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BANQUE SAUDI FRANSI CONSOLIDATED BALANCE SHEET As at December 31, 2008 and 2007 - page 46 / 51

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BANQUE SAUDI FRANSI

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

33 Liquidity risk

Liquidity risk is the risk that the Bank will be unable to meet its net funding requirements. Liquidity risk can be caused by market disruptions or credit downgrades, which may cause certain sources of funding to become unavailable immediately. To mitigate this risk, management has diversified funding sources and assets are managed with liquidity in mind, maintaining an appropriate balance of cash, cash equivalents, and readily marketable securities.

The daily liquidity position is monitored and regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. All liquidity policies and procedures are subject to review and approval by ALCO. Daily reports cover the liquidity position of both the Bank and operating subsidiaries. A summary report, including any exceptions and remedial action taken, is submitted regularly to ALCO.

In accordance with the Banking Control Law and the Regulations issued by SAMA, the Bank maintains a statutory deposit with SAMA equal to 7% of total customers’ demand deposits, and 4% of due to banks and other financial institutions (excluding balances due to SAMA and non -resident foreign currency deposits), saving, time deposits, margins of letters of credit and guarantee, excluding all type of repo deposits. In addition to the statutory deposit, the Bank also maintains liquid reserves of not less than 20% of its deposit liabilities, in the form of cash, Saudi Government securities or assets which can be converted into cash within a period not exceeding 30 days. The Bank can also raise additional funds through repo facilities available with SAMA against its holding of Saudi Government securities up to 75% of the nominal value of securities.

a) Maturity analysis of assets and liabilities

The table below summarizes the maturity profile of the Bank’s assets and liabilities. The expected maturities of assets and liabilities have been determined on the basis of the remaining period at the balance sheet date to the contractual maturity date and do not take account of the effective maturities as indicated by the Bank’s deposit retention history. Management monitors the maturity profile to ensure that adequate liquidity is maintained.

SAR’ 000

Within 3

3-12

1-5

Over 5

No fixed

months

months

years

years

maturity

Total

2008

3,337,528

-

-

-

908,537

4,246,065

6,770,617

10,742,516

9,650,765

376,034

346,950

27,886,882

30,736,694

17,482,044

17,064,410

9,344,471

6,238,856

80,866,475

-

-

-

-

590,645

590,645

-

-

-

-

6,501,837

6,501,837

1,272,947

-

-

-

4,499,910

5,772,857

42,117,786

28,224,560

26,715,175

9,720,505

19,086,735

125,864,761

Assets

Cash and balances with SAMA Due from banks and other financial institutions Investments, net Loans and advances, net Property and equipment, net Other assets

Total assets

42,451,324

15,075,449

3,175,011

-

32,089,497

92,791,281

-

-

-

-

5,675,142

5,675,142

-

-

4,927,200

-

-

4,927,200

-

-

-

-

14,069,136

14,069,136

7,365,695

358,693

-

-

677,614

8,402,002

49,817,019

15,434,142

8,102,211

-

52,511,389

125,864,761

Liabilities and shareholders’ equity

Due to banks and other financial institutions Customers’ deposits Other liabilities Term loans Shareholders’ equity

Total liabilities and shareholders’ equity

46

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