Sumitomo Mitsui Financial Group Inc
Annual Report 2001

Plain-text annual report

A N N U A L R E P O R T 2001 Y E A R E N D E D M A R C H 31 , 2 0 0 1 C O N T E N T S PROFILE (As of April 1, 2001) Foreword President’s Message Topics Financial Highlights Fiscal 2000 Results Progress Report on Strengthening the Financial Base of the Bank Asset Quality Management Issues The SMBC Plan for Strengthening the Financial Base of the Bank Corporate Governance Compliance Risk Management Divisional Review Individual Business Unit Strategies Consumer Banking Unit Middle Market Banking Unit Corporate Banking Unit International Banking Unit Treasury Unit Investment Banking Unit The Group Company Networking Strategy e-Business Social Contribution Environmental Preservation Corporate History Financial Data Corporate Data 2 SUMITOMO MITSUI BANKING CORPORATION 2001 1 2 4 6 9 10 18 20 22 24 32 34 37 40 42 44 46 48 50 52 53 54 55 225 Total Assets Deposits Loans and Bills Discounted Capital Stock Consolidated Capital Ratio ¥113,451.3 billion ¥ 59,041.3 billion ¥ 61,747.8 billion ¥ 1,276.7 billion 10.8% (BIS Guidelines) Shares Issued and Outstanding (As of June 29, 2001) Ordinary Share Type 1 Preference Share Type 5 Preference Share Type 6 Preference Share 5,703 million 167 million 800 million 2 million Long-term Credit Ratings (As of June 29, 2001) Number of Employees (As of April 1, 2001) Network (As of June 30, 2001) (Moody’s) A3 BBB+ (S&P) (Fitch) A (R&I) AA– (JCR) AA 27,793 Domestic Branches 578 (Excluding subbranches and agencies) Overseas Branches 21 (Excluding subbranches and representative offices) OUR MISSION •To provide optimum added value to our customers and together with them achieve growth •To create sustainable shareholder value through business growth •To provide a challenging and professionally rewarding work environment for our dedicated employees This material contains certain forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may materially differ from those contained in the forward-looking statements as a result of various factors. Important factors that might cause such a material difference include, but are not limited to, those economic conditions referred to in this material as assumptions. In addition, the following items are among the factors that could cause actual results to differ materially from the forward-looking state- ments in this material: business conditions in the banking industry, the regulatory environment, new legislation, competition with other finan- cial services companies, changing technology and evolving banking industry standards and similar matters. July 2001 Sumitomo Mitsui Banking Corporation Public Relations Dept. 1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006, Japan Tel: 03-3501-1111 *This annual report was printed on recycled paper. 　 Foreword As the founding executives, it is our great pleasure to invite shareholders and stakeholders of the newly formed Sumitomo Mitsui Banking Corporation to read the Bank’s first annual report. We strive to provide complete disclosure on an impartial, timely and continuous basis in an easily understood format as part of our mission to enhance shareholder value and offer value to customers. This report outlines the strategies for SMBC and summarizes the fiscal 2000 results for the two founding banks. We hope that it will provide you with a greater understanding of where we have come from, what we have accomplished and where we are headed. Banks will have to reinvent themselves repeatedly in the next few years to thrive amid the significant changes wrought by the various regulatory reforms, the IT revolution and the globalization of the financial industry. We are positioning SMBC to have a stronger foundation on which to heighten profitability and enhance our international profile. To accomplish this, we are putting emphasis on gaining initiatives in various businesses to keep abreast of the pace of change, and fostering creativity and originality to provide us with a leading edge. Although economic conditions over the next few years will be daunting, we shall navigate resolutely toward a bright future. We look forward to your continued support and guidance to achieve growth. Akishige Okada Chairman of the Board Yoshifumi Nishikawa President and Chief Executive Officer July 2001 1 President’s Message Launch of the New Bank I am pleased to report that SMBC began operation on April 2, 2001. This auspicious start at the dawn of the new millennium has created great expectations from our shareholders, investors and customers, as well as the general public, for the responsibilities we bear as a cornerstone of the economic infrastructure. We welcome this interest and will work hard to earn the trust of shareholders and stakeholders. The merger has provided us with the key infrastructure—such as various delivery channels, skilled personnel and other management resources, and the competitive might of the Group in each field— to sustain SMBC in the top echelon of the Japanese banks. The crucial task now is to use this infrastructure to produce concrete results under the SMBC brand, which marries the strengths of the Mitsui and Sumitomo brands that have been built up so carefully over the years to mean reliable and innovative service. The Economic Realities In the domestic economy, it is abundantly clear the corporate sector faces a period of adjustment that will continue to slacken demand for financial services. As these conditions begin to be felt in corporate performances and their financial positions, the competitive environment for banks will get even tougher. Nonetheless, the companies that have restructured themselves on the basis of new business models suited to the times are growing in number and we are beginning to see the results of their strengthened capabilities. We view the industrial structuring now underway as a business opportunity and one of the ways in which we can move forward with new growth. Critical Issues We consider strengthening our profit base and balance sheet management to be the top two priorities at this time. We have a number of initiatives to deal directly with these issues. While achieving these targets will not be easy, we are applying bold ideas and resolute measures that will chart a steady course toward the desired outcome, executing paradigm shifts as needed. To bolster our profit base, our primary strategy is to draw fully upon the expanded operating base created as a legacy of the merger and to approach each customer segment from the customer’s perspective. In the retail market, we are taking a customer-by-customer approach to provide the most appropriate services with the goal of maximizing convenience. In the corporate segments, we are addressing operating and financing needs with a variety of services that form complete solutions. We are placing particular emphasis on expanding financial services that do not use our balance sheets, such as fee businesses. At the same time, we will be looking to further pare down expenses. We anticipate that expenses will temporarily increase as a result of computer systems integration and similar start-up costs associated with the merger, but expect to achieve the benefits of the 2 merger synergies early in the process. By fundamentally revising our business processes, we plan to radically reform cost structures and increase the size of the merger effect. We are also planning to operate more cohesively as a consolidated entity to boost overall Group profitability. The investment banking and credit card businesses have significant strategic value. Since the respective companies participating in these markets from both founding groups would gain significant merger synergies and strength, they integrated their operations at the same time the parents merged. We expect the newly Yoshifumi Nishikawa, President merged companies to use their expanded operating bases and expertise to contribute to the growth of consolidated earnings. Balance sheet management is the other focus of activities. Our first priority is to deal conclusively with non-performing loans. We are stepping up disposal and giving this issue our full attention. We are monitoring the non-performing loan measures proposed in the government’s emergency economic package, while moving forward with our own initiatives to resolve each non-performing loan individually. Our initiatives include detailed dialogs with each borrower to detect potential problems early on and put preventative measures in place to avoid new outbreaks of non-performing loans. Our second priority is to reduce the potential for stock price volatility risk to impact our balance sheets, as the accounting method for the stock portfolio changes to the mark-to-market method. In Closing I am firmly committed to strengthening the Bank to make it a first-class player in the international financial markets at the earliest opportunity. Immediately following the merger, the entire Bank, from the directors and management to the staff, has set to work under a single system—without redundancies—toward a clearly defined set of goals. We will strive to maximize the synergies of the merger and secure a leading spot among the competition by promoting staff on a merit basis under a unified personnel system, putting the right people in the right places, instilling in them a sense of urgency and empowering them to turn plans into reality. We shall carry on fulfilling the responsibilities entrusted to us and work to make SMBC the most trusted brand in the market. 3 Topics Former Sakura Bank’s headquarters Former Sumitomo Bank’s headquarters 1999 Former Sakura Bank Year 2000 October Joins two other Mitsui Group companies, Mitsui Marine & Fire Insurance Co., Ltd., and Mitsui Mutual Life Insurance Co., in a strategic business alliance December Launches TV banking services using digital transmissions over broadcast satellites Partners with GE Capital Japan to offer loans to corporate clients via the Web Signs joint agreement for Edy!, a prepaid electronic money service worthy of the information age Delists common shares from the Swiss Stock Exchange Year 2001 January Delists common shares from the Paris Stock Exchange March Delists common shares from the Frankfurt Stock Exchange Former Sumitomo Bank Year 2000 November Starts operation of NetDebit, a settlement service for Internet shopping Launches the One’s Direct service Year 2001 February Commences handling the Complete Internet settlement service for corporations March Delists common shares from the Paris Stock Exchange 2000 2001 ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Steps toward Merger ○ ○ Year 1999 October The founding banks conclude the Strategic Alliance and Integration of Sakura Bank and Sumitomo Agreement on the premise of a future merger. ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Year 2000 April The founding banks announce their merger for April 1, 2001, as the new entity, Sumitomo Mitsui Banking Corporation June Shareholders approve the merger at the respec- tive shareholders’ meetings November The founding banks announce the new bank's logo and corporate colors The founding banks announce the reorganization of Sumitomo Credit Service Co., Ltd., and Sakura Card Co., Ltd. December The Financial Services Agency approves the merger Year 2001 January The founding banks agree to reorganize and merge Sakura Institute of Research Inc., The Japan Research Institute, Ltd., and The JRI Business Consulting, Ltd. Agreement is reached on merging Sakura Capital Co., Ltd., and SB Investment Co., Ltd. February The founding banks announce the agreement in principle for the merger and name change for Daiwa Securities SB Capital Markets Co., Ltd., and Sakura Securities Co., Ltd. March The founding banks announce the expansion of the ATM tie-up with Sumitomo Life Insurance Company and Mitsui Mutual Life Insurance Co. ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 4 4 ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Symbol The ascending curve of the symbol, named the “Rising Mark”, signifies the new bank’s growth through the ap- plication of the diverse skills of SMBC staff to provide pro- gressive, value-added financial services and, through these services, to contribute to the welfare of customers, shareholders and the commu- nity at large. We have se- lected “fresh green” and “trad green” as the two corporate colors. Fresh green is used in the Rising Mark to express our youthful, knowledgeable and friendly approach, while trad green is used as the symbol’s background and text color to represent our tra- dition, reliability and stability. The symbol, color scheme and the SMBC abbreviation, collectively referred to as our “Mark Unit”, is used consistently to promote our corporate identity. Mark Unit Headquarters of Sumitomo Mitsui Banking Corporation (Began operation on April 2, 2001) Sumitomo Mitsui Banking Corporation Year 2001 April Sumitomo Mitsui Banking Corporation begins operation May The Bank takes over housing loans from Mitsui Mutual Life Insurance Co. The Bank announces the establishment of the Advisory Board June The Bank transfers its Sakura Trust & Banking Co., Ltd., shares to Chuo Mitsui Trust and Banking Co., Ltd. 5 5 　 　 Financial Highlights Former Sakura Bank (Consolidated) For the Year Total income Total expenses Net income (loss) At Year-End 2001 2000 1999 1998 1997 Millions of yen ¥01,773,614 1,641,567 48,939 ¥02,157,102 2,030,963 62,581 ¥02,213,222 2,919,480 (479,266) ¥02,921,528 3,021,878 (88,301) ¥02,561,157 2,510,976 17,746 Total stockholders’ equity Total assets Risk-monitored loans Reserve for possible loan losses Net unrealized gains (losses) on securities Capital ratio (BIS Guidelines) ROE PER (times) ¥02,175,809 51,849,687 1,466,633 512,023 (352,844) 11.31% 2.67% 62.36 ¥02,208,554 48,495,608 1,661,440 682,188 654,763 ¥02,174,486 49,015,005 1,766,867 666,692 / 12.53% 3.74% 62.08 12.33% /.% / ¥01,726,737 53,160,330 / 1,064,355 / 9.12% /.% / ¥01,847,460 54,719,655 / 842,310 / 8.92% /.% / Per Share (Yen) Stockholders’ equity Net income (loss) Net income–diluted (Nonconsolidated) For the Year Total income Total expenses Net income (loss) (Appendix) ¥333.46 9.22 9.21 ¥340.98 12.58 — ¥331.28 (124.72) — ¥446.47 (25.51) — ¥467.28 4.38 — 2001 2000 1999 1998 1997 Millions of yen ¥01,441,834 1,302,774 82,160 ¥01,930,928 1,776,858 57,117 ¥02,045,139 2,693,827 (375,315) ¥02,833,166 2,948,431 (220,516) ¥02,538,645 2,480,239 51,042 Gross banking profit (A) Banking profit Banking profit (excluding transfer to general reserve for possible loan losses) Expenses (excluding non-recurring losses) (B) Expense ratio (B)/(A) ¥00,730,392 411,377 ¥00,711,915 328,084 ¥00,699,181 172,947 ¥00,730,391 293,778 ¥00,720,834 281,745 355,401 374,990 51.3% 313,459 397,771 55.8% 274,123 425,057 60.7% 295,495 434,895 59.5% 282,102 438,732 60.8% At Year-End Preferred stock Number of shares issued (thousands) Common stock Number of shares issued (thousands) Total stockholders’ equity Total assets Deposits Loans and bills discounted Securities Risk-monitored loans Problem assets based on Financial Reconstruction Law Reserve for possible loan losses Net unrealized gains (losses) on securities Pay-out ratio Capital ratio (BIS Guidelines) ROE PER (times) Per Share (Yen) Stockholders’ equity Dividends: Common stock Preferred stock (Series I) Preferred stock (Series II) Preferred stock (Series III) (Type-2) Net income (loss) Net income–diluted 6 402,577 802,577 640,129 4,118,077 ¥02,281,230 48,461,818 33,534,079 30,575,498 10,199,669 1,215,082 1,260,895 424,799 (346,628) 34.71% 11.91% 4.86% 33.27 402,772 802,772 639,934 4,117,297 ¥02,252,289 46,559,485 33,342,655 31,939,952 6,911,602 1,672,375 1,723,560 660,454 662,799 53.42% 12.50% 3.23% 69.48 411,307 811,307 631,399 4,083,121 ¥02,223,521 47,208,716 32,965,621 32,291,263 6,217,570 1,760,563 26,883 26,883 572,562 3,747,134 ¥01,298,113 51,650,386 36,380,770 35,083,771 6,449,372 1,475,402 123,710 123,710 475,735 3,424,163 ¥01,551,052 53,131,014 38,270,539 36,833,937 7,062,157 / 1,800,079 735,562 (120,093) —.% 12.38% —.% / / 1,044,082 (25,917) —.% /.% —.% / / 835,024 784,879 60.27% /.% 3.73% / ¥358.43 ¥351.38 ¥343.09 ¥332.07 ¥380.72 6.00 — 15.00 13.70 17.28 17.24 6.00 — 15.00 13.70 11.24 — 7.25 — 15.00 0.04 (97.62) — 8.50 22.50 15.00 — (62.92) — 8.50 45.00 7.50 — 14.10 13.99 Former Sumitomo Bank (Consolidated) For the Year Total income Total expenses Net income (loss) At Year-End 2001 2000 1999 1998 1997 Millions of yen ¥02,727,586 2,454,118 83,469 ¥03,013,618 2,797,115 61,875 ¥02,828,799 3,587,829 (568,889) ¥02,662,503 3,131,832 (251,296) ¥02,572,853 2,511,407 34,048 Total stockholders’ equity Total assets Risk-monitored loans Reserve for possible loan losses Net unrealized gains on securities Capital ratio (BIS Guidelines) ROE PER (times) ¥01,837,151 67,392,974 1,789,785 756,830 51,738 ¥01,804,358 53,767,504 2,203,318 950,499 1,179,452 10.94% 6.05% 43.92 11.60% 4.55% 82.23 ¥01,757,123 54,973,872 2,340,631 1,267,935 — 10.95% /.% / ¥01,671,593 64,369,544 / 1,278,683 — 9.23% /.% / ¥01,949,674 60,229,929 / 554,986 — 8.75% 1.70% / Per Share (Yen) Stockholders’ equity Net income (loss) Net income–diluted (Nonconsolidated) For the Year Total income Total expenses Net income (loss) (Appendix) ¥426.32 25.50 24.93 ¥415.77 18.61 18.17 ¥400.71 (181.48) — ¥532.18 (80.00) — ¥620.71 10.84 10.77 2001 2000 1999 1998 1997 Millions of yen ¥01,850,834 1,716,783 55,675 ¥02,184,348 2,035,847 48,818 ¥02,073,328 2,706,752 (374,123) ¥02,414,077 2,998,041 (621,695) ¥02,361,555 2,317,397 35,318 Gross banking profit (A) Banking profit Banking profit (excluding transfer to general reserve for possible loan losses) Expenses (excluding non-recurring losses) (B) Expense ratio (B)/(A) ¥00,772,811 580,293 ¥00,722,565 350,578 ¥00,750,351 220,157 ¥00,711,376 308,077 ¥00,711,483 338,224 447,672 325,138 42.0% 389,438 329,785 45.6% 396,493 353,858 47.1% 337,621 373,755 52.5% 342,220 369,263 51.9% At Year-End Preferred stock Number of shares issued (thousands) Common stock Number of shares issued (thousands) Total stockholders’ equity Total assets Deposits Loans and bills discounted Securities Risk-monitored loans Problem assets based on Financial Reconstruction Law Reserve for possible loan losses Net unrealized gains (losses) on securities Pay-out ratio Capital ratio (BIS Guidelines) ROE PER (times) Per Share (Yen) Stockholders’ equity Dividends: 250,500 167,000 502,348 3,141,062 ¥01,918,707 65,265,680 37,195,694 31,172,382 16,860,309 1,517,508 250,500 167,000 502,348 3,141,062 ¥01,880,637 51,089,338 34,229,831 31,358,560 8,982,244 1,884,083 250,500 167,000 502,348 3,141,062 ¥01,846,470 51,531,297 33,001,309 33,716,858 6,679,892 1,959,860 — — 502,348 3,141,062 ¥01,138,014 58,076,795 37,390,044 35,930,302 7,256,931 1,469,122 — — 502,348 3,141,062 ¥01,786,408 57,149,204 39,833,827 36,600,112 6,004,310 / 1,561,564 671,042 (83,216) 36.15% 11.80% 3.72% 67.49 1,916,970 909,039 901,356 2,013,692 1,052,958 431,567 / 1,257,212 364,597 41.63% 12.46% 3.32% 106.17 —.% 11.94% —.% / —.% /.% —.% / / 535,043 670,640 75.59% /.% 1.98% / ¥451.35 ¥439.23 ¥428.35 ¥362.30 ¥568.73 Common stock Preferred stock (First series Type I) Preferred stock (Second series Type I) Net income (loss) Net income–diluted 6.00 10.50 28.50 16.59 16.25 6.00 10.50 28.50 14.41 14.12 6.00 0.03 0.08 (119.11) — 8.50 — — (197.93) — 8.50 — — 11.24 11.17 7 Former Sakura Bank (Years ended March 31) (March 31) Banking profit (excluding transfer to general reserve for possible loan losses) (Nonconsolidated) (Billions of yen) 400 350 300 250 200 0 355.4 313.5 295.5 282.1 274.1 1997 1998 1999 2000 2001 (%) 20 16 12 8 4 0 (Years ended March 31) (March 31) Capital ratio (BIS Guidelines) (Consolidated) 12.33 12.53 11.31 8.92 9.12 1997 1998 1999 2000 2001 Expenses and expense ratio (excluding non-recurring losses) (Nonconsolidated) (Billions of yen) 450 438.7 434.9 425.1 400 350 300 250 0 60.8 59.5 60.7 397.8 375.0 55.8 51.3 1997 1998 1999 2000 2001 Expenses (excluding non-recurring losses) Expense ratio (%) 65 60 55 50 45 0 Problem assets based on Financial Reconstruction Law (Nonconsolidated) (Billions of yen) 2,000 1,800.0 1,723.5 1,260.9 1999 2000 2001 1,600 1,200 800 400 0 (Years ended March 31) (March 31) Former Sumitomo Bank Banking profit (excluding transfer to general reserve for possible loan losses) (Nonconsolidated) (Billions of yen) 500 450 400 350 300 0 447.7 396.5 389.4 342.2 337.6 1997 1998 1999 2000 2001 Capital ratio (BIS Guidelines) (Consolidated) 11.60 9.23 8.75 10.95 10.94 1997 1998 1999 2000 2001 (%) 20 16 12 8 4 0 (Years ended March 31) (March 31) Expenses and expense ratio (excluding non-recurring losses) (Nonconsolidated) (Billions of yen) 400 369.3 373.8 350 300 250 200 0 51.9 52.5 353.9 329.8 325.1 47.1 45.6 42.0 1997 1998 1999 2000 2001 Expenses (excluding non-recurring losses) Expense ratio 8 (%) 55 50 45 40 35 0 Problem assets based on Financial Reconstruction Law (Nonconsolidated) (Billions of yen) 2,500 2,000 1,500 1,000 500 0 2,013.7 1,917.0 1,561.6 1999 2000 2001 Fiscal 2000 Results Progress Report on Strengthening the Financial Base of the Bank The founding banks have worked to raise their competitiveness and profitability through restructuring and rationalization based on their respective Plan toward Soundness of Management (former Sakura) and Plan for Strengthening the Financial Base of the Bank (former Sumitomo). Both plans were formulated when the two banks accepted infusions of public funds through subscriptions to preferred shares and perpetual subordinated notes in March 1999. The following summarizes each bank’s progress in fiscal 2000 toward the targets set out in the respective plans. Sakura Bank Sumitomo Bank In the earnings category, gross banking profit reached The Bank surpassed its earnings target for the year. Gross ¥730.4 billion, ¥16.7 billion short of the ¥747.1 billion target. banking profit climbed to ¥772.8 billion, ¥99.8 billion above Although steady progress was made toward increasing earn- the ¥673.0 billion target. This is chiefly attributable to revenue ings from the core banking business by improving loan spreads from new fee businesses, such as electronic banking, money and expanding housing loans, the shortfall occurred, primarily transfer and loan syndication, and from dividends from overseas due to market-related earnings impacted negatively by higher- subsidiaries. Expenses were also reduced beyond the targeted than-expected dollar and euro interest rates. Expenses were level. In addition to savings on personnel costs and branch reduced to ¥375.0 billion, a cut of ¥12.6 billion more than costs through reductions, system maintenance and manage- the targeted ¥387.6 billion, owing to progress in trimming ment costs were decreased. Despite some cost increases due personnel expenses through staff reductions, decreased pur- to the merger, expenses fell to ¥325.1 billion, ¥17.9 billion chasing and scaled back investing. As a result, banking profit lower than the ¥343.0 billion target. As a result, banking excluding transfer to general reserve for possible loan losses profit excluding transfer to general reserve for possible loan jumped ¥41.9 billion, to a record high of ¥355.4 billion. Net losses was ¥447.7 billion, ¥117.7 billion higher than the income for the period topped out at ¥82.2 billion, ¥28.7 bil- ¥330.0 billion target. Net income was ¥55.7 billion, ¥44.3 lion less than the targeted ¥110.9 billion, largely because of billion lower than the targeted ¥100.0 billion, largely owing to increased write-offs and reserves for non-performing loans an increase in write-offs and reserves for non-performing loans and a ¥5.6 billion impact from the introduction of enterprise and a ¥26.4 billion impact from the introduction of enterprise taxes for banks by the Osaka Prefectural Government. taxes for banks by the Osaka Prefectural Government. The Bank made significant strides in its rationalization The rationalization targets were exceeded. The number plans. It is more than a year ahead in its personnel reduction of employees at March 31, 2001, had dropped to 13,526, schedule. At March 31, 2001, the number of employees which compared favorably with the target of 13,600. Similarly, stood at 13,632, well below the 13,800 target for March the targeted reduction of the branch network to 265 by 2002. By accelerating the elimination and integration of the March 31, 2003, was already surpassed two years ahead of domestic branch network, at March 31, 2001, the number of schedule by March 31, 2001, when it stood at 262 branches. manned branches had fallen to 316, achieving the target of 319 two full years ahead of schedule. The Bank also outperformed its key lending target. The New lending to the key small and medium-sized business balance of new loans to small and medium-sized businesses, segment, excluding impact loans, was more than double the where we are stressing the facilitation of the smooth supply target. These loans grew by ¥238.6 billion, or ¥138.6 billion of credit, grew by ¥137.2 billion (excluding impact loans), higher than the target of ¥100.0 billion. exceeding the ¥100.0 billion target by ¥37.2 billion. 9 Asset Quality the amounts transferred to the general reserve. These credit costs reflect three main factors. The protracted economic In the interest of disclosure of problem assets, SMBC pro- slump led to an increase in the number of borrowers experi- vides information about the status of its assets in three differ- encing financial difficulties or requiring fundamental restruc- ent ways. First, self-assessment is conducted to calculate turing. Deflation had a negative impact on some collateral appropriate write-offs and reserves by classifying borrowers value. And finally, both founding banks took precautionary according to their financial soundness. Second, disclosure measures to decrease problem assets prior to the merger. based on “The Law Concerning Measures for the Reconstruc- As of March 31, 2001, the total reserve for possible loan tion of the Functions of the Financial System” (the Financial losses (combined total for the two founding banks) stood at Reconstruction Law) is used to classify the problem assets. ¥1,095.8 billion. (Note: Disclosure on the basis of the Financial Reconstruction On a consolidated basis, total credit cost amounted to Law is related to self-assessment in terms of borrower ¥992.9 billion including the amounts transferred to the category.) Third, we disclose the value of Risk-Monitored Loans general reserve, bringing the total reserve for possible loan based on the Banking Law, which exclude non-loan assets losses to ¥1,268.9 billion. such as foreign exchange, accrued interest and advanced payments. Write-Offs and Reserves Assessments Under self-assessment, each borrower is evaluated and Disposal of Problem Assets for Fiscal 2000 placed into a category—Normal Borrowers, Borrowers SMBC makes the appropriate write-offs and reserves arising Requiring Caution, Potentially Bankrupt Borrowers, Effectively from semi-annual self-assessments conducted in compliance Bankrupt Borrowers and Bankrupt Borrowers—and standard with the financial inspection manual prepared by the Financial write-offs and reserves are assessed against each category. Services Agency and the practical guidelines published by the As part of our overall measures to strengthen risk control Japan Institute of Certified Public Accountants. throughout the Group, all consolidated subsidiaries basically As a result of these self-assessments, on a nonconsolidated use the same standards as the parent bank for write-offs and basis total credit cost (combined total for the two founding reserves. banks) amounted to ¥819.1 billion in fiscal 2000, including Borrower Self-Assessment Category Normal Borrowers Borrowers Requiring Caution Rules for Write-offs and Reserves Amounts are recorded as general reserves in proportion to the expected losses over the next 12 months based on the actual bankruptcy rate for the past for each ratings category. These assets are divided into groups according to the risk of default. Amounts are recorded as general reserves in proportion to the expected losses based on the actual bankruptcy rate for the past for each group. The groups are “Substandard Assets” and “Other” and the latter group is further divided according to credit ratings, etc. Potentially Bankrupt Borrowers The Bank sets specific reserves for possible loan losses on the portion of Classification III assets (other than those expected to be collectible by collateral or guarantees, etc.), as classified according to individual borrowers. Effectively Bankrupt/Bankrupt Borrowers The Bank fundamentally writes-off the full amount of Classification IV assets (deemed to be uncollectible or of no value) that are individually calculated by borrower. In addition, specific reserves have been set for possible loan losses against the full amount of Classification III assets. 10 Self-Assessment Borrower Category Self-assessment is the process used within a bank to cal- culate the write-offs and reserves that ensure the soundness of its assets. Each asset is assessed individually for its secu- rity and verity. Each borrower is classified into one of five categories—Normal Borrowers, Borrowers Requiring Caution, Potentially Bankrupt Borrowers, Effectively Bankrupt Borrowers and Bankrupt Borrowers—according to its current condition. A bank is further required to assess, on a scale of I to IV, the degree of the risk of default and non-collection, and the risk of asset devaluation. As a rule, our consolidated subsidiaries use the same system as part of our efforts to strengthen how risk is managed throughout the Group as a whole. Normal Borrowers Borrowers Requiring Caution Borrowers with good business performance and in good financial standing without identified problems Borrowers marked for close monitoring Potentially Bankrupt Borrowers Borrowers perceived to have a high risk of falling into bankruptcy Effectively Bankrupt Borrowers Borrowers that may not have legally or formally declared bankruptcy, but are essentially bankrupt Bankrupt Borrowers Borrowers that have been legally and formally declared bankrupt Asset Classification Classification I Classification II Classification III Assets not classified into Classification II, III or IV Assets perceived to have above-average risk for collectibility Assets for which final collection or asset value is highly doubtful and which pose a high risk of incurring a loss Classification IV Assets assessed as uncollectible or worthless ■ Total Credit Cost Including General Reserve (Year ended March 31, 2001) Nonconsolidated (Billions of yen) Combined total Sakura Bank Sumitomo Bank Total credit cost Write-off of loans Transfer to specific reserve Transfer to reserve for losses on loans sold Losses on loans sold to CCPC Losses on sale of delinquent loans Transfer to loan loss reserve for specific overseas countries Transfer to general reserve for possible loan losses (1) Total credit cost Reserve for possible loan losses Amount of direct reduction (2) ¥1,007.7 741.4 156.5 52.9 31.7 25.1 0.0 ( ) 188.6 ¥ 819.1 ¥1,095.8 ¥1,570.8 ¥317.1 240.5 9.8 33.9 20.4 8.5 4.0 56.0 ( ) ¥261.1 ¥424.8 ¥888.7 ¥ 690.6 500.9 146.7 19.1 11.4 16.6 ( ) 4.0 ( ) 132.6 ¥ 558.0 ¥ 671.0 ¥ 682.1 (1) Banking profit includes reserve for possible loan losses. (2) Including direct reduction for assets which do not fall under the Financial Reconstruction Law disclosure standards. Consolidated (Billions of yen) Total credit cost Reserve for possible loan losses Amount of direct reduction (3) Combined total Sakura Bank Sumitomo Bank ¥ 992.9 ¥1,268.9 ¥2,009.5 ¥ 346.6 ¥ 512.0 ¥1,121.7 ¥646.3 ¥756.8 ¥887.8 (3) Including direct reduction for assets which do not fall under the Financial Reconstruction Law disclosure standards. 11 Disclosure of Problem Assets Assets Disclosed under the Financial Reconstruction Law Under the Financial Reconstruction Law, assets are assessed and classified into four categories—Bankrupt and Quasi- Bankrupt Assets, Doubtful Assets, Substandard Loans, and Normal Assets. The total value of assets in each category is disclosed. On a nonconsolidated basis (combined total for the two founding banks), the total value of assets in all categories other than Normal Assets amounted to ¥2,822.5 billion as of March 31, 2001, an ¥818.0 billion decrease compared with March 31, 2000. On a consolidated basis (combined total for the two founding banks), the amount was ¥3,355.0 billion. Classification of Disclosure Basis Assets Bankrupt and Quasi- Bankrupt Assets Doubtful Assets This category is defined as the sum of credits to Bankrupt Borrowers and Effectively Bankrupt Borrowers as categorized by self-assessment, minus fully written-off Classification IV credits. In addition, as all Classification III credits are fully covered by reserves, the remainder consists of the collective portion of credits secured by collateral or guarantees. This is the sum of credits extended to borrowers classified as Potentially Bankrupt under self-assessment. Since the sum includes credits that are secured by collateral or guarantees, and considered to be collectible assets, specific reserves are set aside for the unsecured portions under Classification III. Substandard Loans This is the sum of the loans extended to Borrowers Requiring Caution under self- assessment. This figure includes past due loans (three months or more) or restructured loans. Normal Assets This is the sum, as of term-end, of loans, securi- ties lending, foreign exchange, accrued interest, advanced payments and customer liabilities for acceptance and guarantees that is not included in the other three categories. Normal assets thus represent the sum of credits to Normal Borrowers and that portion of credits identified through self- assessment as Borrowers Requiring Caution, but not classified as Substandard, and on which the risk of credit losses is deemed relatively small. ■ Assets Disclosed under the Financial Reconstruction Law (Combined Total of Sakura and Sumitomo Banks) (As of March 31, 2001) (Billions of yen) Bankrupt and quasi-bankrupt assets ¥ 589.9 (1) ¥ 4.4 ¥ 777.3 (2) Nonconsolidated Increase/decrease compared with March 31, 2000 Consolidated Doubtful assets Substandard loans Subtotal Normal assets Total (1) After direct reduction of ¥1,567.4 billion (2) After direct reduction of ¥1,991.6 billion 12 1,943.1 289.4 2,822.5 66,157.8 ¥68,980.3 ( ) 288.9 ( ) 533.6 ( ) 818.0 123.2 ( ) ¥ 694.9 2,166.4 411.2 3,355.0 68,290.6 ¥71,645.6 (Billions of yen) Consolidated Disclosure of total assets (2) ¥ 489.6 803.2 227.3 (Billions of yen) Consolidated Disclosure of total assets (2) ¥ 287.8 1,363.2 183.9 Sakura Bank (As of March 31, 2001) Disclosure of total assets Increase/ decrease Nonconsolidated Claims secured by collateral and guarantees Reserve for possible loan losses Reserve ratio Bankrupt and quasi-bankrupt assets ¥ 390.9 (1) ¥ ( 3.8) ¥ 368.9 ¥ 23.6 100.0% 679.7 190.3 (201.1) (257.7) 334.3 73.8 246.2 20.3 71.3 17.4 ¥ 1,260.9 ¥ (462.7) ¥ 777.0 ¥ 290.0 59.9% ¥ 1,520.1 Doubtful assets Substandard loans Total (1) After direct reduction of ¥885.2 billion (2) After direct reduction of ¥1,118.2 billion Sumitomo Bank (As of March 31, 2001) Disclosure of total assets Increase/ decrease Nonconsolidated Claims secured by collateral and guarantees Reserve for possible loan losses Reserve ratio Bankrupt and quasi-bankrupt assets ¥ 199.0 (1) ¥ 8.2 ¥ 188.2 ¥ 14.2 100.0% Doubtful assets Substandard loans Total (1) After direct reduction of ¥682.1 billion (2) After direct reduction of ¥873.4 billion 1,263.5 99.1 ( 87.7) (275.9) 494.1 50.7 419.2 10.7 54.5 22.1 ¥ 1,561.6 ¥ (355.4) ¥ 733.0 ¥ 444.1 53.6% ¥ 1,834.9 ■ Classification under Self-Assessment, Disclosure of Problem Assets and Write-offs/Reserves (Combined Totals of Sakura and Sumitomo Banks) (Nonconsolidated) (As of March 31, 2001) (Billions of yen) Category of borrowers under self-assessment Disclosure of problem assets based on the Financial Reconstruction Law Classification under self-assessment Classification I Classification II Classification III Classification IV Reserve for possible loan losses Reserve ratio (Note 3) Bankrupt Borrowers Effectively Bankrupt Borrowers Potentially Bankrupt Borrowers Borrowers Requiring Caution Normal Borrowers Bankrupt and quasi-bankrupt assets (1) Claims secured by collateral and guarantees, etc. (4) Fully reserved Direct write-offs 589.9 557.1 32.8 (Note 1) Doubtful assets (2) Claims secured by collateral and guarantees, etc. (5) 1,943.1 828.4 Necessary amount reserved 1,114.8 Substandard loans (3) 289.4 （Claims to substandard borrowers） Substandard loans secured by collateral and guarantees, etc. (6) 124.5 Claims to borrowers requiring caution excluding claims to substandard borrowers Normal assets 66,157.8 Claims to normal borrowers Specific reserve 37.8 (Note 2) 1 0 0 % 665.4 (Note 2) 59.7% Specific reserve General reserve for substandard loans 4.8 26.2 General reserve 367.8 1 5 .0 % (Note 4) Average 3.1% Average 0.2% Total 68,980.3 Loan loss reserve for specific overseas countries Total reserve for possible loan loss (B) Specific reserve + General reserve for claims to substandard borrowers (A) = (1) + (2) + (3) 2,822.5 (C) Portion secured by guarantees and collateral, etc. (5) + (6) + (7) 1,510.0 (D) Unsecured portion (A) – (C) Coverage Ratio {(B) + (C)} / A 20.0 1,095.8 734.1 1,312.5 Reserve ratio (Note 5) (B) / (D) 55.9% 79.5% Notes: 1. Including direct reduction of ¥1,567.4 billion. 2. Includes reserves for assets which do not fall under the Financial Reconstruction Law disclosure standards. (Bankrupt/effectively bankrupt borrowers: ¥5.0 billion; Potentially bankrupt borrowers: ¥10.5 billion) 3. The reserve ratio to normal borrowers is the proportion of the reserve to the total claims to normal borrowers. Reserve ratios to other borrowers are the proportion of the reserve to the claims of each category excluding the portion secured by collateral and guarantees, etc. 4. The proportion of the reserve to the unsecured claims to substandard borrowers (excluding the claims to borrowers with specific reserves). 5. The proportion of the reserve to the claims excluding the portion secured by collateral and guarantees, etc. 13 Risk-Monitored Loans On a nonconsolidated basis (combined total for the two In addition to the disclosure of problem assets in accordance founding banks), Risk-Monitored Loans amounted to ¥2,732.6 with the Financial Reconstruction Law, we also separately billion as of March 31, 2001, an ¥823.9 billion decrease disclose the balance of “Risk-Monitored Loans” in accordance compared with March 31, 2000. with the Banking Law. On a consolidated basis (combined total for the two founding banks), Risk-Monitored Loans amounted to ¥3,256.4 billion. ■ Risk-Monitored Loans (As of March 31, 2001) Nonconsolidated （Billions of yen） Bankrupt loans Non-accrual loans Past due loans (3 months or more) Restructured loans Total Amount of direct reduction Consolidated Combined total Ratio to total loans Increase/decrease compared with March 31, 2000 Sakura Bank Sumitomo Bank ¥ 235.7 2,207.5 103.2 186.2 ¥2,732.6 ¥1,540.4 0.4% 3.6 0.2 0.3 4.4% ¥ 6.1 ¥ 174.8 ( ) 296.3 27.6 ( ) 561.2 ( ) ¥ 823.9 849.9 65.7 124.6 ¥1,215.1 ¥ 877.9 ¥ 60.8 1,357.6 37.5 61.6 ¥1,517.5 ¥ 662.5 Combined total Ratio to total loans Increase/decrease compared with March 31, 2000 Sakura Bank Sumitomo Bank （Billions of yen） Bankrupt loans Non-accrual loans Past due loans (3 months or more) Restructured loans Total Amount of direct reduction ¥ 273.1 2,577.5 125.8 280.0 ¥3,256.4 ¥1,936.6 0.4% 3.9 0.2 0.4 5.0% ¥ 9.5 ( ) 359.0 6.8 ( ) 265.6 ( ) ¥ 608.4 ¥ 197.4 1,042.0 75.9 151.4 ¥1,466.6 ¥1,084.5 ¥ 75.7 1,535.6 49.9 128.6 ¥1,789.8 ¥ 852.1 Category of borrowers under self-assessment Disclosure of problem assets based on the Financial Reconstruction Law Risk-monitored loans Total loans Other assets Total loans Other assets Bankrupt Borrowers Effectively Bankrupt Borrowers Potentially Bankrupt Borrowers Borrowers Requiring Caution Normal Borrowers Bankrupt and quasi-bankrupt assets Doubtful assets Substandard loans （Normal assets） Bankrupt loans Non-accrual loans C Past due loans (3 months or more) Restructured loans Correlation between Disclosure Based on the Financial Reconstruction Law and Risk-Monitored Loans The disclosure of Risk-Monitored Loans corresponds exactly to disclosure based on the Financial Reconstruction Law, except that non-loan assets—such as securities lending, foreign exchange, accrued interest, advanced payments and customers’ liabilities for acceptances and guarantees—are not included in Risk-Monitored Loans. Since the interest income from borrowers classified by self-assessment in the Potentially Bankrupt Borrowers, Effectively Bankrupt Borrowers and Bankrupt Borrowers categories is not accrued in revenue, there is no accrued interest included in the assets disclosed on the basis of the Financial Reconstruction Law. A B C 14 Work-out of Problem Assets by Removing Them from the Balance Sheet ¥1,363.8 billion was disposed of during the second half of fiscal 2000, leaving the balance of assets extended to exist- Under the provisions of the emergency economic program ing Potentially Bankrupt Borrowers or lower categories at enacted in April 2001, we are publishing the results of the ¥1,825.8 billion. While the disposal of assets extended to measures taken for the work-out of problem assets (removing Potentially Bankrupt Borrowers or lower categories is pro- them from the balance sheet), as well as the assets that were ceeding at a reasonable pace, the balance of assets newly newly classified as being extended to Potentially Bankrupt classified as Potentially Bankrupt Borrowers or lower catego- Borrowers or lower categories. ries grew by ¥707.3 billion in the second half of fiscal 2000, At September 30, 2000, the balance of assets extended to bringing the final total to ¥2,533.0 billion as of March 31, Potentially Bankrupt Borrowers or lower categories (combined 2001. This was ¥656.5 billion less than the balance as of total for the two founding banks) was ¥3,189.6 billion. Of this, September 30, 2000. ■ Credits to Potentially Bankrupt Borrowers or Lower Categories in the Financial Reconstruction Law (Combined Totals of Sakura and Sumitomo Banks) (Billions of yen) Problem assets occurring prior to second half of fiscal 2000 As of March 31, As of Sept.30, 2001 2000 (A) (B) Decrease (B) – (A) Newly occurred problem assets during second half of fiscal 2000 (C) Problem assets as of March 31, 2001 (B) + (C) Bankrupt and quasi-bankrupt assets ¥ 621.7 ¥ 472.7 ¥ (149.0) Doubtful assets Total 2,567.9 1,353.1 (1,214.8) ¥3,189.6 ¥1,825.8 ¥(1,363.8) ¥117.2 590.1 ¥707.3 ¥ 589.9 1,943.1 ¥2,533.0 ■ Progress in Decreasing Problem Assets Disposition by borrower's liquidation Re-constructive disposition Loan sales to secondary market, Securitization etc. Direct write-off Others Total (Billions of yen) Second half of fiscal 2000 ¥ (64.3) (348.3) (208.4) 97.7 (840.5) ¥(1,363.8) Reserve for Possible Loan Losses Nonconsolidated (As of March 31, 2001) Disposition by borrower’s liquidation: Omission or write-off of loans involved in bankruptcy liquidation proceedings (bankruptcy or special liquidations) Re-constructive disposition: Omission of loans involved in foreclosure bankruptcy proceedings (corporate reorganization, civil rehabilitation, composition and arrangement), loan forgiveness involving special mediation or other types of civil mediation, or loan forgiveness for restructuring involving a private reorganization Others: Collection, improvement in debtors’ performance Combined total Sakura Bank Sumitomo Bank （Billions of yen） Reserve for possible loan losses (a) ¥1,095.8 ¥ 424.8 ¥ 671.0 General reserve Specific reserve Loan loss reserve for specific overseas countries Risk-monitored loans (b) Reserve ratio (a) / (b) Consolidated 367.8 708.1 20.0 142.8 270.3 11.6 225.0 437.7 8.4 ¥2,732.6 ¥1,215.1 ¥1,517.5 40.1% 35.0% 44.2% Combined total Sakura Bank Sumitomo Bank （Billions of yen） Reserve for possible loan losses (a) ¥1,268.9 ¥ 512.0 ¥ 756.8 General reserve Specific reserve Loan loss reserve for specific overseas countries Risk-monitored loans (b) Reserve ratio (a) / (b) 395.9 853.0 20.0 163.2 337.2 11.6 232.7 515.7 8.4 ¥3,256.4 ¥1,466.6 ¥1,789.8 39.0% 34.9% 42.3% 15 Problem Assets by Domicile of Borrower (Nonconsolidated) (As of March 31, 2001) ■ The Financial Reconstruction Law Standard （Billions of yen） Combined total Percentage Sakura Bank Sumitomo Bank Domestic Overseas Asia Indonesia Hong Kong Thailand Malaysia Other North America Central and South America Western Europe Eastern Europe Middle East/Africa Total ■ Risk-Monitored Loans Domestic Overseas Asia Indonesia Hong Kong Thailand Malaysia Other North America Central and South America Western Europe Eastern Europe Middle East/Africa Total ¥2,702.1 120.4 85.6 22.6 15.1 14.6 11.4 21.9 28.9 0.9 2.2 2.7 − 95.7% ¥1,218.4 ¥1,483.7 4.3 3.0 0.8 0.5 0.5 0.4 0.8 1.0 0.0 0.1 0.1 − 42.5 33.1 11.6 3.0 5.3 5.9 7.3 5.0 0.9 2.2 1.3 − 77.9 52.5 11.0 12.1 9.3 5.6 14.5 23.9 − − 1.4 − ¥2,822.5 100.0% ¥1,260.9 ¥1,561.6 Combined total Percentage Sakura Bank Sumitomo Bank （Billions of yen） ¥2,632.2 100.4 78.4 21.0 13.1 14.4 10.7 19.2 16.2 0.9 2.2 2.6 − 96.3% ¥1,178.2 ¥1,454.0 3.7 2.9 0.8 0.5 0.5 0.4 0.7 0.6 0.0 0.1 0.1 − 36.9 28.9 10.0 3.0 5.2 5.8 4.9 3.5 0.9 2.2 1.3 − 63.5 49.5 11.0 10.1 9.3 4.9 14.2 12.7 − − 1.3 − ¥2,732.6 100.0% ¥1,215.1 ¥1,517.5 Note: “Domestic” means the total of domestic branches excluding the special account for international financial transactions. “Overseas” means the total of overseas branches including the special account for international financial transactions. The above countries and areas are categorized by the obligor’s domicile. 16 Problem Assets by Domicile and Type of Borrower (Nonconsolidated) (As of March 31, 2001) ■ The Financial Reconstruction Law Standard （Billions of yen） Domestic Manufacturing Agriculture, forestry, fishery and mining Construction Wholesale and retail Finance and insurance Real estate Transportation, communications and other public enterprises Services Municipalities Other Overseas Public sector Financial institutions Commerce and industry Other Total Combined total Percentage Sakura Bank Sumitomo Bank ¥2,702.1 95.7% ¥1,218.4 ¥1,483.7 164.4 7.6 99.8 421.3 114.9 856.8 65.3 780.3 0.5 191.2 120.4 1.1 5.0 114.2 0.2 5.8 0.3 3.5 14.9 4.1 30.4 2.3 27.6 0.0 6.8 4.3 0.0 0.2 4.0 0.0 84.9 5.8 64.9 242.9 9.9 366.2 38.2 302.1 ― 103.3 42.5 1.1 0.0 41.2 0.2 79.5 1.9 34.8 178.3 105.0 490.6 27.1 478.2 0.5 87.8 77.9 ― 5.0 72.9 ― ¥2,822.5 100.0% ¥1,260.9 ¥1,561.6 ■ Risk-Monitored Loans （Billions of yen） Domestic Manufacturing Agriculture, forestry, fishery and mining Construction Wholesale and retail Finance and insurance Real estate Transportation, communications and other public enterprises Services Municipalities Other Overseas Public sector Financial institutions Commerce and industry Other Total Combined total Percentage Sakura Bank Sumitomo Bank ¥2,632.2 96.3% ¥1,178.2 ¥1,454.0 162.6 7.3 99.0 404.8 103.0 844.4 61.4 775.5 0.5 173.7 100.4 1.1 4.3 94.8 0.2 6.0 0.3 3.6 14.8 3.8 30.9 2.2 28.4 0.0 6.4 3.7 0.0 0.2 3.5 0.0 83.7 5.4 64.3 233.7 7.5 363.0 34.3 297.6 ― 88.8 36.9 1.1 ― 35.6 0.2 78.9 1.9 34.8 171.0 95.5 481.4 27.1 477.9 0.5 85.0 63.5 ― 4.3 59.2 ― ¥2,732.6 100.0% ¥1,215.1 ¥1,517.5 Note: “Domestic” means the total of domestic branches excluding the special account for international financial transactions. “Overseas” means the total of overseas branches including the special account for international financial transactions. 17 Management Issues The SMBC Plan for Strengthening the Financial Base of the Bank The efficiencies gained through the merger and heightened profitability will enable us to accumulate additional internal capital, which we will combine with more sophisticated risk Continuing in the wake of its predecessors, SMBC is striving management systems to keep potential risk under control and to strengthen its financial base by raising profitability and maintain adequate capital. While we will rely partly on retained rationalizing operations through the merger with the objective earnings to improve our financial condition, it will be neces- of raising its ability to redeem the public funds it received. sary for us to continue to liquidate and securitize existing as- The Bank will draw upon the respective strengths of its two sets, eliminate non-accrual and low-margin assets and reduce founding banks to enhance corporate and shareholder value holdings of shares held for strategic purposes to maintain by offering more high-value added products and services to risk assets at appropriate levels. Specifically, we plan to customers. Our goal is to achieve a superior standing in prof- reduce the two founding banks’ combined ¥71,816.6 billion itability and soundness, becoming an internationally competitive balance of risk-adjusted assets at March 31, 2001, to financial institution fully capable of contributing to the stability approximately ¥68,000 billion by March 31, 2005. This will of the financial system and to economic development. enable us to maintain our BIS-defined capital adequacy ratio Operating Targets up to Fiscal 2004 By fiscal 2004, we expect to take our Tier I ratio to 7% or To enable the Bank to redeem its public funding and continue higher and the BIS ratio to 11% or higher. above the 10% level expected of internationally active banks. on a growth path, we have set the fiscal 2004 target for banking profit to ¥950 billion and net income to ¥420 billion, which will be reached by rebuilding and restructuring operations. Fiscal 2004 On the expense side, we will continue to invest in strategic Banking Profit　　　 　　 ¥950 billion Net Income　　　 　　 ¥420 billion Consolidated ROE 　 　　　 10% or higher BIS Capital Adequacy Ratio 11% or higher IT systems while bringing the beneficial effects of the merger into play early on. By fiscal 2004, we expect to achieve sav- ings of ¥100 billion over the fiscal 1998 cost structure of the two founding banks, bringing expenses down to ¥680 billion. We will take the expense ratio, expressed as expenses divided by banking profit, from 54% in fiscal 1998 to the 42% level by fiscal 2004. The one-time expenses related to the merger will be approximately ¥23.3 billion in fiscal 2001. Over the period from fiscal 2001 to fiscal 2003, we expect to incur charges of approximately ¥51.5 billion for systems and branch dispo- sitions, and over the period from fiscal 2001 to fiscal 2004, approximately ¥128.4 billion for system integration. By fiscal 2004, when these one-time costs will be elimi- nated, we aim to secure net income of ¥420 billion and a return on equity of 10% or more (on a consolidated basis). 18 Restructuring Plan Rationalization Plan The business climate has changed remarkably for banks in In addition to the original restructuring plan, under the merger recent years with the implementation of the financial “Big plan we are planning additional rationalization measures that Bang” and other liberalization measures, and the globalization will eliminate the duplication of functions in both the head of the financial sector and other parts of the economy. Our office and branch network. We will reduce the number of response to these changes is to take a proactive and flexible employees by 3,000, close 100 branches in Japan and 12 stance. To provide the high standard of service demanded by overseas, and increase the effectiveness of IT spending by customers, we will concentrate on the following courses of integrating the two systems. The result will be annual cost action until fiscal 2004: (1) expand consumer banking profits savings of approximately ¥60 billion. through focused customer segmentation, increased promo- By March 31, 2004, we plan to reduce our staff by a total tion of higher margin products and services, and a lower cost of 9,300 employees, close 265 domestic branches and shut structure; (2) promote transactions with domestic and over- down 38 overseas offices as compared to the March 31, seas corporations based on business models that feature 1998 levels. high asset efficiency; (3) rebuild and expand overseas oper- We shall continue to invest in IT to strengthen our competi- ations with reformulated strategies in each geographic area; tive abilities. Specifically, we are investing in systems to carry (4) invest strategically in IT to strengthen marketing and out advanced database marketing for consumers, to provide provide network platforms to serve small and medium-sized a network platform to serve small and medium-sized busi- corporate customers; and (5) establish a leading position in nesses, to create the financial content and supporting infra- e-business. structure for e-business, to upgrade the sophistication of risk In the domestic market, we have divided operations into the management and management information systems, and to consumer and corporate sections and are introducing sepa- upgrade the internal information system to enhance general rate marketing organizations for each customer segment. productivity. By integrating the two founding banks’ systems, Within the consumer sector, we are clearly identifying cus- we will eliminate the duplicate investment and maintenance tomer segments, creating specific business models for each expenses previously required. The funds freed by the merger segment and offering the most appropriate high-margin prod- can then be directed toward strategic IT investment. ucts and services based on low-cost delivery structures. In the corporate sector, we enjoy a commanding market share in the small and medium-sized business segment. The merger provides us with a balanced geographical base in both the Kanto and Kansai regions to build on this and create a solid profit base by offering complete business solutions. 19 Corporate Governance Oversight System Under the current Commercial Code, the Board of Directors Corporate Governance System bears responsibility for “setting policy for important manage- SMBC’s corporate governance system is being strengthened ment issues” and “overseeing performance.” At SMBC, we to improve decision-making transparency and soundness. We place particular emphasis on the latter function. We intro- are bolstering the oversight functions of the Board of Directors duced an executive officer system that separates decision (the Board) and implementing a separate executive officer making at the operational level from the Board’s oversight system at the operational level. In addition, we are incorporat- functions. In particular, the Chairman of the Board is prohibited ing opinions from outside advisors regarding the following from assuming direct responsibility for operational duties and two areas in particular. is primarily charged with their oversight. Moreover, we rein- forced the Board’s oversight functions by setting up three 1. Advice regarding all aspects of management subcommittees: the Risk Management, Compensation and 2. Operational reviews from perspectives independent of Nominating Committees. Two outside directors, with respec- the Bank tive certified public accountant and lawyer backgrounds, have been appointed to each committee. In particular, an outside To facilitate Item 1 above, we established an Advisory Board director has been appointed as the Chairman of the Com- to the chairperson and president in July 2001. For Item 2, we pensation Committee. This system allows the supervision have asked the Board’s outside directors to focus primarily of operations to be conducted from a suitably objective on oversight of operational reviews in Board meetings and perspective. Each of the Board subcommittees is authorized subcommittees. by the Board to supervise the following areas and report on Advisory Board The Advisory Board is a council comprised of prominent indi- viduals from outside the Bank given the mandate to provide advice on the entire range of issues facing the Bank, includ- ing important management strategies, industry-wide prob- lems, economic and political trends, major industry and competitive developments, the consumer mindset and social trends. The appointed members, listed below, are current or former corporate executives, management consultants or scholars. Shoichiro Toyoda Honorary Chairman, and Member of the Naohiko Kumagai Senior Advisor to the Board, Mitsui & Board, Toyota Motor Corporation Co., Ltd. Tetsuro Kawakami Senior Advisor, Sumitomo Electric Toshiomi Uragami Advisor, Sumitomo Life Insurance Industries, Ltd. Company Yoshio Tsukio Professor, Graduate School of Frontier Sciences, The University of Tokyo Yoshinori Yokoyama Director, McKinsey & Company, Inc., Japan them to the Board. • Risk Management Committee Risk Management and Compliance 1. Issues related to overall risk management policies and the risk management system 2. Issues related to market and liquidity risk management policies and the risk management system 3. Issues related to credit risk management policy and the risk management system 4. Other issues with a potential material impact on operations • Compensation Committee Board Members and Executive Officer Remuneration 1. Issues related to remuneration, salaries and incentive plans 2. Issues related to the stock option plan 3. Other remuneration issues • Nominating Committee Selection of Directors, Managing Directors and Representative Directors 1. Issues related to the selection of directors 2. Issues related to the appointment of executive officers and the president 3. Other major personnel issues for the Board 20 A Separate Operations System performance of the Bank, we extended the scope of the At SMBC, the executive officers selected by the Board per- stock option system to include a larger group of managers. It form their duties under the direction of the president. As of was resolved at the Annual General Meeting of Shareholders June 30, 2001, there were 65 executive officers, including in June 2001 to extend stock options to a total of 432 people the president. Of them, 23 are concurrently appointed as in the Bank. directors. The Management Committee is the highest decision-making Internal Audit Unit body at the operations level. The president chairs the commit- We formed the Internal Audit Unit in April 2001, giving it the tee and selects its members from the executive officers. The responsibility to inspect the operations of the Bank in a pro- committee members deliberate on important issues facing cess separate from the oversight exercised by the Board on the Bank, and final decisions lie with the president. the shareholders’ behalf. The unit is charged with conducting The president also designates certain executives in the objective audits to test compliance and the correct discharge Management Committee as representatives of particular of bank duties. The responsibility for auditing operations, admin- departments or units, who then implement the directives from istrative procedures, market transactions, information sys- the Management Committee in that group. tems and assets is centralized in this unit. By operating The Bank adopted a stock option system to strengthen the independently of the other units, the unit is contributing to incentives for executive officers to increase shareholder strengthening of our inspection systems and ensuring that the value. As part of the incentives to upgrade the long-term Bank’s activities are reviewed objectively. Shareholders’ Meeting Chairman of the Board Board of Directors Advisory Board (Prominent individuals from outside the company) Risk Management Committee Compensation Committee Nominating Committee Outside Directors President Management Committee (Composed of executive officers) Head Office Corporate Staff Unit Head Office Corporate Services Unit Head Office Internal Audit Unit (Consumer Banking Unit, Middle Market Banking Unit, Corporate Banking Unit, International Banking Unit, Treasury Unit and Investment Banking Unit) Business Units 21 Compliance • All employees shall behave in a trustworthy manner, observe all laws and regulations, act in a highly ethical manner, and Strengthening the Compliance System serve the public fairly and honestly. Compliance with the various laws and regulations comprising • Employees are charged with providing value to customers our social standards is an issue of great importance for finan- and the Bank’s growth must be linked to the furtherance of cial institutions because of their central role in the financial all stakeholder interests, including customers, shareholders system and social infrastructure. There is even greater and the public. demand for banks to behave responsibly and transparently as competition intensifies across geographic and industry The SMBC Compliance System boundaries and the market becomes more selective. It is To implement a compliance system, it is first necessary to this context in which SMBC is placing high priority on the clarify the framework for observing laws and regulations. At implementation of its compliance system. When we began SMBC, we employ a dual system. Self-regulation by each operating as the new entity in April 2001, all employees department and branch is the primary level. Independent were thoroughly instructed in the following aspects of our inspections conducted by the Internal Audit Unit constitute compliance code. the secondary level. Audit Reports Management Directions Directions Auditing Role (Internal Audit Unit) Strict Check as Independent Unit Autonomous Role (Business Units) Support Role (General Affairs Department) Thorough Advance Check Based on Self-Regulation Compliance System Oversight and Legal Support Audits of Operations Compliance System Oversight and Legal Support Conducts audits of all operations. Reports directly to top management. Each department is responsible for conducting compliance checks under the supervision of the branch or department manager. Bears responsibilities for planning the compliance system. Investigates legal issues in support of each unit. 22 To make this basic framework effective, in April 2001 we Compliance Program established a Compliance Committee that encompasses the The Compliance Program is the detailed implementation plan entire organization. The committee is chaired by the director formulated as resolutions by the Board of Directors to responsible for compliance issues and includes the heads of strengthen the Bank’s compliance system. As the diagram 15 departments and has a council with legal advisors. This shows, it is being implemented in four stages. The basic structure ensures that each section of the Bank is examined objective is to have the compliance system up and running for compliance from an impartial, neutral perspective. in the Bank and consolidated subsidiaries as soon and as Compliance Manual smoothly as possible within the 2001 fiscal year. We have made the concrete plan of the program, and have been set- As a further step in our compliance regime, we distributed a ting up training programs and auditing systems. In addition, compliance manual to each and every employee in April 2001. a compliance officer has been assigned to each department This manual, which is set out in a resolution of the Board of and branch to ensure that the laws and regulations are Directors, is not a mere list of the applicable laws and observed within the basic compliance framework according regulations. It contains control procedures and an employee to the compliance manual. code of conduct. The code of conduct features 60 items that describe the related laws and regulations and provide procedural guidelines and specific examples of conduct. 