My first Publication ocbc_ar17_fullreport_english | Page 149

CAPITAL ADEQUACY RATIOS
The Group remains strongly capitalised, with a Common Equity Tier 1 (CET1) capital adequacy ratio (CAR) of 13.9%, and Tier 1 and
Total CAR of 14.9% and 17.2% respectively. These ratios, based on Basel III transitional arrangements, were well above the regulatory
minima of 6.5%, 8% and 10%, respectively, for 2017. In addition to these minimum capital requirements, Capital Conservation Buffer
(CCB) of 2.5% and Countercyclical Buffer (CCyB) of up to 2.5% are being phased in from 2016 to 2019. The CCB was 1.25% on
1 January 2017 and increases by 0.625% each year to reach 2.5% on 1 January 2019. The CCyB is not an on-going requirement and
the applicable magnitude will be the weighted average of the country-specific CCyB requirements that are being applied by national
authorities in jurisdictions to which the Bank has private sector credit exposures.
The Group’s CET1 CAR, based on Basel III rules which will be effective from 1 January 2018, was 13.1%.
LEVERAGE RATIO
The leverage ratio is an indicator of capital strength to supplement the risk-based capital requirements and is the ratio of Tier 1 Capital
to total exposures (comprising on-balance sheet exposures, derivative exposures, securities financing transaction exposures and off-
balance sheet items). As at 31 December 2017, the Group’s leverage ratio of 7.3% was above the 3% minimum regulatory requirement.
LIQUIDITY COVERAGE RATIOS
For 2017, the average Singapore dollar (SGD) and all-currency liquidity coverage ratios (LCR) for the Group (excluding OCBC Wing Hang
Hong Kong, OCBC Wing Hang Macao and OCBC Yangon which will be included in due course) were 262% and 148% respectively.
The Group continued to focus on acquiring stable deposits and to maintain a mix of High Quality Liquid Assets comprising mainly Level 1
central bank reserves and liquid sovereign bonds. The Asset & Liability Management Desk in Global Treasury manages the day-to-day
liquidity needs of the Group, and is subject to liquidity limits and triggers that serve as risk control on the Group’s liquidity exposure.
UNREALISED VALUATION SURPLUS
Properties (1)
Equity securities (2)
Total
2017
S$ million 2016
S$ million
4,010
5,905
9,915 3,890
2,557
6,447
Includes properties classified as investment properties and assets held for sale. Property values are determined mainly based on external valuations
at year-end.
(2)
Comprises mainly investments in quoted subsidiaries, a quoted associate and the investment in Hong Kong Life Insurance Limited (Hong Kong Life),
which are valued based on their year-end market prices for quoted equities and the sale consideration for Hong Kong Life.
(1)
The Group’s unrealised valuation surplus largely represents the difference between the carrying amounts and market values of its
properties, investments in associates and quoted subsidiaries at the respective years. The carrying amounts of associates and quoted
subsidiaries on the balance sheet are measured at cost plus post-acquisition reserves, while those of properties are measured at cost
less accumulated depreciation, and impairment, if any.
The valuation surplus as at 31 December 2017 was S$9.92 billion, 54% higher from S$6.45 billion as at 31 December 2016, mainly from
higher market valuation from the Group’s equity stake in Great Eastern Holdings.
BUILDING ON OUR CORPORATE STRATEGY FOR SUSTAINABLE GROWTH
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