The COVID-19 pandemic has reshaped the world and the business environment with tumultuous economic and financial effects.
As a result, organisations have been compelled to transform to be sustainable and relevant. This requires smooth adaptation and agility of business models, confronting challenges creatively and capitalising on new opportunities.
Several key factors are shaping the operating context both locally and globally. Linked to these market drivers are challenges and opportunities that are general to the external environment and some that are specific to CDB. We have stated appropriate responses, after careful assessment of the impact of these drivers on our Company.
Increasing adoption of technologies such as internet of things, blockchain, robotics, artiﬁcial intelligence (AI) and data analytics, and the pace of change, aﬀect our ability to remain relevant to our customers as well as our competitiveness and the associated operational risk.
There are several aspects that impact the macro economy. The pandemic created severe pressure on the macro economy and customers across various segments in 2020. This impacts our ability to sustain business and achieve our business commitments.
The market interest rates remained low in 2020. The Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) were both reduced five times during the year to 4.5% and 5.5%, respectively, at year’s end and the Statutory Reserve Ratio (SRR) was reduced twice to 2% at year’s end. This affects our net interest margin and profitability.
Social and climate change risk impacts on our Company, our customers and the operating environment.
GRI 103-1, 103-2, 103-3, 203-1, 203-2, 203-3
The above market drivers create trends that present risks, opportunities or both. They have an impact on our stakeholders and our Company on varying degrees. The matrices that follow illustrate the topics that are material to our Company according to their impact on stakeholders and our Organisation. We define material matters as those that significantly affect our ability to create value over the short, medium, and long term. We have determined the materiality of each matter by its relevance, the magnitude of its impact, and the probability of occurrence.
In this section, we look at topics that have the most impact on our value creation process. We view value creation in terms of the needs and priorities of our stakeholders and the context of the constantly changing environment within which we operate.
The material topics are managed through our strategic planning process. Each material topic is linked to achieving one or several strategic imperatives as indicated in the table below. This is done by assigning responsibility to the heads of the relevant divisions of our Organisation, allocating necessary resources based on the significance of each material topic towards achieving the relevant strategic imperatives. To ensure these material topics are achieved, we have embedded goals and targets where relevant into the KPIs. These are reviewed at regular intervals.
In managing these material topics, we have formulated policies to guide our people to conduct activities in a responsible, ethical, and transparent manner. These policies, which are duly adopted by the Board of Directors, are reviewed at predetermined intervals to stay current with the changing environment.
Formal grievance mechanisms are in place to address and resolve grievances. Lending to our customers and dealings with our business partners are screened for social and environmental aspects. All internal controls, policies, and procedures laid down to achieve the objectives of material topics are subject to internal and external auditing and verification to ensure adherence. We report the findings to the BOD and/or Management Committees on a periodic basis for information and corrective action where necessary. The numerous awards and accolades received by our Company demonstrate the effectiveness of the management approach we have adopted.
Our principal stakeholders are investors, customers, business partners, regulators, employees, the community and the environment. We balance the needs of stakeholders over the short and long term to deliver sustainable performance.
Our engagement and relationship with stakeholders enable us to create value for our Company and our stakeholders. The changes brought about by the pandemic impacted the manner, the level, and the frequency of engagement with our stakeholders. Based on the feedback received from our stakeholders, we continue to work on improving our business model and strategic planning processes.
GRI 102-40, 102-42, 102-43, 102-44