1. Plan (Documentation) Create a compliance manual, etc. 4. Review 2. Implementation Improve compliance program and revise manual Establish training and educational systems to inform employees about compliance Compliance manual 3. Evaluation Conduct independent compliance inspections in every department and branch 23 Risk Management Basic Principles (settlement risk, legal risk, reputational risk and others). Each department is charged with control of risks at an appropriate level within its own business line. To control the risks included As financial liberalization, globalization and the rapid develop- in the items (1–5) above as well as settlement risk, we have ment of IT generate new business opportunities, financial designated certain departments as risk management institutions are being exposed to more diverse and complex departments to oversee specific risk control measures within risks than in the past. Identifying, measuring and controlling each risk category. In addition, we established the Corporate risks has never been more important in the management of Risk Management Department completely independent of the a bank. business units to manage these risks on a bank-wide basis. This At SMBC, we have established risk management rules department works with the Corporate Planning Department to encompassing all the fundamentals required of a risk manage- comprehensively and systematically manage risk. ment framework. In addition to specifying the types and areas The control system we established at the Bank has the of risks that should be managed according to our strategic Board of Directors at its highest level, reflecting the impor- objectives, the rules define the basic principles for appropri- tance we attribute to risk management. The system works as ately controlling each type of risk. The broad principles follows: the risk management department supervising each include “risk management on a consolidated basis,” “risk risk category drafts “basic principles for risk management” management based on quantification,” “consistency with for that category, which are then presented for approval at business strategies,” “consistency checks and balances,” the Management Committee and considered by the Board’s and “verification of actual situations.” Risk Management Committee before being finalized by the The Risk Management System ment, the Management Committee, board members and risk Within the Bank, we classify risk into the following categories management department heads perform risk management for control purposes: (1) credit risk, (2) market risk, (3) liquid- and this process is coordinated by the risk management ity risk, (4) processing risk, (5) systems risk and (6) other risk departments concerned. Board. According to the basic principles for risk manage- Board of Directors Endorsement of principle policies for risk management Approval for exceptional treatments which might have significant impact on management Proposal/ report Management Level Risk Management Committee Discussion on principle policies Discussion on exceptional treatments which might have significant impact on management Proposal/report Management Committee Market Risk Committee Credit Risk Committee Auditor External Auditor Board Member in Charge Board member in charge of Corporate Risk Management Dept. Board member in charge of Credit Risk Management Dept. (cid:0) Audit Dept. Credit Review Dept. Inspection Dept. Audit/verification of the actual situation of risk management Sections in Charge of Risk Management Firm-wide risk management Liquidity Risk Market Risk Corporate Planning Dept./Corporate Risk Management Dept. Credit Risk Processing Risk Systems Risk Other Risk Settlement Risk Corporate Risk Management Dept. Credit Risk Management Dept. Operations Planning Dept. IT Planning Dept. 24 To control market, liquidity and credit risk in particular, we are managed with procedures closely attuned to the nature of have strengthened the decision-making system at the operat- the risk as described below. ing level through the Market Risk Committee and the Credit Risk Committee which are subcommittees formed under the Management Committee comprising the executive members of Credit Risk Credit risk is the chance of a loss arising from a credit event, the Management Committee and the heads of the departments such as deterioration in the financial condition of a borrower, related to risk management. that causes an asset (including off-balance sheet transac- tions) to lose value or become worthless. Overseas credits Risk Management Methodologies also include an element of country risk, which is closely The risk management departments revise the basic risk related to credit risk. This is the risk that changes in currency management principles for each risk category on a regular values or political or economic situations result in a loss. basis, and whenever necessary, to ensure timely and appro- Credit risk is the most significant risk to which banks are priate risk management. Futhermore, in order to maintain a exposed. Without adequate credit risk management, the balance between risk and return as well as ensure soundness impact of the corresponding losses on a bank’s operations of the Bank from an overall perspective, we have introduced can be overwhelming. the “risk capital-based management” method which allocates The purpose of credit risk management should be to avoid capital to each department according to its role in our busi- these credit events, to keep credit risk exposure within the ness strategies to keep the total exposure to credit, market, bank’s capital, maintain the soundness of the bank’s assets processing and systems risk within the scope of our manage- and ensure returns commensurate with risk. This allows a ment resources, i.e., capital. In the credit and market risk bank to build a loan portfolio that achieves efficient returns categories in particular, the maximum risk capital that can be on capital and assets which enables a bank to fulfill its public allocated during a period is predetermined and risk capital guide- mission and create value for its stakeholders. lines are set within this limit to manage these risks. Liquidity risk is managed within a framework that includes plans for Credit Policy money gap and treasury funding. The other risk categories SMBC’s credit policy simultaneously came into effect with the ■ Correlation between Risk Management Framework and Risk Category Framework Category establishment of the new Bank in April 2001. This policy clari- fies the universal and basic operating concepts, code of conduct and standards for credit operations. By giving our employees extensive credit training, we aim to achieve the Credit Risk global standards of credit risk management contemplated by the Bank for International Settlements (BIS) in its January 2001 consultative papers and by the Japanese Financial Ser- vices Agency in its inspection manuals, and create a better credit management culture within the Bank. Management Based on Risk Capital Market Risk Banking Account Risk Trading Account Risk Risk of Strategic Equity Investment Other Market-Related Risks Processing Risk/Systems Risk Liquidity Gap/ ALM Liquidity Risk Other Risk (Settlement Risk, Legal Risk and Others) 25 Credit Risk Assessment and Quantification Quantification of Credit Risk To manage the risk of individual loans as well as the credit Quantifying credit risk is more than just calculating the prob- portfolio as a whole, we acknowledge that every credit poses ability of default for a particular obligor. It must also reflect risks. We assess the credit risk posed by each borrower and the concentrating of risk toward a specific customer or loan with our internal rating system and quantify that risk for industry and fluctuations in the values of real estate, securi- control purposes. ties and other types of collateral. This range of data must be analyzed to quantify the risk of an entire portfolio or an The Internal Rating System individual loan. The Bank’s internal rating system consists of two indicators: To calculate credit risk, historical data for the obligor and the obligor’s grading which indicates the creditworthiness of a facility is entered into a database, the parameters are set— borrower, and the facility grading which shows the probability such as the probability of a ratings change and the recovery of collecting for each facility. Facility gradings are assigned rate—and then the probability distribution of losses for the based on the borrower’s obligor’s grading in consideration of entire portfolio (amount of loss for what probability) is com- transaction terms such as guarantee, tenor and collateral. Over- puted to determine the maximum potential loss in the future. seas credits are further subjected to analysis with the country We obtain an understanding of the risk diversification effect ranking, an indicator derived from analysis of the political and and concentration risk by running a simulation of approximately economic situations, international balance of payments and 10,000 iterations. The quantified credit risk results are then the external debt burden of each country. used to formulate business plans and provide a standard In order to maintain the consistency of the grading system against which individual credit applications are assessed. as a whole, self-assessment is the prerequisite step to the obligor’s grading process. Grading Subrating Obligor’s Grading Definition Debtor Classification in Self Assessment System Facility Grading Grading Subrating Financial Reconstruction Law Based Disclosure Category (Domestic) a b c a b c a b c A B C A B C A B C R 1 2 3 4 5 6 7 8 9 10 Extremely high certainty of redemption High certainty of redemption Reasonable certainty of redemption Redemption is reliable, but the debtor may be affected by large shifts in business conditions or the industry No problem at present with redemption, but the future prospects are not solid and the debtor may be affected by trends in business conditions or the industry No problem at present with redemption, but there are reasons for concern about the debtor's financial condition and the possibility of future problems with recovery Requires management because there are problems meeting loan conditions or with collection, the business is weak or unstable, or the financial condition is poor (Customers requiring caution among this rating) Normal Borrowers Borrowers Requiring Caution A Borrowers Requiring Caution B Borrowers Requiring Caution C Substandard Borrowers Although the debtor is not bankrupt, the business is in difficulty, restructuring progress is poor and it is recognized that the business may fall into bankruptcy Potentially Bankrupt Borrowers Although the debtor is not legally or formally in a state of bankruptcy, it is virtually bankrupt because the business is in deep trouble and there are no prospects for restructuring Effectively Bankrupt Borrowers The debtor is legally and formally bankrupt Bankrupt Borrowers 26 a b c a b c a b c A B C A B C A B C S Ⅰ(cid:0) Ⅰ(cid:0) Ⅱ(cid:0) Ⅱ(cid:0) Ⅲ(cid:0) Ⅲ(cid:0) Ⅳ(cid:0) Ⅳ(cid:0) Ⅴ(cid:0) Ⅴ(cid:0) Ⅵ(cid:0) Ⅵ(cid:0) Ⅶ(cid:0) Ⅶ(cid:0) Ⅷ(cid:0) Ⅷ(cid:0) Ⅸ(cid:0) Ⅸ(cid:0) (cid:0) (cid:0) (cid:0) (cid:0) Normal Assets Substandard Loans Doubtful Assets Bankrupt and Quasi-Bankrupt Assets The Framework for Managing Individual Loans well as Continuous Monitoring performed when the credit Credit Assessments conditions change. Credit assessments involve a variety of financial analyses, including cash flow analysis, to predict an enterprise’s ability The Framework for Credit Portfolio Management to repay the loan and its growth prospects. These quantitative In addition to managing individual loans, we apply the follow- measures are then combined with qualitative analyses of ing basic policies to the management of the entire portfolio to industry trends, research and development capabilities, the maintain and improve its soundness and profitability over the competitiveness of the company and its products or services, medium- to long-term. and its management capabilities. The loan application is also analyzed in terms of the intended uses of the funds, the re- 1. Risk-Taking within the Scope of Capital payment schedule and the state of its collateral. We adhere To control credit risk within the scope of our capital, we to accurate, fair and strict credit decisions based on whether calculate the required credit risk capital through regular quan- the credit risk falls within our Credit Policy guidelines, there is tification of credit risk, and then set credit risk capital limits sufficient ability to repay the debt from cash flow and a return and manage risk-taking activities within these limits. commensurate with the risk can be obtained. 2. Controlling Concentration Risk As part of our measures to enhance efficiency and speed Since the concentration of credit in an industry or corporate up approvals, we have digitized and standardized the loan group has the potential to severely impact a bank’s capital, evaluation and approval processes to run on the Bank’s IT credit control on industries with concentration risk and loan network as the Credit Application System. reviews of large borrowers and their groups are implemented. We also set up credit limits for each country based on its Obligor Monitoring creditworthiness to manage country risk. In addition to analyzing loans at the application stage, the 3. Balancing Risk and Return Credit Monitoring System is implemented in order to reassess We operate on the basic principle of seeking returns commensu- the obligor’s grading and review self-assessment so that prob- rate with the credit risk. Loan pricing, therefore, uses our credit lems can be detected at an early stage and quick and ad- risk quantification calculations and the Sumitomo Mitsui Value equate action can be taken. The system includes Periodic Added (SMVA) indicator to ensure that adequate profit is gener- Monitoring with receipt of the annual report, as ated after deducting credit cost, cost of capital and expenses. Organization of debtor information Obligor’s grading/grading outlook/credit policies (action plan)/facility grading decision-making flow Nonconsoli- dated Financial Condition Rating Nonflagged Creation and Revision of Audit Card/ Registration for the Financial Statements Consolidated Financial Condition Rating Flagging According to the Self Assessment Standards Nonconsoli- dated Overall Rating Flagged Self Assessment Logic Quantitative Assessment Financial Condition Assessment Credit Status Qualitative Assessment Final Debtor Rating Assign- ment Normal Borrowers Borrowers Requiring Caution Potentially Bankrupt Borrowers Effectively Bankrupt Borrowers Bankrupt Borrowers Ratings Outlook Assessment (cid:0) Industry Trends Qualitative Risk Factors Determination of Credit Administration Policies Credit Administration Policy Segment *Positive *Flat *Negative Policy for Handling Each Individual Company Action Plan Formulation Restructuring Feasibility Basic Approach Specific Action Plan Facility Grading Assignment 27 4. Reduction of Problem Loans The Corporate Research Department within the Corporate In order to counter concerns of increasing losses from the Staff Unit performs the basic research on industries and deterioration of existing problem loans or the appearance of subsectors, and investigates individual companies to monitor new problem loans, we are striving to quickly reduce problem early signs of problems or growth potential. loans, by conducting loan reviews to set new responses and Each business unit’s credit departments conduct the credit clarify action plans, and by strengthening our recovery and judgment for the loans handled by their business units and asset value maintenance strategies. manage the business units’ portfolios. The credit limits they 5. Toward Active Portfolio Management use are based on the baseline amounts established for each In addition to controlling the individual loan approval process, rating category and they pay particular attention to evaluating we also actively manage our loan portfolio on an aggregate and managing customers or loans perceived to have particularly basis. The newly established Portfolio Management Department high credit risk. spearheads our use of credit derivatives and loan securitization Bankrupt or virtually bankrupt companies are generally in the markets to proactively manage our portfolio. handled by the Credit Administration Department, which is working to recover non-performing loans as quickly as possible. The Credit Risk Management System The Credit Review Department, the Audit Department for The Credit Risk Management Department within the Corporate the Americas, and the Audit Department for Europe operate Staff Unit is responsible for the comprehensive management independently of the business units, the Corporate Staff Unit of credit risk. This department determines the credit policies, and the Corporate Services Unit. These departments audit establishes the internal rating system, develops credit risk the soundness of assets, accuracy of gradings, self-assess- quantification methods, sets credit limits and approval limits, ments, state of credit operation etc., and report audit results and manages problem loans and other aspects of the loan directly to the Board of Directors and the Management portfolio administration. Committee. Designated Officers Corporate Staff Unit Management Committee Designated Officers Internal Audit Unit Corporate Risk Management Dept. Aggregates risk for comprehensive management Plans and proposes risk management baced on qualification Credit Risk Management Dept. Aggregates credit risk for unified management Plans and proposes basic credit policies Portfolio Management Dept. Plans, proposes, implements and administers active portfolio management Analyzes and researches active portfolio management Credit Review Dept. Audit Dept. for the Americas/Europe Formulates and proposes credit inspections Self assessments, ratings (debtors and loans), audits of write-offs and reserves Reports credit review results to the Board of Directors and the Management Committee Business Units Corporate Services Unit Consumer Banking Unit Middle Market Banking Unit Corporate Banking Unit International Banking Unit Supervisory Officers Deputy Supervisory Officers Designated Officers Supervisory Officers Investment Banking Unit Supervisory Officers Designated Officers Credit Dept., Consumer Banking Unit Credit Dept.1-3, Middle Market Banking Unit Audit Depart- ments Credit for Individuals General Small and Medium- Sized Businesses Credit Supervision Dept.1,2, Middle Market Banking Unit Individually Monitored Small and Medium- Sized Businesses 28 Credit Dept.1, Corporate Banking Unit Credit Dept.2,3 Corporate Banking Unit Credit Dept. International Banking Unit Structured Finance Credit Dept. Credit Administration Dept. Department Manager Credit Dept., Americas Division /Europe Division Large Domestic Corporations (General) Large Corporations (Special Monitoring) Non-Japanese Corporations/ Overseas Structured Finance (Americas/ Europe) Non-Japanese Corporations/ Overseas Structured Finance (Asia, Oceania/Domestic) Domestic Structured Finance Virtually Bankrupt and Bankrupt Customers from All Units Designated Officers Corporate Research Dept. Industry trend research Credit assessments of major industry players, ratings revision directives Market/Liquidity Risk Whenever the VaR is likely to exceed the guidelines, owing to The Market/Liquidity Risk Management System sharp changes in the markets, we put contingency plans into The Corporate Risk Management Department, which is inde- effect and the ALM Committee convenes extraordinary meetings. pendent of the business units that handle market transactions, The market risk of our strategic equity holdings held by the is constructing an integrated system that manages market units not in charge of market-related activities and the market and liquidity risk together. It sends risk reports on a daily risk taken by our major subsidiaries are also included in the basis to senior management via e-mail. integrated risk measurement performed by the Corporate Risk To prevent operational errors or manipulation of transaction Management Department. The VaR is regularly calculated and data, it is important to establish a system of checks and bal- reported to the Board of Directors and Management Committee. ances in the business departments (front office). At SMBC, The VaR of the trading accounts of both founding banks on both the processing departments (back office) and the admin- a consolidated basis for fiscal 2000 was as follows: istrative departments (middle office) conduct backup checks. ■ VaR Results In addition, the independent Internal Audit Unit also performs Trading Account Maximum Minimum Average (Billions of yen) Last Day of Term comprehensive periodic internal audits. In support of these Sakura Bank ¥2.1 ¥0.7 ¥1.3 ¥0.7 procedures and to offer the highest standards of service, we Sumitomo Bank 1.6 0.3 0.9 0.7 are making use of leading-edge financial theory and tech- (Assumed a one-day holding period and a confidence interval of 99.0%) niques and hiring and training staff with specialist knowledge of derivatives and portfolio management. ■ Marginal Profit or Loss and Daily VaR for Fiscal 2000 Trading Activities (Sakura and Sumitomo Banks) (Billions of yen) Marginal profit or loss Daily VaR Market Risk Market risk is the chance that fluctuations in interest rates, foreign exchange rates or stock prices will change the value of financial products, leading to a loss. VaR Model for the Integrated Market Risk Management 3 2 1 0 −1 −2 −3 4/3 5/3 6/3 7/3 8/3 9/3 10/3 11/3 12/3 1/3 2/3 3/3 The value at risk (VaR) method has proven effective in control- The market occasionally undergoes extreme fluctuations ling market risk. This method predicts the maximum potential that exceed expectations. To manage market risk, therefore, loss for a given probability. The SMBC VaR model calculates the it is important to run simulations (stress tests) of situations maximum loss through a Monte Carlo simulation of changes that may occur only once in many years. At SMBC, we run in profits and losses, i.e., 10,000 scenarios of market fluctua- periodic stress tests to prepare for unforeseeable swings. tions based on the historical data for one year. This method is extremely effective in measuring the risk of products that have option risk and in tracking the VaR during active trading. Market risk can be divided into its various factors: foreign exchange rate, interest rate, equity price and option risk. At SMBC, we use both the VaR method and other indicators actually used in daily operations, such as the basis point value (BPV) indicator (to measure the change in earnings for every 0.01% change in interest rates), for finely tuned risk management in each risk category. Our policy is to set the total VaR guidelines to conservative levels relative to capital in line with our business strategies. ■ Back Testing Results Sakura Bank Marginal Profit or Loss (Billions of yen) 2.0 1.5 1.0 .5 0 −.5 −1.0 −1.5 −2.0 0 0.5 1.0 1.5 2.0 VaR (Billions of yen) Sumitomo Bank Marginal Profit or Loss (Billions of yen) 2.0 1.5 1.0 0.5 0 −0.5 −1.0 −1.5 −2.0 0 0.5 1.0 1.5 2.0 VaR (Billions of yen) 29 ings at risk (EaR) model in addition to the VaR model. If an ex- (Former Sumitomo Bank) The internal model used by the Bank (SMBC VaR) has been evaluated by an independent auditing firm and certified to be appropriate. To further verify the reliability of the model, we perform back testing on the relationship between the VaR calculated with the model and the actual profit and loss data. The back testing results for fiscal 2000 for the trading accounts of the two founding banks are shown on the previ- ous page. Any data point below the diagonal line indicates a loss that exceeded the predicted VaR for that day. Since all the losses here were within the predicted VaR range, the VaR model (with a confidence interval of 99%) has been demon- strated to be sufficiently reliable. To manage the risk in our yen-denominated banking account, we use gap analysis employing maturity ladders and the earn- ternal factor, such as interest rates, moves in an unfavorable direction, the EaR model can indicate the largest estimated change in earnings (interest rate spread) for a set period at a given probability. Since strategy and budgetary planning is based on the earnings for a period, we use the EaR model to supplement the VaR model. Using Monte Carlo simulations to generate 1,000 scenarios, we test the magnitude of the ef- fect that new deposits and loans will have on the period’s earnings. In the interests of bolstering asset soundness, we recog- nize maintaining strategic equity holdings at the levels appro- priate to our fiscal strength and managing the price risk of these stocks is an important issue for the Bank’s management. Therefore, we are actively managing these risks. Namely, we treat the entire holding of strategic equity as a portfolio and keep the maximum potential loss amount derived from the VaR model and the earnings for the period within the risk capital allocations, and maintain them at an appropriate level vis-a-vis capital. 30 ■ Composition by Industry of Listed Securities Portfolio (Market Value at March 31, 2001) (Former Sakura Bank) Sakura Portfolio Nikkei Average TOPIX (%) 30 25 20 15 10 5 0 l G a s s / M n e r a s i l i M n n g i T e x t i l e s l P u p / P a p e r C o n s t r u c t i o n F o o d P r o d u c t s C h e m c a s i l P h a r m a c e u t i c a s l l P e t r o e u m / C o a l R u b b e r P r o d u c t s i F s h e r i e s / F a r m n g / F o r e s t r y i （%） 30 25 20 15 10 5 0 i F s h e r i e s / F a r m n g / F o r e s t r y i i M n n g i T e x t i l e s l P u p / P a p e r C o n s t r u c t i o n F o o d P r o d u c t s C h e m c a s i l P h a r m a c e u t i c a s l l P e t r o e u m / C o a l R u b b e r P r o d u c t s l G a s s / M n e r a s i l S t e e l M a c h n e r y i M e t a l P r o d u c t s N o n f e r r o u s M e t a s l S t e e l M a c h n e r y i M e t a l P r o d u c t s N o n f e r r o u s M e t a s l l E e c t r i c M a c h n e r y i l E e c t r i c M a c h n e r y i T r a n s p o r t M a c h n e r y i T r a n s p o r t M a c h n e r y i i i P r e c s o n M a c h n e r y i i i P r e c s o n M a c h n e r y i A i r T r a n s p o r t M a r i n e T r a n s p o r t O v e r l a n d T r a n s p o r t O t h e r P r o d u c t s l E e c t r i c i t y / G a s U t i l i t i e s A i r T r a n s p o r t M a r i n e T r a n s p o r t O v e r l a n d T r a n s p o r t O t h e r P r o d u c t s l E e c t r i c i t y / G a s U t i l i t i e s O t h e r i F n a n c a i l i W a r e h o u s n g / D s t r i b u t i o n i l W h o e s a e l R e t a i l B a n k n g i S e c u r i t i e s I n s u r a n c e l T e e c o m m u n c a t i o n s i Sumitomo Portfolio Nikkei Average TOPIX l W h o e s a e l R e t a i l B a n k n g i S e c u r i t i e s I n s u r a n c e O t h e r i F n a n c a i l l T e e c o m m u n c a t i o n s i i W a r e h o u s n g / D s t r i b u t i o n i S e r v c e s i R e a l E s t a t e S e r v c e s i R e a l E s t a t e Liquidity Risk Liquidity risk is the chance of encountering an obstacle to rais- ing the funds required for settlement due either to a mismatch between the use and procurement of funds or to an unexpected outflow of funds, or being forced to borrow at higher interest rates than usual. At SMBC, we consider liquidity risk to be one of the major risks. We manage liquidity risk so that we are not overly dependent on market-based founding to cover short-term cash outflows. Our liquidity risk management is based on a framework consisting of setting limits and guidelines for the funding gap, maintaining a system of highly liquid supplementary funding sources and establishing contingency plans. In daily risk management operations, we avoid a gradual increase in liquidity risk by adjusting the funding gap limits and guidelines. For an emergency situation, we have contin- risk with the Credit Risk Management Department, which gency plans in place to reduce the funding gap limits and oversees credit risk, and the Corporate Risk Management guidelines and take other measures. To prevent the chance of Department, which oversees liquidity risk. We are continuing market crises interfering with funding, we carry highly liquid to upgrade settlement risk management through such mea- assets, such as U.S. treasury bonds, and have emergency sures as participation in the Continuous Linked Settlement borrowing facilities in place, which also facilitates foreign system, which will reduce the risk inherent in settlement of currency-denominated liquidity management. foreign exchange transactions. Processing Risk Processing risk is the chance of losses arising from negligent Systems Risk Systems risk is the chance of a loss arising from the failure, administration by employees, from accidents or from unautho- malfunction or unauthorized use of a computer system. We rized activities. In our administrative regulations, the basic admin- have instituted a number of basic policies to manage systems istrative policies are summarized as “comprehending the risks risk, including a security policy, usage regulations and specific and costs of administration and transaction processing, and management procedures. We are furthering strengthening managing them accordingly,” and “seeking to raise the quality safety measures based on a needs assessment drawing on of administration to deliver high-quality service to customers.” such references as the Financial Inspection Manual, approved We have organized the Bank’s systems to achieve these goals. by the Financial Services Agency, and the Security Guidelines In our operating regulations, we have also defined specific published by the Financial Information Systems Center. rules for processing risk management. The rules divide process- Since computer-related trouble at financial institutions now ing risk management tasks among six types of departments: has greater potential to impact the public, and systems risk the Operations Planning Department, compliance departments, has increased with the IT revolution and the concomitant use operations departments, transaction execution departments of networks and personal computers, we have taken the nec- (primarily the front office departments and branches), the essary steps to ensure the smooth, secure operation of our Internal Audit Department and the Customer Relations Depart- information systems. We have duplicated each system and ment. The Board of Directors also reviews administrative con- infrastructure and fully proofed our Tokyo and Kansai computer ditions annually and sets new management policies as required. centers against earthquakes and other disasters. To maintain In addition, we have set up a specialized group within the the privacy of customer information and prevent information Operations Planning Department to strengthen administrative leaks, we are encrypting sensitive information, blocking procedures throughout the SMBC Group. unauthorized external access and implementing all known At the Bank, we include processing risk in our calculation countermeasures to secure our data. We have also established of risk capital requirements and have allocated a certain per- contingency plans and conduct training as required to ensure centage of risk capital to cover it, based on the quantification we are fully prepared in the event of an emergency. We will of the risk for fiscal 2001. continue to revise our countermeasures as new technologies Settlement Risk Settlement risk is the chance of a loss arising from a transac- We include systems risk in our calculation of risk capital requirements and have allocated a certain percentage of risk tion that cannot be settled as planned. Since this risk com- capital to cover it, based on the risk quantification results for and usage patterns emerge to maintain our security. prises elements of several types of risk—such as credit risk, fiscal 2001. liquidity risk, processing risk and systems risk—it requires interdisciplinary management. The Operations Planning Depart- ment is charged with coordinating the management of this 31 Individual Business Unit Strategies Consumer Banking Unit p.34 Main Business Areas Services for individual customers in the domestic market, with a focus on investment management and asset building Key Objectives 1. Improve profitability in consumer banking through refined customer segmentation, increase sales of profitable products and services via an extensive network and enhance operational efficiency 2. Establish the SMBC Group as the market- leading financial service brand for individuals Investment Banking Unit p.46 Main Business Areas Provision of investment products to domestic and international customers Key Objectives 1. Provide newly developed products to meet the demands of our customers 2. Offer financial services through the global network of the SMBC Group including Daiwa Securities SMBC 3. Expand the syndicated loan market 4. Make proposals related to customers’ IT- based business models 5. Start defined contribution pension plan business Heighten consumer banking profitability by identifying and targeting finely tuned customer segments, expanding sales of high-margin products and services and securing low-cost operations Sustain a leading role in the e-business market Main Business Areas Yen and foreign-currency banking, trading and promotion of financial instruments of the capital markets Key Objectives 1. Strengthen and round out the organization in pursuit of enhanced customer convenience 2. Implement proactive ALM anticipating market trends 3. Increase profit opportunities in new business areas Treasury Unit p.44 32 Main Business Areas Banking services to small and medium-sized businesses in Japan Key Objectives 1. Create an organization capable of a nimble response to business needs (establish the SMBC brand among business clients) 2. Cater to growth enterprises 3. Develop network-based services and loans for small and medium-sized enterprises 4. Lead in the development of efficient settlement systems 5. Leverage the Group’s total strength Middle Market Banking Unit p.37 Strengthen marketing capabilities and make strategic IT investments to develop e-businesses for small and medium-sized businesses Sumitomo Mitsui Banking Corporation Main Business Areas Banking services to Japanese corporations and their group companies Key Objectives 1. Deliver solutions that enhance corporate value 2. Expand business with the affiliates of our large customers 3. Respond to changing financing and investing Establish high ROA business needs models to promote business 4. Build new alliances based on partnership with major domestic and foreign corporations banking Corporate Banking Unit p.40 Rebuild and expand our overseas presence with clearly defined strategies for each region International Banking Unit p.42 Main Business Areas Banking services to Japanese and non- Japanese corporations, financial institutions, and sovereign and public sector clients Key Objectives 1. Realize synergies from overseas network integration early 2. Offer responsive, multifaceted services to an extensive, select clientele 3. Develop a solutions business based on leading-edge financial services and knowledge The Group Company Networking Strategy p.48 e-Business p.50 33 Consumer Banking Unit Business Strategies fiscal 2000 alone, call centers logged two million outbound calls, offering customers that opened new accounts addi- tional services or such products as investment trusts and Both the asset and liability sides of the Japanese consumer mortgages. banking market have grown, and with the opportunities We aim to secure our position as afforded by information technology (IT) to diversify and pursue the leading bank in the consumer new business models, this market has become one of the banking market. To this end, we most attractive to banks in recent years. At the same time, are building up brand recognition competition has intensified as a result of financial group with the slogan, One’s Next (we mergers and entrants from other sectors. With these factors help plan the next step of one’s at play, it is significant that SMBC ranks first in consumer financial plan according to his/her banking in terms of investment trust balances, loan balances life stage), expressing the underly- and customer accounts.1 We are starting out with an advan- ing reliability and convenience we tageous position that we will leverage to offer even higher offer customers. value-added financial services. To sustain our lead, we will draw upon our already formidable product and service expertise, our channel development capabilities and our staff of highly skilled financial consultants. Organizationally, we have the pieces in place to pursue this market. Our frontline operations are positioned around three main customer segments: private banking clients, asset management clients and long-term asset building clients. Our Block Consumer Business Offices,2 branch network, Con- sumer Investment Services Offices, Consumer Loan Promotion Offices and call centers provide the most appropriate channels and processes for the products and services that meet each individual’s needs. Achieving low-cost operations is a key objective in this mar- ket. While we continue to consolidate and rationalize our con- ventional branch network, we are also aggressively employing IT within branches to heighten teller efficiency and centralize back office administration. At our manned branches, we are concentrating on the products and services requiring in-depth consultation. We are encouraging customers to use our remote channels as the main conduit for everyday transactions to complement our manned branches. Our call centers are a strategically important and effective channel for developing the consumer market. Utilizing large volumes of data and needs analyses, we are achieving a high rate of success by approaching customers with service and product suggestions over the telephone. In the last half of 34 Notes: 1. As of March 31, 2001, the investment trust balance for individuals was ¥1.2 trillion, loans to individuals reached ¥13.5 trillion and the number of ordinary bank accounts for individuals totaled 27 million. 2. A Block Consumer Business Office is a frontline operation covering several branches and Consumer Investment Services Offices in a district. Key Objectives 1. Improve profitability in consumer banking through refined customer segmentation, increase sales of profit- able products and services via an extensive network and enhance operational efficiency 2. Establish the SMBC Group as the market-leading financial service brand for individuals Call center Asset Building Segment The asset building segment is primarily composed of people with relatively long-term horizons—accumulating assets for their retirement or to use as down payments to secure housing loans. We offer a flexible range of service delivery options to accommodate their diverse lifestyles, starting with our manned branches and call centers, which form the market hub for sales promotions. These are supplemented by telephone banking, Internet banking and other remote channels. As of June 30, 2001, we had set up 135 MC Desks (Money Loan Plaza Lifestyle Consulting Desks) manned by consultants specializing in Asset Management Segment helping customers manage their money according to their life- We have positioned highly trained financial consultants in styles. They offer comprehensive one-stop financial counseling each Block Consumer Business Office and Consumer Invest- to promote sales of investment and savings products, such as ment Services Office, the specialized asset management ser- investment trusts and foreign currency instruments, as well as vice outlets that totaled 21 in number as of June 30, 2001. loan products, such as primary or secondary mortgages, loans For customers seeking sophisticated, objective investment for rebuilding or renovation, and loans for education. When a product consulting, these financial consultants offer tailor- customer comes to us for advice, we provide a personalized made financial solutions for their assets and debts based on service that employs database-marketing techniques and offers our Total Portfolio Plan for Financial Assets. the right combination of sales promotions and remote-channel We offer one of the largest selections of investment trust access to match the customer profile and stage of life. units among the Japanese banks. As of June 30, 2001, our roster included 55 funds managed by 26 companies. To make it easier for customers to match funds to their needs, we grouped 26 of these funds, based on their performance, under the SMBC Fund Selection umbrella. By satisfying a broad range of customer needs while pro- viding individualized service, we aim to establish SMBC as the leading brand for asset management services. Money Lifestyle Consulting Desk As measured by loan balances, we are the leader in the housing loan market. To develop this market, we have devel- oped a large product lineup and a network of specialized Consumer Loan Promotion Offices that have direct tie-ups with real estate agencies and housing developers. As of June 30, 2001, we already had 63 offices in place and we plan to further expand this network and its functions. With these channels serving the needs of asset builders at every stage, we are confident we can ensure SMBC is the main, lifelong bank for our customers. Consumer Investment Services Office 35 Private Banking Segment In the private banking segment, we cater to high-net-worth Drawing on the Financial Service Capabilities of the SMBC Group individuals and the owners of high-growth businesses, such SMBC reorganized its credit card business first in April 2001, as those that are planning or have already completed public changing the name of The Sumitomo Credit Service Company, offerings or listings. We offer these individuals business- Limited, to Sumitomo Mitsui Card Company, Limited. Then in owner-specific, long-term consulting with strategic capital July, it transferred the UC Card division of Sakura Card Co., plans and investment management components. Ltd., to Sumitomo Mitsui Card. Having now reorganized both In the strategic capital planning business, we advise on the former Sumitomo and Sakura Banks’ credit card subsid- public offerings, succession planning and the many other iaries, we are ready to pursue the credit card business as a requirements of high-net-worth individuals, drawing on our central component of our consumer banking operations. staff of private bankers with experience in complex corporate In October 2000, we transactions and advanced international product knowledge. inaugurated the Japan Net On the asset management side, we develop and provide Bank, Ltd., the country’s customized products and services based on each customer’s first exclusively Internet- market perspective. based financial institution. Our services for both private banking areas are premised It combines the merits of on building a long-term relationship and becoming the year-round, 24-hour acces- customer’s trusted partner. sibility with high interest Japan Net Bank Payment and Settlement Services joint-venture partners and other allied service providers, we The way individuals settle their financial obligations has changed will employ the advantages of the Internet and IT to make with rapid technological progress in the information and com- Japan Net Bank so convenient it will become the main bank munications fields and the adoption of increasingly diverse of choice for Internet customers and a banking model for the rates on deposits and low service charges. Together with our lifestyles. In response, we are bolstering our remote channels 21st century. to include a full slate of telephone and Internet banking ser- The Sakura Loan Partner, Ltd., a joint venture founded in vices as well as mobile banking services for mobile telephones. June 2000 with am/pm Japan Co., Ltd., Sanyo Shinpan Finance We are also forging ahead with convenience store ATMs to Co., Ltd., and Nippon Life Insurance Company, opened its lower operating costs and enhance customer convenience. doors in July 2000 to begin offering the precedent-setting Through our alliance with the am/pm Japan Co., Ltd., a @Loan product group of small-sum, unsecured loans for indi- convenience store chain operator, we have already estab- viduals. At the same time, the joint venture began deploying lished a network of 1,100 @B∧NK terminals accessible 24 its highly versatile and advanced loan consultation terminals, hours a day. In addition, our One’s Direct service, which called @Loan Boxes, at am/pm convenience stores in the bundles our remote channel banking services together, has Tokyo metropolitan area. By June 30, 2001, the @Loan Box met with enthusiastic market response, attracting 3.73 mil- network extended to 333 locations. lion subscribers by fiscal year-end. Our goal is to make We will continue to implement new business models in such SMBC known as the brand offering the highest degree of fields as credit cards, unse- convenience for everyday banking. 36 cured loans, and payment and settlements, to develop fresh opportunities and enhance the value of the SMBC Group as a whole. Middle Market Banking Unit Creating a Responsive Organization— The SMBC Keyword Business Strategies To establish the SMBC brand among business clients, we are SMBC has retained the organizational improvements made building an organization capable of responding rapidly to the by both founding banks to the traditional full banking branch changing needs of small and medium-sized enterprises under model. Under these changes, the frontline organization for the SMBC banner. The S stands for the three Ss, representing small and medium-sized businesses was separated from that the provision of specialized, speedy solutions; the M stands for individual clients, allowing a speedier, more appropriate for a customer-driven marketing approach; the B is short for response to their growing needs. We can now serve our busi- becoming the customer’s best partner; and the C symbolizes ness clientele, the largest in the country, with well-balanced cooperation between the Middle Market Banking Unit, head- teams consisting of knowledgeable branch staff and corpo- quarters and the other banking units. rate finance specialists at our headquarters. This structure To achieve these organizational goals, we have stationed is allowing us to lower costs while improving service. specialists in derivatives, capital markets, foreign business, electronic banking and other fields in the 10 regional head- quarters that manage their own Middle Market Banking divisions. In the Unit’s Business Promotion Department, and in the other departments, we have also assembled experts in numerous other fields—including mergers and acquisitions (M&A), management buyouts, factoring and securitization, loan syn- dication, public offerings and investment management—to assist in providing first-rate customer solutions. Key Objectives 1. Create an organization capable of a nimble response to business needs (establish the SMBC brand among busi- ness clients) 2. Cater to growth enterprises 3. Develop network-based services and loans for small and medium-sized enterprises 4. Lead in the development of efficient settlement systems 5. Leverage the Group’s total strength 37 Catering to Growth Enterprises business users, with the ultimate goal of stimulating greater Within the Business Promotion Department, we have estab- demand for our solutions business among small and medium- lished the New Business Promotion Department, which com- sized enterprises. In May 2001, we inaugurated the Value prises the New Business Promotion Group and IPO Promotion Door Site for Value Door subscribers. This web site allows Group desks, to focus on winning more business with custom- us to offer each service to businesses on a one-to-one basis ers in growth fields, such as semiconductors, biotechnology, according to the company’s individual circumstances. IT, environmental services and health care. Drawing on their To better serve the financing requirements of small and proprietary knowledge, the seasoned staff at the New Business medium-sized businesses, we are shortening the time required Promotion Group desk analyze and evaluate a company’s tech- for loan approvals by offering loans with credit guarantees by nologies, marketability and growth prospects, and introduce the Credit Guarantee Association and by offering unsecured to it the appropriate capital sources, such as the new business loans based on scoring model analyses. We are also boosting support fund, an unsecured financing system. The Group’s our loan business by accepting applications for unsecured loans venture capital wing, SMBC Capital Co., Ltd., also assists over the Internet analyzed with scoring models to complement companies in the start-up stages with their capital requirements. the initiatives at our manned Business Support Plazas. At the IPO Promotion Group desks, account executives The Business Owner Banking Department is a new depart- experienced with public offerings, particularly initial public ment within the Middle Market Banking Unit, set up to plan offerings, work with affiliate Daiwa Securities SMBC Co., Ltd., and promote new products and services specific to small and to advise on and help implement capital strategies. medium-sized businesses. In the department, the Business Developing Network-Based Services and Loans for Small and Medium-Sized Enterprises Development Group teams up with convenience store chains and similar businesses to offer innovative financing packages, including regular loans, to their franchisees. This is just one SMBC has the largest clientele of small and medium-sized example of how we are tapping new demand using highly businesses in Japan. We are upgrading service to these effective, low-cost methods. enterprises by establishing dedicated Business Support Plazas around the country. As of June 30, 2001, the number of Business Support Plazas totaled 123. Leading the Development of Efficient Settlement Systems These plazas are focusing on sales of Value Door, a PC- Our settlement and cash management professionals deliver based service package that offers online settlement services, solutions at the appropriate level of sophistication to meet the financing and business information. We are promoting Value requirements of individual businesses. In February 2000 we Door as the flagship product of our remote channel for were granted a patent on the business model for our Perfect reconciliation service, which involves setting up numerous col- lection accounts for the receivables of a business in advance and using account number information instead of names to process incoming payments, thereby greatly expediting the account reconciliation process. Since we launched this service, it has been well received. To facilitate innovations of this nature, we set up the e-Business Patent Department within the Electronic Commerce Banking Department. Business Support Plaza We also established the Global Cash Management Depart- ment in the Electronic Commerce Banking Department to 38 enhance our cash management services for global corporate In the burgeoning field of business-to-business (B2B) elec- groups. We offer a range of solutions based on the concept tronic commerce, SMBC was one of the originators of that group management begins with cash management. PAYWEB, an Internet-based settlement system encompassing Now more than ever, domestic businesses are working bank transfers, payments at convenience stores and payments to make their payment systems more efficient. To tap this by credit cards. We are also a participant in the IDENTRUS demand, we have assembled a full lineup of PC-based bank- consortium, an international provider of digital identities. We ing services, which have gained a warm market welcome for are continuing to develop various authentication and payment their superior functionality and easy operation. systems for electronic commerce as well as electronic data interchange (EDI) services for trade finance. ■Perfect Reconciliation Support Service Conventional Fund Transfer System Fund Transfer Fund Transfer Client A Client B Client C Client A Fund Transfer Using Perfect Client B Fund Transfer Deposit Transaction Report Transacting Branch Deposit Account Payer Transaction Amount Payer’s Bank Client A ¥30,000 Bank A Client B ¥5,000 Bank B Client C ¥30,000 Bank C Settlement Transfer Specialized Deposit Account Branch Specialized Deposit Account for Incoming Fund Transfers 6000001 6000002 Fund Transfer Deposit Transaction Report Specialized Deposit Account Number Payer Transaction Amount Payer’s Bank 6000001 Client A ¥30,000 Bank A 6000002 Client B ¥5,000 Bank B 6000003 Client C ¥30,000 Bank C Transacting Branch Deposit Account Branch Tokyo Branch Osaka Branch Main Branch Branch Tokyo Branch Osaka Branch Main Branch Client C 6000003 It is easy to confirm payment since the specialized deposit account number is included with each deposit record. Leveraging the Group’s Total Strength Sakura Factors Co., Ltd., take care of their factoring needs, In the solutions business, it is becoming increasingly impor- and SMBC Consulting Co., Ltd., and The Japan Research tant to respond to customer needs with the entire might of Institute, Ltd., provide management information consulting. the Group. In view of this, we are strengthening the coopera- Mitsui Finance Service Co., Ltd., Sakura Finance Service Co., tion between Group companies to deliver comprehensive Ltd., and QUOQ Inc. serve as collection agents. Affiliate financial services as a single unit and enhance the value pro- Daiwa Securities SMBC Co., Ltd., a joint venture with Daiwa vided to each customer. SMBC Capital, for instance, supports Securities Group Inc., offers top-flight investment banking the funding requirements of fast growing enterprises, while services. Taken together, the Group constitutes a formidable SB Leasing Co., Ltd. (on September 1, 2001, the corporate presence in financial markets, which we are using to the name will become SMBC Leasing Co., Ltd.), handles their greatest advantage of our clients and the Group itself. leasing demands. Sumigin General Finance Co., Ltd., and 39 Corporate Banking Unit Delivering Solutions that Enhance Corporate Value Business Strategies Many of our clients are focusing on restructuring to bolster The Tokyo Corporate Banking Division I and II, and the Osaka corporate value and increasing the level of sophistication at and Nagoya Corporate Banking Divisions are the core of our which the groups are managed. We believe we can help cus- Corporate Banking Unit, which serves the country’s largest tomers maximize corporate value by identifying solutions with corporations. This unit does not limit itself to the traditional financial techniques, quickly formulating a proposal and help- lineup of investment management, capital procurement and ing implement it. The actual process involves working with the payment services. Instead it offers multifaceted services that client to analyze the profitability of its operation. Then, with span the entire spectrum of finance and the operations of the assistance of Daiwa Securities SMBC, we examine the fea- these companies right down to their employees, subsidiaries sibility of acquiring new operations, or spinning off or divesting and commercial networks. existing operations. We then devise a financing structure that Management trends in recent years have focused on utilizes the company’s assets, such as real estate or receiv- greater selectivity and concentration of resources aimed at ables, to their maximum effect, or put together a plan to increasing shareholder value, coinciding with dramatic IT increase the liquidity of the assets with a view toward developments and structural reforms. These major shifts in improving their balance sheets. management thinking and methodology are also stimulating notable changes in financial needs. In the Corporate Banking Unit, we believe our mission is to go beyond the conventional Expanding Business with the Affiliates of Our Large Customers customer relationships of the past and set up new business Most of the corporations in our client base are parent compa- models on which customers can rely. Nurturing the human nies of large numbers of subsidiaries and affiliates in Japan resources to achieve this goal and broadly transforming our and overseas, which, when you consider the employees and business into a solutions business that can enhance corporate commercial networks, constitute a very broad pool of poten- value for customers are some of our most pressing issues. tial customers. Accordingly, the Corporate Banking Unit is Consequently, we have assigned account managers to liaise banding with the International, Middle Market and Consumer with each client company individually, discover its particular Banking Units as a single marketing organization to expand needs and work with the product departments at our head- our client base throughout the entire SMBC Group. quarters and such Group companies as Daiwa Securities SMBC to create and propose solutions and product bundles. By realizing the synergies between the two founding banks and using their accumulated know-how, we intend to strengthen our ability to offer full solutions. Key Objectives 1. Deliver solutions that enhance corporate value 2. Expand business with the affiliates of our large customers 3. Respond to changing financing and investing needs 4. Build new alliances 40 Responding to Changing Financing and Investing Needs To satisfy the increasingly diverse financing requirements of our clients, we supply short-, medium- and long-term financing and assist with direct capital market fundraising involving commercial paper and corporate bond issues and other instruments. We also offer commitment lines of credit to meet their cash flow needs, syndicated loans—which do not yet have a solid track record in Japan compared with the United We have assembled a large cohort of staff in the Financial States and Europe—and non-recourse loans. Solutions Department that is well versed in the investment On the investment side, we offer a full menu of products, banking field. Its mandate is to get involved right from the such as tailor-made deposit products incorporating derivatives early planning stages in creating multilayered, creative solu- and securitized products, as well as asset-backed securities tions to client needs. To provide these staff members with that match the customer’s risk tolerance, investment budgets leading-edge skills on an ongoing basis, their desks are and time horizons. Building New Alliances located in the Investment Banking Unit, but their responsibility is to work in teams with account managers to come up with customer solutions for the Corporate Banking Unit. We have several clients who participate in the financial indus- Moreover, we have introduced corporate finance CRM sys- try. Although the financial entities they create may compete tems as account management support tools that allow users with our commercial banking business to a certain extent, in to exchange data and proposals in real-time. These tools most cases they operate in different market niches or assume were developed completely in-house from the basic concept complementary roles, coexisting without conflict. We are to the system design, and are configured not only for use by forming new alliances with these firms and starting new the account managers but also by specialist staff in overseas services that would not have been contemplated by one bank offices, the Financial Solutions Department and the Invest- on its own. We are ahead of our contemporaries in setting up ment Banking Unit, to collaborate in solving customer issues. winning business models and working toward our mission of These tools make it possible to gather and utilize the Bank’s creating unconventional relationships. know-how at any point in time. Organizational Changes to Strengthen Our Problem-Solving Abilities ment and the corporate finance CRM, we are able to quickly gather complex, multifaceted information and assemble it as The main issue facing the Corporate Banking Unit is how to solutions to the ever-changing problems confronting our clients. With the backup provided by the Financial Solutions Depart- transform itself into a solutions business that can enhance the corporate value of our customers. To realize this goal, we launched a series of organizational changes and improvements that coincided with the formation of SMBC. One of the key measures was to station the Investment Banking Unit’s Finan- cial Solutions Department staff within the Corporate Banking Unit and to introduce corporate finance CRM (customer rela- tionship management) systems as marketing support tools. 