Personnel and other administrative expenses

 

2020

2019

 

 

 

Personnel expenses

 

 

  • salary expenses

89,097

83,414

  • pension expenses

11,893

11,146

  • social security expenses

15,362

16,281

  • temporary co-workers

18,610

18,619

  • other staff costs

7,655

10,255

  • capitalised co-worker costs

-7,981

-5,828

 

 

 

Personnel expenses

134,636

133,887

 

 

 

Other administrative expenses:

 

 

  • office costs

5,686

5,844

  • IT costs

16,965

16,125

  • external administration costs

11,028

9,846

  • travel and lodging expenses

1,180

3,407

  • fees for advice and independent auditor

10,133

10,363

  • advertising charges

6,435

7,449

  • accommodation expenses

5,525

6,063

  • regulatory expenses

16,649

14,391

  • other expenses

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

Regulatory expenses

The regulatory expenses can be broken down as follows:

 

2020

2019

 

 

 

Bank tax

3,273

3,043

Depository Guarantee Scheme

12,196

10,488

Single resolution fund

1,180

860

 

 

 

 

16,649

14,391

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
in profit or loss

Recognised
in OCI

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
in profit or loss

Recognised
in OCI

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.