Liquidity Risk in 2014 dbs annual report 2014

PROCESSES, SYSTEMS AND REPORTS Robust฀internal฀control฀processes฀and฀systems฀underlie฀the฀overall฀approach฀to฀identifying,฀measuring,฀aggregating,฀controlling฀and฀ monitoring฀liquidity฀risk฀across฀DBS.฀In฀2014,฀we฀completed฀the฀development฀of฀an฀in-house฀integrated฀data฀platform฀that฀serves฀฀ to฀aggregate฀relevant฀source฀data฀in฀a฀complete฀and฀accurate฀manner฀that฀facilitates฀timely฀and฀granular฀reporting฀of฀liquidity฀risk฀for฀ internal฀and฀regulatory฀purposes. The฀day-to-day฀liquidity฀risk฀monitoring,฀control฀reporting฀and฀analysis฀are฀managed฀by฀the฀RMG฀Market฀and฀Liquidity฀Risk฀unit฀–฀an฀ independent฀liquidity฀risk฀management฀function฀that฀reports฀to฀the฀CRO.฀This฀group฀comprises฀risk฀control,฀risk฀analytics,฀production฀฀ and฀reporting฀teams.

7.2 Liquidity Risk in 2014

For฀the฀purpose฀of฀risk฀management,฀we฀actively฀monitor฀and฀manage฀DBS’฀liquidity฀proile฀based฀on฀the฀cashlow฀maturity฀ mismatch฀analysis.฀ In฀forecasting฀the฀cashlows฀under฀the฀analysis,฀behavioural฀proiling฀is฀necessary฀in฀cases฀where฀a฀product฀has฀indeterminate฀maturity฀or฀ the฀contractual฀maturity฀does฀not฀realistically฀relect฀the฀expected฀cashlows.฀An฀example฀would฀be฀maturity-indeterminate฀savings฀and฀ current฀account฀deposits฀which฀are฀generally฀viewed฀as฀a฀source฀of฀stable฀funding฀for฀commercial฀banks฀and฀consistently฀exhibited฀stability฀ even฀under฀historical฀periods฀of฀stress.฀ A฀conservative฀view฀is฀therefore฀adopted฀in฀the฀behavioural฀proiling฀of฀assets,฀liabilities฀and฀off-balance฀sheet฀commitments฀that฀฀ have฀exhibited฀cashlow฀patterns฀that฀differ฀signiicantly฀from฀the฀contractual฀maturity฀proile฀shown฀under฀Note฀42.1฀of฀our฀Financial฀ Statements฀on฀page฀175.฀ The฀table฀below฀shows฀DBS’฀behavioural฀net฀and฀cumulative฀maturity฀mismatch฀between฀assets฀and฀liabilities฀over฀a฀1-year฀period฀under฀฀ a฀normal฀scenario฀without฀incorporating฀growth฀projections.฀DBS’฀liquidity฀is฀observed฀to฀remain฀adequate฀under฀the฀maturity฀mismatch฀ analysis,฀amidst฀sustained฀growth฀in฀loans฀supported฀largely฀by฀stable฀sources฀of฀funds฀from฀deposits฀gathering฀and฀the฀issuance฀of฀ medium฀term฀notes฀and฀commercial฀papers. In SGD million a Less than 7 days 1 week to 1 month 1 to 3 months 3 to 6 months 6 months to 1 year As at 31 Dec 2014 Net liquidity mismatch฀ 21,364฀ 6,553฀ 7,767฀ 8,404฀ 10,803 Cumulative mismatch฀ 21,364฀ 14,811฀ 22,578฀ 30,982฀ 41,785 As at 31 Dec 2013 b Net liquidity mismatch฀ 18,638฀ 2,642฀ 7,052฀ 10,539฀ 11,800 Cumulative mismatch฀ 18,638฀ 15,996฀ 23,048฀ 33,587฀ 45,387 a Positive indicates a position of liquidity surplus. Negative indicates a liquidity shortfall that has to be funded b As the behavioural assumptions used to determine the maturity mismatch between assets and liabilities are updated from time to time, the liquidity mismatches may not be directly comparable across past balance sheet dates

7.3 Liquid Assets