To meet the financial needs of customers, the Group and the Bank enter into various irrevocable commitments and contingent liabilities. These consist of financial guarantees, letters of credit and other undrawn commitments to lend. Even though the obligations may not be recognised on the statements of financial position they do contain credit risk and are therefore part of the overall risk of the Group and the Bank.
Refer to note 37 for disclosure on allowance for impairment losses.
Financial guarantees and letters of credit (including standby letters of credit) commit the Group and the Bank to make payments on behalf of customers in the event of a specific act, generally related to the import or export of goods.
During the reporting period, a customer of the Bank instigates proceedings against it for breach of contract in connection to an outward transfer payment of MUR 5M.
Management considers that no liability will arise as the case is currently still at preliminary stage before the Supreme Court of Mauritius and is remote.
Undrawn commitments to lend
Commitments to extend credit represent contractual commitments to make loans and revolving credits. Commitments generally have fixed expiry dates, or other termination clauses. Since commitments may expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.
However, the potential credit loss is less than the total unused commitments since most commitments to extend credit are contingent upon customers maintaining specific standards. The Group and the Bank monitor the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.
The Group and the Bank have entered into commercial leases on premises and vehicles. These leases have an average life that ranges between three and five years with no renewal option included in the contract. There are no restrictions placed upon the lessee by entering the leases.
Future minimum lease payments under the non-cancellable operating leases at 30 June are as follows:
Future minimum sublease payments expected to be received under non-cancellable sub-leases from subsidiary at 30 June are as follows:
Litigation is a common occurrence in the banking industry due to the nature of the business undertaken. The Group and the Bank have formal controls and policies for managing legal claims. Once professional advice has been obtained and the amount of loss reasonably estimated, the Group and the Bank make adjustments to account for any adverse effects which the claims may have on its financial standing.
Transactions with other related parties
In addition to transactions with key management personnel, the Group and the Bank enter into transactions with entities having significant influence over the Group and the Bank. The following table shows the outstanding balance and the corresponding transaction during the year.
The dividend paid to related parties on Class A Shares is MUR 1.2M (2018: MUR 1.1M, 2017: MUR 7.4M).
The dividend paid to related parties on Ordinary Shares is MUR 95.1M (2018: MUR 97.5M, 2017: MUR 52.2M).
Terms and conditions of transactions with related parties
The above mentioned outstanding balances arose in the normal course of business. For the year ended 30 June 2019, the Group and the Bank have not raised any expected credit losses for doubtful debts relating to amounts owed by related parties (2018: MUR Nil, 2017: MUR Nil). At 30 June 2019, none of the facilities to related parties was non-performing (2018: MUR Nil, 2017: MUR Nil). In addition, for the year ended 30 June 2019 the Bank has not written off any amount owed by related party (2018: MUR Nil, 2017: MUR Nil). The total on and off balance sheet exposure to the related parties amounted to MUR 3.0 bn (2018: MUR 2.4bn, 2017: MUR 2.4 bn) representing 10% (2018: 8%, 2017: 8%) of the Group's total exposure.
The credit exposure to the six related parties with the highest exposure amounted to MUR 671M (2018: MUR 526M, 2017: MUR 784.2M) representing 10% (2018: 9%, 2017: 14%) of the CET 1 capital and all the related party transactions were within the regulatory limit as recommended in the Bank of Mauritius Guideline on Related Party Transactions issued in December 2001 and effective in January 2009.
The Bank had no letter of guarantee on behalf of related parties as at 30 June 2019 (2018: MUR Nil , 2017: MUR Nil).
The Bank acts as custodian for AfrAsia Capital Management Ltd. The latter has deposits in Kingdom Bank Limited amounting to USD 1.2M (2018: USD 1.2M and 2017: USD 1.2M).
Amount owed by related parties
The above-related party transactions were carried out under normal business terms and conditions subject to interest wherever applicable.
The amount owed by related parties is unsecured except for MUR 494M under loans and advances which is secured by fixed and floating charge on assets and MUR 420M under debt instruments at amortised cost which is secured by fixed charge on assets. Settlement occurs in cash.
