(AP) — Nordea Bank AB, the largest banking group in the Nordic region, reported Wednesday a nearly 30 percent drop in fourth-quarter net profit, due mainly to rising costs and loan losses.

The Stockholm-based bank also said that it plans to launch a number of combined growth and cost-cutting initiatives, including plans to outsource some of its IT development to India and move some back-office operations to Poland. The measures will start this year and run until 2012 and are expected to cost around €240 million ($329 million).

Nordea posted a net profit of €448 million ($615 million) in the three months ended Dec. 31, compared with a profit of €638 million in the same quarter a year ago.

Share in the company fell 2.3 percent to 66.65 kronor ($9.05) in early market trading on the Stockholm stock exchange after the release of the figures.

Loan losses increased to €347 million in the October-December period, from 320 million.

Net interest income — the main source of revenue — dipped to €1.3 billion in the quarter from €1.4 billion a year earlier. Net fee and commission income grew to €463 billion from €390 billion.

For the full year 2009, profit fell to €2.3 billion from €2.7 billion in 2008.

In its outlook for 2010, Nordea said it expects its risk-adjusted profit to be lower than in 2009, because of lower income in its Treasury and Markets unit.

It also warned that loan losses "could remain at a high level" in the year to come, saying it is difficult to forecast when they will begin to decrease.

Evli analyst Kimmo Rama said the results were a mixed bag. While net profit was worse-than-expected, the loan losses were below forecasts despite their increase, he said.

"The loan losses has really developed and are moving in the right direction," he said, noting also that Nordea has managed to grab more market share in the Nordic region, especially within households.

Nordea CEO Christian Clausen described the past year as "one of the most challenging years for decades," but maintained that his bank's capital position and funding costs "are among the best in Europe."

"By moving even closer to customers and helping them find solutions in the recession, we strengthened our reputation and improved customer satisfaction compared to competitors. We have established a strong platform to continue on a prudent growth track," he said.

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