2011 Annual Report - Khaleeji Commercial Bank BSC

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KHALEEJI COMMERCIAL BANK BSC RISK MANAGEMENT DISCLOSURES 4. Credit Risk (continued) 4.3 Concentration of credit risk 4.3.1 Geographic distribution The geographical exposure profile as at 31 December 2011 was as follows (in BD 000’s): 2011 GCC Europe USA Asia Australia Africa Total Countries Assets Cash and bank balances 14,515 663 7,333 7 124 - 22,642 Placement with financial institutions 61,098 15,689 - - - - 76,787 Financing assets 191,539 9,366 651 - - - 201,556 Investment securities 79,003 2,927 - 24,008 4,605 1,263 111,806 Assets acquired for leasing (including lease rentals receivable) 13,658 - - - - - 13,658 Investment in associates 2,887 - - - - - 2,887 Investment property 6,583 - - - - - 6,583 Other assets 1,933 39 - 175 43 - 2,190 Property and equipment 9,406 - - - - - 9,406 Total funded exposures 380,622 28,684 7,984 24,190 4,772 1,263 447,515 Undrawn financing facilities 4,418 201 - - - - 4,619 Commitment to invest 5,655 - - - - - 5,655 Guarantees 4,555 2,868 - - - - 7,423 Total unfunded exposures 14,628 3,069 - - - - 17,697 4.3.2 Industry / sector-wise distribution The Board of Directors has stipulated maximum exposures to various industry sectors. The industry / sector wise exposure as at 31 December 2011 was as follows (in BD 000’s): 2011 Banks and Real estate Others Total financial institutions Assets Cash and bank balances 22,642 - - 22,642 Placements with financial institutions 76,787 - - 76,787 Financing assets 16,708 92,487 92,361 201,556 Investment securities 24,389 62,944 24,473 111,806 Assets acquired for leasing (including lease rentals receivable) 2,103 11,555 - 13,658 Investment in associates - 2,887 - 2,887 Investment property - 6,583 - 6,583 Other assets 638 950 602 2,190 Property and equipment - 6,715 2,691 9,406 Total funded exposure 143,267 184,121 120,127 447,515 Undrawn financing facilities - 300 4,319 4,619 Commitment to invest 5,655 - - 5,655 Guarantees - 5,820 1,603 7,423 Total unfunded exposures 5,655 6,120 5,922 17,697 * Financing asset exposures have been classified based on the purpose of financing. 88 Annual Report 2011
KHALEEJI COMMERCIAL BANK BSC RISK MANAGEMENT DISCLOSURES 4. Credit Risk (continued) 4.3 Concentration of credit risk (continued) 4.3.3 Transactions with related counterparties Related counterparties are those entities which are related to the Bank through significant shareholding, control, or both. Wherever the Bank has entered into business transactions with such counterparties, such transactions have been done at an arm’s length basis and on commercial terms that bring no disadvantage to the Bank. For the purpose of identification of related counterparties, the Bank strictly follows the guidelines issued by CBB for the purpose. Detailed break up is presented in note 23 of the consolidated financial statements for the year ended 31 December 2011. 4.3.4 Exposures in excess of 15% of capital base Single exposures in excess of 15% of the Bank’s capital base on individual counterparties require prior approval of CBB except where exempted under Para. CM 4.5 of the rule book. The Bank does not have any such large exposures as at 31 December 2011. 4.3.5 Exposures in highly leveraged counterparties The Bank has no exposure to a highly leveraged and other high risk counterparties as per definition provided in the CBB rule book PD 1.3.24. 4.3.6 Residual contractual maturity of the credit portfolio and investment in sukuks The Bank’s policy allows exposures up to a maximum period of 7 years for corporate customers and 25 years for retail customers with any exceptions to be approved by the Board of directors. The Bank constantly monitors the residual maturity profile of its assets to ensure that any mismatch with the maturity of its liabilities is kept within acceptable limits. The contractual residual maturity profile by type of financing contract of the Bank’s credit portfolio and investment in sukuks is given in the table below (in BD 000’s): Maturity Scale < 1 M 1 - 3 M 3 - 6 M 6M - 1Y 1 - 3Y 3 - 5Y 5 - 10Y 10 - 20Y Over 20Y Total Credit portfolio: Murabaha 16,263 6,657 4,596 2,507 47,754 54,218 10,583 - - 142,578 Musharaka 1,747 - - 5,661 13,111 7,221 10,698 - - 38,438 Wakala 3,660 5,441 1,773 70 120 8,635 - - - 19,699 Istisna - - - - - 719 122 - - 841 Ijarah - - - - 2,020 3,018 2,789 4,715 1,116 13,658 Total 21,670 12,098 6,369 8,238 63,005 73,811 24,192 4,715 1,116 215,214 Investment in Sukuks 600 2,730 11,673 1,314 3,110 2,245 - - - 21,672 Total 600 2,730 11,673 1,314 3,110 2,245 - - - 21,672 Grand Total 22,270 14,828 18,042 9,552 66,115 76,056 24,192 4,715 1,116 236,886 The Board approved internal cap for real estate exposure has been 40% of total assets. Due to some large investment, this cap was exceeded in the early part to 2011 for which the Board had provided special approval. The exposure was brought under the original limit by end of the year. Risk Management Disclosures 89
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2011 Annual Report - Khaleeji Commercial Bank BSC

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