South Korean banks saw their financial health improve in the second quarter from three months earlier despite a rise in risk-weighted assets largely thanks to their quarterly net profit and additional issuance of subordinated bonds, preliminary data showed Monday.

The average total capital ratio of 20 commercial and state-run banks, and eight bank holding companies stood at 15.62 percent in end-June, slightly up from 15.61 percent three months ago, according to the Financial Supervisory Service (FSS).

The ratio is a key gauge of financial soundness by measuring the proportion of a bank’s capital against its risk-weighted assets.

The FSS attributed the on-quarter increase to increased capital of banks and holding firms thanks to their quarterly net profit and issuance of additional subordinated bonds.

The banks’ and holding firms’ total capital grew 6.2 trillion won (US$4.7 billion) , or 1.8 percent, on-quarter in the April-June period.

But risk-weighted assets expanded 37.9 trillion won, or 1.7 percent, on increased loans.

The FSS said the banks’ capital ratios satisfy regulatory requirements, but they should be prepared for more volatile financial markets and worse economic situations at home and abroad.

Source: Yonhap News Agency