NBK becomes highest rated bank in emerging markets globally
Moody's Investors Service, the global credit rating, research and risk analysis firm, adjusted National Bank of Kuwait’s (NBK) financial strength rating (FSR) to a 'B-' from a ‘C+’.
Moody's Investors Service, the global credit rating, research and risk analysis firm, adjusted National Bank of Kuwait’s (NBK) financial strength rating (FSR) from a ‘C+’ to a ‘B-’.
The positive adjustment in the bank’s rating is considered the highest rating of its kind amongst banks in emerging markets. “This positive development places NBK as the single, highest rated bank in all emerging markets globally. It is a reflection on the bank’s sound quality, management and clear strategic direction,” George Nasra, general manager of investment banking, asset management and treasury group at NBK, told ITP.net.
Moody’s rating mirrors the bank’s fundamental safety and does not incorporate the likelihood of any external support. The (B-) rating also indicates NBK’s strong intrinsic financial strength, a valuable and defensible business franchise, good financial fundamentals and a predictable and stable operating environment. “The action reflects a re-calibration of the prior FSR rating scale, to incorporate a broader distribution of ratings that are available under the new FSR scale. It is the highest FSR assigned to any Arab bank,” Hank Calenti, vice president and senior analyst at Moody’s Investors Service’s regional Cyprus office, told ITP.net.
Bank-specific analytical factors considered in the assignment of FSRs include: franchise value, earning power, risks (credit, market, liquidity, funding, operational and reputation). Other elements include a bank’s management, economic capitalization, corporate governance, management priorities and strategies as well as the quality and stability of the entity’s operating environment.
According to Calenti, aside from the operating environment, the fundamental factors that may influence NBK's position in the medium term include; “the bank’s strong management team that includes substantial depth and breadth of knowledge and experience, longevity and cohesion as a functioning team; steady emphasis on technology and ability to harvest revenue from investments in technology; phenomenal financial strength and financial fundamentals; and well thought-out, yet cautious regional expansion plans.”
NBK, reported $330 million in net profit for 2000, up 7.6% from the previous year, with a return on equity increase to 25.3%. The bank’s profitability is in tact despite volatile oil prices. Fitch IBCA, another international rating agency has also upgraded NBK to (A) for both long and short-term foreign currency.
Moody’s FSR rating symbols are A, A-, B+, B, B-, C+, C, C-, D+, D, D-, E+, E. The rating agency has also adjusted the FSR for: Bank of Kuwait and the Middle East KSC (D-), Commercial Bank of Kuwait (D+), Gulf Bank (C-), Gulf Investment Corporation (D+), and Kuwait Finance House (D+).