Medium-Term Management Plan
2024

2

1 Long Term VISION

3A Ten-year Look Back
2014/32024/3

117 k

338 k

2.9 times

6.2 bnA-34.7 bn yen

New accounts ( A I F U L )Interest repa y ment ( w i t h d r a w a lamount on consolidated basis)12,000Credit ra ting ( J C R )¥40.9 bn
CCC¥

10 notches
Shifted to Prime
Market (TSE)

10,0008,000

Total Receivables(consolidated)

1,178.9bn

Turnaround ADR
terminated515.9bn

163.1 bn

6,000

4,000

Operating Revenue(consolidated)

2,00091.8 b n0

14/3

15/3

16/3

17/3

18/3

19/3

20/3

21/3

22/3

23/3

24/3

4

Long-Term VISION

Transformation Towards an IT COMPANY- Aiming to Become a Company that Lasts 100 Years Growth Strategy
1. Raise the group’s profit level by pursuing the growth of balances andefficiency in core businesses.
2. Allocate profits and funds from core businesses to M&A aimed at
expanding customer base and acquiring new business models.
3. Promote in-house construction of systems and UI/UX to flexibly meetcustomer needs.

5Targeted VISION –Long-Term VISION-Medium-Term
Management Plan
2024
Ordinary profit
25,00020,00022.0bn
ROA
1.9%
Real ROE*
8.0%

Targeted Vision

42.0bnROA

Ordinary profit

Real ROE*

5,000

100.0bn
Total
receivables

15,00010,0002.5%
11.4%

Ordinary profit

Total
receivables

¥

1.1tr

Total
receivables

1.5tr

¥

Over2tr¥02024/3* Details of real ROE are provided on page 11.

2027/3(Final year)6２Medium-Term
Management Plan

7

Theme & Target - Medium-term Management Plan-8

Theme of the Medium-term Management Plan

Try Harder～Toward a New Stage of Growth～Fundamental Policies
1. Invest in M&A to bring changes to the Top-line portfolio composition
2. Implement Cost Structure Reform by reviewing human resourcecompositions and utilizing in-house engineers, etc.

9Target (Consolidated) – Medium-term Management Plan 2024/3 Result

2027/3 Forecast
60.0

Total Receivables

Total Receivables

1,178.9bn

1,590.0bn

Loan Business

738.6bn

Credit Guarantee

241.1bn

Credit Business173.7bn
Ordinary Profit

22.0bn
ROA

Loan Business960.0bn

Real ROE*

8.0％

Real ROE*

310.0bn

Credit Business260.0bn
Ordinary Profit

42.0bn

11.4%

12.0

55.0
10.0

9.1%

50.0

8.0%

8.0%

45.0

8.0

42.0bnCredit Guarantee

ROA

1.9％

Ordinary Profit

40.0
6.0

中期経営計画2024
35.0

30.0bn30.0

25.0

22.0bn4.0

24.0bn
2.0

20.0

2.5％
Real ROE*

11.4％

15.0

0.0

24/3
*Refer to Page11 for details

25/3（E)

26/3（E)

27/3（E)
10

Real ROE – Medium-term Management Plan Real ROE
ROE is calculated based on the 'Profit attributable to owners of parent' assuming an effective tax rate of 30%.
・AIFUL group has recorded tax losses in the past, resulting in unstable amounts for corporate tax
adjustments and tax expenses.
・Therefore, we are demonstrating the temporal variation and improvement in real ROE using the effective
tax rate borne by typical corporations.
16.00%

ROE

Real ROE*

Aiming for further improvement in ROE

by investing into growth through M&A
14.00%

12.00%

11.7%

12.6%
10.3%

9.6%

10.00%

8.00%

8.0%

8.0%

24/3

25/3（E)

11.4%

9.1%

6.00%

26/3（E)

27/3（E)
11Management Indices – Medium -term Management Plan -2%

10 %ROAor more2.52.5

1.8

2.0

15.0
10.0

8.0

6.0

1.0

4.0

0.5

2.0

0.0

0.0

25/3

15.2

15.1

25/3

26/3

15.5

9.1
8.0

8.0
10.0

1.5

24/3

15.6

11.4

12.0

1.9

Equity Ratio

Real ROE
20.0

3.0

2.0

15 %

More
thanMore
than

26/3

27/3

5.0

0.0

24/3

25/3

*Refer to Page11 for details

26/3

27/3

24/3

*Excluding changes due to capital policy
and investment on M&A

27/3

12

Growth Scenario – Medium-term Management Plan -13

Growth Scenario – Medium-term Management Plan Throughout the Medium-term management plan,well-focused investments will be continued centered on the highperforming 4 Core Businesses• Profits generated from core businesses will be invested in growth investments to the greatest extent possible.
• Aim to improve capital efficiency (ROE) by generating new profits from growth investments.

