Loans and advances to customers

Loans and advances to customers at amortised cost:

The Expected Credit Loss allowance (ECL) 2022 is 0.48% of the total loan portfolio gross carrying amount at 31 December 2022 (31 December 2021: 0.48%).

The annual incurred loss rate, which is the stage 3 impairment expense over the average loan book per 31 December 2022, is 8bps (2021: 6bps).

The movements of the ECL of Loans and Advances to customers for 2022 is presented below. A further breakdown of the movements of the ECL, split between ECL on business loans and current accounts and ECL on mortgages, including comparatives is included within the current disclosure.

The total ECL provision of EUR 49.0 million per 31 December 2021 increased by EUR 2.2 million to EUR 51.2 million per 31 December 2022 due to an increase in Stage 2 of EUR 2.3 million and an increase in Stage 3 of EUR 2.3 million which was offset by a decrease in Stage 1 of EUR 2.4 million. The decrease in Stage 1 is mainly caused by the decrease of EUR 2.6 million due to more favourable macro-economic forward looking parameters compared to 2021. This is partly offset by a net increase of EUR 2.3 million due to transfers from a one-year expected credit loss in Stage 1 to a lifetime expected credit loss in Stage 2 and Stage 3, and an increase in Stage 3 of EUR 8.1 million, offset by write-offs of EUR 5.4 million. This has resulted in a net loss in the profit or loss account of EUR 8.1 million (2021: a net gain EUR 7 thousand).

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

The movement of the ECL of Loans and Advances is further split below between the movement of the ECL for Business loans and current accounts and the movement of the ECL for Mortgages.

The following table shows the movements within the ECL for business loans and current accounts. The allowance for expected credit losses in this table includes ECL on off-balance sheet loan commitments for certain retail products such as credit cards and overdrafts, because Triodos Bank determines the ECL per exposure, including any loan commitment component.

The following table shows the movements within the ECL for mortgage loans.

Loans and advances to customers classified by residual maturity:

A total amount of EUR 5.6 million (2021: EUR 9.4 million) of the loans and advances to customers is subordinated.

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.