** Brokerage Morgan Stanley downgrades large cap banking sector to "in-line" from "attractive", citing tariffs-induced GDP slowdown and higher probability of recession

** Cuts median loan growth forecast for 2025 to 2.2% from 2.7% and for 2026 to 3.2% from 3.5%

** Brokerage calls tariffs "a tax on the American consumer which fuels ~70% of U.S. GDP"

** Relative to nominal GDP, brokerage now expects capital markets recovery to be pushed two years to 2028

** "We have to expect a slowdown at best with recession probability rising sharply as consumers do not have savings levels to absorb these tariffs and continuespending at pre-tariff levels," says brokerage

** Downgrades Goldman Sachs GS.N to "equal-weight" from "overweight"; calls co "the most exposed large cap bank to investment banking revenues"

** Downgrades Northern Trust NTRS.O to "underweight" from "equal-weight"; says co less likely to make progress towards expense-to-trust fee ratio of 105-110%

** Including session moves, the KBW Bank index is down 15.9%, since President Trump announced tariffs

(Reporting by Ateev Bhandari in Bengaluru)

((ateev.bhandari@thomsonreuters.com))