Norwegian lender SpareBank 1 SR-Bank has increased its shipping loan book by NOK 660m ($80m) in strong first-quarter markets.
The Oslo-listed bank said the maritime and other transport portfolio stood at NOK 11.88bn on 31 March, up from NOK 11.22bn at the end of 2020.
But loans in stage three of restructuring — the highest level before default — amounted to NOK 477m, compared with NOK 454m at 31 December.
The energy, oil and gas portfolio fell to NOK 2.47bn, from NOK 2.54bn, over the same period.
Stage-three loans in these sectors totalled NOK 735m, up from NOK 705m.
Overall impairments on loans and financial commitments were cut to NOK 121m in the first quarter, from NOK 560m a year ago.
Loan quality generally 'good'
"The quality of the corporate market portfolio is considered good, although challenges remain within the offshore/platform segment," the lender said.
Chief executive Benedicte Schilbred Fasmer said most customers are doing well, in spite of less activity as a result of the Covid-19 pandemic.
"Our corporate market advisers were in close contact with our customers throughout the first quarter and conducted no fewer than 2,000 advisory interviews with them," she said.
More than 90% have not required any form of payment deferral.
"In addition, a majority of our corporate customers say that they believe economic developments are as good or better than before the pandemic," she said.
Net interest income dropped to NOK 995m for the first quarter, against NOK 1.1bn in the same period of 2020, while net profit rose to NOK 718m versus NOK 221m.
Oil and gas investments to fall
Investment on the Norwegian continental shelf increased by 2% in 2020 despite the outbreak of Covid-19 at the beginning of the year.
However, there was bad news for offshore vessel owners in the near term.
SpareBank 1 said that, due to the ripple effects of the pandemic, the Norwegian Petroleum Directorate expects oil investments on the shelf to fall by almost 7% this year and be somewhat lower in 2022 as well, before rising again.
The lender said it is closely monitoring customers.
"As a result of the low oil price and Covid-19 outbreak, this work was further reinforced from March 2020, and remains ongoing for some customers," it said.
Worst is over
However, the board believes the largest impairment provisions from the pandemic and the low oil price are behind it.
Last June, SpareBank 1 and compatriot lender DNB provided $85m to Fred Olsen Windcarrier to finance three wind turbine installation ships over six years.
The deal involved the establishment of a green loan framework, through which class society DNV will assess eligibility for new investment that will also be financed under sustainable loan criteria.
The lender was involved in the $429m refinancing of Norwegian offshore vessel owner Havila Shipping in 2020, and it recently provided finance to domestic bulker owner Belships.
