ORIX Corporation FY2026 Earnings Call - Record Profits Driven by Asset Sales, ORIX Bank Divestiture Signals Strategic Pivot

Sasaki, Analyst, Nomura Securities7: Thank you for waiting. We’re ready to now start. Thank you very much for joining us. This is the financial results briefing for the fiscal year ended March 2026 of ORIX Corporation. I will be the facilitator. I am Uchida, General Manager of Corporate Communications Department. Let me first introduce the speakers. Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO. Masataka Yamada, Senior Managing Executive Officer, CFO, and CSO. Those two gentlemen will be presenting. In addition, there are 4 attendees. Mr. Satoru Matsuzaki, Member of the Board of Directors, Deputy President, Executive Officer, COO of Japan and APAC. Yoshiteru Suzuki, Senior Managing Executive Officer, COO of USA and Europe. Shuji Irie, Senior Managing Executive Officer, COO of Infrastructure Business Unit. Kazuki Yamamoto, Operating Officer, Corporate Strategy and Management Unit, Head of Corporate Planning, Investor Relations, and Sustainability.

Those four people will be joining. First, I will call upon Mr. Takahashi and Mr. Yamada to present, and then we take questions. We plan to spend about 90 minutes in total. Now over to you, Mr. Takahashi.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Good afternoon, ladies and gentlemen. Again, thank you very much for joining us despite a very busy schedule for our group’s financial results briefing. I’m Takahashi, Group CEO. For the fiscal year ended March 2026, the uncertainty has become the norm. That was a macroeconomic environment. For us, it was the first year toward realizing our long-term vision and also an important year of management transition. We spent 12 months so far, and we have made steady steps forward and made progress toward our goals. We did the earnings announcement just now, and thanks for your support. We were able to achieve record highs for both net income and market capitalization. A robust organization and management structure are essential in order to steadily execute our growth strategy going forward.

To this end, we introduced organizational reform from January 1 this year and implemented a six-role system as of April 1. We have recruited Yamada from outside of the company as CFO/CSO. Additionally, we reviewed guidelines and expanded the investment and financing authority delegated to each business division, enabling faster and accountable decision-making. Furthermore, with the CFO and CRO taking the lead in maintaining strong financial discipline and sophisticated risk management, we aim to take good risks speedily and proactively to achieve growth at a new level. That’s just for the opening remarks. I would like to hand over to our CFO, Yamada, who will explain the results for the fiscal year ending March 2026 and guidance for the fiscal year ending March 2027. Thank you for the introduction. I’m CFO and CSO, Masataka Yamada. Thank you for this opportunity.

Sasaki, Analyst, Nomura Securities0: Please refer to page 2 of results presentation or the screen in front of you. These are the points I would like to cover during today’s briefing. There are 3, as you can see. Number 1, FY 2026 March results and FY 2027 March guidelines, and the FY 2026 March in review. The third point is key initiative for FY 2027 March. I would like to discuss the first topic, FY 2026 March results and the 2027 March guidance, and then CEO will follow and explain the second and third points. Please proceed to page 3. These are the slides for the fiscal year ended March 26. Please look at the graph on the left. This shows ROE and net income for full year.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Net income for FY 2026 March was JPY 447.3 billion, exceeding the full year forecast of JPY 440 billion. That was revised upward at the first half results that was announced in November last year. This marks the third year in a row that ORIX achieved record profits. This represents an increase of JPY 95.6 billion or 27% in net income compared to the previous year. ROE was 10.4%, up 1.6 percentage points from the prior year. Q4 net income was JPY 57.6 billion.

We recorded a total impairments of an JPY 97.2 billion, primarily at ORIX USA, resulting in a low net income compared to the JPY 118.6 billion posted in the third quarter. At OCP in the ORIX USA segment, OCP is ORIX Capital Partners. We are proceeding with our phased withdrawal from the PE business and capital recycling efforts. As a result, we recorded goodwill impairment in the fourth quarter. That’s the major factor. Next, please, proceed to page 4. I would like to explain ORIX pre-tax profits for the fiscal year ending March 2026 using three categories: finance, operation, and investments. The upper table compares segment profits, pre-tax profits, and net income for the last two fiscal years.

As shown in the second row, pre-tax profits for the fiscal year ending March 2026 were JPY 691.4 billion, an increase of JPY 211 billion or 44% compared to the prior fiscal year. Next, please look at the graph at the lower left. Dark blue represents finance, light blue represents operation, and the deep pink bar represents investments. The upper bar graph shows segment profits for the fiscal year ended March 2025, and the lower bar graph, fiscal year ended March 2026. All three categories saw profit growth, while the investments category posted profit growth even excluding JPY 95 billion in gains from the Greenko sales and valuation gains. In the finance category, invest income rose sharply in insurance segment and corporate financial services achieved growth in fee income.

This resulted in an increase of JPY 12.9 billion or 7% year-over-year. In operation, while some businesses have recently been affected by geopolitical risks, inbound-related businesses such as hotels, inns, and airport concessions, as well as rental automobiles and ships, performed strongly in the fiscal year ended March 2026. In addition, the sales of some ORIX stake in Canara Robeco following the firm’s IPO and gains from the sale of ZGlide Suspension contributed to growth, resulting in an increase of JPY 37 billion or 18% compared to the previous fiscal year. In the investment category, ORIX saw a significant increase in segment profits of JPY 138.1 billion or 82% compared to the previous fiscal year.

This was driven primarily gains from the sale of valuation gains of Greenko, as well as large gains from real estate and earnings of from PE investments, including Toshiba. Breakdown of each of the 10 segments are provided on pages 40 and 41 for your reference later. Please turn to page 5. The bar chart on the left shows results for ROE, segment profits, and allocated capital for each of the 3 categories for the fiscal year ended March 2026, as well as the changes from the prior fiscal year. The dark blue bubble, the finance category, has allocated capital of JPY 1.7 trillion, with ROE holding steadily at the same level of 8.2% from the prior year.

Light blue bubble, operation, has allocated capital of JPY 1.4 trillion, with ROE rising from 13.5% of the prior fiscal year to 13.9%. Dark pink bubble, investment, has allocated capital of JPY 1.6 trillion, with ROE significantly improving from 7.4% to 13.6% due to realized gains from the sales of Greenko stake and hotel sales. On page 6, we show historical trends of ROE and ROA of each of the 3 categories. In the operation category, profitability improvement has outpaced asset expansion with ROA improvement an additional 1.0 percentage point over the past 5 years. In the investments category, ROE and ROA increased by 6.2 percentage point and 3.6 percentage point, respectively, compared to the prior fiscal year.

