According to a report in the FT, the Bank of East Asia saw its earnings rise by 5% in the first half despite analysts predicting a slight decline in income. Similarly, though Hang Seng Bank recorded a fall in earnings of 3.8%, this turned out to be a much better performance than the 8% loss analysts were forecasting.

Whilst banking shares dropped sharply at the start of the year, these have now recovered strongly having risen on average 35% from their April lows, outperforming the Hang Seng index which rose 27% in the same period.

It is thought by many observers that an increased level of M&A activity is a major cause for the industry's recovery in recent times with three major merger and acquisition deals have taking place in the market recently. For example, this week has seen Fubon Financial Holdings of Taiwan purchase a 55% stake in International Bank of Asia.

Moreover, it seems that generally, analysts seem optimistic about the chances of a sustained recovery in the sector taking place in the coming months. "We have seen a first wave of recovery boosted by demand in loans," said Dominic Chan, an analyst at CLSA according to the FT. "And I think we are slowly positioning for the second one."