Interim Report - Aozora Bank · Credit-related expenses were a net expense of 1.7 billion yen. This...

AO

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. Interim R

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rt 2012

Interim Report

2012Six-Month Period Ended September 30, 2012

Results and

Ong

oing

S

trategy

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 January 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 practices 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 is a unique bank that is neither a mega bank nor a regional financial institution, and provides a range of financial products and services including deposits and debentures, lending, loan syndication, securitization, business revitalization and investment advice to meet the needs of our retail, corporate and financial institution clients.

Established ........................................................................... April 1957Capital stock ......................................................................... ¥419.8 billionTotal assets (consolidated) ..................................................... ¥5,130.1 billionConsolidated capital adequacy ratio (domestic standard) ........ 19.16%Consolidated Tier 1 ratio (domestic standard) ......................... 20.43%Number of employees (non-consolidated) ............................... 1,484Branch network ..................................................................... 20 domestic offices, 2 overseas representative officesAddress ................................................................................ 3-1, Kudan-minami, 1-chome, Chiyoda-ku, Tokyo 102-8660, Japan

(As of September 30, 2012)Long-term credit ratings Standard & Poor’s .............................................................. A– Moody’s ............................................................................. Baa2 R&I .................................................................................... BBB+ JCR ................................................................................... BBB+

(As of January 1, 2013)

1Results and Ongoing Strategy

15Financial and Corporate Data

8Business Operations

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121314

146

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

1622

22 61

86

108

Retail and Business Banking GroupCorporate Banking GroupSpecialty Finance GroupFinancial Markets Group

To Our StakeholdersTopicsFinancial Highlights

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.

Profile

Contents

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To O

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To Our Stakeholders

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

Report, which includes the FY2012 interim results.

In the first half of FY2012, we finalized and announced ‘Aozora Bank’s Comprehensive Recapitalization Plan’

toward a full repayment of public funds over time which will benefit all of our shareholders. This has been a cor-

porate priority for Aozora Bank. The plan will ensure the full repayment of the remaining public funds over time. To

improve our share valuation, we have also enhanced returns to common shareholders through the implementation

of common share buybacks and through a dividend policy whereby the Bank has set the dividend payout ratio for

common shares at 40% of consolidated net income for as long as the Bank continues repaying its public funds.

The Bank also announced the mid-term direction of its business development in a document entitled ‘Where

Aozora Goes From Here.’ We continue to expand our business franchise and develop a business model which takes

advantage of our strengths including ‘advanced financial skills,’ ‘strong consulting ability for senior generation

customers,’ ‘regional financial institution networks,’ ‘strong financial base’ and ‘diversified human resources.’

We have strengthened our financial base and earnings base through a focus on our core businesses, effi-

cient use of corporate resources and disciplined risk management. As a result, the Bank was able to record its

14th consecutive quarterly profit and maintained one of the strongest capital positions in the Japanese banking

industry, a stable level of funding and ample liquidity as of the first half of FY2012.

In terms of our branch development, using the design concept of an ‘urban oasis’ which was launched in April

2012 as part of our retail strategy, the Bank relocated/renewed several of its existing branches and opened its

first new branch for retail customers in six years in December 2012.

With the approval of our stakeholders, the Bank has taken the first steps towards implementation of the full

recapitalization plan. We are ready to build on our strengths to develop a sustainable business model and enhance

our corporate value while contributing to the success of our customers and economic 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.

Kunimi TokuokaRepresentative Director and Deputy President

Shinsuke BabaRepresentative Director,

President and CEO

Brian F. PrinceRepresentative Director

and Chairman

January 2013

Shinsuke Baba

Representative Director,

President and Chief Executive Officer

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What do you consider to be the highlights

in the first half financial results?Q1.

Shinsuke BabaRepresentative Director, President and CEO

A. The Bank recorded net income of 20.8 billion

yen in the first half of FY2012, representing

steady progress of 52.1% towards its full-year

forecast. Our results reflected continued growth in

net interest income with an improvement in the net

interest margin, while we continued our disciplined

balance sheet management, as well as steady

progress in building up earnings through our busi-

ness operations, including the expansion of the

sale of investment products to retail customers.

Funding costs were reduced 10 bps compared

with the first half of FY2011, and the net interest

margin and the loan margin expanded as well,

reflecting our ongoing efforts to reduce funding

costs while maintaining a stable funding base of

retail deposits. Earnings from the sale of invest-

ment trusts, annuity insurance and structured notes

increased 27.3% year on year as we continued

to strengthen our asset management consulting

business for retail customers.

General and administrative expenses were almost

unchanged, a reduction of 0.2% year on year,

reflecting the Bank’s continued strict control on

costs. The overhead ratio (general and administra-

tive expenses as a percentage of net revenue), which

is a reflection of cost efficiency, was 44.8%, well

within the Bank’s mid-term target of 50% or below.

Credit-related expenses were a net expense of

1.7 billion yen. This reflected the Bank’s continued

disciplined risk management and appropriate

reserving policy based on borrowers’ status, as

well as preventative measures taken by the Bank

to date including the conservative allocation of

reserves. The ratio of loan-loss reserves to total

loans outstanding was 2.67%, remaining one of

the highest among major Japanese banks.

Funding from retail customers remained stable,

representing 67.8% of total core funding. The

Bank maintained sufficient liquidity reserves of

approximately 600 billion yen.

Non-performing claims as defined by the Finan-

cial Reconstruction Law (FRL) decreased, reflecting

the Bank’s appropriate actions with regard to

non-performing loans based on the condition of

borrowers. The FRL ratio (on a non-consolidated

basis) improved by 0.19 points to 3.80% compared

with March 31, 2012.

The Bank’s consolidated capital adequacy ratio

was 19.16%, and the Tier 1 ratio was 20.43%.

These ratios remain among the highest in the

Japanese banking industry. By benefiting from our

financial strength, we will stay focused on improv-

ing our stable and sustainable level of earnings

and increasing our corporate value.

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What is Aozora’s policy going forward? Q2.

A. The Bank has strengthened its business

franchise through a focus on its core busi-

nesses and establishing a strong balance sheet in

order to increase its corporate value.

The Bank’s business model is centered on high

value-added lending and financial solutions busi-

nesses, leveraging its advanced financial skills,

and underpinned by a stable funding base which

mainly consists of retail deposits from the senior

customer segment.

We have focused on business areas where we

can take advantage of our strengths such as our

ability to provide a wide variety of financial prod-

ucts and consulting advice on asset management

to senior generation mass affluent customers,

the provision of loans and various financial solu-

tions to institutional customers, including small

and medium-sized enterprises, collaborating with

regional financial institutions, and utilizing our

advanced skills in specialty finance such as real

estate finance and rehabilitation finance. Interna-

tional business is another area we will focus on

based on disciplined risk management.

As a ‘Primary Secondary Bank: Another Reliable

Partner,’ we aim to be a trusted partner with whom

customers wish to consult in addition to their main

financing banks, while responding more swiftly

and appropriately to their needs.

Under the new management framework, the

Bank will further develop its sustainable business

model in order to ensure the steady implementa-

tion of the Comprehensive Recapitalization Plan

approved by our stakeholders, and I am confident

that we will be able to continue to generate strong

returns for our stakeholders.

Aozora’s Business Model

Another Reliable Partner

¢Strong Consulting Ability for Senior Generation Customers

¢Regional Financial Institution Networks

¢Advanced Financial Skills

¢Strong Financial Base

¢Diversified Human Resources

¢Senior individuals including mass affluent individuals

¢SMEs

¢Regional financial institutions

¢Large companies, public sector etc.

Individual Customers

Institutional Customers

Deposits

Consulting on asset management

Regional financial

institutions

Regional financial

institutions

Loans

Various solutions

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Topics

Summary of Aozora’s Comprehensive Recapitalization Plan and Progress of the Plan

On August 27, 2012, we announced ‘Aozora Bank’s Comprehensive Recapitalization Plan’ toward a full repayment of public funds over time, which will benefit all of our shareholders. With the approval of our shareholders regarding the recapitalization plan on September 27, 2012, the Bank will make every effort toward the steady implementation of the plan.

Approach to full repayment of public funds¢Create a distributable amount sufficient for a full

repayment of public funds through a change in capital composition

(Effective November 15, 2012)¢22.7 billion yen upfront repayment on October 2,

2012 through the repurchase/retirement of a portion of the Series 5 preferred shares

¢Extension of the conversion period of the pre-ferred shares to June 2022. Make installment repayments through an annual fixed super pre-ferred dividend (20.49 billion yen) on preferred shares in addition to the existing preferred dividend

(Amendments to the Bank’s Articles of Incorporation: Effective October 2, 2012)

Improvement of the stock valuation ¢Increase the dividend payout ratio for common

shares to 40% of consolidated net income, until the Bank has fully repaid the public funds

¢A 330 million common share buyback (equiva-lent to approx. 20% of the number of shares issued) began on October 1, 2012

(Total number of shares repurchased as of December 31, 2012: 248.75 million shares)

Outline of Aozora’s Comprehensive Recapitalization Plan

Identify a clear structure for the full repayment of public funds

Improve the stock valuation

Eliminate the hurdles for repayment

Aozora’s Comprehensive Recapitalization

Plan

Measures to realize full repayment of public funds over time

¢Upfront repayment/retirement of portion of the Series 5 preferred shares¢Installment repayments through a super preferred dividend paid from Other Capital

Surplus

¢Common share buyback¢Increase dividend payout ratio (to enhance return to shareholders)

¢Create a distributable amount sufficient for a full repayment of public funds through a change in capital composition

¢Eliminate the ‘gap issue*’ through the installment repayment structure (an extension of the conversion period for the preferred shares)

*Gap issue: Gap between the value of the preferred shares as public funds and total target repayment amount of public funds

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Opening of New Branch for Retail Customers— ‘Financial Oasis Jiyugaoka’

The Bank opened its first new branch for retail customers in six years in Jiyugaoka, located in Tokyo’s Setagaya Ward on December 3, 2012. The new branch, known as the ‘Financial Oasis Jiyugaoka,’ features the Bank’s new branch design based on the concept of an ‘urban oasis.’ The glassed-in branch décor creates a bright and clean atmosphere that blends well with the sophisticated Jiyugaoka area. The Financial Oasis Jiyugaoka features a unique multi-purpose room that can be used for various events and seminars, as well as reception rooms and consultation booths that allow our customers greater privacy as

Financial Oasis Jiyugaoka 5-28-1, Okusawa, Setagaya-ku, Tokyo 158-0083Tel: 03-5483-3223

Financial Oasis Jiyugaoka exterior

Financial Oasis Jiyugaoka interior

they discuss their asset management needs. We provide asset management consultation services for customers in a relaxed atmosphere. The Umeda Branch, Hiroshima Branch, Ueno Branch and Sapporo Branch are existing branches which have been relocated and/or redesigned with the new urban oasis concept since April 2012. With the aim of ensuring privacy and creating a comfortable environment within the branch, we are dedicated to providing financial services that satisfy the diverse needs of even more of our customers.

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Financial Hig

hlights

1.

2.

3.

4.

Net income of 20.8 billion yen in the first half of FY2012, steady progress of 52.1% towards the full-year forecast

Net revenue was 42.8 billion yen, an increase of 3.3 billion yen, or 8.4%, year on year The net interest margin continued to improve while net interest income increased year on year G&A expenses were almost unchanged at 19.2 billion yen, a reduction of 0.2% year on year, reflecting the Bank’s continued strict control on costs. The OHR was 44.8%

Net income was 20.8 billion yen, representing steady progress of 52.1% towards the full-year forecast of 40.0 billion yen. Quarterly net income represented a 14th consecutive quarterly profit

Stable base of retail funding

The percentage of retail funding to total core funding was stable at 67.8% Sufficient level of liquidity reserves at approx. 600 billion yen

Improved quality of loan assets/continued conservative allocation of loan-loss reserves

Financial Reconstruction Law (FRL) claims (non-consolidated) ratio was 3.80%, an improvement of 0.19 points from end-March 2012. The percentage of FRL claims covered by reserves, collateral and guarantees remained high at 91.1%

Ratio of loan-loss reserves to total loans outstanding was 2.67%, remaining one of the highest among major Japanese banks

Capital ratios among the highest in the Japanese banking industry

Consolidated capital adequacy ratio was 19.16%, and the Tier 1 ratio was 20.43%

{ ( ) ( ) }

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, 2012, 2011 and 2010, and the years ended March 31, 2012 and 2011 (Millions of Yen)

Sep. 30, 2012 Sep. 30, 2011 Sep. 30, 2010 Mar. 31, 2012 Mar. 31, 2011

Ordinary income 59,944 64,460 69,756 136,184 126,681Ordinary profit 19,989 20,530 15,381 40,940 28,696Net income 20,836 22,554 14,177 46,282 32,794Comprehensive income 24,593 26,558 19,635 47,131 29,685Capital stock 419,781 419,781 419,781 419,781 419,781Total equity 616,511 586,552 555,129 607,579 565,184Total assets 5,130,112 5,051,968 4,986,277 5,097,427 4,918,370Debentures 184,509 267,582 340,378 223,144 264,741Deposits (Note 1) 2,948,291 2,954,226 2,979,886 2,929,452 2,932,337Loans and bills discounted 2,565,632 2,701,564 2,831,814 2,672,155 2,729,569Securities 1,269,965 1,293,920 1,312,834 1,322,319 1,335,677Total equity per share (yen) 291.64 272.02 251.01 284.22 256.27Basic net income per share (yen) 13.92 15.09 9.48 29.51 20.49Consolidated capital adequacy ratio (domestic standard) 19.16% 18.07% 15.57% 17.86% 16.93%Tier I ratio (domestic standard) 20.43% 19.37% 16.70% 19.37% 18.43%Return on equity (ROE) (Note 2) 9.62% 11.37% 7.71% 10.86% 8.24%

Financial Highlights

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* 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

14.2

22.620.8

Consolidated net income

(Billions of Yen)

2010/9 2011/9 2012/90

150

300

450

60060

45

30

15

0

42.1

23.4

39.5

23.2

42.8

23.6

Consolidated net revenue

(Billions of Yen)

Consolidated net revenue　　　Net interest income

2010/9 2012/92011/9

5,130.1616.5

4,918.4

565.2

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)

2011/3 2012/3 2012/90

10000

20000

30000

40000

2,948.3

2,565.6

2,932.32,729.6

2,929.52,672.2

4,000

3,000

2,000

1,000

0

(Billions of Yen)

2011/3 2012/3 2012/9Deposits　　　 Loans and bills discounted

Consolidated deposits and loans and bills discounted

(Deposits include negotiable certificates of deposit (NCDs))

24

18

12

6

0

570.1 607.716.93%

18.43%

17.86%

19.37%

19.16%

20.43%

510.9 556.1 541.4 587.3

Regulatory capital Tier 1 capitalCapital adequacy ratio Tier 1 ratio

2011/3 2012/3 2012/9

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 2,514.4 Disclosed claims under the Financial Reconstruction Law B 99.5 (Non-consolidated reserve and coverage ratio) B/(A+B) 3.80% Collateral and guarantee C 56.8 Allowance for loan losses D 33.8 Coverage ratio (C+D)/B 91.1%

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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 SME small and medium-sized enterprise (SME) customers. We provide a wide array of original financial products and services, aiming to support financial institution customers in solving increasingly complex and diverse management issues and attending to their business needs.

Major BusinessesRetail Business Middle Market Business¨Provision of Financial Products Ässet Management Consulting ¨Loans, Solutions for SME CustomersFinancial Institutions Business¨Provision of Financial Products ¨Solutions to Management Issues ¨Collaborative Proposals

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 special situations businesses by utilizing our experience and expertise. Aozora’s strengths include abundant experience and a track record in these businesses, the ability to evaluate assets as well as structuring capabilities.

Major Business¨Real Estate Finance ¨Special Situations Business Öthers (International Loans, Aircraft Loans)

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 Businesses¨Derivatives Business ÄLM Business

Corporate Banking Group

Specialty Finance Group

Financial Markets Group

Retail and Business Banking Group

Business Operations

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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 man-agement consultation services. Our staff listen attentively to customers and provide support with asset manage-ment, inheritance and business succession in a relaxed atmosphere at our branches. The Bank’s call center operators respond professionally to our customers’ needs and inquiries to ensure that even a first-time call center user feels at ease. The Bank actively provides useful information to customers through, for example, the organization of seminars on financial planning and the economy.

<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 prod-ucts, investment products, such as investment trusts, individual annuity insurance and structured notes as an intermediary. Aozora offers advisory services on life and medical insurance products through business part-nerships with insurance companies. Specialist teams in some branches provide individual loans for asset utilization purposes such as real estate. Through Aozora Securities Co. Ltd., the Bank’s securities subsidiary, we have enhanced our product lineup including financial intermediary products such as structured notes.

<Enhanced 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 services. Customers can use approximately 26,000 Japan Post Bank and Post Office ATMs for ordinary account deposits and withdrawals free of charge, even on weekends. We commenced our investment trust trading service via Internet banking in October 2012.

Retail and Business Banking Group

The Bank has developed new designs and layouts for its branches based on the concept of an ‘urban oasis’. The Bank’s redesigned branch project was launched in April 2012 with the renewal/relocation of the Umeda Branch, Hiroshima Branch, Ueno Branch and Sapporo Branch. We will continue to expand the project to other branches. In December 2012, Aozora opened its first new branch in six years in Jiyugaoka. Aozora has also commenced service using cash cards over the counter at its staffed branches for withdrawals and other transactions. Customers can enjoy quick and smooth transactions by confirming the transaction details and inputting their cash card PIN number on a tablet device at branches. The Bank will continue to enhance its customer convenience and service channels.

Our Business Activities in the 1st Half of FY2012As a result of our focus on asset management consult-ing activities, sales of investment products have been steady—mainly investment trusts, annuity insurance, life insurance and structured notes. By offering structured notes, the number of accounts opened at Aozora Securities Co., Ltd. increased significantly. Policy and Areas of Focus in Future Operations Our aim is to become ‘another reliable partner’ upon whom customers can rely to discuss their financial and total life needs by focusing on providing specialized consulting services to senior customers, a segment in which we have strength. As the society is aging, we aim to establish a firm position in the finance industry as trusted advisors who support customers in preparing for a quality retirement.

Retail Banking Group

Business Operations

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Middle Market Business

Summary of Major Businesses<Solutions for SME Customers>Our middle market business actively provides financial solutions which match the needs and characteristics of SME customers and a variety of financial products to 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 revitaliza-tion, information to assist management and business activities, and support for overseas expansion. The Bank also promotes collaborative business with regional finan-cial institutions in the provision of financial solutions for SME customers by utilizing its regional financial institution network, which is one of its strengths.

Our Business Activities in the 1st Half of FY2012<Loans to SME Customers>We have responded promptly and flexibly to the diverse needs of SME customers and promote transactions with various customers including new customers. We established the Business Solution Office in July 2012, specializing in business matching, to serve the needs of customers such as increasing sales through mediation, real-estate transactions and M&A. The office develops nationwide business matching using informa-tion received from a variety of customers including financial institutions.

<Initiatives to Facilitate Financing for SMEs>Aozora Bank recognizes that facilitating financing for cus-tomers is one of its most important functions as a financial institution. The Bank is committed to strengthening its consulting function, which accurately captures customers’ management issues and provides appropriate solutions. In response to the enforcement of the Act Concerning Temporary Measures to Facilitate Financing for SMEs, the Bank established a Facilitation of Financing Management Policy in February 2010, which has set out a framework for appropriate responses to customer requests, includ-ing the amendment of terms and conditions of loans. In line with this policy, the Bank responds in a more cordial manner to the consultation requests from each of its cus-tomers and provides them with support and consultation services for business management. At Aozora Financial Garden, specialist staff are available for consultation on various inquiries, such as the amendment of terms and conditions of housing loans. As the Act Concerning Temporary Measures to Facilitate Financing for SMEs is due to expire in March 2013, we will make efforts to facilitate financing for SMEs in an appropriate manner.

Policy and Areas of Focus in Future OperationsAs ‘another reliable partner,’ we focus on providing solu-tions promptly and flexibly to the various management issues of our SME customers in addition to the facilitation of 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

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Financial Institutions Business

Summary of Major BusinessesAozora Bank aims to be a financial institution which meets the expectations of financial institution customers. We actively provide a wide array of original financial products and services, support our financial institution customers in solving increasingly complex and diverse manage-ment issues and respond to their business needs. As a strategic partner to financial institution customers, we aim to develop unique business models which are mutu-ally beneficial by integrating their relationship networks and our strengths in particular business areas.

Our Business Activities in the 1st Half of FY2012We provide regional financial institutions with custom-ized financial products, and support development of their derivative products. We also engage in deposit agency business. Taking advantage of our expertise, we make collabora-tive proposals with regional financial institutions in areas such as real estate finance, finance to medical institu-tions, debtor-in possession (DIP) finance, management buyout (MBO) finance and off-shore loans. We are also active in offering proposals for jointly arranged syndicated loan transactions. The Bank provides a variety of solutions aimed at business revitalization and supporting the improvement of management for the clients of its regional financial institution customers. We provide support in business revitalization and the improvement of management with regional financial institutions through advisory services for the formulation of business recovery plans, plan-ning and implementing business strategies, as well as development of new methods to facilitate financing.

Seminar on Finance to J-REITsIn July 2012, the Bank held a seminar on finance to J-REITs for regional financial institution customers from all over Japan to enhance cooperation in this area. We introduced the trends of the J-REIT market, and the domestic real estate market, the current situation, future outlook and issues of J-REITs, characteristics of risks of J-REIT loans, managing refinancing risks, considerations related to internal ratings and noteworthy points related to the screening process.

Policy and Areas of Focus in Future OperationsThe Bank meets the investment needs of our regional financial institution customers through the provision of a broad range of financial products as well as providing solutions for high-priority management issues such as asset rehabilitation and recovery business. We will contribute to the advancement of financial services and the promotion of local industries through joint investments and loans, the formation of strate-gic business alliances and the sharing of industrial and financial expertise with our regional financial institution customers.

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Summary of Major Businesses<Loans>We meet the 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 mergers and acquisitions (M&As). 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. The Bank will offer M&A-related financing solutions to a broader range of customers through the business alliance it formed with Daiwa Securities Group in September 2011.

<Syndicated Loans>We focus on syndicated loan business and meet the funding needs of our broad range of corporate customers, ranging from medium-sized to large corporations.

<Securitization>We help customers utilize their various assets for secu-ritization 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 place-ment 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 FY2012The Group has been successful in its efforts to accumulate assets such as loans to large and medium-sized corpo-rations. 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, such as overseas project finance, tailored to the needs of our customers.

Policy and Areas of Focus in Future OperationsWe strive to expand our customer base and strengthen relationships with existing customers, as well as actively provide corporate financial services utilizing the Bank’s expertise, aiming to be ‘another reliable partner.’ The Bank is committed to improving its profitability by provid-ing not only loans, but also various types of financing and derivative products. The Bank will aim to increase its portfolio of quality assets by utilizing investment and loan opportunities in the secondary market for investment-grade blue-chip large corporations. After flexible and careful consideration, we will selectively undertake overseas loan transactions including project finance.

Corporate Banking Group

13

Business O

peratio

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pecialty Finance G

roup

Summary of Major BusinessesThe Specialty Finance Group provides finance backed by or collateralized by various assets. In particular, Aozora’s strengths lie in real estate finance and special situations businesses which it actively promotes as foundation busi-nesses. Our target assets range from stable and sound assets to opportunistic and distressed assets. The Bank provides various financial services to respond to custom-ers’ needs. Aozora’s strengths include experience and a track record in these businesses, the ability to evalu-ate 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 FY2012Aozora actively promoted specialty finance including real estate finance and special situations businesses, which have been the Bank’s traditional strengths, carefully con-sidering the diverse needs of customers and market conditions. In November 2012, we established Aozora Chiiki Saisei Co., Ltd., to enhance existing activities in response to business recovery needs of SMEs in each region of Japan. Taking advantage of our expertise in business recovery, we will provide support to SMEs from the perspectives of both business and finance.

Policy and Areas of Focus in Future OperationsReal Estate FinanceReal Estate Finance includes non-recourse finance backed by quality real estate, mainly consisting of office and residential properties in the Tokyo metropolitan area, as well as finance to J-REITs and corporate customers of real estate businesses. We utilize information acquired through various 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 its business. Our wealth of experience and expertise in real estate, finance and securitization allows us to provide high-value-added financial services, while respond-ing flexibly to changes in the business environment to effectively meet the needs of our customers. We also provide non-recourse loans for quality over-seas real estate in North America and other areas, and are developing a variety of transactions related to real estate finance.

Special Situations and OthersThe Bank makes investments in loans to ailing compa-nies 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.

In addition, we provide other types of finance such as aircraft finance, shipping finance and overseas corporate loans. We strive to create a quality portfolio by flexibly and carefully selecting those deals in which the Bank can utilize its experience and expertise.

Specialty Finance Group

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Summary of Major BusinessesThe Financial Markets Group manages the Bank’s deriv-atives business and the asset and liability management (ALM) function. In the derivatives business, we work toward increasing profitability and expanding our cus-tomer base by enhancing our value-added sales function, such as 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 ALM, we maintain a stable portfolio of well-diversified investments in highly liquid securities and are commit-ted 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 FY2012<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 with high rates in response to our customers’ investment needs. We have expanded our commodity derivative product lineup and introduced a new type of foreign currency deposit for corporate customers. By meeting customers’ sophisticated and diversified needs, we have expanded our business to not only existing customers but also new customers.

<ALM>We aim to establish a stable funding base while reducing funding costs. We ensure stable foreign currency liquidity by strengthening foreign currency funding from financial institutions. We have also achieved 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 the profits of our core businesses.

