I O B — Q1 FY27 earnings call

Call held 20 Jul 2026

Management summary

Indian Overseas Bank delivered strong Q1 FY27 results, driven by robust credit growth, improved asset quality, and expanding margins. Net profit surged by 49.32% YoY to INR 1,659 crores, while operating profit grew 14.21%. The bank significantly reduced its GNPA and NNPA percentages to 1.33% and 0.18% respectively, alongside a healthy 22.75% YoY growth in advances. Management expressed confidence in sustaining profitability and asset quality, with strategic focus on CASA, digital initiatives, and capital raising plans.

Highlights

  • Net profit for Q1 FY27 was INR 1,659 crores, a 49.32% year-on-year increase from INR 1,111 crores in Q1 FY26.

  • Operating profit reached INR 2,693 crores, registering a 14.21% year-on-year growth.

  • Gross NPA percentage reduced by 64 bps YoY to 1.33% and Net NPA percentage reduced by 14 bps YoY to 0.18%.

  • Total advances grew 22.75% year-on-year to INR 3,22,132 crores.

  • Return on Assets (RoA) stood at 1.41% for the quarter, a 27 bps increase compared to June 2025, and Return on Equity (RoE) increased 369 bps to 22.69%.

Key financials

  1. Net Profit ₹1,659 Cr +49.3%YoY
  2. Operating Profit ₹2,693 Cr +14.2%YoY
  3. Business Mix ₹6.98L Cr +17.7%YoY
  4. CASA (Absolute) ₹1.54L Cr +6.6%YoY
  5. CASA Ratio (Domestic) 41.5%
  6. Total Deposits ₹3.76L Cr +13.7%YoY
  7. Total Advances ₹3.22L Cr +22.8%YoY
  8. Provision Coverage Ratio 97.7%
  9. Capital Adequacy Ratio 19.4%
  10. Net Interest Margin (Global) 3.4%
  11. Net Interest Margin (Domestic) 3.5%
  12. Gross NPA ₹4,292 Cr
  13. Net NPA ₹588 Cr
  14. GNPA Percentage 1.3%
  15. NNPA Percentage 0.18%
  16. Slippage Ratio 0.06%
  17. Return on Assets 1.4%
  18. Book Value Per Share ₹15.79
  19. Return on Equity 22.7%
  20. Earnings Per Share ₹0.86
  21. PSLC Commission ₹863 Cr
  22. Recovery from Written-off Accounts ₹490 Cr
  23. Net Worth ₹29,256 Cr
  24. DTA Addition ₹200 Cr
  25. MTM Addition ₹300 Cr
  26. SMA 0 ₹5,733 Cr
  27. SMA 1 ₹3,068 Cr
  28. SMA 2 ₹4,246 Cr
  29. Total SMA ₹13,000 Cr
  30. Fee Income (Other than PSLC) ₹476 Cr

What they filed

Q1 FY27: revenue up 18.8%, net profit up 49.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue6,851 7,112 7,634 7,386 7,849 +15%8,172 +15%8,489 +11%8,778 +19%
Net profit777 874 1,051 1,111 1,226 +58%1,365 +56%1,505 +43%1,659 +49%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

  • M&A GIFT City branch New branch expansion · Pending regulatory

    Expand international operations and build a book of business.

    Expected to build a book of around $500 million by the end of this financial year.

    So we got this approval around 3 to 4 months back, and we have started the process of opening it. Maybe in another 2 months, it will come into physical existence. We will start the process. And we are looking to build a book of around 500 million by the end of this financial year through this GIFT City branch. 500 million is the internal budget.

Guidance & targets

Profitability

  • Net Profit Profitability · going forward · High confidence increasing
    On last 10 quarters, if you see the trend of operating profit and net profit quarter-on-quarter is only one dimensional, that is increasing.

    — Ajay Kumar Srivastava

  • Return on Assets (RoA) Profitability · all points in time · High confidence above 1.20%
    Internally, at all points in time, we want to maintain it above 1.20%.

    — Ajay Kumar Srivastava

  • Return on Assets (RoA) Profitability · by end of financial year · Medium confidence around 1.46%
    So going forward, by end of this year, maybe financial year, maybe we are looking at around 1.46%.

    — Ajay Kumar Srivastava

  • Return on Assets (RoA) Profitability · foreseeable two to three quarters going forward · High confidence 1.4% to 1.5%
    ROA also around between 1.4% to 1.5%, we do expect in the foreseeable two to three quarters going forward.

    — Ajay Kumar Srivastava

Margin

  • Net Interest Margin (NIM) Margin · going forward · High confidence 3.3% to 3.4%
    So we are pretty sure that going forward also, sir, NIM will be in this range only around 3.3 to 3.4.

    — Ajay Kumar Srivastava

  • Net Interest Margin (NIM) Margin · foreseeable future · High confidence 3.3% to 3.40%
    We are pretty confident that NIM will be able to maintain at around 3.3% to 3.40% because of our inherent strength and the type of efficiency we have brought into the system.

