Moody’s Elevates Ratings for Five Major Pakistani Banks Amid Economic Reforms

Moody’s Investors Service has upgraded the long-term local and foreign currency deposit ratings for five leading Pakistani banks—including Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan, and United Bank Limited—to Caa1, moving from Caa2. In tandem, the agency raised the Baseline Credit Assessments (BCAs) and adjusted BCAs of all banks to Caa1, except for NBP, which was upgraded to Caa2. Additionally, Moody’s changed the long-term deposit outlook from “positive” to “stable.”

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These upgrades stem from several structural improvements, including Pakistan’s enhanced external financial position, steady execution under the IMF’s Extended Fund Facility program, and significant reductions in interest rates—from 22% in mid-2024 to 11% in mid-2025—supporting broader macroeconomic stability.

The upgraded ratings reflect each bank’s stronger deposit base, improved liquidity, and robust earnings performance, though Moody’s emphasized that elevated asset risks—arising from high exposure to government securities and modest capital buffers—still warrant cautious monitoring. Non-performing loan ratios remain a concern; for instance, NBP’s NPLs stand at 14.2%, while HBL maintains a relatively lower 5.3%.

The upgrade brings these institutions one notch closer to investment-grade classification, signaling elevated confidence in their creditworthiness. This reaffirmation of banking sector resilience is expected to bolster financial market sentiment and encourage further institutional and investor engagement in Pakistan’s banking landscape.