ProCredit Holding - Profitability not fully rewarded by the market
ProCredit Holding (PCB) reported a strong Q323 return on equity (ROE) of 12.5%, assisted by a significant increase in net interest margin (NIM) to 3.9% (vs 3.2% in Q322 and 3.6% in Q223) on the back of continued positive asset repricing from higher base rates (which more than offset deposit repricing). As a result, operating income grew by 26.5% y-o-y (ahead of operating expenses), bringing PCB’s cost to income ratio (CIR) to 57.1% (vs 61.9% in Q322). This was coupled with a moderate annualised cost of risk of 55bp (9M23: 20bp). PCB’s management guides to FY23 ROE of c 12% (vs 8–10% earlier this year), which is in line with its current mid-term ROE target. We are raising our FY23 and FY24 net income estimates by 28% and 15%, respectively. PCB is likely to pay out one-third of its FY23 profits, implying currently a healthy dividend yield of 7.5%.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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