Page 262 - ACCESS BANK ANNUAL REPORTS_eBook

31 December 2016 Fixed Floating Non-interest Total
bearing
ASSETS N'000 N'000 N'000 N'000
Cash and balances with banks 41,798,197 - 476,199,052 517,997,249
Non pledged trading assets 44,570,231 - 59,348 44,629,579
Derivative financial instruments - - 155,772,662 155,772,662
Loans and advances to banks 104,006,574 - - 104,006,574
Loans and advances to customers 4,374,708 1,590,187,637 - 1,594,562,345
Pledged assets 314,947,502 - - 314,947,502
Investment securities:
– Available-for-sale 62,660,545 - 58,177,045 120,837,590
– Held-to-maturity 40,363,051 - - 40,363,051

TOTAL 612,720,808 1,590,187,637 690,208,107 2,893,116,553

LIABILITIES
Deposits from financial institutions 95,122,188 - - 95,122,188
Deposits from customers 799,495,575 1,013,547,297 - 1,813,042,872
Derivative financial instruments - - 30,275,181 30,275,181
Debt securities issued 123,315,728 120,636,690 - 243,952,418
Interest-bearing borrowings 327,504,654 44,675,131 - 372,179,785

TOTAL 1,345,438,145 1,178,859,118 30,275,181 2,554,572,444

Derivative financial instruments include elements of interest rate differential between the applicable underlying curren-
cies. Further details on the fair value of derivatives have been discussed in Note3.9(J) of the financial statement.

Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because
of changes in market interest rates. The Group takes on exposure to the effects of fluctuations in the prevailing levels of
market interest rates on both its fair value and cash flow risks. Interest margins may increase as a result of such changes
but may reduce losses in the event that unexpected movements arise. The Board sets limits on the level of mismatch of
interest rate repricing (note 5.2.1) and value at risk (note 5.2.2) that may be undertaken, which is monitored daily by Group
Treasury.

Cash flow and fair value interest rate risk
The group’s interest rate risk arises from risk assets, long-term borrowings, deposits from banks and customers. Borrow-
ings issued at variable rates expose the group to cash flow interest rate risk. Other financial liabilities issued at fixed rates
expose the group to fair value interest rate risk.

The management of interest rate risk against interest rate gap limits is supplemented with monitoring the sensitivity of
the Group’s financial assets and liabilities to various scenarios.

Interest rate movement have both cash flow and fair value effect depending on whether interest rate is fixed or floating.
The impact resulting from adverse or favourable movement flows from either retained earnings or OCI and ultimately
ends in equity in the following manner:

(i) Retained earnings arising from increase or decrease in net interest income and the fair value changes reported in profit
or loss.

262 Access BAnk Plc
Annual Report & Accounts 2017