Page 59 - Agib Bank Ltd Annual Report and IFRS Financial statements 2020

securities (SUKUK), loans and advances to banks (inter-bank facilities), to ensure that sufficient liquidity is (iii) Market risk
maintained within the bank as a whole.
Market risk is the risk of loss of income arising from unfavourable market movements, including foreign exchange
All liquidity policies and procedures are subject to review and approval by ALCO. Daily reports cover the liquidity rates and profit rates. The objective of market risk management is to manage and control exposures within
position of the bank. A summary report, including any exceptions and remedial action taken, is submitted regularly acceptable parameters, whilst optimising returns. The Company is not exposed to any material foreign currency
to ALCO. risk. Given the bank’s current profile of financial instruments, the principal exposure is the risk of loss arising from
fluctuations in the future cash flows or fair values of these financial instruments because of a change in achievable
Exposure to liquidity risk rates. This is managed principally through monitoring gaps between effective profit and rental rates and reviewing
The key measure used by the bank for managing liquidity risk is daily liquidity report. The Bank liquid ratio (which approved rates and bands at regular re-pricing meetings:
is the ratio of liquid assets to demand deposits from customers) at the reporting date shows excess liquidity
position of the Bank.  Profit rates for Commodity Murabaha receivables are agreed with the counterparty bank at the time of
each transaction and the profit (mark-up) and effective yield rate is consequently fixed (for Murabaha) for
the duration of the contract. Risk exposure is managed by reviewing the maturity profiles of transactions
entered into.
At the reporting period excess liquidity was as follows:  Effective rates applied to new consumer finance transactions are agreed on a monthly basis by ALCO
2020 2019 2018 and the profit (mark-up) will then be fixed for each individual transaction for the agreed deferred payment
 term.
Profit rates payable on Mudaraba customer deposit accounts are calculated at each month-end in line
At 31 December 124.00% 218.0% 204.8% with the profit allocation model and the customer terms and conditions. Profit rates payable on Murabaha
deposits are agreed with the customer at the time of each transaction and the profit (mark-up) and effective
Average for the period 142.70% 181.9% 218.3% yield rate is consequently fixed (for Murabaha) and maintained (for Wakala) for the duration of the contract.
Maximum for the period 201.9% 221.5% 275.5% Risk exposure is managed by reviewing the maturity profiles of transactions entered into.
Minimum for the period 83.50% 142.4% 161.0%

Management of market risk
Overall authority for market risk is vested in ALCO. Risk Management Committee is responsible for the
Residual contractual maturities of financial liabilities (In millions of D) development of detailed risk management policies (subject to review and approval by the board) and for the day-
Gross
nominal Less More to-day review of their implementation.
3
Carrying inflow / than 1 - 3 months 1 - 5 than Carrying Less than 3 - 6 6-1 1 - 5
1 +5
amount (outflow) month months to 1 year years 5 years amount 3 months months months years years
31-Dec-20 31-Dec-20
Non-derivative liabilities 897,150 897,150
Cash and cash equivalents - - - -
Deposits from banks - - - - - - - Islamic finances customers 1,159,410 13,847 80,829 300,406 749,112 15,216
Investment securities 309,884 - 309,884 - -
Deposits from customers 2,482,733 2,482,733 972,714 9,094 1,500,925 - -
2,366,444 910,997 80,829 610,290 749,112 15,216
2,482,733 2,482,733 972,714 9,094 1,500,925 - -
31-Dec-19 Deposits from banks - - - - - -
Non-derivative liabilities Deposits from customers 2,482,733 972,714 9,094 1,500,925 - -
Deposits from banks - - - - - Effect of derivatives held for risk
management - - - - - -
Deposits from customers 1,609,467 1,609,467 365,494 10,343 1,233,630 - -
2,482,733 972,714 9,094 1,500,925 - -
1,609,467 1,609,467 365,494 10,343 1,233,630 - -
31-Dec-19
Cash and cash equivalents 359,414 359,414 - - -
Islamic finances customer 820,863 25,599 123,975 175,345 482,881 13,063
Investment securities 438,027 - 128,507 309,520 -
43 44
Annual Report and IFRS Financial Statements for the year ended 31 December 2020 58