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Regulatory Capital (LKR '000)
Commom Equity 90,644,654 91,682,073
Tier I Capital 90,644,654 91,682,073
Total Capital 119,671,398 120,708,817
Regulatory Capital Ratios (%)
Common Equity Tier I Capital Ratio (Minimum Requirement - 4.5% (with
effect from 01.07.2017)12.30% 12.26%
Tier I Capital Ratio (Minimum Requirement -7.75% (with effect from
01.07.2017 )12.30% 12.26%
Total Capital Ratio (Minimum Requirement -11.75% (with effect from
01.07.2017 )16.24% 16.14%
Regulatory Liquidity
Statutory Liquid Assets (LKR '000) 213,594,125
Statutory Liquid Assets Ratio (Minimum Rquirement -20% )
Domestic Banking Unit (%) 26.65%
Off-Shore Banking Unit (%) 32.45%
Liquidity Coverage Ratio (%) - Rupee (Minimum Requirement - 80%with
effect from 01.01.2017 )237.92%
Liquidity Coverage Ratio (%) - All Currency (Minimum Requirement -
80% with effect 01.01.2017 )182.95%
Basel III - Disclosures Under Pillar 3 as per the Banking Act Direction No.01 of 2016
Template 01
September 30, 2017
Key Regulatory Ratios - Capital and Liquidity
Item
Bank Group
Bank Group
Common Equity Tier I (CETI) Capital after Adjustments 90,644,654 91,682,073
Total Common Equity Tier I (CET1) Capital 92,523,079 92,741,733
Equity Capital (Stated Capital) /Assigned Capital 37,041,837 37,041,837
Reserve fund 5,647,890 5,647,993
Published retained earnings/(Accumulated retained losses) 17,632 (1,526)
Published Accumulated Other Comprehensive Income (OCI) (1,693,711) (1,681,027)
General and other disclosed reserves 43,969,512 43,969,512
Unpublished current year's profit/(losses) and gains reflected in OCI 7,539,919 7,539,919
Ordinary shares issued by consolidated banking and financial subsidiaries of
the bank and held by third parties - 225,025
Total Adjustments to CET1 Capital 1,878,425 1,059,660
Goodwill (net) - 400,045
Intangible Assets (net) 579,963 659,615
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 entity1,298,462 -
Additional Tier 1 (AT1) Capital after Adjustments - -
Total Additional Tier 1 (ATI) 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 (Specify)
Tier 2 Capital after Adjustments 29,026,744 29,026,744
Total Tier 2 Capital 29,026,744 29,026,744
Qualifying Tier 2 Capital Instruments 23,709,215 23,709,215
Revaluation gains 2,040,935 2,040,935
Loan Loss Provisions 3,276,594 3,276,594
Instruments issued by Consolidated Banking and Financial Subsidiaries of the
Bank and held by Third Parties - -
Total Adjustments to Tier 2 Capital - -
Investment in own shares - -
Others (Specify)
CET1 Capital 90,644,654 91,682,073
Total Tier 1 Capital 90,644,654 91,682,073
Total Capital 119,671,398 120,708,817
Template 02
Item
Amount ( LKR '000)
September 30, 2017
Basel III Computation of Capital Ratios as at September 30, 2017
Item
Amount ( LKR '000)
Basel III Computation of Capital Ratios as at September 30, 2017
Bank Group
Total Risk Weighted Amount 736,888,111 747,734,755
Risk Weighted Amount for Credit Risk 675,864,975 686,242,946
Risk Weighted Amount for Market Risk 6,161,591 6,161,591
Risk Weighted Amount for Operational Risk 54,861,546 55,330,218
CET1 Capital Ratio (including Capital Conservation Buffer,Countercyclical
Capital Buffer & Surchage on D - SIBs) (%)12.30% 12.26%
Of which : Capital Consevation Buffer (%)
Of which : Countercyclical Buffer (%)
Of which : Capital Surcharge on D -SIBs (%)
Total Tier 1 Capital Ratio (%) 12.30% 12.26%
Total Capital Ratio (Including Capital Conservation Buffer,Countercyclical
Capital Buffer & Surcharge on D-SIBs (%)16.24% 16.14%
