Personnel and other administrative expenses
| 2020 | 2019 |
---|---|---|
|
|
|
Personnel expenses |
|
|
| 89,097 | 83,414 |
| 11,893 | 11,146 |
| 15,362 | 16,281 |
| 18,610 | 18,619 |
| 7,655 | 10,255 |
| -7,981 | -5,828 |
|
|
|
Personnel expenses | 134,636 | 133,887 |
|
|
|
Other administrative expenses: |
|
|
| 5,686 | 5,844 |
| 16,965 | 16,125 |
| 11,028 | 9,846 |
| 1,180 | 3,407 |
| 10,133 | 10,363 |
| 6,435 | 7,449 |
| 5,525 | 6,063 |
| 16,649 | 14,391 |
| 8,471 | 6,432 |
|
|
|
Other administrative expenses | 82,072 | 79,920 |
|
|
|
| 216,708 | 213,807 |
|
|
|
Average number FTE's during the year | 1,408.7 | 1,345.6 |
Pension expenses
| 2020 | 2019 |
---|---|---|
|
|
|
Pension expenses, defined contribution schemes | 11,893 | 11,146 |
Pension expenses, defined benefit pension schemes | - | - |
|
|
|
| 11,893 | 11,146 |
The pension expenses for the defined contribution schemes and the defined benefit pension schemes are based on the contributions owed for the financial year.
Pension scheme per country
Triodos Bank's pension scheme in The Netherlands is a defined contribution scheme. The commitment to the participating co-workers consists of paying the outstanding contribution to a maximum of the gross annual salary of EUR 110,111.
In The Netherlands, co-workers of related parties also participate in the pension scheme. The total pension commitment and the resulting expenses are reported here in note 27. Part of the expenses are charged to the respective related parties, based on their share of the total salaries of the participating co-workers.
The Triodos Bank pension schemes in the United Kingdom, Spain and Germany are defined contribution schemes that have been placed with life insurance companies in those countries. The commitment to the participating co-workers consists of paying any outstanding contribution. Participation in the pension scheme is obligatory for co-workers in Belgium, Spain and the United Kingdom. In Belgium the pension scheme is considered a defined benefit scheme for which co-workers' contribution is 2% of salary and the employer's contribution is 6%. In Spain, the pension contribution is 1.5% of salary, paid in full by the employer. In the United Kingdom, the co-workers’ contributions are optional with those who opt to do so contributing between 1% and 20% of their salary, and the employer's contribution amounts to 8% or 10% of salary depending on length of service.
In Germany, participation in the pension scheme is voluntary. The co-workers' contribution is 3.33% of the salary and the employer's contribution is 6.67%. In Germany 98% of the co-workers participate in the pension scheme.
Independent auditor’s fees
The table below specifies the fees of the PricewaterhouseCoopers Accountants N.V. (‘PwC Accountants NV’) audit firm that relates to services concerning the financial year.
The column Other PwC network specifies the fees that were invoiced by PwC units with the exception of PwC Accountants NV.
2020 | PWC | Other |
| Total |
---|---|---|---|---|
| Accountants NV | PwC network |
| PwC network |
Audit of the financial statements | 1,568 | 592 |
| 2,160 |
Other audit-related engagements | 229 | 274 |
| 503 |
Tax-related advisory services | - | - |
| - |
Other non-audit services | - | - |
| - |
|
|
|
|
|
Total | 1,797 | 866 |
| 2,663 |
|
|
|
|
|
2019 | PWC | Other |
| Total |
| Accountants NV | PwC network |
| PwC network |
Audit of the financial statements | 1,149 | 582 |
| 1,731 |
Other audit-related engagements | 144 | 8 |
| 152 |
Tax-related advisory services | - | - |
| - |
Other non-audit services | - | - |
| - |
|
|
|
|
|
Total | 1,293 | 590 |
| 1,883 |
The increase of the audit fees mainly relates to the start of the subsidiary Triodos Bank UK Ltd and the preparation for the implementation of the International Financial Reporting Standards (IFRS) as adopted by the European Union.
