45. CAPITAL ADEQUACY Total capital and capital adequacy ratios of the Group and the Bank have been computed based on Bank Negara Malaysia (“BNM”)’s Capital Adequacy Framework for Islamic Banks (Capital Components) issued on 15 December 2023 and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets) issued on 18 December 2023. The Group and the Bank is required to meet minimum Common Equity Tier I (“CET I”), Tier I and Total Capital adequacy ratios of 4.5%, 6.0% and 8.0% respectively. To ensure that banks build up adequate capital buffer outside period of stress, a Capital Conservation Buffer (“CCB”) of 2.5% above the minimum capital adequacy was introduced by BNM. The CCB is maintained in the form of CET I Capital above the minimum CET I Capital, Tier I Capital and Total Capital adequacy at 2.5% starting 1 January 2019 onwards. Therefore, the minimum regulatory capital adequacy ratios requirement for CET I capital ratio, Tier I capital ratio and Total Capital ratio are 7.0%, 8.5% and 10.5% respectively starting year 2019 onwards. The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. The capital adequacy ratios of the Group and the Bank are set out below: Group Bank 2023 2022 2023 2022 Common Equity Tier I (“CET I”) Capital Ratio 14.124% 13.578% 13.530% 13.230% Tier I Capital Ratio 15.132% 14.640% 14.548% 14.298% Total Capital Ratio 19.893% 19.392% 19.347% 19.074% The components of CET I, Tier I and Tier II capital: Group Bank 2023 RM’000 2022 RM’000 2023 RM’000 2022 RM’000 Paid-up share capital 3,888,725 3,645,043 3,888,725 3,645,043 Retained earnings 3,257,009 3,096,604 3,348,297 3,105,912 Other reserves 254,478 54,596 143,590 (56,368) Less: Deferred tax assets (174,728) (212,349) (173,756) (211,377) Regulatory reserves (167,000) (136,000) (167,000) (136,000) Investment in subsidiaries – – (344,049) (100,905) Intangible assets (50,354) (54,578) (50,354) (54,578) Total CET I 7,008,130 6,393,316 6,645,453 6,191,727 Capital securities 500,000 500,000 500,000 500,000 Total Tier I Capital 7,508,130 6,893,316 7,145,453 6,691,727 Sukuk Murabahah 1,800,000 1,700,000 1,800,000 1,700,000 Loss provisions^ 562,500 537,883 557,168 535,095 Total Tier II Capital 2,362,500 2,237,883 2,357,168 2,235,095 Total Capital 9,870,630 9,131,199 9,502,621 8,926,822 ^ Impairment allowances on non-impaired financing and regulatory reserve, subject to maximum of 1.25% of total credit risk-weighted assets less credit absorbed by unrestricted investment accounts. 400 Notes to the Financial Statements for the financial year ended 31 December 2023 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023
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