Indian Overseas Bank (IOB) reported a 21% increase in net profit for Q3 FY25, driven by higher net interest income and improved asset quality. The bank’s GNPA ratio declined to 2.55%, while its pre-provision operating profit rose by 27.3%. The bank’s stock rose 6% following the earnings announcement, despite a 23% correction over the last eight months.
Indian Overseas Bank (IOB), a public sector bank in India, announced impressive results for the third quarter of FY25. The bank reported a standalone net profit of ₹873 crore, marking a significant 21% year-on-year (YoY) increase compared to ₹722 crore in the same period last year.
For the quarter ending December 31, 2024, IOB also saw a rise in its net interest income (NII), which grew by 16.35% to ₹2,789 crore from ₹2,397 crore in Q3FY24. This growth was primarily driven by improved lending activities, and it reflects the bank’s solid financial performance during the quarter.
Key Performance Highlights
- Net Profit: ₹873 crore (21% YoY growth)
- Net Interest Income (NII): ₹2,789 crore (16.35% YoY growth)
- Gross Non-Performing Assets (GNPA): 2.55% (improved from 3.90% YoY)
- Return on Assets (ROA): 0.93% (up by 7 basis points YoY)
- Employee Costs: ₹1,069 crore (a reduction from ₹1,269 crore YoY)
The bank’s gross NPAs stood at ₹6,070 crore, a notable decrease from ₹8,440 crore in the same quarter last year, reflecting an improvement in asset quality. The net NPAs decreased to ₹975 crore from ₹1,059 crore YoY.
Furthermore, the bank’s pre-provision operating profit (PPoP) rose by 27.3% to ₹2,266 crore, compared to ₹1,780 crore in Q3FY24. The reduction in operating expenses and provisions also contributed to the growth in PPoP.
Strategic Moves and Future Outlook
IOB has also made significant strides in improving its asset quality by selling non-performing assets (NPAs) worth ₹11,500 crore to asset reconstruction companies. This move is part of the bank’s broader strategy to strengthen its balance sheet.
The government of India, which holds a 96.4% stake in the bank, is reportedly considering selling stakes in several state-run banks, including IOB. This potential move aims to help these banks meet minimum public shareholding norms.
Following the announcement of its Q3 results, the bank’s stock surged by 6% to ₹53.65 apiece. However, it is still down by 23% from its peak in June 2024.
Indian Overseas Bank continues to showcase strong performance, driven by its robust asset quality management, increasing profitability, and effective cost management strategies, positioning it for further growth in the coming quarters.
