interim report 2013 - aozora bank · ‘proactive approach to sme customers,’ ‘collaboration...

Interim Report

2013Six-Month Period Ended September 30, 2013

AO

ZO

RA

BA

NK

, LTD

. Interim R

epo

rt 2013

Printed in JapanThis report is printed with vegetable oil ink.

Published: January 2014 Corporate Communication Division AOZORA BANK, Ltd.

3-1, Kudan-minami 1-chome, Chiyoda-ku, Tokyo 102-8660, JapanTel: +81-3-3263-1111

Results and

Ong

oing

S

trategy

Forward-Looking StatementsThis interim report contains forward-looking statements regarding the Bank’s financial condition and results of operations. These forward-looking statements, which include the Bank’s views and assumptions with respect to future events, involve certain risks and uncertainties. Actual results may differ from forecasts due to changes in economic conditions and other factors.

Established ....................................................... April 1957Capital stock (consolidated) .............................. ¥100.0 billionTotal assets (consolidated) ................................ ¥4,793.9 billionConsolidated capital adequacy ratio (domestic standard) ........................................ 16.09%Consolidated Tier 1 ratio (domestic standard) ... 16.62%Number of employees (non-consolidated) ......... 1,512Branch network ................................................ 21 domestic offices, nationwide 2 overseas representative officesAddress ............................................................ 3-1, Kudan-minami, 1-chome, Chiyoda-ku, Tokyo 102-8660, Japan

Long-term credit ratings Standard & Poor’s ......................................... A– Moody’s ........................................................ Baa2 R&I ................................................................ BBB+ JCR .............................................................. BBB+

(As of September 30, 2013)

Originally established as the Nippon Fudosan Bank, Limited, under the Long-Term Credit Bank Law in April 1957, the Bank changed its name to Aozora Bank, Ltd., in 2001. In April 2006, the Bank transitioned from a long-term credit bank to a full-service commercial bank. Aozora’s shares were listed on the First Section of the Tokyo Stock Exchange in November 2006. Aozora Bank is firmly established in the Japanese financial system, and its fundamental management focuses on the creation of mutually beneficial partnerships, increased corporate value, and best practice in corporate governance, internal control and risk management. We are truly committed to contributing to the economic and social growth of the country through our business operations. Aozora aims to become the ‘Primary Secondary Bank: Another Reliable Partner,’ and provides a range of financial products and services including deposits and debentures, asset management consultation, lending, real estate related finance, M&A, and busi-ness recovery to meet the needs of our retail, corporate and financial institution clients.

Profile

2 1710

256

8

To Our StakeholdersTopicsOur Business Activities for SME CustomersFinancial Highlights

18 24 24

61

86

110

Corporate DataFinancial Data Consolidated Information Non-Consolidated Information Disclosure Based on Basel II Capital Accord Pillar IIIShare Procedure Information

11

141516

Retail and Business Banking GroupCorporate Banking GroupSpecialty Finance GroupFinancial Markets Group

Results and Ongoing Strategy

Financial and Corporate Data

Business Operations

‘Primary Secondary Bank: Another Reliable Partner’

We aim to become a trusted partner with whom customers wish to consult as the ‘Primary Secondary Bank: Another Reliable Partner.’

2

Results and

Ong

oing

S

trategy

To O

ur Stakeho

lders

Thank you for your continuing support of Aozora Bank. We appreciate your taking the time to read our Interim

Report, which includes our FY2013 interim results.

The Bank has steadily implemented its ‘Comprehensive Recapitalization Plan’ that was announced in August

2012, and in addition to the start of installment repayments of public funds, we have increased our dividend

payout ratio as part of our commitment to strengthening our return to shareholders. We announced ‘Aozora

Bank’s Business Model’ in February 2013, and amid significant changes in our shareholder composition, we

formed a new management framework the following June to begin our new phase. FY2013 represents our first

year of operations under this new framework.

The Bank’s business model describes our ‘4 Focuses’ as ‘retail banking focusing on senior individual customers,’

‘proactive approach to SME customers,’ ‘collaboration with regional financial institutions,’ and ‘advanced

services in specialty finance areas,’ and we intend to take full advantage of our strengths in these areas to expand

our business franchise. In November 2013, we announced our ‘Asian Business Strategy,’ which is designed to

support our efforts of further developing our business model.

In addition to commencing quarterly dividend payments from FY2013, we introduced a special benefit plan for

shareholders in order to further enhance our return to shareholders.

Our accomplishments in our focus businesses, as well as the effective use of management resources and

disciplined risk management, enabled us to record net income of 24 billion yen in the first half of the fiscal year,

representing steady progress toward our full-year earnings forecast.

The Bank aims to become the ‘Primary Secondary Bank: Another Reliable Partner’ for its customers, and we

remain committed to taking full advantage of our financial intermediary function in order to contribute to the

economic and social growth of the country.

Finally, on behalf of the management team of Aozora Bank, I would like to express my gratitude for your

ongoing support.

January 2014

Shinsuke Baba

Representative Director,

President and Chief Executive Officer

To Our Stakeholders

3

Results and

Ong

oing

S

trategy

To O

ur Stakeho

lders

What do you consider to be the highlights in the first half financial results?

Q.

A. The Bank recorded net income of 24 billion

yen in the first half of FY2013, representing a

15% year on year increase and progress of 58.4%

toward the full-year forecast of 41 billion yen. This

result reflected growth in earnings from the sale of

financial products, favorable gains from investments

in limited partnerships, as well as gains from the sale

of overseas investments.

Net revenue was 38.7 billion yen, reflecting risk

reduction measures taken by the Bank, including

those involving our U.S. Treasury bond positions,

amid uncertain U.S. market conditions, while our

business groups continued to show positive prog-

ress. While not included in net revenue, the Bank

recorded gains on the sale of domestic equity ETFs

as part of its business-related revenue, which brought

total business-related net revenue to 42.8 billion

yen, representing progress of 48.6% toward the full-

year forecast of 88 billion yen. Funding costs were

reduced 10 basis points compared with the first half

of FY2013, reflecting our ongoing efforts to reduce

funding costs while maintaining a stable funding base

of retail deposits. Net interest income declined year

on year reflecting a 14 basis point year on year decline

in the yield on total investments. Earnings related

to the sale of investment trusts, annuity insurance

and structured bonds aimed at our retail customers

continued to show strong progress reflecting our

efforts to further strengthen our asset management

consultation services, as well as enhance our prod-

uct line-up. In addition, the sale of derivative-related

products to our corporate and financial institution

customers progressed favorably.

General and administrative expenses remained

almost unchanged as a result of our continued strict

control on costs, representing 48.1% of the full-year

budget of 40 billion yen. The overhead ratio (general

and administrative expenses as a percentage of net

revenue) calculated based on business-related rev-

enue, including gains on the sale of domestic equity

ETFs, was 45%.

Credit-related expenses were a net expense of

3.5 billion yen, reflecting our more conservative

allocation of reserves. The ratio of loan loss reserves

to total loans outstanding was 2.39%, remaining high.

While the loan balance decreased 143.9 billion yen

from March-end to June-end 2013 due to first quarter

seasonal factors, the loan balance increased from

June-end to September-end by 119.2 billion yen.

Funding from retail customers remained stable,

representing 62.6% of total core funding (the sum

of deposits, negotiable certificates of deposit and

debentures). The Bank maintained sufficient liquidity

reserves of approximately 530 billion yen.

Non-performing claims as defined by the Financial

Reconstruction Law (FRL) were 87.9 billion yen, a

decrease of 17.3% from March 31, 2013. The FRL

ratio improved by 0.62 points to 3.21%. The percent-

age of FRL claims covered by reserves, collateral and

guarantees remained high at 90% as of September 30,

2013.

The Bank’s consolidated capital adequacy ratio and

Tier 1 ratio remained high at 16.09% and 16.62%,

respectively.

Benefitting from our financial strength, we remain

focused on improving our stable and sustainable level

of earnings and increasing our corporate value.

4

Results and

Ong

oing

S

trategy

To O

ur Stakeho

lders

What progress have you made with Aozora’s Business Model?

Q.

A. The Bank’s business model is centered on the

provision of high value-added financial solutions

to our customers. We achieve this by leveraging our

‘10 Advantages’ to effectively utilize management

resources and consolidate our financial expertise in

‘4 Focuses,’ with the aim of becoming the ‘Primary

Secondary Bank: Another Reliable Partner’ for our

customers.

Our business activities and accomplishments

related to our 4 Focuses in the first half included the

following:

First, in terms of our ‘Retail Banking Focusing

on Senior Individual Customers,’ sales of financial

products were strong, mainly reflecting efforts to

strengthen our consulting skills and expand our

product lineup.

Next, the Bank’s ‘Proactive Approach to SME

Customers’ enabled us to expand our customer base

through activities such as business matching and the

provision of support for customers aiming to expand

their business in Asia.

The Bank’s ‘Collaboration with Regional Financial

Institutions’ resulted in the strong sale of financial

products, and this collaboration enabled us to build

up joint transactions in the business recovery area.

And finally, with regard to our ‘Advanced Services

in Specialty Finance Areas,’ we have expanded

domestic and overseas transactions with favorable

risk-return profiles, underpinned by our disciplined

risk management framework.

We are committed to the promotion of our business

model, leveraging the Bank’s strengths as we aim for

sustainable growth.

Aozora’s Mid-Term Direction

Operations Base Corporate Base

Primary Secondary Bank: Another Reliable Partner

Advanced Services in Specialty Finance Areas

4 Focuses

10 Advantages

Retail Banking Focusing on Senior Individual Customers

Collaboration with Regional Financial Institutions

Proactive Approach to SME Customers

Nationwide network featuring specialized banking services

Neutral position

Focus on mass affluent retail customers

Tailor-made sales activities

Regional financial institution network

Leading player in specialty finance markets

Compact corporate size for speedy internal communication

Low-cost operation

Strong financial base

Diversified human resources

5

Results and

Ong

oing

S

trategy

Topics

Top

ics

Establishment of ‘Asian Business Strategy’

In recent years, Aozora’s customers, including our small and medium-sized enterprise (SME) customers, have been increasingly looking to Southeast Asia for growth as part of their business development plans, and we have received many inquiries from customers who are aiming to expand their business in the region. In February 2013, we announced ‘Aozora Bank’s Business Model,’ which takes full advantage of our strengths in order to realize our vision of becoming the ‘Primary Secondary Bank: Another Reliable Partner’ for our customers. In November 2013, we established our ‘Asian Business Strategy’ designed to support our efforts of further devel-oping our Business Model. In conjunction with this strategy, we announced business alliances with a leading financial institution in Southeast Asia and a trading company with a large presence in Asia as part of our efforts to support our customers’ overseas business expansion. Based on our Asian Business Strategy, we will continue to consider business alliances with partners, such as local Asian banks or Japanese companies with a network in Asia, as well as the establishment of new overseas offices.

‘My Brilliant 60s Story’ Contest

Brilliant 60s is the name given by the Bank to Japan’s remarkably adventurous and active generation who have not forgotten their dreams, and are keen to broaden their worlds and their knowledge base through hobbies, travel and other activities. With the retail branding message, ‘Together with the Brilliant 60s,’ the Bank is focused on specialized consulting services for this customer segment. As part of this retail strategy, the Bank launched ‘My Brilliant 60s Story’ contest, inviting the submission of stories related to a broad range of activities such as sports, travel, music or the pursuit of dreams from members of Japan’s senior generation, focusing on people in their ‘brilliant 60s,’ but also including people in their 50s who are prepar-ing for such future challenges. The winning stories were announced in November on the Bank’s website, and an award ceremony was held for the winners of the contest. Through this contest, the Bank aimed to encourage more people in their ‘brilliant 60s’ to develop an interest in a more active lifestyle, and Aozora is committed to supporting this generation going forward.

Asian Business Strategy

Award ceremony for ‘My Brilliant 60s Story’ contest

1 Aozora will create opportunities in cross-border M&A and business matching for its SMEs and regional finan-cial institution customers by providing information on local companies in Asia.

2 In order to obtain information on local companies, Aozora will form business alliances with appropriate partners, including major local Asian banks having strong customer bases and Japanese companies having a network in Asia, aimed at complementing the Bank’s network in Asia.

3 Aozora will participate in loan and other transactions arranged by local Asian banks, and directly visit local companies, aimed at obtaining information in which its customers are interested.

4 Aozora will provide local companies with information on Japanese companies and investment opportunities, aimed at establishing partnerships which are deeper than those of just a lender.

The aim is to take advantage of growth and business opportunities as an intermediary for transactions, infor-mation and the flow of investment that exist between our Japan-based clients and the rest of Asia, which arise due to the capital resources, advanced technologies and sophisticated services that exist in Japan.

Aozora will further develop its Business Model through the above activities to become a ‘Primary Secondary Bank: Another Reliable Partner’ in Asia.

Outline of Asian Business Strategy

6

Results and

Ong

oing

S

trategy

As well as responding to the funding needs of SME customers, the Bank offers a diverse range of services including advice on capital policy and business recovery, information to assist management and business activities, and support for overseas expansion. In order to respond accurately and promptly to the needs of SME customers, we have strengthened our business base through such measures as establishing a business division and a credit division dedicated to SME custom-ers, and have accumulated expertise on SME business through the exchange of personnel with regional financial institutions. The Bank is also committed to enhancing its consulting function, which accurately captures customers’ management issues and provides appropriate solutions. We will continue to promote tailor-made sales activities as well as the provision of financial solutions that fully leverage our expertise and our nationwide regional financial institution network.

Our B

usiness Activities fo

r SM

E C

ustom

ers

‘Initiatives to Support SME Management and the Invigoration of Regional Economies’

Our Business Activities for SME Customers

Facilitating financing to customers is one of the critical responsibilities of a financial institution, and Aozora Bank makes every effort to handle requests with empathy and to respond as positively as possible to meet customers’ needs, in order to fulfill its social responsibility and public role.

Upon receiving a request for a loan or a revision of loan terms, the Bank conducts a credit evaluation and exami-nation of terms and conditions, which are deemed to most accurately assess a particular business of a company or an individual, to more thoroughly understand the customer’s actual business condition and characteristics.

The Bank ensures that an appropriate system is in place to provide advice and guidance on the management of customers’ business and to assist with customers’ business improvement.

The Bank is committed to strengthening its ability to appro-priately assess the value of its customers’ business. It also actively implements measures as part of the broad range of the Bank’s financial intermediary function.

The Bank pays keen attention and responds in earnest to the inquiries and concerns of customers, provides cus-tomers with the information needed, and acts quickly and appropriately in handling matters.

Upon receiving a request for a new loan or a revision of loan terms and conditions, the Bank responds appropriately, including by coordinating with other financial institutions that have a business relationship with the customer.

1. Roles and Responsibilities of a Financial Institution

2. Adequate Credit Evaluation and Customer Management

3. Maintenance of Adequate Support System

4. Accurate Assessment of Customers’ Business Value

5. Management of Support to Customers

6. Measures for Facilitation of Financing

Based on the understanding that it is one of the important responsibilities of a financial institution to facilitate the financing necessary for customers who run sound businesses, the Bank sets basic management policies in order to ensure adequate facilitation of financing and to establish an internal system comprising divisions and responsible persons.

Initiatives Toward Facilitation of Financing

Basic Policies for Facilitation of Financing

7

Results and

Ong

oing

S

trategy

Our B

usiness Activities fo

r SM

E C

ustom

ers

2. Interregional Business MatchingIn response to the management needs of SME customers, such as the expansion of sales channels and the strength-ening and streamlining of business, Aozora fully leverages its ‘nationwide network with full banking services’ and ‘regional financial institution network’ to introduce business partners of different sizes, industries and business categories, and across regions, to the clients of regional financial institutions as well as to its own customers.

Business ActivitiesWe formed a business alliance related to business matching with Kirayaka Bank and Sendai Bank in February 2013, and with Tomato Bank in March 2013.

3. Establishment of Aozora Regional Consulting Co., Ltd. The Bank distributes information on recovery and revitalization of regional economies through Aozora Regional Consulting Co., Ltd., fully leveraging its expertise and skills in business recovery and revitalization of regional econo-mies, as well as its network of government entities based on people-to-people exchanges and experience in practical public administration. The Bank will continue to proactively contribute to the invigoration of regional economies by promoting and enhancing its financial services in business recovery and other areas.

1. Promotion of Business Recovery Support We support business recovery and the improvement of management through the provision of consultation utilizing our strength in tailor-made sales activities. The Bank supports business recovery by providing credit lines for working capital and capital investment to compa-nies which are in the process of fundamental recovery, utilizing debt for equity swaps, etc. Aozora continues to contribute to the business recovery of SME customers and the invigoration of regional economies through the establishment and operation of business recovery funds in collaboration with regional financial institutions.

Business ActivitiesTaking advantage of Aozora Chiiki Saisei Co., Ltd., established in November 2012, the fol-lowing month we established the Yamanashi Business Recovery Fund, a business recovery fund exclusively for Yamanashi Prefecture, followed by the establishment of the Gunma SME Business Recovery Fund, exclusively for Gunma Prefecture, in February 2013, and the Kyushu Regional Revitalization Fund, a busi-ness recovery fund for the Kyushu region, in March 2013.

Overview of the business recovery scheme

Investment

Servicing consignment

Business recovery support

Business recovery M&A Refinancing

Aozora Chiiki Saisei

Aozora Loan Services

Regional financial institution clients

Regional recovery funds

Regional financial

institutions

Aozora B

ank

Transfer of claims

Overview of business matching

Nationwide network

Regional network

Customer support network connecting corporations in other regions

Business alliances

Customer Customer

Customer Customer

Customer Customer

Customer Customer

Regional financial

institutions

8

Results and

Ong

oing

S

trategy

Financial Hig

hlights

1.

2.

Net income was 24.0 billion yen, an increase of 15% year on year, representing progress of 58.4% toward the full-year forecast of 41.0 billion yen

Net revenue was 38.7 billion yen, mainly reflecting risk reduction measures taken by the Bank, including those

involving its U.S. Treasury bond positions. Business-related revenue was 42.8 billion yen, including gains from

domestic equity ETFs of 4.1 billion yen

G&A expenses were almost unchanged at 19.3 billion yen. The OHR calculated based on business-related

revenue, including gains from domestic equity ETFs, was 45.0%

Credit-related expenses were a net expense of 3.5 billion yen, reflecting the Bank’s more conservative

allocation of reserves in the first quarter of FY2013

For the second quarter of FY2013, credit-related expenses were a net profit of 0.2 billion yen

Maintained strong financial condition

Stable base of retail funding: The percentage of retail funding to total core funding was 62.6%

Sound loan assets: The Financial Reconstruction Law (FRL) ratio (non-consolidated) improved by 0.62 points

to 3.21%

Conservative allocation of loan loss reserves: The ratio of loan loss reserves to total loans was 2.39%

Strong capital: Capital adequacy ratio and Tier 1 ratio were 16.09% and 16.62%, respectively

{ ( ) ( ) }

Notes: 1. Deposits include negotiable certificates of deposit (NCDs). 2. ROE is calculated as follows:

ROE = (Net income – Dividends paid on preferred shares)*

x 100 Total equity – Number of preferred shares x Issue + Total equity – Number of preferred shares x Issue ÷ 2 at beginning of period outstanding at beginning of period price at end of period outstanding at end of period price

* For the six-month period ended September 30, the numerator is annualized.

ConsolidatedFor the six-month periods ended September 30, 2013, 2012 and 2011, and the years ended March 31, 2013 and 2012 (Millions of Yen)

Sep. 30, 2013 Sep. 30, 2012 Sep. 30, 2011 Mar. 31, 2013 Mar. 31, 2012

Ordinary income 73,921 59,944 64,460 118,109 136,184Ordinary profit 27,392 19,989 20,530 41,080 40,940Net income 23,959 20,836 22,554 40,559 46,282Comprehensive income 9,108 24,593 26,558 50,516 47,131Capital stock 100,000 419,781 419,781 100,000 419,781Total equity 502,471 616,511 586,552 535,839 607,579Total assets 4,793,908 5,130,112 5,051,968 5,016,689 5,097,427Debentures 165,263 184,509 267,582 169,366 223,144Deposits (Note 1) 3,071,019 2,948,291 2,954,226 3,038,963 2,929,452Loans and bills discounted 2,695,058 2,565,632 2,701,564 2,719,732 2,672,155Securities 1,113,288 1,269,965 1,293,920 1,305,779 1,322,319Total equity per share (yen) 298.74 291.64 272.02 308.58 284.22Basic net income per share (yen) 19.83 13.92 15.09 28.05 29.51Consolidated capital adequacy ratio (domestic standard) 16.09% 19.16% 18.07% 15.70% 17.86%Tier I ratio (domestic standard) 16.62% 20.43% 19.37% 16.27% 19.37%Return on equity (ROE) (Note 2) 12.62% 9.62% 11.37% 9.56% 10.86%

Financial Highlights

9

Results and

Ong

oing

S

trategy

Financial Hig

hlights

* Amounts stated in millions of yen have been truncated. Amounts expressed in billions of yen have been truncated to one decimal place.

40

30

20

10

0

24.022.620.8

Consolidated net income

(Billions of Yen)

2011/9 2012/9 2013/9

60

45

30

15

0

38.7

21.7

39.5

23.2

42.8

23.6

Consolidated net revenue

(Billions of Yen)

Consolidated net revenue　　　Net interest income

2011/9 2013/92012/9

4,793.9

502.5

5,016.7

535.8

5,097.4607.6

800

600

400

200

0

Consolidated total assets and total equity

6,000

4,500

3,000

1,500

0

Total assets (left axis) Total equity (right axis)

(Billions of Yen) (Billions of Yen)

2012/3 2013/3 2013/9

3,071.0

2,695.13,039.0

2,719.72,929.5

2,672.2

4,000

3,000

2,000

1,000

0

(Billions of Yen)

2012/3 2013/3 2013/9Deposits　　　 Loans and bills discounted

Consolidated deposits and loans and bills discounted

(Deposits include negotiable certificates of deposit (NCDs))

24

18

12

6

0

484.8 500.9

17.86%

19.37%

15.70%

16.27%

16.09%

16.62%

467.5 484.3541.4 587.3

Regulatory capital Tier 1 capitalCapital adequacy ratio Tier 1 ratio

2012/3 2013/3 2013/9

Consolidated capital adequacy ratio (domestic standard)

1,200

900

600

300

0

(Billions of Yen) (%)

(Billions of Yen)

Non-consolidated disclosed claims under the Financial Reconstruction Law

Normal credit A 2,649.2 Disclosed claims under the Financial Reconstruction Law B 87.9 (Non-consolidated reserve and coverage ratio) B/(A+B) 3.21% Collateral and guarantee C 48.9 Allowance for loan losses D 30.2 Coverage ratio (C+D)/B 90.0%

10

Business O

peratio

nsB

usiness Op

erations

The Retail and Business Banking Group provides a wide range of financial products and detailed face-to-face

asset management consultation to its retail customers, and is active in the provision of loans and other financial

solutions for the Bank’s small and medium-sized enterprise (SME) customers. We also provide a wide array of

financial products and services to regional financial institution customers.

Major Businesses

Retail Business SME Business

¨Provision of Financial Products Ässet Management Consulting ¨Loans, Solutions for SME Customers

Regional Financial Institutions Business

¨Provision of Financial Products ¨Collaborative Proposals

¨Provision of Business Recovery Support Function

Corporate Banking Group

Specialty Finance Group

Financial Markets Group

Retail and Business Banking Group

The Corporate Banking Group provides loans, derivative products and deposits, as well as acquisition and project

financing, syndicated loan arrangement and other financial products to large and medium-sized corporations

mainly in the Tokyo metropolitan and Kansai areas, the public sector as well as major financial institutions. We are

committed to the swift provision of a diverse range of financial solutions.

Major Business

¨Loans Äcquisition and Project Finance ¨Syndicated Loans ¨Derivative Products

Öthers (Private Placement Bonds, Trustee Services, M&A)

The Specialty Finance Group provides finance backed or collateralized by various assets. In particular, we actively

promote real estate finance and business recovery finance by utilizing our experience and expertise. Also, we aim

to diversify the Bank’s portfolio through our selective approach to overseas finance transactions.

Major Business

¨Real Estate Finance ¨Business Recovery Finance Ïnternational Business

The Financial Markets Group develops and provides a variety of products including derivative products for our

customers to hedge their increasingly complex risks and meet their asset management needs. We also manage

the interest rate risk and liquidity risk of the Bank’s assets and liabilities. Our ongoing commitment is to strengthen

our stable revenue through synergy in all areas of our operations.

Major Business

¨Derivatives Business ÄLM Business

Business Operations

11

Business O

peratio

nsR

etail and B

usiness Banking

Gro

up (R

etail Banking

Gro

up)

Retail Business

Summary of Major Businesses<Asset Management Consultation>We aim to build a relationship of trust with our customers through the provision of detailed face-to-face asset management consultation services. At our branches, we have financial planners with a high level of expertise to listen attentively and support customers with asset management, inheritance and business succession. The Bank’s call center operators respond professionally to our customers’ needs and inquiries to ensure that even a first time call center user can feel at ease. In addition, we actively provide useful information to customers through the organization of various seminars. We are further enhancing the consulting skills of our retail sales staff at ‘Aozora Academy at Aoyama’ which was set up in May 2013 as a training center especially for the retail sales staff.

<Financial Products and Services>We offer a wide range of financial products to meet our customers’ various asset management needs. The Bank’s product lineup includes a variety of deposit products and investment products, such as investment trusts, individual annuity insurance, life insurance, medical insurance and structured notes for which we act as an intermedi-ary. Aozora offers advisory services on life and medical insurance products through business partnerships with insurance companies. In March 2013, we began offering the ‘Aozora Cash Card Plus’ with a Visa debit card function. Through Aozora Securities Co., Ltd., the Bank’s securities subsidiary, we continue to further enhance our product lineup including financial intermediary services for products such as structured notes.

<Measures to Enhance Service Channels>Aozora’s service channels include 20 branches and offices nationwide, Internet banking, our call center and Japan Post Bank partnership ATMs, enabling our customers to easily access the Bank’s products and ser-vices. Customers can use approximately 26,000 Japan Post Bank and Post Office ATMs throughout the country for ordinary account deposits and withdrawals free of charge, even on weekends. We also offer investment trust trading services via Internet banking. The Bank has developed new designs and layouts for its branches based on the concept of an ‘urban oasis’ and has been working on the renewal/relocation of the branches since April 2012.

Our Business Activities in the 1st Half of FY2013As a result of our focus on asset management consulting activities, sales of investment products, mainly investment trusts, annuity insurance, life insurance and structured notes, significantly increased. By offering structured notes, the number of accounts opened at Aozora Securities Co., Ltd. increased. We provide information on NISA (Nippon Individual Savings Account), a new tax-free investment account system which will be launched in January 2014, to a wide range of customers. Funding from retail customers through deposits, among others, is steady at ¥2,026.8 billion, and represented 63% of the Bank’s total core funding as of end-September 2013. Putting priority on our retail banking business focusing on senior individual customers, we launched a new retail branding strategy. Based on this strategy, we are further enhancing our products and services aimed at active senior customers in their 60s and above.

Policy and Areas of Focus in Future OperationsOur aim is to become the ‘Primary Secondary Bank: Another Reliable Partner,’ responding to diverse customer needs such as for asset management by providing spe-cialized consulting services mainly to senior customers, where we have the advantage.

Retail Banking Group

Retail and Business Banking Group

12

Business O

peratio

nsR

etail and B

usiness Banking

Gro

up (B

usiness Banking

Gro

up)

SME Business

Summary of Major BusinessesThe Bank provides financial solutions and a variety of financial products which match the needs and character-istics of SME customers and SME business managers. As well as responding to the funding needs of SME customers, the Bank offers a diverse range of services including advice on capital policy and business recov-ery, information to assist management and business activities, and support for overseas expansion. In response to the management needs of SMEs, such as the expansion of sales channels and the strengthen-ing and streamlining of business, Aozora fully leverages its nationwide network and regional financial institution network to introduce business partners of different sizes, industries and business categories, and across regions, to the clients of regional financial institutions as well as to its own customers.

Our Business Activities in the 1st Half of FY2013<Loans to SME Customers>We have responded swiftly and flexibly to the diverse needs of SME customers and promoted transactions with many customers including new customers. We established the Business Solution Office in July 2012, specializing in business matching, to serve the needs of customers, including increasing sales through media-tion and M&A. The office develops nationwide business matching using information received from a variety of customers including regional financial institutions. In response to growing interest in business in Asia, following the ‘China Seminar’ in January 2013, the ‘Vietnam Seminar’ was held in May 2013 under the sponsorship of Aozora. We provide useful information via similar seminars tailored to customers’ needs. In addition, in business revitalization finance, we executed asset-based lending (ABL) in a syndicated loan with regional financial institution customers. We proactively undertake finance which does not rely on real estate collateral as a means to achieve our customers’ business improvement and business revitalization.

<Initiatives to Facilitate Financing for SMEs>In response to the SME Financing Facilitation Act, Aozora Bank has established the “Master Policy for Facilitation of Financing” which sets forth our basic approach to facili-tating financing to our customers, as well as developed a framework which contributes to the facilitation of financ-ing by taking advantage of an appropriate and proactive financial intermediary function. Even after the expiration of the SME Financing Facilitation Act on March 31, 2013, the Bank’s “Master Policy for Facilitation of Financing” has remained unchanged, and it will continue to promote new loans, the amendment of terms and conditions of loans, as well as take advantage of our consultation services, underpinned by the Bank’s expertise and unique network. Aozora is committed to fulfilling its social responsibilities as a financial institution.

Policy and Areas of Focus in Future Operations As the ‘Primary Secondary Bank: Another Reliable Partner,’ we focus on providing solutions promptly and flexibly to the various management issues of our SME customers in addition to facilitating financing. We will provide tailor-made financial instruments and services, in addition to nationwide business matching and support for SMEs who are looking to expand their business into Asia.

Business Banking Group

13

Business O

peratio

nsR

etail and B

usiness Banking

Gro

up (B

usiness Banking

Gro

up)

Regional Financial Institution Business

Summary of Major BusinessesFor over 50 years the Bank has promoted a broad range of transactions with its regional financial institution customers across the country. We provide a variety of financial products and services in response to custom-ers’ diverse management issues and needs. Working together with our regional financial institution customers, we utilize our expertise and skills to provide solutions to their clients, aiming to contribute to regional economies.

<Financial Products>By providing a wide range of financial products that meet the investment needs of our regional financial institution customers, we support them in building an effective and diversified portfolio. The enhanced product lineup includes private placement mutual funds such as Japanese equity and global bonds, as well as deben-tures, time deposits, and various derivative-embedded products. In response to the investment needs of our regional financial institution customers, we arrange or offer syndicated loans, in addition to products such as derivative-embedded loans and structured loans.

<Collaborative Proposals to Customers’ Clients>With regional financial institutions, we jointly provide their clients with a range of services utilizing our expertise. Examples of these include: supporting the develop-ment of their proprietary derivative products, making joint proposals for derivative products to their clients, joint arrangement of syndicated loans, as well as offering collaborative proposals on finance in each area of real estate, health care, business recovery, and buyouts. Also, we actively promote M&A and business matching activities across broader regions together with regional financial institutions through the mutual use of each relationship network.

<Provision of Business Recovery Support Function>Business recovery finance is a special area for the Bank, and Aozora continues to contribute to the business recovery of SME customers, as well as the invigoration of regional economies through the operation of busi-ness recovery funds established jointly with financial institutions, Aozora Loan Services Co., Ltd., and others.

Our Business Activities in the 1st Half of FY2013Using the Bank’s network of regional financial institution customers, Aozora matched the funding needs of the Japan Finance Organization for Municipalities (“JFM”) with the lending needs of regional financial institutions in funding through a syndicated loan, raised by JFM for the first time, in May 2013. In August 2013, Aozora implemented a survey of both financial institutions and corporations on “customer sentiment on recent changes in economic conditions” through its think tank subsidiary, Aozora Regional Consulting Co., Ltd. The survey encompassed financial institutions throughout the country that play an important role in regional finance and was conducted in one month from its commencement to the announcement of the results, delivering timely information.

Policy and Areas of Focus in Future OperationsAs a partner to our regional financial institution custom-ers, we will continue to provide a variety of financial products and services. In addition, the Bank will con-tribute to the advancement of financial services and the promotion of regional industry by integrating the broad client networks of our regional financial institution customers and the Bank’s financial expertise.

14

Business O

peratio

nsC

orp

orate B

anking G

roup

Summary of Major Businesses<Loans>We meet the funding needs of our customers by focusing on their cash-flow generation potential, utilizing our screening methods which are based on future earnings projections considering the customers’ operations and industry characteristics. The Bank promotes a diverse range of transactions by proposing funding schemes designed for the individual needs of customers and by actively providing a variety of financial solutions and information.

<Acquisition and Project Finance>Aozora Bank has been a major player in domestic lever-aged buyout (LBO) finance from the outset of the market, providing finance for management buyouts (MBOs) as well as M&A. We deliver tailored and prompt service, leveraging a wealth of experience and expertise gained over many years.

<Health Care Finance>The Bank established a specialized team for medical institutions in 2002. We are engaged in a variety of trans-actions in addition to regular corporate loans, such as real estate non-recourse loans and hospital M&A finance.

<M&A>Drastic changes in the economic environment are likely to drive companies to concentrate on core competen-cies. Identifying customers’ restructuring needs through our daily business activities, the Bank supports busi-ness restructuring utilizing a specialist team of M&A professionals.

<Syndicated Loans>We focus on the syndicated loan business and meet the funding needs of a broad range of our corporate custom-ers, from SMEs to large corporations.

<Securitization>We help customers utilize their various assets for securitization and liquidation to meet their diversified funding and off-balance-sheet needs.

<Private Placement Bonds, Trustee Services, etc.>The Bank provides products tailored to the private placement bond issuance needs of our customers. We also act as fiscal agent as well as agent for private placement and public bonds.

Our Business Activities in the 1st Half of FY2013The Group has been successful in its efforts to accumulate assets such as loans to large and medium-sized corporations. We actively promoted a variety of transactions, responding swiftly and appropriately to the needs of our customers by strengthening our financial solutions services. As a result, we have promoted LBO loans and syndicated loans utilizing our origination function and expanded cross-border finance.

Policy and Areas of Focus in Future Operations We strive to expand our customer base and strengthen relationships with existing customers, as well as provide corporate financial services utilizing the Bank’s exper-tise, aiming to be the ‘Primary Secondary Bank: Another Reliable Partner.’ The Bank is committed to develop-ing solutions for the diverse needs of our customers, providing not only loans but also many types of financing and derivative products. The Bank will promote cross- border finance with the overseas subsidiaries of Japanese corporations, as well as with the Japanese subsidiaries of overseas corporations.

Corporate Banking Group

15

Business O

peratio

nsS

pecialty Finance G

roup

Summary of Major BusinessesThe Specialty Finance Group provides finance backed by or collateralized with various assets. In particular, Aozora’s strengths lie in real estate finance and business recovery finance which it actively promotes as focus businesses. Our target assets range from stable and sound assets to opportunistic and distressed assets, and we provide a variety of financial services to respond to customers’ needs. Aozora’s strengths include experience and a track record in these businesses, the ability to evaluate real estate, the capability to structure transactions to meet customers’ needs, and networking with major players. We pursue a quality portfolio which generates stable revenues through the steady accumulation of deals offer-ing a suitable return on risk, while paying attention to an ever-changing market environment.

Our Business Activities in the 1st Half of FY2013Aozora actively promoted specialty finance including real estate finance and business recovery finance, which have been the Bank’s traditional strengths, carefully considering the diverse needs of customers and mar-ket conditions. In the area of international business, we focused on corporate loans, project finance and real estate non-recourse loans.

Policy and Areas of Focus in Future Operations<Real Estate Finance>Real Estate Finance includes non-recourse finance backed by quality real estate, mainly consisting of office and residential properties, as well as unlisted equity investment and finance to J-REITs and corporate cus-tomers of real estate businesses. We utilize information acquired through real estate finance deals to understand market trends and improve our financial services.

The Bank has been a leading player in the non-recourse loan market for many years and actively promotes this business. Our wealth of experience and expertise in real estate, finance and securitization allows us to provide high value-added financial services, while responding flexibly to changes in the business environment to effec-tively meet the needs of our customers. We also provide non-recourse loans for quality overseas real estate in North America and other areas, and are developing a variety of transactions related to real estate finance.

<Business Recovery Finance>The Bank makes investments in loans to ailing companies and to corporations facing the challenges of a rapidly changing operating environment, and provides finance secured by assets, such as disposable real estate for companies en route to recovery. Aozora Loan Services Co., Ltd., our loan servicer sub-sidiary designed to promote corporate rehabilitation, provides support to financial institutions in the disposition of problem loans. The Bank has broad experience in these business areas. Considering the competitive situation and market trends, we pursue deal opportunities as well as maintaining and expanding our market presence.

<International Business>In April 2013, the International Division was established within the Specialty Finance Group in order to consolidate and efficiently manage the international business that had previously been managed across a number of business groups. The International Division and the Bank’s Hong Kong subsidiary, Aozora Asia Pacific Finance Limited, selectively pursue overseas finance, such as corporate loans and project finance, mainly in the North American and Asian regions. The Bank is committed to the diver-sification of its assets and strengthening of profitability by promoting international business based on accurate information gathered by its overseas offices on the rapidly changing overseas financial markets.

