Yeah, we're ready. Good morning, all. Welcome to the Triodos Bank 2025 annual results presentation. For the first part of the conference, the participants will be in listen-only mode. After the presentation, we will hold a Q&A session, during which telephone participants will be able to ask questions by dialing pound key five on their telephone keypad. Now, I'll hand over to our speakers for this morning, Triodos Bank CEO Marcel Zuidam and CFO Kees van Kalveen. Please go ahead.
Thank you, Suzanne, and good morning, all. Thank you for joining us today. I will begin our presentation today with an update on our business progress in 2025, and then I will hand over to Kees, who will discuss our financial results. After which, as said, we will open the floor for Q&A. Triodos Bank is transforming with purpose to deliver meaningful impact by enhancing customer focus, innovating and digitalizing, and becoming more cost-efficient. Positive impact generation is our priority. In 2025, we achieved EUR 1.1 billion in new business lending, bringing our total loan volume to EUR 6.1 billion. Our deposits from customers grew by EUR 97 million to EUR 15.1 billion, driven primarily by an increase of EUR 452 million from personal banking customers, demonstrating our stable customer base and their loyalty to our mission.
In 2025, new production of our residential mortgage portfolio amounted to EUR 736 million, bringing our total residential mortgage portfolio to EUR 5.6 billion, primarily in the Netherlands. Our relationship NPS for personal banking customers improved by 11 points in 2025, reflecting increased customer satisfaction. In the year, our financial results were under pressure. Looking at our top-line financial results, we delivered a net result of -EUR 25 million, and our net result was materially impacted by both a EUR 60 million one-off provision related to expected credit losses in the German fiber optic sector and additional provisions relating to strategic decisions we made throughout the year, such as the decision to wind down our German business, an additional provision for the settlement offer, and the launch of the Fit for Impact transformation program.
We achieved a return on equity of -2% and a cost-income ratio came to 85%, both impacted by the previously mentioned provisions. Our CET1 ratio remained strong, coming to 17.4% at the end of the year, comfortably above our internal targets and regulatory requirements. Given the material impact of the provisions on our financial results, we will propose not to pay a final dividend. As a result, our total dividend payment for 2025 is equal to the EUR 0.60 per the interim cash dividend paid out earlier this year.
We also have achieved significant milestones in 2025, one of which was the listing of our depository receipts on Euronext Amsterdam in June, a move that improved the tradability of our DRs and offers improved accessibility for existing and new investors, confirmed also by our admittance to the Euronext Amsterdam small cap index, or AMS Next 20, in December last year. We're also pleased to report a better-than-expected acceptance rate for the settlement offer for eligible DR holders, which stood at 82.4% upon its closure on October 1st. The high acceptance rate will lower the likelihood of future claims risks and lower the administrative and resource burden on our organization. Coming to this next slide, 2025 was a strategically important year.
We made a number of important decisions that have both positioned us to provide a strong basis for our sustainable financial performance going forward and will allow us to focus our resources on where we can generate the most positive impact. I mentioned briefly that our financial results this year were under pressure. Kees will be going into more detail on this later in the presentation, but what I would like to highlight is that despite macroeconomic volatility, our core banking business remains steady. This is illustrated in our net interest margin remaining steady at 1.92% throughout the year. In addition, we were able to continue generating inflows of entrusted funds, particularly from personal banking customers, and these two elements demonstrate our resilience and stability in 2025.
Another important development was the launch of our Fit for Impact program, aligning with our three strategic pillars. Fit for Impact is already modernizing how we work, including the introduction of AI to create efficiencies and support both our coworkers and our customers and our cost discipline. In 2025, we also saw significant progress from a litigation standpoint. With the close of our DR settlement offer, with an acceptance rate well above expectations and significant court rulings in our favor, three from the Supreme Court of Spain and one of the Midden-Nederland District Court. Throughout all this progress, we have remained true to our mission and continued investing in our five transition themes and improved not only the reach of our positive impact but also improved reporting and transparency.
