Archive · 13 Sep 2026
Japanese and Korean Banks Outpace India in Earnings Upgrades
Jefferies compared how banks are doing in several countries.
Banks in Japan and Korea received much bigger increases to their expected profits than banks in India.
Indian banks have been hurt because falling interest rates can reduce their profit margins.
Some concerns about loan quality also affected India.
Share prices showed a similar pattern, with Indian financial stocks falling while several overseas markets rose.
Jefferies thinks this gap may become smaller in the future.
It expects Indian banks’ profit growth to speed up through FY28.
Higher interest rates, if inflation requires them, could help some Indian banks’ margins.
The brokerage also favors several Indian banks, including ICICI Bank, SBI and Axis Bank.
Jefferies said Japan and Korea recorded the largest FY27 EPS upgrades among listed markets, at 19% and 18%.
India’s financial-sector earnings estimates rose just 1%, partly because falling rates pressured net interest margins and some asset-quality concerns remained.
Over two years, Japanese and UK financial indices gained 96% and 90% in dollar terms, while Indian financials fell 9%.
Jefferies expects global financials’ earnings growth to slow to 7% in 2027, while Indian financials could accelerate to 14% by FY28.
The brokerage identified possible rate increases, leadership changes and foreign-investor reallocations as potential catalysts for Indian banks.
- Who
- Jefferies and financial institutions in Japan, Korea, India and other major markets.
- What
- A comparison of financial-sector earnings revisions, market performance and prospects for Indian banks.
- When
- The comparison covers the first nine months of 2026, the latest quarter, the past two years and forecasts through FY28.
- Where
- Major global markets, including Japan, Korea, India, Europe, China, the United Kingdom and the United States.
- Why
- Different interest-rate cycles, economic conditions, earnings trajectories, margin pressures and asset-quality concerns produced sharply different financial-sector results.
Current Weakness
Potential Improvement
Earnings revisions
Current Weakness
Indian financials have received weaker earnings-estimate upgrades than Japan, Korea and several European markets, with only a 1% FY27 EPS increase.
Potential Improvement
Jefferies expects India’s financial earnings growth to accelerate from 7% in FY26 to 14% in FY28.
Interest rates and margins
Current Weakness
India’s falling-rate environment has pressured net interest margins, while pockets of asset-quality pressure have also weighed on lenders.
Potential Improvement
A policy-rate increase, if higher inflation warrants one, could improve net interest margin trends and support upgrades for Indian banks.
Investment outlook
Current Weakness
Indian financials declined 9% in dollar terms over two years, contrasting with strong gains in Japan, the UK and other markets.
Potential Improvement
Jefferies says a normalized global upgrade cycle, a narrowing growth gap and greater leadership clarity could encourage foreign investors to return to Indian financials.
- Largest FY27 EPS upgrade
- Japan, at 19%, according to Jefferies.
- Second-largest FY27 EPS upgrade
- Korea, at 18%.
- India FY27 EPS upgrade
- 1%, near the bottom of the markets compared.
- Two-year financial-index performance
- Japan rose 96% and the UK rose 90% in US-dollar terms; Indian financials declined 9%.
- Global financial earnings growth forecast
- Expected to slow to 7% in 2027 from 15% in both 2025 and 2026.
- Indian financial earnings growth forecast
- Expected to rise from 7% in FY26 to 9% in FY27 and 14% in FY28.
- Jefferies’ preferred bank picks
- ICICI Bank, SBI and Axis Bank; AU Small Finance Bank and IndusInd Bank were preferred mid-cap names.