ProCredit group closes Q1 2020 with portfolio growth and an improved financial result

• Customer loan portfolio growth of 0.9%
• Compared to the previous year, the consolidated result increased by EUR 3.0 million to EUR 13.7 million, the return on average equity stood at 7.0%
• Cost of risk of 57 basis points is in line with expectations and reflects the deteriorated macroeconomic environment
• Cost-income ratio improved significantly to 64.6%

The ProCredit group, which is mainly active in South Eastern and Eastern Europe, has reported a good result for the first quarter of 2020. The customer loan portfolio grew by 0.9% or EUR 42 million (Q1 2019 +1.7% EUR +73 million) to EUR 4.8 billion. The consolidated result of EUR 13.7 million was EUR 3.0 million above that of the same quarter of the previous year (Q1 2019 EUR 10.7 million) and corresponds to a RoAE of 7.0% (Q1 2019 5.6%). The improvement in earnings was mainly due to a significant increase in net interest income and the absence of negative effects from restructuring measures which had impacted the consolidated result in 2019.

This growth in the customer loan portfolio was reduced by currency effects amounting to approx. EUR 50 million, mainly due to depreciation of local currencies in the Eastern Europe segment. Of the overall growth in the customer loan portfolio, 29% came from green loans. The volume of customer deposits amounted to EUR 4.3 billion at the end of the first quarter of 2020. The EUR 74 million (1.7%) drop in deposits is due to the seasonal decrease in business client deposits as well as negative currency effects. The group’s liquidity remained healthy, with an LCR of 181% at the end of the quarter.

At EUR 13.7 million, the consolidated result was EUR 3.0 million higher than in the same quarter of the previous year. This development is predominantly based on a significant increase in net interest income and the absence of negative earnings effects from restructuring measures and discontinued operations, as well as a stable cost base. Net interest income rose by EUR 5.5 million or 12.2% to EUR 50.9 million compared to the first quarter of the previous year, and is primarily attributable to the growth in the customer loan portfolio over the past 12 months. The net interest margin remained stable at the previous year’s level of 3.1%.

Expenses for loss allowances rose by EUR 4.8 million compared with the same quarter of the previous year to a total of EUR 6.9 million, which corresponds to an annualised cost of risk of 57 basis points. This development primarily reflects the deterioration in the macroeconomic outlook due to the COVID-19 pandemic. The share of non-performing loans declined by 0.1 p.p. to 2.4% (31 December 2019: 2.5%), and the risk coverage ratio rose from 89.1% at the end of 2019 to 95.5%.

Net fee and commission income fell slightly by EUR 0.7 million to EUR 12.0 million, mainly due to a decline in income from business with private clients.
Personnel and administrative expenses were stable compared to the same quarter of the previous year. Thanks to the stable cost base and the increase in net interest income, there was a significant reduction in the cost-income ratio to 64.6% (Q1 2019 69.8%). At EUR 22.9 million, the profit before tax and loss allowances was EUR 5.1 million or 29% higher than in the same quarter of the previous year.

The capital adequacy of the ProCredit group remains healthy. The Common Equity Tier 1 capital ratio (CET1 fully loaded) as at 31 March 2020 was 14.0%, almost unchanged from the end of the previous quarter (31 December 2019: 14.1%). The stability of the capital base continues to be underpinned by a leverage ratio of 10.5% (31 December 2019: 10.8%).

The management of ProCredit Holding is convinced that its business approach, which is geared towards sustainability and a long-term outlook, not only provides the group with the stability that is particularly important during the current turbulent times but is also prudent from an economic point of view.

“We believe that a robust SME sector will be vital for the macroeconomic recovery of our markets. Our approach to SME clients has always been based on the ‘Hausbank’ concept, which is built on close, long-term relationships with our clients. In the current situation, this approach enables us to monitor our portfolio effectively, assess credit risks on a case-by-case basis, and support our clients swiftly and pragmatically. With our range of digital direct banking services, we have also created an efficient platform through which we have virtually eliminated ‘over-the-counter’ transactions in branches. This ensures the continued scalability of our business model in the future. In the current situation it also provides additional stability and security, as it enables clients to calmly perform their banking transactions also during lockdown measures, while customer inquiries can be processed efficiently via our contact centres,” the management stated.

On 27 April 2020, a Management Statement on the effects of the COVID-19 pandemic was published on the ProCredit Holding website.

For the year as a whole, the management confirms its forecast of a declining but positive RoAE, and a stable cost-income ratio of around 70%. The customer loan portfolio is expected to continue to grow at a more moderate rate, somewhere in the low single-digit percentage range. It is expected that in accordance with the previous forecast, the Common Equity Tier 1 capital ratio (CET1 fully loaded) will be above 13% at the end of 2020. These forecasts are based on current assessments of the overall situation, which may change in the future due to the quickly evolving situation surrounding the COVID-19 pandemic.

The ProCredit group’s quarterly report is available in the German and English languages as of today on the ProCredit Holding website under Investor Relations at .

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

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:

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.