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37. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
Capital management
Capital policy
The overall objective of capital management is to maintain a strong capital position in order to provide opportunities for
business growth and able to provide cushion for any potential losses. In line with this objective, the Group and the Bank view
capital position as an important key barometer of financial health.
In order to support its mandated roles, the Group and the Bank must have strong and adequate capital to support its business
activities on an on-going basis. In lieu to this, Bank Negara Malaysia has imposed several regulatory capital requirements
whereby, the Bank must have an absolute minimum capital of RM300,000,000 and a minimum Risk Weighted Capital Ratio
(“RWCR”) of 8% at all times. The minimum capital funds refer to paid-up capital and reserves as defined in Section 3 of
Development Financial Institution Act 2002.
In order to further strengthen the capital position of the Group and the Bank through a progressive and systematic building
up of the reserve fund, the Group and the Bank are required to maintain a reserve fund and transfer a certain percentage of
its net profits to the reserve fund once the RWCR falls below the threshold of 16%.
Regulatory capital
The following table set forth capital resources and capital adequacy for the Bank as at 31 December:
2013
2012
RM’000
RM’000
Ordinary share capital
2,708,665
2,708,665
Retained profit
117,593
7,747
Current year profit
144,721
123,770
Eligible Tier 1 capital
2,970,979
2,840,182
Collective allowance on loans, advances and financing*
114,895
83,596
Provision for guarantee and claims
8,034
5,954
Eligible Tier 2 capital
122,929
89,550
Investment in subsidiaries
(64,154)
(64,161)
Total capital base
3,029,754
2,865,571
Risk weighted assets
8,421,544
6,874,076
Risk weighted capital ratio
36.0%
41.7%
Tier 1 Capital Ratio
– With proposed dividend
35.0%
41.1%
– Without proposed dividend
35.3%
41.3%
* The eligible amounts for Tier II Capital is only limited to the excess of total collective allowances over the identifiable
incurred losses in the collective allowance pool.
EXIM Bank Annual Report 2013
159