The ‘B++' rating indicates that BANK ELITA LLC is qualified as a sufficiently reliable borrower (the highest sub-grade of the ‘B' grade).
The rating score of Bank ELITA LLC is essentially supported by the availability of highly reliable and well-reputed proprietors. The Bank is owned by Kaluga region represented by the Ministry of Economic Development of Kaluga region and OJSC Corporation of Development of Kaluga Region. Together they hold 100% of the Bank's authorized capital (90.2% and 9.8%, respectively). The Bank actually belongs to a constituent of the Russian Federation, which reduces a number of administrative risks and improves trust of the population and other counterparts in the Bank.
Over the period under review, the share of the Tier 1 capital exceeds 90% indicating that the Bank’s capital is of high quality. Also, most of the Tier 1 capital comes from the Bank’s authorized capital, a highly reliable source which totals RUB 164.6 million and accounts for more than 80% of the Bank’s equity capital, far above the average level in Russia’s banking system (25-26%).
Over the whole period under review (2006 – Q1 2011), net interest income sources prevailed in the net income structure (their share exceeding 50%) which speaks well for the Bank’s income structure.
Bank ELITA's KPIs are growing steadily. Over the period under review, assets of the Bank are increasing. In 2010, they increased by 47.5% against 14.9% on average in Russia’s banking system. As of 4/1/2011, the Bank’s assets were estimated at RUB 1.2 billion increasing by 10% year-on-year.
The Bank’s loan receivables are on the rise. In 2010, loan assets of the Bank increased by 41.4% to RUB 847.8 million. For Q3 2011, the loan receivables increased by 14.5% to RUB 970.3 million.
In 2010, liabilities of Bank ELITA LLC increased by 44.5%. As of April 1, 2011, the Bank’s liabilities increased by 3% year-on-year to RUB 1,004 million.
Loan assets of Bank ELITA LLC are of fairly good quality. The share of NPLs and problem loans in the loan portfolio as of July 1, 2011 was 3.8%, below the average level in Russia’s banking system. This proves that the Bank’s credit policy is well-balanced and the credit risk is low. Besides, class 1 loans and class 2 loans together account for over 90% of the loan portfolio, also indicating its good quality.
Contributions of physical persons to the Bank are steadily increasing. (by almost 40% in 2009, by 55.9% in 2010). As of the end of Q1 2011, they reached RUB 489 million increasing by 40% year-on-year.
One of the arguments against the rating score is the decrease in profit and profitability. In 2010, pre-tax profit was RUB 5.2 million, falling off from the 2009 result (RUB 14.8 million). However, pre-tax profit for Q1 2011 was RUB 3.1 million increasing by 1.5% year-on-year. Net profit of the Bank is also looking down. In 2010, it decreased by 88.8% to RUB 1.1 million. Net profit of the Bank for  Q1 2011 was RUB 2.4 million increasing by 3.6% year-on-year.
In 2010, return on equity ratio (ROE) was 3.2%, far below the 2009 result (12.6%). For reference, average ROE in Russia’s banking system as of the same date was 12.5%. In 2010, return on assets (ROA) decreased to 0.5% against 1.9% on average in Russia’s banking system as of the same date.
Also, the rating score of Bank ELITA LLC is essentially restricted by the low equity capital. As of June 1, 2011, equity capital totaled RUB 201 million. Overall, the low equity capital affects the Bank’s competitive edge and restricts its expansion opportunities.
Another risk factor is that the Bank’s assets and liabilities are not well-balanced in terms of currency. This spoils the Bank’s liquidity ratios, particularly the instant liquidity ratio (N2) which was equal to 26.6% on June 1, 2011 (the minimum value required being 15%). At the same time, liquid and highly reliable assets (funds placed with the Central Bank and other credit institutions as well as cash funds) have an appreciable share in the Bank’s asset structure. Current liquidity ratio N3 is currently below the average level in Russia’s banking system. As of June 1, 2011 it was 79.2% against the minimum acceptable percentage of 50%.
Bank ELITA LLC is a small-sized regional Russian bank which has been working in the market of banking services since 1991. The bank is only active in Kaluga region. Its branch network consists of 4 additional outlets and stand-alone cash desks. As of April 1, 2011, the Bank’s assets totaled RUB 1,210 million, equity capital was RUB 205 million. Bank ELITA LLC possesses general banking license no. 1399 granted to it by the Central Bank of the Russian Federation on August 7, 2006. In November 2004, the Banking Supervision Committee of the Central Bank permitted the Bank to join the Deposit Insurance System (DIS). The Bank's auditor is Audit-Aktiv LLC.
Bank ELITA LLC provides the whole range of banking services to physical persons, SME businesses and municipal entities of Kaluga region.

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This press release is based on the statement of assigning a credit rating to BANK ELITA LLC.
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