Of which : Capital Consevation Buffer (%)
Of which : Countercyclical Buffer (%)
Of which : Capital Surcharge on D -SIBs (%)
Item
Amount ( LKR '000)
September 30, 2017
Total Un-weighted
Value
Total weighted
Value
Total stock of High Quality Liquid Assets (HQLA) 162,066,841 161,853,895
Total Adjusted Level 1 Assets 161,640,948 161,640,948
Level 1 Assets 161,640,948 161,640,948
Total Adjusted Level 2A Assets - -
Level 2A Assets - -
Total Adjusted Level 2B Assets 425,893 212,947
Level 2B Assets 425,893 212,947
Total Cash outflows 1,082,827,251 191,894,628
Deposits 616,778,694 61,677,869
Unsecured wholesale funding 219,823,108 101,031,398
Secured funding transaction - -
Undrawn portion of committed (irrevocable) facilities and other
contingent funding obligations
246,225,449 29,185,361
Additional requirements - -
Total Cash Inflows 156,812,930 103,427,621
Maturing secured lending transactions backed by the following
collateral
37,993,606 37,580,732
Committed facilities - -
Other inflows by counterparty which are maturing within 30 days 71,486,360 43,995,027
Operational deposits 10,062,797 -
Other cash inflows 37,270,167 21,851,862
Liquidity Coverage Ratio (%) (Stock of High Quality Liquid
Assets/Total Net Cash Outflows over the Next 30 Calender
Days)*100
182.95%
Template 04
Item
Amount (LKR'000)
Reporting Period
Basel III Computation of Liquidity Coverage Ratio as at September 30, 2017
Description of the Capital Instrument Stated CapitalDebentures - Type
"A" - 1
Debentures - Type
"A" - 2
Debentures - Type
"B" - 1
Debentures - Type
"B" - 2IFC Borrowings
Issuer Commercial Bank Commercial Bank Commercial Bank Commercial Bank Commercial Bank
Inernational
Finance
Corparation
Unique Identifier (e.g., ISIN or Bloomberg
Identifier for Private Placement)
Governing Law(s) of the Instrument Sri Lanka Sri Lanka Sri Lanka Sri Lanka Sri Lanka United State
Original Date of Issuance N/A March 8, 2016 October 27, 2016 March 8, 2016 October 27, 2016 March 13, 2013
Par Value of Instrument LKR 100/- LKR 100/- LKR 100/- LKR 100/-
Perpetual or Dated Perpetual Dated Dated Dated Dated Dated
Original Maturity Date, if Applicable N/A March 8, 2021 October 27, 2026 March 8, 2021 October 27, 2026
Amount Recognised in Regulatory Capital (in
LKR ‘000 as at the Reporting Date) 37,042,046 3,544,272 5,071,800 1,749,090 1,928,200 11,415,853
Accounting Classification (Equity/Liability) Equity Liability Liability Liability Liability Liability
Issuer Call subject to Prior Supervisory
Approval No Yes Yes Yes Yes Yes
Optional Call Date, Contingent Call Dates and
Redemption Amount (LKR ‘000) N/A N/A N/A N/A N/A N/A
Subsequent Call Dates, if Applicable N/A N/A N/A N/A N/A N/A
Coupons/Dividends
Fixed or Floating Dividend/Coupon N/A Fixed Fixed Fixed Fixed Floating
Coupon Rate and any Related Index 10.75% 12.00% 11.25% 12.25%
06 Months LIBOR
+ 5.75%
Non-Cumulative or Cumulative
Convertible or Non-Convertible
If Convertible, Conversion Trigger (s) N/A N/A N/A N/A N/A N/A
If Convertible, Fully or Partially N/A N/A N/A N/A N/A N/A
If Convertible, Mandatory or Optional N/A N/A N/A N/A N/A N/A
If Convertible, Conversion Rate N/A N/A N/A N/A N/A N/A
Template 05
Main Features of Regulatory Capital Instruments
On-Balance Sheet
Amout
Off-Balance Sheet
Amout
On-Balance Sheet
Amout
Off-Balance Sheet
AmoutRWA RWA Density (%)
Claims on Central Government and Central Bank of Sri Lanka 295,501,193 65,067,500 295,501,193 1,301,350 - -
Claims on Foreign Sovereigns and their Central Banks 14,743,107 - 14,743,107 - 14,743,107 100.00
