Segment Topics Growing while Constantly Creating New Value and Evolving Guided by a medium-term management strategy that entails increasing the pace of “Finance + Services” and embracing growth in emerging markets such as Asia, ORIX is progressing to the next growth stage by creating new value. Increasing the Pace of Embracing Growth in “Finance + Services” Emerging Markets such as Asia In light of structural changes to the finance-sector busi- Taking into consideration the remarkable paces of expan- ness environment, the ability to provide high value-added sion enjoyed by emerging countries, ongoing efforts to services is becoming an increasingly vital requirement to develop business in such countries including Asia are boost profitability in the existing finance market. ORIX essential to corporate growth. Since opening its first over- already maintains a proven track record in such high val- seas office in Hong Kong in 1971, ORIX has continued to ue-added businesses as maintenance leasing and loan build a network of local subsidiaries as well as relationships servicing. Moving forward, the Company will strive to with leading local partners in emerging markets focusing enter new area of business activity and provide services mainly on Asia. Leveraging its investment track record and that meet the diverse needs of customers by capitalizing established client base, the Company will strive to further its broad client base in Japan and overseas and its expand its overseas business and capture a substantial knowledge and expertise. share of this regional growth. [Corporate Financial Services Segment] Introducing Kyuko-Lease Inc. into the Group and building a partnership with Kyudenko Corporation —Expanding Business Centered on Environment and Energy Fields— In November 2011, ORIX reached an agreement to promote an alli- Japan) where the company has built a stable customer base. Kyuko- ance with Kyudenko Corporation as a strategic partner and subscribe Lease also maintains strong business ties with the Kyudenko Group, to the shares issued by Kyuko-Lease Inc., a wholly owned subsidiary the Kyushu Electric Power Group and governmental bodies in the of Kyudenko. In January 2012, ORIX acquired 90% of Kyuko-Lease’s Kyushu region. outstanding shares and is continuing to deepen its relationship with Since its establishment in 1944, Kyudenko has diversified its busi- Kyudenko, who retained a 10% share in Kyuko-Lease. ness from electric and equipment construction to include environment Since its establishment in 1988 as a Kyudenko Group company, and energy-related and information and communication-related in addi- Kyuko-Lease has been providing services centered on equipment and tion to disaster prevention systems, wind and solar power generation. automobile leasing mainly in Kyushu region (the third largest island of Kazuo Goto Kyuko-Lease is working to provide solutions that take full advantage of ORIX’s high value-added financial services to Representative Director address the diverse needs of our customers as well as Kyudenko’s. At the same time, the company is delivering val- and President Kyuko-Lease Inc. ue-added products such as automobile maintenance leasing, telematics services, precision measuring equipment and PC rental to further upgrade, expand and strengthen its services. Through these means, Kyuko-Lease is deep- ening its already robust ties with customers. In addition, ORIX and Kyuko-Lease are placing considerable emphasis on creating new business opportunities particularly in environment and energy fields by combining the financial service know-how of ORIX with the business base and technological capabilities of Kyudenko. In specific terms, efforts are being channeled toward mega solar, solar and wind power generation, ESCO*, water, waste processing and recycling. Moreover, greater weight will also be placed in the future on expanding business activities beyond the Kyushu region in cooperation with Kyudenko. * ESCO (Energy Service Company) business provides comprehensive services pertaining to energy efficiency. 