02 15-14 aozora results-q3-2
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January 31, 2014
Aozora BankFY2013 3rd Quarter Financial Results
((((April 1 – December 31, 2013 ))))
Primary Secondary Bank: Another Reliable Partner
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 1
� 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 201 3 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 end-September 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
I. Financial highlights(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
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.
(100 million yen, %)
3 monthsOct. - Dec.
9 monthsApr. - Dec. A
3 monthsOct. - Dec.
9 monthsApr. - Dec. B
Amount %
Net revenue 211 639 214 601 -38 -5.9% 880 68.3%
Business-related revenue 653 74.2%
General & administrative expenses -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%
Net income 98 306 102 341 +35 +11.4% 410 83.3%
-8 -24 6 -29 -5 -
0 -4 11 119 +123 -
Taxes -9 1 -38 -71 -72 -
<<<<Reference >>>>
Credit-related expenses
Gains/losses on stock transactions
ProgressFY2012 FY2013 Change B-A FY2013
full-yearforecast
2
ⅡⅡⅡⅡ. 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
* **
* 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.
3 monthsOct. - Dec.
9 monthsApr. - Dec. A
3 monthsOct. - Dec.
9 monthsApr. - Dec. B
Amount %
Net revenue 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%
Net fees & commissions 17 62 31 93 +31 +49.8%
Net trading revenues 3 44 19 66 +22 +49.6%
Gains/losses on bond transactions 45 124 19 -5 -129 -
39 65 32 117 +52 +79.2%
653
Net other ordinary incomeexcl. gains/losses on bond transactions
FY2012 Change B-A
FY2013
(100 million yen)
Business-related re venue, including 5.1 billion yen gains on the sale of dome stic equity ETFs
3
ⅡⅡⅡⅡ. 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
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 4
ⅡⅡⅡⅡ. 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%
Net interest incom e
3 m onthsOct. - Dec. A
9 m onthsApr. - Dec. B
3 m onthsOct. - Dec. C
9 m onthsApr. - Dec. D
C-A D-B
Net interes t incom e 108 344 114 331 +6 -13
Interest incom e 154 489 152 449 -2 -40
Interest on loans and discounts 117 354 110 322 -6 -32
Interest and dividends on securities 30 109 34 107 +4 -1
O ther interes t incom e 3 14 4 11 +1 -2
Interest on swaps 3 13 3 8 -1 -4
Interest expenses -46 -145 -38 -118 +8 +27
Interest on deposits and NCDs -35 -111 -30 -91 +6 +20
Interest on debentures -3 -11 -1 -4 +2 +7
Interest on borrowings and rediscount -1 -3 -1 -4 -0 -1
O ther interes t expenses -3 -9 -2 -7 +1 +1Interest on swaps -4 -11 -3 -11 +0 -0
Decreases in expenses are shown as pos itive
Net interest m argin
Yield on total investm ents (A) 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 securities 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%
(100 million yen, %)
ChangeFY2012 FY2013
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.
11
15
14
10
16 20 8
12
13
28
43
48
10
20
30
40
50
60
FY2011 FY2012 FY2013 Apr.- Dec.
