The 'B++' rating indicates that Bank Yoshkar-Ola 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.

Bank Yoshkar-Ola is a small-scale regional credit institution whose main shareholder is the Mari-El Republic represented by the Ministry of State Property of the Mari-El Republic (holding a 77.9% stake). Apart from the HQ, the Bank's branch network comprises 3 branches, 12 satellite offices and 1 stand-alone cash desks. The bank provides all types of services involving Russian rubles and foreign currencies to legal entities and individuals. Bank Yoshkar-Ola is in the 400-500 range among Russian banks in terms of asset size, in the 500-600 range in terms of equity capital size.

Over the period from March 1, 2015 to March 1, 2016, the credit institution's equity capital increased by 12%. The growth was mainly driven by the successful placement of the bank's additionally issued shares for a total amount of RUB 30 million.

The Bank's liabilities also increased by 11.7% owing to an increase in their main component, namely, personal deposits. Their share in the bank's funding base reaches 72.4%, an evidence of weak diversification, which AK&M Rating Agency regards as a risk factor.

On the asset side, the Bank used the newly raised capital to expand its loan portfolio (+15.7%) which is currently dominating its assets (80.8%). At the same time, the Bank's loan arrears stay low, despite an increase this year, which AK&M Rating Agency regards as a positive rating driver.

As a whole, the activity of Bank Yoshkar-Ola remains profitable, but an increase in operating expenses has weakened its profitability. In 2015, the Bank's pre-tax financial result decreased by 30.9% to RUB 25.6 million.

In 2015, the credit institution earned RUB 232.2 million in net incomes, roughly no change against the previous year. We regard the Bank's constant ability to generate operating income. The main income sources for the Bank include net interest incomes and net fee & commission incomes, which means that its profitability does not depend on non-stable and risky earnings.

AK&M Rating Agency assigned a credit rating to Bank Yoshkar-Ola for the first time on April 20, 2009. The last rating action in relation to the Bank was taken on March 27, 2014. 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.

This press release is based on the Statement of assignment of a credit rating to Bank Yoshkar-Ola. 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.

AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

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