ProCredit Holding — Profitability not fully rewarded by the market

ProCredit Holding (XETRA: PCZ)

Last close As at 26/02/2024

EUR7.56

0.10 (1.34%)

Market capitalisation

EUR440m

More on this equity

Research: Financials

ProCredit Holding — Profitability not fully rewarded by the market

ProCredit Holding (PCB) reported a strong Q323 return on equity (ROE) of 12.5%, assisted by a significant increase in net interest margin (NIM) to 3.9% (vs 3.2% in Q322 and 3.6% in Q223) on the back of continued positive asset repricing from higher base rates (which more than offset deposit repricing). As a result, operating income grew by 26.5% y-o-y (ahead of operating expenses), bringing PCB’s cost to income ratio (CIR) to 57.1% (vs 61.9% in Q322). This was coupled with a moderate annualised cost of risk of 55bp (9M23: 20bp). PCB’s management guides to FY23 ROE of c 12% (vs 8–10% earlier this year), which is in line with its current mid-term ROE target. We are raising our FY23 and FY24 net income estimates by 28% and 15%, respectively. PCB is likely to pay out one-third of its FY23 profits, implying currently a healthy dividend yield of 7.5%.

Milosz Papst

Written by

Milosz Papst

Director, Financials

ProCredit Holding_resized

Financials

ProCredit Holding

Profitability not fully rewarded by the market

Q323 results

Banks

29 November 2023

Price

€8.82

Market cap

€519m

Total assets (€bn) at end-September 2023

9.5

Shares in issue

58.9m

Free float

38.7%

Code

PCZ

Primary exchange

Frankfurt Prime Standard

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

30.1

20.2

135.8

Rel (local)

19.5

18.7

112.1

52-week high/low

€8.82

€3.73

Business description

Based in Germany, ProCredit Holding operates regional banks across South-Eastern and Eastern Europe and Ecuador. The banks focus on SMEs and private middle-income and high earners.

Next events

FY23 results

20 March 2024

Capital Markets Day

21 March 2024

Analyst

Milosz Papst

+44 (0)20 3077 5700

ProCredit Holding is a research client of Edison Investment Research Limited

ProCredit Holding (PCB) reported a strong Q323 return on equity (ROE) of 12.5%, assisted by a significant increase in net interest margin (NIM) to 3.9% (vs 3.2% in Q322 and 3.6% in Q223) on the back of continued positive asset repricing from higher base rates (which more than offset deposit repricing). As a result, operating income grew by 26.5% y-o-y (ahead of operating expenses), bringing PCB’s cost to income ratio (CIR) to 57.1% (vs 61.9% in Q322). This was coupled with a moderate annualised cost of risk of 55bp (9M23: 20bp). PCB’s management guides to FY23 ROE of c 12% (vs 8–10% earlier this year), which is in line with its current mid-term ROE target. We are raising our FY23 and FY24 net income estimates by 28% and 15%, respectively. PCB is likely to pay out one-third of its FY23 profits, implying currently a healthy dividend yield of 7.5%.

Year end

Net interest income (€m)

EPS*
(€)

DPS
(€)

P/BV
(x)

P/E*
(x)

ROE
(%)

12/21

222.0

1.35

0.00

0.61

6.5

9.7

12/22

264.6

0.28

0.00

0.60

31.5

1.9

12/23e

339.8

1.97

0.66

0.53

4.5

12.5

12/24e

349.3

1.97

0.66

0.49

4.5

11.3

Note: *EPS as reported by the company

Improving balance of opportunities and risks

FY23 guidance assumes a cost of risk of up to 30bp (vs up to 45bp previously), with the impact of Russia’s withdrawal from the Black Sea Grain Initiative being less pronounced than originally expected. Given the rise in NIM, management also reduced its guided CIR to 60–62%, from 62–64% previously. Loan portfolio growth expectations for FY23 were reduced slightly, now at low to mid-single-digit percentage growth (vs mid-single-digit previously), with PCB’s loan book increasing by 1.9% in 9M23. That said, management sees a pick-up in SME demand for its loans (Q323 growth was at 1.1%), which should assist loan portfolio growth in the coming quarters.