41 International Banking Unit Business Strategies Europe and Asia. This may include expanding beyond the business fields in which we are already active. By maximizing our new structure, we are going beyond the SMBC completed the integration of the greater part of its restrictions of traditional commercial banking to offer flexible, international network by April 2, 2001, the day after the multifaceted services. At the same time, to maximize the ben- merger. By facilitating the smooth and rapid consolidation of efits of the merger, we are strategically allocating manage- overlapping branches, the merger is enabling the International ment resources freed by the integration of our international Banking Unit to realize synergies, in terms of revenue, result- network to expand our presence in key markets. In Asia— ing from its expanded client base and product lineup. This, where the scope of our operations places us in the top ech- in turn, will enable the unit to strengthen and expand its elon of Japanese financial groups in terms of both quantity business abroad. and quality—we are maximizing the geographical advantage Although the U.S. economic slowdown has drawn a veil we enjoy over our North American and European competitors over growth prospects in Asia and Europe, we have a solid to reinforce our customer base and our network. Our intent is clientele of leading companies in both regions. Our founding to bolster our presence in the Asian market by expanding our banks have left a legacy of highly rated products and financial- existing Asian network—a fact we signaled by elevating our market knowledge, allowing us to compete internationally as Beijing Representative Office to branch status—and reviewing one of the top market players. To build on the global SMBC investments, thereby positioning us to better pursue opportu- brand created by the merger, we are operating under a nities among corporations of Japanese and foreign origin three-region divisional structure—the Americas, Europe and active in the region. Asia—with each division pursuing individual strategies tailored to its region. Progress Integrating the Overseas Network ■ Key Objectives 1. Realize synergies from overseas network integration early 2. Offer responsive, multifaceted services to an extensive, select clientele 3. Develop a solutions business based on leading- edge financial services and knowledge Realizing Synergies from Overseas Network Integration Early SMBC had essentially completed integration of its overseas network as of the merger date. This is an indication of the importance of the concept of speedy delivery in our man- agement style. It is also a sign of our resolve to realize the benefits of the merger in international banking as early as possible by strategically allocating human resources over- seas in key areas to reinforce marketing and integrating over- lapping branches to enhance efficiency. In particular, we are following regionally differentiated strategies in the Americas, 42 No. of Offices 60 40 20 10 10 14 3 3 3 3 4 4 0 Branches (Americas) Branches (Europe) Branches (Asia/Australia) 23 36 42 5 16 17 4 2 3 Agency Offices Representative Offices Total Former Sakura Bank (March 31, 2001) Former Sumitomo Bank (March 31, 2001) SMBC (April 2, 2001) March 31, 2001 April 2, 2001 Branches (Americas) Branches (Europe) Branches (Asia/Australia) Agencies Representative Offices Total Sakura Bank 3 Sumitomo Bank 3 3 10 2 5 23 4 10 3 16 36 SMBC 3 4 14 4 17 42  Offering Responsive, Multifaceted Services to an Extensive, Select Clientele The far-reaching experience of the two founding banks in Developing a Solutions Business Based on Leading-Edge Financial Services and Knowledge overseas markets has given us an enviable international cus- Amalgamating the experience and knowledge amassed by tomer base. Our extensive, select clientele overseas is cen- the two founding banks over many years abroad, we will work tered on leading Japanese corporate groups. Many of these hand-in-hand with the Investment Banking Unit to develop as customers are rapidly expanding their overseas operations. a leading-edge financial services group worldwide. With the Accordingly, our services are tailored to help them respond to reputations earned by our predecessors, we can continue to the strategic challenges inherent in global expansion. To this offer solutions incorporating the latest services and know-how end, we emphasize timely, effective response at the overseas in the market, such as ways to improve customer balance office level, close cooperation with our domestic banking sheets with tax leases and securitization arrangements, and units and the provision of high value-added services. various types of non-recourse financing utilizing syndication. To enhance our services to multinational corporations of SMBC enjoys healthy market shares in such fee-based foreign origin, we will continue to take steps aimed at enhanc- businesses as global cash management services (CMS), yen ing SMBC’s market presence in Europe and the Americas. At custody services and yen clearing services, none of which the same time, we will endeavor to support the efforts of adds asset to our balance sheet. To increase our share of such customers to expand into Japan and other Asian these markets, we will continue to make strategic investments countries or to improve operations, by providing responsive, to deliver customer satisfaction. This will entail maintaining our multifaceted services that ensure a high level of customer ability to quickly gather and disseminate market information satisfaction. and our capability to match services to customer needs. 43 Treasury Unit Business Strategies we used the opportunity presented by the merger to establish a Treasury Marketing Department. To offer the highest stan- dard of service in the industry, we are increasing the number The Treasury Unit operates in the domestic and international of treasury officers engaged in foreign currency-related trans- money, foreign exchange, securities and derivatives markets actions, adding new, low-cost gateways for electronic transac- to serve the hedging and dealing needs of our customers and tions, providing rapid pricing and detailed market information, take advantage of arbitrage opportunities while controlling and beefing up our 24-hour foreign exchange dealing. market and liquidity risk at appropriate levels. To provide a superior level of service with customer conve- Banking nience at the forefront, we are strengthening and rounding In our banking operations, we manage our exposure to mar- out the Treasury Unit structure and making full use of the latest ket and liquidity risk inherent in our own assets and liabilities, technology and a highly trained staff. With the merger, our such as loan assets, securities, and deposits in Japan and combined assets expanded dramatically relative to the bal- abroad. By managing liquidity and market positions with a ance sheet of each of the predecessor banks. To manage the careful eye on the interest rate and supply and demand envi- accompanying risk dynamically, we are concentrating on ronment, we strive to increase our profit opportunities from upgrading our market intelligence and risk management banking operations. capabilities. We are also launching into new business areas The Treasury Department handles yen-denominated trans- as a fresh source of revenue. actions while the International Treasury Department deals with Key Objectives foreign currency-denominated transactions. Both departments are implementing cash flow management systems and fine- 1. Strengthen and round out the organization in pursuit of tuned simulations to increase the sophistication of our ALM tech- enhanced customer convenience 2. Implement proactive ALM anticipating market trends 3. Increase profit opportunities in new business areas niques to manage the increased magnitude of risk arising from the merger. Their mandate is to conduct our ALM operations with an accurate understanding of interest rate trends. For Your Reference The Treasury Unit also issues corporate bonds for our long-term funding needs. Prior to the merger, the two former banks unified their bond issuing and were awarded the Straight Bond Deal of the Year 2000 by Rating and Investment Information, Inc. and the Issuer of the Year 2000 by Thomson DealWatch. Treasury Operations Treasury operations of the new bank were uni- fied at the start of the merger. The Treasury Unit uses an integrated computer system, a single risk management system and a single dealing room. The operations are divided into three main segments: customer transactions, banking and trading. Customer Transactions The merger dramatically expanded the transaction volume handled by the Treasury Unit. To further expand our clientele and respond to its increasingly diverse and advanced needs, 44 Trading Risk Management The goal of our trading operations is to maximize profit poten- The Capital Markets and Treasury Operations Department tial through market transactions taking advantage of short-term (back office) and the Corporate Risk Management Department market fluctuations and intermarket arbitrage opportunities. (middle office) are responsible for screening and checking Under the new bank structure, customer orders for foreign Treasury Unit (front office) operations to prevent operating exchange transactions, interest rate swaps and ALM oper- mistakes or improper transactions from occurring and to ations are handled by the Trading Department, which is charged avoid transactions that deviate from risk management guide- with the efficient management of risk. To increase revenue lines and limits. In addition, the Audit Department conducts opportunities, we are also forging into such new product comprehensive audits on a regular basis. We are also further areas as weather derivatives and commodity derivatives. tightening our compliance systems to ensure due diligence in the observance of market rules, regulations and laws. Customers Corporate Business Office/Branches Planning Dept., Treasury Unit Treasury Marketing Dept. Treasury Dept. Deposits International Treasury Dept. Upgrading services in pursuit of enhanced customer convenience Loans ALM operations and liquidity management Planning/Research Customer transactions Banking services Front Board of Directors (Risk Management Committee) Management Committee (Market Risk Management) Customer Order Flow ALM Operations, etc. Treasury Unit Audit Dept. Middle Back Trading Dept. Efficient operations based on customer order flows and ALM hedging flows Trading Money/ Securities Transactions Credit Risk Management Dept. Corporate Risk Management Dept. Capital Markets and Treasury Operations Dept. Interbank Market 45 Investment Banking Unit Business Strategies Group, which specializes in new business models. The Deriva- tives and Financial Engineering Department offers currency and interest rate derivatives at sharp prices, and expands The Investment Banking Unit aims to rapidly provide sophisti- our market of new products, led by weather and commodity cated financial services to our customers and integrate SMBC’s derivatives. The M&A Advisory Services Department is seizing financial products, human and capital resources. Our organi- an increasing number of opportunities in M&A activities, zation makes it possible to develop advanced products and brought about by progress in legislation facilitating company services, and to contribute to the expansion of financial reorganizations. markets in Japan, including the syndicated loan market. Key Points 1. Provide newly developed products to meet the demands of our customers 2. Offer financial services through the global network of the SMBC Group including Daiwa Securities SMBC 3. Expand the syndicated loan market 4. Make proposals related to customers’ IT-based business models 5. Start defined contribution pension plan business New Product Lineup We provided financial services for UNIVERSAL STUDIOS JAPANTM. Photo courtesy of: UNIVERSAL STUDIOS JAPANTM & Universal Studios© Daiwa Securities SMBC In connection with the formation of SMBC, the wholesale securities businesses of Sakura Bank and Sakura Securities Co., Ltd., were combined with Daiwa Securities SB Capital Markets Co. Ltd. The merged institution is now called Daiwa Securities SMBC Co. Ltd. Daiwa Securities SMBC was origi- nally established in April 1999 through an alliance between the wholesale division of Daiwa Securities Co. Ltd. (now Daiwa Securities Group Inc.) and Sumitomo Bank. In fiscal 2000, Daiwa Securities SMBC was extremely successful, recording ¥123.6 billion in ordinary profit, a year-on-year increase of nearly 70%. Daiwa Securities SMBC aims to be a top-notch The Investment Banking Unit provides the best-suited products investment bank that satisfies our institutional and corporate to our customers through our global network. The Structured clients’ diversified needs by making full use of long-developed Finance Department develops advanced products concerned know-how in product development and marketing. In addition with the securitization business, non-recourse loans such as to the traditional service of helping clients finance their oper- real estate finance and project finance, and the leasing busi- ations and improving the performance of their investments, ness. Furthermore, the department features the New Products Daiwa Securities SMBC will continue to improve its superior services in new business areas, including securitization and providing M&A advisory services. 46 Development of Debt Capital Markets Debt capital markets are a new finan- ■Investment Banking Unit Organization Planning Dept., Investment Banking Unit Structured Finance Credit Dept. Asset Management Planning Dept., Investment Banking Unit •Planning for investment banking services •Inspection of investment banking transactions •Planning for defined contribution pension funds, investment management services cial technique where traditional lend- Structured Finance Dept. ing business (financial intermediation) Financial Solutions Dept., Investment Banking Unit •Distribution, project finance, system finance, lease financing, leveraged buyouts/management buyouts, non-recourse loans •Provision of total solution services is combined with loan asset trading in the market. Syndicated loans are a typical example, where a syndicate of Derivatives and Financial Engineering Dept. •Development and sales of derivatives Syndications Dept. •Syndicated loan origination and placements Corporate Finance Services Dept. •Private offerings lenders extends a loan to a borrower Domestic M&A Advisory Services Dept. •Mergers and acquisitions under a single loan agreement. The Syndications Department of SMBC is actively marketing and arranging this type of transaction to meet the advanced fund raising requirements of customers by providing them with access to markets formed by various types of financial institutions. In line with promoting this type of business, SMBC established the Japan Syndication and Loan-trading Association (JSLA) with other major financial institutions in January 2001, and was appointed to chair the asso- ciation. Through the activities of the e-Business, Media and Telecom Dept. •Business support for IT related companies Daiwa Securities SMBC Co. Ltd. •Wholesale securities distribution Sakura Friend Securities CO., LTD Meiko National Securities Co., Ltd. •Securities retailing (stock, securities, etc.) DLJdirect SFG Securities Inc. •Online securities retailing Sakura Investment Management Co., Ltd. Daiwa SB Investments Ltd. •Investment advisory services, investment trust services Japan Pension Navigator Co., Ltd. •Consulting on and administration of defined contribution pension funds Structured Finance Dept. (Americas, Europe and Asia) •Project finance Syndications Dept. (Americas, Europe and Asia) •Syndication Overseas SMBC Capital Markets, Inc SMBC Capital Markets Ltd. SMBC Derivative Products Ltd. •Derivatives dealing SMBC Securities, Inc. Overseas subsidiaries of Daiwa Securities SMBC Co. Ltd. •Wholesale securities distribution SMBC Leasing and Finance, Inc. •Lease financing association, SMBC leads the debt capital markets in Japan, businesses. Our investment management services are led by allowing us to meet the various demands of our customers Daiwa SB Investments, Ltd., and Sakura Investment Manage- through syndicated loans. ment Co., Ltd., which have formed close alliances with leading investment managers worldwide, such as T. Rowe Price, Alli- Financial Solutions to Customers ance Capital Management L.P. and State Street Bank and The Financial Solutions Department, established within the Trust. We are working with these companies to develop and Structured Finance Department, maintains close contact with offer investment trust products and manage the funds cus- customers to meet their diversified demands and present tomers entrust to us in the global securities markets. We financial solutions. The e-Business, Media and Telecom Depart- have been actively preparing for the defined contribution pen- ment offers unique solutions to customers requiring special- sion system that is expected to be introduced this autumn. In ized knowledge in the IT field, with up-to-date information and September 2000, we co-founded Japan Pension Navigator global connections. Co., Ltd., with six other financial companies in the Mitsui and Sumitomo Groups, to offer consulting services related to this Expanding Investment Management Services new pension system in Japan. SMBC is fully engaged in the investment trust, corporate pension, public pension and defined contribution pension plan 47 The Group Company Networking Strategy The SMBC Group, with SMBC at its core, is fostering cooperation among the constituent subsidiaries and affiliates to respond to increasingly diverse and advanced customer needs with complete financial solutions. Each Group member is highly specialized in its field and has secured a prominent position in its markets. We are striving to increase overall group earnings by drawing on these qualities to maximum effect and allocating resources to high-growth fields. The Wakashio Bank, Ltd. The Bank of Kansai, Ltd. The Minato Bank, Limited Commercial banking QUOQ Inc. Purchase of monetary assets and credit guarantee SMBC Loan Servicer Co., Ltd. Asset management and collection Sakura Guarantee Co., Ltd. Sumigin Guarantee Company, Limited Credit guarantee Consumer Banking Unit p.34 The Sakura Loan Partner, Ltd. Loans Sumitomo Mitsui Card Company, Ltd. Sakura Card Co., Ltd. Credit cards The Japan Net Bank, Ltd. Commercial banking via Internet Daiwa Securities SMBC Co., Ltd. Wholesale securities Sakura Friend Securities CO., LTD. Meiko National Securities Co., Ltd. Securities Sakura Investment Management Co., Ltd. Daiwa SB Investments Ltd. Investment advisory, investment trust management Investment Banking Unit p.46 DLJdirect SFG Securities Inc. On-line discount brokerage SMBC Capital Markets, Inc. SMBC Capital Markets Limited Derivatives The major Group companies are listed here. For a more complete list, please see p.230. 48 48 SMBC Business Servicing Co., Ltd. Asset management and collection SMBC Capital Co., Ltd. Venture capital Japan Pension Navigator Co., Ltd. Operation and administration of defined contribution pension plans Middle Market Banking Unit p.37 Sumitomo Mitsui Banking Corporation Sakura Factors Co., Ltd. Sumigin General Finance Company, Limited Mitsui Finance Service Co., Ltd. Sakura Finance Service Co., Ltd. Sakura Mortgage Co., Ltd. Financial services for corporate customers (including factoring and collection services) Corporate Banking Unit p.40 SMBC Consulting Co., Ltd. Consulting The Japan Research Institute, Ltd. Economic research and systems engineering International Banking Unit p.42 SB Leasing Company, Limited Sakura Leasing Co., Ltd. Leasing Treasury Unit p.44 Sakura KCS Corporation Sakura Information Systems Co., Ltd. System development, data processing Manufacturers Bank Sumitomo Mitsui Banking Corporation of Canada Banco Sumitomo Mitsui Brasileiro S.A. PT Bank Sumitomo Mitsui Indonesia Commercial banking Sumitomo Mitsui Finance Australia Limited Merchant banking 49 49 e-Business e-Business Strategy With advances in IT and the increasing popularity of the Internet and mobile phones, the e-commerce market is expected to expand from ¥23 trillion in fiscal 2000, to ¥124 trillion by fiscal 2005. To respond quickly to this market growth and the structural changes it is bringing about, we are deepening our involvement in e-business. Specifically, we are promoting our e-business operations based on three guiding principles: providing financial services suited to e-commerce, efficiently marketing the use of the Internet and building new business models through alliances ■Overview of Financial Services for Companies Buyer Companies e-marketplace Commercial Transaction Data Link Seller Companies Provision of financial intermediary functions in support of the market Sumitomo Mitsui Banking Corporation (cid:0) Provision of settlement services linked to the commercial transactions on the electronic market Complete B4MP Electronic Authentication Internet Credit Functions Planned for Future Introduction with companies in other industries. NETdeBIZ.com For the corporate market, we plan to offer settlement In April 2000, in collaboration with leading companies in an services linked to e-commerce and to work on services array of industries, we launched a business support site for connected with Internet-based credit extension and approval. small and medium-sized businesses called NETdeBIZ.com. For consumers, we are planning to provide new settlement This site provides a range of solutions to small and medium- services that are compatible with diverse channels and sized businesses in such areas as strengthening involvement introduce new marketing methods utilizing networks. in Internet business, streamlining operations and refining wel- fare activities. It also offers specialist information in subjects Measures for Corporate Customers including taxation, accounting and legal matters. We plan to Complete/Banking Service for Market Place use this site as an efficient marketing tool. Rapidly rising corporate interest in Internet-based transactions has led to the emergence of a large number of e-commerce markets, or so-called e-marketplaces. To respond to the settlement needs of an e-marketplace, we launched Complete, Japan’s first settlement service linked to B2B e-commerce in February 2001. In addition, as a financial service capable of meeting even the most sophisticated demands, in May 2001 we began offering Banking Service for Market Place (B4MP). Both services allow buyer companies to complete payments via the Internet, rationalizing seller companies’ accounting tasks through the elimination of paper invoices. Using these services to satisfy diverse B2B financial needs, we aim to diversify and strengthen settlement services on the We jointly operate this portal site with The Sumitomo Marine & Fire Insurance Co., Ltd., The Sumitomo Trust & Banking Co., Ltd., Sumitomo Life Insurance Company, and NEC Corporation Internet and upgrade such functions as electronic approval and Internet-based credit. 50 Initiatives for Consumers NetDebit/ShoppingSquare have been conducting a monitored trial service since March 2001 with convenience store operator am/pm Japan, with which we Since November 2000 we have been offering NetDebit, a have formed an alliance in the development of @B∧NK. new Internet settlement service. NetDebit is a service that enables real-time debits from a bank account for Internet Money Park shopping payments. In June 2000, in collaboration with leading financial compa- To make online shopping more convenient for users, we have nies, we launched a comprehensive financial portal site for started a linked site that brings together NetDebit member consumers called Money Park. This site aims to be the one- stores. This site is called ShoppingSquare. stop provider of private banking service information for each In developing NetDebit, we are demonstrating the Group’s company involved. It also provides the My Financial service to overall strength through a partnership with Sumitomo Mitsui members, enabling customized management of their financial Card Co., Ltd., while encouraging other financial institutions, asset portfolio. We will continue to add highly convenient such as Japan Net Bank, to provide services and aim for stan- functions that we will leverage as new marketing tools for dardization in Japan. consumers. Prepaid Electronic Money Service (Edy!) We plan to become involved in business applications for the prepaid electronic money service Edy!, which boasts consid- erable promise as a next-generation settlement service. Edy!, the e-money on which we are currently working, enables quick and easy payments through high-speed data processing with a contactless IC card and its reader/writer terminals. Since the chip runs through wireless data communication, it can be built into not only cards but also any shaped object. In the fu- ture, it will be possible to incorporate this e-money service into mobile phones and other mobile devices. We are looking at providing Edy! to convenience stores, fast food restaurant chains and other outlets that have de- We jointly operate this portal site with Nomura Securities Co., Ltd., Japan Life Insurance Co., Mitsui Marine & Fire Insurance Co., Ltd., Chuo Mitsui Trust and Banking Co., Ltd., and Mitsui & Co. mand for small sum payments. And we plan to deploy the pro- Broadcast Satellite TV Banking cessing ability of IC cards in combination with point programs In December 2000 we launched Japan’s first TV banking and other initiatives for use in marketing. service utilizing the digital broadcasting service via the broad- Aiming to be the first bank to provide an e-money service, we cast satellite system. And we plan to provide a similar service compatible with the 110-degree digital broadcasting service scheduled to begin at the end of 2001 via the communications satellite system. With the digitization of broadcasting and the addition of interactive functions, television is set to evolve into a new networking medium. We intend to use television, along with next-generation mobile phones and other broadband networks, to provide more convenient private banking services. 51 Social Contribution Activities under the Leadership of the Corporate Citizenship Department Aiming to be a bank that develops in harmony with its customers and society, SMBC is engaged in a number of activities that aid society. These activities encompass the three key areas of wel- fare, contributing to the regional community and international cooperation. Activities are conducted under the leadership of the Corporate Citizenship Department within our Public Relations Department. This office operates by giving consideration to the aspects of continuity, the characteristics of our Bank and the development of human resources, and creates a corporate foundation that enables employees to engage in socially beneficial activities. Social Contribution Activities Cooperation with the Small Kindness Movement As a participating member, we take part in the Japanese Islands Clean Campaign and collect voluntary contributions from the Bank’s personnel. Cooperation with the NHK Year-End Charity Campaign We cooperate in the NHK Year-End Charity Campaign held in Decem- ber each year, focusing on the Central Community Chest of Japan. We also collect voluntary contributions from the Bank’s personnel. Contributing to the Local Community SMBC actively participates in regional events, cooperates in promoting local art and culture and otherwise contributes to local communities. Promenade Concert We used the lobby of the Kobe Main Office to hold a classical concert and a performance of Beethoven’s Ninth Symphony to coincide with the Kobe Festival in July and Kobe Luminarie in December last year. Money Museum We have a permanent coin collection on display in the Kobe Head Office building, which we open to the gen- eral public. The collection displays in chronological order ancient Japanese coins and other coins of interest, including foreign coins as well as commemorative coins from Japan and abroad. Promenade Concert (held in December 2000) Kyoto Cultural Properties Exhibition Room We have set up the Kyoto Cultural Properties Exhibition Room in our Kyoto Branch building, which is open to the general pub- lic. The permanent display includes cultural treasures from the Yayoi Period to the Edo Period, as well as information on the ethnic cultural assets of the Gion Festival. International Cooperation SMBC Volunteer Fund We set up a fund with the aim of making donations to Japanese and foreign volunteer organizations that provide assistance in the event of disasters or economic difficulties. In fiscal 2000 we made donations to four groups and coun- tries. For example, our donation to Malaysia enabled the purchase of vans for orphanage schoolchildren, while our contribution to China financed repairs at a junior high school. Support for UNICEF We have been a key promoter of UNICEF Coin Aid, a foreign- coin collection program. We place collection boxes in all our branches. In cooperation with our Group companies, we also sort the collected coins by currency. The cumulative weight of the collection to March 2001 was approximately 41 tons (equivalent to approximately ¥260 million). Moreover, every year we purchase UNICEF greetings cards, with half of the purchase price going to fund UNICEF activities, and send the cards to customers. In addition, some branches handle accounts in which total interest after tax on ordinary deposits is donated to UNICEF. Donation of Second-Hand Clothing to African Countries We ask the Bank’s personnel to provide second-hand clothing and daily necessities, which we then donate to the Republic of Mali and other African countries via Motherland Academy International, a nongovernment organization. Support for Kids Earth Fund We design calendars using pictures of children from all over the world gathered by the Kids Earth Fund, a nonprofit organization that supports needy children. Part of the cost of the calendars is donated to the fund. SMBC Global Foundation The SMBC Global Foundation was established with an aim of providing scholarships to Asian university students. The foun- dation subsidizes more than 2,600 students, in Thailand, China, Indonesia and Singapore, and is planning to expand its activities into other areas in the future. SMBC Foundation The SMBC Foundation was founded to develop human resources to contribute to the economic development of developing re- gions and international exchange. In addition to holding interna- tional seminars and business seminars each year, the foundation also provides scholarships for foreign Asian students and subsidizes development aid organizations. Support for Employees’ Volunteer Activities We use our internal electronic network to transmit volunteer information to employees and actively support participation in volunteer organizations. We are expanding the sphere of volun- teer activities by holding regular sign language courses and internally recruiting volunteer staff to promote the planning of volunteer activities. 52 In addition, to promote specific measures in the course of our daily business, EMS seeks to achieve continuous improvement through a cycle of planning, implementation, evaluation and review. The principal results of the EMS in the past fiscal year are described below. These results are the achievements of the former Sakura Bank. Paper waste recycling (Fiscal 2000 results at our Toda Recycling Center) • Quantity recycled • Recycling ratio 1,275 tons 88.03% Using recycled paper • Using a ratio of 41.5% recycled paper in advertising materi- als (representing a 5.4% improvement on the previous term) • Promoting the use of recycled paper for business cards, copier paper and other uses Reducing paper use • Promoting a choice in output of ATM transaction statements so that customers can choose whether or not they need a statement • Promoting a shift to electronic processing of transfer trans- actions through the use of IT and reducing the use of fax paper In fiscal 2000, the Toda Recycling Center earned special recognition for its achievements in promoting the reuse of paper. We were the only financial institution to be awarded the Chairman’s Prize by the Recycling Promotion Association, which has the backing of the Prime Minister’s Office. Based on our goal to be a good corporate citizen, we intend to continue working to strengthen our EMS. Through these activities, we will channel our efforts into preserving the global environment, improving social credibility and reducing the economic risks that arise from environmental problems. Environmental Preservation Environmental Management The Bank is demonstrating a comprehensive commitment to preserving the environment. For example, we have acquired ISO 14001 certification for our environmental management system (EMS), established an internal Environment Committee and a director responsible for environmental affairs. We have also enacted an environmental policy and set up the Corporate Citizenship Department within the Public Relations Department. As a financial institution, we have classified our efforts to address environmental concerns into three main categories: social responsibility (reducing the impact on the environment in our day-to-day operations), measures to address environmental risks and customer support. Below, we describe our specific activities in each of these areas. Social Responsibility • Reducing waste materials and promoting recycling • Reducing the quantity of paper used, conserving water and encouraging energy savings • Using recycled paper • Tackling environmental issues and promoting a strong aware- ness of the environment through internal education, including the production of videos (cid:0) Measures to Address Environmental Risks • Stipulating in our Credit Policy that “we shall not extend credit for projects that would have a grossly adverse effect on the environment.” Customer Support • Introducing environment consult- ants through a tie-up with SMBC Consulting Co., Ltd. • Providing information through the environmental information magazine SAFE (published every other month) • Providing information on finance for environmental measures 53 Corporate History 1876 1893 1895 1909 1912 1936 1940 1943 1944 1945 Mitsui Bank is established as a private bank. Mitsui Bank reorganizes itself as an unlimited partnership. Sumitomo Bank is established as a private enterprise. Mitsui Bank reorganizes into a limited company. Sumitomo Bank reorganizes into a limited company. The seven major banks of Hyogo Prefecture are merged into Kobe Bank. Dai Nihon Mujin is established. Mitsui Bank merges with Dai-Ichi Bank to form Teikoku Bank. Teikoku Bank merges with Jugo Bank. Sumitomo Bank merges with Hannan and Ikeda Jitsugyo Banks. Kobe Bank begins trust business. 1948 Dai Nihon Mujin is renamed Nihon Mujin. Teikoku Bank is re-established by Dai-Ichi Bank’s separation. Sumitomo Bank is renamed Osaka Bank. 1949 Teikoku Bank’s shares become listed on the Tokyo and Osaka stock exchanges. Osaka Bank’s shares become listed on the Tokyo and Osaka stock exchanges. Nihon Mujin is renamed Nihon Sogo Bank. Osaka Bank’s name is restored to Sumitomo Bank. Teikoku Bank’s name is restored to Mitsui Bank. Kobe Bank’s trust division is transferred to Toyo Trust and Banking. Sumitomo Bank merges with Kawachi Bank. Mitsui Bank merges with Toto Bank. Nihon Sogo Bank converts to an ordinary bank and is renamed Taiyo Bank. Kobe Bank and Taiyo Bank merge to form Taiyo Kobe Bank. Sumitomo Bank merges with Heiwa Sogo Bank. Mitsui Bank and Taiyo Kobe Bank merge to form Mitsui Taiyo Kobe Bank. Mitsui Taiyo Kobe Bank is renamed Sakura Bank. Sakura Bank and Sumitomo Bank develop a strategic alliance leading to future integration of the two banks. Sakura Bank and Sumitomo Bank merge to form Sumitomo Mitsui Banking Corporation. 1951 1952 1954 1960 1965 1968 1973 1986 1990 1992 1999 2001 54 Financial Data Consolidated Financial Review Nonconsolidated Financial Review Total Combined Figures of the Former Sakura Bank and Sumitomo Bank Formerly The Sakura Bank, Limited and Subsidiaries Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Retained Earnings Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Certified Public Accountants’ Report Nonconsolidated Balance Sheets Nonconsolidated Statements of Income Formerly The Sumitomo Bank, Limited and Subsidiaries Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Public Accountants Summary of Significant Differences Between Japanese GAAP and U.S. GAAP Supplemental Data (Consolidated) Income Analysis Deposits Loans Securities Trading Assets and Liabilities Supplemental Data (Nonconsolidated) Income Analysis Deposits Loans Securities Capital Ratio Ratios Capital Others 56 62 68 71 72 73 74 75 106 107 108 110 111 112 113 116 156 157 160 166 166 168 170 172 182 188 198 204 206 210 220 55 Consolidated Financial Review Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) and Subsidiaries 1. Financial Results Consolidated operating results for fiscal 2000, ended March 31, 2001, include the Sakura Bank, Limited (the “Bank”), 65 consoli- dated subsidiaries (39 domestic and 26 overseas) and 12 affiliates that are accounted for using the equity method (four domestic and eight overseas). Compared with fiscal 1999, 14 more consolidated subsidiaries and 20 fewer affiliates accounted for by the equity method are included. With regard to deposits (excluding negotiable certificates of deposit), the fiscal year-end balance was ¥32,004.0 billion, ¥1,778.0 billion greater than the previous fiscal year. Loans and bills discounted amounted to ¥32,906.7 billion, an increase of ¥573.5 billion, and securities increased ¥3,537.8 billion, to ¥10,466.5 billion. As a result, total assets increased ¥3,354.1 billion from the In fiscal 2000, consolidated gross profit increased ¥65.2 previous fiscal year, to ¥51,849.7 billion. billion from fiscal 1999, to ¥886.3 billion. After adjustments such as general and administrative expenses and total credit costs, operating profit increased ¥47.4 billion, to ¥183.9 billion. Net income, the amount after adjusting operating profit for extra- ordinary gains (losses), income taxes, and minority interests in net income, decreased ¥13.7 billion, to ¥48.9 billion. Foreign currency translation adjustments arising from cur- rency translation of financial statements of overseas subsidiaries had been recognized as assets or liabilities, but from this fiscal year they are reported as stockholders’ equity and minority interests due to a revision of accounting standards for foreign currency transactions. As a result, stockholders’ equity decreased ¥20.9 billion. Number of Consolidated Subsidiaries and Affiliates Accounted for by the Equity Method March 31 Consolidated subsidiaries Subsidiaries and affiliates accounted for by the equity method 2001 65 12 2000 51 32 Income Summary Years ended March 31 Consolidated gross profit Net interest income Net fees and commissions Net trading income Net other operating income General and administrative expenses Total credit cost Write-off of loans Transfer to specific reserve Transfer to general reserve for possible loan losses Other Gains (losses) on stocks Net income (loss) from nonconsolidated entities by the equity method Other income (expenses) Operating profit Extraordinary gains (losses) Income before income taxes and minority interests Income taxes, current Income taxes, deferred Minority interests in net income Net Income 2001 ¥)886.3 670.0 147.4 26.8 42.1 ¥)490.6 346.6 257.8 83.7 (70.8) 75.9 ¥0)73.5 7.9 53.4 ¥)183.9 (51.8) 132.0 8.1 69.9 (5.1) 48.9 Billions of yen 2000 ¥)821.1 653.4 119.8 16.5 31.4 ¥)487.5 526.7 146.4 238.4 (11.7) 153.6 ¥)342.9 (1.5) (11.9) ¥)136.5 (10.4) 126.1 7.8 74.2 18.5 62.6 Increase/ decrease 14 (20) Increase/ decrease ¥)065.2 16.6 27.6 10.3 10.7 ¥)003.1 (180.1) 111.4 (154.7) (59.1) (77.7) ¥(269.4) 9.4 65.3 ¥)047.4 (41.4) 5.9 0.3 (4.3) (23.6) (13.7) Note: Consolidated gross profit = (Interest income – Interest expenses) + (Fees and commissions (income) – Fees and commissions (expenses)) + (Trading profits – Trading losses) + (Other operating income – Other operating expenses) 56 Consolidated Financial Review Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries 1. Financial Results Consolidated operating results for fiscal 2000, ended March 31, 2001, include the Sumitomo Bank, Limited (the “Bank”), 84 con- solidated subsidiaries (52 domestic and 32 overseas) and 29 affiliates that are accounted for using the equity method (eight domestic and 21 overseas). Compared with fiscal 1999, nine more consolidated subsidiaries and nine fewer affiliates accounted for by the equity method are included. In fiscal 2000, consolidated gross profit increased ¥25.9 billion from fiscal 1999, to ¥951.6 billion. After adjustments such as general and administrative expenses and total credit costs, operating profit increased ¥73.4 billion, to ¥310.7 billion. Net income, the amount after adjusting operating profit for extraordinary gains (losses), income taxes, and minority inter- ests in net income, increased ¥21.6 billion, to ¥83.5 billion. With regard to deposits, the fiscal year-end balance was ¥31,045.1 billion, ¥2,683.0 billion greater than the previous fiscal year. Loans and bills discounted amounted to ¥32,630.4 billion, a decrease of ¥310.5 billion, and securities increased ¥7,877.1 billion, to ¥16,846.0 billion. As a result, total assets increased ¥13,625.5 billion from the previous fiscal year, to ¥67,393.0 billion. Foreign currency translation adjustments arising from cur- rency translation of financial statements of overseas subsidiaries had been recognized as assets or liabilities, but from this fiscal year they are reported as stockholders’ equity and minority interests due to a revision of accounting standards for foreign currency transactions. As a result, stockholders’ equity decreased ¥32.2 billion. Number of Consolidated Subsidiaries and Affiliates Accounted for by the Equity Method March 31 Consolidated subsidiaries Affiliates accounted for by the equity method Income Summary Years ended March 31 Consolidated gross profit Net interest income Net fees and commissions Net trading income Net other operating income General and administrative expenses Total credit cost Write-off of loans Transfer to specific reserve Transfer to general reserve for possible loan losses Other Gains (losses) on stocks Net income (loss) from nonconsolidated entities by the equity method Other income (expenses) Operating profit Extraordinary gains (losses) Income before income taxes and minority interests Income taxes, current Income taxes, deferred Minority interests in net income Net Income 2001 84 29 2000 75 38 2001 ¥)951.6 653.5 168.9 82.2 46.9 ¥)450.3 646.3 556.7 174.8 (138.7) 53.5 ¥)395.0 36.5 24.3 ¥)310.7 (37.3) 273.5 57.4 128.3 (4.2) 83.5 Billions of yen 2000 ¥)925.7 653.7 145.9 46.9 79.2 ¥)466.1 733.5 439.1 219.1 29.2 46.0 ¥)515.6 (35.5) 31.2 ¥)237.3 (20.8) 216.5 50.8 96.4 (7.4) 61.9 Increase/ decrease 9 (9) Increase/ decrease ¥)025.9 (0.2) 23.0 35.3 (32.3) ¥0(15.8) (87.2) 117.6 (44.3) (167.9) 7.5 ¥(120.6) 72.0 (6.9) ¥)073.4 (16.5) 57.0 6.6 31.9 3.2 21.6 Note: Consolidated gross profit = (Interest income – Interest expenses) + (Fees and commissions (income) – Fees and commissions (expenses)) + (Trading profits – Trading losses) + (Other operating income – Other operating expenses) 57 Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) and Subsidiaries Assets, Liabilities and Stockholders’ Equity March 31 Assets Loans and bills discounted Securities Foreign currency translation adjustments Liabilities Deposits (excluding negotiable certificates of deposit) Minority interests Stockholders’ equity Foreign currency translation adjustments Billions of yen 2001 2000 ¥51,849.7 32,906.7 10,466.5 ./ 49,290.0 32,004.0 383.9 2,175.8 (20.9) ¥48,495.6 32,333.2 6,928.7 30.6 45,967.8 30,226.0 319.2 2,208.6 ./ Increase/ decrease ¥3,354.1 573.5 3,537.8 (30.6) 3,322.2 1,778.0 64.7 (32.8) (20.9) 2. Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) With the adoption of a new accounting standard for financial instruments from fiscal 2000 in Japan, securities in consolidated financial statements have been classified by the purpose for which they are held. The classifications are: ‘trading securities,’ ‘held-to-maturity securities’ and ‘other securities.’ ‘Trading securities’ are reported at fair value on the consoli- dated balance sheet with unrealized holding gains and losses reported as part of net income. Securities classified as ‘held-to- maturity securities’ and ‘other securities’ are carried either at acquisition cost or at amortized cost and are reported on the consolidated balance sheet. Effective fiscal 2001, ‘other securi- ties’ will be reported at fair value on the consolidated balance sheet with the difference between the fair value and acquisition cost reported on a net-of-tax basis, as ‘net unrealized gains (losses) on valuation’, which is a component of stockholders’ equity. Net unrealized gains (losses) on ‘held-to-maturity securities’ and ‘other securities’ are as shown in the table below. The mar- ket value of stocks held by the bank in ‘other securities’ is based on average market prices in the one month before the fiscal year-end. Net unrealized gains (losses) on securities at the end of fiscal 2000 amounted to a net loss of ¥352.8 billion, a decrease of about one trillion yen compared to the previous fiscal year, reflecting the large decline in stock prices. At the time of the merger, all of gross unrealized losses on ‘other securities’ (including ‘other money held in trust’) held by the former Sakura Bank were disposed of and the net unrealized gains were trans- ferred to Sumitomo Mitsui Banking Corporation. (For details of the transfer of unrealized gains (losses) on securities at the time of the merger, see 1. Adjustments for Merger Accounting [SMBC’s Unrealized Gains (Losses) (Nonconsolidated)] on page 68.) Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) March 31 Held-to-maturity securities Other securities Stocks Bonds Others Total Stocks Bonds Others 2001 Billions of yen Net unrealized gains (losses) (a) ¥(000.0 (352.8) (361.2) 24.7 (16.4) (352.8) (361.2) 24.7 (16.4) (a) – (b) ./ ./ ./ ./ ./ ¥(1,007.6) (1,041.7) 51.4 (17.4) Unrealized gains Unrealized losses Net unrealized gains (losses) (b) ¥(000.0 170.5 139.2 27.7 3.6 170.5 139.2 27.7 3.6 ¥00(0.0) (523.4) (500.4) (3.0) (19.9) (523.4) (500.4) (3.0) (19.9) ./ ./ ./ ./ ./ ¥654.8 680.5 (26.7) 1.0 2000 Unrealized gains ./ ./ ./ ./ ./ ¥1,109.5 1,083.3 8.8 17.3 Unrealized losses ./ ./ ./ ./ ./ ¥(454.7) (402.8) (35.5) (16.3) Notes: 1. Fair value is calculated by using the average market price in one month before the fiscal year-end as for the Bank’s stocks and by using the mar- ket price at the fiscal year-end as for the others. 2. The amount equivalent to net unrealized gains (losses) on ‘other securities’ (including ‘other money held in trust’) was a net loss of ¥212.1 billion at the fiscal year-end. 58 Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries Assets, Liabilities and Stockholders’ Equity March 31 Assets Loans and bills discounted Securities Foreign currency translation adjustments Liabilities Deposits (excluding negotiable certificates of deposit) Minority interests Stockholders’ equity Foreign currency translation adjustments Billions of yen 2001 2000 ¥67,393.0 32,630.4 16,846.0 ./ 64,949.1 31,045.1 606.7 1,837.2 (32.2) ¥53,767.5 32,940.9 8,968.9 68.7 51,383.8 28,362.1 579.4 1,804.4 ./ Increase/ decrease ¥13,625.5 (310.5) 7,877.1 (68.7) 13,565.3 2,683.0 27.3 32.8 (32.2) 2. Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) With the adoption of a new accounting standard for financial instruments from fiscal 2000 in Japan, securities in consolidated financial statements have been classified by the purpose for which they are held. The classifications are: ‘trading securities,’ ‘held-to-maturity securities’ and ‘other securities.’ ‘Trading securities’ are reported at fair value on the consoli- dated balance sheet with unrealized holding gains and losses reported as part of net income. Securities classified as ‘held-to- maturity securities’ and ‘other securities’ are carried either at acquisition cost or at amortized cost and are reported on the consolidated balance sheet. Effective fiscal 2001, ‘other securi- ties’ will be reported at fair value on the consolidated balance sheet with the difference between the fair value and acquisition cost reported on a net-of-tax basis, as ‘net unrealized gains (losses) on valuation,’ which is a component of stockholders’ equity. Net unrealized gains (losses) on ‘held-to-maturity securities’ and ‘other securities’ are as shown in the table below. The mar- ket value of stocks held by the bank in ‘other securities’ is based on average market prices in the one month before the fiscal year-end. Net unrealized gains (losses) on securities at the end of fiscal 2000 showed a net gain. This was because an unrealized loss of about one trillion yen from the end of the previous fiscal year due to the large decline in stock prices, was offset by a gain on valuation of foreign stocks, Japanese government bonds and other bonds held by subsidiaries. (For details of the transfer of unrealized gains (losses) on securities at the time of the merger, see 1. Adjustments for Merger Accounting [SMBC’s Unrealized Gains (Losses) (Nonconsolidated)] on page 68.) Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) March 31 Held-to-maturity securities Other securities Stocks Bonds Others Total Stocks Bonds Others 2001 Billions of yen Net unrealized gains (losses) (a) ¥00(0.1) 51.7 (156.5) 83.1 125.1 51.7 (156.5) 83.1 125.1 (a) – (b) ./ ./ ./ ./ ./ ¥(1,127.8) (1,071.2) 83.9 (140.4) Unrealized gains ¥000.0 387.7 166.7 85.9 135.1 387.8 166.7 85.9 135.2 Unrealized losses ¥00(0.1) (336.0) (323.2) (2.8) (10.0) (336.1) (323.2) (2.8) (10.1) Net unrealized gains (losses) (b) ./ ./ ./ ./ ./ ¥1,179.5 914.7 (0.8) 265.5 2000 Unrealized gains ./ ./ ./ ./ ./ ¥1,553.7 1,242.3 34.2 277.3 Unrealized losses ./ ./ ./ ./ ./ ¥(374.3) (327.5) (35.0) (11.8) Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in ‘cash and due from banks’ and commercial papers as well as claims on loan trust in ‘commercial paper and other debt purchased.’ Net unrealized gain as well as unrealized gain on them was ¥0.1 billion. 2. Fair value is calculated by using the market price at the fiscal year-end as for bonds and others, and by using the average market price in the one month before the fiscal year-end as for stocks. 3. The amount equivalent to net unrealized gains (losses) on ‘other securities’ (including ‘other money held in trust’) was a net gain of ¥27.6 billion at the fiscal year-end. 59 Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) and Subsidiaries 3. Capital Ratio (BIS Guidelines) The Bank’s capital ratio (BIS Guidelines) decreased 1.22% from the end of the previous term, to 11.31%. Total capital, which constitutes the numerator in the capital ratio calculation equation, decreased ¥266.6 billion from the previous fiscal year, to ¥3,834.3 billion, mainly because the balance of qualifying subordinated debt was reduced as part of initiatives to lower costs of capital. The denominator, risk- adjusted assets, increased ¥1,169.8 billion, to ¥33,891.4 Consolidated Capital Ratio March 31 Tier I capital: Tier II capital: Common stockholders’ equity Minority interests Subtotal (A) 45% of unrealized gains on land General reserve for possible loan losses Qualifying subordinated debt Subtotal billion, owing to several factors including an increase in the number of consolidated companies and the translation effect of a weaker yen. In fiscal 2000, Sakura Bank did not mark ‘other securities’ to market. Consequently, total capital of the Bank does not take into consideration unrealized gains (losses) on valuation of ‘other securities.’ Billions of yen 2001 2000 1999 ¥02,112.5 383.9 ¥02,121.4 319.2 ¥02,093.3 303.6 ¥02,496.4 ¥02,440.6 ¥02,396.8 ¥00,046.7 163.2 1,141.8 ¥00,351.7 227.3 1,382.2 ¥00,053.2 242.7 1,428.9 ¥01,351.6 ¥01,661.3 ¥01,724.8 Tier II capital included as qualifying capital (B) ¥01,351.6 ¥01,661.3 ¥01,724.8 Deductions: Total capital: Risk-adjusted assets: (C) (A) + (B) – (C) = (D) On-balance-sheet Off-balance-sheet Asset equivalent of market risk Subtotal (E) ¥00,013.8 ¥03,834.3 ¥31,812.6 1,924.7 154.1 ¥00,391.0 ¥04,100.9 ¥30,676.7 1,824.2 220.7 ¥00,391.0 ¥04,120.6 ¥30,629.5 2,518.1 251.7 ¥33,891.4 ¥32,721.6 ¥33,399.3 Capital ratio (BIS guidelines) = (D) / (E) x 100 11.31% 12.53% 12.33% 60 Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries 3. Capital Ratio (BIS Guidelines) The Bank’s capital ratio (BIS Guidelines) decreased 0.66% from the end of the previous term, to 10.94%. Total capital, which serves as the numerator in the capital ratio calculation equation, decreased ¥198.3 billion from the end of the previous fiscal year, to ¥4,150.0 billion. Contributing factors include the fact that from fiscal 2000 investments in affiliates engaged in finance business are taken as items for deductions and that the general reserve for possible loan losses included in Tier 2 capital is decreased. The denominator, risk- adjusted assets, increased ¥448.5 billion, to ¥37,925.2 billion, owing to factors including the translation effect of a weaker yen. In fiscal 2000, Sumitomo Bank did not mark ‘other securi- ties’ to market. Consequently, total capital of the Bank does not take into consideration unrealized gains (losses) on valuation of ‘other securities.’ Consolidated Capital Ratio March 31 Tier I capital: Tier II capital: Common stockholders’ equity Minority interests Subtotal (A) 45% of unrealized gains on land General reserve for possible loan losses Qualifying subordinated debt Subtotal Billions of yen 2001 2000 1999 ¥01,652.1 606.1 ¥01,625.0 578.9 ¥01,582.4 597.8 ¥02,258.3 ¥02,203.9 ¥02,180.2 ¥00,122.2 232.7 1,653.2 ¥00,126.1 365.4 1,652.9 ¥00,128.6 348.1 1,625.4 ¥02,008.1 ¥02,144.4 ¥02,102.0 Tier II capital included as qualifying capital (B) ¥01,995.4 ¥02,144.4 ¥02,102.0 Deductions: Total capital: Risk-adjusted assets: (C) (A) + (B) – (C) = (D) On-balance-sheet Off-balance-sheet Asset equivalent of market risk Subtotal (E) ¥00,103.6 ¥04,150.0 ¥34,609.0 3,096.3 219.9 ¥00,000— ¥00,039— ¥04,282.3 ¥04,348.3 ¥35,546.5 ¥34,744.7 3,180.3 2,510.9 357.1 221.1 ¥37,925.2 ¥37,476.7 ¥39,083.9 Capital ratio (BIS guidelines) = (D) / (E) x 100 10.94% 11.60% 10.95% 61 Nonconsolidated Financial Review Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) 1. Operating Results As a result of an ¥18.5 billion increase in gross banking profit and a ¥23.5 billion decrease in expenses (excluding non- recurring losses) and bond issue costs, banking profit (excluding transfer to general reserve for possible loan losses) increased ¥41.9 billion from fiscal 1999, to ¥355.4 billion in fiscal 2000, ended March 31, 2001. Operating profit, which is computed by adjusting banking profit by non-recurring gains (losses) such as total credit cost and gains (losses) on stocks, was ¥190.7 billion. Total credit cost, including transfer to general reserve for possible loan losses, was ¥261.1 billion. This was brought about by factors involving the continued worsening of corporate financial results amid the prolonged economic recession, the continued deteriora- tion of assets as collateral and acceleration in the disposal of problem assets in advance of the merger. Gains (losses) on 2. Income Analysis Gross Banking Profit Gross banking profit increased ¥18.5 billion from the previous fiscal year, to ¥730.4 billion. This was largely because domestic net fees and commissions rose ¥6.7 billion, due to an increase in income from investment trust sales commissions, and because international net trading income increased ¥10.1 billion, primarily attributable to improved profit on dealing. Expenses Expenses (excluding non-recurring losses) decreased ¥22.8 billion from the previous fiscal year, to ¥375.0 billion. This was mainly due to a wide-ranging and drastic cost review that stocks decreased ¥290.3 billion from the previous year to ¥51.5 billion. Net income, after adjustments for operating profit, extra- ordinary gains (losses) and income taxes, increased ¥25.1 billion from the previous fiscal year, to ¥82.2 billion. Net income was ¥108.5 billion lower than operating profit, mainly because ¥36.4 billion was appropriated for amortization of net transition obliga- tion from initial application of the new accounting standard for employee retirement benefits, and because ¥55.1 billion was recognized as ‘income taxes, deferred’ under tax-effect account- ing. In particular, a ¥5.6 billion reduction in deferred tax assets was associated with the lowering of the effective statutory tax rate, affected by the establishment of the Osaka Prefectural Government’s ordinance concerning the special treatment for the standard of enterprise taxes to the banking industry. resulted in a ¥15.1 billion reduction in non-personnel expenses, fully absorbing merger-related costs. It was also due to the ¥6.1 billion decrease in personnel expenses resulting from the reduction in the number of employees. Banking Profit As a result of the above, fiscal 2000 banking profit (excluding transfer to general reserve for possible loan losses) increased ¥41.9 billion from the previous fiscal year, to ¥355.4 billion. With a ¥56.0 billion reversal of the general reserve for possible loan losses, banking profit (including transfer to general reserve for possible loan losses) increased ¥83.3 billion, to ¥411.4 billion. Banking Profit Years ended March 31 Gross banking profit Gross banking profit (excluding net gains (losses) on bonds) Net interest income Net fees and commissions Net trading income Net other operating income Gross domestic banking profit Gross international banking profit Transfer to general reserve for possible loan losses Bond issue costs Expenses (excluding non-recurring losses) Personnel expenses Non-personnel expenses Taxes Banking profit Banking profit (excluding transfer to general reserve for possible loan losses) Banking profit (excluding transfer to general reserve for possible loan losses and net gains (losses) on bonds) 62 Billions of yen 2000 ¥711.9 709.4 609.3 60.1 8.1 34.4 665.6 46.3 ¥,(14.6) 0.7 397.8 161.7 216.1 19.9 ¥328.1 313.5 2001 ¥730.4 722.4 598.7 69.3 20.8 41.6 676.3 54.1 ¥,(56.0) — 375.0 155.6 201.0 18.3 ¥411.4 355.4 Increase/ decrease ¥)18.5 13.0 (10.6) 9.2 12.7 7.2 10.7 7.8 ¥(41.4) (0.7) (22.8) (6.1) (15.1) (1.6) ¥)83.3 41.9 347.5 311.0 36.5 Nonconsolidated Financial Review Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) 1. Operating Results As a result of a ¥50.2 billion increase in gross banking profit and an ¥8.0 billion decrease in expenses (excluding non-recurring losses) and bond issue costs, banking profit (excluding transfer to general reserve for possible loan losses) increased ¥58.3 billion from fiscal 1999, to ¥447.7 billion in fiscal 2000, ended March 31, 2001. Operating profit, which is computed by adjusting banking profit by non-recurring gains (losses) such as total credit cost and gains (losses) on stocks, was ¥168.4 billion. Total credit cost, including transfer to general reserve for possible loan losses, amounted to ¥558.0 billion. It is partly because loan forgiveness in favor of borrowers increased, and partly because provision for workout of problem assets in the next couple of fiscal years was reserved, and also because asset qualities and collateral values deteriorated more seriously than expected. 2. Income Analysis Gross Banking Profit Gross banking profit increased ¥50.2 billion from the previous fiscal year, to ¥772.8 billion. This was largely because domestic net fees and commissions rose ¥6.2 billion, due to increased earn- ings generated from electronic banking and exchange transac- tions. It also reflected a ¥7.1 billion increase in net gains on bonds in other operating income. Moreover, international net interest income increased ¥33.5 billion, which was mainly attributable to dividends received from overseas subsidiaries and affiliates. Expenses Expenses (excluding non-recurring losses) decreased ¥4.7 billion from the previous fiscal year, to ¥325.1 billion. This was mainly due to a ¥3.6 billion decrease in personnel expenses as Banking Profit Years ended March 31 Gross banking profit Gross banking profit (excluding net gains (losses) on bonds) Net interest income Net fees and commissions Net trading income Net other operating income Gross domestic banking profit Gross international banking profit Transfer to general reserve for possible loan losses Bond issue costs Expenses (excluding non-recurring losses) Personnel expenses Non-personnel expenses Taxes Banking profit Banking profit (excluding transfer to general reserve for possible loan losses) Banking profit (excluding transfer to general reserve for possible loan losses and net gains (losses) on bonds) Gains (losses) on stocks decreased ¥226.8 billion from the previous fiscal year to ¥259.9 billion. Net income, after adjustments for operating profit, extra- ordinary gains (losses) and income taxes, increased ¥6.9 billion from the previous fiscal year, to ¥55.7 billion. Net income was ¥112.7 billion lower than operating profit, partly because ¥20.2 billion was appropriated for amortization of net transition obliga- tion from initial application of the new accounting standard for employee retirement benefits, but mainly because ¥70.6 billion in expenses was recognized as ‘income taxes, deferred’ under tax- effect accounting. In particular, a ¥26.4 billion reduction in deferred tax assets was associated with the lowering of the effective statutory tax rate, affected by the establishment of the Osaka Prefectural Government’s ordinance concerning the spe- cial treatment for the standard of enterprise taxes to the banking industry. the number of personnel was reduced. It was also due to a ¥0.6 billion reduction in non-personnel expenses, with merger-related costs fully absorbed through the integration and effective opera- tion of domestic and overseas branches, and administration bases. Banking Profit As a result of the above, fiscal 2000 banking profit (excluding transfer to general reserve for possible loan losses) increased ¥58.3 billion from fiscal 1999, to ¥447.7 billion. With the ¥132.6 billion reversal of the general reserve for possible loan losses, banking profit, including transfer to general reserve for possible loan losses, increased ¥229.7 billion, to ¥580.3 billion. 2001 ¥)772.8 772.0 642.0 81.4 74.6 (25.3) 583.0 189.9 ¥(132.6) — 325.1 138.4 169.6 17.2 ¥)580.3 447.7 Billions of yen 2000 ¥722.6 726.5 604.7 69.3 33.3 15.3 565.2 157.4 ¥038.9 3.3 329.8 142.0 170.2 17.6 ¥350.6 389.4 Increase/ decrease ¥)050.2 45.5 37.3 12.1 41.3 (40.6) 17.8 32.5 ¥(171.5) (3.3) (4.7) (3.6) (0.6) (0.4) ¥)229.7 58.3 446.8 393.4 53.4 63 Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) Non-recurring Gains (Losses) (Including Disposal of Problem Assets) Non-recurring losses amounted to ¥220.6 billion. This was mainly due to ¥317.1 billion disposal of problem assets (total credit cost, including transfer to general reserve for possible loan losses, was ¥261.1 billion), accompanying ¥51.5 billion gains on sale of stocks. (For the disposal and the disclosed amount of problem assets, see Asset Quality on page 10.) Extraordinary Gains (Losses) Extraordinary losses reached ¥51.7 billion. This primarily reflected a loss of ¥16.1 billion on disposition of premises and equipment, because of factors such as losses on the sale of idle real estate as part of restructuring, and the cost of disposing of branches as a result of integration. Another important factor was the appropriation of ¥36.4 billion for amortization of net transition obligation from initial application of the new accounting standard for employee retirement benefits from the fiscal year. Operating Profit and Net Income As a result of the above, operating profit increased ¥30.8 billion from the previous fiscal year, to ¥190.7 billion. Net income, the amount after adjusting operating profit for extraordinary gains (losses) and income taxes, increased ¥25.1 billion from the previous fiscal year, to ¥82.2 billion. Due to the establishment of the Osaka Prefectural Government’s ordinance concerning the special treatment for the standard of enterprise taxes to the banking industry in June 2000, the impact of a ¥5.6 billion decrease in deferred tax assets caused an increase in deferred income taxes and a decrease in net income by the same amount. Operating Profit and Net Income Years ended March 31 Banking profit (excluding transfer to general reserve for possible loan losses) Transfer to general reserve for possible loan losses Banking profit (including transfer to general reserve for possible loan losses) Non-recurring gains (losses) Total credit cost Write-off of loans Transfer to specific reserve Transfer to reserve for losses on loans sold Losses on loans sold to CCPC Losses on sale of delinquent loans Losses on financial support for associated companies Transfer to loan loss reserve for specific overseas countries Gains (losses) on stocks Gains on sale of stocks Losses on sale of stocks Losses on devaluation of stocks Operating profit Extraordinary gains (losses) Gains (losses) on disposition of premises and equipment Amortization of net transition obligation from initial application of the new accounting standard for employee retirement benefits Income taxes, current Income taxes, deferred Effect of introduction of enterprise taxes to banking industries by Tokyo Metropolitan Government Effect of introduction of enterprise taxes to banking industries by Osaka Prefectural Government Net income Note: Total credit cost includes transfer to general reserve for possible loan losses. 