ProCredit : Company Presentation - August 2020

An impact-oriented group of commercial banks with a focus on SMEs in Eastern and South Eastern Europe

Company presentation, August 2020

Our mission

Be the leading "Hausbank" for SMEs in Eastern and South Eastern Europe - with a sustainable approach

1

Group overview & strategy

2

ProCredit - a unique approach to banking

• A profitable, development-oriented commercial group of banks for SMEs with focus on Eastern and South Eastern Europe
• "Hausbank" for SMEs complemented by "ProCredit Direct" for Private Clients
• Headquartered in Frankfurt and supervised by BaFin and Bundesbank
• Strong regional focus on SEE/EE
• Track record of high-quality loan portfolio based on prudent risk management and focus on long-term business relationships
• Profitable every year since creation as a banking group
• Listed on the Frankfurt Stock Exchange since Dec-16

Notes: See page 28 of this presentation

ProCredit at a glance

	Hausbank			ProCredit Direct
	for SMEs				for Private Clients
	Impact and development orientation
	ProCredit Banks	Loan portfolio	Loan growth ('20)
12	EUR 5,052m	5.3%
	CET1 ratio(1)	Rating (Fitch)(2)	RoAE(3) ('20)
14.1%	BBB (stable)	5.5%

	38.7%			17.0%
				13.2%
	8.6%
	10.0%		12.5%

3

Regional presence in SEE/EE

Expected GDP development in SEE/EE(1)

2019A

2020E

2021E

5.1%

3.6%

-4.5%

Strong regional footprint in Eastern and South Eastern Europe

• Attractive regional access and exposure to 10 countries in SEE/EE, with group headquarters based in Germany
• Strong underlying growth dynamics due to
• • relatively high expected GDP growth 2021E, although temporarily impacted by Covid-19
  • GDP per capita still significantly below Western Europe
  • Loan/GDP ratio (banking sector penetration) markedly below Western Europe
• Stringent governmental response to Covid-19 in place (e.g. fiscal and monetary measures, state of emergency and lockdown measures, moratoria recommended/enforced, eased liquidity and capital requirements)
• ProCredit in a favourable competitive situation due to
• • Long track record and experience in SEE/EE markets
  • Strong reputation as "Hausbank" for SMEs, whilst SMEs are still underserved in most markets
  • No focus on consumer lending

Notes: See page 28 of this presentation

Source: IMF World Economic Outlook (April 2020)

4

We partner with SMEs - the ProCredit "Hausbank" principle

Target SME clients

• Growing, stable businesses
• Forward-lookingSMEs investing in innovation and green technology
• SMEs which bank fully with ProCredit: e.g. loans, cards, transactions, deposits

Our approach

• Comprehensive loan and electronic account facilities
• Business Client Advisers' focus: client and risk
• Trustful long-term relationships and true understanding of clients' needs and risks

Strong SME	94%	€1.6bn	2.5%	17.3%
market positions	of loan portfolio	financing backed by	credit impaired loans,	green loan portfolio
e.g. ranked #1 in	to SMEs	EIF as part of InnovFin	significantly better than	in % of total
Kosovo by loan size to
	initiative for	market, reflecting strong
corporate customers
	innovative SMEs	customer relationships
incl. SMEs

Growth. Impact. Low credit risk.

5

ProCredit Direct - an entirely digital offer for Private Clients

Target private clients

• Middle income and higher earners
• Associated with SME owners
• Looking for modern, transparent and reliable banking services

Our approach

• All-indigital offer - digital banking concept consequentially executed
• Low complexity - one account for all products
• High price transparency - standard monthly fee with no hidden costs

€4.4bn

of total deposits, strong growth of +15% YOY

Total staff

11,514
	3,148
Dec-13	Jun-20

No of branches

645
	78
Dec-13	Jun-20

No of cash desk

transactions

28%
	1%
Dec-13	Jun-20

Notes: See page 28 of this presentation	Transparency. Efficiency. Scalability.
	6

Prudent risk management as the key pillar of our business model and impact approach

