The 'A' rating indicates that the State Fund of the Kemerovo Region for Business Support qualifies as a highly reliable guarantee institution. The risk of a failure to meet obligations in time is low. The rating assignment was based on the Credit Rating Methodology for Guarantee Institutions rev. January 23, 2014.

The Fund's rating is supported by the low loss ratio, the growing equity capital and the high reliability guarantee coverage.

Since the start of activity, the Fund has undertaken 691 surety commitments and has discharged only 11 payment obligations to partner banks for a total amount of RUB 27.5 million. Therefore, the historic probability of one borrower's default was a mere 2.1%, indicating a low level of risks assumed by the Fund. At the same time, the guarantee institution is successful in recovering money resources through applicable recourse procedures (as of July 1, 2015 the Fund recovered RUB 4.4 million). As of July 2015, the guarantee institution's balanced loss ratio (the ratio of balanced loss to the total amount of sureties provided) was 1.8%. The low loss ratio, an evidence of the Fund's highly efficient risk management system, makes a positive impact on its rating. It should also be noted that the average weighted balanced loss ratio of guarantee institutions was 3.75% in 2014 (based on the data accumulated from 59 guarantee funds during the preparation of our 2014 Regional Guarantee Fund Ranking).

The Fund's equity capital has been growing every year. In 2014, the guarantee institution's capital went up 3.7% against the previous year to RUB 328.6 million. As of July 1, 2015, its capital increased by almost RUB 7 million (2.1%). This achievement results from the Fund's profit from guarantee activities which the Fund traditionally uses to replenish the capital and to build up reserves for possible losses.

As of July 1, 2015, the Fund's money resources reaching RUB 335.6 million were placed with six Russian banks (all of them ranked among the top 25 banks in terms of asset size) including four publicly-owned credit and financial institutions, which means that the Fund's financial investments qualify as highly reliable.

The Fund's rating is constrained by the lower volume of sureties and the prevalence of loans exceeding RUB 5 million in the loan portfolio.

In the first half of 2015, the guarantee institution provided sureties for a total of RUB 76.5 million. Compared with the same period in 2014, the amount of this year's sureties decreased by 21.9% (by RUB 21.5 million). It should be noted that the Fund's overall surety portfolio decreased by 5.3% (by RUB 26.4 million) since the start of the year to RUB 468.4 million as of July 1, 2015. One of the reasons for the weaker guarantee performance is a slowdown in lending to small and medium-sized businesses (-5.6% in Russia).

Most of the liabilities (74.6%) assumed under the loan agreements are attributable to loans equal to or exceeding RUB 5 million, the share of loans exceeding RUB 15 million reaching 31.5%. The prevalence of sureties for such major loans in the surety portfolio increases the guarantee institution's financial risks in the short and medium term.

Full name: The State Fund of the Kemerovo Region for Business Support

The Fund has been providing sureties since 2009.

AK&M Rating Agency assigned a reliability rating to the State Fund of the Kemerovo Region for Business Support for the first time on July 14, 2014. All rating action announcements are available on the akmrating.ru website.

The rating is valid until July 2016. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the guarantee institution's creditworthiness are revealed.

This press release is based on the Statement of assignment of a guarantee institution rating to the State Fund of the Kemerovo Region for Business Support and the Credit Rating Methodology for Guarantee Institutions rev. January 23, 2014.

The rating, along with any information and conclusions provided in this report, only conveys our opinion and shall not be construed as a recommendation to lend money resources to the Fund or to seek its guarantees and sureties.

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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