UPDATE 1-Turkish deal helps to boost Qatar National Bank profit

* Q3 net profit 3.41 bln riyals vs 3.13 bln riyals yr ago

* Net fees and commission income up by two-thirds

* But impaired loans increase from low base (Adds data from financial statement, detail, context)

DUBAI, Oct 10 (Reuters) - Qatar National Bank (QNB), the Gulf’s largest lender, met analysts’ forecasts on Monday with a 8.7 percent increase in third-quarter net profit, lifted by its recent takeover of Turkey’s Finansbank.

Cementing its position as the largest lender in the Middle East and Africa by assets, the bank completed a 2.7 billion euro ($3.02 billion) purchase of Turkey’s fifth-largest privately-owned lender by assets from National Bank of Greece in June.

That buy helped lift QNB’s net fees and commission income by roughly two-thirds and its net interest income by 49 percent during the third quarter from the same period of last year.

QNB posted a net profit of 3.41 billion riyals ($936.5 million) during the quarter, compared with 3.13 billion riyals in the corresponding period of 2015, according to a financial statement released by the bank.

That was broadly in line with forecasts from three analysts polled by Reuters, who had on average expected a quarterly net profit of 3.26 billion riyals.

QNB, which also owns a business in Egypt and a 23.5 percent stake in pan-African lender Ecobank International, has been striving to build its presence outside of its small domestic market, where banks are adjusting to slimmer state spending in 2016 after the government tightened its budget for the year against a backdrop of lower oil prices.

That contrasts with previous years when banking profits were propelled by lavish state spending and low levels of bad debt.

As well as an uptick in credit issues in its home market, albeit from a very low base, the Finansbank acquisition could also expose it to more soured loans as Turkey’s economy wanes in the wake of a failed coup in July.

During the quarter, net impairment losses on loans and advances to customers jumped to 475 million riyals.

In the same period last year, the bank booked a 91 million riyal profit, attributable to recovering more than it expected from previously-classified bad loans than it had to set aside for new problem debts. ($1 = 3.6412 Qatar riyals) ($1 = 0.8928 euros) (Editing by David French/Keith Weir)