Kuwait International Bank K S C P : Liquidity Coverage Ratio Disclosure Q1,2024

Liquidity Coverage Ratio

Central Bank of Kuwait had adopted at its meeting convened on 23/12/2014 the Liquidity Coverage Ratio ("LCR") for local Islamic banks, to promote resilience of banks liquidity risk management by ensuring that they have sufficient High-Quality Liquid Assets (HQLA) to survive a significant stress scenario lasting for one month. At minimum, such stock of liquid assets should enable the bank to survive until 30 days of the stress scenario. Liquidity Coverage Standard (as a percentage) is calculated as follows:

Governance of Liquidity Risk Management and Funding

The banks liquidity management is guided by its Assets Liability Management (ALM) Policy, which is reviewed periodically and approved by the Board of Directors. The ALM Policy specifies the main goals, roles and responsibilities and related processes for managing liquidity risk. Specifically, the Policy outlines approaches for identifying, measuring and monitoring of liquidity risk parameters in line with regulatory and internal limits. ALCO and the Board Risk Management Committee (BRMC) oversees the liquidity risk management functions. ALCO reviews periodically the liquidity conditions and recommends in terms of immediate targets of liquidity mix and maturity profiles /mismatches. BRMC periodically reviews the adherence to the internal / regulatory liquidity ratios and limits established.

Liquidity risk is measured primarily using the residual maturity approach and bank manages its gaps within the limits. In addition to prudent liquidity ratios, NSFR and LCR, the bank also monitors periodically multiple deposits and funding concentration limits established to ensure better diversification of funding. The Bank's maturity profile and related maturity mismatches are also subjected to stress testing on a periodical basis. Liquidity gaps are monitored on a daily basis and again reviewed on a monthly basis by ALCO. To limit the liquidity risk, funding concentrations are constantly monitored, funding sources diversified and long-term funds sourced.

Analysis of the results for the quarter ended 31 March 2024

As per CBK instructions banks should maintain LCR at above 100%. Bank has complied with this ratio on all days of the quarter.

The Bank maintained an average LCR (All Currencies) during the quarter at 224.45%. The HQLA comprised primarily "Level 1" assets, which represent cash and reserve / excess balances with the Central Bank of Kuwait (CBK). The cash-outflows were primarily driven by unsecured wholesale funding and inter-bank borrowings. The weighted unsecured wholesale funding constituted 68% of the total weighted cash-outflows. The weighted value of Retail deposits (including deposits from small- sized business customers) contributed 21% of the total weighted cash-outflows. Consistent HQLA in the form of CBK deposits was the main driver of a strong HQLA during the reporting period.

The average LCR (All currencies) decreased in the current quarter to 224.45% from 240.27% in the previous quarter.

KIB Classification: CONFIDENTIAL-GENERAL BUSINESS

The following table sets forth the average (simple) for the quarter ending on 31.03.2024 for all business days of the reporting period.

				Value in KD 000
S.R			Value Before	Value After Applying
	Description	Applying Flow Rates	Flow Rates
No.
		(average) **	(Average) **
		High-Quality Liquid Assets (HQLA)
1	Total HQLA (before adjustments)		445,809
		Cash Outflows
2	Retail deposits and small business	804,748	132,387
3	*	Stable deposits	-	-
4	*	Less stable deposits	804,748	132,387
5	Deposit, investment accounts and unsecured wholesale funding	777,474	430,635
excluding the deposits of small business customers:
6	*	Operational deposits	-	-
7	*	Non-operational deposits (other unsecured commitments)	777,474	430,635
8	Secured Funding	-	-
9	Other cash outflows, including:	530,339	53,768
10	*	Resulting from Shari'ah compliant hedging contracts	-	-
11	*	Resulting from assets-backed Sukuk and other structured	-	-
funding instruments
12	*	Binding credit and liquidity facilities	530,339	53,768
13	Other contingent funding obligations	383,884	19,194
14	Other contractual cash outflows obligations	-	-
15	Total Cash Outflows		635,984
		Cash Inflows
16	Secured lending transactions	-	-
17	Inflows from the performing exposures (as per the counterparties)	707,615	437,365
18	Other cash Inflows	-	-
19	Total Cash Inflows	707,615	437,365
		LCR		Total Adjusted Value
20	Total HQLA (after adjustments)		445,809
21	Net Cash Outflows		198,619
22	LCR		224.45%
	** Simple Average for all days of the reporting period.

KIB Classification: CONFIDENTIAL-GENERAL BUSINESS