ANNUAL REPORT 2012 for the year ended March 31, 2012

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Further Progress in Development as a Non-bank Finance Company

Credit Saison's medium-term management concept is to become a non-bank finance company with multiple revenue sources. Alongside the mainstay credit card business, we are also growing our finance business, including lease and rental services, credit guarantees, and Flat 35 mortgages, to develop Credit Saison as a non-bank finance company.

Lease Business

Lease BusinessCredit Saison has partnered with around 1,800 retailers offering lease service contracts throughout Japan to develop a rental business providing vendor leases of office equipment, such as photocopiers, and communications equipment, such as telephones, to small and medium-sized enterprises. In this business, we make full use of credit capabilities and swift application review processes based on individual screening know-how. In fiscal 2012, we will deepen our relationships with retail sellers for major equipment makers such as Canon, FujiXerox and Ricoh, targeting transaction volume for the lease and rental business of ¥105.0 billion, an 8% year-on-year increase. In the LED lighting rental and medical equipment fields, where we see rising demand, we will take steps to develop new lease and rental products to meet market needs.

Credit Guarantee Business

Credit Guarantee BusinessCredit Saison partners with over 300 financial institutions to provide guarantee services for unsecured free-loans to individuals. Using our strengths in individual screening know-how and marketing, we have aggressively promoted non-collateral loan guarantee products that respond to the needs of businesses. These products have been widely used by regional financial institutions and customers. In fiscal 2012, we will increase transaction volume with our partners, as well as add approximately 45 additional partners, aiming to achieve a transaction volume of ¥99.5 billion, up approximately 7% year on year, and a guarantee balance of ¥171.3 billion, up approximately 2% year on year.

Flat 35 Home Mortgage Loan

Flat 35 Home Mortgage LoanOur Flat 35 long-term, fixed-rate mortgage loan business expanded strongly during fiscal 2011 thanks to special incentives we offered to credit card users and a sense of trust and security instilled through our credit card business experience. As of March 31, 2012, the number of loans made since the product was launched in March 2009 reached 4,278, a transaction volume of ¥118.8 billion. From April 2012, the system was revised so that Flat 35 loans may be used to finance only 90% of the purchase price of a property, down from 100% previously. We responded by launching "Flat 35 PLUS," a Credit Saison home loan package that provides financing for the remaining 10% of the property value not covered by Flat 35. Through these initiatives we aim to increase the number of loans in fiscal 2012 by 2,000, for a ¥53.0 billion, or 13%, year-on-year increase in transaction volume.

Business Participation in Asian Markets

Credit Saison is working to create a business scheme in the rapidly developing markets of Asia to lay the foundations for sustainable growth in the medium to long term. From June 2011, we launched a service counter for installment purchases as a contracted service at Yamada Denki's Tianjin Store (China). As a next step, we aim to establish a local corporation and acquire a business permit, enabling us to develop our own loan business. Meanwhile, in Vietnam, we set up a representative office in Hanoi in June 2012, and we plan to acquire an affiliated business license to commercialize retail finance operations with invested affiliate Petro Vietnam Finance. In the future, we intend to develop installment purchase and credit card businesses as well. We are also examining options for utilizing a local subsidiary in Singapore in order to realize the geographical advantages of this location.

Using the expertise we have developed in our operations in Japan and in collaboration with our partners, we will work to increase our brand value by developing our business overseas.

Business Participation in Asian Markets

Return of Profits to Shareholders

To raise shareholder value, Credit Saison places high importance on initiatives to reinforce our corporate structure and to continuously expand our businesses. In order to return profits to our shareholders, we will build the internal cash reserves that we need to execute these plans, while following a policy of paying appropriate, stable, and continuing dividends to shareholders.

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