procredit in africa march 2007 - world...

1

ProCredit in AfricaMarch 2007

2

Congo

3

Angola

4

Ghana

5

Mozambique

6

ProCredit in Africa: Overview

1. Country context

• Political, economic and social environment

• Financial sector

• Positioning of ProCredit institutions

2. Performance of the ProCredit institutions: Key challenges

• Institution building

• Deposit mobilization

• Loan portfolio

• Financial results

3. ProCredit strategy

• Human resources and staff development

• Achieving scale through outreach

7

Macroeconomic and social indicators(December 2006)

1,875 6,43110,10028,5087,561Nominal GDP (in million USD)

-2%

10%

6.5%

121

52

62.7

Congo 1

313 3274721,793GDP/capita (USD)

1%

11%

6%

59

21.4

Ghana

1.0% 7%-0.6%Currency depreciation (against USD) 2

12.2%9.4%13.2%Annual inflation rate 2

6.8% 7.9%14.2%Annual GDP growth 2

404041Life expectancy (years)

6.019.715.9Population (million)

Sierra Leone 1MozambiqueAngola

1 Estimates2 Dec. 2005-Dec. 2006

8

Financial sector data(December 2006)

9% 28%33%31%n.a.Total customer deposits (as % of GDP)

3.4% 16%21%15%3%Total credit to the private sector (as % of GDP)

70% 24%35%49%100%Annual growth of credit 2

64 1,0152,1384,148200 Total credit to the private sector (in million USD)

168 1,7843,3628,699n.a.Total customer deposits (in million USD)

0% 47%53%76%n.a.Annual growth of deposits 2

n.a.

-44%

4%

300

2

52

12

Congo 1

10~ 230n.a.240Number of ATMs

37~ 240~ 350259Total number of branches

9.6% 17%28%72%Annual growth of banking assets 2

157%

52%

5,266

24

Ghana

261%176%210%Deposits / loans rate

13% 41%36%Total assets of the banking sector (as % of GDP)

244 2,63910,282Total assets of the bankingsector (in million USD)

81215Number of commercial banks

Sierra Leone 1MozambiqueAngola

1 Estimates2 Dec. 2005-Dec. 2006

9

Angola –Political, economic and social situation

• Presidential elections postponed• 4m refugees have been

relocated• Major investments in

infrastructure underway• China: new trading partner• Oil production increases to 1.4m

barrels/day• Agricultural production is starting

to revive• Financial sector continues its

rapid post-war expansion• Inflation under control after long

period of hyperinflation

10

Angola –Financial sector development

• Rapid expansion of the banking sector since 2002; estimated ROAE 42%

• 3 new financial institutions established in 2006: BPA (Angolan), VTB (Russian), BDA (development bank)

However:• Only 5% of population uses banks• Lack of long-term credit opportunities• Profits through exchange operations,

T-Bills, short-term import finance and consumer lending

• Still high min. deposit requirementsChallenge:Extension of banking services to general population by growing competition andmore diversification of the sector

268%

106%

77%

13%

110%

64%

9% -1%

19%

116%

31%9%

29%

67%

-50%

0%

50%

100%

150%

200%

250%

300%

2000 2001 2002 2003 2004 2005 2006

Annual inflation Annual devaluation

11

Angola -Positioning in the banking sector

(December 2006)in mln USD

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

BAI

BFA BPC BIC

BESA BCI

BTA SOL

BCA

BCP

BRKNov

oBan

co

BPA

VTB BDA

Deposits Loans

12

Mozambique -Political, economic and social situation

• Replacement of Joaquim Chissano by Armando Guebuza after presidential elections (Feb 05)

• Trade balance still negative despite “mega projects”

• Net importer of oil products• 27% of budget financed by external grants• 100% debt forgiveness by IMF• Introduction of the “Metical of the New

Family” (Mtn) in July 2006• Over 80% of the labor force is employed in

the agricultural sector (contributes 26% of GDP )

• 70% of population below poverty line

13

Mozambique -Financial sector (December 2006)

