Burgan Bank K P S C : Capital & Leverage Disclosure Q2 2022

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Basel III - Capital and Leverage Disclosures

30 June 2022

BURGAN BANK K.P.S.C.

BASEL III - CAPITAL AND LEVERAGE DISCLOSURES

ADDITIONAL CAPITAL DISCLOSURE REQUIREMENTS

1. Common Disclosure Template - Composition of Regulatory Capital

		All amounts are in KD 000's
Common Equity Tier 1 capital: instruments and reserves
1	Directly issued qualifying common share capital plus related stock surplus	611,583
2	Retained earnings	123,037
3	Accumulated other comprehensive income (and other reserves)	(14,105)

4 Directly issued capital subject to phase out from CET1 (only applicable to non-joint stock companies)

5	Common share capital issued by subsidiaries and held by third parties (minority interest)	10,154
6	Common Equity Tier 1 capital before regulatory adjustments	730,669
Common Equity Tier 1 capital: regulatory adjustments
7	Prudential valuation adjustments
8	Goodwill (net of related tax liability)	8,774
9	Other intangibles other than mortgage-servicing rights (net of related tax liability)	9,640

10 Deferred tax assets excluding those arising from temporary differences (net of related tax liability)

11 Cash flow hedge reserve

17,148

1. Shortfall of provisions to expected losses (based on Internal Models Approach, if applied)
2. Securitisation gain on sale
3. Gains and losses due to changes in own credit risk on fair valued liabilities
4. Defined benefit pension fund net assets

16 Investments in own shares (if not already netted off paid-in capital on reported balance sheet)

1,742

1. Reciprocal cross holdings in common equity of banks, Fis and insurance entities
2. Investments in the capital of banking, financial and insurance entities that are outside the scope

of regulatory consolidation, net of eligible short positions , where the bank does not own more	-
than 10% of the issued capital (amount above 10% threshold of bank's CET1 capital)

1. Significant investments in the common stock of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions (amount above 10% threshold)
2. Mortgage servicing rights (amount above 10% threshold of bank's CET1 capital)
3. Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability)
4. Amount exceeding the 15% threshold
5. of which: significant investments in the common stock of financials
6. of which: mortgage servicing rights
7. of which: deferred tax assets arising from temporary differences
8. National specific regulatory adjustments
9. Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions

	28	Total regulatory adjustments to Common Equity Tier 1	37,304
29	Common Equity Tier 1 capital (CET1)	693,365
	Additional Tier 1 capital: instruments
	30	Directly issued qualifying Additional Tier 1 instruments plus related stock surplus	153,350
	31	of which: classified as equity under applicable accounting standards	153,350
32	of which: classified as liabilities under applicable accounting standards
33	Directly issued capital instruments subject to phase out from Additional Tier 1
34	Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by	1,701
		subsidiaries and held by third parties (amount allowed in group AT1)
		31

BURGAN BANK K.P.S.C.

BASEL III - CAPITAL AND LEVERAGE DISCLOSURES

35	of which: instruments issued by subsidiaries subject to phase out
36	Additional Tier 1 capital before regulatory adjustments	155,051

Additional Tier 1 capital: regulatory adjustments

1. Investments in own Additional Tier 1 instruments
2. Reciprocal cross holdings in Additional Tier 1 instruments
3. Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions , where the bank does not own more than 10% of the issued capital (amount above 10% threshold of bank's CET1 capital)
4. Significant investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions
5. National specific regulatory adjustments
6. Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions
7. Total regulatory adjustments to Additional Tier 1 capital

44	Additional Tier 1 capital (AT1)	155,051
45	Tier 1 capital (T1 = CET1 + AT1)	848,416
Tier 2 capital: instruments and provisions
46	Directly issued qualifying Tier 2 instruments plus related stock surplus	153,350
47	Directly issued capital instruments subject to phase out from Tier 2
48	Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5 or 34) issued by	2,309
	subsidiaries and held by third parties (amount allowed in group Tier 2)
49	of which: instruments issued by subsidiaries subject to phase out
50	General provisions included in Tier 2 capital	74,174
51	Tier 2 capital before regulatory adjustments	229,833

Tier 2 capital: regulatory adjustments

1. Investments in own Tier 2 instruments
2. Reciprocal cross holdings in Tier 2 instruments
3. Investments in the capital of banking, financial and insurance entities that are outside the scope

of regulatory consolidation, net of eligible short positions , where the bank does not own more	-
than 10% of the issued capital (amount above 10% threshold of bank's CET1 capital)