High quality loan portfolio built around

• Careful client selection and strong client relationships
• Well trained staff
• Effective group credit risk assessment and monitoring
• Solid risk profile with consistently low net write offs
• Loan portfolio quality consistently better than market

Consistently low net write-offs

4%

3%

2%	Average net write-offs: 0.7%
1%
0.7%
0%
2008	2011	2014	2017	Jun-20

Non-performing loans of ProCredit significantly below

local banking sectors(1)

60 %

			Country NPL (Dec 2019)	50.0%
15%			PCB NPL (Dec 2019)
	9.8%		8.5%
10%	7.7%
5%	3.0%	2.7%	4.8%	4.1%	3.9%
2.2%
0%
Bosnia and	Bulgaria	N.	Moldova	Ukraine
	Herzegovina		Macedonia

Notes: See page 28 of this presentation

7

Strong impact orientation is an essential part of our identity

Responsible banking

• No focus on consumer lending, no complex products
• Promotion of price and banking sector transparency

► Commitment to SDGs and	MSCI ESG
signatory to UNEP FI(1)	rating: AA

Environmental responsibility

• Focus on promotion of "green" investments
• Strict exclusion lists
• Mid-termtarget for green loans of 20% of overall loan portfolio

Investments in staff development

• Unique approach to staff recruitment and development
• Continuous training in own academy
• Value-basedtraining, with salary linked to training level

43%	34%	146	47% / 53%
of loan portfolio	annual growth rate of	annual training hours	diversity of women /
related to local	green loan portfolio	per employee ('19)	men in management
production and	('16-'19)		boards
agriculture sectors

Notes: See page 28 of this presentation

8

Track record of profitability through the economic cycle, successful group restructuring to become visible

Long-term financial stability and attractive profitability

75

50

25

0

in EUR m

15%

Average RoAE: >9%

															61	61				10%
																54	54
						47		46			50			48	5%
		44
	36					39
		30
28																		0%
				12	13
2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
									Profit			RoAE

Successful conclusion of group restructuring in 2019, resulting in no further effects on net income

in EUR m

Net income from continued vs discontinued operations

69.7%		70.5%		66.5%
61.6		61.5
				21.7
-7.1	-7.2
2018		2019		Q2-20
Continued operations	Discontinued operations

• 2018/19 results significantly impacted by discontinued operations
• Group restructuring successfully concluded in 2019 resulting in increased visibility of the group's strengthened earnings generation
• 2020 profitability affected by COVID-19; improved underlying profitability underlined by lower cost-income ratio

Cost-Income-Ratio

Notes: See page 28 of this presentation

9

Loan portfolio

10

Loan portfolio focused on SEE/EE and loans to SMEs, strong regional footprint and diversification

Loan portfolio by geographical segments

Loan portfolio by sector

Ecuador Germany

Moldova 6% 1%

3%

Georgia

7%

Ukraine

12%

Bosnia

4%

Albania

4%

Romania

6% North Macedonia

8%

Total South Eastern Europe: 71%

Total Eastern Europe: 22%

Bulgaria

20%

Kosovo

11%

Investment and

other loans

Housing 1% 5%

Other

economic

activities

20%

Serbia Transportation

18% and storage

5%

Production

23%

Total Business Loans: 94%

Total Private Loans: 6%

Wholesale and

retail trade

26%

Agriculture, forestry and fishing 20%

Notes: See page 28 of this presentation

11

Strong credit risk management with particular focus on high quality collateral

Consistently high loan portfolio quality

Net write-	0.4%	0.3%	0.2%
offs(1)(2)

Coverage

impaired 90.8%89.1%93.6% portfolio(3)

3.1%

2.5%2.5%

Dec-18

Dec-19

Jun-20

Credit impaired loans (Stage 3)

High quality collateral with strict requirements

20%

12%
2%	66%
Total: EUR 3.8 bn
Mortgages	Cash collateral
Financial guarantees	Other

• Majority of collateral consists of mortgages
• Growing share of financial guarantees (e.g. InnovFin)
• Clear, strict requirements for acceptable collateral, legal aspects and insurance of collateral items

