Moody’s drops outlook on four Pakistani bank ratings to “negative”

Moody’s Investors Service has changed the outlook on the B2 long-term foreign-currency deposit ratings of four Pakistani banks to negative from stable. This action is in line with Moody’s sovereign team’s recent announcement that it changed the outlook on the B2 foreign-currency bank deposit ceiling of Pakistan to negative from stable, following the imposition of emergency rule in the country.

All four banks’ foreign-currency deposit ratings remain constrained by the country ceiling.

These Pakistani banks are headquartered in Karachi and in December 2006 had total assets of: National Bank of Pakistan – PKR 637.9 bln (US$ 10.5 bln); Habib Bank – PKR 590.3 bln (US$ 9.7 bln); United Bank – PKR 435.9 bln (US$ 7.2 bln); and, MCB Bank – PKR 343.2 bln (US$ 5.6 bln)

The outlook on each bank’s financial strength rating (BFSR) remains stable. Moody’s cautions that, in the event of a possible prolonged heightened political instability that eroded business confidence, the BFSRs could potentially be adversely impacted as well going forward. For the time being, however, Pakistani banks continue to have satisfactory financial fundamentals and solid franchises, and the prevailing conditions have not so far had any direct impact on their standalone positions.

As all four banks’ short-term ratings are already at Not-Prime (NP), the outlook on these ratings remains stable.