ProCredit (PCZ) Q3 2024 earnings summary

Executive summary

• Achieved strong business growth in the first nine months of 2024, with loans up 9.0% and deposits up 7.8% year-over-year, driven by all customer segments, especially MSMEs and private clients, and supported by strategic investments.

• Profit after tax reached EUR 84.8 million, corresponding to an 11.3% ROE, despite a higher cost-income ratio due to accelerated investments.

• Deposit growth of €566 million, with 60% from private clients, supporting funding granularity and retail strategy.

• Strategic investments in IT, marketing, and branches led to higher costs but are expected to drive future scaling effects.

• Despite headwinds in Ukraine and Ecuador, profitability and asset quality remain strong.

Financial highlights

• Net interest income increased by 11% year-over-year to EUR 270.6 million; operating income up 9.8% to EUR 330.7 million.

• Cost-income ratio rose to 65.7% (from 58.7% in 9M 2023) due to strategic investments and higher staff numbers.

• CET1 ratio at 14.1% (fully loaded/pro forma), total capital ratio at 17.3% after successful EUR 125m Green Tier 2 bond issuance.

• Deposit-to-loan ratio at 115% (115.3%), up year-over-year.

• Cost of risk remained low at 8 basis points, reflecting strong portfolio quality.

Outlook and guidance

• Updated 2024 guidance: loan growth expected above 10%, cost-income ratio around 66%, ROE at ~10%.

• CET1 ratio expected above 13%, leverage ratio around 9%, and dividend payout ratio of 1/3 confirmed.

• Medium-term targets: loan portfolio over EUR 10 billion, cost-income ratio to fall to 57%, ROE outlook of 13–14%.

• Scaling effects from investments expected to reduce cost-income ratio from 2025 onward.

• Green loans targeted at least 25% of portfolio in the medium term.