Notes: See page 28 of this presentation

12

Environmental responsibility is central to the group's impact approach

Strong growth of green loan portfolio, attractive risk parameters

(in EUR m)

9.1%	12.6%	15.4%	16.6%	17.3%
						795	874
						17
				678	17
				15
			489
331	14				857
	662	779
15		475
316
Dec-16	Dec-17		Dec-18	Dec-19	Jun-20
		Business clients		Private clients	% of total loan portfolio

2006	66%	0.3%	$90m
first green loans	of green loan portfolio	credit impaired loans,	green bond placed
granted for energy	relating to investments	significantly lower than	with IFC,
efficiency and	in energy efficiency	overall portfolio	demonstrating
renewable energy			innovation in green
investments			bond market

Notes: See page 28 of this presentation

13

Capital, liquidity and funding

14

Comfortable capital and liquidity positions

Steady capital and liquidity base

• All Tier 1 capital consists of CET1 capital
• Very comfortable leverage ratio
• LCR comfortably above the regulatory minimum (100%)
• Stable amount of highly liquid assets, HLA ratio amounting to 27%
• No visible deterioration of liquidity observable following the outbreak of COVID-19

Capitalisation overview (fully loaded)

14.1%	10.3%
CET1 ratio	leverage ratio
(fully loaded)
142%	€1.1bn
LCR	highly liquid
	assets (HLA)

15

Well diversified funding structure with strong focus on customer deposits

Steady funding base

• Highly diversified both funding structure and counterparties
• Customer deposits are the main funding source (74% of total), supplemented by long-term funding from IFIs and institutional investors
• Solid deposit development through digital banking channels, both from SME and private clients
• Good funding relations to IFIs (e.g. $90m Green Bond in 2019; $100m financing for SME support during COVID-19 pandemic)
• BBB rating by Fitch affirmed in April for PCH and many PCB banks, Outlook confirmed "stable"

Funding sources overview

5%	2% 1%
4%
14%	Customer deposits	15%	88%
Liabilities to IFIs
	Liabilities to banks	growth in deposits	deposit-to-loan
	Debt securities	in YOY to €4.4bn	ratio
	Subordinated debt
	Other liabilities
	74%

16

Financials

17

Financial highlights (Q2 2020)

Net interest margin

3.1% 2.9%

Q2-19

Q2-20

Cost of risk (bps)

	71
18
Q2-19	Q2-20

Cost-income ratio

71.6%	68.5%
Q2-19	Q2-20

Return on equity

6.2% 4.0%

Q2-19

Q2-20

• Increase in net interest income driven by growth in loan portfolio
• Increase in cost of risk in line with expectations, mainly related to updated macroeconomic assumptions in the credit risk model as consequence of Covid-19 and increase in stage 2 loans
• CIR improvement driven by stable cost base and increased pre-provision income
• Return on equity affected by higher cost of risk in connection with Covid-19

Net interest income	Operating income	Operating expenses	Profit after tax
Q2-20: € 49.0m	Q2-20: € 51.1m	Q2-20: € 41.0m	Q2-20: € 8.0m
YoY: +7.8%	YoY: -4.4%	YoY: -0.8%	YoY: -5.3%
Notes: See page 28 of this presentation			18

Summary of key financial indicators (Q2 2020)

