DMIT_Annual_Report_2018_EN

N OTES TO THE C ONSOLIDATED F INANCIAL S TATEMENTS (Thousands of US dollars) Dar Al-Maal Al-Islami Trust 47 Currency risk Assuming that all other variables held constant, the impact of currency risk on the consolidated statement of income and comprehensive income based on reasonable shift is summarised below: USD/EUR USD/PKR At 31 December 2018 Total currency exposure (183,096) (118,258) Reasonable shift 3.08% 2.60% Total effect on income (5,039) (3,075) At 31 December 2017 Total currency exposure (247,157) (997,243) Reasonable shift 2.42% 12.78% Total effect on income (5,981) (127,448) The basis for calculation of the reasonable shift is arrived at by comparing the foreign exchange spot rate at 31 December as compared to the one year forward rate for the same period. The total effect on equity was determined not to be material. (b) Profit rate risk Profit rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market profit rates. Movement in the market profit rates may affect the earnings of the Group. The profit rate exposure taken by the Group arises from investing in corporate, small-medium enterprises, consumer financing, investment banking and inter-banking activities where variation in market profit rates may affect the Profitability of the Group. The risk is managed by the management of individual entities. The profit rate dynamics are reviewed at regular intervals and repricing of assets and liabilities are adjusted to ensure that the spread of the subsidiary remains at an acceptable level. The financings and deposits of the Group are broadly linked to the market variable rates and thus get automatically repriced on a periodic basis based on profit rate scenarios.