Overall, 2025 has allowed us the opportunity to position ourselves to deliver greater efficiency and impact going forward into 2026 and beyond. I now would like to focus on our positive impact creation through our investments in our five transition themes. Triodos Bank provides business loans, current accounts, savings accounts, and mortgages, in addition to managing and distributing investment funds and channeling donations. At the end of 2025, our total business loan portfolio has remained stable at EUR 6.1 billion. This portfolio is invested into our five transition themes, energy, well-being, societal, resource, and food. We aim to optimally balance positive impact as our first priority, with consistent returns and modest risks. We screen our projects based on our proprietary criteria and minimum standards to determine the impact of such projects.
Next, we apply minimum return hurdles to evaluate opportunities that meet our impact criteria with specifically high-impact projects justifying lower returns on an individual basis as long as the overall portfolio meets its return hurdles. Triodos Bank's impact-focused projects inherently imply more modest risk given the naturally lower ESG-driven risks. Additionally, we ensure a modest risk profile through a disciplined institutional approach. The objective of the well-being transition is to support activities that promote physical and mental health, self-development, self-expression, and healthy relationships with others. A good example of this is Therapeutic Care U.K. Therapeutic Care U.K. delivers residential care for children and young people who have experienced trauma by combining comfortable living environments and therapeutic support designed to develop safety, connection, and long-term development.
Earlier this year, Triodos Bank U.K. financed the purchase of four new apartment blocks to house care leavers, being young people who leave traditional care after reaching the age of 18. These apartment blocks enable Therapeutic Care U.K. to support these young people into adulthood in a safe home where they can recover from past trauma and build resilience and emotional well-being. Our climate strategy is built around four pillars, reducing real emissions, leading the change in financing the energy transition, financing nature-based solutions, and advocating for systems change. Together, these pillars guide how we contribute to climate action and support a transition to a sustainable economy. We focus on lowering emissions in the part of our portfolio responsible for most of our financed emissions. Between 2020 and 2025, we reduced financed emissions by 42%, reaching our 2030 reduction target ahead of schedule.
This was driven by improved data quality, portfolio changes, and importantly, actions taken by our customers and investees to reduce their own emissions. This confirms that we are moving in the right direction. Also in 2025, we will evaluate our targets as planned. We continue to play a leading role in financing renewable energy and the broader energy transition. We aim to finance 275 new energy transition deals between 2026 and 2030, supporting renewable energy generation, storage, efficiency, and the decarbonization of industry and transport. We are committed to mobilizing at least EUR 500 million for nature-based solutions between 2020 and 2030. These projects help address both climate change and biodiversity loss while also delivering broader environmental and social benefits such as nature restoration and education.
Finally, through our advocacy work, we aim to accelerate the transition by promoting policies, collaboration, and internal agreements that align financial flows with climate and nature goals, including, for example, the phase-out of fossil fuels and support for high-quality, nature-based solutions. Half of our book is in residential mortgages, providing stability and diversification. Our overall residential mortgage portfolio in 2025 totaled EUR 5.6 billion, and that is an increase of EUR 311 million year on year. Over the past three years, we see a 9% compounded annual growth rate in residential mortgages, further aligning our strong, sustained expansion of the residential mortgage book, portfolio retention, and market demand. Our residential mortgage portfolio is mainly in the Netherlands, which grew by 8.4%, representing an increase of EUR 378 million.
63% of our total mortgage portfolio have an energy label of A or higher. Earlier in 2025, we made a decision to cease the origination of new residential mortgages in Belgium and Spain to align our resources, where we can make the most positive impact. In 2025, we saw an increase of EUR 597 million or 4.1% in our customer deposits, bringing our total customer deposits to EUR 15.1 billion. This increase was particularly visible in the Netherlands, where we saw a growth of 7.9% or EUR 600 million.