Policy and Areas of Focus in Future Operations<Derivative Sales>Our professional sales team analyzes the risks our cus-tomers 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 actively develop new products and enhance our product lineup to meet our customers’ increasingly sophisticated and diversified needs. We have enhanced our commodity derivative product lineup for our corpo-rate customers. In April 2012, we introduced the ‘Dual Currency Extendible Term Deposit (Aqua Blue EX)’ for corporate customers. We are continuously developing new quality products and services to further improve customer satisfaction.

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

Financial Markets Group

Financial Markets G

roup

Financial and C

orp

orate D

ata

15

Financial and

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Financial and Corporate Data

Corporate Data Corporate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Directors, Auditors and Executive Officers . . . . . . . . . . . . . 19 Staff Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Office Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Business Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Financial DataConsolidated InformationCONSOliDAtED BuSiNESS RESultS . . . . . . . . . . . . . . . . . 22 Consolidated Financial Highlights . . . . . . . . . . . . . . . . . . . . 22CONSOliDAtED FiNANCiAl REviEw . . . . . . . . . . . . . . . . . . 23 Consolidated and Equity-Method Companies . . . . . . . . . . . 23 Analysis of Business Results . . . . . . . . . . . . . . . . . . . . . . . . 23 Analysis of Financial Condition . . . . . . . . . . . . . . . . . . . . . . 25 Consolidated Capital Adequacy Ratio (Domestic Standard) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Disclosure of Exposure to Securitized Products . . . . . . . . . 28CONSOliDAtED SEMiANNuAl FiNANCiAl StAtEMENtS . . 29 Consolidated Semiannual Balance Sheets (unaudited) . . . . 29 Consolidated Semiannual Statements of income (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Consolidated Semiannual Statements of Comprehensive income (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Consolidated Semiannual Statements of Changes in Equity (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Consolidated Semiannual Statements of Cash Flows (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Notes to Consolidated Semiannual Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33iNCOME 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 Sheets (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Non-Consolidated Semiannual Statements of income (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Non-Consolidated Semiannual Statements 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 Credits to Major Shareholder Groups . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . 81 Average Balance of Securities (trading Account) . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . 108

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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

June 1999 Established NCB Servicer Co ., ltd . (currently Aozora loan Services Co ., ltd .), and commenced

servicer operations in September 1999

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 .

October 2004 launched Aozora Pocket time Deposit (permits partial withdrawals before maturity)

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

Established tokyo Nihonbashi Branch

May 2007 Established Shanghai Representative Office

April 2008 tender offer for common shares by Cerberus NCB Acquisition, l .P .

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 .)

December 2012 Established Financial Oasis Jiyugaoka (Shibuya Branch Jiyugaoka Office)

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● 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 and agency business for national bonds

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, 2013)

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Organization Chart (As of January 1, 2013)

Retail Banking Group

Retail & Business Banking Group

BusinessBanking Group

CorporateBanking Group

Integrated RiskManagement

Group

FinanceGroup

Technology &Operations

Group

Retail Operation & Technology Div.

RetailProducts & Marketing Div.

Retail SalesPromotion Div.

Retail Business Development Div.

Direct Banking Div.

Retail & InstitutionsBanking Div.

Internet Br.

Aozora SecuritiesCo., Ltd.

Business Banking Planning Div.(Facilitation of Financing Promotion Office)

Asian BusinessPromotion Div.

Metropolitan Business Div. I

Metropolitan Business Div. II

Personal Loan Div.

Financial Institutions 　Div. II

Aozora Trust Bank, Ltd.

Corporate Banking Management Div.

Corporate Banking Services Div.

Syndication & Securitization Div.

M&AAdvisoryDiv.

Corporate Business DivisionII, III, IV, VI

Public Institutions Division

Financial Institutions 　Div. I

Acquisition & Project Finance Div.

TreasuryFunding Div.

Treasury 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 Business Div. I

Corporate Business Div. V

Asset Finance Div.

LeveragedFinance Div.

Aozora Asia Pacific Finance Limited

Aozora Loan ServicesCo., Ltd.

Financial Control Div.

Financial Management Div.

Financial Reporting Control Div.

Corporate Communication Div.

IT Control Div.

ApplicationManagement Div.

InfrastructureManagementDiv.

Business Technology Strategy Div.

Operations Management Div.

Integrated Risk Management Div.

Market RiskManagement Div.

Operations Risk Management Div.

Asset Assessment Div.

Legal & Compliance Div.

Head of Compliance & Governance

Office of Corporate Secretary

EO in charge EO in charge

Deputy President

Director, SMEO

President

Chairman

OCE

Office of Chief Executive

Corporate Strategy Officer

Human Resources Div.

Board of Directors

ShareholdersCorporateAuditors

Board of Corporate Auditors

Corporate AuditorsDivision Internal Audit Div.

[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 RiskManagementDiv.

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.

Representative Offices & OverseasSubsidiary (New York, Shanghai, AAPF)

Business Strategy Div.

Crisis Management Div.

Group Head

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Directors, Auditors and Executive Officers (As of January 1, 2013)

Directors and Auditors

Representative Director

and Chairman Brian F . Prince*


and President Shinsuke Baba*


and Deputy President Kunimi tokuoka*

Director and Senior Managing

Executive Officer Masaki tanabe*

Directors yuji Shirakawa*

James Danforth Quayle

Frank w . Bruno

Kiyoshi tsugawa

Marius J . l . Jonkhart

Shunsuke takeda

Cornelis Maas

louis J . Forster

larry A . Klane

Standing Auditor Shinichi Fujihira

Auditors Mitch R . Fulscher

Akira tachimoto

*Serving as Executive Officer concurrently

Executive Officers

Senior Managing Executive Officers Marc J . Kutik

Managing Executive Officers Hiromi watanabe

Clark D . Graninger

Katsuya Hosono

Executive Officers takeo Saito

Norman King

Jorge A . leon

Shinji Nakamura

Masaki yamagata

Masaaki Harada

yukio Sekizawa

Kei tanikawa

Koji yamakoshi

Staff Profile (As of September 30, 2012)

Number of Employees Average Age Average years of Service

1,484 (347) 41 .0 14 .6

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 .

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Office Directory (As of January 1, 2013)

Overseas Network

● Representative Offices

New York Representative Office

Chief RepresentativeMasaki Onuma

Address780 third Avenue, 11th Floor, New york, Ny 10017, u .S .A . tel: +1-212-759-3900Fax: +1-212-759-3911

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*1

24-12, 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*2

3-1, 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

14-18, tenjin 1-chome, Chuo-ku, Fukuoka 810-0001tel: 092-751-9627

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

*1 Shibuya Branch will relocate to the following address on February 25, 2013 (Monday): 7-7, Shibuya 1-chome, Shibuya-ku, tokyo (there is no change in the postal code or phone number of the branch .)*2 Chiba Branch will relocate to the following address on February 12, 2013 (tuesday): 14-1, Fujimi 2-chome, Chuo-ku, Chiba (there is no change in the postal code or phone number of the branch .)

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Business Network (As of September 30, 2012)

*All companies listed below are consolidated subsidiaries .

Aozora Bank, Ltd.CNCBALP*1

‘Parent Company’

Banking operations Head Office and branches

Main affiliates Investment vehicleInvestment vehicleInvestment vehicleInvestment vehicleInvestment vehicleFinancial servicesInvestmentsInvestmentsInvestments

AzB ClO1 limitedAzB ClO2 limitedAzB ClO3 limitedAzB ClO4 limitedAzB FundingAozora Asia Pacific Finance limited Aozora GMAC investment limitedAozora investment, inc .Aozora investments llC

Other operations Head Office and branches

Main affiliates Trust services, Banking operationsDistressed loan servicingSecurities servicesVenture capital investment

Aozora trust Bank, ltd .Aozora loan Services Co ., ltd .Aozora Securities Co ., ltd .Aozora investment Co ., ltd .*2

*1 ‘CNCBAlP’ is Cerberus NCB Acquisition, l .P ., General Partner Cerberus Aozora GP llC .*2 Aozora investment Co ., ltd . was liquidated on October 31, 2012 .

Subsidiaries (As of September 30, 2012)(%)

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 milions 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 milions of JPy

67 .6 —

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

venture capital investment

May 17, 1991

20 milions of JPy

100 .0 —

Aozora Securities Co ., ltd . 3-1, toranomon 4-chome, Minato-ku, tokyo

Securities services January 23, 2006

3,000 milions 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

— —

* Aozora investment Co ., ltd . was liquidated on October 31, 2012 .

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Consolidated Business Results

Consolidated Financial Highlights For the six-month periods ended September 30, 2012, 2011 and 2010, and the years ended March 31, 2012 and 2011

(Millions of yen)


Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . 59,944 64,460 69,756 136,184 126,681

Ordinary profit . . . . . . . . . . . . . . . . . . . . . . . . . . 19,989 20,530 15,381 40,940 28,696

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,836 22,554 14,177 46,282 32,794

Comprehensive income . . . . . . . . . . . . . . . . . . . 24,593 26,558 19,635 47,131 29,685

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 419,781 419,781 419,781

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616,511 586,552 555,129 607,579 565,184

total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,130,112 5,051,968 4,986,277 5,097,427 4,918,370

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 267,582 340,378 223,144 264,741

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,948,291 2,954,226 2,979,886 2,929,452 2,932,337

loans and bills discounted . . . . . . . . . . . . . . . . 2,565,632 2,701,564 2,831,814 2,672,155 2,729,569

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,269,965 1,293,920 1,312,834 1,322,319 1,335,677

total equity per share (yen) . . . . . . . . . . . . . . . . 291 .64 272 .02 251 .01 284 .22 256 .27

Basic net income per share (yen) . . . . . . . . . . . . 13 .92 15 .09 9 .48 29 .51 20 .49

Diluted net income per share (yen) . . . . . . . . . . . 10 .62 11 .50 7 .23 23 .60 16 .73

Consolidated capital adequacy ratio (domestic standard) (%) . . . . . . . . . . . . . . . . . . 19 .16 18 .07 15 .57 17 .86 16 .93

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . 92,171 (147,271) (28,563) (70,256) 137,695

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . 52,718 27,079 (42,378) 29,462 (62,633)

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . (15,799) (5,482) (3,515) (5,795) (3,812)

Cash and cash equivalents, end of period . . . . . 340,964 132,789 112,754 211,874 258,463

Notes: 1 . ‘Comprehensive income for the interim term’ of September 30, 2010 was calculated by applying retrospectively the Accounting Standard for Presentation of Comprehensive income (ASBJ Statement No . 25) .

2 . Deposits include negotiable certificates of deposit (NCDs) . 3 . 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 .’

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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 13 as of September 30, 2012 and 12 as of March 31, 2012 .

AzB Funding, 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 recorded net revenue of ¥42 .8 billion, an increase of ¥3 .3 billion, or 8 .4%, year on year and business profit of ¥23 .6 billion, an increase of ¥3 .4 billion yen, or 16 .5% . Net income was ¥20 .8 billion . the Bank has recorded a 14th consecutive quarterly profit .

(1) Income

total income was ¥59 .9 billion, a decrease of ¥4 .5 billion year on year . interest income was ¥33 .5 billion, a decrease of ¥1 .7 billion year on year . this decline was due to decreased interest on loans and discounts .

income from fees and commissions were ¥4 .9 billion, an increase of ¥0 .2 billion year on year . Earnings related to the sale of investment trusts, annuity insurance, and structured bonds, targeting the needs of our mass affluent retail customers, showed steady progress . trading income was almost unchanged at ¥4 .1 billion, an increase of 0 .4%, year on year . Other ordinary income was ¥13 .7 billion, a decrease of ¥0 .3 billion year on year, mainly due to a decline in gains on sales of bonds and other securities . Other income decreased by ¥2 .7 billion year on year to ¥3 .8 billion, mainly due to reversal of allowance for loan losses .

Consolidation and Equity-Method Companies (Number of Companies)

Sep. 30, 2012 Mar. 31, 2012 Change

Consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 12 1

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

(Millions of yen)

Sep. 30, 2012 Sep. 30, 2011 (6 months) (6 months) Change

Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,944 64,460 (4,516)

interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,501 35,184 (1,683) interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . 23,794 26,169 (2,375) interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . 7,831 6,755 1,076 interest on deposits with banks . . . . . . . . . . . . . . . . . . . . . . . . . . 45 51 (6) Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,829 2,207 (378)

Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,892 4,701 191

trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,096 4,081 15

Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,681 14,001 (320) Gains on sales of bonds and other securities . . . . . . . . . . . . . . . 8,175 8,843 (668) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,505 5,157 348

Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,773 6,492 (2,719) Gains on sales of stocks and other securities . . . . . . . . . . . . . . . 69 391 (322) trading gain from money held in trust . . . . . . . . . . . . . . . . . . . . . 97 191 (94) Recoveries of written-off claims . . . . . . . . . . . . . . . . . . . . . . . . . . 1,138 732 406 Reversal of allowance for loan losses . . . . . . . . . . . . . . . . . . . . . 1,632 3,326 (1,694) Reversal of provision for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . 170 — 170 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663 1,849 (1,186)

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(2) Expenses

total expenses decreased ¥3 .9 billion year on year to ¥40 .1 billion . interest expenses decreased by ¥2 .1 billion to ¥9 .9 billion year on year . Funding costs were reduced reflecting our ongo-ing efforts to reduce funding costs while maintaining a stable base of retail deposits . Other ordinary expenses decreased by ¥3 .0 billion to ¥3 .1 billion, mainly due to reductions in losses on sales of bonds . General and administrative expenses were reduced ¥0 .1 billion year on year to ¥19 .8 billion, reflecting our continued strict control on costs, well within the Bank’s mid-term target of 50% or below . Other expenses were ¥6 .9 billion, compared with ¥5 .6 billion in the first half of Fy2011 . this reflected the Bank’s

continued disciplined risk management and preventative mea-sures taken by the Bank to date, including the conservative allocation of reserves . in the fourth quarter of Fy2011, the Bank changed the classification of accounting items (for realized/unrealized gains (losses)) of securitization products including real estate related products (available-for-sale), whose interest and principal repayments are no longer expected as per contract . if the reclassification is applied to the first half of Fy2011 (Apr .– Sep . 2011), ‘losses on sales of bonds’ under ‘Other ordinary expenses’ would have decreased ¥1 .4 billion, while ‘Other’ under ‘Other expenses’ would have increased by the same amount .

(3) Net Income

As a result of the above factors, consolidated net income for the first half was ¥20 .8 billion, compared with ¥22 .6 billion in the first half of Fy2011 . Net income per share was ¥13 .92 .

(Millions of yen)


Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,093 43,969 (3,876)

interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,881 11,966 (2,085) interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,540 9,275 (1,735) interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837 1,394 (557) interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . . 314 280 34 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,188 1,016 172

Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 359 3

Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,095 6,111 (3,016) Amortization of debenture issuance costs . . . . . . . . . . . . . . . . . . 9 23 (14) losses on foreign exchange transactions . . . . . . . . . . . . . . . . . . 1,073 1,976 (903) losses on sales of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 2,636 (2,547) losses on devaluation of bonds and other securities . . . . . . . . . . 156 23 133 losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 68 143 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,555 1,382 173

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 19,805 19,884 (79)

Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,948 5,647 1,301 Provision of allowance for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . . . . — 557 (557) write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,052 754 298 losses on sales of stocks and other securities . . . . . . . . . . . . . . 10 — 10 losses on devaluation of stocks and other securities . . . . . . . . . 452 155 297 losses on disposal of noncurrent assets . . . . . . . . . . . . . . . . . . . 137 39 98 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,295 4,139 1,156

(Millions of yen)


Income before income taxes and minority interests . . . . . . . . . . . . 19,851 20,491 (640)

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,015) (2,095) 1,080

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 215 168 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,398) (2,310) 912

Minority interests in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 31 (1)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,836 22,554 (1,718)


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3. Analysis of Financial Condition

(1) Loans and bills discounted

loans decreased from March 31, 2012 by ¥106 .5 billion,

or 4 .0%, to ¥2,565 .6 billion as we continued disciplined

balance sheet management and also as a result of certain

repayments of loans to large lot borrowers .

Risk-monitored loans on a consolidated basis decreased

by ¥8 .1 billion, to ¥101 .8 billion from March 31, 2012 and

the ratio to the loan balance decreased by 0 .1% to 4 .0% .

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

Sep. 30, 2012 Mar. 31, 2012 Change

Loan balance (end of period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,565,632 2,672,155 (106,523)

Risk-monitored loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,826 109,877 (8,051)

loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,687 6,384 (1,697) Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,256 65,820 11,436 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . 363 311 52 Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,519 37,360 (17,841)

Ratio to loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0% 4.1% (0.1%)

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

Sep. 30, 2012 Mar. 31, 2012

Loans and bills discounted Loans and bills discounted

Risk-monitored Risk-monitored loans loans

Domestic offices (excluding Japan offshore market accounts) . . . . . . . . . . . . . . . . . 2,457,173 88,251 2,546,105 90,888

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,140 12,375 272,919 12,936 Agriculture, forestry and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,886 — 3,380 — Mining, quarry, gravel extraction . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,773 — 3,112 — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,943 188 43,591 462 Electricity, gas, heat supply and water . . . . . . . . . . . . . . . . . . . . . . . 5,825 — 6,244 — information and communications . . . . . . . . . . . . . . . . . . . . . . . . . . 53,750 107 45,058 36 transport, postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,681 936 152,507 658 whole sale and retail trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,372 1,830 132,840 1,177 Finance and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442,607 22,436 414,663 31,252 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828,658 25,356 892,000 18,707 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,183 891 61,291 — various services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,750 2,108 172,141 2,377 local government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,650 — 64,042 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261,950 22,021 282,312 22,341

Overseas offices (including Japan offshore market accounts) . . . . . . . . . . . . . . . . . . 108,459 13,574 126,049 18,989

Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,459 13,574 126,049 18,989

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,565,632 101,826 2,672,155 109,877

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Money market funds, assets comparable to the liquidity

reserve, increased by ¥30 .0 billion, or 42 .8% .

total unrealized gains amounted to ¥12 .6 billion as of

September 30, 2012, reflecting unrealized gains on JGBs and

foreign bonds of ¥6 .4 billion and ¥3 .8 billion, respectively .

(3) Deferred tax assets

the balance of deferred tax assets decreased by ¥0 .9

billion, to ¥50 .0 billion . the Bank calculated the amount of

deferred tax assets on the basis of an estimated taxable

income for the subsequent 3 fiscal years .

the proportion of deferred tax assets to net assets was

8 .1% as of September 30, 2012 .

(4) Deposits and debentures

the Bank reduced funding costs while maintaining a stable

base of retail deposits . As a result, funding from retail

customers was ¥2,124 .9 billion, decreasing ¥39 .0 billion,

or 1 .8%, from March 31, 2012, while the percentage of

retail funding to total core funding was stable at 67 .8% .

Our loan to deposit ratio (including NCD) was 87 .0% .

(2) Securities

Securities decreased ¥52 .4 billion, or 4 .0%, from March 31,

2012 . in comparison with March 31, 2012, EtFs, particularly

uS dollar denominated, were increased by ¥45 .6 billion for

the purpose of investment portfolio diversification, while JGBs

and foreign bonds decreased ¥71 .3 billion, or 11 .6%, and

¥35 .6 billion, or 8 .7%, respectively .

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

Sep. 30, 2012 Mar. 31, 2012 Change

Japanese debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616,220 700,850 (84,630)

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . 544,642 615,956 (71,314) Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . 8,900 14,251 (5,351) Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,677 70,642 (7,965)

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,521 26,729 (208)

Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627,223 594,739 32,484

Foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460,687 462,930 (2,243) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,536 131,890 34,646

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,269,965 1,322,319 (52,354)

Deposits and Debentures (Consolidated) (Millions of yen)

Sep. 30, 2012 Mar. 31, 2012 Change

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,948,291 2,929,452 18,839

time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,580,859 2,551,364 29,495 liquid deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,405 365,130 (14,725) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,027 12,958 4,069

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 223,144 (38,635)

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

(5) Equity

the balance of total equity was ¥616 .5 billion, an increase of

¥8 .9 billion in comparison with March 31, 2012 .

there were no changes in capital stock and capital surplus .

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

the consolidated BiS capital adequacy ratios were calculated

pursuant to the Basel ii regulations .

Aozora’s tier 1 ratio as of September 30, 2012 was

among the highest in the Japanese banking industry . the

Bank’s capital adequacy ratio was 19 .16% and tier 1 ratio

was 20 .43% .


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

Sep. 30, 2012 Mar. 31, 2012

Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 Non-cumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 Newly issued stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,575 33,575 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,835 173,611 treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,438) (15,438) Paid-in amount on treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — unappropriated profits to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (15,661) valuation loss on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . — — Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,860) (9,327) Subscription rights to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Minority interests in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 764 758 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) 607,657 587,298 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,589 18,943 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Perpetual subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Subordinated term liabilities and subordinated term preferred stock . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,589 18,943 Tier II capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (B) 18,589 18,943

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

Items deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 56,115 64,863

Regulatory capital (A) + (B) + (C) – (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E) 570,131 541,379

Risk-weighted Balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,491,736 2,589,983 assets Off-balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,187 170,192 Credit risk assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F) 2,651,923 2,760,175 Risk assets derived from market risk equivalents ((H)/8%) . . . . . . . . . (G) 191,880 138,781 Market risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H) 15,350 11,102 Risk assets derived from operational risk equivalents ((J)/8%) . . . . . . ( I ) 130,475 131,994 Operational risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J) 10,438 10,559 (F) + (G) + ( I ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K) 2,974,279 3,030,951

Capital adequacy ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.16% 17.86%

Tier I ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.43% 19.37%

Required capital total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,971 121,238

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 79, issued in 2008, for Mar . 31, 2012 and FSA Notice Number 56, issued in 2012, for Sep . 30, 2012 are also applied to the calculation, respectively .

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 . 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 . 3 . 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 . 4 . Amounts of required capital for each risk are as follows: (Millions of yen)

Sep. 30, 2012 Mar. 31, 2012

Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,076 110,407 Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,675 5,551 Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,219 5,279

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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. 2012

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

CMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

(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. 2012

loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,867

Commitment line (unfunded) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

total leveraged finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,923

Geographical distribution Total leveraged finance (100 Million yen)

Sep. 2012

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,923


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Consolidated Semiannual Financial Statements

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Consolidated Semiannual Balance Sheets (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesAs of September 30, 2012 and 2011, and March 31, 2012

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

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

Cash and cash equivalents (Notes 3 and 22) . . . . . . . . . . . . . . . . . . . . ¥ 340,964 ¥ 132,789 ¥ 211,874 $ 4,393,874 Due from banks (Notes 12 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,949 44,510 48,494 501,922 Call loans and bills bought (Note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 80,000 80,164 1,030,928 Receivables under securities borrowing transactions (Note 22) . . . . . . 192,492 25,987 123,082 2,480,574 Monetary claims bought (Note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,660 46,833 48,783 523,973 trading assets (Notes 4, 12, 22 and 23) . . . . . . . . . . . . . . . . . . . . . . . 511,825 592,363 477,621 6,595,687 Money held in trust (Notes 6 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . 7,353 7,689 6,298 94,755 Securities (Notes 5, 12 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,269,965 1,293,920 1,322,319 16,365,532 loans and bills discounted (Notes 7, 12 and 22) . . . . . . . . . . . . . . . . . 2,565,632 2,701,564 2,672,155 33,062,280 Foreign exchange (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,027 16,281 21,831 142,111 Other assets (Notes 15 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,702 106,473 62,694 485,854 tangible fixed assets (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,148 22,498 22,040 285,416 intangible fixed assets (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,684 4,849 4,230 47,483 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,957 44,612 50,859 643,786 Customers’ liabilities for acceptances and guarantees (Note 10) . . . . . 30,185 31,360 26,968 388,987 Allowance for loan losses (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . (68,427) (94,138) (77,003) (881,802)Allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,009) (5,627) (4,988) (51,669)total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥5,130,112 ¥5,051,968 ¥5,097,427 $66,109,691


Liabilities and Equity Sep. 30, 2012 Sep. 30, 2011 Mar. 31, 2012 Sep. 30, 2012

Liabilities: Deposits (Notes 13 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,948,291 ¥2,954,226 ¥2,929,452 $37,993,452 Debentures (Notes 14 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 267,582 223,144 2,377,704 Call money and bills sold (Notes 12 and 22) . . . . . . . . . . . . . . . . . . 102,741 102,624 136,380 1,323,994 Payables under securities lending transactions (Notes 12 and 22) . . 341,835 378,906 383,178 4,405,093 trading liabilities (Notes 4, 22 and 23) . . . . . . . . . . . . . . . . . . . . . . . 362,653 309,201 308,816 4,673,368 Borrowed money (Notes 12 and 22) . . . . . . . . . . . . . . . . . . . . . . . . 244,750 200,700 215,042 3,153,997 Foreign exchange (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 19 Other liabilities (Notes 15 and 22) . . . . . . . . . . . . . . . . . . . . . . . . . . 285,579 199,762 253,995 3,680,147 Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,303 11,780 10,793 145,665 Provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . . 481 340 436 6,209 Provision for credit losses on off-balance-sheet instruments . . . . . . 532 1,331 704 6,867 Reserves under the special laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 — 2 30 Provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 730 — 932 9,420 Acceptances and guarantees (Note 10) . . . . . . . . . . . . . . . . . . . . . . 30,185 31,360 26,968 388,987 total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,513,600 4,465,415 4,489,848 58,164,952 Equity: Capital stock (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 419,781 5,409,552 Capital surplus (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,575 33,333 33,575 432,668 Retained earnings (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,751 149,821 173,548 2,303,495 treasury stock-at cost (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,438) (15,650) (15,438) (198,953) Accumulated other comprehensive income (loss): valuation difference on available-for-sale securities . . . . . . . . . . . 7,746 6,556 3,348 99,824 Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . 1,207 1,942 1,345 15,565 Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . (9,860) (9,954) (9,327) (127,068) total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (906) (1,454) (4,632) (11,679) Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 749 722 746 9,656 total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616,511 586,552 607,579 7,944,739 total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥5,130,112 ¥5,051,968 ¥5,097,427 $66,109,691

See the accompanying notes to consolidated semiannual financial statements .