4 Core Business1. Consumer financeRaise profit of 4 Core
Businesses to generate
funds for investment

2. Small business loan

Funds forinvestment

3. Credit guarantee
4. Installment sales

Investment⚫ Investment in promising markets such as
overseas, credit card and paymentbusiness → Expansion of customer base
⚫ Investment in M&A and business
partnership → Creation of new businessareas and new products to attract newcustomer segments
14

Raising Profit Levels of Core Businesses– Medium -term Management Plan -⚫ Aim to elevate the profit levels of our core businesses to generate investment capital.

2024/3Companies Leading Core Businesses

Ordinary profit (Consolidated)
Consumer finance
Credit guarantee

Small business loan

Installment sales

2027/3(E)22.0bn42.0bn＋20.0bn

27.1bn30.4bn＋3.3bn▲40M2,000M＋2,000M

200M

1,000

M＋700M

▲60M

4,700

M＋4,800M
15

Change in Portfolio Proportion(Total Receivables Outstanding) – Mid-term Management Plan Installment
Sales, 5.3%

Other,
2.1%

Installment
Sales 8.8%

＋3.5PtCreditCard,

9.5%
Guarantee,
20.5%

Overseas Loan
Business, 3.0%

Other 3.9%

Credit Card,
7.5%

2024/3

PersonalLoan,
50.4%

2027/3(E)Guarantee
19.5%

Small
Business
Loan,

9.2%

Personal Loan
46.9%

SmallBusiness
Loan

Overseas Loan
Business, 2.4%

11.0%
＋1.8Pt16

Initiatives for Core Businesses– Medium -term Management Plan -Consumer Finance Business

Guarantee Business (For financial institutions)⚫ Aim to reach a balance of ¥800bn in 5 years (by theend of FY29/3)⚫ Maintain the number of new acquisitions and CPA
while improving customer attributes to raise theprofit level.

24/3
Loan Business

562.9bn

25/3 (E)26/3 (E)610.0bn

670.0bn⚫ Aim to reach a balance of ¥300bn yen during the period of
this plan.
⚫ Expand business and secured products on the strength ofcredit screening know-how.
⚫ Expanding the number of business partners by capturingcustomer needs and leveraging the diversity of ourproducts.

27/3 (E)

720.0bn

Guarantee Business

24/3

25/3 (E)26/3 (E)27/3 (E)¥241.1bn¥270.0bn¥290.0bn¥310.0bn

Small Business Loan

Installment Sales Finance Business⚫ Aim at a balance of ¥170bn during the period of this plan.
⚫ Increase new acquisitions through web and apps
(unsecured).
⚫ Focus on collateralized financing (real estate, medical fees,factoring, etc.).

⚫ Aim to achieve a 30% market share in installment sales
for esthetics and medical beauty services in five years(by FY29/3) through expansion of sales organization’s
affiliated stores.

24/3
Loan business108.5bn

25/3 (E)120.0bn

26/3 (E)

150.0bn

Market Share as of 24/3：around 18％

27/3 (E)170.0bn

24/3

Outstanding(installment)¥61.9bn

25/3 (E)¥80.0bn

26/3 (E)27/3 (E)¥110.0bn¥140.0bn

17Other Initiatives– Medium-term Management Plan -⚫ Credit Card Business・Improve LTV of proper cards through revenue measures and cost reduction
・Increase the number of new issuances and the utilization rate by enhancingawareness through investment in advertising.

⚫ Small-amount, short-term insurance
・Expansion of diverse products, acquisition of new customers, and revenue
growth through the utilization of the AIFUL's sales branch network.

⚫ Overseas Business•

Strengthen the collection management to ensure stability.

• Consideration of new market entries (Republic of the Philippines).
18

Fundamental Policy –Medium-term Management Plan-19

Fundamental Policy #1 M&A – Medium -term Management Plan ⚫ Proactively promote M&A to generate future profits.

1. M&A Activity Promotion
Promote Aggressive M&A Activityto generate future profits

Maximum investment budget of¥60bn [Over the next 3 years]

M&A
2023/01 Pet insurance business（FPC Co., Ltd.）

2023/03 System Engineering Services（Seven Seas Co., Ltd.）
2023/11 System Engineering Services (Liblock Inc.)

2. Profit Generation
Generate profits from newbusinesses

Aim to improve capital efficiency
(ROE)
20

Fundamental Policy #2 Cost Structure Reform – Medium -term Management Plan Initiatives
3-year total cost reduction effectCategoryover

5.0 billion yen

Cost reduction effect over-3years(2024/4～2027/3)

1. Enhance productivity acrossoperations in the Contact Center¥1,000M reductionin center operating expenses

2. Centralize receivables collection
processes (consolidate groupcompanies collection departments)¥ 500M reductionin personnel expenses¥1,500M reduction

in external outsourcing expenses*

3. Benefits of In-house Engineering
Development
4. Close over 150 unmanned stores¥2,000M reduction*Cost reduction in external outsourcing due to theinternalization of in-house engineering tasks.

in store-related expenses.
21

Fundamental Policy #2 Cost Structure Reform – Medium -term Management Plan 300.0

Operating revenue
Ordinary profit
Cost reduction amount
Ordinary profit to operating revenue ratio
60.0

