Assets

The balance sheet value of the cash and cash equivalents as at 31 December can be broken down as follows:

Received cash collateral regarding forward currency contracts and interest rate swaps was presented as other assets but are reclassified to loans and advances to banks. The comparative figure in the amount of EUR 14,048 is adjusted accordingly.

An amount of EUR 118.2 million of the deposits is encumbered (2020: EUR 41.8 million). These are on demand deposits at Cecabank for the amount of EUR 1.0 million (2020: EUR 1.0 million), ING Bank EUR 13.0 million (2020: EUR 13.0 million), Banco Cooperativo EUR 1.5 million (2020: EUR 7.5 million), the Dutch Central Bank EUR 50.0 million (2020: EUR 0.0 million), Rabobank EUR 13.5 million (2020: EUR 7.1 million), ABN AMRO EUR 39.2 million (2020: EUR 12.6 million) and Mastercard 0.0 million (2019: EUR 0.6 million. A deposit of EUR 1.0 million (2020: EUR 1.0 million) is subordinated. All other deposits can be freely disposed of.

The balance sheet value of the loans and advances to banks as at 31 December can be broken down as follows by residual maturity:

The balance sheet value of the loans and advances to banks as at 31 December can be broken down as follows:

Loans and advances to customers at amortised cost:

The Expected Credit Loss allowance (ECL) 2021 is 0.48% of the total loan portfolio gross carrying amount at 31 December 2021 (31 December 2020: 0.55%).

The annual incurred loss rate, which is the stage 3 impairment expense over the average loan book per 31 December 2021, is 0.06%(6 bps) (2020: 0.12% (12 bps)).

The movements of the ECL of Loans and Advances to customers is as follows:

The total ECL provision of EUR 51.0 million per 31 December 2020 decreased by EUR 2.0 million to EUR 49.0 million per 31 December 2021 due to a decrease in the Stage 2 provision of EUR 6.0 million which is partially offset by an increase in Stage 3 of EUR 3.4 million. The decrease in Stage 2 is mainly caused by the decrease of EUR 6.6 million due to more favourable macro-economic forward looking parameters compared to 2020. This is partly offset by an increase of EUR 1.5 million due to changes in individual loan or advance behaviour which includes, amongst others, changes in credit ratings and exposure. This has resulted in a net gain in the profit and loss account of EUR 7 (2020: a net loss of EUR 22,358).

In 2020, because of the COVID-19 pandemic, the economic circumstances resulted in a large increase in the ECL provision, mainly in Stages 1 and 2. This increase in ECL provision was expected to move to the Stage 3 ECL provision in 2021 once defaults due to the economic downturn would materialise. The Stage 3 ECL provision has shown an increase of EUR 3.4 million in 2021.

More detailed information regarding the allowance for ECL and the impairment gain/loss recognised in the profit and loss accounts can be found in the Risk Management chapter, section Credit risk, with quantitative information starting on page Credit risk quantitative disclosures.

Loans and advances to customers classified by residual maturity:

A total amount of EUR 9.4 million (2020: EUR 16.9 million) of the loans and advances to customers is subordinated. Within the loans to local municipalities a total of EUR 65.0 million (2020: EUR 252.7 million) have a maximum original maturity of one year and one day.

As part of the interest rate risk management, Triodos Bank entered into interest rate swaps to hedge the interest risk on fixed interest rate loans. Please see Non-trading derivatives and hedge accounting for additional information.

Part of the value of securities is used as collateral for a possible debit balance, amounting to EUR 207.1 million at the Dutch Central Bank (2020: EUR 177.5 million).

As part of the interest rate risk management Triodos Bank entered into interest rate swaps to hedge the interest risk on fixed interest rate bonds. Triodos Bank changed its risk management strategy by using portfolio fair value hedging. The remaining fair value hedge accounting movement will amortise over the remaining lifetime.

The movement in debt securities at amortised cost is as follows:

The increase in the debt securities are in the other bonds. The other bonds consists of European regional government and corporate bonds, listed and non-listed. The debt securities including the other bonds are specified below.

The interest bearing securities in the statement below, as at 31 December, are valued at amortised cost. This is the book value without the interest receivable, fair value hedge accounting and the allowance for the ECL.

As part of its mission, Triodos Bank wishes sustainable banking to create more and more impact over the world. In this respect, Triodos Bank provides equity funding to like minded financial institutions in order to increase growth of the sustainable banking sector. No significant influence can be exercised on our participating interests. These investments are of a strategic nature and are not held for trading. The instruments classified as equities, being the participating interests, are designated to be accounted for at fair value though OCI. The instruments classified as debt, being the participating debt, are mandatorily designated to be accounted for at fair value through profit and loss.

The value of these interests is based on the published share price. In absence of a public share price or if such a public share price is established in a non active stock exchange market (low trading activity) Triodos Bank estimates the fair value through the net asset value.

The other participating interests can be broken down as follows:

The movement of the participating interest at fair value through OCI is as follows:

The movement of the participating debt at fair value through profit and loss is as follows:

When a new fund is originated, Triodos Investment Management posts, if needed, seed capital to get the fund started. Depending on de fund and its needs, this may be an investment for less than one year or for a longer period. In 2021, the Triodos Emerging Markets Renewable Energy Fund was originated in which seed capital was posted. The investment classifies as an associate and is accounted for using the equity method.

The movement of Shares in Triodos investment funds is as follows:

The shares in S.W.I.F.T. SCRL are held in the framework of the Bank's participation in S.W.I.F.T. payment transactions.

The development costs for information systems

The development costs for information systems contain costs for internally developed intangible assets related to the Bank’s ICT systems in The Netherlands, Spain and Germany.