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Consolidated Semiannual Statements of Income (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

Thousands of U.S. Dollars Millions of Yen (Note 1) Sep. 30, 2012 Sep. 30, 2011 Mar. 31, 2012 Sep. 30, 2012 (6 months) (6 months) (1 year) (6 months)

Income: interest income: interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,794 ¥26,169 ¥51,335 $306,626 interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . . 7,831 6,755 12,670 100,924 interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 51 88 589 Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,829 2,207 3,953 23,579 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,892 4,701 10,181 63,042 trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,096 4,081 7,247 52,794 Other ordinary income (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,681 14,001 29,317 176,308 Other income (Note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,773 6,492 21,497 48,623 total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,944 64,460 136,291 772,485 Expenses: interest expenses: interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,540 9,275 17,737 97,177 interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837 1,394 2,575 10,797 interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . . . 314 280 571 4,054 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,188 1,016 1,898 15,316 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 359 700 4,667 Other ordinary expenses (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,095 4,661 7,037 39,887 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . 19,805 19,884 39,995 255,229 Other expenses (Note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,948 7,097 24,793 89,541 total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,093 43,969 95,309 516,668 Income before income taxes and minority interests . . . . . . . . . . . . . 19,851 20,491 40,981 255,817 Income taxes: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 215 315 4,937 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,398) (2,310) (5,671) (18,025) total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,015) (2,095) (5,355) (13,088)Net income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . 20,867 22,586 46,337 268,905 Minority interests in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 31 55 396 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥20,836 ¥22,554 ¥46,282 $268,509

Yen U.S. Dollars (Note 1) Sep. 30, 2012 Sep. 30, 2011 Mar. 31, 2012 Sep. 30, 2012 (6 months) (6 months) (1 year) (6 months)

Per share information: Basic net income per share of common stock (Note 24) . . . . . . . . . . . ¥ 13 .92 ¥15 .09 ¥29 .51 $ 0 .18 Diluted net income per share of common stock (Note 24) . . . . . . . . . 10 .62 11 .50 23 .60 0 .14 Cash dividends applicable to the period: Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . — — 10 .00 — Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . — — 7 .44 — Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 9 .00 —See the accompanying notes to consolidated semiannual financial statements .

Millions of Yen

Thousands of U.S. Dollars

(Note 1)

Sep. 30, 2012 (6 months)

Sep. 30, 2011 (6 months)

Mar. 31, 2012 (1 year)

Sep. 30, 2012 (6 months)

Net income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . ¥20,867 ¥22,586 ¥46,337 $268,905 Other comprehensive income (loss) valuation difference on available-for-sale securities . . . . . . . . . . . . . . 4,397 4,761 1,553 56,667 Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . (137) (169) (766) (1,778) Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . (532) (620) 6 (6,865) total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . 3,726 3,972 793 48,024 Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥24,593 ¥26,558 ¥47,131 $316,929 Total comprehensive income attributable to: Owners of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥24,562 ¥26,527 ¥47,076 $316,533 Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 31 55 396

Consolidated Semiannual Statements of Comprehensive Income (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012



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Consolidated Semiannual Statements of Changes in Equity (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012


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

Capital stock Balance at the beginning of current period . . . . . . . . . . . . . . . . . ¥419,781 ¥419,781 ¥419,781 $5,409,552

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 419,781 5,409,552

Capital surplus Balance at the beginning of current period . . . . . . . . . . . . . . . . . 33,575 33,333 33,333 432,668

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 33,575 33,333 33,575 432,668

Retained earnings Balance at the beginning of current period . . . . . . . . . . . . . . . . . 173,548 132,420 132,420 2,236,452 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,633) (5,154) (5,154) (201,466) Change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . — 0 0 — Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,836 22,554 46,282 268,509


treasury stock—at cost Balance at the beginning of current period . . . . . . . . . . . . . . . . . (15,438) (15,650) (15,650) (198,953) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0) (5) —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (15,438) (15,650) (15,438) (198,953)

Accumulated other comprehensive income (loss):

valuation difference on available-for-sale securities Balance at the beginning of current period . . . . . . . . . . . . . . . 3,348 1,795 1,795 43,157 Net change of items during the period . . . . . . . . . . . . . . . . . . 4,397 4,761 1,553 56,667

Balance at the end of current period . . . . . . . . . . . . . . . . . . . 7,746 6,556 3,348 99,824

Deferred gains or losses on hedges Balance at the beginning of current period . . . . . . . . . . . . . . . 1,345 2,112 2,112 17,343 Net change of items during the period . . . . . . . . . . . . . . . . . . (137) (169) (766) (1,778)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . 1,207 1,942 1,345 15,565

Foreign currency translation adjustment Balance at the beginning of current period . . . . . . . . . . . . . . . (9,327) (9,334) (9,334) (120,203) Net change of items during the period . . . . . . . . . . . . . . . . . . (532) (620) 6 (6,865)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . (9,860) (9,954) (9,327) (127,068)

Minority interests Balance at the beginning of current period . . . . . . . . . . . . . . . . . 746 727 727 9,614 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 3 (4) 18 42

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 749 722 746 9,656

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥616,511 ¥586,552 ¥607,579 $7,944,739


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Consolidated Semiannual Statements of Cash Flows (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012


Sep. 30, 2012 Sep. 30, 2011 Mar. 31, 2012 Sep. 30, 2012 (6 months) (6 months) (1 year) (6 months)

Cash flows from operating activities: income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 19,851 ¥ 20,491 ¥ 40,981 $ 255,817 Adjustments for: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,908 2,108 3,888 24,590 impairment losses on long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 22 — Gain on negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (107) — increase (decrease) in allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,551) (5,979) (23,162) (110,204) increase (decrease) in allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . (978) (507) (1,146) (12,612) increase (decrease) in provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 (1,199) (2,186) 6,579 increase (decrease) in provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . 44 67 163 579 increase (decrease) in provision for credit losses on off-balance-sheet instruments . . . . . (170) 557 (70) (2,203) increase (decrease) in provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (201) 788 932 (2,600) interest income (accrual basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,501) (35,184) (68,047) (431,718) interest expenses (accrual basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,881 11,966 22,784 127,343 loss (gain) on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,456) (6,419) (10,218) (96,088) loss (gain) on money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (97) (191) (276) (1,260) Foreign exchange losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,137 42,878 11,403 414,147 loss (gain) on disposal of noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 39 43 1,774 Net decrease (increase) in trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,537) (243,749) (131,247) (599,710) Net increase (decrease) in trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,837 59,603 59,218 693,777 Net decrease (increase) in loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,534 13,144 50,368 1,269,772 Net increase (decrease) in deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,838 21,889 (2,884) 242,770 Net increase (decrease) in debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38,634) 2,841 (41,596) (497,866) Net increase (decrease) in borrowed money (excluding subordinated borrowings) . . . . . . 29,708 (64,900) (50,557) 382,838 Net decrease (increase) in due from banks (excluding due from the Bank of Japan) . . . . . 8,973 (31,861) (35,020) 115,637 Net decrease (increase) in call loans and bills bought and others . . . . . . . . . . . . . . . . . . . 8,287 (45,246) (47,361) 106,803 Net decrease (increase) in receivables under securities borrowing transactions . . . . . . . . (69,410) 7,083 (90,011) (894,462) Net increase (decrease) in call money and bills sold, payables under repurchase agreements and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,638) (21,566) 4,592 (433,486) Net increase (decrease) in payables under securities lending transactions . . . . . . . . . . . . (41,342) 157,335 161,606 (532,770) Net decrease (increase) in foreign exchange—assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,803 30,011 24,461 139,226 Net increase (decrease) in foreign exchange—liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . (0) (0) (0) (0) increase (decrease) in straight bonds—issuance and redemption . . . . . . . . . . . . . . . . . . — (91,199) (91,199) — interest and dividends received (cash basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,737 36,212 69,390 434,767 interest paid (cash basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,930) (13,195) (25,932) (166,624) Other, net (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,259 7,061 101,494 750,770 Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,001 (147,119) (69,676) 1,185,586 income taxes (paid) refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 (152) (579) 2,193 Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,171 (147,271) (70,256) 1,187,779 Cash flows from investing activities: Purchase of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,223,660) (940,675) (2,264,898) (15,768,822) Proceeds from sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776,361 758,536 1,785,206 10,004,654 Proceeds from redemption of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,738 210,132 509,559 6,478,591 increase in money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,932) (883) (4,663) (127,998) Decrease in money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,975 387 5,379 115,660 Purchase of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,030) (101) (205) (13,279) Purchase of intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (539) (316) (801) (6,958) Proceeds from sales of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — 0 10 Execution of asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (193) — — (2,499) Purchase of investments in subsidiaries resulting in change in scope of consolidation . . . — — (114) — Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,718 27,079 29,462 679,359 Cash flows from financing activities: Repayments of lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (138) (291) (599) (1,785) Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,633) (5,154) (5,154) (201,466) Cash dividends paid to minority of stockholders of consolidated subsidiaries . . . . . . . . . (27) (36) (36) (355) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0) (5) — Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,799) (5,482) (5,795) (203,606)Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,090 (125,674) (46,589) 1,663,532 Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211,874 258,463 258,463 2,730,342 Cash and cash equivalents, end of period (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 340,964 ¥ 132,789 ¥ 211,874 $ 4,393,874


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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 semi-

annual financial statements in conformity 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 13 as of September 30, 2012 .

AzB Funding was established and consolidated from the

six-month period ended September 30, 2012 .

under the control or influence concept, those entities in

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

trol over finance and operations are fully consolidated, and

those entities over which the Group has the ability to exer-

cise 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 At

investments Corporation, because the combined total assets,

total income, net income (loss) and retained earnings of such

subsidiaries would not have a material effect on the accompa-

nying consolidated semiannual financial statements .

investments in unconsolidated subsidiaries and affiliated

companies such as vietnam international leasing Company

limited and Daiwa Aozora 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 .

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

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

ended September 30, 2011 (except for the balance sheet

items) to conform to the classifications used in the consoli-

dated semiannual finanical statements for the six-month

period ended September 30, 2012 .

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 ¥77 .60 to $1 .00, the rate of exchange at

September 30, 2012 . 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 state-

ments 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 con-

formity 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, 2012 and the consolidated

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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 pur-

poses (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 appro-

priate, 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 statements 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 statements 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 .

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’) .


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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 hedg-

ing 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 .

(Accounting change)

From the six-month period ended September 30, 2012,

following a revision of the Corporation tax Act, the Bank and

its consolidated domestic subsidiaries applied a depreciation

method, based on the revised Act, to the tangible fixed assets

which had been acquired on and after April 1, 2012 .

this change is immaterial on the consolidated semiannual

statements of income . this change is not subject to retro-

spective application for previous periods since it meets the

specific provision for the exceptional treatment .

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 speci-

fied 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 .

Corporate bond issuance expenses are deferred and amor-

tized by the straight-line method over the terms of the

corporate bonds .

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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 ¥47,156

million ($607,683 thousand) and ¥47,355 million at

September 30 and March 31, 2012, 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, operat-

ing 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 appropriateness 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 .


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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. 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 .

q. Reserve for Contingent Loss—Reserve for contingent

losses is maintained for possible losses from contingencies,

which are not covered by other reserves .

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 .

t. Foreign Currency Items—Assets and liabilities denomi-

nated in foreign currencies held by the Bank are translated

into Japanese yen at the exchange rates prevailing at the bal-

ance 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 .

Cash dividends per share presented in the accompanying

consolidated semiannual statements of income are dividends

applicable to the respective years including dividends to be

paid after the end of the years .

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 .

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(2) Changes in Presentation

when the presentation of financial statements is changed,

prior period financial statements are reclassified in accor-

dance 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 dis-

covered, those financial statements are restated .

this accounting standard and the guidance are applicable

to accounting changes and corrections of prior period errors

which are made from the beginning of the fiscal year that

begins on or after April 1, 2011 .

w. Changes in Presentation—the Bank has invested in

securitization products including real estate related products

(available-for-sale) as alternatives to loans, some of which

are volatile in inherent value due to their risk attributes . the

significance of those products on the financial statements

of the Bank is increasing for reasons such as that declining

real estate prices in Japan have increased losses on those

products .

therefore, in the fiscal year ended March 31, 2012, the

Bank changed the classification of income statement items

(for realized/unrealized gains (losses)) of those products,

whose interest and principal repayments are no longer

expected as per contract, from ‘other ordinary income’ or

‘other ordinary expenses’ to ‘other income’ or ‘other

expenses’ in order to conform to the classification of accounts

for gain/loss on equity securities or loss on write-off/disposal

of bad loans, considering their economic nature and similarity

of transaction .

As a result, the relevant loss of ¥1,449 million was reclassi-

fied from ‘other ordinary expenses’ to ‘other expenses’ in the

consolidated semiannual statement of income for the six-

month period ended September 30, 2011, retrospectively .

4. Trading Assets and Liabilitiestrading assets and liabilities as of September 30 and March 31, 2012, consisted of the following:

Millions of YenThousands of U.S. Dollars

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

trading assets:

trading account securities . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,203 ¥ 1,209 $ 15,511

Securities related to trading transactions . . . . . . . . . . . . 124,411 140,155 1,603,245

Derivatives of securities related to trading transactions . . 239 38 3,081

trading-related financial derivatives . . . . . . . . . . . . . . . . 385,970 336,218 4,973,850

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥511,825 ¥477,621 $6,595,687

trading liabilities:

Derivatives of securities related to trading transactions . . ¥ 29 ¥ 12 $ 381

trading-related financial derivatives . . . . . . . . . . . . . . . . 362,623 308,804 4,672,987

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥362,653 ¥308,816 $4,673,368

3. Cash and Cash EquivalentsCash and cash equivalents as of September 30 and March 31, 2012, consisted of the following:


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

Cash on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 12,331 ¥ 11,870 $ 158,906

Due from the Bank of Japan . . . . . . . . . . . . . . . . . . . . . . . . . . 328,633 200,003 4,234,968

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥340,964 ¥211,874 $4,393,874

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

transactions amounting to ¥57,237 million ($737,592 thousand) and ¥10,081 million for the six-month periods ended September

30, 2012 and 2011, respectively .


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Held-to-maturity bonds as of September 30 and March 31, 2012, were as follows:

Millions of Yen Thousands of U.S. Dollars

Carrying amount Fair value Difference

Carrying amount Fair value Difference

September 30, 2012 Fair value exceeding carrying amount

Bonds: Japanese national government bonds ¥29 ¥30 ¥0 $387 $388 $1

March 31, 2012 Fair value exceeding carrying amount

Bonds: Japanese national government bonds ¥29 ¥30 ¥0

the costs and carrying amounts of available-for-sale securities with fair value as of September 30 and March 31, 2012, were as follows:


Carrying amount Cost Difference


September 30, 2012

Carrying amount exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . ¥ 317 ¥ 214 ¥ 103 $ 4,090 $ 2,761 $ 1,329

Japanese national government bonds . . . . . 370,941 364,505 6,435 4,780,168 4,697,231 82,937

Japanese local government bonds . . . . . . . . 8,022 7,891 131 103,382 101,691 1,691

Japanese corporate bonds . . . . . . . . . . . . . 24,538 24,077 460 316,213 310,277 5,936

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 321,204 317,294 3,909 4,139,228 4,088,844 50,384

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,852 175,209 4,642 2,317,686 2,257,858 59,828

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 904,875 889,192 15,683 11,660,767 11,458,662 202,105

Carrying amount not exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . 665 702 (37) 8,573 9,050 (477)

Japanese national government bonds . . . . . 173,671 173,678 (7) 2,238,031 2,238,128 (97)

Japanese local government bonds . . . . . . . . 878 879 (1) 11,317 11,338 (21)

Japanese corporate bonds . . . . . . . . . . . . . 38,139 38,964 (824) 491,492 502,123 (10,631)

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 50,539 50,615 (75) 651,285 652,262 (977)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,604 26,024 (2,420) 304,176 335,372 (31,196)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,498 290,866 (3,367) 3,704,874 3,748,273 (43,399)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,192,373 ¥1,180,058 ¥12,315 $15,365,641 $15,206,935 $158,706

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, 2012, consisted of the following:


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

Japanese national government bonds . . . . . . . . . . . . . . . . . . ¥ 544,642 ¥ 615,956 $ 7,018,585Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . 8,900 14,251 114,698Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,677 70,642 807,705Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,521 26,729 341,767Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,743 407,295 4,790,514Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,479 187,443 3,292,263

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,269,965 ¥1,322,319 $16,365,532

As of September 30 and March 31, 2012, securities included equity investments in unconsolidated subsidiaries and affiliated

companies that amounted to ¥3,514 million ($45,292 thousand) and ¥4,955 million, respectively .

As of September 30 and March 31, 2012, the Group extended guarantees of ¥3,665 million ($47,238 thousand) and ¥11,668

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

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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, 2012 and

the year ended March 31, 2012, the Group wrote off market-

able available-for-sale securities in the amounts of ¥670

million ($8,643 thousand) and ¥7,168 million, respectively, as

other-than-temporary declines . the breakdown of write-off

for the six-month period ended September 30, 2012, was as

follows: ¥80 million ($1,032 thousand) for monetary claims

bought, ¥260 million ($3,358 thousand) for stocks, ¥173

million ($2,234 thousand) for corporate bonds, and ¥156 mil-

lion ($2,019 thousand) for foreign bonds . the breakdown of

write-off for the year ended March 31, 2012, was as follows:

¥6,795 million for monetary claims bought, ¥24 million for

corporate bonds, and ¥347 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 six-month period ended September 30,

2012 and the year ended March 31, 2012, valuation losses

on the marketable available-for-sale securities which were

planned to be sold off were charged to losses by ¥3 million

($45 thousand) and ¥98 million, respectively .

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, ¥1,221 million ($15,741

thousand) and none were repledged under such agreements,

¥16,243 million ($209,327 thousand) and ¥9,305 million

were loaned under such agreements, and ¥16,564 million

($213,466 thousand) and ¥455 million remained undisposed,

as of September 30 and March 31, 2012, respectively .




March 31, 2012

Carrying amount exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . ¥ 334 ¥ 214 ¥ 120

Japanese national government bonds . . . . . 383,390 377,571 5,818

Japanese local government bonds . . . . . . . . 9,941 9,811 129

Japanese corporate bonds . . . . . . . . . . . . . 33,623 33,216 407

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 89,816 88,901 914

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,335 97,485 2,849

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617,441 607,200 10,240

Carrying amount not exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . 805 962 (157)

Japanese national government bonds . . . . . 232,536 232,573 (37)

Japanese local government bonds . . . . . . . . 4,309 4,315 (5)

Japanese corporate bonds . . . . . . . . . . . . . 37,019 37,630 (611)

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . 317,479 319,720 (2,241)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,048 33,669 (1,621)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624,198 628,872 (4,674)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,241,639 ¥1,236,073 ¥ 5,565


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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 ¥369,893

million ($4,766,669 thousand) and ¥357,119 million as of

September 30 and March 31, 2012, respectively . ¥345,666

million ($4,454,461 thousand) and ¥326,727 million of these

amounts relate to contracts with residual contractual terms

of one year or less as of September 30 and March 31, 2012,

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, 2012, were as follows:


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

Carrying amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥7,353 ¥6,298 $94,755

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, 2012 .

7. Loans and Bills Discountedloans and bills discounted as of September 30 and March 31, 2012, consisted of the following:


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

Bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 622 ¥ 698 $ 8,022

loans on notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,798 98,277 1,234,518

loans on deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,182,754 2,323,559 28,128,275

Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285,007 248,213 3,672,777

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,450 1,405 18,688

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,565,632 ¥2,672,155 $33,062,280

the following risk-monitored loans were included in loans and bills discounted as of September 30 and March 31, 2012:


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

loans to bankrupt borrowers . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 4,687 ¥ 6,384 $ 60,403

Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,256 65,820 995,568

loans overdue for three months or more . . . . . . . . . . . . . . . . 363 311 4,690

Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,519 37,360 251,535

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥101,826 ¥109,877 $1,312,196

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8. Foreign ExchangeForeign exchange as of September 30 and March 31, 2012, consisted of the following:


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

Assets:Due from foreign banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥11,027 ¥21,831 $142,111

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥11,027 ¥21,831 $142,111

liabilities:Due to foreign banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1 ¥ 1 $ 19

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1 ¥ 1 $ 19

9. Tangible Fixed Assets and Intangible Fixed Assetstangible fixed assets as of September 30 and March 31, 2012, consisted of the following:


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

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥10,908 ¥10,697 $140,576land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,249 9,249 119,189lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989 1,268 12,755Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 824 12,896

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥22,148 ¥22,040 $285,416

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥24,208 ¥24,443 $311,960

intangible fixed assets as of September 30 and March 31, 2012, consisted of the following:


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

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,604 ¥4,147 $46,450lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 8 80Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 75 953

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,684 ¥4,230 $47,483

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, 2012 were ¥622 million ($8,022 thousand) and ¥698

million, respectively .

the outstanding amounts which were accounted for

as sales of loans to participants for loan participations in

accordance with the JiCPA Accounting Standard Committee

Report No . 3, issued on June 1, 1995, were ¥53,749 million

($692,647 thousand) and ¥53,912 million as of September

30 and March 31, 2012, respectively .

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 .


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11. Allowance for Loan Losses Allowance for loan losses as of September 30 and March 31, 2012, consisted of the following:


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

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥41,950 ¥54,958 $540,604Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,476 22,044 341,198

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥68,427 ¥77,003 $881,802

12. Pledged Assets and Collateralized Debtsthe carrying amounts of assets pledged as collateral and collateralized debts as of September 30 and March 31, 2012, were as follows:


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

Assets pledged as collateral: trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 91,017 ¥ 98,784 $ 1,172,902 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601,235 574,083 7,747,879 loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . 97,420 140,588 1,255,415

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥789,672 ¥813,456 $10,176,196

Collateralized debts: Call money and bills sold . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 80,000 ¥ 80,000 $ 1,030,928 Payables under securities lending transactions . . . . . . . . . . 341,835 383,178 4,405,092 Borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,000 184,337 2,667,526

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥628,835 ¥647,515 $ 8,103,546

13. DepositsDeposits as of September 30 and March 31, 2012, consisted of the following:


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

Current deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 37,072 ¥ 33,022 $ 477,734Ordinary deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309,428 329,007 3,987,485Deposits at notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,904 3,100 50,316time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,361,052 2,341,574 30,425,929Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . 219,807 209,790 2,832,564Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,027 12,958 219,424

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,948,291 ¥2,929,452 $37,993,452

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, 2012:


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

Due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 100 ¥ 100 $ 1,290 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,088 76,990 1,006,301

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥78,189 ¥77,090 $1,007,591

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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, 2012, consisted of the following:


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

One-year discount debentures . . . . . . . . . . . . . . . . . . . . . . . . ¥ — ¥ 4,986 $ —two-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . 122,250 125,550 1,575,387three-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . 10,000 — 128,866Five-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . 52,259 92,608 673,451

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥184,509 ¥223,144 $2,377,704

15. Other Assets and LiabilitiesOther assets and liabilities as of September 30 and March 31, 2012, consisted of the following:


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

Other assets:Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 6,815 ¥ 7,212 $ 87,834Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,032 3,509 51,968Derivatives other than for trading—assets . . . . . . . . . . . . . . 18,720 20,553 241,246Financial stabilization fund . . . . . . . . . . . . . . . . . . . . . . . . . . — 17,563 — Deferred debenture issuance expenses . . . . . . . . . . . . . . . . 18 26 240Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,114 13,828 104,566

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 37,702 ¥ 62,694 $ 485,854

Other liabilities:Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 20,335 ¥ 23,273 $ 262,060Derivatives other than for trading—liabilities . . . . . . . . . . . . . 13,351 22,238 172,055Borrowed securities related to trading transactions . . . . . . . 175,999 118,762 2,268,041Matured debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,275 7,696 93,750lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 486 4,489Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . 1,547 1,580 19,944Deposits accepted for derivative transactions . . . . . . . . . . . 51,789 52,414 667,385Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,932 27,540 192,423

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥285,579 ¥253,995 $3,680,147


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16. Equity

the amount of treasury stock was ¥15,438 million

($198,953 thousand) and ¥15,650 million as of September 30,

2012 and 2011, respectively . the number of treasury shares

as of September 30, 2012 was 153,753,171 shares of

common stock and as of September 30, 2011 was

155,893,248 shares of common stock .

Changes in the number of shares of common stock, preferred stock and treasury stock of the six-month periods ended September 30, 2012 and 2011, consisted of the following:

Capital stock as of September 30 and March 31, 2012, consisted of the following:


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

Common stock—authorized, 3,772,000 thousand shares, issued, 1,650,147 thousand shares, and outstanding, 1,496,394 thousand shares . . . . . . . . . . . . . . . . . . . . . . . . ¥252,465 ¥252,465 $3,253,422

Preferred stock, Class A Series 4—authorized, issued and outstanding, 24,072 thousand shares . . . . . . . . . . . . . . . . . 12,036 12,036 155,103

Preferred stock, Class C Series 5—authorized, 433,333 thousand shares, and issued and outstanding, 258,799 thousand shares . . . . . . . . . . . . . . . . . . . . . . . . . 155,279 155,279 2,001,027

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥419,781 ¥419,781 $5,409,552

Note: the authorized number of shares of common stock and preferred stock in total was 4,054,871 thousand as of September 30, 2012, while the articles of incorporation prescribe the authorized number of shares for each class of common stock and preferred stock as presented in the table above .