    — Ajay Kumar Srivastava

Credit Growth

  • Corporate Loan Book Growth Credit Growth · by the end of this year · Medium confidence 12% to 13%
    And we expect that the corporate loan book also, by the end of this year will grow by 12% to 13%.

    — Ajay Kumar Srivastava

  • Total Credit Growth Credit Growth · going forward · High confidence 13% to 14%
    See, credit growth, we are intending to grow at around 13% to 14%. And I always say that having said that, this is the minimum we want to grow.

    — Ajay Kumar Srivastava

International Operations

  • GIFT City Book International Operations · by the end of this financial year · Medium confidence $500 million
    And we are looking to build a book of around 500 million by the end of this financial year through this GIFT City branch. 500 million is the internal budget.

    — Ajay Kumar Srivastava

Deposits

  • FCNR Deposits Deposits · by September (end of dispensation period) · Medium confidence $600 million to $650 million

    Previously $300 million → $600 million to $650 million

    We intend to double it, maybe by the time this dispensation period which is coming to an end in September. By September, we intend to double it to $600 million, $650 million. That is the plan.

    — Ajay Kumar Srivastava

Capital Raising

  • Equity Capital Raise Capital Raising · Q3 and Q4 · Medium confidence INR 5,000 crores
    We intend to go to the market in maybe more than one tranche in Q3 and Q4.

    — Ajay Kumar Srivastava

  • Tier 2 Bonds Capital Raising · Medium confidence INR 1,000 crores
    I recently approved a plan to raise to INR5,000 crores by equity and INR1,000 crores by our Tier 2 bonds.

    — Aryan Rana

Asset Quality

  • Credit Cost Asset Quality · full year · High confidence 0.35% to 0.40%
    Credit cost for June quarter is 0.14%. And we expect that for the full year, the credit cost should be around 0.35% to 0.40%.

    — Ajay Kumar Srivastava

Growth

  • Assets and Liabilities Growth Growth · High confidence 13% to 14%
    We intend to grow both sides assets and liabilities by 13% to 14% and as I said that is the minimum.

    — Ajay Kumar Srivastava

What to watch in Q2 FY27

GIFT City branch operationalization and book building

by end of FY27
Current Approval received, physical existence in ~2 months
Target Operational and progress towards $500 million book

Why it matters

Indicates progress on international expansion and new revenue streams.

So we got this approval around 3 to 4 months back, and we have started the process of opening it. Maybe in another 2 months, it will come into physical existence. We will start the process. And we are looking to build a book of around 500 million by the end of this financial year through this GIFT City branch.

Risks & concerns

  • Sustainability of high profitability

    medium

    Analyst questioned if the current high profitability, driven by certain factors, can be sustained in coming quarters. Management expressed confidence in maintaining it based on NII growth and routine activities.

    Analyst acknowledged

  • Sustaining high performance level

    medium

    Analyst noted the bank has reached a very good level of performance and asked about the outlook for sustaining or bettering it, acknowledging it as a challenge. Management outlined strategies for consistency.

    Analyst acknowledged

  • Impact of West Asia crisis on credit quality

    low

    Analyst asked about potential pressure on smaller accounts or SMEs due to the West Asia crisis. Management stated no such signs or struggles have been observed so far.

    Analyst downplayed

Q&A highlights

8 direct
Sustainability of PSLC commission and recovery income Direct
In fact, if you look at last 8 to 9 quarters numbers, these 2 parameters are there in all quarters. PSLC sale income. And so this isintegral part of non interest income. And that will continue, of course, it is stable, and it will continue going forward also.

Analyst questioned if these significant income components are one-off or sustainable, management confirmed they are routine and stable.

Asked by Ashok Ajmera

ECLGS disbursement and potential stress from West Asia crisis Direct
So ECLGS total universe from IOB side, whatever number of eligible accounts and amount is there, that is around INR4,400 crores. And out of that, we have so far disbursed around INR 2,600 crores... INR 1,800 crores is expected to be done over the next one, one and half months. And demand is there, request is there. We are pretty sure that 95% to 100% of ECLGS disbursement will certainly take place by August end or September first week. And regarding West Asia issue and stress on any small borrowers or SME accounts, so far we have not seen.

Provided specific figures for ECLGS disbursement and reassured about no visible stress from geopolitical events on small borrowers.

Asked by Ashok Ajmera

Components of net worth increase (DTA, MTM) Direct
DTA, we have done INR 200 crores, sir. Sir, MTM addition is there around INR 300 crores.

Clarified the specific components contributing to the increase in net worth beyond reported profit, indicating treasury gains and deferred tax assets.

Asked by Ashok Ajmera

SMA numbers and increase in SMA 2 Direct
Total SMA is around 4%. And it is coming down because one month before it was 4.95. As regards SMA, SMA 0 is INR5,733 crores. SMA 1 is INR3,068 crores. And SMA 2 is INR4,246 crores. So total SMA is INR13,000 crores, percentage terms, it is 4.05%. Ajmera Sir, SMA 2 has increased by INR500 crores over March, that is correct. Total SMA, it has come down by INR2,200 crores.

Provided detailed breakdown of SMA categories and clarified that while SMA 2 saw a slight increase, overall SMA has reduced, indicating improving asset quality trends.

