Profits were driven by robust growth in advances in the retail, agri and SME (RAM) sector, and were also helped by the bank’s shift to the new tax regime following deferred tax adjustments in recent years | Photo credit:
The gains were driven by robust growth in advances in the retail, agri and MSME (RAM) sector, and were also helped by the bank’s shift to the new tax regime following adjustments to deferred taxes in recent years.
Operating profit rose 14.8 per cent to ₹2,603 crore in Q3FY26. Net interest income (NII) rose 18.3 per cent to ₹3,299 crore year-on-year in Q3FY26. The domestic net interest margin (NIM) remained stable at 3.32 percent in the third quarter of 2026.
The public sector lender, which has Board approval to raise about ₹4,000 crore through QIP, plans to go to market next month to raise funds, said Ajay Kumar Srivastava, MD and CEO of IOB. The fund’s infusion is likely to reduce the government’s stake by about 4 percent, he added.
“Credit growth has been a key earnings driver this quarter and non-interest income growth has also been robust on the back of revenues generated by the bank from the sale of Priority Sector Lending Certificates (PSLCs), which stood at around ₹500 crore in the nine months of this fiscal,” the MD and CEO said. Recovery of technically written off NPAs has also helped, he added.
total business
The bank’s total revenue rose by ₹1.01 lakh crore to ₹6.44 lakh crore by December 2025, registering a year-on-year growth of 18.7 per cent. Total advances rose 24.1 per cent to ₹2.95 lakh crore in December 2025. The RAM business, which constitutes 77 per cent of total advances, grew 33.1 per cent YoY, with retail alone witnessing 43 per cent growth. Jewelry loans, which are classified over RAM, also grew by a healthy 35-40 percent.
The bank’s asset quality also improved in Q3FY26. Gross non-performing assets (NPAs) stood at 1.54 percent, compared to 2.55 percent in the same quarter last year. Net NPAs fell to 0.24 per cent in December 2025 from 0.42 per cent in the year-ago period. Total recovery for Q3FY26 increased to ₹890 crore from ₹874 crore in Q2FY26.
Regarding the new ECL framework starting from April 1, 2027, IOB said it estimates an additional provision of around ₹2,500 crore. Out of this, it has already created ₹1,500 crore in the December quarter, and the balance will be made in the subsequent quarters.
On the impact of the labor law on the financial sector, Srivastava said they have not yet calculated the additional provisions required. “The rules relating to the said labor laws are yet to be notified and any consequential consequences will be taken into account upon such notification,” the bank said in its notes to the accounts.
Speaking about the impact of the US tariffs on MSMEs, he said exporters are currently managing them based on negotiations with customers and market diversification, but there could be a negative impact in the coming financial year if the tariffs continue.
Published on January 14, 2026
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