Growing impact through sustainable finance
Triodos Bank wants to maintain or establish itself as the leading bank for the sustainable sectors where it works. Increased lending means more impact, both for sustainable businesses and households, via green mortgages. Lending continued to grow and diversify in most branches during the year.
The German branch’s loan book grew, by 13% (2017: 57%) or EUR 52 million. New lending was more diversified in 2018. As well as its first offshore wind farm loan, Triodos Bank in Germany recorded strong growth in the Health Care and Sustainable Property sectors. For the first time, the branch financed a special and palliative care home for very sick children, who are cared for in the presence of their parents.
The UK reached an important milestone with total funds entrusted growing to over GBP 1 billion (EUR 1.2 billion) for the first time. The total loan book amounted to almost GBP 876 million (EUR 975 million), an increase of 10% on 2017, demonstrating a commitment to diversifying lending to increase social, cultural and environmental impact.
This included our first university loan to Winchester University to help fund a GBP 50 million green ‘BREEAM’ campus building, GBP 5 million to help organic veg box company Riverford transfer to employee ownership and GBP 20 million development finance for the new Riverside Studios venue in Hammersmith, London. Triodos Bank UK became one of the banks backing the London Mayor’s Energy Efficiency Fund (MEEF) to help hospitals, small businesses and universities cut their carbon emissions.
In Belgium the sustainable loan portfolio grew, in both business lending and mortgages, in line with targets. The loan portfolio grew by 16% to 1.7 billion (2017: EUR 1.5 billion). Within the lending activities, the mortgages portfolio grew by 21% (to EUR 262 million). Mortgages represented 15% of the Belgian loan portfolio by the year end (2017: 14.5%). Loans to co-housing projects have become a particular and differentiating area of expertise for Triodos Bank in Belgium.
The Belgian branch financed 38 loans for a total amount of 7.6 million to social enterprises under the EaSI Guarantee Scheme, a European initiative involving several Triodos Bank branches.
The Project Finance Team in Belgium, supported by Triodos Bank’s international Energy and Climate Desk, negotiated a stake in the financing of two offshore wind parks along the Belgian cost (Northwester 2 and SeaMade), generating 706 megawatts of wind energy in Belgium by 2020 or enough to meet the energy needs of 705,000 households.
While in France Triodos Bank financed the Feyssine Hydroelectric Power Plant, a power plant using groundbreaking new technology which harnesses the power of the river current with minimal impact on the surrounding environment.
In Spain, the loan portfolio grew by 19%, to EUR 1,402 million representing an additional net amount of EUR 220 million financing sustainable mortgages and businesses or institutions whose activities promote a more human economy.
The sectors that saw the most growth in terms of volume on the balance sheet were renewable energy, mortgages, care for the elderly, sustainable building and social housing. Spain started granting renewable energy loans to individuals and organisations to generate power for their own use in 2018.
Triodos Bank Spain has been a key partner for the development of the European green mortgage scheme within the EeMAP framework (Energy Efficient Mortgages Action Plan). In 2018, the bank granted 36% more financing to private first-time home buyers with sustainability criteria, which now amounts to EUR 204 million in total in this area.
In The Netherlands lending grew by 4% (2017: 12%). Loans to sustainable businesses were up by 20% or EUR 432 million, including significant repayments. Sustainable mortgages, which incentivize people to live in more environmentally friendly homes increased by 40% or EUR 275 million (2017: 40%).
In 2018, the net additions to the provision for doubtful debts, as a percentage of the average loan portfolio, was 0.05% (2017: 0.03%). The total of provisions related to the outstanding credits is 0.5% (2017: 0.8%) as at the end of the year.
Triodos Bank’s branches have worked hard to deliver a better balance between deposits and loans, managing growth in the former and focusing on increasing the latter. This ratio increased in 2018, to 75% from 70% in 2017 and continues to be in a healthy balance.
Large numbers of people are attracted to the idea of using their money consciously and are, therefore, willing to open a new account with Triodos Bank. This awareness is thanks largely to the strength of the Triodos Bank brand and its solid reputation in all countries. Savings continued to grow in all Triodos Bank branches during the year. However, downward pressure on interest rates, leading to low, and even no, interest on savings accounts – as well as more limited proactive marketing to make sure that loans and deposits grow in balance – has reduced this rate of growth.
The Dutch branch increased its funds entrusted by EUR 476 million (2017: EUR 345 million). The branch was serving over 349,000 customers at the year’s end.
In 2018, Spain updated their pricing policy for retail banking products to bring it in line with the low interest rates context and to reflect the costs of the service and the value of its ethical banking proposal. The Spanish branch is now home to 212,000 customers and ist funds entrusted grew to EUR 2,032 million.
Spanish customers can now make deposits into their Triodos Bank accounts from a network of 2,300 post offices across the country thanks to an agreement signed with the National Post Office ‘Correos’. This significantly improves Triodos Bank’s cash service in Spain.
The UK branch grew to serve over 54,000 customers during 2018 and now has a fully operational Personal Current Account. Funds Entrusted (including all current accounts) increased by 10% and GBP 94 million (2017: GBP 60 million).
The Belgian branch continued to attract new savings customers throughout the year despite low interest rates and little marketing. At the same the branch balanced growth in savings with growth in the loan portfolio. Funds entrusted grew by 8% to EUR 1.9 billion (2017: 6%).
The German branch increased the number of customers by 22% during the year. As a result, the funds entrusted grew by 32% in Germany (2017: 35%). The branch now serves more than 22,000 customers.