The amount owed by related parties consist mainly of loans and advances and investment securities.
Amount owed to related parties
The above-related party transactions were carried out under normal business terms and conditions subject to interest wherever applicable. The above balances were unsecured.
The amount owed to related parties consist mainly of deposits.
Risk is inherent in the Group's and the Bank's activities but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Group's and the Bank's continuing profitability and each individual within the Group and the Bank is accountable for the risk exposures relating to his or her responsibilities. The Group and the Bank are exposed to credit risk, liquidity risk and market risk, the latter being subdivided into trading and non-trading risks. It is also subject to operational risks.
Risk management structure
The Board of Directors is ultimately responsible for identifying and controlling risks. However, there are separate independent bodies responsible for managing and monitoring risks.
Board of Directors
The Board of Directors as well as the Group's and the Bank's senior management are responsible for understanding both the nature and level of risks taken by the institution and how the risks relate to adequate capital level. The Board is also responsible for the overall risk management approach and for approving the risk strategies and principles.
Risk Management/Conduct Review Committee
The Committee has the overall responsibility for the development of the risk strategy and implementing principles, frameworks, policies and limits. The Committee is responsible for managing risk decisions and monitoring risk levels.
The Bank's Treasury is responsible for managing the Bank's assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Bank.
The Bank's policy is that risk management processes throughout the Bank are audited annually by the Internal Audit Function, which examines both the adequacy of the procedures and the Bank's compliance with the procedures. Internal Audit discusses the results of all assessments with management, and reports its findings and recommendations to the Audit Committee.
(a) Risk measurement and reporting systems
The Group's and the Bank's risks are measured using a method which reflects both the expected loss likely to arise in normal circumstances and unexpected losses, which are an estimate of the ultimate actual loss based on statistical models. The models make use of probabilities derived from historical experience, adjusted to reflect the economic environment. The Group and the Bank also run worst case scenarios that would arise in the event that extreme events which are unlikely to occur do, in fact, occur.
Monitoring and controlling risks is primarily performed based on limits established by the Group and the Bank. These limits reflect the business strategy and market environment of the Group and the Bank as well as the level of risk that the Group and the Bank are willing to accept, with additional emphasis on selected industries. In addition, the Group's and the Bank's policy is to measure and monitor the overall risk bearing capacity in relation to the aggregate risk exposure across all risk types and activities.
Information compiled from all the business is examined and processed in order to analyse, control and identify risks on a timely basis. This information is presented and explained to the Board of Directors, the Risk Committee and the Head of each business division. The report includes aggregate credit exposure, hold limit exceptions, liquidity ratios and risk profile changes. On a monthly basis, detailed reporting of industry, customer and geographic risks take place. Senior management assesses the appropriateness of the allowance for credit losses on a monthly basis.
As part of its overall risk management, the Bank uses derivatives and other instruments to manage exposures resulting from changes in foreign currencies.
The Bank has set in place a Watchlist committee that monitors accounts in arrears rigourously. Weekly reports are circulated for follow up and tabled at the committee. Through its Impairment committee, Management are provided with a status on Loans and Advances in arrears so as to ensure that appropriate actions have been taken.
The Bank actively use collaterals to reduce their credit risks on loans and advances.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Bank's performance to developments affecting a particular industry or geographical location.
In order to avoid excessive concentrations of risk, the Bank's policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
(b) Credit risk
Credit risk refers to the risk that a customer or counterparty will default on its contractual obligations resulting in financial loss to the entity. The Group and the Bank main income generating activity is lending to customers and therefore credit risk is a principal risk. Credit risk mainly arises from loans and advances to customers and other banks (including related commitments to lend such as loan or credit card facilities), investment in debt securities, derivatives that are an asset position, trade receivables and receivables from related partiies. The Group and the Bank consider all elements of credit risk exposure such as counterparty default risk, geographical risk and sector risk for risk management purposes.
Credit risk management
The Bank has established approaches to manage credit risk including:
Internal Credit Risk Ratings
In order to minimise credit risk, the Bank has tasked its Risk Management Committee to develop and maintain the Bank's Credit Risk grading to categorise exposures according to their degree of risk of default. Board Credit and Risk committee have oversight on the credit rating. The credit rating information is based on a range of data that is determined to be predictive of the risk of default. The nature of the exposure and type of borrower are taken into account in the analysis.
