Compliance Requirements Enforced by the Central Bank of Sri Lanka

6.1 The publication should be made within two months from the end of each quarter, at least once in an English, Sinhala and Tamil newspaper.

6.2 Publication of annual audited financial statements shall be made within five months from the end of the financial year.

6.3 If the Bank publishes its Audited Financial Statements within three months from the end of the financial year, the requirement to publish the Financial Statements for the 4th quarter in terms of 6.1 above would not be mandatory.

(i) Special disclosures about financial assets and financial liabilities designated to be measured at fair value through profit or loss, including disclosures about credit risk and market risk, changes in fair value attributable to these risks and the methods of measurement

(ii) Reclassifications of financial instruments from one category to another

(iii) Information about financial assets pledged as collateral and about financial or non-financial assets held as collateral

(iv) Reconciliation of the allowance account for credit losses by class of financial assets

(v) Information about compound financial instruments with multiple embedded derivatives

(vi) Breaches of terms of loan agreements

(i) Total interest income and total interest expense for those financial instruments that are not measured at fair value through profit and loss

(ii) Fee income and expense

(iii) Amount of impairment losses by class of financial assets

(iv) Interest income on impaired financial assets

(i) Details of equity instruments that have been designated as at FVOCI and the reasons for the designation.

(ii) Fair value of each investment at the reporting date

(iii) Comparable carrying amounts

(iv) Description of how fair value was determined

(v) Dividends recognised during the period, separately for investments derecognised during the reporting period and those held at the reporting date.

(vi) Transfer cumulative gain or loss within equity during the period and the reasons for those transfers

(vii) If investments in equity instruments measured at FVOCI are derecognised during the reporting period,

• Reasons for disposing of the investments

• Fair value of the investments at the date of derecognition

• The cumulative gain or loss on disposal

(i) For all reclassifications of financial assets in the current or previous reporting period

• Date of reclassification

• Detailed explanation of the change in the business model and a qualitative description of its effect on the Financial Statements

• The amount reclassified into and out of each category

(ii) For reclassifications from FVTPL to amortised cost of FVOCI

• The effective interest rate (EIR) determined on the date of reclassification

• the interest revenue recognised

(iii) For reclassifications from FVOCI to amortised cost, or from FVTPL to amortised cost or FVOCI

• The fair value of the financial assets at the reporting date

• The fair value gain or loss that would have been recognised in profit or loss or OCI during the reporting period if the financial assets had not been reclassified.

(i) Comparable carrying amounts

(ii) Description of how fair value was determined

(iii) The level of inputs used in determining fair value

(iv) (a) Reconciliations of movements between levels of fair value measurement hierarchy

(b) Additional disclosures for financial instruments that fair value is determined using Level 3 inputs

(v) Information if fair value cannot be reliably measured

(i) Credit Risk

(a) Maximum amount of exposure (before deducting the value of collateral), description of collateral, information about credit quality of financial assets that are neither past due nor impaired and information about credit quality of financial assets

(b) For financial assets that are past due or impaired, disclosures on age, factors considered in determining as impaired and the description of collateral on each class of financial asset

(c) Information about collateral or other credit enhancements obtained or called

(d) Credit risk management practices – CRM practices and how they relate to the recognition and measurement ECL, including the methods, assumptions, and information used to measure ECL

 Quantitative and qualitative information to evaluate the amounts in the Financial Statements arising from ECL, including changes and the reasons for those changes

 How the Bank determines whether the credit risk of financial instruments has increased significantly since initial recognition

 The Bank’s definitions of default for different financial instruments, including the reasons for selecting those definitions

 How instruments are grouped if ECL are measured on a collective basis

 How the Bank determines that financial assets are credit – impaired

 The Bank’s write-off policy, including the indicators that there is no reasonable expectation of recovery

 How the modification requirements have been applied

(e) ECL calculations

 Basis of the inputs, assumptions and the estimation techniques used when estimating ECL

 How forward – looking information has been incorporated into the determination of ECL including the use of macroeconomic information. Changes in estimation techniques or significant assumptions made during the reporting period

(f) Amounts arising from ECL

 Reconciliation for each class of financial instruments of the opening balance to the closing balance of the impairment loss allowance

(g) Collateral

 Bank’s maximum exposure to credit risk at the reporting date

 Description of collateral held as security and other credit enhancements

(h) Written-off assets

 Contractual amount outstanding of financial assets written off during the reporting period that are still subject to enforcement activity.

(i) Pillar III disclosures of the Banking Act Directions No 1 of 2016 on Capital requirements under Basel III for licensed banks

(ii) Liquidity Risk

(a) A maturity analysis of financial liabilities

(b) Description of approach to risk management

(c) Pillar III disclosures of the Banking Act Direction No. 1 of 2016 on Capital requirements under Basel III for Licensed Banks

(iii) Market Risk

(a) A sensitivity analysis of each type of market risk to which the entity is exposed

(b) Additional information, if the sensitivity analysis is not representative of the Bank’s risk exposure

(c) Pillar III disclosures of the Banking Act Directions No. 1 of 2016 on Capital requirements under Basel III for Licensed Banks

(iv) Operational Risk Pillar III disclosures of the Banking Act Direction No. 1 of 2016
on Capital requirements under Basel III for Licensed Banks

(v) Equity risk in the banking book

(a) Qualitative disclosures

Differentiation between holdings on which capital gains are expected and those taken under other objectives including for relationship and strategic reasons

Discussion of important policies covering the valuation and accounting of equity holdings in the banking book

(b) Quantitative disclosures

Value disclosed in the Statement of Financial Position of investments, as well as the fair value of those investments; for quoted securities, a comparison to publicly quoted share values where the share price is materially different from fair value

The types and nature of investments

The cumulative realised gains/(losses) arising from sales and liquidations in the reporting period

(vi) Interest rate risk in the banking book

(a) Qualitative disclosures

Nature of interest rate risk in the banking book (IRRBB) and key assumptions

(b) Quantitative disclosures

The increase/(decline) in earnings or economic value (or relevant measure used by management) for upward and downward rate shocks according to management’s method for measuring IRRBB, broken down by currency (as relevant)

• Paid-up share capital/common stock

• Reserves

• Non-controlling interests in the equity of subsidiaries

• Innovative instruments

• Other capital instruments

• Deductions from Tier I capital

(b) The total amount of Tier 2 and Tier 3 capital

(c) Other deductions from capital

(d) Total eligible capital

(i) Qualitative disclosures

A summary discussion of the Bank’s approach to assessing the adequacy of its capital or support current and future activities

(ii) Quantitative disclosures

(a) Capital requirements for credit risk, market risk and operational risk

(b) Total and Tier 1 capital ratio