Completion Instructions on Capital to Risk Weighted Assets Return

Effective from 2020-11-09 - Nov 08 2020
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1.	Capital Components
1.1	Core Capital (Tier 1)
1.1.1	Paid-up Ordinary Share Capital
	This is the nominal value of the ordinary shares issued and fully paid.
1.1.2	Non-repayable Share Premium/ (discount)
	This is the difference between the nominal price and purchase price of shares, which is not refundable/ recoverable.
1.1.3	Retained Earnings/ Accumulated losses
	These are retained earnings or accumulated losses from the profits/losses of the prior years. They should however exclude reserves arising from revaluation of investment properties and cumulative unrealised gains and losses on financial instruments.
1.1.4	Current Year 50% Un-audited After Tax Profits
	This is 50% of the current year to date un-audited after tax profits. The DTFC must have made adequate provisions for loans and advances, depreciation, amortization and other expenses. In arriving at the applicable figure, any proposed or interim dividends have to be taken into account. This should however exclude reserves arising from revaluation of investment properties and cumulative unrealised gains and losses on financial instruments. In case of a loss, full amount should be included.
1.1.5	Capital Grants
	These are donations to be on lent to customers that are irredeemable or non-repayable.
1.1.6	Non-cumulative irredeemable preference shares
	These are shares, which have a standing claim on the company every year, but the claim is not carried forward in event of not being paid and they are not redeemable.
1.1.7	Other reserves
	These are all other reserves, which have not been included above. Such reserves should be permanent, unencumbered, uncallable and thus able to absorb losses. Further, the reserves should exclude cumulative unrealised gains and losses on available-for- saleinstruments.
1.1.8	Sub-total
	Enter in this line the sub-total of all the items from 1.1.1 to 1.1.7.
1.1.9	Investments in subsidiary institutions and equity instruments of other financial institutions
	To prevent multiple use of the same capital resources in different financial institutions, the DTFC should deduct any investment in subsidiaries conducting banking or FC business and equity instruments of other such institutions.
1.1.10	Goodwill
	This is the difference between the value of the business as a whole and the aggregate of the fair values of its separable net assets at the time of acquisition.
1.1.11	Other intangible assets
	These are assets without physical existence, e.g. patents, copyrights, formulae, trademarks, franchise etc. However, computer software should not be deducted.
1.1.12	Total deductions
	This is the total of all the items from 1.1.9 to 1.1.11.
1.1.13	Core Capital
	Core Capital is the deduction of line 1.1.12 from line 1.1.8.
1.2	Supplementary Capital (Tier 2)
1.2.1	Revaluation reserves
	This is the revaluation reserves of fixed assets, land and buildings based on independent and professional appraisal as to the obtaining SAMA's approval.
1.2.2	Cumulative irredeemable preference shares
	These are irredeemable shares with standing claim on the company and the claim is carried forward in event of it not being paid in the current year.
1.2.3	Convertible notes and similar capital investments
	Convertible notes are instruments that evidence a company promise to pay a loan on maturity, which can be converted, into shares any time before maturity date. Other similar capital investments are convertible debentures, bonds, loans etc.
1.2.4	Perpetual subordinated debt
	This Is a debt equity or loan capital, which is not redeemable.
1.2.5	Limited life redeemable preference shares
	These are preference shares with limited life of at least five years and are redeemable.
1.2.6	Term subordinated debt
	This refers to loan capital, bonds, commercial paper or debt equity with original maturity period of five years and above.
1.2.7	Statutory Loan Loss Reserve
	These are provisions that have been appropriated from retained earnings (revenue reserves). This will only apply if provisions computed under quality requirements is in excess of impairment losses computed under International Financial Reporting Standards.
	However, loan loss reserve qualifying as supplementary capital should not exceed 1.25% of risk weighted assets total value.
1.2.8	Total supplementary capital
	This is the sub-total of the items in line 1.2.1 to 1.2.7.
1.2.9	Supplementary Capital/Core Capital (%)
	This is the percentage of the supplementary capital to core capital. Total supplementary capital should not exceed core capital. Where supplementary capital exceeds core capital, then qualifying supplementary capital is limited to the amount of core capital.
