Credit Union Annual Report 2022 - Flipbook - Page 81
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2022
22. Financial risk management (continued)
iii. Market risk
The market risk to which the Credit Union’s financial assets are exposed to include currency risk, equity price risk and
interest rate risk.
iv. Currency risk
The Credit Union is exposed to currency risk in relation to monetary assets and liabilities denominated in foreign
currencies. The Credit Union holds an insignificant amount of its cash at bank and fixed deposits denominated in United
States dollars, in addition to the two securities held as investments (Note 4), which are also denominated in United States
dollars. The value of such monetary assets will fluctuate because of changes in the exchange rates at which these are
converted into Cayman Islands dollars. Management considers this risk to be minimal as all foreign currency
holdings are denominated in the United States dollar, which has a fixed rate of exchange to the Cayman Islands dollar.
v. Equity price risk
The Credit Union’s investment in securities exposes it to equity price risk. The investments consist of publicly traded
shares of Caribbean Utilities Company, Ltd. and Cayman National Corporation Ltd. The primary goal of the Credit
Union is to achieve capital growth and dividend income from these investments. Management considers that equity price
risk is not material as this risk is mitigated by restricting the value of funds invested to two different holdings, which
management consider are relatively stable over time. Management regularly monitors the movements in the share
prices of these equities in order to minimize the risk of significant loss to the Credit Union.
The table below illustrates the sensitivity of the Credit Union’s net income of a reasonably possible +/-10% change in
equity prices for the investments held at the year-end:
2022
Change in equity price of investments
+ 10%
- 10%
$
$
307,219
(307,219)
2021
$
$
278,177
(278,177)
vi. Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.
- 45 -
