Installment Loans

12 Months Ended

Mar. 31, 2024

7. Installment Loans

Consolidated financial statements data have been changed since fiscal 2024. The amounts of installment loans in the previous years have been retrospectively reclassified for this change. For further information, see Note 1 “Significant Accounting and Reporting Policies (aa) Reclassifications.”

The composition of installment loans by domicile and type of borrower at March 31, 2023 and 2024 is as follows:


	Millions of yen
	2023		2024
Borrowers in Japan:
Consumer—
Real estate loans	¥	1,949,865	¥	1,851,214
Card loans		171,635		72,353
Other		29,688		5,680

		2,151,188		1,929,247

Corporate—
Real estate companies		296,228		334,506
Non-recourse loans		124,499		145,286
Commercial, industrial and other companies		165,951		187,824

		586,678		667,616

Borrowers in overseas:
Consumer—
Real estate loans		107,094		96,247
Other		43,054		47,415

		150,148		143,662

Corporate—
Real estate companies		277,839		190,630
Non-recourse loans		38,654		50,263
Commercial, industrial and other companies		660,840		705,494

		977,333		946,387

Equity method investees		27,424		251,929

Purchased loans*		12,255		19,973

	¥	3,905,026	¥	3,958,814

*	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.

Generally, installment loans are made under agreements that require the borrower to provide collateral or guarantors.

At March 31, 2024, the contractual maturities of installment loans (except purchased loans) for each of the next five years and thereafter are as follows:


Years ending March 31,	Millions of yen
2025	¥	714,395
2026		403,303
2027		342,527
2028		243,226
2029		207,661
Thereafter		2,027,729

Total	¥	3,938,841

Revenues from installment loans which are included in finance revenues in the consolidated statements of income are ¥176,597 million, ¥194,240 million and ¥205,734 million for fiscal 2022, 2023 and 2024, respectively.

Certain loans, for which the Company and its subsidiaries have the intent and ability to sell to outside parties in the foreseeable future, are considered held for sale and are carried at the lower of cost or market value determined on an individual basis, except loans held for sale for which the fair value option was elected. A subsidiary elected the fair value option on its loans held for sale. The subsidiary enters into forward sale agreements to offset the change in the fair value of loans held for sale, and the election of the fair value option allows the subsidiary to recognize both the change in the fair value of the loans and the change in the fair value of the forward sale agreements due to changes in interest rates in the same accounting period. Loans held for sale are included in installment loans, and the outstanding balances of these loans as of March 31, 2023 and 2024 were ¥201,355 million and ¥137,179 million, respectively. There were ¥197,041 million and ¥129,959 million of loans held for sale as of March 31, 2023 and 2024, respectively, measured at fair value by electing the fair value option.

Purchased loans acquired by the Company and its subsidiaries are generally 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 and characterized by extended period of non-performance by the borrower, and it is difficult to reliably estimate the amount, timing, or nature of collections. Because such loans are commonly collateralized by real estate, the Company and its subsidiaries may pursue various approaches to maximizing the return from the collateral, including arrangement of borrower’s negotiated transaction of such collateral before foreclosure, the renovation, refurbishment or the sale of such loans to third parties. Accordingly, although the acquired assets may remain loans in legal form, collections on these loans often do not reflect the normal historical experience of collecting delinquent accounts, and the need to tailor individual collateral-realization strategies often makes it difficult to reliably estimate the amount, timing, or nature of collections. Accordingly, the Company and its subsidiaries use the cost recovery method of income recognition for such purchased loans. The total carrying amounts of these purchased loans were ¥12,255 million and ¥19,973 million as of March 31, 2023 and 2024, respectively, and the fair value at the acquisition date of purchased loans acquired during fiscal 2023 and 2024 were ¥2,444 million and ¥12,271 million, respectively.