ANNUAL REPORT 2020

Materiality

GRI 102-47, 103-1

 

The materiality assessment is conducted in the context of the Bank’s value creation process (refer Value Creation Model on page 24), strategic Direction (refer Strategic Direction on page 40), emerging global and local trends (refer Operating Context on page 27), and feedback from its many stakeholder engagement mechanisms (refer Stakeholders on page 32).

The preliminary part of the process consisted of a PESTEL analysis of potential material issues. These issues were categorised under the stakeholder group which they impact the most. This categorisation is depicted in the following table.

Stakeholders Political
A
Economic
B
Social
C
Technological
D
Environmental
E
Government/Regulator
F

Investors/
Shareholders
Economic slowdown Growing influence of social media Unorthodox competition IFRS 9 1
Cautiousness among foreign direct investors COVID-19 impact Basel III 2
Spending cuts and pullbacks Higher regulatory capital 3
Governance and accountability 4

Customers
Lower deposit inflows Increasing customer expectations Cloud computing Adherence to Islamic banking principles 5
Lower corporate profits Customer trust and protection eOnboarding 6
Increase in non-performing loans and decreasing credit worthiness Quality of service and customer satisfaction Digitalisation and automation 7
Lower interest rates Engaging with customers Innovation and product development 8
Growth in residential mortgages Artificial intelligence and robotics 9
Government support package for private businesses Blockchain 10
Lockdown Cybersecurity threats 11
Declining oil prices Infrastructure and accessibility 12
Data security 13
     

GRI 102-47

   

Employees
Employee productivity Technology driven change in job skills Human and labour rights 14
Staff retention Operational efficiency 15
Saudisation 16
Employee engagement 17
Employee development 18
Equal opportunity and anti-discrimination 19

Community
and
environment
Geopolitical conflicts Commitment to SDGs Reduced impact of operations ESG risk in lending and investment 20
Lower spending power in local population Increasing demand for green banking and green lending Compliance with regulations 21
Community investment and engagement 22

Business
partners
Sustainable procurement 23
Strengthening relationships 24

Government/
Regulators
Growth of MSME sector (a Vision 2030 goal) Expected decrease in non-oil revenue Ethical business practices and financial crime prevention 25
Diversification of the economy
(A Vision 2030 goal)
26

GRI 102-47, 103-2, 103-3

Following this process the topics were mapped according to those that have the most impact on the stakeholders and/or the Bank. The topics were categorised as risks, opportunities or both.

Opportunities and risks that were rated moderate to very high in importance for the organisation and for the stakeholder are regarded as material topics. All topics are depicted in the materiality matrix.

Management approach

Material topics receive management attention, especially with regard to the Bank’s business strategy, resource allocation, and activities. They are assigned to the relevant Heads of business or functional units. Resource allocation is based on the degree of materiality of any particular risk or opportunity.

In line with the materiality study, the Bank continues to develop and roll out policies as required to guide its employees in the smooth and efficient implementation of their duties.

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