Deutsche Shipping repeats strong performance
- Income before taxes of EUR 58.8 million reaffirms sustainable profitability
- Profit before provision for loan losses increased to EUR 67.5
- New loan commitments totalling EUR 1.2 billion – 50% of
which to German shipowners
Deutsche Shipping successfully stayed the course even in the difficult environment of 2009. Deutsche Bank’s shipfinancing business generated EUR 58.8 million income before income taxes, reported Ralf Bedranowsky, Global Head of Deutsche Shipping, and Annemarie Ehrhardt, Global Head of CRM (Credit Risk Management) Shipping, on behalf of the management of Deutsche Shipping.
“We are pleased that we succeeded in maintaining last year’s historic earnings level,” said Ralf Bedranowsky. The result of EUR 58.8 million was almost at previous year’s record income (EUR 59.5 million). Profit before provision for loan losses rose by EUR 5.7 million to EUR 67.5 million – or 9.2 percent over the previous year (EUR 61.8 million). Net interest income and commission revenues grew by 5.3 percent to EUR 90.4 million (previous year: EUR 85.9 million). These results are attributable to, above all, long-standing client relationships founded on trust, consistent risk management as well as a continuously diversified business portfolio.
Ralf Bedranowsky emphasized that credit commitments for shipowners in Germany made up 52 percent of the new business volume of EUR 1.2 billion. At the same time, there was an above-average increase in new business on the Asian market.
“The loan portfolio of Deutsche Shipping is traditionally well diversified,” explained Annemarie Ehrhardt. Deutsche Shipping avoids concentration risks through pro-active risk management strategies such as diversification in terms of vessel type, volume, age structure and country.
“As anticipated, the shipping market experienced difficulties in 2009,” said Bedranowsky. However, individual segments such as the bulk carrier market performed above expectations, he continued. The Baltic Dry Index recovered last year, climbing from 773 (January 2009) to 3140 (January 2010).
The decline in global demand for oil continued to have a negative impact on the tanker market. This market, usually characterized by high levels of volatility, experienced less movement in 2009. Charter rates declined from the beginning of the year until autumn. However, due to seasonal fluctuation rates rose again in the fourth quarter resulting on average in overall satisfactory charter rates for the year.
As expected 2009 was an unfavourable year for the containership market; charter rates fell and stayed below the level of operating costs. At its worst point, roughly 12 percent of the entire container fleet was laid up. This number has since been reduced to less than 10 percent. In addition, demand is expected to grow roughly 8 to 9 percent in 2010. Towards the end of the year, there were initial signs of recovery on the containership market, although it remains to be seen whether this is a sustainable development.
While challenges in the shipping market persist, Deutsche Shipping remains dedicated to developing viable financing solutions together with its clients. In this respect, Deutsche Shipping intends to continue pursuing its quality-oriented lending practice. For the shipping industry diversification of financing sources will remain a desirable strategy going forward. As an integral part of Deutsche Bank Group, Deutsche Shipping is well positioned to offer its clients sustainable and practical financing solutions in international capital markets.
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