KARACHI: Score company Moody’s on Thursday affirmed the B3 long-term deposit scores of 5 main Pakistani banks and altered their outlook to destructive from secure.
The banks are Allied Financial institution Restricted (ABL), Habib Financial institution Restricted (HBL), MCB Financial institution Restricted (MCB), Nationwide Financial institution of Pakistan (NBP) and United Financial institution Restricted (UBL).
“Moody’s has modified the outlook on the banks’ long-term deposit scores to destructive from secure,” learn an announcement issued right this moment.
The score company has additionally downgraded the long-term international foreign money Counterparty Danger Scores of ABL, MCB and UBL to B3 from B2; these scores at the moment are constrained by the federal government of Pakistan’s international foreign money nation ceiling, which was lowered to B3 from B2.
“Immediately’s score actions comply with Moody’s choice to alter the federal government of Pakistan’s B3 scores to destructive from secure on June 2, 2022, and likewise decrease the nation’s native and international foreign money nation ceilings to B1 and B3, from B3 and B2, respectively,” mentioned Moody’s.
The destructive outlook on the sovereign is pushed by Pakistan’s heightened exterior vulnerability threat and uncertainty across the sovereign’s skill to safe extra exterior financing to fulfill its wants, it added.
Based on the score company, the affirmation of the 5 Pakistani banks’ scores displays their secure, deposit-based, funding profiles and ample liquidity.
Whereas the destructive outlook on the financial institution scores displays:
• The rated banks’ sizable holding of securities holdings, predominantly sovereign debt securities, at between 5-Eight occasions their shareholders’ fairness, which hyperlinks their creditworthiness to that of the federal government.
• The chance of an extra weakening within the authorities’s capability to assist the banks in case of want. The latter is especially related for Nationwide Financial institution of Pakistan and Habib Financial institution Restricted, whose scores incorporate one notch of presidency assist uplift. Extra broadly, all 5 banks’ deposit scores of B3 are on the identical score stage as the federal government, and a possible weakening within the authorities’s credit score profile will subsequently translate to a weaker credit score profile for the banks.