OREANDA-NEWS. Aozora Bank, Ltd. announced its interim financial results for FY2015.

In the first half of FY2015, Aozora reported consolidated net revenue of 46.5 billion yen, business profit of 26.6 billion yen, and net income of 24.3 billion yen, representing progress of 48%, 50%, and 57%, respectively, towards the full-year forecasts.

Shinsuke Baba, Representative Director, President and Chief Executive Officer of Aozora Bank commented, "Aozora entered a new stage of development following the full repayment of public funds, and we are pleased to get off to a good start in the face of increasing uncertainty in global markets. We were able to achieve net revenue of 46.5 billion yen, a year on year increase reflecting our efforts to leverage the '6 Focuses' of our updated Business Model, as well as our ongoing attention to disciplined balance sheet management. In addition, we reported net income of 24.3 billion yen which represented progress of 57%, and places us well on track to achieve our full-year earnings forecast of 43.0 billion yen. Reflecting these results, today we announced a second quarter dividend of 4.0 yen per common share, the same amount as the first quarter dividend, while our full-year forecast is 18.40 yen. We also 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 services while taking full advantage of the Bank's expertise. We also reaffirm our commitment to the forward-looking management of risk. I would like to express my gratitude to all of our stakeholders for their continued support."

Net revenue was 46.5 billion yen, an increase of 0.3 billion yen, or 0.7% year on year, and business profit was 26.6 billion yen, a decrease of 0.6 billion yen, or 2.3% year on year. Net income was 24.3 billion yen, an increase of 0.6 billion yen, or 2.7%, representing progress of 57% towards the full-year forecast of 43.0 billion yen.

Net interest income increased 1.1 billion yen, or 4.6% year on year, to 25.4 billion yen. The net interest margin increased 10 bps to 1.29% as the Bank continued its disciplined approach to balance sheet management.

General and administrative expenses were 19.9 billion yen, a year on year increase of 1.0 billion yen, or 5.0%. The OHR (general and administrative expenses as a percentage of net revenue) was 42.7%, due to the ongoing priority assigned to efficient operations.

Credit-related expenses were a net reversal of 1.8 billion yen, compared with a net reversal of 10.5 billion yen in the first half of FY2014, mainly due to the recoveries of written-off claims.

The loan balance was 2,610.4 billion yen, a decrease of 165.4 billion yen, or 6.0%, from March 31, 2015. Overseas loans increased 50.8 billion yen, while domestic loans decreased 216.2 billion yen, reflecting the Bank's ongoing focus on balancing risk and return as well as a reduction in low yielding loans.

Funding from retail customers was approximately 2,030 billion yen. The percentage of retail funding to total core funding (the sum of deposits, negotiable certificates of deposit, debentures and bonds) was stable at approximately 60%. The Bank maintained adequate liquidity reserves as of September 30, 2015, approximately 600 billion yen following the full repayment of public funds.

Non-performing claims as defined by the Financial Reconstruction Law (FRL) were 25.0 billion yen, a decrease of 13.2 billion yen, or 34.6%, from March 31, 2015. The FRL ratio was below 1%, at 0.94%. The ratio of loan loss reserves to total loans on a consolidated basis remained high at 2.43%.

The Bank's consolidated capital adequacy ratio (domestic standard) remained at an adequate level, approximately 11.02% (preliminary basis) after the full repayment of public funds in June 2015.