The ‘B++’ rating indicates that CB Altaikapitalbank Limited qualifies as a sufficiently reliable borrower. Risk of a delay in meeting liabilities is moderate, restructuring risk for a loan / part of a loan is insignificant.

We appreciate the favorable capital adequacy and quality, growing income and high ROA and ROE ratios as positive rating drivers.

As of June 1, 2013, equity capital of CB Altaikapitalbank Limited was RUB 517.55 million, capital adequacy ratio reached 14.59%, capital quality ratio (namely, the ratio of Tier 2 capital to Tier 1 capital) was 8.0%. The Bank’s capital adequacy ratio is above the average percentage in Russia’s banking sector. The Bank’s retained earnings account for the greater part (74.5% as of June 1, 2013), the authorized capital for 19.5% of its total capital. Also, the Bank increased its equity capital by approximately 10% over the 18-month period from the start of 2012 to June 1, 2013. The equity capital growth is mainly driven by the Bank’s rising retained earnings.

In 2012 and first quarter of 2013, the Bank’s incomes increased by 15.7% and 15.9%, respectively, against the previous similar periods. The Bank’s operating income and income from banking operations and other transactions contribute almost equally to its total income structure. Most of the Bank’s net incomes come from its net interest margin after provisions, net fee and commission income. Despite a minor reduction in Q1 2013 (2.8% against the first quarter of 2012), CB Altaikapitalbank Limited benefits from a fairly strong net income position (RUB 289.61 million in 2012, RUB 76.85 million in the first quarter of 2013).

The steadily increasing equity and incomes, high capital quality and good structure of earnings are contributing to the Bank’s positive image and supporting its rating.

The powerful inflow of earnings is driving up the profits and profitability ratios of CB Altaikapitalbank Limited. The Bank’s pre-tax profit reached RUB 126.60 million in 2012, RUB 46.05 million in the first quarter of 2013. The ROA and ROE ratios are fairly high (22.2% and 4.2%, respectively, as of April 1, 2013, against 17.0% and 2.1% on average, respectively, in Russia’s banking sector as of the same date).

At the same time, the faltering KPI growth, weaker liquidity position and high credit risk ratios in 2013 are working against the Bank’s rating.

At the end of Q1 2013, the Bank’s assets and liabilities were just a little above the early 2012 level: assets increased by 4.0%, liabilities by a mere 1.2% against the start of 2012, mostly due to the fairly poor performance in 2012, with positive changes only seen in the second quarter. As a result, assets increased by a mere 2% for 12 months 2012, while liabilities stayed at roughly the same level.

In the first quarter of 2013, both assets and liabilities of CB Altaikapitalbank Limited edged up, driven by the higher net loans receivable (for assets) and higher borrowings from customers and credit institutions (for liabilities).

We regard the Bank’s failure to push up its assets and liabilities in 2012 and the absence of a solid growth trend in general as a negative rating driver.

In 2013, the Bank’s instant and current liquidity ratios decreased. From the peak values of 65.23% as of March 1, 2013 and 89.72% as of February 1, 2013, they dropped to 28.75% and 65.21% as of June 1, 2013. While lacking stability, the Bank’s liquidity position was stronger in 2012 than in May-June 2013.

The Bank’s credit risk ratios are uncomfortably high. The maximum amount of major credit risks, already exceeding the average value in Russia’s banking sector, further increased in May-June 2013 and reached 350.58% as of June 1, 2013 (against the average percentage of ca. 205%). The maximum amount of loans, guarantees and sureties to the bank’s members (N9.1 ratio) and total magnitude of insider-specific risk (N10.1 ratio) rose above the average level in Russia’s banking sector in March 2013. The N10.1 ratio has been above 2.0% since April 2013, reaching a peak value of 2.36% on April 1, 2013, while the maximum acceptable percentage is 3%.

As a whole, CB Altaikapitalbank Limited has kept its performance ratios within the established limits.

Full name: Commercial Bank Altaikapitalbank Limited.

Short name: CB Altaikapitalbank Limited.

Registration number provided by the Bank of Russia: 2659 as of January 21, 1994.

The bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of March 16, 2010, and a license for accepting money deposits denominated in Russian rubles and foreign currencies from individuals as of March 16, 2010.

The Bank participates in the compulsory deposit insurance scheme, registration no. 83 as of October 14, 2004.

Headquartered in Barnaul, the Bank has a branch network in Altai Krai and the Altai Republic.

The Bank provides all types of services involving Russian rubles and foreign currencies, lends to individuals and legal entities.

This press release is based on the statement of assigning a credit rating to CB Altaikapitalbank Limited.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank’s credit standing 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 – 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), the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia’s Government AK&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.

CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
www.akmrating.ru
Press release by: A.M. Krachkovskaya
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18