Where the world comes to bank - Emirates NBD

NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
47 RISK MANAGEMENT (continued)
As of 31 December 2008
Designated at Held-to- Available- Trading Total
fair value maturity for- sale securities
through profit investment investment
or loss securities securities
AED 000 AED 000 AED 000 AED 000 AED 000
AAA - - 1,415,376 - 1,415,376
AA- to AA+ 87,843 56,630 2,527,772 - 2,672,245
A- to A+ 2,075 192,356 2,992,045 46,311 3,232,787
Lower than A- 151,174 113,206 707,579 - 971,959
Unrated 2,324,573 270,693 8,549,479 198,134 11,342,879
2,565,665 632,885 16,192,251 244,445 19,635,246
Of which issued by:
Designated at Held-to- Available- Trading Total
fair value maturity for- sale securities
through profit investment investment
or loss securities securities
AED 000 AED 000 AED 000 AED 000 AED 000
Governments 19,331 131,810 1,287,777 24,027 1,462,945
Public sector enterprises 202,533 49,155 1,425,260 43,412 1,720,360
Private sector and others 2,343,801 451,920 13,479,214 177,006 16,451,941
2,565,665 632,885 16,192,251 244,445 19,635,246
72 73
The risk transfer in the form of syndicated loans, risk participation agreements with other banks, credit default swaps and
sale of loans are globally accepted practices followed by the Group, where appropriate, to limit its exposure.
Collateral management:
Credit risk assessment identifies the primary sources of repayment which are the obligor’s normal business cash flows
and/or normal personal income. Where credit facilities are secured by a collateral, the Group seeks to ensure the
enforceability of the facilities.
Acceptable collateral includes deposit marked with lien, mortgage over land and property, movable assets including
inventory, securities, investment grade bonds, gold and guarantees. The maximum lending value and the valuation
frequencies are documented in the corporate credit policy.
Collaterals are revalued as a general rule as per the policy. However adhoc valuations are also carried out depending on
the nature of collateral and general economic condition. This enables the Group to assess the fair market value of the
collateral and ensure that risks are appropriately covered.
Collaterals and guarantees are effectively used as mitigating tools by the Group. The quality of collateral is continuously
onitored and assessed.
irates NBD Emirates | Annual NBD | Review GROUP CONSOLIDATED 2009 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
47 RISK MANAGEMENT (continued)
Collateral management: (continued)
The Group’s policy is to pursue timely realisation of the collateral in an orderly manner. The Group generally does not use
non-cash collateral for its own operations.
Risk gross maximum exposure:
The table below shows the maximum exposure to credit risk for the components of the balance sheet, including derivatives.
The maximum exposure is shown gross, before the effect of use of master netting and collateral agreements.
2008 2009
AED 000 AED 000
Deposits with Central Bank 17,414,858 14,926,556
Due from banks 10,046,949 8,128,342
Loans and receivables 194,702,689 188,006,789
Islamic financing and investment products 19,911,611 20,923,373
Trading securities 611,093 244,445
Investment securities 16,152,520 19,390,801
Investments in associates and joint ventures 2,444,550 2,924,808
Positive fair value of derivatives 2,819,686 6,323,494
Customer acceptances 2,562,869 2,860,654
Total (A) 266,666,825 263,729,262
Contingent liabilities 48,567,754 71,587,210
Irrevocable loan commitments 10,092,483 24,126,946
Total (B) 58,660,237 95,714,156
Total credit risk exposure (A + B) 325,327,062 359,443,418