The company also signed new loan agreements worth NOK 5.7 billion in the second quarter, which is four times higher than the corresponding quarter last year (Q2 2018: NOK 1.4 billion). The loans will be disbursed upon delivery of the projects.
“It is nice to register such a high loan volume, which can mainly be ascribed to cruise ships that were delivered during the quarter. All new loan agreements signed in the second quarter came from the shipping and fisheries and aquaculture segments. Norwegian shipyards and shipowners are very capable of capitalising on the opportunities that this financing represents”, says Otto Søberg, CEO of Export Credit Norway.
Export Credit Norway received a total of 56 loan applications (75) for a total application volume of NOK 64.4 billion in the second quarter of 2019. The application volume is at the same level as last year’s second quarter (62.2 billion), but significantly higher than the previous three quarters. The high application volume in the second quarter can mainly be ascribed to a few projects related to energy and industry.
Popular ship financing solution
Last year, Export Credit Norway introduced a new ship financing solution that enables loan financing to Norwegian buyers when vessels are built at shipyards in Norway for use in Norwegian waters. In the second quarter of 2019, the company received five new applications in connection with the ship financing solution. The company has so far received a total of 33 applications related to the ship financing solution, with a total value of NOK 8.9 billion. The applications include several types of vessels, with well boats, ferries and fishing boats representing the majority.
In June, the first loan agreement under the new ship financing solution was signed. Nergård Havfiske ordered a stern trawler from Vard Brattvåg for which the shipowner received a loan equivalent to NOK 354.3 million. According to the Nergård Group, the offer was instrumental for its decision to build the vessel at a Norwegian shipyard rather than abroad.
On the first day of the third quarter this year, 1 July, the first loan disbursement under the ship financing solution was made. The loan of NOK 170.8 million was issued when Sølvtrans took delivery of the well boat Ronja Explorer, which has been built at Aas Mekaniske Verft in Vestnes.
“The ship financing solution will be evaluated by our owner, the Ministry of Trade and Fisheries, during the next six months. Regardless of what the conclusion is, there is little doubt that the ship financing solution has resulted in more ships being built in Norway instead of at international shipyards, exactly in line with its intentions. Both Norwegian shipowners and us as a financing institution want to contribute towards job and value creation in Norway, and the ship financing solution enables us to do so”, says Otto Søberg.
Stable SME segment
Twenty-two of the financing applications received by Export Credit Norway in the second quarter were from small and medium-sized enterprises (SMEs). This represents 39 per cent of the total number of applications during the quarter. In volume, SME applications constitute 3.1 per cent of the total application volume, more specifically NOK 2 billion (3.8 billion).
“The SME segment makes up 99 per cent of all Norwegian businesses and is therefore of particular importance for Norwegian trade and industry. We experience increased demand for sales support and general advice related to financing export activities from these businesses. The latter includes advising and guiding related to CSR and anti-corruption. We will continue to invest a lot of time and energy in the SME companies”, says Otto Søberg.
Increased loan balance
After several quarters with a reduction in its lending portfolio, Export Credit Norway increased its loan balance in the second quarter compared to the end of the previous quarter. As of 30 June 2019, the lending portfolio balance stood at NOK 60.8 billion, an increase of almost one billion NOK during the second quarter. At the same time last year the lending portfolio was NOK 68.1 billion.
“We should be careful to predict developments in our lending portfolio, but we have at broken the declining trend in the second quarter. We are very pleased that our customers raise capital from other sources and redeem our loans earlier than planned. We are a supplement, and not a competitor, to Norwegian commercial banks. At the same time, we expect to issue more new loans within the shipping segment during the second half of the year”, says Otto Søberg.
As of 30 June 2019, GIEK had guaranteed for 71 per cent of Export Credit Norway’s lending portfolio. The remaining share is guaranteed by Norwegian banks (15 per cent) and international banks (14 per cent), respectively.
Export Credit Norway is a state-owned company that offers Norwegian and international companies loans when they buy goods and services from Norwegian export companies.
Published 16. Sep 2019