Message from the President & CEO

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Becoming an Innovator That Opens Up
the Future of the Asset Business and
Co-Creates Value
Bringing out the capabilities of all employees to the fullest to attain 2025 MTMP
I am Taiju Hisai, and I assumed the duties ofRepresentative Director, President & CEO of Mitsubishi
HC Capital Inc. on April 1, 2023.
During the previous two years, I was involved in theoverall management of Mitsubishi HC Capital as a
Deputy President. In that sense, although I have taken
the reins as President & CEO since this past April, my
actual job duties will not change significantly. Even so, I
keenly feel the heavy weight of my responsibilities as the
final decision-maker at Mitsubishi HC Capital.
In April 2023, Mitsubishi HC Capital launched its
Medium-Term Management Plan for FY2023 - FY2025(2025 MTMP), which runs for three years. Having
assumed the role of President & CEO at the same timeas the start of 2025 MTMP, my greatest responsibility is
to ensure that we attain the objectives of 2025 MTMP
through the strategies and measures set forth in theplan. My chief role is to stand at the forefront and leadthe Mitsubishi HC Capital Group, a large organizationconsisting of approximately 9,000 employees, and bringout the full capabilities of these employees. In my previous professional career, I spent many years overseas inmanagerial positions in such countries as the UnitedStates, the United Kingdom, and India. During this time, I
focused my efforts on how I could motivate my teammembers who were from different countries with different languages and cultures, and spur them to work
toward attaining shared goals.
I think one of the reasons I was selected as
President & CEO was so that I could leverage this experience to exercise my leadership to unite Mitsubishi HC
Capital Group employees worldwide and surmount thehigh hurdles we face.

Completion of the business integration process together with
our employees and transitioning to a new stage of growth

Representative Director,
President & CEO
ProfileIn 1985, he joined Mitsubishi Bank (currently
MUFG Bank). Since then, he served in various
managerial positions globally, in Japan, theU.S., Europe and India.
In June 2021, he became a Deputy President
and Executive Officer of Mitsubishi HC Capitaland from April 2023, he became Representative Director, President & CEO.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Mitsubishi HC Capital was born in April 2021 through the
integration of Mitsubishi UFJ Lease & Finance andHitachi Capital, both prominent leasing companies inJapan. The prevailing notion at that time was that the
Mitsubishi Group was a “Lord” and the Hitachi Group a“Nobushi,” or a lordless samurai. In fact, we often heardthat integrating these two companies, which had different systems, rules, and corporate cultures, would likely
be no easy task. Thanks to the hard work of each
employee, who occasionally set aside conflicting opinions, we accomplished all the tasks set at the outset ofthe merger within two years as originally planned as we
aim to create something new and achieve synergistic
coactions.
Having experienced the challenges of two major
corporate mergers during my previous career, I consider
our successful business integration nothing short of atruly miraculous accomplishment. Although we faced
differences because Mitsubishi UFJ Lease & Finance
had a background in banking and trading house businesses, while Hitachi Capitalʼs background was in manufacturing businesses, the temperaments of theemployees of both companies proved to be more similar
than I anticipated. This affinity between the cultures of
the two predecessor companies was a huge factor
underpinning our successful completion of our PMI.
Over long years, Mitsubishi UFJ Lease & Financebuilt close partnerships with the Mitsubishi UFJ Financial
Group and Mitsubishi Corporation, while Hitachi Capitalforged similar ties with Hitachi, Ltd. and other HitachiGroup companies. These strong networks of our forerunners have been firmly inherited by Mitsubishi HC Capital.
The integration of the two companies, which possessed
different competitive advantages, enables us to mutually

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Introduction

expand our business fields, geographically diversify ourportfolio, and create a full lineup of products and services, as well as build an extensive and strong customer
base and network that leads the global market.
Mitsubishi HC Capital Group currently undertakes business in more than 20 countries and regions. With overseas business accounting for over 50% of the segmentsʼ
asset balance in FYE3/2023, Mitsubishi HC CapitalGroup is building a geographically diversified portfolio
and demonstrating its presence globally. For example,
one of our focus regions is the Americas, where thescale of our U.S.-based Group companies as a whole*1
ranks among the top in the U.S. non-banking industry*2.
Building on this solid track record, Mitsubishi HC CapitalGroup will continue to march toward a new growth stage
that maximizes synergies.

