NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2023 265 OUR SUSTAINABILITY APPROACH HOW WE ARE GOVERNED FINANCIAL STATEMENTS SHAREHOLDERS’ INFORMATION ADDITIONAL INFORMATION 48. CAPITAL MANAGEMENT AND CAPITAL ADEQUACY (CONT’D.) Capital adequacy (cont’d.) (i) Components of Tier 1 and Tier 2 capital (cont’d.): ^ Refers to loss allowances measured at an amount equal to 12-month and lifetime expected credit losses and regulatory reserve, to the extent they are ascribed to non-credit impaired exposures, determined under Standardised Approach for credit risk. * The portion of regulatory adjustments not deducted from Tier 2 (as the Group and the Bank do not have enough Tier 2 to satisfy the deduction) is deducted from the next higher level of capital; as per paragraph 31.1 of the BNM’s Capital Adequacy Framework (Capital Components). Breakdown of risk weighted assets in the various categories of risks are as follows: 2023 2022 Notional RM’000 Risk- weighted RM’000 Notional RM’000 Risk- weighted RM’000 Group Credit risk 5,444,902 1,390,445 5,031,093 1,437,747 Market risk - 216,865 - 142,514 Operational risk - 887,613 - 894,847 Large exposure risk - 13,108 - 13,108 Total Risk Weighted Assets 5,444,902 2,508,031 5,031,093 2,488,216 Bank Credit risk 4,962,905 1,376,948 4,450,896 1,403,888 Market risk - 215,327 - 141,026 Operational risk - 569,376 - 628,776 Large exposure risk - 13,108 - 13,108 Total Risk Weighted Assets 4,962,905 2,174,759 4,450,896 2,186,798 (ii) Transitional arrangements for regulatory capital treatment of accounting provisions The Bank has elected to apply the transitional arrangements for regulatory capital treatment of accounting provisions for four financial years beginning on 1 January 2020 and apply the transitional arrangements with 31 December 2020 as the first reporting period.
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