Disclosure 1
Key regulatory ratios – Capital and liquidity
GROUP |
Bank |
||||
As at December 31, | 2021 | 2020 | 2021 | 2020 | |
Regulatory capital (Rs. ’000) | |||||
Common equity |
|
139,730,833 |
|
134,689,261 | |
Tier 1 capital |
|
139,730,833 |
|
134,689,261 | |
Total capital |
|
176,611,213 |
|
171,396,831 | |
Regulatory capital ratios (%) | |||||
Common equity Tier 1 capital ratio (minimum requirement – 7.50%) |
|
13.356 |
|
13.217 | |
Tier 1 capital ratio (minimum requirement – 9.00%) |
|
13.356 |
|
13.217 | |
Total capital ratio (minimum requirement – 13.00%) |
|
16.882 |
|
16.819 | |
Leverage ratio (minimum requirement – 3%) |
|
5.88 |
|
5.74 | |
Regulatory liquidity | |||||
Statutory liquid assets (Rs. ’000) |
|
587,155,074 | |||
Statutory liquid assets ratio (minimum requirement – 20% ) | |||||
Domestic Banking Unit (%) |
|
44.99 | |||
Off-shore Banking Unit (%) |
|
32.70 | |||
Liquidity coverage ratio – Rupee (minimum requirement: 2021– 100%, 2020 - 90%) (%) |
|
599.38 | |||
Liquidity coverage ratio – All currency (minimum requirement: 2021 – 100%, 2020 – 90%) (%) |
|
422.86 | |||
Net stable funding ratio (minimum requirement: 2021 – 100%, 2020 – 90%) (%) |
|
157.49 |
Disclosure 2
Basel III computation of capital ratios
GROUP |
Bank |
||||
As at December 31, | 2021 | 2020 | 2021 | 2020 | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | ||
Common equity Tier 1 (CET1) capital after adjustments |
|
139,730,833 |
|
134,689,261 | |
Total common equity Tier 1 (CET1) capital |
|
143,866,880 |
|
142,208,308 | |
Equity capital (stated capital)/Assigned Capital |
|
52,187,747 |
|
52,187,747 | |
Reserve fund |
|
9,285,232 |
|
9,024,067 | |
Published retained earnings/(Accumulated retained losses) |
|
4,124,307 |
|
3,670,981 | |
Published accumulated other comprehensive Income (OCI) |
|
2,171,371 |
|
1,922,007 | |
General and other disclosed reserves |
|
75,403,506 |
|
75,403,506 | |
Unpublished current year’s profit/(losses) and gains reflected in OCI | – | – | – | – | |
Ordinary shares issued by consolidated banking and financial subsidiaries of the Bank and held by third parties |
|
694,717 | – | – |
GROUP |
Bank |
||||
As at December 31, | 2021 | 2020 | 2021 | 2020 | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | ||
Total adjustment to CET1 capital |
|
4,136,047 |
|
7,519,047 |
|
Goodwill (net) |
|
445,147 | – | – | |
Intangible assets (net) |
|
1,355,368 |
|
1,232,863 | |
Revaluation losses of property, plant and equipment | – | 3,813 | – | 3,813 | |
Significant investments in the capital of financial institutions where the Bank owns more than 10% of the issued ordinary share capital of the entity | – | – |
|
3,782,513 | |
Deferred tax assets (net) |
|
2,331,719 |
|
2,499,858 | |
Additional Tier 1 (AT1) capital after adjustments |
– | – | – | – | |
Total additional Tier 1 (AT1) capital |
– | – | – | – | |
Qualifying additional Tier I 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 | – | – | – | – | |
Reciprocal cross holdings in AT1 capital instruments | – | – | – | – | |
Investments in the capital of banking and financial institutions where the Bank does not own more than 10% of the issued ordinary share capital of the entity | – | – | – | – | |
Significant investments in the capital of banking and financial institutions where the bank own more than 10% of the issued ordinary share capital of the entity | – | – | – | – | |
Regulatory adjustments applied to AT1 due to insufficient Tier 2 capital to cover adjustments |
– | – | – | – | |
Tier 2 capital after adjustments |
|
36,880,380 |
|
36,707,570 | |
Total Tier 2 capital |
|
36,880,380 |
|
36,707,570 | |
Qualifying Tier 2 capital instruments |
|
22,235,336 |
|
22,235,336 | |
Revaluation gains |
|
2,848,860 |
|
2,848,860 | |
Eligible Impairment |
|
11,796,184 |
|
11,623,374 | |
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 | – | – | – | – | |
CET 1 capital |
|
139,730,833 |
|
134,689,261 | |
Total Tier 1 capital |
|
139,730,833 |
|
134,689,261 | |
Total capital |
|
176,611,213 |
|
171,396,831 | |
Total risk weighted amount (RWA) |
|
1,046,175,415 |
|
1,019,068,225 | |
Risk weighted amount for credit risk |
|
955,864,361 |
|
929,869,882 | |
Risk weighted amount for market risk |
|
35,942,531 |
|
35,628,469 | |
Risk weighted amount for operational risk |
|
54,368,523 |
|
53,569,874 | |
CET 1 capital ratio (including capital conservation buffer, countercyclical capital buffer & surcharge on D-SIBs) (%) |
|
13.356 |
|
13.217 | |
Of which: capital conservation buffer (%) |
|
1.500 |
|
1.500 | |
Of which: countercyclical buffer (%) | – | – | – | – | |
Of which: capital surcharge on D-SIBs (%) |
|
1.500 |
|
1.500 | |
Total Tier 1 capital ratio (%) |
|
13.356 |
|
13.217 | |
Total capital ratio (including capital conservation buffer, countercyclical capital buffer and surcharge on D-SIBs) (%) |
