Moody's Investors Service (Moody's) has completed periodic review of the ratings of major banks in Pakistan and other ratings that are associated with the same analytical units. Moody's stated that National Bank of Pakistan's (NBP) B3 local-currency deposit rating is driven by the bank's Caa1 Baseline Credit Assessment (BCA) and one notch of government support uplift. Moody's assumes a very high probability of government support from Pakistan (B3 negative) because of the bank's systemic importance and 75 percent government ownership. The bank's Caa1 foreign currency deposit rating is constrained by Pakistan's relevant country ceiling, which reflects foreign currency transfer and convertibility risks.
The bank's Caa1 BCA reflects Pakistan's weak operating environment, NBP's high level of non-performing loans and modest capital buffers, but also its stable deposit-based funding profile and high liquidity buffers. NBP's BCA is also underpinned by its high exposure to Pakistan's government securities, which links the bank's credit profile to that of the government.
Moody's stated that Allied Bank Limited's (ABL) B3 local-currency deposit rating is driven by the bank's B3 Baseline Credit Assessment (BCA) and is on par with Pakistan's sovereign ratings. The bank's Caa1 foreign currency deposit rating is constrained by Pakistan's relevant country ceiling, which reflects foreign currency transfer and convertibility risks.
The bank's B3 BCA is underpinned by its high exposure to Pakistan's government securities, which links the bank's credit profile to that of the government. It also reflects Pakistan's weak operating environment and ABL's modest capital buffers. However, the ratings also reflect ABL's stable deposit-based funding profile and high liquidity buffers, as well as the bank's good earnings generating capacity, which Moody's expects will further benefit from higher interest rates.
Moody's stated that United Bank Ltd's (UBL) B3 local-currency deposit rating is driven by the bank's B3 Baseline Credit Assessment (BCA) and is on par with Pakistan's sovereign ratings. The bank's Caa1 foreign currency deposit rating is constrained by Pakistan's relevant country ceiling, which reflects foreign currency transfer and convertibility risks.
The bank's B3 BCA is underpinned by its high exposure to Pakistan's government securities, which links the bank's credit profile to that of the government. It also reflects Pakistan's weak operating environment, UBL's modest capital buffers and asset quality pressures stemming from the bank's international operations. The ratings also reflect UBL's stable deposit-based funding profile and high liquidity buffers, and its good earnings generating capacity, with the bank's strong domestic franchise offsetting pressures arising from its international operations.
Moody's stated that MCB Bank Limited's (MCB) B3 local-currency deposit rating is driven by the bank's B3 Baseline Credit Assessment (BCA) and is on par with Pakistan's sovereign ratings. The bank's Caa1 foreign currency deposit rating is constrained by Pakistan's relevant country ceiling, which reflects foreign currency transfer and convertibility risks.
The bank's B3 BCA is underpinned by its high exposure to Pakistan's government securities, which links the bank's credit profile to that of the government. It also reflects Pakistan's weak operating environment, as well as MCB's elevated levels of non-performing loans and modest capital buffers. The ratings also reflect MCB's stable deposit-based funding profile and high liquidity buffers, and its strong earnings generating capacity, which Moody's expects will further benefit from higher interest rates.
The reviews were conducted through a portfolio reviews in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology (ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
The review did not involve a rating committee. Moody's stated that this publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
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