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SINGAPORE (Reuters) -Southeast Asia’s second-largest lender Oversea-Chinese Banking Corp Ltd (OCBC) joined its Singapore peers in beating market estimates and pumping out record quarterly profits as banks rake it in on higher interest rates.

The city-state’s banks, which boast some of the strongest capital buffers in the world, have effectively weathered the COVID-19-induced slump and are now benefiting from rebounding Asian economies.

But analysts say growth could be derailed by a big increase in U.S. interest rates – already at multi-year highs – as central banks try and tackle runaway inflation.

“Net interest income grew on higher net interest margin and loan growth was sustained,” Group CEO Helen Wong said in a statement, adding that asset quality was healthy, with no indication of systemic stress.

OCBC’s net profit increased to S$1.6 billion ($1.13 billion) in July-September versus the S$1.55 billion average estimate from four analysts, according to Refinitiv data.

Wong, who took over as CEO of the lender in April 2021, said OCBC was on track to deliver full-year targets, including mid single-digit loan growth.

On Thursday, OCBC’s larger peer DBS Group (OTC:DBSDY) reported a forecast-beating 32% jump in quarterly profit to a record high while UOB Group also posted a record quarterly profit.

OCBC, which counts Singapore, Greater China and Malaysia among its key markets, said allowances for credit losses declined by 6%, while net interest income surged 44% to a new high of S$2.1 billion.

Analysts have said it would make sense for OCBC to use its relatively large capital buffers for an acquisition, with its local rivals having snapped up targets in recent years.

The bank’s net interest margin, a key gauge of profitability, increased 54 basis points to 2.06% in the quarter.

($1 = 1.4214 Singapore dollars)