32.4 Liquidity risk and funding management

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Liquidity risk and funding management

Liquidity risk is the risk that an institution will be unable to meet its funding requirements. Liquidity risk can be caused by market disruptions or a credit downgrade which may cause certain sources of funding to dry up immediately.  To guard against this risk, management has diversified funding sources and assets are managed with liquidity in mind, maintaining a healthy balance of cash, cash equivalents, and readily marketable securities.

Analysis of financial assets and financial liabilities by remaining contractual maturities

The table below summarises the maturity profile of the Group’s assets and liabilities at
31 December 2017 based on contractual maturities.

 


Less than 3 months   3 months to less than 1 year   1 year to 5 years   Over 5 years       Total
AED’000   AED’000   AED’000   AED’000   AED’000
ASSETS
Cash and balances with U.A.E. Central Bank 35,621   –   6,000   –   41,621
Due from banks and financial institutions 675,848   1,000   –   –   676,848
Loans and advances 710,254   657,841   588,046   379,660   2,335,801
Islamic financing and investing assets 66,672   48,454   56,215   2,029   173,370
Investments, including associate 289,803   152,296   202,105   381,869   1,026,073
Other assets

35,357

  

135,662

  

5,008

  

–

  

176,027
Financial assets 1,813,555   995,253   857,374   763,558   4,429,740
Non-financial assets 32,173   –   95,960   6,966   135,099
Total assets
1,845,728
  
995,253
  
953,334
  
770,524
  
4,564,839

 

LIABILITIES
Due to banks –   23,831   –   –   23,831
Customers’ deposits and margin accounts 1,088,259   1,020,923   841,362    –   2,950,544
Short term borrowings and medium term loans 77,244   260,000   50,000   –   387,244
Other liabilities

82,374

  

52,778

  

–

  

–

  

135,152
Financial liabilities 1,247,877   1,357,532   891,362   –   3,496,771
Non-financial liabilities 25,903   125,342   –   13,624   164,869
Total liabilities
 1,273,780
  
1,482,874
  
891,362
  
13,624
  
3,661,640

 

2017
Contingent liabilities       1,341,523   314,189   72,227   248   1,728,187
Commitments 222,274   –   –   –   222,274
Total
1,563,797
  
314,189
  
72,227
  
248
  
1,950,461

 



The maturity profile of the Group’s assets and liabilities at 31 December 2016 was as follows:

Less than 3 months   3 months to 1 year   1 year to   5 years   Over 5 years   Total
AED’000   AED’000   AED’000   AED’000   AED’000
ASSETS
Cash and balances with U.A.E. Central Bank 27,042 – – – 27,042
Due from banks and financial institutions 717,432 40,309 – – 757,741
Loans and advances, net 620,496 462,091 668,462 302,480 2,053,529
Islamic financing and investing assets 54,720 48,662 73,325 3,309 180,016
Investments, including associate 310,964 149,918 230,506 404,849 1,096,237
Statutory deposit – – – 6,000 6,000
Other assets

32,151

90,763

–

–

122,914
Financial assets 1,762,805 791,743 972,293 716,638 4,243,479
Non-financial assets 21,223 125,215 14,676 7,750 168,864
Total assets
1,784,028
916,958
986,969
724,388
4,412,343
LIABILITIES
Due to banks – 47,175 – – 47,175
Customers’ deposits

Margin accounts

  

610,698

  

1,314,417

  

916,867

  

–

  

2,841,982
Short term borrowings and medium term loans 45,000 197,500 37,500 – 280,000
Other liabilities

63,819

66,938

–

–

130,757
Financial liabilities 719,517 1,626,030 954,367 – 3,299,914
Non-financial liabilities 25,007 121,614 – 12,056 158,677
Total liabilities
744,524
1,747,644
954,367
12,056
3,458,591
 
2016
Contingent liabilities 1,196,036 271,019 132,450 231 1,599,736
Commitments 370,145 – – – 370,145
Total
1,566,181
271,019
132,450
231
1,969,881
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