OREANDA-NEWS. Aozora Bank, Ltd., a leading Japanese commercial bank, today announced its financial results for FY2014, its FY2014 total dividend payment, as well as the Bank's FY2015 earnings forecast including net income of 43.0 billion yen and dividend forecast of 18.40 per common share.

Net revenue was 92.8 billion yen, an increase of 12.2 billion yen, or 15.2% year on year, reflecting increases in both net interest income and non-interest income. Business profit was 52.7 billion yen, an increase of 11.4 billion yen, or 27.6% year on year. Net income was 43.7 billion yen, an increase of 1.4 billion yen, or 3.2% year on year, exceeding the full-year forecast of 43.0 billion yen.

Net interest income increased 6.3 billion yen, or 14.4% year on year, to 50.0 billion yen. The net interest margin expanded 12 bps to 1.21% as a result of an increase in the yield on total investments as the Bank continued its disciplined balance sheet management, as well as ongoing efforts to reduce funding costs.

Non-interest income was 42.9 billion yen, an increase of 5.9 billion yen, or 16.1% year on year, mainly due to growth in earnings from the sale of financial products to our mass affluent retail customers, as well as the sale of derivative-related products to our corporate and financial institution customers.

General and administrative expenses were 40.2 billion yen, a year on year increase of 0.8 billion yen, or 2.1%. The OHR (general and administrative expenses as a percentage of net revenue) was 43.3%, due to the ongoing priority assigned to efficient operations.

Credit-related expenses were a net reversal of 4.7 billion yen, compared with a net expense of 2.3 billion yen in FY2013. This result included the reversal of specific reserves mainly due to an improvement in the condition of borrowers, in addition to the recoveries of written-off claims. As a preventative measure, the Bank allocated additional loan loss reserves during the fourth quarter (Jan-Mar).

The loan balance increased 132.3 billion yen, or 5.0%, to 2,775.8 billion yen from March 31, 2014. Overseas loans in creased approximately 210 billion yen, while domestic loans decreased approximately 80 billion yen as the Bank main tained its focus on balancing risk and return.

Funding from retail customers was approximately 2,060 billion yen, an increase of 13.5 billion yen, or 0.7% year on year, from March 31, 2014. The percentage of retail funding to total core funding (the sum of deposits, negotiable certificates of deposit and debentures) was 63.8%. The Bank maintained adequate liquidity reserves of 630.0 billion yen as of March 31, 2015.

Non-performing claims as defined by the Financial Reconstruction Law (FRL) were 38.2 billion yen, a decrease of 42.0 billion yen, or 52.4%, from March 31, 2014. The FRL ratio improved by 1.63 points to 1.35%. The percent age of FRL claims covered by reserves, collateral and guarantees was 80.4% as of March 31, 2015. The ratio of loan loss reserves to total loans on a consolidated basis remained high at 2.29%.

The Bank's consolidated capital adequacy ratio (Basel III basis, domestic standard) remained at an adequate level at 14.45% (preliminary basis).