Mizuho Leasing Company, Limited

If customers' business activities stagnate and capital expenditures decline significantly due to surging energy and resource prices stemming from regional conflicts, disruptions in global supply chains, and rapid fluctuations in interest rates and exchange rates in international financial markets, this may affect the performance of the Group. Given the business characteristics based on leasing transactions, a decline in customers' investment appetite directly leads to the loss of revenue opportunities.

Leasing transactions involve extending credit to customers over a long period averaging approximately five years, and there is a risk that collection of lease payments and other amounts becomes difficult due to deterioration in customers' business conditions caused by economic downturns. Although strict credit checks and assessment of the used value of leased assets are conducted at the start of transactions, along with regular monitoring after the transaction begins, if credit costs beyond expectations arise due to sudden changes in the economic environment, this may affect performance.

The Group procures operating funds through bank borrowings, corporate bonds, commercial paper, and other means, but if procurement becomes difficult due to sudden fluctuations in financial markets or deterioration in the Group's financial condition, this may impose constraints on business activities. As countermeasures, the Group is diversifying its fund procurement methods, adjusting its procurement structure in consideration of market conditions, and managing on-hand liquidity.

Divergence between the interest rate conditions of leases and securities investments and those of fund procurement may cause interest rate fluctuations to affect net interest income. Although interest rate fluctuation risk is managed by controlling matching ratios using the ALM (integrated asset-liability management) approach and hedging through derivative transactions, sudden interest rate fluctuations could impact earnings.

In real estate leasing, real estate investment and financing businesses, aircraft leasing businesses, and others, deterioration in the performance of business partners or a significant decline in the asset value of properties may affect the Group's performance. The Group has established an internal management system regarding business partners' credit conditions, asset value trends, and future income and expenditure forecasts, and seeks to minimize impact through agile responses.

In investments in renewable energy businesses and other businesses, as well as contributions to funds, there is a risk that asset value may be impaired due to economic fluctuations or changes in the business environment, and a risk that expected returns may not be secured due to cash flow fluctuations, reducing the likelihood of investment recovery. In taking on individual deals, the Group comprehensively assesses future income and expenditure, asset value, and risk-return profiles, and continues monitoring after the deal is undertaken.

If information security risks arising from inappropriate administrative handling, system failures or malfunctions, loss, leakage, or unauthorized removal of information, as well as compliance risks and litigation risks, materialize, this may result in lost revenue opportunities and the need to respond to damage claims, affecting performance. The Group has established a risk management system that responds in a cross-organizational and agile manner, controlling various risks so as to minimize the impact on the Group.

If unforeseeable events such as earthquakes, storm and flood damage, or the spread of infectious diseases occur, the Group may suffer unexpected economic losses that affect its performance. The Group has formulated a Business Continuity Plan (BCP) and has taken measures to minimize the impact on the Group by establishing a system to maintain the continuity of business activities.

If cyberattacks such as computer virus intrusions or unauthorized external access result in system outages, information leaks, or unauthorized use, this may cause economic losses from damage compensation, loss of credibility, and disruption of business activities, affecting performance. The Group has implemented multi-layered measures, including the establishment of a CSIRT, 24/7/365 monitoring by an SOC, completion of the introduction of a zero-trust architecture, and phishing email training, and continues to respond to the latest security threats.

If abnormal weather events such as typhoons and heavy rains occur, laws and regulations related to climate change countermeasures are tightened, or the Group is slow to respond to technological innovation and business model transformation, this may affect customers' business activities and the Group's performance. The Group is advancing its response to climate change through scenario analysis and information disclosure, managing both physical risks and transition risks.