Indian Overseas Bank Reports 56% Jump in September Quarter Net Profit

State-owned Indian Overseas Bank reported a 55.9% increase in its consolidated net profit to ₹1,962.67 crore for the September quarter, driven by higher core income. In the same period last year, the bank posted a net profit of ₹1,258.82 crore.

Financial Performance

The bank's core net interest income grew 26.41% year-on-year to ₹3,867 crore, compared to ₹3,059 crore previously. Total deposits rose 20.16% to reach ₹4.07 lakh crore, supported by a 20.73% growth in current and savings accounts. On a standalone basis, net profit climbed 56% to ₹1,912 crore, while standalone interest income reached ₹9,201 crore. Non-interest income decreased by 10.11% to ₹1,227 crore, which Managing Director and Chief Executive Officer Ajay Kumar Srivastava attributed to a drop in recovery from technically written-off accounts and the absence of priority sector lending certificate income. The lender also mobilised $1.12 billion, or about ₹11,000 crore, under the FCNR(B) concessional swap, with roughly 70% sourced from overseas branches.

Loans and Asset Quality

Advances surged 24.35% during the quarter. The retail, agriculture, and MSME advances segment grew 34.51% year-on-year to ₹2.83 lakh crore, and Mr. Srivastava noted that healthy demand for retail, housing, and vehicle loans is expected to continue. Gross non-performing assets improved to 1.19%, down from 1.33% in the previous quarter and 1.83% a year ago. Additionally, the bank plans to raise up to ₹5,000 crore through a qualified institutional placement in the current financial year or early in the fourth quarter, which would reduce the Indian government's shareholding from 92.44% to about 86%. Following the financial results, bank shares on the BSE settled 5.71% higher at ₹30.34 each.

Context

Public sector lenders in India have seen steady improvements in asset quality and credit growth as bad loan ratios recover from historical highs. Qualified institutional placements are a common method for listed companies and banks to raise fresh capital from the stock market while diluting a portion of existing shareholding.