Rating actions follow downgrade of the Kenyan sovereign rating.
Moody's Investors Service has downgraded to B2 (stable outlook), from B1 (Rating Under Review outlook), the long-term local currency deposit ratings of three Kenyan banks: KCB Bank Kenya Limited (KCB Bank), Equity Bank Kenya Limited (Equity Bank), and Co-operative Bank of Kenya Limited (Co-op Bank). Moody's has also downgraded the baseline credit assessments (BCAs) of the three banks to b2, from b1.
The rating actions conclude the review for downgrade initiated on four October 2017 on the three Moody's-rated banks and follows the weakening of the Kenyan government's credit profile, as captured by Moody's downgrade of the sovereign rating on 13 February 2018. Although Moody's notes that rated Kenyan banks' credit profiles are underpinned by strong capital and profitability metrics as well as solid deposit-based funding profiles, the rating agency views the sovereign credit profile as a key factor driving banks' creditworthiness given their elevated balance sheet exposure to the sovereign.