ROE likely to soften temporarily in FY24 and FY25

The FY23 developments are encouraging (we expect an FY23e ROE of 12.5%) and we consider PCB’s mid-term guidance as achievable. That said, we see several factors that may curb PCB’s ROE in FY24 and FY25, including: 1) continued deposit repricing; 2) a possible turn in the interest rate cycle (especially in the case of the European Central Bank); 3) loan book growth picking up only gradually to reach PCB’s mid-term target (medium to high single-digit percentage growth pa); and 4) ProCredit Bank Ukraine’s (PCB Ukraine’s) FY23 results being difficult to repeat in the near term. Still, we have raised our ROE assumptions for FY24 and FY25 to 11.3% and 11.0%, respectively (vs 10.1% and 10.3% previously).

Valuation: Now assuming a sustainable RoTE of 11%

As a result of the above, we have raised our sustainable return on tangible equity (RoTE) assumption in our base scenario to 11% from 10% previously. This now implies a fair value per PCB share of €13.00 (vs €11.40 previously). In a worst-case scenario of full write-off of PCB Ukraine, we would value PCB at €11.40 per share.

FY23 ROE guidance reiterated at 12%

PCB reported a strong Q323 ROE of 12.5% (up from 4.4% in Q322), bringing the figure for the first nine months of 2023 (9M23) to 13.6% (vs 2.7% in 9M22, which was burdened by the loan loss provisions in Ukraine). In October, PCB’s management raised its FY23 ROE guidance to 12% from 8–10% previously, encouraged by the fact that the earlier assumed adverse conditions (most notably the impact of Russia’s withdrawal from the grain deal and air strikes on Ukrainian port and grain storage infrastructure) materialised only partially. Consequently, management now guides to a cost of risk of up to 30bp (vs up to 45bp previously). We believe that another reason for the guidance revision is PCB’s continued strong net interest income on the back of a sustained strong NIM, see below for details. As a result, management revised its CIR guidance to 60–62% from 62–64%. Loan portfolio growth expectations have been trimmed slightly, with the current guidance of low to mid-single-digit percentage growth (vs mid-single-digit percentage growth previously). Management highlighted that the new guidance still accounts for some headwinds in Q423, most notably the ongoing war in Ukraine. The last quarter of the year usually includes some seasonal costs (eg compensation for untaken leave). That said, we still consider it quite conservative.

Exhibit 1: Q323 and 9M23 results highlights

€m, unless otherwise stated

Q323

Q322

y-o-y change

9M23

9M22

y-o-y change

Net interest income

89.0

67.2

32.4%

244.7

192.1

27.4%

Net interest margin (annualised)

3.9%

3.2%

70bp

3.6%

3.0%

53bp

Expenses for loss allowances

8.5

21.8

-61%

9.0

79.1

NM

Cost of risk (annualised, bp)

55

139

-84bp

20

173

-153bp

Net fee and commission income

14.4

14.0

2.8%

43.2

40.2

7.4%

Pre-tax profit

38.5

11.1

246%

115.2

17.7

NM

Net income

29.9

9.6

210%

94.0

17.3

NM

ROE

12.5%

4.4%

812bp

13.6%

2.7%

NM

Cost income ratio

57.1%

61.9%

-482bp

58.7%

60.7%

-199bp

CET-1 ratio

14.9%

13.6%

1.3pp

14.9%

13.6%

1.3pp

Deposit-to-loan ratio

111.4%

95.1%

16.3pp

111.4%

95.1%

16.3pp

Gross loan portfolio growth (q-o-q)

1.1%

0.0%

-2.5pp

1.9%

6.2%

-4.2pp

Customer deposits growth (q-o-q)

