Solid capital base Improved profitability Comparatively unstable business model The ratings on Aozora Bank Ltd. (A-/Stable/A-2) reflect the bank's solid capital base (17% Tier 1 capital adequacy ratio) and improved profitability. These strengths are partly offset by Aozora's business model, which is less stable than those of its peers. In September 2000, Aozora Bank gained independence from state control and was re-launched under its current name. Since then, Aozora has reduced its nonperforming loans (NPLs) and improved its risk management of loan assets. As a result, its asset portfolio has substantially improved to a level currently higher than that of other major Japanese banks. In addition, its risk-managed loan balance fell below its loan loss reserves at the end of
