Slide 1: Q2 2018 results
Borislav Kostadinov, Member of the Management Board Christian Dagrosa, Head of Controlling Q2 2018 results Frankfurt am Main, 14 August 2018
Slide 2: ProCredit – A unique approach to banking
ProCredit – A unique approach to banking Summary Key figures H1 2018 and FY 2017 ► A profitable, development-oriented commercial group of banks for Total assets Customer loan portfolio Deposits/loans(1) SMEs with a focus on South Eastern Europe and Eastern Europe EUR 5,664m EUR 4,260m 84% ► Headquar
Slide 3: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 2
Slide 4: Where are we coming from? Significant progress since 2013
Where are we coming from? Significant progress since 2013 Focused growth in SME loan categories(1) Decrease in overall branch network Decrease in number of total group staff 645 80% 83% 11,514 328 46% 118 103 3,328 3,174 317 71 47 59 44 Dec-13 Dec-17 Jun-18 Dec-13 Dec-17 Jun-18 Dec-13 Dec-17 Jun-18
Slide 5: Recent key achievements
Recent key achievements Execution of business client strategy ► Successful positioning as Hausbank for SMEs Strong growth with target clients (LP growth of 8.9%) Increase in transaction volume from SME client base ► Efficiency measures reflected in significantly lower operating expenses in H1 20
Slide 6: Strong volume growth in loan portfolio
Strong volume growth in loan portfolio H1 2018 FY 2017 Note: Loan volume growth split by initial loan size in all segments and excluding recovery unit “ARDEC” in Mexico; % are calculated as sum of YTD changes of the bracketed size categories ProCredit Group | Q2 2018 results | Frankfurt am Main, 14
Slide 7: Roll-out of direct banking for private clients
Roll-out of direct banking for private clients ProCredit FlexSave Housing Loan Roll-out completed Not in scope Current Account ProCredit FlexFund Investment Loan Term Deposit www.procreditbank-direct.com Europe South America ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 6
Slide 8: Outlook for ProCredit Group 2018
Outlook for ProCredit Group 2018 ► Growth of the loan portfolio 12 - 15%(1) ► Return on Average Equity (RoAE) 7.5 - 8.5% ► CET1 ratio > 13% ► Cost-income ratio (CIR) < 70% ► Dividend payout ratio 1/3 of profits In the mid-term, and taking into consideration a stable political, economic and operating
Slide 9: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 8
Slide 10: Q2 2018 results at a glance
Q2 2018 results at a glance In EUR m H1-2017 H1-2018 Q1-2018 Q2-2018 y-o-y Net interest income 102.6 93.7 46.6 47.1 -9% Provision expenses 3.4 1.1 0.1 1.0 -69% Net fee and commission income 21.6 24.0 11.4 12.6 11% Net result of other operating income 2.5 -0.7 1.4 -2.0 -126% Operating income 123.3 11
Slide 11: Net interest income
Net interest income ► Net interest income increased with respect to Q1 due to the higher interest income from customer loans, which more 4.0% 3.9% 3.9% 3.4% 3.4% than compensated for the increase in interest expenses 51.3 51.8 ► Certain margin pressure continues, but the net interest 50.4 47.1 margi
Slide 12: Provisioning expenses
Provisioning expenses ► In Q2 2018, loan loss allowance expenses (LLP) of EUR 11 bps 1.0m have been recorded (average for 2017: EUR 1.3m per 10 bps 5 bps quarter) 8 bps 1 bps ► Loan portfolio quality improved and is the major driver of the 1.1 low LLP expenses (Credit impaired loans decreased by 1.0
Slide 13: Net fee and commission income
Net fee and commission income ► Net fee and commission income increased with respect to 12.5 12.6 the previous quarter on the basis of higher income from both 11.7 private and business clients 11.4 10.9 ► The increase in net fee and commission income is a consequence of our new private banking conce
Slide 14: Operating expenses