We continue to create value and rotate assets while enhancing efficiency, as mentioned before. Next, please proceed to page 7. For the fiscal year ending March 2027, we target net income of JPY 530 billion, an increase of JPY 82.7 billion from the prior year. The target of ROE is 11.7%. ORIX Group specific key initiatives will be explained by our CEO Takahashi later on. We aim to increase profit and also improve ROE by continuing to optimize our portfolio. Regarding shareholder returns, I will touch on this again after presenting breakdown of our earnings guidance. Please turn to page 8. I’ll explain the pre-tax profit guidance for the fiscal year ending March 2027 for each of the 3 categories. First, please look at the upper table.

As shown in the second row, expected pre-tax profit for the fiscal year ending March 2027 will be JPY 760 billion, an increase of JPY 68.6 billion or 10% year-over-year. Please look at the lower left graph.

Sasaki, Analyst, Nomura Securities0: Overall, we expect the finance and operation categories to achieve profit growth. Investments will see a decline. Excluding the JPY 95 billion in gains from the sales of Greenko realizing, FY 2026 March investment segment profits also expected to increase. Next, I would like to explain the trend for each categories. Finance. As announced in April, we have concluded share transfer agreement with Daiwa Next Bank, a consolidated subsidiary of a Daiwa Securities Group for all shares of ORIX Bank. We plan to record a gain on sale from the transaction of approximately JPY 124.2 billion at the pre-tax level for fiscal year ending March 2027. Profitability from ORIX USA is expected to contribute as well.

As a result, we expect finance category segment profit of JPY 308.3 billion, an increase of JPY 119.1 billion or 63% compared to the prior year. Within operation, we expect the inbound related business to see lower profits due to the impact of geopolitical tensions. Despite this, we expect solid growth in aircraft leasing and the U.S.-based Hilco Global. We are guiding operations category segment profit of JPY 240.7 billion, an increase of JPY 3.6 billion or 2% compared to the fiscal year ending March 2026. Finally, investment category. In addition to the sale of our domestic PE investment, SUGIKO, which was announced in March, we are proceeding with exits from multiple PE deals in the U.S.

We also expect profit contributions from Toshiba, which is performing well. As a result, our guidance for the segment profit is JPY 290 billion.

Please turn to page 9. Last point that I would like to explain is about the shareholder returns. For the fiscal 2026 March, the full year dividend per share was the record high of JPY 156.1, up 30% year-on-year. Additionally, we fully executed the entire JPY 150 billion buyback program and canceled all shares exceeding 2% of the total shares outstanding. For the fiscal 2027 March, we will maintain the dividend payout ratio of 39%. Thus, at the full year dividend per share will be JPY 187.36, based on the projected net income of JPY 530 billion. We have set the share buyback program of JPY 250 billion, up JPY 100 billion year-on-year.

Sasaki, Analyst, Nomura Securities7: This was decided after considering cash inflows and capital release resulting from the sale of ORIX Bank, as well as the future profit levels, ROE, and financial soundness. The projected total return ratio, as you can see here, is 85.9%. That concludes my presentation. I would hand it back to Mr. Takahashi, CEO, Group CEO.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Thank you, Mr. Yamada. First, I’d like to summarize the previous fiscal year from the perspective of the 3 key initiatives for realizing our long-term vision. We explained at last year’s financial results briefing. The first strategic initiative is portfolio optimization. We have been reviewing our portfolio considering the growth potential, capital efficiency, and impact on the credit ratings of each business. Major examples are shown on the slide. The sale of our Greenko stake and new investment in AM Green convertible bonds, as well as the sale of the ORIX Asset Management and Loan Services. As mentioned last month, we announced that we would sell ORIX Bank during the fiscal March 2027. The second initiative is sophisticated risk management. We have strengthened our management’s decision-making platform by both integrating and visualizing risk information.

Sasaki, Analyst, Nomura Securities0: Through this, we have established a system that enables quantitative risk assessment and agile reflection of this assessment in our management decisions. Starting this year, we have integrated the individual finance deal screening department with the portfolio management department, establishing a system that enables end-to-end risk management. The third initiative is new business creation. Construction on the Osaka IR project commenced in April last year and is progressing smoothly. In October, there was an application for the MICE, and it’s going very smoothly. Through the acquisition of Hilco Global in the U.S., we have entered the professional advisory services businesses, including asset valuation, primarily in the U.S. We’ll also build an asset-backed financing platform going forward. Also, using the Hilco Global, we’ll be also building the asset-backed financing platform.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: In I-NET and conversion of NOZOE INDUSTRY into the subsidiary are part of our efforts to create new businesses in strategic investment areas. Through those priority initiatives, we steadily improved ROE, and I am pleased to report that both net income and market cap reached the record high levels for the 1st fiscal March 26th. Please turn to next page. For the fiscal 27 March, we will continue to promote the 3 key initiatives aimed at realizing our long-term vision, including portfolio optimization, sophisticated risk management, and new business creation. In addition, under the new management structure, we would add a new key initiative that is the business model transformation. We will achieve this by deepening and evolving our 2 core business models as set forth in our group strategy, alternative investment and operations and business solutions. Let me explain the specific details later on.

Sasaki, Analyst, Nomura Securities7: Now please proceed to the next page. This is ORIX Group’s new management structure. In January this year, I myself, Hidetake Takahashi, assumed the position of CEO, and reorganized our firm into five business units and five corporate units. Following this, we introduced a CXO system in April. This organizational reform aims to optimize the allocation of management resources under the CEO and create new businesses through the inter-unit collaboration. By introducing CXO system, we are expanding the delegation of authority to individual BU to help achieve both faster and more accountable decision-making by business division COOs. Our CFO, CRO will be responsible for the maintenance of the strong financial discipline and risk management respectively. Each CXO will not only be responsible for their respective areas, but will also serve a role as top management overseeing the entire group alongside the CEO.

Today’s attendees, Mr. Matsuzaki, Deputy President, and Mr. Suzuki, the Senior Managing Executive Officer, they will be the COO of Japan & APAC Business Unit, as well as COO of USA & Europe Business Unit, and a COO of Infrastructure Business Unit for Mr. Irie. Today, Mr. Otsuka is not present. He is the Managing Executive Officer and he will be in charge of the risk management unit and group CRO. In Japan & APAC Business Unit, we develop wide range of financial businesses from debt to equity in APAC, including Japan. Going forward, we will capture the growth opportunities by expanding the diverse businesses we have cultivated domestically into APAC. USA & Europe is the core of our overseas asset management business.

In addition to the public assets centered on Robeco and private credit at ORIX USA, we will expand asset classes into other alternative assets and pursue AUM growth through strengthening sales collaboration. Infrastructure Business Unit will refine its expertise in the development, management, and operation of real assets such as real estate, energy, and aircraft and ships, while promoting the shift to asset management to expand the business scale through asset rotation. With this new structure, we believe we have established a management system that is more resilient to environmental changes and capable of making sound decision on both offensive and defensive fronts. Please turn to the next page. Let me elaborate on our business model transformation, which has been introduced as a new key initiative.

