Interest income
Amounts in thousands of EUR | 2022 | 2021 |
|---|---|---|
Loans and advances to customers | 244,948 | 212,530 |
Loans and advances to banks | 15,304 | 341 |
Debt securities at amortised cost | 11,556 | 10,597 |
Negative interest expense on TLTRO III | 9,757 | 13,703 |
Negative interest expense deposits from customers | 5,683 | 6,441 |
Other interest income | 631 | 2,708 |
Total interest income | 287,879 | 246,320 |
The interest income includes income derived from loans and related transactions, as well as related commissions, which by their nature are similar to interest payments. The interest income on debt securities at amortised cost includes no sales result in 2022 (2021: EUR -236.0 thousand).
The negative interest expense on TLTRO III relates to the negative interest on the TLTRO III funding received from the ECB under Deposits from banks (refer to note 13 on page Deposits from banks).
Accounting policy
Interest income on financial instruments is determined using the effective interest rate method. The effective interest rate allocates the interest income over the expected life of the asset or liability at the rate that exactly discounts all estimated future cash flows to equal the instrument's initial carrying amount.
Calculation of the effective interest rate takes into account fees payable or receivable that are an integral part of the instrument's yield, and transaction costs. All contractual terms of a financial instrument are considered when estimating future cash flows.
Triodos Bank calculates interest income on financial assets, other than those considered credit-impaired, by applying the effective interest rate to the gross carrying amount. When a financial asset becomes credit impaired and is therefore regarded as 'Stage 3', the interest income is calculated by applying the effective interest rate to the net amortised cost.
Interest expense
Amounts in thousands of EUR | 2022 | 2021 |
|---|---|---|
Deposits from customers | -12,070 | -5,674 |
Subordinated liabilities | -6,297 | -1,194 |
Deposits from banks | -1,041 | -663 |
Negative interest income loans and advances to banks | -8,175 | -13,598 |
Negative interest income debt securities | -1,463 | -1,009 |
Other interest expense | -5,743 | -2,712 |
Total interest expense | -34,789 | -24,850 |
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Net interest income | 253,090 | 221,470 |
During 2022, interest rates on deposits from customers increased resulting in a sharp increase in interest expense on deposits from customers.
Negative interest income loans and advances to banks mainly relates to negative interest paid on cash at central banks up to July 2022. The decrease is caused by the increase in the ECB deposit rate from -0.5% to a positive deposit rate. The positive interest received on cash held at central banks is recorded in interest income.
In the other interest expense, a total of EUR 3.7 million (2021: EUR 1.3 million) was included for the interest on currency forward contracts.
Accounting policy
Interest expense on financial instruments is determined using the effective interest rate method. The effective interest rate allocates the interest expense over the expected life of the asset or liability at the rate that exactly discounts all estimated future cash flows to equal the instrument's initial carrying amount.
Investment income
Amounts in thousands of EUR | 2022 | 2021 |
|---|---|---|
Dividend from investment securities | 616 | 310 |
Investment income | 616 | 310 |
Accounting policy
Investment income includes the dividend income from investments in equity instruments designated at fair value through other comprehensive income (FVOCI). Dividend income is recognised when the right to receive income is established. Usually, this is the ex-dividend date for quoted equity securities. Dividends on equity instruments designated as at FVOCI that clearly represent a recovery of part of the cost of the investment are presented in OCI.
Net fee and commission income
Disaggregation of fee and commission income
In the following table, fee and commission income from contracts with customers in the scope of IFRS 15 is disaggregated by major type of services. The table also includes a reconciliation of the disaggregated fee and commission income with the Group’s reportable segments.
The fees and commission presented in this note include income of EUR 15.7 million (2021: EUR 14.0 million) relating to financial assets and financial liabilities not measured at FVTPL. These figures exclude amounts incorporated in determining the effective interest rate on such financial assets and financial liabilities.
Asset management fees include fees earned by Triodos Bank on trust and fiduciary activities in which the Triodos Bank holds or invests assets on behalf of its customers.