Specialty Finance Group

16

Business O

peratio

ns

Summary of Major BusinessesThe Financial Markets Group manages the Bank’s derivatives business and the asset and liability manage-ment (ALM) function. In the derivatives business, we work toward increasing profitability and expanding our customer base by enhancing our value-added sales function, such as by using a consulting-style approach. We also aim to continue improving our capabilities to supply products for all customer segments includ-ing corporate customers, financial institutions and retail customers. In the ALM business, we maintain a stable portfolio of well-diversified investments in highly liquid securities and are committed to generating stable profits through well-balanced interest rate risk operations, thereby supplementing the profits of our core businesses.

Our Business Activities in the 1st Half of FY2013<Derivative Sales>We have promoted the sale of products to hedge our customers’ FX, interest rate-related risks and commodity price fluctuation risks. We have also promoted the sale of products in response to our customers’ investment needs. In addition, to meet our customers’ sophisticated and diverse needs, we expanded our commodity derivative product lineup and the lineup of derivative-embedded time deposits for financial institutions. We expanded business not only with existing customers but also new custom-ers by, for example, offering super-long-term interest rate swaps as a means of hedging risks in project finance. For retail customers, we introduced “Advantage First,” a new type of structured deposit indexed to the market interest rate, which has attracted many customers.

<ALM>We aim to establish a stable funding base while reducing funding costs. We ensure stable foreign currency liquid-ity by strengthening foreign currency funding from financial institutions. We pursue stable profits through well- diversified investments which mainly consist of highly liquid securities, the efficient investment of excess funds and well-balanced interest-risk management, which supplements our core earnings.

Policy and Areas of Focus in Future Operations<Derivative Sales>Our professional sales team analyzes the risks our customers are facing and, by working together with the product-development and market-making teams, pro-vides them with the best solutions. Taking full advantage of our technical capabilities, we offer derivative products for our corporate customers to hedge their FX, interest rate and commodity price fluctuation risks. For financial institutions, we design derivative-embedded products that are custom-made for their particular needs, and also provide general derivative products. For retail customers, we offer derivative-embedded deposits. We continue to enhance our product lineup to meet our customers’ increasingly sophisticated and diverse needs and develop new quality products and services to further improve customer satisfaction.

<ALM>In the ALM business, the Bank is committed to generating stable profits through agile and timely ALM operations in line with market trends, as well as maintaining a sta-ble portfolio based on diversified investments with a continued focus on highly liquid securities.

Financial Markets G

roup

Financial Markets Group

Financial and C

orp

orate D

ata

17

Financial and

Co

rpo

rate Data

Financial and Corporate Data

Corporate Data Corporate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Directors, Auditors and Executive Officers . . . . . . . . . . . . . 21 Staff Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Office Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Business Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Financial DataConsolidated InformationCONSOliDAtED BuSiNESS RESultS . . . . . . . . . . . . . . . . . 24 Consolidated Financial Highlights . . . . . . . . . . . . . . . . . . . . 24CONSOliDAtED FiNANCiAl REviEw . . . . . . . . . . . . . . . . . . 25 Consolidated and Equity-Method Companies . . . . . . . . . . . 25 Analysis of Business Results . . . . . . . . . . . . . . . . . . . . . . . . 25 Analysis of Financial Condition . . . . . . . . . . . . . . . . . . . . . . 27 Consolidated Capital Adequacy Ratio (Domestic Standard) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Disclosure of Exposure to Securitized Products . . . . . . . . . 30CONSOliDAtED SEMiANNuAl FiNANCiAl StAtEMENtS . . 31 Consolidated Semiannual Balance Sheet (unaudited) . . . . . 31 Consolidated Semiannual Statement of income (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Consolidated Semiannual Statement of Comprehensive income (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Consolidated Semiannual Statement of Changes in Equity (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Consolidated Semiannual Statement of Cash Flows (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Notes to Consolidated Semiannual Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35iNCOME ANAlySiS (Consolidated) . . . . . . . . . . . . . . . . . . . . . 60 interest-Earning Assets and interest-Bearing liabilities . . . . 60 Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 trading Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Other Ordinary income (Net) . . . . . . . . . . . . . . . . . . . . . . . 60

Non-Consolidated InformationNON-CONSOliDAtED BuSiNESS RESultS . . . . . . . . . . . . . 61 Non-Consolidated Financial Highlights . . . . . . . . . . . . . . . . 61NON-CONSOliDAtED CAPitAl ADEQuACy RAtiO (Domestic Standard) . . . . . . . . . . . . . . . . . . . . . . . . 62NON-CONSOliDAtED SEMiANNuAl FiNANCiAl StAtEMENtS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Non-Consolidated Semiannual Balance Sheet (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Non-Consolidated Semiannual Statement of income (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Non-Consolidated Semiannual Statement of Changes in Equity (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65iNCOME ANAlySiS (Non-Consolidated) . . . . . . . . . . . . . . . . . 66 Net Revenue, Business Profit . . . . . . . . . . . . . . . . . . . . . . . 66 Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 yield on interest-Earning Assets, interest Rate on interest-Bearing liabilities, Net yield/interest Rate . . . . . . . 66 Average Balance of interest-Earning Assets and interest-Bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 67 Analysis of interest income and interest Expenses . . . . . . . 68 Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 trading Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Other Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 General and Administrative Expenses . . . . . . . . . . . . . . . . . 70

DEPOSit OPERAtiONS (Non-Consolidated) . . . . . . . . . . . . . 71 Balance by Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . 71 Balance of time Deposits by Residual Period . . . . . . . . . . . 71 Outstanding Balance by Depositor . . . . . . . . . . . . . . . . . . . 72 Deposits per Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Deposits per Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72DEBENtuRE OPERAtiONS (Non-Consolidated) . . . . . . . . . . 73 Outstanding and Average Balance of Debentures . . . . . . . . 73 Balance by Residual Period . . . . . . . . . . . . . . . . . . . . . . . . 73 Outstanding Balance of Debentures per Office . . . . . . . . . . 73 Outstanding Balance of Debentures per Employee . . . . . . . 73lOAN OPERAtiONS (Non-Consolidated) . . . . . . . . . . . . . . . . 74 Outstanding Balance of loans . . . . . . . . . . . . . . . . . . . . . . 74 Balance by Residual Period . . . . . . . . . . . . . . . . . . . . . . . . 74 Ratio of loans and Bills Discounted to Debentures/Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 loans per Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 loans per Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 loans to Small and Medium-Sized Corporations . . . . . . . . 75 Consumer loans Outstanding . . . . . . . . . . . . . . . . . . . . . . 75 Breakdown of loans and Bills Discounted by industry . . . . 75 Risk-Monitored loans by industry . . . . . . . . . . . . . . . . . . . . 76 Balance of loans and Bills Discounted, Classified by Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Breakdown of Balance of Acceptances and Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Breakdown of loans and Bills Discounted by Collateral . . . 76 Breakdown of Collateral for Customers’ liabilities for Acceptances and Guarantees . . . . . . . . . . . . . . . . . . . 77 write-Off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . 77 Country Risk Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Disclosed Claims under the Financial Reconstruction law . . . 78 Risk-Monitored loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Reserve Provision Ratios for Each Category of Borrower, Based on Asset-Assessments . . . . . . . . . . . . . . . . . . . . . 78 Asset-Assessment, Disclosed Claims, write-Offs, Reserves and Risk-Monitored loans . . . . . . . . . . . . . . . . . 79SECuRitiES (Non-Consolidated) . . . . . . . . . . . . . . . . . . . . . . 80 Outstanding and Average Balance of Securities Held . . . . . 80 Balance of Securities by Residual Period . . . . . . . . . . . 80–81 Ratio of Securities to Debentures and Deposits . . . . . . . . . 81SECuRitiES BuSiNESS (Non-Consolidated) . . . . . . . . . . . . . 81 underwriting of Public Bonds . . . . . . . . . . . . . . . . . . . . . . . 81 Over-the-Counter Sales of Public Bonds and Securities investment trusts . . . . . . . . . . . . . . . . . . . . . . . 81iNtERNAtiONAl OPERAtiONS (Non-Consolidated) . . . . . . . 82 Foreign Exchange transactions . . . . . . . . . . . . . . . . . . . . . 82 Balance of Assets in international Operations . . . . . . . . . . . 82OtHER OPERAtiONS (Non-Consolidated) . . . . . . . . . . . . . . . 83 Principal Fees and Commissions . . . . . . . . . . . . . . . . . . . . 83 Domestic Exchange transactions . . . . . . . . . . . . . . . . . . . . 83 Automated installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83CAPitAlizAtiON (Non-Consolidated) . . . . . . . . . . . . . . . . . . . 84 History of Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Major Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Ownership and Distribution of Shares . . . . . . . . . . . . . . . . . 85

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline . . . . . . . . . . . . . 86

Share Procedure Information . . . . . . . . . . . . . . . . . . . 110

Co

rpo

rate Data

18

Financial and

Co

rpo

rate Data

Corporate Data

Corporate History

April 1957 Established as the Nippon Fudosan Bank, limited (capital: ¥1 billion) in accordance with the long-term Credit Bank law

November Started issuance of debentures

September 1958 Started issuance of discount debentures

July 1964 Started foreign exchange business as an authorized foreign exchange bank

September listed stock on the tokyo Stock Exchange

February 1970 listed stock on the Osaka Securities Exchange

October 1977 Changed name to the Nippon Credit Bank, ltd .

February 1994 Established the Nippon Credit trust Bank, ltd . (currently Aozora trust Bank, ltd .), the first domestic subsidiary classified as other type of business

December 1998 Started special public management in accordance with the Financial Reconstruction law and terminated listing of stock on the tokyo Stock Exchange and the Osaka Securities Exchange

September 1999 NCB Servicer Co ., ltd . (currently Aozora loan Services Co ., ltd .), commenced servicer operations

September 2000 Share Purchase Agreement regarding the transfer of the Bank’s shares was signed between Deposit insurance Corporation and SOFtBANK CORP ., ORiX Corporation, the tokio Marine and Fire insurance Co ., ltd . (currently tokio Marine & Nichido Fire insurance Co ., ltd .), and other financial institutions

Ended special public management

November Commenced telephone banking services

January 2001 Changed name to Aozora Bank, ltd .

April launched Aozora Direct time Deposit as a product exclusively available through telephone banking

October 2002 Commenced over-the-counter sales of personal pension life insurance policies

March 2003 Moved headquarters

September through a common stock tender offer conducted in accordance with the Securities Exchange law, all common stock of the Bank held by SOFtBANK CORP . was transferred to the ownership of Cerberus NCB Acquisition, l .P ., General Partner Cerberus Aozora GP l .l .C .

June 2005 launched Excellent First time deposit (callable time deposit)

July Established New york Representative Office

April 2006 Converted from ‘long-term Credit Bank’ to an ‘Ordinary Bank’ issued a Straight Bond Established a securities subsidiary, Aozora Securities Co ., ltd .

November listed on the First Section of the tokyo Stock Exchange

May 2007 Established Shanghai Representative Office

April 2008 tender offer for common shares by Cerberus NCB Acquisition, l .P ., General Partner Cerberus Aozora GP l .l .C .

April 2009 Established internet Branch

Commenced internet banking services

December 2011 Completion of acquisition of Japan wealth Management Securities, inc ., making it a wholly owned subsidiary of the Bank (Merged with Aozora Securities Co ., ltd . in February 2012 . New company name: Aozora Securities, Co ., ltd .)

August 2012 Announced the Comprehensive Recapitalization Plan

December Established Financial Oasis Jiyugaoka (Shibuya Branch Jiyugaoka Office)

January 2013 Secondary offering of Aozora common stock by parent company, Cerberus NCB Acquisition, l .P ., General Partner Cerberus Aozora GP l .l .C .

March launched Aozora Cash Card Plus (visa debit)

Established Aozora Regional Consulting Co ., ltd .

August Cerberus NCB Acquisition, l .P ., General Partner Cerberus Aozora GP l .l .C . sold its entire remaining stake in Aozora

Co

rpo

rate Data

19

Financial and

Co

rpo

rate Data

● Deposits

Deposits

Checking accounts, savings accounts, time deposits, deposits-at-notice, tax-savings deposits, non-residents’ deposits in yen

and deposits in foreign currencies

Negotiable certificates of deposit

● Debentures

issuance of debentures

● Lending

Loans

loans on deeds, loans on notes and overdraft

Discount on promissory notes

Bankers’ acceptances and discounts on commercial bills and documentary drafts

● Securities investment business Public bonds, local bonds, corporate bonds, equity and other securities for cash reserves for payment of the deposit and fund

management

● Domestic exchange

Such services as money orders between branches of the Bank and those of other banks, collection of payments, etc .

● Foreign exchange

Remittance to foreign countries and other foreign currency-related businesses

● Consignment of bonds and registration Consignment business for soliciting or managing public bonds, registration of public bonds as a registered institution and issue

agent or payment agent

● Other services 1 . Guarantee of liabilities (acceptances and guarantees)

2 . lending of securities

3 . underwriting of public bonds

4 . Over-the-counter sales of public bonds, including national government bonds, and securities investment trusts

5 . trust business for secured corporate bonds

6 . Agency business

➀ Revenue agency for Bank of Japan

➁ Handling of funds for regional public entities, including those in tokyo

➂ Japan Finance Corporation; Organization for workers’ Retirement Allowance Mutual Aid;

Government Pension investment Fund; Japan Oil, Gas and Metals National Corporation; and

welfare and Medical Service Agency

7 . Custody services and rental of safe deposit boxes

8 . interest rate, currency and other derivatives transactions

9 . Over-the-counter sales of insurance products

10 . Financial instruments intermediary business

Business Activities (As of January 1, 2014)

Co

rpo

rate Data

20

Financial and

Co

rpo

rate Data

Corporate Data

Organization Chart (As of January 1, 2014)

Retail Banking Group

Retail & Business Banking Group

BusinessBanking Group

Institutional Banking Management Div.

(Facilitation of Financing Promotion Office)

Asian BusinessPromotion Div.

CorporateBanking Group

Integrated RiskManagement

Group

FinanceGroup

Technology &Operations

Group

Retail Business Strategy Div.

Retail Operation & Technology Div.

Retail SalesPromotion Div.

Direct Banking Div.

Retail Banking Div.

Internet Br.

Aozora SecuritiesCo., Ltd.

Metropolitan Business Div. I

Metropolitan Business Div. II

Metropolitan Business Div. III

Business Owner Solution Div.

Financial Institutions Div. II

Aozora Trust Bank, Ltd.

Aozora Regional Consulting Co., Ltd.

Corporate Banking Services Div.

Syndication & Securitization Div.

M&AAdvisoryDiv.

Corporate Business Div.II, III, IV, VI

Public Institutions Div.

Financial Institutions Div. I

Acquisition & Project Finance Div.

TreasuryFunding Div.

Treasury Investment Div.

Credit Investment Div.

Market Products Div.

Derivatives Sales Div.

Market Products Development Div.

Special Situations Div.

Real Estate Finance Div.

Real Estate Structured Debt Div.

Corporate BusinessDiv. I

Corporate BusinessDiv. V

International Div.

Overseas Representative Offices(New York,Shanghai)

Aozora Asia Pacific Finance Limited

Aozora Loan ServicesCo., Ltd.

Financial Control Div.

Financial Management Div.

Corporate Communication Div.

IT Control Div.

ApplicationManagement Div.

InfrastructureManagementDiv.

Business Technology Strategy Div.

Operations Management Div.

Integrated Risk Management Div.

Credit RiskManagementDiv.

Market RiskManagement Div.

Compliance & Operations Management Div.

Compliance & Governance Unit

Human Resources Div.

Human Resources Unit

Head of Compliance & Governance Unit

Head of Human Resources Unit

EO in charge

Management Committee

Office of Corporate Secretary

Board of Directors

ShareholdersAudit & Supervisory

Board Members

Audit & Supervisory Board

Office of Audit & Supervisory Board

[Branches]

Kansai Br., Nagoya Br., Fukuoka Br., Sendai Br., Sapporo Br., Hiroshima Br., Takamatsu Br., Kanazawa Br.

Shinjuku Br., Nihonbashi Br., Shibuya Br., Ueno Br., Ikebukuro Br., Yokohama Br., Chiba Br., Osaka Br., Umeda Br., Kyoto Br., Financial Oasis Jiyugaoka

SpecialtyFinance Group

FinancialMarkets Group

Group Head Group Head Group HeadChief

Risk Officer(CRO)

ChiefFinancial Officer

(CFO)

ChiefTechnology Officer

(CTO)

Credit RiskManagement

Group

Credit Div. I

Credit Div. II

Credit Div. III(Facilitation of Financing Review Office)

Workout Div.

ChiefCredit Risk Officer

(CCRO)Group Head Group Head

Corporate Administration & Service Div.

Business Strategy Div.

Crisis Management Div.

Head of Corporate Strategy Unit

Corporate Strategy Unit

Group Head

Business Innovation

Office

Internal Audit Div.

Asset Assessment Div.

Chief Executive Officer (CEO)

Co

rpo

rate Data

21

Financial and

Co

rpo

rate Data

Directors, Auditors and Executive Officers (As of September 30, 2013)

Directors and Auditors

Director and Chairman Makoto Fukuda*

Representative Director

and President Shinsuke Baba*

Representative Director

and Deputy President Masaki tanabe*

Directors yuji Shirakawa

Kiyoshi tsugawa

Shunsuke takeda

louis J . Forster

Hiroyuki Mizuta

Standing Auditor Shinichi Fujihira

Auditors Mitch R . Fulscher

Akira tachimoto

*Serving as Executive Officer concurrently

Executive Officers

Managing Executive Officers Hiromi watanabe

Clark D . Graninger

Katsuya Hosono

Masatatsu Ozeki

takeo Saito

Masaki yamagata

Executive Officers Jorge A . leon

Shinji Nakamura

Masaaki Harada

yukio Sekizawa

Kei tanikawa

Koji yamakoshi

Keiichi Asada

Fumihiko Hirose

Staff Profile (As of September 30, 2013)

Number of Employees Average Age Average years of Service

1,512 (334) 41 .3 14 .8

Notes: 1 . the number of employees includes executive officers and locally hired staff overseas, but excludes temporary employees . 2 . the figure in parentheses is the average number of temporary employees for the year .

Co

rpo

rate Data

22

Financial and

Co

rpo

rate Data

Corporate Data

Office Directory (As of January 1, 2014)

Overseas Network

● Representative Offices

New York Representative Office

Chief RepresentativeKoji Nomura

Address1270 Avenue of the Americas, Suite #1040, New york, Ny 10020, u .S .A . tel: +1-212-830-1680Fax: +1-212-314-3124

Domestic Network

● Head Office3-1, Kudan-minami 1-chome,Chiyoda-ku, tokyo 102-8660, Japantel: +81-3-3263-1111SwiFt: NCBtJPJt

● Branch OfficesSapporo

1-4, Kita Sanjo-nishi 4-chome,Chuo-ku, Sapporo 060-0003tel: 011-241-8171

Sendai

2-1, Chuo 3-chome, Aoba-ku, Sendai 980-0021tel: 022-225-1171

Shinjuku

37-11, Shinjuku 3-chome,Shinjuku-ku, tokyo 160-0022tel: 03-3354-1600

Nihonbashi

3-11, Nihonbashi 3-chome, Chuo-ku, tokyo 103-0027 tel: 03-3517-7888

Shibuya

7-7, Shibuya 1-chome, Shibuya-ku, tokyo 150-0002tel: 03-3409-6411

Ueno

12-20, ueno 2-chome, taito-ku, tokyo 110-0005tel: 03-3835-7511

Shanghai Representative Office

Chief RepresentativeShigeru tanaka

Address27F, Hang Seng Bank tower, 1000 lujiazui Ring Road, Pudong New Area,Shanghai 200120, Chinatel: +86-21-3899-6288 Fax: +86-21-6841-2882

Ikebukuro

28-13, Minami-ikebukuro 2-chome, toshima-ku, tokyo 171-0022tel: 03-3988-0911

Chiba

14-1, Fujimi 2-chome, Chuo-ku, Chiba 260-0015tel: 043-227-3111

Yokohama

4-1, Kita-saiwai 1-chome, Nishi-ku, yokohama 220-0004tel: 045-319-1588

Kanazawa

2-37, Kamitsutsumicho,Kanazawa 920-0869tel: 076-231-4151

Nagoya

5-28, Meieki 4-chome, Nakamura-ku, Nagoya 450-0002tel: 052-566-1900

Kyoto

79, Kankobokocho, Muromachi-Higashiiru, Shijo-dori, Shimogyo-ku, Kyoto 600-8009tel: 075-211-3341

Kansai

12-12, umeda 1-chome, Kita-ku, Osaka 530-0001tel: 06-4799-3541(Kansai Branch deals solely with corporate clients .)

Osaka

2-3, Namba 2-chome, Chuo-ku, Osaka 542-0076tel: 06-4708-2051

Umeda

12-12, umeda 1-chome, Kita-ku, Osaka 530-0001tel: 06-4799-3533

Hiroshima

13-13, Motomachi, Naka-ku, Hiroshima 730-0011tel: 082-211-0125

Takamatsu

6-1, Bancho 1-chome,takamatsu 760-0017tel: 087-821-5521

Fukuoka

8-36, tenjin 2-chome, Chuo-ku, Fukuoka 810-0001tel: 092-751-4261

Internet Branch

3-1, Kudan-minami 1-chome,Chiyoda-ku, tokyo 102-8660http://www .aozorabank .co .jp/netbranch/

Financial Oasis Jiyugaoka (Shibuya Branch Jiyugaoka Office)

5-28-1, Okusawa, Setagaya-ku, tokyo 158-0083 tel: 03-5483-3223

Co

rpo

rate Data

23

Financial and

Co

rpo

rate Data

Business Network (As of September 30, 2013)

Subsidiaries (As of September 30, 2013)(%)

Company Name Location Business Activities Established CapitalAozora Bank Shareholding

Group Shareholding

Aozora trust Bank, ltd . 3-1, Kudan-minami 1-chome, Chiyoda-ku, tokyo

trust services, banking operations

February 28, 1994

5,437 millions of JPy

100 .0 —

Aozora loan Services Co ., ltd .

13-5, Kudan-kita 1-chome, Chiyoda-ku, tokyo

Distressed loan servicing

June 18, 1996

500 millions of JPy

67 .6 —

Aozora Regional Consulting Co ., ltd .

3-1, Kudan-minami 1-chome, Chiyoda-ku, tokyo

Management consulting services

March 21, 2013

10 millions of JPy

100 .0 —

Aozora Securities Co ., ltd . 3-1, Kudan-minami 1-chome, Chiyoda-ku, tokyo

Securities services January 23, 2006

3,000 millions of JPy

100 .0 —

Aozora Asia Pacific Finance limited

Hong Kong Financial services June 29, 2005

100,000 thousands of uSD

100 .0 —

Aozora GMAC investment limited

london investments November 6, 2006


100 .0 —

Aozora investment, inc . Delaware, uSA investments November 21, 2006

411 thousands of uSD

— 100 .0

Aozora investments llC Delaware, uSA investments November 22, 2006


— 100 .0

AzB ClO1 limited Dublin, ireland investment vehicle December 10, 2008

0 thousands of EuR

— —


0 thousands of EuR

— —


0 thousands of EuR

— —


0 thousands of EuR

— —

AzB Funding Cayman islands, British west indies

investment vehicle June 1, 2012 0 thousands of uSD

— —

AzB Funding 2 Cayman islands, British west indies

investment vehicle March 19, 2013

0 thousands of uSD

— —

AzB Funding 3 Cayman islands, British west indies

investment vehicle September 18, 2013

0 thousands of uSD

— —

Note: Aozora Securities Co ., ltd . relocated to the address above as of November 5, 2013 .

*All companies listed below are consolidated subsidiaries .

Aozora Bank, Ltd.

Banking operations

Other operations

Head Office and branches

Main affiliates

Main affiliates

Management consulting servicesFinancial servicesInvestmentsInvestmentsInvestmentsInvestment vehicleInvestment vehicleInvestment vehicleInvestment vehicleInvestment vehicleInvestment vehicleInvestment vehicle

Trust services, Banking operationsDistressed loan servicingSecurities services

Aozora Regional Consulting Co ., ltd .Aozora Asia Pacific Finance limited Aozora GMAC investment limitedAozora investment, inc .Aozora investments llC AzB ClO1 limitedAzB ClO2 limitedAzB ClO3 limitedAzB ClO4 limitedAzB FundingAzB Funding 2AzB Funding 3

Aozora trust Bank, ltd .Aozora loan Services Co ., ltd .Aozora Securities Co ., ltd .

Co

nsolid

ated B

usiness Results

24

Financial and

Co

rpo

rate Data

Consolidated Business Results

Consolidated Financial Highlights For the six-month periods ended September 30, 2013, 2012 and 2011, and the years ended March 31, 2013 and 2012

(Millions of yen)


Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . 73,921 59,944 64,460 118,109 136,184

Ordinary profit . . . . . . . . . . . . . . . . . . . . . . . . . . 27,392 19,989 20,530 41,080 40,940

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,959 20,836 22,554 40,559 46,282

Comprehensive income . . . . . . . . . . . . . . . . . . . 9,108 24,593 26,558 50,516 47,131

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 419,781 419,781 100,000 419,781

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,471 616,511 586,552 535,839 607,579

total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,793,908 5,130,112 5,051,968 5,016,689 5,097,427

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 184,509 267,582 169,366 223,144

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,071,019 2,948,291 2,954,226 3,038,963 2,929,452

loans and bills discounted . . . . . . . . . . . . . . . . 2,695,058 2,565,632 2,701,564 2,719,732 2,672,155

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,113,288 1,269,965 1,293,920 1,305,779 1,322,319

total equity per share (yen) . . . . . . . . . . . . . . . . 298 .74 291 .64 272 .02 308 .58 284 .22

Basic net income per share (yen) . . . . . . . . . . . . 19 .83 13 .92 15 .09 28 .05 29 .51

Diluted net income per share (yen) . . . . . . . . . . . 15 .23 10 .62 11 .50 22 .32 23 .60

Consolidated capital adequacy ratio (domestic standard)(%) . . . . . . . . . . . . . . . . . . 16 .09 19 .16 18 .07 15 .70 17 .86

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . (87,432) 92,171 (147,271) 140,863 (70,256)

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . 206,584 52,718 27,079 117,499 29,462

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . (42,579) (15,799) (5,482) (122,500) (5,795)

Cash and cash equivalents, end of period . . . . . 424,308 340,964 132,789 347,736 211,874

Notes: 1 . Deposits include negotiable certificates of deposit (NCDs) . 2 . total equity per share, basic net income per share and diluted net income per share are calculated by applying Financial Accounting Standard

No . 2, ‘Accounting Standard for Earnings Per Share’ and Financial Accounting Standards implementation Guidance No . 4, ‘implementation Guidance for Accounting Standard for Earnings Per Share .’

Co

nsolid

ated Financial R

eview

25

Financial and

Co

rpo

rate Data

Consolidated Financial Review

1. Consolidated and Equity-Method Companies

the consolidated financial statements include the accounts of the Bank and its significant subsidiaries . the number of con-solidated subsidiaries was 15 as of September 30, 2013 and 14 as of March 31, 2013 .

AzB Funding 3, which conducts a loan asset acquisition business (location: Cayman islands, British west indies), was established and is now included in the scope of consolidation as a subsidiary . No subsidiaries and affiliated companies were accounted for using the equity method .

2. Analysis of Business Results

Aozora reported net revenue of ¥38 .7 billion, a decrease of ¥4 .1 billion, or 9 .7%, year on year and business profit of ¥19 .4 billion, a decrease of ¥4 .2 billion, or 17 .7% . Net income was ¥24 .0 billion, an increase of ¥3 .1 billion, or 15 .0%, year on year .

(1) Income

total income was ¥73 .9 billion, an increase of ¥14 .0 billion year on year . interest income was ¥29 .7 billion, a decrease of ¥3 .8 billion year on year . this decline was due to decreased interest on loans and discounts . income from fees and commissions was ¥6 .7 billion, an increase of ¥1 .8 billion year on year . Earnings related to the

sale of investment trusts and annuity insurance, aimed at the Bank’s mass affluent retail customers, continued to show strong progress . trading income was ¥4 .7 billion, an increase of ¥0 .6 billion year on year, reflecting the favorable sale of structured bonds to retail customers, as well as the sale of other derivative-related products to corporate and financial institution customers . Other ordinary income was ¥14 .9 billion, an increase of ¥1 .2 billion year on year, mainly reflecting gains from investments in limited partnerships included in other . Other income increased by ¥14 .2 billion year on year to ¥18 .0 billion, mainly due to gains on sales of stocks and other securities .

Consolidated and Equity-Method Companies (Number of Companies)

Sep. 30, 2013 Mar. 31, 2013 Change

Consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 14 1

Subsidiaries and affiliated companies accounted for using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0

(Millions of yen)

Sep. 30, 2013 Sep. 30, 2012 (6 months) (6 months) Change

Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,921 59,944 13,977

interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,713 33,501 (3,788) interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . 21,189 23,794 (2,605) interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . 7,284 7,831 (547) interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 45 (7) Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,201 1,829 (628)

Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,656 4,892 1,764

trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,675 4,096 579

Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,868 13,681 1,187 Gains on sales of bonds and other securities . . . . . . . . . . . . . . . 4,353 8,175 (3,822) Gains on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 — 286 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,228 5,505 4,723

Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,008 3,773 14,235 Gains on sales of stocks and other securities . . . . . . . . . . . . . . . 10,845 69 10,776 trading gain from money held in trust . . . . . . . . . . . . . . . . . . . . . 259 97 162 Recoveries of written-off claims . . . . . . . . . . . . . . . . . . . . . . . . . . 4,089 1,138 2,951 Reversal of allowance for loan losses . . . . . . . . . . . . . . . . . . . . . — 1,632 (1,632) Reversal of provision for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . — 170 (170) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,813 663 2,150

Co

nsolid

ated Financial R

eview

26

Financial and

Co

rpo

rate Data

(2) Expenses

total expenses increased ¥6 .4 billion year on year to ¥46 .5 billion . interest expenses decreased ¥1 .8 billion to ¥8 .0 billion year on year, reflecting a decline in the yield on total investments . Other ordinary expenses increased ¥5 .6 billion to ¥8 .7 billion, mainly due to an increase in losses on sales of bonds .

General and administrative expenses were reduced ¥0 .6 billion year on year to ¥19 .3 billion as a result of the Bank’s continued strict control on costs . Other expenses were ¥10 .1 billion, compared with ¥6 .9 billion in the first half of Fy2012, mainly due to an increase in provision of allowance for loan losses .

(3) Net Income

As a result of the above factors, consolidated net income for the first half was ¥24 .0 billion, compared with ¥20 .8 billion in the first half of Fy2012 . Net income per share was ¥19 .83 .

(Millions of yen)


Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,537 40,093 6,444

interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,033 9,881 (1,848) interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,161 7,540 (1,379) interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 837 (517) interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . . 426 314 112 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,124 1,188 (64)

Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 445 362 83

trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — 0

Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,738 3,095 5,643 Amortization of debenture issuance costs . . . . . . . . . . . . . . . . . . 3 9 (6) losses on foreign exchange transactions . . . . . . . . . . . . . . . . . . 8 1,073 (1,065) losses on sales of bonds and other securities . . . . . . . . . . . . . . 6,708 89 6,619 losses on devaluation of bonds and other securities . . . . . . . . . . 20 156 (136) losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 211 (211) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,997 1,555 442

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 19,251 19,805 (554)

Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,068 6,948 3,120 Provision of allowance for loan losses . . . . . . . . . . . . . . . . . . . . . 7,736 — 7,736 Provision of allowance for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 136 — 136 write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,176 1,052 124 losses on sales of stocks and other securities . . . . . . . . . . . . . . — 10 (10) losses on devaluation of stocks and other securities . . . . . . . . . — 452 (452) losses on disposal of noncurrent assets . . . . . . . . . . . . . . . . . . . 7 137 (130) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,011 5,295 (4,284)

(Millions of yen)


Income before income taxes and minority interests . . . . . . . . . . . . 27,383 19,851 7,532

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,380 (1,015) 4,395

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 996 383 613 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,384 (1,398) 3,782

Minority interests in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 30 13

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,959 20,836 3,123


Co

nsolid

ated Financial R

eview

27

Financial and

Co

rpo

rate Data

3. Analysis of Financial Condition

(1) Loans and bills discounted

loans were ¥2,695 .1 billion, a decrease of ¥24 .7 billion, or

0 .9% from March 31, 2013 . Our ongoing focus on SME

business showed positive results, including an increase in

the number of new clients .

Risk-monitored loans on a consolidated basis decreased

¥19 .3 billion to ¥89 .7 billion from March 31, 2013 and the

ratio to the loan balance decreased 0 .7% to 3 .3% .

Risk-Monitored Loans (Consolidated) (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013 Change

Loan balance (end of period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,695,058 2,719,732 (24,674)

Risk-monitored loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,677 108,998 (19,321)

loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2,768 (2,744) Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,886 86,229 (16,343) loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . — — — Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,767 20,000 (233)

Ratio to loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3% 4.0% (0.7%)

Breakdown of Loans and Bills Discounted by Industry (Consolidated) (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013

Domestic offices (excluding Japan offshore market accounts) . . . . . . . . . . . . . . . . . . . . . . . . 2,514,967 2,607,590

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,685 287,177 Agriculture, forestry and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,943 2,523 Mining, quarry, gravel extraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,127 2,455 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,726 18,427 Electricity, gas, heat supply and water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,695 5,362 information and communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,162 48,805 transport, postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,130 134,643 wholesale and retail trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,426 117,963 Finance and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505,363 531,970 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737,666 807,763 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,654 91,950 various services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,388 135,203 local government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,505 49,915 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365,491 373,428

Overseas offices (including Japan offshore market accounts) . . . . . . . . . . . . . . . . . . . . . . . . . 180,090 112,141

Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,090 112,141

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,695,058 2,719,732

Co

nsolid

ated Financial R

eview

28

Financial and

Co

rpo

rate Data

total unrealized losses amounted to ¥1 .8 billion, compared

with unrealized gains of ¥18 .0 billion as of March 31, 2013 .

(3) Deferred tax assets

the balance of deferred tax assets increased ¥2 .0 billion,

to ¥50 .6 billion from March 31, 2013 . the period for the

estimation of future taxable income for the calculation of

deferred tax assets was changed from 3 years to 5 years

during the first quarter of Fy2013 . Deferred tax assets have

been calculated in consideration of the uncertainty of such

estimations .

the proportion of deferred tax assets to net assets was

10 .1% as of September 30, 2013 .

(4) Deposits and debentures

total deposits and negotiable certificates of deposit

increased ¥32 .1 billion, as compared to March 31, 2013 .

Funding from retail customers was ¥2,026 .8 billion, a

decrease of ¥45 .9 billion, or 2 .2%, from March 31, 2013,

while the percentage of retail funding to total core funding

was stable at 62 .6% .

(2) Securities

Securities decreased ¥192 .5 billion, or 14 .7%, to ¥1,113 .3

billion from March 31, 2013 . in comparison with March 31,

2013, foreign bonds decreased ¥139 .1 billion, or 29 .9%, as a

result of risk reduction measures taken by the Bank, including

those involving its u .S . treasury bond positions, amid

uncertain u .S . market conditions .

Outstanding Balance of Securities Held (Consolidated) (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013 Change

Japanese debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455,571 540,514 (84,943)

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . 371,534 465,014 (93,480) Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . 15,741 11,331 4,410 Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,295 64,168 4,127

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,480 26,992 (512)

Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631,236 738,272 (107,036)

Foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436,211 546,445 (110,234) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,025 191,827 3,198

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,113,288 1,305,779 (192,491)

Deposits and Debentures (Consolidated) (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013 Change

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,071,019 3,038,963 32,056

time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,682,865 2,633,193 49,672 liquid deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,328 388,130 (16,802) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,825 17,639 (814)

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 169,366 (4,103)

Note: total of deposits and time deposits include negotiable certificates of deposit (NCDs) .

(5) Equity

Equity was ¥502 .5 billion, representing a decrease of

¥33 .4 billion, or 6 .2%, in comparison with March 31, 2013 .

this change mainly reflected the repayment of public funds

through a super preferred dividend made from other capital

surplus based on the comprehensive recapitalization plan,

and the payment of preferred and common share dividends .

(6) Capital adequacy ratio (consolidated, domestic standard)

the Bank’s capital adequacy ratio was 16 .09%, and the tier 1

ratio was 16 .62% and they are expected to remain high .


Co

nsolid

ated Financial R

eview

29

Financial and

Co

rpo

rate Data

4. Consolidated Capital Adequacy Ratio (Domestic Standard) (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013

Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 100,000 Non-cumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . — — Newly issued stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,166 330,656 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,569 198,560 treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (99,333) (99,333) Paid-in amount on treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — unappropriated profits to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,912) (38,564) valuation loss on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . — — Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,376) (7,832) Subscription rights to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Minority interests in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 802 781 Preferred stock issued by overseas special purpose companies . . . . . . . . . — — Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equal to goodwill derived from acquisitions . . . . . . . . . . . . . . . . . . . . — — intangible assets derived from mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equivalent to capital increased by securitization transactions . . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 500,916 484,267 Step-up preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Tier II Forty-five percent of the difference between fair value and book value in respect of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — General allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,832 18,601 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Perpetual subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Subordinated term liabilities and subordinated term preferred stock . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,832 18,601 Tier II capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (B) 18,832 18,601

Tier III Short-term subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Tier III capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (C) — —

Items deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 34,919 35,401

Regulatory capital (A) + (B) + (C) – (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E) 484,828 467,467

Risk-weighted Balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,620,119 2,597,707 assets Off-balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,588 161,359 Credit risk assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F) 2,772,707 2,759,067 Risk assets derived from market risk equivalents ((H)/8%) . . . . . . . . . (G) 111,311 91,587 Market risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H) 8,904 7,326 Risk assets derived from operational risk equivalents ((J)/8%) . . . . . . ( I ) 129,158 125,596 Operational risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J) 10,332 10,047 (F) + (G) + ( I ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K) 3,013,177 2,976,250

Capital adequacy ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.09% 15.70%

Tier I ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.62% 16.27%

Required capital total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,527 119,050

Notes: 1 . the capital adequacy ratio is calculated using the formula stipulated in a ministerial notice based on Article 14-2 of the Banking Act (FSA Notice Number 19, issued in 2006) . FSA Notice Number 56, issued in 2012, is also applied to the calculation .

