BASEL III - PILLAR III DISCLOSURES 31 MARCH 2018
Template 1 Key Regulatory Ratios - Capital and Liquidity GROUP As at 31 March 2018 As at 31 December 2017 As at 31 March 2018 As at 31 December 2017 Regulatory Capital (LKR 000) Common Equity Tier 1 25,267,135 24,424,734 30,229,288 29,859,223 Tier 1 Capital 25,267,135 24,424,734 30,229,288 29,859,223 Total Capital 38,631,892 38,304,758 43,042,845 43,189,555 Regulatory Capital Ratios (%) Common Equity Tier 1 Capital Ratio (Minimum Requirement -6.375%(2017-5.75%)) 8.73% 8.85% 10.14% 10.49% Tier 1 Capital Ratio (Minimum Requirement - 7.875% (2017-7.25%)) 8.73% 8.85% 10.14% 10.49% Total Capital Ratio (Minimum Requirement - 11.875% (2017-11.25%)) 13.35% 13.89% 14.44% 15.18% Regulatory Liquidity Statutory Liquid Assets (LKR 000) 79,840,018 77,506,348 79,840,018 77,506,348 Statutory Liquid Assets Ratio (Minimum Requirement -20%) Domestic Banking Unit (%) 22.52 22.13 22.52 22.13 Off-Shore Banking Unit (%) 24.11 24.01 24.11 24.01 Liquidity Coverage Ratio (%) Rupee (Minimum Requirement -90% (2017-80%)) 216.22 214.35 216.22 214.35 Liquidity Coverage Ratio (%) All Currency (Minimum Requirement - 90% (2017-80%)) 155.99 154.50 155.99 154.50 1
Template 2 Basel III Computation of Capital Ratios GROUP As at 31 December As at 31 March 2018 As at 31 December 2017 As at 31 March 2018 2017 Common Equity Tier 1 (CET1) Capital after Adjustments 25,267,135 24,424,734 30,229,286 29,859,223 Common Equity Tier 1 (CET1) Capital 28,649,661 27,696,573 32,359,337 31,875,573 Equity Capital (Stated Capital)/Assigned Capital 3,019,647 2,208,520 3,019,647 2,208,520 Reserve Fund 1,336,479 1,336,479 1,336,479 1,336,479 Published Retained Earnings/(Accumulated Retained Losses) 17,391,740 18,585,254 21,581,926 22,775,440 Published Accumulated Other Comprehensive Income (OCI) (465,206) (239,387) (438,791) (250,573) General and other Disclosed Reserves 5,805,707 5,805,707 5,805,707 5,805,707 Unpublished Current Year's Profit/Loss and Gains reflected in OCI 1,561,294-1,054,369 - Ordinary Shares issued by Consolidated Banking and Financial Subsidiaries of the Bank and held by Third Parties Amount (LKR 000) Total Adjustments to CET1 Capital 3,382,527 3,271,839 2,130,052 2,016,350 Goodwill (net) Intangible Assets (net) 438,249 384,369 456,630 397,053 Defined benefit pension fund assets 209,065 129,662 209,065 129,662 Investments in the capital of banking and financial institutions where the bank does not own more than 10 per cent of the issued ordinary share capital of the entity Significant investments in the capital of financial institutions where the bank owns more than 10 per cent of the issued ordinary share capital of the entity 1,140,520 1,122,016 1,464,357 1,489,635 1,594,693 1,635,792 - - Additional Tier 1 (AT1) Capital after Adjustments Additional Tier 1 (AT1) Capital Qualifying Additional Tier 1 Capital Instruments Instruments issued by Consolidated Banking and Financial Subsidiaries of the Bank and held by Third Parties Total Adjustments to AT1 Capital Investment in Own Shares Others Tier 2 Capital after Adjustments 13,364,757 13,880,024 12,813,559 13,330,332 Tier 2 Capital 13,364,757 13,880,024 13,364,758 13,880,024 Qualifying Tier 2 Capital Instruments 11,655,632 