Bank Capital Soundness Improves on Net Income, Paid-in Capital Increases... Q2 Capital Ratio Up 0.12%p

Key Capital Ratios, Including CET1, Rise Across the Board

All Banks Surpass Regulatory Requirements

FSS: "External Uncertainties Persist"

The BIS (Bank for International Settlements) capital adequacy ratio of domestic banks saw a slight improvement in the second quarter of this year. This was due to the increase in capital, driven by net profit and paid-in capital increases, outpacing the growth in risk-weighted assets.

According to the “Status of BIS Capital Adequacy Ratio of Domestic Banks as of the End of June (Provisional),” published by the Financial Supervisory Service on August 31, the common equity tier 1 (CET1) capital ratio as of the end of June stood at 13.62%, up 0.12 percentage points from the previous quarter’s end (13.50%). This improvement came as common equity capital grew by 8.8 trillion won (2.2%) due to second-quarter net profit and paid-in capital increases, while risk-weighted assets only rose by 42.6 trillion won (1.7%).

The tier 1 capital ratio and total capital ratio also increased to 14.84% and 15.77%, respectively, marking rises of 0.08 percentage points and 0.03 percentage points compared to the previous quarter. In contrast, the leverage ratio edged down by 0.07 percentage points to 6.59% from 6.66% at the end of the previous quarter.

As of the end of June, all domestic banks maintained capital ratios well above regulatory requirements. In terms of the CET1 ratio, Citibank, Standard Chartered Bank Korea, K Bank, KakaoBank, Toss Bank, Suhyup Bank, and Export-Import Bank of Korea posted ratios above 14%, while KB Financial Group, Shinhan Financial Group, Hana Financial Group, Woori Financial Group, and Korea Development Bank held ratios above 13%, indicating relatively high levels.

Based on the total capital ratio, Woori Financial Group, NongHyup Financial Group, Citibank, Standard Chartered Bank Korea, K Bank, KakaoBank, Toss Bank, Suhyup Bank, and Export-Import Bank of Korea exceeded 16%. BNK Financial Group recorded a total capital ratio of 13.48%, indicating a relatively lower level.

Meanwhile, NongHyup Financial Group’s capital ratio recorded the largest increase, rising by 0.94 percentage points from the end of the previous quarter due to the impact of a paid-in capital increase. The common equity tier 1 capital ratios also rose for Standard Chartered Bank Korea (up 0.78 percentage points), iM Bank (up 0.25 percentage points), Citibank (up 0.16 percentage points), and Shinhan Financial Group (up 0.13 percentage points).

On the other hand, K Bank’s capital ratio declined by 1.39 percentage points from the previous quarter, and the ratios for Export-Import Bank of Korea (-0.22 percentage points), Suhyup Bank (-0.20 percentage points), and BNK Financial Group (-0.15 percentage points) also fell.

The Financial Supervisory Service assessed that while domestic banks are generally maintaining sound capital ratios, there is potential for increased credit risk due to persistent external uncertainties—such as the prolonged situation in the Middle East—and changes in economic conditions, including base rate hikes.

A Financial Supervisory Service official stated, “We plan to encourage banks to further strengthen their loss-absorbing capacity and capital adequacy management, so that they can solidly uphold financial soundness and continue to fulfill their role as financial intermediaries.”

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