Korean Banks’ BIS Capital Ratios Edge Down on Bigger Dividends, Weaker Won

At the end of last year, South Korean banks’ capital ratios under the Bank for International Settlements framework slipped slightly from the previous quarter, reflecting larger dividends tied to expanded shareholder returns and the impact of a weaker currency.

The Financial Supervisory Service said on Monday that banks’ total capital ratio stood at 15.83% at the end of 2025, down 0.09 percentage point from the end of the previous quarter.

The common equity Tier 1 ratio was 13.51% and the Tier 1 capital ratio was 14.80%, down 0.12 percentage point and 0.08 percentage point, respectively. The leverage ratio was 6.76%, down 0.07 percentage point.

BIS capital ratios measure capital relative to risk-weighted assets and are a key gauge of banks’ financial soundness.

The FSS said net profit remained solid, but year-end dividends tied to expanded shareholder returns reduced common equity. It added that rising exchange rates increased risk-weighted assets for foreign-currency loan portfolios.
Regulators require banks to keep the common equity Tier 1 ratio above 8.0%, the Tier 1 ratio above 9.5% and the total capital ratio above 11.5%. All domestic banks exceeded those thresholds.

By bank, KB, Woori, Citi, SC, the Export-Import Bank of Korea, Suhyup, Kakao Bank and Toss Bank each posted total capital ratios above 16.0%, which the FSS described as very stable. BNK remained below 14%, a relatively low level.

Among the five major financial holding groups, total capital ratios were KB at 16.16%, Woori at 16.13%, Shinhan at 15.92%, NongHyup at 15.63% and Hana at 15.61%.

Common equity Tier 1 ratios were above 14% at Citi, SC, the Export-Import Bank of Korea, Suhyup, Kakao Bank and Toss Bank. KB, Hana, Shinhan and Korea Development Bank were above 13%, indicating generally sound levels.

Thirteen banks saw their common equity Tier 1 ratios fall from the previous quarter, including Citi (-2.67 percentage points), SC (-1.62), Kakao Bank (-0.70), Korea Development Bank (-0.61) and K Bank (-0.48). Four banks posted increases: Suhyup (3.98), the Export-Import Bank of Korea (0.66), Hana (0.05) and iM (0.03).

An FSS official said banks should prepare for the possibility of larger credit losses and weaker capital ratios amid heightened geopolitical risks, including the situation in the Middle East, as well as high oil prices and elevated exchange rates. The official said the watchdog will strengthen monitoring of capital adequacy and continue to encourage banks to bolster loss-absorbing capacity so they can maintain soundness while carrying out plans for “productive and inclusive finance.”