Norway's DNB Bank has continued to reduce shipping exposure as impairment losses were cut compared to the first three months of the year.
The shipping and offshore lender said its shipping portfolio was NOK 7.47bn ($794m) lower at NOK 48.9bn on 30 June, compared to NOK 56.4bn on 31 March.
Of the total, NOK 338m is in stage three of restructuring, the highest level before default.
This figure was NOK 372m a year ago.
The bank called its second quarter results "significantly better" than the first quarter, and said the economic outlook is "now less uncertain".
Total loan impairments were NOK 2.12bn, up from NOK 450m a year ago, but down from NOK 3.65bn in the first quarter.
Tough road ahead for offshore
Most of this related to customers in stage three within the oil, gas and offshore vessel segment.
Impairment levels are "still higher than normal", according to group chief executive Kjerstin Braathen.
She added: "Market conditions will continue to be challenging for some industries, such as the offshore industry, in the time ahead,"
Uncertainty remains higher than normal, both as regards the development of Covid-19 infection levels and how the economy will recover after the crisis, the CEO said.
Shipping impairments falling
In conventional shipping, there were net impairment losses of NOK 136m, up NOK 141m compared with a year ago, but down NOK 75m compared with the first quarter of 2020.
The losses were primarily related to a negative development for specific customers in stages two and three, while the macro outlook for all shipping segments was stable compared with the previous quarter.
Net impairment losses amounted to NOK 1.86bn for the oil, gas and offshore segment in the quarter. This is an increase of NOK 1.9bn from the second quarter of 2019, but a fall of NOK 742m from the first three months of this year.
Its 2020 losses primarily related to offshore clients in stage three.
"The macro forecasts for this segment in the second quarter are stable compared with the previous quarter, as the oil price is developing in line with expectations, and the challenging situation for offshore companies continues," DNB said.
Net interest income fell to NOK 9.63bn from NOK 9.74bn, and net profit to NOK 4.63bn from NOK 5.9bn.
DNB has a total of NOK 1.81bn of loans at level three, up from NOK 1.3bn in 2019.
Braathen said: "After a very demanding start to the year, we are again seeing some bright spots for the Norwegian economy. The level of activity is higher, and this has affected DNB's results for the second quarter.
"The situation is still challenging for many, not least for people who have been temporarily laid off and for businesses struggling to make ends meet."
But the Norwegian economy is landing on its feet, she added, and in a number of areas, things are looking a lot brighter than they did at the end of last quarter.
