The ‘B++’ rating indicates that JSC International Merchant Bank is qualified 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. The rating score is unlikely to change during the rating period.

The rating score of JSC International Merchant Bank is essentially supported by the high capital quality and adequacy, the growing assets and the high quality of its credit portfolio.

As of September 1, 2012, the Bank’s equity capital amounted to RUB 531. 9 million including the core capital of RUB 443.5 million, supplementary capital of RUB 88.4 million. The Bank maintains high quality of its capital; the supplementary capital to core capital ratio staying within the 18-20% range in 2012.

Capital adequacy ratio of JSC International Merchant Bank as of September 1, 2012 was 13.98%. Despite a decrease in 2012, it was still above the average level in Russia’s banking sector (13.3% as of the same date).

For 12 months from July 1, 2011 till July 1, 2012, the Bank’s assets increased by 20% to RUB 3,128.6 million from RUB 2,606.4 million. The main asset growth driver is the increase in the net loan receivables from RUB 652.5 million to RUB 1,431.1 million (2.2 times). As of July 1, 2012, net loan receivables accounted for 45.7% of the Bank’s assets.

The high capital adequacy, quality and the growing assets naturally support the Bank’s rating.

For a long time, JSC International Merchant Bank has been keeping its liquidity high. Instant and current liquidity ratios at the Bank are far above the average levels in Russia’s banking sector. As of September 1, 2012, instant liquidity ratio (N2) was 73.0%, current liquidity ratio (N3) was 263.8%.

Another positive signal for the rating score of JSC International Merchant Bank is the high quality of loan portfolio. Over the last year, the Bank’s loan portfolio improved appreciably: as of September 1, 2012, class 1 loans accounted for 41.3%, class 2 loans for 26.4%, class 3 loans for 28.3% of the credit portfolio. Loans in arrears are rather low (0.8%); loan loss provisions amounted to 10.6% of the loan portfolio (according to form 0409115, section 1).

At the same time, the low margin, the large relative weight of securities in assets, and the shrinking amount of funds deposited by legal entities prevent a higher rating score for the Bank.

Return on equity and return on assets at the Bank have been underwhelming in the last year. Pre-tax profit for 2011 decreased by 63.6% year-on-year; pre-tax profit for H1 2012 further sank by 47.5% year-on-year; as of July 1, 2012, ROE and ROA equaled 4.0% and 0.7%, respectively (much below the average levels in Russia’s banking sector, 17.7% and 2.3%, respectively).

It will be noted that one year ago, return on equity at JSC International Merchant Bank was close to what it was in Russia’s banking sector, return on assets even exceeded the average percentage. This major decline in profits was basically down to a reduction in the Bank’s incomes from securities and foreign exchange operations.

However, the Bank’s profit increased in the 3rd quarter 2012, which inspires optimism; if this upward trend persists till the end of the year, the annual return ratios may be expected to grow.

The relative weight of investments in securities in the Bank’s total assets is still high: 34.4% as of July 1, 2012, including net investments in securities and financial assets estimated at fair value. This, despite an appreciable reduction in the last year, is still twice above the average level in Russia’s banking sector. At the same time, the Bank does not generate a steady income from its securities business: net income from operations with securities was about RUB 41 million in 2010, approximately RUB 10 million in 2011 and nearly the same in H1 2012.

The amount of funds deposited by legal entities looks discouraging, decreasing by RUB 336.9 million (46.1%) in 2011 and further shrinking by RUB 72.6 million (18.5%) in the first half of the year 2012. Overall, the Bank’s liabilities decreased by 1.3% in 2011 but rose by 26.9% in 2012, down to the growing amount of individuals’ deposits.

The Bank (full business name in English: Joint stock bank “International Merchant Bank”) has been active in the market of banking services since 1993 (registration no. 2609 of the Bank of Russia). The Bank possesses a license for banking operations involving rubles and foreign currencies (without accepting money deposits from individuals) 04/28/1999, and a license for accepting money deposits denominated in Russian rubles and foreign currencies from individuals as of 04/28/1999.

JSC International Merchant Bank participates in the compulsory deposit insurance scheme (DIS scheme registration no. 246 as of December 2, 2004. The Bank is licensed by Russia’s Federal Financial Markets Service for brokerage, dealing, custody services and securities management activities.

Headquartered in Omsk, JSC International Merchant Bank has one branch in Angarsk city (Irkutsk region).

The Bank provides all kinds of banking services involving Russian rubles and foreign currencies, lends money and effects securities transactions.

The Bank’s auditor is CJSC Yekaterinburg Audit Center, primary state registration number: 1036604386367, tax number: 6662006975. The company is a member of the self-regulatory organization Audit Chamber of Russia (a non-profit partnership), membership certificate no. 6068 as of December 28, 2009, principal number of registration entry 10201046624). Yekaterinburg Audit Center’s location: pr. Lenina 60, 620019 Yekaterinburg, phone no. (343) 375-74-02, website: usac.ru.

This press release is based on the statement of assigning a credit rating to JSC International Merchant Bank.

The credit rating, 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.

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. 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 companies 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 and for listing bonds). 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 AK&M 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