12,212,368 11,655,632 12,212,368 Revaluation Gains 542,092 542,092 542,092 542,092 Loan Loss Provisions 1,167,034 1,125,564 1,167,034 1,125,564 Instruments issued by Consolidated Banking and Financial Subsidiaries of the Bank and held by Third Parties Total Adjustments to Tier 2 - - 551,200 549,692 Investment in Own Shares Investments in the capital of financial institutions and where the bank does not own more than 10 per cent of the issued capital carrying voting rights of the issuing entity - - 551,200 549,692 CET1 Capital 25,267,135 24,424,734 30,229,288 29,859,223 Total Tier 1 Capital 25,267,135 24,424,734 30,229,288 29,859,223 Total Capital 38,631,892 38,304,758 43,042,845 43,189,555 Total Risk Weighted Assets (RWA) 289,297,789 275,852,129 298,133,512 284,519,116 RWAs for Credit Risk 261,265,249 248,519,093 265,848,772 253,454,095 RWAs for Market Risk 10,188,682 9,195,023 13,484,362 12,072,722 RWAs for Operational Risk 17,843,858 18,138,013 18,800,378 18,992,299 CET1 Capital Ratio (including Capital Conservation Buffer, Countercyclical Capital Buffer & Surcharge on D-SIBs) (%) 8.73% 8.85% 10.14% 10.49% of which: Capital Conservation Buffer (%) 1.875% 1.25% 1.875% 1.25% of which: Countercyclical Buffer (%) of which: Capital Surcharge on D-SIBs (%) Total Tier 1 Capital Ratio (%) 8.73% 8.85% 10.14% 10.49% Total Capital Ratio (including Capital Conservation Buffer, Countercyclical Capital Buffer & Surcharge on D-SIBs) (%) 13.35% 13.89% 14.44% 15.18% of which: Capital Conservation Buffer (%) 1.875% 1.25% 1.875% 1.25% of which: Countercyclical Buffer (%) of which: Capital Surcharge on D-SIBs (%) 2
Total Stock of High-Quality Liquid Assets (HQLA) Total Adjusted Level 1A Assets Level 1 Assets Total Adjusted Level 2A Assets Level 2A Assets Total Adjusted Level 2B Assets Level 2B Assets Total Cash Outflows Template 4 Basel III Computation of Liquidity Coverage Ratio -All Currency Amount (LKR 000) As at 31 March 2018 As at 31 December 2017 Total Total Weighted Total Total Weighted Value Un-weighted Value Value Un-weighted Value 55,863,358 55,110,793 52,654,215 51,901,650 54,615,264 54,615,264 51,497,371 51,497,371 54,358,228 54,358,228 51,149,085 51,149,085 1,505,130 752,565 1,505,130 752,565 1,505,130 752,565 1,505,130 752,565 428,158,099 83,270,293 415,875,077 79,306,701 Deposits 173,011,766 12,446,880 169,266,672 12,024,091 Unsecured Wholesale Funding 127,795,155 65,685,842 121,018,123 64,833,008 Secured Funding Transactions 4,349,446-3,629,320 - Undrawn Portion of Committed (Irrevocable) Facilities and Other Contingent Funding Obligations 122,399,236 4,535,074 121,960,961 2,449,602 Additional Requirements Total Cash Inflows Maturing Secured Lending Transactions Backed by Collateral Committed Facilities Other Inflows by Counterparty which are Maturing within 30 Days Operational Deposits 602,496 602,496 - - 73,098,154 47,941,315 73,685,467 45,713,579 38,031,539 27,923,847 29,206,561 21,340,667 32,395,362 19,414,972 42,115,292 24,372,913 2,068,756-2,363,615 - Other Cash Inflows 602,496 602,496 - - Liquidity Coverage Ratio (%)(Stock of High Quality Liquid Assets/Total Net Cash Outflows over the Next 30 Calendar Days) * 100 155.99% 154.50% 3
