AGL 40.01 Decreased By ▼ -0.01 (-0.02%)
AIRLINK 187.98 Increased By ▲ 9.91 (5.57%)
BOP 10.12 Increased By ▲ 0.16 (1.61%)
CNERGY 7.11 Increased By ▲ 0.17 (2.45%)
DCL 10.15 Increased By ▲ 0.06 (0.59%)
DFML 41.57 No Change ▼ 0.00 (0%)
DGKC 107.91 Increased By ▲ 1.02 (0.95%)
FCCL 39.00 Decreased By ▼ -0.03 (-0.08%)
FFBL 82.02 Increased By ▲ 0.13 (0.16%)
FFL 14.90 Increased By ▲ 1.20 (8.76%)
HUBC 119.46 Increased By ▲ 0.21 (0.18%)
HUMNL 14.05 Increased By ▲ 0.05 (0.36%)
KEL 6.40 Increased By ▲ 0.49 (8.29%)
KOSM 8.07 Increased By ▲ 0.01 (0.12%)
MLCF 49.47 Increased By ▲ 1.37 (2.85%)
NBP 73.66 Increased By ▲ 0.83 (1.14%)
OGDC 204.85 Increased By ▲ 11.09 (5.72%)
PAEL 33.56 Increased By ▲ 1.41 (4.39%)
PIBTL 8.07 Increased By ▲ 0.05 (0.62%)
PPL 185.41 Increased By ▲ 11.34 (6.51%)
PRL 33.61 Increased By ▲ 1.01 (3.1%)
PTC 27.39 Increased By ▲ 2.12 (8.39%)
SEARL 119.82 Decreased By ▼ -5.14 (-4.11%)
TELE 9.69 Increased By ▲ 0.27 (2.87%)
TOMCL 35.30 Decreased By ▼ -0.09 (-0.25%)
TPLP 12.25 Increased By ▲ 0.63 (5.42%)
TREET 20.26 Increased By ▲ 1.84 (9.99%)
TRG 60.78 Increased By ▲ 0.29 (0.48%)
UNITY 37.99 Decreased By ▼ -0.22 (-0.58%)
WTL 1.65 Decreased By ▼ -0.01 (-0.6%)
BR100 11,772 Increased By 249.2 (2.16%)
BR30 36,584 Increased By 1034.2 (2.91%)
KSE100 110,810 Increased By 1913.6 (1.76%)
KSE30 34,429 Increased By 620.5 (1.84%)
Pakistan

Moody’s upgrades Pakistan’s banking sector outlook from negative to ‘stable’

  • Banks' profitability, stable funding and liquidity provide adequate buffer to withstand the country's macroeconomic challenges and political turmoil, says report
Published March 7, 2024

Moody’s Investors Service (Moody’s) on Thursday upgraded the outlook of Pakistan’s banking sector to ‘stable’ from ‘negative’ as macro challenges and fiscal pressures ease.

“The banks’ solid profitability and stable funding and liquidity provide an adequate buffer to withstand the country’s macroeconomic challenges and political turmoil,” read the report.

Moody’s downgrades five Pakistani banks

“We forecast the Pakistani economy will return to modest growth of 2% in 2024 after subdued activity in 2023, and inflation to fall to around 23% from 29% last year,” it said.

“However, high interest rates and inflation will continue to curb private-sector spending and investment. Furthermore, banks are financing the sovereign’s wide fiscal deficits, leaving little space to lend to the real economy. Initiatives to deepen financial inclusion and assistance for key sectors will only partly support credit demand,” it said.

Moody’s noted that Pakistani banks remain highly exposed to the government via large holdings of government securities that amount to around half of total banking assets, which links their credit strength to that of the sovereign.

Moody’s says timely election result to reduce uncertainty in Pakistan: report

“Persistent external pressures against a challenging operating backdrop will weigh slightly on the performance of Pakistani banks’ loan portfolios,” it added.

The credit rating agency forecasted that the banking sector’s profitability will remain strong because of wide net interest margins (NIMs), but decline from 2023 peaks because of subdued business growth, increased funding costs on the back of higher rates, and elevated taxes.

“Operating expenses will likely stabilise in line with easing inflation and banks’ cost-control efforts. Persistently elevated tax rates and potentially higher loan-loss provisions will weigh on banks’ bottom-line profitability, with the return on average assets hovering around 3%,” said Moody’s.

Pakistan’s rating likely to ‘be upgraded’ if govt’s external, liquidity risks reduce: Moody’s

The US-based rating agency expects Pakistani banks’ modest capital ratios to remain stable, as strong earnings offset high dividend payouts.

“Banks’ stable deposit-based funding will continue to support financial stability.”

Moody’s gives a baseline credit assessment of Caa3 to the top five largest banks in Pakistan i.e. National Bank of Pakistan (NBP), HBL, UBL, MCB and Allied Bank Limited.

Moody’s downgrades Pakistan’s rating to Caa3, changes outlook to stable

Comments

Comments are closed.

Usman Mar 07, 2024 06:15pm
Shahbaz sharif effect.
thumb_up Recommended (0)
Abdul Wahid Karachi Mar 07, 2024 06:35pm
Business recorder news paper excellent news
thumb_up Recommended (0)