Shipowner-backed Maritime & Merchant Bank says the credit quality of its bulker and boxship loans have increased over the third quarter as it seeks new business.
The Oslo-listed lender, which counts Henning Oldendorff and Klaveness Marine Finance among its shareholders, said the improvement has been "significant" after a deterioration in the second three months of 2020.
"The deterioration has however flattened out and partially turned back to more normal levels for both container vessels and bulkers towards the end of the third quarter," M&M Bank added.
This has given owners an "improved ability" to serve their financial obligations, the lender said.
Tanker loan quality declines
The tanker market however became weaker over the summer, with a minor deterioration in credit quality noted.
But this has been more than balanced out by the improved quality of the containership and bulker exposure, M&M Bank said.
"In view of the still unsolved corona situation in major parts of the world, we cannot but take a cautious view on the short-term prospects," the lender said.
"On the other hand, we are looking forward to continue to develop our relationship to existing and new clients and together find good financial solutions for materialising new investments in the maritime sector."
One default
The lender had one loan exposure in default at the end of the quarter, constituting 0.9% of the total loan portfolio.
Net interest income was down at $2.5m from $4.8m, with loan loss provisions rising to $0.28m against $0.14m in 2019.
The loan book now stands at $276m, down from $296m a year ago.
The reduction is due to early repayment and temporary stricter lending criteria following the Covid-19 pandemic.
The lending criteria is back to normal now, M&M Bank said.
Non-performing loans totalled $2.57m, including $0.8m in stage three, the highest level of restructuring before default.
Total assets stood at $551m.
Tankers the biggest slice of portfolio
Tanker loans made up 45% of the portfolio at $125m, with bulkers at $63m or 23%, and boxship lending totalling $77m or 28%. It has no offshore vessel exposure.
Net profit increased to $1.14m from $0.59m in 2019. Lower money-market rates and reduced lending volumes due to the overall situation in the market caused by Covid-19 put downward pressure on the bank’s net interest margin.
