Through business lending and investment funds the bank's positive impact has grown. Triodos Bank’s impact in 2018 in brief:

• financed 513 projects in the sustainable energy sector, contributing to generating green electricity for 2.5 million households worldwide (2017: 1.4 million) while avoiding over 2.9 million tonnes of CO2 emissions (2017: 2.4 million tonnes)
• financed about 717,000 m2 sustainable property (2017: 540,000 m2)
• financed organic farming and food, producing the equivalent of 32 million meals (2017: 30 million)
• financed 550 education initiatives beneficial for 680,000 individuals (2017: 650,000)
• provided finance for cultural institutions including cinemas, theatres and museums across Europe, where 22.6 million visitors enjoyed cultural events (2017: 17.6 million)

Key financial performance milestones:

• 7% growth of assets under management to EUR 15.5 billion
• 17% growth in sustainable lending; mortgage portfolio grew by 36%
• Triodos Bank balance sheet: EUR 10.9 billion (10% growth)
• Funds under management: EUR 4.7 billion (1.5% growth)
• Common Equity Tier 1 Ratio: 17.7% (2017: 19.2%)
• Leverage ratio: 8.7% (2017: 8.9%)
• Net profit : EUR 38.6 million (2017: EUR 37.4 million)
• Return on Equity: 3.6% (2017: 3.9%)
• Number of customers increased by 5% to 715,000
• Number of co-workers: 1,427 (2017: 1,377)

Financing sustainable business

Overall growth of the loan portfolio amounted to EUR 676 million (+10%). This includes the growth of the residential mortgage portfolio by EUR 396 million (+36%). As a result, the sustainable loans to funds entrusted ratio increased from 70% in 2017 to 75% in 2018.

The lower Return on Equity (3.6% versus 3.9% in 2017) reflects the continued pressure on interest margins due to low market interest rates, as well as increased regulatory expenses.

Commenting on the Triodos Bank 2018 annual results, Peter Blom, Chair of the Executive Board of Triodos Bank, said: “The time has come for the financial sector to make clear choices. Climate change and social inclusion are two sides of the same coin and banks have to engage with the challenges society is facing. Increasingly the question will be: what defines the success of banks? And how do we measure their added value: the financial gain for those looking for a quick return, or the long-term gain for society?”  

Operational expenses increased by 11% to EUR 212 million (2017: EUR 190 million) during the year. This was due to an increase in co-worker costs of 11% to EUR 121 million (2017: EUR 109 million). This increase in FTE is mainly driven by investments in ICT and to comply with new and existing regulation. The cost/income ratio was 80% (2017: 79%). Growth and efficiency compensated for lower income and higher costs, but this did not result in a better cost/income ratio. Improving our efficiency continues therefore to be a key focus area for the business. Impairments for the loan portfolio increased from EUR 1.8 million in 2017, to EUR 3.5 million in 2018, or 0.05% of the average loan book compared to 0.03% in 2017. We consider the level of the impairments to be low.

Capital position

Triodos Bank’s equity increased in 2018 by 12%, to EUR 1,131 million. This increase includes net new capital and retained net profit. At the end of 2018, the net asset value for each depository receipt was EUR 84 (2017: EUR 83). The number of depository receipt holders increased to 42,416 (2017: 40,077).

The additional capital enabled Triodos Bank to maintain its position as a resilient financial institution. Despite successfully raising capital of over EUR 83 million in 2018, the Common Equity Tier 1 ratio decreased by 1.5% to 17.7% (2017: 19.2%). This ratio is still well above the regulatory requirement and above our own minimum target of 16%. The decrease in 2018 was mainly caused by an increase in risk weighted assets, due to the growth of the sustainable loan portfolio. This trend was coupled with relatively lower growth in capital in 2018 and the fact that Triodos Bank has increased its capital buffer related to the trading in its depository receipts. The buffer (3% of the capital base) has been deducted from the capital as from 2018.

The leverage ratio of Triodos Bank at the end of 2018 was 8.7 (2017: 8.9).

Triodos Bank in the UK

Customer deposits in the UK grew to over GBP 1 billion for the first time in 2018. The total loan book amounted to almost GBP 876 million (EUR 975 million), an increase of 10% on 2017, demonstrating a commitment to diversifying UK lending and to increase social, cultural and environmental impact. Customer numbers in the UK reached 54,000, helped by growing in interest in a fully operational Personal Current Account, and becoming the first UK bank to launch its own crowdfunding platform.

