ORIX : Annual financial and audit reports

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

• REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2024
  OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period

from

to

OR

• SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report:

Commission file number: 001-14856

ORIX KABUSHIKI KAISHA

(Exact name of Registrant as specified in its charter)

ORIX CORPORATION

(Translation of Registrant's name into English)

Japan

(Jurisdiction of incorporation or organization)

World Trade Center Building, SOUTH TOWER, 2-4-1Hamamatsu-cho,Minato-ku

Tokyo 105-5135, Japan

(Address of principal executive offices)

Akira Igarashi

World Trade Center Building, SOUTH TOWER, 2-4-1Hamamatsu-cho,Minato-ku

Tokyo 105-5135, Japan

Telephone: [phone]

Facsimile: [phone]

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

			Trading
	Title of each class		Symbols(s)	Name of each exchange on which registered
(1)	American depository shares (the "ADSs"), each of which represents five shares		IX		New York Stock Exchange
(2)	Common stock without par value (the "Shares")*

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

As of March 31, 2024, 1,214,961,054 Shares were outstanding, including Shares that were represented by 4,845,777 ADSs.

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

• Yes ' No

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

• Yes È No

Note-Checking the box above will not relieve any Registrant required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 from their obligations under those sections.

Indicate by check mark whether the Registrant:(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

• Yes ' No

Indicate by check mark whether the Registrant submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

• Yes ' No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer" , "accelerated filer", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

È Large accelerated filer ' Accelerated filer ' Non-accelerated filer ' Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. '

The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. È

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. '

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).'

Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing.

È U.S. GAAP ' International Financial Reporting Standards as issued by the International Accounting Standards Board ' Other

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.

• Item 17 ' Item 18

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

• Yes È No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

• Yes ' No

* Not for trading, but only for technical purposes in connection with the registration of the ADSs.

	TABLE OF CONTENTS
		Page
Certain Defined Terms, Conventions and Presentation of Financial Information	ii
Forward-Looking Statements	ii
PART I	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Item 1.	Identity of Directors, Senior Management and Advisers	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	13
Item 4A.	Unresolved Staff Comments	32
Item 5.	Operating and Financial Review and Prospects	33
Item 6.	Directors, Senior Management and Employees	127
Item 7.	Major Shareholders and Related Party Transactions	156
Item 8.	Financial Information	158
Item 9.	The Offer and Listing	159
Item 10.	Additional Information	159
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	174
Item 12.	Description of Securities Other than Equity Securities	177
PART II	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	178
Item 13.	Defaults, Dividend Arrearages and Delinquencies	178
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	178
Item 15.	Controls and Procedures	178
Item 16A.	Audit Committee Financial Expert	179
Item 16B.	Code of Ethics	179
Item 16C.	Principal Accountant Fees and Services	179
Item 16D.	Exemptions from the Listing Standards for Audit Committees	180
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	180
Item 16F.	Change in Registrant's Certifying Accountant	181
Item 16G.	Corporate Governance	181
Item 16H.	Mine Safety Disclosure	182
Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	182
Item 16J.	Insider Trading Policies	183
Item 16K.	Cybersecurity	183
PART III	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	185
Item 17.	Financial Statements	185
Item 18.	Financial Statements	185
Item 19.	Exhibits	186
SIGNATURES .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	187
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

i

CERTAIN DEFINED TERMS, CONVENTIONS AND

PRESENTATION OF FINANCIAL INFORMATION

As used in this annual report, unless the context otherwise requires, the "Company" and "ORIX" refer to ORIX Corporation, and "ORIX Group," "Group," "we," "us," "our" and similar terms refer to ORIX Corporation and its subsidiaries.

In this annual report, "subsidiary" and "subsidiaries" refer to consolidated subsidiaries of ORIX, generally companies in which ORIX owns more than 50% of the outstanding voting stock and exercises effective control over the companies' operations; and "affiliate" and "affiliates" refer to all of our affiliates accounted for by the equity method, generally companies in which ORIX has the ability to exercise significant influence over their operations by way of 20-50% ownership of the outstanding voting stock or other means.

The consolidated financial statements of ORIX have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). For certain entities where we hold majority voting interests but noncontrolling shareholders have substantive participating rights to decisions that occur as part of the ordinary course of the business, the equity method is applied. In addition, the consolidated financial statements also include variable interest entities ("VIEs") of which the Company and its subsidiaries are primary beneficiaries. Unless otherwise stated or the context otherwise requires, all amounts in such financial statements are expressed in Japanese yen.

