Annual Report 2012 - National Savings Bank

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118ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTCollateral and Other CreditEnhancementsAn assessment of the credit risk of thecounterparty determines the amountand type of collateral required. Theloans to banks and nancial institutionsare based on their credit rating while,either property mortgages, treasuryguarantees and corporate guaranteesare obtained as collateral for commerciallending and mortgages over residentialproperties, personnel guarantees,gold and cash were obtained for retaillending.The Management monitors the marketvalue and the forced sale value of thecollateral and assesses the adequacy ofthe allowance for impairment losses. Itis the Bank’s policy to take the decisionof disposing repossessed properties inan orderly manner and the proceedsare used to recover the outstandingclaims. As a general rule, the Bank doesnot occupy repossessed properties forbusiness use.Loan Review Mechanism (LRM)LRM is an effective tool for constantlyevaluating the quality of the loanbook and to bring about qualitativeimprovements in the credit process. TheRisk & Compliance Division therefore,Credit Exposure to Banks & Financial Institutions(based on Ratings)7.1%0.4%61.7%4.4%26.4%AAAA-A-BB+BBB+has drafted a Loan Review Mechanismfor all types of credit with responsibilitiesassigned to various areas such as,evaluating the effectiveness of the loanprocess, maintaining the integrity ofcredit grading process, assessing theloan loss provision, portfolio review etcand intend to implement LRM duringthe next year.Credit Risk IndicatorsThe credit risk along with the riskprole of the Bank are assessed mainlythrough, Key Risk Indicators (KRIs)and Key Performance Indicators (KPIs)such as NPLs, provision for NPLs,monitoring of interest in suspense,market share based analysis, portfoliogrowth, asset allocation and then arereported to the Board and OperationalLevel Committees. The Risk andCompliance Division has developed aMIS to monitor and manage credit riskand submit the data / information tothe relevant divisions to report the creditdata to the relevant Board Committeesand Operational Level Committees.NATIONAL SAVINGS BANK . ANNUAL REPORT 2012
119ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTCredit Risk Monitoring,Mitigation and ControlCredit risk monitoring refers tocontinual monitoring of individualcredits inclusive of Off-Balance sheetexposures to obligors as well as theoverall credit portfolio of the Bank. Aproper credit monitoring system enablesto monitor quality of the credit portfolioon day-to-day basis and will providethe basis for taking prompt correctiveactions when warning signs point-out todeterioration in the nancial health ofa borrower.The credit discipline, credit riskmanagement and control processare being implemented in the Bank.Streamlining of the credit processis being carried-out through theCredit Committee via continuousrevision of procedures and monitoringperformance.The Bank has taken action to strengthenand streamline the Credit RiskManagement Unit (CRMU) under thesupervision of the Risk & ComplianceDivision in order to carry-out creditrisk management functions such as;credit limit setting, credit exceptions,security valuation, exposures etc.The Risk & Compliance Division willinitially be involved in the assessmentof pre-approval stage on large and highrisk credits as per the Integrated RiskManagement Policy.MARKET RISKMarket risk to the Bank stems frommovements in market prices, inparticular, changes in interest rates,foreign exchange rates and equityprices. Market risk is often propagatedby other forms of nancial risk such ascredit and market-liquidity risks. Therisk of losses would arise from On-Balance sheet as well as Off-Balancesheet activities.A bank is required to develop a soundand well informed strategy to manageits market risk. The strategy should rstdetermine the level of market risk theinstitution is prepared to assume. Thislevel should be set with considerationgiven to, among other factors, theamount of market risk capital set asideby the institution.Once its market risk tolerance isdetermined, the Bank needs to developa strategy that balances its businessgoals with its market risk appetite. TheBank will consider the following factorswhen developing such strategies: Economic and market conditionsand their impact on market risk Whether the Bank has the expertiseto prot in specic markets and isable to identify, monitor and controlthe market risk in those markets The Bank’s portfolio mix and howit would be affected if more marketrisk is assumedThe Bank has taken actions toestablish a market risk managementframework with the objective ofoptimising the rewards during theyear 2012. This is facilitated throughBoard approved policies, guidelinesas well as risk parameters and limits.The Risk Management Division ofthe Bank is responsible for the overallrisk management of the Bank and theNATIONAL SAVINGS BANK . ANNUAL REPORT 2012
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ROOTEDANNUAL REPORT 2012
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ROOTEDNATIONAL SAVINGS BANK l ANNUA
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5MISSIONProviding our customers wit
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7ROOTEDFor over 40 years, the Natio
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92000Establishment of subsidiary co
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11HOW WE PERFORMED IN 2012FINANCIAL
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13CHAPTER 1FIRMLY ANCHOREDSTRATEGY
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15A MESSAGE FROM MR SUNIL S. SIRISE
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17A MESSAGE FROM MR SUNIL S. SIRISE
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19A REVIEW BYMR. HENNAYAKE BANDARAG
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21A REVIEW BY MR HENNAYAKE BANDARAG
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23A REVIEW BY MR HENNAYAKE BANDARAG
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25CHAPTER 2HOW WE PERFORMED IN 2012
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33HOW WE PERFORMED IN 2012ECONOMIC
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35HOW WE PERFORMED IN 2012ECONOMIC
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37HOW WE PERFORMED IN 2012ACHIEVEME
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39HOW WE PERFORMED IN 2012OPERATION
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51HOW WE PERFORMED IN 2012FUTURE PL
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53CHAPTER 3ROOTED IN OUR HERITAGEGO
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55ROOTED IN OUR HERITAGEGOVERNANCE
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Page 69 and 70: 67ROOTED IN OUR HERITAGEGOVERNANCE
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Page 105 and 106: 103CHAPTER 4ASSESSING AND MANAGING
Page 107 and 108: 105ASSESSING AND MANAGING OUR RISK
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Page 139 and 140: 137CHAPTER 5BRANCHING OUT INTO NEW
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169BRANCHING OUT INTO NEW VENTURESS
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171BRANCHING OUT INTO NEW VENTURESS
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173BRANCHING OUT INTO NEW VENTURESG
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183CHAPTER 6THE RESULTS OF A CHALLE
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185THE RESULTS OF A CHALLENGING YEA
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251CHAPTER 7ANNEXURESNATIONAL SAVIN
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253STATEMENT OF FINANCIAL POSITION
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255TEN YEARS AT A GLANCE(Rs Mn)Year
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257OUR PRODUCTS AND SERVICESSAVINGS
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259OUR PRODUCTS AND SERVICES19. Ran
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261OUR PRODUCTS AND SERVICESOUR EXT
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263BRANCH NETWORKCentral Province1.
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265CORRESPONDENT BANKSCiti Bank NA,
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267EXCHANGE COMPANIESHabib Qatar In
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269GLOSSARYCredit RatingsAn evaluat
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271GLOSSARYReturn on Average Assets
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273CORPORATE INFORMATIONCOMPLIANCE
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Annual Report 2012 - National Savings Bank

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