Page 404 - Bank Muamalat_AR24

402 BANK MUAMALAT MALAYSIA BERHAD

BASEL II
PILLAR 3 DISCLOSURE

8.0 MARKET RISK AND ASSETS-LIABILITY MANAGEMENT (“ALM”) (CONT’D)

The Bank’s market risk management and ALM objectives are to:
• Ensure the implementation of an effective market risk management system in the Bank;

• Assume an appropriate balance between the level of risk and the level of return desired in order to maximize the return
to shareholders’ funds;
• Ensure prudent management of the Bank’s resources to support the growth of the Bank’s economic value; and

• Proactively manage the Bank’s balance sheet in order to maximize earnings and attain its strategic goal within the overall
risk/return preferences.

The Bank has an independent market risk control function that is responsible for measuring and managing market risk
exposures in accordance with the Board-approved policies and guidelines. The unit reports to the ALCO Committee on a
monthly basis, where issues on balance sheet and capital management are proactively discussed and any recommendation
and decision reached are then escalated to the ERMC, BRCC and Board respectively.
The Bank has formulated several strategies to effectively manage and ensure a sound balance sheet profile that
complements both regulatory and business requirements. Among the strategies implemented for FYE 31 December 2024
were:
• On-going enhancement of Fund Transfer Pricing (“FTP”) as a mechanism for distributing revenue between profit centres
and to improve profitability through improved pricing;
• Concentrate more on sourcing for stable deposits from retail and small businesses segments, longer term deposits, and
deposits from transactional and operational accounts; and
• Offering of investment account products as risk absorbent.
The Bank’s market risk management and ALM processes, which include risk identification, measurement, mitigation,
monitoring and reporting are guided by the Market Risk Management Framework (“MRMF”) and the Trading Book and
Banking Book Policy Statement (“TBPS”).

The Bank defines and segregates its trading and banking book positions as outlined under the TBPS. The policy covers
the definition of trading and banking book for financial instruments, classification, performance, limit monitoring, position
valuation and hedging requirements.