Mortgage rates kick off new year with a drop

Fitch affirms kuwait finance house at a+; outlook stable


´╗┐(The following statement was released by the rating agency) LONDON/BANGKOK, September 09 (Fitch) Fitch Ratings has affirmed Kuwait Finance House's (KFH) Long-term Issuer Default Rating (IDR) at 'A+' with a Stable Outlook. The Viability Rating (VR) has been affirmed at 'bb'. A full list of rating actions is at the end of this comment. KEY RATING DRIVERS - IDRs, SUPPORT RATING AND SUPPORT RATING FLOOR KFH's IDRs, Support Rating and Support Rating Floor reflect Fitch's view that there is an extremely high probability of support being provided by the Kuwaiti authorities, if needed. Fitch's assessment of support is based on Kuwait's financial strength (AA/Stable), KFH's government-related shareholders, the bank's importance within the domestic banking system and the long-standing track record of support by the authorities for the Kuwaiti banking system. RATING SENSITIVITIES - IDRs, SUPPORT RATING AND SUPPORT RATING FLOOR A change in the IDRs, Support Rating and Support Rating Floor would result from a change in Fitch's assessment of the ability or willingness of the Kuwaiti authorities to support KFH. RATING DRIVERS -VR The VR reflects the high sector concentrations in KFH's loan portfolio and the bank's weak asset quality and profitability. Capitalisation strengthened in H113, following a KWD319.5m rights issue. However, capital remains only adequate in light of on-going asset quality issues. On the positive side, the rating also takes into account KFH's dominant domestic franchise and strong funding profile. The bank's efforts to restructure and streamline its business, and strengthen and integrate risk management, support the affirmation. A significant proportion of KFH's financing, leasing and direct investment portfolio is exposed to higher-risk sectors, in particular construction and real-estate - a common feature of the Kuwaiti banking sector, which reflects the relatively undiversified nature of the wider economy. In addition, the bank has a complex organisational structure, and historically lacked a coordinated approach to risk management of its various divisions, subsidiaries and affiliates, making it more difficult to get a clear view of potential risks. These issues should to some extent be addressed by the restructuring. Profitability strengthened in 2012 and in H113, with net profit up about 29% yoy in H113 as positive trends in business volumes and growth in operating income - both interest and non-interest income - continued. However, overall profitability continues to lag peers' as impairment charges depress net income. Impairment charges were KWD103m in H113, absorbing about 60% of pre-impairment operating profit attributable to shareholders (ie after deducting profit paid to depositors). KFH's asset quality remains weaker than that of peers and problematic exposures will take time to work through. The improvement in asset quality indicators in 2012 was due to significant write-offs of problematic assets, which more than compensated for a continued flow of financing becoming impaired. The impaired financing ratio was 9.5% at end-H113 (from 7.7% at end-2012), although this percentage also includes loans the bank has restructured. Reserve coverage of impaired financing at 58% at end-H113 was also relatively weak. Funding is supported by KFH's strong deposit franchise, especially in the retail segment. The deposit base is more diversified than that of many of the bank's peers. Capital has improved following a KWD319.5m rights issue in H113. The bank's Tier 1 capital ratio was 16.1% at end-H113 (end-2012: 13.6% with a Fitch core capital ratio of 12.1%). Fitch notes that while KFH's capital position has improved, the bank would still benefit from a higher cushion, in light of its high exposure to potentially problematic sectors. RATING SENSITIVITIES - VR Downside pressure on the VR would result from deterioration in the domestic operating environment, if it were to adversely affect KFH's asset quality and erode capital from its current level. In addition, downside pressure could arise if recent management changes do not continue to drive improvements in operational control and coordinated risk management. Upside potential would require a significant improvement in asset quality and continued strengthening of the bank's capitalisation. KFH is Kuwait's largest Islamic bank, and second-largest bank overall, benefiting from a sound franchise in both corporate and retail banking. It has several domestic subsidiaries and associates involved in Islamic banking and insurance, real estate and investments and subsidiaries in Malaysia, Saudi Arabia, Bahrain and Turkey. Listed on the Kuwait Stock Exchange, the Kuwaiti government holds a 49% stake in the bank via several public institutions. The rating actions are as follows: Long-term IDR affirmed at 'A+'; Stable Outlook Short-term IDR affirmed at 'F1' Viability Rating affirmed at 'bb' Support Rating affirmed at '1' Support Rating Floor affirmed at 'A+' Contact: Primary Analyst Laila Sadek Director +44 20 3530 1308 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Redmond Ramsdale Director +971 4424 1202 Committee Chairperson Philip Smith Senior Director +44 20 3530 1091 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.this site Additional information is available on this site Applicable criteria, 'Global Financial Institutions Rating Criteria' dated 15 August 2012, and 'Evaluating Corporate Governance' dated 12 December 2012, are available at this site. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Evaluating Corporate Governance here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW. FITCHRATINGS. COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Goldman to create new credit finance group


´╗┐Goldman Sachs Group Inc (GS. N) will create a new credit finance group that combines its structured and leveraged finance divisions, according to an internal memo seen by Reuters on Wednesday. The business, which will help the bank give its clients broader advice across credit markets, will be led by former co-head of leveraged finance in the Americas Christina Minnis and head of structured finance in the Americas Vivek Bantwal. Craig Packer, who co-headed leveraged finance with Minnis, will retire from the firm after 10 years there, according to a separate memo.

A Goldman Sachs spokesman confirmed the contents of the memos.

The moves come as Goldman Sachs is trying to build up its debt underwriting capabilities. The firm ranked sixth for U.S. bond underwriting in 2015, according to Thomson Reuters data, behind banks with larger balance sheets like JPMorgan Chase & Co (JPM. N) and Citigroup Inc (C. N). Wall Street banks are under pressure to grow other sources of revenue like debt financing as bond trading, a traditional profit engine, has struggled amid regulatory changes.