Our independent auditor, PwC Accountants NV, has rendered, for the period to which our statutory audit 2020 relates, in addition to the audit of the statutory financial statements the following services to the company and its controlled entities.
Other audit services required by law or regulatory requirements:
Statutory audits of controlled entities
Audit of Pro forma IFRS consolidated Financial Statements 2019
Audit of the regulatory returns to be submitted to the Dutch Central Bank and the National Bank of Belgium
Assurance engagement on cost price models to be submitted to the AFM
Assurance engagement on segregation of assets to be submitted to the AFM
Assurance engagement on TLTRO reporting to be submitted to the ECB
Client Money and Custody Asset (CASS) Assurance Report
Agreed upon procedures on interest rate risk to the Dutch Central Bank
ISAE type II on DGS reporting to the Dutch Central Bank
Other audit services:
Assurance engagement on the sustainability report
ISAE type II engagement relating to Triodos Investment BV
Assurance engagement on credit claims to the Dutch Central Bank
Assurance engagement on credit claims to the Spanish Central Bank -
Consent letter prospectus
Review engagement on the interim condensed consolidated financial statements as of and for the six month period ended 30 June 2020
Depreciation, amortisation and value adjustments of property and equipment, and intangible assets
| 2020 | 2019 |
---|---|---|
|
|
|
Amortisation of intangible fixed assets | 10,646 | 9,391 |
Impairment of intangible fixed assets | - | 928 |
|
|
|
Amortisation & impairment charge for the year | 10,646 | 10,319 |
|
|
|
Depreciation of property and equipment | 12,812 | 10,119 |
Impairment of property and equipment | 5,244 | 174 |
|
|
|
Depreciation & impairment charge for the year | 18,056 | 10,293 |
Depreciation has been reduced by the part that is charged on to related parties.
Impairment losses on financial instruments
| 2020 | 2019 |
---|---|---|
|
|
|
Allowance for expected credit loss | 23,915 | 3,324 |
Modification result | 7 | 34 |
Correction on addition to provision doubtful debts regarding interest that has been invoiced but not received | - | -28 |
Other impairments financial instruments | 291 | 352 |
|
|
|
Impairment losses on financial instruments for the year | 24,213 | 3,682 |
Taxation on operating result
| 2020 | 2019 |
---|---|---|
|
|
|
Taxation to be paid | 10,583 | 13,021 |
|
|
|
Origination and reversal of temporary differences | -3,101 | 1,675 |
Changes in tax rates | 791 | 390 |
|
|
|
Deferred taxation | -2,310 | 2,065 |
|
|
|
Total taxation expense | 8,273 | 15,086 |
| 2020 | 2019 |
---|---|---|
|
|
|
Corporate tax receivable | 1,764 | - |
|
|
|
| 2020 | 2019 |
|
|
|
Corporate tax payable | 5,283 | 4,629 |
Other tax payable | 11,257 | 10,186 |
|
|
|
Current tax payble | 16,540 | 14,815 |
Amounts recognised in OCI
|
| 2020 |
|
| 2019 |
|
---|---|---|---|---|---|---|
| Before tax | Tax (-expense) benefit | Net of tax | Before tax | Tax (-expense) benefit | Net of tax |
Items that will not be reclassified to profit or loss |
|
|
|
|
|
|
Revaluation gains/(losses) on equity instruments designated at fair value through other comprehensive income | -4,821 | 1,161 | -3,660 | 174 | -123 | 51 |
Items that are or may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
Foreign operations – foreign currency translation differences | -1,209 | - | -1,209 | 120 | - | 120 |
|
|
|
|
|
|
|
Total amounts recognised in OCI | -6,030 | 1,161 | -4,869 | 294 | -123 | 171 |
The other comprehensive income for Triodos Bank consists of revaluations of equity instruments at fair value through OCI and foreign currency translation differences. Investment securities are the related balance sheet account for the revaluations, for which any realised result will not subsequently be taken into the profit or loss. The foreign currency translation difference relates to the UK subsidiary for the part not subject to the net investment hedge. Tax on both of these items can be subject to the participation exemption under Dutch Tax Law.