For the year ended 31 December | Reportable segments |
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| Bank Netherlands | Bank Belgium | Bank United Kingdom | Bank Spain | Bank Germany | Total banking activities | Investment Management | Other | Total | |||||||||
Amounts in thousands of EUR | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Transaction fee securities | 1,249 | 1,318 | - | - | - | - | - | 1 | - | - | 1,249 | 1,319 | - | - | - | - | 1,249 | 1,319 |
Payment transactions1 | 24,415 | 23,974 | 121 | 105 | 187 | 175 | 4,004 | 3,309 | 2,634 | 2,007 | 31,361 | 29,570 | - | - | - | - | 31,361 | 29,570 |
Lending | 6,760 | 5,037 | 2,076 | 2,340 | 1,550 | 1,837 | 2,715 | 2,629 | 1,940 | 1,302 | 15,041 | 13,145 | - | - | - | - | 15,041 | 13,145 |
Asset Management1 | 12,230 | 12,822 | 2,493 | 2,745 | - | - | - | - | 491 | - | 15,214 | 15,567 | - | - | - | - | 15,214 | 15,567 |
Management fees | - | - | 3,442 | 3,266 | 844 | 615 | 315 | 269 | 65 | - | 4,666 | 4,150 | 59,160 | 54,383 | 1,476 | 1,482 | 65,302 | 60,015 |
Other commission income | - | - | - | 1 | 2,550 | 2,297 | 2,934 | 3,581 | 1 | 764 | 5,485 | 6,643 | - | - | 3 | 4 | 5,488 | 6,647 |
Total fee and commission income from contracts with customers | 44,654 | 43,151 | 8,132 | 8,457 | 5,131 | 4,924 | 9,968 | 9,789 | 5,131 | 4,073 | 73,016 | 70,394 | 59,160 | 54,383 | 1,479 | 1,486 | 133,655 | 126,263 |
Financial guarantee contracts and loan commitments | 68 | 73 | - | - | - | - | 362 | 383 | 204 | 393 | 634 | 849 | - | - | - | - | 634 | 849 |
Total fee and commission income | 44,722 | 43,224 | 8,132 | 8,457 | 5,131 | 4,924 | 10,330 | 10,172 | 5,335 | 4,466 | 73,650 | 71,243 | 59,160 | 54,383 | 1,479 | 1,486 | 134,289 | 127,112 |
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Commission to agents | - | - | -34 | -289 | - | - | -5 | -6 | - | - | -39 | -295 | - | - | - | - | -39 | -295 |
Asset Management | -441 | -916 | - | - | - | - | - | - | - | - | -441 | -916 | -4,532 | -3,654 | - | - | -4,973 | -4,570 |
Other commission expense | - | - | -1,472 | -651 | -2,322 | -1,774 | -2,680 | -2,450 | -1,533 | -1,259 | -8,007 | -6,134 | -218 | -65 | -149 | - | -8,374 | -6,199 |
Total fee and commission expense | -441 | -916 | -1,506 | -940 | -2,322 | -1,774 | -2,685 | -2,456 | -1,533 | -1,259 | -8,487 | -7,345 | -4,750 | -3,719 | -149 | - | -13,386 | -11,064 |
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Net fee and commission income | 44,281 | 42,308 | 6,626 | 7,517 | 2,809 | 3,150 | 7,645 | 7,716 | 3,802 | 3,207 | 65,163 | 63,898 | 54,410 | 50,664 | 1,330 | 1,486 | 120,903 | 116,048 |
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Accounting policy
Fee and commission income from contracts with customers is measured based on the consideration specified in a contract with a customer. Triodos Bank recognises income when it transfers control over a service to a customer. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and the related income recognition policies.
Type of service | Nature and timing of satisfaction of performance obligations, including significant payment terms | Income recognition | ||||||
|---|---|---|---|---|---|---|---|---|
Transaction fee securities | Fee charged to customers for processing security transactions. Fee is charged when the transaction is settled. | Income related to transactions is recognised at the point in time when the transaction takes place. | ||||||
Payment transactions: | Fee charged for opening and maintaining current and savings accounts. Fee is charged on a monthly basis for each month the account is active. | Income related to transactions is recognised at the point in time when the transaction takes place. | ||||||
Payment transactions: | Fee charged for processing payment transactions of customers. Fee is charged when the transaction is processed. | Income related to transactions is recognised at the point in time when the transaction takes place. | ||||||
Lending | Fee charged as part of the lending process, not an integral part of the effective interest rate. These fees are charged either at the start of the loan of during the lifetime. | Income related to transactions is recognised at the point in time when the transaction takes place. | ||||||
Asset Management | Asset management fees include fees earned by Triodos Bank on trust and fiduciary activities in which the Triodos Bank holds or invests assets on behalf of its customers. Payment is due on at least quarterly basis. | Income from account service and servicing fees is recognised over time as the services are provided, at the latest on the moment of payment. | ||||||
Management fees | Asset management fees include fees earned by Triodos Investment Management on asset management activities for clients or Triodos Investment Funds. Payment is due on at least quarterly basis. | Income from account service and servicing fees is recognised over time as the services are provided, at the latest on the moment of payment. | ||||||
Other | These are other fees charged to clients. Payment is mostly due when transactions are settled. | Income related to transactions is recognised at the point in time when the transaction takes place. | ||||||
Net result from other financial instruments at FVTPL
Amounts in thousands of EUR | 2022 | 2021 |
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Hedge accounting ineffectiveness | 1,245 | 34 |
Fair value movement of derivatives not yet in a hedge relationship | -1,461 | 1,017 |
Fair value movement of participating debt at fair value through profit or loss | 116 | 986 |
Net result from other financial instruments at FVTPL | -100 | 2,037 |
For further details on hedge accounting, refer to Non-trading derivatives and hedge accounting within the risk management section.
Accounting policy
Net result from other financial instruments at FVTPL includes the fair value movements of derivatives not yet designated in a hedge relationship, ineffectiveness related to hedge accounting, transactions results on foreign exchange forwards and net result on investments in debt instruments designated at fair value through profit o loss, including the related interest income.
Other income
Amounts in thousands of EUR | 2022 | 2021 | |||||||
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Exchange results for foreign currency transactions | 39 | -44 | |||||||
Transaction results on currency forward contracts | 17 | 23 | |||||||
Realised results assets not in use1 | 219 | 1,225 | |||||||
Income assets not in use1 | 70 | 183 | |||||||
Modification result | 268 | 27 | |||||||
Other income | 183 | 652 | |||||||
Total other income | 796 | 2,066 | |||||||
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For further information on the hedge accounting ineffectiveness, please refer to Non-trading derivatives and hedge accounting .
The other income relates to fees for other services performed and results from asset disposals.