{"url_path":"/sec/payp/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 Exhibits","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-30","source_url":"https://www.sec.gov/Archives/edgar/data/2080845/0001193125-26-289382-index.html","accession_number":"0001193125-26-289382","cik":"0002080845","ticker":"PAYP","issuer_name":"PayPay Corp","edgar_url":"https://www.sec.gov/Archives/edgar/data/2080845/0001193125-26-289382-index.html","primary_entity_key":"0002080845","primary_entity_name":"PayPay Corp"},"word_count":46673,"has_tables":true,"body_markdown":"Item 19. Exhibits\n\nEXHIBIT INDEX\n\n \n\n \n\nExhibit\nNo.\n\nDescription of Exhibit\n\n \n\n \n\n1.1\n\n[Articles of Incorporation of the Registrant (English translation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex31.htm) (incorporated by reference to Exhibit 3.2 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n1.2\n\n[Share Handling Regulations of the Registrant (English translation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex34.htm) (incorporated by reference to Exhibit 3.4 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n1.3\n\n[Regulations of Board of Directors of the Registrant (English translation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex36.htm) (incorporated by reference to Exhibit 3.6 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n2.1\n\n[Deposit Agreement among the Registrant, The Bank of New York Mellon, as depositary, and the holders and beneficial owners of ADSs issued thereunder](https://www.sec.gov/Archives/edgar/data/2080845/000119312526103096/d105772dex42.htm) (incorporated by reference to Exhibit 4.2 of the registration statement on Form S-8 (file no. 333-294226) filed with the SEC on March 12, 2026)\n\n \n\n \n\n2.2\n\nForm of American Depositary Receipt evidencing American Depositary Shares (included in Exhibit 2.1)\n\n \n\n \n\n2.3*\n\n[Description of Securities](payp-ex2_3.htm)\n\n \n\n \n\n4.1\n\n[Novation Agreement among PayPay Card Corporation, Yahoo Japan Corporation and Visa Worldwide Pte Limited, dated September 30, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex101.htm) (incorporated by reference to Exhibit 10.1 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.2†\n\n[English translation of Share Purchase Agreement between PayPay Corporation and Z Financial Corporation, dated December 17, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex102.htm) (incorporated by reference to Exhibit 10.2 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.3†\n\n[English translation of Share Purchase Agreement between PayPay Corporation and SoftBank Corp., dated February 10, 2025](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex103.htm) (incorporated by reference to Exhibit 10.3 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.4+\n\n[English translation of Management Agreement between PayPay Corporation and B Holdings Corporation, dated June 16, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex104.htm) (incorporated by reference to Exhibit 10.4 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.5\n\n[English translation of Basic Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated September 16, 2021](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex105.htm) (incorporated by reference to Exhibit 10.5 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.6\n\n[English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated May 9, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex106.htm) (incorporated by reference to Exhibit 10.6 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.7\n\n[English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated September 15, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex107.htm) (incorporated by reference to Exhibit 10.7 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.8\n\n[English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated May 23, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex108.htm) (incorporated by reference to Exhibit 10.8 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n136\n\n[Table of Contents](#toc_page)\n\n \n\n4.9\n\n[English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated September 22, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex109.htm) (incorporated by reference to Exhibit 10.9 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.10\n\n[English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated March 5, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1010.htm) (incorporated by reference to Exhibit 10.10 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.11\n\n[English translation of Memorandum on Amendment of Master Agreement (Sales Promotion Measures, Advertising, Earn and Use of Incentives) between PayPay Corporation and SoftBank Corp., dated March 11, 2025](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1011.htm) (incorporated by reference to Exhibit 10.11 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.12\n\n[English translation of Service Outsourcing Agreement for Issuance of PayPay Bonus (currently PayPay Points) between Yahoo Japan Corporation (currently LY Corporation) and PayPay Corporation, dated August 21, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1012.htm) (incorporated by reference to Exhibit 10.12 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.13\n\n[English translation of Basic Agreement for Provision of “Pay-Toku” Fee Plan between PayPay Corporation and SoftBank Corp., dated September 5, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1013.htm) (incorporated by reference to Exhibit 10.13 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.14\n\n[English translation of Service Outsourcing Agreement for Issuance of PayPay Money Lite and PayPay Points between SoftBank Corp. and PayPay Corporation, dated July 31, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1014.htm) (incorporated by reference to Exhibit 10.14 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.15\n\n[English translation of Business Alliance Agreement for PayCAS between PayPay Corporation, SB C&S Corp. and SB Payment Service Corporation, dated August 1, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1015.htm) (incorporated by reference to Exhibit 10.15 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.16\n\n[English translation of Business Outsourcing Agreement between PayPay Corporation and PayPay SC Corporation, dated August 1, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1016.htm) (incorporated by reference to Exhibit 10.16 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.17†\n\n[English translation of General Agency Agreement between PayPay Corporation and SB Payment Service Corporation, dated December 13, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1017.htm) (incorporated by reference to Exhibit 10.17 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.18†\n\n[English translation of Sales Alliance and Partner Agreement between PayPay Corporation and SB Payment Service Corporation, dated December 3, 2018](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1018.htm) (incorporated by reference to Exhibit 10.18 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.19\n\n[English translation of Memorandum on PayPay Merchant Terms for Mini-apps between PayPay Corporation and PayPay Insurance Corporation, dated December 1, 2021](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1019.htm) (incorporated by reference to Exhibit 10.19 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.20†\n\n[English translation of Basic Loan Agreement between PayPay Card Corporation (then YJ Card Corporation) and Z Holdings Corporation (then Yahoo Japan Corporation), dated February 15, 2018](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1020.htm) (incorporated by reference to Exhibit 10.20 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.21\n\n[English translation of Loan Drawdown Application between and Yahoo Japan Corporation (currently LY Corporation) and YJ Card Corporation (currently PayPay Card Corporation), dated April 8, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1021.htm) (incorporated by reference to Exhibit 10.21 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.22†\n\n[English translation of Basic Loan Agreement between PayPay Card Corporation (then YJ Card Corporation) to Z Holdings Corporation, dated December 18, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1022.htm) (incorporated by reference to Exhibit 10.22 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n137\n\n[Table of Contents](#toc_page)\n\n \n\n4.23\n\n[English translation of Loan Drawdown Application between Z Holdings Corporation (currently LY Corporation) and YJ Card Corporation (currently PayPay Card Corporation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1023.htm) (incorporated by reference to Exhibit 10.23 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.24\n\n[English translation of Basic Loan Agreement between LY Corporation and PayPay Card Corporation, dated December 6, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1024.htm) (incorporated by reference to Exhibit 10.24 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.25\n\n[English translation of Basic Loan Agreement between LY Corporation and PayPay Card Corporation, dated February 29, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1025.htm) (incorporated by reference to Exhibit 10.25 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.26\n\n[English translation of Memorandum of Understanding between LY Corporation and PayPay Card Corporation, dated December 24, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1026.htm) (incorporated by reference to Exhibit 10.26 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.27\n\n[English translation of Basic Contract of Secondment between SoftBank Group Corp. and PayPay Corporation, dated March 23, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1027.htm) (incorporated by reference to Exhibit 10.27 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.28†\n\n[English translation of Basic Contract of Secondment between Z Holdings Corporation (currently LY Corporation) and PayPay Corporation, dated May 1, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1028.htm) (incorporated by reference to Exhibit 10.28 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.29\n\n[English translation of Basic Contract of Secondment between SoftBank Corp. and PayPay Corporation, dated July 1, 2018](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1029.htm) (incorporated by reference to Exhibit 10.29 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.30†\n\n[English translation of Monetary Deposit for Consumption Agreement between Z Holdings Corporation (currently LY Corporation) and PayPay Card Corporation, dated October 2021](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1030.htm) (incorporated by reference to Exhibit 10.30 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.31\n\n[English translation of Trademark Transfer Agreement between Z Holdings Corporation (currently LY Corporation) and PayPay Corporation, dated August 31, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1031.htm) (incorporated by reference to Exhibit 10.31 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.32\n\n[English translation of Trademark License Agreement between PayPay Corporation and Z Holdings Corporation (currently LY Corporation), dated August 31, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1032.htm) (incorporated by reference to Exhibit 10.32 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.33†\n\n[English translation of Basic Loan Agreement between Yahoo Japan Corporation and YJ Card Corporation (currently PayPay Card Corporation), dated April 1, 2015](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1033.htm) (incorporated by reference to Exhibit 10.33 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.34†\n\n[English translation of Memorandum on Contract Amendment between Z Holdings Corporation (then Yahoo Japan Corporation and currently LY Corporation) and YJ Card Corporation (currently PayPay Card Corporation), dated December 22, 2020](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1034.htm) (incorporated by reference to Exhibit 10.34 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.35\n\n[English translation of Memorandum between Z Holdings Corporation (currently LY Corporation) and PayPay Card Corporation, dated October 31, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1035.htm) (incorporated by reference to Exhibit 10.35 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.36\n\n[English translation of PayPay Money General Agency Agreement between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated January 9, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1035.htm) (incorporated by reference to Exhibit 10.36 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n138\n\n[Table of Contents](#toc_page)\n\n \n\n4.37\n\n[English translation of Services Agreement on Acquiring Business and Payment Processing Business between Yahoo Japan Corporation (currently LY Corporation) and PayPay Card Corporation, dated September 29, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1037.htm) (incorporated by reference to Exhibit 10.37 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.38\n\n[English translation of Memorandum on Contract Amendment between Yahoo Japan Corporation (currently LY Corporation) and PayPay Card Corporation, dated April 1, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1038.htm) (incorporated by reference to Exhibit 10.38 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.39\n\n[English translation of PayPay Card General Payment Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated October 1, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1039.htm) (incorporated by reference to Exhibit 10.39 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.40\n\n[English translation of Memorandum on PayPay Card Payment Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated October 1, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1040.htm) (incorporated by reference to Exhibit 10.40 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.41\n\n[English translation of Memorandum on PayPay Card Merchant Agreement among PayPay Card Corporation, Yahoo Japan Corporation (currently LY Corporation) and SB Payment Service Corporation, dated September 30, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1041.htm) (incorporated by reference to Exhibit 10.41 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.42\n\n[English translation of Memorandum on PayPay Card Merchant Agreement among PayPay Card Corporation, Yahoo Japan Corporation (currently LY Corporation) and SB Payment Service Corporation, dated September 30, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1042.htm) (incorporated by reference to Exhibit 10.42 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.43\n\n[English translation of Agreement on Card Merchant between SoftBank Payment Service Corporation and YJ Card Corporation (currently PayPay Card Corporation), dated March 20, 2015](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1043.htm) (incorporated by reference to Exhibit 10.43 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.44†\n\n[English translation of Memorandum on Merchant Fees between SB Payment Service Corporation and PayPay Card Corporation, dated August 25, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1044.htm) (incorporated by reference to Exhibit 10.44 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.45\n\n[English translation of Gift Cards Master Agreement between Yahoo Japan Corporation (currently LY Corporation) and PayPay Corporation, dated February 1, 2020](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1045.htm) (incorporated by reference to Exhibit 10.45 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.46\n\n[English translation of Gift Card Projects Master Agreement between SoftBank Corp. and PayPay Corporation, dated August 28, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1046.htm) (incorporated by reference to Exhibit 10.46 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.47\n\n[English translation of SB Crew Projects Master Agreement between SoftBank Corp. and PayPay Corporation, dated January 11, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1047.htm) (incorporated by reference to Exhibit 10.47 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.48\n\n[English translation of Agreement on Issuance of PayPay Coupons between PayPay Corporation and SoftBank Corp., dated October 15, 2021](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1048.htm) (incorporated by reference to Exhibit 10.48 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.49\n\n[English translation of Service Outsourcing Agreement on Issuance of PayPay Lite between SoftBank Corp. and PayPay Corporation, dated July 31, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1049.htm) (incorporated by reference to Exhibit 10.49 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.50\n\n[English translation of Memorandum on Terms of Service of Carrier Billing among SoftBank Corp., SB Payment Service Corporation and PayPay Corporation, dated July 29, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1050.htm) (incorporated by reference to Exhibit 10.50 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n139\n\n[Table of Contents](#toc_page)\n\n \n\n4.51\n\n[English translation of SoftBank Pay In A Lump Sum (B) Merchant Terms between SoftBank Corp. and SB Payment Service Corporation, as of March 1, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1051.htm) (incorporated by reference to Exhibit 10.51 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.52\n\n[English translation of SoftBank Card Agency Agreement between SB Payment Service Corporation and the Company, dated October 1, 2020](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1052.htm) (incorporated by reference to Exhibit 10.52 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.53†\n\n[License and Services Agreement between Paytm Labs Inc. and PayPay Corporation, dated July 1, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1053.htm)(incorporated by reference to Exhibit 10.53 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.54†\n\n[English translation of Software License Agreement relating to credit card merchant acquiring business between Yahoo Japan Corporation (currently LY Corporation) and PayPay Card Corporation, dated September 28, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1054.htm) (incorporated by reference to Exhibit 10.54 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.55\n\n[English translation of Memorandum on Addition of Payment Method (PayPay Atobarai) to PayPay Money General Agent Agreement between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated January 28, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1055.htm) (incorporated by reference to Exhibit 10.55 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.56\n\n[English translation of Memorandum on Mini App Merchant Terms (PayPay Mall and PayPay Flea Market) between Yahoo Japan Corporation (currently LY Corporation) and PayPay Corporation, dated March 31, 2020](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1056.htm) (incorporated by reference to Exhibit 10.56 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.57\n\n[English translation of Memorandum on Amendment of Merchant Fee Rate, Etc. of PayPay Money General Agency Agreement between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated March 31, 2020](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1057.htm) (incorporated by reference to Exhibit 10.57 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.58\n\n[English translation of Memorandum on PayPay General Agency Agreement between PayPay Corporation and SB Payment Service Corporation, dated February 25, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1058.htm) (incorporated by reference to Exhibit 10.58 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.59†\n\n[PAI SHIELD License and Implementation Statement of Work between Paytm Labs Inc. and PayPay Corporation, dated April 1, 2022](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1059.htm) (incorporated by reference to Exhibit 10.59 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.60\n\n[Master Service Agreement between PayPay Corporation and Paytm Labs Inc., dated October 1, 2018](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1060.htm) (incorporated by reference to Exhibit 10.60 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.61\n\n[English translation of PayPay Card General Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated April 1, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1061.htm) (incorporated by reference to Exhibit 10.61 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.62\n\n[English translation of Memorandum on PayPay Card General Agency Agreement between PayPay Card Corporation and Yahoo Japan Corporation (currently LY Corporation), dated April 1, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1062.htm) (incorporated by reference to Exhibit 10.62 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.63\n\n[English translation of Agreement on Loyalty Program (PayPay Step) between PayPay Corporation and Yahoo Japan Corporation (currently LY Corporation), dated June 30, 2021](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1063.htm) (incorporated by reference to Exhibit 10.63 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.64\n\n[English translation of Fixed-Term Building Lease Agreement among MITSUBISHI ESTATE CO., LTD, MITSUBISHI JISHO PROPERTY MANAGEMENT Co., Ltd., and PayPay Corporation, dated April 30, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1064.htm) (incorporated by reference to Exhibit 10.64 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n140\n\n[Table of Contents](#toc_page)\n\n \n\n4.65\n\n[English translation of Basic Loan Agreement between LY Corporation and PayPay Card Corporation, dated December 24, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1065.htm) (incorporated by reference to Exhibit 10.65 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.66\n\n[English translation of Agreement regarding PayPay Step between PayPay Corporation and PayPay Card Corporation, dated April 29, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1066.htm) (incorporated by reference to Exhibit 10.66 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.67†\n\n[English translation of Guarantee Business Alliance Agreement between PayPay Bank Corporation and SMBC Consumer Finance Co., Ltd., dated October 1, 2025](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1067.htm) (incorporated by reference to Exhibit 10.67 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.68\n\n[English translation of Memorandum on PayPay Card Merchant Agreement between PayPay Card Corporation and Yahoo Japan Corporation, dated April 1, 2013](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1068.htm) (incorporated by reference to Exhibit 10.68 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.69\n\n[English translation of PayPay Card Payment Facilitator Agreement between PayPay Card Corporation and Yahoo Japan Corporation, dated April 1, 2013](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1069.htm) (incorporated by reference to Exhibit 10.69 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.70\n\n[English translation of Memorandum on PayPay Card Merchant Agreement between PayPay Card Corporation and LY Corporation, dated October 1, 2024](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1070.htm) (incorporated by reference to Exhibit 10.70 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.71\n\n[English translation of Amendments to Memorandum among SoftBank Corp., SB Payment Service Corporation and PayPay Corporation, dated August 31, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1071.htm) (incorporated by reference to Exhibit 10.71 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.72\n\n[English translation of Memorandum on Amendment to PayPay Money Payment Facilitator Agreement between PayPay Corporation and Yahoo Japan Corporation, dated May 31, 2019](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1072.htm) (incorporated by reference to Exhibit 10.72 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.73\n\n[English translation of Memorandum on Amendment to PayPay Money Payment Facilitator Agreement between PayPay Corporation and Yahoo Japan Corporation, dated April 5, 2021](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1073.htm) (incorporated by reference to Exhibit 10.73 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.74†\n\n[English translation of Share Purchase Agreement between Mitsui Sumitomo Insurance Company, Limited and PayPay Corporation, dated March 25, 2025](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1074.htm) (incorporated by reference to Exhibit 10.74 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.75†\n\n[English translation of Service Agreement between PayPay Card Corporation and Yahoo Japan Corporation, dated June 30, 2023](https://www.sec.gov/Archives/edgar/data/2080845/000119312526047933/d941409dex1075.htm) (incorporated by reference to Exhibit 10.75 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.76\n\n[Form of Registration Rights Agreement](https://www.sec.gov/Archives/edgar/data/2080845/000119312526085389/d941409dex1076.htm) (incorporated by reference to Exhibit 10.76 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.77+\n\n[Form of Terms and Conditions of Issuance of Stock Acquisition Rights (Trust-type Stock Options) (English translation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526085389/d941409dex1077.htm) (incorporated by reference to Exhibit 10.77 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.78+\n\n[Form of Terms and Conditions of Issuance of Stock Acquisition Rights (Tax qualified-type Stock Options) (English translation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526085389/d941409dex1078.htm) (incorporated by reference to Exhibit 10.78 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.79+\n\n[Form of Terms and Conditions of Issuance of Stock Acquisition Rights (One-yen-exercisable at retirement-type Stock Options) (English translation)](https://www.sec.gov/Archives/edgar/data/2080845/000119312526085389/d941409dex1079.htm) (incorporated by reference to Exhibit 10.79 of the registration statement on Form F-1, as amended (file no. 333-293410) filed with the SEC on March 2, 2026)\n\n \n\n \n\n4.80*†\n\n[Share Purchase Agreement by and between T&D Holdings, Inc. and PayPay Corporation](payp-ex4_80.htm)\n\n \n\n \n\n8.1*\n\n[List of Subsidiaries of Registrant](payp-ex8_1.htm)\n\n \n\n \n\n141\n\n[Table of Contents](#toc_page)\n\n \n\n11.1*\n\n[Rules on Insider Trading of Registrant](payp-ex11_1.htm)\n\n \n\n \n\n12.1*\n\n[Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](payp-ex12_1.htm)\n\n \n\n \n\n12.2*\n\n[Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](payp-ex12_2.htm)\n\n \n\n \n\n13.1**\n\n[Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](payp-ex13_1.htm)\n\n \n\n \n\n13.2**\n\n[Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](payp-ex13_2.htm)\n\n \n\n \n\n15.1*\n\n[Consent of Deloitte Touche Tohmatsu LLC](payp-ex15_1.htm)\n\n \n\n \n\n97.1*\n\n[Clawback Policy of Registrant](payp-ex97_1.htm)\n\n \n\n \n\n101.INS*\n\nInline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document\n\n \n\n \n\n101.SCH*\n\nInline XBRL Taxonomy Extension Schema Document\n\n \n\n \n\n101.CAL*\n\nInline XBRL Taxonomy Extension Calculation Linkbase Document\n\n \n\n \n\n101.DEF*\n\nInline XBRL Taxonomy Extension Definition Linkbase Document\n\n \n\n \n\n101.LAB*\n\nInline XBRL Taxonomy Extension Label Linkbase Document\n\n \n\n \n\n101.PRE*\n\nInline XBRL Taxonomy Extension Presentation Linkbase Document\n\n \n\n \n\n104*\n\nCover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set\n\n \n\n \n\n \n\n*\n\nFiled herewith.\n\n**\n\nFurnished herewith.\n\n+\n\nIndicates management contract or compensatory plan or arrangement.\n\n†\n\nPortions of this exhibit (indicated by asterisks) have been omitted as the registrant has determined that (i) the omitted information is not material and (ii) the omitted information is the type that the registrant treats as private or confidential.\n\n \n\n142\n\n[Table of Contents](#toc_page)\n\n \n\nSIGNATURES\n\n \n\nThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.\n\n \n\n \n\n \n\n \n\nPayPay Corporation\n\n \n\nBy:\n\n/s/ Ichiro Nakayama\n\n \n\n \n\nName: Ichiro Nakayama\n\n \n\n \n\nTitle: President, Representative Director,\nCEO and Corporate Officer\n\n \n\nDate:\n\nJune 30, 2026\n\n \n\n \n\n \n\n \n\n[Table of Contents](#toc_page)\n\n \n\nSelected Statistical and Other Information\n\nThe following tables present selected statistical information as required by subpart 1400 of Regulation S-K.\n\nIn this section, averages are based on quarterly averages. Those averages are calculated as the average of the beginning balance and each quarter-end balance for the applicable year unless otherwise indicated. The presentation of historical averages in this section on a daily basis would involve unreasonable effort and expense. We do not believe that quarterly averages present trends materially different from those that would be presented by daily averages. We have not recalculated tax-exempt income on a tax-equivalent basis because the effect of doing so would not be significant.\n\nI. Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differential\n\nDistribution of Assets, Liabilities and Stockholders’ Equity\n\nThe return (or yield) was calculated by the amount of interest income or expense in the period divided by the average balance.\n\nThe following tables show average balances, interest amounts and yields for our interest-earning assets and interest-bearing liabilities for the years ended March 31, 2024, 2025, and 2026.\n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage\nBalances\n\n \n\nInterest income\n/ expense\n\n \n\nAverage yield\n(assets) /\nrate paid\n(liabilities)\n\nAssets\n\n \n\n(in millions of yen)\n\n \n\n%\n\nInterest-earning assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n749,246\n\n \n\n225\n\n \n\n0.03%\n\nCall loans\n\n \n\n112,838\n\n \n\n4\n\n \n\n0.00%\n\nLoans and advances to customers\n\n \n\n1,376,117\n\n \n\n70,841\n\n \n\n5.15%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCredit card receivables\n\n \n\n721,912\n\n \n\n58,583\n\n \n\n8.11%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nMortgage loans\n\n \n\n453,308\n\n \n\n1,673\n\n \n\n0.37%\n\nOverdraft\n\n \n\n192,799\n\n \n\n10,575\n\n \n\n5.48%\n\nOther\n\n \n\n8,098\n\n \n\n10\n\n \n\n0.12%\n\nSecurities\n\n \n\n541,286\n\n \n\n2,330\n\n \n\n0.43%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities(1)\n\n \n\n2,879\n\n \n\n3\n\n \n\n0.10%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities(2)\n\n \n\n120,632\n\n \n\n388\n\n \n\n0.32%\n\nCorporate and other debt securities(2)\n\n \n\n213,113\n\n \n\n1,301\n\n \n\n0.61%\n\nAsset backed securities\n\n \n\n196,158\n\n \n\n638\n\n \n\n0.33%\n\nExchange traded funds(3)\n\n \n\n8,504\n\n \n\n—\n\n \n\n—\n\nGuarantee deposits\n\n \n\n7,732\n\n \n\n428\n\n \n\n5.54%\n\nOther financial assets\n\n \n\n222\n\n \n\n56\n\n \n\n25.23%\n\nTotal interest-earning assets\n\n \n\n2,787,441\n\n \n\n73,884\n\n \n\n2.65%\n\nTotal non-interest-earning assets\n\n \n\n696,223\n\n \n\n—\n\n \n\n—\n\nTotal assets\n\n \n\n3,483,664\n\n \n\n—\n\n \n\n—\n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest-bearing liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n1,408,251\n\n \n\n412\n\n \n\n0.03%\n\nBorrowing\n\n \n\n514,906\n\n \n\n1,452\n\n \n\n0.28%\n\nLease liabilities\n\n \n\n8,155\n\n \n\n65\n\n \n\n0.80%\n\nOther financial liabilities\n\n \n\n102\n\n \n\n2\n\n \n\n1.96%\n\nTotal Interest-bearing liabilities\n\n \n\n1,931,414\n\n \n\n1,931\n\n \n\n0.10%\n\nTotal non-interest-bearing liabilities\n\n \n\n1,361,154\n\n \n\n—\n\n \n\n—\n\nEquity\n\n \n\n191,096\n\n \n\n—\n\n \n\n—\n\nEquity and non-interest-bearing liabilities\n\n \n\n1,552,250\n\n \n\n—\n\n \n\n—\n\nEquity and liabilities\n\n \n\n3,483,664\n\n \n\n—\n\n \n\n—\n\n \n\n \n\nA-1\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage\nBalances\n\n \n\nInterest income\n/ expense\n\n \n\nAverage yield\n(assets) /\nrate paid\n(liabilities)\n\nAssets\n\n \n\n(in millions of yen)\n\n \n\n%\n\nInterest-earning assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n568,734\n\n \n\n901\n\n \n\n0.16%\n\nCall loans\n\n \n\n91,817\n\n \n\n196\n\n \n\n0.21%\n\nLoans and advances to customers\n\n \n\n1,743,830\n\n \n\n83,557\n\n \n\n4.79%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCredit card receivables\n\n \n\n926,077\n\n \n\n68,395\n\n \n\n7.39%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nMortgage loans\n\n \n\n580,095\n\n \n\n2,201\n\n \n\n0.38%\n\nOverdraft\n\n \n\n237,362\n\n \n\n12,951\n\n \n\n5.46%\n\nOther\n\n \n\n296\n\n \n\n10\n\n \n\n3.38%\n\nSecurities\n\n \n\n811,660\n\n \n\n3,710\n\n \n\n0.46%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities(1)\n\n \n\n31,641\n\n \n\n77\n\n \n\n0.24%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities(2)\n\n \n\n271,501\n\n \n\n1,153\n\n \n\n0.42%\n\nCorporate and other debt securities(2)\n\n \n\n269,136\n\n \n\n1,426\n\n \n\n0.53%\n\nAsset backed securities\n\n \n\n234,259\n\n \n\n1,201\n\n \n\n0.51%\n\nExchange traded funds(3)\n\n \n\n5,123\n\n \n\n(147)\n\n \n\n(2.87%)\n\nGuarantee deposits\n\n \n\n9,292\n\n \n\n7\n\n \n\n0.08%\n\nOther financial assets\n\n \n\n426\n\n \n\n71\n\n \n\n16.67%\n\nTotal interest-earning assets\n\n \n\n3,225,759\n\n \n\n88,442\n\n \n\n2.74%\n\nTotal non-interest-earning assets\n\n \n\n709,203\n\n \n\n—\n\n \n\n—\n\nTotal assets\n\n \n\n3,934,962\n\n \n\n—\n\n \n\n—\n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest-bearing liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n1,559,883\n\n \n\n2,013\n\n \n\n0.13%\n\nBorrowing\n\n \n\n511,009\n\n \n\n2,147\n\n \n\n0.42%\n\nLease liabilities\n\n \n\n8,375\n\n \n\n92\n\n \n\n1.10%\n\nOther Financial liabilities\n\n \n\n119\n\n \n\n2\n\n \n\n1.68%\n\nTotal Interest-bearing liabilities\n\n \n\n2,079,386\n\n \n\n4,254\n\n \n\n0.20%\n\nTotal non-interest-bearing liabilities\n\n \n\n1,650,379\n\n \n\n—\n\n \n\n—\n\nEquity\n\n \n\n205,197\n\n \n\n—\n\n \n\n—\n\nEquity and non-interest-bearing liabilities\n\n \n\n1,855,576\n\n \n\n—\n\n \n\n—\n\nEquity and liabilities\n\n \n\n3,934,962\n\n \n\n—\n\n \n\n—\n\n \n\nA-2\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage\nBalances\n\n \n\nInterest income\n/ expense\n\n \n\nAverage yield\n(assets) /\nrate paid\n(liabilities)\n\nAssets\n\n \n\n(in millions of yen)\n\n \n\n%\n\nInterest-earning assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n405,861\n\n \n\n2,095\n\n \n\n0.52%\n\nCall loans\n\n \n\n69,003\n\n \n\n344\n\n \n\n0.50%\n\nLoans and advances to customers\n\n \n\n2,213,602\n\n \n\n105,130\n\n \n\n4.75%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCredit card receivables\n\n \n\n1,162,605\n\n \n\n83,276\n\n \n\n7.16%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nMortgage loans\n\n \n\n758,323\n\n \n\n5,276\n\n \n\n0.70%\n\nOverdraft\n\n \n\n287,168\n\n \n\n16,522\n\n \n\n5.75%\n\nOther\n\n \n\n5,506\n\n \n\n56\n\n \n\n1.02%\n\nSecurities\n\n \n\n1,222,463\n\n \n\n8,868\n\n \n\n0.73%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities(1)\n\n \n\n63,958\n\n \n\n343\n\n \n\n0.54%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities(2)\n\n \n\n497,003\n\n \n\n3,491\n\n \n\n0.70%\n\nCorporate and other debt securities(2)\n\n \n\n359,941\n\n \n\n2,630\n\n \n\n0.73%\n\nAsset backed securities\n\n \n\n299,467\n\n \n\n2,398\n\n \n\n0.80%\n\nExchange traded funds(3)\n\n \n\n2,094\n\n \n\n6\n\n \n\n0.29%\n\nGuarantee deposits\n\n \n\n7,650\n\n \n\n3\n\n \n\n0.04%\n\nOther financial assets\n\n \n\n524\n\n \n\n48\n\n \n\n9.16%\n\nTotal interest-earning assets\n\n \n\n3,919,103\n\n \n\n116,488\n\n \n\n2.97%\n\nTotal non-interest-earning assets\n\n \n\n767,360\n\n \n\n—\n\n \n\n—\n\nTotal assets\n\n \n\n4,686,463\n\n \n\n—\n\n \n\n—\n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest-bearing liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n1,876,142\n\n \n\n6,346\n\n \n\n0.34%\n\nBorrowing\n\n \n\n538,682\n\n \n\n4,047\n\n \n\n0.75%\n\nLease liabilities\n\n \n\n10,824\n\n \n\n195\n\n \n\n1.80%\n\nOther financial liabilities\n\n \n\n128\n\n \n\n2\n\n \n\n1.56%\n\nTotal Interest-bearing liabilities\n\n \n\n2,425,776\n\n \n\n10,590\n\n \n\n0.44%\n\nTotal non-interest-bearing liabilities\n\n \n\n1,958,797\n\n \n\n—\n\n \n\n—\n\nEquity\n\n \n\n301,890\n\n \n\n—\n\n \n\n—\n\nEquity and non-interest-bearing liabilities\n\n \n\n2,260,687\n\n \n\n—\n\n \n\n—\n\nEquity and liabilities\n\n \n\n4,686,463\n\n \n\n—\n\n \n\n—\n\n \n\n(1)\nJapanese government securities within Payment segment are purchased for the purpose of meeting the deposit requirement under the Payment Services Act.\n\n(2)\nThese securities include assets pledged as collateral at the Bank of Japan and Japanese Banks’ Payment Clearing Network.\n\n(3)\nExchange traded funds are mainly held for PayPay Point investment-related business.\n\nA-3\n\n[Table of Contents](#toc_page)\n\n \n\nChanges in Interest Income and Interest Expenses; Volume and Rate Analysis\n\nThe following tables present the variations in our financial income and expenses as a result of the variations in the average volume of interest-earning assets and interest-bearing liabilities and changes in average interest rates occurred for the years ended March 31, 2025 and 2026, compared to their respective prior years.\n\nChanges attributable to the combined impact of changes in rate and volume have been allocated proportionately to the changes due to volume changes and changes due to rate changes.\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\nFor the year\nended\nMarch 31,\n2024\n\n \n\nFiscal year ended March 31, 2025\nversus\nfiscal year ended March 31, 2024\n\n \n\nFor the year\nended\nMarch 31,\n2025\n\nAssets\n\n \n\n \n\n \n\nVolume\n\n \n\nYield\n\n \n\nNet Change\n\n \n\n \n\nInterest-earning assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n225\n\n \n\n(67)\n\n \n\n743\n\n \n\n676\n\n \n\n901\n\nCall loans\n\n \n\n4\n\n \n\n(1)\n\n \n\n193\n\n \n\n192\n\n \n\n196\n\nLoans and advances to customers\n\n \n\n70,841\n\n \n\n17,889\n\n \n\n(5,173)\n\n \n\n12,716\n\n \n\n83,557\n\nSecurities\n\n \n\n2,330\n\n \n\n1,228\n\n \n\n152\n\n \n\n1,380\n\n \n\n3,710\n\nGuarantee deposits\n\n \n\n428\n\n \n\n72\n\n \n\n(493)\n\n \n\n(421)\n\n \n\n7\n\nOther financial assets\n\n \n\n56\n\n \n\n39\n\n \n\n(24)\n\n \n\n15\n\n \n\n71\n\nTotal interest-earning assets\n\n \n\n73,884\n\n \n\n19,160\n\n \n\n(4,602)\n\n \n\n14,558\n\n \n\n88,442\n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest-bearing liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n412\n\n \n\n49\n\n \n\n1,552\n\n \n\n1,601\n\n \n\n2,013\n\nBorrowing\n\n \n\n1,452\n\n \n\n(11)\n\n \n\n706\n\n \n\n695\n\n \n\n2,147\n\nLease liabilities\n\n \n\n65\n\n \n\n2\n\n \n\n25\n\n \n\n27\n\n \n\n92\n\nOther financial liabilities\n\n \n\n2\n\n \n\n0\n\n \n\n(0)\n\n \n\n0\n\n \n\n2\n\nTotal interest-bearing liabilities\n\n \n\n1,931\n\n \n\n40\n\n \n\n2,283\n\n \n\n2,323\n\n \n\n4,254\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\nFor the year\nended\nMarch 31,\n2025\n\n \n\nFiscal year ended March 31, 2026\nversus\nfiscal year ended March 31, 2025\n\n \n\nFor the year\nended\nMarch 31,\n2026\n\nAssets\n\n \n\n \n\n \n\nVolume\n\n \n\nYield\n\n \n\nNet Change\n\n \n\n \n\nInterest-earning assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n901\n\n \n\n(324)\n\n \n\n1,518\n\n \n\n1,194\n\n \n\n2,095\n\nCall loans\n\n \n\n196\n\n \n\n(59)\n\n \n\n207\n\n \n\n148\n\n \n\n344\n\nLoans and advances to customers\n\n \n\n83,557\n\n \n\n22,317\n\n \n\n(744)\n\n \n\n21,573\n\n \n\n105,130\n\nSecurities\n\n \n\n3,710\n\n \n\n2,388\n\n \n\n2,770\n\n \n\n5,158\n\n \n\n8,868\n\nGuarantee deposits\n\n \n\n7\n\n \n\n(1)\n\n \n\n(3)\n\n \n\n(4)\n\n \n\n3\n\nOther financial assets\n\n \n\n71\n\n \n\n14\n\n \n\n(37)\n\n \n\n(23)\n\n \n\n48\n\nTotal interest-earning assets\n\n \n\n88,442\n\n \n\n24,335\n\n \n\n3,711\n\n \n\n28,046\n\n \n\n116,488\n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest-bearing liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n2,013\n\n \n\n482\n\n \n\n3,851\n\n \n\n4,333\n\n \n\n6,346\n\nBorrowing\n\n \n\n2,147\n\n \n\n122\n\n \n\n1,778\n\n \n\n1,900\n\n \n\n4,047\n\nLease liabilities\n\n \n\n92\n\n \n\n32\n\n \n\n71\n\n \n\n103\n\n \n\n195\n\nOther financial liabilities\n\n \n\n2\n\n \n\n0\n\n \n\n(0)\n\n \n\n0\n\n \n\n2\n\nTotal interest-bearing liabilities\n\n \n\n4,254\n\n \n\n636\n\n \n\n5,700\n\n \n\n6,336\n\n \n\n10,590\n\n \n\nA-4\n\n[Table of Contents](#toc_page)\n\n \n\nInterest-earning Assets-Margin\n\nThe following table presents our levels of average interest-earning assets and illustrates the comparative gross and net yields obtained for the indicated periods.\n\n \n\n \n\n(in millions of yen, except\npercentages)\n\n \n\n \n\nFor the year ended March 31,\n\n \n\n \n\n2024\n\n \n\n2025\n\n \n\n2026\n\nAverage total interest-earning assets\n\n \n\n2,787,441\n\n \n\n3,225,759\n\n \n\n3,919,103\n\nInterest income\n\n \n\n73,884\n\n \n\n88,442\n\n \n\n116,488\n\nInterest expense\n\n \n\n1,931\n\n \n\n4,254\n\n \n\n10,590\n\nNet interest income(1)\n\n \n\n71,953\n\n \n\n84,188\n\n \n\n105,898\n\nNet interest margin(2)\n\n \n\n2.58%\n\n \n\n2.61%\n\n \n\n2.70%\n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage total interest-earning assets\n\n \n\n1,172,964\n\n \n\n1,215,717\n\n \n\n1,348,549\n\nInterest income\n\n \n\n59,013\n\n \n\n68,623\n\n \n\n84,013\n\nInterest expense\n\n \n\n1,387\n\n \n\n1,994\n\n \n\n3,720\n\nNet interest income(1)\n\n \n\n57,626\n\n \n\n66,629\n\n \n\n80,293\n\nNet interest margin(2)\n\n \n\n4.91%\n\n \n\n5.48%\n\n \n\n5.95%\n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage total interest-earning assets\n\n \n\n1,614,477\n\n \n\n2,010,042\n\n \n\n2,570,554\n\nInterest income\n\n \n\n14,871\n\n \n\n19,819\n\n \n\n32,475\n\nInterest expense\n\n \n\n544\n\n \n\n2,260\n\n \n\n6,870\n\nNet interest income(1)\n\n \n\n14,327\n\n \n\n17,559\n\n \n\n25,605\n\nNet interest margin(2)\n\n \n\n0.89%\n\n \n\n0.87%\n\n \n\n1.00%\n\n \n\n \n\n \n\n \n\n(in millions of yen, except\npercentages)\n\n \n\n \n\nFor the year ended March 31,\n\n \n\n \n\n2024\n\n \n\n2025\n\n \n\n2026\n\n(PayPay Bank Corporation of financial service segment)\n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage total interest-earning assets\n\n \n\n1,600,103\n\n \n\n1,996,699\n\n \n\n2,557,553\n\nInterest income\n\n \n\n14,811\n\n \n\n19,759\n\n \n\n32,426\n\nInterest expense\n\n \n\n542\n\n \n\n2,248\n\n \n\n6,855\n\nNet interest income(1)\n\n \n\n14,269\n\n \n\n17,511\n\n \n\n25,571\n\nNet interest margin(2)\n\n \n\n0.89%\n\n \n\n0.88%\n\n \n\n1.00%\n\n \n\n(1)\nNet interest income is the difference between interest income and interest expense.\n\n(2)\nNet interest margin is net interest income divided by average total interest-earning assets.\n\nA-5\n\n[Table of Contents](#toc_page)\n\n \n\nII. Investments in debt securities\n\nMaturity Composition of Investment in Securities Not Carried at Fair Value through Earnings\n\nThe following table presents our weighted average yield of each category of debt securities not carried at fair value through earnings as of March 31, 2026.\n\nThe weighted average yield for each range of maturities is calculated by dividing the interest income for the year ended March 31, 2026 by the book amount of debt securities as of March 31, 2026.\n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMaturing\n\n \n\n \n\nIn 1 year or\nless\n\n \n\nAfter 1 year\nthrough\n5 years\n\n \n\nAfter 5 years\nthrough\n10 years\n\n \n\nAfter\n10 years\n\n \n\n \n\n%\n\n \n\n%\n\n \n\n%\n\n \n\n%\n\nDebt securities measured at fair value through other\n   comprehensive income\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government bonds and municipal bonds\n\n \n\n0.17%\n\n \n\n0.38%\n\n \n\n0.54%\n\n \n\n0.11%\n\nCorporate and other debt securities\n\n \n\n0.28%\n\n \n\n0.39%\n\n \n\n0.44%\n\n \n\n0.41%\n\nAsset-backed securities\n\n \n\n0.80%\n\n \n\n0.70%\n\n \n\n0.60%\n\n \n\n0.51%\n\n \n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMaturing\n\n \n\n \n\nIn 1 year or\nless\n\n \n\nAfter 1 year\nthrough\n5 years\n\n \n\nAfter 5 years\nthrough\n10 years\n\n \n\nAfter\n10 years\n\n \n\n \n\n%\n\n \n\n%\n\n \n\n%\n\n \n\n%\n\nDebt securities measured at amortized cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government bonds and municipal bonds\n\n \n\n0.41%\n\n \n\n0.50%\n\n \n\n0.25%\n\n \n\n—\n\nCorporate and other debt securities\n\n \n\n0.78%\n\n \n\n0.61%\n\n \n\n0.43%\n\n \n\n0.41%\n\nAsset-backed securities\n\n \n\n0.41%\n\n \n\n0.41%\n\n \n\n0.41%\n\n \n\n0.41%\n\n \n\nA-6\n\n[Table of Contents](#toc_page)\n\n \n\nIII. Loan portfolio\n\nMaturity and Composition of Loan Portfolio\n\nThe following table presents our loans and advances to customers’ portfolio by the time remaining to maturity as of March 31, 2026. Loans and advances to customers are presented before deduction of allowance for losses. Of these, the majority of the categories, In 1 year or less and After 1 year through 5 years, comprises credit card receivables and overdrafts. The most balance the other two categories represents mortgage loans.