Procredit Holding Ag · XETR:PCZ
Procredit — Q3 2018 Earnings Presentation
39 slides from Procredit's earnings presentation, Nov 14, 2018
Slide 1: Q3 2018 results
Borislav Kostadinov, Member of the Management Board Christian Dagrosa, Head of Controlling Q3 2018 results Frankfurt am Main, 14 November 2018
Slide 2: ProCredit – A unique approach to banking
ProCredit – A unique approach to banking Summary Key figures Q3 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 5,829m EUR 4,308m 85% ► Headquar
Slide 3: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 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% 84% 11,514 328 46% 118 3,328 3,116 317 102 71 47 58 44 Dec-13 Dec-17 Sep-18 Dec-13 Dec-17 Sep-18 Dec-13 Dec-17 Sep-18
Slide 5: Recent key achievements
Recent key achievements Execution of business client strategy Execution of private client strategy ► Successful positioning as Hausbank for SMEs ► Fully implemented unified range of client services for a standard Strong growth with target clients (LP growth of 10.2%) fee in the ProCredit banks res
Slide 6: Strong volume growth in loan portfolio
Strong volume growth in loan portfolio Sep 2018 +10% YTD Initial loan size (in EUR) 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 | Q3
Slide 7: 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 medium term, assuming a stable political, economic and operating environment, we s
Slide 8: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 7
Slide 9: Q3 2018 results at a glance
Q3 2018 results at a glance In EUR m 9M-2017 9M-2018 Q2-2018 Q3-2018 y-o-y Net interest income 153.0 141.8 47.1 48.0 -7% Provision expenses 4.5 1.4 1.0 0.3 -69% Net fee and commission income 33.3 37.3 12.6 13.3 12% Net result of other operating income 5.3 0.9 -2.0 1.5 -86% Operating income 187.1 178
Slide 10: Net interest income
Net interest income 3.9% 3.9% ► Net interest income increased for the second consecutive quarter in 2018. 3.4% 3.4% 3.3% ► The increase is above all associated with increased interest 51.8 50.4 income from loans to customers, which is showing an 48.0 46.6 47.1 increasingly positive trend that is mos
Slide 11: Provisioning expenses
Provisioning expenses ► The financial performance continues to be supported by the 11 bps very solid risk profile, which maintains loan loss provisioning 8 bps expenses at low levels. 3 bps 10 bps 1 bps ► Credit impaired loans decreased by 0.2pp to 3.5% in this 1.1 quarter alone. 1.0 ► The coverage
Slide 12: Net fee and commission income
Net fee and commission income 13.3 ► Net fee and commission income continues to increase 12.5 12.6 quarter by quarter on the basis of higher income from both 11.7 private and business clients. 11.4 ► YoY, the increase in net fee and commission income for the first nine months of the year stands at E
Slide 13: Operating expenses
Operating expenses 76.4% 72.5% 69.3% 70.2% ► Operating expenses have decreased significantly in 2018 67.8% due to efficiency gains from branch and service point closures as well as a reduction in personnel. 20.3 20.6 19.4 20.4 19.5 ► Since coming down in the first quarter of this year, operating exp
Slide 14: Contribution of segments to group net income 9M 2018
Contribution of segments to group net income 9M 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 95m customer loan portfolio; EUR 286m cus
Slide 15: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 14
Slide 16: Structure of the loan portfolio
Structure of the loan portfolio Loan portfolio by geographical segments Loan portfolio by sector South America: Germany: Private loans: Business loans: 6% 2% 8% 92% 1% 2% 1% 0% 5% 7% Eastern Europe: 3% 19% South Eastern 22% Europe: 69% 27% 8% 16% 12% 17% 5% 4% 4% 20% 6% 12% 23% 7% Bulgaria Serbia Ko
Slide 17: Structure of the loan portfolio (continued)
Structure of the loan portfolio (continued) Loan portfolio by initial loan size Loan portfolio by currency 10% 16% 36% 19% 51% 37% 18% 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 4,289m as of
Slide 18: 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- offs(1)(5) 0.4% 0.4% 0.6% Coverage ► Our prudent risk management is underlined by high impaired 70.0% 81.3% 92.0% portfolio(2) coverage ratios. Coverag
Slide 19: Structure of collateral
Structure of collateral Collateral by type ► Majority of collateral consists of mortgages 22% ► Growing share of financial guarantees mainly as a result of InnovFin and other guarantee programmes provided by the European Investment Fund ► Clear, strict requirements regarding types of acceptable coll
Slide 20: 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% 14.7% 629 15 ► Includes financing of investments in 489 14 • Energy efficiency 331 • Renewable energies 264 15 614 21 • Other environmentally-friendly activities 174 475 (
Slide 21: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 20
Slide 22: Asset reconciliation