1. Significant investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions
2. National specific regulatory adjustments

	57	Total regulatory adjustments to Tier 2 capital	-
	58	Tier 2 capital (T2)	229,833
	59	Total capital (TC = T1 + T2)	1,078,249
60	Total risk-weighted assets	6,260,316
		Capital ratios and buffers
61	Common Equity Tier 1 (as percentage of risk-weighted assets)	11.1%
62	Tier 1 (as percentage of risk-weighted assets)	13.6%
	63	Total capital (as percentage of risk-weighted assets)	17.2%
64	Institution specific buffer requirement (minimum CET1 requirement plus capital conservation
		buffer plus countercyclical buffer requirements plus D-SIB buffer requirement, expressed as a	9.0%
		percentage of risk-weighted assets)
65	of which: capital conservation buffer requirement	1.0%
66	of which: bank specific countercyclical buffer requirement	-
67	of which: DSIB buffer requirement	1.0%
68	Common Equity Tier 1 available to meet buffers (as percentage of risk-weighted assets)	4.1%
		National minima
	69	Kuwait Common Equity Tier 1 minimum ratio	8.0%
	70	National Tier 1 minimum ratio	9.5%
71	National total capital minimum ratio excluding CCY and DSIB buffers	11.5%
		32

BURGAN BANK K.P.S.C.

BASEL III - CAPITAL AND LEVERAGE DISCLOSURES

Amounts below the thresholds for deduction (before risk weighting)

72	Non-significant investments in the capital of other financials	68,086
73	Significant investments in the common stock of financials	4,311
74	Mortgage servicing rights (net of related tax liability)	-
75	Deferred tax assets arising from temporary differences (net of related tax liability)	2,780
Applicable caps on the inclusion of allowances in Tier 2
76	Provision eligible for inclusion in Tier 2 in respect of exposures subject to standardised approach	182,184
	(prior to application of cap)
77	Cap on inclusion of allowances in Tier 2 under standardised approach	74,174

1. Provision eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap)
2. Cap on inclusion of allowances in Tier 2 under internal ratings-based approach

33

BURGAN BANK K.P.S.C.

BASEL III - CAPITAL AND LEVERAGE DISCLOSURES

2. Reconciliation requirements

The basis for the scope of consolidation for accounting and regulatory purposes is consistent for the Group. In order to provide a full reconciliation of all regulatory capital elements to the balance sheet in the consolidated financial information, a three step approach has been mandated under the Pillar 3 disclosures section of the CBK Basel III framework.

Below table provides the comparison (Step1) of the balance sheet published in the consolidated financial information and the balance sheet under the regulatory scope of consolidation. Lines have been expanded and referenced with letters (Step 2) to display the relevant items of the regulatory capital.

Item

Assets

Cash and cash equivalents

Treasury bills and bonds with CBK and others

Due from banks and other financial institutions

Loans and advances to customers

of which General Provisions (netted above) capped for Tier 2 inclusion

Investment securities

of which goodwill in investment in associate

Other assets

Property and equipment

Intangible assets

of which goodwill

of which other intangibles

Disposal group held for sale

Total assets

Liabilities

Due to banks

Due to other financial institutions

Deposits from customers

Other borrowed funds

Directly issued qualifying Tier 2 instruments plus related stock surplus

Other liabilities

Liabilities directly associated with disposal group held for sale

Total liabilities

Equity

Share capital

Share premium

Treasury shares

				All amounts are in KD'000s
	Balance sheet as			Under regulatory
	in published
			scope of			Reference
	financial
			consolidation
	statements
	30-Jun-22		30-Jun-22
	1,010,202		1,010,202
	307,220	307,220
	351,315	351,315
	4,192,468		4,192,468
	74,174			74,174			a
	661,498	661,498
	771			771			b
	282,344	282,344
	157,645	157,645
	17,643	17,643
	8,003			8,003			c
	9,640			9,640			d
	6,980,335		6,980,335
	326,253	326,253
	7,306,588		7,306,588
	616,023	616,023
	457,356	457,356
	4,158,941		4,158,941
	631,524	631,524
	153,350			153,350			e
	236,097	236,097
	6,099,941		6,099,941
	268,528	268,528
	6,368,469		6,368,469
	328,781	328,781			f
	282,802	282,802			g
	(1,742)	(1,742)		h

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