Until now, our alternative investments and operations have primarily been in our alternative assets on the balance sheet, where we can leverage our hands-on asset operation and management capabilities. Going forward, we will continue to build up assets such as real estate and renewable energy development while efficiently utilizing our balance sheet. We would accelerate the investment in assets suitable for shifting to an asset management, asset manager type model and connect this to medium to long-term AUM expansion. Our business solutions model will continue to value touch points with our customers and will expand the services originating in client needs. Through this, we aim to grow our asset under management and fee income. Please refer to the slide as examples of the initiatives of each business unit. Please go to the next page. I would like to discuss our financial and risk management strategies.

To steadily execute our growth strategy going forward, we will continue to strengthen financial discipline and risk management. The environment surrounding us is changing daily, including the situation in the Middle East, the resulting energy crisis and the highly volatile financial markets, and uncertainty has become the norm. As I said earlier.

Sasaki, Analyst, Nomura Securities0: In this climate, it is essential to thoroughly enforce financial discipline and risk management and to enhance resilience. We would not only respond to the changes, but also grow amid the changes. By targetedly implementing management focused on the capital efficiency and optimizing capital allocation across the group, we will concentrate management resources in areas where we have a strong competitive edge. We will pursue maximum profitability and sustainable enhancement of the corporate value under any circumstances. Please go to the next page. Finally, let me summarize the core messages today. Additionally, the previous fiscal year was one of the steady progress towards realizing our long-term vision, as I said at the outset. We recently announced the sale of ORIX Bank. Regarding portfolio optimization, we will continue to pursue this strategy without having any sacred areas.

Under the new management structure, we will continue to balance growth investments and shareholder returns while aiming to maximize corporate value over the medium to long term. With a focus on improving capital efficiency and profit growth, we will steadily execute each initiative. Finally, on the July second of this year, we plan to hold our first ever investor day in London. We continue to value dialogue with our stakeholders and apply it to our management. We appreciate your continued support. Thank you very much for your attention. Now we would like to open the floor for questions. Online participants can also raise your hands, but we would like to take questions from venue first. If you would like to ask a question at the venue, please raise your hand and staff member will bring a microphone to you.

If you would like to ask a question online, please press the Raise the Hand button at the bottom of the Zoom screen. When your name is called, please unmute yourself and ask your question. We would also like to ask you to state your affiliation and the name before the question. The first 30 minutes approximately will be allocated for the press. The question and answer session will be open to investors and analysts after that. Now the question is accepted.

Sasaki, Analyst, Nomura Securities5: Thank you. My name is Sugawa, Nikkei Newspaper. I have two questions. Question one, ORIX Bank sales was decided. What are the reasons? What is the background? Can you please remind us of that? The sales of the bank, I know that there’s a lot of cash coming in from that and other sales. What is the purpose of this cash? How do you intend to spend this cash in the future? Do you have any plans already?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Thank you very much. I would like to respond to this question. The reason to sell the ORIX Bank, there were multiple reasons behind this. The biggest being, well, Daiwa Next Bank and also we’re here at the venue, but, there’s a very good affinity with ORIX Bank and also Daiwa Securities Group has been really appreciating the ORIX Bank highly. Business-wise, ORIX Bank doesn’t really have ordinary deposits. It’s basically CDs, but the interest rate is favorable, and the bank is also providing real estate collateral loans. Actually the deposit to loan ratio is higher than 10% slightly, which is very unique.

Sasaki, Analyst, Nomura Securities0: The deposit stickiness is a little bit weaker, and therefore, in order to grow the business, the interest rate for the term deposit will have to be higher to be more attractive. We have to basically do the investment with loans. Of course, there is competitiveness as well. It’s very difficult to get the margin these days. As far as I know, Daiwa Next Bank is going the opposite way. In other words, they have a relationship with the securities brokers business, and it’s relatively easy for them to collect the deposits. Once they get the deposits, they had challenges in terms of how to invest or manage that money. This combination, I understand that the two entities will be integrated.

As a new bank, we believe that they can aim for further growth, bigger growth, and that is the reason why we decided to sell the bank. With regard to your next question, we also do divestments and also investments. When we gain on sale, we’re not necessarily thinking about spending money for a specific purpose. We want to focus on where we are competitive when it comes to investments. If you invest against macro environment, it doesn’t really work. We need to really consider the macro economic environment and identify good areas for investment. To be more specific, according to the older segment, for example, PE investments within Japan is something that we’ll still be actively investing into going forward. Real estate as well as aircrafts. Those real assets, they have a strong resistance against inflation.

This is what we believe. Operational capabilities of ORIX and Wocarats turnaround capacities would really help us to generate business value on our own. Investment into real assets is another area where we could allocate capital. I hope that answers your question.

Sasaki, Analyst, Nomura Securities7: Thank you. Any other questions? Please raise your hand.

Sasaki, Analyst, Nomura Securities1: Nakahara from Yomiuri Shimbun. Thank you for your presentations. Related question to the first question. I would like to ask two things. About the numbers on page 8, in the finance section, March 27th, the segment profit JPY 300 billion. ORIX Bank sale is JPY 124 billion upside. JPY 300 billion. In the finance segment, is this going to be the highest record? I’d like to clarify that. That’s the first point. Nikkei’s question, I think is the other side of her question. The benefits of a sale, you talked about that. At the same time, as a management decision in the finance segment, continue to hold ORIX Bank. I think that was one way of doing business. Could you talk about the balance? Could you explain that once again?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Yes. To your first question about the financing and investment business, we did not have that category in the past 10 or 20 years. I don’t have the precise data in my head. About the JPY 300 billion segment profit, it is the record high profit in finance, I believe. That is a forecast. Why don’t we maintain it, or why don’t we keep it? One thing is that the ORIX Bank, compared to other banks in terms of ROA, relatively speaking, was at the higher level. In the ORIX Group, ROA, relatively speaking, was lower. In finance sector, the ROA comparison, in the ORIX financial, finance sector was relatively low. Therefore, making significant improvement of the ROA based on the banking business is difficult.

Sasaki, Analyst, Nomura Securities0: In order to improve ROA, we need to increase the leverage. Naturally, it’s a regulated business, and also there is a certain limitation to that. When you look at the overall business portfolio, we wanted to focus more on the ROA, ROE. The bank business for us is not a non-core business. That is the major background.

Sasaki, Analyst, Nomura Securities7: Thank you very much.

Any other questions? If you have a question, please raise your hand. Yes, the person in the fifth row.

