Coop Pank's results for 2023 were primarily affected by growth in business volumes, including the number of customers and our loan portfolio, and the changed interest rate environment.
Over the year, the number of Coop Pank customers increased by 36,000 (+24%) and the number of active customers increased by 15,000 (+23%). Of the new customers, 32,000 were private customers and 4,000 were business customers. By the end of 2023, the number of Coop Pank customers reached 182,000, of which 82,800 were active customers. For comparison: 5,000 new customers joined Coop Pank in 2017; 9,000 in 2018; 19,000 in 2019, 23,000 in 2020; 28,000 in 2021 and 32,000 in 2022.
By the end of 2023, deposits of Coop Pank reached 1.7 billion euros, increased by 214 million euros (+14%) over the year. Term deposits increased by 55% over the year and demand deposits by 31%. The bank's financing cost increased over the year from the level of 0.7% to the level of 2,4%. The market share of the bank's deposits increased from 5.5% to 6,0% over the year.
By the end of 2023, loan portfolio of Coop Pank reached 1.5 billion euros, increased by 190 million euros (+15%) over the year. Home loans and business loans made the biggest contribution to portfolio growth. Home loan portfolio increased by 94 million euros (+18%) and corporate loan portfolio increased by 63 million euros (+11%). Leasing portfolio increased by 24 million euros (+18%) and consumer finance portfolio increased by 10 million euro (+11%). The market share of the bank's loans increased from 5.5% to 6,0% over the year.
In 2023, the quality of the loan portfolio remained very good, despite of the changes in the economic environment. To cover possible loan losses, 6.3 million euros provisions were made in 2023 - that was +20% more than a year earlier due to the increased loan portfolio and the change in the economic environment. The cost ratio for credit risk remained the same in 2023 as it was in 2022.
The net income of Coop Pank reached 85 million euros, increased by 30.6 million euros (+56%) over the year. The largest contribution to revenue growth was made by net interest income, which increased by 30.6 million euros (+60%) over the year. Net service fee revenues also showed strong growth, increasing by 1 million euros (+28%) over the year. The bank's operating cost reached 35.1 million euros, increased by 8.0 million euros (+29%) over the year. Personnel, IT and marketing costs continued to make up the largest part of operating costs.
Net profit of Coop Pank in 2023 was 39.2 million euros, increased by 93% over the year. The bank's cost / income ratio fell from 50% to 41% over the year and the return on equity rose from the level of 16.8% to the level of 23%.
Coop Pank paid 14.4 million euros in taxes in 2023 (9.2 million euros in 2022; growth over the year +64%), including 4.6 million euros of corporate income tax (1.9 million euros in 2022, growth of 2.4 times), in the remaining amount, primarily various labor-related taxes.
As of 31 December 2023, Coop Pank has 37,200 shareholders, over the year the number of shareholders increased by 1,200.
Results in Q4
In Q4 2023, the number of the bank's customers increased by 7,300, of which 6,600 were private customers and 700 were corporate customers. By the end of the year 2023, Coop Pank had 182,000 daily banking customers.
In Q4 2023, the volume of deposits increased by 15 million euros (+1%) and reached 1.7 billion euros by the end of the year. Over the quarter, the volume of demand deposits decreased by 37 million euros and the volume of term deposits increased by 51 million euros.
The bank's net loan portfolio decreased by 3 million euros (-0.2%) over the quarter, reaching 1.5 billion euros by the end of the year. The volume of corporate loans decreased by 21 million euros and consumer financing by 1 million euros. The volume of home loans increased by 15 million euros and leasing by 4 million euros.
In Q4 2023, Coop Pank earned a profit of 8.4 million euros, which is 24% less than in Q3 and 29% more than in the same period last year. Quarterly profitability was affected by an extraordinary discount related to the real estate object in Latvia in the amount of 1.8 million euros.
Comments of the CEO of Coop Pank Margus Rink:
"Coop Pank's results for 2023 were primarily affected by growth in business volumes and the changed interest rate environment.
Despite of the general economic downturn, we continued to implement the growth strategy and made the most of this environment. This is best illustrated by the following fact: when the loan market in Estonia grew by 6% in 2023, the same time Coop Pank's loan portfolio increased by 15%, or 2.5 times faster than the market. In 2023, 36,000 new customers joined us, which is the best result in years.
The high interest rate environment had multiple impacts on our results. From a negative aspect, it inhibited new loan demand and the growth of business volumes, especially in the financing of business customers. On the positive side, high interest rates increased the bank's interest income. Also, the interest costs paid by customers increased several times, taking the bank's financing cost to 2.4% level (0.7% in 2022). Somewhat surprisingly, the quality of the loan portfolio did not grow worse in this environment. However, considering the negative macro perspective, we made additional provisions to cover possible future loan losses.
