ProCredit Holding

DE: PCZ

€462.4m market cap

€7.85 last close

ProCredit Holding is a Germany-based group operating regional banks across Southeastern and Eastern Europe, as well as in Ecuador. The banks focus on small and mid-size enterprises (SMEs) and private middle-income and high earners. At end-September 2020, the group’s total assets stood at €7.1bn.

Investment summary

ProCredit (PCB) has extensive experience in supporting SMEs in emerging economies (coupled with a strong ESG profile), with a focus on Southeastern (SEE) and Eastern Europe (EE) and banking operations in Ecuador. It has recently streamlined its business, involving a digital direct bank strategy for private clients and a reduced branch network and headcount. While lately PCB’s return on equity has been below peers, we underline its relative stability throughout the cycle and believe that its mid-term ROE and CIR targets of 10% and below 60%, respectively, are achievable (close to our FY24 forecasts).

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2018A 245.4 N/A 77.5 90.0 8.7 N/A
2019A 252.6 N/A 76.9 89.0 8.8 N/A
2020E 222.1 N/A 51.0 70.1 11.2 N/A
2021E 238.7 N/A 64.0 87.3 9.0 N/A
Industry outlook

While the SEE and EE region benefitted from secular GDP growth of 3–5% pa in the five years prior to COVID-19, the pandemic is expected to have triggered a recession with the IMF forecasting a 2.8% decline in Emerging and Developing Europe, rebounding to c 4.0% growth in 2021. PCB’s in-depth, impact-oriented relationships with SME borrowers (94% of loan book at end-Q320), prudent credit risk management and solid capital base (CET-1 ratio of 14.1% at end-Q320) should help reduce the impact of macro headwinds. Longer term, PCB’s business should be assisted by the low banking sector penetration in the region (with a loan book to GDP of 40–45% on average vs over 70% in Western Europe).

Last updated on 04/03/2021
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Share price graph
Price performance
%
1m
3m
12m
Actual 12.1 15.4 15.4
Relative* 12.2 9.2 (0.4)
52-week high/low €8.3/€4.6
*% relative to local index
Key management
Dr Gabriel Schor Management Board Member
Dr Gian Marco Felice Management Board Member
Sandrine Massiani Management Board Member