NEW YORK – Moody declares Stable Outlook for Pakistan. The US based bond credit rating agency, Moody Investor Services, has given stable outlook for Pakistan. In its latest report, Moodys has given stable outlook for Pakistani banking system over the next 12-18 months. Including back of robust funding and liquidity and close links with the sovereign.
Moody has anticipated that government will remain willing to support important banks in case of need. But its ability to do so is limited by fiscal challenges reflected by its B3 rating.
Moody‘s senior vice president Constantinos Kypreos has said “The sovereign credit profile has improved in recent months and has benefitted the banks through their high exposure to government securities.” She added,“Operating conditions for Pakistan banks, although gradually improving, remain difficult amid tight monetary conditions.”
As per Moody, in terms of operating environment, economic activity in Pakistan will also be supported by ongoing infrastructure projects and improvements in power generation and domestic security. In addition, terms of trade gains and the rupee depreciation will likely raise private investment from low levels. Moody declares Stable Outlook for Pakistan.
The agency added that meanwhile economic growth will still remain subdued, the exchange rate has stabilized since June 2019 and markets expect the State Bank of Pakistan to lower policy rates over the next few years.
Stable customers deposits and high liquidity also remain key strengths, providing banks with ample low-cost funding. Capital levels will remain broadly stable, but Moody’s considers these modest relative to peers. Profits will increase slightly but remain below historical levels.