18 ORIX Corporation Annual Report 2012 Growing while Constantly Creating New Value and Evolving [Retail Segment] Aiming to combine the collective Group strength and expand the Bank’s card loan activities Akio Ushio President ORIX Bank Corporation ORIX Bank began as ORIX Group’s trust bank in 1998. In the ensuing Expanding the card loan business through integrated manage- period, the bank has continued to develop its business by providing ment with ORIX Credit Corporation appealing financial products and services while ensuring that infra- ORIX Corporation, ORIX Bank’s parent company, fully consolidated structure costs are held to an absolute minimum. As a bank that does ORIX Credit Corporation in June 2012. ORIX Credit maintains an edge not maintain an office network, ORIX Bank has focused on fields in over other companies based on its 25 years of experience managing which it excels as opposed to the provision of comprehensive services. the ORIX VIP Loan Card. ORIX is confident that by integrating the In recent years, mail-order and Internet-based time deposit, housing efforts of ORIX Bank and ORIX Credit, the Group as a whole is better loans and corporate lending transactions have taken up a growing pro- positioned to capture new demand in the consumer finance market portion of overall banking activities. With the balance of deposits hitting and to expand its card loan business. ¥1 trillion in March 2011, the decision was made to change the com- pany’s name to bring it more in line with the actual nature of activities Endeavoring to become a more profitable bank and to build greater affinity with its wide range of customers. As a Breaking free from the traditional mindset of the banking industry, ORIX result, ORIX Trust and Banking Corporation changed its name to ORIX Bank aspires to address customer needs with a growing spirit of inno- Bank Corporation. vation. In addition to providing tailor-made housing loans that match the life plans of individual borrowers as well as corporate loans that Entering the card loan business in March 2012 deliver solutions to key management issues, ORIX Bank will channel its ORIX Bank believes that along with housing loans, unsecured loans to energies toward building a third pillar by offering the card loan business individual customers are important sources of funds supporting the that match individual customer needs in terms of interest rates and daily lives of consumers. As a result, the Bank began offering “ORIX lending limits. Through these endeavors, ORIX Bank will strive to Bank Card Loans” in March 2012. Moving forward, the Bank will strive become a unique and highly profitable bank. to expand this business as one of its core businesses alongside hous- ing loans and corporate loans. The introduction of regulations placing limits on aggregate lending amounts, caused the consumer finance market to contract. However, the reimbursement claims for overpaid interest are calming and the decrease in outstanding loan balances are bottoming out, and ORIX Bank believes there to be significant room for recovery given the substantial contraction of the market. ORIX Corporation Annual Report 2012 19 Segment Topics [Real Estate Segment] Leveraging expertise to expand the facilities operation business In its Real Estate segment, ORIX maintains considerable specialist to intangible assets (facilities operation business by capitalizing its spe- expertise in real estate development, rental, and finance. Drawing on cialist expertise and know-how). In specific terms, ORIX Real Estate these specialist skills, the Company is expanding its business into the Corporation is active in the operation of a variety of facilities. Making high value-added asset management and facilities operation fields. In the most of this accumulated operating know-how, steps are being this context, ORIX is looking to rebuild its earnings base from its tangi- taken to open new facilities. On this basis, the business is expected to ble assets (real estate business linked closely with market conditions) expand, providing a stable earnings base. Japanese Inns: Operation and Business Rehabilitation Know-How Beginning with the Suginoi Hotel in Oita Prefecture in September 2002, ORIX has to date provided support activities in the reorganization and rehabilitation of five well-established and renowned Japanese inns across the country. In addi- tion to putting forward wide-ranging operating and marketing initiatives, ORIX has provided management advice while overseeing new capital investment. In each case, the inn has been transformed into a facility with increased customer appeal. ORIX began providing support to the Naruko Hotel in Miyagi Prefecture from November 2006. On completing its support activities in October 2011, the hotel was re-acquired by its former management team. More recently, and Tateshina Grand Hotel after providing support from September 2011, the Tateshina Grand Hotel Taki-no-yu reopened in April 2012. While Taki-no-yu retaining its ambiance as a traditional hot-spring inn, new initiatives including a lobby fireplace, large spa facility with views of the local waterfall, and a buffet restaurant featuring local delights, all provide additional guest appeal. Dome and Theater: Hall Operation Know-How ORIX commenced operating management of the Kyocera Dome Osaka in Osaka Prefecture from September 2006. This facility not only serves as the home ground for the ORIX Buffaloes professional baseball team, but