Standard & Poor's ratings agency announced that it had affirmed its 'A-/A-2' long- and short-term counterparty credit ratings on Kuwait Finance House (KFH). The outlook is Negative. This reflects the agency’s view that the bank's well-established divestment plan could have a positive impact on its capitalization, although the current operating environment may constrain the execution of this strategy. KFH holds a significant amount of noncore assets, made up primarily of equity and real estate investments, some of which it plans to sell over the next one to two years. KFH has established clear targets for divestments of noncore assets and expects to free up a significant amount of capital over the next three years. The ratings also reflect KFH's business position, that the agency views as adequate, balancing its leading domestic Islamic finance franchise against the historical volatility in its revenues stemming from significant exposure to the real estate sector (both on the trading and lending sides) and the difficult operating conditions in some core markets. The Negative outlook reflects the balance between the bank's commitment to disposing of noncore assets, and the potential positive impact of this on its capitalization, against S&P’s view that the current operating environment may impose major constraints on the execution of this strategy. (S&P)