The country’s second largest lender, ICICI Bank, reported a 20.6% rise in net profit for the quarter ended June 30, 2009 on gains from trading in government bonds and currencies even as its total outstanding loans shrank for a second straight quarter.

The bank saw a slide in revenue in most segments except in treasury during the quarter. Its revenues from wholesale and retail banking and fee-based businesses declined in comparison to the year-ago period, which was attributed to an attempt to slow down its balance-sheet growth.

?The second half would be much healthier for the system as a whole for growth, and it should be for us also,? ICICI Bank managing director and CEO Chanda Kochhar told reporters. She declined to disclose the growth in home and corporate loans.

Kocchar also said she did not see any movement in interest rates at the moment. ?Interest rates will remain stable for some time. I don’t think there will be any substantial movements (in the rates in the near future),? Kochhar said, ahead of the RBI?s monetary policy review on July 28.

ICICI Bank?s net profit for the April-June 2009 quarter stood at Rs 878 crore as against Rs 728 crore during the corresponding period in 2008-09. Its treasury income was worth Rs 714 crore during the period.

The bank?s total outstanding loans shrank to Rs 1,98,102 crore at the end of June 2009 from Rs 2,24,146 a year earlier, the bank said in the statement. Deposits narrowed to Rs 2,10,236 crore from Rs 234,461 crore. For the first quarter of the current fiscal, its total income went down by around 2% to Rs 9,223 crore as against Rs 9,430 crore earned during the first quarter of the last fiscal. Provisioning for the quarter, or funds set aside for loan defaults and other contingencies, climbed 68% to Rs 1,324 crore as against Rs 792 crore during the year-ago period.

The bank also saw an increase in its bad loans with net non-performing asset ratio at 2.19% as on June 30, 2009 as against 1.80% on June 30, 2008. The NPA ratio was 1.96 during January-March 2009. ?We restructured loans worth Rs 1,500 crore during the first quarter of the current fiscal. We expect our wholesale credit portfolio to grow over 20% in the current fiscal,? Kochhar said.

She added, ?We are currently going slow on unsecured lending done due to the prevailing economic scenario.?

ICICI aims to reduce credit card lending and most unsecured personal loans, Kochhar had said in an interview on April 30. ?In the coming year, the growth rate for us would be pretty moderate? on loans, Kochhar said then. ?In times like these, you have to conserve capital, you have to maintain liquidity and you have to contain risk.?

ICICI Bank?s net interest income during the period was Rs 1,985 crore compared to Rs 2,090 crore in the year-ago period, mainly due to 11.6% decrease in advances, to Rs 198,102 crore from Rs 224,146 crore .

Fee income was at Rs 1,319 crore, at about the same level as for the quarter ended March 31, 2009, compared to Rs 1,958 crore in the first quarter last fiscal. The lower level of fee income has been due to reduced investment and M&A activity in the corporate sector and lower level of fees from distribution of retail financial products, reflecting the continued impact of the adverse global economic conditions on the operating environment.

The net interest margin of the bank for the first quarter of the current financial year was 2.4% while capital adequacy at June 30, 2009 as per Basel II norms was 17.4%. The CASA ratio of the bank was 30.4% on June 30, 2009 compared to 27.6% last year.

The bank?s overseas operations also dragged down its performance with its UK subsidiary reporting a 113% dip in net profit for the quarter to around Rs 23 crore as against Rs 50-crore profit earned during the corresponding period in fiscal 2008-09.

ICICI Bank?s branch network stood at 1,471 as on July 24, 2009. The bank is in the process of implementing 580 branch licences received from Reserve Bank of India. It also has plans to open more overseas branches in the current financial year.

Fine print

• Net profit during April-June 2009 was Rs 878 crore against Rs 728 a year ago

• Total outstanding loans shrank to Rs 1,98,102 crore in June 2009 from Rs 2,24,146

• Net NPA ratio stood at 2.19% on June 30, 2009, against 1.80% a year back

• Net interest income stood at Rs 1,985 crore compared to Rs 2,090 crore a year back

• Deposits have narrowed down to Rs 2,10,236 crore from Rs 2,34,461 crore