Claims on Public Sector Entities (PSEs) 7,520 - 7,520 - 7,520 100.00
Claims on Official Entities and Multilateral Development Banks(MDBs) - - - - - -
Claims on Banks Exposures 21,212,405 127,857,625 21,212,405 2,690,435 13,914,297 58.21
Claims on Financial Institutions 26,791,809 - 26,791,809 - 12,675,208 47.31
Claims on Corporates 383,818,214 305,024,759 331,898,393 61,779,156 379,539,110 96.41
Retail Claims 238,514,708 16,697,041 202,462,357 7,665,695 173,218,698 82.43
Claims Secured by Residential Property 59,854,730 - 59,854,730 - 47,416,053 79.22
Claims Secured by Commercial Real Estate - - - - - -
Non-Performing Assets (NPAs) 6,885,116 - 6,885,116 - 9,034,509 131.22
Higher-risk Categories 919,431 - 919,431 - 2,298,578 250.00
Cash Items and Other Assets 45,672,804 - 45,672,804 - 23,017,896 50.40
Total 1,093,921,038 514,646,924 1,005,948,866 73,436,636 675,864,975 62.62
Template 07
Credit Risk under Standardised Approach
Credit Risk Exposures and Credit Risk Mitigation (CRM) Effects
Asset Class
Amount (LKR '000) as at September 30, 2017
Exposures before Credit Conversion Factor
(CCF) and CRMExposures post CCF and CRM RWA and RWA Density (%)
Description
Risk Weight / Asset Class 0% 20% 50% 60% 75% 100% 150% >150%Total Credit
Exposures Amount
Claims on Central Government and Central Bank of Sri Lanka 296,802,543 - - - - - - - 296,802,543
Claims on Foreign Sovereigns and their Central Banks - - - - - 14,743,107 - - 14,743,107
Claims on Public Sector Entities (PSEs) - - - - - 7,520 - - 7,520
Claims on Official Entities and Multilateral Development Banks(MDBs) - - - - - - - - -
Claims on Banks Exposures - 6,772,037 9,141,826 - - 7,988,976 - - 23,902,840
Claims on Financial Institutions - 3,511,554 22,614,716 - - 665,539 - - 26,791,809
Claims on Corporates - 10,953,052 10,751,995 - - 371,972,502 - - 393,677,549
Retail Claims 732,194 433,385 - 9,869,562 127,530,506 71,562,404 - - 210,128,052
Claims Secured by Residential Property - - 24,877,356 - - 34,977,375 - - 59,854,730
Claims Secured by Commercial Real Estate - - - - - - - - -
Non-Performing Assets (NPAs) - - 32,244 - - 2,521,842 4,331,030 - 6,885,116
Higher-risk Categories - - - - - - - 919,431 919,431
Cash Items and Other Assets 17,631,961 6,278,684 - - - 21,762,159 - - 45,672,804
Total 315,166,698 27,948,712 67,418,137 9,869,562 127,530,506 526,201,425 4,331,030 919,431 1,079,385,502
Template 08
Credit Risk under Standardised Approach
Exposures by Asset Classes and Risk Weights
Amount (LKR '000) as at September 30, 2017 (Post CCF & CRM)
Bank Group
(a) RWA for Interest Rate Risk 269,072 269,072
General Interest Rate Risk 125,098 125,098
i) Net Long or Short Position 125,098 125,098
ii) Horizontal Disallowance- -
iii) Vertical Disallowance- -
iv) Options- -
Specific Interest Rate Risk 143,974 143,974
(b) RWA for Equity 59,994 59,994
i) General Equity Risk32,225 32,225
ii) Specific Equity Risk27,769 27,769
(c) RWA for Foreign Exchange & Gold 394,921 394,921
Capital charge for Market Risk [ (a ) + (b +( c ) * CAR6,161,591 6,161,591
Template 09
Market Risk under Standardised Measurment Method
Item
RWA Amount (LKR '000) as at
September 30, 2017
1st Year 2nd Year 3rd Year
The Basic Indicator Approach 15% 37,906,086 42,959,415 48,059,131
The Standardised Approach - - -
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% - - -
The Alternative Standardised Approach
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
The Basic Indicator Approach 6,446,232
The Standardised Approach