Aozora uses the domestic standard applicable to Japanese banks without overseas branches or banking subsidiaries . the capital adequacy ratios are based on the FSA guidelines established to implement Basel ii . 2 . the amount of non-cumulative perpetual preferred stock included in the capital is not disclosed, because the capital composition cannot be

separated by type of stocks . 3 . items deducted (D) include the amount held at other financial institutions for their capital-raising purposes and the amount of our investments in

non-consolidated subsidiaries and affiliated companies . 4 . Methods used to calculate risk-weighted assets are as follows: credit risk assets use the standardized approach; market risk equivalents use the

internal models approach and the standardized approach; operational risk equivalents use the standardized approach . 5 . Amounts of required capital for each risk are as follows: (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013

Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,908 110,362 Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,452 3,663 Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,166 5,023

(A)

(K)

(E)

(K)

Co

nsolid

ated Financial R

eview

5. Disclosure of Exposure to Securitized Products

(1) CDO, CMBS and RMBS ExposureExposure of the Group to CDO (Collateralized Debt Obligation), CMBS (Commercial Mortgage-Backed Securities) and RMBS (Residential Mortgage-Backed Securities) is as follows: (100 Million yen)

Sep. 2013

CDO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

CMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

(2) Leveraged Financethe 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 . (100 Million yen)

Sep. 2013

loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,464

Commitment line (unfunded) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

total leveraged finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,501

Geographical distribution Total leveraged finance (100 Million yen)

Sep. 2013

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,501

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


30

Financial and

Co

rpo

rate Data

31

Financial and

Co

rpo

rate Data

Consolidated Semiannual Financial Statements

Co

nsolid

ated S

emiannual Financial S

tatements

Consolidated Semiannual Balance Sheet (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesSeptember 30, 2013

Thousands of U.S. Dollars Millions of Yen (Note 1)

Assets Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013

Cash and cash equivalents (Notes 3 and 22) . . . . . . . . . . . . . . . . . . . . ¥ 424,308 ¥ 340,964 ¥ 347,736 $ 4,340,750 Due from banks (Notes 12 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,224 38,949 56,743 483,112 Call loans and bills bought (Note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . 22,443 80,000 50,000 229,604 Receivables under securities borrowing transactions (Note 22) . . . . . . 3,223 192,492 — 32,973 Monetary claims bought (Note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,839 40,660 41,021 376,872 trading assets (Notes 4, 12, 22 and 23) . . . . . . . . . . . . . . . . . . . . . . . 338,821 511,825 381,445 3,466,204 Money held in trust (Notes 6 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . 7,193 7,353 7,531 73,590 Securities (Notes 5, 12 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,113,288 1,269,965 1,305,779 11,389,144 loans and bills discounted (Notes 7, 12 and 22) . . . . . . . . . . . . . . . . . 2,695,058 2,565,632 2,719,732 27,570,929 Foreign exchange (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,840 11,027 26,670 315,508 Other assets (Notes 15 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,845 37,702 45,902 397,398 tangible fixed assets (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,641 22,148 22,214 221,398 intangible fixed assets (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,044 3,684 3,164 31,144 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,640 49,957 48,594 518,061 Customers’ liabilities for acceptances and guarantees (Note 10) . . . . . 27,968 30,185 27,555 286,124 Allowance for loan losses (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,632) (68,427) (63,448) (661,203)Allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,841) (4,009) (3,954) (29,069)total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,793,908 ¥5,130,112 ¥5,016,689 $49,042,539


Liabilities and Equity Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013

Liabilities: Deposits (Notes 13 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,071,019 ¥2,948,291 ¥3,038,963 $31,417,077 Debentures (Notes 14 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 184,509 169,366 1,690,676 Call money and bills sold (Notes 12 and 22) . . . . . . . . . . . . . . . . . . 152,139 102,741 169,125 1,556,417 Payables under securities lending transactions (Notes 12 and 22) . . 224,968 341,835 312,674 2,301,470 trading liabilities (Notes 4, 22 and 23) . . . . . . . . . . . . . . . . . . . . . . . 333,268 362,653 407,317 3,409,400 Borrowed money (Notes 12 and 22) . . . . . . . . . . . . . . . . . . . . . . . . 200,385 244,750 222,988 2,049,979 Foreign exchange (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 0 5 Other liabilities (Notes 15 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . 103,588 285,579 119,790 1,059,727 Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,639 11,303 11,763 119,070 Provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . . 336 481 554 3,438 Provision for credit losses on off-balance-sheet instruments . . . . . . 563 532 427 5,768 Provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 730 317 2,973 Reserve under the special laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2 3 43 Acceptances and guarantees (Note 10) . . . . . . . . . . . . . . . . . . . . . . 27,968 30,185 27,555 286,124 total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,291,436 4,513,600 4,480,849 43,902,167 Equity: Capital stock (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 419,781 100,000 1,023,018 Capital surplus (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,166 33,575 330,656 3,173,056 Retained earnings (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,471 178,751 198,474 2,050,856 treasury stock-at cost (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . (99,333) (15,438) (99,333) (1,016,200) Accumulated other comprehensive income (loss): valuation difference on available-for-sale securities . . . . . . . . . . . (2,695) 7,746 12,308 (27,579) Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . 453 1,207 801 4,644 Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . (7,376) (9,860) (7,832) (75,459) total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,618) (906) 5,276 (98,394) Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785 749 766 8,036 total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,471 616,511 535,839 5,140,372 total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,793,908 ¥5,130,112 ¥5,016,689 $49,042,539

See the accompanying notes to consolidated semiannual financial statements .

32

Financial and

Co

rpo

rate Data

Co

nsolid

ated S


tatements

Consolidated Semiannual Statement of Income (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month period ended September 30, 2013

Thousands of U.S. Dollars Millions of Yen (Note 1) Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013 (6 months) (6 months) (1 year) (6 months)

Income: interest income: interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥21,189 ¥23,794 ¥47,106 $216,774 interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . . 7,284 7,831 14,482 74,518 interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 45 87 391 Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,201 1,829 3,129 12,292 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,656 4,892 10,687 68,094 trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,675 4,096 6,224 47,827 Other ordinary income (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,868 13,681 27,443 152,106 Other income (Note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,008 3,773 9,055 184,232 total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,921 59,944 118,217 756,234 Expenses: interest expenses: interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,161 7,540 14,346 63,031 interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 837 1,331 3,283 interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . . . 426 314 690 4,365 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,124 1,188 2,474 11,502 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 362 680 4,560 trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — 0 Other ordinary expenses (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,738 3,095 5,168 89,399 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . 19,251 19,805 39,866 196,951 Other expenses (Note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,068 6,948 12,788 103,001 total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,537 40,093 77,344 476,092 Income before income taxes and minority interests . . . . . . . . . . . . . 27,383 19,851 40,872 280,142 Income taxes: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 996 383 1,577 10,193 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,384 (1,398) (1,311) 24,392 total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,380 (1,015) 265 34,585 Net income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . 24,003 20,867 40,607 245,557 Minority interests in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 30 47 448 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,959 ¥20,836 ¥40,559 $245,109

Yen U.S. Dollars (Note 1) Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013 (6 months) (6 months) (1 year) (6 months)

Per share information: Basic net income per share of common stock (Note 24) . . . . . . . . . . . ¥19 .83 ¥13 .92 ¥28 .05 $0 .20 Diluted net income per share of common stock (Note 24) . . . . . . . . . 15 .23 10 .62 22 .32 0 .16 Cash dividends applicable to the period: Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . 4 .50 — 10 .00 0 .05 Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .348 — 7 .44 0 .03 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 .00 — 13 .90 0 .06 Super preferred dividend on Class C Series 5 preferred stock . . . . — — *1 —*1: Dividend per share is calculated by dividing total dividends of ¥20,490 million from Capital Surplus by 214,579 thousand shares of Class C Series 5 preferred

stock as of the fiscal year ended March 31, 2013 .See the accompanying notes to consolidated semiannual financial statements .

Millions of Yen

Thousands of U.S. Dollars

(Note 1)

Sep. 30, 2013 (6 months)

Sep. 30, 2012 (6 months)

Mar. 31, 2013 (1 year)

Sep. 30, 2013 (6 months)

Net income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 24,003 ¥20,867 ¥40,607 $ 245,557 Other comprehensive income (loss): valuation difference on available-for-sale securities . . . . . . . . . . . . . . (15,004) 4,397 8,959 (153,494) Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . (347) (137) (544) (3,553) Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . 456 (532) 1,494 4,672 total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . (14,894) 3,726 9,909 (152,375)Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 9,108 ¥24,593 ¥50,516 $ 93,182 Total comprehensive income attributable to: Owners of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 9,064 ¥24,562 ¥50,469 $ 92,734 Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 30 47 448

Consolidated Semiannual Statement of Comprehensive Income (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month period ended September 30, 2013



33

Financial and

Co

rpo

rate Data

Co

nsolid

ated S


tatements

Consolidated Semiannual Statement of Changes in Equity (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month period ended September 30, 2013


Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013

Capital stock Balance at the beginning of current period . . . . . . . . . . . . . . . . . ¥100,000 ¥419,781 ¥ 419,781 $ 1,023,018 transfer to capital surplus from capital stock . . . . . . . . . . . . . . . — — (319,781) —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 100,000 419,781 100,000 1,023,018

Capital surplus Balance at the beginning of current period . . . . . . . . . . . . . . . . . 330,656 33,575 33,575 3,382,672 Cash dividends paid—other capital surplus . . . . . . . . . . . . . . . . (20,490) — — (209,616) Retirement of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (22,700) — transfer to capital surplus from capital stock . . . . . . . . . . . . . . . — — 319,781 —


Retained earnings Balance at the beginning of current period . . . . . . . . . . . . . . . . . 198,474 173,548 173,548 2,030,429 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,962) (15,633) (15,633) (224,682) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,959 20,836 40,559 245,109


treasury stock-at cost Balance at the beginning of current period . . . . . . . . . . . . . . . . . (99,333) (15,438) (15,438) (1,016,200) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (106,594) — Retirement of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 22,700 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (99,333) (15,438) (99,333) (1,016,200)

Accumulated other comprehensive income (loss):

valuation difference on available-for-sale securities Balance at the beginning of current period . . . . . . . . . . . . . . . 12,308 3,348 3,348 125,915 Net change of items during the period . . . . . . . . . . . . . . . . . . (15,004) 4,397 8,959 (153,494)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . (2,695) 7,746 12,308 (27,579)

Deferred gains or losses on hedges Balance at the beginning of current period . . . . . . . . . . . . . . . 801 1,345 1,345 8,197 Net change of items during the period . . . . . . . . . . . . . . . . . . (347) (137) (544) (3,553)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . 453 1,207 801 4,644

Foreign currency translation adjustment Balance at the beginning of current period . . . . . . . . . . . . . . . (7,832) (9,327) (9,327) (80,131) Net change of items during the period . . . . . . . . . . . . . . . . . . 456 (532) 1,494 4,672

Balance at the end of current period . . . . . . . . . . . . . . . . . . . (7,376) (9,860) (7,832) (75,459)

Minority interests Balance at the beginning of current period . . . . . . . . . . . . . . . . . 766 746 746 7,837 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 19 3 20 199

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 785 749 766 8,036

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥502,471 ¥616,511 ¥ 535,839 $ 5,140,372


34

Financial and

Co

rpo

rate Data


Co

nsolid

ated S


tatements

Consolidated Semiannual Statement of Cash Flows (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month period ended September 30, 2013


Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013 (6 months) (6 months) (1 year) (6 months)

Cash flows from operating activities: income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 27,383 ¥ 19,851 ¥ 40,872 $ 280,142 Adjustments for: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,665 1,908 3,713 17,041 impairment losses on long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2 — increase (decrease) in allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,176 (8,551) (13,583) 12,038 increase (decrease) in allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . (1,113) (978) (1,033) (11,391) increase (decrease) in provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . (124) 510 970 (1,270) increase (decrease) in provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . (218) 44 117 (2,236) increase (decrease) in provision for credit losses on off-balance-sheet instruments . . . . . 136 (170) (277) 1,393 increase (decrease) in provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27) (201) (615) (277) interest income (accrual basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,713) (33,501) (64,806) (303,975) interest expenses (accrual basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,033 9,881 18,842 82,181 loss (gain) on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,570) (7,456) (12,642) (97,911) loss (gain) on money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (259) (97) (212) (2,655) Foreign exchange losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,515) 32,137 (77,482) (261,032) loss (gain) on disposal of noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 137 204 76 Net decrease (increase) in trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,623 (46,537) 83,562 436,050 Net increase (decrease) in trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (74,049) 53,837 98,501 (757,536) Net decrease (increase) in loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,941 98,534 (35,166) 296,078 Net increase (decrease) in deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,055 18,838 109,510 327,933 Net increase (decrease) in debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,103) (38,634) (53,777) (41,975) Net increase (decrease) in borrowed money (excluding subordinated borrowings) . . . . . . (22,602) 29,708 7,946 (231,232) Net decrease (increase) in due from banks (excluding due from the Bank of Japan) . . . . . 10,123 8,973 (6,455) 103,564 Net decrease (increase) in call loans and bills bought and others . . . . . . . . . . . . . . . . . . . 31,738 8,287 37,892 324,694 Net decrease (increase) in receivables under securities borrowing transactions . . . . . . . . (3,223) (69,410) 123,082 (32,973) Net increase (decrease) in call money and bills sold, payables under repurchase agreements and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,985) (33,638) 32,744 (173,765) Net increase (decrease) in payables under securities lending transactions . . . . . . . . . . . . (87,705) (41,342) (70,503) (897,248) Net decrease (increase) in foreign exchange—assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,170) 10,803 (4,838) (42,669) Net increase (decrease) in foreign exchange—liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . — (0) (1) — interest and dividends received (cash basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,873 33,737 65,964 315,845 interest paid (cash basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,426) (12,930) (22,508) (75,979) Other, net (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,089) 58,259 (118,963) (144,139) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86,140) 92,001 141,062 (881,228) income taxes (paid) refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,292) 170 (198) (13,222) Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . (87,432) 92,171 140,863 (894,450)Cash flows from investing activities: Purchase of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (861,872) (1,223,660) (2,487,886) (8,817,108) Proceeds from sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602,950 776,361 1,601,260 6,168,296 Proceeds from redemption of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,173 502,738 1,008,332 4,769,041 increase in money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,335) (9,932) (25,992) (156,887) Decrease in money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,925 8,975 24,959 162,916 Purchase of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (397) (1,030) (2,194) (4,064) Purchase of intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (795) (539) (994) (8,138) Proceeds from sales of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 272 2 Execution of asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65) (193) (258) (665) Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,584 52,718 117,499 2,113,393 Cash flows from financing activities: Repayments of lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (103) (138) (244) (1,054) Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,452) (15,633) (15,633) (434,298) Cash dividends paid to minority of stockholders of consolidated subsidiaries . . . . . . . . . (24) (27) (27) (248) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (106,594) — Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,579) (15,799) (122,500) (435,600)Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,571 129,090 135,861 783,343 Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347,736 211,874 211,874 3,557,407 Cash and cash equivalents, end of period (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 424,308 ¥ 340,964 ¥ 347,736 $ 4,340,750


35

Financial and

Co

rpo

rate Data

Co

nsolid

ated S


tatements

Notes to Consolidated Semiannual Financial Statements (Unaudited)Aozora Bank, ltd . and Consolidated Subsidiaries

2. Summary of Significant Accounting Policiesa. Use of Estimates—the preparation of consolidated

semiannual financial statements in accordance with Japanese

GAAP requires management to make estimates and assump-

tions that affect the reported amounts of assets and liabilities,

disclosures of contingent assets and liabilities at the date of

the consolidated semiannual financial statements, and the

reported amounts of revenues and expenses during the

reporting period . Actual results could differ from those esti-

mates . Material estimates that are particularly susceptible to

significant change in the near term include, but are not limited

to, those that are related to the determination of the allow-

ance for loan losses, deferred tax assets, and the valuation of

financial instruments .

b. Consolidation—the consolidated semiannual financial

statements include the accounts of the Bank and its signifi-

cant subsidiaries . the number of consolidated subsidiaries

was 15 as of September 30, 2013 .

AzB Funding 3 was established and consolidated from the

six-month period ended September 30, 2013 .

under the control or influence concept, those entities in

which the Bank, directly or indirectly, is able to exercise

control over finance and operations are fully consolidated,

and those entities over which the Group has the ability to

exercise significant influence should be accounted for by the

equity method .

Practical issues task Force (‘PitF’) No . 20, ‘Practical

Solution on Application of Control Criteria and influence

Criteria to investment Associations,’ issued by the Accounting

Standards Board of Japan (the ‘ASBJ’), provides additional

guidance on how the control and influence concept should be

practically applied to investment vehicles, such as limited

partnerships, Tokumei Kumiai arrangements (a silent partner-

ship under the Commercial Code of Japan), and other entities

with similar characteristics in order to prevent these invest-

ment vehicles from being inappropriately excluded from

consolidation .

the consolidated semiannual financial statements do not

include the accounts of certain subsidiaries such as Aozora

Chiiki Saisei Co ., ltd ., because the combined total assets,

total income, net income (loss) and retained earnings, etc . of

such subsidiaries would not have a material effect on the

accompanying consolidated semiannual financial statements .

investments in unconsolidated subsidiaries and affiliated

companies such as vietnam international leasing Company

limited and Aozora Daiwa Finance Co ., ltd . are generally

stated at cost . these companies are not accounted for using

the equity method of accounting because the effect on the

accompanying consolidated semiannual financial statements

would not be material even if the equity method of accounting

had been applied to the investments in these companies .

1. Basis of Presentation of Consolidated Semiannual Financial Statementssemiannual financial statements for the six-month period

ended September 30, 2012 (except for the balance sheet

items) to conform to the classification used in the consolidated

semiannual financial statements for the six-month period

ended September 30, 2013 .

the consolidated semiannual financial statements are

stated in Japanese yen, the currency of the country in which

the Bank is incorporated and operates . Japanese yen figures

of less than one million yen are truncated, except for per

share data . As a result, the totals do not necessarily equal the

sum of the individual amounts . the translation of Japanese

yen amounts into u .S . dollar amounts is included solely for

the convenience of readers outside Japan and has been

made at the rate of ¥97 .75 to $1 .00, the rate of exchange at

September 30, 2013 . Such translations should not be con-

strued as representations that the Japanese yen amounts

could be converted into u .S . dollars at that or any other rate .

the accompanying consolidated semiannual financial

statements of Aozora Bank, ltd . (the ‘Bank’) and consolidated

subsidiaries (together, the ‘Group’) have been prepared in

accordance with the provisions set forth in the Japanese

Financial instruments and Exchange Act, the Banking Act of

Japan and other related accounting regulations, and in accor-

dance with accounting principles generally accepted in Japan

(‘Japanese GAAP’), which are different in certain respects as

to the application and disclosure requirements of international

Financial Reporting Standards .

in preparing these consolidated semiannual financial state-

ments, certain reclassifications and rearrangements have

been made to the consolidated semiannual financial state-

ments issued domestically in order to present them in a form

which is more familiar to readers outside Japan . in addition,

certain reclassifications have been made in the consolidated

balance sheet as of March 31, 2013 and the consolidated

36

Financial and

Co

rpo

rate Data

Co

nsolid

ated S


tatements

the difference between the cost of an acquisition and the

fair value of the net assets of the acquired subsidiaries at the

date of acquisition is charged to operations when incurred

due to its immateriality . A bargain purchase gain is charged to

operations on the acquisition date after reassessing the

procedures of acquisition price allocation to ensure that an

acquirer has correctly identified all of the assets acquired

and all of the liabilities assumed with a review of such

procedures used .

All significant inter-company balances and transactions are

eliminated in consolidation . All material unrealized profits

resulting from transactions within the Group are also

eliminated .

the ASBJ issued ASBJ implementation Guidance No . 22,

‘implementation Guidance on Determining a Subsidiary and

an Affiliate for Consolidated Financial Statements,’ on May 13,

2008, which clarifies the conditions where a company does

not regard an entity as a subsidiary even if the controlling

interest of the entity is held by the company . this accounting

regulation was implemented from the fiscal year commencing

on and after October 1, 2008, and was applied by the Group

from the year ended March 31, 2010 .

in accordance with PitF No . 18, ‘Practical Solution on

unification of Accounting Policies Applied to Foreign

Subsidiaries for the Consolidated Financial Statements,’ for-

eign subsidiaries’ financial statements prepared in accordance

with either international Financial Reporting Standards or gen-

erally accepted accounting principles in the united States are

used for the consolidation process with certain limitations .

c. Cash and Cash Equivalents—Cash and cash equivalents

consist of cash on hand and due from the Bank of Japan .

d. Trading Assets/Liabilities—transactions for trading

purposes (for the purpose of seeking to capture gains arising

from short-term changes in interest rates, currency exchange

rates or market prices of securities and other market-related

indices or arbitrage opportunities) are included in ‘trading

assets’ or ‘trading liabilities,’ as appropriate, on a trade date

basis . trading assets and liabilities are stated at fair value .

Profits and losses on transactions for trading purposes are

shown as ‘trading income’ and ‘trading expenses,’ as

appropriate, on a trade date basis .

e. Securities—All securities are classified and accounted for,

depending on management’s intent, as follows:

(1) trading securities which are held for the purpose of earning

capital gains in the near term (other than securities booked in

trading accounts) are reported at fair value, and the related

unrealized gains and losses are recognized in the consoli-

dated semiannual statement of income, (2) held-to-maturity

debt securities which are expected to be held to maturity with

the positive intent and ability to hold them to maturity are

reported at amortized cost and (3) available-for-sale securities

are reported at fair value, with unrealized gains and losses, net

of applicable taxes, reported within accumulated other com-

prehensive income as a separate component of equity . the

cost of sale of these securities is determined mainly by the

moving-average method .

the measurement at cost or amortized cost of available-for-

sale securities is prohibited unless the fair value cannot be

reliably determined under ‘Accounting Standard for Financial

instruments (ASBJ Statement No .10) .’

Non-marketable equity securities are generally regarded as

securities whose fair value cannot be reliably determined and

are measured at cost . However, certain non-marketable debt

securities, such as privately placed corporate bonds and cer-

tain asset-backed securities are measured at fair value . the

cost of sale of non-marketable available-for-sale securities

stated at cost is determined by the moving-average method .

For other than temporary declines in fair value, the cost of

securities is reduced to fair value and the impairment losses

are recognized by a charge to operations .

the Group records its interests in investment limited part-

nerships, associations under the Civil Code of Japan, and

Tokumei Kumiai arrangements, based on its proportionate

share of the net assets in such entities, and recognizes its

share of profits or losses in a manner similar to the equity

method of accounting . the Group records such interests in

‘Securities .’

Securities included in money held in trust on behalf of the

Group are accounted for in the same manner as the securities

mentioned above .

f. Derivatives and Hedging Activities—Derivative financial

instruments (other than derivatives booked in trading

accounts) are classified and accounted for as follows:

(1) All derivatives other than those used for hedging purposes

are recognized as either assets or liabilities and measured

at fair value, with gains or losses recognized currently in

the consolidated semiannual statement of income .

(2) Derivatives used for hedging purposes, if they meet certain

hedging criteria, including high correlation of fair value

movement and effectiveness between the hedging instru-

ments and the hedged items and the assessment of its

effectiveness, are recognized as either assets or liabilities

and measured at fair value . valuation gains or losses on

derivatives used for hedging purposes are primarily

deferred over the terms of the hedged items within accu-

mulated other comprehensive income as a component of

equity and are charged to operations when the gains and

losses on the hedged items are recognized .


37

Financial and

Co

rpo

rate Data

Co

nsolid

ated S


tatements

Hedges of Interest Rate Risk

the Bank applies deferral hedge accounting to hedges of

interest rate risk associated with financial assets and liabilities

in accordance with industry Audit Committee Report No . 24,

‘Accounting and Auditing treatments on the Application of

Accounting Standards for Financial instruments in the

Banking industry,’ issued by the Japanese institute of Certified

Public Accountants (JiCPA) (the ‘JiCPA industry Audit

Committee Report No . 24’) .

under the JiCPA industry Audit Committee Report No . 24,

hedges to offset changes in fair value of fixed rate instruments

(such as loans or deposits) (‘fair value hedges’) are applied by

grouping hedging instruments and hedged items by their

maturities . the assessment of hedge effectiveness is generally

based on the consideration of interest rate indices affecting

the respective fair values of the group of hedging instruments

and hedged items .

Hedges of Foreign Currency Risk

the Bank applies deferral hedge accounting to hedges of

foreign currency risk associated with foreign currency-

denominated financial assets and liabilities in accordance

with the JiCPA industry Audit Committee Report No . 25,

‘Accounting and Auditing treatments for Foreign Currency

transactions in the Banking industry’ (the ‘JiCPA industry

Audit Committee Report No . 25’) .

in accordance with the JiCPA industry Audit Committee

Report No . 25, the Bank designates certain currency swaps

and foreign exchange swaps for the purpose of funding for-

eign currencies as hedges for the exposure to changes in

foreign exchange rates associated with foreign currency

denominated assets or liabilities when the foreign currency

positions on the hedged assets or liabilities are expected to

exceed the corresponding foreign currency positions on the

hedging instruments . Hedge effectiveness is reviewed by

comparing the total currency position of the hedged items

with that of the hedging instruments by currency .

For hedging the foreign currency exposure of foreign

currency-denominated available-for-sale securities (other than

debt securities), which were designated in advance, fair value

hedge accounting is adopted on a portfolio basis when the

cost of the hedged securities is covered with offsetting

liabilities denominated in the same foreign currency as the

hedged securities .

Inter- and Intra-company Derivative Transactions

For inter- and intra-company derivative transactions for

hedging purposes (‘internal derivatives’), including currency

and interest rate swaps, the Bank currently charges gains and

losses on internal derivatives to operations or defers them

within accumulated other comprehensive income as a com-

ponent of equity without elimination in accordance with the

JiCPA industry Audit Committee Reports No . 24 and No . 25 .

these Reports permit a bank to retain the gains and losses

on internal derivatives in its financial statements without elimi-

nation if the bank establishes and follows strict hedging

criteria by entering into mirror-image offsetting transactions

with external third parties within three business days after the

designation of internal derivatives as hedging instruments .

g. Tangible Fixed Assets and Intangible Fixed Assets—

tangible fixed assets and intangible fixed assets are stated

at cost .

Depreciation of tangible fixed assets of the Group is

computed primarily by the declining-balance method at

rates based on the estimated useful lives of the assets,

while the straight-line method is applied to buildings of the

Bank . the ranges of useful lives are principally from 15 to

50 years for buildings and from 5 to 15 years for other

tangible fixed assets .

Depreciation of intangible fixed assets of the Group is com-

puted by the straight-line method over the estimated useful

lives of the assets . Costs of software developed or obtained

for internal use are depreciated over the estimated useful lives

of the software (principally 5 years) .

lease assets under finance lease transactions, in which

substantial ownership is not deemed to be transferred, are

depreciated by the straight-line method over the lease term .

the salvage value is zero or the guaranteed amounts if

specified in the lease contracts .

h. Long-lived Assets—the Group reviews its long-lived

assets for impairment whenever events or changes in circum-

stances indicate that the carrying amount of an asset or asset

group may not be recoverable . An impairment loss would be

recognized if the carrying amount of an asset or asset group

exceeds the sum of the undiscounted future cash flows

expected to result from the continued use and eventual dis-

position of the asset or asset group . the impairment loss

would be measured as the amount by which the carrying

amount of the asset exceeds its recoverable amount, which is

the higher of the discounted cash flows from the continued

use and eventual disposition of the asset or asset group or

the net selling price at disposition .

i. Deferred Charges—Debenture issuance expenses are

deferred and amortized by the straight-line method over the

terms of the debentures .

38

Financial and

Co

rpo

rate Data

j. Write-off of Loans and Allowance for Loan Losses—

loans to borrowers who are assessed as ‘Bankrupt’ (in the

process of legal proceedings for bankruptcy, special liquida-

tion, etc .) or ‘De facto bankrupt’ (in serious financial difficulties

and are not deemed to be capable of restructuring) under the

Bank’s self-assessment guidelines are written off to the

amounts expected to be collected through the disposal of

collateral or execution of guarantees, etc . the amounts

deemed to be uncollectible and written off were ¥40,001

million ($409,221 thousand) and ¥42,194 million at

September 30 and March 31, 2013, respectively .

For loans to borrowers who are assessed as ‘in danger of

bankruptcy’ (not yet bankrupt but are in financial difficulty and

are highly likely to go bankrupt in the foreseeable future), a

specific allowance is provided for the loan losses at an

amount considered to be necessary based on an overall sol-

vency assessment of the borrowers and expected collectible

amounts through the disposal of collateral or execution of

guarantees, etc . For loans whose future cash flows of princi-

pal and interest are reasonably estimated, the difference

between the discounted cash flows and the carrying value is

accounted for as an allowance for loan losses (the ‘DCF

method’) .

For other loans, the Bank provides a general allowance by

applying the estimated loan-loss ratio determined based on

the historical loan-loss data over a defined period in the past .

However, for borrowers with large credit exposure, catego-

rized as ‘Need attention’ under the internal credit rating

system, the loan loss amount estimated by the DCF method

is reflected as an addition to the allowance for loan losses cal-

culated based on the estimated loan loss ratio, if necessary .

An allowance for loans to restructuring countries is provided

for the amount of expected losses based on an assessment

of political and economic conditions in their respective

countries .

All loans are monitored in line with an internal rating rule

and an internal self-assessment standard on an ongoing

basis . Operating divisions or branches review internal credit

ratings of borrowers (‘borrower ratings’) which are defined in

line with ‘borrower categories’ and those ratings are then

approved by the divisions in charge of credit . the division in

charge of asset assessment, which is independent of operat-

ing divisions or branches and the divisions in charge of credit,

reviews the appropriateness of internal credit ratings on a

sample basis .

Based upon the borrower categories determined by the

aforementioned process as of the balance sheet date, oper-

ating divisions and branches initially compute the amounts

of write-offs and allowance, and the division in charge of

asset assessment verifies the amounts and determines the

final amounts .

with regard to the allowance for loan losses of consolidated

subsidiaries, a general allowance is calculated for the amount

of estimated loan losses using historical loan loss data over

a defined period in the past . For loans to ‘in danger of bank-

ruptcy’ borrowers and ‘De facto bankrupt’ and ‘Bankrupt’

borrowers, a specific allowance is provided or the uncollect-

ible amount is written off based on an assessment of

collectibility of individual loans .

the independent internal audit divisions audit the appropri-

ateness of the write-off and allowances based on the

self-assessment .

k. Allowance for Investment Losses—An allowance for

investment losses is provided for estimated losses on certain

investments based on an assessment of the issuers’ financial

condition and uncertainty about future recoverability of the

decline in realizable values of the investments .

l. Provision for Retirement Benefits—the Group accounts

for the provision for retirement benefits on an accrual basis for

the six-month period based on the expected amounts at the

fiscal year-end of the projected benefit obligations and plan

assets . Prior service cost is amortized using the straight-line

method over a period (9 years) within the employees’ average

remaining service period at incurrence . Net actuarial gain and

loss is amortized using the straight-line method over a period

(5 years) within the employees’ average remaining service

period commencing from the next fiscal year after incurrence .

m. Asset Retirement Obligations—An asset retirement

obligation is defined as a legal obligation imposed either by

law or contract that results from the acquisition, construction,

development and the normal operation of a tangible fixed

asset and is associated with the retirement of such a tangible

fixed asset . the asset retirement obligation is recognized as

the sum of the discounted cash flows required for the future

asset retirement and is recorded in the period in which the

obligation is incurred if a reasonable estimate can be made . if

a reasonable estimate of the asset retirement obligation can-

not be made in the period the asset retirement obligation is

incurred, the liability should be recognized when a reasonable

estimate of asset retirement obligation can be made . upon

initial recognition of a liability for an asset retirement obligation,

an asset retirement cost is capitalized by increasing the carry-

ing amount of the related fixed asset by the amount of the

liability . the asset retirement cost is subsequently allocated to

expense through depreciation over the remaining useful life of

the asset . Over time, the liability is accreted to its present

value each period . Any subsequent revisions to the timing or

the amount of the original estimate of undiscounted cash

flows are reflected as an increase or a decrease in the carry-

ing amount of the liability and the capitalized amount of the

related asset retirement cost .


Co

nsolid

ated S


tatements

39

Financial and

Co

rpo

rate Data

n. Provision for Directors’ Retirement Benefits—the

provision for directors’ retirement benefits is provided at the

amount that would be required if all directors and corporate

auditors retired at the balance sheet date .

o. Provision for Credit Losses on Off-balance-sheet

Instruments—Provision for credit losses on off-balance-sheet

instruments is provided for credit losses on commitments to

extend loans and other off-balance-sheet financial instruments

based on an estimated loss ratio or individually estimated

loss amount determined by the same methodology used in

determining the amount of allowance for loan losses .

p. Provision for Contingent Loss—Provision for contingent

losses is maintained for possible losses from contingencies,

which are not covered by other reserves .

q. Reserve under Special Laws—Reserve under special

laws is reserve for financial products transaction liabilities

which is provided for compensation for losses from securities

brokering in consolidated domestic subsidiaries in accor-

dance with the Financial instruments and Exchange Act,

Article 46-5 and the Cabinet Office Ordinance on Financial

instruments Business, Article 175 .

r. Lease Transactions—All finance lease transactions are

capitalized to recognize lease assets and lease obligations on

the balance sheet .

All other leases are accounted for as operating leases .

s. Income Taxes—Deferred income taxes are recorded to

reflect expected future consequences of temporary differ-

ences between assets and liabilities recognized for financial

reporting purposes and such amounts recognized for tax

purposes . these deferred taxes are measured by applying

currently enacted tax rates to the temporary differences . the

Bank assesses the realizability of deferred tax assets based

on consideration of the available evidence, including future

taxable income, future reversals of existing temporary differ-

ences, and tax planning strategies . the Bank reduces the

carrying amount of a deferred tax asset to the extent that it is

not probable that sufficient taxable income will be available to

allow the benefit of part or all of that deferred tax asset to be

realized . Such reduction may be reversed to the extent that it

becomes probable that sufficient taxable income will be

available and warrant the realization of tax benefits .

the Bank changed the estimation period of future taxable

income from 3 years to 5 years for the evaluation of deferred

tax assets during the six months ended September 30, 2013

in consideration of the fact that the Bank has earned taxable

income for several years and it is likely that stable taxable

income will be generated in future . Deferred tax assets have

been calculated in consideration of the uncertainty of such

estimations .

t. Foreign Currency Items—Assets and liabilities

denominated in foreign currencies held by the Bank are

translated into Japanese yen at the exchange rates prevailing

at the balance sheet date except for investments in equity

securities of unconsolidated subsidiaries or affiliated

companies, which are translated at historical rates .

Assets and liabilities denominated in foreign currencies

which are held by consolidated subsidiaries are translated into

Japanese yen at the exchange rates as of the consolidated

balance sheet date, while equity accounts are translated at

historical rates . Differences arising from such translations are

shown as ‘Foreign currency translation adjustment’ within

accumulated other comprehensive income as a separate

component of equity .

Revenue and expense accounts of consolidated foreign

subsidiaries are translated into Japanese yen at the average

exchange rate . Differences arising from such translation are

included in ‘Minority interests’ or ‘Foreign currency translation

adjustment’ as a separate component of equity in the balance

sheets .

u. Per Share Information—Basic net income (loss) per

share is computed by dividing net income (loss) attributable

to common stockholders by the weighted-average number

of shares of common stock outstanding for the period,

retroactively adjusted for stock splits or reverse stock splits .

Diluted net income per share reflects the potential dilution

that would occur if dilutive options and warrants were exer-

cised or the securities were converted into common stock,

also retroactively adjusted for stock splits or reverse stock

splits . Diluted net income per share of common stock

assumes full conversion of the preferred stock at the begin-

ning of the year (or at the time of issuance) with an applicable

adjustment for related dividends to preferred stock unless the

preferred stock has an anti-dilutive effect .

Net assets per share of common stock are computed by

dividing net assets attributable to common stockholders by

number of shares of common stock outstanding at the end of

the period .

Cash dividends per share presented in the accompanying

consolidated semiannual statement of income are dividends

applicable to the respective years including dividends to be

paid after the end of the period .

Co

nsolid

ated S


tatements

40

Financial and

Co

rpo

rate Data

v. Accounting Changes and Error Corrections—in

December 2009, the ASBJ issued ASBJ Statement No . 24,

‘Accounting Standard for Accounting Changes and Error

Corrections’ and ASBJ Guidance No . 24, ‘Guidance on

Accounting Standard for Accounting Changes and Error

Corrections .’ Accounting treatments under this standard and

guidance are as follows:

(1) Changes in Accounting Policies

when a new accounting policy is applied due to a revision

of accounting standards, the new policy is applied retro-

spectively unless the revised accounting standards include

specific provisions . when the revised accounting stan-

dards include specific provisions, a company shall comply

with the specific provisions .

