Slide 1: Q3 2017 results
Q3 2017 results Frankfurt am Main, 14th November 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 9M 2017 and FY 2016 ► A profitable, development-oriented commercial banking group for SMEs Total assets Customer loan portfolio(1) Deposits/loans(2) with a focus on South Eastern Europe and Eastern Europe EUR 5,504m EUR 3,832m 91% ► Headqu
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 | Q3 2017 results | Frankfurt am Main, 14th November 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 87% 28% 81% 58% 5% 2% Dec-13 Dec-16 Sep-17 Dec-13 Dec-16 Sep-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 ► On track for sharp business profile as modern SME bank for Eastern Europe: Successful sale of Banco ProCredit Nicaragua and Banco ProCredit El Salvador 91% of loan portf
Slide 7: Strong volume growth in core loan categories
Strong volume growth in core loan categories Sep 2017 YTD -25% (EUR -169m) 13% (EUR +377m) +6% Initial loan size (in EUR) EUR 133m EUR 369m FY 2016 -28% (EUR -256m) 13% (EUR +336m) +2% Initial loan size (in EUR) EUR 185m EUR 486m Note: Loan volume growth split by initial loan size in all segments Pr
Slide 8: We deliver on our guidance
We deliver on our guidance Outlook for ProCredit Group 2017 Guidance Actuals Commentary 2017 9M 2017 ► Growth of the gross loan portfolio in the target loan categories (>EUR 30,000) > 10% +13% Continued strong growth in the SME segment ► Growth of the total gross loan portfolio > 8% +6% Decrease
Slide 9: Update on implementation of digital private client offer
Update on implementation of digital private client offer Ongoing implementation Examples ► Implementation of unified service offer to private clients for standard fee in all ProCredit banks ► Launch of one dedicated website: www.procreditbank-direct.com ► Release of new version of mobile banking
Slide 10: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2017 results | Frankfurt am Main, 14th November 2017 10
Slide 11: Q3 2017 results at a glance
Q3 2017 results at a glance In EUR m Q2-2017 Q3-2017 9M-2016 9M-2017 y-o-y Net interest income 51.3 50.4 175.6 153.0 -13% Provision expenses 0.5 1.1 16.8 4.5 -73% Net fee and commission income 10.9 11.7 32.1 33.3 4% Net result of other operating income 0.5 2.8 1.5 5.3 n.m. Operating income 62.2 63.8
Slide 12: Net interest income
Net interest income ► Net interest income stabilisation continued in Q3 in line 4.6% 4.4% 4.0% 4.0% 3.9% with previous two quarters 56.7 55.3 ► Growth of loan portfolio largely compensated declining 51.3 51.3 50.4 margins ► Strategic focus on SME clients is associated with significant positive effec
Slide 13: Provisioning expenses
Provisioning expenses 33 bps 32 bps ► Expenses for allowances for losses on loans and advances to customers (LLP) on low level with comfortable coverage ratio (103%) 20 bps 11 bps 3.0 2.9 ► Decrease in LLP/cost of risk in 2017 driven by improved loan portfolio quality and recovery of written-off loa
Slide 14: Net fee and commission income
Net fee and commission income ► Q3-17 net fee and commission income with substantial increase compared to all previous quarters 11.7 10.9 10.9 ► Increase predominantly driven by adjustment to fees for 10.7 10.4 account maintenance services, which have been gradually implemented in most banks ► Incre
Slide 15: Operating expenses
Operating expenses 78.1% 76.4% 68.9% 73.8% 69.3% ► Decreased operating expenses in Q3 due to efficiency 53.8 gains from branch and service point closures 22.1 48.0 47.3 47.9 ► YTD operating expenses below average FY 2016 levels 44.9 22.1 21.7 22.0 20.6 ► The YTD cost base has been influenced by: ► O
Slide 16: Contribution of segments to group net income 9M 2017
