ICICI Bank 2013 Annual Report Download - page 68

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The following table sets forth, at the dates indicated, the capital adequacy ratios computed in accordance
with the RBI guidelines on Basel II.
` in billion, except percentages
At March 31, 2012 At March 31, 2013
Tier-1 capital ` 505.18 ` 565.62
Tier-2 capital 232.95 262.74
Total capital 738.13 828.36
Credit Risk — Risk Weighted Assets (RWA) 3,468.74 3,894.82
Market Risk — RWA 268.66 254.68
Operational Risk — RWA 248.46 269.94
Total RWA ` 3,985.86 ` 4,419.44
Total capital adequacy ratio 18.52% 18.74%
Tier-1 capital adequacy ratio 12.68% 12.80%
Tier-2 capital adequacy ratio 5.84% 5.94%
Movement in our capital funds and risk weighted assets from March 31, 2012 to March 31, 2013
During fiscal 2013, capital funds (net of deductions) increased by ` 90.23 billion from ` 738.13 billion
at March 31, 2012 to ` 828.36 billion at March 31, 2013. The increase in the capital funds was due
to accretion to retained earnings, issuance of lower Tier-2 capital instruments, lower deduction from
capital funds on account of securitisation exposures and repatriation of capital from an overseas banking
subsidiary.
Credit risk RWA increased by ` 426.08 billion from ` 3,468.74 billion at March 31, 2012 to ` 3,894.82 billion
at March 31, 2013 primarily due to increase of ` 369.53 billion in RWA for on-balance sheet exposures,
offset, in part, by decrease of ` 56.55 billion in RWA for off-balance sheet credit exposures.
Market risk RWA decreased by ` 13.98 billion from ` 268.66 billion at March 31, 2012 to ` 254.68 billion
at March 31, 2013. The general market risk RWA decreased by ` 11.44 billion (capital charge of ` 1.03
billion).
The operational risk RWA at March 31, 2013 was ` 269.94 billion (capital charge of ` 24.29 billion). The
operational risk capital charge is computed based on 15% of average of previous three financial years’
gross income and is revised on an annual basis at June 30.
Internal assessment of capital
Our capital management framework includes a comprehensive internal capital adequacy assessment
process conducted annually, which determines the adequate level of capitalisation necessary to meet
regulatory norms and current and future business needs, including under stress scenarios. The internal
capital adequacy assessment process is formulated at both standalone bank level and the consolidated
group level. The internal capital adequacy assessment process encompasses capital planning for a four
year time horizon, identification and measurement of material risks and the relationship between risk
and capital.
The capital management framework is complemented by the risk management framework, which includes
a comprehensive assessment of material risks. Stress testing, which is a key aspect of the internal capital
adequacy assessment process and the risk management framework, provides an insight on the impact
Management’s Discussion & Analysis