Coop Pank AS (OMXTSE:CPA1T) Q3 2026 Earnings Call

0:00 Hello everyone, my name is Arko Kurtmann, I am the CEO of CoopBank. Next to me is Paavo Tru, who is our financial manager. Hello. Today is 20th October 2026 and the plan is to talk about the results of our third quarter. Before we dive into numbers, we will present some important events that have happened. The first thing that has happened is that the interest rate has changed this year. Because when we entered this year, our view was also that life has normalized, the interest rate could stay somewhere around 2%, but in September we actually saw a rate that exceeded 3%. Fortunately, today it has dropped a little and of course it has also contributed to the results of our life in the third quarter.

0:55 When we talk about business, then the revenue grew in the third quarter positively. Paavo Iljem speaks more precisely about this. When we talk about use, then as a result of this event, we have also made strong use in the third quarter. especially when we consider the year-on-year, then the growth rate has been 30%, which is a very good result. You can talk a little bit about the Põlagurja program.

1:22 I will say a few words about it, but before that I will say a few procedural questions, that the listeners can send us questions in a row. In the Lido center, the screen is always QR code, so that the questions can be asked in the center, and after we have finished the presentation, then we will try to answer them as well as possible. Pank AS We could have done that, but it's really an opportunity that if we need it, we can get it in a week's time. That's exactly right.

2:17 And then the next important big event that took place in our third quarter. In September, Tallinna Linn sold its almost 3% share. And it was good to see that there was a great interest in these shares. It marked both existing shareholders and upcoming full-time shareholders. and all investors were institutional investors by nature. In November, Monika Maaring, who is the head of the CoopBank management team, will be leading our R-client banking. She has worked in the banking sector for a long time with our good competitors and has been in CoopBank for the last two or three years.

3:05 We are happy that we found a new and future manager in the bank. The main reason for us and hopefully also for our clients is that we came out with a Platinum credit card. I dare to say that this is the best Platinum card in Turku. For those who do not have it yet, please do so. We can say that for me and Paavo it exists today and we can all use the coins that come with this card. From this point we would like to talk to you as well.

3:48 Yes, I have already heard from the newspapers that the world of companies in the field of co-operative trading has increased. Prisma stores have been bought in Estonia and this business was closed somewhere, perhaps in the spring, but the end of the business, both legally and physically, is now taking place in the third quarter and it has been going on since early September. One of the signs on the Prisma website, whether it is a blue co-operative sign or an old-fashioned Prisma sign, then all the Pank clients will get a discount and get a bonus and all the good things will work. But in fact, today it can be said that most of the business partners have also got new PAN signs, so I don't think there is any confusion. Everything works, I have even tried to work as a PAN partner.

4:33 Yes, and the last point I would like to bring up is that in August, before the Estonian men's football team went to play in the European Champions League in Finland, we actually signed a contract with the Estonian Football Union for the next three years. and we will continue to cooperate with them and live with the success of the national team. The good news is that the Estonian national team has made a record and in the year 2027, as the first national team, the Estonian national team will be able to compete in the World Championships.

5:18 So, let's take a closer look at the numbers. The classic picture, our four most important methods, supply, maintenance, customer needs and use. It is good to note that all of these indicators are moving in the right direction, starting with supply. Supply growth has been 3% in the quarter, 14% in the year. In fact, our uses have been good for quite a while. I have to say that the turnover is also very good. The turnover of all Estonian banks has increased by 8-9% in the last few years, so the turnover is strong and we are making a little faster growth in terms of revenue, which has been our goal. In terms of annual growth, it is 21% growth, and in terms of quarterly growth, it is 131 million euros, so our financing for the growth of this portfolio is fully covered.

6:10 Calculated clients are growing continuously. We have had a quarter where the value of our clients, or the estimated value of our clients, has increased, so this is the work we do here every day, and these kind of everyday banking activities, buying from Prisma, Platinum Cards and other such things are supporting this position, so here we also see movement in the right direction in each quarter. And the growth, Argo has just mentioned that the growth has increased in many, many quarters in a row, and if we take into account that in the third quarter we made under 7 million, then currently it is slightly below 9 million in a quarter, and that is 30% growth, and it is really quite impressive, such a one-time increase, but you can see that Every quarter has been improved. Let's take a closer look.

