Private vs PSU banks face off: SBI, PNB, Union vs HDFC, ICICI, Axis, AU - Which pack could outperform in Q2 2026 results

The corporate earnings season has begun and experts are bullish on banking sector, with some expecting robust business growth led by FCNR (B) inflows, improvement in net interest margins (NIMs) and profit. Public Sector Banks (PSBs) are likely to report resilient margins, but private players are expected to see adverse impact to NIMs, according to Motilal Oswal Financial Services which keeps ICICI, State Bank of India, Kotak Mahindra Bank, and AU Bank among its top picks.
HDFC Bank is likely to see strong deposit growth aided by FCNR (B) deposits. NIMs are likely to improve marginally for Punjab National Bank (PNB). Union Bank of India may see modest increase in its credit cost and some improvement in asset quality. However, Axis Bank may see marginal decline in credit costs amid a reduction in technical slippage.

Private vs PSU Banks: Which pack is likely to perform better in Q2 2026 results? Private Banks Q2 result estimatesPrivate banks are estimated to see a 24% annual growth in their profit after tax (PAT), whereas, PSU banks are expected to see a 27% annual growth in profit.
Consider PAT, PSU bank stocks are likely to outperform in terms of profit growth.“We estimate PSU banks’ PAT to grow 27% YoY (19% QoQ) in 2QFY27, supported by robust business growth, partly coupled with stake sale gains at SBI (SBI MF & NSE), BOB (NSE), and INBK (NSE), and normalization of BoB’s PAT,” read the Motilal Oswal report.

However, net interest income (NII), which is the difference between interest a bank earns on loans (and investments) and interest paid on deposits and borrowings, presents a slightly different picture. Private banks’ NII are estimated to see 13% annual growth, whereas PSBs may see 10.8% annual growth in the segment.“Among large private banks under our coverage, NII is estimated to grow by 8.9% YoY (up 2.5% QoQ) for HDFCB and 16.8% YoY (3.1% QoQ) for ICICIBC.
AXSB’s NII is likely to grow by 8.5% YoY/1.9% QoQ, and KMB’s by 14.0% YoY/5.1% QoQ,” noted Motilal Oswal in its report. AU Bank is expected to see a profit growth of nearly 53.6% on an annual basis, and NIM expansion of 4 basis points on a sequential basis.

Motilal Oswal has mentioned ICICI Bank, State Bank of India, Kotak Mahindra Bank and AU Bank as its top picks in the sector.