Indian Overseas Bank Q4 FY26: Profit up 43%, NII 11%

Results announced on April 29

Indian Overseas Bank (IOB) reported its earnings for the fourth quarter of FY26 on April 29, showing higher profit and stronger core interest income despite a decline in net interest margins. The public sector lender also reported a further improvement in asset quality indicators, with both gross and net NPA ratios lower than a year ago. The numbers matter for investors because they indicate how the bank is balancing growth and profitability in a quarter where margin pressure was visible.

The market reaction was positive immediately after the announcement. The stock moved up sharply intraday on the National Stock Exchange (NSE), reflecting investor focus on earnings momentum and improving bad loan ratios.

Q4 FY26 profit rises 43% year-on-year

IOB reported a 43.23% year-on-year increase in net profit for Q4 FY26 to ₹1,505.45 crore. In the same quarter last year (Q4 FY25), net profit stood at ₹1,051.07 crore. The gap highlights a strong improvement in profitability compared with the year-ago base.

The quarter’s performance was underpinned by growth in net interest income, while the bank also benefited from an improvement in asset quality. The results positioned IOB among public sector banks showing a steady reduction in NPA ratios over the past year.

Net interest income up 11.1% YoY

Net interest income (NII) advanced 11.1% year-on-year to ₹3,469.71 crore in Q4 FY26. This compares with ₹3,122.95 crore in Q4 FY25. The rise in NII indicates that core lending and deposit operations continued to expand in the March quarter.

NII is a key operating metric for banks because it reflects the difference between interest earned and interest paid, before fee income and other gains. In IOB’s case, core income growth came even as margins compressed, making the margin trend an important point to track alongside NII growth.

Net interest margins weaken on both domestic and global basis

The bank’s domestic net interest margin (NIM) fell 42 basis points to 3.35% in Q4 FY26, from 3.77% in Q4 FY25. Global NIM stood at 3.25%, a 33 basis point year-on-year drop from 3.58% in the March quarter of FY25.

The margin decline suggests that the cost of funds and yield dynamics were less favourable than a year earlier. Even with that pressure, the bank’s NII still increased, indicating that balance sheet volumes and mix helped offset the margin headwind during the quarter.

Asset quality improves as NPA ratios fall

IOB reported an improvement in asset quality in Q4 FY26. Gross non-performing assets (GNPA) declined to 1.42% in the reporting quarter, from 2.14% in Q4 FY25. Net non-performing assets (NNPA) improved to 0.21% in Q4 FY26, compared with 0.37% in the year-ago period.

For investors, the direction of GNPA and NNPA is important because it affects credit costs, provisioning requirements, and the sustainability of earnings. The latest reported ratios indicate that the bank continued to reduce stressed assets compared with the same quarter last year.

Full-year FY26: net profit rises 56% to ₹5,208 crore

On a full-year basis, IOB reported a 56.16% year-on-year surge in net profit to ₹5,208 crore for FY26. This compares with ₹3,335 crore in FY25. The full-year jump provides context beyond a single quarter and shows that profitability improved materially over the year.

While quarterly performance can be volatile, full-year profit growth often captures the combined impact of operating momentum, credit costs, and broader balance sheet trends. In IOB’s case, the FY26 number reinforces the stronger earnings trajectory highlighted in Q4.

Stock reaction: up 4.06% intraday to ₹36.39

Following the result announcement, IOB shares rose as much as 4.06% to hit an intraday high of ₹36.39 per share on the NSE on April 29. The move suggests that the market responded positively to the profit growth and the improvement in asset quality.

Price action immediately after results is often driven by whether key metrics beat or miss expectations, but the provided data does not include street estimates. Still, the reported move shows that the headline numbers were received well at least in the initial trade.

Key numbers at a glance

The table below summarises the main reported figures for Q4 FY26 and year-on-year comparisons where provided.

Recent operational and profitability snapshot from disclosed data

Beyond the Q4 FY26 release, the provided earnings snapshot also listed Q3 FY26 metrics. It showed interest earned of ₹8,172 crore, gross profit of ₹2,603 crore, and net profit of ₹1,365 crore, with the last earnings date noted as January 14, 2026.

The same dataset also included business metrics as of September 30, 2025: total business of ₹6,17,034 crore, total deposits of ₹3,39,066 crore, CASA deposits of ₹1,37,387 crore, and gross advances of ₹2,77,968 crore. CASA ratio was reported at 40.52% and the credit-deposit ratio at 81.98% as on that date. These datapoints provide additional context on the bank’s scale and operating mix, although they relate to a different reporting date than Q4 FY26.

Why the Q4 FY26 print matters

The Q4 FY26 results combine three signals that investors typically track together in PSU banks: strong year-on-year profit growth, sustained NII expansion, and improving NPA ratios. At the same time, the reported fall in domestic and global NIM indicates that spreads narrowed versus the prior year, which can become a constraint if it persists.

For near-term tracking, the reported NIM movement and asset quality trajectory are likely to remain central, alongside how consistently the bank can translate balance sheet growth into core earnings. The next set of disclosures will help investors assess whether margin pressure stabilises while the improvement in GNPA and NNPA continues.