Personnel and other administrative expenses

 

2021

2020

Personnel expenses

 

 

  • salary expenses

98,065

89,097

  • pension expenses

13,143

11,893

  • social security expenses

16,790

15,362

  • temporary co-workers

24,023

18,610

  • other staff costs

7,579

7,655

  • capitalised co-worker costs

-9,670

-7,981

Total personnel expenses

149,930

134,636

 

 

 

Average number FTE's during the year

1,532.7

1,408.7

 

2021

2020

Other administrative expenses

 

 

  • IT costs

19,398

16,965

  • external administration costs

11,641

11,028

  • fees for advice

15,721

7,470

  • advertising charges

8,947

6,435

  • office costs

6,170

5,686

  • accommodation expenses

5,283

5,525

  • fees for independent auditor

2,439

2,663

  • travel and lodging expenses

931

1,180

  • other expenses

7,809

8,471

Other operating administrative expenses

78,339

65,423

 

 

 

Regulatory expenses

20,455

16,649

Total other administrative expenses

98,794

82,072

 

 

 

Operating expenses/total income

80%

80%

Operating expenses excluding regulatory expenses/total income

75%

75%

Pension expenses

 

2021

2020

Pension expenses, defined contribution schemes

13,143

11,893

Pension expenses, defined benefit pension schemes

-

-

Total pension expenses

13,143

11,893

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 112,189.

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 42% 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 3.3% of the salary and the employer's contribution is 6.7%. 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.

2021

PWC

Other

 

Total

 

Accountants N.V.

PwC network

 

PwC network

Audit of the financial statements

1,610

592

 

2,202

Other audit-related engagements

120

117

 

237

Tax-related advisory services

-

-

 

-

Other non-audit services

-

-

 

-

Total

1,730

709

 

2,439

 

 

 

 

 

2020

PWC

Other

 

Total

 

Accountants N.V.

PwC network

 

PwC network

Audit of the financial statements

1,525

609

 

2,134

Other audit-related engagements

390

255

 

645

Tax-related advisory services

-

-

 

-

Other non-audit services

-

-

 

-

Total

1,915

864

 

2,779

The decrease of the audit fees is a result of completing the implementation of IFRS EU during 2020. These costs were non-recurring for 2021 and future years.

Our independent auditor, PwC Accountants N.V., has rendered, for the period to which our statutory audit 2021relates, 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 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 Deposit Guarantee Scheme reporting to the Dutch Central Bank

Other audit services:

  • Assurance engagement on the sustainability report

  • ISAE type II engagement relating to Triodos Investment B.V.

  • Assurance engagement on credit claims to the Dutch Central Bank

  • Assurance engagement on credit claims to the Spanish Central Bank

  • Comfort letter Green bond issue

  • Agreed upon procedures on total assets reported to the ECB

  • Review engagement on the interim condensed consolidated financial statements as of and for the six month period ended 30 June 2021

Regulatory expenses

The regulatory expenses can be broken down as follows:

 

2021

2020

Bank tax

3,557

3,273

Depository Guarantee Scheme

15,721

12,196

Single resolution fund

1,177

1,180

Total regulatory expenses

20,455

16,649

Depreciation, amortisation and value adjustments of property and equipment, and intangible assets

 

2021

2020

Amortisation of intangible fixed assets

11,687

10,646

Impairment of intangible fixed assets

333

-

Amortisation & impairment charge for the year

12,020

10,646

 

 

 

Depreciation of property and equipment

12,140

12,812

Impairment of property and equipment

2,318

5,244

Depreciation & impairment charge for the year

14,458

18,056

Depreciation & impairment charge has decreased, due to an one-off item in 2020. The impairment in 2020 related to the sale of the office buildings located at the Nieuweroordweg 1 and Utrechtseweg 60 in Zeist, where Triodos Head Office was located.

