In 2022, Coop Pank increased its business volumes by about 40% for the sixth consecutive year.
Over the year, the number of Coop Pank customers increased by 32,400 (+28%) and the number of active clients increased by 15,800 (+31%). Of the new customers, 29,400 were private customers and 3,000 were business customers. By the end of 2022, the number of Coop Pank customers reached 147,000, of which 66,800 were active clients. For comparison: 5,000 new customers joined Coop Pank in 2017, 9,000 in 2018, 19,000 in 2019, 23,000 in 2020 and 27,900 in 2021.
By the end of 2022, deposits of Coop Pank reached 1.5 billion euros, increased by 409 million euros (+37%) over the year. Demand deposits grew by 39% over the year and term deposits by 36%. The bank's financing cost remained at the level of 0.7%, alike to the last year. The market share of the bank's deposits increased from 4% to 5.5% over the year.
Loan portfolio of Coop Pank reached 1.3 billion euros by the end of 2022, increased by 347 million euros (+36%) over the year. The greatest growth was shown by corporate loan portfolio and home loan portfolio: the corporate loan portfolio increased by 154 million euros (+36%) and the home loan portfolio by 143 million euros (39%). The leasing portfolio increased by 32 million (+32%) and the consumer finance portfolio increased by 19 million euro (+28%). The market share of the bank's loans increased from 4.5% to 5.5% over the year.
In 2022, the quality of the loan portfolio remained very good, despite of the changes in the economic environment. To cover possible loan losses, 5.2 million euros provisions were made in 2022 – that was +110% more than a year earlier due to the increased loan portfolio and the change in the economic environment. The cost ratio for credit risk increased from 0.3% to 0.5% compared to 2021.
The net income of Coop Pank reached 55 million euros, increased by 15.4 million euros (+39%) over the year. The largest contribution to revenue growth was made by net interest income, which increased by 15.2 million euros (+43%) over the year. Also, very good growth showed net service fee revenues, which increased by 0.7 million euros (+23%) over the year. The bank's operating cost reached 27 million euros, increased by 4.7 million euros (+21%) over the year. Personnel, IT and marketing costs continued to make up the largest part of operating costs.
Net profit of Coop Pank in 2022 was 20.4 million euros, increased by 51% over the year. The bank's cost / income ratio fell from 57% to 50% over the year and the return on equity rose from 12.9% to 16.8%.
As of 31 December 2022, Coop Pank has 36,045 shareholders, over the year the number of shareholders increased by 8,200.
Results in Q4
In Q4 2022, the number of the bank’s customers increased by 8,200, of which 7,300 were private customers and 900 were corporate customers. By the end of the year 2022, Coop Pank had 147,000 daily banking customers.
The volume of deposits increased by 154 million euros (+11%), in Q4 2022 and reached 1.5 billion euros by the end of the year. Over the quarter, the volume of demand deposits increased by 45 million euros and the volume of term deposits by 109 million euros.
The bank's net loan portfolio grew by 92 million euros (+8%) over the quarter, reaching 1.3 billion euros by the end of the year. The volume of corporate loans increased by 45 million euros, the volume of home loans by 35 million euros, leasing by 7 million euros and consumer financing by 5 million euros.
In Q4 2022, Coop Pank earned a profit of 6.5 million euros, which is 13% more than in Q3 and 98% more than in the same period last year. Quarterly profitability was most affected by interest income, the bank group's interest income increased by 3 million euros (+24%) in the quarter.
Comments of the CEO of Coop Pank Margus Rink:
“The year 2022 turned out to be what we certainly could not imagine it to be like when we made forecasts a year ago: at the beginning of the year we were on the back of the corona crisis, expectations for the economic environment were moderately positive, but then the war in Ukraine started, which escalated the energy and commodity crisis, which in its turn accelerated the increase in the prices of goods and services. Inflation accelerated, and the European Central Bank began to raise base interest rates to control it. As a result, the euribor also started to rise sharply, and many private and corporate loans became more expensive than they were before. On the other hand, savers started to earn higher interest on their term deposits. All in all, these changes largely defined the priorities on the desks of bank managers.
Despite the challenging economic environment, Coop Pank managed to grow its business volumes by almost 40% in 2022, its sixth consecutive year of operations, and continue to execute its growth strategy.
