Why public sector bank stocks are still not investor favourites

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Editor's note: Just when Rome is burning, Indian public sector banks seem to be as fit as a fiddle. For the fiscal year ended March 2022, after years of reporting high levels of non-performing assets, state-owned banks put up a stellar performance. These banks, a dozen in number (barring behemoth State Bank of India), tripled their net profit to Rs 42,457 crore from Rs 14,766 crore a year earlier. The growth in profits is even more spectacular if you consider that these very banks made a loss of Rs 21,443 for the year ended March 2020. In the two years since, the cumulative revenue of these banks increased from Rs 369,131 crore to Rs 448,356 crore (according to screener.in) and a merger of several banks initiated by the government starting 2019 ensured that these banks consolidated their position in the pecking order of banks in the country. Consequent to the mergers, two more public sector banks—Punjab National and Bank of Baroda—made it to the top 5 banks in the country, ahead of private banks like ICICI Bank and Axis Bank. SBI continues …