Page 360 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2023 (18 JAMADIL AKHIR 1445H)

51. CAPITAL ADEQUACY (CONT’D.)
(b) Credit risk disclosure by risk weights of the Group and of the Bank as at 31 December, are as follows: (cont’d.)

Bank
2023 2022
Total Total
exposures exposures
after netting after netting
and credit Total risk and credit Total risk
risk weighted risk weighted
mitigation assets mitigation assets
(Restated) (Restated)
RM’000 RM’000 RM’000 RM’000

0% 12,045,012 - 8,377,752 -
20% 2,414,622 482,924 2,186,952 437,390
35% 3,749,471 1,312,315 3,282,515 1,148,880
50% 1,239,287 619,644 895,404 447,702
75% 3,706,671 2,780,003 3,466,540 2,599,905
100% 17,398,736 17,398,736 14,586,930 14,586,930
150% 90,867 136,301 181,231 271,847
Risk weighted assets for credit risk 40,644,666 22,729,923 32,977,324 19,492,654
Less: Credit risk absorbed by PSIA (126,607) (159,800)
Risk weighted assets for market risk 77,388 23,153
Risk weighted assets for operational risk 1,483,198 1,427,083
Total risk weighted assets 24,163,902 20,783,090

Capital management
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 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.

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