Fitch Ratings has affirmed Commercial Bank of Kuwait's (CB) ratings at long-term issuer default rating (IDR) 'A+', Short-term IDR 'F1', Individual 'B/C' and Support '1'.

The rating Outlook on the Long-term IDR remains Stable. The Support Rating Floor is affirmed at 'A+'.

CB's Issuer Default and Support ratings reflect the extremely high probability of support being provided by the Kuwaiti authorities, in case of need.

Fitch's assessment of support is based on the financial strength of Kuwait, its long history of supporting its domestic banks and CB's importance to the local economy.

The Individual rating reflects the bank's good domestic franchise and sound profitability, but also takes into account relatively high concentrations in its loan and funding profiles, significant exposure to local equities and the bank's reliance on a small and undiversified economy.

Upside potential for CB's Individual rating is currently limited given its risk profile. Downside potential could arise from a further increase in exposure to the real estate or construction sectors, which remain susceptible to an adverse change in market values in the event of a downturn, or an increase in lending to clients to purchase securities.

Any acquisition that materially increases the bank's risk profile would also be negative for the Individual rating.

CB's exposure to the real estate and construction sectors increased significantly in 2007 and H108.  Given rapid appreciation in property prices in Kuwait, exposure to these sectors is a cause for concern.

Loans to companies to finance the purchase of equities represented a high 15 per cent of gross loans at end-June 2008 and present a significant risk if high levels
of collateral were to be rapidly eroded by a volatile stock market.-TradeArabia News Service