This article analyzes the Financial Services Agency's report on regional banks' stress test results and measures to strengthen their response capabilities.
Main Points
1. Stress Test Results Overview
- Target: 102 regional banks (64 regional banks, 38 second-tier regional banks)
- Scenario: GDP decline of 5%, stock price fall of 40%, interest rate rise of 2%
- Capital adequacy ratio below 8%: 12 banks (12% of total)
- Average capital adequacy ratio: Declined from 11.2% to 8.9% (down 2.3 percentage points)
2. Vulnerability Factor Analysis
- Credit cost surge: Non-performing loan ratio increased by an average of 2.5 times
- Securities valuation losses: Average 15% loss due to interest rate rises
- Regional economic dependence: 70% of local companies affected
- Insufficient profitability: 40% of banks have core business net profit ROA below 0.2%
3. Characteristics by Business Category and Region
- Regional areas: Greater impact in population-declining areas (down 3.5 percentage points)
- Metropolitan areas: Real estate risk exposure becomes a risk
- By size: Small and medium-sized regional banks show significant vulnerability
- Business model: High risk for banks dependent on securities investment
4. Measures to Strengthen Response Capabilities
- Capital enhancement: Issue subordinated bonds, consider utilizing public funds
- Advanced risk management: Comprehensive risk management, AI utilization
- Strengthening profitability: Target 30% non-interest income ratio
- Business integration: Regional reorganization, promotion of wide-area cooperation
5. Regulatory Policy and Future Measures
- Early warning system: Strengthen quarterly monitoring
- Capital buffer: Phased implementation of additional capital requirements
- Business improvement orders: Guidance on creating profit improvement plans
- Best practice sharing: Horizontal expansion of successful cases
The article concludes that while the soundness of regional banks' management is generally maintained, vulnerabilities appear under severe stress, making daily preparation work extremely important.