Triodos Bank (Group)
In 2013, Triodos Bank’s income grew by 8% to EUR 164 million (2012: EUR 152 million). Triodos Investment Management contributed EUR 25 million to this figure (2012: EUR 23 million). In 2013, commission income amounted to 31% (2012: 31%) of total income, in line with expectations.
The total amount of assets under management including Triodos Bank and the investment funds and Private Banking grew by EUR 1.6 billion, or 20%, to EUR 9.6 billion.
Triodos Bank’s balance sheet total grew by 22% to EUR 6.4 billion thanks to a steady growth of the funds entrusted and a successful share issue. Growth of between 15 to 20% was expected.
Triodos Bank’s total number of customers increased by 18%, against expected growth of between 15 to 20%. By the end of 2013, Triodos Bank passed an important milestone and now has over 500,000 (517,000) customers. This continues to show that a growing number of people are continuing to make a much more conscious choice about their bank and how it uses their money.
In 2013, the ratio of operating expenses against income was 69% (2012:66%). This is due to slower growth of income from interest and commissions from lending activity despite strict control of expenses.
Profit before tax and loan provisioning decreased from EUR 51.5 million in 2012 to EUR 51.0 million despite growth of both the balance sheet and funds under management. This was because of slower growth of income from lending activities. Net profit of EUR 25.7 million was up by 14% (2012: EUR 22.6 million). Loan loss provisions were slightly lower at 0.49% of the average loan book, compared to 0.67% of the loan book in 2012.
Triodos Bank delivered a return on equity of 4.3% in 2013 (2012: 4.5%). The medium-term objective is to grow the return on equity to 7% of Triodos Bank’s equity in normal economic conditions. This target should be seen as a realistic, long-term average for the type of banking activity that Triodos Bank engages in. The mature branches have proven that they can achieve this level of profitability in stable economic and financial conditions.
The troubled economic and financial climate has lead to central banks keeping interest rates artificially low putting pressure on returns. At the same time Triodos Bank has chosen to maintain higher capital ratios and liquidity buffers which, alongside higher loan loss provisions than in previous years, result in a lower return.
The time frame within which Triodos Bank realises this 7% profit objective will also depend on opportunities in the growing sustainability market. In the current market, while Triodos Bank will continue to work on improving its profitability, it does not expect to reach this target in the next three years.
Earnings per share, calculated using the average number of outstanding shares during the financial year, were EUR 3.23 (2012: EUR 3.37), a 4% decrease. The profit is placed at the disposal of the shareholders.
Triodos Bank proposes a dividend of EUR 1.95 per share (2012: EUR 1.95). This means that the pay-out ratio (the percentage of total profit distributed as dividends) will be 60% (2012: 58%).
Triodos Bank increased its share capital by EUR 68 million, or 14%, thanks to depository receipt issues targeting retail investors in particular, which ran throughout the year in The Netherlands, Belgium, the United Kingdom and Spain.
The number of depository receipt holders increased from 26,876 to 31,304. Equity increased by 16% from EUR 565 million to EUR 654 million. This increase includes net new capital and profit (minus a dividend). In 2013, an internal market for the buying and selling of depository receipts for shares continued to operate effectively. At the end of 2013, the net asset value for each depository receipt was EUR 77, compared to EUR 75 at the end of 2012.
From the start of 2008, the BIS ratio (capital adequacy ratio), an important measure of a bank’s solvency, has been calculated according to the Basel II guidelines. At the end of 2013 the BIS ratio was 17.8% (2012: 16.0%). Triodos Bank aims for a regulatory solvency ratio of at least 14%. The Core Tier I ratio was 17.8% (2012: 15.9%).