ProCredit Holding — Strong rebound in profitability in Q123

ProCredit Holding (XETRA: PCZ)

Last close As at 24/02/2024

EUR7.46

0.14 (1.91%)

Market capitalisation

EUR440m

More on this equity

Research: Financials

ProCredit Holding — Strong rebound in profitability in Q123

ProCredit Holding’s (PCB’s) strong Q123 net profit of €29.5m implies an annualised return on equity (ROE) of 13.3%. This is a result of a healthy annualised net interest margin (NIM) of 3.4% (vs 2.9% in Q122), a c 11% year on-year growth in net fee and commission income and limited cost of risk at 12bp. Importantly, ProCredit Ukraine returned to profitability with an annualised ROE of 21.7% in Q123. PCB’s ROE may be more moderate in the coming quarters as customer deposit rates are repriced, loss allowances pick up and further cost inflation is reflected in the company’s bottom line. That said, PCB’s shares now trade at an undemanding 5.2x our FY23e earnings per share, based on an ROE of 9.3% in FY23e (vs the company’s recently raised guidance of 8–10%).

Milosz Papst

Written by

Milosz Papst

Director, Financials

ProCredit Holding_resized

Financials

ProCredit Holding

Strong rebound in profitability in Q123

Q123 results

Banks

6 June 2023

Price

€7.42

Market cap

€437m

Total assets (€bn) at end-March 2023

8.9

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

18.9

41.6

90.3

Rel (local)

18.9

38.2

72.3

52-week high/low

€7.42

€2.56

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

H123 results

14 August 2023

Q323 results

14 November 2023

Analyst

Milosz Papst

+44 (0)20 3077 5700

ProCredit Holding is a research client of Edison Investment Research Limited

ProCredit Holding’s (PCB’s) strong Q123 net profit of 29.5m implies an annualised return on equity (ROE) of 13.3%. This is a result of a healthy annualised net interest margin (NIM) of 3.4% (vs 2.9% in Q122), a c 11% yearon-year growth in net fee and commission income and limited cost of risk at 12bp. Importantly, ProCredit Ukraine returned to profitability with an annualised ROE of 21.7% in Q123. PCB’s ROE may be more moderate in the coming quarters as customer deposit rates are repriced, loss allowances pick up and further cost inflation is reflected in the company’s bottom line. That said, PCB’s shares now trade at an undemanding 5.2x our FY23e earnings per share, based on an ROE of 9.3% in FY23e (vs the company’s recently raised guidance of 8–10%).

Year end

Net interest income (€m)

EPS*

(€)

DPS
(€)

P/BV
(x)

P/E*
(x)

ROE
(%)

12/21

222.0

1.35

0.00

0.51

5.5

9.7

12/22

264.6

0.28

0.00

0.50

26.5

1.9

12/23e

296.5

1.44

0.48

0.46

5.2

9.3

12/24e

305.6

1.57

0.52

0.43

4.7

9.4

Note: *EPS as reported by the company

Deposit-to-loan ratio improved to 104% in Q123

PCB’s Q123 results reflect management’s focus on improving the deposit-to-loan ratio, which reached 104.3% at end-March 2023 (up by 1.3pp vs end-2022 and by 12.8pp y-o-y). PCB’s loan book increased only slightly by 0.5% y-o-y (or 1.5% excluding FX) in Q123, which reflects steady loan repayments coupled with limited new lending at ProCredit Ukraine (its loan portfolio was down 26% y-o-y at end-March 2023), as well as selective growth in other markets aimed at profitability and deposit-to-loan ratio optimisation. Meanwhile, customer deposits increased 14.6% y-o-y (up 0.6% from end-2022, affected by the usual seasonality), assisted by PCB’s digital banking channels.

CET-1 ratio at 14.1% vs 9.2% expected requirement

PCB improved its ratio of risk weighted assets (RWA) to total assets to 66.6% in Q123, from 69.0% at end-2022, assisted by the broadening of the Multilateral Investment Guarantee Agency agreement (resulting in a €112m RWA reduction). As a result, PCB’s CET-1 ratio reached 14.1% at end-March 2023 (reflecting only two-thirds of FY22 profits) versus 13.5% at end-2022. This compares with the expected regulatory requirement at end-June 2023 of 9.2% (assuming a Pillar 2 requirement from the annual Supervisory and Evaluation Review Process of 3.5% vs 2.0% previously). PCB’s total capital ratio was 15.4% versus the expected requirement of 14.3%.