The Bank's Risk Appetite Framework ('RAF') comprises of quantitative and qualitative factors that are indicative of risk of default and are used to define credit risk grades. The RAF has been designed and calibrated to reflect the risk of default as credit risk deteriorates.
As the credit risk increases the difference in risk of default between grades changes. Each exposure is allocated to a credit risk grade at initial recognition, based on the available information about the counterparty. All exposures are monitored and the credit risk grade updated to reflect current information. The monitoring procedures followed are both general and tailored to the type of exposure. The following data are typically used to monitor the Bank’s exposures:
'Payment record and ageing analysis;
The Bank uses credit risk grades as a primary input into the determination of the term structure of the PD for exposures. The Bank collects performance and default information about its credit risk exposure analysed by type of products and borrower as well as by credit risk grading. The information used is both internal and external depending on the portfolio assessed. The table below provides a mapping of the Bank’s internal credit risk grades to external ratings.
Significant Increase in Credit Risk
The Bank monitors all financial assets that are subject to impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk the Bank will measure the loss allowance based on liifetime rather than 12-month ECL. At each reporting date, the Bank must assess whether the credit risk on a financial instrument has increased significantly.
In addition, the Bank has developed a number of objective and subjective factors to consider when evaluating whether an account exhibits SICR:
Loan commitments are assessed along with the category of loan the Bank is commited to provide, i.e. commitments to provide corporate loans are assessed using similar criteria to corporate loans.
The Bank has monitoring procedures in place to make sure that the qualitative criteria used to identify significant increases in credit are effective, meaning that significant increase in credit risk is identified before the exposure is defaulted or when the asset becomes 30 days past due.
Incorporation of forward looking information
The Bank incorporates forward looking information that is available without undue cost and effort into both its assessment of whether the credit risk of an instrument has increased significantly since its intial recognition and its measurement of ECL.
The Bank loan book is split into two segments, namely Segment A for local exposures and Segment B for cross-border exposures.
The Segment A portfolio is further segregated into 2 distinct homogenous group namely Mid-Corporate and Large-Corporate where these clients fall into either one of 14 sectors based on a Bank of Mauritius classification criteria. Monthly marginal PDs for each facility over their remaining maturity are generated through the respective PD function,which is built upon the coefficients of logistic regression equation for each sub-sector and the relevant forwardlooking macro-economic estimates that were deemed as statistically significant by the model. Using these econometric models, the relationships between movements in macroeconomic variables and the default behaviours of our clients are investigated and where evidence could be found, PDs based on the internal default experience including forward looking premium are derived. Macroeconomic variables including GDP and Inflation as well as key market indicator such as the SEMDEX were considered and found to possess significant predictive power within the PD models. For clients belonging to sectors with no internal default experience, PDs are assessed based on the internal rating models given assessments done support that movements in the macroeconomic variables do not have a significant impact on the default behaviours.
The Segment B portfolio on the other hand is segregated by country of exposure. The PD attached to each facility, derived from the Bank’s rating based approach is subsequently adjusted to incorporate forward looking information based on the movements of Sovereign Credit Default Swap (CDS) curves.
The key inputs into the measurement of ECL are the following:
(i) probability of default (PD);
(ii) loss given default (LGD);
(iii) exposure at default (EAD). These parameters are derived as detailed below and they are adjusted to reflect forward-looking information as described above.
The IFRS 9 ECL is calculated every quarter, or as frequently as required. Separate IFRS 9 ECL calculation is done for Stage 1, Stage 2 and Stage 3 accounts.
The ECL for all accounts in stage 1 is calculated by multiplying the PD, LGD and EAD. For stage 2 accounts, ECL is calculated separately for the first 12 months, months 13-24 and so on until the contractual maturity. Lastly, ECL for stage 3 accounts is calculated simply by multiplying the EAD and LGD, given that the account is in default (i.e. the PD is 100%).
