Moody’s revises Pakistan banking sector outlook from constructive to secure

Worldwide credit standing company Moody’s has revised Pakistan’s banking sector outlook from constructive to secure.

Based on Moody’s outlook report, Pakistan’s financial circumstances are regularly enhancing, though the tempo of restoration stays sluggish. The report states that banks’ efficiency is predicted to stay secure over the following 12 to 18 months.

The report additionally highlights that prime rates of interest and credit score threat pressures persist in Pakistan. Moody’s recognized authorities monetary challenges as a significant threat for the banking sector.

Moody’s tasks Pakistan’s GDP progress at 3.5 per cent in 2026 however famous that considerations over exterior financing and inflation stay. Moreover, dangers related to coverage implementation might have an effect on the outlook.

Prime Minister Shehbaz Sharif expressed satisfaction over the event.

In a put up on X, he stated: “Experiences and scores by worldwide establishments are a transparent testimony to the correctness of Pakistan’s financial course. The financial crew has labored day and evening for the financial stability and progress of Pakistan, and so they deserve appreciation. By the grace of God, the dream of Pakistan’s growth is about to be realised.”

Learn: Moody’s upgrades deposit scores of Pak banks

Earlier, Moody’s Scores upgraded to Caa1 from Caa2 the native and foreign-currency long-term deposit scores of 5 Pakistani banks, particularly Allied Financial institution Restricted (ABL), Habib Financial institution Restricted (HBL), MCB Financial institution, Nationwide Financial institution of Pakistan (NBP) and United Financial institution Restricted (UBL).

“Now we have additionally upgraded the baseline credit score assessments (BCAs) and adjusted BCAs for ABL, HBL, MCB and UBL to Caa1 from Caa2, and for NBP to Caa2 from Caa3,” the ranking company stated in an announcement.

The outlook on long-term deposit scores of all banks has been modified to secure from constructive.

Ranking actions comply with its determination to improve the federal government of Pakistan’s native and international foreign money issuer and senior unsecured debt scores to Caa1 from Caa2 to mirror Pakistan’s enhancing exterior place, supported by its progress in reform implementation below the Worldwide Financial Fund’s (IMF) Prolonged Fund Facility.

Moody’s stated that the choice to improve Pakistani banks’ scores displays the nation’s enhancing working surroundings, as captured by the elevating of its Macro Profile for Pakistan to “very weak+” from “very weak”; the federal government of Pakistan’s improved capability to assist banks in case of want, as indicated by the sovereign ranking improve; and banks’ personal resilient monetary efficiency.

The revised Macro Profile rating is underpinned by Pakistan’s enhancing exterior place, supported by its progress in reform implementation. Nonetheless, it stated, Pakistan’s exterior place stays fragile. Its international trade reserves stay properly beneath what’s required to fulfill exterior debt obligations, underscoring the significance of regular progress with the IMF programme to repeatedly unlock financing.