Summarizing the above, in 2023 Coop Pank made the highest net profit of all time and the best performance indicators in its seventh year of operation. We are proud to say that Coop Pank's record results are not only due to the environment of high interest rates. The increase in business volumes, that is our work, affected the increase in net profit by a third. The remaining two-thirds of net profit growth came from high interest rates.
In 2023 we significantly expanded our range of services for private customers and started offering even more convenient ways of saving money. In addition to term deposits, which are growing again in popularity, we added a flexible saving service called the Cash Drawer to our mobile app and started giving our customers the option of joining the Tuleva pension fund. In addition to savings, our various insurance solutions, which we offer through Coop Kindlustusmaakler, help people and businesses feel more secure.
We've continued to develop our digital banking channels. We've made applying for a home loan on our website quicker and easier for everyone too: we're now the only bank in Estonia that shows the applicant an indicative offer as soon as their application has been submitted. Among other things, we introduced biometric personal identification and Google Pay and Apple Pay payment solutions. The most important product innovations for our business customers have been the option to open an account electronically and the introduction of Gateway, which helps companies quickly, securely and conveniently connect their accounting to Coop Pank's services.
In summary: at the end of the seventh year of operation, we have all banking services in place for the customer to switch banks and use Coop Pank as their main bank. This is what we will put the most effort into in the coming years.
As our influence grows, we're ready to take on ever greater responsibility in society. We're now on the list of critical service providers (CSPs). The European Central Bank has also designated Coop Pank as a high impact less-significant institution. We make a difference in the daily lives of people in Estonia and we have a broad social impact. This was recognised last year by Brand Capital, the largest brand and lifestyle research company in the Baltics, which awarded Coop Pank the title of 'Most Human Brand in Estonia'.
Coop Pank's 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%).
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 th. of euros | Q4 2023 | Q3 2023 | Q4 2022 | 12M 2023 | 12M 2022 |
| Net interest income | 20 594 | 21 257 | 15 765 | 81 265 | 50 709 |
| Net fee and commission income | 1 489 | 1 147 | 1 107 | 4 847 | 3 784 |
| Net other income | -1 666 | 334 | -338 | -908 | 137 |
| Total net income | 20 415 | 22 738 | 16 534 | 85 205 | 54 631 |
| Payroll expenses | -5 495 | -5 297 | -4 216 | -20 234 | -15 502 |
| Marketing expenses | -912 | -630 | -526 | -2 587 | -1 758 |
| Rental and office expenses, depr. of tangible assets | -678 | -673 | -680 | -2 776 | -2 721 |
| IT expenses and depr. of intangible assets | -1 365 | -1 204 | -1 203 | -4 802 | -4 378 |
| Other operating expenses | -1 498 | -1 218 | -814 | -4 728 | -2 817 |
| Total operating expenses | -9 948 | -9 022 | -7 439 | -35 128 | -27 176 |
| Net profit before impairment losses | 10 469 | 13 716 | 9 095 | 50 076 | 27 454 |
| Impairment costs on financial assets | -1 148 | -1 296 | -1 898 | -6 302 | -5 245 |
| Net profit before income tax | 9 321 | 12 420 | 7 197 | 43 774 | 22 209 |
| Income tax expenses | -935 | -1 344 | -682 | -4 569 | -1 858 |
| Net profit for the period | 8 386 | 11 076 | 6 515 | 39 204 | 20 351 |
| Earnings per share, eur | 0,08 | 0,11 | 0,07 | 0,38 | 0,22 |
| Diluted earnings per share, eur | 0,08 | 0,11 | 0,07 | 0,38 | 0,21 |
| Statement of financial position, in th. of euros | 31.12.2023 | 30.09.2023 | 31.12.2022 |
| Cash and cash equivalents | 428 354 | 404 911 | 364 878 |
| Debt securities | 36 421 | 31 765 | 18 747 |
| Loans to customers | 1 490 873 | 1 493 985 | 1 300 775 |
| Other assets | 30 564 | 30 527 | 29 776 |
| Total assets | 1 986 212 | 1 961 188 | 1 714 176 |
| Customer deposits and loans received | 1 721 765 | 1 707 214 | 1 508 126 |
| Other liabilities | 28 435 | 27 451 | 18 795 |
| Subordinated debt | 50 187 | 50 148 | 38 139 |
| Total liabilities | 1 800 387 | 1 784 813 | 1 565 060 |
| Equity | 185 825 | 176 375 | 149 116 |
| Total liabilities and equity | 1 986 212 | 1 961 188 | 1 714 176 |
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 09:00 on 9 February 2024. To participate, please register in advance via the following link: https://bit.ly/CP-09-02-24-veebiseminar-registreerimine
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 182,000 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
