Moody’s Investors Service – a leading global agency – on Wednesday stated that Pakistan’s banking system would have a stable outlook due to ongoing reforms and increasing policy effectiveness.
The Moody’s in a report released today says, “Despite a difficult environment, the government’s credit profile is stable due to ongoing reforms and increasing policy effectiveness – a positive for the banks given their outsized holdings of Pakistani government debt link their credit profiles to that of the government.”
The report said that a stable outlook for Pakistan’s banking system reflects banks’ solid funding and liquidity, although a challenging – but improving – operating environment will weigh on asset quality and profitability.
The agency also observed that banks’ slow economic recovery to affect loan quality, with nonperforming loans (NPLs) expected to rise over the coming months from a sector-wide level of 9.9% of gross loans in September 2020.
