- Pakistani banks see stronger growth opportunities ahead: Fitch.
- The global qualification agency appoints improving general commercial conditions.
- The recovery of Pakistan says follows a difficult period of crisis.
The global Credit Fitch rating agency has predicted the real growth of Pakistan’s GDP at 3.5% by 2027, compared to 2.5% in 2024, according to Fitch Ratings.
“The improved sovereign credit profile of Pakistan reinforces this opinion,” said Fitch, referring to the update of the breach of the country’s long-term issuer (IDR) to ‘B-‘/stable of ‘CCC+’ in April 2025. The improvement of the qualification was affected by the ongoing economic recovery, the reforms and the improvement of the fiscal performance.
Recovery occurs after a particularly turbulent period for Pakistan’s economy. Inflation, which reached its maximum point in 38% in May 2023, since then has decreased to 4.1% in July 2025, with Fitch waiting for a average around 5% for the year.
Meanwhile, monetary policy has changed in response to the ease of inflationary pressures. Since May 2024, the Central Bank of Pakistan has reduced the 11%policy rate by half, while external stability has improved through the reduction of monetary volatility and surpluses of current accounts.
Fitch anticipates that this combination of lower interest rates and a more stable macroeconomic environment will increase the demand for private credit.
“We expect the combination of lower interest rates and an improvement of the macroeconomic environment to stimulate the demand for private credit,” said Fitch, adding that this should support the “growth of the most stable loans and deposits, and the financial performance of the banks.”
The agency said that Pakistan banks will benefit from better opportunities to generate commercial volumes due to the improvement of operation conditions in the middle of the winds against winds against winds against macroeconomic.
“It is expected that the private sector credit, which has been reduced to a cyclic minimum of 9.7% of GDP in 2024, recovers, reducing the dependence of banks in public sector loans. Continuous economic and fiscal reforms could further support this change,” reads the statement.
However, Fitch also pointed out the continuous risks, stating that the improvement of Pakistan, although still weak, the operational environment and its low sovereign credit qualification remain areas of concern.
The agency warned that the intrinsic solvency of banks will remain “closely linked to the sovereign and the rhythm of economic reform”, due to its important exposure to sovereign values and entities linked to the State.
Despite the past economic turbulence, Pakistani banks have demonstrated resilience. The deteriorated loan index of the sector improved to 7.1% by March 2025, below 7.6% at the end of 2023, in the middle of a strong loan growth of 26%, largely fed by inflation.