64 Billions of yen 2000 ¥313.5 (14.6) ¥328.1 (168.2) 449.9 130.5 194.7 55.5 37.1 14.2 35.2 (2.6) 341.8 406.3 29.9 34.6 ¥159.9 (5.9) (6.1) — 4.0 93.0 35.8 — 57.1 2001 ¥355.4 (56.0) ¥411.4 (220.6) 261.1 240.5 9.8 33.9 20.4 8.5 — 4.0 51.5 160.7 28.9 80.3 ¥190.7 (51.7) (16.1) 36.4 1.8 55.1 — 5.6 82.2 Increase/ decrease ¥(041.9 (41.4) ¥(083.3 (52.4) (188.8) 110.0 (184.9) (21.6) (16.7) (5.7) (35.2) 6.6 (290.3) (245.6) (1.0) 45.7 ¥(030.8 (45.8) (10.0) 36.4 (2.2) (37.9) (35.8) 5.6 25.1 Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) Non-recurring Gains (Losses) (Including Disposal of Problem Assets) Non-recurring losses amounted to ¥411.9 billion. This was mainly due to ¥690.6 billion disposal of problem assets (total credit cost, including transfer to general reserve for possible loan losses was, ¥558.0 billion), accompanying ¥259.9 billion gains on sale of stocks. (For the disposal and the disclosed amount of problem assets, see Asset Quality on page 10.) Extraordinary Gains (Losses) Extraordinary losses amounted to ¥34.4 billion. This primarily reflected a loss of ¥14.5 billion on disposition of premises and equipment, such as the sale of company housing and other properties and the disposal of branches as part of restructuring. Another important factor was the appropriation of ¥20.2 billion for amortization of net transition obligation from initial Operating Profit and Net Income application of the new accounting standard for employee retirement benefits from the fiscal year. Operating Profit and Net Income As a result of the above, operating profit decreased ¥8.1 billion from the previous fiscal year, to ¥168.4 billion. Net income, the amount after adjusting operating profit for extraordinary gains (losses) and income taxes, increased ¥6.9 billion, to ¥55.7 billion. Due to the establishment of the Osaka Prefectural Government’s ordinance concerning the special treatment for the standard of enterprise taxes to the banking industry in June 2000, the impact of a ¥26.4 billion decrease in deferred tax assets caused an increase in deferred income taxes and a decrease in net income by the same amount. Years ended March 31 Banking profit (excluding transfer to general reserve for possible loan losses) Transfer to general reserve for possible loan losses Banking profit (including transfer to general reserve for possible loan losses) Non-recurring gains (losses) Total credit cost Write-off of loans Transfer to specific reserve Transfer to reserve for losses on loans sold Losses on loans sold to CCPC Losses on sale of delinquent loans Transfer to loan loss reserve for specific overseas countries Gains (losses) on stocks Gains on sale of stocks Losses on sale of stocks Losses on devaluation of stocks Operating profit Extraordinary gains (losses) Gains (losses) on disposition of premises and equipment Amortization of net transition obligation from initial application of the new accounting standard for employee retirement benefits Income taxes, current Income taxes, deferred Effect of introduction of enterprise taxes to banking industries by Tokyo Metropolitan Government Effect of introduction of enterprise taxes to banking industries by Osaka Prefectural Government Net income Note: Total credit cost includes transfer to general reserve for possible loan losses. Billions of yen 2000 ¥389.4 38.9 ¥350.6 (174.1) 680.7 347.4 253.1 17.3 7.7 19.6 (3.1) 486.7 551.2 35.2 29.4 ¥176.5 (28.0) (6.9) — 6.6 93.0 34.3 — 48.8 2001 ¥447.7 (132.6) ¥580.3 (411.9) 558.0 500.9 146.7 19.1 11.4 16.6 (4.0) 259.9 335.5 37.8 37.8 ¥168.4 (34.4) (14.5) 20.2 7.8 70.6 — 26.4 55.7 Increase/ decrease ¥0)58.3 (171.5) ¥)229.7 (237.8) (122.7) 153.5 (106.4) 1.8 3.7 (3.0) (0.9) (226.8) (215.7) 2.6 8.4 ¥00(8.1) (6.4) (7.6) 20.2 1.2 (22.4) (34.3) 26.4 6.9 65 Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) 3. Assets, Liabilities and Stockholders’ Equity Assets Notwithstanding efforts to increase prime assets, including loans to individuals and small and medium-sized corporations, such factors as a slowdown in demand for funds by large and medium-sized enterprises and the negative effect of the disposal of problem assets led loans and bills discounted to decrease ¥1,364.5 billion from the end of the previous fiscal year, to ¥30,575.5 billion. Meanwhile, securities increased ¥3,288.1 billion, to ¥10,199.7 billion, mainly because of a purchase of bonds for additional contri- bution of collateral with the introduction of RTGS (real-time gross settlement). Assets, Liabilities and Stockholders’ Equity Liabilities Deposits decreased ¥931.5 billion from the end of the previous fiscal year, to ¥28,872.2 billion, while negotiable certificates of deposit increased ¥1,122.9 billion, to ¥4,661.8 billion under the cir- cumstances where corporations turned sensitive to interest rates. Stockholders’ Equity Stockholders’ equity increased ¥28.9 billion from the end of the previous fiscal year, to ¥2,281.2 billion. The total number of shares issued at the end of the fiscal year consisted of 4,118 million shares of common stock and 802 million shares of preferred stock. Stockholders’ equity (excluding preferred stock and accom- panying capital surplus) per share increased ¥7.05, to ¥358.43. March 31 Assets Loans and bills discounted Securities Liabilities Deposits Negotiable certificates of deposit Stockholders’ equity Billions of yen 2001 2000 ¥48,461.8 30,575.5 10,199.7 46,180.6 28,872.2 4,661.8 2,281.2 ¥46,559.5 31,940.0 6,911.6 44,307.2 29,803.7 3,538.9 2,252.3 Increase/ decrease ¥(1,902.3 (1,364.5) 3,288.1 1,873.4 (931.5) 1,122.9 28.9 4. Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) Unrealized gains (losses) on the valuation of securities at the end of fiscal 2000 came to a net loss of ¥342.4 billion, a drop of about one trillion yen from the end of the previous fiscal year, reflecting the large decline in stock prices. For the calculation of stocks in ‘other securities,’ the average market price in the one month before the end of the fiscal year is used, but if calculated using fiscal year-end prices, net unrealized losses on valuation would be ¥247.5 billion. However, since all of gross unrealized losses on the valuation of ‘other securities’ held by the former Sakura Bank at the time of the merger were disposed of and only the net unrealized gains were transferred to the new bank, the new bank recorded a net gain on valuation of approximately ¥200 billion at April 1, 2001. (For details, see 1. Adjustments for Merger Accounting [SMBC’s Unrealized Gains (Losses) (Nonconsolidated)] on page 68.) Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) March 31 Held-to-maturity securities Stocks of subsidiaries and affiliates Other securities Stocks Bonds Others Total Stocks Bonds Others 2001 Billions of yen Net unrealized gains (losses) (a) ¥00— 4.2 (346.6) (355.7) 21.4 (12.3) (342.4) (351.5) 21.4 (12.3) (a) – (b) ./ ./ ./ ./ ./ ./ ¥(1,005.2) (1,034.4) 49.3 (20.0) Unrealized gains ¥00— 5.8 157.8 130.3 24.0 3.5 163.6 136.0 24.0 3.5 Unrealized losses ¥00— (1.5) (504.4) (486.0) (2.6) (15.8) (506.0) (487.5) (2.6) (15.8) Net unrealized gains (losses) (b) ./ ./ ./ ./ ./ ./ ¥662.8 682.9 (27.9) 7.7 2000 Unrealized gains ./ ./ ./ ./ ./ ./ ¥1,103.9 1,075.6 7.3 21.0 Unrealized losses ./ ./ ./ ./ ./ ./ ¥(441.1) (392.7) (35.1) (13.3) 5. Dividend Policy With respect to the interest of shareholders, the Bank subscribes to a fundamental policy of issuing appropriate dividends, with the specific view of enriching capital and preserving sound manage- ment. As for year-end dividends, the Bank issued dividends per common share at ¥6.00 (including ¥3.00 of delivered money due 66 to the merger) and dividends per preferred share for series II at ¥15.00 (including ¥7.50 of delivered money due to the merger), and at ¥13.70 (including ¥6.85 of delivered money due to the merger) for series III (Type 2), the same as the previous term. Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) 3. Assets, Liabilities and Stockholders’ Equity Assets Loans and bills discounted decreased ¥186.2 billion from the end of the previous fiscal year, to ¥31,172.3 billion, under the circum- stances where large corporations in domestic and overseas mar- kets continuously reduce interest-bearing liabilities. Meanwhile, securities increased ¥7,878.1 billion, to ¥16,860.3 billion, mainly because of a purchase of bonds for additional contribution of collat- eral with the introduction of RTGS (real-time gross settlement) and an effect of a change in accounting of repurchase agreement transactions associated with the application of a new accounting standard for financial instruments. Assets, Liabilities and Stockholders’ Equity March 31 Assets Loans and bills discounted Securities Liabilities Deposits Negotiable certificates of deposit Stockholders’ equity Liabilities Deposits increased ¥2,780.8 billion, from the end of the previous fiscal year, to ¥30,169.0 billion. This result reflected the string of monetary easing measures taken by the Bank of Japan since the beginning of the year, making funds of individuals and corporations flow in liquid deposits. Stockholders’ Equity Stockholders’ equity increased ¥38.1 billion from the end of the previous fiscal year, to ¥1,918.7 billion. The total number of shares issued at the end of fiscal 2000 comprised 3,141 million shares of common stock and 167 million shares of preferred stock. Stock- holders’ equity (excluding preferred stock and accompanying capital surplus) per share increased ¥12.12 to ¥451.35. Billions of yen 2001 2000 ¥65,265.6 31,172.3 16,860.3 63,346.9 30,169.0 7,026.6 1,918.7 ¥51,089.3 31,358.5 8,982.2 49,208.7 27,388.2 6,841.6 1,880.6 Increase/ decrease ¥14,176.3 (186.2) 7,878.1 14,138.2 2,780.8 185.0 38.1 4. Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) Unrealized gains (losses) on the valuation of securities at the end of fiscal 2000 came to a slight net loss of ¥89.6 billion, because net unrealized gains (losses) on valuation of stocks significantly dropped by about one trillion yen from the end of the previous fiscal year, reflecting the large decline in stock prices, while being offset by net unrealized gains on valuation of bonds. For the calculation of stocks in ‘other securities,’ the average market price in the one month before the end of the fiscal year is used, but if calculated using fiscal year-end prices, net unrealized losses on valuation of securities would be limited to ¥10.6 billion. How- ever, since all of gross unrealized losses on ‘other securities’ (including ‘other money held in trust’) held by the former Sakura Bank at the time of the merger were disposed of and only the net unrealized gains were transferred to the new bank, the new bank shows a net gain on valuation of approximately ¥200 billion as of April 1, 2001. (For details, see 1. Adjustments for Merger Accounting [SMBC’s Unrealized Gains (Losses) (Nonconsolidated)] on page 68.) Unrealized Gains (Losses) on Securities (Before Adjustments for the Merger Accounting) March 31 Held-to-maturity securities Stocks of subsidiaries and affiliates Other securities Stocks Bonds Others Total Stocks Bonds Others Net unrealized gains (losses) (a) ¥00(0.1) (6.3) (83.2) (162.3) 80.9 (1.9) (89.6) (168.6) 80.9 (1.9) 2001 (a) – (b) ./ ./ ./ ./ ./ ./ ¥0,(991.0) (1,073.1) 81.5 0.6 Unrealized gains ¥000.0 0.5 244.6 154.7 83.5 6.4 245.1 155.2 83.5 6.4 Billions of yen Net unrealized gains (losses) (b) ./ ./ ./ ./ ./ ./ ¥901.4 904.5 (0.6) (2.5) 2000 Unrealized gains ./ ./ ./ ./ ./ ./ ¥1,259.3 1,221.9 33.7 3.6 Unrealized losses ¥00(0.1) (6.8) (327.8) (317.1) (2.6) (8.2) (334.7) (323.9) (2.6) (8.3) Unrealized losses ./ ./ ./ ./ ./ ./ ¥(357.9) (317.5) (34.3) (6.2) 5. Dividend Policy With respect to the interest of shareholders, the Bank subscribes to a fundamental policy of issuing appropriate dividends with the specific view of enriching capital and preserving sound management. In view of enriching capital by appropriate retained earnings, at fiscal year-end, the Bank issued dividends per common share at ¥6.00, and dividends per preferred share for First series Type I at ¥10.50 and at ¥28.50 for Second series Type I, the same as the previous term. 67 Total Combined Figures of the Former Sakura Bank and Sumitomo Bank Sumitomo Mitsui Banking Corporation 1. Adjustments for Merger Accounting Prior to the succession of Sakura’s assets, liabilities and capital accompanying the April 1 merger, the Bank applied certain accounting to strengthen the financial base of the bank. First, the unrealized losses on Sakura’s securities classified as ‘other securities’ (including ‘other money held in trust’) were revaluated at fair value and transferred to SMBC. The same treatment was applied to land, which had been revaluated at fair value before. Also, Sakura’s net transition obligation on employee retirement benefits was fully provisioned prior to the merger. Since this accounting treatment increased deferred tax assets, the result was that ¥427.0 billion was deducted from the stockholders’ equity of the former Sakura Bank before its transfer to SMBC The financial positions of the new bank, SMBC, on the date of the merger were as follows. SMBC’s Assets, Liabilities and Stockholders’ Equity (Nonconsolidated) Assets Securities Premises and equipment Deferred tax assets Liabilities Reserve for employee retirement benefit Stockholders’ equity Capital stock Capital surplus Earned surplus reserve Land revaluation excess Retained earnings Former Sakura Bank Adjustments for March 31, 2001 merger accounting ¥48,461.8 10,199.7 286.4 524.1 46,180.6 14.1 2,281.2 1,042.7 899.5 131.3 42.7 165.0 ¥(216.8) (456.3) (29.2) 268.7 210.2 210.2 (427.0) (518.8) 91.8 — — — Billions of yen Amounts to be succeeded (A) ¥48,245.0 9,743.4 257.2 792.8 46,390.8 224.3 1,854.2 523.9 991.3 131.3 42.7 165.0 Former Sumitomo Bank (B) SMBC (A) + (B) March 31, 2001 April 1, 2001 ¥65,265.7 16,860.3 585.4 550.5 63,347.0 (59.4) 1,918.7 752.8 643.1 107.9 166.9 248.0 ¥113,451.3 26,603.7 842.6 1,343.3 109,678.4 164.9 3,772.9 1,276.7 1,634.4 239.2 209.6 413.0 SMBC’s Unrealized Gains (Losses) (Nonconsolidated) Former Sakura Bank March 31, 2001 Unrealized gains (losses) Gains Losses Billions of yen Former Sumitomo Bank March 31, 2001 SMBC April 1, 2001 Unrealized Unrealized gains (losses) Gains Losses gains (losses) Gains Losses 6.2 ¥00(0.1) ¥000.0 ¥00(0.1) ¥00(0.1) ¥000.0 ¥00(0.1) (8.3) 505.2 (304.8) 387.8 (294.0) (2.6) 107.5 (8.2) 9.9 511.4 (313.2) (4.4) ./ (2.1) 200.4 93.8 104.9 1.7 198.2 (3.6) (71.4) (6.8) (304.8) (294.0) (2.6) (8.2) (311.7) (4.4) ./ 0.5 300.6 210.7 83.5 6.4 301.1 0.3 ./ (6.3) (4.2) (83.3) 80.9 (1.8) (10.6) (4.1) (71.4) 0.8 ./ Disposal of unrealized losses ./ ./ ¥(456.3) (437.8) (2.6) (15.9) (456.3) (0.0) (29.2) ¥000— ¥000— ¥(000— (1.5) (456.3) (437.8) (2.6) (15.9) (457.8) (0.0) ./ 4.2 (251.7) (260.7) 21.4 (12.4) (247.5) 0.5 (29.2) 5.7 204.6 177.1 24.0 3.5 210.3 0.5 ./ (210.2) (145.4) (64.8) ./ ./ ./ ./ ./ ./ (210.2) (130.2) (145.4) (64.8) (80.7) (49.5) ./ ./ ./ ./ ./ ./ (130.2) (80.7) (49.5) ./ ./ ./ ./ ./ ./ Held-to-maturity securities Stocks of subsidiaries and affiliates Other securities Stocks Bonds Other Total Money held in trust Land Unrecognized net obligation on employee retirement benefit Net obligation from change of accounting standard Actuarial differences SMBC’s Consolidated Capital Ratio (BIS Guidelines) 10.8% 68 Sumitomo Mitsui Banking Corporation 2. Financial Results and Problem Assets (Combined) Consolidated Number of Consolidated Subsidiaries and Affiliates Accounted for by the Equity Method March 31 Consolidated subsidiaries Subsidiaries and affiliates accounted for by the equity method 2001 149 41 2000 126 70 Income Summary Years ended March 31 Consolidated gross profit Net interest income Net fees and commissions Net trading income Net other operating income General and administrative expenses Total credit cost Write-off of loans Transfer to specific reserve Transfer to general reserve for possible loan losses Other Gains (losses) on stocks Net income (loss) from unconsolidated entities by the equity method Other income (expenses) Operating profit Extraordinary gains (losses) Income before income taxes and minority interests Income taxes, current Income taxes, deferred Minority interests in net income Net Income 2001 ¥1,837.9 1,323.5 316.3 109.0 89.0 ¥0,940.9 992.9 814.4 258.5 (209.5) 129.5 ¥0,468.5 44.4 77.7 ¥0,494.6 (89.1) 405.5 65.5 198.2 (9.3) 132.4 Billions of yen 2000 ¥1,746.7 1,307.1 265.7 63.4 110.6 ¥0,953.6 1,260.2 585.5 457.5 17.5 199.6 ¥0,858.5 (37.0) 19.3 ¥0,373.8 (31.1) 342.6 58.6 170.6 11.1 124.5 Increase/ decrease 23 (29) Increase/ decrease ¥(091.2 16.4 50.6 45.6 (21.6) ¥0(12.7) (267.3) 228.9 (199.0) (227.0) (70.1) ¥(390.0) 81.4 58.4 ¥)120.8 (58.0) 62.9 6.9 27.6 (20.4) 7.9 Note: Consolidated gross profit = (Interest income – Interest expenses) + (Fees and commissions (income) – Fees and commissions (expenses)) + (Trading profits – Trading losses) + (Other operating income – Other operating expenses) Assets, Liabilities and Stockholders’ Equity March 31 Assets Loans and bills discounted Securities Liabilities Deposits (excluding negotiable certificates of deposit) Minority interests Stockholders’ equity Note: For figures after adjustments for the merger accounting, see page 68. Billions of yen 2001 2000 ¥119,242.7 65,537.1 27,312.5 114,239.1 63,049.1 990.6 4,013.0 ¥102,263.1 65,274.1 15,897.6 97,351.6 58,588.0 898.6 4,012.9 Increase/ decrease ¥16,979.6 263.0 11,414.9 16,887.5 4,461.1 92.0 0.1 Problem Assets, Risk-Monitored Loans and Reserve for Possible Loan Losses March 31 Total of problem assets (based on Financial Reconstruction Law) Bankrupt and quasi-bankrupt assets (Hatan kousei tou saiken) Doubtful assets (Kiken saiken) Substandard assets (Youkanri saiken) Risk-monitored loans Reserve for possible loan losses General reserve Specific reserve Loan loss reserve for specific overseas countries 2001 ¥3,355.0 777.3 2,166.4 411.2 ¥3,256.4 ¥1,268.9 395.9 853.0 20.0 Billions of yen 2000 ¥0,000./ ./ ./ ./ ¥3,864.8 ¥1,632.7 592.7 1,019.2 20.8 Increase/ decrease ¥0,00./ ./ ./ ./ ¥(608.4) ¥(363.8) (196.8) (166.2) (0.8) 69 Sumitomo Mitsui Banking Corporation Nonconsolidated Operating Profit and Net Income Years ended March 31 Banking profit (excluding transfer to general reserve for possible loan losses) Transfer to general reserve for possible loan losses Banking profit (including transfer to general reserve for possible loan losses) Non-recurring gains (losses) Total credit cost Write-off of loans Transfer to specific reserve Transfer to reserve for losses on loans sold Losses on loans sold to CCPC Losses on sale of delinquent loans Losses on financial support for associated companies Transfer to loan loss reserve for specific overseas countries Gains (Losses) on stocks Gains on sale of stocks Losses on sale of stocks Losses on devaluation of stocks Operating profit Extraordinary gains (losses) Gains (Losses) on disposition of premises and equipment Amortization of net transition obligation from initial application of the new accounting standard for employee retirement benefits Income taxes, current Income taxes, deferred Effect of introduction of enterprise taxes to banking industries by Tokyo Metropolitan Government Effect of introduction of enterprise taxes to banking industries by Osaka Prefectural Government Net income Note: Total credit cost includes transfer to general reserve for possible loan losses. Assets, Liabilities and Stockholders’ Equity Billions of yen 2000 ¥0,702.9 24.2 ¥0,678.7 (342.3) 1,130.6 477.8 447.8 72.8 44.8 33.8 35.2 (5.8) 828.4 957.5 65.1 64.0 ¥0,336.4 (33.8) (13.1) — 10.6 186.0 70.1 — 105.9 2001 ¥803.1 (188.6) ¥991.7 (632.5) 819.1 741.4 156.5 52.9 31.7 25.1 — 0 311.4 496.2 66.8 118.1 ¥359.2 (86.1) (30.5) 56.5 9.5 125.7 — 32.0 137.8 Increase/ decrease ¥)100.2 (212.8) ¥)313.0 (290.2) (311.5) 263.6 (291.3) (19.9) (13.1) (8.7) (35.2) 5.8 (517.0) (461.3) 1.7 54.1 ¥)022.8 (52.3) (17.4) 56.5 (1.1) (60.3) (70.1) 32.0 31.9 March 31 Assets Loans and bills discounted Securities Liabilities Deposits Negotiable certificates of deposit Stockholders’ equity Billions of yen 2001 2000 ¥113,727.5 61,747.9 27,060.0 109,527.6 59,041.3 11,688.5 4,199.9 ¥97,648.8 63,298.5 15,893.8 93,515.9 57,191.9 10,380.6 4,132.9 Increase/ decrease ¥16,078.7 (1,550.6) 11,166.2 16,011.7 1,849.4 1,307.9 67.0 Note: For figures after adjustments for the merger accounting, see page 68. Problem Assets, Risk-Monitored Loans and Reserve for Possible Loan Losses March 31 Total of problem assets (based on Financial Reconstruction Law) Bankrupt and quasi-bankrupt assets (Hatan kousei tou saiken) Doubtful assets (Kiken saiken) Substandard assets (Youkanri saiken) Risk-monitored loans Reserve for possible loan losses General reserve Specific reserve Loan loss reserve for specific overseas countries 70 2001 ¥2,822.5 589.9 1,943.1 289.4 ¥2,732.6 ¥1,095.8 367.8 708.1 20.0 Billions of yen 2000 ¥3,640.5 585.5 2,232.0 823.0 ¥3,556.5 ¥1,569.5 556.4 993.1 20.0 Increase/ decrease ¥(818.0) 4.4 (288.9) (533.6) ¥(823.9) ¥(473.7) (188.6) (285.0) (0.0) Consolidated Balance Sheets Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited and Subsidiaries) March 31, 2001 and 2000 Assets Cash and due from banks (Note 9, 34) Call loans and bills bought Commercial paper and other debt purchased (Note 34) Trading assets (Notes 2, 9, 34, 35) Money held in trust (Note 34) Securities (Notes 3, 9, 34) Loans and bills discounted (Notes 4, 9, 33) Foreign exchanges (Note 5) Other assets (Notes 6, 9) Premises and equipment (Notes 7, 9) Deferred tax assets (Note 30) Customers’ liabilities for acceptances and guarantees (Note 18) Reserve for possible loan losses (Note 8) Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 2001 ¥ 2,896,268 ¥ 2,168,836 182,712 42,256 1,425,028 72,581 6,928,746 32,333,211 316,395 2,747,979 855,726 611,694 1,492,628 (682,188) 368,425 90,519 577,578 22,208 10,466,528 32,906,703 268,669 1,359,442 883,059 558,234 1,964,073 (512,023) $ 23,375 2,973 730 4,661 179 84,475 265,590 2,168 10,972 7,127 4,505 15,852 (4,132) Total assets ¥51,849,687 ¥48,495,608 $418,480 Liabilities, minority interests and stockholders’ equity Liabilities Deposits (Notes 9, 10) Call money and bills sold (Notes 9, 11) Commercial paper Trading liabilities (Notes 12, 35) Borrowed money (Notes 9, 13) Foreign exchanges (Note 5) Bonds (Note 14) Convertible bonds (Note 15) Other liabilities (Notes 9, 16) Reserve for employee retirement benefit (Note 31) Reserve for possible losses on loans sold Other reserves (Note 17) Deferred tax liabilities (Note 30) Deferred tax liabilities for land revaluation Acceptances and guarantees (Note 18) Total liabilities Minority interests Stockholders’ equity Capital stock (Note 19) Common stock Preferred stock: Series II Series III (Type-2) Capital surplus (Note 19) Land revaluation excess Retained earnings (Note 20) Foreign currency translation adjustments Treasury stock Parent bank stock held by subsidiaries Total stockholders’ equity ¥36,625,010 ¥33,738,616 2,579,499 467,268 360,706 1,508,783 29,346 1,053,354 95 4,553,878 41,366 95,992 513 271 45,494 1,492,628 4,608,193 1,141,697 201,407 1,138,305 37,094 1,133,368 — 2,296,793 31,716 70,627 643 369 40,654 1,964,073 ¥49,289,955 ¥45,967,816 ¥00,383,922 ¥00,319,237 $295,601 37,192 9,214 1,625 9,187 299 9,147 — 18,537 255 570 5 2 328 15,852 $397,820 $003,098 ¥00,640,129 ¥00,639,934 $005,166 2,577 400,000 899,521 63,056 196,060 (20,939) (42) (4,552) 2,772 400,000 899,521 69,333 198,161 — (10) (1,157) ¥02,175,809 ¥02,208,554 20 3,228 7,260 508 1,582 (169) (0) (36) $017,561 $418,480 71 Total liabilities, minority interests and stockholders’ equity ¥51,849,687 ¥48,495,608 See accompanying notes to consolidated financial statements. Consolidated Statements of Income Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited and Subsidiaries) Years ended March 31, 2001 and 2000 Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 2001 ¥ 800,818 134,621 172,389 209,261 26,807 97,621 332,094 — ¥ 767,063 117,759 514,118 186,213 17,484 99,261 455,196 3 ¥1,773,614 ¥2,157,102 ¥0,246,224 103,636 87,979 61,863 — 55,471 490,621 16,870 578,896 2 ¥0,170,171 84,923 490,455 66,414 994 67,883 487,472 224,003 438,643 0 ¥1,641,567 ¥2,030,963 ¥0,132,046 ¥0,126,139 8,091 69,900 5,115 7,831 74,247 (18,521) $06,463 1,086 1,391 1,688 216 787 2,680 — $14,314 $01,987 836 710 499 — 447 3,959 136 4,672 0 $13,249 $01,065 65 564 41 ¥ 48,939 ¥ 062,581 $ 394 Yen U.S. dollars ¥9.22 9.21 ¥12.58 — $0.07. 0.07. Income Interest income: Interest on loans and discounts Interest and dividends on securities Other interest income (Note 21) Fees and commissions Trading profits Other operating income (Note 22) Other income (Note 23) Transfer from other reserves (Note 24) Total income Expenses Interest expenses: Interest on deposits Interest on borrowings, bonds and rediscounts Other interest expenses (Note 25) Fees and commissions Trading losses Other operating expenses (Note 26) General and administrative expenses (Note 27) Transfer to reserve for possible loan losses Other expenses (Note 28) Transfer to other reserves (Note 29) Total expenses Income before income taxes and minority interests Income taxes (Note 30): Current Deferred Minority interests in net income (loss) Net income Per share of common stock: Net income Net income—diluted See accompanying notes to consolidated financial statements. 72 Consolidated Statements of Retained Earnings Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited and Subsidiaries) Years ended March 31, 2001 and 2000 Balance at beginning of year (Note 20) Increase: Transfer from land revaluation excess Increase of retained earnings due to exclusion in affiliates under the equity method Decrease: Dividends paid Delivered money due to merger Decrease of retained earnings due to consolidation of additional subsidiaries Decrease of retained earnings due to the merger of consolidated subsidiaries Net income Balance at end of year (Note 20) See accompanying notes to consolidated financial statements. Millions of yen 2001 2000 ¥198,161 ¥164,329 Millions of U.S. dollars (Note 1) 2001 $1,599 6,759 2,115 938 — 35,705 17,853 30,182 — — 682 5,177 48,939 — 62,581 54 7 288 144 — 41 394 ¥196,060 ¥198,161 $1,582 73 Consolidated Statements of Cash Flows Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited and Subsidiaries) Years ended March 31, 2001 and 2000 Cash flows from operating activities Income before income taxes and minority interests Depreciation of premises and equipment Amortization of goodwill Net (income) loss from nonconsolidated entities accounted for by the equity method Net change in reserve for possible loan losses Net change in reserve for possible losses on loans sold Net change in reserve for employee retirement benefit Interest income Interest expenses Net gains on securities Net (income) loss from money held in trust Net exchange (gains) losses Net losses from disposition of premises and equipment Net change in trading assets Net change in trading liabilities Net change in payable on trading contracts Net change in loans and bills discounted Net change in deposits Net change in borrowed money (excluding subordinated debt) Net change in deposits with banks (except for demand deposits with the Bank of Japan) Net change in call loans and bills bought Net change in pledged money for securities borrowing transactions Net change in call money and bills sold Net change in commercial paper Net change in pledged money for securities lending transactions Net change in foreign exchanges (Assets) Net change in foreign exchanges (Liabilities) Net change in bonds (excluding subordinated bonds) Interest received Interest paid Other, net Subtotal Income taxes paid Net cash provided by operating activities Cash flows from investing activities Purchases of securities Proceeds from sale of securities Proceeds from maturity of securities Purchases of money held in trust Proceeds from sale of money held in trust Purchases of premises and equipment Proceeds from sale of premises and equipment Purchases of subsidiaries stocks Net cash used in investing activities Cash flows from financing activities Proceeds from issuance of subordinated debt Repayment of subordinated debt Proceeds from issuance of subordinated bonds Repayment of subordinated bonds, convertible bonds and notes Dividends paid Proceeds from issuance of subsidiaries’ stocks paid by minority stockholders Dividends paid to minority stockholders Purchases of treasury stock Proceeds from sale of treasury stock Net cash used in financing activities Effects of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Change in cash and cash equivalents due to the inclusion of subsidiaries in consolidation Change in cash and cash equivalents due to the exclusion of subsidiaries from consolidation Cash and cash equivalents at end of year See accompanying notes to consolidated financial statements. 74 Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 2001 ¥ 132,046 35,123 7,077 (7,883) (231,386) (27,006) (15,319) (1,107,828) 437,840 (82,439) (536) (48,638) 18,810 873,036 (189,217) (588,359) 1,390,760 417,630 (409,051) (902,846) (211,068) 680,428 2,019,431 675,474 (797,435) 61,228 7,474 200,967 1,149,235 (439,998) 181,585 ¥)03,229,136 (10,663) ¥)03,218,472 ¥(16,532,695) 9,537,615 3,944,752 (9,171) 60,289 (118,836) 60,584 (2,684) ¥0(3,060,146) ¥(00,112,283 (319,774) 149,500 (332,631) (35,705) 14,000 (7,474) (808) 586 ¥00,(420,024) 830 ¥00,(260,867) ¥(01,408,146 ¥(0,126,139 35,029 5,330 1,487 11,419 (19,539) (3,614) (1,398,941) 745,550 (346,591) 625 145,561 12,209 (542) (194) 408,834 503,351 415,842 (214,107) (247,833) (162,311) (335,705) 253,678 (99,731) (34,993) (7,101) 6,994 155,486 1,625,911 (1,005,204) 325,421 ¥(0,902,462 (13,719) ¥(0,888,743 ¥(7,671,286) 5,672,199 1,535,603 (31,319) 113,981 (54,707) 67,918 — ¥0,(367,609) ¥(00000,0—. (15,000) 136,088 (103,257) (30,182) — (9,767) (25) 18 ¥00,(22,124) 3,614 ¥(0,502,623 ¥0(,905,496 $ 1,065 283 57 (63) (1,867) (217) (123) (8,941) 3,533 (665) (4) (392) 151 7,046 (1,527) (4,748) 11,224 3,370 (3,301) (7,286) (1,703) 5,491 16,298 5,451 (6,436) 494 60 1,622 9,275 (3,551) 1,465 $(026,062 (86) $(025,976 $(133,435) 76,978 31,838 (74) 486 (959) 488 (21) $0(24,698) $(000,906 (2,580) 1,206 (2,684) (288) 112 (60) (6) 4 $00(3,390) 6 $00(2,105) $(011,365 90 83 0 — ¥(01,147,369 (57) ¥)1,408,146 — $0(09,260 Notes to Consolidated Financial Statements Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited and Subsidiaries) Years ended March 31, 2001 and 2000 Years ended March 31, 1999 and 1998 1. Basis of Consolidated Financial Statements and Summary of Significant Accounting Policies significant influence over operations are to be accounted for by the equity method. (1) Basis of consolidated financial statements Sumitomo Mitsui Banking Corporation (formerly The Sakura Bank, Limited) (the “Bank”), a Japanese corporation, maintains its record and prepares its financial statements in Japanese yen. The accompanying consolidated financial statements have been prepared on the basis of accounting principles and practices generally accepted in Japan and in conformity with the “Regulation for consolidated financial statements,” which may differ to some degree from accounting principles and practices generally accepted in countries and jurisdictions other than Japan, and are compiled from the consolidated financial statements as required by the Securities and Exchange Law of Japan. Certain reclassifications and rearrangements have been made to present the accompanying consolidated financial statements in a form which is familiar to readers outside Japan. In addition, the accompanying notes include information which is not required under accounting principles and practices generally accepted in Japan, but is presented herein as additional information. References to fiscal 2000 and fiscal 1999 are to the Bank’s fiscal years ended March 31, 2001 and 2000, respectively. As permitted by the Securities and Exchange Law of Japan, amounts less than one million yen have been omitted. As a result, the totals in Japanese yen shown in the financial statements do not necessarily agree with the sum of the individual amounts. The U.S. dollar amounts shown in the accompanying consoli- dated financial statements and notes thereto represent the arith- metical results of translating original Japanese yen amounts of respective account balances to U.S. dollars on a basis of ¥123.90 to US$1, the exchange rate prevailing as of March 31, 2001. The inclusion of such U.S. dollar amounts is solely for convenience and not intended to imply that yen amounts have been or could have been converted, realized or settled in U.S. dollars at that or at any other rate. (2) Principles of consolidation The consolidated financial statements of the Bank include accounts of the Bank and its significant subsidiaries. Major consolidated subsidiaries for fiscal 2000 are listed below: Name Sakura Securities Co., Ltd. Manufacturers Bank Sakura Finance International Limited Sakura Finance Australia Limited Location Tokyo Los Angeles London Sydney Percentage Ownership 100% 100% 100% 100% Under the control and influence concept, those companies in which the Bank, directly or indirectly, is able to exercise control over operations are to be fully consolidated and those companies in which the Bank, directly or indirectly, is able to exercise The number of consolidated subsidiaries and affiliates as of March 31, 2001 and 2000, was as follows: Consolidated subsidiaries Subsidiaries and affiliates accounted for by the equity method 2001 65 12 2000 51 32 The net decrease in the number of consolidated subsidiaries and equity method subsidiaries and affiliates listed above is mainly due to stock sales or mergers whereby consolidation or equity method accounting for certain subsidiaries or affiliates was no longer required. The decrease was partially offset by the establishment of new subsidiaries, the purchase of additional stock or the injection of capital that required their consolidation or the equity method of accounting. All significant intercompany transactions, account balances and unrealized profits and losses have been eliminated in consolidation. The financial statements of consolidated subsidiaries, whose fiscal year-ends are principally December 31, are included in the consolidated financial statements on the basis of their respective fiscal years after making appropriate adjustments for significant transactions during the periods from their respective year-ends to the date of the consolidated financial statements. Any difference between the cost of an investment in a consoli- dated subsidiary and the Bank’s share of the underlying equity in the net assets fair value of the consolidated subsidiary is charged or credited to income, as the case may be, in the year incurred. (3) Translation of foreign currency financial statements (i) The financial statements of foreign consolidated subsidiaries and affiliates are translated into Japanese yen at exchange rates as of the balance sheet date, except for stockholders’ equity, which is translated at the historical exchange rate. In accordance with the revised accounting standard for foreign currency translation, the presentation of Foreign currency translation adjustments is changed from Assets to Stockholders’ equity and Minority interests. (a) Foreign currency denominated assets and liabilities and the accounts of overseas branches are translated into Japa- nese yen at the exchange rates prevailing at the balance sheet date, except that certain assets and liabilities are translated at the relevant historical exchange rates. (b) Foreign currency accounts held by consolidated foreign subsidiaries are translated into the currency of the subsidiary at the respective year-end exchange rates. (ii) (4) Valuation of trading account activities Trading account positions representing earnings or losses derived from trades made for the purpose of seeking to capture gains 75 arising from short-term changes in interest rates, currency exchange rates, or market prices of securities and other market- related indices or from gaps among markets are included in trading assets and trading liabilities on a trade date basis. Trading securities and monetary claims purchased for trading purposes recorded in these accounts are stated at market value and financial derivatives related to trading transactions are stated at the amounts that would be settled if they were terminated at the end of the fiscal year. Trading profits and trading losses include interest received and paid, the amount of increase/decrease in evaluation gains/losses on the balance sheet date for securities and monetary claims, and the amount of increase/decrease of evaluation gains/losses incurred from the estimated settlement price assuming settlement in cash on the balance sheet date for derivatives, compared with that at the end of the previous term. (5) Valuation of securities Prior to April 1, 2000, securities, including stocks, corporate bonds, and Japanese national and local government bonds, were stated at moving-average cost. Securities included in money held in trust were also recorded at moving-average cost. Effective April 1, 2000, as for securities other than those in trading portfolio, debt securities that the Bank and consolidated subsidiaries have the intent and ability to hold to maturity (held-to- maturity securities) are carried at amortized cost, using the moving-average method. Investments in nonconsolidated subsidiaries and affiliates that are not accounted for by the equity method are carried at cost, using the moving-average method. Securities excluding those classified as trading securities, held-to-maturity or investments in nonconsolidated subsidiaries and affiliates are defined as other securities. Debt securities in other securities are carried at amortized cost, using the moving-average method. Equity securities in other securities are carried at cost, using the moving-average method. Valuation of securities held in individually managed money trusts for asset management purposes are determined by the same method as above. (6) Valuation of derivatives for nontrading purposes Derivative financial instruments other than those held for trading purposes are accounted for by the market value method. (7) Hedge accounting In accordance with the Industry Audit Committee Report No. 15 ‘Temporary Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’ issued by JICPA in 2000, the Bank applies hedge accounting, abiding by the following requirements: (i) Loans, deposits and other interest-bearing assets and liabilities as a whole shall be recognized as the hedged portfolio. (ii) Derivatives as hedging instruments shall effectively reduce the interest rate exposure of the hedged portfolio. (iii) Effectiveness of hedging activities shall be evaluated on a quarterly basis. Certain derivatives are recorded on a cost basis using the short-cut method for interest rate swaps in view of consis- tency with the risk management policy. The subsidiaries use the deferred hedge accounting or the short-cut method for interest rate swaps. Net of deferred unrealized gains and losses from hedging instruments is reported in other liabilities. Deferred unrealized losses and unrealized gains from hedging instruments are ¥191,628 million ($1,546 million) and ¥208,232 million ($1,680 million), respectively. (8) Depreciation method Premises and equipment are stated at cost less accumulated depreciation. The depreciation of premises and equipment of the Bank is computed by the declining balance method (except for that of buildings, which is computed by the straight-line method.) Depreciation of buildings (which were acquired on or before March 31, 1998), building fixtures and structures were computed by the declining balance method before this term. The Bank reviewed the actual condition of buildings and related assets and observed that they had been consistently used for branch offices and other purposes over a long period of time. As a result, the Bank found that the straight-line method, which calculates level depreciation charges over their useful lives, was a more reason- able method to reflect profit and loss for each accounting term more properly. Accordingly, we have changed the depreciation method to the straight-line method from this fiscal year. As a result of this change, Income before income taxes for this fiscal year increased by ¥1,482 million ($11 million) from the corresponding amount that would have been recorded if the declining balance method was adopted. The estimated useful lives of major items are as follows: 10 to 50 years 5 to 20 years Buildings Equipment Depreciation of premises and equipment of subsidiaries is computed mainly by the straight-line method based on estimated useful life. Capitalized software for internal use is depreciated by the straight-line method based on useful life estimated by the Bank and subsidiaries (mainly five years). Capitalized software for internal use is included in other assets. 76 (9) Accounting for leases All leases by the Bank and its domestic consolidated subsidiaries have been accounted for as operating leases. Under Japanese accounting standards for leases, if financing leases where the ownership of the property is deemed to transfer to the lessee are capitalized, while other financing leases can be accounted for as operating leases if necessary information is disclosed in the notes to the lessee’s consolidated financial statements. (10) Reserve for possible loan losses The reserve for possible loan losses of the Bank has been established based on the Bank’s internal rules for establishing a reserve for possible loan losses. liability for lump-sum payments is stated at the amount which would be required to be paid by the Bank if all eligible employees voluntarily retired at the balance sheet date. In addition, the Bank has defined benefit pension plans which substantially cover all employees. Annual contributions, which con- sist of normal costs and amortization of prior service costs, are included in general and administrative expenses. Effective April 1, 2000, a new accounting standard for pension plans and severance indemnity plans, reserve for employee retire- ment benefit is recorded based on an actuarial computation, which uses the present value of the projected benefit obligation and pension assets, due to employee’s credited years of services at the balance sheet date. Customers are initially classified into ten categories, in accor- Prior service cost and unrecognized net actuarial differences dance with the Bank’s own credit rating system. Based on the results of the self-assessment, those customers are classified into five categories: such as “Normal Borrowers,” “Borrowers Requiring Caution,” “Potentially Bankrupt Borrowers,” “Effectively Bankrupt Borrowers” and “Bankrupt Borrowers,” as defined by the report of JICPA. The reserve for possible loan losses was calculated based on the specific actual past loss ratio for Normal Borrowers and Borrowers Requiring Caution categories as a general reserve, and the fair value of the collateral for collateral-dependent loans and other factors of solvency for other self-assessment categories for a specific reserve. For collateral or guaranteed claims of Effec- tively Bankrupt Borrowers and Bankrupt Borrowers, the amount exceeding the estimated value of collateral or guarantees was deducted, as deemed uncollectible, directly from those claims. The deducted amount was ¥1,121,687 million ($9,053 million) and ¥1,125,967 million for fiscal 2000 and fiscal 1999, respectively. For foreign claims, there is a reserve for loans to restructuring countries which has been established based on losses estimated by considering political and economic situations in those countries. All claims are being assessed by the branches and credit supervision divisions based on the Bank’s internal rules for the self- assessment of asset quality. The Assets Review and Inspection Division, which is independent from branches and credit super- vision divisions, conducts audits of these assessments. The consolidated subsidiaries provide reserves for possible loan losses at the amounts considered reasonable in accordance with local accounting standards and are based on prior experience with loan losses. (11) Reserve for employee retirement benefit Under the terms of the Bank’s retirement plan, substantially all employees are entitled to a lump-sum payment at the time of retirement. The amount of reserve for employee retirement benefit is, in general, based on length of service, basic salary at the time of retirement and reason for retirement. Prior to April 1,2000, the are amortized as follows respectively. Prior service cost: Amortized by the straight-line basis over the prescribed years within the average remaining service period (primarily 11 years) of active employees. Unrecognized net actuarial differences: Amortized from the next fiscal year by the straight-line basis over the prescribed years within the average remaining service period (primarily 11 years) of active employees. Unrecognized net obligation from initial application of the new accounting standard of ¥193,823 million ($1,564 million) is amor- tized using the straight-line method over mainly five years. Due to the new accounting standard, Income before income taxes and minority interests for the year ended March 31, 2001 has decreased compared with prior accounting method by ¥29,590 million ($238 million). (12) Reserve for possible losses on loans sold Reserve for possible losses on loans sold to the Cooperative Credit Purchasing Company, Limited (CCPC), is made to provisions in amounts which it views to be necessary based on estimates of possible losses it may sustain in the future on loans sold to the CCPC, taking into account of the value of real estate collateral securing these loans. (13) Land revaluation excess Under the Law of Land Revaluation, effective on March 31, 1998, the Bank elected the one-time revaluation for its own-use land to current value based on real estate appraisal information as of March 31, 1998. Continuous readjustment is not permitted unless the value of the land subsequently declines significantly such that the amount of the decline in value should be removed from the land revaluation excess account and deferred tax liabilities. The amount equivalent to the tax on the revaluation is provided as deferred tax liability for land revaluation, and the remaining amount after the deferred tax liability is included in stockholders’ equity as land revaluation excess. 77 The details of the one-time revaluation were as follows: The date of land revaluation: March 31, 1998 The revaluation of land used for banking business was rationally dividends on preferred shares, divided by the weighted average number of outstanding shares of common stock during the respective year. made, reflecting appropriate adjustments for land shape, timing of the appraisal, etc., based on the appraisal reports for real estate issued by real estate appraisers under the Law of Land Revaluation. The excess of book value over current value was ¥35,942 million ($290 million) as of March 31, 2001 and ¥29,181 million as of March 31, 2000. (14) Income taxes Deferred income taxes relating to temporary differences between financial and tax reporting have been recognized. (15) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits with the Bank of Japan. The assets and liabilities of the newly consolidated company due to acquisition of stocks of The Minato Bank, Ltd. and net expenditure of cash and cash equivalents due to the acquisition of The Minato Bank, Ltd. is as follows: Assets (including ¥1,806,408 million of loans) Liabilities Minority interests Goodwill Cost of investment of The Minato Bank, Ltd. Cash and cash equivalents of The Minato Bank, Ltd. Net: Expenditure for acquisition of The Minato Bank, Ltd. Millions of yen ¥2,342,587 (2,264,968) (46,981) 3,359 33,997 32,972 1,024 (16) Appropriation of retained earnings Cash dividends are recorded in the financial year that the relevant proposed appropriation of retained earnings is approved by the Board of Directors and/or at the General Meeting of Shareholders. (17) Net income per share Net income per share calculations represent net income less The calculation considers the dilutive effect of common stock equivalents, which includes preferred shares and certain convertible bonds, assuming that all convertible bonds and preferred shares were converted into common stock. Diluted net income per common share is to be appropriately adjusted for free distributions of common stock. For fiscal 1999, however, diluted net income per common share is not applicable because it is anti-dilutive. (18) Differences between the accounting principles and practices adopted in the accompanying consolidated financial statements and International Accounting Standards The accompanying consolidated financial statements conform with accounting principles and practices generally accepted in Japan. Such principles and practices differ from International Accounting Standards in several respects, such as methods for valuation of securities, hedge accounting and accounting for leases, among others. (19) New accounting standard for financial instruments Effective April 1, 2000, a new accounting standard for financial instruments was adopted in Japan. Accordingly, the valuation methods of securities and derivatives, excluding those in the trad- ing portfolio, have been changed, and hedge accounting has been adopted. As a result, Income before income taxes and minority interests has increased ¥36,146 million ($291 million) compared with the prior accounting method. Income and expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which represents a change from the prior accounting that presented net by transaction. As a result, Income and expenses for 2001 have decreased ¥155,585 million ($1,255 million), though Income before income taxes and minority interests did not change. 2. Trading Assets Trading assets as of March 31, 2001 and 2000, consisted of the following: Trading securities Derivatives of trading securities Securities related to trading transactions Trading-related financial derivatives Other trading assets* Total Millions of yen 2001 2000 ¥541,360 — 5,403 108,374 422,439 ¥ 466,397 273 40,793 112,225 805,338 ¥577,578 ¥1,425,028 Millions of U.S. dollars 2001 $0,333 — 43 874 3,409 $4,661 * Other trading assets includes commercial paper and other debt purchased related to trading transactions. 78 3. Securities Securities as of March 31, 2001 and 2000, consisted of the following: Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Total Millions of yen 2001 2000 ¥04,903,153 20,769 588,893 3,899,246 1,054,465 ¥1,870,908 137,619 448,294 3,515,820 956,102 ¥10,466,528 ¥6,928,746 Millions of U.S. dollars 2001 $39,573 167 4,752 31,470 8,510 $84,475 Japanese stocks and other include investments in unconsolidated subsidiaries and affiliates of ¥3,784 million ($30 million) and ¥27,425 million as of March 31, 2001 and 2000, respectively. Securities of ¥292,171 million ($2,358 million), which are used for securities lending transactions for consumption are included in securities, other assets and trading assets as of March 31, 2001. 4. Loans and Bills Discounted Loans and bills discounted as of March 31, 2001 and 2000, consisted of the following: Bills discounted Loans on bills Loans on deeds Overdrafts Financing receivables, including leasing Total “Non-accrual Loans” includes loans classified as “Potentially Bank- rupt Borrowers” and “Effectively Bankrupt Borrowers” under the Bank’s self-assessment guidelines. Accrual interest receivable for these categories is not recognized on an accrual basis for accounting purposes. Loans and bills discounted includes loans held by the Bank and its consolidated subsidiaries to borrowers in bankruptcy totaling ¥197,398 million ($1,593 million) and ¥176,313 million as of March 31, 2001 and 2000, respectively, as well as Non-accrual Loans held by the Bank and its consolidated subsidiaries totaling ¥1,041,951 million ($8,409 million) and ¥1,274,607 million as of March 31, 2001 and 2000, respectively. In addition to “Non-accrual Loans” as defined, certain other loans classified as “Borrowers Requiring Caution” under the Bank’s self-assessment guidelines include “Past due loans (3 months or more).” Millions of yen 2001 2000 ¥00,738,621 3,490,209 22,543,959 6,119,474 14,437 ¥ 585,254 3,469,320 21,817,990 6,440,517 20,127 ¥32,906,703 ¥32,333,211 Millions of U.S. dollars 2001 $005,961 28,169 181,952 49,390 116 $265,590 “Past due loans (3 months or more)” consist of loans for which the principal and/or interest is three months or more past due but exclude “Bankrupt Loans” and “Non-accrual Loans.” The balances of Past due loans (3 months or more) as of March 31, 2001 and 2000, were ¥75,870 million ($612 million) and ¥39,777 million, respectively. “Restructured loans” are loans in which the Bank and its sub- sidiaries are relaxing lending conditions, such as reduction of the original interest rate, forbearance of interests payments or princi- pal repayments to support the borrowers’ reorganization, but exclude “Bankrupt Loans,” “Non-accrual Loans” or “Past due loans (3 months or more).” The outstanding balances of restructured loans as of March 31, 2001 and 2000, were ¥151,413 million ($1,222 million) and ¥170,741 million, respectively. 79 5. Foreign Exchanges Foreign exchange assets and foreign exchange liabilities as of March 31, 2001 and 2000, consisted of the following: Assets: Due from foreign banks Foreign bills bought Foreign bills receivable Total Liabilities: Due to foreign banks Foreign bills sold Foreign bills payable Total 6. Other Assets Other assets as of March 31, 2001 and 2000, consisted of the following: Prepaid expenses Accrued income Other Total 7. Premises and Equipment Premises and equipment as of March 31, 2001 and 2000, consisted of the following: Land* Building Equipment Other Total Accumulated depreciation Net book value * Land includes land revaluation excess with related taxes referred to in Note 1 (13). Millions of yen 2001 2000 ¥ 32,427 150,719 85,522 ¥ 14,786 217,114 84,493 ¥268,669 ¥316,395 ¥ 28,272 2,254 6,566 ¥ 17,321 3,066 8,958 ¥037,094 ¥ 29,346 Millions of yen 2001 2000 ¥0,050,025 369,163 940,254 ¥ 68,333 557,122 2,122,524 ¥1,359,442 ¥2,747,979 Millions of yen 2001 2000 ¥0,483,335 277,874 222,702 334,879 ¥1,318,791 435,732 ¥ 495,244 268,480 212,059 301,508 ¥1,277,293 421,566 ¥0,883,059 ¥ 855,726 Millions of U.S. dollars 2001 $0,261 1,216 690 $2,168 $0,228 18 52 $0,299 Millions of U.S. dollars 2001 $00,403 2,979 7,588 $10,972 Millions of U.S. dollars 2001 $03,901 2,242 1,797 2,702 $10,643 3,516 $07,127 80 8. Reserve for Possible Loan Losses Reserve for possible loan losses as of March 31, 2001 and 2000, consisted of the following: General reserve Specific reserve Total 9. Assets Pledged as Collateral Assets pledged as collateral as of March 31, 2001 and 2000, consisted of the following: Millions of yen 2001 2000 ¥163,151 348,872 ¥227,338 454,849 ¥512,023 ¥682,188 Assets pledged as collateral: Cash and due from banks Trading assets Securities Loans and bills discounted Other assets Premises and equipment Liabilities corresponding to assets pledged as collateral: Deposits Call money and bills sold Borrowed money Other liabilities Millions of yen 2001 2000 ¥ 000,001 3,037 1,932,374 701,282 58,620 559 ¥00000,0—. — 654,854 1,122,063 39,308 1,414 ¥0,062,243 2,116,699 68,774 17,928 ¥0,078,711 945,700 96,754 72,706 Millions of U.S. dollars 2001 $1,316 2,815 $4,132 Millions of U.S. dollars 2001 $00,000 24 15,596 5,660 473 4 $00,502 17,083 555 144 In addition, securities with a balance of ¥3,096,063 million ($24,988 million) and ¥1,107,597 million, loans and bills dis- counted of ¥397,546 million ($3,208 million) and ¥9,627 million, cash and due from banks of ¥3 million ($0 million) and ¥— million and other assets of ¥10 million ($0 million) and ¥97,638 million are pledged as collateral for cash settlement and replacement of initial margins of futures markets and so on as of March 31, 2001 and 2000, respectively. The following items are included in premises and equipment and other assets, respectively as of March 31, 2001. Surety deposits and intangible: Initial margins of futures markets in other assets: ¥70,421 million ($568 million) ¥03,006 million ($24 million) 10. Deposits Deposits as of March 31, 2001 and 2000, consisted of the following: Current deposits Ordinary deposits Deposits at notice Time deposits Negotiable certificates of deposit Other deposits Total Millions of yen 2001 2000 ¥02,440,824 9,425,381 3,923,656 13,972,593 4,621,021 2,241,531 ¥ 1,947,618 8,902,508 3,981,865 13,137,772 3,512,634 2,256,217 ¥36,625,010 ¥33,738,616 Millions of U.S. dollars 2001 $019,699 76,072 31,667 112,773 37,296 18,091 $295,601 81 11. Call Money and Bills Sold Call money and Bills sold as of March 31, 2001 and 2000, consisted of the following: Call money Bills sold Total 12. Trading Liabilities Trading liabilities as of March 31, 2001 and 2000, consisted of the following: Trading securities sold for short sales Derivatives of trading securities Securities related to trading transaction sold for short sales Derivatives of securities related to trading transactions Trading-related financial derivatives Total 13. Borrowed Money Borrowed money as of March 31, 2001 and 2000, consisted of the following: Bills rediscounted Borrowings from the Bank of Japan and other financial institutions Subordinated debt Other Total Millions of yen 2001 2000 ¥3,320,493 1,287,700 ¥2,283,799 295,700 ¥4,608,193 ¥2,579,499 Millions of yen 2001 2000 ¥003,914 — 3,756 — 193,736 ¥146,536 256 — 3 213,909 ¥201,407 ¥360,706 Millions of yen 2001 2000 ¥0,020,465 478,748 503,364 135,726 ¥ 23,053 559,519 716,237 209,972 ¥1,138,305 ¥1,508,783 Millions of U.S. dollars 2001 $26,799 10,393 $37,192 Millions of U.S. dollars 2001 $0,031 — 30 — 1,563 $1,625 Millions of U.S. dollars 2001 $0,165 3,863 4,062 1,095 $9,187 The repayment schedule within five years on borrowed money as of March 31, 2001, is shown as follows: Millions of yen One year or less One to two years Two to three years Three to four years Four to five years ¥296,200 ¥80,670 ¥70,546 ¥139,777 ¥167,847 One year or less One to two years Two to three years Three to four years Four to five years $2,390 $651 $569 $1,128 $1,354 Millions of U.S. dollars 14. Bonds Bonds as of March 31, 2001 and 2000, consisted of the following: Subordinated bonds Other Total Millions of yen 2001 2000 ¥0,758,426 374,942 ¥0,877,767 175,586 ¥1,133,368 ¥1,053,354 Millions of U.S. dollars 2001 $6,121 3,026 $9,147 The redemption schedule within five years on bonds as of March 31, 2001, is shown as follows: Millions of yen One year or less One to two years Two to three years Three to four years Four to five years ¥1,079 ¥ — ¥29,039 ¥170,539 ¥126,453 One year or less One to two years Two to three years Three to four years Four to five years $8 $ — $234 $1,376 $1,020 Millions of U.S. dollars 82 15. Convertible Bonds Convertible bonds as of March 31, 2001 and 2000, consisted of the following: 2.625% U.S. dollar convertible bonds due 2003 Total 16. Other Liabilities Other liabilities as of March 31, 2001 and 2000, consisted of the following: Accrued expenses Unearned income Income taxes payable Trading account payable Pledged money for securities lending transactions Other Total Millions of yen 2001 ¥ — ¥ — 2000 ¥95 ¥95 Millions of yen 2001 2000 ¥0,170,796 95,407 11,673 400,651 283,686 1,334,578 ¥ 202,906 97,681 8,325 988,801 1,081,122 2,175,041 ¥2,296,793 ¥4,553,878 Other includes delivered money due to merger of ¥17,853 million ($144 million) as of March 31, 2001. 17. Other Reserves Other reserves as of March 31, 2001 and 2000, consisted of the following: Reserve for contingent liabilities from financial futures transactions Reserve for contingent liabilities from securities transactions Total 18. Acceptances and Guarantees Acceptances and guarantees as of March 31, 2001 and 2000, consisted of the following: Millions of yen 2001 ¥009 633 ¥643 2000 ¥009 503 ¥513 Acceptances Letters of credit Guarantees Total Millions of yen 2001 2000 ¥0,017,939 183,423 1,762,710 ¥ 31,909 178,131 1,282,586 ¥1,964,073 ¥1,492,628 Millions of U.S. dollars 2001 $ — $ — Millions of U.S. dollars 2001 $01,378 770 94 3,233 2,289 10,771 $18,537 Millions of U.S. dollars 2001 $0 5 $5 Millions of U.S. dollars 2001 $00,144 1,480 14,226 $15,852 All contingent liabilities arising in connection with customers’ foreign trade and other transactions are classified under acceptances and guarantees. A contra account, customers’ liabilities for acceptances and guarantees, is classified as an asset representing the Bank and its subsidiaries’ right of indemnity from customers. 