Valuation: Earnings rebound not yet priced in

In our base scenario (which assumes a sustainable return on tangible equity, RoTE, of 10%), we value the business at 10.30/share (slightly down from 10.36 previously). Assuming an RoTE in line with management’s mid-term guidance (12%), PCB would be valued at 12.10/share. Finally, in a worst-case scenario of full write-off of the local bank in Ukraine, we would value PCB at 9.00/share.

FY23 ROE guidance recently raised to 8-10%

PCB’s Q123 annualised ROE of 13.3% (or 11.6% excluding Ukraine) is in line with management’s mid-term target of 12% (recently raised from 10%). PCB’s management recently raised its FY23e ROE guidance to 8-10% from 6–8% previously. This may still look somewhat conservative at first glance. That said, management remains cautious due to (1) the expected NIM compression in the coming quarters, (2) a possible pick-up of cost of risk after the low level in Q123, and (3) inflationary pressure likely to further feed through to PCB’s operating expenses. Moreover, management does not want to draw premature conclusions in terms of the market dynamics based on a single quarter. Nevertheless, we forecast an FY23e ROE of 9.3%, slightly above the mid-point of the guidance.

Exhibit 1: Q123 results highlights

€m, unless otherwise stated

Q123

Q122

y-o-y change

Net interest income

75.4

60.2

25.3%

Net interest margin (annualised)

3.4%

2.9%

47bp

Expenses for loss allowances

1.9

35.6

NM

Cost of risk (annualised, bp)

12

238

-226bp

Net fee and commission income

14.0

12.6

10.9%

Pre-tax profit

35.9

(3.8)

NM

Net income

29.5

(1.7)

NM

ROE

13.3%

-0.8%

NM

CIR

59.7%

59.1%

52bp

CET-1 ratio

14.1%

13.4%

0.7pp

Gross loan portfolio growth (q-o-q)

-0.8%

1.8%

-2.5pp

Customer deposits growth (q-o-q)

0.6%

-0.4%

1pp

Source: ProCredit Holding

NIM strong in Q123 but likely to compress moderately in the near term as deposits are repriced

PCB’s loan book was repriced more quickly in response to the rising interest rates across its countries of operations than its customer deposit base (a development commonly seen across the banking sector). This resulted in a strong annualised NIM of 3.4% in Q123 (vs 2.9% in Q122 and 3.1% in Q422). The NIM increase was particularly strong in some countries (eg Bosnia and Herzegovina) where repricing of some currency loans occurs in bulk twice a year (last repricing occurred in January 2023). Management expects the NIM to moderate towards the end of the year as deposits are further repriced. In this context, we note that, unsurprisingly, Q123 deposit growth was dominated by term deposits as customers looked for higher-interest products. At the same time, the increasing share of deposits in PCB’s funding mix may offset some of the NIM pressure.

We expect the FY23 NIM to come in at 3.3% and moderate further to 3.2% in FY24, even in the absence of any major central bank rate cuts (though we note that the National Bank of Georgia has already started cutting rates in response to moderating inflation). Nevertheless, the current margin level should provide a good tailwind for PCB’s results in the near term and we expect its net interest income to increase by c 12% to €297m in FY23.

Cost of risk at a low 12bp in Q123; FY23 guidance of up to 45bp

While management’s FY23 guidance assumes a cost of risk of up to 45bp, Q123 stood at just 12bp, representing €1.9m in loss allowances, with just €0.5m in South-Eastern Europe and €1.6m in Eastern Europe (and a slight €0.2m net provision release in Ecuador). The share of credit-impaired loans across PCB’s portfolio was 3.2% at end-March 2023 (or 2.3% excluding Ukraine), down slightly from 3.3% (2.4%) at end-2022. Excluding Ukraine, the share was also slightly down from 2.4% at end-March 2022. The stage 3 coverage ratio stood at 62.3% at end-March 2023 versus 61.8% at end-2022 and significantly up versus 51.5% at end-March 2022.

