With Operating Losses of 21.6 billion yen, is Aozora Bank in Severe Trouble?
Aozora Bank, the Japanese bank controlled by U.S. buyout fund Cerberus Capital Management, forecast profit will rise more than sevenfold as it rebounds from a 93 percent plunge last year caused by the U.S. credit crisis.
Net income in the year ending March 2009 will climb to 44 billion yen ($420 million), the bank said in a statement to the Tokyo Stock Exchange. Profit fell to 5.9 billion yen in the year ended March 31, compared with a preliminary earnings figure of 5 billion yen released April 23.
Aozora, which gets most of its profit from investment banking, may struggle to boost earnings as investments in the U.S. mortgage market continue to decline in value. Japan's slowing economy and falling investment sales will continue to pressure profits at the Tokyo-based bank and bigger rivals such as Mizuho Financial Group.
Aozora rose 2.7 percent to close at 303 yen on the Tokyo Stock Exchange before the earnings announcement. The Topix Banks Index gained 2.4 percent.
Aozora changed its profit forecast three times before today's announcement as rising losses on investments in the U.S. mortgage market made it impossible to meet the bank's initial full-year profit target of 84.5 billion yen. Aozora said its investments in collateralized debt obligations had lost more than 90 percent of their original value, leaving the bank with 45.4 billion yen in losses.
Operating Loss
The bank posted an operating loss of 21.6 billion yen, Aozora said.
The bank set aside a provision of 14.9 billion yen for a decline in the value of its $500 million investment in U.S.-based GMAC LLC, whose housing unit has recorded $5.3 billion in losses over the past six quarters. Aozora joined Cerberus and a group of other investors in buying a 51 percent stake in GMAC in November 2006.
Cerberus increased its stake in Aozora to 45 percent from 37 percent last month after completing a public offer for additional shares. Cerberus, founded by Stephen Feinberg and William Richter in 1992, helped return the former Nippon Credit Bank to profit after buying control in 2003.
Lending rose 16 percent to 4.28 trillion yen in the year ending March 31, with net interest income climbing 21.8 percent. The bank cut its dividend forecast for the year ending March 31 to 3.5 yen from a previous forecast of 3.86 yen.
Why Is the Management at Aozora Optimistic About Future Earnings? Do They Know Something That We Don’t?
Aozora Bank, the Japanese bank controlled by U.S. buyout fund Cerberus Capital Management, forecast profit will rise more than sevenfold as it rebounds from a 93 percent plunge last year caused by the U.S. credit crisis.
Net income in the year ending March 2009 will climb to 44 billion yen ($420 million), the bank said in a statement to the Tokyo Stock Exchange. Profit fell to 5.9 billion yen in the year ended March 31, compared with a preliminary earnings figure of 5 billion yen released April 23.
Aozora, which gets most of its profit from investment banking, may struggle to boost earnings as investments in the U.S. mortgage market continue to decline in value. Japan's slowing economy and falling investment sales will continue to pressure profits at the Tokyo-based bank and bigger rivals such as Mizuho Financial Group.
Aozora rose 2.7 percent to close at 303 yen on the Tokyo Stock Exchange before the earnings announcement. The Topix Banks Index gained 2.4 percent.
Aozora changed its profit forecast three times before today's announcement as rising losses on investments in the U.S. mortgage market made it impossible to meet the bank's initial full-year profit target of 84.5 billion yen. Aozora said its investments in collateralized debt obligations had lost more than 90 percent of their original value, leaving the bank with 45.4 billion yen in losses.
Operating Loss
The bank posted an operating loss of 21.6 billion yen, Aozora said.
The bank set aside a provision of 14.9 billion yen for a decline in the value of its $500 million investment in U.S.-based GMAC LLC, whose housing unit has recorded $5.3 billion in losses over the past six quarters. Aozora joined Cerberus and a group of other investors in buying a 51 percent stake in GMAC in November 2006.
Cerberus increased its stake in Aozora to 45 percent from 37 percent last month after completing a public offer for additional shares. Cerberus, founded by Stephen Feinberg and William Richter in 1992, helped return the former Nippon Credit Bank to profit after buying control in 2003.
Lending rose 16 percent to 4.28 trillion yen in the year ending March 31, with net interest income climbing 21.8 percent. The bank cut its dividend forecast for the year ending March 31 to 3.5 yen from a previous forecast of 3.86 yen.
Why Is the Management at Aozora Optimistic About Future Earnings? Do They Know Something That We Don’t?
posted by Charltonmedia.com @ 5:34 PM
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