The 'B++' rating indicates that the Small Business Fund of Krasnokamensk City qualifies as a sufficiently creditworthy borrower. The risk of a delay in meeting obligations is moderate, the full or partial debt restructuring risk is insignificant.

The microfinance institution rating reflects the Fund's income improvements, acceptable equity capital adequacy and operational efficiency.

The Fund's earnings have been growing every year. In 2013, they tripled to RUB 1.84 million; In January-September 2014, the Fund increased its financial income by 29.71% year-on-year to RUB 2.04 million. It should be noted that the Fund's expenses increased by 6.79%, i.e. slower than incomes.

The Fund's equity capital adequacy ratios have been staying in the range from 96.62% to 98.78% over the last three years, meeting the applicable regulatory requirement (at least 15%). The microfinance institution does not currently borrow capital; the last time its capitalization increased was in 2013 (by RUB 6.5 million). The share of operating expenses in the average loan portfolio over the Fund's existence has never exceeded 12% (the upper limit set by the regulatory authority being 30%) and was a mere 6.16% on December 31, 2013.

At the same time, the rating is constrained by the heavy overdue debt and the weaker microlending performance.

The share of overdue debts in the microfinance institution's loan portfolio soared 4.5 times this year. In particular, 10 of its 85 current borrowers failed to meet their obligations for a total amount of RUB 7 million under microloan agreements over the 9-month period in 2014. As of October 1, 2014, the portfolio-at-risk (PAR) ratio in terms of the Ministry of Economic Development's standards was 13%, almost twice above the maximum acceptable level set by the regulatory authority (7%). This, given that the average percentage of arrears on loans provided to small and medium-sized businesses in the region is ca. 2.3%, is an evidence of the Fund's imperfect borrower creditworthiness evaluation method and consequently, of the poor risk management system at the Small Business Fund of Krasnokamensk City.

In January-September 2014, the Fund concluded 43 microloan agreements for a total amount of RUB 25.84 million. Contrary to the previous year's record high SME lending performance in 2013 (up 171.7% year-on-year, total amount provided in loans in absolute terms growing by RUB 47.6 million), a reverse trend persisted this year: the amount of loans decreased by 16.7% to RUB 25.8 million.

As of October 1, 2014, the Small Business Fund of Krasnokamensk City's lending efficiency ratio was 44.67%, which does not meet the Ministry of Economic Development's guidelines (at least 80%).

The Small Business Fund of Krasnokamensk City was founded in 2011, officially registered as a microfinance institution on January 24, 2012.

The fund is a nonprofit organization whose mission is to encourage and support small businesses in Krasnokamensk City by providing microfinance services. The Fund was established by the authorities of Krasnokamensk City and the Small Business Fund of Zabaykalsky Krai.

This press release is based on the Statement of assignment of a microfinance institution credit rating to the Small Business Fund of Krasnokamensk City.

The rating, along with any information and conclusions provided in this press release, only conveys our creditworthiness opinion 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.

AK&M 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

www.akmrating.ru

Ul. Gubkina 3, Moscow, Russia

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