Ambit Capital analysts have projected that the ongoing conflict in Iran may cap India's banking sector loan growth at 10-12% due to geopolitical uncertainties affecting credit growth, margins, and asset quality. While the systemic credit growth outlook remains fundamentally sustainable, risks from supply chain disruptions and liquidity tightening could temper growth expectations. The brokerage has cut its earnings CAGR estimate to 15.7% from 17.3%, citing potential demand shocks and macroeconomic pressures on bank earnings. Despite these challenges, asset quality across the banking system remains stable, with gross non-performing assets (NPAs) reported at around 2.2%. Ambit Capital believes private sector banks, such as HDFC Bank and ICICI Bank, are better positioned than public sector banks due to their stronger balance sheets and pricing power. The brokerage advises a selective investment strategy, focusing on high-quality lenders with robust deposit franchises.