The Financial Supervisory Service said that South Korean banks' capital adequacy ratio touched a record high last year, mainly on account of a decline in bad assets. CAR of 19 domestic banks stood at 12.98% as at the end of last year, an increase of 0.9 percentage points from the end of the previous year. FSS further said that the higher CAR reflects the decline in banks' risk-adjusted assets and higher profitability. Risk-weighted assets increased 11.5% year-over-year in 2005, while their equity capital increased 19.9%.
 
The state owned Korea Development Bank topped the list with CAR of 18.43%, followed by Citibank Korea with 14.92%, and the Export-Import Bank of Korea with 13.86%. However, local banks reduced the dividends despite recording high net income last year. The local banks are likely to pay out a combined KRW2.2 trillion dividends, KRW 1.4 trillion higher than paid in the previous year, but the dividends to net income ratio declined 0.2 percentage points to 17.3%. 
 

Title: S Korea, Capital Adequacy Ratio

Year

 %

  

 Year

 %

2000

 10.6%

  

 2004

 12.1%

2001

 11.7%

  

 Jun-05

 12.5%

2002

 11.3%

  

 2005

 13.0%

2003

 11.2%

  

  

  

Source: FSS