Page 90 - ACCESS BANK ANNUAL REPORTS_eBook

CAPITAL RISK MANAGEMENT

Capital risk is the risk that the Bank’s total capital base is not • to maintain an investment grade credit rating; and
properly managed in a prudent manner. • to achieve a return above the cost of equity.

The Group has a number of capital management objec-
tives: CAPITAL MANAGEMENT STRATEGY:

• to meet the capital ratios required by its The Group’s capital management strategy is focused on
regulators and the Group’s Board; maximizing shareholder value by optimizing the level and
• to maintain an adequate level of available capital mix of capital resources. Decisions on the allocation of cap-
resources as cover for the economic capital (EC) ital resources are based on a number of factors including
requirements calculated at a 99.95% confidence returns on Economic Capital (EC) and on Regulatory Capital
level; (RC), and are part of the Internal Capital Adequacy Assess-
• to generate sufficient capital to support asset ment Process (ICAAP).
growth;

Capital Management Process

Annual Forecast

Medium Term Plans

Capital transactions Regulatory capital

• Retained profit • Calculation of Pillar 1 capi-
tal requirements
• Assess capital supply • Review and challenge of
alternatives given market Pillar 1 requirements for
demand • Economic capital
Review and challenge
Equity and other capital
Capital supply • transactions issuance, • business units’ demand for Capital demand
•
economic capital
including refinancing of ex-
isting capital transactions
Calculation of Group eco-
nomic capital
Securitisation transactions
Stress and
• Share buybacks/dividends scenario testing - Assess adequacy of
Pillar 1 risks
• Dividends from subsidiar- - Calculate additional
ies composition risks
Capital
management
Stress capital supply given Stressed capital requirement
market stressed capital re-
quirement demand and profit
and loss

90 Access BAnk Plc
Annual Report & Accounts 2017