The growth in deposits from customers was primarily due to an increase of EUR 452 million or 4.6% in deposits from personal banking customers, bringing our total deposits from personal banking customers to EUR 10.3 billion and demonstrating our stable customer base and their commitment to our mission to make money work for positive change. We also saw an increase in business banking customers at the end of the year 2025, with deposits increasing by EUR 153 million, totaling EUR 4.8 billion at the end of the year. Our Relationship Net Promoter Score helps us understand how customers experience our services and how likely they are to recommend us. We collect this feedback regularly and use the insights to improve our propositions, services, and customer experience across our banking units.
Looking at our RNPS score for personal banking, customer satisfaction improved significantly in 2025. This progress is linked to improvements in our proposition, including introducing mobile payments like Apple Pay and Google Pay and launching our personal finance tool insights. In addition, as over 74,000 of our customers are under the age of 18, we focused on digitalizing the transition to adult banking and launched a marketing campaign offering a free current account for young adults. For business banking, while still negative, the score improved notably compared to last year, and we continue to focus on strengthening relationships with customers and using survey insights to improve our services and better meet the needs of sustainable entrepreneurs. This year, we introduced RNPS measurements for Triodos Investment Management also to better understand professional investors and their experience and identify areas for improvement.
These insights will help guide ongoing enhancement to our engagement and services for investors. In 2025, we took significant steps to pursue our focused growth strategy and build a more efficient and resilient organization. We conducted a careful review of our product market combinations and sharpened our geographic footprint. This can be seen in our decision to wind down our German banking business by 2027. The decision to focus our efforts in Spain and Madrid and Barcelona too, and to close nine offices in Spain, but also in the discontinuation of two Triodos Investment Management funds. We are focused on streamlining our business, reviewing where we can make the most positive impact, and scale our business in the most effective way. Examples of this can be seen in the simplification and standardization of our business lending journey, leading to increased speed and customer satisfaction.
Going forward, we will continue to focus on modernizing and simplifying our business to further support impact-driven businesses at scale. To support this transformation, in 2025, we added Susanne Schilder as Chief Information Officer to our executive board. Susanne is leading the optimization of the group-wide product market portfolio and commercial footprint with the goal to enable focused growth through disciplined strategic capital allocation and strategy implementation. Looking at our third strategic pillar, driving an efficient and robust operating model in 2025, we continue to modernize our core processes and technological infrastructure. We strengthen our KYC efforts, further solidifying our risk and compliance framework. Leading this process is our new Chief Information Officer, Barbara van Duijn, who also joined the executive board in 2025. Barbara is leading our digital transformation, a key driver of our strategy.
She's focused on further modernizing and simplifying our IT landscape and facilitating the use of data and AI. Technology is not an end in itself, but a lever for impact. By strengthening our digital platforms, improving data quality, and responsibly deploying AI, we support a resilient, compliant, and customer-centered bank, enabling us to finance the real economy and respond to growing social, environmental, and economic challenges. AI is reshaping how banking services are delivered, risks are managed, and operations run. Our approach is grounded in robust governance, risk management, and accountability, guided by our internal AI policy and principles, such as human oversight, data quality, transparency, and compliance. In 2025, we implemented Triobot, an internal chatbot accessible to all our coworkers, and expanded M365 Copilot licenses to around 400 active users to support their day-to-day tasks.
We're now piloting an upgraded Triobot with advanced capabilities with the goal of rolling out Triobot 2.0 to around 750 FTE and expanding Copilot users to approximately 600 active users in 2026. The Fit for Impact program, launched in January 2026, is designed to strengthen our position as leading impact bank and ensure that our focused growth strategy, customer experience, and operating model remain robust and future-ready in a rapidly evolving societal and financial landscape. This program supports our strategic pillars by strengthening customer focus, enhancing business agility, and investing in commercial and technological capabilities. The program targets a net reduction of 250-270 FTE over the next three years, primarily through natural attrition, reduced external hiring, and focused reorganization, and the wind down of the German banking business.
