LAST year's pessimistic projection of banks' 1995 performance may have been overblown as analysts expect a strong profit growth from the sector.
The initial forecasts were dampened by rising interest rates, uncertainty surrounding interest rate deregulation and consolidation of the property market.
'As it turns out, these were misconceptions and the pessimism was exaggerated,' DBS Securities analyst Anthony Lok said.
He said the interest rate cycle reversed by mid-year, interest rate deregulation was halted and the property market was pulling itself out of the doldrum.
Still, banks are not expected to reach the 1994 average profit growth of 17 per cent, and a lower rate of 15 per cent is forecast.
Bigger banks' core earnings should achieve 15 to 20 per cent increase while the stronger medium-sized ones would be up 20 to 25 per cent.
