- Loan portfolio grows by 6.9%, with relevant contribution from all segments
- Deposits grow by 4.1%; private clients as main driver
- Number of customers increases by 5.0%, demonstrating good progress in group’s growth trajectory
- Strong business growth based on foundations laid in recent years
- Good profitability with return on equity of 11.6%
- Financial result of EUR 57.6 million on the back of +14.6% increased operating income and low cost of risk of 18 bps
- 1/3 of half-year result (approx. EUR 0.33 per share) accrued for next year dividend purposes and reflected in comfortable CET1 ratio of 14.3%
The ProCredit group, which is mainly active in South Eastern and Eastern Europe, grew strongly in H1 2024 and achieved a financial result of EUR 57.6 million. This corresponds to a return on equity of 11.6%. The loan portfolio grew by EUR 429 million or 6.9% across all segments and all banks outside Ukraine. Deposit growth was also remarkable at EUR 295 million or 4.1%. Deposits from private clients increased by more than 8%. Capitalisation levels remained comfortable as the group’s CET1 ratio amounted to 14.3% and the total capital ratio to 17.7% as of June 2024, the latter also reflecting the successful placement of a Green Tier 2 Bond in the second quarter. Above all, the strong group performance in H1 2024 was enabled by the solid foundations that has been laid during the past two years.
Chair of the Management Board, Hubert Spechtenhauser: “We are very pleased with our business development in this half-year and feel encouraged by the fact that we were able to deliver strongly on all the strategic priorities we laid out at our Capital Markets Day in March 2024. Investments in growth catalysts are well underway and some 60% of our loan growth was achieved in lower-volume segments. Importantly, many of our smaller banks achieved loan growth rates well above the 10% mark, which will help them reach a critical and scalable mass down the road. Lastly, almost all new deposits came from a highly granular private client base. These results show that we are on a very good track towards the balance sheet transformation we have committed to, as well as the group’s medium-term targets that arise from this strategy.”
Foundations of past years enabling strong business growth
During the past few years, the group has laid the foundations for the marked business development in the first half of 2024. In particular, the strong performance during 2023, ProCredit’s most successful year as a banking group, the placement of a green Tier 2 bond and a very effective deposit strategy, enabled the group to continue along its growth trajectory.
The loan portfolio grew by EUR 429 million or 6.9% in the first half of the year (H1 2023: 0.8%), reflecting a benign investment environment in the region as well as the ongoing implementation of strategic measures designed to provide strong growth rates for the coming years. Similarly, deposits displayed a good increase of EUR 295 million or 4.1% (H1 2023: 2.7%). This increase was attributable in particular to private clients, who are at the centre of the group’s deposit strategy. Compared to the previous year’s period, the deposit-to-loan ratio increased by around 8.5 percentage points to a good level of 113.4% (H1 2023: 104.9%).
Good financial result despite significant investments in growth catalysts
The group’s operating income increased by 14.6% or EUR 27.9 million, driven primarily by higher net interest income. Net interest income increased by EUR 24.9 million or 16.0% to EUR 180.6 million (H1 2023: EUR 155.7 million), with the net interest margin widening by around 16 basis points year-on-year to 3.6%.
Net fee and commission income increased slightly by 1.6% to EUR 29.3 million (H1 2023: EUR 28.9 million). With EUR 9.8 million (H1 2023: EUR 7.2 million), other income positions contributed some EUR 2.6 million more to the group’s result than in H1 2023, mostly due to higher foreign exchange income.
Personnel and administrative expenses increased by EUR 26.3 million, which resulted in an increase in the cost-income ratio of 4.4 percentage points to 64.1% (H1 2023: 59.7%). Cost increases during the period were mainly related to significant investments in growth catalysts in line with the updated group business strategy. In particular, increased staff numbers and continued investments in IT and marketing contributed to the increase in this line item. Beyond those strategic investments, seasonal costs were booked in the second quarter, particularly related to the local deposit insurance funds.
Loss allowances in the first half of the year amounted to EUR 5.7 million (H1 2023: EUR 0.5 million), which corresponds to an annualised cost of risk of 18 basis points. In Ukraine, EUR 4.8 million in loss allowances were booked, accounting for the majority of the group’s loss allowances. The share of Stage 3 loans at group level has further declined slightly since the beginning of the year to 2.5%.
Comfortable capitalisation levels supporting the group’s medium-term growth ambitions
With a CET1 ratio of 14.3% and a total capital ratio of 17.7% as of June 2024, the group’s capitalisation levels were comfortable. As of June 2024, profits for Q4 2023 and H1 2024 were recognised as regulatory capital, net of the 1/3 dividend accrual in line with the group’s dividend policy.
In the second quarter, ProCredit Holding completed the successful placement of a green Tier 2 subordinated bond in the amount of EUR 125 million. The transaction contributed some 2 percentage points to the group’s total capital ratio. Overall, these comfortable capitalisation levels support the group’s ambitious medium-term growth targets towards a loan portfolio of more than EUR 10 billion.
