Page 9 - MAYBANK vs EPF
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default. However, by the year 2018, the trend falls drastically to 50.54% shows that Maybank able
to manage their outstanding loan and lower the risk of default.
5. Risk Weighted Capital Ratio
Risk Weighted Capital Ratio
20.00%
19.50%
19.00% 19.43% 19.38%
18.50%
18.00% 18.27%
17.50%
2016 2017 2018
Risk Weighted Capital
The capital adequacy ratio (CAR) is a measurement of a bank's available capital expressed
as a percentage of a bank's risk-weighted credit exposures. Based on the data above, the trend
goes downward from the year 2016 to 2018. It’s from 19.43% (2016), 19.38% (2017) and 18.27%
(2018). The reason minimum capital adequacy ratios (CARs) are critical is to make sure that
banks have enough cushion to absorb a reasonable amount of losses before they become
insolvent and consequently lose depositors’ funds. The capital adequacy ratios ensure the
efficiency and stability of a nation’s financial system by lowering the risk of banks becoming
insolvent. The conclusion is the higher the capital adequacy ratios the greater the level of
unexpected loses it can absorb before becoming insolvent.
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