Triodos Bank’s impact in brief
- Triodos Bank is one of the first banks in the world to commit to the Net-Zero Banking Alliance, agreeing to align operational and attributable emissions from portfolio with pathways to net-zero by 2050 or sooner.
- All funds of Triodos Investment Management were designated as Article 9 products under the new European Sustainable Finance Disclosure Regulation (SFDR).
- Triodos Bank's mortgages, offered in the Netherlands, Belgium and Spain, have received the Energy Efficient Mortgage Label (EEML).
- Triodos Bank signed a guarantee agreement withthe European Investment Fund (EIF) for the creative and cultural sector, allowing the bank to provide up to EUR 200 million in loans to entrepreneurs in the creative and cultural sectors over the next two years.
- Triodos Bank tops global league table for most clean energy deals executed by a bank for the sixth year running, after financing more than USD 433 million in 2020.
Key financial results:
- Total Assets under Management grew by 12.3% to EUR 22.7 billion
- Funds under Management improved by 12.6% to EUR 7.2 billion
- Funds Entrusted increased by 7.5% to EUR 12.6 billion
- Balance sheet growth of 12.2% led to total of EUR 15.6 billion
- Sustainable loans achieved 6.9% growth with a well-diversified portfolio across Europe
- Net release of ECL provision by EUR 1.2 million (June 2020: net addition of EUR 12.6 million)
- Net profit of EUR 27.7 million (30 June 2020: EUR 5.7 million)
- Strong capital position (CET-1 ratio 18.6% and TCR 18.7%)
- Assessment of options to solidify and diversify our capital base
- Strong nominees for the Executive Board, Supervisory Board and Board of SAAT
- Further improvement of the financial performance to optimise the balance between impact and financial results
"Our good results underline the relevance of our mission to create positive development in society through the conscious use of money and demonstrate the robustness of the sectors we finance"
Jeroen Rijpkema, Chair of the Executive Board and CEO of Triodos Bank
Going forward, to ensure we can continue to finance change, we will need to address our long-term access to new capital and the necessary diversification of our capital base together with a sustainable and long-term solution for the tradability of our Depository Receipts (“DRs”). We will provide a detailed update on the strategic considerations we are reviewing for this integrated way forward during the Extraordinary General Meeting on the 28th of September. A decision is to be expected by the end of the year at the earliest. A re-opening of the DR-trade this year is therefore not anticipated.
While I recognise that the continued suspension of trade in our DRs is unwelcome for several of our investors, we are committed to ensuring that the outcome of the current assessment and the ongoing improvement of the financial elements of our performance, will provide Triodos Bank and all its stakeholders with a sound basis to continue to pursue our mission.”
In the six months to 30 June 2021, Triodos Bank increased its sustainable lending with 6.9%, (first six months 2020: 4.6%). The residential mortgages portfolio increased with 14.4% to EUR 3.1 billion, compared to an increase of 13.8% in the same period last year.
Backed by the recovery of the economy, the net release of the expected credit loss (“ECL”) provision in the first half year amounts to EUR 1.2 million, compared to a net addition of EUR 12.6 million to the ECL provision in the same period in 2020.
Triodos Investment Funds
In the first half of 2021, Triodos Investment Management was able to realise an overall growth in assets under management by 11% to EUR 6.1 billion (End 2020: EUR 5.4 billion).
Details on the performance of the funds can be found at: www.triodos-im.com.
Triodos Bank’s total assets under management increased by EUR 2,488 million in the first six months of 2021 to EUR 22.7 billion, driven by an increase of EUR 1,689 million of the total Balance Sheet to EUR 15.6 billion and by the growth of our funds under management by EUR 799 million to EUR 7.2 billion.
Total income of EUR 165.9 million is significantly higher compared to the same period last year (End June 2020: EUR 143.6 million). Net interest income improved from EUR 92.0 million to EUR 106.7 million due to an increase of higher yielding lending volumes. Furthermore, the participation in the TLTRO tender III.5 and III.7 resulted in an additional income of EUR 5.8 million in 2021.
Total operating expenses (excluding loan impairments and valuation effects) increased to EUR 131.4 million in the first six months of 2021 (first half 2020: EUR 123.8 million). This increase was mainly driven by additional co-worker expenses related to Compliance and Anti-Money Laundering (AML) topics and regulatory expenses due to the additional Deposit Guarantee Scheme (DGS) contribution, which is related to the increased volume of funds entrusted in the first half of the year.
The bank reports a Cost-Income-Ratio of 79% per end of June 2021 (first half 2020: 86%), which was mainly supported by higher revenues and the additional income from TLTRO.
The good performance of the bank resulted in a net profit of EUR 27.7 million in the first six months of the year 2021, which is significantly higher compared to the same period in 2020 (EUR 5.7 million)
Capital and liquidity position
The CET-1 ratio of 18.6% (end of 2020: 18.7%) and TCR of 18.7% (end of 2020: 18.8%) remain well above the regulatory requirements and our internal minimum target levels.
The Liquidity Coverage Ratio (LCR) increased to 242% per end of June 2021 (end of 2020: 232%), which is well above the regulatory requirements.
Conscious asset growth while the bank’s core capital remained nearly stable, resulted in a small decrease of the leverage ratio from 8.8% at the end of 2020 to 8.6%.
Today, the Supervisory Board has nominated candidates for both the Chief Operating Officer and the Chief Commercial Officer roles, which are currently vacant in the Executive Board. The candidates will be introduced at the upcoming Extraordinary General Meeting, which is scheduled for 28 September 2021. Further details can be found on triodos.com/agm and in the separate press release issued today.
Triodos in the 2nd half of the year
An important focus for Triodos Bank is to address the challenge presented by the suspension of trade of the Depository Receipts of ordinary shares (“DRs”) within the broader perspective of the capital strategy and the ongoing work on improving the overall financial performance and cost efficiency.
Fulfilling the bank’s mission while maintaining a sound level of risk and return remains key, especially while we can still be confronted with the direct and indirect consequences of the pandemic. Therefore, the build-up of the ECL provision could resume through the year 2021 in line with the IFRS requirements. However, a shift is expected in this ECL impairment build up towards increasing impairments in stage 3 (defaults) in favour of a release in stages 1 and 2.
Triodos Bank’s capital and liquidity position are well in line with internal target ratios and well above the regulatory minimum requirements. In the second half of the year Triodos Bank is expecting to receive guidance from the Regulator about the new MREL capital requirement, which results from the implementation of the guidelines on capital reserves set by the European Banking Authority (EBA) for banks in the Eurozone. This might result in additional capital requirements and funding costs.
The performance in the first six months provides a solid base for the remainder of 2021. We remain committed to our dividend policy, which under normal conditions aims to distribute to depository receipt holders a fair share of the profits realised. For the full year 2021, subject to the regulator withdrawing its dividend guidance, we plan to return to our long-term dividend policy.
Triodos expects to generate more impact and to realise profitable growth within a challenging interest environment and will ensure Triodos Bank can meet the still increasing regulatory requirements. Triodos Bank is confident it will be able to fulfil its frontrunner role to ‘Change Finance’ and help support customers to deliver the positive change the world’s sustainability challenges demand.