KENANGA ANNUAL REPORT 2020

248 5 1 2 3 4 6 7 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 December 2020 47. CAPITAL MANAGEMENT AND CAPITAL ADEQUACY (CONT’D.) Capital adequacy (cont’d.) (i) Components of Tier 1 and Tier 2 capital (cont’d.): Breakdown of risk weighted assets in the various categories of risks are as follows: 2020 2019 Notional RM’000 Risk- weighted RM’000 Notional RM’000 Risk- weighted RM’000 Group Credit risk 5,615,290 1,492,582 5,116,298 1,340,143 Market risk - 646,327 - 219,406 Operational risk - 704,075 - 604,853 Large exposure risk - 2,250 - 62,367 Total Risk Weighted Assets 5,615,290 2,845,234 5,116,298 2,226,769 Bank Credit risk 5,306,982 1,496,190 4,919,418 1,372,091 Market risk - 632,053 - 204,614 Operational risk - 535,355 - 473,201 Large exposure risk - 2,250 - 62,367 Total Risk Weighted Assets 5,306,982 2,665,848 4,919,418 2,112,273 (ii) Transitional arrangements for regulatory capital treatment of accounting provisions The Bank has elected to apply the transitional arrangements for regulatory capital treatment of accounting provisions for four financial years beginning on 1 January 2020 and apply the transitional arrangements with 31 December 2020 as the first reporting period. Under the transitional arrangements, the Bank is allowed to add back the amount of loss allowance measured at an amount equal to 12-month and lifetime expected credit losses to the extent they are ascribed to non-credit-impaired exposures (“Stage 1 and Stage 2 provisions”) to CET1 Capital.