Annual report 2008-OK-B-up.qxp - Canadia Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS
32. FINANCIAL RISK MANAGEMENT (CONTINUED)
The Bank holds the following financial assets and liabilities:
2008 2007 2008 2007
US$ US$ Riel Million Riel Million
(Unaudited) (Unaudited)
FINANCIAL ASSETS
Cash on hand 42,825,814 27,501,166 174,772 110,087
Balances with the Central Bank 72,046,256 71,056,749 294,021 284,440
Balances with other banks 28,785,020 80,725,776 117,472 323,145
Loans and advances to customers 390,602,198 332,403,990 1,594,047 1,330,613
Other assets 2,595,645 2,646,432 10,593 10,594
Total financial assets 536,854,933 514,334,113 2,190,905 2,058,879
FINANCIAL LIABILITIES
Deposits from banks 25,777,981 6,739,404 105,200 26,978
Due to customers 436,362,009 451,570,063 1,780,793 1,807,635
Other liabilities 6,399,452 5,143,666 26,116 20,590
Borrowings 7,057,279 4,379,241 28,801 17,530
Subordinated debt 7,080,000 7,080,000 28,893 28,341
Total financial liabilities 482,676,721 474,912,374 1,969,803 1,901,074
Net financial assets 54,178,212 39,421,739 221,102 157,805
32.1 Credit risk
The Bank takes on exposure to credit risk, which is the risk that a counterparty will cause a financial loss to
the Bank by failing to discharge an obligation. Credit risk is the most important risk for the Bank's business.
Credit exposure arises principally in lending activities that lead to loans and advances. There is also credit
risk in off-balance sheet financial instruments, such as loan commitments. The credit risk management is
carried out by the Bank's credit committee.
a) Credit risk measurement
The Bank assess the probability of default of individual counterparties using internal rating tool. Credit
committee is responsible for determining the risk rating for each borrower.
In measuring credit risk of loans and advances to customers at a counterparty level, the Bank reflects the
nine risk rating grades which are: (i) minimal risk, (ii) below average risk, (iii) average risk, (iv) above
average risk, (v) higher than above average risk but still acceptable, (vi) watch, (vii) sub-standards, (viii)
doubtful and (ix) loss.
Risk ratings are reviewed and updated at least annually, and in event of (i) change of loan terms and
conditions including extension; (ii) repayment irregularities or delinquencies and (iii) adverse information
relating to the borrower or transaction.
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Annual Report 2008