Page 188 - EXIM-Bank_Annual-Report-2023

EXIM BANk MALAySIA
186 A Vision to Serve Empowering Growth Management Discussion and Analysis
ANNUAL REPORT 2023
Notes to the fiNaNcial statemeNts

43. FINANCIAL rISk MANAGEMENT PoLICIES (cont’d)
Asset liability management

Approach and risk strategy
The main objective is to proactively manage the Group’s and the Bank’s financial position which includes assets, liabilities and
capital, in order to maximise earnings and to attain its strategic goal, within the overall risk/return preferences.

The Group’s and the Bank’s Asset and Liability Management (“ALM”) strategies are as follows:
• Ensure that the Group and the Bank achieve its financial objective through strategic business plan which shall be developed
within the risk tolerance level;
• Ensure that the Group’s and Bank’s pricing and funding are adequately maintain to support a sound capital base through
strategic management of the balance sheet; and
• Ensure that the Group and the Bank are able to sustain its capital against ALM risk inherent in all activities of the Group and
the Bank.
Risk identification

When analysing whether or not an activity introduces a new element of ALM risk exposure, the Group and the Bank should
be aware that changes to an instrument’s maturity, repricing or repayment terms could materially affect the product’s ALM
risks characteristics.

Measurement
The Group and the Bank face interest rate risks arising from re-pricing mismatches of assets and liabilities from its banking
businesses. These risks are monitored through economic value of equity limit and net interest income changes.

The Group and the Bank perform regular net interest income simulation to better understand the sensitivity to changes in
interest rates on the net interest income. In addition, MRC will actively manage the re-pricing mismatches with the aid of
monthly re-pricing gap and Earning-at-Risk (“EAR”) reports.