Sasaki, Analyst, Nomura Securities4: The Nikkei. My name is Nawi. I am an anchor. I have 3 questions. Mr. Takahashi, you said that domestic PE, real estate, and aircrafts and real assets are the areas that you see opportunities in. In terms of macroeconomics, which areas are you more wary of? In other words, you talked about uncertainty becoming the norm. Where are you being more careful? When the interest rate is hiked, what kind of impact will it have on your business? Interest rate hike so far, has it been positive for the management of ORIX Group? If the rate hike accelerates or exceeds a certain threshold, do you need to be more wary of that? The third point is, total payout ratio was 80 some percent in last fiscal year. What is your basic policy for shareholder return?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Can you please explain that once again?

With regard to the first question, are there any areas that we have cautions about? For domestic business, in Kansai we are operating 3 airports. For inbound related business, we have hotels and inns. We also operate those.

It’s very unfortunate that since last autumn, relationship between Japan and China has weakened politically. Kansai International Airport receives about the 30% of the flights from China. Out of that 30%, approximately two-thirds have been reduced. The number of flights have been reduced. There is a three-month lag in terms of impact or performance. For the prior fiscal year, we are only accounting for the number of Kansai Airport up to December last year. The impact is minimal. If the flight reduction continues, the impact will be bigger going forward. There’s also a positive factor. We are receiving a few visitors from China, but we are receiving more visitors from South Korea and Taiwan.

It is not just a simple reduction of a two-thirds of the 30%, like I said, but a certain amount of impact is expected, so we need to be careful. Similarly for hotels, we don’t have many hotels that accept group tourists. Only about 10% of the visitors from China in terms of occupancy, it’s fine, but in terms of room rate, maybe it was too high during some period. Generally, the numbers are softening, and therefore, revenue from the hotels can be impacted to some extent as well. With regard to overseas, in the U.S., fundamental measures have been implemented. We believe that we have already entered the phase of recovery. Private credit, especially SaaS company exposure, impact is of concern for many.

If there is money coming in from the individuals, there are redemptions happening. In terms of a private equity exposure and SaaS related lending, that’s approximately 7%. 7% of the total. For the industry, the average is about 20%. That means that the impact for us is very much limited. Having said that, inflation and interest rate reduction, compared to expectation from one to two years ago, inflation pace and also the interest change pace is slowing down. We have to pay close attention to how this will impact us in the future. Just one more thing. With regard to portfolio of Chinese business, we need to control the exposure generally. There are some parts of portfolio that will have to be turned around.

We will strengthen our structure and continue to provide monitoring over that business. Those are the 3 points that we believe that we need to be careful about. Now, interest rate sensitivity. Interest rate is being hiked, and if it is slow, mostly in Japan, of course, the funding cost will increase. We can respond to that, and we believe that it will have an overall positive impact. 1% interest rate change sensitivity is about 1% by segment or at the segment level, it’s limited. However, as you asked, if there is a sudden interest hike, a very fast interest hike, it is possible that we will fail to catch up or there will be a time lag which will result in potential impact.

At the current pace, as long as the interest hike is happening slowly, we believe that the impact will be positive for us. The third question was about dividend, I believe. Yes, shareholder return policy. As I mentioned in my presentation, investment for future growth and the maintenance of financial soundness and return to shareholders, we need to strike the right balance between the three elements. We continue to sustain this policy. Over the last three fiscal years or so, we had some gains from temporary sales or divestiture, and the profit was really going up, and dividend per share has been going up as well quite a lot. DPS growth on a continuous basis is something that we’re aiming for, and also at the same time, we’ll be focusing on the balance of the three elements.

This is how we decide our dividend policy. I hope that answers your question.

Sasaki, Analyst, Nomura Securities7: Yes. Another person in the fourth row. Kawasaki from Jiji Press. Two questions, please. About the ORIX Bank, the gain on sales of it. JPY 370 billion is the price. For this fiscal year, there is JPY 124.2 billion. It’s a part of that gain, and the remaining will be reflected in the next fiscal year and onwards. Could you explain that? That’s my first question. The second is that about the Middle East situation. Due to the situation, different industries are being affected. Maybe you have not seen the negative impact for yourself. The disruption in Middle East

Unknown Journalist, Journalist, Unknown: What could be the negative impacts or positive impacts, if there are any? If you can summarize that.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Yes. I’d like to respond. About the bank, I would like to refrain from talking about the details, but roughly speaking, the financial net asset of the bank is about JPY 250 billion. JPY 370 billion, the sale, the price of sale, the difference between the two will be our gains. For this fiscal year, we plan to close this. If unless there is a postponement of the closing, it is not likely that we would book the profit from this transaction across at a different fiscal year. That’s my answer to your first question. As about the Middle East, you’re right. The subsidiaries or affiliates that we have in Saudi Arabia, we have a leasing company called Yanal.

Sasaki, Analyst, Nomura Securities0: In Pakistan, the OLP is a leasing and financing company. In terms of exposure, those are the two companies. It’s about JPY 15 billion. Exposure is limited. The potential impact on the businesses, aircraft business, we have a high credit level, the company. So far, no major impact is forecasted due to the Middle Eastern situation. The jet fuel, if this current Middle Eastern situation continues, there could be a short shortage of the jet fuel. Including LCC, it’s possible that they will reduce the number of the flights. The airline performance will deteriorate.

Spirit is another story that used Chapter 11, and it’s possible that there could be some airlines whose credit would deteriorate. We are not too optimistic. We’d like to look at the credit situation and aircraft situation. We are watching that closely. Another thing is, especially in Asia, Southeast Asia, as you all know, their energy reserve is at low level as countries. If it lingers in a different senses, the Southeast Asian macro economy could be impacted. If that happens, then the credit quality goes down. Direct impact, as you correctly said, is limited for us. If it lingers further, then there could be some indirect impact.

In that sense, we have to enhance the risk management, as I said. We’d like to focus on that, and we would like to respond to the situation. Thank you. That’s all the questions. The answers, sorry.

Sasaki, Analyst, Nomura Securities6: Any other questions? Second row on the right-hand side.

Sasaki, Analyst, Nomura Securities8: Thank you. Nikkei Business. My name is Umikuni. I have two questions. Insurance business positioning within your portfolio. You talked about ROE and also business model transformation. Against that background, how do you position your insurance business? That’s my first question. My second question is about the three airports in the Kansai area. What is the significance of this business, and what is your outlook of this business going forward?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: With regard to your first question about our insurance business, insurance, as you may know, is balance sheet heavy and also a regulated business. Therefore, we need to build a certain amount of capital. It is also a capital-intensive business, and we need to use the balance sheet in order to grow the business. Therefore, if you just apply the ROE perspective, then insurance business is a little bit different from the rest of the portfolio. However, there are two things we need to consider. One is if you look at other alternative asset managers, they’re doing something similar. Through insurance policies, you gain liabilities. Non-insurance business usually cannot really finance this kind of long-term debt. You can do that through insurance.

