Capital Intelligence (CI) announced that it has assigned unchanged “aa-“ and “a1+” Foreign Currency Long Term and Short Term ratings
to National Bank of Kuwait, Global Arab Network reports according to a press statement.
The Bank’s Financial Strength rating is also affirmed at “a+” notwithstanding certain liquidity vulnerabilities. Given NBK’s systemic importance, it is very likely that strong official support would be forthcoming should it be required, especially in terms of liquidity; NBK’s Support rating of 2 is therefore affirmed accordingly.
The Outlook for all ratings remains ‘Stable’. National Bank of Kuwait (NBK) is by far the largest bank in Kuwait and one of the largest banks in the GCC. NBK has been able to maintain excellent asset quality during a period that has tested other banks. It also has a sound capital position and consistent profitability, especially at the net profit level.
The one area of potential vulnerability is liquidity given the heavy dependence on purchased funds. A bank with this type of funding profile could be vulnerable at times of stress in what has become a more volatile region both politically and economically. Offsetting this however is the liquidity support expected to be readily available from the Central Bank of Kuwait in case of need. given the systemic importance of NBK. NBK is one of the most internationally represented of all GCC banks.
The overseas network has become much larger in recent years following the investments in the Qatari and Turkish associates and the acquisition of Al Watany Bank of Egypt. Unlike start ups or organic growth through single branches in individual countries which lack a meaningful customer deposit base, these investments provide NBK with stronger growth prospects than start ups and organic growth through single branches in individual countries. as these tend to lack a meaningful local customer deposit base.
More recently, NBK also received the necessary approvals to open a new majority-owned bank in Syria, a growing banking market. At home NBK has a strong position in all segments of the non-Islamic banking market. With the growing stake in Islamic lender Boubyan Bank and the widening product offering at the investment banking arm, NBK Capital, NBK has been able to compensate for the limited growth opportunities for its traditional domestic banking products.
Global Arab Network
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