IOB Director Report

GLOBAL AND DOMESTIC ECONOMIC
ENVIRONMENT

The global economy faced fresh challenges during FY 2025¬
26 due to heightened geopolitical tensions, particularly the
conflict in West Asia, supply chain disruptions, elevated
energy prices, and persistent trade uncertainties. These
developments increased volatility in global financial markets
and created renewed concerns over growth and inflation
across major economies.

Taking into account these prevailing global conditions, the
latest estimates of the International Monetary Fund project
global growth at 3.1% in 2026 and 3.2% in 2027, reflecting
the impact of geopolitical conflicts, elevated commodity
prices, and financial market adjustments.

Amidst the uncertain global environment, India continued to
demonstrate strong macroeconomic resilience supported
by robust domestic demand, sustained investment, ongoing
structural reforms, and a healthy financial sector. India''s real
GDP growth for FY 2025-26 is estimated at 7.6%. Looking
ahead, the Reserve Bank of India has projected GDP growth
of 6.6% for FY 2026-27 in its June 2026 policy and kept the
policy repo rate unchanged at 5.25% while continuing with a
neutral policy stance.

As per the latest available data of March 2026, India''s banking
sector continued to remain strong and resilient. Scheduled
Commercial Banks reported Capital to Risk Weighted Assets
Ratio (CRAR) of 17.68%, well above regulatory requirements.
Asset quality improved further with Gross NPA declining to
1.73% and Net NPA to 0.40%. Liquidity Coverage Ratio (LCR)
remained comfortable at 123.70%. Annualised Return on
Assets (RoA) and Return on Equity (RoE) stood at 1.33% and
13.06%, respectively, while Net Interest Margin (NIM) stood
at 3.26%.

Among Public Sector Banks, financial parameters also
remained robust as of March 2026, with Gross NPA at
1.93%, Net NPA at 0.39%, Return on Assets (RoA) at
1.10%, and Net Interest Margin (NIM) at 2.84%, reflecting
sustained improvement in asset quality, profitability, and
operational efficiency.

Bank credit growth remained broad-based at 13.8% year-
on-year as compared to 11.0% a year ago. Deposit growth
also remained healthy, with aggregate deposits of Scheduled
Commercial Banks growing by around 10.8% year-on-year

supporting continued credit expansion and liquidity stability
in the banking system.

Despite elevated global uncertainties, India''s strong
macroeconomic fundamentals, prudent monetary and fiscal
policies, digital transformation, infrastructure development,
and commitment to inclusive growth position the economy
favorably to sustain growth momentum. Supported by strong
capital buffers, improved asset quality, adequate liquidity,
and expanding digital adoption, the Indian banking sector
remains well-positioned to support investment, financial
inclusion, and the nation''s long-term economic aspirations.

FINANCIAL PERFORMANCE

The Bank continued its strong growth momentum in
business, profitability, asset quality, operational efficiency,
and customer acquisition during the financial year ended
March 31, 2026, delivering one of its best-ever financial
performancesand further strengthening its position among
Public Sector Banks.

The Bank''s Total Business increased by Rs.1,16,657 crore
to Rs.6,78,614 crore as on March 31, 2026 from Rs.5,61,957

crore in the previous year, registering a robust growth of
20.76%. Gross Advances grew by 24.16% to Rs.3,10,423
crore, while Total Deposits grew by 18.03% to Rs.3,68,191
crore, reflecting strong and broad-based business expansion.

On the liability side, the Bank continued to strengthen its
granular and low-cost deposit franchise. Savings Bank
deposits registered strong growth of 15.30%, increasing
by Rs.16,530 crore from Rs.1,08,035 crore to Rs.1,24,565
crore during the year. CASA deposits increased by 10.85%
to Rs.1,50,936 crore, while Retail Term Deposits recorded
healthy growth of 17.81% to Rs.1,83,601 crore. The Bank
maintained a strong low-cost deposit profile with Domestic
CASA ratio of 41.46%, while high-cost bulk deposits were
contained below 6% of total deposits. Significantly, CASA
and Retail Term Deposits together contributed 94% of
total deposits, demonstrating the strength and stability of
the Bank''s retail deposit franchise.

