DNB sees worsening 2012 shipping loan outlook
Norway's DNB, a key lender to the global shipping industry, warned its loan book to the sector would worsen in 2012, with non-performing loan rates on the rise as crude transport rates stay weak and already low dry bulk rates could fall further, Reuters reports. DNB said on Friday that only 0.2 percent of its shipping portfolio was considered non-performing. The bank said this would rise, but declined to predict how fast, and said it had ample loan absorption capacity and was prepared for the worst.
"With the shipping markets remaining where they are today, we must expect some negative migration in the portfolio, but we do not expect dramatic shifts," Harald Serck-Hanssen, head of DNB's shipping business told a conference call.
DNB is one of the most exposed banks to the downturn in the global shipping sector as over 10 percent of its loans are to the sector.
A slew of ships ordered when times were good has continued to be launched this year, outpacing demand in the dry bulk and tanker markets, depressing freight rates and battering ship owners' earnings.
DNB said about 37 percent of the 86 billion crowns ($14.35 billion) on loan to the traditional shipping sector were considered to be in the "most difficult" segments of the industry.
"We hope for some of the factors to surprise us positively but we are prepared for the worst in the dry bulk sector," Serck-Hanssen said. "We have considerable loss-absorbing capacity".
The bank said it may opt by choice to take a provision on performing loans due to the market's sluggish outlook.
DNB said the tanker market was the most distressed and there was little improvement in sight for rates but the bank's portfolio in the segment was especially robust.
Rates in the dry bulk segment could fall even further in 2012 while container rates were seen improving slightly, DNB said.
It said it saw restructuring taking place in the container market, with some players exiting that business or mergers and acquisitions taking place.
"With the shipping markets remaining where they are today, we must expect some negative migration in the portfolio, but we do not expect dramatic shifts," Harald Serck-Hanssen, head of DNB's shipping business told a conference call.
DNB is one of the most exposed banks to the downturn in the global shipping sector as over 10 percent of its loans are to the sector.
A slew of ships ordered when times were good has continued to be launched this year, outpacing demand in the dry bulk and tanker markets, depressing freight rates and battering ship owners' earnings.
DNB said about 37 percent of the 86 billion crowns ($14.35 billion) on loan to the traditional shipping sector were considered to be in the "most difficult" segments of the industry.
"We hope for some of the factors to surprise us positively but we are prepared for the worst in the dry bulk sector," Serck-Hanssen said. "We have considerable loss-absorbing capacity".
The bank said it may opt by choice to take a provision on performing loans due to the market's sluggish outlook.
DNB said the tanker market was the most distressed and there was little improvement in sight for rates but the bank's portfolio in the segment was especially robust.
Rates in the dry bulk segment could fall even further in 2012 while container rates were seen improving slightly, DNB said.
It said it saw restructuring taking place in the container market, with some players exiting that business or mergers and acquisitions taking place.
