At the end of 2023, ProCredit Bank’s President of Management Board, Amir Salkanović, discussed the bank’s performance throughout the year and outlined plans for the upcoming year.
Salkanović highlighted the exceptional results achieved by ProCredit Bank in 2023, acknowledging the challenges and market fluctuations. Despite the global impact on economic conditions in the country, the bank had a remarkably successful year, recording one of the best performances in its history.
In the first nine months of 2023, the bank achieved a positive result of 9.1 million BAM, significantly surpassing the same period in 2022. The return on capital reached 15.5%, with positive trends in key positions and indicators. The positive development of net interest income, as well as fee and commission income, resulted in overall operating income that was 27% higher than the previous year. Additionally, the bank improved cost efficiency, with a 59% enhancement in the cost-to-income ratio. The bank also experienced a growth in credit assets of 13.3 million BAM while simultaneously limiting interest rate growth in line with client expectations. The regulatory capital adequacy ratio stood at 18.2%, significantly exceeding regulatory requirements. The expected year-end results, coupled with retained earnings, will further strengthen the bank’s capital position.
In conclusion, Salkanović expressed confidence that 2023 would be remembered as a year of extraordinary business achievements for ProCredit Bank.
Addressing significant fluctuations in the labor market in Bosnia and Herzegovina during 2023, Salkanović emphasized the bank’s awareness of global and local market dynamics. Despite the challenges, the bank expanded its team by over 30 new employees, a remarkable 18% increase compared to the same period last year. This brings the total number of ProCredit team members to 199. To accommodate the growing workforce, the bank renovated and redesigned the interior of its headquarters, contributing to an improved working environment for the staff.
Apart from a well-defined business strategy, the bank’s focus on employee well-being has been a defining factor this year. Initiatives promoting a work-life balance, such as the fitness center within the main ProCredit Bank building in Sarajevo, have been introduced to enhance working conditions and support employee development.
The bank’s culture and values emphasize teamwork, support, and stimulation in achieving common goals. Continuous efforts are made to promote this culture as an unchanging strategic category.
Regarding the challenges of obtaining skilled personnel in a dialogue about educational reform, the bank advocates for dual education, believing it could be a national remedy. Recognizing the tendency of young people to seek alternatives abroad, the ProCredit group has implemented its own integrated education system, the ProCredit Academy, for several years.
The Academy’s primary goal is to educate team members in real-time and in accordance with market demands. This year alone, 10 employees attended the Academy in Germany. Significant resources are invested in the education and development of employees, recognizing the importance of continuous improvement in the dynamic financial sector environment. The bank supports individual choices of educational programs by its employees to refine skills and competencies, encouraging them to identify areas of interest and further development needs actively.
This approach is considered crucial for building a strong and highly skilled team capable of facing today’s challenges. Employees have the opportunity to travel, explore options from different perspectives, and engage in discussions with colleagues across the entire group. Salkanović believes this can significantly change people’s perspectives and influence the decision to stay in their home country.
Discussions and initiatives on the topics of green economy, sustainability, and energy transition are becoming louder and more frequent in Bosnia and Herzegovina. What does this mean for ProCredit Bank, which is a pioneer in green initiatives in the country?
Even though we executed our first investment in renewable energy sources back in 2015, our commitment to sustainability and ecological principles has come to full fruition this year. We take pride in investing over 50 million BAM in green initiatives, enabling the realization of more than 100 energy sustainability projects. Among other achievements, these investments facilitated the installation of power plants with a total capacity of over 30 MWp from renewable energy sources in Bosnia and Herzegovina. Our efforts have been recognized through the “Golden BAM – Eco Project” award for the initiative of installing free charging stations for electric vehicles across the country, with our network currently comprising 18 chargers. In general, we consider the support for electro-mobility in Bosnia and Herzegovina extremely important.
We’ve taken an innovative approach to individual clients as well, introducing the first ProGreen account, including a debit card made from biodegradable corn fibers. ProGreen provides our clients with the option to choose more sustainable solutions even when it comes to their personal finances. This year, we launched the ProLesi campaign, related to the GEFF credit line for individuals, offering a return of up to 20% for investments in ecological technologies and household energy efficiency. Judging by the success of the campaign, there is a noticeable shift at the individual level, with the Bosnian population increasingly opting for sustainable solutions.
