Capital Intelligence (CI) has affirmed Burgan Bank's Financial Strength Rating (FSR) of 'BBB', on the basis of the improved asset quality [notwithstanding the increase in non-performing loans (NPLs) in the current year], the comfortable liquidity, and the successful Perpetual Tier 1 issue in September of this year.

A bourse filling stated that , the FSR is constrained by Burgan Bank's high indirect exposure to non-investment grade sovereigns through operating subsidiary banks, by large and considerably increased exposure to related parties and by the significant customer concentrations in both loans and customer deposits (although this is to an extent systemic).

Also constraining the FSR is still modest net profitability, despite the rebound in the first nine months of this year and the ongoing difficult regional operating environment.

Notwithstanding that the bank's NPL ratio rose slightly and loan-loss reserve (LLR) cover slipped in the first nine months of this year, CI nonetheless maintains the 'Positive' Outlook for the FSR on the basis of the current rights issue underway, added the statement.

Burgan Bank, currently Kuwait's second largest conventional commercial bank by consolidated assets, is majority owned by Kuwait Projects Company Holding (KIPCO), one of the largest diversified holding companies in the MENA region , noted the statement.