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Credit Quality of Financial Assets and the Allowance for Credit Losses
 12 Months Ended
Mar. 31, 2023
Credit Loss [Abstract]  
Credit Quality of Financial Assets and the Allowance for Credit Losses
8. Credit Quality of Financial Assets and the Allowance for Credit Losses
The Company and its subsidiaries provide the following information disaggregated by portfolio segment and class of financial assets.
Allowance for credit losses
Credit quality of financial assets
 
  •  
Credit quality indicators
 
  •  
Past-due
financing receivables
 
  •  
Non-accrual
Information about troubled debt restructurings
A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. The Company and its subsidiaries classify our portfolio segments by instruments of loans, net investment in leases and other financial assets measured at amortized cost. Classes of financial assets are determined based on the initial measurement attribute, risk characteristics of the financing receivables and the method for monitoring and assessing obligors’ credit risk and are defined as the level of detail necessary for a financial statement user to understand the risks inherent in the financial assets. Classes of financial assets generally are a disaggregation of a portfolio segment, and the Company and its subsidiaries disaggregate our portfolio segments into classes by regions, instruments or industries of our debtors.
 
The following table provides information about the allowance for credit losses for installment loans, net investment in leases and other financial assets measured at amortized cost for fiscal 2021, 2022 and 2023:
 
   
Fiscal Year ended March 31, 2021
  
   
Millions of yen
  
   
Beginning
balance
    
Cumulative
effect of
adopting
According
Standards
Update
2016-13
    
Reclassification
to allowance
for investment
in operating
leases *4
    
Balance at
April 1,
2020
    
Provision
(Reversal)*3
    
Allowance of
purchased
loans

during the
reporting
period
    
Charge-
offs*5
    
Recoveries
    
Other*6
    
Ending
balance*3
    
Collective
(pool)
assessment
    
Individual
assessment
  
Allowance for credit losses :
                                                                                                
Installment loans to consumer borrowers:
                                                                                                
Real estate loans
                                                                                                
Japan
   ¥ 3,112     ¥ 2,856     ¥ 0     ¥ 5,968     ¥ 390     ¥ 0     ¥ (495 )    ¥ 59     ¥ 0     ¥ 5,922     ¥ 5,354     ¥ 568  
Overseas
     128       (102 )      0       26       412       0       0       1       31       470       470       0  
Card loans
                                                                                                
Japan
     3,785       12,146       0       15,931       (802 )      0       (2,150 )      6       (1 )      12,984       12,283       701  
Other
                                                                                                
Japan
     12,735       (963 )      0       11,772       5,875       0       (9,296 )      8       0       8,359       5,616       2,743  
Overseas
     782       563       0       1,345       739       0       (1,754 )      577       368       1,275       1,038       237  
Installment loans to corporate borrowers:
                                                                                                
Non-recourse
loans
                                                                                                
Japan
     13       24       0       37       (5 )      0       0       0       0       32       32       0  
The Americas
     1,773       1,577       0       3,350       43       0       0       0       57       3,450       3,218       232  
Real estate companies
                                                                                                
Japan
     983       46       0       1,029       (58 )      0       (96 )      25       1       901       621       280  
Overseas
     2,010       1,579       0       3,589       (1,502 )      0       (570 )      33       (11 )      1,539       1,539       0  
Commercial, industrial companies
                                                                                                
Japan
     2,447       98       0       2,545       (27 )      0       (592 )      11       1       1,938       199       1,739  
Overseas
     14,769       9,002       0       23,771       10,410       0       (15,427 )      18       (9 )      18,763       13,013       5,750  
Purchased loans*1
     1,458       0       0       1,458       353       3,899       (4,040 )      46       119       1,835       681       1,154  
Net investment in leases:
     11,692       3,550       0       15,242       3,285       0       (2,668 )      10       653       16,522       13,267       3,255  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Subtotal
     55,687       30,376       0       86,063       19,113       3,899       (37,088 )      794       1,209       73,990       57,331       16,659  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Other financial assets measured at amortized cost*2
     1,149       1,369       (312 )      2,206       4,483       0       (344 )      11       (351 )      6,005       810       5,195  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
   ¥ 56,836     ¥ 31,745     ¥ (312 )    ¥ 88,269     ¥ 23,596     ¥ 3,899     ¥ (37,432 )    ¥ 805     ¥ 858     ¥ 79,995     ¥ 58,141     ¥ 21,854  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
   
Fiscal Year ended March 31, 2022
  
   
Millions of yen
  
   
Beginning
balance
    
Provision
(Reversal)*3
    
Allowance of
purchased
loans

during the
reporting
period
    
Charge-
offs*5
    
Recoveries
    
Other*6
    
Ending
balance*3
    
Collective
(pool)
assessment
    
Individual
assessment
  
Allowance for credit losses :
                                                                        
Installment loans to consumer borrowers:    
                                                                        
Real estate loans
                                                                        
Japan
   ¥ 5,922     ¥ 340     ¥ 0     ¥ (570 )    ¥ 24     ¥ 0     ¥ 5,716     ¥ 5,211     ¥ 505  
Overseas
     470       (34 )      0       0       4       15       455       455       0  
Card loans
                                                                        
Japan
     12,984       (1,301 )      0       (1,669 )      4       1       10,019       9,423       596  
Other
                                                                        
Japan
     8,359       4,948       0       (8,114 )      11       0       5,204       2,946       2,258  
Overseas
     1,275       300       0       (644 )      0       174       1,105       961       144  
Installment loans to corporate borrowers:
                                                                        