AND GROUP CET 1 Capital Tier 2 Instruments Description of the Capital Instrument Ordinary Shares Debenture Issue 1 (2013) Debenture Issue 2 (2015) Issuer National Development Bank PLC National Development Bank PLC National Development Bank PLC Unique Identifier (e.g., ISIN or Bloomberg Identifier for Private Placement) Governing Law(s) of the Instrument Type A - LK0207D20998 NDB. N0000 ISIN -Type B- LK0207D21012 LK0207N00007 Type C - LK0207D21038 Type D - LK0207D21053 Companies Act No. 07 of 2007, Listing rules of the Colombo Stock Exchange, Securities and Exchange Commission of Sri Lanka Act Type A - LK0207D23091 Type B - LK0207D23083 Companies Act No. 07 of 2007, Companies Act No. 07 of 2007, Listing rules of the Colombo Stock Listing rules of the Colombo Stock Exchange, SecuritiesExchange, and Exchange Commission of Sri Securities and Exchange Lanka Act Commission of Sri Lanka Act Original Date of Issuance Date listed 26-Apr-1993 19-Dec-2013 24-Jun-2015 Par Value of Instrument NA LKR 100/- LKR 100/- Perpetual or Dated Perpetual Dated Dated Original Maturity Date, if Applicable Amount Recognised in Regulatory Capital (in LKR 000 as at 31 March 2018) Accounting Classification (Equity/Liability) Issuer Call subject to Prior Supervisory Approval Optional Call Date, Contingent Call Dates and Redemption Amount (LKR 000) NA Equity Type A - 19 Dec 2018 Type B - 19 Dec 2018 Type C - 19 Type A - 24 Jun 2020 Dec 2023 Type D - 19 Dec Type B - 24 Jun 2020 2025 3,019,647 7,644,149 4,011,483 Liability NA NA NA Subsequent Call Dates, if Applicable NA NA NA Coupons/Dividends Fixed or Floating Dividend/Coupon Coupon Rate and any Related Index Dividend declared as decided by the Board NA Fixed coupon Type A - 13.0% p.a Type B - 13.4% p.a Type C - 13.9% p.a Type D - 14.0% p.a Liability Fixed coupon Non-Cumulative or Cumulative NA Non-cumulative Non-cumulative Convertible or Non-Convertible Template 5 Main Features of Regulatory Capital Instruments If Convertible, Conversion Trigger (s) NA NA NA If Convertible, Fully or Partially NA NA NA If Convertible, Mandatory or Optional NA NA NA If Convertible, Conversion Rate NA NA NA Type A - 9.4% p.a Type B - 9.4% annual compounding on the Issue Price of LKR 63.8136 4
Template 7 Credit Risk under Standardised Approach Credit Risk Exposures and Credit Risk Mitigation (CRM) Effects Amount (LKR 000) as at 31 March 2018 Exposures before Asset Class Credit Conversion Factor (CCF) and CRM Exposures post CCF and CRM RWA and RWA Density (%) Claims on Central Government and CBSL Claims on Foreign Sovereigns and their Central Banks On-Balance Sheet Amount Off-Balance Sheet Amount On-Balance Sheet Amount Off-Balance Sheet Amount 37,760,587 7,391,000 37,760,587 1,203,989 3,986,654 10.23% Claims on Public Sector Entities 13,947,689 2,112,339 RWA RWA Density (ii) Claims on Official Entities and Multilateral Development Banks Claims on Banks Exposures 4,536,770 67,270,031 4,536,770 3,446,352 4,090,415 51.24% Claims on Financial Institutions 25,095,385 24,416,901 25,095,385 390,853 14,188,540 55.67% Claims on Corporates 148,762,441 149,656,261 139,637,523 27,150,231 163,060,785 97.77% Retail Claims 80,203,839 15,591,280 72,907,391 1,385,322 56,656,550 76.26% Claims Secured by Residential Property Claims Secured by