DUBAI: First Gulf Bank (FGB), the third largest lender by assets in the UAE, posted an 8 percent rise in second-quarter net profit, with performance bolstered by growth in new lending and a drop in bad loans.

The results continue a run of positive earnings for UAE lenders during the quarter, with six major lenders now reporting higher profits.

FGB made a net profit of AED1.45 billion ($394.77 million) for the three months to June 2015, compared to 1.35 billion dirhams in the same period a year ago, it said in a statement.

The results were in line with the estimates of six analysts polled by Reuters earlier this month. They had forecast an average net profit of AED1.44 billion.

Loans and advances grew by 16 percent to AED148.9 billion at the end of June, compared to AED128.2 billion in the year earlier period.

In comparison, overall UAE bank lending rose by 8.8 percent in June, its highest rate this year, according to central bank data.

FGB’s performance in recent quarters has been aided by a general improvement in the amount of provisions it has had to set aside to cover bad loans as the local economy has rebounded. That trend continued in the second quarter as provisions dropped 34 percent on an annual basis to 258 million dirhams.

For the first half of the year, the bank’s non-interest revenue remained a solid growth driver, with its contribution to total operating income reaching 31 percent at the end of June. Core fee income strengthened by 9 percent on an annual basis to reach AED978 million at the end of June.

Banks have squeezed higher revenue from fees for their products and services as net interest margins have tightened as a result of several years of low interest rates.

Reflecting this trend, FGB said net interest and Islamic financing income for the second quarter dropped by 2 percent on an annual basis to reach 1.61 billion dirhams.