Fitch af­firmed NBK Long Term rat­ings at AA-,Out­look Sta­ble

Kuwait Times - - BUSINESS -

Fitch Rat­ings, the in­ter­na­tional credit rating agency (Fitch), once again af­firmed Na­tional Bank of Kuwait’s (NBK) Long-Term Is­suer De­fault Rating (IDR) at ‘AA-’, the high­est in the Mid­dle East and North Africa, with a Sta­ble Out­look. Fitch high­lighted the strength of NBK’s reg­u­la­tory cap­i­tal achieved through a rights is­sue and by is­su­ing ad­di­tional tier 1 se­cu­ri­ties and sub­or­di­nated bonds, not­ing that NBK’s reg­u­la­tory cap­i­tal ra­tios and Fitch Core Cap­i­tal (FCC) have im­proved.

More­over, the agency added that NBK’s Vi­a­bil­ity Rating (VR) is un­der­pinned by its flag­ship sta­tus and dom­i­nant fran­chise, which sup­ports it rev­enue gen­er­a­tion ca­pac­ity and abil­ity to fi­nance bet­ter qual­ity as­sets than its peers. The rating also fac­tors in the bank’s strong man­age­ment, con­sis­tent strat­egy and solid fund­ing pro­file

The re­port con­firmed that the Sta­ble out­look on the bank’s Long-term IDR re­flects the out­look on the Kuwaiti sovereign rating at (AA/Sta­ble), due to the agency’s ex­pec­ta­tion of sup­port from the au­thor­i­ties and Kuwait’s strong abil­ity to pro­vide sup­port to its banks, com­bined with Fitch’s be­lief that there would be a strong will­ing­ness to do so, in ad­di­tion to the au­thor­i­ties’ record of sup­port for the do­mes­tic bank­ing sys­tem in case of need.

Cen­tral Bank of Kuwait (CBK) also played a vi­tal role as per the re­port, with its strict regime and hands-on mon­i­tor­ing ap­proach, lead­ing to the con­tin­ued im­prove­ment of the as­set qual­ity in the bank­ing sec­tor. Ad­di­tion­ally, re­serves for NPLs con­tinue to be ex­tremely high due to the pru­dent ac­tions of CBK’s re­quir­ing the build-up of pre­cau­tion­ary general pro­vi­sions. Fi­nally, in its re­flec­tion on the eco­nomic scene in Kuwait, Fitch con­cluded that de­spite the im­pact of lower oil prices, Kuwaiti banks in general con­tinue to ben­e­fit from a fairly sta­ble op­er­at­ing en­vi­ron­ment, thanks to the govern­ment’s con­tin­u­ing cap­i­tal spend­ing plans which man­aged to par­tially off­set the pres­sures.

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