Thousands

Issued number of shares Treasury stock

Common Stock

Preferred Stock Class A Series 4

Preferred Stock Class C Series 5

Common Stock

Six-month period ended September 30, 2012

Beginning of period . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 153,753

End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 153,753


Beginning of period . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 155,892

increase (Note) . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0

End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 155,893

Millions of Yen

Yen


U.S. Dollars

Total amounts Per share Total amounts Per share

September 30, 2012 (Note 1, 3) Class A Series 4 preferred stock . . . . . . . . . . . ¥ 240 ¥10 .00 $ 3,102 $0 .13 Class C Series 5 preferred stock . . . . . . . . . . . 1,925 7 .44 24,813 0 .10 Common stock . . . . . . . . . . . . . . . . . . . . . . . . 13,467 9 .00 173,551 0 .12

September 30, 2011 (Note 2, 3) Class A Series 4 preferred stock . . . . . . . . . . . ¥ 240 ¥10 .00 Class C Series 5 preferred stock . . . . . . . . . . . 1,925 7 .44 Common stock . . . . . . . . . . . . . . . . . . . . . . . . 2,988 2 .00

Note: the increases were due to the repurchase of odd-lot treasury shares .

Notes: 1 . year-end cash dividends for the fiscal year ended March 31, 2012 were approved at the Board of Directors’ meeting held on May 29, 2012 . 2 . year-end cash dividends for the fiscal year ended March 31, 2011 were approved at the Board of Directors’ meeting held on May 27, 2011 . 3 . the cash dividends were paid from retained earnings .

Cash dividends

Cash dividends paid for the six-month periods ended September 30, 2012 and 2011 were as follows:

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17. Other Ordinary IncomeOther ordinary income for the six-month periods ended September 30, 2012 and 2011, consisted of the following:


2012 2011 2012

Gains on sales of bonds and other securities . . . . . . . . . . . . ¥ 8,175 ¥ 8,843 $105,359 Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,505 5,157 70,949

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥13,681 ¥14,001 $176,308

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

18. Other IncomeOther income for the six-month periods ended September 30, 2012 and 2011, consisted of the following:


2012 2011 2012

Gains on sales of stocks and other securities . . . . . . . . . . . . . ¥ 69 ¥ 391 $ 898 Gains on investments in money held in trust . . . . . . . . . . . . . . 97 191 1,260 Recoveries of written-off claims . . . . . . . . . . . . . . . . . . . . . . . 1,138 732 14,668 Reversal of allowance for loan losses . . . . . . . . . . . . . . . . . . . 1,632 3,326 21,039 Reversal of provision for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . 170 — 2,204 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663 1,849 8,554

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,773 ¥6,492 $48,623

19. Other Ordinary ExpensesOther ordinary expenses for the six-month periods ended September 30, 2012 and 2011, consisted of the following:


2012 2011 2012

Amortization of debenture issuance costs . . . . . . . . . . . . . . . . ¥ 9 ¥ 23 $ 124 losses on foreign exchange transactions . . . . . . . . . . . . . . . . 1,073 1,976 13,828 losses on sales of bonds and other securities . . . . . . . . . . . . 89 1,186 1,152 losses on devaluation of bonds and other securities . . . . . . . 156 23 2,021 losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 68 2,721 Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,555 1,382 20,041

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,095 ¥4,661 $39,887

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

20. Other ExpensesOther expenses for the six-month periods ended September 30, 2012 and 2011, consisted of the following:


2012 2011 2012

Provision of allowance for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . ¥ — ¥ 557 $ — write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,052 754 13,568 losses on sales of stocks and other securities . . . . . . . . . . . . 10 — 135 losses on devaluation of stocks and other securities . . . . . . . 452 155 5,829 losses on disposal of noncurrent assets . . . . . . . . . . . . . . . . 137 39 1,774 Provision for financial products transaction liabilities . . . . . . . . 0 — 2 losses on devaluation of monetary claims bought . . . . . . . . . 80 1,449 1,032 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,214 4,139 67,201

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥6,948 ¥7,097 $89,541


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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, 2012, were as follows:


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

Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 98 ¥101 $1,265 Due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 104 842

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥163 ¥206 $2,107

22. Financial Instruments and Related DisclosuresCarrying amounts, fair values and their differences of financial instruments as of September 30 and March 31, 2012 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, 2012 Sep. 30, 2012

Carrying Amount

Fair Value Difference

Carrying Amount


Cash and due from banks . . . . . . . . . . . . . . . . ¥ 379,913 ¥ 379,913 ¥ — $ 4,895,795 $ 4,895,795 $ —

Call loans and bills bought . . . . . . . . . . . . . . . . 80,000 80,000 — 1,030,928 1,030,928 —

Receivables under securities borrowing transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 192,492 192,492 — 2,480,574 2,480,574 —

Monetary claims bought *1 . . . . . . . . . . . . . . . . 40,366 45,719 5,352 520,189 589,164 68,975

trading assets

trading securities . . . . . . . . . . . . . . . . . . . . . 125,615 125,615 — 1,618,756 1,618,756 —

Money held in trust . . . . . . . . . . . . . . . . . . . . . 7,353 7,756 403 94,755 99,954 5,199

Securities

Held-to-maturity bonds . . . . . . . . . . . . . . . . 29 30 0 387 388 1

Available-for-sale securities *2 . . . . . . . . . . . . 1,181,470 1,181,470 — 15,225,138 15,225,138 —

loans and bills discounted . . . . . . . . . . . . . . . 2,565,632 33,062,280

less allowance for loan losses *1 . . . . . . . . . (66,959) (862,886)

Net loans and bills discounted . . . . . . . . . . . . . 2,498,672 2,545,564 46,891 32,199,394 32,803,671 604,277

Assets total . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,505,915 ¥4,558,562 ¥52,647 $58,065,916 $58,744,368 $678,452

Deposits (excluding negotiable certificates of deposit) . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,728,484 ¥2,747,275 ¥18,790 $35,160,888 $35,403,039 $242,151

Negotiable certificates of deposit . . . . . . . . . . . 219,807 219,807 — 2,832,564 2,832,564 —

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 184,048 (461) 2,377,704 2,371,759 (5,945)

Call money and bills sold . . . . . . . . . . . . . . . . . 102,741 102,741 — 1,323,994 1,323,994 —

Payables under securities lending transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 341,835 341,835 — 4,405,093 4,405,093 —

Borrowed money . . . . . . . . . . . . . . . . . . . . . . . 244,750 245,349 599 3,153,997 3,161,726 7,729

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

Borrowed securities related to trading transactions . . . . . . . . . . . . . . . . . . . . . . . . 175,999 175,999 — 2,268,041 2,268,041 —

liabilities total . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,998,128 ¥4,017,058 ¥18,929 $51,522,281 $51,766,216 $243,935

Derivatives *3

For which hedge accounting is not applied . . ¥ 21,695 ¥ 21,695 ¥ — $ 279,575 $ 279,575 $ —

For which hedge accounting is applied . . . . 7,230 7,230 — 93,179 93,179 —

Derivatives total . . . . . . . . . . . . . . . . . . . . . . . . ¥ 28,925 ¥ 28,925 ¥ — $ 372,754 $ 372,754 $ —

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Mar. 31, 2012

Carrying Amount


Cash and due from banks . . . . . . . . . . . . . . . . ¥ 260,369 ¥ 260,369 ¥ —

Call loans and bills bought . . . . . . . . . . . . . . . . 80,164 80,164 —

Receivables under securities borrowing transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 123,082 123,082 —

Monetary claims bought *1 . . . . . . . . . . . . . . . . 48,442 52,929 4,487

trading assets

trading securities . . . . . . . . . . . . . . . . . . . . . 141,365 141,365 —

Money held in trust . . . . . . . . . . . . . . . . . . . . . . 6,298 6,700 401

Securities

Held-to-maturity bonds . . . . . . . . . . . . . . . . 29 30 0

Available-for-sale securities *2 . . . . . . . . . . . . 1,228,269 1,228,269 —

loans and bills discounted . . . . . . . . . . . . . . . . 2,672,155

less allowance for loan losses *1 . . . . . . . . . (75,713)

Net loans and bills discounted . . . . . . . . . . . . . 2,596,441 2,639,587 43,145

Assets total . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,484,462 ¥4,532,497 ¥48,034

Deposits (excluding negotiable certificates of deposit) . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,719,662 ¥2,741,388 ¥21,725

Negotiable certificates of deposit . . . . . . . . . . . 209,790 209,790 —

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223,144 222,940 (203)

Call money and bills sold . . . . . . . . . . . . . . . . . 136,380 136,380 —

Payables under securities lending transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 383,178 383,178 —

Borrowed money . . . . . . . . . . . . . . . . . . . . . . . 215,042 215,648 606

Other liabilities

Borrowed securities related to trading transactions . . . . . . . . . . . . . . . . . . . . . . . . 118,762 118,762 —

liabilities total . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,005,960 ¥4,028,089 ¥22,128

Derivatives *3

For which hedge accounting is not applied . . ¥ 19,423 ¥ 19,423 ¥ —

For which hedge accounting is applied . . . . . 6,331 6,331 —

Derivatives total . . . . . . . . . . . . . . . . . . . . . . . . ¥ 25,755 ¥ 25,755 ¥ —

*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 ¥21,882 million ($281,993 thousand) and ¥23,142 million, and the fair value was ¥26,300 million ($338,918 thousand) and ¥27,752 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, 2012, respectively . the difference between the fair value and the carrying amounts was ¥4,417 million ($56,925 thousand) and ¥4,610 million, as of September 30 and March 31, 2012, 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 .


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(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

calculated 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

provided 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

dealers . investment trust funds are valued at a price provided

by the management company of each fund . investments

in partnerships 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

reasonably 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 . As a

result, in comparison to the valuation based on market price,

‘Securities’ increased by ¥3,751 million ($48,345 thousand)

and ¥4,231 million, ‘Deferred tax assets’ decreased by

¥1,337 million ($17,230 thousand) and ¥1,508 million,

and ‘valuation difference on available-for-sale securities’

increased by ¥2,414 million ($31,115 thousand) and ¥2,723

million as of September 30 and March 31, 2012, respectively .

the value reasonably estimated for the Floating Rate

JGBs was calculated 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

contractual 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 .

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 funding

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

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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 .

(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

footnotes 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, 2012


(1) unlisted stocks, etc .*1 *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥35,659 $459,528

(2) investments in partnerships *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,922 398,486

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥66,581 $858,014

Carrying amount Mar. 31, 2012

Millions of Yen

(1) unlisted stocks, etc .*1 *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥37,139

(2) investments in partnerships *2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,737

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥70,877

*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 the Group wrote off unlisted stocks, etc ., by ¥18 million ($238 thousand) for the six-month period ended September 30, 2012, and ¥167 million for the year

ended March 31, 2012 .Note: Other than the above, the Bank conducts a total return swap transaction whose contract amount is ¥15,000 million ($193,299 thousand) and ¥15,000

million as of September 30 and March 31, 2012, 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 .


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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, 2012:


Contract or Notional Amount Fair Value

Valuation Gain/(Loss)



September 30, 2012

interest rate contracts:

Futures sold . . . . . . . . . . . . . . . . . ¥ 1,855 ¥ (0) ¥ (0) $ 23,915 $ (4) $ (4)

Bond contracts:

Futures sold . . . . . . . . . . . . . . . . . 1,439 (2) (2) 18,544 (37) (37)

Futures bought . . . . . . . . . . . . . . . 49,415 162 162 636,792 2,092 2,092

Futures options purchased . . . . . . 39,160 65 (80) 504,639 849 (1,036)

Equity contracts:

index options written . . . . . . . . . . . 2,048 (26) (8) 26,401 (344) (114)

index options purchased . . . . . . . . 10,395 110 (9) 133,956 1,428 (121)

March 31, 2012

Bond contracts:

Futures sold . . . . . . . . . . . . . . . . . ¥64,749 ¥(96) ¥(96)

Futures bought . . . . . . . . . . . . . . . 2,985 20 20

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 .

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the Group had the following derivative contracts, which were not listed on exchanges, outstanding as of September 30 and March 31, 2012:






September 30, 2012interest rate contracts: interest rate swaps: Receive fixed and pay floating . . . . ¥9,834,657 ¥ 314,136 ¥ 314,136 $126,735,283 $ 4,048,149 $ 4,048,149 Receive floating and pay fixed . . . . 9,991,290 (300,372) (300,372) 128,753,739 (3,870,783) (3,870,783) Receive floating and pay floating . . 479,446 522 522 6,178,436 6,738 6,738 Other contracts sold . . . . . . . . . . . . . 3,126,694 (51,046) (51,046) 40,292,461 (657,818) (657,818) Other contracts bought . . . . . . . . . . . 2,101,935 55,695 55,695 27,086,799 717,730 717,730 Foreign exchange contracts: Currency swaps . . . . . . . . . . . . . . . . 260,175 1,380 1,380 3,352,773 17,794 17,794 Forward exchange contracts sold . . . 283,418 3,243 3,243 3,652,297 41,801 41,801 Forward exchange contracts bought 104,577 (5,030) (5,030) 1,347,653 (64,827) (64,827) Options written . . . . . . . . . . . . . . . . . 153,481 (6,315) 2,387 1,977,851 (81,391) 30,765 Options purchased . . . . . . . . . . . . . . 155,312 13,372 4,582 2,001,444 172,320 59,053 Commodity derivatives: Commodity swaps: Receive fixed and pay floating . . . . 5,554 (58) (58) 71,572 (758) (758) Receive floating and pay fixed . . . . 5,541 72 72 71,416 930 930 Receive floating and pay floating . . 240 (0) (0) 3,102 (2) (2) Options written . . . . . . . . . . . . . . . 20 — — 269 — — Options purchased . . . . . . . . . . . . 20 — — 269 — — Credit derivatives: CDS sold . . . . . . . . . . . . . . . . . . . . . 258,004 (58) (58) 3,324,794 (756) (756) CDS bought . . . . . . . . . . . . . . . . . . . 248,638 (422) (422) 3,204,098 (5,450) (5,450)internal transactions . . . . . . . . . . . . . . . interest rate swaps: Receive fixed and pay floating . . . . 21,700 289 289 279,639 3,727 3,727 Receive floating and pay fixed . . . . 456,900 (2,603) (2,603) 5,887,887 (33,551) (33,551) Currency swaps . . . . . . . . . . . . . . . . 227,978 261 261 2,937,867 3,372 3,372

March 31, 2012interest rate contracts: interest rate swaps: Receive fixed and pay floating . . . . ¥9,155,833 ¥ 253,849 ¥ 253,849 Receive floating and pay fixed . . . . 8,742,840 (225,115) (225,115) Receive floating and pay floating . . 488,218 425 425 Other contracts sold . . . . . . . . . . . . . 3,954,382 (65,938) (65,938) Other contracts bought . . . . . . . . . . . 3,041,692 59,760 59,760 Foreign exchange contracts: Currency swaps . . . . . . . . . . . . . . . . 235,382 1,236 1,236 Forward exchange contracts sold . . . 217,576 (6,899) (6,899) Forward exchange contracts bought 129,259 (3,316) (3,316) Options written . . . . . . . . . . . . . . . . . 207,059 (8,216) 3,230 Options purchased . . . . . . . . . . . . . . 246,413 16,849 5,444 Commodity derivatives: Commodity swaps: Receive fixed and pay floating . . . . 2,747 (195) (195) Receive floating and pay fixed . . . . 2,740 200 200 Options written . . . . . . . . . . . . . . . 320 0 0 Options purchased . . . . . . . . . . . . 320 0 0 Credit derivatives: CDS sold . . . . . . . . . . . . . . . . . . . . . 318,024 1,869 1,869 CDS bought . . . . . . . . . . . . . . . . . . . 293,822 (2,467) (2,467)internal transactions interest rate swaps: Receive fixed and pay floating . . . . 25,890 407 407 Receive floating and pay fixed . . . . 579,000 (3,153) (3,153) Currency swaps . . . . . . . . . . . . . . . . 212,717 318 318

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 semiannual 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 ¥1,678

million ($21,635 thousand) and a loss of ¥117 million as of September 30 and March 31, 2012, 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 is mainly related to oil and non-ferrous metal .


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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, 2012:




September 30, 2012


interest rate swaps:

Receive fixed and pay floating . . . . . . . . . . . . . . . . . . . . . . . . . . ¥435,200 ¥2,314 $5,608,247 $29,824

Foreign exchange contracts:

Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221,160 (261) 2,850,000 (3,372)

March 31, 2012


interest rate swaps:

Receive fixed and pay floating . . . . . . . . . . . . . . . . . . . . . . . . . . ¥553,110 ¥2,746

Foreign exchange contracts:

Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,927 (318)

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 . 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 gain of ¥5,178

million ($66,727 thousand) and ¥3,904 million as of September 30 and March 31, 2012, respectively, are excluded from ‘Fair value’ shown above . 8 . All of the contracts shown above are internal transactions .

24. Net Income Per Share of Common Stockthe reconciliation of the differences between basic and diluted net income per share (EPS) for the six-month periods ended

September 30, 2012 and 2011, was as follows:

Millions of YenThousands of

Shares Yen U.S. Dollars

Net IncomeWeighted-Average Number of Shares EPS


Basic EPS—Net income available to common stockholders . . ¥20,836 1,496,394 ¥13 .92 $0 .18

Effect of dilutive securities—Preferred stocks . . . . . . . . . . . . . — 465,426

Diluted EPS—Net income for computation . . . . . . . . . . . . . . . ¥20,836 1,961,820 ¥10 .62 $0 .14


Basic EPS—Net income available to common stockholders . . ¥22,554 1,494,254 ¥15 .09

Effect of dilutive securities—Preferred stocks . . . . . . . . . . . . . — 465,426

Diluted EPS—Net income for computation . . . . . . . . . . . . . . . ¥22,554 1,959,680 ¥11 .50

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25. Segment Information 1. Segment information

Segment information for the six-month periods ended

September 30, 2012 and 2011 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 .

Note: the Financial institutions Group (‘FiG’) was integrated into RBBG and CBG on July 1, 2012 . this change was designed to result in a better alignment between relationship teams for financial institu-tion customers and corporate customers, as well as more efficient calling coverage corresponding to size of customers served in each market area . with this integration, the number of reportable segments has changed from the 5 segments of RBBG, CBG, SFG, FiG and FMG to the aforementioned 4 segments .

(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 .

(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 .


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Millions of Yen

RBBG CBG SFG FMG Total

Consolidated net revenue . . . . . . . . . . . . . . ¥ 8,334 ¥ 7,013 ¥ 15,377 ¥ 12,320 ¥ 43,046

General and administrative expenses . . . . . 6,400 4,492 6,374 1,765 19,033

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

(3) Revenues, profit (loss), assets and liabilities by reportable segment

the six-month period ended September 30, 2012

Millions of Yen


Consolidated net revenue . . . . . . . . . . . . . . ¥ 7,575 ¥ 7,464 ¥ 15,576 ¥ 11,639 ¥ 42,255


Segment profit . . . . . . . . . . . . . . . . . . . . . . 1,281 2,733 9,281 9,710 23,005

Segment assets . . . . . . . . . . . . . . . . . . . . . 348,624 1,387,100 1,233,463 2,006,813 4,976,000

Segment liabilities . . . . . . . . . . . . . . . . . . . . 2,789,420 428,645 64,170 998,375 4,280,610

the six-month period ended September 30, 2011

Notes: 1 . Consolidated net revenues profit (loss), assets and liabilities in the six-month period ended September 30, 2011, were adjusted according to the new reportable segments referred to in the section above, ‘(1) Description of reportable segments .’

2 . 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 the management purpose, therefore, revenue in transactions between reportable segments is not disclosed .

3 . 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 ¥ 2,108 million .

4 . Due to a change in presentation of the accounting item for gains and losses of real estate-related securitization products (available-for-sale) which have been invested as alternatives to loans and whose interest and principal repayments are no longer expected as per contract, the consolidated net revenue and the segment profit of SFG and the total of reportable segments for the six-month period ended September 30, 2011, increased by ¥1,449 million, retrospectively .



Consolidated net revenue . . . . . . . . . . . . . . $ 107,407 $ 90,378 $ 198,170 $ 158,767 $ 554,722


Segment profit . . . . . . . . . . . . . . . . . . . . . . 24,928 32,480 116,018 136,021 309,447

Segment assets . . . . . . . . . . . . . . . . . . . . . 4,078,776 16,764,188 15,095,052 29,531,211 65,469,227

Segment liabilities . . . . . . . . . . . . . . . . . . . . 34,858,582 5,590,348 787,152 13,245,026 54,481,108

Notes: 1 . Consolidated net revenues, profit (loss), assets and liabilities in the six-month period ended September 30, 2012, were adjusted according to the new reportable segments referred to in the section above, ‘(1) Description of reportable segments .’

2 . 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 the management purpose, therefore, revenue in transactions between reportable segments is not disclosed .

3 . 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 ($24,590 thousand) .

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2012 2011 2012

total consolidated net revenue of reportable segments . . . . . . . . . . . . . . . . . . . . . ¥43,046 ¥42,255 $554,722 variances resulting from differences in the basis of revenue and expense recognition and measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (214) (1,274) (2,758)

Net revenue derived from the consolidated semiannual statements of income . . . . ¥42,832 ¥40,980 $551,964

(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 consoli-

dated semiannual financial statements of income


2012 2011 2012

total segment profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥24,013 ¥23,005 $309,447 variances resulting from differences in the basis of revenue and expenses recognition and measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (375) (1,267) (4,844)Amortization of actuarial differences on retirement benefit plans, etc . . . . . . . . . . . . (610) (641) (7,868)Credit-related expenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,653) 1,110 (21,313)Other income and expense items, other than credit-related expenses, etc . . . . . . . (1,383) (1,675) (17,829)Net extraordinary income (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (137) (39) (1,776)

income before income taxes and minority interests in the consolidated semiannual statements of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥19,851 ¥20,491 $255,817

(b) Reconciliation between total segment profits and the consolidated semiannual statements of income

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 .


2012 2011 2012

total segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥5,080,412 ¥4,976,000 $65,469,227 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (68,427) (94,138) (881,802)Assets not allocated to reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,127 170,105 1,522,266

total assets on the consolidated semiannual balance sheets . . . . . . . . . . . . . . . . . ¥5,130,112 ¥5,051,968 $66,109,691


2012 2011 2012

total segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,227,734 ¥4,280,610 $54,481,108 liabilities not allocated to reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . 285,866 184,805 3,683,844

total liabilities on the consolidated semiannual balance sheets . . . . . . . . . . . . . . . . ¥4,513,600 ¥4,465,415 $58,164,952

(c) Reconciliation between total segment assets and total assets on the consolidated semiannual balance sheets

(d) Reconciliation between total segment liabilities and total liabilities on the consolidated semiannual balance sheets

Note: As for the six-month period ended September 30, 2011, assets not allocated to reportable segments include other assets of ¥66,513 million, deferred tax assets of ¥44,612 million and fixed assets of ¥27,347 million . As for the six-month period ended September 30, 2012, assets not allocated to reportable segments include other assets of ¥18,962 million ($244,368 thousand), deferred tax assets of ¥49,957 million ($643,786 thousand) and fixed assets of ¥25,832 million ($332,899 thousand) .

Note: As for the six-month period ended September 30, 2011, liabilities not allocated to reportable segments include other liabilities of ¥169,520 million and provision for retirement benefits of ¥11,780 million . As for the six-month period ended September 30, 2012, liabilities not allocated to reportable segments include other liabilities of ¥270,685 million ($3,488,209 thousand) and provision for retirement benefits of ¥11,303 million ($145,665 thousand) .


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2. Related information

For the six-month period ended September 30, 2011

Millions of Yen

Securities Derivatives, Lending investment etc. Others Total

Ordinary income from external customers . . . . . . . . . . . . . . . ¥29,672 ¥19,968 ¥4,305 ¥5,998 ¥59,944

Millions of Yen


Ordinary income from external customers . . . . . . . . . . . . . . . ¥33,290 ¥18,977 ¥5,258 ¥6,934 ¥64,460



Ordinary income from external customers . . . . . . . . . . . . . . . $382,376 $257,321 $55,483 $77,305 $772,485

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, 2012 and 2011 .

(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, 2012

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1. Outline of the Recapitalization Plan

(1) Change capital composition, to create a distributable amount sufficient for the repayment of public funds(2) Extend the convertible period and postpone the mandatory conversion date of the Class A Series 4 and the Class C Series 5 preferred stock into common stock (the ‘Conversion Period into Common Stock’)(3) Commence repaying public funds through a repurchase of a portion of the Class C Series 5 preferred stock(4) installment repayments of the public funds through super preferred dividend on the Class C Series 5 preferred stock(5) Repurchase the common stock(6) increase in the dividend payout ratio for common stock

in addition, the Bank entered into an agreement with the Deposit insurance Corporation of Japan on September 27, 2012, which includes a mutual confirmation that the total amount of public funds to be repaid should be ¥227 .6 billion .

2. Specific Measures

(1) Change in capital composition (Reduction in capital stock) (a) Purpose the change in capital composition was implemented by transferring a portion of Capital Stock to Other Capital Surplus in

order to create a distributable amount sufficient for the full repayment of the remaining public funds . in addition, the Bank transferred another portion of Capital Stock to legal Capital Surplus to eliminate the need to accumulate legal Retained Earnings upon each dividend payment in the coming years .

(b) Details (i) Reduction in Capital Stock Pursuant to Article 447-1 of the Companies Act, Capital Stock was reduced by ¥319,781 million ($4,120,892 thousand) from ¥419,781 million ($5,409,552 thousand) to ¥100,000 million ($1,288,660 thousand) (ii) transfer to legal Capital Surplus and Other Capital Surplus Out of the amount transferred out from Capital Stock, ¥53,980 million ($695,619 thousand) was transferred to legal Capital Surplus, and the remaining ¥265,801 million ($3,425,273 thousand) was transferred to Other Capital Surplus . (c) time schedule (i) Deadline for making objection by creditors: October 29, 2012 (ii) Effective date of the reduction in capital stock: November 15, 2012 (iii) Other:

upon the completion of FSA’s approval and procedures in accordance with the Companies Act, the reduction in capital stock became effective as of November 15, 2012 .

