Chennai-headquartered public sector lender Indian Overseas Bank (IOB) has reported a sharp rise in earnings for the September quarter, with standalone net profit climbing 55.9% year-on-year to ₹1,912.42 crore in Q2 FY27, up from ₹1,226.42 crore a year earlier. The Board approved the unaudited results at its meeting in Chennai on Monday, 26 October 2026.
On a sequential basis, profit rose 15.3% from ₹1,659.24 crore in the June quarter, taking the bank’s first-half FY27 net profit to ₹3,571.66 crore, against ₹2,337.46 crore in H1 FY26.
Core income does the heavy lifting
Net interest income (NII) grew 26.4% to ₹3,866.98 crore from ₹3,059.14 crore in the year-ago quarter, while interest earned rose 17.2% to ₹9,201.23 crore. Operating profit increased 25.7% to ₹3,016.49 crore, helped by tight cost control, with operating expenses rising just 2.6% year-on-year to ₹2,077.14 crore.
Other income, however, slipped 10.2% to ₹1,226.65 crore, and provisions and contingencies rose to ₹950.08 crore from ₹672.45 crore a year ago. Profit before tax grew 19.6% to ₹2,066.41 crore; a significantly lower tax outgo of ₹153.99 crore, against ₹501.16 crore a year earlier, amplified the bottom-line growth.
Asset quality continues to improve
The bank’s cleanup story continued during the quarter. Gross non-performing assets (GNPA) fell to ₹4,114.41 crore, or 1.19% of gross advances, from 1.33% in the June quarter and 1.83% a year ago. Net NPA eased to ₹543.58 crore, or 0.16%, from 0.18% sequentially and 0.28% in Q2 FY26.
Annualised return on assets improved to 1.53% from 1.20% a year ago and 1.41% in Q1.
Balance sheet and capital
Advances grew about 25% year-on-year to around ₹3.42 lakh crore, while deposits rose about 20% to roughly ₹4.07 lakh crore. The capital adequacy ratio under Basel III stood at 18.60%, with a CET-1 ratio of 16.26%, both lower than the previous quarter as the loan book expanded but higher than a year ago. Net worth rose to about ₹31,835 crore.
The Government of India holds 92.44% in the bank. IOB shares traded about 3.5% higher on the BSE after the results were announced.
What it signals for PSU banking
IOB’s numbers add to a strong Q2 season for India’s lenders, where healthy credit growth and lower bad loans have offset margin pressure at several banks. For state-run banks in particular, a net NPA ratio of 0.16% shows how far the clean-up of legacy stressed assets has come. Investors will, however, watch whether the profit momentum holds once the quarter’s unusually low effective tax rate normalises, and how other income and provisioning trend in the second half of the year.
