40 / 87
Notes to the Consolidated Financial Statements
(Thousands of US dollars)
38
Dar Al-Maal Al-Islami Trust
Annual Report 2014
4. Financial instruments
(continued)
F. Liquidity risk
Liquidity risk is the risk that
the Group is unable to meet its
payment obligations associated
with its financial liabilities when
they fall due and to replace funds
when they are withdrawn. The
consequence may be the failure to
meet obligations to repay investors
and fulfil commitments to lend.
Liquidity risk management
process
The Group’s liquidity risk management
process, as carried out within the
Group and monitored by management
in individual entities within the Group,
includes:
i) Day-to-day funding, managed
by monitoring future cash flows
to ensure that requirements
can be met. This includes
replenishment of funds as they
mature or are borrowed by
customers. The Group maintains
an active presence in money
markets to enable this to happen;
ii) Maintaining a portfolio of
highly marketable assets
that can easily be liquidated
as protection against any
unforeseen interruption to cash
flow;
iii) Monitoring statement of
financial position liquidity ratios
against internal and regulatory
requirements; and
iv) Managing the concentration
and profile of debt maturities.
Monitoring and reporting of treasury
and capital market maturities is
done through monitoring of daily
maturities. Similarly the overall
liquidity maintenance is done
through monthly maturity gap
analysis at balance sheet level.
Hence, monitoring and reporting
takes the form of regular and
periodic cash flow measurement
and projections. The starting point
for those projections is an analysis
of the contractual maturity of the
financial liabilities and the expected
collection date of the financial
assets.
The Group also monitors unmatched
medium term assets.
Price risk
Price risk is the risk that the fair values of the equities or the managed funds
increase or decrease as a result of changes in the corresponding value of equity
indices or the value of individual equity stocks held as available-for-sale.
The table below summarises the impact of increase/decrease of equity indices
on the Group’s post tax profit for the year and on other components of equity.
The analysis is based on the assumptions that equity indices increased/
decreased by 10% with all other variables held constant and all the Group’s
equity instruments moved according to the historical correlation with the indices.
Impact on other components of equity
2014
2013
Pakistan stock exchange (+/-10%)
2,099
2,009
Cairo stock exchange (+/-10%)
580
-
Impact on past tax profit
2014
2013
Bahrain Bourse (+/-10%)
54
-
Saudi Stock exchange (+/-10%)
5,320
-