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 it works in.
Lending continued to grow and, importantly, diversify in most branches during the year. The German branch’s loan book grew for a second year by 8.5%, or EUR 20.3 million (2014: 3%). New loan commitments amounted to EUR 40 million (2014: EUR 35 million), primarily in the wind energy sector.
In the UK a re-elected government took a more aggressive position on the removal of subsidies for renewables, which in the short term puts increasing pressure on renewables projects. Proposals for tenants’ ‘right to buy’ housing association properties also created uncertainty for another key ‘Triodos’ sector. Despite this lending to sustainable organisations grew by 17% to EUR 843 million (2014: 17%), with key areas of growth including health and social care provision and community renewables. Highlights included working with Social Investment Scotland, a leading social lender in Scotland, using an innovative financial structure to provide finance to grassroots social organisations requiring unsecured borrowing.
In Belgium the loan portfolio grew by 16% to 1,159 million (2014: EUR 998 million) in a market characterised by stiff competition and historically low interest rates, leading to a large number of prepayments of loans. Sustainable mortgages grew strongly (by 48%) and now represent 13% of the total loan portfolio.
As well as increasing volumes, the number of loans made in Spain increased by almost a third during the year. After a period of stagnant renewable energy lending, following changes to Government legislation, Triodos Bank re-started its lending to solar energy projects during the year.
Sustainable mortgages in The Netherlands, which incentivize homeowners to live in more environmentally friendly houses increased by 46% or EUR 124 million (2014: 45%). Loans to sustainable businesses were up by 5% or EUR 40 million, including some significant repayments.
Overall loan loss provisions decreased from 0.28% of the average loan book in 2014 to 0.16% in 2015 reflecting Triodos Bank’s high quality loan portfolio. This is much lower than the banking industry average in Europe and sends a strong signal about the strength of loans to the real economy, and the value of strong relationships with clients and a long-term focus on projects and businesses with impact.
Triodos Bank’s branches have worked to deliver the right balance between deposits and loans, managing growth in the former and focusing on increasing the latter. The desired balance has not been reached in 2015 and will continue to represent a difficult challenge.
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 grew at a significant rate in all Triodos Bank branches during the year.
With an increase of new personal customers of 10%, and business retail customers of more than 20% the Dutch branch increased its funds entrusted by EUR 402 million. It was serving over 275,000 customers at the year’s end.
In Spain, the branch now serves over 200,000 customers with debit and current accounts the most popular products, fulfilling everyday banking needs.
The UK branch exceeded its savings goals, with 18% (2014: 24%) or EUR 178 million net growth in funds entrusted. Business Banking deposits saw healthy levels of growth towards the second half of the year in particular, primarily because of a number of large deposits from existing businesses and charities.
The Belgian branch launched a new, monthly savings product which contributed to a marked increase in savings accounts, up 11%, and attracting a younger audience.
Funds entrusted grew by 25% in Germany (2014: 11%). The branch now serves 11,410 customers and new products were successfully launched in the market. The main focus for the branch is on growing the loan portfolio.