The Chennai-based public sector lender had reported a net profit of Rs 116.50 crore in the corresponding period a year ago.
For the nine months ended December 31, net profit slipped by 34.4 per cent to Rs 333.41 crore in the quarter under review from Rs 508.36 crore in the corresponding period of the previous fiscal year, IOB said in a filing to the BSE.
Total income in the December quarter rose to Rs 6,190.26 crore from Rs 5,846.98 crore a year ago.
Gross non-performing assets (NPA) during the quarter ended December 2013 rose to 5.27 per cent as against 4.13 per cent registered during the same period of the last fiscal year (FY13).
Net NPAs of the bank increased to 3.24 per cent from 2.33 per cent.
Total business rose to Rs 3,87,406 crore from Rs 3,43,186 crore.
Total deposits increased to Rs 2,13,319 crore as on December 31, 2013 from Rs 1,85,573 crore in the comparable period.
Total gross advances increased to Rs 1,74,087 crore from Rs 1,57,613 crore.
Total capital fund of the bank stood at Rs 18,943.80 crore as on December 31, 2013, as against Rs 17,219.94 crore registered as on December 31, 2012, it said.
"The increase in capital fund is due to infusion of capital to the extent of Rs 1,200 crore from Government of India", the filing said.
Shares in IOB, on Wednesday, ended at Rs 43.65 apiece on the BSE, down 5.83 per cent from the previous close.
Later speaking to reporters in Chennai, Indian Overseas Bank chairman and managing director M Narendra said the net profits declined due to higher provisions.
"Quarter to quarter, our gross profit has been better. But, at the same time, our provisions have not come down drastically. The net profit is a product after providing the provisions...," he said.
On the slippages during the quarter, he said it was around Rs 1,650 crore from 24 accounts.
The banks' exposure to some of the sectors like iron and steel, infrastructure, power, agriculture witnessed some "stress" on recovery of loans, he said.
According to him, the exposure in the iron and steel sector was Rs 348 crore, infrastructure Rs 61 crore, paper mill Rs 103 crore, trading Rs 175 crore, power sector Rs 38 crore as of December 31.
When asked whether there has been increase in retail lending, he said growth increased by 20.92 per cent for the quarter ending December 31, 2013 as compared to the same quarter of previous year.
"Our housing loan for the quarter (ended December 31) grew to 18.02 per cent, educational loan increased by 18.33 per cent to Rs 3,459 crore, pushpaka (vehicle) loan increased by 28.97 per cent...," he said.
He said the bank was likely to receive the QIP (qualified institutional placements) for its proposal to raise funds of about Rs 426 crore.
"For that we are going to have another EGM. We will be getting this money Rs 426 crore as capital..." He also said the lenders' proposal to upgrade the core banking solution was almost done. "We will be issuing the RFP (Request For Proposal) shortly. Today only we cleared that...," he said, without revealing the investments proposed for upgradation.
On expansion of branches, he said commemorating the Banks' Founder's Day celebrations, Indian Overseas bank would inaugurate 78 branches next month.
"We are also getting ready to open our second branch in Bangkok," he said.
At present, the bank has 2,341 ATM network across the country, he said.