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Group-wide global discussions are held to maximize synergies
on a regular basis.
*1 Total U.S.-based Group companies in the Global Business, Aviation, andLogistics segments.
*2 Company internal survey.

Transforming ourselves to realize Our 10-Year Vision
Work on formulating 2025 MTMP began immediately
after I became Deputy President. At first, we held
repeated discussions led mainly by Seiji Kawabe,
Chairman, Takahiro Yanai, President & CEO and the three
Deputy Presidents including myself (all at that time).
Despite numerous twists and turns, everyone unanimously focused on the type of corporate group theCompany aspired to become over the long term.
Additionally, during these discussions, one of our crucial
themes was promoting initiatives to raise corporate value
over the medium to long term and to realize aprice-to-book ratio (PBR) exceeding 1x as a quantitative
benchmark of this increased corporate value.
Society and the economy are currently in a time ofhistoric structural change. Given this, perhaps ten years
from now people might even say, “By the way, there wasonce an industry called leasing.” To ensure that
Mitsubishi HC Capital Group can maintain its presence
as one of Japanʼs premier corporate groups amid thischange, in the coming years, we must take on new
challenges that go beyond the framework of a leasing

company. With this in mind, we all started our discussions with a shared recognition of the importance oftransforming ourselves. In envisioning our future, webegan our discussion with a completely blank slate,asking ourselves, “What type of company does
Mitsubishi HC Capital Group seek to become when it
transcends the framework of a leasing company?”
The manifestation of these discussions was Our
10-Year Vision, “Together we innovate, challenge andexplore the frontiers of the future.” This Vision embodies
our fervent desire to become a company that takes onchallenges in yet unexplored domains and continuously
takes on challenges not by ourselves but also together
with our customers, partners, and various stakeholders.
We will boldly tackle the challenge of achieving things
that nobody has ever accomplished before. Although wewill naturally experience failures along the way, we mustnever fear failure. We need to continuously act as areformer and challenger that creates new things motivated by these failures. I believe this attitude will behighly acclaimed by our customers and partners.

phase. During this phase, the entire Group will work inunison in “sowing seeds” and “gaining a foothold” toenable us to leap ahead to the subsequent Skip andJump phases. Specifically, in “sowing seeds” with aneye to the future, we will focus on promoting DX strategies and developing, securing, and utilizing humancapital such as global human resources and digitaltalent. For “gaining a foothold,” we will promote issues
for sustainable growth, such as the next-generation
system structures, including the integration of coresystems, and building a talent portfolio strategy thataligns with our management strategy.
Our business portfolio consists of a variety of businesses ranging from traditional core businesses to new
businesses with high growth potential and profitability.
This portfolio is widely dispersed globally and is becoming a stable and reliable profit foundation based on oursolid leasing business with a wide range of customers.

For example, even though our Aviation Business was
significantly affected, albeit temporarily, during theperiod of COVID-19, we were able to secure increased
profits on a Group-wide basis thanks to the contributionof the marine container leasing business on the back ofgrowing stay-at-home demand.
Additionally, we must work to transform our business portfolio while accurately responding to the needs
and trends of the times to ensure our continued growth
as a corporate group. To this end, we will shift focus
toward high profitability on a project basis, as well as inbusiness regions and business models. Moreover, byharnessing the knowledge and resources of each organization within the Group, we will implement a policy offocusing across all segments on the four Key Themes ofHydrogen, EVs, Logistics, and Decarbonization
Solutions, which will also help solve social issues both
domestically and globally.

