Capital Disclosures Template

Annex 1

CET1 capital: instruments and reserves
1 Directly issued qualifying CET1 capital instruments plus any related share premium
2 Retained earnings
3 Disclosed reserves
4 Directly issued capital subject to phase out from CET1 capital (only applicable to non-joint stock companies)		Not applicable
5 Minority interests arising from CET1 capital instruments issued by consolidated bank subsidiaries and held by third parties (amount allowed in CET1 capital of the consolidation group)
6 CET1 capital before regulatory deductions
CET1 capital: regulatory deductions
7 Valuation adjustments
8 Goodwill (net of associated deferred tax liability)
#9 Other intangible assets (net of associated deferred tax liability)
#10 Deferred tax assets net of deferred tax liabilities
11 Cash flow hedge reserve
12 Excess of total EL amount over total eligible provisions under the IRB approach
13 Gain-on-sale arising from securitization transactions
14 Gains and losses due to changes in own credit risk on fair valued liabilities
15 Defined benefit pension fund net assets (net of associated deferred tax liabilities)
16 Investments in own CET1 capital instruments (if not already netted off paid-in capital on reported balance sheet)
17 Reciprocal cross-holdings in CET1 capital instruments
#18 Insignificant capital investments in CET1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
#19 Significant capital investments in CET1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
20 Mortgage servicing rights (amount above 10% threshold)		Not applicable
21 Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability)		Not applicable
22 Amount exceeding the 15% threshold		Not applicable
23 of which: significant investments in the common stock of financial sector entities		Not applicable
24 of which: mortgage servicing rights		Not applicable
25 of which: deferred tax assets arising from temporary differences		Not applicable
26 National specific regulatory adjustments applied to CET1 capital
26a Cumulative fair value gains arising from the revaluation of land and buildings (own-use and investment properties)
26b Regulatory reserve for general banking risks
26c Securitization exposures specified in a notice given by the Monetary Authority
26d Cumulative losses below depreciated cost arising from the institution's holdings of land and buildings
26e Capital shortfall of regulated non-bank subsidiaries
26f Capital investment in a connected company which is a commercial entity (amount above 15% of the reporting institution's capital base)
27 Regulatory deductions applied to CET1 capital due to insufficient AT1 capital and Tier 2 capital to cover deductions
28 Total regulatory deductions to CET1 capital
29 CET1 capital
AT1 capital: instruments
30 Qualifying AT1 capital instruments plus any related share premium
31 of which: classified as equity under applicable accounting standards
32 of which: classified as liabilities under applicable accounting standards
33 Capital instruments subject to phase out arrangements from AT1 capital

