02 15-14 aozora results-q3-2

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02 15-14 aozora results-q3-2

  1. 1. Aozora Bank FY2013 3rd Quarter Financial Results (April 1 – December 31, 2013) ) Primary Secondary Bank: Another Reliable Partner January 31, 2014
  2. 2. (Note) Unless otherwise stated, all figures are on a consolidated basis and amounts stated in 100 million yen have been rounded to the nearest 100 million yen I. Financial highlights Net income was 34.1 billion yen, an increase of 11.4% year on year, representing progress of 83.3% towards the full-year forecast of 41.0 billion yen Net revenue was 60.1 billion yen. Business-related revenue, including 5.1 billion yen in gains from domestic equity ETFs, was 65.3 billion yen. Earnings related to the sale of financial products to mass affluent retail customers as well as the sale of derivative-related products to corporate and financial institution customers continued to increase Funding costs were reduced 10 bps to 0.41%. Net interest margin expanded 4 bps to 1.09% Credit-related expenses were a net expense of 2.9 billion yen. The ratio of credit-related expenses to total loans on an annualized basis remained low at 0.14% Loans increased 58.2 billion yen from end-March 2013 to 2,777.9 billion yen. Loans increased for the second consecutive quarter Maintained strong financial condition Stable base of retail funding : The percentage of retail funding to total core funding was 62.5% Sound loan assets : The Financial Reconstruction Law ratio (non-consolidated) improved by 0.67 points to 3.16% Conservative allocation of loan loss reserves : The ratio of loan loss reserves to total loans was 2.42% Strong capital : Capital adequacy and Tier 1 ratios were 16.09% and 16.62%, respectively, as of endSeptember 2013 and are expected to remain at a high level (to be announced in February) Announced the third quarter dividend payment FY2013 third quarter dividend payment : 4 yen per common share Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 1
  3. 3. Ⅱ. PL: Summary Net income increased 3.5 billion yen, or 11.4% year on year, to 34.1 billion yen, representing progress of 83.3% towards the full-year forecast of 41.0 billion yen In the third quarter (Oct.- Dec.), net revenue, business profit, ordinary profit and net income all exceeded the third quarter of FY2012 (100 million yen, %) FY2012 FY2013 Change B-A 3 months Oct. - Dec. Net revenue Business-related rev enue General & administrative expenses 9 months Apr. - Dec. A 3 months Oct. - Dec. 9 months Apr. - Dec. B Amount 211 639 214 601 -38     FY2013 full-year forecast % -5.9% 880 * 653 Progress 68.3% ** 74.2% -94 -286 -97 -289 -3 +1.1% -400 72.3% Business profit 117 353 118 312 -41 -11.5% 480 65.1% Ordinary profit 108 308 139 413 +106 +34.3% 420 98.4% 98 306 102 341 +35 +11.4% 410 83.3% -8 -24 6 -29 -5 - 0 -4 11 119 +123 - -9 1 -38 -71 -72 - Net income < Reference> > Credit-related expenses Gains/losses on stock transactions Taxes * Including 5.1 billion yen gains on the sale of domestic equity ETFs * * Progress towards the full-year forecast of 88.0 billion yen based on business-related revenue Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 2
