Annual Report 2012 - National Savings Bank

117ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTThe scenarios that the Bank is currently carrying out stress testing for credit portfolio include:I) A shifting of performing loans by 10% to NPL plus moving of NPL categories to adversestages by, (a) 50 %, (b) 80 %, and (c) 100%Actual 2012 Scenario 1 Scenario 2Scenario 3100%50%80%PBT (Rs.Million) 6,719 4,559 4,266 4,131P/L Impact (%) 100 68 64 62Interest Cost/ Interest Income (%) 79 83 84 84Margin (%) 3.09 2.62 2.55 2.52Gearing (%) 5.09 5.05 5.03 5.02II) Increasing in NPL up to (a) 10%, (b) 15% and (c) 20% and provisioning by 50%Actual 2012 Scenario 150%Scenario 280%Scenario 3100%PBT (Rs.Million) 6,719 1,532 (329) (4,050)P/L Impact (%) 100 23 (7) (88)Interest Cost/ Interest Income (%) 79 81 81 83Margin (%) 3.09 2.91 2.82 2.65Gearing (%) 5.09 4.95 4.68 3.95Shifting of performing loans by 10% into non-performing categories and moving of NPL categories have a lesser impacton the protability than increasing of NPL by different percentages and provisioning by 50% on the protability. However,occurrences of these stresses are very remote due to practicing of secured lending guidelines and procedures.III) In the event of market value of the pawning portfolio dropping by15% and 10% there will be no serious impact to the Capital Adequacy of the Bank.RatioActualMarket Value Drop to;201285% 90%CAR % (Tier I) 21.90 19.16 21.01CAR % (Tier II) 20.61 17.87 19.72NATIONAL SAVINGS BANK . ANNUAL REPORT 2012