Page 167 - EXIM-BANK-AR20

Section 06 Financial Statements
165

41. CREDIT EXPOSURE ARISING FROM FINANCING FACILITIES WITH CONNECTED PARTIES
The Group’s and the Bank’s credit exposure arising from financing facilities with connected parties are as disclosed below:

Group and Bank
2020 2019
RM’000 RM’000

Aggregate value of outstanding exposure with connected parties 551,146 556,167
Equities and PDS held 600,000 600,000
1,151,146 1,156,167

Total exposure to connected parties as % of total capital 73.40% 56.44%

Total exposure to connected parties as % of total outstanding exposures 10.00% 8.50%

The credit exposures disclosed below are based on the requirement of Paragraph 14.1 of Bank Negara Malaysia’s Policy
Document on Financing Facilities with Connected Parties (“Policy Document”).

42. FINANCIAL RISK MANAGEMENT POLICIES
The Group’s and the Bank’s financial risk management policies seek to enhance shareholder’s value. The Group and the Bank
focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the financial performance
of the Bank.
The Risk Management Division (“RMD”) of the Group and the Bank is responsible for formulating policies and the oversight
of credit, market liquidity and operational risks.
Financial risk management is carried out through risk assessment and reviews, internal control systems and adherence to
Group’s and Bank’s financial risk management policies, which are reported to and approved by the Board of Directors of the
Bank (“the Board”). The Board also approves the treasury practices which cover the management of these risks.
The main areas of financial risks faced by the Group and the Bank and the policies are set out as follows:
a. Capital management
Capital management refers to continuous, proactive and systematic process to ensure the Group and the Bank have
sufficient capital in accordance to its risk profile and regulator’s requirements.
b. Market risk
The Group’s and the Bank’s market risk arise due to changes foreign currency value which would lead to a decline in the
valuation of the Group’s and the Bank’s foreign currency base investment securities, derivatives and borrowings.
c. Asset liability management risk
Asset Liability Management (“ALM”) risk comprises:

(i) Interest rate risks
This refers to the exposure of the Group’s and the Bank’s financial conditions due to adverse movements in interest
rates to the banking book.
(ii) Liquidity risks
Defined as the risk of not being able to obtain sufficient funds in a timely manner at a reasonable cost to meet
financial commitments when due.