Maritime & Merchant Bank (M&M) said investors are showing a "distinct" interest in shipping, but warned that macroeconomic uncertainties could cloud shipping markets in the future.
"Uncertainties regarding the consequences of a full-scale trade war between USA and China continue to throw dark shadows over the shipping market," M&M said in its second-quarter financial report.
"Generally, in spite of usual uncertainties, we see a distinct interest for investing in the shipping sector, in all the main market segments and within all relevant age categories of tonnage, both from our domestic clients and well from our customers abroad."
The bank's advice to prospective investors in shipping is: expect the unexpected.
"The development of the world economy is one thing; a wide spectre of geopolitical movements that could occur can even have a larger impact on the shipping markets," it said in its report.
"We as a bank must as well be prepared to meet eventual challenges as consequences of these events, and this is reflected in our credit work and collateral structures."
Nevertheless, M&M said it remained "optimistic" for the next six months.
Second-quarter results
M&M posted a net profit of $2.7m before tax, up by $200,000 compared to its first-quarter result.
The second quarter saw the bank disburse a further $22m to its clients, which brings the its portfolio of disbursed loans to $293m as of 30 June.
The return on equity before tax increased from 11.1% in the first three months to 12.1% during the second quarter.
Asset values
"In spite of quite disappointing freight markets, in particular for dry bulk and containerships, we have not seen a significant decrease in market values of vessels," the bank said in its second-quarter financial report.
"The prices have been kept fairly stable for relevant tonnage types driven by an underlying interest for investments."
The bank described the tanker market as "a mixed pot", in which the product carrier segment performed best.
Nevertheless, investor interest in tankers remains optimistic on the bank of anticipated rate increases, which are expected within the next six months and have helped stabilise asset values, the bank said.
Risk profile
M&M Bank's risk profile improved during the quarter and there were no loans within its portfolio that were designated as "high risk" or higher, unlike during the first quarter.
The bank's portfolio consists of just over $150m in "moderate risk" loans and nearly $200m labelled "very low risk" loans.
In the first quarter this year, "high-risk" loans accounted for $11.3m of the bank's portfolio, but there were no events of default.
The distribution of the bank's loan portfolio remains much the same as during the first quarter and consists of 24% bulkers, 46% tankers, 25% containerships, 2% LPG carriers and 3% specialised vessels.