Non-recourse
loans
                                                                        
Japan
     32       49       0       0       0       0       81       81       0  
The Americas
     3,450       (1,035 )      0       0       0       276       2,691       1,836       855  
Real estate companies
                                                                        
Japan
     901       (204 )      0       (109 )      29       0       617       490       127  
Overseas
     1,539       (855 )      0       (10 )      0       61       735       735       0  
Commercial, industrial companies
                                                                        
Japan
     1,938       93       0       (761 )      67       0       1,337       505       832  
Overseas
     18,763       3,503       0       (6,185 )      155       2,060       18,296       13,367       4,929  
Purchased loans*1
     1,835       (227 )      2,210       (2,372 )      114       15       1,575       608       967  
Net investment in leases:
     16,522       1,577       0       (2,802 )      21       985       16,303       12,480       3,823  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Subtotal
     73,990       7,154       2,210       (23,236 )      429       3,587       64,134       49,098       15,036  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Other financial assets measured at amortized cost*2
     6,005       2,662       0       (1,661 )      45       231       7,282       562       6,720  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
   ¥ 79,995     ¥ 9,816     ¥ 2,210     ¥ (24,897 )    ¥ 474     ¥ 3,818     ¥ 71,416     ¥ 49,660     ¥ 21,756  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
 
Fiscal Year ended March 31, 2023
 
 
 
Millions of yen
 
 
 
Beginning
balance
 
 
Provision
(Reversal)*3
 
 
Allowance of
purchased
loans

during the
reporting
period
 
 
Charge-
offs*5
 
 
Recoveries
 
 
Other*6
 
 
Ending
balance*3
 
 
Collective
(pool)
assessment
 
 
Individual
assessment
 
Allowance for credit losses :
 
 
 
 
 
 
 
 
 
Installment loans to consumer borrowers:    
 
 
 
 
 
 
 
 
 
Real estate loans
 
 
 
 
 
 
 
 
 
Japan
   ¥ 5,716     ¥ (1,437 )    ¥ 0     ¥ (215 )    ¥ 27     ¥ 1     ¥ 4,092     ¥ 3,644     ¥ 448  
Overseas
     455       (19 )      0       0       1       9       446       446       0  
Card loans
                                                                        
Japan
     10,019       (421 )      0       (584 )      8       0       9,022       8,329       693  
Other
                                                                        
Japan
     5,204       4,672       0       (2,124 )      8       (1 )      7,759       5,337       2,422  
Overseas
     1,105       1,265       0       (508 )      0       27       1,889       1,467       422  
Installment loans to corporate borrowers:
                                                                        
Non-recourse
loans
                                                                        
Japan
     81       173       0       0       0       (1 )      253       253       0  
The Americas
     2,691       (1,186 )      0       0       0       (11 )      1,494       560       934  
Real estate companies
                                                                        
Japan
     617       131       0       0       28       1       777       663       114  
Overseas
     735       264       0       (29 )      0       37       1,007       1,007       0  
Commercial, industrial companies
                                                                        
Japan
     1,337       102       0       (358 )      71       0       1,152       477       675  
Overseas
     18,296       7,164       0       (8,212 )      329       1,555       19,132       16,455       2,677  
Purchased loans*1
     1,575       (261 )      6,901       (7,142 )      64       11       1,148       541       607  
Net investment in leases:
     16,303       1,678       0       (2,637 )      27       348       15,719       12,032       3,687  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Subtotal
     64,134       12,125       6,901       (21,809 )      563       1,976       63,890       51,211       12,679  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Other financial assets measured at amortized cost*2
     7,282       555       0       (6,563 )      30       178       1,482       548       934  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
   ¥ 71,416     ¥ 12,680     ¥ 6,901     ¥ (28,372 )    ¥ 593     ¥ 2,154     ¥ 65,372     ¥ 51,759     ¥ 13,613  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
Notes:
1. Loans held for sale and policy loan receivables of an insurance entity are not scope to allowance for credit losses.
  2.
Held-to-maturity
debt securities held by the Company and subsidiaries consist of Japanese government bonds (JGBs) and other securities secured by JGBs. There was no allowance for credit losses on these
held-to-maturity
debt securities. And there is no delinquency or on
non-accrual
status on
held-to-maturity
debt securities.
*1
Purchased loans represent loans with evidence of deterioration of credit quality since origination and for which it is probable at acquisition that collection of all contractually required payments from the debtors is unlikely. Due to the adoption of Credit Losses
s
tandard, allowance of ¥176,714 million was recorded as credit loss
gross-up
treatment for purchased loans on April 1, 2020, and the same amount has been
charged-off.
 
 
*2
The allowance for other financial assets measured at amortized cost includes the allowance for credit losses on financial receivables, such as loans to affiliates and accounts receivable. Other financial assets measured at amortized cost are mainly “Trade notes, accounts and other receivables”, and loans to affiliates included in “Investment in affiliates” on the consolidated balance sheets.
*3
“Provision for credit losses” in the consolidated statements of income amounted to provisions of ¥16,021 million, ¥3,939 million and ¥7,756 million for fiscal 2021, 2022 and 2023, respectively. “Allowance for credit losses” on the consolidated balance sheets amounted to ¥78,945 million, ¥69,459 million and ¥64,723 million as of March 31, 2021, 2022 and 2023, respectively. The reconciliation between the above table and the amounts reported on the consolidated financial statements in fiscal 2021, 2022 and 2023 are as follows:
 
