* Q2 net profit 585 mln dirhams, up 45 pct
* Total loans up 11 pct in first half (Adds detail, context)
DUBAI, July 23 (Reuters) - Mashreq, Dubai’s third-biggest lender by assets, on Wednesday posted a 45 percent rise in second-quarter net profit, aided by higher lending and a strong local economy.
The results continue the trend of positive earnings from banks in the United Arab Emirates as the local economy recovers from the sovereign-linked debt crisis and bursting of a real estate bubble at the end of the last decade.
Economists forecast the UAE economy will grow by 4.3 percent this year, after a 5.2 percent increase in 2013, supporting demand for banking services.
Mashreq said it made a net profit of 585 million dirhams ($159.3 million) for the three months to June 30, ahead of the 532 million dirhams profit expected by Arqaam Capital.
Strong lending growth helped to drive the bank’s profit, with total lending up 11 percent in the first half of the year. Net interest income, which loans contribute to, grew 38 percent.
The bank’s lending was also more profitable, with the net interest margin - the amount it makes lending out cash over the cost of the original funds - up to 3 percent at the end of June versus 2.7 percent at the same point in 2013.
Chief Executive Abdulaziz al-Ghurair said the bank was on track to post record full-year profit after it rose 40 percent to 1.16 billion dirhams in the first half. ($1 = 3.6728 United Arab Emirates Dirhams) (Reporting by David French; Editing by Erica Billingham)