ProCredit with significant portfolio growth and improved consolidated result in first quarter of 2021 building on solid 2020 financial year
- Growth in customer loans by 3.0% and in customer deposits by 2.5% underscore the group’s strong positioning as reliable partner for SMEs and its growing foothold as a transparent direct bank for private clients
- Green loan portfolio exceeds the EUR 1 billion mark for the first time and now accounts for 18.8% of the total loan portfolio
- Annualised cost of risk at 27 basis points, below previous year’s level; credit risk indicators remain solid
- Cost-income ratio at 64.8% slightly below the guidance corridor of 65% - 68% for the year as a whole
- Consolidated result of EUR 15.6 million represents improved return on equity of 7.9%; positive result contribution from all ProCredit banks
Frankfurt am Main, 12 May 2021 – The ProCredit group, which is mainly active in South Eastern and Eastern Europe, started the 2021 financial year with good Q1 results. The customer loan portfolio grew by EUR 158 million or 3.0%, significantly stronger than the first quarter of the previous year (Q1 2020: EUR 42 million, 0.9%). The consolidated result increased to EUR 15.6 million (Q1 2020: EUR 13.7 million), representing an improved return on equity of 7.9% (Q1 2020: 7.0%). The improved result is largely attributable to a decline in loss allowances to EUR 3.6 million, lowering the annualised cost of risk to 27 basis points (Q1 2020: 57 basis points; EUR 6.9 million). The cost-income ratio stood at 64.8% and is slightly below the guidance corridor of 65% - 68% for the year as a whole (Q1 2020: 64.6%). All ProCredit banks made positive result contributions in Q1 2021, leading to an improved consolidated result.
The portfolio growth in the first quarter of 2021 is attributable to ProCredit’s strong market position as a “Hausbank” for small and medium-sized enterprises (SMEs). In view of the still tense macroeconomic situation caused by the pandemic and in line with their strong ESG positioning, ProCredit banks aim to continue to actively support SME clients in coping with the crisis and to finance their longer-term investment projects. This includes green loans, which increased by EUR 33 million in the first quarter of 2021, accounting for more than 20% of the EUR 158 million in total portfolio growth during the period. As of 31 March 2021, the green loan portfolio exceeded EUR 1 billion for the first time, representing 18.8% of the total loan portfolio.
Customer deposits also showed very good growth of EUR 123 million or 2.5% in the first quarter of 2021 (Q1 2020: decrease of 1.7% or EUR 74 million). The increase in deposits was mainly in the area of sight deposits and savings deposits and can be attributed in particular to direct banking business with private customers.
Solid risk profile serves as foundation for good financial results
In the first quarter of 2021, portfolio quality remained broadly stable at year-end 2020 levels. As of 31 March 2021, the share of credit-impaired loans in the total portfolio was 2.7% (31 December 2020: 2.6%); the share of loans in Stage 2 showed a slight decline by 0.3 percentage points to 4.6%.
The consolidated result for Q1 2021 includes loss allowance expenses amounting to EUR 3.6 million (Q1 2020: EUR 6.9 million); this is reflected in a lower annualised cost of risk at 27 basis points (Q1 2020: 57 basis points). The expenses recorded are mainly attributable to additional loss allowances for credit-impaired loans and to the portfolio growth achieved.
Net interest income stood at EUR 49.3 million, which was lower than the Q1 2020 figure of EUR 50.9 million, primarily due to the base rate cuts made in the COVID year 2020. Furthermore, a change in allocation between net interest income and loss allowance items of EUR 1.3 million from the first quarter of 2021 onwards has contributed to the reduction in net interest income compared with the previous year’s figure, although this change will have no effect on the overall result. At EUR 12.0 million, net fee and commission income was at the level recorded in the previous year (Q1 2020: EUR 12.0 million).
Personnel and administrative expenses declined by EUR 1.1 million to EUR 40.7 million in the first quarter, despite strong portfolio growth. This was partly due to lower travel activity as a result of the COVID-19 pandemic. This stable cost structure paired with steady business growth underlines the scaling potential of the ProCredit group’s business model.
Common Equity Tier 1 capital ratio remains at robust level
The Common Equity Tier 1 capital ratio (CET1 fully loaded) as of 31 March 2021 was 13.2%, and thus at the end-2020 level. A reduction in liquidity placements with central banks had a positive effect in the first quarter of 2021, counteracting the effects of significant portfolio growth. The consolidated result for the first quarter of 2021 and the consolidated result for the second half of 2020 have not yet been recognised in CET1 capital.
The ProCredit group continues to deduct one third of all profits recognised from the 2019 consolidated result and the consolidated result from the first half of 2020 for future dividend payments from CET1 capital. The consolidated result for the second half of 2020 will be recognised in CET1 capital after the Annual General Meeting 2021, with one third also being set aside for dividends.
The comfortable capitalisation of the ProCredit group is reflected particularly in the leverage ratio, which at 9.2% is well above the average for the banking sector.
Guidance for the 2021 financial year confirmed
Based on the positive developments in the first quarter, the Management Board confirms the guidance for the financial year as set out in the 2020 annual financial statements.
The Management Board and Supervisory Board have proposed a dividend distribution of EUR 0.18 per ordinary share for resolution at the Annual General Meeting scheduled for 27 May 2021. This amount corresponds to 20 basis points of the Common Equity Tier 1 capital ratio of the ProCredit group, which is the maximum level under the European Central Bank recommendation on dividend distributions valid until 30 September 2021. The Management Board also intends to propose, in coordination with the Supervisory Board, a further dividend payment of EUR 0.35 per ordinary share for the 2020 financial year at an Extraordinary General Meeting not later than 31 December 2021, provided that no statement from the Federal Financial Supervisory Authority or the European Central Bank precludes such distribution.
The ProCredit group’s quarterly financial report for Q1 2021 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/ .