ProCredit : Q1 2024 Results Presentation

Hubert Spechtenhauser, Chairman of the Management Board Christian Dagrosa, CFO and member of the Management Board

Q1 2024 results

Frankfurt am Main, May 2024

1. Highlights and business update

B.

C.

D.

Group results

Regional performance

Outlook

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

Highlights Q1 2024

Strong start into the year after announcement of new medium-term ambitions

Good loan and deposit growth in Q1-24 underline potential of new group business strategy

• Loans grow strongly by 3.0%, growth momentum across all segments and all banks outside Ukraine
• Deposit growth by 2.8% resulting in deposit-to-loan ratio of 116%; private clients as major driver
• Comfortable capitalisation with CET1 ratio at 14.3%; stable level as good B/S growth absorbed by strong earnings generation and increased RWA efficiency; TCR increased by ~2 pp to pro-forma17.7% following successful EUR 125m Green Tier 2 issuance

Strong Q1 result of 13.4% return on equity as all group banks in SEE/EE contribute with good performance

• Profit of EUR 33.5m, up 14% yoy, driven by good development of income and loss allowance
• Net interest margin of 3.7% (up 25 bps yoy) and good loan growth drive 19% yoy increase in NII
• Low level of risk cost of 2 basis points reflecting stable loan portfolio quality and conservative risk profile; Stage-3 loans at 2.6%
• C/I ratio at 61.7%, increased yoy as result of higher staff and dedicated investments in IT and marketing in line with updated business strategy; strict underlying cost discipline amid substantial investments
• Continued good result contribution from PCB Ukraine; further portfolio reduction in Q1 to now 7.1% of group loans

On track to deliver on the group's short- and medium-term ambitions

• Management Board proposal to AGM on 4 June for dividend of EUR 0.64 per share for FY 2023 (1/3 of consolidated result)
• FY-24outlook of 10-12%RoE, based on a cautious estimate for the cost of risk of up to 40 basis points
• Medium-termoutlook of 13-14%RoE reflecting ambitious growth targets towards a > €10bn loan portfolio and measures to consolidate margins and leverage scaling effects

3.0%

loan growth (EUR 187m)

2.8%

deposit growth

(EUR 200m)

13.4%

return on equity (on Q1-23 level)

3.7%

net interest margin (+25 bps vs. Q1-23)

14.3%

CET1 ratio (fully-loaded),

(on Q1-23 level)

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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Q1 2024 results versus guidance

• Growth of the loan portfolio
• Return on equity (RoE)
• Cost-incomeratio (CIR)
• CET1 ratio and leverage ratio

Dividend payout:

Guidance

FY 2024

Around 10%

(FX adjusted)

10% - 12%

(based on up to 40bps cost of risk)

Around 63%

(with margin of +/- 1 ppt)

> 13.0% CET1 ratio, c. 9% leverage ratio

Actual

Q1 2024

3.0%

(2.7% FX adjusted)

13.4%

(with cost of risk of 2bps)

61.7%

14.3% and 9.0%

Proposal to AGM on 04 June 2024 foresees dividend payout for FY 2023 profits in line with dividend policy (payout ratio of 1/3 of profits) and corresponds to EUR 0.64 dividend per share, or EUR 37.7m dividend in total.

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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STUDY

Successful Tier 2 placement in Apr-24 supporting the group's medium-term growth ambitions

ProCredit Holding AG successfully placed EUR 125m Green Tier 2 Bonds

CASE

Summary of transaction:

• On 25-Apr-24, ProCredit Holding successfully placed green Tier 2 subordinated bonds
• Strong demand enabled ProCredit Holding to increase the originally expected placement volume from EUR 100m to EUR 125m
• The bonds were placed with >20 international and domestic institutional investors
• Investor demand for the bonds was geographically diverse, with Luxembourg (28%), the UK (28%), France (12%) and the US (12%) accounting for the largest volumes
• The transaction was concluded under the ProCredit Group Green Bond Framework, on which Sustainalytics has provided a second party opinion
• As a result of the transaction, the group's total capital ratio increased by ~2pp to a level of 17.7% (pro-forma as of Mar-24)

Main statistics:

ISIN	DE000A383C84
Issue date	25.04.2024
Rating issuer / issue	BBB / BB- (Fitch)
Volume	EUR 125m
Coupon / spread	9.5% / 6.63%
Tenor	10.25NC5.25
Listing	Euro MTF, Luxembourg Stock Exchange

Pro-forma total capital ratio (TCR):

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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Good portfolio growth driven by all customers segments

Loan portfolio growth

► Customer loans increase strongly by EUR 187m or 3.0%

(in EUR m)

5.8% YoY

										3.0% QoQ
6,108		6,061				6,226
548	115	552		113		612	149
1,728		1,724				1,825
3,717		3,672				3,639
FY-22			Q1-23					FY-23
			Medium		Small		Micro		Private clients

6,414

653 168

1,844

3,749

Q1-24

 Growth driven by all segments, with particularly strong

relative growth in Micro (12.8%) and Private clients (6.7%)

 Strong growth in most markets as customer loans excl.

