Kuwait – Mubasher: Moody's Investors Service confirmed the long-term deposit ratings of National Bank of Kuwait (NBK) at Aa3 and Kuwait Finance House (KFH) at A1 and assigned negative outlooks for the two banks' deposit ratings.
Moody's has confirmed both banks' Counterparty Risk Assessments (CR Assessment) at Aa2(cr) and A1(cr) respectively, it said in a statement published on its official website.
The banks’ negative outlook reflects the negative outlook on the sovereign rating, highlighting Kuwait's fiscal pressures, which may weaken its capacity to provide support in the future, Moody’s said on Monday.
“The negative outlook on the sovereign rating reflects Moody's view that there remain material uncertainties around the Kuwaiti government's ability to effectively implement its fiscal and economic reform program, which has the stated objective of diversifying and enhancing the economic base and its budgetary revenues,” the statement revealed.
Furthermore, Moody's confirmation of NBK’s and KFH’s ratings is underpinned by the government’s continued capacity to provide support when there is a need, as indicated by the confirmation of Kuwait's Aa2 rating on 14 May 2016 with a negative outlook.
The sovereign action reflects Moody's view that despite the negative effect of a prolonged low oil prices on the economy, government finances and external strength, the sovereign's overall credit profile remains consistent with a Aa2 rating.
Monday’s action concludes Moody’s review on the banks' ratings that was initiated on 7 March 2016.
