THEBUSINESSBYTES BUREAU

CHENNAI, OCTOBER 26, 2026

Indian Overseas Bank (IOB) on Monday reported a 56 per cent year-on-year jump in net profit to Rs 1,963 crore for the second quarter of FY27, driven by robust growth in interest income, higher net interest income and improved asset quality.

The Chennai-based public sector lender had posted a net profit of Rs 1,259 crore in the July-September quarter of FY26.

The bank's total income rose 13 per cent to Rs 10,428 crore during the quarter under review, while interest income grew 17 per cent to Rs 9,201 crore, compared with Rs 7,851 crore in the corresponding period of the previous fiscal.

"Our net interest income grew by 26 per cent during the quarter. Our asset quality was also good, and our slippages are one of the lowest in the system," IOB Managing Director and Chief Executive Ajay Kumar Srivastava said.

Net interest income (NII), the difference between interest earned and interest expended, increased 26.4 per cent to Rs 3,867 crore in Q2 FY27 from Rs 3,059.3 crore a year ago.

The bank continued to strengthen its asset quality, with fresh loan slippages remaining under control at Rs 240 crore during the quarter. The slippage ratio stood at 0.07 per cent, among the lowest in the banking system, Srivastava said.

IOB's gross non-performing asset (NPA) ratio declined by 64 basis points year-on-year to 1.19 per cent, while the net NPA ratio improved by 12 basis points to 0.16 per cent. Credit cost edged down by one basis point to 0.17 per cent.

NPA recoveries during the quarter stood at Rs 647 crore, nearly three times the amount of fresh slippages, reflecting continued improvement in the bank's recovery efforts.

The bank's financial performance indicators also strengthened, with return on assets (RoA) rising to 1.53 per cent from 1.20 per cent a year ago. Return on equity (RoE) improved to 24.58 per cent from 19.95 per cent in the year-ago period.

Its capital adequacy, measured by the capital to risk-weighted assets ratio (CRAR), rose 66 basis points year-on-year to 18.60 per cent, providing additional support for business expansion.

On the business front, IOB recorded strong growth in deposits and advances. Total deposits increased 20.16 per cent to Rs 4.07 lakh crore from Rs 3.39 lakh crore a year earlier.

Current account savings account (CASA) deposits grew 20.73 per cent year-on-year to Rs 1.65 lakh crore, while the domestic CASA ratio improved by 13 basis points to 41.14 per cent.

Advances expanded 24.35 per cent to Rs 3.45 lakh crore in the second quarter of FY27, compared with Rs 2.77 lakh crore in the corresponding period last year, indicating sustained credit growth.

On the implementation of the expected credit loss (ECL) provisioning framework, Srivastava said the bank's preliminary assessment indicated an additional provisioning requirement of around Rs 2,600-2,800 crore.

However, he said IOB had already created ECL provisions of around Rs 2,700 crore, covering the entire requirement currently envisaged.

"Therefore, 100 per cent of the requirement currently envisaged has already been provided for in the balance sheet as forward-looking ECL provisions," he said.

The bank's gold loan portfolio also continued to perform well, with no signs of stress, Srivastava said, adding that IOB had introduced several schemes to meet the borrowing needs of different sections of society at competitive interest rates.

"Our jewellery loan portfolio is very robust. We have outstanding jewellery loans of nearly Rs 1.36 trillion. It is a very healthy portfolio, with no signs of stress," he said.

The bank maintains a loan-to-value ratio of around 60-62 per cent for its jewellery loan portfolio, providing a cushion against fluctuations in gold prices, he added.