|
16.882 |
|
16.819 | |
Of which: capital conservation buffer (%) |
|
1.500 |
|
1.500 | |
Of which: countercyclical buffer (%) | – | – | – | – | |
Of which: capital surcharge on D-SIBs (%) |
|
1.500 |
|
1.500 |
Disclosure 3
Leverage ratio
GROUP |
Bank |
||||
As at December 31, | 2021 | 2020 | 2021 | 2020 | |
Rs. ‘000 | Rs. ‘000 | Rs. ‘000 | Rs. ‘000 | ||
Tier 1 capital |
|
139,730,833 |
|
134,689,261 | |
Total exposures |
|
2,375,340,709 |
|
2,345,864,995 | |
On-balance sheet items (excluding derivatives and securities financing transactions, but including collateral) |
|
1,751,851,828 |
|
1,722,426,381 | |
Derivative exposures |
|
424,368,169 |
|
424,368,169 | |
Securities financing transaction exposures |
|
103,367,009 |
|
103,367,009 | |
Other off-balance sheet exposures |
|
95,753,703 |
|
95,703,436 | |
Basel III leverage ratio (minimum requirement 3%) (%) |
|
5.88 |
|
5.74 |
Disclosure 4
Liquidity coverage ratio (LCR)
As at December 31, |
2021 |
2020 |
||
Total unweighted value | Total weighted value | Total unweighted value | Total weighted value | |
Rs. '000 | Rs. '000 | Rs. '000 | Rs. '000 | |
Total stock of High Quality Liquid Assets (HQLA) |
|
|
374,992,798 | 362,921,544 |
Total adjusted level 1 assets |
|
|
296,085,549 | 296,085,549 |
Level 1 assets |
|
|
296,085,549 | 296,085,549 |
Total adjusted level 2A assets |
|
|
78,235,345 | 66,500,043 |
Level 2A assets |
|
|
78,235,345 | 66,500,043 |
Total adjusted level 2B assets |
|
|
671,904 | 335,952 |
Level 2B assets |
|
|
671,904 | 335,952 |
Total cash outflows |
|
|
1,605,854,701 | 293,551,795 |
Deposits |
|
|
984,455,378 | 98,445,538 |
Unsecured wholesale funding |
|
|
321,215,910 | 153,023,623 |
Secured funding transaction | – | – | – | – |
Undrawn portion of committed (irrevocable) facilities and other contingent funding obligations |
|
|
290,163,923 | 32,063,144 |
Additional requirements |
|
|
10,019,490 | 10,019,490 |
Total cash inflows |
|
|
301,547,923 | 207,726,008 |
Maturing secured lending transactions backed by collateral |
|
|
63,387,344 | 52,844,324 |
Committed facilities | – | – | – | – |
Other inflows by counterparty which are maturing within 30 calendar days |
|
|
181,980,157 | 140,104,057 |
Operational deposits |
|
– | 26,625,169 | – |
Other cash inflows |
|
|
29,555,253 | 14,777,627 |
Liquidity coverage ratio (%) (stock of high quality liquid assets/ |
|
422.86 |
Disclosure 5
Net stable funding ratio (NSFR)
Bank |
||
As at December 31, | 2021 | 2020 |
Rs. ‘000 | Rs. ‘000 | |
Total available stable funding (ASF) |
|
1,288,573,931 |
Total required stable funding (RSF) |
|
818,207,892 |
Required stable funding – On balance sheet assets |
|
809,526,504 |
Required stable funding – Off balance sheet items |
|
8,681,388 |
NSFR (minimum requirement – 100%) (%) |
|
157.49 |
Disclosure 6
Main features of regulatory capital instruments
Description of the capital Instrument | Stated capital | 2016-2026 listed rated unsecured subordinated redeemable debentures | 2016-2026 listed rated unsecured subordinated redeemable debentures | 2018-2023 Basel III compliant – Tier 2 listed rated unsecured subordinated redeemable debentures with a non-viability conversion | 2018-2028 Basel III Compliant – Tier 2 listed rated unsecured subordinated redeemable debentures with a non-viability Conversion |
2021 - 2026 Basel III Compliant – Tier 2 Listed Rated Unsecured Subordinated Redeemable Debentures with a Non - viability Conversion |
2021 - 2028 Basel III Compliant – Tier 2 Listed Rated Unsecured Subordinated Redeemable Debentures with a Non - viability Conversion |
2013-2023 Floating rate subordinated loans – Tier 2 IFC borrowing |
|
Issuer | Commercial Bank | Commercial Bank | Commercial Bank | Commercial Bank | Commercial Bank | Commercial Bank | Commercial Bank | International Finance Corporation | |
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 | Sri Lanka | Sri Lanka | United States | |
Original date of issuance | Not Applicable | March 9, 2016 | October 28, 2016 | July 23, 2018 | July 23, 2018 | September 21, 2021 | September 21, 2021 | March 13, 2013 | |
Par value of instrument | Rs. 100/- | Rs. 100/- | Rs. 100/- | Rs. 100/- | Rs. 100/- | Rs. 100/- | |||
Perpetual or dated | Perpetual | Dated | Dated | Dated | Dated | Dated | Dated | Dated | |
Original maturity date, if applicable | Not Applicable | March 8, 2026 | October 27, 2026 | July 22, 2023 | July 22, 2028 | September 20, 2026 | September 20, 2028 | March 14, 2023 | |
Amount recognised in regulatory capital (in Rs. ‘000 as at the reporting date) | 54,566,955 | 1,749,090 | 1,928,200 | 4,196,920 | 1,606,160 | 4,237,470 | 4,358,000 | 6,000,000 | |
Accounting classification (equity/liability) | Equity | Liability | Liability | Liability | Liability | Liability | Liability | Liability | |
Issuer call subject to prior supervisory approval | |||||||||
