PSU banks vs Private banks: These banking stocks gave up to 55% returns in 1 year; do you own any?
Large-cap names like HDFC Bank, with an m-cap of Rs 11.99 lakh crore, declined 19% over the past year, making it one of the weakest performers in the segment.
- Apr 30, 2026,
- Updated Apr 30, 2026 4:58 PM IST
The performance of major Indian banking stocks over the past one year shows a clear divergence between public sector (PSU) banks and private sector banks, in terms of market returns. Data from Ace Equity shows that most PSU banks have delivered stronger returns, while some large private banks have performed poorly.
Among private banks, the picture is uneven. Large-cap names like HDFC Bank, with a market capitalisation of Rs 11.99 lakh crore as of April 29, 2026, declined 19% over the past year, making it one of the weakest performers in the segment. Similarly, ICICI Bank (mcap: Rs 9.18 lakh crore) fell 10%, and Kotak Mahindra Bank (mcap: Rs 3.8 lakh crore) dropped 14%. IDBI Bank also slipped 4%.
On the positive side, Axis Bank (mcap: Rs 4.03 lakh crore) and IndusInd Bank (mcap: Rs 71,191 crore) posted modest gains of 9% each. However, the real outperformers within private banks were mid-sized players such as AU Small Finance Bank surged 50% (mcap: Rs 76,157 crore), while Federal Bank gained 45% (mcap: Rs 70,184 crore). Overall, despite their large market caps, most frontline private banks failed to generate strong returns, which weighed on the segment’s overall performance.
In contrast, PSU banks delivered broad-based gains across the board, even though their market capitalisations are generally lower than top private banks. State Bank of India (SBI), the largest PSU lender with a market cap of Rs 10.03 lakh crore, rose 38%, reflecting strong investor confidence.
Other PSU banks also posted solid returns — Indian Bank led with a 55% gain (mcap: Rs 1.18 lakh crore), followed by Canara Bank at 41% (mcap: Rs 1.24 lakh crore) and Union Bank of India surged 33%. Punjab National Bank rose 11%, while Bank of Baroda increased 7%. On the other hand, Indian Overseas Bank underperformed slightly with a 6% decline.
The contrast is clear, while PSU banks, though smaller in size compared to private sector giants, have delivered stronger returns over the past year. This suggests that investors have been willing to re-rate PSU banks, driven by improving fundamentals such as better asset quality, stronger profitability, and relatively attractive valuations.
Meanwhile, private banks, especially the large-cap names, have faced pressure due to slower growth and margin-related concerns, limiting their stock performance despite their scale.
The performance of major Indian banking stocks over the past one year shows a clear divergence between public sector (PSU) banks and private sector banks, in terms of market returns. Data from Ace Equity shows that most PSU banks have delivered stronger returns, while some large private banks have performed poorly.
Among private banks, the picture is uneven. Large-cap names like HDFC Bank, with a market capitalisation of Rs 11.99 lakh crore as of April 29, 2026, declined 19% over the past year, making it one of the weakest performers in the segment. Similarly, ICICI Bank (mcap: Rs 9.18 lakh crore) fell 10%, and Kotak Mahindra Bank (mcap: Rs 3.8 lakh crore) dropped 14%. IDBI Bank also slipped 4%.
On the positive side, Axis Bank (mcap: Rs 4.03 lakh crore) and IndusInd Bank (mcap: Rs 71,191 crore) posted modest gains of 9% each. However, the real outperformers within private banks were mid-sized players such as AU Small Finance Bank surged 50% (mcap: Rs 76,157 crore), while Federal Bank gained 45% (mcap: Rs 70,184 crore). Overall, despite their large market caps, most frontline private banks failed to generate strong returns, which weighed on the segment’s overall performance.
In contrast, PSU banks delivered broad-based gains across the board, even though their market capitalisations are generally lower than top private banks. State Bank of India (SBI), the largest PSU lender with a market cap of Rs 10.03 lakh crore, rose 38%, reflecting strong investor confidence.
Other PSU banks also posted solid returns — Indian Bank led with a 55% gain (mcap: Rs 1.18 lakh crore), followed by Canara Bank at 41% (mcap: Rs 1.24 lakh crore) and Union Bank of India surged 33%. Punjab National Bank rose 11%, while Bank of Baroda increased 7%. On the other hand, Indian Overseas Bank underperformed slightly with a 6% decline.
The contrast is clear, while PSU banks, though smaller in size compared to private sector giants, have delivered stronger returns over the past year. This suggests that investors have been willing to re-rate PSU banks, driven by improving fundamentals such as better asset quality, stronger profitability, and relatively attractive valuations.
Meanwhile, private banks, especially the large-cap names, have faced pressure due to slower growth and margin-related concerns, limiting their stock performance despite their scale.