Kazakhstan’s Halyk Bank Says KKB Deal To Affect Profitability, Dividend

Kazkommertsbank (Almaty), whose securities are officially listed on Kazakhstan Stock Exchange (KASE), has provided KASE with the following press release dated July 5, 2017: quote JSC Kazkommertsbank (hereafter – "KKB") hereby announces on completion of transactions whereby by JSC Halyk Bank (hereafter – "Halyk Bank") acquires common shares of Kazkommertsbank held by Mr. Kenges Rakishev and JSC Sovereign Wealth Fund Samruk-Kazyna subject to the terms of the sale and purchase agreements signed on 15 June 2017. As a result as of 5 July 2017 Halyk Bank holds 96.81% ordinary shares in Kazkommertsbank.

Kazakhstan’s second-biggest lender, Halyk Bank, will pay a dividend this year if a planned takeover of rival Kazkommertsbank falls through, the lender said on Monday, while a successful deal would affect its profitability, Reuters reported.

Halyk expects its net income to rise to over 140 billion tenge ($440 million) this year from 131.4 billion in 2016, Chief Executive Umut Shayakhmetova told reporters.

Kazakh President Nursultan Nazarbayev recently signed a decree, effective immediately, allocating 1.1 trillion tenge (US$3.2 billion) to improve the nation’s banking sector.  The document was published on the portal of the information and legal system of normative legal acts Adilet.

Earlier, Deputy Chairman of the National Bank of Kazakhstan Oleg Smolyakov said the government will allocate 2 trillion tenge (US$6.3 billion) to purchase problem loans from banks.

On March 2, the government of Kazakhstan, the country’s National Bank, the Samruk Kazyna Sovereign Wealth Fund, the Problem Loan Fund, Qazkom Bank and its major shareholder Kenes Rakishev, Halyk Bank of Kazakhstan and BTA Bank signed a memorandum to ensure the financial stability and improvement of the banking sector, according to the National Bank, which stipulates, among other things, that Halyk Bank is set to buy out Qazkom’s shares.

“To effectively implement a potential transaction to purchase a stake in Qazkom, the government of Kazakhstan and the National Bank have an intention to provide financial support through the purchase of troubled assets by the Fund for Problem Loans,” the financial controller said.

Fitch Ratings has placed Halyk Bank of Kazakhstan’s (HB) ‘BB’ Long-Term Issuer Default Ratings (IDRs) and its ‘bb’ Viability Rating (VR) on Rating Watch Negative (RWN). Fitch has also placed the ‘CCC’ Long-Term IDRs of Kazkommertsbank (KKB) on Rating Watch Evolving (RWE) and downgraded the bank’s VR to ‘f’ from ‘ccc’.

The rating actions follow recent announcements by the banks and the Kazakh authorities on HB’s potential acquisition of a controlling stake in KKB.