References in this annual report to "¥" or "yen" are to Japanese yen and references to "US$," "$" or "dollars" are to United States dollars.

Certain monetary amounts and percentage data included in this annual report have been subject to rounding adjustments for the convenience of the reader. Accordingly, figures shown as totals in tables may not be equal to the arithmetic sums of the figures that precede them.

The Company's fiscal year ends on March 31. The fiscal year ended March 31, 2024 is referred to throughout this annual report as "fiscal 2024," and other fiscal years are referred to in a corresponding manner. References to years not specified as being fiscal years are to calendar years.

FORWARD-LOOKING STATEMENTS

This annual report contains statements that constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). When included in this annual report, the words "will," "should," "expects," "intends," "anticipates," "estimates" and similar expressions, among others, identify forward looking statements. Such statements, which include, but are not limited to, statements contained in "Item 3. Key Information-Risk Factors," "Item 5. Operating and Financial Review and Prospects" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk," inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those set forth in such statements. These forward-looking statements are made only as of the filing date of this annual report. The Company expressly disclaims any obligation or undertaking to release any update or revision to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

ii

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

SELECTED FINANCIAL DATA

The following selected consolidated financial information has been derived from our consolidated financial statements as of each of the dates and for each of the periods indicated below except for "Number of employees." This information should be read in conjunction with and is qualified in its entirety by reference to our consolidated financial statements, including the notes thereto, included in this annual report in Item 18, which have been audited by KPMG AZSA LLC.

			Year ended March 31,
	2020	2021		2022		2023	2024
					(Millions of yen)
Income statement data*1,2:
Total revenues	¥2,283,000	¥2,292,357 ¥2,508,043 ¥2,663,659 ¥2,814,361
Total expenses	2,010,648	2,033,884		2,215,160		2,327,736	2,453,648
Operating income	272,352	258,473		292,883		335,923	360,713
Equity in Net Income of Equity method
investments	65,173	822		24,565		22,081	36,774
Gains on Sales of Subsidiaries and Equity
method investments and Liquidation
Losses, net	74,081	23,300		191,999		33,000	72,488
Bargain purchase gain	955	4,966		0		1,174	0
Income before income taxes	412,561	287,561		509,447		392,178	469,975
Net Income	306,724	196,814		322,853		296,933	338,587
Net income (loss) attributable to the
noncontrolling interests	3,640	4,453		5,477		6,561	(7,682)
Net income (loss) attributable to the
redeemable noncontrolling interests	384	(23)	0		32	137
Net income attributable to ORIX
Corporation shareholders	302,700	192,384		317,376		290,340	346,132

1

							As of March 31,
		2020			2021			2022			2023			2024
Balance sheet data*1,2:					(Millions of yen, except number of shares)
Net Investment in Leases*3	¥	1,080,964 ¥	1,029,518	¥	1,057,973	¥	1,087,563	¥	1,155,023
Installment Loans*3		3,779,697			3,705,660			3,899,503			3,905,026			3,958,814
Allowance for Doubtful Receivables
on Finance Leases and Probable
Loan Losses*4		(56,836)	0			0			0			0
Allowance for Credit Losses*4		0			(79,995)	(71,415)	(65,373)	(58,110)
Investment in Operating Leases		1,400,001			1,408,189			1,463,202			1,537,178			1,868,574
Investment in Securities		2,186,896			2,578,023			2,761,698			2,852,378			3,263,079
Property under Facility Operations . .		562,485			491,855			561,846			620,994			689,573
Others		4,114,321			4,429,832			4,607,877			5,351,619			5,445,147
Total Assets	¥	13,067,528 ¥	13,563,082	¥	14,280,684	¥	15,289,385	¥	16,322,100
Short-term Debt, Long-term Debt and
Deposits	¥	6,847,889 ¥	7,041,887	¥	7,142,843	¥	7,964,864	¥	8,446,306
Policy Liabilities and Policy Account
Balances		1,591,475			1,822,422			1,912,698			1,832,057			1,892,510
Common Stock		221,111			221,111			221,111			221,111			221,111
Additional Paid-in Capital		257,638			259,361			260,479			233,169			233,457
ORIX Corporation Shareholders'
Equity		2,993,608			3,028,456			3,304,196			3,543,607			3,941,466
Number of Issued Shares		1,324,629,128			1,285,724,480			1,258,277,087			1,234,849,342			1,214,961,054
Number of Outstanding Shares*5 . . .		1,254,471,656			1,217,338,316			1,193,399,778			1,170,305,869			1,151,485,206