As the global macroeconomic slowdown unfolds through the year, PCB’s cost of risk may also increase. However, we note that PCB already booked sizeable management overlays in FY22 of €39.6m related to macroeconomic risks (eg energy, inflation, geopolitical risks) and the Ukrainian loan book is well covered by provisions (see below). We assume a cost of risk at 46bp in FY23, ie at the upper end of management’s guidance, implying loan loss provisions of €28.4m in FY23 (vs €104.6m in FY22 and €6.5m in FY21).

Adjusted CIR down y-o-y to 57.0% despite persistent inflation

PCB’s personnel and administrative expenses excluding extraordinary items were up 19% y-o-y in Q123 but still below the 20.7% y-o-y increase in operating income. Therefore, its cost to income ratio (CIR) excluding one-off items reached 57.0% in Q123, down from 59.5% in Q122 and on par with management’s mid-term guidance. The headline figure was 59.7% (slightly up vs 59.1% in Q122), with €1.9m in one-time administrative expenses for consulting and legal services in conjunction with PCB’s planned change of legal form (see our previous note for details). We note that PCB’s operating income included a €1.1m negative extraordinary effect related to the fair value of derivatives and derecognition of financial assets.

PCB’s personnel costs increased by 12.6% y-o-y, which (after adjusting for one-off items) was due to a 10.4% headcount increase and a 10% average salary increase (as PCB continues to experience high competition for employees). Management highlighted during the Q123 earnings call that another salary review will be conducted across PCB’s local banks in July, likely leading to a more pronounced increase in personnel costs in H223. We also note that PCB continues its marketing spend to further enhance the positioning of ProCredit Direct (to attract customer deposits, among others). Management now guides to a FY23 CIR at 62-64% vs FY22 at 64.0%. We expect a CIR of 64.4% in FY23, as cost inflation coupled with muted loan book growth (we assume 2.5% in FY23) may limit the opportunity to realise economies of scale in the near term.

ProCredit Ukraine profitable in Q123, but local situation still uncertain

PCB’s FY23 guidance assumes that ProCredit Ukraine will post a nil net profit this year, as still-elevated cost of risk and operating expenses offset operating income. However, the local bank reported a Q123 net profit of €3.1m (vs a €23.4m loss in Q122), implying an annualised ROE of 21.7%. This was a function of a broadly stable operating income of €12.4m (vs €12.3m in Q122), a decline in operating expenses by c 18% y-o-y (most likely due to a high base from one-offs last year) and moderate loan loss provisions of €3.1m (vs €35.3m in Q122), the latter coming from updated macroeconomic parameters amid a subdued outlook for Ukraine’s economy. The local bank retains capital buffers of more than 6pp at end-March 2023 and its liquidity position remains stable, according to PCB’s management. Its share of credit-impaired loans stood at 12.5% at end-March 2023 (vs 11.9% at end-2022), with the bulk of portfolio reclassification complete. The already incurred loan loss provisions cover 16% of the total loan book and 130% of the default portfolio. As new lending remains limited, and amid steady loan repayments, ProCredit Ukraine’s loan book reduced further by €29.5m since end-2022 (also partly due to a €7m negative FX impact). As a result, the local loan book made up 9% of PCB’s total loan portfolio at end-March 2023 (vs 12% at end-March 2022). Nevertheless, the outcome of the war remains uncertain and further significant credit losses at ProCredit Ukraine cannot be ruled out.

Key takeaways from PCB’s Impact Report 2022

Given PCB’s sustainability orientation, we believe it is also instructive to examine the key highlights from the company’s Impact Report 2022 released earlier this year.

Targeting a 25% share of green loans in the medium term

PCB’s €1.2bn green loan portfolio represented 20.2% of its loan book at end-March 2023 and grew at a CAGR of 16% between FY18 and FY22 (and c 9.1% y-o-y in FY22 alone, accounting for more than 50% of total loan portfolio growth). After reaching its previous 20% target, management now aims for PCB’s green loan book to represent 25% of the total loan portfolio in the medium term. Its green portfolio includes loans to fund energy efficiency projects that reduce energy consumption by at least 20% (these made up c 49% of the green loan portfolio at end-March 2023), renewable energy (33%) and other green investments (18%), including investments leading to the prevention of air, water and soil pollution, waste management and organic agriculture and production. The renewable energy projects in operation that were financed by PCB led to a reduction of greenhouse gas equivalents of 144.7 kilotonnes in 2022.

