Triodos Bank provides values-based financial services that reach hundreds of thousands of business and personal customers across Europe, growing sustainable banking’s impact and scale. While Triodos Bank’s values bind customers and co-workers, there are important differences between countries. Regulations, tax incentives and government approaches to sustainability are sometimes markedly different. Local culture, within and between countries, also affects how Triodos Bank approaches its work.
Developments in 2022
Framework agreement with ABS
In 2022, we signed a participation framework agreement with fellow GABV member Alternative Bank Switzerland (ABS) with the aim of jointly financing sustainable businesses. Triodos Bank will originate lending opportunities to build up a shared portfolio of up to EUR 300 million, with a focus on renewable energy, sustainable property, organic farming, health and education. This enables Triodos Bank to increase our positive societal and environmental impact as we can realise larger projects in our lending activities.
InvestEU agreement for social enterprises
At the end of 2022 Triodos Bank signed an agreement with the European Investment Fund for a guarantee instrument to apply on financing opportunities to social enterprises. This guarantee is part of the InvestEU programme of the European Union, allowing us to offer improved financing conditions to social initiatives in Belgium, Germany, Spain and the Netherlands with a total volume up to EUR 67 million. This is the third agreement in our cooperation with the European Investment Fund, next to existing portfolios for guaranteed lending to social enterprises (EUR 130 million) and for clients active in the cultural and creative sectors (EUR 200 million).
Triodos Bank specialises in sustainable mortgages. The more energy-efficient a house, the lower the mortgage interest rate. As the next step in sustainability Triodos Bank launched the Bio-based Mortgage in June 2022. This is a mortgage in which the interest rate is linked to the choice of materials for the home: those who use the money to buy or build a bio-based home receive an extra low interest rate. With this Bio-based Mortgage, a first in the Netherlands, the bank is taking a new step in making the housing market more sustainable by reducing the carbon footprint.
Adjustment to national lending standards
Triodos Bank is involved in the public debate about the Dutch lending standards of the housing market. We have been advocating for years now for an integration of monthly mortgage and energy costs. On an individual basis we have set the limit to 90% financing if the house is not energy efficient. Important elements of our vision will be implemented in the Dutch national lending standard as of January 2024 for the mortgage sector in the Netherlands.
Triodos Bank is expanding the retained residential mortgage-backed securitisation (RMBS) Sinopel 2019 to increase its liquidity resilience. This supports the bank to use more of its funds entrusted for sustainable loans, creating additional positive impact.
The first RMBS was launched in 2019 to gain additional access to potential central bank liquidity and has a current volume of EUR 799 million, collateralised by Dutch residential mortgages. This is now increased to EUR 1.6 billion. DBRS Ratings GmbH (DBRS Morningstar) confirmed its AAA (sf) rating on the Class A notes issued by Sinopel 2019 B.V. (the issuer), following this amendment.
The RMBS is a retained transaction, with Triodos Bank maintaining full ownership of the notes. The mortgages remain on the balance sheet of Triodos Bank and all economic benefits of the underlying mortgage loans remain with Triodos Bank. Clients with a mortgage loan will continue to be served by Triodos Bank.
The overall growth of the loan portfolio amounted to EUR 452 million (or 4%) in 2022. This includes the growth of the residential mortgage portfolio by EUR 826 million (or 23%). The largest growth in business loans was in the production and environmental technology sectors. Overall however, business loans decreased 6% (2021: 2% increase).
The low interest rate environment during a part of 2022 encouraged customers to refinance at lower rates and to pay back their credit facilities earlier than planned during the first part of 2022. This had a downward effect on the volume of the business loans and interest margins.
The graphs in the section Loans and funds’ investments by transition theme show the relative volume of our lending and investment portfolio.
More people want to use their money consciously to deliver positive change by depositing and investing with Triodos Bank. This reflects a wider trend in society and increasing interest in sustainability in general and sustainable finance in particular. Funds entrusted, including savings, enable Triodos Bank to finance companies and organisations that benefit people, the environment and culture. The overall growth of the funds entrusted amounted to EUR 531 million (or 4%) in 2022, which was mainly driven by a growth in funds entrusted by business clients (EUR 405 million).
Triodos Bank’s banking entities offer a variety of sustainable financial products and services as part of its key strategic objective of offering services that allow customers to participate in the transition to sustainable finance.
Continuing growth in all the countries where Triodos Bank operates is due in part to more efficient and customer-friendly account opening processes, and a receptive market keen to use their money more consciously.
Prospects for Retail and Business Banking
Triodos Bank expects to grow its bank balance sheet modestly, maintaining a stable loan-to-deposit ratio and total capital ratio. It aims to grow its fee income.
The bank will focus on the impact, profitability and diversification of its loan portfolio. We will put extra effort into identifying loans to frontrunners in their fields, the entrepreneurs developing the sustainable industries of the future. There are significant opportunities for Triodos Bank as a frontrunner in responsible finance. With a controlled growth strategy, we aim to generate maximum impact and stable profit levels.