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Moody's Interfax affirms rating of Akibank (Russia)

August 02, 2011 | Moody's Investors Service

Moscow, August 01, 2011 -- Moody's Interfax Rating Agency has today affirmed
the Baa2.ru long-term National Scale Rating (NSR) of Akibank.
The NSR carries no specific outlook.

Moody's Interfax affirmation of Akibank's rating is based on the bank's
audited financial statements for 2010 prepared under IFRS, and its H1
2011 unaudited results prepared under the local GAAP.

Please see ratings tab on the issuer/entity page on moodys.com for
information on Global Scale Rating.

RATINGS RATIONALE

"Moody's affirmation of Akibank's Baa2.ru NSR reflects the bank's modest
performance during the recent global financial crisis, with evidence of the
bank's asset quality deteriorating to around the average for the Russian
banking system," says Maxim Bogdashkin, a Moody's Assistant Vice-President
and lead analyst for the bank. Akibank's total non-performing loans --
including loans overdue for more than 90 days and loans repaid via
collateral foreclosure -- peaked at around 18% of total loans as at YE2010;
the bank's net interest margin narrowed to 4.6% in 2010 from an average of
7.5% for the three-year period 2007-2009. The bank remained profitable over
these years, although its net income remains low due to continuing loan loss
charges.

Moody's Interfax notes that Akibank's Baa2.ru NSR is constrained by its high
risk concentrations, with the exposure to 20 largest borrowers exceeding
2.5x total capital, and with high dependence on a single group of depositors
accounting for around a third of total liabilities as at H1 2011. The bank's
business continues to be dominated by personal relationships of its major
private shareholder, thus rendering it highly exposed to key-person risk.
The level of related-party transactions, albeit comparable with some other
Russian banks, is high with total exposure accounting for around Tier 1
capital as of YE2010.



At the same time, Moody's Interfax notes that Akibank maintains a relatively
developed branch network in the Republic of Tatarstan and its image is
additionally supported by a reputable portfolio shareholder, East Capital, a
private equity fund that holds a 19.99% stake in the bank. Akibank's capital
buffer, which was supported by capital increases in 2008 and 2009, and the
bank's loan loss reserves confer relatively good protection from loan losses
that could materialise in the medium term.

Moody's Interfax Rating Agency's National Scale Ratings (NSRs) are intended
as relative measures of creditworthiness among debt issues and issuers
within a country, enabling market participants to better differentiate
relative risks. NSRs differ from Moody's global scale ratings in that they
are not globally comparable with the full universe of Moody's rated
entities, but only with NSRs for other rated debt issues and issuers within
the same country. NSRs are designated by a ".nn" country modifier signifying
the relevant country, as in ".ru" for Russia. For further information on
Moody's approach to national scale ratings, please refer to Moody's Rating
Implementation Guidance published in August 2010 entitled "Mapping Moody's
National Scale Ratings to Global Scale Ratings."

Company: AKIBANK

Full company nameJoint Stock Commercial Mortgage Bank "AKIBANK" (Public Joint Stock Company)
Country of riskRussia
Country of registrationRussia
IndustryBanks

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