Indian Overseas Bank (IOB) sustained its positive momentum in the second quarter of the current fiscal year, posting strong results across key metrics, including double-digit growth in net profit, improved asset quality, lower slippages, and a stable CASA (Current Account Savings Account) ratio. The Chennai-based bank plans to raise approximately ₹2,000 crore in 2-3 phases by March 2025, with the first tranche expected via a Qualified Institutional Placement (QIP). For Q2 25, IOB reported a net profit of ₹777 crore, up from ₹625 crore in the same period last year, driven by higher interest and non-interest income, as well as reduced provisions.

Net profit

“Net profit grew 24.32per cent year-on-year and 22.75per cent quarter-on-quarter from June. We’ve maintained consistent profitability with q-o-q growth in the 24-30per cent range,” said Ajay Kumar Srivastava, IOB’s Managing Director and CEO. He also expressed optimism that the bank could achieve a four-digit net profit by Q4 of this fiscal. Operating profit rose 27per cent to ₹2,128 crore (₹1,677 crore in Q2 24), while net interest income increased by 8per cent to ₹2,537 crore (₹2,346 crore). Interest income grew by 18per cent to ₹6,851 crore (₹5,821 crore), and non-interest income surged by 47per cent to ₹1,633 crore (₹1,114 crore). Provisions for NPAs were lower at ₹71 crore compared to ₹112 crore last year. Fresh slippages declined to ₹251 crore (₹321 crore), while total recoveries improved to ₹1,482 crore (₹1,069 crore), with 75per cent of recoveries coming from written-off accounts. “The bank has recorded zero corporate slippages over the last several quarters, with minimal slippages confined to retail, agriculture, and MSME sectors. “IOB’s slippage ratio is among the lowest in the industry, at 0.11per cent this quarter, down from 0.13per cent in Q1 25 and 0.18per cent a year earlier. Credit cost has dramatically reduced from 2.26per cent last year to 0.12per cent this September,” Srivastava said, attributing this to better asset quality management. The bank’s gross NPA dropped significantly to 2.72per cent in Q2 25, compared to 4.74per cent a year ago, while net NPA fell to 0.47per cent from 0.68per cent.

Gross advances

Gross advances stood at ₹2,30,149 crore as of September 30, 2024, up from ₹2,08,913 crore in Q2 24. Total deposits increased to ₹3,10,652 crore (₹2,73,093 crore). Retail and agriculture loans grew by 19per cent and 29per cent respectively, while MSME loans saw a 6per cent rise, impacted by the repayment of a large ₹3,000 crore loan. Srivastava also highlighted the bank’s efforts in green financing, with a portfolio currently worth about ₹4,000 crore. “A significant portion of our future credit growth will come from green financing, particularly solar energy projects,” he said, noting the launch of a “Green Deposit” product aimed at funding eco-friendly ventures. IOB’s CASA ratio recovered to 42.44per cent in Q2 25, after dipping to 42.17per cent in the June quarter. “Our CASA ratio is one of the highest in the industry, and our focus remains on building a stable, retail-oriented deposit base,” Srivastava added, with 94per cent of the bank’s deposits being retail-based. The bank is also expanding its physical presence, having opened 35 new branches this fiscal year, with plans for an additional 50-55 by March 2025.

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