The 'A+' rating indicates that PJSC BALTINVESTBANK qualifies as a highly creditworthy borrower. The risk of a failure to meet obligations in time is insignificant. The rating assignment was based on the Credit Rating Methodology for Banks and their Debt Instrument rev. February 24, 2015.

The rated Bank is headquartered in St. Petersburg. The branch network covers 5 federal districts of the Russian Federation, and (apart from the HQ) comprises 6 branches, 27 satellite offices, 11 operational offices and 6 stand-alone cash desks.

PJSC BALTINVESTBANK qualifies as a big Russian bank in terms of the amount of business. The credit institution has a fairly sustainable position in the Russian market of banking services. As of July 1, 2015 PJSC BALTINVESTBANK ranked in the top 100 of Russian banks in terms of asset size and equity capital.

PJSC BALTINVESTBANK is developing as a universal credit financial institution providing its clients with the whole range of standard banking services, without prioritizing any business segment.

The Bank's credit rating is essentially supported by improvements in the key balance sheet indicators, the well-diversified structure of obligations, the sufficient loan provisions, the profitable operations.

In 2014, the Bank's basic balance sheet performance indicators such as liabilities and assets were on a steady growth trend. Liabilities increased from RUB 59,710.8 million to RUB 72,538.4 million (+21.5%). The funding base expansion resulted in an increase in assets (by 19.4% or RUB 12,517.3 million to RUB 77,144.2 million).

In the face of a challenging development environment, the Russian banking sector witnesses a notable performance deterioration (on average). In particular, in the first half of 2015, assets and liabilities decreased by 5.3% and 5.9%, respectively. Against this background, the relative performance stability of PJSC BALTINVESTBANK (+0.2% and -0.27%, respectively) is a positive rating driver.

Most of the Bank's liabilities (68%) arise from client deposits, with a good balance of borrowings from corporate and retail clients (31.2% and 37.6%, respectively). The Bank of Russia's resources account for 25.5% of BALTINVESTBANK's total liabilities, which improves diversification of funding sources.

We are pleased to see that the amount of provisions for possible loan losses is sufficiently high to minimize the risk of loss from loan depreciation. As of July 1, 2015, such provisions reached 10.3% of the loan portfolio fully covering the amount of loans more than 30 days in arrears. The Bank's loan provisions exceed the amount of non-performing loans and cover 79% of the combined amount of loans of quality grades 4 and 5, thereby providing favorable conditions for the Bank's financial activity.

BALTINVESTBANK's operations have been profitable this year. As of July 1, 2015, its post-tax financial result amounted to RUB 158.9 million decreasing by 67.4% year-on-year, which is still better than the average performance in Russia's banking sector (-88.6%).

We also regard the financial backing from the Bank's shareholders with a view of increasing its net assets in 2014 and 2015 as a positive rating argument. The shareholders' commitment is a substantial support factor given the crisis effects in the economy.

At the same time, the lower equity and equity capital adequacy ratio, the weaker loan portfolio and the higher loan arrears are working against the Bank's rating.

One of the rating constraints for PJSC BALTINVESTBANK is the equity contraction in both 2014 and the first half of 2015. As a result, the Bank's equity stood at RUB 7,141.7 million as of July 1, 2015. The capital adequacy ratio (N1.0) is also looking down, now approaching 11%.

Another point of concern is a deterioration in the credit institution's loan portfolio resulting from an increase in problem and non-performing loans (their combined share growing more than 1.3 times). While this deterioration matches the general trend in the banking sector, the percentage of low-quality loans at the Bank is 1.6 times above the average level.

The Bank's loan portfolio is also impaired by the high level of loans more than 30 days in arrears (7.8% as of July 1, 2015). In 2014-2015, the average percentage of overdue loans at the Bank was more than twice above the average level in Russia's banking system.

Our review of the solvency of the Bank's major borrowers also indicates problems in the loan portfolio. The share of low-solvency clients remains low, the Bank is forced to apply re-structuring procedures in relation to a substantial share of the loans.

Full Bank name: public joint-stock company Baltic Investment Bank

Short name: PJSC BALTINVESTBANK

PJSC BALTINVESTBANK has been operating in the market of banking services since 1994. The Bank possesses general banking license no. 3176 as of February 12, 2015 issued by the Central Bank of the Russian Federation.

AK&M Rating Agency assigned a credit rating to PJSC BALTINVESTBANK for the first time on December 2, 2008. The last rating action in relation to the Bank was taken on August 19, 2014. All rating action announcements are available on the akmrating.ru website.

The rating is valid until August 2016. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the Bank's creditworthiness are revealed.

For estimation purposes, we completely rely on the reliability of information provided by the Bank. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

This press release is based on the Statement of assignment of a credit rating to PJSC BALTINVESTBANK.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

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) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

AK&M Rating Agency

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www.akmrating.ru

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.