My first Publication ocbc_ar17_fullreport_english | Page 227

39. RISK MANAGEMENT
39.1 OVERVIEW
The objective of the Group’s risk management practice is to drive the business through an integrated proactive risk management
approach with strong risk analytics, while protecting the Group against losses that could arise from taking risks beyond its risk appetite.
The Group’s philosophy is that all risks must be properly understood, measured, monitored, controlled and managed. In addition, risk
management processes must be closely aligned to the Group’s business strategy, to enable the Group to maximise its risk-adjusted
return on capital.
The Group’s risk management objectives, policies and processes are detailed in the Risk Management Section.
39.2 CREDIT RISK
Maximum exposure to credit risk
The following table presents the Group’s maximum exposure to credit risk of on-balance sheet and off-balance sheet financial
instruments, without taking into account of any collateral held or other credit enhancements. For on-balance sheet assets, the
exposure to credit risk equals their carrying amount. For contingent liabilities, the maximum exposure to credit risk is the maximum
amount that the Group would have to pay if the obligations of the instruments issued are called upon. For credit commitments, the
maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers.
Gross
$ million
Credit risk exposure of on-balance sheet assets:
Loans and bills receivable
Placements with and loans to banks
Government treasury bills and securities
Debt securities
Amounts due from associates
Assets pledged
Derivative receivables
Other assets, comprising interest receivables and sundry debtors
Credit risk exposure of off-balance sheet items:
Contingent liabilities
Credit commitments
Total maximum credit risk exposure
Average
2017 2016 2017 2016
234,141
49,377
27,471
21,407
143
1,056
6,386
4,051
344,032 216,830
39,801
24,364
20,067
21
1,789
7,838
3,179
313,889 224,653
43,996
26,976
21,115
106
1,915
6,097
3,832
328,690 206,241
39,524
24,482
20,030
21
1,805
6,267
3,134
301,504
10,504
128,848
139,352 11,145
119,152
130,297 10,275
122,375
132,650 9,404
111,042
120,446
483,384 444,186 461,340 421,950
Collaterals
The main types of collaterals obtained by the Group are as follows:
• For personal housing loans, mortgages over residential properties;
• For commercial property loans, charges over the properties being financed;
• For derivatives, cash and securities;
• For car loans, charges over the vehicles financed;
• For share margin financing, listed securities including those of Singapore, Malaysia and Hong Kong; and
• For other loans, securities and charges over business assets such as premises, inventories, trade receivables or deposits.
73% of the loans and bills receivables as at 31 December 2017 (2016: 74%) are backed by collaterals and credit enhancements. The
financial effect of collaterals and credit enhancements held for the remaining on-balance sheet financial assets is expected to be
not significant.
BUILDING ON OUR CORPORATE STRATEGY FOR SUSTAINABLE GROWTH
225