Realizing CX through the value creation process
We will focus on “sowing seeds” and “gaining a foothold” to achieve sustainablegrowth during the three years of 2025 MTMP
Mitsubishi HC Capital Group regards the 10-year period
for achieving Our 10-Year Vision as consisting of three

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

phases, Hop, Step, and Jump. We have positioned thecurrent three-year period of 2025 MTMP as the Hop

To realize Our 10-Year Vision, and ultimately achievesustainable increases in corporate value, we must fully
utilize both financial capital and non-financial capital.
Accordingly, in formulating this plan, we first set up the“value creation process” that will serve as our guideline.
After redefining our capital, which includes financial

Please see pages 21-22 for the value creation process.

capital, human capital, and intellectual capital, etc., wesummarized the flow of capital accumulation and value
creation via business activities into our own unique story.
Furthermore, in addition to financial targets, 2025 MTMP
sets non-financial targets to confirm that non-financial
capital is accumulated through our value-creation

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Introduction

process. By properly executing this value creation process, we can achieve CX (Corporate Transformation)
through SX (Sustainability Transformation), DX (Digital
Transformation), and Business Portfolio Transformation.
The SX we advocate is a concept that involves
creating businesses that contribute to the sustainabilityof the Company and its stakeholders while responding to
the SDGs and contributing to the sustainability of theenvironment and society. In Japan, there is a saying,“Sampo Yoshi,” which means benefits for all three sides.
Any zero-sum relationship whereby when one party
makes a profit and the other party loses is not sustainable over time. Mindful of this, we will pursue ways ofbusiness that enable customers, society, and the Groupto co-create and share the fruits of these efforts in
keeping with the notion of benefits for all three sides.
DX is now probably a prerequisite for a companyʼs
ongoing existence. By utilizing digital technology, we aim
to generate profits, improve the efficiency of our businessand operations, and pave the way for taking on challenges in new fields. We consider promoting DX to be an
essential initiative for companies of today.
In executing “Business Portfolio Transformation,”
we will extensively review the way we do business froma medium- to long-term perspective with an awarenessof the cost of capital. The key to achieving this will be
the Evolution and Layering of Business Models, which I
will explain next.

Diversification of revenue sources and sophistication of business models
through Evolution and Layering of Business Models
Within 2025 MTMP, we have positioned the Evolution
and Layering of Business Models as the core of ourbusiness strategy. In view of changes in the businessenvironment over the medium to long term, we will
pursue business operations and service developmentthat maximize the use of tangible and intangible assets.
In doing so, we have visualized this process of Evolution
and Layering. Specifically, we have categorized ourbusiness into five business models. Using the customer
base and profit bases of our founding business of

Customer Finance and Asset Finance as a foundation,
we will shift these existing businesses into high-value-added services, namely Finance + Services, Data
Utilization Platform Services, and Asset Utilization
Business.
In our core Customer Finance and Asset Financebusinesses, we will secure stable and continuous
income gains from lease income, interest, and commissions and will replace low-profitability assets withhigh-profitability assets to achieve higher profitability

Message from the
President & CEO

Value Creation Story Business Strategies

overall. With regard to Finance + Services, our policy will
be to focus on developing high-value-added services
such as subscription services. In the Data Utilization
Platform Service, we will utilize data accumulated within
the Group that has yet to be effectively utilized to create
new services such as inventory optimization and sharing.
In the Asset Utilization Business, we will engage inbusiness that leverages the value of assets, such as realestate development and the aggregation business which
integrates and manages renewable energy.
Mitsubishi HC Capital Groupʼs “Evolution andLayering of Business Models” is an innovative attempt toFinancial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

evolve and layer formats into middle-risk, middle-return
businesses to increase the profitability and added valueof our core Customer Finance and Asset Finance businesses, including the new business of Finance +Services, as well as securing service revenue and business revenue. In particular, over the coming three years,
we will strengthen the business foundations of Data
Utilization Platform Services and Asset Utilization
Business to establish a system that can consistently
generate profits at the Step or Jump phases.

