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Q1Please describe the situation regarding the financial results for the second quarter of the fiscal year ending March 31, 2022.
A1

In the cumulative second quarter of the current fiscal year, the Japanese economy is heading toward a gradual recovery, partly due to the spread of vaccines and the progress of immunization, although it is still in the period of the Emergency Declaration.

At present, we expect full-fledged economic activities to resume following the lifting of the Emergency Declaration and priority measures such as prevention of spreading.

The consumer finance industry is also on a recovery trend, with the number of new contracts at major companies increasing year on year.

Going forward, we will continue to closely monitor the situation, including the re-expansion of the COVID-19 contagious disease and the reoccurrence of the Emergency Declaration. However, we will work to expand our sales assets throughout the Group by responding to requests for interest repayment, which is one of our management issues, while effectively investing in advertising and promotions that leverage AIFUL's recognition, and by selling various Group products.

AIFUL Group’s consolidated operating revenue for the second quarter of the fiscal year ended March 31, 2022 rose 2.2% compared with the corresponding period of the previous fiscal year, to 64,837 million yen. The principal components were 37,523 million yen in interest on loans (up 1.2% year on year), 8,973 million yen in revenue from the credit card business (down 1.7% year on year) and 7,774 million yen in revenue from the credit guarantee business (up 5.0% year on year).

Operating expenses was 54,907 million yen (up 1.5% year on year). The main factor behind the increase is that advertising-related expenses were kept down due to the spread of the infectious disease of COVID-19 in the same period of the previous fiscal year.

As a result, AIFUL Group posted operating profit of 9,930 million yen (up 5.9% year on year) and ordinary profit of 9,856 million yen (down 5.0% year on year). Profit attributable to owners of parent stood at 10,042 million yen (up 2.3% year on year), reflecting a profit attributable to non-controlling interests of 106 million yen.

Q2Please describe the situation regarding the consolidated outlook for the fiscal year ending March 31, 2022.
A2

For the fiscal year ending March 2022, we expect operating revenues of 131,800 million yen (up 3.4% from the previous period), operating revenues of 24,100 million yen (up 37.5%), recurring revenues of 24,300 million yen (up 25.9%), and net revenues attributable to owners of the parent of 23,100 million yen (up 25.3%) based on the results of the second quarter of the current fiscal year.

The current business environment surrounding us is subject to various risks and remains uncertain. As a result, the final results may differ from the forecasts.

Q3Please give us your view on dividends.
A3

The return of profits to shareholders is a management priority at the AIFUL Group. The Group’s basic policy calls for a consistent return of profits in line with business results. The Group aims to maximize shareholder returns and shareholder value while simultaneously securing stable internal reserves through medium to long-term profit growth.

For the fiscal year under review, the Company plans to pay an annual dividend of 1 yen per share (year-end dividend of 1 yen).

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.
A1

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 diversifying our business portfolio and utilizing digital technologies while investing in effective advertising and promotions that leverage AIFUL's recognition.
For the detailed information, please refer to "Management Themes and Strategies”.

Q2Please describe the current management environment of AIFUL.
A2

In the cumulative second quarter of the current fiscal year, the Japanese economy is heading toward a gradual recovery, partly due to the spread of vaccines and the progress of immunization, although it is still in the period of the Emergency Declaration.

At present, we expect full-fledged economic activities to resume following the lifting of the Emergency Declaration and priority measures such as prevention of spreading.The consumer finance industry is also on a recovery trend, with the number of new contracts at major companies increasing year on year.

Going forward, we will continue to closely monitor the situation, including the re-expansion of the new Corona contagious disease and the reoccurrence of the Emergency Declaration. However, we will work to expand our sales assets throughout the Group by responding to requests for interest repayment, which is one of our management issues, while effectively investing in advertising and promotions that leverage AIFUL's recognition, and by selling various Group products.

Q3Please describe the market environment for unsecured loans.
A3

The unsecured consumer loan market was worth 17 trillion yen in March 2008. However, due to an increase in billings 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 2021, the overall market shrank temporarily to ¥9.3 trillion, partly due to the impact of the new Corona Virus. Of this amount, loans outstanding by consumer finance companies amounted to 2.5 trillion yen.

Business Performance

Q1Please describe the situation regarding the loan business.
A1

【AIFUL】

In the loan business, the Group worked to strengthen advertising placement in digital media as a measure that will lead to the formation of recognition in the future, while effectively developing advertising with a focus on TV commercials and websites.In addition, we are working to increase the number of new contracts and the balance of operating loans by promptly renovating application forms through in-house system production and maximizing credit capacity through data analysis.As a result, the number of new unsecured loans signed in the cumulative 2Q consolidated accounting period was 99,000 (up 48.9% year-on-year), and the contract completion rate was 35.2% (down 5.1 points year-on-year).

