The Bank’s capital adequacy ratio is computed based on Basel II - Pillar I requirements. The composition of capital and risk weights assigned to the on and off balance sheet assets, are as prescribed by the Central Bank of Sri Lanka.
The Tier I capital of the Bank consists of the stated capital, retained earnings and other reserves after deducting intangible assets, 50% of the investments in unconsolidated banking and financial subsidiaries and 50% investments in capital of other banks and financial institutions.
The Tier II capital of the Bank includes CBSL approved subordinated term debts, approved revaluation reserve and the general loan loss provision after deducting 50% of the investments in unconsolidated banking and financial subsidiaries and 50% investments in capital of other banks and financial institutions.
In arriving at the Risk-Weighted Assets (RWA) of the Bank, the Standardized Approach for credit risk, Standardized Measurement Method for market risk and the Basic Indicator Approach for operational risk have been used.
| BANK | ||
| Capital Base as at 31 December | 2015 LKR ’000 |
2014 LKR ’000 |
| Tier I: Core Capital | ||
| Capital | 1,242,772 | 1,225,162 |
| Statutory reserve fund | 1,242,772 | 1,010,785 |
| Published retained profits | 13,706,561 | 12,974,648 |
| General and other reserves | 5,820,297 | 5,825,950 |
| Total equity considered for Tier I Capital | 22,012,402 | 21,036,545 |
| Deductions – Tier I | ||
| Intangible assets | 240,234 | 253,132 |
| 50% investments in unconsolidated banking and financial subsidiaries | 937,984 | 886,070 |
| 50% investments in capital of other banks and financial institutions | 815,997 | 9,263 |
| 1,994,215 | 1,148,465 | |
| Eligible Tier I Capital | 20,018,187 | 19,888,080 |
| Tier II: Supplementary Capital | ||
| General loan loss provision | 830,100 | 786,362 |
| Approved revaluation reserve | 542,092 | 542,092 |
| Approved subordinated term debts | 9,977,543 | 8,610,732 |
| 11,349,735 | 9,939,186 | |
| Deductions – Tier II | ||
| 50% investments in unconsolidated banking and financial subsidiaries | 937,984 | 886,070 |
| 50% investments in capital of other banks and financial institutions | 815,997 | 9,263 |
| 1,753,981 | 895,333 | |
| Eligible Tier II Capital | 9,595,754 | 9,043,853 |
| Capital Base (Tier I + Tier II) | 29,613,941 | 28,931,933 |
| BANK | |||||
| Assets for Credit Risk | Risk Weights | Risk-Weighted Assets | |||
| 2015 LKR ’000 |
2014 LKR ’000 |
% |
2015 LKR ’000 |
2014 LKR ’000 |
|
| Risk-Weighted Assets and Off Balance Sheet Exposure | |||||
| Cash and claims on Central Government and Central Bank of Sri Lanka | 35,798,265 | 57,012,321 | 0 - 20 | 8,092 | – |
| Claims secured by cash deposits, gold and guarantees | 20,280,019 | 16,178,539 | 0 | – | – |
| Claims on banks | 15,648,215 | 8,103,229 | 20 - 100 | 5,195,269 | 3,235,305 |
| Claims on financial institutions | 25,705,335 | 9,210,855 | 50 - 100 | 14,863,928 | 5,223,618 |
| Loans secured by residential property | 9,055,452 | 7,047,969 | 50 | 4,527,726 | 3,523,984 |
| Past due loans | 2,146,571 | 2,236,918 | 50 - 150 | 2,328,523 | 3,071,530 |
| Retail claims and corporate claims | 189,008,802 | 162,166,523 | 20 - 150 | 175,243,262 | 151,514,624 |
| Property, plant and equipment | 2,030,002 | 1,927,494 | 100 | 2,030,002 | 1,927,494 |
| Other assets | 3,313,600 | 3,573,443 | 100 | 3,313,600 | 3,573,443 |
| Total Assets Considered for Credit Risk | 302,986,261 | 267,457,291 | 207,510,402 | 172,069,998 | |