Structured bonds
Insurance
Investment trusts
(100 million yen)
27272727
Apr. - Dec.result
5
ⅡⅡⅡⅡ. PL: Net fees and commissionsNet 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 derivative-related 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
+78%%%%
Earnings from retail-related business
3 monthsOct. - Dec. A
9 monthsApr. - Dec. B
3 monthsOct. - Dec. C
9 monthsApr. - Dec. D
C-A D-B
Net fees and commissions 17 62 31 93 +14 +31
Fees and commissions received 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
Other 3 8 3 11 +1 +3
Fees and commissions payments -2 -5 -2 -7 -1 -1
Net trading revenues 3 44 19 66 +16 +22
Trading-related financial derivatives 0 29 14 50 +14 +21
Others 3 15 5 16 +2 +1
Incl. Structured bonds 1 8 3 13 +2 +5
9 27 15 48 +6 +21
(100 million yen)
Change
Earnings from retail-related businessEarnings related to the sale of investment trusts,insurance, and structured bonds
FY2012 FY2013
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 6
ⅡⅡⅡⅡ. 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
3 monthsOct. - Dec. A
9 monthsApr. - Dec. B
3 monthsOct. - Dec. C
9 monthsApr. - Dec. D C - A D - B
Gains/losses on bond transactions 45 124 19 -5 -26 -129
Japanese government bonds (JGB) 11 28 0 2 -10 -26 Foreign government bonds & mortgage-backed securities 22 71 1 -47 -21 -118 Others 13 25 18 40 +5 +15
Hedge fund investments (AFS) 0 2 1 3 +1 +1 Others 12 23 17 37 +4 +14
Net other ordinary income excl. gains/losses on bond transactions 39 65 32 117 -7 +52
Gains/losses on foreign currency transactions 12 1 2 2 -10 +1 Gains/losses on derivatives other than trading, net -2 -4 0 3 +3 +7 Gains from limited partnerships 23 42 31 102 +7 +60
Real estate-related 4 11 9 34 +5 +24 Distressed loan-related 4 13 16 41 +12 +27 Other (Buyout and venture capital, etc.) 15 18 5 27 -10 +9
Gains on distressed loans (Aozora Loan Services) 5 15 -2 7 -7 -8 Debenture issue cost -0 -0 -0 -0 +0 +0 Others 1 12 0 3 -1 -9
FY2012
(100 million yen)
ChangeFY2013
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 7
ⅡⅡⅡⅡ. 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
3 monthsOct. - Dec.
A
9 months
Apr. - Dec.
B
3 months
Oct. - Dec.
C
9 months
Apr. - Dec.
DC - A D - B
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
44.6% 44.8% 45.0% 48.1%
44.3%
(100 million yen, %)
FY2012 FY2013 Change
OHR
< Reference >OHR calculated based on business-related revenueincluding 5.1 billion yen gains from domestic equit y ETFs
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 8
ⅡⅡⅡⅡ. 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
Ratio of loan loss reserves to total loans
FRL credit (Non-consolidated)
Coverage 931 949 814 363 348 313 568 602 500
85.3% 89.3% 90.9%Coverage Ratio
ReservesCollateral & guarantees
377200 201
640
792653
75 72
41
1,0911,063
895
3.99%3.83%
3.16%
1%
2%
3%
4%
5%
500
1,000
1,500
End-Mar. 12 End-Mar. 13 End-Dec. 13
(100 million yen)
Bankrupt Doubtful
Special attention The FRL Ratio(Ratio of FRL claims to total claims)3 months
Oct. - Dec. A9 months
Apr. - Dec. B3 months
Oct. - Dec. C9 months
Apr. - Dec. DC - A D - B
-8 -24 6 -29 +14 -5
Write-off of loans 3 -8 -1 -13 -3 -5
Gains/losses on disposition of loans -19 -55 2 16 +21 +71
Reserves for loan losses 8 24 -27 -104 -35 -128
Specific reserve for loan losses -28 -142 -11 -22 +17 +119
General reserve for loan losses 36 166 -16 -82 -52 -248
-1 1 -2 -3 -1 -4
Recoveries of written-off claims 2 13 34 75 +32 +62
Reserve for credit losses onoff-balance-sheet instruments
FY2012
Credit-related expenses
FY2013 Change
(100 million yen)
(100 million y en, % )
E nd - Mar.2 0 1 3
E nd - S e p .2 0 1 3
E nd - D e c .2 0 1 3
R e se rve s fo r lo an lo ss e s (A ) 6 3 4 6 4 6 6 7 2
