Moody'smaintained its stable outlook on Pakistan's banking system to reflect thestable deposit base and high liquidity buffers at the banks.
The ratingagency said Oct. 6 that Pakistani banks will continue to benefit from largevolumes of low-cost and stable customer deposits and ample liquidity. However,the banks' capital buffers may come under pressure due to weakeningprofitability and loan growth. The banks' exposure to the government throughholdings of securities and government-related loans exposes them to event riskand links their creditworthiness to the low-rated sovereign.
Moody'ssaid it expects problem loans to decline in 2017. Meanwhile, an acceleratingeconomic growth underthe IMF program will also help improve banks' asset quality and will createlending opportunities in the next 12 to 18 months.