7.4%

4.2%

3.2pp

10.3%

8.0%

2.3pp

Source: ProCredit Holding

We note that the 12% ROE guidance for FY23 is in line with PCB’s mid-term target (as communicated earlier this year). The latter is based on the following assumptions: 1) loan portfolio growth of medium to high single-digit percentage pa; 2) cost of risk of 25–30bp over the cycle; 3) CIR at c 57% excluding one-off effects; and 4) green loans representing 25% of the total loan book. The mid-term guidance also assumes a moderate bottom-line contribution from ProCredit Bank Ukraine (PCB Ukraine) from FY24 onwards (upper single-digit to lower double-digit million euros pa). We note that PCB’s management also expects c 12% ROE in the medium term in the event of a full write-down of PCB Ukraine. In an upside scenario for Ukraine (post-war reconstruction), management expects a return to pre-war performance in terms of loan growth (a double-digit percentage growth rate pa) and profitability (PCB Ukraine’s FY21 ROE stood at 19.9%). This would represent an ROE upside potential at PCB group level of 1.0–1.5pp pa, according to management. In this context, it is worth noting that PCB Ukraine is one of the few banks in Ukraine that has expanded its headcount (by 8% in 2023 year-to-date).

Has PCB already reached its mid-term target?

PCB’s solid performance in FY23 raises the question of whether PCB has already achieved its medium-term goals ahead of plan, which would justify an increase in our sustainable RoTE assumption from the current 10%. While the FY23 development is encouraging and we consider PCB’s mid-term guidance as achievable, we remain cautious in terms of PCB’s ability to sustain the 12% ROE in the next two years. This is because 1) PCB’s NIM will be under pressure from continued deposit repricing in the coming quarters, which may be further exacerbated by a turn in the interest rate cycle weighing on asset pricing, 2) ProCredit Bank Ukraine’s strong results this year may be difficult to repeat in FY24 and FY25, and 3) loan book growth in FY24 should be somewhere between FY23 and the growth rate included in PCB’s mid-term guidance, which, coupled with continued headcount expansion (to secure future growth potential), may limit the CIR improvement from realising PCB’s scaling potential in the near term. We discuss these factors in more detail later in this note.

We expect an FY24 ROE of 11.3% (vs 10.1% previously), followed by 11.0% in FY25 (when we expect the turn in the interest rate cycle to put stronger downward pressure on asset repricing). Subsequently, we expect increases in FY26 and FY27 to 11.5% and 11.8%, respectively (11.0% and 11.4% previously, respectively), see Exhibits 2 and 3.

Exhibit 2: PCB’s historical and forecasted ROE

Source: ProCredit Holding, Edison Investment Research

Exhibit 3: Forecast revisions

 

2022

2023e

2024e

€m, unless otherwise stated

Actual

Old

New

Change

Growth
y-o-y

Old

New

Change

Growth
y-o-y

Net interest income

264.6

304.0

339.8

11.8%

28.4%

312.5

349.3

11.8%

2.8%

Net interest margin (%, annualised)

3.1%

3.4%

3.8%

0.4 pp

0.6 pp

3.2%

3.6%

0.4 pp

-0.1 pp

Expenses for loss allowances

104.6

28.0

18.7

-33.3%

-82.2%

24.1

23.2

-3.4%

24.6%

Cost of risk (annualised in bp)

174

45

30

-15 bp

-144 bp

37

36

-1 bp

6 bp

Net fee and commission income

54.7

59.6

57.3

-3.8%

4.7%

63.2

61.7

-2.4%

7.6%

Operating expenses

217.4

241.7

253.4

4.9%

16.6%

248.4

268.5

8.1%

6.0%

Pre-tax profit

17.8

109.2

142.2

30.2%

696.7%

118.9

135.4

13.8%

-4.8%

Net income

16.5

91.2

116.3

27.6%

605.1%

101.0

115.9

14.8%

-0.4%

ROE

1.9%

10.0%

12.5%

2.6 pp

10.6 pp

10.1%

11.3%

1.2 pp

-1.2 pp

CET1 ratio (%)

13.5%

14.6%

15.2%

0.6 pp

1.7 pp

14.3%

14.9%

0.7 pp

-0.3 pp

Total capital ratio (%)

14.3%

15.8%

16.4%

0.6 pp

2.1 pp

15.4%

16.1%

0.7 pp

-0.3 pp

CIR (%)

64.0%

63.8%

61.2%

-2.6 pp

-2.8 pp

63.5%

62.9%

-0.6 pp

1.7 pp

Gross loan portfolio

6,107.7

6,250.3

6,285.8

0.6%

3.0%

6,633.8

6,600.7

-0.5%

5.0%

Net loan portfolio

5,892.8

6,030.5

6,072.5

0.7%

3.1%

6,433.6

6,391.7

-0.7%

5.3%

Customer deposits

6,289.5

6,777.9

7,000.2

3.3%

11.3%

7,390.9

7,663.9

3.7%

9.5%

Source: ProCredit Holding, Edison Investment Research

As a result of this, we have raised our sustainable RoTE assumption to 11%, which, together with our forecast revisions and changes in the market valuations of PCB’s peers (see Exhibit 5), translates into a fair value estimate per PCB share of €13.00 (up from €11.40 previously), see Exhibit 4.

