By Kang Seung-woo
The Export-Import Bank of Korea (Eximbank), Korea Exchange Bank (KEB) and Kookmin Bank recorded the sharpest drops in their Bank for International Settlements (BIS) ratio in the second quarter.
The Financial Supervisory Service (FSS) said Tuesday that Eximbank’s capital adequacy ratio dipped 1.04 percentage points, KEB lost 1.02 percentage points and Kookmin sank by 0.88 percentage points from three months earlier, while the average ratio of 18 lenders marked 14.29 percent as of the end of June, down 0.41 percentage points from May.
The average fell from a record high of 14.7 percent in the preceding quarter, the sixth quarter that had seen the ratio go up.
Several provincial banks ― Daegu, Busan, Jeju and Kyongnam banks ― along with the National Agricultural Cooperative Federation (Nonghyup) saw the ratio increase in the range of 0.01 percentage points to 0.47 percentage points.
The BIS ratio measures the financial soundness of a bank by comparing its capital and risk-weighted assets.
In the second quarter, the equity capital of banks dropped 0.9 percent or 1.4 trillion won ($1.17 billion) from the first quarter, and risk-weighted assets rose 2 percent or 21 trillion won, affected by an increase in won-based lending and the currency’s weakness against the U.S. dollar, which raised the conversion value of foreign currency-denominated loans and derivatives, according to the FSS.
The Tier 1 ratio, a measurement of core capital, for the lenders logged 11.33 percent as of the end of June, down 0.06 percentage points from the previous quarter.
“All local banks remain financially sound because their BIS and Tier 1 ratios are above the level of the first grade – 10 percent and 7 percent apiece,” an official of the FSS said. “But due to market uncertainties and pushes to tighten bank’s capital rules, the FSS will advise them to maintain appropriate capital standards.”