Jun 28 2011 |
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PRESS RELEASE: Fitch Affirms Gulf Bank at 'A+'; Outlook Stable
Tuesday, Jun 28, 2011
The following is a press release from Fitch Ratings:
Fitch Ratings-London-28 June 2011: Fitch Ratings has affirmed Gulf Bank 's (GB) Long-term Issuer Default Rating (IDR) at 'A+' with a Stable Outlook, Short-term IDR at 'F1', Support Rating at '1' and Support Rating Floor at A+'. The Individual Rating is affirmed at 'D/E'.
The affirmation of the Long- and Short-term IDRs, Support Rating Floor and Support Rating reflect Fitch's assessment that there is an extremely high probability that state support would be provided to GB if needed. Support provided by the Kuwaiti authorities has traditionally gone beyond that provided by other governments in the region.
The bank's Individual Rating reflects the improvements made by the bank's new management since 2009, which include progress in strengthening the balance sheet and a greater focus on the bank's core business. It also reflects asset quality problems, which will require time to work through, although Fitch's expectation is that improvements in both profitability and asset quality will continue. In Fitch's opinion, capitalisation seems somewhat tight given the reducing, but still sizeable volume of unreserved impaired assets to the bank's reported equity.
The loan book contracted in 2010, mainly due to write-offs of impaired loans, although, loan growth was sluggish across the Kuwaiti banking sector. Impaired loans dropped sharply in 2010, mostly because of the write-offs. The main concentrations in impaired lending were in real estate and loans to domestic investment companies; both sectors that are problematic for most Kuwaiti banks. Despite the write-offs, the impaired loan ratio was still high at 16.7% at end-Q111 (19% at end-2010). Reserve coverage of 33% at end-2010 is low by domestic and regional standards, even though impaired loans are fairly well collateralised; including collateral, coverage levels reached 97% at end-2010. Collateral consists largely of shares traded on the Kuwaiti stock exchange and mainly domestic real estate.
Contact:
Primary Analyst
- Laila Sadek
- Director
- +44 20 3530 1308
- Fitch Ratings Limited
- 30 North Colonnade
- London E14 5GN
Secondary Analyst
- Philip Smith
- Senior Director
- +44 20 3530 1091
Committee Chairperson
- Michael Steinbarth
- Senior Director
- +44 20 3530 1367
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com; Mark Morley, London, Tel: +44 0203 530 1000, Email: mark.morley@fitchratings.com; Hannah Warrington, London, Tel: +44 20 3530 1153, Email: hannah.warrington@fitchratings.com.
Additional information is available on www.fitchratings.com
Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 16 August 2010, and 'Short-term Ratings Criteria for Corporate Finance', dated 2 November 2010, are available at www.fitchratings.com.
Applicable Criteria and Related Research:
- Global Financial Institutions Rating Criteria
- http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
- Short-Term Ratings Criteria for Corporate Finance
- http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=568726
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
(END) Dow Jones Newswires
28-06-11 0908GMT
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