Standard and Poor’s Ratings Services affirmed rating of Bank Vozrozhdenie

12 December 2011

On Friday Standard & Poor’s Ratings Services affirmed Bank Vozrozhdenie long-term credit ratings at „ВВ-” international scale and „ruАА-” Russian national scale following Bank’s review under

S&P’s revised bank criteria. Short-term counterparty credit rating was affirmed at „B”. Outlook remains „Stable”.

Among factors showing positive impact on rating the agency mentioned the Bank’s efforts in optimization of operating expenses, increase of funding base accompanied by a decline in the cost of liabilities, growing share of earning assets and stable liquidity position. Good and loyal client base in the Moscow region, stability and professionalism of the management team and protected income structure with high share of commission income were pointed out as Bank’s traditional strengths. The stable outlook reflects expectations of Rating Service that Bank Vozrozhdenie asset quality and profitability will continue to show improvements, though Banks capitalization will likely decline and its business position will remain under pressure.

„The bank’s earnings power is pressured by market competition, but the earnings structure is healthy, with about 55% of revenues coming from interest income and 40% from fees and commissions. We expect the bank’s profitability to improve in the future, due to the growth of earning assets and optimization of operating expenses”, — Irina Velieva, analyst of rating service, commented. „The bank’s well—developed retail branch network provides it with a stable base of core retail deposits”, — added Irina Velieva.

„Rating was reviewed within implementation of S&P’s new bank criteria, however, changes didn’t affect recently raised Bank‘s rating. We are glad that Standard&Poor’s continue to highlight our efforts in improvement of operating efficiency, increasing share of earning assets that shifted to higher—margin segments, control over interest expenses and loan portfolio quality. The agency positively assesses the Bank’s ability to raise profitability of business in the conditions of sector and economic instability.” — said Andrey Shalimov, Deputy Chairman of the Management Board.

Bank’s rating can be raised in case of significant improvements in the bank’s capitalization and advanced internal profit generation. Positive rating actions can also be considered upon strengthening of the bank’s business position, increase of the Bank’s market share in customer deposits and reduction of single-party loan concentrations.

Unfavorable impact on Bank’s rating can have weakness in earnings, weak capitalization levels and deterioration of asset quality. Negative trends in funding position could also lead to a downgrade.

Bank Vozrozhdenie mortgage-backed Bonds have been registered
Bank Vozrozhdenie placed mortgage-backed bonds in the amount of Rub 4.07 billion