\n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\nMaturing\n\n \n\n \n\nIn 1 year or\nless\n\n \n\nAfter 1 year\nthrough\n5 years\n\n \n\nAfter 5 years\nthrough\n15 years\n\n \n\nAfter 15 years\n\nLoans and advances to customers\n\n \n\n1,453,280\n\n \n\n196,676\n\n \n\n139,610\n\n \n\n723,285\n\nFixed interest rate\n\n \n\n—\n\n \n\n196,254\n\n \n\n119,338\n\n \n\n7,758\n\nVariable interest rate\n\n \n\n—\n\n \n\n422\n\n \n\n20,271\n\n \n\n715,527\n\nTotal Loans\n\n \n\n1,453,280\n\n \n\n196,676\n\n \n\n139,610\n\n \n\n723,285\n\nIV. Allowance for Credit Losses (Loss Allowance)\n\nSummary of Loan Loss Experience\n\nAllocation of Loss Allowance\n\nThe following table presents impairment losses and sets forth the percentage distribution of the loss allowance as of March 31, 2024, 2025, and 2026.\n\n \n\n \n\n(in millions of yen, except percentages)\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\n \n\n \n\nAmount\n\n \n\n% of total\nloan\nportfolio\n\n \n\nAmount\n\n \n\n% of total\nloan\nportfolio\n\n \n\nAmount\n\n \n\n% of total\nloan\nportfolio\n\nTotal loan portfolio(1)\n\n \n\n1,560,487\n\n \n\n—\n\n \n\n1,972,601\n\n \n\n—\n\n \n\n2,560,444\n\n \n\n—\n\nTotal losses allowance\n\n \n\n(31,935)\n\n \n\n2.05%\n\n \n\n(44,994)\n\n \n\n2.28%\n\n \n\n(47,593)\n\n \n\n1.86%\n\nTotal loan portfolio, net of loss allowance\n\n \n\n1,528,552\n\n \n\n—\n\n \n\n1,927,607\n\n \n\n—\n\n \n\n2,512,851\n\n \n\n—\n\n \n\n \n\n(1)\nTotal loan portfolio represents our total loans and advances to customers.\n\nThe ratio of total losses allowance to total loan portfolio has been relatively consistent as of March 31 for the years 2024 through 2026.\n\nAllocation of Net Write-offs\n\n \n\n \n\n(in millions of yen, except percentages)\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\n \n\n \n\nAmount\n\n \n\n% of total\naverage\nloans\noutstanding\n\n \n\nAmount\n\n \n\n% of total\naverage\nloans\noutstanding\n\n \n\nAmount\n\n \n\n% of total\naverage\nloans\noutstanding\n\nLoans and advances to customers\n\n \n\n1,410,585\n\n \n\n—\n\n \n\n1,789,673\n\n \n\n—\n\n \n\n2,213,613\n\n \n\n—\n\nTotal average loans outstanding(1)\n\n \n\n1,410,585\n\n \n\n—\n\n \n\n1,789,673\n\n \n\n—\n\n \n\n2,213,613\n\n \n\n—\n\nNet write-offs:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoans and advances to customers(2)\n\n \n\n7,606\n\n \n\n0.54%\n\n \n\n15,263\n\n \n\n0.85%\n\n \n\n14,307\n\n \n\n0.65%\n\nTotal net write-offs\n\n \n\n7,606\n\n \n\n0.54%\n\n \n\n15,263\n\n \n\n0.85%\n\n \n\n14,307\n\n \n\n0.65%\n\n \n\n(1)\nAverage amounts are based on the average of the quarterly balances within each applicable year, unless otherwise indicated.\n\n(2)\nWe identified a calculation error in prior period figures and restated the amounts as of March 31, 2024 and 2025.\n\nThe ratio of net write-offs to total average loans to customers was 0.54%, 0.85% and 0.65% for the years ended March 31, 2024, 2025 and 2026, respectively, and preserved on levels around 1% as a result of high quality of loan origination and continuing improvements in loan collection process.\n\nA-7\n\n[Table of Contents](#toc_page)\n\n \n\nV. Deposits\n\nComposition of Deposits per Type and Yield\n\nThe following table presents, with average balances, the breakdown of deposits by category as of March 31, 2024, 2025, and 2026.\n\n \n\n \n\n(in millions of yen, except percentages)\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\n \n\n \n\nAverage\nBalance\n\n \n\nAverage rate\npaid\n\n \n\nAverage\nBalance\n\n \n\nAverage rate\npaid\n\n \n\nAverage\nBalance\n\n \n\nAverage rate\npaid\n\nDemand deposits\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest bearing\n\n \n\n1,288,422\n\n \n\n0.00%\n\n \n\n1,407,522\n\n \n\n0.09%\n\n \n\n1,705,877\n\n \n\n0.33%\n\nNon-interest bearing\n\n \n\n197,140\n\n \n\n—\n\n \n\n226,096\n\n \n\n—\n\n \n\n222,309\n\n \n\n—\n\nTime deposits\n\n \n\n119,829\n\n \n\n0.32%\n\n \n\n152,361\n\n \n\n0.48%\n\n \n\n170,265\n\n \n\n0.45%\n\nOther(1)\n\n \n\n392,147\n\n \n\n—\n\n \n\n503,936\n\n \n\n—\n\n \n\n630,311\n\n \n\n—\n\nTotal\n\n \n\n1,997,538\n\n \n\n—\n\n \n\n2,289,915\n\n \n\n—\n\n \n\n2,728,762\n\n \n\n—\n\n \n\n(1)\nOther includes mainly PayPay Users' deposits. For further details on the remaining components of \"Other”, see Note 20 to our audited consolidated financial statements.\n\nUninsured deposits\n\nUninsured deposits refer to the amounts of deposit accounts under certain categories that are not covered by the relevant insurance regimes and the aggregate amounts of the uninsured deposit accounts that exceed the respective limits of the insurance regime.\n\nIn Japan, categories such as deposits denominated in foreign currency and certificates of deposits are uninsured, and, for all other types of deposits, the insurance limit per client is ¥10 million. For further details of the regime, see \"Item 4. Information on the Company—B. Business Overview—Regulations—PayPay Bank Corporation—Deposit Insurance Act\".\n\nPrior period amounts have been revised to reflect updated calculations for uninsured deposits.\n\nOur uninsured deposits were ¥1,134,797 million and ¥1,470,473 million as of March 31, 2025 and 2026, respectively.\n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\nIn 3 months\nor less\n\n \n\nAfter\n3 months\nbut within 6\nmonths\n\n \n\nAfter\n6 months\nbut within 12\nmonths\n\n \n\nAfter 12\nmonths\n\n \n\nTotal\n\nUninsured Time Deposits\n\n \n\n84,619\n\n \n\n6,269\n\n \n\n9,675\n\n \n\n10,416\n\n \n\n110,979\n\nUninsured time deposits are uninsured deposits which are subject to contractual maturity requirements prior to withdrawal.\n\nAmounts are presented on a residual contractual maturity basis and exclude overnight deposits where contractual requirements are imminently satisfied.\n\nA-8\n\n[Table of Contents](#toc_page)\n\n \n\nPAYPAY CORPORATION\n\nINDEX TO CONSOLIDATED FINANCIAL STATEMENTS\n\nAudited Consolidated Financial Statements\n\n \n\nPage\n\n[Report of Deloitte Touche Tohmatsu LLC (PCAOB ID No. 1044), Independent Registered Public Accounting Firm](#report_of_independent_accounting_firm)\n\n \n\nF-2\n\n[Consolidated Statements of Financial Position as of March 31, 2025 and 2026](#consolidated_stmt_of_financial_position)\n\n \n\nF-5\n\n[Consolidated Statements of Profit or Loss for the years ended March 31, 2024, 2025 and 2026](#consolidated_stmt_of_profit_or_loss)\n\n \n\nF-6\n\n[Consolidated Statements of Comprehensive Income for the years ended March 31, 2024, 2025 and 2026](#statements_of_comprehensive_income)\n\n \n\nF-7\n\n[Consolidated Statements of Changes in Equity for the years ended March 31, 2024, 2025 and 2026](#statements_of_changes_in_equity)\n\n \n\nF-8\n\n[Consolidated Statements of Cash Flows for the years ended March 31, 2024, 2025 and 2026](#statements_of_cash_flows)\n\n \n\nF-11\n\n[Notes to Consolidated Financial Statements](#notes)\n\n \n\nF-13\n\n \n\n \n\n \n\nF-1\n\n[Table of Contents](#toc_page)\n\n \n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the shareholders and the Board of Directors of PayPay Corporation\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated statements of financial position of PayPay Corporation and subsidiaries (the \"Group\") as of March 31, 2026 and 2025, the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended March 31, 2026, and the related notes and the Schedule I⁠ (collectively referred to as the \"financial statements\"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2026, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on the Group's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control over financial reporting. Accordingly, we express no such opinion.\n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the Audit and Supervisory Committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,\n\nF-2\n\n[Table of Contents](#toc_page)\n\n \n\nproviding separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nRevenue – Transaction and service income – PayPay Settlement Services and corresponding PayPay Points deduction— Refer to Notes 3 and 30 to the financial statements\n\nCritical Audit Matter Description\n\nThe Group's revenue from the PayPay Settlement Services is based on the settlement amount and the predetermined rates. The processing of transactions and recording of revenue is based on contractual terms in multiple agreements with PayPay Merchants and PayPay Users. Revenue from PayPay Settlement Services also involves manual entries to record PayPay Points, which is accounted for as consideration payable to customers and, therefore, as a deduction from revenue.\n\nWe identified revenue from the PayPay Settlement Services, together with the PayPay Points accounted for as reduction in such revenue, as a critical audit matter given the Group's processes to record revenue are highly automated, involves multiple systems, databases, and tools, and the underlying data used to manually record consideration payable to customers are also highly dependent on Group's technology infrastructure. This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (\"IT\"), to understand the process flow and data flow; to identify, test, and evaluate the relevant systems (including software applications) and automated controls; as well as to test and evaluate the underlying data used in the manual entries recorded as a deduction from revenue. Significant auditor judgment was required to design and execute the audit procedures and to assess the sufficiency of the procedures performed and evidence obtained due to the complexity of the Group's technology infrastructure to recognize revenue.\n\nHow the Critical Audit Matter Was Addressed in the Audit\n\n•\nWith the assistance of our IT specialists, we:\n\n– identified the relevant systems and databases used to process revenue transactions and tested the general IT controls over each of these systems and databases, including testing of user access controls, change management controls, and system operation controls.\n\n– tested the design, implementation, and operating effectiveness of interface controls and automated controls within the PayPay Settlement Services revenue stream, as well as the controls designed to ensure the accuracy and completeness of revenue and the settlement amount.\n\n– evaluated the integrity of underlying data used for the deduction from revenue and the settlement amount in terms of access logs in these systems.\n\n•\nWe tested internal controls within the relevant revenue business processes, including those in place to reconcile the various reports extracted from various systems and databases to the Group's general ledger.\n\n•\nWe performed analytical procedures based on the settlement amounts and the historical revenue.\n\nF-3\n\n[Table of Contents](#toc_page)\n\n \n\n•\nWe tested the underlying data used for the deduction from revenue by agreeing the PayPay Points granted with the respective contracts and tested the mathematical accuracy.\n\nIncome Taxes: Recognition and Recoverability of Deferred Tax Assets —Refer to Notes 3 and 18 to the financial statements\n\nCritical Audit Matter Description\n\nThe Group recognizes deferred taxes for differences between the financial statement and tax basis of assets and liabilities at enacted statutory tax rates in effect for the years in which the deferred tax asset or liability is expected to be settled or utilized. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences and tax loss carry forwards can be utilized. Taxable profit includes future reversals of deductible and taxable temporary differences and expected future taxable profit to the extent permitted under the tax law.\n\nWe identified management’s determination that it is probable that sufficient taxable profit will be generated in the future to recognize its deferred tax assets as a critical audit matter because of the significant judgments and estimates management makes related to the ability to generate future taxable profit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates.\n\nHow the Critical Audit Matter Was Addressed in the Audit\n\nOur audit procedures related to management’s determination that it is probable that sufficient taxable profit will be generated in the future to realize deferred tax assets included the following, among others:\n\n•\nWe tested the reasonableness of the methods, assumptions, and judgments used by management to determine that it is probable that sufficient taxable profit will be generated in the future to recognize the deferred tax assets.\n\n•\nWe evaluated whether the inputs used in estimating the future taxable profit were consistent with evidence obtained in other areas of the audit.\n\n•\nWith the assistance of our income tax specialists, we evaluated whether the sources of management’s estimated taxable profit were of the appropriate character and sufficient to utilize the deferred tax assets under the relevant tax law.\n\n•\nWe tested the mathematical accuracy of the calculations of deferred tax assets and used historical information to evaluate the reasonableness of management’s inputs used in the estimation of future taxable profit.\n\n/s/Deloitte Touche Tohmatsu LLC\n\nTokyo, JAPAN\n\nJune 30, 2026\n\nWe have served as the Group's auditor since 2019.\n\nF-4\n\n[Table of Contents](#toc_page)\n\n \n\nPayPay Corporation\n\nConsolidated Statements of Financial Position\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nNotes\n\n \n\nMarch 31,\n2025\n\n \n\n \n\nMarch 31,\n2026\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n8, 36\n\n \n\n \n\n369,811\n\n \n\n \n\n \n\n363,083\n\n \n\nGuarantee deposits\n\n \n\n9, 36\n\n \n\n \n\n244,229\n\n \n\n \n\n \n\n74,139\n\n \n\nCall loans\n\n \n\n36\n\n \n\n \n\n63,000\n\n \n\n \n\n \n\n40,014\n\n \n\nAccounts receivable\n\n \n\n10, 36\n\n \n\n \n\n141,054\n\n \n\n \n\n \n\n150,372\n\n \n\nLoans and advances to customers\n\n \n\n11, 36\n\n \n\n \n\n1,927,607\n\n \n\n \n\n \n\n2,512,851\n\n \n\nSecurities\n\n \n\n12, 36\n\n \n\n \n\n1,075,748\n\n \n\n \n\n \n\n1,736,835\n\n \n\nOther financial assets\n\n \n\n13, 36\n\n \n\n \n\n23,130\n\n \n\n \n\n \n\n32,293\n\n \n\nProperty and equipment\n\n \n\n14\n\n \n\n \n\n14,493\n\n \n\n \n\n \n\n14,879\n\n \n\nRight-of-use assets\n\n \n\n15\n\n \n\n \n\n14,799\n\n \n\n \n\n \n\n12,175\n\n \n\nIntangible assets\n\n \n\n16\n\n \n\n \n\n65,672\n\n \n\n \n\n \n\n66,466\n\n \n\nGoodwill\n\n \n\n16, 17\n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n15,157\n\n \n\nInvestments accounted for using the equity method\n\n \n\n37\n\n \n\n \n\n1,012\n\n \n\n \n\n \n\n12,762\n\n \n\nDeferred tax assets\n\n \n\n18\n\n \n\n \n\n49,392\n\n \n\n \n\n \n\n107,275\n\n \n\nOther assets\n\n \n\n19\n\n \n\n \n\n37,001\n\n \n\n \n\n \n\n37,711\n\n \n\nTotal assets\n\n \n\n \n\n \n\n \n\n4,042,105\n\n \n\n \n\n \n\n5,176,012\n\n \n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n20, 36\n\n \n\n \n\n2,385,939\n\n \n\n \n\n \n\n2,952,495\n\n \n\nAccounts payable\n\n \n\n21, 36\n\n \n\n \n\n949,397\n\n \n\n \n\n \n\n1,122,338\n\n \n\nIncome tax payables\n\n \n\n \n\n \n\n \n\n6,477\n\n \n\n \n\n \n\n13,073\n\n \n\nBorrowings\n\n \n\n22, 36\n\n \n\n \n\n399,578\n\n \n\n \n\n \n\n564,956\n\n \n\nOther financial liabilities\n\n \n\n23, 36\n\n \n\n \n\n34,207\n\n \n\n \n\n \n\n48,116\n\n \n\nProvisions\n\n \n\n24\n\n \n\n \n\n7,041\n\n \n\n \n\n \n\n7,403\n\n \n\nLease liabilities\n\n \n\n15, 22, 36\n\n \n\n \n\n12,097\n\n \n\n \n\n \n\n9,549\n\n \n\nDeferred tax liabilities\n\n \n\n18\n\n \n\n \n\n377\n\n \n\n \n\n \n\n206\n\n \n\nOther liabilities\n\n \n\n25\n\n \n\n \n\n23,261\n\n \n\n \n\n \n\n27,115\n\n \n\nTotal liabilities\n\n \n\n \n\n \n\n \n\n3,818,374\n\n \n\n \n\n \n\n4,745,251\n\n \n\nShareholders’ equity\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIssued capital\n\n \n\n28\n\n \n\n \n\n91,434\n\n \n\n \n\n \n\n200,635\n\n \n\nShare premium\n\n \n\n28\n\n \n\n \n\n13,727\n\n \n\n \n\n \n\n86,730\n\n \n\nRetained earnings (Accumulated deficit)\n\n \n\n28\n\n \n\n \n\n(4,887\n\n)\n\n \n\n \n\n109,869\n\n \n\nAccumulated other comprehensive loss\n\n \n\n28\n\n \n\n \n\n(379\n\n)\n\n \n\n \n\n(3,055\n\n)\n\nEquity attributable to owners of the parent company\n\n \n\n \n\n \n\n \n\n99,895\n\n \n\n \n\n \n\n394,179\n\n \n\nNon-controlling interests\n\n \n\n37\n\n \n\n \n\n123,836\n\n \n\n \n\n \n\n36,582\n\n \n\nTotal shareholders’ equity\n\n \n\n \n\n \n\n \n\n223,731\n\n \n\n \n\n \n\n430,761\n\n \n\nTotal liabilities and shareholders’ equity\n\n \n\n \n\n \n\n \n\n4,042,105\n\n \n\n \n\n \n\n5,176,012\n\n \n\nSee Notes to Consolidated Financial Statements\n\nF-5\n\n[Table of Contents](#toc_page)\n\n \n\nConsolidated Statements of Profit or Loss\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nNotes\n\n \n\nMarch 31,\n2024\n\n \n\n \n\nMarch 31,\n2025\n\n \n\n \n\nMarch 31,\n2026\n\n \n\nTransaction and service income\n\n \n\n \n\n \n\n \n\n174,127\n\n \n\n \n\n \n\n203,595\n\n \n\n \n\n \n\n251,041\n\n \n\nInterest income\n\n \n\n \n\n \n\n \n\n73,884\n\n \n\n \n\n \n\n88,442\n\n \n\n \n\n \n\n116,488\n\n \n\nGains (losses) on financial instruments\n\n \n\n \n\n \n\n \n\n4,641\n\n \n\n \n\n \n\n5,529\n\n \n\n \n\n \n\n10,250\n\n \n\nOther operating income\n\n \n\n \n\n \n\n \n\n1,959\n\n \n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n2,883\n\n \n\nTotal revenue\n\n \n\n6, 30, 31, 32\n\n \n\n \n\n254,611\n\n \n\n \n\n \n\n299,078\n\n \n\n \n\n \n\n380,662\n\n \n\nPoint expenses\n\n \n\n \n\n \n\n \n\n(45,402\n\n)\n\n \n\n \n\n(50,362\n\n)\n\n \n\n \n\n(60,195\n\n)\n\nSettlement related cost\n\n \n\n \n\n \n\n \n\n(39,992\n\n)\n\n \n\n \n\n(43,662\n\n)\n\n \n\n \n\n(48,731\n\n)\n\nEmployee benefit expenses\n\n \n\n \n\n \n\n \n\n(37,764\n\n)\n\n \n\n \n\n(41,483\n\n)\n\n \n\n \n\n(47,641\n\n)\n\nProfessional and outsourcing services expenses\n\n \n\n \n\n \n\n \n\n(34,800\n\n)\n\n \n\n \n\n(28,767\n\n)\n\n \n\n \n\n(28,099\n\n)\n\nProvision for loss allowance\n\n \n\n \n\n \n\n \n\n(23,006\n\n)\n\n \n\n \n\n(23,942\n\n)\n\n \n\n \n\n(24,923\n\n)\n\nOther operating expenses\n\n \n\n \n\n \n\n \n\n(73,636\n\n)\n\n \n\n \n\n(75,352\n\n)\n\n \n\n \n\n(90,991\n\n)\n\nTotal operating expenses\n\n \n\n6, 26, 33\n\n \n\n \n\n(254,600\n\n)\n\n \n\n \n\n(263,568\n\n)\n\n \n\n \n\n(300,580\n\n)\n\nOperating profit\n\n \n\n6\n\n \n\n \n\n11\n\n \n\n \n\n \n\n35,510\n\n \n\n \n\n \n\n80,082\n\n \n\nShare of loss of investments accounted for using\n  the equity method\n\n \n\n37\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(549\n\n)\n\n \n\n \n\n(137\n\n)\n\nProfit before tax\n\n \n\n \n\n \n\n \n\n11\n\n \n\n \n\n \n\n34,961\n\n \n\n \n\n \n\n79,945\n\n \n\nIncome tax (expense) benefit\n\n \n\n18\n\n \n\n \n\n(841\n\n)\n\n \n\n \n\n4,196\n\n \n\n \n\n \n\n37,865\n\n \n\nProfit (loss) for the year\n\n \n\n \n\n \n\n \n\n(830\n\n)\n\n \n\n \n\n39,157\n\n \n\n \n\n \n\n117,810\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAttributable to\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOwners of the parent company\n\n \n\n \n\n \n\n \n\n(3,350\n\n)\n\n \n\n \n\n36,170\n\n \n\n \n\n \n\n115,034\n\n \n\nNon-controlling interests\n\n \n\n37\n\n \n\n \n\n2,520\n\n \n\n \n\n \n\n2,987\n\n \n\n \n\n \n\n2,776\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEarnings (loss) per share\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In yen)\n\n \n\nEarnings (loss) per share attributable to owners of the\n   parent company (1)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic earnings (loss) per share\n\n \n\n34\n\n \n\n \n\n(6.09\n\n)\n\n \n\n \n\n65.76\n\n \n\n \n\n \n\n180.42\n\n \n\nDiluted earnings (loss) per share\n\n \n\n34\n\n \n\n \n\n(6.09\n\n)\n\n \n\n \n\n65.76\n\n \n\n \n\n \n\n178.55\n\n \n\n \n\n(1)\nThe share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 28, Issued Capital and Reserves for details of share split.\n\nSee Notes to Consolidated Financial Statements\n\nF-6\n\n[Table of Contents](#toc_page)\n\n \n\nConsolidated Statements of Comprehensive Income\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nNotes\n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nProfit (loss) for the year\n\n \n\n \n\n \n\n \n\n(830\n\n)\n\n \n\n \n\n39,157\n\n \n\n \n\n \n\n117,810\n\n \n\nOther comprehensive income (loss) for the year, net of tax\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nItems that may be reclassified subsequently to profit or loss\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nChanges in the fair value of debt instruments at FVTOCI\n\n \n\n \n\n \n\n \n\n(1,110\n\n)\n\n \n\n \n\n(3,525\n\n)\n\n \n\n \n\n(3,342\n\n)\n\nReclassification to profit or loss of debt instruments at\n   FVTOCI on derecognition\n\n \n\n \n\n \n\n \n\n(21\n\n)\n\n \n\n \n\n71\n\n \n\n \n\n \n\n(58\n\n)\n\nExchange differences on translation of foreign operations\n\n \n\n28\n\n \n\n \n\n11\n\n \n\n \n\n \n\n(10\n\n)\n\n \n\n \n\n(10\n\n)\n\nTotal other comprehensive income (loss) for the year, net of tax\n\n \n\n \n\n \n\n \n\n(1,120\n\n)\n\n \n\n \n\n(3,464\n\n)\n\n \n\n \n\n(3,410\n\n)\n\nTotal comprehensive income (loss) for the year, net of tax\n\n \n\n \n\n \n\n \n\n(1,950\n\n)\n\n \n\n \n\n35,693\n\n \n\n \n\n \n\n114,400\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal comprehensive income (loss) for the year, net of\n   tax attributable to\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOwners of the parent company\n\n \n\n \n\n \n\n \n\n(3,361\n\n)\n\n \n\n \n\n35,910\n\n \n\n \n\n \n\n112,390\n\n \n\nNon-controlling interests\n\n \n\n \n\n \n\n \n\n1,411\n\n \n\n \n\n \n\n(217\n\n)\n\n \n\n \n\n2,010\n\n \n\nSee Notes to Consolidated Financial Statements\n\nF-7\n\n[Table of Contents](#toc_page)\n\n \n\nConsolidated Statements of Changes in Equity\n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\nEquity attributable to owners of the parent company\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNotes\n\n \n\nIssued\ncapital\n\n \n\n \n\nShare\npremium\n\n \n\n \n\nAccumulated\ndeficit\n\n \n\n \n\nAccumulated\nother\ncomprehensive\nloss\n\n \n\n \n\n \n\nTotal\n\n \n\n \n\nNon-\ncontrolling\ninterests\n\n \n\n \n\nTotal\nshareholders’\nequity\n\n \n\nBalance as of April 1, 2023\n\n \n\n \n\n \n\n \n\n116,452\n\n \n\n \n\n \n\n17,972\n\n \n\n \n\n \n\n(62,259\n\n)\n\n \n\n \n\n(108\n\n)\n\n \n\n \n\n \n\n72,057\n\n \n\n \n\n \n\n119,483\n\n \n\n \n\n \n\n191,540\n\n \n\nLoss for the year\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,350\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(3,350\n\n)\n\n \n\n \n\n2,520\n\n \n\n \n\n \n\n(830\n\n)\n\nOther comprehensive loss\n\n \n\n28\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n(1,109\n\n)\n\n \n\n \n\n(1,120\n\n)\n\nTotal comprehensive income (loss) for the year\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,350\n\n)\n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n \n\n(3,361\n\n)\n\n \n\n \n\n1,411\n\n \n\n \n\n \n\n(1,950\n\n)\n\nDividends paid to non-controlling interests (1)\n\n \n\n29\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,604\n\n)\n\n \n\n \n\n(1,604\n\n)\n\nDividends paid to the ultimate parent company (1)\n\n \n\n29\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(179\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(179\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(179\n\n)\n\nTransfer from issued capital to share premium (2)\n\n \n\n \n\n \n\n \n\n(22,272\n\n)\n\n \n\n \n\n22,272\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTransfer from share premium\n   to accumulated deficit (2)\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(22,272\n\n)\n\n \n\n \n\n22,272\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nChanges in interests in subsidiaries (1)\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,355\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(3,355\n\n)\n\n \n\n \n\n6,799\n\n \n\n \n\n \n\n3,444\n\n \n\nTotal transactions with owners and other transactions\n\n \n\n \n\n \n\n \n\n(22,272\n\n)\n\n \n\n \n\n(3,355\n\n)\n\n \n\n \n\n22,093\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(3,534\n\n)\n\n \n\n \n\n5,195\n\n \n\n \n\n \n\n1,661\n\n \n\nBalance as of March 31, 2024\n\n \n\n \n\n \n\n \n\n94,180\n\n \n\n \n\n \n\n14,617\n\n \n\n \n\n \n\n(43,516\n\n)\n\n \n\n \n\n(119\n\n)\n\n \n\n \n\n \n\n65,162\n\n \n\n \n\n \n\n126,089\n\n \n\n \n\n \n\n191,251\n\n \n\n \n\n(1)\nIn relation to business combination of entities under common control, any equity transactions undertaken by subsidiaries under common control with entities outside of the Company and its subsidiaries before the date of the actual transaction by the Company are included within “Dividends paid to the ultimate parent company”, “Dividends paid to non-controlling interests” and “Changes in interests in subsidiaries”.\n\n(2)\nThese transfers were carried out to offset the accumulated deficit of the Company. Refer to Note 28, Issued Capital and Reserves for details.\n\nSee Notes to Consolidated Financial Statements\n\nF-8\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\nEquity attributable to owners of the parent company\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNotes\n\n \n\nIssued\ncapital\n\n \n\n \n\nShare\npremium\n\n \n\n \n\nAccumulated\ndeficit\n\n \n\n \n\nAccumulated\nother\ncomprehensive\nloss\n\n \n\n \n\nTotal\n\n \n\n \n\nNon-\ncontrolling\ninterests\n\n \n\n \n\nTotal\nshareholders’\nequity\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n \n\n \n\n94,180\n\n \n\n \n\n \n\n14,617\n\n \n\n \n\n \n\n(43,516\n\n)\n\n \n\n \n\n(119\n\n)\n\n \n\n \n\n65,162\n\n \n\n \n\n \n\n126,089\n\n \n\n \n\n \n\n191,251\n\n \n\nProfit for the year\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,170\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,170\n\n \n\n \n\n \n\n2,987\n\n \n\n \n\n \n\n39,157\n\n \n\nOther comprehensive loss\n\n \n\n28\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(260\n\n)\n\n \n\n \n\n(260\n\n)\n\n \n\n \n\n(3,204\n\n)\n\n \n\n \n\n(3,464\n\n)\n\nTotal Comprehensive income (loss) for the year\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,170\n\n \n\n \n\n \n\n(260\n\n)\n\n \n\n \n\n35,910\n\n \n\n \n\n \n\n(217\n\n)\n\n \n\n \n\n35,693\n\n \n\nDividends paid to non-controlling interests (1)\n\n \n\n29\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,519\n\n)\n\n \n\n \n\n(2,519\n\n)\n\nDividends paid to the ultimate parent company (1)\n\n \n\n29\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(283\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(283\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(283\n\n)\n\nTransfer from issued capital to share premium (2)\n\n \n\n \n\n \n\n \n\n(2,746\n\n)\n\n \n\n \n\n2,746\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTransfer from share premium\n   to accumulated deficit (2)\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,746\n\n)\n\n \n\n \n\n2,746\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nChanges in interests in subsidiaries (1)\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(485\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(485\n\n)\n\n \n\n \n\n485\n\n \n\n \n\n \n\n—\n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(405\n\n)\n\n \n\n \n\n(4\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(409\n\n)\n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n(411\n\n)\n\nTotal transactions with owners and other transactions\n\n \n\n \n\n \n\n \n\n(2,746\n\n)\n\n \n\n \n\n(890\n\n)\n\n \n\n \n\n2,459\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,177\n\n)\n\n \n\n \n\n(2,036\n\n)\n\n \n\n \n\n(3,213\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n \n\n \n\n91,434\n\n \n\n \n\n \n\n13,727\n\n \n\n \n\n \n\n(4,887\n\n)\n\n \n\n \n\n(379\n\n)\n\n \n\n \n\n99,895\n\n \n\n \n\n \n\n123,836\n\n \n\n \n\n \n\n223,731\n\n \n\n \n\n(1)\nIn relation to business combination of entities under common control, any equity transactions undertaken by subsidiaries under common control with entities outside of the Company and its subsidiaries before the date of the actual transaction by the Company are included within “Dividends paid to the ultimate parent company”, \"Dividends paid to non-controlling interests” and “Changes in interests in subsidiaries”.\n\n(2)\nThese transfers were carried out to offset the accumulated deficit of the Company. Refer to Note 28, Issued Capital and Reserves for details.\n\nSee Notes to Consolidated Financial Statements\n\nF-9\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\nEquity attributable to owners of the parent company\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNotes\n\n \n\nIssued\ncapital\n\n \n\n \n\nShare\npremium\n\n \n\n \n\nRetained\nearnings\n\n \n\n \n\nAccumulated\nother\ncomprehensive\nloss\n\n \n\n \n\nTotal\n\n \n\n \n\nNon-\ncontrolling\ninterests\n\n \n\n \n\nTotal\nshareholders’\nequity\n\n \n\nBalance as of April 1, 2025\n\n \n\n \n\n \n\n \n\n91,434\n\n \n\n \n\n \n\n13,727\n\n \n\n \n\n \n\n(4,887\n\n)\n\n \n\n \n\n(379\n\n)\n\n \n\n \n\n99,895\n\n \n\n \n\n \n\n123,836\n\n \n\n \n\n \n\n223,731\n\n \n\nProfit for the year\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n115,034\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n115,034\n\n \n\n \n\n \n\n2,776\n\n \n\n \n\n \n\n117,810\n\n \n\nOther comprehensive loss\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,644\n\n)\n\n \n\n \n\n(2,644\n\n)\n\n \n\n \n\n(766\n\n)\n\n \n\n \n\n(3,410\n\n)\n\nTotal Comprehensive income (loss) for the year\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n115,034\n\n \n\n \n\n \n\n(2,644\n\n)\n\n \n\n \n\n112,390\n\n \n\n \n\n \n\n2,010\n\n \n\n \n\n \n\n114,400\n\n \n\nDividends paid to non-controlling interests (1)\n\n \n\n29\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,909\n\n)\n\n \n\n \n\n(2,909\n\n)\n\nDividends paid to the ultimate parent company (1)\n\n \n\n29\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(311\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(311\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(311\n\n)\n\nIssuance of new shares\n\n \n\n28\n\n \n\n \n\n109,201\n\n \n\n \n\n \n\n107,818\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n217,019\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n217,019\n\n \n\nIssuance of share acquisition rights\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,014\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,014\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,014\n\n \n\nChanges due to business combinations of entities\n   under common control - PayPay Securities\n   Corporation and PayPay Bank Corporation\n\n \n\n7\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(36,827\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(36,827\n\n)\n\n \n\n \n\n(86,358\n\n)\n\n \n\n \n\n(123,185\n\n)\n\nOther\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n33\n\n \n\n \n\n \n\n(32\n\n)\n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n3\n\n \n\n \n\n \n\n2\n\n \n\nTotal transactions with owners and other transactions\n\n \n\n \n\n \n\n \n\n109,201\n\n \n\n \n\n \n\n73,003\n\n \n\n \n\n \n\n(278\n\n)\n\n \n\n \n\n(32\n\n)\n\n \n\n \n\n181,894\n\n \n\n \n\n \n\n(89,264\n\n)\n\n \n\n \n\n92,630\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n \n\n \n\n200,635\n\n \n\n \n\n \n\n86,730\n\n \n\n \n\n \n\n109,869\n\n \n\n \n\n \n\n(3,055\n\n)\n\n \n\n \n\n394,179\n\n \n\n \n\n \n\n36,582\n\n \n\n \n\n \n\n430,761\n\n \n\nSee Notes to Consolidated Financial Statements\n\nF-10\n\n[Table of Contents](#toc_page)\n\n \n\nConsolidated Statements of Cash Flows\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nNotes\n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nCash flows from (used in) operating activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProfit before tax\n\n \n\n \n\n \n\n \n\n11\n\n \n\n \n\n \n\n34,961\n\n \n\n \n\n \n\n79,945\n\n \n\nAdjustments for:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n14, 15, 16, 30\n\n \n\n \n\n18,591\n\n \n\n \n\n \n\n21,391\n\n \n\n \n\n \n\n25,482\n\n \n\nLoss on disposal of property and equipment and intangible assets\n\n \n\n14, 16\n\n \n\n \n\n1,495\n\n \n\n \n\n \n\n696\n\n \n\n \n\n \n\n1,338\n\n \n\nShare-based payment expenses\n\n \n\n35\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,847\n\n \n\nOther income and costs\n\n \n\n \n\n \n\n \n\n(1,552\n\n)\n\n \n\n \n\n618\n\n \n\n \n\n \n\n(1,517\n\n)\n\nChanges in assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGuarantee deposits\n\n \n\n9\n\n \n\n \n\n(39,594\n\n)\n\n \n\n \n\n77,656\n\n \n\n \n\n \n\n170,090\n\n \n\nCall loans\n\n \n\n \n\n \n\n \n\n(18,083\n\n)\n\n \n\n \n\n53,083\n\n \n\n \n\n \n\n22,986\n\n \n\nAccounts receivable\n\n \n\n10\n\n \n\n \n\n50,350\n\n \n\n \n\n \n\n(3,266\n\n)\n\n \n\n \n\n(9,327\n\n)\n\nLoans and advances to customers\n\n \n\n11\n\n \n\n \n\n(311,125\n\n)\n\n \n\n \n\n(399,055\n\n)\n\n \n\n \n\n(585,244\n\n)\n\nSecurities\n\n \n\n12\n\n \n\n \n\n(45,476\n\n)\n\n \n\n \n\n(31,256\n\n)\n\n \n\n \n\n(72,277\n\n)\n\nDeposits\n\n \n\n20\n\n \n\n \n\n260,400\n\n \n\n \n\n \n\n249,362\n\n \n\n \n\n \n\n566,556\n\n \n\nAccounts payable\n\n \n\n21\n\n \n\n \n\n130,744\n\n \n\n \n\n \n\n145,558\n\n \n\n \n\n \n\n173,856\n\n \n\nOther financial assets\n\n \n\n \n\n \n\n \n\n(4,204\n\n)\n\n \n\n \n\n1,890\n\n \n\n \n\n \n\n(7,005\n\n)\n\nOther financial liabilities\n\n \n\n23\n\n \n\n \n\n9,759\n\n \n\n \n\n \n\n2,327\n\n \n\n \n\n \n\n13,393\n\n \n\nProvisions\n\n \n\n24\n\n \n\n \n\n4,438\n\n \n\n \n\n \n\n(1,864\n\n)\n\n \n\n \n\n6\n\n \n\nOther\n\n \n\n \n\n \n\n \n\n(1,913\n\n)\n\n \n\n \n\n10,030\n\n \n\n \n\n \n\n6,865\n\n \n\nCash provided by operations\n\n \n\n \n\n \n\n \n\n53,841\n\n \n\n \n\n \n\n162,131\n\n \n\n \n\n \n\n386,994\n\n \n\nIncome tax paid\n\n \n\n \n\n \n\n \n\n(4,472\n\n)\n\n \n\n \n\n(6,870\n\n)\n\n \n\n \n\n(12,573\n\n)\n\nIncome tax refunded\n\n \n\n \n\n \n\n \n\n606\n\n \n\n \n\n \n\n588\n\n \n\n \n\n \n\n876\n\n \n\nNet cash provided by operating activities\n\n \n\n \n\n \n\n \n\n49,975\n\n \n\n \n\n \n\n155,849\n\n \n\n \n\n \n\n375,297\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash flows from (used in) investing activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchases of securities\n\n \n\n12\n\n \n\n \n\n(437,408\n\n)\n\n \n\n \n\n(463,314\n\n)\n\n \n\n \n\n(779,962\n\n)\n\nProceeds from sales/redemption of securities\n\n \n\n12\n\n \n\n \n\n189,836\n\n \n\n \n\n \n\n177,885\n\n \n\n \n\n \n\n189,284\n\n \n\nPurchases of property and equipment\n\n \n\n14\n\n \n\n \n\n(4,584\n\n)\n\n \n\n \n\n(4,822\n\n)\n\n \n\n \n\n(6,369\n\n)\n\nPurchases of intangible assets\n\n \n\n16\n\n \n\n \n\n(17,911\n\n)\n\n \n\n \n\n(17,264\n\n)\n\n \n\n \n\n(17,823\n\n)\n\nProceeds from withdrawal of deposits with a related party\n\n \n\n38\n\n \n\n \n\n600,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nPayments of deposits with a related party\n\n \n\n38\n\n \n\n \n\n(600,000\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nPayment for acquisition of subsidiaries\n\n \n\n7\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(5,759\n\n)\n\n \n\n \n\n—\n\n \n\nPurchase of investment accounted for using the equity method\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,360\n\n)\n\n \n\n \n\n(11,655\n\n)\n\nOther\n\n \n\n \n\n \n\n \n\n(3,316\n\n)\n\n \n\n \n\n(5,343\n\n)\n\n \n\n \n\n(2,302\n\n)\n\nNet cash used in investing activities\n\n \n\n \n\n \n\n \n\n(273,383\n\n)\n\n \n\n \n\n(319,977\n\n)\n\n \n\n \n\n(628,827\n\n)\n\nSee Notes to Consolidated Financial Statements\n\n \n\nF-11\n\n[Table of Contents](#toc_page)\n\n \n\n \n\nCash flows from (used in) financing activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet increase (decrease) in short-term borrowings\n\n \n\n22\n\n \n\n \n\n30,000\n\n \n\n \n\n \n\n(128,700\n\n)\n\n \n\n \n\n199,982\n\n \n\nProceeds from long-term borrowings\n\n \n\n22\n\n \n\n \n\n595,100\n\n \n\n \n\n \n\n842,300\n\n \n\n \n\n \n\n722,600\n\n \n\nRepayments of long-term borrowings\n\n \n\n22\n\n \n\n \n\n(516,422\n\n)\n\n \n\n \n\n(917,898\n\n)\n\n \n\n \n\n(757,203\n\n)\n\nRepayments of lease liabilities\n\n \n\n22\n\n \n\n \n\n(2,409\n\n)\n\n \n\n \n\n(2,820\n\n)\n\n \n\n \n\n(2,744\n\n)\n\nProceeds from issuance of new common shares\n\n \n\n \n\n \n\n \n\n3,444\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n217,522\n\n \n\nPayments for the purchase of the equity interest of subsidiaries,\n   through business combinations of entities under common control\n\n \n\n7\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(130,185\n\n)\n\nDividends paid to non-controlling interests\n\n \n\n29\n\n \n\n \n\n(1,604\n\n)\n\n \n\n \n\n(2,519\n\n)\n\n \n\n \n\n(2,909\n\n)\n\nDividends paid to the ultimate parent company\n\n \n\n29\n\n \n\n \n\n(179\n\n)\n\n \n\n \n\n(283\n\n)\n\n \n\n \n\n(311\n\n)\n\nOther\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(405\n\n)\n\n \n\n \n\n—\n\n \n\nNet cash provided by (used in) financing activities\n\n \n\n \n\n \n\n \n\n107,930\n\n \n\n \n\n \n\n(210,325\n\n)\n\n \n\n \n\n246,752\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEffect of exchange rate changes on cash and cash equivalents\n\n \n\n \n\n \n\n \n\n488\n\n \n\n \n\n \n\n(59\n\n)\n\n \n\n50\n\n \n\nDecrease in cash and cash equivalents\n\n \n\n \n\n \n\n \n\n(114,990\n\n)\n\n \n\n \n\n(374,512\n\n)\n\n \n\n \n\n(6,728\n\n)\n\nCash and cash equivalents at the beginning of the year\n\n \n\n8\n\n \n\n \n\n859,313\n\n \n\n \n\n \n\n744,323\n\n \n\n \n\n \n\n369,811\n\n \n\nCash and cash equivalents at the end of the year\n\n \n\n8\n\n \n\n \n\n744,323\n\n \n\n \n\n \n\n369,811\n\n \n\n \n\n \n\n363,083\n\n \n\nSee Notes to Consolidated Financial Statements\n\nF-12\n\n[Table of Contents](#toc_page)\n\n \n\nNotes to Consolidated Financial Statements\n\n1. Reporting Entity\n\nPayPay Corporation (the “Company”, “we”, “us”, or “our”) was incorporated in June 2018 in Japan as a corporation (kabushiki kaisha) in accordance with the Companies Act of Japan (the “Companies Act”). The Company’s registered office is located at 1-3, Kioicho, Chiyoda-ku, Tokyo, Japan. The Company’s consolidated financial statements are comprised of the Company and its subsidiaries (collectively, the “Group”). The Group is composed of two reportable segments: Payment segment and Financial service segment. Payment segment includes payment settlement services and related services through our PayPay app, and credit payment settlement services such as revolving and installment payment options and cash advances. Financial service segment includes internet banking services, securities intermediary services and PayPay Point investment-related services, and loan management services.\n\nOn October 1, 2023, Z Holdings Corporation, a shareholder of the Company, carried out intra-group reorganizations with its wholly owned subsidiaries mainly including LINE Corporation and Yahoo Japan Corporation, and changed its name to LY Corporation. All the transactions and events pertaining to LY Corporation including those which occurred prior to the name change are referred to as those of LY Corporation in the following notes.\n\nThe Company is 47.1% owned directly by B Holdings Corporation, 28.5% by SVF II Piranha (DE) LLC, 7.5% by LY Corporation and 7.5% by SoftBank Corp. The ultimate parent company of the Company is SoftBank Group Corp. (“SBG”).\n\nThe intermediate parent of the Company is B Holdings Corporation, which is owned by SBG through the following entities: LY Corporation, A Holdings Corporation, and SoftBank Corp.\n\nThe following diagram illustrates our corporate structure as of March 31, 2026. Certain entities that are immaterial to our results of operations, business and financial condition are omitted.\n\nIn April 2025, the Company acquired shares of PayPay Securities Corporation and PayPay Bank Corporation, which had been under common control of SBG and made both subsidiaries of the Company. The acquisitions of PayPay Securities Corporation and PayPay Bank Corporation were accounted for by the pooling of interests method as business combinations under common control. The Group’s consolidated financial statements are retrospectively adjusted to reflect the consolidation of PayPay Bank Corporation and PayPay Securities Corporation from April 1, 2022. Refer to Note 7, Business Combinations for further details.\n\n \n\n2. Basis of Preparation\n\n(1)\nCompliance with IFRS® Accounting Standards\n\nThe Group’s consolidated financial statements have been prepared on a going concern basis in accordance with IFRS® Accounting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). The term “IFRS” also includes International Accounting Standards (“IASs”) and the related interpretations of the interpretations committees (Standing Interpretations Committee (“SIC”) and IFRS Interpretations Committee (“IFRIC”)).\n\nF-13\n\n[Table of Contents](#toc_page)\n\n \n\n(2)\nBasis of Measurement\n\nThe Group’s consolidated financial statements have been prepared on a historical cost basis except for items such as financial instruments measured at fair value as described in Note 3, Material Accounting Policies, and business combinations under common control accounted for using the book value in the ultimate parent company's consolidated financial statements.\n\n(3)\nFunctional Currency and Presentation Currency\n\nUnless otherwise indicated, the Group’s consolidated financial statements are presented in Japanese yen, which is both the functional currency of the Company and presentation currency of the Group, and amounts are rounded to the nearest million Japanese yen.\n\n3. Material Accounting Policies\n\n(1)\nBasis of Consolidation\n\n(i)\nSubsidiaries\n\nSubsidiaries are entities controlled by the Company. The consolidated financial statements include the accounts of the Group, which are directly or indirectly controlled by the Company (or the Group). Control is generally conveyed by ownership of the majority of voting rights. The Group controls an entity when the Group has power over the entity, is exposed, or has rights, to variable returns from the involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the elements of control.\n\nThe subsidiaries’ financial statements are consolidated from the date when control is acquired (the “acquisition date”) until the date when control is lost. For the accounting policies for business combinations of entities under common control, refer to the section below (2) Business Combinations.\n\nWhen necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. Non-controlling interests in a subsidiary are accounted for separately from the parent’s ownership interests in a subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent company and non-controlling interests, even if this results in the non-controlling interests having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Any difference between the adjustment to the non-controlling interests and the fair value of the consideration paid or received is recognized directly in shareholders’ equity as equity attributable to the owners of the parent company.\n\nInter-company balances and transactions have been eliminated upon consolidation.\n\n(ii)\nAssociates\n\nAssociates are entities over which the Group has a significant influence over the decisions on financial and operating policies, but does not have control. Investments in associates are accounted for using the equity method. Under the equity method, the investment is initially recognized at cost from the date of acquisition and adjusted thereafter to recognize the Group’s interest in profit or loss and other comprehensive income. When necessary, adjustments are made to the financial statements of associates to bring their accounting policies in line with the Group’s accounting policies.\n\nIf the share of losses of associates equals or exceeds the interest in the associates, the Group discontinues recognizing its share of further losses. The interest in associates is the carrying amount of the investment in the associates determined using the equity method together with any long-term interests that, in substance, form part of the net investment in the associates.\n\nAfter the interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associates. If the associate subsequently reports profits, the Group resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.\n\nGains and losses resulting from “upstream” and “downstream” transactions between the Group and its associate are recognized only to the extent of unrelated investors’ interests in the associates.\n\nAny excess in the cost of the acquisition of associates over the Group’s interest of the net fair value of the identifiable assets and liabilities recognized at the date of acquisition is recognized as goodwill and included in the carrying amount of the investments in the associates.\n\nSince goodwill is not separately recognized, it is not tested for impairment separately. Instead, the entire carrying amount of investments in associates, including goodwill, is tested for impairment test as a single asset whenever objective evidence indicates that the investment may be impaired.\n\nWhen use of the equity method is discontinued from the date when the investees are determined to be no longer associates, any gain or loss on such disposal of the investment is recognized in profit or loss.\n\n(iii)\nStructured Entities\n\nF-14\n\n[Table of Contents](#toc_page)\n\n \n\nStructured entities are entities designed so that voting or similar rights are not the dominant factor in determining who controls the entity. The Company has control and, therefore, consolidates structured entities when the Company has exposure or rights to variable returns and has the ability to use its power over the structured entity to affect returns.\n\n(2)\nBusiness Combinations\n\nBusiness combinations are accounted for using the acquisition method at the acquisition date, except acquisitions under common control which are outside the scope of IFRS 3 “Business Combinations” (“IFRS 3”).\n\nThe consideration transferred in business combinations is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree, and the equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred.