27th September 2011
2ο Ναυτιλιακό συνέδριο ΕΕΔΕ –ΕΙΟΔ –ΕΛΛΗΝΟΒΡΕΤΑΝΙΚΟ ΕΠΙΜΕΛΗΤΗΡΙΟ
Trends and Prospects for International and Greek ship finance presented by
Ted Petropoulos HEAD PETROFIN RESEARCH Ship finance
PETROFIN RESEARCH www.petrofin.gr PETROFIN RESEARCH Top 10 Ship financing banks www.petrofin.gr Their total portfolio: $229.51bn Top 10 banks’ percentage of global portfolio: 50.8% (data as of May 2011)
Top 10 Ship finance banks
HSH Nordbank** 32.83
DnB Nor 32.56
Commerzbank/Deutsche Schiffsbank/Dresdner 32.34
Nordea 22.00
RBS 20.83
KfW* 20.10
Nord LB 18.45
BNP Paribas 17.40 * Market estimates
BTMU* 17.00 ** Market Estimate excluding HSH’s non-core shipping loans of approx. $15bn transferred to special unit Credit Suisse* 16.00
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 PETROFIN RESEARCH International Bank Lending to Shipping – Top 40 banks www.petrofin.gr Global Ship finance as of January 2011 – research undertaken May 2011 - in US$bn Total loans of leading 40 ship finance banks approximately $452bn.
HSH Nordbank** 32.83 DnB Nor 32.56 Commerzbank/Deutsche Schiffsbank/Dresdner 32.34 Nordea 22.00 RBS 20.83 KfW* 20.10 Nord LB 18.45 BNP Paribas 17.40 BTMU* 17.00 Credit Suisse* 16.00 Lloyds Banking Group 15.81 HSBC 15.40 Credit Agricole* 13.90 DVB 13.70 Bank of China* 13.20 China Exim* 13.00 Unicredit (HVB) 11.74 Danish Ship Finance* 11.30 SMBC* 10.00 Bremer Landesbank* 9.80 Deutsche Shipping - Deutsche Bank 9.40 ING 8.84 Korea Exim* 8.50 Citi 8.10 Danske Bank/Fokus Bank* 8.00 SEB* 6.10 Societe General* 6.00 Petrofin Bank Research © - May 2011 ICBC* 4.70 ABN Amro (Fortis Bank Nederlands) 4.67 Natixis 4.60 NIBC 3.30 National Bank of Greece 3.00 Swedbank* 3.00 * Market estimates Helaba* 3.00 Emporiki Bank 2.79 ** Market Estimate excluding HSH’s Marfin Egnatia 2.50 non-core shipping loans of approx. Alpha Bank 2.47 $15bn transferred to special unit Piraeus Bank 2.00 Santander 1.90 Bank of Ireland 1.53 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 New hierarchy in Greek banks – portfolios as of end 2010
Alpha+EFG Eurobank $3,331 $549
National Bank of Greece $2,545 $459
Emporiki Bank $2,126 $604
Marfin Egnatia $2,181 $302
Piraeus Bank* $1,870 $130
First Business Bank $663 $25
Bank of Cyprus $360 $16
Aegean Baltic $291 $36
Proton Bank $202 $18
Tbank - ex Aspis Bank $81 $30
Agricultural Bank of Greece $66
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500
Draw Loans Committed but Undrawn Loans
PETROFIN RESEARCH www.petrofin.gr Top 10 banks after merger of Alpha and EFG Eurobank – portfolios as of end 2010
Royal Bank of Scotland $11,288 $1,151
Deutsche Schiffsbank $5,007 $549
Credit Suisse* $3,500 $1,000
Alpha+Eurobank $3,331 $549
HSH Nordbank* $2,881 $241
National Bank of Greece $2,545 $459
DNB Nor $2,297 $580
Emporiki Bank $2,126 $604
DB - Deutsche shipping $2,439 $174 Total Top 10 bank portfolio: $41.8 % of total Greek ship finance: 63% Marfin Egnatia $2,181 $302
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000
Draw Loans Committed but Undrawn Loans Trends and expectations for Greek ship finance for 2011 and 2012
PETROFIN RESEARCH www.petrofin.gr Ship finance has been adversely affected by
1) Reasons related to shipping
2) Reasons unrelated to shipping
PETROFIN RESEARCH www.petrofin.gr Reasons Shipping related reasons: a) Dire Greek situation via its effect on Greek banks b) Market surpluses c) Over ordering and forecasts of even larger surpluses d) Low vessel values – breaches of covenants resulting in loan restructures with higher spreads e) Insufficient cashflows to secure both debt repayments and operational requirements f) Existing bank portfolios: weakening g) Increased provisions and loan recovery situations h) Immediate outlook for shipping recovery: poor i) Bleak shipping capital market prospects j) Low market values of shipping quoted companies PETROFIN RESEARCH www.petrofin.gr Reasons Non - Shipping related reasons:
a) Slowdown in global economic growth – last IMF estimates 4.1% for 2012. However, still 9.6% growth for China.
