In the third quarter of this year, the Bank for International Settlements (BIS)-based capital ratio, a soundness indicator for domestic banks, was shown to have declined slightly due to the impact of a strong exchange rate.
According to the Financial Supervisory Service on Dec. 5, the BIS-based total capital ratio of domestic banks at the end of September was 15.87%, down 0.14 percentage points (p) from the end of the previous quarter. The common equity tier 1 ratio was 13.59% and the tier 1 capital ratio was 14.84%, down 0.03 percentage points and 0.09 percentage points, respectively, from the end of the previous quarter.
The BIS-based capital ratio is the ratio of equity capital to total assets (risk-weighted assets) and is a bank soundness indicator. The regulatory standards set by the supervisory authority are a common equity tier 1 ratio of 8.0%, a tier 1 capital ratio of 9.5%, and a total capital ratio of 11.5%.
The Financial Supervisory Service (FSS) said, "Common equity increased, but due to the rise in the exchange rate, the converted amount of risk-weighted assets of foreign currency loan assets increased even more, so the capital ratio fell." It added, "All domestic banks are well above the capital regulatory ratios, at a favorable level."
For the total capital ratio, Woori, KB, Shinhan, Citi, SC, and KakaoBank exceeded 16%, showing a very stable profile. In contrast, BNK was relatively low at below 14%. For the common equity tier 1 ratio, Citi, SC, Kakao, Export-Import, and Toss were at 14% or higher, while KB, Hana, Shinhan, and Industrial were at 13% or higher.
Meanwhile, at nine banks including KakaoBank (-1.60 percentage points) and SC (-0.84 percentage points), the common equity tier 1 ratio fell from the end of the previous quarter, while at eight banks including Toss (+0.20 percentage points) and JB (+0.32 percentage points), it rose.