\n\nAt the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except for the following:\n\n•\ndeferred tax assets or liabilities and assets or liabilities related to employee benefits are recognized and measured in accordance with IAS 12 “Income Taxes” and IAS 19 “Employee Benefits,” respectively;\n\n•\nliabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 “Share-based Payment,” at the acquisition date; and\n\n•\nassets or disposal groups that are classified as held for sale are measured in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations.”\n\nThe excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the identifiable net assets acquired at the acquisition date is recorded as goodwill. If the consideration transferred and the amount of any non-controlling interest in the acquiree is less than the fair value of the identifiable net assets of the acquired subsidiary, the difference is immediately recognized in profit or loss.\n\nOn an acquisition-by-acquisition basis, the Group chooses a measurement basis of non-controlling interests at either fair value or the proportionate share of the recognized amount of the acquiree’s identifiable net assets. When a business combination is achieved in stages, the Group’s previously held interest in the acquiree is remeasured at fair value at the acquisition date and is accounted for in the same way that the Group has disposed of the interest in the acquiree. The amounts arising from changes in the value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are accounted for in the same way that the Group has disposed of the interest in the acquiree.\n\nIf the initial accounting for a business combination is incomplete by the end of the fiscal year, the Group reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. The Group retrospectively adjusts the provisional amounts recognized at the acquisition date as an adjustment during the measurement period when it acquires new information about facts and circumstances that existed as of the acquisition date that, if known, would have affected the recognized amounts for the business combination. The measurement period shall not exceed one year from the acquisition date.\n\nBusiness combinations under common control are not under the scope of IFRS 3. In accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, management is required to develop an accounting policy in the absence of an IFRS that specifically applies to such transactions. The Group elected to apply the pooling of interests method, recognizing the effects of the business combination under common control. For business combinations between entities under common control (all of the combining companies or businesses are ultimately controlled by the same party or parties both before and after the business combination, and the control is not transitory), the Group accounts for those transactions based on the book value of the ultimate parent company, and regardless of the actual date of the transaction under common control, retrospectively consolidates the financial statements of the acquired companies as if they had always been combined to the earliest comparative period or from the date in which the ultimate parent company acquired those businesses, if later than the beginning of the earliest comparative period. Non-controlling interest is calculated for all periods presented using the same percentage of ownership calculated by our ultimate parent. Payment for the purchase of the equity interest of subsidiary, through business combinations under common control, is presented in cash flows from financing activities in the Consolidated Statement of Cash Flows.\n\n(3)\nForeign Currency Translation\n\n(i)\nTransactions denominated in foreign currencies\n\nTransactions in currencies other than the functional currency (foreign currencies) are recognized at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise.\n\nF-15\n\n[Table of Contents](#toc_page)\n\n \n\n(ii)\nForeign operations\n\nFor the purposes of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Japanese yen using exchange rates prevailing at the dates of the consolidated statements of financial position presented. Income and expense items are translated into Japanese yen using the rates at the dates of the transaction or the average exchange rates for the period. Exchange differences arising from translating the financial statements of foreign operations are recognized in other comprehensive income and cumulative differences are included in accumulated other comprehensive income.\n\n(4)\nFinancial Instruments\n\n(i)\nRecognition\n\nFinancial assets and financial liabilities are recognized in the Group’s Consolidated Statements of Financial Position when the Group becomes a party to the contractual provisions of the instrument.\n\nFinancial assets and financial liabilities are initially measured at fair value, except for accounts receivable that do not have a significant financing component, which are measured at the transaction price. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through profit or loss are recognized immediately in profit or loss.\n\n(ii)\nNon-derivative Financial Assets\n\nNon-derivative financial assets are classified as either financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income (“FVTOCI”) or financial assets measured at fair value through profit or loss (“FVTPL”). The classification of financial assets is determined at the date of initial recognition, depending on the nature and characteristics as well as the purpose of obtaining those financial assets.\n\nAll regular way purchases or sales of financial assets are recognized and derecognized using trade date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.\n\n(A)\nFinancial assets measured at amortized cost\n\nFinancial assets that meet the following conditions are measured subsequently at amortized cost:\n\n•\nThe financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and\n\n•\nThe contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.\n\nThe amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount.\n\nThe effective interest method is a method of calculating the amortized cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or (where appropriate) a shorter period, to the amortized cost of a financial instrument.\n\nThe gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance.\n\n(B)\nDebt instruments measured at FVTOCI\n\nDebt instruments that meet the following conditions are measured subsequently at FVTOCI:\n\n•\nThe financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and\n\n•\nThe contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.\n\nAfter initial recognition, debt instruments measured at FVTOCI are measured at fair value and the valuation gains and losses resulting from changes in fair value are recognized in other comprehensive income. Subsequently, changes in the carrying amount because of foreign exchange gains and losses, impairment gains or losses are recognized in profit or loss.\n\nF-16\n\n[Table of Contents](#toc_page)\n\n \n\n(C)\nFinancial assets measured at FVTPL\n\nFinancial assets that are not classified as financial assets measured at amortized cost or debt instruments measured at FVTOCI are measured at FVTPL. Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with gains or losses from change in fair value recognized in profit or loss.\n\nDividend from equity instruments is recognized in Gains (losses) on financial instruments.\n\n(D)\nImpairment of financial assets\n\nThe Group recognizes a loss allowance for financial assets measured at amortized cost, debt instruments measured at FVTOCI and undrawn loan commitments. At each reporting date, the Group assesses whether credit risk associated with financial assets has increased significantly since initial recognition. Whether the credit risk associated with a financial asset has increased significantly since initial recognition is determined by reviewing the risk of default each reporting date and comparing it with the risk of default at the time of initial recognition. If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses (“ECL”) (Stage 1). In addition, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition (Stage 2 and Stage 3). For accounts receivable arising from transactions that are within the scope of IFRS 15 “Revenue from Contracts with Customers” (“IFRS 15”) and that do not contain significant financing components, the Group applies the simplified approach under IFRS 9 “Financial Instruments” (“IFRS 9”), which requires expected lifetime ECL to be measured from initial recognition.\n\nThe Group considers that default has occurred mainly when a financial asset is more than 90 days past due, when the contractual conditions have been modified, or when the obligor is experiencing significant financial difficulty unless the Group has reasonable and supportable information to demonstrate that a more stringent default criterion is more appropriate.\n\nECLs are estimated in a way that reflects the following:\n\n•\nAn unbiased, probability-weighted amount calculated by evaluating a range of possible outcomes;\n\n•\nThe time value of money; and\n\n•\nReasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions, and forecasts of future economic conditions.\n\nThe Group takes into account not only historical information but also reasonably expected future events and other factors. Specifically, the Group calculates the ECLs by using the average probability of default (“PD”) and loss given default (“LGD”) based on the historical data of PD and LGD during certain past periods, where PD and LGD are expected to remain at levels approximately consistent with those observed during such past periods. In addition, when various macroeconomic indicators are expected to deteriorate in the future and the PD and LGD are expected to increase, the Group adjusts PD and LGD by using macroeconomic indicators, such as unemployment rates, which are correlated with ECL.\n\nThe amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group recognizes an impairment gain or loss in profit or loss for financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account. The amount of reversal with respect to previously recorded impairment loss is also recognized in profit or loss.\n\nThe carrying amount of a financial asset is written off against the allowance for doubtful accounts when the Group has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof.\n\n(E)\nDerecognition of financial assets\n\nThe Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred financial asset, the Group recognizes its retained interest in the financial asset and its associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and recognizes a collateralized borrowing for the proceeds received.\n\nWhen derecognizing a financial asset measured at amortized cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. In addition, when derecognizing an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously recorded in the investment’s revaluation reserve in accumulated other comprehensive income is reclassified to profit or loss.\n\nF-17\n\n[Table of Contents](#toc_page)\n\n \n\n(iii)\nNon-derivative Financial Liabilities\n\nNon-derivative financial liabilities are classified as either financial liabilities measured at FVTPL or financial liabilities measured at amortized cost. Classification of non-derivative financial liabilities is determined at the date of initial recognition. When the transaction price of the non-derivative financial liabilities differs from the fair value at initial recognition and the fair value is based on a valuation technique that uses only observable market data, the Group recognizes the difference between the fair value at initial recognition and the transaction price as a gain or loss.\n\nAfter initial recognition, the Group measures financial liabilities measured at FVTPL at fair value. Any gains and losses resulting from changes in fair value as well as interest expenses are recognized in profit or loss.\n\nFinancial liabilities measured at amortized cost are subsequently measured at amortized cost using the effective interest rate method.\n\nThe Group derecognizes financial liabilities when, and only when, the obligations are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.\n\n(A)\nPayPay Balance and Other Items\n\nPayPay Balance and Other Items refers to deposits by users of PayPay Settlement Services (the “PayPay Users”) and points accrued by PayPay Users in our PayPay Points program.\n\nThe Group records financial liabilities related to PayPay Balance and Other Items as Deposits on the Group’s Consolidated Statements of Financial Position because they represent a current obligation to return the cash deposited or to pay for purchases made by PayPay Users.\n\nThere are four types of transactions included as part of PayPay Balance and Other Items: PayPay Money, PayPay Money Lite, PayPay Points, and PayPay Gift Voucher.\n\nPayPay Money and PayPay Money Lite are topped up with cash by PayPay Users whereas PayPay Points are awarded through promotions and campaigns rather than topped up by PayPay Users. PayPay Gift Voucher is granted to PayPay Users in accordance with the contracts made between the Group and certain merchants.\n\nPayPay Users can withdraw the balance in PayPay Money, but not balances in PayPay Money Lite, PayPay Points and PayPay Gift Voucher. PayPay Money and PayPay Money Lite are deemed deposits in accordance with the Act on Settlement of Funds (Act No. 59 of June 24, 2009, hereinafter referred to as the “Payment Services Act”) of Japan.\n\nWhen an entity becomes subject to the Payment Services Act, it is legally required to make a deposit, and as a result, guarantee deposits are recorded on the Group’s Consolidated Statements of Financial Position. Refer to Note 9, Guarantee Deposits for details.\n\nIn the event that the Group discontinues its operations, it is required to refund the balance of PayPay Money, PayPay Money Lite and PayPay Gift Voucher in cash.\n\nWhen PayPay Points are granted to PayPay Users, the Group accounts for those either as point expenses or as a deduction of revenue, based on the judgment on whether those are consideration payable to a customer. Refer to revenue recognition policy section below at (15) Revenue for further details.\n\n(B)\nPayPay Point Investment Service\n\nPayPay Users can choose to convert their PayPay Points to \"PayPay Investment Points.\" PayPay Investment Points are financial obligations indexed to the performance of certain exchange traded funds (“ETFs”). Whenever a PayPay User sells a part or the whole of their PayPay Investment Points, the consideration is immediately converted back to PayPay Points.\n\nPayPay Investment Points are accounted for as hybrid financial liabilities and the embedded derivatives related to the indexation to ETFs are bifurcated from the host contracts. The host deposit contracts are measured at amortized cost while the embedded derivatives are measured at FVTPL.\n\nPayPay Investment Points are included in Deposits in the Group’s Consolidated Statements of Financial Position and changes in the value of PayPay Investment Points based on the chosen index are recognized in Gains (losses) on financial instruments in the Group’s Consolidated Statements of Profit or Loss.\n\n(iv)\nDerivative instruments\n\nDerivative instruments are financial instruments whose value is derived from underlying variables such as equity prices, interest rates, foreign exchange rates, or other indices. The Group utilizes derivative instruments, including foreign exchange margin trading, forward contracts and futures, primarily to manage exposure to interest rate risk and foreign exchange risk.\n\nF-18\n\n[Table of Contents](#toc_page)\n\n \n\nDerivatives are initially recognized at fair value and are subsequently measured at FVTPL, as the Group does not apply hedge accounting. Derivatives are presented as assets when their fair value is positive and as liabilities when their fair value is negative. Embedded derivatives in financial liabilities are separated from the host contract and accounted for as derivatives when they are not closely related to the host contract and meet the definition of derivative.\n\n(v)\nOffsetting Financial Assets and Financial Liabilities\n\nFinancial assets and financial liabilities are offset, and the net amount is presented in the Group’s Consolidated Statements of Financial Position when and only when the Group has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.\n\n(vi)\nCall loans\n\nCall loans represent inter-bank loans, measured at amortized cost. The fair values of call loans are considered to approximate the carrying amount. Impairment is assessed at each reporting date, with any losses recognized in profit or loss.\n\n(5)\nCash and Cash Equivalents\n\nCash and cash equivalents comprise cash in hand, demand deposits, and short-term investments with an original maturity of three months or less that are readily convertible to a known amount of cash, and which are subject to an insignificant risk of changes in value. Cash deposits for group financing are not classified as cash equivalents because they can be withdrawn only upon the consent of LY Corporation.\n\n(6)\nProperty and Equipment (Excluding Right-of-use Assets)\n\nProperty and equipment are recorded and measured at cost and carried at its cost less accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property and equipment includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost includes borrowing costs directly attributed to the acquisition, construction, or production of a qualifying asset, if any. Refer to the section below (8) Borrowing Costs for details of borrowing cost capitalization policy.\n\nThe depreciable amount of property and equipment is determined after deducting its estimated residual value from the historical cost, and it is depreciated using the straight-line method over the useful life. The estimated useful lives of major assets owned by the Group are as follows:\n\n \n\n \n\nEstimated\nuseful lives\n(years)\n\nLeasehold improvements\n\n \n\n1-18\n\nFurniture and fixtures\n\n \n\n1-20\n\nThe residual values and estimated useful lives are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.\n\n(7)\nIntangible Assets\n\nIntangible assets with finite useful lives that are acquired separately and internally generated intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets also include the asset that is related to customer relationships which is acquired in a business combination, and such asset is recognized only when it is probable that the future economic benefits that are attributed to the asset will flow to the Group and the cost of the asset can be reliably measured. The amount of initial recognition for internally generated intangible assets is the sum of the expenditures incurred during the development period, where the development period starts from the date when technical and commercial feasibility of the asset have been established, and ends when the development is completed. The costs include borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset, if any. Refer to the section below (8) Borrowing Costs for details of borrowing cost capitalization policy. Amortization is recognized on a straight-line basis over their estimated useful lives.\n\nThe estimated useful lives of the major intangible assets owned by the Group are as follows:\n\n \n\n \n\nEstimated\nuseful lives\n(years)\n\nInternally generated software\n\n \n\n1-15\n\nExternally acquired software\n\n \n\n1-5\n\nCustomer relationship intangible assets\n\n \n\n10-15\n\nThe estimated useful lives are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses, if any. There are no intangible assets with indefinite useful lives.\n\nF-19\n\n[Table of Contents](#toc_page)\n\n \n\nResearch and development\n\nExpenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.\n\n(8)\nBorrowing Costs\n\nThe Group capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are expensed as incurred. A qualifying asset is an asset that requires a substantial period of time to get ready for its intended use or sale.\n\nWhen the Group borrows funds specifically for the purpose of acquiring a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.\n\nWhen the Group borrows funds generally and uses them for the purpose of acquiring a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset, which is the effective interest rate of the general borrowing. The capitalization rate is the weighted average of the borrowing costs applicable to all the borrowings of the Group that are outstanding during the period, other than borrowings made specifically for the purpose of acquiring other qualifying assets until substantially all the activities necessary to prepare that asset for its intended use or sale are complete. The amount of borrowing costs that the Group capitalizes during a period does not exceed the amount of borrowing costs incurred during that period.\n\n(9)\nLeases\n\nThe Group assesses whether a contract is, or contains, a lease, at inception. If the contract transfers the right to control the use of the identified assets in exchange for consideration for a period of time, the contract is, or contains, a lease.\n\nGroup as lessee\n\nThe Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for those with a term of one year or less (the “short-term leases”), and leases of low-value assets.\n\nFor leases or contracts that include leases, the Group accounts for the lease components separately from the non-lease components by allocating the consideration in the contract based on the ratio of the independent price of the lease component to the aggregate independent prices of the lease and non-lease components.\n\nThe right-of-use assets comprise the initial measurement of the corresponding lease liabilities, lease payments made at or before the commencement days, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Depreciation begins at the commencement date of the lease and is generally calculated using the straight-line method over the shorter of the lease term and the estimated useful life of the right-of-use asset. However, if the transfer of ownership of the underlying asset is certain, or if it is reasonably certain that a purchase option will be exercised, depreciation is calculated using the straight-line method over the estimated useful life of the underlying asset.\n\nWhenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured in accordance with IAS 37 \"Provisions, Contingent Liabilities and Contingent Assets.\" To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.\n\nThe Group does not recognize right-of-use assets for intangible asset leases.\n\nThe lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.\n\nThe lease liability is presented as a separate line in the Group’s Consolidated Statements of Financial Position.\n\nThe total amount of lease payments included in the measurement of lease liabilities consists of the following:\n\n•\nFixed payments (including in-substance fixed payments), less any lease incentives receivable;\n\n•\nVariable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;\n\n•\nAmounts expected to be payable by the lessee under residual value guarantees;\n\n•\nThe exercise price of a purchase option if the lessee is reasonably certain to exercise that option;\n\n•\nThe lease payment for the option term if it is reasonably certain that the extension option will be exercised; and\n\nF-20\n\n[Table of Contents](#toc_page)\n\n \n\n•\nPayments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.\n\nThe lease liability is subsequently measured using the effective interest method by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made.\n\nThe Group remeasures the lease liability whenever:\n\n•\nThe lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate,\n\n•\nThe lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used), or\n\n•\nA lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.\n\nFor short-term leases and leases of low value assets, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.\n\n(10)\nImpairment of Non-financial Assets\n\nNon-financial assets other than goodwill\n\nAt the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss if any.\n\nRecoverable amount is the higher of fair value less costs of disposal and value in use. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset belongs. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.\n\nIf the recoverable amount of an asset (or a CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or a CGU) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.\n\nWhere an impairment loss subsequently reverses, the carrying amount of the asset (or a CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or a CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognized for the asset in prior years. Any increase in excess of original carrying amount is treated as a revaluation increase.\n\nGoodwill\n\nGoodwill acquired in a business combination is, from the acquisition date, allocated to each CGU or CGU group that is expected to benefit from the synergies arising from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to that CGU or CGU group. A CGU or CGU group to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the CGU or CGU group may be impaired. If the recoverable amount of the CGU or CGU group is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU or CGU group and then to the other assets pro rata based on the carrying amount of each asset in the CGU or CGU group. Impairment losses are recognized in profit or loss, and impairment losses recognized for goodwill are not reversed in subsequent periods. On disposal of the relevant CGU or CGU group, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.\n\n(11)\nProvisions\n\nProvisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.\n\nThe amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, considering the risks and uncertainties surrounding the obligation. Where a provision is measured using\n\nF-21\n\n[Table of Contents](#toc_page)\n\n \n\nthe cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows when the effect of the time value of money is material. The discount amount over time is recognized as a finance cost.\n\nThe Group’s provisions include loss allowance for undrawn loan commitments. Refer to the section above (4) Financial Instruments for further details of loss allowance for undrawn loan commitments.\n\n(12)\nEmployee Benefits\n\n(i)\nShort-term Employee Benefits\n\nShort-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the reporting period in which the employee provided services. A liability is recognized for short-term employee benefits on an accrual basis in the reporting period in which the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.\n\n(ii)\nOther Long-term Employee Benefits\n\nLiabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows in respect of services provided by employees up to the reporting date.\n\n(iii)\nPost-employment Benefits\n\nFor defined contribution plans, when the employees render services, the contribution payables are recognized in profit or loss.\n\n(13)\nIssued Capital and Share Premium\n\nCommon shares issued by the Company are recognized at the issue price in shareholders’ equity. In addition, transaction costs directly attributable to the issuance of such equity instruments are deducted from shareholders’ equity.\n\n(14)\nShare-Based Payments\n\nThe Group has stock option plans and phantom stock awards as share-based payment awards. The stock option plans are classified as equity-settled share-based payments, whereas the phantom stock awards are classified as cash-settled share-based payments. These awards are conditional upon the achievement of business performance and service period of the employees until the performance condition is satisfied.\n\nEquity-settled share-based compensation is measured at fair value at the grant date. The fair value of stock options is calculated using the Black-Scholes model, the Binomial model, Monte Carlo simulation and other methods. The expenses for share-based payments are charged based on the fair value determined at the grant date to operating expenses in the Group's Consolidated Statements of Profit or Loss based on most likely outcome of the performance condition, net of estimated forfeitures, over the vesting period for the services received as consideration for the stock option. At each reporting date, the Group revises its estimate of the number of stock options expected to vest because of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to share premium.\n\nCash-settled share-based payment is measured at the fair value of the liability incurred. The fair value of such liabilities is remeasured at the end of fiscal year and at the settlement date, utilizing valuation techniques such as the Black-Scholes model, the Binomial model, and Monte Carlo simulations, and changes in fair value are recognized in the Consolidated Statements of Profit or Loss.\n\n(15)\nRevenue\n\n(i)\nMajor Revenue Streams\n\nThe Group’s major revenue streams are as follows:\n\n(A)\nTransaction and service income\n\nTransaction and service income represents Revenue from contracts with customers. This revenue mainly consists of a. Payment Settlement Services and b. Financial Services. The Group applies the five-step process in accordance with IFRS 15 to determine the appropriate manner and timing of revenue recognition.\n\n•\nIdentify the contract with a customer (step 1)\n\n•\nIdentify the performance obligations in the contract (step 2)\n\n•\nDetermine the transaction price (step 3)\n\n•\nAllocate the transaction price to the performance obligations in the contract (step 4)\n\nF-22\n\n[Table of Contents](#toc_page)\n\n \n\n•\nRecognize revenue when the Group satisfies a performance obligation (step 5)\n\nThe Group recognizes revenue for the transfer of services that reflects the consideration to which the Group expects to be entitled to receive in exchange for the promised services. Revenue is measured based on the consideration promised for services provided in the ordinary course of business, less applicable consumption tax and other taxes, as well as consideration payable to a customer. Revenue of the Group does not include estimates of significant variable considerations or significant financing components. For most of the Group’s principal revenue streams described below, revenue is recognized at a point in time and no material advance consideration is received from customers. Accordingly, transactions that give rise to contract liabilities are limited.\n\na.\nPayment Settlement Services\n\nPayment Settlement Services are composed of PayPay Settlement Services, Credit Payment Settlement Services and Acquiring Services, and Debit Payment Settlement Services.\n\n•\nPayPay Settlement Services\n\nThe Group enters into Payment and Settlement Service Agreements with PayPay Merchants (1) who are determined to be our customer under IFRS 15 (step 1). PayPay Settlement Services generally include the following transactions and procedures within the Group, PayPay Merchant and PayPay User:\n\n \n\n-\n\nPayPay User funds their PayPay Balance and Other Items by various methods including ATM, bank transfer, and credit card issued by the Group.\n\n-\n\nPayPay User makes a purchase transaction and makes a payment to a PayPay Merchant by utilizing their PayPay Balance and Other Items or PayPay Credit (2) through our PayPay app.\n\n-\n\nPayPay Merchant provides the record of the purchase transaction between the PayPay Merchant and PayPay Users to the Group and the Group approves of the purchase transaction.\n\n-\n\nThe Group is entitled to the settlement fee upon approval of each purchase transaction. The Group retains the fee and remits the net purchase transaction amount to the PayPay Merchant.\n\n \n\nThe Group’s performance obligation is to provide payment settlement platform for transactions and support settlements of purchase transactions between PayPay Merchants and the PayPay Users in which the Group acts as the principal providing the payment settlement service (step 2). The Group charges settlement fee for a purchase transaction settled through our PayPay app based on the transaction amount and predetermined rate in accordance with the Payment and Settlement Services Agreement (step 3), which is applied to the single performance obligation noted above (step 4). The performance obligation is fulfilled upon approval of the purchase transaction and settlement of purchase transaction amount to the PayPay Merchant, in which the Group determines whether the settlement should be completed on our platform. The revenue is then recognized at a point in time when the performance obligation is fulfilled (step 5).\n\nPayPay Settlement Services are included in the Payment segment.\n\n(1)\nPayPay Merchants are companies that the Group provides the PayPay Settlement Services platform to as a method of payment in their stores based on Payment and Settlement Service Agreements between the Group and the PayPay Merchants.\n\n(2)\nUnder PayPay Credit, PayPay Users link and register their PayPay Card in our PayPay app. PayPay Users make payment by PayPay Credit to the PayPay Merchants, and PayPay Users will pay the transaction amount to PayPay Card due to the credit card closing date.\n\n•\nCredit Payment Settlement Services and Acquiring Services\n\nA credit card transaction generally includes the following procedures between credit card issuers, cardholders, credit card merchants, acquirers and payment processing networks such as VISA, Mastercard and JCB:\n\n \n\n-\n\nA cardholder uses their credit card at a credit card merchant with the credit card issuer’s authorization in a purchase transaction.\n\n-\n\nThe credit card merchant presents the purchase transaction data to an acquirer.\n\n-\n\nThe acquirer presents the purchase transaction data to the credit card issuer via the payment processing networks.\n\n-\n\nThe credit card issuer authorizes the purchase transaction and delivers funds for the settlement of the transaction amount to the acquirer, minus the interchange fee, via the payment processing networks.\n\nF-23\n\n[Table of Contents](#toc_page)\n\n \n\n-\n\n \n\nThe acquirer delivers funds received from the credit card issuer to settle the transaction amount to the credit card merchant, minus the merchant fee.\n\n-\n\nThe credit card issuer collects funds from the cardholder.\n\n \n\n(a)\nCredit Payment Settlement Services\n\nThe Group, as the credit card issuer, enters into PayPay Card Comprehensive Merchant Agreements with credit card merchants, Credit Merchants Terms and Conditions with cardholders, and various credit card license agreements with payment processing networks (step 1). In accordance with these agreements, the Group agrees to provide credit card payment settlement services to credit card merchants, payment processing network, and cardholders so that cardholders can make purchases at the credit card merchants by using their credit card.\n\nThe Group issues a credit card, known as PayPay Card, in accordance with the license agreements with payment processing networks. When PayPay Card is used in a purchase transaction at a credit card merchant, the Group is involved in a purchase transaction as the credit card issuer and the Group provides Credit Payment Settlement Services.\n\nFor Credit Payment Settlement Services, the Group’s performance obligation is to provide credit card payment settlement services, including transfer of purchase transaction data and authorization for a purchase transaction (step 2), to the credit card merchants, payment processing networks, and cardholders who are determined to be our customer under IFRS 15.\n\nThe Group charges settlement fee to credit card merchants and payment processing networks based on the transaction amount and the predetermined rate (step 3), which is applied to the single performance obligation above (step 4).\n\nThe performance obligation is fulfilled when the credit card settlement service is completed, specifically upon receipt of purchase transaction data from an acquirer and the purchase transaction is authorized (step 5). The settlement fee recognized by the Group as revenue pursuant to IFRS 15 under contracts related to Credit Payment Settlement Services is paid to the Group approximately within two months from the satisfaction of the performance obligation.\n\nCredit Payment Settlement Services are included in the Payment segment.\n\n(b)\nAcquiring Services\n\nThe Group enters into an Acquiring Services Agreement with credit card merchants who are determined to be our customer under IFRS 15 (step 1).\n\nWhen a credit card issued by another credit card issuer is used to purchase goods or services at a credit card merchant, the Group is involved in such a purchase transaction as the acquirer and the Group provides Acquiring Services to the credit card merchant. The Group assists the credit card merchant to obtain the credit card issuer’s authorization through the payment processing networks to process the purchase transaction by transferring purchase transaction data. The credit card merchant who receives a benefit from the service pays consideration to the Group in exchange.\n\nThe Group has a performance obligation to provide Acquiring Services by obtaining credit card issuer's authorization, transferring purchase transaction data, and processing the purchase transaction (step 2). The amount of revenue recognized by the Group is calculated based on the settlement amount of the purchase transaction and the predetermined rate, less interchange fees charged by the credit card issuer (step 3), which is applied to the single performance obligation above (step 4).\n\nThis performance obligation is fulfilled when the credit card issuer’s authorization is obtained by the Group, after the receipt of the purchase transaction data from the credit card merchant (step 5).\n\nThe fee recognized by the Group as revenue pursuant to IFRS 15 under contracts related to Acquiring Services is paid approximately two business days after the time of satisfying the performance obligation. The cost of Acquiring Services, such as brand fee, charged by the payment processing networks, is recorded as commission fees within operating expenses.\n\nAcquiring Services are included in the Payment segment.\n\n•\nDebit Payment Settlement Services\n\nF-24\n\n[Table of Contents](#toc_page)\n\n \n\nDebit card payment is a payment method where the amount is immediately deducted from the bank account at the time the payment is confirmed with the card.\n\nUnlike credit card payments, there is no deferred payment element, and the amount used can only be paid within the balance available in the account.\n\nA debit card transaction generally includes the following procedures between debit card issuers, cardholders, debit card merchants, acquirers and payment processing networks such as VISA.\n\n \n\n-\n\nA cardholder uses their debit card at a debit card merchant with the debit card issuer’s authorization in a purchase transaction.\n\n-\n\nThe debit card merchant presents the purchase transaction data to an acquirer.\n\n-\n\nThe acquirer presents the purchase transaction data to the debit card issuer via the payment processing networks.\n\n-\n\nThe debit card issuer authorizes the purchase transaction and delivers funds for the settlement of the transaction amount to the acquirer, minus the interchange fee, via the payment processing networks.\n\n-\n\n \n\nThe acquirer delivers funds received from the debit card issuer to settle the transaction amount to the debit card merchant, minus the merchant fee.\n\n-\n\nThe debit card issuer collects funds from the cardholder at the same time as the withdrawal from the bank account immediately.\n\nThe Group, as the debit card issuer, enters into License Agreements with payment processing networks (step 1). In accordance with the agreements, the Group agrees to provide debit card payment settlement services, which enable the debit card user to make a purchase transaction and payment by the debit card at merchant.\n\nFor Debit Payment Settlement Services, the Group’s performance obligation is to provide debit card payment settlement services to payment processing networks who are determined to be customer under IFRS 15, including authorization for a purchase transaction and transfer of purchase transaction data (step 2).\n\nThe Group charges a fee for debit card payment settlement services arising from a purchase transaction settled by debit card, and the fee is calculated by multiplying the transaction amount by the predetermined rate (step 3), which is applied to the single performance obligation above (step 4).\n\nThe performance obligation is fulfilled when the service is completed, specifically upon receipt of transaction data from an acquirer (step 5). The fee recognized by the Group as revenue pursuant to IFRS 15 under contracts related to Debit Payment Settlement Services is paid to the Group approximately within two months from the satisfaction of the performance obligation.\n\nDebit Payment Settlement Services are included in the Financial service segment.\n\nb.\nFinancial Services\n\nFinancial Services mainly consists of remittances and bank transfer transactions. Users, companies, and other institutions request various remittances and bank transfer transactions based on the terms and conditions (step 1). The Group has a performance obligation to provide the service of depositing the money into the specified bank account as requested by the customer (step 2). Remittance and bank transfer fees are calculated at a prescribed rate or unit price according to the transaction amount and number of transactions (step 3) related to the single performance obligation (step 4). The Group recognizes revenue associated with these transactions at the point in time the service is provided (step 5).\n\n(B)\nInterest Income\n\nThe Group earns interest income from revolving, installment, cash advance services rendered to cardholders, loan arrangements entered with customers and treasury investments made for the provision of securities intermediary services and investment trust-related services.\n\nIn recognition of interest income, the Group uses the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset (before adjusting for expected credit losses).\n\nInterest income from non-credit impaired financial assets is recognized by applying the effective interest rate to the gross carrying amount of the asset; for credit impaired financial assets, the effective interest rate is applied to the net carrying amount after deducting the allowance for expected credit losses. The interest rate is set as a fixed rate or is determined based on the length of repayment period.\n\nInterest income is included in both the Payment segment and the Financial service segment.\n\nF-25\n\n[Table of Contents](#toc_page)\n\n \n\n(C)\nGains (losses) on financial instruments\n\nFinancial income mainly comprises of changes in fair value of financial instruments measured at FVTPL and dividend income. For further details, refer to the section above (4) Financial Instruments.\n\n(D)\nOther operating income\n\nOther operating income consists primarily of expired income associated with PayPay Points Code, and other incidental fees. The Group issues PayPay Points Code to PayPay Merchants and other institutions for PayPay Users. By using PayPay Points Code granted by these PayPay Merchants and other institutions, PayPay Users can fund their PayPay Balance and Other Items on our PayPay app. As PayPay Points Code expires over periods of inactivity, the Group recognizes income when it expires.\n\n(ii)\nConsideration Payable to a Customer\n\nThe Group has consideration payable to a customer which includes PayPay Points to cardholders through which the Group intends to increase the number of customers and payment transactions. Refer to the section above (4) Financial Instruments for further details of non-derivative financial liabilities.\n\nThe Group concluded that PayPay Points do not represent a material right under IFRS 15 because these do not include an option to the cardholders to acquire any distinct services or goods from the Group in the future. The accumulated PayPay Points can be used to acquire additional goods or services from third parties or to convert into PayPay Investment Points which represent investments in third parties. Therefore, consideration payable to a customer is accounted for as a reduction of revenue unless the payment to the customer is in exchange for a distinct good or service, which could result in the consideration payable to a customer exceeding the corresponding revenue, and is recognized on the later of when revenue for the transfer of the services or goods is recognized or the consideration is paid or promised to pay.\n\nIf a consideration payable to a customer is an upfront payment, the Group recognizes it as an asset to the extent that the Group reasonably expects to generate future revenue associated with the payment, and, in such case, subsequently reduces revenue when or as the related services are rendered to the customer. Refer to Note 19, Other Assets for further details of an asset with respect to the consideration payable to a customer.\n\n(iii)\nIncremental Costs of Obtaining a Contract\n\nIncremental costs of obtaining a contract are recognized as assets when the Group expects to recover such costs by generating future revenue associated with the payment. The incremental costs of obtaining a contract are those costs that would not have been incurred if the contract had not been obtained. The portion of incremental costs that is not recoverable is expensed when it is incurred. The Group recognizes an asset for the incremental costs of obtaining a contract with a customer for the amount that the Group expects to recover, which is recorded in other assets on the Group’s Consolidated Statements of Financial Position. The asset is amortized over the estimated period that services to which the asset relates are transferred to the customer on a straight-line basis. If the amortization period that the Group otherwise would have recognized is one year or less, the Group applies practical expedient recognizing incremental costs of obtaining a contract as an expense. Refer to Note 19, Other Assets and Note 30, Revenue.