   
Millions of yen
  
   
Fiscal Year
ended March 31,
2021
    
March 31,
2021
    
Fiscal Year
ended March 31,
2022
    
March 31,
2022
    
Fiscal Year

ended March 31,
2023
    
March 31,
2023
  
   
Provision for
credit losses
    
Allowance
for credit
losses
    
Provision

for credit

losses
    
Allowance
for credit
losses
    
Provision

for credit

losses
    
Allowance
for credit
losses
  
Net investment in leases
   ¥ 3,285     ¥ 16,522     ¥ 1,577     ¥ 16,303     ¥ 1,678     ¥ 15,719  
Installment loans
     15,828       57,468       5,577       47,831       10,447       48,171  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Subtotal in the above table
     19,113       73,990       7,154       64,134       12,125       63,890  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Other financial assets measured at amortized cost
     4,483       6,005       2,662       7,282       555       1,482  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total in the above table
     23,596       79,995       9,816       71,416       12,680       65,372  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Off-balance
sheet credit exposures*3(a)
     (7,437 )      —         (4,449 )      —         (4,542 )      —    
Available-for-sale
debt securities*3(b)
     117       —         21       —         (21 )      —    
Less: Loans to affiliates *3(c)
     (255 )      (1,050 )      (1,449 )      (1,957 )      (361 )      (649 ) 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Amount reported on the consolidated financial statements
   ¥ 16,021     ¥ 78,945     ¥ 3,939     ¥ 69,459     ¥ 7,756     ¥ 64,723  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
  *3(a)
The allowance for
off-balance
sheet credit exposure were ¥26,094 million, ¥22,120 million and ¥17,843 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded in “Other liabilities” on the consolidated balance sheets. For further information, see Note 30 “Commitments, Guarantees and Contingent Liabilities.”
  *3(b)
The allowance for
available-for-sale
debt securities were ¥120 million, ¥153 million and ¥144 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded as a reduction in “Investment in securities” on the consolidated balance sheets. For further information, see Note 9 “Investment in Securities.”
  *3(c)
The provision for credit losses on loans to affiliates were provisions of ¥255 million, ¥1,449 million and ¥361 million during fiscal 2021, 2022 and 2023, respectively, and the amounts are recorded in “Equity in net income (loss) of affiliates” in the consolidated statements of income. The allowance for credit losses on loans to affiliates were ¥1,050 million, ¥1,957 million and ¥649 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded as a reduction in “Investment in affiliates” on the consolidated balance sheets.
*4
The allowance for accrued lease payments for receivable from operating leases was reclassified to the investment in operating leases balance on April 1, 2020, due to the application of the Credit Losses
s
tandard.
*5
Included in
Charge-off
in write-offs of purchased loans at acquisition date were ¥3,899 million, ¥2,210 million and ¥6,901 million during fiscal 2021, 2022 and 2023, respectively.
*6
Other mainly includes foreign currency translation adjustments and increases or decreases in allowance due to consolidation or deconsolidation of subsidiaries.
 
The following table provides information about purchased loans which were acquired for fiscal 2021, 2022 and 2023:
 
    
Millions of yen
  
    
Fiscal Year ended

March 31, 2021
     
Fiscal Year ended

March 31, 2022
     
Fiscal Year ended

March 31, 2023
  
Purchase price
    ¥ 2,705      ¥ 4,926      ¥ 2,444  
Allowance for credit losses at acquisition date
      3,899        2,210        6,901  
Discount or premium attributable to other factors
      254        220        261  
    
 
 
     
 
 
     
 
 
  
Par value
    ¥ 6,858      ¥ 7,356      ¥ 9,606  
    
 
 
     
 
 
     
 
 
  
The Company and its subsidiaries estimate an allowance for credit losses for all credit losses expected to occur in future over the remaining life of financial assets, and recognize the allowance adequately based on management judgement. In developing the allowance for credit losses, the Company and its subsidiaries consider, among other things, the following factors in collective assessment and individual assessment by each portfolio:
 
  •  
business characteristics and financial conditions of obligors;
 
  •  
prior
charge-off
experience;
 
  •  
current delinquencies and delinquency trends;
 
  •  
value of underlying collateral and guarantees; and
 
  •  
current economic and business conditions and expected outlook in future.
The Company and its subsidiaries manage credit risk using various indicators specific to the region, industry, and types of assets, in accordance with the group risk management policy. For credit transactions, the basic group policy is to obtain sufficient collateral and guarantees, and to diversify industries and borrowers, and the Company and its subsidiaries comprehensively evaluate and monitor the financial condition and cash flows of borrowers, underlying collateral and guarantees, and profitability. The Company and its subsidiaries also manage exposure to potentially high-risk markets by establishing appropriate credit limits through portfolio analysis.
Due to the diversity of assets and risk indicators held by the Company and its subsidiaries, the Company and its subsidiaries monitor the credit quality indicators as performing and
non-performing
assets as indicators that are common across all classes. The category of
non-performing
assets includes financing receivables for debtors who have filed for insolvency proceedings, whose bank transactions are suspended, whose bills are dishonored, whose businesses have deteriorated, whose repayment is
past-due
90 days or more, financing receivables modified as troubled debt restructurings, and performing assets include all other financing receivables. Regarding purchased loans, they are classified as
non-performing
assets when it is probable that the acquisition cost of purchased loans cannot be collected, while all the other purchased loans are included in the category of performing assets.
When certain performing financial assets mainly have similar risk characteristics to other financial assets, the performing financial assets are collectively evaluated as a pool. On the contrary, when financial assets do not have similar risk characteristics to other financial assets, the financial assets are evaluated individually.
 
