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Moody's downgrades Pak's banking operations from stable to negative

ANI 

Global credit rating agency, has downgraded Pakistan's outlook for the system to negative from stable.

"Over the next 12-18 months, banks in will see their credit profiles challenged by their high exposure to the country's low-rated sovereign debt and a slowing economy," Dawn quoted Constantinos Kypreos, a at Moody's, said in a statement.

According to a statement released on Monday, the company noted that the financial operations of the banks in would become even more difficult in the coming days, as the real GDP growth slowing to 4.3 per cent in the fiscal year ending in June, down from 5.8 per cent in 2018.

"On a more positive note, the banks will continue to benefit from stable customer deposits and high liquidity," Kypreos added.

The Pakistani rupee has depreciated 30% in front of the US dollar, interest rates rose by 450 basis points between December 2017 and February 2019, and inflation is rising; all factors which affect and consumer confidence and the private sector's debt repayment capacities, the company adds.

The company further noted that Pakistani banks are currently facing problems at the macroeconomic level owing to a range of issues, including the large holdings of government securities, and the incapacity of the government authorities to support the banks during such times of need, reported.

The negative outlook of Moody's assessment of Pakistani banks is based on six categories, namely operating environment (deteriorating); asset risk (deteriorating), capital (stable); profitability and efficiency (stable); funding and liquidity (stable); and government support (deteriorating).

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, February 12 2019. 06:48 IST
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