Concentration in the banking sector

Market share – Banco ProCredit

Banking industryNumber of supervised fin. institutions: 18Total assets: USD 2.6 billion (Dec 2006)Total assets yearly growth rate: 16.9%Deposits-to-loans: 176%Total number of branches: ~ 240Total number of ATMs: ~230

Standard18.9% Others

2.4%

Banco ProCredit

0.7%

ABC 2.7%ICB

0.7%BCI 21.3%

UCB1.9%

Banco Austral9.7%

BIM38.9%

SOCREMO

0.6%

BDCM2.3%

0.0%

0.3%

0.6%

0.9%

1.2%

1.5%

Jun-06

Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Deposits

Total AssetsLoans

14

Mozambique –Positioning in the microfinance market

(December 2006)

999

599

369303

207 186

0

200

400

600

800

1,000

1,200

USD

No. of loans outstanding* Avg. loan amount outstanding

*Total number of loans outstanding: 50,245

Banco ProCredit Socremo

Tchuma Banco de Oportunidade

FCC-Fundo de Credito Comunitario

HLUVUKU-ADSEMA

42%

20%

18%

10%

6%4%

15

132 125 120

28

0

50

100

150

USD

Mozambique –Positioning in the microfinance market

(December 2006)

73%

11%

9%

7%

No. of depositors* Avg. amount deposited

Banco ProCreditTchumaSocremo

Banco de Oportunidade

*Total number of depositors: 88,268

16

Congo –Political, economic and social situation

• Currently a stable political situation

• Since 2003, macroeconomic stabilization and promising growth

• Recent increase in inflation and currency depreciation

• Very low-value-added mining and agricultural exports

• A dilapidated and almost non-existent transport system

• 75% of Congolese have no access to drinking water. One child out of ten is an orphan

17

Congo –A tiny and inflexible financial sector

Total banking sector:• 12 operational banks (since 2001/2: 9 liquidated, 7 restructured and 3 licensed in 2005)

and 52 branches• Around 50,000 accounts (active and inactive) in the whole country• Mainly fee-based activities and rental of offices• Loan portfolio: USD 200 million (est.): documentary credit and overdrafts• Very restrictive conditions to open an account

Microfinance sector:• A few (internationally backed) professional MFI (FINCA, Hope International, Socodevi)• New projects: Horus/LFI, Planet Finance...• No significant development of the „old“ co-operatives

Only 14% of the supply in Congolese Franc circulate within the financial sector85% of the banks‘ assets are in USD

18

Ghana –Political, economic and social situation

• A stable political environment in a troubled regional context

• Recent positive economic trends (2006): growth > 6%, declining inflation, stable currency, declining interest rates

• Predominantly agricultural country with still limited industrialization

• Limited and low-value-added export commoditiesVulnerability to international price fluctuations: pressure on Cedi and inflation in 2006

19

Ghana -Development of the financial sector

0

600

1,200

1,800

2,400

3,000

3,600

2000 2001 2002 2003 2004 2005 20060%

40%

80%

120%

160%

200%

Loans Deposits Deposit/loan ratio in %

in mln USD

20

Ghana -Recent developments in the banking sector

In spite of the number of actors, 24 commercial banks, 120 rural banks, 12 savings and loans companies, 200 credit unions, small NGOs:

• Formal banking reaches only 5% of the total population• Banks represent more than 92% of the total assets• 350 branches, mainly in rural areas• Limited intermediation: loans to the private sector = 21% of GDP

Toward more competition and intermediation?

• Declining interest rates• Lower reserve requirements• Entry of agressive Nigerian banks

T-Bill interest rates

9

11

13

15

17

19

Jan05

Mar05

May05

Jul05

Sep05

Nov05

Jan06

Mar06

May06

Jul06

Sep06

Nov06

Jan07

91-Day 182-Day 1-Year

21

Ghana -Positioning in the banking sector

(December 2005)

0

100

200

300

400

500

600

700

GCBStan

chart

Barclay

sADB

EcoBan

kSG-S

SBMerc

hant

Bank

NIBPrud

entia

l Ban

kTrus

t Ban

kCal

Bank

Stanbic

Bank

1ST A

tlanti

c Ban

kHFC

Bank

ICB

Amal Ban

kStan

dard

Trust

UniBan

k

Met & Allie

d Ban

kProC

redit S

LC

Total assets Loans

in mln USD

22

Ghana -S&L companies: market shares

(March 2006)