We are the first and, so far, the only bank from Bosnia and Herzegovina that has become a member of the UN Global Compact at the group level. This consortium, initiated by the UN Secretary-General, aims to encourage companies to take a collaborative approach to improving society, the environment, and the economy. In December 2022, we joined the Net-Zero Banking Alliance (NZBA). This alliance of banks worldwide is convened by the United Nations, led by the banking sector, committing to adjust their credit and investment portfolios to a net-zero carbon emission rate by 2050 or earlier.
This, especially for those of us who have been unwaveringly committed to sustainability and a healthier future for years, is particularly gratifying.
Digitization is crucial for modern society. With the ongoing progress of digitalizing banking services, we expect simplified processes and more efficient services for clients. You were among the first to advocate and implement these processes. How, as an institution, do you continue with the digitization of services and to what extent?
Technology is fundamentally the driving force behind everything we do, and we’ve been working on it since 2015. From digitalizing banking services to developing advanced e-banking and mobile platforms, we manage to stay up-to-date with the times. Our client solutions are designed to be intuitive, secure, and accessible, aiming to enhance the overall client experience.
We believe that the process of digitization plays a crucial role in facilitating banking transactions. However, in our ongoing efforts to improve, we face regulatory challenges that are currently impeding progress. Specifically, the issue of electronic signatures poses a key obstacle, and there is a need for legislative improvements to enable broader application of this technology. Digitization lays the groundwork for service automation, simplifying routine tasks. This will undoubtedly allow our bank teams to focus their resources on providing additional value to clients, such as financial education.
Digitization is not a one-time process but a continuous initiative that aligns with rapid changes in technology and client needs. We work on it continuously. To realize the full potential of digitization, continuous software development and technological solutions are crucial, much of which we do in-house.
However, it became evident this year that the legal framework plays a crucial role in this context. Amendments related to electronic signatures, as well as the development of secure methods for client identification without the need to visit a branch, will enable secure remote banking transactions. This further facilitates client access to banking services, making them more accessible and convenient. We hope to witness necessary legislative interventions and more agile engagement from government bodies on this matter in 2024, as it is in the interest of all of us.
ProCredit Bank has retained its status as a leading bank in cooperation with small and medium-sized enterprises (SMEs) in the Bosnian market for many years. How do you plan to further enhance support for this sector?
The opening of a new branch in Tešanj, a region known for its dynamic entrepreneurial environment, represents a key step in developing support for the SME sector. Although this region constitutes 10% of Bosnia and Herzegovina’s total economy, it contributes almost 20% to the country’s total exports. By opening a physical branch, we have brought ourselves closer to clients in this region, providing advice and facilitating transactions. This was precisely the motivation behind the decision to open the branch, which has proven to be correct based on the reactions of our clients.
We continue to support companies through local and international guarantee lines, enabling financing for those who would otherwise be restricted due to a lack of collateral. This year, we introduced a credit line with a return of up to 15% for investments in digitalization and ecological projects. Through a partnership with the World Bank, we have set specific financing conditions for the SME sector, including fixed-rate loans for up to 12 years.
We fully understand the challenges facing entrepreneurs today, and we consider it our duty and responsibility to be a concrete support to them during this period. We have paid special attention this year to financing developmental activities and projects contributing to the energy transition.
All these activities reflect our commitment to economic prosperity and the progress of the communities we serve. We believe that the SME sector is the foundation of a healthy economy, and it is our task and responsibility to find new ways and business models to be reliable partners to them.
Finally, what are the plans and expectations of ProCredit Bank in 2024?
In 2024, we expect to further strengthen our stable position in the market, especially as a leading bank for micro, small, and medium-sized enterprises (MSMEs) and individuals. Despite a challenging and competitive environment, our business remains healthy and stable. We manage resources appropriately and in accordance with regulatory requirements, with very efficient risk management.
The financial health of the bank is robust, with growth surpassing the country’s GDP, and we maintain a healthy ratio between deposits and loans. We continue to set high standards in the industry, emphasizing asset quality and efficient risk management, regardless of global or market uncertainties.
Our employees are our key capital, and we will continue to invest in their development, ensuring a quality balance between work and privacy for each team member. We remain strongly committed to sustainability and reducing our footprint in nature. At the same time, we will continue to support clients and local communities in their efforts towards sustainability.
The bank’s long-term vision is to become synonymous with innovation, reliability, and social responsibility. Through dedication to employees, sustainability, support for the MSME sector, and technological innovation, we are building a bank whose function is not only to meet the current needs of clients but also to anticipate and shape the future of banking in Bosnia and Herzegovina and broader society. We remain on this path, without hesitation or calculations.