Financial Results for FY2015 - Aozora BankAozora Bank, Ltd. Ⅰ．Overviews of the Financial Results...

Ⅳ.

Ⅴ.

Financial Resultsfor FY2015

【　INDEX　】

Ⅰ. Overviews of the Financial Results for the Year Ended March 31, 2016 (Fiscal Year 2015 )

1. Summary of Revenue and Expenses 【Consolidated】１

【Non-consolidated】２

2. Profit Margins 【Non-consolidated】３

3. Business Profit 【Non-consolidated】

4. ROE 【Non-consolidated】

5. Gains (Losses) on Securities Transactions 【Non-consolidated】

6. Investments and Funding 【Non-consolidated】【Consolidated】４

7. Unrealized Gains and Losses on Securities 【Non-consolidated】【Consolidated】５

8. Employees' Retirement Benefits 【Non-consolidated】【Consolidated】６

9. Capital Adequacy Ratio（under Japanese domestic standards）【Consolidated】【Non-consolidated】７

Ⅱ. Status of Loans, etc.

1. Risk Monitored Loans 【Non-consolidated】【Consolidated】８

2. Allowance for Loan Losses 【Non-consolidated】【Consolidated】９

3. Disclosed Claims under the Financial Reconstruction Law ("FRL Credit") 【Non-consolidated】１０

4. Allowance and Coverage for FRL Credit 【Non-consolidated】

5. Coverage for FRL Credit by Borrowers' Category 【Non-consolidated】１１

6. Off-Balancing of FRL Credit 【Non-consolidated】１２

7. Breakdown of Loans and Bills Discounted Classified by Industry 【Non-consolidated】１４

① Loans and Bills Discounted Classified by Industry

② Risk Monitored Loans Classified by Industry

③ Consumer Loans １５

④ Loans to Small/Medium-sized Corporations

8. Debentures, Deposits and Loans 【Non-consolidated】

Ⅲ. Uniform Questions for FY 2015

1. FRL Credit Ratio 【Non-consolidated】【Consolidated】１６

2. Investment Stocks 【Non-consolidated】

3. Loans to Small/Medium-sized Corporations 【Non-consolidated】

4. Sales of investment trusts and annuity insurance to retail customers 【Non-consolidated】

5. Japanese Government Bonds 【Non-consolidated】

Ⅳ. Deferred Tax Assets １７

Ⅴ. Disclosure of exposure to securitized products １８

Aozora Bank, Ltd.

Ⅰ． Overviews of the Financial Results for the Year Ended March 31, 2016 (Fiscal Year 2015 )

１．Summary of Revenue and Expenses

【Consolidated】

(million yen)

FY 2015 FY 2014

(A) (A)-(B) (B)

Consolidated net revenue　※１ 91,403 (1,430) 92,834

Net interest income 49,804 (176) 49,981

Net fees and commissions 11,464 (3,083) 14,547

Net trading income 12,208 (271) 12,479

Net other ordinary income 17,926 2,100 15,826

General and administrative expenses (42,806) (2,650) (40,155)

Business profit　※２ 48,597 (4,081) 52,679

Credit-related expenses 4,745 54 4,690

Write-off of loans (217) 372 (589)

Provision of specific allowance for loan losses (1,517) (10,144) 8,626

Provision of general allowance for loan losses 2,839 14,487 (11,648)

Provision of allowance for loans to restructuring countries - - -

Loss on disposition of loans (94) (2,704) 2,610

Recoveries of written-off claims 3,393 (1,654) 5,047

Provision of reserve for credit losses on off-balance-sheet instruments 341 (302) 644

Gains (losses) on stock transactions 1,421 116 1,304

Income from interests in associated undertakings - - -

Other 957 (40) 997

Ordinary profit 55,721 (3,950) 59,671

Extraordinary profit (loss) (4) 5,755 (5,759)

Profit before income taxes and non-controlling interests 55,716 1,804 53,912

Income taxes-current (1,257) 2,195 (3,452)

Income taxes-deferred (10,946) (4,194) (6,752)

Profit (loss) 43,512 (194) 43,707

Profit (loss) attributable to non-controlling interests (13) 4 (17)

Profit (loss) attributable to owners of parent 43,499 (190) 43,689

(Note) The amounts are rounded down to the nearest million yen.

(Scope of Consolidation and Equity-Method Application） (Number of companies)

FY 2015 FY 2014

(A) (A)-(B) (B)

Consolidated subsidiaries 18 3 15

Affiliated companies applying equity-method 0 0 0

※１ Consolidated net revenue = (Interest income - Interest expenses) + (Fees and commissions income - Fees and commissions expenses) + (Trading

income - Trading expenses) + (Other ordinary income - Other ordinary expenses)

※２ Business profit = Consolidated net revenue - General and administrative expenses

- 1 -

Aozora Bank, Ltd.

