State-owned lender Indian Overseas Bank on Monday (October 26, 2026) reported a 55.9% jump in consolidated net profit to ₹1,962.67 crore for the September quarter, driven by core income growth and improved asset quality.
In the year-ago period, the bank had reported a net profit of ₹1,258.82 crore.
Its core net interest income (NII) increased 26.41% year-on-year to ₹3,867 crore in the second quarter of the current fiscal, from ₹3,059 crore in the year-ago period.
Domestic net interest margins (NIM) of the bank improved to 3.49% as of September 30, 2026, from 3.48% as of June 30, 2026, and 3.35% as on September 30, 2025, the investor presentation showed.
The advances surged 24.35% during the quarter compared to the year-ago period.
Non-interest income of the bank declined by 10.11% year-on-year to ₹1,227 crore in Q2FY27, from ₹1,365 crore in Q2FY26, due to a drop in recovery from technically written-off accounts.
“The major reduction was due to the absence of income from priority sector lending certificates (PSLCs). We earned around ₹900 crore in commission from PSLCs in the first quarter, but there was no such income in the second quarter. This was the primary reason for the decline,” Ajay Kumar Srivastava, managing director and chief executive officer of Indian Overseas Bank, told PTI.
In the quarter under review, the bank’s total deposits increased by 20.16% YoY to ₹4.07 lakh crore, from ₹3.39 lakh crore a year ago.
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The sharp growth in total deposits was due to a 20.73% growth in current and savings accounts (CASA).
On a standalone basis, the public lender reported a 56% rise in net profit to ₹1,912 crore in Q2 FY27, compared to ₹1,226 crore in the year-ago period.
Standalone interest income of the bank rose to ₹9,201 crore during the quarter, up from ₹7,849 crore in the corresponding quarter of the preceding fiscal.
The lender mobilised $1.12 billion, equivalent to around ₹11,000 crore, under the FCNR(B) concessional swap.
The deposits came from a mix of domestic and overseas branches, with around 70% sourced from overseas branches and the remaining 30% from domestic branches, Mr. Srivastava said.
“We have used only one-time leverage. We did not opt for five, nine or 15 times leverage. The leverage is around 70-80 per cent of the total deposits mobilised, while the remainder is unleveraged,” Mr. Srivastava said.
The bank has not seen any impact of El Nino on its portfolio so far, whether in retail, agriculture or MSME lending, he added.
The retail, agriculture and MSME (RAM) advances segment grew 34.51% YoY to ₹2.83 lakh crore in Q2FY27, from ₹2.10 lakh crore a year ago.
“Our RAM portfolio has already grown by around 35% year-on-year, and we expect some further growth. Demand for retail, housing and vehicle loans has been healthy, and we expect this momentum to continue through the busy season,” Mr. Srivastava said.
The gross non-performing asset (NPA) ratio of the bank improved to 1.19% in the September quarter, from 1.33% in the previous quarter and 1.83% in the corresponding period a year ago.
Mr. Srivastava said the bank has an approval to raise ₹5,000 crore through a qualified institutional placement (QIP) in the current financial year and has obtained almost all the necessary approvals.
“We plan to enter the market by the end of the current quarter or possibly at the beginning of the fourth quarter, depending on market conditions,” he added.
He said that if the bank raised the entire ₹5,000 crore, the dilution would be around 6%. The Government of India’s shareholding, currently at 92.44% would decline to around 86%.
Shares of Indian Overseas Bank settled at ₹30.34 apiece, up 5.71%, on the BSE.
Published – October 26, 2026 10:36 pm IST
