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Banking sector Q4 preview: PSU Banks to post better earnings than private banks

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The fourth quarter of FY24 is expected to be challenging for the banking sector due to factors like net interest margin pressure, slower deposit growth, and cost pressures related to wage hikes and pension provisions. PSU banks are projected to outperform private banks in terms of earnings growth, driven by lower credit costs. The report suggests that the NIM pressure and funding costs are likely to persist in Q4 FY24. PSU banks like SBI are considered top picks due to their earnings stability and growth prospects. Overall, NII growth is estimated to be around 8.3% YoY for the banking coverage universe in Q4 FY24.