Indian Bank FY25 profit jumps 35% to Rs 10,918cr as RAM lending, asset quality and digital banking fuel growth

In a strong reaffirmation of the public sector banking sector’s transformation trajectory, Indian Bank reported a record net profit of ₹10,918 crore for the financial year ended March 31, 2025, registering a robust 35% year-on-year increase. The performance underscores the success of the bank’s calibrated credit strategy, digital initiatives, and risk containment efforts amid a stable interest rate environment and broad-based recovery in retail and MSME segments. The March quarter alone saw a 32% jump in net profit year-on-year to ₹2,956 crore, marking continued momentum from previous quarters. These results position Indian Bank favourably among top-performing public sector banks and offer a compelling case study of post-pandemic resilience coupled with digitisation-led operational efficiency.

Why Did Indian Bank’s FY25 Profit Surge by 35%?

Indian Bank’s earnings growth in FY25 was led by higher core income, stable margins, efficient cost controls, and significantly improved asset quality. Net interest income (NII) grew by 8% to ₹25,176 crore for the year, while operating profit rose 13% to ₹18,998 crore. Fee-based income added another ₹3,528 crore, growing 7% annually, with improved cross-sell of retail and digital products. Return on Assets (RoA) for FY25 increased 25 basis points to 1.32%, while Return on Equity (RoE) climbed 152 basis points to 20.76%. The bank also maintained a healthy domestic Net Interest Margin (NIM) of 3.51%, reflecting disciplined balance sheet management despite stiff competition for deposits in the latter half of the fiscal year.

How Did Indian Bank Perform in Q4 FY25?

In the quarter ended March 2025, Indian Bank delivered a 4% sequential rise in net profit to ₹2,956 crore, while operating profit rose by 6% to ₹5,019 crore. NII came in at ₹6,389 crore, up from ₹6,015 crore in the year-ago quarter. The cost of deposits declined to 5.10%, while domestic NIM held firm at 3.48%. The quarter also saw RoA rising to 1.37%, a 22 basis point improvement from March 2024. Net NPAs were brought down to just 0.19%, the lowest among comparable PSBs, while the gross NPA ratio improved to 3.09% from 3.95% in Q4 FY24. Provision coverage ratio rose to 98.10%, offering a cushion against future credit events.

What’s the Broader Sectoral Context Behind This Growth?

Indian Bank’s FY25 performance comes amid a larger credit revival in India‘s public sector banking space, with banks capitalising on economic recovery, resilient consumption, and higher government capital expenditure. With PSU banks witnessing multi-quarter asset quality improvement and increasing investor preference over private lenders on valuation grounds, Indian Bank’s performance aligns well with sectoral momentum. The PSU banking index rose over 20% in FY25, outperforming the broader Nifty Bank index, aided by improving ROEs, lower NPAs, and rising confidence in digital delivery capabilities of state-owned lenders. Indian Bank’s strategic RAM focus and technological leap under Project WAVE echoes similar reform efforts under the EASE 6.0 agenda.

How Did RAM Lending and CASA Trends Support Growth?

Indian Bank’s gross advances grew 10% year-on-year to ₹5.88 lakh crore, with RAM (Retail, Agriculture, and MSME) segments accounting for ₹3.51 lakh crore—up 13% year-on-year. RAM now contributes 64.23% to the bank’s domestic loan book. Home loans, including mortgage-linked credit, rose 12% over FY24, and MSME loans were up 12% as well. On the liability side, total deposits grew 7% year-on-year to ₹7.37 lakh crore. Domestic CASA ratio stood at a stable 40.17%, ensuring cost-effective funding. The credit-deposit (CD) ratio improved to 79.79%, reflecting healthy asset deployment. Priority sector lending constituted 44% of Adjusted Net Bank Credit (ANBC), exceeding the RBI’s 40% requirement, positioning Indian Bank as a proactive player in financial inclusion and regulatory compliance.

What Does Indian Bank’s Digital Strategy Reveal?

Indian Bank generated ₹1.67 lakh crore worth of business through its digital channels in FY25. With 121 new digital journeys and utilities launched, the bank improved customer acquisition and engagement significantly. Mobile banking users rose 16% to 1.94 crore, while UPI and net banking users grew 25% and 8%, respectively. Credit card users reached 2.78 lakh, a 25% increase from FY24, while PoS transaction volumes rose 13% to 1.28 crore. These metrics underscore Indian Bank’s growing competitiveness in digital financial services, a domain previously dominated by private sector peers. Digital transformation under Project WAVE has earned the bank national recognition, including the SKOCH Award for innovation in digital banking and predictive analytics for Special Mention Accounts (SMA).

What Is the Current Sentiment Around Indian Bank Stock?

As of market close on May 2, 2025, Indian Bank’s share price stood at ₹558.10, down 1.37% for the day. Over the past week, the stock is down 1.95%, but on a three-month basis, it is up 4.25%. The six-month trend shows a moderate decline of 4.65%, indicating intermittent investor caution. Despite the short-term dip, the stock remains fundamentally strong. Analysts estimate its intrinsic value at ₹549.31, indicating it is currently trading at a slight 2% premium—suggesting fair valuation. The earnings-led momentum and improving capital ratios have helped keep sentiment neutral to positive across institutional segments.

What Do Institutional Flows and Ownership Patterns Indicate?

Indian Bank’s shareholding as of March 2025 shows promoters (Government of India) holding 73.84%. FIIs own 4.74%, marginally down from 4.78% in the previous quarter, while DIIs have increased their stake to 17.8% from 17.6%. Mutual fund holdings within this stood at 12.69%. On May 2, 2025, both FIIs and DIIs were net buyers in Indian equity markets, investing ₹2,769.81 crore and ₹3,290.49 crore respectively. This dual-sided buying reflects a broad-based institutional conviction in public sector banks, supported by sustained profitability, digital traction, and declining credit risk.

What Awards and Recognition Did Indian Bank Receive in FY25?

Indian Bank received multiple recognitions in FY25. It was honoured with the SKOCH Award for “Project WAVE” and its predictive analytics tool for SMA management. At the EASE 6.0 Reforms Index awards, the bank ranked second in the Top Improver category and third in HR operations. The bank’s CFO was awarded Best CFO at ASSOCHAM’s Vibrant Bharat Summit 2025. Indian Bank was also recognised at the ET Now BFSI Brands 2025 Conclave and by Marksmen Daily as one of India’s Most Trusted Brands. Its technology leadership was further validated with The Economic Times CIO Award 2025 for Enterprise IT Excellence.

What Is the Future Outlook for Indian Bank?

Looking ahead, Indian Bank is expected to continue its focus on credit growth in RAM segments while enhancing deposit mobilisation. Analysts project further improvement in capital deployment efficiency, with Tier-I capital now at 15.85% and CET-I at 15.36%. The bank is also expected to expand its international operations beyond the current three overseas branches and the GIFT City IBU. On the technology front, Indian Bank is likely to deepen AI-based analytics, cybersecurity, and digital onboarding capabilities. Given its strong provisioning, low NNPA, and capital adequacy, analysts suggest a steady performance outlook for FY26. For long-term investors, Indian Bank presents a value proposition among PSU banks with consistent profitability, improving return ratios, and dividend-paying ability. Most brokerages maintain a ‘Hold’ rating, with a ‘Buy on Dips’ recommendation for conservative accumulation.