tanker financing boom or bust?€¦ · (2014-2016) temporary rebound due to short-term factors...

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Tanker financing – boom or bust?

ALMC - Asian Logistics and Maritime Conference, Hong Kong – 23. November 2017

Disclaimer

This presentation has been prepared by DVB Bank Group.

This presentation does not contain or constitute an offer, or the solicitation of an offer, to buy or subscribe for securities to any person.

This document is not a prospectus.

The presentation is a short summary description of certain aspects in respect of DVB Bank Group. It may not contain all relevant

information in respect of the topics covered. This presentation is therefore not a sufficient basis for any investment decision in respect

of any securities of DVB Bank Group.

This presentation contains forward-looking statements which include statements about our beliefs and expectations as well as the

assumptions underlying them. Such statements speak only as of the day they are made since they are based on plans, estimates and

projections currently available to the management of DVB Bank Group. Forward-looking statements contain risks and uncertainties,

and it cannot be guaranteed that they will turn out to be correct in light of future events or developments.

Information and opinions contained in this presentation have been compiled or arrived from sources believed by DVB Bank Group to

be reliable. Any statements about DVB Bank Group’s market position are based on DVB Bank Group’s own estimates, unless

explicitly stated otherwise herein. Although the information shown herein has been taken from sources which are believed to be

reliable or is based on DVB Bank Group’s own estimates, no warranty or representation is made as to the correctness, completeness

and accuracy of the information or the assessments made on its basis.

DVB Bank Group accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way

connected with, the use of all or any part of this presentation.

Contents

02/ DVB – Shipping Finance portfolio

01/ DVB – At a glance

03/ Tanker market overview & outlook

04/ Shipping Finance – Outlook: boom or bust?

01/ DVB – At a glance

01/ DVB – At a glance 02/ DVB – Shipping Finance portfolio 03/ Tanker market overview & outlook 04/ Shipping Finance – Outlook: boom or bust?

Locations

DVB Bank Group 2017 – 10 offices

Singapore

Tokyo

Hamburg

Frankfurt/Main

Oslo

Athens

Amsterdam

London

New York

Curaçao


Total customer lending volume

1 Aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments and derivatives – nominal volume

24€ bn – Customer lending volume¹

2.0 3.0 4.2 7.7 8.6 8.0 7.6 8.2

10.8 12.0 14.4

18.5 17.3 19.2

21.7 22.2 20.8 23.3

25.3 25.9

1997 1999 2001 2003 2005 2007 2009 2011 2013 31 Dec2016

Customer lending volume

+1,195%



Rating

Shipping Finance –

In-depth expertise

02/ DVB’s – Shipping Finance portfolio

As of 31 December 2016


Shipping Finance portfolio (30 Jun 2017: €11.0 bn)

Total lending volume by vessel type Total lending volume by country risk

1.3% Ferries, passenger vessels

48.1% Tankers

thereof:

14.4% Crude oil tankers

11.6% Gas tankers

11.3% Product tankers

10.8% Chemical tankers

55.2% Europe

3.6% Offshore

3.9% Middle East & Africa

15.2% Asia

21.2% North America 25.7% Bulk carriers

0.9% South &

Central America

1.3% Others

1.7% Cruise ships

2.7% Container boxes

3.1% Car carrier

16.1% Container carriers


03/ Tanker market – overview and outlook

Historical Shipping Market Cycle - Tanker

0

10

20

30

40

50

60

70

80

90

1990

-Jan

1990

-Sep

1991

-May

1992

-Jan

1992

-Sep

1993

-May

1994

-Jan

1994

-Sep

1995

-May

1996

-Jan

1996

-Sep

1997

-May

1998

-Jan

1998

-Sep

1999

-May

2000

-Jan

2000

-Sep

2001

-May

2002

-Jan

2002

-Sep

2003

-May

2004

-Jan

2004

-Sep

2005

-May

2006

-Jan

2006

-Sep

2007

-May

2008

-Jan

2008

-Sep

2009

-May

2010

-Jan

2010

-Sep

2011

-May

2012

-Jan

2012

-Sep

2013

-May

2014

-Jan

2014

-Sep

2015

-May

2016

-Jan

2016

-Sep

2017

-May

$'00

0/da

y

Average Weighted Earnings All Tankers Average EarningsSource: Clarksons, DVB Shipping and Offshore Research