Over the year, the number of the bank’s clients increased by 32,400 to 147,00. The number of active clients increased by 15,800 to 66,800. In order to ensure that Coop Pank continues to be easily accessible to all Estonians, we continued to serve our clients at 15 branches in 12 different Estonian cities. Having such a wide manned service channel is becoming an increasingly bigger competitive advantage for us. At the same time, we continued to develop our digital banking channels. The update of the mobile app improved its reliability, design and capability for the addition of new functions, whilst retaining its previous ease of use.
Coop Pank has contributed to increasing people’s confidence during a difficult time. In order to do this, in addition to the already successfully introduced small loan insurance, we started offering lease payment insurance, which protects private car leasing clients from payment difficulties if they lose their job or capacity for work. Also our private debit cards come with free purchase insurance, and the monthly payment-based travel insurance that protects all family members is also well received by our customers.
We strive to make getting a home easier for people who live outside bigger centres and we’re therefore the only bank operating in Estonia that accepts the guarantee of KredEx for acquiring a home in a rural area. In order to reduce the self-financing requirement, we also accept all other KredEx guarantees and co-financing from the Rural Development Foundation, which is also meant for people setting up their homes in rural areas.
In late 2022, we refreshed our communication language by launching the bank’s image campaign, which focused on our clients. The campaign features Estonian people and entrepreneurs telling their success stories, who also confirm, based on their personal experience, that Coop Pank listens to its clients, takes local conditions into account, is flexible and acts quickly.
In addition to Estonians, we were also a popular choice for Ukrainian war refugees who arrived in Estonia last year. Over the year, we accepted more than 4,000 Ukrainian citizens as our clients, to whom we offer free settlement options. Coop Pank and the regional cooperatives of Coop supported the operations of the Red Cross in Ukraine with a million euros to help people affected by the war with basic necessities.
2022 can be considered the year when the green transition started at Coop Pank. We became the first bank in Estonia to receive a B- rating from the Carbon Disclosure Project (CDP), an international environmental impact assessment organisation, which confirms that we’re a well-managed company in terms of environmental impact. In 2022, we also became a member of the United Nations Environment Programme Finance Initiative (UNEP FI) and approved the Responsible Banking Principles, which make the bank’s business strategy comply with the UN Sustainable Development Goals and the objectives of the Paris Climate Agreement to increase our positive impact on society. We take bold steps to manage our climate impact and strive to become a climate neutral bank by 2050 at the latest.
In terms of business performance, raising deposits was a major challenge throughout the year. In an environment of higher prices for essential goods and fuels as well as rising borrowing rates, customers tapped into earlier savings and the growth of deposits on the market slowed down sharply. This, in its turn, led to even more competition for deposits on the Estonian banking market and the financing costs of banks increased. The deposit portfolio of Coop Pank amounted to 1.5 billion euros as at the end of 2022 – an increase of 409 million euros, i.e. 37%, over the year.
Although the war, supply difficulties and inflation increased uncertainty about the future for both private clients and businesses during the year, demand for financial products remained high until autumn, when we started to see a decline in new loan applications. Over the year, our loan portfolio grew by 347 million euros (+36%) to 1.3 billion euros. Over the number of years, the price of money turned positive, allowing banks to earn additional interest income. We expect a similar impact to continue in the banking sector in 2023. The quality of the portfolio remained at a very good level throughout the year: the share of the portfolio in debt at the end of the year was only 1.5%. However, we are seeing a deterioration in key performance indicators in the financial statements of our clients and have therefore increased provisions for potential loan losses to 5.2 million euros.
The continuing growth in the business volumes of Coop Pank has led to the expected scale effect, which means that our revenues are growing faster than our costs. In 2022, the bank earned revenues of 55 million euros, an annual increase of 39%, and its operating expenses amounted to 27 million euros, an annual increase of 21%. As a result of this, our key performance indicators improved over the year: profit increased to 20.4 million euros, or 51%, the cost/income ratio fell to 50% and the return on equity increased to 16,8%.
Despite the uncertain economic environment, we raised capital to continue the bank’s growth in 2022 on three occasions: in spring we issued fixed-term subordinated bonds, in summer we organised a private placement of perpetual subordinated bonds and in autumn we issued new shares. All instances of raising capital proved to be successful and the investors who showed high levels of trust in Coop Pank invested 46.4 million euros in the bank.
