Stable Capital Ratios Maintained in Banking Sector... Financial Supervisory Service "Continues to Encourage Capital Expansion"

Current Capital Ratios of Domestic Banks.

[Asia Economy Reporter Song Seung-seop] The capital ratios of domestic banks in the first quarter of this year were recorded at levels similar to those at the end of the previous year. The Financial Supervisory Service (FSS) plans to prepare for the possibility of unexpected losses increasing, considering the worsening domestic and international economic conditions.

According to the FSS on the 8th, as of the end of March, the Common Equity Tier 1 (CET1) capital ratio of domestic banks based on the Bank for International Settlements (BIS) standards was 12.99%, exceeding the regulatory ratio of 7%. The Tier 1 capital ratio (14.22%), total capital ratio (15.52%), and simple Tier 1 capital ratio (6.42%) also surpassed their respective regulatory thresholds of 8.5%, 10.5%, and 3.0%.

The BIS ratio is an indicator designed to ensure the financial soundness of banks. It represents the ratio of a bank's capital to its risk-weighted assets. The higher the ratio, the more capital the bank holds, indicating greater soundness.

Overall, as domestic banks' loans increased, risk-weighted assets rose by 5.17 trillion KRW (2.6%). However, with increased net profits and capital increases, capital also grew by 7.7 trillion KRW (2.5%), keeping the ratios similar. Specifically, the total capital ratio and simple Tier 1 capital ratio slightly decreased by 0.01 percentage points and 0.08 percentage points, respectively. The Tier 1 capital ratio increased by 0.04 percentage points. The Common Equity Tier 1 capital ratio remained the same as last year.

The FSS will continue to encourage banks to increase their capital so that, despite domestic and international economic shocks, banks can faithfully perform their fund intermediation functions based on sufficient loss-absorbing capacity. In particular, supervision will be strengthened focusing on the Common Equity Tier 1 capital ratio, which represents the core loss-absorbing capacity of banks, to enhance banks' capital adequacy.

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