banks-capital adequacy ratio

Banks' average capital adequacy ratio rises in Q4

SEOUL, March 30 (Yonhap) -- South Korean banks saw their financial health improve on-year in the fourth quarter of last year from three months earlier due to a decrease in risk-weighted assets, data showed Thursday.

According to the data from the Financial Supervisory Service (FSS), the average capital adequacy ratio of 17 commercial and state-run banks had stood at 15.25 percent as of end-2022, up from 14.84 percent three months earlier.

The FSS said that the on-quarter rise is due in part to a decline in their risk-weighted assets amid falling won-dollar exchange rates.

The ratio is a key gauge of financial soundness by measuring the proportion of a bank's capital against its risk-weighted assets.

The Switzerland-based Bank for International Settlements, an international organization of central banks, advises lenders to maintain a ratio of 8 percent or higher.

"The FSS will encourage banks to expand their loss-absorbing capacity so that they can remain sound and fulfill their roles in the face of internal and external economic shocks," it said.

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