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South Africa rating agency stops KCB grading

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A KCB branch. Last week, Fitch Ratings accorded the bank a stable outlook on solid earnings and strong capital buffer. FILE PHOTO | NMG

Global Credit Ratings (GCR) has halted its ratings and analytical coverage for KCB Bank Kenya #ticker:KCB, the Johannesburg-based agency has announced.

GCR said the withdrawal was at the client’s request.

KCB in an email response to the Business Daily on Wednesday termed the withdrawal as an ordinary business decision.

Prior to the withdrawal, GCR had affirmed the lender’s rating of AA(KE) giving it a stable outlook. Last week, Fitch Ratings accorded the bank a stable outlook on solid earnings and strong capital buffer.

“GCR has affirmed and withdrawn KCB Bank Kenya long-term and short-term national scale ratings of AA(KE) and A+(KE) respectively; with the outlook accorded as stable,” the agency said.

The agency said the affirmed ratings reflect KCB Bank’s stable credit profile underpinned by an established domestic market position, risk-appropriate capitalisation, sound liquidity position, resilient earnings performance and support from its shareholders.

READ: KCB posts Sh5bn net profits in 3 months

The bank reported total and Tier 1 capital adequacy ratio of 16.1 per cent and 14.9 per cent in 2017, which were well above regulatory capital minimum of 14.5 per cent and 10.55 per cent respectively.

An assessment on the impact of IFRS 9 conducted with the help of external consultants reported an expected reduction of core capital by Sh11 billion to Sh16 billion and a reduction of Sh3 billion in supplementary capital to Sh5 billion.

GCR said the bank’s asset quality remained under pressure in the period under review with gross non-performing loans rising to 8.5 per cent of gross loans in 2017 from 7.8 per cent in 2016.

It also said the lender’s bad debts recovery increased from Sh0.6 billion to Sh3.2 billion in 2017.

KCB Bank was established on January 1, 2016 as a result of the corporate restructuring of KCB Group Plc, which prior to January 2016 operated both as a licensed bank and a holding company for its subsidiaries.