Impairment result on financial instruments

 

2021

2020

Allowance for expected credit loss

-500

23,915

Modification result1

-

7

Other impairments financial instruments

80

291

Impairment result on financial instruments for the year

-420

24,213

1

Modification result will be shown in Other income as of 2021, refer to section 26 Other income

Taxation on operating result

Total taxation expense

 

2021

2020

Taxation to be paid

13,836

10,583

 

 

 

Origination and reversal of temporary differences

2,402

-3,101

Changes in tax rates

152

791

Deferred taxation

2,554

-2,310

 

 

 

Total taxation expense

16,390

8,273

Current tax receivable and payable

 

2021

2020

Corporate tax receivable

1,364

1,388

Other tax receivable

366

376

Current tax receivable

1,730

1,764

 

2021

2020

Corporate tax payable

5,740

5,283

Other tax payable

7,132

11,257

Current tax payble

12,872

16,540

Amounts recognised in OCI

 

 

2021

 

 

2020

 

 

Before tax

Tax (-expense) benefit

Net of tax

Before tax

Tax (-expense) benefit

Net of tax

Other comprehensive income that will not be reclassified to profit or loss

 

 

 

 

 

 

Revaluation gains/(losses) on equity instruments designated at fair value through other comprehensive income

2,784

-677

2,107

-4,821

1,161

-3,660

 

 

 

 

 

 

 

Other comprehensive income that will be reclassified to profit or loss

 

 

 

 

 

 

Foreign operations – foreign currency translation differences

-97

-

-97

-1,031

-

-1,031

Foreign operations – Cost of hedging

172

-

172

-178

-

-178

Total items that will be reclassified to profit or loss

75

-

75

-1,209

-

-1,209

 

 

 

 

 

 

 

Total amounts recognised in OCI

2,859

-677

2,182

-6,030

1,161

-4,869

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

 

2021

2020

Result before taxation

67,149

35,476

Statutory tax rate

25.0%

25.0%

 

 

 

Statutory tax amount

16,787

8,869

 

 

 

Income Non Taxable

-222

-401

Tax Deduction Not Expensed

-

-

Expenses Non Deductible

1,338

1,146

Impact tax rate differences - statutory rate foreign jurisdictions

-327

-656

Restatement of deferred taxation items as the result of amended tax rates

152

791

Incentives for gifts, community investment and innovation

-1,408

-1,084

Other reconciling items

70

-392

Effective tax amount

16,390

8,273

 

 

 

Effective tax rate

24.4%

23.3%

Triodos Bank’s approach to tax reflects its values. It sees paying taxes not as a burden, but as a contribution to the societies that the bank operates in. As such, Triodos Bank is not striving to reduce the effective tax rate. Triodos Bank is subject to income taxes in other jurisdictions which levy corporate income tax at different rates compared to the Dutch statutory rate (25%). Additionally, local taxation rules can also lead to differences in the effective tax rate. The effective tax rate amounted to 24.4% in 2021 (2020: 23.3%).

Movement in deferred tax balances

2021

 

 

 

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

-4,860

-1,520

-

-6,380

1,879

8,259

Investment securities at FVOCI

665

-134

-677

-146

-57

89

Effective interest method application

4,543

248

-

4,791

2,766

-2,025

Allowance for expected credit losses

3,228

-1,104

-

2,124

1,466

-658

Employee benefits

181

12

-

193

-

-193

Lease liability

128

-5

-

123

59

-64

Loan modifications

47

-9

-

38

37

-1

Tax losses carried forward

6,118

-82

-

6,036

7,084

1,048

Other

480

40

-

520

383

-137

Tax assets (liabilities)

10,530

-2,554

-677

7,299

13,617

6,318

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 - Vitality leave

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

Deferred tax balances

 

2021

2020

 

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Current balance

233

1,002

1,300

-219

Non-current balance

13,384

5,316

13,564

4,556

Total

13,617

6,318

14,864

4,337

The deferred tax asset relates for an amount of EUR 6.4 million (2020: EUR 6.8 million) to tax losses incurred by the German branch for which it is expected that these will be fully recovered against future taxable profits. 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 1.0 million (2020: 1.4 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 Bank 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

Commission income

59,910

 

Commission expenses

5,009

 

Deposits

81,783

 

Interest income

872

 

Loan facilities and loan commitments (off balance)

132,934

 

Loans

37,094

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, Triodos SICAV II (TMF), Legal Owner Triodos Funds B.V., Sun Roof Limited and to several related parties from the Spanish branch.

