Banks lost half a billion in four months

Banks operating in Estonia made a combined loss of 505 million kroons in four months.

Postimees writes that the data available for the first quarter shows that Swedbank lost 298 million kroons, SEB lost 40 million and Sampo 54 million kroons. The only large bank that made a profit was Nordea (95 million kroons).

In comparison, in four months 2008 the banks made an aggregate 1.3 billion kroons in profit.

According to analysts, most of these losses are still virtual, made up of loan provisions made by the banks. But even central bankers expect the situation to rapidly become worse.

The banks ended last year with a combined net profit of 4 billion that was about half less than in 2007, but about 10 percent more than in 2006.

Altough Estonian central bank Eesti Pank maintains that the banks operating in Estonia are well capitalised and can handle the loan losses, it admits that overdue loans as a share of total credit rose to 5.2 percent in April. This is as much as the central bank expected to see at the end of 2009.

"On a positive side, banks operating in Estonia have made sufficient loan provisions for 2009," said Siret Vildo from Eesti Pank's financial sector policy unit.

The central bank said it will issue a new report on the situation in banking and loan losses in three weeks.

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