DUBAI  - Emirates NBD, Dubai's biggest bank by assets, beat first-quarter profit estimates on Tuesday, supported by strong growth in loans and interest income, and said its total assets had surpassed the 1 trillion dirham milestone.

UAE banks have been buoyed by steady economic growth, rising demand for credit and government-driven investment in non-oil sectors.

Emirates NBD's shares rose 1% in morning trade after it reported a 14% increase in total assets to 1.03 trillion dirhams ($280.4 billion) in the first quarter, as deposits also rose.

Net profit totalled 6.2 billion dirhams for the three months ended March 31, compared with 6.7 billion a year earlier and average analyst expectations for around 5.1 billion dirhams, according to estimates compiled by LSEG.

Net interest income rose 14% to 8.5 billion dirhams, while non-funded income increased 5% to 3.4 billion dirhams.

As Gulf states push ahead with diversification plans, funding for infrastructure, tourism and industrial projects has flowed through local lenders, lifting loan volumes and boosting profitability.

Dubai’s role as a magnet for capital in the Gulf, backed by its business-friendly environment and light-touch regulation, has also helped its banks deepen ties with high-net-worth clients and regional companies alike.

Emirates NBD, majority-owned by Dubai's government, said, total gross loans increased 11% in the quarter, while deposits climbed 14% from a year earlier.

Net fee and commission income also rose 14%, on growth in its retail card business and higher earnings from investment banking, trade finance and wealth management.

As of Monday’s market close, shares of Emirates NBD were down about 9% this year, in-line with a sell-off in global bank stocks, giving it a market value of roughly $33.45 billion, according to LSEG data. ($1 = 3.6729 UAE dirham) (Reporting by Manya Saini in Dubai; Editing by Sonali Paul and Janane Venkatraman, Kirsten Donovan)