The EUR 10 million loan provided to Hivos-Triodos Fund Foundation matures on January 1, 2027 and has an interest rate of 3.15%. Furthermore, Hivos-Triodos Fund Foundation has drawn EUR 3.5 million from an overdraft facility with an agreed limit of EUR 10 million and an interest rate of 2.75%. The loan provided to Triodos SICAV II (TMF) is EUR 4.4 million, matures on September 13, 2022 and has an interest rate of 1.010%. The EUR 2.2 million loan provided to Legal Owner Triodos Funds B.V. has a maturity date of March 31, 2022 and has an interest rate of 1.674%.

Furthermore, the EUR 231 loan provided to Sun Roof Limited matures on November 10, 2027 and has an interest rate of 6.5%. A total of EUR 16.8 million has been provided as loans to several related parties from the Spanish branch, including a EUR 5.8 million loan to CARPIO FOTOVOLTAICA, S.L.U. (maturity date of January 1, 2033 and an interest rate of 2.85%), a EUR 9.3 million loan to LUCENTUN ENERGIA S.L. (maturity date of January 1, 2034 and an interest rate of 3.85%), a EUR 862 loan to GSI NEROSOL, S.L. (maturity date of January 1, 2025 and an interest rate of 0.765%) and a total of EUR 859 loans (maturity date of January 1, 2025 and an interest rate of 0.751%) to other several related parties.

Loan commitments and facilities off balance

The loan commitments and facilities are off balance sheet credit facilities of Triodos Bank the Netherlands branch 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 Stichting Administratiekantoor Aandelen Triodos Bank ("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:

 

2021

2020

Fixed salary expenses

1,131

1,091

Pension expenses

99

90

Pension allowance for salary above EUR 100.000

128

136

Private use company car

12

4

Social security expenses

53

48

Severance payment1

264

320

Total key management personnel compensation

1,687

1,689

1

In consultation with the Supervisory Board Jellie Banga stepped down from her position as a Member of the Executive Board of Triodos Bank N.V. as per 1 May 2021. A severance payment of 100% of her yearly salary was granted. Also in consultation with the Supervisory Board, Peter Blom stepped 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 in 2020 and paid out in 2021. Both severance payments are in line with applicable regulations

Other emoluments of the Executive Board:

 

2021

2020

Total other emoluments

-

38

The other emoluments relate to costs associated with relocation to the Netherlands.

Remuneration paid to the Supervisory Board:

 

2021

2020

Total compensation

179

172

Remuneration paid to the Board of SAAT

 

2021

2020

Total compensation

46

41

Loans and advances to key management personnel

 

2021

2021

2021

2020

2020

2020

 

Amount

Average

 

Amount

Average

 

 

outstanding

interest rate

Repayments

outstanding

interest rate

Repayments

Jellie Banga

 

 

 

421

1.7%

12

The table presents the loans and advances provided to Executive Board members that were outstanding on 31 December 2021 and 2020. Since Jellie Banga was no longer an Executive Board member on 31 December 2021, there is no information included for 2021. 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

Fitch Ratings (Fitch) announced on 4 February 2022 it has affirmed the Long-Term Issuer Default rating of Triodos Bank at ‘BBB’ with a stable outlook and has affirmed the Viability Rating of Triodos Bank at ‘bbb’. Fitch’s rating analysis was done at the request of Triodos Bank. 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.

The current CRO, Carla van der Weerdt, is expected to require a recovery period of up to 12 months from the health impact of long COVID-19. Triodos Bank will seek a temporary statutory replacement for this role in the Executive Board. Pending the search and approval process for a temporary statutory replacement, André Haag (Chief Finance Officer) currently assumes the statutory oversight responsibility for the Risk function of Triodos Bank, similar to the period June to October 2021. Due to her absence she was not able to sign these financial statements.

The invasion of Ukraine by Russia at the end of February 2022 presents new uncertainty. As the war started in 2022, it has no effect on the financial position presented as per 31 December 2021. The impact on the short term and the longer term on society and financial markets is hard to predict at this moment of publication of our annual report. Triodos Bank does not have direct exposure in Russia, but we anticipate that the effects on society and financial markets will amongst others influence management fees and Expected Credit Losses.