				As of and for the Year Ended March 31,
				2020			2021			2022			2023			2024
Key ratios (%)*6:	(Yen and dollars, except ratios and number of employees)
Return on ORIX Corporation shareholders' equity ("ROE") . . . .		10.3			6.4			10.0			8.5			9.2
Return on assets ("ROA")		2.40			1.44			2.28			1.96			2.19
ORIX Corporation shareholders' equity ratio		22.9			22.3			23.1			23.2			24.1
Allowance/net investment in leases and installment loans		1.2			0			0			0			0
Allowance for credit losses/net investment in leases and
	installment loans		0			1.7			1.4			1.3			1.1
Per share data and employees:
ORIX Corporation shareholders' equity per share*7	¥	2,386.35	¥	2,487.77	¥	2,768.72	¥	3,027.93	¥	3,422.94
Basic earnings per share for net income attributable to ORIX
	Corporation shareholders		237.38			155.54			263.72			245.98			298.55
Diluted earnings per share for net income attributable to ORIX
	Corporation shareholders		237.17			155.39			263.42			245.65			298.05
Dividends applicable to fiscal year per share		76.00			78.00			85.60			85.60			98.60
Dividends applicable to fiscal year per share*8	$	0.71	$	0.73	$	0.70	$	0.62	$	0.66
Number of employees		31,233			33,153			32,235			34,737			33,807
*1	Accounting Standards Update 2018-12 ("Targeted Improvements to the Accounting for Long-Duration
	Contracts"-ASC 944 ("Financial Services-Insurance")) (hereinafter, "LDTI") has been adopted since
	April 1, 2023, with the transition date of April 1, 2021, using the modified retrospective transition approach.
	For further information, see Note 1 of "Item 18. Financial Statements."
*2	The presentation of equity method investment has been changed since fiscal 2024. As a result, certain line
	items presented in our consolidated balance sheets and consolidated statements of income for the previous
	fiscal years have been retrospectively reclassified for this change. For further information, see Note 1 of
	"Item 18. Financial Statements."
*3	The sum of assets considered 90 days or more past due and loans individually evaluated for impairment
	amounted to ¥111,430 million as of March 31, 2020. These sums included: (i) net investment in leases

2

	considered 90 days or more past due of	¥15,346 million as of March 31, 2020, (ii) installment loans
	(excluding loans individually evaluated	for impairment) considered 90 days or more past due of
	¥10,264 million as of March 31, 2020, and (iii) installment loans individually evaluated for impairment of
	¥85,820 million as of March 31, 2020. The sum of net investment in leases and installment loans considered
	non-performing amounted to ¥107,771 million, ¥106,182 million, ¥98,851 million and ¥109,381 million as
	of March 31, 2021, 2022, 2023 and 2024, respectively. These sums included: (i) net investment in leases
	considered non-performing of ¥18,925 million, ¥19,224 million, ¥16,841 million and ¥20,805 million as of
	March 31, 2021, 2022, 2023 and 2024, respectively, (ii) non-performing installment loans not individually
	assessed for credit losses of ¥28,181 million, ¥34,479 million, ¥33,706 million and ¥34,154 million as of
	March 31, 2021, 2022, 2023 and 2024, respectively, and (iii) non-performing installment loans individually
	assessed for credit losses of ¥60,665 million, ¥52,479 million, ¥48,304 million and ¥54,422 million as of
	March 31, 2021, 2022, 2023 and 2024, respectively. See "Item 5. Operating and Financial Review and
	Prospects-Results of Operations-Year Ended March 31, 2024 Compared to Year Ended March 31,
	2023-Details of Operating Results-Revenues, New Business Volumes and Investments-Asset quality."
*4	Accounting Standards Update 2016-13 ("Measurement of Credit Losses on Financial Instruments"-ASC
	326 ("Financial Instruments-Credit Losses")) has been adopted since April 1, 2020, and the amounts of
	allowance for doubtful receivables on finance leases and probable loan losses have been reclassified to
	allowance for credit losses.
*5	The Company's shares held through the Board Incentive Plan Trust, which was established in July 2014 to
	provide shares at the time of retirement as compensation, are included in the number of treasury stock and
	excluded from the number of outstanding shares. The Board Incentive Plan Trust held 1,476,828 shares,
	2,154,248 shares, 1,963,282 shares, 2,800,866 shares and 2,727,686 shares as of March 31, 2020, 2021,
	2022, 2023 and 2024, respectively.
*6	Return on ORIX Corporation shareholders' equity is the ratio of net income attributable to ORIX
	Corporation shareholders for the period to average ORIX Corporation shareholders' equity based on fiscal
	year beginning and ending balances for the period. Return on assets is the ratio of net income attributable to
	ORIX Corporation shareholders for the period to average total assets based on fiscal year beginning and
	ending balances for the period. ORIX Corporation shareholders' equity ratio is the ratio as of the period end
	of ORIX Corporation shareholders' equity to total assets. Allowance/net investment in leases and
	installment loans is the ratio as of the period end of the allowance for doubtful receivables on finance Leases
	and probable loan losses to the sum of net investment in leases and installment loans. Allowance for credit
	losses/net investment in leases and installment loans is the ratio as of the period end of the allowance for
	credit losses on net investment in leases and installment loans to the sum of net investment in leases and
	installment loans.
*7	ORIX Corporation shareholders' equity per share is the amount derived by dividing ORIX Corporation
	shareholders' equity by the number of outstanding shares.
*8	The U.S. dollar amounts represent translations of the Japanese yen amounts using noon buying rates for
	Japanese yen per $1.00 in New York City for cable transfers in foreign currencies as certified for customs
	purposes by the Federal Reserve Bank of New York in effect on the respective dividend payment dates.

