New Delhi, Aug. 13 -- Aggressive competition from Public Sector Banks (PSBs) poses a significant risk of prolonged slower growth for Private Sector Banks (PVBs), according to a report by Bernstein.

The report highlighted that PSBs grew faster than PVBs in the latest quarter, with the gap in deposit growth between the two narrowing further. This trend challenges the core of the PVB investment thesis, their ability to consistently deliver structurally higher-than-system loan growth.

It stated "there is a real risk that PVBs face a period of prolonged slower growth, while PSBs continue to grow faster, albeit with structurally lower margins".

Importantly, the report mentioned that this stronger performance by PSBs is not driven by corporat...