Optional call date, contingent call dates and redemption amount (Rs. ‘000) | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | |
Subsequent call dates, if applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable | |
Coupons/dividends: | |||||||||
Fixed or floating dividend/coupon | Not Applicable | Fixed | Fixed | Fixed | Fixed | Fixed | Fixed | Floating | |
Coupon rate and any related index | 11.25% p.a. | 12.25% p.a. | 12.00% p.a. | 12.50% p.a. | 9.00% p.a. | 9.50% p.a. | 6 Months LIBOR + 5.75% | ||
Non-cumulative or cumulative | Non-cumulative | Cumulative | Cumulative | Cumulative | Cumulative | Cumulative | Cumulative | Cumulative | |
Convertible or non-convertible | |||||||||
If convertible, conversion trigger (s) | Not Applicable | Not Convertible | Not Convertible |
A “Trigger Event” is determined by and at the sole discretion of the Monetary Board of the Central Bank of Sri Lanka (i.e., conversion of the said Debentures upon occurrence of the Trigger Event will be affected by the Bank solely upon being instructed by the Monetary Board of the Central Bank of Sri Lanka), and is defined in the Banking Act Direction No. 1 of 2016 of Web-Based Return Code 20.2.3.1.1.1.(10) (iii) (a&b) as a point/event being the earlier of:
(a) “A decision that a write-down, without which the Bank would become non-viable, is necessary, as determined by the Monetary Board, OR (b) The decision to make a public sector injection of capital, or equivalent support,without which the Bank would have become non-viable, as determined by the Monetary Board.” |
A “Trigger Event” is determined by and at the sole discretion of the Monetary Board of the Central Bank of Sri Lanka (i.e., conversion of the said Debentures upon occurrence of the Trigger Event will be effected by the Bank solely upon being instructed by the Monetary Board of the Central Bank of Sri Lanka), and is defined in the Banking Act Directions No. 1 of 2016 of Web Based Return Code 20.2.3.1.1.1.(10) (iii) (a&b) as a point/event being the earlier of:
(a) “A decision that a write-down, without which the Bank would become non-viable, is necessary, as determined by the Monetary Board, OR (b) The decision to make a public sector injection of capital, or equivalent support, without which the Bank would have become non-viable, as determined by the Monetary Board.” |
"A “Trigger Event” is determined by and at the sole discretion of the Monetary Board of the Central Bank of Sri Lanka (i.e. conversion of the said Debentures upon occurrence of the Trigger Event will be effected by the Bank solely upon being instructed by the Monetary Board of the Central Bank of Sri Lanka), and is defined in the Banking Act Directions No. 1 of 2016 of Web Based Return Code 20.2.3.1.1.1.(10) (iii) (a&b) as a point/event being the earlier of:
(a) “A decision that a write-down, without which the Bank would become non-viable, is necessary, as determined by the Monetary Board, OR (b) The decision to make a public sector injection of capital, or equivalent support, without which the Bank would have become non-viable, as determined by the Monetary Board.” |
"A “Trigger Event” is determined by and at the sole discretion of the Monetary Board of the Central Bank of Sri Lanka (i.e. conversion of the said Debentures upon occurrence of the Trigger Event will be effected by the Bank solely upon being instructed by the Monetary Board of the Central Bank of Sri Lanka), and is defined in the Banking Act 0Directions No. 1 of 2016 of Web Based Return Code 20.2.3.1.1.1.(10) (iii) (a&b) as a point/event being the earlier of:
(a) “A decision that a write-down, without which the Bank would become non-viable, is necessary, as determined by the Monetary Board, OR (b) The decision to make a public sector injection of capital, or equivalent support, without which the Bank would have become non-viable, as determined by the Monetary Board.”" |
Not Convertible | |
If convertible, fully or partially | Not Applicable | Not Applicable | Not Applicable | Fully | Fully | Fully | Fully | Not Applicable | |
If convertible, mandatory or optional | Not Applicable | Not Applicable | Not Applicable | Optional. At the discretion of the monetary board of the Central Bank of Sri Lanka upon occurance of trigger points as detailed above. | Optional. At the discretion of the monetary board of the Central Bank of Sri Lanka upon occurrence of trigger points as detailed above. | Optional. At the discretion of the monetary board of the Central Bank of Sri Lanka upon occurrence of trigger points as detailed above. | Optional. At the discretion of the monetary board of the Central Bank of Sri Lanka upon occurance of trigger points as detailed above. | Not Applicable | |
