Financial Highlights

Financial Results for the third quarter of FY2011

Main Data

Revenue and Expenses

• In the first nine months of FY2011, the Bank recorded consolidated net revenue of 59.5 billion yen, a decrease of 1.1 billion yen, or 1.9%, year on year. This represented progress of 73% towards the revised full-year forecast of 81.0 billion yen. Net revenue for the third quarter (Oct.-Dec.) was 19.9 billion yen, an increase of 1.4 billion yen, or 7.7%, year on year, representing the first year on year increase on a quarterly basis for four quarters.
• Net interest income was 34.2 billion yen, representing the first year on year increase of a fiscal year to date result in five quarters. The net interest margin continued to improve while the average balance of interest earning assets declined year on year as the Bank continued its disciplined balance sheet management. Funding costs were reduced 19 bps to 0.60%, from 0.79%, in the first nine months of 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 expanded 10 bps to 1.05% year on year. Net fees and commissions were 6.3 billion yen, a decrease of 1.1 billion yen year on year, and net trading revenues were 5.3 billion yen, a decrease of 2.1 billion yen. Gains/losses on bond transactions decreased 1.1 billion yen to 9.9 billion yen. Net other ordinary income, excluding gains/losses on bond transactions, improved 3.2 billion yen to 3.8 billion yen, mainly due to profit from limited partnerships.
• General and administrative expenses were 28.8 billion yen, a reduction of 1.4 billion yen, or 4.6%, 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 48.4%, well within the Bank's mid-term target of 50% or below. As a result of the above factors, consolidated business profit was 30.7 billion yen. This result represented 74% progress towards the revised full-year forecast of 41.5 billion yen.
• Credit-related expenses were a net profit of 2.0 billion yen, compared with a net expense of 9.4 billion yen in the first nine months of FY2010. While the Bank conservatively strengthened its specific reserves mainly for existing overseas credit, a reversal of the loan loss reserve, reflecting both the absence of significant credit events and preventative measures taken by the Bank to date including the conservative allocation of reserves, resulted in a net profit. The ratio of loan loss reserve to total loans outstanding was 3.42% as of December 31, 2011 and remained one of the highest among major Japanese banks. Taxes were a net profit of 2.1 billion yen. As a result of the aforementioned factors, consolidated net income increased 12.0 billion yen, or 60.8%, to 31.7 billion yen. This result represented steady progress of 70% towards the revised full-year forecast of 45.0 billion yen, including the negative effect on deferred tax assets of approximately 2.5 billion yen resulting from the recent revision of the corporate tax rate for the next fiscal year.

Main Data

Balance Sheet

• Total assets were 5,032.8 billion yen as of December 31, 2011, an increase of 114.5 billion yen, or 2.3%, compared to March 31, 2011. Loans decreased slightly from March 31, 2011 by 62.9 billion yen, or 2.3%, to 2,666.7 billion yen, reflecting a decrease of 87.3 billion yen, or 20.6%, in overseas loans, while domestic lending increased 24.4 billion yen, or 1.1%. Securities decreased by 131.0 billion yen, or 9.8%, to 1,204.7 billion yen.
• On the funding side, total deposits and negotiable certificates of deposit increased 15.7 billion yen, or 0.5%, 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 2,174.4 billion yen, decreasing 137.4 billion yen from March 31, 2011, while the percentage of retail funding to total core funding remained high at 68.1%. Total liabilities increased 85.7 billion yen, or 2.0%, to 4,438.8 billion yen as compared to March 31, 2011.
• Net assets were 594.0 billion yen, representing an increase of 28.8 billion yen, or 5.1%, in comparison with March 31, 2011. Net assets per common share were 276.60 yen, as compared to 256.27 yen per common share as of March 31, 2011.

Main Data

Disclosed Claims under the Financial Reconstruction Law (Non-consolidated)

• The Bank conducted a strict review of its internal borrower ratings, mainly overseas borrowers, following the continuing uncertainty in the global financial market. As a result, non-performing claims as defined by the Financial Reconstruction Law (FRL) were 130.5 billion yen, and the FRL Ratio was 4.79%. The impact on credit-related expenses was limited, due to the preventative measures taken by the Bank to date including the conservative allocation of reserves. In addition, the percentage of FRL claims covered by reserves, collateral and guarantees remained high at 89.0% as of December 31, 2011, and the ratio of loan loss reserves to total loans outstanding was 3.42% as of December 31, 2011, remaining one of the highest among major Japanese banks.
  The Bank remains focused on disciplined risk management and will continue to take appropriate actions with regard to non-performing loans, based on the condition of borrowers.

Main Data

Capital Adequacy Ratio (Domestic standard)

• To be released mid-February.

Main Data