- Indian Overseas Bank’s Q2 net profit rose 56% to Rs 1,912 crore year-on-year
- Net interest income grew 26.4% to Rs 3,867 crore, driven by core lending business
- Gross NPA improved to 1.19% and net NPA fell to 0.16% year-on-year
Shares of Indian Overseas Bank rose as much as 5.3% to Rs 30.20 apiece on Monday after the state-owned lender reported a 56% year-on-year jump in net profit for the July–September quarter, backed by strong growth in core income and further improvement in asset quality.
The stock had fallen as low as Rs 28.32 earlier in the session, down 1.26% from the previous close of Rs 28.68. It turned higher after the board approved the results at a meeting that ended at 12:15 pm. At 12:47 pm, the shares were trading at Rs 29.68, up Rs 1.00 or 3.49%, and 4.80% above the day's low.
Indian Overseas Bank Q2 FY27 Highlights (Standalone, YoY)
- Net profit up 56% at Rs 1,912 crore versus Rs 1,226 crore.
- Net interest income up 26.4% at Rs 3,867 crore versus Rs 3,059 crore.
- Operating profit up 25.7% at Rs 3,016 crore versus Rs 2,400 crore.
- Provisions at Rs 950 crore versus Rs 672 crore YoY and Rs 834 crore QoQ.
- Gross NPA at 1.19% versus 1.33% QoQ and 1.83% YoY.
- Net NPA at 0.16% versus 0.18% QoQ and 0.28% YoY.
The growth came from the bank's core lending business. Net interest income rose 26.4%, as interest earned on advances grew 21% year-on-year to Rs 7,083 crore. Operating expenses rose just 2.6% to Rs 2,077 crore, so the cost-to-income ratio improved to about 40.8% from 45.8% a year earlier, and the operating margin widened to 28.93% from 26.05%. Sequentially, net profit rose 15.3% from Rs 1,659 crore in the April–June quarter, and operating profit grew 12%.
Asset quality continued to improve, with gross bad loans falling 19% year-on-year to Rs 4,114 crore, and the provision coverage ratio stood at 97.69% as of September 30, leaving very little of the bad-loan book unprovided. Most of the increase in provisions was not tied to bad loans: provisions for non-performing assets were only Rs 142 crore out of the total Rs 950 crore.
Profitability got stronger as well, as annualised return on assets rose to 1.53% from 1.20% a year earlier and 1.41% in the June quarter, while net worth grew 25.9% to Rs 31,835 crore. Retail banking was a key driver of growth, with assets in the segment rising 37.8% year-on-year to about Rs 2.50 lakh crore.
Lower taxes also lifted the bottom line, with tax expenses declining 69% year-on-year to Rs 154 crore from Rs 501 crore, while profit before tax grew a slower 19.6% to Rs 2,066 crore.
On the other hand, other income fell 10.2% year-on-year to Rs 1,227 crore. The capital adequacy ratio stood at 18.60%, compared with 17.94% a year earlier and 19.36% in the previous quarter.
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