0%

5%

10%

15%

20%

25%

30%

35%

FirstAllied

ProCredit GardenCity

Citi WWB Sinapi Pacific Johnson Kant Midland Union Adekye

Deposits Loans

23

Sierra Leone today: At a crossroads

• Political stability since the end of the war and the departure of the UN troops (Jan 2006). Elections planned in 2007

• Highly deteriorated infrastructure and low education level

• Rapid post-war economic growth …fuelled by the international community

• Recently relative stabilisation of the local currency

• Pressure from the country’s huge debt, debt service and budget deficit

mostly financed by the banking sector

• High dependency on imports

24

Sierra Leone – banking sector

Total banking sector:• 8 banks, 37 branches, 1,000 staff• Dominated by 3 banks• Still significant government role (SLCB, Rokel)• Foreign ownership (UK, Nigeria, Malaysia)• Ecobank has just started• Mainly T-Bill banking at the expense of lending to the economy• Overdrafts for international trade (mainly for imports)• Significant deterioration of portfolio quality in 2005: 27% NPL• Nice profitability: ROE of 28% in 2005

Microfinance sector:• Offshoots from relief NGOs• Corporation UTB/Finance Salone• 4 main players: 35,000 loans outstanding for a LP < USD 3m• Unique loan products• Average loan amount: USD 80

25

Sierra Leone -Market shares in the banking sector

0%

5%

10%

15%

20%

25%

30%

35%

40%

SLCB Rokel StandardChartered

UTB GTB FIB ICB0%

20%

40%

60%

80%

100%

120%

140%

market share 31/12/2005 growth 2005/2004-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

SLCB Rokel StandardChartered

UTB GTB FIB ICB

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

market share 31/12/2005 growth 2005/2004

Total assets: market and growth Total loans: market and growth

26

Regulatory impediments

-Open currency position max. 10% (20%)

Fixed-asset ratioof maximum 50%-

Accounting in local currency,

with fixed value of capital

Other

USD 10,000USD 5,000n.a.USD 20,000USD 10,000FX transfers

Increased to 12%11.5%Decreased to 9%15%Increased to 3%Reserve requirements

Yes + yearly renewal of bank

licenseYes

In theory not requested for

S&LsYesYes

Branchauthorisationprocess

Expected: to also have residents in

the BoD--

2/3 of themembers of BoDand FB have to

be residents

-Governancebodies

To be increasedfrom equiv. USD

2m to 5mEquiv. USD 2.7 mEquiv. USD 2.2m

(S&Ls)

USD 4m; will be increased to

equiv. USD 7.5mUSD 1.5mMinimum capital

requirement

Sierra LeoneMozambiqueGhanaAngolaCongo

27

ProCredit in Africa: Overview of market position

As many market positions as countries of operations…• Banco ProCredit Mozambique

Leader in outreach in microfinance.• ProCredit Ghana

A leading (but still small) S&L fighting for growth in a competitive environment for retail banking.

• NovoBanco Angola Only target group-oriented bank in a fast growing (oil-fuelled) banking sector.

• ProCredit Bank Congo Leader in a (so far) weak banking sector and tiny microfinance sector. Fully-fledged bank “besieged“ by demand from a wide range of customers.

28

Ownership structure

Start date Total equity(in USD million) in %

Others

Banco ProCredit Mozambique 11/2000 3.9 76 0 0 20 0 0 4

ProCredit Ghana 06/2002 5.3 87 0 0 13 0 0 0

NovoBanco Angola 08/2004 5.0 43 14 0 14 0 14 14

ProCredit Bank Congo 08/2005 3.4 50 15 0 20 15 0 0

ProCredit Bank Sierra Leone Plan 06/2007 3.9 65 0 24 11 0 0 0

Total 21.5

Share in USD million 14.0 1.2 0.9 3.3 0.5 0.7 0.9

29

Changes in ownership structure

ProCredit Bank Congo 08/2005 3.4 50 15 20 15Capital increase 1 million USD in June 2007 4.4 41 12 14 15 12 7