83 19. Capital Stock and Capital Surplus The authorized number of shares of capital stock (common stock and preferred stock) as of March 31, 2001, was as follows: (i) 10,000,000 thousand common shares, voting and ranking equally with any other class of shares, except preferred shares, with respect to payment of dividends and distributions on liquidation or closing of the Bank. (ii) 1,027,577 thousand preferred shares, nonvoting and ranking prior to common shares with respect to payment of dividends and distributions on liquidation or closing of the Bank. The dividend rate, redemption and conversion rights, if any, are to be determined prior to issuance by the Board of Directors. The Bank is authorized to repurchase, at management’s discretion, up to 350 million shares of the Bank’s stock for the purpose of canceling shares by crediting them against retained earnings. The changes in the capital stock and capital surplus accounts for the years ended March 31, 2001 and 2000, were as follows: Millions of yen Common stock Preferred stock Capital surplus Shares (thousands) Stated value Shares (thousands) Stated value 4,083,121 34,175 ¥631,399 8,535 811,307 (8,535) ¥411,307 (8,535) 4,117,297 780 639,934 195 802,772 (195) 402,772 (195) Stated value ¥899,521 — 899,521 — 4,118,077 ¥640,129 802,577 ¥402,577 ¥899,521 — $005,166 — $003,249 $007,260 Unless previously converted at the option of Series II preferred stockholders, all outstanding Series II preferred shares will be mandatorily exchanged for fully paid shares of common stock of the Bank on October 1, 2001, at the number of common shares calculated by dividing ¥2,000 by the average market price per share during a certain period immediately preceding October 1, 2001. The Series III preferred stockholders are entitled to priority as to the payment of dividends and as to distributions on liquidation of the Bank, ranking equally with Series II preferred shares, to common stock of the Bank, to receive noncumulative dividends of ¥13.70 and a distribution of ¥1,000 per preferred share. Series III preferred shares are convertible on or after October 1, 2002, and up to and including September 30, 2009, at the option of stock- holders, into fully paid shares of common stock of the Bank. The Bank has the following stock option plan for the Bank’s direc- tors and certain employees: A plan provides for granting options to directors and certain employees to purchase up to 279 thousand shares of the Bank’s common stock in the period from June 30, 2001 to June 29, 2009. The issue price of the stock is ¥674 per share. Another plan provides for granting options to directors and certain employees to purchase up to 291 thousand shares of the Bank’s common stock in the period from June 30, 2002 to June 29, 2010. The issue price of the stock is ¥772 per share. March 31, 1999 Conversion of preferred stocks March 31, 2000 Conversion of preferred stocks March 31, 2001 Millions of U.S. dollars Under the Japanese Commercial Code (the “Code”), at least 50% of the issue price of new shares, with a minimum of the par value thereof, is required to be designated as stated capital. The portion which is to be designated as stated capital is determined by resolution of the Board of Directors. Proceeds in excess of the amounts designated as stated capital have been credited to capital surplus. (i) (ii) Under the Code, the Bank may, by resolution of the stockholders, transfer a portion of retained earnings available for dividends to the capital stock account, and the Bank may, by resolution of the Board of Directors, issue new shares of common stock to the existing stockholders without consideration to the extent that the amount calculated by multiplying the number of outstanding shares after the issu- ance by par value per share does not exceed the stated capi- tal, or that the amount calculated by dividing the total amount of stockholders’ equity by the number of outstanding shares after the issuance shall not be less than ¥50. These issuances of the new shares are treated as stock splits. Holders of Series II preferred shares issued on October 1, 1996, are entitled to priority as to the payment of dividends and as to distributions on liquidation of the Bank to common stock of the Bank, to receive noncumulative dividends of ¥15 and a distribution of ¥2,000 per preferred share. Series II preferred shares are convertible on or after October 1, 1997, and up to and including September 30, 2001, at the option of the stockholders, into fully paid shares of common stock of the Bank at an initial exchange price of ¥1,122. 84 20. Retained Earnings Earned surplus reserve as of March 31, 2001 and 2000, is included in retained earnings. The changes for the years ended March 31, 2001 and 2000, were as follows: Balance at beginning of year Appropriation of retained earnings Balance at end of year Millions of yen 2001 2000 ¥198,161 (2,100) ¥196,060 ¥164,329 33,832 ¥198,161 Millions of U.S. dollars 2001 $1,599 (16) $1,582 Under the Banking Law of Japan, an amount equivalent to at least 20% of any distribution of profits must be appropriated as an earned surplus reserve until such reserve equals 100% of stated capital. This reserve is not available for dividends, but may be used to reduce a deficit by resolution of the stockholders or may be transferred to the capital stock account by resolution of the Board of Directors. 21. Other Interest Income The composition of other interest income for the years ended March 31, 2001 and 2000, was as follows: Deposits with banks Interest rate swaps Other Total Millions of yen 2001 2000 ¥100,750 — 71,638 ¥172,389 ¥ 25,884 371,105 117,128 ¥514,118 Millions of U.S. dollars 2001 $0,813 — 578 $1,391 Income and expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which represents a change from the prior accounting that presented net by transaction. 22. Other Operating Income Other operating income for the years ended March 31, 2001 and 2000, was as follows: Gains on foreign exchange transactions Gains on sales of bonds Gains on redemption of bonds Other Total 23. Other Income Other income for the years ended March 31, 2001 and 2000, was as follows: Gains on sales of stocks Gains on money held in trust Gains on disposition of premises and equipment Collection of written-off claims Net income from nonconsolidated entities by the equity method Gains on exemption of obligation Gains on securities contributed to employee retirement benefit trust Gains on stock-related derivative transactions Other Total Millions of yen 2001 ¥17,015 16,043 310 64,251 ¥97,621 2000 ¥31,714 22,206 3,690 41,650 ¥99,261 Millions of yen 2001 2000 ¥175,756 942 3,957 1,947 7,883 44,525 29,602 43,661 23,815 ¥332,094 ¥427,122 471 7,754 1,848 — — — — 17,998 ¥455,196 Millions of U.S. dollars 2001 $137 129 2 518 $787 Millions of U.S. dollars 2001 $1,418 7 31 15 63 359 238 352 192 $2,680 85 24. Transfer from Other Reserves Transfer from other reserves for the years ended March 31, 2001 and 2000, was as follows: Reserve for contingent liabilities from securities transactions. Total 25. Other Interest Expenses Other interest expenses for the years ended March 31, 2001 and 2000, was as follows: Convertible bonds Interest rate swaps Other Total Millions of yen 2001 ¥ — ¥ — 2000 ¥3 ¥3 Millions of yen 2001 2000 ¥00,002 18,606 69,371 ¥87,979 ¥ 17 370,907 119,530 ¥490,455 Millions of U.S. dollars 2001 $ — $ — Millions of U.S. dollars 2001 $000 150 559 $710 Income and expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which represents a change from the prior accounting that presented net by transaction. 26. Other Operating Expenses Other operating expenses for the years ended March 31, 2001 and 2000, was as follows: Losses on sales of bonds Losses on redemption of bonds Losses on devaluation of bonds Other Total Millions of yen 2001 2000 ¥04,710 2,290 395 48,074 ¥55,471 ¥15,510 6,262 475 45,635 ¥67,883 27. General and Administrative Expenses General and administrative expenses for the years ended March 31, 2001 and 2000, was as follows: Salaries and welfare expenses Retirement benefits Depreciation Rent and lease expenses Taxes and public impositions Other Total Millions of yen 2001 2000 ¥218,548 21,689 35,123 44,785 24,314 146,160 ¥221,317 32,611 35,029 44,793 25,430 128,289 ¥490,621 ¥487,472 Millions of U.S. dollars 2001 $038 18 3 388 $447 Millions of U.S. dollars 2001 $1,763 175 283 361 196 1,179 $3,959 Other includes cost of research and development of ¥212 million ($1 million) and ¥225 million for fiscal 2000 and 1999, respectively. 86 28. Other Expenses Other expenses for the years ended March 31, 2001 and 2000, was as follows: Write-offs of loans Losses on sales of stocks and other securities Losses on devaluation of stocks and other securities Losses on money held in trust Losses on disposition of premises and equipment Losses on disposal of loans at a subsidiary Amortization of unrecognized net transition obligation for employee retirement benefit Other Millions of yen 2001 2000 ¥257,762 44,653 57,621 405 22,767 40,354 ¥146,374 50,925 33,255 1,097 19,964 — 39,135 116,196 — 187,026 Millions of U.S. dollars 2001 $2,080 360 465 3 183 325 315 937 Total ¥578,896 ¥438,643 $4,672 Other includes provisions for possible losses on loans sold of ¥55,905 million and equity in losses of affiliates of ¥1,487 million for fiscal 1999. 29. Transfer to Other Reserves Transfer to other reserves for the years ended March 31, 2001 and 2000, was as follows: Reserve for contingent liabilities from financial futures transactions Reserve for contingent liabilities from securities transactions Total 30. Income Taxes The Bank is subject to a number of taxes based on income such as corporation tax, inhabitants tax, and enterprise tax which, in the aggregate, resulted in a normal Japanese statutory tax rate of approximately 39.62% for fiscal 2000, and 42.05% for fiscal 1999. The actual effective tax rates for fiscal 2000 and 1999, as shown below, differed from the normal Japanese statutory rate due to a number of factors, including, among others, (1) certain expenses permanently not deductible for tax purposes, (2) the new Income taxes (corporation, inhabitants and enterprise) (a) Income before income taxes and minority interests (b) Actual effective tax rates ((a) / (b)) Millions of yen 2001 ¥ — 2 ¥ )2 2000 ¥ 0 — ¥ 0 Millions of U.S. dollars 2001 $ — 0 $ )0 establishment of Tokyo Metropolitan Government’s ordinance con- cerning the special treatment for the standard of enterprise taxes to banking industries, (3) the new establishment of the Osaka Prefectural Government’s ordinance concerning the special treat- ment for the standard of enterprise taxes to banking industries, (4) different tax rates for the subsidiaries outside Japan, (5) valua- tion allowance for deferred income tax assets and (6) dividend excluded from taxable income in fiscal 1999. Millions of yen 2001 2000 ¥077,991 ¥132,046 59.0%. ¥082,079 ¥126,139 65.0%. Millions of U.S. dollars 2001 $0,629 $1,065 59.0%. 87 The tax effects of significant temporary differences and loss carryforwards, which resulted in deferred tax assets and liabilities at March 31, 2001 and 2000, were as follows: Deferred tax assets: Reserve for possible loan losses Net operating loss carryforwards Other* Subtotal Valuation allowance Total Deferred tax liabilities: Gains on securities contributed to employee retirement benefit trust Reserve for losses on overseas investments Other Total Net deferred tax assets Millions of yen 2001 2000 Millions of U.S. dollars 2001 ¥397,704 120,891 92,703 ¥611,300 (34,317) ¥440,289 90,826 88,352 ¥619,467 (7,749) ¥576,982 ¥611,718 ¥011,604 — 7,513 19,117 ¥00000—. 24 271 295 ¥557,864 ¥611,423 $3,209 975 748 $4,933 (276) $4,656 $0,093 — 60 154 $4,502 * The following items are included in Other of Deferred tax assets for the year ended March 31, 2001. Reserve for possible losses on loans sold Reserve for employee retirement benefit Losses on devaluation of stocks and other securities ¥27,783 ($224 million) 26,437 ($213 million) 15,697 ($126 million) Due to the establishment of the Tokyo Metropolitan Government’s ordinance concerning the special treatment for the standard of enterprise taxes to banking industries on March 31, 2000, the nor- mal statutory tax rate for the computation of deferred tax assets and liabilities decreased from 42.05% to 39.62%. This change decreased the amount of deferred tax assets by ¥35,791 million and increased deferred tax in fiscal 1999 by the same amount. The amount of deferred tax liabilities for land revaluation decreased by ¥1,968 million as a result of the revaluation and increased the land revaluation excess by the same amount. Due to the establishment of the Osaka Prefectural Government’s ordinance concerning the special treatment for the standard of enterprise taxes to banking industries on June 9, 2000, the normal statutory tax rate for the computation of deferred tax assets and liabilities decreased from 39.62% to 39.20%. This change decreased the amount of deferred tax assets and deferred tax liabilities for land revaluation by ¥5,616 million ($45 million) and ¥294 million ($2 million), respectively. Enterprise taxes other than those relating to income are included in other expenses. Effective April 1, 2000, the Special Ordinance Concerning Taxation Standard for Enterprise Taxes in Relation to Banks in the Tokyo Metropolis (Tokyo Metropolis Ordinance 145 of April 1, 2000) was enacted, and enterprise taxes in Tokyo, which were included in income taxes, current for the prior period, are now included in other expenses in the amount of ¥8,733 million ($70 million). 31. Reserve for Employee Retirement Benefit (1) Outline of retirement benefit The Bank and consolidated subsidiaries in Japan have contributory funded defined benefit pension plans, such as contributory pension plans, qualified pension plans and lump-sum severance indemnity plans. They may grant additional benefit in cases where certain requirements are met when employees retire. The Bank contributed certain marketable equity securities to an employee retirement benefit trust. At March 31, 2001, the Bank and The Minato Bank, Ltd. have contributed funded defined benefit pension plans. Sakura Friend Securities Co., Ltd. and SAKURA K.C.S. Corporation have qualified pension plans. The Bank and most subsidiaries in Japan have lump-sum severance indemnity plans. 88 (2) Projected benefit obligation Information on projected benefit obligation and others at March 31, 2001 is shown as follows: Projected benefit obligation Pension assets Unfunded projected benefit obligation Unrecognized net transition obligation Unrecognized actuarial differences Unrecognized prior service cost Net amount recorded on the consolidated balance sheets Reserve for employee retirement benefit (3) Pension expenses Service cost Interest cost on projected benefit obligation Expected return on plan assets Amortization of net transition obligation Other Pension expenses Millions of yen 2001 ¥(645,033) 390,318 ¥(254,714) 153,676 70,985 (1,664) ¥0(31,716) (31,716) Millions of yen 2001 ¥16,535 21,114 (20,536) 39,164 2,681 ¥58,959 Millions of U.S. dollars 2001 $(5,206) 3,150 $(2,055) 1,240 572 (13) $0)(255) (255) Millions of U.S. dollars 2001 $133 170 (165) 316 21 $475 (4) Assumptions The principal assumptions used in determining benefit obligation and pension expenses at or for the year ended March 31, 2001, were as follows: Discount rate Expected rate of return on plan assets Term to amortize prior service cost Term to amortize actuarial differences Term to amortize net transition obligation 2001 1.7% to 3.5% 2.0% to 5.6% Mainly 11 years Mainly 11 years Mainly 5 years The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number of total service years. 32. Leases Financing leases where the ownership of the property is not deemed to transfer to the lessee as of March 31, 2001 and 2000, consisted of the following: (i) As lessee Acquisition cost, accumulated depreciation and net balance of the leased property as of March 31, 2001 and 2000, were as follows: Acquisition cost Accumulated depreciation Net balance Acquisition cost includes the imputed interest expense portion because of its immateriality. Millions of yen 2001 ¥10,527 4,216 ¥06,311 2000 ¥7,078 5,324 ¥1,754 Millions of U.S. dollars 2001 $84 34 $50 89 Obligations as of March 31, 2001 and 2000, were as follows: Due within one year Due after one year Total Millions of yen 2001 ¥2,553 3,757 ¥6,311 2000 ¥1,060 693 ¥1,754 Millions of U.S. dollars 2001 $20 30 $50 The amount of obligations includes the imputed interest expenses portion because of its immateriality. Total lease payments were ¥2,183 million ($17 million) and ¥1,847 million, and depreciation was ¥2,183 million ($17 million) and ¥1,847 million for the years ended March 31, 2001 and 2000, respectively. Depreciation was calculated based on the straight-line method with zero residual value. (ii) As lessor Acquisition cost, accumulated depreciation and net balance of the leased property as of March 31, 2001 and 2000, were as follows: Acquisition cost Accumulated depreciation Net balance Future lease payment receivables as of March 31, 2001 and 2000, were as follows: Due within one year Due after one year Total Millions of yen 2001 2000 ¥187,912 93,908 ¥143,665 74,077 ¥094,004 ¥069,587 Millions of yen 2001 2000 ¥034,949 78,938 ¥113,887 ¥31,004 63,428 ¥94,432 Millions of U.S. dollars 2001 $1,516 757 $0,758 Millions of U.S. dollars 2001 $282 637 $919 The amount of future lease payment receivables includes the imputed interest income portion, because of its immateriality. Total lease revenues were ¥32,980 million ($266 million) and ¥23,585 million, and depreciation was ¥25,416 million ($205 million) and ¥14,642 million for the years ended March 31, 2001 and 2000, respectively. Operating leases as of March 31, 2001 and 2000, consisted of the following: (i) As lessee The minimum rental commitments under noncancellable operating leases as of March 31, 2001 and 2000, were as follows: Due within one year Due after one year Total Millions of yen 2001 ¥1,124 6,533 ¥7,657 2000 ¥ 1,344 8,693 ¥10,038 Millions of U.S. dollars 2001 $09 52 $61 (ii) As lessor There were no minimum rental commitments receivable under noncancelable operating leases as of March 31, 2001 and 2000. 33. Loan Commitments Commitment line contracts on overdrafts and loans are agree- ments to lend to customers when they apply for borrowing, to a prescribed amount, as long as there is no violation of any condi- tion established in the contracts. The amount of unused commit- ments was ¥6,912,401 million ($55,790 million), and the amount of unused commitments whose original contract terms are within one year or unconditionally cancelable at any time was ¥6,322,207 million ($51,026 million) as of March 31, 2001. Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not 90 necessarily represent actual future cash flow requirements. Many of these commitments have clauses that the Bank and consoli- dated subsidiaries can reject an application from customers or reduce the contract amounts in case economic conditions are changed, the Bank and consolidated subsidiaries need to secure claims and other events occur. In addition, the Bank and consolidated subsidiaries request the customers to pledge collateral such as premises and securities at the conclusion of the contracts, and take necessary measures such as grasping cus- tomers’ financial positions, revising contracts when the need arises and securing claims after the conclusion of the contracts. 34. Market Value of Marketable Securities (1) Securities The market value of marketable securities as of March 31, 2001, was as follows: In addition to securities in the consolidated balance sheets, trading securities, securities related to trading transactions, negotiable certificates of deposit and commercial paper within trading assets, negotiable certificates of deposit in cash and due from banks, and commercial paper within commercial paper and other debt purchased are included in the following amounts: (a) Securities classified as trading March 31, 2001 Securities classified as trading March 31, 2001 Securities classified as trading (b) Bonds classified as held-to-maturity with market value Millions of yen Consolidated balance sheet amount ¥469,204 Gains included in profit/loss ¥244 Millions of U.S. dollars Consolidated balance sheet amount $3,786 Gains included in profit/loss $1 March 31, 2001 Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total March 31, 2001 Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total Consolidated balance sheet amount Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥14,295 — — — ¥14,295 ¥14,298 — — — ¥14,298 ¥2 — — — ¥2 ¥2 — — — ¥2 ¥0 — — — ¥0 Consolidated balance sheet amount Market value Net unrealized gains (losses) Unrealized gains Unrealized losses Millions of U.S. dollars $115 — — — $115 $115 — — — $115 $0 — — — $0 $0 — — — $0 $0 — — — $0 Note: Market value is calculated by using market prices at fiscal year-end. 91 (c) Other securities with market value Market value is not reflected in the consolidated financial statements. Summary information on other securities that have market value are shown in the following table: March 31, 2001 Stocks Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total March 31, 2001 Stocks Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total Consolidated balance sheet amount ¥3,782,106 5,182,955 4,888,857 16,589 277,507 899,034 Market value ¥3,420,904 5,207,684 4,908,522 16,977 282,184 882,663 Millions of yen Net unrealized gains (losses) ¥(361,202) 24,728 19,664 387 4,676 (16,371) Unrealized gains Unrealized losses ¥139,239 27,743 22,294 387 5,061 3,560 ¥500,442 3,014 2,629 0 385 19,931 ¥9,864,096 ¥9,511,251 ¥(352,844) ¥170,544 ¥523,388 Consolidated balance sheet amount Market value Net unrealized gains (losses) Unrealized gains Unrealized losses Millions of U.S. dollars $30,525 41,831 39,458 133 2,239 7,256 $79,613 $27,610 42,031 39,616 137 2,277 7,123 $76,765 $(2,915) 199 158 3 37 (132) $(2,847) $1,123 223 179 3 40 28 $1,376 $4,039 24 21 0 3 160 $4,224 Note: For the Bank’s stocks, market value is based on the average market price during one month before the fiscal year-end, and for the others the market prices at the balance sheet date. (d) Bonds sold during fiscal 2000 that are classified as held-to-maturity There are no corresponding items. (e) Other securities sold during fiscal 2000 March 31, 2001 Other securities March 31, 2001 Other securities (f) Securities with no available market value March 31, 2001 Bonds classified as held-to-maturity: Nonlisted foreign securities Other securities: Nonlisted bonds Nonlisted stocks (except OTC stocks) Nonlisted foreign securities (g) Change of classification of securities There are no corresponding items. 92 Millions of yen Sales amount Gains on sale Losses on sale ¥9,773,852 ¥192,631 ¥42,095 Millions of U.S. dollars Sales amount Gains on sale Losses on sale $78,885 $1,554 $339 Millions of yen Millions of U.S. dollars Consolidated balance sheet amount Consolidated balance sheet amount ¥007,094 $0,057 315,565 117,140 63,341 2,546 945 511 (h) Redemption schedule on other securities with maturities and bonds classified as held-to-maturity Millions of yen 1 year or less 1 to 5 years 5 to 10 years Over 10 years ¥2,428,170 2,372,038 2,749 53,382 406,355 ¥2,031,335 1,612,608 46,824 371,903 277,212 ¥0,994,009 859,706 15,843 118,459 151,917 ¥059,300 58,800 — 500 147,428 ¥2,834,526 ¥2,308,547 ¥1,145,927 ¥206,728 1 year or less 1 to 5 years 5 to 10 years Over 10 years Millions of U.S. dollars $19,597 19,144 22 430 3,279 $16,394 13,015 377 3,001 2,237 $22,877 $18,632 $8,022 6,938 127 956 1,226 $9,248 $0,478 474 — 4 1,189 $1,668 March 31, 2001 Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total March 31, 2001 Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total (2) Money held in trust (a) Money held in trust classified as trading There are no corresponding items. (b) Money held in trust classified as held-to-maturity There are no corresponding items. (c) Other money held in trust (money held in trust that are classified neither as trading nor as held-to-maturity) Market value is not reflected on consolidated financial statements. Summary information on other money held in trust that have market value are shown in the following table: March 31, 2001 Other money held in trust March 31, 2001 Other money held in trust Consolidated balance sheet amount Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥22,208 ¥22,677 ¥468 ¥494 ¥25 Millions of U.S. dollars Consolidated balance sheet amount Market value Net unrealized gains (losses) Unrealized gains Unrealized losses $179 $183 $3 $3 $0 Note: Market value is calculated by using market prices at fiscal year-end. 93 (3) Net unrealized gains (losses) on other securities and other money held in trust If other securities and other money held in trust were evaluated by market value, net unrealized gains (losses) on valuation would be as shown in the following table: March 31, 2001 Difference (Market value – Balance sheet amount) Other securities Other money held in trust (+) Deferred tax assets Net unrealized gains (losses) on valuation (before following adjustment) (–) Minority interests (+) Parent company’s share in net unrealized gains (losses) on valuation of other securities held by affiliates accounted for by the equity method Millions of yen 2001 ¥(352,375) (352,844) 468 138,131 (214,244) (2,173) (42) Millions of U.S. dollars 2001 $(2,844) (2,847) 3 1,114 (1,729) (17) (0) Net unrealized gains (losses) on valuation ¥(212,113) $(1,711) (Appendix) Previous Year’s Information on Market Value of Marketable Securities (1) Securities The market value of marketable securities as of March 31, 2000, was as follows: March 31, 2000 Bonds Stocks Others Total Book value Market value ¥ 485,177 3,361,262 461,115 ¥ 460,384 3,977,851 461,187 Millions of yen Net unrealized gains (losses) ¥ (24,793) 616,588 72 Unrealized gains Unrealized losses ¥ 3,490 1,011,530 14,540 ¥ 28,284 394,941 14,468 ¥4,307,555 ¥4,899,422 ¥591,866 ¥1,029,561 ¥437,694 Notes: 1. Figures in the above table are for marketable securities listed on securities exchanges. The fair market value of listed bonds is calculated mainly using the closing prices on the Tokyo Stock Exchange at the consolidated balance sheet date or the prices calculated under the yield published on the Japan Securities Dealers Association’s Indication Chart in most cases. Other listed securities are calculated primarily using the closing price on the Tokyo Stock Exchange at the balance sheet date. Others are mainly foreign bonds. 2. Listed below are figures calculated to correspond to the fair market value of unlisted securities if it is possible to calculate. March 31, 2000 Bonds Stocks Others Total Book value Market value ¥1,571,230 ¥1,569,330 37,807 100,291 101,720 101,176 ¥1,709,330 ¥1,772,226 Millions of yen Net unrealized gains (losses) ¥ (1,900) 63,913 884 ¥62,896 Unrealized gains Unrealized losses ¥ 5,331 71,806 2,756 ¥79,894 ¥ 7,231 7,893 1,872 ¥16,998 Values of non-listed securities are calculated using the Japan Securities Dealers Association’s figures for securities traded over the counter, using the prices calculated under the yield published on the Japan Securities Dealers Association’s Indication Chart for public bonds, and using standard prices for the beneficiary certificate of securities investment trusts. Others are mainly beneficiary certificates of securities investment trusts. 3. Securities excluded from the above information on values of the consolidated balance sheet are principally as follows: March 31, 2000 Bonds Stocks Others Millions of yen Book value ¥400,413 116,750 394,696 4. Figures on trading account securities and securities related to trading transactions are omitted from the above tables because those securities are valued at market prices and evaluation gains (losses) are stated in the consolidated statements of income. 94 (2) Money held in trust March 31, 2000 Money held in trust Book value Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥72,581 ¥72,887 ¥305 ¥542 ¥237 Notes: The market value represents the prices that the fiduciaries of money held in trust calculated in accordance with the following methods: 1. The fair market value of listed securities is calculated mainly using the closing prices on the Tokyo Stock Exchange at the consolidated balance sheet date. 2. Values of non-listed stocks are calculated using the Japan Securities Dealers Association’s figures for securities traded over the counter. 35. Derivative Transactions (1) Interest Rate Transactions March 31, 2001 Listed transactions: Futures contracts: Sold Bought Options: Sold Bought Unlisted transactions: Forward rate agreement: Sold Bought Swaps: Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥ 0,059,123 262,802 ¥0000000—. — ¥0,00(431) 2,151 ¥(00(431) 2,151 2,029,981 622,669 — — 825 519 655 258 1,039,613 1,629,713 10,000 — 344 (1,589) 344 (1,589) Receivable fixed rate/Payable floating rate Receivable floating rate/Payable fixed rate Receivable floating rate/Payable floating rate, etc. 43,061,905 40,592,544 2,160,512 25,195,263 24,860,084 769,755 755,835 (773,704) (17,494) 755,835 (773,704) (17,494) Others: Sold Bought Total 3,267,592 2,444,194 2,954,530 2,191,101 23,119 27,933 (6,253) 19,066 ¥ / ¥ / ¥0(30,380) ¥(21,161) 95 (continued) March 31, 2001 Listed transactions: Futures contracts: Sold Bought Options: Sold Bought Unlisted transactions: Forward rate agreement: Sold Bought Swaps: Receivable fixed rate/Payable floating rate Receivable floating rate/Payable fixed rate Receivable floating rate/Payable floating rate, etc. Others: Sold Bought Total Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $000,477 2,121 $,0000—. — $0,00(3) 17 $(000(3) 17 16,384 5,025 8,390 13,153 347,553 327,623 17,437 26,372 19,727 — — 80 — 203,351 200,646 6,212 23,846 17,684 6 4 2 (12) 6,100 (6,244) (141) 186 225 5 2 2 (12) 6,100 (6,244) (141) (50) 153 $ / $ , / $0,(245) $0,(170) Notes: 1. The above transactions are valuated by market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which hedge accounting method was applied are not included in the figures above. 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial Futures Exchange and others. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models. 3. Others consists of cap, floor and swaption transactions. (2) Currency Derivatives March 31, 2001 Unlisted transactions: Currency swaps Total March 31, 2001 Unlisted transactions: Currency swaps Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥4,309,192 ¥3,169,586 ¥0,000,00/. ¥0,000,00/. ¥1,482 ¥1,482 ¥1,482 ¥1,482 Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $34,779 $25,581 $0),,00/. $0,000/. $11 $11 $11 $11 Notes: 1. The above transactions are valuated by market value and the valuated gains (losses) are accounted for in the consolidated statements of income. 2. Market value is calculated mainly discounted present value. 96 (continued) 3. Currency swaps whose profit and loss are recognized on accrual basis based on ‘Temporary Treatment of Auditing on Continuous Adoption of the Accounting Standard for Foreign Currency Transactions in Banking Industry’ (published by JICPA, April 2000) are excluded from the previous table. The contract amount to currency swaps which are recognized on accrual basis are as follows: March 31, 2001 Unlisted transactions: Currency swaps March 31, 2001 Unlisted transactions: Currency swaps Contract amount Millions of yen Market value Net valuated gains (losses) ¥1,833,414 ¥(69,269) ¥(69,269) Millions of U.S. dollars Contract amount Market value Net valuated gains (losses) $14,797 $(559) $(559) 4. Forward foreign exchange and currency options which are of the following types are not included in the figures above: 1) Those that are revaluated at year-end and the revaluated gains (losses) are accounted for in the consolidated statements of income. 2) Those that were allotted to financial assets/liabilities by foreign currency and whose market values are already reflected in the amount of the financial assets/liabilities on the consolidated balance sheets. 3) Those that were allotted to financial assets/liabilities by foreign currency and the financial assets/liabilities that are allotted to are eliminated in the process of consolidation. The contract amount of currency and foreign exchange related transactions which are revaluated at the consolidated balance sheet date are as follows: March 31, 2001 Unlisted transactions: Forward foreign exchange contracts: Sold Bought Currency options: Sold Bought (3) Bond Derivatives March 31, 2001 Listed transactions: Futures contracts: Sold Bought Total Millions of yen Contract amount Millions of U.S. dollars Contract amount ¥4,296,653 5,633,384 694,904 689,497 $34,678 45,467 5,608 5,564 Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥00,188 23,066 ¥ / ¥ — — ¥ / ¥0)(6) 112 ¥106 ¥0)(6) 112 ¥106 97 (continued) March 31, 2001 Listed transactions: Futures contracts: Sold Bought Total Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $001 186 $ / $ — — $ / $(0) 0 $(0 $(0) 0 $(0 Notes: 1. The above transactions are valuated by market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which hedge accounting method was applied are not included in the figures above. 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange Market. (4) Credit Derivative Transactions March 31, 2001 Unlisted transactions: Others: Sold Bought Total March 31, 2001 Unlisted transactions: Others: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥147 147 ¥ / ¥ — — ¥ / ¥(4) 6 ¥(2 ¥(4) 6 ¥(2 Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $1 1 $/ $ — — $ / $(0) 0 $(0 $(0) 0 $(0 Notes: 1. The above transactions are valuated by market value and the valuated gains (losses) are accounted for in the consolidated statements of income. 2. Market value is calculated based on factors such as price of the relevant commodity and contract term using discounted present value and option pricing models. 98 (Appendix) Previous Year’s Information on Derivative Transactions Outstanding derivative financial instruments as of March 31, 2000, were as follows: (1) Interest Rate-Related Transactions March 31, 2000 Listed transactions: Futures contracts: Sold Bought Options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option premiums Unlisted transactions: Swaps: Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥ 9,784,429 5,657,962 ¥ 670,310 249,452 ¥9,765,752 5,651,207 ¥ 18,677 (6,754) 13,776,338 3,441 12,329,538 2,609 6,025,776 1,059 5,323,445 1,720 — — — — 556 2,884 1,786 822 407 1,581 (652) (139) Receivable fixed rate/Payable floating rate Receivable floating rate/Payable fixed rate Receivable floating rate/Payable floating rate, etc. 34,478,328 24,638,127 25,024 15,236,759 8,588,126 17,796 573,908 (267,975) (135) 573,908 (267,975) (135) Others: Sold Option premiums Bought Option premiums Total Notes: 1. Market values 609,287 2,688 123,982 1,429 599,271 113,966 1,148 1,539 827 (603) ¥ / ¥ / ¥ / ¥321,572 The market values listed represent the closing prices on the Tokyo International Financial Futures Exchange and other exchanges at the consolidated balance sheet date. The market values of unlisted transactions are calculated by using mainly the discounted present value or option pricing model. 2. Option premiums shown in this table are accounted for on the consolidated balance sheets. 3. “Others” consists of cap, floor and swaption transactions. 4. The market value and unrealized gains (losses) on interest swap transaction at March 31, 2000, include ¥343,651 million of accrued swap interest that was stated in the consolidated statements of income. 99 5. Details of interest rate swap notional amounts according to time to maturity are as follows: March 31, 2000 Receivable fixed rate/Payable floating rate Receivable floating rate/Payable fixed rate Millions of yen One year or less More than one year to three years Over three years Total ¥19,241,568 ¥12,494,950 ¥2,741,809 ¥34,478,328 16,050,001 5,586,090 3,002,035 24,638,127 Receivable floating rate/Payable floating rate, etc. 7,227 4,350 13,446 25,024 6. Derivative financial products transactions that are included in the trading account are not shown above because those transactions were valued at their fair market prices and evaluation gains (losses) was included in the consolidated statements of income. Contract amount included in the trading account are as follows: Millions of yen Contract amount Market value ¥ 422,513 ¥ 422,244 585,857 583,533 1,891,590 260 2,560,186 446 736,133 173 1,332,250 279 23 231 27 126 678,521 1,324,902 678,458 1,325,226 34,706,694 32,590,848 1,636,745 3,411,883 9,329 3,077,923 4,886 385,949 (506,149) (13,467) 21,935 58,646 March 31, 2000 Listed transactions: Futures contracts: Sold Bought Options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option premiums Unlisted transactions: Forward rate agreements: Sold Bought Swaps: Receivable fixed rate/Payable floating rate Receivable floating rate/Payable fixed rate Receivable floating rate/Payable floating rate, etc. Others: Sold Option premiums Bought Option premiums 100 (2) Currency and Foreign Exchange-Related Transactions March 31, 2000 Unlisted transactions: Currency swaps: U.S. dollar Others Notes: 1. Market values Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥2,779,199 1,866,061 913,137 ¥1,179,058 935,342 243,715 ¥(54,273) (43,375) (10,897) ¥(54,273) (43,375) (10,897) The market values are calculated by using discounted present value. 2. The market value or unrealized loss for currency swap transactions at March 31, 2000, includes ¥6,647 million (losses) of accrued swap inter- est that was stated in the consolidated statements of income. 3. Derivative financial products transactions that are included in the trading account are not shown above because those transactions were valued at their fair market prices and evaluation gains (losses) was included in the consolidated statements of income. Contract amount included in the trading account is as follows: March 31, 2000 Unlisted transactions: Currency swaps: U.S. dollar German mark Others Millions of yen Contract amount Market value ¥3,887,543 2,599,267 554,556 733,720 ¥ (5,539) (15,018) (2,833) 12,312 4. Forward foreign exchange contracts, currency options and other currency-related derivative financial instruments are not shown here because they were revalued at the consolidated balance sheet date and their gains (losses) were included in the consolidated statements of income, or because they are reflected on the consolidated balance sheets as foreign currency denominated monetary assets and liabilities. Contract amount of currency and foreign exchange related derivative financial instruments revalued at the consolidated balance sheet date are as follows: March 31, 2000 Listed transactions: Currency futures: Sold Bought Unlisted transactions: Forward foreign exchange contracts: Sold Bought Currency options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option premiums Millions of yen Contract amount ¥ 356 20 ¥2,185,551 3,697,674 188,930 4,105 170,453 3,600 156,601 2,368 178,950 4,473 101 (3) Equity-Related Transactions March 31, 2000 Unlisted transactions: Options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option premiums Equity-related swaps Total Notes: 1. Market values Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥ 198 1 — 198 1 — 897,438 ¥ / ¥— — — — — ¥ / ¥ 0 ¥ 1 — 0 — (0) — (18,554) — (18,554) ¥ / ¥(18,554) Market values are calculated by using the pricing method, based on the closing prices on the Tokyo Stock Exchange at the consolidated balance sheet date. 2. Option premiums shown in this table are accounted for on the consolidated balance sheets. 3. Derivative financial products transactions that are included in trading account are not shown here because those transactions were valued at their fair market prices and evaluation gains (losses) was included in the consolidated statements of income. Contract amount included in trading account is as follows: Millions of yen Contract amount Market value ¥ 1,536 101 ¥1,530 101 11,740 36 21,880 26 4,578 53 1,902 53 37 31 97 30 March 31, 2000 Listed transactions: Stock index futures contracts: Sold Bought Stock index options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option Premiums 102 (4) Bond-Related Transactions March 31, 2000 Listed transactions: Futures contracts: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥74,904 — ¥ / ¥— — ¥ / ¥76,182 — ¥ / ¥(1,277) — ¥(1,277) Notes: 1. The market values listed represent the closing prices on the Tokyo Stock Exchange and other exchanges at the consolidated balance sheet date. 2. Derivative financial products transactions that are included in the trading account are not shown above because those transactions were valued at their fair market prices and evaluation gains (losses) was included in the consolidated statements of income. Contract amount included in the trading account is as follows: March 31, 2000 Listed transactions: Futures contracts: Sold Bought Futures options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option premiums Unlisted transactions: Options: Sold Call Option premiums Put Option premiums Bought Call Option premiums Put Option premiums Millions of yen Contract amount Market value ¥28,726 35,094 ¥28,818 35,147 838 5 8,580 11 4,477 16 37,370 90 — — 21,670 251 29,272 167 7,837 51 2 7 11 14 — 118 106 14 103 36. Segment Information (1) Business segment information Some of the consolidated subsidiaries are engaged in securities, trust, leasing and other businesses in addition to the commercial (2) Geographic segment information banking business. As those activities are not deemed material, business segment information has not been disclosed. Year ended March 31, 2001 Operating income Customers Intersegment Domestic Americas Europe Millions of yen Asia and Oceania Subtotal Interarea elimination Consolidated total ¥01,410,422 111,842 ¥0,164,903 111,432 ¥0,047,571 17,058 ¥0,100,284 ¥01,723,182 278,864 38,530 ¥,00000,0—. ¥01,723,182 — (278,864) Total Operating expenses 1,522,264 1,771,347,019 276,336 259,322 64,630 74,385 138,815 133,426 2,002,047 1,814,154 (278,864) (274,848) 1,723,182 1,539,306 Operating profit Millions of U.S. dollars ¥00,175,245 $ 0,001,414 ¥0,017,013 $0,000,137 ¥000(9,755) ¥0,005,388 ¥00,187,892 $00000,(78) $0,000,043 $00,001,516 ¥0,00(4,016) ¥00,183,876 $0,000,0(32) $ 1,484 Assets Millions of U.S. dollars ¥47,434,438 $ 0,382,844 ¥2,322,229 $ 18,742 ¥1,279,831 $ 10,329 ¥2,920,478 ¥53,956,977 $ 23,571 $00,435,488 ¥(2,107,290) ¥51,849,687 $0,0(17,007) $ 418,480 Year ended March 31, 2000 Operating income Customers Intersegment Total Operating expenses Domestic Americas Europe Millions of yen Asia and Oceania Subtotal Interarea elimination Consolidated total ¥ 1,808,407 77,421 ¥ 129,272 23,014 ¥ 90,029 21,863 ¥ 119,786 15,752 ¥ 2,147,495 138,052 ¥ — (138,052) ¥ 2,147,495 — 1,885,829 1,772,018 152,286 143,625 111,893 109,852 135,539 122,775 2,285,548 2,148,272 (138,052) (137,274) 2,147,495 2,010,998 Operating profit ¥ 113,810 ¥ 8,661 ¥ 2,040 ¥ 12,764 ¥ 137,276 ¥ (778) ¥ 136,497 Assets ¥44,745,840 ¥2,319,292 ¥1,062,201 ¥3,070,871 ¥51,198,205 ¥(2,702,596) ¥48,495,608 Notes: 1. The geographic segmentation is decided based on the degrees of following factors: geographic proximity, similarity of economic activities and relationship of business activities among regions. 2. Americas includes the United States, Canada and others; Europe includes the United Kingdom, Germany and others; Asia and Oceania includes Singapore, Hong Kong, Australia and others except Japan. 3. (a) As shown in Notes to consolidated financial statements, the Bank changed the depreciation method from the declining balance method to the straight-line method from this fiscal year. Consequently, operating profit increased by ¥1,482 million ($11 million) in Japan, compared with the prior accounting method. (b) As shown in Notes to consolidated financial statements, accounting standard for employee retirement benefit was applied from the fiscal year ended March 31, 2001. Consequently, operating profit increased by ¥9,558 million ($77 million) in Japan, compared with the prior accounting method. (c) As shown in Notes to consolidated financial statements, accounting standard for financial instruments was applied from the fiscal year ended March 31, 2001, and the method to evaluate securities and derivatives and the method of hedge accounting were changed. Consequently, operating profit increased by ¥35,427 million ($285 million) in Japan, by ¥572 million ($4 million) in Americas, and by ¥31 million ($0 million) in Europe, and by ¥114 million ($0 million) in Asia and Oceania, compared with prior accounting method. Effective April 1, 2000, income and expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which has been changed from prior accounting that presented net by transaction. As a result, operating income and expenses decreased by ¥132,394 million ($1,068 million) in Japan, by ¥4,340 million ($35 million) in Americas, by ¥14,269 million ($115 million) in Europe, and by ¥4,580 million ($36 million) in Asia and Oceania for 2001 compared with the prior accounting method. (d) As shown in Notes to consolidated financial statements, enterprise tax other than relating to pre-tax income was included in operating expenses. Effective April 1, 2000, the Special ordinance concerning taxation standard for enterprise taxes in relation to banks in the Tokyo Metropolis (Tokyo Metropolis Ordinance 145 of April 1, 2000) was enacted, and the enterprise tax in Tokyo, which was not included in operating expenses for prior period, was included in operating expenses in Japan by the amount of ¥8,733 million ($70 million) for 2001. Operating income or expenses represent total income or expenses excluding Gains or losses on dispositions of premises and equip- ment, Collection of written-off claims, Transfer to (from) Other reserves, Gains on exemption of obligation, Losses on disposal of loans at a subsidiary and Amortization of unrecognized net transi- tion obligation for employee retirement benefit. 104 (3) Operating income from overseas operations (i) Operating income from overseas operations (ii) Consolidated operating income (i) / (ii) Millions of yen 2001 2000 ¥0,312,760 1,723,182 18.2%. ¥0,339,087 2,147,495 15.7%. Millions of U.S. dollars 2001 $02,524 13,907 18.2%. From fiscal 1999, operating income from overseas operations is listed in place of operating income from international operations to express foreign trading activities more correctly. Operating income from overseas operations comprises transactions at the Bank’s over- seas branches and income from overseas consolidated subsidiaries. The composition of this substantial volume of transactions is not broken down by counterparty and, therefore, data by region and country have not been included. 37. Subsequent Events The Bank merged with The Sumitomo Bank, Limited and transferred its assets, liabilities, all the claims and obligations and employees to The Sumitomo Bank, Limited as of April 1, 2001. 105 Independent Certified Public Accountants’ Report 106 Nonconsolidated Balance Sheets (Supplemental Information) Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) March 31, 2001 and 2000 Assets Cash and due from banks Call loans and bills bought Commercial paper and other debt purchased Trading assets Money held in trust Securities Loans and bills discounted Foreign exchanges Other assets Premises and equipment Deferred tax assets Customers’ liabilities for acceptances and guarantees Reserve for possible loan losses Millions of yen 2001 2000 ¥02,730,973 ¥ 2,095,204 197,492 640 1,104,111 72,381 6,911,602 31,939,952 316,149 1,156,771 317,774 583,559 2,524,300 (660,454) 86,437 3,097 565,596 22,208 10,199,669 30,575,498 262,590 992,360 286,354 524,199 2,637,631 (424,799) Millions of U.S. dollars 2001 $022,041 697 25 4,564 179 82,321 246,775 2,119 8,009 2,311 4,230 21,288 (3,428) Total assets ¥48,461,818 ¥46,559,485 $391,136 Liabilities and stockholders’ equity Liabilities Deposits Call money and bills sold Commercial paper Trading liabilities Borrowed money Foreign exchanges Bonds Convertible bonds Other liabilities Reserve for employee retirement benefit Reserve for possible losses on loans sold Other reserves Deferred tax liabilities for land revaluation Acceptances and guarantees Total liabilities Stockholders’ equity Capital stock: Common stock Preferred stock Capital surplus Earned surplus reserve Land revaluation excess Retained earnings Total stockholders’ equity ¥33,534,079 ¥33,342,655 2,558,919 451,000 161,238 1,953,529 30,218 270,000 95 2,856,182 32,099 94,853 9 32,092 2,524,300 4,600,490 1,136,800 172,176 1,596,797 38,368 470,000 — 1,885,491 14,054 67,163 9 27,524 2,637,631 $270,654 37,130 9,175 1,389 12,887 309 3,793 — 15,217 113 542 0 222 21,288 ¥46,180,587 ¥44,307,196 $372,724 ¥00,640,129 ¥00,639,934 402,772 899,521 124,120 48,908 137,032 402,577 899,521 131,261 42,690 165,051 ¥02,281,230 ¥02,252,289 $005,166 3,249 7,260 1,059 344 1,332 $018,411 Total liabilities and stockholders’ equity ¥48,461,818 ¥46,559,485 $391,136 Notes: 1. Translation into U.S. dollars has been made on the basis of ¥123.90 to US$1, the effective exchange rate at March 31, 2001. 2. Amounts less than one million have been omitted. 107 Nonconsolidated Statements of Income (Supplemental Information) Sumitomo Mitsui Banking Corporation (Formerly The Sakura Bank, Limited) Years ended March 31, 2001 and 2000 Income Interest income: Interest on loans and discounts Interest and dividends on securities Other interest income Fees and commissions Trading profits Other operating income Other income Total income Expenses Interest expenses: Interest on deposits Interest on borrowings, bonds and rediscounts Other interest expenses Fees and commissions Trading losses Other operating expenses General and administrative expenses Transfer to reserve for possible loan losses Other expenses Transfer to other reserves Total expenses Income before income taxes Income taxes: Current Deferred Net income Per share of common stock: Net income Net income—diluted Millions of yen 2001 2000 Millions of U.S. dollars 2001 ¥ 733,568 130,003 152,935 111,790 20,776 49,455 243,304 ¥ 729,354 111,654 497,809 102,556 8,498 57,954 423,100 ¥1,441,834 ¥1,930,928 ¥0,239,280 97,255 81,409 42,512 — 7,810 380,520 (43,728) 497,715 — ¥0,166,591 81,685 482,863 42,441 412 24,231 430,417 155,208 393,004 0 ¥1,302,774 ¥1,776,858 ¥0,139,060 ¥0,154,069 ¥0,001,767 55,131 ¥0,003,986 92,965 ¥0,082,160 ¥0,057,117 $05,920 1,049 1,234 902 167 399 1,963 $11,637 $01,931 784 657 343 — 63 3,071 (352) 4,017 — $10,514 $01,122 $00,014 444 $00,663 Yen U.S. dollars ¥17.28 17.24. ¥11.24 — $0.13 0.13. Notes: 1. Translation into U.S. dollars has been made on the basis of ¥106.15 to US$1, the effective exchange rate at March 31, 2001. 2. Amounts less than one million have been omitted. 108 Consolidated Balance Sheets Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries March 31, 2001 and 2000 Assets Cash and due from banks (Note 9) Deposits with banks (Notes 9, 30) Call loans and bills bought Receivables under resale agreements Commercial paper and other debt purchased (Notes 9, 30) Trading assets (Notes 3, 4, 9, 30) Money held in trust (Note 30) Securities (Notes 4, 9, 30) Loans and bills discounted (Notes 5, 9) Foreign exchanges Other assets (Notes 4, 6, 9, 27) Premises and equipment (Notes 7, 9) Lease assets (Note 8) Deferred tax assets Goodwill Customers’ liabilities for acceptances and guarantees (Note 16) Reserve for possible loan losses Total assets Liabilities, minority interests and stockholders’ equity Liabilities Deposits (Notes 9, 10) Call money and bills sold (Note 9) Payables under repurchase agreements (Note 9) Commercial paper Trading liabilities (Notes 9, 11) Borrowed money (Notes 9, 12) Foreign exchanges Bonds (Note 13) Convertible bonds (Note 14) Pledged money for securities lending transactions Other liabilities (Note 15) Reserve for employee retirement benefit (Note 27) Reserve for possible losses on loans sold Other reserves Deferred tax liabilities Deferred tax liabilities for land revaluation (Note 17) Acceptances and guarantees (Notes 9, 16) Total liabilities Minority interests (Note 18) Stockholders’ equity (Note 19) Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 2001 3,755,464 139,189 2,905,306 168,497 1,913,404 52,912 16,845,970 32,630,388 470,092 4,297,808 683,833 827,134 598,280 6,224 1,987,164 (756,830) ¥ 4,868,132 ¥ 1,323,157 2,642,560 252,075 — 178,331 1,745,425 109,039 8,968,853 32,940,880 362,889 2,425,278 680,334 823,859 704,881 — 1,560,437 (950,499) ¥67,392,974 ¥53,767,504 5,332,877 5,262,187 594,456 1,068,607 2,322,477 213,813 2,061,693 101,106 4,607,098 3,116,359 7,972 74,639 8 24,271 103,401 1,987,164 ¥38,071,013 ¥35,231,324 2,745,132 — 192,507 952,649 2,518,700 163,951 1,566,242 101,106 3,288,365 2,782,112 49,715 116,240 8 3,585 111,692 1,560,437 ¥64,949,149 ¥51,383,774 ¥00,606,673 ¥00,579,371 $007,007 30,310 1,123 23,449 1,360 15,443 427 135,964 263,361 3,794 34,688 5,519 6,676 4,829 50 16,038 (6,108) $543,930 $307,272 43,042 42,471 4,798 8,625 18,745 1,726 16,640 816 37,184 25,152 64 602 0 196 835 16,038 $524,206 $004,896 Preferred stock, no par value; authorized 970,000 thousand shares and issued 167,000 thousand shares in 2001 and 2000 Common stock, par value ¥50; authorized 7,500,000 thousand shares and issued 3,141,062 thousand shares in 2001 and 2000 Capital surplus Land revaluation excess (Note 17) Retained earnings Foreign currency translation adjustments Treasury stock Parent bank stock held by subsidiaries Total stockholders’ equity Total liabilities, minority interests and stockholders’ equity See accompanying notes to consolidated financial statements. ¥00,250,500 ¥00,250,500 $002,022 502,348 643,080 167,613 319,924 (32,171) (4) (14,140) 502,348 643,080 168,119 253,573 — (16) (13,247) ¥01,837,151 ¥01,804,358 ¥67,392,974 ¥53,767,504 4,054 5,190 1,353 2,582 (259) (0) (114) $014,828 $543,930 110 Consolidated Statements of Income Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries Years ended March 31, 2001, 2000 and 1999 Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 1999 2001 Income Interest income: Interest on loans and discounts Interest and dividends on securities Interest on receivables under resale agreements Other interest income Fees and commissions (Note 20) Trading profits (Note 21) Other operating income (Note 22) Other income (Note 23) Total income Expenses Interest expenses: Interest on deposits Interest on borrowings and rediscounts Interest on payables under repurchase agreements Other interest expenses Fees and commissions (Note 20) Trading losses (Note 21) Other operating expenses (Note 24) General and administrative expenses (Note 27) Transfer to reserve for possible loan losses Other expenses (Note 25) Total expenses Income (loss) before income taxes and minority interests Income taxes (Note 26): Current Deferred Minority interests in net income Net income (loss) Per share data: ¥0,858,927 ¥0,844,865 ¥1,044,429 185,039 — 475,792 212,090 107,402 615,925 188,119 193,828 10,861 264,438 202,836 84,376 552,060 560,256 162,129 — 521,036 182,637 69,760 589,638 643,550 ¥2,727,586 ¥3,013,618 ¥2,828,799 ¥0,397,616 ¥0,288,363 ¥0,537,301 118,313 — 393,401 33,634 81,847 466,419 523,937 654,245 778,729 74,574 22,224 180,092 33,918 2,146 505,193 450,268 32,103 755,978 79,239 — 506,712 36,775 22,853 510,433 466,140 245,182 641,414 ¥2,454,118 ¥2,797,115 ¥3,587,829 ¥0,273,468 ¥0,216,503 ¥0(759,030) ¥0,057,439 ¥0,050,794 ¥0,043,048 (231,468) 128,327 96,387 ¥0,185,766 ¥0,147,182 ¥0(188,419) 1,721 4,231 7,444 ¥ 83,469 ¥0,061,875 ¥0(568,889) $ 6,932 1,564 88 2,134 1,637 681 4,456 4,522 $22,014 $03,209 602 179 1,454 274 17 4,077 3,634 259 6,102 $19,807 $02,207 $00,463 1,036 $01,499 34 $00,674 Yen U.S. dollars (Note 1) Net income (loss) Net income—diluted Declared dividends on common stock Declared dividends on preferred stock (first series type I) Declared dividends on preferred stock (second series type I) ¥25.50 24.93 6.00 10.50 28.50 ¥18.61 18.17 6.00 10.50 28.50 ¥(181.48) .— 6.00 0.03 0.08 $0.21 0.20 0.05 0.08 0.23 See accompanying notes to consolidated financial statements. 111 Consolidated Statements of Stockholders’ Equity Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries Years ended March 31, 2001, 2000 and 1999 Millions of yen Preferred stock Common stock Capital surplus Earned surplus reserve Land revaluation excess Retained earnings Foreign currency translation adjustments Deduction* Total Balance at March 31, 1998 Preferred stock issued Reclassification (Notes 17 and 19) Increase due to change of consolidation policy Cash dividends paid Net income Change of treasury stock and parent bank stock held by subsidiaries Balance at March 31, 1999 Transfer from land revaluation excess to retained earnings Change of effective tax rates and others Cash dividends paid Net income Change of treasury stock and parent bank stock held by subsidiaries Balance at March 31, 2000 Transfer from land revaluation excess to retained earnings Change of effective tax rates and others Cash dividends paid Net income Adoption of revised accounting standard for foreign currency translation Change of treasury stock and parent bank stock held by subsidiaries ¥000,0—. ¥502,348 ¥392,580 — 250,500 250,500 — — ¥(94,595 — — (94,595) — — — — — — — — — — — — — — — — ¥000,0—. ¥682,075 ¥00,00—. ¥00000(5) ¥1,671,593 501,000 165,289 — 165,289 — 94,595 — — — — — 24,170 — (22,772) — (568,889) — — — — — — 24,170 (22,772) (568,889) — — — (13,267) (13,267) ¥250,500 ¥502,348 ¥643,080 ¥(00,0—. ¥165,289 ¥209,178 ¥00,00—. ¥,(13,272) ¥1,757,123 — — — — — — — — — — — — — — — — — — — — (3,152) 3,152 5,983 — — (20,633) 61,875 — — — — — — — — — — — — 9 — 5,983 (20,633) 61,875 9 ¥250,500 ¥502,348 ¥643,080 ¥(00,0—. ¥168,119 ¥253,573 ¥00,00—. ¥,(13,263) ¥1,804,358 — — — — — — — — — — — — — — — — — — — — — — — — — — (5,281) 5,281 4,775 — — (22,399) 83,469 — — — — — — (32,171) — — — — — — 4,775 (22,399) 83,469 (32,171) — — (880) (880) Balance at March 31, 2001 ¥250,500 ¥502,348 ¥643,080 ¥(000—. ¥167,613 ¥319,924 ¥(32,171) ¥(14,144) ¥1,837,151 Balance at March 31, 2000 Transfer from land revaluation excess to retained earnings Change of effective tax rates and others Cash dividends paid Net income Adoption of revised accounting standard for foreign currency translation Change of treasury stock and parent bank stock held by subsidiaries Millions of U.S. dollars (Note 1) Preferred stock Common stock Capital surplus Earned surplus reserve Land revaluation excess Retained earnings Foreign currency translation adjustments Deduction* Total $2,022 $4,054 $5,190 $(0,0—. $1,357 $2,047 $(0—. $(107) $14,563 — — — — — — — — — — — — — — — — — — — — — — — — (42) 42 38 — — — — — (181) 674 — — — — — — (259) — — — — — — 38 (181) 674 (259) — (7) (7) Balance at March 31, 2001 $2,022 $4,054 $5,190 $(0,0—. $1,353 $2,582 $(259) $(114) $14,828 * Deduction includes treasury stock and parent bank stock held by subsidiaries. See accompanying notes to consolidated financial statements. 112 Consolidated Statements of Cash Flows Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries Years ended March 31, 2001 and 2000 Cash flows from operating activities Income before income taxes and minority interests Depreciation of premises and equipment Depreciation of lease assets Amortization of goodwill Net (income) loss from nonconsolidated entities accounted for by the equity method Net change in reserve for possible loan losses Net change in reserve for possible losses on loans sold Net change in reserve for employee retirement benefit Interest income Interest expenses Net gains on securities Net (income) loss from money held in trust Net exchange (gains) losses Net losses from disposition of premises and equipment Net losses from disposition of lease assets Gain on sale of business operation Loss from additional payment for pension liabilities Net change in trading assets Net change in trading liabilities Net change in loans and bills discounted Net change in deposits Net change in negotiable certificates of deposit Net change in borrowed money (excluding subordinated debt) Net change in deposits with banks Net change in call loans and receivables under resale agreements Net change in pledged money for securities borrowing transactions Net change in call money and payables under repurchase agreements Net change in commercial paper Net change in pledged money for securities lending transactions Net change in foreign exchanges (assets) Net change in foreign exchanges (liabilities) Net change in bonds (excluding subordinated bonds) Interest received Interest paid Other, net Subtotal Additional payment for pension liabilities Income taxes paid Net cash provided by operating activities See accompanying notes to consolidated financial statements. Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 2001 ¥ 273,468 26,140 268,700 1,571 ¥(0,216,503 24,070 272,031 1 $ 2,207 211 2,169 13 (36,479) (192,154) (41,600) (46,355) (1,328,056) 674,508 (418,493) (268) (103,436) 15,097 3,575 — — (303,615) 433,148 350,155 2,687,498 154,263 (203,229) (1,087,125) (2,576,375) (652,884) 3,166,244 401,621 1,318,733 (107,134) 49,833 478,453 1,211,640 (837,803) 25,236 35,549 (315,850) (23,545) (2,715) (1,528,031) 874,315 (508,327) 760 73,864 8,306 33,342 (8,000) 21,460 826,416 (351,166) 2,514,357 271,528 1,061,647 (200,617) (1,875,746) 235,178 137,396 (615,238) (321,851) 1,154,362 30,430 22,124 524,910 1,430,203 (894,663) (429,627) (294) (1,551) (336) (374) (10,719) 5,444 (3,378) (2) (835) 122 29 — — (2,451) 3,496 2,826 21,691 1,245 (1,640) (8,774) (20,794) (5,269) 25,555 3,241 10,643 (865) 402 3,862 9,779 (6,762) 204 ¥3,604,878 — (47,172) ¥2,693,381 (21,578) (41,659) $29,095 — (381) ¥3,557,706 ¥2,630,143 $28,714 113 (Continued) Cash flows from investing activities Purchases of securities Proceeds from sale of securities Proceeds from maturity of securities Purchases of money held in trust Proceeds from sale of money held in trust Purchases of premises and equipment Proceeds from sale of premises and equipment Purchase of lease assets Proceeds from sale of lease assets Proceeds from sale of business operation Proceeds from sale of subsidiaries Millions of yen Millions of U.S. dollars (Note 1) 2001 2000 2001 ¥(28,751,233) ¥(38,223,957) 29,463,927 6,821,306 (59,516) 34,750 (36,175) 11,365 (325,621) 16,304 8,000 — 12,151,611 12,930,322 (91,300) 148,488 (49,183) 21,260 (314,383) 35,590 — 5,083 $(232,052) 98,076 104,361 (737) 1,198 (397) 172 (2,537) 287 — 41 Net cash used in investing activities ¥0(3,913,743) ¥0(2,289,615) $0(31,588) Cash flows from financing activities Proceeds from issuance of subordinated debt Repayment of subordinated debt Proceeds from issuance of subordinated bonds, convertible bonds and notes Repayment of subordinated bonds, convertible bonds and notes Dividends paid Dividends paid to minority stockholders Purchases of treasury stock Proceeds from sale of treasury stock ¥)00,010,000 (52,000) ¥)00,005,000 (47,000) $)00,0081 (420) 104,500 (143,550) (22,406) (192) (541) 548 149,150 (23,000) (20,640) (333) (714) 717 843 (1,159) (181) (1) (4) 5 Net cash (used in) provided by financing activities ¥00,(103,642) ¥)00,063,179 $00,0(836) Effects of exchange rate changes on cash and due from banks ¥)00,002,525 ¥00,00(9,226) $)00,0020 Net change in cash and due from banks ¥00,(457,154) ¥)00,394,481 $00(3,690) Cash and due from banks at beginning of year ¥(01,323,157 ¥00),928,701 $)010,680 Change in cash and due from banks due to newly consolidated subsidiaries Decrease of cash and due from banks caused from exception of consolidation 2,129 — — (25) 17 — Cash and due from banks at end of year ¥(00,868,132 ¥(01,323,157 $(007,007 See accompanying notes to consolidated financial statements. 