New Delhi, April 10 -- The prolonged phase of earnings downgrades in the Indian financial sector could come to an end by the first half of the financial year 2025-26 (1HFY26), said a report by Goldman Sachs.

The report stated that the Indian financial sector may finally be approaching a turning point, with early signs of recovery emerging in asset quality and operating profitability.

It said, "We believe our "muddle through" scenario for Indian Financials could be coming closer to an end, as we see early signs of improvement in asset quality and operating profitability".

However, the report highlighted that the recent data points indicate some pressure on earnings due to weak credit growth, a decline in net interest margins (NIMs), and...