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Credit Quality of Financial Assets and the Allowance for Credit Losses
 6 Months Ended
Sep. 30, 2023
Credit Loss [Abstract]  
Credit Quality of Financial Assets and the Allowance for Credit Losses
7.
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 modifications of financing receivables made to debtors experiencing financial difficulty
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 as of March 31, 2023, and for the six and three months ended September 30, 2022 and 2023:
 
    
Six months ended September 30, 2022
  
    
Millions of yen
  
    
Beginning
balance
     
Provision
(Reversal) *3
    
Allowance
of
purchased
loans

during the
reporting
period
     
Charge-offs *4
    
Recoveries
    
Other *5
    
Ending
balance *3
     
Collective
(pool)
assessment
     
Individual
assessment
  
Allowance for credit losses:
                       
Installment loans to consumer borrowers:
                       
Real estate loans
                       
Japan
    ¥ 5,716      ¥ (0 )    ¥ 0      ¥ (82 )    ¥ 13     ¥ 1     ¥ 5,648      ¥ 5,153      ¥ 495  
Overseas
      455        (2 )      0        0       0       3       456        456        0  
Card loans
                       
Japan
      10,019        228       0        (265 )      4       0       9,986        9,357        629  
Other
                       
Japan
      5,204        2,152       0        (865 )      4       0       6,495        4,167        2,328  
Overseas
      1,105        286       0        (206 )      0       137       1,322        1,187        135  
Installment loans to corporate borrowers:
                       
Non-recourse
loans
                       
Japan
      81        1       0        0       0       0       82        82        0  
The Americas
      2,691        (944 )      0        0       0       122       1,869        857        1,012  
Real estate companies
                       
Japan
      617        (21 )      0        0       13       1       610        489        121  
Overseas
      735        (98 )      0        (14 )      0       57       680        680        0  
Commercial, industrial companies
                       
Japan
      1,337        256       0        (277 )      7       0       1,323        475        848  
Overseas
      18,296        114       0        (1,825 )      310       3,144       20,039        16,169        3,870  
Purchased loans *1
      1,575        (242 )      2,095        (2,309 )      56       12       1,187        563        624  
Net investment in leases:
      16,303        582       0        (1,430 )      25       760       16,240        12,030        4,210  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
Subtotal
      64,134        2,312       2,095        (7,273 )      432       4,237       65,937        51,665        14,272  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
Other financial assets measured
at amortized cost *2
      7,282        157       0        (4,567 )      15       334       3,221        629        2,592  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
Total
    ¥ 71,416      ¥ 2,469     ¥ 2,095      ¥ (11,840 )    ¥ 447      ¥ 4,571      ¥ 69,158      ¥ 52,294      ¥ 16,864  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
 
    
Three months ended September 30, 2022
  
    
Millions of yen
  
    
Beginning
balance
     
Provision
(Reversal) *3
 
Allowance
of
purchased
loans

during the
reporting
period
     
Charge-offs *4
    
Recoveries
    
Other *5
    
Ending
balance *3
     
Collective
(pool)
assessment
     
Individual
assessment
  
Allowance for credit losses:
                       
Installment loans to consumer borrowers:
                       
Real estate loans
                       
Japan
    ¥ 5,725      ¥ (80 )    ¥ 0      ¥ (3 )    ¥ 5     ¥ 1     ¥ 5,648      ¥ 5,153      ¥ 495  
Overseas
      471        1       0        0       0       (16 )      456        456        0  
Card loans
                       
Japan
      9,933        209       0        (158 )      2       0       9,986        9,357        629  
Other
                       
Japan
      5,915        1,038       0        (460 )      2       0       6,495        4,167        2,328  
Overseas
      1,164        242       0        (140 )      0       56       1,322        1,187        135  
Installment loans to corporate borrowers:
                       
Non-recourse
loans
                       
Japan
      65        17       0        0       0       0       82        82        0  
The Americas
      2,235        (218 )      0        0       0       (148 )      1,869        857        1,012  
Real estate companies
                       
Japan
      600        4       0        0       5       1       610        489        121  
Overseas
      630        54       0        (14 )      0       10       680        680        0  
Commercial, industrial companies
                       
Japan
      1,206        220       0        (107 )      4       0       1,323        475        848  
Overseas
      18,720        78       0        (190 )      281       1,150       20,039        16,169        3,870  
Purchased loans *1
      1,546        (214 )      2,067        (2,261 )      56       (7 )      1,187        563        624  
Net investment in leases:
      16,665        123       0        (650 )      18       84       16,240        12,030        4,210  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
Subtotal
      64,875        1,474       2,067        (3,983 )      373       1,131       65,937        51,665        14,272  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
Other financial assets measured at amortized cost *2
      2,976        161       0        (31 )      (12 )      127       3,221        629        2,592  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
Total
    ¥ 67,851      ¥ 1,635     ¥ 2,067      ¥  (4,014 )    ¥ 361     ¥ 1,258     ¥ 69,158      ¥ 52,294      ¥ 16,864  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
     
 
 
  
 
    
March 31, 2023
  
    
Millions of yen
  
    
Ending
balance *3
     
Collective
(pool)
assessment
     
Individual
assessment
  
Allowance for credit losses:
         
