Annual Report 2012 - National Savings Bank

127ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTMeasurement of Liquidity Risk and Liquidity Risk IndicatorsTo measure and monitor the liquidity risk of the Bank, liquidity risk indicators such as Loans to Customer Deposits, LiquidAssets to Short term Liabilities, Purchased Funds to Total Assets are calculated and they are monitored on a regular basis andreported to the ALCO and the Board. The liquidity risk indicators were reviewed in 2012 in order to be in line with CBSLrequirements and the Basel II guidelines.Movement of Some Liquidity Risk IndicatorsMonth /Ratio (%) 31/03/2012 30/06/2012 30/09/2012 31/12/2012Loans to Deposits 30.1 31.8 32.1 33.1Loan to Adjusted Deposit32.0 34.5 34.6 35.3(Less than 12 Months Deposits) RatioLiquid Asset to Total Deposits 70.6 68.8 68.3 67.5Liquid Asset to Total Assets 62.3 59.9 59.8 58.5Net Loans to Total Assets 26.4 27.5 27.9 28.5Liquid Assets to Short term Liabilities 69.0 67.1 67.4 66.4Large Liabilities (Minus) Temporary Investments to(14.3) (14.3) (19.7) (18.0)Earning Assets (Minus) Temporary InvestmentsPurchased Funds to Total Assets 16.7 18.3 18.1 20.5Commitments to Total Loans 1.2 1.1 1.1 1.6Core deposits to Total Deposits 9.9 12.2 12.7 12.6Loans + Fixed Assets to Total Assets 27.7 28.8 29.2 29.7Loans + Fixed Assets to Core Deposits 255.5 270.9 262.7 271.0Temporary Investments to Volatile Liabilities 25.6 26.0 30.1 30.3Volatile Liabilities to Total Assets 91.2 91.1 91.0 91.1As shown in the above table, the Bank’sLoans to Deposit Ratio is on theincreasing trend which compares theloans and advances to customers as apercentage of deposits. The Bank hasroom to increase the ratio much furthersince it is below the industry averages.In accordance with the Board approvedstress test policy, liquidity levelsare assessed under stress scenariosperiodically to monitor the soundnessof the liquidity of the Bank. The Loansto Deposits Ratio and the Net Loansto Total Assets Ratio are around 30%.The industry average of the Loans toDeposits ratio is around 90% whichNATIONAL SAVINGS BANK . ANNUAL REPORT 2012