Ship part

Vessel financing returns to growth for the first time in 11 years

As 2021 developed and Covid-19 restrictions eased, global economy GDP grew from -3.1% to +5.9% YoY, maritime trade from -3.5% to +4% year-on-year, while the growth of the maritime fleet was limited to an increase of 2.9%.

In addition, Athens-based Petrofin Research, in its annual review of Global Ship Finance Reports the Petrofin index for Global Ship Finance which started at 100 in 2008 is up one point from 62 in 2021 to 63, showing an increase for the first time in 11 years.

Meanwhile, lending by the 40 largest banks in 2021 was higher, at $290.12 billion, compared to $286.9 billion in 2020. That 1.12% year-over-year growth the other may seem small, but it represents the first increase since 2011. .

Petrofin Research says the turnaround has been aided by continued central bank monetary easing, low interest rates and a resurgence in demand for goods and commodities, leading to increased congestion and fleet inefficiency .

As a result of these developments, charter rates in most sectors (except tankers) have increased by 50% for LNG, up to 185% for dry bulk and several times for containers according to Clarkson’s statistics. Ship values ​​followed suit, while demolition slowed. All in all, a remarkable turnaround, says Ted Petropoulos, head of Petrofin Research.

“Banks, under these favorable conditions and outlook, have faced increased demand for loans, as well as competition from other non-bank lenders,” Petroloulos says.

Of the top 40, twenty-one banks are based in Europe, 16 are based in Asia/Australia and three are based in North America.

Asian and Australian (APAC) banks posted the only growth, rising from $100.85 billion to $114.75 billion. APAC increased its share of global portfolios from 35% to 39.5%. The share of European banks fell further by $9.78 billion, or 5.8% year-on-year.

Petrofin

Within Europe, the sharp fall continues by German banks even if the trend has slowed down. Greek banks posted year-on-year growth of 14.2%, while Scandinavian banks continued their general decline by reducing their focus on lending in favor of using their services for shipping.

Relative newcomers/smaller banks such as Bank of Cyprus, Hellenic Bank of Cyprus, Pareto of Norway, US bank M&M, expanded in 2021 and provided plurality to available sources of bank funding.

Petrofin Research, said it could provide “a conservative indicative figure for global ship financing, including all forms of lending, leasing and alternative providers, of approximately $500 billion”.

“Total global bank lending from all banks, including local banks, is approximately $340 billion, or about two-thirds of the global ship finance total,” Petrofin said.

He warns, however, that there is growing evidence that due to the Russian invasion of Ukraine, along with high energy prices, geographic sanctions, higher interest rates, slowing global growth and worries about a looming recession, bank lending in 2022 has been halted as caution reigns among banks.

Additionally, China’s selective shutdowns and economic slowdown have added to concerns and are also having a temporary impact on Chinese leasing.