Indian Overseas Bank Posts 76% Jump in Q1 Profit as NPAs Ease, NII Grows 12.5%

Public sector lender Indian Overseas Bank (IOB) posted a 75.57 per cent year-on-year rise in net profit for the quarter ended June 30, 2025 (Q1 FY26), with net profit climbing to Rs 1,111 crore from Rs 633 crore in the same period last year, led by improved asset quality, a stronger CASA base, and higher net interest income. 

Operating profit rose 40.70 per cent YoY to Rs 2,358 crore, up from Rs 1,676 crore, while net interest income (NII) increased by 12.50 per cent to Rs 2,746 crore, compared with Rs 2,441 crore in Q1 FY25. The bank’s net interest margin (NIM) stood at 3.04 per cent globally and 3.17 per cent domestically. 

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Asset quality too showed notable improvement, with gross non-performing assets (GNPA) ratio dropping by 92 basis points to 1.97 per cent, down from 2.89 per cent a year ago. Net NPA fell to 0.32 per cent from 0.51 per cent, while the slippage ratio improved by 3 bps to 0.10 per cent. Credit cost remained low at 0.29 per cent, and provision coverage ratio (PCR) rose to 97.47 per cent, up 51 bps YoY. 

Total business for the bank expanded by 12.19 per cent YoY to Rs 5,93,213 crore, driven by a 14.05 per cent growth in gross advances to Rs 2,62,421 crore and a 10.75 per cent increase in total deposits to Rs 3,30,792 crore. The bank’s CASA deposits rose 15 per cent YoY to Rs 1,44,837 crore, pushing the CASA ratio up by 161 bps to 43.78 per cent. The credit-to-deposit (CD) ratio stood at 79.33 per cent as of June 30, 2025. 

Profitability metrics saw a substantial boost, with return on assets (RoA) improving by 44 bps to 1.14 per cent, and return on equity (RoE) increasing by 490 bps to 19 per cent. The cost-to-income ratio improved significantly by 754 bps to 44.22 per cent, reflecting improved operating efficiency. 

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The bank also reported sequential (quarter-on-quarter) improvements across key parameters, including total business up by 5.56 per cent, deposits growing by 6.04 per cent, and advances jumping by 4.96 per cent. Asset quality for the bank continued to strengthen quarter over quarter, with GNPA and NNPA ratios falling by 17 bps and 5 bps, respectively. 

Indian Overseas Bank’s performance in Q1 FY26 reflects sustained improvements across profitability, asset quality, and operational efficiency, underscoring the success of its strategic focus on low-cost liabilities, disciplined credit growth, and recoveries.