ORIX Corporation (ORXCF)

How it makes money

Because it spans leasing, lending, insurance, banking and investing, ORIX earns money in several different ways at once: interest and fees on loans and leases, insurance premiums, gains on private-equity and real-estate investments, and returns on aircraft, ship and infrastructure assets it owns and operates. Group results are reported mainly as segment profit rather than a single, clean revenue split, reflecting how different these businesses are from one another.

Spreading across leasing, lending, insurance, real estate, private equity and infrastructure means different parts of the group respond to different conditions at different times — private equity and real estate lean cyclical, insurance and core leasing lean steadier — so the group as a whole tends to be less exposed to any single economic swing than a pure-play in one of those businesses would be.

Key risks

• Credit risk across many businesses — ORIX monitors credit exposure across loans, leases and investments by borrower type, region and asset quality; concentration in any of these can expose the group to loan and lease losses.
• Interest rate exposure — A meaningful part of interest income comes from floating-rate installment loans and related instruments, so a drop in market interest rates can reduce income earned on that book.
• Market risk from diverse exposures — The group is exposed to interest rate, foreign exchange and equity market price movements across its lending, investment and insurance businesses simultaneously.
• Liquidity and funding risk — As a business that lends and leases using borrowed and raised capital, ORIX depends on continued access to funding markets at reasonable cost to sustain its lending and leasing activities.
• Operational and cybersecurity risk — The group names information security, IT and operational risk among its principal risk categories, given how many financial systems and customer data it operates across its many business lines.