IOB Q2 Results: Net Profit Jumps 56% to ₹1,912 Crore, Gross NPA Falls to 1.19%

Indian Overseas Bank had a quarter most private lenders would be happy with. The IOB Q2 results, filed with the exchanges on October 26, show standalone net profit up 55.95% year-on-year to ₹1,912 crore for July-September 2026, against ₹1,226 crore a year ago, according to the bank’s press release on NSE. Sequentially, profit was up 15.25% from ₹1,659 crore in the June quarter.

IOB Q2 results: the core numbers

The growth was not just a provisioning story. Net interest income, the gap between what the bank earns on loans and pays on deposits, rose 26.41% to ₹3,867 crore from ₹3,059 crore. Operating profit climbed 25.67% to ₹3,016 crore. CNBC-TV18’s results liveblog carried the same headline figures for profit and NII.

• Net interest margin: domestic NIM went up 14 basis points year-on-year to 3.49%; global NIM rose 16 bps to 3.37% and was flat against the June quarter.
• Return ratios: return on assets was 1.53% (up 33 bps YoY) and return on equity 24.58% (up 463 bps YoY).
• Cost-to-income ratio: 40.78%, which the bank says is 498 bps better than a year ago.

Asset quality keeps getting cleaner

For a public sector bank, this is the part we would watch most closely. Gross NPA ratio fell to 1.19% from 1.33% in June and 1.83% a year earlier. Net NPA came in at 0.16%, against 0.18% in June and 0.28% in September 2025. Provision coverage ratio stood at 97.69%.

Fresh stress stayed tiny. The quarterly slippage ratio was 0.07% and credit cost 0.17%. The bank also says it recovered ₹647 crore of bad loans in the quarter, which it puts at 2.95 times its quarterly slippages. When recoveries run well ahead of new bad loans, that money flows back into profit, and that is a big reason why profit is growing faster than NII.

Loans grew faster than deposits

Total advances rose 24.35% YoY to ₹3,45,650 crore, while total deposits grew 20.16% to ₹4,07,428 crore. Total business crossed ₹7.53 lakh crore, up 22.05%. Within lending, the bank’s retail, agriculture and MSME book (which it calls RAM) grew 34.51%, with retail up 33.77%, agri up 47.31% and MSME up 13.80%.

On the liability side, CASA deposits rose 20.73% to ₹1,65,862 crore. Current account deposits were the standout, up 31.87% YoY to ₹34,454 crore, while savings deposits grew 18.11% to ₹1,31,408 crore. Domestic CASA ratio was 41.14%, a little lower than the 41.45% of June.

Capital looks comfortable. The capital adequacy ratio (CRAR) was 18.60%, up 66 bps from a year ago but down 76 bps from June as the loan book grew, with a CET-1 ratio of 16.26%.

First-half picture

For April-September 2026, net profit was ₹3,572 crore, up 52.85% from ₹2,337 crore in the first half of FY26. Net interest income for the half rose 30.15% to ₹7,555 crore and non-interest income 19.01% to ₹3,387 crore.

What it means

Two things stand out. First, IOB is now growing its loan book faster than its deposits, so the CASA franchise and the 20% deposit growth have to keep pace if margins are to hold near 3.4-3.5%. Second, with net NPA at 0.16% and coverage near 98%, most of the clean-up is done; from here, earnings growth will depend more on loan growth and margins than on recoveries. For context on how other state-run lenders did this season, see our take on Bank of Maharashtra’s Q2 numbers, and our guide on how to analyse quarterly results if you want to read a bank’s results table yourself.

Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making any investment decision.