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Indian shadow lender Bajaj Finance posted a bigger-than-expected rise in third-quarter profit on Friday, helped by a drop in provisions for bad loans and an increase in interest income.

The company's consolidated net profit rose 39.9% to 29.73 billion rupees ($364.8 million) in the quarter ended Dec. 31. Analysts on average were expecting a profit of 29.24 billion rupees, according to Refinitiv IBES.

Credit off-take has risen in India in recent months, even as lending costs increased with the pick up in economic activity from pandemic lows, which has driven robust earnings for lenders.

Bajaj Finance said its loan losses and provision fell to 8.41 billion rupees in the latest quarter from 10.51 billion rupees a year earlier.

The non-bank lender's asset quality improved slightly, with gross non-performing assets as a percentage of total loans slipping to 1.14% as on end-December from 1.17% at end-September.

Net interest income, the difference between interest earned and paid, rose 24% to 74.35 billion rupees.

Earlier this month, the company said it added 3.1 million customers in the quarter, while its new loans booked rose 5% year-on-year.

The company's assets under management as of end-December was 33% higher than a year ago. ($1 = 81.5000 Indian rupees)