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financial conglomerates-capital adequacy ratio

Financial conglomerates' capital adequacy ratios down in 2022 on higher interest rates

SEOUL, June 14 (Yonhap) -- South Korean financial conglomerates' capital adequacy ratios fell in 2022 from a year earlier on higher interest rates, preliminary data showed Wednesday.

The average capital adequacy ratios of six financial conglomerates -- Samsung, Hanwha, Mirae Asset, Kyobo, Hyundai Motor and DB -- stood at 186.5 percent as of December of last year, compared with 226.4 percent previously, according to data from the Financial Supervisory Service (FSS).

The tally is a version where risk-weighted assets were reflected for the first time in the capital adequacy ratio.

When the risk-weighted assets were not reflected, the adequacy ratio was 194.2 percent in December 2022, down from 226.4 percent a year ago.

The FSS said higher interest rates are to blame for the reduced capital adequacy ratios and advised the financial conglomerates to prepare for potential risks, including financial market volatility.

The integrated equity of the companies came in at 116.7 trillion won (US$91.6 billion) as of end-December, down 16.7 trillion won from a year ago mainly due to lower valuation gains from available-for-sale securities.

But aggregate requisite capital increased to 62.6 trillion won on-year from 58.9 trillion won.

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