Back in 2014 I was working on an analysis of the credit default rates of social enterprises. The only way to possibly estimate them was using the balance sheet of those banks which are interchangeably defined as value banks, social banks or ethical banks. I was really surprised about the growth of this segment.

I was doing a similar analysis in 2020 and it really struck me to see the continuous growth rates. Take a look at the figures of the German GLS Bank in the table below.

Year Total Balance Total Loans Equity
2011 2 262 1 106 117
2012 2 715 1 401 160
2013 3 237 1 636 197
2018 5 681 3 353 470
2019 6 714 3 770 545

 

It is not a singular phenomenon. The numbers for the Dutch Triodos Bank are even more impressive.

Year Total Balance Total Loans Equity
2009 2 987 1 661 314
2010 3 495 2 128 362
2011 4 291 2 838 451
2012 5 291 3 285 565
2013 6 447 3 545 654
2015 8 211 5 216 781
2016 9 081 5 708 904
2017 9 902 6 598 1 013
2018 10 850 7 248 1 112
2019 12 060 8 187 1 200

 

Indeed, you might wonder how good the loan book can possibly be. Fast-growing banks often have the tendency to compromise the quality of the loans they are providing to companies and individuals. The Austrian Hypo Alpe Adria Bank was such an example.

However, if you look at the default rates it is really limited. Triodos Bank had outstanding loans amounting to €8.2 billion in 2019 with impairments at a level of 0.05% for the same year. Take a look at the overview of loans and the movement of the provision for doubtful debts in the screenshots below.

The same picture is repeated across the continent. The Global Alliance for Banking on Values is publishing statistics on their numbers as well: MagNet Hungarian Community Bank, Crédit Coopératif, Merkur Cooperative Bank or Alternative Bank Switzerland. The statistics also include Return on Equity, Net Income and the number of clients.

The main underlying trend seems to be the interest from customers. However, the total amount of capital managed by those banks is still very small compared to traditional banks.