ProCredit Holding - Strong rebound in profitability in Q123

ProCredit Holding's (PCB's) strong Q123 net profit of €29.5m implies an annualised return on equity (ROE) of 13.3%. This is a result of a healthy annualised net interest margin (NIM) of 3.4% (vs 2.9% in Q122), a c 11% year on-year growth in net fee and commission income and limited cost of risk at 12bp. Importantly, ProCredit Ukraine returned to profitability with an annualised ROE of 21.7% in Q123. PCB's ROE may be more moderate in the coming quarters as customer deposit rates are repriced, loss allowances pick up and further cost inflation is reflected in the company's bottom line. That said, PCB's shares now trade at an undemanding 5.2x our FY23e earnings per share, based on an ROE of 9.3% in FY23e (vs the company's recently raised guidance of 8-10%).

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