ProCredit Holding

DE: PCZ

€350.5m market cap

€5.95 last close

ProCredit is a Germany-based group operating regional banks across Southeastern and Eastern Europe, as well as in Ecuador. The banks focus on SMEs and private middle-income and high earners. At end-March 2020, the group’s total assets stood at €6.6bn.

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 6.6 N/A
2019A 252.6 N/A 76.9 89.0 6.7 N/A
2020E 214.6 N/A 40.3 53.7 11.1 N/A
2021E 231.3 N/A 52.1 70.2 8.5 N/A
Industry outlook

While the SEE and EE region has benefited from secular GDP growth of 3–5% pa in the last five years, COVID-19 is expected to trigger a recession in 2020 (the IMF forecasts a decline of 4–5% in PCB’s markets), with a rebound of c 5% forecast in 2021. PCB’s in-depth, impact-oriented relationships with SME borrowers (93% of loan book at end-Q120), prudent credit risk management and solid capital base (CET-1 ratio of 14.0% at end-Q120) 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 09/07/2020
Share price graph
Price performance
%
1m
3m
12m
Actual (7.0) 16.7 (19.6)
Relative* (6.1) (1.3) (19.9)
52-week high/low €8.1/€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