SBI ARUHI Corporation

Demand for housing finance products, centered on home loans, is affected by interest rate trends, economic conditions, the number of new housing starts, tax system changes, government policy, and other factors. If new demand declines, this could impact business performance and financial condition, including a decrease in origination-related revenue. As countermeasures, the Company is working to stabilize earnings through the full consolidation of SBI Estate Finance as a wholly owned subsidiary and the strengthening of its stock-type business through SBI Credit Guarantee.

The housing finance market is characterized by intense competition among numerous financial institutions in terms of lending rates and ancillary services. A 0.1% change in market share would result in a change of approximately ¥20.0 billion in loan execution amount, and in a typical branch-based transaction, this would affect origination-related revenue by approximately ¥400 million. As countermeasures, the Company is strengthening relationships with real estate business operators, expanding the product lineup offered at franchise (FC) stores, and promoting joint product development with the SBI Group.

Of the home loans executed in FY2026 (ending March 2026), "Flat 35" and "Super Flat" accounted for approximately 90%, indicating an extremely high degree of dependence on the Japan Housing Finance Agency. Should there be changes in the partnership relationship, a decline in the Agency's creditworthiness, changes in government policy, or a decline in product competitiveness, this could have a material impact on business performance and financial condition. As countermeasures, the Company is expanding sales of proprietary floating-rate products such as bank agency products and the "Home Loan (SBI Credit Guarantee)," and is broadening its product lineup through partnerships with financial institutions outside the SBI Group.

Of the 90 locations nationwide, 75 are franchise (FC) stores, and home loan executions via FC stores account for approximately 70% of the total. If contracts with FC operating companies cannot be maintained due to circumstances on the part of the FC operators, this could affect business performance and financial condition. As countermeasures, the Company strives to maintain trusted relationships as business partners through the expansion of training programs and on-the-job training, store operation guidance, the development of various operational support tools, and contributions to FC operators' business performance through joint product development with the SBI Group.

With the commencement of the home loan guarantee business through SBI Credit Guarantee in April 2025, the Company began recording a provision for loss on guarantee obligations and an allowance for doubtful accounts related to indemnity receivables following subrogated repayment. If subrogated repayments increase due to deteriorating economic conditions, or if the value of collateral real estate declines due to a worsening real estate market, this could affect business results and financial condition. As countermeasures, the Company employs highly accurate screening and credit assessment using AI technology, measures and monitors credit risk exposure after guarantee execution, and applies conservative collateral valuation and rigorous ongoing credit management for real estate secured loans.

A portion of borrowings bearing floating interest rates is affected by fluctuations in market interest rates, and because there is a roughly two-month time lag between home loan execution and securitization, interest rate movements during this period may cause fluctuations in revenue related to loan receivables securitization. In addition, financial assets classified as FVTPL are measured at fair value at each fiscal period-end, and changes in the discount rate resulting from market interest rate fluctuations affect their valuation. As countermeasures, the Company works to minimize interest rate fluctuation risk through fixed-rate borrowings and derivative transactions.

Goodwill of ¥24,464 million (10.7% of consolidated total assets), recognized through the tender offer for the former ARUHI Corporation, is not amortized under IFRS. If the future profitability of the businesses to which the goodwill relates declines, an impairment loss would need to be recognized, which could have a material impact on business performance and financial condition. As a countermeasure, the Company conducts impairment testing using an independent external valuation institution.

Collaboration and synergy generation with subsidiaries such as SBI Estate Finance, SBI Smile, and SBI Credit Guarantee form a pillar of the growth strategy; however, if the business development of these subsidiaries does not proceed as planned or if their business conditions deteriorate, this could affect the overall business performance and financial condition of the Group. In addition, as the proportion of consolidated revenue attributable to subsidiaries is expected to increase alongside the expansion of their businesses, the impact of any deterioration in subsidiary performance may become greater than currently anticipated. As a countermeasure, the Company dispatches its officers and employees to serve as directors or corporate auditors of the subsidiaries to ensure appropriate management.

Because the Company provides housing finance products on a non-face-to-face basis utilizing the internet and information systems, system failures caused by disasters, communication outages, human error, equipment malfunction, or other causes could result in an inability to provide services or issues related to the protection of personal information and transaction data. If important information is leaked due to external cyberattacks, unauthorized access, computer viruses, or similar causes, this could result in loss of trust or legal liability such as damages claims. As countermeasures, the Company has established backup systems, continuous 24-hour monitoring, a CSIRT, and a framework for organizing a response headquarters in the event of an incident.

The Company conducts business under registration pursuant to the Money Lending Business Act and a bank agency license under the Banking Act; if it falls afoul of grounds for disciplinary action, it could be subject to administrative sanctions or revocation of its registration or license. In addition, if inappropriate conduct or legal violations occur, including among FC store employees, this poses a risk of direct losses, administrative sanctions, and damage to social credibility. As countermeasures, the Company undergoes regular regulatory inspections, has established a Compliance Committee, conducts internal audits at all stores, and has strengthened training and monitoring systems under the banner of "Compliance First."