Aozora Bank Reports Fiscal Year 2004 Results; Growth in Net Non-Interest Income Drives Strong Business Performance.TOKYO -- Aozora Bank Aozora Bank, Ltd. (株式会社あおぞら銀行 , Ltd., ("Aozora" or "the Bank") a leading provider of financial products and services to corporate customers, financial institutions and retail customers, today reported its financial results for the fiscal year ended March 31, 2005. 2004 FINANCIAL HIGHLIGHTS (Year-on-Year): --Net income increased 172.7% to 86.9 billion yen on strong operating performance, rigid cost controls, credit reserve releases and extraordinary items --Non-interest income grew 73.8% to 32.8 billion yen and now represents 36.3% of net revenue --Consolidated capital adequacy ratios Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. increased to 18.7%; Tier 1 capital Tier 1 Capital A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves. Notes: Equity capital includes instruments that can't be redeemed at the option of the holder. ratio increased to 18.3% "We are pleased to report strong financial results for Aozora in 2004," said Aozora President, Mr. Hirokazu Mizukami. "We deeply appreciate the ongoing support of our customers, staff and other important stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. ." "The Bank has executed on its strategy and met or exceeded the key financial targets set out in our 2004 financial plan. We remain focused on expanding our presence with financial institutions and our corporate and retail customers by attracting specialist talent and providing new and innovative financial solutions. "Aozora's strategy is to capture sustainable competitive advantages by building a specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. , customer-focused bank with unique capabilities in product origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and distribution. During this past year, we significantly improved the quality of our capital base, strengthened the balance sheet, and diversified diversified (di·verˑ·s our earnings. In 2005 Aozora will continue to focus on building an efficient organization that fosters creativity, independence, and disciplined risk-management. With a strong balance sheet, diversified businesses and specialist talent in every function, the Bank is well positioned to capture future growth opportunities." Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Michael Rossi said: "Aozora continues to invest in technology to improve our operational efficiency and manage risk. In 2004, we have focused on the control infrastructure to optimize performance, control and risk reduction. Going forward, we plan to upgrade our applications, automate a larger portion of tasks and conduct regular and frequent reviews of policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental to streamline our efforts while maintaining the highest levels of control and governance." "The capital foundations of the Bank are now much stronger thanks to the support of our shareholders and our improved financial performance. By continuing to invest in risk management systems and broadening our capabilities, the Bank will look for opportunities to increase the risk positions by developing new products, markets and businesses, both organically and, where appropriate, through strategic alliances. We are committed to further build and strengthen our client relationships--especially the Japanese corporate sector, regional banks, those with needs for specialized and recovery finance, and retail clients seeking help to meet their savings and investment objectives. We will continue to grow our business in diversified ways in a highly disciplined manner." 2004 FISCAL YEAR REVIEW: Business Results Highlights --Improved cost control and productivity while increasing earnings and business growth --Improved quality of loan portfolio by elimination of credit concentration risk --Increase in non-interest revenue results from a more diversified earning base --Increase in retail deposits as a secure and diverse funding source and the foundation to expand Aozora's wealth management business --Announced internet banking joint venture with Yahoo that should provide a further diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of business and earnings in the future Strong Financial Results Aozora Bank reported net revenue of 90.4 billion yen, up 10.7% from 81.6 billion yen in 2003. Net income increased strongly during the year, up 172.7% to 86.9 billion yen from 31.9 billion yen in 2003. Business Profit before General Loan Loss Reserves increased by 17.0% to 49.7 billion yen. Earnings Quality Strong earnings contributions came from recovery finance and fund investments from the Special Finance Group and derivative sales to corporate customers and trading activities in the Financial Markets Group. This strength contributed to a significant increase in net non-interest income, which now comprises 36.3% of total net revenue, up from 23.1% in 2003. Net interest income fell by 8.3% to 57.6 billion yen as a result of a reduced loan book. The loan book reduction was due to initiatives to lower the Bank's credit concentration exposure to specific credits and sectors. The objectives of this program have been accomplished and management is satisfied with the risk profile of the loan portfolio. The bank invested in a number of asset classes including domestic and offshore loans, securities and funds to further diversify earnings sources. Through investments in technology and the development of staff with specialized skill and experience, Aozora is developing a core competency A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