114 Consolidated Statement of Cash Flows Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries Year ended March 31, 1999 Cash flows from operating activities Net loss Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization Transfer to reserve for possible loan losses Write-off of loans Losses on sale of loans and loans sold Securities gains, net Deferred income taxes Minority interests in net income Net change in trading assets and liabilities Net change in accrual and other, net Net cash provided by operating activities Cash flows from investing activities Net change in deposits with banks Net change in call loans Net change in commercial paper and other debt purchased Net change in money held in trust Net change in loans and bills discounted Proceeds from sale of securities Proceeds from maturity of securities Purchases of securities Purchases of premises and equipment Purchases of lease assets Other, net Net cash provided by investing activities Cash flows from financing activities Net change in deposits Net change in call money Net change in commercial paper and borrowed money Proceeds from issuance of preferred stock Proceeds from issuance of subordinated debt Proceeds from issuance of preferred securities Dividends paid Other, net Net cash used in financing activities Effect of increase in consolidated subsidiaries Effects of exchange rate changes on cash and due from banks Net change in cash and due from banks Cash and due from banks at beginning of year Cash and due from banks at end of year See accompanying notes to consolidated financial statements. Millions of yen 1999 ¥0,(568,889) 299,820 654,245 369,481 179,204 (87,778) (237,489) 1,721 150,384 539,138 ¥,1,299,837 ¥,1,608,594 587,175 55,801 131,564 1,748,431 7,290,157 654,920 (7,229,552) (64,249) (278,528) 218,901 ¥,4,723,214 ¥(4,246,208) (1,442,174) (1,891,537) 501,000 150,829 340,000 (22,772) (101,110) ¥(6,711,972) ¥00002,699 ¥00,(44,549) ¥0,(730,771) ¥,1,576,972 ¥(0,846,201 115 Notes to Consolidated Financial Statements Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) and Subsidiaries March 31, 2001, 2000 and 1999 Years Ended March 31, 1999 and 1998 1. Basis of Financial Statements Sumitomo Mitsui Banking Corporation (formerly The Sumitomo Bank, Limited) (the “Bank”), a Japanese corporation, maintains its records and prepares its financial statements in Japanese yen. The Bank and its consolidated domestic subsidiaries maintain their accounts and records in accordance with accounting prin- ciples and prevailing practices generally accepted in Japan, which are different from accounting and disclosure requirements of international accounting standards. The accounts of overseas consolidated subsidiaries are based on their accounting records maintained in conformity with gener- ally accepted accounting principles and the practices prevailing in the respective countries of domicile. In preparing the accompanying consolidated financial state- ments, certain reclassifications have been made in the consoli- dated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. The consolidated statements of stockholders’ equity for 2001, 2000 and 1999 have been prepared for the purpose of inclusion in the accompanying consolidated financial statements, although such statements were not required for domestic purposes and were not filed with the regulatory authorities. Amounts less than one million yen have been omitted. As a result, the totals in Japanese yen shown in the financial statements do not necessarily agree with the sum of the individual amounts. For the convenience of the readers, the accompanying U.S. dollar financial statements have been translated from Japanese yen, as a matter of arithmetical computation only, at the rate of ¥123.90 to US$1, the exchange rate prevailing at March 31, 2001. The translations should not be construed as a representa- tion that Japanese yen have been or could have been converted into U.S. dollars at that rate. 2. Significant Accounting Policies (1) Consolidation The consolidated financial statements include the accounts of the Bank and its significant subsidiaries. All significant intercompany balances and transactions have been eliminated. Effective April 1, 1998, a new accounting standard on con- solidated financial statements (the “New Standard”) has been adopted in Japan. The New Standard requires a company to consolidate any subsidiaries of which the company substantially controls the operations, even if it is not a majority owned subsid- iary. Control exists where the company has (a) the power to appoint or remove the majority of the numbers of the board of directors or equivalent governing body; or (b) the power to cast the majority votes at meetings of the board of directors or equivalent governing body, etc. The consolidated financial statements include the accounts of consolidated subsidiaries, of which the fiscal year-ends on or after December 31. In case that these subsidiaries have a significant 116 transaction during the period from their fiscal year-end to March 31, the Bank makes an adjustment to the consolidated financial statements to be comprehensive. In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to minority shareholders, are evaluated using the fair value at the time the Bank acquired control of the respective subsidiaries. Goodwill on The Sumitomo Credit Service Company, Ltd. is amortized using the straight-line method over five years. Goodwill on the other entities is charged or credited to income directly. Investments in major affiliates are accounted for by the equity method. Net income (loss) from such investments were ¥36,479 million ($294 million) recorded as other income and ¥(35,549) million recorded as other expense for 2001 and 2000, respectively. (2) Statements of cash flows For the purposes of the consolidated statements of cash flows, cash and cash equivalents represent cash and due from banks. Starting from fiscal 1999, the definition of due from banks has been changed to include all non-interest bearing deposits. The Bank prepared the 2001 and 2000 consolidated state- ments of cash flows as required by and in accordance with the “Standards for Preparation of Consolidated Cash Flow Statements, etc.,” effective from the year ended March 31, 2000. The 1999 consolidated statement of cash flows, which was voluntarily prepared for the purpose of inclusion in the consoli- dated financial statements in a form familiar to readers outside Japan, has not been restated. One of the significant differences between the consolidated statements of cash flows in 2001 and 2000 and in 1999 is the use of pretax income in 2001 and 2000 instead of net income in 1999. Additionally, some of the classification of activities, such as loans (previously classified as investing) and deposits (previously classified as financing), were changed to operating activities. (3) Trading assets and liabilities Financial instruments, such as derivatives and trading securities, which are held for the short term in anticipation of market gains, are recorded at fair value. Such gains and losses are included in trading profits or losses on the consolidated statements of income. Trading assets and liabilities are accounted for based on trading date. (4) Securities Prior to April 1, 2000, securities, including stocks, corporate bonds, and Japanese national and local government bonds, were stated at moving-average cost. Securities included in money held in trust were also recorded at moving-average cost. Effective April 1, 2000, as for securities other than those in trading portfolio, debt securities that the Bank and consolidated subsidiaries have the intent and ability to hold to maturity (held-to- maturity securities) are carried at amortized cost using the moving-average method. Investments in nonconsolidated subsidiaries and affiliates that are not accounted for by the equity method are carried at cost us- ing the moving-average method. Securities excluding those classified as trading securities, held-to-maturity or investments in nonconsolidated subsidiaries and affiliates are defined as other securities. Debt securities in other securities are carried at amortized cost using the moving-average method. Equity securities in other securities are carried at cost using the moving-average method. Securities held by the consolidated overseas subsidiaries are carried at cost (amortized cost) using primarily the specific identification method. Securities included in money held in trust are carried in the same manner. (5) Derivative transactions Derivative transactions, excluding those classified as trading derivatives, are carried at fair value, though some consolidated overseas subsidiaries account for derivative transactions in accordance with local accounting standards. (6) Hedge accounting In accordance with the Industry Audit Committee Report No. 15 ‘Temporary Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’ issued by JICPA in 2000, the Bank applies hedge accounting, abiding by the following requirements: (i) Loans, deposits and other interest-bearing assets and liabilities as a whole shall be recognized as the hedged portfolio. (ii) Derivatives as hedging instruments shall effectively reduce the interest rate exposure of the hedged portfolio. (iii) Effectiveness of hedging activities shall be evaluated on a quarterly basis. Certain derivatives managed by some foreign branches are recorded on a cost basis using the short-cut method for interest rate swaps in view of consistency with the risk management policy. In accordance with the Industry Audit Committee Report No. 19 ‘Temporary Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Leasing Industry’ issued by JICPA in 2000, one of the consolidated domestic subsidiaries in the leasing industry applies a deferred hedge accounting related to portfolio hedge on liabilities. Deriva- tive transactions, such as interest rate swaps, are used in these hedging activities, and the contract amount is ¥564,560 million ($4,557 million), the fair value is ¥(12,688) million ($(102) million) and net unrealized loss is ¥(12,688) million ($(102) million) at March 31, 2001. Other domestic subsidiaries use the deferred hedge accounting or the short-cut method for interest rate swaps. Net of deferred unrealized gains and losses from hedging instruments is reported in other liabilities. Deferred unrealized losses and unrealized gains from hedging instruments at March 31, 2001 are ¥668,099 million ($5,392 million) and ¥680,130 million ($5,489 million), respectively. (7) Nonaccrual loans Loans are generally placed on nonaccrual status when such loans are classified as Bankrupt and Effectively Bankrupt and Potentially Bankrupt by the self-assessment rule (see (10) Reserve for possible loan losses). (8) Premises and equipment Premises and equipment are generally stated at cost less accumu- lated depreciation. The Bank computes depreciation for premises using the straight-line method over the estimated useful lives of the respective assets. The depreciation for equipment is com- puted using the declining-balance method over the estimated useful lives of the respective assets. Depreciation of premises and equipment owned by consolidated domestic subsidiaries is mainly computed using the declining- balance method, while depreciation of those owned by consolidated overseas subsidiaries is mainly computed using the straight-line method over the estimated useful lives of respective assets. (9) Software costs Capitalized software for internal use is depreciated using the straight-line method over its estimated useful lives (mainly five years) at the Bank and consolidated domestic subsidiaries, and included in other assets. (10) Reserve for possible loan losses Reserve for possible loan losses of the Bank and its major con- solidated subsidiaries is provided based on the internal rules for write-offs and reserves for loans. Based on the self-assessment rule for the credit quality of the assets (“self-assessment rule”), the Bank and its major consoli- dated subsidiaries classify a borrower into one of the following five risk categories according to the borrower’s credit risk: Bankrupt Borrowers who are legally bankrupt, Effectively Bankrupt Borrowers who are regarded as substantially in the same situation as legally bankrupt borrowers, Potentially Bankrupt Borrowers who are not currently in the status of bankrupt but are likely to become bank- rupt in future, Borrowers Requiring Caution or Normal Borrowers. For collateral and/or guaranteed loans of Bankrupt Borrowers and Effectively Bankrupt Borrowers, the Bank recognizes a portion exceeding the appraised value of collateral of and/or the amount 117 deemed collectible from guarantees of those loans as irrecover- able, and writes off the portion. For the years ended March 31, 2001 and 2000, the Bank and the consolidated subsidiaries made such write-offs of ¥887,791 million ($7,165 million) and ¥978,443 million, respectively. For loans of Bankrupt Borrowers and Effectively Bankrupt Borrowers, the Bank provides specific reserves. The amounts of the specific reserves are calculated by deducting the disposal value of collateral and/or the amount deemed collectible from guarantees, from the book balances of those loans which remain after the write-offs. The Bank also provides specific reserves for loans of Poten- tially Bankrupt Borrowers based on the estimated amount of recoveries from the collateral and/or guarantees and other pertinent indicators specific to the borrowers. assets, due to employee’s credited years of services at the bal- ance sheet date. Unrecognized net actuarial gain or loss is amor- tized from the next fiscal year using the straight-line method over certain years (mainly 10 years) within the average remaining ser- vice period of active employees. Unrecognized net obligation from initial application of the new accounting standard of ¥105,290 million ($850 million) is amortized using the straight-line method over five years. Due to the new accounting standard, Income before income taxes and minority interests for the year ended March 31, 2001, has increased compared with prior accounting method by ¥11,266 million ($91 million). Prepaid pension cost is reported in Other assets at March 31, 2001. The Bank also provides general reserves for loans of (13) Translation of foreign currencies Borrowers Requiring Caution and Normal Borrowers. The ratio of the general reserves is determined based on the Bank's loan loss experiences and economic conditions. The Bank provides additional reserve for the loans originated in certain countries based on management’s assessment of economic or political conditions of such countries. Reserve for possible loan losses of other consolidated subsid- iaries is provided for general claims by the amount deemed necessary based on the historical loan-loss ratio, and for doubtful claims by the amount deemed uncollectible based on respective assessments. (11) Reserve for possible losses on loans sold Reserve for possible losses on loans sold provides for contingent losses arising from decline of market value of underlying collateral for loans sold to the Cooperative Credit Purchasing Company, Limited. (12) Reserve for employee retirement benefit Under the terms of the Bank’s retirement plan, substantially all employees are entitled to a lump-sum payment at the time of retirement. The amount of reserve for employee retirement benefit is, in general, based on length of service, basic salary at the time of retirement and reason for retirement. Prior to April 1, 2000, the liability for lump-sum payments is stated at the amount which would be required to be paid by the Bank if all eligible employees voluntarily retired at the balance sheet date. In addition, the Bank has defined benefit pension plans which substantially cover all employees. Annual contributions, which con- sist of normal costs and amortization of prior service costs, are included in general and administrative expenses. Effective April 1, 2000, a new accounting standard for employee’s severance and retirement benefits was adopted in Japan. Reserve for employee retirement benefit (prepaid pension cost) is recorded based on an actuarial computation, which uses the present value of the projected benefit obligation and pension (ii) (i) The foreign currency financial statements are translated into Japanese yen at the exchange rate prevailing at respective year-ends, except for the stockholders’ equity accounts, which are translated at historical rates. (a) Foreign currency assets and liabilities of the Bank are translated into Japanese yen at the exchange rate pre- vailing at the date of the consolidated balance sheets, except for certain special investment accounts as approved by the Japanese regulatory authorities, which are translated at their historical rates. (b) Foreign currency accounts held by the consolidated subsidiaries are translated into the currency of the subsidiary at the exchange rate prevailing at the respective year-ends. Effective April 1, 2000, consolidated domestic subsidiaries adopt the revised ‘Accounting Standards for Foreign Currency Transactions’ (issued by the Business Accounting Deliberation Council in October 1999). As a result, Income before income taxes and minority interests for 2001 has decreased compared with prior accounting method by ¥48 million. In accordance with the revision of the accounting standard, the presentation of Foreign currency translation adjustments is changed from Assets to Stockholders’ equity and Minority interests. As a result, Assets decreased by ¥32,778 million ($264 million), Stockholders’ equity decreased by ¥32,171 million ($259 million), and Minority interests decreased by ¥607 million ($5 million) at March 31, 2001 compared with prior accounting method. (14) Lease transactions Financing leases where the ownership of the property is deemed to be transferred to the lessee are capitalized, while other financ- ing leases are allowed to be accounted for in the same manner as operating leases. Lease assets are depreciated using the straight-line method over the lease term with estimated salvage value. 118 Lease-related income is recognized on a straight-line basis over the full term of the lease, based on the contractual amount of lease fees per month. (15) Amounts per share Net income (loss) per share is computed by deducting dividends for preferred stock from net income (loss), divided by the weighted average number of shares of common stock, excluding treasury stock and parent bank stock held by subsidiaries, outstanding during each fiscal year. Declared dividends represent the cash dividends declared applicable to respective years, including dividends to be paid after the end of the year. (16) Reclassifications Certain prior year’s amounts have been reclassified in conformity with the 2001 presentation. These changes had no impact on previously reported results of operations or stockholders’ equity. (17) New accounting standard for financial instruments Effective April 1, 2000, a new accounting standard for financial instruments was adopted in Japan. Accordingly, the valuation methods of securities and derivatives, excluding those in the trad- ing portfolio, have been changed, and hedge accounting has been adopted. As a result, Income before income taxes and minority interests for 2001 has increased ¥20,738 million ($167 million) compared with the prior accounting method and Income and expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which repre- sents a change from the prior accounting that presented net by transaction. As a result, income and expenses for 2001 have decreased by ¥493,177 million ($3,980 million) though Income before income taxes and minority interests did not change. In addition, certain transactions under resale agreements and repurchase agreements are considered as financing activities, not as purchasing or selling activities, and reported in Receivables under resale agreements and Payables under repurchase agree- ments. As a result, the amount of Securities increased by ¥1,610,677 million ($13,000 million) at March 31, 2001 com- pared with the prior treatment as purchasing or selling activities. 3. Trading Assets Trading assets at March 31, 2001 and 2000, consisted of the following: Trading securities Derivatives of trading securities Derivatives of securities related to trading transactions Trading-related financial derivatives Other trading assets* Millions of yen 2001 2000 ¥ 247,429 19 18 914,197 751,740 ¥ 301,522 18 57 591,008 852,817 ¥1,913,404 ¥1,745,425 * Other trading assets includes commercial paper and other debt purchased related to trading transactions. 4. Securities Securities at March 31, 2001 and 2000, consisted of the following: Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks* Other* Millions of yen 2001 2000 ¥10,691,292 322,120 666,286 3,042,388 2,123,883 ¥3,488,594 358,977 714,032 3,396,547 1,010,700 ¥16,845,970 ¥8,968,853 Millions of U.S. dollars 2001 $ 1,997 0 0 7,379 6,067 $15,443 Millions of U.S. dollars 2001 $086,290 2,600 5,378 24,555 17,141 $135,964 * Japanese stocks and other include investments in nonconsolidated subsidiaries and affiliates of ¥197,762 million ($1,596 million) and ¥178,896 million at March 31, 2001 and 2000, respectively. Securities of ¥1,956,646 million ($15,792 million), which are used for security lending transactions for consumption, are included in the accounts of Securities, Other assets and Trading assets at March 31, 2001. 119 5. Loans and Bills Discounted Loans and bills discounted at March 31, 2001 and 2000, consisted of the following: Bills discounted Loans on notes and deeds Overdrafts Millions of yen 2001 2000 ¥01,474,217 26,332,159 5,824,011 ¥00,448,000 24,414,229 8,078,649 ¥32,630,388 ¥32,940,880 The following summarizes the non-accrual loans of the Bank and consolidated subsidiaries at March 31, 2001 and 2000. Bankrupt loans Non-accrual loans Total non-accrual loans Millions of yen 2001 2000 ¥1,875,729 1,535,566 ¥0,087,296 1,661,933 ¥1,611,295 ¥1,749,230 Millions of U.S. dollars 2001 $013,827 212,528 47,006 $263,361 Millions of U.S. dollars 2001 $17,611 12,394 $13,005 In addition to the non-accrual loans, the Bank and consolidated subsidiaries also classify loans overdue by three months or longer as substandard loans, and such loan balances at March 31, 2001 and 2000 were ¥49,909 million ($403 million) and ¥79,208 million, respectively. Restructured loans are loans for which the Bank and the consolidated subsidiaries have adjusted the terms of the loans in favor of borrowers as a means of financial assistance. These restructured loans are also classified as substandard and amounted to ¥128,581 million ($1,038 million) and ¥374,880 million at March 31, 2001 and 2000, respectively. 6. Other Assets Other assets at March 31, 2001 and 2000, consisted of the following: Accrued income and prepaid expenses Securities in custody Other 7. Premises and Equipment Premises and equipment at March 31, 2001 and 2000, consisted of the following: Land* Buildings Equipment and others Total Accumulated depreciation Net book value * Land includes land revaluation excess with related taxes referred to in Note 17. Millions of yen 2001 2000 ¥1,295,002 1,111,612 2,891,193 ¥0,501,086 704,390 1,219,801 ¥4,297,808 ¥2,425,278 Millions of yen 2001 2000 ¥0,416,299 286,758 323,721 ¥0,428,300 282,938 331,076 ¥1,026,779 (342,946) ¥1,042,315 (361,980) ¥0,683,833 ¥0,680,334 Millions of U.S. dollars 2001 $12,381 8,972 23,335 $34,688 Millions of U.S. dollars 2001 $3,360 2,314 2,613 $8,287 (2,768) $5,519 120 8. Lease Assets Lease assets at March 31, 2001 and 2000, were as follows: Equipment and others Accumulated depreciation 9. Assets Pledged as Collateral Assets pledged as collateral at March 31, 2001 and 2000, were as follows: Assets pledged as collateral: Cash and due from banks and Deposits with banks Commercial paper and other debt purchased Trading assets Securities Loans and bills discounted Premises and equipment Other assets Liabilities corresponding to assets pledged as collateral: Deposits Call money and bills sold Payables under repurchase agreements Trading liabilities Borrowed money Acceptances and guarantees Millions of yen 2001 2000 ¥2,131,697 (1,304,562) ¥2,148,685 (1,324,826) ¥0,827,134 ¥0,823,859 Millions of yen 2001 2000 ¥ 660,462 — 1,143,569 7,103,992 1,671,141 — 2,255 ¥0,000,699 3,944,800 5,262,187 22,740 107,769 42,373 ¥0,000,0—. 10,615 — 803,881 1,532,634 471 — ¥0,168,240 1,495,300 — 5,473 24,354 36,303 Millions of U.S. dollars 2001 $17,205 (10,529) $06,676 Millions of U.S. dollars 2001 $00,488 — 9,230 57,336 13,488 — 18 $00,006 31,839 42,471 184 870 342 Premises and equipment include surety deposits and intangible of ¥70,478 million ($569 million) and ¥72,244 million at March 31, 2001 and 2000, respectively. Other assets include initial margins of futures markets of ¥17,539 million ($142 million) and ¥7,301 million and pledged money for securities borrowing trans- actions of ¥823,711 million ($6,648 million) and ¥170,826 million at March 31, 2001 and 2000, respectively. In addition to the assets presented above, the following assets were pledged as collateral for exchange settlements, initial margins of future markets and certain other purposes at March 31, 2001 and 2000: Cash and due from banks and Deposits with banks Trading assets Securities Loans and bills discounted Other assets (Securities in custody) 10. Deposits Deposits at March 31, 2001 and 2000, consisted of the following: Current deposits Savings deposits Deposits at notice Time deposits Other deposits Negotiable certificates of deposit Millions of yen 2001 2000 ¥0,062,978 3,072 3,549,337 120,089 263,550 ¥052,799 — 799,307 — 26,115 Millions of yen 2001 2000 ¥01,983,588 8,169,611 6,469,731 12,290,315 2,131,815 7,025,950 ¥01,750,499 7,721,902 4,397,254 12,666,726 1,825,681 6,869,258 ¥38,071,013 ¥35,231,324 Millions of U.S. dollars 2001 $00,508 25 28,647 969 2,127 Millions of U.S. dollars 2001 $016,010 65,937 52,217 99,195 17,206 56,707 $307,272 121 11. Trading Liabilities Trading liabilities at March 31, 2001 and 2000, consisted of the following: Trading securities sold for short sales Derivatives of trading securities Derivatives of securities related to trading transactions Trading-related financial derivatives 12. Borrowed Money Borrowed money at March 31, 2001 and 2000, consisted of the following: Bills rediscounted Subordinated debt obligation Borrowings from the Bank of Japan and other financial institutions Millions of yen 2001 2000 ¥1,014,326 0 9 1,054,270 ¥1,068,607 ¥327,165 17 26 625,440 ¥952,649 Millions of yen 2001 2000 ¥1,034,817 642,315 1,645,344 ¥0,022,027 684,151 1,812,521 ¥2,322,477 ¥2,518,700 Millions of U.S. dollars 2001 $7,116 0 0 8,509 $8,625 Millions of U.S. dollars 2001 $17,281 5,184 13,280 $18,745 The repayment schedule within five years on borrowed money at March 31, 2001, is shown as follows: Millions of yen One year or less One to two years Two to three years Three to four years Four to five years ¥1,385,271 ¥311,718 ¥209,824 ¥128,587 ¥185,927 One year or less One to two years Two to three years Three to four years Four to five years $11,181 $2,516 $1,693 $1,038 $1,501 Millions of U.S. dollars 13. Bonds Bonds included subordinated bonds of ¥1,082,130 million ($8,734 million) and ¥1,067,255 million at March 31, 2001 and 2000, respectively. The redemption schedule within five years on bonds (including convertible bonds) at March 31, 2001, is shown as follows: Millions of yen One year or less One to two years Two to three years Three to four years Four to five years ¥160,010 ¥66,366 ¥94,965 ¥220,297 ¥525,847 One year or less One to two years Two to three years Three to four years Four to five years $1,291 $536 $766 $1,778 $4,244 Millions of U.S. dollars 14. Convertible Bonds Convertible bonds at March 31, 2001 and 2000, consisted of the following: Convertible bonds payable in U.S. dollars: 31/8% due 2004, convertible into common stock at ¥3,606.90 per share ¥001,106 ¥001,106 Convertible bonds payable in Japanese yen: 3/8% due 2001, convertible into common stock at ¥1,239.00 per share 100,000 100,000 ¥101,106 ¥101,106 Millions of yen 2001 2000 Millions of U.S. dollars 2001 $629 807 $816 Convertible bonds payable in Japanese yen (3/8% due 2001) (the “Bonds”) were mandatorily converted to common stock of the Bank at May 31, 2001. Consequently, common stock and capital surplus increased by ¥50,045 million and ¥49,954 million, respectively, and the number of common shares issued increased by 91,324 thousand. The conversion price of the Bonds was adjusted to ¥1,095 per share in accordance with the terms and conditions of the Bonds at May 31, 2001. 122 15. Other Liabilities Other liabilities at March 31, 2001 and 2000, consisted of the following: Accrued expenses and unearned income Income taxes Employees’ deposits Trading-related accounts payable Financial derivatives Other 16. Acceptances and Guarantees Acceptances and guarantees at March 31, 2001 and 2000, consisted of the following: Acceptances Letters of credit Guarantees Millions of yen 2001 2000 ¥1,216,473 40,110 41,657 — 488,138 2,329,977 ¥0,283,443 17,206 43,832 607,318 — 1,830,310 ¥3,116,359 ¥2,782,112 Millions of yen 2001 2000 ¥0,019,941 580,140 1,387,081 ¥0,019,276 525,101 1,016,059 ¥1,987,164 ¥1,560,437 Millions of U.S. dollars 2001 $11,747 324 336 — 3,940 18,805 $25,152 Millions of U.S. dollars 2001 $00,161 4,682 11,195 $16,038 Guarantees and standby letters of credit are conditional com- mitments issued by the Bank to guarantee the performance of a customer to a third party. The Bank is obliged to pay the third party upon presentation of a claim that meets the conditions of the commitment. The Bank also issues letters of credit for import transactions in international operations. These contingent liabilities are accounted for in acceptances and guarantees, with a corresponding amount recorded in customers’ liabilities for acceptances and guarantees. 17. Land Revaluation Excess Pursuant to the Enforcement Ordinance for the Law concerning land revaluation (the “Law”), effective March 31, 1998, the Bank and one of its domestic banking subsidiaries recorded their own land at fair value at March 31, 1998 and March 31, 1999, respectively. According to the Law, net unrealized gains are reported in a separate component of stockholders’ equity net of applicable income taxes as Land revaluation excess, and the 18. Minority Interests SB Treasury Company, L.L.C., a subsidiary of the Bank, issued noncumulative preferred securities, totaling $1.8 billion in February 1998. SB Equity Securities (Cayman), Limited, a subsidiary of the Bank, issued floating noncumulative preferred securities, totaling 19. Stockholders’ Equity Under the Banking Law of Japan, the Bank is required to appropri- ate as an earned surplus reserve an amount equal to at least 20 percent of cash disbursements in each period until the earned sur- plus reserve equals 100 percent of the common stock. The capital related deferred tax liabilities are reported in liabilities as deferred tax liabilities for land revaluation. According to the Law, the Bank is not permitted to revalue the land at any time, even if the fair value of the land declines. Such unrecorded revaluation losses at March 31, 2001 and 2000, were ¥72,126 million ($582 million) and ¥56,692 million, respectively. ¥340 billion in March 1999. Both subsidiaries are consolidated and the preferred securities are accounted for as minority interests. surplus and earned surplus reserve are not available for distribu- tion as dividends but may be used to reduce a deficit by resolution of the stockholders or may be capitalized by resolution of the Board of Directors. 123 In accordance with a disclosure requirement effective from the year ended March 31, 1999, the earned surplus reserve is included in retained earnings. The Commercial Code of Japan provides that at least one half of the proceeds from shares issued at prices in excess of par value be included in common stock. In conformity therewith, the Bank has divided the paid-in amount of the stock issued upon con- version of bonds and notes into common stock equally between common stock and capital surplus. In accordance with the Law concerning Emergency Measures for the Early Strengthening of the Functions of the Financial System, the Bank issued a series of noncumulative preferred stock in the aggregate amount of ¥501 billion (the first issuance of 67 million shares at ¥201 billion and the second issuance of 100 million shares at ¥300 billion). All of the preferred stocks were subscribed by The Resolution and Collection Bank, Limited, on March 30, 1999. The noncumulative preferred stocks are redeemable at the option of the Bank at any time. The initial ¥201 billion in Preferred stock is convertible into common stock of the Bank at any time from May 1, 2002 until February 26, 2009, while the subsequent ¥300 billion in Preferred stock is convertible into common stock of the Bank at any time from August 1, 2005 until February 26, 2009, in each case subject to certain adjustments to the conversion period. 20. Fees and Commissions Fees and commissions for the years ended March 31, 2001 and 2000, consisted of the following: Fees and commissions (income) Deposits and loans Remittances and transfers Securities-related business Agency Safe deposits Guarantees Credit card business Other Fees and commissions (expenses) Remittances and transfers Other Millions of yen 2001 2000 ¥202,836 24,150 51,091 6,291 9,049 2,771 12,313 66,110 31,058 ¥033,918 11,873 22,045 ¥182,637 20,013 47,162 6,639 8,351 2,820 12,175 62,499 22,974 ¥036,775 12,033 24,741 21. Trading Income Trading income for the years ended March 31, 2001 and 2000, consisted of the following: Trading profits Gains on trading securities Gains on securities related to trading transactions Gains on trading-related financial derivatives Other Trading losses Losses on trading securities Losses on securities related to trading transactions Losses on trading-related financial derivatives Other 124 Millions of yen 2001 2000 ¥84,376 10,358 606 70,436 2,974 ¥02,146 190 — 1,166 789 ¥69,760 36,460 — 30,063 3,235 ¥22,853 6,839 944 14,590 479 Millions of U.S. dollars 2001 $1,637 195 412 51 73 22 99` 534 251 $0,274 96 178 Millions of U.S. dollars 2001 $681 84 5 568 24 $917 2 — 9 6 22. Other Operating Income Other operating income for the years ended March 31, 2001, 2000 and 1999, consisted of the following: Gains on foreign exchange transactions Gains on sale of bonds Gains on redemption of bonds Lease-related income Other Millions of yen 2001 2000 1999 ¥874,789 29,963 — 482,433 34,873 ¥027,854 38,202 4,565 483,612 35,403 ¥011,588 110,753 3,803 467,129 22,651 ¥552,060 ¥589,638 ¥615,925 23. Other Income Other income for the years ended March 31, 2001, 2000 and 1999, consisted of the following: Gains on sale of stocks and other securities Net income from nonconsolidated entities by equity method Gains on securities contributed to employee retirement benefit trust Gains on money held in trust Gains on disposition of premises and equipment Collection of written-off claims Gains on sales of majority interest of the Sumitomo Bank of California and Banca del Gottardo Gain on sale of business operation Other Millions of yen 2001 2000 1999 ¥475,976 36,479 24,006 1,199 963 627 ¥589,185 — — 1,528 1,710 979 ¥013,265 — — 1,716 69,168 2,453 — — 21,003 — 8,000 42,146 78,440 — 23,074 Millions of U.S. dollars 2001 $0,039 242 — 3,894 281 $4,456 Millions of U.S. dollars 2001 $3,842 294 194 10 8 5 — — 169 24. Other Operating Expenses Other operating expenses for the years ended March 31, 2001, 2000 and 1999, consisted of the following: ¥560,256 ¥643,550 ¥188,119 $4,522 Losses on sale of bonds Losses on redemption of bonds Losses on devaluation of bonds Lease-related expenses Other Millions of yen 2001 2000 1999 ¥821,835 1,192 1,640 417,847 62,677 ¥033,793 15,251 986 421,338 39,063 ¥030,654 8,593 5,661 402,818 18,691 ¥505,193 ¥510,433 ¥466,419 Millions of U.S. dollars 2001 $0,176 10 13 3,372 506 $4,077 125 25. Other Expenses Other expenses for the years ended March 31, 2001, 2000 and 1999, consisted of the following: Write-off of loans Losses on sale of stocks and other securities Losses on devaluation of stocks and other securities Losses on money held in trust Losses on disposition of premises and equipment Losses on sale of loans to the Cooperative Credit Purchasing Co., Ltd. Transfer to reserve for possible losses on loans sold Losses on delinquent loans sold Additional contribution to pension fund Amortization of unrecognized net transition obligation for employee retirement benefit Other Millions of yen 2001 2000 1999 ¥556,661 39,819 41,172 930 16,060 11,388 19,409 26,761 — ¥439,122 37,071 36,522 2,288 10,016 7,692 18,407 23,065 21,460 ¥369,481 30,336 33,891 5,253 7,547 60,269 79,169 105,293 22,660 21,058 22,717 — 45,767 — 64,829 Millions of U.S. dollars 2001 $4,493 321 332 8 130 92 157 216 — 170 183 ¥755,978 ¥641,414 ¥778,729 $6,102 26. Income Taxes Effective April 1, 1998, a new accounting standard for income taxes accounting was adopted in Japan. According to this new standard, income taxes consist of current and deferred corporation, inhabitant and enterprise taxes. On March 30, 2000, the Tokyo Metropolitan Government passed and established the Special Ordinance Concerning Taxation Standards for Enterprise Taxes in Relation to Banks in the Tokyo Metropolis (Tokyo Metropolitan Ordinance 145 of April 1, 2000). The measure has changed the effective statutory tax rate used by the Bank to calculate deferred tax assets and liabilities from 41.98% in the year ended March 31, 1999, to 39.83%. As a result of this change, deferred tax assets decreased by ¥34,218 million at March 31, 2000, and an equivalent increased income taxes deferred for the year ended March 31, 2000. Further, as deferred tax liabilities for land revaluation decreased by ¥5,980 million due to this change, land revaluation excess increased by the same amount. On June 9, 2000, the Osaka Prefecture Government promul- gated the Special Ordinance Concerning Taxation Standards for Enterprise Taxes in Relation to Banks in Osaka Prefecture (Osaka Prefectural Ordinance 131 of June 9, 2000), which applies in business years starting on or after April 1, 2001. The effect of this measure is to change the effective statutory tax rate used by the Bank to calculate deferred tax assets and liabilities from 39.83% to 38.05%. As a result of this change, deferred tax assets decreased by ¥24,802 million ($200 million) at March 31, 2001, and an equiva- lent increased in income taxes deferred for the year ended March 31, 2001. Further, as deferred tax liabilities for land revaluation decreased by ¥4,795 million ($39 million) due to this change, land revaluation excess increased by the same amount at March 31, 2001. Enterprise taxes other than those relating to income are included in Other expenses. Effective April 1, 2000, the Special Ordinance Concerning Taxation Standard for Enterprise Taxes in Relation to Banks in the Tokyo Metropolis (Tokyo Metropolis Ordinance 145 of April 1, 2000) was enacted, and the enterprise taxes in Tokyo, which were included in Income taxes current for prior periods, are included in Other expenses by the amount of ¥8,100 million ($65 million) for the year ended March 31, 2001. 126 Significant components of deferred tax assets and liabilities at March 31, 2001 and 2000, were as follows: Deferred tax assets: Reserve for possible loan losses Write-off of loans Net operating loss carryforwards Reserve for possible losses on loans sold Other Subtotal Valuation allowance Total deferred tax assets Deferred tax liabilities: Undistributed earnings of subsidiaries Leveraged lease Gains on securities contributed to employee retirement benefit trust Other Total deferred tax liabilities Net deferred tax assets Millions of yen 2001 2000 Millions of U.S. dollars 2001 ¥312,336 190,414 102,585 28,543 80,127 ¥714,008 (40,310) ¥346,890 208,099 59,510 46,389 96,989 ¥757,879 (28,744) ¥673,697 ¥729,135 ¥144,246 34,803 9,153 11,483 ¥0))))00—. 18,705 — 9,134 ¥199,687 ¥027,839 ¥574,009 ¥701,295 $2,521 1,537 828 230 647 $5,763 (326) $5,437 $7,357 281 74 92 $7,804 $4,633 A reconciliation of the effective income tax rate reflected in the accompanying consolidated statements of income to the statutory tax rate for the years ended March 31, 2001 and 2000, was as follows: Statutory tax rate Deferred tax liabilities for undistributed earnings of subsidiaries Change of tax rate Loss from unconsolidated entities by equity method Other Effective income tax rate 27. Employee Retirement Benefit (1) Outline of retirement benefit The Bank and consolidated subsidiaries in Japan have contributory funded defined benefit pension plans such as contributory pension plans, qualified pension plans and lump-sum severance indemnity plans. They may grant additional benefits in cases where certain requirements are met when employees retire. The Bank and a consolidated subsidiary in Japan contributed certain marketable equity securities to an employee retirement 2001 39.83% 16.77 9.07 .— 2.26 67.93 2000 41.98% .— 15.80 6.89 3.31 67.98 benefit trust. Gains on securities contributed to the employee retirement benefit trust of ¥24,006 million ($194 million) is in- cluded in Other income. At March 31, 2001, the Bank and the Bank of Kansai, Ltd., have contributed funded defined benefit pension plans. SB Leas- ing, Limited and The Sumitomo Credit Service Company, Limited have qualified pension plans. The Bank and most subsidiaries in Japan have severance indemnity plans. 127 (2) Projected benefit obligation March 31 Projected benefit obligation Pension assets Unfunded projected benefit obligation Unrecognized net transition obligation Unrecognized actuarial differences Net amount recorded on the consolidated balance sheet Prepaid pension cost (other assets) Reserve for employee retirement benefit (3) Pension expenses Year ended March 31 Service cost Interest cost on projected benefit obligation Expected return on plan assets Amortization of net transition obligation Other Pension expenses Millions of yen 2001 ¥(495,409) 410,572 ¥0(84,836) 85,988 50,585 ¥(051,737 59,710 (7,972) Millions of yen 2001 ¥12,922 16,485 (15,646) 21,058 1,533 ¥36,352 Millions of U.S. dollars 2001 $(3,999) 3,314 $0,(685) 695 408 $0,)418 482 (64) Millions of U.S. dollars 2001 $104 133 (126) 170 12 $293 (4) Assumptions The principal assumptions used in determining benefit obligation and pension expenses at or for the year ended March 31, 2001, were as follows: Discount rate Expected rate of return on plan assets Term to amortize actuarial differences Term to amortize net transition obligation 2001 3.5% 1.5% to 5.0% Mainly 10 years 5 years The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number of total service years. 28. Lease Transactions (1) Financing leases Financing leases without transfer of ownership at March 31, 2001 and 2000, consisted of the following: (a) Lessee side March 31, 2001 Equipment Other March 31, 2000 Equipment Other 128 Millions of yen Accumulated depreciation Net book value Acquisition cost Accumulated depreciation Net book value Millions of U.S. dollars ¥3,613 3 ¥6,701 0 ¥3,617 ¥6,702 $83 0 $83 $29 0 $29 $54 0 $54 Acquisition cost ¥10,315 4 ¥10,320 Millions of yen Accumulated depreciation ¥2,350 — ¥2,350 Acquisition cost ¥6,321 — ¥6,321 Net book value ¥3,970 — ¥3,970 Future minimum lease payments excluding interests at March 31, 2001 and 2000, were as follows: Due within one year Due after one year Millions of yen 2001 ¥1,886 5,003 ¥6,890 2000 ¥1,144 2,920 ¥4,064 Millions of U.S. dollars 2001 $15 41 $56 Total lease expenses for the years ended March 31, 2001 and 2000, were ¥1,332 million ($11 million) and ¥1,190 million, respectively. Depreciation expense for the years ended March 31, 2001 and 2000 amounted to ¥1,242 million ($10 million) and ¥1,106 million, respectively. Depreciation is calculated using the straight- line method over the lease term of the respective assets. The difference between the minimum lease payments and the acquisition costs of the lease assets represents interest expense. The allocation of such interest expense over the lease term is computed using the effective interest method. Interest expense for the years ended March 31, 2001 and 2000 amounted to ¥101 million ($1 million) and ¥78 million, respectively. (b) Lessor side March 31, 2001 Equipment Other March 31, 2000 Equipment Other Millions of yen Accumulated depreciation Acquisition cost Net book value Acquisition cost ¥1,873,952 ¥1,179,276 120,946 231,447 ¥694,675 110,500 $15,125 1,868 Millions of U.S. dollars Accumulated depreciation $09,518 976 Net book value $5,607 892 ¥2,105,399 ¥1,300,222 ¥805,176 $16,993 $10,494 $6,499 Millions of yen Accumulated depreciation Acquisition cost Net book value ¥1,917,876 215,680 ¥1,207,576 114,937 ¥710,300 100,743 ¥2,133,557 ¥1,322,514 ¥811,043 Future lease payments receivable excluding interests at March 31, 2001 and 2000, were as follows: Due within one year Due after one year Millions of yen 2001 2000 ¥255,827 580,905 ¥258,438 586,246 ¥836,733 ¥844,684 Millions of U.S. dollars 2001 $2,065 4,688 $6,753 Lease income for the years ended March 31, 2001 and 2000, were ¥327,731 million ($2,645 million) and ¥334,157 million, respectively. Depreciation expense for the years ended March 31, 2001 and 2000, amounted to ¥265,216 million ($2,141 million) and ¥270,809 million, respectively. Depreciation is calculated using the straight-line method over the lease term of the respective assets without salvage values. The difference between the minimum lease payments receiv- able and the acquisition costs of the lease assets represents inter- est income. The allocation of such interest income over the lease term is computed using the effective interest method. Interest income for the years ended March 31, 2001 and 2000, were ¥63,694 million ($514 million) and ¥63,593 million, respectively. 129 (2) Operating leases Operating leases at March 31, 2001 and 2000, consisted of the following: (a) Lessee side Future minimum lease payments at March 31, 2001 and 2000, were as follows: Due within one year Due after one year (b) Lessor side Future lease payment receivables at March 31, 2001 and 2000, were as follows: Due within one year Due after one year Millions of yen 2001 2000 ¥08,031 44,184 ¥52,216 ¥07,758 50,143 ¥57,901 Millions of yen 2001 ¥0,334 990 ¥1,325 2000 ¥207 787 ¥994 Millions of U.S. dollars 2001 $065 356 $421 Millions of U.S. dollars 2001 $03 8 $11 29. Loan Commitments Commitment line contracts on overdrafts and loans are agree- ments to lend to customers when they apply for borrowing, to a prescribed amount, as long as there is no violation of any condi- tion established in the contracts. The amount of unused commit- ments was ¥17,349,040 million ($140,025 million), and the amount of unused commitments whose original contract terms are within one year or unconditionally cancellable at any time was ¥15,538,193 million ($125,409 million) at March 31, 2001. Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily represent actual future cash flow requirements. Many of these commitments have clauses that the Bank and con- solidated subsidiaries can reject an application from customers or reduce the contract amounts in case economic conditions are changed, the Bank and consolidated subsidiaries need to secure claims or other events occur. In addition, the Bank and its consoli- dated subsidiaries request the customers to pledge collateral such as premises and securities at the conclusion of the con- tracts, and take necessary measures such as grasping custom- ers’ financial positions, revising contracts when need arises and securing claims after the conclusion of the contracts. 30. Market Value of Marketable Securities (1) Securities The market value of marketable securities at March 31, 2001, was as follows: In addition to Securities in the consolidated balance sheets, trading securities, negotiable certificates of deposit and commercial paper within Trading assets, negotiable certificates of deposit in Deposits with banks, and commercial papers and claims on loan trust within Commercial paper and other debt purchased are included in the following amounts: (a) Securities classified as trading March 31, 2001 Securities classified as trading March 31, 2001 Securities classified as trading 130 Millions of yen Consolidated balance sheet amount ¥998,998 Millions of U.S. dollars Consolidated balance sheet amount $8,063 Gains included in profit/loss ¥713 Gains included in profit/loss $6 (b) Bonds classified as held-to-maturity with market value March 31, 2001 Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total March 31, 2001 Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total Consolidated balance sheet amount Market value ¥00,114 — — 18,451 ¥18,565 ¥00,114 — — 18,367 ¥18,482 Millions of yen Net unrealized gains (losses) ¥(00 — — (83) ¥(82) Unrealized gains Unrealized losses ¥00 — — 46 ¥47 ¥000 — — 130 ¥130 Consolidated balance sheet amount Market value Net unrealized gains (losses) Unrealized gains Unrealized losses Millions of U.S. dollars $001 — — 149 $150 $001 — — 148 $149 $(0 — — (1) $(1) $0 — — 0 $0 $0 — — 1 $1 Note: Market value is calculated by using market prices at fiscal year-end. (c) Other securities with market value March 31, 2001 Stocks Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total March 31, 2001 Stocks Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total Consolidated balance sheet amount Market value ¥02,738,365 ¥02,581,842 ¥11,453,252 ¥11,536,374 10,752,965 271,306 512,103 ¥01,399,155 ¥01,524,294 10,691,178 260,232 501,842 Millions of yen Net unrealized gains (losses) ¥(156,523) ¥)083,122 61,787 11,073 10,261 ¥)125,139 Unrealized gains Unrealized losses ¥166,678 ¥085,908 64,163 11,077 10,667 ¥135,120 ¥323,201 ¥002,785 2,375 3 406 ¥009,981 ¥15,590,773 ¥15,642,511 ¥0(51,738 ¥387,707 ¥335,969 Consolidated balance sheet amount $022,101 $092,440 86,289 2,101 4,050 $011,293 Market value $020,838 $093,110 86,787 2,190 4,133 $012,303 $125,834 $126,251 Millions of U.S. dollars Net unrealized gains (losses) Unrealized gains Unrealized losses $(1,263) $(0,670 498 89 83 $(1,010 $(0,417 $1,345 $0,693 518 89 86 $1,091 $3,129 $2,608 $0,023 20 0 3 $0,081 $2,712 Note: Market value is calculated by using the market prices at fiscal year-end for bonds and others, and by using the average market price during one month before the fiscal year-end for stocks. (d) Bonds sold during fiscal 2000 that are classified as held-to-maturity There are no corresponding items. 131 (e) Other securities sold during fiscal 2000 Year ended March 31, 2001 Other securities Year ended March 31, 2001 Other securities (f) Securities with no available market value March 31, 2001 Bonds classified as held-to-maturity Nonlisted foreign securities Other Other securities Nonlisted foreign securities Nonlisted bonds Nonlisted stocks (excluding OTC stocks) Other (g) Change of classification of securities There are no corresponding items. Millions of yen Sales amount Gains on sales Losses on sales ¥12,148,851 ¥501,662 ¥41,367 Millions of U.S. dollars Sales amount Gains on sales Losses on sales $98,054 $4,049 $334 Millions of yen Consolidated balance sheet amount Millions of U.S. dollars Consolidated balance sheet amount ¥031,163 5,091 ¥668,428 226,332 112,592 224,483 $0,252 41 $5,395 1,827 909 1,812 (h) Redemption schedule of other securities with maturities and bonds classified as held-to-maturity Millions of yen 1 year or less 1 to 5 years 5 to 10 years Over 10 years ¥4,829,489 4,676,663 22,556 130,269 ¥0,445,721 ¥4,668,333 4,248,153 54,534 365,646 ¥1,079,457 ¥2,178,313 1,766,475 244,466 167,370 ¥0,148,466 ¥003,563 — 563 3,000 ¥352,019 ¥5,275,210 ¥5,747,790 ¥2,326,779 ¥355,582 1 year or less 1 to 5 years 5 to 10 years Over 10 years Millions of U.S. dollars $38,979 37,746 182 1,051 $03,597 $37,678 34,287 440 2,951 $08,713 $17,581 14,257 1,973 1,351 $01,198 $42,576 $46,391 $18,779 $0,029 — 5 24 $2,841 $2,870 March 31, 2001 Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total March 31, 2001 Bonds Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Total 132 (2) Money held in trust (a) Money held in trust classified as trading March 31, 2001 Money held in trust March 31, 2001 Money held in trust (b) Money held in trust classified as held-to-maturity There are no corresponding items. Millions of yen Consolidated balance sheet amount ¥2,467 Millions of U.S. dollars Consolidated balance sheet amount $20 Gains included in profit/loss — Gains included in profit/loss — (c) Other money held in trust (money held in trust that is classified neither as trading nor as held-to-maturity) March 31, 2001 Other money held in trust March 31, 2001 Other money held in trust Consolidated balance sheet amount Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥50,444 ¥46,335 ¥(4,108) ¥317 ¥4,426 Millions of U.S. dollars Consolidated balance sheet amount Market value Net unrealized gains (losses) Unrealized gains Unrealized losses $407 $374 $(33) $3 $36 Note: Market value is calculated by using market prices at the fiscal year-end. (3) Net unrealized gains (losses) on other securities and other money held in trust March 31, 2001 Net unrealized gains (losses) Other securities Other money held in trust (–) Deferred tax liabilities Net unrealized gains (losses), net of taxes (before following adjustments) (–) Minority interests (+) Parent company’s interest in net unrealized gains (losses) on valuation of other securities held by affiliates accounted for by the equity method Net unrealized gains, net of taxes Note: The above figures were not reflected in the consolidated financial statements. Millions of yen 2001 ¥47,629 51,738 (4,108) ¥18,371 ¥29,257 ¥01,713 ¥00,013 ¥27,557 Millions of U.S. dollars 2001 $384 417 (33) $148 $236 $014 $000 $222 133 (Appendix) Previous Year’s Information on Market Value of Marketable Securities (1) Securities The following table represents market value and unrealized gains or losses on listed securities held by the Bank and the consolidated subsidiaries at March 31, 2000. March 31, 2000 Securities: Japanese bonds Japanese stocks Other Total Consolidated balance sheet amount Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥0,877,620 3,131,298 521,933 ¥0,871,538 3,987,659 786,986 ¥000(6,081) 856,360 265,053 ¥0,022,187 1,178,416 274,936 ¥028,269 322,055 9,883 ¥4,530,852 ¥5,646,185 ¥1,115,332 ¥1,475,540 ¥360,208 Notes: 1. Japanese bonds include national government bonds, local government bonds and corporate bonds. 2. Market values for securities listed on exchanges are the closing prices on the Tokyo Stock Exchange or on other exchanges, or are calculated on the earnings yield of the quotation of over-the-counter issues released by the Securities Dealers Association of Japan. 3. The estimated value of unlisted securities is summarized as follows: March 31, 2000 Securities: Japanese bonds Japanese stocks Other Total Consolidated balance sheet amount Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥3,169,079 ¥3,174,359 34,181 66,800 92,557 67,264 ¥05,279 58,376 464 ¥12,030 63,839 2,331 ¥06,750 5,463 1,867 ¥3,270,060 ¥3,334,181 ¥64,120 ¥78,201 ¥14,081 The estimated market value equivalents of unlisted securities are calculated as follows: Japanese over-the-counter securities: Based on purchase prices released by the Securities Dealers Association of Japan. Public bonds: Based on the earnings yield of the quotation of over-the-counter issues released by the Securities Dealers Association of Japan. Beneficial securities of securities investment trust: Based on the reference price. U.S. over-the-counter securities: Based on NASDAQ purchasing price of the National Association of Securities Dealers. 4. The following represents the book values of major non-marketable securities, which have not been included in the market value information on marketable securities: March 31, 2000 Securities: Japanese bonds Japanese stocks Other Millions of yen Consolidated balance sheet amount ¥514,905 231,067 421,966 5. Trading securities, which are accounted for in the trading accounts, are not included in the above amounts because revaluated gains (losses) are accounted for in the consolidated statements of income. (2) Money held in trust March 31, 2000 Money held in trust Consolidated balance sheet amount Market value Millions of yen Net unrealized gains (losses) Unrealized gains Unrealized losses ¥109,039 ¥108,980 ¥(59) ¥0 ¥59 Notes: 1. Market values for securities listed on exchanges are the closing prices on the Tokyo Stock Exchange or on other exchanges, or are calculated based on the earnings yield of the quotation of over-the-counter issues released by the Securities Dealers Association of Japan. 2. Over-the-counter stocks are valued by the purchase prices released by the Securities Dealers Association of Japan. 134 31. Derivative Transactions (1) Interest Rate Derivatives March 31, 2001 Transactions listed on exchange Interest rate futures: Sold Bought Interest rate options: Sold Bought Over-the-counter transactions Forward rate agreements: Sold Bought Interest rate swaps: Receivable fixed rate/payable floating rate Receivable floating rate/payable fixed rate Receivable floating rate/payable floating rate Swaptions: Sold Bought Caps: Sold Bought Floors: Sold Bought Other: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥001,101,977 ¥00,017,858 485,657 5,697,426 ¥0,000,(437) ¥0,000,(437) 8,991 8,991 ¥000,248,680 ¥000000,0—. ¥0,000,0(10) ¥0,000,0(10) 6 109,340 — 6 ¥006,884,618 ¥000000,0—. ¥0,000,(649) ¥0,000,(649) 841 1,777,431 841 — ¥135,767,183 ¥83,730,613 40,064,077 39,778,519 3,359,612 65,115,663 64,847,289 5,165,148 ¥0,0(69,662) ¥0,0(69,662) 1,573,923 (1,644,551) (1,674) 1,573,923 (1,644,551) (1,674) ¥000,400,466 ¥00,248,801 240,727 326,828 ¥0,0(12,247) ¥0)0(12,247) 6,547 6,547 ¥003,207,128 ¥02,358,919 1,535,957 2,107,655 ¥0,00(4,459) ¥0,00(4,459) 4,673 4,673 ¥000,151,911 ¥00,140,436 230,219 283,412 ¥0,00(2,833) ¥0,00(2,833) 5,098 5,098 ¥000,032,799 ¥00,029,850 93,760 141,681 ¥0,000,)099 490 ¥000,00099 490 . . ¥0,0(63,553) ¥0,0(63,553) 135 March 31, 2001 Transactions listed on exchange Interest rate futures: Sold Bought Interest rate options: Sold Bought Over-the-counter transactions Forward rate agreements: Sold Bought Interest rate swaps: Receivable fixed rate/payable floating rate Receivable floating rate/payable fixed rate Receivable floating rate/payable floating rate Swaptions: Sold Bought Caps: Sold Bought Floors: Sold Bought Other: Sold Bought Total Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $0,008,894 45,984 $000,144 3,920 $00,00(4) 72 $00,00(4) 72 $0,002,007 882 $00000—. — $00,00(0) 0 $00,00(0) 0 $0,055,566 14,346 $1,095,780 525,550 523,384 41,688 $00000—. — $675,792 323,358 321,053 27,116 $00,00(5) 7 $0,0(562) 12,703 (13,273) (14) $00,00(5) 7 $00,(562) 12,703 (13,273) (14) $0,003,232 2,638 $002,008 1,943 $00,0(99) 53 $00,0(99) 53 $0,025,885 17,011 $019,039 12,397 $00,0(36) 38 $00,0(36) 38 $0,001,226 2,287 $001,133 1,858 $00,0(23) 41 $00,0(23) 41 $0,000,265 1,144 $000,241 757 $00,00)1 4 $00,00(1 4 . . $00,(513) $00,(513) Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which the hedge accounting method is applied are not included in the amounts above. Some consolidated overseas subsidiaries account for interest rate derivatives in accordance with local accounting standards and such transactions are not included in the figures above, of which their net unrealized gains amount to ¥2,848 million ($23 million). 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial Futures Exchange and others. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models. 136 (2) Currency Derivatives March 31, 2001 Over-the-counter transactions Currency swaps Forward foreign exchange Currency options Sold Bought Other Total March 31, 2001 Over-the-counter transactions Currency swaps Forward foreign exchange Currency options Sold Bought Other Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥10,574,656 787,136 ¥4,808,279 187,702 ¥(69,281) (13,451) ¥(69,281) (13,451) 19,804 22,702 — . 6,453 5,554 — (1,583) 1,466 — (1,583) 1,466 — . ¥(82,850) ¥(82,850) Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $85,348 6,353 $38,808 1,515 $(559) (109) $(559) (109) 160 183 — . 52 45 — (13) 12 — (13) 12 — . $(669) $(669) Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which the hedge accounting method is applied are not included in the amounts above. Some consolidated overseas subsidiaries account for currency derivatives in accordance with local accounting standards and such transactions are not included in the figures above, of which their net unrealized gains amount to ¥650 million ($5 million). 2. Market value is calculated mainly using discounted present value. 3. Forward foreign exchange and currency options which are of the following types are not included in the figures above: 1) Those that are revaluated at fiscal year-end and the revaluated gains (losses) are accounted for in the consolidated statement of income. 2) Those that are allotted to financial assets/liabilities by foreign currency and whose market values are already reflected in the amount of the financial assets/liabilities on the consolidated balance sheet. 3) Those that are allotted to financial assets/liabilities by foreign currency and the financial assets/liabilities are eliminated in the process of consolidation. The contract amount of currency derivatives which are revaluated at the consolidated balance sheet date are as follows: March 31, 2001 Transactions listed on exchange Currency futures: Sold Bought Currency options: Sold Bought Over-the-counter transactions: Forward foreign exchange Currency options: Sold Bought Other: Sold Bought Millions of yen Millions of U.S. dollars Contract amount Contract amount ¥0000000—. — $000)0—. — — — — — ¥48,193,991 $388,975 1,877,037 1,606,427 15,150 12,966 — — — — 137 (3) Stock Derivatives March 31, 2001 Transactions listed on exchange Stock price index futures: Sold Bought Stock price index options: Sold Bought Over-the-counter transactions Equity options: Sold Bought Stock price index swaps Other: Sold Bought Total March 31, 2001 Transactions listed on exchange Stock price index futures: Sold Bought Stock price index options: Sold Bought Over-the-counter transactions Equity options: Sold Bought Stock price index swaps Other: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥03,039 — ¥00,0—. — ¥00,137 — ¥00,137 — ¥0000—. — ¥0000—. — ¥0000—. — ¥0000—. — ¥0000—. — ¥0000—. — ¥0000—. — ¥0000—. — ¥45,202 ¥16,039 ¥00(805) ¥00(805) ¥79,457 34,947 ¥61,219 — ¥10,685 (1,072) ¥10,685 (1,072) ¥08,944 ¥08,944 Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $025 — $,0—. — $,0—. — $365 $641 282 $,0—. — $,0—. — $,0—. — $129 $494 — $01 — $,—. — $,—. — $,(6) $86 (9) $72 $01 — $,—. — $,—. — $,(6) $86 (9) $72 Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which the hedge accounting method is applied are not included in the amounts above. 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models. 138 (4) Bond Derivatives March 31, 2001 Transactions listed on exchange Bond futures: Sold Bought Bond futures options: Sold Bought Over-the-counter transactions Bond options: Sold Bought Other: Sold Bought Total March 31, 2001 Transactions listed on exchange Bond futures: Sold Bought Bond futures options: Sold Bought Over-the-counter transactions Bond options: Sold Bought Other: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥02,000 — ¥02,000 — ¥0000—. — ¥0000—. — ¥21,981 25,457 ¥19,850 18,562 ¥0000—. — ¥0000—. — ¥08 — ¥,— — ¥00 0 ¥,— — ¥08 ¥08 — ¥,— — ¥00 0 ¥,— — ¥08 Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $016 — $0,—. — $177 206 $0,—. — $016 — $0,—. — $160 150 $0,—. — $,0 — $— — $,0 0 $— — $,0 $,0 — $— — $,0 0 $— — $,0 Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which the hedge accounting method is applied are not included in the amounts above. 