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Moody’s upgrades the outlook of CREDIT BANK OF MOSCOW to Stable

13.09.2010

08 September 2010 – international rating agency Moody's Investors Service upgraded ratings outlook of CREDIT BANK OF MOSCOW (CBM) to Stable. The Bank’s ratings were affirmed as follows: long-term global local and foreign currency deposit rating at B1, financial strength rating at E+ and long-term national scale credit rating at А2.ru. Analysts of the agency note that “the change in outlook reflects the less severe impact of the global financial crisis on CBM’s financial fundamentals than Moody’s had previously anticipated”. According to Moody’s, the asset quality of the Bank is sound thanks to recovery in the Moscow retail trade sector (the primary market to which the Bank lends), adequate risk management procedures and low exposure to real estate projects. Loan portfolio quality is maintained at a high level: as at H1 2010 loans overdue by more than 90 days made 2% of the loan book as compared to 3% at year-end 2009, less than 1% of the loan book being restructured. The agency notes that extensive capital injections for RUB 6 billion made by the shareholder in 2009 and H1 2010 supported CBM’s capital adequacy level at 14% at end-H1 2010 despite additional loan loss provisioning charges and over 100% loan portfolio growth since the end of 2008. “CREDIT BANK OF MOSCOW demonstrated satisfactory financial performance in 2009 and H1 2010, as it was able to generate a stable flow of interest and commission income which, together with reasonable efficiency, enabled it to comfortably cover an increase in provisioning levels,” – comment analysts of Moody's. It is worth mentioning that in June 2010 international rating agency Fitch Ratings upgraded long-term issuer default rating of CREDIT BANK OF MOSCOW to ‘B+’ from ‘B’ and national long-term rating to ‘A-(rus)’ from 'BBB-(rus)'. The Bank’s ratings were removed from Rating Watch Evolving (RWE), and a Stable outlook was assigned. Other ratings were affirmed at the same level, i.e. short-term IDR affirmed at ‘B’ and individual rating affirmed at ‘D’.