ANNUAL REPORT 2020

Value Creation Model

 

The Bank’s robust value creation model illustrates the multiple forms of capital that are the inputs to the Bank’s business activities as it creates value over time against the fast-paced changes of its operating environment.

The value drivers

The Bank’s value is driven by its Vision and Mission (refer This is Al Rajhi Bank on page 09); engagement with stakeholders (refer Stakeholders on page 32); and integrated thinking and strategy (refer Strategic Direction on page 40). The adoption of a multi-capital mindset is driving the Bank’s strategy formulation, powering it further on its integrated reporting journey.

The results chain

The Bank’s future earnings are driven by value derived from and delivered to stakeholders. The Bank creates value in this manner sustainably over time as it continues to build and strengthen relationships with its key stakeholder groups. The Bank considers such stakeholder groups to be forms of “capital.”

In addition to financial capital and Institutional capital, other capitals include investor capital, customer capital, business partner capital, employee capital, government and regulator capital, and social and environmental capital (refer Stakeholders on page 32). Together these capitals provide the “inputs” for the Bank’s activities enabling delivery of value to and deriving of value from stakeholders over time.

The Bank’s system for transforming input capitals through business activities into outputs, outcomes and impact is illustrated in the Value Creation Model on page 24. Each segment that follows “Inputs” is part of a results chain that represents value creation in the current, short, medium, and long term respectively.

Completing the picture

The business drivers and the results chain described previously are complemented by events and trends in the internal and external operating environment (refer Operating Context on page 27), good governance (refer Governance on page 105) and risk management practices (refer Risk Management on page 135), and the ongoing monitoring and evaluation of the Bank’s performance in the current, short, medium, and long term.

Despite the vibrant nature of the value creation process – where the capitals are constantly rising, falling, or being preserved – the Bank remains focused on increasing the overall stock of capital (refer Business in Perspective on page 45).

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