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India's PNB Housing Finance Ltd on Tuesday reported a better-than-expected 43% rise in third-quarter profit on the back of a strong demand for loans and improved asset quality.

PNB Housing, a unit of state-run lender Punjab National Bank, said its consolidated net profit after tax rose to 2.69 billion rupees ($32.96 million) from 1.88 billion rupees a year earlier.

Analysts, on average, had expected a profit of 2.39 billion rupees, according to IBES data from Refinitiv.

Its net interest margin, a key measure of profitability, improved sequentially to 4.68%.

With a rise in urbanisation and growing disposable income, demand for housing in India remained high, even as borrowing costs went up.

The mortgage lender's net interest income jumped 21.4% to 17.14 billion rupees in the three months ended Dec. 31.

Disbursements grew to 34.25 billion rupees from 28.28 billion rupees a year earlier, the lender said in a statement.

The New Delhi-based company's asset quality improved sharply, with gross non-performing assets as a percentage of total loans slipping to 4.87% as on Dec. 31 from 6.06% as on Sept. 30, 2022.

Separately, the company's board approved private placement of non-convertible debentures up to 20 billion rupees.

Shares of the company rose as much as 6.1% after the December quarter results were declared.

($1 = 81.6250 Indian rupees)