(2) Changes in Presentation

when the presentation of financial statements is changed,

prior period financial statements are reclassified in

accordance with the new presentation .

(3) Changes in Accounting Estimates

A change in an accounting estimate is accounted for in

the period of the change if the change affects that period

only and is accounted for prospectively if the change

affects both the period of the change and future periods .

(4) Corrections of Prior Period Errors

when an error in prior period financial statements is

discovered, those financial statements are restated .

4. Trading Assets and Liabilitiestrading assets and liabilities as of September 30 and March 31, 2013, consisted of the following:

Millions of YenThousands of U.S. Dollars

Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

trading assets:

trading account securities . . . . . . . . . . . . . . . . . . . . . . . ¥ 498 ¥ 560 $ 5,101

Securities related to trading transactions . . . . . . . . . . . . 12,088 — 123,669

Derivatives of securities related to trading transactions . . 64 35 663

trading-related financial derivatives . . . . . . . . . . . . . . . . 326,169 380,849 3,336,771

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥338,821 ¥381,445 $3,466,204

trading liabilities:

Derivatives of securities related to trading transactions . . ¥ 66 ¥ 58 $ 677

trading-related financial derivatives . . . . . . . . . . . . . . . . 333,202 407,259 3,408,723

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥333,268 ¥407,317 $3,409,400

3. Cash and Cash EquivalentsCash and cash equivalents as of September 30, 2013 and 2012, consisted of the following:


2013 2012 2013

Cash on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 13,338 ¥ 12,331 $ 136,457

Due from the Bank of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . 410,969 328,663 4,204,293

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥424,308 ¥340,964 $4,340,750

the ‘Other, net’ in ‘Cash flows from operating activities’ includes the net increase of the borrowed securities related to trading

transactions amounting to ¥5,324 million ($54,743 thousand) and ¥57,237 million for the six-month periods ended September 30,

2013 and 2012, respectively .


Co

nsolid

ated S


tatements

41

Financial and

Co

rpo

rate Data

No held-to-maturity bond was held as of September 30 and March 31, 2013 .

the costs and carrying amounts of available-for-sale securities with fair value as of September 30 and March 31, 2013, were as follows:

Millions of Yen Thousands of U.S. Dollars

Carrying amount Cost Difference


September 30, 2013

Carrying amount exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . ¥ 1,632 ¥ 935 ¥ 696 $ 16,700 $ 9,571 $ 7,129

Japanese national government bonds . . . . . 192,867 189,980 2,886 1,973,067 1,943,539 29,528

Japanese local government bonds . . . . . . . . 10,156 10,036 119 103,900 102,676 1,224

Japanese corporate bonds . . . . . . . . . . . . . 25,062 24,554 508 256,394 251,195 5,199

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 34,392 33,538 853 351,839 343,108 8,731

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,148 80,110 9,037 912,003 819,544 92,459

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353,259 339,156 14,102 3,613,903 3,469,633 144,270

Carrying amount not exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . — — — — — —

Japanese national government bonds . . . . . 178,666 179,597 (930) 1,827,795 1,837,313 (9,517)

Japanese local government bonds . . . . . . . . 5,585 5,614 (29) 57,137 57,441 (305)

Japanese corporate bonds . . . . . . . . . . . . . 43,233 43,978 (745) 442,286 449,912 (7,626)

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 292,302 301,986 (9,683) 2,990,307 3,089,373 (99,066)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,894 176,293 (3,398) 1,768,744 1,803,513 (34,769)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692,682 707,470 (14,787) 7,086,269 7,237,552 (151,283)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,045,941 ¥1,046,627 ¥ (685) $10,700,172 $10,707,185 $ (7,013)

5. SecuritiesCertain amounts shown in the following tables include certain beneficiary interests in trust classified as ‘Monetary claims bought’ in

addition to ‘Securities’ stated in the consolidated semiannual balance sheets .

‘Securities’ stated in the consolidated semiannual balance sheets as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Japanese national government bonds . . . . . . . . . . . . . . . . . . ¥ 371,534 ¥ 465,014 $ 3,800,862Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . 15,741 11,331 161,037Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,295 64,168 698,680Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,480 26,992 270,901Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326,694 465,798 3,342,146Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304,541 272,474 3,115,518

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,113,288 ¥1,305,779 $11,389,144

As of September 30 and March 31, 2013, securities included equity investments in unconsolidated subsidiaries and affiliated

companies that amounted to ¥2,520 million ($25,786 thousand) and ¥2,571 million, respectively .

As of September 30 and March 31, 2013, the Group extended guarantees of ¥2,620 million ($26,806 thousand) and ¥2,630 million,

respectively, to certain Japanese corporate bonds issued in private placements .

Co

nsolid

ated S


tatements

42

Financial and

Co

rpo

rate Data

the Group has adopted its impairment criteria based on

the severity of decline of securities by ‘borrower category’

of the issuer of securities in the determination of significant

declines . A significant decline is regarded as an other-than-

temporary decline unless the significant decline is reasonably

recoverable . impairment losses are recognized for other-than-

temporary declines .

For the six-month period ended September 30 and the

year ended March 31, 2013, the Group wrote off marketable

available-for-sale securities in the amounts of ¥20 million

($208 thousand) and ¥2,223 million, respectively, as other-

than-temporary declines . the breakdown of write-offs for the

six-month period ended September 30, 2013, was as follows:

¥0 million ($0 thousand) for monetary claims bought, ¥3

million ($39 thousand) for corporate bonds, and ¥16 million

($168 thousand) for foreign bonds . the breakdown of

write-offs for the year ended March 31, 2013 was as follows:

¥1,636 million for monetary claims bought, ¥163 million for

stocks, ¥185 million for corporate bonds, and ¥238 million for

foreign bonds .

if fair value declines more than 50% from the acquisition

cost or amortized cost, the Group generally deems the

decline to be significant and other-than-temporary . However,

based on the borrower category of the issuer of securities, the

following impairment criteria determines whether or not the

fair value decline is significant under the internal standards for

write-offs and reserves .

‘in danger of bankruptcy,’ ‘De facto bankrupt’ and

‘Bankrupt’ … if fair value declines from cost .

‘Need attention’ … if fair value declines more than 30%

from cost .

‘Normal’ … if fair value declines more than 50% from cost .

For debt securities categorized as ‘Normal,’ the fair value

decline is deemed significant if fair value declines more than

30% from cost .

For securities, other than debt securities, whose fair value

remains below a certain level, the fair value decline is deemed

significant even if it does not meet the above criteria .

‘Bankrupt’ borrower means an issuer of securities under

legal proceedings such as bankruptcy or liquidation . ‘De facto

bankrupt’ borrower means an issuer of securities in a similar

condition as ‘Bankrupt’ borrower . ‘in danger of bankruptcy’

borrower means an issuer of securities that is not currently

bankrupt but is highly likely to become bankrupt . ‘Need

attention’ borrower means an issuer of securities that needs

to be monitored carefully . ‘Normal’ borrower means an issuer

of securities categorized as other than ‘Bankrupt,’ ‘De facto

bankrupt,’ ‘in danger of bankruptcy’ or ‘Need attention .’

in addition, for the year ended March 31, 2013, valuation

losses on the marketable available-for-sale securities which

were planned to be sold off were charged to losses in the

amount of ¥11 million . No such valuation losses were charged

to losses for the six-month period ended September 30, 2013 .

Of securities received under unsecured lending agree-

ments, lending agreements with cash collateral or resale

agreements, etc ., and securities received as collateral for

derivative transactions, which permit borrowers to sell or

repledge such securities received, ¥5,308 million ($54,305

thousand) and ¥5,064 million were repledged under such

agreements and ¥4,521 million ($46,260 thousand) and

¥6,290 million remained undisposed, as of September 30

and March 31, 2013, respectively .




March 31, 2013

Carrying amount exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . ¥ 1,155 ¥ 644 ¥ 511

Japanese national government bonds . . . . . 409,892 403,902 5,989

Japanese local government bonds . . . . . . . . 9,626 9,433 192

Japanese corporate bonds . . . . . . . . . . . . . 29,087 28,492 595

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 233,344 231,833 1,510

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,121 193,604 13,517

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890,228 867,911 22,316

Carrying amount not exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . 288 291 (3)

Japanese national government bonds . . . . . 55,121 55,146 (24)

Japanese local government bonds . . . . . . . . 1,704 1,709 (5)

Japanese corporate bonds . . . . . . . . . . . . . 35,080 35,729 (648)

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 232,453 234,701 (2,248)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,588 11,449 (860)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335,238 339,028 (3,789)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,225,466 ¥1,206,939 ¥18,527


Co

nsolid

ated S


tatements

43

Financial and

Co

rpo

rate Data

the above amounts are stated after write-offs of uncol-

lectible amounts but before deduction of the allowance for

loan losses .

‘loans to bankrupt borrowers’ are loans to borrowers who

are legally bankrupt and are placed on non-accrual status .

‘Past due loans’ are loans on which accrued interest

income is not recognized, excluding loans to bankrupt

borrowers and loans on which interest payments are deferred

in order to support the borrowers’ recovery from financial

difficulties . ‘Past due loans’ include loans to borrowers who

are assessed as ‘in danger of bankruptcy’ and ‘De facto

bankrupt’ under the self-assessment guidelines .

‘loans overdue for three months or more’ are accruing

loans for which principal or interest remains unpaid for at

least three months, excluding loans to bankrupt borrowers

and past due loans .

‘Restructured loans’ are loans in which lending conditions

have been relaxed, such as by reducing the interest rate

or by forbearing interest payments or principal repayments

to support the borrowers’ recovery, excluding loans to

bankrupt borrowers, past due loans and loans overdue for

three months or more .

Overdraft contracts and contracts for loan commitments

are those by which the Bank is bound to extend loans up

to a prearranged amount, upon the request of customers,

unless the customer is in breach of contract conditions . the

unutilized balance of these contracts amounted to ¥394,914

million ($4,040,042 thousand) and ¥407,739 million as of

September 30 and March 31, 2013, respectively . ¥355,477

million ($3,636,594 thousand) and ¥382,991 million of these

amounts relate to contracts with residual contractual terms

of one year or less as of September 30 and March 31, 2013,

respectively .

Bills discounted are accounted for as financing

transactions in accordance with the JiCPA industry Audit

Committee Report No . 24, although the Bank has the right

to sell or pledge them without restriction . the face values

of such bills discounted held as of September 30 and

March 31, 2013 were ¥499 million ($5,114 thousand) and

¥1,242 million, respectively .

6. Money Held in Trustthe carrying amounts and related valuation gains recognized in earnings for money held in trust classified as for investment

purposes as of September 30 and March 31, 2013, were as follows:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Carrying amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥7,193 ¥7,531 $73,590

unrealized gains recognized in earnings . . . . . . . . . . . . . . . . . — — —

None of the money held in trust was categorized as held-to-maturity or available-for-sale as of September 30 and March 31, 2013 .

7. Loans and Bills Discountedloans and bills discounted as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 499 ¥ 1,242 $ 5,114

loans on notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,138 81,083 809,606

loans on deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,250,874 2,285,216 23,026,850

Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358,916 347,600 3,671,781

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,628 4,588 57,578

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,695,058 ¥2,719,732 $27,570,929

the following risk-monitored loans were included in loans and bills discounted as of September 30 and March 31, 2013:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

loans to bankrupt borrowers . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 24 ¥ 2,768 $ 248

Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,886 86,229 714,949

Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,767 20,000 202,223

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥89,677 ¥108,998 $917,420

Co

nsolid

ated S


tatements

44

Financial and

Co

rpo

rate Data

8. Foreign ExchangeForeign exchange as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Assets:Due from foreign banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥30,840 ¥26,670 $315,508

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥30,840 ¥26,670 $315,508

liabilities:Due to foreign banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 0 ¥ 0 $ 5

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 0 ¥ 0 $ 5

9. Tangible Fixed Assets and Intangible Fixed Assetstangible fixed assets as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥11,055 ¥11,308 $113,102land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,235 9,235 94,481lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 712 4,483Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912 958 9,332

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥21,641 ¥22,214 $221,398

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥24,348 ¥24,172 $249,093

intangible fixed assets as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,969 ¥3,087 $30,375lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4 25Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 72 744

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,044 ¥3,164 $31,144

10. Customers’ Liabilities for Acceptances and GuaranteesAll contingent liabilities arising from acceptances and guarantees are included in acceptances and guarantees . As a contra

account, customers’ liabilities for acceptances and guarantees are shown as assets representing the Bank’s right of indemnity

from customers .


11. Allowance for Loan Losses Allowance for loan losses as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥42,565 ¥35,986 $435,455Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,066 27,461 225,748

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥64,632 ¥63,448 $661,203

Co

nsolid

ated S


tatements

45

Financial and

Co

rpo

rate Data

12. Pledged Assets and Collateralized Debtsthe carrying amounts of assets pledged as collateral and collateralized debts as of September 30 and March 31, 2013, were as follows:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Assets pledged as collateral: trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 10,015 ¥ — $ 102,455 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454,800 600,400 4,652,693 loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . 132,200 132,122 1,352,434

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥597,016 ¥732,522 $6,107,582

Collateralized debts: Call money and bills sold . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 80,000 ¥ 80,000 $ 818,414 Payables under securities lending transactions . . . . . . . . . . 224,968 312,674 2,301,470 Borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,757 178,400 1,409,282

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥442,725 ¥571,074 $4,529,166

13. DepositsDeposits as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Current deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 29,846 ¥ 36,267 $ 305,332Ordinary deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,035 347,238 3,447,936Deposits at notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,446 4,624 45,488time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,360,875 2,297,664 24,152,179Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . 321,990 335,529 3,294,015Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,825 17,639 172,127

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,071,019 ¥3,038,963 $31,417,077

in addition, the following assets were pledged or deposited as margin money for future trading and collateral for transactions,

including exchange settlements and derivatives as of September 30 and March 31, 2013:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 100 ¥ 100 $ 1,024 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,501 96,312 721,239 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,775 9,406 100,000 Other assets

Cash collateral for financial instruments . . . . . . . . . . . . . . . . 2,487 4,130 25,447 Guarantee deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,032 4,576 41,248

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥86,895 ¥114,524 $888,958

Co

nsolid

ated S


tatements

14. Debenturesthe Bank converted its long-term credit bank charter to an ordinary commercial bank charter on April 1, 2006 . the Financial

Services Agency of Japan, however, allows the Bank to retain the ability to issue debentures without registration, which was one

of the benefits the Bank enjoyed as a long-term credit bank, for a period of ten years following the conversion to an ordinary

commercial bank .

Debentures as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

two-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . ¥115,300 ¥121,150 $1,179,540three-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . 46,000 23,450 470,588Five-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . 3,963 24,766 40,548

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥165,263 ¥169,366 $1,690,676

46

Financial and

Co

rpo

rate Data

15. Other Assets and LiabilitiesOther assets and liabilities as of September 30 and March 31, 2013, consisted of the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Other assets:Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 4,535 ¥ 5,657 $ 46,404Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,531 13,491 87,278Derivatives other than for trading—assets . . . . . . . . . . . . . . 13,328 13,633 136,354Financial stabilization fund . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Deferred debenture issuance expenses . . . . . . . . . . . . . . . . 9 11 97Cash collateral paid for financial instruments . . . . . . . . . . . . 2,487 4,130 25,447Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,952 8,978 101,818

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 38,845 ¥ 45,902 $ 397,398

Other liabilities:Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 20,047 ¥ 19,627 $ 205,086Derivatives other than for trading—liabilities . . . . . . . . . . . . . 8,447 15,871 86,417Borrowed securities related to trading transactions . . . . . . . 5,324 — 54,473Matured debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,035 6,488 61,748lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 242 1,434Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . 1,524 1,542 15,592Cash collateral received for financial instruments . . . . . . . . . 40,306 43,567 412,344Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,762 32,450 222,633

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥103,588 ¥119,790 $1,059,727


16. EquityCapital Stock and Capital Surplus

Authorized numbers of common shares, Class A Series 4 preferred shares and Class C Series 5 preferred shares were 3,772,000

thousand, 24,072 thousand and 433,333 thousand as of September 30 and March 31, 2013, respectively .

Changes in the number of issued shares of common stock, preferred stock and treasury stock of the six-month periods ended September 30, 2013 and 2012, consisted of the following:

Thousands

Number of shares

As of April 1, 2013 Increase Decrease As of September 30, 2013

issued—Common stock . . . . . . . 1,650,147 — — 1,650,147

issued—Preferred stock

Class A Series 4 . . . . . . . . . . . . 24,072 — — 24,072

Class C Series 5 . . . . . . . . . . . 214,579 — — 214,579

treasury stock

Common stock . . . . . . . . . . . . 483,753 — — 483,753

Co

nsolid

ated S


tatements

47

Financial and

Co

rpo

rate Data

the Bank entered into the ‘Agreement on the treatment of

Preferred Stock as Public Funds’ (dated September 27,

2012) with the Deposit insurance Corporation of Japan,

which included a mutual confirmation that the total amount

of public funds to be paid should be ¥227 .6 billion .

On October 2, 2012, the Bank repurchased a portion of

the Class C Series 5 preferred stock (44 million shares) and

made a ¥22 .7 billion upfront repayment of public funds out

of total public funds to be repaid amounting to ¥227 .6 billion .

the Bank retired the shares on the same day .

the Bank will pay a ¥20 .49 billion annual fixed super

preferred dividend from Other Capital Surplus, from

April 2013, as installment repayments, based on the

Comprehensive Recapitalization Plan . the Bank repaid

¥20 .49 billion on June 27, 2013 .

Thousands

Number of shares

As of April 1, 2012 Increase Decrease As of September 30, 2012

issued—Common stock . . . . . . . 1,650,147 — — 1,650,147

issued—Preferred stock

Class A Series 4 . . . . . . . . . . . . 24,072 — — 24,072

Class C Series 5 . . . . . . . . . . . 258,799 — — 258,799

treasury stock

Common stock . . . . . . . . . . . . 153,753 — — 153,753

Millions of Yen

Yen


U.S. Dollars

Total amounts Per share Total amounts Per share

September 30, 2013 (Record date: June 30, 2013) (Note 1)

Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 54 ¥ 2 .25 $ 554 $0 .02 Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . 359 1 .674 3,675 0 .02 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,499 3 .00 35,797 0 .03

(Record date: March 31, 2013) (Note 2)

Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 240 ¥10 .00 $ 2,463 $0 .10 Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1,596 7 .44 16,332 0 .08 Class C Series 5 preferred stock—super preferred dividends . . . . . 20,490 (Note 4) 209,616 (Note 4)

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,212 13 .90 165,861 0 .14

September 30, 2012 (Record date: March 31, 2012) (Note 3)

Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 240 ¥10 .00 Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1,925 7 .44 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,467 9 .00

Notes: 1 . Cash dividends applicable to the three-month period ended June 30, 2013 were approved at the Board of Directors’ meeting held on July 30, 2013 . 2 . year-end cash dividends applicable to the fiscal year ended March 31, 2013 were approved at the Board of Directors’ meeting held on May 24, 2013 . 3 . year-end cash dividends applicable to the fiscal year ended March 31, 2012 were approved at the Board of Directors’ meeting held on May 29, 2012 . 4 . Dividend per share is calculated by dividing total dividends of ¥20,490 million ($209,616 thousand) by 214,579 thousand shares of Class C Series 5

preferred stock as of the fiscal year end, which were paid from capital surplus . 5 . Apart from ‘Class C Series 5 preferred stock—super preferred dividends,’ the cash dividends were paid from retained earnings .

Cash dividends

Cash dividends paid for the six-month periods ended September 30, 2013 and 2012, were as follows:

Co

nsolid

ated S


tatements

As a result, as of September 30, 2013, the remaining

amount of public funds to be repaid was ¥184 .41 billion .

Capital stock consists of the Common stock, Class A

Series 4 preferred stock and Class C Series 5 preferred

stock . the Bank determined its comprehensive recapitaliza-

tion plan on September 27, 2012 and the change in capital

composition became effective on November 15, 2012 . the

change in capital composition made it impossible to

distinguish the sources of paid-in-capital by each capital

account, because a part of capital stock was transferred in

total to capital surplus and the capital stock amounts were

determined to be ¥100,000 million ($1,023,018 thousand) .

therefore, the separate amounts of capital stock by

common stock and preferred stocks are not disclosed .

48

Financial and

Co

rpo

rate Data

17. Other Ordinary IncomeOther ordinary income for the six-month periods ended September 30, 2013 and 2012, consisted of the following:


2013 2012 2013

Gains on sales of bonds and other securities . . . . . . . . . . . . ¥ 4,353 ¥ 8,175 $ 44,541 Gains on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 — 2,927 Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,228 5,505 104,638

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,868 ¥13,681 $152,106

* the ‘Other’ category primarily includes gains from investments in partnerships .

18. Other IncomeOther income for the six-month periods ended September 30, 2013 and 2012, consisted of the following:


2013 2012 2013

Gains on sales of stocks and other securities . . . . . . . . . . . . . ¥10,845 ¥ 69 $110,954 Gains on investments in money held in trust . . . . . . . . . . . . . . 259 97 2,655 Recoveries of written-off claims . . . . . . . . . . . . . . . . . . . . . . . 4,089 1,138 41,839 Reversal of allowance for loan losses . . . . . . . . . . . . . . . . . . . — 1,632 —Reversal of provision for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . — 170 —Gains on redemption of monetary claims bought . . . . . . . . . . 1,100 — 11,257 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,713 663 17,527

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥18,008 ¥3,773 $184,232

19. Other Ordinary ExpensesOther ordinary expenses for the six-month periods ended September 30, 2013 and 2012, consisted of the following:


2013 2012 2013

Amortization of debenture issuance costs . . . . . . . . . . . . . . . . ¥ 3 ¥ 9 $ 40 losses on foreign exchange transactions . . . . . . . . . . . . . . . . 8 1,073 82 losses on sales of bonds and other securities . . . . . . . . . . . . 6,708 89 68,634 losses on devaluation of bonds and other securities . . . . . . . 20 156 208 losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 211 —Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,997 1,555 20,435

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥8,738 ¥3,095 $89,399

* the ‘Other’ category primarily includes losses from investments in partnerships .

20. Other ExpensesOther expenses for the six-month periods ended September 30, 2013 and 2012, consisted of the following:


2013 2012 2013

Provision of allowance for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . ¥ 136 ¥ — $ 1,393Provision of allowance for loan losses . . . . . . . . . . . . . . . . . . . 7,736 — 79,148write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,176 1,052 12,038 losses on sales of stocks and other securities . . . . . . . . . . . . — 10 —losses on devaluation of stocks and other securities . . . . . . . — 452 — losses on disposal of noncurrent assets . . . . . . . . . . . . . . . . 7 137 76 Provision for financial products transaction liabilities . . . . . . . . 1 0 12 losses on devaluation of monetary claims bought . . . . . . . . . 0 80 0 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010 5,214 10,334

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥10,068 ¥6,948 $103,001


Co

nsolid

ated S


tatements

49

Financial and

Co

rpo

rate Data

21. Lease TransactionsFinance lease transactions

the Group leases certain fixed assets, such as system-related equipment and software .

Operating lease transactions

the minimum rental commitments under non-cancelable operating leases as of September 30 and March 31, 2013, were as follows:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥129 ¥101 $1,328 Due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 25 818

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥209 ¥127 $2,146

22. Financial Instruments and Related DisclosuresCarrying amounts, fair values and their differences of financial instruments as of September 30 and March 31, 2013 are shown

below . immaterial accounts on the consolidated balance sheets are not included in the table below . Some instruments, such as

unlisted stocks, whose fair value cannot be reliably determined, are not included in the table below (see Note 2) .


Sep. 30, 2013 Sep. 30, 2013

Carrying Amount

Fair Value Difference

Carrying Amount


Cash and due from banks . . . . . . . . . . . . . . . . ¥ 471,532 ¥ 471,532 ¥ — $ 4,823,862 $ 4,823,862 $ —

Call loans and bills bought . . . . . . . . . . . . . . . . 22,443 22,443 — 229,604 229,604 —

Receivables under securities borrowing transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 3,223 3,223 — 32,973 32,973 —

Monetary claims bought *1 . . . . . . . . . . . . . . . . 36,605 42,882 6,277 374,481 438,697 64,216

trading assets

trading securities . . . . . . . . . . . . . . . . . . . . . 12,587 12,587 — 128,770 128,770 —

Money held in trust . . . . . . . . . . . . . . . . . . . . . 7,193 7,567 373 73,590 77,414 3,824

Securities

Available-for-sale securities *2 . . . . . . . . . . . . 1,036,823 1,036,823 — 10,606,885 10,606,885 —

loans and bills discounted . . . . . . . . . . . . . . . 2,695,058 27,570,929

less allowance for loan losses *1 . . . . . . . . . (63,843) (653,132)

Net loans and bills discounted . . . . . . . . . . . . . 2,631,214 2,681,241 50,027 26,917,797 27,429,585 511,788

Assets total . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,221,623 ¥4,278,301 ¥56,678 $43,187,962 $43,767,790 $579,828

Deposits (excluding negotiable certificates of deposit) . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,749,029 ¥2,760,607 ¥11,578 $28,123,062 $28,241,513 $118,451

Negotiable certificates of deposit . . . . . . . . . . . 321,990 321,990 — 3,294,015 3,294,015 —

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 164,630 (632) 1,690,676 1,684,204 (6,472)

Call money and bills sold . . . . . . . . . . . . . . . . . 152,139 152,139 — 1,556,417 1,556,417 —

Payables under securities lending transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 224,968 224,968 — 2,301,470 2,301,470 —

Borrowed money . . . . . . . . . . . . . . . . . . . . . . . 200,385 201,331 946 2,049,980 2,059,660 9,680

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . .

Borrowed securities related to trading transactions . . . . . . . . . . . . . . . . . . . . . . . . 5,324 5,324 — 54,473 54,473 —

liabilities total . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,819,101 ¥3,830,993 ¥11,892 $39,070,093 $39,191,752 $121,659

Derivatives *3

For which hedge accounting is not applied . . ¥ 19,987 ¥ 19,987 ¥ — $ 204,477 $ 204,477 $ —

For which hedge accounting is applied . . . . (22,140) (22,140) — (226,506) (226,506) —

Derivatives total . . . . . . . . . . . . . . . . . . . . . . . . ¥ (2,153) ¥ (2,153) ¥ — $ (22,029) $ (22,029) $ —

Co

nsolid

ated S


tatements

Millions of Yen

Mar. 31, 2013

Carrying Amount


Cash and due from banks . . . . . . . . . . . . . . . . ¥ 404,479 ¥ 404,479 ¥ —

Call loans and bills bought . . . . . . . . . . . . . . . . 50,000 50,000 —

Monetary claims bought *1 . . . . . . . . . . . . . . . . 40,762 47,388 6,626

trading assets

trading securities . . . . . . . . . . . . . . . . . . . . . 560 560 —

Money held in trust . . . . . . . . . . . . . . . . . . . . . . 7,531 7,841 309

Securities

Available-for-sale securities *2 . . . . . . . . . . . . 1,215,657 1,215,657 —

loans and bills discounted . . . . . . . . . . . . . . . . 2,719,732

less allowance for loan losses *1 . . . . . . . . . (62,716)

Net loans and bills discounted . . . . . . . . . . . . . 2,657,015 2,711,056 54,040

Assets total . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,376,007 ¥4,436,984 ¥60,977

Deposits (excluding negotiable certificates of deposit) . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,703,434 ¥2,718,975 ¥15,540

Negotiable certificates of deposit . . . . . . . . . . . 335,529 335,529 —

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,366 168,820 (546)

Call money and bills sold . . . . . . . . . . . . . . . . . 169,125 169,125 —

Payables under securities lending transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 312,674 312,674 —

Borrowed money . . . . . . . . . . . . . . . . . . . . . . . 222,988 223,751 763

liabilities total . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,913,118 ¥3,928,876 ¥15,757

Derivatives *3

For which hedge accounting is not applied . . ¥ 11,813 ¥ 11,813 ¥ —

For which hedge accounting is applied . . . . . (40,484) (40,484) —

Derivatives total . . . . . . . . . . . . . . . . . . . . . . . . ¥ (28,670) ¥ (28,670) ¥ —


50

Financial and

Co

rpo

rate Data

Co

nsolid

ated S


tatements

*1 General allowance for loan losses and specific allowance for loan losses provided to ‘loans and bills discounted’ are separately presented in the above table . Allowance for loan losses provided to ‘Monetary claims bought’ is directly deducted from the carrying amounts due to immateriality .

*2 Carrying amounts, fair values and their differences of available-for-sale securities do not include those of certain investments in partnerships of which com-posing assets consist of monetary claims etc ., whose fair value is determinable . As for such investments in partnerships, the carrying amounts were ¥13,328 million ($136,357 thousand) and ¥18,347 million, and the fair value was ¥16,198 million ($165,713 thousand) and ¥21,016 million, which was our share of the fair value of composing assets such as monetary claims determined by the present value of estimated future cash flows or estimated collectable amount by collaterals or guarantees as of September 30 and March 31, 2013, respectively . the difference between the fair value and the carrying amounts was ¥2,869 million ($29,356 thousand) and ¥2,668 million, as of September 30 and March 31, 2013, respectively .

*3 Derivatives recorded in ‘trading assets,’ ‘trading liabilities,’ ‘Other assets’ and ‘Other liabilities’ are aggregated and shown herein in total . Assets and liabilities attributable to the derivative contracts are totally offset and the net liability position as a consequence of offsetting would be represented with brackets, if any .

51

Financial and

Co

rpo

rate Data

(Note 1) Valuation method of financial instruments

Assets

(1) Cash and due from banks, call loans and bills bought,

and receivables under securities borrowing transactions

Since these instruments are paid on demand, or cancellable

by short notice, or with short maturities, the fair value of

these instruments is approximately equal to the carrying

amount . therefore, the carrying amount of these instruments

is deemed as the fair value .

(2) Monetary claims bought

the fair value of trust beneficiary rights, recorded as mon-

etary claims bought, which meet the criteria of securities for

the purpose of accounting treatment, is measured using the

same method as described in, (5) Securities, below .

the fair value of monetary claims bought other than the

above is calculated using the same method as described in,

(6) loans and bills discounted, below .

(3) Trading assets

the fair value of trading securities, mainly bonds, is

determined using market prices quoted at exchanges or

market prices announced by certain industry associations or

provided by information vendors .

(4) Money held in trust

Securities held in trust on behalf of the Group are valued

using the same method as described in, (5) Securities, below .

Monetary claims held in trust on behalf of the Group are cal-

culated using the same method as described in, (6) loans

and bills discounted, below .

(5) Securities

Stocks are valued at market prices quoted at exchanges .

Bonds that have a market price announced by certain

industry associations or provided by information vendors are

valued at those prices, in principle . However, floating rate

Japanese Government Bonds (the ‘Floating Rate JGBs’) are

valued as shown below . Bonds that do not have a market

price announced by certain industry associations or pro-

vided by information vendors are calculated using the same

method as described in, (6) loans and bills discounted,

below, or valued at a price provided by the brokers or deal-

ers . investment trust funds are valued at a price provided by

the management company of each fund . investments in part-

nerships are valued in accordance with the above method or

using the same method as described in, (6) loans and bills

discounted, below, depending on the type of assets which

are held by the partnership .

the Floating Rate JGBs were stated at the value rea-

sonably estimated on the basis of internal calculations

in consideration of Practical issues task Force No . 25,

‘Practical Solution on Measurement of Fair value for Financial

Assets,’ issued on October 28, 2008 by the ASBJ . the value

reasonably estimated for the Floating Rate JGBs was calcu-

lated by discounting the estimated future cash flows at the

rate derived from yields of Japanese national government

bonds . the yields of Japanese national government bonds

and volatility are major variables in pricing .

(6) Loans and bills discounted

Fair value of loans and bills discounted is determined as the

present value of estimated future cash flows, discounted

by the market interest rates, less accrued interest . the

estimated future cash flows are calculated by adjusting con-

tractual payments of principal and interest with credit and

other risks, which are reflected mainly through PD and lGD .

PD is based on the internal credit ratings and lGD is based

on the situations of underlying assets and collateral . Some

loans and bills discounted are valued at prices provided by

vendor financial institutions, etc . Concerning compound

financial instruments to which bifurcation accounting is

applied, the contractual payments of principal and interest

for the calculations are those of the host contracts where

embedded derivatives are bifurcated under bifurcation

accounting .

As for loans to ‘Bankrupt’ borrowers, ‘De facto bankrupt’

borrowers and ‘in danger of bankruptcy’ borrowers, the

collectible amount through the disposal of collateral or the

execution of guarantees, or the present value of estimated

future cash flows, etc ., is deemed as the fair value .

As for loans with no maturity due to the feature that the

amount of loans are limited within the collateral amount, and

immaterial loans without concerns about collectability, the

carrying amount is deemed as the fair value .

Liabilities

(1) Deposits (excluding negotiable certificates of deposit)

Fair value of deposits on demand is deemed as the payment

amount payable if demanded on the consolidated balance

sheet date, i .e ., ‘carrying amount .’ Fair value of time deposits

is determined as the present value of contractual payments

of principal and interest less accrued interest . the discount

rate is the market interest rate, adjusted with average fund-

ing spreads of the Bank observed within a specified period

preceding the consolidated balance sheet date . Concerning

compound financial instruments to which bifurcation

accounting is applied, contractual payments of principal and

interest for the calculations are those of the host contracts

where embedded derivatives are bifurcated under bifurcation

accounting .

(2) Negotiable certificates of deposit

Since the contract period is short, the fair value is approxi-

mately equal to the carrying amount . therefore, the carrying

amount is deemed as the fair value .

Co

nsolid

ated S


tatements

52

Financial and

Co

rpo

rate Data

(3) Debentures

Debentures that have a market price announced by certain

industry associations or provided by information vendors are

valued at those prices . As for debentures that do not have

a market price announced by certain industry associations

or provided by information vendors, the fair value of those

with short maturities is approximately equal to the carrying

amount . therefore, the carrying amount is deemed as the fair

value . On the other hand, the fair value of debentures other

than those above is calculated using the same method as for

time deposits described in ‘(1) Deposits’ above .

(4) Call money and bills sold, and payables under

securities lending transactions

Since the contract period is short, the fair value is approxi-

mately equal to the carrying amount . therefore, the carrying

amount is deemed as the fair value .

(5) Borrowed money

As for borrowed money from the Bank of Japan, since the

contract period is short, the fair value is approximately equal

to the carrying amount . therefore, the carrying amount is

deemed as the fair value .

Fair value of other borrowed money is calculated using the

same method as for time deposits described in ‘(1) Deposits’

above . Concerning the compound financial instruments

to which bifurcation accounting is applied, the contractual

payments of principal and interest for the calculations are

those of the host contracts where embedded derivatives are

bifurcated under bifurcation accounting .

(6) Other liabilities

Fair value of borrowed securities related to trading transac-

tions is based on the market price announced by certain

industry associations or provided by information vendors .

Derivatives

the valuation method of derivatives is described in the foot-

notes to the respective tables in Note 23, ‘Derivatives .’

(Note 2) Financial instruments whose fair value cannot be reliably determined

the following instruments are not included in ‘Asset (5) Securities’ or ‘Derivatives’ in the above table showing fair value of financial

instruments .

Carrying amount Sep. 30, 2013


(1) unlisted stocks, etc .*1 *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥29,212 $298,845

(2) investments in partnerships *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,924 347,057

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥63,136 $645,902

Carrying amount Mar. 31, 2013

Millions of Yen

(1) unlisted stocks, etc .*1 *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥38,888

(2) investments in partnerships *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,886

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥71,774


Co

nsolid

ated S


tatements

*1 Fair value of unlisted stocks, etc ., is not disclosed because they do not have a market price and their fair value cannot be reliably determined .*2 Fair value of investments in partnerships, comprised of assets whose fair value cannot be reliably determined, such as unlisted stocks, is not disclosed .*3 No unlisted stocks were written off for the six-month period ended September 30, 2013 . the Group wrote off unlisted stocks, etc ., by ¥26 million for the year

ended March 31, 2013 .Note: Other than the above, the Bank conducts a total return swap transaction whose contract amount is ¥15,000 million ($153,453 thousand) and ¥15,000

million as of September 30 and March 31, 2013, respectively . this instrument, a form of derivative transaction, transfers all risks and returns of an unlisted stock owned by the Bank . the fair value of this transaction is not disclosed because the fair value cannot be reliably determined .

53

Financial and

Co

rpo

rate Data

23. Derivatives

a. Derivative transactions for which hedge accounting is not applied

the Group had the following derivative contracts, which were listed on exchanges, outstanding as of September 30 and March 31, 2013:


Contract or Notional Amount Fair Value

Valuation Gain/(Loss)



September 30, 2013

Bond contracts:

Futures sold . . . . . . . . . . . . . . . . . ¥ 3,429 ¥(14) ¥(14) $ 35,085 $(148) $(148)

Futures bought . . . . . . . . . . . . . . . 6,751 22 22 69,064 231 231

Futures options written . . . . . . . . . — — — — — —

Futures options purchased . . . . . . 69,402 5 (68) 710,000 55 (697)

Equity contracts:

index futures sold . . . . . . . . . . . . . 72 0 0 746 6 6

index futures bought . . . . . . . . . . . 1,236 (5) (5) 12,648 (57) (57)

index options written . . . . . . . . . . . 10,196 (39) 12 104,309 (404) 125

index options purchased . . . . . . . . 7,713 29 (9) 78,908 302 (100)

March 31, 2013

interest rate contracts::

Futures sold . . . . . . . . . . . . . . . . . ¥35,154 ¥ (1) ¥ (1)

Bond contracts:

Futures sold . . . . . . . . . . . . . . . . . 8,693 (33) (33)

Futures bought . . . . . . . . . . . . . . . 185 0 0

Futures options written . . . . . . . . . 8,000 (14) (5)

Futures options purchased . . . . . . 7,643 14 (11)

Equity contracts:

index futures sold . . . . . . . . . . . . . 310 0 0

index futures bought . . . . . . . . . . . 123 0 0

index options written . . . . . . . . . . . 3,681 (9) 18

index options purchased . . . . . . . . 1,250 18 3

Notes: 1 . the contracts or notional amounts of derivatives which are shown in the above table do not necessarily represent the amounts exchanged by the parties and do not measure the exposure of the Group to credit or market risk .

