Aozora Bank (8304)

Equity Research 1 August 2026 | 7:50PM JST

Aozora Bank (8304.T) 1Q earnings review: above expectations; limited partnership gains also contributes as legacy asset disposals progress

8304.T 12m Price Target: ¥2,690 Price: ¥3,038 Downside: 11.5% SELL Makoto Kuroda Aozora Bank announced 1Q3/27 results after the close on July 31. | Goldman Sachs Japan Co., Ltd. 1Q3/27 net business profits were ¥16.2 bn (+77% yoy, 37% Hibiki Takuma progress against full-year guidance for ¥44 bn), and net income was | Goldman Sachs Japan Co., Ltd. ¥11.4 bn (+82% yoy, 43% vs. full-year guidance for ¥27 bn, 41% progress vs. BBG consensus of ¥27.3 bn), coming in above consensus. Amid solid performance in the investment banking business and GMO Aozora Net Bank, gains from limited partnership (buyout exit gains) absorbed valuation losses on the disposal of Key Data _____________________________________ Market cap: ¥420.6bn / $2.6bn legacy assets, resulting in a start with a high rate of progress. 3m ADTV: ¥3.7bn / $23.0mn Japan Japan Financials Despite the high rate of progress, guidance was left unchanged. M&A Rank: 3 Regarding the possibility of future upward revisions, the company GS Forecast __________________________________ noted during the earnings call that because it holds unrealized 3/26 3/27E 3/28E 3/29E Net inc. (¥ bn) New losses on securities such as credit ETFs and other legacy assets, it Net inc. (¥ bn) Old will depend on the balance with the disposal of these assets. Gains EPS (¥) New EPS (¥) Old and losses from limited partnership is also difficult to forecast. On EPS growth (%) )

the other hand, based on the progress of the solutions business, it P/E (X) P/B (X) 0.7 0.8 0.8 0.8 noted that there is some room for upside to guidance. Price/PPOP (X) Dividend yield (%) 3.9 3.3 3.4 3.5

Looking at funding costs, which tend to draw attention at the 6/26 9/26E 12/26E 3/27E company, the domestic deposit interest rate was 0.59%, up 5 bp EPS (¥)

qoq from 0.54% in 4Q3/26. However, because the domestic lending GS Factor Profile ______________________________ interest rate also rose 10 bp qoq, the loan-to-deposit margin Growth

expanded. Because the company raised deposit interest rates in July Financial Returns

to reflect the BOJ rate hike in June, we want to see if this is Multiple sustainable in 2Q. Integrated

Looking ahead, although a turning point is being recognized after completing provisioning for US CRE in the previous fiscal year, the Percentile 20th 40th 60th 80th 100th

bank is in the process of advancing the disposal of credit ETFs (¥7.8 8304.T relative to Japan Coverage

bn in valuation losses at end-June) this fiscal year and next. If limited 8304.T relative to Japan Financials

partnership investment gains exceeds guidance, we think this will be Source: Company data, Goldman Sachs Research estimates. See disclosures for details. allocated to front-load the disposal of credit ETFs. Considering the impact of market volatility from 2Q onward on equity-related

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Aozora Bank (8304.T)

Aozora Bank (8304.T) Income Statement (¥ bn) ___________________________________ SELL Rating since Dec 15, 2023 3/26 3/27E 3/28E 3/29E Net interest income Net fees Treasury income 4.3 4.6 4.0 4.0 Ratios & Valuation __________________________________________ Other operating income /26 3/27E 3/28E 3/29E Total revenue P/E (X) Compensation & benefits exp. -- -- -- -- Price/PPOP (X) Non-employee costs 0.0 0.0 0.0 0.0 P/B (X) 0.7 0.8 0.8 0.8 Pre-provision op. profit P/NTA per share (X) -- -- -- -- Provision for loans -- -- -- -- Dividend yield (%) 3.9 3.3 3.4 3.5 Total provision expense -- -- -- -- Div. payout ratio (%) Income/(loss) from…