We note PCB’s strong emphasis on the environmental and social approach in its lending decisions. This is, for instance, illustrated by its Plastic Strategy launched in FY20 and fully implemented in FY22, with single-use plastic items included in PCB’s exclusion list, with the exception of items for which there are no substitutes with a lower environmental impact. As a result, the company devised an exit strategy for some of its clients operating in the plastics production business (even though they represented a small proportion of PCB’s overall portfolio). PCB aims to have an exit strategy for all its blacklist clients (whose operations relate to all types of plastics banned by the European Union from 3 July 2021) by end-2023. We also note that PCB recently introduced an animal welfare assessment to its client evaluation process.

Moreover, PCB started to consider the recommendations of the Task Force on Climate-Related Financial Disclosure in FY21. As part of this, PCB completed the screening of its portfolio for (1) physical risk to strengthen its analysis at client and portfolio level using geographic information systems and (2) transition risk, executing a stress and scenario analysis to define sector activities that need to be prioritised on the decarbonisation pathway and identify new business opportunities to guide and support its clients in this transition. The company is also working towards aligning its environmental and social scoring methodology with the EU Taxonomy over the medium term.

Environmental impact: Targeting carbon neutrality by 2023

Management reaffirmed its target to become carbon neutral in its own operations by 2023, prioritising the transition to renewable energy sources and environmentally friendly solutions. PCB is in the final stages of construction of its own 3MWp photovoltaic park in Kosovo (to be commissioned in 2023), which will compensate for 85–90% of its stage 1 and 2 emissions. The remaining CO2 emissions at group level, which management expects will be very small, will be covered by carbon offset certificates.

In 2022, PCB specified the carbon neutrality of its operations as Scope 1 and 2 emissions, in line with the Science Based Targets initiative (SBTi) and Net-Zero Banking Alliance (NZBA) standards. PCB reduced its Scope 1 and Scope 2 CO2 emissions by 44% between 2018 and 2022 (or by 42% including flight emissions, see Exhibit 2), facilitated, among other things, by green building (ie EDGE) certifications (there are currently five buildings with EDGE-certification at group level), installing photovoltaic panels at eight of PCB’s locations, expanding its electric and hybrid car fleet to c 52.4% of the total (77% including hybrid plug-ins) in FY22 and making 272 e-chargers freely available for the public. PCB has also started reporting client emissions (Scope 3 financed emissions) in accordance with the Partnership for Carbon Accounting Financials (PCAF) standard since 2021 and included the updated data for FY22 in its latest Impact report. Moreover, it joined the NZBA and committed to setting near- and long-term emissions reduction targets companywide in line with the SBTi Net-Zero Standard.

Exhibit 2: PCB’s Scope 1 and 2 emissions

Source: ProCredit

Social performance: Emphasis on strong corporate culture

On the social front, PCB’s focus remains on comprehensive staff development, reflected in the average number of training hours that its employees have per year (c 134 on average between 2018 and 2022) and its competencies (eg 100% of employees had a minimum B1/intermediate English proficiency in FY22). We believe that PCB’s strong corporate culture is reflected in the high average tenure across its staff, reaching 7.7 years for women in FY22 (vs 7.9 years in FY21) and 6.6 years for men (6.6 years in FY21), as well as a turnover rate of 11% in FY22 (vs 12% in FY21). Moreover, management highlights the diversity within PCB, with over 30 nationalities in its German head office and c 38% and 48% of the group’s board members and middle management being women, respectively. The company promotes equitable pay and its renumeration policy is aligned with PCB’s long-term oriented business objectives, and therefore does not include any short-term, performance-related bonuses.

Since the beginning of the war in Ukraine, the company has provided accommodation outside the country to some of its staff (with 150 Ukrainian colleagues and family members living at the academy at its peak) as well as essentials and medical supplies to employees in the country. Management highlights that ProCredit buildings in Ukraine are equipped with emergency shelters and remote working is used whenever necessary.

