Axis Bank vs Punjab National Bank: Which banking stock should you choose for long term?
RBI holding rates, GDP growth coming better than expected in the September quarter as well as the improving global macros have also been aiding the sentiment. The Indian banks delivered healthy earnings during the second quarter of FY24, but the performance was marked by slowing momentum. The lenders reported net profit growth of 33 percent year-on-year (YoY) led by a reduction in credit costs.
Analysts believe the lenders are entering a period of low revenue growth for H2FY24 as the cost of funds is yet to peak for all players. Asset quality is unlikely to be a concern for most banks in the medium term unless there is a sharp macroeconomic downturn—a relatively low probability event. Amid this backdrop, between private sector lender Axis Bank and public sector lender Punjab National Bank (PNB), which one has better long-term investment opportunities? Both Axis Bank and PNB have outperformed the benchmark this year so far.
While PNB has performed better, surging over 59 percent in 2023 YTD, Axis Bank has jumped 20 percent. In comparison, the Nifty Bank has added 11 percent and Nifty has advanced 17 percent in this period. Despite the better performance, PNB has been in the green in only 6 of the 12 months this year versus Axis's 8 months of positive returns.
PNB surged the most in September, up 27.3 percent and shed the most in February, down 9.7 percent. Axis Bank, on the other hand, has gained the most in November, up 9.4 percent and lost the most in October, down 5.3 percent. Just in December, PNB has soared almost 16 percent as compared to a 4.3 percent rise in Axis.
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