Sasaki, Analyst, Nomura Securities0: This is something that we can really use for other assets within the group, including the utilization of the reinsurance. If we can allocate it like that in terms of financing, we believe that there is good synergy. That’s one point. The second point is that when we obtain a debt and also sell insurance, well, the third category insurance targeted at individuals were advertised on TV, and we were also focusing on online sales as well. Now we live in a world where we have interest rates. Life insurance, death coverage, and also wealthy individual insurance. We have started this several years ago. Now, corporate financial services in of ORIX is one of the best sales agents in Japan.

We believe that there’s synergy in terms of obtaining insurance policies as well. There is actually a third point. If you just look at ROE, it’s only about 7%, so you may consider that we should be selling this business. However, as you could see from the performance of the prior year, for pre-tax segment profit, we are generating more than JPY 100 billion from this segment. Considering the nature of the insurance business, this kind of a revenue or profit is very stable. We do not just apply the ROE perspective. This is similar to the bank business. Well, in other words, we don’t really consider to sell insurance, like we did with the bank, just looking at ROE.

We have to look at the debt structure of ORIX Group as a whole, and also asset management structure as well, and how to utilize insurance business within that framework. That’s what we consider. Now, with regard to the three airports, there are certain factors that are in our control and out of control. Relationship between Japan and China was already explained earlier. We don’t just sit by and watch the situation change or improve. As I said before, we are getting more visitors from South Korea and Taiwan, and Indonesia, Thailand, and other southeastern airlines. We are approaching them. Our sales team is approaching them because this is a great opportunity. Traditionally, we were relying on a single market for 30% of our sales or revenue, but this is a great opportunity to change that structure to reduce the dependency.

Now the risks have materialized. We want to make sure that the lesson is learned and same problem will not be repeated so that we can operate this business over the long term. That’s all. Thank you.

Unknown Journalist, Journalist, Unknown: Yes, the person in the sixth row. Thank you. Kawase from The Nikkei. About China, I’d like to ask a question. Earlier, Mr. Takahashi, in your presentation, you said that the portfolio in China and exposure needs to be controlled, and maybe turnaround is necessary in part. In the distribution, it is the materials about the Greater China, you are saying that you will be controlling your business. More specifically, the areas that you were not investing or you will withdraw, where are they and how do you control the exposure? When you say you’ll be more restrictive, it means that you won’t be not really reducing it totally, but what are the areas that you are referring to?

Sasaki, Analyst, Nomura Securities7: The APAC business, Asia Pacific, I mean. In APAC, how do you position China? The excluding China, you want to enhance the APAC. Is that the framework of APAC excluding China? Could you explain that?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Well, about China, following U.S., it’s the second-largest market. We are not going to withdraw it completely from China. That’s not something that we expect. At the same time, including the investment of the listed companies, the minority investment, I think that the horizon of the investment is becoming longer. The capital recycling will be promoted so that the assets will be rotated. That’s our investment policy. There are no exceptions. In comparison to others, the minority investment and the investment period will be longer. We would need to rotate our assets there. For example, in Hong Kong market, compared to two years ago, is recovering quite a bit. Pre-IPO investment in the technology companies is the main investment that we make. That is relatively short term.

Sasaki, Analyst, Nomura Securities0: We have experiences, so we’d like to continue working on those investments. It doesn’t mean that we will withdraw or exit our businesses from China. That is not the case. We will look at the individual assets, and if it’s longer term, we would rotate the assets. As a whole, we are not going to increase the overall exposure so much. We want to control the level of exposure as much as we can. That’s the situation in China. What about APAC? APAC, it’s not just one market. It’s multiple countries and multiple markets in APAC. In terms of or as a region, it’s a APAC region, Matsuzaki here with us is in charge.

If you look at, each country or each market. Different cultures and institutions, there are differences. If we can take advantage of our strength, then we would like to expand the businesses. For example, in Asia Pacific, in the area of the Pacific, Australia, conventionally the auto leasing was the major business. The real estate related financing, there are opportunities there. Already one or two are being executed. We would like to continue to form a team to promote this. Also India, there could be similar opportunities. Rather than thinking about it as one region, we like to look at each country or each market individually and do whatever we can do. Thank you.

Sasaki, Analyst, Nomura Securities7: Next question is going to be the last one from the press. My name’s Inagaki, Asahi Shimbun newspaper. I have two questions. First of all, about ORIX Bank. Lending competition and getting more difficult to get the margin. BOJ rate hike, for example, is pushing up the deposit interest rate. The ORIX Bank deposit interest rate, you found it difficult to increase the rate to get more money. Maybe the business model wasn’t working very well. Was BOJ rate hike one of the factors behind this? That’s my first question. Second question is about portfolio optimization. There is no sacred area, you said. Within your view, Mr. Takahashi, what are the specific challenges and what are the specific focuses?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: With regard to the first question, I think there are pros and cons, both positive and negative. BOJ’s rate hike policy or the monetary policy has changed, and the now interest rate is positive and the stickiness is weak. We are beginning to find that out. It is more difficult to get the arbitrage or the margin. Now, for the finance sector or the bank sector as a whole, it has a positive impact on the sales. Valuation of the banks was lower than 1, but now it’s beyond 1.0 times. There was a question about the gain on sales earlier. Basically, we got a positive gain on sales and found a very good partner for this business as well. If PBR was below 1 time, there was no incentive to probably to sell.

Sasaki, Analyst, Nomura Securities0: Well, maybe not. There was not an incentive to sell by generating a loss. Anyway, we decided the sales, and I think it had both positive and negative factors. What was your second question? Could you please repeat?

Unknown Journalist, Journalist, Unknown: About portfolio optimization. You said you will leave no stone unturned. What are the specific challenges you see in doing this?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: We say there is no sacred area, no stone unturned, so there is no sense of challenge. We will be implementing the reform steadily, logically. As I said in the summary of the last fiscal year, when we consider capital recycling, it’s not just about getting capital gain. We look at ROE and the financial status as a snapshot. Based on the snapshot, some indices are better or worse, and we also look at whether or not they would improve or further grow in following several years. In that sense, we look at growth capacity, growth potential. Thirdly, we want to look at the impact on rating, credit rating, because when we acquire something for portfolio, we have to consider the goodwill as well.

