NBK gets Fitch ratings boost
Kuwait, June 30, 2013
Fitch Ratings has affirmed National Bank of Kuwait's (NBK) long-term Issuer Default Rating (IDR) at ‘AA-’ with a stable outlook.
The ratings reflect NBK's dominant domestic franchise and significant international network, consistent profitability, strong capital base, sound asset quality, and sound liquidity, said Fitch in its review.
Fitch pointed out that NBK was the only Kuwaiti bank with a significant international presence. The agency stressed that its expansion plans were in line with its aim of becoming a premier pan-Arab bank.
“NBK is the only Kuwaiti bank with a significant international presence. Although Kuwait remains NBK’s primary market, international operations have contributed a steadily increasing proportion of revenue,” said Fitch in the report.
“Internationally, NBK’s expansion plans are in line with its aim of becoming a premier pan-Arab bank, without jeopardising its strong profitability, asset quality and capitalisation,” the ratings agency stated.
Commenting on the ratings boost, NBK said in less than two months, three major international rating agencies including Moody's and Standard & Poor's have all affirmed the bank's long term ratings at Aa3, A+ and AA- respectively, the highest in the Mena region.
All ratings carry a stable outlook, the Kuwaiti lender stated.
Fitch in its review said that NBK was the largest bank in Kuwait in terms of assets and had leading shares in most market sectors. "NBK offers corporate banking, retail and private banking, investment banking, and international banking. With the acquisition of Boubyan, NBK became the only bank in Kuwait servicing both the conventional and Islamic banking markets," it stated.
"The corporate banking division leverages off a wide product offering and the ability to cross-sell with other divisions such as international banking and Islamic banking," it added.
Fitch also pointed out that NBK's management stability, indicated by a long-serving senior team, had aided its performance and franchise.
"NBK maintained sound profitability ratios in 2012 and Q113. Asset quality ratios continue to be relatively sound. NBK has a conservative risk profile with good risk management systems and controls and has historically been better able to manage risks than its domestic peers," said the Fitch report.
The agency stressed that NBK has a very strong and stable deposit base, and through past crises the bank has benefited from a “flight to safety”. Despite the acquisition of the controlling stake in Boubyan Bank, Fitch said that NBK’s capital base is still strong, it added.-TradeArabia News Service