Page 337 - Bank-Muamalat_Annual-Report-2023
P. 337
ANNUAL REPORT 2023
OUR NUMBERS
47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.)
(b) Market risk (cont’d.)
Types of market risk (cont’d.)
(ii) Non-traded market risk (cont’d.)
Foreign currency risk
Foreign exchange risk arises from the movements in exchange rates that adversely affect the revaluation of the
Group and the Bank foreign currency positions.
Group and Bank
2023 2022
appreciation depreciation appreciation depreciation
1% 1% 1% 1%
RM’000 RM’000 RM’000 RM’000
Impact to profit after tax and reserves (57) 57 (2,229) 2,229
Interpretation of impact
The Group and the Bank measure the foreign exchange sensitivity based on the foreign exchange net open
positions (including foreign exchange structural position) under an adverse movement in all foreign currencies
against reporting currency (MYR). The result implies that the Group and the Bank may be subjected to
additional translation (loss)/gain if MYR appreciated/depreciated against other currencies or vice versa.
(c) Liquidity and funding risk
Liquidity and funding risk is the potential inability of the Group and the Bank to meet its funding requirements
arising from cash flow mismatches at a reasonable cost while market liquidity risk refers to the Group’s and the Bank’s
potential inability to liquidate positions quickly and with insufficient volumes, at a reasonable price.
The Group and the Bank monitor the maturity profile of assets and liabilities so that adequate liquidity is maintained at
all times. The Group’s and the Bank’s ability to maintain a stable liquidity profile is primarily due to its success in retaining
and growing its customer deposits base.
The marketing strategy of the Group and the Bank has ensured a balanced mix of deposits level. Stability of the deposits
base thus minimises the Group’s and the Bank’s dependency on volatile short-term receiving. Considering the effective
maturities of deposits are based largely on retention history (behavioral method) and in view of the ready availability of
liquidity investments, the Group and the Bank are able to ensure that sufficient liquidity is always available whenever
necessary.
The Asset Liability Committee (“ALCO”) chaired by the PCEO, is being conducted on monthly basis, which purpose
is to review the Liquidity Gap Profile of the Group and the Bank. In addition, the Group and the Bank apply the
liquidity stress test which addresses strategic issues concerning liquidity risk.
The tables depicted in the following pages are the analysis of assets and liabilities of the Group and the Bank
as at 31 December 2023 based on remaining contractual maturities.
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