S.Korean banks' capital adequacy ratio inches down in Q1

Source: Xinhua | 2020-06-09

South Korean banks' capital adequacy ratio inched down in the first quarter due to higher demand for loan, financial watchdog data showed Monday.

The total capital adequacy ratio of 19 local commercial and state-run banks averaged 14.72 percent under the Bank for International Settlements (BIS) framework as of the end of March, down 0.54 percentage points from three months earlier, according to the Financial Supervisory Service.

The ratio, a barometer of financial healthiness, measures the proportion of a bank's capital to its risk-weight assets. Banks are required to maintain the ratio above 10.5 percent.

The tier-1 capital ratio, which gauges common stock capital and retained earnings, slipped 0.41 percentage points from three months earlier to 12.80 percent as of end-March.

The tangible common equity ratio, which measures the proportion of common equity to risk-weighted assets, fell 0.40 percentage points to 12.16 percent in the cited period.

The lower ratios came as demand mounted for bank loan amid growing worry about an economic fallout from the COVID-19 outbreak.

The South Korean currency's depreciation versus the U.S. dollar expanded risk-weighted assets relevant to over-the-counter currency derivatives, contributing to the lower capital adequacy ratio.

Citibank Korea logged the highest capital adequacy ratio of 18.44 percent, trailed by Busan Bank with 16.13 percent, Hana Bank with 15.62 percent, Shinhan Bank with 15.54 percent, Gwangju Bank with 15.41 percent, Kookmin Bank with 15.01 percent and Woori Bank with 14.77 percent respectively.

The ratios for the two Internet-only banks, Kakao Bank and K-Bank, stood at 14.29 percent and 11.14 percent each.