(2) Extend the Conversion Period into Common Stock of the Class A Series 4 and the Class C Series 5 preferred stock in order to make the installment repayments, the Bank extended the Conversion Period into Common Stock of the Class A

Series 4 and the Class C Series 5 preferred stocks to June 2022 .(3) Commence repaying public funds through a repurchase of a portion of the Class C Series 5 preferred stock (a) Purpose Pursuant to the Articles of incorporation in accordance with Article 459-1 of the Companies Act, the Bank made a

¥22 .7 billion ($292 .5 million) upfront repayment of public funds through a repurchase/retirement of a portion of the Class C Series 5 preferred stock .

26. Subsequent eventsthe Bank finalized a comprehensive recapitalization plan including the following six measures toward a full repayment of public

funds . Based on the resolution at an extraordinary general meeting of common stockholders, meetings of respective preferred

stockholders and the board of directors’ meeting on September 27, 2012, the Bank reduced the Capital Stock, repurchased and

retired a portion of the Class C Series 5 preferred stock, and repurchased common stock, after the semiannual balance sheet date .


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(b) Details (i) type of shares to be repurchased the Class C Series 5 preferred stock (ii) total number of shares to be repurchased 44,220,205 shares (iii) Consideration for repurchase Cash (iv) total repurchase amount ¥22,700 million ($292,526 thousand) (v) Approved period for the repurchase From immediately after the conclusion of the extraordinary general meeting of stockholders on September 27, 2012 to March 31, 2013 (vi) Other

On October 2, 2012, the Bank repurchased the treasury stock stated above through an off-market transaction, all of which were retired on the same date, based on the resolution on September 27, 2012 at the board of directors’ meeting pursuant to Article 178 of the Companies Act .

(4) installment repayments of the public funds through super preferred dividend on the Class C Series 5 preferred stock the Bank will pay a ¥20 .49 billion annual fixed super preferred dividend in addition to the existing preferred dividend during the

10-year of the extended Conversion Period into Common Stock (until June 2022) through amendments to the conditions of the Class C Series 5 preferred stock . this super preferred dividend will be paid from the increased Other Capital Surplus created through the change in capital composition described in (1) above, and will be treated as a repayment of public funds . the annual repayment amount during the 10-year repayment period, together with the upfront repayment amount through the transaction described in (3), will total ¥227 .6 billion, the total repayment amount of the public funds, in this structure .

in addition, the Bank will revise the conditions of the Class A Series 4 and the Class C Series 5 preferred stocks, in order to reduce their existing preferred dividend depending on the declining balance of the remaining public funds resulting from the installment repayments .

these condition changes were made through the amendments to the Bank’s Articles of incorporation, together with (2) above, and became effective on October 2, 2012 .

(5) Repurchase the common stock (a) Purpose

As a countermeasure to eliminate one of the hurdles for the repayment of public funds at this point, utilizing the Bank’s strong capital base, the Bank planned to repurchase its common stock up to 330 million shares (equivalent to approximately 20% of the number of shares issued), pursuant to the Articles of incorporation in accordance with Article 459-1 of the Companies Act .

(b) Details (i) type of shares to be repurchased Common stock (ii) upper limit for the total number of shares to be repurchased 330,000,000 shares (iii) upper limit for the total repurchase amount ¥100,000 million ($1,288,660 thousand) (iv) Approved period for the repurchase From October 1, 2012 to September 30, 2013 (v) Repurchase methods - Open market repurchase at the tokyo Stock Exchange (tSE) (through a trust account) - Repurchase through the Off-Auction Own Share Repurchase trading (toStNet-3) - tender offer for own common stock (vi) Other Based on the above, the Bank commenced a repurchase of common stock on and after October 1, 2012 .

(6) increase in the dividend payout ratio for common stockthe Bank will adopt a dividend policy whereby it sets the dividend payout ratio for common shares at 40% of consolidated net income, so long as the Bank continues repaying the public funds through installment repayments in this repayment structure .

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Fees and Commissions For the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Net fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,529 4,342 9,481 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,892 4,701 10,181 Deposits, debentures and loan operations . . . . . . . . . . . . . . . . . . . . 2,879 3,078 6,586 Foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 109 214 Securities-related operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518 533 965 Agency services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 939 555 1,383 Safekeeping and safe deposit box services . . . . . . . . . . . . . . . . . . . 0 0 4 Guarantee operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 69 142 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 359 700 Foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 62 126

Trading RevenuesFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Net trading revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,096 4,081 7,247 Trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,096 4,081 7,247 Gains on trading account securities transactions . . . . . . . . . . . . . . . . . 697 414 787 income from securities and derivatives related to trading transactions . 588 217 1,146 income from trading-related financial derivatives transactions . . . . . . . 2,810 3,448 5,314 Other trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 Trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Other Ordinary Income (Net)For the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Gains (losses) on bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,929 6,183 17,106 Net other ordinary income excluding gains (losses) on bond transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,656 1,706 5,173

Interest-Earning Assets and Interest-Bearing LiabilitiesFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen, %)

Average balance Interest income/expenses Return/rates

Sep. 2012 Sep. 2011 Mar. 2012 Sep. 2012 Sep. 2011 Mar. 2012 Sep. 2012 Sep. 2011 Mar. 2012

Interest-earning assets . . . . . 4,131,632 4,154,245 4,184,732 33,501 35,184 68,047 1.61 1.68 1.62 Due from banks . . . . . . . . . 42,481 49,107 47,302 45 51 88 0 .21 0 .20 0 .18 Call loans and bills bought . 78,205 70,302 74,192 46 42 88 0 .11 0 .11 0 .11 Receivables under securities borrowing transactions . . . 195,600 24,551 73,617 97 13 80 0 .09 0 .10 0 .10 Securities . . . . . . . . . . . . . . 1,294,389 1,277,576 1,282,433 7,831 6,755 12,670 1 .20 1 .05 0 .98 loans and bills discounted . 2,465,275 2,656,816 2,636,267 23,747 26,127 51,247 1 .92 1 .96 1 .94 Interest-bearing liabilities . . . 3,726,503 3,818,748 3,870,613 9,875 11,951 22,757 0.52 0.62 0.58 Deposits . . . . . . . . . . . . . . . 2,692,166 2,718,195 2,727,180 7,426 9,126 17,452 0 .55 0 .66 0 .64 Negotiable certificates of deposit . . . . . . . . . . . . . . . 182,610 215,460 205,059 114 149 284 0 .12 0 .13 0 .13 Debentures . . . . . . . . . . . . . 204,397 262,993 254,704 837 1,394 2,575 0 .81 1 .05 1 .01 Call money and bills sold . . . 104,461 111,368 113,661 86 83 172 0 .16 0 .14 0 .15 Payables under repurchase agreements . . . . . . . . . . . — 6,459 4,458 — 8 12 — 0 .26 0 .27 Payables under securities lending transactions . . . . . 337,103 259,727 343,880 446 262 661 0 .26 0 .20 0 .19 Borrowed money . . . . . . . . 208,381 238,849 220,887 228 197 398 0 .21 0 .16 0 .18 Bonds payable . . . . . . . . . . — 10,465 5,232 — 93 93 — 1 .77 1 .78

Note: interest expenses are shown after deduction of amounts of assumed cost of funding money held in trust (¥6 million for the six-month period ended September 30, 2012, ¥14 million for the six-month period ended September 30, 2011, and ¥26 million for the year ended March 31, 2012) .

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Non-Consolidated Financial HighlightsFor the six-month periods ended September 30, 2012, 2011 and 2010, and the years ended March 31, 2012 and 2011

(Millions of yen)


Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . 57,703 61,760 68,071 130,243 124,277

Ordinary profit (loss) . . . . . . . . . . . . . . . . . . . . . 19,587 20,236 15,680 39,475 28,017

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . 20,597 22,606 14,681 45,140 31,825

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 419,781 419,781 419,781

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 . . . . . . . . . . 258,799 258,799 258,799 258,799 258,799

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615,739 587,324 556,824 606,504 565,289

total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,133,594 5,058,950 4,994,823 5,101,003 4,928,632

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 267,582 340,378 223,144 264,741

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,955,460 2,961,903 2,988,221 2,937,390 2,942,859

loans and bills discounted . . . . . . . . . . . . . . . . 2,575,013 2,715,451 2,840,032 2,684,180 2,738,610

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,306,653 1,331,973 1,361,167 1,360,506 1,378,138

total equity per share (yen) . . . . . . . . . . . . . . . . 291 .62 273 .02 252 .61 284 .00 256 .83

Dividends per share (yen) Common stock . . . . . . . . . . . . . . . . . . . . . . . — — — 9 .00 2 .00 Class A Series 4 preferred stock . . . . . . . . . . — — — 10 .00 10 .00 Class C Series 5 preferred stock . . . . . . . . . . — — — 7 .44 7 .44

(interim dividends per share) (Common stock) . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (—) (—) (Class A Series 4 preferred stock) . . . . . . . . . (—) (—) (—) (—) (—) (Class C Series 5 preferred stock) . . . . . . . . . (—) (—) (—) (—) (—)

Basic net income (loss) per share (yen) . . . . . . . 13 .76 15 .12 9 .82 28 .74 19 .84

Diluted net income per share (yen) . . . . . . . . . . . 10 .49 11 .53 7 .49 23 .02 16 .24

Dividend payout ratio (%) . . . . . . . . . . . . . . . . . . — — — 31 .31 10 .07

Capital adequacy ratio (domestic standard) (%) . . . . . . . . . . . . . . . . . . 19 .21 18 .24 15 .66 17 .96 17 .00

Number of employees . . . . . . . . . . . . . . . . . . . . 1,484 1,495 1,497 1,466 1,505

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 .

Non-Consolidated Business Results

62

Financial and

Co

rpo

rate Data

(A)

(K)

(E)

(K)

(Millions of yen)

Sep. 30, 2012 Mar. 31, 2012

Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 Non-cumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 Newly issued stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 Other capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 241 Earned surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,686 9,560 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,162 154,324 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,438) (15,438) Paid-in amount on treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — unappropriated profits to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (15,633) 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) 606,766 586,168 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,625 18,956 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Perpetual subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Subordinated term liabilities and subordinated term preferred stock . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,625 18,956 Tier II capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (B) 18,625 18,956

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

Items deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 52,828 60,134

Regulatory capital (A) + (B) + (C) – (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E) 572,563 544,990

Risk-weighted Balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,508,394 2,604,230 assets Off-balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,112 171,255 Credit risk assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F) 2,670,507 2,775,485 Risk assets derived from market risk equivalents ((H)/8%) . . . . . . . . . (G) 191,317 137,930 Market risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H) 15,305 11,034 Risk assets derived from operational risk equivalents ((J)/8%) . . . . . . ( I ) 118,258 119,652 Operational risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J) 9,460 9,572 (F) + (G) + ( I ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K) 2,980,083 3,033,068

Capital adequacy ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.21% 17.96%

Tier I ratio (Domestic standard)) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.36% 19.32%

Required capital total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,203 121,322

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 79, issued in 2008, for Mar . 31, 2012 and FSA Notice Number 56, issued in 2012, for Sep . 30, 2012 are also applied to the calculation, respectively .

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 . items deducted (D) include the amount held at other financial institutions for their capital-raising purposes . 3 . 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 . 4 . Amounts of required capital for each risk are as follows: (Millions of yen)

Sep. 30, 2012 Mar. 31, 2012

Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,820 111,019 Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,652 5,517 Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,730 4,786

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

Liabilities: Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,955,460 ¥2,961,903 ¥2,937,390 $38,085,834 Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 267,582 223,144 2,377,704 Call money and bills sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,741 102,624 136,380 1,323,994 Payables under repurchase agreements . . . . . . . . . . . . . . . . . . . . — 7,596 — — Payables under securities lending transactions . . . . . . . . . . . . . . . 341,835 378,906 383,178 4,405,093 trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362,653 309,201 308,816 4,673,368 Borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243,300 200,700 213,637 3,135,309 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 19 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,820 198,092 251,890 3,657,480 Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,231 11,746 10,725 144,742 Provision for directors’ retirements benefits . . . . . . . . . . . . . . . . . . 468 328 423 6,034 Provision for credit losses on off-balance-sheet instruments . . . . . . 938 1,669 1,060 12,088 Provision for contingent loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 730 — 932 9,420 Acceptances and guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,162 31,273 26,917 388,691

total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,517,854 4,471,626 4,494,498 58,219,776

Equity: Capital stock Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252,465 252,465 252,465 3,253,421 Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 2,156,130 Capital surplus legal capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 429,554 Other capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 — 241 3,114 Retained earnings legal retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,686 9,560 9,560 163,491 Other retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,162 131,791 154,324 2,012,400 treasury stock—at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,438) (15,650) (15,438) (198,953) valuation difference on available-for-sale securities . . . . . . . . . . . . . 7,765 6,566 3,356 100,071 Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . 1,207 1,942 1,345 15,565

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615,739 587,324 606,504 7,934,793

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥5,133,594 ¥5,058,950 ¥5,101,003 $66,154,569

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 ¥77 .60 to $1 .00, the approximate rate of exchange on September 30, 2012 .

Non-Consolidated Semiannual Balance Sheets (Unaudited)Aozora Bank, ltd .As of September 30, 2012 and 2011 , and March 31, 2012


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

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 340,964 ¥ 132,788 ¥ 211,873 $ 4,393,868 Due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,790 32,304 35,971 383,902 Call loans and bills bought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 80,000 80,164 1,030,928 Receivables under securities borrowing transactions . . . . . . . . . . . . . 192,492 25,987 123,082 2,480,574 Monetary claims bought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,065 20,764 23,699 219,916 trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,621 591,148 476,412 6,580,176 Money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,884 5,440 2,639 37,177 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,306,653 1,331,973 1,360,506 16,838,319 loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,575,013 2,715,451 2,684,180 33,183,163 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,027 16,281 21,831 142,111 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,134 105,825 61,245 465,646 tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,072 22,406 21,946 284,443 intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,700 5,061 4,306 47,687 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,277 43,875 50,140 635,020 Customers’ liabilities for acceptances and guarantees . . . . . . . . . . . . 30,162 31,273 26,917 388,692 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (67,982) (93,397) (76,760) (876,063)Allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,284) (8,235) (7,154) (80,990)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥5,133,594 ¥5,058,950 ¥5,101,003 $66,154,569

No

n-Co

nsolid

ated S


tatements

Non-Consolidated Semiannual Financial Statements

64

Financial and

Co

rpo

rate Data

Non-Consolidated Semiannual Statements of Income (Unaudited)Aozora Bank, ltd .For the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012



Income: interest income: interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,689 ¥25,785 ¥ 50,934 $305,281 interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . 7,792 6,726 12,548 100,425 interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 40 69 436 Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,827 2,205 3,945 23,556 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,858 4,657 9,950 62,605 trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,399 3,666 6,460 43,805 Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,452 12,632 25,819 160,469 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,648 6,045 20,513 47,022

total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,703 61,760 130,243 743,599

Expenses: interest expenses: interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,541 9,275 17,739 97,184 interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837 1,394 2,575 10,797 interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . 302 280 571 3,905 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,186 1,016 1,893 15,293 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . 387 373 823 4,994 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,418 4,739 7,209 44,055 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 18,454 18,812 37,739 237,816 Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,121 5,670 22,258 78,890

total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,251 41,562 90,810 492,934

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,451 20,197 39,433 250,665

Income taxes: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 (34) 89 3,298 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,402) (2,374) (5,797) (18,067)

total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,146) (2,408) (5,707) (14,769)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥20,597 ¥22,606 ¥ 45,140 $265,434

Yen U.S. Dollars


Per share information: Basic net income per share of common stock . . . . . . . . . . . . . . . . ¥13 .76 ¥15 .12 ¥28 .74 $0 .18 Diluted net income per share of common stock . . . . . . . . . . . . . . . 10 .49 11 .53 23 .02 0 .14 Cash dividends applicable to the year: Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . — — 10 .00 — Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . — — 7 .44 — Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 9 .00 —


No

n-Co

nsolid

ated S


tatements

Non-Consolidated Semiannual Financial Statements

65

Financial and

Co

rpo

rate Data

Non-Consolidated Semiannual Statements of Changes in Equity (Unaudited)Aozora Bank, ltd .For the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012


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

Common stock Balance at the beginning of current period . . . . . . . . . . . . . . . . . ¥252,465 ¥252,465 ¥252,465 $3,253,421


Preferred stock Balance at the beginning of current period . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 2,156,130


Capital surplus legal capital surplus Balance at the beginning of current period . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 429,554


Other capital surplus Balance at the beginning of current period . . . . . . . . . . . . . . . . . 241 — — 3,114 Disposal of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 241 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 241 — 241 3,114

Retained earnings legal retained earnings Balance at the beginning of current period . . . . . . . . . . . . . . . . . 9,560 8,529 8,529 123,197 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,126 1,030 1,030 40,294


Other retained earnings Balance at the beginning of current period . . . . . . . . . . . . . . . . . 154,324 115,370 115,370 1,988,724 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,760) (6,185) (6,185) (241,759) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,597 22,606 45,140 265,435


treasury stock—at cost Balance at the beginning of current period . . . . . . . . . . . . . . . . . (15,438) (15,650) (15,650) (198,953) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0) (5) — Disposal of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 217 —

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (15,438) (15,650) (15,438) (198,953)

valuation difference on available-for-sale securities Balance at the beginning of current period . . . . . . . . . . . . . . . . . 3,356 1,813 1,813 43,255 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 4,408 4,752 1,542 56,816


Deferred gains or losses on hedges Balance at the beginning of current period . . . . . . . . . . . . . . . . . 1,345 2,112 2,112 17,343 Net change of items during the period . . . . . . . . . . . . . . . . . . . . (137) (169) (766) (1,778)


total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥615,739 ¥587,324 ¥606,504 $7,934,793


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, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Net interest income . . . . . . . . . . 23,482 17,249 6,232 22,805 17,471 5,334 44,745 33,910 10,835 interest income . . . . . . . . . . . . 33,344 25,911 8,869 34,758 28,497 8,227 67,498 54,914 15,992 [1,436] [1,966] [3,408] interest expenses . . . . . . . . . . 9,862 8,661 2,636 11,952 11,025 2,893 22,753 21,003 5,157 [1,436] [1,966] [3,408]Net fees and communications . 4,470 4,011 458 4,283 3,844 438 9,126 8,223 903 Fees and commissions (income) . . . . . . . . . . . . . . . . 4,858 4,283 575 4,657 4,128 529 9,950 8,773 1,177 Fees and commissions (expenses) . . . . . . . . . . . . . . 387 271 116 373 283 90 823 549 273 Net trading revenues . . . . . . . . . 3,399 (2,324) 5,723 3,666 (3,830) 7,497 6,460 (2,763) 9,224 trading profits . . . . . . . . . . . . . 3,399 (2,324) 5,723 3,666 (3,830) 7,497 6,460 (2,763) 9,224 trading losses . . . . . . . . . . . . — — — — — — — — — Net other ordinary income . . . . 9,033 3,403 5,629 6,442 2,524 3,918 18,610 7,654 10,956 Other ordinary income . . . . . . 12,452 4,618 7,833 12,632 5,366 7,265 25,819 11,492 14,327 Other ordinary expenses . . . . . 3,418 1,215 2,203 6,189 2,842 3,347 7,209 3,838 3,370 Net revenue . . . . . . . . . . . . . . . . 40,385 22,340 18,044 37,199 20,010 17,189 78,944 47,024 31,919 Net revenue ratio (%) . . . . . . . . 1.94 1.17 4.24 1.77 1.03 4.05 1.87 1.20 3.89 Business profit . . . . . . . . . . . . . 22,541 — — 18,490 — — 42,492 — —

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 (¥6 million for the six-month period ended September 30, 2012, ¥14 million for the six-month period ended September 30, 2011 and ¥26 million for the year ended March 31, 2012)

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 6-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 . 6 . if the reclassification is applied to the six-month period ended September 30, 2011, net revenue in domestic operations increased by ¥1,449 million

(of which, other ordinary expenses decreased by ¥1,449 million) . Net revenue ratio was 1 .84% for total and 1 .10% for domestic operations .

RatiosFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

(%)

Sep. 2012 Sep. 2011 Mar. 2012

Ordinary profits to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .83 0 .87 0 .83 Ordinary profits to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 .39 7 .00 6 .73 Net income to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .88 0 .97 0 .95 Net income to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 .72 7 .82 7 .70

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 6-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, 2012 and 2011, and the year ended March 31, 2012

(%)

Sep. 2012 Sep. 2011 Mar. 2012


yield on interest-earning assets . . 1 .60 1 .36 2 .08 1 .66 1 .46 1 .94 1 .60 1 .41 1 .95 interest rate on interest-bearing liabilities . . . . . . . . . . . . . . . . . . 1 .47 1 .46 0 .96 1 .56 1 .55 1 .02 1 .52 1 .50 0 .99 Net yield/interest rate . . . . . . . . . 0 .13 (0 .09) 1 .12 0 .09 (0 .08) 0 .91 0 .08 (0 .09) 0 .95

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Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012


Balance of interest- [491,942] [548,023] [510,400] earning assets Average balance 4,145,772 3,789,967 847,747 4,169,470 3,872,786 844,707 4,199,774 3,890,813 819,361 [1,436] [1,966] [3,408] Interest income/expense 33,344 25,911 8,869 34,758 28,497 8,227 67,498 54,914 15,992 Return/rates (%) 1.60% 1.36% 2.08% 1.66% 1.46% 1.94% 1.60% 1.41% 1.95%

Cash and due from Average balance 33,578 262 33,316 39,062 141 38,920 37,853 155 37,698 banks interest income/expense 33 0 33 40 0 40 69 0 69 Return/rates (%) 0 .20% 0 .01% 0 .20% 0 .20% 0 .01% 0 .20% 0 .18% 0 .03% 0 .18%

Call loans Average balance 78,205 78,114 90 70,302 70,300 2 74,192 74,180 12 interest income/expense 46 46 0 42 42 0 88 88 0 Return/rates (%) 0 .11% 0 .11% 0 .30% 0 .11% 0 .11% 0 .43% 0 .11% 0 .11% 0 .34%

Receivables under Average balance 195,600 195,600 — 24,551 24,551 — 73,617 73,617 — securities borrowing interest income/expense 97 97 — 13 13 — 80 80 — transactions Return/rates (%) 0 .09% 0 .09% — 0 .10% 0 .10% — 0 .10% 0 .10% —

Securities Average balance 1,331,563 859,709 471,853 1,317,384 930,372 387,012 1,321,629 939,806 381,823 interest income/expense 7,792 3,563 4,229 6,726 3,567 3,158 12,548 6,404 6,144 Return/rates (%) 1 .16% 0 .82% 1 .78% 1 .01% 0 .76% 1 .62% 0 .94% 0 .68% 1 .60%

loans and bills Average balance 2,475,196 2,144,815 330,380 2,668,833 2,265,030 403,802 2,647,568 2,263,115 384,453 discounted interest income/expense 23,643 19,056 4,586 25,743 20,730 5,013 50,846 41,101 9,744 Return/rates (%) 1 .90% 1 .77% 2 .76% 1 .92% 1 .82% 2 .47% 1 .92% 1 .81% 2 .53%

Balance of interest- [491,942] [548,023] [510,400] bearing liabilities Average balance 3,732,582 3,439,122 785,402 3,827,185 3,581,426 793,782 3,878,309 3,631,388 757,321 [1,436] [1,966] [3,408] Interest income/expense 9,862 8,661 2,636 11,952 11,025 2,893 22,753 21,003 5,157 Return/rates (%) 0.52% 0.50% 0.66% 0.62% 0.61% 0.72% 0.58% 0.57% 0.68%

Deposits Average balance 2,699,707 2,690,265 9,441 2,726,639 2,707,496 19,142 2,735,347 2,719,453 15,894 interest income/expense 7,426 7,415 11 9,126 9,116 10 17,454 17,421 32 Return/rates (%) 0 .54% 0 .54% 0 .23% 0 .66% 0 .67% 0 .11% 0 .63% 0 .64% 0 .20%

Negotiable certificates Average balance 182,610 182,610 — 215,460 215,460 — 205,059 205,059 — of deposit interest income/expense 114 114 — 149 149 — 284 284 — Return/rates (%) 0 .12% 0 .12% — 0 .13% 0 .13% — 0 .13% 0 .13% —

Debentures Average balance 204,397 204,397 — 262,993 262,993 — 254,704 254,704 — interest income/expense 837 837 — 1,394 1,394 — 2,575 2,575 — Return/rates (%) 0 .81% 0 .81% — 1 .05% 1 .05% — 1 .01% 1 .01% —

Call money Average balance 104,461 90,655 13,805 111,368 97,994 13,374 113,661 102,042 11,619 interest income/expense 86 54 31 83 62 21 172 128 44 Return/rates (%) 0 .16% 0 .12% 0 .45% 0 .14% 0 .12% 0 .31% 0 .15% 0 .12% 0 .38%

Payable under Average balance — — — 6,459 — 6,459 4,458 — 4,458 repurchase interest income/expense — — — 8 — 8 12 — 12 agreements Return/rates (%) — — — 0 .26% — 0 .26% 0 .27% — 0 .27%

Payable under Average balance 337,103 71,166 265,936 259,727 52,946 206,781 343,880 132,456 211,424 securities lending interest income/expense 446 37 408 262 28 234 661 147 513 transactions Return/rates (%) 0 .26% 0 .10% 0 .30% 0 .20% 0 .10% 0 .22% 0 .19% 0 .11% 0 .24%

Borrowed money Average balance 206,920 202,645 4,274 238,849 238,849 — 220,420 216,898 3,522 interest income/expense 216 203 12 196 196 — 398 377 20 Return/rates (%) 0 .20% 0 .20% 0 .59% 0 .16% 0 .16% — 0 .18% 0 .17% 0 .58%

Corporate bonds Average balance — — — 10,465 10,465 — 5,232 5,232 — interest income/expense — — — 93 93 — 93 93 — Return/rates (%) — — — 1 .77% 1 .77% — 1 .78% 1 .78% —

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 .

