The net profit of India’s second largest bank ICICI Bank Ltd rose 33% for the July-September quarter, helped by credit growth and an increase in low-cost current and savings accounts deposits.

ICICI Bank chief financial officer Chanda Kochhar

This compares with a forecast of a 23% rise in net profit to Rs928 crore, according to a Reuters poll of 11 brokerages.

Shares of the company closed 1.42% down at Rs1,024 each on the Bombay Stock Exchange (BSE), on a day when the BSE benchmark index, Sensex, lost 438.41 points, or 2.44%, and closed at 17,559.08.

Total advances for the September quarter increased 33% to Rs207,121 crore from Rs155,403 crore, while no-cost current and low-cost savings accounts deposits increased 38% to Rs. 57,827 crore from Rs41,997 crore in the year-ago quarter.

While there have been signs that rise in interest rates have been slowing demand for loans, Vishakha Muley, ICICI’s chief financial officer, told reporters that the trend in loan growth was likely to continue given the current interest rate settings.

“I would say whatever has happened can be taken as a going-forward trend as well," she said.

ICICI’s total deposits increased 20% to Rs228,307 crore from Rs189,499 crore in the same period a year ago.

Retail advances for the quarter were at Rs131,014 crore and constituted 63% of total advances.

Advances from its international operations increased 146% to Rs.36,994 crore as on 30 September, from Rs15,025 crore a year ago.

The bank’s non-performing assets, or bad debts, rose to 1.4% of all loans compared with about 1% a year earlier.

The capital adequacy ratio, or the ratio of a bank’s capital to its risk-weighted assets, a key indicator to its financial strength, was 16.8% including tier I capital adequacy of 13.0%.

The Reserve Bank of India requires banks to maintain total capital adequacy of 9.0%.

Hatim K. Broachwala, an analyst with domestic brokerage firm Khandwala Securities, said: “The bottom line was above expectation and the top line was almost in line (with expectations)."

However, ICICI said the growing operations of its ICICI Prudential Life Insurance Co., or ICICI Life, hurt its profit after tax by Rs406 crore in the first half of fiscal 2008.

“This is nothing to worry about. The insurance companies are structured in a way that it incurs loss in the initial years as the expenses are upfront," said Broachwala.

During the quarter, the bank’s shares rose 11.3%, while the Mumbai market’s banking index and the Sensex rose 18%, according to Reuters data.

The bank, in a statement, said it has promoted Chanda Kochhar, deputy managing director, as the chief financial officer and joint managing director of the company.

Nachiket Mor, the bank’s deputy managing director, will head ICICI Foundation effective 22 October.

Sonjoy Chatterjee has been appointed executive director in charge of wholesale and international banking.

V.Vaidyanathan, executive director, would take over responsibility for rural banking in addition to his current portfolio of retail banking.

Himangshu Watts of Reuters contributed to this story.