Standard & Poor (S&P)'s Ratings Services raised its long-term counterparty credit and certificate of deposit ratings on National Bank of Kuwait (NBK) to A from A- and on Commercial Bank of Kuwait (CBK) to BBB+ from BBB.
At the same time, S&P's affirmed its A-2 short-term counterparty credit rating on CBK. The outlook on the two banks is stable. In addition, the rating agency revised its outlook on Gulf Investment Corporation (GIC) to positive from stable, and affirmed its BBB+/A-2 ratings on the bank.
"The upgrade of CBK mainly reflects the bank's improving asset quality and financial performance. The changes in management structure and operations of prior years are bearing fruit for CBK, which is now in a position to sustain satisfactory performance and balanced growth in the medium term," said S&P's credit analyst Anouar Hassoune.
The ratings on Kuwaiti banks benefit from the protected competitive environment, the government's supportive policy toward the banking sector, and the excellent risk-reward balance of the domestic retail market. The banks face a major challenge, however, as they operate in an essentially mono-industrial country, which is highly sensitive to oil-price fluctuations and which has restricted banking opportunities due to a limited number of customers.
The stable outlook on NBK and CBK mainly reflects the banks' strong commercial and financial profile, also taking into account the embedded risk of operating not just in a volatile region, but also in a country that is primarily dependent on oil production and refining. Overall, NBK's preeminent domestic position appears untouchable, enabling the bank to mitigate risks linked to the restricted playing field of the non-oil private sector. The stable outlook on CBK anticipates stability in its financial performance and asset quality. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
