Going the Way of Dinosaurs?

This clearly is an exaggeration; however the juxtaposition of recent news raises interesting questions about the role of lending these days and where it may be going. Please bear with us as we go through the litany of reports that hopefully will provide some clues.

First, Deutsche Bank’s maritime division reported net income of EUR 51 million, a decline of EUR 2 million from that reported last year. It was the first time in a long while that the bank reported a profit decline in shipping. The reduction in profitability was attributed to pricing pressures resulting from intense competition as well as the bank’s strategy to focus on top tier owners who require razor thin pricing. Nevertheless even with the reduced nominal profit, the ship lending activity met the bank’s minimum pre-tax ROE target of 25%.

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