ProCredit Bank has a very successful year behind it. This is shown, among other things, by the fact they ended the year with over EUR 10 million in net profit. This development-oriented bank, which focuses on small and medium businesses, also boasts a quality credit portfolio, as well as an NPL rate of only 2.1%.
We talked to Ivan Smiljkovic, Executive Board member at ProCredit Bank, about last year's results, expectations for 2018, interest rate trends and support to small and medium businesses.
eKapija: How satisfied are you with the results in 2017?
– The year 2017 was very successful for us. In our key segments, small and medium businesses and agriculture, we realized loans of over EUR 410 million and had a growth of 20%. I have to note that the growth rate in the market at the time was around 1%. This result is accompanied by a remarkably quality portfolio, as the NPL rate was only 2.1%, far below the average of 13% in the Serbian market. According to preliminary information, we ended the year 2017 with over EUR 10 million in net profit, and our return on capital ratio exceeded 9%.
eKapija: What are your plans for 2018? In addition to SMEs and agriculture, will you also focus on citizens' savings?
– As regards the growth rate and maintaining the quality of the portfolio, our expectations for 2018 remain big. We do not expect to make considerable changes in our approach. We will continue to strongly support small and medium enterprises, as well as agriculture. Furthermore, we will also focus on savings of natural persons. Citizens recognize our bank as a safe place for their savings, but also a bank which successfully invests their assets in development and support to local economy. Nowadays, most people are interested in savings with a high degree of flexibility, that is, freedom of money management. Free non-term savings are growing much faster than other forms of savings. That's why we've devised a new product – FlexSave. With this model, clients can manage their money themselves, to freely pay and draw money from their savings accounts thanks to our euro ATMs, as well as to do all this electronically, through out online or mobile banking, anytime, anywhere. FlexSave features an excellent interest rate, which amounts to 0.8% annually for deposits of up to EUR 50,000 and 1% annually for deposits of over EUR 50,000.
eKapija: Your portfolio is not dominated by liquidity loans, but investment loans. What kind of support can the business sector count on?
– Of the corporate loans approved in 2017, the share of investment loans in ProCredit Bank amounted to 45%, whereas, in the market, the percentage amounted to around 20%. These are loans for investments in fixed assets, increasing competitiveness, upgrading production processes and improving energy efficiency. We managed to realize a growth of EUR 40 million in the segment of financing the improvement of energy efficiency alone. We will continue at the same pace in 2018, while upgrading the service. As always, we will actively cooperate with the state. In 2017, we actively participated in the programs of the Ministry of Economy for financing the procurement of equipment for SMEs and agriculture, as well as in subsidizing agricultural loans.
eKapija: You've always highlighted agriculture as an important field for ProCredit Bank. How would you characterize this sector in Serbia?
– Late repayments of agricultural loans in our bank are below 1%, which proves that we understand this sector, since we do have 17 years of experience after all. Our agriculture has been developing quicker than the agriculture in the surrounding countries in the past two decades. A typical farm used to be small and feature several small parcels, whereas now these are big agricultural producers. This field is still very important to us and we intend to remain the leading bank in crediting agriculture. Training for the utilization of funds from the IPARD program is currently in progress. We are ready for both contests within this program and we expect clients to address us if they need advice. We have pre-accession funds of the EU before us and we need to prepare for more serious endeavors in the upcoming period on time.
eKapija: Both agriculturists and businessmen want to know what the interest rate trends are. Do you expect any changes to take place?
– Interest rates in Serbia are lower than in the countries of the region, which is a consequence of big competition in the banking market, as well as of an adaptation to the market conditions we operate in. I believe that they will remain the same in the upcoming period.
eKapija: The previous year was also marked by investments in real estate and housing. How important is this segment for ProCredit Bank?
– ProCredit Bank and its partners have initiated several real estate projects and in 2017 we financed the construction of several larger housing projects in Belgrade. Clients can choose between housing loan products – we offer credits with fixed or variable interest rates. Having analyzed interest rate trends, I believe our offer is attractive.
eKapija: You have assigned a part of your portfolio to Banca Intesa. Tell us something more about it.
– We signed an agreement with Banca Intesa in late 2017 whereby around EUR 35 million in loans was assigned to the bank, amounting to less than 4% of our bank's portfolio. These are micro business and micro agri clients, as well as natural persons residing in towns in which ProCredit Bank no longer has offices. This is a market segment that ProCredit Bank stopped actively cooperating with several months ago and which we believe is best and most responsibly handled by being shifted to the bank which is dedicated to working with very small clients and which has a developed network and services that will best serve their needs in the future.
Savings models for SMEs and agriculture
The savings model that ProCredit has provided to citizens is a basis for the bank to soon offer a free model of deposits for local companies as well, looking to stimulate savings and make the most of it, that is, to have it invested in the local economy. ProCredit Bank is preparing a very flexible and attractive savings model for SMEs and agriculture, which will hopefully cause interest among local business people.