Contribution of segments to group net income 9M 2017 Group functions, e.g. risk management, reporting, capital Profit contribution (after tax of EUR -0.7m) management, liquidity management, training and development from entities in El Salvador and Nicaragua. YTD result influenced by sale of PCB Incl
Slide 17: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2017 results | Frankfurt am Main, 14th November 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% 6% Private loans: Business loans: 1% 2% 9% 2% 91% Eastern Europe: 5% South Eastern 7% 21% 19% Europe: 3% 70% 8% 19% 10% 17% 4% 5% 72% 6% 13% 7% Bulgaria Serbia Kosovo Macedonia
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: 13% 3% 87% 10% 10% 35% 12% 25% 51% 27% 13% 14% EUR 30-50k EUR 50-150k EUR 150-250k EUR 250-1m EUR USD Other currencies > EUR 1m EUR 10-
Slide 20: Loan portfolio quality
Loan portfolio quality Net write-offs(1) 0.2% 0.3% ► Net write-off development remains at a low level Coverage ratio 66% 67% ► Further improvement in portfolio at risk (PAR) impaired(2) Coverage ratio 104% 103% ► Prudent risk management underlined by high coverage PAR30(3) ratios 5.8% ► Continuous m
Slide 21: Structure of collateral
Structure of collateral Collateral by type ► Majority of collateral consisting of mortgages 23% ► Clear and strict requirements regarding types of acceptable collateral, legal aspects of collateral and insurance of collateral items ► Standardised collateral valuation methodology ► Regular monitoring
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% 11.3% 2013-2016) 428 23 ► Includes financing of investments in 329 264 22 ► Energy efficiency 21 174 405 126 23 307 ► Renewable energies (in EUR m) 22 242 104 150
Slide 23: Agenda
Agenda A Highlights B Financial development C Asset quality D Balance sheet, capital and funding Q&A Appendix ProCredit Group | Q3 2017 results | Frankfurt am Main, 14th November 2017 23
Slide 24: Asset reconciliation
Asset reconciliation Increase of liquidity due Strong growth in core loan Deconsolidation of to strong deposit growth segment + EUR 377m; further PCB Nicaragua (sold in decline in loans < EUR 30k Aug-17) Other 11% assets 5% Assets held for sale 16% Cash and cash equivalents (in EUR m) 67% Net loans
Slide 25: Liabilities and equity reconciliation
Liabilities and equity reconciliation Decrease in liabilities to private clients, largely due to Deconsolidation of the closure of service points; more than compensated PCB Nicaragua (sold in by increased liabilities to private entities Aug -7) Liabilities 6% to banks Emission of new bond (in EUR m)
Slide 26: Liquidity update
Liquidity update Liquidity coverage ratio 143% ► Adequate group liquidity situation 112% ► All ratios remained comfortably above limits 80% 80% ► Increase of liquidity in Q3 as a result of deposit growth Jun-17 Sep-17 LCR ratio Regulatory minimum Highly liquid assets (HLA) and HLA ratio 20% 23% 0.8
Slide 27: Regulatory capital and risk-weighted assets
Regulatory capital and risk-weighted assets Overview of capitalisation In EUR m Jun-17 Sep-17 ► Increase of CET1, Total Capital and Leverage ratios CET1 capital (net of deductions) 593 594 Additional Tier 1 capital (net of deductions) 0 0 ► CET1 capital includes Q1/Q2 2017 profits Tier 1 capital 593
Slide 28: Development of CET1 capital ratio (fully loaded)
Development of CET1 capital ratio (fully loaded) Leverage ratio (fully loaded) 10.5% ProCredit Group | Q3 2017 results | Frankfurt am Main, 14th November 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 | Q3 2017 results | Frankfurt am Main, 14th November 2017 29
Slide 30: Q&A
