ProCredit Holding AG (PRRCF) (Q2 2026) Earnings Call Highlights: Loan Growth Crosses EUR8 ...

Negative Points

• Cost-income ratio remained elevated at 71.2%, with operating costs up 7% due to investments in digitalization and central functions.

• Net fee and commission income declined year-on-year due to euro introduction in Bulgaria and SEPA adoption, reducing FX and payment fees.

• Geopolitical risks (Ukraine war, Middle East tensions) increased downside risks, leading to additional portfolio-level provisions of EUR2.7 million.

• Elevated tax rates in Ukraine and Romania, along with reduced fee income, pressured profitability, with ROE guidance at 7%.

• Deposit growth was modest at 2.2% in H1, with competition for term deposits remaining a headwind, though management expects stronger H2.

Q & A Highlights

Q: With the Tier 1 ratio now at 14.7% after the AT1 issuance, does this change your appetite for loan growth towards the top end of the 12% to 15% range? Is the buffer earmarked primarily for loan growth? A: The AT1 issuance was already an assumption in our capital management forecast for 2026, which guided our loan growth and ROE targets. The successful placement provides the necessary capital to safely continue with our loan growth ambition, and we confirm our expectation to grow in the 12% to 15% range by year-end, which is higher than market averages in our operating regions. The ROE guidance remains at 7%.

Q: Is the 18 basis point improvement in net interest margin to 3.4% sustainable into the second half of the year? A: Yes, the improvements are structural and achieved on a highly granular basis, with quarter-on-quarter improvements in essentially all markets. We are continuing to roll out focused efforts to optimize the net interest margin on both sides of the balance sheet, and we see this trajectory as sustainable in the second half of the year.

Q: Do you consider double-digit deposit growth achievable in FY26, given that H2 tends to be seasonally stronger? Do you plan to increase marketing budgets to attract deposits faster? A: We are confident we will achieve double-digit growth in customer deposits in the second half, driven by typical seasonality in SME funds and exceptionally strong growth from micro customers. Regarding marketing, we are shifting from a product-driven to a customer-focused acquisition strategy built around value streams. We expect marketing costs per retail customer and per euro of retail deposits to decline and stabilize, as we focus on a funding-driven, digital-first retail banking strategy centered on mass and mass-affluent payroll customers.

Q: What loan-to-deposit ratio do you expect over the medium term, and is there an upper level you would accept at the individual bank level to facilitate loan book growth? A: As a general principle, we seek to fund lending predominantly through local customer deposits as it is the most stable and attractive funding source. However, we do not manage the group against a specific loan-to-deposit ratio target or a predefined upper threshold. Our focus is on the quality and structure of funding, increasing the share of operational current accounts and savings deposits while reducing reliance on expensive term deposits. We will act opportunistically with wholesale funding when it is economically more attractive.

Q: Do you expect any meaningful negative effects from liability repricing in the second half due to base rate hikes in countries like Ukraine or ECB policy, or competition for deposits? A: We do not expect a material increase directly related to ECB policy, but the competitive environment for term deposits will remain a feature of our markets. We have been managing this headwind successfully, and our funding costs have developed in line with expectations. More importantly, our lending strategy focuses on higher-yielding opportunities, which is reflected in the positive trajectory of net interest income and margin. We are confident we can continue building on this momentum.

Q: Why was the tax rate in Q2 significantly higher than in Q1? Is it due to elevated tax effects from Ukraine? A: Yes, Ukraine is a significant factor. Profit before tax in Ukraine was higher in Q2 than in Q1 because we had higher loan loss provisions in Q1. This is the major driver for the higher calculated tax rate in Q2.

Q: Can you provide more detail on the drivers of the strong net interest income growth of 11.6% year-on-year? A: The growth was driven by strong volume effects across the group, partly offset by a mixed pricing environment. The net interest margin increased by six basis points year-on-year, supported by margin recovery in Ecuador. More importantly, the underlying quarter-on-quarter margin trend is broadly consistent both including and excluding Ecuador, indicating that improvements are now driven granularly by developments across our entire Eastern Europe and Southeastern Europe region.

Q: What is the outlook for net fee and commission income given the headwinds from the euro introduction in Bulgaria and SEPA adoption? A: Net fee and commission income declined by EUR3 million year-on-year, broadly in line with expectations. The decrease was primarily driven by the euro introduction in Bulgaria, which reduces foreign exchange income opportunities, and the continued rollout of SEPA, which lowers fees from international payment transactions. While these are headwinds, they reflect the ongoing integration of our markets into the European payments infrastructure and associated benefits for clients.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .