Moody’s changes banking outlook to stable

Moody’s, the global rating agency, has changed its outlook on Pakistan’s banking system to stable from positive, while stating that the operating environment is recovering only gradually. The rating agency also forecast Pakistan’s real GDP growth of around 3.5 percent for 2026, up from 3.1 percent in 2025, while stating that it is supported by ongoing reforms that are improving confidence and gradually strengthening economic activity. The operating environment continues to recover, but gradually, supported by the country’s slowly improving economic and fiscal outlook, and strengthening external position. However, banks’ financial performance will be stable over the next 12-18 months as they continue to face asset quality and profitability challenges.