Exhibit 4: PCB’s P/BV-ROE valuation

€’000s unless otherwise stated

FY22

FY23e

FY24e

FY25e

FY26e

FY27e

Shareholder’s equity

869,435

985,449

1,062,571

1,144,981

1,241,359

1,348,276

Intangibles

17,993

20,512

20,512

20,512

20,512

20,512

Tangible equity

851,442

964,937

1,042,059

1,124,469

1,220,847

1,327,764

Net attributable profit

16,497

116,315

115,893

121,041

136,725

152,493

RoTE

2.0%

12.8%

11.5%

11.2%

11.7%

12.0%

Tangible equity per share (€)

14.5

16.4

17.7

19.1

20.7

22.5

Tangible equity per share (FY23e, €)

16.4

Sustainable RoTE

11.0%

Growth rate

2.0%

Cost of equity

11.9%

Fair value multiple – CAPM model

0.91x

Fair value multiple – regression multiple

0.68x

Fair value multiple – simple average

0.80x

 

Fair value per share (€)

13.00

Current share price (€)

8.82

Potential upside/downside

47%

Source: ProCredit Holding, Edison Investment Research

Exhibit 5: P/BV versus ROE – PCB’s peers (2023e)

Source: Refinitiv consensus at 29 November 2023

Q323 NIM of 3.9%, but deposit repricing continues

PCB reported a healthy NIM of 3.6% in 9M23 versus 3.0% in 9M22 (and an even stronger 3.9% in Q323 vs 3.2% in Q322), despite the continued increase in funding costs from deposits (up by 70bp ytd to 1.7% in 9M23), as the latter has been more than offset by asset repricing (see Exhibit 6). The year-on-year NIM improvement in 9M23 has been quite broad based, with most local banks (except for Moldova and Ecuador) contributing to it.

Exhibit 6: PCB’s net interest income waterfall 9M23 versus 9M22 (€m)

Source: ProCredit Holding

The loan book declined slightly by 1.0% y-o-y due to a targeted portfolio reduction in some banks, most notably in Ukraine. That said, PCB grew its loan book year to date by 1.9%, with 1.1% growth in Q323 alone, and management has recently seen an uptick in demand for credit from SMEs. This bodes well for 2024, with our current forecast at 5.0%, followed by 7.5% pa thereafter. Simultaneously, PCB was able to significantly grow its deposit base by 10.3% in 9M23 (50/50 from private individuals and SMEs), which resulted in an improvement in its deposit to loan ratio to 111.4% (vs 103.1% at end-2022). This had a positive impact on PCB’s NIM due to 1) improved funding mix and 2) income from this excess liquidity held with central banks or deployed into short-term investment securities.

PCB’s NIM is likely to moderate in the coming quarters amid a further increase in the average interest rate on its deposits, with year-on-year growth to end-September 2023 in term deposits (30.6%) outpacing growth in savings accounts (17.4%) and current accounts (5.8%). Moreover, NIM should at some stage also come under pressure from a turn in the interest rate cycle, especially a potential onset of the European Central Bank’s monetary easing in 2024, as 52.2% of PCB’s loan book at end-September 2023 was euro denominated (with a further 12.2% in US dollars and the rest in other currencies). With respect to local policy rates, only the Eastern European countries of PCB’s operations have started cutting rates for now (see Exhibits 7 and 8).

