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Moody’s Revises Pakistan Banking Outlook to Stable, Upgrades Major Bank Ratings
Moody’s changes Pakistan’s banking sector outlook from positive to stable, citing slow but steady economic recovery, and upgrades five major banks’ long-term ratings.
ND
by News Desk
2026-02-09
Moody’s Revises Pakistan Banking Outlook to Stable, Upgrades Major Bank Ratings

International credit rating agency Moody’s has revised Pakistan’s banking sector outlook from positive to stable, while upgrading the ratings of five major banks amid gradual economic improvement.

In its outlook report, Moody’s highlighted that while Pakistan’s economic conditions are improving, the pace of recovery remains slow. The report noted that high interest rates, credit risks, and government financial challenges continue to pose risks to the banking sector over the next 12 to 18 months.

The rating agency upgraded the long-term local and foreign-currency deposit ratings of Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank, National Bank of Pakistan (NBP), and United Bank Limited (UBL) to Caa1 from Caa2, while also upgrading the baseline credit assessments (BCAs) of ABL, HBL, MCB, and UBL to Caa1 and NBP to Caa2. However, the outlook for all banks was revised to stable from positive.

Moody’s noted that the upgrades reflect:

  • Pakistan’s improving operating environment, captured by a revised Macro Profile score of “very weak+” from “very weak”
  • The government’s enhanced capacity to support banks, in line with the sovereign rating upgrade
  • Banks’ resilient financial performance

The report projected Pakistan’s GDP growth at 3.5% in 2026, while flagging ongoing concerns about external financing, inflation, and risks associated with policy implementation. Moody’s emphasized that Pakistan’s foreign exchange reserves remain below levels needed to meet external debt obligations, making continued progress under the IMF Extended Fund Facility program critical.

Prime Minister Shehbaz Sharif welcomed the rating actions, posting on X:
"Reports and ratings by international institutions are a clear testimony to the correctness of Pakistan's economic direction. The economic team has worked day and night for the economic stability and progress of Pakistan, and they deserve appreciation. By the grace of God, the dream of Pakistan's development is about to be realised."
Tagged:

IMF

PakistanEconomy

BankingSector

Moody’s
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