Page 50 - Agib Bank Limited Annual Report 2021

Personal lending liabilities as they fall due. The risk arises from
mismatches in the cash flows.
The Bank’s personal lending portfolio consists of
secured and unsecured loans.
Management of liquidity risk
Corporate lending
The bank’s approach to managing liquidity is to
The Bank requests collateral and guarantees for ensure, as far as possible, that it will always have
corporate lending. The most relevant indicator of
corporate customers’ creditworthiness is an analysis sufficient liquidity to meet its liabilities when due,
of their financial performance and their liquidity, under both normal and stressed conditions, without
leverage, management effectiveness and growth incurring unacceptable losses or risking damage to
ratios. For this reason, the valuation of collateral the bank’s reputation.
held against corporate lending is not routinely
updated. The valuation of such collateral is updated Treasury Department receives information from
if the loan is put on “watch-list” and is therefore other business units regarding the liquidity profile of
monitored more closely. their financial assets and liabilities and details of
other projected cash flows arising from projected
For credit-impaired loans the Bank obtains future business. Treasury Department then
appraisals of collateral to inform its credit risk maintains a portfolio of short-term liquid assets,
management actions. As at 31 December 2021 the largely made up of short-term liquid investment
net carrying amount of Islamic finance to corporate securities (SUKUK), loans and advances to banks
customers was D2.170billion, (2020: D1.159billion).
(inter-bank facilities), to ensure that sufficient
Investment securities liquidity is maintained within the bank as a whole.

The Bank holds investment securities measured at
All liquidity policies and procedures are subject to
amortised cost with a carrying amount of review and approval by ALCO. Daily reports cover
D314million. The investment securities held by the the liquidity position of the bank. A summary report,
Bank are sovereign debts (Sukuk AL Salam).
including any exceptions and remedial action taken,
is submitted regularly to ALCO.
(ii) Liquidity risk

Liquidity risk is the risk that the Bank will encounter
difficulty in meeting obligations from its financial

Exposure to liquidity risk
The key measure used by the bank for managing liquidity risk is daily liquidity report. The Bank liquid ratio (which
is the ratio of liquid assets to demand deposits from customers) at the reporting date shows excess liquidity
position of the Bank.

At the reporting period excess liquidity was as follows:
2021 2020

At 31 December 80.90% 124.00%

Average for the period 93.85% 142.70%
Maximum for the period 116.50% 201.9%
Minimum for the period 71.00% 83.50%

Annual Report and IFRS Financial Statements

Agib Bank Annual Report 2021 www.agib.gm 50