ICICI Bank Ltd.’s profit climbed in the second quarter, backed by strong demand for retail loans in the world’s most populous economy.

Net income rose to 102.6 billion rupees, ($1.2 billion) in the three months ended Sept. 30, compared with 75.6 billion rupees a year ago, according to a statement Saturday. That beat the average estimate of 97 billion rupees in a Bloomberg survey.

Indian banks are riding the wave of sustained demand for retail loans, which have driven credit expansion in the country, according to Reserve Bank of India’s report in June on financial stability. They account for more than 54% of ICICI Bank’s total lending, and grew by 21.4% year-on-year in the September quarter.

This quarter, investors are parsing results to assess the compression in margins as deposits begin to reprice. They are also watching for any uptick in delinquencies with demand for unsecured personal loans outpacing overall credit growth.

HDFC Bank Ltd., India’s largest private sector lender, kicked off the earnings season for the nation’s banks earlier this month with an increase in profit that topped expectations.

Following in the steps of its peers, who have so far reported their earnings for the quarter ended September, ICICI’s net interest margins also narrowed.

The net margin in second quarter was 4.53%, compared with 4.78% in the previous quarter, according to the statement. The bank expects to end the year with a margin similar to its previous year, Sandeep Batra, executive director, said in a media call after the quarterly earnings.

The bank’s lower cost deposits grew by 3.9% while the higher costing term deposits grew by 31.8% year-on-year as of Sept 30, according to filings.