UOB Annual Report 2002 - United Overseas Bank

Notes to the Financial Statements
for the financial year ended 31 December 2002
44 Financial Risk Management (continued)
(d) Liquidity Risk
Liquidity risk is the risk that the Group is unable to meet its cash flow obligations as and when they fall due, such as upon the
maturity of deposits and loan draw-downs.
It is not unusual for a bank to have mismatches in the contractual maturity profile of its assets and liabilities. The Group manages
liquidity risk in accordance with a framework of liquidity policies, controls and limits that is approved by the Asset Liability
Committee, with the main objectives of honouring all cash outflow commitments on an on-going basis, satisfying statutory
liquidity and reserve requirements, and avoiding raising funds at market premiums or through forced sale of assets.
These controls and policies include the setting of limits on the minimum proportion of maturing funds available to meet such calls
and on the minimum level of inter-bank and other borrowing facilities that should be in place to cover withdrawals at unexpected
levels of demand.
Additionally, the Group is required by law in the various locations that it operates from, including Singapore, to maintain a certain
percentage of its liability base in the form of cash and other liquid assets as a buffer against unforeseen liquidity requirements.
The following table shows the maturity analysis of the Group’s assets and liabilities based on contractual terms.
The Group – 2002
Over 7 Over Over Over Non-
Up to Days to 1 to 3 3 to 12 1 to 3 Over Specific
Total 7 Days 1 Month Months Months Years 3 Years Maturity
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Assets
Cash and balances
with central banks 4,213,458 4,213,458 – – – – – –
Government treasury
bills and securities 9,593,937 214,443 1,045,187 2,086,935 1,974,078 3,237,786 1,035,508 –
Placements and
balances with
banks and agents 19,355,944 2,158,301 7,654,531 4,763,373 4,550,610 226,213 2,916 –
Trade bills and
advances to
customers 58,884,007 12,337,096 3,911,198 4,218,308 6,225,664 9,815,778 22,375,963 –
Dealing and
investment
securities 3,749,109 31,012 53,142 117,933 536,617 461,936 1,196,897 1,351,572
Investments in
associates 1,274,245 – – – 2,014 25,825 – 1,246,406
Goodwill 3,666,046 – – – – – – 3,666,046
Others 5,832,837 136,620 119,349 45,931 79,379 50,592 37,746 5,363,220
106,569,583 19,090,930 12,783,407 11,232,480 13,368,362 13,818,130 24,649,030 11,627,244
Assets
attributable
to SPE 899,838
Total assets 107,469,421
156