Maybank’s Capital Position

MAybank’s capital position:

Capital, in its simplest form, represents the portion of the value of a bank’s assets that is not legally required to be repaid to anyone. In more complicated forms, it can include portions of the value that do have to be repaid but only far in the future. (Elliott, A Primer on Bank Capital, 2010) Capital is usually represented by the equity’s shareholders.

(Malayan Banking Berhad, 2002-2011)

From the chart above, we can see the capital of Maybank is gradually increases from 2002 until 2007. The 2007-2009 international financial risk is just slightly affect the capital of Maybank in 2008 and then the capital continues to grow greatly until 2011.

On the other hand, capital position of Maybank can be indicated by capital adequacy ratio.Capital adequacy ratio is used to protect depositors and promote the stability of financial system.

Capitaladequacyratio | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 |

Core capital ratio | 10.87 | 10.92 | 10.86 | 9.81 | 9.0 | 9.13 | 11.06 | 14.06 | 13.78-14.91 | 14.73-15.68 |

Risk-weightedcapitalratio | 14.51 | 14.40 | 14.07 | 12.84 | 11.9 | 13.42 | 12.30 | 14.06 | 13.78-14.91 | 14.73-15.68 |

(Malayan Banking Berhad, 2002-2011)

The Basel Committee on Banking Supervision has implemented the Basel Accord that established capital requirements. These requirements are to ensure that the financial institutions are not participating or holding investments that increase the default risk and to sustain operating losses while still honouring withdrawals. It states that banks have to hold at least 8 per cent of their risk-weighted assets. Besides, Bank Negara Malaysia also required at least 7 per cent of core equity ratio.

From the table above, it is clear that the Maybank’s core capital ratios and risk-weighted capital ratios of past 10 years are all above the regulatory requirements. It indicates that the capital position of Maybank is remain strong . However, the core...