The rating downgrade reflects the continuing deterioration in the Bank's financial position. In particular, we have seen a further impairment of the Bank's loan portfolio: overdue debt on retail and corporate loans increased by 44% in the last month. As a result, as of May 1, 2016, the share of loan arrears in the loan portfolio of BRT reached 22%.

We also note that the additional provisions for losses created by the Bank have worsened its financial result, the Bank's 4-month loss reaching RUB 575 million.

The Bank's capital adequacy ratios are on a negative trend. It should be noted that BRT failed to meet the applicable requirements in relation to the N1.1 and N1.2 ratios several times; as of May 1, 2016, these ratios decreased to 3.2%.

Another point of concern is a heavy reduction in the balances of legal entities' accounts in the last two months. In March-April 2016, balances of corporate accounts decreased by 86% year-on-year to RUB 71 million as of May 1.

AK&M Rating Agency assigned a credit rating to Bank of Development of Technologies for the first time on August 5, 2009. The last rating action in relation to the Bank was taken on March 10, 2016. All rating action announcements are available on the akmrating.ru website.

For estimation purposes, we completely rely on the reliability of information provided by the Client. 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.

The rating assignment is based on the monitoring results of the current credit rating assigned to Bank of Development of Technologies and the Credit Rating Methodology for Banks and their Debt Instruments rev. February 25, 2016.

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.

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