	Q2-2019	Q2-2020	H1-2019	H1-2020	y-o-y
Net interest income	47.3	49.0	92.7	99.9	7.2
Provision expenses	2.0	8.8	4.1	15.7	11.6
Net fee and commission income	13.1	10.6	25.8	22.6	-3.2
Net result of other operating income	-1.3	0.3	-0.4	2.1	2.5
Operating income	57.0	51.1	114.0	108.9	-5.1
Operating expenses	42.3	41.0	83.5	82.8	-0.7
Operating results	14.8	10.1	30.5	26.1	-4.4
Tax expenses	2.9	2.1	6.1	4.4	-1.7
Profit of the period from continuing operations	11.9	8.0	24.4	21.7	-2.7
Profit of the period from discontinued operations	0.4	0.0	-1.5	0.0	1.5
Profit after tax	12.2	8.0	22.9	21.7	-1.2
Change in customer loan portfolio(1)	3.3%	4.4%	5.0%	5.3%	0.3pp
Cost-income ratio	71.6%	68.5%	70.7%	66.5%	-4.2pp
Return on equity(2)	6.2%	4.0%	6.0%	5.5%	-0.5pp
CET1 ratio (fully loaded)	14.3%	14.1%	14.3%	14.1%	-0.1pp
Net interest margin(2)	3.1%	2.9%	3.1%	3.0%	-0.1pp
Net write-off ratio(2)(3)	0.0%	0.3%	0.1%	0.2%	0.1pp
Credit impaired loans (Stage 3)	2.9%	2.5%	2.9%	2.5%	-0.4pp
Coverage impaired portfolio (Stage 3)	94.9%	93.6%	94.9%	93.6%	-1.3pp
Book value per share	12.6	13.5	12.6	13.5	0.9

Notes: See page 28 of this presentation

19

Strong track record of delivering on guidance

  

FY 2017		FY 2018		FY 2019
guidance		guidance		guidance

On track

FY 2020

guidance

(updated)

8% - 10%

Previous: low single digit percentage increase in loan portfolio

positive RoAE,

but lower

compared to FY

2019

c.70% CIR

>13% CET1

1/3 dividend

payout

Confirmed

Medium term

targets

10% loan

portfolio growth

~10% RoAE

<60% CIR

20% share of

green loans

Notes: See page 28 of this presentation

20

Q&A

21

Appendix

22

H1 2020 results versus guidance

Guidance 2020	Actual
(updated)	H1 2020

• Growth of the loan portfolio
• Return on average equity (RoAE)
• Cost-incomeratio (CIR)
• CET1 ratio
• Dividend payout ratio

Medium term:

8% - 10% (excl. fx effects)	5.3%
Previous: low single-digit percentage increase
positive, but lower compared to FY 2019	(1)
5.5%
c 70%	66.5%
> 13%	14.1%
1/3 of profits	1/3 of profits

In the medium term, assuming a stable political, economic and operating environment, we see potential for around 10% p.a. growth in the total loan portfolio, a cost-income ratio (CIR) of < 60%, and a return on average equity (RoAE) of about 10%.

Risk factors to guidance:

Include negative economic effects from further spreading of COVID-19, major disruptions in the Eurozone, a significant change in foreign trade or monetary policy, a worsening of the interest rate margin, and pronounced exchange rate fluctuations.

Notes: (1) Annualised;
ProCredit Group | Q2 2020 results | Frankfurt am Main, 13 August 2020	23

FY 2019 results at a glance

In EUR m			FY 2018	FY 2019	y-o-y
		Net interest income	186.2	194.5	8.3
	Provision expenses	-4.7	-3.3	1.4
		Net fee and commission income	52.2	52.0	-0.2
	Net result of other operating income	2.3	2.8	0.5
Income		Operating income	245.4	252.6	7.2
Operating expenses	167.9	175.7	7.9
statement
	Operating results	77.5	76.9	-0.7
	Tax expenses	15.9	15.3	-0.6
		Profit of the period from continuing operations	61.6	61.5	-0.1
	Profit of the period from discontinued operations	-7.1	-7.2	-0.1
		Profit after tax	54.5	54.3	-0.2
		Change in customer loan portfolio	12.5%	10.3%	-2.2pp
Key performance	Cost-income ratio	69.7%	70.5%	0.8pp
indicators		Return on Average Equity(1)	7.6%	6.9%	-0.7pp
	CET1 ratio (fully loaded)	14.4%	14.1%	-0.3pp
		Net interest margin(1)	3.3%	3.1%	-0.2pp
	Net write-off ratio(1)(2)	0.4%	0.3%	-0.2pp
Additional		Leverage Ratio	11.0%	10.8%	-0.2pp
indicators	Credit impaired loans (Stage 3)(3)	3.1%	2.5%	-0.6pp
		Coverage of Credit impaired portfolio (Stage 3)(3)	90.8%	89.1%	-1.6pp
	Book value per share (EUR)	12.5	13.5	1.0
Notes: See page 28 of this presentation			24

