(Bloomberg) -- Aozora Bank Ltd., the Japanese bank that had shocked the market with losses on its portfolio of US office property loans, plans to keep cutting its exposure amid continued uncertainties in the sector.
The office rental situation hasn’t improved, said Chief Executive Officer Hideto Oomi at an earnings briefing. People continue to work from home, and the environment hasn’t changed from last year, according to Oomi, who just visited New York where the firm has its biggest office exposure in the US.
The lender that’s now backed by Daiwa Securities Group Inc. reduced its US non-recourse office loans outstandings by $186 million compared to end-March, according to the earnings statement. It still has $1.7 billion of exposure to US property loans, and non-performing loans rose slightly from the previous quarter to $618 million.
Among US cities where Aozora has office loan exposure, Los Angeles and San Francisco showed the steepest percentage decline in valuation, followed by Chicago and New York, its statement showed.
Aozora reported results on Friday that missed estimates. For the current fiscal year, the bank maintained its forecast for net income of ¥18 billion ($115 million). It had booked a net loss of ¥49.9 billion in the year ended in March, its first loss in 15 years.
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