Aozora Bank, the reincarnation of Nippon Credit Bank, returned to profitability in fiscal 2000 for the first time in three years with group pretax profits of 99.1 billion yen — a sharp upturn from the 112.6 billion yen loss the previous year.
Shaking off a mountain of debt, the bank posted gains during its five months under state control and seven months under management implemented by an investment consortium that purchased NCB in September and renamed it Aozora.
Regarding nonperforming loans, Aozora booked 89 billion yen in loan-loss charges on a parent-only basis to cover possible losses from the worsened outlook for borrowers. It plans to book 60 billion yen in loan-loss charges for the current fiscal year.
The bank has also said it asked the government to buy back 36.9 billion yen in problem loans under a loan-buyback clause included in the purchase contract with the government. Under the contract, the bank can demand the state buy back any loan whose collateral value has fallen by more than 20 percent from the time the bank purchased the loan.
Operating profit — which measures a bank’s profitability from core operations such as lending — rose to 16.8 billion yen against a loss of 23.7 billion yen the previous year.
Clients who had fled the bank while it was under state control returned during the second half of fiscal 2000, President Hiroshi Maruyama said.
To further boost pretax profit, the bank transferred back to its operating balance as much as 55.2 billion yen from its general loan-loss reserves, which were built up during the bank’s time under government administration. Aozora expects operating profits to rise 42.9 percent to 24 billion yen in the current fiscal year.
“We will step up cooperation with regional banks . . . and strengthen our retail division by providing higher financial planning services to our high-income customers,” Maruyama said.
Teetering under the weight of huge loan losses, the former NCB was declared insolvent in December 1998 and placed under state control.
The nationalized bank was sold to an investment consortium led by Softbank Corp. after the government agreed to eliminate the bank’s negative net worth of more than 3.2 trillion yen and recapitalized it.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.