34 AT1 capital instruments issued by consolidated bank subsidiaries and held by third parties (amount allowed in AT1 capital of the consolidation group)
35 of which: AT1 capital instruments issued by subsidiaries subject to phase out arrangements
36 AT1 capital before regulatory deductions
AT1 capital: regulatory deductions
37 Investments in own AT1 capital instruments
38 Reciprocal cross-holdings in AT1 capital instruments
#39 Insignificant capital investments in AT1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
40 Significant capital investments in AT1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation
41 National specific regulatory adjustments applied to AT1 capital
42 Regulatory deductions applied to AT1 capital due to insufficient Tier 2 capital to cover deductions
43 Total regulatory deductions to AT1 capital
44 AT1 capital
45 Tier 1 capital (Tier 1 = CET1 + AT1)
Tier 2 capital: instruments and provisions
46 Qualifying Tier 2 capital instruments plus any related share premium
47 Capital instruments subject to phase out arrangements from Tier 2 capital
48 Tier 2 capital instruments issued by consolidated bank subsidiaries and held by third parties (amount allowed in Tier 2 capital of the consolidation group)
49 of which: capital instruments issued by subsidiaries subject to phase out arrangements
50 Collective impairment allowances and regulatory reserve for general banking risks eligible for inclusion in Tier 2 capital
51 Tier 2 capital before regulatory deductions
Tier 2 capital: regulatory deductions
52 Investments in own Tier 2 capital instruments
53 Reciprocal cross-holdings in Tier 2 capital instruments
#54 Insignificant capital investments in Tier 2 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
55 Significant capital investments in Tier 2 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation
56 National specific regulatory adjustments
56a Add back of cumulative fair value gains arising from the revaluation of land and buildings (own-use and investment properties) eligible for inclusion in Tier 2 capital
57 Total regulatory deductions to Tier 2 capital
58 Tier 2 capital
59 Total capital (Total capital = Tier 1 + Tier 2)
60 Total risk weighted assets
Capital ratios (as a percentage of risk weighted assets)
61 CET1 capital ratio
62 Tier 1 capital ratio
63 Total capital ratio
64 Institution specific buffer requirement (minimum CET1 capital requirement as specified in s.3B of the BCR plus capital conservation buffer plus countercyclical buffer requirements plus G-SIB or D-SIB requirements)
65 of which: capital conservation buffer requirement
66 of which: bank specific countercyclical buffer requirement
67 of which: G-SIB and D-SIB buffer requirements
68 CET1 capital surplus over the minimum CET1 requirement and any CET1 capital used to meet the Tier 1 and Total capital requirements under s.3B of the BCR
National minima (if different from Basel 3 minimum)
69 National CET1 minimum ratio	Not applicable
70 National Tier 1 minimum ratio	Not applicable
71 National Total capital minimum ratio	Not applicable
Amounts below the thresholds for deduction (before risk weighting)
72	Insignificant capital investments in CET1 capital instruments, AT1 capital instruments and Tier 2 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation
73	Significant capital investments in CET1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation
74	Mortgage servicing rights (net of related tax liability)	Not applicable
75	Deferred tax assets arising from temporary differences (net of related tax liability)	Not applicable
	Applicable caps on the inclusion of provisions in Tier 2 capital
76	Provisions eligible for inclusion in Tier 2 in respect of exposures subject to the basic approach and the standardized (credit risk) approach (prior to application of cap)
77	Cap on inclusion of provisions in Tier 2 under the basic approach and the standardized (credit risk) approach
78	Provisions eligible for inclusion in Tier 2 in respect of exposures subject to the IRB approach (prior to application of cap)
79	Cap for inclusion of provisions in Tier 2 under the IRB approach
	Capital instruments subject to phase-out arrangements (only applicable between 1 Jan 2018 and 1 Jan 2022)
80	Current cap on CET1 capital instruments subject to phase out arrangements	Not applicable
81	Amount excluded from CET1 capital due to cap (excess over cap after redemptions and maturities)	Not applicable
82	Current cap on AT1 capital instruments subject to phase out arrangements
83	Amount excluded from AT1 capital due to cap (excess over cap after redemptions and maturities)
84	Current cap on Tier 2 capital instruments subject to phase out arrangements
85	Amount excluded from Tier 2 capital due to cap (excess over cap after redemptions and maturities)

Footnote:

Indicates elements where a more conservative definition has been applied in the BCR relative to that set out in the Basel III capital standards.

Abbreviations:
CET1: Common Equity Tier 1
AT1: Additional Tier 1

Notes to the template

Row No.	Description	Hong Kong basis	Basel III basis
	Other intangible assets (net of associated deferred tax liability)
#9	Explanation As set out in paragraph 87 of the Basel III text issued by the Basel Committee (December 2011), mortgage servicing rights (MSRs) may be given limited recognition in CET1 capital (and hence be excluded from deduction from CET1 capital up to the specified threshold). In Hong Kong, an AI is required to follow the accounting treatment of including MSRs as part of intangible assets reported in the AI's financial statements and to deduct MSRs in full from CET1 capital. Therefore, the amount to be deducted as reported in row 9 may be greater than that required under Basel III. The amount reported under the column "Basel III basis" in this box represents the amount reported in row 9 (i.e. the amount reported under the "Hong Kong basis") adjusted by reducing the amount of MSRs to be deducted to the extent not in excess of the 10% threshold set for MSRs and the aggregate 15% threshold set for MSRs, DTAs arising from temporary differences and significant investments in CET1 capital instruments issued by financial sector entities (excluding those that are loans, facilities or other credit exposures to connected companies) under Basel III.
	Deferred tax assets net of deferred tax liabilities
#10	Explanation As set out in paragraphs 69 and 87 of the Basel III text issued by the Basel Committee (December 2011), DTAs that rely on future profitability of the bank to be realized are to be deducted, whereas DTAs which relate to temporary differences may be given limited recognition in CET1 capital (and hence be excluded from deduction from CET1 capital up to the specified threshold). In Hong Kong, an AI is required to deduct all DTAs in full, irrespective of their origin, from CET1 capital. Therefore, the amount to be deducted as reported in row 10 may be greater than that required under Basel III. The amount reported under the column "Basel III basis" in this box represents the amount reported in row 10 (i.e. the amount reported under the "Hong Kong basis") adjusted by reducing the amount of DTAs to be deducted which relate to temporary differences to the extent not in excess of the 10% threshold set for DTAs arising from temporary differences and the aggregate 15% threshold set for MSRs, DTAs arising from temporary differences and significant investments in CET1 capital instruments issued by financial sector entities (excluding those that are loans, facilities and other credit exposures to connected companies) under Basel III.