6:55 This is a comparison of Q3 numbers compared to Q2 numbers. We can see that the income has increased quite a bit. and the interest rate is the most important factor and it has been estimated that a lot of interest rate growth has been due to the increase in income and how much is the interest rate in the central sector. In the central sector where we are now, the euro rate has risen and will continue to rise, so we can't say that there is a rate, if we have increased interest rates by about 3.1 million euros per quarter, It is important to note that half of this has come from the interest community, and the other half is the growth of our industry, port structure changes and other things.

7:52 At this point, it is important to note that the interest community is not only our income, but also our expenses, our livelihoods, We have also increased the cost of interest and increased it from two components. There is a growth in income and there is a growth in interest. In the same way, half of this growth has come from the interest community and the other half has come from the growth of our activities. Now, another point is the cost of activity. The report shows that growth is actually quite strong, let's say 13% in the quarter-to-quarter ratio, that the cost of activity here is so much stronger in the quarter-to-quarter ratio than in the year-to-year ratio.

8:38 and this includes a range of personal expenses. In the previous year and in the beginning of this year, we made a reserve of the annual income from the personal expense components, considering that we do not know how close it is. But since the returns are good, we have increased the return rate quite a bit in the third quarter, and this has given a significant impact on the numbers of the third quarter. This kind of growth rate in the 13% quarter is definitely not a permanent rate. And now the third important line in each quarter is the supply and demand provisions. The supply and demand provisions in the third quarter are very strong.

9:34 is far below the average cost in the quarterly budget. Of course, it doesn't come from itself, because it shows that the quality of the product is actually good. We can see that the quality of the product is good and it means that the right credit choices have been made in the past. The quarterly number is now more than 400,000 euros. In fact, the annual number is much lower for us. We have had a much better period of the product provisions in the past nine months. and we actually see that the portfolio is still good, that there is no negative news here either. The same figures in the third quarter of the year. Comments are clear that the interest rates are growing again.

10:19 After the growth of interest, there is a significant increase in interest rates. Here, in the year, it is significantly smaller. In the year, there is a significant increase in interest, which dominates. and in the same way in terms of costs. And in terms of actual costs, we can see that the growth of the year has increased by 19%. Again, the effect of the income levels in the third quarter of the year is actually what has caused it. And then we can see that the decline in the balance sheet was actually relatively small in the third quarter of the year, but even smaller in this year. In conclusion, a very strong quarter both in terms of expenses and in terms of use and supply.

11:06 Portfolio growth. According to the portfolio, it has increased by 68 million euros. And it can be said that this is quite a significant increase. 33 million euros have been invested and 32 million euros have been home. These are the two largest parts of our portfolio and they are growing very rapidly. There are no problems with this growth. Euribor's growth is also visible here. At the end of September, Euribor reached a 3% level. In our portfolio, as you know, it has been rolling for a while, during the month and month, so our average was about 2.5% at that time. This means that the interest rate growth, even if Euribor stays above 3%, then the growth of our finances will not be visible at the end of the year. and that is actually on both sides, not on the income side, but on the consumption side, that clearly on the consumption side interest rates are still growing.

12:06 In terms of the quality of the PAN portfolio, you can't really say that the quality is good. The numbers show that the long-term trend is that the part of the portfolio that is in demand from the first day is around 2% and the colors on the bottom also indicate that from the ninth day of the period until the ninth day is the blue line in the line and above the ninth day is the pink line. The blue line is relatively small in pink, and the 2% ratio is very problematic, 9% is very little. The risk of loss of credit is also there. Quarters are not very strong, depending on the growth of the portfolio, depending on the specific price of some of the client's provisions. From quarter to quarter, these numbers are slightly increasing, but the big trend is actually, if you look here with some kind of eye-catching center, well, more or less 0.2-0.0.

