Page 79 - Suncorp_Review

Suncorp Group Limited Annual Report 2010/11 77

(c) Preference share dividends paid

CONSOLIDATED

2011 2010

¢ per share $m Date paid ¢ per share $m Date paid

Preference share dividend payments recognised as interest expense

Reset preference shares

Period from March to September 255 4 14 September 2010 255 3 14 September 2009 Period from September to March 251 4 14 March 2011 251 4 15 March 2010 8 7

Convertible preference shares

September quarter 142 10 14 September 2010 113 8 14 September 2009 December quarter 140 10 14 December 2010 116 9 14 December 2009 March quarter 143 11 14 March 2011 130 10 15 March 2010 June quarter 144 11 14 June 2011 135 10 15 June 2010 42 37

7.11 Banking – Capital adequacy

APRA’s risk-based approach requires eligible capital held by banks to be divided by total risk-weighted exposures, with the resultant ratio being used as a measure of a bank’s capital adequacy.

Tier 1 capital comprises the highest quality components of capital and can be split into Fundamental Tier 1 capital and Residual Tier 1 capital. Fundamental Tier 1 capital is the strongest form of capital such as ordinary share capital, reserves and retained profts. Residual Tier 1 capital comprises instruments such as perpetual non-cumulative preference shares and other capital instruments that can include features such as fxed terms, and step-ups in dividends or interest.

Tier 2 capital includes other components that, to varying degrees, fall short of the quality of Tier 1 capital but nonetheless contribute to the overall strength of a bank as a going concern. Upper Tier 2 capital comprises components of capital that are permanent in nature and include some forms of hybrid instruments. Lower Tier 2 capital comprises hybrid instruments that are not permanent.

For capital adequacy purposes, the capital base is defned as the sum of Tier 1 and Tier 2 capital after all specifed deductions and adjustments. Eligible Tier 2 capital cannot exceed the level of Tier 1 capital. Lower Tier 2 capital after all specifed deductions and adjustments cannot exceed 50% of net Tier 1 capital.

The measurement of risk-weighted exposures is based on: –– credit risk associated with on-balance sheet and off-balance sheet exposures, and securitisation exposures –– market risk arising from trading activities; and –– operational risk associated with the banking activities.