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Real Economy – Real Returns The Business Case for Values-based Banking

17 February 2020

Amsterdam, The Netherlands.

Values-based Banks (VBBs) continue to outperform Global Systemically Important Banks (GSIBs) on financial returns and growth, focus on the real economy and clients’ needs, and the delivery of social and environmental impact, according to a new research report by the Global Alliance for Banking on Values (GABV).

Financial data analysed by the GABV through 2018 from over 50 VBBs and 30 GSIBs showed that VBBs continue to demonstrate steady financial returns and significantly stronger levels of growth with a strong focus on the real economy built on solid capital positions. What is more, it is striking that with the 2007/2008 crisis now several years behind us the conclusions of the ninth update of the Real Economy – Real Returns research fundamentally remain the same.

This research uses publicly available financial information. It relies on available lending and deposit information as proxy for the distinction between the real and the financial economy activities of banking institutions; Equity to Total Assets, Tier 1 Capital Ratio and Risk Weighted Assets to Total Assets for capital comparisons; Returns on Assets and Returns on Equity for financial viability and profitability comparisons; and Loans, Deposits, Assets, Equity and Total Income for growth comparisons. Better data will contribute to a better understanding as to how values-based banking institutions’ focus on the real economy and societal and environmental sustainability impacts both financial performance and their capacity to bring about a just transition to a low carbon economy.

The findings of this report are important not only for VBBs and GSIBs but also for clients, policymakers and regulators.

Marcos Eguiguren, executive director of the Global Alliance for Banking on Values, said: “If we have a growing group of banks all over the world that use banking to create positive impact in society, that outperform other banking institutions and that are, in essence, less risky than others, the whole banking industry should look at this example and should take clear steps towards Values-based Banking”. Please refer to the Principles of Values-based Banking for an understanding of the values-based banking model.

 

About GABV
The Global Alliance for Banking on Values is a not-for-profit organisation and independent network of banks and banking cooperatives. They have a shared mission to use finance to deliver sustainable economic, social and environmental development. Founded in 2009, the GABV comprises of 63 financial institutions and 16 supporting partners operating in countries across Asia, Africa, Australia, South and North America and Europe. Collectively, we serve more than 67 million customers, hold over $200 billion USD of combined assets under management, and we are supported by more than 76,000 co-workers. Learn more about the GABV, meet all our members and find how we are working to build a growing, global, values-based banking movement.

The full report can be downloaded here

Fernando García-Escudero
Communications and Brand Manager
T +31 (0) 611 807 718
E fernando.gescudero@gabv.org

 

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