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange. Market value of OTC transactions is calculated mainly using option pricing models. 139 (5) Commodity Derivatives March 31, 2001 Over-the-counter transactions Commodity options: Sold Bought Total March 31, 2001 Over-the-counter transactions Commodity options: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥2,707 2,707 ¥2,707 2,707 ¥56 (4) ¥51 ¥56 (4) ¥51 Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $22 22 $22 22 $0 (0) $0 $0 (0) $0 Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statement of income. Derivative transactions to which the hedge accounting method is applied are not included in the amounts above. 2. Market value is calculated based on factors such as price of the relevant commodity and contract term. (6) Credit Derivative Transactions March 31, 2001 Over-the-counter transactions Credit default options: Sold Bought Other: Sold Bought Total March 31, 2001 Over-the-counter transactions Credit default options: Sold Bought Other: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Net valuated gains (losses) ¥42,389 55,966 ¥33,782 43,746 ¥0,(366) 465 ¥0,(366) 465 ¥32,669 62,942 ¥14,500 58,978 ¥(8,276) 7,334 ¥(8,276) 7,334 ¥0,(842) ¥0,(842) Millions of U.S. dollars Contract amount Total Over one year Market value Net valuated gains (losses) $342 452 $264 508 $273 353 $117 476 $0(3) 4 $(67) 59 $0(7) $0(3) 4 $(67) 59 $0(7) Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statements of income. Derivative transactions to which the hedge accounting method is applied are not included in the amounts above. 2. Market value is calculated based on factors such as price of the relevant commodity and contract term. 3. ‘Sold’ represents transactions in which the credit risk is accepted; ‘Bought’ represents transactions in which the credit risk is transferred. 140 (Appendix) Previous Year’s Information on Derivative Transactions Notes: 1. Contract amount lists notional amount for swaps or contract value for futures, options and other derivatives. Option premiums accounted for in the consolidated balance sheets are denoted by brackets ([ ]). 2. Market values of contracts listed on exchanges are based on the closing prices on the relevant exchanges. (1) Interest Rate Derivatives March 31, 2000 Transactions listed on exchange Interest rate futures: Sold Bought Interest rate options: Sold Call Put Bought Call Put Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥11,123,048 10,099,803 ¥52,429 — ¥11,074,094 10,058,766 ¥048,953 (41,036) ¥00,00000—. [—] — [—] — [—] — [—] ¥0000—. ¥00,00000—. ¥000,0—. — — — — — — — — — 141 (continued) March 31, 2000 Over-the-counter transactions Forward rate agreements: Sold Bought Interest rate swaps: Receivable fixed rate/payable floating rate Receivable floating rate/payable fixed rate Receivable floating rate/payable floating rate Swaptions: Sold Call Put Bought Call Put Caps: Sold Bought Floors: Sold Bought Other: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥00,002,160 1,506 ¥0000000—. — ¥48,250,014 27,361,147 20,031,787 508,746 ¥22,256,360 11,051,720 10,429,396 427,421 ¥002,111 1,510 ¥125,780 499,210 (372,856) (395) ¥000,049 4 ¥125,780 499,210 (372,856) (395) ¥00,098,150 [3,309] 2,546 [—] 19,356 [266] 2,546 [—] ¥00,076,931 [67] 249,635 [1,913] ¥00,055,026 [1,543] 2,054 [5] ¥0000000—. [—] — [—] ¥00,048,200 — 11,356 — ¥00,032,658 200,907 ¥00,047,088 1,031 ¥0000000—. — ¥000,956 ¥002,353 (88) 88 156 (68) (110) (68) ¥000,493 ¥000(426) 1,132 (780) ¥002,025 ¥000(481) 10 5 ¥000,0—. ¥00,00—. — — ¥134,332 Notes: 1. Regarding over-the-counter transactions, market value calculation is based on net present value or option pricing model. 2. A swaption call is defined as a right to carry out an interest rate swap with a floating receivable rate and a fixed payable rate. A swaption put is defined as a right to carry out an interest rate swap with a fixed receivable rate and a floating payable rate. 3. The market value or unrealized gains (losses) for interest rate swaps, excluding trading transactions, includes ¥205,785 million of accrued interest, which has been accounted for in the consolidated statements of income. 142 4. Derivative transactions, which are classified as trading transactions, are not included in the figures on the previous page because revaluated gains (losses) are accounted for in the consolidated statements of income. Figures on trading transactions are as follows: March 31, 2000 Transactions listed on exchange Interest rate futures: Sold Bought Interest rate options: Sold Call Put Bought Call Put Over-the-counter transactions: Forward rate agreements: Sold Bought Interest rate swaps: Receivable fixed rate/payable floating rate Receivable floating rate/payable fixed rate Receivable floating rate/payable floating rate Swaptions: Sold Call Put Bought Call Put Caps: Sold Bought Floors: Sold Bought Other: Sold Bought Millions of yen Contract amount Market value ¥000,376,132 ¥0,376,065 2,993,460 2,993,271 ¥00000000—. [—] — [—] — [—] — [—] ¥000000—. — — — ¥004,459,803 ¥4,459,860 463,020 462,888 ¥123,131,402 ¥000(5,904) 62,619,490 56,298,809 3,358,339 705,951 (708,757) (1,964) ¥000,125,840 [1,495] ¥000(3,131) 173,210 [1,623] 118,000 [2,841] 143,939 [555] (2,516) (143) 646 ¥003,262,039 [15,723] ¥00(10,897) 1,834,494 [7,413] 9,546 ¥000,284,086 [3] ¥000(2,020) 329,676 [1,706] 3,597 ¥000,045,730 [349] ¥00000079 125,263 [—] (198) 143 (2) Currency Derivatives March 31, 2000 Over-the-counter transactions Currency swaps: US$ £Stg. Euro Other Other: US$ Total Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥2,854,232 2,207,137 86,458 5,043 555,592 ¥1,541,624 1,254,151 59,235 — 228,236 ¥0,(883) (2,309) 1,216 15 193 ¥0,(883) (2,309) 1,216 15 193 1,092 . — 68 68 ¥0,(815) Notes: 1. Market value calculation is based on net present value. 2. The market value or unrealized gains (losses) for currency swaps and other transactions, excluding trading transactions, includes ¥6,731 million of accrued interest, which has been accounted for in the consolidated statements of income. 3. Derivative transactions in trading account are not included in the figures above because revaluated gains (losses) are accounted for in the consolidated statements of income. Contract amounts are as follows: March 31, 2000 Over-the-counter transactions Currency swaps: US$ Euro SFr Other Forward foreign exchange: Currency options: Millions of yen Contract amount Market value ¥9,046,598 7,919,579 343,486 3,171 780,360 ¥0,565,868 ¥0,005,557 ¥(64,124) (64,433) 39 200 68 ¥(16,132 ¥0(1,321) 144 4. Forward foreign exchange and currency options which are revaluated at the end of fiscal year and revaluated gains (losses) are accounted for in the consolidated statements of income are not included in the figures on the previous page. The contracts so treated are as follows: March 31, 2000 Transactions listed on exchange Currency futures: Sold Bought Currency options: Sold Call Put Bought Call Put Over-the-counter transactions Foward foreign exchange: Currency options: Sold Bought Other: Sold Bought Millions of yen Contract amount ¥00,000,0—. — . ¥00,000,0—. [—] — [—] — [—] — [—] ¥41,745,624 1,179,988 (14,341) 964,387 (17,199) ¥00,000,0—. — 145 (3) Stock Derivatives March 31, 2000 Transactions listed on exchange Stock price index futures: Sold Bought Stock price index options: Sold Call Put Bought Call Put Over-the-counter transactions Equity options: Sold Call Put Bought Call Put Stock price index swaps: Stock price index receivable/interest floating rate payable Stock price index payable/interest floating rate receivable Other: Sold Bought Total Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥— — ¥— [—] — [—] — [—] — [—] ¥— [—] — [—] — [—] — [—] ¥— — — [—] 58 [22] ¥— — ¥— — — — ¥— — — — ¥— — — — ¥— — ¥(— — ¥— ¥— — — — — — — ¥— ¥— — — — ¥— — — 9 — — — ¥— — — (13) ¥(13) Notes: 1. For over-the-counter transactions, market value calculation is based on net present value or option pricing model. 146 2. Derivative transactions, which are classified as trading transactions, are not included in the figures on the previous page because revaluated gains (losses) are accounted for in the consolidated statements of income. Figures on trading transactions are as follows: March 31, 2000 Transactions listed on exchange Stock price index futures: Sold Bought Stock price index options: Sold Call Put Bought Call Put Over-the-counter transactions Equity options: Sold Call Put Bought Call Put Stock price index swaps Other: Sold Bought Millions of yen Contract amount Market value ¥00000—. 48,554 ¥000,0—. 51,294 ¥00000—. [—] — [—] 1,858 [49] — [—] ¥000,0—. — 67 — ¥074,558 ¥0(8,824) 14,135 95 36,269 1,197 22,497 (170) ¥126,759 ¥00,(905) — [—] — [—] — — 147 (4) Bond Derivatives March 31, 2000 Transactions listed on exchange Bond futures: Sold Bought Bond futures options: Sold Call Put Bought Call Put Over-the-counter transactions Bond options: Sold Call Put Bought Call Put Other: Sold Call Put Bought Call Put Total Millions of yen Contract amount Total Over one year Market value Unrealized gains (losses) ¥416,719 47,866 ¥0000—. — ¥419,622 48,035 ¥(2,902) 168 ¥000,0—. [—] — [—] — [—] — [—] ¥000,0—. [—] — [—] — [—] — [—] ¥000,0—. [—] — [—] — [—] — [—] ¥0000—. ¥000,0—. ¥000—. — — — — — — — — — ¥0000—. ¥000,0—. ¥000—. — — — — — — — — — ¥0000—. ¥000,0—. ¥000—. — — — — — — — — — ¥(2,734) Note: Derivative transactions, which are classified as trading transactions, were not included in the figures above because revaluated gains (losses) are accounted for in the consolidated statements of income. Figures on trading transactions are on the following page. 148 March 31, 2000 Transactions listed on exchange Bond futures: Sold Bought Bond futures options: Sold Call Put Bought Call Put Over-the-counter transactions Bond options: Sold Call Put Bought Call Put Other: Sold Bought Millions of yen Contract amount Market value ¥6,548 4,804 ¥0,0—. [—] — [—] — [—] — [—] ¥0,0—. [—] — [—] — [—] — [—] ¥6,575 4,862 ¥0,0—. — — — ¥0,0—. — — — ¥0,0—. — ¥0,0—. — (5) Commodity Derivatives There are no corresponding items. (6) Credit Derivative Transactions All credit derivative transactions other than trading transactions are treated in the same way as guarantees and have been excluded from the following table. The transactions which are classified as trading transactions are recorded at estimated market value and related gains and losses are included in trading profits or losses on the consolidated statements of income. The contract amounts of derivative transactions included in trading transactions are as follows: March 31, 2000 Over-the-counter transactions Sold Bought Millions of yen Contract amount Market value ¥015,828 117,465 ¥00(25) 9,890 Notes: 1. Market value is calculated based on the price of the reference assets or components such as the contract term. 2. “Sold” represents transactions in which the Bank accepts the credit risk, and “Bought” represents transactions in which the Bank transfers the credit risk. 149 32. Segment Information (1) Business segment information Year ended March 31, 2001 Banking business Leasing Other Total Elimination Consolidated Millions of yen I. Operating income (1) External customers (2) Intersegment Total Operating expenses Operating profit II. Assets Depreciation Capital expenditure ¥01,843,146 ¥0,516,850 ¥0,365,998 ¥02,725,995 ¥000)000—. ¥02,725,995 — (190,901) 190,901 111,435 75,387 4,078 ¥01,918,534 ¥0,520,929 ¥0,477,434 ¥02,916,897 ¥0,(190,901) ¥02,725,995 2,415,254 1,731,682 2,545,968 (130,713) 314,034 500,251 ¥00,186,851 ¥00,20,677 ¥0,163,399 ¥00,370,929 ¥0,0(60,187) ¥00,310,741 ¥66,438,599 ¥1,535,527 ¥4,544,442 ¥72,518,569 ¥(5,125,594) ¥67,392,974 360,752 346,493 317,022 271,022 360,752 346,493 34,981 64,749 8,748 10,721 — — Year ended March 31, 2000 Banking business Leasing Other Total Elimination Consolidated Millions of yen I. Operating income (1) External customers (2) Intersegment Total Operating expenses Operating profit II. Assets Depreciation Capital expenditure ¥02,208,367 ¥0,522,953 4,869 36,596 ¥0,271,602 ¥03,002,923 141,398 99,933 ¥[0,000,0—. ¥03,002,923 — (141,398) ¥02,244,963 ¥0,527,822 506,429 2,062,769 ¥0,371,535 ¥03,144,322 ¥0,(141,398) ¥03,002,923 2,765,637 2,901,481 (135,843) 332,282 ¥00,182,194 ¥0,021,393 ¥0,039,253 ¥00,242,841 ¥0,00(5,555) ¥00,237,285 ¥52,348,529 ¥1,479,808 ¥4,548,267 ¥58,376,605 ¥(4,609,101) ¥53,767,504 45,077 33,033 329,348 272,749 4,989 4,581 379,415 310,363 — — 379,415 310,363 Year ended March 31, 2001 Banking business Leasing Other Total Elimination Consolidated Millions of U.S. dollars I. Operating income (1) External customers (2) Intersegment Total Operating expenses Operating profit II. Assets Depreciation Capital expenditure $014,876 609 $015,485 13,977 $04,172 32 $04,204 4,037 $02,954 899 $03,853 2,534 $022,002 1,540 $023,542 20,548 $0,,,00—. (1,540) $0(1,540) (1,054) $022,002 — $022,002 19,494 $001,508 $00,167 $01,319 $002,994 $0,0(486) $002,508 $536,228 0282 0523 $12,393 2,559 2,187 $36,678 71 87 $585,299 2,912 2,797 $(41,369) — — $543,930 2,912 2,797 Notes: 1. The business segmentation is determined based on the Bank’s internal administrative purposes. 2. “Other” includes securities, credit card, investment banking, loans and venture capital etc. 3. Impact on application of new accounting standards is as follows: (a) Accounting standard for employee retirement benefit As shown in Notes to consolidated financial statements, accounting standard for retirement benefits was applied from the fiscal year ended March 31, 2001. Consequently, operating profit increased by ¥10,533 million ($85 million) in banking business, decreased by ¥62 million ($1 million) in leasing, and decreased by ¥110 million ($1 million) in other for 2001 compared with prior accounting method. (b) Accounting standard for financial instruments As shown in Notes to consolidated financial statements, accounting standard for financial instruments was applied from the fiscal year ended March 31, 2001, and the method to evaluate securities and derivatives and the method of hedge accounting were changed. Consequently, operating profit increased by ¥21,019 million ($170 million) in banking business, decreased by ¥161 million ($1 million) in leasing and by ¥119 million ($1 million) in other for 2001 compared with prior accounting method. Effective April 1, 2000, income and expenses relating to derivative transactions that met the criteria for hedge accounting were presented net by account, which was changed from prior accounting that presented net by transaction. As a result, operating income and expenses 150 decreased by ¥475,321 million ($3,836 million) in banking business, by ¥5,864 million ($47 million) in leasing, and by ¥11,993 million ($97 million) in other for 2001 compared with prior accounting method. (c) Accounting standard for foreign currency transactions As shown in Notes to consolidated financial statements, domestic consolidated subsidiaries (excluding a domestic banking subsidiary) applied the revised accounting standard for foreign currency transactions from 2001. Consequently, operating profit decreased by ¥40 million in leasing and by ¥7 million in other for 2001 compared with prior accounting method. (d) Taxation standard for enterprise tax As shown in Notes to consolidated financial statements, enterprise tax other than relating to pre-tax income was included in operating expenses. Effective April 1, 2000, the Special ordinance concerning taxation standard for enterprise taxes in relation to banks in the Tokyo Metropolis (Tokyo Metropolis Ordinance 145 of April 1, 2000) was enacted, and the enterprise tax in Tokyo, which was not included in operating expenses for prior period, was included in operating expenses in banking business by the amount of ¥8,100 million ($65 million) for 2001. 4. Operating income represents total income excluding gains on disposition of premises and equipment, collection of written-off claims, gain on sale of business operation and reversals of other reserves. Operating expenses represent total expenses excluding losses on disposition of premises and equipment, amortized cost of unrecognized net transition obligation for employee retirement benefit and other extraordinary expenses. (2) Geographic segment information Millions of yen Year ended March 31, 2001 Japan The Americas Europe Asia and Oceania Total Elimination Consolidated I. Operating income (1) External customers (2) Intersegment Total Operating expenses Operating profit ¥02,075,857 ¥0,354,622 ¥0,168,645 ¥0,126,870 ¥02,725,995 ¥00,0000—. ¥02,725,995 — 40,438 (274,417) 274,417 116,616 53,979 63,382 ¥02,192,474 ¥0,408,602 ¥0,232,028 ¥0,167,308 ¥03,000,413 ¥0,(274,417) ¥02,725,995 2,415,254 137,464 2,632,669 2,015,569 (217,414) 249,594 230,040 ¥00,176,904 ¥0,159,007 ¥0,001,988 ¥0,029,843 ¥00,367,744 ¥0,0(57,002) ¥00,310,741 II. Assets ¥60,600,462 ¥5,051,346 ¥2,575,486 ¥2,300,560 ¥70,527,854 ¥(3,134,879) ¥67,392,974 Millions of yen Year ended March 31, 2000 Japan The Americas Europe Asia and Oceania Total Elimination Consolidated I. Operating income (1) External customers (2) Intersegment ¥02,388,478 86,088 ¥0,296,813 53,410 ¥0,128,364 54,999 ¥0,189,267 28,352 ¥03,002,923 222,851 ¥[0,000,0—. (222,851) ¥03,002,923 — Total Operating expenses Operating profit ¥02,474,567 2,344,476 ¥0,350,224 264,258 ¥0,183,363 168,449 ¥0,217,619 206,969 ¥03,225,775 2,984,153 ¥0,(222,851) (218,516) ¥03,002,923 2,765,637 ¥00,130,090 ¥0,085,966 ¥0,014,914 ¥0,010,650 ¥00,241,621 ¥0,00(4,335) ¥00,237,285 II. Assets ¥49,196,165 ¥4,039,567 ¥1,756,961 ¥2,647,550 ¥57,640,245 ¥(3,872,740) ¥53,767,504 Year ended March 31, 2001 Japan The Americas Europe Asia and Oceania Total Elimination Consolidated Millions of U.S. dollars I. Operating income (1) External customers (2) Intersegment Total Operating expenses Operating profit $016,755 940 $017,695 16,267 $02,862 436 $03,298 2,015 $01,361 512 $01,873 1,857 $01,024 326 $01,350 1,109 $022,002 2,214 $024,216 21,248 $000,0—. (2,214) $0(2,214) (1,754) $022,002 — $022,002 19,494 $001,428 $01,283 $00,016 $00,241 $002,968 $00,(460) $002,508 II. Assets $489,108 $40,769 $20,787 $18,568 $569,232 $(25,302) $543,930 151 Notes: 1. The geographic segmentation is decided based on the degrees of following factors: geographic proximity, similarity of economic activities and relationship of business activities among regions. 2. The Americas includes the United States, Brazil and others; Europe includes the United Kingdom, France and others; Asia and Oceania includes Hong Kong, Singapore and others except Japan. 3. (a) Accounting standard for employee retirement benefit As shown in Notes to consolidated financial statements, accounting standard for retirement benefits was applied from the fiscal year ended March 31, 2001. Consequently, operating profit increased by ¥10,360 million ($84 million) in Japan for 2001 compared with prior accounting method. (b) Accounting standard for financial instruments As shown in Notes to consolidated financial statements, accounting standard for financial instruments was applied from the fiscal year ended March 31, 2001, and the method to evaluate securities and derivatives and the method of hedge accounting were changed. Consequently, operating profit increased by ¥22,556 million ($182 million) in Japan, by ¥3,304 million ($27 million) in the Americas, and by ¥731 million ($6 million) in Asia and Oceania and decreased by ¥5,853 million ($47 million) in Europe, for 2001 compared with prior accounting method. Effective April 1, 2000, income and expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which has been changed from prior accounting that presented net by transaction. As a result, operating income and expenses decreased by ¥220,611 million ($1,781 million) in Japan, by ¥134,827 million ($1,088 million) in the Americas, by ¥58,364 million ($471 million) in Europe, and by ¥79,374 million ($641 million) in Asia and Oceania for 2001 compared with the prior accounting method. (c) Accounting standard for foreign currency transactions As shown in Notes to consolidated financial statements, domestic consolidated subsidiaries (excluding a domestic banking subsidiary) applied the revised accounting standard for foreign currency transactions from 2001. Consequently, operating profit decreased by ¥48 million in Japan for 2001 compared with prior accounting method. (d) Taxation standard for enterprise tax As shown in Notes to consolidated financial statements, enterprise tax other than relating to pre-tax income was included in operating expenses. Effective April 1, 2000, the Special ordinance concerning taxation standard for enterprise taxes in relation to banks in the Tokyo Metropolis (Tokyo Metropolis Ordinance 145 of April 1, 2000) was enacted, and the enterprise tax in Tokyo, which was not included in operating expenses for prior period, was included in operating expenses in Japan by the amount of ¥8,100 million ($65 million) for 2001. 4. Operating income represents total income excluding gains on disposition of premises and equipment, recoveries of written-off claims, gain on sale of business operation and reversals of other reserves. Operating expenses represent total expenses excluding losses on disposition of premises and equipment, amortized cost of unrecognized net transition obligation for employee retirement benefit and other extraordinary expenses. (3) Operating income from overseas operations Operating income from overseas operations (A) Consolidated operating income (B) (A) / (B) Millions of yen 2001 2000 ¥0,650,138 2,725,995 23.9%. ¥0,614,445 3,002,923 20.5%. Millions of U.S. dollars 2001 $05,247 22,002 23.9%. Note: The above table shows operating income from transactions of the Bank’s overseas branches and overseas consolidated subsidiaries, excluding internal income. 152 33. Subsequent Event (1) Appropriations of retained earnings The following appropriations of retained earnings of the Bank at March 31, 2001, were approved by the ordinary general meeting of shareholders held on June 28, 2001. Cash dividends, ¥3.00 per share on common stock ¥5.25 per share on preferred stock (first series type 1) ¥14.25 per share on preferred stock (second series type 1) Millions of yen ¥9,423 351 1,425 Millions of U.S. dollars $76 3 12 (2) Merger with The Sakura Bank, Limited On April 1, 2001, The Sumitomo Bank, Limited merged with The Sakura Bank, Limited (“Sakura”) and succeeded its assets, liabili- ties, all the claims, obligations and employees, and changed its corporate name to Sumitomo Mitsui Banking Corporation. Upon the merger; (a) The Bank issued 2,470,846,767 par value common stocks (par value of ¥50 per share) and allotted these common stocks to each of Sakura’s shareholder listed in Sakura’s final shareholders’ registration on the day immediately preceding the appointed date of merger in the ratio of 1 to 0.6 of Sakura’s common stock to the Bank’s common stock. (b) The Bank issued 2,577,000 non-par-value Type VI preferred stocks and allotted these preferred stocks to each share- holder listed in Sakura’s final shareholders’ registration of preferred stock (Series-II) on the day immediately preceding the appointed date of merger in the ratio of 1 to 1 of Sakura’s preferred stock (Series-II) to the Bank’s Type VI preferred stock. (c) The Bank issued 800,000,000 non-par-value Type V preferred stocks and allotted these preferred stocks to each share- holder listed in Sakura’s final shareholders’ registration of preferred stock (Series-III (Type 2)) on the day immediately preceding the appointed date of merger in the ratio of 1 to 1 of Sakura’s preferred stock (Series-III (Type 2)) to the Bank’s Type V preferred stock. (d) The Bank’s preferred stock increased by ¥400,309 million to ¥650,809 million, common stock increased by ¥123,542 million to ¥625,890 million, capital surplus increased by ¥991,326 million to ¥1,634,407 million, earned surplus reserve increased by ¥131,261 million to ¥239,121 million, land revaluation excess increased by ¥42,690 million to ¥209,583 million and retained earnings increased by ¥165,051 million to ¥413,077 million. 153 34. Parent Company Nonconsolidated Balance Sheets Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) March 31, 2001 and 2000 Assets Cash and due from banks Deposits with banks Call loans and bills bought Receivables under resale agreements Commercial paper and other debt purchased Trading assets Money held in trust Securities Loans and bills discounted Foreign exchanges Other assets Premises and equipment Deferred tax assets Customers’ liabilities for acceptances and guarantees Reserve for possible loan losses Millions of yen 2001 2000 ¥ 0,835,448 3,702,608 125,531 2,597,816 77,362 1,842,889 52,912 16,860,309 31,172,382 460,908 3,417,288 585,395 550,472 3,655,396 (671,042) ¥ 1,280,533 2,502,386 202,615 — 84,494 1,445,843 108,888 8,982,244 31,358,560 352,971 1,540,495 591,187 624,585 2,923,570 (909,039) Millions of U.S. dollars 2001 $ 06,743 29,884 1,013 20,967 624 14,874 427 136,080 251,593 3,720 27,581 4,725 4,443 29,503 (5,416) Total assets ¥65,265,680 ¥51,089,338 $526,761 Liabilities and stockholders’ equity Liabilities Deposits Call money and bills sold Payables under repurchase agreements Commercial paper Trading liabilities Borrowed money Foreign exchanges Bonds Convertible bonds Other liabilities Reserve for employee retirement benefit Reserve for possible losses on loans sold Other reserves Deferred tax liabilities for land revaluation Acceptances and guarantees Total liabilities Stockholders’ equity ¥37,195,694 5,330,519 4,857,211 500,400 1,008,330 2,388,329 212,344 1,000,607 101,106 6,923,707 — 70,809 8 102,506 3,655,396 ¥34,229,831 2,739,363 — 110,200 603,424 2,461,252 165,145 432,343 101,106 5,173,303 46,764 111,588 8 110,798 2,923,570 ¥63,346,972 ¥49,208,701 $300,207 43,023 39,203 4,039 8,138 19,276 1,714 8,076 816 55,881 — 572 0 827 29,503 $511,275 Preferred stock, no par value; authorized 970,000 thousand shares and issued 167,000 thousand shares in 2001 and 2000 Common stock, par value ¥50 per share; authorized 7,500,000 thousand shares and issued 3,141,062 thousand shares in 2001 and 2000 Capital surplus Earned surplus reserve Land revaluation excess Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity ¥00,250,500 ¥00,250,500 $002,022 502,348 643,080 107,859 166,893 248,026 502,348 643,080 103,319 167,379 214,008 4,054 5,190 871 1,347 2,002 ¥01,918,707 ¥01,880,637 ¥65,265,680 ¥51,089,338 $015,486 $526,761 Note: Translation into U.S. dollars has been made on the basis of ¥123.90 to US$1, the effective exchange rate at March 31, 2001. 154 Nonconsolidated Statements of Income Sumitomo Mitsui Banking Corporation (Formerly The Sumitomo Bank, Limited) Years ended March 31, 2001, 2000 and 1999 Income Interest income: Interest on loans and discounts Interest and dividends on securities Interest on receivables under resale agreements Other interest income Fees and commissions Trading profits Other operating income Other income Total income Expenses Interest expenses: Interest on deposits Interest on borrowings and rediscounts Interest on payables under repurchase agreements Other interest expenses Fees and commissions Trading losses Other operating expenses General and administrative expenses Transfer to reserve for possible loan losses Other expenses Total expenses Income (loss) before income taxes Income taxes: Current Deferred Net income (loss) Millions of yen 2001 2000 1999 ¥0,778,683 218,173 1,614 260,699 119,990 74,609 24,021 373,042 ¥0,766,285 142,745 — 507,548 106,565 34,227 61,072 565,902 ¥0,971,144 175,223 — 499,542 104,338 37,156 115,264 170,659 ¥1,850,834 ¥2,184,348 ¥2,073,328 ¥0,398,203 118,481 7,512 93,500 38,575 — 49,272 331,467 5,653 674,115 ¥0,282,160 110,299 — 420,641 37,306 944 49,091 350,791 292,209 492,402 ¥0,506,237 122,861 — 413,916 43,159 542 69,729 366,369 566,279 617,656 ¥1,716,783 ¥2,035,847 ¥2,706,752 ¥0,134,051 ¥0,148,500 ¥0(633,423) ¥0,007,759 70,616 ¥0,006,634 93,047 ¥0,020,812 (280,112) ¥ 55,675 ¥0,048,818 ¥0(374,123) Millions of U.S. dollars 2001 $06,285 1,761 13 2,104 968 602 194 3,011 $14,938 $03,214 956 61 755 311 — 398 2,675 45 5,441 $13,856 $01,082 $00,063 570 $ 449 Per share data: Net income (loss) Net income—diluted Declared dividends on common stock Declared dividends on preferred stock (first series type I) Declared dividends on preferred stock (second series type I) ¥00016.59 16.25 6.00 10.50 28.50 ¥000,14.41 14.12 6.00 10.50 28.50 ¥0,(119.11) .— 6.00 0.03 0.08 $000.13 0.13 0.05 0.08 0.23 Yen U.S. dollars 155 Report of Independent Public Accountants To The Board of Directors of Sumitomo Mitsui Banking Corporation We have audited the accompanying consolidated balance sheets of Sumitomo Mitsui Banking Corporation (formerly The Sumitomo Bank, Limited) and subsidiaries as of March 31, 2001 and 2000, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2001, expressed in Japanese yen. Our audits were made in accordance with generally accepted auditing standards in Japan and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the consolidated financial statements referred to above present fairly the consolidated financial position of Sumitomo Mitsui Banking Corporation and subsidiaries as of March 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2001 in conformity with accounting principles generally accepted in Japan applied on a consistent basis during the periods, except as noted in the following paragraph. As explained in Note 2, effective April 1, 2000, Sumitomo Mitsui Banking Corporation and subsidiaries prospectively adopted new Japanese accounting standards for employees’ severance and retirement benefits, financial instruments and foreign currency translation. Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements have been translated from Japanese yen on the basis set forth in Note 1. As explained in Note 33 (2), The Sumitomo Bank, Limited merged with The Sakura Bank, Limited on April 1, 2001. Tokyo, Japan June 28, 2001 Statement on Accounting Principles and Auditing Standards This statement is to remind users that accounting principles and auditing standards and their application in practice may vary among nations and therefore could affect, possibly materially, the reported financial position and results of operations. The accompanying financial state- ments are prepared based on accounting principles generally accepted in Japan, and the auditing standards and their application in practice are those generally accepted in Japan. Accordingly, the accompanying consolidated financial statements and the auditors’ report presented above are for users familiar with Japanese accounting principles, auditing standards and their application in practice. 156 Summary of Significant Differences Between Japanese GAAP and U.S. GAAP The consolidated financial statements of the Bank and its consolidated subsidiaries presented in this annual report conform with Japanese Generally Accepted Accounting Principles (GAAP). Such principles vary from U.S. GAAP in the following significant respects. Japanese GAAP U.S. GAAP Consolidated subsidiaries The consolidated financial statements include all enterprises that are controlled by the parent, irrespective of the percentage of the voting shares owned. Accounting for sales of loans with recourse Under Japanese GAAP, certain loan participations which meet specified criteria are allowed to be recorded as sales. Accounting for derivatives and hedging activities Under the new Japanese GAAP effective April 1, 2000, derivative instruments are carried at fair value with changes included in the current period income unless certain hedge accounting criteria are met. In general, if derivative instruments are used as hedges and meet certain hedging criteria, a company defers recognition of gains or losses resulting from changes in fair value of deriva- tive instruments as either an asset or liability until the related losses or gains on the hedged items are recognized. Securities Under the new Japanese GAAP effective April 1, 2000, debt secu- rities that the Bank has the intent and ability to hold to maturity (held-to-maturity securities) are carried at amortized cost. Trading securities are carried at market value with gains or losses in- cluded in the current period income. Other securities (available- for-sale securities) can be carried at cost (effective April 1, 2001, other securities should be carried at fair value with unrealized gains or losses recorded directly to equity, net of taxes). Loan fees Loan origination fees are recognized when income is received. Statement of Financial Accounting Standards (“SFAS”) No. 94 requires, with a few exceptions, a parent company to consolidate all of its majority-owned subsidiaries with more than 50% of outstanding voting shares. SFAS No. 140 specifies that sale of assets such as loans refers to an outright sale with legal title passing to the purchaser. A transfer of assets qualifying as a sale with recourse under SFAS No. 140 would result in the recording of an estimated liability. Derivative instruments are currently classified into trading and hedging instruments. Derivative instruments for a trading purpose and a hedging purpose are recorded at fair value and on an accrual basis, respectively. Under SFAS No. 133 and No. 137 effective all fiscal years beginning after June 15, 2000, derivative instruments are recorded at fair value with changes recognized currently in earnings unless precise hedge accounting criteria are met. Under SFAS No. 115, debt securities intended to be held to matu- rity are carried at amortized cost. Equity securities and debt securities available for sale are carried at fair values with unreal- ized gains and losses reported as comprehensive income in the stockholders’ equity section. Trading securities are carried at market value with gains and losses included in the current period income. Loan origination fees are deferred and recognized over the life of the loan. Accrued interest on non-performing loans The Bank places into the nonaccrual status the loans which management assessed as “Bankrupt” and “Effectively Bankrupt” and “Potentially Bankrupt.” Loans are generally placed on nonaccrual status when they become 90 days past due or when they are deemed uncollectible based on management’s assessment. 157 Restructured loans Discounted present value is not used to measure impairment of a loan. Reserve for restructured loans is computed based on historical loss experience. Earned surplus reserve An amount equivalent to at least 20% of cash disbursements, such as dividend distribution, must be appropriated as earned surplus reserve in the retained earnings. Leases Unless transfer of ownership occurs, financing leases may be accounted for as operating leases accompanied with sufficient footnote disclosure. Land revaluation excess Land which had been recorded at cost was revalued at fair value. The resulting gains were recorded in land revaluation excess in the stockholders’ equity section. Guarantees Guarantees, including standby letters of credit and the related reimbursement obligations of customers, are included on the face of the financial statements and assets of equal amounts. Directors’ bonuses Directors’ bonuses are charged directly to earned surplus. Comprehensive income Reporting of other comprehensive income not included in net income is not required. SFAS No. 114 requires that impaired loans be measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as is practically expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. Earned surplus reserve are not provided for under U.S. GAAP. Leases are classified as either capital or operating, based on specified criteria. A lease which transfers substantially all of the benefits and risks of ownership to the lessee is reported as a capital lease. Other leases are accounted for as operating leases. Such land revaluation excess is not permissible. Such guarantees and reimbursement obligations are disclosed in the footnotes and not included in the balance sheet. Directors’ compensation is generally expensed on an accrual basis. SFAS No. 130 requires the reporting of the revenues, expenses, gains and losses that are not included in net income as comprehensive income. 158 Supplemental Data (Consolidated) INCOME ANALYSIS Formerly The Sakura Bank, Limited and Subsidiaries Operating Income, Classified by Domestic and Overseas Operations Years ended March 31 2001 2000 2001 2000 2001 2000 2001 2000 Domestic operations Overseas operations Elimination Total Millions of yen Interest income Interest expenses Net interest income Fees and commissions (income) Fees and commissions (expenses) Net fees and commissions Trading profits Trading losses Net trading income Other operating income Other operating expenses Net other operating income ¥853,796 ¥1,103,878 ¥324,675 ¥360,523 ¥070,643 ¥065,459 ¥1,107,828 ¥1,398,941 743,919 655,022 463,441 280,097 344,461 16,061 44,578 640,437 437,710 670,118 223,203 630,592 65,590 5,052 63,983 1,476 ¥198,328 ¥0,174,558 ¥010,933 ¥011,655 ¥00000—. ¥000,0—. ¥0,209,261 ¥0,186,213 66,414 119,799 61,863 147,397 57,180 141,147 61,651 112,907 4,683 6,250 4,763 6,891 — — — — ¥122,550 ¥0,010,464 ¥004,257 ¥007,020 ¥00000—. ¥000,0—. ¥0,026,807 ¥0,017,484 994 16,490 — 26,807 — 22,550 71 10,392 — 4,257 923 6,097 — — — — ¥189,471 ¥0,092,997 ¥008,150 ¥006,264 ¥00000—. ¥000,0—. ¥0,097,621 ¥0,099,261 67,883 31,378 55,471 42,149 54,880 34,590 64,984 28,012 591 7,558 2,898 3,365 — — — — Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Interest expenses are shown after deduction of an amount equivalent to interest expenses on money held in trust (2001, ¥130 million; 2000, ¥1,631 million). 3. As for interest income and interest expenses, internal transactions between domestic operations and overseas operations are shown in the elimination column. As for fees and commissions (income) (expenses), trading profits and trading losses, and other operating income and other operating expenses, internal transactions between domestic operations and overseas operations are excluded. 4. Due to application of the new accounting standard, interest income and interest expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which has been changed from prior accounting that presented net by transaction. As a result, interest income and interest expenses for the year ended March 31, 2001 have decreased by ¥155,585 million, respectively. Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities, Interest and Yields Domestic Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans and bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money and bills sold Commercial paper Borrowed money Millions of yen Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 ¥39,629,986 ¥38,274,476 30,837,811 6,796,661 118,381 269,204 30,544,153 7,697,365 226,077 708,029 ¥853,796 ¥1,103,878 658,031 107,583 291 7,801 667,713 125,971 2,451 36,306 2.15% 2.88% 2.18 1.63 1.08 5.12 2.13 1.58 0.24 2.89 ¥38,203,911 ¥36,650,560 29,182,025 2,691,051 2,330,833 267,443 2,145,204 28,234,447 3,479,955 3,129,943 441,024 2,005,986 ¥223,203 ¥0,463,441 99,523 4,170 6,441 1,094 45,061 108,285 10,506 9,283 2,976 41,005 0.58% 1.26% 0.38 0.30 0.29 0.67 2.04 0.34 0.15 0.27 0.40 2.10 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. 2. As a general rule, average balances are calculated using average daily balances. For domestic consolidated subsidiaries except financial business, however, an average balance based on the balances at the end of each semi-annual period is used. 3. Interest-earning assets are shown after deduction of the average balance of non-interest earning deposits with banks (2001, ¥334,599 million; 2000, ¥376,853 million) and interest-bearing liabilities are shown after deduction of an amount equivalent to the average balance of money held in trust (2001, ¥50,636 million; 2000, ¥133,392 million) and interest (2001, ¥123 million; 2000, ¥1,626 million). 160 INCOME ANALYSIS Formerly The Sumitomo Bank, Limited and Subsidiaries Operating Income, Classified by Domestic and Overseas Operations Years ended March 31 Interest income Interest expenses Net interest income Fees and commissions (income) Fees and commissions (expenses) Net fees and commissions Trading profits Trading losses Net trading income Other operating income Other operating expenses Net other operating income Domestic operations Overseas operations Elimination Total 2001 2000 2001 2000 2001 2000 2001 2000 Millions of yen ¥959,017 ¥1,052,708 ¥481,206 ¥530,614 ¥(112,168) ¥(55,291) ¥1,328,056 ¥1,528,031 873,073 654,958 476,516 423,726 451,858 78,756 57,480 576,191 (55,804) (56,363) 673,943 654,113 306,021 652,996 (55,300) 9 ¥176,645 ¥0,165,029 ¥026,275 ¥019,744 ¥000,0(84) ¥0(2,136) ¥0,202,836 ¥0,182,637 36,775 145,861 29,802 146,843 33,918 168,918 30,170 134,858 4,246 22,029 8,430 11,313 (1,825) (310) (130) 45 ¥043,914 ¥0,028,625 ¥045,207 ¥045,772 ¥00(4,744) ¥0(4,638) ¥0,084,376 ¥0,069,760 22,853 46,907 (4,744) — 4,745 39,168 2,146 43,060 2,146 82,229 937 27,687 26,553 19,219 (4,638) — ¥538,282 ¥0,568,113 ¥013,937 ¥022,061 ¥000,(158) ¥0,0(535) ¥0,552,060 ¥0,589,638 510,433 79,204 37,293 (23,356) 467,982 70,299 505,193 46,867 497,156 70,956 13,352 8,709 (75) (460) (81) (76) Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Interest expenses are shown after deduction of an amount equivalent to interest expenses on money held in trust (2001, ¥565 million; 2000, ¥1,242 million). 3. Internal transactions between domestic operations and overseas operations are shown in the elimination column. 4. Due to application of the new accounting standard, interest income and interest expenses relating to derivative transactions that meet the criteria for hedge accounting are presented net by account, which has been changed from prior accounting that presented net by transaction. As a result, interest income and interest expenses for the year ended March 31, 2001 have decreased by ¥493,177 million, respectively. Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities, Interest and Yields Domestic Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans and bills bought Receivables under resale agreements Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money and bills sold Payables under repurchase agreements Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥43,761,247 ¥39,967,136 30,585,767 7,751,326 257,639 — 1,026,205 29,640,322 11,520,742 343,620 278,995 1,569,608 ¥42,156,287 ¥39,427,381 25,410,496 5,658,239 3,541,425 — 366,793 3,947,864 336,515 25,058,159 5,347,869 4,026,447 2,579,529 413,450 3,649,186 887,721 ¥959,017 ¥1,052,708 650,841 119,432 3,953 633,924 198,736 4,439 1,137 97,378 2.19% 2.63% 2.14 1.73 1.29 — 0.41 6.20 2.13 1.54 1.53 .— 3.59 36,865 ¥306,021 ¥0,476,516 119,424 8,815 6,021 0.73% 1.21% 0.56 0.29 0.29 — 0.29 0.42 2.71 1.90 0.47 0.16 0.17 .— 0.27 2.74 1.83 978 108,178 6,155 140,304 15,329 11,703 7,512 1,754 98,826 16,844 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. 2. As a general rule, average balances are calculated using average daily balances. For some consolidated subsidiaries, however, an average balance based on the balances at the end of each week, month or semi-annual period is used. 3. Money held in trust is not included in interest-earning assets, and accordingly the amounts of interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust (2001, ¥85,524 million; 2000, ¥108,483 million) and corresponding interest (2001, ¥565 million; 2000, ¥1,242 million). 161 Formerly The Sakura Bank, Limited and Subsidiaries Overseas Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans and bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money and bills sold Commercial paper Borrowed money Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥5,460,757 3,978,439 220,734 48,826 1,103,360 ¥5,142,279 4,243,255 217,170 54,068 530,360 ¥5,422,693 3,143,698 47,442 99,410 10,583 1,308,437 ¥4,821,896 2,568,758 50,869 56,430 — 1,332,204 ¥324,675 183,555 13,768 3,154 69,658 ¥280,097 130,135 2,511 4,510 704 58,742 ¥360,523 159,127 11,847 2,695 24,740 5.94% 7.01% 4.61 6.23 6.45 6.31 3.75 5.45 4.98 4.66 ¥344,461 69,334 3,793 2,340 5.16% 7.14% 4.13 5.29 4.53 — 6.65 — 4.48 2.69 7.45 4.14 3.84 51,248 Notes: 1. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. As a general rule, average balances are calculated using average daily balances. For subsidiaries with a head office located overseas, however, an average balance based on the balances at the end of semi-annual period is used. 3. Interest-earning assets are shown after deduction of the average balance of non-interest earning deposits with banks (2001, ¥4,073 million; 2000, ¥7,737 million) and interest-bearing liabilities are shown after deduction of an amount equivalent to the average balance of money held in trust (2001, ¥139 million; 2000, ¥67 million) and interest (2001, ¥7 million; 2000, ¥5 million). Total of Domestic and Overseas Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans and bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money and bills sold Commercial paper Borrowed money Millions of yen Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 ¥42,752,740 ¥40,653,736 32,859,959 6,770,728 156,842 522,943 32,589,813 7,789,349 256,702 1,553,926 ¥1,107,828 ¥1,398,941 764,328 117,759 2,735 25,884 795,443 134,621 5,374 100,750 2.59% 3.44% 2.44 1.72 2.09 6.48 2.32 1.73 1.74 4.94 ¥41,560,846 ¥39,249,060 31,520,040 2,667,332 2,350,306 267,443 1,608,315 31,173,079 3,491,797 3,210,861 451,608 1,514,119 ¥1,437,710 ¥0,743,919 162,312 7,859 8,312 1,094 43,580 233,379 12,845 13,563 3,679 43,922 1.05% 1.89% 0.74 0.36 0.42 0.81 2.90 0.51 0.29 0.35 0.40 2.70 Notes: 1. The amounts shown in the total column exclude internal transactions between domestic operations and overseas operations. 2. Interest-earning assets are shown after deduction of the average balance of non-interest earning deposits with banks (2001, ¥338,672 million; 2000, ¥384,590 million) and interest-bearing liabilities are shown after deduction of an amount equivalent to the average balance of money held in trust (2001, ¥50,775 million; 2000, ¥133,459 million) and interest (2001, ¥130 million; 2000, ¥1,631 million). 162 Formerly The Sumitomo Bank, Limited and Subsidiaries Overseas Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans and bills bought Receivables under resale agreements Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money and bills sold Payables under repurchase agreements Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥8,543,552 5,140,836 799,311 72,783 249,572 1,940,830 ¥7,694,131 5,520,504 155,435 110,934 349,206 8,248 244,530 1,265,359 ¥7,512,428 5,605,366 644,374 58,404 — 946,961 ¥5,635,880 4,047,646 178,330 62,856 — 70,598 242,133 977,033 ¥481,206 273,251 51,620 2,667 9,723 120,780 ¥423,726 234,585 7,681 3,872 14,712 475 13,297 43,501 ¥530,614 243,195 42,839 1,617 5.63% 7.06% 5.32 6.46 3.66 — 3.90 6.22 4.34 6.65 2.77 .— 5.05 47,796 ¥451,858 151,248 9,200 2,586 5.51% 8.02% 4.25 4.94 3.49 — 4.21 5.77 5.44 3.44 3.74 5.16 4.11 .— 5.71 5.04 3.96 4,031 12,194 38,696 Notes: 1. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. For some consolidated subsidiaries, an average balance based on the balance at the end of each week, month, or semi-annual period is used. Total of Domestic and Overseas Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans and bills bought Receivables under resale agreements Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money and bills sold Payables under repurchase agreements Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥50,855,990 ¥45,951,745 34,686,573 8,393,160 316,043 — 1,952,501 33,344,068 12,317,862 416,403 528,568 3,500,912 ¥48,400,855 ¥43,534,455 29,436,514 5,836,546 3,604,281 — 437,391 2,685,437 1,311,007 30,568,412 5,503,275 4,137,382 2,928,735 421,698 2,456,627 2,150,889 ¥1,328,056 ¥1,528,031 839,295 162,129 5,570 851,820 193,828 7,106 10,861 217,874 2.61% 3.33% 2.55 1.57 1.71 — 2.05 6.22 2.42 1.93 1.76 .— 4.32 84,335 ¥0,673,943 ¥0,873,073 270,347 18,016 8,607 374,606 23,010 15,575 22,224 2,229 56,768 60,182 1.39% 2.01% 1.23 0.42 0.38 — 0.76 0.53 2.31 2.80 0.92 0.31 0.24 .— 1.15 2.44 3.41 5,010 65,621 44,709 Notes: 1. The amounts shown in the total column exclude internal transactions between domestic operations and overseas operations. 2. Money held in trust is not included in interest-earning assets, and accordingly the amounts of interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust (2001, ¥85,524 million; 2000, ¥108,483 million) and corresponding interest (2001, ¥565 million; 2000, ¥1,242 million). 163 Formerly The Sakura Bank, Limited and Subsidiaries Fees and Commissions Years ended March 31 Fees and commissions (income) Deposits and loans Remittances and transfers Securities-related business Agency Safe deposits Guarantees Fees and commissions (expenses) Remittances and transfers Millions of yen Domestic operations Overseas operations Total 2001 2000 2001 2000 2001 2000 ¥198,328 ¥174,558 ¥10,933 ¥11,655 2,999 1,473 367 246 5 1,682 10,861 51,380 25,108 3,336 2,961 13,664 9,296 49,343 20,920 3,489 3,080 11,325 4,601 1,537 83 59 5 149 ¥057,180 ¥061,651 ¥04,683 ¥04,763 136 10,538 10,174 868 ¥209,261 ¥186,213 12,296 50,816 21,288 3,735 3,085 13,007 15,463 52,918 25,191 3,396 2,967 13,813 ¥061,863 ¥066,414 10,311 11,407 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. The amounts shown in the above table exclude internal transactions between domestic operations and overseas operations. Trading Income Years ended March 31 Trading profits Gains on trading securities Gains on securities related to trading transactions Gains on trading-related financial derivatives Other Trading losses Losses on trading securities Losses on securities related to trading transactions Losses on trading-related financial derivatives Other Millions of yen Domestic operations Overseas operations Total 2001 2000 2001 2000 2001 2000 ¥22,550 ¥10,464 1,819 5,163 ¥4,257 2,182 ¥7,020 1,831 ¥26,807 7,345 ¥17,484 3,650 1 — 2,026 — 2,028 — 15,988 1,396 7,060 1,583 — 48 5,185 4 15,988 1,445 12,246 1,588 ¥0000—. ¥00,071 — — ¥000—. — ¥0,923 — ¥0000—. — ¥00,994 — — — — 71 — — — — — 923 — — — — — 994 — — Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. The amounts shown in the above table exclude internal transactions between domestic operations and overseas operations. 164 Formerly The Sumitomo Bank, Limited and Subsidiaries Fees and Commissions Years ended March 31 2001 2000 2001 2000 2001 2000 2001 2000 Domestic operations Overseas operations Elimination Total Millions of yen Fees and commissions (income) Deposits and loans Remittances and transfers Securities-related business Agency Safe deposits Guarantees Credit card Fees and commissions (expenses) Remittances and transfers ¥176,645 ¥165,029 ¥26,275 ¥19,744 10,497 3,980 660 148 6 1,147 — 15,562 4,583 3 914 0 1,526 — 8,588 46,508 6,287 8,134 2,770 10,870 66,110 9,515 43,182 6,624 8,202 2,813 12,514 62,499 ¥0(84) ¥(2,136) ¥202,836 ¥182,637 20,013 47,162 6,639 8,351 2,820 12,175 62,499 24,150 51,091 6,291 9,049 2,771 12,313 66,110 — — (645) — — (1,487) — — (0) — — — (84) — ¥029,802 ¥030,170 ¥04,246 ¥08,430 1,843 10,385 10,190 1,487 ¥(130) ¥(1,825) ¥033,918 ¥036,775 12,033 11,873 (0) — Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Internal transactions between domestic operations and overseas operations are shown in the elimination column. Trading Income Years ended March 31 Trading profits Gains on trading securities Gains on securities related to trading transactions Gains on trading-related financial derivatives Other Trading losses Losses on trading securities Losses on securities related to trading transactions Losses on trading-related financial derivatives Other Domestic operations Overseas operations Elimination Total 2001 2000 2001 2000 2001 2000 2001 2000 Millions of yen ¥43,914 2,831 ¥28,625 ¥45,207 ¥45,772 ¥(4,744) ¥(4,638) — 33,683 7,526 2,776 — ¥84,376 10,358 ¥69,760 36,460 599 — 7 — — — 606 — 37,508 2,974 24,451 1,398 37,672 — 10,250 1,837 (4,744) — (4,638) — 70,436 2,974 30,063 3,235 ¥04,745 0 ¥00,937 ¥02,146 ¥26,553 ¥(4,744) ¥(4,638) — 6,839 190 — — ¥02,146 190 ¥22,853 6,839 — 937 — 6 — — — 944 4,744 — — — 1,166 789 19,228 479 (4,744) — (4,638) — 1,166 789 14,590 479 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Internal transactions between domestic operations and overseas operations are shown in the elimination column. 165 DEPOSITS Formerly The Sakura Bank, Limited and Subsidiaries Deposits and Negotiable Certificates of Deposit Year-End Balance March 31 Liquid deposits Fixed-term deposits Other Subtotal Negotiable certificates of deposit Billions of yen Domestic operations Overseas operations Total 2001 2000 2001 2000 2001 2000 ¥13,500.8 13,757.5 1,752.1 ¥29,010.5 ¥04,574.6 ¥13,026.3 12,959.2 1,710.4 ¥27,696.1 ¥03,479.3 ¥2,777.2 215.0 1.1 ¥2,993.4 ¥0,046.3 ¥2,342.6 178.5 8.6 ¥2,529.8 ¥0,033.2 ¥16,278.0 13,972.6 1,753.3 ¥32,003.9 ¥04,621.0 ¥15,369.0 13,137.7 1,719.1 ¥30,225.9 ¥03,512.6 Total ¥33,585.1 ¥31,175.4 ¥3,039.8 ¥2,563.1 ¥36,625.0 ¥33,738.6 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan, overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice 3. Fixed-term deposits = Time deposits + Installment savings LOANS Loan Portfolio, Classified by Industry March 31 Domestic operations Manufacturing Agriculture, forestry, fisheries and mining Construction Wholesale and retail Finance and insurance Real estate Transportation, communications and other public enterprises Services Municipalities Other Subtotal Overseas operations Public sector Financial institutions Commerce and industry Other Subtotal Total Billions of yen Percent 2001 2000 2001 2000 ¥04,208.5 143.3 1,656.7 4,549.2 2,080.3 4,822.1 1,663.5 3,009.5 274.5 7,703.2 ¥04,003.6 211.9 1,632.2 4,457.0 2,111.0 4,256.3 1,660.7 3,214.6 332.4 7,554.4 13.98% 13.60% 0.48 5.50 15.11 6.91 16.01 5.52 10.00 0.91 25.58 0.72 5.55 15.14 7.17 14.46 5.64 10.92 1.13 25.67 ¥30,111.1 ¥29,434.5 100.00% 100.00% ¥0,0063.9 146.6 2,478.6 106.2 ¥00,051.4 144.1 2,595.1 107.9 2.29% 5.25 88.66 3.80 1.78% 4.97 89.53 3.72 ¥02,795.5 ¥02,898.6 100.00% 100.00% ¥32,906.7 ¥32,333.2 Note: Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan, overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 166 DEPOSITS Formerly The Sumitomo Bank, Limited and Subsidiaries Deposits and Negotiable Certificates of Deposit Year-End Balance March 31 Liquid deposits Fixed-term deposits Other Subtotal Negotiable certificates of deposit Billions of yen Domestic operations Overseas operations Total 2001 2000 2001 2000 2001 2000 ¥10,729.9 11,929.5 2,108.1 ¥24,767.5 ¥06,900.8 ¥10,138.9 12,288.0 1,818.1 ¥24,245.1 ¥06,764.8 ¥5,893.0 360.7 23.6 ¥6,277.4 ¥0,125.0 ¥3,730.6 378.6 7.5 ¥4,116.9 ¥0,104.3 ¥16,622.9 12,290.3 2,131.8 ¥31,045.0 ¥07,025.9 ¥13,869.6 12,666.7 1,825.6 ¥28,362.0 ¥06,869.2 Total ¥31,668.4 ¥31,010.0 ¥6,402.5 ¥4,221.3 ¥38,071.0 ¥35,231.3 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan, overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice 3. Fixed-term deposits = Time deposits LOANS Loan Portfolio, Classified by Industry March 31 Domestic operations Manufacturing Agriculture, forestry, fisheries and mining Construction Wholesale and retail Finance and insurance Real estate Transportation, communications and other public enterprises Services Municipalities Other Billions of yen Percent 2001 2000 2001 2000 ¥03,633.5 68.3 1,622.8 3,649.1 2,160.4 5,019.3 1,420.4 4,418.0 81.8 6,925.9 ¥03,596.7 70.5 1,722.3 3,671.7 2,116.7 4,910.5 1,231.9 4,883.4 104.2 7,056.2 12.53% 12.25% 0.24 5.60 12.58 7.45 17.31 4.90 15.23 0.28 23.88 0.24 5.87 12.50 7.21 16.72 4.20 16.63 0.35 24.03 Subtotal ¥28,999.9 ¥29,364.5 100.00% 100.00% Overseas operations Public sector Financial institutions Commerce and industry Other Subtotal Total ¥00,203.4 158.7 3,260.4 7.7 ¥00,159.6 213.8 3,191.6 11.1 5.61% 4.37 89.81 0.21 4.46% 5.98 89.25 0.31 ¥03,630.3 ¥03,576.2 100.00% 100.00% ¥32,630.3 ¥32,940.8 Note: Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan, overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 167 Formerly The Sakura Bank, Limited and Subsidiaries Risk-Monitored Loans March 31 Bankrupt loans Non-accrual loans Past due loans (3 months or more) Restructured loans Total SECURITIES Year-End Balance March 31 Domestic operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Securities lent Subtotal Overseas operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Securities lent Subtotal Total Billions of yen 2001 2000 ¥0,197.4 1,042.0 75.9 151.4 ¥0,176.3 1,274.6 39.7 170.7 ¥1,466.6 ¥1,661.4 Billions of yen 2001 2000 ¥04,903.1 20.7 588.8 3,899.2 838.7 — ¥10,250.8 ¥0,0000— — — — 215.7 — ¥0,0215.7 ¥10,466.5 ¥1,870.9 137.6 448.2 3,515.8 730.7 17.9 ¥6,721.3 ¥0000— — — — 207.4 — ¥0,207.4 ¥6,928.7 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Foreign bonds and foreign stocks are included in other. 3. Securities lent in 2001 are included in each type of securities by the classification above. 4. The amounts shown in the above table exclude internal transactions between domestic operations and overseas operations. 168 Formerly The Sumitomo Bank, Limited and Subsidiaries Risk-Monitored Loans March 31 Bankrupt loans Non-accrual loans Past due loans (3 months or more) Restructured loans Total SECURITIES Year-End Balance March 31 Domestic operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Subtotal Overseas operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Subtotal Total Billions of yen 2001 2000 ¥0,075.7 1,535.6 49.9 128.6 ¥0,087.2 1,661.9 79.2 374.8 ¥1,789.8 ¥2,203.3 Billions of yen 2001 2000 ¥10,616.2 322.1 666.2 3,042.3 1,122.5 ¥15,769.6 ¥00,075.0 — — — 1,001.3 ¥01,076.3 ¥16,845.9 ¥3,488.5 358.9 713.5 3,392.5 393.8 ¥8,347.4 ¥0000— — 0.4 4.0 616.8 ¥0,621.3 ¥8,968.8 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Foreign bonds and foreign stocks are included in other. 3. Due to the change of accounting method for certain transactions under resale and repurchase agreements, the amounts of Japanese government bonds for domestic operations increased by ¥1,610.6 billion. 169 TRADING ASSETS AND LIABILITIES Formerly The Sakura Bank, Limited and Subsidiaries Year-End Balance March 31 Trading assets: Trading securities Derivatives of trading securities Securities related to trading transactions Trading-related financial derivatives Other trading assets Millions of yen Domestic operations Overseas operations Total 2001 2000 2001 2000 2001 2000 ¥515,510 ¥1,300,937 ¥62,067 ¥124,091 30,491 — 40,793 52,805 — 11,502 — — 83,770 420,238 435,906 273 — 59,419 805,338 29,858 — 5,403 24,603 2,201 ¥577,578 ¥1,425,028 466,397 273 40,793 112,225 805,338 41,360 — 5,403 108,374 422,439 Trading liabilities: ¥128,601 ¥0,236,276 ¥72,805 ¥124,430 ¥201,407 ¥0,360,706 Trading securities sold for short sales Derivatives of trading securities Securities related to trading transactions sold for short sales Derivatives of securities related to trading transactions Trading-related financial derivatives 114 — — 142,910 256 — 3,800 — 3,756 3,625 — — 3,914 — 3,756 146,536 256 — — 128,486 3 93,105 — — 65,249 120,804 — 193,736 3 213,909 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. The amounts shown in the above table exclude internal transactions between domestic operations and overseas operations. 170 TRADING ASSETS AND LIABILITIES Formerly The Sumitomo Bank, Limited and Subsidiaries Year-End Balance March 31 Trading assets: Trading securities Derivatives of trading securities Derivatives of securities related to trading transactions Trading-related financial derivatives Other trading assets Domestic operations Overseas operations Elimination Total 2001 2000 2001 2000 2001 2000 2001 2000 Millions of yen ¥1,818,583 ¥1,344,608 ¥103,182 ¥430,919 92,317 259,135 — 155,111 19 42,387 18 — ¥(8,361) ¥(30,101) ¥1,913,404 ¥1,745,425 301,522 18 247,429 19 — — — — 18 911,865 751,568 57 476,401 825,743 — — 10,693 144,709 27,074 171 — (8,361) — — (30,101) — 18 914,197 751,740 57 591,008 852,817 Trading liabilities: ¥0,972,437 ¥0,496,184 ¥104,531 ¥486,567 ¥(8,361) ¥(30,101) ¥1,068,607 ¥0,952,649 Trading securities sold for short sales Derivatives of trading securities Derivatives of securities related to trading transactions Trading-related financial derivatives 14,326 0 9 958,100 937 17 — 326,227 — — — — — — 14,326 0 327,165 17 26 — 495,202 104,531 160,340 — — (8,361) — (30,101) 9 1,054,270 26 625,440 Notes: 1. Domestic operations refers to the operations of the Bank (except for overseas branches) and its consolidated subsidiaries within Japan. Overseas operations refers to the operations of the overseas branches of the Bank and its consolidated subsidiaries with a head office located overseas. 2. Internal transactions between domestic operations and overseas operations are shown in the elimination column. 171 Supplemental Data (Nonconsolidated) INCOME ANALYSIS Formerly The Sakura Bank, Limited Gross Banking Profit, Classified by Domestic and International Operations Interest expenses 79,035 220,375 339,438 509,596 Years ended March 31 Interest income Net interest income Fees and commissions (income) Fees and commissions (expenses) Net fees and commissions Trading profits Trading losses Net trading income Other operating income Other operating expenses Net other operating income Gross banking profit Gross banking profit rate (%) Domestic operations International operations Total 2001 2000 2001 2000 2001 2000 Millions of yen ¥669,088 ¥832,456 ¥348,079 ¥506,823 590,052 ¥095,040 36,368 58,671 ¥003,373 — 3,373 ¥030,298 6,135 24,162 612,081 ¥087,163 35,163 52,000 ¥001,167 382 785 ¥017,214 16,491 723 8,641 (2,772) ¥016,749 6,143 10,606 ¥017,402 — 17,402 ¥019,157 1,675 17,481 ¥015,392 7,278 8,114 ¥007,330 30 7,300 ¥040,739 7,056 33,683 ¥1,016,508 [660] 417,814 [660] 598,693 ¥1,338,818 [461] 729,509 [461] 609,308 ¥0,111,790 42,512 69,277 ¥0,020,776 — 20,776 ¥0,049,455 7,810 41,644 ¥102,556 42,441 60,114 ¥008,498 412 8,085 ¥057,954 23,547 34,406 ¥676,260 ¥665,589 ¥054,131 ¥046,325 ¥0,730,392 ¥711,915 1.94% 1.90% 0.89% 0.86% 1.79% 1.77% Notes: 1. Domestic operations include yen-denominated transactions by domestic branches, while international operations include foreign-currency- denominated transactions by domestic branches and operations by overseas branches. Yen-denominated nonresident transactions and Japan offshore banking accounts are included in international operations. 2. Interest expenses are shown after deduction of an amount equivalent to interest expenses on money held in trust (2001, ¥130 million; 2000, ¥1,631 million). 3. Figures in brackets indicate interest payments between domestic and international operations. 