Greek banks have emerged as key members of the global ship financing market, with a growing market share and a portfolio of $18 billion by the end of 2024, an impressive annual increase of 18%, according to the latest annual report on global ship financing, compiled by Petrofin Research. The Petrofin Index for Global Ship Finance which commenced at 100 in 2008, just before the financial crisis, has shown a modest increase to 63 as of end 2024 from 62 in 2023.
Top 40 Banks’ lending to shipping in 2024 stood at US$289.65, up 2% compared to US$284.27bn in 2023. This is the second consecutive year that moderate growth is seen.
Europe still represents the biggest ship finance area at 52% of the top 40 banks, lending US$152bn. Asian and Australian banks (APAC) mark a decline mainly due to their concentration in leasing finance. Japanese banks are still holding 22% of the top 40 banks portfolio. The USA remains range bound.
Greek banks showed an impressive yoy growth of 18% from US$15bn in 2023 to US$18bn in 2024. Greece’s market share increased from 5.2% to 6.1%. French & Belgian and Other European bank portfolios also showed rises with the addition of CaixaBank in this analysis.
According to Petrofin Research, the total global bank lending of all banks, including local banks, is in the region of US$400bn, i.e. approx. 60% of all types of the global ship finance total. Last year this percentage stood at 62%. We can provide a cautious, indicative figure for global ship finance, including all forms of lending – leasing, export finance and alternative providers – of approx. US$625bn. Interesting to note that Clarkson’s estimate the global fleet value at US$2trn (current fleet and orderbook).
It should be noted that in 2024 non-bank lending continued to show considerable higher growth than bank lending, primarily through leasing. Unlike banks which are regulated by Basel IV, alternative finance providers are largely unregulated and especially for funds for which there are no available figures. From information available the strong upward trend is evident in 2024.
This year we have added a section on Sustainability. We will look into the Poseidon Principles as well as global shipping sustainability linked portfolios and we will be monitoring their gradual development. The IMO’s and other bodies’ requirements on fuel emissions, ESG considerations and bank strategies continue to favour bank ship lending towards eco vessels. There is increasing evidence that sustainability considerations have become more prevalent in bank lending. Poseidon Principles at end of 2024 incorporated 35 signatories, which represented approx. US$240 in ship finance. We will look into the 30 signatories that are involved primarily in bilateral lending and have a shipping portfolio of approx. US$200bn.
Despite decent efforts towards decarbonization by parties involved, there still remain doubts as to the required technology and its cost to meet the zero-emission target by 2050. Such concerns are shared amongst all stakeholders including lenders.
In 2024, the global banking industry recorded a modest 2% growth in ship finance. While this figure might seem underwhelming, it is notable given the significant headwinds faced throughout the year, including competition from alternative finance sources and upcoming regulatory pressures. This growth is a credible performance in a challenging environment.
Global economic growth, as reported by the International Monetary Fund (IMF), reached 3.2%, with international trade expanding by 2.2%. Shipping demand also rose, evidenced by a 5.9% increase in ton miles. However, scrapping values for vessels dropped by 20% year-on-year, signaling weaker returns for older ships. Fleet growth varied across sectors: tankers grew by 0.9%, bulkers by 3%, and containers by a robust 10%, according to Clarkson’s.
Cashflow across all shipping sectors remained sufficient to service loans, bolstered by a surge in vessel orders driven by ESG priorities. This ESG focus not only increased demand for new ships but also spurred ship finance activity.
The banking industry faced stiff competition from alternative financing, particularly Chinese leasing, which offered more flexible terms. Additionally, in anticipation of the Basel IV regulations, effective January 1, 2025, stricter capital requirements, heightening banks’ awareness of lending limitations were introduced. Despite these pressures, banks competed aggressively to retain clients, often accepting lower margins to secure new business.
High US Dollar interest rates, combined with shipowners’ strong liquidity, led to a wave of early loan repayments. Banks responded by offering sustainability-linked loans tied to KPIs, aligning with the Poseidon Principles.
Geopolitical tensions, including the Ukraine war, heightened sanctions, Houthi attacks in the Red Sea, and the Gaza conflict, disrupted trade routes. So far, however, their direct impact on ship finance was minimal, although they contributed to trade dislocations.
Lending conditions grew challenging as vessel earnings were insufficiently high to support vessel prices and subsequent investments. The Clarkson’s average price index for vessels jumped from 149 to 176 in 2024, reflecting this trend. Shipowners mitigated this by accepting lower loan-to-value (LTV) ratios, leveraging their liquidity to cover the gap amid high interest rates.
The Capital market underperformed in 2024 in terms of shipping IPOs and follow ons but support for owners was found in a doubling of shipping bonds from $7.4bn in 2023 to $14.5bn in 2024.
A two-tier ship finance system took shape in 2024. Traditional banks offered low LTV loans for most transactions, except for ESG-related dual-fuel and LNG new buildings. In contrast, Chinese, Japanese, and Korean sale-and-leaseback (SLB) providers offered higher LTVs—often 70-75% or more. The same applied to specialist Fund providers, such as Neptune, Australis, Entrust, Sole and others. Combining shipping and finance expertise in selecting the appropriate transactions to grow their portfolios, funds are able to offer tailor made terms attracting many shipowners seeking higher leverage.
Another trend witnessed was the increased ship finance activity by many regional and national banks, which have started to lend more aggressively to local owners. The Middle East ship finance market expanded rapidly, while Japanese lenders, backed by domestic banks, grew their SLB offerings to both local and international clients, capitalizing on regional expertise.
Source: Petrofin Research
