ProCredit Bank is unique for the domestic market financial institution

Having started its journey in Ukraine in 2001 as a Bank for the financing of micro business in a difficult 2014 “ProCredit Bank” has decided to shift to a larger business. The process lasted all these years of crisis.

However the financial institution was able to demonstrate impressive growth, while remaining profitable. Now “ProCredit Bank”, with just 260 employees and nine offices, the size of the credit portfolio of business customers is very close to the largest banks with Western capital.

— As the Bank completed last year?

In reporting, we have the numbers in Euro equivalent. So, after 2017 the increase in the loan portfolio was 35% – almost 400 million In 2016, the increase was 50%. 400 million is a large enough portfolio that allows us to occupy the 16th position in the rankings by assets. However, it should be noted that the share of non-performing loans in our portfolio is only 6%. This is the lowest figure for the sector . In addition, note that we specializiruetsya to work with SMEs. Therefore, our position in the rankings even higher! “ProCredit Bank” is consistently profitable since 2010. We have a total of nine offices, we have only 260 employees, professionals in whom we have invested a lot of money.

— As you know, several years ago, “ProCredit Bank” started working with larger clients of the SME segment. How did you manage to keep the quality of the portfolio then?

— Yes, we have shifted from microclients on a more organized segment of small and medium enterprises. The process was pretty smooth and lasted three years. Introduced new standards of review and approval of the loans. When in 2014 we started the reorientation, it was not given any credit over 1 million euros. Now we have a number of such borrowers. Maximum credit per customer of today is 7.5 million euros. At the same time, the average loan amount now – 200 thousand euros. To refocus – less than 15 thousand euros. And we have almost no such micro-loans in the portfolio.

— By the way, I’m not familiar with banks, burning desire to maintain it micro. So you left them… Why?

One of the main reasons – entrepreneurs (FLP) is often credited in the banks as ordinary individuals – cash loans, credit cards and the like. Under this status, the credits available, although more expensive. Nominally such loans are considered consumer, but in fact the funds go to the business needs.
This approach is unacceptable for us. We believe that in time our Bank has made a significant contribution to the development of this segment when it was most needed. Due to this we took as a Bank. Now the economy has changed, we feel the need to support the larger SMEs. We believe that we are well able to perform the function of a financial intermediary.

— Work with large corporations and “retail” are you interested in?

A big “corporate” we are still not interested. To grow steadily and become a large Bank, and without this, working with SMEs. Retail, of course, interesting to us, we are there to develop. In particular, there is no purpose to be a Bank for mass retail, to grow at the expense of the number of clients. Our goal is to provide quality comprehensive services to modern clients of moderate means who are willing to work via remote (online) channels, without the emphasis on working with cash and credit.

— Now that individuals are the main source of resources for banks. Enough of “retail” in this format to properly secure increasing funding for the Bank?

— Yes, now we begin to feel that the lack of long-term resources is one of the factors limiting the growth of the business. In 2017, we had to attract external loans. Now the share of resources from individuals is 30%, funds business – 40%, another 30% – external loans, in particular EIB, EBRD and other funds. External resources are targeted, but in our case, these objectives are aligned with our business model, and therefore are widely used.

“By the end of 2017 the increase in the loan portfolio was 35% – almost €400 million”

— What helped you to gain a foothold in the SME segment after the withdrawal from microfinance?

— First of all we had no problems with the consequences of the crisis, as other players we have on the agenda there was only growth! We have the reliable support of the shareholders. At least we have not had discussions with shareholders on whether to stay in Ukraine or not. It is also important to focus, or specialization, which allows us to make our services as efficient as possible.

— The risk appetite you have it higher than the competition?

— I’d say the opposite. For example, there is a list, which we do not consider: goods in turnover, future harvest. That is, we are quite conservative. But our strength is in quick decisions and proper structuring of the loan. For example, we called the agricultural (40-50% of our portfolio falls on this segment) for the funds for the purchase of the tractor. We will carefully study the business and the output will suggest the credit limit, taking into account not only the investment but also the current needs. At the same time, we consider the credit terms, the cost of borrowing. We do not make mistakes when investing financeusa through short-term lines of credit.

— What is the ratio of lending in local currency and foreign currency?

— Of course, mostly loans issued in local currency – about 70%. Loans in foreign currency available to companies with protection against foreign exchange risk (in receipt currency) or very good financial status that enables them without shocks to overcome the possible effects of exchange rate fluctuations.

— What are your main loan product.

Until the middle of last year, the greatest demand for loans to Finance the working capital. Most of these were short-term lines of credit. Since the second half of 2017 we see a shift towards investment lending for the purchase of machinery, equipment, etc. for example, our agribusiness is technically very understaffed.

— What interest rates are offered on loans? How will it affect them, the increase in the NBU discount rate to 16%?

Standard credit rate in national currency – 15-17% per annum. The discount rate was increased recently, so the impact is not yet felt, but, of course, there is the risk of increase in resources.

— Rates are quite attractive. It’s not dumping?

— I would not say there are better offers, at least nominally. Our maximum rate on the fixed Deposit – 14% per annum. Although banks with domestic capital resources objectively more expensive. Generally, interest rate is not a defining parameter. A regular customer will not go to competitors that will offer him a loan at 1 percent cheaper.

— You evolve at a time when the banking sector is sitting on money and not the credit, referring to poor protection of creditor rights.

— Each in its own rights. For rapid mass recovery crediting system changes, in particular the judicial system. If we would be a large systemic Bank, this issue necessarily would have encountered. As a specialized Bank, we are growing by attracting quality businesses. Thus we minimize systemic risks.

— The main success factor of attracting customers is financing, right?

Lending is the core business of any commercial Bank, therefore, its role is dominant. But we are developing comprehensively. For example, do everything to be convenient for customers. Here, for example, simplify tariffs so that it occupies half a page! From the outside it looks simple, but actually had a lot to do. Therefore, have succeeded in attracting also “non-credit” customers. As a result, we have a growing resource base.

Author: Dmitry Grinkov
License of the Bank: NBU License No. 195 dated 13.10.2011

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