The 'B++' rating indicates that the Association 'Business Support Center – MFI of Kursk region' qualifies as a microfinance institution with satisfactory creditworthiness. 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 Microfinance Institutions rev. October 12, 2015.

In 2015, the Association 'Business Support Center – MFI of Kursk region' provided 129 microloans for a total amount of more than RUB 108 million, twice above the result achieved in 2014. The amount of loans provided by the association in 2015 alone accounted for more than half of the total amount lent for the whole period of its existence.

As of January 1, 2016, capitalization of the association stayed at approximately RUB 144 million. The association invested 45% of the funds available in a portfolio of microloans. The remaining funds (RUB 78 million) were deposited on settlement accounts with two credit institutions ranked among the top 10 leading Russian banks, with interest accrued on deposits as long as they stay equal to or below the minimum required balance.

The interest income earned by the association accounted for a substantial increase in its total income (up 9.4 times to over RUB 14 million in 2015). As a result, operational sustainability of the association increased to 275%, fully meeting the Ministry of Economic Development's requirement.

Earlier, AK&M Rating Agency assigned a positive outlook on the rating appreciating the notable potential for further improvements in the key performance indicators of the association. While the association generally achieved the target performance levels, we consider it premature to upgrade the microfinance institution's rating given the microloan portfolio deterioration and the write-off of hopeless loans.

In 2015, the relative share of overdue debt in the microloan portfolio increased to 5% against 3% in 2014. Besides, the association, for the first time ever, had to write off RUB 439 thousand in losses on non-recoverable loans.

Key performance indicators

All the above factors testify to AK&M Rating Agency's opinion on the rating assigned to the association.

On November 23, 2015, nonprofit organization "Regional centre of supporting small and middle enterprises" was renamed as the Association 'BSC – MFI of Kursk region' according to changes made to Federal Law no. 99 as of May 5, 2014 and Federal no. Law 151 as of July 2, 2010.

Full name: Association 'Business Support Center – MFI of Kursk region'

Short name: Association 'BSC – MFI of Kursk region'

The Association 'BSC – MFI of Kursk region' was established in 2006 as an entity affiliated with the Consumer Market, Small Business Development and Licensing Committee of Kursk region for the purpose of creating a favorable environment for the operation and development of small and medium-sized businesses in the region. The association providing loans and microloans to small and medium-sized businesses since November 15, 2010 was included in the state register of microfinance institutions on December 15, 2011. For the whole period of microfinance activities, the Association has concluded 281 micro-lending contracts for a total amount of RUB 207 million.

AK&M Rating Agency assigned a credit rating to the Association 'BSC – MFI of Kursk region' for the first time on March 14, 2013. The last rating action in relation to the association was taken on February 4, 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 Fund. 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 the Association 'BSC – MFI of Kursk region' and the Credit Rating Methodology for Microfinance Institutions rev. October 12, 2015.

The rating, along with any information and conclusions provided in this press release, only conveys our creditworthiness opinion 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. 

AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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