Commercial Real Estate 12,233,652 322,699 12,225,128 93,583 6,748,396 54.78% Non-Performing Assets (NPAs) (i) 4,627,512-4,382,714-6,248,253 142.57% Higher-risk Categories 268,618-268,618-671,546 250.00% Cash s and Other Assets 8,518,339-8,518,339-5,614,111 65.91% Total 335,954,832 266,760,510 305,332,455 33,670,331 261,265,249 Asset Class Claims on Central Government and CBSL Claims on Foreign Sovereigns and their Central Banks 37,760,587 7,391,000 37,760,587 1,203,989 3,986,654 10.23% Claims on Public Sector Entities 13,947,689 2,112,339 Claims on Official Entities and Multilateral Development Banks Claims on Banks Exposures 4,833,432 67,270,031 4,833,432 3,446,352 4,245,372 51.27% Claims on Financial Institutions 25,474,614 24,416,901 25,474,614 390,853 14,378,111 55.59% Claims on Corporates 149,289,882 149,709,939 140,164,964 27,104,280 163,379,694 97.67% Retail Claims 80,203,839 15,591,280 72,907,391 1,385,322 56,656,550 76.26% Claims Secured by Residential Property Claims Secured by Commercial Real Estate GROUP Amount (LKR 000) as at 31 March 2018 Exposures before Credit Conversion Factor (CCF) and CRM Exposures post CCF and CRM RWA and RWA Density (%) On-Balance Sheet Amount Off-Balance Sheet Amount On-Balance Sheet Amount Off-Balance Sheet Amount 12,233,652 322,699 12,225,128 93,583 6,748,396 54.78% Non-Performing Assets (NPAs) (i) 4,627,512-4,382,714-6,248,253 142.57% Higher-risk Categories 387,692 651,698 387,692 651,698 1,559,084 150.00% Cash s and Other Assets 11,551,008-11,551,008-8,646,658 74.86% Total 340,309,906 267,465,886 309,687,529 34,276,078 265,848,772 RWA RWA Density (ii) Note: (i) (ii) NPAs As per Banking Act Directions on Classification of loans and advances, income recognition and provisioning. RWA Density Total RWA/Exposures post CCF and CRM. 5
Template 9 Market Risk under Standardised Measurement Method RWA Amount (LKR'000) as at 31 March 2018 GROUP (a) RWA for Interest Rate Risk 1,075,187 1,075,187 General Interest Rate Risk 1,075,187 1,075,187 (i) Net Long or Short Position 1,075,187 1,075,187 (ii) Horizontal Disallowance (iii) Vertical Disallowance (iv) Options Specific Interest Rate Risk - - (b) RWA for Equity 53,225 444,587 (i) General Equity Risk 31,855 226,627 (ii) Specific Equity Risk 21,370 217,960 (c) RWA for Foreign Exchange & Gold 81,494 81,494 Capital Charge for Market Risk [(a) + (b) + (c)]* CAR 10,188,682 13,484,362 6
Template 10 Operational Risk under Basic Indicator Approach Gross Income (LKR 000) as at 31 March 2018 Business Lines Capital Charge Factor Fixed Factor 1 st Year 2 nd Year 3 rd Year The Basic Indicator Approach 15% 11,882,544 13,518,617 16,978,003 Corporate Finance 18% Trading and Sales 18% Payment and Settlement 18% Agency Services 15% Asset Management 12% Retail Brokerage 12% Retail Banking 12% Commercial Banking 15% Corporate Finance 18% Trading and Sales 18% Payment and Settlement 18% Agency Services 15% Asset Management 12% Retail Brokerage 12% Retail Banking 12% 0.035 Commercial Banking 15% 0.035 Capital Charges for Operational Risk (LKR 000) The Basic Indicator Approach 2,118,958 Risk Weighted Amount for Operational Risk (LKR 000) The Basic Indicator Approach 17,843,858 GROUP Gross Income (LKR 000) as at 31 March 2018 