IR-FAQ
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Corporate Information
Q1 |
Could you explain AIFUL's strategy in the consumer finance business?
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A1 |
The operating environment in Japan's consumer finance business remains very difficult, including legislation lowering the maximum interest rate and introducing restrictions on total lending. Nevertheless, from the medium to long-term perspective, we can expect the competition to get somewhat lighter due to a decline in the number of market participants and reductions in credit costs as a result of the fall in the number of borrowers with loans from multiple lenders. Thus, we intend to keep the consumer finance business as the core business of the AIFUL Group.
In order to build a business model adapted to the new Money Lending Business Control and Regulation Law quickly, the AIFUL Group has switched its management policy from the former "duplication and diversification" to "selection and concentration," with the aim of focusing management resources and raising management efficiency through such means as the reorganization and integration of consumer finance subsidiaries, a review of the branch strategy, and reductions in operating costs. We seek a return to the starting point of the consumer finance business, boosting the earnings base by strengthening credit management and reviewing customer service.
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Q2 |
What is LIFE's strategy in the credit card business?
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A2 |
LIFE, which became an AIFUL subsidiary in 2001, has achieved aggressive business expansion focused on the three areas of credit card shopping loans, credit card cash advances, and a new model of bank loan guarantees. Looking ahead, LIFE will aim to further strengthen its business structure, concentrating its management resources on the credit card sector, which is its core business, at the same time as conducting cost structure reforms in response to the changing competitive environment. In the consumer credit card business, the company's basic policy is to "increase cardholder numbers through a diverse partnership strategy, reaping the benefits of merit of scale,"and "raising card activity rates by strengthening services, encouraging the use of the company's credit card as a customer's main card," as it seeks to switch to a business model that is not overly dependent on the loan business. Meanwhile, based on the AIFUL Group's overall strategy to "strengthen the business loan sector," LIFE will tap into new markets and create new sources of income by strengthening the corporate card business for small and medium-sized businesses, making full use of its credit card settlement and credit functions.
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Q3 |
Can you outline progress in the business loan sector?
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A3 |
As part of the Group's comprehensive financial services strategy, AIFUL itself began to sell business loans in 1995 with the aim of product diversification. Subsequently, the Group achieved steady business expansion with the development of the medium risk customer market through the establishment of Businext in a joint venture with Sumitomo Trust & Banking Co., Ltd., in 2001 and the acquisition of City's, a company specializing in business loans for high risk customers, in 2002.
At present, the small business loan sector faces a tough environment with the number of corporate bankruptcies on the rise as a result of the deterioration in business sentiment at small and medium-sized enterprises. However, there is a large latent demand for working funds, and the sector is extremely promising in the medium to long term. Thus, the AIFUL Group's future strategy targets the medium risk segment to nurture and strengthen business loans as the Group's second earnings base by taking maximum advantage of the resources and channels of each Group company and systematically organizing the Group's overall synergies in marketing and attracting customers.
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Q4 |
Can you explain the credit guarantee business?
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A4 |
In the credit guarantee business, the partner financial institution sells loan products to customers and also functions as the point of contact for these customers, and consumer finance companies provide services to the partner ranging from credit screening to loan guarantee. For consumer finance companies, this business promises to raise earnings by tapping into new customer segments, effectively utilizing the credit scoring expertise that they possess without using their own funds. The AIFUL Group offers unsecured personal loan guarantee and business loan guarantee products through AIFUL itself and its subsidiary, LIFE. Our competitors have also entered the guarantee business, but the AIFUL Group's advantage lies in its aggressive development of the business loan guarantee sector, using expertise on business finance that the other companies do not possess. Looking to the future, we will continue to focus strongly on the business loan guarantee sector, developing new kinds of guarantee products and further expanding the number of our partner financial institutions.
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