ProCredit (PCZ) Q2 2024 earnings summary

Executive summary

• Achieved strong business growth and profitability in H1 2024, with 6.9% loan growth and 4.1% deposit growth year-over-year, and profit of EUR 57.6 million, corresponding to an 11.6% ROE.

• Strategic investments in IT, staff, and marketing led to higher costs, reflected in a cost-income ratio of 64.1%.

• Comfortable capitalisation with CET1 ratio at 14.3% and total capital ratio at 17.7%, supported by a successful EUR 125 million Green Tier 2 bond issuance.

• Continued positive contribution from the Ukrainian bank despite ongoing conflict, though lending is restricted and risk remains elevated.

• Strategy focuses on SME financing, direct digital banking for private clients, and sustainability initiatives.

Financial highlights

• Operating income rose 14.6% year-over-year to EUR 219.7 million, mainly from a 16% increase in net interest income.

• Net fee and commission income grew 1.6% year-over-year, with payment services and card transactions as key contributors.

• Personnel and administrative expenses increased by 22.9% due to staff expansion and strategic investments.

• Cost-income ratio at 64.1%, at the upper end of guidance, reflecting growth investments.

• Loss allowances in Q2 were €5.4 million (annualized cost of risk: 33 bps); Stage 3 loans at 2.5% of portfolio, coverage ratio 55.6%.

Outlook and guidance

• Full-year 2024 guidance confirmed: loan growth target of ~10% (FX adjusted), ROE of 10–12%, cost-income ratio near 63%, and CET1 ratio above 13%.

• Medium-term ambitions: loan portfolio exceeding €10 billion, green loans at least 25% of total, ROE of 13–14%, and cost-income ratio improving to ~57%.

• Dividend payout policy remains at one-third of profits.

• Management remains cautious on loan growth run rate and will monitor developments.

• Continued focus on cost discipline, strategic investments, and automation, especially in retail and loan origination.