Exhibit 7: Central bank policy rates in the SEE region and eurozone

Exhibit 8: Central bank policy rates in the EE region

Source: Local central banks

Source: Local central banks

Exhibit 7: Central bank policy rates in the SEE region and eurozone

Source: Local central banks

Exhibit 8: Central bank policy rates in the EE region

Source: Local central banks

The economic outlook for 2024 is benign, with GDP growth of 3.0% or more across all countries of PCB’s operations (except for Ecuador – 1.8%), according to the forecasts of the International Monetary Fund (IMF) released in October 2023. At the same time, while the IMF expects inflation to moderate across these economies in 2024 versus 2023, it still forecasts an inflation rate of 4.0% or more for Serbia, North Macedonia, Romania, Albania, Ukraine and Moldova. Solid economic growth coupled with still somewhat elevated inflation may limit the near-term scope for rate cuts in local currency. Even in Georgia, where inflation was just 0.7% in September 2023, the appetite for interest rate reductions has been moderate so far, with the refinancing rate down from 11.00% in April 2023 to 10.00% in October 2023. Assuming positive economic development across the region in 2024, we do not expect any major downward repricing of assets denominated in local currencies in the Southeastern Europe (SEE) region next year. PCB’s management highlighted that for the time being, the asset repricing on the upside is still ongoing.

We currently assume PCB’s NIM at group level to increase to 3.8% in 2023 (from 3.1% in 2022), but then to fall to 3.6% in 2024 and 3.4% in 2025. The 2025 figure we assume is still above the 2.9–3.1% achieved in 2019–22, given that 1) we do not expect a return to ultra-low interest rates, and 2) PCB’s management has recently put more emphasis on margin optimisation across its loan book.

ProCredit Ukraine performing well despite the war

PCB Ukraine posted healthy results with 9M23 profit after tax of €16.4m, translating into an annualised ROE of 33.4%, though based on somewhat eroded equity due to last year’s significant loan loss allowances. This was despite the 21% y-o-y decline in the local loan book to end-September 2023, assisted by a high NIM of 6.0% (vs 4.5% in 9M22) and good cost efficiency (9M23 CIR of 32.9% vs 40.4% in 9M22). The bank also exhibited strong growth in deposits in 9M23 of 22% (or €133m), which together with the loan portfolio reduction brought its deposit-to-loan ratio to 137.9% at end-September 2023 (up by c 50pp since the outbreak of the war).

PCB’s management also highlighted that the bank’s results so far this year benefited from a relatively low level of provisioning (€6.1m in 9M23) resulting from the high loss allowances in 2022 of €86.7m. Management aimed to make provisions for all the known risks by end-2022, which translated into a strong 140% coverage ratio of its credit-impaired loan portfolio (c 10.5% of the total loan book at end-September 2023), or 15% of the total loan portfolio. This year’s provisions were mainly attributable to the risks to PCB Ukraine’s agriculture portfolio (50% of which was moved to the Stage 2 loan group) arising from Russia’s termination of the grain deal and the air strikes on port and grain storage infrastructure. Loss allowances for PCB Ukraine will represent most of the provisions at group level in FY23, according to PCB’s management. In 9M23, PCB booked €9.0m of loss allowances (representing an annualised cost of risk of a moderate 20bp), of which €6.1m was at PCB Ukraine (€4.6m associated with the termination of the grain deal).

It is worth highlighting PCB’s strong recoveries of written-off loans across the group (€9.8m in 9M23). Overall, the share of credit-impaired loans across the PCB group was 3.0% at end-September 2023 (2.3% excluding Ukraine), with a coverage ratio of 59.5%. This compares with 3.1% (2.2% excluding Ukraine) and 57.1% at end-September 2022, respectively.

Emphasis on team expansion, IT and marketing

PCB’s personnel expenses increased by 21.0% y-o-y in 9M23 (and 22.8% y-o-y in Q323), driven by both expansion of headcount (c 9%) and higher average salaries (c 11%). Administrative expenses rose by 15.4% y-o-y in 9M23 (11.1% y-o-y in Q323), driven by marketing expenses and IT investments. PCB’s management highlighted that the group invests in its front-end applications to be a market leader in this respect.

