Shares of Indian Overseas Bank Ltd.(IOB), the state-run lender surged as much as 5% on Monday, January 20, after it reported its December quarter results.

Net profit for the lender increased by 21% from last year to ₹874 crore. The bank had reported a net profit of ₹723 crore during the same period last year.

Net Interest Income (NII) or core income of the bank increased by 16% on a year-on-year basis to ₹2,789 crore.

Asset quality for the lender improved on a sequential basis. Gross NPA stood at 2.55% from 2.72% in September, while Net NPA stood at 0.42% from 0.47% in the September quarter.

Provisions for the period declined sequentially but increased on a year-on-year basis. Provisions stood at ₹1,029 crore for Indian Overseas Bank at the end of the December quarter, while the figure stood at ₹1,146 crore in September and ₹701 crore during the same quarter last year.

Indian Overseas Bank is one of the few state-run lenders who have a low free float in the market.

The government owns a 96.38% stake in the lender at the end of the December quarter.

Indian Overseas Bank and four other state-run lenders were in focus last week after CNBC-TV18 reported citing sources that the government has approved a QIP worth ₹2,000 crore each for these lenders to bring down their shareholding, in order to comply with the minimum shareholding norms.

The government has also mandated the DIPAM to look at an Offer for Sale (OFS) option to bring down the stake.

Shares of Indian Overseas Bank are currently trading 4.6% higher at ₹52.95.

Also Read: PSU Bank Stake Sale: How will shareholding look like post a successful ₹2,000 crore QIP