Oman bank lending grew at its slowest pace in almost four years in the first quarter at 2.1 per cent with banks extending fewer loans to the government and public companies, central bank data showed on Sunday.

Across the Gulf Arab region, banks have become more cautious about extending new loans during the global recession, leading to either gradual declines in bank lending or a slowdown in credit growth.

In Oman, total credit of commercial banks grew 2.1 percent in the first three months of 2009 compared with the end of last year, data released by the central bank in a quarterly bulletin showed.

That is down from quarter-on-quarter growth of 6.9 percent in the fourth quarter and was the slowest quarterly growth since the second quarter of 2005.

The decline happened as bank credit to public enterprises eased 2.8 per cent to RO455.9 million and loans to the government fell 26.2 per cent to RO20.8 million.

Lending to the private sector - which has witnessed a decline in Saudi Arabia, Kuwait and Bahrain - grew 2.5 percent in the three-month period, down from expansion of 6.9 percent in the fourth quarter, the data showed.

Banks across the world's biggest oil-exporting region have been taking provisions to guard against an expected rise in bad loans after the global financial crisis brought to a close a regional economic boom late last year.

Total loans by Omani banks had doubled in the last year years as banks rode a wave of economic growth spurred by an oil price rally to record levels of almost $150 last summer.

Year on year in March, bank credit growth of 29.7 percent was the slowest since October 2007. Deposits at Omani banks rose to RO8.65 billion on March 31 from RO8.58 billion at the end of the December, the central bank added.-Reuters