Loans to consumer borrowers
Loans to consumer borrowers mainly consist of real estate loans and card loans.
The credit quality of real estate loans is affected by the cash flows derived from the property and its collateral value.
The credit quality of card loans is affected by the repayment ability of customers such as customer credit standing or payment history.
The Company and its subsidiaries use these factors to estimate the allowance for credit losses because they are reflected in the probability of default and loss given default in each portfolio.
Loans to corporate borrowers
Loans to corporate borrowers are classified into
non-recourse
loans and loans other than
non-recourse
loans.
The credit quality of
non-recourse
loans for which cash flows from real estate are the source of repayment depends mainly on the real estate collateral value.
Loans other than
non-recourse
loans are classified into either real estate companies or commercial, industrial and other companies, each of which are further divided into Japan and overseas.
The credit quality of real estate companies is affected by mainly Japanese and Americas real estate markets and trends.
The credit quality of commercial, industrial and other companies, which consist of various industries, is affected mainly by broader financial and economic conditions and trends in Japan, the Americas and Asian countries.
The allowance for credit losses for loans to corporate borrowers is estimated by considering, among others, debtors’ situation, as well as economic conditions and trends in its industries, the value of underlying collateral and guarantees, and probability of default and loss given default.
Net investment in leases
Net investment in leases consists of leases of various equipment types, including office equipment, industrial machinery, transportation equipment and real estate properties. The allowance for credit losses for net investment in leases is estimated based on the value of the underlying leased assets, debtors’ situation, economic conditions and trends in its industries, and probability of default and loss given default.
In common with portfolio segments, the forecasted future economic indicators correlated with the prior
charge-off
experience are reflected to the estimate of the allowance for credit losses. Economic indicators correlated with prior
charge-off
experience are determined over the reasonable and supportable forecasted period. Economic indicators include GDP growth rates, consumer price indices, unemployment rates, and government bond interest rates. It also considers forward-looking scenarios of how the selected economic indicators will change in the future. The Company and its subsidiaries use the latest economic forecasts available from the economic reports published by governments and central banks, as well as from third-party information providers as economic indicators. For the impact of the spread of
COVID-19
etc., the Company and its subsidiaries revise forward-looking scenarios, as necessary, with a quantitative adjustment based on the analysis of impact to the portfolios and the referenced economic indicators.
 
On the other hand, for periods beyond which the Company and its subsidiaries are able to make or obtain reasonable and supportable forecasts of future economic indicators of the entire life of the financial asset, expected credit losses are estimated for the remaining life mainly using an appropriate reversion approach, mainly immediate reversion to historical credit loss information.
There have been no significant changes during fiscal 2023 to methodologies and economic indicators used to estimate the allowance for Credit Losses.
When
non-performing
financial assets with deteriorated credit quality have similar risk characteristics to other financial assets, the allowance for credit losses is collectively evaluated based on mainly loss given default. On the other hand, if the
non-performing
financial assets do not have similar risk characteristics to other financial assets, the allowance for credit losses is individually evaluated.
In the individual assessment the allowance for credit losses is estimated individually based on the present value of expected future cash flows, the observable market price or the fair value of the collateral securing the financial receivables if the financial receivables are collateral-dependent.
The collateral-dependent financial receivables are defined as the finance receivables, which a debtor would be in financial difficulty and the collection significantly depend on the collateral. These financial receivables are mainly
non-recourse
loans and purchased loans for which cash flows from underlying real estate is the source of repayment.
For
non-recourse
loans, their collection depends on the real estate collateral value, which may decline as a result of a decrease in liquidity of the real estate market, a rise in vacancy rate of rental properties, a fall in rents and other factors.
For purchased loans, their collection may decrease due to a decline in the real estate collateral value and debtors’ creditworthiness. Thus, the changes in these risks affect the amount of the allowance for credit losses.
In common with all portfolio segments, the Company and its subsidiaries charge off doubtful receivables when the likelihood of any future collection is believed to be minimal, mainly based upon an evaluation of the relevant debtors’ creditworthiness and the liquidation status of collateral.
 
The following table provides information about the origination years of financial assets as of March 31, 2022 and 2023. Card loans to consumer borrowers with a revolving repayment feature that cannot be classified into the origination year are excluded from the table.
 
       
March 31, 2022
  
       
Millions of yen
  
Portfolio segment
      
Origination year (years ended March 31)
        
Class
                                              
   
Credit Quality
  
2022
    
2021
    
2020
    
2019
    
2018
    
Prior
    
Total
  
Consumer borrowers:
                                                        
    Performing   ¥    322,924     ¥    314,935     ¥ 387,988     ¥ 314,163     ¥ 202,309     ¥ 595,321     ¥ 2,137,640  
   
Non-Performing
     8,282       4,595       3,852       2,098       961       11,915     ¥ 31,703  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Real estate loans
                                                        
    Performing     302,695       309,893       382,612       311,959       198,974       594,612     ¥ 2,100,745  
   
Non-Performing
     26       94       489       380       222       11,474     ¥ 12,685  
Other*
                                                            
    Performing     20,229       5,042       5,376       2,204       3,335       709     ¥ 36,895  
   
Non-Performing
     8,256       4,501       3,363       1,718       739       441     ¥ 19,018  
Corporate borrowers:
                                                        
    Performing     487,433       188,634       283,950       127,128       96,851       111,640     ¥ 1,295,636  
   
Non-Performing
     412       3,184       4,138       4,747       14,562       21,000     ¥ 48,043  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Non-recourse
loans
                                                        
Japan
                                                            
    Performing     26,991       6,686       24,244       5,256       2,750       8,158     ¥ 74,085  
The Americas
                                                        