Operating expenses 76.4% 76.4% 70.2% 72.5% ► Operating expenses have decreased significantly in 2018 69.3% due to efficiency gains from branch and service point closures as well as a reduction in personnel 22.0 20.3 20.6 ► Since coming down in the first quarter of this year, operating 19.5 19.4 expe
Slide 15: Contribution of segments to group net income H1 2018
Contribution of segments to group net income H1 2018 Group functions, e.g. risk management, reporting, capital management, liquidity management, training and development. Includes ProCredit Holding, Quipu, ProCredit Academy Fürth, ProCredit Bank Germany (EUR 105m customer loan portfolio; EUR 280m cu
Slide 16: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 15
Slide 17: Structure of the loan portfolio
Structure of the loan portfolio Loan portfolio by geographical segments Loan portfolio by sector South America: Germany: 2% Private loans: Business loans: 6% 9% 91% 1% 2% 1% 0% 5% 8% Eastern Europe: 19% South Eastern 3% 23% Europe: 69% 27% 8% 16% 12% 16% 5% 4% 5% 21% 12% 22% 6% 7% Wholesale and reta
Slide 18: Structure of the loan portfolio (continued)
Structure of the loan portfolio (continued) Loan portfolio by initial loan size Loan portfolio by currency 9% 17% 37% 19% 50% 38% 17% 13% < 50k 50-250k 250-500k 500k-1.5m >1.5m EUR USD Other currencies Notes: Loan portfolio by initial loan size in % of total outstanding principal (EUR 4,238m as of 3
Slide 19: Loan portfolio quality
Loan portfolio quality IAS 39 IFRS 9 ► Portfolio quality has improved substantially, both in terms of share of impaired loans and PAR 30 Net write- 0.4% 0.4% 0.5% offs(1)(5) ► Our prudent risk management is underlined by high Coverage coverage ratios impaired 70.0% 81.3% 90.2% portfolio(2) Coverage
Slide 20: Structure of collateral
Structure of collateral Collateral by type ► Majority of collateral consists of mortgages ► Growing share of financial guarantees mainly as a result of the InnovFin initiative provided by the 23% European Investment Fund ► Clear, strict requirements regarding types of acceptable collateral, legal as
Slide 21: Development of green loan portfolio
Development of green loan portfolio Green loan portfolio growth ► Strong growth in the green loan portfolio 4.0% 6.4% 9.1% 12.6% 13.9% ► Includes financing of investments in 591 489 15 • Energy efficiency 14 331 • Renewable energies 264 15 576 (in EUR m) 174 21 475 • Other environmentally-friendly a
Slide 22: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 21
Slide 23: Asset reconciliation
Asset reconciliation Strong portfolio growth net of additional IFRS 9 provisions Reduction of seasonal excess liquidity available at year-end ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 22
Slide 24: Liabilities and equity reconciliation
Liabilities and equity reconciliation Stable level of deposits in spite Capital increase in February of substantial restructuring and 2018, IFRS 9 effect and closing of branches capitalised profit ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 23
Slide 25: Liquidity update
Liquidity update Liquidity coverage ratio ► To support the strong loan portfolio growth and ensure 179% 170% adequate liquidity levels, new structural liquidity was attracted in Q2, predominantly from IFIs 100% 80% ► In Q2 2018 the level of HLAs remained stable. The reduction as compared to Dec-17 i
Slide 26: Regulatory capital and risk-weighted assets
Regulatory capital and risk-weighted assets Overview of capitalisation in EUR m Dec-17 Jun-18 ► Increases in CET1, total capital CET1 capital 595 665 and leverage ratios due to the capital increase in Feb. 2018 Additional Tier 1 capital 0 0 Tier 1 capital 595 665 ► Q4 2017 profits recognised (after
Slide 27: Development of CET1 capital ratio (fully loaded)
