Circular dated October 26, 2023 regarding the inclusion of net interim profits from the continuing basic capital in the first tranche within the capital base according to the capital adequacy standard

Sir/ Chairman of the Board of Directors of Bank.....

Greetings,

With reference to the instructions on "Minimum Capital Adequacy Standard" issued under Circular No. dated December 24, 2012, and Circular No. dated February 27, 2017, regarding the treatment of interim profits/losses within the regulatory capital account under the capital adequacy standard, and in the context of the Central Bank's efforts to apply international best practices in banking supervision, it is worth noting that Basel III decisions included many regulatory reforms and new treatments for some items of regulatory capital, including allowing banks to include net interim profits/losses in the continuing basic capital in the first tranche instead of additional capital.

Based on the above, the Board of Directors of the Central Bank decided in its meeting held on October 24, 2023, the following:

"Under the capital adequacy standard, banks are allowed to include net interim profits in the continuing basic capital in the first tranche after a limited review by the auditor of the bank's financial statements, with the deduction of interim losses (if any)."

Please accept our highest regards,

Hassan Abdullah