Who we are: ProCredit today
The ProCredit group is made up of development-oriented commercial banks operating in South Eastern and Eastern Europe and South America, as well as a bank in Germany. Based in Frankfurt, Germany, the parent company of the group, ProCredit Holding, is responsible for the strategic management, capital adequacy, reporting, risk management, and proper business organisation of the group and also acts as a superordinated company from a regulatory point of view. At consolidated level, the group is supervised by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht or BaFin) and the Deutsche Bundesbank.
The ProCredit group is dedicated to an ethical corporate mission and benefits from a strong international and local reputation as an international development-oriented banking group. As such the group aims to combine a high development impact with commercial success for its shareholders.
ProCredit banks aim to drive forward the creation of transparent, inclusive financial sectors in developing countries and transition economies.
ProCredit banks aim to drive forward the creation of transparent, inclusive financial sectors in developing countries and transition economies. A functioning and fair financial system, which enables small and medium-sized businesses to invest and expand, is important for economic and social development. That is why our business model is very lean and laser-focused on supporting the small and medium clients that matter the most from a development point of view.
In our view, the word “development” means more than merely increasing a country’s Gross Domestic Product (GDP) or raising efficiency and productivity. Development also has to do with the free development of individuals, the democratic organisation of societies and social justice. The way we operate as a banking group reflects this conviction: We carefully select the clients we want to work with and provide them with fair and transparent advice from well-trained staff who are not incentivised to push loan business. We provide the entire range of banking services relevant to small and medium-sized companies and we want to work with them long term. As their “Hausbank” with a strong regional focus on South Eastern and Eastern Europe, we support business cooperation in the region by bringing our clients together.
Minimising our negative impact on the environment and proactively promoting a sustainable way of doing business is an integral part of our business strategy – not only in connection with our lending operations or the provision of financial services to our clients, but also in our own day-to-day operations as institutions.
ProCredit banks aim to be the “Hausbank” for small and medium-sized businesses, as well as to promote a savings culture for private individuals in order to counteract the “spend now, pay back later” mentality, which in our countries of operation is often combined with irresponsible, but widespread, consumer lending behavior.
The “Hausbank” concept means that we want to engage in a long-term partnership with our clients by providing them with a full range of modern financial services according to their needs and with proper advice given by our well-trained Business Client Advisers (BCAs).
In most countries, small and medium enterprises (SMEs) are still an underserved client group in terms of both the quality and quantity of appropriate financial services available to them, and this is especially true for those engaged in agriculture, small-scale manufacturing, services, and industrial production. Analysing and serving these clients is time-consuming and complex, and demands a high level of expertise and flexibility. Scoring models, such as those used in consumer lending, are of little value for assessing these diverse businesses. That is precisely why they are not treated as a priority client group by commercial banks. We, however, have deliberately chosen to target SMEs because we are convinced that the primary duty of a socially responsible bank is to offer financial services to the productive companies that create jobs, while raising the requisite funds largely from the respective local market.
The “Hausbank” concept means that we want to engage in a long-term partnership with our clients by providing them with a full range of modern financial services according to their needs and with proper advice given by our well-trained Business Client Advisers (BCAs), who are not driven by a bonus system. Our BCAs are not there just to “sell products”; they are truly there for the clients, as reflected for example in the fact that they visit each of their clients’ business premises at least twice a year.
By the same token, we expect our clients to treat us as their “Hausbank”, meaning that they should conduct all of their transactions through ProCredit and also deposit their liquidity with us. Our aim is to build long-term business relationships characterised by trust between bank and client. Instead of being motivated by bonuses or short-term sales success, our BCAs consider the success of our clients in the long term, which bolsters our responsible approach to banking and helps to build trust.
We offer our clients account services such as a e-banking, cards, domestic and international payments and efficient transactions; advice on liquidity management or accounting and reporting; payroll services, documentary business and trade finance, as well as savings and personal banking services for the family unit.
Located at the entrances of all our Service Points and Branches, our modern 24/7 self-service areas offer our clients the possibility to make withdrawals, deposit cash (including large amounts of cash via a drop-box), and carry out various transactions such as transfers, account information retrieval, etc. These areas complement our electronic banking services, which most clients also choose for convenience and efficiency. Our Service Points with their 24/7 Zones are equipped with the most advanced technology and automation that the financial sector has to offer and this clearly sets us apart from our competitors.
We follow very strict know-your-customer (KYC) principles and anti-money laundering (AML) rules. As a group we are supervised at a consolidated level by the German financial regulators and we comply with all risk requirements in our countries of operation. We take this very seriously and believe that our default rates, which are typically much lower than the sector averages in our respective countries, clearly demonstrate this.
ProCredit banks also focus on encouraging private individuals to save and on promoting a savings culture in the countries in which we operate.
ProCredit banks also focus on encouraging private individuals to save and on promoting a savings culture in the countries in which we operate. Therefore, we design accessible savings services with fair interest rates and we train our Client Advisers to talk with clients about the benefits of saving. Local savings mobilised in this way also provide a stable source of funding for our business lending activities.
Nevertheless, we refuse to engage in manipulative advertising, we do not offer inflated interest rates, and we assess the seriousness of every one of our savings clients and verify the legitimacy of their income. Since we want to avoid over-indebting our customers, we are very cautious about issuing credit cards and overdrafts to private individuals.
ProCredit banks do not promote consumer loans. Since the beginning, ProCredit has distanced itself from consumer loans or “microloans” with unspecified purposes, as the risk of overindebtedness is high and the productive capacity of such loans is low. This has become even more important as providers of consumer lending have flourished in recent years in our countries of operation, creating widespread overindebtedness among vulnerable lower income groups. Our focus on enterprise lending is therefore strong. We engage in very limited lending to private households, and where we do, we aim to build family assets, for example by providing housing and housing improvement loans.
Our performance in the past shows that our business model and business results are strong and stable, even in volatile macroeconomic times and markets.
The ProCredit group operates on a commercial and profitable basis and we see high growth potential in our markets of operation. Our performance in the past shows that our business model and business results are strong and stable, even in volatile macroeconomic times and markets.
The ProCredit group enjoys a simple balance sheet: our assets and liabilities largely consist of business loans and customer deposits, respectively. Our main source of income is the interest we charge on the loan portfolio. Interest rates are set transparently and are competitive in the market context in which we operate.
In recent years we have placed special emphasis on the quality and efficiency of the services we provide, which has proven to be in the best interests of our clients and has further improved our business results. Similarly, we have sustained a strong focus on loan portfolio quality management, which has kept our provisioning costs below those of our competitors, although coverage ratios of our portfolio at risk are higher. A comprehensive know-your-customer (KYC) approach and strong client loyalty in the broadest sense lie at the heart of our successful business model. Therefore, the key to sustainable success over the long term remains the training and quality of our staff in general and our Client Advisers and the managers who guide them.
Further, we have designed and promote green loans, which are embedded in our Environmental Management System to support investments in energy efficiency, renewable energy and environmental protection, and continuously strive to increase our green loan portfolio.