#18	Insignificant capital investments in CET1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
	Explanation For the purpose of determining the total amount of insignificant capital investments in CET1 capital instruments issued by financial sector entities, an AI is required to aggregate any amount of loans, facilities or other credit exposures provided by it to any of its connected companies, where the connected company is a financial sector entity, as if such loans, facilities or other credit exposures were direct holdings, indirect holdings or synthetic holdings of the AI in the capital instruments of the financial sector entity, except where the AI demonstrates to the satisfaction of the Monetary Authority that any such loan was made, any such facility was granted, or any such other credit exposure was incurred, in the ordinary course of the AI's business. Therefore, the amount to be deducted as reported in row 18 may be greater than that required under Basel III. The amount reported under the column "Basel III basis" in this box represents the amount reported in row 18 (i.e. the amount reported under the "Hong Kong basis") adjusted by excluding the aggregate amount of loans, facilities or other credit exposures to the AI's connected companies which were subject to deduction under the Hong Kong approach.
#19	Significant capital investments in CET1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
	Explanation For the purpose of determining the total amount of significant capital investments in CET1 capital instruments issued by financial sector entities, an AI is required to aggregate any amount of loans, facilities or other credit exposures provided by it to any of its connected companies, where the connected company is a financial sector entity, as if such loans, facilities or other credit exposures were direct holdings, indirect holdings or synthetic holdings of the AI in the capital instruments of the financial sector entity, except where the AI demonstrates to the satisfaction of the Monetary Authority that any such loan was made, any such facility was granted, or any such other credit exposure was incurred, in the ordinary course of the AI's business. Therefore, the amount to be deducted as reported in row 19 may be greater than that required under Basel III. The amount reported under the column "Basel III basis" in this box represents the amount reported in row 19 (i.e. the amount reported under the "Hong Kong basis") adjusted by excluding the aggregate amount of loans, facilities or other credit exposures to the AI's connected companies which were subject to deduction under the Hong Kong approach.
#39	Insignificant capital investments in AT1 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation (amount above 10% threshold)
	Explanation The effect of treating loans, facilities or other credit exposures to connected companies which are financial sector entities as CET1 capital instruments for the purpose of considering deductions to be made in calculating the capital base (see note re row 18 to the template above) will mean the headroom within the threshold available for the exemption from capital deduction of other insignificant capital investments in AT1 capital instruments may be smaller. Therefore, the amount to be deducted as reported in row 39 may be greater than that required under Basel III. The amount reported under the column "Basel III basis" in this box represents the amount reported in row 39 (i.e. the amount reported under the "Hong Kong basis") adjusted by excluding the aggregate amount of loans, facilities or other credit exposures to the AI's connected companies which were subject to deduction under the Hong Kong approach.
#54	Insignificant capital investments in Tier 2 capital instruments issued by financial sector entities that are outside the scope of regulatory consolidation
	Explanation The effect of treating loans, facilities or other credit exposures to connected companies which are financial sector entities as CET1 capital instruments for the purpose of considering deductions to be made in calculating the capital base (see note re row 18 to the template above) will mean the headroom within the threshold available for the exemption from capital deduction of other insignificant capital investments in Tier 2 capital instruments may be smaller. Therefore, the amount to be deducted as reported in row 54 may be greater than that required under Basel III. The amount reported under the column "Basel III basis" in this box represents the amount reported in row 54 (i.e. the amount reported under the "Hong Kong basis") adjusted by excluding the aggregate amount of loans, facilities or other credit exposures to the AI's connected companies which were subject to deduction under the Hong Kong approach.

Consultation on Basel III Implementation – Disclosure Requirements: Annex 1: Capital Disclosures Template

Capital Disclosures Template

Annex 1

Notes to the template

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