Coop Pank — Earnings Release 2022

Feb 9, 2023

Coop Pank Group 2022 Q4 and yearly unaudited results

Key notes from Q4

• Strong growth in business volumes (no of customers, deposits, loans)
• Secondary public offering of shares
• Additional provisions to loan portfolio (weakening of economic environment)

Key notes from year 2022

• Number of clients increased
• Record high increase in deposits
• Strong growth of loan portfolio across all business lines. High quality loan portfolio
• Capital has attracted a price. Increasing interest rates in loans and deposits
• Strong capitalization (three capital raising events in 2022)
• First dividend payment made
• Performance indicators (profit, CIR; ROE) at their all-time high levels

Business volumes in quarterly comparison

Increase calculations refer to active customers. Active client has made at least 4 transactions in the last 60 days

Deposits

Results of Q4 2022 – compared to Q3 2022

Key indicators in year on year comparison • Revenues +2.7m€ (+19%)

• • Net interest increased +3.0m€ (+24%) as loan portfolio grew by 92m€ and euribor increased
• Other net revenue -0.5m€ as additional provision was made regarding real estate object in Latvia
• Operating expenses +0.5m€ (+7%)
• Impairment costs +1.2m€ (+182%)
• Additional loan impairments made in Q4 as financial reports of our clients express signs of weakening, loan portfolio credit quality is still at a very good level
• Successful secondary public offering of shares increased share capital by 20.3m€
• Net profit +13%

	Q4 2022	Q3 2022	Quarterly change
Net operating income ('000 €)	16 534	13 847	+2 687	+19%
Interest	15 765	12 721	+3 044	+24%
Service fees and commissions	1 107	978	+129	+13%
Other	-338	148	-486	-328%
Operating expenses	-7 439	-6 929	-510	+7%
Operating profit	9 095	6 918	+2 177	+31%
Impairment costs	-1 898	-672	-1 226	+182%
Profit before income tax	7 197	6 246	+951	+15%
Income tax	-682	-499	-183	+37%
Net profit	6 515	5 747	+768	+13%
Net loan portfolio (m€)	1 301	1 208	+92	+8%
Deposits and loans received	1 508	1 354	+154	+11%
Equity	149	123	+26	+21%
ROE	19.2%	19.1%	+0.0%
Net interest margin (NIM)	3.9%	3.5%	+0.4%
Cost of financing	0.9%	0.7%	+0.3%
Cost / income ratio (CIR)	45%	50%	-5.0%
Capital adequacy ratio	17.8%	16.7%	+1.1%

Business volumes in yearly comparison

Increase calculations refer to active customers. Active client has made at least 4 transactions in the last 60 days

Results of 2022 – compared to 2021

• • Net interest +15.2m€, loan portfolio +347m€, increasing euribor

• Net service fees +0.7 m€ (+23%)

• Operating expenses +4.7m€ (+21%)

• Payroll expenses
• IT costs
• Marketing costs
• Impairment costs +2.7m€ (+110%)
• Negative changes in macroeconomic outlook were taken into account in 2022
• Net profit +51%

Key indicators in quarterly comparison			• Revenues +15.4m€ (+39%)
	2022	2021	Year on Year change		increasing euribor
Net operating income ('000 €)	54 631	39 238	+15 393	+39%
Interest	50 709	35 538	+15 171	+43%
Service fees and commissions	3 785	3 085	+700	+23%
Other	137	615	-478	-78%
Operating expenses	-27 177	-22 453	-4 724	+21%
Operating profit	27 454	16 785	+10 669	+64%
Impairment costs	-5 245	-2 497	-2 748	+110%
Profit before income tax	22 209	14 288	+7 921	+55%	• Payroll expenses
Income tax	-1 859	-825	-1 034	+125%	• IT costs
Net profit	20 350	13 463	+6 887	+51%	• Marketing costs
Net loan portfolio (m€)	1 301	953	+347	+36%
Deposits and loans received	1 508	1 099	+409	+37%
Equity	149	112	+37	+33%	• Impairment costs +2.7m€ (+110%)
ROE	16.8%	12.9%	+3.9%		taken into account in 2022
Net interest margin (NIM)	3.5%	3.4%	+0.1%
Cost of financing	0.7%	0.7%	-0.0%
Cost / income ratio (CIR)	50%	57%	-7.5%
Capital adequacy ratio	17.8%	14.0%	+3.9%		• Net profit +51%

Loan portfolio continues to grow

• Net loan portfolio Annual growth of loan portfolio +347m€ (+36%)
• Business loans +154m€ (+36%)
• Private mortgage loans +143m€ (+39%)
• Leasing +32m€ (+32%)
• Consumer loans +19m€ (+28%)

