Page 415 - Bank-Muamalat-Annual-Report-2021

ANNUAL REPORT 2021 413
SUSTAINABILITY STATEMENT OUR GOVERNANCE OUR NUMBERS OTHER INFORMATION

8.4 lIquIDITy rIsK (conT’D)

liquidity and funding risk (cont’d)
To effectively manage its liquidity, the Bank has the following policies and strategies in place:
• Management under normal condition:

Normal condition is defined as the situation in which the Bank is able to meet any liquidity demands when they come
due.

The Bank monitors its liquidity positions through liquidity controls such as maximum cumulative outflows, deposits
concentration, financing to deposits ratio, and controlled financing draw down level.

• Management under crisis condition:
Crisis condition is defined as the situation in which the Bank faces difficulties to meet liquidity demand when they fall
due. The crisis can be classified into three levels as follows:

contingency level Trigger/status
level 1 Abnormal event that interrupts normal business operations at a minimal level.

level 2 Disruption event tantamount or escalates into a crisis e.g. massive or continuous withdrawal
of deposits in a particular branch or area, difficulties in raising funds from interbank market.

level 3 Critically threatens the operations, staffs, shareholders’ value, stakeholders, brand, reputation
of which a crisis management is necessary to be put in place.

The Bank’s Liquidity Crisis Management is outlined in the Liquidity Crisis Contingency Plan (“LCCP”) Policy. Further,
as required under the Basel 3 guidelines, the Bank has put in place the relevant measures and monitoring processes
on liquidity management through the Liquidity Coverage Ratio (“LCR”) and Net Stable Funding Ratio (“NSFR”)
computations. The Bank has put in place a buffer above minimum regulatory requirement to ensure the LCR and
NSFR level is maintained in compliance with the regulation.