Governance and socio-political performance: Strong shareholder register aligned with PCB’s long-term strategy

ProCredit Holding is managed by ProCredit General Partner (the personally liable managing partner of ProCredit AG & Co KGaA), an independent company owned by the core shareholders: Zeitinger Invest (a strategic shareholder since inception), KfW (a German development bank), DOEN Participaties (a Dutch entity focused on supporting sustainable and socially inclusive entrepreneurs) and the European Bank for Reconstruction and Development. These entities hold c 61.3% of all listed shares at ProCredit Holding AG & Co KGaA.

In March 2023, PCB announced that the European Bank for Reconstruction and Development (EBRD) will purchase the 5.06% stake held by IFC. This transaction has now been completed with EBRD replacing IFC as a core shareholder with an 8.7% stake (EBRD has held a 3.6% minority stake since 2018). We believe that having EBRD as a major shareholder should further support PCB’s business in the South-Eastern and Eastern Europe regions given EBRD’s regional focus and emphasis on funding climate change adaption and SMEs. PCB is already participating in EBRD programmes in all its countries of operation in the region.

In October 2022, ProCredit General Partners agreed with PCB’s shareholders to prepare a change of ProCredit Holding’s legal form into a stock corporation. The general partner believes that the change will provide greater alignment of ProCredit Holding as an internationally oriented, listed financial holding company and offers the opportunity to realise efficiencies in its corporate governance structure and the work of the company’s executive bodies. PCB obtained shareholder approval for the change during the 2023 AGM held on 5th June 2023.

Finally, we note that PCB recently joined the United Nations Global Compact to align its operations and strategies with 10 universally accepted principles in the areas of human rights, labour, environment and anti-corruption.

Forecast revisions

We have raised our net income forecasts for PCB in FY23 by c 13%, reflecting the lower cost of risk assumption in line with company guidance. For FY24, we have reduced our net income expectations by c 6% to reflect the full-year impact of the ongoing cost inflation (pressure on salaries, in particular), with our new FY24 CIR at 63.6% versus 62.3% previously.

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

295.5

296.5

0.3%

12.0%

303.3

305.6

0.8%

3.1%

Net interest margin (%, annualised)

3.1

3.3

3.3%

0 pp

0.2 pp

3.2%

3.2%

0 pp

-0.1 pp

Expenses for loss allowances

104.6

43.0

28.5

-33.8%

-72.8%

25.2

29.1

15.6%

2.4%

Cost of risk (annualised in bp)

174

70

46

-24 bp

-128 bp

39

45

6 bp

-1 bp

Net fee and commission income

54.7

57.9

59.4

2.6%

8.5%

61.8

62.5

1.1%

5.3%

Pre-tax profit

17.8

89.3

102.8

15.1%

476.0%

116.8

109.8

-6.0%

6.8%

Net income

16.5

75.0

84.7

12.9%

413.7%

98.9

92.5

-6.5%

9.2%

CET1 ratio (%)

13.5

14.0

14.4%

0.4 pp

0.9 pp

14.2%

14.2%

0 pp

-0.2 pp

Total capital ratio (%)

14.3

14.8

15.6%

0.8 pp

1.4 pp

15.0%

15.4%

0.4 pp

-0.2 pp

CIR (%)

64.0

63.4

64.4%

1 pp

0.4 pp

62.3%

63.6%

1.3 pp

-0.8 pp

Gross loan portfolio

6,103.2

6,234.4

6,258.6

0.4%

2.5%

6,648.7

6,674.7

0.4%

6.6%

Net loan portfolio

5,892.8

6,031.0

6,056.6

0.4%

2.9%

6,466.5

6,491.4

0.4%

7.2%

Customer deposits

6,289.5

6,916.2

6,910.2

-0.1%

9.9%

7,590.7

7,583.0

-0.1%

9.7%

Source: ProCredit Holding, Edison Investment Research

Exhibit 4: P/BV versus ROE – PCB’s peers (2022)

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

Source: Refinitiv at 6 June 2023

Source: Refinitiv consensus at 6 June 2023

Exhibit 4: P/BV versus ROE – PCB’s peers (2022)

