This website contains forward-looking statements regarding the Bank's financial condition and results of operations. These forward-looking statements, which include the Bank's views and assumptions with respect to future events, involve certain risks and uncertainties. Actual results may differ from forecasts due to changes in economic conditions and other factors.
Financial Results for FY2011
Revenue and Expenses
- In FY2011, the Bank recorded consolidated net revenue of 84.3 billion yen, an increase of 6.4 billion yen, or 8.2%, year on year, and representing the first year on year increase in two years.
- Net interest income was 45.3 billion yen, an increase of 0.3 billion yen, or 0.6%, year on year, representing the first year on year increase in three years. The net interest margin continued to improve while the average balance of interest earning assets declined as the Bank continued its disciplined balance sheet management. Funding costs were reduced 19 bps from 0.77% to 0.58% in FY2011, reflecting our ongoing efforts to reduce funding costs while maintaining a stable base of retail deposits. As a result of the reduction in funding costs, the net interest margin improved 9 bps to 1.04%. Net fees and commissions were 9.5 billion yen, a decrease of 0.9 billion yen, or 8.6%, and net trading revenues were 7.2 billion yen, a decrease of 2.4 billion yen, or 25.1%. Gains/losses on bond transactions increased 6.2 billion yen to 17.1 billion yen. Net other ordinary income, excluding gains/losses on bond transactions, improved 3.2 billion yen to 5.2 billion yen. The accounting treatment related to gains/losses from the impairment of securitized products including CMBS has changed in the fourth quarter. Following the change, 2.8 billion yen losses from the impairment of CMBS included in net revenue (gains/losses on bond transactions) in the first nine months of FY2011 (Apr.-Dec.) were reclassified mainly into credit-related expenses in the fourth quarter.
- General and administrative expenses were 38.7 billion yen, a reduction of 2.1 billion yen, or 5.2%, year on year, as a result of our continued strict control on costs, including the implementation of a Bank-wide cost review, which led to broad savings in personnel cost, technology cost and other operating expense categories. The OHR (general and administrative expenses as a percentage of net revenues) was 45.9%, well within the Bank's mid-term target of 50% or below. As a result of the above factors, consolidated business profit increased 8.5 billion yen, or 23.0%, to 45.6 billion yen.
- Credit-related expenses were a net expense of 0.8 billion yen, compared with a net expense of 6.1 billion yen in FY2010. This reflected the Bank's disciplined risk management and appropriate reserving policy based on borrowers' status, including disposal of non-performing loans, as well as preventative measures taken by the Bank to date, including the conservative allocation of reserves.
The ratio of loan loss reserves to total loans outstanding was 2.88% as of March 31, 2012, remaining one of the highest among major Japanese banks. Taxes were a net profit of 5.4 billion yen. As a result of the aforementioned factors, consolidated net income increased 13.5 billion yen, or 41.1%, year on year, to 46.3 billion yen, representing a year on year increase for the third consecutive year.
Balance Sheet
- Total assets were 5,097.4 billion yen as of March 31, 2012, an increase of 179.1 billion yen, or 3.6%, compared to March 31, 2011. Loans decreased slightly from March 31, 2011 by 57.4 billion yen, or 2.1%, to 2,672.2 billion yen, despite an increase from December 31, 2011 of 5.4 billion yen, or 0.2%. Overseas loans decreased 74 billion yen, or 17.4%, while domestic lending increased 16.6 billion yen, or 0.7%, during the term. Securities decreased by 13.4 billion yen, or 1.0%, to 1,322.3 billion yen.
- On the funding side, deposits and negotiable certificates of deposit decreased 2.9 billion yen, as compared to March 31, 2011, and bonds payable decreased 91.2 billion yen due to redemptions. We continued our effort to reduce funding costs while maintaining a stable base of retail deposits. As a result, funding from retail customers was 2,163.9 billion yen, decreasing 147.9 billion yen, or 6.4%, from March 31, 2011, while the percentage of retail funding to total core funding remained high at 68.6%. Total liabilities increased 136.7 billion yen, or 3.1%, to 4,489.8 billion yen as compared to March 31, 2011.
- Net assets were 607.6 billion yen, representing an increase of 42.4 billion yen, or 7.5%, in comparison with March 31, 2011. Net assets per common share were 284.22 yen, as compared to 256.27 yen per common share as of March 31, 2011.
Disclosed Claims under the Financial Reconstruction Law (Non-consolidated)
- Non-performing claims as defined by the Financial Reconstruction Law (FRL) were 109.1 billion yen, a decrease of 18.4 billion yen, or 14.4%, from March 31, 2011, reflecting the Bank's disciplined risk management and appropriate actions with regard to non-performing loans, based on the condition of borrowers. The FRL ratio decreased 0.60 points to 3.99%. In addition, the percentage of FRL claims covered by reserves, collateral and guarantees remained high at 85.3% as of March 31, 2012, and the ratio of loan loss reserves to total loans outstanding was 2.88% as of March 31, 2012, remaining one of the highest among major Japanese banks.
Capital Adequacy Ratio (Domestic standard) (Preliminary)
- Aozora's Tier 1 ratio as of March 31, 2012 was among the highest in the Japanese banking industry. The Bank's capital adequacy ratio was 17.86%, Tier 1 ratio was 19.37%, and Core Tier 1 ratio was 17.69%.
