Moody’s upgrades Pakistan’s banking outlook – Business

KARACHI: The global ranking agency Moody has strengthened Pakistan’s banking perspective on the back of better financial performance.

“We have made our viewpoint positively positive about Pakistan’s banking system to reflect the flexible financial performance of the banks, as well as improve economic economic conditions from a very weak level a year ago,” said the rating agency.

Financial sector experts say that banks have made considerable profit in the last two years, despite lack of lack of engagement in using their money for economic growth. Borrowing to the private sector has been disappointing. However, in the fiscal year 24, 22 % and even more government’s aggressive loans have enriched banks.

All the high -ranking agencies downplayed Pakistan’s economic approach in 2023, which prevented the country from reaching the international market to launch the Eurobonds to collect the dollar. The biggest obstacle is still there for the country. Finance Minister Mohammad Aurangzeb met with top agencies in Washington a few months ago to brief him on the progress made in Pakistan.

Terms Long -term loan stability, weak financial position for Pakistan ‘key risks’

Moody has said that the stability of Pakistan’s long -term loans is a major threat, it still has a very weak financial status, high liquidity and external risk risks.

However, the rating agency said that Pakistan’s economy will extend to 3pc in the financial year, compared to 2.5 PC in FY 24 and -0.2PC in FY33. The State Bank of Pakistan has recently predicted GDP growth from 2.5 to 3.5pc.

“We have predicted GDP growth in 3pc and 4PC in 2025 in 2025, which exceeds 2.5 pcs in 2024, which has been reduced to 1,000 points since the start of the monetary policy in June 2024,” Moody said.

Moody’s statement said, “Inflation is also significantly ease, which we have estimated in 2024 for an average of 8PC from 23 PC to 2025.”

It added that a positive approach to the sector is also a mirror of the Government of Pakistan (CA2 positive) positive view, in which Pakistani banks have a significant exhibition with sovereignty through the acquisition of government security, which is half of the total banking assets.

“Banks will maintain proper capital buffers, which helps increase loans and produce solid cash, yet the profit is left over.”

As of September 2024, government securities had 55pc of banks’ total assets. This important exhibition connects the bank’s credit strength with a sovereign, which is improving with very weak levels, the statement said. Nevertheless, the total debt from 7.6pc to September 2024 a year before the debt has been damaged from 8.4pc, with only 23pC banks’ total assets in the overall loans.

Dawn, appeared on March 13, 2025