Procredit Holding Ag · XETR:PCZ
Procredit — ProCredit Holding AG & Co. KGaA — Q2 2017 Earnings Presentation
44 slides from Procredit's earnings presentation, Aug 14, 2017
Slide 1: Q2 2017 results
Q2 2017 results Frankfurt am Main, 14th August 2017 Borislav Kostadinov, Member of the Management Board Jana Donath, Manager Finance and Controlling
Slide 2: ProCredit – A unique approach to banking
ProCredit – A unique approach to banking Summary Key figures H1 2017 and FY 2016 ► A profitable, development-oriented commercial banking group for SMEs Total assets Customer loan portfolio(1) Deposits/loans(2) with focus on South Eastern Europe and Eastern Europe EUR 5,552m EUR 3,801m 89% ► Headquar
Slide 3: “Hausbank” for SMEs serving their typical banking needs
“Hausbank” for SMEs serving their typical banking needs Ukraine Comprehensive service as “Hausbank” Products Customers Value-added Simple loan and deposit products Target customers with high potential: SMEs Significant benefits for clients… ► Full range of business loans ► SMEs with formalised struc
Slide 4: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 4
Slide 5: Where do we come from? Significant progress since 2013
Where do we come from? Significant progress since 2013 Focused growth in SME loan categories (1) Decrease in number of cash desk transactions 85% 28% 81% 58% 5% 2% Dec-13 Dec-16 Jun-17 Dec-13 Dec-16 Jun-17 Loan portfolio > EUR 30k in % total loan portfolio YTD Cash desk transactions in % total trans
Slide 6: Recent key achievements
Recent key achievements Execution of business client strategy ► Very strong growth with target SME clients in Eastern Europe (+10.8% loan portfolio growth > EUR 30k in H1 2017) ► On track for sharp business profile as modern SME bank for Eastern Europe: Announced successful sale of Banco ProCredit
Slide 7: Update on implementation of digital private client offer
Update on implementation of digital private client offer “A simple, unified offer for target private clients Reduction of branches and service points (entrepreneurs, middle-income clients) accessible above all ► Since Dec. 2013, reduction of total number of branches via relevant electronic channel
Slide 8: Strong volume growth in core loan categories
Strong volume growth in core loan categories H1 2017 -17% (EUR -115m) 10% (EUR +290m) +5% Initial loan size (in EUR) EUR 151m EUR 405m FY 2016 -28% (EUR -256m) 13% (EUR +336m) +2% (in EUR m) Initial loan size (in EUR k) Note: Loan volume growth split by initial loan size in all segments ProCredit Gr
Slide 9: Outlook for ProCredit Group 2017
Outlook for ProCredit Group 2017 ► Growth of the gross loan portfolio in the target loan categories (>EUR 30,000) > 10% ► Growth of the total gross loan portfolio > 8% ► Return on average equity (RoAE) 7 – 9% ► CET1 ratio (fully loaded) > 13% ► Dividend payout ratio 1/3 of profits In the mid-term, a
Slide 10: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 10
Slide 11: Q2 2017 results at a glance
Q2 2017 results at a glance (In EUR m) H1-2016 H1-2017 Q1-2017 Q2-2017 y-o-y Net interest income 118.9 102.6 51.3 51.3 0% Provision expenses 13.9 3.4 3.0 0.5 -84% Net fee and commission income 21.6 21.6 10.7 10.9 2% Net result of other operating income 1.9 2.5 2.0 0.5 n.m. Operating income 128.4 123
Slide 12: Net interest income
Net interest income ► Net interest income development stabilising in Q2 2017 58.2 56.7 55.3 ► Decreasing interest expenses fully compensated for decline in interest income on group level 51.3 51.3 ► Interest income in Eastern Europe increasing in Q2 2017, portfolio growth more than compensated for d
Slide 13: Provisioning expenses
Provisioning expenses ► Allowances for losses on loans and advances to 51 bps customers (LLP) continues to be on low levels with comfortable PAR 30 coverage ratio (104%) ► Decrease in LLP/cost of risk driven by improved loan 4.5 portfolio quality and recovery of written-off loan portfolio 33 bps 32
Slide 14: Net fee and commission income
Net fee and commission income ► Increase in account maintenance and card transaction 10.9 10.9 10.9 10.7 income compensated for declining fee income from cash 10.4 transactions ► Continuous strong increase of net fee and commission income per client (in EUR m) Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Net fee a
Slide 15: Operating expenses
