The Nordic region's biggest bank said that loan losses will remain on a high level this year as it failed to meet profit forecast.

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Nordea, the Nordic region's biggest bank by value, posted worse-than-expected fourth-quarter operating profits on Wednesday and gave a gloomy outlook for this year’s earnings. Shares dived in morning trade.

Operating profit for the period fell 25 percent to 592 million euros, missing a mean forecast for 626 million seen in a Reuters poll.

The Swedish group said that the banking sector was stabilising after the upsets caused by the global financial crisis of the end of 2008, but forecast lower risk-adjusted profits for 2010.

Up till now Nordea has been largely shielded from the worst of the economic crisis as the bank is less exposure to the recession-hit Baltics region than its rivals SEB and Swedbank. It has only about 3 percent of its lending in the Baltics.

The bank now said that loan losses will remain at a high level this year and that risk-adjusted profit would be lower.

"Loan losses could remain at a high level also in 2010, as it is difficult to forecast when loan losses will start to decline," the firm said in a statement. "Nordea expects risk-adjusted profit to be lower in 2010 compared to 2009, due to lower income in Treasury and Markets".

Loan losses amounted to 347 million euros in the fourth quarter against a forecast for a 419 million euro. During the third quarter loan losses totaled 358 million loss.

For the full year 2009 it reported a net profit of 2.32 billion euros (3.19 billion dollars), down 13 percent from the 2008 figure, while the net interest income rose 4.0 percent to 5.28 billion euros.

Nordea, the first Swedish bank ahead of rivals Handelsbanken, SEB and Swedbank, avoided the global subprimes crisis but suffered bad loans because of its activities in the Baltic countries and Denmark's real estate crisis.

Fellow Swedish bank SEB, the country's third biggest, meanwhile reported on Wednesday a sharp drop of 89 percent in its net profit for 2009, due to its exposure to the Baltic countries' recession, but said it expected the situation to improve in 2010.