2 . Derivative transactions shown above are stated at fair value in the accompanying consolidated financial statements . 3 . Fair values of the above derivatives are based on quoted market prices, such as those from the tokyo Stock Exchange inc .

Co

nsolid

ated S


tatements

54

Financial and

Co

rpo

rate Data

the Group had the following derivative contracts, which were not listed on exchanges, outstanding as of September 30 and March 31, 2013:






September 30, 2013interest rate contracts: interest rate swaps: Receive fixed and pay floating . . . . ¥12,128,997 ¥ 298,844 ¥ 298,844 $124,081,820 $ 3,057,236 $ 3,057,236 Receive floating and pay fixed . . . . 11,785,236 (277,951) (277,951) 120,565,082 (2,843,496) (2,843,496) Receive floating and pay floating . . 535,949 934 934 5,482,858 9,564 9,564 Other contracts sold . . . . . . . . . . . . . 1,348,928 (8,092) (8,092) 13,799,777 (82,790) (82,790) Other contracts bought . . . . . . . . . . . 431,716 2,766 2,766 4,416,540 28,306 28,306 Foreign exchange contracts: Currency swaps . . . . . . . . . . . . . . . . 400,208 (156) (156) 4,094,201 (1,600) (1,600) Forward exchange contracts sold . . . 371,730 1,810 1,810 3,802,865 18,518 18,518 Forward exchange contracts bought 118,764 5,679 5,679 1,214,977 58,101 58,101 Options written . . . . . . . . . . . . . . . . . 119,760 (5,815) (140) 1,225,174 (59,498) (1,434) Options purchased . . . . . . . . . . . . . . 126,265 3,207 (1,566) 1,291,717 32,816 (16,021)Commodity derivatives: Commodity swaps: Receive fixed and pay floating . . . . 8,716 (77) (77) 89,168 (792) (792) Receive floating and pay fixed . . . . 8,660 131 131 88,603 1,350 1,350 Receive floating and pay floating . . 524 0 0 5,369 2 2 Options written . . . . . . . . . . . . . . . 11,849 (191) (191) 121,225 (1,957) (1,957) Options purchased . . . . . . . . . . . . 11,849 191 191 121,225 1,957 1,957 Credit derivatives: CDS sold . . . . . . . . . . . . . . . . . . . . . 132,805 1,229 1,229 1,358,619 12,579 12,579 CDS bought . . . . . . . . . . . . . . . . . . . 138,247 (1,401) (1,401) 1,414,297 (14,334) (14,334)internal transactions . . . . . . . . . . . . . . . interest rate swaps: Receive fixed and pay floating . . . . 12,200 89 89 124,808 911 911 Receive floating and pay fixed . . . . 280,200 (1,246) (1,246) 2,866,496 (12,754) (12,754) Currency swaps . . . . . . . . . . . . . . . . 350,388 436 436 3,584,535 4,466 4,466

March 31, 2013interest rate contracts: interest rate swaps: Receive fixed and pay floating . . . . ¥11,418,822 ¥ 351,960 ¥ 351,960 Receive floating and pay fixed . . . . 11,081,856 (323,954) (323,954) Receive floating and pay floating . . 513,660 725 725 Other contracts sold . . . . . . . . . . . . . 1,627,740 (31,707) (31,707) Other contracts bought . . . . . . . . . . . 842,224 19,144 19,144 Foreign exchange contracts: Currency swaps . . . . . . . . . . . . . . . . 394,933 (39) (39) Forward exchange contracts sold . . . 283,270 (7,059) (7,059) Forward exchange contracts bought 92,720 6,063 6,063 Options written . . . . . . . . . . . . . . . . . 189,852 (7,582) 700 Options purchased . . . . . . . . . . . . . . 194,765 6,340 (1,084)Commodity derivatives: Commodity swaps: Receive fixed and pay floating . . . . 4,989 (221) (221) Receive floating and pay fixed . . . . 4,966 246 246 Receive floating and pay floating . . 796 0 0 Options written . . . . . . . . . . . . . . . 5,582 (33) (33) Options purchased . . . . . . . . . . . . 5,582 33 33 Credit derivatives: CDS sold . . . . . . . . . . . . . . . . . . . . . 201,258 984 984 CDS bought . . . . . . . . . . . . . . . . . . . 191,543 (1,296) (1,296)internal transactions interest rate swaps: Receive fixed and pay floating . . . . 17,700 184 184 Receive floating and pay fixed . . . . 338,700 (2,003) (2,003) Currency swaps . . . . . . . . . . . . . . . . 326,793 537 537


2 . Derivative transactions shown above are stated at fair value in the accompanying consolidated financial statements . 3 . the calculation or quotation of the fair value of the above derivatives are based on the discounted present value method or option pricing models, etc . 4 . ‘Sold’ credit derivatives represent credit risk taking . ‘Bought’ credit derivatives represent credit risk transfer . 5 . Foreign exchange profit/loss generated from currency exposure with the final principal settlement of currency swaps, amounting to a loss of ¥400

million ($4,094 thousand) and a loss of ¥483 million as of September 30 and March 31, 2013, respectively, are excluded from ‘Fair value’ and ‘valuation Gain/(loss)’ shown above .

6 . Other contracts sold and bought of ‘interest rate contracts’ were mainly swaptions . 7 . CDS is the abbreviation for credit default swaps . 8 . Commodity derivatives are mainly related to oil and non-ferrous metal .


Co

nsolid

ated S


tatements

55

Financial and

Co

rpo

rate Data

b. Derivative transactions for which hedge accounting is applied

the Group had the following derivative contracts for which hedge accounting is applied as of September 30 and March 31, 2013:




September 30, 2013

interest rate contracts:

interest rate swaps:

Receive fixed and pay floating . . . . . . . . . . . . . . . . . . . . . . . . . . ¥268,000 ¥1,157 $2,741,688 $11,843

Foreign exchange contracts:

Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,450 (436) 3,800,000 (4,466)

March 31, 2013

interest rate contracts:

interest rate swaps:

Receive fixed and pay floating . . . . . . . . . . . . . . . . . . . . . . . . . . ¥321,000 ¥1,818

Foreign exchange contracts:

Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366,834 (537)

24. Per Share Informationthe reconciliation of the differences between basic and diluted net income per share (EPS) for the six-month periods ended

September 30, 2013 and 2012, was as follows:

Millions of YenThousands of

Shares Yen U.S. Dollars

Net IncomeWeighted-Average Number of Shares EPS

Six-month period ended September 30, 2013

Basic EPS—Net income available to common stockholders

(Net income less preferred dividends other than super

preferred dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,132 ¥1,166,394 ¥19 .83 $0 .20

Effect of dilutive securities—Preferred stocks . . . . . . . . . . . . . 826 406,465

Diluted EPS—Net income for computation . . . . . . . . . . . . . . . ¥23,959 ¥1,572,859 ¥15 .23 $0 .16

Six-month period ended September 30, 2012

Basic EPS—Net income available to common stockholders

(Net income less preferred dividends other than super

preferred dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥20,836 ¥1,496,394 ¥13 .92

Effect of dilutive securities—Preferred stocks . . . . . . . . . . . . . — 465,426

Diluted EPS—Net income for computation . . . . . . . . . . . . . . . ¥20,836 ¥1,961,820 ¥10 .62

Co

nsolid

ated S


tatements


2 . the calculation or quotation of the fair value of the above derivatives are based on the discounted present value method, etc . 3 . For the interest rate swaps shown above, deferred hedge accounting is applied in accordance with the JiCPA industry Audit Committee Report No . 24 . 4 . For the currency swaps shown above, deferred hedge accounting is applied in accordance with the JiCPA industry Audit Committee Report No . 25 . 5 . the main hedged items for interest rate swaps are interest bearing financial liabilities such as deposits and debentures . 6 . the main hedged items for currency swaps are foreign currency denominated financial assets or liabilities such as loans and securities . 7 . Foreign exchange profit/loss generated from currency exposure with the final principal settlement of currency swaps, amounting to a loss of ¥22,862

million ($233,882 thousand) and a loss of ¥41,766 million as of September 30 and March 31, 2013, respectively, are excluded from 'Fair value' shown above .

8 . All of the contracts shown above are internal transactions .

56

Financial and

Co

rpo

rate Data

25. Segment Information1. Segment information

Segment information for the six-month periods ended

September 30, 2013 and 2012 was as follows:

(1) Description of reportable segments

(a) Identification of operating segments

the Bank has classified its Group’s business operations into

business groups based upon the nature of the customers

served and products offered: Retail and Business Banking

Group (‘RBBG’), Corporate Banking Group (‘CBG’), Specialty

Finance Group (‘SFG’), and Financial Markets Group (‘FMG’) .

Financial information for these groups is regularly reported

to the Management Committee, which is comprised of

appointed executive officers and representative directors, and

is utilized for management decisions on the allocation of

resources, an evaluation of the performance of each business

group, and so on .

the Bank has designated these business groups as operat-

ing segments and reportable segments for the purpose of the

disclosures contained herein .

(b) Services provided by each reportable segment

RBBG offers financial services mainly to retail customers,

small and medium-sized entities (‘SMEs’) and financial institu-

tions . For retail customers, RBBG’s major services are the

sale of investment products, including deposits, debentures,

investment trusts and insurance, as well as lending and other

financial services . For SMEs and financial institutions, major

services offered by RBBG are loans and deposits, sales of

financial products and other financial services .

CBG offers financial services to large-cap corporate

customers as well as public sector customers . Major services

offered by CBG are loans and deposits, acquisition finance,

sale of financial products, financing through securitization,

privately placed bonds and M&A advisory .

SFG offers financial services that require specialized

expertise such as corporate restructuring finance, real estate

finance and asset-backed finance .

FMG engages in offering derivatives and foreign exchange

products to customers, trading derivatives and foreign

exchange products, as well as AlM operations .


Co

nsolid

ated S


tatements

Net assets per share of common stock as of September 30 and March 31, 2013, were calculated based on the following:


Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥502,471 ¥535,839 $5,140,368

Deductions from total equity:

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785 766 8,031

Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,819 152,819 1,563,366

Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 22,327 4,225

Net assets attributable to common stock at the end of the year . . . . . . . . ¥348,452 ¥359,927 $3,564,747

Number of shares of common stock at the end of the period used for the calculation of net assets per share of common stock

(shares in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,166,394 1,166,394

Net assets per share of common stock as of September 30 and March 31, 2013, were as follows:

Yen U.S. Dollars

Sep. 30, 2013 Mar. 31, 2013 Sep. 30, 2013

Net assets per share of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥298 .74 ¥308 .58 $3 .06

As described in Note 16, the Bank entered into the

‘Agreement on the treatment of Preferred Stock as Public

Funds’ (dated September 27, 2012) with the Deposit

insurance Corporation of Japan, which includes a mutual

confirmation that the total amount of public funds to be paid

should be ¥227 .6 billion . However, for the calculation of the

net assets per share, the net assets as of the balance sheet

date attributable to the common share holders are based on

the net assets less the amounts of the preferred stocks,

which are calculated by multiplying the per share paid-in

amount (¥1,000 per Class A Series 4 preferred stock and

¥600 per Class C Series 5 preferred stock) by the number of

shares issued . therefore, the total amount of public funds to

be repaid and those accumulated repayments are not

reflected in the calculation .

57

Financial and

Co

rpo

rate Data

Millions of Yen

RBBG CBG SFG FMG Total

Consolidated net revenue . . . . . . . . . . . . . . ¥ 9,770 ¥ 8,320 ¥ 18,103 ¥ 2,159 ¥ 38,354

General and administrative expenses . . . . . 6,859 4,583 6,051 1,790 19,285

Segment profit . . . . . . . . . . . . . . . . . . . . . . 2,910 3,737 12,051 368 19,068

Segment assets . . . . . . . . . . . . . . . . . . . . . 267,092 1,297,336 1,309,619 1,839,469 4,713,516

Segment liabilities . . . . . . . . . . . . . . . . . . . . 2,681,280 564,596 80,150 856,875 4,182,901

(3) Revenues, profit (loss), assets and liabilities by reportable segment

the six-month period ended September 30, 2013

Millions of Yen


Consolidated net revenue . . . . . . . . . . . . . . ¥ 8,334 ¥ 7,013 ¥ 15,377 ¥ 12,320 ¥ 43,046


Segment profit . . . . . . . . . . . . . . . . . . . . . . 1,934 2,520 9,003 10,555 24,013

Segment assets . . . . . . . . . . . . . . . . . . . . . 316,513 1,300,901 1,171,376 2,291,622 5,080,412

Segment liabilities . . . . . . . . . . . . . . . . . . . . 2,705,026 433,811 61,083 1,027,814 4,227,734

the six-month period ended September 30, 2012

Notes: 1 . Due to the nature of the banking business, the Bank uses ‘consolidated net revenue’ as a substitute for ‘sales’ as would be used by non-financial service companies . Consolidated net revenue represents the total of net interest income, net fees and commissions, net trading income and net other ordinary income . the Bank oversees its revenue by reportable segment using consolidated net revenue . the Bank offsets interest income and interest expense for management purposes, therefore, revenue in transactions between reportable segments is not disclosed .

2 . Depreciation expenses are included in the general and administrative expenses of each reportable segment but are not disclosed as a separate item, because in the calculation process of the segment profit (loss), a part of depreciation expenses is allocated to each reportable segment, aggregated with other general and administrative expenses . therefore, depreciation expenses by reportable segment are not managed separately . the amount of depreciation expense for this period is ¥1,908 million .



Consolidated net revenue . . . . . . . . . . . . . . $ 99,950 $ 85,123 $ 185,203 $ 22,093 $ 392,369


Segment profit . . . . . . . . . . . . . . . . . . . . . . 29,773 38,237 123,293 3,771 195,074

Segment assets . . . . . . . . . . . . . . . . . . . . . 2,732,399 13,271,980 13,397,637 18,818,097 48,220,113

Segment liabilities . . . . . . . . . . . . . . . . . . . . 27,429,974 5,775,918 819,949 8,765,985 42,791,826

Notes: 1 . Due to the nature of the banking business, the Bank uses ‘consolidated net revenue’ as a substitute for ‘sales’ as would be used by non-financial service companies . Consolidated net revenue represents the total of net interest income, net fees and commissions, net trading income and net other ordinary income . the Bank oversees its revenue by reportable segment using consolidated net revenue . the Bank offsets interest income and interest expense for management purposes, therefore, revenue in transactions between reportable segments is not disclosed .

2 . Depreciation expenses are included in the general and administrative expenses of each reportable segment but are not disclosed as a separate item, because in the calculation process of the segment profit (loss), a part of depreciation expenses is allocated to each reportable segment, aggregated with other general and administrative expenses . therefore, depreciation expenses by reportable segment are not managed separately . the amount of depreciation expense for this period is ¥1,665 million ($17,041 thousand) .

Co

nsolid

ated S


tatements

(2) Methods of measurement for the amounts of

revenues, profit (loss), assets and liabilities by

reportable segments

Revenues, profit (loss), assets and liabilities of reportable

segments are recognized and measured based on substan-

tially the same accounting policies as those described in

‘2 . Summary of Significant Accounting Policies .’

the Bank calculates its net interest income from funding

and investing across reportable segments based on i) the

internal transfer rates determined by the average rate of

funding by the currency and by contractual term, and ii) the

allocation ratio determined by the Bank based on the value of

compensation for funding activities .

Fixed assets are not allocated to reportable segments,

while the associated expenses are allocated to specific

reportable segments and included in the segments’

expenses .

58

Financial and

Co

rpo

rate Data


2013 2012 2013

total consolidated net revenue of reportable segments . . . . . . . . . . . . . . . . . . . . . ¥38,354 ¥43,046 $392,369 variances resulting from differences in the basis of revenue and expense recognition and measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341 (214) 3,493

Net revenue derived from the consolidated semiannual statement of income . . . . . ¥38,695 ¥42,832 $395,862

(4) Reconciliation between total segment amounts and the consolidated semiannual financial statements

(a) Reconciliation between total consolidated net revenue of reportable segments and the consolidated net revenue in the consolidated

semiannual financial statement of income for the six-month periods ended September 30, 2013 and 2012, were as follows:


2013 2012 2013

total segment profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥19,068 ¥24,013 $195,075 variances resulting from differences in the basis of revenue and expenses recognition and measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 (375) 3,852 Amortization of actuarial differences on retirement benefit plans, etc . . . . . . . . . . . . (1) (610) (16)Credit-related expenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,525) (1,653) (36,067)Gains on sales of stocks and other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,845 (393) 110,954 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 628 (990) 6,432 Net extraordinary income (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) (137) (88)

income before income taxes and minority interests in the consolidated semiannual statement of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥27,383 ¥19,851 $280,142

(b) Reconciliation between total segment profits and the consolidated semiannual statement of income for the six-month periods

ended September 30, 2013 and 2012, were as follows:

Note: Credit-related expenses, etc ., represent the total of write-offs of loans, provision of allowance for loan losses and losses on disposition of non- performing loans .


2013 2012 2013

total segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,713,516 ¥5,080,412 $48,220,113 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,632) (68,427) (661,203)Assets not allocated to reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,024 118,127 1,483,629

total assets on the consolidated semiannual balance sheet . . . . . . . . . . . . . . . . . . ¥4,793,908 ¥5,130,112 $49,042,539


2013 2012 2013

total segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,182,901 ¥4,227,734 $42,791,826 liabilities not allocated to reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,535 285,866 1,110,341

total liabilities on the consolidated semiannual balance sheet . . . . . . . . . . . . . . . . ¥4,291,436 ¥4,513,600 $43,902,167

(c) Reconciliation between total segment assets and total assets on the consolidated semiannual balance sheet as of

September 30, 2013 and 2012, were as follows:

(d) Reconciliation between total segment liabilities and total liabilities on the consolidated semiannual balance sheet as of

September 30, 2013 and 2012, were as follows:

Note: As for the year ended September 30, 2013, assets not allocated to reportable segments include foreign exchange of ¥30,840 million ($315,508 thousand), other assets of ¥25,507 millin ($260,947 thousand), fixed assets of ¥24,686 million ($252,543 thousand) and deferred tax assets of ¥50,640 million ($518,061 thousand) . As for the year ended September 30, 2012, assets not allocated to reportable segments include other assets of ¥18,962 million, fixed assets of ¥25,832 million and deferred tax assets of ¥49,957 million .

Note: As of September 30, 2013, liabilities not allocated to reportable segments include other liabilities of ¥93,531 million ($956,844 thousand) and provision for retirement benefits of ¥11,639 million ($119,070 thousand) . As of September 30, 2012, liabilities not allocated to reportable segments include other liabilities of ¥270,685 million and provision for retirement benefits of ¥11,303 million .


Co

nsolid

ated S


tatements

59

Financial and

Co

rpo

rate Data

2. Related information

For the six-month period ended September 30, 2012

Millions of Yen

Securities Derivatives, Lending investment etc. Others Total

Ordinary income from external customers . . . . . . . . . . . . . . . ¥28,220 ¥27,810 ¥4,457 ¥13,433 ¥73,921

Millions of Yen


Ordinary income from external customers . . . . . . . . . . . . . . . ¥29,672 ¥19,968 ¥4,305 ¥5,998 ¥59,944



Ordinary income from external customers . . . . . . . . . . . . . . . $288,702 $284,506 $45,597 $137,429 $756,234

Note: Ordinary income is presented instead of sales as would be used by non-financial service companies .

(2) Segment information by geographic region

(a) Ordinary income

the information by geographic region has been omitted as the transaction data on each customer regarding interest income, gains

on sales of securities and income related to derivative transactions, etc ., were not available to be segmented by customers’ domicile .

(b) Tangible fixed assets

the information by geographic region has been omitted as the amounts of tangible fixed assets located in Japan exceeded 90% of

the amounts of tangible fixed assets on the consolidated semiannual balance sheets as of September 30, 2013 and 2012 .

(3) Segment information by major customers

the information by major customers has been omitted as ordinary income from any particular customer was less than 10% of

ordinary income on the consolidated semiannual statements of income .

3. Segment information on impairment losses on fixed assets by reportable segment

Not applicable .

4. Segment information on amortization and unamortized portion of goodwill by reportable segment

Not applicable .

5. Segment information on profit on negative goodwill by reportable segment

Not applicable .

(1) Segment information by service

For the six-month period ended September 30, 2013

Co

nsolid

ated S


tatements

26. Subsequent EventsAppropriation of Retained Earnings

the following distribution of retained earnings to the stockholders of record as of September 30, 2013 was approved at the

Board of Directors’ meeting held on November 14, 2013:


Dividends for the three-month period ended September 30, 2013:Class A Series 4 preferred stock, ¥2 .25 ($0 .02) per share . . . . . . . . . . . . . . . . . . . . ¥ 54 $ 554Class C Series 5 preferred stock, ¥1 .674 ($0 .02) per share . . . . . . . . . . . . . . . . . . . 359 3,675Common stock, ¥3 .00 ($0 .03) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,499 35,797

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,912 $40,026

60

Financial and

Co

rpo

rate Data

Incom

e Analysis (C

onso

lidated

)

Income Analysis (Consolidated)

Fees and Commissions For the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Net fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,210 4,529 10,006 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,656 4,892 10,687 Deposits, debentures and loan operations . . . . . . . . . . . . . . . . . . . . 2,997 2,879 5,961 Foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 108 211 Securities-related operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,335 518 1,701 Agency services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,605 939 1,847 Safekeeping and safe deposit box services . . . . . . . . . . . . . . . . . . . — 0 3 Guarantee operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 82 163 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 362 680 Foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 65 129

Trading RevenuesFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Net trading revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,675 4,096 6,224 Trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,675 4,096 6,224 Gains on trading account securities transactions . . . . . . . . . . . . . . . . . 1,078 697 1,343 income from securities and derivatives related to trading transactions . 53 588 939 income from trading-related financial derivatives transactions . . . . . . . 3,543 2,810 3,941 Other trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — Expenses on trading securities and derivatives . . . . . . . . . . . . . . . . . . — — — Expenses on securities and derivatives related to trading transactions . — — — Expenses on trading-related financial derivatives transactions . . . . . . . — — — Other trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — —

Other Ordinary IncomeFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Net other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,129 10,586 22,275 Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,868 13,681 27,443 Gains on foreign exchange transactions . . . . . . . . . . . . . . . . . . . . . . . — — 539 Gains on sales of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,353 8,175 15,237 Gains on redemption of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Gains on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 — — Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,228 5,505 11,666 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,738 3,095 5,168 loss on foreign exchange transactions . . . . . . . . . . . . . . . . . . . . . . . . 8 1,073 — loss on sales of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,708 89 765 loss on redemption of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — loss on devaluation of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 156 238 Amortization of debenture and corporate bonds issurance expenses . 3 9 18 loss on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 211 673 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,997 1,555 3,472

Interest-Earning Assets and Interest-Bearing LiabilitiesFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen, %)

Average balance Interest income/expenses Return/rates

Sep. 2013 Sep. 2012 Mar. 2013 Sep. 2013 Sep. 2012 Mar. 2013 Sep. 2013 Sep. 2012 Mar. 2013

Interest-earning assets . . . . . 4,008,574 4,131,632 4,147,180 29,713 33,501 64,806 1.47 1.61 1.56 Due from banks . . . . . . . . . 52,084 42,481 42,452 38 45 87 0 .14 0 .21 0 .20 Call loans and bills bought . 49,329 78,205 76,573 31 46 90 0 .12 0 .11 0 .11 Receivables under securities borrowing transactions . . . 10,388 195,600 185,006 2 97 189 0 .05 0 .09 0 .10 Securities . . . . . . . . . . . . . . 1,277,493 1,294,389 1,285,999 7,284 7,831 14,482 1 .13 1 .20 1 .12 loans and bills discounted . 2,549,536 2,465,275 2,499,668 21,158 23,747 47,016 1 .65 1 .92 1 .88 Interest-bearing liabilities . . . 3,777,379 3,726,503 3,808,311 8,028 9,875 18,795 0.42 0.52 0.49 Deposits . . . . . . . . . . . . . . . 2,694,172 2,692,166 2,705,445 6,001 7,426 14,076 0 .44 0 .55 0 .52 Negotiable certificates of deposit . . . . . . . . . . . . . . . 268,103 182,610 217,581 159 114 269 0 .11 0 .12 0 .12 Debentures . . . . . . . . . . . . . 160,195 204,397 188,132 320 837 1,331 0 .39 0 .81 0 .70 Call money and bills sold . . . 144,549 104,461 123,496 141 86 224 0 .19 0 .16 0 .18 Payables under repurchase agreements . . . . . . . . . . . — — — — — — — — — Payables under securities lending transactions . . . . . 257,659 337,103 329,679 363 446 933 0 .28 0 .26 0 .28 Borrowed money . . . . . . . . 220,257 208,381 216,086 285 228 466 0 .25 0 .21 0 .21 Bonds payable . . . . . . . . . . — — — — — — — — —

Note: interest expenses are shown after deduction of amounts of assumed cost of funding money held in trust (¥4 million for the six-month period ended September 30, 2013, ¥6 million for the six-month period ended September 30, 2012, and ¥46 million for the year ended March 31, 2013) .

61

Financial and

Co

rpo

rate Data

No

n-Co

nsolid

ated B

usiness Results

Non-Consolidated Financial HighlightsFor the six-month periods ended September 30, 2013, 2012 and 2011, and the years ended March 31, 2013 and 2012

(Millions of yen)


Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . 71,203 57,703 61,760 113,514 130,243

Ordinary profit (loss) . . . . . . . . . . . . . . . . . . . . . 26,739 19,587 20,236 40,652 39,475

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . 23,659 20,597 22,606 40,516 45,140

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 419,781 419,781 100,000 419,781

Number of issued shares(in thousands) . . . . . . . Common stock . . . . . . . . . . . . . . . . . . . . . . . 1,650,147 1,650,147 1,650,147 1,650,147 1,650,147 Class A Series 4 preferred stock . . . . . . . . . . 24,072 24,072 24,072 24,072 24,072 Class C Series 5 preferred stock . . . . . . . . . . 214,579 258,799 258,799 214,579 258,799

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499,010 615,739 587,324 533,140 606,504

total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,786,661 5,133,594 5,058,950 5,017,190 5,101,003

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 184,509 267,582 169,366 223,144

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,078,146 2,955,460 2,961,903 3,049,604 2,937,390

loans and bills discounted . . . . . . . . . . . . . . . . 2,703,401 2,575,013 2,715,451 2,740,978 2,684,180

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,147,217 1,306,653 1,331,973 1,333,979 1,360,506

total equity per share (yen) . . . . . . . . . . . . . . . . 296 .44 291 .62 273 .02 306 .92 284 .00

Common stock (interim) dividends per share (yen) . . . . . . . . . 6 .00 — — 13 .90 9 .00 1st quarter end . . . . . . . . . . . . . . . . . . . . . (3 .00) (—) (—) (—) (—) 2nd quarter end . . . . . . . . . . . . . . . . . . . . (3 .00) (—) (—) (—) (—) 3rd quarter end . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (—) (—) year end . . . . . . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (13 .90) (9 .00)

Class A Series 4 preferred stock (interim) dividends per share (yen) . . . . . . . . . 4 .50 — — 10 .00 10 .00 1st quarter end . . . . . . . . . . . . . . . . . . . . . (2 .25) (—) (—) (—) (—) 2nd quarter end . . . . . . . . . . . . . . . . . . . . (2 .25) (—) (—) (—) (—) 3rd quarter end . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (—) (—) year end . . . . . . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (10 .00) (10 .00)

Class C Series 5 preferred stock . . . . . . . . . . . . (interim) dividends per share (yen) . . . . . . . . . 3 .348 — — 7 .44 7 .44 1st quarter end . . . . . . . . . . . . . . . . . . . . . (1 .674) (—) (—) (—) (—) 2nd quarter end . . . . . . . . . . . . . . . . . . . . (1 .674) (—) (—) (—) (—) 3rd quarter end . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (—) (—) year end . . . . . . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (7 .44) (7 .44)

Basic net income (loss) per share (yen) . . . . . . . 19 .57 13 .76 15 .12 28 .01 28 .74

Diluted net income per share (yen) . . . . . . . . . . . 15 .04 10 .49 11 .53 22 .30 23 .02

Dividend payout ratio (%) . . . . . . . . . . . . . . . . . . 30 .65 — — 49 .60 31 .31

Capital adequacy ratio (domestic standard) (%) . . . . . . . . . . . . . . . . . . 16 .02 19 .21 18 .24 15 .66 17 .96

Number of employees . . . . . . . . . . . . . . . . . . . . 1,512 1,484 1,495 1,466 1,466

Notes: 1 . Deposits include negotiable certificates of deposit (NCDs) . 2 . total equity per share, basic net income per share and diluted net income per share are calculated by applying Financial Accounting Standard No . 2,

‘Accounting Standard for Earnings per Share’ and Financial Accounting Standards implementation Guidance No . 4, ‘implementation Guidance for Accounting Standard for Earnings per Share .’

3 . Number of employees does not include executive officers, locally hired overseas staff or the Bank’s employees seconded to other firms . 4 . in addition to the existing preferred dividend of ¥7 .44 per share for ‘Dividends per share’ of Fy2012, the Bank paid a ¥20,490 million super preferred

dividend from Other Capital Surplus on the remaining Class C Series 5 preferred stock . Dividend per share of the super preferred dividend is calculated by dividing total dividends of ¥20,490 million by 214,579 thousand shares of

Class C Series 5 preferred stock as of March 31, 2013 .

Non-Consolidated Business Results

62

Financial and

Co

rpo

rate Data

(A)

(K)

(E)

(K)

(Millions of yen)

Sep. 30, 2013 Mar. 31, 2013

Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 100,000 Non-cumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . — — Newly issued stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — legal capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,313 87,313 Other capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,852 243,342 legal retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,686 12,686 Other retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177,777 176,080 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (99,333) (99,333) Paid-in amount on treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — unappropriated profits to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,912) (38,540) valuation loss on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . — — Subscription rights to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equal to goodwill derived from acquisitions . . . . . . . . . . . . . . . . . . . . — — intangible assets derived from mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equivalent to capital increased by securitization transactions . . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 497,384 481,550 Step-up preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Tier II Forty-five percent of the difference between fair value and book value in respect of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — General allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,856 18,633 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Perpetual subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Subordinated term liabilities and subordinated term preferred stock . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,856 18,633 Tier II capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (B) 18,856 18,633

Tier III Short-term subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Tier III capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (C) — —

Items deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 32,668 33,066

Regulatory capital (A) + (B) + (C) – (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E) 483,572 467,116

Risk-weighted Balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,632,558 2,614,964 assets Off-balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,955 161,187 Credit risk assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F) 2,784,514 2,776,152 Risk assets derived from market risk equivalents ((H)/8%) . . . . . . . . . (G) 110,826 91,257 Market risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H) 8,866 7,300 Risk assets derived from operational risk equivalents ((J)/8%) . . . . . . ( I ) 121,756 113,870 Operational risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J) 9,740 9,109 (F) + (G) + ( I ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K) 3,017,098 2,981,280

Capital adequacy ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.02% 15.66%

Tier I ratio (Domestic standard)) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.48% 16.15%

Required capital total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,683 119,251

Notes: 1 . the capital adequacy ratio is calculated using the formula stipulated in a ministerial notice based on Article 14-2 of the Banking Act (FSA Notice Number 19, issued in 2006) . FSA Notice Number 56, issued in 2012, is also applied to the calculation .

Aozora uses the domestic standard applicable to Japanese banks without overseas branches or banking subsidiaries . the capital adequacy ratios are based on the FSA guidelines established to implement Basel ii . 2 . the amount of non-cumulative perpetual preferred stock included in the capital is not disclosed, because the capital composition cannot be

separated by type of stocks . 3 . items deducted (D) include the amount held at other financial institutions for their capital-raising purposes . 4 . Methods used to calculate risk-weighted assets are as follows: credit risk assets use the standardized approach; market risk equivalents use the

internal models approach and the standardized approach; operational risk equivalents use the standardized approach . 5 . Amounts of required capital for each risk are as follows: (Millions of yen)

Sep. 30, 2013 Mar. 31, 2013

Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,380 111,046 Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,433 3,650 Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,870 4,554

No

n-Co

nsolid

ated C

apital A

deq

uacy Ratio

(Do

mestic S

tandard

)

Non-Consolidated Capital Adequacy Ratio (Domestic Standard)

63

Financial and

Co

rpo

rate Data

Thousands of Millions of Yen U.S. Dollars

Liabilities and Equity Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013

Liabilities: Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,078,146 ¥2,955,460 ¥3,049,604 $31,489,993 Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 184,509 169,366 1,690,676 Call money and bills sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,139 102,741 169,125 1,556,417 Payables under securities lending transactions . . . . . . . . . . . . . . . 224,968 341,835 312,674 2,301,470 trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333,268 362,653 407,317 3,409,400 Borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,757 243,300 218,400 1,992,402 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 1 0 5 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,376 283,820 116,579 1,006,414 Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,558 11,231 11,686 118,246 Provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . 335 468 540 3,436 Provision for credit losses on off-balance-sheet instruments . . . . . . 575 938 881 5,882 Provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 730 317 2,973 Acceptances and guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,968 30,162 27,555 286,123

total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,287,650 4,517,854 4,484,050 43,863,437

Equity: Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 419,781 100,000 1,023,018 Capital surplus legal capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,313 33,333 87,313 893,232 Other capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,852 241 243,342 2,279,824 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . legal retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,686 12,686 12,686 129,789 Other retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177,777 156,162 176,080 1,818,694 treasury stock—at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (99,333) (15,438) (99,333) (1,016,200) valuation difference on available-for-sale securities . . . . . . . . . . . . . (2,740) 7,765 12,249 (28,036) Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . 453 1,207 801 4,644

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499,010 615,739 533,140 5,104,965

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,786,661 ¥5,133,594 ¥5,017,190 $48,968,402

Note: the translation of Japanese yen amounts into u .S . dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥97 .75 to $1 .00, the approximate rate of exchange on September 30, 2013 .

Non-Consolidated Semiannual Balance Sheet (Unaudited)Aozora Bank, ltd .September 30, 2013


Assets Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 424,307 ¥ 340,964 ¥ 347,736 $ 4,340,746 Due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,179 29,790 40,505 318,972 Call loans and bills bought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,443 80,000 50,000 229,604 Receivables under securities borrowing transactions . . . . . . . . . . . . . 3,223 192,492 — 32,973 Monetary claims bought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,796 17,065 17,889 151,369 trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,322 510,621 380,884 3,461,103 Money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,726 2,884 2,919 27,892 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,147,217 1,306,653 1,333,979 11,736,242 loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,703,401 2,575,013 2,740,978 27,656,280 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,840 11,027 26,670 315,508 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,998 36,134 44,071 358,040 tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,572 22,072 22,145 220,692 intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,981 3,700 3,095 30,501 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,893 49,277 47,868 510,419 Customers’ liabilities for acceptances and guarantees . . . . . . . . . . . . 27,968 30,162 27,555 286,124 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,413) (67,982) (63,163) (658,964)Allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,799) (6,284) (5,944) (49,099)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,786,661 ¥5,133,594 ¥5,017,190 $48,968,402

No

n-Co

nsolid

ated S


tatements

Non-Consolidated Semiannual Financial Statements

64

Financial and

Co

rpo

rate Data

Non-Consolidated Semiannual Statement of Income (Unaudited)Aozora Bank, ltd .For the six-month period ended September 30, 2013



Income: interest income: interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . ¥20,875 ¥23,689 ¥46,801 $213,564 interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . 13,120 7,792 14,637 134,220 interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 33 73 377 Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,196 1,827 3,120 12,237 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,432 4,858 10,472 65,808 trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,596 3,399 4,881 36,796 Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,226 12,452 25,517 145,539 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,718 3,648 8,118 119,881

total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,203 57,703 113,622 728,422

Expenses: interest expenses: interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,161 7,541 14,347 63,038 interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 837 1,331 3,283 interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . 386 302 661 3,954 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,123 1,186 2,465 11,490 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . 528 387 985 5,403 trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — 0 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,049 3,418 5,943 92,577 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 17,749 18,454 37,076 181,585 Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,151 6,121 10,363 93,617

total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,471 38,251 73,172 454,947

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,732 19,451 40,449 273,475

Income taxes: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 255 1,321 6,987 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,390 (1,402) (1,388) 24,450

total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,072 (1,146) (66) 31,437

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,659 ¥20,597 ¥40,516 $242,037

Yen U.S. Dollars


Per share information: Basic net income per share of common stock . . . . . . . . . . . . . . . . ¥19 .57 ¥13 .76 ¥28 .01 $0 .20 Diluted net income per share of common stock . . . . . . . . . . . . . . . 15 .04 10 .49 22 .30 0 .15 Cash dividends applicable to the period: Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . 4 .50 — 10 .00 — Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . 3 .348 — 7 .44 — Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 .00 — 13 .90 — Super preferred dividend on Class C Series 5 preferred stock . . — — (Note 1) —Notes: 1 . Dividend per share is calculated by dividing total dividends of ¥20,490 million ($209,616 thousand) from Other Capital Surplus by 214,579 thousand

shares of Class C Series 5 preferred stock as of the fiscal year ended March 31, 2013 . 2 . the translation of Japanese yen amounts into u .S . dollar amounts is included solely for the convenience of readers outside Japan and has been

made at the rate of ¥97 .75 to $1 .00, the approximate rate of exchange on September 30, 2013 .

