Aozora Bank : Summary of the Financial Statements for FY2023 (Consolidated)（3,005KB）

Summary of the Financial Statements for FY2023 [JGAAP] (Consolidated)

					May 13, 2024
Company name	Aozora Bank, Ltd.		Listed exchange	Tokyo Stock Exchange
TSE code	8304
Representative	Hideto Oomi, President and CEO
Contact person	Yukie Tajima, Joint General Manager of Financial Control Division
Date of ordinary shareholders' meeting	June 25, 2024	URL	https://www.aozorabank.co.jp/
Dividend payable date		-	TEL	[phone]
Scheduled filing date of securities report	June 26, 2024	Trading accounts	Affirmative
Reference material	Affirmative
Investor meeting	Affirmative

(Unit: JPY millions, rounded down)

1. Business highlights for the fiscal year ended March 31, 2024 (FY2023)

(1) Consolidated business results		(Note: Percentages show year-on-year rates of change)
	Ordinary income		Ordinary profit		Profit attributable
			to owners of parent
	Millions of yen		%	Millions of yen		%	Millions of yen		%
FY2023	246,299		34.4	(54,816)		－	(49,904)		－
FY2022	183,292		36.0	7,356		(84.1)	8,719		(75.1)

(Note) Comprehensive income	JPY (42,703) million －% (FY2023) JPY (38,507) million －% (FY2022)
	Net income per	Net income per		Ordinary profit per	Ordinary profit per
	common share	common share	ROE
	total assets	ordinary income
	(basic)	(diluted)
		Yen	Yen	%		%	%
FY2023		(427.22)	－	(12.1)		(0.7)	(22.3)
FY2022		74.67	74.54	1.9		0.1	4.0
(Ref.) Gains (losses) on equity method investments JPY 2,342 million (FY2023)	JPY 2,380 million (FY2022)

1. Consolidated financial condition

	Total assets	Total net assets	Net assets to total	Net assets
	assets ratio	per common share
	Millions of yen	Millions of yen	%	Yen
March 31, 2024	7,603,002	391,078	5.0	3,285.94
March 31, 2023	7,184,070	431,119	6.1	3,751.95

(Ref.) Total net assets (less Share acquisition rights and Non-controlling interests) JPY 383,871 million (March 31, 2024) JPY 438,157 million (March 31, 2023)

(Note) Net assets to total assets ratio = (Total net assets - Share acquisition rights - Non-controlling interests) / Total assets

The above Net assets to total assets ratio is different from the capital adequacy ratio prescribed in the notification of the Financial Services Agency.

1. Consolidated Cash Flows

	Operating activities	Investing activities	Financing activities	Cash and cash equivalents
				at the end of the period
	Millions of yen	Millions of yen	Millions of yen	Millions of yen
FY2023	133,949	167,439	2,136	1,499,756
FY2022	(61,382)	213,939	(18,068)	1,196,230

2. Dividend

		Annual dividend		Total	Dividend	Dividends to
			dividends	ratio	net assets ratio
	1Q end	2Q end	3Q end	Year-end	Annual	(Annual)	(Consolidated)	(Consolidated)
	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
FY2022(common share)	38.00	38.00	38.00	40.00	154.00	17,983	206.2	3.9
FY2023(common share)	38.00	38.00	0.00	0.00	76.00	8,877	－	2.2
FY2024(common share)	－	－	－	－	76.00		58.4
(Forecast)

(Note) Aozora will continue to pay dividends on a quarterly basis, although dividend payment forecast was announced only on an annual basis.

(Note: Percentages show year-on-yearrates of change)

3. Consolidated earnings forecast for the year ending March 31, 2025 (FY2024)

(Note: Percentages show year-on-year rates of change)

	Ordinary profit		Profit attributable		Net income
		to owners of parent		per common share
	Millions of yen		%	Millions of yen		%	Yen
FY2024 (Full Year)	24,000		－	18,000		－	130.13

(Note) Net income per common share is calculated based on the assumption that issuing new shares of 21,500,000 through third- party allotment was implemented at the beginning of FY 2024 as stated in "Notice Regarding Issuance of New Shares Through Third Party Allotment Under the Capital and Business Alliance with Daiwa Securities Group Inc., and Changes in the Major Shareholders, Largest Shareholder, Which Is a Major Shareholder, and Other Associated Companies" dated today.

