VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of National Bank of Pakistan (PSX: NBP) at ‘AAA/A1+’ with a stable outlook, signaling continued confidence in the bank’s credit quality, operational resilience, and strategic role within Pakistan’s financial system. The latest rating action was officially communicated following the agency’s previous review dated June 26, 2024.
The long-term rating of ‘AAA’ reflects the highest credit quality, with negligible risk factors only marginally exceeding those attached to the sovereign debt of Pakistan. Meanwhile, the short-term rating of ‘A1+’ indicates the strongest capacity for timely repayment of short-term obligations, supported by robust liquidity metrics.
NBP, incorporated under the National Bank of Pakistan Ordinance of 1949, stands as the country’s largest public sector commercial bank and serves a critical mandate by managing treasury transactions on behalf of the Government of Pakistan as an agent to the State Bank of Pakistan. This unique role underscores its status as a systemically important financial institution in Pakistan’s banking landscape.
As of the close of 2023, NBP maintained a domestic branch network of 1,503 outlets along with 16 international branches. Its domestic footprint includes 207 branches dedicated to Islamic banking, reinforcing its efforts to provide Shariah-compliant financial solutions across the country. The bank holds a notable market share of approximately 10.8 percent in domestic deposits, further cementing its position as a key player in supporting Pakistan’s financial intermediation and public sector operations.
VIS’s reaffirmation of NBP’s ratings is anchored in several strengths. These include the bank’s strong franchise value, reflected in reliable access to low-cost deposits, sustained earnings generation capacity, a largely sovereign-backed ownership structure, and sound asset quality buffers. The agency also highlighted that NBP continues to benefit from governance frameworks that provide rigorous board oversight and effective Shariah governance for its Islamic operations.
In line with evolving banking trends, NBP is making substantial progress on its digital transformation roadmap. Investments in core banking modernization, cybersecurity enhancements, and improved customer interface platforms are expected to enhance operational efficiency and customer engagement. Moreover, the bank has started integrating environmental, social, and governance (ESG) principles into its broader business strategies, aligning with emerging global banking standards.
Operational challenges did arise over 2024, primarily due to external shocks impacting the agriculture sector, such as the wheat crisis, which led to some deterioration in asset quality. However, proactive provisioning and subsequent improvements in non-performing loan balances as of March 2025 helped reinforce the bank’s risk buffers.
NBP’s liquidity profile remains robust, underpinned by a steady base of customer deposits and a conservative investment approach heavily weighted towards government securities. Liquidity coverage and funding ratios comfortably exceed regulatory minima, positioning the bank well against short-term volatility.
While profitability faced temporary pressure during 2024 from exceptional pension-related costs, financial performance rebounded strongly in the first quarter of 2025. This recovery was driven by margin expansion following monetary easing and stronger non-markup income streams. Continued emphasis on cost management and income diversification is expected to support profitability going forward.
Capitalization remains a clear strength for NBP. Retained earnings and regulatory changes allowing the inclusion of foreign currency translation reserves into core capital have further bolstered the bank’s capital adequacy ratio, keeping it well above minimum regulatory thresholds.
Overall, VIS’s reaffirmation of ratings with a stable outlook underscores confidence in NBP’s steady financial position, strong institutional franchise, and strategic role within Pakistan’s banking sector.