Deutsche Shipping turns in excellent profit for 2008

Deutsche Shipping turns in excellent profit for 2008

* Profit up by 44.5 percent to € 59.5 million
* Profit before provision for loan losses climbs by 49 percent to € 61.8 million
* New business / outstandings grow to € 2.6 billion

Deutsche Bank’s ship financing business, which has been operating under the name of ‘Deutsche Shipping’ since May 2008, remains on track for success. Ralf Bedranowsky, Global Head of Deutsche Shipping, and Annemarie Ehrhardt, Head of CRM Shipping, presented the results for the 2008 financial year in Hamburg.

“In 2008, Deutsche Shipping outperformed 2007 which already has been a very satisfactory year,” said Ralf Bedranowsky. Profits increased by € 18.3 million, or 44.5 percent, to € 59.5 million. The profit before provision for loan losses of € 61.8 million reflected an increase of € 20.3 million, or 49 percent, over the previous year. Net interest income and commission revenues went up by 26.2 percent to € 85.9 million. The good results achieved by Deutsche Shipping were attributable above all to its successful growth strategy focused on global diversification.

Bedranowsky was especially gratified to see that profits reflected the strategic benefits of lending business as part of Deutsche Shipping’s integrated coverage of clients. In 2008, the volume of outstandings rose to € 2.636 billion compared with € 2.146 billion a year earlier. The loan portfolio of Deutsche Shipping is traditionally well diversified geographically and by respective ship type segmentation, explained Annemarie Ehrhardt, with some 60 percent made up of investment-grade lending. Once again, thanks to clients’ good creditworthiness, there was no need to form specific loan loss provisions in 2008.

“2008 was a truly exceptional year in every respect,” reported Torsten Wagner, Senior Executive Consultant at Deutsche Shipping. The extreme volatility of the markets last year could be seen from the movements on the Baltic Dry Index. This index for dry bulk shipping rates reached an all-time high of 11,700 points in May 2008, only to bottom out at a 22-year low of 663 points in December. After some promising signs this year, Wagner was optimistic that partially 2009 would see some growth in charter rates. Oil supply and demand were as crucial as ever for the performance of the crude oil tanker market, but charter rates were still profitable for shipowners in 2008. In 2009, however, anticipated fleet growth of about 10 percent is likely to be met by weaker demand. According to Wagner, the sharp worldwide decline in consumption and consumer confidence caused charter rates on the container ship market to collapse just as abruptly as in bulk shipping. Roughly nine percent of container ship capacities are not utilized, with further deterioration to about 20 percent expected for 2009.

Ralf Bedranowsky reassured clients that they could rely on Deutsche Shipping to meet their funding needs, even in difficult times. In this respect, Deutsche Shipping would continue to pursue its quality-oriented lending policy. Deutsche Shipping plans to step up further its activities in Germany and the Nordic countries and launch new client initiatives primarily in the Southern European and Asian markets. “Our aim is to build long-term relationships with our clients and to serve as a reliable global partner - through good and less favourable times,” said Bedranowsky.

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