Indian Overseas Bank (IOB) has started the financial year on a very strong note. The bank reported a net profit of ₹1,659 crore for the quarter ended June 2026 (Q1FY27). This is a 49 per cent increase compared to the same time last year. The growth was mainly caused by higher Net Interest Income (NII) [the difference between interest earned on loans and interest paid on deposits] and better recovery of old bad loans.

The bank's Net Interest Income rose by 34.3 per cent to reach ₹3,688 crore. In terms of efficiency, the Domestic Net Interest Margin (NIM) [a measure of profitability showing the gap between interest income and expenses] stood at 3.5 per cent. The bank’s total business grew by 17.7 per cent, reaching a total of ₹6,98,325 crore. This is a big milestone for the public sector lender.

Deposits grew by 13.7 per cent to touch ₹3,76,193 crore. A major highlight was the 18 per cent growth in Savings Bank deposits. This happened because the bank focused on digital onboarding [opening accounts online] and personal engagement with customers. On the lending side, total credit jumped by 22.7 per cent to ₹3,22,132 crore. Retail loans grew by 36.5 per cent, while Agriculture loans grew by 46.8 per cent, largely due to jewel loans. Vehicle loans also saw a strong 31.5 per cent growth.

Asset quality [the health of the loan book] improved significantly. The Gross Non-Performing Assets (NPA) [loans that are not being repaid] dropped to 1.33 per cent from 1.97 per cent last year. The Net NPA also fell to a very low 0.18 per cent. The bank recorded a historic low slippage ratio [the rate at which good loans turn into bad ones] of just 0.06 per cent. This shows that the bank's credit monitoring is working very well.

MD & CEO Ajay Kumar Srivastava shared that the bank plans to raise $1 billion by September using FCNR (B) deposits [Foreign Currency Non-Resident accounts] and overseas borrowings. So far, they have already raised $300 million. The bank is offering a 6.5 per cent interest rate on these deposits to attract its 4.52 lakh active NRI customers. This will help the bank get more foreign currency funds.

Looking ahead, the bank is preparing for the new Expected Credit Loss (ECL) rules [a new way to keep money aside for potential bad loans] starting in April 2027. IOB estimates it needs ₹3,000 crore for this and has already set aside ₹2,150 crore. The bank also has a strong corporate loan pipeline of ₹14,000 crore. With a Liquidity Coverage Ratio (LCR) [highly liquid assets held to meet short-term obligations] of 125-130 per cent, the bank says it is in a comfortable position even though credit is growing faster than deposits.