Banks hold onto profits
LONDON: Lenders are meeting regulators' demands to increase capital by holding onto profits rather than curbing lending, according to a report by the Bank for International Settlements (BIS).
Banks increased capital ratios to an average of 8.5 per cent at the end of June 2012 from 5.7 per cent at the end of 2009, the BIS wrote in a quarterly review published yesterday.
Leverage ratios, which measure equity capital as a proportion of total assets, rose to 3.7 per cent from 2.8 per cent over the period.
Most of the increase came from banks reducing dividends and widening lending spreads, said the BIS, a group of regulators and central bankers that sets global capital standards. Bloomberg