$IOB Indian Overseas Bank (IOB) – PSU Bank Benefiting from Strong Credit Growth & Improving Asset Quality

$IOB Indian Overseas Bank has emerged as one of the strongest turnaround stories among PSU banks, driven by robust loan growth, improving asset quality, higher profitability, and strong operational efficiency. The bank is benefiting from increasing credit demand across retail, agriculture, MSME, and corporate segments while maintaining disciplined risk management. Improved recoveries and lower provisions have further strengthened earnings momentum. Key Financial Highlights • FY26 Net Profit surged 56% YoY to ₹5,208 crore, crossing ₹5,000 crore for the first time. • Q4 FY26 Net Profit rose 43% YoY to ₹1,505 crore. • Net Interest Income (NII) increased to ₹3,470 crore in Q4 FY26. • Total business crossed ₹6.4 lakh crore with strong credit growth. • Improving Return on Assets (RoA) and declining NPAs reflect strengthening asset quality. Investment Rationale: Strong earnings growth, improving asset quality, expanding loan book, attractive PSU bank valuation, and continued government-led economic growth make IOB a compelling play on India's banking sector expansion. Continued reduction in NPAs and sustained profitability can support further re-rating potential.