Portfolio, Investment & Restructuring
Non-performing Shipping Loans
Summary
A non-performing shipping loan is an exposure classified as impaired or in default under applicable accounting and prudential criteria.
Why this matters in ship finance
NPL classification affects provisioning, capital management, servicing and distressed sale strategy.
The concept
Default, non-performing and Stage 3 accounting concepts overlap but are not fully interchangeable. In-scope EU banks apply CRR and supervisory rules, while IFRS 9 informs accounting impairment.
How it is used in practice
Track days past due, unlikeliness to pay, collateral shortfall, borrower viability, provisioning and projected recoveries.
Practical issues
Do not define non-performance solely as a covenant breach or assume every shipping-related loan sale falls within the EU credit-servicer directive.
How ShipFinance.ai uses this concept
Reconcile portfolio classifications and expected-loss estimates to workout decisions.
Key takeaways
- Prudential default and accounting impairment require careful reconciliation.
- Collateral values affect recoveries, not necessarily borrower viability.
- Loan-sale rules depend on entity and asset scope.