Germany’s HSH Nordbank, the world’s biggest ship financier, warned the crisis in the shipping market could deepen through 2014, as it announced sharply lower net income and more than tripled loan loss provisions.
The state-owned bank posted net income of €73 million ($94 million) down from €124 million ($ 160 million) in the first three months of 2012.
Total income jumped to €471 million ($608 million) from €137 million ($177 million), driven mainly by a much improved trading result.
The loan loss provision shot up to €133 million ($172 million) from €43 million ($55 million), in response to “the persistently difficult situation in the international shipping sector.”
“As global shipping capacity increased faster than the demand for transport, freight and charter rates, together with ship values, remained at an historically low level,” it said.
Hamburg-based HSH is trying to reduce its shipping book, which accounts for €27 billion ($34.8 billion) of its €125 billion ($161 billion) portfolio.
The situation in the shipping market remains extremely difficult and “no perceptible recovery can be expected ... in 2013,” the bank said.
Ahead of the publication of the results, CEO Constantin von Oesterreich said the market could get tougher before the end of 2014. He ruled out a recovery before then.
HSH said it will post a loss for the full year, due to the loan loss provisions for its risk-prone shipping portfolio, but it still expects to be back in the black in 2014.