Installment loans to consumer borrowers:
         
Real estate loans
         
Japan
    ¥ 4,092      ¥ 3,644      ¥ 448  
Overseas
      446        446        0  
Card loans
         
Japan
      9,022        8,329        693  
Other
         
Japan
      7,759        5,337        2,422  
Overseas
      1,889        1,467        422  
Installment loans to corporate borrowers:
         
Non-recourse
loans
         
Japan
      253        253        0  
The Americas
      1,494        560        934  
Real estate companies
         
Japan
      777        663        114  
Overseas
      1,007        1,007        0  
Commercial, industrial companies
         
Japan
      1,152        477        675  
Overseas
      19,132        16,455        2,677  
Purchased loans *1
      1,148        541        607  
Net investment in leases:
      15,719        12,032        3,687  
  
 
 
     
 
 
     
 
 
  
Subtotal
      63,890        51,211        12,679  
  
 
 
     
 
 
     
 
 
  
Other financial assets measured at amortized cost *2
      1,482        548        934  
  
 
 
     
 
 
     
 
 
  
Total
    ¥ 65,372      ¥ 51,759      ¥ 13,613  
  
 
 
     
 
 
     
 
 
  
 
    
Six months ended September 30, 2023
  
    
Millions of yen
  
    
Beginning
balance
     
Provision
(Reversal) *3
    
Allowance
of
purchased
loans
during the
reporting
period
     
Charge-offs *4
    
Recoveries
     
Other *5
     
Ending
balance *3
     
Collective
(pool)
assessment
     
Individual
assessment
  
Allowance for credit losses:
                         
Installment loans to consumer borrowers:
                         
Real estate loans
                         
Japan
    ¥ 4,092      ¥ (50 )    ¥ 0      ¥ (144 )    ¥ 84      ¥ 1      ¥ 3,983      ¥ 3,613      ¥ 370  
Overseas
      446        118       0        0       1        41        606        575        31  
Card loans
                         
Japan
      9,022        753       0        (450 )      8        0        9,333        8,611        722  
Other
                         
Japan
      7,759        2,970       0        (1,806 )      3        1        8,927        6,487        2,440  
Overseas
      1,889        1,370       0        (1,124 )      163        238        2,536        1,896        640  
Installment loans to corporate borrowers:
                         
Non-recourse
loans
                         
Japan
      253        (27 )      0        0       0        0        226        226        0  
The Americas
      1,494        197       0        0       0        192        1,883        837        1,046  
Real estate companies
                         
Japan
      777        23       0        (4 )      13        0        809        705        104  
Overseas
      1,007        (68 )      0        0       0        82        1,021        1,021        0  
Commercial, industrial companies
                         
Japan
      1,152        (29 )      0        (23 )      4        0        1,104        615        489  
Overseas
      19,132        434       0        (2,131 )      101        2,107        19,643        16,288        3,355  
Purchased loans *1
      1,148        69       7,580        (7,612 )      1        12        1,198        511        687  
Net investment in leases:
      15,719        1,717       0        (1,234 )      17        590        16,809        12,366        4,443  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Subtotal
      63,890        7,477       7,580        (14,528 )      395        3,264        68,078        53,751        14,327  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Other financial assets measured at amortized cost *2
      1,482        254       0        (178 )      5        227        1,790        702        1,088  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total
    ¥ 65,372      ¥ 7,731     ¥ 7,580      ¥ (14,706 )    ¥ 400      ¥ 3,491      ¥ 69,868      ¥ 54,453      ¥ 15,415  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
    
Three months ended September 30, 2023
  
    
Millions of yen
  
    
Beginning
balance
     
Provision
(Reversal) *3
    
Allowance
of
purchased
loans
during the
reporting
period
     
Charge-offs *4
    
Recoveries
     
Other *5
    
Ending
balance *3
     
Collective
(pool)
assessment
     
Individual
assessment
  
Allowance for credit losses:
                        
Installment loans to consumer borrowers:
                        
Real estate loans
                        
Japan
    ¥ 4,003      ¥ 30     ¥ 0      ¥ (88 )    ¥ 38      ¥ 0     ¥ 3,983      ¥ 3,613      ¥ 370  
Overseas
      532        65       0        0       1        8       606        575        31  
Card loans
                        
Japan
      9,102        433       0        (206 )      4        0       9,333        8,611        722  
Other
                        
Japan
      8,487        1,369       0        (930 )      1        0       8,927        6,487        2,440  
Overseas
      2,153        884       0        (630 )      82        47       2,536        1,896        640  
Installment loans to corporate borrowers:
                        
Non-recourse
loans
                        
Japan
      262        (36 )      0        0       0        0       226        226        0  
The Americas
      1,727        98       0        0       0        58       1,883        837        1,046  
Real estate companies
                        
Japan
      788        15       0        0       5        1       809        705        104  
Overseas
      1,044        (37 )      0        0       0        14       1,021        1,021        0  
Commercial, industrial companies
                        
