ICICI Bank Ltd.’s first-quarter profit topped estimates, underpinned by sustained demand for retail loans in the world’s most populous country.

Net income climbed to 96.5 billion rupees ($1.2 billion) in the quarter ended June 30, compared with 69 billion rupees a year ago, according to a statement Saturday. That beat the average estimate of 88.5 billion rupees in a Bloomberg survey.

Like its peers, ICICI Bank is riding the wave of robust demand for credit in India and fewer soured loans as the economy grows. Retail loans, an area where ICICI Bank is focused, has been a major driver of credit expansion in the country, according to the financial stability report published by the Reserve Bank of India in June.

Investors are assessing how the recent merger of HDFC Bank Ltd. with mortgage lender Housing Development Finance Corp. could further intensify competition for deposits in the market. Any contractions in the lenders’ net interest margins amid deposit repricing will also be watched, according to analysts.

Net interest margins may moderate after their “peak or near peak levels”, Anindya Banerjee, ICICI Bank’s Chief Financial Officer had said in an earnings call with analysts in April.

The Mumbai-based bank’s net interest margin narrowed to 4.78% in the quarter from 4.9% in the previous quarter, filings show. Total loans led by consumer advances grew by 18% annually, almost at the same pace as deposits.

ICICI Bank, which counts Singapore state investor Temasek Holdings Pte. as a shareholder, saw net bad-loan ratio little changed at 0.48% from the previous quarter.