  4. 4. Ⅱ. PL: Net revenue In the third quarter (Oct.- Dec.), net revenue increased 0.4 billion yen to 21.4 billion yen, as compared to the third quarter of FY2012 Net revenue for the first nine months was 60.1 billion yen, mainly reflecting losses on bond transactions of 0.5 billion yen Business-related revenue, including gains from domestic equity ETFs, was 65.3 billion yen, representing progress of 74.2% towards the full-year forecast of 88.0 billion yen (100 million yen) FY2012 3 months Oct. - Dec. FY2013 Change B-A 9 months 3 months 9 months Apr. - Dec. A Oct. - Dec. Apr. - Dec. B Amount % 211 639 214 601 -38 -5.9% Net interest income 108 344 114 331 -13 -3.8% Non-net interest income 103 295 101 271 -24 -8.3% 17 62 31 93 +31 +49.8% 3 44 19 66 +22 +49.6% Gains/losses on bond transactions 45 124 19 -5 -129 - Net other ordinary income excl. gains/losses on bond transactions 39 65 32 117 +52 +79.2% Net revenue Net fees & commissions Net trading revenues Business-related revenue, including 5.1 billion yen gains on the sale of domestic equity ETFs 653 Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 3
  5. 5. Ⅱ. PL: Net interest income Net interest income was 33.1 billion yen, a decrease of 1.3 billion yen, or 3.8% year on year. In the third quarter (Oct.- Dec.), net interest income increased 0.6 billion yen to 11.4 billion yen as compared to the third quarter of FY2012 Funding costs were reduced 10 bps to 0.41%, reflecting our continuing efforts to reduce funding costs Net interest margin expanded 4 bps to 1.09% Ne t interest inco m e (100 million yen, % ) FY2012 FY2013 C hange 3 m onths O c t. - D ec . A 9 m onths Apr. - D ec . B 3 m onths O c t. - D ec . C 9 m onths Apr. - D ec . D Net interes t inc om e 108 344 114 331 +6 -13 Interes t inc om e 154 489 152 449 -2 -40 117 354 110 322 -6 -32 30 109 34 107 +4 -1 3 3 14 13 4 3 11 8 +1 -1 -2 -4 -46 -145 -38 -118 +8 +27 -35 -111 -30 -91 +6 +20 -3 -1 -11 -3 -1 -1 -4 -4 +2 -0 +7 -1 -3 -4 -9 -11 -2 -3 -7 -11 +1 +0 +1 -0 Interes t on loans and dis c ounts Interes t and dividends on s ec urities O ther interes t inc om e Interes t on s w aps Interes t expens es Interes t on depos its and NC D s Interes t on debentures Interes t on borrow ings and redis c ount O ther interes t expens es Interes t on s w aps C -A D -B Dec reas es in ex pens es are s hown as pos itive Ne t interest m argin 1.45% 1.56% 1.55% 1.50% +0.10% -0.06% Yield on loans (B) 1.85% 1.89% 1.67% 1.66% -0.18% -0.23% Yield on s ec urities 0.95% 1.12% 1.25% 1.17% +0.30% +0.05% Yield on funding (C ) 0.47% 0.51% 0.39% 0.41% -0.08% -0.10% Net interes t m argin (A)-(C ) 0.98% 1.05% 1.16% 1.09% +0.18% +0.04% Net loan m argin (B)-(C ) 1.38% 1.38% 1.28% 1.25% -0.10% -0.13% Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. Yield on total inves tm ents (A) 4
  6. 6. Ⅱ. PL: Net fees and commissions Net trading revenues Net fees and commissions were 9.3 billion yen, an increase of 3.1 billion yen, or 49.8% year on year Net trading revenues were 6.6 billion yen, an increase of 2.2 billion yen, or 49.6% year on year, reflecting the favorable sale of structured bonds as well as other derivativerelated products Earnings related to the sale of investment trusts, insurance, and structured bonds, aimed at our mass affluent retail customers, showed strong progress, increasing 78.4% year on year, to 4.8 billion yen, significantly exceeding the first nine months of FY2012 (100 million yen) FY2012 FY2013 3 months 9 months 3 months 9 months Oct. - Dec. A Apr. - Dec. B Oct. - Dec. C Apr. - Dec. D Net fees and commissions Earnings from retail-related