The capital adequacy ratio of South Korean banks fell in the third quarter from three months earlier.
This was due to weak earnings and growing risk-weighted assets, reports Yonhap News.
The average capital adequacy ratio under Basel II for 18 local lenders stood at 14.17 percent as of the end of September, down 0.23 percentage point from three months before, according to the Financial Supervisory Service.
The ratio, which is calculated under the Basel framework set by the Bank for International Settlements, declined in four quarters due to reduced earnings growth and an expansion in risk- weighted assets.
Net profits of 18 domestic banks totaled 2.4 trillion won or US 2.06 billion during the July-September period, down from 5.5 trillion won tallied in the second quarter.
Risk-weighted assets increased as the conversion value of external credit surged in the third quarter after the local currency depreciated sharply against the U.S. dollar amid the deepening global financial turmoil.
All the 18 banks met the standard of financial soundness in the third quarter required by the financial watchdog, which asks banks to hold the BIS ratio and Tier 1 ratio at over 10 percent and 7 percent respectively.
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