Triodos Bank’s values-based financial services reach hundreds of thousands of business and personal customers across Europe, and grows sustainable banking’s scale and impact. While Triodos Bank’s values bind customers and co-workers, there are important differences between countries. Regulations, tax incentives and government approaches to sustainability are sometimes markedly different in diverse markets. Local culture, within and between countries, also impacts on how Triodos Bank approaches its work.

Retail activities developed further in 2019 as people and sustainable enterprises continued to choose to partner with Triodos Bank.

Triodos Bank in The Netherlands, UK, Spain and Belgium all contributed to the Group’s profitability in line with positive expectations. Triodos Bank Spain turned a corner during 2019 contributing, once again, to the Group’s overall profitability. In Germany, Triodos Bank progressed further in 2019 and is close to making a positive contribution to the Group’s overall profitability. In the UK a smooth transition to become a subsidiary was executed during the year. In addition, Triodos Investment Management made a significant contribution to the Group as described in more detail below.

Triodos Bank in France

Triodos Bank announced its decision not to establish a banking branch in France in December 2019. A persistent low interest rate environment and growing regulatory demands are expected to continue for a longer period of time in France and the wider European region. Therefore, Triodos Bank decided not to make the large investment required to establish a banking branch in France. Following consultation with relevant representative bodies, the decision was taken in January 2020 to close the intermediary office in Paris.

Triodos Regenerative Money Centre

A new business unit, the Triodos Regenerative Money Centre (TRMC), was created during 2019. The primary objective of the new business unit is to manage unconsolidated entities that lend, invest or donate money that has as its main goal to make pioneering, transformative initiatives possible: Financing transformational change requires both the development of more blended (and/or higher risk) finance products and of gift money (or donations).

The Triodos heritage and mission puts us in a strong, credible position to take our long-term vision on the conscious use of money forward in this new area. As per 1 April 2019, “Triodos Regenerative Money Centre” has started. We have chosen the name ‘Regenerative Money Centre’, as we aim to focus on the conscious use of money that ‘regenerates’.

The Regenerative Money vision is not new within Triodos, but we will give it a new impulse and a stronger focus by combining several existing activities and by building a story line about the different qualities of money that underline the distinctive approach.

Loans

Outstanding loans per sector in 2019

Outstanding loans per sector (pie chart)

The growth of the quality and size of the loan portfolio is an important indicator of the contribution Triodos Bank makes towards a more sustainable economy. All the sectors it works in qualify as sustainable and the companies and projects it finances contribute to delivering Triodos Bank’s mission (as detailed below).

To make sure that Triodos Bank only finances sustainable enterprise, potential borrowers are first assessed on the added value they create in these areas. The commercial feasibility of a prospective loan is then assessed, and a decision made, about whether it is a responsible banking option. The criteria or guidelines Triodos Bank uses to assess companies can be viewed on www.triodos.com.

Triodos Bank’s main focus remains on the existing sectors in which it has already developed considerable expertise and where it considers more growth, diversification and innovation to be possible.

Environment 35% (2018: 40%)

This sector consists of renewable energy projects such as wind and solar power, hydro-electric, heat and cold storage, and energy saving 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 23% (2018: 23%)

This sector includes loans to traditional businesses or non-profit organisations and innovative enterprises and service providers with clear social objectives, such as social housing, loans to fair trade businesses, integration for people with disabilities or at risk of social exclusion and health care institutions.

Culture 13% (2018: 13%)

This sector covers loans to organisations working in education, retreat centres, religious groups, cultural centres and organisations, and artists.

Residential sustainable mortgages 24% (2018: 21%)

The retail sector of the loan book is primarily comprised of residential sustainable mortgages including a small amount of other private loans and overdrafts on current accounts.

Municipalities 5% (2018: 3%)

The remaining proportion of the loan book is primarily comprised of some limited short-term loans to municipalities. These investment-type loans in the public sector are included in the loan portfolio in accordance with regulations related to financial reporting.

Total lending

The lending sectors above describe the main sectors Triodos Bank is involved in. Parts of these sectors are also financed by both Triodos Bank itself and its investment funds (see Triodos Investment Management).

