S. Korean banks’ capital adequacy ratio rebounds in Q2

SEOUL, Aug. 28 (Xinhua) — South Korean banks’ capital adequacy ratio rebounded in the second quarter owing to slower growth in risk-weighted assets and higher capital, financial watchdog data showed Wednesday.
The total capital ratio for 28 banks, bank holding companies and Internet-only banks under the Bank for International Settlements framework averaged 15.76 percent at the end of June, up 0.13 percentage points from three months earlier, according to the Financial Supervisory Service.
It turned upward after going down 0.09 percentage points during the January-March quarter.
The ratio, a barometer of financial soundness, measures the proportion of a bank’s capital to its risk-weighted assets. Banks are required to maintain the ratio above 11.5 percent.
The risk-weighted assets climbed 46.0 trillion won (34.4 billion U.S. dollars) in the second quarter after soaring 78.5 trillion won (58.7 billion dollars) in the previous quarter.
Net income for the banks gained from 7.0 trillion won (5.2 billion dollars) in the first quarter to 9.0 trillion won (6.7 billion dollars) in the second quarter, leading to higher capital.
The tier-1 capital ratio, which gauges common stock capital and retained earnings, advanced 0.18 percentage points from three months earlier to 14.51 percent at the end of June.
The common equity tier-1 capital ratio, or the proportion of common equity to risk-weighted assets, increased 0.18 percentage points to 13.18 percent in the cited quarter.
Banks are required to keep the tier-1 and the common equity tier-1 capital ratios above 9.5 percent and 8.0 percent respectively. ■