Public sector lender Indian Bank reported a 10.09% year-on-year (YoY) increase in net profit for the first quarter of FY27, supported by robust growth in net interest income, healthy credit expansion and continued improvement in asset quality.
The Chennai-headquartered bank posted a net profit of ₹3,273 crore for the quarter ended June 2026, compared with ₹2,973 crore in the corresponding quarter of the previous fiscal.
Strong growth in interest income
Net Interest Income (NII) rose 16.92% YoY to ₹7,435 crore from ₹6,359 crore a year earlier, reflecting healthy business growth and improved operating performance.
Domestic Net Interest Margin (NIM) improved to 3.41% from 3.35%, aided by lower funding costs. Cost of deposits declined by 34 basis points to 4.80%, while the cost of funds fell 40 basis points to 4.83%. Yield on investments stood at 6.96% during the quarter.
The bank also improved operational efficiency, with its cost-to-income ratio declining by 98 basis points to 44.80%.
Advances and deposits maintain momentum
Gross advances increased 13.89% YoY to ₹6.85 lakh crore from ₹6.01 lakh crore, while deposits grew 13.47%, taking the bank’s total business growth to 13.66%.
The domestic CASA ratio improved to 39.73% from 38.97% a year ago, while the credit-deposit ratio strengthened to 81.06% from 80.77%.
Retail, agriculture and MSME lending remain key drivers
The Retail, Agriculture and MSME (RAM) portfolio continued to drive loan growth, with advances in the segment rising 14.80% YoY to ₹4.17 lakh crore. RAM loans now account for 66% of the bank’s domestic advances.
Retail advances grew 18.74%, agriculture advances increased 9.96%, while MSME advances expanded 17.03%. Home loans, including mortgage loans, registered 13.36% growth.
Priority sector advances stood at ₹2.37 lakh crore, representing 45.36% of Adjusted Net Bank Credit (ANBC), comfortably exceeding the regulatory requirement of 40%.
Asset quality strengthens further
Indian Bank continued to improve its asset quality during the quarter. Gross Non-Performing Assets (GNPA) declined sharply to 1.86% from 3.01% a year ago, while Net NPA improved to 0.15% from 0.18%.
The Provision Coverage Ratio (PCR), including technical write-offs, improved to 98.22%. The slippage ratio reduced to 0.77% from 0.94%, while credit cost improved to 0.23% compared with 0.28% in the year-ago period.
The bank maintained a strong capital position, with the Capital Adequacy Ratio standing at 17.58% and Common Equity Tier-I (CET-I) ratio at 16.51%.
Digital banking gathers pace
Digital banking continued to gain traction, with business worth ₹67,327 crore generated through digital channels during Q1FY27.
The bank has launched 158 digital journeys, utilities and processes so far to enhance customer experience.
Mobile banking users increased 22% YoY to 2.48 crore, while UPI users grew 21% to 2.77 crore. Net banking users reached 1.19 crore, while Fastag and POS users registered growth of 79% and 40%, respectively.
Extensive nationwide network
Indian Bank operates 6,003 domestic branches, including three Digital Banking Units (DBUs), supported by 5,676 ATMs and BNAs and 17,314 Business Correspondents. The bank also has three overseas branches and an International Banking Unit (IBU) at GIFT City.
Outlook
The bank said it remains focused on becoming the preferred financial partner for customers by offering comprehensive banking solutions through operational excellence, disciplined portfolio management and a customer-centric approach. It aims to deliver simpler, faster and more seamless banking experiences while sustaining profitable growth and maintaining healthy asset quality.