Annual Report 2012 - National Savings Bank

124ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTMaturities of Foreign Currency Assets and Liabilities (Rs.Millions)Item Upto 1 Month 1- 3 Months 3-6 Months 6-9 Months 9- 12 MonthsAssetsInvestments (Net of provisions) 412 1,212 1,475 1,456 1,375LiabilitiesDeposits 2,007 264 338 2,401 600Gap (1,595) 949 1,137 (945) 775Cumulative Gap (1,595) (646) 491 (454) 320Actual 2012 25% Drop of the portfolio and 1% Discount of AssetsPBT (Rs.Million) 6,719 6,450P/L Impact (%) 100 97Interest Cost/ Interest Income (%) 79 79Margin (%) 3.1 3.1Gearing (%) 5.1 5.0A stress test was carried out to measurethe impact on the balance sheet and theincome statement when a prematurewithdrawal is made of the entire (100%)FC deposits during the period of 0 to91 days in rst day of the period while25% of the deposits matured thereafter(0 - 91 days, 90 - 120 days and 121 -364 days maturity buckets) is withdrawnduring the rst maturity bucket on thesame day. The impact of loss is assessedby 1% drop of the interest rates due todiscounting of foreign currency assets tomeet withdrawals. It indicates that theBank is unaffected since the exposure isminimal.Equity Price RiskEquity risk is the risk that one’sinvestments will depreciate because ofstock market dynamics causing one tolose money.The measure of risk used in equitymarkets is typically the standarddeviation of a security’s price overa number of periods. The standarddeviation will delineate the normaluctuations one can expect in thatparticular security above and belowthe mean, or average. However, sincemost investors would not consideructuations above the average returnas “risk”, some economists prefer othermeans of measuring it.The Bank is conscious of systematicand un-systematic risks of the equityportfolio and encourages portfoliodiversication and therefore selectNATIONAL SAVINGS BANK . ANNUAL REPORT 2012