1.2.10	Total Capital
	Total capital is the sum of core capital and supplementary capital, i.e. Total of lines 1.1.13 and 1.2.8
1.2.11	Total Shareholders' funds
	The figure reported in this line should agree with the total shareholders funds as reported in the monthly balance sheet.
1.2.12	Difference
	Any difference between total capital and total shareholders' funds should be reported in this line and a reconciliation of the same be attached.
2.	On-Balance Sheet Assets
2.1	Cash
	Enter in this line cash at hand (domestic notes and coins).
2.2	Balances with SAMA
	This includes reverse repo with SAMA, reserve requirement and any other balances held by SAMA.
2.3	KSA Government Treasury Bills
	These are Treasury bills issued by KSA Government.
2.4	KSA Government Treasury bonds
	These refer to the Treasury Bonds issued by KSA Government.
2.5	Lending fully secured by cash
	Enter here all other debts that are fully secured by cash.
2.6	Advances guaranteed by KSA Government
	This refers to all loans and advances duly guaranteed by KSA Government.
2.7	Cash in Foreign currencies
	Enter in this line cash at hand (foreign notes and coins).
2.8	Deposits and balances due from Local Institutions
	These are deposits and balances held with local banks, financial companies and mortgage finance companies including overnight balances.
2.9	Deposits and balances due from foreign institutions
	These are balances held with correspondent banks and financial institutions abroad.
2.10	Foreign Treasury Bills and Bonds
	These are bills and bonds issued by foreign governments, banks and other multilateral institutions.
2.11	Claims guaranteed by Multi-Lateral Development Banks (MDB's)
	These are loans, advances and capital market instruments such as commercial paper that are guaranteed by MDBs.
2.12	Loans secured by Residential Property
	These are facilities secured by residential properties situated within cities and municipalities in KSA. Such facilities should only be those classified as normal under Asset Quality Return and are performing in accordance with the original terms and conditions specified in the letter of offer. in addition, the security should be perfected in all respects and its current forced sale value should, cover in full, the outstanding debt with at least a 20% margin. The 50% weight will not be specifically applied to loans to companies engaged in speculative residential building or property development.
2.13	Other loans and advances
	These refer to loans and advances that are not guaranteed by KSA government and not secured by cash. These also include commercial paper and corporate bonds and should be reported net of provisions. Provisions must be computed in accordance with Asset Quality Return. However, provisions appropriated from retained earning should not be netted off from loans and advances.
2.14	Other investments
	These are investments in other companies other than financial institutions.
2.15	Fixed assets
	These are assets acquired for use in the operation of the business or for investment purposes, e.g. furniture, computers, freehold and leasehold land and buildings. They should be shown net of accumulated depreciation, amortized cost, or at fair value.
2.16	Amount due from group companies
	This is the claim of the reporting institution from other group companies that are not financial institutions.
2.17	Other assets
	These are other assets, which have not been dealt with above.
2.18	Total on-balance sheet assets
	Enter in this line total on-balance sheet asset i.e. total of line 2.1 to 2.17. Total deductions from core capital should also be deducted from the assets for the purposes of computing the risk weighted asset values. All profit bearing assets should be reported inclusive of profit earned.
2.19	Total Assets
	Total asset figure should be indicated in this line.
2.20	Difference
	This is the difference between total on-balance sheet assets and total assets. The difference should be explained in the form of reconciliation.
3.	Off-Balance Sheet Items
	DTFCs should compute credit risk equivalents for different categories of off- balance sheet transactions. The resulting amounts should be assigned 100% risk weight. Under line 3.4 of the return, foreign banks include the Multi-lateral Development Banks specified under item 2.10 of the completion notes. Under line 3.5, DTFC should include undelivered spot transactions.
3.1	Total weighted assets values
	Enter in this line the total weighted assets values, i.e. 2.18 + 3.7
4.	Capital Ratio Calculations
	Compute as per the formulae provided in the form.
4.1	Total Deposits
	This refers to margins on letters of credit, local and foreign currency deposit liabilities plus accrued profit repayable on demand, after fixed period or after notice.
4.2	General
	All reported items should agree with or capable of being derived from the figures reported by the DTFC under of the same period. This is a monthly return and should be submitted by the 15th business day of the following month.

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