Coop Pank reports €19.7 million profit for first half of 2023

A Coop Pank branch.
A Coop Pank branch. Source: Siim Lõvi/ERR

Coop Pank is the latest bank in Estonia to report first-half of 2023 profits close to those of 2022's entire figure. Whereas the bank made a net profit of €20.4 million last year, it has reported a profit of €19.7 million for January to June this year alone.

Coop Pank board chair Margus Rink said via a press release that the bank's business volumes grew at a record pace in the second quarter of this year, ie. April-June inclusive.

Rink said: "The growth of the loan portfolio affected all our business lines: Business loans, home loans, car leasing, and consumer financing. This demonstrates that despite the fragile macroeconomic environment and increased interest rates, there is still a high demand for loans remaining in the market."

Rink added that firms and households are coping well with increasing loan payments which have resulted from the recent rises in the Euribor rate.

"We are doing well thanks to unemployment remaining low, people's incomes growing, inflation falling and responsible borrowing. However, we are seeing some growth in short-term debt, although this has to be seen in light of having just reached an all-time low in terms of overall debt. Short-term debts are generally being paid off ahead of the next loan payment being due, meaning the quality of our loan portfolio remains good," Rink continued.

Rink said that challenges include attracting depositors to the bank. "Within the market as a whole, deposits have not risen since the start of the year - private deposits have increased by €0.5 billion, but corporate deposits have decreased by the same value. This has increased the competition between banks for any available resources here.

"As a price of money has been created (ie. a rise in interest rates-ed.), a large number [of deposit accounts] are being converted on demand to term deposits, at higher interest rates," Rink went on.

"The growth in Coop Pank's second quarter revenues is the result of both record growth in business volumes and additional interest income resulting from the rise in the Euribor. As regards expenses, we see increasing interest expenses here. We have also boosted precautionary loan provisions resulting from the weak macro environment," Rink added.

Q2 2023 ended with Coop Pank's best ever quarterly profits, of €10.4 million, its lowest cost-to-income ratio* ever, at 38 percent, and a record return on equity of 25.6 percent. 

Coop Bank reported 37,000 shareholders as of June 30. 500 more shareholders were added during the quarter.

Coop Pank, based on Estonian capital, is one of five consumer banks operating in Estonia. The bank reports 167,000 regular banking customers.  The bank's strategic owner is the domestic supermarket retail chain Coop Eesti, whose sales network comprises 320 stores.

SEB, Swedbank and LHV have all reported first-half 2023 profits approaching, or in LHV's case, exceeding 2022 whole-year profits.


*Calculated by dividing the operating expenses by the operating income generated. Cost-to-income ratio is important for determining the profitability of a bank.

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Editor: Andrew Whyte, Huko Aaspõllu

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