Who will give better returns in banking sector? On the basis of strong growth and low NPA, these 4 stocks became the choice of brokerage Which banking sector stocks will deliver better returns? Driven by strong growth and low NPAs, these four stocks have become brokerage favourites.

The Indian banking sector seems to be in a very strong position at present. There has been a major improvement in the financial condition of banks due to the increase in economic activities of the country and increase in credit demand (demand for loans). The most reassuring thing is that the bad loans of banks i.e. NPA are continuously decreasing. In view of this excellent outlook, leading brokerage houses have advised to bet on 4 selected shares of the banking sector, which can give excellent returns to investors in the coming time.

The pace of credit growth and decreasing NPA became a game changer.

According to market analysts, the loan book of Indian banks is registering strong growth on an annual basis. From retail loans to corporate loans, demand is strong across every vertical. Along with this, there has been a historic improvement in the asset quality of banks due to strict regulations and better recovery. Net NPA figures have come down to a low level, due to which the provisioning burden of banks has reduced and the direct impact is visible on their profits (net profit). This is the reason why experts are quite bullish about this sector.

These 4 strong banking stocks came on the radar of brokerage

The four stocks that brokerage houses have made their top picks include both private and government banks. These banks not only have a large deposit base but also have a very strong digital infrastructure which is helping them expand in tier-2 and tier-3 cities. Experts believe that entry into these shares at the current valuation can prove to be a profitable deal in the long term. Stability is also being seen in the margins (NIM) of all these banks.

Banks’ dominance in small and big cities due to increasing demand at local level

These banks are getting the maximum benefit from the improvement in the local economy. The scope of banking services has expanded rapidly in towns and semi-urban areas from North to South India. According to the brokerage report, banks which are strengthening their regional networks and providing easy loans to local businesses (MSMEs), are likely to have better growth performance than their competitors.