Domestic Banks' BIS Ratio at 16.73% at End of Q1... Slight Increase

Improvement in Bank Holding Companies' Asset Soundness

[Asia Economy Reporter Jin-ho Kim] The total capital ratio of domestic banks under the Bank for International Settlements (BIS) slightly increased.

According to the Financial Supervisory Service's announcement on the 1st, the BIS total capital ratio of 19 domestic banks as of the end of March 2021 recorded 16.73%. This is a 0.21 percentage point rise compared to the end of last year (16.52%).

The BIS total capital ratio refers to the ratio of capital to risk-weighted assets. Considering that the regulatory total capital ratio set by financial authorities is 10.5%, domestic banks maintain a stable capital ratio.

The improvement in banks' total capital ratios in the first quarter was influenced by a significant decrease in risk-weighted assets at Hana Bank, which introduced the Basel III final accord during this period, and DGB Daegu Bank, which received approval for the internal ratings-based approach.

Looking at individual banks, KakaoBank had the highest ratio at 19.85%. It was followed by Citibank (19.93%), Hana Bank (16.32%), and Kookmin Bank (16.00%). On the other hand, K Bank (14.20%) and Suhyup Bank (13.28%), which saw a sharp increase in loan assets, experienced a decline in their capital ratios.

The asset soundness of bank holding companies also improved. As of the end of March, the BIS total capital ratio of bank holding companies was 15.16%, up 0.53 percentage points from the previous quarter at the end of last year (14.63%).

A Financial Supervisory Service official explained, "Despite COVID-19, the capital ratios of domestic banks continue to rise. However, some banks have rapidly increasing assets and relatively low common equity tier 1 capital ratios, so capital ratio management needs to be strengthened."

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