b) Due to market inefficiencies (slow steaming, long GOA passages, congestion, etc) higher international trade growth expected in the region of 6-7% in 2012.
c) Increasing market and consumer uncertainty undermining confidence and growth
d) Build up of enormous state and central banks deficits / exposures causing concerns
e) Deepening banking and liquidity crisis
f) Particular problems for key ship lending banks
g) F/x wars: a possibility PETROFIN RESEARCH www.petrofin.gr Reasons Non - Shipping related reasons (cont.):
h) Flight to safety continues
i) Deleveraging process continues
j) Investor risk/appetite weakening
k) Increasing bank capital adequacy requirements
l) Western global banks not growing
m) Poor capital markets – lack of IPOs
PETROFIN RESEARCH www.petrofin.gr However, 1. World n/b orders are slowing down.
Orderbook since 2005 - Quarterly breakdown since 2005
700
600
500
400
300
200
100
0 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
Data: Clarksons World Fleet Register PETROFIN RESEARCH www.petrofin.gr However,
2. Limited slowdown in n/b deliveries Data from Clarksons World Fleet Register Increase – Decrease World fleet deliveries – in mDWT % First 8 months - 2009 79.26 First 8 months - 2010 105.2 32.73% First 8 months - 2011 102.8 -2.28%
3. Increase rate of scrapping figures:
Data from Clarksons World Fleet Register Increase – Decrease World Fleet Demolitions - in mDWT % First 8 months - 2009 22.29 First 8 months - 2010 19.45 -12.74% First 8 months - 2011 28.6 47.04%
PETROFIN RESEARCH www.petrofin.gr However,
4. Many Greek owners still liquid and committed to growth
5. Quality clients still able to obtain finance
6. Bargain hunters still keep vessel values from collapsing
7. Bank foreclosures increasing but still represent a tiny % of shipping loan portfolios
PETROFIN RESEARCH www.petrofin.gr However,
8. Greek owners scrutinizing costs, reducing exposure 9. Low US$ interest rates an enormous help 10. Greek shipping has a younger and higher quality profile 11. Banks too weak to absorb losses; hence, persistent and controlled pressure 12. Greek ability to survive 13. Increasing interest by Far Eastern lenders 14. Current loan yields are at record highs 15. Current loan terms are very stringent 16. Opportunity for active ship lending banks to build up profitable and high quality loan portfolios
PETROFIN RESEARCH www.petrofin.gr CONSEQUENCES
• Many deals do not get done – slowdown in S&P finance by 25%
• Those that do get done are either to first class owners or mainly CASH DEALS • Private capital at very high cost • Quoted shipping companies’ purchases are slowing down • Private Greek owners still looking to expand
PETROFIN RESEARCH www.petrofin.gr LATEST PETROFIN RESEARCH DRY BULK NET SUPPLY GROWTH – ESTIMATES FOR 2011/2012
PETROFIN RESEARCH www.petrofin.gr DRY BULK WORLD FLEET GROWTH ESTIMATES
2010 2011 2012
Dry bulk Fleet at commencement of (in mDWT) 457.15* 534.23* 599.23 E
Newbuilding Fleet growth (mDWT) 78.3* 93 E 87 E
Scrapping 6.15* 28 E 30 E
Net fleet growth (in mDWT) 15.78% 12.17% 9.51%
Actual deliveries / orderbook 62.84% 68.40% 67.34%
SLIPPAGE 37.16% 31.60% 32.66%
* SSY data
data: PETROFIN RESEARCH ©
Prospects • Chinese ship finance but with a catch • Further mergers of banks with additional capital will help • Strategic alliances between Greek banks and major international banks • Is there a silver lining in the cloud? • QE III under way will help to stabilize markets • Fleet increase for dry bulk is slowing down • Demand / supply imbalances are growing but at a slower rate • Japanese and Korean shipyards have adjusted capacities but will Chinese yards do likewise? • Cyclical analysis pointing to a recovery from 2013 onwards with a
PETROFIN RESEARCH peak at / about 2015 www.petrofin.gr PETROFIN RESEARCH www.petrofin.gr