3

RISK FACTORS

Investing in our securities involves risks. You should carefully consider the risks described below as well as all the other information in this annual report, including, but not limited to, our consolidated financial statements and related notes and "Item 11. Quantitative and Qualitative Disclosures about Market Risk." Our business activities, financial condition and results of operations and the trading prices of our securities could be adversely affected by any of the factors discussed below or other factors. Even if we do not incur direct financial loss as a result of these risks, our reputation may be adversely affected. This annual report also contains forward-looking statements that involve uncertainties. Our actual results could differ from those anticipated in these forward- looking statements as a result of various factors, including, but not limited to, the risks faced by us described below and elsewhere in this annual report. See "Forward-Looking Statements." Forward-looking statements in this section are made only as of the filing date of this annual report.

For information about our management of the principal risks we face, see "Item 5. Operating and Financial Review and Prospects-RiskManagement-Management of Principal Risks."

1. Risks Related to our External Environment

1. Global economic weakness and instability or political turmoil could adversely affect our business activities, financial condition and results of operations.

We conduct business operations in Japan and other areas of Asia, as well as in the Americas, Europe, Oceania and the Middle East. Our business is affected by general geopolitical, economic and financial conditions in these countries and regions. These conditions are affected by changes in various factors including, for example, wars and riots, changes in fiscal and monetary policies and trade and technology frictions among major trading partners, including the United States and China. Fluctuations or shifts in commodity market prices and consumer demand, trade disputes, political, social or economic instability in these countries and regions could also adversely affect our business activities, financial condition and results of operations. As for the Russia- Ukraine and Israel-Hamas conflicts, we do not expect a significant impact on our financial performance at this stage; though any resolution is uncertain and any long-term or indirect impact is difficult to predict.

Despite our attempts to minimize the adverse effects of such factors through, for example, improving our risk management procedures, global economic weakness and instability, or political turmoil could adversely affect our business activities, financial condition and results of operations.

(2) Competition could affect our business

We compete on the basis of pricing, transaction structure, service quality and other terms. It is possible that our competitors may seek to compete aggressively on the basis of pricing and other terms through their low funding costs or without regard to their profitability. In addition, technological advances and innovation may result in the emergence of new competitors and as a result, we may be forced to adapt our business to compete more effectively. As a result of such aggressive competition by our competitors, our market share or our profitability may decline.

1. Negative publicity could affect our business activities, financial condition, results of operations and share price

Our business is built upon the confidence of our customers and market participants. Whether based on facts or not, negative publicity about our activities, our industries or the parties with whom we do business could harm our reputation and diminish confidence in our business. In such an event, we may lose customers or business opportunities, which could adversely affect our business activities, financial condition and results of operations, as well as our share price.

