STOCKHOLM (Reuters) - Nordea ST:NDA, the Nordic region's biggest bank by market value, posted better-than-expected first-quarter operating profits thanks in part to a pick-up in its corporate advisory business.
Nordea is the third Swedish bank to report quarterly earnings, following SEB's ST:SEBa stronger-than-forecast results last week as it got a boost from stronger corporate business and Swedbank's ST:SWEDa largely in-line earnings. Handelsbanken reports earnings on Wednesday.
Analysts say Nordic banks continue to offer stability during uncertain times though their European peers are starting to catch up as recovery takes hold.
Operating profit for the period was 1.11 billion euros (0.89 billion pounds) compared with a mean forecast for 1.09 billion euros seen in a Reuters poll of analysts and a year-ago 1.04 billion euros.
"The activity level in our corporate advisory operations has picked up in the beginning of 2014 and remains strong in the savings area," CEO Christian Clausen said in a statement.
Nordea, which has been grabbing increasing market share from the region's go-to corporate bank SEB, saw a 13 percent rise in net commission and fees in the quarter - above forecasts - as demand for investment banking services boosted income. Buoyant equity markets and a return of corporate confidence has led to a flurry of listings and deals in recent months and both banks are expected to benefit from a pick-up in activity in the year ahead.
Still, Clausen was cautious about the road ahead.
"Lending demand is subdued and interest rates remain at very low levels. In this environment we continue to execute on our cost and capital efficiency programmes..." he said.
The bank is in the midst of accelerating a cost savings programme to create 900 million euros in savings by 2015.
Nordea shares are up 6 percent so far this year compared with a near 2 percent rise in the wider STOXX Europe 600 Banks index . Another cloud of uncertainty for some Nordic banks is the conflict between Russia and Ukraine, something which both SEB and Swedbank - large players in the Baltic region - have noted. Nordea has a smaller exposure to the region.
Nordea also has a 1.8 percent lending exposure to Russia, mainly with the largest Russian corporates and Nordic customers. It said had seen a limited impact since sanctions were targeted on a limited number of people over tensions in Ukraine.
(Editing by Kim Coghill)