New Delhi, Jan. 13 -- Public sector banks (PSBs) are expected to outperform broader system credit growth over the medium term, noted HSBC Global Investment Research report. The report says that, "PSBs should achieve loan growth that is 100-300bp higher than system credit growth," driven by balance sheet strength, improved underwriting standards and sustained momentum in corporate and retail demand.

In its latest outlook on Indian PSU banks, HSBC said the sector is entering a phase of structurally stronger growth following a prolonged clean-up cycle. "PSBs are well placed to gain market share given improved capital positions, healthier balance sheets and competitive pricing," the report noted, adding that credit growth is likely to remain...