Moody's affirms NBK rating, downgrades Burgan Bank

BANK RATING: Moody's affirmed NBK's Aa2 long term deposit rating. (ITP Images)

Moody’s on Wednesday affirmed National Bank of Kuwait’s (NBK) Aa2 long term deposit rating, while downgrading Burgan Bank to A2 from A1 amid weakening credit conditions.

NBK's strong capital base, market leadership and strong management team are among the factors that place the bank “a class above its domestically rated peers”, Moody’s said.

However, the ratings agency downgraded the bank’s financial strength rating to C+ from B- on concerns over its exposure to the real estate and construction sectors, and the corporate sector’s exposure to the country’s embattled investment companies.

The lowering of Burgan’s deposit rating was prompted by a downgrade of its financial strength rating to D+ from C-.

“Moody's rating action reflects weakening credit conditions in Kuwait over the past 12 months, the poor performance of the Kuwaiti stock exchange…coupled with Burgan's elevated single-party and industry concentrations to sectors that have experienced pressure over the past year,” Moody’s said.

Those sectors include construction and real estate, investment companies and lending for purchasing securities.

Bank deposit ratings reflect Moody’s opinion of a bank’s ability to repay its currency deposit obligations on time.

The bank financial strength rating is a measure of the likelihood that a bank will require assistance from third parties, such as its owners.

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