• Notes

1. Changes in material subsidiaries during the term (changes in specified subsidiaries which affect the

scope of consolidation) None

(2) Changes in accounting policy, accounting estimates, or retrospective restatements

	(a) Changes with revisions of accounting standards	None
	(b) Changes other than (a) above	None
	(c) Changes in accounting estimates	None
	(d) Retrospective restatements	None
(3) The number of common shares issued
		March 31, 2024	March 31, 2023
	(a) The number of common shares issued		118,289,418	118,289,418
	( including treasury shares )
	(b) The number of treasury shares		1,467,109	1,508,199
			FY2023	FY2022
	(c) The average number of common shares		116,812,393	116,779,012
	outstanding

(Summary of non-consolidated financial statements)

1. Business highlights for the fiscal year ended March 31, 2024 (FY2023)

(1) Business results

		Ordinary income	Ordinary profit		Profit
		Millions of yen		Millions of yen		%	Millions of yen
		%
FY2023	221,737	34.7	(60,992)		－	(50,792)
FY2022	164,564	37.3	3,180		(92.2)	(8,127)
		Net income per	Net income per
		common share (basic)	common share (diluted)
			Yen			Yen
FY2023			(434.82)			－
FY2022			(69.60)			－

%

－

－

(2) Financial condition

	Total assets	Total net assets	Net assets to total	Net assets
	assets ratio	per common share
	Millions of yen	Millions of yen	%	Yen
March 31, 2024	6,942,657	344,004	4.9	2,940.12
March 31, 2023	6,767,805	405,177	6.0	3,465.23

(Ref.) Total net assets (less Share acquisition rights): JPY 343,472 million (March 31, 2024) JPY 404,674 million (March 31, 2023) (Note) Net assets to total assets ratio = (Total net assets - Share acquisition rights) / Total assets

The above Net assets to total assets ratio is different from the capital adequacy ratio prescribed in the notification of the Financial Services Agency.

2. Non-consolidated earnings forecast for the year ending March 31, 2025 (FY2024)

(Note: Percentages show year-on-year rates of change)

	Ordinary profit		Profit		Net income
			per common share
	Millions of yen		%	Millions of yen	%	Yen
FY2024 (Full Year)	21,000		－	15,000	－	108.44

(Note) Net income per common share is calculated based on the assumption that issuing new shares of 21,500,000 through third-party

allotment was implemented at the beginning of FY 2024 as stated in "Notice Regarding Issuance of New Shares Through Third Party Allotment Under the Capital and Business Alliance with Daiwa Securities Group Inc., and Changes in the Major Shareholders, Largest Shareholder, Which Is a Major Shareholder, and Other Associated Companies" dated today.

• Summary of financial statements is out of scope of audit (by CPAs or audit firms).
• Notes and remarks for the proper use of earnings projection

The above earnings forecast involves certain risks and uncertainties since the calculations are based on management's assumptions and beliefs in light of information currently available. This should not be interpreted as a promise or guarantee that the forecast will be achieved. Please be aware that actual results may be materially different from the forecast presented herein due to various factors.

Aozora Bank, Ltd.

