Moody's Investors Service has raised to A2 from A3 the Long-Term foreign currency deposit rating for Kuwait Finance House (KFH). This action places the bank's rating at the country ceiling for foreign currency bank deposits in Kuwait. The bank's Prime-2 Short-Term deposit rating and D+ financial strength rating are not affected by this action.
According to Moody's, the rating improvement was triggered by the recently-enhanced regulatory and supervision oversight for Islamic banks in Kuwait, coupled with steps taken by KFH itself in its effort to be regulatory compliant. Moody's explains that the passing of the new
Islamic Banking Law by the Kuwaiti parliament in 2003 and the recent inclusion of KFH under the direct regulation and supervision of the Central Bank of Kuwait have given the rating agency added confidence with regard to timing of external support should KFH need assistance.
Moody's notes that KFH, which is 44.3% owned by the government, has a strong business franchise, particularly in customer deposits where it has an approximate 22% share of the market. This franchise is augmented through a complementary domestic and foreign value chain of affiliates that originate and service Islamic-based financial products. KFH also enjoys franchise leadership in auto and real estate financing in Kuwait, and is well known and respected in regional and international markets.
Moody's notes that, although new entrants will gradually raise competition for Islamic deposits and financing business, it believes KFH has implemented a series of core strategic franchise improvements in preparation for eventual competition within its market space and is
expected to cope well.
Kuwait Finance House is headquartered in Kuwait City, Kuwait, and had total group assets of KWD 3.4 billion ($11.4 billion) as at 30th June 2004. (menareport.com)
© 2004 Mena Report (www.menareport.com)
