QUESTION TWO Table 1: Pillar 3 Disclosure: Capital Adequacy RAJHI BANK MALAYSIA. Group and Bank 31 Dec 2020 31 Dec 2019 Risk- Risk- Capital Capital Weighted Weighted Requirement Requirement Assets Assets RM000 RM000 RM000 RM000 Credit Risk Market Risk Operational Risk Total 5,011,660 156,534 360,862 5.529,056 400,934 12,523 28,869 442 326 5,161,016 173,339 368,432 5 702 786 412,881 13,867 29,475 456 223 2.2 Capital Adequacy Ratios and Capital Structure The following tables present the capital adequacy ratios and the capital structure of the Group and the Bank. As at 31 December 2020, the Group's and the Bank's Tier 1 and total capital adequacy ratios were higher than BNM's minimum requirements. Group 31 Dec 2020 31 Dec 2019 RM000 RM1000 Bank 31 Dec 2020 31 Dec 2019 RM000 RM000 Tier-1 capital Paid-up share capital Accumulated losses 1,000,000 (309,340) 690,660 (49,497) 641,163 1,000,000 (246,635) 753,365 (49,496) 703,869 1,000,000 (309,511) 690,489 (49,497) 640,992 1,000,000 (246,848) 753,152 (49,497) 703,655 Less: Deferred tax Total Tier-1 capital 62,646 54,899 Tier-2 capital Collective impairment for impairment loss on non- impaired financing Subordinated Sukuk Total Tier-2 capital Capital base 321,294 383,940 1,025,103 381,881 436,780 1,140,649 62,646 321,294 383,940 1,024,932 54,899 381,881 436,780 1,140,435 Source: Rajhi Bank Malaysia 2020 2 Based on Table 1 above, answer the following questions: (Note: Use data at Bank Level as of June 2021) a) Banking capital of Islamic and conventional banks are both exposed to business risk. Explain. (6 marks) b) What is the minimum capital base of Rajhi Bank? (3 marks) c) Find the actual risk weighted capital ratio (RWCR). (3 marks) d) How much gross profit can be generated from Rajhi Bank's capital buffer, assuming the financing rate and cost of funds is at 12% and 3% respectively, with risk-weight set at 70%? (6 marks) 3 QUESTION TWO Table 1: Pillar 3 Disclosure: Capital Adequacy RAJHI BANK MALAYSIA. Group and Bank 31 Dec 2020 31 Dec 2019 Risk- Risk- Capital Capital Weighted Weighted Requirement Requirement Assets Assets RM000 RM000 RM000 RM000 Credit Risk Market Risk Operational Risk Total 5,011,660 156,534 360,862 5.529,056 400,934 12,523 28,869 442 326 5,161,016 173,339 368,432 5 702 786 412,881 13,867 29,475 456 223 2.2 Capital Adequacy Ratios and Capital Structure The following tables present the capital adequacy ratios and the capital structure of the Group and the Bank. As at 31 December 2020, the Group's and the Bank's Tier 1 and total capital adequacy ratios were higher than BNM's minimum requirements. Group 31 Dec 2020 31 Dec 2019 RM000 RM1000 Bank 31 Dec 2020 31 Dec 2019 RM000 RM000 Tier-1 capital Paid-up share capital Accumulated losses 1,000,000 (309,340) 690,660 (49,497) 641,163 1,000,000 (246,635) 753,365 (49,496) 703,869 1,000,000 (309,511) 690,489 (49,497) 640,992 1,000,000 (246,848) 753,152 (49,497) 703,655 Less: Deferred tax Total Tier-1 capital 62,646 54,899 Tier-2 capital Collective impairment for impairment loss on non- impaired financing Subordinated Sukuk Total Tier-2 capital Capital base 321,294 383,940 1,025,103 381,881 436,780 1,140,649 62,646 321,294 383,940 1,024,932 54,899 381,881 436,780 1,140,435 Source: Rajhi Bank Malaysia 2020 2 Based on Table 1 above, answer the following questions: (Note: Use data at Bank Level as of June 2021) a) Banking capital of Islamic and conventional banks are both exposed to business risk. Explain. (6 marks) b) What is the minimum capital base of Rajhi Bank? (3 marks) c) Find the actual risk weighted capital ratio (RWCR). (3 marks) d) How much gross profit can be generated from Rajhi Bank's capital buffer, assuming the financing rate and cost of funds is at 12% and 3% respectively, with risk-weight set at 70%? (6 marks) 3