\n\n(16)\nIncome Tax\n\nIncome tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss, except to the extent that they relate to business combinations and items recognized directly in equity or in other comprehensive income.\n\n(i)\nCurrent Tax\n\nCurrent tax is measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.\n\n(ii)\nDeferred Tax\n\nF-26\n\n[Table of Contents](#toc_page)\n\n \n\nDeferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized, except for the following temporary differences:\n\n•\nTaxable temporary differences arising from initial recognition of goodwill.\n\n•\nTaxable temporary differences arising from the initial recognition of assets or liabilities in a transaction which is not a business combination, affects neither accounting profit or loss nor taxable profit or tax loss and does not give rise to equal taxable and deductible temporary differences.\n\n•\nDeductible temporary differences associated with investments in subsidiaries and associates, where it is not probable that the temporary difference will reverse in the foreseeable future or there will be taxable profit against which the temporary differences can be utilized.\n\n•\nTaxable temporary differences associated with investments in subsidiaries and associates, where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.\n\nDeferred tax assets are recognized by considering whether it is probable that part or all of deductible temporary differences and tax loss carry forwards can be deducted against future taxable profit and income taxes based on projected future taxable profit and tax planning. The estimation of future taxable profit is calculated based on financial budgets and it is based on management’s judgments and assumptions. Deferred tax assets related to operating loss carry forwards and in excess of deferred tax liabilities have been recognized as it is estimated that future taxable profits will be available to realize such assets.\n\nDeferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting date.\n\nDeferred tax assets and liabilities are offset, only when the Group has a legally enforceable right to set off current tax assets against current tax liabilities, and the same taxation authority levies income taxes either on the same taxable entity or on different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities simultaneously.\n\nThe carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.\n\n(iii)\nUncertainty over Income Tax Treatments\n\nUncertain tax positions as of each reporting date have been analyzed by the Group in accordance with IFRIC 23 \"Uncertainty over Income Tax Treatments.\" The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained.\n\nThe Group records a provision for uncertain tax positions if it is probable that the Group will have to make a payment to tax authorities upon their examination of a tax position. This provision is measured at the Group’s best estimate of the amount expected to be paid. Provisions are reversed as a reduction of income tax expense in the period in which management determines they are no longer required or as determined by statute.\n\n(17)\nEarnings Per Share\n\nBasic earnings per share (“EPS”) is calculated by dividing profit or loss attributable to the holders of common shares of the Company by the weighted average number of common shares outstanding for each reporting period. Profit or loss attributable to the holders of common shares of the Company is the same as the profit or loss for the year attributable to owners of the parent company.\n\nDiluted EPS is calculated by dividing profit or loss attributable to the holders of common shares of the Company by the weighted average number of common shares outstanding for each reporting period plus the weighted average number of common shares assuming the conversion of all dilutive potential common shares into common shares. Profit or loss attributable to holders of common shares increased by the after-tax amount of dividends recognized in the period in respect of the dilutive potential common shares and is adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential common shares. Potential common shares are antidilutive when their conversion to common shares would increase earnings per share or decrease loss per share. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential common shares that would have an antidilutive effect on earnings per share.\n\n \n\nF-27\n\n[Table of Contents](#toc_page)\n\n \n\n4. Critical Accounting Judgments and Key Sources of Estimation Uncertainty\n\nThe preparation of the Group’s consolidated financial statements requires the management to make judgments, estimates, and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. These estimates and assumptions are based on the best judgment of the management considering historical experience and various factors deemed to be reasonable as of the end of reporting period. Given their nature, uncertainty about these estimates and assumptions could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.\n\nThe estimates and assumptions are continuously reviewed by the management, as these estimates may change as new events occur. The effects of a change in estimates and assumptions are recognized in the period of the change and in any future periods effected.\n\nThe Group has following areas of critical accounting judgments made and accounting estimates and assumptions made that have significant effects on the reported amount in the consolidated financial statements:\n\n(1)\nBusiness combinations under common control\n\nAs disclosed in Note 3, Material Accounting Policies, for business combinations between entities under common control, the Group accounts for such transactions based on the book values of the ultimate parent company, SBG, and regardless of the actual date of the transactions under common control, retrospectively consolidates the financial statements of the acquired companies as if they had always been combined to the earliest comparative period or from the date in which the ultimate parent company acquired those businesses, if later than the beginning of the earliest comparative period.\n\n(2)\nImpairment\n\n(i)\nAssets\n\nNon-financial assets other than goodwill\n\nAssets, such as property and equipment, right-of-use assets, intangible assets with definite useful lives disclosed in Note 14, Property and Equipment, Note 15, Leases, Note 16, Goodwill and Intangible Assets, are assessed for indications of impairment at the end of the reporting period. The Group evaluates both internal and external sources of information to assess whether impairment indicators exist. Some of the impairment indicators are evidence of obsolescence or significant adverse changes in the technological, market, economic or legal environment in which the Group (or an associate) operates, or in the market to which the asset is dedicated. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. The recoverable amount is the greater of its value in use and its fair value less cost to sell. An impairment loss is recognized and the carrying amount is adjusted to be equal to its recoverable amount, if the carrying amount of an asset or a CGU exceeds its recoverable amount. The Group identified no impairment indicators for property and equipment, right-of-use assets, and intangible assets as of March 31, 2025 and 2026, except for the assets held by PayPay Securities Corporation.\n\nGoodwill\n\nA goodwill impairment test requires the Group to exercise judgment and assess whether the carrying value of the CGU or CGU group to which goodwill has been allocated can be supported by the recoverable amount of such CGU or CGU group to which goodwill has been allocated.\n\nThe recoverable amount of a CGU or CGU group has been determined based on a value in use calculation which involves the use of estimates. The main assumptions used in the value in use calculation include the discount rate, terminal growth rate and expected future cash flow projections for a period of up to five years from financial budgets approved by the management. Cash flow projections beyond the planning period are extrapolated using terminal growth rates. Cash flow projections take into account past experience and represent management’s best estimates. These assumptions can be subject to significant adjustments from such factors as user trend, spending on marketing, IT spending of corporations, and market conditions, such as competitors. The key assumptions used to determine the recoverable amounts of the different CGU or CGU group to which goodwill has been allocated are disclosed and further explained in Note 17, Impairment of Goodwill.\n\nF-28\n\n[Table of Contents](#toc_page)\n\n \n\n(ii)\nFinancial assets measured at amortized cost, debt instruments measured at FVTOCI, and undrawn loan commitments\n\nThe Group assesses ECLs associated with financial assets measured at amortized cost, debt instruments measured at FVTOCI, and undrawn loan commitments. The impairment methodology depends on whether there has been a significant increase in the credit risk associated with the individual financial asset or the group of financial assets. A significant increase in the credit risk associated with the respective financial asset is assessed by considering default risk at the reporting date and comparing it to that at the date of initial recognition. In particular, the financial asset is deemed to be in default when contractual payments are 90 days or more past due, the contractual conditions have been modified, or the obligor is experiencing significant financial difficulty. The ECL estimation is performed based on unbiased, probability-weighted cash flows calculated by evaluating a range of possible outcomes and the time value of money. The estimation also considers the forecasts of future economic conditions and reasonably expected future events, expected increases in default probabilities and deterioration in macroeconomic indicators, such as unemployment rate. Refer to Note 3, Material Accounting Policies and Note 36, Financial Instruments for further details.\n\n(3)\nRecoverability of Deferred Tax Assets\n\nRegarding temporary differences, which are differences between carrying value of an asset or liability in the Group’s Consolidated Statements of Financial Position and its tax base, the Group recognizes deferred tax assets and deferred tax liabilities. In considering their recoverability, the Group assesses the likelihood of their deferred tax assets being recovered within a reasonably foreseeable timeframe. Refer to Note 3, Material Accounting Policies and Note 18, Income Tax for further details.\n\n \n\n5. Standards Issued but Not Yet Effective\n\nOn April 9, 2024, the IASB published IFRS 18 “Presentation and Disclosure in Financial Statements” (“IFRS 18”). IFRS 18, which replaces IAS 1, “Presentation of Financial Statements”, introduces new disclosure requirements regarding the required presentation of operating, investing, financing, income taxes, and discontinued operations categories, management performance measures and improvement on grouping information within the financial statements. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted.\n\nThe impact of the adoption of IFRS 18 is still under consideration, and the impact upon adoption on the Group’s consolidated financial statements cannot be reasonably estimated at this time.\n\nOther than noted above, the Group reviewed the following standards and concluded that the standards do not materially affect its financial reporting.\n\n \n\nStandards and amendments\n\n \n\nEffective date\n\n \n\nDate of adoption\nby the Group\n\nThe Classification and Measurement of Financial Instruments\n   (Amendments to IFRS 9 and IFRS 7 “Financial Instruments:\n   Disclosures” (“IFRS 7”))\n\n \n\nJanuary 1, 2026\n\n \n\nApril 1, 2026\n\nAnnual Improvements to IFRS Accounting Standards - Volume 11\n\n \n\nJanuary 1, 2026\n\n \n\nApril 1, 2026\n\nContracts Referencing Nature-dependent Electricity\n   (Amendments to IFRS 9 and IFRS 7)\n\n \n\nJanuary 1, 2026\n\n \n\nApril 1, 2026\n\nIFRS 19 “Subsidiaries without Public Accountability: Disclosures”\n\n \n\nJanuary 1, 2027\n\n \n\nApril 1, 2027\n\nIAS 21 \"Translation to a Hyperinflationary Presentation Currency\"\n\n \n\nJanuary 1, 2027\n\n \n\nApril 1, 2027\n\n \n\nF-29\n\n[Table of Contents](#toc_page)\n\n \n\n6. Segment Information\n\n(1)\nOverview of Reportable Segments\n\nThe Group’s operating segments are components of the Group that engage in business activities from which they may earn revenues and incur expenses, and those components' discrete financial information is available. Such operating segments engage in business activities that earn revenues and incur expenses and the operating segments are subject to regular review by the Chief Executive Officer (“CEO”), who is the Group’s Chief Operating Decision Maker (“CODM”), in deciding how to allocate resources and in assessing performance.\n\nAccordingly, the Group has two operating segments, Payment segment and Financial service segment, which are also reportable segments that are determined based on the nature of services as described below. The reportable segments were revised from PayPay segment and PayPay Card segment to Payment segment and Financial service segment due to the change of segment management classifications triggered by the business combinations of PayPay Securities Corporation and PayPay Bank Corporation, which are described in Note 7, Business Combinations.\n\n(i)\nPayment segment\n\nThe Payment segment mainly consists of PayPay Corporation and PayPay Card Corporation. This segment includes payment settlement services and related services offered through our PayPay app and credit payment settlement services such as revolving and installment payment options and cash advances.\n\n(ii)\nFinancial service segment\n\nThe Financial service segment mainly consists of PayPay Bank Corporation, PayPay Securities Corporation, and Credit Engine, Inc. This segment includes financial service such as internet banking services, securities intermediary services and PayPay Point investment-related services, and loan management services.\n\n(2)\nProfit or Loss for the Group's Reportable Segments\n\nThe Group’s CODM primarily uses revenue and operating profit or loss to allocate resources and assess performance. The Group’s segment profit or loss for each reportable segment is prepared in the same basis as the Group’s consolidated financial statements. The total of individual segment profit or loss is equivalent to operating profit or loss presented on the Group’s Consolidated Statements of Profit or Loss.\n\nSegment financial information presented below does not include assets or liabilities, as the Group's CODM does not allocate resources or assess performance based on such information.\n\nInter-segment transaction prices are determined in the same manner as arm's length transactions with external customers.\n\n \n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nInter-segment\neliminations\n\n \n\n \n\nConsolidated\n\n \n\nTransaction and service income\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRevenue from external customers\n\n \n\n \n\n149,310\n\n \n\n \n\n \n\n24,817\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n174,127\n\n \n\nInter-segment revenue\n\n \n\n \n\n823\n\n \n\n \n\n \n\n2,081\n\n \n\n \n\n \n\n(2,904\n\n)\n\n \n\n \n\n—\n\n \n\nTotal transaction and service income\n\n \n\n \n\n150,133\n\n \n\n \n\n \n\n26,898\n\n \n\n \n\n \n\n(2,904\n\n)\n\n \n\n \n\n174,127\n\n \n\nInterest income\n\n \n\n \n\n59,013\n\n \n\n \n\n \n\n14,871\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n73,884\n\n \n\nGains (losses) on financial instruments\n\n \n\n \n\n405\n\n \n\n \n\n \n\n4,236\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,641\n\n \n\nOther operating income\n\n \n\n \n\n1,756\n\n \n\n \n\n \n\n203\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,959\n\n \n\nTotal revenue\n\n \n\n \n\n211,307\n\n \n\n \n\n \n\n46,208\n\n \n\n \n\n \n\n(2,904\n\n)\n\n \n\n \n\n254,611\n\n \n\nOperating expenses (1)\n\n \n\n \n\n(215,084\n\n)\n\n \n\n \n\n(42,420\n\n)\n\n \n\n \n\n2,904\n\n \n\n \n\n \n\n(254,600\n\n)\n\nSegment profit (loss) (2)\n\n \n\n \n\n(3,777\n\n)\n\n \n\n \n\n3,788\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n11\n\n \n\n \n\n(1)\nFor information on depreciation and amortization expenses, see Note 33, Operating Expenses.\n\n(2)\nThe total of segment profit (loss) is equivalent to profit before tax in the Consolidated Statements of Profit or Loss for the year ended March 31, 2024.\n\n \n\nF-30\n\n[Table of Contents](#toc_page)\n\n \n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nInter-segment\neliminations\n\n \n\n \n\nConsolidated\n\n \n\nTransaction and service income\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRevenue from external customers\n\n \n\n \n\n176,597\n\n \n\n \n\n \n\n26,998\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n203,595\n\n \n\nInter-segment revenue\n\n \n\n \n\n1,454\n\n \n\n \n\n \n\n1,362\n\n \n\n \n\n \n\n(2,816\n\n)\n\n \n\n \n\n—\n\n \n\nTotal transaction and service income\n\n \n\n \n\n178,051\n\n \n\n \n\n \n\n28,360\n\n \n\n \n\n \n\n(2,816\n\n)\n\n \n\n \n\n203,595\n\n \n\nInterest income\n\n \n\n \n\n68,623\n\n \n\n \n\n \n\n19,819\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n88,442\n\n \n\nGains (losses) on financial instruments\n\n \n\n \n\n276\n\n \n\n \n\n \n\n5,253\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,529\n\n \n\nOther operating income\n\n \n\n \n\n1,304\n\n \n\n \n\n \n\n208\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,512\n\n \n\nTotal revenue\n\n \n\n \n\n248,254\n\n \n\n \n\n \n\n53,640\n\n \n\n \n\n \n\n(2,816\n\n)\n\n \n\n \n\n299,078\n\n \n\nOperating expenses (1)\n\n \n\n \n\n(217,898\n\n)\n\n \n\n \n\n(48,486\n\n)\n\n \n\n \n\n2,816\n\n \n\n \n\n \n\n(263,568\n\n)\n\nSegment profit\n\n \n\n \n\n30,356\n\n \n\n \n\n \n\n5,154\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n35,510\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(Reconciliation to profit before tax)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShare of loss of investments accounted for using the equity method\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(549\n\n)\n\nProfit before tax\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n34,961\n\n \n\n \n\n(1)\nFor information on depreciation and amortization expenses, see Note 33, Operating Expenses.\n\n \n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nInter-segment\neliminations\n\n \n\n \n\nConsolidated\n\n \n\nTransaction and service income\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRevenue from external customers\n\n \n\n \n\n220,770\n\n \n\n \n\n \n\n30,271\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n251,041\n\n \n\nInter-segment revenue\n\n \n\n \n\n1,124\n\n \n\n \n\n \n\n870\n\n \n\n \n\n \n\n(1,994\n\n)\n\n \n\n \n\n—\n\n \n\nTotal transaction and service income\n\n \n\n \n\n221,894\n\n \n\n \n\n \n\n31,141\n\n \n\n \n\n \n\n(1,994\n\n)\n\n \n\n \n\n251,041\n\n \n\nInterest income\n\n \n\n \n\n84,574\n\n \n\n \n\n \n\n32,674\n\n \n\n \n\n \n\n(760\n\n)\n\n \n\n \n\n116,488\n\n \n\nGains (losses) on financial instruments\n\n \n\n \n\n2,327\n\n \n\n \n\n \n\n7,923\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n10,250\n\n \n\nOther operating income\n\n \n\n \n\n2,422\n\n \n\n \n\n \n\n628\n\n \n\n \n\n \n\n(167\n\n)\n\n \n\n \n\n2,883\n\n \n\nTotal revenue\n\n \n\n \n\n311,217\n\n \n\n \n\n \n\n72,366\n\n \n\n \n\n \n\n(2,921\n\n)\n\n \n\n \n\n380,662\n\n \n\nOperating expenses (1)\n\n \n\n \n\n(246,722\n\n)\n\n \n\n \n\n(56,779\n\n)\n\n \n\n \n\n2,921\n\n \n\n \n\n \n\n(300,580\n\n)\n\nSegment profit\n\n \n\n \n\n64,495\n\n \n\n \n\n \n\n15,587\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n80,082\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(Reconciliation to profit before tax)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShare of loss of investments accounted for using the equity method\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(137\n\n)\n\nProfit before tax\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n79,945\n\n \n\n \n\n(1)\nFor information on depreciation and amortization expenses, see Note 33, Operating Expenses.\n\n \n\n(3)\nGeographical Information\n\nAlmost all revenues from external customers of the Group were generated in Japan, which is the Company’s country of domicile, for the years ended March 31, 2024, 2025 and 2026. In addition, the assets of the Group were primarily located in Japan, as of March 31, 2025 and 2026.\n\n(4)\nService Information\n\nThe services provided and the amount of revenue are described in revenue section within Note 3, Material Accounting Policies and Note 30, Revenue.\n\n(5)\nInformation about Major Customers\n\nThere are no customers that individually accounted for more than 10% of the Group's revenues during the year ended March 31, 2024, 2025 and 2026.\n\nF-31\n\n[Table of Contents](#toc_page)\n\n \n\n7. Business Combinations\n\nFor the year ended March 31, 2024\n\nThere were no significant business combinations.\n\nFor the year ended March 31, 2025\n\nThere were no significant business combinations.\n\nFor the year ended March 31, 2026\n\nAcquisition of PayPay Securities Corporation and PayPay Bank Corporation\n\nThe Company entered a series of transactions and acquired PayPay Securities Corporation and PayPay Bank Corporation from SBG in April 2025.\n\nOn April 1, 2025, the Company acquired an additional 31.0% of the common shares of PayPay Securities Corporation, in which the Company had originally held 35.0% of the common shares prior to the transactions. The common shares were acquired from SoftBank Corp. and LY Corporation, subsidiaries of SBG. PayPay Securities Corporation also issued additional common shares to the Company on April 1, 2025 for a total cash consideration of 12,807 million yen. As a result of the transactions, the Company held 75.2% of the common shares of PayPay Securities Corporation as of April 1, 2025. Also, on April 11, 2025, the Company acquired 47.1% of the common shares and all the non-voting Class A preferred shares of PayPay Bank Corporation from Z Financial Corporation (currently LY Corporation after a merger on August 1, 2025), a subsidiary of SBG, and Mitsui Sumitomo Insurance Co., Ltd. for a cash consideration of 117,378 million yen. After the conversion of the non-voting Class A preferred shares of PayPay Bank Corporation into common shares, effective April 28, 2025, the Company held 75.5% of the common shares of PayPay Bank Corporation.\n\nPayPay Securities Corporation is engaged in the securities intermediary business and PayPay Point investment service related business, and PayPay Bank Corporation is engaged in the internet banking business. Through the transactions, the Group aims to create synergies in the Payment Settlement Services and plans to further expand its market share in the cashless services market by providing PayPay Settlement Services and internet banking and securities intermediary services.\n\nThose transactions were accounted for as business combinations of entities under common control as the Company and PayPay Securities Corporation as well as PayPay Bank Corporation were controlled by SBG before and after the transactions. As business combinations of entities under common control, the Group applied the pooling of interests method recognizing the effects of the business combination from April 1, 2022. In all periods presented in these consolidated financial statements, the Group recognized the assets, liabilities, and results of operations of PayPay Securities Corporation and PayPay Bank Corporation at the historical book values recorded by SBG in its consolidated financial statements. On April 1 and 11, 2025, the Company acquired common shares of PayPay Securities Corporation and common shares and Class A preferred shares of PayPay Bank Corporation, respectively, increasing the Company’s ownership interests. As a result, the Group derecognized a portion of Non-controlling interests of those entities in Total shareholder's equity, which resulted in 86,358 million yen decrease in Non-controlling interests and 36,827 million yen decrease in Share premium in the Consolidated Statements of Financial Position as of March 31, 2026. Also, the Group recognized 130,185 million yen cash used in Payments for the purchase of the equity interest of subsidiaries, through business combinations of entities under common control in the Consolidated Statements of Cash Flows.\n\nAs a result of the application of the pooling of interests method, the Group recognized its share of the corresponding goodwill previously recognized by SBG based on historical cost. This goodwill has been allocated to the Group’s cash generating unit in which PayPay Securities Corporation’s operations are included. There is no goodwill recognized arising from the acquisition of PayPay Bank Corporation.\n\nF-32\n\n[Table of Contents](#toc_page)\n\n \n\n8. Cash and Cash Equivalents\n\nCash and cash equivalents are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and demand deposits\n\n \n\n \n\n141,289\n\n \n\n \n\n \n\n53,439\n\n \n\nRestricted cash related to transfers of credit card receivables\n\n \n\n \n\n734\n\n \n\n \n\n \n\n697\n\n \n\nSubtotal\n\n \n\n \n\n142,023\n\n \n\n \n\n \n\n54,136\n\n \n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and demand deposits\n\n \n\n \n\n15,530\n\n \n\n \n\n \n\n16,322\n\n \n\nDeposits with the Bank of Japan (1)\n\n \n\n \n\n212,258\n\n \n\n \n\n \n\n292,622\n\n \n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n3\n\n \n\nSubtotal\n\n \n\n \n\n227,788\n\n \n\n \n\n \n\n308,947\n\n \n\nTotal\n\n \n\n \n\n369,811\n\n \n\n \n\n \n\n363,083\n\n \n\n \n\n(1)\nThe Company’s banking subsidiary, PayPay Bank Corporation, is required by the Act on the Reserve Deposit Requirement System to deposit with the Bank of Japan an amount exceeding a certain ratio of deposits (legal reserve), and it deposits an amount exceeding the legal reserve.\n\n9. Guarantee Deposits\n\nGuarantee deposits are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nGuarantee deposits under Payment Services Act (1)(2)(3)(4)(5)\n\n \n\n \n\n219,466\n\n \n\n \n\n \n\n49,734\n\n \n\nSubtotal\n\n \n\n \n\n219,466\n\n \n\n \n\n \n\n49,734\n\n \n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nOther (5)(6)\n\n \n\n \n\n24,763\n\n \n\n \n\n \n\n24,405\n\n \n\nSubtotal\n\n \n\n \n\n24,763\n\n \n\n \n\n \n\n24,405\n\n \n\nTotal\n\n \n\n \n\n244,229\n\n \n\n \n\n \n\n74,139\n\n \n\n \n\n(1)\nIn accordance with the Payment Services Act of Japan, the Group is required to safeguard unused prepaid balances held by users of PayPay settlement services through prescribed measures, including making a security deposit (the \"guarantee deposit\") or investing in Japanese government securities with the Legal Affairs Bureau. The balance is required to cover 100% of the total unused prepaid balance of PayPay Money and 50% of the total unused prepaid balance of PayPay Money Lite.\n\n(2)\nIn addition to guarantee deposits and Japanese government securities reserved with the Legal Affairs Bureau, the Group adopted an additional method for safeguarding the unused prepaid balances through the establishment of a consolidated trust during the year ended March 31, 2026, and the Group reported the trust arrangement to the Kanto Local Finance Bureau. Through this trust arrangement, the consolidated trust deposits the funds with PayPay Bank Corporation and the funds are managed in the normal course of the banking business. For details of the trust arrangement, refer to Note 37. Subsidiaries and Investments Accounted for Using the Equity Method.\n\n(3)\nThe total balance of cash held by the trust, the guarantee deposits, and the Japanese government securities amounts to 250,329 million yen and 306,747 million yen as of March 31, 2025 and 2026, respectively. The Company has deposited 196,500 million yen to PayPay Bank Corporation under the trust arrangement as of March 31, 2026.\n\n(4)\nThe balance also includes regulatory safeguarding assets maintained in connection with digital wage payment services pursuant to the Ordinance for Enforcement of the Labor Standards Act of Japan. The balance was 5,002 million yen and 5,011 million yen as of March 31, 2025 and 2026, respectively.\n\n(5)\nGuarantee deposits are classified as financial assets measured at amortized cost.\n\n(6)\nThese are mainly cash segregated as reserve deposits for customers.\n\n10. Accounts Receivable\n\nAccounts receivable are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nSettlement receivables (1)(2)\n\n \n\n \n\n94,087\n\n \n\n \n\n \n\n91,343\n\n \n\nOther receivables (2)(3)\n\n \n\n \n\n47,819\n\n \n\n \n\n \n\n59,815\n\n \n\nLoss allowance (4)\n\n \n\n \n\n(852\n\n)\n\n \n\n \n\n(786\n\n)\n\nTotal\n\n \n\n \n\n141,054\n\n \n\n \n\n \n\n150,372\n\n \n\n \n\nF-33\n\n[Table of Contents](#toc_page)\n\n \n\n \n\n(1)\nReceivables are primarily due from external payment service providers, who collect the amount equivalent to PayPay Balance and Other Items charged by PayPay Users through their payment methods on behalf of the Group.\n\n(2)\nThese assets are classified as financial assets measured at amortized cost.\n\n(3)\nOther receivables include mainly cash deposits collected by financial institutions from PayPay Users, but not yet paid out to the Group. The balance of such items were 28,054 million yen and 34,872 million yen as of March 31, 2025 and 2026, respectively.\n\n(4)\nThe changes in loss allowance for accounts receivable are shown in Note 36, Financial Instruments.\n\n11. Loans and Advances to Customers\n\nLoans and advances to customers are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCredit card receivables\n\n \n\n \n\n1,045,681\n\n \n\n \n\n \n\n1,321,827\n\n \n\nLoss allowance (1)\n\n \n\n \n\n(43,739\n\n)\n\n \n\n \n\n(45,312\n\n)\n\nSubtotal\n\n \n\n \n\n1,001,942\n\n \n\n \n\n \n\n1,276,515\n\n \n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nMortgage loans (2)\n\n \n\n \n\n664,594\n\n \n\n \n\n \n\n909,483\n\n \n\nOverdraft\n\n \n\n \n\n261,943\n\n \n\n \n\n \n\n312,255\n\n \n\nOther\n\n \n\n \n\n383\n\n \n\n \n\n \n\n16,879\n\n \n\nLoss allowance (1)\n\n \n\n \n\n(1,255\n\n)\n\n \n\n \n\n(2,281\n\n)\n\nSubtotal\n\n \n\n \n\n925,665\n\n \n\n \n\n \n\n1,236,336\n\n \n\nTotal\n\n \n\n \n\n1,927,607\n\n \n\n \n\n \n\n2,512,851\n\n \n\n \n\n(1)\nFor further details of loss allowance, refer to credit risk management section within Note 36, Financial Instruments.\n\n(2)\nMortgage loans include the loans acquired from a financial institution with a guarantee provided by the seller up to 1% of the initial principal balance, the balance of which amounts to 187,471 million yen and 175,950 million yen as of March 31, 2025 and 2026, respectively.\n\nF-34\n\n[Table of Contents](#toc_page)\n\n \n\n12. Securities\n\nSecurities are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities (1)\n\n \n\n \n\n35,953\n\n \n\n \n\n \n\n65,612\n\n \n\nSubtotal\n\n \n\n \n\n35,953\n\n \n\n \n\n \n\n65,612\n\n \n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government securities (2)\n\n \n\n \n\n329,062\n\n \n\n \n\n \n\n713,244\n\n \n\nCorporate and other debt securities (2)\n\n \n\n \n\n295,707\n\n \n\n \n\n \n\n416,121\n\n \n\nAsset backed securities\n\n \n\n \n\n282,333\n\n \n\n \n\n \n\n337,685\n\n \n\nExchange traded funds (3)\n\n \n\n \n\n132,509\n\n \n\n \n\n \n\n202,879\n\n \n\nEquity securities\n\n \n\n \n\n184\n\n \n\n \n\n \n\n1,294\n\n \n\nSubtotal\n\n \n\n \n\n1,039,795\n\n \n\n \n\n \n\n1,671,223\n\n \n\nTotal\n\n \n\n \n\n1,075,748\n\n \n\n \n\n \n\n1,736,835\n\n \n\n \n\n(1)\nJapanese government securities within Payment segment are purchased for the purpose of meeting the deposit requirement under the Payment Services Act. Refer to Note 9, Guarantee Deposits for details.\n\n(2)\nThese securities include assets pledged as collateral at the Bank of Japan and Japanese Banks’ Payment Clearing Network. Refer to Note 36, Financial Instruments for further details.\n\n(3)\nExchange traded funds are mainly held for PayPay Point investment-related business.\n\n13. Other Financial Assets\n\nOther financial assets are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nReceivables from third party operators of deposit machines (1)(2)\n\n \n\n5,744\n\n \n\n5,239\n\nTime deposits pledged as collateral (1)(3)(4)\n\n \n\n3,677\n\n \n\n5,128\n\nAccrued interest (1)\n\n \n\n2,177\n\n \n\n3,792\n\nTrade date accrual (1)\n\n \n\n1,903\n\n \n\n3,534\n\nOffice security deposits (1)\n\n \n\n3,725\n\n \n\n2,946\n\nReceivables from customers and other parties in the securities intermediary business (1) (5)\n\n \n\n1,118\n\n \n\n2,740\n\nReceivables from third parties for PayPay Gift Vouchers (1)(5)\n\n \n\n3\n\n \n\n2,400\n\nDerivative assets (6)\n\n \n\n2,234\n\n \n\n2,310\n\nAccrued income  (1)\n\n \n\n1,741\n\n \n\n1,949\n\nOther\n\n \n\n808\n\n \n\n2,255\n\nTotal\n\n \n\n23,130\n\n \n\n32,293\n\n \n\nCertain comparative information for the previous fiscal year has been reclassified to the current fiscal year presentation.\n\n \n\n(1)\nThese assets are classified as financial assets measured at amortized cost.\n\n(2)\nThe balance mainly consists of the deposits made by customers of PayPay Bank Corporation which are retained at third party operators of deposit machines.\n\n(3)\nThe name of the line item previously presented as “Time deposits” has been changed to “Time deposits pledged as collateral” to clarify that the deposits are pledged as collateral.\n\n(4)\nRefer to Note 36, Financial Instruments for further details.\n\n(5)\nThe comparative amounts of 1,118 million yen for \"Receivables from customers and other parties in the securities intermediary business\" and 3 million yen for \"Receivables from third parties for PayPay Gift Vouchers\" have been reclassified from \"Other\" and \"Receivables from third party operators of deposit machines\", respectively. This reclassification was made because the financial significance of these items has increased due to the expansion of transaction volumes during the current fiscal year.\n\n(6)\nThese assets are classified as financial assets measured at FVTPL.\n\n \n\nF-35\n\n[Table of Contents](#toc_page)\n\n \n\n14. Property and Equipment\n\nChanges in property and equipment are as follows:\n\n(1)\nAcquisition Cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nLeasehold\nimprovements\n\n \n\n \n\nFurniture\nand\nfixtures\n\n \n\n \n\nConstruction\nin progress\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n2,746\n\n \n\n \n\n \n\n19,441\n\n \n\n \n\n \n\n806\n\n \n\n \n\n \n\n22,993\n\n \n\nAdditions\n\n \n\n \n\n432\n\n \n\n \n\n \n\n3,222\n\n \n\n \n\n \n\n1,676\n\n \n\n \n\n \n\n5,330\n\n \n\nTransfer from construction in progress\n\n \n\n \n\n6\n\n \n\n \n\n \n\n1,264\n\n \n\n \n\n \n\n(1,270\n\n)\n\n \n\n \n\n—\n\n \n\nDisposals\n\n \n\n \n\n(35\n\n)\n\n \n\n \n\n(1,592\n\n)\n\n \n\n \n\n(9\n\n)\n\n \n\n \n\n(1,636\n\n)\n\nOther\n\n \n\n \n\n(112\n\n)\n\n \n\n \n\n(86\n\n)\n\n \n\n \n\n(647\n\n)\n\n \n\n \n\n(845\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n3,037\n\n \n\n \n\n \n\n22,249\n\n \n\n \n\n \n\n556\n\n \n\n \n\n \n\n25,842\n\n \n\nAdditions\n\n \n\n \n\n418\n\n \n\n \n\n \n\n3,232\n\n \n\n \n\n \n\n2,371\n\n \n\n \n\n \n\n6,021\n\n \n\nTransfer from construction in progress\n\n \n\n \n\n11\n\n \n\n \n\n \n\n1,858\n\n \n\n \n\n \n\n(1,869\n\n)\n\n \n\n \n\n—\n\n \n\nDisposals\n\n \n\n \n\n(468\n\n)\n\n \n\n \n\n(1,782\n\n)\n\n \n\n \n\n(3\n\n)\n\n \n\n \n\n(2,253\n\n)\n\nOther\n\n \n\n \n\n6\n\n \n\n \n\n \n\n(61\n\n)\n\n \n\n \n\n(292\n\n)\n\n \n\n \n\n(347\n\n)\n\nBalance as of March 31, 2026\n\n \n\n \n\n3,004\n\n \n\n \n\n \n\n25,496\n\n \n\n \n\n \n\n763\n\n \n\n \n\n \n\n29,263\n\n \n\n \n\n(2)\nAccumulated Depreciation and Impairment Losses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nLeasehold\nimprovements\n\n \n\n \n\nFurniture\nand\nfixtures\n\n \n\n \n\nConstruction\nin progress\n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n877\n\n \n\n \n\n \n\n7,581\n\n \n\n \n\n―\n\n \n\n \n\n8,458\n\n \n\nDepreciation\n\n \n\n \n\n455\n\n \n\n \n\n \n\n3,658\n\n \n\n \n\n―\n\n \n\n \n\n4,113\n\n \n\nDisposals\n\n \n\n \n\n(24\n\n)\n\n \n\n \n\n(1,018\n\n)\n\n \n\n―\n\n \n\n \n\n(1,042\n\n)\n\nImpairment Losses\n\n \n\n \n\n(100\n\n)\n\n \n\n \n\n(80\n\n)\n\n \n\n―\n\n \n\n \n\n(180\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n1,208\n\n \n\n \n\n \n\n10,141\n\n \n\n \n\n―\n\n \n\n \n\n11,349\n\n \n\nDepreciation\n\n \n\n \n\n374\n\n \n\n \n\n \n\n4,344\n\n \n\n \n\n―\n\n \n\n \n\n4,718\n\n \n\nDisposals\n\n \n\n \n\n(462\n\n)\n\n \n\n \n\n(1,198\n\n)\n\n \n\n―\n\n \n\n \n\n(1,660\n\n)\n\nOther\n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n(21\n\n)\n\n \n\n―\n\n \n\n \n\n(23\n\n)\n\nBalance as of March 31, 2026\n\n \n\n \n\n1,118\n\n \n\n \n\n \n\n13,266\n\n \n\n \n\n―\n\n \n\n \n\n14,384\n\n \n\n \n\n(3)\nBook Value\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nLeasehold\nimprovements\n\n \n\n \n\nFurniture\nand\nfixtures\n\n \n\n \n\nConstruction\nin progress\n\n \n\n \n\nTotal\n\n \n\nBalance as of March 31, 2025\n\n \n\n \n\n1,829\n\n \n\n \n\n \n\n12,108\n\n \n\n \n\n \n\n556\n\n \n\n \n\n \n\n14,493\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n1,886\n\n \n\n \n\n \n\n12,230\n\n \n\n \n\n \n\n763\n\n \n\n \n\n \n\n14,879\n\n \n\n \n\nAmounts related to property and equipment under construction are shown as construction in progress. There were no property and equipment with restrictions on ownership or pledged as a collateral. Depreciation is included in operating expenses in the Group’s Consolidated Statements of Profit or Loss. There was no borrowing cost capitalized on property and equipment. For commitments regarding the acquisition of property and equipment, refer to Note 39, Commitments.\n\nF-36\n\n[Table of Contents](#toc_page)\n\n \n\n15. Leases\n\nThe Group has no significant sublease arrangements. For cash flows related to leases, refer to Note 22, Borrowings and Lease Liabilities.\n\nGroup as a lessee\n\n(1)\nNature of the Leases\n\nThe Group enters into lease contracts primarily for the use of rental offices as well as company housing for employees. Some of the lease agreements include extension and termination options, but there are no purchase options, escalation clauses, or significant restrictions on additional borrowings or additional leases imposed by the lease agreement.\n\nThe majority of the extension options are for the same period as the original lease contract, and termination options are for early termination with advance notification of three or six months. These options are exercised as necessary to enable the Group to utilize the underlying asset in its business. In determining the lease term, all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease are considered. Right-of-use assets and lease liabilities are measured reflecting the lease term based on the management’s best estimate about whether an extension or termination option will be exercised at the lease commencement date or when the management reassess the lease terms.\n\n(2)\nLease-related Expenses\n\nLease-related expenses are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nDepreciation expenses on right-of-use assets –Buildings\n\n \n\n \n\n2,541\n\n \n\n \n\n \n\n2,732\n\n \n\n \n\n \n\n3,045\n\n \n\nDepreciation expenses on right-of-use assets – Other\n\n \n\n \n\n64\n\n \n\n \n\n \n\n90\n\n \n\n \n\n \n\n83\n\n \n\nInterest expenses on lease liabilities\n\n \n\n \n\n72\n\n \n\n \n\n \n\n92\n\n \n\n \n\n \n\n195\n\n \n\nExpenses relating to short-term leases\n\n \n\n \n\n208\n\n \n\n \n\n \n\n167\n\n \n\n \n\n \n\n130\n\n \n\nExpenses relating to leases of low-value assets excluding\n   short-term lease expenses\n\n \n\n \n\n186\n\n \n\n \n\n \n\n176\n\n \n\n \n\n \n\n138\n\n \n\nTotal lease-related expenses\n\n \n\n \n\n3,071\n\n \n\n \n\n \n\n3,257\n\n \n\n \n\n \n\n3,591\n\n \n\nTotal cash outflow\n\n \n\n \n\n2,832\n\n \n\n \n\n \n\n3,038\n\n \n\n \n\n \n\n3,207\n\n \n\n \n\nRefer to Note 36, Financial Instruments for the maturity analysis of the financial liabilities including lease liabilities.\n\n(3)\nBook Value of Right-of-use Assets\n\nThe movements of the book value of right-of-use assets are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nBuildings\n\n \n\n \n\nOther\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n8,440\n\n \n\n \n\n \n\n412\n\n \n\n \n\n \n\n8,852\n\n \n\nIncrease due to new lease agreements and\n   remeasurement of lease liabilities\n\n \n\n \n\n9,026\n\n \n\n \n\n \n\n43\n\n \n\n \n\n \n\n9,069\n\n \n\nDecrease due to termination of lease agreements and\n   remeasurement of lease liabilities\n\n \n\n \n\n(207\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(207\n\n)\n\nDepreciation\n\n \n\n \n\n(2,732\n\n)\n\n \n\n \n\n(90\n\n)\n\n \n\n \n\n(2,822\n\n)\n\nOther\n\n \n\n \n\n(61\n\n)\n\n \n\n \n\n(32\n\n)\n\n \n\n \n\n(93\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n14,466\n\n \n\n \n\n \n\n333\n\n \n\n \n\n \n\n14,799\n\n \n\nIncrease due to new lease agreements and\n   remeasurement of lease liabilities\n\n \n\n \n\n577\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n577\n\n \n\nDecrease due to termination of lease agreements and\n   remeasurement of lease liabilities\n\n \n\n \n\n(104\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(104\n\n)\n\nDepreciation\n\n \n\n \n\n(3,045\n\n)\n\n \n\n \n\n(83\n\n)\n\n \n\n \n\n(3,128\n\n)\n\nOther\n\n \n\n \n\n31\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n31\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n11,925\n\n \n\n \n\n \n\n250\n\n \n\n \n\n \n\n12,175\n\n \n\n \n\nF-37\n\n[Table of Contents](#toc_page)\n\n \n\n16. Goodwill and Intangible Assets\n\nChanges in goodwill and intangible assets are as follows:\n\n(1)\nAcquisition Cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nIntangible Assets\n\n \n\n \n\n \n\nGoodwill\n\n \n\n \n\nSoftware\n\n \n\n \n\nSoftware in\nprogress\n\n \n\n \n\nCustomer\nrelationship\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n9,919\n\n \n\n \n\n \n\n110,198\n\n \n\n \n\n \n\n3,582\n\n \n\n \n\n \n\n4,527\n\n \n\n \n\n \n\n118,307\n\n \n\nAcquisitions\n\n \n\n \n\n5,238\n\n \n\n \n\n \n\n4,794\n\n \n\n \n\n \n\n4,082\n\n \n\n \n\n \n\n1,097\n\n \n\n \n\n \n\n9,973\n\n \n\nInternal development\n\n \n\n \n\n—\n\n \n\n \n\n \n\n193\n\n \n\n \n\n \n\n7,373\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,566\n\n \n\nTransfer from software in progress\n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,767\n\n \n\n \n\n \n\n(11,767\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDisposals\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,047\n\n)\n\n \n\n \n\n(79\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,126\n\n)\n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(83\n\n)\n\n \n\n \n\n(187\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(270\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n123,822\n\n \n\n \n\n \n\n3,004\n\n \n\n \n\n \n\n5,624\n\n \n\n \n\n \n\n132,450\n\n \n\nAcquisitions\n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,382\n\n \n\n \n\n \n\n3,809\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,191\n\n \n\nInternal development\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,373\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,373\n\n \n\nTransfer from software in progress\n\n \n\n \n\n—\n\n \n\n \n\n \n\n10,045\n\n \n\n \n\n \n\n(10,045\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDisposals\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(7,282\n\n)\n\n \n\n \n\n(75\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(7,357\n\n)\n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(75\n\n)\n\n \n\n \n\n(38\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(113\n\n)\n\nBalance as of March 31, 2026\n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n130,892\n\n \n\n \n\n \n\n6,028\n\n \n\n \n\n \n\n5,624\n\n \n\n \n\n \n\n142,544\n\n \n\n \n\n(2)\nAccumulated Amortization and Impairment Losses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nIntangible Assets\n\n \n\n \n\n \n\nGoodwill\n\n \n\n \n\nSoftware\n\n \n\n \n\nSoftware in\nprogress\n\n \n\n \n\nCustomer\nrelationship\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n—\n\n \n\n \n\n \n\n53,633\n\n \n\n \n\n \n\n224\n\n \n\n \n\n \n\n2,760\n\n \n\n \n\n \n\n56,617\n\n \n\nAmortization\n\n \n\n \n\n—\n\n \n\n \n\n \n\n12,733\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n438\n\n \n\n \n\n \n\n13,171\n\n \n\nDisposals\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,024\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,024\n\n)\n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n14\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n14\n\n \n\nBalance as of March 31, 2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n63,356\n\n \n\n \n\n \n\n224\n\n \n\n \n\n \n\n3,198\n\n \n\n \n\n \n\n66,778\n\n \n\nAmortization\n\n \n\n \n\n—\n\n \n\n \n\n \n\n15,430\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n482\n\n \n\n \n\n \n\n15,912\n\n \n\nDisposals\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(6,612\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(6,612\n\n)\n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n—\n\n \n\n \n\n \n\n72,174\n\n \n\n \n\n \n\n224\n\n \n\n \n\n \n\n3,680\n\n \n\n \n\n \n\n76,078\n\n \n\n \n\n(3)\nBook Value\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nIntangible Assets\n\n \n\n \n\n \n\nGoodwill\n\n \n\n \n\nSoftware\n\n \n\n \n\nSoftware in\nprogress\n\n \n\n \n\nCustomer\nrelationship\n\n \n\n \n\nTotal\n\n \n\nBalance as of March 31, 2025\n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n60,466\n\n \n\n \n\n \n\n2,780\n\n \n\n \n\n \n\n2,426\n\n \n\n \n\n \n\n65,672\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n58,718\n\n \n\n \n\n \n\n5,804\n\n \n\n \n\n \n\n1,944\n\n \n\n \n\n \n\n66,466\n\n \n\n \n\nThere were no intangible assets with restrictions on ownership or pledged as a collateral. Amortization of intangible assets is included in operating expenses in the Group’s Consolidated Statements of Profit or Loss. For commitments regarding the acquisition of intangible assets, refer to Note 39, Commitments.