【Non-consolidated】(million yen)

FY 2015 FY 2014

(A) (A)-(B) (B)

Net revenue 86,121 257 85,863

(Excluding gains (losses) on bond transactions) 77,993 (5,012) 83,005

Net interest income 47,855 (600) 48,456

Net fees and commissions 11,542 (2,960) 14,503

Net trading income 9,753 (366) 10,119

Net other ordinary income 16,969 4,185 12,784

(Gains (losses) on bond transactions) 8,128 5,270 2,857

(39,273) (2,402) (36,871)

Personnel (18,795) (635) (18,160)

Property and equipment (17,786) (1,175) (16,611)

Taxes (2,691) (592) (2,099)

Business profit before general allowance for loan losses 46,847 (2,144) 48,992

Excluding gains (losses) on bond transactions 38,719 (7,415) 46,134

Credit-related expenses 4,081 (980) 5,062

Written-off of loans (369) 577 (946)

Provision of specific allowance for loan losses (1,377) (9,605) 8,227

Provision of general allowance for loan losses 2,612 12,892 (10,280)

Provision of allowance for loans to restructuring countries - - -

Loss on disposition of loans (11) (2,665) 2,653

Recoveries of written-off claims 2,935 (1,787) 4,723

292 (391) 684

Gains (losses) on stock transactions 1,319 15 1,304

Other 2,211 (280) 2,492

Ordinary profit 54,460 (3,391) 57,851

Extraordinary profit (loss) (3) (0) (2)

Profit before income taxes 54,456 (3,392) 57,849

Income taxes-current (894) 1,841 (2,736)

Income taxes-deferred (10,930) (4,133) (6,796)

Profit 42,631 (5,684) 48,316

46,847 8,135 38,712

(Note) The amounts are rounded down to the nearest million yen.

General and administrative expenses

Business profit

Provision of reserve for credit losses on off-balance-sheet

instruments

- 2 -

Aozora Bank, Ltd.

2. Profit Margins 【Non-consolidated】(Total)

FY 2015 FY 2014

(A) (A)-(B) (B)

（１）Yield on total investments （Ａ） 1.63% 0.12% 1.51%

Yield on loans （Ｂ） 1.51% 0.00% 1.51% Yield on securities 1.89% 0.50% 1.39%

1.37% 0.10% 1.27%

1.45% 0.01% 1.44%

Yield on debentures, deposits & certificates of deposit

（Ｅ）0.27% (0.03%) 0.30%

Yield on borrowings 0.38% 0.08% 0.30%

（３）Profit margins （Ａ）－（Ｃ） 0.26% 0.02% 0.24%

（４）Loan margin （Ｂ）－（Ｄ） 0.06% (0.01%) 0.07%

（５）Yield spread （Ｂ）－（Ｅ） 1.24% 0.03% 1.21%(Note) The figures are calculated in the method specified in "Kessan Jokyohyo".

(Domestic operations）

FY 2015 FY 2014

(A) (A)-(B) (B)

（１）Yield on total investments （Ａ） 0.85% (0.06%) 0.91%

Yield on loans （Ｂ） 1.03% (0.12%) 1.15% Yield on securities 1.16% 0.54% 0.62%

1.24% 0.00% 1.24%

1.35% 0.00% 1.35%

Yield on debentures, deposits & certificates of deposit

（Ｅ）0.26% (0.04%) 0.30%

Yield on borrowings 0.29% 0.03% 0.26%

（３）Profit margins （Ａ）－（Ｃ） (0.39%) (0.06%) (0.33%)

（４）Loan margin （Ｂ）－（Ｄ） (0.32%) (0.12%) (0.20%)

（５）Yield spread （Ｂ）－（Ｅ） 0.77% (0.08%) 0.85%

(Note) The figures are calculated in the method specified in "Kessan Jokyohyo".

3. Business Profit 【Non-consolidated】 (million yen)

FY 2015 FY 2014

(A) (A)-(B) (B)Business profit

before general allowance for loan losses 46,847 (2,144) 48,992per employee (thousand yen) 27,753 (2,771) 30,524

4. ROE 【Non-consolidated】

FY 2015 FY 2014

(A) (A)-(B) (B)11.72% (0.85%) 12.57%

Profit basis 10.67% (1.72%) 12.39%

5. Gains (losses) on Securities Transactions 【Non-consolidated】 (million yen)

FY 2015 FY 2014

(A) (A)-(B) (B)Gains (losses) on bond transactions 8,128 5,270 2,857

Gain on sale 10,153 (935) 11,088Gain on redemption - - - Loss on sale (1,491) 6,739 (8,230)Loss on redemption (528) (528) - Loss on devaluation (6) (5) (0)

Gains (losses) on stock transactions 1,319 15 1,304Gain on sale 1,319 14 1,305 Loss on sale - - - Loss on devaluation - 0 (0)

{(Total net assets at beginning of term - Subscription rights to shares - Number of preferred + (Total net assets at end of term - Subscription rights to shares - Number of preferred

shares outstanding at the beginning of the term × Issue price) shares outstanding at the end of the term × Issue price)} /2

ROE=(Profit - Dividends paid on preferred stock(excluding the super preferred dividend))

Business profit before general allowance for loan losses basis

（２）Rate of funding cost（including general and administrative

expenses）（Ｃ） Cost of debentures, deposits & certificates of deposit

（including general and administrative expenses）（Ｄ）

（２）Rate of funding cost（including general and administrative

expenses）（Ｃ） Cost of debentures, deposits & certificates of deposit

（including general and administrative expenses）（Ｄ）

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Aozora Bank, Ltd.

