Value creation and capital formation

Value creation and capital formation are integral aspects of any organisation’s growth and success. In today’s dynamic business landscape, organisations need to go beyond financial value and consider a broader range of capitals to drive sustainable growth. This integrated report showcases the value the Bank has created for its stakeholders, evident in various types of capital described here and the Bank’s consistent ability to derive value from these capitals in the short, medium and long term.

Multi-capital model

Utilising a “multi-capital” model is a fundamental principle of Integrated Reporting, allowing us to comprehensively understand and disclose the diverse facets of value creation, transcending beyond mere financial gains. This interconnectedness underscores the significance of delivering value – both financial and non-financial – to investors, customers, employees, partners, regulators, society and the environment, which in turn drives our future earnings and intrinsic value. This holistic approach and the underlying duality of value creation, i.e. delivering value to and deriving value from various stakeholders, is epitomised by the multi-capital model, which acknowledges different forms of capital, including financial, manufactured, intellectual, human, social and relationship and natural capital.

The interconnectedness of these capitals is paramount, as the Bank’s ability to generate value for stakeholders and for itself is intricately linked. The greater the value the Bank generates for its stakeholders, the greater the value the Bank can expect in return. By embracing a broader perspective of value creation beyond financial metrics, the Bank has been able to capture a more comprehensive range of information and enhance its disclosures relating to the value creation process.

Strategic imperatives and capital formation

To drive value creation over the short, medium and long term, the Bank needs to focus on its strategic imperatives. These imperatives serve as guiding principles for sustainable growth and include prudent growth, customer centricity, leading through innovation and operational excellence.

• Prudent growth involves astute business expansion with a long-term perspective, ensuring sustainable value creation.
• Customer centricity emphasises enhancing the quality of stakeholder interactions and experiences, leading to increased value for both the Bank and its customers.
• Leading through innovation encourages the Bank to continuously innovate and improve, driving value creation through new products, services and processes.
• Operational excellence focuses on enhancing operational efficiencies to improve productivity and customer service, leading to value creation.

Capital formation is a result of strategic actions undertaken by the Bank to grow its stock of capitals and create value. These actions, often referred to as value driver activities, contribute to the growth of financial, manufactured, intellectual, human, social and relationship and natural capitals.

The Management Discussion and Analysis structured on our Sustainability Framework and strategic imperatives, depicts how we steer strategic actions to grow our capitals and create value.

The Statement of Capital Position (Table 07) reflects the value amassed over 104 years as a result of these actions and the relationships they foster, fueling our future expansion and value generation, distinguishing us among private sector banks.

Table 03 highlights the structured mechanisms of the Bank for stakeholder engagement process and how it aids in adapting to challenges, fortifying our business model, fostering innovation and guiding strategic planning.

Sustainability and long-term value creation

The Bank always focuses on long-term sustainability and value creation. By aligning its actions with Sustainable Development Goals (SDGs) and adhering to guiding principles, the Bank contributes to a more sustainable future while creating value.

Furthermore, the Bank strives to diversify its risk exposures and revenue streams geographically. This expansion, both organic and inorganic, helps improve the sustainability and long-term value creation of its operations. By constantly seeking opportunities for growth and innovation, the Bank has been able to ensure its continued success and value creation and make a positive impact on the world.