Operating expenses ► Operating expenses below average FY 2016 levels ► Cost base influenced by ► One-off expenses related to reduction of branch network ► Increased average salaries in line with SME strategy ► Strong IT investments e.g. private cloud infrastructure in Germany, centralisation of IT a
Slide 16: Contribution of segments to group net income H1 2017
Contribution of segments to group net income H1 2017 Group functions, e.g. risk management, reporting, capital management, liquidity management, training and development Includes ProCredit Holding, Quipu, ProCredit Academy Fürth, Profit contribution (after tax of EUR 2.8m) ProCredit Bank Germany (EU
Slide 17: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 17
Slide 18: Structure of the loan portfolio
Structure of the loan portfolio Loan portfolio by geographical segments Loan portfolio by sector Germany: South America: 2% 7% Private loans: Business loans: 1% 2% 10% 2% 6% 7% 90% Eastern Europe: 21% 3% 18% South Eastern Europe: 8% 70% 19% 10% 17% 4% 5% 71% 6% 13% 7% Bulgaria Serbia Kosovo Macedoni
Slide 19: Structure of the loan portfolio (continued)
Structure of the loan portfolio (continued) Loan portfolio by initial loan size Loan portfolio by currency Segment loan size Segment loan size < EUR 30k: > EUR 30k: 15% 4% 85% 10% 11% 35% 11% 26% 51% 26% 12% 14% EUR 30-50k EUR 50-150k EUR 150-250k EUR 250-1m > EUR 1m EUR 10-30k EUR USD Other currenc
Slide 20: Loan portfolio quality
Loan portfolio quality ► Favourable net write-off development due Net write-offs(1) 0.7% 0.2% to high recoveries in Q2 2017 Coverage ratio impaired(2) 66% 66% ► Further improvement in portfolio at risk (PAR) Coverage ratio 106% 104% PAR30(3) ► Prudent risk management underlined by high coverage rati
Slide 21: Structure of collateral
Structure of collateral Collateral by type ► Majority of collateral consists of mortgages ► Clear and strict requirements regarding types of acceptable collateral, legal aspects of collateral and insurance of collateral items 23% ► Standardised collateral valuation methodology ► Regular monitoring o
Slide 22: Development of green loan portfolio
Development of green loan portfolio Green loan portfolio growth ► Strong growth of the green loan portfolio (38% p.a. 3.0% 4.0% 6.4% 9.1% 10.1% 2013-2016) 385 329 22 ► Includes credit products for investments in 264 22 21 ► Energy efficiency 174 363 126 23 307 ► Renewable energies (in EUR m) 22 242
Slide 23: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 23
Slide 24: Asset reconciliation
Asset reconciliation Reduction of surplus liquidity (cyclical Q1 effect and sale of Banco Los Andes ProCredit Bolivia) Strong growth in core loan segment + EUR 290m; further decline in loans < EUR 30k ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 24
Slide 25: Liabilities and equity reconciliation
Liabilities and equity reconciliation Decrease driven by seasonal decline of current account balances in Q1 2017 Repayment of maturing liabilities in Q1 2017 ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 25
Slide 26: Liquidity update
Liquidity update Liquidity coverage ratio 194% ► Adequate group liquidity situation 112% ► All ratios comfortably above limits 70% 80% ► Liquidity decrease in Q2 is due to strong loan portfolio growth, deposit base adjustment process and HLA adjustments Dec-16 Jun-17 in line with new regulatory requ
Slide 27: Regulatory capital and risk-weighted assets
Regulatory capital and risk-weighted assets Overview of capitalisation in EUR m Dec-16 Jun-17 ► Increase of CET1, Total Capital and CET1 capital (net of deductions) 574 593 Leverage ratios Additional Tier 1 capital (net of deductions) 0 0 Tier 1 capital 574 593 ► Q4 2016 profits recognised (after An
Slide 28: Development of CET1 capital ratio (fully loaded)
Development of CET1 capital ratio (fully loaded) Leverage ratio (fully loaded) 10.3% ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 28
Slide 29: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 29
Slide 30: Q&A
Q&A ProCredit Bank Romania ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 30
Slide 31: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2017 results | Frankfurt am Main, 14th August 2017 31
Slide 32: Strong volume growth in core loan categories H1 2017 vs H1 2016
