MCCU Annual Report - page 83

83
31. Financial Instruments and Financial Instruments Risk Management (cont'd):
b) Liquidity Risk
NOTES TO THE FINANCIAL STATEMENTS - (CONT'D)
YEAR ENDED 31ST DECEMBER 2013
Liquidity risk is the risk that the credit union will encounter difficulty in raising funds to meet commitments
associated with financial instruments. The Credit Union is exposed to daily calls on its available cash resources from
loan draw-downs, withdrawal of savings, overnight and maturing deposits. The approach to managing liquidity is to
ensure, as far as possible, that there is always sufficient cash and marketable securities to meet obligations when due,
under normal as well as stressed conditions. The Board of Directors has delegated responsibility for the management
of liquidity risk to the General Manager. On a monthly basis, the Manager reviews the ratios and gap reports in
order to assess and manage liquidity risk and to ensure compliance with internal policies and regulatory guidelines.
There is also the monitoring of future cash flows and maintenance of an adequate amount of committed facilities.
Liquidity is monitored on a daily basis.
MANCHESTER CO-OPERATIVE CREDIT UNION (1977) LIMITED
The Credit Union is subject to a liquidity limit imposed by the Jamaica Co-operative Credit Union League (JCCUL)
and compliance is regularly monitored. This limit requires that the Credit Union maintain liquid assets amounting to
at least 10% of savings and deposits and member's voluntary share capital. The key measure used by the Credit
Union for managing liquidity risk is the ratio of liquid assets to total savings deposits. For this purpose, liquid assets
include cash and bank balances, deposits held with JCCUL and highly liquid investments which are readily
convertible into cash within nine months. The liquid asset ratio at the end of the year was 34.2% (2012: 30.18%)
which is in compliance with the liquidity limit.
There has been no change to the Credit
Union’s
exposure to liquidity risk or the manner in which it manages and
measures this risk.
Members Voluntary Shares have no contractual maturity. The amounts included in the analysis are based on
management’s
estimate of expected cash flows on these instruments as determined by retention history. These may
vary significantly from actual cash flows which are generally expected to maintain a stable or increasing balance.
MANCHESTER CO-OPERATIVE CREDIT UNION
ANNUAL REPORT 2013
I...,73,74,75,76,77,78,79,80,81,82 84,85,86,87,88,89,90,91,92,93,...126
Powered by FlippingBook