Japan
      976        128       0        (1 )      2        (1 )      1,104        615        489  
Overseas
      18,929        1,411       0        (1,337 )      101        539       19,643        16,288        3,355  
Purchased loans *1
      1,189        36       7,261        (7,288 )      0        0       1,198        511        687  
Net investment in leases:
      16,388        942       0        (609 )      0        88       16,809        12,366        4,443  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
  
Subtotal
      65,580        5,338       7,261        (11,089 )      234        754       68,078        53,751        14,327  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
  
Other financial assets measured at amortized cost *2
      1,655        113       0        (136 )      5        153       1,790        702        1,088  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
  
Total
    ¥ 67,235      ¥ 5,451     ¥ 7,261      ¥ (11,225 )    ¥ 239      ¥ 907     ¥ 69,868      ¥ 54,453      ¥ 15,415  
  
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
     
 
 
  
 
Notes:
    1   
Loans held for sale and policy loan receivables of an insurance entity are not in
the
 scope of 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.
*2
The allowance for other financial assets measured at amortized cost includes the allowance for credit losses on financing 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 ¥1,674 million and ¥8,524 million during the six months ended September 30, 2022 and 2023, provisions of ¥1,426 million and ¥5,604 million during the three months ended September 30, 2022 and 2023, respectively. “Allowance for credit losses” on the consolidated balance sheets amounted to ¥64,723 million and ¥69,046 million as of March 31, 2023 and September 30, 2023, respectively. The reconciliation between the above table and the amounts reported on the consolidated financial statements during the six and three months ended September 30, 2022 and 2023, and as of March 31, 2023 and September 30, 2023 are as follows:
 
    
Millions of yen
  
    
Six months
ended
September 30,
2022
    
Three months
ended
September 30,
2022
    
March 31,
2023
    
Six months
ended
September 30,
2023
    
Three months
ended
September 30,
2023
    
September 30,
2023
  
    
Provision for
credit losses
    
Provision for
credit losses
    
Allowance for
credit losses
    
Provision for
credit losses
    
Provision for
credit losses
    
Allowance for
credit losses
  
Net investment in leases
    ¥ 582     ¥ 123     ¥ 15,719     ¥ 1,717     ¥ 942     ¥ 16,809  
Installment loans
      1,730       1,351       48,171       5,760       4,396       51,269  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Subtotal in the above table
      2,312       1,474       63,890       7,477       5,338       68,078  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Other financial assets measured at amortized cost
      157       161       1,482       254       113       1,790  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total in the above table
      2,469       1,635       65,372       7,731       5,451       69,868  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Off-balance
sheet credit exposures *3(a)
      (868 )      (225 )      —        591       171       —   
Available-for-sale
debt securities *3(b)
      (5 )      0       —        292       0       —   
Less: Loans to affiliates *3(c)
      78       16       (649 )      (90 )     (18 )      (822 ) 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Amount reported on the consolidated financial statements
    ¥ 1,674     ¥ 1,426     ¥ 64,723     ¥ 8,524     ¥ 5,604     ¥ 69,046  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
  *3(a)
The allowance for
off-balance
sheet credit exposure were ¥17,843 million and ¥18,783 million as of March 31, 2023 and September 30, 2023, respectively, and the amounts are recorded in “Other liabilities” on the consolidated balance sheets. For further information, see Note 24 “Commitments, Guarantees and Contingent Liabilities.”
  *3(b)
The allowance for
available-for-sale
debt securities were ¥144 million and ¥468 million as of March 31, 2023 and September 30, 2023, respectively, and the amounts are recorded as a reduction in “Investments in securities” on the consolidated balance sheets. For further information, see Note 8 “Investment in Securities.”
  *3(c)
The provision for credit losses on loans to affiliates were a reversal of ¥78 million and a provision of ¥90 million during the six months ended September 30, 2022 and 2023, a reversal of ¥16 million and a provision of ¥18 million during the three months ended September 30, 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 ¥649 million and ¥822 million as of March 31, 2023 and September 30, 2023, respectively, and the amounts are recorded as a reduction in “Investments in affiliates” on the consolidated balance sheets.
*4
Included in
Charge-off
in write-offs of purchased loans were ¥2,095 million and ¥7,580 million during the six months ended September 30, 2022 and 2023, ¥2,067 million and ¥7,261 million during the three months ended September 30, 2022 and 2023, respectively.
*5
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 the six and three months ended September 30, 2022 and 2023:
 
    
Six months ended

September 30, 2022
     
Six months ended

September 30, 2023
  
Purchase price
    ¥ 1,940      ¥ 1,281  
Allowance for credit losses at acquisition date
      2,095        7,580  
Discount or premium attributable to other factors
      226        125  
  
 
 
     
 
 
  
Par value
    ¥ 4,261      ¥ 8,986  
  
 
 
     
 
 
  
    
Millions of yen
  
    
Three months ended

September 30, 2022
     
Three months ended

September 30, 2023
  
Purchase price
    ¥ 1,537      ¥ 1,031  
Allowance for credit losses at acquisition date
      2,067        7,261  
Discount or premium attributable to other factors
      208        100  
  
 
 
     
 
 
  
Par value
    ¥ 3,812      ¥ 8,392  
  
 
 
     
 
 
  
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 to debtors experiencing financial difficulty, 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.
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 the six months ended September 30, 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 financing receivables if the financing receivables are collateral-dependent.
 
