Bank of Maharashtra, Indian Bank gain over 2% ahead of Q1 earnings; what PSBs' Q1 updates indicate

Shares of Bank of Maharashtra (BoM) and Indian Bank were trading with decent gains in the morning trade on Friday, July 10, ahead of the lenders' June-quarter announcements, scheduled for later in the day.

When last seen, Bank of Maharashtra shares were trading 2.13% higher at ₹83.76 apiece on the NSE, while Indian Bank was trading nearly 2% higher at ₹807.50.

PSBs started the first quarter of FY27 on a strong footing, reporting double-digit growth in advances, but deposit mobilisation seemed to be trailing the jump in loans.

Retail loans remained the key growth engine even as low-cost CASA deposits stayed under pressure.

Provisional business disclosures, compiled by PTI, by nine of the 12 state-owned lenders for the quarter ended June 30, showed loan growth ranging from around 12 per cent to nearly 29% year-on-year compared to deposit growth of 3.5-16%, reflecting sustained credit demand despite a slower pace of liability mobilisation.

Among the major lenders, Bank of Baroda reported a 17.4% year-on-year rise in global advances against a 13.8% increase in deposits, while Bank of India posted 18.64% loan growth and a 14.92% rise in deposits.

Punjab National Bank's (PNB) advances grew 12.85% year-on-year compared to an 8.5% increase in deposits.

Canara Bank reported 18% growth in loans and an 11.7% rise in deposits, while Indian Bank recorded 13.9% loan growth and a 13.3% jump in deposits.

Central Bank of India emerged as the fastest-growing lender in the group, with advances rising 28.8% year-on-year against an 11.7% expansion in deposits.

UCO Bank reported a 21.3% rise in advances and an 11% increase in deposits, and Punjab & Sind Bank posted 19.5% loan growth and a 12.2% rise in deposits.

Union Bank of India stood out for relatively weak deposit mobilisation, with the component growing just 3.5% year-on-year, even as advances increased 12.5%.

Retail, agriculture and MSME (RAM) loans continued to drive credit expansion across lenders.

Canara Bank reported the highest growth among peers, with domestic RAM advances rising 21.3% year-on-year, followed by Bank of India at 19.7% and Bank of Baroda at 18.5%. Indian Bank's RAM portfolio grew 14.8%, while Union Bank's expanded 11.56%.

The faster pace of lending compared to deposit growth also resulted in a further rise in credit-deposit ratios at several lenders.

Recent developments

Former NITI Aayog Vice Chairman Arvind Panagariya in June 2026 called for the government to revive the privatisation of public sector undertakings (PSUs) and public sector banks (PSBs), describing it as a key pillar of India’s economic reform agenda.

In an interview with PTI, Panagariya also proposed the creation of an independent privatisation ministry to fast-track the government’s disinvestment programme, arguing that the current Department of Disinvestment has struggled to sustain the momentum.

“I firmly believe that, regardless of fiscal pressures, the privatisation of PSUs and most public sector banks is integral to our economic reforms,” he said, adding that the process should continue despite the ongoing West Asia conflict and broader geopolitical uncertainties.

PSBs post record profit in FY26

Public sector banks reported a record aggregate net profit of ₹1.98 lakh crore in FY26, marking the fourth consecutive year of profitability, according to data released by the Finance Ministry in May 2026.

The ministry attributed the strong performance to improved asset quality, healthy credit growth and higher income. Aggregate operating profit rose to ₹3.21 lakh crore, while net profit increased 11.1% year-on-year to an all-time high of ₹1.98 lakh crore.

The combined business of PSBs expanded 12.8% year-on-year to ₹283.3 lakh crore as of March 31, 2026. Aggregate deposits grew 10.6% to ₹156.3 lakh crore, reflecting continued depositor confidence and robust resource mobilisation, while gross advances increased 15.7% year-on-year to ₹127 lakh crore, underscoring sustained credit demand across sectors of the economy.