Page 176 - EXIM-BANK-AR20

174 EXIM BANK MALAYSIA
Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS

42. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D.)
Asset liability management (cont’d.)
Analysis of net interest income (“NII”) and net profit income (“NPI”) sensitivity

The table below shows the Bank’s NII and NPI sensitivity based on possible parallel shift in interest rate:
NII NPI
2020 2019 2020 2019
Impact Impact Impact Impact
on profit on profit on profit on profit
and loss and loss and loss and loss
Increase/ Increase/ Increase/ Increase/
(decrease) (decrease) (decrease) (decrease)
RM’000 RM’000 RM’000 RM’000

Interest/Profit rate - parallel shift
+ 50 basis points 91 388 552 604
- 50 basis points (91) (388) (552) (604)

Impact to revaluation reserve is assessed by applying up and down 50 basis points rate shock to the yield curve to model on
mark-to-market for financial investments at FVOCI portfolio:
2020 2019
Impact Impact
on OCI on OCI
Increase/ Increase/
(decrease) (decrease)
RM’000 RM’000

+ 50 basis points (55) 68
- 50 basis points 55 (68)

Liquidity risk management
Approach and risk strategy

The inability to create liquidity would cause serious repercussion to the Group and the Bank in terms of its reputation and even
its continued existence. In view of this, the Group and the Bank pay particular attention to liquidity risk management approach
and strategy.

The objective of liquidity risk management is to ensure the availability of sufficient liquidity to honour all financial obligations and
able to meet any stressful events. The Group’s and the Bank’s liquidity risk management strategies involve:

• Establish appropriate policies to oversee the management of liquidity risk of the Group and the Bank;
• Establish prudent liquidity risk limits to ensure the Group and the Bank maintain a safe level of asset liquidity; and
• Develop contingency funding plans to manage the Group’s and the Bank’s funding requirement during liquidity crisis.