S. Korean banks stronger in Q2

SEOUL, Sept. 2 (Yonhap) -- The financial strength of South Korean banks improved
sharply in the second quarter as they made greater efforts to boost capital and
earned more income, the nation's financial watchdog said Wednesday.

The average capital ratio of 18 commercial and state banks stood at 13.74 percent
as of the end of June, compared with 12.94 percent three months earlier,
according to the Financial Supervisory Service (FSS). The June figure marked a
record high, the FSS said.
The ratio, a key barometer of solvency, gauges the percentage of a bank's capital
to its risk-weighted credit.
"Continued efforts to replenish capital along with positive earnings boosted
equity capital for the banks, while less derivative trading and a stronger local
currency pushed down risk-weighted assets," the FSS said in a statement.
The lenders' tier-1 ratio, a measure of core capital, reached 10.3 percent at
end-June, rising from 9.51 percent three months earlier, the regulator said.
During the April-June period, the lenders raised a combined 5.3 trillion won
(US$4.3 billion) by selling new shares and bonds. Their total net profit reached
2.1 trillion won, according to the FSS.
Banks have been seeking to shore up their capital adequacy ratios as the slowing
economy and a credit crunch threatened to boost the number of problem loans.
The watchdog said the lenders were maintaining stable capital levels to soak up
potential losses, and that it will take steps to clear their bad debts.
pbr@yna.co.kr
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