Those were the top-level figures from the 16th annual analysis of key developments in global ship finance by Greece’s Petrofin Research.
Ted Petropoulos, head of Athens-based Petrofin Research, highlights significant growth in Asian and Australian banks’ (APAC) market share, increasing from 43% to 45%. Their actual exposure now amounts to $127.94 billion, up from $120.83 billion in 2022. Europe remains the dominant region in ship finance, holding 50% of the top 40 banks with a lending total of $141 billion. However, the U.S. continues to maintain a more domestic focus, while Europe has shown a marginal decrease in its overall share.
Greek banks demonstrated notable year-on-year growth of 13%, with their portfolios rising from $13 billion in 2022 to $15 billion in 2023, increasing Greece’s market share from 4.6% to 5.2%. French, Belgian, and other European banks also experienced portfolio growth. According to Petrofin Research, the total global bank lending, which includes local banks, is approaching $375 billion, representing approximately 62% of the global ship finance total, down from 67%.
Ted Petropoulos estimates that global ship finance, encompassing all forms of lending such as leasing, export finance, and alternative providers, amounts to approximately $600 billion. Interestingly, Clarksons estimates the global fleet value at $1.5 trillion. It is noteworthy that non-bank lending has shown considerably higher growth rates compared to traditional bank lending over the years.
Asian and Australian Banks Increase Market Share Amid Shifts in Global Ship Finance
Japanese banks have become more prominent in global ship finance, now holding 22% of the top 40 banks. This is attributed to the weak yen and the rapid rise in Sale and Leaseback transactions (SLB). Petropoulos notes that Japanese banks primarily provide loans to either Japanese owners or Japanese-owned but internationally operated bareboat charterers.
The Poseidon Principles, a framework encouraging decarbonization of shipping through finance, now has 35 signatories representing $300 billion in shipping finance. Environmental, Social, and Governance (ESG) considerations and bank strategies increasingly favor lending towards eco-friendly vessels. Petrofin Research observes growing evidence that sustainability has become a more significant factor in bank lending decisions.
Despite the efforts towards decarbonization, there remain concerns about the required technology and its costs to meet zero-emission targets. These doubts are shared among all stakeholders, including lenders. The shipping industry faces a challenging transition, balancing the need for sustainable practices with the financial and technological realities of achieving these goals.
