Republic Bank Limited
126
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)
21.3 Liquidity risk
(continued)
21.3.1 Analysis of financial liabilities by remaining contractual maturities
(continued)
Financial liabilities - off statement of financial position
On
Up to one
1 to 5
Over 5
demand
year
years
years
Total
2015
Acceptances
391,149
389,352
327,499
666
1,108,666
Guarantees and
indemnities
8,222
227,053
35,313
30,573
301,161
Letters of credit
85,533
223,577
–
–
309,110
Total
484,904
839,982
362,812
31,239
1,718,937
2014
Acceptances
283,600
241,865
215,951
671
742,087
Guarantees and
indemnities
121
52,294
17,204
37,279
106,898
Letters of credit
54,433
63,283
–
–
117,716
Total
338,154
357,442
233,155
37,950
966,701
The Group expects that not all of the contingent liabilities or commitments will be drawn before expiry of the
commitments.
21.4 Market risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market
variables such as interest rates, foreign exchange rates and equity prices.
21.4.1 Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values
of financial instruments. The Group has an Asset/Liability Committee which reviews on a monthly basis the non-credit
and non-operational risk for the Parent and each subsidiary. Asset and Liability management is a vital part of the risk
management process of the Group. The mandate of the Committee is to approve strategies for the management of
the non-credit risks of the Group, including interest rate, foreign exchange, liquidity and market risks.
The primary tools currently in use are gap analysis, interest rate sensitivity analysis and exposure limits for financial
instruments. The limits are defined in terms of amount, term, issuer, depositor and country. The Group is committed to
refining and defining these tools to be in line with international best practice.
The table below summarises the interest-rate exposure of the Group’s statement of financial position. Interest on
financial instruments classified as floating is repriced at intervals of less than one year while interest on financial
instruments classified as fixed is fixed until the maturity of the instrument.
