ProCredit group continues to grow in a successful fiscal 2017

• The “Hausbank” principle for small and medium-sized enterprises (SMEs) continues to bear fruit
• Overall customer loan portfolio growth rate of 8% in 2017 significantly above previous year’s level (2016: 2.4%)
• Customer loan portfolio in the core segment – loans over EUR 30,000 – grows by 18% in 2017 (2016: 13%)
• Consolidated profit from continuing business operations, at EUR 46.6 million in 2017, nearly as high as previous year’s figure (2016: EUR 47 million)
• At 7.1%, return on average equity (RoAE) in 2017 within the predicted range (2016: 9.6%)
• In 2018, gross loan portfolio expected to grow by 12–15% and RoAE to 7.5–8.5%

ProCredit Holding AG & Co. KGaA (ProCredit Holding), the parent company of the ProCredit group of banks, can look back on a successful fiscal 2017. The success of the continued strategic focus on SMEs is particularly reflected in strong lending growth of 18% in the core segment of business loans over EUR 30,000 (2016: 13%).

The customer loan portfolio of the group, which has positioned itself as the “Hausbank” for SMEs and operates primarily in South-Eastern and Eastern Europe, grew by 8% during 2017, a significantly higher rate than in the previous year (2016: 2.4%), despite being impacted by negative currency effects. As at 31 December 2017, the total customer loan portfolio amounted to EUR 3.9 billion (31 December 2016: EUR 3.6 billion). The main driver of this growth was very positive development in the core customer business. The ProCredit group’s strategic focus is on SMEs with good development and growth potential and whose financing needs are generally for loans ranging from EUR 30,000 to EUR 3 million. In line with the raised forecast of July 2017, this core segment showed clear double-digit growth of 18% during the year (2016: 13%), increasing to a total of EUR 3.4 billion (31 December 2016: EUR 2.9 billion). In the sub-segment of loans over EUR 50,000, the ProCredit group even achieved portfolio growth of 22.9% during the year, and as at 31 December 2017 this sub-segment accounted for 89.7% of the core segment of loan volumes over EUR 30,000.

The growth of the loan portfolio was accompanied by a further improvement in quality. The proportion of overdue loans (PAR 30) fell to 2.9% (2016: 3.9%). As a result, provisioning expenses fell from EUR 18.6 million (31 December 2016) to EUR 5.3 million, while continuing to maintain an appropriate level of risk coverage.

Strong growth in the banks in South Eastern and Eastern Europe

During the reporting period, the South Eastern Europe segment was able to achieve EUR 224.2 million in loan portfolio growth to EUR 2.8 billion (31 December 2016: EUR 2.5 billion). In the core segment of loan volumes above EUR 30,000, portfolio growth stood at 18.6%, significantly higher than the previous year’s rate (2016: 12.5%).

In the Eastern Europe segment, the loan portfolio grew by EUR 114.7 million in 2017 to EUR 823.4 million (31 December 2016: EUR 708.7 million). In the core segment of loans over EUR 30,000, growth of 21.4% was achieved in 2017, improving on the 17.7% of the previous year. This successful business development is attributable to the strong growth rates achieved by all ProCredit banks in the South Eastern Europe segment as well as by the Ukrainian bank.

The double-digit growth achieved in the South Eastern and Eastern Europe regions in the core segment of loans with volumes of more than EUR 30,000 was primarily driven by the extremely successful implementation of the ProCredit group’s strategic focus on SMEs with strong development and growth potential, and was also aided by a favourable investment climate.

The development of the ProCredit group’s total customer loan portfolio in the 2017 financial year was affected by the planned reduction of the portfolio of very small loans below EUR 30,000. Overall, it was possible to reduce this part of the portfolio by EUR 236.1 million during the reporting period. By the end of 2017, this process had largely been completed in the majority of our banks.

Strategic reorientation in South America continues

In South America, the strategic realignment and focus on SMEs with financing needs of above EUR 30,000 is still ongoing and will be completed later than in South Eastern and Eastern Europe. The customer loan portfolio in South America saw a reduction of EUR 68 million during the reporting period to EUR 238.9 million (31 December 2016: EUR 306.9 million). This decrease was mainly due to rapid progress in the withdrawal from loans below EUR 30,000 as well as to the depreciation of the US dollar. This development allows for resources to be focused on the core client segment and sets a solid framework for future portfolio growth.

