DBS BANK CHINA LIMITED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2008 All amounts expressed in Rmb unless otherwise stated
[English translation for reference only]
56
42 FINANCIAL RISK MANAGEMENT continued
42.3 Market risk continued i
Trading market risk continued
Bank As at
1 January 2008 to 31 December 2008 Equivalent Rmb in
million 31 December 2008
Average Highest
Lowest Total 4.57
5.23 10.94
1.90 As at
26 May 2007 to 31 December 2007 31 December 2007
Average Highest
Lowest Total 3.38
2.88 7.22
1.31
ii Non-trading market risk
Non-trading market risk arises from changes in foreign exchange rates and interest rate. Non-trading market risk arises in the course of a the Bank’s management of funds
arising from banking intermediation and b the Bank’s banking business; specifically, from mismatches in the interest rate profile of assets and liabilities, from the effect of exchange
rate movements on the Bank’s earnings and capital accounts.
To optimise its income and balance sheet management, the Bank deploys funds in the interbank market. Derivatives may be used to hedge non-trading market risk. The market
risks arising in the course of managing surplus funds are monitored using risk sensitivity measures.
Board Audit Committee and Senior Management Committees oversee non-trading market risk and allocate core limits to risk taking units. The China Asset and
Liability Committee ‘ALCO’ is responsible for managing the risks, including the setting of operational limits and guidelines to refine risk management.
A Currency risk
Non trading foreign exchange exposure covers the foreign exchange risk arising from foreign currency earnings. Foreign currency loans in fundable currencies are generally
funded in the same foreign currencies. However, positions arising from currencies which have high hedging costs or which are illiquid or controlled, will be reviewed by ALCO and
may be managed with alternative strategies or left unhedged. This non-trading foreign exchange risk is monitored using foreign exchange net open position reports.
The table below summarizes the Bank’s exposure to foreign currency exchange rate risk at the end of each reporting period. Included in the table are the Bank’s assets and liabilities
at carrying amounts in Rmb, categorized by the original currency.
DBS BANK CHINA LIMITED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2008 All amounts expressed in Rmb unless otherwise stated
[English translation for reference only]
57
42 FINANCIAL RISK MANAGEMENT continued
42.3 Market risk continued ii Non-trading market risk continued
