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(Adds detail from earnings on funding, deposits)
DUBAI, July 11 (Reuters) - Qatar National Bank (QNB), the Gulf's largest lender, reported an almost 3.6 percent increase in second-quarter net profit on Tuesday, above analysts forecasts, helped by a drop in bad debt charges and lower staff costs.
The bank said in a statement its first-half net profit hit a record 6.7 billion Qatari riyals ($1.8 billion), up about 7 percent from 6.25 billion a year earlier as loans grew 11 percent.
The results were the first since Saudi Arabia, the United Arab Emirates, Bahrain and Egypt on June 5 decided to cut diplomatic ties with Qatar and impose economic sanctions on it.
The bank did not say anything new about the rift. On June 14, QNB said it had seen no significant outflows of deposits since the rift started, adding it had a "robust" liquidity position.
The bank reported a net profit of around 3.5 billion riyals in the three months to June 30, compared with 3.38 billion riyals in the corresponding period of 2016, according to its detailed results.
Three analysts polled by Reuters had on average forecast a quarterly net profit of 3.027 billion riyals.
Net impairment losses on loans and advances to customers fell to 221.68 million riyals, from 1.057 billion riyals a year earlier.
Qatar's biggest bank said it was able to attract more deposits in the first half, which boosted customer funding by 15 percent from a year earlier.
The loan to deposit ratio hit 98.3 percent compared with 101.7 percent in June 2016.
"This clearly demonstrates the success of QNB’s strategy to diversify its funding sources," it said.
The statement could reassure investors concerned about Qatari banks' dependence on foreign funding.
Thirty-six percent of commercial banks' total liabilities in May were to foreigners, including others in the six-nation Gulf Cooperation Council (GCC), although analysts say QNB's funding sources are more diversified than others.
Moody's Investors Service last week changed the outlook on QNB's deposit ratings to negative from stable following a shift in the outlook for the government.
Moody's cited a weakening domestic operating environment, particularly for bank funding, and a reduced capacity of the Qatar government to support banks as reasons for the change.
Qatar central bank governor Sheikh Abdullah Bin Saoud al-Thani said this week the country had $340 billion in reserves that could help the country to weather the isolation imposed by its powerful Arab neighbours.
$1 = 3.6411 Qatar riyals Reporting by Saeed Azhar; Editing by Mark Potter