Soaring profit from financial trading helped German ship and aviation financier DVB Bank to post stable first-half earnings despite a drop in net interest income and a major arbitration defeat.
Following a ruling by the London Court of International Arbitration, the Frankfurt-based shipping lender was forced to write off a EUR36.4million (USD40.8million) claim by its subsidiary Dalian Deepwater Developer against a shipyard for performance problems on a shipbuilding contract for a drill vessel.
Also, DVB suffered an 18.9% fall in net interest income, partly due to reduced interest margins in transport lending.
Even so, the bank managed to deliver a net profit of EUR30.1million, against EUR31.7million in the corresponding period last year. Earnings were bolstered by a strong improvement in its result from financial instruments, which increased by multiples to EUR75million – up from just EUR2.4million in the first half of 2014.
DVB said its trading result was boosted by significant non-recurring profits related to the sale of securities.
The bank’s chief executive Ralf Bedranowsky offered a cautious outlook for DVB’s ship lending activities, stressing that risk costs in its existing loan book would continue to weigh down on net interest income. Still the bank increased its new lending volumes across all modes of transport by more than 50% to EUR3.6billion in the first half.