Market Risks Our consolidated financial statements are prepared in accordance with IFRS as issued by the IASB. Accordingly, the following disclosure is intended to satisfy the objective of Item 11 of Form 20-F and should be read together with Note 36 to our audited consolidated financial statements included elsewhere in this Annual Report. We have selected the sensitivity analysis disclosure alternative for our quantitative market risk disclosures. We assess market risk exposure separately for market risk sensitive instruments entered into for trading purposes and those entered into for purposes other than trading. We do not hold material market risk sensitive instruments for trading purposes. Therefore, unless otherwise indicated, the market risk disclosures in this Item 11 relate to instruments entered into for purposes other than trading. In preparing our market risk disclosures, we considered interest rate risk, foreign currency exchange rate risk, commodity price risk, equity price risk and other relevant market price risks. Based on our assessment, our primary market risk exposures are foreign exchange risk and interest rate risk. We did not have material exposure to commodity price risk or derivative commodity instruments. Our exposure to equity price risk and other market price risk, including 124 Table of Contents price risk associated with equity instruments, exchange-traded funds and other marketable securities, was not material for purposes of Item 11. Foreign Exchange Risk We have exposure to foreign exchange risks on transactions denominated in currencies other than the functional currencies. The main foreign currency we use is the U.S. dollar. We enter 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. For PayPay Bank Corporation, we identify assets and liabilities subject to foreign exchange risk and set a risk limit for the investment amount and the present value fluctuation amount arising from that portfolio, and we manage its compliance with the limit on a daily basis. In addition, we regularly analyze the changes in present value due to exchange rate fluctuations and monitor the impact on assets and liabilities. Through the risk management procedures described above, our net foreign exchange risk exposure and the effects on profit or loss before tax and shareholders’ equity are not material. In assessing the materiality of our foreign exchange risk, we considered our aggregate exposure to foreign currency-denominated assets and liabilities, derivative instruments used to manage such exposure and, to the extent applicable, both transactional currency/functional currency and functional currency/reporting currency exchange rate exposures. Because our net foreign exchange risk exposure after taking into account these risk management activities was not material as of March 31, 2026, we have not presented separate quantitative sensitivity analysis for foreign exchange risk. Interest Rate Risk We raise capital through interest-bearing loans, including those with floating interest rates, and therefore we are exposed to the risk of an increase in our interest payments resulting from rising interest rates. On the other hand, PayPay Bank Corporation may see an increase in investment income in the event of a rise in interest rates. In order to prevent or reduce any risk tied to interest rate fluctuations, we maintain 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, we also continuously monitor interest rate fluctuations. For PayPay Bank Corporation, we identify assets and liabilities subject to interest rate risk management and set a risk limit for the amount of fluctuation in the present value arising from the portfolio, and we manage compliance with the limit on a daily basis. In addition, we regularly analyze the change in present value in response to changes in the shape of the yield curve (flattening and steepening) and monitor the impact on assets and liabilities. At PayPay Bank Corporation, financial assets exposed to interest rate risk are mainly debt instruments, including bonds and other debt securities measured at amortized cost or at fair value through other comprehensive income, purchased monetary claims and loans, including both general loan assets and interbank short-term loans. Financial liabilities exposed to interest rate risk are mainly deposits from customers. The fluctuation of the fair value of these financial assets and liabilities, given certain fluctuations in interest rates, is used in quantitative analysis as part of the process to manage interest rate risk. The quantitative sensitivity analysis for interest rate risk disclosed in Note 36 to our audited consolidated financial statements has been prepared using selected hypothetical changes in interest rates that management believes are reasonably possible in the near term, which for this purpose means a period of up to one year from the date of the consolidated statement of financial position. The analysis assumes that the relevant interest-rate-sensitive financial assets and liabilities outstanding as of the end of the fiscal year remained outstanding for the full year, that the hypothetical change in interest rates occurs instantaneously, and that all other variables remain constant. For financial instruments measured at amortized cost, including certain debt instruments, loans and deposits, changes in market interest rates may affect their fair values but generally do not affect profit before tax or shareholders’ equity unless such instruments are sold, impaired or otherwise remeasured. Fair value information for such financial instruments is disclosed in Note 36 to our audited consolidated financial statements. The year-over-year changes in our quantitative interest rate sensitivities disclosed in Note 36 were primarily attributable to changes in the volume and composition of interest-bearing liabilities, including deposits and borrowings, and interest-rate-sensitive assets, including debt instruments held by PayPay Bank Corporation, as our financial services businesses expanded. Except as described above and in Note 36 to our audited consolidated financial statements, there were no material changes in our primary market risk exposures or in the manner in which such exposures were managed during the year ended March 31, 2026, and we are not aware of any material changes that are currently expected to affect our primary market risk exposures or risk management practices in future reporting periods. 