Indian Overseas Bank Q4 profit up 30%, plans ₹5,000 crore

Q4 earnings season keeps focus on banks

Indian equity markets are moving through a complex phase as the Q4 FY26 earnings season plays out alongside escalating geopolitical events in West Asia. The breakdown of US-Iran ceasefire talks has led to renewed hostilities and a sharp jump in crude oil prices, adding macro uncertainty for investors. Against this backdrop, bank earnings and balance-sheet trends are drawing attention, especially around asset quality and capital planning. Large private lenders reported steady profit growth and improved asset quality in the March quarter, providing a domestic positive. Public sector banks are also using the results window to outline capital-raising plans for upcoming years.

Indian Overseas Bank posts higher Q4 FY25 profit

Indian Overseas Bank (IOB) reported a 30% year-on-year rise in standalone net profit for Q4 FY25 to ₹1,051.07 crore, compared with ₹808.10 crore a year earlier. Net interest income (NII) increased 13% year-on-year to ₹3,123 crore. Operating profit before provisions and contingencies for the quarter rose 33.5% to ₹2,617.92 crore from ₹1,961.11 crore in Q4 FY24. Provisions during the March quarter were ₹200 crore, down from ₹400 crore in the preceding December quarter. The bank’s return on assets (ROA) stood at 1.12% for the quarter, up from 0.94% in the year-ago period.

Asset quality trends improve sequentially

IOB reported a sequential improvement in asset quality during the quarter. The gross NPA (GNPA) ratio declined to 2.14% from 2.55% in December. On a year-on-year basis, the GNPA amount fell 21.3% to ₹5,347.72 crore from ₹6,794.43 crore in Q4 FY24. Net NPA (NNPA) ratio improved sequentially to 0.37% from 0.42% in the previous quarter. The NNPA amount declined 25% year-on-year to ₹911.86 crore from ₹1,216.86 crore, with the NNPA ratio at 0.37% compared with 0.57% in Q4 FY24.

Fundraising plan: ₹5,000 crore via equity and Tier II bonds

Alongside the quarterly results, IOB’s board cleared fundraising for FY26 through a mix of equity and debt. The bank said it intends to raise up to ₹5,000 crore through a combination of equity capital and Tier II bonds. Specifically, the board approved raising up to ₹4,000 crore in equity share capital, subject to shareholder approval at the upcoming Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM), and other regulatory approvals. The bank said the equity fundraising can be done through one or a combination of routes such as a follow-on public offer (FPO), rights issue, Qualified Institutional Placement (QIP), preferential issue, or any other suitable mode, potentially including an Employees' Stock Purchase Scheme (ESPS). The fundraising can be executed in one or more tranches or phases during FY26.

Tier II bonds: up to ₹1,000 crore under Basel III

In addition to the equity plan, the board sanctioned raising up to ₹1,000 crore through Basel-III compliant Tier II bonds. The bank said the issuance would depend on its requirement and may be done with or without a greenshoe option. The Tier II funds may be raised in one or more phases during FY26 through either private placement or a public issue, in India or abroad. For investors, the split between equity and bonds matters because it shapes dilution risk, capital ratios, and funding cost, though the bank has not disclosed tranche timing or pricing.

Earlier QIP plans and a completed QIP

In a separate fundraising update reported earlier, IOB had indicated it planned to raise ₹4,000 crore through QIP during the quarter, with the government stake expected to dilute by 4%. The bank also said it recently completed a QIP that raised ₹1,436 crore, though the post-issue shareholding change was yet to be updated. These disclosures underline that fundraising is being aligned with market conditions, with timing dependent on capital market appetite.

Indian Bank’s Q4 FY25: dividend and ₹7,000 crore capital plan

Indian Bank, another Chennai-headquartered public sector lender, also reported a strong March-quarter performance and announced capital actions. For Q4 FY25, Indian Bank’s standalone net profit rose 31.55% year-on-year to ₹2,956.07 crore from ₹2,247 crore. NII increased 6% year-on-year to ₹6,389 crore from ₹6,015 crore. Asset quality improved, with GNPA down 86 basis points to 3.09% and NNPA down to 0.19% from 0.43% in Q4 FY24. The board recommended a dividend of ₹16.25 per equity share (162.50% of paid-up equity capital) for FY25, with the record date set as June 10. Indian Bank’s board also approved a capital raising plan aggregating to ₹7,000 crore, including ₹5,000 crore in equity via QIP, FPO, rights issue, or a combination, and ₹2,000 crore via Basel III compliant AT-1 perpetual bonds and or Tier 2 bonds in one or more tranches.

Private bank results offer a domestic positive amid macro risk

Among private lenders, HDFC Bank reported an 8.04% increase in consolidated net profit to ₹20,350.76 crore for the March quarter, supported by net interest margins (NIMs) of 3.38% and a gross NPA ratio of 1.15%. ICICI Bank posted a 9.28% rise in consolidated net profit to ₹14,755 crore, and the bank reduced loan loss provisions by nearly 90%, pointing to improved asset quality and a shift in provisioning needs. These results have been cited as a stabilising factor for sentiment even as geopolitical developments add volatility through crude oil prices.

Key numbers at a glance

What investors will track next

For IOB, the near-term focus will be on the sequencing of FY26 fundraising tranches, the mode chosen (QIP, FPO, rights, or others), and any updates on shareholding following the completed ₹1,436 crore QIP. Investors will also watch whether the sequential improvement in GNPA and NNPA sustains and how provisioning levels trend after the March-quarter reduction. For the broader banking sector, the earnings season, crude-linked macro pressures, and capital-market conditions will remain key inputs shaping fundraising execution and market sentiment.