Staff Reporter
Lahore
Moody’s Investors Service (“Moody’s”) has today affirmed the B3 long-term local currency deposit ratings of NBP and upgraded the outlook from negative to stable.
The rating action follows Moody’s decision on 2 December to affirm the B3 rating for the Government of Pakistan and change the outlook on the sovereign rating to stable from negative and reflect reduced external vulnerability risks and ongoing fiscal reforms.
The rating action reflects improvements in the operating environment in Pakistan and in the country’s sovereign credit profile. The primary driver of Moody’s decision to change the bank’s outlook to stable is the extensive interconnectedness between the bank’s balance sheet and sovereign credit risk, owing to the bank’s high exposure to government securities.
The high direct exposure to government credit risk, in addition to the primarily Pakistan focus of its operations, links the bank’s credit profile to that of the government. As a result, the improvements in the operating environment and in the sovereign credit profile have eased pressures on the bank as well.
The stable outlook assigned to the bank’s local currency deposit ratings also reflects Moody’s expectation that the government’s capacity to support banks in case of need will not deteriorate.
