In its recent report on Pakistan, Moody’s Investor Services (Moody’s) stated that increased worker remittances to Pakistan are credit-positive for banks.
As reported by the State Bank of Pakistan (SBP) on 15 February, monthly workers’ remittances for the seven months to January 2021 (Pakistan’s fiscal year ends on 30 June) showed an increase of 24.1 percent to $16.5 billion.
In addition, Moody’s said that growth is also contrary to our hope that the pandemic will keep remittances flat and the World Bank’s forecast of a sharp drop in worldwide remittances.
Increased remittances are credit-positive for Pakistani banks, notably United Bank Ltd (B3 stable, b3), which, as of 30 September 2020, had a leading market share of around 24% of remittances, as they support deposit inflows and foreign currency liquidity.
Moreover, increased remittances are contributing to higher domestic deposits, providing banks with stable and reasonable financing while increasing their liquidity in foreign currencies.