The collateral-dependent financing receivables are defined as the finance receivables, which a debtor would be in financial difficulty and the collection significantly depend on the collateral. These financing 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, 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, 2023
 
Millions of yen
 
Portfolio segment
  
Origination year (years ended March 31)
 
  
Total
 
Class
  
 
 
Credit Quality
  
2023
 
  
2022
 
  
2021
 
  
2020
 
  
2019
 
  
Prior
 
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
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
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
 
 
The following table provides information about the origination years of financial assets as of September 30, 2023 and the gross write-offs, corresponding to each class of financial assets by origination year, recorded during the six months ended September 30, 2023. Card loans to consumer borrowers with a revolving repayment feature that cannot be classified into the origination year are excluded from the table.
 
                                                                                                                      
September 30, 2023
  
Millions of yen
  
Portfolio segment
   
Origination year (years ended March 31)
     
Total
  
Class
                                          
Credit Quality
   
2024
     
2023
     
2022
     
2021
     
2020
     
Prior
  
Consumer borrowers:
                     
Performing
   
¥
187,132
 
   
¥
228,270
 
   
¥
186,944
 
   
¥
268,576
 
   
¥
349,046
 
   
¥
865,427
 
   
¥
2,085,395
 
Non-Performing
   
 
6,438
 
   
 
9,147
 
   
 
4,076
 
   
 
2,918
 
   
 
1,803
 
   
 
13,357
 
   
¥
37,739
 
Gross write-offs
   
 
136
 
   
 
1,770
 
   
 
736
 
   
 
154
 
   
 
103
 
   
 
175
 
   
¥
3,074
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Real estate loans
                     
Performing
   
 
167,178
 
   
 
201,748
 
   
 
179,433
 
   
 
267,260
 
   
 
348,336
 
   
 
864,500
 
   
¥
2,028,455
 
Non-Performing
   
 
4
 
   
 
53
 
   
 
254
 
   
 
792
 
   
 
479
 
   
 
12,551
 
   
¥
14,133
 
Gross write-offs
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
144
 
   
¥
144
 
Other*
                     
Performing
   
 
19,954
 
   
 
26,522
 
   
 
7,511
 
   
 
1,316
 
   
 
710
 
   
 
927
 
   
¥
56,940
 
Non-Performing
   
 
6,434
 
   
 
9,094
 
   
 
3,822
 
   
 
2,126
 
   
 
1,324
 
   
 
806
 
   
¥
23,606
 
Gross write-offs
   
 
136
 
   
 
1,770
 
   
 
736
 
   
 
154
 
   
 
103
 
   
 
31
 
   
¥
2,930
 
Corporate borrowers:
                     
Performing
   
 
309,556
 
   
 
302,774
 
   
 
320,807
 
   
 
109,252
 
   
 
160,645
 
   
 
218,685
 
   
¥
1,421,719
 
Non-Performing
   
 
87
 
   
 
478
 
   
 
9,344
 
   
 
5,509
 
   
 
7,843
 
   
 
26,594
 
   
¥
49,855
 
Gross write-offs
   
 
101
 
   
 
4
 
   
 
225
 
   
 
73
 
   
 
112
 
   
 
1,643
 
   
¥
2,158
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Non-recourse
loans
                     
Japan
                     
Performing
   
 
25,529
 
   
 
30,596
 
   
 
11,504
 
   
 
6,707
 
   
 
22,058
 
   
 
7,291
 
   
¥
103,685
 
Gross write-offs
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
¥
0
 
The Americas
                     
Performing
   
 
0
 
   
 
5,734
 
   
 
1,800
 
   
 
147
 
   
 
19,679
 
   
 
12,365
 
   
¥
39,725
 
Non-Performing
   
 
0
 
   
 
69
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
3,556
 
   
¥
3,625
 
Gross write-offs
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
¥
0
 
Other than non-recourse loans
                     
Real estate companies in Japan
                     
Performing
   
 
78,728
 
   
 
89,599
 
   
 
36,194
 
   
 
26,002
 
   
 
25,098
 
   
 
62,824
 
   
 
¥318,445
 
Non-Performing
   
 
0
 
   
 
3
 
   
 
0
 
   
 
0
 
   
 
834
 
   
 
873
 
   
 
¥1,710
 
Gross write-offs
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
4
 
   
 
0
 
   
 
¥4
 
Real estate companies in overseas
                     
Performing
   
 
1,907
 
   
 
18,799
 
   
 
11,665
 
   
 
3,604
 
   
 
4,644
 
   
 
3,946
 
   
 
¥44,565
 
Non-Performing
   
 
0
 
   
 
18
 
   
 
543
 
   
 
508
 
   
 
1,750
 
   
 
12,441
 
   
 
¥15,260
 
Gross write-offs
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
¥0
 
Commercial, industrial and other companies in Japan
                     
Performing
   
 
139,480
 
   
 
48,159
 
   
 
22,640
 
   
 
14,258
 
   
 
12,861
 
   
 
17,647
 
   
¥
255,045
 
Non-Performing
   
 
0
 
   
 