The balance of unsecured loans at the end of the second quarter under review was 434,245 million yen (up 2.0% from the end of the previous fiscal year), the balance of secured loans was 4,079 million yen (down 15.2% from the end of the previous fiscal year), the balance of small business loans was 8,027 million yen (up 5.1% from the end of the previous fiscal year), and the balance of operating loans in the loan business as a whole was 446,352 million yen (up 1.8% from the end of the previous fiscal year), including 13,128 million yen in off-balance sheet operating loans resulting from the securitization of receivables.

Q2Please describe the situation regarding the credit card business.
A2

【LIFE CARD】

In the credit card business, the Group worked to efficiently acquire cardholders by utilizing Group resources, improve the utilization rate of existing cardholders by implementing campaigns only for excellent cardholders, and improve convenience by shortening the number of card issuance days.As a result, the transaction value in the cumulative consolidated second quarter under review was 419,397 million yen (up 6.8% year-on-year), and the balance of installment receivables related to the credit purchase intermediary business at the end of the current second quarter was 97,328 million yen (down 3.0% year-on-year), including 6,842 million yen of installment receivables that became off-balance-sheet due to the securitization of receivables.

Q3Please provide an overview of credit guarantee business situation.
A3

【AIFUL】

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 fiscal year under review was 121,938 million yen (up 7.4% from the end of the previous fiscal year), and loans outstanding for unsecured business loan guarantee was 28,687 million yen (up 11.0% from the end of the previous fiscal year).Of the acceptance and guarantee balance of unsecured loans to businesses, 5.049 billion yen is guaranteed to AIFUL BUSINESS FINANCE CORPORATION.

Q4Please describe the situation regarding the overseas business.
A4

The AIFUL Group currently operates group companies in Thailand and Indonesia, where we offer consumer finance and used car loans to local customers.

In the Kingdom of Thailand, a state of emergency was declared in March 2020, restricting economic activities to combat the novel coronavirus. With the number of new infections thereafter remaining low, restrictions have been eased in stages since May and economic activities are recovering.

Against this backdrop, AIRA & AIFUL Public Company Limited introduced a new scoring system to acquire prime customers in order to improve the quality of its loan portfolios.

As a result of the above, operating revenues in AIRA & AIFUL Public Company Limited during the cumulative second quarter of the fiscal year under review amounted to 2,806 million yen (a 9.0% decrease from the same period of the previous fiscal year), while operating revenues amounted to 207 million yen (an operating loss of 91 million yen in the same period of the previous fiscal year), ordinary revenues totaled 209 million yen (an ordinary loss of 104 million yen in the same period of the previous fiscal year), and net revenues increased by 313 million yen from the same period of the previous fiscal year to 209 million yen (a net loss of 104 million yen in the same period of the previous fiscal year).

Q5Please describe the situation regarding the non-performing loans (NPL).
A5

In the second quarter of the fiscal year ending March 31, 2022, amount of non-performing unsecured loans outstanding increased to 58,453 million yen (up 13.8% year-on-year) and the ratio of unsecured loans NPL stood at 13.4% (up 1.0 pt year-on-year).

The increase in non-performing loans outstanding was primarily due to an increase in the number of regularly received settled loans (restructured loans), although it takes a certain amount of time to settle. In addition to an increase in the balance of non-performing loans, the ratio of non-performing loans has been on an increasing trend due to the impact of the new Corona, which reduced the rate of growth in the balance of operating loans compared to normal years. On the other hand, the ratio of bad debt write-offs (depreciation bad debts excluding waived receivables due to requests for interest repayment) remained stable at a low level of 1.9%.

Q6Please describe the situation regarding the interest repayment claims.
A6

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 10 years have passed since the Supreme Court decision.

In the second quarter of the period ending March 2022, interest redemption claims decreased by 29.6% from the previous year to 3,800. Interest refunds decreased by 21.4% from the same period of the previous year to 4,156 million yen and interest refunds decreased by 8.6% to 384 million. As a result, interest refunds decreased by 20.5% from the same period of the previous year to 4,540 million yen.

Stock Information/ Others

Q1What is the current equity ratio?
A1

The AIFUL Group's equity ratio stood at 17.3% on a consolidated basis and 16.3% on a non-consolidated basis as of September 30, 2021

Q2What are AIFUL's current credit ratings?
A2

Please refer to Corporate Bonds/Rating.

Q3What stock exchanges list the company's shares?
A3

The first sections of the Tokyo Stock Exchange.

Q4What is AIFUL's securities code?
A4

8515.

Q5How many shares are there in a trading unit?
A5

100.

Q6Is there a shareholder gift scheme?
A6

AIFUL has not introduced a shareholder gift scheme.

Q7Who is the transfer agent of the shareholders' register?
A7

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?
A8

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?
A9

Please see here for historical stock splits and purchases of treasury stock.

Q10When is the fiscal year of AIFUL?
A10

AIFUL closes the fiscal year on March 31. AIFUL announces quarterly result.

Q11What is the date of the Monthly Data release?
A11

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?
A12

February 1978. See History for a list of AIFUL milestones.

Q13Where can I make an IR-related inquiry?
A13

Please use Contact Details.