Imagine that Hazim Islamic bank, has the following asset and financial details: Balance Sheet Items RM (million) Risk weightage BNM statutory reserve 20 0% Malaysian government securities (MGS) and treasury bills 60 0% Placement with discount houses 30 10% Amounts owed by banking institutions 50 20% House financing secured by first charge on residential property 120 50% Financing and advances provided to commercial customers 400 100% Off-balance sheet items RM (million) Credit Conversion Factor Risk weightage House financing sold to Cagamas with recourse 60 100% 50% Performance sukuk for commercial customers 20 50% 100% Letters of credit for commercial customers 70 20% 100% Capital RM (million) Paid up ordinary shares 30 Share premium 5 Retained profits 10 Subordinated term debt 14 Revaluation reserve 4 General provision for bad debts and doubtful debts 6 (a) Compute the risk weighted capital adequacy ratio (RWCR). (b) Evaluate whether the bank has fulfilled the capital adequacy requirement.
QUESTION
Imagine that Hazim Islamic bank, has the following asset and financial details:
Balance Sheet Items |
RM (million) |
Risk weightage |
BNM statutory reserve |
20 |
0% |
Malaysian government securities (MGS) and treasury bills |
60 |
0% |
Placement with discount houses |
30 |
10% |
Amounts owed by banking institutions |
50 |
20% |
House financing secured by first charge on residential property |
120 |
50% |
Financing and advances provided to commercial customers |
400 |
100% |
Off-balance sheet items |
RM (million) |
Credit Conversion Factor |
Risk weightage |
House financing sold to Cagamas with recourse |
60 |
100% |
50% |
Performance sukuk for commercial customers |
20 |
50% |
100% |
Letters of credit for commercial customers |
70 |
20% |
100% |
Capital |
RM (million) |
Paid up ordinary shares |
30 |
Share premium |
5 |
Retained profits |
10 |
Subordinated term debt |
14 |
Revaluation reserve |
4 |
General provision for |
6 |
(a) Compute the risk weighted capital adequacy ratio (RWCR).
(b) Evaluate whether the bank has fulfilled the capital adequacy requirement.
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