Aiful : Annual Report

Corporate Philosophy

Earn the trust of society through corporate activity

based in integrity

We defined our vision, mission, and value for embodying our corporate philosophy.

The AIFUL Group has upheld the corporate philosophy: "Earn the trust of society through corporate activity based in integrity" as an unalterable underlying philosophy, and in April 2021, we defined our vision, mission, and value as concrete goals suited for the present age for redeveloping the system of our philosophy.

VISION MISSION VALUE

For realizing a society where each person can play an active role

Based on our corporate philosophy: "Earn the trust of society through corporate activity based in integrity" and

our vision: "For Colorful Life: To a society in which your individuality flourishes," and in order to create a future in which everyone can achieve ideal selves, the AIFUL Group supports the Sustainable Development Goals (SDGs) and aims to "realize a sustainable society" and "attain the growth of the Group."

To a society in which your individuality flourishes

Contents

Year-on-Year Summary ……………………………………………………………………………………………… 2

Our History……………………………………………………………………………………………………………… 4

To Our Investors and Shareholders ……………………………………………………………………………… 6

Initiatives to Create Corporate Value …………………………………………………………………………… 10

Forte and Features of AIFUL ……………………………………………………………………………………… 12

AIFUL Group Business Overview ………………………………………………………………………………… 14

Sustainability of the AIFUL Group ……………………………………………………………………………… 24

Corporate Gevernance ……………………………………………………………………………………………… 30

Management …………………………………………………………………………………………………………… 36

Financial Report ……………………………………………………………………………………………………… 37

Six-Year Summary …………………………………………………………………………………………………… 38

Business Data ……………………………………………………………………………………………………… 40

Financial Report by the Management Team ……………………………………………………………… 46

Financial Statements ……………………………………………………………………………………………… 60

Notes to Consolidated Financial Statements……………………………………………………………… 67

Consolidated Schedule …………………………………………………………………………………………… 98

Others ………………………………………………………………………………………………………………… 99

Non-Consolidated Financial Statements ………………………………………………………………… 100

Group Companies ………………………………………………………………………………………………… 104

Corporate Overview/Stock Infomation ……………………………………………………………………… 105

Editorial policy

The AIFUL Group creates Annual Reports so that stakeholders such as shareholders and investors can gain deeper understanding of our initiatives to grow the Group and to enhance corporate value. In this report, we have enhanced financial and non-financial information such as management philosophy, initiatives for corporate value creation, and business overview.

Reporting period

Period: Fiscal 2022 (April 1, 2022 to March 31, 2023) Some information after April 2023 is included.

Applicable companies: AIFUL Corporation and group companies inside and outside Japan

Forward-Looking Statements

The figures contained in this Annual Report with respect to AIFUL Group's plans and strategies and other statements that are not historical facts are forward-looking statements about the future performance of the AIFUL Group, which are based on management's assumptions and beliefs in light of the information currently available to it, and involve risks and uncertainties and actual results may differ from those in the forward-looking statements as a result of various factors.

Potential risks and uncertainties include, without limitation, general economic conditions in the AIFUL Group's market and changes in the overall market for consumer loans, the rate of default by customers, and the level of interest rates charged for or by the AIFUL Group.

Year-on-Year Summary

Financial Highlight

Balance of operating receivables (billions of yen)

Profit attributable to owners of parent (billions of yen)

Non-Financial Highlight

Ratio of employees who have taken paid holidays（%）

Ratio of male employees who have taken childcare leave（%）

Fiscal 2022

63.6 aiming for

100%

Ratio of females in recruiting full-time employees（%）

Ratio of employees who have taken childcare leave（%）

Fiscal 2022

68.7 aiming for

100%

Ratio of full-time female employees（%）

Number of non-Japanese employees

(including those recruited outside Japan) (persons)

2

3

Our History

1967

Yoshitaka Fukuda, AIFUL CORPORATION's current chairman, establishes a sole proprietorship as a consumer finance company

1978

Established Marutaka, Inc. (now AIFUL CORPORATION) and began business with three branches in Kyusyu and one in Kyoto

1982

Marutaka, Inc. absorbs three related companies

Name simultaneously changed to AIFUL CORPORATION

1984

2002

Established Compliance Committee

2003

Received "Listed Company Disclosure Commendation" from the Tokyo Stock Exchange

2004

Converted KOKUSAI Capital Co., Ltd. into 100% subsidiary

KOKUSAI Capital Corporation changed its name to New Frontier Partners Co., Ltd.

2013

New Frontier Partners Co., Ltd. (a consolidated subsidiary) acquired all shares in BUSINEXT CORPORATION owned by the Company and Sumitomo Mitsui Trust Bank Limited and made it a wholly-owned subsidiary

2014

LIFE GUARANTEE CO., LTD. (now AIFUL GUARANTEE CO., LTD.) commenced installment sales and credit guarantee business.

AIRA & AIFUL Public Company Limited, a joint venture, was established with AIRA Capital, as an overseas subsidiary in Thailand

2020

Established AG Miraibarai Co., Ltd., which manages the Postpay settlement business

Established Aiful Medical Finance Co., Ltd., which manages the business of medical fee-type secured loans

AIFUL Group companies below have been renamed as follows:

BUSINEXT CORPORATION to AIFUL BUSINESS FINANCE CORPORATION; AsTry Loan Services Corporation to AG Loan Services Corporation; and LIFE GUARANTEE CO., LTD. to AIFUL GUARANTEE CO., LTD.