    Performing     0       5,547       51,467       11,744       7,721       1,397     ¥ 77,876  
   
Non-Performing
     0       64       0       1,587       0       1,391     ¥ 3,042  
Other than
non-recourse
loans
                                                        
Real estate companies in Japan
                                                        
    Performing     102,719       48,420       37,845       28,727       24,481       34,111     ¥ 276,303  
   
Non-Performing
     0       245       938       71       0       1,050     ¥ 2,304  
Real estate companies in overseas
                                                        
    Performing     24,104       26,751       41,644       2,256       5,478       740     ¥ 100,973  
   
Non-Performing
     0       0       0       371       12,790       7,717     ¥ 20,878  
Commercial, industrial and other companies in Japan
                                                        
    Performing     75,273       24,808       26,748       13,746       6,457       13,806     ¥ 160,838  
   
Non-Performing
     156       457       1,392       124       392       773     ¥ 3,294  
Commercial, industrial and other companies in overseas
                                                        
    Performing     258,346       76,422       102,002       65,399       49,964       53,428     ¥ 605,561  
   
Non-Performing
     256       2,418       1,808       2,594       1,380       10,069     ¥ 18,525  
 
       
March 31, 2022
  
       
Millions of yen
  
Portfolio segment
      
Origination year (years ended March 31)
        
Class
                                              
   
Credit Quality
  
2022
    
2021
    
2020
    
2019
    
2018
    
Prior
    
Total
  
Purchased loans:
                                                        
    Performing     0       0       24       281       1,072       10,885     ¥ 12,262  
   
Non-Performing
     0       0       0       0       0       1,485     ¥ 1,485  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net investment in leases:
 
                                                
    Performing     328,428       249,106       190,125       113,190       77,683       80,217     ¥ 1,038,749  
   
Non-Performing
     2,608       2,899       3,474       2,787       2,178       5,278     ¥ 19,224  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Japan
                                                            
    Performing     119,538       154,757       133,589       91,691       68,087       78,283     ¥ 645,945  
   
Non-Performing
     402       605       1,044       1,103       1,247       2,109     ¥ 6,510  
Overseas
                                                            
    Performing     208,890       94,349       56,536       21,499       9,596       1,934     ¥ 392,804  
   
Non-Performing
     2,206       2,294       2,430       1,684       931       3,169     ¥ 12,714  
Other financial assets measured at amortized cost
                                                        
    Performing     14,287       2,220       345       0       817       17,743     ¥ 35,412  
   
Non-Performing
     0       0       58       0       1,586       0     ¥ 1,644  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
(excluding revolving repayment card loans)
                                                        
    Performing   ¥ 1,153,072     ¥ 754,895     ¥ 862,432     ¥ 554,762     ¥ 378,732     ¥ 815,806     ¥ 4,519,699  
   
Non-Performing
   ¥ 11,302     ¥ 10,678     ¥ 11,522     ¥ 9,632     ¥ 19,287     ¥ 39,678     ¥ 102,099  
 
       
March 31, 2023
  
       
Millions of yen
  
Portfolio segment
      
Origination year (years ended March 31)
        
Class
                                              
   
Credit Quality
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Total
  
Consumer borrowers:
                                                        
    Performing   ¥    300,198     ¥    200,041     ¥ 281,872     ¥ 360,726     ¥ 293,297     ¥ 656,584     ¥ 2,092,718  
   
Non-Performing
     10,896       5,259       3,140       2,257       1,078       12,324     ¥ 34,954  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Real estate loans
                                                        
    Performing     266,663       190,076       279,690       359,321       292,388       655,811     ¥ 2,043,949  
   
Non-Performing
     17       81       378       474       239       11,821     ¥ 13,010  
Other*
                                                            
    Performing     33,535       9,965       2,182       1,405       909       773     ¥ 48,769  
   
Non-Performing
     10,879       5,178       2,762       1,783       839       503     ¥ 21,944  
Corporate borrowers:
                                                        
    Performing     427,902       346,629       127,984       171,314       103,628       139,503     ¥ 1,316,960  
   
Non-Performing
     257       793       5,485       4,959       4,624       24,008     ¥ 40,126  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Non-recourse
loans
                                                        
Japan
                                                            
    Performing     65,874       17,831       6,699       22,384       4,158       7,553     ¥ 124,499  
The Americas
                                                        
    Performing     2,901       706       5,217       15,153       10,595       834     ¥ 35,406  
   
Non-Performing
     0       0       0       0       0       3,248     ¥ 3,248  
Other than
non-recourse
loans
                                                        
Real estate companies in Japan
                                                        
    Performing     124,452       43,210       30,996       27,022       22,251       46,222     ¥ 294,153  
   
Non-Performing
     0       230       0       913       9       923     ¥ 2,075  
Real estate companies in overseas
                                                        
    Performing     34,508       12,639       9,091       6,998       1,627       1,165     ¥ 66,028  
   
Non-Performing
     0       0       741       0       813       12,063     ¥ 13,617  
Commercial, industrial and other companies in Japan
                                                        
    Performing     76,764       27,327       16,743       17,003       8,383       12,878     ¥ 159,098  
   
Non-Performing
     125       80       431       264       133       399     ¥ 1,432  
Commercial, industrial and other companies in overseas
                                                        
    Performing     123,403       244,916       59,238       82,754       56,614       70,851     ¥ 637,776  
   
Non-Performing
     132       483       4,313       3,782       3,669       7,375     ¥ 19,754  
Purchased loans:
                                                        
