Oslo-listed Maritime & Merchant Bank (M&M Bank) has logged a boost in credit quality thanks to container ship wheeling and dealing by owners in hot markets.

The Henning Oldendorff-backed niche shipping lender celebrated five years in business in 2021.

During that time, it has dished out $578m in loans and financed 120 ships.

The total credit loss for the bank during the same period constitutes just 0.06%.

The lender has no defaulted exposures, and no credit losses were accounted for in 2021.

The net loan portfolio increased 17% and ended 2021 at $314m.

“The bank experienced a considerable turnover in the portfolio during 2021 due to the historic development in the container market and the strong upturn in the dry sector, resulting in owners securing huge profits by selling tonnage and repaying the loans,” the bank said.

“Mirroring the positive market development, a corresponding significant improvement took place in the credit quality of the bank’s loan portfolio of container and dry bulk,” M&M Bank added.

The tanker segment had to digest a new year with generally weak markets, though with a few bright spots within product and chemicals, however, the bank said.

By the end of 2021, bulkers made up 35% of the portfolio, with tankers on 36% and boxships on 24%.

The rest is made up by LPG and car carriers, and specialised tonnage.

Positive forecasts

M&M Bank said there is “obviously no quick fix” for container ship disruption and cargo flows.

“The forecasts are basically most positive for the next 12 months,” the company added.

“Modest orderbooks for newbuildings and fair forecasts for the global economy for the next two years provides backing for an optimistic view for the further development,” the lender said.

Tanker markets are surrounded by many question marks, the bank believes.

It noted analysts moving forward the horizon for an upswing.

“On the other hand, the history has taught us that one should expect the unexpected when it comes to the tanker market. The poor freight market has surprisingly not significantly affected the secondhand values,” the company said.

Net profit falls back

Fourth quarter net profit was down at $543,000, from $2.4m in 2020, but that year saw a $918,000 write-back of a loss allowance and a lower tax bill.

Interest income rose to $5.3m against $4.1m the year before.

The average probability of default for bulker and boxship loans is back to levels seen before the pandemic.

Tankers, however, have seen a “small deterioration” in credit quality, the lender said.

“The bank has over five years built a solid competence-driven platform and we feel that we are well prepared for further expansion of our activities,” M&M Bank said.

“We are optimistic for the market for our services going forward and looking forward to continue to strengthen and develop our organisation,” the company said.

M&M Bank is 25% owned by shipowner Oldendorff and 25% by Norwegian investor Endre Rosjo’s Centennial, with Deutsche Bank, SEB, Societe Generale and Klaveness Marine Finance also involved.