ProCredit Bank Sierra Leone Plan 06/2007 3.9 65 24 11

Total 21.5 / Share in USD million 14.0 / 1.2 / 0.9 / 3.3 0.5 0.7 / 0.9

28.021.0 0.5 1.5 0.3

Start date Total equity(in USD million) in %

Others

Banco ProCredit Mozambique 11/2000 3.9 76 20 4

Plans 2007

Capital increase 2 million USD in March 07 5.9 85 14 1

ProCredit Ghana 06/2002 5.3 87 13Capital increase 1.5 million USD in June 07 6.8 90 10

Capital increase 2 million USD end of 07 8.8 92 8

NovoBanco Angola 08/2004 5.0 43 14 14 14 14Purchase of shares from BIO and IFC in June 07 72 0 14 0 145.0

30

Key figures for Africa

* the volume does not include accrued interest

** Incl. international management, excl. non-professional support staff and staff on leave

Congo Angola GhanaMozam-bique

Total Africa

Plan 2007(incl. SL)

Loan PortfolioVolume (in mln USD)*Number (in ´000)

7.4 7.6 14.4 12.6 42 752.8 2.3 10.6 21.2 36.9 62

Total Assets (in mln USD) 20.5 13.7 20.0 16.9 71.1 113

DepositsVolume (in mln USD)*Number (in ´000)

16.5 7.4 13.5 8.5 45.9 7518.3 27.0 72.5 56.3 174.1 272

Total Borrowings (in mln USD) 0.0 1.0 1.7 3.0 5.7 9

Equity (in mln USD) 3.4 5.0 3.9 4.4 16.7 28

Net profit (in mln USD) 0.1 0 0.1 0.1 0.3 3

No. of staff** 102 92 325 323 842 1.400

No. of branches 2 3 8 9 22 41

31

Growth of number of branches

0

5

10

15

20

25

Congo

Angola

Ghana

Mozam

bique

Bolivia

Ecuado

rEl S

alvad

orNica

ragua

Albania

Bosnia

Bulgari

a

Georgi

a

Kosovo

Maced

onia

Moldov

aRomania

Serbia

Ukraine

2004 2005 2006

Africa Latin America Eastern Europe

32

Branches before and after

33

Growth of staff

0

50

100

150

200

250

300

350

400

450

500

2002 2003 2004 2005 2006 Plan 2007

Congo Angola Ghana Mozambique

34

Head office staff vs. staff in branches

0%

20%

40%

60%

80%

100%

Congo Angola Ghana Mozambique Eastern Europe Latin America

Head office staff Staff in branches

Avg. no. of staff per branch

27 32 35 30 20 22

35

Staff

0

50

100

150

200

250

300

350


Management staffin HO

Other staff in HO

Management staffin branches

Loan officers

Client advisors

Cashiers

LO and CAtrainees

Administrative andsupportive staff inthe branches

36

Institution buildingHR related issues

• Volatility of performance• No back-up personnelOperations still relying on too few persons

• Slow growth in branching out• Results below plan

• Primary and technical education is on a low level• Training local staff takes a long time• Recruiting local people with working experience has not always proved successful and is often extremely costly• Finding reasonably qualified people in smaller cities is even more difficult

Insufficient middle management capacity for branching out

• Qualified personnel not easily available• High investments (unprofitable)

Reasons

• Top management overworked with daily business instead of concentrated on management issues• Work cannot be delegated to qualified people

Weak head office structures

Impact on institutionsIssues

37

Institution building HR related issues

• Delay in branching-out• Branch expansion below plan• Weak HR departments• Low number of qualified applicants, especially outside capitals• High turnover

Staff recruitment below plan

• Compensation for termination of employment contracts is extremely high• Disciplinary proceedings generally in favor of employee• Unions attempt to influence the banks’HR policy

• HistoricalUnfavorable labor legislation andintervention by unions

• Poor organization of daily workflow• Insufficient service orientation• Bribes and fraud• Lack of adequate communication skills

• Cultural• Religious• Traditions• Education

Different social context and attitude towards work

• Low percentage of experienced staff leads to reduced performance

• Dismissals due to bad performance and fraud• Staff poaching by other banks• Attractive offers on local labor market

