It’s taken a decade, and two defining crisis responses, for the banking industry to finally look beyond one set of stakeholders and address other looming issues.
For our latest piece of research, we looked at the opening and closing comments of the chairmen (and it was all men, regrettably) of 10 major banks given in their annual reports from 2010 and 2020. We analysed the variances in language and content, as well as sentiment, using a sentiment analysis tool.
Where were the global banks in 2010, and where were they in 2020? I don’t need to teach anyone a history lesson, but it’s good to remember the challenging position, post the global financial crisis, that banks were in when annual reports were published through the spring of 2011. Managing public bailouts in many circumstances, and being reined in by regulation like never before, they had to prove that they still had a place in their investors’ portfolios.
2020 is fresher in all our memories, but probably not for good reasons. The pandemic was a year-ish in. We all knew back then that it would it not be an easy exit – and so it still proves in some geographies.
But how did bank chairmen reflect on the crises that they had just come through? Whether they wrote a version of the words themselves, or whether someone in their office or the comms team was responsible, the output from the view on each of these years was fascinating.
Because whereas highlighting success after a near-death experience was the major theme 2010, a decade later they were forced by a different crisis to think more broadly.
The people piece
One of the most striking differences, our researchers said, was the focus shift from ‘capital at work’ to ‘people delivering results’. Quite simply, the chairmen’s letters mentioned ‘colleagues’ 550% more in 2020 than in 2010. ‘Colleagues’, let’s not forget, is the new and acceptable way of saying ‘staff’. But it at least shows that from high up on the leadership floor of the building, they’re noticing that it was their people that kept soldiering on.
Colleagues got a thank you for three things: their resilience and dedication; empathy around their losses of loved ones in the pandemic; and providing business continuity, often with the call-out being to ‘the colleagues, led by our CEO’ or similar.
More broadly, if you want to see a real split in how banks talked about their colleague response, then the emotive language used in the US and UK-based banks was markedly different to the rather more clinical treatment from European banks. Christian Sewing at DB trumpeted success on internal restructuring and the pandemic-affected market: “we mastered these twin challenges better than expected…”. Over at Goldman Sachs, David Solomon said: “we never would have done it without the extraordinary efforts of our people. I am humbled by the commitment I see across our firm every day.” JP Morgan’s Jamie Dimon tells his shareholders to appreciate ‘our people’, making it clear that results come from their hands and brains.
Still shareholders first?
The annual report in 2010 was a status update for investors. By 2020, many corporates are having to weave in all kinds of other stuff like more complete environmental impacts, far more risk reporting, community projects, and so on. You might argue, that’s all to give shareholders a more complete picture. But by 2020, every stakeholder was looking at the report as an ever-richer account of the non-financial progress being made.
In 2010, after the GFC, banks were falling over themselves to prove that they were on the right track and making money; Jamie Dimon kicked off with “Our return on tangible equity for 2010 was 15%.” Talk about the soft skills he’s so famous for, right?
StanChart’s John Peace almost dislocated his shoulder when patting himself on the back: “I am delighted to report that 2010 was the eighth consecutive year of record income and profits.” What global financial crisis?
But by 2020, the word ‘shareholder’ gets just 45% of mentions it scored in 2010. Predictably, variants of ‘sustainable’ get 200% more mentions, while ‘community’ outscores ‘shareholder’ by 30%.
A sentimental journey
Using sentiment analysis can be a little hit-and-miss when using relatively small chunks of text, of 600-900 words each, but one clear trend was that chairmen seemed to be more downbeat in 2020 that they were in 2010. By almost a score of 2 to 1, sentiment scores fell in the decade.
Does that reflect a less bullish and combative trend, with senior bankers humbled by elements out of their control, coupled with the realisation – finally – that it really was the hundreds of thousands of individuals making an extraordinary effort that delivered returns for stakeholders? And that to be relevant to investors, they’ve got to start thinking beyond the six-year loan tenor?
Let’s see what they say in next year’s crop of letters to stakeholders.
At Guarente + Company, we do research that helps our clients have ever greater insight into their comms. The blogs – like this one – are a useful by-product. If you’d like us to undertake research on your industry or business, contact us.
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