Domestic Banks' BIS Capital Ratio Increased by 0.37%p at the End of Last Year

Financial Supervisory Service building in Yeouido, Seoul. Photo by Younghan Heo younghan@

At the end of December last year, the total capital ratio of domestic banks based on the Bank for International Settlements (BIS) standards recorded 15.66%, rising by 0.37 percentage points compared to the end of the previous year.

According to the Financial Supervisory Service on the 29th, the common equity tier 1 capital ratio and the tier 1 capital ratio were 13.01% and 14.29%, respectively, increasing by 0.40 percentage points and 0.38 percentage points compared to the previous year. The simple tier 1 capital ratio rose by 0.39 percentage points to 6.59% compared to the end of the previous year.

The BIS-based capital ratio is the ratio of equity capital to total assets (risk-weighted assets) and is considered a key indicator to gauge the soundness of a bank's financial structure. The regulatory standards set by the supervisory authorities are 7.0% for the common equity tier 1 capital ratio, 8.5% for the tier 1 capital ratio, and 10.5% for the total capital ratio.

The Financial Supervisory Service explained that as of the end of December, all domestic banks' capital ratios exceeded the regulatory thresholds, indicating a sound level. Based on the total capital ratio, KB Kookmin, Shinhan, Hana, NH Nonghyup, Woori Bank, as well as Citi, Kakao, and SC First Bank all exceeded 15%, showing a very stable condition, the Financial Supervisory Service added.

Based on the common equity tier 1 capital ratio, Citi, Kakao, and SC First Bank showed relatively high levels above 14%, while KB Kookmin, Hana, and Shinhan Banks were above 13%.

A Financial Supervisory Service official stated, "Due to concerns over increased financial market volatility this year caused by uncertainties in major countries' monetary policies and a sluggish real estate market, we will strengthen monitoring of the capital adequacy status of domestic banks," adding, "We plan to continuously refine the bank soundness system to enhance loss absorption capacity."

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