Export Credit Norway, Q3: Good influx of loan applications despite uncertain outlook

- These are challenging times for Norwegian export businesses, but the situation speeds up a highly necessary conversion, said Otto Søberg, CEO of Export Credit Norway.

Export Credit Norway experienced a good influx of loan applications in the quarter, but notes that the pandemic hits the various business sectors differently.

Export Credit Norway paid out NOK 1,5 billion in new loans in the third quarter of 2020. At the end of the quarter, the company’s loan portfolio totals NOK 60,4 billion.

The company received 64 applications with a total value of NOK 23,8 billion, an increase of NOK 10 billion compared to the third quarter of 2019.

The pandemic’s effect

Export Credit Norway has received loan applications in all of the company’s three segments; energy and industry, shipping, and fisheries and aquaculture. The increase in both the number and value of applications can mainly be credited to the fisheries and aquaculture, and shipping segments.

The activity in the fisheries and aquaculture segment has been high during the quarter. Since demand is strong, we expect to see further contracting of smaller aquaculture service vessels. In our experience, more businesses who traditionally have delivered equipment and services to the offshore oil and gas industry now consider possibilities in offshore aquaculture.

The activity in the shipping segment was focused on offshore wind and zero/low emission ferries. We expect this trend to continue. Activity is low when it comes to the contracting of offshore vessels, cruise ships and passenger ships. This is due to the pandemic’s effect on global economy, oil prices and an increased focus on climate targets and renewable energy.

The activity in the energy and industry segment has been stable, although we see that export business working with the oil and gas industry are facing challenges. Export Credit Norway has received several applications regarding development of power lines, pump stations and water and sanitary systems in developing countries. Our perception is that Norwegian export businesses operating in the energy and industry segment are increasingly turning their focus away from oil and gas and towards wind, solar and waterpower.

– So far 2020 has been a challenging year for Norwegian export businesses. It is therefore uplifting to see so many businesses changing their focus. The pandemic is far from over, so we have probably just seen the start of the conversion Norway has to go through. From around 2025 we will experience a fall in our oil production income. Therefore we have to strengthen both our existing export sectors and develop new and strong export sectors, said Otto Søberg, CEO of Export Credit Norway.

Merging process well underway

The Ministry of Trade, Industry and Fisheries, NFD, has announced that the two export credit agencies Export Credit Norway and the Norwegian Export Credit Guarantee Agency, GIEK, are to merge. The new agency is to be operating from July 1 2021. The merger will contribute to a more efficient system for export financing.

The merging process is well underway, but this does not affect neither existing nor potential clients.

– It’s business as usual. Export Credit Norway is available to all our clients and partners, both new and existing, said Søberg.

Export Credit Norway Q3 report 2020