Bank Islam Integrated Annual Report 2020

2. CAPITAL ADEQUACY (CONTINUED) 2.4 Capital Adequacy Ratios The Group is required to comply with the Common Equity Tier 1 (“CET 1”) Capital Ratio, Tier 1 Capital Ratio and Total Capital Ratio (“TCR”) as prescribed by BNM. The Group has been in compliance with all prescribed capital adequacy ratios throughout the period. Total capital and capital adequacy ratios of the Group have been computed based on the updated BNM’s CAFIB - Capital Components Guideline issued on 9 December 2020 and BNM’s CAFIB – RWA Guideline issued on 3 May 2019. The minimum regulatory capital adequacy ratios requirement for CET 1 capital ratio, Tier 1 capital ratio and TCR including capital buffers i.e. Capital Conservation Buffers (“CCB”) are 7.0%, 8.5% and 10.5% respectively. The CCB is intended to encourage the build-up of capital buffers by individual Islamic banking institutions during normal times that can be drawn down during stress periods. Arising from the COVID-19 pandemic outbreak, BNM through its Memo titled “Additional Measures to Assist Borrowers/Customers Affected by the COVID-19 Outbreak” dated 24 March 2020 allowed banking institutions to withdraw the CCB of 2.5% until 31 December 2020. With the withdrawal, the minimum regulatory capital adequacy ratios requirement for CET 1 capital ratio, Tier 1 capital ratio and TCR for year 2020 were reduced to 4.50%, 6.00% and 8.00% respectively. However, BNM required all banking institutions to restore its minimum regulatory requirements back to its original position by 30 September 2021. Table below shows the composition of the regulatory capital and capital adequacy ratios as of 31 December 2020 determined by the requirements of the CAFIB. The capital adequacy ratios of the Group and Bank are set as per below: (a) The capital adequacy ratios of the Group and of the Bank: Group Bank Before effect of IA 31.12.2020 31.12.2019 31.12.2020 31.12.2019 Before deducting proposed dividends CET 1 Capital Ratio 12.07% 11.89% 12.04% 11.86% Tier 1 Capital Ratio 12.07% 11.89% 12.04% 11.86% Total Capital Ratio 16.53% 15.82% 16.51% 15.79% After deducting proposed dividends CET 1 Capital Ratio 11.79% 11.57% 11.77% 11.54% Tier 1 Capital Ratio 11.79% 11.57% 11.77% 11.54% Total Capital Ratio 16.26% 15.49% 16.24% 15.47% BANK ISLAM MALAYS IA BERHAD INTEGRATED ANNUAL REPORT 2020 321