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Analysis of Interest Income and Interest Expenses (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012


Interest Income Volume-related increase (decrease) (197) (609) 29 (2,306) (3,441) (1,019) (3,361) (4,886) (2,165) Rate-related increase (decrease) (1,216) (1,976) 612 (2,355) (879) (1,183) (3,908) (2,113) (1,177) Net increase (decrease) (1,413) (2,586) 641 (4,662) (4,321) (2,202) (7,269) (7,000) (3,342)

Cash and due volume-related increase (decrease) (5) 0 (5) 1 (0) 1 8 (0) 8 from banks Rate-related increase (decrease) (1) 0 (1) (11) (0) (11) (31) (0) (31) Net increase (decrease) (6) 0 (6) (9) (0) (9) (23) (0) (23)

Call loans volume-related increase (decrease) 4 4 0 (10) (10) — (17) (17) 0 Rate-related increase (decrease) (0) (0) (0) 2 2 0 4 4 (0) Net increase (decrease) 4 4 0 (8) (8) 0 (13) (13) 0

Receivables under volume-related increase (decrease) 91 91 — (18) (18) — 20 20 — securities borrowing Rate-related increase (decrease) (7) (7) — (1) (1) — (5) (5) — transactions Net increase (decrease) 83 83 — (20) (20) — 14 14 —

Securities volume-related increase (decrease) 72 (270) 692 392 70 533 (85) (188) 375 Rate-related increase (decrease) 993 267 377 (936) (178) (969) (447) 250 (970) Net increase (decrease) 1,066 (3) 1,070 (543) (108) (435) (533) 61 (595)

loans and bills volume-related increase (decrease) (1,867) (1,100) (911) (2,740) (1,233) (1,777) (3,632) (1,095) (3,062) discounted Rate-related increase (decrease) (232) (573) 485 (926) (676) 20 (1,577) (1,382) 330 Net increase (decrease) (2,100) (1,673) (426) (3,667) (1,910) (1,757) (5,210) (2,478) (2,731)

Interest expenses Volume-related increase (decrease) (295) (438) (30) (805) (1,208) (879) (702) (1,198) (1,544) Rate-related increase (decrease) (1,794) (1,925) (225) (3,695) (3,315) (959) (7,092) (6,480) (1,645) Net increase (decrease) (2,090) (2,364) (256) (4,500) (4,523) (1,839) (7,795) (7,679) (3,190)

Deposits volume-related increase (decrease) (90) (58) (5) (714) (697) (3) (967) (916) (8) Rate-related increase (decrease) (1,609) (1,642) 5 (1,982) (1,994) (1) (3,797) (3,856) 15 Net increase (decrease) (1,699) (1,700) 0 (2,696) (2,691) (4) (4,765) (4,772) 7

Negotiable volume-related increase (decrease) (22) (22) — 66 66 — 95 95 — certificates Rate-related increase (decrease) (11) (11) — (32) (32) — (23) (23) — of deposit Net increase (decrease) (34) (34) — 34 34 — 71 71 —

Debentures volume-related increase (decrease) (310) (310) — (973) (973) — (1,170) (1,170) — Rate-related increase (decrease) (245) (245) — (211) (211) — (452) (452) — Net increase (decrease) (556) (556) — (1,184) (1,184) — (1,622) (1,622) —

Call money volume-related increase (decrease) (5) (4) 0 9 5 9 11 7 5 Rate-related increase (decrease) 7 (3) 9 (11) (2) (13) (12) (3) (10) Net increase (decrease) 2 (7) 10 (1) 2 (4) (0) 3 (4)

Payable under volume-related increase (decrease) (8) — (8) — — — — — — repurchase Rate-related increase (decrease) — — — 8 — 8 12 — 12 agreements Net increase (decrease) (8) — (8) 8 — 8 12 — 12

Payable under volume-related increase (decrease) 78 9 66 199 — 130 536 124 177 securities lending Rate-related increase (decrease) 105 (0) 107 (76) 28 (35) (273) 22 (61) transactions Net increase (decrease) 183 8 174 123 28 94 262 146 116

Borrowed money volume-related increase (decrease) (26) (29) — (28) (28) — (93) (99) — Rate-related increase (decrease) 45 36 12 (15) (15) — 23 8 20 Net increase (decrease) 19 6 12 (43) (43) — (70) (91) 20

Corporate bonds volume-related increase (decrease) (93) (93) — (672) (672) — (1,425) (1,425) — Rate-related increase (decrease) — — — 5 5 — 6 6 — Net increase (decrease) (93) (93) — (667) (667) — (1,418) (1,418) —

Note: Changes due to a combination of volume-and rate-related increases (decreases) have been included in rate-related increase (decrease) .

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Fees and Commissions (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012


Net fees and commissions . . . . 4,470 4,011 458 4,283 3,844 438 9,126 8,223 903

Fees and Commissions income . . . . . . . . . . . . . . . . 4,858 4,283 575 4,657 4,128 529 9,950 8,773 1,177 Deposits, debentures and loan operations . . . . . . . . 2,776 2,322 454 2,972 2,644 327 6,321 5,527 793 Foreign exchange operations . . . . . . . . . . . . 109 92 16 110 90 20 216 175 41 Securities-related operations . . . . . . . . . . . . 465 465 — 530 530 — 920 920 — Agency services . . . . . . . . . 1,381 1,266 115 907 737 170 2,047 1,735 311 Safekeeping and safe deposit box services . . . . 0 0 — 0 0 — 4 4 — Guarantee operations . . . . . 82 69 13 69 55 13 142 121 21 Other . . . . . . . . . . . . . . . . . 43 68 (25) 67 70 (3) 299 290 9

Fees and Commissions expenses . . . . . . . . . . . . . . 387 271 116 373 283 90 823 549 273 Foreign exchange operations . . . . . . . . . . . . 65 58 7 62 56 6 126 111 14 Other . . . . . . . . . . . . . . . . . 321 213 108 310 226 83 697 437 259

Trading Revenues (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012


Net trading revenues . . . . . . . . 3,399 (2,324) 5,723 3,666 (3,830) 7,497 6,460 (2,763) 9,224

Trading income . . . . . . . . . . . 3,399 (2,324) 5,723 3,666 (3,830) 7,497 6,460 (2,763) 9,224 Gains on trading securities . . . . . . . . . . . . — — — — — — — — — Gains on securities related to trading transactions . . . 588 694 (105) 217 195 22 1,146 1,070 76 Gains on trading-related financial derivatives . . . . . 2,810 (3,018) 5,829 3,448 (4,026) 7,475 5,314 (3,833) 9,148 Other . . . . . . . . . . . . . . . . . — — — — — — 0 0 —

Trading expenses . . . . . . . . . — — — — — — — — — losses on trading securities . . . . . . . . . . . . — — — — — — — — — losses on securities related to trading transactions . . . — — — — — — — — — losses on trading-related financial derivatives . . . . . — — — — — — — — — Other . . . . . . . . . . . . . . . . . — — — — — — — — —

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Other Ordinary Income (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012


Net other ordinary income . . . . 9,033 3,403 5,629 6,442 2,524 3,918 18,610 7,654 10,956

Other ordinary income . . . . . 12,452 4,618 7,833 12,632 5,366 7,265 25,819 11,492 14,327 Gains on foreign exchange transactions . . . . . . . . . . . — — — — — — — — — Gains on sales of bonds . . 8,175 2,037 6,138 8,843 2,725 6,118 18,578 6,027 12,550 Gains on redemption of bonds . . . . . . . . . . . . . — — — — — — — — — Gains on derivatives . . . . . — — — — — — — — — Other . . . . . . . . . . . . . . . . . 4,276 2,581 1,695 3,788 2,640 1,147 7,241 5,464 1,777

Other ordinary expenses . . . 3,418 1,215 2,203 6,189 2,842 3,347 7,209 3,838 3,370 loss on foreign exchange transactions . . . 1,015 — 1,015 1,800 — 1,800 1,127 — 1,127 loss on sales of bonds . . . 89 52 37 2,636 1,469 1,167 1,364 113 1,251 loss on redemption of bonds . . . . . . . . . . . . . — — — — — — — — — loss on devaluation of bonds . . . . . . . . . . . . . . . 174 0 173 23 23 0 41 24 16 Amortization of debenture and corporate bonds issurance expenses . . . . . 9 9 — 23 23 — 46 46 — loss on derivatives . . . . . . 211 77 133 68 24 43 242 255 (13) Other . . . . . . . . . . . . . . . . . 1,918 1,075 843 1,636 1,299 336 4,387 3,398 989

Note: if the reclassification, mentioned in note 6 to Net Revenue, Business Profit, is applied to the six-month period ended September 30, 2011, net other ordinary income increased by ¥1,449 million (of which, loss on sales of bonds decreased by ¥1,449 million) .

General and Administrative Expenses (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . 18,454 18,812 37,739 Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,767 6,654 13,512 Retirement benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,095 1,140 2,288 welfare expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 257 512 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 854 866 1,527 Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,076 1,319 2,514 Rent and lease expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,544 1,606 3,251 Building and maintenance expenses . . . . . . . . . . . . . . . . . . . . . . . 83 89 178 Supplies expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 116 236 water, lighting and heating expenses . . . . . . . . . . . . . . . . . . . . . . . 248 257 487 travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 169 313 Communication expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 288 570 Publicity and advertising expenses . . . . . . . . . . . . . . . . . . . . . . . . 138 276 642 taxes, other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,029 902 1,677 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,806 4,867 10,024

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Balance by Deposit Account (Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012


Deposits Liquid deposits Average balance 355,400 355,400 — 353,396 353,396 — 348,345 348,345 — (%) (13.16) (13.21) — (12.96) (13.05) — (12.73) (12.81) — Term-end balance 355,682 355,682 — 394,017 394,017 — 372,473 372,473 — (%) (13.00) (13.05) — (14.16) (14.26) — (13.66) (13.71) —

interest-bearing Average balance 331,232 331,232 — 331,319 331,319 — 324,235 324,235 — deposits (%) (12 .27) (12 .31) — (12 .15) (12 .24) — (11 .85) (11 .92) — term-end balance 317,625 317,625 — 355,459 355,459 — 338,005 338,005 — (%) (11 .61) (11 .65) — (12 .77) (12 .86) — (12 .39) (12 .44) —

Time deposits Average balance 2,330,711 2,330,711 — 2,352,117 2,352,117 — 2,369,025 2,369,025 — (in general) (%) (86.33) (86.63) — (86.26) (86.87) — (86.61) (87.11) — Term-end balance 2,361,052 2,361,052 — 2,368,102 2,368,102 — 2,341,574 2,341,574 — (%) (86.31) (86.62) — (85.09) (85.68) — (85.85) (86.16) —

Deregulated Average balance 1,815,556 1,815,556 — 1,851,399 1,851,399 — 1,862,846 1,862,846 — interest rate (%) (67 .25) (67 .49) — (67 .90) (68 .38) — (68 .10) (68 .50) — time deposits term-end balance 1,853,095 1,853,095 — 1,868,576 1,868,576 — 1,821,700 1,821,700 — (fixed) (%) (67 .74) (67 .99) — (67 .14) (67 .60) — (66 .79) (67 .03) —

Deregulated Average balance 515,155 515,155 — 500,718 500,718 — 506,179 506,179 — interest rate (%) (19 .08) (19 .15) — (18 .36) (18 .49) — (18 .51) (18 .61) — time deposits term-end balance 507,957 507,957 — 499,525 499,525 — 519,873 519,873 — (floating) (%) (18 .57) (18 .64) — (17 .95) (18 .07) — (19 .06) (19 .13) —

Others Average balance 13,595 4,154 9,441 21,124 1,982 19,142 17,976 2,082 15,894 (%) (0.50) (0.15) (100.00) (0.78) (0.08) (100.00) (0.66) (0.08) (100.00) Term-end balance 18,918 9,002 9,916 20,973 1,880 19,093 13,552 3,636 9,915 (%) (0.69) (0.33) (100.00) (0.75) (0.06) (100.00) (0.50) (0.13) (100.00)

Subtotal Average balance 2,699,707 2,690,265 9,441 2,726,639 2,707,496 19,142 2,735,347 2,719,453 15,894 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Term-end balance 2,735,653 2,725,736 9,916 2,783,093 2,764,000 19,093 2,727,600 2,717,684 9,915 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)

Negotiable certificates Average balance 182,610 182,610 — 215,460 215,460 — 205,059 205,059 — of deposit Term-end balance 219,807 219,807 — 178,810 178,810 — 209,790 209,790 —

Total Average balance 2,882,318 2,872,876 9,441 2,942,099 2,922,957 19,142 2,940,406 2,924,512 15,894 Term-end balance 2,955,460 2,945,543 9,916 2,961,903 2,942,810 19,093 2,937,390 2,927,474 9,915

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. 2012 Sep. 2011 Mar. 2012

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 . . . . . . . 418,165 416,965 1,200 368,101 365,632 2,469 371,778 370,078 1,7003–6 months . . . . . . . . . . . . . . 257,023 255,423 1,600 278,542 277,442 1,100 283,561 274,711 8,8506 months–1year . . . . . . . . . . 367,888 367,388 500 471,303 459,753 11,550 430,377 427,577 2,8001–2 years . . . . . . . . . . . . . . . 418,400 415,900 2,500 332,853 329,553 3,300 332,808 331,008 1,8002–3 years . . . . . . . . . . . . . . . 274,966 249,106 25,860 275,222 271,422 3,800 281,107 265,655 15,452More than 3 years . . . . . . . . . 624,606 148,309 476,297 642,078 164,772 477,306 641,939 152,667 489,271

Total . . . . . . . . . . . . . . . . . . 2,361,052 1,853,095 507,957 2,368,102 1,868,576 499,525 2,341,574 1,821,700 519,873

Deposit Operations (Non-Consolidated)

72

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osit O

peratio

ns (No

n-Co

nsolid

ated)

Outstanding Balance by Depositor (Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012

Balance Share Balance Share Balance Share

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 365,165 13 .35 377,500 13 .57 372,117 13 .64Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,095,266 76 .59 2,127,950 76 .46 2,128,682 78 .04Public sector . . . . . . . . . . . . . . . . . . . . . . . 28,054 1 .03 13,462 0 .48 2,044 0 .08Financial institutions . . . . . . . . . . . . . . . . . 247,167 9 .03 264,179 9 .49 224,755 8 .24

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,735,653 100.00 2,783,093 100.00 2,727,600 100.00

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. 2012 Sep. 2011 Mar. 2012

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 . . . . . . . . 147,773 147,773 — 148,095 148,095 — 146,869 146,869 —

Note: Deposits include negotiable certificates of deposit .

Deposits per Employee (Number of Employees, Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas


Number of employees . . . . . . 1,495 1,495 — 1,520 1,520 — 1,498 1,498 —Deposits per employee . . . . . 1,976 1,976 — 1,948 1,948 — 1,960 1,960 —

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

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Deb

enture Op

erations (N

on-C

onso

lidated

)

Debenture Operations (Non-Consolidated)

Outstanding and Average Balance of Debentures (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Term-end Average Term-end Average Term-end Average balance balance balance balance balance balance

Aozora debentures . . . . . . . . . . . . . . . . . . 184,509 202,212 254,346 249,321 218,158 243,731

Discounted Aozora debentures . . . . . . . . . — 2,184 13,236 13,671 4,986 10,973

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,509 204,397 267,582 262,993 223,144 254,704

Note: Debentures do not include debenture subscriptions .

Balance by Residual Period (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Discounted

Discounted

Discounted

Aozora

Aozora

Aozora

Aozora

Aozora

Aozora

Total debentures debentures Total debentures debentures Total debentures debentures

less than 1 year . . . . . . . . . . 111,319 111,319 — 150,846 137,609 13,236 133,007 128,021 4,986 1–3 years . . . . . . . . . . . . . . . 70,863 70,863 — 112,199 112,199 — 86,652 86,652 —3–5 years . . . . . . . . . . . . . . . 2,326 2,326 — 4,537 4,537 — 3,483 3,483 —5–7 years . . . . . . . . . . . . . . . — — — — — — — — —Over 7 years . . . . . . . . . . . . . — — — — — — — — —

Total . . . . . . . . . . . . . . . . . . 184,509 184,509 — 267,582 254,346 13,236 223,144 218,158 4,986

Outstanding Balance of Debentures per Office (Number of Offices, Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

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 . . . . . 9,225 9,225 — 13,379 13,379 — 11,157 11,157 —

Outstanding Balance of Debentures per Employee (Number of Employees, Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Domestic Overseas Domestic Overseas Domestic Overseas Total offices offices Total offices offices Total offices offices

Number of employees . . . . . . 1,495 1,495 — 1,520 1,520 — 1,498 1,498 —Outstanding balance of debentures per employee . . 123 123 — 176 176 — 148 148 —

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

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Loan O

peratio

ns (No

n-Co

nsolid

ated)

Balance by Residual Period (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Fixed Floating Fixed Floating Fixed Floating Total interest interest Total interest interest Total interest interest

less than 1 year . . . . . . . . . . 1,008,815 938,671 1,096,536 1–3 years . . . . . . . . . . . . . . . 765,425 197,585 567,839 950,735 273,907 676,828 768,201 220,721 547,480 3–5 years . . . . . . . . . . . . . . . 579,886 127,730 452,155 616,430 182,953 433,476 616,464 155,054 461,409 5–7 years . . . . . . . . . . . . . . . 137,007 26,247 110,759 127,147 23,596 103,550 128,109 15,249 112,860 Over 7 years . . . . . . . . . . . . . 83,799 37,925 45,873 82,247 41,315 40,932 74,727 38,714 36,013 indefinite period . . . . . . . . . . 79 — 79 218 — 218 140 — 140 Total . . . . . . . . . . . . . . . . . . . 2,575,013 2,715,451 2,684,180 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 then 1 year .

Ratio of Loans and Bills Discounted to Debentures/Deposits (Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012


loans and bills discounted (A) . . 2,575,013 2,238,053 336,960 2,715,451 2,348,193 367,258 2,684,180 2,305,602 378,577 Debentures and deposits (B) . . . 3,139,970 3,130,053 9,916 3,229,486 3,210,393 19,093 3,160,534 3,150,618 9,915 (A)/(B) . . . . . . . . . . . . . . . . . . . . . 82 .00 71 .50 3,397 .87 84 .08 73 .14 1,923 .51 84 .92 73 .17 3,817 .96Average during the year . . . . . . . 80 .18 69 .69 3,499 .20 83 .26 71 .09 2,109 .40 82 .86 71 .18 2,418 .81Notes: 1 Debentures do not include debenture subscriptions . 2 . Deposits include negotiable certificates of deposit .

Loans per Office (Number of Offices, Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Domestic Overseas Domestic Overseas Domestic Overseas


Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 — loans per office . . . . . . . . . . 128,750 128,750 — 135,772 135,772 — 134,209 134,209 —

Loans per Employee (Number of Employees, Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Domestic Overseas Domestic Overseas Domestic Overseas


Number of employees . . . . . 1,495 1,495 — 1,520 1,520 — 1,498 1,498 — loans per employee . . . . . . . 1,722 1,722 — 1,786 1,786 — 1,791 1,791 — 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 .

Loan Operations (Non-Consolidated)

Outstanding Balance of LoansFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012


loans on deeds Average balance 2,224,218 1,894,881 329,337 2,458,292 2,054,556 403,735 2,414,167 2,030,388 383,779 term-end balance 2,193,584 1,857,625 335,959 2,412,812 2,046,130 366,682 2,336,990 1,959,831 377,158 loans on bills Average balance 84,660 83,616 1,043 99,549 99,482 66 98,718 98,043 674 term-end balance 95,798 94,797 1,000 93,619 93,044 575 98,277 96,858 1,418 Overdrafts Average balance 165,711 165,711 — 110,306 110,306 — 134,091 134,091 — term-end balance 285,007 285,007 — 208,460 208,460 — 248,213 248,213 —Bills discounted Average balance 606 606 — 685 685 — 590 590 — term-end balance 622 622 — 558 558 — 698 698 —Total Average balance 2,475,196 2,144,815 330,380 2,668,833 2,265,030 403,802 2,647,568 2,263,115 384,453 Term-end balance 2,575,013 2,238,053 336,960 2,715,451 2,348,193 367,258 2,684,180 2,305,602 378,577

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

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

Sep. 2012 Sep. 2011 Mar. 2012

Balance of loans Share Balance of loans Share Balance of loans Share

Loans by domestic offices . . . . . . . . . . . . 2,574,769 100.00 2,715,154 100.00 2,683,915 100.00 (excluding Japan Offshore Market accounts) Manufacturing . . . . . . . . . . . . . . . . . . . . . 264,089 10 .26 292,619 10 .78 272,886 10 .17 Agriculture, forestry and fisheries . . . . . . . 2,886 0 .11 5,075 0 .19 3,380 0 .13 Mining, quarry, gravel extraction . . . . . . . 2,773 0 .11 3,318 0 .12 3,112 0 .12 Construction . . . . . . . . . . . . . . . . . . . . . . 36,943 1 .43 38,029 1 .40 43,591 1 .62 Electricity, gas, heat supply and water . . . 5,825 0 .23 6,899 0 .26 6,244 0 .23 information and communications . . . . . . 53,750 2 .09 44,863 1 .65 45,058 1 .68 transport,postal service . . . . . . . . . . . . . 142,681 5 .54 165,093 6 .08 152,507 5 .68 wholesale and retail trade . . . . . . . . . . . . 110,372 4 .29 130,586 4 .81 132,840 4 .95 Financial and insurance . . . . . . . . . . . . . . 442,607 17 .19 423,833 15 .61 414,663 15 .45 Real estate . . . . . . . . . . . . . . . . . . . . . . . 828,126 32 .16 884,490 32 .58 891,416 33 .21 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . 61,183 2 .38 74,800 2 .75 61,291 2 .28 Other services . . . . . . . . . . . . . . . . . . . . . 170,732 6 .63 170,805 6 .29 172,129 6 .41 local governments . . . . . . . . . . . . . . . . . 72,650 2 .82 66,314 2 .44 64,042 2 .39 Others . . . . . . . . . . . . . . . . . . . . . . . . . . 380,147 14 .76 408,424 15 .04 420,750 15 .68

Loans by overseas offices . . . . . . . . . . . . 244 100.00 297 100.00 265 100.00 (including Japan Offshore Market accounts) Government . . . . . . . . . . . . . . . . . . . . . . — — — — — — Financial institutions . . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . 244 100 .00 297 100 .00 265 100 .00

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,575,013 2,715,451 2,684,180 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. 2012 Sep. 2011 Mar. 2012

Consumer loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,751 7,989 7,353 Housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,412 7,487 6,941 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339 502 411Note: 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 .

Credits to Major Shareholder Groups (Number of Borrowers, Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

CERBERuS Group (Number of borrowers) 1 2 2 (Credit balance) 3,880 4,982 4,709 Total (Number of borrowers) 1 2 2 (Credit balance) 3,880 4,982 4,709 Notes: 1 . Figures for credit balance refer to credits extended by Aozora Bank, its subsidiaries and affiliated companies . 2 . Major Shareholder Groups refer to principal shareholders (i .e ., those with over 10% of shareholder voting rights of the Bank and its subsidiaries

as well as affiliated companies .) 3 . Credit balance consists of loans, acceptances and guarantees, equity holdings/interest and derivative transactions .

