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Q1Please describe the situation regarding the financial results for the fiscal year ended March 31, 2020.
A1

During the consolidated fiscal year ended March 31, 2020, the Japanese economy expanded gradually, driven by improvements in the employment and income environment. However, sluggish consumption activities and the resulting deceleration of the economy arising from the novel coronavirus pandemic have been of great concern, and the situation remains unpredictable.

In the consumer finance industry, the number of new contracts at major players remained stable, and the operating loan balance increased moderately. On the other hand, the issue of interest repayment claims, which are the industry’s biggest risk, still requires close monitoring, even though they have declined significantly from their peak in the current fiscal year.

Under these circumstances, while dealing with interest repayment claims as the principal management issue, the AIFUL Group has worked to increase operating assets and diversify the financial services business on a group-wide basis, and to manage its business with an emphasis on balancing safety, profitability and growth. As far as the impact of the novel coronavirus pandemic is concerned, while we did not observe major impacts such as a significant decline in the number of new contracts during the consolidated fiscal year under review, the AIFUL Group is aware that the situation remains unpredictable.

In the consolidated fiscal year under review, the AIFUL Group’s consolidated operating revenue was 127,038 million yen (up 10.2% year on year). The principal components and their movements were 72,444 million yen in interest on operating loans (up 10.7% year on year), 18,862 million yen revenue from the credit card business (up 14.6% year on year) and 15,203 million yen revenue in the credit guarantee business (up 9.0% year on year). Also, collection from purchased receivable was 1,662 million yen (up 2.8% year on year) and recoveries of charged off claims was 6,896 million yen (up 9.1% year on year).
Operating expenses increased 13,061 million yen to 125,358 million yen (up 11.6% year on year). Main factors included a 5,425 million yen increase in provision of loss for interest repayments to 16,927 million yen (up 47.2% year on year), and an increase of 4,455 million yen (up 15.2% year on year) to 33,796 million yen in provision of allowance for doubtful accounts due to operating assets growth.

As a result of the above factors, for the consolidated fiscal year under review, the AIFUL Group recorded an operating profit of 1,679 million yen (down 44,6% year on year) and ordinary profit of 1,716 million yen (down 58.2% year on year). Also, profit attributable to owners of parent was 1,390 million yen (down 85.1% year on year), reflecting a loss attributable to non-controlling interests of 1,089 million yen.

Since the consolidated fiscal year under review, LIFE GUARANTEE CO., LTD., which engages mainly in the installment sales finance business, and Sumishin Life Card Company, Limited, comprehensive profit mediation business, have been included in the scope of consolidation due to increased materiality.

Q2Please describe the situation regarding the consolidated outlook for the fiscal year ending March 31, 2021.
A2

In the business environment surrounding the AIFUL Group, the loan business for consumers and small- and medium-sized enterprises as well as retail finance business such as credit card services have been on an upward trend in Japanese and overseas markets. Therefore, we expect stable growth in operating assets in the medium- to long-term perspectives. Meanwhile, while interest repayment claims, which are the industry’s biggest risk, have declined significantly from their peak, we should continue to pay close attention to this issue for the time being.

Under these circumstances, while dealing with the principal management issue of interest repayment claims, the AIFUL Group will unite its overall efforts to increase operating assets and diversify the financial business mainly in the loan, credit card, credit guarantee and overseas businesses, with an emphasis on balancing safety, profitability and growth.

On the other hand, the impacts of the novel coronavirus pandemic on our business include a decline in customers’ funding needs in Japan and abroad, the deceleration of the growth rate of operating assets due to shrinking use of credit cards, and possible increase in bad debt-related expenses arising from the increase in customers who face difficulties in repayment of loans.

Since a state of emergency was declared in April in Japan, AIFUL has fully or partially suspended operation at some of its staffed branches. In addition, further impacts including temporary closure of offices are assumed in the event that an employee of the AIFUL Group is found to be infected.

Although the above-mentioned impacts are assumed, future developments remain uncertain to date, and it is currently difficult to provide forecasts for future financial results due to the novel coronavirus pandemic.

Therefore, we hereby provide the business forecasts for the AIFUL Group’s consolidated fiscal year ending March 31, 2021, but it should be noted that the impacts of the novel coronavirus pandemic are excluded from these figures. We expect operating revenue of 139,100 million yen (up 9.5% year on year), operating profit of 19,900 million yen (compared with operating profit of 1,680 million yen in the previous period), ordinary profit of 20,300 million yen (compared with ordinary profit of 1,716 million yen in the previous period), and profit attributable to owners of parent of 17,900 million yen (compared with Profit attributable to owners of parent of 1,391 million yen in the previous period).

