The 'B++' rating indicates that CB Transnational Bank (Limited) 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 Bank qualifies as a mid-sized Russian credit institution in terms of the amount of business. The bank is registered in Moscow. Apart from the HQ, the Bank's branch network comprises 5 branches, 34 satellite offices, 26 operational offices and 1 stand-alone cash desk. The bank provides all types of services to legal entities and individuals, lends funds and performs transactions with precious metals. In terms of asset size and retained earnings, CB Transnational Bank (Limited) is in the 100-200 range in terms of equity capital in the 200-300 range among Russian banks.

The Bank's rating is supported by the good structure and steady growth of equity, profitable operations, fairly high profitability metrics.

The bank's equity capital is well-structured and growing. In 2014, it increased by RUB 431.5 million (24.8%) reaching 2,170.8 million as of January 1, 2015. The equity capital is dominated by core capital (74.1%), with a significant share of authorized capital (44.5%).

We regard the profitable operations of CB Transnational Bank (Limited) as a positive rating driver. In 2014, the bank improved pre-tax profit by 18.6%, net profit by 28.4% (according to Form 102).

The bank's profitability performance is above the average level in Russia's banking system. As of October 1, 2014, ROE and ROA ratios were 24.2% and 2.6%, respectively against 12.8% and 1.6% in Russia's banking sector. Adjusted for preliminary Q4 2014 performance results, the bank's profitability as of January 1, 2015 is still comfortably high.

At the same time, we regard the low equity capital adequacy, weak diversification of obligations across funding sources and a reduction in interest margin as risk factors for the Bank.

The equity capital adequacy of CB Transnational Bank (Limited) remains fairly low, which is a constraining factor for the Bank's rating. The N1.0 ratio is below the average level in Russia's banking sector and approaching the minimum regulatory limit of 10% (10.18% as of January 1, 2015).

The analysis of the Bank's assets and liabilities shows that 87% of the Bank's liabilities arise from private deposits used for lending to companies and organizations. This structural imbalance, in AK&M Rating Agency's view, puts certain pressure on the bank's liquidity position making it dependent on investors' behavior.

Besides, the high share of private deposits raises the cost of borrowing for the bank, with an ensuing negative impact on its interest margin. The Bank's interest margin plummeted as interest rates on the Bank's obligations soared to a level exceeding the interest rates on loans provided by it. In December 2014, average interest rate on retail loans was 18.2%, interest rate on deposits raised being 18.9%. If this trend persists, the Bank may face its liquidity position and profitability jeopardized.

Bank official name: Commercial Bank Transnational Bank (Limited).

The Bank has been active in the market of banking services since 1992, reg. no. 2108 at the Bank of Russia. The Bank possesses a license for banking operations involving rubles and foreign currencies (without accepting money deposits from individuals) and a license for accepting deposits of precious metals as of December 26, 2012, along with a license for accepting money deposits from individuals denominated in Russian rubles and foreign currencies as of August 27, 1999. The Bank has been a member of the deposit insurance system since December 9, 2004, DIS registration no. 286.

This press release is based on the Statement of assignment of a credit rating to CB Transnational Bank (Limited).

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.

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CJSC AK&M Rating Agency

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