Coop Pank demonstrates fast growth for the fourth consecutive year

Number of the bank’s customers at the end of 2020 was 86,700 – an increase of 23,000 customers, i.e., 36% over the year. For comparison: 5,000 new customers were gained in 2017, 9,000 in 2018 and 19,000 in 2019. In 2020, the number of private customers increased by 21,000 and the number of corporate customers by 2,000.

Loan portfolio of Coop Pank increased to 671 million euros in 2020 – an increase of 210 million euros, i.e., 46%, over the year. Business loan and home loan portfolios increased the most with 64% and 47%, respectively. Leasing portfolio increased by 30% and consumer finance by 11%. Market share of the bank’s loans at the end of 2020 was 3.4%, an increase of 1 percentage point over the year.

Quality of the loan portfolio remained stable irrespective of the corona crisis and the solvency of customers who used the grace period, has recovered. Provisions of 4.8 million euros were formed in 2020 as cover for potential loan losses. Credit risk cost ratio was 0.8%, compared to 0.5% in 2019. Increase in impairment costs derived from significant increase in portfolio as well as the impact of the economic environment.

Deposits of Coop Pank amounted to 758 million euros as at the end of 2020 – an increase of 251 million euros, i.e., 50%, over the year. Demand deposits grew by 99% over the year and term deposits by 29%. Market share of the bank’s deposits increased from 2.6% to 3.2%.

Profit earned by Coop Pank in 2020 amounted to 7.3 million euros, an increase of 31% over the year. Annual increase in the bank’s income was 31%. Largest contribution to revenue growth came from net interest income, which increased by 37% over the year. Annual increase in the bank’s operating costs was 16%.

Comments of the CEO of Coop Pank Margus Rink:
“Coop Pank has been operating on Estonian banking market for four years. We have been implementing a growth strategy in these years and increased our business volumes by 40% a year on average. We feel that our footprint in Estonian economy is growing.

The crisis that broke out in the beginning of the year cast doubt on our growth opportunities in 2020. However, increase in our business volumes slowed down only in March and April, and recovered in May. In spring and summer, our strategy as a local Estonian bank led to particularly good results: our market share of new home loans and corporate financing in this period was 10%. Despite extraordinary nature of last year our branches remained open and we did not ask our customers to make appointments for visiting us. Our account managers continued communicating with customers from their home offices using digital channels. All in all, we can say that we want to grow and took advantage of the opportunity that presented itself.

Our biggest concern in the year was fear for preservation of jobs and solvency of our customers. We offered our customers grace periods to prevent insolvency, which many of them used. At the start of the crisis, we also formed additional provisions in light of possible loan losses. Fortunately, real life turned out to be better than we feared. In second half of the year grace periods given to customers started to end and occasionally customers ended these periods early. We ended 2020 with lower rate of overdue loans than the year before.

Every year, increasingly more customers join us and start using Coop Pank as their main bank, which means that they have their monthly cash receipts paid into accounts in our bank and use our payment solutions. This trend has another positive aspect: the share of local demand resources increases, which reduces financing costs of the bank and makes it possible to offer better loan interest to customers.

In August, international rating agency Moody’s assigned Coop Pank investment-grade rating of Baa2 with a stable outlook. This step created opportunity for major businesses, state, and local authorities to become customers of Coop Pank and keep their money in a local financial institution where interest paid on deposits is the best on the market. Inflow of deposits of corporate customers increased significantly after the rating was assigned. Deposits of corporate customers increased by 131% and deposits of private customers grew by 26% over the year.

While implementing our growth strategy, it has always been important to have profitable growth. 2020 was the first year when we saw that we were getting close to the critical level, i.e., the economies of scale, in our business volumes, which guarantees improvement of efficiency indicators. The bank’s income grew twice as fast as its expenses and cost-income ratio decreased significantly.

Coop Pank had approximately 13,000 shareholders as of 31 December 2020. The bank has approximately 2,000 new shareholders in addition to the ones who participated in initial public offering of the bank’s shares. We are grateful for their trust.

In 2021, we will continue with the strategy that has brought us success so far. We want to grow, we are proactive and we are looking for solutions that fit into our customers lives and/or businesses. We have promised our owners that by the end of 2022, Coop Pank will have at least 100,000 customers, our loan portfolio will be at least 1 billion euros, our financing costs will decrease to 0.7%, our cost-income ratio will drop to 50% and return on equity will increase to 15%. Our team does everything in its power to keep this promise.”

Reports of Coop Pank are available here: https://www.cooppank.ee/en/reporting.