2021

Aiful Medical Finance Corporation changed its name to AG Medical Corporation

Start of ATM operations

1985

Introduced first Scoring System (automated credit check system)

1994

Opened Heartful Center (now Contact Center)

1995

Completed installation of "Ojidousan", an automated loan agreement machine, at Kanda north exit branch and Ikebukuro west exit branch

1997

Over-the-counter registration of company's stock with the Japan Securities Dealers Association

2000

2007

Revised management philosophy. The new management philosophy is "Earn the trust of society through corporate activity based in integrity"

2009

Transferred all shares of 4 consolidated subsidiaries to NEOLINE CAPITAL Co., Ltd.

2010

LIFE Co., Ltd. established a wholly owned subsidiary for the credit card business and credit guarantee business, called Life Card Co., Ltd.

2011

Under the group reorganization, credit sales business as well as the

2015

AIRA & AIFUL Public Company Limited commenced the consumer finance business in Thailand with the A Money brand

Shares of Anshin Guarantor Service Co., Ltd., a group company, were listed on the Tokyo Stock Exchange Mothers

2016

New Frontier Partners Co., Ltd. changed its corporate name to AG Capital Corporation

2017

The 50th anniversary of AIFUL's establishment

2022

Established AG Smile Leaseback Corporation, which manages leaseback business

Changed the listing market to the Prime Market Revised the visual identity (VI) of the Group

2023

Revised the VI of Life Card

Revised the VI

Listed on First Section, Tokyo Stock Exchange and First Section, Osaka Securities Exchange

2001

Established business finance company Businext Co., Ltd. (now AIFUL BUSINESS FINANCE Corporation) through a joint venture with Sumitomo Trust and Banking Co., Ltd.

Transferred the head office to Shimogyo-ku, Kyoto (current location)

Converted LIFE Co., Ltd., into 100% subsidiary

Established servicer company AsTry Loan Services Corporation (now AG Loan Services Corporation) in joint venture with Aozora Bank, Ltd.

credit guarantee and insurance businesses of LIFE Co., Ltd. was transferred to LIFE CARD Co., Ltd. by way of corporate spinoff and merger

Furthermore, four consolidated subsidiaries including LIFE Co., Ltd. (following its spin-off) were merged into AIFUL

Conversion of LIFE Co., Ltd. into 100% subsidiary

Entry into overseas markets

4

5

To Our Investors and Shareholders

To Our Investors and Shareholders

Introduction

The AIFUL Group's consolidated results for fiscal 2022 are as follows: operating revenue was 144.1 billion yen (up 9.1% year-on-year), operating profit was 23.7 billion yen (up 111.0% year-on-year), ordinary profit was 24.4 billion yen (up 99.2% year-on-year) and profit attributable to owners of parent was 22.3 billion yen (up 81.1% year-on-year). The main reason for the increase in revenue and profit was that operating expenses d e c r e a s e d 4 0 0 m i l l i o n y e n ( d o w n 0 . 4 % year-on-year) to 120.4 billion yen, as provision for loss on interest repayment decreased 19.9 billion yen (down 100.0% year-on-year) while operating revenue increased 12 billion yen. In addition, as a

result of a steady increase of new accounts, consolidated balance of operating receivables amounted to 1,015.9 billion yen (up 14.5% year-on-year).

While the balance of operating loans receivable i s s t e a d i l y i n c r e a s i n g , t h e e n v i r o n m e n t surrounding the Group is rapidly changing due to the entry of competitors from different fields and the acceleration of digital transformation (DX), so we need to swiftly respond to these changes. In this environment, we will make group-wide efforts to increase operating assets mainly in the loan, credit card, credit guarantee, and overseas businesses and diversify our financial business, while dealing with interest repayment claims,

which is one of managerial issues, and continue business administration focused on the balance among "reliability," "profitability," and "growth potential." Furthermore, by establishing the AIFUL Group brand and advancing data utilization, we aim to evolve into an enterprise that will obtain strong support from our stakeholders, improve the credit screening ability with IT, and optimize m a n a g e r i a l r e s o u r c e s f o r m a x i m i z i n g consolidated profit.

Summary of financial results for fiscal 2022 The theme of the two-year plan ending in fiscal

2023, which was announced in June 2022, is "Go (new) Standard: Sophistication of customer

orientation." This management theme indicates t h a t t h e A I F U L G r o u p w i l l f o s t e r t h e customer-centric mindset and measure up to social standards in order to survive the digital business age under the concept of normalizing our business by dealing with things we have disregarded so far and modifying our systems rather than drastically changing our company in two years.

In fiscal 2022, we strove to diffuse "a design-focused attitude" inside our company, under the management theme "Innovation based on a design-focused attitude: To design u s e r - f i r s t s e r v i c e s . " T h e w o r d " d e s i g n " reminds most people of artistic creation, but our

Summary of financial results for fiscal 2022

Profitability

203.4 year on year

bn

Growth potential

Balance of operating receivables more than 10% growth per annum

（Billions of yen）

6

7