The bank had reported a net loss of Rs 554.44 crore in the October-December quarter of the previous fiscal.
Sequentially, the loss narrowed compared with Rs 1,222.50 crore in the second quarter ended September 2017.
Total income of the bank also fell to Rs 5,062.38 crore during October-December period of 2017-18, against Rs 5,599.50 crore in the same period of 2016-17, the bank said in a regulatory filing.
Even as the bank cut its bad loan proportion marginally, non-performing assets (NPAs) still remain at elevated level with gross NPAs at 21.95 per cent of the gross advances on December 31, 2017, against 22.42 per cent at end-December 2016.
Net NPAs, or bad loans, were 13.08 per cent of the net loans by the end of third quarter this fiscal, down from 14.32 per cent by same period last fiscal.
Thus, the provisions for bad loans and contingencies were raised to Rs 1,640.25 crore for the quarter under review.
The bank said there were recoveries of Rs 3,020.53 crore during the quarter, higher than Rs 2,446 crore a year ago, while total slippages for the December quarter were restricted to Rs 1,431.77 crore.
IOB said it has rebalanced the credit portfolio with retail, agri and MSME share of total domestic advances, improving from 54.18 per cent to 64.75 per cent year-on-year.
The deposits of the bank as on December 31, 2017, were Rs 2.16 lakh crore and advances were Rs 1.51 lakh crore.
Stock of the bank closed 4.30 per cent higher at Rs 21.85 on Monday.
Disclaimer: No Business Standard Journalist was involved in creation of this content