TALLINN — Swedbank’s Estonian subsidiary announced Tuesday that lost 1.1 billion krooni (€70.3 million) in 2009, driven by massive loan losses of 3.8 billion krooni (€245 million) last year.

However the loan losses in the fourth quarter were smaller than in the previous quarter. The bank’s loss at the end of the fourth quarter was 129 million krooni (€8.2 million), and the loan deficit was 3.79 billion krooni (€242 million).

Profit before loan impairment charges at the fourth quarter totaled 667 million krooni (€42.6 million). The revenues were 1.1 billion krooni (€71.1 million), which is 6 percent higher than in the third quarter, and operating costs decreased by 2 percent and the loan portfolio declined by 3 percent.

Priit Perens, CEO of Swedbank Estonia, stressed the fourth quarter’s signs of recovery instead of the year’s heavy losses.

“The signs of stabilization are clearly seen in case of enterprises, but when it comes to citizens, then the recovery presumes the decrease of unemployment, which could happen only by support of new investments,” said Perens in the statement to the press.

The loan capacity reduced by 12 percent in the fourth quarter, largely by the decline in borrowing activity by the clients.

“People have become more moderate in their consumption patterns and the expenses are not made so easily,” said Perens. “However, if there’s a need to change a living space, and the family income has not changed, then the price level today supports the real estate purchase.”

Swedbank Group’s total deficit was €1 billion — smaller than in 2008, and earnings per share were €1 billion.

Michael Wolf, CEO and President of Swedbank wrote in the Swedish banking giant’s year-end report that the bank will continue reducing the lending in the Baltics to lower its risk level.

“We will continue to reduce the share of our lending in Ukraine, Russia and the Baltic countries,” wrote Wolf.

This could stifle economic recovery in the crisis-hit Baltic states, one of the worst-performing regions in the world, by reducing available credit. However, Perens said Swedbank has no special intention to reduce the lending.

“Interest toward new loans in the Nordic countries decreased right after the real estate crash, and the same could happen in Estonia,” Perens told Baltic Reports. “People will borrow less once the loan portfolio depreciates.”