If convertible, conversion rate | Not Applicable | Not Applicable | Not Applicable | The price based on the simple average of the daily volume of weighted average price (VWAP) of an ordinary voting share of the Bank during the three (03) months period, immediately preceding the date of the Trigger Event. | The price based on the simple average of the daily volume of weighted average price (VWAP) of an ordinary voting share of the Bank during the three (03) months period, immediately preceding the date of the Trigger Event. | The price based on the simple average of the daily volume weighted average price (VWAP) of an ordinary voting share of the Bank during the three (03) months period, immediately preceding the date of the Trigger Event. | The price based on the simple average of the daily volume weighted average price (VWAP) of an ordinary voting share of the Bank during the three (03) months period, immediately preceding the date of the Trigger Event. | Not Applicable |
Disclosure 7
Summary discussion on adequacy/meeting current and future capital requirements
The Bank prepares the Corporate Plan and Budget for a period of 5 years which is rolled over every year and contains the forecast for key ratios mentioned under Basel III accord including the Capital Adequacy ratios (CARs).
As part of the budgeting process the CARs are computed based on the movements in risk-weighted assets underlying the budgeted expansion of assets, including business volumes.The Bank has set up an internal threshhold on minimum CARs and ensures that appropriate measures are taken to maintain the CARs above the said threshhold in preparing the budget. The budget also captures the capital augmentation plan covering both internal and external capital sources. The Bank has a well established monitoring mechanism to periodically monitor the level of achievement against pre-determined targets to take timely corrective action in case of significant deviations.
Additionally, the Bank has a dynamic ICAAP process with rigorous stress testing embodied in addition to taking into consideration the qualitative aspects such as reputational and strategic risks. The ICAAP process also computes the concentration risk ensuring that the Bank has a well-diversified assets portfolio which is not overly exposed to any individual counterparty or sector. In addition ICAAP process also captures the residual risk to assess the amount of risk that remains after controls are accounted for. This process also proactively identifies the possible gaps in CARs in advance, allowing the Bank to take calculated decisions to optimise utilisation of capital.
Methods of improving the CARs are being evaluated on an ongoing basis and in extreme situations, the Bank will deliberate on strategically curtailing the expansion of risk weighted assets. However, prior to taking such decisions, the Bank will assesss the impact on the internally developed thresholds of minimum CARs resulting from the short-term asset expansion plans. The Bank is committed to maintaining the internal CAR thresholds despite any leniency provided by Central Bank of Sri Lanka (CBSL) during adverse times.
The dividend policy of the Bank is formulated to achieve the twin objectives of satisfying the shareholder expectation of a stable dividend payout while retaining part of the profit for future business expansion. Capital generated through retained profits over the years is one of the primary sources of internal capital to the Bank, which is also strengthened by the scrip dividend paid to shareholders.
A comprehensive analysis of “Managing Funding and Liquidity” given in the section on Prudent Growth .
Disclosure 8
Credit risk under standardised approach
Credit risk exposures and credit risk mitigation (CRM) effects
GROUP |
||||||
As at December 31, 2021 | Exposures before credit conversion factor (CCF) and CRM | Exposures post CCF and CRM | RWA and RWA density (%) | |||
On-balance sheet amount (a) | Off-balance sheet amount (b) | On-balance sheet amount (c) | Off-balance sheet amount (d) | RWA (e) | RWA density {e/(c+d)} | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | (%) | |
Claims on Central Government and Central Bank of Sri Lanka |
|
|
|
|
|
|
Claims on Foreign Sovereigns and their Central Banks |
|
|
|
|
|
|
Claims on Public Sector Entities (PSEs) |
|
|
|
|
|
|
Claims on Official Entities and Multilateral Development Banks(MDBs) |
|
|
|
|
|
|
Claims on Banks Exposures |
|
|
|
|
|
|
Claims on Financial Institutions |
|
|
|
|
|
|
Claims on Corporates |
|
|
|
|
|
|
Retail Claims |
|
|
|
|
|
|
Claims Secured by Residential Property |
|
|
|
|
|
|
Claims Secured by Commercial Real Estate |
|
|
|
|
|
|
Non-Performing Assets (NPAs) |
|
|
|
|
|
|
Higher-risk Categories |
|
|
|
|
|
|
Cash Items and Other Assets |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Credit risk exposures and credit risk mitigation (CRM) effects (Contd.)
