The ‘A’ rating indicates that CB OBRAZOVANIE is qualified as a highly reliable borrower.
The rating score of CB OBRAZOVANIE is essentially supported by the high growth rates of the Bank’s KPIs (assets, liabilities, loan receivables, capital, and profit) which are by far outstripping the respective average growth rates in Russia indicating that the credit institution is strengthening its market position.
In 2010, the Bank’s equity capital increased by almost 54% against 2.4% on average in Russia’s banking system. For two quarters 2011, equity capital further increased by 68.9% (against 0.8% on average in Russia’s banking system). As of July 1, 2011, the Bank’s own funds reached RUB 1.3 billion.
In 2010, assets of CB OBRAZOVANIE increased by 107.4% against 14.9% on average in Russia’s banking system. As of 7/1/2011, the Bank’s assets were estimated at RUB 12.7 billion increasing by 65.8% since by 7/1/2010. Loan assets of the Bank increased by 126.8% to RUB 6.3 billion. For the first half year 2011, the Bank’s loan receivables increased by 37.9% to RUB 8.7 billion.
In 2010, the Bank’s liabilities increased more than twice and reached RUB 11.6 billion as of July 1, 2011 (+63.7% year-on-year).
Contributions of physical persons have been increasing steadily since 2008. The growth rate was 81.8% in 2009, 190.4% in 2010. As of the end of Q2 2011, contributions of physical persons amounted to RUB 3603.5 million increasing by 105.71% year-on-year.
One of the most powerful arguments supporting the rating score of CB OBRAZOVANIE is its high profitability in recent years. The Bank’s net profit for 2010 amounted to RUB 202.5 million increasing twice year-on-year (RUB 100.8 million). This increase was mainly driven by successful operations involving foreign currencies and securities. It will be noted, however, that the Bank's net profit for H1 2011 decreased by 55% year-on-year to RUB 31.9 million.
CB OBRAZOVANIE has achieved high profitability. Its return on equity was 45% in 2010 increasing against 2009 (32%). It will be noted that this ratio in Russia’s banking system was 12.5% in 2010. Return on assets of CB OBRAZOVANIE was 3.2% against 1.9% on average in Russia’s banking system.
The low risk magnitude of CB OBRAZOVANIE's loan portfolio remains another argument supporting the rating score. As of July 1, 2011, the share of non-performing loans and problem loans in the loan portfolio was 3.9%, which is below the average level in Russia’s banking system (8.1%). This proves the well-balanced loan policy and the low credit risk. It will also be noted that class 1 loans and class 2 loans jointly account for almost 91% of the loan indebtedness indicating the high quality of the loan portfolio.
Arrears on the loans granted by CB OBRAZOVANIE and other funds placed by it equaled 1.1% of the loan receivables on July 1, 2011. This percentage is below the average value in Russia’s banking system (4.5%).
CB OBRAZOVANIE has a well-developed branch network. For today, the Bank is active in 6 regions of Russia and manages 9 branches, 11 additional outlets, 1 operational office and sixteen operational cash desks. This branch network enables the Bank to actively expand in the market and to increase its customer base all over Russia.
One of the forces exerting pressure on the rating score of CB OBRAZOVANIE is the low capital adequacy (N1) which equaled 11.9% as of July 1, 2011, quite close to the lower regulatory threshold and below the average CAR in Russia’s banking system (16.7%).
Another risk factor is that the Bank’s profit depends on currency operations. The share of incomes from operations involving foreign currencies is quickly growing. While these operations yielded 26.2% of the Bank’s total net income in 2009, their share increased to 35.5% in 2010. In H1 2011, operations involving foreign currencies had roughly the same share in the total net income structure (33.6%).
CB OBRAZOVANIE has been active in the market of banking services since 1991. It is a mid-sized regional bank in the amount and volume of operations in Russia. The bank is active in 6 regions of the Russian Federation. Its branch network consists of 9 branches, 10 additional outlets, 1 operational office and 16 operational cash desks. As of July 1, 2011, CB OBRAZOVANIE ranked 180th in the amount of assets (according to Interfax-CEA). As of July 1, 2011, the Bank’s assets totaled RUB 12.6 billion, equity capital was RUB 1.3 billion. CB OBRAZOVANIE possesses general banking license no. 1521 granted to it by the Central Bank of the Russian Federation on December 19, 2007. In November 2005, the Banking Supervision Committee of the Central Bank permitted CB OBRAZOVANIE to join the Deposit Insurance System (DIS).
Today, CB OBRAZOVANIE is a universal credit institution offering a wide range of banking products and services to private and corporate customers.

This press release is based on the statement of assigning a credit rating to CB OBRAZOVANIE.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.
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.
AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.
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 – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.

CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: Y.B. Kuznetsova
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.
Email: kuznetsova@akm.ru