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European Branch Network
(Retail and Business Banking)

Developing a European branch network is fundamental to Triodos Bank. It allows it to build and share expertise, and use it to benefit a fast-growing Triodos Bank community. It brings a credible set of values-based financial services to hundreds of thousands of business and personal customers, 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 2016 as people and sustainable enterprises continue to choose to partner with Triodos Bank.

Loans

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).

Outstanding loans per sector in 2016

Outstanding loans per sector (pie chart)

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 38% (2015: 37%)

This sector consists of renewable energy projects such as wind and solar power, biomass, hydro-electric, 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 24% (2015: 24%)

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 14% (2015: 14%)

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

Residential sustainable mortgages, municipalities and private loans 24% (2015: 25%)

The remaining proportion of the loan book is primarily comprised of residential sustainable mortgages, plus some limited short-term loans including overdrafts on current accounts.

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 below).

Triodos Bank’s goal is to lend between 65% and 75% of its funds entrusted. The total loan portfolio, including short term loans to municipalities, as a percentage of the total amount of funds entrusted was 71% in 2016 (2015: 72%). Without the loans to municipalities, the ratio increased to 64% on the previous year (2015: 62%). Continuing to increase this ratio remains an important challenge for the bank.

The quality of the loan book remained satisfactory overall, particularly in the light of the declining quality of lending in many European banks, and despite a wider economic environment of limited or no growth in some countries and a difficult economic environment. This, and a continuing focus on maintaining and diversifying a high quality loan portfolio, led to a decline of the impairments for the loan portfolio to 0.10% of the average loan book (2015: 0.16%). This is lower than the Triodos Bank’s long-term internal benchmark for impairments of 0.25%. These impairments are taken in case potential losses resulting from defaults by borrowers become a reality.

9%

Growth of the loan
portfolio amounted to
EUR 493 million, or 9%.

Growth of the loan portfolio amounted to EUR 493 million or 9%. Expected growth was between 5% and 15%.

Investment-type loans in the public sector are included in the loan portfolio in accordance with regulations related to financial reporting. Without this the loan portfolio would have grown by approximately 14%, mainly because of the increase of the mortgage portfolio by 30%. The increase in business loans was limited to 11%. The distribution of growth over the sectors has been deliberate to achieve more diversification and to lower the risk profile of the portfolio.

Competition between banks in the lending market has revived after a period of restructuring and recapitalisation. Banks regard sustainability as an emerging market and have continued to make inroads into it, competing aggressively to take advantage of available lending opportunities.

Funds entrusted

Statement of funds entrusted per branch

Download XLS

 

 

 

 

 

Amounts in millions of EUR

31.12.2016

31.12.2015

 

EUR

%

EUR

%

 

 

 

 

 

 

 

 

 

 

The Netherlands

3,206.7

40

2,771.6

38

Belgium

1,656.6

21

1,504.2

21

United Kingdom

1,076.6

13

1,153.0

16

Spain

1,860.4

23

1,660.2

22

Germany

224.3

3

193.6

3

 

 

 

 

 

 

 

 

 

 

Total

8,024.6

100

7,282.6

100

 

 

 

 

Statement of funds entrusted per category

Download XLS

 

 

 

 

 

Amounts in millions of EUR

31.12.2016

31.12.2015

 

EUR

%

EUR

%

 

 

 

 

 

 

 

 

 

 

Saving accounts

3,904.6

49

3,462.7

48

Deposits and time accounts

1,303.3

16

1,403.9

19

Other funds entrusted

2,816.8

35

2,416.0

33

 

 

 

 

 

 

 

 

 

 

Total

8,024.7

100

7,282.6

100

 

 

 

 

10%

Despite strong competition
in all savings markets,
funds entrusted grew by
10% across the European
branches.

Funds entrusted, including savings, enable Triodos Bank to finance companies and organisations that benefit people, the environment and culture. An increase of the funds entrusted is an important indicator of Triodos Bank’s ability to attract sufficient funds to finance sustainable organisations.

Triodos Bank’s branches offer a variety of sustainable financial products and services as part of its key strategic objective to offer a full set of services to customers. This has been achieved in some branches and is being developed in others, leading to a marked growth in funds entrusted which increased by EUR 742 million, or 10%, against expected growth of approximately 10%.

390

In 2016, 390 organisations
received total donations
of EUR 0.2 million.

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 2016, 390 organisations (2015: 389) received total donations of EUR 0.2 million (2015: EUR 0.2 million) in this way. The low interest rate climate and low interest rates on savings accounts that result from it discouraged some customers to donate part of the interest they receive.

Prospects

Triodos Bank’s balance sheet total is expected to grow more modestly. Growth of between 5 and 10% is expected in 2017.

All branches will focus on continuing to deliver, or develop, a credible set of services. For example, the launch of a current account is expected in the UK in 2017. The number of customers is expected to grow in 2017 by between 10 and 15% across the Group.

We want to realise a loans to deposits ratio between 65 and 75%, excluding investment-type loans in the public sector.

The sustainable loan portfolio and funds entrusted are expected to increase by between 20 and 25% and 5 and 10% respectively. Triodos Bank’s ambitions are to focus primarily on the quality and diversification of its loan portfolio while realising modest growth. In that context we will put extra effort into identifying loans to front-runners in their fields; the entrepreneurs developing the sustainable industries of the future.