13:02 and 25% in the middle, which is completely affordable and suitable for us and is actually lower in the long-term trend. We are in a good place with our portfolio quality. The same thing applies to the stock market. The numbers on the absolute scale are different. The average is 1% from the first day. This is a very good ratio. which is not a major competitor, is the short-term billing. This has been the case with our R model for quite a long time. But what makes it fun is that in the long-term billing, the 9 plus bills are so small that you can't even see it with your naked eye that there are no internal problems. And there are no internal problems, as long as there is work from people and the nominal salary is growing.

13:58 There is a long-term trend in the supply chain, which many of us who have been working here for a long time remember, that we actually have a larger portfolio of supply chains in relation to the stock market, and this has shown a sign of improvement quarter by quarter, and this trend can also be seen in the last 4-5 quarters, that the quality of the supply chain portfolio is even better than before. In the leasing, we are now at the 3% level, a year ago we had a specific client who needed to do it, but this specific client found his solution, so now we are back at the 3% level and again we can see that there is practically no pink color, i.e. 9 plus lines. The cost of financing.

14:43 The cost of financing depends on the interest rate in which we live. When we say that interest rates have increased in general, then it is even a bit of a joke to see that our cost of financing is 2.1% already from the last four quarters. Then the picture is not quite so flat that we actually see in the second quarter that the lower point was still in the second quarter and in the third quarter, microscopically, our cost of financing has started to increase. This trend is not yet over, we are definitely going to see this trend in the next quarter, but this is the trend of the interest rate, which we will also take into account on the other hand. So, usually in interest rates, the trend in the interest rate sector is this process, at least for our bank's business model, more or less predictable, and when interest rates start to fall, then at least in the short term, it causes us a little bit of a backlash.

15:34 But right now it's all fine. As I said, we actually have a quarter to a quarter and have been moving together all the time. It is on the other side and it also came into the hands in the third quarter of the year. We always want to get the clients closer to us and therefore we do the work so that the activities that have taken place in the second and third quarters of the year and we are really very, very We are looking forward to the co-operation between Coop and Prisma in Tallinn and other cities where Prisma has a very strong position. There is a daily contact with Coop and this should help our clients and their activity to grow in these cities. Turuosa, in the same way, is growing. 7.2% of the population of Turuosa is a few times smaller. We have financed more through other channels than our population.

16:37 In terms of capital, capital is very relevant to our business. In the better part of the picture, we can see that in terms of capital activity, the relative value of the point country with the direction of the regulatory trend and the pink line is our factor. We can see that in the second quarter, there was a significant jump upwards. where we were able to increase our capital without having to rely on the capital of the shareholders. We were able to achieve this effect, and now we continue to grow in the use of free capital lines. In the same way liquidation indicators are more in the use trend. If we take the liquidation values as a whole value, then the most visible example is the strong position.

17:29 Regulatory indicators LCR and NSFR are also in the use trend, so at the moment we don't see a cloud in the sky. There are two examples of revenue indicators that we have seen in the investor presentation. Of course, there is more in the house, but the cost of income and we can see that the price has gone up. When we reached our 50% level in the second quarter, then now it has gone up a little. Again, here is the revenue balance reserve correction that we made in the third quarter, which results in objectively good results. and we still hope to get back below 50 and we are working on it. And the representative of ROE, who is here in the initial TULP diagram, said that the third quarter was very good, 14.6, we are still very close to the long-term target, but again it is to see that we are actually moving closer to the target in terms of trends and we have managed to get there.

18:33 In terms of the value of the shares, we can see that the shareholder is maybe giving up on our positions, while the other side, on the better side, In the sector diagram, Tallinna-Linna was also earlier. Tallinna-Linna is no longer here, because Tallinna-Linna in September sold its position below 3% of the current position, so it went to other shareholders, including those who are here, whose names are named. Andres Son has gone through one buyer, but also here in this hall block, in front of others, there have been added heavy professional or institutional investors, that their share has increased, and we are very happy about that. The share price. Here we are always waiting for better results, especially investors themselves. But if we look at the trend of the last couple of years, the timeline of the last couple of years, then in this period we can still see a slight increase in the share price, but without looking at that, if we look at the relative values today and compare is a useful bank with a good tempo of use and B with a ratio of less than 8. All of its competitors have a two-digit number, 10+.

