The 'A' rating indicates that PJSC Sotsinvestbank 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.

Headquartered in Ufa, Russia, PJSC Sotsinvestbank has one branch, 44 satellite offices, 64 operational offices and 24 stand-alone cash desks. The bank is operating in two regions of the Russian Federation: Republic of Bashkortostan and Moscow.

PJSC Sotsinvestbank has a fairly sustainable position in the Russian market of banking services. As of March 1, 2015, the Bank was in the 200-300 range among Russian banks in terms of asset size, in the 100-200 range in terms of equity capital. As of the same date, Sotsinvestbank ranked first in equity capital, third in terms of asset size and fifth in terms of profit among the seven banks registered in Russia's Republic of Bashkortostan.

PJSC Sotsinvestbank provides a broad range of banking products and services involving Russian rubles and foreign currencies.

The Bank's credit rating is essentially supported by the high quality and growth of capital, the sustainably profitable operations, the well-balanced interest policy, and the robust loan portfolio.

In 2014, the Bank's capital grew by 12.63% reaching RUB 2,725 million resulting from an increase in the authorized capital by RUB 461.7 million (+39.3%). Capital adequacy ratio increased to 23.5% as of March 1, 2015.

The Bank's capital quality ratio (Tier 2 to Tier 1 capital ratio) was 31.6% easily meeting the Basel Accord guidelines (below 50%) and almost reaching the Bank of Russia's standard (below 30%).

The Bank's operations have been profitable throughout 2014 and the first months of 2015. The absence of quarterly losses and the even distribution of earnings across the financial year contribute to the Bank's rating.

The Bank's sustainable positive financial performance results from the dominance of growing interest income (+22.9% in 2014) and the Bank's policy to maintain a comfortable balance between the loan interest rates and the cost of borrowings (deposit interest rates), as proven by the net interest spread which stayed on a positive trend and reached 5.8% at the end of 2014.

At the same time, the Bank's rating is constrained by the poor diversification of funding sources and the low level of highly liquid assets.

The diversification of funding sources at the Bank is extremely poor. As of March 1, 2015, customer deposits accounted for 92.8% of the Bank's total liabilities. Funds raised from the population are the main source of borrowings, their share increasing to 76.9%.

The dominance of this funding source which is extremely sensitive to the smallest signs of economic turbulence indicates relatively high risks of insolvency absent a solid funding base.

Another point of concern for the Bank is the low level of highly liquid assets. In 2014, the share of highly liquid assets in the Bank's total assets was unable to exceed 14% and shrank to 7.9% as of March 1, 2015, which means growing liquidity risks should a stress scenario play out. This weakness is putting pressure on the Bank's rating.

Full Bank name: public joint stock company Sotsinvestbank

Short name: PJSC Sotsinvestbank

PJSC Sotsinvestbank has been operating in the market of banking services since 1990. The Bank possesses general banking license no. 1132 as of March 17, 2015 issued by the Central Bank of the Russian Federation.

The Bank is a member of Russia's compulsory deposit insurance system (registered under no. 50 as of October 7, 2004).

The rating assignment is based on the Credit Rating Methodology for Banks and their Debt Instruments (AK&M Rating Agency, 2014).

This press release is based on the Statement of assignment of a credit rating to PJSC Sotsinvestbank.

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.

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.

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