PD is an estimate of the likelihood of default over a given time horizon. PDs are estimated considering the contractual maturities of exposures and the estimation is based on current conditions, adjusted to take into account estimates of future conditions that will impact PD.
The PD of the domestic accounts is derived either through the econometric models where available or alternatively, based on the Bank internal rating models (as explained above). For international accounts, the PD is determined based on the external rating of the counterparty if available. Otherwise, the Bank uses the internal rating models, capped to the respective country rating. The PDs are thereafter duly adjusted to include any forward looking premium as required.
LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from any collateral.
LGD for performing accounts is dependent on the collateral held against the exposure. The Bank derives the LGD based on the type of collateral rather than the estimated collateral value. The LGD for non-performing accounts is prudently calculated under the assumption that the Bank will take possession of the collateral and liquidate.
EAD represents the expected exposure in the event of a default. The Bank derives the EAD from the current exposure to the counterparty and potential changes to the current amount allowed under the contract including amortisation. The EAD of a financial asset is its gross carrying amount. For overdraft, credit card and financial guarantees, the EAD includes the amount drawn, as well as potential future amounts that may be drawn under the contract. As described above, and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not significantly increased, the Bank measures ECL considering the risk of default over the maximum contractual period (including any borrower’s extension options) over which it is exposed to credit risk, even if, for risk management purposes, the Bank considers a longer period. The maximum contractual period extends to the date at which the Bank has the right to require repayment of an advance or terminate a loan commitment or guarantee.
Credit-related commitments risks
The Bank make available for its customers guarantees which may require that the Bank make payments on their behalf and enter into commitments to extend credit lines to secure their liquidity needs. Letters of credit and guarantees (including standby letters of credit) commit the Bank to make payments on behalf of customers in the event of specific act, generally related to the import or export of goods. Such committments expose the Bank to similar risks to loans and are mitigated by the same control process and policies.
Country risk is the uncertainty whether obligors will be able to fulfil financial obligations given political or economic conditions in the country in question. The Bank make a thorough evaluation of risks which may be associated with their cross-border operations and which have the potential to adversely affect its risk profile. These risks can be elaborated below:
Transfer Risk - Where a country suffers economic, political or social problems, leading to a drainage in its foreign currency reserves, the borrowers in that country may not be able to convert their funds from local currency into foreign currency t o repay their external obligations.
Sovereign Risk - This risk denotes a foreign government's capacity and willingness to repay its direct and indirect (i.e., guaranteed) foreign currency obligations. It arises as a result of a bank having any type of lending, extension of credit, or advance to a country's government.
Currency Risk - The risk that a borower's domectic currency holdings and cash flow become inadequate to service its foreign currency obligations because of devaluation.
Contagion Risk - The risk that adverse developments in one country may, for instance, lead to a downgrade of rating or credit squeeze not only for that country but also for other countries in the region, notwithstanding the fact that those countries may be more creditworthy and that the adverse developments do not apply.
Indirect Country Risk - The risk that the repayment ability of a domestic borrower is endangered owing to the deterioration of the economic, political or social conditions in a foreign country where the borrower has substantial business relationship or interest.
Macroeconomic Risk - The risk that the borrower in a country may, for example, suffer from the impact of high interest rates due to measures taken by the According to the Bank of Mauritius guideline on country risk management, the Bank is required to prudently make provisions on country risk. A provision of MUR 50M was raised for the year ended 30 June 2017. No incremental provisioning was allocated for the year ended 30 June 2018 and 30 June 2019.
Conferring to ABL's country risk policy, the Bank would set exposure limits for individual countries to manage and monitor Country risk. Country exposure limits should apply to all on and off balance sheet exposures to foreign borrowers. While it is the responsibility of the Board Risk Committee (BRC) to approve the proposed structure of limits, investment strategy and the related limits with regards to the Bank risk appetite , the Board of Directors is also repsonsible for setting the Bank's tolerance for country risks.
Risk concentrations: Maximum exposure to credit risk without taking account of any collateral and other credit enhancements
The Group's and the Bank's concentrations of risk are managed by client/counterparty (excluding government), by geographical region and by industry sector. The maximum credit exposure to any client or counterparty as of 30 June 2019 was MUR
18.5bn (2018: MUR 13.4bn and 2017: MUR 4.8bn) before taking account of collateral or other credit enhancements.
