Page 411 - Bank Muamalat_AR24

ANNUAL REPORT 2024 1 2 3 4 5 6 7 Our Numbers 8 409

8.4 LIQUIDITY RISK (CONT’D)

Liquidity and Funding Risk (cont’d)
To effectively manage its liquidity, the Bank has the following policies and strategies in place:

• Management under normal condition:
Normal condition is defined as the situation in which the Bank is able to meet any liquidity demands when they come due.

The Bank monitors its liquidity positions through liquidity controls such as maximum cumulative outflows, deposits
concentration, financing to total available funds (“FTAF”) and financing to deposits ratio (“FDR”).
• Management under crisis condition:

Crisis condition is defined as the situation in which the Bank faces difficulties to meet liquidity demand when they fall
due. The crisis can be classified into three levels as follows:

Contingency Level Trigger/Status

Level 1 Abnormal event that interrupts normal business operations at a minimal level.
Level 2 Disruption event tantamount or escalates into a crisis e.g. massive or continuous withdrawal of
deposits in a particular branch or area, difficulties in raising funds from interbank market.
Level 3 Critically threatens the operations, staffs, shareholders’ value, stakeholders, brand, reputation of
which a crisis management is necessary to be put in place.

The Bank’s Liquidity Crisis Management is guided by Liquidity Crisis Contigency Plan (“LCCP”) Policy.