UPDATE 3-Nordea expects its return-on-equity growth to level off

(Recasts, adds details) HELSINKI, Feb 2 (Reuters) - Finnish banking group Nordea posted a bigger-than-expected gain in fourth-quarter operating profits on Thursday and said the growth of its return on equity would level off in 2023 to a level similar to 2022. The Nordic region's biggest lender said its return on equity rose to 13.5% last year from 11.2% in 2021 and is expected to exceed 13% also in 2023 despite a high degree of macroeconomic uncertainty. Nordea and its Nordic peers have seen a year of rapid rate hikes by central banks seeking to curb inflation, boosting the banking industry's interest income and profits while credit losses have remained subdued. The bank's fourth-quarter profit grew 26% year-on-year, driven by a sharp rise in interest rates and strong corporate lending, beating analyst expectations. Nordea reported an operating profit of 1.6 billion euros ($1.76 billion) in the quarter, up from 1.28 billion a year ago. A Refinitiv poll of analysts had estimated a mean of 1.49 billion euros. Nordea's board proposed a dividend of 0.80 euros per share for 2022, up 16% from 0.69 euros per share for 2021, while analysts, on average, had predicted a payout of 0.76 euros. "For 2023, our plan is to remain focused on maintaining strict cost control and growing revenues faster than costs while continuing to invest to strengthen the bank," Chief Executive Frank Vang-Jensen said in a statement.

The bank's net fee and commission income declined 12% to 812 million euros due to a 13% decline year-on-year in its assets under management and continued lower capital markets activity, the bank said. Net interest income climbed 31% to 1.64 billion euros while analysts on average had expected 1.53 billion.
($1 = 0.9075 euros) (Reporting by Anne Kauranen, editing by Terje Solsvik and Janane Venkatraman)