NBK benefits from 'flight of fancy' amid MidEast unrest

Fitch Ratings says National Bank of Kuwait is expected to generate sound profits throughout 2011
NBK benefits from 'flight of fancy' amid MidEast unrest
National Bank of Kuwait
By Andy Sambidge
Tue 28 Jun 2011 07:59 PM

Fitch Ratings on Tuesday said the National Bank of Kuwait (NBK) had benefited from a "flight to safety" during crises elsewhere in the Middle East and North Africa.

As a result, the bank had a strong and stable deposit base, both retail and corporate, the ratings agency said in a new report.

It affirmed NBK's long-term issuer default rating (IDR) at 'AA-' with a stable outlook, reflecting the bank's "leading domestic franchise, consistent profitability, sound asset quality, conservative risk profile and low funding costs".

Fitch added that NBK's IDRs reflected the extremely high probability of support from the government of Kuwait, should it be required.

The rating agency said NBK had maintained sound profitability ratios in 2010, with net income 13.6 percent higher, assisted by a marked reduction in impairment charges.

It said net income continued to grow in the first quarter of 2011, adding that the bank was expected to generate sound profits throughout the year despite the more difficult conditions in certain Middle East markets.

NBK reported a slight improvement in loan quality ratios during 2010, with non-performing loans at 1.7 percent of the total. Past due but not impaired loans continued to fall in 2010.

NBK is the largest bank in Kuwait, with a market share of around 30 percent of loans and deposits.

It offers retail, private and corporate banking via a  domestic network of 71 branches. It also has an extensive international network in major financial centres worldwide and elsewhere in the Middle East.

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