PILLAR 3 DISCLOSURES
For the year ended 31 December, 2021
The National Bank of Ras Al-Khaimah (P.S.C.)
1. Introduction
On 12th November 2020, the Central Bank of UAE published final Capital Adequacy Standards and Guidance along with Notice 4980/2020. This included revised Standards and Guidance with respect to Pillar 3 - Market Disclosures. Further to this, the Central Bank of UAE provided explanatory notes and disclosure templates for Pillar 3 on 30th November 2021 as part of Notice 5508/2021. The Standards prescribed the effective date of these disclosures to be 31st December 2021 and quarterly thereon.
The Bank has a formal disclosure policy in place which highlights the roles and responsibilities of the management and Board of Directors with respect to internal controls and procedures for information reported under Pillar 3 disclosures.
The scope of consolidation for Pillar 3 disclosures is different compared to the scope of consolidation for financial reporting. Under the scope of regulatory consolidation, all subsidiaries of the Bank are consolidated with the exception of Ras Al Khaimah National Insurance Company PSC. All sections of the following document have been prepared under the scope of regulatory consolidation unless specifically mentioned.
2. Overview of risk management, key prudential metrics and RWA
Amounts in AED'000 | a | b | ||||||
31 Dec'21 | 30 Sep'21 | |||||||
Available capital (amounts) | ||||||||
1 | Common Equity Tier 1 (CET1) | 7,889,152 | 8,145,217 | |||||
1a | Fully loaded ECL accounting model | 7,889,152 | 8,060,377 | |||||
2 | Tier 1 | 7,889,152 | 8,145,217 | |||||
2a | Fully loaded ECL accounting model | 7,889,152 | 8,060,377 | |||||
Tier 1 | ||||||||
3 | Total capital | 8,434,886 | 8,682,434 | |||||
3a | Fully loaded ECL accounting model | 8,434,886 | 8,596,534 | |||||
total capital | ||||||||
Risk-weighted assets (amounts) | ||||||||
4 | Total risk-weighted assets (RWA) | 49,523,321 | 48,854,950 | |||||
Risk-based capital ratios as a percentage of RWA | ||||||||
5 | Common Equity Tier 1 ratio (%) | 15.9% | 16.7% | |||||
5a | Fully loaded ECL accounting model | 15.9% | 16.5% | |||||
CET1 (%) | ||||||||
6 | Tier 1 ratio (%) | 15.9% | 16.7% | |||||
6a | Fully loaded ECL accounting model | 15.9% | 16.5% | |||||
Tier 1 ratio (%) | ||||||||
7 | Total capital ratio (%) | 17.0% | 17.8% | |||||
7a | Fully loaded ECL accounting model | 17.0% | 17.6% | |||||
total capital ratio (%) | ||||||||
Additional CET1 buffer requirements as a percentage of RWA | ||||||||
8 | Capital conservation buffer | 2.5% | 2.5% | |||||
requirement (2.5% from 2019) (%) | ||||||||
9 | Countercyclical buffer requirement | 0.0% | 0.0% | |||||
(%) | ||||||||
10 | Bank D-SIB additional requirements | 0.0% | 0.0% | |||||
(%) | ||||||||
11 | Total of bank CET1 specific buffer | 2.5% | 2.5% | |||||
requirements (%) | ||||||||
c | d | e | |
30 Jun'21 | 31 Mar'21 | 31 Dec'20 | |
7,954,695 | 7,787,899 | 7,678,712 | |
7,816,080 | 7,598,041 | 7,479,512 | |
7,954,695 | 7,787,899 | 7,678,712 | |
7,816,080 | 7,598,041 | 7,479,512 | |
8,490,887 | 8,301,074 | 8,170,892 | |
8,350,540 | 8,108,843 | 7,969,202 | |
47,731,422 | 45,941,944 | 43,869,813 | |
16.7% | 17.0% | 17.5% | |
16.4% | 16.6% | 17.1% | |
16.7% | 17.0% | 17.5% | |
16.4% | 16.6% | 17.1% | |
17.8% | 18.1% | 18.6% | |
17.5% | 17.7% | 18.2% | |
2.5% | 2.5% | 2.5% | |
0.0% | 0.0% | 0.0% | |
0.0% | 0.0% | 0.0% | |
2.5% | 2.5% | 2.5% |
The National Bank of Ras Al-Khaimah (P.S.C.) | 2
CET1 available after meeting the | |||||||||||||
12 | bank's minimum capital | 6.5% | 7.3% | 7.3% | 7.6% | 8.1% | |||||||
requirements (%) | |||||||||||||
Leverage Ratio* | |||||||||||||
13 | Total leverage ratio measure | 62,970,840 | |||||||||||
14 | Leverage ratio (%) | 12.5% | |||||||||||
14a | Fully loaded ECL accounting model | 12.5% | |||||||||||
leverage ratio (%) | |||||||||||||
Leverage ratio (%) (excluding the | |||||||||||||
14b | impact of any | 12.5% | |||||||||||
applicable temporary exemption of | |||||||||||||
central bank reserves) | |||||||||||||
Liquidity Coverage Ratio | |||||||||||||
15 | Total HQLA | ||||||||||||
16 | Total net cash outflow | ||||||||||||
17 | LCR ratio (%) | ||||||||||||
Net Stable Funding Ratio | |||||||||||||
18 | Total available stable funding | ||||||||||||
19 | Total required stable funding | ||||||||||||
20 | NSFR ratio (%) | ||||||||||||
ELAR | |||||||||||||
21 | Total HQLA | 5,476,267 | 4,750,558 | 4,404,492 | 4,701,854 | 6,426,291 | |||||||
22 | Total liabilities | 47,259,762 | 45,720,359 | 45,749,164 | 44,737,329 | 44,345,236 | |||||||
23 | Eligible Liquid Assets Ratio (ELAR) | 11.6% | 10.4% | 9.6% | 10.5% | 14.5% | |||||||
(%) | |||||||||||||
ASRR | |||||||||||||
24 | Total available stable funding | 45,269,869 44,292,196 43,698,781 43,373,569 43,301,738 | |||||||||||