Development of CET1 capital ratio (fully loaded) Leverage ratio 11.3% Leverage ratio 10.5% ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 26
Slide 28: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 27
Slide 29: Q&A
Q&A ProCredit Bank Georgia ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 28
Slide 30: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q2 2018 results | Frankfurt am Main, 14 August 2018 29
Slide 31: Overview of quarterly financial development
Overview of quarterly financial development In EUR m Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Net interest income 51.3 50.4 51.8 46.6 47.1 Provision expenses 0.5 1.1 0.8 0.1 1.0 Net fee and commission income 10.9 11.7 12.5 11.4 12.6 Net result of other operating income 0.5 2.8 -2.7 1.4 -2.0 Operating
Slide 32: Segment South Eastern Europe
Segment South Eastern Europe Regional loan portfolio breakdown Key financial data Bosnia Albania 6% (in EUR m) H1 2017 H1 2018 7% Bulgaria Net interest income 66.8 58.2 27% Romania Provision expenses -1.7 0.0 8% Net fee and commission income 14.7 16.6 Net result of other operating income -0.5 -2.6 M
Slide 33: Segment Eastern Europe
Segment Eastern Europe Regional loan portfolio breakdown Key financial data Moldova 11% (in EUR m) H1 2017 H1 2018 Net interest income 27.6 27.8 Provision expenses 6.4 -0.2 Net fee and commission income 4.3 4.3 Net result of other operating income 1.4 1.5 Ukraine Operating income 26.8 33.7 Georgia 5
Slide 34: Segment South America
Segment South America Regional loan portfolio breakdown Key financial data Mexico 3% (in EUR m) H1 2017 H1 2018 Colombia 17% Net interest income 10.5 8.1 Provision expenses -1.3 1.2 Net fee and commission income 0.0 -0.3 Net result of other operating income 0.5 1.1 Operating income 12.3 7.7 Operatin
Slide 35: Funding and rating update
Funding and rating update Funding sources overview 3%1% 5% ► Highly diversified funding structure and counterparties 4% ► Customer deposits main funding source, accounting for 72% Customer deposits as of Jun-18 15% Liabilities to IFIs Liabilities to banks ► Supplemented by long-term funding from IFI
Slide 36: Balance sheet
Balance sheet in EUR m Dec-17 Jun-18 Assets Cash and central bank balances 1,077 872 Loans and advances to banks 196 172 Investment securities 0 265 Available-for-sale financial assets 215 0 Loans and advances to customers 3,910 4,260 Allowance for losses on loans and advances to customers -129 -144
Slide 37: Income statement by segment
Income statement by segment South Eastern 01.01.- 30.06.2018 (in EUR m) Germany Eastern Europe South America Consolidation Group Europe Interest and similar income 9.4 50.7 69.9 13.8 -8.5 135.3 of which inter-segment 8.5 0.1 -0.1 0.0 0.0 0.0 Interest and similar expenses 10.1 22.9 11.8 5.7 -8.8 41.6
Slide 38: Information regarding financial figures in this presentation
Information regarding financial figures in this presentation Q2 2018: ► Financial data for six-month period ended 30 June 2018, as shown in the unaudited quarterly financial report ended 30 June 2018 Q1 2018: ► Financial data for three-month period ended 31 March 2018, as shown in the unaudited quar
Slide 39: Contact Investor Relations
Contact Investor Relations Contact details Financial calendar Investor Relations Date Place Event information Equity Forum ProCredit Holding AG & Co. KGaA 3/4.09.2018 Frankfurt/ Main Autumn Conference 2018 Nadine Frerot Quarterly Statement as of 30-Sep-18, Analyst 14.11.2018 Conference Call tel.: +4
Slide 40: Disclaimer
Disclaimer The material in this presentation and further supporting This presentation and further supporting documents may contain documents have been prepared by ProCredit Holding AG & Co. forward-looking statements including statements regarding our KGaA, Frankfurt am Main, Federal Republic of Ger