The rating downgrade and the outlook revision reflect the Bank's persistently aggressive deposit raising policy. In particular, retail deposits maturing in up to 3 years account for 63% of the bank's liabilities; their amount increased by more than half since the start of the year, by 12.5% in June alone. 

In AK&M Rating Agency's view, the rapidly growing dependence of the Bank on retail funding sources bears elevated systemic risks related to the high probability of the regulatory authority taking restrictive measures.

Besides, we note the steadily low level of retail loan provisioning. The amount of reserves built up in the retail lending segment does not exceed the amount of overdue debt.

AK&M Rating Agency assigned a credit rating to PJSC MJSB Tempbank for the first time on July 27, 2012. The last rating action in relation to the Bank was taken on June 1, 2015. All rating action announcements are available on the akmrating.ru website.

For estimation purposes, we completely rely on the reliability of information provided by the Bank. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

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.

AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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