Having a strong capital base and maintaining the bank’s risk profile within its risk appetite is one of the main pillars of CEB Group’s strategy. To achieve this goal, we continuously strive to improve our risk and capital management capabilities. Through detailed budgeting and internal capital adequacy assessment processes, CEB Group ensures that it holds enough capital to cover its material risks while maintaining a healthy balance sheet and profitable business over the next three years. The budgeting and scenario/stress testing processes incorporate macro-outlook into the Bank’s three-year plan. The Bank maintained its strong capital ratios throughout the years and as of December 31, 2021, our common equity tier 1 (CET1) ratio, which represents our CET1 capital as a percentage of our risk-weighted assets, stood at 26.15%. In addition, with a 1:6 capital to asset leverage, the Bank has a very low leverage ratio.

On the asset side, improving asset quality remains as one of the key points of attention for the Bank. In terms of asset quality, we are dedicated to have a low percentage of the non-performing loan (NPL) ratio. In this regard, CEB has prepared a Non-Performing Exposure (NPE) strategy where realistic and sufficiently ambitious NPL reduction targets and the operation plan to achieve these targets are defined. On the liability side, the Bank has a stable and diversified funding base in terms of bank borrowings and client deposits.

Continual focus on risk awareness is an integral part of the Bank’s culture. The risk appetite of the Bank is established in conjunction with the Bank’s business plan and is aligned with its vision and mission statements. The risk appetite of the Bank is set at the consolidated level. This risk appetite is then translated into policies and procedures that define practices to ensure adherence to risk limits during the Bank’s day-to-day activities.

Given the risk appetite statement, the Management, in cooperation with the relevant committees and functions, select the key risk indicators (KRIs) and corresponding risk tolerance levels to be monitored. These KRIs are an integral part of the Bank’s operating processes, risk management, and internal control framework.