2 7 ,1 9 7 2 6 ,9 5 1 2 7 ,7 7 9
2 .3 3 % 2 .3 9 % 2 .4 2 %
T o tal lo ans (B )
(A ) / (B )
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 9
ⅢⅢⅢⅢ. 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)
Change
B - A
30,390 30,710 30,593 +203
Debentures 1,694 1,653 1,813 +119
2,230 2,004 1,178 -1,051
Trading liabilities 4,073 3,333 3,328 -746
Others 6,422 5,215 6,621 +199
Total liabilities 44,808 42,914 43,533 -1,276
Capital stock 1,000 1,000 1,000 -
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
Others -63 -61 -53 +9
Total net assets 5,358 5,025 5,047 -311
Total liabilities and net assets 50,167 47,939 48,580 -1,587
Valuation difference onavailable-for-sale securities
Deposits /Negotiable certificates of deposit
End - Dec.2013 B
Borrowed money
Treasury Stock
End - Mar.2013 A
End - Sep.2013
Change
B - A
Loans and bills discounted 27,197 26,951 27,779 +582
Domestic loans 22,932 22,080 22,107 -825
Overseas loans 4,266 4,870 5,672 +1,406
Securities 13,058 11,133 10,761 -2,296
Incl. JGBs 4,650 3,715 2,755 -1,895
Incl. US Treasury 2,822 1,671 2,094 -728
Cash and due from banks 4,045 4,715 4,393 +348
3,814 3,388 3,451 -363
Others 2,053 1,752 2,196 +143
Total assets 50,167 47,939 48,580 -1,587
Trading assets
End - Sep.2013
End - Mar.2013 A
End - Dec.2013 B
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 10
ⅢⅢⅢⅢ. 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
B-A
20,727 20,268 20,265 -462
7,074 6,980 7,062 -13
4,282 5,115 5,079 +797
32,083 32,363 32,405 +322
Retail Funding Ratio 64.6% 62.6% 62.5%
89.5% 87.8% 90.8%
5,597 5,315 5,160 -437
End - Mar.2013 A
End - Sep.2013
End - Dec.2013 B
Liquidity reserves
Retail
Corporate andPublic institutions
Financial institutions
Total
Loans to deposit ratioincluding NCDs
21,639 20,727 20,265
5,396 7,074 7,062
2,371 2,633 3,302 2,120
1,649 1,777 31,526 32,083 32,405
10,000
20,000
30,000
40,000
End-Mar. 12 End-Mar. 13 End-Dec. 13
(100 million yen)
Retail Corporate and Public Institutions
Financial Institutions Financial Institutions (Debentures)
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 11
ⅢⅢⅢⅢ. 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)
Balance % Balance % Balance % B-A
Loans by domestic offices
(excluding Japan offshore market accounts) 26,076 95.9% 25,150 93.3% 25,541 91.9% -535
Manufacturing 2,872 10.6% 2,837 10.5% 2,811 10.1% -60
Agriculture, forestry and fisheries 25 0.1% 29 0.1% 27 0.1% +2
Mining, quarry, gravel extraction 25 0.1% 21 0.1% 21 0.1% -4
Construction 184 0.7% 177 0.7% 231 0.8% +46
Electric ity, gas, heat supply and water 54 0.2% 67 0.2% 66 0.2% +13
Information and communications 488 1.8% 522 1.9% 583 2.1% +95
Transport, postal services 1,346 5.0% 1,151 4.3% 1,137 4.1% -209
W holesale and retail sale 1,180 4.3% 1,134 4.2% 1,122 4.0% -57
Financial and insurance 5,320 19.6% 5,054 18.8% 5,193 18.7% -126
Real estate 8,078 29.7% 7,377 27.4% 7,202 25.9% -875
5,126 63.5% 4,445 60.3% 4,392 61.0% -734
Leasing 920 3.4% 1,067 4.0% 1,119 4.0% +200
Other services 1,352 5.0% 1,584 5.9% 1,549 5.6% +197
Local governments 499 1.8% 475 1.8% 467 1.7% -32
Others 3,734 13.7% 3,655 13.6% 4,011 14.4% +277
3,144 11.6% 3,069 11.4% 3,434 12.4% +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
Overseas loans (A) + (B) 4,266 15.7% 4,870 18.1% 5,672 20.4% +1,406
Overseas loans with no final risk residing in Japan 3,850 14.2% 4,436 16.5% 5,212 18.8% +1,362
End - Sep.2013
End - Dec.2013 B
Non-recourse loans*
Overseas (Headquarters booked) (A)
End - Mar.2013 A
Change
* Non-recourse loans ratio is % of real estate loans
Loans and bills discountedby industry
Loans by overseas offices incl. Japan offshore market accounts (B)
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.
