Fitch rates GIC IDR 'A' with outlook stable

DUBAI — Fitch Ratings has assigned ratings to Kuwait's Gulf Investment Corporation (GIC) of issuer default 'A', short-term 'F1', individual 'C' and support '1'. The outlook is stable.

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Published: Tue 26 Sep 2006, 10:00 AM

Last updated: Sat 4 Apr 2015, 1:23 PM

The issuer default, short-term and support ratings of GIC reflect the extremely high probability that the bank would be supported by its owners, the Gulf Co-operation Council states (GCC - consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) should the need arise. The Individual rating reflects its satisfactory capitalisation and cost efficiency, as well as consistent profitability and its good franchise in private equity investment. The rating also takes into account its substantial market risk exposure, and revenue volatility from its private equity investment activities.

Profitability in H1 2006 was driven by the strong performance of the bank's private equity investments, which have benefited from the benign GCC operating environment. However, revenue from private equity investment can be large and infrequent, giving revenue an element of volatility. Fees and commissions income was a modest 11 per cent of operating revenue in H1 2006, mainly from the bank's asset management activities.

Substantial market risk exposure arises from the bank's private equity investments. Potential investments undergo a rigorous due-diligence process with only a few projects taken forward. GIC has a good track record in private equity investment and losses have been limited.

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