The ‘B++' rating indicates that OJSC International Merchant Bank is qualified as a sufficiently reliable borrower (the highest sub-grade of the ‘B' grade). Risk of a delay in meeting liabilities is moderate, restructuring risk for a loan / part of a loan is insignificant.
OJSC International Merchant Bank’s rating score is essentially supported by its high liquidity meeting the applicable requirements of the Central Bank of Russia. As of July 1, 2011, quick liquidity ratio (N2) was 67.0% exceeding the average value in Russia’s banking system by 2.4 percentage points. Current and long-term liquidity ratios have been above the respective average values in Russia’s banking system since 2009.
OJSC International Merchant Bank has sufficient equity capital of high quality. As of September 1, 2011, the Bank’s equity capital totaled RUB 503.8 million. The Bank’s capital is of high quality, the share of core capital being 84%. As of August 1, 2011, capital adequacy ratio of OJSC International Merchant Bank was 23.9%, which is appreciably above the banking average as of the same date (16.1%).
The bank has been operating at a profit for the last four years and H1 2011. Net profit of OJSC International Merchant Bank for H1 2011 totaled RUB 10.2 million. Return on assets and return on capital of the Bank as of July 1, 2011 (on an annualized basis) equaled 3.0% and 15.1%, respectively. The Bank’s ROA and ROE are close to the respective average values in Russia’s banking system.
The Bank’s operating efficiency is positive when compared with other banks registered in Omsk region. In 2010 and H1 2011, OJSC International Merchant Bank was average among the six regional banks in terms of assets, net profit, and capital.
The Bank’s rating score is essentially supported by the high amount of investments in securities (in absolute terms) and their large share in the Bank’s assets. In recent years, OJSC International Merchant Bank’s investments in securities have been growing. As of July 1, 2011, they reached RUB 1,368 million, their share in the Bank’s assets being 52.5%. The share of investments in securities exceeds the average value in Russia’s banking system approximately 3 times. Operations with securities do not generate a reliable source of profit for the Bank. While the Bank’s profit on operations with securities was RUB 41 million in 2010, it only reached RUB 4.8 million for H1 2011. Now that financial markets lack stability, The Bank may end up at a loss investing heavily in securities.
The loan receivables of OJSC International Merchant Bank leave much to be desired in the way of quality. The share of class 4 loans and class 5 loans as of July 1, 2011 was 32.7% against 8.1% in Russia’s banking system. In 2010, the share of loan arrears was high: about 15% of the loan receivables and their equivalents.
One of the negative drivers is the low share of the Bank’s authorized capital in its equity capital (10% since early 2010 against about 24%-26% in Russia’s banking system in 2010-2011). The Bank’s authorized capital has not increased since 2006.
Another negative signal for the Bank is the decrease in assets, the loan portfolio and the funds of customers. The Bank’s assets decreased in 2010 and H1 2011, the share of net lending receivables has been shrinking for several years, the funds of legal entities since early 2010.
OJSC International Merchant Bank has been active in the market of banking services since 1993. The bank possesses licenses of the Central Bank of Russia as of April 28, 1999, reg. no. 2609. OJSC International Merchant Bank is a mid-sized regional bank in the amount and volume of operations. The bank is operating in Omsk city and Irkutsk region. As of July 1, 2011, OJSC International Merchant Bank ranked 458th in the amount of net assets, 406th in equity capital.
OJSC International Merchant Bank has been participating in the deposit insurance scheme since 2004, certificate of registration for the participation in the DIS scheme no. 246.
The Bank’s auditor is CJSC Yekaterinburg Audit Center, primary state registration number: 1036604386367, tax number: 6662006975, audit license of the Ministry of Finance of the Russian Federation no. E000455 dated June 25, 2002.
The Bank provides all types of banking services involving Russian rubles and foreign currencies focusing on securities operations.

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This press release is based on the statement of assigning a credit rating to OJSC International Merchant Bank.
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 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: A.M. Krachkovskaya
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18