Indian Overseas Bank‘s (IOB) net profit rose 49% year-on-year to ₹1,659 crore in the first quarter of FY27, aided by higher net interest income, growth in fee income, lower bad loan provisions and tax expenses. The state-run lender reported a net profit of ₹1,505 crore in the March quarter.
Interest income increased 14% year-on-year to ₹8,778 crore in Q1FY27, while interest expenditure rose 5% to ₹5,090 crore, helping in 34% expansion in Net interest income (NII) to ₹3,688 crore. Consequently, net interest margin improved to 3.48% from 3.17% in the year-ago quarter.
Non-interest income surged 67% to ₹2,160 crore. This includes commission income, recoveries from technical written-off accounts, sale of priority sector lending (PSL) certificates and all other incomes.
While the IOB’s NPA recovery of ₹654 crore during the quarter was 3.35 times the quarterly slippages, MD & CEO Ajay Kumar Srivastava said the recovery pool is shrinking due to sustained recoveries over the past few years. “Five years back the pool used to be around ₹47,000 crore. Now, the technical Written-off pool has come down to around ₹20,000 crore and NPA pool is around ₹4,000 crore only,’ Srivastava said addressing the first quarter earnings briefing.
Credit growth continued to outpace deposit mobilisation. Total advances rose 24% year-on-year to ₹3.22 lakh crore in Q1FY27, compared with a 14% increase in deposits to ₹3.76 lakh crore. Total business stood at ₹6.98 lakh crore, up 18% year-on-year. Srivastava said the bank is planning aggressive deposit mobilisation to narrow the credit-deposit gap. “But there is no ideal Credit-Deposit (CD) ratio. Our domestic CD ratio is around 83%, which shows that credit and deposit growth is happening.”
Retail loans grew 36% to ₹96,637 crore, while agriculture loans jumped 47% to ₹1.12 lakh crore. MSME loans increased 16% to ₹52,554 crore as of the June 2026 quarter. Retail, agriculture and MSME (RAM) loans together accounted for 81% of the bank’s total advances.
Srivastava said the bank does not see any stress in its agriculture or MSME portfolio due to the ongoing West Asia crisis. “We have created ₹500 crore provision (for West Asia) just to be on safer side. So far, we do not see stress in any of the portfolios or industries.”
The bank expects credit growth of 12-13% in FY27 on a conservative basis. On the liability side, low-cost CASA deposits rose 7% to ₹1.54 lakh crore, while retail term deposits increased 16% to ₹1.86 lakh crore.
Asset quality improved further during the quarter. Gross non-performing assets (GNPAs) declined to 1.33% at the end of June 2026 from 2.14% a year earlier, while net NPAs fell to 0.21% from 0.37%. Fresh slippages declined to a five-quarter low of ₹195 crore. Recoveries stood at ₹654 crore during the quarter, compared with ₹960 crore in the preceding quarter.
Shares of IOB closed 4% higher at ₹35.06 on the NSE.