We will announce the impact of the novel coronavirus pandemic on our business performance as soon as it becomes possible to provide a reasonable forecast. Furthermore, it should be noted that the management environment surrounding the Company contains various risks including developments with the issue of interest repayment claims, and that the actual financial results may differ from the forecast.

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.

However, the financial burden associated with claims for interest repayments is still heavy, creating difficult conditions for the distribution of profits. In addition, losses in the distributable amount continue. The Group therefore regret to announce that we will be unable to pay any dividends for the current fiscal year and forecast no dividends for the next fiscal year.

The AIFUL Group has been dealing with the principal management issue of interest repayment claims. At the same time, it is taking measures to diversify the financial business and increase operating assets to bolster its revenue base, and also work to diversify funding channels. The Group is also determined to return to the basic policy outlined above by improving its financial position and profitability.

The AIFUL Group asks all of its shareholders for their understanding and cooperation in these endeavors.

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

Our aim is to become a global financial group providing products and services that surpass customer expectations, and which is trusted and needed in Japan and around the world.
By practicing management consistent with its Corporate Philosophy and the Essence of the Finance Business, the AIFUL Group strives to become a global financial group that is trusted and needed in Japan and around the world.

We practice management based on our Corporate Philosophy.
The corporate philosophy, conscience guidelines, conduct guidelines and mindset of the AIFUL Group incorporates a direction to be continually pursued.
To achieve the corporate philosophy, we will continue to provide products and services that surpass customer expectations and strive to be a global financial group that is trusted and needed by customers in Japan and overseas.

We practice management based on the essence of the finance business.
The essence of the finance business lies in business risk management.
Risk management in the finance industry means striking a balance between profitability, safety, growth potential and workforce so as to continually adapt to environmental changes, given the permanence of companies. To achieve this, the AIFUL Group pursues financial diversification and actively expands overseas in an effort to establish a global financial group.
For the detailed information, please refer to "Long Term Vision" and “Management Strategy”.

Q2Please describe the current management environment of AIFUL.
A2

During the consolidated fiscal year ended March 31, 2020, the Japanese economy expanded gradually, driven by improvements in the employment and income environment. However, sluggish consumption activities and the resulting deceleration of the economy arising from the novel coronavirus pandemic have been of great concern, and the situation remains unpredictable.
In the consumer finance industry, the number of new contracts at major players remained stable, and the operating loan balance increased moderately. On the other hand, the issue of interest repayment claims, which are the industry’s biggest risk, still requires close monitoring, even though they have declined significantly from their peak in the current fiscal year.
Under these circumstances, while dealing with interest repayment claims as the principal management issue, the AIFUL Group has worked to increase operating assets and diversify the financial services business on a group-wide basis, and to manage its business with an emphasis on balancing safety, profitability and growth. As far as the impact of the novel coronavirus pandemic is concerned, while we did not observe major impacts such as a significant decline in the number of new contracts during the consolidated fiscal year under review, the AIFUL Group is aware that the situation remains unpredictable.

Q3Please describe the market environment for unsecured loans.
A3

The market for unsecured consumer loans shrank from 17 trillion yen in March 2008 to 8.7 trillion yen by March 2013 due to the revision of the Money Lending Business Act that was carried out on the back of an increase in interest repayment claims triggered by the Supreme Court decision in 2006 and the introduction of total loan amount control, impacting a large number of consumer finance companies.

However, the market bottomed out in 2014 and recovered to 10.5 trillion yen by March 2019 due to improved business confidence in the Japanese economy and aggressive advertisements by consumer finance companies on TV and online.

In December 2019, the overall market decreased to 10.2 trillion yen, partly due to financial institutions’ voluntary restraints on advertising. Of the 10.2 trillion yen, outstanding loans by consumer finance companies grew 5% from the previous year to 2.6 trillion yen.

Business Performance

Q1Please describe the situation regarding the loan business.
A1

In the loan business, AIFUL endeavored to increase the number of new contracts and the operating loan balance by developing effective advertising, mainly through TV commercials and websites, and improving its customer service through enhanced functionality of the chat service.

