New Delhi, April 11 -- In its latest banking sector report, InCred Equities said it expects profitability for public sector banks (PSBs) to moderate in the upcoming rate cut cycle, as margin pressure intensifies and non-core income fades. Despite this, the brokerage expressed preference for PSBs like Punjab National Bank (PNB) and Canara Bank (CBK), citing their relative liquidity strength and valuation comfort. Within its broader coverage, InCred stated it prefers large private sector banks over PSBs due to stronger fundamentals and greater growth visibility.

InCred highlighted that margins for PSBs are structurally lower by 5-10 basis points, even by Q4FY27, assuming a 50 basis point cut in the repo rate. The firm has built in margin c...