BANK |
||||||
As at December 31, 2021 | Exposures before credit conversion factor (CCF) and CRM | Exposures post CCF and CRM | RWA and RWA density (%) | |||
On-balance sheet amount (a) | Off-balance sheet amount (b) | On-balance sheet amount (c) | Off-Balance Sheet Amount (d) | RWA (e) | RWA density {e/(c+d)} | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | (%) | |
Claims on Central Government and Central Bank of Sri Lanka |
|
|
|
|
|
|
Claims on foreign sovereigns and their central banks |
|
|
|
|
|
|
Claims on public sector entities (PSEs) |
|
|
|
|
|
|
Claims on Official Entities and Multilateral Development Banks (MDBs) |
|
|
|
|
|
|
Claims on Banks exposures |
|
|
|
|
|
|
Claims on financial institutions |
|
|
|
|
|
|
Claims on corporates |
|
|
|
|
|
|
Retail claims |
|
|
|
|
|
|
Claims secured by residential property |
|
|
|
|
|
|
Claims Secured by Commercial Real Estate |
|
|
|
|
|
|
Non-performing assets (NPAs) |
|
|
|
|
|
|
Higher-risk Categories |
|
|
|
|
|
|
Cash items and other assets |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Disclosure 9
Credit risk under standardised approach
Exposures by asset classes and risk weights (Post CCF and CRM)
GROUP |
|||||||||||
As at December 31, 2021 | 0% | 10% | 20% | 35% | 50% | 60% | 75% | 100% | 150% | >150% | Total credit exposures amount |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | |
Claims on Central Government and Central Bank of Sri Lanka |
|
|
|
|
|
|
|
|
|
|
|
Claims on Foreign Sovereigns and their Central Banks |
|
|
|
|
|
|
|
|
|
|
|
Claims on Public Sector Entities (PSEs) |
|
|
|
|
|
|
|
|
|
|
|
Claims on Official Entities and Multilateral Development Banks(MDBs) |
|
|
|
|
|
|
|
|
|
|
|
Claims on Banks Exposures |
|
|
|
|
|
|
|
|
|
|
|
Claims on Financial Institutions |
|
|
|
|
|
|
|
|
|
|
|
Claims on Corporates |
|
|
|
|
|
|
|
|
|
|
|
Retail Claims |
|
|
|
|
|
|
|
|
|
|
|
Claims Secured by Residential Property |
|
|
|
|
|
|
|
|
|
|
|
Claims Secured by Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
Non-Performing Assets (NPAs) |
|
|
|
|
|
|
|
|
|
|
|
Higher-risk Categories |
|
|
|
|
|
|
|
|
|
|
|
Cash Items and Other Assets |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Exposures by asset classes and risk weights (post CCF and CRM) (Contd.)
BANK |
|||||||||||
As at December 31, 2021 | 0% | 10% | 20% | 35% | 50% | 60% | 75% | 100% | 150% | >150% | Total credit exposures amount |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | |
Claims on Central Government and Central Bank of Sri Lanka |
|
|
|
|
|
|
|
|
|
|
|
Claims on Foreign Sovereigns and their Central Banks |
|
|
|
|
|
|
|
|
|
|
|
Claims on Public Sector Entities (PSEs) |
|
|
|
|
|
|
|
|
|
|
|
Claims on Official Entities and Multilateral Development Banks(MDBs) |
|
|
|
|
|
|
|
|
|
|
|
Claims on Banks Exposures |
|
|
|
|
|
|
|
|
|
|
|
Claims on Financial Institutions |
|
|
|
|
|
|
|
|
|
|
|
Claims on Corporates |
|
|
|
|
|
|
|
|
|
|
|
Retail Claims |
|
|
|
|
|
|
|
|
|
|
|
Claims Secured by Residential Property |
|
|
|
|
|
|
|
|
|
|
|
Claims Secured by Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
Non-Performing Assets (NPAs) |
|
|
|
|
|
|
|
|
|
|
|
Higher-risk Categories |
|
|
|
|
|
|
|
|
|
|
|
Cash Items and Other Assets |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Disclosure 10
Market risk under standardised measurement method
GROUP |
Bank |
||||
As at December 31, | 2021 | 2020 | 2021 | 2020 | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | ||
(a) Capital charge for interest rate risk |
|
4,225,720 |
|
4,225,720 | |
General interest rate risk |
|
918,969 |
|
918,969 | |
(i) Net long or short position |
|
918,969 |
|
918,969 | |
(ii) Horizontal disallowance | – | – | – | – | |
(iii) Vertical disallowance | – | – | – | – | |
(iv) Options | – | – | – | – | |
Specific interest rate risk |
|
3,306,751 |
|
3,306,751 | |
(b) Capital charge for equity |
|
334,665 |
|
334,665 | |
(i) General equity risk |
|
171,844 |
|
171,844 | |
(ii) Specific equity risk |
|
162,821 |
|
162,821 | |
(c) Capital charge for foreign exchange and gold |
|
112,144 |
|
71,316 | |
(d) Capital charge for market risk [(a) + (b) + (c)] |
|
4,672,529 |
|
4,631,701 | |
Total risk - weighted amount for Market Risk [ ( d )*100 / CAR ] |
|
35,942,531 |
|
35,628,469 |
Disclosure 11
Operational risk under the Alternative Standardised Approach (ASA) – Group
As at December 31, | 2021 | 2020 | ||||||
Gross income | Gross income | |||||||
