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Coop Pank sustained growth despite the restrictions due to the coronavirus crisis

Estonian domestic bank Coop Pank sustained growth in the 2nd quarter of this year having increased its loan portfolio and the amount of deposits by 50% year-on-year, according to the bank’s interim report for the 2nd quarter.

In the 2nd quarter of 2020, Coop Pank’s loan portfolio increased by 55 million euros, having reached 559 million euros, which is 11% more than in the preceding quarter. Compared to the second quarter of 2019, Coop Pank’s loan portfolio increased by 179 million euros, i.e., by 47%. The fastest quarter-on-quarter growth was displayed by the business loans portfolio, having increased by 28 million euros (+16%) while the portfolio of mortgages grew by 20 million euros, (+10%); leasing portfolio, by 5 million euros (+7%); and the portfolio of consumer loans, by 2 million euros (+3%).

Coop Pank’s amount of deposits increased by 68 million euros (+12%) in the second quarter, reaching 615 million euros. compared to the 2nd quarter of 2019, the amount of deposits in Coop Pank increased by 206 million euros, which equals 50%. The amount of demand deposits in the bank increased by 33 million euros (+20%), of which 23 million euros were the deposits of business clients, and 10 million were those of private clients.

Coop Pank’s net profit in the second quarter this year amounted to 7.5 million euros, having increased year-on-year by 33% and quarter-on-quarter by 5%. The operating expenses reached 4.4 million euros in the 2nd quarter, having increased year-on-year by 11% and decreased quarter-on-quarter by 2%. The bank’s operating profit in the second quarter amounted to 3.1 million euros, having increased by 83% in the span of a year, and by 16% in the span of a quarter. In the 2nd quarter of 2020, Coop Pank earned 1.4 million euros of net profit, which is 9% more than that of the previous year and 7% less than that of the first quarter of this year.

Due to the impact of the restrictions established for the prevention of the spread of the coronavirus on the economic environment, additional write-offs in the amount of 0.7 million euros were made to the loan portfolio in the second quarter of 2020. In total, the cost of loan write-offs in the second quarter equalled 1.7 million euros.

As at the end of the 2nd quarter, the number of the bank’s clients had reached 74,500, having increased by 5100 or 7% during the quarter. The number of private clients with a current account increased by 4600 during the quarter; and the number of business clients, 500. Year-on-year, Coop Pank’s client base increased by 44%, which is 22,700 clients. As at the end of June, Coop Pank had 12,401 shareholders, of whom 443 were acquired during the second quarter.

Margus Rink, chair of the management board at Coop Pank, noted that the bank had managed to achieve decent growth in the amount of business despite the challenging environment. “Within the first six months of this year, our loan portfolio increased by nearly 100 million euros, which is approximately twice the amount compared to the same period of the previous year. The amount of business, which had been growing at an accelerating pace, contributed to the growth of the bank’s interest income, which was increasing at an obviously higher rate than that of the increase in the bank’s costs. The decision to cut down the bank’s operating costs and implement additional austerity measured taken at the end of the first quarter ensured a 2% decrease in expenses in the second quarter compared to the first quarter. The rapid growth of revenue combined with decreased costs ensured a 2% a 78% growth in the bank’s 6-month operating profit compared to the same period of the previous year,” Rink explained.

The CEO of Coop Pank also said the bank would continue to carefully monitor the economic environment and would promptly respond to the situation at hand. “At the end of Q1 and the beginning of Q2, we could see an increase in the number of clients’ application for payment breaks and a slight decrease in the private clients’ interest in financial products. still, in the second half of April the amount of business started recovering. Although the quality of the loan portfolio stayed stable, we made additional provisions for the negative impact pf the economic environment in the amount of 1.1 million euros during the first 6 months of the year. We have been conservative in out write-offs of the loan portfolios, and we intend to remain so,” Margus Rink elaborated.

Margus Rink added that the addition of new private and business clients has resulted in a rapid growth in the number of demand deposits. “We can see that becoming our client is followed by transferring one’s income and receipts to a new bank account, which is why the share of the clients’ demand deposits reached one third of the total amount of bank deposits by the end of the second quarter, and it will contribute to a decrease in financial costs in the long term,” he stated.

Coop Pank’s reports can be viewed here.