Nordea’s Loan Book Increases Since Start of Year

Sweden's Nordea Bank AB Tuesday posted a better-than-expected second-quarter net profit, but said uncertainties over how the economic recession will hit its loan book has increased since the start of the year and may lead to higher losses on sour credits.

Nordea said net profit fell 11% to €616 million ($876.3 million) from €692 million a year earlier as loan losses swelled for the sixth consecutive quarter, to €425 million from €36 million, Wall Street Journal reports.

However, worries over a major fallout in the Baltic region have weighed on Swedish banks which have been left heavily exposed following a lending spree in the once booming economies of Latvia, Lithuania and Estonia.

However, Nordea has a much smaller exposure to the troubled region than rivals SEB and Swedbank -- it represents just 3 percent of its total lending -- while Handelsbanken has no exposure at all , Reuters reports.

Meanwhile, the Swedish bank said net earnings in the April-June period came to 618 million euros (879 million dollars), down 11 percent from the figure for the second quarter 2008.

But the performance beat expectations of net profit of 421 million euros from analysts polled by Dow Jones Newswires.

Compared with the first three months of the year, net earnings were down just 1.0 percent.

But the bank warned that a sharper-than-expected contraction in the world and Nordic economies since the start of the year "has increased the risk for a somewhat higher loan loss ratio for the full year compared to the first half year.", AFP reports.

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Author`s name: Editorial Team