6. Investments and Funding【Non-consolidated】(Total) (million yen)

Average balance Yield Average balance Yield Average balance Yield

Total investments 3,868,640 1.63% (216,769) 0.12% 4,085,410 1.51%

Due from banks 41,506 0.24% 5,475 0.11% 36,031 0.13%

Call loans 17,250 0.13% (4,250) (0.01%) 21,501 0.14%

Receivables under securities borrowing transactions 31,414 0.02% (14,211) (0.01%) 45,625 0.03%

Securities 1,050,729 1.89% (206,310) 0.50% 1,257,039 1.39%

Loans and bills discounted 2,659,050 1.56% (18,767) 0.02% 2,677,817 1.54%

Total funding 3,973,053 0.38% 47,287 0.05% 3,925,766 0.33%

Deposits 2,759,813 0.29% 28,461 (0.04%) 2,731,351 0.33%

Negotiable certificates of deposit 305,995 0.10% 28,965 (0.01%) 277,030 0.11%

Debentures 240,557 0.25% 24,502 (0.01%) 216,055 0.26%

Call money 154,936 0.31% (22,972) 0.08% 177,909 0.23%

Payables under repurchase agreements - - - - - -

Payables under securities lending transactions 284,267 0.33% (40,797) 0.15% 325,064 0.18%

Borrowed money 190,762 0.43% 12,800 0.06% 177,962 0.37%

Bonds payable 10,997 0.19% 10,997 0.19% - -

(Domestic operations) (million yen)


Total investments 3,477,300 0.85% (171,502) (0.06%) 3,648,803 0.91%

Due from banks 108 0.05% 80 (0.05%) 28 0.10%

Call loans 17,117 0.13% (4,293) (0.01%) 21,410 0.14%


Securities 424,088 1.16% (237,454) 0.54% 661,543 0.62%

Loans and bills discounted 1,732,993 1.12% (181,824) (0.10%) 1,914,818 1.22%

Total funding 3,621,087 0.26% 64,672 (0.03%) 3,556,414 0.29%

Deposits 2,728,219 0.28% 14,444 (0.04%) 2,713,775 0.32%


Debentures 240,557 0.25% 24,502 (0.01%) 216,055 0.26%

Call money 99,879 0.07% (17,365) (0.03%) 117,244 0.10%


Payables under securities lending transactions 71,901 0.04% (5,052) (0.02%) 76,954 0.06%

Borrowed money 160,412 0.43% 6,955 0.05% 153,457 0.38%

Bonds payable 10,997 0.19% 10,997 0.19% - -

【Consolidated】(Total) (million yen)


Total investments 3,853,632 1.69% (219,051) 0.14% 4,072,684 1.55%

Due from banks 61,986 0.21% 11,711 0.10% 50,274 0.11%

Call loans and bills bought 17,250 0.13% (4,250) (0.01%) 21,501 0.14%


Securities 996,537 2.01% (216,209) 0.56% 1,212,747 1.45%

Loans and bills discounted 2,651,904 1.63% (21,781) 0.03% 2,673,686 1.60%

Total funding 3,963,564 0.38% 44,285 0.04% 3,919,279 0.34%

Deposits 2,746,197 0.29% 26,165 (0.04%) 2,720,031 0.33%


Debentures 240,557 0.25% 24,502 (0.01%) 216,055 0.26%

Call money and bills sold 154,936 0.31% (22,972) 0.08% 177,909 0.23%


Payables under securities lending transactions 284,267 0.33% (40,797) 0.15% 325,064 0.18%

Borrowed money 194,889 0.46% 12,094 0.06% 182,795 0.40%

Bonds payable 10,997 0.19% 10,997 0.19% - -

FY 2015 FY 2014

(A) - (B)

FY 2015 FY 2014

(A) (B)

(A) (A) - (B) (B)

(A) - (B)(A) (B)

FY 2015 FY 2014

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Aozora Bank, Ltd.

