Investment available for sale forecast.

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Permalink Reply by David Smart on February 8, 2010 at 3:46pm

Hi Adel,

Would you mind if I ask how the current liquidity position for the bank is. My reason for asking that is that you need to consider the movement in AFS in conjunction with customer deposits. Am guessing that the bank could have a higher portion of deposits in time deposits. Hence it could be merely matching the AFS investments to the said deposits.

Also, please clarify what the local regulatory requirements are currently i.e. is the bank required to invest in certain types of assets for purposes of meeting their liquidity requirements.

FYI - Basel has recently issued a new guidance for liquidity risk which could allow a regulator to severely restrict the type of investments that a bank can invest in.

Regards

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Permalink Reply by Adel Ansari on February 10, 2010 at 3:55am

Hi David,
Thanks for the reply. The current Liquidity Ratio is 0.58 for 2008 and cash balance increased by 1 % compared to 51% in previous year. Time deposit was just 16 % of the total deposits as compared to 22% in previous year. As far as I know there are no regulations binding on banks to invest in certain types of assets for meeting liquidity requirements.

Looking forward to your reply, Let me know if you require more info. also I have uploaded the actual financials for 2008.


Thanks

Attachments:

• NBK_Annual_Report_2008.pdf, 2.9 MB
• NBK_Annual_Report_2007.pdf, 1.2 MB

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Permalink Reply by Mohamed Khedr on February 10, 2010 at 3:13am

Hi Adel,

I think if you does not know more information about these investments, the only way to forecast its future performance is analysis the historical results; mainly the growth in the carrying value of these assets from Y-o-Y and the interest income also. So that, based on CAGR of the historical growth in carrying value and the interest income, you can be assumed the future performance of these investments.

FYI - Investment available for sale classify as a non-current assets and that means there are difficult to be converted to liquidity. Hence you can not forecast any exit value of these investments.


Regards

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