Mega Bank Annual Report 2017

95 Annual Report 2017 -95- (B) Maturity analysis of USD financial instruments of the Bank UNIT: In US Thousand Dollars December 31, 2017 Total 0-30 days 31-90 days 91-180 days 181 days- 1 year Over 1 year Primary funds inflow upon maturity $ 56,886,477 $ 26,657,714 $ 8,343,873 $ 3,766,739 $ 2,154,972 $ 15,963,179 Primary funds outflow upon maturity 66,821,302 26,582,615 9,076,199 5,419,476 6,325,843 19,417,169 Gap ($ 9,934,825 ) $ 75,099 ($ 732,326 ) ($ 1,652,737 ) ($ 4,170,871 ) ($ 3,453,990 ) December 31, 2016 Total 0-30 days 31-90 days 91-180 days 181 days- 1 year Over 1 year Primary funds inflow upon maturity $ 49,616,397 $ 19,875,115 $ 7,124,975 $ 3,407,806 $ 2,521,586 $ 16,686,915 Primary funds outflow upon maturity 61,855,679 22,461,490 8,469,306 5,147,899 6,649,376 19,127,608 Gap ($ 12,239,282 ) ($ 2,586,375 ) ($ 1,344,331 ) ($ 1,740,093 ) ($ 4,127,790 ) ($ 2,440,693 ) Note 1: The funds denominated in US dollars means the amount of all US dollars of the Bank. Note 2: If overseas assets exceed 10% of total assets, supplementary information shall be disclosed. (C) Maturity analysis of USD financial instruments of the foreign branches UNIT Ǻ In US Thousand Dollars December 31, 2017 Total 0-30 days 31-90 days 91-180 days 181 days- 1 year Over 1 year Primary funds inflow upon maturity $ 20,412,248 $ 11,517,700 $ 2,516,467 $ 753,350 $ 1,009,933 $ 4,614,798 Primary funds outflow upon maturity 21,991,414 10,855,576 1,066,824 727,380 666,492 8,675,142 Gap ($ 1,579,166 ) $ 662,124 $ 1,449,643 $ 25,970 $ 343,441 ($ 4,060,344 ) December 31, 2016 Total 0-30 days 31-90 days 91-180 days 181 days- 1 year Over 1 year Primary funds inflow upon maturity $ 19,234,224 $ 10,148,675 $ 2,547,692 $ 790,346 $ 825,862 $ 4,921,649 Primary funds outflow upon maturity 21,533,211 10,478,428 1,219,097 844,573 818,041 8,173,072 Gap ($ 2,298,987 ) ($ 329,753 ) $ 1,328,595 ($ 54,227 ) $ 7,821 ($ 3,251,423 ) (5) Market risk A. Definition of market risk Market risk refers the potential losses of the Bank’s and subsidiaries’ on -balance-sheet and off-balance-sheet positions due to the Bank and subsidiaries enduring fluctuations of market prices (for example: fluctuations of market interest, exchange rates, stock prices and price of products). B. Objective of market risk management The objective of the Bank’s and subsidiaries’market ri sk management is to confine risks within a tolerable scope to avoid the fluctuations of financial product prices impacting future returns and the values of assets and liabilities. C. Market risk management policies and procedures The Board of (Managing) Directors decided the risk tolerant limits, position limits, and loss limits. Market risk management comprises trading book control and banking book control. Trading book operation mainly pertains to the positions held by bills and securities firms due to market making. Policies for financial instrument trading of bank are based on back-to-back operation principle. Banking book is based on held-to-maturity principle and adopts hedging measures. D. Procedures for market risk management (A) The Bank’s objectives of marke t risk management are respectively proposed by The Treasury Department and Risk Management Department, and then Risk Management Department summarizes and reports these objectives to Risk Management Committee of Mega Financial Holdings and the Bank’s Board of Directors for assessment. (B) Risk Management Department not only prepares statement of market risk position and profit and loss of various financial instruments but regularly compiles securities investment performance evaluation and reports to the Board of (Managing) Directors for the Board’s knowledge of the Bank’s risk control over securities investment. Risk Management Department summarizes and analyzes information on a daily basis. Besides, Risk Management Department monthly summarizes and analyzes data collected from positions of various financial instruments, profit and loss assessment, analysis on risk-sensitive factors, and stress testing for senior management’s knowledge of the Bank’s market risk exposure profile.