7. Unrealized Gains and Losses on Securities

① Valuation standards

Held-for-trading securities Fair value

Held-to-maturity bonds Amortized cost

Available-for-sale securities

With fair value available

Without fair value available Acquisition cost

Stocks in subsidiaries and affiliates Acquisition cost

② Unrealized gains and losses

【Non-consolidated】 (million yen)

Unrealized gains and losses Unrealized gains and losses

(A) (A)-(B) (B)

Held-to-maturity bonds - - - - - - -

- - - - - - -

Available-for-sale securities 22,869 (28,043) 37,577 14,708 50,912 53,279 2,367

Japanese stocks 23,549 (2,720) 23,621 72 26,269 26,325 55

Japanese debt securities 506 (587) 561 54 1,094 1,380 286

Other (1,186) (24,736) 13,395 14,581 23,549 25,574 2,024

Total 22,869 (28,043) 37,577 14,708 50,912 53,279 2,367

Japanese stocks 23,549 (2,720) 23,621 72 26,269 26,325 55


Other (1,186) (24,736) 13,395 14,581 23,549 25,574 2,024 (Note)

(A)-(B)Monetary claims bought 23 21 23 - 1 1 -

【Consolidated】 (million yen)

Unrealized gains and losses Unrealized gains and losses

(A) (A)-(B) (B)

Held-to-maturity bonds - - - - - - -

Available-for-sale securities 23,045 (28,043) 37,754 14,708 51,089 53,456 2,367

Japanese stocks 23,549 (2,720) 23,621 72 26,269 26,325 55


Other (1,015) (24,738) 13,566 14,581 23,722 25,747 2,024

Total 23,045 (28,043) 37,754 14,708 51,089 53,456 2,367

Japanese stocks 23,549 (2,720) 23,621 72 26,269 26,325 55


Other (1,015) (24,738) 13,566 14,581 23,722 25,747 2,024 (Note)

(A)-(B)Monetary claims bought 23 21 23 - 1 1 -

Fair value (Unrealized gains (losses) recorded in net assets, net of taxes.)

losses

March 31, 2016 March 31, 2015 Unrealized gainsand losses (A)

Unrealized gainsand losses (B)gains losses gains losses

March 31, 2016 March 31, 2015

lossesgains

gains

gains losses

gains

March 31, 2016

gains losses gains

Available-for-sale securities are marked-to-market, and above figures are difference between balance sheet amount and acquisition cost.

Unrealized gainsand losses (A)

Unrealized gainsand losses (B)

losses

The gain or loss from revaluation of 'Securities' on the consolidated balance sheet is included in the table above.

A portion of beneficial interests in investment trust within 'monetary claims bought' are marked-to-market, but the unrealized gains and losses

in the table below are not included in the table above.

losses

March 31, 2015

Stocks in subsidiaries and affiliates

Available-for-sale securities are marked-to-market, and above figures are difference between consolidated balance sheet amount and

acquisition cost.

The gain or loss from revaluation of 'Securities' on the balance sheet is included in the table above.

A portion of beneficial interests in investment trust within 'monetary claims bought' are marked-to-market, but the unrealized gains and losses

in the table below are not included in the table above.

March 31, 2016 March 31, 2015

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Aozora Bank, Ltd.

8. Employees' Retirement Benefits

① Provision for retirement benefits


March 31, 2016 March 31,

2015

(A) (A) - (B) (B)

Retirement benefit obligations (A) (42,053) (4,971) (37,082)Pension assets (B) 34,143 (706) 34,850

Unfunded retirement benefit obligations (C)=(A)+(B) (7,909) (5,677) (2,231)Unrecognized actuarial loss (D) 1,519 7,139 (5,620)Unrecognized prior service cost (E) (1,720) 327 (2,047)

Net liability recognized (F)=(C)+(D)+(E) (8,110) 1,789 (9,899)Prepaid pension cost (G) - - - Provision for retirement benefits (F)-(G) (8,110) 1,789 (9,899)


March 31, 2016 March 31,

2015

(A) (A) - (B) (B)

Retirement benefit obligations (A) (42,153) (4,977) (37,175)Pension assets (B) 34,143 (706) 34,850

Unfunded retirement benefit obligations (C)=(A)+(B) (8,009) (5,684) (2,325)Net defined benefit asset (D) 951 (4,534) 5,485

Net defined benefit liability (C)-(D) (8,961) (1,149) (7,811)Unrecognized actuarial loss (E) (1,519) (7,139) 5,620Unrecognized prior service cost (F) 1,720 (327) 2,047

(E)+(F) 200 (7,467) 7,668

② Net periodic benefit costs


FY 2015 FY 2014

(A) (A) - (B) (B)

Net periodic benefit costs (830) (124) (706)Service cost 1,267 23 1,243Interest cost 474 1 473Expected investment revenue (871) (71) (800)Charge off of prior service cost (327) - (327)Charge off of actuarial loss (1,383) (75) (1,308)Other 10 (3) 13


FY 2015 FY 2014

(A) (A) - (B) (B)

Net periodic benefit costs (818) (123) (694)

Remeasurements of defined benefit plans

(before income tax effect)

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Aozora Bank, Ltd.

