The banking sector witnessed a mixed quarter in Q1FY26, with larger private and PSU banks managing margins better than expected, while mid-sized players and small finance banks faced sharper compression. Credit growth stood at 11% YoY, supported by retail and SME lending, though corporate credit remained sluggish due to competitive pricing pressure.Looking ahead, growth momentum is expected to improve from H2FY26, aided by rate cuts, festive demand, and consumption support from tax reductions. Axis Securities has highlighted its top conviction ideas in the banking space across Tier 1 banks, PSU banks, and mid-sized banks, reflecting growth visibility and margin resilience.
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