* Q1 net profit jumps to 3.18 bln NOK vs forecast 2.60 bln
* Says quarterly losses in shipping have bottomed out
* Higher bank lending rates to lift interest income from Q2
* Forecasts similar credit losses this year to 2012 (Adds outlook for shipping, quotes, credit losses)
By Camilla Knudsen and Mia Shanley
OSLO/STOCKHOLM, April 26 Norway's largest bank, DNB, said on Friday it may have seen the worst for bad loans in the troubled shipping sector and forecast stronger lending income in the months ahead after reporting better than expected first-quarter profits.
Norway's hydrocarbon-rich economy is one of Europe's best performers and its banks got through the global financial crisis relatively unscathed.
However, DNB, one the world's largest lenders to the shipping industry has struggled with souring loans in the sector, which has been plagued by global overcapacity depressing freight rates.
But Chief Executive Rune Bjerke said on Friday there was now cause for some optimism.
"Shipping provisions increased as expected but we believe the level we see on a quarterly basis is the bottom," he told a results news conference. "We see some bright spots that make us more optimistic than one quarter ago."
Rival Nordea, which also has extensive shipping interests, had said on Thursday that credit quality in the sector had stabilised.
Their outlooks contrasted with a report by Fitch this week which said the shipping crisis would likely last longer than originally expected and that impaired loans and losses would remain high.
DNB added, however, that Nordic banks had been able to offset the weaker performance in shipping with resilient Swedish and Norwegian loan portfolios which have been backed by strong economies.
It said overall loan impairments in the last quarter amounted to 737 million Norwegian crowns ($125 million), which was below expectations, while credit losses this year are forecast to be at a similar level to 2012.
Meanwhile rate increases on mortgages and some corporate loans implemented by the bank in the first quarter will bring a rise in interest income from the second quarter, it said.
DNB's results follow buoyant earnings from Swedish peers this week, though most said overall lending would remain relatively weak as customers worried about stability in other parts of Europe.
DNB has also suffered from somewhat slower demand internationally and amongst its largest corporate clients.
"In spite of a relatively strong financial market trend in the first quarter, it appears that it will take some time before Norway's main trading partners experience an economic recovery," the bank said.
However, DNB's net profit surged 80 percent to 3.18 billion Norwegian crowns ($541 million) in the three months just ended, beating the 2.6 billion expected in a poll of analysts.
"These were good, solid numbers that were better than expected," said Bengt Kirkoen, a Swedbank First Securities analyst.
Shares in DNB were up 5 percent at 92.35 crowns by 1130 GMT, outperforming an Oslo benchmark index down 0.05 percent and the Stoxx 600 Europe index, down 0.5 percent. ($1=5.8793 Norwegian kroner) (Additional reporting by Gwladys Fouche in Oslo; Editing by Greg Mahlich)