9. Capital Adequacy Ratio (under Japanese domestic standards)

■Basel Ⅲ


March 31, 2016 March 31, 2015 September 30, 2015

preliminary (A) (A) - (B) (A) - (C) (B) (C)

(1) Capital adequacy ratio (4)/(5) 11.03% (3.42%) 0.01% 14.45% 11.02%

(2) Core capital: instruments and reserves 421,137 (124,132) 4,640 545,269 416,497

(3) Core capital: regulatory adjustments 4,014 1,654 1,173 2,360 2,841

(4) Regulatory capital (2)-(3) 417,123 (125,786) 3,468 542,909 413,655

(5) Risk-weighted assets 3,778,341 21,457 27,384 3,756,884 3,750,957

(6) Total required capital (5)*4% 151,133 858 1,095 150,275 150,038



preliminary (A) (A) - (B) (A) - (C) (B) (C)

(1) Capital adequacy ratio (4)/(5) 10.83% (3.40%) 0.04% 14.23% 10.79%

(2) Core capital: instruments and reserves 413,813 (122,651) 6,473 536,464 407,340

(3) Core capital: regulatory adjustments 3,524 1,989 1,499 1,535 2,025

(4) Regulatory capital (2)-(3) 410,288 (124,640) 4,974 534,928 405,314

(5) Risk-weighted assets 3,786,782 27,998 31,002 3,758,784 3,755,780

(6) Total required capital (5)*4% 151,471 1,120 1,240 150,351 150,231

The 'Composition of Capital Disclosure' is available on our website at

http://www.aozorabank.co.jp/english/ir/library/

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http://www.aozorabank.co.jp/english/ir/library/

Aozora Bank, Ltd.

II. Status of Loans, etc.

1. Risk Monitored Loans

□ After partial and direct written-off



(A) (A) - (B) (A) - (C) (B) (C)

Loans to bankrupt companies - - - - -

Past due loans 19,146 (7,227) (1,852) 26,374 20,999

Loans overdue for 3 months or more - - - - -

Restructured loans 3,819 (7,949) (164) 11,768 3,984

Total 22,966 (15,176) (2,017) 38,143 24,983

Loan balance （end of period basis） 2,515,868 (265,577) (100,743) 2,781,445 2,616,611


Past due loans 0.8% (0.2%) (0.0%) 0.9% 0.8%


Restructured loans 0.2% (0.3%) (0.0%) 0.4% 0.2%

Total 0.9% (0.5%) (0.0%) 1.4% 1.0%




(A) (A) - (B) (A) - (C) (B) (C)


Past due loans 19,278 (7,095) (1,720) 26,374 20,999


Restructured loans 4,545 (7,997) (211) 12,543 4,757

Total 23,823 (15,093) (1,932) 38,917 25,756

Loan balance （end of period basis） 2,511,622 (264,194) (98,768) 2,775,817 2,610,391


Past due loans 0.8% (0.2%) (0.0%) 1.0% 0.8%


Restructured loans 0.2% (0.3%) (0.0%) 0.5% 0.2%

Total 0.9% (0.5%) (0.0%) 1.4% 1.0%

Risk

Monitor

ed

Loans

Ratio to

Loan

balance

Risk

Monitor

ed

Loans

Ratio to

Loan

balance

- 8 -

Aozora Bank, Ltd.

2. Allowance for Loan Losses




(A) (A) - (B) (A) - (C) (B) (C)

Allowance for loan losses 60,185 (2,169) (1,996) 62,354 62,182

General allowance 51,077 (2,612) (1,984) 53,689 53,061

Specific allowance 9,108 442 (12) 8,665 9,121

- - - - -




(A) (A) - (B) (A) - (C) (B) (C)

Allowance for loan losses 61,384 (2,346) (2,065) 63,731 63,450

General allowance 52,145 (2,920) (2,184) 55,065 54,329

Specific allowance 9,239 573 118 8,665 9,121

- - - - -

Allowance for loans to

restructuring countries

Allowance for loans to

restructuring countries

- 9 -

Aozora Bank, Ltd.

3. Disclosed Claims under the Financial Reconstruction Law ("FRL Credit")




(A) (A) - (B) (A) - (C) (B) (C)

Bankrupt and similar credit 125 (151) (150) 276 275

Doubtful credit 19,021 (7,128) (1,702) 26,150 20,724

Special attention credit 3,819 (7,949) (164) 11,768 3,984

Total (a) 22,966 (15,229) (2,018) 38,195 24,985

4. Allowance and Coverage for FRL Credit




(A) (A) - (B) (A) - (C) (B) (C)

Allowance & Coverage (b) 18,595 (12,107) (1,031) 30,702 19,626

Allowance for loan losses 10,662 (928) (42) 11,591 10,705

Collateral / guarantee

coverage7,932 (11,178) (989) 19,111 8,921

(Note) Allowance for loan losses is the sum of specific allowance for loan losses and general allowance for loan losses for FRL Credit.

Coverage Ratio (b)/(a)


(A) (A) - (B) (A) - (C) (B) (C)

81.0% 0.6% 2.4% 80.4% 78.6%After partial and direct written-

off

- 10 -

Aozora Bank, Ltd.

