Kuwait - Moody's Investors Service has affirmed Warba
Bank’s Baseline Credit Assessment (BCA) and the adjusted BCA at ‘ba3’, and changed the outlook to ‘Stable’ from ‘Positive’.
The bank’s long-term and short-term deposits were affirmed at ‘Baa2’ and ‘P-2’, respectively, according to a stock exchange filing on Sunday.
“The affirmation of Warba Bank's Baa2 long-term deposit ratings reflects the affirmation of the bank's ba3 BCA and an unchanged four notch government support uplift underpinning the rating agency's expectation of a very high probability of government support,” according to the rating agency's report.
Warba Bank’s BCA rating was endorsed by its robust liquid resources with liquid assets representing 21% of tangible banking assets as of December 2019. The rating also highlights the bank’s adequate capitalisation with tangible common equity/risk-weighted assets of 12.4% as of December 2019.
The change in the outlook captures Moody’s expectations that the pressures on the operating environment in Kuwait due to the dual shock of the coronavirus (COVID-19) outbreak and the prolonged falling oil prices will neutralise for the foreseeable future the positive pressures on the bank’s BCA.
In 2019, the Kuwaiti lender recorded a 30% year-on-year (YoY) profit increase at KWD 16.5 million ($53.94 million), compared to KWD 12.74 million ($41.65 million) in 2018.
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