A 2 9. Capital Adequacy a) T h e capital adequacy ratios of t h e G r o u p a n d t h e B a n k below a r e disclosed p u r s u a n t to t h e requirements of B a n k Negara Malaysia ("BNM")'s Risk Weighted Capital A d e q u a c y Framework (Basel II) - Disclosure Requirements (Pillar 3 ): Group B a n k 2 0 1 4 2 0 1 3 2 0 1 4 2 0 1 3 Before deducting interim dividends * Common equity Tier I ("CET I") capital ratio 8. 5 2 8 % 9. 2 7 6 % 9. 5 6 5 % 1 0. 9 2 7 % Tier I capital ratio 1 0. 0 7 3 % 1 1. 0 5 5 % 1 1. 3 8 5 % 1 3. 0 2 3 % Total capital ratio 1 3. 2 5 7 % 1 4. 2 8 8 % 1 2. 9 3 9 % 1 4. 0 8 6 % After deducting interim dividends * CET I capital ratio 8. 5 2 8 % 8. 7 5 0 % 9. 5 6 5 % 1 0. 3 0 0 % Tier I capital ratio 1 0. 0 7 3 % 1 0. 5 2 9 % 1 1. 3 8 5 % 1 2. 3 9 6 % Total capital ratio 1 3. 2 5 7 % 1 3. 7 6 2 % 1 2. 9 3 9 % 1 3. 4 5 9 % * Refers to interim dividends declared subsequent to the financial period/year end. Group B a n k 2 0 1 4 2 0 1 3 2 0 1 4 2 0 1 3 RM'000 RM'000 RM'000 RM'000 Components of CET I, Tier I and Tier II capital: CET I / Tier I capital: Paid-up share capital 3, 5 3 1, 9 2 6 3, 5 3 1, 9 2 6 3, 5 3 1, 9 2 6 3, 5 3 1, 9 2 6 Share premium 1, 0 7 3, 3 1 0 1, 0 7 3, 3 1 0 1, 0 7 3, 3 1 0 1, 0 7 3, 3 1 0 Other reserves 4, 3 9 5, 2 4 3 4, 4 0 2, 8 4 3 3, 9 2 1, 1 9 8 3, 9 2 4, 8 9 6 Retained profits 1 0, 4 5 6, 6 9 9 1 1, 5 0 7, 5 6 5 9, 8 4 1, 8 6 6 1 0, 8 9 2, 5 0 4 Treasury shares ( 2 1 5, 5 7 2 ) ( 2 1 5, 5 7 2 ) ( 2 1 5, 5 7 2 ) ( 2 1 5, 5 7 2 ) Qualifying non-controlling interests 5 1 8, 7 6 4 5 2 2, 0 9 3 - - Less: Goodwill ( 1, 9 9 8, 9 1 7 ) ( 2, 0 0 3, 9 1 2 ) ( 6 9 5, 3 9 3 ) ( 6 9 5, 3 9 3 ) Less: Deferred tax assets, net ( 7 0, 2 4 5 ) ( 7 0, 1 2 1 ) - - Less: Defined benefit pension fund assets ( 2 1 2, 7 2 0 ) ( 2 2 0, 9 2 2 ) ( 2 0 7, 4 7 9 ) ( 2 1 5, 3 7 2 ) Less: Investment in banking / insurance subsidiary companies and associated companies deducted from CET 1 capital ( 2 8, 4 5 1 ) - ( 8 5 2, 9 5 7 ) - Total CET I capital 1 7, 4 5 0, 0 3 7 1 8, 5 2 7, 2 1 0 1 6, 3 9 6, 8 9 9 1 8, 2 9 6, 2 9 9 Innovative Tier I capital securities 1, 4 4 9, 2 8 0 1, 6 3 0, 4 4 0 1, 4 4 9, 2 8 0 1, 6 3 0, 4 4 0 Non-innovative Tier I stapled securities 1, 6 7 0, 4 0 0 1, 8 7 9, 2 0 0 1, 6 7 0, 4 0 0 1, 8 7 9, 2 0 0 Qualifying CET I and additional Tier I capital instruments held by third parties 4 1, 6 2 7 4 2, 0 3 1 - - Total Tier I capital 2 0, 6 1 1, 3 4 4 2 2, 0 7 8, 8 8 1 1 9, 5 1 6, 5 7 9 2 1, 8 0 5, 9 3 9 5 0
A 2 9. Capital Adequacy (continued) a) The capital adequacy ratios of the Group and the Bank (continued): Group B a n k 2 0 1 4 2 0 1 3 2 0 1 4 2 0 1 3 RM'000 RM'000 RM'000 RM'000 Tier II capital Collective assessment allowance and regulatory reserves # 1, 1 5 2, 0 1 7 1, 1 2 3, 7 0 6 6 5 4, 7 4 0 6 2 5, 0 1 0 Subordinated notes - meeting all relevant criteria 1, 9 4 9, 1 6 2 1, 9 4 9, 1 1 6 1, 9 4 9, 1 6 2 1, 9 4 9, 1 1 6 - subject to gradual phase-out treatment 3, 4 7 1, 2 6 8 3, 4 7 1, 1 2 1 3, 4 7 1, 2 6 8 3, 4 7 1, 1 2 1 Qualifying CET I and additional Tier I and Tier II capital instruments held by third parties 5 5, 5 0 3 5 6, 0 4 2 - - Less: Investment in banking / insurance subsidiary companies and associated companies deducted from Tier II capital ( 1 1 3, 8 0 4 ) ( 1 4 2, 2 5 5 ) ( 3, 4 1 1, 8 3 0 ) ( 4, 2 6 4, 7 8 7 ) Total Tier II capital 6, 5 1 4, 1 4 6 6, 4 5 7, 7 3 0 2, 6 6 3, 3 4 0 1, 7 8 0, 4 6 0 Total capital 2 