Indian Overseas Bank (IOB) on Friday reported a 30% year-on-year rise in its net profit at Rs 1,051 crore for the fourth quarter, driven by a growth in interest income and lower operating expenses.
Interest income of the state-owned lender increased 15% to Rs 7,634 crore while interest expenses grew 17% to Rs 4,511 crore. Consequently, net interest income saw a 13% rise to Rs 3,123 crore. However, Other income de-grew 36% to Rs 1,581 crore.
Addressing a media briefing on Q4 earnings, managing director and CEO Ajay Kumar Srivastava said the de-growth in other income was due to a delay in recovery of technically written-off accounts. “Some of the accounts that were supposed to recover did not happen. We hope it will happen in the current fiscal.”
Operating expenses fell 36% to Rs 2,086 crore, aiding the lender’s profitability.
Total business stood at Rs 5.62 lakh crore as of Q4FY25. Advances outpaced deposit growth at 14.15% to Rs 2.50 lakh crore. Total deposits increased 9% to Rs 3.12 lakh crore. The credit-deposit (CD) ratio went up to 80.15%, against 76.61% in the year-ago period.
The share of low-cost current account, savings account (CASA) in total deposits was down by 25 bps year-on-year to 43.65%. “Despite the challenges in sourcing CASA deposits, we are able to maintain the CASA ratio at 43%,” Srivastava said.
He added that most of the deposit portfolio consists of only CASA and retail term deposits. “The bulk deposits, which we call hot money, is only 3-4% of our deposits now,” he said. The cost of deposits of the bank stood at 5.17% in Q4FY25 compared to 4.88% in Q4FY24.
On the advances side, the share of retail, agriculture, and MSME (RAM) in domestic lending increased to 77.78%, compared with 72.6% at the end of fourth quarter last year. Srivastava said the bank is aiming to achieve a 70:30 mix between RAM and corporate advances by the end of this fiscal.
Domestic net interest margin stood at 3.77% against 3.73% in Q4FY24. For the entire FY25, the NIM was at 3.42%.
The asset quality showed a significant improvement, with gross non-performing assets (NPA) as a percentage of gross advances reducing to 2.14% from 3.10% a year earlier. Net NPA improved to 0.37% from 0.57%.
Recoveries during the quarter stood at Rs 992 crore, against Rs 1,468 crore in the same quarter last year. For the full year, recoveries stood at Rs 4,014 crore in FY25. Srivastava said the bank is targeting Rs 4,500 crore in recovery for FY26.
For the full year, the bank’s net profit stood at Rs 3,334 crore in FY25 compared with Rs 2,656 crore in FY24.
Shares of IOB closed flat at Rs 37.74 on the NSE on Friday.