In a year marked with COVID-19, Triodos Bank reports a sound net profit of EUR 50.8 million after tax for the year 2021, which is EUR 23.6 million higher than the same period last year.

Our total income, EUR 341.9 million in 2021 (2020: EUR 305.1 million), has recovered over the last 12 months and is above pre-COVID-19 levels due to sustainable lending growth and higher funds under management.

The underlying interest result records an increase of EUR 23.3 million to EUR 221.5 million in 2021 (2020: EUR 198.2 million), supported by conscious lending growth in sustainable sectors in Europe driving our ambitious net-zero target in 2035. The bank's interest result was further supported by the one-off benefit from TLTRO. Triodos Bank has met the lending growth criteria under the TLTRO program and is therefore entitled to the interest discount of 0.5%. The total net interest discount amounts to EUR 6.9 million (2020: EUR 1.0 million). However, the bank’s overall net interest margin continues to be under pressure due to the very low interest rate environment in Europe and negative interest rates to be paid for excess liquidity from funds entrusted.

The bank’s commission result improved by 9% to EUR 116.0 million in 2021 (2020: EUR 106.1 million) due to additional fees for payment solutions and management fees for investment fund solutions. As both our underlying interest and commission results grew in 2021, the overall contribution share of 34% for commissions remained stable this year. The bank continues to focus on realising healthy interest margins and improving fee income from investment fund and payment solutions.

The bank’s total operating expenses increased by EUR 29.8 million to EUR 275.2 million in 2021 (2020: EUR 245.4 million), mainly due to additional employee expenses for compliance and anti-money laundering (AML) topics, and an additional deposit guarantee scheme (DGS) contribution. The expenses without additional compliance and regulatory costs are improving due to the structural cost savings program and higher cost discipline applied across the group. In future periods the bank will continue to focus on realising cost synergies while coping with regulatory cost increases.

In 2021, the bank reports a cost-income-ratio (CIR) of 80% (2020: 80%).

Our loan business remains resilient. The cumulated ECL expenses decreased significantly over the last 12 months and resulted in a net release (gain) of EUR 0.5 million in 2021. In particular, more favourable macro-economic forward-looking parameters led to a release in ECL stages 1 and 2, partially offset by an increase in ECL stage 3 covering defaulted loans. In 2020, ECL expenses were significantly impacted by the COVID-19 pandemic in the first quarter of 2020, which at that time resulted in a sharp drop of forward-looking parameters (e.g. GDP growth in Europe) and therefore triggered a material increase of the ECL provision in stages 1 and 2 in 2020.

Total ECL expenses on loans in 2021 compared to the average loan book over 2021 resulted in clearly improved risk cost ratio (2021: 0 bps; 2020: 27 bps). The annual incurred loss rate in ECL stage 3 amounts to 6 bps for 2021 (2020: 12 bps). Both factors underpin the high credit quality in Triodos Bank’s loan portfolio, which focuses on balancing impact, risk and return for each single loan engagement.