Ukraine grow by 4.0%

 Loan portfolio in Ukraine reduces by EUR 42m amid higher-

than-expected repayments and early repayments

► Green loan portfolio steady at EUR 1.3bn, representing 20% of

total loan portfolio

Loan portfolio by loan type	Green loan portfolio

 High portfolio quality as default rate of green loan portfolio at

1.9% (0.7pp lower than for total loan portfolio)

20%

45%

35%

(in EUR m)

1,268

218

462

588

FY-23

1.0% QoQ

1,281

236

462

584

Q1-24

Investment loans	Working capital loans	Energy efficiency	Renewable energy
Green loans		Other green investments

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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Strong deposit development through digital banking channels

(in EUR m)

Deposit growth

							17.9% YoY
										2.8% QoQ
6,290	6,324			7,254			7,455
		2,490			2,664
1,872	2,054
							1,740
1,604	1,550			1,721
2,814	2,720			3,043			3,051
FY-22		Q1-23	FY-23	Q1-24
		Current accounts			Savings accounts			Term deposit accounts

• Customer deposits increase by EUR 200m or 2.8%
• • Private client deposits grow strongly by more than 5% (~80% of deposit growth in Q1), signaling good progress of the planned acceleration of ProCredit's direct banking strategy
  • Growth continues to be driven by term deposit accounts, as appetite for interest-bearing accounts remains high in high- margin environment
• Strategic management of deposit/loan ratio and deposit base

Deposits by client and key metrics

8%					>45%
26%			share of retail
									deposits
42%						(private clients
					and micro)
21%
4%			116.2%
									deposit / loan ratio,
Medium		Small		Micro		Private clients		Institutional	up 11.9 ppt yoy

• Deposit-to-loanratio up 11.9 percentage points yoy with positive developments across almost all banks
• Result of good positioning: increased and diversified deposit base as strategic priority to further support margin development in the coming years
• Strong deposit growth enabling YOY reduction of EUR 185m in non-customer funds

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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Strategic group positioning on SEE/EE, with positive expected GDP development and increased international focus on the region

GDP outlook for SEE/EE remains intact, well above Euro area

Macroeconomic environment / key current themes

	SEE/EE			Euro area
2024	2025	2026 - 29	2024	2025	2026 - 29

3.9 3.8

%)	2.9			%)
(in							(in			1.5	1.3
								0.8
					Median real GDP growth						Real GDP growth
Inflation expected to decrease in 2024 and thereafter
					SEE/EE							Euro area
	2024	2025	2026 - 29		2024	2025	2026 - 29
	3.7	3.0	3.0
(in %)					(in %)	2.4
							2.1	1.9
			Median consumer price inflation				Consumer price inflation

Note: Inflation figures based on average period consumer prices; Source: IMF World Economic Outlook Apr-24

Expected

GDP growth

Regional focus on

SEE/EE

War on

Ukraine

Inflation outlook

Interest rate

policies

• Recent update of GDP growth estimates by IMF with further decreased outlook for Eurozone, 2024 at 0.8% vs 1.2% before
• 2024e median GDP growth in SEE/EE at 2.9%; resilience of the region demonstrated by intact mid-term GDP growth outlook of around 4% p.a.
• Risk factors to macro environment incl. middle east conflict
• Increased momentum regarding EU accession; currently 8 countries in SEE/EE status as candidates for EU membership
• High level of investment appetite and FDI inflows
• Ongoing, intensified discussions Serbia, Kosovo and EU
• Still ongoing with significant human and economic losses
• Ukraine GDP outlook of 3.2% in 2024e and 6.5% in 2025e, however, still subject to high risks as war continues
• Strong decrease in inflation observable
• Reversion to a ~3% level expected to start in 2024, depending on country; lack of labor key constraint in many industries
• Many policy rates have stabilized at high levels, with some reductions particularly in EE segment
• ECB decision to keep interest rates constant; potential divergence between ECB and FED on rates development

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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1. Highlights and business update
2. Group results

C.

D.

Regional performance

Outlook

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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Operating income and expense overview

Operating income

► Strong increase in operating income yoy by EUR 13m or 14%,

21.4%

14.3%

to EUR 107m

(in EUR m)

412.5

339.8

93.7

(in EUR m)

107.2

	Continued positive trajectory of net interest income with yoy
	increase of 19%
	Net fee income and income from fx transactions with
	marginal yoy improvement

FY-22	FY-23		Q1-23	Q1-24
		Net interest income			Net fee income		Other operating income (net)

 Other operating income down EUR 1.4m, due to less

material non-recurring effects in both periods

Personnel and administrative expenses

CIR 64.0%

Adj. CIR

60.8%

217.4

13.6%

59.9%

59.4%

247.0

59.7%61.7%

59.5%61.7%

18.3%

66.1

► Cost-income ratio at 61.7%, as strategic investments result in
the anticipated short-term reduction of cost-efficiency
	Strategic investments reflected in higher costs for personnel,
	IT, marketing and depreciation
	Continued strict underlying cost discipline

(in EUR m)

(in EUR m)

55.9

 No material extraordinary items recorded in Q1-24

FY-22		FY-23		Q1-23	Q1-24
		Administrative expenses		Personnel expenses

ProCredit Group | Q1 2024 results | Frankfurt am Main, 13 May 2024

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