STOCKHOLM, Feb 2 (Reuters) - Sweden's central bank chief said on Tuesday the country's top banks would see slightly lower loan losses this year from the recession-hit Baltic region than previously expected.
Riksbank Governor Stefan Ingves said it expected loan losses in the Baltics for Sweden's banks to total 27 billion crowns ($3.7 billion) in 2009 and be roughly the same level this year.
In November, the central bank pegged loan losses in 2010 at 33.1 billion crowns for Estonia, Latvia and Lithuania Estonia.
The Nordic country's banks -- mainly Swedbank and SEB -- extended billions of crowns of loans in the Baltics over years of strong growth. They now face big losses due to double-digit contractions in the region's economies.
Ingves said the downswing in Baltic economies, where Swedish banks have lent some 400 billion crowns ($55 billion), had been very rapid and severe, but he noted brighter signs.
"There are some indications that the recession may have bottomed out or is at least close to it," he said in the text of a speech published on the central bank's website.
Trade and current account balances have improved while the pressure on the currencies has declined. All three countries have recently secured loans on the international markets.
This week, Lithuania said it expected its economy to grow this year, while Estonia expects only a small contraction.
"Assuming that developments in Swedbank's and SEB's other markets continue to be relatively good ... the bank groups should be able to cover most of the losses from the Baltic region with the earnings from the remainder of their operations," Ingves said.
Swedbank was set to report fourth-quarter results on Feb. 9, followed by SEB the next day.
Nordea, the Nordic region's biggest bank, is also exposed to the downturn in the Baltics, but lending to the region makes up only a small percentage of its book.
Nordea reports its results on Feb. 10.
Ingves said the Riksbank had no reason to question the Latvian government's wish to retain its fixed exchange rate so that it can qualify to join the euro zone as soon as possible. (Editing by Dan Lalor) ($1 = 7.273 Swedish crowns)