Local banks reaped bumper earnings in the first six months of this year but the risk of declining profits is greater in the second half of the year and next year, Credit Suisse said in a report on Friday.

It said lenders' profits could fall in coming months, citing a deterioration in the macroeconomic environments of Singapore, Southeast Asia and India which are local banks' core markets.

This is after Singapore banks notched up record profits in the first six months of this year due to "better-than-expected strength in non-interest income and loan growth".

Credit Suisse said that earnings could drop by 5 per cent to 10 per cent if there is a mild slowdown in loan growth, interest margins remain flat and credit costs move towards historical averages. In a worse scenario, earnings could tumble 18 per cent to 22 per cent, it added.

It said that DBS appeared to be "relatively safe" but UOB and OCBC, which face higher Singapore dollar funding costs, "appear to be more at risk".