Shipping update, Telephone conference December 16, 2011 Agenda - - PowerPoint PPT Presentation

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Shipping update, Telephone conference December 16, 2011 Agenda - - PowerPoint PPT Presentation

Jun 18, 2023 23 likes •206 views

Shipping update, Telephone conference December 16, 2011 Agenda Opening remarks, Leif Teksum Group executive vice president, Large Corporates and International Review of the Shipping, Offshore and Logistics portfolio as part of DNBs

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Shipping update, Telephone conference December 16, 2011

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  • Opening remarks,

Leif Teksum – Group executive vice president, Large Corporates and International

  • Review of the Shipping, Offshore and Logistics portfolio as part of DNB’s overall

credit portfolio, Trygve Young, Chief Risk Officer.

  • Review of the different shipping segments, DNB’s strategy and exposure,

Harald Serck-Hanssen, Executive vice president, Global Head of the Shipping, Offshore and

Logistics division

Agenda

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Credit policy based on future cash flow

"The customer's debt service capacity is the key element when considering whether to approve a credit. If the customer has not proven satisfactory debt service capacity, credit should normally not be extended, even if the collateral is adequate."

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EaD Shipping and DNB Group

1 715 1 605 1 663 1 661 1 694 1 928 1 894 152 110 117 107 110 127 117 9 % 7 % 7 % 6 % 7 % 7 % 6 %

0 % 5 % 10 % 15 % 20 % 25 % 500 1 000 1 500 2 000 2 500 0812 0912 1012 1103 1106 1109 1110 billion kroner Shipping DNB Group Shipping in % of Group

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EL Shipping and DNB Group

3 953 4 762 3 956 3 751 3 778 4 009 3 919 467 692 491 374 392 476 429 12 % 15 % 12 % 10 % 10 % 12 % 11 %

0 % 5 % 10 % 15 % 20 % 25 % 1 000 2 000 3 000 4 000 5 000 0812 0912 1012 1103 1106 1109 1110 million kroner Shipping DNB Group Shipping in % of Group

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Key figures by segment

million kroner EDF weighted Grade weighted Sev % Weighted EL EL % RAC RAC% EaD Drawn Aviation 2.48 % 7.4 26 % 4 0.63 % 36 6.3 % 576 295 Cruise 0.36 % 3.4 22 % 5 0.08 % 103 1.5 % 6 660 4 844 Logistics 1.48 % 6.3 35 % 57 0.52 % 405 3.7 % 11 073 8 417 Offshore 0.92 % 5.3 20 % 89 0.19 % 1 541 3.2 % 48 203 32 419 Other non-shipping 0.57 % 4.2 17 % 6 0.10 % 179 2.8 % 6 522 2 674 Shipping 1.45 % 6.2 25 % 423 0.37 % 5 765 5.0 % 115 271 86 190 1110 1.25 % 6.0 25 % 584 0.31 % 8 030 4.3 % 188 306 134 839 1109 1.21 % 5.9 25 % 631 0.30 % 9 481 4.6 % 207 611 142 506 1106 1.23 % 5.9 25 % 536 0.30 % 7 353 4.1 % 177 708 127 252 1103 1.20 % 5.8 25 % 552 0.30 % 8 138 4.4 % 182 887 129 941 1012 1.35 % 6.1 26 % 677 0.35 % 9 032 4.7 % 193 030 152 980 0912 1.62 % 6.4 33 % 977 0.53 % 11 205 6.1 % 182 798

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Development in net write-downs: International Shipping and in % of the group

220 3 509 7 709 2 998 2 519 3 520 281 140 0 % 0 % 7 % 9 % 6 %

0 % 1 % 2 % 3 % 4 % 5 % 6 % 7 % 8 % 9 % 10 %

  • 1 000

2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000 2007 2008 2009 2010 2011 (Jan-Sep) million kroner International shipping Total Shipping in % of DNB-group

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Norway is a major shipping nation with a unique maritime cluster

Shipowners Finance Ship- brokers Legal services Education Insurance R&D Yards etc Class

We are in the maritime sector by choice, not by accident: Norway is and has been a leading maritime nation for generations. It is a world leader in many sectors with a well functioning and professional maritime cluster: Shipowners, brokers, insurance, legal, classification societies, yards, finance, R & D, education. OSE is an important exchange for shipping and

  • ffshore listings.

