Moody's termed Pakistan's banking system scenario as stable

Moody's termed Pakistan's banking system scenario as stable

Posted on Feb 7, 2020

Moody's Investors Services has announced a strong outlook for Pakistan's banking system over the next 12 to 18 months, thanks to its close association with independent companies, dynamic funding and liquidity.

According to a statement issued by the agency, economic activities in Pakistan in terms of work environment will help in development projects as well as improvement in energy production and security situation at the local level.

At the same time, it was said that private investment at the lower levels is likely to increase with the increase in trade and the depreciation of the rupee.

senior vice president of Moody's said that in recent times, the independent credit profile has improved, which has benefited banks from government securities, which make up 40% of their assets.

He said the working conditions for banks in the country are gradually improving but they are difficult to work with due to tight monetary conditions and the growing need for heavy government debt, which makes it difficult for private sector investors. There will be adverse effects on work.

Moody's said that despite the disappointing economic growth situation in Pakistan, the exchange rate has been stable since June last year and the market is expected to reduce the policy rate by the State Bank in the next few years.

According to the statement, stability and rising liquidity were also important elements in consumer deposit, which led to the banks having poor funding, although a slight increase in profitability is expected but will remain lower than the historical data.

The agency hoped that the government would help major banks when needed, but said the B3 rating reflected that it had limited capacity to do so due to the challenges facing the financial year.

It should be noted that in December last year, Moody's strengthened Pakistan's rating by B3 to negative.




Mian Tajamul

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