Indian Overseas Bank Q4 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. Compliment to you for the fantastic set of tumble for the quarter and the year. Now, am I audible now?

Question: Ashok Ajmera - Ajcon Global - Analyst : Yeah. So I was (iaudible) in saying that I'm not audible. So whether I am audible now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, IOBK.NS - Q4 2025 Indian Overseas Bank Earnings Call

Question: Ashok Ajmera - Ajcon Global - Analyst : Yes. Okay. So my compliments to you for a good set of numbers. Your gross ROE for the first time, 1% in this quarter, 1.12%. And the overall business also has -- business growth has also been good in this difficult environment, especially on the front of the deposit and the credit, both in many other banks, people are facing, whereas you have done well on the advanced front of 14.15% and deposit 9.11% in this. So on the whole, it's a good set of results. I have some couple of some questions and some observations and data points. Sir, my first point is on the fresh slippages, which have gone up to INR2,756 crores. Would you like to elaborate on that a page to NPA category, what kind of accounts and what is the reason for it and something can you give some color on this? Then my first question, please?

Question: Ashok Ajmera - Ajcon Global - Analyst : So sir, what will be the base of now like there must be talk going on to bring it back to the tender category or what is the process now to be followed to bring down our NPA, though you -- though the gross NPAs are under control because there is a heavy written of INR3,043 crores write-off in this quarter, but it still is a matter of concern only. So what is -- what generally happens in this kind of case now?

Question: Ashok Ajmera - Ajcon Global - Analyst : Yeah, as you must that entire money while on MTNL, you should lose any money when you say government undertaking. Anyway sir, there is -- we have an investment in Universal Tempo General Insurance of 18.6% which is basically a minority interest, and it is not coming in our consolidation books also because of less than 25%. So any plan on this, either riding off or increasing the stake?

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay, sir. And there is a loss in the other investment in associate books. So what is exactly -- is that INR331 crores adjusted again the result in surplus. So this belongs to which associate companies with here to write off?

Question: Ashok Ajmera - Ajcon Global - Analyst : No, on note number nine in investment in associates. Yeah, [AS 23].

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay, sir. Sir, my next question is on the which I have been raising in earlier meetings also is about the distributed tax liability. So that continues to be there in the notes, which auditors have given most of the account. And even last time also, we had, I think, one or two quarters back also, we had a discussion on this that it is there with all other banks also. But we have not seen this kind of note in any other -- most of the other public sector banks. The huge distributed tax liability of INR4,062 crores -- and plus there is income tax and service tax INR265 crores and GST 1,615 crores. So where do we stand today? I mean -- why is taking so much of time to settle the liabilities. And there is a process in the all these tax laws where you can place for early disposal of the cases.

Question: Ashok Ajmera - Ajcon Global - Analyst : That's very good, sir. On this IT refund of INR4,402 crores, you must have received a good amount of interest also. What is the net amount of the IT returns.

Question: Ashok Ajmera - Ajcon Global - Analyst : So no credit has been taken in P&L on account of that interest whatever it is --

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. All right, sir. I will take it now on the coming back of the business and the credit growth and as well as the deposit growth, we are sitting on a DD ratio of global around almost about 80% and domestic is 76.96%. So going forward, what is your targets are now for FY26 or maybe one or two quarter next quarter on the credit growth, if you want to continue it at 14%, 15%? Or is there any change? And the same, what is the target and for the deposit.

Question: Ashok Ajmera - Ajcon Global - Analyst : 12% to 13%.

Question: Ashok Ajmera - Ajcon Global - Analyst : Alright, thank you very much for this round of questioning. I have some couple of data points also to be discussed. But if time permits, I'll come back again, sir. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, IOBK.NS - Q4 2025 Indian Overseas Bank Earnings Call

Question: Niteen Dharmawat - Aurum Capital - Analyst : Thank you for the opportunity. Am I audible?

Question: Niteen Dharmawat - Aurum Capital - Analyst : Yes. Sir, my first question is, what is the plan to expand the branch network during the next financial year? And what will be the guidance for the cost-to-income ratio last year or last quarter, rather, it went down to 44%. And for the year, it remained at around 47%. So can you provide some more details about this?

Question: Niteen Dharmawat - Aurum Capital - Analyst : And in segmental NPA and MSME segment is still close to 3%. So do we see any stress over there? What is your reading for the sector?

Question: Niteen Dharmawat - Aurum Capital - Analyst : Let me refer now. Where do you see the stress in the economy in general? Do you see anywhere space in the economy specific sectors where you see -- whether we are lending there or not is a different question. But in general. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, IOBK.NS - Q4 2025 Indian Overseas Bank Earnings Call

Question: Niteen Dharmawat - Aurum Capital - Analyst : I understand that. No, I was not looking only at MSME, but in general, sales anywhere you see in the economy, whether it is MSME, rural or micro lending, or gold loan or anywhere actually, in any of the sectors you see a --

Question: Niteen Dharmawat - Aurum Capital - Analyst : My final question is about what are the top three accounts other than [MPNL] where you have seen or where you see any possible NPAs of provisioning during the quarter?