No

n-Co

nsolid

ated S


tatements

Non-Consolidated Semiannual Financial Statements

65

Financial and

Co

rpo

rate Data

Non-Consolidated Semiannual Statement of Changes in Equity (Unaudited)Aozora Bank, ltd .For the six-month period ended September 30, 2013


Sep. 30, 2013 Sep. 30, 2012 Mar. 31, 2013 Sep. 30, 2013

Capital stock Balance at the beginning of current period . . . . . . . . . . . . . . . . . ¥100,000 ¥419,781 ¥419,781 $1,023,018 transfer to legal capital surplus from capital stock . . . . . . . . . . . — — (53,980) — transfer to other capital surplus from capital stock . . . . . . . . . . . — — (265,801) —


Capital surplus legal capital surplus Balance at the beginning of current period . . . . . . . . . . . . . . . . . 87,313 33,333 33,333 893,232 transfer to legal capital surplus from capital stock . . . . . . . . . . . — — 53,980 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 87,313 33,333 87,313 893,232

Other capital surplus Balance at the beginning of current period . . . . . . . . . . . . . . . . . 243,342 241 241 2,489,441 Dividends from other capital surplus . . . . . . . . . . . . . . . . . . . . . (20,490) — — (209,617) Retirement of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (22,700) — transfer to other capital surplus from capital stock . . . . . . . . . . . — — 265,801 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 222,852 241 243,342 2,279,824

Retained earnings legal retained earnings Balance at the beginning of current period . . . . . . . . . . . . . . . . . 12,686 9,560 9,560 129,789 transfer from other retained earnings . . . . . . . . . . . . . . . . . . . . . — 3,126 3,126 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 12,686 12,686 12,686 129,789

Other retained earnings Balance at the beginning of current period . . . . . . . . . . . . . . . . . 176,080 154,324 154,324 1,801,339 Dividends from retained earnings and transfer to legal retained earnings . . . . . . . . . . . . . . . . . . . (21,962) (18,760) (18,760) (224,682) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,659 20,597 40,516 242,038


treasury stock—at cost Balance at the beginning of current period . . . . . . . . . . . . . . . . . (99,333) (15,438) (15,438) (1,016,200) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (106,594) — Retirement of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 22,700 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (99,333) (15,438) (99,333) (1,016,200)

valuation difference on available-for-sale securities Balance at the beginning of current period . . . . . . . . . . . . . . . . . 12,249 3,356 3,356 125,309 Net change of items during the period . . . . . . . . . . . . . . . . . . . . (14,989) 4,408 8,892 (153,345)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (2,740) 7,765 12,249 (28,036)

Deferred gains or losses on hedges Balance at the beginning of current period . . . . . . . . . . . . . . . . . 801 1,345 1,345 8,197 Net change of items during the period . . . . . . . . . . . . . . . . . . . . (347) (137) (544) (3,553)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 453 1,207 801 4,644

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥499,010 ¥615,739 ¥533,140 $5,104,965

Note: the translation of Japanese yen amounts into u .S . dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥97 .75 to $1 .00, the approximate rate of exchange on September 30, 2013 .

No

n-Co

nsolid

ated S


tatements

66

Financial and

Co

rpo

rate Data

Net Revenue, Business Profit For the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Net interest income . . . . . . . . . . 27,240 13,138 14,101 23,482 17,249 6,232 45,875 32,413 13,461 interest income . . . . . . . . . . . . 35,228 19,906 16,752 33,344 25,911 8,869 64,633 48,628 18,755 [1,430] [1,436] [2,750] interest expenses . . . . . . . . . . 7,988 6,767 2,650 9,862 8,661 2,636 18,758 16,215 5,293 [1,430] [1,436] [2,750]Net fees and communications . 5,904 5,492 412 4,470 4,011 458 9,486 8,734 752 Fees and commissions (income) . . . . . . . . . . . . . . . . 6,432 5,797 634 4,858 4,283 575 10,472 9,200 1,271 Fees and commissions (expenses) . . . . . . . . . . . . . . 528 305 222 387 271 116 985 465 519 Net trading revenues . . . . . . . . . 3,596 3,858 (261) 3,399 (2,324) 5,723 4,881 (1,869) 6,750 trading profits . . . . . . . . . . . . . 3,596 3,858 (261) 3,399 (2,324) 5,723 4,881 (1,869) 6,750 trading losses . . . . . . . . . . . . 0 0 — — — — — — — Net other ordinary income . . . . 5,176 8,028 (2,851) 9,033 3,403 5,629 19,573 8,336 11,237 Other ordinary income . . . . . . 14,226 10,575 3,651 12,452 4,618 7,833 25,517 11,551 13,965 Other ordinary expenses . . . . . 9,049 2,546 6,502 3,418 1,215 2,203 5,943 3,215 2,728 Net revenue . . . . . . . . . . . . . . . . 41,919 30,518 11,400 40,385 22,340 18,044 79,817 47,615 32,201 Net revenue ratio (%) . . . . . . . . 2.08 1.67 2.23 1.94 1.17 4.24 1.91 1.26 3.59 Business profit . . . . . . . . . . . . . 17,615 — — 22,541 — — 43,886 — —

Notes: 1 . Domestic operations include yen-denominated transactions by domestic offices, while international operations include foreign currency-denominated transactions by domestic offices and transactions by overseas offices . yen-denominated nonresident transactions and Japan offshore banking accounts are included under international operations .

2 . interest expenses are shown after deduction of amounts equivalent to interest expenses on money held in trust (¥4 million for the six-month period ended September 30, 2013, ¥6 million for the six-month period ended September 30, 2012 and ¥46 million for the year ended March 31, 2013)

3 . Figures in brackets [ ] indicate interest received/paid as a result of interdepartmental lending and borrowing activities between domestic and international operations .

4 . Net revenue ratio is calculated as follows: net revenue*

Net revenue ratio =

average balance of interest-bearing assets X 100

*As for the six-month periods ended on September 30, the numerator is annualized . 5 . Business profit is calculated by deducting the net provision to general allowance for loan losses and general and administrative expenses from

net revenue .

RatiosFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(%)

Sep. 2013 Sep. 2012 Mar. 2013

Ordinary profits to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 .18 0 .83 0 .87 Ordinary profits to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 .33 6 .39 7 .13 Net income to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 .05 0 .88 0 .86 Net income to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 .14 6 .72 7 .11

Notes: 1 . Return on assets, as calculated ordinary profits or net income* using ordinary profits or net income

= (average balance of total assets — customers’ liabilities for acceptances and guarantees)

X 100

2 . Return on equity, as calculated ordinary profits or net income* using ordinary profits or net income

= (equity, beginning of period + equity, end of period) ÷ 2

X 100

* As for the six-month periods ended on September 30, the numerator is annualized .

Yield on Interest-Earning Assets, Interest Rate on Interest-Bearing Liabilities, Net Yield/Interest RateFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(%)

Sep. 2013 Sep. 2012 Mar. 2013


yield on interest-earning assets . . 1 .74 1 .09 3 .28 1 .60 1 .36 2 .08 1 .55 1 .28 2 .09 interest rate on interest-bearing liabilities . . . . . . . . . . . . . . . . . . 1 .35 1 .33 0 .80 1 .47 1 .46 0 .96 1 .42 1 .42 0 .91 Net yield/interest rate . . . . . . . . . 0 .39 (0 .24) 2 .48 0 .13 (0 .09) 1 .12 0 .13 (0 .14) 1 .18

Incom

e Analysis (N

on-C

onso

lidated

)

Income Analysis (Non-Consolidated)

67

Financial and

Co

rpo

rate Data

Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013


Balance of interest- Average balance 4,018,119 3,631,160 1,017,873 4,145,772 3,789,967 847,747 4,160,946 3,774,481 895,799 earning assets [630,914] [491,942] [509,334] Interest income/expense 35,228 19,906 16,752 33,344 25,911 8,869 64,633 48,628 18,755 [1,430] [1,436] [2,750] Return/rates (%) 1.74% 1.09% 3.28% 1.60% 1.36% 2.08% 1.55% 1.28% 2.09%

Cash and due from Average balance 36,513 69 36,443 33,578 262 33,316 31,668 265 31,403 banks interest income/expense 36 0 36 33 0 33 73 0 73 Return/rates (%) 0 .20% 0 .03% 0 .20% 0 .20% 0 .01% 0 .20% 0 .23% 0 .02% 0 .23%

Call loans Average balance 49,329 48,825 504 78,205 78,114 90 76,573 76,410 162 interest income/expense 31 30 0 46 46 0 90 90 0 Return/rates (%) 0 .12% 0 .12% 0 .27% 0 .11% 0 .11% 0 .30% 0 .11% 0 .11% 0 .26%

Receivables under Average balance 10,388 10,388 — 195,600 195,600 — 185,006 185,006 — securities borrowing interest income/expense 2 2 — 97 97 — 189 189 — transactions Return/rates (%) 0 .05% 0 .05% — 0 .09% 0 .09% — 0 .10% 0 .10% —

Securities Average balance 1,309,649 846,009 463,639 1,331,563 859,709 471,853 1,319,243 840,833 478,409 interest income/expense 13,120 2,816 10,303 7,792 3,563 4,229 14,637 6,276 8,360 Return/rates (%) 1 .99% 0 .66% 4 .43% 1 .16% 0 .82% 1 .78% 1 .10% 0 .74% 1 .74%

loans and bills Average balance 2,565,047 2,079,937 485,110 2,475,196 2,144,815 330,380 2,514,710 2,144,527 370,183 discounted interest income/expense 20,844 14,469 6,374 23,643 19,056 4,586 46,710 36,435 10,275 Return/rates (%) 1 .62% 1 .38% 2 .62% 1 .90% 1 .77% 2 .76% 1 .85% 1 .69% 2 .77%

Balance of interest- Average balance 3,782,178 3,456,612 956,480 3,732,582 3,439,122 785,402 3,814,735 3,477,921 846,148 bearing liabilities [630,914] [491,942] [509,334] Interest income/expense 7,988 6,767 2,650 9,862 8,661 2,636 18,758 16,215 5,293 [1,430] [1,436] [2,750] Return/rates (%) 0.42% 0.39% 0.55% 0.52% 0.50% 0.66% 0.49% 0.46% 0.62%

Deposits Average balance 2,704,104 2,688,493 15,610 2,699,707 2,690,265 9,441 2,713,990 2,704,007 9,983 interest income/expense 6,002 5,979 23 7,426 7,415 11 14,077 14,045 32 Return/rates (%) 0 .44% 0 .44% 0 .29% 0 .54% 0 .54% 0 .23% 0 .51% 0 .51% 0 .32%

Negotiable certificates Average balance 268,103 268,103 — 182,610 182,610 — 217,581 217,581 — of deposit interest income/expense 159 159 — 114 114 — 269 269 — Return/rates (%) 0 .11% 0 .11% — 0 .12% 0 .12% — 0 .12% 0 .12% —

Debentures Average balance 160,195 160,195 — 204,397 204,397 — 188,132 188,132 — interest income/expense 320 320 — 837 837 — 1,331 1,331 — Return/rates (%) 0 .39% 0 .39% — 0 .81% 0 .81% — 0 .70% 0 .70% —

Call money Average balance 144,549 106,979 37,569 104,461 90,655 13,805 123,496 101,622 21,873 interest income/expense 141 63 77 86 54 31 224 121 102 Return/rates (%) 0 .19% 0 .11% 0 .41% 0 .16% 0 .12% 0 .45% 0 .18% 0 .11% 0 .47%

Payable under Average balance — — — — — — — — — repurchase interest income/expense — — — — — — — — — agreements Return/rates (%) — — — — — — — — —

Payable under Average balance 257,659 17,367 240,291 337,103 71,166 265,936 329,679 57,539 272,140 securities lending interest income/expense 363 8 355 446 37 408 933 61 872 transactions Return/rates (%) 0 .28% 0 .09% 0 .29% 0 .26% 0 .10% 0 .30% 0 .28% 0 .10% 0 .32%

Borrowed money Average balance 215,124 213,095 2,028 206,920 202,645 4,274 213,966 211,822 2,143 interest income/expense 245 240 4 216 203 12 437 424 12 Return/rates (%) 0 .22% 0 .22% 0 .41% 0 .20% 0 .20% 0 .59% 0 .20% 0 .20% 0 .59%

Corporate bonds Average balance — — — — — — — — — interest income/expense — — — — — — — — — Return/rates (%) — — — — — — — — —

Notes: 1 . interest-earning assets are shown after deduction of the average balance of non-interest-earning deposits . interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust and corresponding interest .

2 . Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and overseas operations and corresponding interest income/expenses .

3 . the average balance of foreign currency denominated transactions by domestic offices in international operations has been calculated using the daily current method .

Incom

e Analysis (N

on-C

onso

lidated

)

68

Financial and

Co

rpo

rate Data

Analysis of Interest Income and Interest Expenses (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013


Interest Income Volume-related increase (decrease) (1,026) (1,085) 1,779 (197) (609) 29 (624) (1,641) 1,491 Rate-related increase (decrease) 2,911 (4,919) 6,103 (1,216) (1,976) 612 (2,241) (4,643) 1,270 Net increase (decrease) 1,884 (6,004) 7,883 (1,413) (2,586) 641 (2,865) (6,285) 2,762

Cash and due volume-related increase (decrease) 2 (0) 3 (5) 0 (5) (11) 0 (11) from banks Rate-related increase (decrease) 0 0 (0) (1) 0 (1) 14 (0) 14 Net increase (decrease) 3 (0) 3 (6) 0 (6) 3 (0) 3

Call loans volume-related increase (decrease) (17) (17) 0 4 4 0 2 2 0 Rate-related increase (decrease) 2 1 (0) (0) (0) (0) (0) (0) (0) Net increase (decrease) (14) (15) 0 4 4 0 2 2 0

Receivables under volume-related increase (decrease) (91) (91) — 91 91 — 121 121 — securities borrowing Rate-related increase (decrease) (2) (2) — (7) (7) — (12) (12) — transactions Net increase (decrease) (94) (94) — 83 83 — 109 109 —

Securities volume-related increase (decrease) (128) (56) (73) 72 (270) 692 (22) (674) 1,554 Rate-related increase (decrease) 5,455 (690) 6,148 993 267 377 2,111 546 662 Net increase (decrease) 5,327 (747) 6,074 1,066 (3) 1,070 2,089 (127) 2,216

loans and bills volume-related increase (decrease) 858 (576) 2,148 (1,867) (1,100) (911) (2,551) (2,153) (361) discounted Rate-related increase (decrease) (3,657) (4,010) (360) (232) (573) 485 (1,584) (2,512) 892 Net increase (decrease) (2,799) (4,586) 1,787 (2,100) (1,673) (426) (4,135) (4,666) 530

Interest expenses Volume-related increase (decrease) 131 44 574 (295) (438) (30) (372) (887) 604 Rate-related increase (decrease) (2,005) (1,938) (560) (1,794) (1,925) (225) (3,621) (3,901) (468) Net increase (decrease) (1,874) (1,894) 13 (2,090) (2,364) (256) (3,994) (4,788) 136

Deposits volume-related increase (decrease) 12 (4) 7 (90) (58) (5) (136) (98) (12) Rate-related increase (decrease) (1,436) (1,431) 5 (1,609) (1,642) 5 (3,240) (3,277) 11 Net increase (decrease) (1,424) (1,436) 12 (1,699) (1,700) 0 (3,376) (3,375) (0)

Negotiable volume-related increase (decrease) 53 53 — (22) (22) — 17 17 — certificates Rate-related increase (decrease) (8) (8) — (11) (11) — (32) (32) — of deposit Net increase (decrease) 44 44 — (34) (34) — (15) (15) —

Debentures volume-related increase (decrease) (181) (181) — (310) (310) — (673) (673) — Rate-related increase (decrease) (335) (335) — (245) (245) — (571) (571) — Net increase (decrease) (516) (516) — (556) (556) — (1,244) (1,244) —

Call money volume-related increase (decrease) 33 9 54 (5) (4) 0 14 (0) 39 Rate-related increase (decrease) 21 (0) (8) 7 (3) 9 36 (6) 19 Net increase (decrease) 55 9 46 2 (7) 10 51 (7) 58

Payable under volume-related increase (decrease) — — — (8) — (8) (12) — (12) repurchase Rate-related increase (decrease) — — — — — — — — — agreements Net increase (decrease) — — — (8) — (8) (12) — (12)

Payable under volume-related increase (decrease) (105) (28) (39) 78 9 66 (27) (83) 147 securities lending Rate-related increase (decrease) 22 (1) (13) 105 (0) 107 300 (2) 211 transactions Net increase (decrease) (82) (29) (52) 183 8 174 272 (86) 358

Borrowed money volume-related increase (decrease) 8 10 (6) (26) (29) — (11) (8) (8) Rate-related increase (decrease) 19 26 (1) 45 36 12 50 55 0 Net increase (decrease) 28 37 (8) 19 6 12 38 46 (7)

Corporate bonds volume-related increase (decrease) — — — (93) (93) — (93) (93) — Rate-related increase (decrease) — — — — — — — — — Net increase (decrease) — — — (93) (93) — (93) (93) —

Note: Changes due to a combination of volume- and rate-related increases (decreases) have been included in rate-related increase (decrease) .

Incom

e Analysis (N

on-C

onso

lidated

)


69

Financial and

Co

rpo

rate Data

Fees and Commissions (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013


Net fees and commissions . . . . 5,904 5,492 412 4,470 4,011 458 9,486 8,734 752

Fees and Commissions income . . . . . . . . . . . . . . . . 6,432 5,797 634 4,858 4,283 575 10,472 9,200 1,271 Deposits, debentures and loan operations . . . . . . . . 2,827 2,406 420 2,776 2,322 454 5,763 4,786 976 Foreign exchange operations . . . . . . . . . . . . 109 94 14 109 92 16 213 177 35 Securities-related operations . . . . . . . . . . . . 1,038 1,022 15 465 465 — 1,468 1,468 — Agency services . . . . . . . . . 2,259 2,095 164 1,381 1,266 115 2,712 2,462 250 Safekeeping and safe deposit box services . . . . — — — 0 0 — 3 3 — Guarantee operations . . . . . 85 67 18 82 69 13 163 136 27 Other . . . . . . . . . . . . . . . . . 112 111 1 43 68 (25) 146 165 (18)

Fees and Commissions expenses . . . . . . . . . . . . . . 528 305 222 387 271 116 985 465 519 Foreign exchange operations . . . . . . . . . . . . 67 58 8 65 58 7 129 114 14 Other . . . . . . . . . . . . . . . . . 460 246 214 321 213 108 855 351 504

Trading Revenues (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013


Net trading revenues . . . . . . . . 3,596 3,858 (261) 3,399 (2,324) 5,723 4,881 (1,869) 6,750

Trading income . . . . . . . . . . . 3,596 3,858 (261) 3,399 (2,324) 5,723 4,881 (1,869) 6,750 Gains on trading securities . . . . . . . . . . . . — — — — — — — — — Gains on securities related to trading transactions . . . 53 94 (41) 588 694 (105) 939 1,161 (222) Gains on trading-related financial derivatives . . . . . 3,543 3,764 (220) 2,810 (3,018) 5,829 3,941 (3,031) 6,973 Other . . . . . . . . . . . . . . . . . — — — — — — — — —

Trading expenses . . . . . . . . . 0 0 — — — — — — — losses on trading securities . . . . . . . . . . . . — — — — — — — — — losses on securities related to trading transactions . . . — — — — — — — — — losses on trading-related financial derivatives . . . . . — — — — — — — — — Other . . . . . . . . . . . . . . . . . 0 0 — — — — — — —

Incom

e Analysis (N

on-C

onso

lidated

)

70

Financial and

Co

rpo

rate Data

Other Ordinary Income (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013


Net other ordinary income . . . . 5,176 8,028 (2,851) 9,033 3,403 5,629 19,573 8,336 11,237

Other ordinary income . . . . . 14,226 10,575 3,651 12,452 4,618 7,833 25,517 11,551 13,965 Gains on foreign exchange transactions . . . . . . . . . . . — — — — — — 572 — 572 Gains on sales of bonds . . 4,353 3,032 1,321 8,175 2,037 6,138 15,237 5,352 9,885 Gains on redemption of bonds . . . . . . . . . . . . . — — — — — — — — — Gains on derivatives . . . . . 286 19 266 — — — — — — Other . . . . . . . . . . . . . . . . . 9,586 7,523 2,063 4,276 2,581 1,695 9,707 6,199 3,508

Other ordinary expenses . . . 9,049 2,546 6,502 3,418 1,215 2,203 5,943 3,215 2,728 loss on foreign exchange transactions . . . 53 — 53 1,015 — 1,015 — — — loss on sales of bonds . . . 6,708 704 6,004 89 52 37 765 187 577 loss on redemption of bonds . . . . . . . . . . . . . — — — — — — — — — loss on devaluation of bonds . . . . . . . . . . . . . 20 3 16 174 0 173 256 0 256 Amortization of debenture and corporate bonds issurance expenses . . . . . 3 3 — 9 9 — 18 18 — loss on derivatives . . . . . . — — — 211 77 133 673 352 320 Other . . . . . . . . . . . . . . . . . 2,262 1,834 428 1,918 1,075 843 4,230 2,657 1,572

General and Administrative Expenses (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . 17,749 18,454 37,076 Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,938 6,767 13,793 Retirement benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 1,095 2,049 welfare expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 243 479 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751 854 1,738 Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . 879 1,076 2,083 Rent and lease expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,485 1,544 3,138 Building and maintenance expenses . . . . . . . . . . . . . . . . . . . . . . . 35 83 136 Supplies expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 145 286 water, lighting and heating expenses . . . . . . . . . . . . . . . . . . . . . . . 267 248 500 travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 169 326 Communication expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279 251 517 Publicity and advertising expenses . . . . . . . . . . . . . . . . . . . . . . . . 261 138 401 taxes, other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 946 1,029 1,734 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,980 4,806 9,890

Incom

e Analysis (N

on-C

onso

lidated

)


71

Financial and

Co

rpo

rate Data

Dep

osit O

peratio

ns (No

n-Co

nsolid

ated)

Balance by Deposit Account (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013


Deposits Liquid deposits Average balance 379,232 379,232 — 355,400 355,400 — 353,175 353,175 — (%) (14.02) (14.11) — (13.16) (13.21) — (13.01) (13.06) — Term-end balance 377,647 377,647 — 355,682 355,682 — 395,972 395,972 — (%) (13.70) (13.75) — (13.00) (13.05) — (14.59) (14.65) —

interest-bearing Average balance 351,920 351,920 — 331,232 331,232 — 329,586 329,586 — deposits (%) (13 .01) (13 .09) — (12 .27) (12 .31) — (12 .14) (12 .19) — term-end balance 345,731 345,731 — 317,625 317,625 — 357,868 357,868 — (%) (12 .54) (12 .59) — (11 .61) (11 .65) — (13 .19) (13 .24) —

Time deposits Average balance 2,303,928 2,303,928 — 2,330,711 2,330,711 — 2,345,869 2,345,869 — (in general) (%) (85.20) (85.70) — (86.33) (86.63) — (86.44) (86.76) — Term-end balance 2,360,875 2,360,875 — 2,361,052 2,361,052 — 2,297,664 2,297,664 — (%) (85.66) (85.99) — (86.31) (86.62) — (84.66) (85.03) —

Deregulated Average balance 1,852,132 1,852,132 — 1,815,556 1,815,556 — 1,843,464 1,843,464 — interest rate (%) (68 .49) (68 .89) — (67 .25) (67 .49) — (67 .92) (68 .18) — time deposits term-end balance 1,914,390 1,914,390 — 1,853,095 1,853,095 — 1,834,058 1,834,058 — (fixed) (%) (69 .46) (69 .73) — (67 .74) (67 .99) — (67 .58) (67 .87) —

Deregulated Average balance 451,795 451,795 — 515,155 515,155 — 502,405 502,405 — interest rate (%) (16 .71) (16 .80) — (19 .08) (19 .15) — (18 .51) (18 .58) — time deposits term-end balance 446,485 446,485 — 507,957 507,957 — 463,606 463,606 — (floating) (%) (16 .20) (16 .26) — (18 .57) (18 .64) — (17 .08) (17 .16) —

Others Average balance 20,943 5,332 15,610 13,595 4,154 9,441 14,945 4,962 9,983 (%) (0.78) (0.19) (100.00) (0.50) (0.15) (100.00) (0.55) (0.18) (100.00) Term-end balance 17,634 7,100 10,533 18,918 9,002 9,916 20,438 8,583 11,854 (%) (0.64) (0.26) (100.00) (0.69) (0.33) (100.00) (0.75) (0.32) (100.00)

Subtotal Average balance 2,704,104 2,688,493 15,610 2,699,707 2,690,265 9,441 2,713,990 2,704,007 9,983 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Term-end balance 2,756,156 2,745,623 10,533 2,735,653 2,725,736 9,916 2,714,075 2,702,220 11,854 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)

Negotiable certificates Average balance 268,103 268,103 — 182,610 182,610 — 217,581 217,581 — of deposit Term-end balance 321,990 321,990 — 219,807 219,807 — 335,529 335,529 —

Total Average balance 2,972,207 2,956,596 15,610 2,882,318 2,872,876 9,441 2,931,572 2,921,588 9,983 Term-end balance 3,078,146 3,067,613 10,533 2,955,460 2,945,543 9,916 3,049,604 3,037,749 11,854

Notes: 1 . time deposits (in general) = time deposits Deregulated interest rate time deposits (fixed) = Deregulated interest rate time deposits for which the interest up to the due date is determined

when the deposits are made . Deregulated interest rate time deposits (floating) = Deregulated interest rate time deposits for which the interest varies according to changes in

market interest rates during the period of deposit . 2 . liquid deposits = Deposits at notice + ordinary deposits + current deposits 3 . Average balance of domestic offices’ foreign currency-denominated transactions in the international operations sector has been computed by the

daily current method .

Balance of Time Deposits by Residual Period (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Deregulated Deregulated Deregulated Deregulated Deregulated Deregulated interest rate

interest rate

interest rate

interest rate

interest rate

interest rate

Total (fixed) (floating) Total (fixed) (floating) Total (fixed) (floating)

less than 3 months . . . . . . . 451,603 449,903 1,700 418,165 416,965 1,200 398,688 396,488 2,200 3–6 months . . . . . . . . . . . . . . 289,954 286,154 3,800 257,023 255,423 1,600 219,541 217,041 2,500 6 months–1year . . . . . . . . . . 489,575 487,375 2,200 367,888 367,388 500 460,101 458,801 1,300 1–2 years . . . . . . . . . . . . . . . 398,619 378,867 19,752 418,400 415,900 2,500 452,331 442,279 10,052 2–3 years . . . . . . . . . . . . . . . 233,295 214,395 18,900 274,966 249,106 25,860 206,236 185,491 20,745 More than 3 years . . . . . . . . . 497,825 97,692 400,133 624,606 148,309 476,297 560,765 133,956 426,808

Total . . . . . . . . . . . . . . . . . . 2,360,875 1,914,390 446,485 2,361,052 1,853,095 507,957 2,297,664 1,834,058 463,606

Deposit Operations (Non-Consolidated)

72

Financial and

Co

rpo

rate Data

Dep

osit O

peratio

ns (No

n-Co

nsolid

ated)

Outstanding Balance by Depositor (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013

Balance Share Balance Share Balance Share

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 408,533 14 .82 365,165 13 .35 404,675 14 .91 Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,998,303 72 .50 2,095,266 76 .59 2,043,788 75 .30 Public sector . . . . . . . . . . . . . . . . . . . . . . . 60,564 2 .20 28,054 1 .03 36,001 1 .33 Financial institutions . . . . . . . . . . . . . . . . . 288,755 10 .48 247,167 9 .03 229,610 8 .46

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,756,156 100.00 2,735,653 100.00 2,714,075 100.00

Note: the above balance does not include negotiable certificates of deposit in offshore market accounts .

Deposits per Office (Number of Offices, Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas

Total offices offices Total offices offices Total offices offices

Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 —Deposits per office . . . . . . . . 153,907 153,907 — 147,773 147,773 — 152,480 152,480 —

Notes: 1 . Deposits include negotiable certificates of deposit . 2 . Number of offices does not include domestic sub-branches and overseas representative offices .

Deposits per Employee (Number of Employees, Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas


Number of employees . . . . . . 1,508 1,508 — 1,495 1,495 — 1,485 1,485 —Deposits per employee . . . . . 2,041 2,041 — 1,976 1,976 — 2,053 2,053 —

Notes: 1 . Deposits include negotiable certificates of deposit . 2 . Number of employees represents the average number of employees in each fiscal year . the number of employees in domestic offices includes

head office staff .

Deposit Operations (Non-Consolidated)

73

Financial and

Co

rpo

rate Data

Deb

enture Op

erations (N

on-C

onso

lidated

)

Debenture Operations (Non-Consolidated)

Outstanding and Average Balance of Debentures (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Term-end Average Term-end Average Term-end Average balance balance balance balance balance balance

Aozora debentures . . . . . . . . . . . . . . . . . . 165,263 160,195 184,509 202,212 169,366 187,173

Discounted Aozora debentures . . . . . . . . . — — — 2,184 — 958

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,263 160,195 184,509 204,397 169,366 188,132

Note: Debentures do not include debenture subscriptions .

Balance by Residual Period (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Discounted

Discounted

Discounted

Aozora

Aozora

Aozora

Aozora

Aozora

Aozora

Total debentures debentures Total debentures debentures Total debentures debentures

less than 1 year . . . . . . . . . . 59,423 59,423 — 111,319 111,319 — 85,707 85,707 —1–3 years . . . . . . . . . . . . . . . 67,756 67,756 — 70,863 70,863 — 82,580 82,580 —3–5 years . . . . . . . . . . . . . . . 38,083 38,083 — 2,326 2,326 — 1,079 1,079 —5–7 years . . . . . . . . . . . . . . . — — — — — — — — —Over 7 years . . . . . . . . . . . . . — — — — — — — — —

Total . . . . . . . . . . . . . . . . . . 165,263 165,263 — 184,509 184,509 — 169,366 169,366 —

Outstanding Balance of Debentures per Office (Number of Offices, Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic Overseas Domestic Overseas Domestic Overseas Total offices offices Total offices offices Total offices offices

Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 —Outstanding balance of debentures per office . . . . . 8,263 8,263 — 9,225 9,225 — 8,468 8,468 —

Note: Number of offices does not include domestic sub-branches and overseas representative offices .

Outstanding Balance of Debentures per Employee (Number of Employees, Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic Overseas Domestic Overseas Domestic Overseas Total offices offices Total offices offices Total offices offices

Number of employees . . . . . . 1,508 1,508 — 1,495 1,495 — 1,485 1,485 —Outstanding balance of debentures per employee . . 109 109 — 123 123 — 114 114 —

Note: Number of employees represents the average number of employees in each fiscal year . the number of employees in domestic offices includes head office staff .

74

Financial and

Co

rpo

rate Data

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Balance by Residual Period (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Fixed Floating Fixed Floating Fixed Floating Total interest interest Total interest interest Total interest interest

less than 1 year . . . . . . . . . . 1,047,942 1,008,815 997,404 1–3 years . . . . . . . . . . . . . . . 750,065 190,717 559,348 765,425 197,585 567,839 802,526 221,750 580,775 3–5 years . . . . . . . . . . . . . . . 651,371 153,252 498,118 579,886 127,730 452,155 698,008 152,235 545,773 5–7 years . . . . . . . . . . . . . . . 150,916 32,329 118,587 137,007 26,247 110,759 146,777 26,165 120,612 Over 7 years . . . . . . . . . . . . . 103,041 40,911 62,130 83,799 37,925 45,873 96,192 38,595 57,596 indefinite period . . . . . . . . . . 63 — 63 79 — 79 68 — 68 Total . . . . . . . . . . . . . . . . . . . 2,703,401 2,575,013 2,740,978 Notes: 1 . Maturity is based on scheduled final maturity dates . 2 . No distinction has been made between fixed interest and floating interest for loans with a residual period of less than 1 year .

Ratio of Loans and Bills Discounted to Debentures/Deposits (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013


loans and bills discounted (A) . . 2,703,401 2,182,191 521,210 2,575,013 2,238,053 336,960 2,740,978 2,277,853 463,125 Debentures and deposits (B) . . . 3,243,410 3,232,877 10,533 3,139,970 3,130,053 9,916 3,218,971 3,207,116 11,854 (A)/(B) . . . . . . . . . . . . . . . . . . . . . 83 .35 67 .49 4,948 .19 82 .00 71 .50 3,397 .87 85 .15 71 .02 3,906 .65Average during the year . . . . . . . 81 .88 66 .73 3,107 .56 80 .18 69 .69 3,499 .20 80 .60 68 .96 3,707 .94Notes: 1 Debentures do not include debenture subscriptions . 2 . Deposits include negotiable certificates of deposit .

Loans per Office (Number of Offices, Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic Overseas Domestic Overseas Domestic Overseas


Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 — loans per office . . . . . . . . . . 135,170 135,170 — 128,750 128,750 — 137,048 137,048 —Note: Number of offices does not include domestic sub-branches and overseas representative offices .

Loans per Employee (Number of Employees, Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic Overseas Domestic Overseas Domestic Overseas


Number of employees . . . . . 1,508 1,508 — 1,495 1,495 — 1,485 1,485 — loans per employee . . . . . . . 1,792 1,792 — 1,722 1,722 — 1,845 1,845 — Note: Number of employees represents the average number of employees in each period (year) . the number of employees in domestic offices includes head

office staff .

Loan Operations (Non-Consolidated)

Outstanding Balance of LoansFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013


loans on deeds Average balance 2,274,419 1,790,159 484,260 2,224,218 1,894,881 329,337 2,238,257 1,868,944 369,312 term-end balance 2,264,845 1,744,857 519,988 2,193,584 1,857,625 335,959 2,311,051 1,848,208 462,842 loans on bills Average balance 66,373 65,522 850 84,660 83,616 1,043 88,418 87,547 871 term-end balance 79,138 77,917 1,221 95,798 94,797 1,000 81,083 80,801 282 Overdrafts Average balance 223,496 223,496 — 165,711 165,711 — 187,392 187,392 — term-end balance 358,916 358,916 — 285,007 285,007 — 347,600 347,600 —Bills discounted Average balance 757 757 — 606 606 — 642 642 — term-end balance 499 499 — 622 622 — 1,242 1,242 —Total Average balance 2,565,047 2,079,937 485,110 2,475,196 2,144,815 330,380 2,514,710 2,144,527 370,183 Term-end balance 2,703,401 2,182,191 521,210 2,575,013 2,238,053 336,960 2,740,978 2,277,853 463,125

Notes: 1 . the average balance of foreign currency-denominated transactions by domestic offices in international operations has been calculated using the daily current method .

2 . the Bank carries out partial and direct write-off of loans . this also applies to the table shown below .

75

Financial and

Co

rpo

rate Data

Breakdown of Loans and Bills Discounted by Industry (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013

Balance of loans Share Balance of loans Share Balance of loans Share

Loans by domestic offices . . . . . . . . . . . . 2,703,401 100.00 2,574,769 100.00 2,740,978 100.00 (excluding Japan Offshore Market accounts) Manufacturing . . . . . . . . . . . . . . . . . . . . . 283,685 10 .49 264,089 10 .26 287,177 10 .48 Agriculture, forestry and fisheries . . . . . . . 2,943 0 .11 2,886 0 .11 2,523 0 .09 Mining, quarry, gravel extraction . . . . . . . 2,127 0 .08 2,773 0 .11 2,455 0 .09 Construction . . . . . . . . . . . . . . . . . . . . . . 17,726 0 .66 36,943 1 .43 18,427 0 .67 Electricity, gas, heat supply and water . . . 6,695 0 .25 5,825 0 .23 5,362 0 .20 information and communications . . . . . . 52,162 1 .93 53,750 2 .09 48,805 1 .78 transport,postal service . . . . . . . . . . . . . 115,130 4 .26 142,681 5 .54 134,643 4 .91 wholesale and retail trade . . . . . . . . . . . . 113,426 4 .20 110,372 4 .29 117,963 4 .30 Financial and insurance . . . . . . . . . . . . . . 505,363 18 .69 442,607 17 .19 531,970 19 .41 Real estate . . . . . . . . . . . . . . . . . . . . . . . 736,509 27 .24 828,126 32 .16 806,775 29 .43 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . 106,654 3 .94 61,183 2 .38 91,950 3 .36 Other services . . . . . . . . . . . . . . . . . . . . . 156,652 5 .79 170,732 6 .63 134,195 4 .90 local governments . . . . . . . . . . . . . . . . . 47,505 1 .76 72,650 2 .82 49,915 1 .82 Others . . . . . . . . . . . . . . . . . . . . . . . . . . 556,818 20 .60 380,147 14 .76 508,812 18 .56

Loans by overseas offices . . . . . . . . . . . . — — 244 100.00 — — (including Japan Offshore Market accounts) Government . . . . . . . . . . . . . . . . . . . . . . — — — — — — Financial institutions . . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . — — 244 100 .00 — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,703,401 2,575,013 2,740,978 Note: Domestic refers to the Bank’s head office and branch offices; overseas refers to the Bank’s overseas branch offices .

