The bank’s Tokyo-listed shares fell for a second day, tracking losses in U.S. regional lenders overnight.
The commercial lender said Thursday it expects to post a net loss of 28 billion Japanese yen ($191 million) for the fiscal year ending March 31, compared with its previous outlook for a net profit of 24 billion yen. The bank forecast a net profit of 17 billion yen for the next fiscal year.
“Aozora is a major mid-tier lender whose strength lies in its relationships with real estate/business revitalization financing companies and regional financial institutions,” Goldman Sachs analysts wrote in a Friday note.
They retained their sell rating on Aozora’s shares with a price target of about 2,460 yen per share, mainly due to the short to medium outlook for the bank’s profits.
Aozora said Thursday it expects its Common Equity Tier 1 ratio, which compares a bank’s capital against its assets, to fall to 6.6% by the end of the current fiscal year, temporarily dipping below its 7% target.
“There have been some concerns in recent years over a decline in the CET1 ratio due to deterioration in U.S. commercial real estate credit costs and valuation losses on available-for-sale securities,” Masahiko Sato, a senior analyst with SMBC Nikko Securities, wrote in a Thursday note to clients.
“How this will impact other banks is another question,” Sato added. “U.S. real estate lending for around 10% of (its) total lending with a CET1 ratio of below 7% due to unrealized losses on securities has…