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BANQUE SAUDI FRANSI CONSOLIDATED BALANCE SHEET As at December 31, 2008 and 2007 - page 28 / 51

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Commission rate swaps

4,260,331

4,207,703

155,237,874

15,472,738

35,774,346

87,961,951

16,028,839

127,542,075

Commission rate futures and options

5,859

2,247

9,239,742

-

1,665,000

6,792,500

782,242

8,042,127

Forward rate agreements

-

76

50,000

-

50,000

-

-

37,500

Forward foreign exchange contracts

454,235

441,466

64,752,949

29,595,561

32,999,702

2,157,686

-

67,089,121

Currency options

336,238

227,597

11,311,778

2,503,780

6,229,366

2,578,632

-

12,665,666

Others

6,864

-

1,269,650

341,262

365,700

562,688

-

809,618

Held for trading

Commission rate swaps

501,431

724

11,402,450

467,500

150,000

9,278,700

1,506,250

6,507,138

Total

5,776,805

5,086,498

265,520,187

50,299,753

80,458,720

116,263,089

18,498,625

234,020,612

Fair value of netting arrangements

(851,196)

(851,196)

(39,074,298)

(2,246,824)

(5,849,212)

(27,603,174)

(3,375,088)

(24,640,664)

Total after netting (notes 10 and 14)

4,925,609

4,235,302

226,445,889

48,052,929

74,609,508

88,659,915

15,123,537

209,379,948

BANQUE SAUDI FRANSI

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2008 and 2007 _______________________________________________________________________________________________

As part of its asset and liability management the Bank uses derivatives for hedging purposes in order to adjust its own exposure to currency and commission rate risks. This is generally achieved by hedging specific transactions as well as strategic hedging against overall balance sheet exposures. Strategic hedging does not qualify for special hedge accounting and the related derivatives are accounted for as held for trading.

Held as fair value hedges

Commission rate swaps

Held as cash flow hedges

211,847

206,685

12,255,744

1,918,912

3,224,606

6,930,932

181,294

11,327,367

The Bank uses forward foreign exchange contracts and currency swaps to hedge against specifically identified currency risks. In addition, the Bank uses commission rate swaps and commission rate futures to hedge against the commission rate risk arising from specifically identified fixed commission rate exposures. The Bank also uses commission rate swaps to hedge against the cash flow risk arising on certain floating rate exposures. In all such cases, the hedging relationship and objective, including the details of the hedged items and hedging instrument are formally documented and the transactions are accounted for as fair value or cash flow hedge.

The tables below show the positive and negative fair values of derivative financial instruments held, together with their notional amounts analyzed by the term to maturity and monthly average. The notional amounts, which provide an indication of the volumes of the transactions outstanding at the year end, do not necessarily reflect the amounts of future cash flows involved. These notional amounts, therefore, are neither indicative of the Bank’s exposure to credit risk, which is generally limited to the positive fair value of the derivatives, nor to market risk.

Positive

Negative

Notional

fair

fair

amount

Within 3

3-12

1-5

Over 5

Monthly

value

value

total

months

months

years

years

average

SAR’ 000

2008

Notional amounts by term to maturity

28

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