The 'A' rating indicates that JSC Izhcombank qualifies as a highly creditworthy borrower. The risk of a failure to meet obligations in time is low, the full or partial debt restructuring risk is minimal.

JSC Izhcombank qualifies as a medium-sized Russian credit institution in terms of the amount of business. As of July 1, 2014, it ranked 306th among Russian banks in terms of asset size, 390th in terms of equity capital size, 333rd in terms of net profit.

Headquartered in Izhevsk city and operating a network of 28 outlets in the Udmurt republic and Perm Krai, JSC Izhcombank provides the whole range of banking products and services involving Russian rubles and foreign currencies to legal entities and private customers.

We appreciate the Bank's growing balance sheet indicators, profitable operations, well-structured assets and high-quality loans receivable as the main positive rating drivers.

In the first half of 2014, the Bank's key balance sheet indicators were commensurate with the same period in 2013, assets and liabilities increased by RUB 154.5 million (+2.14 %) and RUB 140.3 million (+2.17 %), respectively. The growth was mainly driven by an increase in customer funds, primarily deposits of private customers, a traditional funding source for the Bank. This liability item increased by RUB 771.2 million (19.9%) offsetting and exceeding the reduction in other items.

Despite the pressure of external economic challenges, the Bank's operations were profitable both in 2013 and in the first half of 2014. As of July 1, 2014, pre-tax profit was RUB 40.1 million, profit after tax amounted to RUB 30.8 million.

The Bank maintains a sustainable asset structure; we appreciate its high net loans receivable (73.2%, exceeding the average percentage of 71.6%).

The high level of net loans receivable resulted in a growing interest income (+10.4%) which, coupled with a 17.3% increase in earnings from commission operations, pushed up the Bank's total net income by RUB 27.8 million (13.4%) in the first half of 2014.

Another positive signal for the Bank's rating is the highly skillful loan portfolio management strategy, as evidenced by the low relative share of problem and non-performing loans (0.86% and 1.93%, respectively, as of July 1, 2014, which is 2.7 times and 1.9 times, respectively, below the average levels in Russia's banking sector. The domination of loans of quality grades 1 and 2 (91.6%, exceeding the average percentage of 86%) is also indicative of the high quality of assets.

The Bank never failed to meet the applicable liquidity and credit risk requirements in the period under review. The corresponding ratios have been close to the average market benchmarks and appreciably far away from the regulatory limits set by the Central Bank of Russia. It should also be noted that most of these ratios are still improving.

However, in AK&M Rating Agency's view, the high share of private deposits in the liability structure is putting pressure on JSC Izhcombank's rating. The relative share of retail deposits grew steadily in 2013 and the first half of 2014 reaching 70.25% as of July 1, 2014, which is above the average percentage in Russia's banking sector. The low diversification of the Bank's funding base may generate insolvency risks in the face of today's challenges for the domestic economy.

Official Bank Name: Joint Stock Company Izhombank; short name: JSC Izhcombank.

Based on the Udmurt Republican Department of Zhilsotsbank of the USSR, JSC Izhcombank has been active in the market of banking services since 1990.

JSC Izhcombank possesses licenses of the Central Bank of Russia to provide banking services involving Russian rubles and foreign currencies and to accept money deposits denominated in Russian rubles and foreign currencies from individuals (lic. no. 646 as of October 31, 2012). The Bank is a member of the Deposit Insurance System (no. 106 as of October 28, 2004).

This press release is based on the Statement of assignment of a credit rating to JSC Izhcombank.

The 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.

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.

CJSC Analysis, Consulting and Marketing Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.

CJSC AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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