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Public sector lender Indian Overseas Bank reported a 56 per cent YoY growth in net profit at ₹1,912 crore for the quarter ended September 2026 (Q2FY27) on the back of strong net interest income growth, and partially aided by lower tax outgo in the quarter compared to the year-ago period.

Net interest income for the quarter increased by 26 per cent YoY to ₹3,867 crore, and Operating profit also increased by 26 per cent YoY to ₹3,016 crore. The bank’s net interest margin (domestic) increased by 14 bps YoY to 3.49 per cent.

“Our internal aspiration and mandate is that every year, net profit on a year-on-year basis should grow by a minimum of 25–30 per cent. If you look at our last 10 quarters, you will find this consistency,” Ajay Kumar Srivastava, MD & CEO, Indian Overseas Bank, told media persons in a post-earnings interaction, calling the performance a sustainable one. He attributed the growth largely to strong credit expansion and the bank’s ability to manage funding costs.

Indian Overseas Bank net rises 49% in Q1FY27 on higher NII, recoveries

Total business of the bank grew robustly in Q2FY27 with a 24.35 per cent growth in advances at ₹3,45,650 crore. At ₹4,07,428 crore, deposits grew 20 per cent YoY.

Advances were driven by strong growth in the RAM (Retail, Agri and MSME) portfolio. Retail credit was up 33.77 per cent, agriculture up 47.31 per cent largely on agri jewel loans, and MSME credit up 13.8 per cent.

Srivastav attributed the expansion partly to faster processing and decentralised sourcing through branches and loan processing centres. He does not anticipate any stress in the jewel loan category.

Asset quality continued to improve with Gross NPA ratio reduced by 64 bps YoY to 1.19 per cent and Net NPA ratio reduced by 12 bps YoY to 0.16 per cent, primarily attributable to steady recoveries.

On deposits, the bank mobilised around ₹11,000 crore, or $1.2 billion, in FCNR(B) deposits under the special window, and said the entire amount had been “suitably” deployed. Even without the FCNR(B) mobilisation, our deposits grew 17 per cent, the MD said.

IOB is targeting $500 million in fundraising through the RBI’s ECB window by December. The MD said around $250 million had been finalised, with the remaining amount under discussion with banks and agencies.

“Overall, $500 million by December is what we are targeting. Around $250 million has already been finalised, and for the balance $250 million, we are in discussions with banks and agencies,” he said.

On the expected credit loss (ECL) framework, IOB had already made around ₹2,700 crore in provisions, which the MD expects to cover the bank’s anticipated requirement. The bank will continue building buffers over the next two quarters, he added.

With regard to a 43 per cent sequential dip in other income, the bank said it had earned around ₹900 crore from priority sector lending certificates (PSLCs) in Q1, which did not recur in Q2.

With regard to the need for strong cybersecurity controls in the financial world, the MD said IOB had benchmarked its systems against industry practices and also engaged PwC to identify gaps and recommend improvements. He described the lender’s cybersecurity approach as a continuous process requiring round-the-clock monitoring.

The shares of IOB ended the trading day at ₹30.38, up almost 6 per cent on the NSE

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