PSU banks will continue to ride on strong loan growth & benign credit cycle in FY25: Rahul Malani

Rahul Malani, Equity Research Analyst, Sharekhan, says PSU banks are reporting strong loan growth versus their private peers right now. In terms of PNB has reported a sequential pickup in the loan growth versus the numbers also. So, Sharekhan continues to believe that the journey for PSBs will continue to ride on strong loan growth as well as a benign credit cycle for FY25.

Weak numbers reported as opposed to what the market, I guess, was anticipating or do you think it was well in the price or not quite?
Rahul Malani: In the last one month. HDFC Bank has already outperformed. A modest expectation was built in HDFC Bank around 1% to 2% deposit growth because Q1 is a weak quarter especially if we look at the flows perspective, as well as the system growth and deposit growth has also been muted. So, already expectation was that the deposits would grow around 1% to 2% but the numbers which overall deposits were flat mainly due to CASA de-grew by around 5%, which was below expectation.

What is the sense that you are getting all in all having taken a look at the kind of Q1 updates, how are you looking at PSBs versus the private lenders?

Rahul Malani: Basically, we have seen that PSBs are reporting strong loan growth versus their private peers right now. In terms of PNB has reported a sequential pickup in the loan growth versus the quarter four numbers also. So, we continue to believe that the journey for PSBs will continue to ride on strong loan growth as well as a benign credit cycle for FY25.