BIMB Integrated Annual Report 2017

44. CAPITAL ADEQUACY (CONTINUED) 44.1 Bank Islam (continued) Capital Adequacy Ratios (continued) As a result, the minimum regulatory capital adequacy ratios requirement for CET I capital ratio, Tier I capital ratio and Total Capital ratio are 5.75%, 7.25% and 9.25% respectively for year 2017 (2016: 5.125%, 6.625% and 8.625%). The Bank has adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. The capital adequacy ratios of Bank Islam are set out below: 2017 2016 % % Common Equity Tier I (“CET I”) Capital Ratio 12.729 12.397 Total Capital Ratio 16.435 15.518 The components of CET I, Tier I and Tier II capital of Bank Islam: 2017 2016 RM’000 RM’000 Tier I capital Paid-up share capital 2,869,498 2,404,384 Share premium – 264,790 Retained earnings 2,150,402 523,247 Other reserves* (124,841) 1,193,045 Less: Deferred tax assets (37,288) (48,378) Total CET I and Tier I Capital 4,857,771 4,337,088 Sukuk Murabahah 1,000,000 700,000 Collective assessment allowance^ 414,193 391,782 Total Tier II Capital 1,414,193 1,091,782 Total Capital 6,271,964 5,428,870 * Other reserves exclude regulatory reserve amounting to RM64,645,000 (2016: RM Nil) ^ Collective assessment allowance on non-impaired financing subject to maximum of 1.25% of total credit risk-weighted assets less credit risk absorbed by unrestricted investment accounts. The breakdown of risk-weighted assets by each major risk category is as follows: 2017 2016 RM’000 RM’000 Credit risk 37,442,256 33,908,778 Less: Credit risk absorbed by unrestricted investment accounts (3,034,004) (2,566,180) Market risk 602,089 609,931 Operational risk 3,152,951 3,031,801 38,163,292 34,984,330 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 249 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis