The research house said on Wednesday that it was lowering the forecast to 4.1% from 4.6%.
However, it expects 2018 domestic loan growth to expand at a faster rate of 4.5% emanating from higher consumer loan growth.
“A key contributor to earnings growth this year has been the expansion in net interest margin (NIM), for which we expect to be stable in 2018, with marginal benefit from an expected 25bp hike in interest rates.
“Pending guidance from the banks, we are projecting 2018 credit costs to remain relatively unchanged year-on-year post MFRS9,” it said in a note.
The research house noted that Q3’17 saw the results of most banks coming in within expectations, with cumulative core net profit up 13% on-year during the quarter 3Q17 and 15% on-year in for the nine month period.
It said core net profit growth for 9M17 had been respectable and projects an aggregate 2017 earnings growth of 13.7% for the banks in its coverage, aided in large part by the expansion in NIMs.
This growth is projected to taper off to 5.8% in 2018 amid flat NIMs and stable credit costs.
It said upside risks to earnings would be if NIMs or credit costs surprised positively.
It maintained its Neutral call on the sector, with Buys on HLFG, CIMB and BIMB.