SBI ARUHI Corporation

Business Details

Centered on the mortgage banking business with ARUHI Flat 35 as its core product, the segment develops adjustable-rate and fixed-rate home loan lending and collection, along with sales of various insurance products. Home loan receivables are, in principle, securitized to minimize credit and interest rate risk, forming a fee-based business structure. The segment also includes real estate secured loans from group company SBI Estate Finance, the leaseback business of SBI Smile, and Yuryo Jutaku Loan Co., Ltd. Revenue is composed of three categories: origination-related, recurring, and asset/other.

Recent Overview

Revenue and pre-tax income increased, but net income declined due to the reversal of a prior-year one-time tax benefit; earnings growth is expected to resume next fiscal year

In FY2026 (ending March 2026), operating revenue reached ¥25,086 million (up 12.5% year on year), and income before income taxes reached ¥2,779 million (up 14.5% year on year), driven by an increase in the number of Flat 35 loans executed, expansion of servicing fees, and growth in asset revenue. Meanwhile, net income declined to ¥1,779 million (down 6.2% year on year) due to the reversal of a temporary reduction in corporate income tax expense recorded in the prior fiscal year in connection with group reorganization. Yuryo Jutaku Loan Co., Ltd. and SBI North Asset Co., Ltd. were newly consolidated. For FY2027 (ending March 2027), operating revenue of ¥28,000 million and net income attributable to owners of the parent of ¥2,080 million (up 15.4% year on year) are forecast.

Key Products

Growth Drivers

• Continued expansion in the number of Flat 35 loans executed, driven by a shift in demand toward fixed rates in anticipation of rising interest rates
• Buildup of servicing fee balances through the transfer of servicing businesses from multiple companies (recurring revenue up 17.8% year on year)
• Expansion of asset/other revenue (up 30.7% year on year) driven by increased interest income from SBI Estate Finance's real estate secured loans and increased property sale revenue at SBI Smile
• Strengthening of the group's business platform and servicing functions through the full consolidation of Yuryo Jutaku Loan Co., Ltd. as a wholly owned subsidiary
• Accelerated expansion of the guarantee business to financial institutions nationwide through joint investment with the SBI Group
• Expansion of the product lineup, including Flat 50, Pair Loan, and Kosodate Plus, and capturing refinancing demand
• Improved operational speed and productivity through the introduction of a web application system, sales DX initiatives, and AI utilization

Risks

• Sluggish origination-related revenue (down 1.3% year on year) due to stagnant loan execution volumes for adjustable-rate products and a decline in revenue related to the securitization of loan receivables amid rising interest rates
• Increased financial expenses due to rising funding costs (from ¥4,649 million in the prior fiscal year to ¥6,141 million in the current fiscal year)
• Ballooning operating expenses (up 12.6% year on year) due to the full consolidation of Yuryo Jutaku Loan and M&A-related costs, among other factors
• Dividend payout ratio reaching 98.6% of net income, limiting room for further dividend increases absent profit growth
• A revenue structure weighted toward flow-based income that is highly sensitive to interest rate trends (improving the ratio of recurring/stock revenue remains an ongoing challenge)
• Impairment risk related to goodwill of ¥24,464 million (recoverable amount estimated annually)
• Risk of a downturn in housing demand due to elevated housing prices and rising material costs and delivery delays stemming from geopolitical risk
• Rising financial leverage due to increased borrowings and corporate bonds accompanying the rapid expansion of operating loans (up ¥20,510 million year on year), with the ratio of equity attributable to owners of the parent declining from 20.4% to 18.4%