What is Banking Sector?
Banks come in many forms: large universal banks (JPMorgan, HSBC, ICICI), regional banks (US community banks), investment banks (Goldman Sachs, Morgan Stanley), and specialty finance. Core revenue sources: net interest income (loan rates minus deposit rates), fee income (cards, wealth management, investment banking), and trading. Banks are highly regulated due to systemic risk โ bank failures cascade through the economy.
Why it matters for investors
Banking sector health reflects broader economic conditions: loan growth signals business activity, deposit flows reveal consumer behavior, credit losses indicate stress. Bank earnings dominate Q1/Q2 earnings season โ JPMorgan typically opens the season. India's banking sector has experienced a multi-year asset quality turnaround following the post-2014 NPA crisis.