Bank Muscat, Oman's largest lender by market value, rode increased lending growth and a drop in impairments to post a 20-percent rise in first-quarter net profit, beating analysts' forecasts.

First-quarter net profit rose to 33.4 million rials ($86.75 million), compared with 27.8 million for the year-ago period, Bank Muscat said in a bourse statement on Monday.

Four analysts polled by Reuters were on average expecting the bank to post a net profit of 31.6 million rials for the quarter.      
Impairments against credit losses dropped to 12.5 million rials from 13.1 million rials, the lender said. Loans and advances rose sharply by 24.7 percent to 4.99 billion rials for the quarter.

Oman reversed its secular approach to finance last year after seeing a steady trickle of investment flow to nearby countries with well-established Islamic banking, and Bank Muscat said in December that it would set up a sharia-compliant banking arm. 

Brokerage NBK Capital, which upgraded Bank Muscat and rival  National Bank of Oman last month, predicted then that the introduction of Islamic banking in Oman would lead to loan growth of 15 percent this year.

Last week, Bank Dhofar, Oman's second-largest bank by market capitalisation, saw its first-quarter net profit rise marginally by 0.2 percent. - Reuters