Shipping update, Telephone conference December 16, 2011 Agenda - PowerPoint PPT Presentation

Shipping update, Telephone conference December 16, 2011

Agenda  Opening remarks, Leif Teksum – Group executive vice president, Large Corporates and International  Review of the Shipping, Offshore and Logistics portfolio as part of DNB’s overall credit portfolio, Trygve Young, Chief Risk Officer.  Review of the different shipping segments, DNB’s strategy and exposure, Harald Serck-Hanssen, Executive vice president, Global Head of the Shipping, Offshore and Logistics division 2

Credit policy based on future cash flow "The customer's debt service capacity is the key element when considering whether to approve a credit. If the customer has not proven satisfactory debt service capacity, credit should normally not be extended, even if the collateral is adequate." 3

EaD Shipping and DNB Group 2 500 25 % 1 928 2 000 20 % 1 894 1 715 1 694 1 663 1 661 1 605 billion kroner 1 500 15 % 9 % 1 000 10 % 7 % 7 % 7 % 7 % 6 % 6 % 7 7 500 5 % 152 127 117 117 110 107 110 0 0 % 0812 0912 1012 1103 1106 1109 1110 Shipping DNB Group Shipping in % of Group 4

EL Shipping and DNB Group 5 000 25 % 4 762 4 009 3 953 3 956 3 919 4 000 3 778 20 % 3 751 million kroner 15 % 3 000 15 % 12 % 12 % 12 % 11 % 10 % 10 % 2 000 10 % 1 000 5 % 692 491 467 476 429 374 392 0 0 % 0812 0912 1012 1103 1106 1109 1110 Shipping DNB Group Shipping in % of Group 5

Key figures by segment EDF Grade Sev % million kroner weighted weighted Weighted EL EL % RAC RAC% EaD Drawn Aviation 2.48 % 7.4 26 % 4 0.63 % 36 6.3 % 576 295 Cruise 0.36 % 3.4 22 % 5 0.08 % 103 1.5 % 6 660 4 844 Logistics 1.48 % 6.3 35 % 57 0.52 % 405 3.7 % 11 073 8 417 Offshore 0.92 % 5.3 20 % 89 0.19 % 1 541 3.2 % 48 203 32 419 Other non-shipping 0.57 % 4.2 17 % 6 0.10 % 179 2.8 % 6 522 2 674 Shipping 1.45 % 6.2 25 % 423 0.37 % 5 765 5.0 % 115 271 86 190 1110 1.25 % 6.0 25 % 584 0.31 % 8 030 4.3 % 188 306 134 839 1109 1.21 % 5.9 25 % 631 0.30 % 9 481 4.6 % 207 611 142 506 1106 1.23 % 5.9 25 % 536 0.30 % 7 353 4.1 % 177 708 127 252 1103 1.20 % 5.8 25 % 552 0.30 % 8 138 4.4 % 182 887 129 941 1012 1.35 % 6.1 26 % 677 0.35 % 9 032 4.7 % 193 030 152 980 0912 1.62 % 6.4 33 % 977 0.53 % 11 205 6.1 % 182 798 6

Development in net write-downs: International Shipping and in % of the group 10 000 10 % 9 % 9 000 9 % 8 000 7 709 8 % 7 % 7 000 7 % million kroner 6 000 6 % 6 % 5 000 5 % 4 000 4 % 3 509 2 998 3 000 3 % 2 519 2 000 2 % 1 000 1 % 520 281 220 0 % 140 0 % 3 - 0 % 2007 2008 2009 2010 2011 (Jan-Sep) International shipping Total Shipping in % of DNB-group 7

Norway is a major shipping nation with a unique maritime cluster We are in the maritime sector by choice, not by Yards accident: Norway is and has been a leading Ship- etc maritime nation for generations. It is a world brokers leader in many sectors with a well functioning and professional maritime cluster: Shipowners, brokers, insurance, legal, classification Legal Finance societies, yards, finance, R & D, education. services OSE is an important exchange for shipping and Shipowners offshore listings . Education Insurance Based on our Norwegian background, we have gradually expanded our client base abroad. R&D Class 8

Shipping consists of many segments, with different drivers. Our largest segment is offshore, where market conditions are positive Crude Oil/Product Liquid Natural Cruise / Gas (LNG) ULCC , VLCC, Suezmax, Passenger vessel Aframax, Panamax, Product (LR1/LR2/MR) Bulk Carrier/Dry Cargo Drilling Rigs RoRo / PCTC / UltraLargeOreCarrier, Semis, jack- PCC Cape Size, Panamax, ups and Handymax, Handysize drillships Chemical Tankers Reefer vessel Container Vessel Refrigerated cargo Post Panamax, Panamax, Sub Panamax, Handy Feedermax, Feeder 9

We strive to have a well diversified portfolio with a good credit quality The division’s (SOL) portfolio segmentation* The PD distribution of the SOL division* *EaD, Exposure at default, as of 3q 2011 10

The shipping portfolio has been reduced since 2008, both in absolute numbers and as a share of DNB’s total portfolio The shipping exposure has been reduced since The portfolio is around 7% of the bank’s total portfolio vs. 10% in 2008 2008, especially within Dry Bulk. % 2 500 25 % EaD NOK bill. 2 000 20 % billion kroner 1 500 15 % 1 000 10 % 500 5 % 0 0 % 0812 0912 1012 1103 1106 1109 1110 Shipping DNB Group Shipping in % of Group Including Dry Bulk and Tankers 11

We are long term and relationship driven • Our core clients 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 aim to keep a good credit quality, our credit guidelines being based upon the “4 Cs”: Cash flow Covenants Client Collateral 12

We have a conservative view when assessing risk Tankers (USD/day) Dry bulk (USD/day) Spot rates for VLCC tanker vessels last 10 years vs Spot rates for dry-bulk capesize vessels last 10 DNB 's assumptions years vs DNB's assumptions Sources: Fearnleys, Clarksons 13

The PD developments in dry bulk, tankers and containers Sept 2010 – Oct 2011 • Dry Bulk EaD • Tankers EaD • Containers. EaD 14

Shipping vs. DNB group: Non-performing commitments and Write-downs Non-performing and net doubtful commitments, total Write-downs 2007 – 2011, shipping vs. total DNB DNB pr. 3q 2011: NOK 7.618 mill., excl DNB Nord 10 000 10 % 9 000 9 % 8 000 8 % 7 000 7 % million kroner 6 000 6 % 5 000 5 % 4 000 4 % 3 000 3 % 2 000 2 % 1 000 1 % - 0 % 2007 2008 2009 2010 2011 (Jan-Sep) International shipping Total Shipping in % of DNB-group 15

The Shipping Division has managed to minimize write-downs Actual write- downs 2009, 2010 vs. DNB’s own Actual write-downs past 10 years expectations, communicated externally 16

DNB maintains its position as a leading shipping, offshore and logistics bank, delivering strong results each year The Shipping division’s financial Top maritime bookrunners according to Deallogic performance, 2007 -2010 NOK mill. 17

The shipping companies and the banks usually find ways to solve challenging situations. In very few cases, the bank becomes a shipowner Shipowner Contribution Bank Contribution • Providing additional guarantees or • Modifying, postponing or waiving security covenants • Raising additional capital • Moratorium, stretching the repayment schedule • Reducing or stopping dividends • "Bridge loans" - solving temporary • Cancelling or postponing newbuildings liquidity challenges • Scrapping vessels • Restructuring – in several ways • Selling assets • Cutting costs 18