Strong volume growth in core loan categories H1 2017 vs H1 2016 H1 2017 -17% (EUR -115m) 10% (EUR +290m) +5% Initial loan size (in EUR) EUR 151m EUR 405m H1 2016 -12% (EUR -115m) 6% (EUR 152m) 1% Initial loan size (in EUR) EUR 229m EUR 582m Note: Loan volume growth split by initial loan size in all
Slide 33: Overview of quarterly financial development
Overview of quarterly financial development (In EUR m) Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Net interest income 58.2 56.7 55.3 51.3 51.3 Provision expenses 4.5 2.9 1.8 3.0 0.5 Net fee and commission income 10.9 10.4 10.9 10.7 10.9 Net result of other operating income -0.1 2.4 2.6 2.0 0.5 Operatin
Slide 34: Segment South Eastern Europe
Segment South Eastern Europe Regional loan portfolio split Key financial data Bosnia 6% Albania 6% (in EUR m) H1-2016 H1-2017 Bulgaria 26% Net interest income 78.4 66.8 Romania 9% Provision expenses 6.7 -1.7 Net fee and commission income 14.9 14.7 Net result of other operating income 0.8 -0.5 Macedo
Slide 35: Segment Eastern Europe
Segment Eastern Europe Regional loan portfolio split Key financial data Moldova 13% (in EUR m) H1-2016 H1-2017 Net interest income 29.9 27.6 Provision expenses 6.7 6.4 Net fee and commission income 4.3 4.3 Ukraine 46% Net result of other operating income 1.3 1.4 Operating income 28.9 26.8 Operating
Slide 36: Segment South America
Segment South America Regional loan portfolio split Key financial data Mexico 4% Colombia (in EUR m) H1-2016 H1-2017 12% Net interest income 12.1 10.5 Provision expenses 0.6 -1.3 Net fee and commission income -0.1 0.0 Net result of other operating income 1.7 0.5 Operating income 13.1 12.3 Operating
Slide 37: Funding and rating update
Funding and rating update Funding sources overview ► Highly diversified funding structure and 3% 1% counterparties 4% 8% ► Customer deposits main funding source, accounting for 74% as of Jun-17 Customer deposits 10% Liabilities to IFIs ► Supplemented by long-term funding from IFIs and institutional
Slide 38: Sustainability overview
Sustainability overview Continued focus on transparent reporting ► Advanced disclosure including e.g.: ► Annual Environmental Performance Report 2016 ► Environmental Statement for the ProCredit institutions located in Germany ► Group Environmental Management Policy ► Further documents on the group’s
Slide 39: Social Stock Exchange Membership
Social Stock Exchange Membership ProCredit Holding Impact Report 2016 ► Approval as member of the Social Stock Exchange (SSX) following the ratification of the Impact Report by the independent SSX Admissions Panel in May-17 ► Impact Report details the social impact of the group focusing on three mai
Slide 40: Balance sheet
Balance sheet (in EUR m) Dec-16 Jun-17 Assets Cash and cash equivalents 937 751 Loans and advances to banks 287 262 Financial assets at fair value through profit or loss 0 0 Available-for-sale financial assets 250 198 Loans and advances to customers 3,629 3,801 Allowance for losses on loans and adva
Slide 41: Income statement by segment
Income statement by segment 01.01. - 30.06.2017 South Eastern Germany Eastern Europe South America Consolidation Group (in EUR m) Europe Interest and similar income 9.3 49.4 77.4 17.7 -8.6 145.1 of which inter-segment 8.4 0.2 0.1 0.0 Interest and similar expenses 10.7 21.8 10.6 7.1 -7.8 42.5 of whic
Slide 42: Information regarding financial figures in this presentation
Information regarding financial figures in this presentation Q2 2017: − Financial data for six-month period ended June 30, 2017, as shown in the unaudited quarterly financial report ended June 30, 2017 − Entities classified as discontinued operations include Banco ProCredit El Salvador and Banco Pro
Slide 43: Contact Investor Relations
Contact Investor Relations Contact details Financial calendar Investor relations Date Place Event information ProCredit Holding AG & Co. KGaA 14.08.2017 Interim Report as of 30-Jun-17, Nadine Frerot Analyst Conference Call tel.: +49 69 951 437 285 06.09.2017 Frankfurt/ Main DVFA e-mail: PCH.ir@procr
Slide 44: Disclaimer
Disclaimer The material in this presentation and further supporting documents have been prepared by ProCredit Holding AG & Co. KGaA, Frankfurt am Main, Federal Republic of Germany (“ProCredit Holding”) and are general background information about the ProCredit group’s activities current as at the da
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