Higher provisions will likely impact net profit and lead to lower dividends for banks that rely on dividend payout ratios. “A larger risk for stock prices is banks and regulators re-thinking capital management plans,” JP Morgan indicates.
While the local market and markets in Apac have taken the Iran War in their stride, with minimal impact thus far, a prolonged energy crisis could have a second-order impact, according to JP Morgan. In an update on Mar 22, JP Morgan says the shifts in the availability and price of energy should lead to negative second-order effects for select lenders.
“Banks appear to be tightening credit standards, with some flagging the possibility of requests for loan restructuring. We expect [more] provision overlays in 1Q2026 with cautious commentary. By 2Q2026, some losses should come through, with possibly more in 2H2026,” the JP Morgan report says.