As growth in operating income of 22.1% y-o-y in 9M23 outpaced the operating cost inflation (also due to lower net one-off expenses), PCB’s CIR improved to 58.7% in 9M23 from 60.7% in 9M22. This was supported by both net interest income (as discussed above) and net fee and commission income, which went up by 7.4% y-o-y (or by €3.0m) to €43.2m, assisted by structural growth, in particular in payment services (by €2.4m). PCB’s management highlighted that this momentum was driven by continued focus on the acquisition of private individual clients and non-loan business clients (with the number of SME clients up 5% y-o-y).

We expect further growth in personnel expenses by 21.9% and 7.0% in FY23e and FY24e, respectively. While the slowing inflation across the SEE and Eastern Europe region may take some pressure off wage growth, it is worth highlighting that local labour markets remain tight. Moreover, PCB maintains its headcount growth agenda aimed at making the group well-positioned for long-term growth. Together with our forecasted growth in administrative expenses of 11.9% in FY23 and 5.0% in FY24, we expect PCB’s total operating expenses to increase by 16.6% and 6.0% in FY23 and FY24, respectively. As a result, we anticipate PCB’s CIR at c 61.2% in FY23 and 62.9% in FY24.

Capital base supporting PCB’s growth agenda

We note that PCB’s growth and profitability ambitions are supported by its capital base, with its CET-1 ratio up to 14.9% from 13.5% at end-2022 (vs the regulatory requirement of 9.2%). This has been supported by the recognition of the FY22 and 9M23 profits (1.3pp), but also an increase in the risk weighted asset (RWA) efficiency (0.9pp), bringing the ratio of RWA to total assets to 64.4% at end-September 2023 (vs 69.0% at end-2022). PCB’s management highlighted that it has successfully implemented the following RWA efficiency measures: 1) broadening of the Multilateral Investment Guarantee Agency collaboration; 2) securitisation with the European Investment Fund in Bulgaria; 3) recognition of real estate collateral in Bulgaria; and 4) introduction of European Bank for Reconstruction and Development guarantees. PCB’s total capital ratio reached 16.1% at end-September 2023 versus 14.3% at end-2022 and a regulatory requirement of 14.3%. The good capital base should allow PCB to resume its dividend payments at a one-third payout ratio, with our forecast DPS paid out of FY23 profits of €0.66 implying a healthy 7.5% dividend yield based on the current share price.

Exhibit 9: Financial summary

Year ending 31 December, €000s

2018

2019

2020

2021

2022

2023e

2024e

2025e

2026e

2027e

Income statement

 

 

 

 

 

 

 

 

 

 

Net interest income

186,235

194,533

201,561

222,021

264,634

339,815

349,258

349,405

369,413

399,143

Net fee and commission income

52,172

51,972

47,380

50,855

54,731

57,328

61,701

66,054

70,267

74,795

Operating income

240,678

249,275

252,114

281,881

339,848

414,265

427,148

432,809

458,585

494,467

Operating expenses

167,866

175,737

171,430

180,859

217,428

253,429

268,547

273,593

285,411

297,779

Loss allowances

(4,714)

(3,327)

28,600

6,490

104,573

18,650

23,238

17,793

13,676

19,223

PBT

77,526

76,865

52,084

94,532

17,847

142,186

135,363

141,423

159,498

177,464

Net profit after tax

54,477

54,304

41,395

79,641

16,497

116,315

115,893

121,041

136,725

152,493

Reported EPS (€)

0.90

0.89

0.70

1.35

0.28

1.97

1.97

2.06

2.32

2.59

DPS (€)

0.30

0.00

0.53

0.00

0.00

0.66

0.66

0.69

0.77

0.86

Balance sheet

 

 

 

 

 