163.1bn13.5%

180.0bn13.3%

198.0bn

15.2%

218.0bn19.3%

42.0 bn

250.0

200.0
20.0%

150.0

2.6bn

100.0

30.0 bn22.0 bn【Initiatives】
Cost reduction
3-year Total

1.5bn

24.0 bn

50.0

0.9bn

0.0

0.0%

15.0

24/3

25/3（E)

26/3（E)¥ 5.0 bn27/3（E)22

３ Capital Policy

23Equity Ratio Indicator – Capital Policy –Indicator

Equity Ratio of 15% or more

The equity ratio is an indicator that should be improved as a higher ratio increases

security. However, at the current stage (Phase of growing balance), we aim to maintainan equity ratio of 15% or higher considering the risks to be covered by capital.

(Risks Covered by Capital)
Regarding risks, expected losses are covered by normal business operations, while
unexpected losses* are covered by capital.
*The difference between the expected maximum loss amount and the average loss amount (expected loss)
24

Growth Investment and Shareholder Return – Capital Policy –① Growth Investment【2025/3～2027/3】

60.0bn MAX

Total investment of ¥⚫ Group Synergy

M&A⚫ Potential for Future Group Growth
Capital Investment⚫ Contribution to Consolidated ROE of 10% or More

② Shareholder Return【2027/3】

Targeting a Total Payout Ratio of around

Share buybacks
Dividend

20%

Approx.
20％

While prioritizing growth investments,
2.1%
we aim to enhance shareholder returns
targeting a total payout ratio of around24/3
25/3(E) 26/3(E) 27/3(E)
20% in the final year of the plan.
Considering share repurchase
based on capital adequacy status

25Appendix

26

(Market Outlook)Unsecured Loan Market⚫ With the subsiding of the COVID-19 pandemic, there has been a recovery in demand for funds although rising prices
remain a significant challenge for market growth.
⚫ The consumer finance industry is expected to continue to expand, as the entry of new companies is leading to anincrease in younger customer acquisition and reducing their resistance to the industry.

Financial Institutions

Unit: trillion yen

Credit Card

Consumer FinanceOutlook

10.5

6.4

1.7
2.4
*Source

18/3

10.5

6.3

10.4

6.1

1.7

1.7

2.5

2.6

19/3

20/3

9.4
5.5

9.2
5.3

9.3
5.3

9.5
5.3

9.7

9.9

10.1

5.4

5.4

5.4

1.6

1.4

1.3

1.3

1.6

1.6

1.6

2.5

2.6

2.7

2.6

2.7

2.9

3.1

25/3

26/3

27/3

21/3

22/3

23/3

24/3

**2023/7 Consumer finance company with balance of about 300 billion yen shifted to credit card.
Consumer finance and Credit card companies :Statistic by the Japan Financial Services Association.
Financial institutions :Statistic by The Bank of Japan. (Consumer loan outstanding at domestic banks and credit unions)27

(Market Outlook)Business Loan Market⚫ Business Loan Market has been growing steadily. The balance of loans to small and medium -sized enterprises, which
is our main segment, is on a gradual upward trend, and we expect the market to continue to expand.

Business Loan Balance at Money Lenders
Outlook

16.5

Unit: trillion yen

15.2

10.9
8.0

18/3

8.8

8.7

19/3

20/3

*Source: Financial Services Agency

11.8

12.8

13.8

9.9

21/3

22/3

23/3

24/3

25/3

26/3

27/3
28

(Market Outlook) Cashless Payment Market⚫ The cashless ratio increased to 36% by 2022 and is expected to grow to 48% by 2026.
⚫ With the government's promotion of cashless transactions, the transaction volume of credit cards is also steadily
increasing.
Private final consumption expenditure
Unit: trillion yen

400

Credit card market

Cashless ratio

Outlook

65%

55%

308tn

48%

45%

36%
35%

25%94tn

15%

5%

0-5%

2018

2019

2020

*Source: Ministry of Economy, Trade and Industry

2021

2022

2023

2024

2025

2026
29

－ Disclaime r －・The figures contained in this presentation material with respect to AIFUL andA I F U L G r o u p‘s p l a n s a n d s t r a t e g i e s a n d o t h e r s t a t e m e n t s t h a t a r e n o t h i s t o r i c a lfacts are for ward-looking statements about the future performance of AIFULa n d A I F U L G r o u p w h i c h a r e b a s e d o n m a n a g e m e n t ’s a s s u m p t i o n s a n d b e l i e f i nlightoftheinformation

currently

available

toitandinvolve

risks

and

uncertainties. Therefore, actual results may differ from those in the for wardlooking statements due to various factors.
・ This English-translated material was prepared solely for the convenience ofEnglish-speaking investors. If any discrepancies

exist, the originalJapaneseversion always prevails. AIFUL and AIFUL Group shall not be liable for any loss
or damages arising from this translation.

30