SEOUL, June 1 (Yonhap) — South Korean banks saw their financial health improve in the first quarter from three months earlier as they recorded high net profits and raised capital amid the COVID-19 pandemic, data showed Tuesday.
The average capital adequacy ratio of 16 commercial and state-run banks stood at 15.34 percent as of end-March, up 0.34 percentage point from the end of last year, according to the data from the Financial Supervisory Service (FSS).
A key barometer of financial soundness, the ratio measures the proportion of a bank’s capital to its risk-weighted assets.
The rise came as their risky loans expanded at a slower pace than their total capital, which includes net profits.
The FSS said most lenders had higher capital adequacy ratios than the international standard, despite a steady rise in lending stemming from the coronavirus outbreak.
The Switzerland-based Bank for International Settlements (BIS), an international organization of central banks, advises lenders to maintain a ratio of 8 percent or higher.
At the end of March, KB Kookmin, Hana, Shinhan and other major lenders boasted stable capital adequacy ratios of 15-18 percent.
The figure for two state banks — the Korea Development Bank and the Export-Import Bank of Korea — came to 15.85 percent and 15.28 percent, respectively.