Domestic Banks' Capital Ratios Slightly Increase QoQ in Q2... Remain at Healthy Levels

Financial Supervisory Service: "All Domestic Banks Exceed Regulatory Ratios"

At the end of June, the capital ratios of domestic banks slightly increased compared to the end of the previous quarter, and all banks maintained a sound level by exceeding the regulatory capital ratios.

As of the end of June, the Common Equity Tier 1 (CET1) ratio, Tier 1 capital ratio, total capital ratio, and simple Tier 1 capital ratio of domestic banks based on the Bank for International Settlements (BIS) standards were 12.98%, 14.27%, 15.62%, and 6.53%, respectively. These figures represent increases of 0.08 percentage points, 0.01 percentage points, 0.01 percentage points, and 0.04 percentage points compared to the end of March.

Although risk-weighted assets expanded by KRW 37.9 trillion (1.7%) due to loan growth, capital also increased by KRW 6.2 trillion (1.8%) through quarterly net income realization and subordinated bond issuance, resulting in a slight rise in capital ratios.

As of the end of June, all domestic banks exceeded the regulatory capital ratios. Five banks (Citibank, Industrial Bank, Export-Import Bank, KB, and DGB), whose total capital growth rates were higher than the risk-weighted asset growth rates, saw an increase in their total capital ratios compared to the previous quarter.

Twelve banks (Kakao, Toss, Suhyup, SC, JB, BNK, Woori, Industrial, Hana, Shinhan, Nonghyup, and K) that experienced a slight decrease in total capital or a relatively large increase in risk-weighted assets saw a decline in their total capital ratios.

An official from the Financial Supervisory Service (FSS) stated, "Given the ongoing uncertainties in the financial markets such as rising exchange rates and interest rates, as well as worsening domestic and international economic conditions including the sluggish Chinese real estate market, it is necessary to secure sufficient capital buffers."

The FSS plans to monitor the capital ratios of domestic banks and strengthen capital adequacy management, especially for banks with relatively weak capital ratios. Additionally, it will encourage banks to prepare for the imposition of countercyclical capital buffer requirements and the introduction of stress buffer capital systems to ensure they have adequate capital buffers to respond to domestic and external uncertainties.

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