Financial Crisis

(1992-1993)

The collapse of the

European exchange

rate mechanism Asian Financial Crisis

(1997-1999)

Tech. Investment

bubble (1999-2002)

Global Economies upswing

(2002-2008)

Chinese economy boom

trigged increase in trades

Global Financial Crisis

(2008-2009)

Temporary rebound in

2010 post credit crisis

Collapse of oil prices

(2014-2016)

Temporary rebound due

to short-term factors

Further

Recession

(2016 – 20??)


Demand Dynamics

World GDP Growth vs. Oil Demand OECD vs. Non-OECD Oil Demand

Slide 15

3.3%

3.4%

3.2%

3.1%

3.4%

3.6%

3.5%

3.4%

3.4%

3.3%

84.0

86.0

88.0

90.0

92.0

94.0

96.0

98.0

100.0

102.0

104.0

106.0

2.8%

2.9%

3.0%

3.1%

3.2%

3.3%

3.4%

3.5%

3.6%

3.7%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

mio

bb

ls/d

Wo

rld

GD

P G

row

th

World GDP Growth Rate World Oil Demand

Forecast

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2015 2016 2017 2018 2019 2020 2021 2022

Mn bbls/day

OECD Non-OECD

Forecast

Source: IMF, IEA, EIA and DVB Shipping and Offshore Research


Demand Dynamics

Slide 16

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2017

1002

2017

0906

2017

0810

2017

0717

2017

0619

2017

0523

2017

0427

2017

0331

2017

0307

2017

0208

2017

0112

2016

1215

2016

1118

2016

1025

2016

0929

2016

0905

2016

0810

2016

0715

2016

0620

2016

0524

2016

0428

2016

0404

2016

0308

2016

0210

2016

0114

2015

1221

2015

1125

2015

1030

2015

1006

2015

0910

2015

0817

2015

0722

2015

0626

2015

0602

2015

0506

2015

0410

2015

0316

2015

0218

2015

0122

2014

1224

2014

1128

2014

1103

2014

1008

2014

0909

2014

0813

2014

0718

2014

0623

2014

0528

2014

0501

2014

0404

2014

0311

2014

0212

2014

0116

West Texas Intermediate Grade European Brent Grade

$/barrel Oil Prices Developments

Source: IEA and EIA


Offshore E&P Spending outlook

Source: Rystad Energy, DVB Shipping and Offshore Research

Slide 17

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2016 2017f 2018f 2019f 2020f 2021f

Mn US$Offshore E&P Spending

Opex Capex < $50/bbl Capex $50-65/bblCapex $65-85/bbl Capex > $85/bbl Capex


Supply Dynamics – Age Range

Slide 18

237 297 316

740

1,632

2,099

1,046

566

0

50,000

100,000

150,000

200,000

250,000

-

500

1,000

1,500

2,000

2,500

>30 yrs 25 - 29 yrs 20 - 24 yrs 15 - 19 yrs 10 - 14 yrs 5 - 9 yrs < 5 yrs Order Book

Number of vessels DWT '000 (RH)

Number of vessels DWT (`000)

Source: Clarksons, IHS and DVB Shipping and Offshore Research


Supply Dynamics – Tanker Fleet Growth

Slide 19

0%

2%

4%

6%

8%

10%

12%

-20

-10

-

10

20

30

40

50

60

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e

Delivered Scheduled Deliveries Scrapped Y-O-Y Fleet Growth (right axis)