Asia16%
Oceania3%
North America72%
Europe5% Others
4%
12
<<<<By industry >>>> <<<<By region >>>>
� * With no final risk residing in Japan
ⅢⅢⅢⅢ. Balance Sheet: Loans ーーーー Overseas ーーーー� 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%
� Portfolio well diversified by industry
(100 million yen, %)
Change
B - A
Total loans (A) 27,197 26,951 27,779 582
Overseas loans* (B) 3,850 4,436 5,212 1,362
(B) / (A) 14.2% 16.5% 18.8% -
End - Mar.2013 A
End - Dec.2013 B
End - Sep.2013
Manufacturing20%
Mining, quarry, gravel extraction
4%
Construction1%
Electricity, gas, heat supply and
water8%
Information and communications
12%Transport, postal
service10%
Wholesale and retail 3%
Financial and insurance
7%
Real estate25%
Leasing0%
Other services10%
Local governments
1%
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.
Residential30%
Office54%
Retail9%
Logistics / Others
2%
Hotel5%
13
ⅢⅢⅢⅢ. Balance Sheet: Loans ーーーー Real estate sector ーーーー
� 93% of the non-recourse loan portfolio remained LTV 70% or below
� Tokyo-metro focused. Most non-recourse loans were office or residential
LTV Status Maturity schedule
Breakdown of non-recourse loans<<<<By area>>>> <<<<By sector >>>>
70% or below
80% or below92.7%96.9%
Cumulative % of portfolio
Tokyo78%
Tokyo-Metro
9%
Hokkaido1% Osaka
4% Aichi2%
Fukuoka2%
Others4%
(100 million yen, %)
Change
B-A
Total loans 27,197 26,951 27,779 +582
Real estate sector 8,078 7,377 7,202 -875
5,126 4,445 4,392 -734
End - Sep.2013
End - Dec.2013 B
Non-recourse loans
End - Mar.2013 A
Non-recourse loansas of end-Dec. 2013
2% 9% 18% 18% 53%
FY2016 FY2017 or laterFY2013 FY2015FY2014 Legal maturity Balance
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 14
ⅢⅢⅢⅢ. Balance Sheet: Securities
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.
� 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)
Change
B - A D-CJGBs 4,650 3,715 2,755 -1,895 60 20 16 -43
Incl. TDB only 1,502 1,302 1,002 -500 0 0 -0 -0
Incl. 15Y floating rate only 1,468 1,458 1,453 -15 38 28 23 -15
Municipal bonds 113 157 139 +26 2 1 -0 -2 Corporate bonds 642 683 566 -75 -1 -2 -2 -1
Equities 270 265 267 -3 5 7 8 +3 Foreign bonds 4,658 3,267 3,736 -922 -7 -88 -145 -138
US Treasury 2,822 1,671 2,094 -728 0 -37 -64 -64 MBS 1,449 1,123 1,159 -290 -16 -59 -89 -73
387 473 482 +96 8 8 8 -0
CDO 2 2 1 -1 1 1 1 -0 Others 385 471 482 +97 7 6 7 +0
Others 2,725 3,045 3,298 +573 121 46 74 -47 Hedge funds 90 83 81 -9 17 18 19 +2 ETFs 696 928 1,220 +524 32 -3 26 -6
Investments in limited partnerships 525 489 437 -88 2 3 5 +3 REIT 287 305 313 +26 72 29 23 -48
Others 1,127 1,241 1,247 +120 -2 -2 1 +2 Incl. GMAC 14 14 15 +2 - - - -Incl. Money market funds 1,000 1,199 1,201 +201 0 -1 1 +1
Total 13,058 11,133 10,761 -2,296 180 -18 -48 -228
End - Dec.2013 D
End - Mar.2013 C
Others
End - Mar.2013 A
End - Sep.2013
Book value
Unrealized gains / lossesChangeEnd - Sep.
