The Dog and His Master

Return-on-Equity, those oft muttered words, are a siren’s song for investors and shipowners. Calculating return on equity, “ROE” in the parlance of investors, is determined by dividing net income by total shareholders equity and signifies how much bang for the buck a company or a project has produced. As with all figures, not the least of which is EBITDA, there are a million ways to manipulate the numbers and, as Regg Jones of Greenbriar candidly pointed out at Marine Money Week, the ROE a project is supposed to generate and the ROE a project actually generates can be quite different – and generally not for the better. Every quarter or so, we take a look at the ROEs generated by our community of shipowners and ship financiers and we present them herewith.

First up are the Top 10 shipping banks with “top” defined by their standing in the 1Q03 League tables. These banks generated an average quarterly ROE of 13% and lent a total of $2.15 billion. The moral of the story is the more you lend, the higher your ROE.

This is only an excerpt of The Dog and His Master

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