Annual Report - Ahli United Bank

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Annual Report - Ahli United Bank

Notes to theConsolidated Financial Statements (Contd.)34 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)Level 1 Level 2 TotalUS$ ’000 US$ ’000 US$ ’000Trading securities 376 - 376Bonds 1,505,648 297,574 1,803,222Equities and funds 175,340 178,580 353,920Derivative assets 107,063 84,266 191,329Derivative liabilities (98,247) (145,040) (243,287)1,690,180 415,380 2,105,560There are no financial instruments that qualify for classification under Level 3 as at 31 December 2009. During the year 2009 there havebeen no transfers between Level 1 and Level 2.For an explanation of valuation techniques used to value these financial instruments refer to note 3.3 (f).Investments in associates include quoted equity investments of ABQ on the Doha Securities Market, and ABO on the Muscat SecuritiesMarket. The table below shows the market value based on closing price as at 31 December 2009 and carrying value of these investments :2009 2008US$ (million) US$ (million)Market value 433 367Carrying value 483 476Impairment testing of the Group’s investments in associates was carried out as required under IAS 28 and IAS 36 and the resultsindicated no impairment.35 LIQUIDITY RISKLiquidity risk is the risk that an institution will be unable to meet its funding requirements. Liquidity risk can be caused by marketdisruptions 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.The Group Asset and Liability Committee (GALCO) monitors the maturity profile on an overall basis with ongoing liquidity monitoringby the Group’s treasury department.The maturity profile of the assets and liabilities at 31 December 2009 given below reflects management’s best estimates of thematurities of assets and liabilities that have been determined on the basis of the remaining period at the balance sheet date to thecontractual maturity date, except in the case of customer deposits. The liquidity profile of customer deposits has been determined onthe basis of the effective maturities indicated by the Group’s deposit retention history.96 AUB Annual Report 2009

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