[THE INVESTOR] South Korean banks suffered a net loss in the second quarter from a year earlier due to increased non-performing loans, the financial watchdog said on Sept. 1.

The country‘s 17 commercial and state-run banks posted a combined net loss of 400 billion won (US$358 million) in the April-June period, swinging from a net profit of 2.2 trillion won a year earlier, the Financial Supervisory Service said in a statement.

The FSS said state-run banks incurred a net loss of 2 trillion won due to the ongoing restructuring of the shipping and shipbuilding industries in the second quarter, compared with a net profit of 300 billion won a year ago.

Quarter-on-quarter, the banks saw their financial health improve slightly in the second quarter helped by increased capital and decreased risky assets, the statement said.

Their average capital adequacy ratio stood at 14.39 percent as of the end of June, up 0.41 percentage point from the previous quarter, it said.

The amount of the banks’ equity capital increased 2.7 trillion won in the second quarter, while their risky assets decreased 22.3 trillion won, the statement said.

KEB Hana Bank, South Korea’s largest bank by assets, posted the highest capital ratio of 16.82 percent, followed by Citibank Korea with 16.49 percent and the state-run Korea Development Bank with a ratio of 15.15 percent.

(theinvestor@heraldcorp.com)