business Change C-A D-B (100 million yen) Structured bonds 60 Insurance Investment trusts 17 62 31 93 +14 +31 18 67 33 100 +15 +32 Loans, deposits and debentures 8 37 17 47 +8 +10 Securities 4 9 5 19 +1 +10 Agencies 3 13 8 24 +4 +11 40 Other 3 8 3 11 +1 +3 -2 -5 -2 -7 -1 -1 30 3 44 19 66 +16 +22 Trading-related financial derivatives 0 29 14 50 +14 +21 Others 3 15 5 16 +2 +1 1 8 3 13 +2 +5 10 Fees and commissions received Fees and commissions payments Net trading revenues Incl. Structured bonds 43 9 27 15 48 +6 +78% % 13 12 28 8 27 20 16 20 10 15 Apr. - Dec. result 14 11 Earnings from retail-related business Earnings related to the sale of investment trusts, insurance, and structured bonds 48 50 +21 FY2011 FY2012 FY2013 Apr.- Dec. Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 5
  7. 7. Ⅱ. PL: Net other ordinary income Gains/losses on bond transactions were a loss of 0.5 billion yen, reflecting risk reduction measures taken by the Bank, including to its U.S. Treasury bond positions, in the first six months. In the third quarter (Oct.-Dec.), gains/losses on bond transactions were a gain of 1.9 billion yen Net other ordinary income, excluding gains/losses on bond transactions, increased 5.2 billion yen, or 79.2% year on year, to 11.7 billion yen Mainly due to gains from investments in limited partnerships (100 million yen) FY2012 FY2013 Change 3 months Oct. - Dec. A 9 months Apr. - Dec. B 3 months Oct. - Dec. C 9 months Apr. - Dec. D 45 124 19 -5 -26 -129 Japanese government bonds (JGB) Foreign government bonds & mortgage-backed securities Others Hedge fund investments (AFS) Others 11 22 13 0 12 28 71 25 2 23 0 1 18 1 17 2 -47 40 3 37 -10 -21 +5 +1 +4 -26 -118 +15 +1 +14 Net other ordinary income excl. gains/losses on bond transactions 39 65 32 117 -7 +52 12 -2 23 1 -4 42 2 0 31 2 3 102 -10 +3 +7 +1 +7 +60 4 4 15 11 13 18 9 16 5 34 41 27 +5 +12 -10 +24 +27 +9 5 -0 1 15 -0 12 -2 -0 0 7 -0 3 -7 +0 -1 -8 +0 -9 Gains/losses on bond transactions Gains/losses on foreign currency transactions Gains/losses on derivatives other than trading, net Gains from limited partnerships Real estate-related Distressed loan-related Other (Buyout and venture capital, etc.) Gains on distressed loans (Aozora Loan Services) Debenture issue cost Others C-A D-B Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 6
  8. 8. Ⅱ. PL: G&A expenses G&A expenses were almost unchanged at 28.9 billion yen This represented 72.3% of the full-year budget of 40.0 billion yen as a result of the Bank’s continued strict control on costs The OHR was 48.1%. Calculated based on business-related revenue, including gains from domestic equity ETFs, the OHR was 44.3% Breakdown of G&A expenses (100 million yen, %) FY2012 FY2013 Change 3 months 9 months 3 months 9 months Oct. - Dec. Apr. - Dec. Oct. - Dec. Apr. - Dec. A B C C-A D-B D G&A Expenses 94 286 97 289 +3 +3 Personnel 47 142 50 148 +3 +6 Non-Personnel 43 129 42 128 -1 -2 Tax 4 15 4 14 +0 -1 OHR 44.6% 44.8% 45.0% 48.1% < Reference > OHR calculated based on business-related revenue including 5.1 billion yen gains from domestic equity ETFs 44.3% Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 7
