Aozora Bank Faces Challenges, Projects Net Loss

Aozora Bank's shares have experienced a sharp decline as the bank anticipates a net loss for the fiscal year. The loss is attributed to higher provisions for U.S. office loans and losses from foreign bonds.

Share Price Plummet

As of Thursday morning, Aozora Bank shares were down 21% at 2,557.0 yen, hitting the day's trading limit.

Revised Projections

Aozora Bank had originally projected a net profit of Y24.0 billion for the fiscal year ending in March. However, the bank now expects a net loss of Y28.0 billion ($190.5 million) instead.

Furthermore, in a move to strengthen its capital base, the bank has decided not to pay a dividend for the latter half of the year. Dividends per share have declined from Y154 the previous year to Y76 this fiscal year.

Factors Contributing to Losses

Aozora Bank has made provisions of Y32.4 billion for potential losses from U.S. office loans. The continued adverse conditions in the office market, including higher interest rates and the shift to remote work amidst the pandemic, have necessitated this precautionary measure.

Additionally, the bank expects losses of Y41.0 billion from sales of marketable securities, primarily foreign bonds, due to rising U.S. interest rates.

Future Outlook

Moving forward, Aozora Bank aims to achieve a net profit of approximately Y17.0 billion and plans to increase dividends for the new fiscal year starting in April.