The Bank reported its highest-ever annual Net Profit of
Rs.5,208 crore as against Rs.3,335 crore in the previous
year, registering an impressive growth of 56.16%. Notably,
the Bank delivered net profit of above Rs.1,000 crore in all
four quarters of FY 2025-26, increasing sequentially from
Rs.1,111 crore in Q1 to Rs.1,505 crore in Q4, reflecting
consistency and sustainability in earnings.

The Net Interest Income (NII) increased by 15.46% to
Rs.12,574 crore, while Operating Profit crossed the
landmark Rs.10,000 crore and increased by 15.40% to
Rs.10,026 crore. Operating Income increased by 10.80%
to Rs.18,210 crore. Despite cumulative repo rate cuts of 125
bps, the Bank maintained healthy margins with Global NIM at
3.21% and Domestic NIM at 3.33%. The Bank''s profitability
ratios continued to strengthen, with RoA improving from
0.92% to 1.23%, remaining above 1% throughout the year,
and RoE improving from 16.28% to 20.42%. Further, the
Cost-to-Income ratio improved from 47.14% to 44.94%,
while Cost of Deposits declined from 5.08% to 4.97%,
reflecting improved operating efficiency and effective
liability management.

The Bank continued its remarkable journey in asset quality
improvement. Gross NPA declined from 2.14% to 1.42%, while
Net NPA improved from 0.37% to 0.21%, among the best in the
industry. The Bank maintained an industry-leading Provision
Coverage Ratio of 97.50%, while Credit Cost remained low at
0.30%.

Fresh slippages during FY 2025-26 reduced significantly
by 66% to Rs.1,211 crore from Rs.3,568 crore in the

previous year, with Slippage Ratio improving from 1.68% to
0.49%, one of the lowest in the industry. During the year,
the Bank recovered Rs.3,576 crore, which was nearly 2.95
times of fresh slippages, reaffirming strong recovery and
resolution mechanisms.

The Bank''s strategic focus on Retail, Agriculture and MSME
(RAM) segments continued to yield strong results. RAM
advances increased by 34.91% to Rs.2,45,014 crore and
constituted 78.93% of total advances. Within RAM portfolio,
Retail advances grew by 45.12%, Agriculture advances by
39.27%, and Core MSME advances by 23.77%, reflecting
diversified and granular credit growth.

The Bank''s capital position remained strong, with Capital
Adequacy Ratio (CRAR) improving to 19.78%, including
CET-1 ratio of 16.94%, significantly above regulatory
requirements and among the best in the industry.

The Bank also significantly expanded its customer
outreach during the year by adding 163 new branches, 3
Regional Offices, 154 ATM/CRMs, and 2,052 Business
Correspondents, further strengthening its commitment
towards financial inclusion, customer accessibility, and
sustainable growth.

The consistent improvement in business growth, profitability,
operating efficiency, asset quality, recovery performance,
capital strength, and customer acquisition reaffirms the
Bank''s transformation into a strong, sustainable, and future-

ready institution, well-positioned to create long-term value
for all stakeholders.

INCOME AND EXPENDITURE ANALYSIS

The interest received on advances has increased by 19.32%
(YoY) to Rs.24,082 Crores for the financial year ended 31^st
March 2026 as compared to Rs.20,182 Crores received
during the previous financial year ended 31^st March 2025.
Interest earned on investments increased by 6.82% to
Rs.7,518 Crores in FY 2025-26 as against Rs.7,038 Crores
in FY 2024-25. Consequently, total interest income increased
by 13.38% to Rs.31,896 Crores in FY 2025-26 as compared
to Rs.28,131 Crores in the previous year.

The Bank''s non-interest income also registered growth
and stood at Rs.5,636 Crores in FY 2025-26 as against
Rs.5,545 Crores in FY 2024-25, registering a growth of
1.64%. Accordingly, Total Income increased by 11.45%
to Rs.37,532 Crores in FY 2025-26 as against Rs.33,676
Crores in FY 2024-25.

On the expenditure side, interest paid on deposits increased
to Rs.16,577 Crores in FY 2025-26 as against Rs.15,008
Crores in FY 2024-25, registering a growth of 10.45%, in
line with growth in deposit base. Interest paid on borrowings
increased by 22.98% to Rs.2,745 Crores as against Rs.2,232
Crores in the previous year. Consequently, total interest
expenses increased by 12.07% to Rs.19,322 Crores in
FY 2025-26 from Rs.17,241 Crores in FY 2024-25.

