IOB delivered its best-ever quarterly net profit, sustained strong growth in the retail and agriculture segments, significantly improved asset quality, and maintained a robust capital position.
The Bank more than doubled its net profit on a year-on-year basis, posting ₹1,111 crore for the quarter ended June 30, 2025, compared to ₹633 crore in the June 2024 quarter and ₹1,051 crore in the March 2025 quarter. This performance was driven by strong growth in operating profit, aided by a rise in interest and non-interest income, along with lower provisioning.
The net profit rose by 75.57% year-on-year—marking the highest-ever quarterly net profit in the bank’s history. Operating profit increased by 40.70%, net interest income (NII) grew by 12.50%, the net interest margin (NIM) stood at 3.04%, and the cost-to-income ratio improved to 44.22%, said Ajay Kumar Srivastava, Managing Director and CEO of IOB.
Operating profit grew by 41% year-on-year to ₹2,358 crore (₹1,676 crore in Q1FY25). Net interest income rose 12.5% to ₹2,746 crore (₹2,441 crore).
Total slippages for the quarter stood at ₹254 crore, compared to ₹277 crore in the year-ago quarter. Provisioning requirements declined year-on-year, primarily due to lower slippages. Provisions excluding tax in Q1 FY26 were ₹938 crore, compared to ₹844 crore a year earlier—positively impacting the bottom line.
Srivastava noted that the bank’s asset quality continued to improve. Gross NPA declined from ₹6,600 crore to ₹5,178 crore year-on-year, and Net NPA reduced from ₹1,154 crore to ₹816 crore. Consequently, the gross NPA ratio fell to 1.97% in Q1 FY26 from 2.89% a year earlier and 2.14% in the previous quarter. The net NPA ratio dropped to 0.32% from 0.51% a year ago and 0.37% in Q4 FY25. “The current slippage ratio stands at 0.10%, which is among the best in the industry,” he added.
Recovery performance was also strong. Total recovery for the quarter stood at ₹851 crore, surpassing the budgeted ₹700 crore (₹582 crore in Q1FY25). Of this, ₹629 crore came from technically written-off accounts, helping further reduce both GNPA and NNPA levels. The bank has set a recovery target of about ₹4,500 crore for FY26, in line with its performance over the past two years (₹4,500–5,000 crore annually).
On the deposit front, total deposits increased 10.75% year-on-year to ₹3,30,792 crore, up from ₹2,98,681 crore a year ago and ₹3,11,938 crore in the preceding quarter. Savings deposits grew by 7.23% year-on-year to ₹1,07,718 crore. Current account deposits surged by 45.59% to ₹37,119 crore. CASA deposits rose by 15% to ₹1,44,837 crore, maintaining a stable CASA ratio of 43.78%. Retail term deposits grew 12% year-on-year, while total term deposits increased by 7.65%.
On the credit side, retail credit grew by 38.75% year-on-year, agricultural loans increased 25.93% year-on-year, and MSME credit rose by 6.11%.
“It’s worth noting that last year’s MSME portfolio included a ₹3,000 crore corporate loan that was repaid. Despite that, we achieved a net growth of ₹2,604 crore year-on-year and ₹936 crore quarter-on-quarter,” Srivastava explained.
RAM (Retail, Agriculture, MSME) advances rose 24.69% year-on-year and 6.04% sequentially. Total advances grew 14.05% year-on-year and nearly 5% sequentially. RAM now constitutes 78.92% of the bank’s domestic advances. The credit-deposit ratio stood at 79.33%, and the total business mix increased 12.19% year-on-year (over ₹64,000 crore), reaching ₹5,93,230 crore.
Srivastava said the bank has received board approval to raise up to ₹4,000 crore and is in the process of approaching relevant authorities for necessary approvals.
“We expect to raise the funds sometime in Q3. The fundraising will involve a mix of instruments depending on market conditions, but the major portion will be through Qualified Institutional Placement (QIP). If we are able to raise the full ₹4,000 crore, the Government of India’s stake in the bank will come down by around 4%, from 94% to 90%,” he added.