2. Acquiring 100% ownership of Promise

Japan’s consumer finance industry suffered from challenging business conditions brought on by a number of unfavorable factors over several years, including two events: the Supreme Court ruling in January 2006 on overpaid interest, and the partial revision of the Money Lending Business Act which was revised in December 2006. These events exerted downward pressure on moneylenders’ profits for a prolonged period. Additionally, in June 2010, total loan volume control was introduced for the purpose of prohibiting lenders from offering new loans to borrowers with a total loan balance exceeding one-third of the annual income of the borrower. Owing to these stricter regulations, consumer finance companies faced a significant decline in outstanding borrowings, which led to restructuring of the industry, resulting in oligopolization.

The revised Money Lending Business Act had a huge impact on Promise, an equity-method affiliate of SMFG at that time. In a prompt response to the business environment, Promise implemented business restructuring plans in January 2010 in order to survive in a shrinking market. SMFG made Promise a wholly owned subsidiary in April 2012, and it was renamed SMBC Consumer Finance Co., Ltd., in July 2012.