Nordea boosted by improving loan book Nordea beat expectations in the first quarter, helped by an improving loan book, despite weakness in its shipping business and Danish operations. The Nordic region's biggest lender by market value, which reported a 60 per cent rise in net loan losses in the previous quarter , said its loan book had improved because of the strength of the US and Scandinavian economies Nordea also benefited from an inflow of new customers which helped operating profit rise 3.4 per cent to €1bn compared with the same period in 2011. Net interest income rose 7 per cent to €1.4bn and net loan losses fell 10 per cent to €218m. "Loan losses declined slightly from last quarter and our credit quality remains solid," said Christian Clausen, chief executive. [But] there are still two areas where we have special attention - Denmark and shipping. Nordea's loan loss ratio in shipping jumped from 41 to 176 basis points during the first quarter, as the tanker market suffered from overcapacity and lower global demand. Losses in Nordea's Danish banking unit rose from 47 to 64 basis points as Denmark struggled to emerge from the fallout of a housing bubble that burst in 2007. "As expected, provisions for future loan losses in shipping and Denmark remained at elevated levels, whereas in other areas the losses decreased from already moderate levels," the company said. Nordea said the first quarter saw many positive developments, characterised by improving European sovereign debt markets due to liquidity provided by the European Central Bank. But the bank warned of the risks of tough austerity measures in Europe and announced that it had increased its core tier one capital ratio from 9.1 per cent to 9.4 per cent over the past year, which is much higher than most other large European banks. "Since Nordea is the only global systemically important bank in the Nordics, we have taken large steps in developing our recovery and resolution plan," Mr Clausen said. Sweden's government and financial regulator have put pressure on banks to increase capital and liquidity levels more swiftly than called for by the Basel III rules and proposed European Union regulations. Nordic banks have complained that such moves could hurt their competitiveness, compared with European rivals. Analysts said the results were better than expected and they were not surprised by the rise in loan losses in the Danish and shipping divisions. Shares in the company rose 4 per cent to SKr56.55. The company said it was ahead of schedule with its plan, announced last year, to cut about 2,000 of its 34,000 workers by the end of 2012. The number of employees has been reduced by about 1,600 from the end of the second quarter in 2011.