Public sector banking firms are witnessing a steady improvement in asset quality, supported by lower slippages and strong recovery momentum. Gross NPAs across major lenders have continued to trend downward, reflecting disciplined underwriting and better credit monitoring.
However, analysts caution that margin movement will remain a key monitorable as deposit costs gradually firm up. Banks are increasingly focusing on retail and MSME segments to sustain credit growth while maintaining balance sheet strength.
The sector outlook remains stable in the near term, though earnings trajectory will depend on liquidity conditions and rate cycle movements.