Reconciliation of effective tax rate
| 2020 | 2019 |
---|---|---|
|
|
|
Result before taxation | 35,476 | 54,091 |
Statutory tax rate | 25.0% | 25.0% |
|
|
|
Statutory tax amount | 8,869 | 13,523 |
|
|
|
Income Non Taxable | -401 | -284 |
Tax Deduction Not Expensed | - | -45 |
Expenses Non Deductible | 1,146 | 1,831 |
Impact tax rate differences - stat rate foreign jurisdictions | -656 | 358 |
Restatement of deferred taxation items as the result of amended tax rates | 791 | 390 |
Incentives for gifts, community investment and innovation | -1,084 | -550 |
Other reconciling items | -392 | -137 |
|
|
|
Effective tax amount | 8,273 | 15,086 |
|
|
|
Effective tax rate | 23.3% | 27.9% |
Triodos Bank is subject to income taxes in the Netherlands and several other jurisdictions which levy corporate income tax at different rates.
The effective tax rate (‘ETR’) amounted to 23.3% (2019: 27.9%) and differs from the theoretical rate that would arise using only the Dutch corporate tax rate (25%). Other than mentioned differences and changes in applicable local corporate income tax rates, the difference can partly be attributed to the non-taxable release of a provision regarding the closure of the credit intermediation office in France ad EUR 1.7 million in 2020.
Following the decision not to establish a banking branch in France, a provision was recognized of EUR 3.4 million in 2019. This provision was treated as a non-tax deductible expense under local tax legislation and therefore resulted in a higher ETR. The subsequent release of a part of the provision of EUR 1.7 million in 2020, following lower expenditure than originally anticipated, results in non-taxable income and therefore a lower ETR in 2020.
Movement in deferred tax balances
2020 |
|
|
| Balance at 31 December | ||
---|---|---|---|---|---|---|
| Net balance at 1 January | Recognised | Recognised | Net | Deferred tax assets | Deferred tax liabilities |
Property and equipment, and intangible assets | -4,657 | -203 | - | -4,860 | 1,093 | 5,953 |
Investment securities at FVOCI | -573 | 77 | 1,161 | 665 | 76 | -589 |
Effective interest method application | 5,121 | -578 | - | 4,543 | 2,901 | -1,642 |
Allowance for expected credit losses | 1,002 | 2,226 | - | 3,228 | 2,703 | -524 |
Employee benefits | 139 | 42 | - | 181 | - | -181 |
Lease liability | 208 | -80 | - | 128 | 77 | -51 |
Loan modifications | 85 | -38 | - | 47 | 46 | -1 |
Tax losses carried forward | 6,318 | -200 | - | 6,118 | 7,488 | 1,372 |
Other | -584 | 1,064 | - | 480 | 480 | - |
|
|
|
|
|
|
|
Tax assets (liabilities) | 7,059 | 2,310 | 1,161 | 10,530 | 14,864 | 4,337 |
2019 |
|
|
| Balance at 31 December | ||
---|---|---|---|---|---|---|
| Net balance at 1 January | Recognised | Recognised | Net | Deferred tax assets | Deferred tax liabilities |
Property and equipment, and intangible assets | -3,740 | -917 | - | -4,657 | 1,699 | 6,356 |
Investment securities at FVOCI | -428 | -21 | -124 | -573 | 194 | 767 |
Effective interest method application | 5,644 | -523 | - | 5,121 | 5,295 | 174 |
Allowance for expected credit losses | 1,060 | -58 | - | 1,002 | 1,002 | - |
Employee benefits - Vitality leave | 99 | 40 | - | 139 | 139 | - |
Lease liability | 90 | 118 | - | 208 | 208 | - |
Loan modifications | 119 | -34 | - | 85 | 85 | - |
Tax losses carried forward | 6,897 | -579 | - | 6,318 | 7,802 | 1,485 |
Other | -493 | -91 | - | -584 | -326 | 283 |
|
|
|
|
|
|
|
Tax assets (liabilities) | 9,248 | -2,065 | -124 | 7,059 | 16,098 | 9,065 |
Deferred tax balances
| 2020 | 2019 | ||
---|---|---|---|---|
| Deferred tax assets | Deferred tax liabilities | Deferred tax assets | Deferred tax liabilities |
Current balance | 1,300 | -219 | 1,431 | 1,092 |
Non-current balance | 13,564 | 4,556 | 14,667 | 7,973 |
|
|
|
|
|
Total | 14,864 | 4,337 | 16,098 | 9,065 |
The deferred tax asset relates for an amount of EUR 6.8 million (2019: EUR 7.3 million) to tax losses incurred by the German branch for which it is expected that these will be fully recovered against future profits. Compensation is expected in the coming years. Under the German corporate income tax code tax losses have no expiration date. The remaining deferred tax asset relates to temporary differences because of differences between accounting rules and tax rules.
