Capital adequacy ratio of banks inches down in Q1

The capital adequacy ratio of South Korean banks slightly fell in the first quarter of the year from three months earlier, largely due to compensation for a derivatives-linked product sales fiasco, data showed Thursday. The average capital ratio of 17 commercial and state-run banks here had come to 15.57 percent as of end-March, down 0.10 percentage point from three months earlier, according to the data from the Financial Supervisory Service. The capital adequacy ratio is a key gauge of financial soundness by measuring the proportion of a bank's capital against its risk-weighted assets. The banks are required to keep the ratio at 10.5 percent or higher. The financial watchdog said the fall came as some local banks set aside funds for customers who suffered losses related to equity-linked securities products tracking Chinese shares on Hong Kong's H Index. Source: Yonhap News Agency