  9. 9. Ⅱ. PL: Credit-related expenses Credit-related expenses were a net expense of 2.9 billion yen. In the third quarter (Oct.- Dec.), credit-related expenses were a net reversal of 0.6 billion yen The ratio of credit-related expenses to total loans on an annualized basis remained low at 0.14% The Financial Reconstruction Law (FRL) Ratio improved 0.67% to 3.16% The ratio of loan loss reserves to total loans remained high at 2.42% Credit-related expenses FY2012 FY2013 Write-off of loans Gains/losses on disposition of loans Bankrupt C-A D-B Doubtful Special attention Change 3 months 9 months 3 months 9 months Oct. - Dec. A Apr. - Dec. B Oct. - Dec. C Apr. - Dec. D Credit-related expenses FRL credit (Non-consolidated) (100 million yen) The FRL Ratio (Ratio of FRL claims to total claims) (100 million yen) 5% 1,500 -8 -24 6 -29 +14 -5 3 -8 -1 -13 -3 -5 3.99% 1,091 75 -19 -55 2 16 +21 +71 8 24 -27 -104 -35 -128 1,000 Specific reserve for loan losses -28 -142 -11 -22 +17 36 166 -16 -82 -52 -248 -1 1 -2 -3 -1 -4 2 13 34 75 +32 4% +119 General reserve for loan losses Reserve for credit losses on off-balance-sheet instruments Recoveries of written-off claims 3.83% +62 Reserves for loan losses 895 T o tal lo ans (B ) (A ) / (B ) 41 3% 2% 792 653 500 1% 377 ( 100 m illion y en, % ) R e s e rve s f o r lo an lo s s e s (A ) 3.16% 640 Ratio of loan loss reserves to total loans E nd - M ar. 2013 1,063 72 E nd - S e p . 2013 200 E nd - D e c . 2013 634 646 672 2 7 ,1 9 7 2 6 ,9 5 1 2 7 ,7 7 9 2 .3 3 % 2 .3 9 % 2 .4 2 % Coverage Reserves Collateral & guarantees Coverage Ratio End-Mar. 12 931 363 568 85.3% 201 End-Mar. 13 949 End-Dec. 13 814 348 602 89.3% 313 500 90.9% Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 8
  10. 10. Ⅲ. Balance Sheet: Summary Total assets were 4,858.0 billion yen, a decrease of 158.7 billion yen, or 3.2%, compared to end-March 2013 Total liabilities decreased 127.6 billion yen, or 2.8%, to 4,353.3 billion yen, as compared to end-March 2013 Total net assets were 504.7 billion yen, representing a decrease of 31.1 billion yen, or 5.8%, in comparison with end-March 2013 Mainly due to the repayment of public funds based on the Comprehensive Recapitalization Plan (100 million yen) End - Mar. 2013 A End - Sep. 2013 End - Dec. 2013 B End - Mar. End - Sep. End - Dec. Change 2013 A 2013 2013 B B-A Change B- A Deposits / Negotiable certificates of deposit 27,197 26,951 27,779 +582 30,390 30,710 30,593 +203 Debentures Loans and bills discounted 1,694 1,653 1,813 +119 Domestic loans 22,932 22,080 22,107 -825 Borrowed money 2,230 2,004 1,178 -1,051 Overseas loans 4,266 4,870 5,672 +1,406 Trading liabilities 4,073 3,333 3,328 -746 Others 6,422 5,215 6,621 +199 13,058 11,133 10,761 -2,296 44,808 42,914 43,533 -1,276 Incl. JGBs 4,650 3,715 2,755 -1,895 Capital stock 1,000 1,000 1,000 - Incl. US Treasury 2,822 1,671 2,094 -728 Capital surplus 3,307 3,102 3,102 -205 Retained earnings 1,985 2,005 2,067 +83 -993 -993 -993 - 123 -27 -75 -198 -63 -61 -53 +9 5,358 5,025 5,047 -311 50,167 47,939 48,580 -1,587 Securities Cash and due from banks 4,045 4,715 4,393 +348 Trading assets 3,814 3,388 3,451 -363 Others 2,053 1,752 2,196 +143 50,167 47,939 48,580 -1,587 Total liabilities Treasury Stock Valuation difference on available-for-sale securities Others Total assets Total net assets Total liabilities and net assets Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 9
