Aozora Bank has revised its earnings forecast for this fiscal year downward and announced that its final profit and loss will be in the red by 28 billion yen, a complete reversal from its previous forecast of a surplus. This would be the first time in 15 years that the company was in the red, and the main reason was that it had increased reserves to protect against losses in the commercial real estate loan business in the United States, which continues to face difficult conditions.
Aozora Bank announced on the 1st that it has revised downward its group-wide performance forecast for the current fiscal year, and that the final profit and loss is expected to be a deficit of 28 billion yen, compared to the 24 billion yen surplus originally expected.
If the company is in the red for the full year, it will be the first time in 15 years since 2008, which was affected by the Lehman Shock.
Since the spread of the new coronavirus, the business environment surrounding the commercial real estate loan business in the U.S. has become increasingly harsh due to the spread of remote work, and the main reason for this is that we have increased reserves in preparation for losses. It's a factor.
In addition, due to the impact of rising interest rates in the United States, the company is experiencing unrealized losses on bonds it holds, so it is expected to record losses from the sale of these bonds.
Meanwhile, the company has also announced personnel changes to the president this April, with current president Kei Tanigawa retiring and vice president Hideto Omi being promoted.
Under the new management structure, the company aims to achieve a final profit next fiscal year, 2024.