Scales

Scale 1 represents that the bank is performing very well with proper risk management

Scale 2 represents that the bank is financially sound with moderate weaknesses.

Scale 3 means it needs supervisory concerns in some areas.

Scale 4 indicates that the bank is unsafe because of serious financial problems

Scale 5 suggests that the bank is in very bad position with improper risk management practices.

The overall CAMELS ratings of the bank is 1.75 which is close to the scale of 2 that represents
that the bank is financially sound with some weaknesses.

Components of Camels ratings

Capital adequacy: capital adequacy means the amount of capital which includes loans and
investments, a financial institution holds as required by central bank. To calculate capital under
capital adequacy, the capital of the bank will be classified under 2 tiers.

Tier 1 capital

1.1 common equity tier 1 capital: common stocks, retained earnings, certain adjustments
1.2 additional tier 1 capital: instruments should be subordinate to deposits and other debt
obligations with no fixed maturity. If any instrument makes any dividend or payment, it
will fall under additional tier 1 capital.
2. Tier 2 capital: capital should be subordinated to deposits and to general creditors of the bank
with minimum maturity of 5 years.