Public sector lender Indian Overseas Bank (IOB) reported a sharp 43.2% year-on-year jump in net profit to ₹1,505 crore for the March quarter, compared to ₹1,051 crore in the same period last year. The earnings surge reflects a combination of steady income growth, lower credit costs, and continued gains in asset quality. Net Interest Income (NII) rose 11.11% YoY to ₹3,470 crore, pointing to stable core operating performance despite a competitive interest rate environment.
Margins steady, efficiency improves
Margins remained broadly stable, with domestic Net Interest Margin at 3.35% and global NIM at 3.25% for the quarter. Operational efficiency showed marginal improvement, with the cost-to-income ratio easing to 44.02% from 44.35% a year ago. Return on assets strengthened by 20 basis points to 1.32%, reflecting improved profitability and better utilisation of the balance sheet.
Consistent growth
Commenting on the performance, Ajay Kumar Srivastava, Managing Director & CEO of IOB, said the bank has been registering consistent growth in profitability on the back of improved asset quality stemming from tighter control over slippages and lower provisioning requirements. He added that recovery performance has remained robust, further supporting the bank’s earnings trajectory.
Balance sheet growth gains momentum
The bank’s balance sheet growth remained strong and well distributed. Total business expanded by ₹1.16 lakh crore to ₹6.79 lakh crore as of March 2026, marking a 20.76% YoY increase. Advances grew at a faster pace of 24.16% YoY to ₹3.10 lakh crore, while total deposits rose 18.03% to ₹3.68 lakh crore, indicating sustained credit demand and improving franchise strength.
RAM segments drive credit expansion
A key driver of growth was the RAM (Retail, Agriculture and MSME) portfolio, which expanded 34.91% YoY, reflecting a strategic pivot toward granular lending. Retail credit led the growth with a sharp 45.12% increase, while agriculture and MSME segments grew 39.27% and 13.08% respectively, providing a diversified growth base.
CASA remains stable amid deposit growth
On the liability side, CASA deposits rose 10.85% YoY to ₹1.51 lakh crore. The domestic CASA ratio improved marginally to 41.46%, while the global CASA ratio edged up to 40.99%, indicating stable access to low-cost funding even as retail term deposits grew strongly at 17.81%.
Asset quality strengthens further
Asset quality remained a standout positive for the quarter. Gross NPA ratio declined sharply by 72 basis points YoY to 1.42%, while net NPA ratio improved to 0.21%. Provision Coverage Ratio strengthened to 97.50%, reflecting strong provisioning buffers. Slippages remained tightly controlled, with the ratio at just 0.13% for the quarter and 0.49% for the full year. Notably, the bank reported zero slippages in its corporate and overseas portfolios over the past two quarters, with the corporate book maintaining a clean record throughout FY26.
Recoveries and capital provide cushion
Recovery efforts remained robust, with total recoveries rising to ₹960 crore in Q4, including ₹564 crore from written-off accounts. Credit cost for the quarter stood at a low 0.30%, aiding profitability. Meanwhile, the bank’s capital position strengthened, with Capital Adequacy Ratio rising to 19.78%, including a Tier-I ratio of 16.94%, providing sufficient headroom for future growth.