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Loans to Small and Medium-Sized Corporations (Number of Borrowers, Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012

Number of Number of Number of borrowers Value borrowers Value borrowers Value

total domestic loans (A) . . . . . . . . . . . . . . . 2,064 2,574,769 2,370 2,715,154 2,193 2,683,915loans to small and medium-sized corporations (B) . . . . . . . . . . . . . . . . . . . . 1,629 1,694,495 1,947 1,727,513 1,770 1,739,787(B)/(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 .92 65 .81 82 .15 63 .62 80 .71 64 .82Notes: 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

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Loan O

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ated)

Risk-Monitored Loans by Industry (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Loans by domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,155 91,566 108,783 (excluding Japan Offshore Market accounts) Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,375 1,428 12,936 Agriculture, forestry and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Mining, quarry, gravel extraction . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 225 462 Electricity, gas, heat supply and water . . . . . . . . . . . . . . . . . . . . . . . — — — information and communications . . . . . . . . . . . . . . . . . . . . . . . . . . 107 — 36 transport, postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936 438 658 wholesale and retail trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,830 978 1,177 Financial and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,436 33,982 31,252 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,356 14,876 18,707 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891 — 938 Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,108 2,416 2,377 local governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,925 37,220 40,236

Loans by overseas offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 297 265 (including Japan Offshore Market accounts) Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 297 265

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,400 91,863 109,048

Balance of Loans and Bills Discounted, Classified by Purpose (Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012

Balance of loans Share Balance of loans Share Balance of loans Share

Funds for capital investment . . . . . . . . . . . . 300,795 11 .68 368,836 13 .58 333,414 12 .42Funds for working capital . . . . . . . . . . . . . . 2,274,217 88 .32 2,346,614 86 .42 2,350,766 87 .58

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,575,013 100.00 2,715,451 100.00 2,684,180 100.00

Breakdown of Loans and Bills Discounted by Collateral (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,216 17,545 15,776 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,334 14,626 16,465 Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231,613 254,807 234,859 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,724 8,722 7,198

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263,890 295,702 274,300

Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164,013 144,460 154,704 unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,147,109 2,275,288 2,255,175

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,575,013 2,715,451 2,684,180

Breakdown of Balance of Acceptances and Guarantees (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Acceptances of bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,162 31,273 26,917

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,162 31,273 26,917


77

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Loan O

peratio

ns (No

n-Co

nsolid

ated)

Write-Off of Loans (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 712 1,031 6,891

Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 26 20

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 26 20

Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,174 504 1,220 unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,847 30,743 25,675

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,162 31,273 26,917

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, 2012 and 2011, and the year ended March 31, 2012

(Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Reduction during period Reduction during period Reduction during year

General allowance . . . . . . 55,086 42,006 — 55,086 42,006 69,875 63,104 — 69,875 63,104 69,875 55,086 — 69,875 55,086

Specific . . . . . . . . (901) (1,005) (164) allowance . . . . . . 20,773 25,976 6,012 14,760 25,976 27,891 30,293 1,213 26,678 30,293 28,732 21,674 8,044 20,688 21,674

Related to non- (901) (978) (137) residents . . . . 13,288 7,779 5,780 7,507 7,779 13,424 16,916 741 12,682 16,916 14,265 14,189 5,542 8,722 14,189

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

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ated)

Disclosed Claims under the Financial Reconstruction Law(Billions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Disclosed claims under the Financial Reconstruction law Bankrupt and similar credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .2 7 .4 7 .5 Doubtful credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 .4 52 .7 64 .0 Special attention credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .9 32 .4 37 .7

Subtotal (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 .5 92 .5 109 .1 Normal credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,514 .4 2,671 .6 2,619 .1

total credit (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,613 .9 2,764 .1 2,728 .2

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .80% 3 .34% 3 .99%

Risk-Monitored LoansNon-Consolidated

(Billions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Risk-monitored loans: loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 .7 7 .4 6 .4 Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 .8 52 .1 65 .0 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .4 — 0 .3 Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .5 32 .4 37 .4

total (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 .4 91 .9 109 .0

year-end balance of total loans (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,575 .0 2,715 .5 2,684 .2

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .86% 3 .38% 4 .06%

Reserve Provision Ratios for Each Category of Borrower, Based on Asset-AssessmentsNon-Consolidated

(%)

Definition of Borrower Categories Sep. 2012 Sep. 2011 Mar. 2012

Normal 0 .7 0 .6 0 .6Need attention: Other need attention borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .8 9 .7 6 .9 Special attention borrowers (Ratio of reserve to unsecured) . . . . . . . . . . . . . . 68 .2 60 .5 52 .8in danger of bankruptcy (Ratio of reserve to unsecured) . . . . . . . . . . . . . . . . . . . 82 .9 93 .8 88 .1De facto bankrupt and bankrupt (Ratio of reserve to unsecured) . . . . . . . . . . . . . 100 .0 100 .0 100 .0

Consolidated

(Billions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Risk-monitored loans: loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 .7 7 .4 6 .4 Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 .3 53 .7 65 .8 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .4 — 0 .3 Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 .5 32 .4 37 .4

total (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 .8 93 .4 109 .9

year-end balance of total loans (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,565 .6 2,701 .6 2,672 .2

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .96% 3 .45% 4 .11%


79

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<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, 2012

(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 credit74.4

Special attention credit19.9

Normal credit2,514.4

Bankrupt and similar credit5.2

Disclosed claims under the FRL99.5

Total credit 2,613.9

Reserve and coveragefor claims under the FRL

Total reserve 68.0

Collateral/Guarantee coverage 56.8Reserve 33.8

Estimated collections 8.9

Collateral/Guarantee coverage 5.2Reserve —





Reserve and coverage ratio

Reserve to unsecured credit ratio

100.0%

92.8%

82.0%

100.0%

82.9%

69.1%

Risk-monitored loans

Restructured loans19.5

Risk-monitored loans99.4Reserve and

coverage ratio for disclosed claims

under the FRL91.1%

Reserve ratio for disclosed claims

under the FRL79.2%

Loans overdue for three months or more

0.4

Past due loans74.8

Loans to bankrupt companies4.7

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

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Securities (N

on-C

onso

lidated

)

Outstanding and Average Balance of Securities Held (Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012


Total Average balance 1,331,563 859,709 471,853 1,317,384 930,372 387,012 1,321,629 939,806 381,823 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Term-end balance 1,306,653 841,909 464,743 1,331,973 970,511 361,461 1,360,506 895,072 465,433 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)

Japanese national Average balance 573,681 573,681 — 648,853 648,853 — 656,830 656,830 — government (%) (43 .08) (66 .73) — (49 .25) (69 .74) — (49 .70) (69 .89) — bonds term-end balance 544,412 544,412 — 698,434 698,434 — 615,726 615,726 — (%) (41 .66) (64 .66) — (52 .44) (71 .97) — (45 .26) (68 .79) —

Japanese local Average balance 9,530 9,530 — 10,646 10,646 — 11,257 11,257 — government (%) (0 .72) (1 .11) — (0 .81) (1 .14) — (0 .85) (1 .20) — bonds term-end balance 8,900 8,900 — 8,984 8,984 — 14,251 14,251 — (%) (0 .68) (1 .06) — (0 .67) (0 .93) — (1 .05) (1 .59) —

Japanese Average balance — — — — — — — — — short-term (%) — — — — — — — — — corporate term-end balance — — — — — — — — — bonds (%) — — — — — — — — —

Japanese Average balance 60,510 60,510 — 69,545 69,545 — 70,193 70,193 — corporate (%) (4 .54) (7 .04) — (5 .28) (7 .48) — (5 .31) (7 .47) — bonds term-end balance 57,075 57,075 — 64,176 64,176 — 65,122 65,122 — (%) (4 .37) (6 .78) — (4 .82) (6 .60) — (4 .79) (7 .28) —

Japanese stocks Average balance 38,553 38,553 — 38,015 38,015 — 38,124 38,124 — (%) (2 .90) (4 .48) — (2 .89) (4 .09) — (2 .89) (4 .06) — term-end balance 38,390 38,390 — 37,736 37,736 — 38,537 38,537 — (%) (2 .94) (4 .56) — (2 .83) (3 .89) — (2 .83) (4 .30) —

Others Average balance 649,288 177,434 471,853 550,324 163,312 387,012 545,223 163,400 381,823 (%) (48 .76) (20 .64) (100 .00) (41 .77) (17 .55) (100 .00) (41 .25) (17 .38) (100 .00) term-end balance 657,874 193,130 464,743 522,642 161,180 361,461 626,868 161,434 465,433 (%) (50 .35) (22 .94) (100 .00) (39 .24) (16 .61) (100 .00) (46 .07) (18 .04) (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. 2012

Japanese national government bonds

Japanese local government bonds

Japanese short-term corporate bonds

Japanese corporate bonds Japanese stocks Others

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

(Millions of yen)

Sep. 2011





less than 1 year . . . . 151,460 48 — 6,267 11,038 1—3 years . . . . . . . . — 484 — 18,451 98,847 3—5 years . . . . . . . . 301,458 3,819 — 20,607 75,791 5—7 years . . . . . . . . 15,377 461 — 9,914 20,751 7—10 years . . . . . . . 193,206 4,125 — 3,935 33,543 Over 10 years . . . . . . 36,932 45 — — 79,626 indefinite period . . . . — — — 5,000 37,736 203,042

Total . . . . . . . . . . . . 698,434 8,984 — 64,176 37,736 522,642

81

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Securities/S

ecurities Business (N

on-C

onso

lidated

)

Securities Business (Non-Consolidated)

Ratio of Securities to Debentures and Deposits (Millions of yen, %)

Sep. 2012 Sep. 2011 Mar. 2012


Securities (A) . . . . . . . . . . . . . . 1,306,653 841,909 464,743 1,331,973 970,511 361,461 1,360,506 895,072 465,433Debentures and deposits (B) . . 3,139,970 3,130,053 9,916 3,229,486 3,210,393 19,093 3,160,534 3,150,618 9,915

Ratio (A)/(B) . . . . . . . . . . . . . . 41 .61 26 .89 4,686 .43 41 .24 30 .23 1,893 .15 43 .04 28 .40 4,693 .90Average during the year . . . . . 43 .13 27 .93 4,997 .59 41 .10 29 .20 2,021 .69 41 .36 29 .56 2,402 .26

Notes: 1 . Debentures do not include debenture subscriptions . 2 . Deposits include negotiable certificates of deposit .

Underwriting of Public Bonds (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

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. 2012 Sep. 2011 Mar. 2012

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . — — —Japanese local government bonds and government-guaranteed bonds . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Securities investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,887 22,164 34,382

Average Balance of Securities (Trading Account) (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Japanese national government bonds (trading account) . . . . . . . . . . . — — —Japanese local government bonds (trading account) . . . . . . . . . . . . . . — — —Japanese government-guaranteed bonds (trading account) . . . . . . . . . — — —Other securities (trading account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Note: the Bank has established a trading account .

Balance of Securities by Residual Period(Millions of yen)

Mar. 2012





less than 1 year . . . . 199,968 171 — 10,510 12,868 1—3 years . . . . . . . . — 310 — 6,039 100,169 3—5 years . . . . . . . . 201,434 5,671 — 21,953 98,742 5—7 years . . . . . . . . 23,575 530 — 11,321 54,118 7—10 years . . . . . . . 174,804 7,522 — 10,296 32,325 Over 10 years . . . . . . 15,945 44 — — 106,066 indefinite period . . . . — — — 5,000 38,537 222,576

Total . . . . . . . . . . . . 615,726 14,251 — 65,122 38,537 626,868

82

Financial and

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rate Data

International O

peratio

ns (No

n-Co

nsolid

ated)

International Operations (Non-Consolidated)

Foreign Exchange Transactions (Millions of u .S . Dollars)

Sep. 2012 Sep. 2011 Mar. 2012

Outward exchange Foreign bills sold . . . . . . . . . . . . . 2,892 2,295 5,060 Foreign bills bought . . . . . . . . . . . — 0 —

incoming exchange Foreign bills payable . . . . . . . . . . . 898 766 1,742 Foreign bills receivable . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,791 3,061 6,802

Balance of Assets in International Operations (Millions of yen)

Sep. 2012 Sep. 2011 Mar. 2012

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas


Balance of assets in international operations . . . . . 1,171,727 1,171,727 — 1,104,111 1,104,111 — 1,194,057 1,194,057 —

83

Financial and

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rate Data

Other O

peratio

ns (No

n-Co

nsolid

ated)

Other Operations (Non-Consolidated)

Principal Fees and Commissions (As of September 30, 2012)

To Other Banks

By Wire

transfers Handled at Clients with On transfers up to ¥210 ¥525 the counter accounts at ¥30,000

the Bank On transfers exceeding ¥420 ¥735 ¥30,000

Clients without On transfers up to ¥210 accounts at ¥30,000

the Bank On transfers exceeding ¥420 ¥1,000

¥30,000

telephone banking On transfer ¥0 ¥300

internet banking On transfer ¥0 ¥150

Collection of For same-site (local) payment Per item ¥210 ¥210payments 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 .

To Aozora BankHead Office/

Branches

Automated Installations

Sep. 2012

Automated teller machines (AtMs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Domestic Exchange TransactionsFor the six-month periods ended September 30, 2012 and 2011, and the year ended March 31, 2012 (Millions of yen, thousands of transactions)

Sep. 2012 Sep. 2011 Mar. 2012

Value of Number of Value of Number of Value of Number of transactions transactions transactions transactions transactions transactions

Money transfer Sent . . . . . . . . . . . . . . . . . . . . . 1,929,400 610 1,607,062 609 3,392,190 1,210 Received . . . . . . . . . . . . . . . . . . 2,133,174 257 1,857,462 271 3,958,574 549

Money transfer by check Sent . . . . . . . . . . . . . . . . . . . . . 9,461 1 10,323 1 18,841 2 Received . . . . . . . . . . . . . . . . . . 10,015 1 11,510 1 20,039 2

84

Financial and

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Note: the change in capital composition became effective on November 15, 2012, reducing the Capital Stock by 319,781 million yen from 419,781 million yen to 100,000 million yen . Out of the reduced Capital Stock, 53,980 million yen was transferred to legal Capital Surplus and the remaining 265,801 million yen was transferred to Other Capital Surplus .

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

History of Capitalization

Major Shareholders(As of September 30, 2012)

a. Common Stock Percentage of Number of shares held total outstanding shares

CERBERuS NCB ACQuiSitiON, l .P ., GENERAl PARtNER CERBERuS AOzORA GP l .l .C . . . . . . . . . . . . . . . . 821,469,000 49 .78%Aozora Bank, ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,753,171 9 .32ORiX Bank Corporation (trust Account 5200011) . . . . . . . . . . . . . . . . . . . . . 104,174,000 6 .31Japan trustee Services Bank, ltd . (trust Account) . . . . . . . . . . . . . . . . . . . . 28,000,000 1 .70tHE CHASE MANHAttAN BANK 385036 . . . . . . . . . . . . . . . . . . . . . . . . . . 23,509,000 1 .42the Master trust Bank of Japan, ltd . (trust Account) . . . . . . . . . . . . . . . . . . 23,305,000 1 .41StAtE StREEt BANK AND tRuSt COMPANy . . . . . . . . . . . . . . . . . . . . . . 21,704,586 1 .32NORtHERN tRuSt CO . AvFC RE FiDElity FuNDS . . . . . . . . . . . . . . . . . . 15,113,000 0 .92GOlDMAN, SACHS & CO . REG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,844,545 0 .90StAtE StREEt BANK AND tRuSt COMPANy 505104 . . . . . . . . . . . . . . . 13,837,332 0 .84tHE BANK OF NEw yORK, NON-tREAty JASDEC ACCOuNt . . . . . . . . . 12,896,566 0 .78Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417,541,152 25 .30total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147,352 100 .00Notes: 1 . the above table was compiled based on the shareholder’s registry as of September 30, 2012 . 2 . As of November 17, 2008, CERBERuS NCB ACQuiSitiON, l .P ., GENERAl PARtNER CERBERuS AOzORA GP l .l .C . became the Parent

Company of the Bank as set out in Regulations Concerning terminology, Forms and Methods of Preparation of Financial Statements, etc . Article8-3 . this was a result of an increase in the number of shares held by the aforementioned shareholder, as well as a decrease of the total number of voting rights of all shareholders due to the buyback of common shares by the Bank . Also, on the same date, the aforementioned shareholder came under the category of Majority Shareholder under Article 14-7-1-2 of the Order for Enforcement of the Financial instruments and Exchange Act and the Bank and the aforementioned shareholder became Joint Holders under the Financial instruments and Exchange Act Article 27-23-6 .

3 . the standing proxy of CERBERuS NCB ACQuiSitiON, l .P ., GENERAl PARtNER CERBERuS AOzORA GP l .l .C . submitted a copy of a Report of Possession of large volume (a Change Report), dated October 15, 2012, stating their holdings of 729,030,000 shares as of October 9, 2012 .

4 . Because of the buyback of shares from October 1, 2012, the number of treasury stock became 402,503,171 shares as of December 31, 2012, representing 24 .39% of total outstanding shares .

5 . ORiX Bank Corporation submitted a copy of a Report of Possession of large volume (a Change Report), dated October 15, 2012, stating their holdings of 39,969,000 shares as of October 9, 2012 .

6 . Fil investments (Japan) limited submitted a copy of a Report of Possession of large volume (a Change Report), dated July 6, 2012, stating their holdings with its joint holder FMR llC as follows as of June 29, 2012 . 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 September 30, 2012 .

Number of shares held Percentage of shares held

Fil investments (Japan) limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,870,000 1 .03%

FMR llC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,825,000 4 .13

Number of shares held Percentage of shares held

Fil investments (Japan) limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,876,000 0 .84%

FMR llC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,008,000 2 .86

Note: Percentage of shares held is the percentage of total outstanding shares including preferred shares .

Fil investments (Japan) limited submitted a copy of a Report of Possession of large volume (a Change Report), dated October 22, 2012, stating their holdings with its joint holder FMR llC as follows as of October 15, 2012 .

Note: Percentage of shares held is the percentage of total outstanding shares including preferred shares .

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c. Class C Series 5 Preferred Stock Percentage of Number of shares held total outstanding shares

the Resolution and Collection Corporation . . . . . . . . . . . . . . . . . . . 258,799,500 100 .00%

Note: Aozora Bank repurchased its Class C Series 5 Preferred Stock amounting to 44,220,205 shares from the Resolution and Collection Corporation (RCC) on October 2, 2012, and retired all of them on the same day . As a result the number of shares held by the RCC on the same day became 214,579,295 representing 100% of total outstanding shares .

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%

Ownership and Distribution of Shares(As of September 30, 2012)

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 . . . — 50 31 612 382 24 30,469 31,568 —Number of shares held (tangen) . . . . . . . . . . . . . . — 225,586 9,182 13,730 1,151,010 1,011 249,552 1,650,071 76,352Percentage of total number of shares . . . . . . — 13 .67 0 .56 0 .83 69 .75 0 .06 15 .13 100 .00 —Notes: 1 . treasury stock of 153,753,171 shares comprises 153,753 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, inc ., represent one tangen unit .

b. Class A Series 4 Preferred Stock


National



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



Number of shareholders . . . — 1 — — — — — 1 —Number of shares held (tangen) . . . . . . . . . . . . . . — 258,799 — — — — — 258,799 500Percentage of total number of shares . . . . . . . — 100 .00 — — — — — 100 .00 —

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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 are deducted from consolidated regulatory capital is assigned compulsory capital requirements for end-September 2011 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. 2012 Sep. 2011

CategoryAmount of exposure

Amount of credit

risk assets

Amount of capital

requirementsAmount of exposure

Amount of credit

risk assets

Amount of capital

requirements

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 — — 147 — — Claims on Japanese government/bank 10,897 — — 10,505 — — Claims on foreign central government/bank . . . . . . . . . . . . . . . . . . . . . 2,936 3 0 2,280 — — Claims on Bank for international Settlements (BiS) . . . . . . . . . . . . . . . . — — — — — — Claims on Japanese local public bodies . . . . . . . . . . . . . . . . . . . . . . . . 819 5 0 758 6 0 Claims on non-central government public sector entities (PSEs) of foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 101 4 318 60 2 Claims on multilateral development banks (MDBs) . . . . . . . . . . . . . . . . — — — — — — Claims on Japan Finance Organization for Municipalities (JFM) . . . . . . . 9 0 0 3 0 0 Claims on organs affiliated with the Japanese government . . . . . . . . . . 977 98 4 981 190 8 Claims on three major local public corporations . . . . . . . . . . . . . . . . . . 613 2 0 594 4 0 Claims on financial institutions and type i financial instruments business operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,379 1,049 42 5,053 1,241 50 Claims on corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,820 13,402 536 17,192 13,972 559 Claims on SMEs and individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Mortgage-backed housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7 0 24 8 0 Claims on projects including acquisition of real estate properties . . . . . 1,681 1,681 67 1,850 1,843 74 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . 753 738 30 619 744 30 Cash items in process of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — loans guaranteed by Credit Guarantee Association, etc . . . . . . . . . . . . — — — 0 — — loans guaranteed by Enterprise turnaround initiative Corporation of Japan (EtiC), etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equity, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,371 1,348 54 696 669 27 Securitization (as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 42 — —

Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 42 — — Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — — — —

Securitization (not as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . 5,884 5,485 219 6,032 5,583 223 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355 184 7 620 267 11 look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,267 5,301 212 5,281 5,316 213 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 4 — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 — — 127 — —

Fund (look-through approach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,719 1,990 80 2,873 2,587 103 Risk weight 0% to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,001 103 4 695 124 5 Risk weight > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 11 0 13 4 0 Risk weight > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 258 10 707 623 25 Risk weight > 100% <= 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,260 1,499 60 1,317 1,618 65 Risk weight > 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 119 5 80 217 9 Capital deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 — — 61 — —

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 798 797 32 997 994 40 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,332 26,705 1,068 50,967 27,901 1,116

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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

Breakdown by Portfolio (Consolidated)(100 Million yen)

Sep. 2012 Sep. 2011

CategoryAmount of exposure

Amount of credit

risk assets

Amount of capital

requirementsAmount of exposure

Amount of credit

risk assets

Amount of capital

requirements

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 — — 147 — — Claims on Japanese government/bank . . . . . . . . . . . . . . . . . . . . . . . . . 10,899 — — 10,508 — — Claims on foreign central government/bank . . . . . . . . . . . . . . . . . . . . . 2,936 3 0 2,280 — — Claims on Bank for international Settlements (BiS) . . . . . . . . . . . . . . . . — — — — — — Claims on Japanese local public bodies . . . . . . . . . . . . . . . . . . . . . . . . 819 5 0 758 6 0 Claims on non-central government public sector entities (PSEs) of foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 101 4 318 60 2 Claims on multilateral development banks (MDBs) . . . . . . . . . . . . . . . . — — — — — — Claims on Japan Finance Organization for Municipalities (JFM) . . . . . . . 9 0 0 3 0 0 Claims on organs affiliated with the Japanese government . . . . . . . . . . 977 98 4 981 190 8 Claims on three major local public corporations . . . . . . . . . . . . . . . . . . 613 2 0 594 4 0 Claims on financial institutions and type i financial instruments business operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,354 1,044 42 5,002 1,231 49 Claims on corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,205 13,781 551 17,712 14,491 580 Claims on SMEs and individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Mortgage-backed housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7 0 24 8 0 Claims on projects including acquisition of real estate properties . . . . . 1,684 1,684 67 1,850 1,843 74 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . 1,479 1,729 69 1,552 1,945 78 Cash items in process of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — loans guaranteed by Credit Guarantee Association, etc . . . . . . . . . . . . — — — 0 — — loans guaranteed by Enterprise turnaround initiative Corporation of Japan (EtiC), etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Equity, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,189 1,188 48 519 518 21 Securitization (as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 42 — —

Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 42 — — Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — — — —

Securitization (not as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . 5,928 5,514 221 6,066 5,602 224 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 188 8 639 271 11 look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,292 5,326 213 5,296 5,331 213 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 4 — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 — — 127 — —

Fund (look-through approach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,378 458 18 1,179 698 28 Risk weight 0% to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,001 103 4 695 124 5 Risk weight > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 0 7 2 0 Risk weight > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 64 3 191 175 7 Risk weight > 100% <= 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 185 7 149 185 7 Risk weight > 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 105 4 76 211 8 Capital deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 — — 61 — —

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 906 905 36 1,139 1,136 45 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,052 26,519 1,061 50,675 27,732 1,109

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 .

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(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. 2012 Sep. 2011

Consolidated Non-consolidated Consolidated Non-consolidated

Standardized Approach . . . . . . . . . 3,824 3,801 2,812 2,709interest Rate Risk . . . . . . . . . . . . 1,013 1,007 1,647 1,627Equity Risk . . . . . . . . . . . . . . . . . 5 5 0 0Foreign Exchange Risk . . . . . . . . 17 0 90 1Commodities Risk . . . . . . . . . . . . 171 171 33 33Options transactions . . . . . . . . . . 2,616 2,616 1,040 1,046

internal Models Approach . . . . . . . . 3,851 3,851 1,931 1,931

total . . . . . . . . . . . . . . . . . . . . . . . . 7,675 7,652 4,743 4,640

Note: the calculation methods are as follows: 1 . internal Model Approach General market risk for the linear risk portion of 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 .

(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:

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Breakdown of Exposure by Industry Sector (Non-Consolidated) (100 Million yen)

Sep. 2012 Sep. 2011

Industry sector Loans etc. SecuritiesOTC

derivatives Total Loans etc. SecuritiesOTC

derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . 7,828 8,952 3 16,782 5,790 9,645 5 15,440 Financial institution . . . . . . . . . . . . . 2,541 256 1,759 4,556 3,278 363 1,623 5,263 Manufacturer . . . . . . . . . . . . . . . . . 3,224 183 55 3,462 3,274 187 80 3,541 Agriculture/forestry/fisheries . . . . . . 29 — 5 34 51 — 9 60 Mining . . . . . . . . . . . . . . . . . . . . . . 64 — — 64 67 — — 67 Construction . . . . . . . . . . . . . . . . . . 409 — 0 410 398 — 0 398 utilities (electric power/gas/ heat supply/water service) . . . . . . 234 — 0 234 165 — 1 166 information & telecommunications . . 898 267 2 1,168 767 271 2 1,040 transport . . . . . . . . . . . . . . . . . . . . 1,408 3 17 1,427 1,787 3 25 1,815 wholesale/retail . . . . . . . . . . . . . . . 1,439 36 74 1,550 1,633 37 175 1,844 Other financial business (moneylending,leasing) . . . . . . . . . 6,118 2,713 4 8,835 6,155 2,043 10 8,207 Real estate . . . . . . . . . . . . . . . . . . . 8,136 647 17 8,800 8,669 766 31 9,466 various services (excluding leasing) . . . . . . . . . . . . 1,738 22 4 1,763 1,692 21 7 1,720 Others . . . . . . . . . . . . . . . . . . . . . . 1,176 — 71 1,246 1,858 — 80 1,938

Total . . . . . . . . . . . . . . . . . . . . . . . . 35,241 13,079 2,011 50,332 35,584 13,336 2,047 50,967

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. 2012 Sep. 2011

Area Loans etc. SecuritiesOTC


derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . 31,498 7,926 626 40,050 31,527 9,110 748 41,385 Overseas . . . . . . . . . . . . . . . . . . . . . . . 4,084 4,532 1,386 10,002 4,451 3,541 1,299 9,291

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 35,583 12,458 2,011 50,052 35,978 12,650 2,047 50,675

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. 2012 Sep. 2011

Area Loans etc. SecuritiesOTC


derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . 31,135 8,505 626 40,265 31,132 9,761 748 41,641 Overseas . . . . . . . . . . . . . . . . . . . . . . . 4,106 4,574 1,386 10,066 4,452 3,575 1,299 9,326

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 35,241 13,079 2,011 50,332 35,584 13,336 2,047 50,967

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 .

