HSH Nordbank Sees No Shipping Recovery Before End-2014

By MarEx 2013-04-11 12:21:00

Troubled transport lender HSH Nordbank expects weak conditions in the shipping industry to drag on for at least another 18 months and continue to weigh on its earnings.

"Looking at the current situation, we do not expect a sustainable improvement (in the shipping sector) before the end of 2014," Chief Executive Constantin von Oesterreich said at the presentation of the lender's 2012 results on Thursday, striking a more pessimistic tone than in late 2012.

While a slew of new vessels ordered during the boom years is still being delivered, charter rates have fallen below break-even levels in a sector slump lasting more than four years.

Late last year, HSH, which is one of the world's biggest ship financiers, had said it expected the slump to bottom out with a pickup possible as soon as early 2014.

Maersk Line (part of AP Moeller-Maersk ), the world's biggest container shipping operator and a barometer of world trade as its fleet carries more than 15 percent of all sea-borne containers, recently said markets were likely to improve this year.

Oesterreich said a large number of debtors were not servicing ship loans granted by HSH.

"About half of our 30 billion euros ($39.3 billion) in shipping is facing an unfavourable situation at the moment," he said.

The Hamburg-based lender made a net loss of 124 million euros last year as provisions for bad loans spiked to 656 million from 389 million in 2011.

The dismal state of its ship portfolio prompted the lender to seek additional state aid and HSH's majority owners, the German states of Hamburg and Schleswig-Holstein, restored guarantees of 10 billion euros the lender had secured at the height of the financial crisis.

While HSH last year returned 3 billion euros of that total in anticipation of an improvement in business, it later realised it would have to reverse the step to cope with provisions for bad ship loans. ($1 = 0.7642 euros) 

--Reporting by Jan Schwartz; Writing by Arno Schuetze; Editing by David Holmes (C) Reuters 2013.