39. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D.) The policies in respect of the major areas of treasury activities are as follows: (cont’d.) (a) Market risk (cont’d.) (ii) Interest rate risk (cont’d.) If interest rate on USD denominated borrowings at 31 December 2021 and 31 December 2020 had been 60 basis points higher/lower with all other variables held constant, the impact on the post-tax profit for the financial year and equity, as a result of an increase/decrease in the fair value of the interest rate derivative financial instruments under cash flow hedges are tabulated below. The impact on post-tax profits arises only from derivative held for trading, and the impact to other comprehensive income arises from derivative designated as hedging instruments are as follows: 2021 2020 +60bps RM’million -60bps RM’million +60bps RM’million -60bps RM’million Impact on post tax profits (15) (47) (44) (86) The remaining terms of the outstanding interest rate derivative contracts of the Group at balance sheet date, which are all denominated in USD, are as follows: 2021 RM’million 2020 RM’million Later than 1 year but less than 5 years: Interest rate caps – – Interest rate swaps – – Later than 5 years: Interest rate swaps 688 734 Cross currency interest rate swaps – – 688 734 (iii) Foreign currency risk The Group is exposed to foreign currency exchange risk. These exposures are managed, to the extent possible, by natural hedges that arise when payments for foreign currency payables are matched against receivables denominated in the same foreign currency or whenever possible, by intragroup arrangements and settlements. As at 31 December 2021, the Group has not hedged any of its USD denominated borrowings. In prior year, the Group has not hedged any of its USD denominated borrowings. The exposure to other foreign currency risk of the Group is not material and hence, sensitivity analysis is not presented. The Group’s currency exposure profile of financial instruments denominated in currencies other than the functional currency is presented in the respective financial asset and financial liabilities notes. F I N A N C I A L S T A T E M E N T S A N N U A L R E P O R T 2 0 2 1 3 0 3
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