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Banks in Sweden will outperform European competitors in revenue growth this year as booming economic expansion and higher central bank borrowing rates heighten interest income, Bloomberg said.

“The economic cycle in Sweden is running at least 12 months ahead of what it is elsewhere,” Simon Maughan, co- head of European equities at MF Global, told the newswire. “The higher interest rates should be better for margins.”

Data compiled by financial derivatives brokers MF Global shows that Sweden’s biggest banks -- Nordea, Handelsbanken, SEB and Swedbank -- will see a 10 percent average increase this year in net interest income (the difference between what a bank makes from lending and what it pays on deposits). That’s twice as much as it’s European peers. In 2012 net interest income in Sweden will jump 11 percent, while rivals may grow 6.5 percent.

On Wednesday Nordea, the Nordic region's biggest bank by value, posted a better-than-expected fourth-quarter operating profit. Net income climbed to 769 million euros ($1.06 billion) from 448 million euros a year earlier, Stockholm-based Nordea said. Net interest income was up 4 percent.

“The economic upturn in the Nordic countries is increasingly robust. Sweden is in the forefront of growth, and consumption picks up in the Nordic countries as well as in new European markets,” Chief Executive Officer Christian Clausen said.

The Swedish economy will show strong growth this year and in 2012, after emerging relatively unscathed from the economic crisis, notably thanks to strong public finances, the OECD said last week, calling the Scandinavian country's economy "as strong as Pippi Longstocking".

The Riksbank has hiked interest rates four times since July, bringing the benchmark repo rate to 1.25 percent in December. The government also has the smallest budget deficit in the EU.

“With Sweden’s strong fiscal situation, the banks may likely outpace rivals this year” Ben Hauzenberger, a Zurich-based fund manager at Swisscanto Asset Management, told Bloomberg.