GDANSK, May 9 (Reuters) - Poland's biggest bank PKO BP beat market expectations on Thursday with a 41% surge in quarterly net profit, as strong net interest income and revenues from commissions and fees offset provisions made for foreign exchange mortgage loans.

Net profit came in at 2.04 billion zlotys ($509.81 million) for the first quarter, beating the 1.85 billion forecast by analysts.

Net interest income jumped 24% to 5.19 billion zlotys, supported by expanding credit portfolio, lower interest cost on hedging instruments, and improved revenues from a growing securities portfolio.

Sales of all new loans doubled to 12.7 billion zlotys on the back of the well-received Safe 2% Credit scheme aimed at aiding new home buyers, which helped to triple the sale of mortgages in the first quarter.

Net interest margin at end of the quarter edged up to 4.56% from 4.32% in the corresponding period of last year, while return on equity (ROE) - a key measure of profitability - jumped 2% to 17.7%.

Polish banks have benefited recently from higher interest rates, but their earnings have been under pressure for several years from costs related to Swiss franc mortgage loans.

PKO had also been hit by provisions of 5.43 billion zlotys in the previous year, while costs in the current quarter also jumped more than 38% on the year to 1.34 billion.

The lender said it had signed 38,428 court settlements for Swiss franc loans to the end of the first quarter, up from 37,000 made by the end of 2023. It had earlier said it expected to conclude between 2,000 and 3,000 cases per quarter.

Hundreds of thousands of Poles took out mortgages in foreign currencies, mainly in Swiss francs, in the early to mid-2000s attracted by lower interest rates.

They are now repaying them in far bigger instalments than expected after the Swiss franc soared against the zloty and following interest rate hikes in Switzerland.

As at March, the reserves for Swiss franc mortgage covered 98% of the problematic credit portfolio. ($1 = 4.0015 zlotys) (Reporting by Mateusz Rabiega; Editing by Subhranshu Sahu)