Trends & Tribulations in the Achievements of Ship-Lenders

Each year when we take our annual banking market survey we have the unique opportunity to amalgamate the thoughts and opinions of shipping bankers across the world in various parts of the business. While this data can be broken down in countless ways, by anything from continent of business to astrological sign, the most useful correlation we have found is to break it down by the level of returns achieved and look for trends among the banks based on where they fell.

Most of what we found this year was worthy of some thought less because it is dramatically different than anything we have seen before, and more because it is indicative of the direction in which the ship-lending market is evolving. For example we see that firms that achieve higher returns are by and large better at keeping up spreads, but we also see that very few firms at all are successful at keeping spreads high enough to guarantee high returns. As a corollary to this, we see yet again this year that economies of scale work in the shipping industry, as those with larger portfolios have advantages in many arenas, not least importantly cost of capital. However size by no means guarantees returns, and smaller portfolio models are often successfully applied to win midlevel returns.

What really stands out is the growing amount of specialization occurring in the shiplending industry, a specialization that we hope and can believe mirrors at least to some extent the different financial “types” of shipping companies that are evolving as the industry matures in its relationship to the capital markets.

This is only an excerpt of Trends & Tribulations in the Achievements of Ship-Lenders

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