Annual Report 2012

Notes to the financial statements(Expressed in millions of RMB, unless otherwise stated)63 Risk Management (continued)(7) Capital managementThe Group has implemented a comprehensive capital management policy, covering the management of regulatory capital, economiccapital and accounting capital, including but not limited to management of capital adequacy ratio, capital planning, capital raising andeconomic capital.Capital adequacy ratio is a reflection of the Group’s ability to run stable operations and resist adverse risks. The CBRC requirescommercial banks to maintain the capital adequacy ratio at or above minimum of 8% and the core capital adequacy ratio at or aboveminimum of 4%. Supplementary capital of a commercial bank cannot exceed 100% of its core capital. Any amount in excess of thebalance of the trading book over 10% of total on and off-balance sheet assets or RMB8,500 million will be subject to provision formarket risk in the computation of capital adequacy ratio. The Group timely monitors, analyses and reports capital adequacy ratio levelto exercise effective management of capital adequacy ratio. The Group adopts various measures such as controlling asset growth,adjusting the structure of risk assets, accumulating capital internally and raising capital through external channels, to ensure that thecapital adequacy ratio and core capital adequacy ratio of the Group and the Bank are in full compliance with regulatory requirementsand meet internal management needs. This helps insulate against potential risks as well as support the healthy businessdevelopment. The Group now fully complies with all regulatory requirements in this respect.The Group’s capital planning has taken the regulatory requirements, the Group’s development strategy and risk appetite intoconsideration, and based on those factors the Group projects the capital usage and need. The Group regularly compares its positionwith its capital adequacy ratio target to ensure capital will be adequate for future or otherwise to plan for supplementation of capital.The capital raising management of the Group involves reasonable utilisation of various capital instruments to ensure that both externalregulatory and internal capital management objectives are met, taking in account capital planning and operating environment. Thishelps to optimise the Group’s total capital and structure, as well as improve the competitiveness of the Group’s cost of capital.206 China Construction Bank Corporation annual report 2012