Shipping Industry Headwinds Widen DVB’s Bad Debt Expense

- May 19, 2016-

Due to the “persistently difficult segments of the shipping industry” and offshore financing, Germany’s DVB Bank reported an increase in its allowance for credit losses from EUR 13.4 million (USD 15.2 million) to EUR 36.3 million (USD 41.3 million), despite the bank’s cautious lending policy.

New allowance recognised for credit losses totalled EUR 131.9 million, of which EUR 113.3 million was accounted for by shipping finance and offshore finance.

“The increase was largely required for legacy exposures in the shipping finance portfolio, and for financings in the offshore finance portfolio, which is burdened by the slump in oil prices,” Ralf Bedranowsky, CEO and Chairman of DVB Bank SE’s Board of Managing Directors, said.

“We continue to assess the financial year 2016 with cautious optimism, and are endeavouring to achieve consolidated net income that should approach the previous year’s level. Given the persistent challenges on the shipping and offshore markets, we are aware that allowance for credit losses will continue to remain on an elevated level.”

During the first three months of 2016, DVB Bank generated a consolidated net income before taxes of EUR 25.9 million, against the EUR 84.3 million reported in the first quarter of 2015.

Furthermore, the bank said that the net interest income decreased by 10.8%, from EUR 64.8 million to EUR 57.8 million, due to the risk costs included in net interest income largely comprising expenses incurred for vessels which are under the Bank’s control, as part of restructuring measures

Previous:Maersk Line’s Boxship On Fire After Collision Off China Next:Russia’s USC To Build First Cruise Ship In 60 Years