** Brokerage Citi upgrades earnings forecast for Australia's 'big four' banks by 1% in FY25 and 1-3% in FY26 to reflect better net interest margins

** Citi gives a 'neutral' rating to ANZ ANZ.AX and 'sell' rating to Westpac WBC.AX, Commonwealth Bank of Australia CBA.AX and National Australia Bank NAB.AX

** Says the Reserve Bank Of Australia unexpectedly holding interest rates is a positive development for the major banks

** However, Citi flags downside risk into FY26 due to lower cash rates when they will be felt more meaningfully

** Morningstar sees margins softening in the short term as cash rates fall, but anticipates an improvement in the medium term

** Investment research firm forecasts 5% net interest income growth per year to FY2029 on higher NIMs and low-single-digit loan growth

(Reporting by Jasmeen Ara Shaikh in Bengaluru)

((JasmeenAraIslam.Shaikh@thomsonreuters.com;))