Sasaki, Analyst, Nomura Securities0: As I said, in the China business, minority investment does have an impact on S&P credit rating, so we have to think about that impact as well. As I said before, we will just not look at the numbers. We will also look at the qualitative aspects, whether there’s synergy within the group, whether it’s meaningful for the group to have it. We will look at all of these aspects in terms of portfolio optimization. That’s all the questions we take from the press. We would like to take Now, Tomioka-san of IR will be leading. Thank you very much. We would like to take questions from analysts and investors. There are some remote participants, but first of all, we would like to take questions from the people who are present here. Any questions? Anyone here?

The person in the front.

Muraki, Analyst, SMBC Nikko: Muraki from SMBC Nikko. I have two questions. On page 15, you talked about the ROE, so I would like to ask you a question. Eleven point seven percent is expected for the new fiscal year, so you exceeded your target. ORIX Bank sale gain and also HEXEL gain, I think those are included. In the underlying capability, it’s above 11%. Are you feeling that? That’s my first question. Second question is on page 14 on the left-hand side.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: The capital usage, utilization, what is the current investment environment? If the situation continues to be the same, the share price being too high, you cannot make investments. Is it possible that this number goes down further? Is there such possibility happening? Well, thank you. About the ROE, underlying ROE, as I explained earlier, for this fiscal year, ORIX Bank gains on sale and the major sale of others are included. In the previous fiscal year, the Toshiba was showing strong. There was a gain in relation to Kioxia which are also included. In terms of our feeling, in real terms, maybe we are very close to 11%, but we have to work a little bit harder.

Sasaki, Analyst, Nomura Securities0: That’s how we feel. That’s the very honest feeling that I can share. As for the capital utilization, relatively speaking, divestment under the current environment, the setting I think is, well, I wouldn’t say easier, but easy to handle than buying. Divestment is leading, divestment are happening at the relatively high price. Therefore, the collection is proceeding, the capital utilization comes down and the liquidity position goes up. That has been the trend. As you correctly said, in terms of the real assets, the real estate and also the aircrafts and also the PE, the valuations are rising.

Under those circumstances, the projects that we’ll interested in working with us, there are many of those examples. How can we increase those projects will be the key. It’s not an easy environment to invest in, but unique investment opportunities are the ones that we would like to continue to pursue. Thank you.

Watanabe, Analyst, Daiwa Securities: I’m Watanabe from Daiwa Securities. Thank you presentation. I have 2 questions. Page 49, employed capital ratio. Since April, we had exits and the ORIX Bank and SUGIKO. Based on that pipeline, do you have the pro forma employed capital ratio? How much is that right now? On page 49 on the left-hand side, insurance debt, assessment evaluation. Compared to end of December, the amount of debt is actually bigger. Have you changed the evaluation method? What is the background for this?

Sasaki, Analyst, Nomura Securities0: With regard to employed capital ratio, for 26th March, 86%. ORIX Bank sales was mentioned before, and also SUGIKO. This is PE investment, so this is in and out. Anyway, those are not really reflected in these numbers yet. ORIX Bank sales, if this is included, roughly speaking, 86%, employed capital ratio at the end of the term will be coming down to about 80% according to our pro forma calculations. As I have explained, PE investment and the real asset-focused investments will be accelerated. With regard to your second question, the debt evaluation. Method of evaluation has been changed. That is true. I would like to ask Yamamoto to explain the details of this.

Kazuki Yamamoto, Operating Officer, Corporate Strategy and Management Unit, Head of Corporate Planning, Investor Relations, and Sustainability, ORIX Corporation: Yes. I would like to provide some additional explanation. For insurance policies acquisition, things are progressing smoothly, this is pushing up the amount of liabilities. Liabilities evaluation, especially for long-term interest. In order to be able to apply this more stably, we did something. Well, our corporate debt market was quite unstable for a while. We combined multiple indices in order to evaluate it more accurately. This is pushing up the number. In terms of net asset, this is basically a negative impact. That’s all from me. Thank you.

Watanabe, Analyst, Daiwa Securities: That’s very clear. Thank you very much.

Sasaki, Analyst, Nomura Securities6: Thank you very much. The person in the third row.

Sasaki, Analyst, Nomura Securities2: Sakamaki from Mizuho Securities. I have two questions. The first is on page 15. The ROE 15%, FY 2035 March. I think you included your enthusiasm there. A year passed, and I think you have already made a progress. This, the feasibility of achieving 15%, is it becoming better? Could you talk about that? The second question, U.S. business

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Restructuring is progressing. What is the timeframe that before you see the improvement of the profitability? Thank you. 15%, how confident are we? I think that’s your question. Last fiscal year and this fiscal year, if you look at the numbers on page 7, there’s a comparison to the FY March 2025. I think it’s increasing and getting close to that level. I think that’s the reason why you asked this question. Frankly speaking, our feeling is that we really have to work very much harder to get to this level. How can I say this? What should we do to reach that level? With us, that we have our COOs and CSO. We have a CRO. We have the top management team.

Sasaki, Analyst, Nomura Securities0: We have a very frequent discussion, and we are updating the content. Going through the PDCA, and as long as we take the steady initiatives, I think we can get close to this level. I strongly believe in that. Of course, there could be some temporal improvement of our ERA, and also there is a decline at some time. There is still nine years to go, so we like to make sure that we make the linear growth. If you look at the three, five years timeframe, we would like to get closer to these targets. We would continue to execute what we need to do one by one.

About the ORIX USA, there are several, in March, April, in the area of the private equity portfolio, we made announcement about the sale. In addition to those, there are core and non-core, and we are rotating the portfolio. Maybe we have reached the bottom, but in order to get to the normal profit level, I think we would probably need a few more years. The size of the business could shrink, but we like to make sure that we recover the profitability. That is our priority. In charge of U.S. and Europe, the COO, Suzuki, is here with us. Suzuki is usually in New York, but very frequently we have a discussion with him to take necessary initiative.

We like to spend a few more years so that we can normalize the profitability level. That’s the very frank views that I shared. Thank you very much.

Sasaki, Analyst, Nomura Securities6: Any other questions? Third row from the front.

Unknown Analyst, Analyst, Morgan Stanley, MUFG: Thank you. Takemura, Morgan Stanley, MUFG. I have two questions. My first question is related to the last question. How do you view the future of the U.S.? What is your outlook? Page 8 shows that the finance category profit JPY 189.2 billion, and excluding one-time factors, JPY 175.8 billion. This is -JPY 13.4 billion. Last fiscal year I’m sorry. Correction. The U.S. are actually included in finance, I think. Anyway, debt recovery gain on sales was about JPY 8 billion or JPY 7 billion last year. I think there’s an absence of this. You now have a absence of the profit from the bank. Naturally should be about -JPY 20 billion, but actually JPY 13.4 billion.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: The difference explains the recovery in the United States. Is that the correct understanding? Can you please also talk about the background? That’s my first question.

