Slowin­g econom­y, high exposu­re to sovere­ign debt drive the outloo­kKARACHI: Moody’s, one of the top three global rating agencies, has assigned a ‘negative’ outlook to Pakistan-based banks due to economic slowdown and the banks’ higher investment in sovereign securities’ papers of the government. “Our outlook for Pakistan’s banking system is negative,” Moody’s Investors Service said in a research publication on Monday. “As Moody’s changed Pakistan’s banking system outlook to negative, commercial banks remained the worst performing sector erasing 187 points,” Topline Securities stated in a report after the market’s closure. The asset risk has worsened due to high exposure to government bonds, which links banks’ creditworthiness with that of the sovereign. “Improvements in the operating environment and in the sovereign’s credit risk profile are prerequisites to restoring a stable outlook,” it said.

Source: The Express Tribune February 12, 2019 03:11 UTC