The ‘B++’ rating indicates that the Company 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.

The essential positive rating drivers for OJSC MJSB Tempbank are the growing assets and equity, favorable adequacy and high quality of capital, higher net incomes, steady positive returns, low share of non-performing loans in the loan portfolio, and low funding costs.

The Bank’s equity capital has been steadily growing for the last six years, the growth rate exceeding the average percentage in Russia’s banking sector in the last four years. In 2012 and the first quarter of 2013, the Bank’s equity capital increased by 18% and further by 35.1%, respectively (against 16.6% and 3.06%, respectively, in Russia’s banking sector).

In 2013, OJSC MJSB Tempbank continued to increase its assets. The asset growth rate also surpassed the average value in the domestic banking sector reaching 48.6% in 2012 and 67.7% in the first quarter of 2013 against the same period in 2012 (compared with 18.9% and 20.0%, respectively, in Russia’s banking sector).

OJSC MJSB Tempbank maintains fairly high capital quality. As of May 1, 2013, Tier 1 capital accounted for 64% of the Bank’s equity, resulting in a higher capital quality ratio (Tier 2 to Tier 1 capital ratio), reaching 56.35% as of May 1 this year. Besides, the share of authorized capital in OJSC MJSB Tempbank’s equity capital is 37.5%, 1.7 times above the average value in Russia’s banking sector.

We also appreciate the fairly low share of non-performing loans in the loan portfolio of OJSC MJSB Tempbank (2.8%, below the average value of 4%) as a positive signal for its rating.

For the last six years, the Bank has benefited from low funding costs, compared with the Bank of Russia’s refinancing rate), which produces a positive effect on its credit rating. Since 2012, the cost of borrowing has been further looking down. At the end of the first quarter 2013, the cost of debt was 3.32% per annum, the interest rate on customer deposits was 3.13% per annum.

Net incomes of OJSC MJSB Tempbank are looking up. The Bank boosted its one-year net income growth rate from 9.23% as of January 1, 2013, to an impressive 25.98% as of April 1, 2013.

Since 2011, OJSC MJSB Tempbank has been a sound and profit-making financial institution. The Bank generated RUB 4.5 million in net profits for the first quarter of 2013; as of April 1, 2013, return on assets was 0.81%%, return on equity was 6.99%.

At the same time, the rating of OJSC MJSB Tempbank is under pressure of a recent negative trend in its profit and earning power, low share of prime loans, coupled with a significant share of problem loans in the loan portfolio and an increase in loan arrears.

The net profit performance of OJSC MJSB Tempbank weakened in 2013. The Bank’s 12-month net profit dropped from RUB 34 million as of January 1, 2013 to RUB 29.6 million on April 1, 2013. Furthermore, the Bank’s net profit for the first quarter 2013 dropped almost twice against the same period in 2012. As a result, the Bank’s profitability decreased in early 2013.

The low share of prime loans (7.8%) and fairly high percentage of problem loans (4.3%) in the loan portfolio are also working against the credit rating of OJSC MJSB Tempbank.

While decreasing in the first quarter of 2013, the share of loan arrears in the Bank’s total loan portfolio is still high, which we regard as another negative signal for the rating. At the end of the first quarter of 2013, 5.2% of the loans provided by OJSC MJSB Tempbank were in arrears, against only 4.53% on average in Russian’s banking sector.

OJSC MJSB Tempbank has been operating in the market of banking services since 1989. The Bank is focused on providing comprehensive services to corporate and personal customers. Its core business is the provision of all types of banking products and services involving Russian rubles and foreign currencies. As a whole, the Bank’s activity profile is typical for a mid-sized Russian credit institution. As of April 1, 2013, the Bank ranked 271st in assets (RUB 9,336 million), 325th in equity (RUB 1,064 million), 552nd in retained earnings, as estimated by Interfax-Center for Economic Analysis.

Apart from the HQ, the Bank is operating a branch network comprising 8 branches, 9 satellite offices, 1 operational office and 8 stand-alone cash desks. Today, OJSC MJSB Tempbank is operating in nine subjects of the Russian Federation (Moscow, Moscow region, Oryol region, Samara region, Nizhny Novgorod region, Saratov region, Kostroma region, Stavropol Krai, and North Ossetia-Alania). The Bank has the following licenses: license no. 55 for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) issued by the Central Bank of Russia on May 29, 2012; license no. 55 to accept money deposits denominated in Russian rubles and foreign currencies from individuals, issued by the Central Bank of Russia on May 29, 2012; professional securities market participant license no. 077-03978-000100 as of December 15, 2000 for custody services; professional securities market participant license no. 077-03253-100000 as of November 29, 2000 for brokerage services; professional securities market participant license no. 077-03342-010000 as of November 29, 2000 for dealer services, and professional securities market participant license no. 077-03410-001000 as of November 29, 2000 for securities management services. In February 2005, the Banking Supervision Committee of the Central Bank permitted the Bank to join the Deposit Insurance System (DIS). The Bank's auditor is RIAN-AUDIT LLC.

Full name: Open Joint-Stock Company "Moscow Joint-Stock Bank "Tempbank".

Short name: OJSC MJSB Tempbank.

This press release is based on the statement of assigning a credit rating to Moscow Joint-Stock Bank TEMPBANK.

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.

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