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

Specialised Reefer Container Operators can Thrive: DMR

Despite growing competition from container lines, specialised reefer operators can still thrive, according to Drewry’s latest Reefer Shipping Market Annual Review & Forecast,

HERCULES-2 Phoenix Rises from the Ashes

Wärtsilä Corporation advises that the HERCULES R&D programme to develop large engine technologies, which was initiated in 2004 as a joint vision by the two major European engine manufacturing groups,

Short-Term Perils of Lower Oil Prices: DW Monday

At present we are seeing lower oil prices as a function of softer demand growth in both Europe and China combined with recent output increases from OPEC, particularly Libya,

Tanker Trends

Ingram Barge Order 20 Tank Barges for 2015

Ingram Barge Company say they will be building 20 tank barges in 2015 to meet growing demand for chemical shipments. While most of the company’s recent tank barges have come through acquisitions,

Finland Grants Support to Three Small LNG Terminals

The Finnish government granted 65.2 million euros (84.22 million US dollar) in subsidies to build three small liquefied natural gas (LNG) terminals to cut on use

Senator Says 2015 Could Be Time for US Oil Export Bill

The top supporter in the U.S. Congress for reversing the 40-year ban on crude oil exports, Senator Lisa Murkowski from Alaska, said next year could be the time for a bill on lifting the restriction.

Finance

Short-Term Perils of Lower Oil Prices: DW Monday

At present we are seeing lower oil prices as a function of softer demand growth in both Europe and China combined with recent output increases from OPEC, particularly Libya,

Nigerian Minister Pledges $1.3 bln for Power Companies

Nigeria's oil minister announced a 213 billion naira (1.3 billion US dollar) bail-out package for power companies on Saturday, nearly a year after the sector was privatised.

Russia's Yamal LNG Project May Tap Wealth Fund in 2014

Russia's Novatek may get funds from the National Wealth Fund for its Yamal LNG project before the year-end, a minister said, as part of government plans to support sanction-hit companies.

Container Ships

Specialised Reefer Container Operators can Thrive: DMR

Despite growing competition from container lines, specialised reefer operators can still thrive, according to Drewry’s latest Reefer Shipping Market Annual Review & Forecast,

Chevron To Find Buyers for Hawaiian Refinery

Chevron Corp has hired an investment bank to identify potential buyers of its 54,000 barrel-a-day refinery in Kapolei on the Hawaiian island of Oahu, a company official said.

South Carolina Ports Container Volume Up by 13%

SC Ports Authority reported container volumes up 13 percent fiscal year to date, a strong start to the first two months of the fiscal calendar. The SCPA handled 163,

News

MHPS's DeNOx System For Power Plant in Poland

Mitsubishi Hitachi Power Systems (MHPS) has received an order from ENEA Wytwarzanie S.A., a power producer in Poland, for two sets of selective catalytic reduction

Blood Pumping With Mobile CPR Unit for HII's Newport

Huntington Ingalls Industries' Newport News Shipbuilding division partnered with the American Heart Association to teach shipbuilders how to perform hands-only CPR during a demonstration Thursday.

Voith Hydropower Equipment for Thailand's Storage Plant

Voith has been awarded a new contract to supply the complete electromechanical equipment for a pumped storage power plant in Thailand. The order for the extension

People in the News

NNS Identify 124 Employees as 'Models of Excellence'

Huntington Ingalls Industries says that 124 employees from the company's Newport News Shipbuilding division have been recognized with Model of Excellence (MOE) awards.

Seadrill Chairman Reassures Investors as Director Leaves

Seadrill Limited informs that Tor Olav Trøim has decided not to stand for re-election to the Board of Directors in order to focus his efforts on developing Golar LNG.

XL Group Underwriters at IUMI Conference in Hong Kong

XL Group informs that its leading marine underwriters will join the annual International Union of Marine Insurance (IUMI) conference, the first time to be held

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Pod Propulsion Port Authority Ship Electronics Ship Repair Shipbuilding / Vessel Construction Winch
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: 0.1848 sec (5 req/sec)