Moody's has revised the outlook for Pakistan's banking sector from positive to stable, citing a gradual economic recovery and an improving fiscal and external position, as reported by Geo Business and Business Recorder. The agency highlighted that while the operating environment is gradually improving, challenges related to asset quality and profitability persist. Moody's noted, 'banks' financial performance will be stable over the next 12-18 months,' aligning the sector's outlook with the Government of Pakistan's rating of Caa1 stable, given banks' significant holdings of government securities. This change reflects the broader economic conditions, including the country's fiscal position and debt sustainability concerns.