Procredit Holding Ag · XETR:PCZ
Procredit — Investor Day (March 2024)
49 slides from Procredit's investor day presentation, Mar 21, 2024
Slide 1: An impact-oriented group of commercial banks for MSMEs and private clients
An impact-oriented group of commercial banks for MSMEs and private clients in South Eastern and Eastern Europe Capital Markets Day, 21 March 2024
Slide 2: Today's agenda
Today’s agenda 13.00 ProCredit strategy and impact update followed by Q&A Strategic update | Hubert Spechtenhauser ProCredit impact | Dr Gian Marco Felice Positioning and growth | Eriola Bibolli Profitability | Christian Dagrosa 15.00 Break 15.30 Round table ‘ProCredit on the ground’ ProCredit Banks
Slide 3: A. Strategic update
A. Strategic update Hubert Spechtenhauser, Chairman of the management board B. ProCredit impact C. Positioning and growth D. Profitability ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 2
Slide 4: Strategic update | what's new?
Strategic update | what’s new? Broadened ProCredit footprint for enhanced positive impact Positioning Growth Profitability ► Broadened and sharpened ► Attain critical size and ► Improved balance sheet impact definition strong SME market position structure with more granularity ► Universal bank for M
Slide 5: Raison d'être
Raison d’être “ As a development-oriented commercial banking group, we strive to balance ’’ financial sustainability with comprehensive positive impact of our business on the economies, environment and societies of our countries of operation Broader sense Positive contribution to ESG of responsibili
Slide 6: ProCredit regional focus in context of EU accession
ProCredit regional focus in context of EU accession EU member states Intact and strong EU candidates / EU applicants GDP growth outlook ProCredit countries of operation in SEE/EE for SEE/EE of 3.8% (p.a. in 2025-28 vs. 1.6% for Euro area) Continued EU accession (currently 8 countries status as candi
Slide 7: Before strategic update: focused positioning on SMEs
Before strategic update: focused positioning on SMEs Business Retail ProCredit target Micro SME Private individuals customers (by client exposure) Very Small: Small: Medium: Business owners, Up to € 50k € 50 – 500k > € 500k high-/medium income Business focus Non-strategic Core segment Highly restric
Slide 8: Strong group positioning for MSME and PI clients
Strong group positioning for MSME and PI clients Business Retail ProCredit target Micro SME Private individuals customers (by client exposure) Very Small: Small: Medium: Up to € 100k € 100 – 750k > € 750k Strategic STRONG GROWTH CONTINUE TO EXPAND MARKET SHARE BROAD RETAIL update APPROACH Strong e
Slide 9: Targeting ambitious client and balance sheet growth
Targeting ambitious client and balance sheet growth Leading bank for MSMEs in SEE/EE Critical size and strong MSME market Loan growth to position in each >€10bn and B/S market Client growth transformation by ~1.5x in SME Attractive bank for and ~2.5x in PI private individuals Strategic investments i
Slide 10: Increased outlook for group profitability
Increased outlook for group profitability Scale and B/S transformation ► Margins to be strengthened from both sides of the balance sheet Medium-term RoE outlook ► Expansion of client base across all segments to support ~ 13 – 14% non-interest income ~ 12% Continued strong focus on cost efficiency ►
Slide 11: A new era of ProCredit
A new era of ProCredit Broadened and sharpened impact definition embedded in all business aspects Transformation into universal bank for MSMEs and private individuals linked to ambitious growth targets to attain critical size and strong MSME market positions in each market Positioning as an attracti
Slide 12: B. ProCredit impact
A. Strategic update B. ProCredit impact Dr Gian Marco Felice, Member of the management board C. Positioning and growth D. Profitability ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 11
Slide 13: Strong impact track record over the decades
Strong impact track record over the decades Consistently low net-write offs 5% Network of 4% Opening of the EV CHARGING Establishment of Published OUR RESPONSE 3% ProCredit academies STATIONS installed ProCredit as a ON FORCED LABOUR BANKING GROUP ALLEGATIONS related to 2% and consolidation of GREEN
Slide 14: Impact in ProCredit today
Impact in ProCredit today KPI: Jobs 200k jobs supported by our SMEs Jobs and investment KPI: Investment 64% of our lending goes to Social capital formation impact KPI: Gender Equity Diversity and 20% of our clients are inclusion women owned SMEs Sustainability at ProCredit Green energy KPI: Green Le
Slide 15: Sustainability inside ProCredit
Sustainability inside ProCredit INTERNAL MANAGEMENT SYSTEM CORPORATE GOVERNANCE STAFF ► Merit-based culture; PCB managers ► Comprehensive Environmental ► Flat hierarchies support transparency “home-grown”; ProCredit Academy Management System to analyse and and open communication graduates; equal sha
Slide 16: Bank for MSME and PI clients – increased group impact
