finance PM market analysis — 2026-09-12

Banking sector evidence continues to point in two directions at once. Bandhan Bank’s latest quarter showed improving asset quality and stronger retail-deposit support, a sign that funding bases are stabilising even where headline performance has been softer. Set against that, commentary from ETBFSI describes lenders turning more selective with credit, protecting borrower quality but accepting slower loan growth as margin pressure builds.

SBAB Bank’s experience reinforces the margin concern. Its profitability came under strain from lower margins and higher costs, even though capital and credit quality held up. That combination, solid balance-sheet fundamentals paired with squeezed earnings, looks consistent with the broader theme emerging from this pack: banks are managing risk carefully while absorbing pressure on net interest income.

The UK monetary-policy backdrop adds a further layer of uncertainty. Persistent inflation risk keeps the interest-rate path consequential for funding costs and credit demand across financial institutions, and nothing in this pack resolves that ambiguity. Taken together, the sector picture is one of resilience in asset quality and deposits offset by genuine earnings pressure, which argues for a cautious, balanced reading rather than a directional call.