NORD/LB Expects More Than €1 Billion Loss Through Ship Finance

by Ship & Bunker News Team
Friday November 25, 2016

NORD/LB Norddeutsche Landesbank (NORD/LB) says current estimates indicate that the company's annual loss is expected to be over €1 billion (over $1.06 billion) due to ship financing.

Further, NORD/LB says its risk provisioning is above average in the fourth quarter, and is expected to come in "considerably above" €2 billion (above $2.11 billion) for the 2016 year.

The company notes that the first nine months of the 2016 financial year saw a consolidated loss before taxes of €624 million ($658.95 million), and a consolidated loss of €736 million ($777.23 million) after taxes.

"This was mainly due to a further increase in risk provisioning for ship finance. With this, the bank is reacting to the further intensification of the global shipping crisis over the course of this year and responding to the lower forecasts from all relevant institutions," said NORD/LB.

The company attributes a "disproportionately high" portion of its overall risk provisioning to ship finance provided through Bremer Landesbank (BLB), which will come under 100 percent NORD/LB ownership upon the new year, but has had its result already fully incorporated in the group's figures.

"In spring 2016, NORD/LB had already made the strategic decision to considerably reduce its ship finance portfolio from €19 billion at the time," said the bank.

"The bank aims to reduce the size of its portfolio to between €12 and €14 billion by the end of 2018."

With the exception of ship finance, NORD/LB says all of it business segments remained very profitable in the first three quarters of 2016, noting that outside of ship finance, the risk situation remains relaxed.

In September, Moore Stephens UK (Moore Stephens), in its second annual Shipping Risk Survey, says that not enough shipping companies are utilising sufficient risk management procedures.