S Korean banks' BIS capital ratio falls in Q1

The capital adequacy ratio of South Korea's local banks fell in the first quarter from three months earlier due to dividend payments to shareholders, the financial watchdog said Friday.

The average capital adequacy ratio under Basel II for 18 local lenders stood at 14.23 percent as of the end of March, down 0.32 percentage points from 14.55 percent at the end of 2010, the Financial Supervisory Service (FSS) said in a statement.

The BIS ratio posted a second straight quarterly decrease in the first quarter. The ratio fell to 14.55 percent as of the end of last year from 14.62 percent three months ago, according to the FSS.

The first-quarter decline came as banks' equity capital contracted on banks' payments of cash dividends to investors while risk-weighted assets increased by 16.7 trillion won (1.55 billion U.S. dollars), according to the statement.

It was also attributable to the credit card unit spin-off by top player Kookmin Bank because the separation reduced equity capital on the balance sheet of the bank. The BIS ratio, a key barometer of banks' financial strength, is calculated by dividing equity capital by risk-weighted assets.

The average Tier capital ratio, excluding supplementary capital such as subordinated debts from equity capital, fell 0.37 percentage points on-quarter to 11.21 percent as of the end of March, the FSS said.

Citibank Korea, National Agricultural Cooperative Federation, Korea Development Bank (KDB) and Shinhan Bank showed particularly high ratio, exceeding 15 percent in BIS capital ratio and 12 percent in Tier ratio, the FSS added.

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