Karachi: Moody’s Investors Service on Thursday upgraded the outlook of five major banking institutions from ‘negative’ to ‘stable’, according to a news report. The five banks in question are Habib Bank Ltd (HBL), Allied Bank Ltd (ABL), United Bank Ltd (UBL), MCB Bank Ltd, and the National Bank of Pakistan (NBP).
Moody’s, a New York-based ratings agency, affirmed these banks’ existing B3 long-term local currency deposit ratings. This announcement followed the body’s decision on December 2 to affirm the B3 rating of the Government of Pakistan, and change its rating from ‘negative’ to ‘stable’. This rating reflects the ongoing financial reforms, loan repayments, and the reduced external vulnerability risks for investors.
‘The banks’ rating actions reflect improvements in the operating environment in Pakistan and in the country’s sovereign credit profile, which affect the banks, given their high government exposures that link their credit profiles to that of the government and the expectation that the government’s capacity to support banks in case of need will not deteriorate,’ it said in a statement.
It attributed this change to the banks’ higher exposure to government securities as well, and expected that the government’s support for banks would not decrease in times of need.
