Germany’s NordLB plans reduce to its current €19bn shipping loan portfolio to between €5bn to €7bn within the next five years as part of ongoing efforts to reduce its exposure to shipping, reports say.
“The only certainty is that things will remain difficult,” NordLB chief executive Gunter Dunkel said during a presentation on the bank’s 2015 financial results, Reuters reports. The chief executive said it was hard to predict developments in shipping markets this year.
The massive cuts to NordLB’s shipping loan portfolio will hurt the bank’s bottom line. Dunkel said he expects an additional negative impact on earnings, for which the bank will make provisions in the coming quarters. The bank said year-on-year earnings are likely to decline during 2016.
In December, NordLB said it expects to suffer “substantial” impairments to its shipping loan portfolio during 2016, 2017 and 2018.
However, Dunkel added he expects a decline in the amount of cash NordLB must set aside to cover non-performing loans during the next three years, and this amount could even drop substantially in 2018.
