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Transfer of Financial Assets | 6 Months Ended
--- | ---
Sep. 30, 2023
Transfers and Servicing [Abstract] |
Transfer of Financial Assets |
9. | Transfer of Financial Assets
The Company and its subsidiaries have securitized and transferred financial assets such as installment loans (commercial mortgage loans, housing loans and other). In the securitization process, these financial assets are transferred to SPEs that issue beneficial interests of the securitization trusts and securities backed by the financial assets to investors. The cash flows collected from these assets transferred to the SPEs are then used to repay these asset-backed beneficial interests and securities. As the transferred assets are isolated from the Company and its subsidiaries, the investors and the SPEs have no recourse to other assets of the Company and its subsidiaries in cases where the debtors or the issuers of the transferred financial assets fail to perform under the original terms of those financial assets. The Company and its subsidiaries often have continuing involvement with transferred financial assets by retaining the servicing arrangements and the interests in the SPEs in the form of the beneficial interest of the securitization trusts. Those interests that continue to be held include interests in the transferred assets and are often subordinate to other tranche(s) of the securitization. Those beneficial interests that continue to be held by the Company and its subsidiaries are subject to credit risk, interest rate risk and prepayment risk on the securitized financial assets. With regards to these subordinated interests that the Company and its subsidiaries retain, they are subordinated to the senior investments and are exposed to different credit and prepayment risks, since they first absorb the risk of the decline in the cash flows from the financial assets transferred to the SPEs for defaults and prepayment of the transferred assets. If there is any excess cash remaining in the SPEs after payment to investors in the securitization of the contractual rate of returns, most of such excess cash is distributed to the Company and its subsidiaries for payments of the subordinated interests. SPEs used in securitization transactions have been consolidated if the Company and its subsidiaries are the primary beneficiary of the SPEs. When the Company and its subsidiaries have transferred financial assets to a transferee that is not subject to consolidation, the Company and its subsidiaries account for the transfer as a sale if control over the transferred assets is surrendered. For the six months ended September 30, 2022 and 2023, the amount of installment loans that has been derecognized due to new securitization and transfer of loans were ¥512,156 million and ¥471,119 million, respectively. For the six months ended September 30, 2022 and 2023, gains (losses) from the securitization and transfer of loans were ¥11,156 million and ¥9,215 million, respectively, which is included in finance revenues in the consolidated statements of income. For the three months ended September 30, 2022 and 2023, the amount of installment loans that has been derecognized due to new securitization and transfer of loans were ¥285,760 million and ¥256,753 million, respectively. For the three months ended September 30, 2022 and 2023, gains (losses) from the securitization and transfer of loans were ¥5,744 million and ¥4,613 million, respectively, which is included in finance revenues in the consolidated statements of income. A certain subsidiary originates and sells loans into the secondary market while retaining the obligation to service those loans. In addition, the subsidiary undertakes obligations to service loans originated by others. The servicing assets related to those servicing activities are included in other assets in the consolidated balance sheets and roll-forwards of the amount of the servicing assets for the six and three months ended September 30, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | Six months ended September 30, 2022 |  |  | Six months ended September 30, 2023 |  |  | Three months ended September 30, 2022 |  |  | Three months ended September 30, 2023 |
Beginning balance |  | ¥ | 70,254 |  |  | ¥ | 72,265 |  |  | ¥ | 77,199 |  |  | ¥ | 78,392 |
Increase mainly from loans sold with servicing retained |  |  | 5,426 |  |  |  | 4,788 |  |  |  | 2,546 |  |  |  | 2,336 |
Decrease mainly from amortization |  |  | (8,146 | ) |  |  | (5,227 | ) |  |  | (4,079 | ) |  |  | (2,704 | )
Increase from the effects of changes in foreign exchange rates |  |  | 12,656 |  |  |  | 8,670 |  |  |  | 4,524 |  |  |  | 2,472 |
Ending balance |  | ¥ | 80,190 |  |  | ¥ | 80,496 |  |  | ¥ | 80,190 |  |  | ¥ | 80,496 |
The fair value of the servicing assets as of March 31, 2023 and September 30, 2023 are as follows: |
|  |  |  |  |  |  |  | Millions of yen |
|  |  |  |  |  |  |  | March 31, 2023 |  |  | September 30, 2023 |
Beginning balance |  |  |  |  |  |  |  |  |  | ¥ | 83,732 |  |  | ¥ | 101,375 |
Ending balance |  |  |  |  |  |  |  |  |  | ¥ | 101,375 |  |  | ¥ | 114,501 |

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- Definition The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 860 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 1A -Subparagraph (b)(2) -Publisher FASB -URI 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