Kuwait – Mubasher: Moody's Investors Service assigned A3 long-term deposit ratings to Commercial Bank of Kuwait (CBK) with Outlook Stable.
The A3 long-term deposit ratings incorporate four notches of support uplift from the bank's ba1 standalone baseline credit assessment (BCA), reflecting Moody’s view of a very high probability of government support in the event of need. The bank's short-term deposit rating is Prime-2.
Furthermore, Moody’s assigned a Counterparty Risk Assessment (CR Assessment) of A2(cr)/Prime-1(cr) to CBK.
. CBK's ba1 BCA reflects elevated credit risks, as indicated by high credit concentrations and significant provisioning charges in recent years; in addition to strong core profitability and efficiency but modest bottom-line earnings.
The bank's ratings also reflect its comfortable liquidity supported by a deposit-based funding structure and solid capitalisation (with tangible common equity to risk-weighted assets of 16.4% as of end-2015).
Even though asset quality has been stable in Kuwait, a further sustained reduction in oil prices will negatively affect business confidence, noted Moody’s report.