[ Attachment ]

1. Overview of operating results ・・・・・・・・・・・・・・・・・・・・・・・・・・・ 2

1. Overview of operating results for FY2023 ・・・・・・・・・・・・・・・・・・・・・ 2
2. Overview of financial condition for FY2023 ・・・・・・・・・・・・・・・・・・・ 4
3. Policy for appropriation of earnings and dividend for the year and
   next year ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4

2.	Basic view on selection of Accounting Standards	・・・・・・・・・・・・・・・・・・・・ 5
3.	Consolidated financial statements and main notes	・・・・・・・・・・・・・・・・・・ 6
	(1)	Consolidated balance sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・ 6
	(2) Consolidated statement of operations and Consolidated statement of
		comprehensive income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
		Consolidated statement of operations ・・・・・・・・・・・・・・・・・・・・・・・・ 8
		Consolidated statement of comprehensive income	・・・・・・・・・・・・・・・・・ 9
	(3)	Consolidated statement of changes in net assets	・・・・・・・・・・・・・・・・・ 10

1. Consolidated statement of cash flows ・・・・・・・・・・・・・・・・・・・・・ 12
2. Notes to consolidated financial statements ・・・・・・・・・・・・・・・・・・・ 14

(Information on going concern assumption) ・・・・・・・・・・・・・・・・・・・・・ 14

(Additional information) ・・・・・・・・・・・・・・・・・・・・・・・・・・ 14

(Segment information) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 15

(Per share information) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 19

(Material subsequent event) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 20

4. Non-consolidated financial statements ・・・・・・・・・・・・・・・・・・・・・・・・・・ 21

1. Non-consolidatedbalance sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・ 21
2. Non-consolidatedstatement of operations ・・・・・・・・・・・・・・・・・・・・・・・・ 23

(3)	Non-consolidated statement of changes in net assets ・・・・・・・・・・・・・・・・・ 25
(4)	Notes to non-consolidated financial statements ・・・・・・・・・・・・・・・・・・・ 27
	(Information on going concern assumption) ・・・・・・・・・・・・・・・・・・・・・・ 27

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Aozora Bank, Ltd.

1. Overview of operating results
(1) Overview of operating results for FY2023
Consolidated results of operations
				（Billions of	yen）
			FY2022	FY2023	Change
Net revenue ※1		59.5	50.9		(8.6)
	Net interest income		51.0	42.0		(9.0)
	Net fees and commissions		13.3	20.4		7.0
	Net gains on trading account transactions		4.1	1.6		(2.5)
	Gains (losses) on bond transactions		(11.1)	(18.6)		(7.4)
	Net other ordinary income excluding gains		2.1	5.3		3.2
	(losses) on bond transactions
General and administrative expenses		(59.3)	(61.8)		(2.4)
Gains (losses) on equity method investments		2.3	2.3		(0.0)
Business profit (loss) ※2		2.5	(8.5)		(11.1)
Credit-related expenses		(1.7)	(46.9)		(45.2)
Gains (losses) on stock transactions		8.4	1.6		(6.8)
Other		(2.0)	(0.9)		1.1
Ordinary profit (loss)		7.3	(54.8)		(62.1)
Extraordinary profit (loss)		(0.0)	1.6		1.6
Profit (loss) before income taxes		7.3	(53.1)		(60.5)
Total income taxes		(0.6)	1.4		2.1
Profit (Loss)		6.6	(51.7)		(58.3)
Loss attributable to non-controlling interests		2.0	1.8		(0.2)
Profit (Loss) attributable to owners of parent		8.7	(49.9)		(58.6)
※1 Net revenue = (Interest income－Interest expenses)

• (Trust fees＋Fees and commissions - Fees and commissions payments)
• (Gain on trading account transactions - Loss on trading account transactions)
• (Other ordinary income - Other ordinary expenses)

※2 Business profit (loss) = Net revenue - General and administrative expenses + Gains (losses) on equity method investments

※3 Regardless of nature of accounts, income or profits are shown as positive and expenses or losses are shown as negative amount on the table above.

For FY2023, net revenue was 50.9 billion yen, decrease of 8.6 billion yen from the previous year, and business profit (loss) was (8.5) billion yen, a decrease of 11.1 billion yen from the previous year. Loss attributable to owners of parent was 49.9 billion yen, as compared to a profit of 8.7 billion yen in FY2022

Net interest income was 42.0 billion yen, a decrease of 9.0 billion yen from the previous year. Non-interest income was 8.8 billion yen, an increase of 0.3 billion yen from the previous year.

