KUWAIT CITY, April 7: Moody’s Investors Service said that National Bank of Kuwait’s (NBK) board of directors decision to increase the bank’s capital by 6.5%, would be positive as it enhances the bank’s capital adequacy ratios ahead of a full implementation of the Central Bank of Kuwait’s (CBK) Basel III capital requirements by the end of 2016.
In its latest credit outlook report released today, Moody’s commented on NBK’s recent capital increase announcement stressing that the additional capital w also support NBK’s business growth in Kuwait, where the government continues to execute projects related to its five-year plan to develop the private sector, despite lower hydrocarbon revenues. NBK remains a key financier of major projects in the country.
The capital increase will involve an issuance of 344 million shares at 400 fils per share to existing shareholders, and follows the CBK’s February approval of NBK increasing its authorized capital. The proposed issuance price includes an issuance premium of 300 fils per share on top of a par value of 100 fils per share.
Moody’s said that NBK is Kuwait’s largest financial institution, with an assets market share of more than 30% at year-end 2015, and total assets of KWD24 billion ($78 billion).
Moody’s added that NBK’s additional capital will be credit enhancing to NBK’s standalone financial strength because it will increase the bank’s buffers against unforeseen losses. It is worth mentioning that in 2015, NBK issued USD 700 million in additional Tier 1 securities and KD 125 million in Tier 2 subordinated bonds. The bank’s capital adequacy ratio stood at 16.8% as of end-December 2015, comfortably above regulatory requirements.
Moody’s noted that NBK’s loss-absorption capacity is further bolstered by substantial total loan-loss reserves equivalent to 322% of nonperforming loans at the end of 2015.
NBK continues to enjoy collectively the highest ratings among all banks in the Middle East from the three international rating agencies Moody’s, Fitch Ratings and Standard and Poor’s. The Bank’s ratings are supported by its high capitalization, prudent lending policies, and its disciplined approach to risk management, in addition to its highly recognized and very stable management team. NBK was also named among Global Finance’s list of the 50 safest banks in the world for the tenth consecutive time.
NBK enjoys the widest banking presence with a local and international network reaching 4 continents. NBK’s international presence spans many of the world’s leading financial centers including New York, Europe, GCC, Middle East, Singapore as well as China (Shanghai).