Fitch Ratings has downgraded the Long-Term Issuer Default Ratings (IDRs) of three domestically-owned Kenyan banks (KCB Bank Kenya Limited, NCBA Bank Kenya Plc and I&M Bank LIMITED) and their bank holding companies (BHCs; KCB Group PLC, NCBA Group PLC and I&M Group Plc) to 'B-' from 'B'. The Outlooks are Stable. Fitch has revised the Outlook on foreign-owned Stanbic Bank Kenya Limited's (SBK) Long-Term IDR to Stable from Negative and affirmed the IDR at 'B'. A full list of rating actions is below.
The rating actions follow the downgrade of Kenya's Long-Term IDRs to 'B-' from 'B' on 2 August 2024 (see: Fitch Downgrades Kenya to 'B-'; Outlook Stable). The downgrades of the domestically-owned banks and BHCs are driven by the downgrades of their Viability Ratings (VRs) to 'b-' from 'b', which reflect the issuers' high sovereign exposure relative to capital and the concentration of their activities in Kenya.
The downgrades of KCB Bank and NCBA Bank are also driven by the downgrades of their Government Support Ratings (GSRs) to 'b-' from 'b', which reflect the government's weaker ability to provide support, if required, as indicated by the recent sovereign downgrade.
The affirmation of SBK's Long-Term IDR, which is now one notch above the sovereign Long-Term IDRs, reflects our view that the bank would retain its capacity to service its obligations in case of a sovereign default and that no restrictions would be imposed by Kenya's government to prevent SBK doing so. This is due to its intrinsic strength, as indicated by its VR of 'b', and potential shareholder support, as indicated by a Shareholder Support Rating (SSR) of 'b' (the level of Kenya's Country Ceiling), both above the sovereign Long-Term IDRs.
The issuers' National Ratings are unaffected by the sovereign downgrade.
