Solid H1 result and strong growth figures – ProCredit group raises growth forecast for 2020

• Higher-than-expected 5.3% increase in customer loan portfolio in H1 – Management Board raises growth forecast for the full year to between 8% and 10%
• Annualised cost of risk of 67 basis points in line with expectations, with good portfolio quality
• Consolidated result of EUR 21.7 million corresponds to an annualised return on equity of 5.5% with stable expenses and a significant improvement in earnings before risk costs

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

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.