The deferred tax liability relates for an amount of EUR 1.4 million (2019: 1.5 million) to a taxable temporary difference following the tax losses incurred by the German branch over the period 2009 – 2011 amounting to EUR 6.8 million which have been offset against taxable income in the Triodos Dutch corporate income tax return over the same period. The Dutch corporate income tax act 1969 allowed income tax deduction on losses incurred by foreign branches of a Dutch resident taxpayer in so far that these tax losses could not be recovered in the country of residence till 2011. This Dutch income tax deduction is subsequently reversed when the branch recovers profitability and the incurred tax losses are offset in the local income tax return, resulting in a taxable temporary difference. Under the German corporate income tax code tax losses have no expiration date.
Fiscal unity
Triodos Bank, as a parent company, forms a tax unity for corporate income tax purposes with Triodos Investment Management as subsidiary. The method chosen for the taxation set-off between Triodos Bank and its subsidiary is that of proceeding as if the legal entities were independently liable to pay tax. In fact, the legal entities are jointly and severally liable for the tax liabilities of the companies belonging to the fiscal unity.
Related Parties
Triodos Bank enters into various transactions with related parties, as part of the normal course of business,
Related parties of Triodos Bank include, among others, its subsidiaries, associates and key management personnel. Transactions between related parties include rendering or receiving of services, deposits, transfers under finance arrangements and provisions of guarantees or collateral. All transactions with related parties took place at arm's length.
There are no significant provisions for doubtful debts or individually significant bad debt expenses recognised on outstanding balances with related parties.
Overview of related parties transactions
| Other related parties | Associates and joint ventures | ||
---|---|---|---|---|
Commission income | 49,295 |
|
|
|
Commission expenses | 3,695 |
|
|
|
Deposits | 149,439 |
|
|
|
Interest income | 400 |
|
|
|
Loan facilities and loan commitments (off balance) | 100,000 |
|
|
|
Loans | 6,135 |
| 1,000 |
|
Transactions with related parties
The commission income and commission expenses are related to fund management activities. The deposits and interest income are transactions following from regular banking activities, which are offered to the related parties at competitive rates. These transactions are interest fee and unsecured and are to be settled in cash.
Loans
The loan granted to associates is a subordinated loan provided to Merkur Bank. The maturity date of this loan is 30th of April 2026, to be settled in cash. The interest rate charged is 5%.
The loans granted to other related parties are provided to Hivos-Triodos Fund Foundation. The 6.135K consists of two loans that both mature on the 1st of January 2022, to be settled in cash. The interest rates on the loans are 2.63% and 3% respectively.
Loan commitments and facilities off balance
The loan commitments and facilities are off balance sheet credit facilities of TBNL that can be drawn upon by the other related parties.
These facilities are secured by means of collateral in the form of fund assets that cover the facility provided in full.
Key management personnel compensation
Transactions with key management personnel are transactions with related parties. The members of the Executive Board, supervisory board and the board of SAAT are considered to be key management personnel and their compensation is therefore included in the tables below.
