IOB's profit jumps 56% to Rs 1,912 cr in Q2; to complete $500 mn ECB raise by December

CHENNAI: Indian Overseas Bank (IOB) reported a 56% jump in its net profit for the second quarter of FY27 at Rs 1,912 crore, with its core income contributing to the stellar performance.

The Chennai-based bank, which has 3,546 branches across the country, said it has received licences for opening 200 branches to boost its expansion exercise this year. "We have been onboarding 3-4 customers every day at our branches, which works to 16,000 to 18,000 customers daily," its MD-CEO Ajay Kumar Srivastava told the media here on Monday, after presenting an overview of the bank's performance in the September quarter of FY27.

Having added 1.40 crore new CASA (current account savings account) customers over the last three years, he said the fresh CASA has yielded Rs 60,000 crore new business.

The bank's operating profit has also surged by 26% YoY to Rs 3,016 crore while its net interest income increased by 26.41% YoY to Rs 3,867 crore. NIM (domestic) increased by 14 bps YoY to 3.49% and NIM (global) increased by 16 bps YoY to 3.37%, he said.

Srivastava also spoke about the priority sector sales certificates contributing Rs 900 crore, which has helped to increase the profit.
IOB has seen its cost of deposits going up on account of FCNR (B) deposits, without which a 17% deposit growth has been possible. "We have mobilised Rs 11,000 crore only through the FCNR route, which is a small portion of the overall deposits. Our CD ratio at 81% is due to the FCNR deployment," he said, noting that the entire amount has been deployed.

The bank is not only confident of maintaining its momentum but also sustaining the 25-30% growth in net profit. Also, the credit growth has pushed the net interest income over 20%, he sought to point out.
Speaking about slippages, Srivastava said this ratio reduced by 4 bps YoY to 0.07% and credit cost reduced by 1 bps YoY to 0.17%.

Also, NPA (non performing assets) recovery during the quarter stood at Rs 647 cr which is 2.95 times the quarterly slippages.

On festive demand, the bank chief said there has been no slowdown as it has been "business as usual," while conceding that the bank has struggled to boost its treasury income due to the prevailing market conditions. Even the operating profit has been hit by this decline, he added.

IOB is looking to complete its $500 million ECB (external commercial borrowing) raise by December with half of the funding to be completed in a week or so.

As regards the ECL (expected credit loss) requirement of Rs 2,600 crore to Rs 3,000 crore, the bank has exclusively provisioned for Rs 2,700 crore. "We are fully prepared for the implementation and we still have two quarters to create some more buffers," Srivastava said. ECL norms come into effect from April 1, 2027.

To a question on cyber security, he said the bank has already engaged PwC to identify and plug the gaps by 24x7 monitoring measures.

PERFORMANCE METRICS

Net profit increased by 55.95% YoY to Rs 1,912 crore

Gross NPA ratio reduced by 64 bps YoY to 1.19% and Net NPA ratio reduced by 12 bps YoY to 0.16%

Slippage ratio reduced by 4 bps YoY to 0.07% and credit cost reduced by 1 bps YoY to 0.17%

NPA recovery in Q2 stood at Rs 647 cr, 2.95 times quarterly slippages

Global business increased by 22.05% YoY to Rs 7,53,078 crore
Global advances increased by 24.35% YoY to Rs 3,45,650 crore

RAM segment of IOB rose by 34.51% YoY, within which 33.77% growth in retail, 47.31% growth in agri and 13.80% growth in MSME

CASA deposits increased by 20.73% YoY to Rs 1,65,862 crore

Domestic CASA % stood at 41.14% while global CASA % stood at 40.71 %

SB deposits up 18.11% YoY to Rs 1,31,408 crore

CD deposits jumped by 31.87% YoY to Rs 34,454 crore