The 'A+' rating indicates that the Foundation of the Corporation for enterprise development of Ulyanovsk region qualifies as a highly creditworthy microfinance institution. The risk of a failure to meet obligations in time is insignificant. The rating assignment was based on the Credit Rating Methodology for Microfinance Institutions rev. October 12, 2015.

The Foundation of the Corporation for enterprise development of Ulyanovsk region of the Ministry of Economic Development of Ulyanovsk region was established in 2010 to provide financial support to small and medium-sized businesses using microfinancing schemes. The fund has a mature branch network in the territory of Ulyanovsk region (Dimitrovgrad and Inza cities, Novospassky, Barysh and Staraya Kulatka and Surskoye industrial communities. The entity was registered as a microfinance institution on July 8, 2011.

The high microfinance institution rating reflects growing capitalization, microloan portfolio improvements, a high level of loan security and an increase in lending efficiency.

Compared with January 1, the Fund increased capitalization by 9% to almost RUB 196 million on October 1, 2015 benefiting from subsidies from the regional budget in the amount of RUB 8 million. Borrowings from SME Bank amounting to RUB 90 million are another source of capital for expanding the loan portfolio. The loans from SME Bank are secured by obligations under the loan agreements concluded by the Fund with SME businesses.

The stronger funding base enabled the Fund to expand its microloan portfolio. As of October 1, 2015, the Fund's portfolio of microloans totaled RUB 177 million increasing by 27% since the start of the year.

We appreciate the high level of security for the loans provided by the Fund exceeding the amount of existing microloans almost 5 times. The security comprises movable and immovable assets as well as sureties issued by the guarantee institution of Ulyanovsk region (qualifying as a highly reliable institution, in view of AK&M Rating Agency) worth a total of RUB 5 million. This substantially mitigates the risk of loss of money should clients default on their obligations.

In the accounting period, the Fund considerably improved its lending efficiency by 18 p.p. to a historic high of 90% at the end of the third quarter of 2015.

The microfinance institution has deposited a total of RUB 8 million with VTB 24 (PJSC). The Fund intends to use these funds for providing microloans to small and medium-sized businesses in Ulyanovsk region in the fourth quarter of 2015.

The credit rating is constrained by the Fund's loss-making activity, low operational sustainability, and growing amount of restructured debts.

The Fund is currently operating in the red, its net loss for the 9-month period in 2015 reaching RUB 1.5 million on account of the provisions made against possible loan losses, according to the Central Bank of Russia's Instruction no. 3321-U as of July 14, 2014. To minimize losses, the Fund plans to cut down expenses and to strengthen control over the recovery of clients' overdue debts.

As a result of the Fund's loss-making activity, its operational sustainability failed to meet the applicable regulatory requirement on October 1, 2015 reaching 77%.

Our review has revealed that the amount of debt restructured by the Fund increase to RUB 13 million as of October 1, 2015. It should also be noted that the average microloan is currently RUB 799 thousand, almost RUB 100 thousand above the maximum regulatory threshold.

AK&M Rating Agency has assigned a credit rating to the Foundation of the Corporation for enterprise development of Ulyanovsk region for the first time. All rating action announcements are available on the akmrating.ru website.

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

For estimation purposes, we completely rely on the reliability of information provided by the Fund. 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 the Foundation of the Corporation for enterprise development of Ulyanovsk region and the Credit Rating Methodology for Microfinance Institutions rev. October 12, 2015.

The rating, along with any information and conclusions provided in this press release, only conveys our creditworthiness opinion 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.