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Indian private lender Axis Bank Ltd on Monday reported a stronger-than-expected 62% jump in quarterly profit, as a surge in interest income outpaced a rise in provisions for bad loans.

Demand for credit has rebounded from the pandemic lows and boosted loan growth at banks, with consumers and businesses stepping up spending as the economy revived. Banks have in turn had to jostle for a larger share of deposits.

Axis Bank's net profit rose to 58.53 billion rupees ($719.58 million) in the three months to Dec. 31 from 36.14 billion rupees a year ago, despite a 7.7% rise in provisions, the Mumbai-based bank said in an exchange filing.

Analysts on average had expected the bank to report a profit of 54.43 billion rupees, according to Refinitiv IBES data.

Net interest income, the difference between interest earned and paid, rose 32.4% to 114.59 billion rupees, while net interest margin, a key indicator of a bank's profitability, rose to 4.26% from 3.53%.

Over the weekend, rivals ICICI Bank and Kotak Mahindra Bank reported quarterly profits that beat estimates, with a healthy improvement in loan growth, though analysts flagged concerns over weak deposit growth.

Deposits at Axis Bank grew 10%, while loans grew 15%.

Meanwhile, the bank's gross bad loans as a percentage of total loans, a measure of asset quality, improved to 2.38% from 2.5% from the last quarter.

($1 = 81.3390 Indian rupees)