ProCredit Holding - Impact-oriented SME lender in SEE and EE

ProCredit (PCB) has extensive experience in supporting small and medium-sized enterprises (SMEs) in emerging economies (coupled with a strong environmental, social and governance (ESG) profile), with a focus on Southeastern (SEE) and Eastern Europe (EE) and banking operations in Ecuador. Its in-depth, impact-oriented relationships with SME borrowers (93% of loan book at end-Q120), prudent credit risk management and solid capital base (CET-1 ratio of 14.0% at end-Q120) should help reduce the impact of macro headwinds. We forecast PCB’s ROE to increase from c 7% in FY19 to 10% by FY24, driven by solid loan book growth after FY20e (c 9% pa), which can be achieved with the existing capital base. This should be assisted by limited growth in operating expenses due to a lean branch network and digital platform.