Page 208 - Bank-Muamalat-AR2020

206 BANK MUAMALAT MALAYSIA BERHAD About Us Our Leadership Our Strategy
ANNUAL REPORT FY2020

Notes to the fiNaNcial statemeNts
31 December 2020 (16 JamaDil awal 1442h)

2. SIGNIFICANT ACCOuNTING POLICIES (CONT’D.)
2.5 Significant changes in regulatory requirements

(a) revised Policy Document on Capital Adequacy Framework for Islamic Banks (Capital Components) issued by
BNM

On 9 December 2020, BNM issued the revised policy document on Capital Adequacy Framework for Islamic
Banks (Capital Components), which came into effect immediately and shall be applied prospectively. The revised
policy document applies to financial institutions in Malaysia which covers licensed Islamic banks, licensed banks
carrying on Islamic banking business and financial holding companies. The revised policy document superseded
policy documents issued by BNM previously, namely, Capital Adequacy Framework for Islamic Banks (Capital
Components) dated 5 February 2020 and Guidelines on the Recognition and Measurement of Profit Sharing
Investment Account as Risk Absorbent dated 22 July 2011.

The revised policy document was updated to include:

(a) Additional capital buffer requirements on the HLA requirements for financial institution that is designated
as aD-SIB; and

(b) The transitional arrangements for regulatory capital treatment of accounting provisions. Financial institution
which elect to apply the transitional arrangements are allowed to add back a portion of the Stage 1 and Stage
2 provisions for ECL to Common Equity Tier 1 Capital over a four-year period from financial year beginning
2020 or a three-year period from financial year beginning 2021. This is consistent with the guidance issued
by the Basel Committee of Banking Supervision on “Regulatory treatment of accounting provisions – interim
approach and transitional arrangement” (March 2017) and “Measures to reflect the impact of COVID-19”
(April 2020).
For the financial year ended 31 December 2020, the Bank does not elect to apply the transitional arrangement and
will reassess the position in 2021. The application of the revised policy documents do not have any significant
impact to the financial statements of the Bank.

(b) Measures announced by BNM to assist individuals, small-medium enterprises (“SMEs”) and corporates affected
by COvID-19

During the financial year ended 31 December 2020, BNM had announced various COVID-19 assistance programmes
which aimed to support economy at large and provide relief to all affected individuals, SMEs and corporations. The
support measures include the following:
Automatic six-month moratorium

The automatic moratorium applies to ringgit-denominated financing that are not in arrears exceeding 90 days as of
1 April 2020. However, the moratorium does not apply to credit card balances. For outstanding credit card balances,
customers will be offered an option to convert the outstanding balances into term-financing of not more than three
years.

The moratorium did not automatically result in stage transfer under MFRS 9 in the absence of other factors
relevant to the assessment. The financial impact of the moratorium is reflected at the financing income of the Bank
(see Notes 27(a) and 29(b)).