BENGALURU, Jan 23 (Reuters) - 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 are now jostling 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%.

There was a broad-based growth in corporate loan demand, Amitabh Chaudhry, managing director and chief executive officer of the bank said in a post-earnings conference call.

Capacity expansion projects are picking up, especially in consumption-driven sectors, Chaudhry said, adding that pricing of corporate loans has improved.

Axis 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.

Provisions and contingencies rose to 14.38 billion rupees from 13.35 billion rupees a year ago, and 5.50 billion rupees in the prior quarter.

The increase in provisions was largely as a prudent measure on large accounts, Chief Financial Officer Puneet Sharma said in the call, without elaborating details.

Meanwhile, the bank's management said on Monday that the private lender was "on track" to consummate its deal with Citi in the January-March quarter. The $1.6 billion deal was announced in March last year.

The bank may consider raising capital after the Citi deal is completed, Sharma said.

($1 = 81.3390 Indian rupees) (Reporting by Nandan Mandayam and Chris Thomas in Bengaluru, Nupur Anand in Mumbai; Editing by Shinjini Ganguli and Dhanya Ann Thoppil)