Banks tout 2026 earnings lift despite mixed China stimulus signals

China and India are the markets to watch out for.

Banks are optimistic for 2026, expecting solid earnings backdrop and touting constructive outlooks, according to FTI Consulting.

Several banks globally highlight resilient profitability, strong capital positions, and improving credit trends, the consulting and management advisory firm said in its report “What Major Financial Institutions Expect for 2026” published in January.

Banks are "increasingly well-capitalized and profitable,” according to UBS, which expected the return on equity (ROE) of the financial services sector to have hit 11.5% in 2025 with further gains expected.

Most banks in the Asia-Pacific region are expected to maintain “broadly steady profitability” in 2026, although net interest margins (NIMs) are still likely to decline, according to an earlier report by Fitch Ratings.

In Asia, several banks highlighted China’s stabilisation and India’s expansion as things to look out for in 2026.

Policy support in mainland China is expected to help drive real GDP to expand 5% throughout the year, according to a forecast by Morgan Stanley.

Separately, J.P. Morgan noted China’s efforts to "combine monetary stimulus with targeted fiscal support” had limited success until recently.

India is increasingly being viewed as a core emerging market opportunity by investors, FTI Consulting noted. Natixis, for example, said that “half of institutions now think India will surpass China as the leading emerging market investment” even as it thinks India’s 2026 performance will remain mixed.

HSBC maintains a neutral stance on India, saying that it will “wait for evidence that government reform measures will materially change the growth and earnings outlook” of the country, FTI Consulting noted.

A January 2026 report by Fitch Ratings said that Indian banks are likely to benefit from enhanced regulatory oversight in 2026, which should reduce systemic risks.

Banks in India are now better positioned to monitor and control loan risks, Fitch had said.