S&P: Kuwait's banking system strong

Standard & Poor's said it ranks Kuwait's banking system in Group 4 of its Global Banking Industry Country Risk Assessment, reflecting the system's strong financial profile, the protected business environment in which banks operate, and the supportive economic environment.

Offsetting these positives are the country's limited economic diversification, rapid and untested loan growth, high exposure to the real estate and stock markets, and increasing competition in Kuwait, S&P said.

In addition, S&P said its assessment of the banking system in Kuwait (AA-/stable/A-1+) takes into account the government's interventionist approach toward the system and the high likelihood of support of systemically important private sector banks in case of need, therefore uplifting the ratings on Kuwaiti banks above their stand-alone creditworthiness.

With total banking assets of $129.7 billion at Dec. 31, 2007, the Kuwaiti banking system is the Gulf Cooperation Council's third largest, the agency said.

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