REPUBLIC BANK LIMITED
100
Notes to theConsolidatedFinancial Statements
For the year ended September 30, 2014. Expressed in thousands of Trinidad and Tobago dollars ($’000), except where otherwise stated
21 Risk management
(continued)
21.4 Market risk
(continued)
21.4.2 Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The
Group’s exposure to the effects of fluctuations in foreign currency exchange rates arises mainly from its investments and overseas
subsidiaries and associates. The Group’s policy is to match the initial net foreign currency investment with funding in the same
currency. The Group also monitors its foreign currency position for both overnight and intra-day transactions.
Changes in foreign exchange rates affect the Group’s earnings and equity through differences on the re-translation of the net
assets and related funding of overseas subsidiaries and associates, from the respective local currency to TT dollars. Gains or losses
on foreign currency investment in subsidiary and associated undertakings are recognised in reserves. Gains or losses on related
foreign currency funding are recognised in the consolidated statement of income.
The principal currencies of the Group’s subsidiary and associated company investments are TT, US, Guyanese, EC and Barbados
dollars.
The tables below indicate the currencies to which the Group had significant exposure at September 30 on its non-trading
monetary assets and liabilities and its forecast cash flows. The analysis also calculates the effect of a reasonably possible movement
of each currency rate against the Trinidad and Tobago dollar, with all other variables held constant.
TTD
USD
BDS
OTHER
Total
2014
Financial assets
Cash and cash equivalents
328,458
44,132
115,730
76,905
565,225
Statutory deposits
with Central Banks
4,050,897
3,220
285,951
494,388
4,834,456
Due from banks
4,468,127
2,986,743
8,881
881,395
8,345,146
Treasury Bills
3,827,652
–
765,598
1,311,803
5,905,053
Investment interest
receivable
37,212
27,818
3,268
3,838
72,136
Advances
16,541,205
3,359,902
4,575,140
2,589,160
27,065,407
Investment securities
3,410,496
4,111,340
542,028
196,518
8,260,382
Total financial assets
32,664,047
10,533,155
6,296,596
5,554,007
55,047,805
Financial liabilities
Due to banks
66
41,048
12,009
16,834
69,957
Customers’current, savings
and deposit accounts
24,362,375
8,924,974
5,038,884
5,444,527
43,770,760
Other fund raising instruments
2,930,841
76,245
350,747
–
3,357,833
Debt securities in issue
1,066,802
–
–
–
1,066,802
Interest payable
17,896
3,343
17,939
1,413
40,591
Total financial liabilities
28,377,980
9,045,610
5,419,579
5,462,774
48,305,943
Net currency risk exposure
1,487,544
877,018
91,233
Reasonably possible change
in currency rate
1%
1%
1%
Effect on profit before tax
14,875
8,770
912
