HSH Nordbank’s Shipping Loan Losses Reach USD 221 Mn

With persistent shipping woes, the German-based provider of shipping finance HSH Nordbank has seen its loan loss provisions increase in the first quarter of 2017.

Namely, the bank’s loan losses amounted to EUR 198 million (USD 221.3 million) during the three-month period, significantly larger than EUR 62 million reported a year earlier, primarily related to the difficult market situation in shipping.

The Non-Core Bank accounted for EUR 187 million of these provisions, while the Core Bank accounted for only EUR 11 million, “owing to its good portfolio quality,” HSH Nordbank said.

Due to the full utilisation of the second loss guarantee on the balance sheet as at March 31, 2017, loan loss provisions were, for the first time, offset only in part by EUR 142 million. After the guarantee, loan loss provisions in the lending business of the group thus came to EUR 56 million.

Total income of EUR 20 million in the shipping segment reflected a decline in net interest income as a result of a managed reduction in the loan portfolio of EUR 6.7 billion.

“In a market that remains challenging, new business in shipping was selective and flat year-on-year at EUR 0.2 billion as the bank is focusing on names that maintain a good credit rating,” HSH Nordbank said.

For the 2017 business year the bank is still expecting a positive group pre-tax result in the region of EUR 100 million, which would be comparable to the previous year when it reached EUR 121 million.

The bank said that it “has had a successful start to the current financial year in operating terms,” as it generated a pre-tax profit of EUR 128 million in the first quarter of 2017.

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