Consumer Loans Outstanding (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Consumer loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,863 6,751 6,366 Housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,558 6,412 6,050 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 339 315Note: Consumer loans outstanding includes personal housing loans, as well as personal loans for general spending purposes and tax payments, and does

not include business loans to sole proprietorships or their owners .

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Loans to Small and Medium-Sized Corporations (Number of Borrowers, Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013

Number of Number of Number of borrowers Value borrowers Value borrowers Value

total domestic loans (A) . . . . . . . . . . . . . . . 2,067 2,703,401 2,064 2,574,769 2,082 2,740,978loans to small and medium-sized corporations (B) . . . . . . . . . . . . . . . . . . . . 1,633 1,805,240 1,629 1,694,495 1,640 1,812,438(B)/(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 .00 66 .77 78 .92 65 .81 78 .77 66 .12Notes: 1 . in this table, the balance of loans and bills discounted does not include offshore banking accounts . 2 . SMEs are defined as companies having capital of not more than ¥300 million (¥100 million in wholesale, and ¥50 million in retail, food service and

leasing business categories), or companies with not more than 300 full-time employees (100 in wholesale and leasing, 50 in retail and food service business categories), etc .

76

Financial and

Co

rpo

rate Data

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Risk-Monitored Loans by Industry (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Loans by domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,745 99,155 106,240 (excluding Japan Offshore Market accounts) Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,220 12,375 12,811 Agriculture, forestry and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Mining, quarry, gravel extraction . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 188 153 Electricity, gas, heat supply and water . . . . . . . . . . . . . . . . . . . . . . . — — — information and communications . . . . . . . . . . . . . . . . . . . . . . . . . . 67 107 68 transport, postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 936 840 wholesale and retail trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,212 1,830 1,303 Financial and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,321 22,436 35,727 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,855 25,356 29,133 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589 891 589 Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 2,108 131 local governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,093 32,925 25,480

Loans by overseas offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 244 — (including Japan Offshore Market accounts) Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 244 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,745 99,400 106,240

Balance of Loans and Bills Discounted, Classified by Purpose (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013

Balance of loans Share Balance of loans Share Balance of loans Share

Funds for capital investment . . . . . . . . . . . . 271,219 10 .03 300,795 11 .68 284,680 10 .39Funds for working capital . . . . . . . . . . . . . . 2,432,182 89 .97 2,274,217 88 .32 2,456,297 89 .61

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,703,401 100.00 2,575,013 100.00 2,740,978 100.00

Breakdown of Loans and Bills Discounted by Collateral (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,207 11,216 22,426 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,904 15,334 18,172 Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,982 231,613 227,348 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,096 5,724 8,796

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,191 263,890 276,743

Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244,218 164,013 225,913 unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,194,991 2,147,109 2,238,320

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,703,401 2,575,013 2,740,978

Breakdown of Balance of Acceptances and Guarantees (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Acceptances of bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,968 30,162 27,555

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,968 30,162 27,555


77

Financial and

Co

rpo

rate Data

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Write-Off of Loans (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 712 2,435

Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 140 152

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 140 152

Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700 1,174 1,685 unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,763 28,847 25,718

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,968 30,162 27,555

Balance at beginning of period Provision

Used for specific purpose Other

Balance at end of

period

Balance at beginning of period Provision


Balance at end of

period

Balance at beginning

of year Provision


Balance at end of

year

Allowance for Loan LossesFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013

(Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Reduction during period Reduction during period Reduction during year

General allowance . . . . . . 36,126 42,678 — 36,126 42,678 55,086 42,006 — 55,086 42,006 55,086 36,126 — 55,086 36,126

Specific . . . . . . . . (–227) (901) (–608) allowance . . . . . . 27,265 21,735 6,746 20,518 21,735 20,773 25,976 6,012 14,760 25,976 22,282 27,037 9,614 12,668 27,037

Related to non- (–227) (901) (–608) residents . . . . 6,066 6,160 39 6,027 6,160 13,288 7,779 5,780 7,507 7,779 14,798 5,839 8,573 6,224 5,839

Allowance for loans to restructuring countries . . . . . . — — — — — — — — — — — — — — —

Note: Figures in parentheses for balance at beginning of period (year) indicate translation difference due to foreign exchange fluctuations .

Country Risk ReserveNone .

78

Financial and

Co

rpo

rate Data

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Disclosed Claims under the Financial Reconstruction Law(Billions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Disclosed claims under the Financial Reconstruction law Bankrupt and similar credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 .8 5 .2 7 .2 Doubtful credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 .3 74 .4 79 .2 Special attention credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .8 19 .9 20 .0

Subtotal (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 .9 99 .5 106 .3 Normal credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,649 .2 2,514 .4 2,668 .8

total credit (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,737 .1 2,613 .9 2,775 .1

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .21% 3 .80% 3 .83%

Risk-Monitored LoansNon-Consolidated

(Billions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Risk-monitored loans: loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .0 4 .7 2 .8 Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 .0 74 .8 83 .5 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 .4 — Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .8 19 .5 20 .0

total (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 .7 99 .4 106 .2

year-end balance of total loans (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,703 .4 2,575 .0 2,741 .0

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .24% 3 .86% 3 .87%

Reserve Provision Ratios for Each Category of Borrower, Based on Asset-AssessmentsNon-Consolidated

(%)

Definition of Borrower Categories Sep. 2013 Sep. 2012 Mar. 2013

Normal 0 .8 0 .7 0 .7Need attention: Other need attention borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .9 5 .8 4 .2 Special attention borrowers (Ratio of reserve to unsecured) . . . . . . . . . . . . . . 61 .5 68 .2 63 .6in danger of bankruptcy (Ratio of reserve to unsecured) . . . . . . . . . . . . . . . . . . . 86 .3 82 .9 78 .7De facto bankrupt and bankrupt (Ratio of reserve to unsecured) . . . . . . . . . . . . . 100 .0 100 .0 100 .0

Consolidated

(Billions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Risk-monitored loans: loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .0 4 .7 2 .8 Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 .9 77 .3 86 .2 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 .4 — Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .8 19 .5 20 .0

total (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 .7 101 .8 109 .0

year-end balance of total loans (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,695 .1 2,565 .6 2,719 .7

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .32% 3 .96% 4 .00%


79

Financial and

Co

rpo

rate Data

<Definitions of Borrower Categories>Normal Business performance is strong and no special financial

problems exist .

Need attention Borrowers that need to be monitored carefully because of weak business fundamentals, financial problems or problematic lending conditions .

In danger of Borrowers that are not currently bankrupt but are highly bankruptcy likely to become bankrupt .

De facto Borrowers that are substantially bankrupt but are not bankrupt legally or practically bankrupt yet .

Bankrupt Borrowers that are legally or practically bankrupt .

<Definitions of Asset Classifications>Category I Assets that present no particular risk of collectability or

impairment of value .

Category II Assets, including credits, which bear above-average risk of collectability .

Category III Assets that bear substantial risk of final collectability or impairment of value, and are likely to incur losses .

Category IV Assets deemed to be uncollectable or valueless .

<Write-Off and Reserve Provision Rules>Normal and A general allowance is provided by applying the estimated Need attention loan-loss ratio determined based on the historical loan-loss borrowers data over a defined period in the past . However, for borrowers

with large credit exposure, categorized as ‘Need attention,’ the loan-loss amount estimated by the DCF method is reflected as an addition to the allowance for loan losses calculated based on the estimated loan-loss ratio, if necessary .

In danger of A specific allowance is provided for the loan losses at an bankruptcy amount considered to be necessary based on an overall borrowers solvency assessment of the borrowers and expected collectible

amounts through the disposal of collateral or execution of guarantees, etc . For loans whose future cash flows of principal and interest are reasonably estimated, the difference between the discounted cash flows and the carrying value is accounted for as an allowance for loan losses .

De facto in principle, the full amounts of credits that bear substantial bankrupt and risk of final collectability or impairment of value, and credits Bankrupt deemed to be uncollectable or valueless are written off directly . borrowers

<Definitions of Disclosed Claims under the Financial Reconstruction Law>Bankrupt and Bankrupt and similar credit refers to the credit of borrowers similar credit who have filed for bankruptcy, corporate reorga nization,

composition, etc ., as well as those borrowers who are in an equivalent situation .

Doubtful credit Doubtful refers to credit with serious doubt concerning the recovery of principal and receiving of interest as contract provisions, because the borrower’s financial condition and business results have worsened, although they have not reached the point of management collapse .

Special attention Special attention refers to loans in arrears for more than credit three months or with mitigated conditions .

Normal credit Normal credit refers to credit to borrowers whose financial condition and business results have no particular problem and which are not categorized in any of the above categories .

<Risk-Monitored Loans>Loans to loans to bankrupt borrowers are loans for which interest bankrupt in arrears has not been accrued because recovery or borrowers settlement of principal or interest is unlikely due to the

prolonged delay in payment of principal or interest (which hereafter shall be called ‘non-accrual loans’) and whose borrowers are legally bankrupt (defined below), excluding the amount of write-offs .

1 . Borrowers that have applied for commencement of company or financial institution reorganization procedures under the provisions of the Corporate Reorganization law .

2 . Borrowers that have applied for reorganization under the provisions of the Civil Reorganization law .

3 . Borrowers that have applied for bankruptcy under the provisions of the Bankruptcy law .

4 . Borrowers that have applied to commence special liquidation under the provisions of the Company law .

5 . Borrowers with reasons equivalent to 1 . to 4 . above as defined by Ministry of Finance ordinances .

6 . Borrowers who have applied for commencement of legal liquidation procedures under overseas laws, corresponding to those listed above .

Past due loans Past due loans refer to non-accrual loans except those for which concessions on payment of interest were made in order to assist the reorganization of bankrupt companies and loans to them .

Loans overdue loans overdue for three months or more refer to those for three loans, excluding loans to bankrupt companies and past months or due loans for which principal or interest remains unpaid more for at least three months .

Restructured Restructured loans refer to those loans, excluding loans loans to bankrupt companies, past due loans and loans overdue

for three months or more for which agreement was made to provide reduction or a moratorium on interest payments, or concessions in the borrower’s favor on interest or principal payments or to waive claims for the purpose of assisting the reconstruction of insolvent borrowers .

<Differences Between Disclosed Claims under the Financial Reconstruction Law and Risk-Monitored Loans>•DisclosedClaims

Disclosure: loans and other claims equivalent thereof (foreign exchange, acceptances and guarantees, suspense payments, as well as loaned securities that require notation [limited to only those subject to a usage and lending or lending agreement], etc .) .

Disclosed: By borrower (by loan for substandard credit)

•Risk-MonitoredLoans

Disclosure: loans only

Disclosed: By loan

Asset-Assessment, Disclosed Claims, Write-Offs, Reserves and Risk-Monitored Loans(After Partial and Direct Write-Offs, Non-Consolidated Basis) as of September 30, 2013

(Billions of Yen)

Borrower categoriesfor self-assessment

Bankrupt borrowers

In danger of bankruptcy borrowers

Normal borrowers

De facto bankrupt borrowers

Disclosed credit under the FRLLoans Other

Doubtful credit65.3

Special attention credit19.8

Normal credit2,649.2

Bankrupt and similar credit2.8

Disclosed claims under the FRL87.9

Total credit 2,737.1

Reserve and coveragefor claims under the FRL

Total reserve 64.4

Collateral/Guarantee coverage 48.9Reserve 30.2

Estimated collections 8.8

Collateral/Guarantee coverage 2.8Reserve —





Reserve and coverage ratio

Reserve to unsecured credit ratio

100.0%

94.7%

72.7%

100.0%

86.3%

61.5%

Risk-monitored loans

Restructured loans19.8

Risk-monitored loans87.7Reserve and

coverage ratio for disclosed claims

under the FRL90.0%

Reserve ratio for disclosed claims

under the FRL77.4%

Loans overdue for three months or more

—

Past due loans68.0

Loans to bankrupt companies0.0

Need attention borrowers

FRL: Financial Reconstruction LawReserve to unsecured credit ratio = Reserve ÷ (Claims – Collateral, guarantees, etc.)Reserve and coverage ratio = (Collateral, guarantees, etc. + Reserve) ÷ Claims

Loan O

peratio

ns (No

n-Co

nsolid

ated)

80

Financial and

Co

rpo

rate Data

Securities (N

on-C

onso

lidated

)

Outstanding and Average Balance of Securities Held (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013


Total Average balance 1,309,649 846,009 463,639 1,331,563 859,709 471,853 1,319,243 840,833 478,409 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Term-end balance 1,147,217 708,680 438,536 1,306,653 841,909 464,743 1,333,979 793,352 540,627 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)

Japanese national Average balance 522,834 522,834 — 573,681 573,681 — 546,782 546,782 — government (%) (39 .92) (61 .80) — (43 .08) (66 .73) — (41 .45) (65 .03) — bonds term-end balance 371,304 371,304 — 544,412 544,412 — 464,784 464,784 — (%) (32 .37) (52 .39) — (41 .66) (64 .66) — (34 .84) (58 .58) —

Japanese local Average balance 14,365 14,365 — 9,530 9,530 — 9,018 9,018 — government (%) (1 .10) (1 .70) — (0 .72) (1 .11) — (0 .68) (1 .07) — bonds term-end balance 15,741 15,741 — 8,900 8,900 — 11,331 11,331 — (%) (1 .37) (2 .22) — (0 .68) (1 .06) — (0 .85) (1 .43) —

Japanese Average balance — — — — — — — — — short-term (%) — — — — — — — — — corporate term-end balance — — — — — — — — — bonds (%) — — — — — — — — —

Japanese Average balance 60,950 60,950 — 60,510 60,510 — 59,383 59,383 — corporate (%) (4 .65) (7 .20) — (4 .54) (7 .04) — (4 .50) (7 .06) — bonds term-end balance 62,923 62,923 — 57,075 57,075 — 58,784 58,784 — (%) (5 .48) (8 .88) — (4 .37) (6 .78) — (4 .41) (7 .41) —

Japanese stocks Average balance 38,046 38,046 — 38,553 38,553 — 38,486 38,486 — (%) (2 .91) (4 .50) — (2 .90) (4 .48) — (2 .92) (4 .58) — term-end balance 38,168 38,168 — 38,390 38,390 — 38,679 38,679 — (%) (3 .33) (5 .39) — (2 .94) (4 .56) — (2 .90) (4 .88) —

Others Average balance 673,452 209,812 463,639 649,288 177,434 471,853 665,572 187,162 478,409 (%) (51 .42) (24 .80) (100 .00) (48 .76) (20 .64) (100 .00) (50 .45) (22 .26) (100 .00) term-end balance 659,080 220,543 438,536 657,874 193,130 464,743 760,399 219,771 540,627 (%) (57 .45) (31 .12) (100 .00) (50 .35) (22 .94) (100 .00) (57 .00) (27 .70) (100 .00)

Notes: 1 . total for ‘Others’ is the sum of domestic operations and international operations . 2 . the average balance of foreign currency-denominated transactions by domestic offices in international operations has been calculated using the

daily current method .

Securities (Non-Consolidated)

Balance of Securities by Residual Period(Millions of yen)

Sep. 2013

Japanese national government bonds

Japanese local government bonds

Japanese short-term corporate bonds

Japanese corporate bonds Japanese stocks Others

less than 1 year . . . . 129,987 174 — 3,450 5,516 1—3 years . . . . . . . . — 1,029 — 9,109 12,795 3—5 years . . . . . . . . 65,112 6,599 — 15,562 129,830 5—7 years . . . . . . . . 53,270 319 — 12,055 9,426 7—10 years . . . . . . . 102,443 7,577 — 17,744 37,163 Over 10 years . . . . . . 20,491 41 — — 117,183 indefinite period . . . . — — — 5,000 38,168 347,164

Total . . . . . . . . . . . . 371,304 15,741 — 62,923 38,168 659,080

(Millions of yen)

Sep. 2012





less than 1 year . . . . 203,470 302 — 1,181 5,002 1—3 years . . . . . . . . — 755 — 11,120 93,581 3—5 years . . . . . . . . 130,590 2,637 — 21,827 70,677 5—7 years . . . . . . . . 28,636 379 — 9,978 54,464 7—10 years . . . . . . . 181,715 4,781 — 7,967 47,400 Over 10 years . . . . . . — 43 — — 97,933 indefinite period . . . . — — — 5,000 38,390 288,814

Total . . . . . . . . . . . . 544,412 8,900 — 57,075 38,390 657,874

81

Financial and

Co

rpo

rate Data

Securities/S

ecurities Business (N

on-C

onso

lidated

)

Securities Business (Non-Consolidated)

Ratio of Securities to Debentures and Deposits (Millions of yen, %)

Sep. 2013 Sep. 2012 Mar. 2013


Securities (A) . . . . . . . . . . . . . . 1,147,217 708,680 438,536 1,306,653 841,909 464,743 1,333,979 793,352 540,627Debentures and deposits (B) . . 3,243,410 3,232,877 10,533 3,139,970 3,130,053 9,916 3,218,971 3,207,116 11,854

Ratio (A)/(B) . . . . . . . . . . . . . . 35 .37 21 .92 4,163 .32 41 .61 26 .89 4,686 .43 41 .44 24 .73 4,560 .41Average during the year . . . . . 41 .80 27 .14 2,970 .02 43 .13 27 .93 4,997 .59 42 .28 27 .03 4,791 .99

Notes: 1 . Debentures do not include debenture subscriptions . 2 . Deposits include negotiable certificates of deposit .

Underwriting of Public Bonds (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . — — —Japanese local government bonds and government-guaranteed bonds . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Over-the-Counter Sales of Public Bonds and Securities Investment Trusts (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . — — —Japanese local government bonds and government-guaranteed bonds . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Securities investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,660 15,887 59,253

Balance of Securities by Residual Period(Millions of yen)

Mar. 2013





less than 1 year . . . . 149,987 161 — 1,000 3,958 1—3 years . . . . . . . . — 1,338 — 9,977 8,911 3—5 years . . . . . . . . 110,412 3,651 — 23,195 168,621 5—7 years . . . . . . . . 38,520 514 — 8,963 56,133 7—10 years . . . . . . . 139,431 5,622 — 10,648 66,164 Over 10 years . . . . . . 26,433 43 — — 147,642 indefinite period . . . . — — — 5,000 38,679 308,966

Total . . . . . . . . . . . . 464,784 11,331 — 58,784 38,679 760,399

82

Financial and

Co

rpo

rate Data

International O

peratio

ns (No

n-Co

nsolid

ated)

International Operations (Non-Consolidated)

Foreign Exchange Transactions (Millions of u .S . Dollars)

Sep. 2013 Sep. 2012 Mar. 2013

Outward exchange Foreign bills sold . . . . . . . . . . . . . 3,834 2,892 6,537 Foreign bills bought . . . . . . . . . . . — — —

incoming exchange Foreign bills payable . . . . . . . . . . . 918 898 1,659 Foreign bills receivable . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,752 3,791 8,197

Balance of Assets in International Operations (Millions of yen)

Sep. 2013 Sep. 2012 Mar. 2013

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas


Balance of assets in international operations . . . . . 1,327,096 1,327,096 — 1,171,727 1,171,727 — 1,445,884 1,445,884 —

83

Financial and

Co

rpo

rate Data

Other O

peratio

ns (No

n-Co

nsolid

ated)

Other Operations (Non-Consolidated)

Principal Fees and Commissions (As of January 1, 2014)

Automated Installations

Jan. 2014

Automated teller machines (AtMs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Domestic Exchange TransactionsFor the six-month periods ended September 30, 2013 and 2012, and the year ended March 31, 2013 (Millions of yen, thousands of transactions)

Sep. 2013 Sep. 2012 Mar. 2013

Value of Number of Value of Number of Value of Number of transactions transactions transactions transactions transactions transactions

Money transfer Sent . . . . . . . . . . . . . . . . . . . . . 2,291,181 625 1,929,400 610 4,495,388 1,220 Received . . . . . . . . . . . . . . . . . . 2,775,496 270 2,133,174 257 4,950,616 530

Money transfer by check Sent . . . . . . . . . . . . . . . . . . . . . 7,863 2 9,461 1 16,246 3 Received . . . . . . . . . . . . . . . . . . 8,070 2 10,015 1 16,804 3

To Aozora Bank Head Office/

Branches

To Other Banks

By Wire

transfers Handled at the counter

Clients with accounts at the Bank

On transfers up to ¥30,000

¥210 ¥525

On transfers exceeding ¥30,000

¥420 ¥735

Clients without accounts at the Bank

On transfers up to ¥30,000

¥210

¥1,000On transfers exceeding ¥30,000

¥420

telephone banking On transfer ¥0 ¥300

internet banking (retail) On transfer ¥0 ¥150

Collection of payments

For same-site (local) payment Per item ¥210

For different-site (remote) payment Per item ¥420 urgent Normal

¥840 ¥630

Checks and notes Checks cost ¥630 for one book of 50 sheets Notes cost ¥1,050 for one book of 50 sheets

Cashier’s checks ¥525 per check

Document/Card reissuing ¥1,050 to reissue each account book, transaction receipt or certificate ¥1,050 to reissue each card

Balance verification ¥420 per section each timeNotes: 1 . Amounts include 5% consumption tax and regional tax . 2 . the account pre-registered by customers who are registered for telephone banking will be used . 3 . transfers by telegraph are no longer provided as of June 1, 2010 .

84

Financial and

Co

rpo

rate Data

Capitalization (Non-Consolidated)

Cap

italization (N

on-C

onso

lidated

)

(Millions of yen)

Capital Capital

Month/Year increases thereafter

Remarks

Sep . 2000 66,666 419,781 Compensatory private placement (common stock, 333,334 thousand shares); issue price ¥300; transfer to capital ¥200

Oct . 2000 (260,000) 159,781 Non-compensatory reduction of capital • Capitalreductionof¥105,287millionbyredemptionofthe2ndpreferred

stock, 102,000 thousand shares; the 3rd preferred stock, 386,398 thousand shares; and the 4th preferred stock, 71,856 thousand shares

• Capitalreductionof¥154,712millionexceedingfaceamountofcommonstock and transferred to capital

Oct . 2000 260,000 419,781 Compensatory private placement (the 5th preferred stock, 866,667 thousand shares); issue price ¥300; transfer to capital ¥300

Nov . 2012 (319,781) 100,000 Capital reduction (Change in capital composition) Capital Stock was reduced by ¥319,781 million . Of which, ¥53,980 million was transferred to legal Capital Surplus, and the remaining ¥265,801 million was transferred to Other Capital Surplus .

History of Capitalization

Major Shareholders(As of September 30, 2013)

a. Common Stock Percentage of Number of shares held total outstanding shares

Aozora Bank, ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483,753,171 29 .32%the Master trust Bank of Japan, ltd . (trust Account) . . . . . . . . . 51,232,000 3 .10Japan trustee Services Bank, ltd . (trust Account) . . . . . . . . . . . 47,132,000 2 .86StAtE StREEt BANK AND tRuSt COMPANy . . . . . . . . . . . . . 44,111,789 2 .67tHE CHASE MANHAttAN BANK, N .A . lONDON . . . . . . . . . . . 41,750,297 2 .53ORiX Bank Corporation (trust Account 5200011) . . . . . . . . . . . . 39,969,000 2 .42tHE CHASE MANHAttAN BANK 385036 . . . . . . . . . . . . . . . . . 29,637,000 1 .80tHE CHASE MANHAttAN BANK, N .A . lONDON SECS lENDiNG OMNiBuS ACCOuNt . . . . . . . . . . . . . . . . . . . . . . . . 22,422,882 1 .36StAtE StREEt BANK AND tRuSt COMPANy 505224 . . . . . . 19,174,000 1 .16StAtE StREEt BANK AND tRuSt COMPANy . . . . . . . . . . . . . 18,051,975 1 .09NORtHERN tRuSt CO . (AvFC) RE FiDElity FuNDS . . . . . . . . 17,870,000 1 .08Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835,043,238 50 .61total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147,352 100 .00Notes: 1 . the above table was compiled based on the Bank’s Shareholder Registry as of September 30, 2013 . 2 . Fil investments (Japan) limited submitted a copy of a Major Shareholders Report dated August 6, 2013, stating their holdings with its joint holder

FMR llC as follows as of July 31, 2013 . they are not included, however, in the above table of major shareholders as the Bank was unable to confirm the actual number of shares held by the aforementioned shareholders as of the end of the second quarter .

Number of shares held Percentage of shares held

Fil investments (Japan) limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,078,000 1 .27%

FMR llC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,413,000 3 .73

Note: Percentage of shares held is the percentage of total outstanding shares including preferred shares .

c. Class C Series 5 Preferred Stock Percentage of Number of shares held total outstanding shares

the Resolution and Collection Corporation . . . . . . . . . . . . . . . . . . . 214,579,295 100 .00%

b. Class A Series 4 Preferred Stock Percentage of Number of shares held total outstanding shares

Deposit insurance Corporation of Japan . . . . . . . . . . . . . . . . . . . . . 24,072,000 100 .00%

85

Financial and

Co

rpo

rate Data

Cap

italization (N

on-C

onso

lidated

)

Ownership and Distribution of Shares(As of September 30, 2013)

a. Common Stock

Stock Status (1 tangen unit = 1,000 shares)

National

Foreign Investors Fractional

and Financial Other shares of municipal Financial instruments domestic Other than Individuals common Classification government institutions firms companies individuals Individuals and others Total stock

Number of shareholders . . . — 62 53 712 412 64 47,280 48,583 —Number of shares held (tangen) . . . . . . . . . . . . . . — 222,935 36,730 22,798 648,202 1,418 717,928 1,650,011 136,352Percentage of total number of shares . . . . . . — 13 .51 2 .23 1 .38 39 .29 0 .08 43 .51 100 .00 —Notes: 1 . treasury stock of 483,753,171 shares comprises 483,753 tangen units under individuals and others and 171 shares under Fractional shares of

common stock . 2 . in the Other domestic companies column, shares in the name of Japan Securities Depository Center, incorporated represent one tangen unit .

b. Class A Series 4 Preferred Stock


National


and Financial Other shares of municipal Financial instruments domestic Other than Individuals preferred Classification government institutions firms companies individuals Individuals and others Total stock

Number of shareholders . . . — — — 1 — — — 1 —Number of shares held (tangen) . . . . . . . . . . . . . . — — — 24,072 — — — 24,072 —Percentage of total number of shares . . . . . . . — — — 100 .00 — — — 100 .00 —

c. Class C Series 5 Preferred Stock


National


and Financial Other shares of municipal Financial instruments domestic Other than Individuals preferred Classification government institutions firms companies individuals Individuals and others Total stock

Number of shareholders . . . — 1 — — — — — 1 —Number of shares held (tangen) . . . . . . . . . . . . . . — 214,579 — — — — — 214,579 295Percentage of total number of shares . . . . . . . — 100 .00 — — — — — 100 .00 —

86

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Disclosure Based on Basel II Capital Accord Pillar III—Market DisciplineDisclosure Based on Basel II Capital Accord Pillar III—Market Discipline

Quantitative Disclosure

1. Names and aggregate capital for unconsolidated subsidiaries that are deducted from consolidated regulatory capital and have less than the compulsory amount of capital

None of the unconsolidated subsidiaries where investment from the Bank or consolidated subsidiaries is deducted from consolidated regulatory capital was assigned compulsory capital requirements as of end-September 2013 and end-September 2012 .

2. Items pertaining to capital structuresthese items are described in ‘Consolidated Capital Adequacy Ratio (Domestic Standard),’ and ‘Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .’

3. Items pertaining to capital adequacy

this section describes the information consistent with FSA Notice Number 15, Basel ii Pillar iii—Market Discipline, based on Article 19-2 .1 .5 .d and 19-3 .1 .3 .c of the Ordinance for the Enforcement of the Banking Act (Ministry of Finance Ordinance Number 10, 1982) issued on March 23, 2007 . ‘Notice’ in this section refers to FSA Notice Number 19, Basel ii Pillar i— Required Capital, issued on March 27, 2006 .

(1) Breakdown by Portfolio (Non-Consolidated)(100 Million yen)

Sep. 2013 Sep. 2012

CategoryAmount of exposure

Amount of credit

risk assets

Amount of capital

requirementsAmount of exposure

Amount of credit

risk assets

Amount of capital

requirements

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 — — 123 — — Claims on Japanese government/bank 10,013 — — 10,897 — — Claims on foreign central government/bank . . . . . . . . . . . . . . . . . . . . . 2,485 5 0 2,936 3 0 Claims on Bank for international Settlements (BiS) . . . . . . . . . . . . . . . . — — — — — — Claims on Japanese local public bodies . . . . . . . . . . . . . . . . . . . . . . . . 642 4 0 819 5 0 Claims on non-central government public sector entities (PSEs) of foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 113 5 532 101 4 Claims on multilateral development banks (MDBs) . . . . . . . . . . . . . . . . — — — — — — Claims on Japan Finance Organization for Municipalities (JFM) . . . . . . . 47 0 0 9 0 0 Claims on organs affiliated with the Japanese government . . . . . . . . . . 1,371 79 3 977 98 4 Claims on three major local public corporations . . . . . . . . . . . . . . . . . . 366 2 0 613 2 0 Claims on financial institutions and type i financial instruments business operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,048 958 38 4,379 1,049 42 Claims on corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,582 13,754 550 15,820 13,402 536 Claims on SMEs and individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Mortgage-backed housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7 0 21 7 0 Claims on projects including acquisition of real estate properties . . . . . 1,875 1,859 74 1,681 1,681 67 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . 556 639 26 753 738 30 Cash items in process of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — loans guaranteed by Credit Guarantee Association, etc . . . . . . . . . . . . — — — — — — loans guaranteed by Regional Economy vitalization Corporation of Japan (REviC), etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equity, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,707 1,686 67 1,371 1,348 54 Securitization (as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0

Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0 — —

Securitization (not as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . 5,583 5,221 209 5,884 5,485 219 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 160 6 355 184 7 look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,187 5,060 202 5,267 5,301 212 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 — — 262 — —

Fund (look-through approach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,532 2,726 109 2,719 1,990 80 Risk weight 0% to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004 97 4 1,001 103 4 Risk weight > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 14 1 32 11 0 Risk weight > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 303 12 296 258 10 Risk weight > 100% <= 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,880 2,076 83 1,260 1,499 60 Risk weight > 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 235 9 70 119 5 Capital deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 — — 60 — —

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790 790 32 798 797 32 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,235 27,845 1,114 50,332 26,705 1,068 Notes:1.AmountofExposure •Afterdeductingtheamountequivalenttopartialdirectwrite-offs(beforeapplyingcreditriskmitigationeffect). Specific allowance for loan-losses and allowance for loans to restructuring countries are not subject to the

deduction . •TheamountisequivalenttocreditextensionsetforthintheNotice(aftertheeffectofdeductingtheamount

equivalent to credit extension under the close-out netting agreement) . 2.AmountofCreditRisk •Afterapplyingcreditriskmitigationeffect. 3.AmountofCapitalRequirements •AsthestandardapproachanddomesticstandardareadoptedbyAozoraBank,theamountiscalculated

taking 4% of credit risk assets . 4. IndicationMethodafter •Theamountisroundedtothenearestwholenumber.Thesameappliestothefollowingcharts. the Decimal Point

87

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Breakdown by Portfolio (Consolidated)(100 Million yen)

Sep. 2013 Sep. 2012

CategoryAmount of exposure

Amount of credit

risk assets

Amount of capital

requirementsAmount of exposure

Amount of credit

risk assets

Amount of capital

requirements

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 — — 123 — — Claims on Japanese government/bank . . . . . . . . . . . . . . . . . . . . . . . . . 10,015 — — 10,899 — — Claims on foreign central government/bank . . . . . . . . . . . . . . . . . . . . . 2,485 5 0 2,936 3 0 Claims on Bank for international Settlements (BiS) . . . . . . . . . . . . . . . . — — — — — — Claims on Japanese local public bodies . . . . . . . . . . . . . . . . . . . . . . . . 642 4 0 819 5 0 Claims on non-central government public sector entities (PSEs) of foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 113 5 532 101 4 Claims on multilateral development banks (MDBs) . . . . . . . . . . . . . . . . — — — — — — Claims on Japan Finance Organization for Municipalities (JFM) . . . . . . . 47 0 0 9 0 0 Claims on organs affiliated with the Japanese government . . . . . . . . . . 1,371 79 3 977 98 4 Claims on three major local public corporations . . . . . . . . . . . . . . . . . . 366 2 0 613 2 0 Claims on financial institutions and type i financial instruments business operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,126 974 39 4,354 1,044 42 Claims on corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,697 14,845 594 16,205 13,781 551 Claims on SMEs and individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Mortgage-backed housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7 0 21 7 0 Claims on projects including acquisition of real estate properties . . . . . 1,899 1,883 75 1,684 1,684 67 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . 1,097 1,403 56 1,479 1,729 69 Cash items in process of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — loans guaranteed by Credit Guarantee Association, etc . . . . . . . . . . . . — — — — — — loans guaranteed by Regional Economy vitalization Corporation of Japan (REviC), etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equity, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,443 1,442 58 1,189 1,188 48 Securitization (as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0

Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0 — —

Securitization (not as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . 5,713 5,309 212 5,928 5,514 221 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 199 8 374 188 8 look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,236 5,110 204 5,292 5,326 213 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 — — 262 — —

Fund (look-through approach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,652 685 27 1,378 458 18 Risk weight 0% to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999 97 4 1,001 103 4 Risk weight > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 0 6 2 0 Risk weight > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 224 9 77 64 3 Risk weight > 100% <= 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 131 5 167 185 7 Risk weight > 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 232 9 68 105 4 Capital deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 — — 60 — —

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975 975 39 906 905 36 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,165 27,727 1,109 50,052 26,519 1,061 Notes:1.AmountofExposure •Afterdeductingtheamountequivalenttopartialdirectwrite-offs(beforeapplyingcreditriskmitigationeffect). Specific allowance for loan-losses and allowance for loans to restructuring countries are not subject to the

deduction . •TheamountisequivalenttocreditextensionsetforthintheNotice(aftertheeffectofdeductingtheamount

equivalent to credit extension under the close-out netting agreement) . 2.AmountofCreditRisk •Afterapplyingcreditriskmitigationeffect. 3.AmountofCapitalRequirements •AsthestandardapproachanddomesticstandardareadoptedbyAozoraBank,theamountiscalculated

taking 4% of credit risk assets .

88

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline

(2) Amount of capital required to cover credit risk related to exposures for which credit risk assets are deemed applicable:

this information is described in Quantitative Disclosure 3 . (1) .

(Millions of yen)

Sep. 2013 Sep. 2012

Consolidated Non-consolidated Consolidated Non-consolidated

internal Model Approach . . . . . . . . 3,335 3,335 3,851 3,851

Standardized Approach . . . . . . . . . 1,117 1,098 3,824 3,801interest Rate Risk . . . . . . . . . . . . 458 452 1,013 1,007Equity Risk . . . . . . . . . . . . . . . . . 17 17 5 5Foreign Exchange Risk . . . . . . . . 13 0 17 0Commodities Risk . . . . . . . . . . . . 628 628 171 171Options transactions . . . . . . . . . . — — 2,616 2,616

total . . . . . . . . . . . . . . . . . . . . . . . . 4,452 4,433 7,675 7,652

Notes: the calculation methods are as follows: 1 . internal Model Approach General market risk for the non-consolidated interest rates, foreign exchange (major currencies), equity and CDS trading 2 . Standardized Approach General market risk not applicable to the internal model and specific risk for CDS trading, etc . 3 . Options transactions are calculated by the Standardized Approach in September 2012 and by the internal Model Approach in September 2013,

changing the method of measurement from September 30, 2013 .

(4) Amount of capital required to cover operational risk and amounts presented by each method:this information is described in ‘Consolidated Capital Adequacy Ratio (Domestic Standard),’ and ‘Non-Consolidated Capital

Adequacy Ratio (Domestic Standard) .’

(5) Capital adequacy ratio and Tier I ratio:these ratios are described in ‘Consolidated Capital Adequacy Ratio (Domestic Standard),’ and ‘Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .’

(6) Total capital requirements:this information is described in ‘Consolidated Capital Adequacy Ratio (Domestic Standard),’ and ‘Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .’

(3) Amount of capital required to cover market risk and amounts presented by each method used:

89

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Breakdown of Exposure by Industry Sector (Non-Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

Industry sector Loans etc. SecuritiesOTC

derivatives Total Loans etc. SecuritiesOTC

derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . 8,580 6,825 2 15,407 7,828 8,952 3 16,782 Financial institution . . . . . . . . . . . . . 2,105 373 1,714 4,192 2,541 256 1,759 4,556 Manufacturer . . . . . . . . . . . . . . . . . 3,481 53 35 3,569 3,224 183 55 3,462 Agriculture/forestry/fisheries . . . . . . 29 — 1 31 29 — 5 34 Mining . . . . . . . . . . . . . . . . . . . . . . 140 — — 140 64 — — 64 Construction . . . . . . . . . . . . . . . . . . 219 — 0 219 409 — 0 410 utilities (electric power/gas/ heat supply/water service) . . . . . . 479 — 2 481 234 — 0 234 information & telecommunications . . 768 259 2 1,029 898 267 2 1,168 transport . . . . . . . . . . . . . . . . . . . . 1,345 4 14 1,364 1,408 3 17 1,427 wholesale/retail . . . . . . . . . . . . . . . 1,413 45 13 1,471 1,439 36 74 1,550 Other financial business (moneylending,leasing) . . . . . . . . . 7,411 3,046 8 10,464 6,118 2,713 4 8,835 Real estate . . . . . . . . . . . . . . . . . . . 8,065 859 11 8,935 8,136 647 17 8,800 various services (excluding leasing) . . . . . . . . . . . . 1,657 20 4 1,682 1,738 22 4 1,763 Others . . . . . . . . . . . . . . . . . . . . . . 1,185 — 65 1,250 1,176 — 71 1,246

Total . . . . . . . . . . . . . . . . . . . . . . . . 36,878 11,485 1,872 50,235 35,241 13,079 2,011 50,332

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above . 2 . the category Sovereign includes the exposures to sovereign as stipulated in the Notice . the same applies to the following charts . 3 . the category Financial institution includes exposures to financial institutions as stipulated in the Notice . the same applies to the following charts .

