Indian Overseas Bank Q2 Results: Strong core income drives profitability, asset quality improves

State-run Indian Overseas Bank Ltd. (IOB) reported its September quarter results on Monday, October 26, which showcased strong core income growth, that contributed to the growth in its bottom-line, along with better asset quality.

Net Interest Income (NII) for the quarter increased by 26.4% during the September quarter to ₹3,867 crore from ₹3,059.3 crore earlier.

The lender's profitability increased by 56% year-on-year to ₹1,912 crore from ₹1,226.4 crore reported during the base quarter. IOB's net profit grew despite its other income dropping to ₹1,226 crore from ₹1,365 crore last year, and provisions increasing to ₹950 crore from ₹834 crore during the June quarter.

Asset quality for the bank improved sequentially, with Gross NPA improving to 1.19% from 1.33% last quarter, while net NPA improving to 0.16% from 0.18% in the June quarter.

In absolute terms, IOB's Gross NPA stood at ₹4,114 crore from ₹4,292 crore in June, while Net NPA stood at ₹543.5 crore from ₹588.4 crore last quarter.

Shares of Indian Overseas Bank surged to the day's high after the results announcement, currently trading 3.3% higher on Monday at ₹29.63. The stock is down 7% in the last one month, taking its year-to-date decline down to 18%.

This story will be updated with more details.