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Japanese banks post biggest YOY swing in capital strength in Q1

Japanese banks posted the largest year-over-year swing in their common equity Tier 1 ratios for the quarter ended March 31, taking the top two spots at either end of a S&P Global Market Intelligence ranking exercise for the region's largest lenders.

The ratio measures a bank's CET1 capital as a percentage of risk-weighted assets, and banks in the region must have CET1 ratios of at least 7% by 2019 under Basel III requirements, consisting of a 4.5% common equity Tier 1 ratio and a 2.5% capital conservation buffer. Some banks may be subject to additional domestic capital buffer stipulations.

Among the Asia-Pacific lenders with total assets above US$400 billion as of March 31, Sumitomo Mitsui Financial Group Inc. posted the largest year-over-year CET1 ratio jump of 233 basis points, while Mizuho Financial Group Inc. came in second with a 115-basis-point rise.

At the opposite end, Japan Post Bank Co. Ltd. posted the sharpest year-over-year decline of 478 basis points, even though its ratio was second-highest for the quarter. Resona Holdings Inc. recorded the next largest year-over-year fall with a drop of 105 basis points.

Of the 10 lenders that reported ratios below 10%, nine are based in China and one in India. Ping An Bank Co. Ltd. and Hua Xia Bank Co. Ltd. each posted the rankings' lowest ratio of 8.19% for the period, with China CITIC Bank Corp. Ltd. turning in the next lowest indicator of 8.58%. The State Bank of India posted a ratio of 9.86%.

Meanwhile Japan's Norinchukin Bank recorded the highest CET1 ratio of 19.02% for the period, followed by Japan Post Bank's 17.44%. South Korea's KB Financial Group Inc. was third with a ratio of 14.61%.

SNL Image

SNL Image

See a section dedicated to capital adequacy for your bank. To do so, search the company in the top search box and go to the "Capital Adequacy" section, housed under the Templated Financials on the left-hand panel. Here is an example for Sumitomo Mitsui Financial Group.

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