Business Lines Capital Charge Factor Fixed Factor 1 st Year 2 nd Year 3 rd Year The Basic Indicator Approach 15% 13,216,368 13,877,773 17,556,758 Corporate Finance 18% Trading and Sales 18% Payment and Settlement 18% Agency Services 15% Asset Management 12% Retail Brokerage 12% Retail Banking 12% Commercial Banking 15% Corporate Finance 18% Trading and Sales 18% Payment and Settlement 18% Agency Services 15% Asset Management 12% Retail Brokerage 12% Retail Banking 12% 0.035 Commercial Banking 15% 0.035 Capital Charges for Operational Risk (LKR 000) The Basic Indicator Approach 2,232,545 Risk Weighted Amount for Operational Risk (LKR 000) The Basic Indicator Approach 18,800,378 7
Template 11 Differences between Accounting and Regulatory Scopes and Mapping of Financial Statement Categories with Regulatory Risk Categories Bank Only Amount (LKR 000) as at 31 March 2018 a b c d e Carrying Values as Reported in Published Financial Statements Carrying Values under Scope of Regulatory Reporting Subject to Credit Risk Framework Subject to Market Risk Framework Not subject to Capital Requirements or Subject to Deduction from Capital Assets 395,650,557 395,525,755 305,332,455 57,355,429 32,837,870 Cash and Cash Equivalents 4,944,817 5,016,059 5,016,059 - - Balances with Central Banks 15,941,582 15,941,582 15,941,582 - - Placements with Banks 430,258 430,000 430,000 - - Derivative Financial Instruments 2,368,808 Other Financial Assets Held-For-Trading 3,338,124 58,495,949-57,355,429 1,140,520 Loans and Receivables to Banks 13,039 13,039 13,039 - - Loans and Receivables to Other Customers 282,033,734 282,730,794 253,275,451-29,455,343 Financial Investments - Available-For-Sale 55,157,824 Financial Investments - Held-To-Maturity 3,511,088 24,167,235 24,167,235 Financial Investments - Loans and receivables 20,939,425 - - Investments in Subsidiaries 2,091,461 2,091,461 496,768 1,594,693 Property, Plant and Equipment 2,276,004 2,276,004 2,276,004 Goodwill and Intangible Assets 438,249 438,249 438,249 Other Assets 2,166,144 3,925,382 3,716,317 209,065 Liabilities 365,959,634 365,999,262 Due to Banks 19,850,192 Derivative Financial Instruments 920,809 Due to Other Customers 284,159,753 278,019,290 Debt Securities Issued other borrowed funds 29,430,190 48,678,680 Current Tax Liabilities 1,881,518 1,661,900 Deferred Tax Liabilities 1,083,111 1,327,766 Employee benefit liabilities and other liabilities 8,758,009 16,843,487 Subordinated Term Debts 19,876,052 19,468,139 Off-Balance Sheet Liabilities 273,347,377 227,328,631 266,498,275 Guarantees 23,143,610 23,143,610 20,969,941 163,771 Performance Bonds 8,915,267 8,915,267 8,884,066 31,201 Letters of Credit 12,600,569 12,600,569 12,533,307 67,262 Other Contingent s 8,921,454 8,921,454 8,921,454 - Undrawn Commitments 115,222,979 115,222,979 115,222,979 - Other Commitments 104,543,498 58,524,752 99,966,528 - Shareholders' Equity Equity Capital (Stated Capital)/Assigned Capital 3,019,647 3,019,647 of which Amount Eligible for CET1 3,019,647 3,019,647 of which Amount Eligible for AT1 - - Retained Earnings 18,953,035 18,323,399 Accumulated Other Comprehensive Income 576,055 - Other Reserves 7,142,186 8,183,447 Total Shareholders' Equity 29,690,923 29,526,493 8