Scope and Boundary

The DFCC Bank Annual Report 2023 (herein referred to as “the Report” or “the Annual Report”) is the Bank’s 11th Integrated Report and presents a concise yet holistic picture of the Bank’s strategies, goals, governance, and operations from 1 January 2023 to 31 December 2023 which is the financial year of the Bank’s reporting.

The scope and boundary of this report mainly cover the core banking activities of DFCC Bank PLC (herein referred to as “DFCC Bank”, “DFCC” or “Bank”) while presenting both financial and non-financial aspects of the Bank’s performance. Accordingly, this Annual Report reflects the Bank’s integrated approach to management, ensuring that different functions are not in isolated silos but are integrated. In line with global trends, the Bank increasingly focuses on sustainability, which the Report emphasises. Non-financial factors that impact the Bank’s ability to create value, such as social and environmental impacts, are therefore given prominence in the Report. The Report brings out the Bank’s value creation in the short, medium, and long-term. The Bank’s overall strategy and that of its separate divisions are given prominence in the Report. In addition, an overview and financial performance of the companies in the DFCC Bank Group (herein referred to as “Group”), i.e. its subsidiaries, namely DFCC Consulting (Pvt.) Limited, Synapsys Limited, Lanka Industrial Estates Limited, Joint Venture – Acuity Partners (Pvt) Limited and Associate Company – National Asset Management Limited are presented in this Report. (details given on Business Partner Capital). The respective entities have been duly identified where applicable.

This Report is in accordance with the boundaries of our Financial Statements and includes DFCC Bank and its subsidiaries. Stakeholders and entities to be included in this Annual Report are decided based on the <IR> Framework discussed below:

 

 

 

Reporting Frameworks

 

The guiding principles in integrated reporting have been considered in preparing and presenting the Report. This includes material risks, opportunities, and outcomes attributable to or associated with the operating environment (Integrated Risk Management), our value creation model (Our Value Creation Model), capitals (Management Discussion and Analysis) and corporate governance (Corporate Governance) etc.

Sustainability must be supported by governance frameworks, systems, and procedures. This is depicted in the governance section of the Report. Risks and opportunities are featured throughout the Report, while a section is dedicated to the risk management process.

Value Creation

DFCC’s value creation process is captured and clearly articulated in its business model on Our Value Creation Model.

The model describes inputs and outputs regarding capitals and their growth/transformation. The value derived by the Bank and delivered to stakeholders is described under outcomes, while the ultimate outcome is described under impact. The entire process is placed within the context of the operating environment and governance structures.

The Eight Capitals

The IFRS Foundation recognises six distinct but interrelated capitals:

Financial, Manufactured, Natural, Human, Intellectual, and Social Relationship. Integrated Reporting is based on the understanding that future cash flows and other conceptions of value depend on a wide range of capitals, interactions, activities, causes and effects, and relationships other than those directly associated with changes in financial capital. The organisation’s operations create value for itself and its stakeholders. During value creation, capital is consumed, developed, and transformed.

As provided in paragraphs 2.17 and 2.18 of the Integrated Reporting <IR> Framework, organisations are not required to adopt the Framework’s categorisation of capitals. Thus, the capitals have been categorised in a manner that best describes the Bank regarding the Bank’s value creation process.

Capitals described in this Annual Report:

The relationships and interconnections between the various capitals will be brought out in the Report. Reporting on the multiple products, services, activities, and operations will be placed appropriately within the capitals.

Materiality

According to the principles of integrated reporting, a matter is considered to be material if it substantively affects the ability of an organisation to create value in the short, medium, and long-term. Materiality is largely industry-specific but is also organisation-specific. Identification of material matters is interwoven with the identification of risks and opportunities featured throughout the Report.

DFCC’s strategies, governance, plans, and operations are guided by integrated thinking and materiality matters. Financial and non-financial factors are considered and are given appropriate importance.

Ascertainment of material matters requires input from all key divisions of the Bank and must consider all stakeholder groups’ perspectives. The process must also be placed in the context of the operating environment.

Precautionary Principle

We use the Precautionary Principle as a social and environmental decision-making guideline. The salient points of the Principle are:

• Taking preventive action in the face of uncertainty.
• Shifting the burden of proof to the proponents of an activity.
• Exploring a wide range of alternatives to possibly harmful actions.
• Increasing public participation in decision-making.

Forward-looking Statements

This Report includes forward-looking statements relating to the likely future financial position and results of the Bank’s operations. By their very nature, these statements involve elements of risk and uncertainty as they relate to events and depend on circumstances that may or may not occur in the future.

Looking Forward

The last few years have been highly turbulent, politically, economically, and socially. The current environment is still somewhat fluid. Given this backdrop, it is imperative to take a forward-looking view. We cannot foresee the future, but we attempt to present the most probable scenario as we see it.

Combined Assurance

The mandatory independent review of the financial statements, including the notes to the accounts, has been provided by external auditors – Messrs KPMG Sri Lanka, Chartered Accountants. Their opinion is given on Independent Auditors’ Report.

Further, independent assurance on the following presented in this report has been provided by Messrs Ernst & Young, Sri Lanka (EY).

• Independent assurance on the DFCC Bank’s reporting adherence to the GRI standards
• Independent assurance on DFCC Bank’s reporting adherence to the Integrated Reporting <IR> Framework

Board Responsibility Statement

The Board of Directors of DFCC Bank PLC confirms that the 2023 Annual Report has been prepared and presented in accordance with the <IR> Framework and acknowledges its responsibility for ensuring the integrity of this integrated report. Accordingly, the Board is satisfied with the presentation of information with regard to the Bank’s strategy and value creation addresses material matters relevant to the Bank and its stakeholders. The Board has considered the completeness of the information presented in the report based on the combined assurance process outlined above.

Signed on behalf of the Board,

N H T I Perera
Director/Chief Executive Officer

Feedback

For any clarification
on this Report please write to:

The Company Secretary
DFCC Bank PLC
73/5, Galle Road,
Colombo 3,
Sri Lanka
Email: info@dfccbank.com

Company Secretary

Ms N Ranaraja

Registered office

73/5, Galle Road,
Colombo 3,
Sri Lanka
Phone: +94 11 244 2442
Email: info@dfccbank.com
Website: www.dfcc.lk