ANNUAL REPORT 2011 for the year ended March 31, 2011

Review of Operations

Results for Fiscal 2010

The credit industry experienced a severe business environment in the fiscal year ended March 31, 2011. Amid continued economic sluggishness, the employment and wage environments failed to recover, while the yen appreciation, high resources prices, and then the Great East Japan Earthquake created a drag on the economy which slowed recovery momentum. The strengthening of the Money-Lending Business Control and Regulation Law and other regulations added to the industry's challenges.

In this environment, in our core credit card business, we had 2.57 million new card applications to increase our total number of cardmembers to 28.34 million. We promoted an increase in active cardmembers, which expanded the active customer base by 370,000 to 14.7 million cardmembers. We strengthened our alliance with American Express and took other measures to prioritize the expansion of the Saison American Express Card, which enjoys a high brand status and usage rate.


  (Billions of yen)
Operating revenues Operating income (loss)
2011 % change 2011 % change
Credit Service 230.8 92.3 15.9 62.3
Lease 14.4 114.9 5.0 236.7
Finance 15.5 92.6 6.7 135.6
Real Estate Related 12.3 82.0 (2.1) -
Entertainment 13.9 95.2 1.7 100.4
Total 287.1 92.9 27.3 75.3
Inter-segment transactions (1.4) - 0.0 -
Consolidated 285.7 93.1 27.3 75.7

(Year ended March 31)


  Figures in parentheses are year-on-year comparisons.
2011 % change
New applications (millions) 2.57 84.3
New cards issued (millions) 2.12 81.9
Total cardmembers (millions) 28.34
Active cardmembers (millions) 14.70
Transaction volume (¥ billion) 4,324.8 97.2
Card shopping (¥ billion) 3,953.4 102.8
Cash advances (¥ billion) 371.4 61.5

(Year ended March 31)

In credit card-related shopping services, transaction volume grew 2.8% over the previous year as usage frequency continued to increase. Credit card usage continues to become more prevalent in daily shopping and payments as more people use their cards for settling running accounts such as public utilities, mobile phone fees, and Internet shopping. Usage scope has also increased, including for medical and tax payments.

In cash advances, the balance of cash advances declined 25.0% compared to the previous year. Cash advance transaction volume fell due mainly to the full enactment of the Money-Lending Business Control and Regulation Law in June 2010, which included provisions restricting total loans per individual, and the weak economy, which dented demand for cash advances.

We continued to diversify sources of revenue outside the core credit card business, with healthy expansion in our lease and rental business, our "Flat 35" long-term, fixed-rate mortgage loan in our finance-related business, and the credit guarantee business, which guarantees loans to customers through tie-ups with financial institutions.

In terms of costs, we increased the provision for loss on interest repayment by ¥11.0 billion to cover potential losses from the failure of large consumer credit companies and the impact of the Great East Japan Earthquake. Overall, however, the credit portfolio improved and costs of uncollected receivables remained within estimates, as a result of a decline in new claims handled by lawyers and the strengthening of our credit management. We also bolstered our business structure by using IT to improve efficiency, through such measures as promoting Web-based usage statements and reviewing outsourcing contracts, while also raising awareness of cost-benefits in carrying out initiatives.

As a result, our operating revenues declined 6.9% compared to the previous year to ¥285.7 billion, primarily as a result of the decline in profits from cash advances, while our ordinary income declined 13.7% to ¥33.7 billion. Moreover, our net income declined 31.3% year on year to ¥12.8 billion due to a conservative approach to expensing the impact of the Great East Japan Earthquake, for which we booked a loss of ¥9.9 billion.

Medium-Term Management Strategy

We have established "Collaborative Management" as our medium-term management strategy. The entire company is striving to execute the strategy.

One of the advantages of Credit Saison is its highly independent position in the finance industry, as we are not a part of any of the major Japanese banking groups. This independence has enabled us to create a rich network of alliances with leading companies in such diverse industries as retail, including department stores, supermarkets, consumer electronics chains, and convenience stores, along with financial institutions, corporate and industry associations, Internet and IT companies, telecommunications carriers, transport firms, and service providers. In addition, we have successfully diversified our business to ensure stable flow of revenues over the long term, using strategic investments to bolster the lease and rental, credit guarantee, finance, insurance, Internet and other non-card businesses.

Over the decades, Credit Saison has fostered an overwhelming number of alliance partners, a richly diversified business domain, the point program, a lineup of four distinct American Express brand credit cards, and a host of other unique products and services that set us apart from the competition in the credit industry. Add to this the processing and agency services for the Saison Card and UC Card, and we boast an unrivaled customer base of 35.7 million people. We are prepared to fully leverage these strategic advantages in our fight with the competition, unifying the company around the goal of expanding revenues over the medium term.

By tenaciously promoting "Collaborative Management," we will strive to become No. 1 in the cashless settlement market.

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