Despite business expansion and branch network growth, the
Bank maintained strong cost discipline. Operating Expenses
increased moderately by 5.64% to Rs.8,184 Crores as
against Rs.7,747 Crores in the previous year, which was lower
than the growth in operating income, reflecting improved
operating efficiency. Staff expenses remained largely stable
at Rs.4,689 Crores, while other operating expenses stood at
Rs.3,495 Crores during the year. Total expenses increased
by 10.08% to Rs.27,506 Crores in FY 2025-26 as against
Rs.24,988 Crores in FY 2024-25.

The Net Interest Income (NII) increased by 15.46% on YoY
basis to Rs.12,574 Crores for the year ended 31.03.2026 as
against Rs.10,890 Crores for the year ended 31.03.2025.
Operating Income increased by 10.80% to Rs.18,210
Crores, while Operating Profit crossed the significant
milestone of Rs.10,000 Crores and increased by 15.40%
to Rs.10,026 Crores. The Bank''s Cost-to-Income ratio
improved from 47.14% to 44.94%, reflecting enhanced
operational efficiency and effective cost management.

Despite cumulative policy repo rate reductions of 125 bps
during the year, the Bank maintained healthy margins with
Global NIM at 3.21% and Domestic NIM at 3.33%. Improved

income profile, efficient liability management, moderation
in cost of deposits from 5.08% to 4.97%, and disciplined
expenditure management contributed to strong profitability,
resulting in the Bank reporting its highest-ever Net Profit
of Rs.5,208 Crores, registering a growth of 56.16% over
the previous year.

CAPITAL ADEQUACY RATIO

The Bank''s Capital Adequacy Ratio continued to remain
strong and improved further by 74 basis points to 19.78%
as on 31.03.2026 as against 19.04% as on 31.03.2025, which
is significantly above the regulatory requirement, reflecting
the Bank''s strong capital position and its ability to support
future business growth.

The Bank''s Common Equity Tier-1 (CET-1) ratio stood at as
on 31.03.2026 as against 16.44% as on 31.03.2025, while
Tier-II capital ratio improved to 2.84% from 2.60% during
the same period. The Bank''s total capital funds increased to
Rs.39,144 crore as on March 31, 2026 from Rs.32,306 crore
in the previous year.

The consistently strong capital buffers, supported by healthy
internal profit generation, improved asset quality, and prudent
risk management, position the Bank comfortably to support
accelerated business growth, meet regulatory requirements,
and pursue strategic growth opportunities in the years ahead.

BRANCH NETWORK

The Bank continued to strengthen its physical presence and
customer outreach during FY 2025-26. The Bank has 3,494
Domestic Branches as on 31^st March 2026 as against 3,335
Branches as on 31^st March 2025, registering a net addition
of 159 branches during the year.

The branch network continues to have a strong presence
across rural and semi-urban geographies, supporting the
Bank''s commitment towards financial inclusion and inclusive
economic growth. Out of the total branch network, around
58% of branches are located in Rural and Semi-Urban
centres, enabling deeper penetration in underbanked and
priority sectors.

The Bank expanded its customer touch points by adding 154
ATM/CRMs and 2,052 Business Correspondents during
the year, taking the total customer touch points to 19,336
as on March 31, 2026. The continued expansion of the
Bank''s physical and alternate delivery channels reinforces
its commitment towards customer convenience, financial
inclusion, and sustainable business growth.

Capital:

• During the year 2025-26, the Bank has not raised
equity capital.

• The paid-up capital of the Bank stands at Rs.19,256.59
Crore as on 31^st March 2026. The Government of India
shareholding stands at 92.44% as on 31^st March 2026.

• During the Financial Year 2025-26, Bank has issued
Basel III Tier II Bonds (Series VI) aggregating to Rs.1000
Crore through Private Placement basis subscribed by
Qualified Institutional Buyers (QIBs).

Dividend:

Board of Directors of the Bank did not recommend any

dividend during the Financial Year 2025-26.

Market capitalization of the Bank:

Particulars	Market capitalization as on 31.12.2025 (Rs. in Crores)	Rank among listed entities
BSE Ltd	74120	140
National Stock ____
Exchange Ltd	74113	141

Corporate Governance:

The Board of the Bank is firmly committed to upholding the
highest standards of Corporate Governance, both in letter
and in spirit. The Bank has established a comprehensive and
well-documented framework of policies and practices to
ensure effective governance. A detailed report on Corporate
Governance is presented in a dedicated section of the
Annual Report.

