Shipping update Oslo, November, 2011 Per Augdahl Senior Vice President Shipping, Offshore & Logistics
Which segments do we cover Who are our clients How do we serve our clients 2
Norway is a major shipping nation with a unique maritime cluster Yards etc Shipbrokers Finance Legal services Shipowners Education Insurance R&D Class Source: ISL
Shipping consists of many segments, with different drivers Crude Oil/Product ULCC, VLCC, Suezmax, Aframax, Panamax, Product (LR1/LR2/MR) Liquid Natural Gas (LNG) Cruise / Passenger vessel Bulk Carrier/Dry Cargo UltraLargeOreCarrier, Cape Size, Panamax, Handymax, Handysize Drilling Rigs Semis, jackups and drillships RoRo / PCTC / PCC Chemical Tankers Reefer vessel Refrigerated cargo Container Vessel Post Panamax, Panamax, Sub Panamax, Handy Feedermax, Feeder
We aim to have a diversified portfolio with a good credit quality
Which segments do we cover Who are our clients How do we serve our clients 6
We are long term and relationship driven Our core client are typically leading integrated shipping companies We prioritize clients where we have a good and close dialogue and who use a broad range of DNB products We have a global approach We will maintain a good credit quality 7
Which segments do we cover Who are our clients How do we serve our clients 8
We serve our clients through more than 100 maritime & offshore relationship bankers world-wide What? Provide capital to finance shipping companies or assets directly on a long or short term basis To who? For what? Major Norwegian and international shipping companies Mainly prime assets such as tankers, bulkcarriers, cruise vessels, PCC & Ro/Ro, chemical, oil rigs & FPSO s, but have also Oslo Bergen London Athens New York Shanghai Singapore done more specialized vessels such as PSV s, shuttle tankers, DSV, pipe laying vessels and open hatch 9
Risk mitigation by the 4 Cs Our core client are typically leading integrated shipping companies We prioritize clients where we have a good and close dialogue and who use a broad range of DNB products We have a global approach We will maintain a good credit quality Risk mitigation by the 4 Cs Cash flow Client Covenants Collateral 10
01042001 01042002 01042003 01042004 01042005 01042006 01042007 01042008 01042009 01042010 01042011 01042001 01042002 01042003 01042004 01042005 01042006 01042007 01042008 01042009 01042010 01042011 Our internal analysis is based upon low rate estimates Dry bulk (USD/day) Spot rates for dry-bulk capesize vessels last 10 years vs DNB's assumptions Tankers (USD/day) Spot rates for VLCC tanker vessels last 10 years vs DNB's assumptions 250000 200000 250000 200000 150000 100000 50000 0 150000 100000 50000 0 Spot rates Base Case Risk Case Spot rates Base Case Risk Case Source: Fearnleys
We are supporting our core clients and remaining active 12
DNB maintains its position as a leading shipping, offshore and logistics bank, delivering strong results each year NOK mill 3 000 The Shipping division s financial performance, 2007-2010 2 500 2 000 1 500 1 000 500 0 2007 2008 2009 2010 Gross income Operating profit Operating profit after wd including interest on allocated capital 13
MillNOK The Shipping Division has managed to minimize write-downs Actual write-downs 2009, 2010 vs DNB s own expectations, communicated externally Actual write-downs past 10 years 1600 1400 1200 1000 800 600 400 200 0 MNOK 2009 2010 Expectations Expected loss Write-downs 1600 1400 1200 1000 800 600 400 200 0-200 -400 Net write downs % of drawn portfolio 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1,00 % 0,90 % 0,80 % 0,70 % 0,60 % 0,50 % 0,40 % 0,30 % 0,20 % 0,10 % 0,00 % -0,10 % -0,20 % -0,30 %
So in conclusion DNB is a leading global shipping bank We must continually follow shipping and financial markets We serve the global market through branch offices DNB is long term and relationship driven Clients are served through client teams Credit is assessed by 4 C s High volatility! The unexpected can and will happen 15