East African Development Bank will likely maintain robust capital buffers, prudent liquidity levels and remain resilient to shocks going forward, credit rating agency Moody’s has said.
While affirming the credit rating of the institution in which Kenya has a shareholding, Moody’s said capital and liquidity levels are likely to remain broadly unchanged in the medium term. The agency gave the bank a Baa3 long-term issuer rating and a stable outlook.
“Moody's decision to affirm the rating reflects its expectation that EADB will maintain robust capital buffers, and prudent liquidity levels, which support the bank's resilience to shocks,” said the agency in a statement.
Despite keeping the rating at the same level, impairment of loans and a still-evolving risk management framework will continue to pressure down the credit rating, Moody’s added.
“This is offset by weak asset quality, a deterioration in asset performance in recent years, as highlighted by relatively high and fluctuating non-performing loans (NPLs), and a developing risk management framework, which continue to weigh on EADB's credit profile,” said the rating agency.
The creditworthiness of the countries that are shareholders have also been raised as an issue that will continue to affect the regional bank. The main owners of the institution include not only Kenya but also Uganda, Tanzania, Rwanda who hold Class A shares. None of the countries that hold Class A shares have an ‘A’-linked credit rating with Kenya at B2, Uganda at B2, Tanzania at B1 and Rwanda at B2.
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