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Press Releases / 24.01.2013
Press Release as of 24.01.2013 Small Business Fund of Krasnokamensk City CJSC AK&M Rating Agency assigned the ‘B+’ rating with a stable outlook as per the national scale to the microfinance institution Small Business Fund of Krasnokamensk City. cates that the Small Business Fund of Krasnokamensk City is qualified as a sufficiently reliable borrower. Restructuring risk for a loan / part of a loan is relatively low. The Fund’s rating is supported by its high capital adequacy, the low debt burden per borrower and the high quality loan portfolio. As of September 30, 2012, the Fund’s earmarked capital amounted to RUB 60,459 thousand. The Small Business Fund of Krasnokamensk City does not resort to borrowed funds. Accounts payable on specific reporting dates were low. average debt burden per borrower is fairly low. The loan ceiling for any borrower is RUB 1,000 thousand. The Fund lends to legal entities and individual businessmen. The observance of the Fund’s lending rules keeps the average debt burden relatively low: RUB 1,000 thousand per one legal entity, about RUB 460 thousand per individual businessman. Fund’s loan portfolio is of high quality. Over the first nine months of the Fund’s operation, the borrowers maintained their respective interest payment and principal repayment schedules. No loan arrears were available, the borrowers never applied for loan restructuring. However, the brief experience, the shallow pool of borrowers, the low placement efficiency and the unimpressive operational sustainability work against the Fund’s rating. The Small Business Fund of Krasnokamensk City has been providing microfinance services since early 2012. As of the end of the third quarter 2012, the Fund’s lending books contained 22 borrowers who took out a total of 24 loans. As of September 30, 2012, the total loan receivables amounted to RUB 9,545 thousand. The Fund’s lending performance lacks efficiency. As of September 30, 2012, the Fund placed 15.8% of its lending capital. Given the current loan portfolio growth rate, the Fund will fail to meet the capital placement efficiency target recommended by Russia’s Ministry of Economic Development as per Order 223 dated April 23, 2012 (at least 80%) in the first full year of its operation. Operational sustainability of the Fund at the end of the third quarter was unimpressive (about 30% for 9 months 2012). For microfinance institutions, the operational sustainability percentage, also set by the Ministry of Economic Development, should be at least 100% after two years in operation. Trying to expand its pool of borrowers and to increase its loan portfolio, the Fund will apparently incur higher operating expenses, which means that its operational sustainability, along with the capital placement efficiency, may be hard to improve. The microfinance institution (full business name: Small Business Fund of Krasnokamensk City) was founded in 2011, registration entry 6120775001038 was made in the state register of microfinance institutions on January 24, 2012. The fund is a nonprofit organization whose mission is to encourage and support small businesses in Krasnokamensk City by providing microfinance services. The fund was established by the authorities of Krasnokamensk City and the Small Business Fund of Zabaykalsky Krai.
This press release is based on the statement of assigning a credit rating to the Small Business Fund of Krasnokamensk City. The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Fund’s reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Fund. 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). By a resolution of Russia’s GovernmentAK&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.
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