Ipak Yuli Bank -- Moody's assigns B2/NP/E+ to Ipak Yuli; stable outlook

RATINGS RATIONALE

According to Moody's, Ipak Yuli's E+ BFSR (which maps to a standalone credit assessment of b2) and B2 deposit ratings are constrained by (i) high single-name concentration whereby the aggregate credit exposure to the top five borrowers amounted to 77% of the bank's Tier 1 capital as at 1 January 2012, (ii) the unseasoned nature of the bank's rapidly growing loan portfolio that grew 48% in 2011, as well as (iii) immobilisation of a large proportion of the bank's capital (approximately two thirds of Tier 1 capital as at year-end 2011) in real estate holdings, although these assets comprise the office buildings used for Ipak Yuli's core banking activities.

Factors underpinning Ipak Yuli's ratings include (i) a wide distribution network of 11 branches and 62 mini-banks providing good client outreach throughout the whole territory of the Republic of Uzbekistan, as well as entrenched positions in certain market niches; (ii) sound profitability underpinned by stable and recurring core earnings, including a robust fee and commission component which accounted for 48% of total revenues in 2011; (iii) the good quality of the bank's loan portfolio, to date, with 4% of all loans being impaired and another 2.5% of the loans being less than 90 days 'past due' at year-end 2011; and (iv) its diversified funding mix which includes both customer deposits and wholesale funding (the latter derived from the state and international financial institutions).

Moody's explained that Ipak Yuli's global local currency deposit ratings of B2/Not Prime do not incorporate any element of systemic support given the bank's limited franchise value and its low importance for the Uzbek banking system as a whole. Nor do Ipak Yuli's ratings incorporate any probability of shareholder support to the bank, in case of distress.

WHAT COULD CHANGE THE RATINGS UP/DOWN

According to the rating agency, Ipak Yuli's BFSR has limited upside potential at its current level. However, in the longer term, the BFSR might map to a higher standalone credit assessment (currently b2), if the bank were to diversify its credit exposures and decrease the level of its fixed assets as a proportion of capital, thus increasing the proportion of "free" capital. These conditions would also need to be accompanied by sustainably good asset quality and sound financial fundamentals.

Negative pressure could be exerted on Ipak Yuli's ratings as a result of the bank's failure to maintain (i) a good-quality loan book, (ii) a sustainably strong financial performance, and (iii) adequate capital and liquidity cushion. A substantial increase in the volume of related-party business or non-core investments (such as equities or fixed assets) represents another factor that could have an adverse impact on Ipak Yuli's ratings.

PRINCIPAL METHODOLOGIES

The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Headquartered in Tashkent, Uzbekistan, Ipak Yuli reported -- under audited IFRS -- total assets of $354 million and total shareholder equity of $31 million as at 31 December 2011; net IFRS income for 2011 stood at $7 million.

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Olga G Ulyanova Vice President - Senior Analyst Financial Institutions Group Moody'sInvestors Service Limited, Russian Branch 7th floor, Four Winds Plaza21 1st Tverskaya-Yamskaya St.Moscow 125047 Russia Yves J Lemay MD - Banking Financial Institutions Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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