Triodos Bank’s Executive Board provides a perspective on the wider world it operates in, its impact and activity in 2017 and its prospects for the future.
Sustainable Savings and Lending
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 56% (2016: 19.5%) or EUR 143 million. New lending was more diversified in 2017. Triodos Bank supports the energy transition by financing renewable energy production as well as grid and storage and introduced a new community savings account during the year. The product, ’Bürgersparen’, includes the local community of a renewable energy project. Loans were made to sustainable properties and the social sector, one year after opening a new office in Berlin.
The total loan book amounted to almost GBP 800 million (EUR 899 million), an increase of 12.4% on 2016. Loans were made to several new sectors and high impact projects. These included GBP 1.7m to the Organic Trade Board to support the promotion of organic food and agriculture in the UK and Vitsoe furniture , the first UK circular economy business to be financed.
In Belgium the sustainable loan portfolio grew, in both business lending and mortgages, in line with targets. The loan portfolio grew by 13.6 % to 1.493million (2016: EUR 1,314 million). Within the lending activities, the mortgages portfolio grew by 25% (to EUR 217 million). Mortgages represented 14.5% of the Belgian loan portfolio by the year end (2016: 13.2%). Loans to co-housing projects have become a particular area of expertise for Triodos Bank in Belgium.
Triodos Bank Spain passed the milestone of EUR 1 billion in loans during 2017, after 13 years of activity. The gross volume of loans paid out in Spain was EUR 375 million. Net growth was EUR 215 million. Highlights included the launch of a loan product for the performing arts sector, developed in partnership with a mutual guarantee company. The green mortgages portfolio was up by EUR 40 million and loans to municipalities increased by EUR 75 million during the year. The continuing low interest rate environment meant loans were less profitable than before and increased the number of early loan repayments.
In The Netherlands lending grew by 12% (2016: 7%). Loans to sustainable businesses were up by 5% or EUR 365 million, including significant repayments. Sustainable mortgages, which incentivize people to live in more environmentally friendly homes increased by 40% or EUR 213 million (2016: 33%).
In 2017, the net additions to the provision for doubtful debts, as a percentage of the average loan portfolio, was 0.03% (2016: 0.10%). The total of provisions related to the outstanding credits is 0.8% (2016: 1.0%) 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 2017, to 77% from 71% in 2016 and is now 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.
With an increase of new personal customers of 6%, and business retail customers of 7%, the Dutch branch increased its funds entrusted by EUR 345 million (2016: EUR 431 million). The branch was serving over 317,000 customers at the year’s end.
A new price policy was introduced in Spain during the year to address the impact of low interest rates on loans and ICT and regulation costs. The Spanish branch is now home to 220,000 customers, increasing by an average of 1,400 each month.
After two years of development, the UK branch launched its Personal Current Account in 2017. Funds Entrusted (including all current accounts) increased by 6.4% and GBP £58.9 million (2016: GBP £68.7 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 6.5% to EUR 1,762 million (2016: 10.2%).
The German branch increased the number of customers by 34% during the year. As a result, the funds entrusted grew by 35% in Germany (2016: 16%). The branch now serves more than 17,500 customers.