Bank for MSME and PI clients – increased group impact Supporting sustainable economic development: Responsible approach to private individuals: MSME Hausbank ProCredit Direct High importance of SMEs in our countries of operation 71% of 62% of people GDP employed Focus on SMEs which are often under
Slide 17: Excursus Climate Action Strategy
Excursus Climate Action Strategy We set SBTi targets to achieve net zero for scope 3 emissions ProCredit is pioneering decarbonisation with SME clients from our business loan portfolio in line with Paris Agreement • Measuring at scale and accurately direct emissions from SMEs is both a huge challeng
Slide 18: Excursus Climate Action Strategy
Excursus Climate Action Strategy No exposure to the fossil fuel industries, but a leader North Macedonia is still highly dependent on energy production from coal: in renewable energy financing Less than 1 % of total electricity is generated by PV power plants in the country. Case study: Solar one Št
Slide 19: Continuous pioneering role in impact banking
Continuous pioneering role in impact banking Sustainability is embedded in the DNA of ProCredit and holistically integrated in the business model with all client groups Strong impact track record over the past decades in South-Eastern and Eastern Europe in fostering social-economic development and e
Slide 20: C. Positioning and growth
A. Strategic update B. ProCredit impact C. Positioning and growth Eriola Bibolli, Member of the management board D. Profitability ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 19
Slide 21: Attractive region from macro and banking sector view
Attractive region from macro and banking sector view Focus on SEE/EE | strategic and impact rationale GDP growth outlook Banking sector penetration Strong and intact GDP growth outlook in the (GDP growth p.a. 2025 – 28e) (loans/GDP 2022, median) region, particularly compared to Euro area 1.4x Georgi
Slide 22: Strong growth ambitions in all three client segments
Strong growth ambitions in all three client segments Targeted growth and transformation of loan book … Medium: ~1.5x Enlarge group footprint across all client target loan portfolio segments to amplify positive impact multiplier FY-23: Medium-term: €6.2bn > €10bn Small: Use unique market position
Slide 23: MSME: SME and micro clients
MSME: SME and micro clients ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 22
Slide 24: Starting point and key strengths
Starting point and key strengths SME Starting point Key strengths of ProCredit Micro ► Strong market position as a leading bank for SME ► Long and consistent track record PI clients in our market of operation ► Solid reputation as reliable ‘Hausbank’ for SMEs, ► Usually among the top-3 lenders in ea
Slide 25: Growth and positioning levers
Growth and positioning levers SME Growth focus Investments in growth catalysts Micro ► Consolidate market position as a leading SME bank ► Differentiate through leading relationships, networking PI in the region and advisory capabilities ► Medium-term ambition to rank among the top-3 Accelerate su
Slide 26: Lean and modernized branch network as premium advisory centers
Lean and modernized branch network as premium advisory centers Proximity to clients and commercial centers 2023 2024/25 10 4 4 4 3 6 Romania Ukraine 1 2 6 5 5 Serbia Moldova 3 Bosnia and Georgia 7 7 Herzegovina 4 1 4 1 Kosovo Bulgaria Albania 3 3 North Macedonia 15 new branches planned by 2025 to co
Slide 27: Focused marketing for enhanced visibility
Focused marketing for enhanced visibility CASE STUDY Targeted Campaigns for Businesses Agro Loans Investment loans to drive digitization Loans for European Projects with Non-refundable Grants Example of marketing campaigns by ProCredit Banks Bosnia & Herzegovina and Romania ProCredit Group | Capital
Slide 28: Micro: Uniquely positioned to strongly grow client base
Micro: Uniquely positioned to strongly grow client base SME Starting point Key strengths and growth focus going forward Micro ► Client profile: Small offices (lawyers, doctors), shops, ► Good position and reputation to serve client group PI self-employed people, aspiring SMEs ► Strong technology alr
Slide 29: Private individual clients
Private individual clients ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 28
Slide 30: Good starting point and well-established retail approach
Good starting point and well-established retail approach SME Starting point Key strengths of ProCredit Micro ► Solid base: Established position in some markets, ► Modern, convenient and transparent digital PI emerging position in others banking services – pioneering role in local rollout of ► Stable
Slide 31: Rethinking retail: setting the direction
Rethinking retail: setting the direction SME Growth focus Investments in growth catalysts Micro ► Become the bank of choice as modern and ► Customer centered product and service offering PI convenient full-service retail bank Simple and streamlined (cards, instant payments, ► Profound change to gr
Slide 32: Focused marketing for enhanced visibility