\n\nF-38\n\n[Table of Contents](#toc_page)\n\n \n\n17. Impairment of Goodwill\n\n(1)\nGoodwill Allocated to CGU or CGU group\n\nAnnual impairment testing for goodwill was performed as of January 1, 2025 and 2026 for the years ended March 31, 2025 and 2026, respectively.\n\nGoodwill resulting from the acquisition of PayPay Card Corporation was allocated to one CGU, PayPay Card CGU, which is included in the Payment segment, for impairment testing purposes. PayPay Card CGU includes PayPay Card Corporation acquired on October 1, 2022, which is retrospectively consolidated as if such transaction was executed by the Group prior to the transfer or April 1, 2021. On October 1, 2022, we acquired all of the shares of PayPay Card Corporation from Yahoo Japan Corporation (currently LY Corporation). Immediately prior to the acquisition, Yahoo Japan Corporation transferred its credit card merchant acquiring business to PayPay Card Corporation. The acquisition of PayPay Card Corporation was accounted for as a transaction under common control since we, Yahoo Japan Corporation and PayPay Card Corporation are all controlled by SBG.\n\nThe carrying amounts of goodwill allocated to the CGU or CGU group for impairment testing are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayPay Card CGU\n\n \n\n \n\n9,176\n\n \n\n \n\n \n\n9,176\n\n \n\nOther CGUs or CGU groups\n\n \n\n \n\n5,981\n\n \n\n \n\n \n\n5,981\n\n \n\nTotal\n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n15,157\n\n \n\n \n\n(2)\nMeasurement Method for Recoverable Amounts of Goodwill\n\nPayPay Card CGU\n\nThe recoverable amount of the CGU was determined based on a value in use calculation using cash flow projections and dividend projections for a period of up to five years from financial budgets approved by the Group’s management.\n\nCash flow projections and dividend projections take into account past experience and represent management’s best estimates.\n\nThe main assumptions used in the value in use calculation include the pre-tax discount rate, terminal growth rate and expected future dividends. These assumptions can be subject to significant adjustments due to factors such as marketing budgets and market conditions, such as competitors. Dividends beyond the planning periods were extrapolated using terminal growth rates. To estimate the pre-tax discount rate that reflects the time value of money and the risks specific to the CGU, the Group has assumed a risk-free rate equal to one-month average market yield on 10-year Japanese government bonds at the date of performing the annual impairment test. The Group also incorporates risk premiums, such as company specific premium including size risk premium and equity premium, in the pre-tax discount rate. The terminal growth rates are based on the long-term average inflation rates of Japan, which take into consideration external macroeconomic sources of data.\n\nThe significant assumptions used in the value in use calculations are as follows:\n\n \n\n \n\n \n\nFor the year ended\n March 31, 2025\n\n \n\n \n\n \n\nPre-tax\ndiscount rate\n\n \n\n \n\nTerminal\ngrowth rate\n\n \n\nPayPay Card CGU\n\n \n\n \n\n10.2\n\n%\n\n \n\n \n\n1.5\n\n%\n\n \n\n \n\n \n\nFor the year ended\n March 31, 2026\n\n \n\n \n\n \n\nPre-tax\ndiscount rate\n\n \n\n \n\nTerminal\ngrowth rate\n\n \n\nPayPay Card CGU\n\n \n\n \n\n9.8\n\n%\n\n \n\n \n\n1.4\n\n%\n\n \n\nNo impairment losses were recognized for goodwill for the years ended March 31, 2025 and 2026, as a result of the annual impairment testing.\n\n(3)\nSensitivity to Changes in Assumptions\n\nThe Group conducted an analysis of the sensitivity of the impairment test to changes in the significant assumptions used\n\nF-39\n\n[Table of Contents](#toc_page)\n\n \n\nto determine the recoverable amount for the CGU or CGU group.\n\nFor all the CGUs or CGU groups, in the opinion of the Group’s management, the recoverable amount has considerably exceeded the carrying amount of the CGU or CGU group, and the outcomes of the impairment tests are not sensitive to cause material changes in any of the assumptions underlying the cash flow projections, including discount rates, for the periods presented for the CGU or CGU group.\n\n18. Income Tax\n\n(1)\nDeferred Tax\n\nThe major movements of deferred tax assets and liabilities are as follows:\n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nBalance as of\nApril 1, 2024\n\n \n\n \n\nAmounts\nrecorded\nunder profit\nor loss\n\n \n\n \n\nAmounts\nrecognized\nunder other\ncomprehensive\nloss\n\n \n\n \n\nOther\n\n \n\n \n\nBalance as of\nMarch 31, 2025\n\n \n\nDeferred tax assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating loss carryforwards\n\n \n\n \n\n4,846\n\n \n\n \n\n \n\n(2,052\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,794\n\n \n\nLoss allowance\n\n \n\n \n\n15,378\n\n \n\n \n\n \n\n6,191\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n21,569\n\n \n\nImpairment\n\n \n\n \n\n2,184\n\n \n\n \n\n \n\n(819\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,365\n\n \n\nAssets revaluation of acquired business\n\n \n\n \n\n9,258\n\n \n\n \n\n \n\n(2,647\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,611\n\n \n\nLease liabilities\n\n \n\n \n\n2,456\n\n \n\n \n\n \n\n2,789\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,245\n\n \n\nAccrued liabilities\n\n \n\n \n\n1,000\n\n \n\n \n\n \n\n(567\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n433\n\n \n\nDeposits\n\n \n\n \n\n65\n\n \n\n \n\n \n\n12,668\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n12,733\n\n \n\nSecurities\n\n \n\n \n\n1,098\n\n \n\n \n\n \n\n184\n\n \n\n \n\n \n\n1,501\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,783\n\n \n\nAsset retirement obligation\n\n \n\n \n\n564\n\n \n\n \n\n \n\n494\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,058\n\n \n\nLoans and advances to customers\n\n \n\n \n\n1,872\n\n \n\n \n\n \n\n1,004\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,876\n\n \n\nOther\n\n \n\n \n\n1,495\n\n \n\n \n\n \n\n822\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n10\n\n \n\n \n\n \n\n2,327\n\n \n\nSubtotal\n\n \n\n \n\n40,216\n\n \n\n \n\n \n\n18,067\n\n \n\n \n\n \n\n1,501\n\n \n\n \n\n \n\n10\n\n \n\n \n\n \n\n59,794\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCapitalized card acquisition cost\n\n \n\n \n\n1,359\n\n \n\n \n\n \n\n(492\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n867\n\n \n\nRight-of-use assets\n\n \n\n \n\n2,841\n\n \n\n \n\n \n\n1,961\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,802\n\n \n\nLease receivables\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,422\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,422\n\n \n\nAccounts receivable\n\n \n\n \n\n540\n\n \n\n \n\n \n\n1,472\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,012\n\n \n\nOther\n\n \n\n \n\n1,313\n\n \n\n \n\n \n\n(570\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n933\n\n \n\n \n\n \n\n1,676\n\n \n\nSubtotal\n\n \n\n \n\n6,053\n\n \n\n \n\n \n\n3,793\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n933\n\n \n\n \n\n \n\n10,779\n\n \n\nDeferred tax, net\n\n \n\n \n\n34,163\n\n \n\n \n\n \n\n14,274\n\n \n\n \n\n \n\n1,501\n\n \n\n \n\n \n\n(923\n\n)\n\n \n\n \n\n49,015\n\n \n\n \n\nThe amounts of deferred tax assets and deferred tax liabilities on the Consolidated Statements of Financial Position are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\nDeferred tax assets\n\n \n\n \n\n49,392\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n377\n\n \n\nDeferred tax, net\n\n \n\n \n\n49,015\n\n \n\n \n\nF-40\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nBalance as of\nApril 1, 2025\n\n \n\n \n\nAmounts\nrecorded\nunder profit\nor loss\n\n \n\n \n\nAmounts\nrecognized\nunder other\ncomprehensive\nloss\n\n \n\n \n\nOther\n\n \n\n \n\nBalance as of\nMarch 31, 2026\n\n \n\nDeferred tax assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating loss carryforwards\n\n \n\n \n\n2,794\n\n \n\n \n\n \n\n29,196\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n31,990\n\n \n\nLoss allowance\n\n \n\n \n\n21,569\n\n \n\n \n\n \n\n(325\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n21,244\n\n \n\nImpairment\n\n \n\n \n\n1,365\n\n \n\n \n\n \n\n(488\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n877\n\n \n\nAssets revaluation of acquired business\n\n \n\n \n\n6,611\n\n \n\n \n\n \n\n(2,752\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,859\n\n \n\nLease liabilities\n\n \n\n \n\n5,245\n\n \n\n \n\n \n\n(2,430\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,815\n\n \n\nAccrued liabilities\n\n \n\n \n\n433\n\n \n\n \n\n \n\n2,624\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n0\n\n \n\n \n\n \n\n3,057\n\n \n\nDeposits\n\n \n\n \n\n12,733\n\n \n\n \n\n \n\n19,593\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n32,326\n\n \n\nSecurities\n\n \n\n \n\n2,783\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,751\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,534\n\n \n\nAsset retirement obligation\n\n \n\n \n\n1,058\n\n \n\n \n\n \n\n(39\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,019\n\n \n\nLoans and advances to customers\n\n \n\n \n\n2,876\n\n \n\n \n\n \n\n1,432\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,308\n\n \n\nPayPay Trademark\n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,142\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,142\n\n \n\nOther\n\n \n\n \n\n2,327\n\n \n\n \n\n \n\n1,749\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(53\n\n)\n\n \n\n \n\n4,023\n\n \n\nSubtotal\n\n \n\n \n\n59,794\n\n \n\n \n\n \n\n53,702\n\n \n\n \n\n \n\n1,751\n\n \n\n \n\n \n\n(53\n\n)\n\n \n\n \n\n115,194\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCapitalized card acquisition cost\n\n \n\n \n\n867\n\n \n\n \n\n \n\n(453\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n414\n\n \n\nRight-of-use assets\n\n \n\n \n\n4,802\n\n \n\n \n\n \n\n(919\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,883\n\n \n\nLease receivables\n\n \n\n \n\n1,422\n\n \n\n \n\n \n\n(1,422\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nAccounts receivable\n\n \n\n \n\n2,012\n\n \n\n \n\n \n\n194\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,206\n\n \n\nOther\n\n \n\n \n\n1,676\n\n \n\n \n\n \n\n(54\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,622\n\n \n\nSubtotal\n\n \n\n \n\n10,779\n\n \n\n \n\n \n\n(2,654\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,125\n\n \n\nDeferred tax, net\n\n \n\n \n\n49,015\n\n \n\n \n\n \n\n56,356\n\n \n\n \n\n \n\n1,751\n\n \n\n \n\n \n\n(53\n\n)\n\n \n\n \n\n107,069\n\n \n\n \n\nThe amounts of deferred tax assets and deferred tax liabilities on the Consolidated Statements of Financial Position are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\nDeferred tax assets\n\n \n\n \n\n107,275\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n206\n\n \n\nDeferred tax, net\n\n \n\n \n\n107,069\n\n \n\n \n\nDeferred tax assets which belong to each company in the Group that recorded losses as of March 31, 2025 were 12,772 million yen, while there were no such deferred tax assets as of March 31, 2026. The Group recognizes deferred tax assets to the extent that it is probable that future taxable profit will be available.\n\n(2)\nDeductible Temporary Differences and Carryforward of Unused Tax Losses for Which No Deferred Tax Asset is Recognized in the Group’s Consolidated Statements of Financial Position\n\nDeductible temporary differences and carryforward of unused tax losses for which deferred tax assets are not recognized are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nDeductible temporary differences\n\n \n\n \n\n135,389\n\n \n\n \n\n \n\n59,507\n\n \n\nCarryforward of unused tax losses\n\n \n\n \n\n141,868\n\n \n\n \n\n \n\n20,350\n\n \n\nTotal\n\n \n\n \n\n277,257\n\n \n\n \n\n \n\n79,857\n\n \n\n \n\nF-41\n\n[Table of Contents](#toc_page)\n\n \n\nBreakdown of carryforward of unused tax losses by expiry date for which deferred tax assets are not recognized are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nWithin 1 year\n\n \n\n \n\n315\n\n \n\n \n\n \n\n1,529\n\n \n\nBetween 1 year and 2 years\n\n \n\n \n\n887\n\n \n\n \n\n \n\n—\n\n \n\nBetween 2 years and 3 years\n\n \n\n \n\n1,529\n\n \n\n \n\n \n\n1,559\n\n \n\nBetween 3 years and 4 years\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,882\n\n \n\nBetween 4 years and 5 years\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,829\n\n \n\n5 years and after\n\n \n\n \n\n139,137\n\n \n\n \n\n \n\n13,551\n\n \n\nTotal\n\n \n\n \n\n141,868\n\n \n\n \n\n \n\n20,350\n\n \n\n \n\nThe Company and certain of its domestic subsidiaries apply the Japanese Group Relief System effective from the year ended March 31, 2024. However, the deductible temporary differences and carryforward of unused tax losses for which deferred tax assets are not recognized that are presented in the above table do not include the amounts related to local taxes (inhabitant tax and enterprise tax), which are not subject to the Japanese Group Relief System.\n\nAs of March 31, 2025 and 2026, the amounts of deductible temporary differences related to local taxes (inhabitant tax and enterprise tax) were 103,230 million yen and 20,194 million yen, and the amounts of carryforward of unused tax losses were 142,730 million yen and 23,268 million yen, respectively,\n\n(3)\nTaxable Temporary Differences Relating to Investments in Subsidiaries for which Deferred Tax Liabilities have not been Recognized\n\nThere were no material taxable temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognized as of March 31, 2025 and 2026.\n\n(4)\nIncome Tax Expense (Benefit)\n\nThe components of income tax expense (benefit) are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nCurrent tax expense (1)\n\n \n\n \n\n5,306\n\n \n\n \n\n \n\n10,078\n\n \n\n \n\n \n\n18,491\n\n \n\nDeferred tax expense (benefit)\n\n \n\n \n\n(4,465\n\n)\n\n \n\n \n\n(14,274\n\n)\n\n \n\n \n\n(56,356\n\n)\n\nChanges related to origination and reversal\n   of temporary differences (2)(3)\n\n \n\n \n\n(4,628\n\n)\n\n \n\n \n\n(13,095\n\n)\n\n \n\n \n\n(57,017\n\n)\n\nChanges in the tax rate (4)\n\n \n\n \n\n163\n\n \n\n \n\n \n\n(1,179\n\n)\n\n \n\n \n\n661\n\n \n\nTotal\n\n \n\n \n\n841\n\n \n\n \n\n \n\n(4,196\n\n)\n\n \n\n \n\n(37,865\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nIncome tax recognized directly in equity\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(460\n\n)\n\nIncome tax recognized in other comprehensive income\n\n \n\n \n\n(521\n\n)\n\n \n\n \n\n(1,501\n\n)\n\n \n\n \n\n(1,751\n\n)\n\n \n\n(1)\nFor the years ended March 31, 2024, 2025 and 2026, current tax expense includes benefits arising from tax losses and temporary differences of prior periods that had not previously been recognized. As a result, current tax expense decreased by nil, 37,159 million yen and 32,504 million yen, respectively.\n\n(2)\nFor the year ended March 31, 2026, the Company reassessed the recoverability of its deferred tax assets in light of projections of future taxable profit. As a result, the Company recognized additional deferred tax assets relating to deductible temporary differences and carryforward of unused tax losses that had not been previously recognized. The basis for this conclusion is as follows:\n\n•\nIt has become probable that taxable profit will be generated for two consecutive fiscal years at the end of the current fiscal year.\n\n•\nThe unused tax losses resulted from identifiable causes that are unlikely to recur in the future.\n\n•\nBased on a critical assessment of historical performance and approved business plans for the next three years, the Company concluded that sufficient taxable profit is expected to be generated during the periods in which the carryforward of unused tax losses can be utilized.\n \n\nFor the years ended March 31, 2025 and 2026, deferred tax expense includes benefits arising from the recognition of deferred tax assets related to tax losses and temporary differences of prior periods following the reassessment of their recoverability. As a result, deferred tax expense decreased by 12,737 million yen and 57,536 million yen, respectively. No such benefits were recognized for the year ended March 31, 2024, as the recognition criteria for deferred tax assets were not met.\n\n(3)\nFor details, refer to the changes in deferred tax assets and liabilities at the section (1) above.\n\nF-42\n\n[Table of Contents](#toc_page)\n\n \n\n(4)\nAmendments to the Japanese tax regulations were enacted into law on March 31, 2025. As a result of these amendments, the Japanese statutory effective tax rate is scheduled to be increased from 31.46% to approximately 32.34% effective from the year ending March 31, 2027. The Group measured deferred tax assets and deferred tax liabilities at the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.\n\n(5)\nReconciliation of the Statutory Effective Tax Rate and the Actual Effective Tax Rate\n\nThe reconciliation of the statutory effective tax rate and the actual effective tax rate are as follows:\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nJapanese statutory effective tax rate (1)\n\n \n\n \n\n31.46\n\n%\n\n \n\n \n\n31.46\n\n%\n\n \n\n \n\n31.46\n\n%\n\nPermanent non-deductible items\n\n \n\n \n\n877.15\n\n \n\n \n\n \n\n(0.46\n\n)\n\n \n\n \n\n(0.05\n\n)\n\nAssessment of the recoverability of deferred\n   tax assets\n\n \n\n \n\n10,522.38\n\n \n\n \n\n \n\n(41.39\n\n)\n\n \n\n \n\n(79.80\n\n)\n\nAdditional taxable profit (2)\n\n \n\n \n\n341.31\n\n \n\n \n\n \n\n1.23\n\n \n\n \n\n \n\n0.46\n\n \n\nChange in tax rate (3)\n\n \n\n \n\n1,441.10\n\n \n\n \n\n \n\n(3.37\n\n)\n\n \n\n \n\n0.83\n\n \n\nTax credits\n\n \n\n \n\n(2,773.17\n\n)\n\n \n\n \n\n(0.92\n\n)\n\n \n\n \n\n(0.65\n\n)\n\nShare of loss of investments accounted\n   for using the equity method\n\n \n\n \n\n—\n\n \n\n \n\n0.49\n\n \n\n \n\n \n\n0.05\n\n \n\nTax rate difference between subsidiaries\n\n \n\n \n\n(989.88\n\n)\n\n \n\n \n\n0.58\n\n \n\n \n\n \n\n0.30\n\n \n\nOther\n\n \n\n \n\n(2,004.09\n\n)\n\n \n\n \n\n0.38\n\n \n\n \n\n \n\n0.04\n\n \n\nActual effective tax rate\n\n \n\n \n\n7,446.26\n\n%\n\n \n\n \n\n(12.00\n\n)%\n\n \n\n \n\n(47.36\n\n)%\n\n \n\n(1)\nJapanese statutory effective tax rate is calculated based on corporate tax, inhabitant tax and enterprise tax applicable to the Group.\n\n(2)\nFor added value component of the enterprise tax, there are certain additional taxable items such as employee benefit expenses that are included in taxable profit and loss carryforward cannot be utilized.\n\n(3)\nDue to tax reform enacted during the year ended March 31, 2024, a certain subsidiary will apply the size-based enterprise tax from the year ending March 31, 2027. Amendments to the Japanese tax regulations were enacted into law on March 31, 2025. As a result of these amendments, the Japanese statutory effective tax rate is scheduled to be increased from 31.46% to approximately 32.34% effective from the year ending March 31, 2027. The Group measured deferred tax assets and deferred tax liabilities at the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.\n\n19. Other Assets\n\nOther assets are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nCustomer incentives (1)\n\n \n\n \n\n20,504\n\n \n\n \n\n \n\n17,194\n\n \n\nIncremental costs of obtaining a contract (2)\n\n \n\n \n\n8,882\n\n \n\n \n\n \n\n12,077\n\n \n\nPrepaid expenses\n\n \n\n \n\n6,497\n\n \n\n \n\n \n\n6,905\n\n \n\nIncome tax receivables\n\n \n\n \n\n328\n\n \n\n \n\n \n\n604\n\n \n\nOther\n\n \n\n \n\n790\n\n \n\n \n\n \n\n931\n\n \n\nTotal\n\n \n\n \n\n37,001\n\n \n\n \n\n \n\n37,711\n\n \n\n \n\n(1)\nThe Group has consideration payable to a customer for PayPay Points for cardholders. PayPay Points for cardholders are capitalized based on recoverability and those that are not recoverable are expensed as incurred. Capitalized points are amortized on a straight-line basis over the period of ten years from which the related revenue is expected to be recognized when cardholders use their credit cards.\n\nThe amortization expenses recorded as a reduction of revenue for the years ended March 31, 2025 and 2026 were 4,464 million yen, and 4,473 million yen, respectively.\n\n(2)\nRefer to Note 30, Revenue for further details of incremental costs of obtaining a contract.\n\nF-43\n\n[Table of Contents](#toc_page)\n\n \n\n20. Deposits\n\nDeposits are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Users' deposits (1)(2)\n\n \n\n \n\n391,595\n\n \n\n \n\n \n\n451,263\n\n \n\nSubtotal\n\n \n\n \n\n391,595\n\n \n\n \n\n \n\n451,263\n\n \n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits from customers in the banking business\n\n \n\n \n\n \n\n \n\n \n\n \n\n   Demand deposits\n\n \n\n \n\n1,688,643\n\n \n\n \n\n \n\n2,090,486\n\n \n\n   Time deposits\n\n \n\n \n\n152,393\n\n \n\n \n\n \n\n178,594\n\n \n\nDeposits from customers in the securities intermediary business\n\n \n\n \n\n142,236\n\n \n\n \n\n \n\n221,374\n\n \n\nOther\n\n \n\n \n\n11,072\n\n \n\n \n\n \n\n10,778\n\n \n\nSubtotal\n\n \n\n \n\n1,994,344\n\n \n\n \n\n \n\n2,501,232\n\n \n\nTotal\n\n \n\n \n\n2,385,939\n\n \n\n \n\n \n\n2,952,495\n\n \n\n \n\n(1)\nPayPay Users' deposits are PayPay Balance and Other Items held by PayPay Users in PayPay Settlement Services. For further details of PayPay Balance and Other Items, refer to financial instruments section within Note 3, Material Accounting Policies.\n\n(2)\nPayPay Users' deposits include PayPay Money which PayPay Users can withdraw at users' discretion. The balance of PayPay Money amounts to 170,030 million yen and 212,179 million yen as of March 31, 2025 and 2026, respectively.\n\n21. Accounts Payable\n\nAccounts payable are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nSettlement payable (1)\n\n \n\n \n\n902,682\n\n \n\n \n\n \n\n1,069,525\n\n \n\nCredit card payable (1)\n\n \n\n \n\n27,913\n\n \n\n \n\n \n\n30,867\n\n \n\nOther payables (1)\n\n \n\n \n\n18,802\n\n \n\n \n\n \n\n21,946\n\n \n\nTotal\n\n \n\n \n\n949,397\n\n \n\n \n\n \n\n1,122,338\n\n \n\n \n\n(1)\nThese accounts payable are classified as financial liabilities measured at amortized cost.\n\n22. Borrowings and Lease Liabilities\n\n(1)\nComponents of Borrowings and Lease Liabilities\n\nComponents of borrowings and lease liabilities are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nBorrowings\n\n \n\n \n\n \n\n \n\n \n\n \n\nPayment:\n\n \n\n \n\n \n\n \n\n \n\n \n\nLoan payables (1)\n\n \n\n \n\n213,050\n\n \n\n \n\n \n\n280,825\n\n \n\nCommercial papers (2)\n\n \n\n \n\n84,000\n\n \n\n \n\n \n\n73,000\n\n \n\nSubtotal\n\n \n\n \n\n297,050\n\n \n\n \n\n \n\n353,825\n\n \n\nFinancial service:\n\n \n\n \n\n \n\n \n\n \n\n \n\nLoan payables (1)\n\n \n\n \n\n102,528\n\n \n\n \n\n \n\n211,131\n\n \n\nSubtotal\n\n \n\n \n\n102,528\n\n \n\n \n\n \n\n211,131\n\n \n\nTotal\n\n \n\n \n\n399,578\n\n \n\n \n\n \n\n564,956\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLease liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nPayment\n\n \n\n \n\n11,121\n\n \n\n \n\n \n\n9,096\n\n \n\nFinancial service\n\n \n\n \n\n976\n\n \n\n \n\n \n\n453\n\n \n\nTotal\n\n \n\n \n\n12,097\n\n \n\n \n\n \n\n9,549\n\n \n\n \n\n(1)\nThe weighted average interest rates of the outstanding loan payables as of March 31, 2025 and 2026 were 0.55% and 0.80%, respectively.\n\n(2)\nThe weighted average interest rates of the outstanding commercial papers as of March 31, 2025 and 2026 were 0.59% and 0.95%, respectively.\n\nF-44\n\n[Table of Contents](#toc_page)\n\n \n\nSignificant financial covenants on the loan payables of PayPay Card Corporation\n\nPayPay Card Corporation is subject to the following financial covenants with respect to a portion of its loan payables from financial institutions and was in compliance with such covenants for the years ended March 31, 2025 and 2026. All financial covenants are determined based on PayPay Card Corporation stand-alone financial information.\n\n(i)\nNet assets as of each fiscal year-end should be equal to or greater than 75% of the net assets as of the end of the previous fiscal year or March 31, 2021, whichever is higher.\n\n(ii)\nShould not incur operating losses or ordinary losses for two consecutive fiscal years.\n\n(iii)\nRequired to remain a subsidiary of LY Corporation.\n\n(iv)\nMust maintain a minimum issuer rating of BBB- by a rating agency, and in absence of such rating, LY Corporation must maintain a minimum issuer rating of BBB+.\n\n(2)\nChanges in Liabilities Arising from Financing Activities\n\nThe table below details changes in the Group’s liabilities arising from financing activities, including both cash flows and non-cash transactions. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified as cash flows from financing activities in the Group’s Consolidated Statements of Cash Flows.\n\n \n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nNon-cash transactions\n\n \n\n \n\n \n\n \n\nCarrying amount\nas of April 1,\n2023\n\n \n\nCash flows\n\n \n\nAddition (1)\n\n \n\nDecrease\n\n \n\nCarrying amount\nas of March 31,\n2024\n\nLoan payables\n\n \n\n361,540\n\n \n\n129,678\n\n \n\n—\n\n \n\n—\n\n \n\n491,218\n\nCommercial papers\n\n \n\n133,000\n\n \n\n(21,000)\n\n \n\n—\n\n \n\n—\n\n \n\n112,000\n\nLease liabilities\n\n \n\n8,698\n\n \n\n(2,409)\n\n \n\n1,837\n\n \n\n(392)\n\n \n\n7,734\n\nTotal\n\n \n\n503,238\n\n \n\n106,269\n\n \n\n1,837\n\n \n\n(392)\n\n \n\n610,952\n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nNon-cash transactions\n\n \n\n \n\n \n\n \n\nCarrying amount\nas of April 1,\n2024\n\n \n\nCash flows\n\n \n\nAddition (1)\n\n \n\nDecrease\n\n \n\nCarrying amount\nas of March 31,\n2025\n\nLoan payables\n\n \n\n491,218\n\n \n\n(176,298)\n\n \n\n658\n\n \n\n—\n\n \n\n315,578\n\nCommercial papers\n\n \n\n112,000\n\n \n\n(28,000)\n\n \n\n—\n\n \n\n—\n\n \n\n84,000\n\nLease liabilities\n\n \n\n7,734\n\n \n\n(2,820)\n\n \n\n7,204\n\n \n\n(21)\n\n \n\n12,097\n\nTotal\n\n \n\n610,952\n\n \n\n(207,118)\n\n \n\n7,862\n\n \n\n(21)\n\n \n\n411,675\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nNon-cash transactions\n\n \n\n \n\n \n\n \n\nCarrying amount\nas of April 1,\n2025\n\n \n\nCash flows\n\n \n\nAddition\n\n \n\nDecrease\n\n \n\nCarrying amount\nas of March 31,\n2026\n\nLoan payables\n\n \n\n315,578\n\n \n\n176,378\n\n \n\n—\n\n \n\n—\n\n \n\n491,956\n\nCommercial papers\n\n \n\n84,000\n\n \n\n(11,000)\n\n \n\n—\n\n \n\n—\n\n \n\n73,000\n\nLease liabilities\n\n \n\n12,097\n\n \n\n(2,744)\n\n \n\n307\n\n \n\n(111)\n\n \n\n9,549\n\nTotal\n\n \n\n411,675\n\n \n\n162,634\n\n \n\n307\n\n \n\n(111)\n\n \n\n574,505\n\n(1) Addition of lease liabilities and loan payables mainly resulted from new contracts.\n\n \n\n \n\nF-45\n\n[Table of Contents](#toc_page)\n\n \n\n \n\n23. Other Financial Liabilities\n\nOther financial liabilities are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nAdvances received (1)\n\n \n\n \n\n12,016\n\n \n\n \n\n \n\n22,158\n\n \n\nSuspense receipt (1)(2)\n\n \n\n \n\n12,826\n\n \n\n \n\n \n\n14,699\n\n \n\nAccrued expenses\n\n \n\n \n\n6,840\n\n \n\n \n\n \n\n7,128\n\n \n\nTrade date accrual (1)\n\n \n\n \n\n1,336\n\n \n\n \n\n \n\n2,440\n\n \n\nDerivative liabilities (3)\n\n \n\n \n\n1,186\n\n \n\n \n\n \n\n1,368\n\n \n\nOther\n\n \n\n \n\n3\n\n \n\n \n\n \n\n323\n\n \n\nTotal\n\n \n\n \n\n34,207\n\n \n\n \n\n \n\n48,116\n\n \n\n \n\n(1)\nThese liabilities are classified as financial liabilities measured at amortized cost.\n\n(2)\nSuspense receipt primarily consists of PayPay Points Code, which can be used by PayPay Users to fund their PayPay Balance and Other Items.\n\n(3)\nThese liabilities are classified as financial liabilities measured at FVTPL.\n\n24. Provisions\n\nChanges in provisions are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nLoss allowance for\nundrawn loan\ncommitments\n\n \n\n \n\nAsset\nretirement\nobligations\n\n \n\n \n\nOther\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n5,166\n\n \n\n \n\n \n\n2,102\n\n \n\n \n\n \n\n27\n\n \n\n \n\n \n\n7,295\n\n \n\nChanges in ECL\n\n \n\n \n\n(1,836\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,836\n\n)\n\nAdditions\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,841\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,841\n\n \n\nUnwinding of discount\n\n \n\n \n\n—\n\n \n\n \n\n \n\n3\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3\n\n \n\nUtilized\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(83\n\n)\n\n \n\n \n\n(27\n\n)\n\n \n\n \n\n(110\n\n)\n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(152\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(152\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n3,330\n\n \n\n \n\n \n\n3,711\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,041\n\n \n\nChanges in ECL\n\n \n\n \n\n22\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n22\n\n \n\nAdditions\n\n \n\n \n\n—\n\n \n\n \n\n \n\n19\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n20\n\n \n\nUnwinding of discount\n\n \n\n \n\n—\n\n \n\n \n\n \n\n22\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n22\n\n \n\nUtilized\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(282\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(282\n\n)\n\nOther\n\n \n\n \n\n—\n\n \n\n \n\n \n\n580\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n580\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n3,352\n\n \n\n \n\n \n\n4,050\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n7,403\n\n \n\n \n\nLoss allowance for undrawn loan commitments\n\nThe lending commitments of the Group mainly consist of the shopping limits and cashing limits that are granted to customers in the Group's credit card business.\n\nThe total amount of the undrawn balances as of year end is as follows:\n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nUndrawn loan commitments\n\n \n\n9,954,633\n\n \n\n10,622,322\n\nThe undrawn balance of the shopping limit and cash advance limit does not indicate that the total amount of the balance will be used in the future because customers may use the credit card up to the limit at any time and do not always use the full amount of the limit and the Group may change the limit at its discretion. Also, since any amounts drawn by customers are repayable on demand, the Company considers the undrawn lending commitments are due within one year.\n\nAsset retirement obligations\n\nThe Group recognizes asset retirement obligations for restoring leased properties to their original conditions upon termination of the lease contract based on contracts and agreements. The asset retirement obligations are measured using a discounted cash flow model at a pre-tax discount rate which can be reasonably estimated. The estimated future cash flow represents the management’s best estimates of the expenses expected to be incurred for restoring an asset to its original condition specified in the lease contracts.\n\nF-46\n\n[Table of Contents](#toc_page)\n\n \n\nThese expenses are expected to be paid after the estimated period of use. However, the amounts will be affected by future business plans including extension or termination of lease contracts.\n\n25. Other Liabilities\n\nOther liabilities are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nConsumption tax payables\n\n \n\n \n\n9,118\n\n \n\n \n\n \n\n8,474\n\n \n\nAccrued bonuses\n\n \n\n \n\n4,647\n\n \n\n \n\n \n\n6,327\n\n \n\nAccrued paid leave\n\n \n\n \n\n4,105\n\n \n\n \n\n \n\n4,968\n\n \n\nContract liabilities\n\n \n\n \n\n2,900\n\n \n\n \n\n \n\n4,295\n\n \n\nOther tax payables\n\n \n\n \n\n819\n\n \n\n \n\n \n\n1,484\n\n \n\nOther\n\n \n\n \n\n1,672\n\n \n\n \n\n \n\n1,567\n\n \n\nTotal\n\n \n\n \n\n23,261\n\n \n\n \n\n \n\n27,115\n\n \n\n \n\n26. Employee Benefits\n\n(1)\nDefined Contribution Plan\n\nThe amounts recognized as operating expenses in the Group’s Consolidated Statements of Profit or Loss in respect of the defined contribution plans, including publicly provided plans, are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nContribution\n\n \n\n \n\n3,459\n\n \n\n \n\n \n\n3,910\n\n \n\n \n\n \n\n4,266\n\n \n\n \n\n(2)\nEmployee Benefit Expenses\n\nEmployee benefit expenses included in operating expenses in the Group’s Consolidated Statements of Profit or Loss are 37,764 million yen, 41,483 million yen and 47,641 million yen for the years ended March 31, 2024, 2025 and 2026, respectively. For further details, refer to Note 33, Operating Expenses.\n\nEmployee benefit expenses include salaries, bonuses, statutory welfare expenses. Refer to Note 38, Related Party Transactions for details of compensation of key management personnel.\n\nF-47\n\n[Table of Contents](#toc_page)\n\n \n\n27. Classification of Current and Non-current\n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nCollection or settlement period\n\n \n\n \n\n \n\n \n\n \n\n \n\n12 months or less\n\n \n\n \n\nOver 12 months\n\n \n\n \n\nTotal\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n369,811\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n369,811\n\n \n\nGuarantee deposits\n\n \n\n \n\n244,229\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n244,229\n\n \n\nCall loans\n\n \n\n \n\n63,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n63,000\n\n \n\nAccounts receivable\n\n \n\n \n\n141,054\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n141,054\n\n \n\nLoans and advances to customers\n\n \n\n \n\n794,538\n\n \n\n \n\n \n\n1,133,069\n\n \n\n \n\n \n\n1,927,607\n\n \n\nSecurities\n\n \n\n \n\n225,867\n\n \n\n \n\n \n\n849,881\n\n \n\n \n\n \n\n1,075,748\n\n \n\nOther financial assets\n\n \n\n \n\n19,372\n\n \n\n \n\n \n\n3,758\n\n \n\n \n\n \n\n23,130\n\n \n\nProperty and equipment\n\n \n\n \n\n—\n\n \n\n \n\n \n\n14,493\n\n \n\n \n\n \n\n14,493\n\n \n\nRight-of-use assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n14,799\n\n \n\n \n\n \n\n14,799\n\n \n\nIntangible assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n65,672\n\n \n\n \n\n \n\n65,672\n\n \n\nGoodwill\n\n \n\n \n\n—\n\n \n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n15,157\n\n \n\nInvestment accounted for using the equity method\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,012\n\n \n\n \n\n \n\n1,012\n\n \n\nDeferred tax assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n49,392\n\n \n\n \n\n \n\n49,392\n\n \n\nOther assets\n\n \n\n \n\n5,742\n\n \n\n \n\n \n\n31,259\n\n \n\n \n\n \n\n37,001\n\n \n\nTotal assets\n\n \n\n \n\n1,863,613\n\n \n\n \n\n \n\n2,178,492\n\n \n\n \n\n \n\n4,042,105\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n2,371,052\n\n \n\n \n\n \n\n14,887\n\n \n\n \n\n \n\n2,385,939\n\n \n\nAccounts payable\n\n \n\n \n\n949,396\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n949,397\n\n \n\nIncome tax payables\n\n \n\n \n\n6,477\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,477\n\n \n\nBorrowings\n\n \n\n \n\n201,978\n\n \n\n \n\n \n\n197,600\n\n \n\n \n\n \n\n399,578\n\n \n\nOther financial liabilities\n\n \n\n \n\n34,203\n\n \n\n \n\n \n\n4\n\n \n\n \n\n \n\n34,207\n\n \n\nProvisions\n\n \n\n \n\n3,662\n\n \n\n \n\n \n\n3,379\n\n \n\n \n\n \n\n7,041\n\n \n\nLease liabilities\n\n \n\n \n\n2,739\n\n \n\n \n\n \n\n9,358\n\n \n\n \n\n \n\n12,097\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n377\n\n \n\n \n\n \n\n377\n\n \n\nOther liabilities\n\n \n\n \n\n22,610\n\n \n\n \n\n \n\n651\n\n \n\n \n\n \n\n23,261\n\n \n\nTotal liabilities\n\n \n\n \n\n3,592,117\n\n \n\n \n\n \n\n226,257\n\n \n\n \n\n \n\n3,818,374\n\n \n\n \n\nF-48\n\n[Table of Contents](#toc_page)\n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nCollection or settlement period\n\n \n\n \n\n \n\n \n\n \n\n \n\n12 months or less\n\n \n\n \n\nOver 12 months\n\n \n\n \n\nTotal\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n363,083\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n363,083\n\n \n\nGuarantee deposits\n\n \n\n \n\n74,139\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n74,139\n\n \n\nCall loans\n\n \n\n \n\n40,014\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n40,014\n\n \n\nAccounts receivable\n\n \n\n \n\n150,372\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n150,372\n\n \n\nLoans and advances to customers\n\n \n\n \n\n1,045,113\n\n \n\n \n\n \n\n1,467,738\n\n \n\n \n\n \n\n2,512,851\n\n \n\nSecurities\n\n \n\n \n\n344,867\n\n \n\n \n\n \n\n1,391,968\n\n \n\n \n\n \n\n1,736,835\n\n \n\nOther financial assets\n\n \n\n \n\n29,324\n\n \n\n \n\n \n\n2,969\n\n \n\n \n\n \n\n32,293\n\n \n\nProperty and equipment\n\n \n\n \n\n—\n\n \n\n \n\n \n\n14,879\n\n \n\n \n\n \n\n14,879\n\n \n\nRight-of-use assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n12,175\n\n \n\n \n\n \n\n12,175\n\n \n\nIntangible assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n66,466\n\n \n\n \n\n \n\n66,466\n\n \n\nGoodwill\n\n \n\n \n\n—\n\n \n\n \n\n \n\n15,157\n\n \n\n \n\n \n\n15,157\n\n \n\nInvestments accounted for using the equity method\n\n \n\n \n\n—\n\n \n\n \n\n \n\n12,762\n\n \n\n \n\n \n\n12,762\n\n \n\nDeferred tax assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n107,275\n\n \n\n \n\n \n\n107,275\n\n \n\nOther assets\n\n \n\n \n\n6,668\n\n \n\n \n\n \n\n31,043\n\n \n\n \n\n \n\n37,711\n\n \n\nTotal assets\n\n \n\n \n\n2,053,580\n\n \n\n \n\n \n\n3,122,432\n\n \n\n \n\n \n\n5,176,012\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n2,935,149\n\n \n\n \n\n \n\n17,346\n\n \n\n \n\n \n\n2,952,495\n\n \n\nAccounts payable\n\n \n\n \n\n1,122,338\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,122,338\n\n \n\nIncome tax payables\n\n \n\n \n\n13,073\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n13,073\n\n \n\nBorrowings\n\n \n\n \n\n391,681\n\n \n\n \n\n \n\n173,275\n\n \n\n \n\n \n\n564,956\n\n \n\nOther financial liabilities\n\n \n\n \n\n47,793\n\n \n\n \n\n \n\n323\n\n \n\n \n\n \n\n48,116\n\n \n\nProvisions\n\n \n\n \n\n3,412\n\n \n\n \n\n \n\n3,991\n\n \n\n \n\n \n\n7,403\n\n \n\nLease liabilities\n\n \n\n \n\n2,322\n\n \n\n \n\n \n\n7,227\n\n \n\n \n\n \n\n9,549\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n206\n\n \n\n \n\n \n\n206\n\n \n\nOther liabilities\n\n \n\n \n\n26,701\n\n \n\n \n\n \n\n414\n\n \n\n \n\n \n\n27,115\n\n \n\nTotal liabilities\n\n \n\n \n\n4,542,469\n\n \n\n \n\n \n\n202,782\n\n \n\n \n\n \n\n4,745,251\n\n \n\n#  \n\nF-49\n\n[Table of Contents](#toc_page)\n\n \n\n28. Issued Capital and Reserves\n\n(1)\nAuthorized Shares and Issued Capital\n\nThe movement of authorized shares and shares issued is as follows:\n\n \n\n \n\n(In thousands of shares)\n\n \n\n \n\n \n\nNumber of\nauthorized shares\n\n \n\n \n\nNumber of\nshares issued\n(3)(4)\n\n \n\nCommon shares (1)(2)\n\n \n\n \n\n \n\n \n\n \n\n \n\nApril 1, 2023\n\n \n\n \n\n1,600,000\n\n \n\n \n\n \n\n550,000\n\n \n\nIncrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDecrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nMarch 31, 2024\n\n \n\n \n\n1,600,000\n\n \n\n \n\n \n\n550,000\n\n \n\nIncrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDecrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nMarch 31, 2025\n\n \n\n \n\n1,600,000\n\n \n\n \n\n \n\n550,000\n\n \n\nIncrease during the year (3)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n126,956\n\n \n\nDecrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nMarch 31, 2026 (4)\n\n \n\n \n\n1,600,000\n\n \n\n \n\n \n\n676,956\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNumber of\nauthorized shares\n\n \n\n \n\nNumber of\nshares issued\n\n \n\nClass A preferred shares (5)\n\n \n\n \n\n \n\n \n\n \n\n \n\nApril 1, 2023\n\n \n\n \n\n400,000\n\n \n\n \n\n \n\n—\n\n \n\nIncrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDecrease during the year (6)\n\n \n\n \n\n(400,000\n\n)\n\n \n\n \n\n—\n\n \n\nMarch 31, 2024\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nIncrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDecrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nMarch 31, 2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nIncrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nDecrease during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nMarch 31, 2026\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n(1)\nHolders of common shares are entitled to receive dividends. Each common share carries one vote at general meetings of shareholders. All shares issued by the Group have no par value and the Group holds no Treasury Shares of the Company. Common shares are reserved for issue under outstanding share options. Refer to Note 35, Share-based Payments for details of the number of common shares and the relevant terms.\n\n(2)\nThe Company conducted a share split, which became effective on November 15, 2025. Under the share split, the Company's common shares were split at a ratio of 200 shares for one share. The number of shares presented above are retrospectively adjusted in respect of the share split.\n\n(3)\nIn April 2025, the Company implemented a third-party allotment of new shares to SoftBank Corp., LY Corporation, and SVF II Piranha (DE) LLC, and all of the 1st Stock Options issued by the Company and held by SVF II Piranha (DE) LLC were exercised. Additionally, in March 2026, in conjunction with the initial public offering on the Nasdaq Global Select Market, the Company implemented an allotment of new shares, and a portion of the stock options were exercised. Refer to Note 35, Share-based Payments and Note 38, Related Party Transactions for further detail.\n\n(4)\nAll common shares are fully paid as of March 31 2026, except for 82,000 common shares issued upon the exercise of stock options in March 2026, for which payment had not yet been received.\n\n(5)\nClass A preferred shares have no voting rights, and have preference in dividend payments, while both of Class A preferred shares and common shares have the same rights to residual assets of the Group. The holders of Class A preferred shares have right of conversion of one Class A preferred share to one common share on and after April 1, 2022.\n\n(6)\nDecrease due to the abolishment of the provision in the articles of incorporation related to Class A preferred shares.\n\n(2)\nShare Premium and Retained Earnings\n\n(i)\nShare Premium\n\nLegal capital reserve\n\nUnder the Companies Act, at least 50% of the proceeds of certain issuances of share capital shall be credited to issued capital. The remaining proceeds shall be credited to share premium. The Companies Act permits, upon approval at the general shareholders’ meeting, the transfer of amounts from share premium to issued capital.\n\nF-50\n\n[Table of Contents](#toc_page)\n\n \n\nTransaction costs of equity transaction\n\nTransaction costs of an equity transaction are directly deducted from share premium. The amount deducted for the year ended March 31, 2026 was 1,002 million yen.\n\n \n\n(ii)\nRetained Earnings\n\nLegal earnings reserve\n\nThe Companies Act requires that an amount equal to at least 10% of dividends from surplus, as defined under the Companies Act, shall be appropriated as capital reserve (part of share premium), or appropriated for legal earnings reserve (part of retained earnings) until the aggregate amount of capital reserve and legal earnings reserve is equal to 25% of share capital. The legal earnings reserve may be used to eliminate or reduce a deficit or be transferred to other retained earnings upon approval at the general shareholders’ meetings.\n\n(3)\nAccumulated other comprehensive income (loss)\n\nChanges in accumulated other comprehensive income (loss) are as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nChanges in debt\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nExchange\ndifferences on\ntranslation of\nforeign\noperations\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n(123\n\n)\n\n \n\n \n\n4\n\n \n\nOther comprehensive income (loss) (attributable to\n   owners of the parent company)\n\n \n\n \n\n(250\n\n)\n\n \n\n \n\n(10\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n(373\n\n)\n\n \n\n \n\n(6\n\n)\n\nOther comprehensive income (loss) (attributable to\n   owners of the parent company)\n\n \n\n \n\n(2,634\n\n)\n\n \n\n \n\n(10\n\n)\n\nOther\n\n \n\n \n\n(32\n\n)\n\n \n\n \n\n—\n\n \n\nBalance as of March 31, 2026\n\n \n\n \n\n(3,039\n\n)\n\n \n\n \n\n(16\n\n)\n\n \n\n29. Dividends\n\nThe following dividends paid by the Group were included in the Group’s Consolidated Statements of Changes in Equity for the years ended March 31, 2024, 2025 and 2026.\n\n \n\n \n\n \n\nClass of shares\n\n \n\nAmount of\ndividends\n(In millions of yen)\n\n \n\n \n\nDividends per\nshare\n(Yen)\n\n \n\n \n\nEffective date\n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Bank Corporation June 22, 2023,\n   general meeting of shareholders\n\n \n\n Common shares\n\n \n\n \n\n783\n\n \n\n \n\n \n\n1,030\n\n \n\n \n\nJune 23, 2023\n\n \n\n \n\n Class A preferred stock\n\n \n\n \n\n1,000\n\n \n\n \n\n \n\n1,133\n\n \n\n \n\nJune 23, 2023\n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Bank Corporation June 21, 2024,\n   general meeting of shareholders\n\n \n\n Common shares\n\n \n\n \n\n1,228\n\n \n\n \n\n \n\n1,616\n\n \n\n \n\nJune 24, 2024\n\n \n\n \n\n Class A preferred stock\n\n \n\n \n\n1,574\n\n \n\n \n\n \n\n1,782\n\n \n\n \n\nJune 24, 2024\n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Bank Corporation June 24, 2025,\n   general meeting of shareholders\n\n \n\n Common shares\n\n \n\n \n\n1,413\n\n \n\n \n\n \n\n1,860\n\n \n\n \n\nJune 25, 2025\n\n \n\n \n\n Class A preferred stock\n\n \n\n \n\n1,806\n\n \n\n \n\n \n\n2,046\n\n \n\n \n\nJune 25, 2025\n\n \n\nDividends applicable to the owners of the parent company included in the total cash dividends for the years ended March 31, 2024, 2025 and 2026 were 179 million yen, 283 million yen and 311 million yen, respectively.