Moody’s raises ratings for key Pakistani banks
Outlook stable, Banks remain heavily tied to government debt
Hammad Qureshi
Senior Producer / Correspondent
A business journalist with 18 years of experience, holding an MS in Finance from KU and a Google-certified Data Analyst. Expert in producing insightful business news content, combining financial knowledge with data-driven analysis.
The Moody's logo is seen on their office building in Lithuania
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Moody’s Investors Service on Tuesday upgraded the local- and foreign-currency long-term deposit ratings of five major Pakistani banks, citing improved government support capacity and resilient financial performance.
The ratings of Allied Bank Ltd. (ABL), Habib Bank Ltd. (HBL), MCB Bank Ltd. (MCB), National Bank of Pakistan (NBP) and United Bank Ltd. (UBL) were raised to Caa1 from Caa2. The outlook for all five banks was revised to stable from positive.
The move follows Moody’s upgrade of Pakistan’s sovereign credit rating last week to Caa1 from Caa2, reflecting the government’s stronger capacity to support the financial system. The agency noted the country’s improving operating environment and banks’ resilience despite pressures on profitability.
Moody’s said Pakistani banks remain heavily exposed to the sovereign, with government securities accounting for about half of total banking assets. It warned that profitability will likely face downward pressure due to narrower net interest margins as rate cuts take hold.
Despite the upgrade, Pakistan’s external position remains fragile. Foreign exchange reserves remain well below the level required to meet external debt obligations, underlining the need for continued progress under the International Monetary Fund program to unlock financing.
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