Indian Overseas Bank Q3 Results: Net profit jumps 21% YoY to ₹873 crore; NII improves 16% to ₹2,789 crore

Indian Overseas Bank, a state-run lender, released its December quarter performance on Monday, January 20, reporting a standalone net profit of ₹873 crore, a 21% year-on-year (YoY) improvement. In the same period last year, the bank reported a net profit of ₹722 crore.

Sequentially, the net profit improved by 12.35%, as the bank recorded a net profit of ₹777 crore in Q2FY25. The bank’s net interest income (NII), which is the difference between the interest income earned from lending activities and the interest paid to depositors, jumped to ₹2,789 crore in Q3FY25, a 16.35% improvement compared to ₹2,397 crore in the same quarter last year.

In the preceding quarter, the bank reported an NII of ₹2,537.3 crore. The bank also saw a rise in its other income to ₹1,297 crore in Q3FY25, marking a 13.60% increase compared to ₹1,261 crore in Q3FY24. Employee costs dropped to ₹1,069 crore as compared to ₹1,269 crore in Q3FY24, contributing to a decline in operating expenses, which stood at ₹1,820 crore.

As a result, the pre-provision operating profit (PPoP) of the bank reached ₹2,266 crore for the December 2024 quarter, reflecting a growth of 27.3% compared to the PPoP of ₹1,780 crore reported in the year-ago quarter.

The bank’s provisions fell to ₹1,028 crore from ₹1,146 crore in Q2FY25. However, on a YoY basis, provisions surged from ₹701 crore.

On the asset quality front, the bank’s gross non-performing assets (GNPA) ratio improved to 2.55% in Q3FY25 from 3.90% in Q3FY24. Similarly, the net non-performing assets (NNPA) ratio improved to 0.42% in Q3FY25 from 0.62% in Q3FY24.

In absolute terms, gross NPAs stood at ₹6,070 crore compared to ₹8,440 crore quarter-on-quarter, while net NPAs came in at ₹975 crore compared to ₹1,059 crore year-on-year. The Return on Assets (ROA) reached 0.93%, up 7 basis points from the previous year.

Last week, the state-owned lender announced that it is selling non-performing assets (NPAs) worth ₹11,500 crore to asset reconstruction companies. 

According to media reports, the Indian government is considering selling stakes in five state-run banks, including IOB, either through stake sales or by allowing the lenders themselves to sell shares to large investors. This move aims to help the banks meet the minimum public shareholding norms.

As per the latest shareholding data, the Government of India held a 96.4% stake in the lender at the end of the December quarter. Life Insurance Corporation of India (LIC) held an additional 1.21% stake in the company.

Stock corrects 23% in 8 months

Following the healthy set of numbers, the shares jumped 6% in trade, reaching ₹53.65 apiece. However, it is still down by 23% from its June level. This correction follows a one-way rally between June 2022 and May 2024, during which the stock delivered massive gains of 318%. 

The stock’s all-time peak of ₹227.45 was recorded in January 2008.

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