GCR has retained KCB Bank’s (Kenya) long-term credit rating at AA and short-term’s at A1+ with a stable outlook, for the fourth straight year.
The rating, the highest by GCR in Kenya, boosts any effort by KCB to raise capital.
KCB’s total capital to risk-weighted assets ratio dropped to 17.0 per cent in March 2017 from 18.1 per cent against a statutory minimum of 14.5 per cent, while core capital ratio (tier one capital) dipped to 14.1 from 17.1 per cent against 10.5 per cent minimum.
This still gives KCB some cushion against loss on its assets without adversely impacting its growth and earnings according to GCR.
“The accorded ratings reflect KCB Bank’s established domestic market position, risk appropriate capitalisation, sound liquidity position, resilient earnings performance and support from its shareholders,” GCR said in a statement.
“However, IFRS 9 (set to be implemented in 2018) is expected to lead to higher provisioning and earlier recognition of credit losses. KCB management expects a transitional increase in balance sheet provisions in line with IFRS 9 requirements.”
KCB has hired an undisclosed consultants who are helping it assess the likely impact of the new standards on the bank’s earnings and statutory capital ratios.
“This is a signal that the operational excellence that we have been instituting as well as robust structures and systems we have in place are paying off,” KCB Group chief executive Joshua Oigara said of the rating.