DGAP-News: ProCredit Holding AG & Co. KGaA / Key word(s): Quarterly / Interim Statement/9-month figures
ProCredit banks achieve significant growth in the first nine months of 2017
- Growth of 12.9% (9M 2016: 7.7%) of the customer loan portfolio in the core segment of loans over EUR 30,000 in the first nine months of 2017
- Total customer loan portfolio grows by 5.6% (9M 2016: 0.6%) in the first nine months of 2017
- 9M 2017: result from continuing business operations of EUR 36.5 million on par with the previous year's result (9M 2016: EUR 36.6 million)
- Q3 2017 vs Q2 2017: result from continuing business operations increased by EUR 4.4 million to EUR 15.7 million
- Efficiency gains thanks to digital offers and restructuring of branch network
- Sale of Banco ProCredit El Salvador successfully concluded in November 2017
Frankfurt am Main, 14 November 2017 - ProCredit Holding AG & Co. KGaA (ProCredit Holding), parent company of the ProCredit banks, continued to achieve strong growth of the ProCredit group as well as remarkable efficiency gains through the optimisation of the branch network in Q3 2017.
The customer loan portfolio of the group, which has positioned itself as the "Hausbank" for small and medium-sized companies (SMEs) and focuses on South Eastern and Eastern Europe, has grown by 5.6% since the beginning of the year, a significantly higher rate than in the same period of the previous year (9M 2016 December: 0.6%). As at 30 September 2017, the total customer loan portfolio amounted to EUR 3.8 billion (31 December 2016: EUR 3.6 billion).
Double-digit growth in the group's core segment of loans over EUR 30,000
The development of the ProCredit group's total customer loan portfolio in the 2017 financial year was affected by the planned reduction of the very small portfolio of loans under EUR 30,000. Overall, this part of the portfolio shrank by EUR 169.3 million during the first nine months of the current year. It is expected that the group's withdrawal from the segment of loans of less than EUR 30,000 will be largely completed by the end of 2017.
In South America, the strategic realignment and focus on SMEs with financing needs of above EUR 30,000 is progressing more slowly, and total withdrawal will be completed later than in South Eastern and Eastern Europe. The customer loan portfolio in South America saw a 20.6% reduction in the first three quarters of 2017 to EUR 243.7 million as at 30 September 2017 (31 December 2016: EUR 306.9 million). This decrease was mainly due to the withdrawal from loans below EUR 30,000 as well as to the depreciation of the US dollar since the beginning of the year. In domestic currency, the loan portfolio growth in the core segment of lending volumes above EUR 30,000 was positive.
As at 30 September 2017 the overwhelming majority of the customer loan portfolio consisted of business loans, reflecting the group's strategy. On this date, 19.0% of the customer loan portfolio consisted of loans to agricultural businesses. Loans to private clients accounts for a minor share of the portfolio (9.2%). The great majority of these are mortgage loans used to purchase, renovate or improve the energy efficiency of real estate (30 September 2017: 79.0%).
The green loan portfolio, which comprises loans granted by ProCredit banks specifically for ecologically responsible projects, grew by 30.1% (9M 2016:12.2%) to EUR 428.4 million (9M 2016: EUR 295.9 million) in the first nine months of the financial year. The green loan portfolio thus accounted for a share of 11.3% of the total customer loan portfolio as at 30 September 2017 (9M 2016:8.3%).
The loan portfolio of the ProCredit group continues to be highly diversified. The ten largest exposures represented only 1.8% of the group's total customer loan portfolio as at 30 September 2017.
Improvement of cost/income ratio in the third quarter of 2017
Borislav Kostadinov, Member of the Management Board of ProCredit General Partner AG (personally liable managing partner of ProCredit Holding AG & Co. KGaA), explains: "After the successful automation of cash transactions via our 24/7 self-service zones, we are now focusing our attention on widening the use of our range of online-banking services, which are aimed in particular at private clients who appreciate modern and innovative financial services. This is why we are restructuring our branch network and are already reaping the first fruits of these efficiency-enhancing measures in our operating business."
In the first nine months of the financial year 2017, the ProCredit group generated consolidated result of EUR 35.8 million, slightly higher than in the same period of the previous year (9M 2016: EUR 35.5 million). At EUR 36.5 million, earnings from continuing operations for this period were at the same level as in the previous year (9M 2016: EUR 36.6 million). The consolidated net income for the first nine months of the financial year 2017 includes special effects, but these had only a negligible net effect. The previous year's result includes extraordinary income from the merger of Visa Europe and Visa Inc.
The return on average equity (RoAE) for the first nine months of the financial year 2017 stood at 7.1% (9M 2016: 7.6 %). The focus on providing financing to SMEs with good prospects for development and growth, coupled with the withdrawal from lending to very small businesses, has led to an improvement in loan portfolio quality. As a result, loan loss provisions in the first three quarters of 2017 were lower than in the same period of the previous year. In addition, efficiency-enhancing measures have reduced operating expenses and increased non-interest income. This was offset by reduced net interest income, which was a consequence of the strategic realignment and market factors.
The Common Equity Tier 1 (CET1 fully loaded) capital ratio of 13.3% as at 30 September 2017 illustrates the very solid equity base of the ProCredit group (31 December 2016: 12.4%). This includes a positive effect from the sale of Banco ProCredit Nicaragua, which was completed in August 2017. The sale of Banco ProCredit El Salvador, also announced, was successfully concluded in November 2017. This is expected to have a further positive effect on the Common Equity Tier 1 capital ratio.
Portfolio growth for the remainder of the year likely to be stronger than originally expected
"We live SME banking and focus on building long-term, trust-based business relationships with our clients. Our experienced teams in the individual banks know the local markets and needs of our clients very well and aim to convince SMEs that we are the right bank for them. The strong growth in our core segment of loans of over EUR 30,000, especially also in the third quarter, as well as the existing pipeline are clear signs that we have chosen the right strategic direction. Based on the growth achieved in the first nine months of the current year, we confirm the growth forecast for the financial year 2017, which was adjusted in July," concluded Borislav Kostadinov.
The forecast for return on average equity (RoAE) is unchanged and is expected to be in a range of 7% to 9% for the financial year 2017. The projection for Common Equity Tier 1 capital (CET1 fully loaded) is also unchanged at a value of over 13%.
The ProCredit group's quarterly report dated 30 September 2017 will be available as of today in German and English on ProCredit Holding's website in the Investor Relations section at https://www.procredit-holding.com/investor-relations/reports-and-publications/financial-reports/.
ProCredit Holding AG & Co. KGaA
14.11.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Company:||ProCredit Holding AG & Co. KGaA|
|60486 Frankfurt am Main|
|Listed:||Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Dusseldorf, Stuttgart, Tradegate Exchange|
|End of News||DGAP News Service|