7, 1 2 5, 4 9 0 2 8, 5 3 6, 6 1 1 2 2, 1 7 9, 9 1 9 2 3, 5 8 6, 3 9 9 # Excludes collective assessment allowance on impaired loans restricted f r o m Tier II c a p i t a l of t h e Group a n d t h e B a n k of R M 586,597,000 (2013 : R M 600,816, 000) and R M434, 986, 000 (2 0 1 3 : R M 4 4 6, 9 4 8, 000 ) respectively. Includes t h e Group's qualifying r e g u l a t o r y reserves for non -impaired loans which pertain to Public B a n k (Hong Kong) Limited a n d Public Finance Limited amounting to R M131, 346, 000 (2 0 1 3 : R M 1 3 2, 4 3 7, 000 ). T h e capital adequacy r a t i o s of t h e Group consist o f total capital a n d risk -weighted assets derived f r o m consolidated balances of t h e B a n k a n d its s u b s i d i a r y companies. T h e capital adequacy ratios o f t h e B a n k consist o f t o t a l capital a n d risk -weighted assets derived f r o m t h e B a n k a n d f r o m i t s w h o l l y-owned offshore banking subsidiary company, Public B a n k (L) Ltd. 5 1
A 2 9. Capital Adequacy (continued) a) The capital adequacy ratios of the Group and the Bank (continued): T h e total r i s k -weighted assets o f t h e Group a n d t h e B a n k are computed based on t h e following approaches: (i) Standardised Approach for Credit Risk; (ii) Standardised Approach for Market Risk; (iii) Basic Indicator Approach for Operational Risk. T h e capital adequacy ratios of t h e Group and t h e Bank are computed in accordance with BNM's Capital A d e q u a c y Framework (Capital Components a n d Basel II - Risk -weighted Assets) issued on 2 8 November 2 0 1 2, which is effective f r o m 1 J a n u a r y 2 0 1 3. T h e minimum regulatory capital adequacy ratios, a s required under BNM's Capital A d e q u a c y Framework (Capital Components) which includes transitional arrangements for year 2 0 1 4, are set o u t as follows: C E T I Tier I Total Calendar Year Capital Ratio Capital Ratio Capital Ratio % % % 2 0 1 4 4. 0 5. 5 8. 0 2015 onwards * 4. 5 6. 0 8. 0 * Before including capital conservation buffer of 2. 5 %, counter -cyclical buffer a n d a n y other buffers t o b e introduced b y B N M. 5 2
A 2 9. Capital Adequacy (continued) b ) The capital adequacy ratios of the banking subsidiary companies of the Group are as follows: Public Public Islamic Investment Public Public Bank Public Cambodian B a n k B a n k B a n k (Hong Kong) Finance Public Bank Berhad 1 Berhad 2 3 ( L ) L t d. Limited 4 Limited 4 Plc 5 31 March 2014 Before deducting interim dividends: * CET I capital ratio 11.425% 26.255% N/A 14.205% 26.541% N/A Tier I capital ratio 11.425% 26.255% 25.178% 14.205% 26.541% N/A Total capital ratio 12.046% 26.429% 25.220% 15.379% 27.482% 18.911% After deducting interim dividends: * CET I capital ratio 11.425% 26.255% N/A 14.205% 26.541% N/A Tier I capital ratio 11.425% 26.255% 25.178% 14.205% 26.541% N/A Total capital ratio 12.046% 26.429% 25.220% 15.379% 27.482% 18.911% 31 December 2013 Before deducting interim dividends: * CET I capital ratio 12.133% 27.252% N/A 13.916% 27.468% N/A Tier I capital ratio 12.133% 27.252% 25.625% 13.916% 27.468% N/A Total capital ratio 12.751% 27.448% 25.671% 15.089% 28.409% 19.685% After deducting interim dividends: * CET I capital ratio 11.743% 26.139% N/A 13.916% 25.257% N/A Tier I capital ratio 11.743% 26.139% 25.625% 13.916% 25.257% N/A Total capital ratio 12.360% 26.336% 25.671% 15.089% 26.199% 19.685% * Refers to interim dividends declared subsequent to the financial period/year end. 53