In the consolidated fiscal year under review, the number of new contracts signed for unsecured loans were 206,000 (up 3.4% year on year) whereas the contract rate was 43.7% (down 1.6 points year on year).

As a result, unsecured loans outstanding at the end of the consolidated fiscal year under review were 422,382 million yen (up 11.4 % compared with a year earlier), secured loans outstanding were 6,958 million yen (down 25.2 % compared with a year earlier), small business loans outstanding were 8,338 million (up 5.3 % compared with a year earlier) and the total balance of operating loans for the loan segment was 437,679 million yen (up 10.4% compared with a year earlier) (23,965 million yen off-balance sheet operating loans from the securitization have been included).

Q2Please describe the situation regarding the credit card business.
A2

In the credit card business, LIFECARD endeavored to increase the number of new applications through such measures as aggressive affiliate advertising and issuing new tie-up cards with hospitals and universities. It also worked to increase corporate customers through the issuance of tie-up business cards with financial institutions and placed an emphasis on increasing convenience for card holders by raising upper credit limits and enhancing settlement services.

As a result of the above, the transaction volume for the consolidated fiscal year under review was 817,906 million yen (up 8.1% year on year), and the balance of accounts receivable–installment for credit card business as of the end of the consolidated fiscal year under review stood at 105,773 million yen (up 1.4% compared with a year earlier).

Q3Please provide an overview of credit guarantee business situation.
A3

In the credit guarantee business, we made the most of our know-how related to credit operations for individuals and small- and medium-sized enterprises and the unique strengths we possess as an independent organ to expand the credit guarantee outstanding at both AIFUL and LIFECARD by making efforts to increase the diversity of new products and the number of guarantee partners.

As a result, credit guarantee outstanding at the fiscal year ended March 2020, was 125,332 million yen (up 26.6% from the end of previous fiscal year). Of which, the balance credit guarantees for individuals were 106,309 million yen (up 24.5% from the end of previous fiscal year) and for business operators were 19,022 million yen (up 40.0% from the end of previous fiscal year).

Q4Please describe the situation regarding the overseas business.
A4

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

Of these group companies, AIRA & AIFUL Public Company Limited (A&A), which operates in Thailand, has been engaging in attracting blue-chip customers with the aim of improving its loan portfolio quality.

As a result, for the current consolidated fiscal year, AIRA & AIFUL Public Company Limited recorded operating revenue of 6,519 million yen (up 10.5 % year on year), operating loss of 1,097 million yen (compared with operating loss of 1,213 million yen in the previous period), ordinary loss of 1,064 million yen (compared with ordinary loss of 1,210 million yen in the previous period) and net loss of 1,176 million yen, decreasing 33 million yen (compared with net loss of 1,210 million yen in the previous period).

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

In the fiscal year ended March 2020, amount of non-performing unsecured loans outstanding increased to 50,037 million yen (up 21.5% year-on-year) and the ratio of unsecured loans NPL stood at 11.8% (up 0.9pt year-on-year).

The main factors include a decrease in interest repayment claims with attorney involvement and an increase in consolidation of debt that requires a certain amount of time until resolution (installment settlement). In other words, the current situation constitutes a transition in the non-performing loan structure. Although the ratio of NPL is on a rising trend against this background, the resulting ratio of bad debt to operating loans (normal bad debt excluding write-offs related to interest repayment claims) remained low at 3.6%, slightly higher than in the previous year, since the ratio of loans resulting in a write-off did not differ significantly.

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.

Interest repayment claims for the fiscal year ended March 2020, decreased 18.5% year on year, to 12,800.
Interest repayment amount increased 16.2% year on year, to 13,697 million yen, and the waiver of principal accompanying interest repayment declined 16.0%, to 1,211 million yen year on year, totaling 14,909 million yen, or an increase of 12.7% from corresponding period of previous fiscal year.

Stock Information/ Others

Q1What is the current equity ratio?
A1

The AIFUL Group's equity ratio stood at 14.6% on a consolidated basis and 14.6% on a non-consolidated basis as of the fiscal year ended March 31, 2020.

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.

Q12What is the origin of the AIFUL company name?
A12

The company name "AIFUL" represents a company that approaches its work with Affection and Improvement and earns the Faithfulness of its customers as it abounds with Unity and Liveliness. The name was decided in an in-house competition.

Q13When was the company established?
A13

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

Q14Where can I make an IR-related inquiry?
A14

Please use Contact Details.