Bank earnings may face cuts on prolonged West Asia crisis

Bank earnings are expected to face headwinds on continued stress in West Asia even as their balance sheets are healthy, according analyst reports.

Analysts said that bank loans are expected to grow at a pace of 11% to 13% in fiscal 2027 with BNP Paribas cutting its estimates 3 percentage points to 11%. “The full impact of the West Asia crisis is expected to come from fiscal 2027.  Higher inflation due to a prolonged conflict and sooner resolution might lead the central bank hiking rates to control inflation and this may cut loan growth estimates further, said KIE. The researchers however forecast that the tensions will returns to normalcy in a month and this would mean there will be no major rate increases.