A29. Capital Adequacy (continued) b) The capital adequacy ratios of the banking subsidiary companies of the Group are as follows: 1 2 3 The risk-weighted a s s e t s of P u b l i c Islamic Bank Berhad are computed based on the Standardised Approach for Credit and Market Risk and the Basic Indicator Approach for Operational Risk. The capital a d e q u a c y ratios are computed in accordance with BNM's Capital A d e q u a c y Framework for Islamic Banks (Capital Components and Risk-weighted Assets) issued on 28 November 2012, which is effective from 1 J a n u a r y 2013. The minimum r e g u l a t o r y capital a d e q u a c y requirement for CET I capital ratio, Tier I capital ratio and total capital ratio are 4.0%, 5.5% and 8.0% respectively for year 2014. The risk-weighted a s s e t s of Public Investment Bank Berhad are computed based on the Standardised Approach for Credit and Market Risk and the Basic Indicator Approach f o r Operational Risk. The capital a d e q u a c y ratios are computed in accordance with BNM's Capital A d e q u a c y Framework (Capital Components and Basel II - R i s k-weighted Assets) issued on 28 November 2012, which is effective on 1 J a n u a r y 2013. T h e minimum regulatory capital a d e q u a c y requirement for CET I capital ratio, Tier I capital ratio a n d total capital ratio are 4.0%, 5.5% and 8.0% respectively for year 2014. The capital a d e q u a c y ratios of P u b l i c Bank (L) Ltd. for capital compliance on a s t a n d a l o n e basis a r e computed in accordance with the Guidelines on Risk-weighted Capital Adequacy issued b y the Labuan Financial Services A u t h o r i t y (Labuan FSA), which is based on the Basel I capital accord. The minimum regulatory capital a d e q u a c y requirements are 4.0% and 8.0% for the Tier I capital ratio and total capital ratio respectively. 4 5 These two s u b s i d i a r y companies have adopted the Standardised Approach for Credit and Market Risk. P u b l i c B a n k ( H o n g Kong) Limited has adopted the Basic Indicator Approach f o r Operational Risk and P u b l i c Finance Limited h a s adopted the Standardised Approach f o r Operational Risk. W i t h effect from 1 J a n u a r y 2 0 1 3, the capital a d e q u a c y ratios of these t w o subsidiaries a r e computed in accordance with t h e provisions of the Banking (Amendment) Ordinance 2012 relating to Basel III capital standards and the a m e n d e d Banking Capital Rules. The amount presented here is t h e S o l v e n c y R a t i o of Cambodian P u b l i c Bank Plc, which is the nearest equivalent r e g u l a t o r y compliance ratio. This ratio is computed i n accordance with Prakas B7-010-182, B7-00-46, B7-04-206 and B7-07-135 issued b y t h e National Bank o f Cambodia. This ratio is derived as Cambodian P u b l i c Bank Plc's net worth divided b y its riskweighted assets and o f f-balance sheet items. The minimum regulatory s o l v e n c y ratio requirement is 15.0%. 54
A29. Capital Adequacy (continued) c) The breakdown of risk-weighted assets by each major risk category is as follows: Group B a n k 2014 2013 2014 2013 RM'000 RM'000 RM'000 RM'000 Credit risk 187,914,308 183,113,937 158,345,431 154,360,722 Market risk 2,039,764 2,111,436 2,742,458 2,850,579 Operational risk 14,666,068 14,497,356 10,333,814 10,228,677 204,620,140 199,722,729 171,421,703 167,439,978 55