SEOUL, Aug. 31 (Xinhua) -- South Korean banks' capital adequacy ratios rebounded in the second quarter, boosted by solid quarterly earnings and paid-in capital increases, financial watchdog data showed Monday.
The common equity tier-1 ratio for 28 domestic banks, bank holding companies and internet-only banks under the Bank for International Settlements (BIS) framework averaged 13.62 percent at the end of June, up 0.12 percentage points from three months earlier, according to the Financial Supervisory Service (FSS).
The growth came after being unchanged at 13.5 percent in the January-March quarter.
The second-quarter improvement was attributed to a 2.2 percent expansion in common equity, fueled by net profit gains and paid-in capital increases, which outpaced a 1.7 percent growth in risk-weighted assets.
The tier-1 capital ratio rose 0.08 percentage points to 14.84 percent, and the total capital ratio grew 0.03 percentage points to 15.77 percent in the April-June quarter.
The ratios, a barometer of financial soundness, measure the proportion of a bank's capital to its risk-weighted assets.
Under the regulatory requirements, the minimum thresholds are set at 8 percent for a common equity tier-1 ratio, 9.5 percent for a tier-1 capital ratio, and 11.5 percent for a total capital ratio.
Despite the improved figures, the FSS emphasized the need for continued vigilance due to external uncertainties such as the prolonged geopolitical risks in the Middle East and interest rate hikes that can lead to expanded credit risks and lower capital ratios.
The country's central bank raised its benchmark interest rate by 25 basis points to 3 percent last week, delivering back-to-back rate hikes amid rising worries about inflationary pressure and household debts. ■