2005 - Asianbanks.net

Credit Review Department is responsible for reviewing credit quality to ensure that all loans have already been processed in accordance with
the procedures established within the Bank, which include those for reviewing the correctness of loan classification, procedures for dealing
with troubled debtors, and evaluating systems for monitoring borrowers in term of qualitative criteria after credit has been granted.
The Bank has a policy to grant credit to all business types and industries which have potential and make significant contributions to the
country’s economic growth. Furthermore, the Bank also focuses on the provision of credit to small and retail enterprises in order to diversify
risk. In addition, the Bank puts emphasis on risk management both before and after credit is approved. For example, credit officers are
required to check the credit information of customers with the Credit Bureau before submitting a credit application for approval of lending to
new borrowers or to increase a credit limit to an existing borrower.
The maximum credit risk exposure is the carrying value of the financial assets after deducting allowance for losses as presented in the
balance sheets, and the risk from off-balance sheet commitments arising as a result of loan guarantees and other guarantees.
As at 31 December 2005 and 2004, the Bank had the following off-balance sheet commitments as summarised by the remaining periods
to maturity of the contracts, counting from the balance sheet dates : -
(Unit : Million Baht)
Consolidated and the Bank only
Counting from 31 December 2005 Counting from 31 December 2004
Not more Over Not more Over
than 1 year 1 year Total than 1 year 1 year Total
Aval to bills 1,064 16 1,080 985 23 1,008
Guarantees of loans 1,121 41 1,162 1,190 - 1,190
Liabilities under unmatured import bills 768 - 768 826 - 826
Letters of credit 1,496 258 1,754 5,100 - 5,100
Other guarantees 18,284 902 19,186 17,189 1,541 18,730
Others 33,401 2,464 35,865 32,962 - 32,962
31.2 Market risk
Market risk is the risk that changes in interest rates, foreign exchange rates or securities prices will affect on the Bank’s foreign currency
position or investment position, and cause the Bank to incur a financial loss. As such, market risk consists of interest rate risk, foreign exchange
risk and equity position risk.
The Bank’s Assets and Liabilities Management Committee is responsible for determining strategies and operating guidelines for the
management of liquidity risk, interest rate risk and foreign exchange risk, while the Bank’s Risk Management Department is entrusted with the
responsibilities of (a) managing market risk, liquidity risk, and operational risk in line with strategies and guidelines laid down by the Assets and
Liabilities Management Committee, and (b) developing tools for risk evaluation, and procedures for risk auditing, reporting and monitoring, to
ensure risk management is effective.
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