    Performing     26       396       0       21       406       10,385     ¥ 11,234  
   
Non-Performing
     0       0       0       0       0       1,021     ¥ 1,021  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net investment in leases:
                                                        
    Performing     440,421       257,871       139,306       103,726       53,604       75,794     ¥ 1,070,722  
   
Non-Performing
     2,757       3,228       1,806       2,042       1,720       5,288     ¥ 16,841  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
 
 
 
March 31, 2023
 
 
 
 
 
Millions of yen
 
Portfolio segment
 
 
 
Origination year (years ended March 31)
 
 
 
 
Class
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Quality
 
2023
 
 
2022
 
 
2021
 
 
2020
 
 
2019
 
 
Prior
 
 
Total
 
Japan
                                                            
    Performing     193,297       136,285       99,739       80,542       44,853       72,295     ¥ 627,011  
   
Non-Performing
     212       660       658       798       811       1,970     ¥ 5,109  
Overseas
                                                            
    Performing     247,124       121,586       39,567       23,184       8,751       3,499     ¥ 443,711  
   
Non-Performing
     2,545       2,568       1,148       1,244       909       3,318     ¥ 11,732  
Other financial assets measured at amortized cost
                                                        
    Performing     3,197       0       2,089       282       0       21,301     ¥ 26,869  
   
Non-Performing
     0       298       0       0       368       0     ¥ 666  
       
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total
(excluding revolving repayment card loans)
                                                        
    Performing   ¥ 1,171,744     ¥ 804,937     ¥ 551,251     ¥ 636,069     ¥ 450,935     ¥ 903,567     ¥ 4,518,503  
   
Non-Performing
     13,910       9,578       10,431       9,258       7,790       42,641     ¥ 93,608  
 
Note:
Loans held for sale and policy loan receivables of an insurance entity are not included in the table above.
*
Other in loans to consumer borrowers includes claims receivable arising from payments on guarantee of consumer loans. For further information, see Note 30 “Commitments, Guarantees and Contingent Liabilities.”
The information about card loans to consumer borrowers with a
revolving
repayment feature that cannot be classified into the origination year as of March 31, 2022 and 2023 are as follows:
 
   
March 31, 2022
  
   
Millions of yen
  
Portfolio segment
  
Revolving repayment
card loans
    
Modification of
collection condition
by relief of contract
condition
    
Total—revolving
repayment card
loans
    
Total—

origination year

(excluding revolving

repayment card
loans)
    
Total—

financial assets
measured at amortized
cost
  
Credit quality
Consumer borrowers:
                                        
Performing
   ¥ 169,601     ¥ 0     ¥ 169,601     ¥ 4,519,699     ¥ 4,689,300  
                                   
 
 
  
Non-Performing
     671       3,415       4,086       102,099     ¥ 106,185  
                                   
 
 
  
 
 
 
March 31, 202
3
 
 
 
Millions of yen
 
Portfolio segment
 
Revolving repayment
card loans
 
 
Modification of
collection condition
by relief of contract
condition
 
 
Total—revolving
repayment card
loans
 
 
Total—

origination year

(excluding revolving

repayment card
loans)
 
 
Total—

financial assets
measured at amortized
cost
 
Credit quality
Consumer borrowers:
                                        
Performing
   ¥ 166,392     ¥ 0     ¥ 166,392     ¥ 4,518,503     ¥ 4,684,895  
                                   
 
 
  
Non-Performing
     1,588       3,655       5,243       93,608     ¥ 98,851  
                                   
 
 
  
 
Of
non-performing
 
assets, the Company and its subsidiaries consider smaller balance homogeneous loans (including real estate loans and card loans, among others, which are not restructured) and net investment in leases as the 90 days or more
past-due
financing receivables not individually evaluated, and consider all others as the loans individually evaluated. After the Company and its subsidiaries have set aside a provision for those
non-performing
assets, the Company and its subsidiaries continue to monitor at least on a quarterly basis the quality of any underlying collateral, the business conditions of the debtors and other important factors in order to report to management and develop additional provision for credit losses as necessary.
The following table provides information about the
past-due
financial assets as of March 31, 2022 and 2023:
 
   
March 31, 2022
  
       
Millions of yen
  
       
Past-due
financing assets
        
Portfolio segment
  
Class
  
30-89 days

past-due
    
90 days

or more

past-due
    
Total

past-due
    
Total

financing

receivables
  
Consumer borrowers
       ¥ 4,183     ¥ 5,637     ¥ 9,820     ¥ 2,343,030  
    Real estate loans     1,473       2,262       3,735       2,113,430  
    Card loans     371       503       874       173,687  
    Other     2,339       2,872       5,211       55,913  
Corporate borrowers
         20,840       31,935       52,775       1,343,679  
Non-recourse
loans
   Japan     0       0       0       74,085  
    The Americas     514       3,042       3,556       80,918  
Other than
Non-recourse
loans
   Real estate companies in Japan     578       350       928       278,607  
    Real estate companies in overseas     16,113       20,879       36,992       121,851  
   
Commercial, industrial and
other companies in Japan
     1,243       1,268       2,511       164,132  
   
Commercial, industrial and
other companies in overseas
     2,392       6,396       8,788       624,086  
Net investment in leases
         9,322       17,746       27,068       1,057,973  
    Japan     2,252       5,782       8,034       652,455  
    Overseas     7,070       11,964       19,034       405,518  
       
 
 
    
 
 
    
 
 
    
 
 
  
Total
       ¥ 34,345     ¥ 55,318     ¥ 89,663     ¥ 4,744,682  
       
 
 
    
 
 
    
 
 
    
 
 
  
 
   