Last year, Coop Pank paid dividends to shareholders for the first time. By doing this, we kept the promise made to the shareholders during the IPO: to pay 25% of the profit as dividends from 2021. In 2022, the number of our shareholders increased by 8200 and at the end of the year Coop Pank had 36,045 shareholders.
In 2022, we delivered on all the targets we had set ourselves and kept the promises we made to investors, and we’ll continue with the strategy that has brought us success so far. Our strategic goal is to increase the bank’s market share in Estonia to 10% and the loan portfolio to at least 2 billion euros by the beginning of 2027, and thereby reach a position where one in ten Estonians settles with Coop Pank – this means at least 150,000 active clients. As a result of the growth in business volumes, the bank aims to operate with increasing efficiency (cost/income ratio below 50%) and to offer shareholders a decent return on equity (ROE of at least 15%). We already achieved and even exceeded these levels in 2022.
I would like to thank all the clients, shareholders and employees of Coop Pank for a great year! Our goal is to build Coop Pank to be everyone’s success story. A success story for clients. A success story for shareholders. A success story for employees.”
| Income statement, in thousands of euros | Q4 2022 | Q3 2022 | Q4 2021 | 12M 2022 | 12M 2021 |
| Net interest income | 15 765 | 12 721 | 9 824 | 50 709 | 35 538 |
| Net fee and commission income | 1 107 | 978 | 903 | 3 785 | 3 085 |
| Net other income | -338 | 148 | -50 | 137 | 615 |
| Total net income | 16 535 | 13 847 | 10 677 | 54 631 | 39 238 |
| Payroll expenses | -4 216 | -4 057 | -3 182 | -15 502 | -12 490 |
| Marketing expenses | -526 | -442 | -332 | -1 758 | -1 247 |
| Rental and office expenses, depreciation of tangible assets | -680 | -684 | -980 | -2 721 | -2 802 |
| IT expenses and depreciation of intangible assets | -1 203 | -1 088 | -1 013 | -4 379 | -3 455 |
| Other operating expenses | -814 | -660 | -698 | -2 817 | -2 459 |
| Total operating expenses | -7 439 | -6 931 | -6 205 | -27 177 | -22 453 |
| Net profit before impairment losses | 9 095 | 6 918 | 4 471 | 27 454 | 16 785 |
| Impairment costs on financial assets | -1 898 | -672 | -963 | -5 245 | -2 497 |
| Net profit before income tax | 7 197 | 6 246 | 3 508 | 22 209 | 14 288 |
| Income tax expenses | -682 | -499 | -213 | -1 859 | -825 |
| Net profit for the financial year | 6 515 | 5 747 | 3 295 | 20 350 | 13 463 |
| Statement of financial position, in thousands of euros | 31.12.2022 | 30.09.2022 | 31.12.2021 | ||
| Cash and cash equivalents | 364 878 | 287 158 | 252 799 | ||
| Debt securities | 18 747 | 14 540 | 5 932 | ||
| Loans to customers | 1 300 775 | 1 208 457 | 953 396 | ||
| Other assets | 29 776 | 29 880 | 29 849 | ||
| Total assets | 1 714 176 | 1 540 035 | 1 241 976 | ||
| Customer deposits and loans received | 1 508 126 | 1 354 345 | 1 098 746 | ||
| Other liabilities | 18 795 | 19 659 | 14 423 | ||
| Subordinated debt | 38 139 | 43 211 | 17 064 | ||
| Total liabilities | 1 565 060 | 1 417 215 | 1 130 233 | ||
| Equity | 149 116 | 122 820 | 111 743 | ||
| Total liabilities and equity | 1 714 176 | 1 540 035 | 1 241 976 | ||
The reports of Coop Pank are accessible at: https://www.cooppank.ee/aruandlus.
Coop Pank will hold an Investor Webinar for the introduction of its financial results, which is scheduled at 10:00 on 9 February 2023. To participate, please register in advance via the following link: https://forms.office.com/e/AUPiAED8zN
The webinar will be recorded and posted on the company’s website www.cooppank.ee and YouTube account.
Coop Pank, which is based on Estonian capital, is one of the five universal banks operating in Estonia. The bank has 147,000 everyday banking customers. Coop Pank aims to put the synergy generated by the interaction of retail business and banking to good use and to bring everyday banking services closer to people’s homes. The strategic owner of the bank is the local retail chain Coop Estonia, which has a sales network of 320 stores.
Further information:
Margus Rink
Chief Executive Office
Email: margus.rink@cooppank.ee
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