New Delhi, Jan. 21 -- The outlook for the banking sector remains positive, with earnings expected to recover steadily over the medium term, supported by stable margins, improving asset quality, and a pickup in loan growth, according to a report by Motilal Oswal Financial Services.

The report estimates that the banking sector will deliver an earnings CAGR of around 16 per cent over FY26-28E, signalling a gradual but sustained recovery after a period of pressure.

It stated, "Sector outlook positive; Estimate earnings CAGR of approx. 16 per cent over FY27-28E Buoyed by resilient margin performance and improved asset quality, we have earlier raised our aggregate FY26/27 earnings estimates by approx. 3 per cent/1 per cent in 2QFY26 results, ...