* FGB Q3 profit 1.86 bln dhs vs 1.42 bln dhs yr-ago

* FGB Q3 impairments 420 mln dhs vs 317 mln dhs yr-ago

(adds details, context)

ABU DHABI, Oct 26 (Reuters) - First Gulf Bank (FGB), the third-largest lender by assets in the United Arab Emirates, beat estimates on Wednesday as it posted a 31 percent rise in third-quarter net profit, boosted partly by gains from real estate sales.

But in a trend seen across local banking results, FGB booked a 32 percent rise in provisions for bad loans over the period to 420 million dirhams ($114 million). The rise signals how businesses and consumers are adjusting to slower economic growth caused by low oil prices.

FGB, which is being merged with rival National Bank of Abu Dhabi , made a net profit of 1.86 billion dirhams in the three months ending Sept. 30, it said in a statement.

This compared with 1.42 billion dirhams in the same period a year earlier, while the average forecast of analysts polled by Reuters was for a net profit in the quarter of 1.37 billion dirhams.

Operating income was 2.81 billion dirhams in the third quarter compared with 2.20 billion in the year-ago period, aided by "other operating income" of 708 million. This included 473 million dirhams from sale of real estate.

Excluding property gains, third-quarter revenues were up 8 percent, reflecting strong core-banking performance, the statement said.

Loans and advances stood at 156.2 billion dirhams for the nine months ended September 2016, compared with 154.1 billion dirhams a year earlier. Customer deposits totalled 140.9 billion dirhams, versus 141.5 billion dirhams during the same period.

Merging NBAD and FGB, as recommended by the boards of the two lenders in July, would create one of the largest banks by assets in the Middle East and Africa. The deal is expected to complete in the first quarter of 2017.

($1 = 3.6726 UAE dirham)

($1 = 3.6724 UAE dirham)

(Reporting by Stanley Carvalho; Editing by David French and Mark Potter) ((stanley.carvalho@thomsonreuters.com; + 9712 6444431; Reuters Messaging: stanley.carvalho.thomsonreuters.com@reuters.net))