He also pointed out that while the start to 2024-25 (FY25) has been modest for most banks, growth is likely to pick up in the second half of the year. System-wide credit growth is expected to be around 11%, with the first half remaining weak and a recovery seen in the latter half.
Among large-cap banks, Aggarwal’s top picks include ICICI Bank, HDFC Bank, and within the public sector undertaking (PSU) space, SBI. He believes SBI has more room to grow, especially after its recent capital raise. “Post this capital raise, I think the overhang will go away,” he said, adding that SBI could catch up with the rally seen in other PSU names like Union Bank and Canara Bank.
Also Read:
DSP’s Vinit Sambre sees long-term value in small and midcaps
Aggarwal emphasised that investors should not choose banks just based on size. Instead, it’s better to look at individual performance and outlook. “You will still have to look at it on a case-by-case basis,” he said.
Also Read: UBS sees Nifty at 27,500 in 12 months, driven by earnings growth
On public sector banks, he acknowledged that April-June 2025 (Q1FY26) has been slow, with muted loan and deposit growth reported by some names like Bank of Baroda and Punjab National Bank (PNB). However, he doesn’t expect this to impact the full-year outlook, as Q1 is usually a weaker season.
For the entire interview, watch the accompanying video
Catch all the latest updates from the stock market here