Triodos Bank’s goal is to lend between 75% and 85% of its funds entrusted to sustainable projects. Overall growth of the loan portfolio amounted to EUR 939 million (+13%). This includes the growth of the residential mortgage portfolio by EUR 472 million (+31%). The increase in business loans was 6% (2018: 13%). The low interest rate environment encourages customers to refinance at lower rates and to pay back their credit facilities earlier than planned. Both these trends continued in 2019 and have a downward effect on interest margins. Impairment for the loan portfolio and other receivables increased slightly to EUR 3.9 million (2018: EUR 3.5 million). This represents 0.05% of the average loan book (2018: 0.05%). This relatively low historical impairment ratio is influenced by both cautious management and the relatively positive economic circumstances during 2019. The total loan portfolio, as a percentage of the total amount of funds entrusted was 77% in 2019 (2018: 76%).

13%

Growth of the loan portfolio amounted to EUR 940 million, or 13%.

Competition between banks in the lending market was strong in 2019. Mainstream banks increasingly embrace sustainability as a business opportunity and compete aggressively to take advantage of available lending opportunities.

Funds entrusted

 

31.12.2019

31.12.2018

Amounts in millions of EUR

EUR

%

EUR

%

The Netherlands

4,643.4

43

4,020.0

42

Belgium

2,128.8

20

1,906.8

20

United Kingdom

1,369.8

13

1,198.5

13

Spain

2,043.4

19

2,031.6

21

Germany

504.5

5

401.3

4

Total

10,689.9

100

9,558.2

100

 

31.12.2019

31.12.2018

Amounts in millions of EUR

EUR

%

EUR

%

Saving accounts

5,225.3

49

4,661.9

49

Deposits and time accounts

1,139.8

11

1,136.9

12

Other funds entrusted

4,324.9

40

3,759.4

39

Total

10,690.0

100

9,558.2

100

More people want to use their money consciously to deliver positive change by depositing and investing with Triodos Bank. This reflects a wider trend in society and increasing interest in sustainability in general and sustainable finance in particular. Funds entrusted, including savings, enable Triodos Bank to finance companies and organisations that benefit people, the environment and culture.

12%

Despite strong competition in all savings markets, funds entrusted grew by 12% across the European banking entities.

Triodos Bank’s banking entities offer a variety of sustainable financial products and services as part of its key strategic objective to offer services that allow customers to participate in the transition to sustainable finance.

Detailed retail and business customer research took place across the group during 2019, using Net Promoter Score (NPS) methodology. This technique is widely used across the business sector to measure customer satisfaction. It is based on asking customers whether they would recommend Triodos Bank to a friend or colleague.

Triodos Bank’s NPS score across the retail group is 28 (2018:25). This figure is an overall NPS on all indicators. It is much better than the average for large banks. The equivalent figure for business clients is 12 (2018: 20). Triodos Bank’s principles as a sustainable bank are the main reason to recommend the bank according to the research. The decline in the NPS score for business clients is primarily due to the perception of costs associated with banking with Triodos. The detailed results are now used as a key performance indicator, so Triodos Bank can continuously measure and gather better insights about its customers’ views.

290

In 2019, 290 organisations received total donations of EUR 62 thousand.

Together, this resulted in continuing growth in all the countries where Triodos Bank operates due in part to a growing profile, more efficient and customer-friendly account opening processes, and a receptive market keen to use their money more consciously.

By offering our savers, in some countries, the opportunity to donate part of the interest they receive to a charity, many social organisations receive support every year. In 2019, 290 organisations (2018: 269) received total donations of EUR 62 thousand (2018: EUR 61 thousand) in this way. The low interest rate climate and low interest rates on savings accounts make it more difficult, and sometimes even impossible, for some customers to donate part of the interest they receive.

Prospects for retail and business banking

Triodos Bank expects to grow its bank balance sheet more modestly, maintaining a stable loan to deposit ratio and has the ambition to grow its fee income by making an extra effort in growing the Triodos Investment activities.

The bank will focus on impact, profitability and diversification of its loan portfolio. In that context we will put extra effort into identifying loans to frontrunners in their fields; the entrepreneurs developing the sustainable industries of the future. We will continue to face a serious challenge with low interest rates and increasing regulatory costs. And yet, the opportunities for Triodos Bank as a frontrunner in responsible finance are significant. With a controlled growth strategy, we aim to generate maximum impact and a stable profit.