The movement in the development costs for the information systems item is as follows:

Management contracts

The management contracts relate to contracts for the management of funds by Triodos Investment Management. When it acquired its participating interest in Triodos Investment Management in 2006, Triodos Bank paid EUR 4 million for this to Stichting Triodos Holding. No impairment was recognised based on the remaining usefulness of the contracts.

The movement in management contracts is as follows:

Computer software

Computer software relate to software that has been purchased. The movement in computer software is as follows:

The movement in the property for own use is as follows:

The Executive Board of Triodos Bank decided in December 2020 to sell the buildings located at the Nieuweroordweg 1 and Utrechtseweg 60 in Zeist and related to Triodos Head Office. The decision to sell the buildings was made in December 2020 as a consequence of the new way of working within Triodos Bank during 2020 resulting from the COVID-19 pandemic. This way of working entails a combination of working from home and working from the office. Triodos Bank believes that this is a more efficient way of working. Furthermore, it is in line with the Triodos Bank values of lowering the carbon footprint which will be continued after the COVID-19 pandemic.

This decision triggered an impairment in 2020 because the carrying value of the buildings will no longer be recovered through its continuing use, but through the sale of the property. An impairment loss of EUR 5.1 million for property and equipment related to Triodos Head Offices combined is recorded in 2020 in the profit and loss account. The impairment is recognised to adjust the carrying value to the fair value less cost of disposal.

At the end of 2021 an agreement to sell has been signed with a buyer. The book value represents the sales price less cost to sell and continues to be classified as held for sale, refer to note 12 Non-current Assets Held for Sale . The transaction is expected to be finalised in the first half year of 2022.

The movement in equipment is as follows:

Fully depreciated equipment with a total purchase value of EUR 1.4 million (2020: EUR 4.1 million) has been disposed of.

Triodos Bank sometimes repossesses assets which come from acquisition in public auctions. These assets are collaterals of an executed loan. A part of the repossessed assets however will not be sold immediately because Triodos Bank has opted to add value by renting out these assets and are therefore presented as investment property.

The movement in the investment property is as follows:

Leases as lessor

Triodos Bank leases out its investment properties for the purpose of adding value to the repossessed assets. Triodos Bank has recognised the following items in the profit and loss account.

Triodos Bank leases many assets including land and buildings, vehicles, and IT equipment. Information about leases for which Triodos Bank is a lessee is presented below.

Right-of-use assets

Lease liabilities

Amounts recognised in profit or loss

Amounts recognised in the statement of cash flows

Real estate leases

Triodos Bank leases land and buildings for its office space. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term. Some leases provide for additional rent payments that are based on changes in local price indices.

Other leases

Triodos Bank leases vehicles and equipment, with lease terms of generally three to five years. Triodos Bank also leases IT equipment with contract terms of generally one to three years. Leases with a contract term of less than one year and/or a value of less than EUR 5.000 are considered short-term and/or leases of low-value items.

Triodos Bank has elected not to recognise right-of-use assets and lease liabilities for these leases.

Additional hedge accounting disclosures are part of the financial risk management paragraph, please see note Non-trading derivatives and hedge accounting for additional information.

As part of the interest rate risk management Triodos Bank entered into interest rate swaps to hedge the interest risk on fixed interest rate loans. The fair value of the interest rate swaps with a positive value at the end of the year is represented on the asset side of the balance sheet and the interest rate swaps with a negative value on the liability side.

Breakdown of derivatives by remaining term to maturity and fair value:

Non-trading derivative assets

Triodos Bank applies macro fair value hedge accounting, in which the interest rate swaps (also named IRS) are the hedging instruments. Triodos Bank only enters into these contract for the purpose of hedging the interest rate risk, no derivatives are used for trading purposes. In 2021 Triodos Bank entered into additional interest rate swaps to further mitigate the interest rate risk. See page Market risk management for further information on interest rate risk for Triodos Bank.

Triodos Bank entered into currency contracts with Triodos Investment Management in order to manage the currency risk of the investment funds. Triodos Bank hedges these positions directly in the market. Therefore the long and short position are almost the same. In 2017 Triodos Bank stopped entering into new currency contract with Triodos Investment Management because of new regulation.

Non-trading derivative liabilities

The forward currency contracts relates mainly to GPB contracts that Triodos Bank entered for a notional amount of EUR 221.4million (2020: EUR 201.1million) for hedging the currency risk of the UK subsidiary equity participation of Triodos Bank. The other currency contracts relates to contracts that Triodos Bank entered into with Triodos Investment Management in order to manage the currency risk of the investment funds. Triodos Bank hedges these positions directly in the market. Therefore the long and short position of these contracts are almost the same.

The balance sheet value of the other assets as at 31 December can be broken down as follows:

Received cash collateral regarding forward currency contracts and interest rate swaps was presented as other assets but are reclassified to loans and advances to banks. The comparative figure in the amount of EUR 14,048 is adjusted accordingly.

The main reason for the increase in other prepayments and accrued income is the received cash collateral for rents in Spain.

The other assets fall due within one year for an amount of EUR 46,201 (2020: EUR 40,368).

The balance sheet value of the assets held-for-sale as at 31 December can be broken down as follows:

Triodos Bank can acquire the collateral under non performing loans, all assets acquired are real estate. It is the intention of Triodos Bank to dispose of these assets as they are not part of the primary business of the Bank. If permitted by the underlying contracts of the acquired assets, these assets are presented as real estate for sale, using a realtor.

Triodos Investment Management has provided seed capital to a new investment fund in November 2020 to improve the product offering and with the intention to exit within a year. The exit was realised, as intended, in November 2021.

The disclosure regarding the addition to the assets held for sale as required by IFRS 5 is included in note 7, Property and Equipment, on page Property and equipment of the financial statements. The increase in bookvalue can be explained by the revaluation based on the sale agreement in 2021.