EUR 10.6 billion
The total amount of assets
under management, including
Triodos Bank and the
investment funds and
Private Banking, grew by
EUR 1 billion, or 10%,
to EUR 10.6 billion.
In 2014, Triodos Bank’s income grew by 16% to EUR 190 million (2013: EUR 164 million). Triodos Investment Management contributed EUR 31 million to this figure (2013: EUR 25 million). In 2014, commission income amounted to 33% (2013: 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 1.0 billion, or 10%, to EUR 10.6 billion.
Triodos Bank’s balance sheet total grew by 11% to EUR 7.2 billion thanks to a steady growth of the funds entrusted and new capital raised during the year, in all branches. Growth of between 5 to 15% was expected as a result of a difficult environment for lending, a focus on internal governance improvements and meeting increasing regulatory obligations.
Triodos Bank’s total number of customers increased by 13%, against expected growth of between 10 to 15%, and now numbers 530,000 customers. This year we have refined the definition of a customer so that this data is reported more consistently and accurately across all branches. This includes, for example, that only the beneficiary of an account, such as a young saver, is counted as a single customer and not the operator(s) of their account in addition. We have also amended the 2013 figure using the same definition, for comparison purposes. We will continue to report the number of accounts in the annual report’s section.
The more limited growth reflects efforts to balance the ratio of loans to deposits. At the same time, continuing growth despite extremely low interest rates shows that a growing number of people are choosing to make a much more conscious choice about their bank and how it uses their money.
The profit was materially affected by a special tax levied by the Dutch government as a contribution to the rescue of the Dutch SNS Bank, amounting to EUR 8.3 million. As a consequence of this as well as costs to become Basel III compliant, to enhance Risk management and Governance, to continue investing in IT, and to meet additional local bank taxes in Belgium and Spain, operating expenses increased by 23%. This impacted on the ratio of operating expenses against income, which was 73% (2013: 69%), and on profit before tax and net profit. The profit before tax and loan provisioning increased slightly from EUR 51.0 million in 2013 to EUR 51.2 million.
Net profit of
EUR 30.1 million,
up 17% on 2013.
Net profit of EUR 30.1 million was up by 17% (2013: EUR 25.7 million). The main difference between the growth of the net profit compared to the growth of the profit before tax and loan provisioning resulted from the significantly lower amount of loan provisioning in 2014.
Loan loss provisions decreased to 0.28% of the average loan book, compared to 0.49% in 2013, reflecting careful management of a high quality loan portfolio in all branches.
Triodos Bank delivered a return on equity of 4.4% in 2014 (2013: 4.3%). 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.
A challenging economic and financial environment has lead to central banks keeping interest rates at historically low levels putting pressure on returns. At the same time Triodos Bank has chosen to maintain higher capital ratios and liquidity buffers which reduce returns on equity. Net profit is also under pressure because of the increase of costs as a result of compliance with regulatory requirements.
The time frame within which Triodos Bank realises this 7% profit objective continues to 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. Today we prefer to maintain a relatively high equity base and a substantial liquidity surplus which results in a lower Return of Equity. We also expect overhead costs to grow relatively significantly as we have to deal with the implementation of European Central Bank supervision rules.
Earnings per share, calculated using the average number of outstanding shares during the financial year, were EUR 3.41 (2013: EUR 3.23), a 5% increase. The profit is placed at the disposal of the shareholders.
Triodos Bank’s total number
of customers increased by
13%, against expected
growth of between 10 to
15%, and now numbers
Triodos Bank proposes a dividend of EUR 1.95 per share (2013: EUR 1.95). This means that the pay-out ratio (the percentage of total profit distributed as dividends) will be 57% (2013: 60%).
Triodos Bank increased its share capital by EUR 23 million, or 4%, thanks to depository receipt issues targeting retail investors in particular, which ran throughout the year in The Netherlands, Belgium, the United Kingdom, Spain and, for the first time, in Germany.
The number of depository receipt holders increased from 31,304 to 32,591. Equity increased by 8% from EUR 654 million to EUR 704 million. This increase includes net new capital and profit (minus a dividend). In 2014, Triodos Bank’s platform for trading in depository receipts continued to operate effectively. At the end of 2014, the net asset value for each depository receipt was EUR 78 (2013: EUR 77).
From the start of 2008 until 2013, the total capital ratio, an important measure of a bank’s solvency, has been calculated according to the Basel II guidelines. In 2014 the calculation of the total capital ratio was based on the reporting requirement under the Capital Requirement Directive (CRD) and Capital Requirement Regulation (CRR). At the end of 2014 the total capital ratio was 19.0% (2013: 17.8%). Triodos Bank aims for a solvency ratio of at least 14%. The Core Tier I ratio was 19.0% (2013: 17.8%).