UNITY BANK LIMITED 2022 Financial Report UNITY BANK LIMITED 2022 Financial Report
ABN 11 087 650 315
ABN 11 087 650 315
B. LIQUIDITY RISK Liquidity risk is the risk that the Bank may encounter difficulties raising funds to meet commitments associated with financial instruments, e.g. borrowing repayments or member withdrawal demands. It is the policy of the Board of Directors that the Bank maintain adequate cash reserves and committed credit facilities so as to meet the member withdrawal demands when requested. The Bank manages liquidity risk by: - Continuously monitoring actual daily cash flows and longer term forecasted cash flows - Monitoring the maturity profiles of financial assets and liabilities - Maintaining adequate reserves, liquidity support facilities and reserve borrowing facilities; and - Monitoring the prudential liquidity ratio daily. The Bank has a longstanding arrangement with the industry liquidity support credit union, Credit Union Financial Support Services (CUFSS) which can access industry funds to provide support to the Bank should it be necessary at short notice. The Bank is required to maintain at least 9% of total adjusted liabilities as liquid assets capable of being converted to cash within 24 hours under the APRA Prudential standards. The Bank policy is to apply 11.0% of funds as liquid assets to maintain adequate funds for meeting member withdrawal requests. The ratio is checked daily. Should the liquidity ratio fall below this level the management and Board are to address the matter and ensure that the liquid funds are obtained from new deposits or borrowing facilities available. Note 36 describes the borrowing facilities as at the balance date. These facilities are in addition to the support from CUFSS. The maturity profile of the financial assets and financial liabilities based on the contractual repayment terms are set out in the specific Note 32. The ratio of liquid funds over the past year is set out below:
30-Jun-22
30-Jun-21
$'000
$'000
Liquid Funds
324,441
303,273
Total Adjusted Liabilities
1,560,281 1,457,780 % % 20.79% 20.80% 9.00% 9.00%
Liquid Ratio (%)
Prescribed Liquidity % (per policy)
Average for the year
22.20% 18.17%
Minimum during the year
20.67% 16.27%
C. CREDIT RISK Credit risk is the risk that members, financial institutions and other counterparties will be unable to meet their obligations to the Bank which may result in financial losses. Credit risk arises principally from the Bank ’s loan book, investment assets and derivative contracts (where applicable).
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