121
 
   
 
76
 
   
 
208
 
   
 
196
 
   
 
448
 
   
¥
1,049
 
Gross write-offs
   
 
0
 
   
 
1
 
   
 
0
 
   
 
0
 
   
 
22
 
   
 
0
 
   
¥
23
 
Commercial, industrial and other companies in overseas
                     
Performing
   
 
63,912
 
   
 
109,887
 
   
 
237,004
 
   
 
58,534
 
   
 
76,305
 
   
 
114,612
 
   
¥
660,254
 
Non-Performing
   
 
87
 
   
 
267
 
   
 
8,725
 
   
 
4,793
 
   
 
5,063
 
   
 
9,276
 
   
¥
28,211
 
Gross write-offs
   
 
101
 
   
 
3
 
   
 
225
 
   
 
73
 
   
 
86
 
   
 
1,643
 
   
¥
2,131
 
Purchased loans:
                     
Performing
   
 
0
 
   
 
27
 
   
 
596
 
   
 
199
 
   
 
69
 
   
 
9,390
 
   
¥
10,281
 
Non-Performing
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
12
 
   
 
1,109
 
   
¥
1,121
 
Gross write-offs
   
 
0
 
   
 
409
 
   
 
226
 
   
 
29
 
   
 
206
 
   
 
6,742
 
   
¥
7,612
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Net investment in leases:
                     
Performing
   
 
282,112
 
   
 
372,170
 
   
 
207,953
 
   
 
108,800
 
   
 
78,472
 
   
 
95,566
 
   
¥
1,145,073
 
Non-Performing
   
 
3,028
 
   
 
4,475
 
   
 
3,346
 
   
 
1,676
 
   
 
1,745
 
   
 
6,446
 
   
¥
20,716
 
Gross write-offs
   
 
0
 
   
 
7
 
   
 
409
 
   
 
234
 
   
 
139
 
   
 
445
 
   
¥
1,234
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Japan
                     
Performing
   
 
115,467
 
   
 
165,315
 
   
 
118,882
 
   
 
83,911
 
   
 
62,476
 
   
 
88,499
 
   
¥
634,550
 
Non-Performing
   
 
24
 
   
 
380
 
   
 
764
 
   
 
720
 
   
 
742
 
   
 
2,253
 
   
¥
4,883
 
Gross write-offs
   
 
0
 
   
 
5
 
   
 
36
 
   
 
52
 
   
 
80
 
   
 
327
 
   
¥
500
 
Overseas
                     
Performing
   
 
166,645
 
   
 
206,855
 
   
 
89,071
 
   
 
24,889
 
   
 
15,996
 
   
 
7,067
 
   
¥
510,523
 
Non-Performing
   
 
3,004
 
   
 
4,095
 
   
 
2,582
 
   
 
956
 
   
 
1,003
 
   
 
4,193
 
   
¥
15,833
 
Gross write-offs
   
 
0
 
   
 
2
 
   
 
373
 
   
 
182
 
   
 
59
 
   
 
118
 
   
¥
734
 
Other financial assets measured at amortized cost
                     
Performing
   
 
3,341
 
   
 
3,185
 
   
 
0
 
   
 
1,862
 
   
 
288
 
   
 
19,912
 
   
¥
28,588
 
Non-Performing
   
 
0
 
   
 
0
 
   
 
332
 
   
 
0
 
   
 
0
 
   
 
1,410
 
   
¥
1,742
 
Gross write-offs
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
 
0
 
   
¥
0
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total (excluding revolving repayment card loans)
                     
Performing
   
¥
782,141
 
   
¥
906,426
 
   
¥
716,300
 
   
¥
488,689
 
   
¥
588,520
 
   
¥
1,208,980
 
   
¥
4,691,056
 
Non-Performing
   
 
9,553
 
   
 
14,100
 
   
 
17,098
 
   
 
10,103
 
   
 
11,403
 
   
 
48,916
 
   
¥
111,173
 
Gross write-offs
   
 
237
 
   
 
2,190
 
   
 
1,596
 
   
 
490
 
   
 
560
 
   
 
9,005
 
   
¥
14,078
 
 
Note: Loans held for sale, policy loan receivables of an insurance entity and financing receivables, such as accounts receivable 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 24 “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, 2023 is as follows:
 
    
March 31, 2023
  
    
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  
              
 
 
  
 
The information about card loans to consumer borrowers with a revolving repayment feature that cannot be classified into the origination year as of September 30, 2023 and the gross write-offs, corresponding to card loans, recorded during the six months ended September 30, 2023 is as follows:
 
 
    
September 30, 2023
  
    
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
    ¥ 167,209      ¥ 0      ¥ 167,209      ¥ 4,691,056      ¥ 4,858,265  
              
 
 
  
Non-Performing
      2,076        3,857        5,933        111,173      ¥ 117,106  
              
 
 
  
Gross write-offs
      375        75        450        14,078      ¥   14,528  
              
 
 
  
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, 2023 and September 30, 2023:
 
    
March 31, 2023
  
         
Millions of yen
  
         
Past-due
financial 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  
     
 
 
     
 
 
     
 
 
