Norwegian shipping lender Pareto Bank is pulling back from its recently stated expansion ambitions as a result of the coronavirus outbreak.
In January, the bank had said there was scope for it to expand in shipping, which it described as an "under-served" sector.
But on Thursday he niche player, which focuses mainly on domestic medium-size shipping companies, said: "In the future, the bank will prioritise existing customers rather than new sales."
But the bank added that it is still open and still giving redit.
Most employees are working from home and operations have been stable without challenges, Pareto added.
This was based on a "strong, positive culture based on thoroughness and care for each other".
Pareto said it has a good overview of challenges in the short term, but added: "At this time it is not possible to have insight into the long-term effects of Covid-19."
Profit dented
A fall in long-term interest rates led to negative changes in value in the bank's surplus liquidity portfolio, reducing the result in the first quarter.
Net profit was NOK 71m ($6.9m) in the first quarter, from NOK 99.7m in 2019.
"Covid-19 did not affect net interest income in the first quarter substantially," it added.
This figure was NOK 184m, up from NOK 163m a year ago.
Lending increased by NOK 342m to reach NOK 13.5bn, from NOK 12.1bn a year ago.
"There has been good growth in corporate finance and shipping financing," Pareto said.
The lender is focusing on liquidity after reviewing its loans, but said the situation was good with "high excess liquidity and a diversified funding structure."
Write-downs increase
Write-downs have increased by NOK 40.3m primarily due to "changes in macroeconomic scenarios" related to the Covid-19 pandemic and the uncertainty associated with it in terms of economic development.
There were no individual write-downs related to Covid-19 in the first quarter, however.
Total assets at the end of the period stood at NOK 18bn, up from NOK 16.9bn last year.
In January, the lender had said its maritime exposure fell to NOK 782m at the end of the year, from NOK 834m at the end of the third quarter.
Pareto Bank has been in shipping and offshore finance markets since 2011. It has 16 customers and finances 25 vessels.
Its largest exposure is a loan of $20.2m and the average commitment size of outstanding loans is $5.2m.
Pareto said "industrial" vessels account for NOK 197m of shipping loans, with chemical tankers on NOK 170m and bulkers at NOK 145m, but it also finances gas carriers, product tankers, car carriers and boxships.
For 2019, it logged record net profit of NOK 397.6m, up from NOK 330.8m in 2018.
