Orix Targets $1.8 Billion Loan Growth Next Year Led by Consumers, Wealthy

Orix Corp. (8691), the Japanese provider of financial services ranging from leasing to insurance, aims to expand loans at its bank unit by 150 billion yen ($1.8 billion) next fiscal year on demand from households and wealthy clients.

Orix Bank Corp. (OTBZ) targets 18 percent growth in lending for the year starting April from 814 billion yen in March 2011, Akio Ushio, president of the unit, said in an interview. The bank introduced a loan card on March 1 and began a private banking service to lure clients with assets exceeding 100 million yen.

Having entered the banking business in 1993 focusing on mortgages, Orix is seeking to diversify by attracting retail customers seeking fast credit at outlets including automated teller machines. A government clampdown that restricted lending to consumers by non-banks has opened up a gap in the market that the company can fill, Ushio said.

“For retail clients with or without wealth, a bank may be more accessible than Orix’s other real-estate subsidiaries when they borrow money,” said Takehito Yamanaka, a Tokyo-based analyst at Credit Suisse Group AG. (CSGN) “Orix Bank’s 150 billion yen loan target for next fiscal year sounds doable given their past track record.”

Through its card, Orix aims to increase consumer loans by 100 billion yen in the next three years, Ushio said. The bank has more than doubled corporate loans in the past three years to 180 billion yen by focusing on mid-sized companies in service industries such as real estate, he said.

Acom, Promise

Acom Co. (8572) and Promise Co. (8574) are among consumer finance firms that had to reduce interest rates to 20 percent from as much as 29 percent and cap lending to low-income borrowers under a law introduced in 2010. The legislation also forced lenders to refund overcharged interest, leading to the bankruptcy of Takefuji Corp. Loans at consumer lenders shrank to about 3 trillion yen by December 2010 from 8.5 trillion yen in 2003, according to a government study.

“As a bank, we’re confident our consumer loans will grow steeply after Japanese moneylenders reduced their market share on tighter regulations,” Ushio said at the company’s Tokyo headquarters last week. “Even with those regulations, the country has big potential for growth in quick-money lending.”

Orix Bank, which holds 1 trillion yen of deposits, offers loans ranging from 3 percent to 17.8 percent with a credit limit of 8 million yen, the lender said in a statement on Feb. 28. The bank lends to Japanese residents with annual income of more than 2 million yen, it said.

Private Wealth

Shares (8591) of Orix have climbed 23 percent this year, outperforming the benchmark Topix Index’s 15 percent increase. The shares rose 0.3 percent in Tokyo as of 10:30 a.m.

For wealthy retail customers, Orix Bank formed its private banking division this month with six staff, Ushio said. It will target business owners, executives of foreign financial institutions, and doctors and lawyers with annual paychecks exceeding 50 million yen, he said.

The bank will focus asset management advice on real estate in the first few years and will provide customers with loans for property investment, Ushio said. The lender, which will broaden services in the longer term, aims to get as much as 20 billion yen of wealth assets in the year starting April, he said.

“2012 will be the year for Orix Bank to be really aggressive,” he said.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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