ITHMAAR HOLDING B.S.C. ITHMAAR BANK B.S.C. (C)
Public Disclosures as at 30 June 2023
Ithmaar Bank B.S.C. (C)
Public Disclosures at 30 June 2023
INDEX | ||
S. No. | Description | Page No |
1 | Background | 3 |
2 | Basel III Framework | 3 |
3 | Capital management | 3 - 4 |
4 | Approaches adopted for determining regulatory capital requirements | 4 |
5 | Regulatory Capital components | 4 - 6 |
6 | Tier one capital ratios and Total capital ratios | 7 |
7 | Risk Management | 8 - 14 |
8 | Disclosure of the regulatory capital requirements for credit risk under | 15 |
standardized approach | ||
9 | Gross credit exposures | 16 |
10 | Geographical distribution of credit exposures | 17 |
11 | Industrial distribution of credit exposures | 18 |
12 | Maturity breakdown of credit exposures | 19 |
13 | Related-party balances under credit exposure | 20 |
14 | Past due and impaired financings and related provisions for impairment | 21 |
15 | Past due and impaired financings by geographical areas | 22 |
16 | Details of credit facilities outstanding that have been restructured during the | 22 |
period | ||
17 | Credit exposures which are covered by eligible financial collateral | 22 |
18 | Market Risk | 23 - 24 |
19 | Disclosure of regulatory capital requirements for market risk under the | 25 |
standardized approach | ||
20 | Currency risk | 25 |
21 | Equity positions in Banking book | 25 |
22 | Profit Rate Risk in the Banking Book | 26 |
23 | Operational Risk | 27 - 28 |
24 | Disclosure of regulatory capital requirements for operational risk under the | 29 |
basic indicator approach | ||
25 | Liquidity Risk | 29 - 31 |
26 | Legal contingencies and compliance | 32 |
27 | Displaced Commercial Risk | 32 |
28 | Gross income from Mudaraba and profit paid to Unrestricted Investment | 33 |
Accountholders (URIA) | ||
29 | Average declared rate of return on General Mudaraba deposits | 33 |
30 | Movement in Profit Equalization Reserve and Provisions - URIA | 34 |
31 | Performance ratios | 34 |
32 | Other disclosures | 34 |
Ithmaar Bank B.S.C. (C)
Public Disclosures at 30 June 2023
-
Background
The public disclosures under this section have been prepared in accordance with the Central Bank of Bahrain (CBB) requirements outlined in its Public Disclosure Module (PD), CBB Rule Book, Volume II for Islamic Banks. The disclosures in this report are in addition to the disclosures set out in Ithmaar Bank B.S.C (C)'s (Ithmaar Bank/Bank/Group) condensed consolidated interim financial information for the period ended 30 June 2022, presented in accordance with Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). - Basel III Framework
CBB has issued Basel III guidelines for the implementation of Basel III capital adequacy framework for Banks incorporated in the Kingdom of Bahrain.
The Basel III framework provides a risk based approach for calculation of regulatory capital. The Basel III framework is expected to strengthen the risk management practices across the financial institutions.
The Basel III framework is based on three pillars as follows:- - Pillar I: Minimum capital requirements including calculation of the capital adequacy ratio
- Pillar II: Supervisory review process which includes the Internal Capital Adequacy Assessment Process
- Pillar III: Market discipline which includes the disclosure of risk management and capital adequacy information.
-
Capital management
Ithmaar Bank's Internal Capital Adequacy Assessment Process (ICAAP) policy provides the required guidelines and methodologies to assess the Bank's capital requirements for Pillar 1 and Pillar 2 risks and thereby ensures that the Bank meets the capital requirements as mandated by the CBB in line with the Capital Adequacy (CA) module for Pillar 1 risks and the ICAAP Module for all pillar 2 risks. Capital management also ensures that shareholders' value is protected and enhanced.
The Bank adopts a Pillar I + Pillar II approach for capital estimation as recommended under CBB guidelines. Under this approach, the Bank calculates the Pillar I capital or minimum regulatory capital requirements in accordance to CBB's capital adequacy guidelines as prescribed in the CA module of the CBB rulebook. Secondly, additional capital or pillar II capital requirement is calculated separately based on an "add-on" approach, where the additional capital requirements are added onto the calculated Pillar I capital requirements, to arrive at the Bank's internal capital requirements as per CBB guidelines. To ensure that the business model is thoroughly examined and subject to sufficient analysis, ICAAP is supported with comprehensive Stress Testing in line with the Stress Testing Module of CBB rulebook.
