At the End of Last Year, Bank Capital Ratio Down 0.16%p... K-Bank Lowest

[Asia Economy Reporter Kim Hyo-jin] At the end of last year, the capital ratios of domestic banks slightly declined.

According to the Financial Supervisory Service on the 19th, as of the end of 2019, the banks' total capital ratio based on the Bank for International Settlements (BIS) standard was 15.25%, down 0.16 percentage points compared to the previous year. The Tier 1 capital ratio and common equity tier 1 capital ratio were 13.20% and 12.54%, respectively, decreasing by 0.05 percentage points and 0.12 percentage points from the previous year.

The Financial Supervisory Service explained that the capital ratio fell slightly because the growth rate of risk-weighted assets last year (5.3%) slightly exceeded the capital growth rate (4.2% based on total capital).

Major banks, including large banks such as Shinhan (15.91%), Woori (15.38%), Hana (16.12%), KB Kookmin (15.85%), and NH Nonghyup (15.19%), maintained a stable total capital ratio in the range of 14-16%.

The internet-only bank K-Bank, which is struggling to raise capital, had the lowest total capital ratio at 10.88%, down 5.65 percentage points from the previous year. Korea Kakao Bank (KakaoBank) recorded 13.48%.

The Financial Supervisory Service expects the capital ratios of internet-only banks to rise by about 3 percentage points starting this year.

This is because, from this year, the Basel III capital adequacy regulations will be applied instead of Basel I, reducing the risk weight applied to personal credit loans from 100% to 75%.

The total capital ratio of bank holding companies at the end of last year was 13.54%, down 0.73 percentage points from the previous year. The Tier 1 capital ratio (12.10%) and common equity tier 1 capital ratio (11.10%) decreased by 0.83 percentage points and 1.19 percentage points, respectively.

The increase in risk-weighted assets (9.9%) of holding companies exceeded the capital growth rate (6.3% based on total capital), which had an impact.

Large holding companies such as KB (14.48%), Hana (13.95%), Shinhan (13.90%), and Nonghyup (14.01%) maintained stable total capital ratios in the 13-14% range. Woori (11.89%), DGB (12.32%), and BNK (12.95%) financial holding companies had relatively lower total capital ratios.

An official from the Financial Supervisory Service said, "Concerns about economic slowdown are being raised due to the novel coronavirus disease (COVID-19) outbreak," adding, "We will continuously monitor to prevent the increase in borrowers' credit risk from spreading to bank insolvency and systemic crises, and if necessary, we will encourage banks to strengthen their loss absorption capacity by expanding capital increases and internal reserves for each bank."

This content was produced with the assistance of AI translation services.