Sustainability within ProCredit

ORIGIN		BANKING		SME FINANCE
Origin of		GROUP	In 2008, move from
ProCredit with		In 2003, creation of		a product-oriented
IPC:		ProCredit		microfinance
Consulting of		as a banking group		provider to
financial		with key shareholders		positioning as
institutions in	IPC (investment arm has		the "Hausbank" for
developing		been transferred to		SMEs
countries		Zeitinger Invest),	PROCREDIT
First		DOEN, KfW, IFC and	HOLDING
	ProCredit Staff Invest	consolidation of
microfinance		PROCREDIT	ownership in
bank		ACADEMY	ProCredit Holding
in Bosnia and		In 2006	and subsequent
Herzegovina		establishment of	investment grade	BANKING
founded as		the ProCredit	rating since 2004	LICENCE
a greenfield	Foundation	Academies in		IN GERMANY
bank	recognition of the		In 2009,
	of IMI	need to develop		implementation
	(now	and integrate		of German
	ProCredit	local middle and		regulatory
	Holding)	senior managers		standards

SUPERVISION by German banking authority (BaFin and Deutsche Bundesbank)

CHANGE

IN THE LEGAL FORM of ProCredit Holding

from AG to AG & Co. KGaA in 2011

KEY HISTORIC MILESTONES

INSTITUTIONAL DEVELOPMENT

		PROCREDIT
		DIRECT
		Digital banking
LISTING		approach for
	private clients fully
of ProCredit Holding		implemented
shares (PCZ) on
Prime Standard of
Frankfurt Stock		FIRST
Exchange
	CAPITAL
	GROUP CODE	INCREASE
	as a listed
Introduction of	OF CONDUCT	company
replaces local	(10% of share
group-wide	banks' versions	capital)
APPROACH
TO HR

1980	1997-1998	2003 - 2006
		FIRST GREEN
		LOANS
ENVIRONMENTAL	granted for energy
efficiency and
MANAGEMENT	renewable energy
Investments in 2006
AND GREEN LENDING
		ENVIRONMENTAL
		EXCLUSION LIST
		introduced group-wide
		in the banks' Codes of
		Conduct in 2006

2008 - 2011

ENVIRONMENTAL

MANAGEMENT (EM)

Introduction of group-wide comprehensive 3-pillar approach to EM

EM policy and EM Unit at each bank

In 2010, first environmental courses at the ProCredit Academies

2012 - 2014	2015 - 2017	2018	2019
Start of semi-annual		GREEN FINANCE			Publication
group-wide		APPROACH FULLY			of first group
GREEN SEMINARS			IMPLEMENTED			IMPACT
		All ProCredit banks			REPORT
First Group		apply the entire green	ESG RATING		following GRI
Environmental		lending and environ-		Standards
Steering		mental and social risk	Positive ESG		FIRST GREEN
Committee		management concept	rating by MSCI
			BOND
meeting				and oekom
				Placement for
		All ProCredit	research
				emerging countries
		institutions certified	acknowledging
			with IFC for green
		under ISO 14001 or	our high
			investments by
			EMAS	standards
							SMEs

25

Long-standing and well-interconnected management teams at group and local level

Experienced management collaborating at Holding and local level

Sandrine Massiani

• AML and compliance
• Audit
• Human resources
• Legal
• Risk management

Gian Marco Felice

• Business support
• Environmental management and impact reporting
• IT

Dr Gabriel Schor

• Accounting and taxes
• Administration and translation
• Communications
• Funding and treasury
• Investor relations
• Reporting and controlling
• Supervisory reporting and capital planning

Christian Edgardo Dagrosa

• Investor relations
• Reporting and controlling

Local ProCredit banks

32 key management members		On average 15 years of experience with ProCredit | 15 female/17 male

