Page 342 - Bank-Muamalat-AR2020

340 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)

50. CAPITAL ADEquACy (CONT’D.)
(b) Credit risk disclosure by risk weights of the Group as at 31 December, are as follows:

Bank
31 December 2020 31 December 2019
Total Total
exposures exposures
after netting after netting
and credit Total risk and credit Total risk
risk weighted risk weighted
mitigation assets mitigation assets
rM’000 rM’000 rM’000 rM’000

0% 6,524,558 - 5,902,452 -
20% 1,910,642 382,128 1,818,548 363,710
35% 3,732,543 1,306,390 3,110,625 1,088,719
50% 1,310,235 655,118 1,195,617 597,808
75% 2,941,178 2,205,884 3,175,251 2,381,439
100% 10,502,441 10,502,441 8,582,297 8,582,297
150% 7,578 11,366 39,701 59,551
risk weighted assets for credit risk 26,929,175 15,063,327 23,824,491 13,073,524
risk weighted assets for market risk 22,546 35,361
risk weighted assets for operational risk 1,250,046 1,206,121

Total risk weighted assets 16,335,919 14,315,006

Capital management
The issuance of subordinated sukuk which qualifies for Tier 2 capital amounting to RM250 million (issued in June 2016), had
ensured that the Group’s and the Banks’ RWCR remain competitive throughout the duration of the 5-year business plan.

Board of Directors holds the ultimate responsibility in approving the capital management strategy. At the Management level,
capital management strategy review is a periodic exercise that is under the purview of Asset-Liability Working Committee
(“ALCO”). The said exercise refers to an assessment of the Bank’s capital requirement vis-à-vis the development of the Bank as
well as broad environment, i.e. regulatory and macroeconomic setting.

Latest review exercise revealed that the management of the Bank’s capital has remained consistent with the development of the
5-year business plan. This indicates that the present depth in capital is sufficient to meet the requirements of the business plan
outlined.

Meanwhile, there were series of developments made from the regulatory perspective, in particular, the proposal by the Basel
Committee on Banking Supervision on Basel III. Much have been deliberated as regulators globally strive to address reform in
banking supervision, especially in the quality of capital and liquidity standards.

The Bank has adopted the Standardised Approach for the measurement of credit and market risks, and the Basic Indicator
approach for operational risk, in compliance with BNM’s requirements vis-à-vis the Capital Adequacy Framework for Islamic
Bank. In addition, the stress testing process forecast the Bank’s capital requirements under plausible and worst case stress
scenarios to assess the Bank’s capital to withstand the shocks.