Aligning bank reporting with shareholder value

in Audit, 14.05.2014

For banks here in Switzerland as well as abroad, there has been a trend in financial reporting in recent years of greatly expanded interim and annual financial reports. Since the financial crisis, banks have been faced with ever increasing disclosure requirements that have inflated the size of reports. Yet at the same time many users of financial statements are feeling that they actually get less really insightful information about these companies.

KPMG’s recent thought leadership piece “Aligning bank reporting with shareholder value” discusses the trend of compliance only disclosures, and explores a number of ways that banks could break away from this with financial reports that provide focus on shareholder value creation.
The practical recommendations that banks could consider when telling their business story to shareholders:

  1. The link between earnings and the financial risk choices taken by the business needs to be made clearly.
  2. Greater focus on operational performance could help investors understand how business prospects have been enhanced.
  3. ‘Business as usual’ cannot be taken for granted – A longer term perspective in reports is needed to help explain how the future of the business has been developed and protected.

Shareholders may well appreciate timely financial information which is focused on their needs as investors in the business.