Pursuing new forms of asset businesses that sometimes compete andsometimes collaborate
We undertake asset businesses globally utilizing bothtangible and intangible assets. Among these, we are
currently focusing on the leasing business, and our maincompetitors are naturally domestic and overseas leasing
companies. However, competitive relationships are
becoming increasingly complex as business fields andbusiness models diversify. Various types of non-leasing
companies are now also our competitors, as well as ourpartners.
For example, the Mitsubishi HC Capital Group is
working on projects for revitalizing urban functions andregional revitalization. This includes wide-ranging
involvement in large-scale development projects, whichwere once the exclusive domain of general contractors,
trading companies, and major real estate companies. We
are also carrying out such renewable energy businesses
as solar power and wind power businesses. We are evenpromoting some businesses in which we go beyond theframework of a lease provider and serve as a business
operator. General contractors and home builders in thereal estate development business and general trading
companies in the renewable energy business are allstrong competitors. Meanwhile, these companies arealso our partners with which we sometimes work
together to build and operate business schemes.
Furthermore, it is important to build win-win relationships in which all parties involved in the business,
including customers, can mutually utilize their respectivefunctions and strengths and enjoy equal benefits. I
expect that Mitsubishi HC Capital Group will play a role
as a comprehensive financial service provider or project
operator and so our business opportunities are expanding more than ever before. The days when Mitsubishi HC
Capital Group focused solely on providing leasing functions are in the past. This is precisely why we must workon Evolving and Layering Business Models.

Four initiatives to improve the sophistication of our management foundation
To improve the sophistication of our management foundation, we have set four strategies consisting of fostering and securing human resources, bolstering thefinancial base and internal organizational base, strengthening the corporate governance framework, andenhancing stakeholder engagement.
I believe the key to Mitsubishi HC Capital Groupʼsfurther growth over the next ten years will be to effectively allocate and utilize our human resources, which

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

represent our greatest asset. Formed through the business integration of Mitsubishi UFJ Lease & Finance andHitachi Capital, which were two companies with different
backgrounds, Mitsubishi HC Capital Group possesses
human resources in Japan and overseas who are wellversed in financial businesses centered on leasing in
addition to a large number of employees with specialized
knowledge in specific assets and fields that include
environmental & energy, aviation, marine containers, andMITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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Introduction

railway freight car leasing businesses.
Mitsubishi HC Capital Group has positioned humanresources as the driving force behind this growth. As
such, Mitsubishi HC Capital Group works to further
expand and enhance its human resources by bothquantitatively securing diverse human resources that
include new graduate hires and mid-career hires as wellas members who join the Group through M&A and thenqualitatively transforming these resources througheducation and training programs.
In bolstering the financial base and internal organizational base, Mitsubishi HC Capital Group will implement financial strategies that take into accountwell-balanced growth potential, return on capital, andfinancial soundness. At the same time, we will work to
rebuild our credit screening and management frameworkin accordance with our business portfolio transformation.
Regarding corporate governance, Mitsubishi HC
Capital Group will focus on establishing an effective
consolidated management framework and sophisticating
its integrated risk management, which is the foundationfor our business promotion. Through the business integration, Mitsubishi HC Capital Group has become a
global group of companies with bases in more than 20
countries worldwide.
To pursue growth for the entire Group, all employees must share a vision for the future in implementing

strategies and measures based on common goals. A key
point in doing so is balancing our centrifugal and centripetal forces. Instead of individually optimizing eachbusiness site, we aim for overall optimization as a Group.
We will strive to establish effective global governancebased on our Consolidated Management Philosophy,
which advocates the disciplined growth of the Group.
For stakeholder engagement, we aim to further
deepen ESG management through initiatives that
address climate change and human rights. Concurrently,
we will strive to forge even closer relationships with our
stakeholders by disseminating financial andnon-financial information in a timely and accurate
manner. Recently, we have been receiving an increasing
number of questions about our risk management fromshareholders and investors in Europe and the UnitedStates. Promoting the Evolution and Layering ofBusiness Models is synonymous with increasing risk
tolerance. Therefore, we must quantify the risk factors
faced by the Group and manage these appropriately
through detailed analysis and effective countermeasures.
We will continuously strive to minimize volatility in ourmanagement and business by smoothly operating a
multi-layered risk management framework that includes
adopting individual risk measures, ensuring compliance,
and implementing internal controls.

