Shinsei Bank, Limited, a leading diversified financial institution to both institutional and individual customers in Japan, today announced consolidated cash basis net of 35.7 billion yen (consolidated reported basis net income of 22.2 billion yen) for the nine month period ended December 31, 2009 compared to a consolidated cash basis net loss of 23.3 billion yen (consolidated reported basis net loss of 32.1 billion yen) for the nine month period ended December 31, 20098. Furthermore, Shinsei Bank announced a non-consolidated net income of 6.2 billion yen this period compared to a net loss of 87.2 billion yen for the same period of the previous fiscal year. Highlights
Net income positive due to higher top-line revenue from core businesses, flat expenses and lower credit costs
Institutional Group continues to focus on further restructuring businesses, exiting non-core operations such as proprietary investments and cleaning up and managing legacy portfolios
Individual Group shows continued momentum with strong retail banking franchise and steady consumer finance operations
Full fiscal year 2009 (FY2009) guidance deferred considering remaining key risks and uncertainties
Top-line revenues up 31.0% due mainly to contribution from our consumer finance subsidiary Shinsei Financial and improvements in the Institutional Group
Normalized expenses down 16.1% and overall expenses flat year-on-year through business right-sizing and technology deployment
Credit card costs down 21.8%, but need to ensure appropriate level of reserving that adequately represents the changing operating environment
Institutional Group: proactively cleaning up legacy portfolios and booking some gains in the process
Individual Group – Retail Banking: expanding franchise and shifting focus from deposits to asset management
Individual Group – Consumer Finance: continue to pursue integration and lower risk customer base while lowering costs through technology
Maintained robust liquidity position with about 1.7 trillion yen of cash, cash equivalents and liquidity reserves
3Q FY2009 issuance of 9 billion yen of Tier 1 non-step up, non-cumulative perpetual preferred securities and 5 billion yen debut issuance of Tier II retail non-dilutive subordinate bonds and debt
Total capital adequacy ration at 10.46%, Tier 1 capital ratio at 7.83% and will work to enhance our capital in light of the changing regulatory environment
Continues reduction of higher risk assets while risk monitored loans and non-performing loan ratio remain relatively high
While we had planned to provide earnings guidance for the full fiscal year 2009 upon the announcement of our results today, we have decided to defer this guidance. The major reason for this is the ongoing review of our legacy portfolio including domestic real estate in our Institutional Group, as well as our consumer finance subsidiaries with reference to the adequacy of grey zone reserves and impairments. Upon the completion of this review, we will evaluate and record additional reserves, mark-downs and impairments, as necessary, on a prudent basis, which may have an impact on our full fiscal year financial performance.