IOB net profit jumps 75% in Q1 FY26; bank plans to raise Rs 4,000 crore in Q3
CHENNAI: Public sector Indian Overseas Bank (IOB) on Friday reported a 75.6% rise in net profit in the quarter ended June 30, 2025 at Rs 1,111 crore against Rs 633 crore during the corresponding quarter last year.
It was on the back of growth in interest income YoY by 13% at Rs 7,386 crore in Q1 FY26 and other income.
The Chennai-headquartered bank will raise Rs 4,000 crore likely by Q3 of the current fiscal. It has also received approval from its board for raising Rs 10,000 crore through infrastructure bonds.
While its net interest income (NII) increased by 12.5 % to Rs 2,746 crore in April-June period of 2025-26 from Rs 2,441 crore, the gross advances rose by 14 % YoY and stood at Rs 2,62,421 crore during the first quarter of the current fiscal.
CASA ratio improved by 161 bps to 43.8 % as on June 30, 2025. Its gross non-performing assets (GNPA) ratio reduced to 1.97% as on 30.06.2025, a decrease by 92 bps, against 2.89 % during the year ago quarter.
The net NPA ratio was down to 0.32% in Q1 FY26 from 0.51 % in the same quarter last year.
The bank recorded fresh slippages of Rs 254 crore in the quarter ended June 2025. Its total recovery for the quarter ended June 30, 2025 increased to Rs 851 crore from Rs 582 crore in the corresponding quarter (Q1 FY25).
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The recovery from the written off accounts (technical write off & set off) for Q1 FY26 increased to Rs 629 crore from Rs 364 crore as on June 30, 2024.
However, net interest margin (NIM) (domestic) stood at 3.17 % as on June 30, 2025, which is a marginal dip YoY by 4 bps and 60 bps QoQ basis when compared with March 31, 2025. The cost of deposit also rose by 15 bps at 5.1% in Q1 FY26 from 4.95% during the same quarter previous year.
IOB MD & CEO Ajay Kumar Srivastava told reporters here that the Q1 FY26 net profit was the highest for the bank during any quarter.
"The driver was interest income. We have been able to control the expenses to a certain extent and there was an increase in other income. We sold priority sector lending certificates. We got around Rs 200 crore through that," he said.
The bank would continue to sustain with the same level of net profit in the coming quarters, he added.
The state-owned bank will be raising Rs 4,000 crore through qualified institutional placement (QIP) during Q3. "If we can raise the entire Rs 4,000 crore, it will bring down the Centre's holding with the bank to 90% from the current 94%," he said.
On the infrastructure bond of Rs 10,000 crore, Srivastava said, "We started the process three months ago. Due diligence is going on and we will go to the market when conditions are conducive to raise."
Steps are being taken to bring back NIM to 3.25% by the last two quarters of FY26. "Now, we are trying to reduce the pressure on margin. By reducing the rate of interest on deposits and other expenses, we are expecting that the pressure on margin will be eased out by Q4."
He said the business growth for the current fiscal would be 11%-12%.
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