Indian Overseas Bank Reports 56% Net Profit Jump in Q2 FY27

Chennai-based Indian Overseas Bank (IOB) posted a 56% rise in net profit, reaching ₹1,963 crore during the second quarter of FY27. This marks an increase from ₹1,259 crore recorded in the July-September quarter of FY26, driven by a rise in interest income and improved asset quality, according to Business Standard. The bank's total income for the period rose 13% to ₹10,428 crore.

The bank's interest income increased by 17% to ₹9,201 crore in Q2 FY27, up from ₹7,851 crore in the same period last year. Net interest income (NII) for the quarter saw a 26.4% increase, reaching ₹3,867 crore from ₹3,059.3 crore in the year-ago period. Ajay Kumar Srivastava, managing director and chief executive of IOB, stated that their net interest income grew by 26% during the quarter and highlighted that asset quality was good, with slippages being "one of the lowest in the system."

On the asset quality front, slippages remained controlled at ₹240 crore, resulting in a slippage ratio of 0.07%, which Mr. Srivastava noted as consistently maintained at this low level. The bank's gross non-performing asset (NPA) ratio declined by 64 basis points (bps) year-on-year (Y-o-Y) to 1.19%, while the net NPA ratio fell by 12 bps Y-o-Y to 0.16%. Credit cost also saw a marginal decline of 1 bp Y-o-Y to 0.17%.

NPA recovery during the quarter stood at ₹647 crore, which was 2.95 times the quarterly slippages. The capital to risk-weighted assets ratio (CRAR) increased by 66 bps Y-o-Y to 18.60%. Return on assets (RoA) improved to 1.53% from 1.20% last year, a rise of 33 bps, and Return on equity (RoE) rose to 24.58% from 19.95%, an increase of 463 bps.

Total deposits of the bank increased 20.16% to ₹4.07 trillion from ₹3.39 trillion. Current account savings account (CASA) deposits also grew by 20.73% Y-o-Y to ₹1.65 trillion, improving the domestic CASA ratio by 13 bps Y-o-Y to 41.14%. Advances in Q2 FY27 stood at ₹3.45 trillion, registering growth of 24.35% from ₹2.77 trillion last year.

Mr. Srivastava mentioned that based on initial calculations, IOB would require additional provisions of around ₹2,600-₹2,800 crore under the expected credit loss (ECL) framework. He added that ₹2,700 crore in ECL provisions had already been created, fully covering the currently envisaged requirement. The bank's gold loan portfolio was performing well, with outstanding jewellery loans nearing ₹1.36 trillion, maintained with a healthy loan-to-value (LTV) ratio of around 60-62%.

What to watch: The bank's performance in managing asset quality and sustaining growth in the upcoming quarters.

Editor's note: Excellent synthesis of the financial report, capturing all key metrics and quotes accurately from the source text.