Top Shipping Bank Expects Loss in 2016 as Loans Sour

German state-backed lender NordLB now expects to report a loss in 2016 after non-performing loans in shipping, where it is one of the world's top lenders, helped push it into the red in the first quarter.

The results at NordLB, which previously said it expected an earnings decline this year but did not point to a loss, bode ill for German peers HSH, Commerzbank, DVB and KFW, who have also been forced to take writedowns and boost capital buffers against shipping loan portfolios turning bad.

"We are expecting NORDLB to close the current year with a negative result," Chief Executive Gunter Dunkel said in a statement on Wednesday. That would be its first full year loss since 2009.

The bank did not expect any improvement in the shipping markets in the coming quarters, while there would be a further significant increase in risk provisioning, he said.

NordLB plans to trim its ship finance portfolio from close to 19 billion euros to 12 to 14 billion euros, which would hit profits ahead, Dunkel said.

The bank posted a pretax loss of 98 million euros in the first quarter, compared with a profit of 229 million in the year earlier quarter, it said on Wednesday.