Capital charge factor | Fixed factor | 1st year | 2nd year | 3rd year | 1st year | 2nd year | 3rd year | |
% | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | ||
Corporate finance | 18 |
|
|
|
210,049 | 167,464 | 157,810 | |
Trading and sales | 18 |
|
|
|
3,956,306 | 3,852,135 | 7,747,013 | |
Payment and settlement | 18 |
|
|
|
651,440 | 690,845 | 730,737 | |
Agency services | 15 | – | – | – | – | – | – | |
Asset management | 12 | – | – | – | – | – | – | |
Retail brokerage | 12 | – | – | – | – | – | – | |
Sub total (a) |
|
|
|
4,817,795 | 4,710,444 | 8,635,560 | ||
Retail banking (Loans and advances) | 12 | 0.035 |
|
|
|
452,610,049 | 487,202,436 | 513,177,931 |
Commercial banking (Loans and advances) | 15 | 0.035 |
|
|
|
606,642,106 | 719,146,950 | 927,864,854 |
Sub total (b) |
|
|
|
1,059,252,155 | 1,206,349,386 | 1,441,042,785 | ||
Total (a) + (b) |
|
|
|
1,064,069,950 | 1,211,059,830 | 1,449,678,345 | ||
Capital charge for operational risk |
|
|
|
5,953,036 | 6,669,652 | 8,581,039 | ||
Average capital charge (c) |
|
7,067,909 | ||||||
RWA for operational risk [(c)*100/ CAR] |
|
54,368,523 |
Operational risk under the Alternative Standardised Approach (ASA) – Bank
As at December 31, | 2021 | 2020 | ||||||
Gross income | Gross income | |||||||
Capital charge factor | Fixed factor | 1st year | 2nd year | 3rd year | 1st year | 2nd year | 3rd year | |
% | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | ||
Corporate finance | 18 |
|
|
|
210,049 | 167,464 | 157,810 | |
Trading and sales | 18 |
|
|
|
3,911,019 | 3,661,995 | 7,414,971 | |
Payment and settlement | 18 |
|
|
|
651,440 | 690,845 | 730,737 | |
Agency services | 15 | – | – | – | – | – | – | |
Asset management | 12 | – | – | – | – | – | – | |
Retail brokerage | 12 | – | – | – | – | – | – | |
Sub total (a) |
|
|
|
4,772,508 | 4,520,304 | 8,303,518 | ||
Retail banking (Loans and advances) | 12 | 0.035 |
|
|
|
448,200,815 | 481,442,015 | 506,645,437 |
Commercial banking (Loans and advances) | 15 | 0.035 |
|
|
|
604,168,024 | 708,987,024 | 913,988,024 |
Sub total (b) |
|
|
|
1,052,368,839 | 1,190,429,039 | 1,420,633,461 | ||
Total (a) + (b) |
|
|
|
1,057,141,347 | 1,194,949,343 | 1,428,936,979 | ||
Capital charge for operational risk |
|
|
|
5,913,377 | 6,557,893 | 8,420,981 | ||
Average capital charge (c) |
|
6,964,084 | ||||||
RWA for operational risk [(c)*100/ CAR] |
|
53,569,874 |
Disclosure 12
Differences between accounting and regulatory scopes and mapping of financial statement categories with regulatory risk categories – Bank
As at December 31, 2021 | 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 | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | |
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Balances with Central Banks |
|
|
|
|
|
Placements with banks |
|
|
|
|
|
Securities purchased under re-sale agreements |
|
|
|
|
|
Derivative financial assets |
|
|
|
|
|
Financial assets recognised through profit or loss – Measured at fair value |
|
|
|
|
|
Financial assets at amortised cost – Loans and advances to banks |
|
|
|
|
|
Financial assets at amortised cost – Loans and advances to other customers |
|
|
|
|
|
Financial assets at amortised cost – Debt and other financial instruments |
|
|
|
|
|
Financial assets measured at fair value through other comprehensive income |
|
|
|
|
|
Investments in subsidiaries |
|
|
|
|
|
Investment in associate |
|
|
|
|
|
Property, plant and equipment and right-of-use assets |
|
|
|
|
|
Intangible assets |
|
|
|
|
|
Deferred tax assets |
|
|
|
|
|
Other assets |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Due to banks |
|
|
|
|
|
Derivative financial liabilities |
|
|
|
|
|
Securities sold under repurchase agreements |
|
|
|
|
|
Financial liabilities at amortised cost – Due to depositors |
|
|
|
|
|
Financial liabilities at amortised cost – Other borrowings |
|
|
|
|
|
Current tax liabilities |
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
Other liabilities |
|
|
|
|
|
Due to subsidiaries |
|
|
|
|
|
Subordinated liabilities |
|
|
|
|
|
Off-balance sheet liabilities |
|
|
|
|
|
Guarantees |
|
|
|
|
|
Performance bonds |
|
|
|
|
|
Letter of credit |
|
|
|
|
|
Other contingent items |
|
|
|
|
|
Undrawn loan commitments |
|
|
|
|
|
Other commitments |
|
|
|
|
|
Differences between accounting and regulatory scopes and mapping of financial statement categories
with regulatory risk categories – Bank (Contd.)