Balance sheet optimization is our most important financial theme
Now, I would like to explain the quantitative indicators ofthe 2025 MTMP.
Mitsubishi HC Capital Group has established financial targets of 160 billion yen in net income, ROA (netincome on total assets) of approximately 1.5%, and ROE(net income on equity) of approximately 10% for FYE
3/2026. During the period of 2025 MTMP, we have also
set the goal of maintaining a dividend payout ratio of
40% or higher and an “A” credit rating. To attain thesehigh financial targets, we consider one of our mostimportant themes to be optimizing our balance sheet
based on well-balanced growth potential, return on
capital, and financial soundness.
Mitsubishi HC Capital Group has total assets
exceeding 10 trillion yen. We believe we can continue tosecure stable funding because we maintain steady
performance and a sound financial position through ourdiversified business portfolio. On the other hand, I do notbelieve it prudent to increase total assets without limit
from the perspective of ensuring sufficient resilience

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

against sudden changes in the external environment,such as the Lehman Shock in 2008. We recognize that it
is essential to improve the quality of our portfolio throughthe Evolution and Layering of Business Models andthereby raise ROA and ROE.
Furthermore, I believe that improving our pricebook-value ratio (PBR) is an urgent management issueeven though we have not set a specific numerical target.
PBR serves as a benchmark for achieving our plans andis also watched closely by the market. Mitsubishi HC
Capital Groupʼs PBR is hovering around 0.8x as ofNovember 2023. I believe we should raise this to 1x as
quickly as possible from the perspective of shareholder
value. We will make our best efforts to gain even greater
understanding and empathy for the Group by accumulating profits through the steady progress of 2025 MTMP
and by disseminating the details and results of ourinitiatives to capital markets and society in a timely
manner.

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Becoming a company with satisfied employees that is respected by society
Mitsubishi HC Capitalʼs history spans over half a century
counting the founding dates of our two predecessor
companies. During this time, we have continuously
achieved steady growth by providing a variety of leasing
services to industry and society. We are deeply gratefulto all our stakeholders for their support that made thisgrowth possible.
We now stand at a major turning point in history.
The business environment for companies remains
clouded by factors that include rising geopolitical risks
such as regional conflicts worldwide, supply chain
disruptions, soaring resource and energy prices, ongoinginflation, and volatile fluctuations in exchange rates.
Furthermore, AI and DX are reshaping the structure of
economic society while there are also strong calls forcorporate management to contribute to environmental
and social sustainability. To respond appropriately tothese issues and contribute to the realization of safe andsecure lifestyles, we must create environmental, social,and economic value unique to Mitsubishi HC CapitalGroup.
Only people can lead and realize the transformationand development of a company. I am confident thatrealizing the happiness of every employee who supports
Mitsubishi HC Capital Groupʼs value creation will allow
us to contribute to society through our business andservices. Our goal is to continue being a company where
all employees are satisfied and happy with their workand talk with pride to their families and friends about ourGroup. We will strive to earn the trust of society and be arespected corporate group by making steady progresswith 2025 MTMP and by realizing Our 10-year Vision,“Together we innovate, challenge and explore thefrontiers of the future.”
Mitsubishi HC Capital Group has achieved continuous development thanks to the support of numerous
stakeholders, including its customers, shareholders andinvestors, business partners, and the local communities
where Group companies have operating bases. We
believe that by continuing to further deepen our relationships of trust with our stakeholders, we will be able toachieve healthier and fairer Group management. We
would like to ask all our stakeholders for their continued
understanding and support of the Group.

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