Aozora Bank Ltd. said Wednesday that it expects a 23 percent decline in full-year profit after writing down the value of investments related to U.S. home loans and on lower income from bond trading.
Net income will fall to ¥62.6 billion for the year ending next March, from ¥81.5 billion, the bank said. The forecast is 26 percent lower than its earlier expectation of ¥84.5 billion.
Aozora, which sold shares to the public last November, and the larger Shinsei Bank Ltd. are struggling to lift profit as credit market turmoil pressures earnings. Shinsei said Tuesday that first-half earnings plunged 40 percent as it added to provisions linked to U.S. home loans to riskier borrowers.
For the business first half, Aozora said net income fell 20 percent to ¥42.7 billion, as profit related to bond trading declined. Revenue in the half rose 14 percent to ¥110 billion. The bank said it recognized unrealized valuation losses of ¥5.8 billion on collateralized debt obligations and realized losses of ¥6.8 billion on securities, including Japanese government bonds and U.S. Treasuries.