Petrofin Research claimed in its latest annual research on Greek bank ship financing conditions that the worst is over. According to the company's analysis, the rise of ship values bodes well for a recovery of financing across the board, both from Far East banks, but also from Greek ones as well. Petrofin said that “there are some encouraging signs already in place in 2017. The dry bulk market staged a meaningful recovery from 685 on 14th February to 1324 on March 30th 2017 (BDI). Although there has been a recent correction, there is the widespread feeling that coupled with a more robust growth of dry bulk commodities expected over the next couple of years to the order of 3.5% per annum (IMF) and a relatively low remaining order book and low newbuilding orders, a dry bulk recovery has commenced".

According to Petrofin's Ted Petropoulos, "a similar story appears to be shaping up in the container sector and most analysts anticipate a modest recovery in the wet sector, by next year as well. Without going into a deeper analysis, which is not the purpose of this commentary, the main point is that owners and banks alike are more confident of future market conditions than before. This view has been supported by a sharp rise in dry bulk vessel values and cash flows, which have provided a more tangible proof of an improvement. Tanker and container vessel values have also risen during the last months with the Clarkson all vessels index rising from 75 average in 2016 to 88 in May 2017 i.e. a 17.3% improvement across the board".

Meanwhile, "latest reports by banks over their shipping related losses and provisions are showing that the worst may be over. Moreover, the number of bank loan portfolios left for sale is reducing and the majority is expected to be sold by 2017 year-end. This development shall take out a lot of negative momentum that has adversely affected Greek bank finance over the last years. Among the existing and committed bank lenders, most are reluctant to lend for speculative newbuildings and this is bourne out by the decline of the committed but undrawn figures in this year’s research by 38%. There are some new names joining shiplending, namely Warburg, Amsterdam Trade Bank, M&M Bank, Carnegie Bank, as well as numerous local banks in the Middle and Far East. It is expected that their presence shall become increasingly felt over the years, as they cater for the small to medium client. Previous relatively small lenders, such as Berenberg, have magnified their commitment by acquiring approximately $300m of largely Greek related RBS loans and seeking to develop closer ties with all these new clients. The International banking climate remains unsupportive for banks. Conditions are not ripe for capital expansion to bolster capital ratios, which have been hit by losses and provisions. With the capital adequacy rules biting harder and lending opportunities remaining restricted, the era of aggressive shiplending is in the very distant horizon. Nevertheless, should the quality of banks’ lending portfolios further recover and taking into account the higher margins and fees enjoyed today, the attractiveness of bank finance shall increase", Petrofin's head noted.

Petropoulos said that "it is our opinion that the risk / reward of shipfinance is improving and this will assist Greek bank lending in the future. More banks are expected to enter the market, aiming at the small to medium owner. As newbuilding orders shall increase on the back of recovering shipping markets, it is expected that Far East lending will resume its growth. Greek banks are also expected to be in a better position to compete for Greek business, both in terms of loans, as well as deposits, once the Greek economic situation shall stabilise and this would be welcomed by Greek owners. Greek shipping, which was under high threat in 2016, seems to have recovered and confidence is rising. Greek owners have invested huge amounts of capital in shipping and in upgrading their fleets. It is important that this investment be vindicated by a market recovery, based on a positive demand outlook and a non-repetition of overordering. As the growth of Greek shipping continues unabated in 2017, it is clear that Greek owners have found ways to expand their fleets with an emphasis on modern, eco vessels. To the extent that the shipping market shall assist and bank finance shall become less restricted, this growth is expected to continue", he concluded.