Moody’s downgrades Bangladesh’s banking sector

Moody’s Ratings has downgraded Bangladesh’s banking sector to “very weak” from “weak,” expressing concerns over deteriorating client confidence, limited transparency, and inadequate financial safeguards.

The rating agency anticipates increased financial instability, slower economic growth, and higher default risks, which could negatively impact banks’ creditworthiness and profitability.

“We anticipate that the central bank’s initiative to enhance asset quality recognition will cause a near-term surge in non-performing loans (NPLs) but contribute to greater systemic stability,” it said.

Despite these challenges, Moody’s noted that the funding and liquidity positions of most rated banks remain relatively stable. This downgrade follows Moody’s recent decision to lower Bangladesh’s sovereign rating to B2 with a negative outlook.

Attribution: Xinhua

Subediting: M. S. Salama