R ARIVANANTHAM
CHENNAI, JAN 16
Indian Overseas Bank (IOB) delivered a stellar financial performance in the third quarter of FY26, reporting its highest-ever quarterly net profit of ₹1,365 crore, a sharp 56.18 per cent year-on-year jump, underscoring the bank’s successful transformation driven by strong core earnings, improved asset quality and disciplined risk management.
For the nine months ended December 2025, net profit surged 62.13 per cent to ₹3,703 crore, firmly positioning IOB among the strongest-performing public sector banks in the current financial year.
- Robust core income, sharp NPA containment and disciplined recoveries power sustained momentum
- Nine-month profit crosses ₹3,700 crore as asset quality touches best-ever levels
- Retail, Agri and MSME lending accelerates, driving 33% RAM business growth
- Capital adequacy remains strong at 16.30%, ensuring headroom for future expansion
- GIFT City licence secured; branch launch planned within 6–9 months
Core profitability strengthens further
Operating profit for Q3FY26 rose 14.87 per cent year-on-year to ₹2,603 crore, while Net Interest Income (NII) increased 18.29 per cent to ₹3,299 crore, supported by healthy credit growth and stable margins. Domestic Net Interest Margin improved to 3.42 per cent, reflecting efficient balance-sheet management despite a competitive rate environment.
Return on Assets (RoA) climbed to 1.28 per cent, while Return on Equity (RoE) improved significantly to 20.98 per cent, highlighting enhanced shareholder value creation. The cost-to-income ratio stood at a controlled 45.74 per cent, reflecting sustained operating discipline.
Business growth remains broad-based
The bank’s total business expanded by ₹1.01 lakh crore to ₹6.44 lakh crore as of December 2025, registering a strong 18.7 per cent year-on-year growth. Total advances rose 24.1 per cent to ₹2.95 lakh crore, while deposits increased 14.5 per cent to ₹3.49 lakh crore.
The growth momentum was led by priority segments, with Retail, Agriculture and MSME credit rising by 43.04 per cent, 34.51 per cent and 17.42 per cent, respectively. Overall RAM business grew by 33.1 per cent, reinforcing IOB’s focus on granular, high-quality lending.
CASA deposits grew 7.8 per cent year-on-year to ₹1.43 lakh crore, with the domestic CASA ratio maintained at 41.29 per cent, ensuring a stable and low-cost funding base.
Asset quality at best-ever levels
IOB continued its sharp improvement in asset quality, with Gross NPA declining to 1.54 per cent, down 101 basis points year-on-year, and Net NPA improving to 0.24 per cent. The slippage ratio remained benign at 0.11 per cent, while the Provision Coverage Ratio strengthened further to 97.49 per cent.
Recoveries consistently outpaced slippages, reflecting robust monitoring and resolution mechanisms. During Q3FY26, total recoveries stood at ₹890 crore, including ₹635 crore from written-off accounts. For the nine-month period, recoveries of ₹2,616 crore were nearly three times higher than slippages of ₹845 crore.
Leadership on NPA containment and growth roadmap
Commenting on the performance, Ajay Kumar Srivastava, Managing Director & CEO, along with the Chief Strategy Officer, said the bank’s sustained profitability was anchored in proactive asset-quality management, early warning systems, focused recoveries and a calibrated credit growth strategy.
They highlighted that special measures to contain NPAs, including tighter underwriting norms, continuous portfolio reviews and accelerated recovery initiatives, have structurally strengthened the balance sheet and reduced credit costs to 0.44 per cent during the quarter.
GIFT City foray signals global ambitions
In a strategic move to enhance its international and institutional banking footprint, the MD & CEO announced that IOB has received regulatory approval to open a branch at GIFT City, Gandhinagar, during December 2025. Preparations are underway, and the bank expects to operationalise the branch within the next six to nine months.
The GIFT City presence is expected to support offshore banking, trade finance, forex services and global treasury operations, aligning with India’s ambition to position GIFT City as a global financial hub.
Capital strength and expanding reach
The bank’s Capital Adequacy Ratio stood at 16.30 per cent, with Tier-I capital at 13.99 per cent, providing adequate buffers for future growth. IOB also continued expanding its physical and digital footprint, adding 116 branches over the last year, taking the total to 3,438 branches, with 58 per cent located in rural and semi-urban areas.
Customer touchpoints expanded to over 19,000, including ATMs, CRMs and business correspondents, reinforcing financial inclusion and service accessibility across the country.