March 31, 2023
  
       
Millions of yen
  
       
Past-due
financing assets
        
Portfolio segment
  
Class
  
30-89 days

past-due
    
90 days

or more

past-due
    
Total

past-due
    
Total

financing

receivables
  
Consumer borrowers
       ¥ 4,574     ¥ 10,047     ¥ 14,621     ¥ 2,299,307  
    Real estate loans     1,739       2,181       3,920       2,056,959  
    Card loans     514       1,364       1,878       171,635  
    Other     2,321       6,502       8,823       70,713  
Corporate borrowers
         5,628       21,363       26,991       1,357,086  
Non-recourse
loans
   Japan     0       0       0       124,499  
    The Americas     0       1,494       1,494       38,654  
Other than
Non-recourse
loans
   Real estate companies in Japan     159       219       378       296,228  
    Real estate companies in overseas     1,412       13,618       15,030       79,645  
   
Commercial, industrial and
other companies in Japan
     1,366       1,118       2,484       160,530  
   
Commercial, industrial and
other companies in overseas
     2,691       4,914       7,605       657,530  
Net investment in leases
         9,181       15,583       24,764       1,087,563  
    Japan     2,648       4,431       7,079       632,120  
    Overseas     6,533       11,152       17,685       455,443  
       
 
 
    
 
 
    
 
 
    
 
 
  
Total
       ¥ 19,383     ¥ 46,993     ¥ 66,376     ¥ 4,743,956  
       
 
 
    
 
 
    
 
 
    
 
 
  
 
Note:
Loans held for sale, policy loans receivable of an insurance entity and purchased loans are not included in the table above.
In common with all classes, the Company and its subsidiaries consider financial assets as
past-due
financial assets when principal or interest is
past-due
30 days or more. Loans whose terms have been modified are not classified as
past-due
financial assets if the principals and interests are not
past-due
30 days or more in accordance with the modified terms.
 
The following table provides information about
non-accrual
of financial assets as of March 31, 2022 and 2023:
 
   
March 31, 2022
  
   
Millions of yen
  
   
Beginning
balance
    
Ending
balance
    
Interest income
recognized during
the reporting period
    
Balance not
associated
allowance for credit
losses among
financial assets
measured at
amortized cost,
which is suspending
recognition of
income
  
Non-accrual
of financial assets:
                                
Installment loans to consumer borrowers:
                                
Real estate loans
                                
Japan
   ¥ 1,976     ¥ 1,824     ¥ 193     ¥ 21  
Overseas
     570       475       0       129  
Card loans
                                
Japan
     1,115       503       35       0  
Other
                                
Japan
     5,970       2,391       208       0  
Overseas
     691       519       0       39  
Installment loans to corporate borrowers:
                                
Non-recourse
loans
                                
The Americas
     10,148       8,787       0       0  
Real estate companies
                                
Japan
     778       351       51       61  
Overseas
     14,505       20,879       0       0  
Commercial, industrial companies and other
                                
Japan
     1,993       1,267       91       28  
Overseas
     26,396       18,634       112       4,018  
Net investment in leases
     17,166       17,771       0       0  
   
 
 
    
 
 
    
 
 
    
 
 
  
Total
   ¥ 81,308     ¥ 73,401     ¥ 690     ¥ 4,296  
   
 
 
    
 
 
    
 
 
    
 
 
  
 
 
   
March 31, 2023
  
   
Millions of yen
  
   
Beginning
balance
    
Ending
balance
    
Interest income
recognized during
the reporting period
    
Balance not
associated
allowance for credit
losses among
financial assets
measured at
amortized cost,
which is suspending
recognition of
income
  
Non-accrual
of financial assets:
                                
Installment loans to consumer borrowers:
                                
Real estate loans
                                
Japan
   ¥ 1,824     ¥ 1,693     ¥ 235     ¥ 41  
Overseas
     475       547       0       0  
Card loans
                                
Japan
     503       1,367       28       0  
Other
                                
Japan
     2,391       5,429       170       10  
Overseas
     519       1,105       0       0  
Installment loans to corporate borrowers:
                                
Non-recourse
loans
                                
The Americas
     8,787       3,248       0       0  
Real estate companies
                                
Japan
     351       219       51       13  
Overseas
     20,879       12,804       0       0  
Commercial, industrial companies and other
                                
Japan
     1,267       1,118       71       190  
Overseas
     18,634       20,470       0       2,113  
Net investment in leases
     17,771       16,627       0       0  
   
 
 
    
 
 
    
 
 
    
 
 
  
Total
   ¥ 73,401     ¥ 64,627     ¥ 555     ¥ 2,367  
   
 
 
    
 
 
    
 
 
    
 
 
  
The Company and its subsidiaries suspend accruing interest on
past-due
installment loans and net investment in leases when principal or interest is
past-due
90 days or more, or earlier, if management determines that their collections are doubtful based on factors such as individual debtors’ creditworthiness, historical loss experience, current delinquencies and delinquency trends. Cash repayments received on
non-accrual
loans are applied first against past due interest and then any surpluses are applied to principal in view of the conditions of the contract and obligors. The Company and its subsidiaries return to accrual status
non-accrual
loans and net investment in leases when it becomes probable that the Company and its subsidiaries will be able to collect all amounts due according to the contractual terms of these loans and lease receivables, as evidenced by continual payments from the debtors. The period of such continual payments before returning to accrual status varies depending on factors that are considered relevant in assessing the debtor’s creditworthiness, such as the debtor’s business characteristics and financial conditions as well as relevant economic conditions and trends.
 