  11. 11. Ⅲ. Balance Sheet: Funding The percentage of retail funding to total core funding was stable at 62.5% Maintained sufficient liquidity reserves of approximately 520 billion yen Funding sources (100 million yen, %) Change End - Mar. 2013 A End - Sep. 2013 End - Dec. 2013 B 20,727 20,268 20,265 -462 Corporate and Public institutions 7,074 6,980 7,062 -13 Financial institutions 4,282 5,115 5,079 (100 million yen) +797 Retail B-A Retail Corporate and Public Institutions Financial Institutions 40,000 Financial Institutions (Debentures) 31,526 30,000 2,120 2,371 5,396 Total 32,083 32,363 32,405 32,083 32,405 1,649 2,633 1,777 7,074 7,062 3,302 +322 20,000 Retail Funding Ratio Loans to deposit ratio including NCDs Liquidity reserves 64.6% 62.6% 62.5% 89.5% 87.8% 5,597 5,315 5,160 10,000 90.8% 21,639 20,727 20,265 -437 End-Mar. 12 End-Mar. 13 End-Dec. 13 Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 10
  12. 12. Ⅲ. Balance Sheet: Loans Loans increased 58.2 billion yen from end-March 2013 to 2,777.9 billion yen Loans increased for the second consecutive quarter, increasing 202.1 billion yen over the six month period to end-December 2013. Domestic loans increased 64.3 billion yen and overseas loans increased 137.7 billion yen (100 million yen) Loans and bills discounted by industry Loans by domestic offices (excluding Japan offshore market accounts) End - Sep. 2013 End - Mar. 2013 A Balance % Balance End - D ec. 2013 B % Balance C hange % B -A 26,076 95.9% 25,150 93.3% 25,541 91.9% -535 2,872 25 25 184 54 488 1,346 1,180 5,320 8,078 5,126 920 1,352 499 3,734 3,144 10.6% 0.1% 0.1% 0.7% 0.2% 1.8% 5.0% 4.3% 19.6% 29.7% 63.5% 3.4% 5.0% 1.8% 13.7% 11.6% 2,837 29 21 177 67 522 1,151 1,134 5,054 7,377 4,445 1,067 1,584 475 3,655 3,069 10.5% 0.1% 0.1% 0.7% 0.2% 1.9% 4.3% 4.2% 18.8% 27.4% 60.3% 4.0% 5.9% 1.8% 13.6% 11.4% 2,811 27 21 231 66 583 1,137 1,122 5,193 7,202 4,392 1,119 1,549 467 4,011 3,434 10.1% 0.1% 0.1% 0.8% 0.2% 2.1% 4.1% 4.0% 18.7% 25.9% 61.0% 4.0% 5.6% 1.7% 14.4% 12.4% -60 +2 -4 +46 +13 +95 -209 -57 -126 -875 -734 +200 +197 -32 +277 +290 1,121 4.1% 1,801 6.7% 2,238 8.1% +1,116 Total 27,197 100.0% 26,951 100.0% 27,779 100.0% +582 Domestic loans 22,932 84.3% 22,080 81.9% 22,107 79.6% -825 4,266 15.7% 4,870 18.1% 5,672 20.4% +1,406 3,850 14.2% 4,436 16.5% 5,212 18.8% +1,362 Manufacturing Agriculture, forestry and fisheries Mining, quarry, gravel extraction C onstruction Electricity, gas, heat supply and water Inform ation and com m unications Transport, postal services W holesale and retail sale Financial and insurance R eal estate Non-recourse loans* Leasing O ther services Local governm ents O thers O verseas (Headquarters booked) (A) Loans by overseas offices incl. Japan offshore market accounts (B) O verseas loans (A) + (B) O verseas loans w ith no final risk residing in Japan * Non-recourse loans ratio is % of real estate loans Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 11
  13. 13. Ⅲ. Balance Sheet: Loans ー Overseas ー Overseas loans* increased 136.2 billion yen, or 35.4%, to 521.2 billion yen, as compared to end-March 2013, representing the sixth consecutive quarterly increase The percentage of overseas loans* to total loans was 18.8% (100 million yen, %) End - Mar. 2013 A Total loans (A) End - Sep. 2013 End - Dec. 2013 B Change B-A 27,197 (B) / (A) 27,779 582 3,850 Overseas loans* (B) 26,951 4,436 5,212 1,362 14.2% 16.5% 18.8% - * With no final risk residing in Japan Portfolio well diversified by industry <By industry> > Local governments 1% Other services 10% Leasing 0% Real estate 25% Financial and insurance 7% Wholesale and retail 3% <By region> > Europe 5% Others 4% Manufacturing 20% Mining, quarry, gravel extraction 4% Asia 16% Construction 1% Oceania 3% Electricity, gas, heat supply and water 8% Information and communications 12% Transport, postal service 10% North America 72% Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 12
