CJSC AK&M Rating Agency affirmed the national scale credit rating of JSCB Bashcomsnabbank (license no.  1398) at 'A', tier 3. The outlook is stable.

The 'A' rating indicates that JSCB Bashcomsnabbank qualifies as a highly creditworthy borrower. Risk of a delay in meeting obligations is relatively low, full or partial debt restructuring risk is minimal.

We appreciate the steadily improving assets, liabilities and capital, and the robust loan portfolio as positive rating drivers for JSCB Bashcomsnabbank.

In 2013 and the first quarter of 2014, the Bank's assets and liabilities kept growing. As of April 1, 2014, its assets improved to RUB 11,583.21 million against RUB 8,474.71 million at the start of 2013; liabilities increased to RUB 10,645.81 million from RUB 7,727.50 million for the same period.

The Bank's asset growth is mainly driven by net loans receivable, the increase in liabilities by customer funds. Since the start of 2013, the Bank's net loans receivable have increased by RUB 1,779.22 million (29.1%), the customer funds by RUB 3,002.04 million (42.1%). The assets and liabilities growth rates exceeded the average levels in Russia's banking sector.

Over the period from January 1, 2013 to May 1, 2014, equity capital of JSCB Bashcomsnabbank increased by RUB 255.03 million (24.5%). The equity capital growth resulted from an increase in the authorized capital, retained earnings, and a subordinated loan. As of May 1, 2014, the authorized capital accounted for approximately 32%, retained earnings for ca. 25%, property revaluation surplus for 12%, the subordinated loan for about 30% of the bank's equity capital.

The steadily improving KPIs, well-structured assets, liabilities and capital naturally support the Bank's rating.

JSCB Bashcomsnabbank maintains a high quality of loans receivable: as of May 1, 2014, top-grade loans accounted for ca. 23%, quality grade 2 loans for approximately 72% of the total loans provided by the Bank. The share of problem and non-performing loans was 3.6%, the share of loan arrears being 4.3%. The Bank mainly lends to legal entities, mostly companies operating in the construction and financial sectors.

The Bank's rating is impaired by the shrinking profits and a low capital adequacy ratio.

While the Bank stays above the break-even point, its profit performance in 2013 and the first quarter of 2014 weakened against the respective previous periods. In particular, net profit for 2013 decreased by RUB 8.65 million year-on-year (-8.7%), the 3-month profit in 2014 plunged by RUB 12.70 million year-on-year (-30.9%). At the same time, the Bank's net profit in absolute terms is comfortably high (RUB 28.43 million for the first quarter of 2014).

JSCB Bashcomsnabbank is facing a poor capital adequacy. Its CAR ratio floated around 11% in 2013 (reaching a peak value of 11.99% on April 1, 2014), around 10% at the start of 2014 (hitting the lowest value of 10.19% on February 1, 2014). This ratio is below the average level in Russia's banking sector, and the failure to push it up, let alone a further decrease, could have a negative  impact on the Bank's credit rating.

Full name: Joint-Stock Commercial Bank Bashcomsnabbank

Short name: JSCB Bashcomsnabbank

The Bank operating in the market of banking services since 1991 was registered by the Bank of Russia under no. 1398 as of March 1, 1991. The bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of August 6, 2012, and a license for accepting money deposits from individuals denominated in Russian rubles and foreign currencies, as of June 25, 2012. The Bank is a member of the compulsory deposit insurance scheme (registered under no. 474 as of January 20, 2005. Headquartered in Ufa, the Bank has a branch in Moscow, with a network of satellite offices in the Republic of Bashkortostan. JSCB Bashcomsnabbank provides the whole range of banking products and services involving Russian rubles and foreign currencies, provides loan facilities, performs operations in the securities market, and issues bank cards.

This press release is based on the statement of assigning a credit rating to JSCB Bashcomsnabbank.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds to the Bank.

AK&M Rating Agency shall not be held liable 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 accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

CJSC AK&M Rating Agency

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Moscow, Russia

www.akmrating.ru

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.