HSH Nordbank New Lending Surges 30% as Moody’s Warns on Defaults

Dec. 12 (Bloomberg) — HSH Nordbank AG, the world’s largest shipping lender, said new loans to businesses surged about 30 percent this year, after Moody’s Investors Service warned of rising default risks in the maritime industry.

New lending to companies including firms operating in logistics, which includes shipping, as well as textiles and services, jumped to 2.8 billion euros ($3.8 billion) from about 2.2 billion euros in 2012, HSH Nordbank said in an e-mailed statement from Hamburg today. The loans will probably grow about 30 percent in 2014, it said.

Germany’s top shipping lenders, including HSH Nordbank and Commerzbank AG, are grappling with an industry crisis that prompted the European Central Bank to include them in a list of about 130 banks deemed to be of systematic risk and requiring an asset quality review. HSH Nordbank’s provisions for bad debt will fall significantly next year, Rune Hoffmann, a spokesman for the company, said two days ago.

“HSH Nordbank’s client base grew by more than 10 percent in 2013, while the segment in Germany as a whole suffered a decline,” the bank said in today’s statement.

Bad debt in German shipping will mount, Moody’s said in a report this week. The ECB review will lead to increasing provisioning for non-performing loans, including for restructured loans and loans where repayments have been postponed, Moody’s said.

General Decline

Growth in HSH Nordbank’s lending contrasts with a decline in Germany’s credit market. Only a “marked increase in investments in commercial construction” would lead to growth, which may be “at the end of the year at the earliest,” KfW Group said in a report on Sept. 30. The market shrank 6.8 percent year-on-year in the third quarter, it said.

HSH Nordbank is “well-prepared” for the ECB reviews, Chief Executive Officer Constantin von Oesterreich said in an interview with newspaper Die Welt published two weeks ago.

The loan book of Deutsche Bank AG, Germany’s biggest bank, expanded 1.1 percent to 183 billion euros at the end of September from a year previously, excluding credit to financial institutions and the public sector, company filings showed.

HSH Nordbank said the quality of its loan portfolio is also on the rise. Market share among mid-sized companies in HSH Nordbank’s core market in North Germany stood at more than 50 percent, it said.

The bank relies on “traditional bank refinancing through various channels” to raise the cash needed for the new business, spokesman Rune Hoffmann said by e-mail today.

– Nicholas Brautlecht, Copyright 2013 Bloomberg.