  14. 14. Ⅲ. Balance Sheet: Loans ー Real estate sector ー 93% of the non-recourse loan portfolio remained LTV 70% or below Tokyo-metro focused. Most non-recourse loans were office or residential (100 million yen, %) End - Mar. End - Sep. End - Dec. 2013 A 2013 2013 B Total loans Change B-A 27,197 Non-recourse loans LTV Status 27,779 +582 8,078 Real estate sector 26,951 7,377 7,202 -875 5,126 4,445 4,392 -734 Maturity schedule Cumulative % of portfolio 70% or below 80% or below 92.7% 96.9%        Balance Legal maturity Non-recourse loans as of end-Dec. 2013 FY2013 FY2014 2% FY2015 9% 18% FY2016 FY2017 or later 18% 53% Breakdown of non-recourse loans <By area> > TokyoMetro 9% Hokkaido 1% Osaka 4% Aichi 2% <By sector> > Logistics / Others 2% Hotel 5% Fukuoka 2% Others 4% Retail 9% Office 54% Residential 30% Tokyo 78% Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 13
  15. 15. Ⅲ. Balance Sheet: Securities Securities were 1,076.1 billion yen, a decrease of 229.6 billion yen, or 17.6%, compared to end-March 2013 In comparison with end-March 2013, JGBs decreased 189.5 billion yen, or 40.8%, and foreign bonds decreased 92.2 billion yen, or 19.8% (100 million yen) End - Mar. 2013 A JGBs Incl. TDB only Incl. 15Y floating rate only Municipal bonds Corporate bonds Equities Foreign bonds US Treasury MBS Others CDO Others Others Hedge funds ETFs Investments in limited partnerships REIT Others Incl. GMAC Incl. Money market funds Total Book value End - Dec. End - Sep. 2013 B 2013 Unrealized gains / losses Change B-A End - Mar. End - Sep. End - Dec. 2013 C 2013 2013 D Change D-C 4,650 1,502 1,468 3,715 1,302 1,458 2,755 1,002 1,453 -1,895 -500 -15 60 0 38 20 0 28 16 -0 23 -43 -0 -15 113 642 157 683 139 566 +26 -75 2 -1 1 -2 -0 -2 -2 -1 270 4,658 265 3,267 267 3,736 -3 -922 5 -7 7 -88 8 -145 +3 -138 2,822 1,449 387 1,671 1,123 473 2,094 1,159 482 -728 -290 +96 0 -16 8 -37 -59 8 -64 -89 8 -64 -73 -0 2 385 2 471 1 482 -1 +97 1 7 1 6 1 7 -0 +0 2,725 90 696 3,045 83 928 3,298 81 1,220 +573 -9 +524 121 17 32 46 18 -3 74 19 26 -47 +2 -6 525 287 489 305 437 313 -88 +26 2 72 3 29 5 23 +3 -48 1,127 14 1,000 1,241 14 1,199 1,247 15 1,201 +120 +2 +201 -2 0 -2 -1 1 1 +2 +1 13,058 11,133 10,761 -2,296 180 -18 -48 -228 Floating rate JGBs as of end-December 2013, were valued in the same way as at end-March 2013, on the basis of internal calculations pursuant to Practical Issues Task Force No.25, ‘Practical Solution on Measurement of Fair Value for Financial Assets’ issued by the Accounting Standards Board of Japan. A portion of beneficial interests in investment trusts within ‘monetary claims bought’ is marked at fair value, but the amounts (balance sheet total 2.5 billion yen; valuation gains 0.4 billion yen as of end-December 2013) are not included in the table above. Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 14
