New Delhi, July 10 -- India's banking sector is expected to witness a strong earnings recovery over FY26-28, with earnings projected to grow at a compound annual growth rate (CAGR) of around 15 per cent, driven by sustained credit growth and robust net interest income (NII), according to a report by Motilal Oswal Financial Services (MOFS).The report said credit growth is expected to remain in the mid-to-high teens in FY27, with private sector banks likely to outperform public sector banks during the period.

According to MOFS, the banking sector continues to benefit from the Reserve Bank of India's (RBI) recent relief measures, higher foreign capital inflows, and continued support for both short-term and durable liquidity.

The report not...