125 Table of Contents For more information on market risks, see Note 36 to our audited consolidated financial statements included elsewhere in this annual report. Limitations of Quantitative Market Risk Disclosures The sensitivity analyses described above and in Note 36 to our audited consolidated financial statements are hypothetical and should not be considered predictive of actual future results. These analyses do not represent the maximum possible loss that we could incur from changes in market rates or prices. The analyses are based on market risk sensitive instruments outstanding as of the applicable fiscal year-end and do not reflect changes in the composition of our portfolio after such date, future transactions, changes in business volumes, changes in funding sources, management actions that may be taken to mitigate market risk, or changes in customer behavior. In addition, except as otherwise described, the analyses assume that all other variables remain constant and do not fully reflect correlations among interest rates, foreign exchange rates, market prices, credit spreads, liquidity spreads, or other risk variables. Accordingly, the quantitative market risk information may not fully reflect our net market risk exposure. There were no material changes in the disclosure alternative, key model characteristics, assumptions or parameters used to provide quantitative information about market risk during the year ended March 31, 2026. Credit Risk We are exposed to the debtors’ credit risk arising from our operating activities. Generally, the credit risk is related to accounts receivable from cardholders, payment service providers and PayPay merchants, loan arrangements, such as housing loans and card loans, to banking customers, and loan commitments for cardholders. For cardholders’ credit risk, we conduct a screening in accordance with internal policy upon entering into an agreement with a cardholder. We also monitor mainly the collection status of each cardholder to manage potential uncollectible amounts. As for the credit card receivables from cardholders, in the event of delinquency, the terms of the contract may be modified for the purpose of facilitating collections, and the original contractual cash flow would change. While most of the credit card receivables are from cardholders based in Japan, we are working to prevent or reduce credit risk through the risk management procedures described above. For PayPay Bank Corporation customers’ credit risk, we have established a credit risk management system in our internal regulations and strive to control credit risk in accordance with our internal credit policy. In addition, we have established regulations for credit review, concentration risk and write-off of bad debts. In order to avoid excessive concentrations of risk, our banking policies and procedures include specific guidelines to focus on maintaining a diversified portfolio by establishing an adequate credit limit. Also, PayPay Bank Corporation is subject to the regulations relating to single party exposure. We use collateral and guarantees to reduce counterparty credit risk and set limits for both individual subsidiaries and the group as a whole. Our portfolio is built around a core of market securities with high creditworthiness and small loans with low concentration risk. Our audit department, which is independent from any department of ours, regularly audits our credit risk management status, checks our credit operations and reports the results of the audits it conducts to our board of directors. PayPay Securities Corporation holds certain deposits of its customers in segregated trust accounts deposited with trust banks and other financial institutions. These accounts are exposed to the credit risk of the financial institutions in which they are deposited. PayPay Securities Corporation manages this credit risk by keeping the amount of assets exposed to risk from any particular counterparty within a specified amount. We derecognized 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. There were no financial assets with modification of contractual cash flows that did not meet such criteria of derecognition as of March 31, 2025 and 2026. For general credit risks other than those mentioned above, we conduct credit investigations and establish a credit line in order to manage credit risks. We periodically monitor the status of debtors, past dues and outstanding balances in accordance with our internal credit management regulations. For more information on credit risk, see Note 36 to our audited consolidated financial statements included elsewhere in this Annual Report. Liquidity Risk Liquidity risk is the risk that we will encounter difficulty in meeting our obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. We are exposed to liquidity risk in funding and use and repayment of cash in relation to our business operations. In order to prevent and reduce liquidity risk, we 126 Table of Contents invest, in principle, in highly liquid and low-risk financial instruments. We hold a sufficient amount of cash and cash equivalents, and receivables with maturities of mainly two months so that our liquidity and stability can be ensured. For PayPay Bank Corporation, in order to prevent excessive reliance on short-term funds in financing (i.e., overnight to one month), we set an upper limit on the amount of short-term financing permitted and monitor compliance with this limit on a daily basis. In addition, we monitor the balance of assets that can be converted into cash in order to secure liquidity in case of an emergency, for example, if there are large withdrawals of customers’ deposits. We define such an emergency based on the ratio of deposit outflows to our primary reserves (our BOJ current account deposits and call loans). PayPay Bank Corporation and PayPay Card Corporation have prepared advance measures to procure liquidity in the event of an emergency. PayPay Bank Corporation finances its funds through deposits from customers and PayPay Card Corporation finances its funds through direct financing such as bank loans, commercial paper and financing through liquidation of receivables. For more information on liquidity risk, see Note 36 to our audited consolidated financial statements included elsewhere in this Annual Report.