The capital adequacy ratio of South Korean banks edged down in the fourth quarter of 2010 from three months earlier due to their payouts of year-end stock dividends, the financial regulator said Wednesday.

   The average capital adequacy ratio of 18 local lenders, including top lender Kookmin Bank and Woori Bank, reached 14.6 percent as of the end of December, down 0.02 percentage point from end-September, the Financial Supervisory Service (FSS) said in a quarterly report.

   The weaker reading in the capital adequacy rate, a key barometer of financial strength, came as lenders tapped their capital holdings in the October-December period to pay out dividends to shareholders, the FSS noted.

   The latest result marks the third straight quarterly fall since the rate posted a record-high level of 14.7 percent at the end of March last year, according to the regulator.

   Compared with a year earlier, the rate was up 0.23 percentage point at the end of 2010, it added.

   The average core capital ratio, called Tier I capital rate, also shed 0.12 percentage point on-quarter to 11.63 percent as of end-December, the FSS noted.

   Meanwhile, the average capital adequacy rate of seven bank holding firms rose 0.13 percentage point on-quarter to reach 13.52 percent as of the end of December, the financial watchdog said in a separate statement.

   The stronger result is attributable to the banking groups' increased interest income, according to the FSS.

   "The FSS will conduct thorough supervision of the firms' financial health so that they don't compromise their soundness due to their ongoing race for mergers and acquisitions and loan asset growth," the FSS said. (Yonhap News)