263 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2022 KENANGA INVESTMENT BANK BERHAD Annual Report 2022 47. CAPITAL MANAGEMENT AND CAPITAL ADEQUACY (CONT’D.) Capital adequacy (cont’d.) (i) Components of Tier 1 and Tier 2 capital (cont’d.): The capital adequacy ratios of the Group and of the Bank are as follows (cont’d.): Group Bank 2022 RM’000 2021 RM’000 2022 RM’000 2021 RM’000 CET 1 capital/Tier 1 capital Paid-up share capital 253,834 253,834 253,834 253,834 Retained profits 655,907 673,097 597,058 624,353 Other reserves 121,077 136,462 166,427 176,227 Less: Goodwill (241,027) (241,277) (252,909) (252,909) 55% of cumulative gains on financial investments at FVOCI - (3,625) - (349) Deferred tax assets (25,184) (30,605) (12,966) (15,219) Other intangibles (88,192) (89,784) (78,223) (79,077) Regulatory reserve (17,192) (18,921) (17,192) (18,921) Treasury shares (13,538) (13,064) (13,538) (13,064) Other CET 1 regulatory adjustments specified by BNM 1,510 1,765 1,020 944 Investment in ordinary shares of unconsolidated financial entities (126,252) (119,140) (170,596) (169,047) Total CET 1/Tier 1 capital 520,943 548,742 472,915 506,772 Tier 2 Capital Subordinated obligations capital 180,500 185,500 180,500 185,500 General provisions ^ 17,972 16,986 17,549 16,321 Total Tier 2 capital 198,472 202,486 198,049 201,821 Total Capital 719,415 751,228 670,964 708,593 ^ Refers to loss allowances measured at an amount to 12-month and lifetime expected credit losses and regulatory reserve, to the extent they are ascribed to non-credit impaired exposures, determined under Standardised Approach for credit risk. * The portion of regulatory adjustments not deducted from Tier 2 (as the Group and the Bank do not have enough Tier 2 to satisfy the deduction) is deducted from the next higher level of capital; as per paragraph 31.1 of the BNM’s Capital Adequacy Framework (Capital Components).
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