  16. 16. Ⅳ. Dividend payment FY2013 third quarter dividend payment : 4 yen per common share Dividend per common share End-Jun. 2013 Current forecast ( FY2013 ) Dividend payment ( FY2013 ) Payments in previous term (FY2012) End-Sep. 2013 End-Dec. 2013 End-Mar. 2014   4.00 yen 3.00 yen 3.00 yen - - 14.00 yen* 4.00 yen - Full-Year 13.90 yen 13.90 yen The total common share dividend amount is set at 40% of consolidated net income. *Calculated by dividing the total dividend amount, which is 40% of the consolidated net income forecast (41.0 billion yen) for the full-year, by the total number of common shares issued excluding treasury stock as of end-March 2013. Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 15
  17. 17. Ⅴ. Reference : Consolidated, Non-consolidated difference Difference between consolidated and non-consolidated net income (100 m illion yen) Non-consolidated net income 334 Subsidiaries Com pany nam e Shareholding, etc Net Incom e Aozora Trust Bank, Ltd. 100.0% -0 Aozora Securities Co., Ltd. 100.0% 3 67.6% 1 Aozora Regional Consulting Co., Ltd. 100.0% 0 Aozora Asia Pacific Finance Lim ited (AAPF) 100.0% 2 AZB CLO 1-4 100.0% -1 AZB Funding 100.0% 2 Aozora Investment, Inc. etc. 100.0% 63 Aozora Loan Services Co., Ltd. T otal 70 Consolidation adjustments -63 Consolidated net income 341 Difference 7 Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 16
  18. 18. Ⅴ. Reference : Deferred tax assets (Non-consolidated basis) The period for the estimation of future taxable income for the calculation of deferred (*1) tax assets was changed from 3 years to 5 years in the first quarter of FY2013 Income taxes deferred were a net expense of 5.1 billion yen as a result of the conservative calculation of deferred tax assets Estimated future taxable income for the next 5 years has been estimated conservatively at 151.3 billion yen, almost the same as the estimation for the 3 year period as of end-March 2013 of 147.9 billion yen The basis for calculating the tax effect as of end-Dec. 2013 was approx. 290.0 billion yen, including tax loss carryforwards of 51.0 billion yen. Deferred tax assets were calculated at 49.5 billion yen by multiplying the sum of tax loss carryforwards and the future deductible temporary differences realizable of 137.3 billion yen, which is deductible to the extent of estimated future taxable income for each year, by the effective tax rate Income taxes deferred in the first nine months of FY2013 were a net expense of 5.1 billion yen, which represents the change in the outstanding amount of deferred tax assets from 54.6 billion yen(*2) as of end-March 2013 to 49.5 billion yen (*1) The Bank has been categorized under the ‘proviso of Category No.4 of the judgment guidelines on the realizability of deferred tax assets’ (*2) Deferred tax assets were 54.6 billion yen after deducting deferred tax liabilities of 0.2 billion yen Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 17
  19. 19. Ⅴ. Reference : Capital adequacy ratios (As of end-September 2013) Capital adequacy and Tier 1 ratios are expected to remain at a high level (to be announced in February) Capital adequacy and Tier 1 ratios were 16.09% and 16.62%, respectively, as of endSeptember 2013 Risk-weighted assets Regulatory capital Tier 1 capital Capital adequacy ratio Tier 1 capital ratio (100 million yen) 50,000 19.37% 40,000 17.86% 20% 16.27% 16.62% 15.70% 16.09% 15% 30,000 10% 20,000 30,310 30,132 29,763 5% 10,000 5,414 5,873 4,675 4,843 4,848 0 5,009 0% End-Mar.12 End-Mar.13 End-Sep.13 Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 18
