Archive · 6 Oct 2026
Goldman Sachs Keeps Sell Ratings Despite PSU Banks’ Growth
Seven large government-owned banks in India reported how their loans and deposits changed during the second quarter of FY27.
Together, their loans grew faster than in the previous quarter, but more slowly than loans across the whole banking system.
Their deposits also grew faster than before, but not as quickly as deposits across the system.
Bank of Baroda attracted deposits more quickly than it expanded loans.
Punjab National Bank’s loans grew faster than its deposits.
Goldman Sachs still rates both banks as Sell.
It says future earnings could grow more slowly as some costs return to normal and income from certain other sources eases.
The brokerage set different 12-month target prices for the two banks.
Goldman Sachs retained Sell ratings on Bank of Baroda and Punjab National Bank, with 12-month target prices of Rs 245 and Rs 103, respectively.
Seven public sector banks reported aggregate domestic credit growth of about 16% year-on-year in the second quarter of FY27, up from 15% in the previous quarter but below system growth of 18%.
Aggregate domestic deposit growth for the seven banks improved to around 13%, compared with 10% in the previous quarter and 17% for the banking system.
Bank of Baroda reported 13.5% domestic credit growth and 17% deposit growth; Punjab National Bank reported 12.6% credit growth and 9.4% deposit growth.
Goldman Sachs expects earnings growth at the two banks to moderate as credit costs normalise and non-core earnings decline.
- Who
- Goldman Sachs and seven Indian public sector banks, including Bank of Baroda and Punjab National Bank.
- What
- Goldman Sachs retained Sell ratings on Bank of Baroda and Punjab National Bank despite improvements in some reported business measures.
- When
- The banks reported second-quarter FY27 business updates; Goldman Sachs published its report on 5 October.
- Where
- India.
- Why
- Goldman Sachs expects earnings growth to moderate because of normalising credit costs and lower non-core earnings.
Operating growth
Goldman Sachs’ caution
Loan and deposit performance
Operating growth
Credit and deposit growth among the seven banks improved from the previous quarter, and several lenders reported double-digit loan growth.
Goldman Sachs’ caution
The group’s aggregate credit and deposit growth remained below banking-system growth.
Bank of Baroda and Punjab National Bank
Operating growth
Both banks reported year-on-year credit growth; Bank of Baroda also recorded 17% deposit growth.
Goldman Sachs’ caution
Goldman Sachs kept Sell ratings, citing expected moderation in earnings growth from normalising credit costs and weaker non-core earnings.
- Goldman Sachs target: Bank of Baroda
- Rs 245 over 12 months; the article says this implies about 6% upside based on cited prices.
- Goldman Sachs target: Punjab National Bank
- Rs 103 over 12 months; the article says this implies about 6% downside based on cited prices.
- Seven-bank aggregate credit growth
- About 16% year-on-year in Q2 FY27, versus 15% in the previous quarter.
- Banking system credit growth
- 18% as of September 15.
- Seven-bank aggregate deposit growth
- Around 13% year-on-year in Q2 FY27, versus about 10% in the previous quarter.
- Banking system deposit growth
- 17%.
- Banks covered
- Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Bank of India, Indian Bank and UCO Bank; together they represent about 65% of public sector bank credit.