Indian Overseas Bank (IOB) Q2 FY27 Results Analysis: PAT Jumps 56%, GNPA Hits Record Low

Indian Overseas Bank reported Q2 FY27 numbers with revenue of Rs. 10,427.88 Cr (+13.17% YoY) and PAT growth of +55.94% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

IOB delivered ahead of its own FY27 guidance on credit growth (25.00% vs 13-14% minimum), ROA (1.53% vs 1.4-1.5%) and credit cost (0.167% vs 0.35-0.40%), with PAT up 55.94% YoY and GNPA at a best-on-record 1.19%. Cost-to-income improved to 40.78% and PPOP rose 25.69% YoY, while the pending Rs.5,000 crore equity raise and a 76 bps QoQ CRAR drift are the main watch items. Other income fell 10.17% YoY and retail segment margins compressed, but the core operating engine accelerated on every bank metric.

Key Investment Insights

Key Positives

• Advances grew 25.00% YoY to Rs.3,42,060.58 crore, exceeding the 13-14% FY27 minimum guidance with two quarters to spare
• Deposits grew 20.16% YoY to Rs.4,07,428.18 crore, ahead of the 13-14% guidance
• Standalone PAT grew 55.94% YoY to Rs.1,912.42 crore; normalized PAT Rs.2,040.36 crore, +66.37% YoY
• PPOP grew 25.69% YoY to Rs.3,016.49 crore, rising for the fifth straight quarter
• GNPA fell to 1.19% (-14 bps QoQ, from 1.83% YoY), NNPA 0.16%, PCR 97.69%
• Credit cost 0.167% annualized vs 0.35-0.40% FY27 guidance; ROA 1.53% annualized vs 1.4-1.5% guidance
• Cost-to-income improved to 40.78% from 53.95% in Q1 and 45.76% YoY
• NII grew 26.41% YoY to Rs.3,866.98 crore, more than double total income growth of 13.17%

Risk Factors

• Other income declined 10.17% YoY and 43.22% QoQ, the only revenue line shrinking against 26.41% NII growth
• Other operating expenses rose 39.95% YoY, growing well ahead of income
• CRAR eased 76 bps QoQ to 18.60% (CET1 16.26% vs 16.88%) as risk-weight growth outpaced accretion
• Deposit growth (+20.16%) lags advances growth (+25.00%) by ~4.8 pp, a persisting funding gap
• Retail segment result fell 10.44% YoY with margin compression from 26.91% to 20.86%
• Provisions and contingencies rose 41.29% YoY to Rs.950.08 crore