Quarterly Results FY2006

Investor Meeting 1HFY2006 Summary of QA Session

Schedule: November 22, 2006 10:00 (Tokyo)
Speaker: Thierry Porte, President and CEO

Q1:

　I have two questions. First question is: Will you be increasing provisions for APLUS and Showa Leasing for the next term, too?
　Second question is: How long do you think the costs will continue to increase and when you pay costs, where will you give priority to, for instance, branches, staff or system? /a>
Q2:

　I have two questions. Would you give me the number of customers of Showa Leasing? Second question is about foreign procurement. How much on the balance sheet is allocated by foreign denominated funds? What portion of your business is going to be impacted by foreign exchange fluctuation?
Q3： 　I have a question about each area of non-bank business and securitization. First, with regard to non-bank business, do you intend to continue the cashing business of APLUS? What is your forecast of revenue from the cashing business and the credit cost level?
　My second question is on securitization. The revenue from securitization business seems to be declining as a trend. Is there any change in the market environment you had anticipated previously? If so, how are you going to revamp the securitization business in a changing environment?
Q4： 　I have two questions. First question is related to the Q3. Profitability of non-recourse loans profitability is on a decline. Is there a reason for this? Is it due to environmental changes? What are you going to do to increase this business once again?
　Second, why did ALM/Other total revenue increase greatly? Is this attributed to moving revenues from the retail banking business?
Q5： My question is on public sector business. How much development have you made? Where are you focusing? What is your future vision on this business, particularly business related to regional entities?
Q6： 　 I have two questions. First question is: How are you going to deal with the remaining treasury stocks? If you have something under consideration, please kindly explain it to us.
　 　Second question is a rather abstract one. Regarding major exposures, do you have a loan limit per customer? How do you control loan limits?
Q7： 　My question is related to the previous question from the view point of loan control. You have very high concentration in real estate and the growth rate is 33% up from the end of March. How do you monitor and manage the limit by sector? Is this the maximum level? Or, is it possible to increase more if it is within control of correlation management?
　In addition, while real estate-related lending and its risk are increasing, the margins are not so salient. It would be helpful if you also could give us comments in relation to the spread.
Q8：

　I have two questions. First question is regarding Retail Banking. According to page 5 of the Appendix, there is lack of growth across the board in terms of these businesses. Do you feel that you’ve reached the limit in terms of growth? Or do you feel that retail banking business strategies needs to be overhauled?
　 Second question is regarding the remaining preferred shares. Please elaborate your direction about them.

* Please refer to the Appendix here.
Q9： 　I wonder if you could comment on loan yields. As you’ve been increasing lending and interest income from lending is still your largest source of interest income, the yields have been going down. Did you expand lending by reducing pricing a bit? And what is the competitive environment at the moment? How much of the rate rise will be competed away by competition and how much do you think you can achieve?
Q10： 　I have two questions on consumer and commercial finance business. The environment of this area is changing. Are you thinking about reorganization of your subsidiaries?
　Next question is related to the fact that the consumer and commercial finance industry itself is going through reorganization. Do you have any intention of acquiring more consumer and commercial finance companies? Or do you wait and see, because there is uncertainty in the regulation environment? And last option could be that after careful consideration you might even buy and dispose your subsidiaries.

Latest Revision: January 15, 2007

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