BankVic Annual Report 2019
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In addition, excessive concentration of liabilities is minimised by setting limits on the maximum amount of single and multiple<br />
liabilities.<br />
The Company has set out below the contractual maturities of financial liabilities, including estimated interest payments and<br />
excluding the impact of netting arrangements.<br />
30 June <strong>2019</strong><br />
Financial Liabilities ($’000)<br />
Carrying<br />
Amount<br />
Contractual<br />
Cash Flow<br />
Less than<br />
1 month<br />
1 - 3<br />
months<br />
3 months<br />
to 1 year<br />
1 - 5 years<br />
Deposits* 1,850,261 1,855,980 1,416,494 208,488 180,085 50,913 -<br />
Trade and other payables 13,045 13,045 13,045 - - - -<br />
Borrowings 2,010 2,010 2,010 - - - -<br />
Total 1,865,316 1,871,035 1,431,549 208,488 180,085 50,913 -<br />
5+<br />
years<br />
30 June 2018<br />
Financial Liabilities ($’000)<br />
Carrying<br />
Amount<br />
Contractual<br />
Cash Flow<br />
Less than<br />
1 month<br />
1 - 3<br />
months<br />
3 months<br />
to 1 year<br />
1 - 5 years<br />
Deposits* 1,595,735 1,600,662 1,304,443 146,843 115,492 33,884 -<br />
Trade and other payables 9,506 9,506 9,506 - - - -<br />
Borrowings 44,670 44,670 18,214 17,636 8,820 - -<br />
Total 1,649,911 1,654,838 1,332,308 165,365 126,255 30,910 -<br />
* Deposits less than 1 month include deposits with no maturity.<br />
Market Risk<br />
Market risk is the risk that changes in market prices, such as interest rate risk and other market prices will affect the Company’s<br />
income or the value of its holdings of financial instruments.<br />
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while<br />
optimising the return.<br />
The Company is not exposed to currency risk and other price risk. The Company does not trade in the financial instruments it<br />
holds on its books. The most significant form of market risk to which the Company is exposed is interest rate risk arising from<br />
changes in market interest rates.<br />
i. Interest Rate Risk<br />
The policy of the Company is to manage the variability in the net interest margin as a result of adverse movements in interest<br />
rates. This is achieved by keeping the mismatch between rate sensitive assets and liabilities to an acceptable level.<br />
The Company manages interest rate risk by setting prudent limits for the impact of movements in market rates on net interest<br />
income, net present value and Value at Risk (VaR).<br />
ii. Interest Rate Sensitivity<br />
At 30 June, a 1% increase or decrease in interest rates compared to actual rates would improve/(reduce) annual net interest<br />
income by the following amounts. The impact on equity is not material.<br />
<strong>2019</strong><br />
$’000<br />
5+<br />
years<br />
2018<br />
$’000<br />
1% increase 4,521 4,257<br />
1% decrease (4,819) (4,473)<br />
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