Nordea reduced its shipping exposure by €290m ($319m) in the fourth quarter as provisions fell.
The Nordic lender's maritime loans totalled €7.72bn as of 31 December, including €4.86bn in Norway and €2.11bn outside the Nordic region.
This is down from €8.01bn at the end of the third quarter, with Norwegian lending cut from €5.07bn and non-Nordic borrowings down from €2.27bn.
The net loan loss for shipping was €2m in the final three months, down from €63m in the third quarter.
Nordea has €706m of maritime finance in the final stage of restructuring, compared to €727m at the end of the third quarter.
The impairment ratio was 895 basis points (bps).
If offshore and oil services are added in, the total portfolio reaches €8.2bn.
Tankers in pole position
Tankers account for €2.1bn of this, gas carriers €1.4bn and dry cargo vessels €1bn.
The struggling platform supply vessel (PSV) sector totals €600m.
Overall loan losses in the quarter were cut to €102m from €30m a year ago, or to 17 bps from 5 bps.
Annual loan losses hit €254m, versus €173m in 2018.
Customer activity in the shipping business remained in line with the previous quarter during the final three months, reflecting the higher activity in the industry in general, Nordea said.
But the offshore business remained muted.
Shipping provisions in place
"The shipping, offshore and oil portfolio is well provisioned at approximately 6% of total lending," the bank said.
Net interest income dipped to €1.1bn from €1.14bn, while net profit rose to €750m compared to €505m in 2018.
Group chief executive Frank Vang-Jensen said: "Net loan losses were somewhat elevated at 17 bps of lending, due to additional provisions on a couple of specific corporate exposures. Overall credit quality is solid."
The bank is forecasting a largely unchanged outlook for credit quality in the coming quarters.
Nordea continues to review its collective loan loss provisioning model during 2020, which may have some impact on provisions, it said.
"We continue to have ongoing discussions with our supervisors regarding regulatory expectations including the introduction of new non-performing loan (NPL) coverage requirement that will guide prudential expectations on adequate coverage of dated NPLs," the bank added.