The Alternative Standardised Approach
The Basic Indicator Approach 54,861,546
The Standardised Approach
The Alternative Standardised Approach
Capital Charges for Operational Risk ( LKR'000)
Risk-Weighted Amount for Operational Risk (LKR'000)
Template 10
Operational Risk under Basic Indicator Approach / The Standardised Approach / The Alternative Standardised Approach
Business LinesCapital
Charge FactorFixed Factor
Gross Income (LKR '000) Risk weighted Assets Amount
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 1,098,985,741 1,097,775,428 1,005,948,866 5,568,580 86,574,003
Cash and Cash Equivalents 25,896,049 27,699,639 27,699,639
Balances with Central Banks 46,164,247 40,883,479 40,883,479
Placements with Banks 12,378,863 16,429,573 16,429,573
Derivative Financial Instruments 2,363,141
Other Financial Instruments - Held-For-Trading 5,246,327 5,246,327 5,246,327
Financial Assets Designnated at Fair Value through
Profit or Loss
Loans and Receivables to Banks 638,427
Loans and Receivables to Other Customers 707,431,178 707,830,256 623,134,679 84,695,577
Financial investments - Available-for-sale 156,151,241
Financial investments – Held-to-maturity 63,567,170 270,629,351 270,307,098 322,253
Financial investments – Loans and receivables 48,205,468
Investments in Subsidiaries 2,564,879 2,564,879 1,266,417 1,298,462
Investments in Associates and Joint Ventures 44,331 44,331 44,331
Property, plant & equipment 10,700,347 10,700,347 10,700,347
Investment Properties
Goodwill and Intangible assets 579,963 579,963 579,963
Deferred Tax Assets -
Other Assets 17,054,110 15,167,283 15,483,304
Liabilities 996,466,791 994,821,353
Due to banks 41,847,322
Derivative Financial Instruments 3,489,848
Securities sold under repurchase agreements 60,212,617 61,448,330
Other Financial Liabilities - Held-For-Trading
Financial Liabities Designated at Fair Value through
Profit or Loss
Due to Other Customers 818,564,433 802,286,405
Other Borrowings 24,423,731 75,950,755
Debt Securities Issued
Current Tax Liabilities 3,676,796 3,638,854
Deferred Tax Liabilities 920,553 2,104,987
Other Provisions 1,874
Other Liabilities 17,923,742 36,212,592
Due to Subsidiaries 35,271
Subordinated Term Debts 25,370,604 13,179,430
Off- Balance Sheet Liabilities 562,482,289 562,482,289 73,436,636
Guarantees 47,277,151 47,277,151 27,972,950 5,730,776
Performance Bonds 24,302,653 24,302,653 10,843,773 1,307,554
Letter of Credit 46,938,526 46,938,526 9,258,358 129,347
Other Contingent Items 297953163.4 297,953,163 11,144,542 806
Undrawn Loan Commitments 29,229,186 29,229,186 14,217,012
Other Commitments 116,781,609 116,781,609
Shareholders' Equity
Equity Capital (Stated Capital)/Assigned Capital
of which Amount Eligible for CET1 37,042,046 37,042,046
of which Amount Eligible for AT1 -
Retained Earnings 11,691,774
Accumulated Other Comprehensive Income (2,105,511)
Other Reserves 55,890,641 65,912,030
Total Shareholders' Equity 102,518,950 102,954,076
Template 11
Differences between Accounting and Regulatory Scopes and Mapping of Financial Statement Categories with Regulatory Risk Categories – Bank Only
Item
Amount (LKR '000) as at September 30, 2017
Notes: Where a single item attracts capital charges according to more than one risk category, it should be reported in all columns that it attracts a capital charge.
As a consequence, the sum of amounts in columns (c) to (e) may be greater than the amount in column (b). An explanation note must be provided for such
reporting for reconciliation purpose.
