Moody’s Investors Service – a renowned global credit rating agency – has affirmed the B3 long-term local currency deposit ratings of five Pakistani banks and upgraded the outlook to stable from negative.
“Affected banks include Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Limited (UBL),” Moody’s report reads.
The US-based credit rating agency gave the decision in the backdrop of the banks’ huge risk-free lending to the government for its annual budgetary requirements and anticipated a further improvement in banking operations ahead of foreseen gradual acceleration in economic growth in the country.
To recall, the International Monetary Fund (IMF) conditioned government of Pakistan to stop borrowing from the central bank under its latest $6 billion loan programme kicked start in July. The conditioning agreed the government to borrow from commercial banks to meet the gap budgetary financing.
The global credit rating agency said 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 (1) their high government exposures that link their credit profiles to that of the government; and (2) the expectation that the government’s capacity to support banks in case of need will not deteriorate.