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Nordea Profit Rose 2.7% Last Quarter as Bank’s Loan Losses Fell

Nordea CEO Christian Clausen
Christian Clausen, chief executive officer of Nordea Bank AB, is cutting about 10 percent of Nordea’s workforce to help meet stricter regulatory rules. Photographer: Casper Hedberg/Bloomberg

Nordea Bank AB, the Nordic region’s largest lender, said profit rose 2.7 percent in the first quarter after reporting smaller impairments at its Danish division and shipping unit.

Net income increased to 794 million euros ($1.03 billion) from 773 million euros a year earlier, the Stockholm-based lender said in a statement today. That beat the average 745.2 million-euro estimate of 10 analysts surveyed by Bloomberg. Net loan losses fell 8.7 percent to 199 million euros. The results helped the bank raise its core Tier 1 capital ratio to 13.2 percent, under Basel II rules.

“Our credit quality is robust and loan losses declined by 18 percent in the quarter,” Chief Executive Officer Christian Clausen said in the statement. “In Denmark and shipping, the trend is stabilizing and we continue to expect an improvement during 2013 compared to 2012. Our 10-year historic average has been 16 basis points and we expect to approach that level in the coming years.”

Clausen is cutting about 10 percent of Nordea’s workforce to help meet stricter regulatory rules. The pan-Nordic bank, which is lagging behind Swedish rivals Svenska Handelsbanken AB and Swedbank AB in terms of capital ratios, said today its core Tier 1 capital ratio rose from 13.1 percent at the end of last year.

Nordea said Jan. 30 it targets a core Tier 1 capital ratio above 13 percent and a return on equity of 15 percent, under normal interest rate conditions, by no later than Jan. 1, 2015. The bank needs to meet higher capital standards in Sweden than those set elsewhere as the government of Prime Minister Fredrik Reinfeldt pledges to protect taxpayers from bank-industry losses. Sweden’s four biggest banks must hold at least 12 percent core Tier 1 capital against their risk-weighted assets by 2015.

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