5. Coverage for FRL Credit by Borrowers' Category


【Non-consolidated】 (100 millions yen)

FRL Credit

Loans other

-

1 100.0% 100.0%

Doubtful credit

Collateral /

Guarantee

coverage

78

190Allowance 90

79.9% 88.1% 191

Estimated

collections 22

Collateral /

Guarantee

coverage

- 44.6% 44.6% -

Allowance

38 17

Estimated

collections38

21

(Normal credit)

(25,282)

Collateral /

Guarantee

coverage

79

Allowance 107

Estimated

collections 44

70.9% 81.0% 230

Total credit Total allowance

25,511 602

The reserve ratio for the non-secured portion of special attention credit 44.6%

The reserve ratio for the need attention credit 7.5%

The reserve ratio for the normal credit 1.4%

(Note) The amounts are rounded to the nearest JPY 100 millions.

Risk Monitored

Loans

Risk Monitored

loans

Coverage Ratio

Special

attention credit

FRL Credit

Coverage Ratio

Restructured loans

Loans overdue for

three months or

more

Allowance RatioAllowance & CoverageBorrower categories

for self-assessment

Allowance ratio

= Allowance / (Credit－Collateral, Guarantees, etc.)

Bankrupt borrowers

Need Attention

borrowers

Normal borrowers

230

Past due loans

Coverage ratio

= (Collateral, Guarantees＋Allowance) / Credit

Loans to bankrupt

companies

De facto bankrupt

borrowers

In Danger of

Bankruptcy borrowers

FRL Credit, totalFRL Credit

Allowance Ratio

Collateral /

Guarantee

coverage

Bankrupt and similar

credit 1

- 11 -

Aozora Bank, Ltd.

6. Off-Balancing of FRL Credit 【Non-consolidated】

① Balance of doubtful credit, and bankrupt and similar credit

(100 millions yen)

As of As of As of As of As of As of As of As of

Newly added within:Sep. 30,

2012

Mar. 31,

2013

Sep. 30,

2013

Mar. 31,

2014

Sep. 30,

2014

Mar. 31,

2015

Sep. 30,

2015

increase

(decrease)Mar. 31,

2016

(B) (A)-(B) (A)

-Sep. 30, 2012Bankrupt and

similar credit52 61 17 15 4 2 2 (1) 1

Doubtful credit 744 570 403 304 218 188 125 (11) 115

796 631 420 319 222 190 128 (12) 116

Oct. 1, 2012

-Mar. 31, 2013

Bankrupt and

similar credit- 11 11 19 1 0 0 (0) -

Doubtful credit - 221 206 200 111 3 3 (0) 3

- 232 216 219 112 4 3 (0) 3

Apr. 1, 2013

-Sep. 30, 2013

Bankrupt and

similar credit- - 0 2 - - - - -

Doubtful credit - - 45 18 17 3 3 (0) 3

- - 45 20 17 3 3 (0) 3

Oct. 1, 2013

-Mar. 31, 2014

Bankrupt and

similar credit- - - - - - - - -

Doubtful credit - - - 45 39 37 25 (4) 21

- - - 45 39 37 25 (4) 21

Apr. 1, 2014

-Sep. 30, 2014

Bankrupt and

similar credit- - - - 0 - - - -

Doubtful credit - - - - 18 20 16 (16) -

- - - - 18 20 16 (16) -

Oct. 1, 2014

-Mar. 31, 2015

Bankrupt and


Doubtful credit - - - - - 10 10 (2) 8

- - - - - 10 10 (2) 8

Apr. 1, 2015

-Sep. 30, 2015

Bankrupt and


Doubtful credit - - - - - - 25 1 26

- - - - - - 25 1 26

Oct. 1, 2015

-Mar. 31, 2016

Bankrupt and


Doubtful credit - - - - - - - 16 16

- - - - - - - 16 16

(Note1) The amounts are rounded to the nearest 100 millions yen.(Note2)

subtotal

subtotal

Balance as of Mar. 31, 2016 includes those borrowers (JPY 0.1 billion) for whom

measures are undertaken which will lead to eventual off-balancing.

subtotal

subtotal

subtotal

subtotal

subtotal

subtotal

- 12 -

Aozora Bank, Ltd.

② Off-balancing of doubtful credit, and bankrupt and similar credit

(100 millions yen)

-Sep. 30,

2012

Oct. 1, 2012

-Mar. 31, 2013

Apr. 1, 2013

-Sep. 30, 2013

Oct. 1, 2013

-Mar. 31, 2014

Apr. 1, 2014

-Sep. 30, 2014

Oct. 1, 2014

-Mar. 31, 2015

Apr. 1, 2015

-Sep. 30, 2015

- - - - - - -

- - - - - - -

- - - - - (2) -

11 0 - - - 0 -

(23) (1) (0) (4) (16) (1) 1

(12) (0) (0) (4) (16) (2) 1

(Note1)(Note2)　　

(Note3) If legal proceedings such as debt waiver, forgiveness, collection and so on, occur after direct written-off of book cost, relevant

amounts are reentered in "Liquidation-type disposition", "Restructuring-type disposition" or "Other" where appropriate and

subtracted from "Direct written-off".