Collective training…	…as catalyst for a shared vision and teamwork…
► Central training in Fürth	► Common set of values
► English as lingua franca	► Closely-knit network
► Regular specialist events and regional	► Rapid diffusion of best practices
meetings

…supported by clear framework

• Strict common operating standards and policy guidelines
• Strong, standardised MIS reporting
• Holding management with supervisory board seats at local banks involved in strategic business processes

26

ProCredit bank management board teams

32 management board members of the ProCredit banks

Albania

Albania

BiH

BiH

BiH

Bulgaria

Bulgaria

Bulgaria

Bulgaria

Ecuador

Ecuador

Georgia

Georgia

Georgia

Kosovo

Kosovo

Kosovo

Macedonia

Macedonia

Macedonia

Moldova

Moldova

Romania		Romania		Romania		Serbia		Serbia		Serbia

• 15 female (47%) / 17 male (53%)
• Average age: 41
• Average years with ProCredit: 15
• 32 ProCredit Management Academy graduates

UkraineUkraineUkraineUkraine

South Eastern Europe

Eastern Europe

South America

27

Slide 3

1. Fully loaded
2. Re-affirmedon April 2 2020
3. Annualised

Note: Shareholder structure according to the voting right notifications and voluntary disclosure of voting rights as published on our website www.procredit- holding.com

Slide 4

1. Median real GDP growth; includes PCH countries of operation in SEE/EE, i.e. Albania, Bosnia and Herzegovina, Bulgaria, Georgia, Kosovo, Moldova, North Macedonia, Romania, Serbia, Ukraine

Slide 6

Note: All related figures and ratios for Dec-13 relate to the subsidiaries as shown in the consolidated financial statement as of 2013

Slide 7

1. NPL figures for banking sectors are derived from respective central or national banks, as per Dec-19. Country NPL for Bosnia and Herzegovina is as of Sep-19.

Slide 8

1. ProCredit Holding AG & Co. KGaA is a signatory to the Principles for Responsible Banking and is a member of the UN Environment Programme Finance Initiative (UNEP FI)

Slide 9

Note: RoAE since 2005 as publicly available in "Bundesanzeiger"

Slide 11

1. Notes: Loan portfolio by geographical segments and by sector in % of gross loan portfolio (EUR 5,052m as per 30-June-20)

Notes

Slide 12

1. Net write-offs to customer loan portfolio
2. Excluding interest accrued under IFRS 9 from PAR 90 loans, which is fully provisioned for
3. Allowances for loan losses on loans and advances divided by credit impaired portfolio

Slide 13

Note: Previous periods have been adjusted according to the scope of continuing operations as of June 2020

Slide 18

Note: Net interest margin, cost of risk and return on average equity are annualised

Slide 20

Notes: Risk factors to guidance: Include negative economic effects from further spreading of COVID-19, major disruptions in the Eurozone, a significant change in foreign trade or monetary policy, a worsening of the interest rate margin, pronounced exchange rate fluctuations.

Medium term: In the medium term, assuming a stable political, economic and operating environment, we see potential for around 10% p.a. growth in the total loan portfolio, a cost-income ratio (CIR) of < 60%, and a return on average equity (RoAE) of about 10%.

Slide 24

Note: Return on average equity and CET1 ratio include discontinued operations; Previous period has been adjusted according to the new scope of continued operations

1. Annualised
2. Net write-offs to customer loan portfolio
3. Credit impaired portfolio under IFRS 9

28

Disclaimer

The material in this presentation and further supporting documents have been prepared by ProCredit Holding AG & Co. KGaA, Frankfurt am Main, Federal Republic of Germany ("ProCredit Holding") and are general background information about the ProCredit group's activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation and further supporting documents, including forecast financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk.

This presentation and further supporting documents may contain forward- looking statements including statements regarding our intent, belief or current expectations with respect to the ProCredit group's businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward- looking statements. ProCredit Holding does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside ProCredit Holding's control. Past performance is not a reliable indication of future performance.

29