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Indian Overseas Bank reported an all-time high quarterly net profit of Rs. 1,365 crores for Q3 FY26, marking a significant 56.18% year-on-year increase from Rs. 874 crores in December 2024. This was supported by a strong 24.13% YoY growth in gross advances to Rs. 2,94,974 crores. The bank also demonstrated substantial asset quality improvement, with the Net NPA ratio reducing by 18 basis points to 0.24% in December 2025 from 0.42% in December 2024, and the Provision Coverage Ratio improving to 97.49% from 97.07%.

The bank's credit growth is projected to reach 24-25% by the end of FY26, driven primarily by the Retail, Agriculture, and MSME (RAM) sectors, which constitute 75-76% of the total portfolio. Management emphasized a deliberate strategy to focus on RAM due to better interest rates, diversified risk, and lower capital requirements, with corporate lending being selective. The domestic CASA ratio stood at a healthy 41.29%, with the bank committed to maintaining it above 41%, despite faster growth in retail term deposits (16% YoY) and SB deposits (>11% YoY).

The Capital Adequacy Ratio (CAR) was reported at 16.30%, comfortably above the regulatory minimum of 11.50%. Management indicated that if the nine-month net profit of Rs. 3,700 crores were factored into capital, the CAR would rise to approximately 18.40%. Furthermore, the bank is in the process of raising Rs. 4,000 crores through a QIP, expected to be completed by February or March 2026. This QIP is projected to reduce government shareholding by another 4%, bringing the total from 96%+ in March 2025 to around 88% by March 2026, with plans for further dilution in the next financial year.

The bank made significant provisions this quarter, including Rs. 800 crores as an additional standard provision buffer and Rs. 1,500 crores for ECL. A notable change was the write-off of Deferred Tax Assets (DTA) amounting to Rs. 2,900 crores, enabling the bank to move to a new tax regime, which is expected to yield future benefits. Additionally, Rs. 160 crores was set aside as surplus provision for pension and gratuity liabilities, contributing to the Rs. 175 crores increase in employee costs, reflecting a prudent approach to employee-related obligations.

Indian Overseas Bank is heavily investing in its IT infrastructure, with an approved expenditure of Rs. 1,600 crores for the current year, of which 70% has already been spent. Key initiatives include core banking modernization (costing Rs. 600 crores), establishment of a state-of-the-art data center, and upgrades to core network and branch infrastructure. These investments are aimed at enhancing operational efficiency, improving customer experience, and strengthening the bank's competitive position, with IT infrastructure being a top priority.

Having exited the Prompt Corrective Action (PCA) framework in September 2021, the bank's management expressed confidence in being able to declare dividends in the next financial year. This signals a return to normal capital distribution policies and is a positive development for shareholders, reflecting the bank's improved financial health and sustained profitability. The bank's Return on Equity (RoE) also saw a significant increase of 312 basis points year-on-year, reaching 20.98%.