Bloomberg News

Aozora Bank Gains on Profit Outlook; Resona Net Rises

October 31, 2011

(Adds Resona’s preliminary earnings in first paragraph.)

Oct. 31 (Bloomberg) -- Aozora Bank Ltd., the Japanese lender controlled by Cerberus Capital Management LP, climbed to a two-month high after raising its profit forecast. Bigger rival Resona Holdings Inc. said first-half net income climbed.

Shares of Aozora rose 2.6 percent on the Tokyo Stock Exchange to close at 200 yen, the highest since Aug. 30. The bank forecast net income of 45 billion yen ($594 million) for the year ending March, 36 percent more than earlier predicted.

Resona, Japan’s fourth-biggest lender, posted a 57 percent increase in profit to 128 billion yen for the six months ended Sept. 30, it said in a preliminary earnings statement.

The banks follow Sumitomo Mitsui Financial Group Inc. in boosting earnings projections as a decline in bad-loan costs makes up for a two-year lending slump. Aozora said it will increase its dividend payout for this year to 9 yen a share from an earlier plan of 3 yen and the 2 yen paid last year.

“Higher dividend payout was a surprise and lured investors in this morning,” said Maoki Matsuno, a Tokyo-based analyst at Daiwa Securities Capital Markets Co. “Lower credit costs and higher bond trading income propelled the bank’s earnings.”

Tokyo-based Aozora said it posted an undisclosed amount of profit from lower provisions for bad loans. The lender reported net income of 32.8 billion yen in the previous year ended March.

Taming Bad Loans

Resona cited lower-than-expected credit costs as one of the reasons behind its profit gain. Shares of the Tokyo-based lender rose 1.1 percent to 355 yen before the statement was released.

Sumitomo Mitsui, Japan’s second-largest bank by market value, said on Oct. 28 that profit totaled 310 billion yen in the six months ended Sept. 30, more than its forecast of 170 billion yen, also aided by lower bad-loan costs.

That remains lower than the 417.5 billion yen net income posted in the same period a year earlier. Sumitomo Mitsui fell 1.6 percent to 2,216 yen today.

Bigger rivals led by Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are scheduled to announce their earnings in the third week of November.

--Editors: Russell Ward, James Gunsalus

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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