(Rewrites ninth paragraph to remove comparison between Swedish
and Norwegian capital regulations, as they are not comparable.)
* DNB, SEB Q3 earnings ahead of forecasts
* DNB warns about rapidly rising shipping losses
* SEB says economic turbulence will take its toll
* DNB shares rise 3.1 pct, SEB up 1.2 pct
By Balazs Koranyi and Mia Shanley
OSLO/STOCKHOLM, Oct 25 Rising losses from the
shipping industry and slowing growth in Sweden pose risks to
Nordic banks' ability to remain aloof from the crisis engulfing
rivals elsewhere in Europe, two of Scandinavia's top lenders
Norway's DNB and Sweden' SEB both beat
quarterly earnings forecasts on Thursday, helped by falling loan
losses and contrasting with the profit falls posted by mainland
European rivals Credit Suisse and Santander as they grapple with
the euro zone debt crisis.
However, both Nordic banks flagged challenges ahead.
"The small open Nordic economies have until now shown
resilience, but will not remain unaffected by global
developments," SEB Chief Executive Annika Falkengren said.
SEB said broader economic risks were on the downside as the
European banking system strives to boost capital and improve
asset quality, while Sweden itself was going through an economic
DNB, meanwhile, is making only slow progress in boosting its
capital buffers and warned losses from the struggling global
shipping industry would continue to rise as the sector's
recovery is still well into the future.
DNB's third-quarter pretax profit rose 17 percent to 4.76
billion Norwegian crowns ($828 million), beating forecasts by 12
percent, as loan losses more than halved and margins held up.
However, its shipping loan book, worth around 7.5 percent of
its entire loan book, will deteriorate quickly next year,
generating loan losses of up to 1.5 billion crowns after this
year's 800 million to 1 billion crown loss, the bank said.
Its Tier 1 capital, a key measure of liquidity, inched up to
10 percent, above the 9 percent regulatory minimum, but analysts
said even with a dividend cut it was only making slow progress
compared to Swedish peers.
"We still have not seen progress in the capital ratios at
DNB like we have at the Swedish banks," Nomura analysts said.
Still, DNB should continue to benefit from Norway's economic
boom as the country, not part of the 27-nation European Union,
remains the continent's best performer.
The economy grew by an annual 5 percent in the second
quarter thanks to a booming offshore oil sector, a bloated and
well funded public sector, and healthy private sector.
DNB shares rose 3.1 percent to 72.55 crowns on Thursday,
outperforming a 0.9 percent gain by peers as the bank is
generally valued well below Swedish peers.
SEB's operating profit rose to 3.9 billion Swedish crowns,
beating a mean forecast for 3.8 billion crowns and coming ahead
of last year's 3.7 billion crowns, mostly on lower writedowns.
The bank said its core tier one capital level - a key
measure of financial strength - swelled further.
However, it warned Sweden's small and open economy, and thus
its banks, would not remain unaffected by global turbulence.
"We believe SEB's business mix is more exposed to a slowing
Sweden and as a consequence expect the bank to deliver a return
on equity below peers in the near term," Citi analysts said.
Following a strong start to the year, Sweden's economy is
seen slowing and the central bank on Thursday signalled it could
ease borrowing costs later this year.
SEB, whose shares outperformed the Stockholm bourse
, rising 1.2 percent, is the last of the Swedish banks
to report third-quarter earnings.
Handelsbanken and Nordea both missed
forecasts, weighed down by weaker deposit margins, while
Swedbank beat expectations.
($1 = 5.7474 Norwegian crowns)
(Additional reporting by Camilla Knudsen and Oskar von Bahr;
Editing by Dan Lalor and Mark Potter)