Shipping loan losses hit Norwegian bank DNB's earnings

Posted by Joseph Keefe
Thursday, July 10, 2014

Q2 net profit NOK 4.65 bln vs f'cast NOK 4.77 bln; loan losses NOK 554 mln vs fcast NOK 398 mln. Bank on schedule to fulfill capital requirements, but shares down 4.6 percent, Swedish bank shares lower.

Higher-than-expected loan losses in the shipping sector ate into DNB's second-quarter earnings, sending shares in Norway's largest bank down almost 5 percent on Thursday.

Nordic banks made it through Europe's recent financial crisis relatively unscathed, but have suffered from their exposure to countries in the Baltic region and to a shipping sector which has struggled with overcapacity in recent years.

DNB, one of the world's biggest lenders to the shipping sector, had been seeing a declining trend of souring loans in shipping, but the second quarter saw an unexpected uptick in losses for the sector.

That took the shine off of what analysts said was otherwise a healthy quarter for the bank.

DNB shares traded down 4.6 percent at 110.2 Norwegian crowns by 0851 GMT, underperforming the Oslo market as a whole which was 1.5 percent lower.

The results dragged on DNB's Swedish banking peers which report earnings next week.

Loan losses in the quarter reached 554 million Norwegian crowns ($90 million), higher than 398 million seen in a Reuters poll of banks and brokerages, due in part to lower freight rates in shipping which makes up about 6 percent of its overall lending portfolio.

Still, Karl Storvik, an analyst at Oslo-based brokerage Arctic Securities, said he did not think the increase in collective shipping provisions reflected a change in underlying credit quality, as it was partly due to the way the bank monitored shipping loans.

Nordea, the Nordic region's biggest bank, is also a large lender to the shipping sector and will report earnings next Thursday. Its shares traded down 1.6 percent.

DNB said overall loan losses were on a downward trajectory from a year earlier and it was on schedule to fulfill new capital requirements for Norwegian banks.

"The rise in profits from the second quarter of 2013 reflects higher lending volumes, wider lending spreads, reduced restructuring expenses and lower impairment losses on loans," Chief Executive Rune Bjerke said in a statement.

The bank, the first Nordic lender to report second-quarter results, has had to meet tough new core capital requirements designed to prevent a repeat of a banking collapse in the early 1990s that forced the government to rescue several big lenders.

It posted a net profit of 4.65 billion crowns ($756 million), lagging the 4.77 billion seen in the Reuters poll, up from 3.80 billion at the same time a year ago.

DNB shares were up 6.5 percent in the six months before Thursday's report, lagging an Oslo benchmark index up 13 percent over the same period.

($1 = 6.1834 Norwegian Kroner)

By Gwladys Fouche and Mia Shanley

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

RDS Wins Engineering and Design Contract for Sea Lion

Rig design and engineering specialist RDS has been awarded a front-end engineering design (FEED) contract by AMEC for Premier Oil’s Sea Lion development in the North Falklands Basin.

Rickmers-Linie Appoints Interliner Agencies

Hamburg based Rickmers-Linie has appointed Interliner Agencies as its new agent in South Central Europe. The agency contract covers Slovenia, Austria, Czech Republic,

Brent Crude Slips Towards US$102

Brent crude fell towards $102 a barrel on Tuesday on concerns of slowing oil demand growth due to weak economic recoveries in China and Europe, although new unrest

Tanker Trends

Joe Barton: Lift Oil Export Ban

A senior U.S. Congressman from Texas has come out in full support of the United States lifting the 40-year old ban on crude oil exports, putting him at odds with

Russia's Shipping Major Reports Strong 1H 2014

OAO Sovcomflot (SCF Group), Russia’s largest shipping company and a global leader in seaborne energy transportation and offshore services, has announced its financial

Tankship-specific Version of FindaportCD Released

Harbour & terminal information providers, Shipping Guides Ltd, says its latest tanker-specific  addition enables customers to access the most comprehensive port

Finance

Halliburton to Settle US Gulf Spill Claims for $1.1b

Halliburton Co said it reached a $1.1 billion settlement for a majority of claims against the company for its role in the BP oil spill in the Gulf of Mexico in 2010.

Joe Barton: Lift Oil Export Ban

A senior U.S. Congressman from Texas has come out in full support of the United States lifting the 40-year old ban on crude oil exports, putting him at odds with

Brent Crude Slips Towards US$102

Brent crude fell towards $102 a barrel on Tuesday on concerns of slowing oil demand growth due to weak economic recoveries in China and Europe, although new unrest

Container Ships

Rickmers-Linie Appoints Interliner Agencies

Hamburg based Rickmers-Linie has appointed Interliner Agencies as its new agent in South Central Europe. The agency contract covers Slovenia, Austria, Czech Republic,

NYK Opens New Planning Center in Kumamoto

On September 1, 2014, NYK and Kozo Keikaku Engineering Inc. established a stowage planning center for container shipping at the Kumamoto office of Kozo Keikaku Engineering Inc.

More German Shipowners Look to Gibdock for Repairs

Gibdock remarks it has continued to see its stock rise amongst the German shipowner community over the past year. Indeed the Gibraltar ship repair yard’s recent

News

Two MCS Exhaust Gas Boilers to Tersan Shipyard

Parat Halvorsen AS has been awarded new boiler plant contracts for two freezer trawlers to be built at Tersan Shipyard located in Telova, Turkey. The boiler plants are for Tersan¹s newbuildings No.

Halliburton to Settle US Gulf Spill Claims for $1.1b

Halliburton Co said it reached a $1.1 billion settlement for a majority of claims against the company for its role in the BP oil spill in the Gulf of Mexico in 2010.

RDS Wins Engineering and Design Contract for Sea Lion

Rig design and engineering specialist RDS has been awarded a front-end engineering design (FEED) contract by AMEC for Premier Oil’s Sea Lion development in the North Falklands Basin.

People in the News

Joe Barton: Lift Oil Export Ban

A senior U.S. Congressman from Texas has come out in full support of the United States lifting the 40-year old ban on crude oil exports, putting him at odds with

Navy Unmanned Aircraft Sets the Bar

The Navy's X-47B unmanned aircraft has completed its final test aboard 'USS Theodore Roosevelt' (CVN 71) and has returned to its home base at Naval Air Station Patuxent River after eight days at sea
,

Gibdock Rreputation Rises in German Market

Gibdock has continued to see its stock rise amongst the German shipowner community over the past year. Indeed the Gibraltar ship repair yard’s recent client list

 
 
Maritime Contracts Maritime Security Naval Architecture Navigation Pipelines Pod Propulsion Port Authority Salvage Ship Repair Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1863 sec (5 req/sec)