20:04 We can see that the price of this share has not reached the actual results, but that is still the price of the shareholders. Do they have to make it attractive or not?

20:16 And the price to book is below 1, so it is also a very attractive rate.

20:21 The price to book is below 1, yes, and it is really useful, it grows. Investors have to make their own decisions here.

20:30 If you want to take it together, take it together yourself. Yes, we have already talked about numbers. In conclusion, I would like to say that the third quarter was a very strong quarter and very good results. It certainly makes us happy. Our client base has grown, our customers have grown and all of this in the end results in strong use. As you said, in the third quarter we saw the number of users, which then started at 9, we made 9 million euros of users. That's a very, very good word. There is a little bit of efficiency that we still have to do, but it is, let's say, that we are moving at a very good, long-term pace. To make our long-term goals come true, we would certainly recommend that our turnover would be 15, and our cost-benefit ratio would be around 45%.

21:23 We have to go there, but it didn't happen and it all takes a little time. It would be a very strong quarter result. So we have to go to the questions. Yes, it's good to see that the questions have come in and let's start with the questions. The first question is why didn't Coop Bank buy the shares in Tallinn-Linnműs? Maybe you can answer that.

21:51 I can answer that Coop Bank has always listened to their own stock purchase program since the spring of the 26th. We don't buy the shares because of a number of reasons. One of them is that we have a demand from the stock exchange program every year. to give out shares to employers and managers. These can be done in two ways, either by buying back existing shares or by emitting new ones. New emitting means that the share of existing shares will decrease a little in the spring. By the end of the year, we have decided to start buying back. The second purpose of the program is to make the shareholders full of liquidity, so that the small and medium-sized shareholders can sell and liquidate their positions.

22:40 The second purpose is to make liquidity. If we had gone to the city auction in Tallinn and bought back the necessary amount of Portsu in exchange for our options, then we would have covered the liquidity for the return. And we would have been left with the intention of not realising the return on the program or ending it. We didn't want to do that. We want to continue to pay the liquidity for the return.

23:11 Next question. How much do you charge the clients to make Tallinn become a hub for the transformation of TANU Prisma? We did not expect much from this project, but it was a pleasure to see that in the third quarter the total number of our clients exceeded 240,000. It was also a pleasure to see that in the third quarter the number of our estimated clients increased by more than 113,000. Pank AS is used to activate the client. We have been doing this for a long time, and the fact that Coop has now launched PrismaPoets has definitely had positive effects on it. But we haven't figured out the exact value of the client yet, so I don't think there's any point in it. The important thing is just to understand and all the contracts are still going on in their own Prisma stores.

24:10 Yes, that was a key point in our strategy and in our client placement. A very important part of our placement is the fact that there is a contract in Coop stores to buy with our card, there are full bonuses, and also in-and-out transactions of cash, which are possible in all Coop stores. In the region of Tallinn, it was still difficult to get hold of that. Coop was present here and there, but certainly not in the same amount as above the country and as it is in Turku. Here we are definitely two steps closer to the client.

24:42 We also missed the next question a little bit, but the question is that Coop has also been a strength in maintaining the control of costs. In the last quarter, however, the activity of increasing costs has increased. Why? What is the strategy?

25:01 Well, the strategy hasn't changed. The strategy is still the same as the cornerstones that we talked about in the beginning of the year. But with regard to spending, yes, I would say that there are two blocks or areas where spending has been in the third quarter as well. Maybe it's different from the trend or a little too fast. One thing is the personal cost block, where again it would be said that the personal cost is generally controlled in this sense, that our worker's salary, for example, has remained at 450 for the last two years, that we have enlarged our structure. Existence of nominal debt in the country, but all this has been relatively small and with little effect. In the third quarter, as I mentioned, there was a fund for the future, and it depends on how we bring in the future.

