Page 73 - Ecobank Gambia Annual Report 2020
P. 73
Risk identification interest rates. Exposure to interest rate risk can result
The Bank identifies market risk through daily monitoring from a variety of factors, including:
of levels and profit and loss balances of trading and non- (i) Differences between the timing of market interest rate
trading positions. The Market Risk Officer together with changes and the timing of cash flows (re-pricing risk);
the Internal Control department monitor daily trading (ii) Changes in the market interest rates producing
activities to ensure that risk exposures taken are within different effects on yields on similar instruments with
approved limits and overall risk tolerance levels set by different maturities (yield curve risk); and
the Board. In addition, Assets and Liabilities Committee (iii) Changes in the level of market interest rates producing
(ALCO) members, the Treasurer and the Risk Manager different effects on rates received or paid on instruments
monitor market risk factors that affect the value of with similar re-pricing characteristics (basis risk).
trading and non-trading positions as well as income The Bank uses gap analysis to measure its exposure to
streams on non-trading portfolios on a daily basis. They interest rate risk. Through this analysis, it compares the
also track liquidity indicators to ensure that Bank meet values of interest rate sensitive assets and liabilities that
their financial obligations at all times. mature or re-price at various time periods in the future.
Interest rate risk The Bank may make judgmental assumptions about
Interest rate risk is the exposure of current and future the behavior of assets and liabilities which do not have
earnings and capital to adverse changes in the level of specific contractual maturity or re-pricing dates.
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