Bevis Watts, managing director of Triodos Bank UK said: "We continue to see strong growth in new customers – amounting to a 26% increase over the past three years. Our personal current account can inspire the many people who make conscious sustainable choices in their daily lives to move their banking to a bank which shares their values, and which is working to have a real, positive, impact on society. Additionally, our new crowdfunding site launched in 2018 and managed to raise over £20million for eight different projects – with minimum investments from £50. We offer the opportunity for people to see their money is used to benefit them, their community and society in the long term."

Triodos Investment Funds

In 2018 Triodos Investment Management insourced the financial asset management of the discretionary portfolios of Triodos Bank Private Banking Netherlands, and of its funds that invest in stock listed companies. Triodos Investment Management is responsible for 16 funds, for both individual and professional investors. The assets under management of Triodos Investment Management increased by 21% (2017: 5%) to EUR 4.2 billion of which 18% relates to bringing the financial asset management of the discretionary portfolios of Triodos Bank Private Banking Netherlands in house. The closure of the Culture Fund resulted in a 3% decrease in total assets under management. The net inflow of funds was 4%. Due to stock exchange movements in 2018 the investment funds overall lost 1% of their value.

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

Gatekeeper role

The gatekeeper role of banks is to protect the integrity of the financial system and to prevent money-laundering and terrorism financing. In fulfilling that role, the sector is facing serious challenges. Triodos Bank is also exposed in that respect and has received an instruction from its supervisor to improve its customer due diligence processes as well as the monitoring of customer transactions. Triodos Bank expects to remedy shortcomings and to meet the requirements as articulated by the supervisor.

Changes to Executive Board

The growth of the organisation, coupled with increased regulation, bring additional challenges particularly in the domain of Risk Management and Compliance. Triodos Bank has therefore decided to expand its Executive Board with a Chief Risk Officer, bringing the board to four members.

In May 2018, Pierre Aeby, CFO, announced his decision to step down from his role after the next annual general meeting.

Recruitment for both the Chief Finance Officer and the Chief Risk Officer is under way and further announcements will be made in due course.

Changes to Supervisory Board

Mr. Udo Philipp resigned from the Triodos Bank Supervisory Board as per 28 February 2019 due to taking up a public political role in Germany.

Triodos Bank in 2019

Triodos Bank’s balance sheet total is expected to grow more modestly. Growth of between 5% and 10% is expected in 2019. We want to continue to deliver a loans to deposits ratio of between 75% and 85%.

The sustainable loan portfolio and funds entrusted are expected to grow by up to 20% and up to 10% respectively. Triodos Bank’s ambition is to focus primarily on the profitability, impact and diversification of its loan portfolio. In that context we will put extra effort into identifying loans to frontrunners in their fields; the entrepreneurs developing the sustainable industries of the future. The increased responsibility of banks for customer due diligence and transaction monitoring require attention and investment, to both comply and stay fully up-to-date with new developments.

Like the financial sector in general, Triodos Bank faces a serious challenge with low interest rates and increasing regulatory costs. And yet, the opportunities for Triodos Bank as a frontrunner in responsible finance are significant. With a controlled growth strategy, we aim to generate maximum impact and a stable profit.

Dividend

Triodos Bank NV proposes a dividend of EUR 1.95 per depository receipt. This will result in a pay-out ratio of 65% (2017: 61%).

Important dates for shareholders and depository receipt holders:

About Triodos Bank

Founded in 1980, Triodos Bank has become a reference point for sustainable banking globally.

Triodos Bank is an independent bank that promotes sustainable and transparent banking. It does not see any conflict between a focus on people and the planet and a good financial return. Instead it believes that they reinforce each other in the long-term.

Triodos Bank has branches in the Netherlands, Belgium, the UK, Spain, Germany and an agency in France. Triodos Bank co-founded the Global Alliance for Banking on Values, a network of 54 sustainable banks. Together these banks want to grow sustainable banking and its impact on the real economy substantially.

Triodos Bank N.V. has a full banking licence and is registered with The Nederlandsche Bank N.V. (the Dutch central bank) and The Netherlands Authority for the Financial Markets.

Most recent company information is available on Triodos Bank’s website: www.triodos.com