There are multiple factors, and therefore it is very difficult to do an apple-to-apple comparison, but what you said is largely correct. Gain on sales of the servicer and also for ORIX Bank sales in the first half, that is the assumption. Second half, profit will not be coming in from ORIX Bank. The last fiscal year, we had the profit coming in for the full year, contributing for the full year. Net-net for the finance category, we believe that the profit will increase slightly. As you have mentioned, ORIX USA recovery is accounted for. Credit cost allocation was done for ORIX USA in the prior fiscal year. This was a big allocation, and the absence of this will lead to recovery, big recovery. There are many positive and negative factors. I cannot explain everything today. That is, basically the picture.

Outlook for the United States. This is a very difficult question to answer. In terms of the businesses that we have, downside protection wise, we have done everything we could in the last fiscal year already, basically. It’s just a question of how long will it take to recover. Example deal, project sales is now ongoing, and potential buyers are sometimes private equities. Private equity also has private debt business. The private equity, private debt within the current U.S. environment, including the major players, are basically struggling, and the PEPDs that are listed are suffering from much lower share prices as well. When these problems start to materialize to a greater extent, then speed of asset recycling will slow down, and therefore, we don’t have a extremely positive outlook for the United States.

Sasaki, Analyst, Nomura Securities9: Rather than that, we need to take a very close look at what’s happening in the U.S. on a day-by-day basis. Just this weekend, Suzuki has come back from the U.S., I think maybe he has a comment about his own assessment. I’m in charge of Europe and the U.S. My name is Suzuki. Our CEO, Takahashi, has basically given you the overall picture of the U.S. already. Macroeconomic environment-wise, when you look at the non-bank business, including the fund business, private debt impact does slow things down. With regard to ORIX USA, thankfully, the impact is quite small, as was explained before. Our business partners are impacted, affected by this. Again, we are exiting some private equity business, and also there is a non-core portion.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Compared to when we were planning things last year, timing of sales and also the amount that we can get from that is something that we have to pay close attention to, and we need to follow up closely in terms of recovery of the assets. With regard to new projects, new deals, there are 3 things that we’re considering, largely speaking. One is a company, Hilco, and Hilco can do asset-based leasing, asset-based financing based on their asset evaluation capabilities, and we can turn this into an asset management business. This is alternative asset management product structure that can be done for the future. Product mix-wise, we also want to focus on real estate. This is, of course, real assets.

In the United States, agency targeted mortgage in real estate has been our focus, but we want to expand further, including multi-family residential financing and also not just financing, but also equity investments. These are the potential areas that we want to get into, and also other areas where we have real estate related opportunities. Now, asset management and alternative focus asset management, this is something that we will continue to promote. NXT is one of the cores. They do direct lending. The market recognition has improved and the first closing of a new fund launch was also successful. We want to continue to promote this. Will we see the result of this already within six months? The answer would be no. It will take a little bit longer.

Unknown Analyst, Analyst, Morgan Stanley, MUFG: We will continue to run this business meticulously over the long term. Thank you very much for a very detailed explanation. I have one more question about dividend. ORIX Bank sales expected in the first half. SUGIKO also first half. First half dividend is 39% against the profit of the first half. Is that the correct understanding? This year you’ll be paying out a lot of dividend. Is this going to be the baseline for the next fiscal year’s dividend? With regard to your first question, your understanding is correct. With regard to your second question, at the board of directors, we are debating this quite a lot, and we need some more time to debate this.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: We thought that this question will be asked. Let me explain about Toshiba. Kioxia share based on the large shareholding report sold by several percentage point by March. Equity ratio is already 17.6% as far as we know. This is what we found out at the end of the fiscal year. Toshiba uses U.S. accounting standards. Their accounting process, well, they’ll be doing the e-earnings call fifteenth of May. We have to wait for that to see how they will do this. Toshiba may reclassify Kioxia to marketable securities. This is a possibility. According to U.S. accounting standards, it will no longer be equity method. It will be market to market.

Sasaki, Analyst, Nomura Securities0: Which means that, based on the share price of last fiscal year-end, it’s possible that they want to capture the gain on valuation. Whether Toshiba will sell Kioxia, even if they don’t sell Kioxia, if it’s reclassified to marketable securities, then the evaluation will be different based on the share price at the end of the term. Whatever Toshiba captures will be captured by us based on the equity method, based on the stake. I’m sure as analysts you have already did the calculation, but we have to take that into consideration. Last year’s prior’s dividend, you’d been used as a full may be questionable when you consider sustainable return policy.

There is still a potential debate there, and we need some more time, and we would like to deliberate this at the board level and decide on the policy, the direction.

Unknown Analyst, Analyst, Morgan Stanley, MUFG: Thank you.

Unknown Moderator, Moderator, ORIX Corporation: Thank you very much. Next, I’d like to take a question from the remote participants. J.P. Morgan Securities, Sato-san, go ahead. Thank you very much for this opportunity. This is Sato speaking. 2 questions, please. First, about the U.S., especially the credit business. I’d like to know more about the current situation. I think you referred to it earlier. The credit value creation expenses is included and in the supplementary information. It’s about JPY 10 billion, the lending support, and this I think is mostly U.S. You mentioned that the risk is not so big. What is your recognition about this credit loss being included here? Could you explain that? Second is about the capital gain. On page 46, this fiscal year capital gains are mentioned.

Sasaki, Analyst, Nomura Securities7: Already something which was discussed, bank and Sugiko, JPY 180 billion, I think. On the now the capital gain in comparison to your plan, the normal level, something that might emerge from now on, I think that the budget for that is quite controlled. Other sales, does that mean that you’re not very aggressive about that? This about the capital gain plan. Could you explain the capital gain plan a little bit further? Sato-san, thank you.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: About the U.S. credit cost. If you go deeper and calculate, I think you will be able to get the numbers relatively roughly speaking, about the JPY 24 billion credit cost included in the previous fiscal year. The breakdowns include, as we mentioned in the past earnings call, one thing, as it was mentioned earlier, is the mortgage business. For the agencies, we have that business. With the high interest rate, which is continuing, the borrower’s credit quality is coming down. Among the numbers that we mentioned, the major credit expense is for the real estate mortgage business. Another is the growth capital for the startups, the financing business. In that portfolio, specific names, the situation is not so great. We have some reserves for that.

Sasaki, Analyst, Nomura Securities0: Those are the two, that is the mortgage related and the gross capital financing. It’s the reserve for a specific name. Those two are the major part of this. Of course, that, we do have a debt business which is very much diversified. Even at the normal level, a certain level of the reserve becomes unnecessary, and that would continue to be the case. When we announce the interim results, we mention this. As much as we can foresee, when we can reserve or have a provision in the first half, we would like to have a conservative approach to have that. For this fiscal year, we expect that we can reach to that normalized level.

