ProCredit Holding - Impact of war in Ukraine
In light of the recent developments in Ukraine, we have temporarily suspended our forecasts and fair value estimate for ProCredit Holding (PCB) until further notice. The conflict is likely to have a significant impact on PCB’s operations in Ukraine (gross loan book of €732m or c 13% of the total loan portfolio at 30 September 2021). Potential effects are likely to include 1) a spike in default rates (although this could be mitigated by credit moratoria), 2) a decline in interest and fee income, 3) a collapse in lending volumes, and 4) a negative FX impact from the depreciating Ukrainian Hryvnia (although we note that PCB normally matches the foreign currency exposure of its assets and liabilities). The local banking system is now operating under Ukraine’s martial law (introduced on 24 February), which should help to mitigate the short-term impact. We note that PCB has no exposure to Russia and thus the sanctions imposed on Russia will have no meaningful impact on PCB’s business.Procredit Holding Ag & Co Kgaa. ProCredit Holding AG & Co KGaA is a Germany-based company, which is primarily engaged in the financial services industry. The Company operates as a parent for development-oriented ProCredit group, which consists of commercial banks for small and medium enterprises (SMEs) and whose operational focus is on South Eastern and Eastern Europe. In addition to this regional presence, the ProCredit group is also active in South America and Germany. The Company operates through various subsidiaries, such as ProCredit Bank SA, ProCredit Bank (Bulgaria) EAD, ProCredit Bank AG, ProCredit Academy GmbH, Quipu GmbH, ProCredit Bank SA, ProCredit Bank ShA, Banco ProCredit Colombia SA, Banco ProCredit SA, JSC ProCredit Bank, Banco Pyme Los Andes ProCredit SA, BC ProCredit Bank, JSC ProCredit Bank, as well as operates special purpose vehicles PC Finance II BV and Fideicosimo Primera Tituarizacion de Cartera Comercial Pymes ProCredit, among others.
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