How the World Looked in 2015
Historically low central bank interest rates and the huge supply of liquidity, or ‘quantitative easing’ continued to be the authority’s ‘monetary answer’ to a lack of economic growth during the year. While the effectiveness of this approach has been debated by many, the negative impact on interest rates for the ordinary depositor is a fact.
Individuals, businesses, banks and governments continued to wrestle with the financial crisis and its legacy. At the same time regulators continued to require large and small banks alike to spend considerable time and effort meeting new regulatory demands. These efforts are designed to improve the banking sector’s resilience and, therefore, reduce the risk that governments have to rescue financial institutions in the future.
The rise and rise of sustainability
At the same time sustainability has become more deeply linked to many people’s lives – driven by increasing awareness of converging climate change and social crises and positive opportunities to address them. Sustainability has been increasingly embraced by banks, some of whom see this as a key market opportunity and in response to pressure from stakeholders; others who may see this as a better long term trajectory for the future health of their organisations. In many countries there has been increasing dialogue about the role of business in society and in particular the role of finance, demonstrating an appetite for change from the public.
This trend has led more banks to promote themselves as more ethical and transparent and to compete more actively for sustainable loans and investments. When these commitments to sustainability are genuine, these developments are good for the wider banking industry.
Large numbers of people continue to choose Triodos Bank as their first bank because it meets their financial needs and is aligned with their values. This has again resulted in growth in savings, lending and investments during the year.
Higher costs, lower margins and greater impact: the challenge for the banking sector
The higher costs of meeting regulation and lower margins as a result of low interest rates and increasing competition for personal and business customers (either solely on price or from banks eager to lend to attractive ‘sustainable’ loans) was intense, particularly in Belgium and Spain, during the year. This puts pressure on the bank’s profitability.
Triodos Bank undertook a detailed programme of strategic planning for the next three years which has identified emerging trends and possible developments in wider society. The plans focus on four key strategic areas; to broaden Triodos Bank’s scope, innovate more, become even more of a learning organisation and further deepen its relationship approach. These areas are all priorities both for Triodos Bank in the coming years and its , and are designed to make sure it delivers more, long term sustainable impact.
Despite a challenging environment for lending the branches were able to grow the loan book, which is critical to increasing Triodos Bank’s impact. However, ensuring a healthy balance between the growth of the loan portfolio and a relatively strong inflow of deposits continues to be a serious point of attention.
How we did
Becoming the First Bank for our Customers
Offering a full set of services and high quality customer service to personal and business customers and increasing the volume of our transactions with them, is crucial for Triodos Bank to increase its impact and fulfill its mission. In some countries, such as The Netherlands, a full set of services is already offered, as it is in Spain where the branch extended its offering to sustainable businesses with a commercial pack including Point of Sale services and lending solutions. In others, such as Triodos Bank in the UK, the branch is developing a current account offering which is expected to be available for customers in 2016. Sustainable mortgages continue to be a unique product in some of our markets and reflect a real opportunity for the bank to help reduce emissions in the housing sector.
In Germany, Triodos Bank increased its new commitments by 20%, and launched a new savings product as well as successfully raising new capital despite being relatively new to the German market. The branch grew in line with plans during the year.
Triodos Bank wants to grow its capital so it can continue to develop and expand its activities, particularly lending. In 2015 a total of EUR 40 million in new capital was raised in The Netherlands, Belgium, Spain the UK and Germany, attracting over 3,144 net new depository receipt holders. Depository receipts were actively sold to clients and prospects in Germany for the second year raising over EUR 3.5 million (2014: EUR 2 million).
In Belgium, Triodos Bank opened its first regional office, in Ghent. The new office focuses on individuals, organisations and businesses in and around Ghent and its opening was covered extensively in the press.
The organisation continues to grow in popularity on the basis of strong relationships and our customer’s willingness to recommend Triodos Bank. More than half of Dutch customers would promote the organisation to others, an extremely high score for any bank. In Spain, Triodos Bank was again recognised as having high levels of customer satisfaction among its banking peers, by an independent study.
Triodos Bank’s representative office in France continued to develop its activities in line with plans, but is not yet a fully-fledged branch.
Engaging in a learning organisation
Triodos Bank encourages co-workers to participate in a co-creative way.
A co-worker’s conference is organised every year bringing a broad group of co-workers together. In 2015 it was hosted in the UK in close cooperation between the head office and the UK branch and focused this year on the value of social, natural, human and other forms of non-financial ‘capital’ as well as the role of Triodos Bank in developing and financing such initiatives.
The branches started working together on internal communications in a more structured way during the year, particularly to support the development of an online platform, which will be launched in 2016 and help make more collaboration easier across the organisation.