Triodos Bank’s impact in 2022 in brief:

• 611 projects co-financed in the sustainable energy sector, with a total generating capacity of 9100 MW, producing the equivalent of the electricity needs of 7.4 million households worldwide.
• 1,048 ktonnes of CO2e emissions avoided as a result of sustainable energy projects financed by Triodos Bank.
• Financed the equivalent of 29.5 million meals produced by the organic farming sector.
•  Financed 33,900 hectares of nature, conservation land and sustainable forestry, representing around 450 m2 land per customer, which is important for the sequestration of CO2 from the atmosphere.
• 20.3 million borrowers and 19.9 million savers were provided with access to financial services via inclusive finance in emerging markets through its investment funds.
• 22,000 people provided with accommodation via social housing projects financed.
• Triodos Bank Netherlands launched the biobased mortgage and Triodos Investment Management launched the TriodosFuture Generations Fund.
• Partnership with European Investment Fund (EIF) for EUR 67 million in guaranteed lending for social and cultural enterprises. Triodos Bank now has three partnerships with the EIF totalling up to EUR 400 million in guaranteed lending to social and cultural enterprises.

Key financial performance information:

• Driven by accelerated performance in the second half of the year, Triodos Bank reports a net profit of EUR 49.9 million for the year 2022. This includes the provisions related to the restructuring of the Triodos Bank operating model and expenses related to the Multilateral Trading Facility (MTF) listing and Depository Receipt (DR) litigations, impacting profit by EUR 14.6 million after tax. In 2021 Triodos Bank reported a net profit of EUR 50.8 million.
• Our performance in 2022 was supported by higher income of EUR 375.3 million driven by lending growth and improving interest margins (full year 2021: EUR 341.9 million).
• Sustainable lending increased by EUR 452 million in 2022 to EUR 10.6 billion at the end of December 2022 (December 2021: EUR 10.2 billion), with a continued focus on high credit quality and a geographically well diversified loan portfolio.
• Total Assets under Management decreased by EUR 1.6 billion over the last 12 months to EUR 22.6 billion per end December 2022 (full year 2021: EUR 24.2 billion) mainly caused by the repayment of the TLTRO III funding of EUR 1.6 billion, and by a decrease of our funds under management due to market circumstances by EUR 0.9 billion in 2022 to EUR 6.8 billion per end of December 2022 (full year 2021: EUR 7.7 billion).
• Triodos Bank reports a Return-on-Equity (RoE) of 4.0% (full year 2021: 4.1%). When excluding the provision for the restructuring (EUR 5.0 million pre-tax) and the expenses related to the MTF listing and DR litigations (EUR 13.9 million pre-tax) the RoE comes to 5.1%. Triodos Bank increases its medium term RoE target to 5-7% from 4-6%.
• The Cost-Income-Ratio (CIR) remained stable at 80%for the full year 2022 (full year 2021: 80%), including the provision for the restructuring and the expenses related to the MTF listing and DR litigations. Excluding these expenses, the CIR comes to 75%. The CIR developed positively in the second half of the year.
• Our customer community remained stable at 744,477 (December 2021: 747,413).
• Triodos Bank’s capital ratios remain resilient with a CET-1 ratio of 17.3% and a TCR of 21.0% in 2022 (full year 2021: 17.5% for the CET-1 ratio and 21.3% for the TCR).
• The totaldividend over 2022 amounts to EUR 2.11 per Depository Receipt (DR) (2021: EUR 1.80) excluding the extraordinary dividend of EUR 1.01 per DR. The ordinary dividend includes the earlier paid interim dividend of EUR 0.35 and a final dividend of EUR 1.76 per DR that Triodos Bank will propose at the Annual General Meeting in May 2023.

Read our Integrated Annual Report 2022 and Pillar 3 Report 2022.

Jeroen Rijpkema, Chair of the Executive Board and CEO of Triodos Bank commented:

“While the COVID-19 pandemic eased during 2022, the world faced challenges on other fronts such as the devastating war in Ukraine, rising costs, high inflation, climate change and inequality, exposing the vulnerability of our economic and social systems. In these challenging circumstances, Triodos Bank continued to successfully focus on combining its pursuit of growing positive societal impact with sound financial performance.

Our mission remains as relevant as ever to help create a prosperous life for people on a thriving planet. In 2022, we reaffirmed our frontrunner role in the financial sector with, for instance, the launch of our biobased mortgage and the Triodos Future Generations Fund.

Our positive impact can only be achieved thanks to the ongoing support from our community of customers and investors, who encourage us to tackle today’s societal issues. It is backed by our sound financial performance, which was bolstered by rising interest rates in the second half of 2022.

The return to positive interest rates marks the end of a challenging periodthrough whichwe navigated well. The normalisation of the interest rate environment is a welcome development for our future performance, especially as a values-based bank with a unique focus on sustainability and based on the premise that customers are willing to let their savings work through us towards a more sustainable society.