2013End - Dec.
2013 B
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 15
ⅣⅣⅣⅣ. Dividend payment� FY2013 third quarter dividend payment : 4 yen per common share
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.
End-Jun. 2013 End-Sep. 2013 End-Dec. 2013 End-Mar. 2014 Full-Year
Current forecast(FY2013)
4.00 yen 14.00 yen*
Dividend payment(FY2013)
3.00 yen 3.00 yen 4.00 yen
Payments in previous term(FY2012)
- - - 13.90 yen 13.90 yen
Dividend per common share
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 16
ⅤⅤⅤⅤ. Reference : Consolidated, Non-consolidated difference
� Difference between consolidated and non-consolidated net income
(100 million yen)
Non-consolidated net income 334
Subsidiaries
Shareholding, etc Net Income
Aozora Trust Bank, Ltd. 100.0% -0
Aozora Securities Co., Ltd. 100.0% 3
Aozora Loan Services Co., Ltd. 67.6% 1
Aozora Regional Consulting Co., Ltd. 100.0% 0
Aozora Asia Pacific Finance Limited (AAPF) 100.0% 2
AZB CLO 1-4 100.0% -1
AZB Funding 100.0% 2
Aozora Investment, Inc. etc. 100.0% 63
70
-63
Consolidated net income 341
Difference 7
Company name
Total
Consolidation adjustments
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.17
ⅤⅤⅤⅤ. Reference : Deferred tax assets (Non-consolidated basis)
� The period for the estimation of future taxable income for the calculation of deferred tax assets was changed from 3 years to 5 years in the first quarter of FY2013 (*1)
� 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. 18
ⅤⅤⅤⅤ. 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 end-September 2013
30,310 29,763 30,132
5,414 4,675 4,848 5,873 4,843 5,009
17.86%
15.70% 16.09%
19.37%
16.27% 16.62%
0%
5%
10%
15%
20%
0
10,000
20,000
30,000
40,000
50,000
End-Mar.12 End-Mar.13 End-Sep.13
(100 million yen)
Risk-weighted assets Regulatory capital Tier 1 capital Capital adequacy ratio Tier 1 capital ratio
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 19
� 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
ⅤⅤⅤⅤ. Reference : Status of comprehensive recapitalization plan
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 20
ⅤⅤⅤⅤ. Reference : Share Status
� Common shares
� Preferred shares (Public funds)
Remaining amount of public funds : 184.4 billion ye n (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 >>>>
1,650
484
1,166
Number of shares issued
Treasury stock
Number of shares(million shares)
Shares outstanding (After deduction of treasury stock)
Common shares
(as of end-Dec. 2013)
@ 1,000
@ 600
Total 1,528 -
June 2022
June 2022
-
Conversion price(yen)
200
-
450
406
Mandatoryconversion
Current number of commonshares equivalent(million shares)
120
Per share paid-in amount (yen)
286
24
215
Total paid-in amount (100 million yen)
5th preferred shares 1,287
4th preferred shares 241
Number of shares (million)
(as of end-Dec. 2013)
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved. 21
** Calculated based on business-related revenue, including gains on the sale of domestic equity ETFs
ⅤⅤⅤⅤ. Reference : Mid-term KPIs
FY2012Results
FY20133Q (Apr.- Dec.)
Results
FY2015Targets
Net interest margin 1.07% 1.09% 1.1% ~ 1.3%
Non-interest income ratio 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%
* Annualized basis
Copyright © 2014 Aozora Bank, Ltd.All Rights Reserved.
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.
< 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
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