We remain committed to supporting all coworkers affected by these changes with dedicated support. As a result of this program, we estimate an annual cost reduction of EUR 25 million-EUR 30 million per annum by the end of 2028. Through these measures, we aim to reach the lower end of our midterm 70%-75% cost-income ratio target and the higher end of the midterm 5%-7% return on equity target, enabling us to amplify impact and deliver sustainable value for our stakeholders. To support this transformation, we will selectively restructure the organization to strengthen customer focus and improve agility while continuing to invest in growth areas such as business lending, digital capabilities, and impact investing. With this, I would now like to hand over to Kees to walk you through our financial performance for this year.
Thank you, Marcel, and good morning all. As Marcel mentioned earlier, our financial performance for 2025 was under significant pressure, materially impacted by credit provisions and a number of other one-off provisions. Overall, our core banking performance showed resilience, which we saw in increased funds under trust and our commercial activities remained sound. From a capital perspective, we improved under the new CRR3 framework. In addition, cost discipline and organizational simplification started to take effect. In part, you can see it in the stabilization of our FTE numbers and also the launch of our Fit for Impact program. We've worked hard to reduce our litigation risk with the settlement offer and the favorable judgments in multiple jurisdictions. I will go through all these topics in greater detail on the next slide. Let's start with some of the key figures. Our underlying business remained stable.
This is illustrated in the stability of our net interest margin, which remained stable at 1.92% throughout the year. As Marcel previously mentioned, our net result came at -EUR 25 million, materially impacted by a EUR 60 million provision for an expected credit loss in the German fiber optic market. This ECL was sector-specific and does not reflect credit quality concerns across the board of portfolio. In addition, we had EUR 27.7 million of non-credit provisions related to strategic decisions as well. These provisions also had a significant impact on our return on equity, coming in at -2% for 2025. Our cost-income ratio improved slightly on last year to 85%. Both our ROE and cost-income ratio came in significantly outside our targets this year. The introduction of the Fit for Impact program will address this.
Our capital ratios improved on the CRR3. Our CET1 ratio at the end of 2025 came in at 17.4%, comfortably above our own targets and our regulatory requirements. Our operating expenses decreased to EUR 374 million. Later in the presentation, I will walk you through in greater detail. We see a stabilization of our structural expenses and a decrease in our non-credit provisions. Deposits from customers increased from EUR 14.5 billion to EUR 15.5 billion in 2025. Our FTE over 2025 stabilized at 1,700-1,790 FTE. Our balance sheet demonstrated growth in funds entrusted, specifically in the Netherlands. Our mortgage portfolio has demonstrated growth despite our strategic decision to cease origination of residential mortgages in Belgium and Spain at the beginning of the year.
We see a 6% overall growth year-on-year, totaling EUR 5.6 billion at year-end. On the liability side, we see a 4% increase year-on-year of our funds adjusted, increasing to EUR 15.1 billion. This growth was primarily driven by increases in deposits from personal banking customers. Our business lending volume has stabilized over the past few years. In 2025, we saw growth in the Netherlands while other markets remained stable or slightly decreased. The overall stabilization is not much, not so much due to a lack of demand, but rather a limit of what our current infrastructure is able to produce operationally. This is why, as part of Fit for Impact, we are investing in our business lending capabilities to cater to the demand and achieve a 3%-5% annual overall loan book growth.
Despite the favorable interest rate environment, our net interest margin stopped declining at the start of the year and remained stable throughout the year. Our total income decreased to EUR 442 million, a 4.5% decline. This was driven by a decrease in net interest income following the margin decrease throughout 2024. Our fees and commission income also decreased to EUR 100 million, driven by lower management fees as a result of lower funds under management following net outflows and volatile market conditions. Excluding non-credit provisions, our structural expenses for 2025 stabilized and the number of coworkers declined.
Our structural expenses, defined as operational expenses excluding the non-credit provisions for 2025, showed only a slight increase of EUR 1.5 million . This was primarily driven by an increase in personal expenses due to wage drift, compensated by reductions in regulatory expenses, lower depreciation and amortization, and also disciplined cost management across the organization. Looking at our non-credit provisions, in 2024, we booked a EUR 101 million provision for the settlement offer for the depository receipt holders. In comparison, in 2025, our non-credit provisions decreased 74% to EUR 27.7 million. Our non-credit provisions were related to strategic decisions designed to position us for stronger performance in 2026. In October, we closed our settlement offer to the DR holders.