OTHER RISK MANAGEMENT DISCLOSURES
Financial Highlights
Rs Mn Performance 2Q Annual Performance
(For the six months ended)
2017 2016
% Change 2017 2016
% Change
Net Interest Income 9,159.8 7,997.9 14.53% 17,821.2 16,110.8 10.62% Net fee and commission income 1,956.2 1,508.9 29.64% 3,977.4 2,968.9 33.97% Other income 756.7 496.7 52.35% 1,605.1 1,902.3 -15.63% Less: Impairment for loans and other losses 695.3 551.2 26.14% 937.0 1,546.3 -39.40% Net operating income 11,177.4 9,452.3 18.25% 22,466.7 19,435.8 15.59% Operating expenses 4,831.1 4,437.7 8.86% 9,779.8 9,044.5 8.13% Operating profit before VAT & NBT 6,346.3 5,014.6 26.56% 12,686.9 10,391.3 22.09% Less: Financial VAT & NBT 1,143.2 698.7 63.62% 2,262.0 1,495.9 51.21% Profit before income tax 5,203.1 4,315.9 20.56% 10,424.9 8,895.4 17.19% Less - Income tax expense 1,438.6 1,062.1 35.45% 2,885.0 2,407.3 19.85% Profit for the Period 3,764.5 3,253.8 15.70% 7,539.9 6,488.1 16.21%
ROA has been hovering around industry average whilst ROE has slightly deteriorated during second half compared to industry performance resulting from the latest Rights Issue of the
Bank
NIM continued to be under pressure compared to Industry Performance and CAR continued to be above the Industry
A proven track record of improving asset quality whilst growing the portfolio of the
Bank
Bank continued to manage Liquid Assets in an efficient manner
Financial Stability Through Risk Management
A clear understanding of risks surrounding the business activities is essential for any organisation to create sustainable stakeholder value through executing its strategies. It is therefore, essential to reinforce the overall strategy of an organisation with a prudent risk management strategy so that the opportunities could be optimised while minimising the effects of down-side risks. Banks which are responsible for the vital role of financial intermediation in the economy should be more committed to managing their risks in a prudent and transparent manner compared to a normal business organisation. Accordingly, Basel Committee on Banking Supervision has formulated broad supervisory standards and guidelines to inculcate industry best practices across the banking institutions through ‘Basel Accords’ (Basel II, the second of the Basel Accords which has been extended by Basel III). While Basel Accord encourages convergence towards common approaches and standards, the ultimate purpose of these rules is to create financial stability and resilience in financial sector institutions.
Value Creation through Operational Efficiency
Basel II Framework
The Basel II framework is built on three Pillars and the progress made by the Bank in achieving these standards are discussed below:
Pillar 1
Pillar 2
Pillar 3
Concept
Maintenance of minimum regulatory capital for credit risk, market risk and operational risk.
Supervisory review process to evaluate the activities and risk profile of the Bank to determine whether the Bank should hold higher level of capital than the minimum requirement in Pillar 1. This mechanism is commonly known as ICAAP (Internal Capital Adequacy Assessment Process).
Complements the minimum capital requirement and the supervisory review process (i.e., the first and the second pillars) by developing a set of disclosure requirements to facilitate market participants to assess the risk exposures of banks and way in which the risks are managed.
Progress Made by the Bank
Computation of capital adequacy as per regulatory requirements.
The Bank has implemented a comprehensive ICAAP framework since December, 2013 with the assistance of an overseas risk consultancy firm.
The Bank started providing a comprehensive set of risk management disclosures from 2012 in line with the regulatory requirements to enhance market discipline.
In addition to meeting the requirements stated in the Risk Management Framework prescribed by the regulator, the Bank has progressed well in implementing the International Best Practices of Risk Management by acquiring risk management software systems for Credit, Market and Operational risks.
Basel III and Beyond
In compliance with the regulatory requirements, the Bank has initiated establishing one of the standards prescribed under Basel III Framework - Liquidity Coverage Ratio (LCR). Accordingly, Bank started submitting these reports since March 2015.
With the objective of achieving a more resilient banking system in the country, CBSL is to implement Basel III minimum capital requirements from July 01, 2017 with specified timelines to increase minimum capital ratios to be fully implemented by January 01, 2019.
In line with such directive, introduction of various capital buffers and strengthening of level of capital as well as avoidance of systemic risk is expected to be achieved. The Bank is gearing to embrace changes to be proposed in line with this and work towards providing a safe banking system to our stakeholders.