Kuwait Times, Thursday, Dec 24, 2020 | Jamadi Al Awwal
9, 1442
Fitch Ratings affirms KIB’s long-term IDR at ‘A+’ with a stable outlook
Kuwait:
Fitch Ratings, one of the leading global credit ratings agencies, has
affirmed Kuwait International Bank (KIB)’s Long-term Issuer Default Rating (IDR)
at ‘A+’ and viability rating (VR) at “bb-“, with a stable outlook. This stable
outlook on KIB’s long-term IDR reflects the outlook on the Kuwaiti sovereign
rating. In its report issued on 22 December 2020, Fitch stated that KIB’s Issuer
Default Ratings (IDRs) reflect an extremely high probability of support from the
Kuwaiti authorities, if needed.
This considers Kuwait’s strong ability to provide support to domestic banks, as
reflected by its sovereign rating (AA/Stable) and strong willingness to do so
irrespective of the banks’ size, franchise, funding structure and the level of
government ownership. Fitch also added that key rating drivers include stable
funding, nominal domestic franchise, higher risk appetite, asset quality and
profitability under pressure, adequate but declining capitalization.
Fitch stated that the bank’s fast growth and the implementation of Basel 3 have
reduced capitalization levels and buffers over minimum requirements but capital
ratios continue to compare well with peers. KIB successfully issued a $300
million perpetual Tier 1 sukuk in June 2019 and a $300 million Tier 2 sukuk in
November 2020 to boost its total capital adequacy ratio and fund its growth.
Fitch mentioned that the Central Bank of Kuwait operates a strict regime with
good oversight, sound supervision and active monitoring ensuring compliance with
prudential limits. These include Basel III capital, leverage and liquidity
requirements, as well as financing caps and best practice corporate governance
requirements. According to Fitch, a stronger franchise and better profitability,
lower financing growth and concentrations, as well as a record of stable asset
quality would be positive for the VR.
Commenting about the ratings, Sheikh Mohamed Jarrah Al-Sabah, Chairman of KIB,
said: “This recently released credit rating reflects KIB’s distinctive position
and highlights our strong financial position, as well as our sound growth and
investment strategy. This rating is also in line with Fitch’s report on the Tier
2 Sukuk final “A-” rating – Fitch has also assigned final A+’/’F1′ long- and
short-term ratings, respectively, to the program, which will apply only to
senior unsecured certificates to be issued under the under the umbrella of this
issuance program.”
Al-Jarrah stressed that these distinct ratings help KIB achieve its strategic
objectives. “In addition to consolidating its position as a leading Islamic Bank
over the long term, Fitch’s ratings help boost the trust of our customers and
shareholders and enhance the Bank’s reputation in the market, which unlocks many
growth opportunities in the near future,” he said.
Raed Jawad Bukhamseen, Vice Chairman and CEO of KIB, said: “The reality is that
the global banking industry must evolve in a way that is compatible with the
future. From our side, we are committed to stay ahead of the curve and keeping
up with the rapid pace of change in our industry, which is why we made major
investments in upgrading our IT infrastructure, streamlining systems and
processes, and restructuring our operational model to provide customers with an
enhanced digital experience. We believe that this will eventually contribute
towards expanding our customer-base, thereby promoting the Bank’s long-term
growth and stability.”
Bukhamseen further added: “We have always been proud of our success and notable
industry track record, in addition to having garnered numerous regional and
international awards. For example, in 2020, we were honored to be recognized as
the “Fastest Growing Islamic Bank MENA” and the “Best Shari’a Complaint Bank
MENA” by CFI.co, for the fourth and fifth years respectively. We are also proud
to have recently picked up the “Most Secure Bank in Kuwait” Award and the “Best
Islamic Bank” Award from World Finance, the latter being an award we have now
received for the seventh consecutive time.”