ProCredit (PCZ) Q4 2024 earnings summary

Executive summary

• Achieved record loan growth of 12.6% year-over-year, surpassing €7bn in the loan portfolio, and deposit growth of €1 billion (14.3%), mainly from micro, small enterprises, and private clients, with strong performance in smaller banks.

• Net result reached €104.3 million, corresponding to a 10.2% ROE, supported by income growth and robust loan portfolio quality.

• Strategic investments in staff, IT, marketing, and branch network led to a temporarily higher cost-income ratio of 68.1%.

• Challenging environments in Ukraine and Ecuador impacted results, with Ecuador contributing a loss and Ukraine operations remaining stable with strong capital buffers.

• Solid capitalisation maintained, with a CET1 ratio of 13.1% and leverage ratio of 8.4%.

Financial highlights

• Operating income grew by €32 million (7.7%) year-over-year to €444.3 million, mainly from net interest income (+6%).

• Cost-income ratio increased to 68.1% (65% excluding Ecuador), driven by investments and Ecuador's negative contribution; personnel expenses up 19%.

• Net interest margin declined to 3.3% in Q4, down 0.5 percentage points year-over-year; full-year margin at 3.5%.

• Loss allowances were low, with a net release of €5.2 million for the year, mainly from recoveries.

• Deposit-to-loan ratio improved to 118.3%, up 1.8pp year-over-year.

Outlook and guidance

• Loan portfolio expected to grow by around 12% in 2025, with continued focus on lower volume segments and smaller banks.

• Cost-income ratio anticipated to remain elevated in 2025 before scaling effects materialize.

• ROE guidance for 2025 is around 10%; medium-term ambition is 13%-14% (excluding Ukraine reconstruction upside).

• CET1 ratio expected to remain around 13%, with dividend payout policy of one-third of consolidated results.

• Potential upside to ROE guidance if the war in Ukraine ends and reconstruction begins.