Strong growth momentum puts group well on track for the full year 2024
With the strong business development and good financial result recorded in the first half of the year, the group is well on track with regard to the full year 2024.
For the financial year, the Management Board expects loan portfolio growth of around 10%, adjusted for currency effects. Return on equity is expected to be around 10-12%, based on a cautious estimate of up to 40 basis points for cost of risk. The cost-income ratio is expected to be around 63% (plus/minus 1 percentage point), which assumes a slightly decreased net interest margin and takes into account increased investments compared to previous years. The group’s CET1 ratio is expected to be above 13%, with the leverage ratio at around 9%.
The ProCredit group’s Interim Group Management Report as of 30 June 2024 is available as of today on the ProCredit Holding website under Investor Relations at https://www.procredit-holding.com/en/investor-relations/reports-publications/financial-reports. The financial calendar for ProCredit Holding is available at https://www.procredit-holding.com/investor-relations/financial-calendar
H1 2024 results at a glance
in EUR m.
Statement of Financial Position
| 30.06.2024 | 31.12.2023 | Change | |
| Loan portfolio | 6,656.0 | 6,226.5 | 429.5 |
| Deposits | 7,549.0 | 7,254.2 | 294.8 |
Statement of Profit or Loss
| 01.01. – 30.06.2024 | 01.01. – 30.06.2023 | Change | |
| Net interest income | 180.6 | 155.7 | 24.9 |
| Net fee and commission income | 29.3 | 28.9 | 0.5 |
| Operating income | 219.7 | 191.8 | 27.9 |
| Personnel and administrative expenses | 140.8 | 114.5 | 26.3 |
| Loss allowance | 5.7 | 0.5 | 5.2 |
| Profit of the period | 57.6 | 64.1 | -6.5 |
Key performance indicators
| 01.01. – 30.06.2024 | 01.01. – 30.06.2023 | Change | |
| Change in loan portfolio | 6.9% | 0.8% | 6.1 pp |
| Cost-income ratio | 64.1% | 59.7% | 4.4 pp |
| Return on equity (annualised) | 11.6% | 14.2% | -2.6 pp |
| 30.06.2024 | 31.12.2023 | Change | |
| CET1 ratio (fully loaded) | 14.3% | 14.3% | 0.0 pp |
Additional indicators
| 30.06.2024 | 31.12.2023 | Change | |
| Deposits to loan portfolio | 113.4% | 116.5% | -3.1 pp |
| Net interest margin (annualised) | 3.6% | 3.6% | 0.0 pp |
| Cost of risk (annualised) | 18 bp | 25 bp | -7 bp |
| Share of defaulted loans | 2.5% | 2.7% | -0.2 pp |
| Stage 3 loans coverage ratio | 55.6% | 57.6% | -2.0 pp |
| Green loan portfolio (in EUR m) | 1,310.1 | 1,268.3 | 3.3% |
Contact:
Andrea Kaufmann, Group Communications, ProCredit Holding, Tel.: +49 69 95 14 37 138,
E-mail: Andrea.Kaufmann@procredit-group.com
About ProCredit Holding AG
ProCredit Holding AG, based in Frankfurt am Main, Germany, is the parent company of the development-oriented ProCredit group, which consists of commercial banks for small and medium enterprises (SMEs). In addition to its operational focus on South Eastern and Eastern Europe, the ProCredit group is also active in South America and Germany. The company’s shares are traded on the Prime Standard segment of the Frankfurt Stock Exchange. The main shareholders of ProCredit Holding AG include the strategic investors Zeitinger Invest GmbH and ProCredit Staff Invest GmbH & Co KG (the investment vehicle for ProCredit staff), KfW, the Dutch DOEN Participaties BV and the European Bank for Reconstruction and Development. As the group’s superordinated company according to the German Banking Act and as the parent financial holding company of the ProCredit financial holding group, ProCredit Holding AG is supervised on a consolidated level by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) and the German Bundesbank. For additional information, visit: https://www.procredit-holding.com/
Forward-looking statements
This press release contains statements relating to our future business development and financial performance, as well as statements relating to future actions or developments affecting ProCredit Holding which may constitute forward-looking statements. Such statements are based on the management of ProCredit Holding’s current expectations and specific assumptions, many of which are beyond the control of ProCredit Holding. They are therefore subject to a multitude of risks, uncertainties and factors. Should one or more of these risks or uncertainties materialise, or should underlying expectations or assumptions prove incorrect, then the actual results, performance and achievements (both negative and positive) of ProCredit Holding may differ significantly from those expressed or implied in the forward-looking statement. Beyond the legal requirements, ProCredit Holding does not undertake any obligation to update these forward-looking statements or to correct them in the event of deviations from the expected development.