I O B

Indian Overseas Bank achieved an all-time high quarterly net profit of Rs. 1,365 crores for Q3 FY26, representing a significant 56.18% year-on-year increase. The bank's total business expanded by 18.71% year-on-year to Rs.6,44,276 crores, with gross advances growing by 24.13% to Rs.2,94,974 crores. This strong performance was also reflected in a healthy Return on Assets (RoA) of 1.28% and Return on Equity (RoE) of 20.98%, a 312 bps increase year-on-year.

The bank demonstrated substantial progress in asset quality, with the Gross NPA ratio reducing from 2.55% to 1.54% year-on-year, and the Net NPA ratio improving by 18 basis points to 0.24% from 0.42%. The Provision Coverage Ratio (PCR) increased to 97.49% from 97.07% last year, indicating strong provisioning. Management expects further GNPA reduction of 5-7 bps in Q4, supported by robust recoveries, which are projected to reach Rs.1,400-1,500 crores in Q4, bringing the total FY recovery to over Rs.4,000 crores.

IOB maintains a diversified loan book, with Retail, Agriculture, and MSME (RAM) sectors collectively accounting for approximately 76% of the total portfolio, and corporate loans making up 23-24%. This strategy prioritizes better risk-adjusted returns and lower capital requirements. Despite a 125 bps rate cut in the last 9-10 months, the bank's global Net Interest Margin (NIM) improved to 3.32% from 3.21% last time, with domestic NIM at 3.40%, and management aims to maintain it within the 3.3-3.4% range.

The Capital Adequacy Ratio (CAR) stood at a healthy 16.30%, well above the minimum regulatory requirement of 11.50%. Management noted that factoring in the Rs.3,700 crores net profit from the first three quarters would further boost CRAR to approximately 18.40%. The bank also consistently maintained a Liquidity Coverage Ratio (LCR) above 120%, with 127% on December 31, 2025, ensuring ample liquidity.

The Government of India's holding in IOB is currently 92.44%, down from over 96% in February 2025. The bank has approval to raise Rs.4,000 crores through a Qualified Institutional Placement (QIP) in February or March, which is expected to reduce government holding by 4% to around 88% by March 2026. Following its exit from PCA in September 2021, the bank anticipates being in a position to declare dividends in the next financial year.

IOB is actively investing in its IT infrastructure, with Rs.1,600 crores approved for capital and revenue expenditure this year, of which approximately 70% has been spent. Key initiatives include core banking modernization (Rs.600 crores), a new state-of-the-art data center, and upgrades to core network and branch networks. Concurrently, the bank is expanding its physical presence, having opened 120 branches and planning another 180 in the pipeline for the next 3-6 months, alongside recruiting 1,200 new personnel this year.