Asset reconciliation Strong portfolio growth net of additional IFRS 9 provisions Other 12% assets Cash and cash 17% equivalents (in EUR m) Net loans to 72% customers ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 21
Slide 23: Liabilities and equity reconciliation
Liabilities and equity reconciliation Increase in deposits in spite of substantial restructuring and closing of branches Capital increase in February 2018, IFRS 9 effect and IFI and bank funding as a capitalised profit stable and long-term source to support the dynamic growth in our portfolio Liabil
Slide 24: Liquidity update
Liquidity update Liquidity coverage ratio 179% 186% ► In Q3 2018 the level of HLAs increased by roughly EUR 150m. 100% 80% ► The increase primarily resulted from higher deposit portfolio growth as compared to loan portfolio growth and new structural funding attracted by several banks from IFIs. Dec-
Slide 25: Regulatory capital and risk-weighted assets
Regulatory capital and risk-weighted assets Overview of capitalisation in EUR m Dec-17 Sep-18 ► Increases in CET1, total capital and leverage ratios due to the capital increase in Feb. 2018 CET1 capital 595 662 Additional Tier 1 capital 0 0 ► Q4 2017 and Q1/Q2 2018 profits recognised Tier 1 capital
Slide 26: Development of CET1 capital ratio (fully loaded)
Development of CET1 capital ratio (fully loaded) Leverage ratio 11.0% Leverage ratio 10.5% ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 25
Slide 27: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 26
Slide 28: Q&A ProCredit Bank Georgia
Q&A ProCredit Bank Georgia ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 27
Slide 29: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2018 results | Frankfurt am Main, 14 November 2018 28
Slide 30: Overview of quarterly financial development
Overview of quarterly financial development In EUR m Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Net interest income 50.4 51.8 46.6 47.1 48.0 Provision expenses 1.1 0.8 0.1 1.0 0.3 Net fee and commission income 11.7 12.5 11.4 12.6 13.3 Net result of other operating income 2.8 -2.7 1.4 -2.0 1.5 Operating
Slide 31: Segment South Eastern Europe
Segment South Eastern Europe Regional loan portfolio breakdown Key financial data Bosnia (in EUR m) Sep-17 YTD Sep-18 YTD Albania 6% 7% Net interest income 99.2 87.4 Bulgaria 27% Romania Provision expenses 0.1 1.3 8% Net fee and commission income 22.7 25.5 Net result of other operating income -0.3 -
Slide 32: Segment Eastern Europe
Segment Eastern Europe Regional loan portfolio breakdown Key financial data Moldova (in EUR m) Sep-17 YTD Sep-18 YTD 12% Net interest income 41.7 41.7 Provision expenses 6.1 -0.1 Net fee and commission income 6.6 6.9 Net result of other operating income 2.7 2.6 Ukraine Operating income 44.9 51.3 Geo
Slide 33: Segment South America
Segment South America Regional loan portfolio breakdown Key financial data Mexico 3% (in EUR m) Sep-17 YTD Sep-18 YTD Colombia 16% Net interest income 15.1 12.4 Provision expenses -1.7 0.1 Net fee and commission income -0.1 -0.1 Net result of other operating income 0.7 1.2 Operating income 17.4 13.4
Slide 34: Funding and rating update
Funding and rating update Funding sources overview 3%1% ► Highly diversified funding structure and counterparties 4% 4% ► Customer deposits main funding source, accounting for 72% Customer deposits as of Sep-18 16% Liabilities to IFIs ► Supplemented by long-term funding from IFIs and institutional L
Slide 35: Balance sheet
Balance sheet in EUR m Dec-17 Sep-18 Assets Cash and central bank balances 1,077 974 Loans and advances to banks 196 196 Investment securities 0 261 Available-for-sale financial assets 215 0 Loans and advances to customers 3,910 4,308 Allowance for losses on loans and advances to customers -129 -140
Slide 36: Income statement by segment
Income statement by segment 01.01.- 30.09.2018 South Eastern Germany Eastern Europe South America Consolidation Group (in EUR m) Europe Interest and similar income 14.9 78.5 105.7 20.8 -13.6 206.3 of which inter-segment 13.6 0.1 -0.1 0.0 0.0 0.0 Interest and similar expenses 15.3 36.8 18.3 8.4 -14.3
Slide 37: Information regarding financial figures in this presentation
Information regarding financial figures in this presentation Q3 2018: ► Financial data for nine-month period ended 30 September 2018, as shown in the unaudited quarterly financial report ended 30 September 2018 Q2 2018: ► Financial data for six-month period ended 30 June 2018, as shown in the unaudi
Slide 38: Contact Investor Relations
Contact Investor Relations Contact details Financial calendar Investor Relations Date Place Event information 28.11.2018 Frankfurt/Main Deutsche Börse ProCredit Holding AG & Co. KGaA German Equity Forum 2018 Nadine Frerot tel.: +49 69 951 437 285 e-mail: PCH.ir@procredit-group.com Media Relations Pr
Slide 39: 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