Triodos Bank provides values-based financial services that reach hundreds of thousands of business and personal customers across Europe, growing sustainable banking’s impact and scale. 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. Local culture, within and between countries, also affects how Triodos Bank approaches its work.

Retail activities developed further in 2020 as people and sustainable enterprises continued to choose to partner with Triodos Bank.

Triodos Bank in The Netherlands, United Kingdom and Belgium contributed to the Group’s profitability in line with positive expectations. Triodos Bank Spain unfortunately suffered the most significant impact of loan impairments based on the negative change to the macro-economic parameters due to the COVID-19 pandemic. In addition, Spain’s loan production lagged in combination with a modest funds entrusted growth. In Germany, Triodos Bank progressed further in 2020, despite the COVID-19 effects, and is close to making a positive contribution to the Group’s overall profitability. In the United Kingdom, the smooth transition to become a subsidiary executed in 2019 continued during the year 2020. Triodos Investment Management made a significant contribution to the Group. Finally, the closing down of the French activities has further progressed. This process has resulted in a partial release of EUR 1.3 million of the provision that was created in 2019 (EUR 3.4 million).

Assets committed to the triple bottom line (TBL) and real economy

Triodos Bank is a values-based bank. We lend and invest in the real economy because that is where we can have a positive impact on people’s lives and safeguard the environment. We apply the Global Alliance for Banking on Values (GABV) scorecard using indicators like ‘assets committed to TBL’ and ‘assets committed to real economy’ to monitor and qualify impact. For more information and the complete GABV scorecard see section Understanding impact and Appendix IV– Global Alliance for Banking on Values scorecard – quantitative evidence of our impact .

Real economy assets in a values-based bank should be relatively high. In 2020, this was 75% (2019: 76%). Triodos Bank targets a ratio of loans (in the real economy) to deposits of 75% to 85% to make sure it always has enough money available (i.e. liquidity) to support its clients in case of disruptions in the market. The total loan portfolio, as a percentage of the total amount of funds entrusted, was 78% in 2020 (2019: 77%).

Triodos Bank has 74% (2019: 75%) of its total assets committed to triple bottom line. This figure provides the best indication of a bank’s commitment to sustainability. Triple bottom line assets refer to assets not only focused on economic benefits, but also on positive social and environmental benefits.

The Impact by sector and Climate impact of our loans and funds' investments sections describe this impact in the main (sub-)sectors Triodos Bank finances.

Total lending

Despite the challenges to grow in all sectors caused by COVID-19, the overall growth of the loan portfolio amounted to EUR 948 million (or 12%) in 2020. This includes the growth of the residential mortgage portfolio by EUR 762 million (or 39%). The increase in business loans was 3% (2019: 6%).

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 2020 and had a downward effect on interest margins. The Expected Credit Loss (ECL) on loans and advances to customers increased by EUR 18.7 million in 2020 to EUR 53.3 million, influenced by the COVID-19 pandemic which has significant negative effect on the macro-economic parameters used to calculate the Expected Credit Loss (ECL).

Competition between banks in the lending market was strong in 2020. Mainstream banks are increasingly embracing sustainability as a business opportunity and competing aggressively to take advantage of available lending opportunities.

The Loans and funds’ investments by sector section describes the relative volume of our loans and investments in the main sectors where Triodos Bank is involved.

Funds entrusted

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.

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

The Group derived detailed retail and business customer research during 2020 using Net Promoter Score (NPS) methodology. This technique is widely used across the business sector to measure customer satisfaction.

Triodos Bank’s overall NPS on all indicators for the retail group is 25 (2019: 28). This is much better than the average for large banks. Triodos Bank’s principles as a sustainable bank are the main reason to recommend the bank. The equivalent figure for business clients is 1 (2019: 12). The decline in the NPS score for business clients is primarily due to the perception of costs associated with banking with Triodos Bank. The detailed results are now being used as a key performance indicator to allow Triodos Bank continuously to measure its customers’ views and gather better insights.

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.

Prospects for Retail and Business Banking

Triodos Bank expects to grow its bank balance sheet more modestly, maintaining a stable loan-to-deposit ratio. It aims to grow its fee income with particular emphasis on growing Triodos Investment Management activities.

The bank will focus on the 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. Persistent low interest rates and increasing regulatory costs continue to pose a serious challenge. And yet, there are significant opportunities for Triodos Bank as a frontrunner in responsible finance. With a controlled growth strategy, we aim to generate maximum impact and stable profit levels.