Published on 12 February 2015
RAM Ratings has assigned AA3/Stable/P1
financial institution ratings to Kuveyt Türk Katilim Bankasi AS (the
Bank), and an AA3(s)/Stable preliminary rating to the proposed Islamic
MTN Programme of RM2.0 billion (the proposed sukuk) to be issued by the
Bank’s funding conduit, KT Kira Sertifikalari Varlik Kiralama AS. Kuveyt
Türk is the obligor of the proposed sukuk via a purchase undertaking;
the issue rating thus reflects the Bank’s credit strength.
Kuveyt Türk is the largest Islamic bank in Turkey,
with an asset base of TRY30 billion (approximately RM46 billion) as at
end-June 2014. The ratings incorporate a high likelihood of
extraordinary support from the Bank’s major shareholder, Kuwait Finance
House KSC (KFH), which owns a 62%-stake. As the second-largest bank in
Kuwait as well as its biggest Islamic bank, KFH is a systemically
important entity in Kuwait.
Kuveyt Türk is considered strategically important to
KFH. The Bank is KFH’s largest subsidiary, and contributed more than 40%
of its parent’s consolidated pre-tax profit in fiscal 2013. KFH has a
well-established track record of supporting Kuveyt Türk, including
participation in all of the Bank’s equity raising exercises,
subscription of its tier-2 capital and the provision of inter-bank
funding.
About 65% of Kuveyt Türk’s well-diversified customer
deposits stem from individuals. While Kuveyt Türk’s financing-to-deposit
ratio of 93% as at end-June 2014 is relatively high, it is still well
below the Turkish industry average of more than 110%. In addition, the
Bank has a strong liquidity profile, with a Basel III liquidity coverage
ratio of more than 100%.
Kuveyt Türk’s gross impaired-financing ratio has been
kept below 3.0% for the last 3 years, standing at 2.6% as at end-June
2014. Given its rapid financing expansion (CAGR of 36% between 2009 and
2013), the Bank’s financing portfolio is relatively unseasoned. This,
together with the Bank’s large exposure to SMEs, means that the
challenging macroeconomic backdrop in Turkey could affect its asset
quality. However, its impairment charges are expected to be comfortably
absorbed by its broad margins. In 1H fiscal 2014, Kuveyt Türk recoded a
credit-cost ratio of 0.7% while its net financing margin came up to 4%.
The Bank’s capitalisation is sound, with a Basel III common-equity
tier-1 capital ratio of 13% as at end-June 2014.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.