Considerable staff turnover

Reasons Impact on institutionsIssues

38

Range of products


Loan products Local currencyand USD

Local currency andindexed to USD

Local currency

Local currency

Business loans X X X XHousing improvement loans X XEmployee loans X X XCredit lines and overdrafts X

Deposits Local currency,USD and EUR

Local currency and USD

Local currency

Local currencyand USD

Current accounts X X X XSavings accounts X X X XSavings plans XTerm deposits X X X X

Other banking services

Cheques X X X XMoney transfer:

domestic X X X Xinternational X X

ATM X XVisa cards XWestern Union X X XPayment services XMoney exchange X X X

39

Development of number of depositsin the first years of operation

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0 1 2 3 4 5 6


year of operation

40

Deposit volume developmentin the first years of operation

Volume in mln USD

0

2

4

6

8

10

12

14

16

18

20

0 1 2 3 4 5 6


year of operation

41

Deposits vs. loans

100%

67%

94%

217%

0

2

4

6

8

10

12

14

16

18


NumberVolume in %Deposits to loans ratio

1:13:15:1

91%Eastern Europe62%Latin America

109%Africa

Volume in mln USD

3:1

7:1

6:1

12:1

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000


Numbers

Loans Deposits Ratio of deposits to loans

42

Deposits by type – Africa

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Current accounts Savings accounts Term deposit accounts

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Distribution by volume Distribution by number

43

Deposits by type – regions

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Africa Eastern Europe Latin America

Current accounts Savings accounts Term deposit accounts

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Africa Eastern Europe Latin America


44

Breakdown of the deposit base by size Total Africa

Ia 82%

Ib 15%

IIa 3% III 0.03%IIb 0.3%


Average size of deposits

(USD)

Ia 16Ib 329IIa 2,715IIb 19,005III 131,101

Ia <=USD 100; Ib USD 101- 1,000; IIa USD 1,001-10,000; IIb USD 10,001-50,000; III USD > 50,000

Ia 5%

Ib 19%

IIa 35%

IIb 24%

III 17%

45

Breakdown of the deposit base by size

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



Average amount deposited (in USD):

902 275 187 150

up to 100 101 to 1,000 1,001 to 10,000

10,001 to 50,000 more than 50,001

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


46

Development of no. of outstanding loansFirst years of operation

0

5,000

10,000

15,000

20,000

25,000

0 1 2 3 4 5 6year of operation


47

Loan portfolio developmentin the first years of operation

Volume in mln USD

0

2

4

6

8

10

12

14

16

0 1 2 3 4 5 6year of operation


48

Volume and number of outstanding loans

0

2

4

6

8

10

12

14

16

Congo Angola Ghana Mozambique0

4.000

8.000

12.000

16.000

20.000

24.000

Volume Number

Volume in mln USD Number of loansAverage loan amount outstanding:

2,678 3,260 1,364 596

49

llb 0.0%lla 1.8%

lb 27.3%

la 70.9%

Breakdown of the loan portfolio Total Africa

Ia 20.7%

IIb 1.3%

IIa 23.3%

Ib 54.7%

Distribution by volume Distribution by number of loans

Ia <=USD 1,000; Ib USD 1,001- 10,000; IIa USD 10,001-50,000; IIb >USD 50,000

Average size of outstanding loans

(USD)

Ia 333 Ib 2,286IIa 14,384IIb 56,126

50

0%

20%

40%

60%

80%

100%


Breakdown of loan portfolio by size of loan

Distribution by volume Distribution by numberAverage loan amount outstanding (in USD):2,678 3,260 1,364 596

0%

20%

40%

60%

80%

100%


up to 1,000 from 1,001 up to 10,000 from 10,001 up to 50,000 over 50,000

51

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Congo Angola Ghana Mozambique Total group

Business loans Agricultural loans House improvement loansEmployee loans Other loans

Total loan portfolio –breakdown by type of loan

52

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Congo Angola Ghana Mozambique Total group

Trade Industry, production, constructionTransport TourismOther services Mixed

Business loans –breakdown by sector

53

Business loans –breakdown by maturity

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Up to 6 months 6 months to 12 months 12 months to 24 months over 24 months