The higher than expected acceptance rate of 82.4% led to an addition of EUR 16.2 million on top of the EUR 101 million we already took in 2024. For the wind down of the German business, we took a provision out of expenses of EUR 5.5 million, and for the launch of the Fit for Impact program, we took a provision of EUR 7.3 million. In 2025, our FTE number already reduced slightly. We launched the Fit for Impact program in January of this year to address the increase in personnel costs with a targeted reduction of between 250 and 270 FTE by the end of 2028. We expect the first results of this program to materialize in the second half of 2026.
In 2025, our capital ratios improved despite our negative net result. Our CET1 ratio improved from 16.4% to 17.4%, well above our internal targets and our regulatory requirements. This movement was mainly driven by the implementation of CRR3. A strong capital buffer is an important part of our risk profile as it supports resilience in a more volatile environment. Furthermore, in August, we diversified our funding profile by issuing EUR 300 million senior preferred notes that contributed towards meeting our MREL requirements. Given our 2025 net result, we will propose to not pay a final dividend over the year 2025, only an interim dividend of EUR 0.60 per DR. Our priority is to grow our mission-aligned lending and investments in the coming years.
Using today's capital to fund that balance sheet expansion allows us to increase long-term earnings capacity and impact. Our dividend policy remains unchanged. We continue to target a total payout of around 50% of net profits over the cycle, with flexibility to pay out more or less in a given year should circumstances allow. That means as profitability normalizes and our strategy delivers, DR holders should benefit both from a growing capital base that supports earnings and from a predictable, sustainable dividend stream. Our loan book is well-diversified among sectors, evenly split between loans in our transition themes and residential mortgages. Our underlying loan portfolio grew by EUR 90 million, reaching EUR 11.7 billion, reflecting continued financing of the real economy across our transition themes. The main driver of growth was the residential mortgage portfolio, which increased by EUR 300 million, primarily in the Netherlands.
As part of our focused growth strategy, mortgage origination in Spain and Belgium were discontinued to concentrate resources on markets where we can achieve greater scale and impact. Residential mortgages represent 48% of our total loan book and generally carry lower credit risk than business loans. The portfolio shows a comfortable LTV distribution, with 64.4% of mortgages below 65% LTV. Growth in business lending was spread across five transition themes, with the strongest expansion in environmental technology, renewable energy and social housing, while repayments were highest in arts and culture, healthcare and education. Overall, the loan portfolio remains well-diversified across transition themes, geographies and maturities, supporting balanced growth while continuing to finance sectors that contribute to positive social and environmental impact. In December, we announced a provision of EUR 60 million for expected credit losses in the German fiber optic market.
Let me take a moment to address the development in our German fiber optic portfolio. As announced, we have taken EUR 60 million pre-tax provision on our German fiber optic loan portfolio. This reflects a prudent forward-looking reassessment of expected credit losses in a market that has changed materially over the past year. The provision follows a sector-wide deterioration in market conditions characterized by slower than expected fiber network rollout, increased competitive pressure and downward revisions of business cases. Our total exposure to German fiber optic related loans is EUR 180 million of syndicated loans, which represents around 1.6% of our total EUR 11.7 billion loan book. We have been actively monitoring the portfolio and intensifying borrower engagement as market conditions deteriorated. As a result of this reassessment, we have seen migration of exposures into stage two and stage three.
As shown in the graph on the slide, the stage two ratio for business loans increased to 9.8, compared with 8.8% in 2024, and the stage three ratio increased to 5% from 4.5 in 2024. At the overall portfolio level, this translated into stage two ratio increase from 5% to 5.3% and an increase from 2.6% to 2.9% in 2025 for our stage three ratio. This development is unrelated to the planned wind down of our banking operations in Germany, which continues to progress as planned towards completion by the end of 2027. With this slide, we take a look at our overall credit metrics excluding German fiber optic.