As at December 31, 2021 | 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 | |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | |
Shareholders’ equity |
|
|
|
|
|
Equity capital (stated capital)/assigned capital: | |||||
Of which amount eligible for CET1 |
|
|
|
|
|
Of which amount eligible for AT1 |
|
|
|
|
|
Retained earnings |
|
|
|
|
|
Accumulated other comprehensive income |
|
|
|
|
|
Other reserves |
|
|
|
|
|
Disclosure 13
Explanations of Differences between Accounting and Regulatory Exposure Amounts
Reasons for differences | ||||||||
As at December 31, 2021 | Differences observed between accounting carrying value and amounts considered for regulatory purposes | Net impact arising from Impairment (Stage 1,2 and 3) | Fair Value Adjustment | Effective Interest Rate (EIR) Adjustment | Re-classification of Interest Receivable/ Payable and others | Unamortised cost on staff loans (Day 1 difference) | Other SLFRS Adjustments | Tax Impact on SLFRS Adjustments |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | |
Assets | ||||||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Balances with Central Banks |
|
|
|
|
|
|
|
|
Placements with banks |
|
|
|
|
|
|
|
|
Derivative financial assets |
|
|
|
|
|
|
|
|
Financial assets at amortised cost – Loans and advances to other customers |
|
|
|
|
|
|
|
|
Financial assets at amortised cost – Debt and other financial instruments |
|
|
|
|
|
|
|
|
Financial assets measured at fair value through other comprehensive income |
|
|
|
|
|
|
|
|
Property, plant and equipment and right-of-use assets |
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
Explanations of Differences between Accounting and Regulatory Exposure Amounts (Contd.)
Reasons for differences | ||||||||
As at December 31, 2021 | Differences observed between accounting carrying value and amounts considered for regulatory purposes | Net impact arising from Impairment (Stage 1,2 and 3) | Fair Value Adjustment | Effective Interest Rate (EIR) Adjustment | Re-classification of Interest Receivable/ Payable and others | Unamortised cost on staff loans (Day 1 difference) | Other SLFRS Adjustments | Tax Impact on SLFRS Adjustments |
Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | Rs. ’000 | |
Liabilities | ||||||||
Due to banks |
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
|
|
|
|
|
|
|
Financial liabilities at amortised cost – due to depositors |
|
|
|
|
|
|
|
|
Financial liabilities at amortised cost – other borrowings |
|
|
|
|
|
|
|
|
Current tax liabilities |
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
Other liabilities |
|
|
|
|
|
|
|
|
Subordinated liabilities |
|
|
|
|
|
|
|
|
Shareholders‘ equity | ||||||||
Retained earnings |
|
|
|
|
|
|
|
|
Accumulated other comprehensive income |
|
|
|
|
|
|
|
|
Explanations of Differences between Accounting and Regulatory Exposure Amounts
Under SLFRS 9: “Financial Instruments: Recognition & Measurement”, the Bank assess the impairment of loans and advances individually or collectively based on the principles of “expected credit loss” ( Refer Note 18 for details) model which is expected to capture future trends in the economy. However, the regulatory provisions are made on loans and advances under the Direction No. 03 of 2008 on “Classification of loans and advances, Income Recognition and Provisioning” (and subsequent amendments thereof) issued by the CBSL are “time/delinquency base”. Further, under SLFRS 9, other debt financial assets not held at FVTPL, together with loan commitments and other off balance sheet exposures such as financial guarantees and letter of credits, are subjected to impairment provision, whereas no such regulatory provision is required for those financial assets as per the CBSL direction. As a result, SLFRS 9 recognises higher impairment provisions compared to CBSL guidelines.
Financial investments and financial liabilities (other than FVTPL) are carried at "cost" for regulatory reporting purposes while they are classified as "Financial assets measured at fair value through other comprehensive income" carried at fair value or Financial assets/liabilities at amortised cost under the SLFRS 9. The "Fair value" is defined as the best estimate of the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A variety of valuation techniques combined with the range of plausible market parameters as at a given point in time may still generate unexpected uncertainty beyond fair value. An “amortised cost” of a financial asset or financial liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the EIR method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. Hence, the amortised cost of financial investments and financial liabilities under SLFRS 9 is different to the carrying value for regulatory reporting which is
the "cost."