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Breakdown of Exposure by Industry Sector (Consolidated) (100 Million yen)

Sep. 2012 Sep. 2011



derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . 7,828 8,954 3 16,785 5,790 9,647 5 15,442 Financial institution . . . . . . . . . . . . . 2,459 198 1,759 4,416 3,169 311 1,623 5,103 Manufacturer . . . . . . . . . . . . . . . . . 3,437 183 55 3,674 3,531 187 80 3,798 Agriculture/forestry/fisheries . . . . . . 29 — 5 34 51 — 9 60 Mining . . . . . . . . . . . . . . . . . . . . . . 75 — — 75 76 — — 76 Construction . . . . . . . . . . . . . . . . . . 409 — 0 410 402 0 0 402 utilities (electric power/gas/ heat supply/water service) . . . . . . 240 — 0 240 171 — 1 171 information & telecommunications . . 1,142 267 2 1,411 1,114 280 2 1,397 transport . . . . . . . . . . . . . . . . . . . . 1,444 3 17 1,464 1,830 3 25 1,858 wholesale/retail . . . . . . . . . . . . . . . 1,497 36 74 1,608 1,716 37 175 1,928 Other financial business (moneylending,leasing) . . . . . . . . . 5,158 2,048 4 7,210 4,902 1,299 10 6,211 Real estate . . . . . . . . . . . . . . . . . . . 8,173 667 17 8,857 8,712 785 31 9,528 various services (excluding leasing) . . . . . . . . . . . . 1,969 22 4 1,995 2,015 21 7 2,044 Others . . . . . . . . . . . . . . . . . . . . . . 1,722 81 71 1,874 2,497 80 80 2,658

Total . . . . . . . . . . . . . . . . . . . . . . . . 35,583 12,458 2,011 50,052 35,978 12,650 2,047 50,675

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. 2012 Sep. 2011

OTC OTC Remaining period Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

< 1 year . . . . . . . . . . . . . . . . . . . . 10,459 2,102 86 12,647 10,111 1,694 53 11,858

=> 1 year < 5 years . . . . . . . . . . . . . 13,984 3,254 239 17,477 15,536 5,118 420 21,074

=> 5 years . . . . . . . . . . . . . . . . . . . 10,798 7,722 1,687 20,208 9,936 6,524 1,575 18,035

Total . . . . . . . . . . . . . . . . . . . . . . 35,241 13,079 2,011 50,332 35,584 13,336 2,047 50,967

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. 2012 Sep. 2011

OTC OTC Remaining period Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

< 1 year . . . . . . . . . . . . . . . . . . . . 9,970 2,102 86 12,158 9,733 1,694 53 11,480

=> 1 year < 5 years . . . . . . . . . . . . . 13,318 3,254 239 16,811 14,453 5,118 420 19,991

=> 5 years . . . . . . . . . . . . . . . . . . . 12,295 7,102 1,687 21,084 11,791 5,839 1,575 19,205

Total . . . . . . . . . . . . . . . . . . . . . . 35,583 12,458 2,011 50,052 35,978 12,650 2,047 50,675

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 .

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Sep. 2012 Sep. 2011



derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . — — — — — — — — Financial institution . . . . . . . . . . . . . 50 — — 50 77 — — 77 Manufacturer . . . . . . . . . . . . . . . . . 126 1 0 127 32 0 0 33 Agriculture/forestry/fisheries . . . . . . — — — — — — — — Mining . . . . . . . . . . . . . . . . . . . . . . 4 — — 4 — — — — Construction . . . . . . . . . . . . . . . . . . 26 — — 26 28 — — 28 utilities (electric power/gas/ heat supply/water service) — — — — — — — — information & telecommunications . . 15 8 — 23 — — — — transport . . . . . . . . . . . . . . . . . . . . 163 — 0 163 108 — — 108 wholesale/retail . . . . . . . . . . . . . . . 18 — 20 38 10 — 29 39 Other financial business (moneylending,leasing) . . . . . . . . . 187 0 — 187 266 0 1 267 Real estate . . . . . . . . . . . . . . . . . . . 96 — 0 96 44 — — 44 various services (excluding leasing) . . . . . . . . . . . . 38 0 — 38 22 0 0 22 Others . . . . . . . . . . . . . . . . . . . . . . 1 — — 1 0 — — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . 723 8 21 753 589 0 30 619


(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. 2012 Sep. 2011

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 487 1 21 509 444 0 30 474 Overseas . . . . . . . . . . . . . . . . . . . 236 8 0 244 145 0 — 145

Total . . . . . . . . . . . . . . . . . . . . . . 723 8 21 753 589 0 30 619


Breakdown of Exposure Overdue for Three Months or More by Area (Consolidated) (100 Million yen)

Sep. 2012 Sep. 2011

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 923 1 21 945 944 0 30 974 Overseas . . . . . . . . . . . . . . . . . . . 526 8 0 534 569 9 — 579

Total . . . . . . . . . . . . . . . . . . . . . . 1,449 8 21 1,479 1,513 9 30 1,552


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Sep. 2012 Sep. 2011



derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . . — — — — — — — — Financial institution . . . . . . . . . . . . . 50 — — 50 77 — — 77 Manufacturer . . . . . . . . . . . . . . . . . 217 1 0 218 90 0 0 90 Agriculture/forestry/fisheries . . . . . . — — — — — — — — Mining . . . . . . . . . . . . . . . . . . . . . . 4 — — 4 9 — — 9 Construction . . . . . . . . . . . . . . . . . . 26 — — 26 28 — — 28 utilities (electric power/gas/ heat supply/water service) — — — — — — — — information & telecommunications . . 110 8 — 117 169 9 — 178 transport . . . . . . . . . . . . . . . . . . . . 183 — 0 184 116 — — 116 wholesale/retail . . . . . . . . . . . . . . . 51 — 20 72 43 — 29 72 Other financial business (moneylending,leasing) . . . . . . . . . 191 0 — 191 323 0 1 325 Real estate . . . . . . . . . . . . . . . . . . . 104 — 0 104 59 — — 59 various services (excluding leasing) . . . . . . . . . . . . 76 0 — 76 99 0 0 99 Others . . . . . . . . . . . . . . . . . . . . . . 437 — — 437 500 — — 500

Total . . . . . . . . . . . . . . . . . . . . . . . . 1,449 8 21 1,479 1,513 9 30 1,552


(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. 2012 Sep. 2011 Mar. 2012 Mar. 2011

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 631 551 699

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 303 217 289 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 134 75 141 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 169 142 148

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680 934 768 988

(100 Million yen)

Area Sep. 2012–Mar. 2012 Sep. 2011–Mar. 2011

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (131) (68)

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 14 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 (8) Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64) 22

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88) (54)

Breakdown of Allowance by Area (Non-Consolidated)

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Breakdown of Allowance by Industry Sector (Non-Consolidated)(100 Million yen)


General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 631 551 699

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 303 217 289 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 85 — 85 Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 3 4 10 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2 2 2 utilities (electric power/gas/heat supply/water service) . . . . . . . . . — — — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . 24 36 25 9 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 67 59 70 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8 8 6 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . 3 64 56 62 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 31 49 22 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . 9 7 14 23 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680 934 768 988

(100 Million yen)


General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 631 550 699

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 311 220 303 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 134 75 141 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 177 146 162

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 941 770 1,002

(100 Million yen)



Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 (8) Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) 15


Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86) (61)

Breakdown of Allowance by Area (Consolidated)

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(100 Million yen)



Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 14 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0) Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 (7) Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) — utilities (electric power/gas/heat supply/water service) . . . . . . . . . . — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . (0) 27 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (3) wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . (53) 2 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . (5) (16) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0


Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88) (54)

(100 Million yen)


General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 631 550 699

Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 311 220 303 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 85 — 85 Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 3 4 15 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 4 5 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2 2 2 utilities (electric power/gas/heat supply/water service) . . . . . . . . . — — — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . 24 36 25 9 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 67 59 70 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8 8 6 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . 3 64 56 62 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 34 49 27 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . 9 7 14 23 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Allowance for loans to restructuring countries . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 941 770 1,002

Breakdown of Allowance by Industry Sector (Consolidated)

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(100 Million yen)

Industry sector Sep. 2012 Sep. 2011 Mar. 2012

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 2 42 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2 utilities (electric power/gas/heat supply/water service) . . . . . . . . . . . . . . — — —information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7 21 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 1 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . . . . . 5 — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 3 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 0 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 — (0)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 69

(100 Million yen)

Industry sector Sep. 2012 Sep. 2011 Mar. 2012

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 2 42 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2 utilities (electric power/gas/heat supply/water service) . . . . . . . . . . . . . . — — —information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7 21 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 1 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . . . . . 5 — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 3 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 0 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (3) (4)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 8 65

(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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7 Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0) Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 (12) Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (0) Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) — utilities (electric power/gas/heat supply/water service) . . . . . . . . . . — — information & telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . (0) 27 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (3) wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 Other financial business (moneylending, leasing) . . . . . . . . . . . . . . . (53) 2 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 7 various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . (5) (16) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0


Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86) (61)

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(5) Outstanding Exposure after Recognizing Credit Risk Mitigations by Risk Weight (Non-Consolidated) (100 Million yen)

Sep. 2012 Sep. 2011

Amount of exposure

Amount of capital deduction

Amount of exposure

Amount of capital deductionRisk weight

Application of external rating


0% . . . . . . . . . . . . . . . . . . . . . . . . . 15,644 2,921 — 15,049 2,280 — > 0% <= 10% . . . . . . . . . . . . . . . . . 1,224 — — 988 — — > 10% <= 20% . . . . . . . . . . . . . . . . . 6,632 5,535 — 6,793 6,049 — > 20% <= 50% . . . . . . . . . . . . . . . . . 2,417 2,191 — 3,156 3,004 — > 50% <= 75% . . . . . . . . . . . . . . . . . 123 101 — 165 137 — > 75% <= 100% . . . . . . . . . . . . . . . . 21,743 3,711 — 21,965 2,819 — > 100% <= 150% . . . . . . . . . . . . . . . 1,875 242 — 2,156 470 — > 150% . . . . . . . . . . . . . . . . . . . . . 120 33 — 145 39 — Capital deduction . . . . . . . . . . . . . . 402 62 378 358 85 326

Total . . . . . . . . . . . . . . . . . . . . . . . 50,181 14,796 378 50,776 14,882 326

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. 2012 Sep. 2011

Amount of exposure

Amount of capital deduction

Amount of exposure

Amount of capital deductionRisk weight



0% . . . . . . . . . . . . . . . . . . . . . . . . . 15,655 2,921 — 15,064 2,285 — > 0% <= 10% . . . . . . . . . . . . . . . . . 1,224 — — 988 — — > 10% <= 20% . . . . . . . . . . . . . . . . . 6,646 5,549 — 6,760 6,016 — > 20% <= 50% . . . . . . . . . . . . . . . . . 2,433 2,228 — 3,251 3,032 — > 50% <= 75% . . . . . . . . . . . . . . . . . 104 101 — 155 137 — > 75% <= 100% . . . . . . . . . . . . . . . . 21,894 3,996 — 22,023 3,124 — > 100% <= 150% . . . . . . . . . . . . . . . 1,427 422 — 1,745 747 — > 150% . . . . . . . . . . . . . . . . . . . . . 117 33 — 141 39 — Capital deduction . . . . . . . . . . . . . . 402 62 378 358 85 326

Total . . . . . . . . . . . . . . . . . . . . . . . 49,902 15,312 378 50,484 15,464 326

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. 2012 Sep. 2011

Eligible financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 145 Cash and deposits at Aozora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 59 Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 85 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Guarantees and credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,208 1,137 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,208 1,137 Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,283 1,282

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 .

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6. Items pertaining to counterparty risk on derivative product transactions

Breakdown of Derivative Products (Non-Consolidated) (100 Million yen)

Type of transaction

Sep. 2012 Sep. 2011

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 . . . . . . . . . . . . . . . 133 138 271 — 271 318 167 485 — 485 interest rate-related . . . . . . . . . . . . . . . . . 3,756 1,747 5,503 — 5,503 3,263 1,477 4,740 — 4,740 Equity-related . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Precious metal-related (excluding gold-related) . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Other commodity-related . . . . . . . . . . . . . 3 12 15 — 15 1 2 3 — 3 Credit derivatives (counterparty risk) . . . . . 33 216 249 — 249 49 284 333 — 333 Credit-equivalent amount reduction effect through close-out netting agreement . . . (3,035) (991) (4,026) — (4,026) (2,646) (868) (3,514) — (3,514)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 889 1,122 2,011 — 2,011 985 1,062 2,047 — 2,047

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. 2012 Sep. 2011

Eligible financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 145 Cash and deposits at Aozora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 59 Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 85 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Guarantees and credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,238 1,137 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,238 1,137 Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,313 1,282

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 .

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Breakdown of Eligible Financial Collateral Associated with Derivatives by Type (Non-Consolidated, Consolidated)

No applicable transactions existed as of end-September 2012 and end-September 2011 .

Breakdown of Derivative Products (Consolidated) (100 Million yen)

Type of transaction

Sep. 2012 Sep. 2011

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 . . . . . . . . . . . . . . . 133 138 271 — 271 318 167 485 — 485 interest rate-related . . . . . . . . . . . . . . . . . 3,756 1,747 5,503 — 5,503 3,263 1,477 4,740 — 4,740 Equity-related . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Precious metal-related (excluding gold-related) . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — Other commodity-related . . . . . . . . . . . . . 3 12 15 — 15 1 2 3 — 3 Credit derivatives (counterparty risk) . . . . . 33 216 249 — 249 49 284 333 — 333 Credit-equivalent amount reduction effect through close-out netting agreement . . . (3,035) (991) (4,026) — (4,026) (2,646) (868) (3,514) — (3,514)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 889 1,122 2,011 — 2,011 985 1,062 2,047 — 2,047

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. 2012 Sep. 2011

Notional principal Notional principal

transactions subject to the calculation of credit equivalent amount . . . . . . . 5,066 6,679 Credit derivatives (credit reference asset of single organization) . . . . . . . . . . Purchase 2,431 3,104

Supply 2,580 3,490 First-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase 55 85

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. 2012 Sep. 2011

Notional principal Notional principal

transactions subject to the calculation of credit equivalent amount . . . . . . . 5,066 6,679 Credit derivatives (credit reference asset of single organization) . . . . . . . . . . Purchase 2,431 3,104

Supply 2,580 3,490 First-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase 55 85

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 .

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Securitization Exposure Held by the Bank (Consolidated) (100 Million yen)

Category of underlying assets

Sep. 2012 Sep. 2011

Securitization exposure Resecuritization exposure Total Securitization exposureOn-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 . . . . . . . . . . . . . . . . — — 0 — 0 — 42 Non-performing loans . . . . . . . . — — — — — — — lease receivables . . . . . . . . . . . — — — — — — — Consumer loan receivables . . . . — — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 0 — 0 — 0 — 42

Securitization Exposure Deducted from Equity Capital (Non-Consolidated) (100 Million yen)


Sep. 2012 Sep. 2011

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 42 42 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 42 42

Note: the figures above include the amount of capital deduction by applying Supplementary Provision 15 of the Notice, ‘transitional Arrangements Regarding Securitization Exposure .’

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. 2012 Sep. 2011


Project finance . . . . . . . . . . . . . — — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — — Claims on corporations . . . . . . . 0 — — — 0 — — Residential loan receivables . . . — — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — — Real estate . . . . . . . . . . . . . . . . — — 0 — 0 — 42 Non-performing loans . . . . . . . . — — — — — — — lease receivables . . . . . . . . . . . — — — — — — — Consumer loan receivables . . . . — — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 0 — 0 — 0 — 42

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Securitization Exposure Deducted from Equity Capital (Consolidated) (100 Million yen)


Sep. 2012 Sep. 2011



deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Claims on corporations . . . . . . . . . . . . . . . . . . — — — — Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 42 42 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 42 42


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. 2011

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 . . . . . . . — — — — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . 42 42 42 — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 42 42 42 — — —

(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 — — —

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(100 Million yen)


Sep. 2011

Amount of exposure






Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . — — — — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . 42 42 42 — — — Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . 42 42 42 — — —

(100 Million yen)


Sep. 2012 Sep. 2011

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 . . . . . . . . . . . . . . . . — — — 42 — 0 Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . — — — 42 — 0

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 .

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. 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 — — —

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(100 Million yen)


Sep. 2012 Sep. 2011


the current term





the current term




Project finance . . . . . . . . . . . . . — — — — — — Equities . . . . . . . . . . . . . . . . . . — — — — — — Claims on corporations . . . . . . . — — — — — — Residential loan receivables . . . — — — — — — Ships/aircraft . . . . . . . . . . . . . . — — — — — — Real estate . . . . . . . . . . . . . . . . — — — 42 — 0 Non-performing loans . . . . . . . . — — — — — — lease receivables . . . . . . . . . . . — — — — — — Consumer loan receivables . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . . . — — — 42 — 0

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 .

(100 Million yen)

Risk weight

Sep. 2012 Sep. 2011

Securitization exposure Resecuritization exposure

Securitization exposureOn-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 . . — — — — 0 — — — 42 —

Total . . . . . . . . . . . 0 0 — — 0 — — — 42 —

(100 Million yen)

Risk weight

Sep. 2012 Sep. 2011



OutstandingCapital





requirement

0% . . . . . . . . . . . . . — — — — — — — — — — >0%, <= 20% . . . . . . — — — — — — — — — — >20%, <= 50% . . . . . — — — — — — — — — — >50%, <= 100% . . . . 0 0 — — — — — — — — >100%, <= 350% . . . — — — — — — — — — — >350% . . . . . . . . . . — — — — — — — — — — Capital deduction . . — — — — 0 — — — 42 —

Total . . . . . . . . . . . 0 0 — — 0 — — — 42 —

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Non-Consolidated)

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Consolidated)

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(100 Million yen)


Sep. 2012 Sep. 2011


Project finance . . . . . . . . . . . . . 143 16 — — 143 16 90 Equities . . . . . . . . . . . . . . . . . . 567 1 — — 567 1 563 Claims on corporations . . . . . . . 209 49 117 — 325 49 254 Residential loan receivables . . . 16 — — — 16 — 27 Ships/aircraft . . . . . . . . . . . . . . 33 18 — — 33 18 67 Real estate . . . . . . . . . . . . . . . . 4,322 13 134 — 4,456 13 4,658 Non-performing loans . . . . . . . . 203 — — — 203 — 232 lease receivables . . . . . . . . . . . 8 — — — 8 — 14 Consumer loan receivables . . . . 51 — — — 51 — 96 Others . . . . . . . . . . . . . . . . . . . 26 — 0 — 26 — 66

Total . . . . . . . . . . . . . . . . . . . . 5,579 98 251 — 5,830 98 6,066

(2) Securitization Transactions in which Aozora Group Invests

(100 Million yen)


Sep. 2012 Sep. 2011


Project finance . . . . . . . . . . . . . 143 16 — — 143 16 75 Equities . . . . . . . . . . . . . . . . . . 567 1 — — 567 1 563 Claims on corporations . . . . . . . 209 49 117 — 325 49 254 Residential loan receivables . . . 16 — — — 16 — 27 Ships/aircraft . . . . . . . . . . . . . . 33 18 — — 33 18 67 Real estate . . . . . . . . . . . . . . . . 4,278 13 134 — 4,413 13 4,639 Non-performing loans . . . . . . . . 203 — — — 203 — 232 lease receivables . . . . . . . . . . . 8 — — — 8 — 14 Consumer loan receivables . . . . 51 — — — 51 — 96 Others . . . . . . . . . . . . . . . . . . . 26 — 0 — 26 — 66

Total . . . . . . . . . . . . . . . . . . . . 5,535 98 251 — 5,786 98 6,032

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 (Non-Consolidated, Consolidated)As of end-September 2012, there are no assets held for the purpose of securitization transactions .

Securitization Exposures Subject to Early Amortization Provisions Retained(Non-Consolidated, Consolidated)in line with the Provision 252 of the Notice, as of end-September 2012 and end-September 2011, there were no securitization exposures subject to early amortization treatment that are retained by external investors to calculate credit risk-weighted assets .

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(100 Million yen)


Sep. 2012 Sep. 2011



deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 — — Claims on corporations . . . . . . . . . . . . . . . . . . 117 117 7 7 Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 203 248 224 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 320 255 231


Securitization Exposure Deducted from Equity Capital (Non-Consolidated)

(100 Million yen)


Sep. 2012 Sep. 2011



deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . . . — — — — Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 Claims on corporations . . . . . . . . . . . . . . . . . . 117 117 7 7 Residential loan receivables . . . . . . . . . . . . . . — — — — Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 203 248 224 Non-performing loans . . . . . . . . . . . . . . . . . . . — — — — lease receivables . . . . . . . . . . . . . . . . . . . . . . — — — — Consumer loan receivables . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 320 255 231

Securitization Exposure Deducted from Equity Capital (Consolidated)


(100 Million yen)

Risk weight

Sep. 2012 Sep. 2011



OutstandingCapital





requirement

0% . . . . . . . . . . . . . — — — — — — — — — — >0%, <= 20% . . . . . . 141 1 — — — — — — 302 2 >20%, <= 50% . . . . . 90 2 — — — — — — 149 3 >50%, <= 100% . . . . 4,858 193 98 4 79 3 — — 5,072 201 >100%, <= 350% . . . 276 16 — — — — — — 254 17 >350% . . . . . . . . . . — — — — — — — — — — Capital deduction . . 170 — — — 173 — — — 255 —

Total . . . . . . . . . . . 5,535 212 98 4 251 3 — — 6,032 223

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Non-Consolidated)

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(100 Million yen)

As of Sep. 2012 As of Sep. 2011

Interest rate Equity Forex

Funds and others Total

Interest rate Equity Forex

Funds and others Total

trading . . . . . . . . 3 0 0 2 6 3 0 0 5 8Banking . . . . . . . 22 2 0 17 39 18 1 0 12 30

Total . . . . . . . . . 25 3 0 19 44 20 1 0 17 37

(100 Million yen)

Sep. 2012 Sep. 2011

Average Highest Lowest As of Sep. 2012 Average Highest Lowest As of Sep. 2011

trading . . . . . . . . 5 8 3 6 4 8 3 8Banking . . . . . . . 42 49 39 39 32 38 27 30

1. The Value at Risk (VaR ) number at term-end

2. The highest, lowest and average VaR number during the disclosure period

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

Market risk for the entire bank

Notes: 1 . ‘Funds and others’ includes hedge funds, REits and credit derivatives etc . 2 . the above figures are based on a 1-day holding period and a 99% confidence level . 3 . the figures for total vaR do not represent the sum of individual components, due to correlations .

(100 Million yen)

Risk weight

Sep. 2012 Sep. 2011



OutstandingCapital





requirement

0% . . . . . . . . . . . . . — — — — — — — — — — >0%, <= 20% . . . . . . 161 1 — — — — — — 321 3 >20%, <= 50% . . . . . 90 2 — — — — — — 149 3 >50%, <= 100% . . . . 4,882 194 98 4 79 3 — — 5,087 202 >100%, <= 350% . . . 276 16 — — — — — — 254 17 >350% . . . . . . . . . . — — — — — — — — — — Capital deduction . . 170 — — — 173 — — — 255 —

Total . . . . . . . . . . . 5,579 213 98 4 251 3 — — 6,066 224

Outstanding Securitization Exposure by Risk Weight and Capital Requirement Thereof (Consolidated)

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 Guarantors(Non-Consolidated, Consolidated)As of end-September 2012, there are 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 .

(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 .

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(100 Million yen)

Sep. 2012

Average Highest Lowest As of Sep. 2012

5 6 3 6

(2) The stressed Value at Risk number at term-end and the highest, lowest and average stressed VaR number during the disclosure period

(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 .

(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 over the 247 business days from October 3, 2011 to September 28, 2012 . the actual daily losses exceeded daily vaR on no business day . this result supports the reliability of the Bank’s vaR .

(VaR: JPY 100 Million)

(PL: JPY 100 Million)

(1) Balance sheet amount (Millions of yen)

Sep. 2012 Sep. 2011

Non-consolidated Consolidated Non-consolidated Consolidated

Balance sheet amount . . . . . . . . . . . . . . . . . . . . . 137,063 118,790 69,396 51,836listed stock exposures . . . . . . . . . . . . . . . . . . . 85,267 85,267 17,006 17,006Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,796 33,523 52,390 34,830

(2) Gains and losses on sales, and write-offs of equity exposure (Millions of yen)

Sep. 2012 Sep. 2011


Gains on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 113 391 391losses on sales . . . . . . . . . . . . . . . . . . . . . . . . . . 52 52 — —write-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279 279 102 155

(Millions of yen)

Sep. 2012 Sep. 2011


unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . 932 932 (1,666) (1,666)

(3) Unrealized gains/losses recognized on the balance sheet but not recognized on the statement of income

9. Items pertaining to equity exposures in the banking book

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(100 Million yen, %)

Sep. 2012 Sep. 2011

P/l impact of interest Rate Shock . . . . . . . . . . . . . . 244 200Outlier Ratio (Ratio to tier i and tier ii) . . . . . . . . . . . 3 .9 3 .3

Interest rate risk in the banking book

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 .

11. Losses on interest rate shocks based on internal measures for interest rate risk related to the banking book, and changes in economic prices

(4) Unrealized gains/losses not recognized on the balance sheet or the statement of income(For Sep . 2011 and Sep . 2012) Consolidated: Not applicableNon-consolidated: Not applicable

10. Amount of exposures to which credit risk asset calculation is appliedthis item is described in Quantitative Disclosure 3 . (1) above .

Share P

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Share Procedure Information (As of January 1, 2013)

● Fiscal year From April 1 to March 31

● Ordinary general shareholders’ meeting Held in June ● Record date for determination March 31 and September 30 (interim dividends) 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)

*Mailing address and contact number changed in January 2013

● 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

Aozora Bank Website

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

Printed in Japan

AO

ZO

RA

BA

NK

, LTD

. Interim R

epo

rt 2012

This report is printed with vegetable oil ink.

Published: January 2013 Corporate Communication Division AOZORA BANK, Ltd.

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

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