- Q1Please describe the situation regarding the financial results for the second quarter of fiscal year ending March 2024.
AIFUL Group’s consolidated operating revenue for the second quarter of the fiscal year ending March 31, 2024 rose 12.3% compared with the corresponding period of the previous fiscal year, to 79,092 million yen. The principal components were 46,013 million yen in interest on loans (up 12.6 % year on year), 10,756 million yen in revenue from the credit card business (up 8.5 % year on year) and 9,474 million yen in revenue from the credit guarantee business (up 15.5 % year on year).
Operating expenses increased by 14,245 million yen, or 24.5 %, compared with the corresponding period of the previous fiscal year, to 72,497 million yen. This was mainly due to an increase of 2,601 million yen in advertising expenses to 9,992 million yen (up 35.2% year on year) and an increase of 8,791 million yen in credit cost to 27,141 million yen (up 47.9% year on year).
As a result, AIFUL Group posted operating profit of 6,594 million yen (down 45.7 % year on year) and ordinary profit of 7,205 million yen (down 43.0 % year on year). Profit attributable to owners of parent stood at 6,609 million yen (down 43.9 % year on year), reflecting a profit attributable to non-controlling interests of 130 million yen.
- Q2Please describe the situation regarding the consolidated outlook for the fiscal year ending March 2024.
For the future outlook, while the demand for funds is expected to recover due to the relaxation of activity restrictions for countermeasures against COVID-19, the uncertain business environment is expected to continue as the economic slowdown is cautioned by the impact of rising prices against the backdrop of soaring energy and raw material prices.
In addition, the environment surrounding the Group is changing rapidly due to new entry from outside industries and acceleration of digital transformation, etc., and it is necessary to respond promptly to the changes.
Under these circumstances, the AIFUL Group will continue to focus on increasing operating assets, diversifying financial business across the Group, mainly in the loan, credit card, credit guarantee, and overseas businesses and balancing "safety," "profitability," and "growth potential," while responding to interest repayment claims, which is one of the management issues. Also, in order to respond to the ever-changing environment, the Group will strive to transform itself into a company that can gain strong support from stakeholders by establishing the AIFUL Group brand and enhancing the use of data, as well as to maximize our credit capacity through the use of IT and digital technology and to maximize consolidated profits.
With regard to its earnings forecasts for the fiscal year ending March 2024, AIFUL Group expects to record operating revenue of 161,200 million yen (up 11.8% year on year), operating profit of 25,200 million yen (up 6.2% year on year), ordinary profit of 25,500 million yen (up 4.4% year on year), and profit attributable to owners of parent of 22,600 million yen (up 1.1% year on year).
The above forecasts are based on information available as of the date of financial announcement, and the actual financial results may differ from the forecasts due to various factors going forward.
- Q3Please give us your view on dividends.
The AIFUL Group recognize that returning profits to our shareholders is one of the most important management issues. The Company’s basic policy is to secure stable internal reserves and return profits to shareholders in accordance with our operating results, while aiming to maximize shareholder value through medium-to long-term profit growth.
For the fiscal year ending March 2024, we plan to pay an annual dividend of 1 yen per share (1 yen per share at the end of the fiscal year).
AIFUL has adopted the following provisions in its Articles of Incorporation: "The Company may determine dividends of surplus, etc. with a resolution of the Board of Directors pursuant to the provisions of Article 459, Paragraph 1 of the Companies Act" and "the Company may pay interim dividends with a resolution of the Board of Directors with September 30 each year as the record date."
Management Policy/ Environment
- Q1Please describe the AIFUL Group's management policy.
The AIFUL Group's management theme is to "achieve growth as an IT finance group by transforming our organization and systems in response to changes in the environment and utilizing digital technologies."
Amid the diversification of social needs as a result of reforms in the industrial structure, lifestyles, and consumer lifestyles, we will work to optimize management resources, such as "human assets," "products and services," "financing," and "systems," in order to resolve new needs created by social changes.
In addition, to realize the AIFUL Group's management themes, we will focus on "diversification of business portfolio" such as business diversification and strengthening of overseas businesses, and "utilization of digital technologies" such as IT technology analysis and in-house production of systems.
