New Delhi, Sept. 27 -- Public Sector Banks (PSBs) are entering a new phase of profitability as their return on assets (RoA) has crossed 1 per cent, supported by stronger balance sheets, better asset quality and steady credit growth, according to a recent Motilal Oswal report.

The report said the PSB sector's profitability has touched a record high of Rs 1.5 lakh crore. It added that aggregate earnings of the banks under coverage are expected to grow at a 14 per cent compound annual growth rate (CAGR) over FY26 to FY28.

"While NIM pressure may weigh on the near-term outlook, rising fee income, a gradual moderation in cost ratios, and healthy coverage levels (PCR ~79 per cent) will help to keep RoA stable at 1.0-1.1 per cent." it said.

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