The 'A' rating indicates that Bank RUBLEV qualifies as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal. The rating score is unlikely to change during the rating period.

The positive rating action was motivated by the Bank's growing capital and assets, strong loan portfolio, high profitability and return ratios.

In 2012 and 2013, Bank RUBLEV increased its capital significantly. In particular, the Bank's equity capital grew from RUB 853.37 million to RUB 1,035.57 million (by 21.4%) in 2012, to RUB 1,351.61 million (by 30.5%) for eight months 2013. The equity capital growth was driven by the Bank's retained earnings and a subordinated loan. As of September 1, 2013, the authorized capital accounted for ca. 28% of the equity capital, exceeding the average percentage in Russia's banking sector (about 22%). The Bank's capital adequacy ratio stays at 11% (11.06%, as of September 1, 2013), always meeting the applicable regulatory requirements.

The Bank's assets have also grown impressively since the start of 2012 (11.5% in 2012, 29.1% in the first half of 2013). As of January 1, 2013, Bank RUBLEV's assets exceeded RUB 10 billion; as of July 1, 2013, they further increased to RUB 13 billion. The main source of the Bank's assets is its net loans receivable (57.4% of the total assets as of the last reporting date).

Other asset growth drivers, apart from the higher net worth, were the increasing deposits of individuals and loans taken out from the Bank of Russia. The share of customer deposits in the Bank's liabilities is high (more than 85% at the beginning of 2013, about 79% as of July 1, 2013).

We appreciate the growing capital, assets, and customer deposits as positive rating drivers for Bank RUBLEV.

The Bank benefits from a fairly well-structured loan portfolio. As of August 1, 2013, quality grade 2 loans accounted for more than 50%, quality grade 1 loans for more than 25% of the loans receivables. At the same time, the share of quality grade 3 loans (13.4% as of August 1, 2013) and the loan arrears (8.5% as of September 1, 2013) are exceeding the average levels in Russia's banking sector (8.4% and 3.6% at the same dates, respectively).

The high profitability and return ratios are producing a positive impact on the Bank's rating. The Bank's pre-tax profit for 2012 increased 5 times to RUB 197.84 million, pre-tax profit for H1 2013 grew 3.4 times to RUB 56.55 million. The higher profits drove up the Bank's earning capacity (expressed by return ratios) to levels exceeding the mean values in Russia's banking sector. As of July 1, 2013, the Bank's return on assets ratio was 2.6%, return on equity ratio was 26.0% (against 2.1% and 16.6%, respectively, in the banking sector).

At the same time, a reduction in total income and structural changes in the Bank's net income profile in the first half of 2013, coupled with an uncomfortably high long-term liquidity ratio and maximum amount of large credit risks (N7) ratio are exerting pressure on the rating of Bank RUBLEV.

The Bank's total income in the first half of 2013 decreased by RUB 513.13 million (13.7%) against the same period in 2012, primarily due to the shrinking incomes from securities transactions, from revaluation of foreign currency assets, and from recovery of loan loss provisions. At the same time, the Bank's expenses in the first half of 2013 decreased by RUB 559.15 million (15.0%), the total financial result for the period being therefore higher than in H1 2012. However, the reduction (in absolute terms) in the Bank's income brought about structural changes to the net income profile: in the first half of 2013, the share of net interest margin after loan loss provisions in the net income structure decreased to 39.3% (from more than 55% in 2012).

The lower total income and negative changes in the net income structure are working against the rating score of Bank RUBLEV.

The Bank's long-term liquidity ratio was uncomfortably high in H1 2012 and early 2013. As of July 1 and December 1, 2012, it exceeded 119% and was extremely close to the higher limit of 120% set by the Central Bank of the Russian Federation. Also, the long-term liquidity ratio stayed over 100% from July 2012 to February 2013. In the following months, this ratio decreased ending up at 55.6% as of September 1, 2013, much below the average level in Russia's banking sector (84.6% as of the same date). The acid test and instant liquidity ratios stayed far from the established lower limits, without failures to meet the applicable liquidity requirements.

The Bank faces a fairly high maximum amount of large credit risks (N7 ratio). While not approaching the ceiling value, this ratio is far above the average percentage in Russia's banking sector (ca. 500%-600% in 2012, 450%-500% in February-July 2013, topping 500% again as of August 1, 2013 and September 1, 2013 – against the average level of ca. 220% in 2012, 208% as of August 1, 2013).

Full name: Joint Stock Commercial Bank RUBLEV.

Short name: Bank RUBLEV.

Bank RUBLEV has been operating in the market of banking services since 1994, registration no. 3098 of the Bank of Russia. Bank RUBLEV possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of November 7, 2012, and a license for accepting money deposits denominated in Russian rubles and foreign currencies from individuals, as of November 7, 2012.

Headquartered in Moscow, the Bank has branches in Vologda, Rostov-on-Don, Saratov, and Stavropol.

The Bank provides all types of banking services involving Russian rubles and foreign currencies, lends to individuals and legal entities, effects securities transactions.

This press release is based on the statement of assigning a credit rating to Bank RUBLEV.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's credit standing and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Bank.

CJSC 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.

CJSC 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).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of 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: A.M. Krachkovskaya
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.
Email: anna_k@akm.ru