The German company set up to deal with the toxic shipping loan portfolio of the former HSH Nordbank is speeding up the winding down of its operations in better shipping markets.
Portfoliomanagement had previously said that the pandemic had slowed this process but now believes its 10-year target can be reduced by two years.
The company's outstanding loan amount fell €392m ($477m) to €2.9bn in 2020.
The decrease is mainly due to principal repayments and loan losses.
Portfoliomanagement started 2021 with 144 ships as collateral, down by 10 vessels over the year.
10 ships gone
The number of ships has been reduced by 43% since the company was formed in 2016 to deal with legacy loans of €4.3bn covering 253 ships.
This came two years before HSH Nordbank was bought by a consortium led by Cerberus Capital Management and JC Flowers to become Hamburg Commercial Bank.
Loan losses jumped to €244m in 2020, against €5,000 in 2019, due to the high allocations to value adjustments required in the second quarter as a result of the pandemic.
The annual net loss was €235m, compared to €5.5m in 2019.
Managing directors Karl-Hermann Witte and Ulrike Helfer said: "In 2020, we were able to further optimise the loan portfolio and reduce it as planned."
The operating result at the end of the financial year was also significantly better than planned, they added.
The very high net loss "could only be compensated to a small extent by the good interest result and the considerably reduced administrative expenses", they added.
Huge disruption
The company reported "massive distortions" to shipping markets in the first half of the year.
"The individual segments were affected by the global containment measures in different ways, with the container and tanker markets in particular showing quite significant, but also completely divergent, reactions," the managing directors said.
Containerships, which are crucial to Portfoliomanagement, enjoyed "an extremely remarkable year," they added.
After charter rates came under considerable pressure in the first half of the year and were at times close to historic lows, there was a sustained dynamic and unexpectedly fast and strong recovery during the third and especially the fourth quarters, Portfoliomanagement explained.
The bosses said signs point to a continuing positive market environment in container shipping, at least for the first half of 2021.
As vaccines become more widely available and pandemic-related restrictions are eased worldwide, global demand is also expected to recover further, the duo added.
Market strength good for provision release
"The charter rates and secondhand prices of the containerships financed by Portfoliomanagement would also benefit from this, which would ultimately enable the release of risk provisions," the company said.
Portfoliomanagement is forecasting some declines from current very high levels from mid-2021 onwards.
"We will take advantage of the improved market conditions expected compared to the previous year to further reduce the portfolio where possible," Witte and Helfer said.
They added that forecasts remain uncertain in view of the pandemic.
"However, the current extraordinary market situation in container shipping will provide an extremely positive impetus, which will enable us to focus on a new phase, which should also improve the results of Portfoliomanagement," they added.
