32.4 Liquidity risk and funding management
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 |