ProCredit Holding

DE: PCZ

Market Cap€208m

Last Close €3.53

ProCredit Holding is a Germany-based group operating regional banks across SEE, EE and Ecuador. The banks focus on SMEs and private middle-income and high earners. At end-September 2021, the group’s total assets stood at €7.9bn.

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Investment summary

ProCredit Holding (PCB) continued to report good progress in realising its scaling potential with FY21 ROE of 9.7% versus 6.9% in FY19. Despite the risk of a global recession, we believe that monetary tightening (supporting PCB’s net interest margin) and a relatively favourable, regional mid-term outlook should translate into healthy earnings growth in its South-Eastern (SEE) segment (c 70% of PCB’s loan book at end-March 2022). Having said that, the war in Ukraine will weigh on PCB’s local bank (12.9% of PCB’s loan book as at May 2022) and could lead to further provisions in Ukraine in FY22. Nevertheless, we believe the market has overreacted, with PCB’s shares now trading at c 0.24x our expected FY22 tangible book value.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2020A 201.6 N/A 52.1 70.0 5.0 N/A
2021A 222.0 N/A 94.5 135.0 2.6 N/A
2022E 251.3 N/A 25.5 38.9 9.1 N/A
2023E 278.1 N/A 98.0 140.1 2.5 N/A
Industry outlook

SEE and EE saw secular GDP growth of 3–5% pa in the five years prior to COVID-19 and the IMF estimates that GDP in emerging and developing Europe was up 6.7% in 2021 (vs -1.7% in 2020). However, Russia’s invasion of Ukraine has introduced macroeconomic and geopolitical uncertainty in the region: the IMF expects a 35% GDP contraction in Ukraine. PCB’s in-depth, impact-oriented relationships with SME borrowers (92% of loan book at end-March 2022), prudent credit risk management and solid capital base (CET-1 ratio of 13.4% at end-March 2022) should help weather the near-term turmoil. Longer term, PCB’s business should be assisted by the low banking sector penetration in the region.

Last updated on 01/07/2022
Content on ProCredit Holding
ProCredit Holding – ESG Edge Report
Financials | research | 30 May 2022
ProCredit Holding – Looking oversold at FY21 P/BV of 0.3x
Financials | research Update | 5 April 2022
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Share price graph
Price performance
%
1m
3m
12m
Actual (7.1) (11.8) (57.8)
Relative* 4.0 (0.5) (48.6)
52-week high/low €8.6/€3.3
*% relative to local index
Key management
Dr Gabriel Schor Management Board Member
Dr Gian Marco Felice Management Board Member
Hubert Spechtenhauser Management Board Member
Sandrine Massiani Management Board Member

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