Moody’s Investors Service (“Moody’s”) has confirmed Pakistani banks’ B3 long-term deposit ratings but has revised the outlook from stable to negative.
Five Pakistani banks, Allied Bank Limited (ABL), Habib Bank Ltd. (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP), and United Bank Ltd., have had their B3 long-term deposit ratings affirmed by the rating agency (UBL).
Moody’s has downgraded the outlook on the bank’s long-term deposit ratings from stable to negative as part of the same rating action.
ABL, MCB, and UBL’s long-term foreign currency Counterparty Risk Ratings were similarly cut to B3 from B2 by the rating agency; these ratings are now bound by the Government of Pakistan’s foreign currency nation ceiling, which was decreased to B3 from B2.
Following Moody’s decision to downgrade Pakistan’s B3 ratings to negative from stable on June 2, 2022, the nation’s local and foreign currency country limits were lowered to B1 and B3, respectively, from Ba3 and B2, respectively.
Pakistan’s pessimistic outlook is based on the country’s increased external vulnerability risk and uncertainty about its ability to seek extra external finance to satisfy its demands.
The confirmation of the five Pakistani banks’ ratings, according to the rating agency, indicates their stable, deposit-based funding profiles and ample liquidity. Around 12% of assets are stored in cash and interbank placements, with the remaining 45 percent in government securities, the majority of which may be repo’d with the central bank in the event of a crisis.
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