Kazkommertsbank to complete unfinished projects of Kuat construction company

Visor Capital 

June 3, 2009

Kairat Aitekenov, the Managing Director at Samruk-Kazyna Fund (SK) reported yesterday that Kazkommertsbank (KKGB KZ)(KKGB LI)(KKGBp KZ) will create a company to complete residential construction projects left unfinished by Kuat Corporation, one of the country’s largest construction company. He added that SK would open a credit line for the Bank to complete the projects, which may in total cost more than KZT35bn (US$233m). SK indicated that the cost of construction will be US$1,600 per square metre. We understand that the cost is in line with the current market price for residential real estate, although note the risk of further declines in the residential real estate market.

We believe that this action may improve the quality of loan portfolios of Kazakh banks in the construction sector. The overall impact could be limited for Kazkommertsbank as the Bank has already has significant exposure to construction sector. We currently have Kazkommertsbank under formal research coverage, available to our clients.