Mumbai, Oct. 30: ICICI Bank — the country’s second largest commercial bank — today reported a 2.56 per cent growth in second quarter net profit at Rs 1,040 crore, beating analysts’ estimates.

The bank’s financials were underpinned by strong growth in its treasury income.

In the year-ago quarter, ICICI Bank had reported net profit of Rs 1,014 crore. Analysts had estimated the bank to report profits in the region of Rs 900 crore. Profits had risen even though the bank’s net interest income declined to Rs 2,036 crore from Rs 2,148 crore in the same period last year. Net interest income is the difference between interest earned on loans and that paid on borrowings.

Treasury income grew to Rs 297 crore against a loss of Rs 594 crore in the same quarter a year ago. ICICI Bank said its loan book had shrunk to Rs 190,860 crore as on September 30, 2009 from Rs 198,102 crore on June 30, 2009.

This was mainly because of the decrease in the agricultural loan portfolio in line with the seasonal nature of the business, and repayments from the retail loan portfolio, partly offset by an increase in corporate advances.

The largest private sector bank has been deliberately slowing down asset growth by focussing less on segments such as personal and other unsecured loans.

However, Chanda Kochhar, managing director and CEO, said the bank was unlikely to see any balance sheet contraction ahead as it expected loans to the corporate sector to increase.

Total deposits of the bank amounted to Rs 197,832 crore on September 30 against Rs 210,236 crore on June 30.

During the quarter, the bank’s savings account deposits increased Rs 4,859 crore and current account deposits by Rs 4,094 crore, resulting in an improvement in the CASA ratio to 36.9 per cent from 30 per cent as on September 30, 2008.

The bank’s net non-performing asset ratio stood at the same level as on June 30, 2009 at 2.19 per cent.