Banking on the High Seas: A Resurgence in Ship Finance
The world of ship finance is experiencing a resurgence, with global bank lending to shipping climbing back above $300 billion in 2025, according to the latest annual Petrofin Global Bank Research report. This marks a clear recovery after years of consolidation, with a 6% increase from the previous year's $283.6 billion. The Petrofin Global Index of Ship Finance, benchmarked at 100 in 2008 before the financial crisis, has risen from 61 in 2024 to 63 in 2025, returning to levels last seen in 2018.
This recovery trend is particularly notable given the long period during which many lenders reduced exposure or exited the shipping industry altogether. BNP Paribas remains the largest global ship finance bank, and the report highlights that there were no bank departures from the sector in 2025, with a positive outlook from the vast majority of banks. Europe continues to dominate ship finance, accounting for 50.4% of top 40 bank lending, while APAC banks have reversed their decline, growing by 8.3%. Japanese banks have increased their share of top 40 portfolios from 22% to 26%, and US banks have expanded their portfolios by 6.7%.
One of the most significant shifts is the return of Greek banks, which grew their shipping loan books by 37% year-on-year to $23.6 billion, lifting Greece's market share to 7.8%. Scandinavian banks have also recovered strongly, increasing lending by 16.2% to $26.2 billion after an 8% decline the previous year. These regional shifts highlight the dynamic nature of the ship finance industry.
The recovery is attributed to several factors, including strong cash flows, rising vessel values, and a larger orderbook. The Clarkson's Price Index rose from 176 in 2024 to 191 at the end of 2025, while the total value of the fleet and orderbook increased significantly. However, the report also highlights the impact of geopolitics, with threatened US penalties on Chinese owners prompting some to reduce exposure to Chinese leasing structures and convert leases into bank loans. This shift benefited major international banks like Citi and ING.
Borrowing conditions have also improved, with competition driving loan margins lower and mid-sized owners securing margins of around 1.5% to 1.9% with strong parent guarantees and liquidity. Arrangement fees have fallen, and loan-to-value ratios remain around 60%. Sustainability-linked finance is growing, with Poseidon Principles banks holding portfolios of more than $200 billion, and even non-signatory banks adopting the Poseidon methodology.
However, the outlook is cautious. Petrofin expects modest growth in 2026 and 2027, supported by newbuilding finance, higher fleet values, and limited scrapping. Banks are becoming more careful on loan-to-value ratios and focusing on financially strong clients as vessel prices remain high relative to earnings. The broader message is that shipping finance is evolving, with a growing role for leasing, export credit, regional lenders, funds, and private capital, moving away from the narrow bank-dominated market of the past.
In conclusion, the ship finance industry is undergoing a transformation, with a shift from a specialist niche towards a broader global asset class. While this presents opportunities, it also means that ship finance remains exposed to sanctions, geopolitics, energy shocks, and high vessel values that need to be supported by real earnings. The industry is adapting, but the challenges remain, and the future of ship finance is a complex and dynamic landscape.
