Niche Norwegian lender Pareto Bank’s maritime portfolio dropped in the first quarter, but a modest uptick is expected over the whole of 2023.
The Oslo-listed institution said the shipping book had shrunk to NOK 1.62bn ($152m) to 31 March, from NOK 1.8bn in the fourth quarter.
The bank focuses on medium-sized shipowners, family offices and the investment project market.
Corporate loans made up 39% of the exposure and the rest was loans to investment projects.
Pareto finished the quarter with 18 customers, down from 21 three months ago, and 45 vessels, against 48 at the end of 2022.
Bulker lending stood at NOK 513m, down from NOK 524m in the fourth quarter, while industrial shipping totalled NOK 292m.
Product tankers made up NOK 196m of the book, down from NOK 300m previously, and LPG carriers accounted for a further NOK 201m, with car carriers on NOK 117m.
Offshore supply ship lending stood at NOK 97m, down a fraction from NOK 100m, but up from zero six months ago as the bank re-entered a recovering sector.
Chemical tankers made up NOK 111m of the total, but container ship loans shrank again, hitting NOK 95m from NOK 101m three months ago.
The average commitment size is $7.6m and largest exposure $22.8m.
Conservative approach
“The bank has a conservative approach focusing on corporate customers with solid balance sheets, modern high-quality assets and equity contribution of minimum 45%,” it said.
Credit quality was assessed as stable, with an average weighted loan to value of 37%.
Pareto noted a positive outlook for the dry bulk market, due to a low orderbook and demand growth supported by China’s post-Covid reopening.
Tanker markets were strong, with increased demand for oil products and longer transport distances. But the soft container market continued on weakening demand, less congestion and accelerating fleet growth.
Pareto expects limited fleet growth in 2023. It is forecasting a modest deal flow in shipping and strong flows in offshore.
Overall, it expects moderate lending growth in 2023.
First-quarter net profit was NOK 130.9m, up from NOK 116.9m a year ago.
Net interest income was NOK 262.5m, compared with NOK 207.5m in 2022, on increased lending rates, lending growth and a higher return on the bank’s liquidity reserve.
“Pareto Bank sees good opportunities despite still uncertain times. The bank has built a solid position in its selected markets based on high sector expertise…” the lender said.