25 | Total Advances | 37,508,892 | 37,147,070 | 36,572,054 | 37,079,158 | 34,927,178 | |||||||
26 | Advances to Stable Resources Ratio | 82.9 | 83.9 | 83.7 | 85.5 | 80.7 | |||||||
(%) | |||||||||||||
*Leverage Ratio went live starting 31st December 2021 and hence, columns for previous periods have been left blank
The National Bank of Ras Al-Khaimah (P.S.C.) | 3
The Bank's Risk Management strategy is intrinsically interlinked with Bank's business strategy, i.e. Bank's risk appetite and its business strategy co-exist to achieve and enhance shareholder value. The Enterprise-wide Risk Management (ERM) structure of the Bank incorporates the effective participation of the Board and Senior Management at different levels to provide oversight functions and ensures the creation and sustenance of a proper risk management environment. The Bank's philosophy is to proactively manage risks to ensure that risk-taking activities are commensurate with its size and complexity of operations.
The Bank ensures considerable due diligence on risk monitoring to ensure on-going compliance with the approved risk limits. The Bank has an effective structure in place for reporting to relevant committees and management bodies, including the Board on development of risks, liquidity, credit portfolio and details on the non-performing loans among others. The Bank's Enterprise Risk Management Policy provides in details the Risk Governance Framework of the Bank. Below is an overview of the Framework:
RISK FRAMEWORK
Lines of Defense | A three line of defense mechanism for managing risk is followed in the bank | |
1. First Line - Is the business unit responsible for maintaining internal controls for their | ||
processes. | ||
2. Risk Management/Compliance: The teams function as independent monitoring | ||
units for the business units. | ||
3. Internal Audit: Reviews first and second line of defense and provides assurance to | ||
the management and Board of Directors. | ||
Board Responsibility | Board is responsible for providing oversight on the effective management of the | |
Bank's overall risk. While recognizing the risks to which the Bank is exposed, they | ||
provide the required human resources, environment, practices and systems to | ||
address such risks. | ||
Management Committees | Specific risks are covered by specific management committees of the bank like ALCO | |
is responsible for Asset Liability Management, Interest Rate, and Liquidity. | ||
Policies and Procedures | The Risk Management Department has policies like Enterprise Risk Management | |
Framework, Market Risk Policy, Credit Risk Policies, Information Security Policy, | ||
Operational Risk Policy enabling definition of the roles, responsibilities and operating | ||
procedures for Risk Management. | ||
Risk Appetite | Board Risk Committee approved Risk Appetite statement specifies category-wise risk | |
limits/thresholds, which serves as an overall encompassing document for Risk | ||
Management | ||
RISK MITIGATION | ||
Monitoring | Risk monitoring is done by establishment of Risk limits and monitoring the utilisation | |
to ensure compliance and remedial action in case of breach. Limits are set for each | ||
type of risk and monitored on a daily, monthly, quarterly basis and annual basis | ||
Reporting | Reporting of the risk triggers is done at Board, CEO, Management and Department | |
head level. Reporting is ensured through information shared at regular intervals or on | ||
need basis with Board and Management committees. | ||
Mitigation | Risk mitigation is ensured through management triggers, risk appetite triggers , early | |
warning indicators, contingency funding plans, forward looking estimates and other | ||
remedial measures |
The National Bank of Ras Al-Khaimah (P.S.C.) | 4
The Bank's risk governance is built upon the premise that each business line is responsible for monitoring the risks inherent in its business activities, which is augmented by the oversight provided by the Board and its relevant committees. The Bank operates in accordance with the statutory requirements and is committed to adopting and complying with good corporate governance practices.
The organizational chart is as below.
Board of Directors regularly review the Bank's financial performance as well as the performance of the individual areas. The Board agenda typically includes:
- Strategy and risk management, market trends and developments and new business opportunities
- Implication of developments in international sanctions, compliance and central bank regulations
- Enhancements in governance structure and practices
The National Bank of Ras Al-Khaimah (P.S.C.) | 5
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RAKBANK - National Bank of Ras Al-Khaimah PSC published this content on 15 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 February 2022 14:36:07 UTC.