\n\nF-51\n\n[Table of Contents](#toc_page)\n\n \n\n30. Revenue\n\n(1)\nDisaggregation of Revenue\n\n(i)\nRevenue recognized from contracts with customers and other sources\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nRevenue from contracts with customers\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTransaction and service income\n\n \n\n \n\n174,127\n\n \n\n \n\n \n\n203,595\n\n \n\n \n\n \n\n251,041\n\n \n\nRevenue from other sources\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest income (1)\n\n \n\n \n\n73,884\n\n \n\n \n\n \n\n88,442\n\n \n\n \n\n \n\n116,488\n\n \n\nGains (losses) on financial instruments\n\n \n\n \n\n4,641\n\n \n\n \n\n \n\n5,529\n\n \n\n \n\n \n\n10,250\n\n \n\nOther operating income\n\n \n\n \n\n1,959\n\n \n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n2,883\n\n \n\nTotal\n\n \n\n \n\n254,611\n\n \n\n \n\n \n\n299,078\n\n \n\n \n\n \n\n380,662\n\n \n\n \n\n(1)\nThe Group pays guarantee fees to third-party financial institutions to mitigate the credit risk of loans and advances to customers. These guarantee fees are an integral part of the loan arrangement. In accordance with IFRS 9, these guarantee fees are included in the calculation under the effective interest rate method and therefore reduce interest income. The guarantee fees were 14,707 million yen, 18,163 million yen and 20,747 million yen for the years ended March 31, 2024, 2025 and 2026, respectively.\n\n(ii)\nDisaggregation of revenue from contracts with customers by type of service\n\n \n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nTotal\n\n \n\nPayment Settlement Services\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Settlement Services\n\n \n\n \n\n151,673\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n151,673\n\n \n\nCredit Payment Settlement Services and Acquiring\n   Services (1)\n\n \n\n \n\n31,917\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n31,917\n\n \n\nDebit Payment Settlement Services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,731\n\n \n\n \n\n \n\n4,731\n\n \n\nPayment settlement services deduction (2)\n\n \n\n \n\n(52,669\n\n)\n\n \n\n \n\n(1,171\n\n)\n\n \n\n \n\n(53,840\n\n)\n\nSubtotal\n\n \n\n \n\n130,921\n\n \n\n \n\n \n\n3,560\n\n \n\n \n\n \n\n134,481\n\n \n\nFinancial Services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n20,867\n\n \n\n \n\n \n\n20,867\n\n \n\nOther (3)(4)\n\n \n\n \n\n18,389\n\n \n\n \n\n \n\n390\n\n \n\n \n\n \n\n18,779\n\n \n\nTotal (5)(6)\n\n \n\n \n\n149,310\n\n \n\n \n\n \n\n24,817\n\n \n\n \n\n \n\n174,127\n\n \n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nTotal\n\n \n\nPayment Settlement Services\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Settlement Services\n\n \n\n \n\n193,237\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n193,237\n\n \n\nCredit Payment Settlement Services and Acquiring Services (1)\n\n \n\n \n\n37,192\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n37,192\n\n \n\nDebit Payment Settlement Services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,077\n\n \n\n \n\n \n\n5,077\n\n \n\nPayment settlement services deduction (2)\n\n \n\n \n\n(77,161\n\n)\n\n \n\n \n\n(1,309\n\n)\n\n \n\n \n\n(78,470\n\n)\n\nSubtotal\n\n \n\n \n\n153,268\n\n \n\n \n\n \n\n3,768\n\n \n\n \n\n \n\n157,036\n\n \n\nFinancial Services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n22,269\n\n \n\n \n\n \n\n22,269\n\n \n\nOther (3)(4)\n\n \n\n \n\n23,329\n\n \n\n \n\n \n\n961\n\n \n\n \n\n \n\n24,290\n\n \n\nTotal (5)(6)\n\n \n\n \n\n176,597\n\n \n\n \n\n \n\n26,998\n\n \n\n \n\n \n\n203,595\n\n \n\n \n\n \n\nF-52\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nTotal\n\n \n\nPayment Settlement Services\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPayPay Settlement Services\n\n \n\n \n\n245,799\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n245,799\n\n \n\nCredit Payment Settlement Services and Acquiring Services (1)\n\n \n\n \n\n46,019\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n46,019\n\n \n\nDebit Payment Settlement Services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,468\n\n \n\n \n\n \n\n5,468\n\n \n\nPayment settlement services deduction (2)\n\n \n\n \n\n(100,358\n\n)\n\n \n\n \n\n(1,413\n\n)\n\n \n\n \n\n(101,771\n\n)\n\nSubtotal\n\n \n\n \n\n191,460\n\n \n\n \n\n \n\n4,055\n\n \n\n \n\n \n\n195,515\n\n \n\nFinancial Services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n24,706\n\n \n\n \n\n \n\n24,706\n\n \n\nOther (3)(4)\n\n \n\n \n\n29,310\n\n \n\n \n\n \n\n1,510\n\n \n\n \n\n \n\n30,820\n\n \n\nTotal (5)(6)\n\n \n\n \n\n220,770\n\n \n\n \n\n \n\n30,271\n\n \n\n \n\n \n\n251,041\n\n \n\n \n\n(1)\nRevenue from Credit Payment Settlement Services and Acquiring Services is presented net of interchange fees charged by the credit card issuer in respect of Acquiring Services, as the Group recognizes revenue based on the settlement amount of the purchase transaction and the predetermined rate, less such interchange fees. The interchange fees were 12,427 million yen, 10,819 million yen and 11,023 million yen for the years ended March 31, 2024, 2025 and 2026, respectively. Refer to the major revenue streams section within Note 3, Material Accounting Policies for more details.\n\n(2)\nPayment settlement services deduction mainly consists of rewards given to customers, all the deduction is related to the Payment Settlement Services only.\n\n(3)\nOther in the Payment segment includes revenues primarily earned from a monthly paid subscription plan for PayPay Merchants, and is presented net of a revenue deduction, which amounts to 1,870 million yen, 3,408 million yen and 4,554 million yen for the years ended March 31, 2024, 2025 and 2026, respectively. These deductions mainly relate to consideration payable to customers in connection with annual membership fees for a certain type of PayPay Card.\n\n(4)\nOther in the Financial service segment includes revenues primarily earned from system platform services provided by Credit Engine, Inc.\n\n(5)\nAlmost all revenues from external customers of the Group were generated in Japan, which is the Company’s country of domicile, for the years ended March 31, 2024, 2025 and 2026.\n\n(6)\nFor further details of each service category, refer to major revenue streams section within Note 3, Material Accounting Policies.\n\n(2)\nAssets Recognized from the Incremental Costs of Obtaining a Contract\n\nContract costs are incurred mainly in the PayPay Card’s business.\n\nThe Group outsources marketing activities to third-party companies to promote card membership and pays commissions to the third-party companies based on the number of new cardholders acquired by the Group through the third-party companies’ promotions. The commission payment represents an incremental cost of obtaining a contract, because it is a cost that would not have been incurred if the contract for the Credit Payment Settlement Services had not been obtained.\n\nSince August 2024, the Group also outsources marketing activities to a joint venture, PayPay SC Corporation to promote PayPay Settlement Services and pays commissions to the joint venture based on the number of new merchants acquired by the Group through the joint venture’s promotions. The commission payment represents an incremental cost of obtaining a contract, because it is a cost that would not have been incurred if the contract for the PayPay Settlement Services had not been obtained.\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nAssets recognized from the costs to obtain contracts with customers\n\n \n\n \n\n8,882\n\n \n\n \n\n \n\n12,077\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nAmortization expenses of assets recognized\n   from the costs to obtain contracts with\n   customers\n\n \n\n \n\n1,043\n\n \n\n \n\n \n\n1,297\n\n \n\n \n\n \n\n1,724\n\n \n\n \n\n(3)\nConsideration Payable to a Customer\n\nFor consideration payable to a customer accounted for as an asset, refer to customer incentives in Note 19, Other Assets.\n\n \n\nF-53\n\n[Table of Contents](#toc_page)\n\n \n\n31. Income and Expenses on Financial Instruments\n\n## Income and Expenses on Financial Instruments are as follows:\n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\n \n\nFinancial\nassets\nmeasured\nat FVTPL\n\n \n\n \n\nDebt\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nEquity\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nFinancial\nassets\nmeasured at\namortized\ncost\n\n \n\n \n\nFinancial\nliabilities\nmeasured at\namortized\ncost\n\n \n\n \n\nDerivative\ninstruments\n\n \n\n \n\nTotal\n\n \n\nIncome\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGains (losses) on financial\n   instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet gains (losses) recognized in\n   profit or loss\n\n \n\n \n\n42,073\n\n \n\n \n\n \n\n43\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n33\n\n \n\n \n\n \n\n412\n\n \n\n \n\n \n\n(38,612\n\n)\n\n \n\n \n\n3,949\n\n \n\nDividend income\n\n \n\n \n\n692\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n0\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n692\n\n \n\nSubtotal\n\n \n\n \n\n42,765\n\n \n\n \n\n \n\n43\n\n \n\n \n\n \n\n0\n\n \n\n \n\n \n\n33\n\n \n\n \n\n \n\n412\n\n \n\n \n\n \n\n(38,612\n\n)\n\n \n\n \n\n4,641\n\n \n\nInterest income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,577\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n72,247\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n60\n\n \n\n \n\n \n\n73,884\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExpenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest expenses (1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,930\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n1,931\n\n \n\nImpairment losses (gains) on\n   financial assets (2)(3)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n18,881\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n18,881\n\n \n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\n \n\nFinancial\nassets\nmeasured\nat FVTPL\n\n \n\n \n\nDebt\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nEquity\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nFinancial\nassets\nmeasured at\namortized\ncost\n\n \n\n \n\nFinancial\nliabilities\nmeasured at\namortized\ncost\n\n \n\n \n\nDerivative\ninstruments\n\n \n\n \n\nTotal\n\n \n\nIncome\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGains (losses) on financial\n   instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet gains (losses) recognized in\n   profit or loss\n\n \n\n \n\n7,401\n\n \n\n \n\n \n\n(90\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n667\n\n \n\n \n\n \n\n(3\n\n)\n\n \n\n \n\n(3,680\n\n)\n\n \n\n \n\n4,295\n\n \n\nDividend income\n\n \n\n \n\n1,234\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n0\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,234\n\n \n\nSubtotal\n\n \n\n \n\n8,635\n\n \n\n \n\n \n\n(90\n\n)\n\n \n\n \n\n0\n\n \n\n \n\n \n\n667\n\n \n\n \n\n \n\n(3\n\n)\n\n \n\n \n\n(3,680\n\n)\n\n \n\n \n\n5,529\n\n \n\nInterest income\n\n \n\n \n\n(147\n\n)\n\n \n\n \n\n1,850\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n86,689\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n50\n\n \n\n \n\n \n\n88,442\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExpenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest expenses (1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,253\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n4,254\n\n \n\nImpairment losses (gains) on\n   financial assets (2)(3)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n26,468\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n26,468\n\n \n\n \n\nF-54\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\n \n\nFinancial\nassets\nmeasured\nat FVTPL\n\n \n\n \n\nDebt\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nEquity\ninstruments\nmeasured at\nFVTOCI\n\n \n\n \n\nFinancial\nassets\nmeasured at\namortized\ncost\n\n \n\n \n\nFinancial\nliabilities\nmeasured at\namortized\ncost\n\n \n\n \n\nDerivative\ninstruments\n\n \n\n \n\nTotal\n\n \n\nIncome\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGains (losses) on financial\n   instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet gains (losses) recognized in\n   profit or loss\n\n \n\n \n\n58,250\n\n \n\n \n\n \n\n66\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,524\n\n \n\n \n\n \n\n(154\n\n)\n\n \n\n \n\n(51,524\n\n)\n\n \n\n \n\n9,162\n\n \n\nDividend income\n\n \n\n \n\n1,088\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n0\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,088\n\n \n\nSubtotal\n\n \n\n \n\n59,338\n\n \n\n \n\n \n\n66\n\n \n\n \n\n \n\n0\n\n \n\n \n\n \n\n2,524\n\n \n\n \n\n \n\n(154\n\n)\n\n \n\n \n\n(51,524\n\n)\n\n \n\n \n\n10,250\n\n \n\nInterest income\n\n \n\n \n\n6\n\n \n\n \n\n \n\n3,218\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n113,237\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n27\n\n \n\n \n\n \n\n116,488\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExpenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest expenses (1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n10,588\n\n \n\n \n\n \n\n2\n\n \n\n \n\n \n\n10,590\n\n \n\nImpairment losses (gains) on\n   financial assets (2)(3)\n\n \n\n \n\n1\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n25,640\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n25,641\n\n \n\n \n\n(1)\nInterest expenses are included in other operating expenses presented in the Consolidated Statements of Profit or Loss.\n\n(2)\nImpairment losses (gains) on financial assets are included in provision for loss allowance presented in the Consolidated Statements of Profit or Loss.\n\n(3)\nThe following adjustments would reconcile impairment losses (gains) on financial assets with provision for loss allowance presented in the Consolidated Statements of Profit or Loss:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nImpairment losses (gains) on financial assets\n\n \n\n \n\n18,881\n\n \n\n \n\n \n\n26,468\n\n \n\n \n\n \n\n25,641\n\n \n\nProvisions for credit losses on loan commitments\n\n \n\n \n\n4,740\n\n \n\n \n\n \n\n(1,836\n\n)\n\n \n\n \n\n24\n\n \n\nWrite-offs\n\n \n\n \n\n(615\n\n)\n\n \n\n \n\n(690\n\n)\n\n \n\n \n\n(742\n\n)\n\nProvision for loss allowance\n\n \n\n \n\n23,006\n\n \n\n \n\n \n\n23,942\n\n \n\n \n\n \n\n24,923\n\n \n\n \n\n32. Other Operating Income\n\nOther operating income is as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nGain on expiration of contractual obligation (1)\n\n \n\n \n\n1,258\n\n \n\n \n\n \n\n1,216\n\n \n\n \n\n \n\n1,752\n\n \n\nReceived secondment and expense contributions\n\n \n\n \n\n—\n\n \n\n \n\n \n\n276\n\n \n\n \n\n \n\n330\n\n \n\nGrants and contributions from non-governmental entities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n328\n\n \n\nGovernment grants\n\n \n\n \n\n574\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOther\n\n \n\n \n\n127\n\n \n\n \n\n \n\n20\n\n \n\n \n\n \n\n473\n\n \n\nTotal\n\n \n\n \n\n1,959\n\n \n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n2,883\n\n \n\n \n\n(1)\nThe gain on expiration of contractual obligation mainly consists of gains from expiration of PayPay Points Code. For further details, refer to other operating income section within Note 3, Material Accounting Policies.\n\nF-55\n\n[Table of Contents](#toc_page)\n\n \n\n33. Operating Expenses\n\nOperating expenses by nature are as follows:\n\n \n\nFor the year ended March 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nInter-segment\neliminations\n\n \n\n \n\nConsolidated\n\n \n\nPoint expenses (1)\n\n \n\n \n\n45,402\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n45,402\n\n \n\nSettlement related cost (2)\n\n \n\n \n\n30,660\n\n \n\n \n\n \n\n9,832\n\n \n\n \n\n \n\n(500\n\n)\n\n \n\n \n\n39,992\n\n \n\nEmployee benefit expenses (3)\n\n \n\n \n\n30,981\n\n \n\n \n\n \n\n6,783\n\n \n\n \n\n―\n\n \n\n \n\n \n\n37,764\n\n \n\nProfessional and outsourcing services\n   expenses (4)\n\n \n\n \n\n26,456\n\n \n\n \n\n \n\n8,516\n\n \n\n \n\n \n\n(172\n\n)\n\n \n\n \n\n34,800\n\n \n\nProvision for loss allowance\n\n \n\n \n\n22,650\n\n \n\n \n\n \n\n356\n\n \n\n \n\n―\n\n \n\n \n\n \n\n23,006\n\n \n\nOther operating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n12,849\n\n \n\n \n\n \n\n4,700\n\n \n\n \n\n―\n\n \n\n \n\n \n\n17,549\n\n \n\nLicense fees\n\n \n\n \n\n15,899\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n15,899\n\n \n\nInterest expenses\n\n \n\n \n\n2,814\n\n \n\n \n\n \n\n544\n\n \n\n \n\n \n\n(1,427\n\n)\n\n \n\n \n\n1,931\n\n \n\nAdvertising and promotion expenses\n\n \n\n \n\n7,955\n\n \n\n \n\n \n\n4,050\n\n \n\n \n\n \n\n(547\n\n)\n\n \n\n \n\n11,458\n\n \n\nTax and charges\n\n \n\n \n\n4,270\n\n \n\n \n\n \n\n2,248\n\n \n\n \n\n―\n\n \n\n \n\n \n\n6,518\n\n \n\nAmortization of contract cost\n\n \n\n \n\n1,043\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n1,043\n\n \n\nOther\n\n \n\n \n\n14,105\n\n \n\n \n\n \n\n5,391\n\n \n\n \n\n \n\n(258\n\n)\n\n \n\n \n\n19,238\n\n \n\nSubtotal\n\n \n\n \n\n58,935\n\n \n\n \n\n \n\n16,933\n\n \n\n \n\n \n\n(2,232\n\n)\n\n \n\n \n\n73,636\n\n \n\nTotal\n\n \n\n \n\n215,084\n\n \n\n \n\n \n\n42,420\n\n \n\n \n\n \n\n(2,904\n\n)\n\n \n\n \n\n254,600\n\n \n\n \n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nInter-segment\neliminations\n\n \n\n \n\nConsolidated\n\n \n\nPoint expenses (1)\n\n \n\n \n\n50,362\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n50,362\n\n \n\nSettlement related cost (2)\n\n \n\n \n\n33,645\n\n \n\n \n\n \n\n10,592\n\n \n\n \n\n \n\n(575\n\n)\n\n \n\n \n\n43,662\n\n \n\nEmployee benefit expenses (3)\n\n \n\n \n\n32,984\n\n \n\n \n\n \n\n8,499\n\n \n\n \n\n―\n\n \n\n \n\n \n\n41,483\n\n \n\nProfessional and outsourcing services expenses (4)\n\n \n\n \n\n19,887\n\n \n\n \n\n \n\n8,997\n\n \n\n \n\n \n\n(117\n\n)\n\n \n\n \n\n28,767\n\n \n\nProvision for loss allowance\n\n \n\n \n\n23,368\n\n \n\n \n\n \n\n574\n\n \n\n \n\n―\n\n \n\n \n\n \n\n23,942\n\n \n\nOther operating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n14,705\n\n \n\n \n\n \n\n5,388\n\n \n\n \n\n―\n\n \n\n \n\n \n\n20,093\n\n \n\nLicense fees\n\n \n\n \n\n18,027\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n18,027\n\n \n\nInterest expenses\n\n \n\n \n\n2,628\n\n \n\n \n\n \n\n2,278\n\n \n\n \n\n \n\n(652\n\n)\n\n \n\n \n\n4,254\n\n \n\nAdvertising and promotion expenses\n\n \n\n \n\n6,896\n\n \n\n \n\n \n\n4,528\n\n \n\n \n\n \n\n(693\n\n)\n\n \n\n \n\n10,731\n\n \n\nTax and charges\n\n \n\n \n\n3,038\n\n \n\n \n\n \n\n2,014\n\n \n\n \n\n―\n\n \n\n \n\n \n\n5,052\n\n \n\nAmortization of contract cost\n\n \n\n \n\n1,297\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n1,297\n\n \n\nOther\n\n \n\n \n\n11,061\n\n \n\n \n\n \n\n5,616\n\n \n\n \n\n \n\n(779\n\n)\n\n \n\n \n\n15,898\n\n \n\nSubtotal\n\n \n\n \n\n57,652\n\n \n\n \n\n \n\n19,824\n\n \n\n \n\n \n\n(2,124\n\n)\n\n \n\n \n\n75,352\n\n \n\nTotal\n\n \n\n \n\n217,898\n\n \n\n \n\n \n\n48,486\n\n \n\n \n\n \n\n(2,816\n\n)\n\n \n\n \n\n263,568\n\n \n\n \n\nF-56\n\n[Table of Contents](#toc_page)\n\n \n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nPayment\n\n \n\n \n\nFinancial\nservice\n\n \n\n \n\nInter-segment\neliminations\n\n \n\n \n\nConsolidated\n\n \n\nPoint expenses (1)\n\n \n\n \n\n60,195\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n60,195\n\n \n\nSettlement related cost (2)\n\n \n\n \n\n37,817\n\n \n\n \n\n \n\n11,713\n\n \n\n \n\n \n\n(799\n\n)\n\n \n\n \n\n48,731\n\n \n\nEmployee benefit expenses (3)\n\n \n\n \n\n36,790\n\n \n\n \n\n \n\n10,865\n\n \n\n \n\n \n\n(14\n\n)\n\n \n\n \n\n47,641\n\n \n\nProfessional and outsourcing services expenses (4)\n\n \n\n \n\n20,336\n\n \n\n \n\n \n\n8,120\n\n \n\n \n\n \n\n(357\n\n)\n\n \n\n \n\n28,099\n\n \n\nProvision for loss allowance\n\n \n\n \n\n23,861\n\n \n\n \n\n \n\n1,062\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n24,923\n\n \n\nOther operating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n17,018\n\n \n\n \n\n \n\n6,740\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n23,758\n\n \n\nLicense fees\n\n \n\n \n\n18,060\n\n \n\n \n\n \n\n839\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n18,899\n\n \n\nInterest expenses\n\n \n\n \n\n3,920\n\n \n\n \n\n \n\n6,997\n\n \n\n \n\n \n\n(327\n\n)\n\n \n\n \n\n10,590\n\n \n\nAdvertising and promotion expenses\n\n \n\n \n\n7,281\n\n \n\n \n\n \n\n3,028\n\n \n\n \n\n \n\n(303\n\n)\n\n \n\n \n\n10,006\n\n \n\nTax and charges\n\n \n\n \n\n3,889\n\n \n\n \n\n \n\n2,054\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,943\n\n \n\nAmortization of contract cost\n\n \n\n \n\n1,724\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,724\n\n \n\nOther\n\n \n\n \n\n15,831\n\n \n\n \n\n \n\n5,361\n\n \n\n \n\n \n\n(1,121\n\n)\n\n \n\n \n\n20,071\n\n \n\nSubtotal\n\n \n\n \n\n67,723\n\n \n\n \n\n \n\n25,019\n\n \n\n \n\n \n\n(1,751\n\n)\n\n \n\n \n\n90,991\n\n \n\nTotal\n\n \n\n \n\n246,722\n\n \n\n \n\n \n\n56,779\n\n \n\n \n\n \n\n(2,921\n\n)\n\n \n\n \n\n300,580\n\n \n\n \n\n(1)\nPoint expenses are incurred primarily when the Group grants reward points to a PayPay User through various reward programs, which the PayPay User can use such reward points at the merchants to pay off balance due in a purchase transaction.\n\n(2)\nSettlement related cost includes fees paid to banks for users to charge their PayPay Balance from their bank accounts and brand or network fees paid to international card brands. Settlement related cost also includes interbank transaction fees.\n\n(3)\nRefer to Note 26, Employee Benefits for details.\n\n(4)\nProfessional and outsourcing services expenses include customer service related costs, system development labor, and other professional services.\n\n34. Earnings Per Share\n\n(1)\nBasis for Calculation of Basic Earnings Per Share\n\nThe profit (loss) for the year and the weighted average number of shares used in the calculation of basic earnings per share (“EPS”) are as follows:\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nProfit (loss) for the year attributable to owners of\n   the parent company (Million yen)\n\n \n\n \n\n(3,350\n\n)\n\n \n\n \n\n36,170\n\n \n\n \n\n \n\n115,034\n\n \n\nWeighted average number of issued common shares\n   for the year (Thousand shares) (1)\n\n \n\n \n\n550,000\n\n \n\n \n\n \n\n550,000\n\n \n\n \n\n \n\n637,577\n\n \n\nBasic earnings (loss) per share (Yen) (1)\n\n \n\n \n\n(6.09\n\n)\n\n \n\n \n\n65.76\n\n \n\n \n\n \n\n180.42\n\n \n\n \n\n(1)\nThe share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 28, Issued Capital and Reserves for details of share split.\n\nF-57\n\n[Table of Contents](#toc_page)\n\n \n\n(2)\nBasis for Calculation of Diluted Earnings Per Share\n\nThe calculation of the diluted earnings per share is based on the following data:\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nProfit (loss) for the year attributable to owners of\n   the parent company (Million yen)\n\n \n\n \n\n(3,350\n\n)\n\n \n\n \n\n36,170\n\n \n\n \n\n \n\n115,034\n\n \n\nWeighted average number of issued common shares\n   for the year (Thousand shares) (1)\n\n \n\n \n\n550,000\n\n \n\n \n\n \n\n550,000\n\n \n\n \n\n \n\n637,577\n\n \n\nEffects of dilutive potential common shares (Thousand shares) (2)\n\n \n\n-\n\n \n\n \n\n-\n\n \n\n \n\n \n\n6,682\n\n \n\nWeighted average number of common shares\n   adjusted for the effect of dilution (Thousand\n   shares) (1)\n\n \n\n \n\n550,000\n\n \n\n \n\n \n\n550,000\n\n \n\n \n\n \n\n644,259\n\n \n\nDiluted earnings (loss) per share (Yen) (1)\n\n \n\n \n\n(6.09\n\n)\n\n \n\n \n\n65.76\n\n \n\n \n\n \n\n178.55\n\n \n\n \n\n(1)\nThe share split occurred and became effective on November 15, 2025 and earnings per share has been retrospectively adjusted. Refer to Note 28, Issued Capital and Reserves for details of share split.\n\n(2)\nThe potential dilutive effect of the 1st series of Stock Options is not disclosed as the estimated difference between basic and diluted earnings per share was determined not to be material. Regarding the 2nd to 49th series of Stock Options, the IPO condition was satisfied during the current fiscal year, and they were included in the computation of diluted earnings per share. Refer to Note 35, Share-based Payments.\n\n35. Share-based Payments\n\nNote that the number of the shares or stock options, the exercise price, and the fair value of shares on the grant date presented below have been retrospectively adjusted in respect of the share split that occurred on November 15, 2025. Refer to Note 28, Issued Capital and Reserves, for further details.\n\n(1)\nOverview of the Stock Option\n\n(i)\n1st stock options\n\nThe Group has granted stock options as share-based payment awards to non-employees for the software development service provided to the Group. The option holder has the right to acquire the Company’s common shares upon exercise. The option holder may exercise the options at any time subsequent to vesting and no later than the expiration date. On April 4, 2025, all of the 1st stock options held by SVF II Piranha (DE) LLC were exercised. Refer to Note 28, Issued Capital and Reserves and Note 38, Related Party Transactions.\n\n(ii)\n2nd to 46th trust-type of stock options\n\nThe Group has a trust-type stock option plan for directors, corporate officers, and employees (“the trust-type plan”) to attract and retain exceptionally qualified and talented human resources to achieve the Group’s business goals. Under the trust-type plan, SoftBank Corp. and LY Corporation, which are the owners of the parent company, contributed their funds to the trust and the trust acquired a total of 11,636 thousand shares of the 2nd to 46th series of the stock options (“the trust-type stock options”) from the Company on August 29, 2022. In addition, on a predetermined date, according to the instructions of the Company, the trust-type stock options will be granted to the directors, corporate officers, and other employees of the Company or its subsidiaries.\n\nThe number of trust-type stock options issued to the trust is shown in the table below.\n\n \n\n \n\n \n\n(In thousands of shares)\n\n \n\n \n\n \n\nExercisable period\n(Five periods)\n\n \n\nMarket condition\n(Nine conditions)\n\n \n\nFrom April 1, 2024\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2025\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2026\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2027\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2028\nto March 31, 2033\n\n \n\nNone\n\n \n\n \n\n843\n\n \n\n \n\n \n\n843\n\n \n\n \n\n \n\n843\n\n \n\n \n\n \n\n843\n\n \n\n \n\n \n\n838\n\n \n\n3 trillion yen\n\n \n\n \n\n416\n\n \n\n \n\n \n\n387\n\n \n\n \n\n \n\n387\n\n \n\n \n\n \n\n386\n\n \n\n \n\n \n\n386\n\n \n\n4 trillion yen\n\n \n\n \n\n359\n\n \n\n \n\n \n\n328\n\n \n\n \n\n \n\n324\n\n \n\n \n\n \n\n308\n\n \n\n \n\n \n\n308\n\n \n\n5 trillion yen\n\n \n\n \n\n248\n\n \n\n \n\n \n\n248\n\n \n\n \n\n \n\n192\n\n \n\n \n\n \n\n108\n\n \n\n \n\n \n\n108\n\n \n\n6 trillion yen\n\n \n\n \n\n174\n\n \n\n \n\n \n\n174\n\n \n\n \n\n \n\n161\n\n \n\n \n\n \n\n161\n\n \n\n \n\n \n\n125\n\n \n\n7 trillion yen\n\n \n\n \n\n73\n\n \n\n \n\n \n\n73\n\n \n\n \n\n \n\n73\n\n \n\n \n\n \n\n73\n\n \n\n \n\n \n\n73\n\n \n\n8 trillion yen\n\n \n\n \n\n84\n\n \n\n \n\n \n\n84\n\n \n\n \n\n \n\n84\n\n \n\n \n\n \n\n80\n\n \n\n \n\n \n\n80\n\n \n\n9 trillion yen\n\n \n\n \n\n107\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n104\n\n \n\n \n\n \n\n104\n\n \n\n \n\n \n\n104\n\n \n\n10 trillion yen\n\n \n\n \n\n167\n\n \n\n \n\n \n\n167\n\n \n\n \n\n \n\n167\n\n \n\n \n\n \n\n167\n\n \n\n \n\n \n\n167\n\n \n\nTotal\n\n \n\n \n\n2,471\n\n \n\n \n\n \n\n2,411\n\n \n\n \n\n \n\n2,335\n\n \n\n \n\n \n\n2,230\n\n \n\n \n\n \n\n2,189\n\n \n\n \n\nF-58\n\n[Table of Contents](#toc_page)\n\n \n\n \n\nFor the year ended March 31, 2023, a total of 4,589 thousand shares of trust-type stock options were granted to directors, corporate officers and other employees. In addition, the trust was consolidated to the Group’s Consolidated Statements of Financial Position and Consolidated Statements of Profit or Loss. As of April 30, 2025, remaining 7,047 thousand shares of trust-type stock options which the trust held were forfeited and extinguished, and the trust had been terminated.\n\n(iii)\n47th and 48th tax qualified-type, and 49th one-yen-exercisable at retirement-type of stock options\n\nThe Group has tax qualified-type and one-yen-exercisable at retirement-type of stock option plans for directors, corporate officers, and other employees for the purpose of attracting and retaining exceptionally qualified and talented human resources to achieve the Group’s business goals.\n\n(iv)\nPhantom stock awards\n\nThe Group grants phantom stock awards to certain employees, which are accounted for as cash-settled share-based payment arrangements. A phantom stock award is an award of a theoretical number of units (phantom units) operating in substance as a phantom option, whose value is based on the appreciation of the Company's common stock over a specified exercise price. The value of each phantom unit is based on the excess of the Company’s common stock price over the exercise price and, therefore, appreciates and depreciates on the basis of fluctuations in the value of the Company's common stock.\n\n(2)\nStock Options Outstanding\n\nThe Group’s stock options outstanding as of March 31, 2026 are as follows:\n\n(i)\n2nd to 46th trust-type stock options\n\n \n\nName\n\n \n\n2nd to 6th stock options\n\n \n\n7th to 46th stock options\n\nGrant date\n\n \n\nDecember 5, 2022\n\n \n\nDecember 5, 2022\n\nGrantee\n\n \n\nDirectors, corporate officers\nand other employees\n\n \n\nDirectors, corporate officers and other employees\n\nNumber of options granted\n\n \n\nSee the table below (4)\n\n \n\nSee the table below (4)\n\nSettlement method\n\n \n\nEquity-settled\n\n \n\nEquity-settled\n\nExercisable period\n\n \n\nSee the table below (4)\n\n \n\nSee the table below (4)\n\nConditions of vesting\n\n \n\nService condition (1)\n\nIPO condition (2)\n\n \n\nService condition (1)\n\nIPO condition (2)\n\nMarket condition (3)\n\n \n\n(1)\nService condition\n\nHolders of stock options must be directors, corporate officers, or other permanent employees of the Company or its subsidiaries at the time of exercising the rights. The stock options are forfeited upon resignation from the Group. However, this shall not apply in cases where the Board of Directors approves the condition such as retirement due to expiration of term of office or mandatory retirement age.\n\n(2)\nIPO condition\n\nHolders of stock options may exercise their stock options only when the Company’s shares are listed on a financial instruments exchange market.\n\n(3)\nMarket condition\n\nHolders of stock options may not exercise their stock options unless the market capitalization exceeds a certain threshold (4) on a specific date at least once during the period from the listing of the Company’s shares on a financial instruments exchange market to the last day of the exercisable period.\n\n(4)\nNumber of 2nd to 46th trust-type stock options granted, exercisable period and market condition\n\nThere are five exercisable periods and nine market capitalization conditions, therefore, the Group has a total of 45 types of stock options. The number of trust-type stock options is as follows.\n\nF-59\n\n[Table of Contents](#toc_page)\n\n \n\n \n\n \n\n \n\n(In thousands of shares)\n\n \n\n \n\n \n\nExercisable period\n(Five periods)\n\n \n\nMarket condition\n(Nine conditions)\n\n \n\nFrom April 1, 2024\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2025\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2026\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2027\nto March 31, 2033\n\n \n\n \n\nFrom April 1, 2028\nto March 31, 2033\n\n \n\nNone\n\n \n\n \n\n444\n\n \n\n \n\n \n\n444\n\n \n\n \n\n \n\n442\n\n \n\n \n\n \n\n376\n\n \n\n \n\n \n\n342\n\n \n\n3 trillion yen\n\n \n\n \n\n187\n\n \n\n \n\n \n\n165\n\n \n\n \n\n \n\n152\n\n \n\n \n\n \n\n144\n\n \n\n \n\n \n\n136\n\n \n\n4 trillion yen\n\n \n\n \n\n123\n\n \n\n \n\n \n\n115\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n98\n\n \n\n \n\n \n\n89\n\n \n\n5 trillion yen\n\n \n\n \n\n82\n\n \n\n \n\n \n\n74\n\n \n\n \n\n \n\n63\n\n \n\n \n\n \n\n51\n\n \n\n \n\n \n\n38\n\n \n\n6 trillion yen\n\n \n\n \n\n52\n\n \n\n \n\n \n\n50\n\n \n\n \n\n \n\n47\n\n \n\n \n\n \n\n44\n\n \n\n \n\n \n\n31\n\n \n\n7 trillion yen\n\n \n\n \n\n28\n\n \n\n \n\n \n\n28\n\n \n\n \n\n \n\n27\n\n \n\n \n\n \n\n26\n\n \n\n \n\n \n\n26\n\n \n\n8 trillion yen\n\n \n\n \n\n27\n\n \n\n \n\n \n\n27\n\n \n\n \n\n \n\n26\n\n \n\n \n\n \n\n25\n\n \n\n \n\n \n\n25\n\n \n\n9 trillion yen\n\n \n\n \n\n36\n\n \n\n \n\n \n\n35\n\n \n\n \n\n \n\n35\n\n \n\n \n\n \n\n35\n\n \n\n \n\n \n\n33\n\n \n\n10 trillion yen\n\n \n\n \n\n52\n\n \n\n \n\n \n\n52\n\n \n\n \n\n \n\n51\n\n \n\n \n\n \n\n50\n\n \n\n \n\n \n\n49\n\n \n\nTotal\n\n \n\n \n\n1,031\n\n \n\n \n\n \n\n990\n\n \n\n \n\n \n\n950\n\n \n\n \n\n \n\n849\n\n \n\n \n\n \n\n769\n\n \n\n \n\n(ii)\n47th and 48th tax qualified-type and 49th one-yen-exercisable at retirement-type of stock options\n\n \n\nName\n\n \n\n47th stock option\n\n \n\n48th stock options\n\n \n\n49th stock options\n\nGrant date\n\n \n\nApril 28, 2025\n\n \n\nApril 28, 2025\n\n \n\nApril 28, 2025\n\nGrantee\n\n \n\nEmployees\n\n \n\nDirectors and corporate officers\n\n \n\nDirectors and corporate officers\n\nNumber of options granted\n\n \n\nSee the table below (3)\n\n \n\nSee the table below (3)\n\n \n\n569 thousand shares\n\nSettlement method\n\n \n\nEquity-settled\n\n \n\nEquity-settled\n\n \n\nEquity-settled\n\nExercisable period\n\n \n\nSee the table below (3)\n\n \n\nSee the table below (3)\n\n \n\nFrom June 1, 2025\n\nto May 31, 2045\n\nConditions of vesting\n\n \n\nService condition (1)\n\nIPO condition (2)\n\n \n\nService condition (1)\n\nIPO condition (2)\n\n \n\nIPO condition (2)\n\n \n\n(1)\nService condition\n\nHolders of stock options must be directors, corporate officers, or other permanent employees of the Company or its subsidiaries at the time of exercising the rights. The stock options are forfeited upon resignation from the Group. However, this shall not apply in cases where the Board of Directors approves the condition such as retirement due to expiration of term of office or mandatory retirement age.\n\n(2)\nIPO condition\n\nHolders of stock options may exercise their stock options only when the Company’s shares are listed on a financial instruments exchange market.\n\n(3)\nNumber of stock options granted, exercisable period\n\nThe number of 47th and 48th tax qualified-type stock options by exercisable period is as follows.\n\n \n\n \n\n \n\n(In thousands of shares)\n\n \n\n \n\n \n\nExercisable period\n(Five periods)\n\n \n\n \n\n \n\nFrom\nApril 25, 2027\nto April 23, 2035\n\n \n\n \n\nFrom\nApril 29, 2028\nto April 23, 2035\n\n \n\n \n\nFrom\nApril 29, 2029\nto April 23, 2035\n\n \n\n \n\nFrom\nApril 29, 2030\nto April 23, 2035\n\n \n\n \n\nFrom\nApril 29, 2031\nto April 23, 2035\n\n \n\n \n\nTotal\n\n \n\n47th stock options\n\n \n\n \n\n1,625\n\n \n\n \n\n \n\n1,582\n\n \n\n \n\n \n\n1,529\n\n \n\n \n\n \n\n1,472\n\n \n\n \n\n \n\n1,417\n\n \n\n \n\n \n\n7,625\n\n \n\n48th stock options\n\n \n\n \n\n107\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n107\n\n \n\n \n\n \n\n535\n\n \n\n \n\n(iii)\nPhantom stock awards\n\nThe awards become exercisable upon satisfaction of all conditions, including service conditions, an IPO condition, and market conditions. Upon exercise, the Group settles the awards in cash based on the difference between the exercise price and the share price at the exercise date. The maximum term of the phantom stock awards granted under this plan is 11.9 years, which represents the period from the grant date to the expiration of the exercise period.\n\n(3)\nExpenses and Liabilities Arising from Share-based Payments\n\nOperating expenses and liabilities recognized in the Group's Consolidated Statements of Profit or Loss and Consolidated Statements of Financial Position in connection with share-based payments were as follows:\n\nF-60\n\n[Table of Contents](#toc_page)\n\n \n\n(i)\nOperating expenses\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\n \n\nEquity-settled\n\n \n\n―\n\n \n\n―\n\n \n\n \n\n1,730\n\n \n\nCash-settled\n\n \n\n―\n\n \n\n―\n\n \n\n \n\n117\n\n \n\nTotal\n\n \n\n―\n\n \n\n―\n\n \n\n \n\n1,847\n\n \n\n \n\n(ii)\nLiabilities\n\nLiabilities recognized in connection with share-based payments solely relate to phantom stock awards, which are classified as cash-settled share-based payment arrangements.\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\n \n\nTotal carrying amount of liabilities\n\n \n\n―\n\n \n\n \n\n130\n\n \n\nTotal intrinsic value of vested liabilities\n\n \n\n―\n\n \n\n \n\n20\n\n \n\n \n\nAs the Group completed its initial public offering on March 12, 2026 and satisfied the IPO condition, the Group commenced the recognition of share-based payment expenses and liabilities in the Consolidated Statements of Profit or Loss for the year ended March 31, 2026 and Consolidated Statements of Financial Position as of March 31, 2026.\n\n \n\n(4)\nDetails of the stock options and awards\n\nDetails of the stock options and awards are as follows:\n\nFor the year ended March 31, 2024\n\n \n\n \n\n1st stock options\n\n \n\n2nd to 46th stock options\n\n \n\n \n\nPhantom stock awards\n\n \n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\nOutstanding at the beginning\n   of the year\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n \n\n4,516\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n79\n\n \n\n \n\n \n\n1,300\n\n \n\nGranted\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nExercised\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nForfeited\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n(217\n\n)\n\n \n\n \n\n1,300\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nExpired\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nOutstanding at the end of the\n   year (1)\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n \n\n4,299\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n79\n\n \n\n \n\n \n\n1,300\n\n \n\nExercisable at the end of the\n   year\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n(1)\nThe weighted average remaining contractual lives in relation to 1st stock options, 2nd to 46th stock options, and phantom stock awards outstanding as of March 31, 2024 were 6.5 years, 9.0 years, and 9.0 years, respectively.\n\nF-61\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2025\n\n \n\n \n\n1st stock options\n\n \n\n \n\n2nd to 46th stock options\n\n \n\n \n\nPhantom stock awards\n\n \n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\nOutstanding at the beginning\n   of the year\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n \n\n \n\n4,299\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n79\n\n \n\n \n\n \n\n1,300\n\n \n\nGranted\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nExercised\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nForfeited\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n(288\n\n)\n\n \n\n \n\n1,300\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nExpired\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nOutstanding at the end of the\n   year (1)\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n \n\n \n\n4,011\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n79\n\n \n\n \n\n \n\n1,300\n\n \n\nExercisable at the end of the\n   year\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n(1)\nThe weighted average remaining contractual lives in relation to 1st stock options, 2nd to 46th stock options outstanding, and Phantom stock awards as of March 31, 2025 were 5.5 years, 8.0 years, and 8.0 years, respectively.\n\nFor the year ended March 31, 2026\n\n \n\n \n\n1st stock options\n\n \n\n \n\n2nd to 46th stock options\n\n \n\n \n\n47th stock options\n\n \n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\nOutstanding at the beginning\n   of the year\n\n \n\n \n\n31,802\n\n \n\n \n\n \n\n500\n\n \n\n \n\n \n\n4,011\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n—\n\n \n\n \n\n―\n\n \n\nGranted\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n—\n\n \n\n \n\n―\n\n \n\n \n\n \n\n7,625\n\n \n\n \n\n \n\n1,300\n\n \n\nExercised (1)\n\n \n\n \n\n(31,802\n\n)\n\n \n\n \n\n500\n\n \n\n \n\n \n\n(82\n\n)\n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n—\n\n \n\n \n\n―\n\n \n\nForfeited\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n(122\n\n)\n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n(255\n\n)\n\n \n\n \n\n1,300\n\n \n\nExpired\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n—\n\n \n\n \n\n―\n\n \n\n \n\n \n\n—\n\n \n\n \n\n―\n\n \n\nOutstanding at the end of the\n   year (2)\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n3,807\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n7,370\n\n \n\n \n\n \n\n1,300\n\n \n\nExercisable at the end of the\n   year\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n633\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n—\n\n \n\n \n\n―\n\n \n\n \n\n \n\n \n\n48th stock options\n\n \n\n \n\n49th stock options\n\n \n\n \n\nPhantom stock awards\n\n \n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof stock\noptions\n(Thousand\nshares)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\n \n\nNumber\nof awards\n(Thousand)\n\n \n\n \n\nWeighted\naverage\nexercise\nprice\n(Yen)\n\n \n\nOutstanding at the beginning\n   of the year\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n79\n\n \n\n \n\n \n\n1,300\n\n \n\nGranted\n\n \n\n \n\n535\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n569\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n155\n\n \n\n \n\n \n\n1,327\n\n \n\nExercised (1)\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nForfeited\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nExpired\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\nOutstanding at the end of the\n   year (2)\n\n \n\n \n\n535\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n \n\n569\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n234\n\n \n\n \n\n \n\n1,318\n\n \n\nExercisable at the end of the\n   year\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n10\n\n \n\n \n\n \n\n1,300\n\n \n\n \n\n(1)\nThe weighted average share price at the date of exercise was 1,305 yen.\n\n(2)\nThe weighted average remaining contractual lives in relation to the stock options and awards outstanding as of March 31, 2026 were as follows:\n\n \n\n \n\n \n\n2nd to 46th\nstock options\n\n \n\n \n\n47th stock\noptions\n\n \n\n48th stock\noptions\n\n \n\n49th stock\noptions\n\n \n\nPhantom\nstock awards\n\nWeighted average remaining\n   contractual lives (years)\n\n \n\n \n\n7.0\n\n \n\n \n\n9.1\n\n \n\n9.1\n\n \n\n19.2\n\n \n\n8.4\n\n \n\nF-62\n\n[Table of Contents](#toc_page)\n\n \n\n(5)\nFair Value Measurement\n\n(i)\nFair value measurement of the equity-settled share-based payments issued during the reporting periods\n\nFor the years ended March 31, 2024 and 2025\n\nThere were no stock options granted during the years ended March 31, 2024, and 2025, respectively.\n\nFor the year ended March 31, 2026\n\nFair value of stock options granted during the year ended March 31, 2026 was measured as follows:\n\n \n\nGrant and name\n\n \n\n47th stock\noptions\n\n \n\n \n\n48th stock\noptions\n\n \n\n \n\n49th stock\noptions\n\n \n\nWeighted average fair value\n\n \n\n488 yen\n\n \n\n \n\n409 yen\n\n \n\n \n\n472 yen\n\n \n\nValuation method used\n\n \n\nMonte-Carlo\nsimulation (1)\n\n \n\n \n\nMonte-Carlo\nsimulation (1)\n\n \n\n \n\nMonte-Carlo\nsimulation (1)\n\n \n\nKey inputs and assumptions\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExercise price\n\n \n\n1,300 yen\n\n \n\n \n\n1,300 yen\n\n \n\n \n\n1 yen\n\n \n\nFair value of share on\n   grant date\n\n \n\n1,300 yen\n\n \n\n \n\n1,300 yen\n\n \n\n \n\n1,300 yen\n\n \n\nExercise period\n\n \n\n10 years\n\n \n\n \n\n10 years\n\n \n\n \n\n20 years\n\n \n\nExpected dividend yield\n\n \n\n \n\n3.4\n\n%\n\n \n\n \n\n3.4\n\n%\n\n \n\n \n\n3.4\n\n%\n\nExpected volatility (2)\n\n \n\n \n\n38.6\n\n%\n\n \n\n \n\n38.6\n\n%\n\n \n\n \n\n37.6\n\n%\n\nRisk-free interest rate\n\n \n\n \n\n1.3\n\n%\n\n \n\n \n\n1.3\n\n%\n\n \n\n \n\n2.1\n\n%\n\n \n\n(1)\nMonte-Carlo simulation requires various highly subjective assumptions, including expected volatility, expected life of stock options, expected dividend yield, and fair value of common share at the time of option grants.\n\n(2)\nThe expected volatility was derived from the historical volatility over a period similar to the expected life of the stock options for publicly listed companies that are comparable to the Group.\n\n(ii)\nFair value measurement of cash-settled share-based payments at the end of the year\n\n \n\n \n\n \n\nMarch 31, 2026\n\nWeighted average fair value\n\n \n\n1,998 yen\n\nValuation method used\n\n \n\nMonte-Carlo simulation (1)\n\nKey inputs and assumptions\n\n \n\n \n\nExercise price\n\n \n\n1,300 yen or 1,750 yen\n\nFair value of share at the end of the\n   period\n\n \n\n3,393 yen\n\nExercise period\n\n \n\n7.0 years - 9.1 years\n\nExpected dividend yield\n\n \n\nSee below (2)\n\nExpected volatility (3)\n\n \n\n39.9% - 41.6%\n\nRisk-free interest rate\n\n \n\n2.1% - 2.3%\n\n \n\n(1)\nMonte-Carlo simulation requires various highly subjective assumptions, including expected volatility, expected life of the awards, expected dividend yield, and fair value of common share at the end of the year.