Moody's cuts Kuwait Finance House

Moody's Investors Service said it lowered Kuwait Finance House's baseline credit assessment to Baa2 from Baa1. The bank's local- and foreign-currency, long-term and short-term issuer ratings remain unchanged at Aa3/prime-1.

The outlook remains stable.

The ratings reflect the difficult market conditions all Kuwaiti banks continue to operate in, despite heavy government spending in recent months, Moody's said.

The ratings also consider deteriorated asset quality and mounting provisioning needs, the bank's declining core profitability compared with the costs of sector concentration risks that have arisen and still significant exposures to the volatile real estate sector, the agency said.

The unchanged ratings reflect the company's structural strengths, including robust capitalization, strong franchise value and ample liquidity, even during times of stress, Moody's said.

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