By Dominic Chopping

STOCKHOLM--Nordea Bank AB (NDA.SK) on Wednesday posted a 14% rise in third-quarter net profit as income from its wholesale banking activities helped offset sluggish net interest income.

Net profit at the Stockholm-based bank climbed to 888 million euros ($966.6 million) in the three months ending Sept. 30, from EUR780 million in the same period a year earlier, beating expectations of EUR818 million, according to a FactSet poll.

"The third quarter was characterised by a stable environment with low volatility on the financial markets but also continued low growth," Chief Executive Casper von Koskull said. "Total revenues held up well in the quarter...we continue to believe the trough levels are over. Negative rates have put pressure on deposit margins, which was partly offset by higher lending margins."

Net interest income fell to EUR1.18 billion from EUR1.23 billion a year ago and for the fourth quarter it expects largely unchanged net interest income on the year.

Volume growth remained muted, but with continued demand for mortgages in Sweden, it said. Lending volumes in Russia were down 33% in local lending currencies.

The bank reiterated guidance of 3% cost growth in local currencies in 2016 compared with 2015, and flat costs in 2018 compared with 2016. In the forth quarter 2016, Nordea will book a gain of EUR80 million-EUR85 million due to a changed pension agreement with employees in Norway.

The common equity Tier 1 ratio--a key measure of financial strength--stood at 17.9% at the end of the quarter, up from 16.3% a year ago.

-Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @domchopping @WSJNordics

(END) Dow Jones Newswires

October 26, 2016 01:57 ET (05:57 GMT)

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