Our total impairment charges, excluding the German fiber optic provision, were EUR 11.8 million, very much in line with previous years. Looking at stage migration and excluding the German fiber optic portfolio, the stage two ratio decreased by 0.5 percentage point year-on-year, while the stage three ratio remained stable. Our portfolio continues to benefit from proactive credit risk management and a high level of diversification across geographies, sectors, and transition themes, which supports the overall stability of our loan book. In 2025, we made significant progress in reducing our litigation risk with a higher than anticipated acceptance rate of our settlement offer. In October, we closed the settlement offer to the depository receipt holders. The final acceptance rate was 11.7 million DRs or 82.4% of outstanding DRs.
We are pleased with this outcome as higher DR holder participation not only reduces the likelihood of future claims but also lowers the risk of ongoing administrative burden and resource strain that arises from prolonged legal actions. We see a significant reduction in litigation overall. We received three favorable rulings from the Supreme Court of Spain, and as a result, 822 out of 930 claims in Spain have been resolved. Also in the Netherlands, we received a favorable ruling from the Midden-Nederland District Court in a group claim brought by Stichting Triodos Tragedie, a group that represents approximately 5% of outstanding DRs. In Belgium, a group claim was filed by a group representing approximately 3% of outstanding DRs, and we expect a verdict in the course of 2026.
Overall, in 2025, we made great strides in reducing our litigation risk, allowing for our resources and focus to move to our strategic progress and generating greater impact going forward. We remain committed to our financial targets throughout the cycle. 2025 marks the beginning of several important developments that will strengthen Triodos Bank structurally in 2026 and beyond. We were able to simplify our business, reduce our litigation risk, and lower our cost base. With the introduction of Fit for Impact, we expect to return to growth and income and achieve a decline in our operating expenses in 2026 compared to 2025.
As we stated in the launch of Fit for Impact, we strive to achieve the lower end of our midterm, 70%-75% cost-to-income ratio and the higher end of our 5%-7% return on equity target. I would like to stress that Triodos remains committed to all of its financial and impact goals in spite of our current shortfall in ROE and cost-income ratios. In conclusion, and before we open the floor to Q&A, I would like to stress the strategic importance of 2025. We made a number of important decisions that have both positioned us to generate a stronger performance going forward and allow us to focus our resources on where we can generate the most positive impact. Despite macroeconomic volatility, our core banking business remains steady. We launched our Fit for Impact program aimed at modernizing how we work.
We saw significant progress on litigation, and most importantly, throughout all of this progress, we have remained true to our mission and continued investing in our five transition themes. Overall, 2025 has allowed us the opportunity to position ourselves to deliver greater efficiency and impact going forward into 2026 and beyond. With that, I would like to open the floor for Q&A.
Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please press pound key six on your telephone keypad. The first question comes from Benoit Pétrarque from Kepler Cheuvreux. Please go ahead.
Yes. Good morning. The first question is actually on the transformation. You know, you have been sharpening your geographical footprint, also the product offering has changed slightly. I was wondering if you are done with this sharpening of the footprint and the product offering, or are there still things we could expect in 2026, any announcement we could expect there? With the nomination of Barbara, any views on, you know, what the modernization and simplification of the IT landscape will mean in terms of the need of maybe IT investments or anything specific there? That's the first question. Number two is on the income growth.
You have been talking about income growth in 2026. Could you help us maybe to, if possible, put a number on that or a range at least, and I guess it comes mainly from NI, so it will be interesting to understand the moving parts of NI you expect in 2026. Then just maybe a final one on the impairment, so ex fiber, it goes well. Obviously, we have a bit of an energy geopolitical crisis as we speak, and I was wondering if you could maybe have a first reaction in terms of what that could mean potentially for Triodos in terms of business growth and also credit risk going forward.
I will expect your ESG focus and also clean energy focus, let's say, to be helpful, but just wanted to get your view on that. Thank you.
