Germany’s DVB Bank has fallen to a loss over the first nine months as shipping weakness hit the bottom line.
Total allowance for credit losses hit EUR 406m ($437m), up 39.1% from the end of 2015, due to “significant” provisions in shipping and offshore finance.
The nine-month net loss was EUR 27.3m, from a profit of EUR 92.2m a year ago.
The bank blamed ongoing and high tonnage over-capacity in numerous international shipping segments.
“In the recent past, governmental policies and speculative exuberance have led to a high number of newbuild orders especially at Chinese and Korean shipyards,” it said.
“These market distortions, which prevailed into the third quarter of 2016, heavily burdened the liquidity cushions of shipping clients, with increasing effects upon the banks involved.”
And it said the “geopolitical developments” in the Eastern Mediterranean imposed an additional burden for specific shipping markets during the third quarter of 2016.
It responded by making more allowances in the period.
CEO Ralf Bedranowsky said new business totalled EUR 4.2bn from EUR 5bn in 2015, and net interest income rose to EUR 168.4m, from EUR 151.6m.
He added: “In the persistently difficult segments of the shipping industry, the bank continues to be available to current clients, and selected new clients - given reduced opportunities to originate new business, however, on a lower level."
DVB's total assets decreased to EUR 26bn at 30 September, down 2.3% year-on-year.
