The 'B++' rating indicates that JSC IT Bank qualifies as a sufficiently creditworthy borrower. The risk of a delay in meeting obligations is moderate, the full or partial debt restructuring risk is insignificant. The rating assignment was based on the Credit Rating Methodology for Banks and their Debt Instruments rev. October 27, 2015.

JSC IT Bank qualifies as a medium-sized regional Russian credit institution in terms of the amount of business. The Bank's Headquarters and three satellite offices are located in Omsk, one branch in Angarsk city of Irkutsk region. The Bank provides all types of banking products and services denominated in Russian rubles and foreign currencies and effects securities transactions. The Bank's special feature is a traditionally high share of securities in assets. In terms of assets and equity capital, IT Bank is in the 300-400 range among Russian banks.

The rating is supported by the Bank's ability to maintain satisfactory quality of assets and its high equity capital adequacy.

The credit institution's assets are largely composed of investments in securities and loans receivable. JSC IT Bank uses a fairly conservative approach to its portfolio of securities investing in bonds on the Lombard List of the Central Bank of Russia issued by federal subjects and municipal entities of the Russian Federation, major Russian companies and banks.

The Bank's ability to maintain good quality of loan assets and a low percentage of overdue debt indicates a competent lending policy and low credit risks, which positively contributes to its rating. As of January 1, 2016, loans of quality grades 1 and 2 accounted for 80% of the whole portfolio. The relative share of problem and hopeless loans in the Bank loan portfolio is 0.6% against ca. 8% on average in the banking sector of Russia.

Besides, we appreciate the Bank's ability to keep the percentage of loan arrears low over the period under review. The share of loan arrears in the loan portfolio stayed less than 1%, far below the average level in the Russian banking sector.

The rated Bank keeps equity capital adequacy at a comfortable level. The N1.0 ratio did not go below 16% staying above the average levels in the national banking sector and meeting the regulatory authority's requirements with a margin. The high capital adequacy will enable the credit institution to offset risks, should higher allowances for provisions be required.

At the same time, the Bank's rating is constrained by its high dependence on retail funding, a worse structure of borrowings in terms of maturity and growth of related expenses outstripping the growth of interest income.

We regard the weak diversification of obligations across funding sources along with high concentration in borrowings from major depositors as negative rating drivers. The funding base is dominated by retail clients (80%, against 27% on average in Russia's banking sector, for reference). The Bank keeps corporate deposits at RUB 272-472 million, i.e. ca. 10-13% of its total obligations. The concentration of borrowings in major customers remains considerable: the maximum share of liabilities attributable to one group of depositors was 28% as of January 1, 2016.

For the last 12 months, the Bank faced a 9% outflow of client funding, which also puts certain pressure on the rating.

We also note certain changes in the structure of obligations on terms of maturity: the share of obligations maturing in no more than 90 days increased considerably, the relative share of medium-term and long-term components decreased, which restricts the banking power of IT Bank.

Over the last two years, the Bank's interest expenses outstripped the growth of interest income, which we regard as a risk factor. In particular, in 2015, the Bank's expenses increased by 22.7% against a 15.9% increase in interest income. Therefore, the interest income to interest expense ratio decreased to 1.3.

Foreign language name: Joint stock company "IT Bank"

IT Bank has been operating in the market of banking services since 1993. The Bank of Russia assigned it registration no. 2609 on December 19, 1993. The Bank possesses a license for banking operations involving Russian rubles and foreign currencies (without accepting money deposits from individuals) as of April 28, 1999, and a license for accepting money deposits denominated in Russian rubles and foreign currencies from individuals, as of April 28, 1999. The Bank has been a member of Russia's compulsory deposit insurance system (DIS) since December 2, 2004, registered in the DIS register under no. 246.

AK&M Rating Agency assigned a credit rating to JSC IT Bank for the first time on August 5, 2009. The last rating action in relation to the Bank was taken on January 21, 2015. All rating action announcements are available on the akmrating.ru website.

The rating is valid until February 2017. 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 JSC IT Bank. The rating assignment was based on the Credit Rating Methodology for Banks and their Debt Instruments rev. November 27, 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.

CJSC AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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