2. CAPITAL ADEQUACY (CONTINUED) 2.1 Capital Management (continued) The Group’s Capital Management Plan is updated annually and approved by the Board for implementation at the beginning of each financial year. The capital plan is drawn up to cover at least a three-year horizon and takes into account, amongst others, the Group’s strategic objectives and business plans, regulatory capital requirements, capital benchmarking against the industry, available supply of capital and capital raising options, performance of business sectors based on a Risk Adjusted Return on Capital (“RAROC”) approach, as well as ICAAP and stress testing results. The Group has fully issued Subordinated Sukuk Murabahah under its Subordinated Sukuk Murabahah Programme of up to RM1.0 billion in nominal value (“Subordinated Sukuk Murabahah Programme”) which was approved by the Securities Commission Malaysia (“SC”) on 7 October 2014. On 6 September 2018, the Group successfully lodged with SC under Lodge and Launch Framework, a Sukuk Murabahah Programme of up to RM10.0 billion in nominal value, which allows issuances of Subordinated Sukuk Murabahah and Senior Sukuk Murabahah. The purpose of the Subordinated Sukuk Murabahah issuance under both programmes is to enhance the capital adequacy of the Group, in line with the requirements under the Basel III capital framework. Both programmes are qualified as Tier 2 regulatory capital of the Bank and the Group in accordance with BNM’s CAFIB (Capital Components) Guideline. Additionally, on 27 June 2022, the Group successfully lodged with SC under Lodge and Launch Framework, a Sukuk Wakalah Programme of up to RM5.0 billion in nominal value, for the issuances of Additional Tier-1 Capital Sukuk Wakalah. Subsequently, on 24 August 2022, the Group issued RM500 million Additional Tier 1 Sukuk Wakalah under the RM5.0 billion Sukuk Wakalah Programme. This shall qualify as Tier 1 regulatory capital of the Bank and the Group. Table below depicts a summary of the Subordinated Sukuk Murabahah and Sukuk Wakalah Programme of the Group: Capital Instrument Capital Component Main Features 1) Subordinated Sukuk Murabahah Programme of up to RM1.0 billion (Programme 1) a) Tranche 1: RM300 million at 5.75% •• Issued on 22 April 2015 •• Mature on 22 April 2025 Note: Tranche 1 was called on 22 April 2020 Tier 2 Capital •• The tenure of both programmes are as follows: i. Programme 1 – up to thirty (30) years from the date of the first issue under the Subordinated Sukuk Murabahah Programme. ii. Programme 2 – perpetual. •• The tenure of each issuance of the Subordinated Sukuk Murabahah under both programmes are as follows: i. Programme 1 – shall be not less than five (5) years and up to thirty (30) years from the issue date and provided that the Subordinated Sukuk Murabahah matures on or prior to the expiry of the tenure of the Subordinated Sukuk Murabahah Programme. ii. Programme 2 – shall be not less than five (5) years from the issue date. •• Each of the Subordinated Sukuk Murabahah may have a call option to allow the Group to redeem the relevant tranche of the Subordinated Sukuk Murabahah (in whole or in part) on any periodic profit payment date after a minimum period of five (5) years from the issue date of that tranche, subject to the relevant early redemption conditions being satisfied. •• Unsecured. b) Tranche 2: RM400 million at 5.50% •• Issued on 15 December 2015 •• Mature on 15 December 2025 Note: Tranche 2 was called on 15 December 2020 c) Tranche 3: RM300 million at 5.08% •• Issued on 13 November 2017 •• Mature on 12 November 2027 Pillar 3 Disclosure as at 31 December 2022 Integrated Report 2022 386
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