Aozora Bank Ltd.'s (BBB+/Stable/A-2) earnings are on a declining trend. Although the bank posted positive earnings after gaining independence from state control, it revised its net loss forecast for fiscal 2008 (ended March 31, 2009) substantially downward to ¥196 billion, following a net loss forecast of ¥27 billion in November 2008. The downward revision is attributable to significant losses arising from overseas investments and a substantial increase in credit costs. The bank's credit-related costs, which were negative for four consecutive fiscal years until fiscal 2007 (ended March 31, 2008) are now pressuring earnings due to the recent domestic and global economic downturn. It also extended credit to the real estate industry, which is another risk factor for the bank's asset