Based on our Norwegian background, we have gradually expanded our client base abroad.

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Shipping consists of many segments, with different drivers. Our largest segment is offshore, where market conditions are positive

Bulk Carrier/Dry Cargo UltraLargeOreCarrier, Cape Size, Panamax, Handymax, Handysize Crude Oil/Product ULCC , VLCC, Suezmax, Aframax, Panamax, Product (LR1/LR2/MR) Chemical Tankers Container Vessel Post Panamax, Panamax, Sub Panamax, Handy Feedermax, Feeder Liquid Natural Gas (LNG) Drilling Rigs Semis, jack- ups and drillships Reefer vessel Refrigerated cargo RoRo / PCTC / PCC Cruise / Passenger vessel 9

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We strive to have a well diversified portfolio with a good credit quality

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The division’s (SOL) portfolio segmentation* The PD distribution of the SOL division*

*EaD, Exposure at default, as of 3q 2011

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The shipping portfolio has been reduced since 2008, both in absolute numbers and as a share of DNB’s total portfolio

EaD NOK bill.

The shipping exposure has been reduced since 2008, especially within Dry Bulk. The portfolio is around 7% of the bank’s total portfolio vs. 10% in 2008

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0 % 5 % 10 % 15 % 20 % 25 % 500 1 000 1 500 2 000 2 500 0812 0912 1012 1103 1106 1109 1110 billion kroner Shipping DNB Group Shipping in % of Group 11

Including Dry Bulk and Tankers

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We are long term and relationship driven

Client Collateral Cash flow

Covenants

  • Our core clients are typically leading integrated

shipping companies

  • We prioritize clients where we have a good and

close dialogue and who use a broad range of DNB products

  • We have a global approach
  • We aim to keep a good credit quality, our credit

guidelines being based upon the “4 Cs”:

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Dry bulk (USD/day)

Spot rates for dry-bulk capesize vessels last 10 years vs DNB's assumptions

Tankers (USD/day)

Spot rates for VLCC tanker vessels last 10 years vs DNB 's assumptions

We have a conservative view when assessing risk

Sources: Fearnleys, Clarksons

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The PD developments in dry bulk, tankers and containers Sept 2010 – Oct 2011

  • Dry Bulk
  • Tankers
  • Containers.

EaD EaD EaD

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Shipping vs. DNB group: Non-performing commitments and Write-downs

0 % 1 % 2 % 3 % 4 % 5 % 6 % 7 % 8 % 9 % 10 %

  • 1 000

2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000 2007 2008 2009 2010 2011 (Jan-Sep) million kroner International shipping Total Shipping in % of DNB-group

Write-downs 2007 – 2011, shipping vs. total DNB Non-performing and net doubtful commitments, total DNB pr. 3q 2011: NOK 7.618 mill., excl DNB Nord

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The Shipping Division has managed to minimize write-downs

Actual write-downs 2009, 2010 vs. DNB’s own expectations, communicated externally Actual write-downs past 10 years

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DNB maintains its position as a leading shipping, offshore and logistics bank, delivering strong results each year

The Shipping division’s financial performance, 2007 -2010 Top maritime bookrunners according to Deallogic

NOK mill.

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The shipping companies and the banks usually find ways to solve challenging situations. In very few cases, the bank becomes a shipowner

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  • Providing additional guarantees or

security

  • Raising additional capital
  • Reducing or stopping dividends
  • Cancelling or postponing newbuildings
  • Scrapping vessels
  • Selling assets
  • Cutting costs
  • Modifying, postponing or waiving

covenants

  • Moratorium, stretching the repayment

schedule

  • "Bridge loans" - solving temporary

liquidity challenges

  • Restructuring – in several ways

Bank Contribution Shipowner Contribution