Breakdown of Exposure by Area (Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

Area Loans etc. SecuritiesOTC


derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . 31,156 6,766 513 38,435 31,498 7,926 626 40,050 Overseas . . . . . . . . . . . . . . . . . . . . . . . 6,150 4,222 1,358 11,730 4,084 4,532 1,386 10,002

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 37,306 10,988 1,872 50,165 35,583 12,458 2,011 50,052

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above . 2 . Disclosure of the average balance is not made because there is no significant difference between the average risk position of the exposure for the

term and the balance at the term-end .

4. Items pertaining to credit risk(1) Breakdown of term-end credit risk exposure balance by area, industry and residual period, as well as category:

Breakdown of Exposure by Area (Non-Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

Area Loans etc. SecuritiesOTC


derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . 30,760 7,237 513 38,510 31,135 8,505 626 40,265 Overseas . . . . . . . . . . . . . . . . . . . . . . . 6,119 4,248 1,358 11,725 4,106 4,574 1,386 10,066

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 36,878 11,485 1,872 50,235 35,241 13,079 2,011 50,332

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above . 2 . Disclosure of the average balance is not made because there is no significant difference between the average risk position of the exposure for the

term and the balance at the term-end .

90

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


Breakdown of Exposure by Industry Sector (Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012



derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . 8,580 6,827 2 15,410 7,828 8,954 3 16,785 Financial institution . . . . . . . . . . . . . 2,129 313 1,714 4,156 2,459 198 1,759 4,416 Manufacturer . . . . . . . . . . . . . . . . . 3,863 53 35 3,952 3,437 183 55 3,674 Agriculture/forestry/fisheries . . . . . . 31 — 1 33 29 — 5 34 Mining . . . . . . . . . . . . . . . . . . . . . . 216 — — 216 75 — — 75 Construction . . . . . . . . . . . . . . . . . . 219 — 0 219 409 — 0 410 utilities (electric power/gas/ heat supply/water service) . . . . . . 534 — 2 536 240 — 0 240 information & telecommunications . . 1,163 259 2 1,424 1,142 267 2 1,411 transport . . . . . . . . . . . . . . . . . . . . 1,483 4 14 1,501 1,444 3 17 1,464 wholesale/retail . . . . . . . . . . . . . . . 1,452 45 13 1,510 1,497 36 74 1,608 Other financial business (moneylending,leasing) . . . . . . . . . 5,798 2,568 8 8,373 5,158 2,048 4 7,210 Real estate . . . . . . . . . . . . . . . . . . . 8,065 884 11 8,960 8,173 667 17 8,857 various services (excluding leasing) . . . . . . . . . . . . 2,055 20 4 2,079 1,969 22 4 1,995 Others . . . . . . . . . . . . . . . . . . . . . . 1,718 14 65 1,797 1,722 81 71 1,874

Total . . . . . . . . . . . . . . . . . . . . . . . . 37,306 10,988 1,872 50,165 35,583 12,458 2,011 50,052

Note: loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

Breakdown of Exposure by Remaining Period (Non-Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

OTC OTC Remaining period Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

< 1 year . . . . . . . . . . . . . . . . . . . . 10,553 1,394 85 12,032 10,459 2,102 86 12,647

=> 1 year < 5 years . . . . . . . . . . . . . 14,436 2,443 230 17,110 13,984 3,254 239 17,477

=> 5 years . . . . . . . . . . . . . . . . . . . 11,889 7,648 1,557 21,094 10,798 7,722 1,687 20,208

Total . . . . . . . . . . . . . . . . . . . . . . 36,878 11,485 1,872 50,235 35,241 13,079 2,011 50,332

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above . 2 . Exposures with remaining period => 5 years also include the transactions for which no maturity period is stipulated .

Breakdown of Exposure by Remaining Period (Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

OTC OTC Remaining period Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

< 1 year . . . . . . . . . . . . . . . . . . . . 8,972 1,394 85 10,451 9,970 2,102 86 12,158

=> 1 year < 5 years . . . . . . . . . . . . . 14,216 2,443 230 16,889 13,318 3,254 239 16,811

=> 5 years . . . . . . . . . . . . . . . . . . . 14,118 7,150 1,557 22,825 12,295 7,102 1,687 21,084

Total . . . . . . . . . . . . . . . . . . . . . . 37,306 10,988 1,872 50,165 35,583 12,458 2,011 50,052

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above . 2 . Exposures with remaining period => 5 years also include the transactions for which no maturity period is stipulated .

91

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Breakdown of Exposure Overdue for Three Months or More by Industry Sector (Non-Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012



derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . — — — — — — — — Financial institution . . . . . . . . . . . . . 3 — — 3 50 — — 50 Manufacturer . . . . . . . . . . . . . . . . . 3 0 — 3 126 1 0 127 Agriculture/forestry/fisheries . . . . . . — — — — — — — — Mining . . . . . . . . . . . . . . . . . . . . . . 25 — — 25 4 — — 4 Construction . . . . . . . . . . . . . . . . . . 26 — — 26 26 — — 26 utilities (electric power/gas/ heat supply/water service) — — — — — — — — information & telecommunications . . 15 — — 15 15 8 — 23 transport . . . . . . . . . . . . . . . . . . . . 200 — — 200 163 — 0 163 wholesale/retail . . . . . . . . . . . . . . . 57 — 0 57 18 — 20 38 Other financial business (moneylending,leasing) . . . . . . . . . 167 — — 167 187 0 — 187 Real estate . . . . . . . . . . . . . . . . . . . 44 — — 44 96 — 0 96 various services (excluding leasing) . . . . . . . . . . . . 13 0 — 13 38 0 — 38 Others . . . . . . . . . . . . . . . . . . . . . . 1 — — 1 1 — — 1

Total . . . . . . . . . . . . . . . . . . . . . . . . 556 0 0 556 723 8 21 753


(2) Balance of term-end exposures overdue three months or more and breakdown by area and industry:

Breakdown of Exposure Overdue for Three Months or More by Area (Non-Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 247 0 0 247 487 1 21 509 Overseas . . . . . . . . . . . . . . . . . . . 308 — — 308 236 8 0 244

Total . . . . . . . . . . . . . . . . . . . . . . 556 0 0 556 723 8 21 753


Breakdown of Exposure Overdue for Three Months or More by Area (Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 603 0 0 603 923 1 21 945 Overseas . . . . . . . . . . . . . . . . . . . 494 — — 494 526 8 0 534

Total . . . . . . . . . . . . . . . . . . . . . . 1,097 0 0 1,097 1,449 8 21 1,479


92

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


Breakdown of Exposure Overdue for Three Months or More by Industry Sector (Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012



derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . — — — — — — — — Financial institution . . . . . . . . . . . . . 3 — — 3 50 — — 50 Manufacturer . . . . . . . . . . . . . . . . . 63 0 — 63 217 1 0 218 Agriculture/forestry/fisheries . . . . . . 2 — — 2 — — — — Mining . . . . . . . . . . . . . . . . . . . . . . 40 — — 40 4 — — 4 Construction . . . . . . . . . . . . . . . . . . 26 — — 26 26 — — 26 utilities (electric power/gas/ heat supply/water service) 15 — — 15 — — — — information & telecommunications . . 64 — — 64 110 8 — 117 transport . . . . . . . . . . . . . . . . . . . . 210 — — 210 183 — 0 184 wholesale/retail . . . . . . . . . . . . . . . 87 — 0 87 51 — 20 72 Other financial business (moneylending,leasing) . . . . . . . . . 167 — — 167 191 0 — 191 Real estate . . . . . . . . . . . . . . . . . . . 44 — — 44 104 — 0 104 various services (excluding leasing) . . . . . . . . . . . . 19 0 — 19 76 0 — 76 Others . . . . . . . . . . . . . . . . . . . . . . 356 — — 356 437 — — 437

Total . . . . . . . . . . . . . . . . . . . . . . . . 1,097 0 0 1,097 1,449 8 21 1,479


(3) Year-end balances and year on year changes for general allowance for loan losses, specific allowance for loan losses and country risk allowance

(100 Million yen)

Area Sep. 2013 Sep. 2012 Mar. 2013 Mar. 2012

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 420 361 551

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 260 270 217 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 182 212 75 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 78 58 142

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644 680 632 768

(100 Million yen)

Area Sep. 2013 – Mar. 2013 Sep. 2012 – Mar. 2012

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 (131)

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53) 43 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56) 107 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (64)

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (88)

Breakdown of Allowance by Area (Non-Consolidated)

93

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Breakdown of Allowance by Industry Sector (Non-Consolidated)(100 Million yen)


General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 420 361 551

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 260 270 217 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 72 73 4 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 0 — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 2 utilities (electric power/gas/heat supply/water service) . . . . . . . . . — — — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . 2 24 1 25 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 54 59 59 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 14 10 8 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . 46 3 33 56 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 83 92 49 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . 1 9 1 14 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 — 1 —

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644 680 632 768

(100 Million yen)


General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 420 360 550

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 265 275 220 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 182 212 75 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 83 63 146

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 684 634 770

(100 Million yen)



Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (54) 44 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56) 107 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (63)


Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (86)

Breakdown of Allowance by Area (Consolidated)

94

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(100 Million yen)



Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53) 43 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65) 68 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0) 0 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2) utilities (electric power/gas/heat supply/water service) . . . . . . . . . . — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . 1 (1) transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (5) wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 6 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . 13 (53) Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) 35 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . (0) (5) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 —


Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (88)

(100 Million yen)


General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 420 360 550

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 265 275 220 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 72 73 4 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 5 4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 2 utilities (electric power/gas/heat supply/water service) . . . . . . . . . — — — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . 2 24 1 25 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 54 59 59 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 14 10 8 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . 46 3 33 56 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 83 92 49 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . 1 9 1 14 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 — 1 —

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 684 634 770

Breakdown of Allowance by Industry Sector (Consolidated)

95

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

(100 Million yen)

Industry sector Sep. 2013 Sep. 2012 Mar. 2013

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0 0Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —utilities (electric power/gas/heat supply/water service) . . . . . . . . . . . . . . — — —information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2 5transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — 3wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 — —Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . . . . . — 5 —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 16various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 24

(100 Million yen)

Industry sector Sep. 2013 Sep. 2012 Mar. 2013

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0 0Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —utilities (electric power/gas/heat supply/water service) . . . . . . . . . . . . . . — — —information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2 5transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — 3wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 — —Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . . . . . — 5 —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 16various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 11 27

(4) Breakdown of Write-Offs by Industry Sector (Non-Consolidated)

Breakdown of Write-Offs by Industry Sector (Consolidated)

Note: the table shows the breakdown of the write-off of loans in the Statement of Operations .

Notes: 1 . the table shows the breakdown of the write-off of loans in the Statement of Operations . 2 . the ‘write-offs’ include write-offs made by AOzORA loan Services Co ., ltd ., which are shown on the ‘Others’ line .

(100 Million yen)



Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (54) 44 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65) 68 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 1 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2) utilities (electric power/gas/heat supply/water service) . . . . . . . . . . — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . 1 (1) transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (5) wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 6 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . 13 (53) Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) 35 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . (0) (5) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 —


Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (86)

96

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(5) Outstanding Exposure after Recognizing Credit Risk Mitigations by Risk Weight (Non-Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

Amount of exposure

Amount of capital deduction

Amount of exposure

Amount of capital deductionRisk weight

Application of external rating


0% . . . . . . . . . . . . . . . . . . . . . . . . . 14,784 2,468 — 15,644 2,921 — > 0% <= 10% . . . . . . . . . . . . . . . . . 1,949 — — 1,224 — — > 10% <= 20% . . . . . . . . . . . . . . . . . 5,311 5,209 — 6,632 5,535 — > 20% <= 50% . . . . . . . . . . . . . . . . . 2,791 2,698 — 2,417 2,191 — > 50% <= 75% . . . . . . . . . . . . . . . . . 297 80 — 123 101 — > 75% <= 100% . . . . . . . . . . . . . . . . 22,282 3,751 — 21,743 3,711 — > 100% <= 150% . . . . . . . . . . . . . . . 2,300 249 — 1,875 242 — > 150% . . . . . . . . . . . . . . . . . . . . . 176 26 — 120 33 — Capital deduction . . . . . . . . . . . . . . 253 48 235 402 62 378

Total . . . . . . . . . . . . . . . . . . . . . . . 50,144 14,528 235 50,181 14,796 378

Notes: 1 . in the ‘Application of external rating’ section, the exposures to which an external rating is applied in the calculation of risk weight are included . 2 . Capital deduction above includes the amount deducted from capital in accordance with Provision 43 .1 .2 and 43 .1 .5 of the Notice .

Outstanding Exposure after Recognizing Credit Risk Mitigations by Risk Weight (Consolidated) (100 Million yen)

Sep. 2013 Sep. 2012

Amount of exposure

Amount of capital deduction

Amount of exposure

Amount of capital deductionRisk weight



0% . . . . . . . . . . . . . . . . . . . . . . . . . 14,796 2,468 — 15,655 2,921 — > 0% <= 10% . . . . . . . . . . . . . . . . . 1,945 — — 1,224 — — > 10% <= 20% . . . . . . . . . . . . . . . . . 5,492 5,389 — 6,646 5,549 — > 20% <= 50% . . . . . . . . . . . . . . . . . 2,779 2,714 — 2,433 2,228 — > 50% <= 75% . . . . . . . . . . . . . . . . . 296 80 — 104 101 — > 75% <= 100% . . . . . . . . . . . . . . . . 23,260 4,759 — 21,894 3,996 — > 100% <= 150% . . . . . . . . . . . . . . . 1,070 380 — 1,427 422 — > 150% . . . . . . . . . . . . . . . . . . . . . 181 32 — 117 33 — Capital deduction . . . . . . . . . . . . . . 253 48 235 402 62 378

Total . . . . . . . . . . . . . . . . . . . . . . . 50,073 15,870 235 49,902 15,312 378

Notes: 1 . in the ‘Application of external rating’ section, the exposures to which an external rating is applied in the calculation of risk weight are included . 2 . Capital deduction above includes the amount deducted from capital in accordance with Provision 31 .1 .3 and 31 .1 .6 of the Notice .

5. Items pertaining to credit risk mitigation techniques

Breakdown of Exposure for which Credit Risk Mitigations Are Applied (Non-Consolidated) (100 Million yen)

Credit risk mitigation Sep. 2013 Sep. 2012

Eligible financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 75 Cash and deposits at Aozora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 47 Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 28 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Guarantees and credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,898 1,208 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,898 1,208 Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,976 1,283

Notes: 1 . the exposure above does not include the amount for which a credit risk mitigation is recognized through netting between loans and deposits at the Bank under the netting agreement (Provision 117 of the Notice) .

2 . Regarding the issuers of equities and debt securities included in Eligible Financial Assets, we have confirmed that the risk of concentration in individual companies or industries is modest .

97

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

6. Items pertaining to counterparty risk on derivative product transactions

Breakdown of Derivative Products (Non-Consolidated) (100 Million yen)

Type of transaction

Sep. 2013 Sep. 2012

Gross replacement

costGross

add-on

Credit- equivalent

amount (before credit risk mitigating

effect is recognized)

Credit- equivalent

amount reduction

effect through eligible

financial collateral

Credit- equivalent

amount (after credit

risk mitigating effect is

recognized)

Gross replacement

costGross

add-on

Credit- equivalent



Credit- equivalent

amount reduction



Credit- equivalent



recognized)

Forex and gold-related . . . . . . . . . . . . . . . 113 139 252 — 252 133 138 271 — 271 interest rate-related . . . . . . . . . . . . . . . . . 3,218 1,694 4,912 — 4,912 3,756 1,747 5,503 — 5,503 Equity-related . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Precious metal-related (excluding gold-related) . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Other commodity-related . . . . . . . . . . . . . 4 31 35 — 35 3 12 15 — 15 Credit derivatives (counterparty risk) . . . . . 15 155 170 — 170 33 216 249 — 249 Credit-equivalent amount reduction effect through close-out netting agreement . . . (2,577) (920) (3,497) — (3,497) (3,035) (991) (4,026) — (4,026)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 772 1,100 1,872 — 1,872 889 1,122 2,011 — 2,011

Note: the credit-equivalent amount is calculated by applying the current-exposure method .

Breakdown of Exposure for which Credit Risk Mitigations Are Applied (Consolidated) (100 Million yen)

Credit risk mitigation Sep. 2013 Sep. 2012

Eligible financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 75 Cash and deposits at Aozora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 47 Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 28 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Guarantees and credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943 1,238 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943 1,238 Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,021 1,313

Notes: 1 . the exposure above does not include the amount for which a credit risk mitigation is recognized through netting between loans and deposits at the Bank under the netting agreement (Provision 117 of the Notice) .

2 . Regarding the issuers of equities and debt securities included in Eligible Financial Assets, we have confirmed that the risk of concentration in individual companies or industries is modest .

98

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


Breakdown of Eligible Financial Collateral Associated with Derivatives by Type

No applicable transactions existed as of end-September 2013 and end-September 2012 .

Breakdown of Derivative Products (Consolidated) (100 Million yen)

Type of transaction

Sep. 2013 Sep. 2012

Gross replacement

costGross

add-on

Credit- equivalent



Credit- equivalent

amount reduction



Credit- equivalent



recognized)

Gross replacement

costGross

add-on

Credit- equivalent



Credit- equivalent

amount reduction



Credit- equivalent



recognized)

Forex and gold-related . . . . . . . . . . . . . . . 113 139 252 — 252 133 138 271 — 271 interest rate-related . . . . . . . . . . . . . . . . . 3,218 1,694 4,912 — 4,912 3,756 1,747 5,503 — 5,503 Equity-related . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Precious metal-related (excluding gold-related) . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Other commodity-related . . . . . . . . . . . . . 4 31 35 — 35 3 12 15 — 15 Credit derivatives (counterparty risk) . . . . . 15 155 170 — 170 33 216 249 — 249 Credit-equivalent amount reduction effect through close-out netting agreement . . . (2,577) (920) (3,497) — (3,497) (3,035) (991) (4,026) — (4,026)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 772 1,100 1,872 — 1,872 889 1,122 2,011 — 2,011

Note: the credit-equivalent amount is calculated by applying the current-exposure method .

Breakdown of Credit Derivative Transactions (Non-Consolidated) (100 Million yen)

Type of transactionPurchase or supply

of guarantee

Sep. 2013 Sep. 2012

Notional principal Notional principal

transactions subject to the calculation of credit equivalent amount . . . . . . . 2,711 5,066 Credit derivatives (credit reference asset of single organization) . . . . . . . . . . Purchase 1,382 2,431

Supply 1,328 2,580 First-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase — 55

Supply — — Second-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase — —

Supply — — transactions not subject to the calculation of credit-equivalent amount . . . Purchase — — Note: the amount used in order to recognize the effect of a credit risk mitigation is provided in the transactions not subject to the calculation of credit-

equivalent amount .

Breakdown of Credit Derivative Transactions (Consolidated) (100 Million yen)

Type of transactionPurchase or supply

of guarantee

Sep. 2013 Sep. 2012

Notional principal Notional principal

transactions subject to the calculation of credit equivalent amount . . . . . . . 2,711 5,066 Credit derivatives (credit reference asset of single organization) . . . . . . . . . . Purchase 1,382 2,431

Supply 1,328 2,580 First-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase — 55

Supply — — Second-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase — —

Supply — — transactions not subject to the calculation of credit-equivalent amount . . . Purchase — — Note: the amount used in order to recognize the effect of a credit risk mitigation is provided in the transactions not subject to the calculation of credit-

equivalent amount .

99

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Securitization Exposure Held by the Bank (Consolidated) (100 Million yen)

Category of underlying assets

Sep. 2013

Securitization exposure Resecuritization exposure Total

On-Balance Off-Balance On-Balance Off-Balance On-Balance Off-Balance

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . . . . . . . . . . . . 0 — — — 0 — Residential loan receivables . . . . . . . . . . . . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — — 0 —

7. Items pertaining to securitization transactions

(1) Securitization Transactions Originated by Aozora Group Securitization Exposure Held by the Bank (Non-Consolidated) (100 Million yen)


Sep. 2013



Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . . . . . . . . . . . . 0 — — — 0 — Residential loan receivables . . . . . . . . . . . . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — — 0 —

(100 Million yen)


Sep. 2012



Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . . . . . . . . . . . . 0 — — — 0 — Residential loan receivables . . . . . . . . . . . . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 — 0 — Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — 0 — 0 —

100

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(100 Million yen)


Sep. 2012



Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . . . . . . . . . . . . 0 — — — 0 — Residential loan receivables . . . . . . . . . . . . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 — 0 — Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — 0 — 0 —

Securitization Exposure Deducted from Equity Capital (Non-Consolidated) (100 Million yen)


Sep. 2013 Sep. 2012

Amount of exposure Amount of capital

deduction Amount of exposure Amount of capital

deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Claims on corporations . . . . . . . . . . . . . . . . . . — — — — Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 0 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 0

Securitization Exposure Deducted from Equity Capital (Consolidated) (100 Million yen)


Sep. 2013 Sep. 2012



deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Claims on corporations . . . . . . . . . . . . . . . . . . — — — — Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 0 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 0

101

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Amount of Underlying Assets, Amount of Exposure Overdue for Three Months or More and Amount of Losses for the Term (Non-Consolidated)

(100 Million yen)


Sep. 2012

Amount of exposure

Amount of underlying assets Amount of exposure

overdue for three months or more

Losses for the termTotal

Asset transfer securitization

Synthetic securitization

Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . 0 46 46 — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . 0 42 42 — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 0 88 88 — — —

(100 Million yen)


Sep. 2013

Amount of exposure






Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . 0 8 8 — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . — — — — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 0 8 8 — — —

Amount of Underlying Assets, Amount of Exposure Overdue for Three Months or More and Amount of Losses for the Term (Consolidated)

(100 Million yen)


Sep. 2013

Amount of exposure






Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . 0 8 8 — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . — — — — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 0 8 8 — — —

102

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(100 Million yen)


Sep. 2013 Sep. 2012

Amount securitized for

the current term

Amount equivalent to equity capital

Profit & loss on sale recognized

during the current term


the current term




Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . — — — — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . — — — — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . — — — — — —

Outline of Exposures Securitized for the Current Term (Non-Consolidated)

Note: the amount equivalent to the increased equity capital in tandem with securitization originated by Aozora Bank is provided as the amount equivalent to equity capital .

(100 Million yen)


Sep. 2012

Amount of exposure






Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . 0 46 46 — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . 0 42 42 — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 0 88 88 — — —

(100 Million yen)


Sep. 2013 Sep. 2012


the current term





the current term




Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . — — — — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . — — — — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . — — — — — —

Outline of Exposures Securitized for the Current Term (Consolidated)

Note: the amount equivalent to the increased equity capital in tandem with securitization originated by Aozora Bank is provided as the amount equivalent to equity capital .

103

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Non-Consolidated)

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Consolidated)

(100 Million yen)

Risk weight

Sep. 2013

Securitization exposure Resecuritization exposure

On-Balance Off-Balance On-Balance Off-Balance

OutstandingCapital

requirement OutstandingCapital



requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — — — — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . — — — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — — — — —

(100 Million yen)

Risk weight

Sep. 2013



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — — — — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . — — — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — — — — —

(100 Million yen)

Risk weight

Sep. 2012



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — — — — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . — — — — 0 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — 0 — — —

(100 Million yen)

Risk weight

Sep. 2012



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — — — — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . — — — — 0 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — 0 — — —

104

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(2) Securitization Transactions in which Aozora Group Invests

(100 Million yen)


Sep. 2013



Project finance . . . . . . . . . . . . . . . . . . . . . . . . 305 111 — — 305 111 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 1 — — 383 1 Claims on corporations . . . . . . . . . . . . . . . . . . 40 — 2 — 42 — Residential loan receivables . . . . . . . . . . . . . . 40 30 — — 40 30 Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . 61 39 — — 61 39 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,156 41 118 — 4,274 41 Non-performing loans . . . . . . . . . . . . . . . . . . . 99 — — — 99 — lease receivables . . . . . . . . . . . . . . . . . . . . . . 31 — — — 31 — Consumer loan receivables . . . . . . . . . . . . . . . 125 — — — 125 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 — 0 — 3 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,242 221 120 — 5,362 221

(100 Million yen)


Sep. 2013



Project finance . . . . . . . . . . . . . . . . . . . . . . . . 311 111 — — 311 111 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 1 — — 383 1 Claims on corporations . . . . . . . . . . . . . . . . . . 89 — 2 — 91 — Residential loan receivables . . . . . . . . . . . . . . 40 30 — — 40 30 Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . 61 39 — — 61 39 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,181 41 118 — 4,299 41 Non-performing loans . . . . . . . . . . . . . . . . . . . 99 — — — 99 — lease receivables . . . . . . . . . . . . . . . . . . . . . . 31 — — — 31 — Consumer loan receivables . . . . . . . . . . . . . . . 174 — — — 174 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 — 0 — 3 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,372 221 120 — 5,492 221

(100 Million yen)


Sep. 2012



Project finance . . . . . . . . . . . . . . . . . . . . . . . . 143 16 — — 143 16 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567 1 — — 567 1 Claims on corporations . . . . . . . . . . . . . . . . . . 209 49 117 — 325 49 Residential loan receivables . . . . . . . . . . . . . . 16 — — — 16 — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . 33 18 — — 33 18 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,278 13 134 — 4,413 13 Non-performing loans . . . . . . . . . . . . . . . . . . . 203 — — — 203 — lease receivables . . . . . . . . . . . . . . . . . . . . . . 8 — — — 8 — Consumer loan receivables . . . . . . . . . . . . . . . 51 — — — 51 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 — 0 — 26 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,535 98 251 — 5,786 98

Securitization Exposure Held by the Group (Non-Consolidated)

Securitization Exposure Held by the Group (Consolidated)

Assets held for the purpose of securitization transactions and breakdown of these main assets by type As of end-September 2012 and end-September 2013, there were no assets held for the purpose of securitization transactions .

Securitization Exposures Subject to Early Amortization Provisions Retainedin line with the Provision 252 of the Notice, as of end-September 2012 and end-September 2013, there were no securitization exposures subject to early amortization treatment that are retained by external investors to calculate credit risk-weighted assets .

105

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

(100 Million yen)


Sep. 2012



Project finance . . . . . . . . . . . . . . . . . . . . . . . . 143 16 — — 143 16 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567 1 — — 567 1 Claims on corporations . . . . . . . . . . . . . . . . . . 209 49 117 — 325 49 Residential loan receivables . . . . . . . . . . . . . . 16 — — — 16 — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . 33 18 — — 33 18 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,322 13 134 — 4,456 13 Non-performing loans . . . . . . . . . . . . . . . . . . . 203 — — — 203 — lease receivables . . . . . . . . . . . . . . . . . . . . . . 8 — — — 8 — Consumer loan receivables . . . . . . . . . . . . . . . 51 — — — 51 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 — 0 — 26 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,579 98 251 — 5,830 98

(100 Million yen)


Sep. 2013 Sep. 2012



deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11 0 0 Claims on corporations . . . . . . . . . . . . . . . . . . 2 2 117 117 Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 165 225 203 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 178 342 320

Securitization Exposure Deducted from Equity Capital (Non-Consolidated)

(100 Million yen)


Sep. 2013 Sep. 2012



deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11 0 0 Claims on corporations . . . . . . . . . . . . . . . . . . 2 2 117 117 Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 165 225 203 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 178 342 320

Securitization Exposure Deducted from Equity Capital (Consolidated)

106

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(100 Million yen)

Risk weight

Sep. 2013



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . 103 1 — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . 146 2 — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 4,702 184 221 9 64 3 — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . 141 10 — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . 140 — — — 56 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,242 197 221 9 120 3 — —

(100 Million yen)

Risk weight

Sep. 2013



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . 177 1 — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . 146 2 — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 4,702 184 221 9 64 3 — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . 196 13 — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . 140 — — — 56 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,372 201 221 9 120 3 — —

(100 Million yen)

Risk weight

Sep. 2012



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . 141 1 — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . 90 2 — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 4,858 193 98 4 79 3 — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . 276 16 — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . 170 — — — 173 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,535 212 98 4 251 3 — —

(100 Million yen)

Risk weight

Sep. 2012



OutstandingCapital




requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — >0%, <= 20% . . . . . . . . . . . . . . . . . . . . . . . . . 161 1 — — — — — — >20%, <= 50% . . . . . . . . . . . . . . . . . . . . . . . . 90 2 — — — — — — >50%, <= 100% . . . . . . . . . . . . . . . . . . . . . . . 4,882 194 98 4 79 3 — — >100%, <= 350% . . . . . . . . . . . . . . . . . . . . . . 276 16 — — — — — — >350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — Capital deduction . . . . . . . . . . . . . . . . . . . . . 170 — — — 173 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,579 213 98 4 251 3 — —

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Non-Consolidated)

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Consolidated)

107

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

8. Items pertaining to market risk(1) The Value at Risk (VaR) number at term-end as well as the highest, lowest and average VaR numbers during

the disclosure period

Presence/Absence of Method Applied to Reduce Credit Risk to Resecuritization Exposures Originated by Aozora Group or in which Aozora Group Invests and Breakdown of Risk-Weight Categories Applied to GuarantorsAs of end-September 2012 and end-September 2013, there were no resecuritization exposures to which methods to reduce credit risk have been applied .

(3) Securitization exposure originated by Aozora Group that is subject to the calculation of the market risk amountthere was no securitization exposure originated by Aozora Group that was subject to the calculation of the market risk amount as of end-September 2012 and end-September 2013 .

(4) Securitization exposure in which Aozora Group invests that is subject to the calculation of the market risk amount

there was no securitization exposure in which Aozora Group invested that was subject to the calculation of the market risk amount as of end-September 2012 and end-September 2013 .

(100 Million yen)

Sep. 2013

Interest rate Equity Forex Others Total

trading . . . . . . . . . . . 0 1 0 0 2Banking . . . . . . . . . . 35 17 2 17 41

Total . . . . . . . . . . . . 35 18 2 17 42

(100 Million yen)

Sep. 2012

Interest rate Equity Forex Others Total

trading . . . . . . . . . . . 3 0 0 2 6Banking . . . . . . . . . . 22 8 0 12 39

Total . . . . . . . . . . . . 25 8 0 14 44

(100 Million yen)

Sep. 2013

Average Maximum Minimum As of Sep. 2013

trading . . . . . . . . . . . . . 2 2 1 2Banking . . . . . . . . . . . . 43 48 39 41

(100 Million yen)

Sep. 2012


trading . . . . . . . . . . . . . 5 8 3 6Banking . . . . . . . . . . . . 42 49 39 39

1. The Value at Risk (VaR ) number at term-end

2. The highest, lowest and average VaR number during the disclosure period

Market risk for the entire bank

Notes: 1 . the method of measurement from September 30, 2013 was changed to the new method of historical simulation from the previous variance- covariance method . ‘September 2012’ was calculated using the previous method, ‘September 2013’ was calculated using the new method of measurement .

2 . ‘Others’ includes hedge funds and credit derivatives, etc . REits are included in ‘Equity’ following the change in the method of measurement from September 30, 2013 . (For the purpose of comparison, REits as of September 2012 (0 .5 billion) are included in Equity .)

3 . the above figures are based on a 1-day holding period and a 99% confidence level . 4 . the figures for total vaR do not represent the sum of individual components, due to correlations .

Note: All figures as of September 30, 2012 were calculated using the previous variance-covariance method . the figures as of September 2013 were calculated using the new method of historical simulation, except for the figures of banking ‘Average’ ‘Maximum’ ‘Minimum,’ which were calculated using the previous method .

108

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline


(100 Million Yen)

Sep. 2013


5 8 3 8

(100 Million Yen)

Sep. 2012


5 6 3 6

(2) The stressed Value at Risk (stressed VaR) number for the trading activities at term-end and the highest, lowest and average stressed VaR number during the disclosure period

Note: The figures as of ‘September 2012’ were calculated using the previous variance-covariance method. The figures as of ‘September 2013’ were calculated using the new method of historical simulation.

(3) Amount of required capital for additional and comprehensive risk at term-end and the highest, lowest and average capital requirements during the disclosure period

There was no applicable required capital amount as of end-September 2012 and end-September 2013.

(4) Back-testing results and explanations in the event actual losses strayed significantly downward from VaR numbers

The following graph represents the results of the back testing for trading businesses with internal models (the new method of measurement) over the 245 business days from October 1, 2012 to September 30, 2013. As a result of the back testing, by comparing 1-day holding VaR to daily hypothetical P/L, the daily losses did not exceed daily VaR on any business day. This result supports the reliability of the Bank’s VaR.

(1) Balance sheet amount (Millions of Yen)

Sep. 30, 2013 Sep. 30, 2012

Non-consolidated Consolidated Non-consolidated Consolidated

Balance sheet amount . . . . . . . . . . . . . . . . . . . . . 170,563 145,604 137,063 118,790 Listed stock exposures . . . . . . . . . . . . . . . . . . . 118,333 118,333 85,267 85,267 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,230 27,270 51,796 33,523

(2) Gains and losses on sales, and write-offs of equity exposure (Millions of Yen)

1H of FY2013 1H of FY2012


Gains on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,757 13,038 113 113Losses on sales . . . . . . . . . . . . . . . . . . . . . . . . . . — — 52 52Write-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 279 279

9. Items pertaining to equity exposures in the banking book

109

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

(100 Million yen, %)

Sep. 2013 Sep. 2012

P/l impact of interest Rate Shock . . . . . . . . . . . . . . 303 244Outlier Ratio (Ratio to tier i and tier ii) . . . . . . . . . . . 5 .9 3 .9

Note: interest rate shock is defined as the maximum absolute figure of 1st and 99th percentiles on the interest rate movement distribution based on a 1-year holding period observed during the past 5 years .

(Millions of yen)

Sep. 30, 2013 Sep. 30, 2012


unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . 3,097 3,098 932 932

(3) Unrealized gains/losses recognized on the balance sheet but not recognized on the statement of income

(4) Unrealized gains/losses not recognized on the balance sheet or the statement of income(As of end-September 2013 and end-September 2012)Consolidated: Not applicableNon-consolidated: Not applicable

Interest rate risk in the banking book

11. Losses on interest rate shocks based on internal measures for interest rate risk related to the banking book, and changes in economic prices

10. Amount of exposures to which credit risk asset calculation is appliedthis item is described in Quantitative Disclosure 3 . (1) above .

Share P

roced

ure Info

rmatio

n

110

Financial and

Co

rpo

rate Data

Share Procedure Information (As of January 1, 2014)

● Fiscal year From April 1 to March 31

● Ordinary general shareholders’ meeting Held in June

● Record date for determination March 31, June 30, September 30 and December 31 of dividends

● Record date Ordinary General Shareholders’ Meeting: March 31 (also to be held in other cases as deemed necessary, whereby the record date will be set and advance notice given) .

● Public notifications Electronic public notice via the internet . in the event that public notice cannot be made via the internet, the Nihon Keizai Shimbun will be used .

● Listed on the First Section of the tokyo Stock Exchange

● Securities code 8304

● Number of shares 1,000 shares constituting one unit (tangen)

● Manager of register of shareholders Sumitomo Mitsui trust Bank, limited and administrator of 4-1, Marunouchi 1-chome, Chiyoda-ku, tokyo the ‘special account’

● Manager of register of Stock transfer Agency Business Planning Dept ., shareholders location Sumitomo Mitsui trust Bank, limited 4-1, Marunouchi 1-chome, Chiyoda-ku, tokyo

(Mailing address) Stock transfer Agency Business Planning Dept ., Sumitomo Mitsui trust Bank, limited 8-4, izumi 2-chome, Suginami-ku, tokyo, 168-0063

(Contact number) 0120-782-031 (toll free only if calling from Japan)

● Inquiries regarding shares and notification of changeswe ask that shareholders direct all inquiries, including change of address, to their securities company . For those shareholders who do not have an account with a securities firm, inquiries should be directed to the agent above .

● Regarding the ‘special account’Prior to the implementation of the electronic share certificate system in Japan, an account was established with Sumitomo Mitsui trust Bank, limited, for shareholders who did not use JASDEC’s hofuri system . Such shareholders should direct all matters related to change of address and other inquiries to the agent above .

3

Ao

zora B

ank Web

site

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

http://www.aozorabank.co.jp/english/hojin/

Corporate and Institutional

http://www.aozorabank.co.jp/english/about/

About Aozora

http://www.aozorabank.co.jp/english/investors/

Investor Relations

Aozora Bank Website

Interim Report

2013Six-Month Period Ended September 30, 2013

AO

ZO

RA

BA

NK

, LTD

. Interim R

epo

rt 2013

Printed in JapanThis report is printed with vegetable oil ink.

Published: January 2014 Corporate Communication Division AOZORA BANK, Ltd.

3-1, Kudan-minami 1-chome, Chiyoda-ku, Tokyo 102-8660, JapanTel: +81-3-3263-1111

interim report 2013 - aozora bank · ‘proactive approach to sme customers,’ ‘collaboration...

Documents