Guidelines on the Differential Premium Systems - PIDM

Ref No DI/GL2-A1/2011(DPS) Issued on 4 March 2011TITLE<strong>Guidelines</strong> on The Differential Premium SystemsTable 4: Score Range for Core Capital RatioCore Capital RatioRange of ResultsScoreCore Capital Ratio ≥ 8% 10Core Capital Ratio ≥ 7% but < 8% 8Core Capital Ratio ≥ 6% but < 7% 6Core Capital Ratio ≥ 5% but < 6% 4Core Capital Ratio ≥ 4% but < 5% 2Core Capital Ratio < 4% 0(c)Return on risk-weighted assets ratioReturn on risk-weighted assets ratio is calculated as a member’s profit or loss beforetax and zakat divided by its average risk-weighted assets.Notes:i. In calculating this ratio for Assessment Year 2011, a member adopting theInternal Rating Based (“IRB”) approach 1 is required to use its risk-weightedassets for position as at 31 December 2010 (1-year risk-weighted assets).Thereafter, a member adopting the IRB approach is to revert to the originalcomputation where a member’s profit or (loss) before taxation and zakatdivided by its average risk-weighted assets for two assessment years. This is toensure the standardisation in the computation of average risk-weighted assetafter the requirement to incorporate Operational Risk under Basel II. Amember that is not reporting on IRB approach is to use the originalcomputation where a member’s profit or (loss) before taxation and zakatdivided by its average risk-weighted assets for two assessment years.ii.iii.For the purpose of this ratio only, a member may exclude the operations ofLabuan’s subsidiary in calculating risk-weighted assets.A member which has less than two years of risk-weighted assets data shall notbe assigned a score for this ratio. The scores for this ratio shall be determinedon a proportionate basis as specified in paragraph 4.5 (Insufficient QuantitativeInformation).1 As approved by Bank Negara Malaysia (“BNM”).Page 6