25:48 If the income is good, then we have combined it with our employees, so that we share the good income with our employees, so that we have our own income principles and policies in place. And based on that, we actually created a supplementary income fund fund, which covers expenses and which is not quite every quarter. It was specific to the third quarter. The second area, where there is a bit of a longer trend, is IT costs. At the same time, we are happy that we are changing ourselves to be more technological and investing in it and making it better, which has enabled us to keep the value of personal data in place for two years without looking at the benefits and benefits. This is a good news, but it is clear that this is not the case.

26:34 Especially in today's world, where certain IT components have become more expensive, as we are talking about memory or storage systems or processor capabilities, then the best IT costs are in the second stage, where the growth is quite strong.

26:51 So, the next question concerns the growth of the industry. Maybe the pace has remained at a high level, but then every quarter has been slow. How do you see the prices in the fourth quarter in relation to retail and retail? You might be able to comment a little more in detail, but I would personally say in general that we definitely want to grow in both retail and retail in the fourth quarter. and we still have an internal rule that the tree should grow at least twice as fast and we try to keep that in mind. There is a demand and we just have to do a good job. However, I have always felt that the bigger we grow, the lower the percentage of growth, but the absolute number means that we grow at the same time or at a faster pace.

27:53 Yes, millions of euros, because our use time is not limited. In percentage terms, it is limited, but on the other hand, it is a trend that has been driven or forecasted. A few years ago, when we were growing Pank AS in the beginning, 30 plus percent per year, then today to maintain such a growth rate, well, then we would definitely recommend either efficiency or quality, that this would mean, as in euros, still three times greater growth than we do today, and then we would definitely have to follow some other parameters, where we do not want to follow.

28:25 So, we still have three last questions left, and the following will also slightly interfere with bookkeeping or bookkeeping methods. Are there any one-time expenses in the third quarter in terms of net operating income? Or how do you explain the ratio of the income to the real income?

28:52 This is a very good question. I might have had to mark it myself. In the third quarter, it can be seen that the net operating income has probably gone down. And based on this income, there is also the issue of tax evasion. and there is an interesting statement that according to the rules in the book, we have to cover the cost of the company in the lock for the guarantee of the manufacturing process. This is how it has been seen by the national standards. And that is why there has been a full cost in the third quarter, which has not been the case in the second. and this cost will certainly happen in the fourth quarter and in the next year. This is not a third quarter specific, but it started in the third, but it will last for many more years. This is a guarantee-level cost due to value-sharing, and this large share is a little more than 100,000 euros per month.

29:48 The next question is about the revenue reserve. What was the revenue reserve in the third quarter in terms of personal expenses? Is the same rate expected in the fourth quarter?

30:07 The same rate is not expected in the fourth quarter. In the third quarter, we really reduced it considerably. This does not mean that the revenue reserve in the fourth quarter will not be modified at all. It will be modified, but not in such a large amount. In general, when we take over the entire bank, the workers can earn up to 2 months of salary and income per year. It depends on the profession, but it is a general relationship. If a questioner wants to know more, we pay 2 months of salary and income per year from the entire salary fund.

30:51 And the last question. Does the government have its own view on the relative value of the PAN? Why is the PAN's relative value significantly lower in comparison with the region's competitors? I certainly expect your opinion in this regard as well. Perhaps I myself recognize that Our investor base or shareholder base has become stronger over time. If we look at the investors who have joined us in the last year, they have not joined because the share could be at the level where it is now, but definitely the darker shareholders have joined Because they see our potential. And now the question is how they can see and feel that I don't have good ideas. But the fact that we work with bigger shareholders and show how we want to grow and that they understand that is definitely a positive thing for us.

32:02 Well, I would say that it is low liquidity. The Baltic Sea is wider, but maybe the CoopBank in its size or geographical background, it is relatively low liquidity. In fact, it is also one of the reasons why we are realising the feedback program as much as we are currently doing, to keep up with the liquidity. I can only say that it is liquidity.

32:28 Yes, but at the same time, if we look at the low points of last year, then at the moment the share has risen by more than 20% and this is definitely a good positive sign that the knowledge and confidence of the shareholders has returned. Thank you for listening and see you soon!