* Q3 net profit 62.44 bln yuan vs 59.9 bln yuan view
* Q3 NPL ratio at 0.87 pct vs 0.89 pct in end-June
* Q3 interest income up 16 pct to 107 bln yuan
HONG KONG, Oct 30 (Reuters) - Industrial and Commercial Bank of China Ltd (ICBC), the world's biggest bank, reported a 15 percent rise in quarterly net profit, beating estimates, as interest margins widened due to increased demand for credit.
Net profit rose to 62.44 billion yuan ($10 billion) in July-September from 54.4 billion yuan a year earlier, ICBC said on Tuesday. That compares with an average estimate of 59.9 billion yuan in a Reuters poll of 12 analysts.
ICBC, the last of the so-called ``Big Four'' Chinese banks to post third-quarter earnings, joined rivals Bank of China Ltd , China Construction Bank Corp and Agricultural Bank of China Ltd in reporting better-than-expected income.
The July-September period marked the first full quarter since the central bank allowed lenders to set their own loan rates in a landmark move to liberalise the country's interest rate regime.
The central bank in June allowed banks to set loan rates up to 20 percent above its benchmark rate, and in July raised the ceiling to 30 percent.
ICBC said its net interest margin, which measures loan profitability, widened from 2.66 percent in the first half of 2011, but did not elaborate.
Net interest income, the amount a bank charges for loans minus what it pays for them, rose 16 percent from a year ago to 107.3 billion yuan.
Shares in ICBC have risen 9 percent in Hong Kong trading so far this year, lagging a 19 percent rise in the benchmark Hang Seng Index.
Analysts warn that the two central bank rate cuts since June that brought the benchmark rate down to 6 percent from 6.56 percent may still to weigh on banks' profitability in the fourth quarter.
``A lot of people were surprised at how strong net interest margins have held up for the banks,'' said Mike Werner, an analyst at Sanford Bernstein. ``People thought pricing power would evaporate, but that's definitely not the case.''
The central bank has lowered interest rates to help jumpstart the world's second-biggest economy, which has seen growth slow for seven consecutive quarters.
Worries about a spike in bad loans have also restrained analysts' estimates of future earnings and sapped the performance of Chinese banks this year.
In 2008-2009, local governments set up special purpose vehicles to borrow heavily from banks to fund infrastructure projects across China and stimulate the country's economic growth. Now, analysts are fretting about loan defaults if the economy worsens.
Loans to once-favoured industries such as solar energy and steel have also come under pressure.
ICBC's overall non-performing loan balance fell to 74.8 billion yuan from 75.1 billion yuan at the end of June. Its non-performing loan ratio dropped to 0.87 percent from 0.89 percent.
The bank said it put aside 5.7 billion yuan as provisions against potential bad loans, a quarter lower than a year ago. That brought its non-performing loan coverage ratio up to 288 percent of total outstanding bad loans.
Bank of China and AgBank both set aside less provisions than a year earlier, helping to propel bottom-line earnings past market expectations. AgBank cut its provision charge by a fifth, while Bank of China cut its charge by 16 percent.
``The Chinese banks' perspective is that they have met their regulatory requirement, so there's no need to save anymore,'' said Jim Antos, an analyst at Mizuho Securities in Hong Kong. ``If faced with an economic slowdown, many Western banks would have provisioned more and downgraded earnings.''
China's banks tower over most of its global peers in size, with ICBC's market value alone roughly equivalent to that of JP Morgan, Goldman Sachs and Bank of America Corp combined.
(Reporting by Kelvin Soh; Editing by Ryan Woo)