Indian Overseas Bank (IOB) reported a 43% year-on-year rise in net profit to ₹1,505 crore in the fourth quarter, aided by higher interest income and lower provisions and tax expenses. For FY26, net profit rose 56% to ₹5,419 crore, crossing the ₹5,000 crore mark for the first time. The public sector lender also crossed a key milestone, with annual operating profit exceeding ₹10,000 crore for the first time at ₹10,026 crore.

“This has been one of our best years in terms of overall performance and consistency,” said Ajay Kumar Srivastava, MD & CEO, Indian Overseas Bank. He attributed the sharp jump in profitability to multiple factors. “Interest income has grown, but more importantly, slippages are low and asset quality is strong, which reduces provisioning. Fee income and sale of priority sector lending certificates have also supported the bottom line,” he added.

Interest income rose 11% year-on-year to ₹8,488 crore in Q4FY26, while interest expenses grew at a similar pace to ₹5,019 crore. Net interest income increased 11% to ₹3,470 crore. Domestic net interest margin (NIM) moderated to 3.33% in FY26 from 3.42% in FY25, while global NIM declined 4 basis points to 3.21%. Srivastava attributed the compression to the 125 basis point repo rate cut impacting the bank’s retail and MSME portfolio. “We are pretty sure that we will be able to maintain NIM around 3.21% to 3.30% this year also,” he said.

Credit growth continued to outpace deposits. Total advances rose 24% year-on-year to ₹3.10 lakh crore in Q4FY26, while deposits grew 18% to ₹3.68 lakh crore. Total business stood at ₹6.78 lakh crore, up 21% year-on-year. Srivastava said the gap between credit and deposit growth has been a persistent trend for the bank and the industry over the past two years. However, he noted that deposit growth has improved from low single digits to 18% this quarter. “Our credit-to-deposit ratio is only 82%. We have been managing with borrowing from RBI and refinancing agencies. All these things taken together we have been able to show a growth of 24% in credit.” he said.

IOB expects credit growth of 12–13% and deposit growth of 14–15% in FY27, factoring in potential stress from West Asia tensions. Srivastava said a few MSME accounts in select pockets are showing some stress due to the ongoing conflict, though the situation is not concering. “If the Iran war persists, it could have an impact on credit growth,” he said. The bank has created an additional provision buffer of ₹400 crore to address potential risks from the geopolitical situation. It has also set aside ₹1,750 crore towards the expected credit loss regime to be implemented from April 1, 2027.

Asset quality improved during the quarter. Gross NPAs declined to 1.42% from 2.14% a year earlier, while net NPAs fell to 0.21% from 0.37%. The lender reported recoveries of ₹3,576 crore in FY26 against slippages of ₹1,211 crore. For FY27, it is targeting recoveries of ₹3,600 crore from bad loans and written-off accounts.