     
 
 
  
    
September 30, 2023
  
         
Millions of yen
  
         
Past-due
financial assets
         
Portfolio segment
   
Class
   
30-89
days

past-due
     
90 days

or more

past-due
     
Total

past-due
     
Total

financing

receivables
  
Consumer borrowers
       ¥ 5,350      ¥ 12,875      ¥ 18,225      ¥ 2,296,276  
   Real estate loans      1,433        2,772        4,205        2,042,588  
   Card loans      557        1,938        2,495        173,142  
   Other      3,360        8,165        11,525        80,546  
Corporate borrowers
         6,183        30,419        36,602        1,471,574  
Non-recourse
loans
    Japan      0        0        0        103,685  
   The Americas      0        1,661        1,661        43,350  
Other than
Non-recourse
loans
    Real estate companies in Japan      235        206        441        320,155  
   Real estate companies in overseas      1,000        15,260        16,260        59,825  
  
Commercial, industrial and
other companies in Japan
      1,748        822        2,570        256,094  
  
Commercial, industrial and
other companies in overseas
      3,200        12,470        15,670        688,465  
Net investment in leases
         14,961        19,742        34,703        1,165,789  
   Japan      2,967        4,385        7,352        639,433  
   Overseas      11,994        15,357        27,351        526,356  
     
 
 
     
 
 
     
 
 
     
 
 
  
Total
       ¥ 26,494      ¥ 63,036      ¥ 89,530      ¥ 4,933,639  
     
 
 
     
 
 
     
 
 
     
 
 
  
 
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, 2023 and September 30, 2023:
 
         
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  
     
 
 
     
 
 
     
 
 
     
 
 
  
 
         
September 30, 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
    ¥ 1,693      ¥ 1,899      ¥ 126      ¥ 194  
  
Overseas
      547        941        0        7  
Card loans
   
Japan
      1,367        1,938        16        0  
Other
               
  
Japan
      5,429        6,746        101        8  
  
Overseas
      1,105        1,423        0        4  
Installment loans to corporate borrowers:
            
Non-recourse
loans
   
The Americas
      3,248        3,556        0        0  
Real estate companies
            
  
Japan
      219        206        23        8  
  
Overseas
      12,804        21,927        0        0  
Commercial, industrial companies and other
            
  
Japan
      1,118        822        18        158  
  
Overseas
      20,470        27,936        0        2,368  
Net investment in leases
      16,627        20,879        0        0  
     
 
 
     
 
 
     
 
 
     
 
 
  
Total
       ¥      64,627      ¥      88,273      ¥      284      ¥      2,747  
     
 
 
     
 
 
     
 
 
     
 
 
  
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 six and three months ended September 30, 2022:
 
Six months ended September 30, 2022
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Pre-modification

outstanding

recorded investment
     
Post-modification

outstanding

recorded investment
  
Consumer borrowers
       ¥ 3,979      ¥ 3,175  
   Real estate loans      5        3  
   Card loans      713        619  
   Other      3,261        2,553  
Corporate borrowers
         8,213        8,212  
Other than
Non-recourse
loans
    Commercial, industrial and other companies in overseas      8,213        8,212  
     
 
 
     
 
 
  
Total
       ¥ 12,192      ¥ 11,387  
     
 
 
     
 
 
  
 
Three months ended September 30, 2022
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Pre-modification

outstanding

recorded investment
     
Post-modification

outstanding

recorded investment
  
Consumer borrowers
       ¥ 1,938      ¥ 1,527  
   Real estate loans      5        3  
   Card loans      332        284  
   Other      1,601        1,240  
Corporate borrowers
         2,582        2,582  
Other than
Non-recourse
loans
    Commercial, industrial and other companies in overseas      2,582        2,582  
     
 
 
     
 
 
  
Total
       ¥ 4,520      ¥ 4,109  
     
 
 
     
 
 
  
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 six months ended September 30, 2022, 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 September 30, 2022 and for which there was a payment default during the six and three months ended September 30, 2022:
 
Six months ended September 30, 2022
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Recorded investment
  
Consumer borrowers
       ¥ 395  
   Card loans      7  
   Other      388  
Corporate borrowers
         1,671  
Other than
Non-recourse
loans
    Commercial, industrial and other companies in overseas      1,671  
     
 
 
  
Total
       ¥ 2,066  
     
 
 
  
Three months ended September 30, 2022
  
         
Millions of yen
  
Portfolio segment
   
Class
   
Recorded investment
  
Consumer borrowers
       ¥ 208  
   Card loans      3  
   Other      205  
Corporate borrowers
         1,671  
Other than
Non-recourse
loans
    Commercial, industrial and other companies in overseas      1,671  
     
 
 
  
Total
       ¥ 1,879  
     
 
 
  
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.
 
