AMERICAN HONDA FINANCE CORP Quarterly Report Released - Here’s What You Should Know

American Honda Finance Corporation – Q2 FY2026 Investor Summary (Quarter Ended September 30, 2025)

Key Financial Results

• Net income attributable to AHFC: $251 million for Q2 FY2026 (down from $298 million in prior-year quarter); $598 million for first half FY2026 (up from $548 million in prior-year period).
• Total revenues: $2,660 million for Q2 FY2026 (up from $2,345 million); $5,258 million for the first half (up from $4,588 million).
  • Retail financing revenue: $786 million (Q2); $1,548 million (YTD)
  • Dealer revenue: $71 million (Q2); $140 million (YTD)
  • Operating leases revenue: $1,803 million (Q2); $3,570 million (YTD)
• Net revenues: $747 million Q2 vs. $650 million prior-year Q2; $1,489 million YTD vs. $1,282 million prior-year YTD.
• Total expenses: $450 million for Q2 FY2026 (vs. $263 million prior-year Q2); $723 million for the first half (vs. $548 million).
• Provision for credit losses: $86 million Q2 (flat YoY); $189 million YTD (up from $158 million).
• Effective tax rate: 21.7% for Q2 FY2026 (improved from 26.0% year-ago quarter).

Balance Sheet & Asset Quality

• Total assets: $92,054 million as of September 30, 2025 (up from $88,969 million at March 31, 2025).
  • Finance receivables, net: $54,101 million (up from $52,516 million).
  • Investment in operating leases, net: $32,173 million (up from $30,596 million).
• Total debt: $65,950 million (up from $62,547 million).
  • Unsecured: $51,748 million; Secured: $14,202 million.
  • Weighted avg. rates: CP – 4.34%, MTN – 4.10%, Bank loans – 3.91%, Secured – 4.62%.
• Allowance for credit losses: $430 million (up from $396 million at 3/31/25); allowance as % of receivable balance: 0.79% (vs. 0.80% prior year).
• Net charge-offs: $155 million (six-month period), charge-offs as % of average receivables: 0.57% (up from 0.41% prior-year period).
• Delinquencies (60+ days): $204 million or 0.37% of ending receivables (vs. 0.36% prior year).

Operating Metrics

• Consumer financing penetration rates declined:
  • U.S. new auto penetration: 59% for Q2 FY2026 (down from 72% prior-year quarter).
  • Canada: 66% (down from 74%).
• Retail loan acquisitions in the U.S.: 169,000 units Q2, down 19% YoY; leases: 91,000 units, down 20%.
• Operating lease expenses: Increased to $1,209 million in Q2 (up 15% YoY) driven by higher depreciation and early termination losses ($80 million in Q2, up from $37 million).
• General & administrative expenses: Increased to $224 million in Q2 FY2026, up 62% YoY, primarily due to higher accruals and operational costs.

Liquidity & Capital

• Robust liquidity: Cash and equivalents of $3,186 million; access to extensive credit facilities ($7.0 billion syndicated credit in U.S.; $1.4 billion in Canada).
• Strong support: Supported by “Keep Well Agreements” with Honda Motor Co., Ltd. for ongoing liquidity.
• Dividends: $562 million paid to parent in July 2025; $630 million total YTD.
• Material cash requirements: $25,994 million due next 12 months on unsecured and secured debt, plus $2,264 million on interest.

Risks & Outlook

• Credit risk: Elevated charge-offs and provisions reflect macro headwinds and an uptick in delinquencies.
• Lease residual value risk: High exposure to future used vehicle values; no impairment recorded for the period, but early term losses increased.
• Interest rate and funding risk: Significant exposure to floating rate debt; utilized swaps and diverse funding sources to hedge.
• Regulatory and economic risks: Continued impact from declining consumer finance penetration amid shifting economic conditions.

Other Information

• No material legal changes: No significant updates to previously stated risk factors or legal proceedings.
• Segment performance: U.S. remains dominant, with revenues of $2,370 million vs. Canada $290 million for Q2 FY2026.
• Derivative impacts: Notable $139 million loss in Q2 on interest rate/currency swaps (vs. $288 million gain prior-year Q2); six-month net gain of $605 million YTD.

Conclusion for Investors AHFC posted strong revenue growth but faced pressures on margins, credit, and operational costs. Delinquency and loss metrics trended higher, and lease early terminations rose sharply. Maintaining diverse and deep funding sources along with support from Honda bolster liquidity for the near term. Risks from rising credit losses, lease residual values, and declining penetration rates merit close monitoring.

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