Republic Bank Limited
124
For the year ended September 30, 2015. Expressed in thousands of Trinidad and Tobago dollars ($’000) except where otherwise stated
Notes to theConsolidatedFinancial Statements
4
Financial
21 RISK MANAGEMENT
(continued)
21.2 Credit risk
(continued)
21.2.3 Credit quality per category of financial assets
(continued)
Financial investment securities
(continued)
Acceptable:
Corporate securities that are current and being serviced in accordance with the terms and conditions of
the underlying agreements. Issuing company has fair financial strength and reputation.
Sub-
standard:
These securities are either greater than 90 days in arrears, display indicators of impairment, or have
been restructured during the financial year.
The table below illustrates the credit quality of debt security investments as at September 30:
Superior
Desirable
Acceptable Sub-standard
Total
Available-for-sale
2015
6,655,944
728,260
461,518
35,427
7,881,149
2014
5,530,809
1,801,968
707,033
163,460
8,203,270
Held to Maturity
2015
–
122,491
–
–
122,491
21.3 Liquidity risk
Liquidity risk is defined as the risk that the Group either does not have sufficient financial resources available to meet all its
obligations and commitments as they fall due, or can access these only at excessive cost.
Liquidity management is therefore primarily designed to ensure that funding requirements can be met, including the replacement
of existing funds as they mature or are withdrawn, or to satisfy the demands of customers for additional borrowings. Liquidity
management focuses on ensuring the Group has sufficient funds to meet all of its obligations.
Three primary sources of funds are used to provide liquidity – retail deposits, wholesale deposits and the capital market. A
substantial portion of the Group is funded with ‘core deposits’. The Group maintains a core base of retail and wholesale funds,
which can be drawn on to meet ongoing liquidity needs. The capital markets are accessed for medium to long-term funds as
required, providing diverse funding sources to the Group. Facilities are also established with correspondent banks, which can
provide additional liquidity as conditions demand.
The Asset/Liability Committee (ALCO) sets targets for daily float, allowable liquid assets and funding diversification in line with
system liquidity trends. While the primary asset used for short-term liquidity management is the Treasury Bill, the Group also
holds significant investments in other Government securities, which can be used for liquidity support. The Group continually
balances the need for short-term assets, which have lower yields, with the need for higher asset returns.
