Credit Rating

Ref No. IRC/88 /2025-26 25.06.2026 The General Manager, The Vice President, Department of Corporate Services, National Stock Exchange Ltd., BSE Limited, Exchange Plaza, C-1 Block G, Floor 1, P.J. Towers, Dalal Street, Bandra-Kurla Complex, Bandra (E), Mumbai 400 001 Mumbai – 400 051 BSE SCRIP CODE: 532388 NSE SCRIP CODE: IOB Dear Sir/ Madam, Rating Action by CRISIL Ratings Rating upgraded to ‘Crisil AA+/Stable’ Pursuant to Regulation 30(6) and Regulation 55, read with Point 3 of Para A of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform that Crisil Ratings Limited has reviewed the credit rating assigned to the Bank’s Non-Convertible Securities as follows: Name of Date of Verification Credit Credit Date of ISIN Rating/ Outlook Status of Rating Rating Verification Agency (Review) Upgraded the rating from INE565A08035 CRISIL “AA” to “AA+” (Basel III Tier II 25.06.2026 Verified 25.06.2026 Ratings while maintaining Bonds) the outlook as “Stable.” This is for your information and appropriate dissemination. Yours faithfully, Raghuram Mallela Deputy General Manager/ Company Secretary & Compliance Officer Indian Overseas Bank, Investor Relations Cell, Central Office, 763 Anna Salai, Chennai 600 002 044 – 7172 9791, 2888 9360 | investor@iob.bank.in Rating Rationale June 25, 2026 | Mumbai Indian Overseas Bank Ratings upgraded to 'Crisil AAA/Crisil AA+/Stable'; FD rating continues on 'Notice of Withdrawal' Rating Action Rs.500 Crore Tier II Bonds (Under Basel Crisil AA+/Stable (Upgraded from 'Crisil AA /Stable') SEBI III) Crisil AAA/Stable (Upgraded from 'Crisil AA+/Stable'; Rs.200000 Crore Fixed Deposits RBI Rating continues on 'Notice of Withdrawal') Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to Annexure for Details of Instruments & Bank Facilities Detailed Rationale Crisil Ratings has upgraded its long-term ratings on the fixed deposit programme and Tier-II bonds (under Basel III) of Indian Overseas Bank (IOB) to ‘Crisil AAA/Crisil AA+/Stable’. Ratings on Fixed Deposits continue to remain on ‘Notice of Withdrawal'. The rating upgrade is primarily driven by sustained improvement in earning profile supported by improved asset quality metrics. The overall rating continues to factor in the expectation of continued strong support from its majority owner, the Government of India (GoI), both on an ongoing basis and in the event of distress. IOB’s asset quality has shown substantial improvement over the last 2-3 fiscals, leading to gradual decline in credit costs. As of March 31, 2026, the company’s gross non-performing assets (Gross NPAs) stood at 1.4% lower in comparison to 2.1% as of March 2025 (3.1% as of March 2024). As a result, the credit costs have declined to 0.9% during fiscal 2026 as against 1.1% for fiscal 2025. The improvement in asset quality is primarily backed by controlled slippage as the bank has strategically shifted its focus towards Retail, Agriculture and MSME segment (RAM). These segments currently constitute 79% of gross advances as on March 31, 2026, as against 73% as of March 31, 2025 (67% as of March 2024). The slippage ratio, accordingly, improved substantially to 0.5% for fiscal 2026, from level of 1.7% in fiscal 2025. Strong control over asset quality, along with the availability of low-cost deposits (CASA1 deposits and retail term deposits), have provided the bank with the necessary headroom to expand its asset base. As a result, the gross advances of the bank grew by around 24% to Rs 3,10,423 crore as of March 31, 2026, from Rs 2,50,019 crore as on March 31, 2025. The improvement in asset quality (reflected in lower credit costs), along with portfolio growth, has collectively driven a sustained improvement in profitability. During the last five consecutive quarters the bank was able to maintain RoA at 1.1-1.3% (annualised basis). During fiscal 2026, the bank reported a net profit of Rs 5,208 crore (RoA of 1.2%) as compared to Rs 3,335 crore during fiscal 2025 (RoA of 0.89%). As far as bank’s capital position is concerned, it has remained comfortable over the years and is expected to improve further with management’s plan to raise additional Rs 5,000 crore during fiscal 2027. Tier-I capital and overall capital adequacy of the bank stood at 16.94% and 19.78% respectively as of March 2026, improving from 16.44% and 19.04% as of March 2025. 1Current account and Saving account Analytical Approach Crisil Ratings has considered the standalone business and financial risk profiles of IOB and has factored in the strong support that the bank is expected to receive from its majority owner, GoI, both on an ongoing basis and in the event of distress. Key Rating Drivers - Strengths Strong support from the majority owner, GoI The ratings continue to factor in the expected strong government support both on an ongoing basis and in the event of distress. This is because GoI is both the majority shareholder in public sector banks (PSBs) and the guardian of India's financial system. Stability of the banking sector is of prime importance to the government given its criticality to the economy, strong public perception of sovereign backing for PSBs and severe implications of any PSB failure, in terms of political fallout, systemic stability and investor confidence. The majority ownership creates a moral obligation on GoI to support PSBs, including IOB. As part of the Indradhanush framework, the government had pledged to infuse at least Rs 70,000 crore in PSBs over fiscals 2015-2019, of which Rs 25,000 crore per annum was infused in fiscals 2016 and 2017. In October 2017, the government outlined a recapitalisation package of Rs 2.11 lakh crore over fiscals 2018-2019. IOB received Rs 5,794 crore in fiscal 2018 and Rs 5,963 crore in fiscal 2019 under this package. Also, GoI allocated Rs 70,000 crore in fiscal 2020, of which IOB received Rs 8,217 crore. During fiscal 2021, GoI infused Rs 4,100 crore. Thus, over fiscals 2018-2021, GoI infused Rs 24,074 crore into IOB. This has helped the bank to improve its capital ratios and meet regulatory requirements. As on March 31, 2026, Tier 1 and overall CAR stood at 16.94% and 19.78% respectively. An adequate capital position supported by internal accrual will limit the bank’s dependence on further capital support from GoI. Improved asset quality metrics The asset quality has shown substantial improvement over the last 2-3 fiscals, leading to gradual decline in credit costs and improved profitability. As of March 2026, the company’s GNPA stood at 1.4% as against 2.1% as of March 2025 (3.1% as of March 2024). The improvement in asset quality is primarily backed by controlled slippage as the bank has strategically shifted its focus towards Retail, Agriculture and MSME segment (RAM). These segments currently constitute 79% of gross advances as on March 31, 2026, as against 73% as of March 31, 2025 (67% as of March 2024). The slippage ratio, accordingly, improved substantially to 0.5% for fiscal 2026, from level of 1.7% in fiscal 2025. However, the ability to maintain the asset quality with controlled slippages will remain a key monitorable factor. Sustained improvement in earnings profile The earning profile of the bank has shown an improving trend on a sustained basis over the past five fiscals. Improvement in the earnings profile is supported by lower credit costs along with the availability of low-cost deposits. The credit costs have declined to 0.9% during fiscal 2026 as against 1.1% for fiscal 2025. The CASA ratio has maintained above 40% during the last five fiscals. Additionally, the retail deposits (CASA and retail term deposits) constitute around 90% of total deposits. Strong control over asset quality, along with the ava [Showing first 8,000 characters — download PDF for full document]