Thank you, Benoit. I will take your first questions, and then Kees will answer the other ones. As to further plans, I think currently no further branch closures are planned. However, we will continue to critically evaluate our product market combinations under our focused growth strategy and to ensure that we will meet our targets. For now, the focus is on the Netherlands. This is our core market and, as a full-service bank, in the Netherlands, and outside the Netherlands, we will pursue our focused growth approach, particularly in U.K., Belgium, and Spain in products where we feel we can generate the most impact. Your second question relates to the portfolio of Barbara.
I think with her new appointment as a CIO on the board of Triodos Bank, we feel that it's important to champion the importance of technology at the highest level in the bank. The main priorities of Barbara will be to further modernize our IT platform with the use of data and AI capabilities, making sure that we have an efficient and resilient platform going forward.
On the topic of income growth, it is correct to assume that the income growth that we indicate will come from our net interest income. Our net interest income will hopefully grow in 2025, driven by our expected loan growth of between 3% and 5%, which should be in line with our number I think we have given in the past as well. We combine that with a view that we at least don't expect our net interest margin to drop. Of course, predicting interest margins remains difficult also in a volatile market environment, which may still significantly change between now and the end of the year.
On impairments and credit risk, I think Triodos, at least for first instance impact of an energy crisis, is well positioned, and its clients are well positioned for that. If you look at the CO2 emissions per financed euros, Triodos has a very low number which should protect our borrowers from a large initial impact. Of course, any secondary impact, if there is a very wide recession, we'll have to wait and see. At least from an energy perspective, our clients should be well sheltered.
Benoit, I also would like to add to my earlier answer on the priorities of Barbara. I think our commitment to our investments in the coming period, Fit for Impact also entails a significant investment program whereby Barbara will be very much responsible for investments in business lending to support scalable growth and to improve our process and technology around our business lending practices. Also, the digitalization and modernization of processes and technologies in finance, procurement, HR, and risk, where we will make a step up following this Fit for Impact program.
Also to a large extent, she will be co-responsible in adopting further best practices in our way of work in our organization to improve the effectiveness and time to market of new products and propositions. In closing, also speeding up the gradual rollout of AI across our primary and secondary processes will also be an important part of her responsibility, as well as continued investments in KYC and robust risk management processes. A very broad portfolio with a broad responsibility.
Thank you. Just to follow up on that, do you think you can fit in the required investments within the current IT budget or just let it grow slightly or do you think there's a step up in IT budget, based on what you expect?
I think the EUR 25 million-EUR 30 million cost reduction that we have indicated includes also the costs of investments. It is a net figure that we have discussed.
Yeah. Thank you very much.
The next question comes from Cor Kluis from ABN AMRO - Oddo BHF. Please go ahead.
Hello. Good morning. Indeed, Cor Kluis, ABN AMRO - Oddo BHF. Couple of questions. Most of, maybe first one question on the revenue guidance. Of course, revenue was guided up in 2026. More specifically on the NII. In H2, the NII was EUR 169. We removed the restructuring effect. Can we at least assume that figure remains stable or will go up? I think 169 X 2 , that means EUR 338 in NII for 2026. Is that at least a minimum, something that you would normally assume? Of course, if the yield curve and the margins, et cetera, remain the same. That's more a concrete guidance for the NII.
Then on the loan losses, the fiberglass loan loss was, of course, quite material, 33% impairment on one book. What actions have you taken after this impairment to make sure that these things won't happen again? It's, of course, we find that a very good decision that you closed Germany, where this came from. But yeah, could you give some comments on maximum individual loan exposures and these kind of things which you normally take into account for management for loan losses? Then my last question is about the asset management operations. I think that's some outflows. Maybe you could specify a little bit sizes, et cetera, and the reasons why that has been the case.
I think it was tax, wealth tax driven in the Netherlands. Maybe you could elaborate on that and, yeah, your view and actions or, yeah, how to go forward. Because ultimately we want to see inflows in that business. That's my questions.
Yeah.
Good morning, Cor. On the question of revenue, we do expect a rising income and we would expect the first half of the year to be in line with the second half of 2025.
