Following a profit warning from New York Community Bancorp that was at least partly due to a deteriorating office loan market, a Japanese bank wrote down the value of some of its U.S. office loans by more than 50%.
Ozora Bank shares 8304,
Down 21%, it was the worst-performing stock in the Nikkei 225 JP:NIK on Thursday, after cutting its annual earnings forecast by 52% and its revenue forecast by 35%.
Ozora Bank said the US office market is facing headwinds due to rising US interest rates and the shift to remote work. It reduced the value of its non-performing office loans by 58%, including a 63% reduction in Chicago, and reductions of between 51% and 59% in New York, Washington, D.C., Los Angeles and San Francisco.
Her comment on the Chicago market was particularly gloomy: “It takes a significant amount of time to restore the balance of supply and demand in urban areas. Real estate sales volume is still very low.” It was a bit more positive for New York, where she said supply is expected to rebound. And demand in Manhattan earlier than other cities.
US office loans of $1.89 billion represented 6.6% of the total, and 21 of those office loans worth $719 million were classified as non-performing. The loan loss reserve ratio in US offices was raised to 18.8% from 9.1%.
Ozora also reduced its securities portfolio after being weighed down by foreign bond losses, mostly due to higher US interest rates.
It sold 9.3 billion yen worth of its portfolio in the third fiscal quarter and is selling another 26.7 billion yen worth in the current fiscal fourth quarter, recording losses in US and European government bonds, US mortgage-backed securities and US investment-grade bonds. ETFs.
New York Bancorp NYCB Community Stock,
It ended Wednesday down 38% after a surprise loss and dividend cut, news that also weighed on shares of other U.S. regional bank KRE..
Separately, BNP Paribas, BNP.
Shares fell on Thursday after the French banking giant cut its long-term earnings forecast.
Related: Banks' exposure to office loans remains a “mixed bag” as lenders manage through the recession
