• Friday, April 19, 2019

Moody changes outlook to negative for Pakistan’s banking sector

Discussion in 'Pakistan Economy' started by Champion_Usmani, Feb 11, 2019.

  1. Champion_Usmani

    Champion_Usmani SENIOR MEMBER

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    Moodys-768x576.jpg

    LAHORE: Moody’s investors’ service on Monday changed its outlook for Pakistan’s banking system down (B3 negative) to negative from stable.

    According to the report, the banks’ operating conditions will be difficult due to slow down in Pakistan’s real GDP growth to 4.3% in the current financial year 2018-19, down from 5.8% in FY18.

    Moody’s said tighter domestic monetary conditions fueled by a wide current account deficit and low foreign exchange reserves will impact economic activity.

    Since December 2017, the rupee has depreciated 30% against the greenback and interest rates have risen by 450 basis points (bps) since January last year and inflation is increasing, said Moody’s.


    All these factors will impact business and consumer confidence and the private sectors’ debt repayment capacities.

    “High exposure to government securities (34% of assets) links banks’ credit profile to that of the sovereign, whose credit profile is increasingly challenged as also evident by the negative outlook on its B3 rating,” said the report.

    Moody’s stated the declining trend in problem loans (8% of gross loans as of September 2018) will stall, as challenging operating conditions and structural impediments hinder banks’ ability to resolve legacy non-performing loans (NPLs).

    The rating agency said regulatory capital i.e. tier 1 at 13.2% as of September 2018 will remain stable, but as per its evaluations indicate towards modest capital buffers.

    As per the report, higher profit retention, hybrid Tier 1 capital issuances and other capital optimization measures will offset credit growth and so assist Tier 1 ratios.

    It added that profits will slightly rise but will remain below historical levels.

    And profitability will be fueled by higher interest margins due to hike in interest rates and increasing government yields, 10-12% credit growth and lower one-off costs, which will recoup for increasing provisioning requirements and ongoing pressures at banks’ operations abroad, said the report.

    Moreover, stable customer deposits and high liquidity will remain key strengths and customers deposits constitute of approximately 71% of total assets and it projected these to grow 10% in 2019, providing ample low-cost funding to banks.

    Moody’s said cash and bank placements constitute for about 15% of total assets, whilst another 34% is invested in government securities offering sound liquidity.

    “Expanding the low-cost deposit base remains a key area of focus for banks (low-cost current accounts accounted for ~40% of customer deposits as of September 2018).

    Encouraging higher savings and enhancing the deposit base (to 55% of GDP from around 35% currently) is also a key goal for the authorities.

    Pakistani banks’ reliance on market funding has increased in recent years, a negative development. This was primarily in the form of interbank and SBP repo facilities, used for “carry trades” (i.e. buying government bonds funded by short-term borrowings).

    Since the spreads on such transactions have narrowed, banks’ exposure to market funding has declined,” said the report.

    In a comment to Profit, Head of Arif Habib Limited (AHL) Research Samiullah Tariq said, “The major reason for the downgrade is the weakness in the macroeconomic indicators coupled with high exposure to sovereign credit.”

    He added, “I think with the improvement in the macroeconomy, the operating environment for banks will improve significantly.”

    Moody’s Senior Vice President Constantinos Kypreos said, “Over the next 12-18 months, banks in Pakistan will see their credit profiles challenged by their high exposure to the country’s low-rated sovereign debt and a slowing economy.”

    He added, “On a more positive note, the banks will continue to benefit from stable customer deposits and high liquidity.”

    The rating agency said it rates the largest banks in Pakistan by assets and together they constitute for around 50% of the banking sector deposits.

    https://profit.pakistantoday.com.pk...ook-to-negative-for-pakistans-banking-sector/

    @Jinn Baba @SmartGeek @Tameem @CIS-TRANS @Canuck786 @MUSTAKSHAF @BATMAN @Yaseen1 @Major Sam @Proudpakistaniguy @Musafir117
     
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  2. Syed1.

    Syed1. SENIOR MEMBER

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    Such patriotic "Pakistanis" we have who celebrate bad news about Pakistan.
     
