IOB Q1 net up 76% at ₹1,111 cr, eyes QIP for ₹4,000 cr equity in Q3FY26

Indian Overseas Bank (IOB) posted a 76% rise in Q1FY26 net profit to Rs 1,111 crore and plans to raise Rs 4,000 crore via QIP in Q3FY26 to dilute government shareholding

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Chennai-based Indian Overseas Bank’s net profit soared 75.57 per cent year-on-year (Y-o-Y) to ₹1,111 crore in the first quarter ended June 2025 (Q1FY26). The growth was driven by steady interest income and the sale of priority-sector loans certificates (PSLCs).

 

The lender plans to raise up to ₹4,000 crore via qualified institutional placement (QIP) in Q3 to dilute government shareholding. 

 

The net interest income (NII) grew 12.5 per cent Y-o-Y to ₹2,746 crore, while the net interest margin (NIM) moderated to 3.04 per cent, down from 3.06 per cent in Q1FY25. Its non-interest income surged by 43.37 per cent Y-o-Y to ₹1,481 crore in Q1.

 

Ajay Kumar Srivastava, managing director and chief executive of IOB, said the growth in NII, management of expenses, and sale of PSLCs helped in improving the profit after tax. 

 

The NIM may take a hit of 5-10 basis points (bps) in the near term due to the immediate impact of lending rate cuts following the policy repo rate reduction by the Reserve Bank of India (RBI). According to Srivastava, NIM is expected to return to a level of 3.25 per cent by Q4FY26.

 

The bank’s total deposits increased by 10.75 per cent Y-o-Y to ₹3.3 trillion. The share of low-cost deposits — current account and savings account (CASA)— stood at 43.78 per cent in Q1, up from 42.17 per cent a year ago. The lender expects 10 per cent growth in overall deposits in FY26. The bank’s board has also approved raising up to ₹10,000 crore through infrastructure bonds, which are exempt from meeting the cash reserve ratio and statutory ratio.

 

The bank’s asset quality has improved, with gross non-performing assets (NPA) declining to 1.97 per cent in Q1 from 2.89 per cent in the year-ago period. Net NPAs declined to 0.51 per cent from 0.32 per cent in Q1FY25.

 

The IOB stock closed flat at ₹39.78 per share on the BSE.