The following table provides information about modifications of financing receivables made to debtors experiencing financial difficulty that occurred during the six and three months ended September 30, 2023:
 
Six months ended September 30, 2023
  
 
  
Millions of yen
  
 
  
Portfolio segment
   
Interest rate reduction
     
Term extension
     
Principal forgiveness
  
 
   
 
 
     
 
 
     
 
 
  
Class
   
Amortized
cost basis
     
% of total
class of
financing
receivable
     
Amortized
cost basis
     
% of total
class of
financing
receivable
     
Amortized
cost basis
     
% of total
class of
financing
receivable
  
 
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Consumer borrowers
    ¥ 245        0.0      ¥ 2,354        0.1      ¥ 45        0.0  
Real estate loans
      3        0.0        1        0.0        1        0.0  
Card loans
      222        0.1        1        0.0        41        0.0  
Other
      20        0.0        2,352        2.9        3        0.0  
Corporate borrowers
      0        0        862        0.1        58        0.0  
Other than
Non-recourse
loans
      0        0        862        0.1        58        0.0  
Real estate companies in Japan
      0        0        35        0.0        0        0  
Commercial, industrial and other companies in Japan
      0        0        542        0.2        0        0  
Commercial, industrial and other companies in overseas
      0        0        285        0.0        58        0.0  
Net investment in leases
      0        0        0        0        0        0.0  
Overseas
      0        0        0        0        0        0.0  
    
 
 
              
 
 
              
 
 
           
Total
    ¥ 245        0.0      ¥ 3,216        0.1      ¥ 103        0.0  
    
 
 
              
 
 
              
 
 
           
 
Six months ended September 30, 2023
  
 
  
Millions of yen
  
 
  
Portfolio segment
   
Combination - interest rate

reduction and term
extension
     
Combination - interest rate

reduction and principal
forgiveness
     
Combination - term
extension and principal
forgiveness
  
 
   
 
 
     
 
 
     
 
 
  
Class
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
 
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Consumer borrowers
    ¥ 14        0.0      ¥ 583        0.0      ¥ 264        0.0  
Real estate loans
      0        0        0        0        0        0  
Card loans
      0        0        563        0.3        0        0  
Other
      14        0.0        20        0.0        264        0.3  
Corporate borrowers
      0        0        0        0        0        0  
Other than
Non-recourse
loans
      0        0        0        0        0        0  
Real estate companies in Japan
      0        0        0        0        0        0  
Commercial, industrial and other companies in Japan
      0        0        0        0        0        0  
Commercial, industrial and other companies in overseas
      0        0        0        0        0        0  
Net investment in leases
      0        0        0        0        0        0  
Overseas
      0        0        0        0        0        0  
    
 
 
              
 
 
              
 
 
           
Total
    ¥ 14        0.0      ¥ 583        0.0      ¥ 264        0.0  
    
 
 
              
 
 
              
 
 
           
 
Three months ended September 30, 2023
  
 
  
Millions of yen
  
 
  
Portfolio segment
   
Interest rate reduction
     
Term extension
     
Principal forgiveness
  
 
   
 
 
     
 
 
     
 
 
  
Class
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
 
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Consumer borrowers
    ¥ 182        0.0      ¥ 1,236        0.1      ¥ 16        0.0  
Real estate loans
      0        0        1        0.0        1        0.0  
Card loans
      164        0.1        1        0.0        15        0.0  
Other
      18        0.0        1,234        1.5        0        0  
Corporate borrowers
      0        0        712        0.0        5        0.0  
Other than
Non-recourse
loans
      0        0        712        0.1        5        0.0  
Real estate companies in Japan
      0        0        0        0        0        0  
Commercial, industrial and other companies in Japan
      0        0        427        0.2        0        0  
Commercial, industrial and other companies in overseas
      0        0        285        0.0        5        0.0  
Net investment in leases
      0        0        0        0        0        0.0  
Overseas
      0        0        0        0        0        0.0  
    
 
 
              
 
 
              
 
 
           
Total
    ¥ 182        0.0      ¥ 1,948        0.0      ¥ 21        0.0  
    
 
 
              
 
 
              
 
 
           
 
Three months ended September 30, 2023
  
 
  
Millions of yen
  
 
  
Portfolio segment
   
Combination - interest rate

reduction and term
extension
     
Combination - interest rate

reduction and principal
forgiveness
     
Combination - term
extension and principal
forgiveness
  
 
   
 
 
     
 
 
     
 
 
  
Class
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
   
 
Amortized
cost basis
 
 
   
 


 
% of total
class of
financing
receivable
 
 
 
 
 
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Consumer borrowers
    ¥ 5        0.0      ¥ 247        0.0      ¥ 112        0.0  
Real estate loans
      0        0        0        0        0        0  
Card loans
      0        0        239        0.1        0        0  
Other
      5        0.0        8        0.0        112        0.1  
Corporate borrowers
      0        0        0        0        0        0  
Other than
Non-recourse
loans
      0        0        0        0        0        0  
Real estate companies in Japan
      0        0        0        0        0        0  
Commercial, industrial and other companies in Japan
      0        0        0        0        0        0  
Commercial, industrial and other companies in overseas
      0        0        0        0        0        0  
Net investment in leases
      0        0        0        0        0        0  
Overseas
      0        0        0        0        0        0  
    
 
 
              
 
 
              
 
 
           
Total
    ¥ 5        0.0      ¥ 247        0.0      ¥ 112        0.0  
    
 
 
              
 
 
              
 
 