The following table provides information about troubled debt restructurings of financing receivables that occurred during the fiscal year ended March 31, 2021, 2022 and 2023:
 
   
Fiscal Year ended March 31, 2021
  
       
Millions of yen
  
Portfolio segment
  
Class
  
Pre-modification

outstanding

recorded investment
    
Post-modification

outstanding

recorded investment
  
Consumer borrowers
       ¥ 9,279     ¥ 6,727  
    Real estate loans     34       23  
    Card loans     1,677       1,261  
    Other     7,568       5,443  
Corporate borrowers
         14,723       13,049  
Other than
Non-recourse
loans
   Real estate companies in overseas     111       111  
   
Commercial, industrial and
other companies in Japan
     38       38  
   
Commercial, industrial and
other companies in overseas
     14,574       12,900  
       
 
 
    
 
 
  
Total
       ¥    24,002     ¥    19,776  
       
 
 
    
 
 
  
 
   
Fiscal Year ended March 31, 2022
  
       
Millions of yen
  
Portfolio segment
  
Class
  
Pre-modification

outstanding

recorded investment
    
Post-modification

outstanding

recorded investment
  
Consumer borrowers
       ¥ 8,761     ¥ 6,152  
    Real estate loans     15       6  
    Card loans     1,385       1,072  
    Other     7,361       5,074  
Corporate borrowers
         5,481       5,319  
Other than
Non-recourse
loans
  
Commercial, industrial and
other companies in overseas
     5,481       5,319  
       
 
 
    
 
 
  
Total
       ¥    14,242     ¥    11,471  
       
 
 
    
 
 
  
 
   
Fiscal Year ended March 31, 2023
  
       
Millions of yen
  
Portfolio segment
  
Class
  
Pre-modification

outstanding

recorded investment
    
Post-modification

outstanding

recorded investment
  
Consumer borrowers
       ¥ 7,977     ¥ 6,171  
    Real estate loans     10       4  
    Card loans     1,536       1,312  
    Other     6,431       4,855  
Corporate borrowers
         10,510       10,507  
Other than
Non-recourse
loans
   Real estate companies in Japan     231       230  
   
Commercial, industrial and
other companies in overseas
     10,279       10,277  
       
 
 
    
 
 
  
Total
       ¥    18,487     ¥    16,678  
       
 
 
    
 
 
  
A troubled debt restructuring is defined as a restructuring of a financing receivable in which the creditor grants a concession to the debtor for economic or other reasons related to the debtor’s financial difficulties.
 
The Company and its subsidiaries offer various types of concessions to our debtors to protect as much of the investment as possible in troubled debt restructurings. For the debtors of all financing receivables, the Company and its subsidiaries offer concessions including an extension of the maturity date at an interest rate lower than the current market rate for a debt with similar risk characteristics. In addition, for the debtors of all financing receivables other than
non-recourse
loans, the Company and its subsidiaries also offer concessions such as a reduction of the loan principal or a temporary reduction in the interest payments. Furthermore, the Company and its subsidiaries may acquire collateral assets from the debtors in troubled debt restructurings to satisfy fully or partially the loan principal or past due interest.
In common with all portfolio segments, financing receivables modified as troubled debt restructurings are recognized as impaired and are individually evaluated for allowance for credit losses. In most cases, these financing receivables have already been considered impaired and individually evaluated for allowance for credit losses prior to the restructurings. However, as a result of the restructuring, the Company and its subsidiaries may recognize additional allowance for credit losses for the restructured receivables.
For fiscal 2021, 2022 and 2023, while there are financial assets for which the payments were deferred other than those in the troubled debt restructuring stated above due to the spread of
COVID-19,
the payment deferrals, which are determined not to meet the definition of a troubled debt restructuring are not included in the troubled debt restructuring stated the above.
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2021 and for which there was a payment default during the fiscal year ended March 31, 2021:
 
    
Fiscal Year ended March 31, 2021
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Recorded investment
  
Consumer borrowers
         ¥ 387  
     Card loans      36  
     Other      351  
Corporate borrowers
           752  
Other than
Non-recourse
loans
    Commercial, industrial other companies in overseas      752  
         
 
 
  
Total
         ¥ 1,139  
         
 
 
  
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2022 and for which there was a payment default during the fiscal year ended March 31, 2022:
 
    
Fiscal Year ended March 31, 2022
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Recorded investment
  
Consumer borrowers
         ¥ 900  
     Real estate loans      4  
     Card loans      6  
     Other      890  
         
 
 
  
Total
         ¥    900  
         
 
 
  
 
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2023 and for which there was a payment default during the fiscal year ended March 31, 2023:
 
    
Fiscal Year ended March 31, 2023
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Recorded investment
  
Consumer borrowers
         ¥ 808  
     Real estate loans      5  
     Card loans      2  
     Other      801  
Corporate borrowers
           4,692  
Other than
Non-recourse
loans
   
Commercial, industrial and
other companies in overseas
      4,692  
         
 
 
  
Total
         ¥ 5,500  
         
 
 
  
The Company and its subsidiaries consider financing receivables whose terms have been modified in a restructuring as defaulted receivables when principal or interest is
past-due
90 days or more in accordance with the modified terms.
In common with all portfolio segments, the Company and its subsidiaries suspend accruing interest and may recognize additional allowance for credit losses as necessary for the defaulted financing receivables.
As of March 31, 2022 and 2023, there were no foreclosed residential real estate properties. The carrying amounts of installment loans in consumer real estate loans collateralized by residential real estate property that are in the process of foreclosure were ¥162 million and ¥57 million as of March 31, 2022 and 2023, respectively.