State-owned Indian Overseas Bank (IOB) reported a 45.64 per cent year-on-year increase in its consolidated net profit to INR 1,716.29 crore during the first quarter of FY27, supported by higher interest income, growth in fee-based earnings and improved asset quality. 
During an interaction with PTI, Managing Director and Chief Executive Officer Ajay Kumar Srivastava said the bank's strong quarterly performance was mainly driven by three factors. He said net interest income increased by 34 per cent as interest income grew by around 18-19 per cent, while interest expenses rose only about 9 per cent. He further stated that non-interest income increased by nearly 45 per cent, supported by around INR 800 crore earned from the sale of Priority Sector Lending Certificates (PSLCs) and nearly INR 450 crore recovered from technically written-off accounts. He also noted that fresh loan slippages during the quarter were almost negligible. 
The bank's net interest income (NII) rose 34.3 per cent year-on-year to INR 3,688 crore in the April-June quarter of FY27, compared with INR 2,746 crore in the corresponding period last year. 
Non-interest income increased 45.85 per cent to INR 2,160 crore, largely due to a sharp increase in commission earned through Priority Sector Lending Certificate (PSLC) transactions. The bank's global net interest margin also improved to 3.37 per cent from 3.04 per cent a year ago, reflecting better earnings from its lending operations. 
IOB's total deposits increased 13.72 per cent year-on-year to INR 3.76 lakh crore from INR 3.31 lakh crore in the year-ago period. The growth was supported by a 19.26 per cent increase in term deposits and an 18.14 per cent rise in savings bank deposits. 
However, the bank's domestic current account and savings account (CASA) ratio declined to 41.45 per cent from 44.16 per cent in the corresponding quarter last year, indicating a moderation in the share of low-cost deposits despite overall deposit growth. 
On foreign currency deposits, Srivastava said the bank has mobilised around USD 300 million through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits so far. He added that IOB aims to increase this to USD 600-650 million by the end of September and has another USD 50 million worth of deposits in the pipeline. Including overseas funding through OFC borrowings, the bank expects the overall figure to reach nearly USD 1 billion by September. 
The bank also reported healthy credit growth during the quarter. Global advances increased 22.75 per cent year-on-year to INR 3.22 lakh crore, while retail, agriculture and MSME (RAM) advances rose 35.82 per cent to INR 2.62 lakh crore. 
Speaking about corporate lending, Srivastava said the bank currently has a corporate loan pipeline of around INR 13,000-14,000 crore. He added that since it is still the early part of the financial year, sanctions and disbursements are expected to continue over the coming months, with the corporate loan book likely to grow by around 12-13 per cent by the end of FY27. 
On the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, he said the bank has already disbursed around INR 2,600 crore and expects to lend another INR 1,800 crore over the next one to two months. 
The lender also reported a further improvement in asset quality. Its gross non-performing asset (GNPA) ratio declined to 1.33 per cent at the end of the June quarter, compared with 1.97 per cent a year earlier. Provisions remained broadly stable at INR 834 crore against INR 844 crore in the corresponding quarter last year. 
Srivastava also explained that the bank's cost-to-income ratio increased during the quarter because it made higher human resource-related provisions based on an actuarial assessment. These included pension liabilities, gratuity, leave encashment, leave travel concession (LTC), performance-linked incentives and other employee benefits. 
He said the bank decided to recognise around INR 972 crore of provisions upfront during the first quarter instead of spreading them over the remaining quarters of the financial year. According to him, the decision was taken ahead of the implementation of the Expected Credit Loss (ECL) framework and amid uncertainty arising from the West Asia situation. 
The bank also provided an update on its planned capital-raising exercise. Srivastava said the board has already approved an INR 5,000 crore offer-for-sale (OFS), while the remaining regulatory and government approvals are expected during the current quarter. Subject to these approvals and prevailing market conditions, the bank plans to launch its Qualified Institutional Placement (QIP) in the third or fourth quarter of FY27. 
Indian Overseas Bank has been focusing on strengthening its balance sheet over the past few years by improving recoveries, reducing bad loans and expanding its retail, agriculture and MSME portfolio. The lender has also been pursuing capital raising to support future credit growth while maintaining regulatory capital requirements. 
Source PTI