Newly added

within:

Liquidation-type

disposition

Restructuring-

type disposition

Loan liquidations

Direct written-off

Other

Total

The amounts are rounded to the nearest 100 millions yen.Liquidation-type disposition : debt waiver in event of bankruptcy or special liquidationRestructuring-type disposition : debt waiver in event of restructuring-type proceedings, such as corporate reorganization, civil

rehabilitation, composition and winding-up; or debt forgivenessOther : collection by disposition of collateral, business improvement of debtor, etc.

- 13 -

Aozora Bank, Ltd.

7. Breakdown of Loans and Bills Discounted Classified by Industry 【Non-consolidated】


① Loans and Bills Discounted Classified by Industry (million yen)


2,515,868 2,781,445 2,616,611

Manufacturing 215,294 264,304 212,512

Agriculture, forestry & fisheries 3,774 3,139 2,689

Mining, quarry, gravel extraction 800 1,627 1,437

Construction 17,795 22,155 15,916

Electricity, gas, heat supply & water 18,731 14,339 15,271

Information & communications 29,632 40,229 33,024

Transport, postal Service 62,743 82,284 72,589

Whole sale & retail trade 110,774 127,820 115,243

Finance & insurance 382,603 433,157 389,025

Real estate 513,521 604,207 569,077

Leasing 84,067 116,714 98,882

Various Services 152,182 160,315 144,486

Local governments 22,970 40,402 24,394

Others 900,977 870,747 922,061

- - -

Government - - -

Financial institution - - -

Others - - -

Total 2,515,868 2,781,445 2,616,611

② Risk Monitored Loans Classified by Industry (million yen)


22,966 38,143 24,983

Manufacturing 3,184 3,365 3,358

Agriculture, forestry & fisheries - - -

Mining, quarry, gravel extraction - - -

Construction - - -

Electricity, gas, heat supply & water - - -

Information & communications 66 66 66

Transport, postal Service 19 21 19

Whole sale & retail trade 320 1,173 620

Finance & insurance 125 7,800 -

Real estate 1,288 6,294 1,510

Leasing - 238 238

Various Services 46 46 46

Local governments - - -

Others 17,916 19,137 19,123

- - -

Government - - -

Financial institution - - -

Others - - -

Total 22,966 38,143 24,983

Loans by domestic offices

(excluding Japan Offshore Market accounts)

Loans by domestic offices

(excluding Japan Offshore Market accounts)

Loans by oversea offices

(including Japan Offshore Market accounts)

Loans by oversea offices

(including Japan Offshore Market accounts)

- 14 -

Aozora Bank, Ltd.

③ Consumer Loans (million yen)

March 31, 2016 March 31, 2015 September 30,

2015

(A) (A) - (B) (A) - (C) (B) (C)

Consumer loans 3,653 (356) (378) 4,009 4,031

Housing loans 3,163 (810) (354) 3,974 3,518

Other loans 489 454 (23) 35 513

④ Loans to Small/Medium-sized Corporations (million yen)


2015

(A) (A) - (B) (A) - (C) (B) (C)

Loans to small/medium-sized corporations 1,771,132 (156,274) (64,736) 1,927,407 1,835,869

Ratio to total loans 70.4% 1.1% 0.2% 69.3% 70.2%

8. Debentures, Deposits and Loans【Non-consolidated】 (million yen)


2015

(A) (A) - (B) (A) - (C) (B) (C)

Ending balance 219,465 (26,646) (21,920) 246,112 241,386

Average balance 240,557 24,502 (6,594) 216,055 247,151

Ending balance 2,723,774 13,496 (24,789) 2,710,278 2,748,564

Average balance 2,759,813 28,461 (17,655) 2,731,351 2,777,468

Ending balance 2,945,374 (51,556) (101,889) 2,996,931 3,047,264

Average balance 3,065,808 57,426 (36,416) 3,008,382 3,102,224

Ending balance 2,515,868 (265,577) (100,743) 2,781,445 2,616,611

Average balance 2,659,050 (18,767) (68,969) 2,677,817 2,728,019

Debentures

Deposits

Deposits & Certificates of deposits

Loans and bills discounted

- 15 -

Aozora Bank, Ltd.