To the loan losses. Now, clearly, we have, let's say, seen the developments in this portfolio. I think it's important to emphasize that the exposures had characteristics that were not really representative for the broader Triodos loan book, which is typically built on longstanding sector equities, very close client relationship, relatively moderate leverage, and customers with predictable cash flows and collateral values. It is clear that from our analysis that we have done on the portfolio that this situation really relates to a very specific subsector, and that it does not alter the overall risk profile of our loan book.
Also, I think our conclusion was that not an immediate change in our sector risk appetite or concentration approach is needed. Of course, and we will apply the lessons out of this situation in our ongoing overall portfolio oversight.
On asset management, we did see a decrease in our funds under management. Looking at the whole year, two things stand out for me. The first is something that we already saw in 2024, and that is indeed the continued impact of the changes in Box 3 tax. Which means that especially our Triodos Groenfonds has continued seeing outflows. The second element in 2025 was a reallocation of funds in our cooperation we have between Triodos Belgium, a third party and TIM, in which a reallocation led to a reallocation out of some of the funds that were from Triodos.
The combination of those two were the main drivers of our funds under management drop. For 2026, we will work hard with all our partners to increase, of course, our funds under management. We have also launched a retail product in the Netherlands, an investment product. Combining that, we hope to increase or stabilize our funds under management for the year.
Okay, wonderful. Thank you very much.
The next question comes from Michael Roeg from Degroof Petercam. Please go ahead.
Yes. Good morning. I have three questions, and I would like to do them one by one, please. The first one is on loan production. That has been slower than your growth in deposits for about 18 months. If I understood correctly from the introduction, Kees mentioned that was due to infrastructure problems that have been tackled now. Please explain a bit what kind of infrastructure problems were those, how were they addressed, and have they been solved since the start of the year, or is that something that will gradually come during the first half of the year?
Yeah. It's a good question, Michael, and good morning, by the way. We have seen that it's hard for our relationship managers and our back office and mid-office in business banking to structurally produce more than we did in 2024 and also in parts of 2025. This means that in order to increase production, we are taking two steps simultaneously. On the one hand, we are improving our mid-office and lending processes, which is necessary to become more efficient but also to do more loan production. On the other hand, in a number of targeted places, we are also increasing our number of relationship managers and some of the mid-office capacity.
We started doing that more structurally in the second half of 2025, so we expect to see results on that in 2026.
Okay, that's clear. Thank you. The second question I have is on the operating costs. Slide number 19 is very insightful. First of all, can you confirm that the structural expenses include the legal expenses related to all the cases of the past several years? The second question is you guide for lower operating costs. Is that lower total operating costs or lower structural operating costs?
Yeah. Let me start with the first. What we defined as structural expenses does include all the legal expenses that we've made on litigation.
Clear.
Go on.
Is it fair to assume that those legal cases in 2026 will be much lower than in 2024, 2025?
Yes. That is fair to assume. I think we have seen a drop in legal expenses between the first half of the year of 2025 compared to the second half of the year. We do again expect to see a drop in 2026 compared to 2025. Given the ongoing litigation, we don't expect this to go to zero.
Okay. Clear.
We have.
The guidance.
Yeah. We have indeed made a choice to provide the guidance on our total operating expenses, which includes the provisions.
Okay. Good. Helpful. Yeah, the third question I have is just a short question and indirectly related to this topic. Can you confirm that wage inflation in the Netherlands will be 3.5% this year?
I think the collective labor agreement increase is 3.5%. Overall, with a 3.5% collective labor agreement, you do have to add some to come to the overall expected wage drift of Triodos. Overall-
Okay
There is some increase in seniority and increase in wages through promotions, but the base is 3.5% indeed. Yeah.
Clear. Thank you. That's it from my side. Thank you.
Thank you.
Ladies and gentlemen, it appears we don't have any more incoming questions. With that, I would like to turn the call over to Suzanne for any closing remarks.
Thank you, Alba. On behalf of Marcel and Kees, I would like to thank you for attending this call, and we look forward to speaking to you soon. Have a great rest of your day.