Outstanding loans per sector in 2010
The growth of the loan portfolio is an important indicator of the contribution Triodos Bank makes towards a more sustainable economy. All the sectors the Bank works in qualify as sustainable and the companies and projects it finances contribute to realising Triodos Bank’s mission. In 2010, there was no reason to compare the sustainability levels of the various sectors and base a core policy on the outcome of this. The Bank’s main focus remains on the existing sectors in which it has already developed considerable expertise.
Environment (49%, 2009: 50%)
This sector consists of renewable energy projects such as wind and solar power, biomass and hydroelectric projects. It also includes organic agriculture, and projects across the entire agricultural chain, from farms, processors and wholesale companies to natural food shops. Environmental technology, such as recycling companies and nature conservation projects, is also represented.
Social (28%, 2009: 31%)
This sector includes loans to traditional businesses and innovative enterprises and service providers with clear social objectives, such as social housing, loans to fair trade business and health care institutions.
Culture (14%, 2009: 15%)
This sector covers loans to organisations working in education, retreat centres, religious groups, cultural centres and organisations, and artists.
In 2010, the loan portfolio grew by 28% to EUR 2,128 million (2009: 31%). This EUR 467 million growth was lower than expectations of 35%-40%. The loan portfolio as a percentage of the total amount of funds entrusted rose to 70% (2009: 64%), so Triodos Bank met its goal to lend 70% of its funds entrusted.
The quality of the loan book remained satisfactory notwithstanding the economic recession. However, a number of sectors related to agricultural production and organic waste, including energy production based on biomass, were more affected by the economic recession due to the long lasting depression in demand and high price volatility. The increased loan loss provisions resulted in EUR 9.8 million (2009: EUR 5.0 million) value adjustments, of which EUR 4.8 million (EUR 3.3 million) relate to biomass energy projects. Although the impact on the results is material, the net exposure to the biomass energy sector only represents 1.3% (EUR 27.6 million) of the total loan book. This contributed to the loan loss provision of 0.52% of the average loan book (2009: 0.34%). Our long-term benchmark for provisions is 0.25%. These provisions are taken as a preventive measure to protect the bank against potential defaults by borrowers.