* Nordea Q3 op profit in line with forecasts at 1.02 bln eur
* Handelsbanken Q3 op profit tops forecasts at 4.57 bln SEK
* Loan losses improve at both banks
* Nordea sees better credit quality in years ahead
* Results could pave way for higher dividends (Adds Nordea CFO on dividend payout ratio; share prices)
By Mia Shanley and Oskar von Bahr
STOCKHOLM, Oct 23 (Reuters) - Nordic banks Nordea and Handelsbanken reported increased third-quarter earnings on Wednesday and higher capital levels, laying the ground for higher dividends this year.
Analysts have seen scope for many banks in the region - some of Europe's strongest performers - to raise dividends this year thanks to healthy capital generation and weak loan demand.
"I would say that the probability of raising our payout ratio is high," Nordea CFO Torsten Hagen Jorgensen told a news conference. "Exactly how much we are not ready to say."
Credit Suisse has forecast that Nordea will raise its payout ratio - the proportion of net profit paid out on dividends - to 70 percent from the current level of at least 40 percent.
Nordea and Handelsbanken shares nevertheless erased nearly all gains made on Tuesday as earnings failed to impress as much as Swedbank, which posted profits nearly 6 percent above market forecasts.
Nordea, the region's biggest bank by stock market value, said its credit quality, especially in hard-hit areas such as shipping, would continue to improve after loan losses in the quarter dropped nearly 30 percent from the previous year.
"There are clear signs that the worst is over," Chief Executive Christian Clausen said.
He said consumers were growing more confident in the economy thanks to lower unemployment, more disposable income and stable housing markets.
The bank saw stronger levels of activity with corporate clients towards the end of the quarter, but cautioned growth overall would remain slow in coming years.
Nordea's operating profit rose 12 percent to 1.02 billion euros ($1.4 billion) compared with a mean forecast of 1.05 billion in a Reuters poll of analysts.
Sweden's Handelsbanken saw a 7 percent increase in its operating profit to 4.57 billion Swedish crowns ($717.3 million), slightly above a mean forecast for 4.53 billion.
Nordic lenders made it through Europe's financial crisis relatively unscathed, thanks to their strong economic backdrops, offering steady, predictable growth during uncertain times.
Denmark and shipping were the only real trouble spots during the downturn and banks like Nordea and Danske have been reporting several quarters of improved loan losses.
Sweden's SEB and Norway's DNB NOR are also expected to report healthy third-quarter earnings on Thursday, with profits up around 10 percent from a year ago.
Higher capital buffers are another positive.
Handelsbanken, one of the most conservative lenders, benefits from the lowest funding costs in Europe. It said its core Tier 1 ratio according to Basel III global banking rules rose to 18.8 percent from 17.8 percent in the second quarter.
Nordea's ratio rose to 14.4 percent from 14 percent. It estimated tougher rules on mortgage risk weights in Norway and new EU standards would cause it to drop to 13.4 percent, still above the 12 percent that Sweden will require by 2015.
It said it expected regulator approval of its internal models on its corporate loan book later this year which would lift its ratio to 15 to 16 percent.
$1 = 6.3715 Swedish crowns Editing by Niklas Pollard and Pravin Char