54

Business loans –New customers vs. repeat customers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


New customers Repeat customers

55

0

500

1,000

1,500

2,000

2,500

Sep-04

Oct-04

Nov-04

Dec-04

Jan-0

5Feb

-05Mar-

05Apr-

05May

-05Ju

n-05

Jul-0

5Aug

-05Sep

-05Oct-

05Nov

-05Dec

-05Ja

n-06

Feb-06

Mar-06

Apr-06

May-06

Jun-0

6Ju

l-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-0

7Feb

-07


Monthly disbursements

No. of loans

56

Loan officer productivity

0

5

10

15

20

25

30

35

40

45

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep

-01

Nov

-01

Jan-

02

Mar

-02

May

-02

Jul-0

2

Sep

-02

Nov

-02

Jan-

03

Mar

-03

May

-03

Jul-0

3

Sep

-03

Nov

-03

Jan-

04

Mar

-04

May

-04

Jul-0

4

Sep

-04

Nov

-04

Jan-

05

Mar

-05

May

-05

Jul-0

5

Sep

-05

Nov

-05

Jan-

06

Mar

-06

May

-06

Jul-0

6

Sep

-06

Nov

-06

Jan-

07


No. of loans disbursed per loan officer

57

Loan officer performance(February 2007)

340,000

78,000

20

Congo Latin America

Eastern EuropeAfricaMozambiqueGhanaAngola

690,0001,170,000190,000130,000190,000250,000Portfolio per loan officer (in USD)

59,500110,00031,00017,50029,00048,000

Vol. disbursed per month per loan officer (in USD)

34181719178

No. of loans disbursed per month per loan officer

58

Portfolio at risk over 30 days

PAR in % of gross loan portfolio

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan

03

Mar

03

May

03

July

03

Sep

03

Nov

03

Jan

04

Mar

04

May

04

Jul 0

4

Sep

04

Nov

04

Jan

05

Mar

05

May

05

Jul 0

5

Sep

05

Nov

05

Jan

06

Mar

06

May

06

Jul 0

6

Sep

06

Nov

06

Jan

07

Congo Angola Ghana Mozambique Total Africa

59

Loan loss provisions vs. loans in arrears > 30 days

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000


Arrears > 30 days Loan loss provisions

Provisioning expenses year-to-date (in ‘000 USD):

33 54 8 31

60

Loan officer productivity vs. portfolio at risk - Mozambique

No. of loans PAR in %

0

5

10

15

20

25

30

35

40

45

50

Nov

-00

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep

-01

Nov

-01

Jan-

02

Mar

-02

May

-02

Jul-0

2

Sep

-02

Nov

-02

Jan-

03

Mar

-03

May

-03

Jul-0

3

Sep

-03

Nov

-03

Jan-

04

Mar

-04

May

-04

Jul-0

4

Sep

-04

Nov

-04

Jan-

05

Mar

-05

May

-05

Jul-0

5

Sep

-05

Nov

-05

Jan-

06

Mar

-06

May

-06

Jul-0

6

Sep

-06

Nov

-06

Jan-

07

0

1

2

3

4

5

Disbursements per loan officer PAR over 30 days

61

Write-offs (total; in % of loan portfolio)

in '000 USD Net write-offs in year

Outstanding loan portfolio

As %Net write-offs

in yearOutstanding loan portfolio

As %Net write-offs

in yearOutstanding loan portfolio

As %

Congo - - - - 2,243 - - 7,390 -

Angola - 1,212 - - 4,369 - 172 7,551 2.3%

Ghana - 4,675 - 46 7,211 0.6% 170 13,671 1.2%

Mozambique 33 6,899 0.5% 79 8,106 1.0% 141 12,938 1.3%

Total Africa 33 12,786 0.3% 124 21,929 0.6% 483 41,550 1.2%

Total EEB 1,270 926,388 0.1% 5,108 1,356,509 0.4% 7,535 2,221,191 0.3%

Total LA 1,485 298,045 0.5% 4,965 393,998 1.3% 2,479 528,171 0.5%

2004 2005 2006

62

International transfers(in and out, incl. Western Union)