The following table shows the maximum exposure to credit risk for the components of the statement of financial position, including derivatives, by geography and by industry before the effect of mitigation through the use of master netting and
collateral agreements. Where financial instruments are recorded at fair value, the amounts shown represent the current credit risk exposure but not the maximum risk exposure that could arise in the future as a result of changes in values.
The Group’s and the Bank’s financial assets before taking into account any collateral held or other credit enhancements, can be analysed as follows by the following geographical regions:
An industry analysis of the Group’s and the Bank’s financial assets, without taking account of any collateral held or other credit enhancements, is as
Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of
collateral and valuation parameters. The main types of collateral obtained are as follows:
• Floating charges for commercial lending;
• Fixed charges for retail lending and for commercial lending;
• Cash deposits held under lien; and
• Pledge of quoted shares.
The Group and the Bank also request for personal guarantees from promoters, directors, shareholders and also corporate and cross guarantees from parent and sister
The fair value of collateral and other credit enhancements received on loans and advances as at 30 June 2019 is MUR 21bn (2018: MUR 18bn and 2017: MUR 28bn). All other
financial assets are unsecured except for collateralised placements.
Credit quality per class of financial assets
The table below shows the credit quality by class of asset for loan-related statement of financial position lines, based on the Bank's credit rating system:
Refer to the different captions in the financial statements for the credit quality disclosure based on credit rating system for 30 June 2019.
Refer to the different captions in the financial statements for the credit quality disclosure based on credit rating system for 30 June 2019.
It is the Group’s and the Bank's policy to maintain accurate and consistent risk ratings across the credit portfolio. These facilitates focused management of the applicable risks and the comparison of credit exposures across all
lines of business, geographic regions and products. The rating system is supported by a variety of financial analytics, combined with processed market information to provide the main inputs for the measurement of
counter party risk. All risk ratings are tailored to the various categories and are derived in accordance with the Group’s and the Bank's rating policy. The attributable risk ratings are assessed and updated regularly.
See Note 17 for more detailed information with respect to the allowance for impairment losses on loans and advances to customers.
The fair value of the collaterals that the Group and the Bank hold relating to loans that were past due but not impaired and loans individually determined to be
impaired at 30 June 2019 amounts to MUR 665M (2018: MUR 437M and 2017: MUR 3.7bn) and MUR 658m (2018: MUR 1.6bn and 2017: MUR 3.7bn)
During the year, the Group and the Bank did not take possession of any collateral (2018: Nil and 2017: Nil).
The main considerations for the loan impairment assessment include whether any payments of principal or interest are overdue or there are any known difficulties in the cash flows of counterparties, credit rating downgrades, or infringement of the original terms of the contract. The Group and the Bank address impairment assessment in two areas: individually assessed allowances and collectively assessed allowances.
Individually assessed allowances
The Group and the Bank determine the allowances to be appropriate for each facility assessed on an individual basis. Items considered when determining allowance amounts include the sustainability of the counterparty's business plan, its ability to improve performance once a financial difficulty has arisen, projected receipts and the expected dividend payout should bankruptcy ensue, the availability of other financial support, the realisable value of collateral and the timing of the expected cash flows. The impairment losses are evaluated at each reporting date, unless unforeseen circumstances require more careful attention.
Collectively assessed allowances
Allowances are assessed collectively for losses on loans and advances that are not individually significant and for individually significant loans and advances where there is not yet objective evidence of individual impairment. Allowances are evaluated on each reporting date with each portfolio receiving a separate review.
The collective impairment allowances are estimated by taking into consideration trends in the delinquency and loan loss history. Collective impairment is conducted in accordance with the Bank of Mauritius Guideline on 'Credit Impairment Measurement and Income Recognition up to 2018'.
The Group's and the Bank's financial assets before taking into account any collateral held or other credit enhancements, can be analysed as follows by the following geographical regions:
Financial guarantees and unutilised commitments are assessed and provision made in similar manner as for loans.
