Page 161 - RFHL ANNUAL REPORT 2024_ONLINE

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22. Risk management (continued)
22.2 Credit risk (continued)
22.2.7 Analysis of gross carrying amount and corresponding ECLs are as follows:(continued)

Investment securities

2024 2023
% %

Stage 1 84.5 83.0
Stage 2 5.5 5.6
Stage 3 0.1 0.0
POCI 9.9 11.4

100.0 100.0

2024 Stage 1 Stage 2 Stage 3 POCI Total

Gross balance 17,272 1,120 14 2,032 20,438
ECL (4) (12) (7) (92) (115)

17,268 1,108 7 1,940 20,323

ECL as a % of gross investments 0.1 1.1 50.0 4.6 0.6

2023

Gross balance 16,851 1,128 7 2,308 20,294
ECL (13) (14) (5) (159) (191)

16,838 1,114 2 2,150 20,103

ECL as a % of gross investments 0.1 1.2 74.4 6.9 0.9

Despite the increase in the overall portfolio, the ECLs decreased given lower PD and LGDs, reflective of a decision
to purchase higher grade investments to improve the credit quality of the portfolio.

22.3 Liquidity risk
Liquidity risk is defined as the risk that the Group either does not have sufficient financial resources available to meet all
its obligations and commitments as they fall due, or can access these only at excessive cost.

Liquidity management is therefore primarily designed to ensure that funding requirements can be met, including the
replacement of existing funds as they mature or are withdrawn, or to satisfy the demands of customers for additional
borrowings. Liquidity management focuses on ensuring that the Group has sufficient funds to meet all of its obligations.

Three primary sources of funds are used to provide liquidity – retail deposits, wholesale deposits and the capital
market. A substantial portion of the Group is funded with ‘core deposits’. The Group maintains a core base of retail and
wholesale funds, which can be drawn on to meet ongoing liquidity needs. The capital markets are accessed for medium
to long-term funds as required, providing diverse funding sources to the Group. Facilities are also established with
correspondent banks, which can provide additional liquidity as conditions demand.