NTUC Income AR 2018

Notes to the Financial Statements For the Financial Year Ended 31 December 2018 4. Management of insurance and financial risks (continued) (c) Financial risk (continued) (i) Market risk (continued) (b) Interest rate risk (continued) The table below summarises the impact on net operating surplus and equity based on a 100bps parallel shift in the yield curves: 2018 Impact on net operating surplus $’000 Impact on equity $’000 Parallel shift in yield curves +100 bps (1,514,706) (35,268) -100 bps 1,776,400 39,925 2017 Impact on net operating surplus $’000 Impact on equity $’000 Parallel shift in yield curves +100 bps (1,321,101) (36,955) -100 bps 1,514,248 39,742 (c) Foreign currency risk The Group operates mainly in Singapore, with over 99% (2017: 99%) of its insurance liabilities denominated in Singapore Dollars. The Group mitigates the potential foreign currency risks arising from its investment in financial assets through hedging. The potential foreign currency risks arising from the investment in foreign currency denominated securities are managed using foreign exchange forward contracts and cross currency swaps. 77 2018 ANNUAL REPORT