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.

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.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 23QTD

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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