           
The Company and its subsidiaries offer various types of concessions to the debtors to protect as much of the investment as possible in modifications of financing receivables made to debtors experiencing financial difficulty. For the debtors of all financing receivables, the Company and its subsidiaries offer concessions including an interest rate reduction and a term extension. 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 principal forgiveness or a temporary reduction in the interest payments. Furthermore, the Company and its subsidiaries may acquire collateral assets from the debtors in modifications of financing receivables made to debtors experiencing financial difficulty to satisfy fully or partially the loan principal or past due interest.
In common with all portfolio segments, financing receivables modified to debtors experiencing financial difficulty are recognized as impaired and are individually evaluated for allowance for credit losses, taking into account payment default and repayment status after modifications. In most cases, these financing receivables have already been considered impaired and individually evaluated for allowance for credit losses prior to the modifications. However, as a result of the modification, the Company and its subsidiaries may recognize additional allowance for credit losses for the modified receivables.
 
The following table provides information about the financial effect of the modifications of financing receivables made to debtors experiencing financial difficulty that occurred during the six and three months ended September 30, 2023:
 
Six months ended September 30, 2023
 
Millions of yen
 
Portfolio segment
  
Financial effect
 
  
 
Class
  
Interest rate reduction
  
Term extension
  
Principal forgiveness
 
  
 
Consumer borrowers
  
  
  
Real estate loans
   
Reduced weighted-average
contractual interest rate from 3.9% to 0.0%.		    Added a weighted-average
1.0 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥1 million.
Card loans
    Reduced weighted-average contractual interest rate from 12.6% to 0.4%.    Added a weighted-average
6.6 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥92 million.
Other
    Reduced weighted-average contractual interest rate from 14.2% to 2.5%.   
Added a weighted-average

4.8 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥336 million.
Corporate borrowers
               
Other than
Non-recourse
loans
    —     —     — 
Real estate companies in Japan
    —     Added a weighted-average
0.5 years to the life of
 
loans.		    — 
Commercial, industrial and other companies in Japan
    —     Added a weighted-average
0.6 years to the life of
 
loans.		    — 
Commercial, industrial and other companies in overseas
    —     Added a weighted-average
4.7 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥108 million.
Net investment in leases
               
Overseas
    —     —     Reduced the amortized cost basis of the loans by ¥0 million.
Three months ended September 30, 2023
 
Millions of yen
 
Portfolio segment
  
Financial effect
 
  
 
Class
  
Interest rate reduction
  
Term extension
  
Principal forgiveness
 
  
 
Consumer borrowers
  
  
  
Real estate loans
    —    
Added a weighted-average

1.0 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥0 million.
Card loans
   
Reduced weighted-average
contractual interest rate from 12.7% to 0.4%.		    Added a weighted-average
6.6 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥40 million.
Other
    Reduced weighted-average contractual interest rate from 12.4% to 1.8%.    Added a weighted-average
4.9 years to the life of
 
loans.		    Reduced the amortized cost basis of the loans by ¥177 million.
Corporate borrowers
    —     —     — 
Other than Non-recourse loans
    —     —     — 
Real estate companies in Japan
    —     —     — 
Commercial, industrial and other companies in Japan
    —     Added a weighted-average
0.5 years to the life of
 
loans.		    — 
Commercial, industrial and other companies in overseas
    —     Added a weighted-average
4.7 years to the life of
 
loans.		   
Reduced the amortized cost basis of the loans by ¥3 million.
Net investment in leases
               
Overseas
    —     —     Reduced the amortized cost basis of the loans by ¥0 million.
During the six and three months ended September 30, 2023, 2023 there was no financing receivable that had a payment default and had been modified, when the debtor was experiencing financial difficulty, within the previous 12 months preceding the payment default date.
The Company and its subsidiaries consider financing receivables whose terms have been modified to debtors experiencing financial difficulty as defaulted receivables when principal or interest is
past-due
90 days or more in accordance with the modified terms.
 
The following table provides information about the
past-due
financial assets modified to debtors experiencing financial difficulty within the previous 12 months from September 30, 2023:
 
September 30, 2023
 
 
  
Millions of yen
 
Portfolio segment
  
Current
 
  
30-89 days

past-due
 
  
90 days

or more

past-due
 
Class
Consumer borrowers
    
¥                   
3,471		        ¥
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34		      ¥                    0  
Real estate loans
      5        0        0  
Card loans
      823        4        0  
Other
      2,643        30        0  
Corporate borrowers
      613        0        307  
Other than
Non-recourse
loans
      613        0        307  
Real estate companies in Japan
      0        0        35  
Commercial, industrial and other companies in Japan
      285        0        257  
Commercial, industrial and other companies in overseas
      328        0        15  
Net investment in leases
      0        0        0  
Overseas
      0        0        0  
    
 
 
     
 
 
     
 
 
  
Total
    ¥ 4,084      ¥ 34      ¥ 307  
    
 
 
     
 
 
     
 
 
  
 
As of March 31, 2023 and September 30, 2023, there were no foreclosed residential real estate properties. The carrying amounts of installment loans in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure were ¥57 million and ¥59 million as of March 31, 2023 and September 30, 2023, respectively.