0

1

2

3

4

5

6

7

8

9

10

Jan-0

4Mar-

04May

-04Ju

l-04

Sep-04

Nov-04

Jan-0

5Mar-

05May

-05Ju

l-05

Sep-05

Nov-05

Jan-0

6Mar-

06May

-06Ju

l-06

Sep-06

Nov-06

Jan-0

7

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Congo Angola Ghana Mozambique Total no. of transfers

Volume in mln USD Numbers

63

Balance sheet analysis

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Congo

Angola

Ghana

Mozam

bique

Total G

roup

Cash

Accounts atCentralBank

Deposits &investments

Loans

Fixed andother assets

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Congo

Angola

Ghana

Mozam

bique

Total G

roup

Customerdeposits

Borrowings

Otherliabilities

Equity

Assets Liabilities and equity

64

Financial margins(December 2006)

32.8

5.7

58.0

Africa

13.48.545.037.225.120.9Net interest income / Avg. total assets

2.0

53.3

Congo

5.85.27.17.36.2Financial expenses / Avg. debt financing (in%)

22.018.365.757.149.7Income from loans / Avg. loan portfolio (in%)

Latin America

Eastern Europe

MozambiqueGhanaAngolain %

65

Expenses(December 2006)

13,227

8,720

16.3

10.7

75.4

Africa

23,436

7,442

13.3

4.2

70.9

Congo

13,52116,00011,0589,91521,211Administrative expenses/Avg. number of staff (USD)

10,64912,0118,2277,80714,451Personnel expenses/Avg. number of staff (USD)

5.84.018.817.315.1Administrative expenses/Avg. total assets (in%)

4.73.014.013.610.3Personnel expenses/Avg. total assets (in%)

74.172,667.379.690.0Cost-income ratio (in%)

Latin America

Eastern Europe

MozambiqueGhanaAngola

66

Returns(December 2006)

17.9

19.6

5.0

Africa

11.817.949.515.20.521.7Return on avg. equity (after revaluation)

1.31.310.73.40.24.6Return on assets

21.7

Congo

12.616.156.716.40.5Return on avg. equity

Latin America

Eastern Europe

MozambiqueGhanaAngolain %

67

Actual vs. budget(December 2006)

Actual Plan Diff. Actual Plan Diff. Actual Plan Diff. Actual Plan Diff. Actual Plan Diff.

Congo 7.4 6.3 1.1 15.0 8.8 6.2 626 -352 978 90 116 -26 2 3 -1

Angola 7.6 10.2 -2.6 7.4 4.7 2.7 94 132 -38 107 131 -24 3 5 -2

Ghana 13.7 14.1 -0.4 12.7 12.0 0.7 429 332 97 322 334 -12 8 10 -2

Mozambique 13.0 10.9 2.1 8.1 8.6 -0.5 1,362 631 731 320 342 -22 9 9

Total 41.7 41.5 0.2 43.2 34.1 9.1 2,511 743 1,768 839 923 -84 22 27 -5

Staff BranchesGross loan

portfolio(in mln USD)

Liabilities to customers

(in mln USD)

Net profit(in '000 USD)

0

68

0

1

2

3

4

5

6

7

Serbia

('00-'

06)

Ukraine

('00-'

08)

Roman

ia ('0

2-'06

)

Maced

onia

('02-'

06)

Kosov

o ('99

-'03)

Georgi

a ('96

-'07)

Bulgari

a ('01

-'05)

Bosnia

('96-'

02)

Albania

('99-'

03)

Moldov

a ('99

-'04)

El Salv

ador

('88-'

03)

Bolivia

('91-'

98)

Nicarag

ua ('0

0-'03

)

Ecuad

or ('0

1-'03

)

Angola

('02-'

10)

Mozam

bique

('00-'

10)

Ghana

('00-'

10)

Congo

('04-'

10)

Sierra

Leon

e ('06

-'10)

New ba

nk

Funding from the Gates Foundation 8.98m

Eastern Europe Latin America Africa42.9m 12.1m 22.3m

Volume in mln USD

Funding from GTZ prior to the establishment of the banks

TA for ProCredit Banks

69

Africa: Key challenges and opportunities

Challenges• Unstable political and macroeconomic framework• Slow institution building• Low loan officer performance• High operational costs

Opportunities• Ongoing learning process • Potential to increase productivity and efficiency• Strong demand• Potential for more synergies within the ProCredit Group

70

Our strategy in Africa

• Human resources and staff development– HR department– Recruitment– Training at various levels

• Scale: How to reach “critical mass“– Fine-tune/broaden our product range– Increase our visibility– Build a nation wide branch network– Expand regionally (Sierra Leone, Liberia, ...)