For the detailed information, please refer to Grow as an IT Financial Group.
- Q2Please describe the current management environment of AIFUL.
During the six months ended September 30, 2023, socio-economic activities have normalized due to the relaxation of activity restrictions after downgrading of COVID-19 to Class 5. However, the outlook remains uncertain due to concerns about risks that could put downward pressure on the economy, such as global monetary tightening and inflationary pressures.
In the consumer finance industry, the number of new contracts at major companies has continued to increase year-on-year and the balance of operating loans has expanded accordingly. Although interest repayment claims have been steadily decreasing, it still requires close monitoring as it is easily affected by changes in the external environment.
Under these circumstances, AIFUL Group will work to improve convenience by enhancing UI/UX in a user-first manner, such as expanding functions to increase the usage rate of apps. In addition, we will strive to improve productivity by simplifying our organizational structure and operations by strengthening group-wide management, while continuing to invest in human capital by hiring and training IT human resources.
- Q3Please describe the market environment for unsecured loans.
The unsecured consumer loan market was worth 17 trillion yen in March 2008. However, due to an increase in filing for interest repayment and revisions to the Money Lending Business Act resulting from the introduction of regulations on the total amount of loans, triggered by the Supreme Court decision in 2006, the market shrank to 8.7 trillion yen in March 2013, affected by many consumer finance companies.
In 2014, however, the market bottomed out and reversed out, and recovered to 10.4 trillion yen in March 2020, thanks to an improvement in business confidence in Japan's economy and aggressive advertising by consumer finance companies on television and the web.
On the other hand, in June 2023, the overall market shrank temporarily to 9.3 trillion yen, partly due to the impact of the Covid-19. Of this amount, loans outstanding by consumer finance companies amounted to 2.7 trillion yen.
- Q1Please describe the situation regarding the loan business.
In the loan business, AIFUL conducts effective and efficient advertising centered on TV and WEB commercial. In addition, we are working to increase the number of new accounts and loans outstanding through ongoing efforts to improve our services from the customer's perspective, such as speedy modifications of official sites, smartphone apps, and application forms through the in-house development.
As a result, the number of new contracts for unsecured loans was 187,000 (up 38.6% year on year) and the contract rate was 34.4% (up 2.6pt year on year) in the second quarter of fiscal year ending March 2024.
At the end of the second quarter of the fiscal year under review, unsecured loans outstanding were 519,149 million yen (up 5.9% from the previous year-end), secured loans outstanding were 2,112 million yen (down 15.6% from the previous year-end), small business loans outstanding were 11,276 million yen (up 9.7% from the previous year-end), and the total balance of loans outstanding was 532,538 million yen (up 5.9% from the previous year-end) (6,156 million yen off-balance sheet operating loans from the securitization have been included).
- Q2Please describe the situation regarding the credit card business.
In the credit card business, the LIFECARD is making efforts to acquire new members by enhancing its appeal particularly to the younger generation through the renewal of its new membership enrollment program, refreshing card designs and advertising mainly on WEB. Furthermore, it is also dedicated to improving convenience by renewing LIFE-WebDesk, a homepage for its card holders, adding new features to its apps. LIFECARD aim to improve card usage rates by providing functions and benefits tailored to customers' needs.
As a result of the above, the transaction volume for the second quarter of fiscal year ending March 2024 was 364,357 million yen (up 4.7% year on year). The balance of installment receivables for credit card business at the end of second quarter of the fiscal year under review was 105,491 million yen (down 1.6% from the previous year-end) (6,392 million yen off-balance sheet operating loans from the securitization have been included).
- Q3Please provide an overview of credit guarantee business situation.
In the credit guarantee business, AIFUL leveraged its know-how related to credit operations for individuals and small- and medium-sized enterprises as well as its unique strengths as an independent entity to increase the credit guarantee balance by promoting the diversification of credit guarantee products and increasing the number of guarantee partners.
As a result, loans outstanding for unsecured personal loan guarantee at the end of the second quarter for the fiscal year ending March 2024 was 151,762 million yen (up 6.7% from the previous year-end), and loans outstanding for unsecured business loan guarantee was 49,315 million yen (up 16.4% from the previous year-end).