Finally, we also made good progress with the implementation of our decision to pursue a listing of our Depository Receipts on an MTF and in making our organisation more efficient and effective to further grow our positive impact.”

Positive Impact
The current geopolitical, environmental and societal challenges make clear that an integrated and coordinated approach is needed to create a prosperous life for people on a thriving planet. In 2022, Triodos Bank identified five interlinked transition themes: food, resource, energy, society and wellbeing. Triodos Bank wants to enable and accelerate these vital transitions, to address key societal and environmental issues - including biodiversity loss, social inequality and climate change - and improve life for all.

This should be seen in the context of our #AsOneToZero ambition to be net-zero by 2035. In 2022 Triodos Bank set an intermediate target to reduce net emissions by 32% in 2030 across the entire loans and funds’ investments portfolios. In a context of portfolio growth, Triodos Bank expects net absolute emissions to be relatively stable until 2025 and to start declining from then onwards because of our sequestration (capturing and storing carbon dioxide through natural processes) investments and our reduction efforts diminishing the carbon intensity of portfolios.

The impact of our Green Subordinated Tier 2 Bond, as outlined in our first green bond report, made a strong contribution to this ambition. Using the proceeds, 77 projects were funded in the renewable energy sector, together producing the equivalent of the annual electricity needs of approximately 122,600 European households. Approximately 1,275 hectares of nature and conservation land and forestry in Europe were funded, which is important for sequestration.

Addressing the loss of biodiversity is a priority. Next to publishing a white paper on the topic,we actively engaged with European policymakers on the new Deforestation Regulation. We also launched the first-ever bio-based mortgage proposition in the Netherlands, stimulating homeowners to use ecological building materials and offering a reduced interest rate for bio-based homes.

The Triodos Future Generations Fund was launched by Triodos Investment Management. It is a thematic fund aimed at improving the wellbeing and development of children worldwide. The whole of Triodos Investment Management stands out with all its funds classified as Article 9 funds, the most sustainable category defined by the Sustainable Finance Disclosure Regulation.

Triodos Bank announced an agreement with Alternative Bank Switzerland (ABS) to jointly finance up to EUR 300 million in the areas of renewable energy, sustainable property, organic farming and the health and educational sectors, primarily in the Netherlands, Belgium, and Germany. At the end of 2022 Triodos Bank signed a partnership with the European Investment Fund (EIF) providing up to EUR 67 million in guaranteed loans to social enterprises. This is the third agreement in Triodos Bank’s cooperation with the EIF, totalling up to EUR 400 million in guaranteed lending to social and cultural enterprises.

We collaborated with several other financial institutions to actively advocate against the decision of the European Union to classify natural gas and nuclear energy as sustainable in the new taxonomy. Triodos Bank is of the opinion that investors are entitled to a fully sustainable, non-compromised green taxonomy.

Our business model was vetted last year against the strict international requirements of social and environmental performance, accountability and transparency set by the international organisation B Corp, of which we have been a member since 2015. Our recertification resulted in a score of 131.3 (the worldwide average is 93.9). B Corp applauded our governance, how we measure the positive impact of our financing and how we support local communities. We are encouraged to further increase the diversity of our own organisation to further improve our score.

Banking activities
Triodos Bank’s financing activities are exclusively focused on assets with a clear social, cultural or environmental impact, supporting our net-zero ambition for the core asset portfolio. The overall growth of the loan portfolio amounted to EUR 452 million (plus 4%) in 2022. In 2022 our loan portfolio was rebalanced in favour of residential mortgages: our residential mortgage portfolio grew by EUR 826 million (plus 23%) and our portfolio of business loans decreased by 6% (2021: increase 2%). The balance sheet provision for expected credit losses (ECL) increased by EUR 1.5 million to EUR 53.0 million per end of December 2022 (2021: EUR 51.5 million).  

Triodos Bank’s funds entrusted increased by EUR 0.5 billion in 2022, which resulted in an overall position of EUR 13.8 billion (end of 2021: EUR 13.3 billion). The loans-to-funds entrusted ratio increased to 76.9% in 2022 (end of 2021: EUR 76.5%).

The bank’s total operating expenses (excluding loan impairments) increased by EUR 24.9 million to EUR 300.1 million in 2022 (2021: EUR 275.2 million), mainly due to additional co-worker expenses for compliance and anti-money laundering, costs associated with the preparation of the MTF listing and litigation costs in relation to our DRs (EUR 13.9 million) and the restructuring provision (EUR 5.0 million). These expense drivers impacted our short-term ability to further improve our CIR. Over 2022 the bank reports a CIR of 80% (2021: 80%). The bank will continue to focus on realising cost synergies while managing regulatory cost increases.

