Analysts love these four stocks in this struggling sector

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Subscribe to enjoy similar stories. Stepping into 2025, the banking sector is recalibrating its approach to balance growth with stability. Guided by the Reserve Bank of India’s (RBI) measures to manage systemic risks and encourage prudent lending, banks are prioritizing deposit growth over aggressive lending strategies.

This shift will help address challenges such as stress in unsecured loans and tighter net interest margins (NIM), setting the stage for a stable financial outlook. Armed with robust fundamentals, large banks are expected to weather these headwinds effectively. These include major players such as ICICI Bank, HDFC Bank, State Bank of India (SBI), and Axis Bank, which continue to inspire confidence and remain analysts’ favourites.

Data from Bloomberg indicates that most brokerage firms maintain a “Buy" rating for these banks, citing their strong fundamentals, proactive risk management, and resilience to market pressures. “Improved profitability and a stronger capital base have been key drivers of the banking sector recently. As the busy season began in October, the advances of banks are likely to further pick up in the subsequent three months, particularly in the retail sector," said Jyoti Prakash Gadia, managing director at Resurgent India.

However, Gadia cautioned that pressure on unsecured loan portfolios could impact short-term earnings. Anchal Kansal, research analyst at Green Portfolio, added, “Due to the RBI’s actions and guidelines, banks are focusing on faster deposit growth over loan expansion. This trend has led to higher deposit growth during Q3 but may compress NIMs and quarterly performance." Having said that, valuations have also turned appealing, potentially offering lucrative opportunities