71

Human resources and staff development

Strengthening the HR department

• Establishing a training unit within the HR department• Creating knowledge in legal aspects/labor law• Creating capacities in staff evaluation• Establishing a consistent and transparent remuneration policy• Defining an acceptable and clear-cut position with regard to the

unions

Recruiting staff

• Recruiting on an ongoing basis• Establishing a convincing corporate image• Adapting recruitment criteria to local conditions, especially in the

regions• Offering social benefits and professional development

72

Human resources and staff development

Training at various levels

• Training for new staff on an ongoing basis• Ongoing refreshment courses• Offering seminars on specific technical topics and basic work

organization• Training management skills locally• Exchanging staff within the ProCredit Group• Offering advanced middle-management training in the regional

academy and in Fürth

73

Regional Academy in Ghana

Objective: Build up a strong base of middle and lower management capacity in African Banks

Training concept: Courses in banking-related subjects, such as credit technology, savings, marketing, branch management, audit. Additionally: human recourses management, social and political issues, corporate values.

Duration: 1 year courses, three times four weeks each, 20 participants/course

Participants: Senior bank staff, coordinators, potential managers

Trainers: ProCredit Holding staff members, Bank staff trained at Fürth Academy

Complementary: English language courses for all non English speaking participants, 2 month classroom training, combined with practical training at ProCredit Ghana. English training is open for staff from all ProCredit banks

Setting: In Accra, training facility with 40 bedrooms and 3 classrooms, canteen, 1,000 m² building, recreation area

74

Training sessions

75

Towards a broad and more customised product range

2006 2007 2008

• Visa cards• ATMs/debit cards• Agricultural loans• International money transfers

• Savings accounts/plans• Overdrafts/credit lines

Mozambique

• ATMs• FX operations• International money transfers• Bank guarantees

• Agricultural loans• ProKid• Savings plans

• Housing improvement loans• ProFlex account

Ghana

• ATMs/Visa cards• Housing improvement loans• Agricultural loans• Instant loans

• Western Union• Express loans (< $ 1,000)

Angola

• Housing improvement loans• Agricultural loans

• Overdrafts• E-banking• Bank guarantees• Salary accounts

• ATMs/debit cards• Visa cards

Congo

76

Visibility and brand awareness in Africa

Current situation

• Low to non-existent brand awareness• If brand awareness exists it is primarily associated with micro loans• Limited presence, concentrated in capital cities • Differing legal status and names• Lack of local marketing expertise• High potential for better visibility• Logistical constraints

77


Strategy

• Expanding the branch network• “Rebranding“ of branches and head offices (image, standard design)• More brand-related marketing• Promoting the “neighborhood bank“ concept

– Direct marketing– Community activities– Redefinition of client advisors’ and LO’s role

• Training of marketing staff• Active role of marketing experts from ProCredit Holding

78


79


80


81


82


83

A nation wide branch network

Benefits• Capture vibrant local activities• Visibility / image • Agricultural loans• Staff (local)• (Forced to) develop innovative technical solutions

Strategy• Create staff capacity at head office level• Implementation of several branch development projects simultaneously• Parallel expansion in the capital cities AND regions• Further branch expansion into smaller cities from regional centers• Other types of branches (saving mobilization units, mobile branches, etc.)

84

Outlook

3,800

330

340

230,000

680,000

130

Projections for 2011(5 banks)

842No. of staff

42.0Total loan portfolio (in mln USD)

45.9Customer deposits (in mln USD)

36,880No. of loans

174,079No. of deposits

22No. of branches

January 2007

procredit in africa march 2007 - world...

Documents