\n\n(2)\nThe expected dividend yield was estimated to be zero for the first five years following the IPO and 1.6 % from the sixth year onward.\n\n(3)\nThe expected volatility was derived from the historical volatility over a period similar to the expected life of the awards for publicly listed companies that are comparable to the Group.\n\n36. Financial Instruments\n\n(1) Capital Management\n\nThe Group’s capital management policy is to realize and maintain the capital composition at optimized levels in order to sustain mid-term and long-term growth and maximize the corporate value.\n\nThe main indicators used by the Group in capital management are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nTotal shareholders’ equity\n\n \n\n \n\n223,731\n\n \n\n \n\n \n\n430,761\n\n \n\nEquity capital ratio (1) (%)\n\n \n\n \n\n5.54\n\n%\n\n \n\n \n\n8.32\n\n%\n\n \n\n(1)\nEquity capital ratio is calculated as total shareholders’ equity divided by total liabilities and shareholders' equity.\n\nF-63\n\n[Table of Contents](#toc_page)\n\n \n\nPayPay Bank Corporation, the Company’s banking subsidiary in Japan, is subject to the capital adequacy guidelines set by the Financial Services Agency of Japan, which are based on the Basel Capital Accord. Under the guidelines, PayPay Bank Corporation is classified as a Domestically Active Bank and required to maintain a minimum capital adequacy ratio, namely no less than 4.0%, of capital against the amount of risk weighted assets.\n\nThe table below presents PayPay Bank Corporation's capital adequacy ratio, core capital, total capital and risk-weighted assets under Japanese GAAP.\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nCapital adequacy ratio\n\n \n\n \n\n16.76\n\n%\n\n \n\n \n\n14.04\n\n%\n\nCore capital\n\n \n\n \n\n145,215\n\n \n\n \n\n \n\n157,147\n\n \n\nTotal capital\n\n \n\n \n\n132,575\n\n \n\n \n\n \n\n144,202\n\n \n\nRisk-weighted assets\n\n \n\n \n\n790,957\n\n \n\n \n\n \n\n1,026,786\n\n \n\n \n\nOther companies below in the Group are also required to maintain their own capital-related ratio and equity balance defined by the capital regulations as follows:\n\n \n\nCompany\n\n \n\nLaws and regulations\n\n \n\nRequirements\n\nPayPay Corporation\n\n \n\nPayment Services Act\n\n \n\nMaintenance of minimum required equity amount\n\nPayPay Card Corporation\n\n \n\nInstallment Sales Act\n\n \n\nMaintenance of minimum required equity ratio\n\nPayPay Securities Corporation\n\n \n\nFinancial Instruments and Exchange Act\n\n \n\nMaintenance of minimum required capital-to-risk ratio\n\n \n\nEach company in the Group adequately meets the capital requirements under the laws and regulations.\n\n(2) Financial Risk Management\n\nThe Group is exposed to financial risks, including credit risk, liquidity risk, and market risk, relating to its operations. Therefore, we regularly monitor such financial risks and follow policies implemented to mitigate risk exposures.\n\n(i)\nCredit Risk\n\nThe Group is exposed to the debtors’ credit risk arising from its operating activities. Generally, the credit risk is related to accounts receivable from cardholders, payment service providers and PayPay Merchants, loan arrangements to banking customers, and loan commitments for cardholders.\n\n(A)\nCredit risk management\n\nThe Group assesses credit cardholders' credit risk in accordance with internal policy upon entering into an agreement with cardholders. The Group also monitors mainly collection status of each cardholder to manage potential uncollectible amounts.\n\nAs for the credit card receivables from cardholders, in the event of delinquency, the terms of the contracts may be modified for the purpose of facilitating collections, and the original contractual cash flows would change.\n\nWhile most of the credit card receivables are from cardholders based in Japan, the Group is working to prevent or reduce credit risk through the risk management procedures described above.\n\nFor banking customers' credit risk, the Group has established a credit risk management system in its internal regulations and strives to control credit risk in accordance with the internal \"Credit Policy.\" In addition, the Group has established regulations for credit review, concentration risk and write off. In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio by establishing an adequate credit limit. The Audit Department, which is independent from each division, regularly audits the credit risk management status, checks credit operations, and reports the results of the audit to the Board of Directors.\n\nThe Group derecognized these financial assets for which the contractual cash flows have been modified and recognized purchased or originated credit-impaired financial assets, where the change in the discounted present value of the cash flows under the new terms of these financial assets changed by more than 10% from the discounted present value of the remaining cash flows of the original terms.\n\nF-64\n\n[Table of Contents](#toc_page)\n\n \n\nAs of March 31, 2025 and 2026, there were no modifications of the contractual cash flows of financial assets where the modification did not result in derecognition.\n\nFor general credit risks other than the credit risk above, the Group conducts credit investigations and establishes a credit line in order to manage credit risks. The Group periodically monitors the status of debtors, past dues and outstanding balances in accordance with the internal Credit Management Regulations.\n\nThe maximum exposure to credit risk as of March 31, 2025 and 2026 represents the carrying amounts, net of impairment losses, of the respective financial assets recognized in the Group’s Consolidated Statements of Financial Position.\n\n(B) Analysis by credit risk rating grades\n\na. Businesses other than banking business\n\nThe following table details the gross carrying amounts of financial assets for the businesses other than banking business subsequently measured at amortized cost (1) by due date:\n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets with loss allowance\nmeasured at lifetime ECL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets\nwith loss\nallowance\nmeasured at\n12-month ECL\n\n \n\n \n\nAccounts\nreceivables for\nwhich\nsimplified\napproach is\napplied\n\n \n\n \n\nFinancial\nassets with\nsignificant\nincrease in\ncredit risk\nsince initial\nrecognition\n\n \n\n \n\nCredit-\nimpaired\nfinancial assets\n\n \n\n \n\nFinancial\nassets that are\npurchased or\noriginated\ncredit-\nimpaired\n\n \n\n \n\nTotal\n\n \n\nNot past due\n\n \n\n \n\n1,479,394\n\n \n\n \n\n \n\n1,914\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,481,308\n\n \n\nWithin 30 days\n\n \n\n \n\n66,830\n\n \n\n \n\n \n\n28\n\n \n\n \n\n \n\n2,781\n\n \n\n \n\n \n\n948\n\n \n\n \n\n \n\n95\n\n \n\n \n\n \n\n70,682\n\n \n\nWithin 31 to 90 days\n\n \n\n \n\n—\n\n \n\n \n\n \n\n3\n\n \n\n \n\n \n\n4,486\n\n \n\n \n\n \n\n3,250\n\n \n\n \n\n \n\n1,383\n\n \n\n \n\n \n\n9,122\n\n \n\nOver 90 days\n\n \n\n \n\n—\n\n \n\n \n\n \n\n494\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,389\n\n \n\n \n\n \n\n10,103\n\n \n\n \n\n \n\n46,986\n\n \n\nTotal\n\n \n\n \n\n1,546,224\n\n \n\n \n\n \n\n2,439\n\n \n\n \n\n \n\n7,267\n\n \n\n \n\n \n\n40,587\n\n \n\n \n\n \n\n11,581\n\n \n\n \n\n \n\n1,608,098\n\n \n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets with loss allowance\nmeasured at lifetime ECL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets\nwith loss\nallowance\nmeasured at\n12-month ECL\n\n \n\n \n\nAccounts\nreceivables for\nwhich\nsimplified\napproach is\napplied\n\n \n\n \n\nFinancial\nassets with\nsignificant\nincrease in\ncredit risk\nsince initial\nrecognition\n\n \n\n \n\nCredit-\nimpaired\nfinancial assets\n\n \n\n \n\nFinancial\nassets that are\npurchased or\noriginated\ncredit-\nimpaired\n\n \n\n \n\nTotal\n\n \n\nNot past due\n\n \n\n \n\n1,522,485\n\n \n\n \n\n \n\n2,789\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,525,274\n\n \n\nWithin 30 days\n\n \n\n \n\n86,713\n\n \n\n \n\n \n\n74\n\n \n\n \n\n \n\n3,128\n\n \n\n \n\n \n\n1,159\n\n \n\n \n\n \n\n82\n\n \n\n \n\n \n\n91,156\n\n \n\nWithin 31 to 90 days\n\n \n\n \n\n—\n\n \n\n \n\n \n\n28\n\n \n\n \n\n \n\n5,944\n\n \n\n \n\n \n\n3,519\n\n \n\n \n\n \n\n1,673\n\n \n\n \n\n \n\n11,164\n\n \n\nOver 90 days\n\n \n\n \n\n—\n\n \n\n \n\n \n\n378\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n37,277\n\n \n\n \n\n \n\n13,210\n\n \n\n \n\n \n\n50,865\n\n \n\nTotal\n\n \n\n \n\n1,609,198\n\n \n\n \n\n \n\n3,269\n\n \n\n \n\n \n\n9,072\n\n \n\n \n\n \n\n41,955\n\n \n\n \n\n \n\n14,965\n\n \n\n \n\n \n\n1,678,459\n\n \n\n \n\n(1)\nThese assets include cash and cash equivalents, guarantee deposits, accounts receivable, loans and advances to customers, securities and other financial assets on the Group’s Consolidated Statements of Financial Position. All of the loss allowance for the financial assets other than credit card receivables and settlement receivables in the tables are measured at 12-month ECL as of March 31, 2025 and 2026. In addition, all of those financial assets except for credit card receivables and settlement receivables were not past due as of March 31, 2025 and 2026.\n\nF-65\n\n[Table of Contents](#toc_page)\n\n \n\nb. Banking business\n\nFor the banking business, financial assets are segregated into following credit qualities based on internal risk assessments by debtors.\n\n \n\nClassification of debtors\n\n \n\nBasis of classification\n\nPerforming\n\n \n\nAccount not classified as either\n\nCredit Watch\n\n \n\nAccount designated for elevated attention\n\nAt Risk or Default\n\n \n\nAccount where there is an increased likelihood that default may exist based on qualitative and quantitative factors\n\n \n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets with loss allowance\nmeasured at lifetime ECL\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets\nwith loss\nallowance\nmeasured at\n12-month ECL\n\n \n\n \n\nFinancial\nassets with\nsignificant\nincrease in\ncredit risk\nsince initial\nrecognition\n\n \n\n \n\nCredit-\nimpaired\nfinancial assets\n\n \n\n \n\nTotal\n\n \n\nPerforming\n\n \n\n \n\n2,143,066\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,143,066\n\n \n\nCredit Watch\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,849\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,849\n\n \n\nAt Risk or Default\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,680\n\n \n\n \n\n \n\n1,680\n\n \n\nTotal\n\n \n\n \n\n2,143,066\n\n \n\n \n\n \n\n1,849\n\n \n\n \n\n \n\n1,680\n\n \n\n \n\n \n\n2,146,595\n\n \n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets with loss allowance\nmeasured at lifetime ECL\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets\nwith loss\nallowance\nmeasured at\n12-month ECL\n\n \n\n \n\nFinancial\nassets with\nsignificant\nincrease in\ncredit risk\nsince initial\nrecognition\n\n \n\n \n\nCredit-\nimpaired\nfinancial assets\n\n \n\n \n\nTotal\n\n \n\nPerforming\n\n \n\n \n\n3,065,985\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,065,985\n\n \n\nCredit Watch\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,279\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,279\n\n \n\nAt Risk or Default\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,023\n\n \n\n \n\n \n\n3,023\n\n \n\nTotal\n\n \n\n \n\n3,065,985\n\n \n\n \n\n \n\n2,279\n\n \n\n \n\n \n\n3,023\n\n \n\n \n\n \n\n3,071,287\n\n \n\n \n\n(C) Measurement in loss allowances\n\nThe amount of loss allowances is calculated based on PD, LGD and the exposure at default (“EAD”) as well as other reasonably available forward-looking information, and measured on a collective basis after grouping the accounts receivable, debt instruments measured at FVTOCI, loans and loan commitments by product and duration of past due.\n\nThe Group considers that there has been a significant increase in credit risk mainly when payments are more than 30 days past due. For loans in the banking business, the Group considers there has been a significant increase in credit risk when payments are more than 10 days past due or when multiple late payments have occurred. In assessing whether credit risk has increased significantly, the Group considers reasonably available and supportable information in addition to past due information.\n\nThe Group defines a receivable to be in default mainly when the contractual payment is 90 days or more past due, the contractual conditions have been modified, or the obligor is experiencing significant financial difficulty. Credit impairment is considered to have occurred for receivables that are judged to be in default.\n\nF-66\n\n[Table of Contents](#toc_page)\n\n \n\nThe Group measures the loss allowances of the financial assets at an amount equal to the amount of expected credit losses from possible defaults in the next 12 months after the end of the reporting period if the credit risk has not increased significantly since the initial recognition (12-month expected credit losses). If credit risk on the financial assets at the end of the reporting period have increased significantly since the initial recognition, the loss allowances are measured at an amount equal to the expected credit losses that result from all possible default events over the expected life (lifetime expected credit losses).\n\nHowever, for accounts receivable result from transactions that are within the scope of IFRS 15, and that do not contain significant financing components, the amount of loss allowances is measured at an amount equal to lifetime expected credit losses, regardless of whether or not there is a significant increase in credit risk from the time of initial recognition.\n\nThere was collateral for mortgage loans and guarantee contracts for some loans.\n\nThe movements in loss allowances for the financial assets are as follows:\n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets with loss allowance\nmeasured at lifetime ECL\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial\nassets with\nloss allowance\nmeasured at\n 12-month ECL\n\n \n\n \n\nAccounts\nreceivables for\nwhich\nsimplified\napproach is\napplied\n\n \n\n \n\nFinancial\nassets with\nsignificant\nincrease in\ncredit risk\nsince initial\nrecognition\n\n \n\n \n\nCredit-impaired\nfinancial assets\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2024\n\n \n\n \n\n8,822\n\n \n\n \n\n \n\n589\n\n \n\n \n\n \n\n1,308\n\n \n\n \n\n \n\n22,190\n\n \n\n \n\n \n\n32,909\n\n \n\nProvision for loss allowance, net of reversal\n\n \n\n \n\n3,851\n\n \n\n \n\n \n\n(84\n\n)\n\n \n\n \n\n81\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,848\n\n \n\nWrite-offs\n\n \n\n \n\n(1,621\n\n)\n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n(709\n\n)\n\n \n\n \n\n(13,622\n\n)\n\n \n\n \n\n(15,953\n\n)\n\nTransfer between stages\n\n \n\n \n\n(205\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(647\n\n)\n\n \n\n \n\n852\n\n \n\n \n\n \n\n—\n\n \n\nChanges in risk variables\n\n \n\n \n\n(142\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,539\n\n \n\n \n\n \n\n23,661\n\n \n\n \n\n \n\n25,058\n\n \n\nOther\n\n \n\n \n\n(45\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n29\n\n \n\n \n\n \n\n(16\n\n)\n\nBalance as of March 31, 2025\n\n \n\n \n\n10,660\n\n \n\n \n\n \n\n504\n\n \n\n \n\n \n\n1,572\n\n \n\n \n\n \n\n33,110\n\n \n\n \n\n \n\n45,846\n\n \n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets with loss allowance\nmeasured at lifetime ECL\n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial\nassets with\nloss allowance\nmeasured at\n 12-month ECL\n\n \n\n \n\nAccounts\nreceivables for\nwhich\nsimplified\napproach is\napplied\n\n \n\n \n\nFinancial\nassets with\nsignificant\nincrease in\ncredit risk\nsince initial\nrecognition\n\n \n\n \n\nCredit-impaired\nfinancial assets\n\n \n\n \n\nTotal\n\n \n\nBalance as of April 1, 2025\n\n \n\n \n\n10,660\n\n \n\n \n\n \n\n504\n\n \n\n \n\n \n\n1,572\n\n \n\n \n\n \n\n33,110\n\n \n\n \n\n \n\n45,846\n\n \n\nProvision for loss allowance, net of reversal\n\n \n\n \n\n4,838\n\n \n\n \n\n \n\n(69\n\n)\n\n \n\n \n\n27\n\n \n\n \n\n \n\n2\n\n \n\n \n\n \n\n4,798\n\n \n\nWrite-offs\n\n \n\n \n\n(1,679\n\n)\n\n \n\n \n\n(12\n\n)\n\n \n\n \n\n(696\n\n)\n\n \n\n \n\n(12,661\n\n)\n\n \n\n \n\n(15,048\n\n)\n\nTransfer between stages\n\n \n\n \n\n(126\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(782\n\n)\n\n \n\n \n\n908\n\n \n\n \n\n \n\n—\n\n \n\nChanges in risk variables\n\n \n\n \n\n(448\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,864\n\n \n\n \n\n \n\n22,006\n\n \n\n \n\n \n\n23,422\n\n \n\nDerecognition of receivables upon sale\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(10,598\n\n)\n\n \n\n \n\n(10,598\n\n)\n\nOther\n\n \n\n \n\n6\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(47\n\n)\n\n \n\n \n\n(41\n\n)\n\nBalance as of March 31, 2026\n\n \n\n \n\n13,251\n\n \n\n \n\n \n\n423\n\n \n\n \n\n \n\n1,985\n\n \n\n \n\n \n\n32,720\n\n \n\n \n\n \n\n48,379\n\n \n\n \n\nLoss allowances mainly relate to credit card receivables and loans.\n\nThe total amount of undiscounted expected credit losses at initial recognition on financial assets that were purchased or originated credit-impaired as of March 31, 2025 and 2026 were 14,881 million yen and 13,851 million yen, respectively.\n\nF-67\n\n[Table of Contents](#toc_page)\n\n \n\nThere was no significant increase or decrease in the loss allowance relating to financial assets that are purchased or originated credit-impaired.\n\nThere was no financial asset that the credit risk that has been modified while the loss allowance was measured at an amount equal to lifetime expected credit losses, has improved to the extent that the loss allowance reverted to being measured at an amount equal to 12-month expected credit losses for the years ended March 31, 2025 and 2026.\n\nThere were no significant changes in the gross carrying amount that affected changes in the loss allowance for the years ended March 31, 2025 and 2026.\n\nThe amount of financial assets which has been written off but subject to ongoing collection activity was not material for the years ended March 31, 2025 and 2026.\n\n(ii)\nLiquidity Risk\n\n(A)\nManagement of liquidity risk related to financing\n\nLiquidity risk is the risk that the Group may encounter difficulty in meeting its obligations associated with financial liabilities, including derivative instruments that are settled by delivering cash or another financial asset. The Group is exposed to liquidity risk in relation to funding, utilization, and repayment of cash arising from its business operation. In order to prevent and reduce the liquidity risk, the Group, in principle, invests in highly liquid and low-risk financial instruments. The Group maintains a sufficient level of cash and cash equivalents and receivables with maturities of primarily up to two months, in order to ensure its liquidity and stability.\n\nIn its banking business, in order to prevent excessive reliance on short-term funding (ranging from overnight to one month), the Group sets an upper limit on the amount of such funding and monitors compliance with this limit on a daily basis. In addition, the Group monitors the balance of assets that can be readily converted into cash to ensure liquidity in emergency situations, such as large withdrawals of customers' deposits in its financial businesses.\n\nThe Group finances its operations through customer deposits in the financial businesses, loan payables, commercial papers and financing through liquidation of receivables.\n\n(B)\nThe balance of financial liabilities by repayment date\n\nThe following table details the balance of financial liabilities by repayment date. The contractual cash flow amount below reflects cash flow presented on an undiscounted cash flow basis, including interest expense.\n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nBook value\n\n \n\n \n\nContractual\ncash flow\n\n \n\n \n\nWithin\n1 year\n\n \n\n \n\nWithin\n1-2 years\n\n \n\n \n\nWithin\n2-3 years\n\n \n\n \n\nWithin\n3-4 years\n\n \n\n \n\nWithin\n4-5 years\n\n \n\n \n\nMore than\n5 years\n\n \n\nNon-derivative financial\n   liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n2,385,939\n\n \n\n \n\n \n\n2,386,132\n\n \n\n \n\n \n\n2,371,106\n\n \n\n \n\n \n\n3,531\n\n \n\n \n\n \n\n4,065\n\n \n\n \n\n \n\n695\n\n \n\n \n\n \n\n1,761\n\n \n\n \n\n \n\n4,974\n\n \n\nAccounts payable\n\n \n\n \n\n949,397\n\n \n\n \n\n \n\n949,397\n\n \n\n \n\n \n\n949,396\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBorrowings\n\n \n\n \n\n399,578\n\n \n\n \n\n \n\n401,819\n\n \n\n \n\n \n\n202,992\n\n \n\n \n\n \n\n59,136\n\n \n\n \n\n \n\n37,083\n\n \n\n \n\n \n\n91,446\n\n \n\n \n\n \n\n11,012\n\n \n\n \n\n \n\n150\n\n \n\nOther financial liabilities\n\n \n\n \n\n33,021\n\n \n\n \n\n \n\n33,021\n\n \n\n \n\n \n\n33,017\n\n \n\n \n\n \n\n4\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nLease liabilities\n\n \n\n \n\n12,097\n\n \n\n \n\n \n\n12,661\n\n \n\n \n\n \n\n2,933\n\n \n\n \n\n \n\n2,373\n\n \n\n \n\n \n\n2,288\n\n \n\n \n\n \n\n2,247\n\n \n\n \n\n \n\n1,805\n\n \n\n \n\n \n\n1,015\n\n \n\nDerivative financial\n   liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther financial liabilities\n\n \n\n \n\n1,186\n\n \n\n \n\n \n\n1,186\n\n \n\n \n\n \n\n1,186\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTotal liabilities\n\n \n\n \n\n3,781,218\n\n \n\n \n\n \n\n3,784,216\n\n \n\n \n\n \n\n3,560,630\n\n \n\n \n\n \n\n65,045\n\n \n\n \n\n \n\n43,436\n\n \n\n \n\n \n\n94,388\n\n \n\n \n\n \n\n14,578\n\n \n\n \n\n \n\n6,139\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOff-balance sheet item\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUndrawn loan\n   commitments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,954,633\n\n \n\n \n\n \n\n9,954,633\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\nF-68\n\n[Table of Contents](#toc_page)\n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nBook value\n\n \n\n \n\nContractual\ncash flow\n\n \n\n \n\nWithin\n1 year\n\n \n\n \n\nWithin\n1-2 years\n\n \n\n \n\nWithin\n2-3 years\n\n \n\n \n\nWithin\n3-4 years\n\n \n\n \n\nWithin\n4-5 years\n\n \n\n \n\nMore than\n5 years\n\n \n\nNon-derivative financial\n   liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n2,952,495\n\n \n\n \n\n \n\n2,952,536\n\n \n\n \n\n \n\n2,935,149\n\n \n\n \n\n \n\n5,118\n\n \n\n \n\n \n\n4,540\n\n \n\n \n\n \n\n1,204\n\n \n\n \n\n \n\n2,222\n\n \n\n \n\n \n\n4,303\n\n \n\nAccounts payable\n\n \n\n \n\n1,122,338\n\n \n\n \n\n \n\n1,122,338\n\n \n\n \n\n \n\n1,122,338\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBorrowings\n\n \n\n \n\n564,956\n\n \n\n \n\n \n\n566,243\n\n \n\n \n\n \n\n392,273\n\n \n\n \n\n \n\n67,883\n\n \n\n \n\n \n\n92,747\n\n \n\n \n\n \n\n11,813\n\n \n\n \n\n \n\n1,376\n\n \n\n \n\n \n\n151\n\n \n\nOther financial liabilities\n\n \n\n \n\n46,748\n\n \n\n \n\n \n\n46,748\n\n \n\n \n\n \n\n46,430\n\n \n\n \n\n \n\n106\n\n \n\n \n\n \n\n106\n\n \n\n \n\n \n\n106\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nLease liabilities\n\n \n\n \n\n9,549\n\n \n\n \n\n \n\n9,924\n\n \n\n \n\n \n\n2,475\n\n \n\n \n\n \n\n2,353\n\n \n\n \n\n \n\n2,257\n\n \n\n \n\n \n\n1,823\n\n \n\n \n\n \n\n770\n\n \n\n \n\n \n\n246\n\n \n\nDerivative financial\n   liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther financial liabilities\n\n \n\n \n\n1,368\n\n \n\n \n\n \n\n1,368\n\n \n\n \n\n \n\n1,368\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTotal liabilities\n\n \n\n \n\n4,697,454\n\n \n\n \n\n \n\n4,699,157\n\n \n\n \n\n \n\n4,500,033\n\n \n\n \n\n \n\n75,460\n\n \n\n \n\n \n\n99,650\n\n \n\n \n\n \n\n14,946\n\n \n\n \n\n \n\n4,368\n\n \n\n \n\n \n\n4,700\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOff-balance sheet item\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUndrawn loan\n   commitments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n10,622,322\n\n \n\n \n\n \n\n10,622,322\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n(C)\nLines of credit\n\nThe Group has lines of credit with financial institutions for borrowing arrangements and liquidation arrangements of credit card receivables. The remaining lines of credit available are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nCommitted lines of credit\n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\n3,673\n\n \n\n \n\n \n\n5,124\n\n \n\nUsed\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nRemaining\n\n \n\n \n\n3,673\n\n \n\n \n\n \n\n5,124\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUncommitted lines of credit\n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\n910,200\n\n \n\n \n\n \n\n1,024,200\n\n \n\nUsed\n\n \n\n \n\n(109,900\n\n)\n\n \n\n \n\n(205,600\n\n)\n\nRemaining\n\n \n\n \n\n800,300\n\n \n\n \n\n \n\n818,600\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal remaining lines of credit available\n\n \n\n \n\n803,973\n\n \n\n \n\n \n\n823,724\n\n \n\n \n\n(iii) Market Risk\n\n(A)\nForeign exchange risk management\n\nThe Group has exposure to foreign exchange risks on transactions denominated in currencies other than the functional currencies. The main foreign currency used for transactions of the Group is the U.S. dollar (“USD”).\n\nThe Group enters into forward exchange contracts, foreign exchange futures and other contracts in response to currency exposures resulting from on-balance sheet assets and liabilities denominated in foreign currencies in order to limit the net foreign exchange position by currency to an appropriate level.\n\nFor the banking business, identifying assets and liabilities subject to foreign exchange risk, the Group sets a risk limit for the investment amount and the present value fluctuation amount arising from that portfolio, and manages its compliance with the limit on a daily basis. In addition, the Group regularly analyzes the changes in present value due to exchange rate fluctuations and monitors the impact on assets and liabilities.\n\nThrough the risk management procedures described above, the Group’s net foreign exchange risk exposure and the effects on profit or loss before tax and shareholders’ equity are not material.\n\n(B)\nInterest rate risk management\n\nThe Group raises capital through interest-bearing borrowings and deposits, including those with floating interest rates, and hence is exposed to the risk of an increase in the interest payments resulting from rising interest rates. In order\n\nF-69\n\n[Table of Contents](#toc_page)\n\n \n\nto prevent or reduce the risk of interest rate fluctuations, the Group maintains an appropriate mix of interest-bearing debt with fixed and floating interest rates to hedge the risk of interest rate fluctuations. For floating interest rate debt, the Group also continuously monitors interest rate fluctuations.\n\nThe sensitivity analysis was performed by using balances of the outstanding financial liabilities, including deposits and borrowings bearing floating interest rates, as of March 31, 2025 and 2026, assuming such liabilities were outstanding for the full fiscal year immediately before the respective dates, while holding all other variables constant.\n\nThe table below presents the impact of a 1% increase in market interest rates, which would reduce profit or loss before tax and shareholders’ equity. A corresponding 1% decrease in market interest rates would result in an equal and opposite impact.\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nImpact on profit or loss before tax\n\n \n\n18,085\n\n \n\n23,111\n\nImpact on shareholders' equity\n\n \n\n12,500\n\n \n\n15,947\n\n \n\n \n\nFor the banking business, identifying assets and liabilities subject to interest rate risk management, the Group sets a risk limit for the amount of fluctuation in the present value arising from the portfolio and manages compliance with the limit on a daily basis. In addition, the Group regularly analyzes the change in present value in response to changes in the shape of the yield curve (flattening and steepening) and monitors the impact on assets and liabilities. Risk monitoring is carried out by the Risk Management Department, which is independent from the business division, after organizationally separating the front, middle and back offices. Monitoring results are reported internally on a daily basis and regularly to the Asset Liability Management Committee and the Board of Directors.\n\nAt PayPay Bank Corporation, financial assets exposed to interest rate risk are mainly debt instruments. The fluctuation of the fair value of these financial assets, given certain fluctuations in interest rates, is used in quantitative analysis as part of the process to manage interest rate risk. As the debt instruments are measured at FVTOCI, the change in interest rate only affects the shareholders’ equity but not profits before tax.\n\nPayPay Bank Corporation calculates the “BPV” (Basis Point Value: the change in market value when interest rates change by 0.01%) for these financial instruments as the change in the present value of the portfolio due to interest rate fluctuations, and uses this for quantitative analysis in interest rate risk management. When calculating BPV, PayPay Bank Corporation breaks down the target financial instruments into appropriate cash flows for each product classification by characteristics of the financial instruments, and applies the change rates derived from interest rate fluctuations for each period determined by the PayPay Bank Corporation.\n\nThe fluctuation is based on the assumption that risk variables other than interest rates remain constant, and does not take into account the correlation between interest rates and other risk variables. In general, an increase in market interest rates results in a decrease in the fair value of debt instruments, while a decrease in market interest rates results in an increase in their fair value. The following table presents the sensitivity of the fair value to the fluctuation of interest by 100 basis points.\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nAs the date of\n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nChange of fair value\n\n \n\n9,225\n\n \n\n11,155\n\n \n\nIn the calculation of the above table, debt securities held to maturity are excluded as they are not affected by changes in market interest rates.\n\n(3) Fair Value of Financial Instruments\n\n(i) The Group refers to the levels of the fair value hierarchy for financial instruments measured at fair value in the consolidated financial statements based on the following inputs:\n\n•\nLevel 1 inputs are quoted prices in active markets for identical assets or liabilities.\n\n•\nLevel 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.\n\nF-70\n\n[Table of Contents](#toc_page)\n\n \n\n•\nLevel 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entity’s own assumptions that market participants would use in establishing a price.\n\nTransfers between levels of fair value hierarchy are recognized as if they occurred at each reporting date. There were no material transfers between the levels for the years ended March 31, 2025 and 2026.\n\n(ii) The following table presents financial instruments measured at fair value on a recurring basis by level within the fair value hierarchy.\n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFair value\n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nSecurities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets measured at FVTPL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDebt instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExchange traded funds\n\n \n\n \n\n132,509\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n132,509\n\n \n\nEquity instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEquity securities\n\n \n\n \n\n184\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n184\n\n \n\nFinancial assets measured at FVTOCI\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDebt instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government bonds and municipal bonds\n\n \n\n \n\n4,639\n\n \n\n \n\n \n\n6,786\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,425\n\n \n\nCorporate and other debt securities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n87,492\n\n \n\n \n\n \n\n8,200\n\n \n\n \n\n \n\n95,692\n\n \n\nAsset backed securities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n279,442\n\n \n\n \n\n \n\n279,442\n\n \n\nOther financial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets measured at FVTPL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDerivative assets\n\n \n\n \n\n228\n\n \n\n \n\n \n\n2,006\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,234\n\n \n\nTotal\n\n \n\n \n\n137,560\n\n \n\n \n\n \n\n96,284\n\n \n\n \n\n \n\n287,642\n\n \n\n \n\n \n\n521,486\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther financial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liabilities measured at FVTPL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDerivative liabilities\n\n \n\n \n\n102\n\n \n\n \n\n \n\n1,084\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,186\n\n \n\nTotal\n\n \n\n \n\n102\n\n \n\n \n\n \n\n1,084\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,186\n\n \n\n \n\nF-71\n\n[Table of Contents](#toc_page)\n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFair value\n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nSecurities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets measured at FVTPL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDebt instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExchange traded funds\n\n \n\n \n\n202,879\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n202,879\n\n \n\nEquity instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEquity securities\n\n \n\n \n\n306\n\n \n\n \n\n \n\n24\n\n \n\n \n\n \n\n964\n\n \n\n \n\n \n\n1,294\n\n \n\nFinancial assets measured at FVTOCI\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDebt instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government bonds and municipal bonds\n\n \n\n \n\n55,949\n\n \n\n \n\n \n\n2,725\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n58,674\n\n \n\nCorporate and other debt securities\n\n \n\n \n\n3,118\n\n \n\n \n\n \n\n77,736\n\n \n\n \n\n \n\n6,732\n\n \n\n \n\n \n\n87,586\n\n \n\nAsset backed securities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n335,214\n\n \n\n \n\n \n\n335,214\n\n \n\nOther financial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial assets measured at FVTPL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDerivative assets\n\n \n\n \n\n203\n\n \n\n \n\n \n\n2,107\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,310\n\n \n\nTotal\n\n \n\n \n\n262,455\n\n \n\n \n\n \n\n82,592\n\n \n\n \n\n \n\n342,910\n\n \n\n \n\n \n\n687,957\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther financial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liabilities measured at FVTPL\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDerivative liabilities\n\n \n\n \n\n100\n\n \n\n \n\n \n\n1,268\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,368\n\n \n\nTotal\n\n \n\n \n\n100\n\n \n\n \n\n \n\n1,268\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,368\n\n \n\n \n\n(iii) The following table compares the fair value and carrying amount of the financial assets and financial liabilities. These are not measured at fair values in the Group’s Consolidated Statements of Financial Position, but for which fair values are disclosed. Certain financial instruments with short-term maturities are not included as their carrying amounts approximate their fair value.\n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nBook\n value\n\n \n\n \n\nFair value\n\n \n\n \n\n \n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nFinancial assets measured at amortized cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoan and advances\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMortgage loans\n\n \n\n \n\n664,594\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n673,236\n\n \n\n \n\n \n\n673,236\n\n \n\nOverdraft\n\n \n\n \n\n261,943\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n327,971\n\n \n\n \n\n \n\n327,971\n\n \n\nOther\n\n \n\n \n\n383\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n383\n\n \n\n \n\n \n\n383\n\n \n\nSecurities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDebt instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government bonds and municipal bonds\n\n \n\n \n\n353,590\n\n \n\n \n\n \n\n126,188\n\n \n\n \n\n \n\n220,256\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n346,444\n\n \n\nCorporate and other debt securities\n\n \n\n \n\n200,015\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n195,886\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n195,886\n\n \n\nAsset backed securities\n\n \n\n \n\n2,891\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,866\n\n \n\n \n\n \n\n2,866\n\n \n\nTotal\n\n \n\n \n\n1,483,416\n\n \n\n \n\n \n\n126,188\n\n \n\n \n\n \n\n416,142\n\n \n\n \n\n \n\n1,004,456\n\n \n\n \n\n \n\n1,546,786\n\n \n\nFinancial liabilities measured at amortized\n   cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDemand deposits\n\n \n\n \n\n1,688,643\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,688,643\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,688,643\n\n \n\nTime deposits\n\n \n\n \n\n152,393\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n152,222\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n152,222\n\n \n\nBorrowings\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoan payables\n\n \n\n \n\n315,578\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n99,354\n\n \n\n \n\n \n\n210,907\n\n \n\n \n\n \n\n310,261\n\n \n\nTotal\n\n \n\n \n\n2,156,614\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,940,219\n\n \n\n \n\n \n\n210,907\n\n \n\n \n\n \n\n2,151,126\n\n \n\n \n\nF-72\n\n[Table of Contents](#toc_page)\n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\n \n\n \n\n \n\nFair value\n\n \n\n \n\n \n\nBook\n value\n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nFinancial assets measured at amortized cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoan and advances\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMortgage loans\n\n \n\n \n\n909,483\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n908,513\n\n \n\n \n\n \n\n908,513\n\n \n\nOverdraft\n\n \n\n \n\n312,255\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n337,479\n\n \n\n \n\n \n\n337,479\n\n \n\nOther\n\n \n\n \n\n16,879\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n16,841\n\n \n\n \n\n \n\n16,841\n\n \n\nSecurities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDebt instruments\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nJapanese government bonds and municipal bonds\n\n \n\n \n\n720,182\n\n \n\n \n\n \n\n264,985\n\n \n\n \n\n \n\n439,089\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n704,074\n\n \n\nCorporate and other debt securities\n\n \n\n \n\n328,535\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n319,545\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n319,545\n\n \n\nAsset backed securities\n\n \n\n \n\n2,471\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,480\n\n \n\n \n\n \n\n2,480\n\n \n\nTotal\n\n \n\n \n\n2,289,805\n\n \n\n \n\n \n\n264,985\n\n \n\n \n\n \n\n758,634\n\n \n\n \n\n \n\n1,265,313\n\n \n\n \n\n \n\n2,288,932\n\n \n\nFinancial liabilities measured at amortized\n   cost\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDemand deposits\n\n \n\n \n\n2,090,486\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,090,486\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,090,486\n\n \n\nTime deposits\n\n \n\n \n\n178,594\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n178,319\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n178,319\n\n \n\nBorrowings\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoan payables\n\n \n\n \n\n491,956\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n208,150\n\n \n\n \n\n \n\n278,056\n\n \n\n \n\n \n\n486,206\n\n \n\nTotal\n\n \n\n \n\n2,761,036\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,476,955\n\n \n\n \n\n \n\n278,056\n\n \n\n \n\n \n\n2,755,011\n\n \n\n \n\n(iv) Fair value of financial instruments is measured as follows:\n\n(A)\nDebt instruments\n\nFair values of the debt instruments that mainly consist of Japanese government bonds and municipal bonds are evaluated at quoted prices for the identical assets in active markets. When these prices are available, the fair values are classified as Level 1. When these prices are not available, the fair values are evaluated using observable inputs based on available information such as reference statistical prices, and those are classified as Level 2.\n\nFair values of the debt instruments that consist of exchange traded funds are evaluated at quoted prices for the identical assets in active markets and those are classified as Level 1. Fair values of the debt instruments that consist of corporate bonds are calculated by each contract using discounted future cash flows according to the contract period using an interest rate that reflects the credit risk. Those that are measured using market-observable inputs such as interest rates reflecting external credit ratings are classified as Level 2, and those that use unobservable inputs such as unobservable credit spread of the issuers of the debt instruments are classified as Level 3. The Risk Management Department quarterly evaluates whether the quoted price meets the eligibility of fair value under IFRS 13 by determining whether there is a certain discrepancy between the quoted price and the price calculated by the Financial Planning Department on a sample basis by type of debt instruments.\n\n(B)\nEquity instruments\n\nThese securities include listed shares and private investment trust. Fair values of listed shares are evaluated at quoted prices for the identical assets in active markets and those are classified as Level 1. Fair values of private investment trust that are measured using market-observable inputs such as interest rates reflecting external credit ratings are classified as Level 2, and those that use significant unobservable inputs such as unobservable real estate risk premium are classified as Level 3.\n\n(C)\nAsset backed securities\n\nThese securities include residential mortgage backed, credit card asset backed, installment receivables backed, and other asset backed securities. The markets for these securities are not active, and fair values of the asset backed securities are evaluated using broker or dealer quotations of identical or similar securities where the significant inputs are yields, prepayment rates, default probabilities and loss severities. Because such significant inputs are unobservable, these are classified as Level 3.\n\nThe Group monitors whether there is a continuing discrepancy between the quotations from brokers or\n\nF-73\n\n[Table of Contents](#toc_page)\n\n \n\ndealers and the value calculated by the Risk Management Department on a daily basis using discounted future cash flows. In addition, the Risk Management Department quarterly evaluates whether the quoted price meets the eligibility of fair value under IFRS 13 by determining whether there is a certain discrepancy between the quoted price and the price calculated by the Financial Planning Department on a sample basis by type of asset backed securities.\n\n(D)\nDerivative instruments\n\nFair values of the derivative instruments that consist of listed derivatives are evaluated at quoted prices for the identical derivatives in active markets and those are classified as Level 1. Fair values of the derivative instruments that consist of over-the-counter foreign currency derivatives are evaluated using broker or dealer quotations derived by discounted future cash-flow method where the significant inputs are future foreign exchange rates and interest rates. These are classified as Level 2.\n\n(E)\nLoans and advances\n\nFair values of the loans and advances are measured based on the discounted cash flow model using an interest rate considering the credit spread that is based on the internal rating and loan terms. Because the credit spread is a significant unobservable input, these are classified as Level 3.\n\n(F)\nDeposits\n\nFair values of the on-demand deposits that are paid immediately upon demand on the statement of financial position date are measured at fair value at that amount. Fair values of the time deposits are measured based on the discounted present value obtained by discounting future cash flows applying current rates for deposits of similar remaining maturities. For those with a short remaining maturity (six months or less), fair value is approximately equal to book value, so the book value is recorded as fair value. These are classified as Level 2.\n\n(G)\nBorrowings\n\nFair values of the borrowings are measured based on the discounted cash flow model using an interest rate considering the Group's own credit spread that would be used for borrowing with the same terms and maturity. The borrowings mainly consist of those classified as Level 3 since the Group’s own credit spread is used for fair value measurement which is unobservable. Other financial instruments not listed above, such as call loans, are settled mainly within one year and book value approximates their fair value.