South Korean banks saw their capital adequacy ratios slip in the second quarter from three months earlier on hike in risk-weighted assets, the financial regulator said Monday.

The average capital adequacy ratio of 18 local banks reached 13.88 percent at the end of June, down 0.12 percentage point from the previous quarter, according to the Financial Supervisory Service.

The ratio, a percentage of a bank’s risk-weighted credit exposure, is measured under the Basel II framework set by the Bank for International Settlements and indicates the banks’

capacity to absorb losses and meet risks including liabilities.

The slight fall in the banks’ capital adequacy ratios came as their risk-weighted assets increased by 15.1 trillion won ($13.5 billion) on-quarter in the April-June period as loans extended to some large firms soured or became prone to default on the protracted economic downturn, the FSS said. (Yonhap News)