In summary, as at 31 December 2017, the ProCredit group’s customer loan portfolio consisted mainly of business loans, which accounted for 89.6% of the total. Loans to agricultural enterprises account for 20.3% of the total loan portfolio. The “Green” loan portfolio, which comprises loans granted by ProCredit banks specifically for environmentally responsible projects, accounted for 12.6% of the total portfolio in fiscal year 2017. Loans to private clients account for only a minor share of the portfolio. The great majority of these are mortgages and smaller investment loans to purchase, renovate or improve the energy efficiency of real estate. Consumer loans are not a focal area for ProCredit and they constitute only a negligible share of the portfolio.

The loan portfolio of the ProCredit group continues to be highly diversified. The ten largest exposures represented only 1.4% of the group’s total customer loan portfolio as at 31 December 2017.

Consolidated result stable despite extraordinary expenses

The ProCredit group recorded a consolidated profit of EUR 48.1 million in 2017, which was lower than that of the previous year (2016: EUR 61 million). This decrease in profit was due to the lower profit from discontinued operations. Profit from continuing operations amounted to EUR 46.6 million, similar to the previous year (2016: EUR 47 million).

Return on average equity (RoAE) at the end of the year was 7.1% (2016: 9.6%), thus lying within the forecast range of 7% to 9% for 2017. Lower net interest income and extraordinary expenses due to the restructuring of the branch network were offset by lower risk provisioning expenses and lower operating expenses.

Borislav Kostadinov, Member of the Management of ProCredit Holding, said: “We are satisfied that, at EUR 46.6 million in 2017, net income from continuing operations was almost on a par with the previous year’s level. We achieved this result despite the extraordinary expenses connected with the significant reduction of our branch and 24/7 Zone network, and the investments in the launch of a group-wide uniform range of ‘Direct Banking’ facilities. We expect these to contribute to even greater process efficiency in the coming years and support the targeted acquisition of new private individual clients.”

Equity base very sound

The ProCredit group’s equity base was further strengthened by the successful completion of the announced sales of the banks in Nicaragua and El Salvador in August and November 2017, respectively. The Common Equity Tier 1 capital ratio (CET1 fully loaded) was 13.7% as at 31 December 2017 (2016: 12.5%), in line with the forecast level of over 13%.

Increases in growth and profitability expected in fiscal year 2018

In 2018, the gross loan portfolio is forecast to grow by 12 – 15%, assuming positive overall economic developments and no severe exchange rate fluctuations. This growth is expected to be achieved primarily in loans above EUR 50,000. Lending in the area of “Green Finance” is to be expanded and the share of “Green” loans will increase to over 15% of the gross loan portfolio.

The cost-income ratio is expected to improve further in fiscal year 2018, falling below 70%. Depending on the development of the net interest margin and loan portfolio growth, a return on average equity (RoAE) of 7.5% to 8.5% is expected for the current fiscal year 2018.

It is projected that the Common Equity Tier 1 capital ratio (CET1) will be over 13%.

Borislav Kostadinov concluded by adding: “We can look back with satisfaction on the 2017 fiscal year, as we achieved our earnings and growth targets, completed important strategic measures such as the withdrawal from Central America, and successfully developed our private customer strategy with the roll-out of our new range of digital services as planned. We intend to accelerate our growth this year. In the markets where we operate, our banks have earned an excellent reputation as banks for SMEs with good development prospects. We anticipate favourable conditions for their economic growth over the current year. With the funds raised from the successful capital increase at the beginning of this year, we are well positioned to take advantage of the opportunity to stand by our customers and foster the further growth of the ProCredit group.”

The ProCredit Holding Annual Report for 2017, available in the German and English languages, as well as the 2017 Disclosure Report, available in the German language, are accessible as of today on the ProCredit Holding website at

Andrea Kaufmann, Group Communications, ProCredit Holding,
Tel.: +49 69 951 437 138, e-mail:

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 banks for small and medium enterprises (SMEs) and whose operational focus is on South-Eastern and Eastern Europe. In addition to this regional focus, 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 (comprising the investment vehicles 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

Forward-looking statements
This report contains forward-looking statements. Forward-looking statements are statements that do not describe past events; they include statements on the assumptions and expectations of ProCredit Holding as well as underlying assumptions. These statements are based on the plans, estimates and forecasts currently available to the Management of ProCredit Holding. Forward-looking statements therefore pertain solely to the date on which they are made. ProCredit Holding undertakes no obligation to update these statements in the event of new information or future events. Forward-looking statements naturally involve risks and uncertainties. A number of important factors can contribute to the fact that actual results may differ materially from forward-looking statements. These factors could include major disruptions in the Eurozone, a significant change in foreign trade or monetary policy, a worsening of the interest rate margin or pronounced exchange rate fluctuations. Should any of these factors arise, the impact could be manifested in decreased loan portfolio growth and an increase in past-due loans, and thus result in lower profitability.