In Q1 2020, the net loan portfolio of Coop Pank exceeded EUR 0.5 billion. In the first three months of the year, the loan portfolio increased by EUR 44 million (+9%), reaching EUR 504 million. The home loan portfolio demonstrated the largest growth in Q1, increasing by EUR 20 million (+11%), business loans increased by EUR 16 million (+10%), leasing portfolio by EUR 6 million (+9%) and private consumer finance portfolio by EUR 2 million (+3%). Compared to Q1 of 2019, the loan portfolio of the bank increased by EUR 153 million (+44%).
In Q1 2020, the volume of Coop Pank's deposits increased by EUR 41 million (+8%), reaching EUR 547 million by the end of the quarter. Demand deposits increased by EUR 14 million (+9%) and term deposits by EUR 27 million (+8%) over the quarter. Compared to Q1 2019, the volume of the bank's deposits increased by EUR 148 million (+37%).
Financing expense of the bank decreased quarter-on-quarter and stayed at the level of 1% in Q1 2020. The main factor reducing the cost of financing was the lower interest rate of deposits, attracted via the international deposit raising platform Raisin.
In Q1, the overdue loan portfolio of Coop Pank remained at the level of 7%, similar to 2019. In the second half of March, the restrictions due to the spread of coronavirus gave rise to the number of payment holidays granted to clients. As a result, additional impairment of EUR 0.4 million was made to the loan portfolio. The loan impairment losses in Q1 2020 totalled EUR 1.2 million.
The number of clients reached 69,400 by the end of Q1 2020, having increased by 5,600, i.e. 9% over the quarter. The number of private clients with current account in the bank increased by 5,100 and the number of business clients by 500 over the quarter. The client base of Coop Pank increased 45%, i.e. by 21,700 clients, year-on-year.
Coop Pank earned a net profit of EUR 1.5 million in Q1 2020, an increase of 24% year-on-year and a decrease of 8% compared to the previous quarter. Net income increased by 36% year-on-year and by 5% quarter-on-quarter. Operating expenses increased by 21% year-on-year and decreased by 4% quarter-on-quarter.
The bank's cost / income ratio decreased from the 69% in Q4 2019 to 62% in the first quarter of this year. Coop Pank's ROE in Q1 2020 was 6.5%.
As at March 31, 2020, Coop Pank has 11,958 shareholders, 685 shareholders having joined over the quarter.
Margus Rink, Chairman of the Management Board of Coop Pank, comments the results:
„The year started very well for Coop Pank. In the first two months, we were able to outperform our growth targets and move at the pace of meeting our three-year strategic goals, announced at the entering to the stock market. The positive result for the quarter was supported by the increase in the number of customers, both private and business, and the rapid growth of private customers’ demand deposits. This demonstrates that the newly joined customers start using our services immediately.
In mid-March, the economic situation changed and the impact of the restrictions, imposed for prevention of the coronavirus, reached companies and individuals. The Bank's financial results are primarily affected by additional impairment losses on the loan portfolio, resulting from granting payment holidays. We can also see that due to the decline in customer confidence, interest in loan products has decreased and even in the most positive economic recovery scenario, the rebuilding of confidence will take its time.
In the changed economic environment, we have cut the bank's operating expenses as a first step and shall increase efficiency in our operations in the forthcoming quarters as well. Although this year's growth of business volumes will be lower-than expected, we have not yet changed the bank's three-year strategic goals, among which the main ones being the increase of the customer base to 100,000 and reach a loan portfolio of EUR 1 billion.
One of the most important events of Coop Pank in Q1 2020 is the solution, created in cooperation with Veriff in early March, which allows potential customers to identify themselves via video identification based on Veriff technology and customers no longer have to visit a bank branch for signing a small loan agreement. This innovative solution changes the loan issuing process swifter and more convenient.
In March of this year, the research company Kantar Emor published a ranking of the net promoter score (NPS) of largest Estonian service companies, based on the actual service experience of their customers. According to the survey, Coop Pank achieved a high 2nd place among banks for the second year in a row. This confirms that we follow the right track in providing the service experience and that the clients will notice it.
Coop Pank can be characterised by the courage to lead banking in an innovative way, creating banking services that fit into the daily activities of our clients at the point where they need them. As a local bank, we make quick decisions and are flexible, thus contributing to the improvement of life in Estonia. We continue to implement our distinctive strategy, based on the integration between banking and retail trade."
| Income statement, EUR thousand | Q1 2020 | Q4 2019 | Q1 2019 |
| Net interest income | 6 358 | 5 819 | 4 500 |
| Net fee and commission income | 521 | 675 | 552 |
| Other net income | 238 | 262 | 163 |
| Total net income | 7 117 | 6 756 | 5 215 |
| Payroll expense | -2 662 | -2 710 | -2 248 |
| Marketing expense | -226 | -317 | -213 |
| IT expense and depreciation of intangible assets | -563 | -444 | -452 |
| Rental and office expense, depreciation of property, plant and equipment | -490 | -550 | -294 |
| Other operating expense | -501 | -614 | -463 |
| Total operating expense | -4 442 | -4 635 | -3 670 |
| Net profit before impairment losses on loans and advances | 2 675 | 2 121 | 1 545 |
| Impairment losses on loans and advances | -1 214 | -538 | -373 |
| Profit/loss before income tax | 1 461 | 1 583 | 1 172 |
| Income tax | 0 | 0 | 2 |
| Net profit for the reporting period | 1 461 | 1 583 | 1 174 |
| Basic and diluted earnings per share | 0,02 | 0,02 | 0,02 |
| Balance sheet, EUR thousand | 31.03.2020 | 31.12.2019 | 31.03.2019 |
| Cash and cash equivalents | 119 480 | 122 295 | 83 889 |
| Debt securities | 3 737 | 4 061 | 7 732 |
| Loans to customers | 504 119 | 460 460 | 351 193 |
| Other assets | 25 341 | 24 486 | 22 638 |
| Total assets | 652 677 | 611 302 | 465 452 |
| Customer deposits and loans received | 547 398 | 506 531 | 399 015 |
| Other liabilities | 7 696 | 8 356 | 8 872 |
| Subordinated debt | 7 111 | 7 064 | 7 111 |
| Total liabilities | 562 205 | 521 951 | 414 998 |
| Shareholder’s equity | 90 472 | 89 351 | 50 454 |
| Total liabilities and equity | 652 677 | 611 302 | 465 452 |
The reports of Coop Pank are available at: https://www.cooppank.ee/en/reporting
Coop Pank will organise a webinar on April 21, 2020 at 11:00 AM, to present the financial results of Q1 2020. For participation, please register in advance at:
https://attendee.gotowebinar.com/register/6690533059297836043
The webinar will be recorded and published on the company's website www.cooppank.ee as well as on the Nasdaq Baltic youtube.com channel.
Coop Pank, based on Estonian capital, is one of the five universal banks operating in Estonia. The bank has 69,400 daily banking clients. 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 shareholder of the bank is the domestic retail chain Coop Eesti, comprising of 340 stores.
Additional information:
Kerli Lõhmus
CFO
Phone: +372 669 0902
E-mail: kerli.lohmus@cooppank.ee
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