  20. 20. Ⅴ. Reference : Status of comprehensive recapitalization plan Status of annual installment repayments of public funds over 10 years Secured a distributable amount sufficient for a full repayment of public funds (Implemented Nov. 2012) Transfer of 265.8 billion yen from Capital Stock to Other Capital Partial repayment of public funds (Implemented Oct. 2012) 22.7 billion yen upfront repayment/retirement of a portion of the Series 5 preferred shares Commenced installment repayments of public funds over 10 years (Implemented Jun. 2013) Payment of the first annual super preferred dividend (20.49 billion yen) Remaining amount of public funds: 184.4 billion yen (as of end-Dec. 2013) Enhanced return to shareholders Completed common share buyback (Mar. 2013) Conducted a 330 million common share buyback (Total: 83.9 billion yen) Increased dividend payout ratio 40% of consolidated net income for at least as long as the Bank continues to repay public funds Commenced quarterly dividend payments, a first for a Japanese bank Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 19
  21. 21. Ⅴ. Reference : Share Status Common shares (as of end-Dec. 2013) Number of shares (million shares) Number of shares issued Common shares 1,650 Treasury stock 484 Shares outstanding (After deduction of treasury stock) 1,166 Preferred shares (Public funds) Remaining amount of public funds : 184.4 billion yen (as of end-Dec. 2013) Based on the comprehensive recapitalization plan, the Bank makes an annual installment repayment of public funds through a super preferred dividend of 20.49 billion yen each June. <Reference> > (as of end-Dec. 2013) Total paid-in amount (100 million yen) Number of shares (million) Per share paid-in amount (yen) 4th preferred shares 241 5th preferred shares 1,287 Total 1,528 24 @ 1,000 215 @ 600 - Conversion price (yen) Current number of common shares equivalent (million shares) Mandatory conversion 200 120 June 2022 450 286 June 2022 - 406 - Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 20
  22. 22. Ⅴ. Reference : Mid-term KPIs FY2012 Results FY2013 3Q (Apr.- Dec.) Results FY2015 Targets 1.07% 1.09% 1.1% ~ 1.3% 46% 45% 40% ~ 45% Overhead ratio (OHR) 45.8% 44.3%** Less than 45% Credit cost ratio* 0.09% 0.14% 0.2% ~ 0.3% Retail funding ratio 65% 63% 60% or higher ROE* 7.1% 8.7% 8% ~ 10% ROA* 0.8% 0.9% 0.7% ~ 1.0% Net interest margin Non-interest income ratio * Annualized basis ** Calculated based on business-related revenue, including gains on the sale of domestic equity ETFs Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 21
  23. 23. < Inquiries > AOZORA BANK, LTD. Corporate Communication Division TEL: 03-5212-9253 FAX: 03-3239-8065 URL: http://www.aozorabank.co.jp/english/ Mr. Hiroyuki Kajitani h.kajitani@aozorabank.co.jp Mr. Richard Roylance r.roylance@aozorabank.co.jp Ms. Junko Matsumoto j.matsumoto@aozorabank.co.jp Mr. Yasunari Shimizu y4.shimizu@aozorabank.co.jp Ms. Yasuko Fukai y1.fukai@aozorabank.co.jp This presentation 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 including the effects of changes in general economic conditions, changes in interest rates, stock markets and foreign currency, and any ensuing decline in the value of our securities portfolio, incurrence of significant credit-related cost and the effectiveness of our operational, legal and other risk management policies. Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.

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