Ⅲ. Uniform Questions for FY2015

1．FRL Credit Ratio　【Non-consolidated】【Consolidated】

Sep. 30, 2013 Mar. 31, 2014 Sep. 30, 2014 Mar. 31, 2015 Sep. 30, 2015 Mar. 31, 2016

Non-consolidated 3.21% 2.98% 1.88% 1.35% 0.94% 0.90%Consolidated 3.29% 3.00% 1.91% 1.38% 0.97% 0.93%

2． Investment Stocks　【Non-consolidated】(1) Investment Stocks (100 millions yen)

Acquisition cost(A) Market value(B) (B)-(A)

March 31, 2015 279 542 263September 30, 2015 307 558 251 March 31, 2016 311 547 235 (Note) The amounts are rounded to the nearest 100 millions yen. The same applies in the following tables.

(2) Sales of cross-holding stocks

None

(3) Impairment of stocks (100 millions yen)

Impairment loss

FY 2014 13 - FY 2015 1st Half Period 1 -FY 2015 13 -

3．Loans to Small/Medium-sized Corporations　【Non-consolidated】Loan Balance (100 millions yen)

Balance Increase/Decrease Ratio to total loans

March 31, 2015 19,274 2.7% 69.3%September 30, 2015 18,359 (4.7%) 70.2%March 31, 2016 17,711 (3.5%) 70.4%

4． Sales of investment trusts and annuity insurance to retail customers　【Non-consolidated】ａ．Investment trusts (100 millions yen)

Sales Total

FY 2014 558FY 2015 1st Half Period 236 FY 2015 433

ｂ．Annuity insurance (100 millions yen)

Sales Total

FY 2014 550FY 2015 1st Half Period 237 FY 2015 443

5． Japanese Government Bonds　【Non-consolidated】(100 millions yen)

Balance

March 31, 2015 1,938 September 30, 2015 1,352 March 31, 2016 280

Gains (losses) on stock transactions

- 16 -

Aozora Bank, Ltd.

1. Judgement for Realizability of Deferred Tax Asset and Estimation Period of Future Taxable Income

2. Past Business Performance

(Unit: JPY 100 millions)

FY 2013 FY 2014 FY 2015

457 490 468

511 578 545

299 321 151

Taxable Income before Adjustment 512 700 478

3. Estimated Future Taxable Income


next 5 years

Business Profit before General Loan-loss Reserve 1,583 （*）

Income before Income Taxes 1,602

1,684

4. Temporary Differences and Loss Carryforwards


303

Allowance for loan losses 196

Provision for employees' retirement benefits 25

Securities write-off 205

Unrealized gain on available-for-sale securities -

Tax loss carryforwards 21

Other 109

Subtotal 556

Less valuation allowance (253)

92

Unrealized gain on available-for-sale securities 68

210

note) Deferred tax assets/ liabilities are shown on a non-consolidated basis, as those of consolidated subsidiaries are

insignificant.

Deferred Tax Assets

Deferred tax liabilities

Net deferred tax assets

Basis for Estimation

Estimated Taxable Income before Adjustment (*)

Estimated conservatively reflecting the

uncertainty of the projection.

IV. Deferred Tax Assets

Taxable income (before offsetting of tax loss carryforwards)

Business Profit before General Loan-loss Reserve

Income before Income Taxes

We have categorized the Bank under the 'proviso of Category No.4 of the judgment guidelines on the realizability of deferred tax

assets' (*) and have calculated deferred tax assets based on the estimation of future taxable income for the next 5 years.

The tax-loss carryforwards as of March 31, 2016 were mainly attributed to the past non-recurring events shown below.

- Significant addressing of overseas investments that deteriorated as a result of the turbulence in global financial markets

stemming from the subprime loan crisis in the USA

(*) 'The audit treatment with respect to the judgment for the realizability of deferred tax assets' (JICPA Audit Committee Report

#66)

- 17 -

Aozora Bank, Ltd.

Ⅴ.　Disclosure of Exposure to Securitized Products

1. CDO, CMBS and RMBS Exposure

(100 Million Yen)

March 31,2016 March 31,2015

0 0

North America 0 0

28 30

Japan - -

Asia 28 30

5 7

Japan 5 7

2. Leveraged Finance

(100 Million Yen)

March 31,2016 March 31,2015

881 846

55 36

936 882

Geographical distribution

Total leveraged finance (100 Million Yen)

March 31,2016 March 31,2015

376 409

81 60

449 349

30 64

936 882

Note: The figures stated in 100 million yen are rounded to the nearest 100 million.

Exposure of the Group to CDO (Collateralized Debt Obligation), CMBS (Commercial Mortgage-Backed Securities) and

RMBS (Residential Mortgage-Backed Securities) is as follows:

　ＣＤＯ

　ＣＭＢＳ

　ＲＭＢＳ

The exposure of the Group to leveraged finance is as follows:

The following amount is the aggregated amount of loan balance rendered for M&A finance (including refinance for M&A

deals in the past). It excludes loans that are in investment grade or equivalent ratings.

　Europe

　Japan

　Oceania

　Total

　Loan balance

　Commitment line(Unfunded)

　Total leveraged finance

　North America

-18-

Financial Results for FY2015 - Aozora BankAozora Bank, Ltd. Ⅰ．Overviews of the Financial Results...

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