Indian Overseas Bank’s Analyst Meet and Q&A Session (Q1 FY26)-Investor Highlights

Performance & Financial Highlights (Q1 FY26):
-Net Profit rose significantly by 76% YoY, reflecting consistent performance.

-Fee-based Income saw a sharp rise, driven by:

-₹200 Cr from Priority Sector Lending Certificate (PSLC) sales.

-Processing fees improved from ₹80 Cr to ₹110 Cr YoY.

-CASA growth strong with onboarding of 65 lakh+ CASA customers in 2 years, maintaining a balance of ₹17,000 Cr.

-RAM (Retail, Agri, MSME) Portfolio at ~76% of total credit, among the highest in the industry:

-Retail loans grew 39% YoY

-Agriculture loans grew 26%

-MSME grew 6%, adjusted to ~16% (excluding one large repaid account).

-Gold Loan (Agri) grew 45% YoY, with nearly 50% of agri book backed by gold, offering safety and profitability.

-Net Interest Margin (NIM) maintained at ~3.04%, despite repo rate cuts.

-Cost-to-Income Ratio declined significantly, indicating improved efficiency.

Asset Quality Stable:

-Slippage ratio at 0.10%–0.14%, lowest in the industry.

-GNPA: 3.28%, NNPA: 0.56%, PCR: ~97%.

-SMA 1+2 down to 5.51% in June 2025 from 7.99% in March 2024.

-Education Loan Growth targeted at 9–10%, backed by Vidya Lakshmi guarantee support.

-Co-lending Portfolio at ₹2,000 Cr; plans to expand to ₹5,000 Cr with 8–10 NBFCs this year.

Key Takeaways from Q&A Session:

Income, Treasury & Other Income:

-Other income increase was driven largely by PSLC gains.

-Analyst concern on sustainability: Management expects similar or better performance in coming quarters.

Asset Quality:
-Slippages are under control, with SMA and GNPA ratios improving.

-COVID provisioning buffer of ₹1,692 Cr remains intact.

RAM Strategy:
-Growth is broad-based across geographies, not just south India.

-Strategy driven by pricing discipline and customer onboarding.

CASA Strategy:
-Growth driven by branch-level KPIs and targets to onboard 3–4 CASA customers per branch per day.

-Cross-selling to new CASA base (currently 10–12% penetrated) to fuel RAM growth.

Gold & Agri Lending:
-Aggressive growth in jewellery-backed agri loans with near-zero NPAs.

-RBI’s revised stance on gold collateral (voluntary declaration) has restored earlier lending position.

Technology Investments:
-₹1,600 Cr+ tech capex budgeted for FY26.

-Major integration efforts: Real-time RBI i4C fraud tracking and upcoming Mule Hunter integration.

Compliance & Risk Mitigation:

-Penalty of ₹63 lakh by RBI due to earlier deviation in gold loan collateral policy (now corrected).

-KYC practices strengthened; robust onboarding and fraud detection protocols in place.

Subsidiaries, JV, and Investments:

-₹200 Cr recovery expected from Malaysian JV under winding-up.

-JV investment in RRB (sponsored by SBI) grew from ₹606 Cr to ₹1,205 Cr.

Outlook & Guidance:
-Credit growth guidance: ~13% for FY26, with actual Q1 growth already at 5.5%.

-Dividend outlook: Bank is aiming to declare dividends in the current fiscal.

-Corporate loan pipeline of ₹9,000 Cr; book growth slowed due to pricing discipline.

Final Remarks

-IOB is now a “Bank to Watch”, consistently ranking in the top 3–4 PSU banks across key metrics.

-Strong profitability, low slippage, cost controls, and growth momentum make IOB stand out.

-Management invites greater coverage and visibility from analyst and investor community.

Source -Analyst Meet Audio Recording. https://www.bseindia.com/xml-data/corpfiling/AttachHis/042f292c-d0a8-491e-b9e9-58a58f55eeaa.pdf