Average bank capital ratio falls in Q2

SEOUL, Sept. 7 (Yonhap) — South Korean banks saw their financial health weaken in the second quarter compared to three months earlier due mainly to an increase in corporate debt, data showed. this Wednesday.

According to data from the Financial Monitoring Service (FSS), the average capital adequacy ratio of 17 commercial and public banks stood at 13.94% at the end of June, down 0.28 percentage points from compared to three months ago.

The ratio is a key indicator of financial strength by measuring the proportion of a bank’s capital to its risk-weighted assets.

The Swiss-based Bank for International Settlements, an international organization of central banks, advises lenders to maintain a ratio of 8% or more.

The quarterly drop came amid aggressive central bank rate hikes that raised corporate borrowing costs and reduced the value of corporate bonds, the FSS said.

According to data from the regulator, business lending by local banks jumped 31.5 trillion won in the second quarter of this year, compared with an increase of 29.4 trillion won a quarter ago.

The FSS said local banks’ capital adequacy remains strong despite the quarterly decline, all above BIS regulatory standards.

Among the 17 lenders, Toss Bank, the new internet-only lender, is exempt from BIS average capital adequacy requirements until 2023.

Sallie R. Loera