PSU banks outperform on return: Higher profit, cleaner books fuel 2025 surge

State-owned banks dominated equity markets in 2025, outperforming their private-sector peers on the back of stronger asset quality, rising profitability and steady growth in net interest income.

Data compiled by Moneycontrol shows PSU bank stocks rallied 8–32 percent during the year, outstripping the 2–23 percent gains clocked by private-sector lenders.

Indian Bank emerged as the star performer, soaring 34 percent to Rs 809.20 from Rs 530.95 at the start of the year. Canara Bank followed closely with a 33 percent rise, while Union Bank of India and State Bank of India posted gains of 21 percent and 18 percent, respectively.

Among private banks, Federal Bank led with a 23 percent return, trailed by IDFC First Bank at 22 percent and Kotak Mahindra Bank at 17 percent, respectively, but sti