[Kazakhstan’s Banking Sector] #4 Kazkommertsbank

The second largest bank in Kazakhstan, Kazkommertsbank (KKB) has a 26% market share in corporate lending and 14% share in retail lending. It is one of the three London-listed Kazakh banks, having conducted an Initial Public Offering in 2006 that raised $1.7 billion.

At the beginning of 2009, KKB was - together with BTA Bank, Alliance Bank and Halyk Bank - bailed out under the government’s bank rescue program. It was allocated a total of $1 billion as part of the anti-crisis package which gave National Wellbeing Fund Samruk-Kazyna, the country’s sovereign wealth fund, the option to acquire a 25% stake.

In May KKB completed its stake sale, raising a total of $296 million. Samruk-Kazyna ultimately decided to take up only 21.2%, paying $240 million, with the remainder going to other investors. The sale fell far short of KKB’s $471 million goal, but the bank’s CFO later said that, despite this, there won’t be a need for further capital injections this year. Unlike with Alliance Bank, BTA Bank and Astana Finance, the Kazakh government has said it will not help KKB restructure its $10 billion in debt, and KKB has rather ambitiously said that it is not currently planning any such restructuring.

Everything is relative, and KKB is certainly in a stronger position than many of its peers. But not everyone shares this optimistic outlook for the second half of the year. In June Standard & Poor’s lowered its long-term counterparty credit ratings from ‘B+’ to ‘B’ citing “the continuing downward pressure on the bank’s asset quality, capitalization, funding and liquidity.”

And on top of that, the bank reported a 70% fall in net profit for the first quarter of 2009, the result of efforts to build up provisions against bad loans.

So what are KKB’s prospects? Hard to say for sure, but with its depository receipts trading up about 30% from the beginning of Q2 2009, it has perhaps turned the corner - and may yet prove the pessimists wrong.

Possibly related posts:

1. [Kazakhstan’s Banking Sector] #1 Alliance Bank
2. [Kazakhstan’s Banking Sector] #2 BTA Bank
3. [Kazakhstan’s Banking Sector] #3 Astana Finance
4. [Kazakhstan’s Banking Sector] #5 Halyk Bank
5. Down But Not Out - Ukraine’s Banking Sector is Putting Up a Fight