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Aozora Bank, Ltd.

General and administrative expenses were 61.8 billion yen, an increase of 2.4 billion yen from the previous year.

Gains (losses) on equity method investments were a net gain of 2.3 billion yen.

From the above, business profit (loss) was (8.5) billion yen, a decrease of 11.1 billion yen from the previous year.

Credit-related expenses were a net expense of 46.9 billion yen, as compared to a net expense of

1.7 billion yen in FY2022. Gains (losses) on stock transactions were a net gain of 1.6 billion yen. Ordinary loss was 54.8 billion yen, as compared to profit of 7.3 billion yen in FY2022, and loss before income taxes was 53.1 billion yen, as compared to profit of 7.3 billion yen in FY2022.

Total income taxes (corporation tax, resident tax, business tax and deferred income taxes) were a net profit of 1.4 billion yen.

As a result of the above factors, loss attributable to owners of parent was 49.9 billion yen, as compared to profit of 8.7 billion yen in FY2022. Net loss per share (basic) was 427.22 yen, as compared to net income per share (basic) of 74.67 yen in FY2022.

Business profit (loss) by reportable segments

(Billions of yen)

	FY2022	FY2023	Change
Institutional Banking Group	3.0	6.5	3.5
Structured Finance Group	18.9	27.8	8.9
International Business Group	15.7	11.2	(4.5)
Market Group	(17.5)	(45.6)	(28.0)
Customer Relations Group	(2.4)	(2.9)	(0.5)

The Bank has classified its Group's business operations into business groups based upon the nature of the customers served and products offered: Institutional Banking Group, Structured Finance Group, International Business Group, Market Group, and Customer Relations Group. The Bank has designated these business groups as operating segments and reportable segments for the purpose of the disclosures contained herein.

Each operating segment consists of the following business groups.

Institutional Banking Group

• Corporate Banking Group and M&A Advisory Group Structured Finance Group
• Acquisition & Structured Finance Group, Environment Business Group, Special Situations Group and Real Estate Finance Group

International Business Group

• International Finance Group and Asia Investment Group Market Group

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Aozora Bank, Ltd.

• Financial Markets Group Customer Relations Group
• Allied Banking Group and Retail Banking Group

The Bank calculates its business profit (loss) by reportable segments as Business revenue minus General administrative expenses. Business revenue includes 'Consolidated net revenue', 'Gains (losses) on equity method investments' and 'Gains (losses) on stock transactions.'

(2) Overview of financial condition for FY2023

• Assets, liabilities, and net assets

Total assets were 7,603.0 billion yen as of March 31, 2024, an increase of 418.9 billion yen, compared to March 31, 2023.

Loans and bills discounted were 4,071.2 billion yen, an increase of 189.9 billion yen from March 31, 2023. Domestic loans increased by 87.9 billion yen and overseas loans increased by 101.9 billion yen. Securities decreased by 92.1 billion yen from March 31, 2023, to 1,186.5 billion yen.

Total liabilities were 7,211.9 billion yen, an increase of 458.9 billion yen compared to March 31, 2023. Total core funding (deposits, negotiable certificates of deposit and bonds payable) was 5,957.7 billion yen, an increase of 312.6 billion yen from March 31, 2023.

Total net assets were 391.0 billion yen, a decrease of 40.0 billion yen from March 31, 2023. Net assets per common share were 3,285.94 yen, as compared to 3,751.95 yen per common share as of March 31, 2023.

• Cash flow

Cash flow from operating activities was a positive 133.9 billion yen mainly due to increase in deposits. From investing activities, cash flow was a positive 167.4 billion yen mainly as a result of income from the sale and redemption of securities exceeding expenditures for the acquisition of securities. Cash flow from financing activities was a positive 2.1 billion yen mainly as a result of income from the sale of shares of subsidiaries not resulting in change in scope of consolidation exceeding dividend payment. As a result, cash and cash equivalents as of March 31, 2024 were 1,499.7 billion yen, an increase of 303.5 billion yen compared to the previous fiscal year end.