Question: Niteen Dharmawat - Aurum Capital - Analyst : Got it. Thank you so much, sir. And wish you all the best.

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Can you hear me?

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Congrats for the good set of numbers. Sir, just a few questions. First on the capital raise, I just want to, is it an enabling provision or you're looking at raising the real capital because we just made our capital days a few months back. So just want to know why we are looking at further capital days given that our CD ratio is also very good.

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Yes. Because that will dilute the capital measures. That is the reason that while government is not selling its stake instead the bank is raising the captive then you don't need to growth capital.

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Okay, sir. Sir, the next question is, what is the recovery that you are -- the NPA equity and the write-off equity that you are projecting for the next two to three years and particularly for the financial.

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : But what is the total pool of NPA and recovery from which you are recovering this spend. I just wonder what is the total full side?

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : And what is the rate of portfolio?

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : INR30,000 crores. Okay. And sir, what is the guidance for ROE for the financial year '25, '26?

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Will you maintain it or will improve in the coming financial year?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Sir, congratulations to Team IOB an excellent result and a stable outlook. Second is congratulations also on the QIP. Sir, this dilution, which you answered to the previous question, if I assume that you do INR1,400 crores to INR2,000 crores of QIP will take at least another four, five rounds before you get to 75%, which will destroy value of the existing shareholders. So I would urge that the government should consider and the request should go out from the bank. And we let the OFS happen so retail participate rather than doing QIP. Secondly, sir, what is our outlook on treasury because this year may be a bump of harvesting of all banks in India, where treasury profits are concerned? And how would you utilize that for growth, the profit? And second thing is, will this lead to that you will diversify to corporate bond, which yields higher? And how would you also sustain CASA. At the same time, with foreign interest rate redeemed, CASA would be a good enabler for growth. What is our strategy to increase the saving deposits?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Treasury profit.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Sir, looking good from that perspective, I understand, but this treasury has set you will you invest in corporate bonds or you'll utilize for growth in the --

Question: Sushil Choksey - Indus Equity Advisors - Analyst : I understand that the money is not idle. But as of today, out of your treasury total portfolio, what would comprise of equity and corporate bonds other than PSU and treasury government (inaudible)?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Okay. Second thing, sir, on the CD ratio, what is your outlook?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : And what is the outlook on NIM where global business is concerned?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : That is global NIM total NIM. I'm not asking on an international book.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : So you're saying your NIM on international book would be 3.2%.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : Can I understand what product is bringing us this kind of wins on international book?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : No, no getting impacted, I understand, but which product is corporate lending given you those kind of in international book.

Question: Sushil Choksey - Indus Equity Advisors - Analyst : What is the strategy on digital spend for technology upgradation gold lending, retail products, corporate banking? And what is the total budget for this year? And what are the new enablers which you're trying to roll out?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : My last question Jha-ji, what are we doing in HR to make bank future ready?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : What is the average age of our staff?

Question: Sushil Choksey - Indus Equity Advisors - Analyst : 30 to 39 crores, okay. Good luck and best wishes for the years to come.

Question: Ashok Ajmera - Ajcon Global - Analyst : Sir, one of my question is on the -- a little update on the DTA assets and then by what time thinks that we will go in, I mean, take advantage of all that old last benefit is available, and we will go to the new tax regime. Any calculation on that?

Question: Ashok Ajmera - Ajcon Global - Analyst : So the entire DTA benefit, which accrues on INR3,864 crores will be utilized in the FY26 and then we will be ready for the new tax reg.

Question: Ashok Ajmera - Ajcon Global - Analyst : And sir, on for data point to some information between the noninterest income -- there is another poly of, again, other income, that is neutral income or something, which has gone up in this quarter to INR466 crores. Any major item on that or is that interest on refund or something? What is that INR466 crore income in noninterest income?

Question: Ashok Ajmera - Ajcon Global - Analyst : How much of that, sir, commission earned?

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. But this INR466 crores included to INR287 crores. Sir, coming back to that one earlier question on this, that we are expanded now we have started global when we have four centers there to serve the people they are down abroad. What are our basically plan going forward on the overseas book because our scale is very, very small today. And do we have any -- that kind of pot client here in India, which will require the credit down there so that we fund part of our exposure there to the Indian customers and clients. Any study on our overseas operation, expanding the operation there, sir?

Question: Ashok Ajmera - Ajcon Global - Analyst : All right, then. Thank you very much, sir. And all the best to you.

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Yes. Just to (inaudible) question, [cuts to the] other operating costs have gone up almost INR200 crores this quarter compared to the quarter. So is there any one-off in this?

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Sir, I'm talking about the other operating expense, not the employee cost. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, IOBK.NS - Q4 2025 Indian Overseas Bank Earnings Call

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst :

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Okay. And sir, did we get any gain because this quarter, the gains will come down significantly. So when we restated our employee liabilities and pension and other retirement benefits. Did you give any balance -- I mean, get any one-off gain

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Okay. So can you take because the statute cost -- employee cost from a line item perspective.

Question: Raj Kumar Vaidyanathan - RK Investments - Analyst : Okay, sir. Not a problem. Thank you so much.