Of the credit guarantee for the unsecured business loans, 1,811 million yen comes from guarantees provided to AG BUSINESS SUPPORT CORPORATION.
- Q4Please describe the situation regarding the overseas business.
The AIFUL Group currently operates group companies in Thailand and Indonesia,where we offer consumer finance and used car loans to local customers.
Of these, in Thailand, real GDP grew by 1.8% from April to June 2023, mainly reflecting the acceleration of consumer spending, and economic activity continues to recover. Against this backdrop, AIRA & AIFUL Public Company Limited has been working to acquire new customers by introducing eKYC ahead of other companies.
As a result of the above, AIRA & AIFUL Public Company Limited posted operating revenue of 3,965 million yen (up 19.1% year on year), operating profit of 125 million yen (down 4.4% year on year), ordinary profit of 127 million yen (up 2.5% year on year) in the second quarter of fiscal year ending March 2024. Net profit was 71 million yen (down 90.7% year on year).
- Q5Please describe the situation regarding the non-performing loans (NPL).
In the second quarter of fiscal year ending March 2024, amount of non-performing unsecured loans outstanding increased to 78,813 million yen (up 15.7% year-on-year) and the ratio of unsecured loans NPL stood at 15.2% (up 0.6pt year on year).
The increase in non-performing loans outstanding was primarily due to an increase in the number of settlement receivables with regular deposits (restructured loans), although it takes a certain amount of time to settle.
On the other hand, the ratio of bad debt write-offs remained stable at a low level of 2.1%, up 0.2 pt year on year.
- Q6Please describe the situation regarding the interest repayment claims.
The situation still requires careful attention although the declining trend in interest repayment claims at AIFUL (non-consolidated) has become more apparent, dropping significantly from the peak of 16,000 cases in February 2011 as more than 15 years have passed since the Supreme Court decision.
In the second quarter of fiscal year ending March 2024, interest repayment claims decreased by 41.4% from the previous year to 820. Interest repayment decreased by 19.9% year on year to 1,163 million yen and waiver of principals related to interest repayment decreased by 9.0% to 252 million. As a result, total withdraw for interest repayment decreased by 20.7% year on year to 3,031 million yen.
Stock Information/ Others
- Q1What is the current equity ratio?
The AIFUL Group's equity ratio stood at 15.7% on a consolidated basis and 16.3% on a non-consolidated basis as of second quarter of fiscal year ending March 2024.
- Q2What are AIFUL's current credit ratings?
Please refer to Corporate Bonds/Rating.
- Q3What stock exchanges list the company's shares?
The Prime Market of the Tokyo Stock Exchange.
- Q4What is AIFUL's securities code?
- Q5How many shares are there in a trading unit?
- Q6Is there a shareholder gift scheme?
AIFUL has not introduced a shareholder gift scheme.
- Q7Who is the transfer agent of the shareholders' register?
The transfer agent of AIFUL's shareholders' register is the Sumitomo Mitsui Trust Bank, Limited. (Please see here for contact details.)
- Q8Can you explain the procedure for name and address changes relating to shares?
The various procedures for AIFUL's shares are handled by the Sumitomo Mitsui Trust Bank, Limited which is the transfer agent of the shareholders' register. Please contact the transfer agent of the shareholders' register for details. In addition, shareholders who use the depository system should contact the securities company where they conduct business.
- Q9Can you outline historical stock splits and purchases of treasury stock?
Please see here for historical stock splits and purchases of treasury stock.
- Q10When is the fiscal year of AIFUL?
AIFUL closes the fiscal year on March 31. AIFUL announces quarterly result.
- Q11What is the date of the Monthly Data release?
Monthly Data is announced on the 25th of the following month.
The monthly data for June, September, December and March which are the quarterly fiscal year-ends, will be announced in the same date as the announcement date of each financial period.
- Q12When was the company established?
February 1978. See History for a list of AIFUL milestones.
- Q13Where can I make an IR-related inquiry?
Please use Contact Details.