To Our Stakeholders

Returning to profitability in FY2009 was a top priority for the Bank. Despite the difficult economic conditions, we posted positive net income for four consecutive quarters and exceeded all of our main forecasts for the full fiscal year.

Deposits from our retail customers grew to 63% of Aozora’s total core funding, and both liquidity and funding further stabilized. In FY2009, we achieved a 6.5% reduction in general and administrative expenses from the previous year, and a 13.3% reduction compared to FY2007. The Bank maintained its consolidated capital adequacy ratio at a level that was amongst the highest in the industry.

Combining the corporate finance expertise that our experience has brought with the strengths of our corporate and financial institution customer base, our aim is to create a stable, sustainable earnings structure, and provide the type of value-added services that will attract a greater number of customers. To achieve this, we will strengthen our tailor-made financial solutions to swiftly respond to the precise needs of our customers. In order to best provide for the funding needs of our customers, we intend to continue our expansion of retail funding and create a funding structure combining retail, corporate customer and financial markets funding that strikes a balance between cost and stability.

Although we announced the termination of the alliance agreement with Shinsei Bank, Limited in May 2010, Aozora Bank is well positioned to utilize its strong capital base to generate stable profits over the long term.

Difficult economic conditions are expected to continue into this new fiscal year, but through a focus on the Bank’s core businesses, controlling operational expenses and continuing to be disciplined from a risk management perspective, I believe we can achieve our forecasts for this new fiscal year.

I hope you will take the opportunity to read through the 2010 Annual Report, which includes an explanation of the Bank’s results for FY2009.

On behalf of the management of Aozora Bank, I would like to express my gratitude for your ongoing support.

July 2010
Brian F. Prince
President and Chief Executive Officer, Representative Director