(3) Policy for appropriation of earnings and dividend for the year and next year

The Bank's policy is to provide returns to our shareholders primarily in the form of cash dividends based on our earnings results and the policy of stable shareholder returns while maintaining capital adequacy. Aozora intends to continue quarterly dividend payments.

For this fiscal year, the Bank paid a cash dividend of 76.00 yen for the entire year per common share. (No dividend will be paid for the fourth quarter.)

The entire year dividend forecast for the next fiscal year is 76.00 yen per common share.

(Note) Figures are rounded down to the nearest unit specified.

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Aozora Bank, Ltd.

2. Basic view on selection of Accounting Standards

The Bank's consolidated financial statements are prepared in accordance with accounting principals generally accepted in Japan ("J GAAP"), in order to ensure the comparability with other domestic banks.

In terms of the application of IFRS, the Bank will take appropriate actions in consideration of the Group's business operations, based on internal and external situations, etc.

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			Aozora Bank, Ltd.
3. Consolidated financial statements and main notes
(1) Consolidated balance sheet
			(Millions of yen)
		As of March 31, 2023	As of March 31, 2024
Assets
Cash and due from banks	1,275,003	1,579,781
Call loans and bills bought	78,311	17,269
Monetary claims bought	75,209	68,093
Trading account assets	151,285	173,713
Money held in trust	13,083	12,963
Securities	1,278,749	1,186,561
Loans and bills discounted	3,881,373	4,071,295
Foreign exchanges	76,873	51,267
Other assets	284,650	420,921
Tangible fixed assets	21,617	23,159
Buildings, net	9,837	10,355
Land	9,235	9,235
Leased assets, net	247	1,313
Other tangible fixed assets	2,297	2,254
Intangible fixed assets	19,392	18,962
Software	19,325	18,895
Other intangible fixed assets	67	67
Retirement benefit asset	3,873	8,741
Deferred tax assets	53,577	44,580
Customers' liabilities for acceptances and guarantees	18,630	18,084
Allowance for loan losses	(44,052)	(87,929)
Allowance for investment loss	(3,509)	(4,463)
Total assets	7,184,070	7,603,002
Liabilities
Deposits	5,463,352	5,634,992
Negotiable certificates of deposit	34,000	141,380
Call money and bills sold	10,000	－
Securities sold under repurchase agreements	48,224	29,903
Cash collateral received for securities lent	215,983	260,689
Trading account liabilities	121,877	165,078
Borrowed money	525,613	563,300
Bonds payable	147,773	181,397
Other liabilities	151,280	199,472
Provision for bonuses	4,373	4,646
Provision for bonuses for directors (and other officers)	25	76
Retirement benefit liability	11,288	10,912
Provision for credit losses on off-balance-sheet instruments	496	1,960
Reserves under special laws	8	8
Deferred tax liabilities	22	21
Acceptances and guarantees	18,630	18,084
Total liabilities	6,752,951	7,211,924

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Aozora Bank, Ltd.

		(Millions of yen)
	As of March 31, 2023	As of March 31, 2024
Net assets
Share capital	100,000	100,000
Capital surplus	87,481	87,498
Retained earnings	291,898	228,444
Treasury shares	(3,099)	(3,015)
Total shareholders' equity	476,280	412,928
Valuation difference on available-for-sale securities	(45,449)	(45,803)
Deferred gains or losses on hedges	972	4,332
Foreign currency translation adjustment	7,683	10,137
Remeasurements of defined benefit plans	(1,328)	2,277
Total accumulated other comprehensive income	(38,122)	(29,056)
Share acquisition rights	503	532
Non-controlling interests	(7,541)	6,673
Total net assets	431,119	391,078
Total liabilities and net assets	7,184,070	7,603,002

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