As for the capital gain plan, it just happens that it’s not really toward the end of the fiscal year, but the beginning of the fiscal year, there are some major gains from the sale. It just happened to be happening at that timing. It doesn’t mean that there will be a major time lag. We have to look at the market and we would like to try to maximize our assets when we consider the timing of the sale. I wouldn’t mention the specific name or specific number, but in the case of real estate and the renewable projects and the private equities, and we continue to do the asset rotation and the capital recycling. We apply our strategies.

For this fiscal year, only 1 month and 11 month to go. We would proceed with the sale from now on, and there will be some the proceeds or the gains from those sales booked in eventually. Thank you. One point of clarification. Earlier, U.S. in the United States, what I wanted to ask was that on page 32, especially the credit business line and for the full year, reserve or provision was mentioned. At the end of the fiscal year, credit line probably was included. That’s the growth capital. This is for the startup lending. That is the debt. That is where the reserve provision happened. Yes, that’s correct. Your understanding is correct. Okay. Thank you very much.

Sasaki, Analyst, Nomura Securities6: Thank you, Mr. Sato. We see 2 more hands up. Nomura Securities, Sasaki-san, please ask your question.

Sasaki, Analyst, Nomura Securities: This is Sasaki, Nomura Securities. Thank you. Page 8 of the presentation material, I would like to understand how to read this slide. For FY 2027 March, profit is high. For 2028 March, considering the following fiscal year, I think you have big names with latent profit. Until March 2028, I expect the profit level to continue to be high or continue to increase. What about FY 2029 March or 2030 March? Is there going to be some ups and downs, or do you think the profit, the growth trend will still continue? What is the management’s understanding? That’s my question.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Last year, Greenko gain on sales and also ORIX servicer sales are a little bit smaller. For this fiscal year, we have a latent gain for sales for ORIX Bank. These are one-offs. This is not something that we can book year after year, as you can imagine. In order to maintain the growth in profitability, we believe that there are a lot of latent profit in core business as well, we have to materialize that. We don’t want to sell things just for that purpose. Real estate, energy, and aircrafts. We will be recycling assets, we buy and sell and buy and sell. We need to continuously do that. Rather than going up and down year after year, we want to grow a recurring capital gain on a continuous basis as much as possible.

Sasaki, Analyst, Nomura Securities0: It depends on the market situation. Sometimes we can sell at a higher price or lower price against our expectations. Considering the recent environment, we are seeing some deals which are priced higher than our original expectations. Can we continue this trend into the next fiscal year and the following fiscal year? Well, we have to think about the macroeconomic environment impact. We’re not talking about 2035, we’re not just thinking about next fiscal year, the 4th fiscal year. We’re really focused on executing what we can within this current fiscal year. Meaning that we want to capture all the profit opportunities, and also we have the long-term vision into 2035, and there was a question about the feasibility of this. We will be focusing both on ROE and profit growth.

We have the mid to long-term plan, but we, as management, focused on what we execute within this current fiscal year in terms of resource and also time. I know that I’m not answering your question directly. I’m sorry. That is what we’re thinking.

Sasaki, Analyst, Nomura Securities: I understand. Thank you very much.

Sasaki, Analyst, Nomura Securities0: Thank you. We are getting close to the end time. I’d like to take one last question. BofA, Tsujino-san.

Sasaki, Analyst, Nomura Securities3: Thank you. Two questions. This year’s forecast. Business in-investment and equity profit. It’s difficult, I’m sure, to try to come up with the expectations, so higher than last year and relatively conservative forecast, I think, is shown. Earlier, you mentioned that there could be investment securities or the, it’s possible that the shares are being sold quite a bit. In that sense, you are having the conservative view. That’s how you got to JPY 530 billion. That’s my first question. Should I go one by one?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Tsujino-san, hello. To your first question, you’re referring to Toshiba. This, JPY 550 billion, the assumption that we have is that Toshiba has Kioxia under the equity method, and ORIX also have that under the equity method. We are the LP. How Toshiba will announce their business results, we don’t know. After checking on their business or earnings, if the classification changes, then from the equity method to the investment securities, it could change. I’m talking about the Kioxia. We need to look at how they announce their business results. Once again, based on that, we would like to make the evaluation. I think that there is a sale on the gain on sale of the Kioxia.

Sasaki, Analyst, Nomura Securities0: Based on a certain level of the assumption, you made this forecast number. Well, there’s a 3-month delay to incorporate the equity profit of innovation to Toshiba. As far as we can confirm, during the last fiscal year, there was a sale and the unit price of the sale is not known, but we base our forecast on the reasonable price and the parts that were sold are incorporated into the forecast.

Sasaki, Analyst, Nomura Securities3: As for the forecast for this fiscal year, the environment and energy, the impairment, I expected a bigger impairment, but it was smaller than what I expected. That is in Q4, I think, in Q4, it’s JPY 6.1 billion. This, March 27th, I think there could be some additional impairment. Is that the case?

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: As of now, no.

Well, I was the head of the energy and environment in the past, so Tsujino-san probably thought that this is low. I was actually my impression was that this was quite high, so this is regrettable. We have no plans to incorporate any additional impairment. Just one last point. March 28th, the ROE of 11%, it’s a long way in the future, and probably it’s up to Toshiba. I’m sure that it was difficult for you to come up with this number, those are the very rough numbers. If no changes from Toshiba, then 11% probably is difficult to achieve. Is that right?

Well, earlier, during the press, or Q&A with the mass media, there was a similar question. Of course, it’s not an easy number for us to achieve. We need to make further efforts. Naturally, when we made the plan, in the previous fiscal year, we said that our target remains the same. At 11%. We continue to make efforts, and it is an achievable number. Right now we are May 26th. In March 28th, there is still 2 years to go. I think there are many initiatives that we can take. We are not changing this.

Sasaki, Analyst, Nomura Securities0: As a management team, who are here today, we will be working hard in coming two years in order to get to this level. Thank you very much.

Sasaki, Analyst, Nomura Securities6: Thank you very much. That concludes the earnings call. Before closing, we would like to ask our CEO Takahashi to say a few words.

Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and CEO, ORIX Corporation: Again, thank you very much for joining us today. As I said in the beginning, last year, we announced our long-term vision and also long-term financial objectives that we want to achieve over time. We’re talking about long duration, and there are many things that will need to be executed. 12 months have passed. We have 9 years still to go. It’s a very long duration, but we just need to focus on execution. We will be implementing action plans one by one steadily in order to achieve our goals. To that end, the whole management team will work closely together. We really appreciate your kind support going forward, and I would like to thank you again for joining us today. Thank you.

Sasaki, Analyst, Nomura Securities6: Thank you very much. That concludes the earnings call. Thank you very much for your participation.