Source: Clarksons, IHS and DVB Shipping and Offshore Research

DWT (`000) Growth %


Tanker Market Outlook – Earnings

Slide 20

-

5

10

15

20

25

30

35

$ ’0

00 /d

ay

Average Earnings All Tankers Average rate Base case High Case Low Case

Source: Clarksons and DVB Shipping and Offshore Research


Tanker Market Outlook – Asset Values

Slide 21

Source: Clarksons and DVB Shipping and Offshore Research

5 Years Old Tanker Secondhand Price Index

0

20

40

60

80

100

120

140

160

2010

1Q

2010

2Q

2010

3Q

2010

4Q

2011

1Q

2011

2Q

2011

3Q

2011

4Q

2012

1Q

2012

2Q

2012

3Q

2012

4Q

2013

1Q

2013

2Q

2013

3Q

2013

4Q

2014

1Q

2014

2Q

2014

3Q

2014

4Q

2015

1Q

2015

2Q

2015

3Q

2015

4Q

2016

1Q

2016

2Q

2016

3Q

2016

4Q

2017

1Q

2017

2Q

2017

3Q

F 2

017

4Q

F 2

018

1Q

F 2

018

2Q

F 2

018

3Q

F 2

018

4Q

F 2

019

1Q

F 2

019

2Q

F 2

019

3Q

F 2

019

4Q

Base case High Case Low Case


04/ Shipping Finance – Outlook: boom or bust?

2016 Shipping finance lead table

Slide 23

/ Asian banks & leasing houses booming

/ TOP 10/20/30: 30% Asian institutions

/ Predominately Chinese leasing


2016 Lending activity – Chinese leasing on the rise

Slide 24

/ Despite challenging shipping markets, Chinese financial

institutions rapidly grew their market share further

during 2016.

/ TOP 10: 50% Chinese players

/ Leasing the main product

/ ~USD12 bn new business via Chinese institutions

/ Traditional finance slower, focus on core/ corporate

clients

/ 2017: Eletson 4xLR2 (second hand) sale & lease back

via CSIC Leasing (belongs to: China Shipbuilding

Industry Corp.)


Increasing requirements – more red tape

Slide 25

Source:ThomsonReuters


Global Syndicated Marine Finance Loan Volume (US$m)

by World Region

Slide 26

Tota

l No.

of d

eals

2012 2013 2014 2015 2016 2017

Americas $11,614 $14,904 $21,389 $31,569 $15,706 $10,481

Asia Pacific $11,386 $18,482 $29,696 $19,852 $12,083 $4,048

EMEA $21,765 $33,157 $46,715 $50,025 $25,265 $11,828

Total $44,765 $66,543 $97,800 $101,446 $53,054 $26,357

Total No. of deals 184 203 236 261 200 96

0

50

100

150

200

250

300

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Dea

l vol

ume

(US

$m)


30 year LIBOR – rising trend

Slide 27

Source: www.macrotrends.net


Shipping Finance – Outlook: boom or bust?

Overview (1)

/ Key near-term issues: Basel IV regulations require to refocus on capital

efficiency and non-risk-weighted-asset income (instead of loan

production).

/ New requirements & more red tape: Compliance, KYC,…

/ Regulatory burden may lengthen negotiations and approval process

/ Increasing long-term costs of liquidity; this has partially contributed to

shorter loan tenors being preferred across all industries.


Shipping Finance – Outlook: boom or bust

Overview (2)

/ Challenging shipping and offshore markets: banks likely to continue to exit

or scale down lending activity

/ New appetite for traditional shipping and offshore finance is likely to remain

muted.

/ Lending capacity will either be reserved for existing and core clients or

focus on credit quality and vessel employment.

/ Limited availability for finance of older tonnage and upgrades (e.g. BWTS,

Scrubbers, Greenhouse gas).


Contact

Domenik Nizet

Senior Vice President

Shipping Finance

Asia Pacific & Middle East

Phone: +65 6511 3448

E-mail: [email protected]

DVB Bank SE

Singapore Branch

77 Robinson Road #30-02

Singapore 068896

[email protected],

www.dvbbank.com

For further information please visit

www.dvbbank.com

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