Korea's Top 5 Financial Groups See Q1 RWA Rise as Won-Dollar Rate Tops 1,510
Updated
Updated · en.sedaily.com · May 26
Korea's Top 5 Financial Groups See Q1 RWA Rise as Won-Dollar Rate Tops 1,510
2 articles · Updated · en.sedaily.com · May 26
Four of Korea's five biggest financial holding companies posted lower CET1 ratios in the first quarter after risk-weighted assets climbed across all five groups.
The pressure came from the won-dollar rate jumping from the high-1,440s at end-2025 to above 1,510 intraday in Q1, inflating won-converted foreign-currency assets and OTC derivatives exposure.
Shinhan and Hana saw the sharpest RWA increases: Shinhan's rose more than 12 trillion won to 365 trillion won and Hana's to 301.1 trillion won, pushing their CET1 ratios down to 13.19% and 13.09%.
KB and NH NongHyup also recorded weaker capital ratios, while Woori was the exception, lifting CET1 to 13.6% even as its RWA increased to 241 trillion won.
Banks estimate the exchange-rate surge shaved about 0.25 percentage point off CET1 ratios, a hit that could force slower asset growth and weigh on policy efforts to expand corporate lending.
As the US loosens bank capital rules, is Korea's financial system facing an impossible currency stress test?
Could tokenizing assets be the key to shielding Korean banks from devastating currency shocks?
Korean Banks Face Capital Ratio Squeeze as RWA Soars Amid Won Depreciation in Q1 2026
Overview
In the first quarter of 2026, South Korea’s major financial institutions faced significant pressure on their capital ratios due to a sharp depreciation of the Korean won against the U.S. dollar. This currency drop led to a decline in Common Equity Tier 1 (CET1) ratios, forcing banks to consider slowing their asset growth to maintain regulatory compliance. As a result, the government’s efforts to expand productive financing, especially in corporate lending, encountered new challenges. In response, financial groups prioritized managing Risk-Weighted Asset (RWA) growth and shifted their focus toward high-quality asset portfolios to stabilize their capital positions.