4

(4) Climate change could impact our business

The physical risks and transition risks associated with climate change are subject to increasing political, societal and regulatory focus in Japan and globally, and could have a negative impact on the earnings, business activities, financial condition and results of operation of ORIX Group.

Major physical risks of climate change may arise from a number of factors and relate to specific weather events or the gradual deterioration of environmental conditions. Consequences may include the possibility of a halt to, or reduction in, business operations owing to damage at our facilities and offices as well as an increase in operating or construction costs caused by rising temperatures. In addition, climate change could impact the value of our assets pledged as collateral, resulting in an increase in our credit costs.

Major transition risks may arise due to changes in climate change policies, tightening of environmental regulations or technological innovation, and, as a result, the financial condition and results of operation of our businesses and partners in sectors that are deemed to contribute to climate change may be adversely affected. For example, strengthened decarbonization policies may impact our coal-biomassco-fired power plants, or increase costs in certain businesses owing to carbon taxes.

ORIX announced its support for the Task Force on Climate-related Financial Disclosures ("TCFD") in October 2020, with the aim of enhancing corporate value through the assessment and disclosure of the risks and opportunities posed by climate change. ORIX is working to expand its information disclosure in line with the TCFD framework's four themes involving governance, strategy, risk management, and metrics and goals. With regards to its ESG-related material issues and focus areas and key goals, ORIX has announced that it will actively promote its renewable energy business, reduce GHG (CO2) emissions, and reduce our investment and credit balance in GHG (CO2) emitting industries. While ORIX Group intends to maintain its commitment to ESG-related material issues and focus areas, developments in political, economic, technological, social and market environments or other factors, much of which are outside of its control and subject to significant uncertainties, may affect its strategies or capability to achieve its ESG-related goals as planned, and there is no assurance that ORIX will achieve its key goals in the specified time frames or otherwise. Moreover, these risks or a failure to achieve these goals, could adversely affect ORIX's business and operating results and significantly impact ORIX's mid- and long-term initiatives.

For further information, see "Item 4. Information on the Company-Sustainability at ORIX and Our Initiatives."

(5) Risk related to natural disasters and other calamities could impact our business

Unpredictable events such as earthquakes, storms, floods, tsunamis and other natural phenomena, extreme weather conditions, fires, pandemics, etc. may, among other things, cause unexpectedly large market changes or unanticipated deterioration of economic conditions in a country or a region, or cause major injuries to our personnel or damages to our facilities, equipment and other properties. As a result of such events, our business activities, financial condition and results of operations could be adversely affected.

In addition, the global COVID-19 pandemic has had a serious impact on domestic and international economies since the beginning of 2020. In the event the pandemic reoccurs in the future or the world experiences another pandemic similar to or worse than the COVID-19 pandemic, our business activities, financial condition and results of operations could be adversely affected in a manner that we cannot currently anticipate.

2. Credit Risk

We maintain an allowance mainly for credit losses on finance leases and probable loan losses. However, we cannot be sure that the allowance will be adequate to cover future credit losses. This allowance may be

5

inadequate due to unexpected adverse changes in the Japanese and overseas economies in which we operate, or deterioration of specific industries, markets or customers' business performance. While we constantly strive to diversify risk through portfolio management, we may be required to make additional provisions in the future depending on economic trends and other factors.

Furthermore, if adverse economic or market conditions affect the value of underlying collateral, secondhand equipment, or other collateral measures, our credit-related costs other than the allowance might increase. If any such event occurs, our business activities, financial condition and results of operations could be adversely affected.

3. Business Risk

(1) We are exposed to risks from expansion of our businesses, acquisitions of companies and assets, entry into joint ventures and alliances with other companies and similar activities with uncertain outcomes

We are engaged in a broad range of businesses in Japan and overseas and continue to expand such range, including through acquisitions of companies and businesses. The breadth of our business and continued expansion may expose us to new and complex risks that we may be unable to fully control or foresee, and, as a result, we may incur unexpected and potentially substantial costs or losses. Such unexpected costs and losses, which may result from regulatory, technological or other factors, may be particularly acute when we expand our business through acquisitions. In addition, we may not achieve targeted results if our business or business opportunities do not develop as expected or if competitive pressures undermine profitability. Furthermore, when we acquire companies or businesses to expand our business, we could be required to make large write-downs of goodwill or other assets if the results of operations of an acquired company or business are lower than what we expected at the time we made such acquisition, or if they encounter other financial or operational difficulties.

