Preliminary figures compiled by the FSS show that as of the end of March this year, the BIS capital adequacy ratio averaged 12.05%, 0.03 percentage points down from 12.08% at the end of 2004 but 0.56 percentage points up from a year earlier.

With domestic banks posting a net income of KRW2.8 trillion in the first quarter of 2005, Tier-1 capital increased by KRW3.7 trillion, but a 1.3% increase in risk-weighted assets coupled with a KRW2.8 trillion reduction in Tier-2 capital pushed the ratio slightly lower. Domestic banks, however, continue to have a good capital base: they achieved a qualitative improvement in their capital base with the Tier-1 capital ratio rising by 0.34 percentage points from a year earlier.

With the ratios of Chohung Bank and Korea Exchange Bank rising steadily, it is forecast that all BIS capital adequacy ratios of domestic banks will be higher than 10% at the end of this year.

* Please refer to the attached PDF for details.