| BANK | |||||
| Principal Amount of Off Balance Sheet Items |
Credit Conversion Factor |
Credit Equivalent of Off Balance Sheet Items |
|||
| 2015 LKR ’000 |
2014 LKR ’000 |
% |
2015 LKR ’000 |
2014 LKR ’000 |
|
| General guarantees of indebtedness | 13,247,956 | 11,215,680 | 100 | 13,247,956 | 11,215,680 |
| Standby letters of credit relating to particular transactions | 64,800 | 65,950 | 50 | 32,400 | 32,975 |
| Performance bonds and bid bonds | 8,614,302 | 6,503,688 | 50 | 4,307,151 | 3,251,844 |
| Trade related acceptances and advance documents endorsed | 8,584,926 | 8,014,553 | 20 | 1,716,985 | 1,602,911 |
| Shipping guarantees | 1,352,796 | 1,167,685 | 20 | 270,559 | 233,537 |
| Documentary letters of credit | 8,067,461 | 7,455,645 | 20 | 1,613,492 | 1,491,129 |
| Undrawn term loans | 6,803,723 | 10,120,524 | 0, 20 & 50 | 3,386,562 | 5,060,262 |
| Foreign exchange contracts | 81,168,189 | 97,569,796 | 2 ,5 & 8 | 2,336,935 | 2,673,123 |
| Undrawn overdrafts and credit lines | 14,836,720 | 10,745,652 | 0 | – | – |
| Other unutilized facilities | 89,009,483 | 73,070,852 | 0, 20 & 50 | 114,862 | 51,643 |
| Total Credit Equivalent of Off Balance Sheet Items | 231,750,356 | 225,930,025 | 27,026,902 | 25,613,104 | |
| BANK | ||
| 2015 LKR ’000 |
2014 LKR ’000 |
|
| Capital Charge for Market Risk | ||
| Capital charge for interest rate risk | 448,997 | 362,267 |
| Capital charge for equity securities and unit trusts | 503,478 | 450,602 |
| Capital charge for foreign exchange and gold | 63,668 | 146,740 |
| Total Capital Charge for Market Risk | 1,016,143 | 959,609 |
| Total Risk-Weighted Assets Equivalent for Market Risk | 10,161,436 | 9,596,087 |
| Capital Charge for Operational Risk | ||
| Gross Income: | ||
| Year 1 | 10,842,463 | 8,216,803 |
| Year 2 | 11,901,793 | 10,842,463 |
| Year 3 | 12,237,313 | 11,901,793 |
| Average gross income | 11,660,523 | 10,320,353 |
| Total Capital Charge for Operational Risk at 15% | 1,749,078 | 1,548,053 |
| Total Risk-Weighted Assets Equivalent for Operational Risk | 17,490,784 | 15,480,529 |
| Total Risk-Weighted Assets | 235,162,622 | 197,146,615 |
| Capital Adequacy Ratios | ||
| Tier I (Required statutory minimum ratio is 5%) | 8.51% | 10.09% |
| Tier I & Tier II (Required statutory minimum ratio is 10%) | 12.59% | 14.68% |
| Group | ||
| Capital Base as at 31 December | 2015 LKR ’000 |
2014 LKR ’000 |
| Tier I: Core Capital | ||
| Capital | 1,162,964 | 1,145,353 |
| Statutory reserve fund | 1,242,772 | 1,010,785 |
| Published retained profits | 19,213,211 | 18,585,817 |
| General and other reserves | 5,886,805 | 5,865,854 |
| Non-controlling interest | 1,011,046 | 920,752 |
| Total Equity Considered for Tier I Capital | 28,516,798 | 27,528,561 |
| Deductions – Tier I | ||
| Intangible assets | 274,747 | 297,070 |
| 50% investments in the capital of other banks and financial institutions | 1,087,623 | 279,762 |
| 1,362,370 | 576,832 | |
| Eligible Tier I Capital | 27,154,428 | 26,951,729 |
| Tier II: Supplementary Capital | ||
| General loan loss provision | 830,100 | 786,362 |
| Approved Revaluation Reserve | 542,092 | 542,092 |
| Approved subordinated term debt | 9,977,543 | 8,610,732 |
| 11,349,735 | 9,939,186 | |
| Deductions – Tier II | ||
| 50% investments in the capital of other banks and financial institutions | 1,087,623 | 279,762 |
| Eligible Tier II Capital | 10,262,112 | 9,659,424 |
| Capital Base (Tier I + Tier II) | 37,416,540 | 36,611,153 |