We have a wide range of investments in business operations, including operations that are very different from our financial services business. If we fail to manage our investee companies effectively, we may experience financial losses as well as losses of future business opportunities. In addition, we may not be able to sell or otherwise dispose of investments at the times or prices we initially expected or at all. We may also need to provide financial support, including credit support or equity investments, to some investee companies if their financial condition deteriorates.

From time to time we also enter into joint ventures and other alliances, and the success of these alliances is often dependent upon the operational capabilities, the financial stability and the legal environment of our counterparties. If an alliance suffers a decline in its financial condition or is subject to operational instability because of a change in applicable laws or regulations, we may be required to pay in additional capital, reduce our investment at a loss, or terminate the alliance.

If any such events occur, our business activities, financial condition results of operations and reputation may be adversely affected.

(2) We are exposed to risks related to asset value volatility

In the management of our businesses, we hold various classes of assets and investments, including real estate, aircraft, ships and other assets in Japan and overseas, which we may hold for our own use or lease to our customers. The market values of these assets and investments may be volatile and may decline substantially in the future.

Asset valuation losses are recorded based on the fair market values at the time when revaluation is conducted in accordance with applicable accounting principles. However, losses from the sale of these assets, including as a result of a sudden need for liquidity or to mitigate an adverse credit event at one of our customers, may exceed the amount of recorded valuation losses.

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We estimate the residual value for certain operating leases at the time of contract. Our estimates of the residual value of equipment are based on current market values of used equipment and assumptions about when and to what extent the equipment will become obsolete; however, we may need to recognize additional valuation losses if our estimates differ from actual trends in equipment valuation and the secondhand market, and we may incur losses if we are unable to collect such estimated residual amounts.

In addition, due to our operation of asset management businesses, if there are changes in the market value of asset such as shares and other securities, it could affect the results of our asset management services, which could lead to reductions in our assets under management and related fees and negatively impact our revenue.

If any event described above occurs, our business activities, financial condition and results of operations may be adversely affected.

(3) Risks related to our other businesses

We operate a wide range of businesses in Japan and overseas, including financial services businesses.

Entry into new businesses, and the results of operations following such entry, are accompanied by various uncertainties, and if any unanticipated risk does occur, it may adversely affect our business activities, financial condition and results of operations.

4. Market Risk

1. Changes in market interest rates and currency exchange rates could adversely affect our assets and our business activities, financial condition and results of operations

Our business activities are subject to risks relating to changes in market interest rates and currency exchange rates in Japan and overseas. Although we conduct asset-liability management ("ALM"), changes in the yield curve and currency exchange rates could adversely affect our results of operations.

When funding costs increase due to actual or perceived increases in market interest rates, financing lease terms and loan interest rates for new transactions may diverge from the trend in market interest rates.

Changes in market interest rates could have an adverse effect on the credit quality of our assets and our asset structure. For example, with respect to floating-rate loan assets, if market interest rates increase, the repayment burdens of our customers may also increase, which could adversely affect the financial condition of such customers and their ability to repay their obligations to us. Alternatively, a decline in interest rates could result in an increase in early repayment of loans and a corresponding decrease in our assets, which could adversely impact our revenue generation capabilities.

Although we enter into derivative investments to hedge our market interest and currency risks, we may not be able to perfectly hedge against all risks arising from our business operations in foreign currencies and overseas investments. As a result, a significant change in interest rates or currency exchange rates could have an adverse impact on our business activities, financial condition and results of operations.

(2) Our risk management strategy of using derivatives for hedging purposes may not be effective

We may use derivative instruments to reduce fluctuations in the value of our investments and to hedge against interest rate and currency risks. However, it is possible that this risk management strategy may not be fully effective in all circumstances due to our failure to appraise the value of assets being hedged or execute such derivative instruments properly or at all, or our failure to achieve the intended results of such hedging due to the unavailability of offsetting or roll-over transactions in the event of sudden turbulence in the market or otherwise. Furthermore, our derivatives counterparties could fail to honor the terms of their contracts with us. Our existing derivative contracts and new derivative transactions may also be adversely affected if our credit ratings are downgraded.

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