* Q1 op profit 4.92 bln SEK vs fcast 4.79 bln
* Says prepared for potentially tougher capital rules on mortgages
* Income outside Sweden rises 13 percent (Adds details, background)
STOCKHOLM, April 30 Sweden's Handelsbanken posted a bigger-than-expected rise in quarterly earnings with business in Britain and the Netherlands lifting income as the bank keeps up its pace of expansion overseas.
Handelsbanken wraps up a healthy earnings season for the Swedish banks thanks to the region's solid economic backdrop and stronger income from companies that are finally stepping out to do deals after a long dry spell.
Operating profit in the quarter rose 13 percent to 4.92 billion crowns ($750 million) with commissions and fees and higher equity market activity boosting income, beating a mean forecast for 4.79 billion crowns in a Reuters poll of analysts.
Core income in home markets outside of Sweden rose 13 percent. In Britain alone, net interest income jumped 30 percent and in the Netherlands 40 percent.
Unlike other Nordic banks that have been busy shrinking their balance sheets, Handelsbanken has been growing rapidly in Britain, grabbing market share from competitors still struggling to get their houses in order after the financial crisis.
Handelsbanken opened five new branches in the first quarter, taking its total to 166. While it still makes the bulk of its income in Sweden, profits in Britain are now on par with some of its other Nordic markets.
In contrast to its peers who are slashing jobs and focusing on costs, Handelsbanken's expenses rose 2 percent in the quarter while the average number of employees rose by almost 400, mainly due to expansion in Britain and the Netherlands.
Handelsbanken said on Wednesday a proposal by Sweden's financial watchdog to raise the amount of capital needed to be put aside for possible losses in bank mortgage portfolios to 25 percent from a current 15 percent would increase its capital requirement a further 9.2 billion crowns ($1.4 billion).
"The bank's assessment is that the group will continue to be well capitalised after a possible implementation," the bank said in a statement.
Like other Nordic lenders, Handelsbanken has benefited from a healthy economy in Sweden which grew at the fastest pace in three years in the fourth quarter.
Uncertainty about the global recovery and worries about the housing market in Sweden remain, but the economy is nevertheless expected to pick up speed this year and expand around 2.7 percent.
($1 = 6.5625 Swedish crowns) (Reporting by Mia Shanley; Editing by Matt Driskill)