| Group | |||||
| Assets for Credit Risk | Risk Weights | Risk-Weighted Assets | |||
| 2015 LKR ’000 |
2014 LKR ’000 |
% |
2015 LKR ’000 |
2014 LKR ’000 |
|
| Risk-Weighted Assets and Off-Balance Sheet Exposure | |||||
| Cash and claims on Central Government and Central Bank of Sri Lanka | 35,798,378 | 57,012,415 | 0 - 20 | 8,092 | – |
| Claims secured by cash deposits, gold and guarantees | 20,280,019 | 16,178,539 | 0 | – | – |
| Claims on banks | 16,057,734 | 8,386,190 | 20 - 100 | 5,373,130 | 3,332,205 |
| Claims on financial institutions | 27,523,393 | 9,936,776 | 20 - 100 | 16,164,584 | 5,566,363 |
| Loans secured by Primary Mortgage | 9,055,452 | 7,047,969 | 50 | 4,527,726 | 3,523,984 |
| Past due loans | 2,146,571 | 2,236,918 | 50 - 150 | 2,328,523 | 3,071,530 |
| Retail claims and corporate claims | 189,654,725 | 163,634,509 | 20 - 150 | 175,373,279 | 152,755,397 |
| Property, plant & equipment | 4,126,881 | 3,798,342 | 100 | 4,126,881 | 3,798,342 |
| Other assets | 3,922,896 | 3,996,044 | 100 | 3,922,896 | 3,996,044 |
| Total Assets Considered for Credit Risk | 308,566,049 | 272,227,702 | 211,825,111 | 176,043,865 | |
| Group | |||||
| Principal Amount of Off Balance Sheet Items |
Credit Conversion Factor |
Credit Equivalent of Off Balance Sheet Items |
|||
| 2015 LKR ’000 |
2014 LKR ’000 |
% |
2015 LKR ’000 |
2014 LKR ’000 |
|
| General guarantees of indebtedness | 12,412,956 | 11,217,699 | 100 | 12,412,956 | 11,217,699 |
| Standby letters of credit relating to particular transactions | 64,800 | 65,950 | 50 | 32,400 | 32,975 |
| Performance bonds and bid bonds | 8,614,302 | 6,503,688 | 50 | 4,307,151 | 3,251,844 |
| Trade related acceptances and advance documents endorsed | 8,584,926 | 8,014,553 | 20 | 1,716,985 | 1,602,911 |
| Shipping guarantees | 1,352,796 | 1,167,685 | 20 | 270,559 | 233,537 |
| Documentary letters of credit | 8,067,461 | 7,455,645 | 20 | 1,613,492 | 1,491,129 |
| Undrawn term loans | 6,803,723 | 10,120,524 | 0, 20 & 50 | 3,386,562 | 5,060,262 |
| Foreign exchange contracts | 81,168,189 | 97,569,796 | 2 ,5 & 8 | 2,336,935 | 2,673,123 |
| Undrawn overdrafts and credit lines | 14,836,720 | 10,745,651 | 0 | – | – |
| Other unutilized facilities | 90,685,643 | 73,074,062 | 0, 20 & 50 | 952,942 | 53,248 |
| Total Credit Equivalent of Off-Balance Sheet items | 232,591,516 | 225,935,253 | 27,029,982 | 25,616,728 | |
| Group | ||
| Capital Base as at 31 December | 2015 LKR ’000 |
2014 LKR ’000 |
| Capital Charge for Market Risk | ||
| Capital charge for interest rate risk | 448,997 | 362,267 |
| Capital charge for equity securities and unit trusts | 899,542 | 1,009,140 |
| Capital charge for foreign exchange and gold | 63,668 | 146,740 |
| Total Capital Charge for Market Risk | 1,412,207 | 1,518,147 |
| Total Risk-Weighted Assets Equivalent for Market Risk | 14,122,076 | 15,181,466 |
| Capital Charge for Operational Risk | ||
| Gross Income: | ||
| Year 1 | 12,001,151 | 9,255,352 |
| Year 2 | 13,588,231 | 12,001,151 |
| Year 3 | 13,226,127 | 13,588,231 |
| Average gross income | 12,938,503 | 11,614,911 |
| Total Capital Charge for Operational Risk – 15% | 1,940,755 | 1,742,237 |
| Total Risk-Weighted Assets Equivalent for Operational Risk | 19,407,755 | 17,422,367 |
| Total Risk-Weighted Assets | 245,354,942 | 208,647,698 |
| Capital Adequacy Ratios | ||
| Tier I (Required statutory minimum ratio is 5%) | 11.07% | 12.92% |
| Tier I & Tier II (Required statutory minimum ratio is 10%) | 15.25% | 17.55% |