Commitments and guarantees
To meet the financial needs of customers, the Group and the Bank enter into various irrevocable commitments and contingent liabilities. Even though these obligations may not be recognised on the statements of financial position, they do contain credit risk and are therefore part of the overall risk of the Group and the Bank.
The table below shows the Group's and the Bank's maximum credit risk exposure for commitments and guarantees.
The maximum exposure to credit risk relating to a financial guarantee is the maximum amount the Group and the Bank could have to pay if the guarantee is called on. The maximum exposure to credit risk relating to a loan commitment is the full amount of the commitment. In both cases, the maximum risk exposure is significantly greater than the amount recognised as a liability in the statement of financial position.
(c) Liquidity risk and funding management
Liquidity risk is the risk that the Group and the Bank will be unable to meet its payment obligations when they fall due under normal and stress circumstances. To limit this risk, management has arranged diversified funding sources in addition to its core deposit base, manages assets with liquidity in mind, and monitors future cash flows and liquidity on a daily basis. This incorporates an assessment of expected cash flows and the availability of high grade collateral which
could be used to secure additional funding if required.
Sources of liquidity risk include unforseen withdrawal of demand deposit, restricted access to new funding with appropriate maturity and interest rate characteristics, inability to liquidate a marketable asset in a timely manner with minimum risk of capital loss, unpredicted non payment of a loan obligation and a sudden increased demand for loans. The Group and the Bank maintain a portfolio of highly marketable and diverse assets that can be easily liquidated in the event of an unforeseen interruption of cash flow. The Group and Bank also have committed lines of credit that they can
access to meet liquidity needs. In addition, the Group and the Bank maintain a statutory deposit with the Bank of Mauritius. The liquidity position is assessed and managed under a variety of scenarios giving due consideration to stress factors
relating to both the market in general and specifically to the Group and the Bank.
Analysis of financial assets and liabilities by remaining contractual maturities
The table on next page summarises the maturity profile of the Group's and the Bank's financial assets and liabilities based on contractual repayment obligations. Repayments which are subject to notice are treated as if notice were to be given immediately. However, the Group and the Bank expect that many customers will not request repayment on the earliest date the Group and the Bank could be required to pay and the table does not reflect the expected cash flows indicated by the Group's and the Bank's deposit retention history.
*Included in debt issued are subordinated debt with maturity of 1 year amounting to MUR 184.2M.
*Included in debt issued are subordinated debt with maturity of 1 year amounting to MUR 184.2M.
The Group and the Bank do not expect all the contingent liabilities or commitments to be drawn before expiry of commitments.
(d) Market risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates and foreign exchange rates. The Group and the Bank classify exposures to market risk into either trading or non trading portfolios and manage these portfolios separately. Except for the
concentrations within foreign currency, the Group and the Bank have no significant concentration of market risk.
(i) Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. Management has established
limits on the interest rate gaps for stipulated periods.
The following table demonstrates the sensitivity to a reasonable possible change in interest rates, (all other variables held constant) of the Group's and the Bank's statements of
profit or loss and other comprehensive income.
The sensitivity of the statements of profit or loss and other comprehensive is the effect of the assumed changes in interest rates on the profit or loss for the year, based on the
financial assets and financial liabilities held at 30 June.
The table below analyses the Group's and the Bank's interest rate risk exposure on non–trading financial assets and liabilities. The Group's and the Bank’s assets and liabilities are included at carrying amount and categorised by the earlier of contractual re–pricing or maturity dates.
(ii) Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Management has set limits on positions by currency. Positions are monitored on a daily basis and hedging strategies are used to ensure positions are maintained within established limits.
The table below indicates the currencies to which the Group and the Bank had significant exposure at 30 June on all its monetary assets and liabilities and its forecast cash flows. The analysis calculates the effect of a reasonably possible movement of the currency rate against the MUR, with all other variables held constant on the statements of profit or loss (due to the fair value of currency sensitive non trading monetary assets and liabilities). A negative amount in the table reflects a potential net reduction in the statement of profit or loss, while a positive amount reflects a net potential increase.
Other price risk
Other price risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices. The nontrading
equity price risk exposure arises from debt instrument measured at fair value through other comprehensive income.