On Thursday, The Moody Investors Services had claimed that although there was a lower interest margin, amid the pandemic there significantly was a higher provision for non-performing loans.
This led to strong profit growth for the Pakistani banks in 2020.
The Moody’s furthermore added that as of February 22nd the financial results declared by the three renowned banks of Pakistan comprised of Habib Bank, Muslim Commercial Bank, and Allied Bank, reflected containment and had acclaimed the pandemic’s adverse effects with their profits.
Each of the banks reported higher profitability and capital buffers than in 2019, with robust liquidity.
Although the Moody’s said that they could expect some pressure in 2021’s profits amid the narrower net interest margins as well as the ongoing asset quality deterioration.
In 2021 it is expected that the profitability does remain on 2020’s levels for the most part due to the squeeze in net interest margins after the interest rate cuts.
Though it wasn’t perceivable during 2020 because the Pakistani banks had held a high percentage in the investment of Pakistani bonds which were purchased the former years that contributed to the protection of margins from the interest rate cut.