Focused marketing for enhanced visibility CASE STUDY Targeted Campaigns for Private Individuals ProCredit Direct ProGreen Loans ProGreen PV Loans Example of marketing campaign by ProCredit Bank Romania ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 31
Slide 33: Regional growth strategies
Regional growth strategies ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 32
Slide 34: Differentiated regional growth strategies in place
Differentiated regional growth strategies in place Unified target picture despite different maturity of banks … … contributing to group growth KPIs Loan portfolio per SEE/EE bank1 (€m) 1.5x / increased SME & Mature Further consolidate good market Bulgaria 1.517 2.5x private client base banks positio
Slide 35: ProCredit Kosovo as 'blueprint' for other group banks
ProCredit Kosovo as ‘blueprint’ for other group banks CASE STUDY ProCredit Kosovo: Further consolidate SME market leader position and good reputation with PI clients Key bank highlights: ► Strong local reputation as leading SME bank ► # 1 ranked bank by business loan portfolio ► Long-standing presen
Slide 36: Strong and targeted positioning for growth
Strong and targeted positioning for growth ProCredit group with its impact-centred approach uniquely positioned on SEE/EE region, offering above WE growth outlook High loan growth ambitions paired with strategic transformation of loan book: targeting ~ 50% of loans in Small, Very Small and PI client
Slide 37: D. Profitability
A. Strategic update B. ProCredit impact C. Positioning and growth D. Profitability Christian Dagrosa, CFO and member of the management board ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 36
Slide 38: Financial benefits of loan portfolio transformation
Financial benefits of loan portfolio transformation Medium-term outlook for loan portfolio growth Strong growth outlook delivering > €10bn enhanced economies of scale Stabilized medium-term margins due to portfolio effect (Target structure ~50% medium and ~50% other segments) Loan portfolio Grou
Slide 39: Amplified growth of highly granular deposit base
Amplified growth of highly granular deposit base Strong deposit growth to be continued … … particularly driven by private clients Close to € 1.0bn deposit growth +15.4% ytd Target picture in FY-23, ~50% by PI clients 7.3 6.3 0.6 0.6 1.6 1.9 ~ 50% 1.5 from PI Highly granular target structure with
Slide 40: Targeting a well-enhanced medium-term RoE level
Targeting a well-enhanced medium-term RoE level Structurally strengthened RoE outlook A ► Structural benefits of loan portfolio and deposit A B C D transformation on margins and growth ~ 13-14% ► Scaled operating income based on assumed broadly stable margins (NII FY-23: 3.6%) and increased share of
Slide 41: Local enhancements driving group profitability
Local enhancements driving group profitability Updated group RoE clusters and expectations (SEE/EE) Structural profitability improvements Medium-term RoE level FY 2023 ambition driven by growth strategy and dedicated investments Kosovo, > 20% 2 banks Ukraine1 Few selected banks Internal expectatio
Slide 42: Strategic investments enabling more operating leverage
Strategic investments enabling more operating leverage Temporary increase in CIR enabling medium-term potential Combination of increased scale and cost discipline Illustrative development of cost-income-ratio over time Illustrative development of operating income and expenses FY-24 guidance: Medium-
Slide 43: Prudent capitalization and higher RWA efficiency
Prudent capitalization and higher RWA efficiency Prudent capitalization and capital structure (FY-23) Key strategic measures 14.3% 14.3% 15.8% 8.8% ► Maintain comfortable capitalisation on all levels leverage ratio (fully-loaded) ► Overall capital structure regularly reviewed in terms of capital eff
Slide 44: Updated positioning secures margin and delivers RoE
Updated positioning secures margin and delivers RoE Increased and transformed asset and liability structure expected to stabilize NIM at ~3.6%, whilst generating additional potential from other income streams Strategic investments in growth catalysts increase CIR short-term, but enable more operatin
Slide 45: Q&A
Q&A Photovoltaic project financed by ProCredit Bulgaria 44
Slide 46: Appendix
Appendix ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 45
Slide 47: Illustration of Service Point with 24/7 zone and advisory space
Illustration of Service Point with 24/7 zone and advisory space ProCredit Group | Capital markets day | Frankfurt am Main, 21 March 2024 46
Slide 48: Notes
Notes Slide 5 Slide 39 GDP growth based on IMF World Economic Outlook as of October 2023. For Indicative visualisation of the relative development of different line items for the SEE/EE the figure shown is based on the median of the countries of operation in updated medium-term group RoE outlook. SE
Slide 49: Disclaimer
Disclaimer The material in this presentation and further supporting documents have This presentation and further supporting documents may contain forward- been prepared by ProCredit Holding AG, Frankfurt am Main, Federal looking statements including statements regarding our intent, belief or Republi