Investor Education & Protection Fund (IEPF):

In accordance with the guidelines issued by the Ministry of
Corporate Affairs (MCA), Government of India, the Bank has
transferred all unpaid dividend amounts up to the financial
year 2013-14 to the Investor Education and Protection
Fund (IEPF).

The Bank remains fully compliant with the regulations and
directives prescribed by the Regulatory Authorities and the
Government of India. Shareholder grievances are addressed
promptly and efficiently, ensuring transparency and trust in
all dealings.

Directors'' Responsibility Statement:

The Directors confirm that, in the preparation of the annual

accounts for the year ended 31^st March 2026:

• Accounting Standards have been duly followed, together
with proper explanations for any material departures,
if applicable.

• Accounting Policies had been selected and applied
consistently and made judgments and estimates that
are reasonable and prudent so as to give a true and fair
view of the state of affairs of your Bank at the end of the
financial year and of the profit and loss of your Bank for
that period.

• Proper and sufficient care was taken for the maintenance
of adequate Accounting Records in accordance with
the provisions of the relevant Acts for safeguarding the
assets of your Bank and for preventing and detecting
fraud and other irregularities.

• The Annual Accounts were prepared on a going
concern basis.

• The Bank has established and maintained adequate
Internal Financial Controls, which were operating
effectively during the year. For this purpose, Internal
Financial Controls” refers to the policies and procedures
adopted to ensure orderly and efficient conduct of
business, adherence to policies, safeguarding of assets,
prevention and detection of frauds and errors, accuracy
and completeness of accounting records, and timely
preparation of reliable financial information.

• Proper systems are in place to ensure compliance with
all applicable laws, and such systems have been found
adequate and operating effectively.

BOARD OF DIRECTORS

The business of the Bank is vested with the Board of Directors. The MD & CEO and EDs function under the superintendence,
direction and control of the Board. The strength as on 31.03.2026 were 10 directors comprising 01 Non-executive Chairman,
03 whole time Directors, 01 GOI Nominee Director, 01 RBI Nominee Director, 03 Part time Non-Official Directors and 01
director elected from amongst the shareholders to duly represent their interest.

Position of the terms of the Directors during the FY 2025-26

S. No.	Name	DOJ	DOR/Term Ends on	Designation
01	Shri Srinivasan Sridhar	21/02/2024	20/02/2027	Non-Executive Chairman & Part Time Non-Official Director
02	Shri Ajay Kumar Srivastava	01/01/2023	08/10/2027	Managing Director & Chief Executive Officer
03	Shri Joydeep Dutta Roy	31/01/2024	19/10/2028	Executive Director
04	Shri Dhanaraj T	10/03/2024	09/03/2027	Executive Director
05	Ms Neelam Agrawal	05/08/2024	UFO *	Govt. Nominee Director
06	Shri Thomas Mathew	03/03/2026	UFO *	RBI Nominee Director
07	Shri G Venkataramanan	03/12/2025	02/12/2028	Shareholder Director
08	Shri Suresh Kumar Rungta	11/04/2025	10/04/2026	Part Time Non-Official Director
09	Shri B Chandra Reddy	11/04/2025	10/04/2026	Part Time Non-Official Director
10	Shri Deepak Sharma	11/04/2025	10/04/2026	Part Time Non-Official Director

During the FY 2025-26, the following Directors'' tenure ended as below:

01	Ms Sonali Sen Gupta	14/07/2023	03/03/2026	RBI Nominee Director
02	Shri Sanjaya Rastogi	03/12/2022	02/12/2025	Shareholder Director

ACKNOWLEDGEMENT

The Board of Directors is grateful for the valuable guidance and support received from the Government of India, Reserve Bank
of India, Securities and Exchange Board of India (SEBI). Stock Exchanges, State Governments, Financial Institutions, and all
Overseas Regulators. The Board of Directors acknowledge with thanks our valued Customers, Employees, Unions, Officers
Associations, domestic and international banking group, the shareholders & other stakeholders for their valued support and
continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuable contribution of the Bank''s staff at all levels
and looks forward to their continued involvement and commitment towards achieving the future goals.

For and on behalf of the Board of Directors

Place: Chennai Ajay Kumar Srivastava

Date: 21.05.2026 Managing Director & Chief Executive Officer