ProCredit Bank Says it Has Long-term Strategy for Business in Georgia

The FINANCIAL — ProCredit Bank, one of the largest banks in Georgia, said it will expand its SME portfolio in 2017.

As a part of ProCredit Bank’s strategic reorientation, the Bank has decided to exit the micro-financing segment and concentrate purely on small and medium-sized enterprises. “Our mission is to work with small and medium-sized enterprises. We occupy 24% of this segment in Georgia and plan to increase this share,” Ketevan Khuskivadze, Director of ProCredit Bank Georgia, told The FINANCIAL. She also said that the Bank plans to increase its loan portfolio to EUR 70 million.

“I confirm that ProCredit Bank Georgia will continue operating on the market. We are not planning to sell it. Of course ProCredit is not the biggest player on the market but we have our own direction and niche. From the year 2017 we will expand our operations in the SME segment,” Claus-Peter Zeitinger, Chairperson of the Supervisory Board of ProCredit Holding, said at a press meeting.

“We want to be attractive to depositors,” Mr. Zeitinger said.

The Bank has reduced its number of employees due to changes in its clients segment.

In December 2016, Bank of Georgia agreed to acquire, for cash, a micro and small business portfolio from ProCredit Bank Georgia, currently the third largest bank in Georgia by total assets and market share of gross loans. The transaction will add c. 2,400 micro and small business clients and a net value of c. GEL 120 million loans to BOG’s retail banking loan portfolio. As a result of this deal, Bank of Georgia drew in 2,400 new micro and small business clients and increased the net value of its loans portfolio by GEL 120 million.

“Due to the Bank’s new strategy we entered the next stage of our development and all our resources will now be directed towards small and medium sized (SME) businesses offering our clients more sophisticated and enhanced banking services. In the past, while oriented on micro business clients our employees totalled 1,800 while now we are 300,” said Khuskivadze, Director at ProCredit Bank Georgia.

A decision about strategic reorientation was initially announced by ProCredit Bank in 2015.

In January 2015 TBC Bank publicized an agreement with ProCredit Bank, claiming to be strengthening its leadership position in the microfinance segment, and agreeing to acquire the entire micro loans portfolio from ProCredit Bank Georgia, which was the fifth largest bank by total assets in the Georgian banking sector at the time.

As of the 27th of January 2015, ProCredit Bank’s Micro gross loans portfolio amounted to GEL 39.3 million (with net loans of GEL 37.3 million). TBC Bank, which also acquired micro-focused Bank Constanta, said it agreed to pay a multiple on the net portfolio which is equivalent to about GEL 40 million as of the same date.

The Bank’s micro loans are defined as loans under EUR 10,000, which for the period of 2015 represented around 5% of ProCredit Bank’s total loan portfolio.

“In terms of Corporate Social Responsibility, ProCredit Group is in general very active,” Ilir I. Aliu, Chairman of the Supervisory Board, told The FINANCIAL. “We want to be very responsible citizens in all the markets in which we operate. I would divide this into two folds. The first part is how we do our business, how we try to land, so in a very responsible manner. Basically we analyse the financial capacity of individuals or businesses, and we give a loan only if the person has the capacity to pay it back. This is fundamental CSR.”

“The second part is that we are very committed to supporting the environment and fighting pollution. This also includes reducing emissions,” Mr. Aliu told The FINANCIAL.

Since 22 December 2016, ProCredit Holding AG & Co. KGaA (ProCredit Holding), the holding company of the international ProCredit group of banks, has been listed on the regulated market (Prime Standard) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) in Germany. This marks another milestone in the successful development of ProCredit since its establishment as a banking group in 2003.

In May 2016 Fitch Ratings affirmed ProCredit Bank (Georgia) (PCBG, BB/Stable/bb-). The agency said that the rating also factors in the Bank’s robust corporate governance and fairly conservative risk management, in line with the ProCredit group of banks.