The remuneration paid to the members of the Executive Board is as follows:
| 2020 | 2019 |
---|---|---|
|
|
|
Fixed salary expenses | 1,091 | 803 |
Pension expenses | 90 | 73 |
Pension allowance for salary above € 100.000 | 136 | 115 |
Private use company car | 4 | 4 |
Social security expenses | 48 | 41 |
Severance payment 1) | 320 | 263 |
|
|
|
| 1,689 | 1,299 |
1In consultation with the Supervisory Board, Peter Blom announced to step down from his position as a Member of the Executive Board of Triodos Bank N.V. at the AGM 2021. A severance payment of 100% of his yearly salary was granted. This is in line with applicable regulations and will be paid out in 2021. Also in consultation with the Supervisory Board, Pierre Aeby stepped down from his position as a Member of the Executive Board of Triodos Bank N.V. on 18 May 2019. A severance payment of 100% of his yearly salary was granted. This was also in line with applicable regulations. The severance payment was paid out in 2020.
Other emoluments of the Executive Board:
| 2020 | 2019 |
---|---|---|
|
|
|
Total other emoluments | 38 | - |
The other emoluments relate to costs associated with relocation to the Netherlands.
Remuneration paid to the Supervisory Board:
| 2020 | 2019 |
---|---|---|
|
|
|
Total compensation | 172,000 | 149,681 |
Remuneration paid to the Board of SAAT
| 2020 | 2019 |
---|---|---|
|
|
|
Total compensation | 40,750 | 62,834 |
Loans and advances to key management personnel
The table below provides the loans that have been granted to the members of the Executive Board.
| 2020 | 2020 | 2020 | 2019 | 2019 | 2019 |
---|---|---|---|---|---|---|
| Amount | Average |
| Amount | Average |
|
| outstanding | interest rate | Repayments | outstanding | interest rate | Repayments |
|
|
|
|
|
|
|
Jellie Banga | 421 | 1.7% | 12 | 433 | 1.7% | 31 |
No other loans, advances or guarantees have been granted to members of the Executive Board, Supervisory Board members or members of Board of SAAT. For reasons of principle, no share option scheme is offered to members of the Executive Board, Supervisory Board members or members of Board of SAAT.
Subsequent events
The end of 2020 was marked by an increasing number of Covid-19 infections across Europe leading to additional measures taking in the affected countries. The economic consequences for vulnerable individuals and firms resulted into additional governmental support. Triodos Bank monitors the potential and social implications for the countries and sectors where it is active. Mitigating actions have been taken and will be adapted as necessary as we keep on supporting our customers. The uncertainties and sensitivity that accompanies the pandemic is captured in the allowance for expected credit losses as calculated by Triodos Bank. The reflection of this ongoing event has therefore been captured in the financial valuations as per 31 December.
Triodos Bank has temporarily stopped offering depository receipts as from 5 January 2021. A trade pattern has emerged where the number of sell orders outweighs the number of buy orders for Depository Receipts. This trend emerges despite the financial health of the bank, as our capital and liquidity ratios remain well above regulatory minimum levels. The ongoing uncertainty around the Corona crisis and its longer-term economic effects have not disappeared, on the contrary, further lockdown and other restrictions are seen globally. Relevant measures are investigated to achieve balanced trading. The details of possible new measures are considered relevant information for making an informed investment decision.
Peter Blom, our CEO, has decided to step down from his role, having worked at Triodos Bank for forty years. He will leave Triodos Bank at the end of this year’s Annual General Meeting, on 21 May 2021.
Jellie Banga decided to step down from her role as Vice-Chair of the Executive Board and the Chief Operating Officer effective May 1, 2021. In reviewing the scope of Jellie’s role, Triodos Bank has decided to split her role into a COO role – focusing on the operating side of the bank – and a Chief Commercial Officer (CCO) role - focusing on the commercial side of the bank. This will bring the total number of Executive Board members to five.
Fitch Ratings (Fitch) announced on 16 February 2021 it has assigned Triodos Bank a Long-Term Issuer Default rating at ‘BBB’ with a stable outlook and a Viability Rating at ‘bbb’. Fitch’s rating analysis was done at the request of Triodos Bank. The rating gives Triodos Bank a better position on the financial markets should the need arise. It will improve access to institutional debt funding and potentially reduce the cost of funding. Therefore, it supports the banks financial health. The Stable Outlook reflects Fitch’s view that Triodos Bank’s ratings have sufficient headroom at their current level to absorb significant shocks under various scenarios to Fitch’s baseline economic forecast.