LM-2.3.2
Such early warning indicators can be qualitative or quantitative in nature and may include, but are not limited to, the following:
(a) Rapid asset growth, especially when funded with potentially volatile liabilities;
(b) Growing concentrations on certain assets or liabilities or funding sources;
(c) Increasing currency mismatches;
(d) Increasing overall funding costs;
(e) Worsening cash-flow or structural liquidity positions as evidenced by widening negative maturity mismatches, especially in the short-term time bands (e.g. up to 1 month);
(f) A decrease in weighted average maturity of liabilities;
(g) Repeated incidents of positions approaching or breaching internal or regulatory limits;
(h) Negative trends or heightened risk, such as rising delinquencies or losses, associated with a particular business, product or activity;
(i) Significant deterioration in earnings, asset quality, and overall financial condition;
(j) Negative publicity;
(k) A credit rating downgrade;
(l) Stock price declines;
(m) Widening spreads on credit default Shari'a compliant hedging instrument or senior and subordinated Sukuk;
(n) Counterparties beginning to request additional collateral for credit exposures or to resist entering into new transactions to provide unsecured or longer dated funding;
(o) Reduction in available credit lines from correspondent banks;
(p) Increasing trends of retail deposit withdrawals;
(q) Increasing redemptions of certificates of deposit before maturity; and
(r) Difficulty in accessing longer-term funding or placing short-term liabilities (e.g. Murabaha Sukuk).
August 2018