Danish Ship Finance profit of 203m in 1H
MARITIME SERVICE: The Danish Ship Finance profit after tax for the first half of 2012 amounted to DKK 203.4 million compared with a profit of DKK 181.3 million in the first half of 2011. The financial performance is considered satisfactory by the management.
Net earnings from lending operations including fees rose in the first half of 2012 to DKK 244.7 million, up from DKK 201.9 million in the first half of 2011. The improvement was due to higher credit margins on loans relative to the same period of last year. Furthermore, the appreciation of the USD relative to DKK during the period triggered an increase in total loans measured in Danish kroner.
Loan impairment charges in the first half of 2012 represented an expense of DKK 128 million, against an income of DKK 25 million in 2011. Developments in impairment charges were driven by the appreciation of the USD against DKK since the turn of the year as loan impairment charges as a percentage of outstanding loans and guarantees only rose from 4.6% at the end of 2011 to 4.7% at 30 June 2012.
The credit quality in lending remains strong although there has been an increase in loans on which deferral has been granted. The company did not incur losses on loans in the first half of 2012. Since the crisis started in 2008, losses actually incurred have generally remained at a very low level, standing at 0.1% p.a. of total loans.
In the first half of 2012, total lending rose by DKK 2,441.6 million from DKK 46,947.9 million at 31 December 2011 to DKK 49,389.5 million at 30 June 2012, or an increase of 5.2%. As most of the loans are denominated in US dollars, the increase is partly attributable to the fact the exchange rate of the USD against DKK has risen by 2.8% since 1 January. The exchange rate adjustment amounts to DKK 1,250.8 million of the total increase in lending. At the same time, the company recorded a net increase in lending of DKK 1,353.3 million, which is the result of a DKK 5,015.2 million increase in new loans and loan instalments totalling DKK 3,661.9 million. Note 5 provides a detailed description of loan developments.
Danish Ship Finance will retain its strategy of focusing on reputable ship owners, so the company does not expect that the second half year will bring any dramatic increases in loan impairment charges measured in lending currency. Credit quality in lending thus generally remains at a satisfactory level.
By way of exception, Danish Ship Finance published an interim announcement after the first quarter of 2012 because of the rating review that was ongoing at the time. The company does not intend to publish an interim announcement for the third quarter. Going forward, the company will only be publishing full-year and half-year reports as it is believed that more frequent reports would not affect the pricing of the bonds issued.
Source: Danish Ship Finance
