ANNUAL REPORT 2013 for the year ended March 31, 2013

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MANAGEMENT STRATEGY 03

Further Progress in Development as a Non-bank Finance Company

Since our foundation, we have used the expertise in credit and collection operations for individuals and individual business owners that we built up in our core credit card business to also develop non-bank financial services. These include lease and rental services, credit guarantee services, and Flat 35 long-term, fixed-rate mortgage loans.

The management environment in the credit card business continues to change dramatically under the influence of laws and regulations. Credit Saison has met this challenge by focusing on the non-bank financial services sector as a key area, under its medium-term management concept of aspiring to be a non-bank finance company with multiple revenue sources, through collaborative management. As a result, these non-bank finance operations have expanded steadily, and are on track for further growth.

Credit Saison will continue to promote further development as a non-bank finance company, and to diversify its revenue sources, while pursuing synergies with the credit card business. Our goal is to achieve a steady increase in our corporate value over the medium- to long-term.

Lease Business

Lease Transaction Volume

Leveraging our strengths in credit screening expertise and speed, we work in partnership with some 2,000 dealers around the country to handle leases and rentals for office equipment like copiers and multifunction printers, telephones and other communication equipment, LED lighting, and more.

In fiscal 2013, we will bolster our approaches and support operations that are finely matched to the characteristics of our dealers. At the same time, we will strengthen our existing vendor lease activities by expanding our partnerships with new dealers. We will also widen the lease sales channel by approaching related business partners and users. By working to develop new products that match the needs of the market, such as medical equipment and industrial tools and machinery, we aim to increase transaction volume by 14% year on year, to ¥120.0 billion.

Credit Guarantee Business

Credit Guarantee Balance

Partnering with some 350 credit unions and credit associations and other locally rooted financial institutions, we are promoting guarantee services specializing in unsecured freeloans to individuals.

Based on our expertise as a retail credit card company, which is our strength, we have leveraged our marketing capabilities to obtain a detailed understanding of customer needs. Based on this, we developed a loan product—a free loan that can also be used for business purposes. This loan integrates the characteristics of Credit Saison and a financial institution to provide three features: 1) versatility in the loan purpose, 2) simple application procedures, and 3) a fast credit screening result. Another special feature of the loans is wide-ranging promotional support for loan marketing through financial institutions. The loan has enjoyed widespread support from local financial institutions and customers.

In fiscal 2013, we intend to help drive increased transaction volume at existing partner financial institutions in order to build even stronger relationships with them, while increasing our partner list by 25, and seeking to increase the guarantee balance by 9% over last year to ¥215.0 billion.

Other Finance Business

The long-term fixed-rate mortgage loan program Flat 35 continued to provide full 100% financing for home purchases when used in combination with the Flat 35 Plus program, which we began handling in fiscal 2011.Customers responded positively to advantages provided to cardmembers, and a sense of trust and confidence in the Saison brand, developed through our credit card business. The loan balance as of March 31, 2013 was ¥153.5 billion.

In January 2013 we added an additional product to our loan lineup: Saison Asset Formation Loans. These are loans for purchasing condominiums for investment, and seek to meet demand for asset formation via condominium management. With this new product, we can also offer services for customers considering the purchase of a condominium for investment purposes, as well as for a residence. These services have been well received.

In fiscal 2013, we will strengthen marketing activities with a view to becoming the No. 1 company in the Flat 35 loan market, and work to increase transaction volume by 12% year on year to ¥54.0 billion. Additionally, we will work to make asset formation loans a new revenue pillar, by increasing partnerships and building up the balance to ¥24.0 billion. At the same time we will increase quality real estate mortgage loans, primarily non-recourse loans, and develop new finance businesses aligned with market needs.

Credit Guarantee Business

Full-scale Entry into the Retail Finance Market in Asia

Full-scale Entry into the Retail Finance market in Asia

In the Asian market, especially the ASEAN region, where remarkable economic growth is occurring, Credit Saison is taking its first steps toward sustained, long-term growth by working to create business schemes in the region. Specifically, we will apply the know-how we have developed in Japan with regard to the card business, installment purchasing and loan business, to meet Asian market needs and quickly commercialize retail finance operations.

In June 2012, we established a local representative office in Hanoi, Vietnam to acquire a non-bank license and begin providing installment purchasing and finance products. Further, in April 2013, also in Hanoi, we established a consulting company to provide relevant expertise to support the development of retail finance businesses by local companies, and launched consulting services for local financial institutions.

In March 2013, we formed a capital and business alliance with econtext ASIA Ltd., an online settlement firm in the Digital Garage Group, and agreed to jointly promote development and provision of settlement services and e-commerce infrastructure in the Asian market, including Japan. Drawing on the business resources and know-how of both companies, we will actively work to develop and promote new schemes that provide new value for customers and affiliated merchants.

Going forward, we intend to expand our business domain through partnerships with prominent Japanese affiliated companies in Asia, and with local companies, to prepare the way for our medium/long-term overseas strategy aimed at entering markets in Indonesia, Malaysia, the Philippines and other parts of Asia.

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