Greek Financing Down 2% in 2023 at 50.9 Billion USD

Bank ship finance for Greek shipping has decreased during 2023 by 2%, Petrofin Research said in its latest annual report. The overall Greek loans (both drawn and committed but undrawn) booked both in Greece and worldwide as of 31/12/2023 are down to $50,891.42 compared to $51,909.77m in 2022, $52,580.03m in 2021, $49,794.51m in 2020, $53,107.8m in 2019, $53,176.32m in 2018, $53,994.96m in 2017 and $57,211.35 in 2016.

Despite robust new loans generation as the year progressed, the high interest rates and loan repayments made it difficult for most banks to achieve portfolio growth in 2023. Additionally, SLB (Sale and Leaseback) finance strongly competed with banks for newbuilding and second hand financing. The Petrofin Index for Greek Ship finance, which commenced at 100 in 2001 and peaked at 443 in 2008, continues its downward curve down to 308 in 2023 from 314 in 2022. In the last 14 years the portfolio has reduced by 23%. It should be noted that the Petrofin Index relates to bank related finance only. Finance via SLBs and other forms of lending are not included. However, our research shows that such alternative forms of finance rose substantially in 2023 and provided Greek owner with a wider array of ship finance options.

International banks without a Greek presence show a reduction of 9.59%. International Banks with Greek presence reversed their growth of 2022 and have dropped by 2.23% marking the largest fall among the 3 bank groups.

By contrast, Greek banks form the only group that shows growth, at 12.25% which is quite more dynamic than last year’s 3.7%. The upward trend continues uninterrupted since 2017. International banks found that the Greek banks’ ability to reduce their loan margins undercut their competitiveness. Drawn loans are down by 5.27% continuing a downward trend started in 2022. Significantly, end year commitments have marked a huge rise of the order of 42.03%, doubling 2022’s rise of 22.43%.

According to the research, as 2023 developed, ship finance activity increased and hence the high commitments at year end. The number of banks involved in Greek ship finance has remained the same. UBS (Credit Suisse) still retains the first position, despite further portfolio reduction of 7.27%.

The top 10 Greek ship financing banks stood at $33.1bn compared to $32.1bn in 2022, $30.45bn in 2021, marking growth of 3.15%. Their market share is up at 65% up from 62% in 2022, compared to 57.9% in 2021 and 58.25% in 2020. The steady decrease of European banks’ exposure continues but at a slower pace (0.4% in 2023). Their market share has gone up to 74.02% nearing 2021 levels. Their share in 2022 was 72.89% of market share, 74.33% in 2021, 73.84% in 2020, 75.8% in 2019, 76.9%, in 2018, 78.70% in 2017, 81.04% in 2016.

It is believed that European banks that remain in Greek ship finance are committed towards remaining in this sector. Indeed, of the banks involved in Greek ship finance, the vast majority have higher loan portfolio budgets for 2024 and are only limited from growing by competition from non bank related finance and prepayments due to the high liquidity of Greek owners and high interest rates, which adversely affect new loan transaction cash flows. Also, the Lead Managers’ total is down by 22.3%.The rise in forward commitments is reflected in the amounts directed to newbuildings which have increased to 14% in 2023 compared to the 3% drop in 2022.

Overall, 2023 is viewed as a year in which bank finance met some challenges in achieving loan growth, despite bank eagerness to do so.
Nikos Roussanoglou, Hellenic Shipping News Worldwide