New Delhi, Feb. 21 -- The banking sector is expected to see a subdued profit after tax (PAT) growth of 6 per cent in FY25 and 4 per cent in FY26, according to a report by IIFL capital.

However, given the inexpensive valuations, much of this outlook is already factored into stock prices. The sector's performance will largely depend on whether earnings downgrades stabilize.

India's banking sector saw a mixed performance in the third quarter, with net interest income (NII) growing 6 per cent year-on-year (YoY), core pre-provision operating profit (PPOP) rising 13 per cent, and adjusted profit after tax (PAT) increasing by 7 per cent. While earnings expectations for FY25 have been slightly upgraded by 1 per cent, a 3 per cent downgrade has ...