The document discusses the Pakistan banking sector and recent rumors that the central bank may reduce minimum deposit rate (MDR) requirements to provide relief to banks. It notes that banks have faced headwinds since monetary easing began in 2012 and MDR was introduced in 2008. Recent reports suggest the central bank may 1) directly cut MDR by 50-100bps or 2) link MDR to a variable rate like KIBOR. This has boosted banking stock prices. However, the document argues the sector rally may not materialize as central bank has previously not supported banks despite rate cuts and rates may eventually rise again. A direct MDR cut may provide temporary relief but linking it to KIBOR could cause banks to lose
The document discusses the Pakistan banking sector and recent rumors that the central bank may reduce minimum deposit rate (MDR) requirements to provide relief to banks. It notes that banks have faced headwinds since monetary easing began in 2012 and MDR was introduced in 2008. Recent reports suggest the central bank may 1) directly cut MDR by 50-100bps or 2) link MDR to a variable rate like KIBOR. This has boosted banking stock prices. However, the document argues the sector rally may not materialize as central bank has previously not supported banks despite rate cuts and rates may eventually rise again. A direct MDR cut may provide temporary relief but linking it to KIBOR could cause banks to lose
The document discusses the Pakistan banking sector and recent rumors that the central bank may reduce minimum deposit rate (MDR) requirements to provide relief to banks. It notes that banks have faced headwinds since monetary easing began in 2012 and MDR was introduced in 2008. Recent reports suggest the central bank may 1) directly cut MDR by 50-100bps or 2) link MDR to a variable rate like KIBOR. This has boosted banking stock prices. However, the document argues the sector rally may not materialize as central bank has previously not supported banks despite rate cuts and rates may eventually rise again. A direct MDR cut may provide temporary relief but linking it to KIBOR could cause banks to lose