During the first half of fiscal year 2008, global markets experienced some of the most severe conditions witnessed in memory. Financial institutions across the globe have recorded changes once thought unimaginable and have experienced extreme tests to their levels of capitalization. Aozora Bank has not been immune to the turmoil and recorded an ordinary loss of ¥35.6 billion and a net loss of ¥28.0 billion during the first half. However, these losses were not as a result of poor performance of our core business but rather isolated to four specific exposures, namely GMAC, CDOs, hedge funds and Lehman Brothers. To the contrary, Aozora Bank’s core business of lending on a secured basis in the domestic Japanese market continues to perform well despite the challenging environment.

I believe the banks that will be best positioned to successfully address the ongoing market and economic challenges will possess strong capital positions like Aozora Bank. The Bank’s Tier 1 Capital Ratio of 14.75% as of September 30, 2008, remains one of the highest in Japan. On November 17 Aozora Bank initiated a stock buy-back program, a testament not only to its sound capital position but also its commitment to enhancing shareholder value.

Going forward, Aozora Bank will compete by leveraging its experience and core skill sets in secured lending, especially in such areas as non-recourse real estate finance and specialized finance. We continue to de-risk our balance sheet and endeavor to boost operating efficiencies, allowing us to move ahead of the competition to seek future business opportunities. Aozora Bank chooses not to be all things to all people but rather provides focused solutions to its customers and clients, as demonstrated by its deep, long-standing relationships with Japanese regional banks.

The Bank is committed to enhancing its core businesses, maintaining its financial strength, increasing corporate value, and repaying public monies. Aozora Bank has made significant management and organizational changes in order to ensure the Bank returns to sustainable profitability as soon as possible. We pride ourselves on our proven risk management processes and leadership in disclosure and transparency, the foundations of our trusted operating model.

In closing, I would like to express my sincere gratitude to all customers, stakeholders, and employees of Aozora Bank for your continued patronage, commitment and support.