Asked by Ashok Ajmera

Capital raising plans (method and timing) Direct
So, it is true that INR 5,000 crores of capital raising plan has been approved by the Board. And we are in the process of obtaining all other statutory approval before hitting the market. And we expect that in this quarter, it will happen. So maybe in Q3 or Q4, depending on the market conditions, we will go to the market maybe in 1 or 2 or maybe more than 2 tranches also.

Provided clarity on the approved capital raising amount and the expected timeline and tranches for execution.

Asked by Vimal Panchal

Yield on advances and corporate loan book decline Direct
Yes. Yield on advances has increased because of a pricing issue, of course. And about 54% of the credit portfolio is linked to MCLR and 37% to RLLR, and because of good quality lending at reasonable pricing, yield on advances has increased. The corporate book, I will say that, there is a pipeline of around INR 14,000 crores already sanctioned and in different stages of disbursement. And we expect that the corporate loan book also, by the end of this year will grow by 12% to 13%.

Explained the drivers of increased yield (pricing, MCLR/RLLR linkage) and provided context for corporate loan book decline (one large account, not systemic) with future growth targets.

Asked by Ashlesh Sonje

Digital initiatives and their impact Direct
So as on date around 96% of the total transactions happen digitally in the system. Across-the-counter transactions are hardly 2% to 3%. And a lot of efficiency has come in through mobile banking, through net banking. Of course, everyone does UPI. We have created products and systems where people can apply for loan also sitting at home and sanction later, they can get it within 10 minutes on their laptop or mobile.

Highlighted the extensive digital adoption (96% transactions, 75% onboarding) and its role in efficiency and customer experience, indicating a strong digital transformation.

Asked by Sumera Choksi

Monetization strategy for GIFT City operations Direct
So we got this approval around 3 to 4 months back, and we have started the process of opening it. Maybe in another 2 months, it will come into physical existence. We will start the process. And we are looking to build a book of around 500 million by the end of this financial year through this GIFT City branch. 500 million is the internal budget.

Provided timeline for operationalization and a specific target for the business book to be built through the new GIFT City branch, indicating international expansion plans.

Asked by Sumera Choksi

2 min read 6 chapters

Detailed narrative

Strong Profitability and Growth Highlights

Indian Overseas Bank reported a net profit of INR 1,659 crores for Q1 FY27, marking a significant 49.32% year-on-year increase from INR 1,111 crores in Q1 FY26. The operating profit also saw a healthy growth of 14.21% year-on-year, reaching INR 2,693 crores. The bank's total business mix expanded by 17.72% year-on-year to INR 6,98,325 crores, driven by a 22.75% increase in total advances to INR 3,22,132 crores and a 13.72% growth in total deposits to INR 3,76,193 crores.

Improved Asset Quality and Provisioning

The bank demonstrated significant improvement in asset quality, with Gross NPA reducing to 1.33% (down 64 bps YoY from 1.97%) and Net NPA falling to 0.18% (down 14 bps YoY from 0.32%). Gross NPA in absolute terms decreased from INR 5,178 crores to INR 4,292 crores, and Net NPA from INR 816 crores to INR 588 crores. The slippage ratio for the quarter was notably low at 0.06%, down from 0.10% in Q1 FY26, and the Provision Coverage Ratio (PCR) improved to 97.67%.

Robust Margins and Capital Adequacy

Net Interest Margin (NIM) showed positive momentum, with global NIM at 3.37% (up 12 bps QoQ) and domestic NIM at 3.48%. The bank's Return on Assets (RoA) improved to 1.41% for the quarter, a 27 bps increase from June 2025, and Return on Equity (RoE) surged by 369 bps to 22.69%. Capital adequacy remains strong at 19.36%, well above the regulatory requirement of 11.50%, providing a solid foundation for future growth.

Deposit Franchise Strength and Cost Management

The bank's CASA (Current Account Savings Account) in absolute terms grew by 6.61% year-on-year to INR 1,54,415 crores, with a domestic CASA ratio of 41.45% and global CASA ratio of 41.05%. Management highlighted aggressive focus on CASA and reduced reliance on high-cost bulk deposits, which contributed to an improvement in the cost of deposits, declining by approximately 10 basis points quarter-on-quarter.

Digital Transformation and Operational Efficiency

IOB has made significant strides in digital adoption, with approximately 96% of total transactions now happening digitally, and only 2-3% being over-the-counter. About 75% of customer onboarding is also digital. The bank has revamped its digital products and processes, enabling features like instant loan applications and sanctions within 10 minutes, and digital locker allotments in 2 minutes, enhancing efficiency and customer experience.

Strategic Capital Raising and International Expansion

The Board has approved a capital raising plan of INR 5,000 crores through equity and INR 1,000 crores through Tier 2 bonds, expected to be executed in Q3 or Q4 FY27 in multiple tranches. Additionally, the bank received approval for a GIFT City branch and plans to make it physically operational within two months, aiming to build a business book of around $500 million by the end of the current financial year. The bank also targets to double its FCNR deposits to $600-$650 million by September.

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