Loan portfolio interest by business lines

Quality of loan portfolio

• Credit risk cost ratio 0.5% in 2022

Total residual of loan principal amounts past due; loss allowances in balance sheet; share of overdue contracts in total (gross) portfolio

Loan portfolio quality by business lines

Total residual of loan principal amounts past due; loss allowances in balance sheet; share of overdue contracts in total (gross) portfolio

Interest costs of deposits have begun to rise

• Deposits Total cost of financing has remained at a 0.7% level compared to 2021, but on a quarterly basis, cost rate has increased from a 0.7% (Q3) to 0.9% (Q4)
• Deposits grew by 409m€ (37%)
  • +245m€ from business clients (+172m€ demand deposits, +73m€ term deposits)
  • +51m€ from private clients (+28m€ demand deposits, +23m€ term deposits)
  • +113m€ from Raisin platform and other financial institutsions
• Proportion of demand deposits at 48%

Client base and market share

Clients with a bank account. Active client has made at least 4 transactions in the last 60 days

• Total no of clients increased by 32.4 thousand (+28%) in 2022 (+27.9 thousand in 2021)
• 15.8 thousand (+31%) new active clients in 2022 (+13.1 thousand in 2021)
• Bank's market share changed in 2022:
• Market share of loan portfolio 4.5% => 5.5%
• Market share of deposits portfolio 4.0% => 5.5%

Capital base supports growth plans

Performance indicators

• Cost / income ratio (CIR) and ROE Decreasing CIR (long term goal: <50%)
• Revenues +15.4m€ (+39%)
• Costs +4.7m€ (+21%)
• Increased ROE (long term goal: >15%)
  • Quality of loan portfolio remains high
  • Rising euribor contributes to revenue growth

Brand awareness and preference as a financial partner

Preference as a financial partner

Shareholders

Source: Nasdaq CSD, Coop Pank

Share price

• Successful secondary public offering of shares completed in December. Emission was oversubscribed by 4.2 times and capital was raised in the amount of 20.3m€
• Share price at the end of 2022 at 2.46 € (2.99 € at the end of 2021)
• No of transactions in 2022 totalling 96 thousand. Volume of transactions 32m€
• EPS in 2022: 0.22 €
• P/E ratio 12.2
• P/B ratio 1.67

Sources: Nasdaq CSD, Coop Pank Market capitalization calculation based on share price and no of shares as at the end of the period

Summary: 2022 results

20.4m€ profit ROE 16.8%

• Business volumes continue to grow ca +40% YoY
• Net profit 20.4m€ (+51% YoY)
• CIR: 50% (2021 57%)
• ROE: 16.8% (2021 12.9%)

Financial results 5 years

Financial results and key indicators
	2018 2019		2020	2021	2022
Net operating income ('000 €)	19 768	23 719	31 089	39 238	54 631
Interest	16 779	20 689	28 371	35 538	50 709
Service fees and commissions	2 302	2 372	2 097	3 085	3 785
Other	687	658	621	615	137
Operating expenses	-13 601	-16 261	-18 796	-22 453	-27 177
Operating profit	6 167	7 458	12 293	16 785	27 454
Impairment costs	-1 392	-1 931	-4 789	-2 497	-5 245
Profit before income tax	4 775	5 527	7 504	14 288	22 209
Income tax	-22	0	-245	-825	-1 859
Net profit	4 753	5 527	7 259	13 463	20 350
Net loan portfolio (m€)	329	460	671	953	1 301
Deposits and loans received	385	507	758	1 099	1 508
Equity	49	89	98	112	149
ROE	10.1%	9.8%	7.8%	12.9%	16.8%
Net interest margin (NIM)	4.3%	4.2%	3.9%	3.4%	3.5%
Cost of financing	0.8%	1.0%	0.9%	0.7%	0.7%
Cost / income ratio (CIR)	69%	69%	60%	57%	50%
Capital adequacy ratio	18.1%	24.3%	19.5%	14.0%	17.8%

• On average +40% yearly increase in business volumes
• Increased profitability due to economies of scale resulting in higher ROE and better CIR

Target: increasing number of active clients

Target: growth of loan portfolio

Target: decreasing cost/income ratio

Target: increasing return on equity

Return on equity

Paavo Truu Member of Board, CFO paavo.truu@cooppank.ee

https://www.cooppank.ee/en/for-investors

Margus Rink Chairman of Board, CEO margus.rink@cooppank.ee