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  3. Champion_Usmani

    Champion_Usmani SENIOR MEMBER

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    PTI's bad economic performance (Moody's Report)



    موڈیز نے پاکستانی بینکس کا آوٹ لک منفی کر دیا

    news-1549885319-6984.jpg

    نیویارک(ڈیلی پاکستان آن لائن )عالمی ریٹنگ ایجنسی موڈیز نے پاکستانیوں کو افسوسناک خبر سناتے ہوئے پاکستانی بینکس کا آوٹ لک منفی کر دیا ہے۔

    تفصیلات کے مطابق پاکستانی بینکوں نے حکومتی بانڈز میں بہت رقم لگا رکھی ہے، بینکوں کا کریڈٹ نچلی پروفائل کے سرکاری بانڈز سے منسلک ہوگیا۔رپورٹ میں بتایا گیا ہے کہ اگلے ڈیڑھ سال تک بینکوں کو نچلی پروفائل کے سرکاری بانڈز کے چیلنج سے نمٹنا ہو گا اور بینکوں کو سست معیشت کے ساتھ کام کرنے میں مشکلات کا سامنا رہے گا ۔بینکوں کیلئے کاروبار کے مواقع محدود ہو گئے ہیں، ایک سال میں پاکستانی روپے کی قدر ڈالر کے مقابلے میں 30 فیصدکم ہوئی ۔

    https://dailypakistan.com.pk/11-Feb-2019/924457

    No at all, we are exposing the bad economic performance of PTI govt. Now that you accept that it is a bad news, so why not condemn & expose those who are the sole reason of that bad news. Asad Umar had bankrupted Engro Ltd, now he is doing the same with the country.

    IMF's satanic Debt cycle...





    Agreed...



    Views of Mehmood Sadiq...

     
  4. Whirling_dervesh

    Whirling_dervesh FULL MEMBER

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    Thank the Sharif Bros for this. pti are on the right track. 20 years of pmln and ppp plunder will not be fixed in 6 month's
     
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  5. Canuck786

    Canuck786 FULL MEMBER

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    #PTIBlunders #IsThisTheTabdeeli #2020PakistanElections
     
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  6. Thəorətic Muslim

    Thəorətic Muslim SENIOR MEMBER

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    Moody always had a negative outlook on Pakistan's banking sector. They just categorized it as safe a few month/year ago and took A LOT of flak for it.
     
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  7. Yaseen1

    Yaseen1 SENIOR MEMBER

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    There are reports coming out that imf has offered ik 80 billion usd if Pakistan give up their nukes
     
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  8. Hakikat ve Hikmet

    Hakikat ve Hikmet SENIOR MEMBER

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    Let the Ehl-i Dunya get bogged down with the "outlook" of Satan/Devil/Iblis etc.!!! As for the Ehl-i Iman, it's OUTLOOK of Allah-u Azimushshan that only matters...

    Say, [O Muhammad], "Shall we [believers] inform you of the greatest losers as to [their] deeds?
    [They are] those whose effort is lost in worldly life, while they think that they are doing well in work."
    - Sura El Kahf (ayet#103-104)
     
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  9. valkyr_96

    valkyr_96 FULL MEMBER

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    IMF doesn't work like that....also please post these reports
     
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  10. Jinn Baba

    Jinn Baba SENIOR MEMBER

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    That's not how IMF works.
     
  11. insight-out

    insight-out FULL MEMBER

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    Reports coming out of what/where? Do you have a credible source? If you cannot provide one, then you are just spreading rumours.
     
  12. Yaseen1

    Yaseen1 SENIOR MEMBER

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  13. hussain0216

    hussain0216 ELITE MEMBER

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    These are the idiots and namak harams this country is inflicted with

    They think decades of harami can be fixed in 6 months

    We can only hope these idiots are kept at bay whilst the country tries to fix the mess they have left

    Our biggest problem will be our susceptible population who are prone to propaganda without questioning it

    We need more then 4 years of Imran
    4 years to lay the foundation and atleast another 4 to see the projects through


    Pakistan has immense potential but we need to fix our issues now
     
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  14. Rafi

    Rafi ELITE MEMBER

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    Reports coming out of his cake hole, if you know what I mean.
     
  15. insight-out

    insight-out FULL MEMBER

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    I can't make out the name of this publication. I think it's something Post. Is it credible?