New Delhi: State-run Indian Overseas Bank (IOB) on Monday reported a 45.64 percent year-on-year jump in its consolidated net profit for the June quarter to Rs 1,716.29 crore, driven by interest income and improved asset quality.

Follow The PSUWatch Channel on WhatsApp

“Three factors contributed significantly. First, net interest income grew 34 percent, with interest income rising 18-19 percent while interest expenses increased only 9 percent. Second, non-interest income grew nearly 45 percent, including about Rs 800 crore from PSLC (priority sector lending certificates) sales and around Rs 450 crore from recoveries in technically written-off accounts. Third, slippages were almost nil during the quarter," Ajay Kumar Srivastava, managing director and chief executive officer of the bank, told PTI in an interview.

The bank’s net interest income increased by 34.3 percent YoY to Rs 3,688 crore in Q1 FY27, from Rs 2,746 crore in the year-ago period.

Similarly, non-interest income increased 45.85 percent to Rs 2,160 crore in the quarter under review, driven by a multi-fold growth in Priority Sector Lending Certificate (PSLC) commission.

Global net interest margins of the bank widened by 0.33 percent in the June quarter to 3.37 percent, from 3.04 percent in the same period a year earlier.

Total deposits increased by 13.72 percent to Rs 3.76 lakh crore, from Rs 3.31 lakh crore in Q1 FY26, aided by a rise in term deposits and savings bank deposits, which grew 19.26 percent and 18.14 percent YoY, respectively.

The domestic current account and savings account (CASA) ratio of the state-owned lender declined by 2.71 percent YoY to 41.45 percent in the quarter under review, from 44.16 percent in the year-ago period.

On the FCNR-B deposits front, Srivastava said the bank has so far garnered USD 300 million, and is targeting USD 600-650 million by September end, he said.

“There is a pipeline of another USD 50 million and the bank is targeting to take the number to USD 1 billion by September, including the OFC borrowings as well,” he added.

In the reporting quarter, global advances of the bank jumped by 22.75 percent YoY to Rs 3.22 lakh crore in Q1 FY27, with the retail, agri and MSME (RAM) advances growing 35.82 percent YoY to Rs 2.62 lakh crore.

Srivastava said that as of now, the corporate pipeline is around Rs 13,000-14,000 crore. “It is still the beginning of the financial year, and sanctions and disbursements will continue through the year. We expect the corporate book to grow by about 12-13 percent by FY27-end.”

When asked about the ECLGS 5.0 scheme, Srivastava said that the bank has so far disbursed around Rs 2,600 crore, and another Rs 1,800 crore is expected to be disbursed over the next one to two months.

The bank's asset quality improved in Q1 FY27, with the gross non-performing assets (GNPA) ratio dropping to 1.33 percent from 1.97 percent a year earlier.

Further, provisions remained nearly unchanged at Rs 834 crore in the quarter under review, compared to Rs 844 crore a year ago.

Srivastava told PTI that the bank's cost-to-income ratio increased in the June quarter as the lender has made HR-related provisions based on an actuarial assessment, including pension, gratuity, leave encashment, LTC, performance-linked incentives and other employee benefits.

Follow PSU Watch on LinkedIN

“For the next nine months, the total requirement was around Rs 972 crore. Since the Expected Credit Loss (ECL) framework is approaching and there is uncertainty due to the West Asia situation, we decided to book the required provisions upfront in Q1 rather than spread them across subsequent quarters," Srivastava said.

Further, on the Offer-for-Sale (OFS) in Indian Overseas Bank, Srivastava told media that the board approval for Rs 5,000 crore is already in place and the remaining regulatory and government approvals are expected to come through during this quarter.

“Subject to approvals and market conditions, the QIP could be launched in Q3 or Q4,” he added.

(PSU Watch is India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy. 👉 Click to join our channel now: PSUWatch WhatsApp Channel. Prefer LinkedIn? Follow PSU Watch on LinkedIN. Click to stay connected on Twitter here and stay updated)