* Q2 net profit NOK 4.65 bln vs f'cast NOK 4.77 bln
* Loan losses NOK 554 mln vs fcast NOK 398 mln
* Says on schedule to fulfill capital requirements
* Shares down 4.6 percent, Swedish bank shares lower
(Adds analysts, share)
By Gwladys Fouche and Mia Shanley
OSLO/STOCKHOLM, July 10 Higher-than-expected
loan losses in the shipping sector ate into DNB's
second-quarter earnings, sending shares in Norway's largest bank
down almost 5 percent on Thursday.
Nordic banks made it through Europe's recent financial
crisis relatively unscathed, but have suffered from their
exposure to countries in the Baltic region and to a shipping
sector which has struggled with overcapacity in recent years.
DNB, one of the world's biggest lenders to the shipping
sector, had been seeing a declining trend of souring loans in
shipping, but the second quarter saw an unexpected uptick in
losses for the sector.
That took the shine off of what analysts said was otherwise
a healthy quarter for the bank.
DNB shares traded down 4.6 percent at 110.2 Norwegian crowns
by 0851 GMT, underperforming the Oslo market as a whole
which was 1.5 percent lower.
The results dragged on DNB's Swedish banking peers which
report earnings next week.
Loan losses in the quarter reached 554 million Norwegian
crowns ($90 million), higher than 398 million seen in a Reuters
poll of banks and brokerages, due in part to lower freight rates
in shipping which makes up about 6 percent of its overall
Still, Karl Storvik, an analyst at Oslo-based brokerage
Arctic Securities, said he did not think the increase in
collective shipping provisions reflected a change in underlying
credit quality, as it was partly due to the way the bank
monitored shipping loans.
Nordea, the Nordic region's biggest bank, is also a
large lender to the shipping sector and will report earnings
next Thursday. Its shares traded down 1.6 percent.
DNB said overall loan losses were on a downward trajectory
from a year earlier and it was on schedule to fulfill new
capital requirements for Norwegian banks.
"The rise in profits from the second quarter of 2013
reflects higher lending volumes, wider lending spreads, reduced
restructuring expenses and lower impairment losses on loans,"
Chief Executive Rune Bjerke said in a statement.
The bank, the first Nordic lender to report second-quarter
results, has had to meet tough new core capital requirements
designed to prevent a repeat of a banking collapse in the early
1990s that forced the government to rescue several big lenders.
It posted a net profit of 4.65 billion crowns ($756
million), lagging the 4.77 billion seen in the Reuters poll, up
from 3.80 billion at the same time a year ago.
DNB shares were up 6.5 percent in the six months before
Thursday's report, lagging an Oslo benchmark index up 13 percent
over the same period.
($1 = 6.1834 Norwegian Kroner)
(Editing by David Holmes)