According to Hellenic Shipping News, shipping finance has shown its first signs of growth over the past year. The Petrofin Index for Global Ship Finance, which started at 100 in 2008, has risen 1 point (from 62 in 2021 to 63), showing an increase for the first time in eleven years.

According to Petrofin Research’s annual report, released yesterday, loans from the top 40 banks for shipments in 2021 are $290.12 billion higher from $286.9 billion in 2020. 3. Asian and Australian (APAC) banks show the only growth, from $100.85 billion to $114.75. APAC increased its share of the Global Portfolios from 35% to 39.5%.

The share of European banks further decreased by $9.78, or 5.8% year over year. Within Europe, the big drop in German banks continues, although the trend has slowed down. Greek banks posted 14.2% year-on-year growth, while Scandinavian banks continued their overall decline and downplayed lending in favor of using their services for shipping.

“According to Petrofin Research, we can provide an indicative and cautious figure for global ship financing, including all forms of lending, leasing and alternative providers, of approx. $500 billion. Total global bank lending from all banks including local banks amounts to approx. 340,000 million dollars, that is, approx. 2/3 of the total global financing of ships.

There is mounting evidence that due to the Russian invasion of Ukraine, coupled with high energy prices, geographic sanctions, higher interest rates, slowing global growth and concerns about an incoming recession, Bank lending in 2022 has been interrupted as caution prevails among banks. China’s targeted closures and economic slowdown have added to previous concerns and are also having a temporary impact on Chinese leasing,” the report noted.

In its analysis, Petrofin Research said that “as 2021 unfolded and Covid-19 restrictions eased, global economy GDP rebounded from -3.1% to +5.9% y/y, seaborne trade from -3.5% to +4% YoY, while fleet growth was limited to a 2.9% increase. The above change was aided by continued monetary easing by central banks, low interest rates and a resurgence in demand for goods and raw materials, leading to increased fleet congestion and inefficiency. As a result of these developments, charter rates in most sectors (except oil tankers) have skyrocketed by 50% for LNG, up to 185% for dry bulk and multiples for containers (Clarkson statistics). Ship values ​​followed suit, while scrapping slowed. All in all, a remarkable change. Banks, under the aforementioned favorable conditions and prospects, faced increased demand for loans, as well as competition from other non-bank lenders.

The report noted that “global bank lending showed limited growth. According to the latest Petrofin Research ©, Chart 1 ranks the portfolios of the top 40 ship finance banks, which collectively stood at $290.12 billion at the end of 2021, an increase of 1.12% year-on-year. This growth may seem small, but it represents the first increase since 2011. New bank loans were strong in 2021, especially towards the second half of the year. However, it should be noted that the newbuild order book, which stood at 200m tonnes DWT at the end of 2020, fell to 177m tonnes at the end of 2021, but rose to 219m tonnes on 30 /06/2022 (Clarkson).

The Petrofin Global Index (Chart 2) shows the development of ship finance versus global fleet growth from 2008 to 2021. The long decline in ship finance loans was mainly due to the exit of many big European names from ship financing during the period. This withdrawal process appears to have run its course. The 2021 bank credit marks a long-awaited recovery.”

“However, compared to the growth of the global fleet, it is clear that such growth was not primarily financed by banks, but by relevant non-bank financing sources, including private fleet cash flows and liquidity from private fleets. owners. Within the top 40, 21 banks are based in Europe, 16 in Asia/Australia and 3 in North America. European banks still have the lion’s share at US$157.2bn.

The share of European banks fell further, from 58% to 54.19%. Within Europe, the share of German and Scandinavian banks continued to fall, while Greek banks showed a year-on-year increase of 14.2%.

Relatively new/small banks like Bank of Cyprus, Hellenic, Pareto, M&M bank, etc. they grew during 2021 and provided plurality to the available sources of bank financing. Total shipping-related bank lending for all banks, including numerous domestic banks worldwide, which are outside the scope of this research, at the end of 2021 is projected to be approximately US$340 billion. An estimate of the global exposure to ship financing would include all forms of direct or indirect financing.

This exercise should be approached with caution, as there is a paucity of information, especially from Asian leasing companies and banks, as well as loan funds on a bilateral basis. However, just as an indication, according to Petrofin Research © the total global exposure to ship financing, including leasing and all other forms of financing, at the end of 2021 amounted to approximately USD 500 billion, of which Total global bank loans accounted for about 2/3 of the total,” Petrofin Research concluded.

Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide