Sh Suhyup Bank said on Feb. 2 it received approval from the Financial Supervisory Service on Jan. 29 for its internal ratings-based approach to credit risk.

The internal ratings-based approach is a system under which banks assess credit risk on their own and can be adopted only if they meet strict supervisory requirements. The approval is significant in that it shows Suhyup Bank's risk management improvements have been recognised externally.

Ahead of the approval, Suhyup Bank has over the past 4 years carried out an intensive overhaul of its risk management framework across the bank, including assessment models, data and infrastructure, as well as its organisation, staffing and risk management culture.

With the adoption of the approach, Suhyup Bank's BIS ratio is expected to improve by more than 3 percentage points. The bank is forecast to achieve capital adequacy on par with major commercial banks.

An improvement in capital ratios can also have a positive impact on the bank's external creditworthiness and funding conditions, creating a virtuous cycle that could lead to higher profitability over the medium to long term.

Suhyup Bank plans to use its expanded capital capacity to accelerate productive finance for key domestic industries, advanced industries and small and medium-sized enterprises, while expanding support for fishers and strengthening marine and fisheries finance.

Bank President Shin Hak-gi (신학기) said, "With stronger fundamentals, Suhyup Bank will be able to play a bigger role in our economy and finance." He said, "We will do our utmost to expand productive finance and become a better bank and deliver better finance."