OREANDA-NEWS. Aozora Bank, Ltd., a leading Japanese commercial bank, today announced its financial results for the first three months of FY2015.

Earnings results for the first three months of FY2015 For the first three months of FY2015, Aozora reported consolidated net revenue of 23.5 billion yen and net income of 12.4 billion yen, representing progress of 24% and 29%, respectively, towards the full-year forecasts of 96.0 billion yen and 43.0 billion yen.

Shinsuke Baba, Representative Director, President and Chief Executive Officer of Aozora Bank commented, "With the full repayment of public funds on June 29, we entered a new stage in our development and we are pleased to get off to a strong start. We were able to achieve year-on-year increases in both net interest income and non-interest income as a result of our ongoing focus on disciplined balance sheet management and diversification of income sources. Reflecting these results, our reported net income represented progress of 29% against our full-year earnings forecast. In addition, today we announced a first quarter dividend of 4.00 yen per common share and remain committed to a 50% payout ratio for the full year."

Baba concluded, "We will strive to further enhance Aozora's corporate value through the provision of differentiated and specialized financial services. We also reaffirm our commitment to a strong risk management framework and the maintenance of sound management in order to preserve our financial strength and institutional discipline. Going forward, we intend to put more emphasis on quality communications with our stakeholders, including our shareholders. We also expect to provide full support for our customers as well as contribute to the economic and social development of Japan. I would like to express my gratitude to all of our stakeholders for their continued support."

Net revenue was 23.5 billion yen, an increase of 1.6 billion yen, or 7.3% year on year, reflecting year on year increases in both net interest income and non-interest income.

Business profit was 13.6 billion yen, an increase of 1.1 billion yen, or 9.1% year on year.

Net income was 12.4 billion yen, representing progress of 29% towards the full-year forecast of 43.0 billion yen.

Net interest income was 13.0 billion yen, an increase of 1.0 billion yen, or 8.6% year on year. The net interest margin expanded 10 bps to 1.30% as a result of an increase in the yield on total investments as the Bank continued its disciplined approach to balance sheet management.

Non-interest income was 10.5 billion yen, an increase of 0.6 billion yen, or 5.6% year on year, mainly due to the favorable sale of financial products to our mass affluent retail customers, as well as growth in earnings from the sale of derivative-related products to our corporate andfinancial institution customers.

General and administrative expenses were 9.8 billion yen, a year on year increase of 0.4 billion yen, or 4.8%.The OHR (general and administrative expenses as a percentage of net revenue) was 41.9%, due to the ongoing priority assigned to efficient operations.

Credit-related expenses were a net reversal of 1.6 billion yen, compared with a net reversal of 8.8 billion yen recorded in the first three months of FY2014, mainly due to the recoveries of written-off claims.

The loan balance was 2,716.3 billion yen, a decrease of 59.5 billion yen, or 2.1%, from March 31, 2015. Reflecting the Bank's ongoing focus on balancing risk and return, overseas loans increased approximately 33 billion yen while domestic loans decreased approximately 92 billion yen.

Funding from retail customers was approximately 2,040 billion yen. The percentage of retail funding to total core funding (the sum of deposits, negotiable certificates of deposit and debentures) was stable at approximately 60%. The Bank maintained adequate liquidity reserves of approximately 600 billion yen as of June 30, 2015.

Non-performing claims as defined by the Financial Reconstruction Law (FRL) were almost unchanged from March 31, 2015 at 39.1 billion yen. The FRL ratio was 1.41%. The percentage of FRL claims covered by reserves, collateral and guarantees was 78.8% as of June 30, 2015. The ratio of loan loss reserves to total loans on a consolidated basis remained high at 2.34%.

Aozora will announce its June 30, 2015 consolidated capital adequacy ratio (Basel III basis, domestic standard) at a later date. The Bank expects the ratio to remain at an adequate level, approximately 10.5% following the full repayment of public funds in June 2015.