Norway's Pareto Bank is expecting to grow its ship loan portfolio in the second half of 2021, following "good deal flow" in the second quarter.
The Oslo-listed niche lender said several new loans will be paid out in the third three-month period as it forecast healthy markets in most sectors over the next couple of years.
The bank said this is due to "a promising demand growth and, more importantly, a manageable supply side".
Pareto Bank reversed loan impairments worth NOK 3.4m ($0.37m) in the three months to 30 June, against a charge of NOK 0.1m a year ago.
This was down to partially writing back provisions made for Covid-19 effects in the first three months of 2020.
These will continue to be gradually reversed, the lender said.
Loans in stage three of restructuring, the highest level before default, remained stable.
Credit quality high
The bank has 22 long-term domestic clients and finances 35 vessels.
The largest exposure is $12.1m and the average commitment size $5.5m.
The lender does not cover offshore support vessels.
The average loan to value of the portfolio is 38% and credit quality was high, Pareto Bank said.
Chemical tankers are the biggest vessel sector for the bank, accounting for NOK 289m of the portfolio.
Boxships are second on NOK 229m, followed by bulkers on NOK 174m.
The bank also finances product tankers, LPG carriers and crude tankers.
Profit edges up
Net profit in the quarter was up at NOK 131.3m from NOK 127.9m, while shipping exposure dipped to NOK 1.09bn, down from NOK 1.11bn a year ago.
Net interest income was NOK 213.3m, against NOK 183.8m in 2020.
Pareto Bank said dry bulk and container markets have benefited in particular from a strong global economic outlook for 2021, due to economic stimulus in 2020.
"Other shipping segments have also developed positively, but tanker markets are still weak due to lower oil demand," the lender added.
Further easing of Covid-19 restrictions is expected to have a positive impact on tankers, however, the bank said.
Total lending to customers, including property, climbed NOK 221m to NOK 15.31bn on 30 June.
The bank's total assets amounted to NOK 19.9bn, up from NOK 19.6bn a year ago.
