notes to the consolidated financial statements - Sacombank

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
43 CONCENTRATIONS OF ASSETS AND LIABILITIES BY GEOGRAPHICAL AREA
139 ANNUAL REPORT 2011
Loans and
advances to
customers and
other credit
institutions
Deposits and
borrowings from
customers and
other credit
institutions
Credit
commitments
Derivatives
financial
instruments
(total contract
value)
Trading
and investment
securities
Million VND Million VND Million VND Million VND Million VND
Domestic 79,566,634 104,147,724 2,614,126 1,666,820 25,672,056
Overseas 1,953,395 6,098,503 5,649,112 7,666,043 52,124
44 FINANCIAL RISK MANAGEMENT
81,520,029 110,246,227 8,263,238 9,332,863 25,724,180
The Group’s business involves taking on risks in a targeted manner and managing them professionally. The core functions
of the Group’s risk management are to identify all key risks for the Group, measure these risks, manage the risk positions
and determine capital
allocations. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products
and best market practice.
The Group’s aim is to achieve an appropriate balance between risk and return and minimise potential adverse effects on
the Group’s financial performance.
The Group defines risk as the possibility of losses or profits foregone, which may be caused by internal or external factors.
Risk management is carried out by a risk management department under policies approved by the Board of General
Directors. The Risk Management Department identifies, evaluates and hedges financial risks in close co-operation with
the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies
covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative financial instruments. In addition, internal audit is responsible for the independent review of risk
management and the control environment.
The risks arising from financial instruments to which the Group is exposed are financial risks, which includes credit risk,
liquidity risk, market risk and operational risk
44.1 Credit risk
Form B 05/TCTD - HN
Credit risk is the risk of suffering financial loss, should any of the Group’s customers, clients or market counterparties fail
to fulfil their contractual obligations to the Group. Credit risk arises mainly from lending activities and financial guarantees
under many ways.
The Group is also exposed to other credit risks arising from investments in debt securities and other exposures arising from
its trading activities (‘trading exposures’), including non-equity trading portfolio assets, derivatives and settlement balances
with market counterparties.
Credit risk is the single largest risk for the Group’s business; management therefore carefully manages its exposure to
credit risk. The credit risk management and control are centralised in a credit risk management team, which reports to the
Board of General Directors and head of each business unit regularly