Frankfurt am Main, 13 August 2020 – The
ProCredit group, which is mainly active in South Eastern and Eastern Europe,
reports a good result for the first half of the year, despite the impact of the
COVID-19 pandemic. In H1 2020 the customer loan portfolio grew by 5.3% or
EUR 255 million (H1 2019: +5.0% / EUR +217 million), which
was above the guidance communicated for the year as a whole. The consolidated
result of EUR 21.7 million (H1 2019:
EUR 22.9 million) was achieved despite a EUR 11.6 million
increase in risk costs compared with the same period of the previous year. The
improvement in the cost-income ratio by 4.2 percentage points to 66.5% reflects
a significant EUR 8.7 million rise in earnings before taxes and loss allowances to
EUR 41.8 million.
The Management is encouraged by the
first-half results: “Our growing loan portfolio shows that – especially in
challenging times – it is important for SMEs to have a reliable banking
partner. We are convinced that our robust business model, steady risk profile
and solid financial results provide a firm basis for supporting our clients,
even in the current market environment, and thereby taking advantage of
attractive growth opportunities.”
Growth in the customer loan portfolio was
achieved primarily in the area of longer-term investment loans to new and
existing SME customers, reflecting the further strengthening of the group’s
market position.
Particularly strong growth was recorded in
the green loan portfolio, which increased by 9.9% and was especially dynamic in
the renewable energy sector. Overall, the green portfolio contributed over 30%
to total growth, and as of 30 June 2020 accounted for 17.3% of the total loan
portfolio.
The growth in customer deposits by EUR 113 million or 2.6%
in the first half of the year is due to the increase in sight deposits and
instant access savings accounts. The fact that this growth has been generated
by existing and new business clients as well as by private individuals reflects
the increasing attractiveness of ProCredit DIRECT, the ProCredit group’s
offering of digital services. The group’s liquidity coverage ratio (LCR) stood
at 142% at the end of the half-year.
At EUR 21.7 million,
the consolidated result fell only slightly short of the EUR 22.9 million
earned in the same period of the previous year. The improvement in net interest
income was more than cancelled out by higher expenses for loss allowances.
Thanks to the growth of the loan portfolio, net interest income rose by
EUR 7.2 million or 7.8% to EUR 99.9
million over the past 12 months. At 3.0%, the
net interest margin was 0.1 percentage points below the previous year’s level.
This decline is mainly due to significant reductions in key interest rates in
the Eastern Europe segment.
Expenses for loss allowances rose by
EUR 11.6 million compared with the same period of the previous year
to a total of EUR 15.7 million. This corresponds to an annualised
cost of risk of 67 basis points, which is in line with expectations. Around EUR 8 million of this
figure is attributable to updated macroeconomic parameters in the credit risk
model. In addition, the ProCredit banks also increased provisions in the course
of an ongoing, individual review of all their credit exposures to business
clients. The share of credit-impaired loans was unchanged compared with the end
of the year at 2.5%. The ratio of allowances to credit-impaired loans rose from
89.1% to 93.6%.
Net fee and commission income fell
slightly by EUR 3.2 million to EUR 22.6 million, mainly resulting from a decline in domestic and
international transfers during the COVID-19 pandemic.
Operating expenses fell slightly by EUR 0.7 million to EUR 82.8 million, due to
a reduction in administrative expenses. The cost-income ratio dropped by 4.2
percentage points to 66.5%. On a stable cost basis, profit before tax and loss
allowances increased by EUR 8.7 million
or 26.2% compared to the previous year, to EUR 41.8 million.
The capital adequacy of the ProCredit
group remains healthy. The Common Equity Tier 1 capital ratio (CET1 fully
loaded) as at 30 June 2020 was 14.1%, and thus unchanged since the end of 2019.
Risk-weighted assets declined despite strong portfolio growth, partly due to
the early introduction of new risk weights for SME exposures by the European
Parliament in June 2020. The group’s core capital includes the consolidated
profit for 2019, less the planned dividend payment of one third of consolidated
profit. The comfortable capital base continues to be underpinned by a leverage ratio
of 10.3% (31 December 2019: 10.8%).
In the course of the first half of 2020,
ProCredit Holding AG & Co. KGaA was provided with a loan of USD 100 million by the
International Finance Corporation (IFC), a member of the World Bank Group. This
loan opens up further possibilities for ProCredit banks to offer targeted
financing for small and medium-sized enterprises in the current situation.
Following the strong growth achieved in
the first half of the year, the Management of ProCredit Holding also sees good
growth opportunities for the second half. After forecasting low single-digit
growth in the customer loan portfolio at the beginning of the year, the
Management Board now expects overall growth of between 8% and 10%. This does
not take into account possible effects from currency translation at year-end.
The danger of a new wave of the pandemic and the introduction of additional
restrictions on domestic and international trade are major risk factors for
this forecast.
With a cost of risk of around 75 basis
points, the return on equity for the year as a whole is still expected to be
positive, although lower than in the previous year. This is based on the
assumption that the economies of ProCredit’s markets will start to recover in
the second half of the year. The forecasts for the cost-income ratio (about
70%) and the core capital ratio (over 13%) were also confirmed.
The ProCredit group’s 2020 half-year
report is available in the German and English languages as of today on the
ProCredit Holding website under Investor Relations at http://www.procredit-holding.com/en/investor-relations/reports-publications/financial-reports/
Contact:
- Andrea Kaufmann, Group Communications, ProCredit Holding, Tel.: +49 69
951 437 138, E-mail: Andrea.Kaufmann@procredit-group.com
About ProCredit Holding AG & Co. KGaA
ProCredit Holding AG & Co. KGaA, based
in Frankfurt am Main, Germany, is the parent company of the
development-oriented ProCredit group, which consists of commercial banks for
small and medium enterprises (SMEs). In addition to its operational focus on
South Eastern and Eastern Europe, the ProCredit group is also active in South
America and Germany. The company’s shares are traded on the Prime Standard
segment of the Frankfurt Stock Exchange. The anchor shareholders of ProCredit
Holding AG & Co. KGaA include the strategic investors Zeitinger Invest and
ProCredit Staff Invest (the investment vehicle for ProCredit staff), the Dutch
DOEN Participaties BV, KfW Development Bank and IFC (part of the World Bank
Group). As the group’s superordinated company according to the German Banking
Act, ProCredit Holding AG & Co. KGaA is supervised on a consolidated level
by the German Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht, BaFin) and the German Bundesbank. For additional
information, visit: www.procredit-holding.com.
Forward-looking statements
This press release contains statements
relating to our future business development and financial performance, as well
as statements relating to future actions or developments affecting
ProCredit Holding which may constitute forward-looking statements. Such
statements are based on the management of ProCredit Holding’s current
expectations and specific assumptions, many of which are beyond the control of
ProCredit Holding. They are therefore subject to a multitude of risks,
uncertainties and factors. Should one or more of these risks or uncertainties
materialise, or should underlying expectations or assumptions prove incorrect,
then the actual results, performance and achievements (both negative and
positive) of ProCredit Holding may differ significantly from those expressed or
implied in the forward-looking statement. ProCredit Holding does not undertake
any obligation to update these forward-looking statements or to correct them in
the event of deviations from the expected development.