Source: Refinitiv at 6 June 2023

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

Source: Refinitiv consensus at 6 June 2023

Exhibit 6: 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

296,521

305,647

320,201

346,328

372,066

Net fee and commission income

52,172

51,972

47,380

50,855

54,731

59,402

62,527

67,038

71,435

76,156

Operating income

240,678

249,275

252,114

281,881

339,848

368,495

381,679

401,976

434,046

466,002

Operating expenses

167,866

175,737

171,430

180,859

217,428

237,230

242,686

251,946

263,735

276,116

Loss allowances (-)

(4,714)

(3,327)

28,600

6,490

104,573

28,461

29,146

17,599

18,575

21,033

PBT

77,526

76,865

52,084

94,532

17,847

102,804

109,846

132,431

151,737

168,853

Net profit after tax

54,477

54,304

41,395

79,641

16,497

84,747

92,517

111,935

128,410

143,066

Reported EPS (€)

0.90

0.89

0.70

1.35

0.28

1.44

1.57

1.90

2.18

2.43

DPS (€)

0.30

0.00

0.53

0.00

0.00

0.48

0.52

0.63

0.73

0.81

Balance Sheet

 

 

 

 

 

 

 

 

 

 

Cash and balances at Central Banks

963,714

1,081,723

1,405,349

1,545,523

1,939,681

2,135,488

2,345,543

2,537,130

2,688,704

2,721,336

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

6,056,644

6,491,372

7,029,587

7,611,027

8,197,608

Property, plant and equipment and investment properties

130,153

138,407

140,744

137,536

133,703

133,703

133,703

133,703

133,703

133,703

Intangible assets

22,191

20,345

19,316

18,411

17,993

17,993

17,993

17,993

17,993

17,993

Other assets

73,396

67,106

59,315

58,416

81,330

69,944

81,330

69,944

81,330

69,944

Total assets

5,966,184

6,697,560

7,329,301

8,215,901

8,826,124

9,174,393

9,830,562

10,548,978

11,293,378

11,901,205

Liabilities to banks

1,014,182

1,079,271

1,235,763

1,313,666

1,318,647

962,612

881,753

837,665

825,100

610,574

Liabilities to customers

3,825,938

4,333,436

4,898,897

5,542,251

6,289,511

6,910,202

7,582,962

8,264,370

8,930,237

9,652,328

Debt securities

206,212

343,727

266,858

353,221

191,988

191,988

191,988

191,988

191,988

191,988

Subordinated debt

143,140

87,198

84,974

87,390

93,597

93,597

93,597

93,597

93,597

93,597

Other liabilities

33,076

50,436

63,080

63,059

62,946

62,946

62,946

62,946

62,946

62,946

Total liabilities

5,222,549

5,894,068

6,549,573

7,359,587

7,956,689

8,221,346

8,813,246

9,450,566

10,103,868

10,611,433

Total shareholders' equity

743,634

803,492

779,728

856,314

869,435

953,047

1,017,315

1,098,412

1,189,510

1,289,772

BVPS

12.5

13.5

13.2

14.5

14.8

16.2

17.3

18.6

20.2

21.9

TNAV per share

12.1

13.1

12.9

14.2

14.5

15.9

17.0

18.3

19.9

21.6

Ratios

 

 

 

 

 

 

 

 

 

 

NIM

3.30%

3.10%

2.90%

2.90%

3.11%

3.29%

3.22%

3.14%

3.17%

3.21%

Costs/Income

69.7%

70.5%

68.0%

64.2%

64.0%

64.4%

63.6%

62.7%

60.8%

59.3%

ROAE

7.6%

6.9%

5.3%

9.7%

1.9%

9.3%

9.4%

10.6%

11.2%

11.5%

CET-1 ratio

14.4%

14.1%

13.3%

14.1%

13.5%

14.4%

14.2%

14.4%

14.7%

15.2%

Tier 1 ratio

14.4%

14.1%

13.3%

14.1%

13.5%

14.4%

14.2%

14.4%

14.7%

15.2%

Capital adequacy ratio

17.2%

15.7%

14.7%

15.3%

14.3%

15.6%

15.4%

15.5%

15.7%

16.2%

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%

68.2%

67.9%

68.4%

69.1%

70.5%

Deposits/loans

87.1%

90.3%

93.2%

93.5%

103.1%

110.4%

113.6%

114.6%

114.5%

115.0%

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


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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

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