Q&A ProCredit Bank Bulgaria, Thessaloniki Branch ProCredit Group | Q3 2017 results | Frankfurt am Main, 14th November 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 | Q3 2017 results | Frankfurt am Main, 14th November 2017 31
Slide 32: Strong volume growth in core loan categories 9M 2017 vs 9M 2016
Strong volume growth in core loan categories 9M 2017 vs 9M 2016 Sep 2017 YTD -25% (EUR -169m) 13% (EUR +377m) +6% Initial loan size (in EUR) EUR 133m EUR 369m Sep 2016 YTD -20% (EUR -182m) 8% (EUR +201m) +1% Initial loan size (in EUR) EUR 208m EUR 537m Note: Loan volume growth split by initial loan
Slide 33: Overview of quarterly financial development
Overview of quarterly financial development In EUR m Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Net interest income 56.7 55.3 51.3 51.3 50.4 Provision expenses 2.9 1.8 3.0 0.5 1.1 Net fee and commission income 10.4 10.9 10.7 10.9 11.7 Net result of other operating income 2.4 2.6 2.0 0.5 2.8 Operating i
Slide 34: Segment South Eastern Europe
Segment South Eastern Europe Regional loan portfolio split Key financial data Bosnia 6% (in EUR m) Sep-16 YTD Sep-17 YTD Albania 6% Bulgaria 27% Net interest income 115.0 99.2 Romania 8% Provision expenses 7.8 0.1 Net fee and commission income 21.7 22.7 Net result of other operating income 1.2 -0.3
Slide 35: Segment Eastern Europe
Segment Eastern Europe Regional loan portfolio split Key financial data Moldova 13% (in EUR m) Sep-16 YTD Sep-17 YTD Net interest income 45.1 41.7 Provision expenses 9.7 6.1 Net fee and commission income 6.4 6.6 Ukraine Net result of other operating income 2.1 2.7 47% Operating income 43.9 44.9 Oper
Slide 36: Segment South America
Segment South America Regional loan portfolio split Key financial data Mexico 4% (in EUR m) Sep-16 YTD Sep-17 YTD Colombia 14% Net interest income 17.9 15.1 Provision expenses -0.5 -1.7 Net fee and commission income -0.1 -0.1 Net result of other operating income 1.7 0.7 Operating income 20.0 17.4 Op
Slide 37: Funding and rating update
Funding and rating update Funding sources overview ► Highly diversified funding structure and 3% 1% 4% counterparties 7% ► Customer deposits main funding source, accounting for 75% as of Sep-17 Customer deposits 10% Liabilities to IFIs ► Supplemented by long-term funding from Liabilities to banks IF
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’
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 Sep-17 Assets Cash and cash equivalents 937 900 Loans and advances to banks 287 208 Financial assets at fair value through profit or loss 0 0 Available-for-sale financial assets 250 184 Loans and advances to customers 3,629 3,832 Allowance for losses on loans and advanc
Slide 41: Income statement by segment
Income statement by segment 01.01. - 30.09.2017 Eastern South Eastern Germany South America Consolidation Group (in EUR m) Europe Europe Interest and similar income 13.9 74.5 115.1 25.1 -12.7 215.9 of which inter-segment 12.3 0.2 0.1 0.0 Interest and similar expenses 15.9 32.8 16.0 10.0 -11.8 62.9 o
Slide 42: Information regarding financial figures in this presentation
Information regarding financial figures in this presentation Q3 2017: − Financial data for nine-month period ended September 30, 2017, as shown in the unaudited quarterly financial report ended September 30, 2017 − Entities classified as discontinued operations include Banco ProCredit El Salvador in
Slide 43: Contact Investor Relations
Contact Investor Relations Contact details Investor Relations Media Relations ProCredit Holding AG & Co. KGaA ProCredit Holding AG & Co. KGaA Nadine Frerot Andrea Kaufmann tel.: +49 69 951 437 285 tel.: +49 69 951 437 138 e-mail: PCH.ir@procredit-group.com e-mail: PCH.media@procredit-group.com 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