Why the Shipping Industry Could Water Down Asset Quality Concerns for European Banks

In 2025, maritime shippers face pressures such as declining shipping rates amid rising geopolitical risk and trade tensions. Several banks in Europe report a sizeable exposure to the shipping sector, which has been a source of difficulty in the past, especially for asset quality. European banks are already facing asset quality concerns in general, notably from geopolitical risks, weaker economic prospects, and vulnerabilities in some sectors.

Key Highlights:
-- Shipping exposures have been a source of asset quality challenges for European banks in the past.
-- These are now much lower overall and account for a smaller proportion of European banks' portfolios, save for Greece.
-- New shipping alliances have been formed in early 2025 but should not lead to short-term asset quality challenges.
-- The shipping industry's resilience should provide leeway for European banks and help them face other concerns given the increased geopolitical risk, benign economic growth, trade tensions, and vulnerabilities in some key sectors.

"As shipping companies have also strengthened their balance sheets, we do not expect European banks to see any large asset quality deterioration of their shipping exposure", said Arnaud Journois, Senior Vice President, European Financial Institution Ratings.