Page 311 - Full Book_24.4.2021

NOTES TO THE
FINANCIAL STATEMENTS in retrospect

|
for the financial year ended 31 december 2020 (continUed)
the Will to Suceed

|
49 FINANCIAL RISk MANAGEMENT POLICIES (CONTINUED)
49.4 Market risk (continued)
(b) Takaful (continued) achieving a leading repute
(iii) Foreign exchange risk

takaful malaysia’s primary transactions are carried out in ringgit malaysia (“rm”) and its exposure to foreign |
exchange risk arises principally with respect to indonesia rupiah (“rp”) and US dollar (“USd”).
as takaful malaysia’s business is conducted primarily in malaysia, the takaful malaysia Group and its
subsidiaries’ financial assets are also primarily maintained in malaysia as required under the islamic financial
Services act 2013, and hence, primarily denominated in the same currency (the local rm) as its takaful Paving the Way for a Sustainable future
and investment contract liabilities. accordingly, the main foreign exchange risk from recognised assets and
liabilities arises from transactions other than those in which takaful and investment contract liabilities are
expected to be settled.
as takaful malaysia’s main foreign exchange risk from recognised assets and liabilities arises from retakaful
transactions for which the balances are expected to be settled and realised in less than a year, the impact
arising from sensitivity in foreign exchange rates is deemed minimal as takaful malaysia has no significant 305
concentration of foreign currency risk.

takaful malaysia’s exposure to currency risk is immaterial in the context of the financial statements and
hence, sensitivity analysis is not presented.

49.5 Liquidity risk
Overview adhering to the best Governance Practices

liquidity risk is the potential inability of the Group to meet its funding needs and regulatory obligation when they fall due,
or will have to do it at excessive cost. this risk can arise from mismatches in the timing of cash flows.
the management reviews both banking and takaful business’ liquidity risk separately due to the different nature of both
|
businesses.
Laying the Foundation for Financial Growth
(a) Banking
in respect of bank islam, the bank maintains a diversified and stable funding base comprising of retail and corporate
customer deposits. this is augmented by wholesale funding and portfolios of highly liquid assets.
the objective of the bank’s liquidity management is to ensure that all foreseeable funding commitments and
deposit withdrawals can be met when due and that wholesale market remains accessible and cost effective.

|
additional information & disclosure Summary

|
24 th aGm information