A comprehensive risk assessment of the Business and Budget Plans is independently performed by the Risk Management Department (RMD), which among others, assesses the capital requirement of Ithmaar Bank supporting both current and future activities. Ithmaar Bank's capital position is monitored on a regular basis and reported to the Asset Liability Management Committee (ALCO), the Audit, Governance, Risk, Nomination and Remuneration Committee (AGRNRC) and the Board of Directors.
3
Ithmaar Bank B.S.C. (C)
Public Disclosures at 30 June 2023
(Expressed in thousands of Bahraini Dinars unless otherwise stated)
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Capital management (continued)Capital Adequacy Methodology:
As per the requirements of CBB's Basel III capital adequacy framework, the method for calculating the consolidated capital adequacy ratio for the Group is summarized as follows: - Line by line consolidation is performed for the risk exposures and eligible capital of all the Financial Institutions subsidiaries within the Group with the exception of the Bank's banking subsidiaries incorporated outside Kingdom of Bahrain which are operating under Basel III compliant jurisdictions, where full aggregation is performed of the risk weighted exposures and eligible capital as required under CA module of CBB rulebook.
- All significant investments in commercial entities are risk weighted if these are within 15% of the capital base at individual level and 60% at aggregate level. Any exposure over and above the threshold of 15% are risk weighted at 800%.
- All exposures exceeding the large exposure limit as per Credit Risk Management (CM) module of CBB rulebook are risk weighted at 800%.
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Approaches adopted for determining regulatory capital requirements
The approach adopted for determining regulatory capital requirements under CBB's Basel III guidelines is summarised as follows:
Credit Risk | Standardised approach |
Market Risk | Standardised approach |
Operational Risk | Basic Indicator approach |
5. Regulatory Capital components
Step 1: Disclosure of Balance Sheet under Regulatory scope of Consolidation
The Bank's subsidiaries (consolidated line by line for accounting purposes) have the following treatment for regulatory purposes
Principal | ||||||
Country of | business | Regulatory | ||||
Name | Total assets | Total Equity | Ownership | Incorporation | activity | Treatment |
Faysal Bank Limited | 1,652,719 | 100,906 | 67% | Pakistan | Banking | Aggregation |
Cayman | ||||||
Dilmunia Development Fund I L.P. | 65,390 | 56,975 | 92% | Islands | Real estate | Risk weight |
The reconciliation from published financial information to regulatory return is as follows:
Balance sheet as per published financial statements | 2,202,515 |
FAS 30 Transitional impact | 21,630 |
Modification loss & ECL transitional impact | 18,403 |
Aggregation | 29,784 |
Balance sheet as in Regulatory Return | 2,272,332 |
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Ithmaar Bank B.S.C. (C)
Public Disclosures at 30 June 2023
(Expressed in thousands of Bahraini Dinars unless otherwise stated)
5. Regulatory Capital components (continued)
Step 2: Reconciliation of published financial balance sheet to regulatory reporting as at 30 June 2023
As per published | ||
financial | As per Consolidated | |
Assets | statements | PIRI |
Cash and balances with banks and central banks | 151,744 | 151,744 |
Commodity and other placements with banks, financial | ||
and other institutions | 44,043 | 44,043 |
Murabaha and other financings | 594,000 | 594,000 |
Musharaka financing | 492,517 | 492,517 |
Sukuk and investment securities | 694,689 | 694,689 |
Investment in associates | 115 | 115 |
Assets acquired for leasing | 304 | 304 |
Other assets | 106,780 | 106,780 |
Investment in real estate | 3,946 | 3,946 |
Development Properties | 56,831 | 56,831 |
Fixed assets | 51,163 | 51,163 |
Intangible assets | 6,383 | 6,383 |
FAS 30 Transitional impact | - | 21,630 |
Modification loss & ECL transitional impact | - | 18,403 |
Aggregation | - | 29,784 |
Total Assets | 2,202,515 | 2,272,332 |
Liabilities & Unrestricted Investment Accounts (URIA) | ||
Unrestricted Investment Accounts | 893,370 | 893,370 |
Other liabilities | 1,232,322 | 1,232,322 |
Total Liabilities & URIA | 2,125,692 | 2,125,692 |
Non-controlling interests | 39,140 | 39,140 |
Owners' Equity | ||
Share capital | 100,000 | 100,000 |
Reserves | (53,699) | (53,699) |
of which eligible for CET1 | - | (37,097) |
Accumulated losses | (8,618) | (8,618) |
of which eligible for CET1 | - | (52,429) |
FAS 30 Transitional impact | - | 21,630 |
Modification loss & ECL transitional impact | - | 18,403 |
Aggregation | - | 29,784 |
Total Owners' Equity | 37,683 | 107,500 |
Total Liabilities + Owners' Equity | 2,202,515 | 2,272,332 |
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Ithmaar Holding BSC published this content on 31 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 August 2023 15:31:04 UTC.