Claims on real assets. . In fiscal year 2004 progress in this area generated earnings growth that compensated for reduced interest income from the loan book. Going forward, the Bank plans to use stronger capital position and improved asset management capabilities to develop unique products for our customers. Expense Management Expense management is an important element of the Bank's revitalization re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. plans, and the cost to revenue ratio of the Bank improved to 45% from 48% in the prior year showing that productivity gains were captured. General and Administrative Expenses ("GAE GAE Grant Aided Expenditure (UK) GAE Georgia Association of Educators GAE Granulomatous Amoebic Encephalitis GAE General American English (language studies) GAE Generic Application Environment ") increased 3.9% to 40.7 billion yen for 2004. The increase was mainly due to compensation expenses related to the addition of several externally recruited specialists and the new pro-forma standard tax. Although the Bank plans to target further cost efficiencies, additional expenses can be expected in order to fully capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. growth opportunities. GAE may increase on an absolute basis as the Bank continues to improve systems and invest in quality talent. Credit and Extraordinary Items Total assets of the Bank decreased for the year, reflecting the shift to a lower risk loan portfolio. As the loan portfolio reduced in size and improved in quality, excessive credit reserves were released to offset credit costs from specific credit deteriorations and write offs. Net credit-related items resulted in income of 27.8 billion yen compared to an expense of 6.5 billion yen in the prior year. Extraordinary items included the gain on the sale of Aozora Card, Ltd. shares and the return of the substitutional portion of the government welfare pension plan. Balance Sheet Total Assets decreased due to a planned reduction in the loan portfolio of 364.4 billion yen, which was partially offset by an increase of 262.9 billion yen (27%) in securities including investments into domestic and foreign securities, funds, investment trusts and limited partnerships. Funding was maintained from diversified sources, with term deposits from retail customers increasing to 1.07 trillion yen. Total regulatory capital increased 13.6% to 617.2 billion yen in fiscal year 2004. Risk weighted assets decreased 4.8% to 3,300.3 billion yen as the Bank reduced credits considered too high or of impaired quality. The capital adequacy ratio increased to 18.7% from 15.7% in 2003 and Tier 1 capital ratio increased to 18.3% from 15.0% in 2003. Aozora declared a cash dividend of 2.523 billion yen payable to common stockholders. The Board of Directors declared a cash dividend of 240 million yen on the outstanding shares of the 4th series of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and 3.224 billion yen for outstanding shares of the 5th series of preferred stock. Aozora Bank, Ltd. was established in 1957 as the Nippon Fudosan Bank, Ltd. under the Long-term Credit Bank Law. In 2001, the Bank changed its name to Aozora Bank, Ltd., and in 2003 it became majority owned by Cerberus NCB (Network Control Block) A packet structure used by the NetBIOS communications protocol. Acquisition, L.P. In 2003 Mr. Hirokazu Mizukami was appointed President, establishing a new organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. in 2004 to improve the customer focus within each of the Bank's business groups. In 2005 Mr. Mike Rossi was appointed Chairman and Chief Executive Officer to lead the Bank in developing a performance-based corporate culture, innovative business solutions and sustainable earnings growth. Aozora is a leading provider of financial products and services to corporate customers, financial institutions and retail customers, providing lending, securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. , business and asset revitalization, asset management, loan syndication Loan Syndication The process of involving numerous different lenders in providing various portions of a loan. Notes: Mainly used in extremely large loan situations, syndication allows any one lender to provide a large loan while maintaining a more prudent and manageable and investment advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal . News and other information about Aozora Bank, Ltd. are available at http://www.aozorabank.co.jp/en/company/ |
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