Materiality

SAIB strives to create value in the short, medium, and long term for itself and its stakeholders. The process of value creation is a two-way process, wherein the Bank delivers value to its stakeholders as well as derives value from them. The process must be considered within the context of the Bank’s operating environment and the needs and priorities of its stakeholders.

The topics that have the most impact on the Bank’s value creation process have been identified through a multi-step process. The first step of the process was a PESTEL analysis of potential material issues categorized under the stakeholder group on which they have the most impact, as shown in the following table.

Stakeholders	Political	Economic	Social	Technological	Environmental	Legal/Regulatory
Investors/ Shareholders		Economic slowdown	Growing influence of social media	Unorthodox competition		IFRS 9
		Depreciating currencies against USD				Basel III
		Expected growth in the Saudi economy				Higher regulatory capital
		Financial system stability				Governance and accountability
Customers		Propensity to invest in Saudi Arabia	Increasing customer expectations (especially in the younger generation)	Cloud computing		Adherence to Islamic banking principles
		Corporates are de-leveraging	Customer trust and protection	e-onboarding
		Increase in non-performing loans	Quality of service and customer satisfaction	Digitalization and automation
		New parallel stock market being set up for MSMEs	Engaging with customers	Innovation and product development
		Higher oil prices		AI, Robotics
		Higher percentage of short-term loans		Blockchain
				Cybersecurity threats
				Infrastructure and accessibility
				Data security
Employees			Employee productivity	Technology driving change in job skills		Human and labour rights
			Staff retention	Operational efficiency
			Saudization
			Employee satisfaction and engagement
			Staff training
			Soft skills development
			Equal opportunity and anti-discrimination
Community and the environment	Geopolitical conflicts		Need to commit to Sustainable Development Goals		Reduction of environmental impact of operations	ESG risk in lending and investment
			Higher spending power in local population		Increasing demand for green banking and green lending	Compliance with regulations
			Community investment and engagement
Business partners/ Suppliers			Sustainable procurement
			Strengthening relationship
Government/ Policymakers		Expected increase in non-oil revenue
	Slow growth in economic integration in the GCC
	Growth of MSME sector being part of the Vision 2030 goals
	Diversification of the economy being one of the Vision 2030 goals
Regulators						Business ethics and prevention of financial crime

The next step of the process was to map the topics that have the most impact on the stakeholders and/or SAIB. The topics have been categorized as risks or opportunities or both.

The degree of materiality of importance of a topic is assessed according to its relevance to SAIB or the stakeholder and its significance, as determined by the probability of its occurrence and the magnitude of its impact. Material risks and opportunities are further analyzed to determine whether they are of high, moderate, or low importance to the Bank and its stakeholders.

The outcomes of the materiality analysis contributed to the formulation of the Bank’s strategies and strategic imperatives.

Management approach

Material topics are managed in accordance with the Bank’s strategic plan and responsibilities are assigned to the respective functional unit heads as per the Organization’s structure. The degree of materiality of a risk or opportunity will be a guideline for resource allocation. Accordingly, the Bank has designed and implemented several policies relevant to material topics to guide its employees in conducting their duties.

Opportunities to be seized

Risks to be mitigated

GRI 102-47