Triodos Bank reports a net profit of EUR 49.9 million after tax for 2022, which is EUR 0.9 million lower than the same period last year (EUR 50.8 million) caused by the provision for the restructuring and the expenses related to the MTF listing and DR litigations. Adjusted for these expenses, the net profit amounts to EUR 64.5 million after tax for 2022, which is EUR 13.7 million higher than the same period last year (EUR 50.8 million). In 2022, the sources of net profit were further diversified: Retail and Business Banking (including Private Banking) contributed a share of 83% to the bank’s overall net profit (2021: 88%).

Triodos Investment Funds
Triodos Investment Management achieved a net profit of EUR 8.4 million, which accounts for 17% of Triodos Bank’s overall net profit, compared to a net profit of EUR 6.3 million (12% of Triodos Bank’s overall net profit) in 2021. Triodos Investment Management only manages Article 9 funds. Although the majority of these funds continued to see inflow in 2022, the overall assets under management decreased by 13% compared to the year-end of 2021 (EUR 6.4 billion) to EUR 5.5 billion. This was mainly the result of market circumstances impacting the value of the underlying investments despite the high quality of the funds’ portfolios.

The investment funds publish separate annual reports, and most have their own Annual General Meeting. Details can be found at www.triodos-im.com.

Equity
The bank’s equity position increased by EUR 9 million to EUR 1,259 million per December 2022 (2021: EUR 1,250 million) thanks to the result of 2022 minus the dividend pay-outs in May and October 2022. The underlying CET-1 capital remained strong at 17.3% (2021: 17.5%). The total capital ratio also remained strong at 21.0% (2021: 21.3%).

During 2022 we made good progress with the implementation of our decision to pursue a listing of our DRs on an MTF. The preparations for the intended listing in June 2023 are progressing according to plan. Restoring tradability is first and foremost of great importance to the DR holders. Furthermore, the MTF listing offers the possibility of issuing DRs in the future and is therefore in the interest of all stakeholders.

Through this listing Triodos Bank expects to be able to facilitate tradability of DRs to those DR holders who wish to trade on the MTF, and to create the possibility to attract new investors and potential access to capital in the future. The ruling of the Enterprise Chamber case on 22 December 2022 is expected in March 2023 and could have an impact on the MTF process and current planning.

During the Extraordinary General Meeting of 11 October 2022, we announced a change in our capital strategy. Triodos Bank intends to no longer issue new shares and DRs for organic growth but to use internally generated capital to finance this growth. This supports the realisation of our RoE target which is necessary to provide an adequate financial return for DR holders next to the societal impact they support with their investment in our DRs.

Triodos Bank in 2023
Triodos Bank will continue to fulfil its role as frontrunner in 2023, by financing impactful initiatives on the one hand and by encouraging the financial sector to structurally address the environmental and social challenges of our time on the other hand. All our stakeholders rightfully expect this of us.

Together with our customers, we will reinforce our ambition to be net-zero by 2035 by limiting greenhouse gas emissions and we will carry on creating positive impact with a holistic approach. We will further focus our activities towards the five transition themes.

The roll out and implementation of the new operating model will continue, and we expect to benefit in terms of enhanced effectiveness and efficiencyto further increase impact for our customers and investors. In view of the rising interest rates, we expect to be able to improve and secure our interest margins, whilst we anticipate more challenges for our business customers due to the higher energy costs and inflation. We will support them as well as we can.

We will carry on our efforts to improve our cost efficiency, aimed at meeting our CIR target between 70-75%. Based on the expected benefits from the earlier announced optimisation of the business and operating model, and in view of the return to positive interest rates, Triodos Bank increases its medium-term RoE target from 4-6% to 5-7%. This will further enable Triodos Bank to combine the distribution of half of its profits to the depository receipt holders in line with the dividend policy, with the funding of its organic growth by profit retention, a strategy which is in the interest of all its stakeholders.

In 2023 Triodos Bank expects to receive guidance from the regulator about the new MREL capital requirements, which result from the implementation of the guidelines on capital reserves set by the European Banking Authority for banks in the Eurozone.

In 2023, Triodos Bank aims to take a significant step in the restoration of the DR tradability, via the listing on an MTF platform.

Dividend
The totaldividend over 2022 amounts to EUR 2.11 per DR (2021: EUR 1.80) excluding the extraordinary dividend of EUR 1.01 per DR. The ordinary dividend includes the earlier paid interim dividend of EUR 0.35. Triodos Bank will propose a final dividend amount of EUR 1.76 per DR at the Annual General Meeting in May 2023. The final dividend proposal is as per our communicated pay-out ratio target of 50%. The remaining profit will be attributed to the retained earnings of the bank.

Important dates for investors:

• Publication of Annual Report 2022            16 March 2023
• Extraordinary General Meeting                    23 March 2023
• Annual General Meeting                                 26 May 2023
• Ex-dividend date                                                30 May 2023
• Dividend payment date                                    2 June 2023

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