Wednesday 09, August 2017 by William Mullally

Industrial Bank of Kuwait’s ratings affirmed

Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, announced that it has affirmed the Financial Strength Rating (FSR) of the Industrial Bank of Kuwait (IBK) at ‘A’. The rating is supported by the Bank’s very strong liquidity, stable long-term funding base, and robust capital position, as well as excellent asset quality. Also supporting the rating is the Bank’s good profitability at both the operating and net level despite the continuing high cost of credit ongoing provisioning.

The main constraints to the rating are IBK’s specialised nature together with the low demand for financing for industrial development in Kuwait and the resulting concentrations in its asset base, although these are natural in a business model where there will always be a low number of loans but where most will be high value. In view of the significant government ownership, the state funding line in place, and IBK’s importance to the industrial sector in Kuwait, the Support Rating is maintained at ‘2’, reflecting a very high likelihood of support in case of need from the Kuwaiti government.

For this reason, IBK’s Long- and Short-Term Foreign Currency Ratings (FCRs) are affirmed at ‘A+’ and ‘A2’ respectively. The Outlook for all ratings remains ‘Stable’. Given the size of the Bank (total assets of KWD714mn – USD2.3 billion at end March 2017) and its specialised nature, the ratings are unlikely to rise above the current level.