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Q1Please describe the situation regarding the financial results for the third quarter of the fiscal year ending March 31, 2021.
A1

During the first 3 quarters of the fiscal year under review, the Japanese economy continued to recover moderately, reflecting a recovery in consumption activities, which had been stagnant due to the effects of the spread of COVID-19, as a result of various government policies and other factors.

However, the outlook remains unclear due to concerns over the impact on economic activities resulting from the issuance of another declaration of a state of emergency mainly in urban areas, against the backdrop of an increase in the number of people with infections and the nationwide spread of contingencies.

In the consumer finance industry, with the resumption of economic activities, the number of new contracts and the balance of operating loans at major companies are gradually recovering.

In this environment, AIFUL Group is working to diversify its financial business and expand its operating sales assets on a group-wide basis while responding to requests for interest repayment, which is an important management issue, and is implementing management that emphasizes a balance between "reliability," "profitability," and "growth potential."

In the first 3 quarters of the current fiscal year, AIFUL group's operating revenues were 95,863 million yen (up 2.9% year-on-year).The principal components were 55,679 million yen in interest on loans (up 4.3% year on year), 14,136 million yen in revenue from the credit card business (up 7.3% year on year) and 10,959 million yen in revenue from the credit guarantee business (down 3.2% year on year).

Operating expenses decreased by 1,425 million yen, or 1.7%, compared with the corresponding period of the previous fiscal year, to 80,261 million yen. This was mainly attributable to a decrease in sales promotion expenses associated with a drop in consumer spending due to the spread of COVID-19 and a decrease in provision for doubtful receivables due to a decrease in operating assets.

As a result, in the first 3 quarters of the current fiscal year, AIFUL Group posted operating profit of 15,602 million yen (up 35.6% year on year) and ordinary profit of 16,958 million yen (up 38.7% year on year). In addition, profit attributable to owners of the parent was million yen (up 37.6% year on year) , reflecting a loss attributable to non-controlling interests of 187 million yen.

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

The earning forecast for the full fiscal year ending March 31, 2021 has not been changed from the forecast announced on November 11, 2020.

The forecast is based on information available as of the date of publication of these materials. There are various risks in the current business environment surrounding us, and 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.

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.

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 first 3 quarters of the fiscal year under review, the Japanese economy continued to recover moderately, reflecting a recovery in consumption activities, which had been stagnant due to the effects of the spread of COVID-19, as a result of various government policies and other factors.

However, the outlook remains unclear due to concerns over the impact on economic activities resulting from the issuance of another declaration of a state of emergency mainly in urban areas, against the backdrop of an increase in the number of people with infections and the nationwide spread of contingencies.

In the consumer finance industry, with the resumption of economic activities, the number of new contracts and the balance of operating loans at major companies are gradually recovering.

In this environment, AIFUL Group is working to diversify its financial business and expand its operating sales assets on a group-wide basis while responding to requests for interest repayment, which is an important management issue, and is implementing management that emphasizes a balance between "safety," "profitability," and "growth potential."

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 10.4 trillion yen by March 2018 due to improved business confidence in the Japanese economy and aggressive advertisements by consumer finance companies on TV and online.

In September 2020, the overall market has shrunk temporarily to 9.6 trillion yen mainly due to the impact of COVID-19. Of this, the operating loan balance stood at 2.5 trillion yen, a decrease of 0.1trillion versus a year earlier.

Business Performance

Q1Please describe the situation regarding the loan business.
A1

In the loan business, in addition to effective advertising activities centered on TV commercials and Web sites, automatic bank transfer financing service is available 24 hours a day. We are working to increase the number of new contracts and the balance of operating loans by taking steps to improve convenience.

In the third quarter of the fiscal year under review, new accounts of unsecured loans totaled 115 thousand (down 24.1% from the same period of the previous fiscal year) and the contract rate was 40.5% (down 2.7 points from the same period of the previous fiscal year).

As a result, at the end of the third quarter of the fiscal year under review, unsecured loans outstanding were 419,900 million yen (down 0.6% from the end of the previous fiscal year), secured loans outstanding were 5,247 million yen (down 24.6% from the end of the previous fiscal year), small business loans outstanding were 7,516 million yen (down 9.9% from the end of the previous fiscal year), and total loans outstanding in the loan business were 432,664 million yen (down 1.1% from the end of the previous fiscal year).

Q2Please describe the situation regarding the credit card business.
A2

In the credit card business, card use for online shopping was robust in the midst of lifestyle changes arising from efforts to prevent the spread of COVID-19 infections, but card use for retail, food & beverage, and transportation purchases remained sluggish despite the resumption of economic activities after the state of emergency was lifted. Given these circumstances, efforts are being made to increase card applications and purchases by issuing co-branded cards to individuals and corporations.

As a result of the above, the transaction volume for the second quarter of the fiscal year ending March 31, 2021 was 392,709 million yen (down 1.4% year on year), and the balance of accounts receivable installment for credit card business as of the end of second quarter of the fiscal year ending March 31, 2021 stood at 97,440 million yen (down 7.9% compared with a year earlier).

Q3Please provide an overview of credit guarantee business situation.
A3

In the credit guarantee business, by leveraging the crediting know-how of individuals and businesses and the strength of independent company, we are working to diversify our products and promote new guarantee alliances in order to expand the guarantee balance.

As a result, the balance credit guarantees for individuals at the end of the third quarter under review was 24,323 million yen (up 4.9% from the end of the previous fiscal year), and the balance credit guarantees for business operators was 1,079 million yen (down 34.9% from the end of the previous fiscal year).

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 third quarter of the fiscal year under review were 4,519 million yen (6.9% reduction from the same period of the previous fiscal year), and operating losses were 363 million yen (operating loss of 736 million yen in the same period of the previous fiscal year), ordinary losses were 376 million yen (ordinary loss of 707 million yen in the same period of the previous fiscal year), and net loss was 376 million yen (quarterly net loss of 817 million yen in the same period of the previous fiscal year).

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

In the third quarter of the fiscal year ending March 31, 2021, amount of non-performing unsecured loans outstanding increased to 52,985 million yen (up 15.0% year-on-year) and the ratio of unsecured loans NPL stood at 12.6% (up 1.4pt 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 3.0%, 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 third quarter of the fiscal year ending March 31, 2021,decreased 19.4% year on year, to 2,500. Interest repayment amount decreased 9.6% year on year, to 8,664 million yen, and the waiver of principal accompanying interest repayment declined 18.2% to 705 million yen year on year, totaling 9,370 million yen, or a decrease of 10.3% 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 16.5% on a consolidated basis and 16.5% on a non-consolidated basis as of the fiscal year ending December 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.

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.