\n\n(v) The changes in financial instruments categorized as Level 3\n\nThe changes in financial instruments categorized as Level 3 are as follows:\n\nFor the year ended March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\n \n\nFinancial assets measured at FVTOCI\n\n \n\n \n\n \n\nAsset backed\nsecurities\n\n \n\n \n\nCorporate and other debt securities\n\n \n\n \n\nTotal\n\n \n\nFair value as of April 1, 2024\n\n \n\n \n\n204,271\n\n \n\n \n\n \n\n9,663\n\n \n\n \n\n \n\n213,934\n\n \n\nPurchases\n\n \n\n \n\n138,261\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n138,261\n\n \n\nTotal gains (losses) for the year:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIncluded in other comprehensive income (loss)\n\n \n\n \n\n(1,964\n\n)\n\n \n\n \n\n(63\n\n)\n\n \n\n \n\n(2,027\n\n)\n\nSales and settlements\n\n \n\n \n\n(61,126\n\n)\n\n \n\n \n\n(1,400\n\n)\n\n \n\n \n\n(62,526\n\n)\n\nFair value as of March 31, 2025\n\n \n\n \n\n279,442\n\n \n\n \n\n \n\n8,200\n\n \n\n \n\n \n\n287,642\n\n \n\n \n\nF-74\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(in millions of yen)\n\n \n\n \n\nFinancial assets measured at FVTPL\n\n \n\n \n\nFinancial assets measured at FVTOCI\n\n \n\n \n\nEquity Securities\n\n \n\n \n\nAsset backed\nsecurities\n\n \n\n \n\nCorporate and other debt securities\n\n \n\n \n\nTotal\n\n \n\nFair value as of April 1, 2025\n\n-\n\n \n\n \n\n \n\n279,442\n\n \n\n \n\n \n\n8,200\n\n \n\n \n\n \n\n287,642\n\n \n\nPurchases\n\n \n\n964\n\n \n\n \n\n \n\n135,968\n\n \n\n \n\n-\n\n \n\n \n\n \n\n136,932\n\n \n\nTotal gains (losses) for the year:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIncluded in other comprehensive income (loss)\n\n-\n\n \n\n \n\n \n\n(192\n\n)\n\n \n\n \n\n(68\n\n)\n\n \n\n \n\n(260\n\n)\n\nSales and settlements\n\n-\n\n \n\n \n\n \n\n(80,004\n\n)\n\n \n\n \n\n(1,400\n\n)\n\n \n\n \n\n(81,404\n\n)\n\nFair value as of March 31, 2026\n\n \n\n964\n\n \n\n \n\n \n\n335,214\n\n \n\n \n\n \n\n6,732\n\n \n\n \n\n \n\n342,910\n\n \n\n \n\n(vi) Valuation techniques and inputs\n\nThe valuation techniques used to measure the fair value of major assets classified as Level 3 and significant unobservable inputs are as follows:\n\n \n\nFinancial assets\n\n \n\nValuation technique\n\n \n\nSignificant unobservable inputs\n\nAsset backed securities\n\n \n\nDiscounted cash flows\n\n \n\nDiscount margin/spreads\n\nConstant prepayment rate\n\nConstant default rate\n\nEquity securities\n\n \n\nDiscounted cash flows\n\n \n\nReal estate risk premium\n\nLoan and advances\n\nDebt instruments\n\n \n\nDiscounted cash flows\n\n \n\nCredit spread\n\n \n\nThe fair values of the asset backed securities were measured using broker or dealer quotes. These quotes are derived using discounted cash flow models. The broker or dealer quotes used are non-binding and reflect indicative pricing based on proprietary models and assumptions. The Group reviews the significant inputs used in the calculation of the quoted price. The Group believes that no adjustments are required for the broker or dealer quotes, and the use of broker or dealer quotes represents the best estimate of fair value, given the lack of active markets and observable inputs for asset backed securities.\n\n(A)\nDiscount margin/spreads\n\nDiscount margin/spreads represent the discount rates used when calculating the present value of future cash flows. In discounted cash flow models, such spreads are added to the benchmark rate when discounting the future expected cash flows. Hence, these spreads reduce the net present value of an asset. They generally reflect the premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by the uncertainty of the cash flows caused by the credit quality of the asset.\n\n(B)\nConstant prepayment rate\n\nThe constant prepayment rates represent the expected future speed at which a loan portfolio will be repaid ahead of the contractual terms of the underlying loans. Hence, this rate reduces the net present value of the asset backed securities when it is high.\n\n(C)\nConstant default rate\n\nThe constant default rate reflects the percentage of loans within a pool of loans on which the borrowers have fallen behind in making payments to their lender by more than 90 days. Hence, this rate reduces the net present value of the asset backed securities when it is high.\n\n(D)\nReal estate risk premium\n\nReal estate risk premium reflects terminal capitalization rates which are used in calculating reversionary value of real estate, and discount margin/spreads of real estate.\n\n(E)\nCredit spread\n\nThe credit spread represents the discount rate used when calculating the present value of future cash flows. In discounted cash flow models, such a spread is added to the benchmark rate when discounting the future expected cash flows. Hence, this spread reduces the net present value of debt instruments. The credit spread\n\nF-75\n\n[Table of Contents](#toc_page)\n\n \n\nreflects the additional net yield an investor can earn from a security with more credit risk relative to one with less credit risk.\n\n(4) Transfers of financial assets that do not meet the requirements for derecognition\n\n(i)\nTransfer of financial assets pertaining to Code-based Payment Business\n\nThe Group transfers certain settlement receivables included in accounts receivable to an external payment service provider. These transferred receivables subject to recourse obligation that makes the Group obligated to pay in the case of the debtor’s default and other specific conditions. As the Group bears credit risks arising from such transactions until collection of receivables, the Group has not substantially transferred all risks and rewards and therefore, such receivables are not derecognized.\n\nThe balances of transferred receivables that did not meet the requirement for derecognition of financial assets were 21,615 million yen and 20,494 million yen, which were included in accounts receivable in the Group’s Consolidated Statements of Financial Position, as of March 31, 2025 and 2026, respectively. The amounts received due to the transfer were 3,269 million yen and 1,694 million yen, which were included in other financial liabilities in the Group’s Consolidated Statements of Financial Position, as of March 31, 2025 and 2026, respectively. As these financial instruments are settled in a short period of time, the carrying amounts are equal to or reasonably approximate to their fair values, and consequently net positions are equal to or reasonably approximate to the difference between the fair value of the transferred assets and the associated liabilities.\n\nThis liability will be settled when the payment for the transferred assets by the original debtors is made and the Group is unable to utilize the transferred assets until the settlement is made. The difference between the amount of transferred assets and related liabilities as of March 31, 2025 and 2026 are because of timing difference between the transfer and the collection.\n\n(ii)\nTransfers of receivables arising from the credit card business\n\nThe Group transfers certain credit card receivables included in loans and advances to customers to financial institutions. Certain transferred receivables are subject to recourse obligation that makes the Group obligated to pay the transferee in the case of the debtor’s default and other conditions. As the Group bears credit risks arising from such transfers until the collection of such receivables, the Group has not substantially transferred all risks and rewards and therefore, such receivables are not derecognized.\n\nThe balances of receivables transferred that did not meet the requirement for derecognition of financial assets were 1,144 million yen and 7,133 million yen which were included in loans and advances to customers in the Group’s Consolidated Statements of Financial Position, as of March 31, 2025 and 2026, respectively. The amounts received from the transferee were 70,000 million yen and 160,000 million yen, which were included in borrowings in the Consolidated Statements of Financial Position, as of March 31, 2025 and 2026, respectively.\n\nThis borrowing will be derecognized when the payment for the transferred receivables by the original debtors received is executed and until such payment is received the Group is unable to utilize the transferred receivables. The difference between the amount of transferred receivables and related borrowing for the years ended March 31, 2025 and 2026 are due to collection of credit card receivables.\n\n \n\n(iii)\nTransfers of securities arising from repurchase agreements\n\nFor the year ended March 31, 2026, the Group transfers certain debt instruments measured at amortized cost included in securities to money market dealers. While the Group transfers the debt instruments, the Group enters into agreements to repurchase them at fixed prices in the future, and therefore the Group bears the price fluctuation risks of such debt instruments. As the Group bears the price fluctuation risks arising from such transactions until the repurchase is executed, the Group has not substantially transferred all risks and rewards and therefore, such securities are not derecognized.\n\n \n\nThe balance of transferred securities that did not meet the requirement for derecognition of financial assets was 111,360 million yen, which was included in securities in the Group’s Consolidated Statements of Financial Position, as of March 31, 2026. The amount received from the transferee was 108,981 million yen, which was included in borrowings in the Group’s Consolidated Statements of Financial Position, as of March 31, 2026.\n\n \n\nThis borrowing will be derecognized when the repurchase by the Group is executed, and until the repurchase is executed, the Group is unable to utilize the transferred debt instruments. In addition, the carrying amounts of the transferred debt instruments and the associated borrowings reasonably approximate their fair values as of March 31, 2026.\n\nF-76\n\n[Table of Contents](#toc_page)\n\n \n\n(5) Assets Pledged as Collateral\n\nThe carrying amounts of assets pledged as collateral are as follows:\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nGuarantee deposits (1)\n\n \n\n \n\n2,133\n\n \n\n \n\n \n\n1,980\n\n \n\nLoans and advances to customers (2)\n\n \n\n \n\n30,982\n\n \n\n \n\n \n\n30,999\n\n \n\nSecurities (1)(3)\n\n \n\n \n\n249,056\n\n \n\n \n\n \n\n605,904\n\n \n\nOther (1)\n\n \n\n \n\n3,713\n\n \n\n \n\n \n\n5,162\n\n \n\nTotal\n\n \n\n \n\n285,884\n\n \n\n \n\n \n\n644,045\n\n \n\n \n\n(1)\nFinancial institutions have the right to dispose of the assets pledged as collateral and apply the proceeds to satisfy the outstanding debt or offset the amount due in the event of a default.\n\n(2)\nThe Group does not derecognize credit card receivables that are transferred to securitization trusts. The amounts of borrowings from securitization backed by pledged loans and advances to customers was 55,000 million yen as of March 31, 2025 and 2026. The transfers of credit card receivables that do not meet the requirements for derecognition are shown in (ii) Transfers of receivables arising from the credit card business above.\n\n(3)\nPayPay Bank Corporation pledges securities as collateral with the Bank of Japan and the Japanese Banks' Payment Clearing Network for funding and for settlement purposes.\n\n \n\n(6) Offsetting of Financial Assets and Financial Liabilities\n\nThe offsetting information regarding financial assets and financial liabilities is as follows:\n\nAs of March 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nGross amounts\nof recognized\nfinancial assets\nand financial\nliabilities\n\n \n\n \n\nAmounts offset in Consolidated\nStatements of\nFinancial\nPosition\n\n \n\n \n\nNet amounts\npresented in Consolidated\nStatements of\nFinancial\nPosition\n\n \n\n \n\nNet amounts\n\n \n\nFinancial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts receivable\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSettlement receivables\n\n \n\n \n\n54,611\n\n \n\n \n\n \n\n(21,904\n\n)\n\n \n\n \n\n32,707\n\n \n\n \n\n \n\n32,707\n\n \n\nOther receivables\n\n \n\n \n\n15,396\n\n \n\n \n\n \n\n(15,396\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nLoans and advances to customers\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCredit card receivables\n\n \n\n \n\n1\n\n \n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOther financial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nReceivables from third party operators of\n   deposit machines\n\n \n\n \n\n21,418\n\n \n\n \n\n \n\n(16,075\n\n)\n\n \n\n \n\n5,343\n\n \n\n \n\n \n\n5,343\n\n \n\nFinancial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSettlement payables\n\n \n\n \n\n934,212\n\n \n\n \n\n \n\n(36,473\n\n)\n\n \n\n \n\n897,739\n\n \n\n \n\n \n\n897,739\n\n \n\nCredit card payables\n\n \n\n \n\n27,742\n\n \n\n \n\n \n\n(373\n\n)\n\n \n\n \n\n27,369\n\n \n\n \n\n \n\n27,369\n\n \n\nOther payables\n\n \n\n \n\n545\n\n \n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n544\n\n \n\n \n\n \n\n544\n\n \n\nOther financial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccrued expenses\n\n \n\n \n\n454\n\n \n\n \n\n \n\n(454\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nSuspense receipts\n\n \n\n \n\n19,496\n\n \n\n \n\n \n\n(16,075\n\n)\n\n \n\n \n\n3,421\n\n \n\n \n\n \n\n3,421\n\n \n\n \n\nF-77\n\n[Table of Contents](#toc_page)\n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nGross amounts\nof recognized\nfinancial assets\nand financial\nliabilities\n\n \n\n \n\nAmounts offset in\nConsolidated\nStatements of\nFinancial\nPosition\n\n \n\n \n\nNet amounts\npresented in\nConsolidated\nStatements of\nFinancial\nPosition\n\n \n\n \n\nNet amounts\n\n \n\nFinancial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts receivable\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSettlement receivables\n\n \n\n \n\n55,361\n\n \n\n \n\n \n\n(25,674\n\n)\n\n \n\n \n\n29,687\n\n \n\n \n\n \n\n29,687\n\n \n\nOther receivables\n\n \n\n \n\n18,676\n\n \n\n \n\n \n\n(18,676\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nLoans and advances to customers\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCredit card receivables\n\n \n\n \n\n1\n\n \n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOther financial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nReceivables from third party operators of\n   deposit machines\n\n \n\n \n\n22,201\n\n \n\n \n\n \n\n(17,547\n\n)\n\n \n\n \n\n4,654\n\n \n\n \n\n \n\n4,654\n\n \n\nFinancial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSettlement payables\n\n \n\n \n\n1,108,070\n\n \n\n \n\n \n\n(43,533\n\n)\n\n \n\n \n\n1,064,537\n\n \n\n \n\n \n\n1,064,537\n\n \n\nCredit card payables\n\n \n\n \n\n30,684\n\n \n\n \n\n \n\n(404\n\n)\n\n \n\n \n\n30,280\n\n \n\n \n\n \n\n30,280\n\n \n\nOther payables\n\n \n\n \n\n589\n\n \n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n587\n\n \n\n \n\n \n\n587\n\n \n\nOther financial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccrued expenses\n\n \n\n \n\n412\n\n \n\n \n\n \n\n(412\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nSuspense receipts\n\n \n\n \n\n20,681\n\n \n\n \n\n \n\n(17,547\n\n)\n\n \n\n \n\n3,134\n\n \n\n \n\n \n\n3,134\n\n \n\n \n\nThe Group has no enforceable master netting arrangement or similar agreement.\n\n37. Subsidiaries and Investments Accounted for Using the Equity Method\n\n(1)　Information on Subsidiaries\n\nThe Group’s consolidated financial statements include the following subsidiaries.\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPercentage of ownership\n\n \n\nName\n\n \n\nPrimary business activities\n\n \n\nCountry of\nincorporation\n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPayPay Card Corporation\n\n \n\nCredit card business\n\n \n\nJapan\n\n \n\n \n\n100\n\n \n\n \n\n \n\n100\n\n \n\nPayPay India Private Limited\n\n \n\nSoftware development\n\n \n\nIndia\n\n \n\n \n\n100\n\n \n\n \n\n \n\n100\n\n \n\nPayPay Bank Corporation (1)\n\n \n\nBanking business\n\n \n\nJapan\n\n \n\n \n\n6\n\n \n\n \n\n \n\n76\n\n \n\nPayPay Securities Corporation (2)\n\n \n\nSecurity intermediary business\n\n \n\nJapan\n\n \n\n \n\n29\n\n \n\n \n\n \n\n75\n\n \n\nPPSC Investment Service Corporation (3)\n\n \n\nPayPay Point investment-related business\n\n \n\nJapan\n\n \n\n \n\n29\n\n \n\n \n\n \n\n75\n\n \n\nCredit Engine, Inc. (4)\n\n \n\nSoftware development\n\n \n\nJapan\n\n \n\n \n\n100\n\n \n\n \n\n \n\n100\n\n \n\nLENDY Servicing, Inc. (5)\n\n \n\nServicer\n\n \n\nJapan\n\n \n\n \n\n100\n\n \n\n \n\n \n\n100\n\n \n\nCE Asset, Inc. (5)\n\n \n\nServicer\n\n \n\nJapan\n\n \n\n \n\n100\n\n \n\n \n\n \n\n100\n\n \n\nCredit Engine Asia Pte. Ltd. (6)\n\n \n\nServicer\n\n \n\nSingapore\n\n \n\n \n\n100\n\n \n\n \n\n \n\n—\n\n \n\n \n\n(1)\nThe Group consolidated the financial statements of PayPay Bank Corporation retrospectively from April 1, 2022 as PayPay Bank Corporation was acquired through a business combination of entities under common control with Z Financial Corporation (currently LY Corporation), a subsidiary of SBG. Refer to Note 7, Business Combinations, for details.\n\n(2)\nThe Group consolidated the financial statements of PayPay Securities Corporation retrospectively from April 1, 2022 as PayPay Securities Corporation was acquired through a business combination of entities under common control with SoftBank Corp. and LY Corporation, subsidiaries of SBG. Refer to Note 7, Business Combinations, for details.\n\n(3)\nPPSC Investment Service Corporation is a subsidiary of PayPay Securities Corporation.\n\n(4)\nEffective April 1, 2025, Credit Engine Group, Inc. absorbed Credit Engine, Inc., its wholly owned subsidiary, with Credit Engine Group, Inc. as the surviving company and Credit Engine, Inc. as the disappearing company.\n\n(5)\nThese companies are subsidiaries of Credit Engine, Inc. (formerly Credit Engine Group, Inc.).\n\n(6)\n The liquidation of Credit Engine Asia Pte. Ltd. was completed, effective September 1, 2025.\n\n(2)　Summarized Financial Information and Other Information on a Subsidiary with Significant Non-controlling Interests\n\nF-78\n\n[Table of Contents](#toc_page)\n\n \n\nThe summarized financial information and other information on subsidiaries with significant non-controlling interests for the years ended March 31, 2024, 2025 and 2026 are as follows.\n\n \n\nPayPay Bank Corporation\n\nGeneral Information\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nOwnership of the non-controlling interests (%) (1)(2)\n\n \n\n94\n\n \n\n94\n\n \n\n24\n\n(1)\nNon-controlling interests of PayPay Bank Corporation represent the share of PayPay Bank Corporation not owned by the Company’s ultimate parent company, SBG, prior to the actual date of the business combination of entities under common control on April 11, 2025. Such interests arise as the Company applied the pooling of interests method of accounting for the acquisition of PayPay Bank Corporation retrospectively.\n\n(2)\nOn April 11, 2025, the Company acquired 47.1% of the common shares and all non-voting Class A preferred shares of PayPay Bank Corporation from Mitsui Sumitomo Insurance Co., Ltd. and SBG’s subsidiary, Z Financial Corporation (currently LY Corporation), with such preferred shares subsequently converted into common shares on April 28, 2025, resulting in an ownership interest of 75.5%. Refer to Note 7, Business Combinations for further details.\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nAccumulated amount attributable to non-controlling\n   interests in PayPay Bank Corporation\n\n \n\n \n\n119,427\n\n \n\n33,249\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nProfit for the year attributable to non-controlling\n   interests in PayPay Bank Corporation\n\n \n\n5,037\n\n \n\n5,052\n\n \n\n2,745\n\n \n\nSummarized financial information\n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nTotal assets\n\n \n\n2,179,939\n\n \n\n3,155,448\n\nTotal liabilities\n\n \n\n2,048,079\n\n \n\n3,019,577\n\nTotal shareholders’ equity\n\n \n\n131,860\n\n \n\n135,871\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nTotal revenue\n\n \n\n43,322\n\n \n\n49,658\n\n \n\n65,745\n\nProfit for the year\n\n \n\n5,483\n\n \n\n5,368\n\n \n\n10,844\n\nTotal comprehensive income for the year, net of tax\n\n \n\n4,351\n\n \n\n1,915\n\n \n\n7,444\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nNet cash provided by operating activities\n\n \n\n38,709\n\n \n\n82,238\n\n \n\n592,220\n\nNet cash used in investing activities\n\n \n\n(238,302)\n\n \n\n(102,940)\n\n \n\n(618,910)\n\nNet cash provided by (used in) financing activities\n\n \n\n77,686\n\n \n\n(3,645)\n\n \n\n104,578\n\nEffect of exchange rate changes on cash and cash\n   equivalents\n\n \n\n392\n\n \n\n(11)\n\n \n\n—\n\nIncrease (decrease) in cash and cash equivalents\n\n \n\n(121,515)\n\n \n\n(24,358)\n\n \n\n77,888\n\n \n\nF-79\n\n[Table of Contents](#toc_page)\n\n \n\n(3)　Investments Accounted for Using the Equity Method\n\nThe consolidated financial statements of the Group include the following investments accounted for using the equity method:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPercentage of ownership\n\nName\n\n \n\nPrimary business activities\n\n \n\nCountry of\nincorporation\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nPayPay SC Corporation\n\n \n\nMerchant acquisition agent\n\n \n\nJapan\n\n \n\n34\n\n \n\n34\n\nBinance Japan Inc.(1)\n\n \n\nCryptocurrency exchange business\n\n \n\nJapan\n\n \n\n—\n\n \n\n40\n\n(1)\nThe Group acquired shares of Binance Japan Inc. in September 2025.\n\nFinancial information of individually immaterial investments accounted for using the equity method is as follows:\n\nInformation on investments accounted for using the equity method as of March 31, 2025 is omitted as it is immaterial.\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nMarch 31, 2026\n\nCarrying amounts\n\n \n\n12,762\n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2026\n\nShare of loss\n\n \n\n(137)\n\nShare of total comprehensive loss\n\n \n\n(137)\n\n \n\n(4)　Structured Entities\n\nThe Group’s consolidated structured entities include money trusts established and operated for specific purposes, and trusts established to facilitate securitization transactions for the Group’s receivables. Although the Group does not hold voting rights or similar rights in these trusts, the Group has the power to direct the relevant activities under the trust agreements and other contractual arrangements. In addition, the Group is exposed to variable returns associated with income and other economic benefits generated by these trusts. Furthermore, the Group has the ability to affect the amount of such variable returns through its power over these trusts. Accordingly, the Group has determined that it controls these trusts and consolidates them. Except for additional trust contributions required to satisfy safeguarding obligations under the Payment Services Act, and for subordinated beneficial interests in securitization trusts, the Group has no contractual obligation to provide significant financial or other support to any of these trusts. In addition, the Group has not provided, and does not intend to provide, significant financial or other support to its consolidated structured entities. Additionally, the Group has no material unconsolidated structured entities.\n\n \n\n \n\nF-80\n\n[Table of Contents](#toc_page)\n\n \n\n38. Related Party Transactions\n\nThe following tables provide significant balances and related party transactions for the years ended March 31, 2024, 2025 and 2026. For information about the Group’s structure, including the parent companies, refer to Note 1, Reporting Entity.\n\n(1)\nTransactions with Related Parties\n\nFor the year ended March 31, 2024\n\nSignificant balances and transactions between the Group and related parties are as follows:\n\nSettlement and Other Operating Transactions\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nProfit or\nloss (1)\n\n \n\n \n\nSettlement\namounts (2)\n\n \n\n \n\nOutstanding\nreceivable\n(payable)\nbalances (3)\n\n \n\nParent company\n\n \n\nSoftBank Corp.\n\n \n\nGranting PayPay Points to users\non behalf of SoftBank Corp. (4)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n19,888\n\n \n\n \n\n \n\n3,350\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(184\n\n)\n\n \n\n \n\n \n\n \n\nSecuritization transaction involving\nreceivables\n\n \n\n \n\n—\n\n \n\n \n\n \n\n51,543\n\n \n\n \n\n \n\n80,278\n\n \n\nParent company\n\n \n\nLY Corporation\n\n \n\nRendering settlement service (5)\n\n \n\n \n\n15,701\n\n \n\n \n\n \n\n1,768,955\n\n \n\n \n\n \n\n(138,749\n\n)\n\n \n\n \n\n \n\n \n\nBearing expenses of user incentives awarded by LY Corporation (6)\n\n \n\n \n\n6,573\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(844\n\n)\n\nSubsidiary of parent company\n\n \n\nSB Payment Service\nCorporation\n\n \n\nUtilizing settlement system for\nmerchants (7)\n\n \n\n \n\n10,245\n\n \n\n \n\n \n\n912,322\n\n \n\n \n\n \n\n36,144\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(4,471\n\n)\n\n \n\n \n\n \n\n \n\nRendering settlement service (7)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n419,058\n\n \n\n \n\n \n\n(22,240\n\n)\n\n \n\n(1)\nProfit or loss shows the amount that is recorded in the Group’s Consolidated Statements of Profit or Loss.\n\n(2)\nSettlement amounts show the volume of settlements in millions of yen for settlement related services that are recorded as items in the Consolidated Statements of Financial Position and not recorded as profit or loss.\n\n(3)\nThe receivable and payable amounts outstanding are unsecured and will be settled in cash.\n\n(4)\nThe Group grants PayPay Points to users on behalf of SoftBank Corp. and claims those amounts from SoftBank Corp.\n\n(5)\nThe Group renders settlement services such as for LY Corporation’s e-commerce businesses. The amounts of profit or loss and settlement amount are total of those with Yahoo Japan Corporation on and before September 30, 2023 and those with LY Corporation after September 30, 2023, due to the intra-group reorganizations of LY Corporation on October 1, 2023. Refer to Note 1, Reporting Entity for further details of the intra-group reorganizations of LY Corporation.\n\n(6)\nThe Group pays for user incentives awarded mainly by making purchases on LY Corporation's e-commerce platform.\n\n(7)\nThe Group utilizes SB Payment Service Corporation’s settlement system for merchants, which enables users to top up the PayPay Balance and Other Items and billings of telecommunication services of SoftBank Corp.\n\nFinancial Transaction\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nInterest amounts\n\n \n\n \n\nOutstanding\nreceivable\n(payable)\nbalances\n\n \n\nParent company\n\n \n\nLY Corporation\n\n \n\nLoan payables and interest expenses (1)\n\n \n\n \n\n502\n\n \n\n \n\n \n\n(95,100\n\n)\n\n \n\n \n\n \n\n \n\nDeposits and interest received (1)\n\n \n\n \n\n428\n\n \n\n \n\n \n\n—\n\n \n\n \n\n(1)\nInterest amount is total of those with Z Holdings Corporation on and before September 30, 2023 and those with LY Corporation after September 30, 2023, due to the intra-group reorganizations of LY Corporation on October 1, 2023. Refer to Note 1, Reporting Entity for further details of the intra-group reorganizations of LY Corporation.\n\nF-81\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2025\n\nSignificant balances and transactions between the Group and related parties are as follows:\n\nSettlement and Other Operating Transactions\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nProfit\n or loss (1)\n\n \n\n \n\nSettlement\namounts (2)\n\n \n\n \n\nOutstanding\nreceivable\n(payable)\nbalances (3)\n\n \n\nParent company\n\n \n\nSoftBank Corp.\n\n \n\nGranting PayPay Points to users\non behalf of SoftBank Corp. (4)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,385\n\n \n\n \n\n \n\n4,546\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(259\n\n)\n\n \n\n \n\n \n\n \n\nSecuritization transaction\ninvolving receivables\n\n \n\n \n\n—\n\n \n\n \n\n \n\n72,914\n\n \n\n \n\n \n\n123,050\n\n \n\nParent company\n\n \n\nLY Corporation\n\n \n\nRendering settlement service (5)\n\n \n\n \n\n18,253\n\n \n\n \n\n \n\n1,825,130\n\n \n\n \n\n \n\n(148,646\n\n)\n\n \n\n \n\n \n\n \n\nBearing expenses of user incentives awarded by LY Corporation (6)\n\n \n\n \n\n2,814\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(474\n\n)\n\nSubsidiary of parent company\n\n \n\nSB Payment Service\nCorporation\n\n \n\nUtilizing settlement system\nfor merchants (7)\n\n \n\n \n\n8,806\n\n \n\n \n\n \n\n615,825\n\n \n\n \n\n \n\n32,275\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(3,531\n\n)\n\n \n\n \n\n \n\n \n\nRendering settlement service (7)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n721,382\n\n \n\n \n\n \n\n(39,036\n\n)\n\n \n\n(1)\nProfit or loss shows the amount that is recorded in the Group’s Consolidated Statements of Profit or Loss.\n\n(2)\nSettlement amounts show the volume of settlements in millions of yen for settlement related services that are recorded as items in the Consolidated Statements of Financial Position and not recorded as profit or loss.\n\n(3)\nThe receivable and payable amounts outstanding are unsecured and will be settled in cash.\n\n(4)\nThe Group grants PayPay Points to users on behalf of SoftBank Corp. and claims those amounts from SoftBank Corp.\n\n(5)\nThe Group renders settlement services such as for LY Corporation’s e-commerce businesses.\n\n(6)\nThe Group pays for user incentives awarded mainly by making purchases on LY Corporation's e-commerce platform.\n\n(7)\nThe Group utilizes SB Payment Service Corporation’s settlement system for merchants, which enables users to top up the PayPay Balance and Other Items and billings of telecommunication services of SoftBank Corp.\n\nFinancial Transactions\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nInterest amounts\n\n \n\n \n\nOutstanding\nreceivable\n(payable)\nbalances\n\n \n\nParent company\n\n \n\n LY Corporation\n\n \n\n Loan payables and interest expenses\n\n \n\n \n\n493\n\n \n\n \n\n \n\n(50,052\n\n)\n\n \n\nF-82\n\n[Table of Contents](#toc_page)\n\n \n\nFor the year ended March 31, 2026\n\nSignificant balances and transactions between the Group and related parties are as follows:\n\nSettlement and Other Operating Transactions\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nProfit or\nloss (1)\n\n \n\nSettlement\namounts (2)\n\n \n\nOutstanding\nreceivable\n(payable)\nbalances (3)\n\nParent company\n\n \n\nSoftBank Corp.\n\n \n\nGranting PayPay Points to users\non behalf of SoftBank Corp. (4)\n\n \n\n—\n\n \n\n55,699\n\n \n\n5,200\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(459)\n\n \n\n \n\n \n\n \n\nSecuritization transaction\ninvolving receivables\n\n \n\n—\n\n \n\n62,916\n\n \n\n139,630\n\nParent company\n\n \n\nLY Corporation\n\n \n\nRendering settlement service (5)\n\n \n\n21,947\n\n \n\n2,097,781\n\n \n\n(167,738)\n\n \n\n \n\n \n\nBearing expenses of user incentives awarded by LY Corporation (6)\n\n \n\n2,897\n\n \n\n—\n\n \n\n(358)\n\nSubsidiary of parent company\n\n \n\nSB Payment Service\nCorporation\n\n \n\nUtilizing settlement system for\nmerchants (7)\n\n \n\n8,697\n\n \n\n591,330\n\n \n\n29,368\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(1,963)\n\n \n\n \n\n \n\n \n\nRendering settlement service (7)\n\n \n\n—\n\n \n\n1,011,159\n\n \n\n(53,688)\n\n(1)\nProfit or loss shows the amount that is recorded in the Group’s Consolidated Statements of Profit or Loss.\n\n(2)\nSettlement amounts show the volume of settlements in millions of yen for settlement related services that are recorded as items in the Consolidated Statements of Financial Position and not recorded as profit or loss.\n\n(3)\nThe receivable and payable amounts outstanding are unsecured and will be settled in cash.\n\n(4)\nThe Group grants PayPay Points to users on behalf of SoftBank Corp. and claims those amounts from SoftBank Corp.\n\n(5)\nThe Group renders settlement services such as for LY Corporation’s e-commerce businesses.\n\n(6)\nThe Group pays for user incentives awarded mainly by making purchases on LY Corporation's e-commerce platform.\n\n(7)\nThe Group utilizes SB Payment Service Corporation’s settlement system for merchants, which enables users to top up the PayPay Balance and Other Items and billings of telecommunication services of SoftBank Corp.\n\nFinancial Transactions\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nInterest\namounts\n\n \n\nOutstanding receivable\n(payable) balances\n\nParent company\n\n \n\n LY Corporation\n\n \n\n Loan payables and interest\nexpenses\n\n \n\n278\n\n \n\n(20,035)\n\nEquity Transactions\n\nThere are no significant impacts either on assets or liabilities as of March 31, 2026 or profit or loss for the year ended March 31, 2026 arising from the transactions listed in the table below.\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\nRelationship\n\n \n\nName\n\n \n\nTransactions\n\n \n\nAmount\n\nParent company\n\n \n\n SoftBank Corp.\n\n \n\nAcquisition of shares (1)\n\n \n\n5,727\n\n \n\n \n\n \n\n \n\nIssuance of new shares (3)\n\n \n\n34,889\n\nParent company\n\n \n\n LY Corporation\n\n \n\nAcquisition of shares (1)\n\n \n\n80\n\n \n\n \n\n \n\n \n\nIssuance of new shares (3)\n\n \n\n34,889\n\nOther affiliated company\n\n \n\n SVF II Piranha (DE) LLC\n\n \n\nExercise of stock options (2)\n\n \n\n15,901\n\n \n\n \n\n \n\n \n\nIssuance of new shares (3)\n\n \n\n35,944\n\nSubsidiary of parent company\n\n \n\nZ Financial Corporation (5)\n(currently LY Corporation)\n\n \n\nAcquisition of shares (4)\n\n \n\n117,000\n\n(1)\nOn April 1, 2025, the Company acquired common shares of PayPay Securities Corporation at 100,000 yen per share.\n\n(2)\nOn April 4, 2025, all of the 1st Stock Options issued by the Company and held by SVF II Piranha (DE) LLC were exercised.\n\n(3)\nOn April 10, 2025, the Company issued common shares through a third-party allotment.\n\n(4)\nOn April 11, 2025, the Company acquired common and Class A preferred shares of PayPay Bank Corporation at 94,584 yen per share.\n\n(5)\nZ Financial Corporation was merged into LY Corporation on August 1, 2025.\n\nF-83\n\n[Table of Contents](#toc_page)\n\n \n\n(2)\nCompensation for Key Executives\n\nThe compensation for our key executives (directors) is as follows:\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\nTypes of compensation\n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nRemuneration and bonuses\n\n \n\n \n\n231\n\n \n\n \n\n \n\n262\n\n \n\n \n\n \n\n379\n\n \n\nShare-based payments (1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n189\n\n \n\nTotal\n\n \n\n \n\n231\n\n \n\n \n\n \n\n262\n\n \n\n \n\n \n\n568\n\n \n\n(1)\nAs the Group completed its initial public offering on March 12, 2026 and satisfied the IPO condition, the Group commenced the recognition of share-based payment expenses in the Consolidated Statements of Profit or Loss for the year ended March 31, 2026\n\n \n\n39. Commitments\n\nSignificant commitments for the purchase of goods and services are as follows:\n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nPurchase contracts for services\n\n \n\n \n\n3,738\n\n \n\n \n\n \n\n25,175\n\n \n\nIntangible assets\n\n \n\n \n\n1,138\n\n \n\n \n\n \n\n515\n\n \n\nProperty and equipment\n\n \n\n \n\n192\n\n \n\n \n\n \n\n494\n\n \n\nTotal\n\n \n\n \n\n5,068\n\n \n\n \n\n \n\n26,184\n\n \n\n \n\n40. Supplemental Cash Flow Information\n\n(1)\nClassification of cash flows in Financial Services segment\n\nThe Group classifies the cash flows from changes in assets and liabilities associated with its banking business, such as loans and advances and deposits from customers, as cash flows from operating activities in the Consolidated Statements of Cash Flows because the changes are derived from the principal revenue-producing activities.\n\n \n\n(2)\nInterests received and Interests paid\n\nCash flows from operating activities include the following amounts of interest received and interest paid (negative figures indicate payments).\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nInterests received\n\n \n\n74,962\n\n \n\n89,771\n\n \n\n115,524\n\nInterests paid\n\n \n\n(2,246)\n\n \n\n(4,463)\n\n \n\n(10,466)\n\n \n\n(3)\nSignificant Non-cash Transactions\n\nSignificant non-cash transactions are as follows:\n\na. Issuance of stock options\n\nThe Company granted stock options to the Group’s directors and employees for the year ended March 31, 2026. The stock options granted with no cash consideration are non-cash transactions. Refer to Note 35, Share-based Payments for further detail.\n\nb. Lease transactions\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\nFor the year ended\n\n \n\n \n\nMarch 31, 2024\n\n \n\nMarch 31, 2025\n\n \n\nMarch 31, 2026\n\nIncrease in right-of-use assets\n\n \n\n1,852\n\n \n\n8,862\n\n \n\n504\n\n \n\nF-84\n\n[Table of Contents](#toc_page)\n\n \n\n41. Subsequent Events\n\nAgreement to acquire T&D Financial Life Insurance Company\n\nOn June 4th, 2026, the Company entered into the Share Purchase Agreement to purchase 70.2% of shares of T&D Financial Life Insurance Company. The consideration for the shares is expected to be approximately 132 billion yen. The acquisition is intended to add life insurance services to the Company’s financial services offering and to combine T&D Financial Life Insurance Company’s business platform with the Company’s digital platform and customer base. The consummation of the share acquisition is subject to regulatory approval and permits from the relevant authorities, the implementation of an IFRS transition plan at T&D Financial Life Insurance Company and other customary closing conditions.\n\nAs of the date of approval of these consolidated financial statements, the financial impact of the transaction cannot be reasonably estimated because the transaction has not yet been completed and the purchase price allocation and related assessments have not been finalized.\n\nExtinguishment of Stock Options under the Trust-Type Stock Option Plan\n\nOn June 11, 2026, the knockout condition applicable to the trust-type stock option plan was triggered, resulting in the automatic extinguishment of all remaining outstanding stock options under the 2nd through 46th Series Stock Option plan. This was a non-adjusting subsequent event and had no material impact on the consolidated financial statements. In addition, the extinguishment of these stock options had no material impact on the calculation of diluted earnings per share.\n\n \n\n42. Approval of Consolidated Financial Statements\n\nThe consolidated financial statements have been approved by Wataru Kagechika, Managing Corporate Officer and Chief Financial Officer, on June 30, 2026.\n\nF-85\n\n[Table of Contents](#toc_page)\n\n \n\n# Schedule I—Condensed Financial Information\n\n# In accordance with Rule 5-04 of Regulation S-X, management concluded that the Group is required to present Condensed Financial Information as of March 31, 2025 and 2026, and for each of the three years ended March 31, 2026.\n\n# Management calculated the restricted net assets, as defined in Rule 1-02(dd) of Regulation S-X, for each consolidated subsidiary. As of March 31, 2026, the restricted net assets of PayPay Card Corporation and PayPay Bank Corporation were 724,001 million yen and 41,071 million yen, respectively. In the aggregate, these restricted net assets exceeded 25% of the Group's consolidated net assets of 430,761 million yen.\n\nPayPay Corporation\n\nCondensed Statements of Financial Position\n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n133,350\n\n \n\n \n\n \n\n308,218\n\n \n\nGuarantee deposits\n\n \n\n \n\n590,878\n\n \n\n \n\n \n\n624,995\n\n \n\nAccounts receivable\n\n \n\n \n\n472,813\n\n \n\n \n\n \n\n579,421\n\n \n\nLoans and advances to customers\n\n \n\n \n\n51\n\n \n\n \n\n \n\n50\n\n \n\nSecurities\n\n \n\n \n\n35,953\n\n \n\n \n\n \n\n65,612\n\n \n\nOther financial assets\n\n \n\n \n\n11,264\n\n \n\n \n\n \n\n15,271\n\n \n\nProperty and equipment\n\n \n\n \n\n1,666\n\n \n\n \n\n \n\n1,814\n\n \n\nRight-of-use assets\n\n \n\n \n\n2,959\n\n \n\n \n\n \n\n4,366\n\n \n\nIntangible assets\n\n \n\n \n\n18,958\n\n \n\n \n\n \n\n20,883\n\n \n\nInvestments in subsidiaries and associates\n\n \n\n \n\n115,165\n\n \n\n \n\n \n\n257,536\n\n \n\nDeferred tax assets\n\n \n\n \n\n12,737\n\n \n\n \n\n \n\n70,273\n\n \n\nOther assets\n\n \n\n \n\n5,126\n\n \n\n \n\n \n\n5,036\n\n \n\nTotal assets\n\n \n\n \n\n1,400,920\n\n \n\n \n\n \n\n1,953,475\n\n \n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nDeposits\n\n \n\n \n\n391,595\n\n \n\n \n\n \n\n451,263\n\n \n\nAccounts payable\n\n \n\n \n\n842,956\n\n \n\n \n\n \n\n1,008,463\n\n \n\nIncome tax payables\n\n \n\n \n\n2,995\n\n \n\n \n\n \n\n4,872\n\n \n\nOther financial liabilities\n\n \n\n \n\n21,099\n\n \n\n \n\n \n\n32,485\n\n \n\nProvisions\n\n \n\n \n\n745\n\n \n\n \n\n \n\n1,466\n\n \n\nLease liabilities\n\n \n\n \n\n6,744\n\n \n\n \n\n \n\n6,166\n\n \n\nOther liabilities\n\n \n\n \n\n14,523\n\n \n\n \n\n \n\n15,371\n\n \n\nTotal liabilities\n\n \n\n \n\n1,280,657\n\n \n\n \n\n \n\n1,520,086\n\n \n\nShareholders’ equity\n\n \n\n \n\n \n\n \n\n \n\n \n\nIssued capital\n\n \n\n \n\n91,434\n\n \n\n \n\n \n\n200,635\n\n \n\nShare premium\n\n \n\n \n\n968\n\n \n\n \n\n \n\n110,799\n\n \n\nRetained earnings\n\n \n\n \n\n27,861\n\n \n\n \n\n \n\n121,955\n\n \n\nTotal shareholders’ equity\n\n \n\n \n\n120,263\n\n \n\n \n\n \n\n433,389\n\n \n\nTotal liabilities and shareholders’ equity\n\n \n\n \n\n1,400,920\n\n \n\n \n\n \n\n1,953,475\n\n \n\n \n\nF-86\n\n[Table of Contents](#toc_page)\n\n \n\nCondensed Statements of Profit or Loss\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nTransaction and service income\n\n \n\n \n\n167,871\n\n \n\n \n\n \n\n217,432\n\n \n\n \n\n \n\n273,939\n\n \n\nInterest income\n\n \n\n \n\n36\n\n \n\n \n\n \n\n325\n\n \n\n \n\n \n\n1,783\n\n \n\nGains (losses) on financial instruments\n\n \n\n \n\n(59\n\n)\n\n \n\n \n\n105\n\n \n\n \n\n \n\n882\n\n \n\nOther operating income\n\n \n\n \n\n1,740\n\n \n\n \n\n \n\n1,439\n\n \n\n \n\n \n\n2,562\n\n \n\nTotal revenue\n\n \n\n \n\n169,588\n\n \n\n \n\n \n\n219,301\n\n \n\n \n\n \n\n279,166\n\n \n\nPoint expenses\n\n \n\n \n\n(65,078\n\n)\n\n \n\n \n\n(86,424\n\n)\n\n \n\n \n\n(110,416\n\n)\n\nSettlement related cost\n\n \n\n \n\n(41,872\n\n)\n\n \n\n \n\n(46,894\n\n)\n\n \n\n \n\n(52,816\n\n)\n\nEmployee benefit expenses\n\n \n\n \n\n(21,853\n\n)\n\n \n\n \n\n(20,972\n\n)\n\n \n\n \n\n(23,673\n\n)\n\nProfessional and outsourcing services expenses\n\n \n\n \n\n(15,480\n\n)\n\n \n\n \n\n(12,757\n\n)\n\n \n\n \n\n(14,081\n\n)\n\nProvision for loss allowance\n\n \n\n \n\n(536\n\n)\n\n \n\n \n\n93\n\n \n\n \n\n \n\n67\n\n \n\nOther operating expenses\n\n \n\n \n\n(30,416\n\n)\n\n \n\n \n\n(30,899\n\n)\n\n \n\n \n\n(34,890\n\n)\n\nTotal operating expenses\n\n \n\n \n\n(175,235\n\n)\n\n \n\n \n\n(197,853\n\n)\n\n \n\n \n\n(235,809\n\n)\n\nOperating profit (loss)\n\n \n\n \n\n(5,647\n\n)\n\n \n\n \n\n21,448\n\n \n\n \n\n \n\n43,357\n\n \n\nProfit (loss) before tax\n\n \n\n \n\n(5,647\n\n)\n\n \n\n \n\n21,448\n\n \n\n \n\n \n\n43,357\n\n \n\nIncome tax (expense) benefit\n\n \n\n \n\n2,506\n\n \n\n \n\n \n\n9,651\n\n \n\n \n\n \n\n50,710\n\n \n\nProfit (loss) for the year\n\n \n\n \n\n(3,141\n\n)\n\n \n\n \n\n31,099\n\n \n\n \n\n \n\n94,067\n\n \n\n \n\nCondensed Statements of Cash Flows\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n(In millions of yen)\n\n \n\n \n\n \n\nFor the year ended\n\n \n\n \n\n \n\nMarch 31, 2024\n\n \n\n \n\nMarch 31, 2025\n\n \n\n \n\nMarch 31, 2026\n\n \n\nNet cash provided by (used in) operating activities\n\n \n\n \n\n(254,620\n\n)\n\n \n\n \n\n(133,687\n\n)\n\n \n\n \n\n140,554\n\n \n\nCash flows from (used in) investing activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchases of securities\n\n \n\n \n\n(14,394\n\n)\n\n \n\n \n\n(21,555\n\n)\n\n \n\n \n\n(43,943\n\n)\n\nProceeds from sales/redemption of securities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n14,400\n\n \n\nPurchases of intangible assets\n\n \n\n \n\n(9,235\n\n)\n\n \n\n \n\n(8,360\n\n)\n\n \n\n \n\n(8,101\n\n)\n\nPurchases of shares of subsidiaries and associates\n\n \n\n \n\n(6,596\n\n)\n\n \n\n \n\n(8,543\n\n)\n\n \n\n \n\n(11,655\n\n)\n\nPayments into term deposits\n\n \n\n \n\n(1,740\n\n)\n\n \n\n \n\n(1,861\n\n)\n\n \n\n \n\n—\n\n \n\nOthers\n\n \n\n \n\n(588\n\n)\n\n \n\n \n\n(3,641\n\n)\n\n \n\n \n\n(2,181\n\n)\n\nNet cash used in investing activities\n\n \n\n \n\n(32,553\n\n)\n\n \n\n \n\n(43,960\n\n)\n\n \n\n \n\n(51,480\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash flows from (used in) financing activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRepayments of lease liabilities\n\n \n\n \n\n(714\n\n)\n\n \n\n \n\n(1,075\n\n)\n\n \n\n \n\n(1,531\n\n)\n\nProceeds from issuance of new shares\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n217,522\n\n \n\nPayment for the purchase of the equity interest of subsidiaries, through transactions under common control\n\n \n\n―\n\n \n\n \n\n―\n\n \n\n \n\n \n\n(130,185\n\n)\n\nNet cash provided by (used in) financing activities\n\n \n\n \n\n(714\n\n)\n\n \n\n \n\n(1,075\n\n)\n\n \n\n \n\n85,806\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEffect of exchange rate changes on cash and cash equivalents\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(12\n\n)\n\nIncrease (decrease) in cash and cash equivalents\n\n \n\n \n\n(287,887\n\n)\n\n \n\n \n\n(178,722\n\n)\n\n \n\n \n\n174,868\n\n \n\nCash and cash equivalents at the beginning of the year\n\n \n\n \n\n599,959\n\n \n\n \n\n \n\n312,072\n\n \n\n \n\n \n\n133,350\n\n \n\nCash and cash equivalents at the end of the year\n\n \n\n \n\n312,072\n\n \n\n \n\n \n\n133,350\n\n \n\n\n\n \n\n308,218\n\n \n\n \n\n \n\nNote to Condensed Financial Statements - Basis of presentation\n\nThe condensed financial statements have been prepared on a going concern basis in accordance with IFRS Accounting Standards issued by the IASB.\n\nThe Company's condensed financial information includes inter-company revenue or expenses, which is eliminated in the Group's Consolidated Statements of Profit or Loss. The Company's condensed financial information should be read in conjunction with the Group's consolidated financial statements.\n\n \n\nF-87"}