The 'A' rating indicates that Commercial Bank BFG-Credit (LLC) qualifies as a highly reliable borrower. The risk of a delay in meeting obligations is low, the full or partial debt restructuring risk is minimal. The rating assignment was based on the Credit Rating Methodology for Banks and their Debt Instruments rev. August 14, 2015.

Commercial Bank BFG-Credit (LLC) headquartered in Moscow qualifies as a medium-sized Russian credit institution in terms of the amount of business. Apart from the Headquarters, the bank's network comprises 4 branches, 36 satellite offices, 17 operational offices, 1 loan desk, 1 stand-alone cash desk and 1 representative office. The Bank provides the whole range of banking products and services involving Russian rubles and foreign currencies to legal entities and private customers. In terms of asset size and retained earnings, CB BFG-Credit (LLC) is among the Top 100 leading banks of Russia; in terms of equity capital, the Bank ranks in the 100-200 range.

The positive rating drivers include the Bank's stronger key performance indicators, satisfactory equity capital adequacy, and profitable operations.

Assets of CB BFG-Credit (LLC) continue to increase. For the 9-month period in 2015, they grew by 15.2%. The Bank's asset-side transactions are mainly financed out of corporate and private deposits accounting for 46.0% and 41.3%, respectively, of the Bank's liabilities. Corporate deposits increased by 12.1% while the inflow of funds from retail clients by 31.5%. Therefore, the total amount of liabilities reached almost RUB 50 billion increasing by 13.6% since the start of the year.

The Bank's equity capital is also growing, with an acceptable level of adequacy. In January-September 2015, the equity capital of CB BFG-Credit (LLC) increased by 25.1% resulting from the growing profit and the foreign currency revaluation of a subordinated loan. The equity capital adequacy level stayed in the 13-15% range exceeding the average levels in the banking sector.

The Bank's activity is profitable, its financial metrics have grown substantially. In particular, the Bank's 9-month pre-tax profit increased by 50.6% year-on-year to RUB 1.7 billion. At the same time, we take into account the substantial impact of financial backing from the Bank's shareholders on the final performance results.

The credit rating of CB BFG-Credit (LLC) is constrained by a rather weak loan portfolio, high volatility of the acid test and current liquidity ratios, substantial dependence of the Bank's incomes on the speculative component.

The Bank's inability to improve its loan portfolio exerts pressure on the rating. The relative share of problem and non-performing loans is 17.4%, far above the average percentage of 7.4% in Russia's banking sector. It should however be noted that the percentage of overdue loan is acceptably low (2.6%). The Bank's provisions for possible loan losses exceed the amount of loans in arrears more than twice, although provisions for non-performing loans are insufficient: only 25% of the total amount of quality grade 5 loans is covered by provisions.

The acid test and current liquidity ratios are unimpressive and excessively volatile in the wake of the constantly high concentration of operations within a group of major depositors whose activities involve inflows and write-offs of funds on a large scale. The Bank's liquidity ratios mainly came short of the average levels in Russia's banking sector: N2 stayed in the 26-48% range, N3 in the 54-84% range, fairly close to the minimum threshold of 50%.

The credit rating of CB BFG-Credit (LLC) is also constrained by the heavy dependence of its net incomes on the speculative component. In particular, the Bank's 9-month loss from operations and foreign currency revaluation amounted to RUB 1.7 billion, which reduced its total net incomes by almost 65%. Nevertheless, the Bank increased its net income by 42% against the same period in 2014.

Full Bank name: Commercial Bank "BFG-Credit" (Limited Liability Company)

Short name: Commercial Bank "BFG-Credit" (LLC)

Commercial Bank BFG-Credit (LLC) has been operating in the market of banking services since 1994. The Bank of Russia assigned it registration number 3068 as of September 1, 1994. The bank has a general license for banking activities as of February 19, 2013 and a license to place and accept deposits of precious metals as of April 22, 1999. Since 2005, the Bank has been a member of Russia's compulsory deposit insurance system (Registration Certificate no. 730).

AK&M Rating Agency assigned a credit rating to CB BFG-Credit (LLC) for the first time on November 6, 2009. The last rating action in relation to the Bank was taken on November 27, 2014. All rating action announcements are available on the akmrating.ru website.

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

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.

This press release is based on the Statement of assignment of a credit rating to CB BFG-Credit (LLC). The rating assignment was based on the Credit Rating Methodology for Banks and their Debt Instruments rev. August 14, 2015.

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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