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Q1Please describe the situation regarding the financial results for the third quarter of fiscal year ending March 2024.
A1

AIFUL Group’s consolidated operating revenue for the third quarter of the fiscal year ending March 31, 2024 rose 13.0% compared with the corresponding period of the previous fiscal year to 121,518 million yen. The principal components were 70,716 million yen in interest on loans (up 13.4% year on year), 16,441 million yen in revenue from the credit card business (up 7.5% year on year) and 14,403 million yen in revenue from the credit guarantee business (up 14.9% year on year).

Operating expenses increased by 16,304 million yen, or 18.2% year on year to 106,132 million yen. This was mainly due to an increase in advertising expenses by 2,589 million yen or 22.8% year on year to 13,957 million yen and an increase in provision for allowance for doubtful accounts of 10,166 million yen or 35.3% year on year to 38,982 million yen.

As a result, AIFUL Group posted operating profit of 15,386 million yen (down 13.3 % year on year) and ordinary profit of 16,188 million yen (down 11.6 % year on year). Profit attributable to owners of parent stood at 14,424 million yen (down 14.5 % year on year), reflecting a profit attributable to non-controlling interests of 178 million yen.

Q2Please describe the situation regarding the consolidated outlook for the fiscal year ending March 2024.
A2

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 163,900 million yen (up 13.7% year on year), operating profit of 21,500 million yen (down 9.4% year on year), ordinary profit of 21,700 million yen (down 11.2% year on year) and profit attributable to owners of parent of 20,400 million yen (down 8.7% year on year).

For more details, please refer to the news release “Notice of Revisions to Financial Results Forecast” released on February 9, 2024.

The above forecasts are based on information available as of the date of publication of this document. 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 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.
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 "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.
A2

During the nine months ended December 31, 2023, restrictions on activities due to COVID-19 have been lifted and socioeconomic activities have normalized. However, Japanese economy outlook remains uncertain due to the prolonged situation in Ukraine, exchange rate fluctuations associated with monetary tightening, price increase and other factors.

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 is promoting in-house production in the digital field through the proactive recruitment of IT personnel and working to enhance UI/UX and customer satisfaction as well as streamlining and simplifying operations by revamping the official website, smartphone apps, and application forms. In addition, the Group will continue to improve the profitability of its core businesses through aggressive investment in advertising, while trying to diversify its future earnings base by acquiring new business models.

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 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.

Business Performance

Q1Please describe the situation regarding the loan business.
A1

【AIFUL】

In the loan business, AIFUL is committed to an effective and efficient advertising strategy, primarily focusing on TV and WEB commercials. Additionally, we continuously strive for improvement in UI/UX through in-house production on digital area. This includes enhancements to our official website, smartphone apps, and application forms to swiftly adapt to changes. Our efforts are directed towards increasing new customer acquisitions and the outstanding balance of business loans.

As a result, the number of new contracts for unsecured loans was 268,000 (up 26.4% year on year) and the contract rate was 35.7% (up 3.5pt year on year) in the third quarter of fiscal year ending March 2024.

At the end of the third quarter of the fiscal year under review, unsecured loans outstanding were 531,668 million yen (up 8.5% from the previous year-end), secured loans outstanding were 1,954 million yen (down 21.9% from the previous year-end), small business loans outstanding were 11,863 million yen (up 15.5% from the previous year-end), and the total balance of loans outstanding was 545,486 million yen (up 8.5% from the previous year-end) (5,603 million yen off-balance sheet operating loans from the securitization have been included).

Q2Please describe the situation regarding the credit card business.
A2

【LIFE CARD】

In the credit card business, the LIFECARD is working to acquire new members by issuing new tie-up cards, revamping its website, and aggressive advertising. In addition, we are working to improve the number of active members by providing functions and rewards that meet customer needs, such as renewing gold card's design and services.

As a result of the above, the transaction volume for the third quarter of fiscal year ending March 2024 was 554,113 million yen (up 4.1% year on year). The balance of installment receivables for credit card business at the end of third quarter of the fiscal year under review was 111,050 million yen (up 3.6% from the previous year-end) (6,184 million yen off-balance sheet operating loans from the securitization have been included).

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 third quarter for the fiscal year ending March 2024 was 155,993 million yen (up 9.7% from the previous year-end), and loans outstanding for unsecured business loan guarantee was 53,323 million yen (up 25.9% from the previous year-end).

Of the credit guarantee for the unsecured business loans, 1,596 million yen comes from guarantees provided to AG BUSINESS SUPPORT CORPORATION.

Q4Please describe the situation regarding the overseas business.
A4

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

In the Kingdom of Thailand, although consumer spending has been recovering, the real GDP growth rate (July-September 2023) has slowed to 1.5%. Against this backdrop, in AIRA & AIFUL Public Company Limited introduced eKYC ahead of other companies and worked to expand the balance of operating loans by acquiring new customers. However, the collection environment has recently worsened somewhat due to the completion of the Corona remedy measures.

As a result of the above, AIRA & AIFUL Public Company Limited posted operating revenue of 6,154 million yen (up 19.1% year on year), operating profit of 46 million yen (down 21.6% year on year), ordinary profit of 45 million yen (down 11.9% year on year) in the third quarter of fiscal year ending March 2024. Net profit was 60 million yen (down 91.4% year on year).

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

In the third quarter of fiscal year ending March 2024, amount of non-performing unsecured loans outstanding increased to 82,360 million yen (up 15.4% year-on-year) and the ratio of unsecured loans NPL stood at 15.5% (up 0.5pt 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 2.8%, up 0.1 pt year on year.

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 15 years have passed since the Supreme Court decision.

In the third quarter of fiscal year ending March 2024, interest repayment claims decreased by 43.8% from the previous year to 730. Interest repayment decreased by 28.9% year on year to 1,295 million yen and waiver of principals related to interest repayment decreased by 17.9% to 360 million. As a result, total withdraw for interest repayment decreased by 21.5% year on year to 4,324 million yen.

Stock Information/ Others

Q1What is the current equity ratio?
A1

The AIFUL Group's equity ratio stood at 15.7% on a consolidated basis and 16.4% on a non-consolidated basis as of third quarter of fiscal year ending March 2024.

Q2What are AIFUL's current credit ratings?
A2

Please refer to Corporate Bonds/Rating.

Q3What stock exchanges list the company's shares?
A3

The Prime Market 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.