Moody's upgraded Pakistan's banking sector outlook from negative to stable due to solid profitability and stable funding.

Moody's Investors Service upgraded Pakistan's banking sector outlook from negative to stable, citing solid profitability and stable funding as key factors. The country's banks are forecasted to return to modest growth of 2% in 2024, following subdued activity in 2023, with inflation expected to fall from 29% to 23%. The banking sector remains highly exposed to the government through large holdings of government securities.