Locate the font_size value and increase it to a value between 90 and 120 or so. At the top of the file, there's a FontData parameter.Locate the font_data.XML file and right-click it, then choose Open in Notepad.In Windows, navigate to your \Steam\steamapps\common\MountBlade Warband\Data folder.I'm longer bothered by battle text covering half the screen during combat, and the rest of the game's text is still easily readable.
Be aware that it'll change the size of all the text in the game, but I did so and found it incredibly useful. Unfortunately there aren't any options that control your font size directly, but you can change your font size by editing an XML file in your M&B:W installation location. This came up in another thread and I thought I'd post the fix for anyone else who's just starting Warband and wants to reduce the size of the combat text during field battles so it doesn't cover half of your screen.