First Gulf Bank, the United Arab Emirates' third-largest lender by assets, beat estimates as it reported a 20 per cent increase in third-quarter net profit on Monday thanks to higher fee income and lower provisions for bad loans.

The results reflect the healthy third-quarter earnings growth reported across the sector as UAE banks they benefit from a strong domestic economic backdrop and improving asset quality since a downturn at the start of the decade.

Mashreq and Union National Bank posted year-on-year net profit gains of 26 per cent and 22 per cent respectively on Monday.

FGB, majority owned by the Abu Dhabi government, made Dh1.43 billion ($388 million) in the three months to September 30, up from Dh1.19 billion in the same period last year, it said in a statement.

The average forecast from six analysts polled by Reuters was a quarterly profit of Dh1.35 billion.

"FGB's improving asset quality metrics are a mere reflection of the underlying strength of the UAE operating environment," chief executive Andre Sayegh said in the statement. "Although global markets are volatile, domestic fundamentals are strong and confidence in our economy is undeterred."

Shares in FGB rose 3.5 per cent on Monday, against a 0.5 per cent gain for the wider Abu Dhabi exchange. The results were disclosed after the market close.

The bank's profit was boosted by a 39 per cent jump in non-interest income, which includes fees, commission and derivatives income, to Dh733 million.

Provisions for bad loans were down 13 per cent year on year at Dh368 million.

The bank experienced strong quarter-on-quarter growth in total lending and customer deposits, gaining 4 per cent to Dh132.7 billion and 5 per cent to Dh144.6 billion respectively.  - Reuters