In its latest report on National Bank of Kuwait (NBK), the credit rating agency Moody’s said that NBK’s financial strength rating reflects the “bank's dominant position in its domestic market, strong financial metrics, resilient asset quality, and good capitalization levels.” The agency added: “The rating also reflect our view of the strength and depth of NBK’s management team and its clear strategy.”
Moody’s in the report issued recently stressed that “NBK's asset quality has exhibited a level of resilience unparalleled by its domestic peers. In particular, as of September 2011, the bank's NPLs/Gross loans ratio improved further to 1.59% from 1.65% at YE2010 and compared to a system average of around 7%. The bank also maintains a substantial provision buffer with provisions exceeding 200% of problem loans. NBK has been able to maintain robust asset quality metrics despite the deterioration seen by other Kuwaiti banks”.
Moody’s pointed out that “NBK’s entrenched and stable franchise is quite defensible”. NBK’s international operations provide some asset diversification,” the agency added. “In comparison with its domestic peers, the depth and diversity of NBK’s business lines enhance its revenue diversification.”
The agency added that NBK enjoys a stable deposit base, an excellent reputation and “would be among those benefiting from “flight to quality” in the event of non-intrinsic systemic problems.” NBK also “continues to enjoy excellent cost efficiency metrics by international standards”.
Moody’s said that credit conditions in Kuwait have remained subdued during 2011 for the third consecutive year. “Domestic prospects for 2012 continue to depend on the level of implementation of the government’s expansionary fiscal policy”.
Moody's said that “NBK is the largest financial institution in Kuwait, with a market share of just under 30% of consolidated system assets (as at YE2010). The bank is particularly dominant in terms of retail operations in which it reportedly captures around 35% of consumer credit, and around 40% of overall Kuwaiti salary accounts”.
Moody’s added that NBK’s “corporate lending is equally strong” and “the bank is the leader in trade finance in Kuwait and one of the few indigenous banks with the capacity to structure and underwrite large capital market transactions”.