S Korean banks' BIS capital ratio rises in Q4

13:57, March 09, 2011      

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The capital adequacy ratio of South Korea's domestic banks rose in the fourth quarter of last year, the financial regulator said Wednesday.

The average capital adequacy ratio under Basel II for the country's 18 local lenders stood at 14.60 percent as of the end of December last year, up 0.23 percentage points from 14.36 percent at the end of 2009, the Financial Supervisory Service (FSS) said in a quarterly report.

The ratio's slight rise came as the domestic banks' total equity capital increased 1.2 percent in the fourth quarter from a year earlier while risk-weighted assets decreased 0.4 percent, according to the report. The BIS ratio, a key barometer of financial strength, is calculated by dividing equity capital by risk-weighted assets.

Compared with three months earlier, the average BIS capital ratio of local banks fell 0.02 percentage points due to massive payments of dividend by Hana Bank.

Hana Bank decided to pay 1.9 trillion won (1.7 billion U.S. dollars) in fourth-quarter dividend to its holding company Hana Financial Group in a bid to support the Group's financing for acquiring the Korea Exchange Bank (KEB).

The total equity capital of local lenders decreased 0.3 percent or 449.7 billion won in the October-December period from three months earlier and their risk-weighted assets reduced 0.3 percent, the report showed.

The average Tier I capital ratio, excluding supplementary capital such as subordinate debts from equity capital, rose 0.70 percentage points to 11.63 percent as of the end of December last year, the FSS said.

The core capital ratio, however, was down by 0.12 percentage points in the fourth quarter, affected by dividend payments, the regulator added.

Korea Development Bank (KDB), Citibank Korea, KEB, Shinhan Bank and National Agricultural Cooperative Federation showed particularly high ratio, exceeding 16 percent in BIS capital ratio and 12 percent in Tier I capital ratio.

Meanwhile, the average consolidated BIS capital ratio of South Korea's seven bank holding companies came in at 13.52 percent as of the end of December, up 0.13 percentage points from the previous quarter, the FSS said in a separate report.

The consolidated BIS ratio is the rate of equity capital, including Tier I and supplementary capital minus deductions, to total risk-weighted assets of a bank holding company.

The consolidated Tier I capital ratio, an indicator of the quality of capital, was also rose to 10.38 percent in the fourth quarter from 10.27 percent in the third quarter, according to the FSS.

The rise in the ratios is attributable to the banking groups' strong earnings backed by improved net interest margin, the FSS added.

Source: Xinhua
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