TWO of the world's largest ship lenders, Nordea Bank AB (NDA) and DNB ASA (DNB), are experiencing a reduction in loan losses, sparking optimism that the five-year slump in maritime financing is coming to an end.
Nordea Bank and DNB see recovery in ship lending as loan losses diminish TWO of the world's largest ship lenders, Nordea Bank AB (NDA) and DNB ASA (DNB), are experiencing a reduction in loan losses, sparking optimism that the five-year slump in maritime financing is coming to an end.
Bloomberg reports that Nordea's maritime loan losses decreased 15 per cent in the second quarter compared to the first three months of 2013, and represented the lowest ratio since the third quarter of 2011. Operating profit increased to a seven-quarter high.
Nordea CEO Christian Clausen predicts loan losses will come down further. "They're now coming down, they're not that high," Mr Clausen told Bloomberg from Stockholm. "I don't think loan losses in shipping are an issue anymore."
The shipping industry is seeking recovery from the worst slump in the market since the 1970s caused by weak freight rates and overcapacity. Over this period, shipping companies have been struggling to service debts, triggering loan losses at banks such as Nordea and DNB, as well as their German rivals HSH Nordbank AG, Commerzbank AG (CBK) and Norddeutsche Landesbank Girozentrale.
Second quarter loan losses from the shipping, offshore and logistics division at Nordea's Norwegian competitor DNB, the second largest shipping bank globally, shrunk by 43 per cent to NOK198 million (US$33 million) from the first three months of the year, according to its website.
"2013 will be a very tough year and 2014 will also be quite tough in some industries, but with a diversified portfolio we should still be able to have a good return," DNB's Kristin Holth told Bloomberg.
He said DNB has predicted loan loss provisions in shipping of NOK1 billion to NOK1.5 billion this year, compared with NOK940 million in 2012.