Cash and balances at Central Banks

963,714

1,081,723

1,405,349

1,545,523

1,939,681

2,219,972

2,454,854

2,594,231

2,799,172

2,678,823

Loans and advances to banks

211,592

320,737

236,519

252,649

280,453

280,453

280,453

280,453

280,453

280,453

Investment securities

297,308

378,281

336,476

410,400

480,168

480,168

480,168

480,168

480,168

480,168

Loans and advances to customers

4,267,829

4,690,961

5,131,582

5,792,966

5,892,796

6,072,534

6,391,743

6,899,628

7,441,248

8,011,870

Property, plant and equipment and investment properties

130,153

138,407

140,744

137,536

133,703

135,566

135,566

135,566

135,566

135,566

Intangible assets

22,191

20,345

19,316

18,411

17,993

20,512

20,512

20,512

20,512

20,512

Other assets

73,396

67,106

59,315

58,416

81,330

86,576

86,013

86,576

86,013

86,576

Total assets

5,966,184

6,697,560

7,329,301

8,215,901

8,826,124

9,295,781

9,849,308

10,497,133

11,243,132

11,693,968

Liabilities to banks

1,014,182

1,079,271

1,235,763

1,313,666

1,318,647

936,239

748,991

674,092

687,574

343,787

Liabilities to customers

3,825,938

4,333,436

4,898,897

5,542,251

6,289,511

7,000,240

7,663,894

8,304,208

8,940,346

9,628,052

Debt securities

206,212

343,727

266,858

353,221

191,988

181,778

181,778

181,778

181,778

181,778

Subordinated debt

143,140

87,198

84,974

87,390

93,597

116,223

116,223

116,223

116,223

116,223

Other liabilities

33,076

50,436

63,080

63,059

62,946

75,851

75,851

75,851

75,851

75,851

Total liabilities

5,222,549

5,894,068

6,549,573

7,359,587

7,956,689

8,310,332

8,786,737

9,352,153

10,001,773

10,345,691

Total shareholders' equity

743,634

803,492

779,728

856,314

869,435

985,449

1,062,571

1,144,981

1,241,359

1,348,276

BVPS (€)

12.5

13.5

13.2

14.5

14.8

16.7

18.0

19.4

21.1

22.9

TNAV per share (€)

12.1

13.1

12.9

14.2

14.5

16.4

17.7

19.1

20.7

22.5

Ratios

 

 

 

 

 

NIM

3.30%

3.10%

2.90%

2.90%

3.11%

3.75%

3.65%

3.43%

3.40%

3.48%

Costs/Income

69.7%

70.5%

68.0%

64.2%

64.0%

61.2%

62.9%

63.2%

62.2%

60.2%

ROAE

7.6%

6.9%

5.3%

9.7%

1.9%

12.5%

11.3%

11.0%

11.5%

11.8%

CET-1 ratio

14.4%

14.1%

13.3%

14.1%

13.5%

15.2%

14.9%

15.2%

15.5%

16.2%

Tier 1 ratio

14.4%

14.1%

13.3%

14.1%

13.5%

15.2%

14.9%

15.2%

15.5%

16.2%

Capital adequacy ratio

17.2%

15.7%

14.7%

15.3%

14.3%

16.4%

16.1%

16.3%

16.5%

17.2%

Payout ratio (%)

33.3%

0.0%*

33.3%*

0.0%

0.0%

33.3%

33.3%

33.3%

33.3%

33.3%

Customer loans/Total assets

73.6%

71.6%

71.7%

72.1%

69.1%

67.6%

67.0%

67.6%

67.8%

70.1%

Deposits/loans

87.1%

90.3%

93.2%

93.5%

103.1%

111.4%

116.1%

117.1%

117.2%

117.4%

Source: Company data, Edison Investment Research. Note: *In 2021, PCB distributed one-third of the accumulated profits from 2019 and 2020.


General disclaimer and copyright

This report has been commissioned by ProCredit Holding and prepared and issued by Edison, in consideration of a fee payable by ProCredit Holding. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by ProCredit Holding and prepared and issued by Edison, in consideration of a fee payable by ProCredit Holding. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on ProCredit Holding

View All

Latest from the Financials sector

View All Financials content

Research: Consumer

Britvic — Brand portfolio proving resilient

Britvic reported robust FY23 results despite the weaker consumer environment, reflecting the resilience of its brand portfolio. Price/mix offset limited volume declines resulting in revenue growth of 6.6%, despite unfavourable summer weather and tougher comparators. Inflationary pressures were mitigated through pricing actions and cost discipline, as adjusted EBIT grew 6% at a margin of 12.5%. Investment in its existing brand portfolio and the recent addition of two bolt-on acquisitions in high growth categories underpins management’s confidence heading into FY24.

Continue Reading
Britvic_resized

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free