As per SLFRS 9, a “Day 1” profit or loss is recognised, when the transaction price differs from the fair value of other observable current market transactions in the same instrument. Eg: Employee below market loans. Refer Note 7.1.2.1 for details. However, the carrying value of such transactions for regulatory reporting purposes is equal to cost/transaction price.
As per SLFRS 16, the Bank recognizes a lease liability for leases previously classified as operating leases. Accordingly, the Bank measures the lease liability at the present value of the remaining lease payments, discounted using the IBR. In addition, the Bank recognizes right-of-use asset at an amount equal to the lease liability, on a lease-by-lease basis, adjusted by the amount of any prepaid or accrued lease payments relating to that lease. However as per regulatory reporting, the Bank charges the operating lease rentals as expense to profit or loss on an accrual basis.
Disclosure 14
Bank Risk Management Approach
Effective risk management is at the core of the Bank’s value creation model as we accept risk in the normal course of business. Significant resources are devoted to this critical function to ensure that it is well articulated, communicated and understood by all employees of the Bank as it is a shared responsibility. It is a dynamic and disciplined function increasing in sophistication and subject to stringent oversight by regulators and other stakeholders. The overarching objectives are to ensure that risks accepted are in line with the Bank’s risk appetite and strategic priorities and that there is an appropriate trade-off between risk and reward enabling delivery of value to key stakeholders.“ The risk governance structure, responsibilities attributed throughout the bank, risk management framework, objectives, strategies, policy framework, risk appetite and tolerance limits for key risk types, and the overall risk management approach of the Bank are discussed in the section on “Risk Governance and Management ”.
Disclosure 15
Risk management related to key risk exposures
The quantitative disclosures relating to key risk areas such as credit, market, liquidity, operational, and interest rate risk in the banking book are presented and discussed in the Section on “Risk Governance and Management ” and in Note 67 of the Financial Statements on Financial Risk Review.
D-SIB Assessment Exercise
(As per the CBSL Direction No. 10 of 2019)
GROUP |
||
2021 Rs. ’000 |
2020
Rs. ’000 |
|
Size Indicator | ||
Section 1 – Total Exposures | ||
Total exposures measure |
|
2,375,340,709 |
Interconnectedness Indicators | ||
Section 2 – Intra-Financial System Assets | ||
a. Funds deposited with or lent to other financial institutions (including unused portion of committed lines extended) ( i + ii ) |
|
52,431,787 |
(i) Funds deposited |
|
41,433,076 |
(ii) Lending |
|
10,998,711 |
b. Holdings of securities issued by other financial institutions |
|
823,563 |
c. Net positive current exposure of securities financing transactions (SFTs) with other financial institutions |
|
2,798,298 |
d. Over-the-counter (OTC) derivatives with other financial institutions that have a net positive mark to market value |
|
3,894,131 |
Intra-financial system assets (a + b + c + d) |
|
59,947,779 |
Section 3 – Intra-Financial System Liabilities | ||
a. Funds deposited by or borrowed from other financial institutions (including unused portion of committed lines obtained) |
|
127,918,135 |
(i) Funds deposited |
|
15,482,943 |
(ii) Borrowings |
|
112,435,192 |
b. Net negative current exposure of securities financing transactions with other financial institutions |
|
(5) |
c. Over-the-counter derivatives with other financial institutions that have a net negative mark to market value |
|
2,486,482 |
Intra-financial system liabilities (a + b + c) |
|
130,404,612 |
Section 4 – Securities Outstanding | ||
Securities outstanding |
|
23,179,430 |
Substitutability/Financial Institution Infrastructure Indicators | ||
Section 5 – Payments made in the reporting year (excluding intragroup payments) | ||
Payments activity |
|
7,663,939,028 |
Section 6 – Assets Under Custody | ||
Assets under custody |
|
5,446,768 |
Section 7 – Underwritten Transactions in Debt and Equity Markets | ||
Underwriting activity |
– | – |
Section 8 – Trading Volume | ||
a. number of shares or securities |
|
5,531 |
b. value of the transactions |
|
171,971 |
Trading Volume (a+b) |
|
177,502 |
Complexity indicators | ||
Section 9 – Notional Amount of Over-the-Counter (OTC) Derivatives | ||
OTC derivatives |
|
307,412,791 |
Section 10 – Level 2 Assets | ||
Level 2 assets |
|
78,907,249 |
Section 11 – Trading and available for sale (AFS) securities | ||
a. debt instruments |
|
315,290,030 |
b. equity instruments |
|
292,069 |
c. derivatives |
|
2,636,717 |
Trading and available for sale (AFS) securities (a+b+c) |
|
318,218,816 |
Section 12 – Cross-Jurisdictional Liabilities | ||
Cross-jurisdictional liabilities (excluding derivatives and intragroup liabilities) |
|
174,819,921 |
Section 13 – Cross-Jurisdictional Claims | ||
Cross-jurisdictional claims (excluding derivatives and intragroup claims) |
|
58,931,898 |