Annual Report 2012 - National Savings Bank

110ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTinternal controls and reporting thendings with recommendations to therelevant Board and Operational LevelCommittees.The CC, ALCO, Executive RiskManagement Committee (ERMC)and the Integrated Risk ManagementCommittee (IRMC) review the creditrisk assessments.In order to carry-out credit riskmanagement activities at operationallevel the Bank has strengthenedand streamlined the Credit RiskManagement Unit (CRMU) within theCredit Division under the supervisionof Risk & Compliance Division.Credit Risk Exposures of theBankThe total Credit Exposure which is33.1% of the Bank’s total assets is theBank’s second major line of business(The investment in risk free securities is62.0% of total assets-based on SLFRS).Hence the magnitude of credit risk iscomparatively low to the Bank, albeitthe fact that the Bank considers creditrisk as a major type of risk.The credit exposure of the Bank iscreated from two main categories i.e.‘lending to banks’ and ‘lending toother customers’ such as corporateand retail borrowers, Government andGovernment Institutions.NSB’s Credit risk mainly arises from‘lending to other customers’ whichis 92% of the total Credit Exposurecreated by the conventional On-Balance Sheet items i.e Term Loans,Debentures, Trust Certicates andSecuritisation and Off-Balance Sheetitems such as Guarantees and Bonds.Credit risk which is created through thewholesale lending or ‘lending to banks’i.e. funding short-term and mediumtermfund requirements of the Banksvia short-term loans, Debentures,Securitised Instruments, Trust Receiptsetc. represents 8% of the total CreditExposure.Credit Exposure is based on the level ofsecurity depicted that 90% representssecured loans and 10% representsunsecured loans. Loans which arebacked by property represents the largestportion (35%) of the secured categoryof Loans and Advances and pawningCredit Exposure - Based on Loan Category (based on SLFRS)92%8%Loans and Receivables to BanksLoans and Receivables to Other CustomersNATIONAL SAVINGS BANK . ANNUAL REPORT 2012