Part 3/10:
While the outlook remains positive, there is a consensus that the pace of earnings growth is approaching a peak. Much of the recent margin expansion was driven by asset expansion and aggressive measures like strategic asset sales, which have now largely concluded. Moving forward, the banks will face higher funding costs that could eat into profit margins.
Credit costs are also expected to rise modestly due to the high interest rate environment, which tends to restrict borrowing activity. Borrowers are generally cautious in such conditions, leading to slower credit growth. Consequently, analysts expect a period of stability in key credit metrics, with only slight upside potential for net interest margins.