The ‘A’ rating indicates that RUSSLAVBANK is qualified as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal. The previous credit rating ‘B++’ as per the national scale (stable outlook) was assigned to the Bank in July 2012.

Revising the credit institution’s rating position, we appreciate the considerable improvement in the structure of active and passive operations coupled with the high principal balance sheet ratios and key performance indicators. Of special note are the positive changes in the sources of funding: increasingly more often, instead of inter-bank loans and debt instruments, the Bank tends to mobilize capital from individuals’ deposits (including time deposits) and funds received from non-financial organizations (increasing by 19.6% and 7.5% since the start of the year, respectively, almost twice above the average growth rate in Russia’s banking sector). Another benefit is a reduction in the share of interest expenses in the Bank’s total outlays by almost 20% resulting from the lower cost of funds.

In the segment of active transactions, the principal trend is the growing volume of retail loans (+31.6% year-to-date). Net loan receivables as of 10/1/2012 amounted to RUB 8.33 billion increasing by more than 7% year-on-year. Also, net interest income from the loans granted to non-credit institutions increased almost twice year-on-year.

The optimized balance sheet structure produced a positive effect on the credit institution’s operating efficiency. Pre-tax profit for 9 months 2012 was RUB 168.2 million, twice above what it had been for 9 months 2011.

The pivotal component of the Bank’s activity is its function as the provider and clearing house of the CONTACT system intended for money transfers without opening accounts. The Bank’s efforts to expand its customer base and to gain more partners (including those outside the banking sector) resulted in more transactions within the system and a higher total amount of payments (increasing by 56% and 60% year-on-year, respectively). The CONTACT system generates a steadily growing fee and commission income, a large contributor to the Bank’s general income structure.

At the same time, the relatively low liquidity in the short and medium term and the fairly high share of loan arrears in the total loan portfolio (6.9% as of 10/1/2012) generate risks related to the credit institution’s current operations.

RUSSLAVBANK is a mid-sized Russian credit institution in terms of assets and volume of operations. As of October 1, 2012, the Bank’s assets amounted to RUB 14.75 billion, retained earnings totaled RUB 133.1 million (the 187th and 190th position in the Russian banks’ rankings, according to the Interfax Center for Economic Analysis).

The Bank (full business name: Commercial Bank “Russky Slaviansky Bank” (Closed Joint-Stock Company), short business name: CB RUSSLAVBANK CJSC) has been active in the market of banking services since 1990. The bank has a wide network of outlets (7 branches, 1 representative office and 45 business units including 35 supplementary offices, 7 stand-alone cash desks and 1 operational office).

RUSSLAVBANK possesses general banking license no. 1073 issued by the Central Bank of the Russian Federation on January 5, 2003. In December 2004, the Banking Supervision Committee of the Central Bank permitted RUSSLAVBANK to join the Deposit Insurance System (DIS). Since 2012, the Bank’s auditor has been CJSC KMPG, the largest Russian audit firm in 2011, according to the Kommersant Dengi weekly.

RUSSLAVBANK focuses on providing the whole range of banking products and services involving Russian rubles and foreign currencies. Besides, RUSSLAVBANK is the clearing house for the CONTACT system, the first Russian system for private ruble-, US dollar- or euro-denominated money transfers to recipients in Russia, the CIS and other foreign countries without opening accounts. Today, CONTACT unites more than 900 financial institutions and offers its customers a powerful branching network comprising over 270,000 points of service in more than 100 countries worldwide. In November 2012, RUSSLAVBANK operating the system won the International Star Award for Quality (ISAQ) in the gold category for its strong commitment to quality, leadership, technology and innovation at the annual B.I.D. International Quality Convention in Geneva

This press release is based on the statement of assigning a credit rating to RUSSLAVBANK.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's credit standing and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.

CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base and for listing bonds). Pursuant to an order of Russia's Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.

CJSC AK&M Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: A.V. Khibukhin
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18