ANNUAL REPORT 2013 for the year ended March 31, 2013

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We will fulfill our corporate social responsibility by striving to meet the expectations of all of our customers, shareholders, and business partners. We, as a leading edge service company, will compete successfully in the market by promoting our three shared values: practical implementation of the principles of customer satisfaction; mutual respect for our interests and those of our business partners; and developing a corporate culture of creative innovation.

TO OUR STAKEHOLDERS

Hiroshi rinno President and Ceo Head of Audit office and Credit Card division
                    Photo: Motoyuki Ishibashi

Hiroshi Rinno, President and CEO
August 2013

Hiroshi rinno President - sign

We are establishing a multi-core framework for our revenue streams through collaborative management utilizing our strategic assets.

The environment in recent years surrounding the Japanese credit card industry has undergone considerable change due to economic conditions, consumption trends, the regulatory framework and other factors. In particular, tighter regulations under the Money Lending Business Act and Installment Sales Act have caused changes to the earnings structure of the credit card sector, which has resulted in large-scale reorganization of the industry centering on Japan's megabanks as well as increased competition from companies in other industries entering the fray. I believe the past few years have been among the toughest that Credit Saison has faced since its founding.

However, beginning with the credit card business, we have earned the broad support of customers for over 30 years by continuing to provide innovative products and services, including credit cards with no annual membership fees, Eikyufumetsu Points that never expire, signature-less settlements, the Saison American Express Card, and the Eikyufumetsu.com online shopping mall. In December 2012, our innovative card strategy was recognized and honored with a Porter Prize, named after Professor Michael E. Porter, a leading figure in competition and strategy theory.

Going forward, as a leading-edge service company we intend to continue pursuing customer satisfaction by providing products and services born of innovative ideas.

Moreover, Credit Saison's assets include a diverse network of alliance partners we have cultivated through highly distinctive and flexible management practices, a highly varied business domain based on credit cards, and a 35-million strong customer base for our two brands, Saison Card and UC Card, plus processing agency services. We will harness these assets combined with our highly unique products and services—our strategic assets—to maximize our corporate value through "Collaborative Management."

We will also create a settlement platform to break the dominance of the cash market, while strongly promoting the Internet business, where we are expanding fee-based businesses such as Eikyufumetsu.com, the finance business, which handles leases, credit guarantees, Flat 35 mortgages and Saison Asset Formation Loans, and the retail finance business overseas, which is geographically centered on the ASEAN region.

By fostering collaboration with a range of outstanding business and alliance partners, we will continue to develop as a non-bank finance company and further reinforce our revenue base.

In order to overcome the challenging operating conditions that currently prevail, we will continue to innovate, boldly promote "Collaborative Management," establish a multi-core framework of revenue sources, and thereby make further strides as a non-bank finance company.

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Accelerate Business Development in ASEAN Countries and Actively Promote Upfront Investment

We believe that the global economy in the 21st century will center on Asia and that the 10 ASEAN countries in particular will begin growing at a fast pace. With its proximity to mainland Asia, Japan has strong advantages geographically, as well as in technologies and services.

Leveraging the retail finance expertise we have built up over many years, Credit Saison has begun full-scale entry into the Asian market, our first step toward sustained future growth. In June of last year we opened a representative office in Hanoi, Vietnam, and in April of this year we established a consulting company also in Hanoi to provide retail finance know-how to local companies. Going forward we intend to accelerate business development in ASEAN countries and open new offices in Indonesia, Malaysia, the Philippines and other parts of the region.

In addition, we will also actively make upfront investment for medium- and long-term growth by forming strategic partnerships, for example, with local financial firms and operating companies, prominent Japanese IT companies, and companies moving into ASEAN markets.

Stimulating Consumer Spending and Strengthening Development and Promotion of New Settlement Methods

"Abenomics," the economic policy of the Abe administration, is expected to promote macro-economic improvements—renewed real estate investment, a recovery in business conditions, etc.—through higher stock prices, a weaker yen, and monetary easing, which should lead to a recovery in consumer spending through improved corporate performance and resulting increases in wages and bonuses. In order to actively take advantage of the opportunity afforded by enlivened consumption, we will focus on increasing cardmembers primarily for cards with high usage rates like Saison American Express Cards, retailer affinity cards, and cards acquired through online channels. Our goal is to become the No. 1 issuer on a consolidated basis in terms of cardmembers.

At the same time, in order to boost the appeal of our cards, we will enhance services and carry out aggressive promotions to stimulate consumer spending, including collaborative campaigns with retailers in major cities throughout Japan.

Moreover, we will continue to work to expand our Internet business in ways that utilize Eikyufumetsu Points and also take proactive steps in the small-amount settlement market. The latter includes a new settlement service, Coiney, that utilizes smartphones and tablet PCs in an effort to break cash dominance, as well as measures to reinforce prepaid card services.

AMERICAN EXPRESS

Becoming No. 1 in Personnel Activation and Active Participation of Women

As part of innovative management, we will work to foster a new generation of human resources capable of taking on the challenge of innovation on various fronts. We are aiming to become the No. 1 company in personnel activation—for example, we will promote the formation of a dynamic corporate culture by encouraging active communication within the Company through such means as the Dream Plan system, which allows all employees to propose solutions for issues facing management, Future Lab for thinking about the future of the Company, and Learning Cafe, where employees can learn from the experience of upper level managers.

Women currently account for roughly half of all management positions, with a particularly strong presence on the frontlines of sales. With a management vision of becoming No. 1 in active participation of women, we are taking measures to make it easier for women in various situations to work at the Company. For example, we have instituted a childcare leave program for employees with children up to age three, a program for working shorter hours after returning to work, seminars on how to balance parenting and childcare and a variety of other schemes as well. Starting this term, we intend to focus still further on initiatives to support women at work, which includes corporate sales.

Distribution of Managers by Gender and Age

A Work and Parenting Seminar

A Work and Parenting Seminar

Reasonable, Stable, and Sustained Dividends

Based on a management strategy aimed at long-term, stable growth, Credit Saison considers it important to steadily execute business policies for achieving its goals and to use upfront investment for future growth to maximize shareholder value. Regarding returns to shareholders, we intend to pay reasonable, stable, and sustained dividends while working to augment internal reserves to achieve these objectives. The annual dividend for fiscal 2013 was kept at ¥30 per share. We also anticipate paying an annual dividend of ¥30 per share in fiscal 2014.

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