4. Gross banking profit rate = Gross banking profit/average balance of interest-earning assets x 100 The Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities, Interest and Yields Domestic Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans Bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥34,841,034 ¥34,852,646 28,855,023 5,882,989 76,285 28,454 8,868 27,921,156 6,684,363 22,116 18,628 8,349 ¥33,977,837 ¥33,884,278 [183,908] 27,660,195 2,690,916 2,106,478 136,361 267,443 809,422 141,284 [261,686] 25,326,957 3,478,211 2,758,205 309,568 441,024 679,491 419,589 ¥669,088 577,839 84,922 62 65 29 ¥179,035 [660] 39,837 10,501 6,154 579 2,976 19,530 6,114 ¥832,456 592,848 71,373 58 7 32 ¥220,375 [461] 49,438 4,169 3,240 64 1,094 22,920 1,987 1.92% 2.38% 2.07 1.27 0.28 0.35 0.35 2.05 1.21 0.07 0.02 0.36 0.23% 0.65% 0.15 0.30 0.22 0.18 0.67 2.87 1.45 0.17 0.15 0.15 0.04 0.40 2.83 1.40 Notes: 1. Interest-earning assets are shown after deduction of the average balance of non-interest earning deposits with banks (2001, ¥329,881 million; 2000, ¥371,348 million). Interest-bearing liabilities are shown after deduction of an amount equivalent to the average balance of money held in trust (2001, ¥50,636 million; 2000, ¥125,958 million) and interest (2001, ¥121 million; 2000, ¥821 million). 2. Figures in brackets indicate the amounts resulting from lending and borrowing activities between domestic and international operations. 172 INCOME ANALYSIS Formerly The Sumitomo Bank, Limited Gross Banking Profits, Classified by Domestic and International Operations Years ended March 31 Interest income Interest expenses Net interest income Fees and commissions (income) Fees and commissions (expenses) Net fees and commissions Trading profits Trading losses Net trading income Other operating income Other operating expenses Net other operating income Gross banking profit Gross banking profit rate (%) Millions of yen Domestic operations International operations Total 2001 2000 2001 2000 2001 2000 ¥632,210 ¥757,299 ¥630,186 ¥659,318 113,065 242,028 507,292 569,889 519,145 ¥084,001 29,677 54,324 ¥005,806 — 5,806 ¥012,141 8,461 3,679 ¥582,955 515,271 ¥075,810 27,700 48,109 ¥004,174 — 4,174 ¥024,948 27,330 (2,381) ¥565,173 122,893 ¥035,989 8,898 27,091 ¥068,802 — 68,802 ¥011,890 40,821 (28,931) ¥189,856 89,429 ¥030,755 9,605 21,149 ¥030,052 944 29,108 ¥036,124 18,420 17,703 ¥157,391 ¥1,259,171 [3,225] 617,132 [3,225] 642,038 ¥0,119,990 38,575 81,415 ¥0,074,609 — 74,609 ¥0,024,021 49,272 (25,251) ¥0,772,811 ¥1,416,579 [38] 811,878 [38] 604,700 ¥106,565 37,306 69,259 ¥034,227 944 33,282 ¥061,072 45,750 15,321 ¥722,565 1.50% 1.59% 1.82% 1.80% 1.58% 1.63% Notes: 1. Domestic operations include yen-denominated transactions by domestic branches, while international operations include foreign-currency- denominated transactions by domestic branches and operations by overseas branches. Yen-denominated nonresident transactions and Japan offshore banking accounts are included in international operations. 2. Interest expenses are shown after deduction of an amount equivalent to interest expenses on money held in trust (2001, ¥565 million; 2000, ¥1,222 million). 3. Figures in brackets indicate interest payments between domestic and international operations. In addition, the figures for 2001 in brackets include effect of an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 4. Gross banking profit rate = Gross banking profit/average balance of interest-earning assets x 100 The Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities, Interest and Yields Domestic Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans Receivables under resale agreements Bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money Payables under repurchase agreements Bills sold Commercial paper Borrowed money Bonds Average balance 2001 2000 ¥38,740,834 ¥35,397,481 27,384,887 10,804,411 3,435 277,192 263,432 3,373 28,019,739 7,199,331 391 — 170,746 3,311 ¥36,168,247 ¥32,504,927 [15,641] 21,958,363 5,651,266 3,297,640 — 200,921 267,406 820,000 242,329 [329,404] 21,768,745 5,335,742 3,335,588 2,579,529 642,732 353,806 1,015,688 728,269 Millions of yen Interest Earnings yield 2001 ¥632,210 [2,326] 525,950 100,759 30 1,130 813 1 ¥113,065 [899] 40,310 15,300 6,513 5,368 1,462 1,567 20,427 14,769 2000 ¥757,299 2001 1.63% 2.13% 2000 1.92 537,952 0.93 89,385 37 0.88 — 0.40 0.30 82 0.04 2 1.91 1.24 9.55 .— 0.04 0.09 0.31% 0.74% ¥242,028 [38] 44,183 8,782 3,595 0.18 0.28 0.19 — 0.20 0.22 0.44 2.01 2.02 118 515 24,275 5,038 0.20 0.15 0.10 .— 0.05 0.19 2.96 2.07 Notes: 1. Money held in trust is not included in interest-earning assets, and accordingly the amounts of interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust (2001, ¥79,410 million; 2000, ¥100,294 million) and corresponding interest (2001, ¥248 million; 2000, ¥746 million). 2. Figures in brackets indicate the amounts resulting from lending and borrowing activities between domestic and international operations. In addi- tion, the figures for 2001 in brackets include effect of an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Bond interest includes amortization of discounts of bonds. 173 Formerly The Sakura Bank, Limited International Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans Bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥6,028,024 [261,686] 3,119,422 767,292 75,217 — 1,492,222 ¥5,360,655 [183,908] 3,443,140 855,816 49,376 — 502,282 ¥5,681,458 4,076,775 47,442 129,120 — — 1,239,812 — ¥4,722,198 3,389,244 49,663 101,411 — — 1,166,971 — ¥348,079 [660] 150,813 45,080 4,788 — 96,976 ¥339,438 186,430 2,511 6,668 — — 55,230 — ¥506,823 [461] 133,934 40,280 2,505 — 24,956 ¥509,596 110,144 2,838 4,701 — — 47,676 — 5.77% 9.45% 4.83 5.87 6.36 .— 6.49 3.88 4.70 5.07 .— 4.96 5.97% 10.79% 4.57 5.29 5.16 .— .— 4.45 .— 3.24 5.71 4.63 .— .— 4.08 .— Notes: 1. Interest-earning assets are shown after deduction of the average balance of non-interest earning deposits with banks (2001, ¥8,790 million; 2000, ¥13,242 million), interest-bearing liabilities are shown after deduction of an amount equivalent to the average balance of money held in trust (2001, ¥139 million; 2000, ¥7,500 million) and interest (2001, ¥8 million; 2000, ¥809 million). 2. Figures in brackets indicate the amounts resulting from lending and borrowing activities between domestic and international operations. 3. The average balance of foreign currency denominated transactions by domestic branches in international operations is calculated by the monthly current method (under which the TT middle rate at the end of the previous month is applied to non-exchange transactions of the month concerned). Total of Domestic and International Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans Bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥40,607,371 ¥40,029,393 32,298,163 6,738,805 125,662 28,454 511,151 31,040,579 7,451,656 97,333 18,628 1,500,572 ¥1,016,508 ¥1,338,818 726,783 111,654 2,563 7 24,988 728,652 130,003 4,851 65 97,005 ¥39,397,609 ¥38,422,568 31,049,440 2,740,580 2,207,889 136,361 267,443 1,976,394 141,284 29,403,732 3,525,653 2,887,325 309,568 411,024 1,919,304 419,589 ¥1,417,814 ¥0,729,509 159,583 7,008 7,941 64 1,094 70,596 1,987 226,267 13,012 12,823 579 2,976 74,761 6,114 2.50% 3.34% 2.35 1.74 4.98 0.35 6.46 2.25 1.65 2.03 0.02 4.88 1.06% 1.89% 0.76 0.36 0.44 0.18 0.67 3.89 1.45 0.51 0.25 0.35 0.04 0.40 3.57 1.40 Notes: 1. Interest-earning assets are shown after deduction of the average balance of non-interest earning deposits with banks (2001, ¥338,672 million; 2000, ¥384,590 million). Interest-bearing liabilities are shown after deduction of an amount equivalent to the average balance of money held in trust (2001, ¥50,775 million; 2000, ¥133,459 million) and interest (2001, ¥130 million; 2000, ¥1,631 million). 2. The amounts resulting from lending and borrowing activities between domestic and international operations are offset. 174 Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen Formerly The Sumitomo Bank, Limited International Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans Receivables under resale agreements Bills bought Deposits with banks ¥10,405,393 [329,404] 4,398,567 1,379,176 92,473 38,209 — 3,485,713 ¥8,713,177 [15,641] 4,965,293 1,167,250 100,758 — — 1,915,905 Interest-bearing liabilities ¥39,772,930 ¥8,687,325 Deposits Negotiable certificates of deposit Call money Payables under repurchase agreements Bills sold Commercial paper Borrowed money Bonds 7,875,662 129,420 162,395 42,859 2,276 — 1,409,212 — 6,536,656 173,795 106,601 — 910 — 1,712,602 — ¥1,630,186 [899] 246,542 117,414 5,347 484 — 216,811 ¥1,507,292 [2,326] 334,960 7,631 7,392 2,144 53 — 81,064 — 6.05% 7.56% ¥659,318 [38] 223,218 53,359 4,995 5.60 8.51 5.78 — 1.26 .— — 6.21 84,452 4.49 4.57 4.95 .— .— 4.40 ¥569,889 5.19% 6.56% 220,241 8,952 4,779 4.25 5.89 4.55 — 5.00 2.34 27 .— — 5.75 76,988 .— — 3.36 5.15 4.48 .— 2.99 .— 4.49 .— Notes: 1. Money held in trust is not included in interest-earning assets, and accordingly the amounts of interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust (2001, ¥6,109 million; 2000, ¥7,255 million) and corresponding interest (2001, ¥317 million; 2000, ¥475 million). 2. Figures in brackets indicate the amounts resulting from lending and borrowing activities between domestic and international operations. In addi- tion, the figures for 2001 in brackets include effect of an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. The average balance of foreign currency denominated transactions by domestic branches in international operations is calculated by the monthly current method (under which the TT middle rate at the end of the previous month is applied to non-exchange transactions of the month concerned). Total of Domestic and International Operations Years ended March 31 Interest-earning assets Loans and bills discounted Securities Call loans Receivables under resale agreements Bills bought Deposits with banks Interest-bearing liabilities Deposits Negotiable certificates of deposit Call money Payables under repurchase agreements Bills sold Commercial paper Borrowed money Bonds Average balance Interest Earnings yield 2001 2000 2001 2000 2001 2000 Millions of yen ¥48,816,823 ¥44,095,017 32,985,032 8,366,581 101,150 — 170,746 1,919,216 31,783,455 12,183,588 95,909 315,402 263,432 3,489,086 ¥45,611,774 ¥41,176,612 28,495,019 5,825,062 3,404,242 — 201,832 267,406 2,532,603 242,329 29,644,408 5,465,162 3,497,983 2,622,388 645,008 353,806 2,424,901 728,269 ¥1,259,171 ¥1,416,579 761,170 142,745 5,032 2.57% 3.21% 2.43 1.79 5.60 — 0.51 0.30 82 6.21 84,455 2.30 1.70 4.97 .— 0.04 4.40 ¥1,617,132 ¥0,811,878 264,425 17,735 8,375 1.35% 1.97% 1.26 0.41 0.39 — 0.28 0.23 0.44 4.18 2.02 0.92 0.30 0.24 .— 0.07 0.19 3.99 2.07 145 515 101,263 5,038 772,492 218,173 5,378 1,614 813 216,812 375,271 22,932 13,906 7,512 1,516 1,567 101,491 14,769 Notes: 1. Money held in trust is not included in interest-earning assets, and accordingly the amounts of interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust (2001, ¥85,519 million; 2000, ¥107,550 million) and corresponding interest (2001, ¥565 million; 2000, ¥1,222 million). 2. The amounts resulting from lending and borrowing activities between domestic and international operations are offset. 3. Bond interest includes amortization of discounts of bonds. 175 Formerly The Sakura Bank, Limited Breakdown of Interest Income and Interest Expenses Domestic Operations Years ended March 31 Interest income Loans and bills discounted Securities Call loans Bills bought Deposits with banks Effect of a change in accounting standard Interest expenses Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Effect of a change in accounting standard Volume-related increase/decrease Millions of yen Rate-related increase/decrease Net increase/decrease 2001 2000 2001 2000 2001 2000 ¥00,(277) (19,300) 10,063 (64) (3) (1) — ¥(00,606 (3,963) 838 1,186 155 940 (3,729) 4,053 — ¥(24,498) (18,735) 3,801 115 15 (133) — ¥(00,246 6,731 874 (6,916) (727) (670) (1,893) 642 — ¥(83,816) 4,291 3,485 68 61 (0) — ¥(62,671) (5,637) 5,492 1,727 359 941 340 73 — ¥(18,105 (12,531) (17,995) (330) (16) 68 — ¥(99,126) (55,668) (14,410) (12,081) (1,152) (994) 464 (479) — ¥(163,368) (15,009) 13,548 4 57 (2) (79,274) ¥(141,339) (9,601) 6,331 2,914 514 1,882 (3,389) 4,127 (79,274) ¥0(6,393) (31,266) (14,193) (215) (1) (64) — ¥(98,879) (48,936) (13,535) (18,997) (1,879) (1,665) (1,428) 162 — Notes: 1. Volume/rate variance is prorated according to changes in volume and rate. 2. Effect of a change in accounting standard is due to an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Each figure for 2001 in the columns of volume-related increase/decrease as well as rate-related increase/decrease does not include effect of a change in accounting standard. International Operations Years ended March 31 Interest income Loans and bills discounted Securities Call loans Bills bought Deposits with banks Effect of a change in accounting standard Interest expenses Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Effect of a change in accounting standard Volume-related increase/decrease Millions of yen Rate-related increase/decrease Net increase/decrease 2001 2000 2001 2000 2001 2000 ¥(57,773 (13,445) (4,470) 1,535 — 62,287 — ¥(90,535 25,368 (123) 1,387 — — 3,085 — — ¥(199,898) (70,581) (4,302) (888) — (19,310) — ¥(253,154) (71,736) (9,103) (3,310) — — 7,690 — — ¥(143,831) 30,324 9,270 748 — 9,732 — ¥000,638 (32,125) (2,061) (743) — (3,434) — ¥(158,743) ¥(199,260) (102,707) (6,364) (1,631) — (22,745) — 16,878 4,799 2,283 — 72,019 (72,686) ¥(188,006) ¥(104,639 (33,774) (2,266) (2,164) — — (3,766) — — 50,916 (203) 579 — — 4,468 — — ¥(170,157) ¥(148,514) (105,510) (11,369) (5,475) — — 3,923 — — 76,285 (326) 1,967 — — 7,554 — (72,686) Notes: 1. Volume/rate variance is prorated according to changes in volume and rate. 2. Effect of a change in accounting standard is due to an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Each figure for 2001 in the columns of volume-related increase/decrease as well as rate-related increase/decrease does not include effect of a change in accounting standard. 176 Formerly The Sumitomo Bank, Limited Breakdown of Interest Income and Interest Expenses Domestic Operations Years ended March 31 Interest income Loans and bills discounted Securities Call loans Bills bought Deposits with banks Effect of a change in accounting standard Interest expenses Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Effect of a change in accounting standard Volume-related increase/decrease Millions of yen Rate-related increase/decrease Net increase/decrease 2001 2000 2001 2000 2001 2000 ¥(67,889 (12,192) 37,318 54 66 0 — ¥(25,349 (378) (516) 41 582 209 5,000 9,857 — ¥0(16,531 (16,751) 49,228 7 1,166 (19) — ¥(013,938 6,487 (731) (1,985) (56) 889 (2,636) 2,466 — ¥(87,740) ¥(133,379) (39,260) (69,039) 20 (1,849) (31) — 190 (25,944) (61) 664 (1) — ¥(125,088) ¥(116,848) (56,011) (19,811) 27 (683) (50) — (12,002) 11,373 (6) 730 (1) (105,237) ¥(49,074) ¥(133,548) (37,460) (23,800) (11,607) (640) (1,315) 342 751 — (3,494) 7,033 2,876 761 842 (8,848) (127) — ¥(128,962) ¥(119,610) (30,972) (24,531) (13,593) (696) (425) (2,294) 3,218 — (3,873) 6,517 2,917 1,344 1,051 (3,848) 9,730 (105,237) Notes: 1. Volume/rate variance is prorated according to changes in volume and rate. 2. Effect of a change in accounting standard is due to an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Each figure for 2001 in the columns of volume-related increase/decrease as well as rate-related increase/decrease does not include effect of a change in accounting standard. International Operations Years ended March 31 Interest income Loans and bills discounted Securities Call loans Bills bought Deposits with banks Effect of a change in accounting standard Interest expenses Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Effect of a change in accounting standard Volume-related increase/decrease Millions of yen Rate-related increase/decrease Net increase/decrease 2001 2000 2001 2000 2001 2000 ¥142,202 (27,465) 11,140 (433) — 88,138 — ¥077,781 50,304 (2,496) 2,538 33 — (15,117) — — ¥(228,482) (110,110) (10,750) (5,130) — 14,361 — ¥(205,233) (104,773) (14,539) (1,322) 16 — 13,730 — — ¥187,857 ¥)115,272 (31,964) (1,916) (986) — (7,475) — 50,790 52,913 785 — 44,219 — ¥0(29,132) ¥(113,209) (142,074) (12,667) (6,116) — 6,885 — 23,324 64,054 352 — 132,358 (359,193) ¥218,815 ¥(097,108 (45,632) (3,626) (735) (2) — (7,238) — — 64,414 1,175 74 (6) — 19,193 — — ¥0(62,596) ¥(108,125) (150,406) (18,166) (2,058) 14 — 6,492 — — 114,719 (1,321) 2,613 26 — 4,075 — (359,193) Notes: 1. Volume/rate variance is prorated according to changes in volume and rate. 2. Effect of a change in accounting standard is due to an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Each figure for 2001 in the columns of volume-related increase/decrease as well as rate-related increase/decrease does not include effect of a change in accounting standard. 177 Formerly The Sakura Bank, Limited Total of Domestic and International Operations Years ended March 31 Interest income Loans and bills discounted Securities Call loans Bills bought Deposits with banks Effect of a change in accounting standard Interest expenses Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Effect of a change in accounting standard Volume-related increase/decrease Millions of yen Rate-related increase/decrease Net increase/decrease 2001 2000 2001 2000 2001 2000 ¥(19,078 (28,877) 12,227 (690) (3) 61,736 — ¥(18,088 (8,863) 2,356 2,769 155 940 (2,083) 4,053 — ¥(102,138) (62,042) 3,336 543 15 (21,824) — ¥0(51,510) (1,790) (2,682) (10,413) (727) (670) 4,178 642 — ¥(189,426) ¥(101,755) (71,931) (23,894) (2,390) (16) (984) — 30,747 6,120 2,978 61 10,280 — ¥(177,821) ¥(194,123) (152,656) (22,222) (14,058) (1,152) (994) (1,683) (479) — 75,547 3,647 2,111 359 941 6,248 73 — ¥(322,310) ¥(203,893) (133,974) (20,558) (1,846) (1) (22,809) — 1,869 18,348 2,287 57 72,017 (151,961) ¥(311,694) ¥(245,634) (154,446) (24,904) (24,472) (1,879) (1,665) 2,495 162 — 66,684 6,004 4,881 514 1,882 4,164 4,127 (151,961) Notes: 1. Volume/rate variance is prorated according to changes in volume and rate. 2. Effect of a change in accounting standard is due to an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Each figure for 2001 in the columns of volume-related increase/decrease as well as rate-related increase/decrease does not include effect of a change in accounting standard. Fees and Commissions Years ended March 31 Fees and commissions (income) Deposits and loans Remittances and transfers Securities-related business Agency Safe deposits Guarantees Fees and commissions (expenses) Remittances and transfers Trading Income Years ended March 31 Trading profits Gains on trading securities Gains on securities related to trading transactions Gains on trading-related financial derivatives Other Trading losses Losses on trading securities Losses on securities related to trading transactions Losses on trading-related financial derivatives Other Note: Gains and losses are netted against each other. 178 Millions of yen Domestic operations International operations Total 2001 2000 2001 2000 2001 2000 ¥95,040 10,229 41,423 8,733 2,992 2,871 1,188 ¥36,368 7,367 ¥87,163 8,968 41,197 9,146 3,171 2,949 976 ¥35,163 7,166 ¥16,749 3,521 9,282 8 76 0 1,758 ¥06,143 3,503 ¥15,392 2,489 9,159 5 73 0 3,468 ¥111,790 ¥102,556 11,457 50,356 9,151 3,245 2,949 4,445 13,750 50,705 8,741 3,068 2,871 2,947 ¥07,278 2,952 ¥042,512 ¥042,441 10,118 10,871 Millions of yen Domestic operations International operations Total 2001 2000 2001 2000 2001 2000 ¥3,373 2,436 — — 937 ¥,0,0—. — — — — ¥1,167 — — — 1,167 ¥0,382 341 40 — — ¥17,402 0 — 17,402 — ¥0,,00—. — — — — ¥7,330 — — 7,330 — ¥0,030 — 30 — — ¥20,776 2,436 — 17,402 937 ¥00,,0—. — — — — ¥8,498 — — 7,330 1,167 ¥0,412 341 71 — — Formerly The Sumitomo Bank, Limited Total of Domestic and International Operations Years ended March 31 Interest income Loans and bills discounted Securities Call loans Bills bought Deposits with banks Effect of a change in accounting standard Interest expenses Deposits Negotiable certificates of deposit Call money Bills sold Commercial paper Borrowed money Bonds Effect of a change in accounting standard Volume-related increase/decrease Millions of yen Rate-related increase/decrease Net increase/decrease 2001 2000 2001 2000 2001 2000 ¥159,556 (28,327) 68,035 (270) 66 88,014 — ¥093,625 11,053 (1,153) 236 674 209 (4,402) 9,857 — ¥0(67,584) (80,902) 39,017 (5,136) 1,166 14,244 — ¥0(39,967) (19,531) (3,672) (2,841) (54) 889 10,264 2,466 — ¥149,792 39,649 7,393 615 664 44,342 — ¥178,386 99,792 6,350 5,294 696 842 4,630 (127) — ¥(161,746) (117,183) (71,495) (953) (1,849) (7,409) — ¥(190,040) (161,847) (39,025) (12,810) (628) (1,315) (6,066) 751 — ¥(157,408) ¥(229,330) (198,086) (32,478) (6,089) (683) 6,835 — 11,321 75,428 345 730 132,357 (466,757) ¥(194,746) ¥(227,007) (181,378) (42,698) (15,651) (682) (425) 4,197 3,218 — 110,846 5,196 5,531 1,370 1,051 227 9,730 (466,757) Notes: 1. Volume/rate variance is prorated according to changes in volume and rate. 2. Effect of a change in accounting standard is due to an application of a new accounting standard on financial instruments, effective April 1, 2000, which requires that income and expenses on derivatives for hedge be presented by net method instead of gross method. 3. Each figure for 2001 in the columns of volume-related increase/decrease as well as rate-related increase/decrease does not include effect of a change in accounting standard. Fees and Commissions Years ended March 31 Fees and commissions (income) Deposits and loans Remittances and transfers Securities-related business Agency Safe deposits Guarantees Fees and commissions (expenses) Remittances and transfers Trading Income Years ended March 31 Trading profits Gains on trading securities Gains on securities related to trading transactions Gains on trading-related financial derivatives Other Trading losses Losses on trading securities Losses on securities related to trading transactions Losses on trading-related financial derivatives Other Note: Gains and losses are netted against each other. Millions of yen Domestic operations International operations Total 2001 2000 2001 2000 2001 2000 ¥84,001 4,376 38,781 5,799 6,775 2,729 1,045 ¥29,677 8,149 ¥75,810 4,380 35,337 6,162 6,782 2,774 806 ¥27,700 7,651 ¥35,989 19,145 12,152 39 949 — 2,598 ¥08,898 3,523 ¥30,755 15,014 11,480 153 1,200 — 2,276 ¥119,990 ¥106,565 19,394 46,818 6,315 7,982 2,774 3,082 23,522 50,934 5,839 7,724 2,729 3,643 ¥09,605 4,176 ¥038,575 ¥037,306 11,827 11,672 Millions of yen Domestic operations International operations Total 2001 2000 2001 2000 2001 2000 ¥5,806 2,831 — — 2,974 ¥0,0—. — — — — ¥4,174 2,776 — — 1,398 ¥0,0—. — — — — ¥68,802. — 606 68,196 — ¥0000—. — — — — ¥30,052 — — 30,052 — ¥0,0944 — 944 — — ¥74,609 2,831 606 68,196 2,974 ¥00,0—. — — — — ¥34,227 2,776 — 30,052 1,398 ¥00,944 — 944 — — 179 Formerly The Sakura Bank, Limited Net Other Operating Income Years ended March 31 Gains and losses on bonds Gains and losses on foreign exchange transactions Total Millions of yen Domestic operations International operations Total 2001 ¥04,145 / ¥24,162 2000 ¥677 / ¥039 2001 2000 2001 2000 ¥03,800 15,393 ¥01,817 31,963 ¥07,945 15,393 ¥02,495 31,963 ¥17,481 ¥33,683 ¥41,644 ¥33,722 General and Administrative Expenses Years ended March 31 2001 2000 1999 1998 1997 Millions of yen Salaries and related expenses Retirement pay Transfer to reserve for retirement allowance Retirement benefit cost Welfare expenses Depreciation Rent and lease expenses Building and maintenance expenses Supplies expenses Water, lighting and heating expenses Traveling expenses Communication expenses Publicity and advertising expenses Taxes, other than income taxes Other ¥128,175 — — 17,269 18,908 24,651 55,694 1,795 4,699 4,245 1,556 4,981 3,138 18,334 97,070 ¥135,833 26,944 3,813 — 32,415 28,562 62,089 1,268 5,333 4,392 1,659 5,055 4,074 19,899 99,073 ¥149,571 16,510 4,190 — 33,978 31,163 59,531 1,548 6,347 4,655 1,930 5,256 5,498 23,827 102,462 ¥166,392 16,785 5,142 — 34,880 31,176 38,528 2,922 6,513 4,773 2,195 5,446 4,572 34,824 102,619 ¥174,845 18,345 5,976 — 36,143 33,386 38,457 2,166 6,630 4,908 2,207 5,046 4,328 29,117 100,771 Total ¥380,520 ¥430,417 ¥446,473 ¥456,774 ¥462,330 180 Formerly The Sumitomo Bank, Limited Net Other Operating Income Domestic operations International operations Total Millions of yen Years ended March 31 2001 2000 2001 2000 2001 2000 Gains and losses on bonds Gains and losses on foreign exchange transactions ¥4,223 / ¥(2,889) / ¥0(3,373) (25,651) ¥,(1,060) 18,919 ¥)00,849 (25,651) ¥,(3,950) 18,919 Total ¥3,679 ¥(2,381) ¥(28,931) ¥17,703 ¥(25,251) ¥15,321 General and Administrative Expenses Years ended March 31 2001 2000 1999 1998 1997 Millions of yen Salaries and related expenses Retirement pay Transfer to reserve for retirement allowance Retirement benefit cost Welfare expenses Depreciation Rent and lease expenses Building and maintenance expenses Supplies expenses Water, lighting and heating expenses Traveling expenses Communication expenses Publicity and advertising expenses Taxes, other than income taxes Other ¥113,829 / / 13,873 15,943 17,337 35,022 1,344 5,311 4,306 2,235 7,770 3,700 17,199 93,592 ¥117,345 12,180 3,373 / 30,350 15,873 39,099 1,099 5,441 4,554 1,962 6,767 2,300 17,647 92,796 ¥127,237 6,424 3,449 / 32,392 16,759 40,556 1,484 5,857 4,927 2,341 7,261 3,590 20,545 93,541 ¥138,294 6,853 3,534 / 30,967 22,598 41,310 1,755 6,142 5,597 2,967 7,354 5,110 21,909 93,225 ¥139,007 4,906 3,289 / 27,901 29,993 39,288 1,896 5,936 5,536 2,826 7,002 4,800 19,747 86,134 Total ¥331,467 ¥350,791 ¥366,369 ¥387,623 ¥378,269 181 DEPOSITS Formerly The Sakura Bank, Limited Deposits and Negotiable Certificates of Deposit Year-End Balance March 31 Domestic operations Liquid deposits Fixed-term deposits Other Subtotal Negotiable certificates of deposit 2001 2000 1999 1998 1997 Billions of yen ¥12,635.6 42.9% 11,670.5 39.7% 503.3 1.7% ¥24,809.5 84.3% ¥04,615.4 15.7% ¥13,047.4 43.7% 12,575.3 42.1% 734.5 2.5% ¥26,357.3 88.3% ¥03,505.6 11.7% ¥11,357.6 38.1% 14,910.8 50.1% 730.8 2.5% ¥26,999.2 90.7% ¥02,783.3 9.3% ¥10,952.3 37.5% 14,483.3 49.5% 674.2 2.3% ¥26,109.9 89.3% ¥03,128.2 10.7% ¥10,836.5 37.5% 13,732.3 47.6% 1,000.5 3.5% ¥25,569.3 88.6% ¥03,303.3 11.4% Total ¥29,424.9 ¥29,863.0 ¥29,782.6 ¥29,238.1 ¥28,872.7 International operations Liquid deposits Fixed-term deposits Other Subtotal Negotiable certificates of deposit Total Grand total ¥02,730.6 66.5% 182.6 4.4% 1,149.3 28.0% ¥04,062.7 98.9% ¥000,46.3 1.1% ¥02,310.9 66.4% 179.0 5.1% 956.3 27.5% ¥03,446.3 99.0% ¥00,033.2 1.0% ¥01,651.5 51.9% 176.0 5.5% 1,283.8 40.3% ¥03,111.4 97.8% ¥000,71.5 2.2% ¥04,817.7 67.5% 407.2 5.7% 1,490.7 20.9% ¥06,715.8 94.0% ¥00,426.8 6.0% ¥05,889.9 62.7% 844.0 9.0% 2,261.0 24.1% ¥08,995.0 95.7% ¥0,0402.7 4.3% ¥04,109.1 ¥03,479.6 ¥03,182.9 ¥07,142.6 ¥09,397.8 ¥33,534.0 ¥33,342.6 ¥32,965.6 ¥36,380.7 ¥38,270.5 Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice 2. Fixed-term deposits = Time deposits + Installment savings 3. Percentages indicate the composition ratio. 182 DEPOSITS Formerly The Sumitomo Bank, Limited Deposits and Negotiable Certificates of Deposit Year-End Balance March 31 Domestic operations Liquid deposits Fixed-term deposits Other Subtotal Negotiable certificates of deposit 2001 2000 1999 1998 1997 Billions of yen ¥10,533.1 37.0% 10,847.5 38.1% 217.5 0.7% ¥21,598.2 75.8% ¥06,893.3 24.2% ¥09,975.4 35.5% 11,051.2 39.4% 317.3 1.1% ¥21,344.0 76.0% ¥06,728.3 24.0% ¥08,335.4 31.8% 11,996.8 45.8% 370.6 1.4% ¥20,702.9 79.0% ¥05,512.1 21.0% ¥07,527.9 30.7% 12,527.7 51.1% 420.5 1.7% ¥20,476.2 83.5% ¥04,048.0 16.5% ¥06,966.3 29.8% 12,246.2 52.4% 404.1 1.8% ¥19,616.7 84.0% ¥03,732.9 16.0% Total ¥28,491.5 ¥28,072.3 ¥26,215.1 ¥24,524.2 ¥23,349.6 International operations Liquid deposits Fixed-term deposits Other Subtotal Negotiable certificates of deposit Total Grand total ¥06,057.1 69.6% 611.7 7.0% 1,902.0 21.9% ¥08,570.8 98.5% ¥00,133.2 1.5% ¥03,738.4 60.7% 819.6 13.3% 1,486.0 24.2% ¥06,044.1 98.2% ¥00,113.3 1.8% ¥03,448.0 50.8% 419.2 6.2% 2,653.4 39.1% ¥06,520.7 96.1% ¥00,265.4 3.9% ¥07,330.8 57.0% 1,460.6 11.4% 3,255.8 25.2% ¥12,047.3 93.6% ¥00,818.4 6.4% ¥08,536.4 51.8% 2,571.2 15.6% 3,673.8 22.3% ¥14,781.5 89.7% ¥01,702.6 10.3% ¥08,704.1 ¥06,157.4 ¥06,786.1 ¥12,865.7 ¥16,484.1 ¥37,195.6 ¥34,229.8 ¥33,001.3 ¥37,390.0 ¥39,833.8 Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice 2. Fixed-term deposits = Time deposits 3. Percentages indicate the composition ratio. 183 Formerly The Sakura Bank, Limited Average Balance Years ended March 31 Domestic operations Liquid deposits Fixed-term deposits Other Subtotal 2001 2000 1999 1998 1997 Billions of yen ¥12,379.4 12,681.9 265.6 ¥12,309.4 15,081.1 269.6 ¥10,213.1 15,320.9 241.0 ¥10,185.0 14,879.7 237.9 ¥09,423.5 15,284.6 245.3 ¥25,326.9 ¥27,660.1 ¥25,775.1 ¥25,302.6 ¥24,953.5 Negotiable certificates of deposit ¥03,478.2 ¥02,690.9 ¥02,814.7 ¥03,680.5 ¥02,885.5 Total ¥28,805.1 ¥30,351.1 ¥28,589.8 ¥28,983.2 ¥27,839.1 International operations Liquid deposits Fixed-term deposits Other Subtotal ¥02,767.7 204.2 1,104.7 ¥02,149.8 221.0 1,018.3 ¥03,325.3 447.8 1,680.0 ¥06,089.6 469.7 2,314.3 ¥06,443.2 655.0 2,530.9 ¥04,076.7 ¥03,389.2 ¥05,453.3 ¥08,873.7 ¥09,629.2 Negotiable certificates of deposit ¥00,047.4 ¥00,049.6 ¥00,201.9 ¥00,421.4 ¥0,0356.2 Total Grand total ¥04,124.2 ¥03,438.9 ¥05,655.2 ¥09,295.2 ¥09,985.5 ¥32,929.3 ¥33,790.0 ¥34,245.1 ¥38,278.4 ¥37,824.6 Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice 2. Fixed-term deposits = Time deposits + Installment savings 3. The average balance of foreign currency-denominated transactions by domestic branches in international operations is calculated by the monthly current method. Balance of Deposits, Classified by Depositor March 31 Individual deposits Corporate deposits Total Billions of yen 2001 2000 1999 1998 1997 ¥14,796.7 57.4% 10,996.3 42.6% ¥15,071.2 55.6% 12,014.4 44.4% ¥15,352.7 56.1% 12,018.0 43.9% ¥15,317.4 57.4% 11,357.2 42.6% ¥15,056.6 56.9% 11,420.1 43.1% ¥25,793.1 ¥27,085.7 ¥27,370.7 ¥26,674.7 ¥26,476.7 Notes: 1. Figures are before adjustment on inter-office accounts in transit. 2. Negotiable certificates of deposit are not included. 3. Accounts at overseas branches and Japan offshore banking accounts are excluded. 4. Percentages indicate the composition ratio. 184 Formerly The Sumitomo Bank, Limited Average Balance Years ended March 31 Domestic operations Liquid deposits Fixed-term deposits Other Subtotal 2001 2000 1999 1998 1997 Billions of yen ¥10,298.3 11,282.2 188.0 ¥10,011.5 11,772.2 174.6 ¥07,418.9 12,755.3 179.9 ¥06,583.0 12,309.7 217.1 ¥05,863.4 12,572.1 235.8 ¥21,768.7 ¥21,958.3 ¥20,354.2 ¥19,109.8 ¥18,671.5 Negotiable certificates of deposit ¥05,335.7 ¥05,651.2 ¥05,780.9 ¥05,401.6 ¥03,785.7 Total ¥27,104.4 ¥27,609.6 ¥26,135.1 ¥24,511.5 ¥22,457.2 International operations Liquid deposits Fixed-term deposits Other Subtotal ¥05,195.0 779.2 1,901.3 ¥03,783.8 878.8 1,873.9 ¥05,560.4 1,100.9 2,843.1 ¥08,868.0 2,309.7 3,419.0 ¥08,302.2 2,845.7 3,800.0 ¥07,875.6 ¥06,536.6 ¥09,504.5 ¥14,596.8 ¥14,948.0 Negotiable certificates of deposit ¥00,129.4 ¥00,173.7 ¥00,446.2 ¥01,502.8 ¥01,504.1 Total Grand total ¥08,005.0 ¥06,710.4 ¥09,950.8 ¥16,099.6 ¥16,452.1 ¥35,109.5 ¥34,320.0 ¥36,086.0 ¥40,611.1 ¥38,909.4 Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice 2. Fixed-term deposits = Time deposits 3. The average balance of foreign currency-denominated transactions by domestic branches in international operations is calculated by the monthly current method. Balance of Deposits, Classified by Depositor March 31 Individual deposits Corporate deposits Total Billions of yen 2001 2000 1999 1998 1997 ¥13,512.7 58.8% 9,477.3 41.2% ¥13,124.9 57.6% 9,672.4 42.4% ¥12,639.4 56.0% 9,913.9 44.0% ¥12,392.1 56.3% 9,624.4 43.7% ¥11,241.4 53.0% 9,952.8 47.0% ¥22,990.0 ¥22,797.3 ¥22,553.3 ¥22,016.5 ¥21,194.2 Notes: 1. Figures are before adjustment on inter-office accounts in transit. 2. Negotiable certificates of deposit are not included. 3. Accounts at overseas branches and Japan offshore banking accounts are excluded. 4. Percentages indicate the composition ratio. 185 Formerly The Sakura Bank, Limited Balance of Investment Trusts, Classified by Customer March 31 Individual Corporate Total 2001 ¥605.9 103.0 ¥708.9 Billions of yen 2000 ¥479.9 136.9 ¥616.8 1999 ¥13.9 37.5 ¥051.4 Note: Balance of investment trusts is recognized on a contract basis and measured according to each fund’s net asset balance at the fiscal year-end. Balance of Time Deposits, Classified by Maturity March 31 Less than three months Fixed interest rates Floating interest rates Three–six months Fixed interest rates Floating interest rates Six months–one year Fixed interest rates Floating interest rates One–two years Fixed interest rates Floating interest rates Two–three years Fixed interest rates Floating interest rates Three years or more Fixed interest rates Floating interest rates Total Fixed interest rates Floating interest rates Note: The figures above do not include installment savings. 2001 2000 1999 1998 1997 Billions of yen ¥06,221.4 6,062.4 0.3 ¥01,950.6 1,939.2 0.0 ¥02,689.1 2,685.9 0.0 ¥00,520.8 520.2 0.1 ¥00,276.6 276.3 0.1 ¥00,194.4 184.5 0.0 ¥11,853.1 11,668.7 0.7 ¥06,821.1 6,651.0 0.4 ¥01,849.7 1,839.7 0.2 ¥02,572.8 2,565.8 2.1 ¥00,725.1 724.3 0.5 ¥00,681.6 680.6 0.9 ¥00,103.8 92.8 0.1 ¥12,754.3 12,554.5 4.4 ¥07,744.5 7,571.6 0.3 ¥02,154.9 2,146.7 0.1 ¥02,990.6 2,984.0 3.6 ¥01,277.7 1,276.0 0.6 ¥00,771.7 771.3 0.4 ¥00,147.2 135.0 0.1 ¥15,086.8 14,884.9 5.3 ¥06,927.8 6,626.4 0.4 ¥02,308.4 2,196.3 0.2 ¥03,258.2 3,245.1 3.2 ¥01,028.6 1,020.1 1.4 ¥01,200.8 1,199.2 0.5 ¥00,166.4 163.1 — ¥14,890.5 14,450.5 6.0 ¥06,361.7 5,685.7 0.7 ¥02,404.1 2,311.2 0.3 ¥03,728.8 3,641.4 5.2 ¥01,030.0 1,029.6 0.3 ¥00,868.5 867.2 1.3 ¥00,177.3 148.6 — ¥14,570.6 13,684.0 7.8 186 Formerly The Sumitomo Bank, Limited Balance of Investment Trusts, Classified by Customer March 31 Individual Corporate Total 2001 ¥586.2 62.8 ¥649.1 Billions of yen 2000 ¥398.3 49.6 ¥448.0 1999 ¥58.0 19.8 ¥77.8 Note: Balance of investment trusts is recognized on a contract basis and measured according to each fund’s net asset balance at the fiscal year-end. Balance of Time Deposits, Classified by Maturity March 31 Less than three months Fixed interest rates Floating interest rates Three–six months Fixed interest rates Floating interest rates Six months–one year Fixed interest rates Floating interest rates One–two years Fixed interest rates Floating interest rates Two–three years Fixed interest rates Floating interest rates Three years or more Fixed interest rates Floating interest rates Total Fixed interest rates Floating interest rates Note: The figures above do not include installment savings. 2001 2000 1999 1998 1997 Billions of yen ¥04,303.8 4,080.0 — ¥02,127.1 2,085.3 — ¥02,870.5 2,867.6 — ¥01,102.2 1,100.3 — ¥00,675.2 667.0 5.0 ¥00,380.3 347.6 — ¥11,459.2 11,148.0 5.0 ¥04,578.2 3,848.3 0.7 ¥02,143.8 2,097.8 0.8 ¥03,231.8 3,226.4 1.2 ¥00,785.7 774.8 2.7 ¥00,768.6 765.2 2.3 ¥00,362.4 330.6 0.0 ¥11,870.8 11,043.3 7.8 ¥05,293.5 4,929.7 0.3 ¥01,982.5 1,964.5 0.4 ¥02,914.7 2,901.3 10.3 ¥01,263.7 1,248.7 6.9 ¥00,594.1 590.5 2.5 ¥00,366.3 340.3 0.0 ¥12,415.1 11,975.3 20.6 ¥05,980.1 5,272.7 0.2 ¥02,696.8 1,982.2 0.5 ¥02,948.0 2,945.5 0.7 ¥00,879.5 874.2 3.6 ¥01,060.3 1,051.5 1.9 ¥00,422.3 393.1 0.0 ¥13,987.3 12,519.4 7.1 ¥07,807.5 5,273.8 0.6 ¥02,001.4 1,981.7 0.4 ¥03,060.5 3,048.1 1.2 ¥00,758.4 727.6 1.7 ¥00,672.6 670.0 2.4 ¥00,515.3 515.3 — ¥14,816.0 12,216.9 6.5 187 LOANS Formerly The Sakura Bank, Limited Balance of Loans and Bills Discounted Year-End Balance March 31 Domestic operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal International operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal Total Average Balance Years ended March 31 Domestic operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal International operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal Total 2001 2000 1999 1998 1997 Billions of yen ¥02,798.4 17,830.4 6,294.4 638.5 ¥03,004.0 18,543.1 6,728.7 560.3 ¥03,113.6 18,545.5 6,621.4 425.6 ¥03,061.9 17,620.7 7,291.7 741.4 ¥03,547.4 17,698.0 7,807.2 847.5 ¥27,561.8 ¥28,836.3 ¥28,706.3 ¥28,715.8 ¥29,900.3 ¥00,331.5 2,652.4 27.6 1.9 ¥00,359.7 2,714.0 21.6 8.1 ¥00,370.9 3,183.9 24.4 5.5 ¥00,704.6 5,609.4 40.0 13.7 ¥01,009.6 5,814.8 84.6 24.5 ¥03,013.6 ¥03,103.5 ¥03,584.9 ¥06,367.8 ¥06,933.5 ¥30,575.4 ¥31,939.9 ¥32,291.2 ¥35,083.7 ¥36,833.9 2001 2000 1999 1998 1997 Billions of yen ¥02,920.4 18,175.6 6,282.7 542.2 ¥03,092.0 18,467.1 6,749.7 546.0 ¥03,202.9 18,218.4 7,618.7 719.2 ¥03,423.5 17,566.6 7,763.6 872.5 ¥03,786.5 17,460.3 7,893.1 956.9 ¥27,921.1 ¥28,855.0 ¥29,759.3 ¥29,626.4 ¥30,097.0 ¥00,330.8 2,757.6 24.9 5.9 ¥00,364.1 3,048.3 22.5 8.0 ¥00,564.4 4,551.2 35.6 10.3 ¥00,958.4 6,394.1 74.3 21.8 ¥01,181.4 5,563.2 100.6 26.0 ¥03,119.4 ¥03,443.1 ¥05,161.6 ¥07,448.7 ¥06,871.4 ¥31,040.5 ¥32,298.1 ¥34,921.0 ¥37,075.1 ¥36,968.4 Note: The average balance of foreign currency-denominated transactions by domestic branches in international operations is calculated by the monthly current method. 188 LOANS Formerly The Sumitomo Bank, Limited Balance of Loans and Bills Discounted Year-End Balance March 31 Domestic operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal International operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal Total Average Balance Years ended March 31 Domestic operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal International operations Loans on notes Loans on deeds Overdrafts Bills discounted Subtotal Total 2001 2000 1999 1998 1997 Billions of yen ¥04,090.2 16,949.5 5,549.1 466.2 ¥02,496.0 16,657.0 7,697.9 440.3 ¥02,985.4 16,647.4 7,571.7 493.1 ¥03,726.0 15,433.8 7,839.3 711.3 ¥03,957.3 14,517.0 7,535.0 760.3 ¥27,055.2 ¥27,291,4 ¥27,697.8 ¥27,710.6 ¥26,769.8 ¥00,696.9 3,198.8 221.4 — ¥00,617.4 3,123.2 326.4 — ¥01,017.0 4,322.3 679.5 — ¥01,463.5 5,556.2 1,196.1 3.7 ¥01,676.4 5,717.4 2,425.5 10.9 ¥04,117.1 ¥04,067.1 ¥06,019.0 ¥08,219.6 ¥09,830.3 ¥31,172.3 ¥31,358.5 ¥33,716.8 ¥35,930.3 ¥36,600.1 2001 2000 1999 1998 1997 Billions of yen ¥03,309.9 16,855.3 6,815.7 403.8 ¥02,801.8 16,612.8 8,154.4 450.6 ¥03,638.6 16,145.1 8,460.6 605.6 ¥03,994.6 14,898.3 7,954.2 728.5 ¥04,118.6 14,156.0 7,353.6 745.8 ¥27,384.8 ¥28,019.7 ¥28,850.1 ¥27,575.7 ¥26,374.1 ¥00,721.2 3,401.9 275.2 — ¥00,795.2 3,634.8 535.2 — ¥01,315.0 5,018.6 1,023.4 1.2 ¥01,787.0 6,212.3 2,033.7 11.8 ¥01,797.5 5,565.5 2,579.3 9.3 ¥04,398.5 ¥04,965.2 ¥07,358.4 ¥10,044.9 ¥09,951.7 ¥31,783.4 ¥32,985.0 ¥36,208.6 ¥37,620.6 ¥36,325.9 Note: The average balance of foreign currency-denominated transactions by domestic branches in international operations is calculated by the monthly current method. 189 Formerly The Sakura Bank, Limited Balance of Loans and Bills Discounted, Classified by Purpose March 31 Funds for capital investment Funds for working capital Total Note: Percentages indicate the composition ratio. Breakdown of Loan Collateral March 31 Securities Commercial claims Commercial goods Real estate Other Subtotal Guanranteed Unsecured Total Billions of yen 2001 2000 1999 1998 1997 ¥12,673.7 41.5% 17,901.7 58.5% ¥13,014.9 40.7% 18,925.0 59.3% ¥12,904.5 40.0% 19,386.7 60.0% ¥13,291.4 37.9% 21,792.3 62.1% ¥12,833.1 34.8% 24,000.7 65.2% ¥30,575.4 ¥31,939.9 ¥32,291.2 ¥35,083.7 ¥36,833.9 Billions of yen 2001 2000 1999 1998 1997 ¥00,349.8 654.9 14.4 5,519.7 176.0 ¥00,466.0 726.2 5.8 5,969.0 363.9 ¥00,474.6 771.6 11.0 6,558.9 244.0 ¥00,512.0 886.8 8.0 7,446.4 218.7 ¥00,604.1 1,259.1 14.7 7,848.2 166.6 ¥06,714.9 ¥07,531.0 ¥08,060.2 ¥09,072.1 ¥09,892.8 ¥13,982.7 9,877.8 ¥14,575.1 9,833.7 ¥14,444.2 9,786.7 ¥14,868.8 11,142.7 ¥14,541.6 12,399.4 ¥30,575.4 ¥31,939.9 ¥32,291.2 ¥35,083.7 ¥36,833.9 Balance of Loans and Bills Discounted, Classified by Maturity March 31 One year or less Floating interest rates Fixed interest rates One–three years Floating interest rates Fixed interest rates Three–five years Floating interest rates Fixed interest rates Five–seven years Floating interest rates Fixed interest rates More than seven years Floating interest rates Fixed interest rates No designated term Floating interest rates Fixed interest rates Total Billions of yen 2001 2000 1999 1998 1997 ¥06,087.7 / / ¥06,587.7 / / ¥06,528.4 / / ¥10,162.5 / / ¥13,217.4 / / 4,731.2 3,249.8 1,481.3 2,875.1 2,010.7 864.3 1,492.2 803.0 689.1 8,860.8 7,075.1 1,785.7 6,528.2 6,527.1 1.0 4,421.1 2,218.4 2,202.6 3,076.9 2,107.5 969.3 1,453.5 842.2 611.3 9,394.8 8,390.9 1,003.9 7,005.6 7,004.9 0.7 4,730.3 2,705.5 2,024.7 3,306.5 2,232.8 1,073.6 1,495.6 932.1 563.5 9,339.5 8,189.8 1,149.7 6,890.6 6,889.6 1.0 6,182.4 4,665.1 1,517.3 3,495.1 2,583.8 911.2 1,821.5 1,395.5 426.0 6,093.1 4,304.8 1,788.3 7,328.9 7,327.9 1.0 5,761.7 3,683.6 2,078.0 2,829.3 1,714.1 1,115.2 1,555.8 1,244.0 311.7 5,606.5 4,738.0 868.4 7,863.0 7,861.6 1.4 ¥30,575.4 ¥31,939.9 ¥32,291.2 ¥35,083.7 ¥36,833.9 Note: Loans with a maturity of one year or less are not classified by floating or fixed interest rates. 190 Formerly The Sumitomo Bank, Limited Balance of Loans and Bills Discounted, Classified by Purpose March 31 Funds for capital investment Funds for working capital Total Note: Percentage indicates the composition ratio. Breakdown of Loan Collateral March 31 Securities Commercial claims Commercial goods Real estate Other Subtotal Guanranteed Unsecured Total Billions of yen 2001 2000 1999 1998 1997 ¥11,694.2 37.5% 19,478.1 62.5% ¥11,701.4 37.3% 19,657.0 62.7% ¥12,226.5 36.3% 21,490.3 63.7% ¥11,964.3 33.3% 23,965.9 66.7% ¥11,790.6 32.2% 24,809.4 67.8% ¥31,172.3 ¥31,358.5 ¥33,716.8 ¥35,930.3 ¥36,600.1 Billions of yen 2001 2000 1999 1998 1997 ¥00,610.8 638.7 1.3 4,899.4 379.6 ¥00,404.3 671.9 2.6 5,086.5 564.4 ¥00,554.8 673.8 3.5 5,477.6 424.4 ¥00,654.3 1,087.0 4.5 6,321.3 328.2 ¥00,818.3 861.5 9.4 7,012.4 295.3 ¥06,529.9 ¥06,729.9 ¥07,134.3 ¥08,395.5 ¥08,997.0 ¥10,923.8 13,718.5 ¥11,344.3 13,284.2 ¥12,150.3 14,432.1 ¥13,639.6 13,895.1 ¥13,078.0 14,524.9 ¥31,172.3 ¥31,358.5 ¥33,716.8 ¥35,930.3 ¥36,600.1 Balance of Loans and Bills Discounted, Classified by Maturity March 31 One year or less Floating interest rates Fixed interest rates One–three years Floating interest rates Fixed interest rates Three–five years Floating interest rates Fixed interest rates Five–seven years Floating interest rates Fixed interest rates More than seven years Floating interest rates Fixed interest rates No designated term Floating interest rates Fixed interest rates Total Billions of yen 2001 2000 1999 1998 1997 ¥10,269.3 / / ¥07,465.4 / / ¥09,182.7 / / ¥11,276.5 / / ¥11,458.9 / / 5,889.3 3,243.2 2,646.1 3,451.9 2,246.7 1,205.2 1,375.7 1,134.3 241.4 4,415.3 4,063.1 352.2 5,770.5 5,770.5 — 4,882.9 2,747.0 2,135.8 3,764.2 2,056.0 1,708.1 1,402.8 925.7 477.0 5,818.8 4,347.3 1,471.5 8,024.2 8,024.2 — 5,920.4 3,239.3 2,681.1 3,852.5 2,111.0 1,741.4 1,516.3 1,089.8 426.4 4,993.4 3,844.7 1,148.6 8,251.3 8,251.3 — 5,775.3 3,257.7 2,517.6 3,507.7 2,241.6 1,266.0 1,690.1 1,326.6 363.5 4,642.6 3,573.2 1,069.3 9,037.9 9,037.9 — 5,422.6 3,289.6 2,133.0 3,767.2 2,569.4 1,197.8 1,592.8 1,243.3 349.5 4,397.7 3,594.8 802.9 9,960.6 9,960.6 — ¥31,172.3 ¥31,358.5 ¥33,716.8 ¥35,930.3 ¥36,600.1 Note: Loans with a maturity of one year or less are not classified by floating or fixed interest rates. 191 Formerly The Sakura Bank, Limited Loan Portfolio, Classified by Industry March 31 Domestic offices Manufacturing Agriculture, forestry, fisheries and mining Construction Wholesale and retail Finance and insurance Real estate Transportation, communications and other public enterprises Services Municipalities Other Subtotal Overseas offices Public sector Financial institutions Commerce and industry Other Subtotal Total 2001 2000 1999 1998 1997 Billions of yen ¥03,904.9 13.9% 129.9 0.5% 1,392.4 5.0% 4,119.6 14.7% 2,534.1 9.0% 4,664.2 16.6% 1,590.1 5.7% 2,616.7 9.3% 222.3 0.8% 6,843.3 24.5% ¥28,017.9 100.0% ¥000,60.7 2.4% 111.2 4.3% 2,320.5 90.7% 65.0 2.6% ¥02,557.5 100.0% ¥03,915.3 13.4% 208.7 0.7% 1,554.5 5.3% 4,342.4 14.8% 2,533.8 8.7% 4,397.1 15.0% 1,635.0 5.6% 3,026.5 10.4% 332.3 1.1% 7,298.4 25.0% ¥29,244.6 100.0% ¥00,048.4 1.8% 144.3 5.4% 2,432.4 90.2% 69.9 2.6% ¥02,695.3 100.0% ¥03,738.5 12.8% 226.7 0.8% 1,530.7 5.2% 4,451.6 15.3% 2,624.3 9.0% 4,426.7 15.2% 1,355.0 4.6% 3,383.0 11.6% 307.1 1.0% 7,134.2 24.5% ¥29,178.1 100.0% ¥00,077.9 2.5% 215.0 6.9% 2,450.4 78.7% 369.5 11.9% ¥03,113.0 100.0% ¥03,889.2 13.3% 230.4 0.8% 1,589.6 5.4% 4,787.8 16.3% 2,727.4 9.3% 4,633.3 15.8% 1,253.6 4.3% 3,386.3 11.6% 240.1 0.8% 6,564.7 22.4% ¥29,303.1 100.0% ¥00,186.8 3.2% 385.2 6.7% 4,733.4 81.9% 475.0 8.2% ¥05,780.6 100.0% ¥04,080.2 13.4% 251.9 0.8% 1,689.1 5.5% 5,231.6 17.1% 3,076.5 10.1% 4,453.1 14.6% 1,480.4 4.9% 3,697.2 12.1% 219.5 0.7% 6,351.0 20.8% ¥30,531.0 100.0% ¥00,174.8 2.8% 607.4 9.6% 5,370.3 85.2% 150.1 2.4% ¥06,302.8 100.0% ¥30,575.4 ¥31,939.9 ¥32,291.2 ¥35,083.7 ¥36,833.9 Notes: 1. Japan offshore banking accounts are included in the overseas offices’ accounts. 2. Percentages indicate the composition ratio. 192 Formerly The Sumitomo Bank, Limited Loan Portfolio, Classified by Industry March 31 Domestic offices Manufacturing Agriculture, forestry, fisheries and mining Construction Wholesale and retail Finance and insurance Real estate Transportation, communications and other public enterprises Services Municipalities Other Subtotal Overseas offices Public sector Financial institutions Commerce and industry Other Subtotal Total 2001 2000 1999 1998 1997 Billions of yen ¥03,550.4 12.9% 58.9 0.2% 1,536.7 5.6% 3,511.4 12.8% 2,316.0 8.4% 4,557.9 16.6% 1,392.0 5.1% 4,103.6 14.9% 81.8 0.3% 6,424.2 23.2% ¥27,533.2 100.0% ¥00,203.2 5.6% 267.5 7.4% 3,167.6 87.0% 0.6 0.0% ¥03,639.0 100.0% ¥03,503.0 12.6% 62.5 0.2% 1,643.5 5.9% 3,529.7 12.7% 2,325.1 8.4% 4,318.3 15.6% 1,213.1 4.4% 4,481.3 16.1% 104.2 0.4% 6,564.6 23.7% ¥27,745.9 100.0% ¥00,159.3 4.4% 289.0 8.0% 3,162.6 87.6% 1.5 0.0% ¥03,612.6 100.0% ¥03,450.4 12.2% 97.5 0.3% 1,537.6 5.4% 3,605.2 12.7% 2,059.1 7.3% 4,198.7 14.8% 1,183.7 4.2% 4,635.1 16.4% 106.5 0.4% 7,467.0 26.3% ¥28,341.3 100.0% ¥00,193.9 3.6% 419.6 7.8% 4,753.8 88.4% 8.1 0.2% ¥05,375.4 100.0% ¥03,407.0 11.9% 76.2 0.3% 1,584.5 5.6% 3,665.4 12.8% 2,193.2 7.7% 4,001.6 14.0% 1,295.8 4.5% 4,985.6 17.5% 78.9 0.3% 7,241.8 25.4% ¥28,530.3 100.0% ¥00,241.3 3.3% 609.3 8.2% 6,537.8 88.4% 11.3 0.2% ¥07,399.9 100.0% ¥03,402.7 12.3% 67.9 0.2% 1,541.6 5.6% 3,601.8 13.0% 2,047.0 7.4% 3,796.2 13.8% 1,219.0 4.4% 4,884.7 17.7% 96.3 0.4% 6,971.5 25.2% ¥27,629.2 100.0% ¥00,339.7 3.8% 760.7 8.5% 7,852.7 87.5% 17.7 0.2% ¥08,970.9 100.0% ¥31,172.3 ¥31,358.5 ¥33,716.8 ¥35,930.3 ¥36,600.1 Notes: 1. Japan offshore banking accounts are included in the overseas offices’ accounts. 2. Percentages indicate the composition ratio. 193 Formerly The Sakura Bank, Limited Loans to Individuals and Small and Medium-Sized Corporations March 31 2001 2000 1999 1998 1997 Total domestic loans (A) Loans to small and medium-sized corporations, etc. (B) (B) / (A) ¥28,017.9 20,804.3 74.25% ¥29,244.6 21,260.0 72.69% ¥29,178.1 20,367.2 69.80% ¥29,303.1 20,679.8 70.57% ¥30,531.0 21,341.4 69.90% Billions of yen Notes: 1. The figures above are shown after deduction of loans at overseas branches and of Japan offshore banking accounts. 2. Small and medium-sized corporations, etc., are defined as companies having capital of not more than ¥300 million (¥100 million in wholesale, and ¥50 million in retail and services business categories), or companies and individuals with not more than 300 full-time employees (100 in wholesale, and 50 in retail and 100 in services business categories). Pursuant to the partial revision of Small and Medium Enterprise Basic Law effective December 3, 1999, the coverage of ‘small and medium-sized corporations’ was expanded, and the figures of (B) as of March 31, 2001 and 2000 are shown based on the new definition. Consumer Loans Outstanding March 31 Consumer loans Housing loans Breakdown of Reserve for Possible Loan Losses Billions of yen 2001 2000 1999 1998 1997 ¥7,931.0 6,695.4 ¥7,974.6 6,612.7 ¥7,687.7 6,173.1 ¥7,279.5 5,676.9 ¥6,998.5 5,304.8 Year ended March 31, 2001 General reserve for possible loan losses Specific reserve for estimated loan losses on certain doubtful loans For nonresident loans Reserve for possible losses on specific overseas loans Total Year ended March 31, 2000 General reserve for possible loan losses Specific reserve for estimated loan losses on certain doubtful loans For nonresident loans Reserve for possible losses on specific overseas loans Total Balance at beginning of the fiscal year Increase during the fiscal year Decrease during the fiscal year Objectives Others Balance at end of the fiscal year Billions of yen ¥197.2 [1.5] ¥142.8 ¥0,0—. ¥197.2* ¥142.8 454.0 270.3 193.4 260.5* 270.3 32.9 7.6 [(0.0)] ¥658.9 [1.5] 20.0 11.6 11.0 21.9* — 7.6* 20.0 11.6 ¥424.8 ¥193.4 ¥465.4 ¥424.8 Balance at beginning of the fiscal year Increase during the fiscal year Decrease during the fiscal year Objectives Others Balance at end of the fiscal year Billions of yen ¥209.7 [3.6] ¥198.8 ¥0,0—. ¥209.7* ¥198.8 511.8 454.0 226.6 285.1* 454.0 49.4 10.2 [(0.0)] ¥731.9 [3.6] 32.9 7.6 16.5 32.9* — 10.2* 32.9 7.6 ¥660.4 ¥226.6 ¥505.2 ¥660.4 * Transfer from reserves by reversal or origination method Note: Figures in brackets [ ] indicate foreign exchange translation adjustments. 194 Formerly The Sumitomo Bank, Limited Loans to Individuals and Small and Medium-Sized Corporations March 31 2001 2000 1999 1998 1997 Total domestic loans (A) Loans to small and medium-sized corporations, etc. (B) (B) / (A) ¥27,533.2 19,666.9 71.42% ¥27,745.9 20,199.1 72.80% ¥28,341.3 20,173.9 71.18% ¥28,530.3 21,175.9 74.22% ¥27,629.2 20,652.1 74.75% Billions of yen Notes: 1. The figures above are shown after deduction of loans at overseas branches and of Japan offshore banking accounts. 2. Small and medium-sized corporations, etc., are defined as companies having capital of not more than ¥300 million (¥100 million in wholesale, and ¥50 million in retail and services business categories), or companies with not more than 300 full-time employees (100 in wholesale, and 50 in retail and 100 in services business categories) and individuals. Pursuant to the partial revision of Small and Medium Enterprise Basic Law effective December 3, 1999, the coverage of ‘small and medium-sized corporations’ was expanded, and the figures of (B) as of March 31, 2001 and 2000 are shown based on the new definition. Consumer Loans Outstanding March 31 Consumer loans Housing loans Breakdown of Reserve for Possible Loan Losses Billions of yen 2001 2000 1999 1998 1997 ¥5,553.6 5,095.7 ¥5,708.8 5,216.8 ¥5,842.0 5,316.3 ¥5,730.7 5,169.2 ¥5,426.9 4,834.8 Year ended March 31, 2001 General reserve for possible loan losses Specific reserve for estimated loan losses on certain doubtful loans For nonresident loans Reserve for possible losses on specific overseas loans Total Year ended March 31, 2000 General reserve for possible loan losses Specific reserve for estimated loan losses on certain doubtful loans For nonresident loans Reserve for possible losses on specific overseas loans Total Balance at beginning of the fiscal year Increase during the fiscal year Decrease during the fiscal year Objectives Others Balance at end of the fiscal year Billions of yen ¥362.0 [(4.4)] 544.3 [(5.2)] 40.4 [(5.0)] 12.3 [—] ¥918.7 [(9.6)] ¥225.0 ¥0,0— ¥362.0* ¥225.0 437.7 253.3 291.0* 437.7 22.6 8.4 16.1 24.3* — 12.3* 22.6 8.4 ¥671.0 ¥253.3 ¥665.3 ¥671.0 Balance at beginning of the fiscal year Increase during the fiscal year Decrease during the fiscal year Objectives Others Balance at end of the fiscal year Billions of yen ¥0,315.2 [3.4] 714.4 [4.3] 27.2 [3.7] 15.4 [—] ¥1,045.1 [7.7] ¥357.5 ¥0,0—. ¥315.2* ¥357.5 539.1 428.3 286.0* 539.1 35.4 12.3 7.3 — 19.9* 15.4* 35.4 12.3 ¥909.0 ¥428.3 ¥616.8 ¥909.0 * Transfer from reserves by reversal or origination method Note: Figures in brackets [ ] indicate foreign exchange translation adjustments. 195 Formerly The Sakura Bank, Limited Write-Off of Loans Years ended March 31 Write-off of loans Specific Overseas Loans March 31 Indonesia Russia Other countries Total Ratio of the total amounts to total assets Number of countries Risk-Monitored Loans Billions of yen 2001 2000 1999 1998 1997 ¥240.5 ¥113.3 ¥149.3 ¥011.8 ¥010.7 Billions of yen 2001 2000 1999 1998 1997 ¥124.2 0.1 3.3 4 countries ¥116.2 0.1 5.9 8 countries ¥178.2 0.1 6.8 8 countries ¥,000/ 1.6 1.7 7 countries ¥0,00/ 0.1 17.3 9 countries ¥127.7 0.26% 6 ¥122.3 0.26% 10 ¥185.2 0.39% 10 ¥003.4 0.01% 8 ¥017.4 0.03% 10 Billions of yen March 31 2001 2000 1999 1998 1997 Bankrupt loans (a) Non-accrual loans (b) Renegotiated loans (c) Loans to borrowers who are financially assisted by the Bank (d) Subtotal (previous standard) (a) + (b) + (c) + (d) Past due loans (3 months or more) (e) Restructured loans (f) ¥0,174.8 849.9 / / / 65.7 124.6 ¥0,156.6 1,067.7 / / / 35.2 412.7 ¥0,165.1 994.8 / / ¥0,402.8 592.4 143.7 1.0 ¥0,355.8 829.1 244.2 346.3 / ¥1,140.0 ¥1,775.5 58.9 541.6 216.7 263.3 / / Total (new standard) (a) + (b) + (e) + (f) ¥1,215.1 ¥1,672.3 ¥1,760.5 ¥1,475.4 ¥00000/ Problem Assets Based on the Financial Reconstruction Law March 31 Bankrupt and quasi-bankrupt assets (Hatan kousei tou saiken) Doubtful assets (Kiken saiken) Substandard assets (Youkanri saiken) Total of problem assets Normal assets (Seijou saiken) Total Billions of yen 2001 2000 1999 ¥00,390.9 679.7 190.3 ¥00,394.7 880.8 448.0 ¥00,390.2 809.2 600.6 ¥01,260.9 ¥01,723.5 ¥01,800.0 32,302.5 33,184.9 33,896.7 ¥33,563.4 ¥34,908.4 ¥35,696.7 196 Formerly The Sumitomo Bank, Limited Write-Off of Loans Years ended March 31 Write-off of loans Specific Overseas Loans March 31 Indonesia Algeria Iran Other countries Total Ratio of the total amounts to total assets Number of countries Risk-Monitored Loans Billions of yen 2001 2000 1999 1998 1997 ¥500.9 ¥347.3 ¥305.0 ¥066.0 ¥130.2 Billions of yen 2001 2000 1999 1998 1997 ¥60.3 4.3 — 0.5 4 countries ¥65.1 0.10% 6 ¥59.7 4.3 0.7 0.4 7 countries ¥65.3 0.13% 10 ¥69.5 4.7 4.7 3.7 13 countries ¥82.7 0.16% 16 ¥0,/ 4.9 / 0.2 4 countries ¥05.2 0.00% 5 ¥0,/ 4.8 / 0.7 4 countries ¥05.6 0.00% 5 Billions of yen March 31 2001 2000 1999 1998 1997 Bankrupt loans (a) Non-accrual loans (b) Renegotiated loans (c) Loans to borrowers who are financially assisted by the Bank (d) Subtotal (previous standard) (a) + (b) + (c) + (d) Past due loans (3 months or more) (e) Restructured loans (f) ¥0,060.8 1,357.6 / / / 37.5 61.6 ¥0,073.0 1,436.0 / / / 40.3 334.7 ¥0,115.4 1,524.2 / / ¥0,257.8 544.7 84.9 117.6 ¥0,190.4 616.6 104.6 162.4 / ¥1,005.2 ¥1,074.2 82.4 237.6 311.2 355.1 / / Total (new standard) (a) + (b) + (e) + (f) ¥1,517.5 ¥1,884.0 ¥1,959.8 ¥1,469.1 ¥0,000,/ Problem Assets Based on the Financial Reconstruction Law March 31 Bankrupt and quasi-bankrupt assets (Hatan kousei tou saiken) Doubtful assets (Kiken saiken) Substandard assets (Youkanri saiken) Total of problem assets Normal assets (Seijou saiken) Total Billions of yen 2001 2000 1999 ¥00,199.0 1,263.5 99.1 ¥00,190.8 1,351.2 375.0 ¥00,217.3 1,476.3 320.1 ¥01,561.6 ¥01,917.0 ¥02,013.7 33,855.3 32,849.8 35,421.0 ¥35,416.9 ¥34,766.8 ¥37,434.7 197 SECURITIES Formerly The Sakura Bank, Limited Average Balance of Trading Securities Years ended March 31 2001 2000 Japanese government bonds Japanese local government bonds Japanese government-guaranteed bonds Total ¥276.8 3.6 6.0 ¥286.5 ¥233.3 8.5 46.0 ¥287.9 Balance of Securities Year-End Balance March 31 Domestic operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Securities lent Other 1998 ¥82.3 0.3 3.5 ¥86.2 1997 ¥68.9 0.2 0.1 ¥69.3 Billions of yen 1999 ¥083.0 4.5 78.6 ¥166.3 Billions of yen 2001 2000 1999 1998 1997 ¥04,669.0 5.3 458.0 3,994.8 — 107.6 ¥1,844.4 134.6 414.9 3,546.3 15.7 123.1 ¥1,404.5 121.4 381.0 3,291.0 18.2 162.3 ¥1,193.2 175.3 462.7 3,395.0 17.2 221.1 ¥1,322.1 188.7 573.1 3,761.0 15.4 187.3 Subtotal ¥09,234.9 ¥6,079.2 ¥5,378.8 ¥5,464.8 ¥6,047.9 International operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Subtotal Total ¥0,0000— ¥0,000,0— ¥0,000,0— ¥0,000,0— ¥0,000,0— — — — 1,014.1 815.2 198.8 — — — 964.7 811.5 153.1 — — — 984.5 772.4 212.0 — — — 838.7 656.0 182.6 — — — 832.3 664.4 167.8 ¥00,964.7 ¥0,832.3 ¥0,838.7 ¥0,984.5 ¥1,014.1 ¥10,199.6 ¥6,911.6 ¥6,217.5 ¥6,449.3 ¥7,062.1 Notes: 1. Japanese stocks include treasury stocks. 2. Securities lent in 2001 are included in each type of securities by the classification above. 198 SECURITIES Formerly The Sumitomo Bank, Limited Average Balance of Trading Securities Years ended March 31 Japanese government bonds Japanese local government bonds Japanese government-guaranteed bonds Total Balance of Securities Year-End Balance March 31 Domestic operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other 2001 ¥138.8 0 0 ¥138.9 2000 ¥098.9 13.4 0 ¥112.4 Billions of yen 1999 ¥080.2 27.8 0 ¥108.1 1998 ¥65.9 0.5 0 ¥66.5 1997 ¥23.6 0.6 0 ¥24.3 2001 2000 1999 1998 1997 Billions of yen ¥10,602.0 317.8 537.4 3,172.7 20.4 ¥3,447.2 357.0 616.8 3,427.2 37.5 ¥1,374.3 359.5 592.4 3,017.9 62.2 ¥1,854.7 328.5 597.2 3,025.1 59.9 ¥0,819.5 499.4 829.4 2,863.9 138.5 Subtotal ¥14,650.5 ¥7,885.9 ¥5,406.5 ¥5,865.6 ¥5,150.8 International operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Subtotal Total ¥0,0000— — — — 2,209.7 1,442.2 767.5 ¥0000— — — — 1,096.2 497.7 598.4 ¥0000— — — — 1,273.3 677.6 595.7 ¥0000— — — — 1,391.2 616.7 774.5 ¥0000— — — — 853.4 400.8 452.6 ¥02,209.7 ¥1,096.2 ¥1,273.3 ¥1,391.2 ¥0,853.4 ¥16,860.3 ¥8,982.2 ¥6,679.8 ¥7,256.9 ¥6,004.3 Notes: 1. Japanese stocks include treasury stocks. 2. Securities lent are included in each type of securities by the classification above. 199 Formerly The Sakura Bank, Limited Average Balance Years ended March 31 Domestic operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Subtotal International operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Subtotal Total 2001 2000 1999 1998 1997 Billions of yen ¥2,520.8 101.1 414.3 3,523.9 124.1 ¥1,931.3 139.7 381.4 3,282.4 148.0 ¥1,657.9 64.0 389.6 3,337.9 173.7 ¥1,269.8 162.0 521.3 3,726.3 194.3 ¥1,336.7 190.9 625.3 3,797.4 177.6 ¥6,684.3 ¥5,882.9 ¥5,623.3 ¥5,873.9 ¥6,128.1 ¥0,000— — — — 767.2 600.3 166.9 ¥000,0— — — — 855.8 679.4 176.3 ¥000,0— — — — 945.8 728.8 217.0 ¥000,0— — — — 1,101.4 901.9 199.4 ¥000,0— — — — 842.3 665.3 177.0 ¥0,767.2 ¥0,855.8 ¥0,945.8 ¥1,101.4 ¥0,842.3 ¥7,451.6 ¥6,738.8 ¥6,569.2 ¥6,975.4 ¥6,970.5 Notes: 1. Japanese stocks include treasury stocks. 2. Securities lent are included in each type of securities by the classification above. 3. The average balance of foreign currency denominated transactions by domestic branches in international operations is calculated by the monthly current method. Balance of Securities Held, Classified by Maturity March 31 One year or less Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent One–three years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent Three–five years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent 200 2001 2000 1999 1998 1997 Billions of yen ¥2,343.9 2.2 22.4 358.6 354.1 / ¥0,639.7 — 126.3 125.7 106.6 / ¥0,833.7 0 198.9 138.1 109.9 / ¥441.8 0.2 57.7 197.2 183.5 0.6 ¥200.8 2.2 65.6 209.1 181.7 0.9 ¥581.5 0 148.3 55.9 33.6 0.6 ¥076.8 0.4 81.4 252.3 212.2 0.0 ¥172.8 2.7 89.4 259.8 235.2 2.2 ¥279.7 — 78.7 73.5 41.9 3.1 ¥051.7 0.1 67.8 357.7 262.9 2.0 ¥199.7 0.7 161.4 203.5 175.5 0.6 ¥472.6 2.5 83.6 59.7 33.4 0.3 ¥227.3 0.1 70.9 85.7 69.8 0.8 ¥130.3 0.6 214.9 389.5 315.3 1.2 ¥448.8 3.0 157.7 197.1 171.9 1.2 Formerly The Sumitomo Bank, Limited Average Balance Years ended March 31 Domestic operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Subtotal International operations Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Subtotal Total 2001 2000 1999 1998 1997 Billions of yen ¥06,571.0 326.0 593.6 3,275.0 38.6 ¥3,023.0 354.4 601.1 3,175.4 45.2 ¥1,762.2 375.8 580.8 3,008.3 61.0 ¥1,509.0 380.9 643.1 2,963.6 83.0 ¥0,729.4 632.1 936.2 2,825.4 130.8 ¥10,804.4 ¥7,199.3 ¥5,788.3 ¥5,579.8 ¥5,254.2 ¥0,0000— — — — 1,379.1 759.2 619.8 ¥000,0— — — — 1,167.2 581.8 585.4 ¥000,0— — — — 1,401.3 696.7 704.5 ¥000,0— — — — 1,012,1 494,1 517,9 ¥000,0— — — — 753.1 312.8 440.3 ¥01,379.1 ¥1,167.2 ¥1,401.3 ¥1,012,1 ¥0,753.1 ¥12,183.5 ¥8,366.5 ¥7,189.7 ¥6,592,0 ¥6,007.3 Notes: 1. Japanese stocks include treasury stocks. 2. Securities lent are included in each type of securities by the classification above. 3. The average balance of foreign currency denominated transactions by domestic branches in international operations is calculated by the monthly current method. Balance of Securities Held, Classified by Maturity March 31 One year or less Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent One–three years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent Three–five years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent 2001 2000 1999 1998 1997 Billions of yen ¥4,676.5 22.5 109.7 112.0 107.0 / ¥3,496.1 30.3 93.2 551.9 551.6 / ¥0,673.7 24.1 169.3 305.1 304.9 / ¥0,745.7 24.7 252.3 88.0 84.8 — ¥1,314.8 43.6 170.2 141.1 135.9 0.0 ¥0,405.0 20.2 64.4 89.1 89.1 0.0 ¥134.7 30.2 57.8 180.5 180.2 0.0 ¥118.5 55.8 369.0 106.2 97.9 0.0 ¥246.3 32.6 91.1 142.7 142.5 0.0 ¥028.4 17.1 67.0 202.3 200.3 0.0 ¥342.3 71.3 217.6 79.9 76.2 0.0 ¥466.2 68.5 134.0 71.5 66.4 0.0 ¥108.6 7.8 104.2 46.7 46.6 — ¥216.5 58.6 153.4 208.6 131.8 0.0 ¥229.0 78.7 231.1 105.0 96.6 0.5 201 Formerly The Sakura Bank, Limited (Continued) March 31 Five–seven years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent Seven–10 years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent More than 10 years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent No designated term Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Securities lent Total Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Securities lent 2001 2000 1999 1998 1997 Billions of yen ¥0,076.1 2.9 54.1 60.8 33.3 / ¥0,775.4 0.0 56.0 85.8 65.6 / ¥0,000— — — 146.5 141.7 / ¥0,000— — — 3,994.8 156.5 — 153.1 / ¥4,669.0 5.3 458.0 3,994.8 1,072.3 811.5 153.1 / ¥0,172.4 2.9 74.4 41.2 14.3 — ¥0,447.7 129.0 59.7 103.0 75.8 — ¥0,000— — 9.0 181.0 175.2 — ¥0,000— — — 3,546.3 167.8 — 167.8 13.4 ¥1,844.4 134.6 414.9 3,546.3 955.4 664.4 167.8 15.7 ¥0,078.0 0.0 74.2 52.5 18.6 0.7 ¥0,797.0 118.2 48.0 134.2 103.5 — ¥0,000— — 9.0 45.8 44.3 — ¥0,000— — — 3,291.0 182.6 — 182.6 12.2 ¥1,404.5 121.4 381.0 3,291.0 1,001.0 656.0 182.6 18.2 ¥0,158.7 8.5 76.8 53.0 20.3 0.6 ¥0,310.3 163.3 56.2 92.0 52.9 1.4 ¥0,000— — 16.6 221.2 221.0 — ¥0,000— — — 3,395.0 218.2 6.1 212.0 12.1 ¥1,193.2 175.3 462.7 3,395.0 1,205.6 772.4 212.0 17.2 ¥0,358.9 — 40.0 53.2 22.9 0.6 ¥0,156.6 184.9 74.3 101.5 60.3 1.4 ¥0,000— — 15.1 175.0 174.8 — ¥0,000— — — 3,761.0 199.1 — 198.8 10.1 ¥1,322.1 188.7 573.1 3,761.0 1,201.5 815.2 198.8 15.4 Notes: 1. Japanese stocks include treasury stocks. 2. Securities lent in 2001 are included in each type of securities by the classification above. 202 Formerly The Sumitomo Bank, Limited (Continued) March 31 Five–seven years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent Seven–10 years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent More than 10 years Japanese government bonds Japanese local government bonds Japanese corporate bonds Other Foreign bonds Securities lent No designated term Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Securities lent Total Japanese government bonds Japanese local government bonds Japanese corporate bonds Japanese stocks Other Foreign bonds Foreign stocks Securities lent 2001 2000 1999 1998 1997 Billions of yen ¥00,406.0 55.6 33.8 38.3 35.7 / ¥01,349.5 184.5 128.2 100.8 91.4 / ¥0,0000— 0.5 3.0 351.4 351.4 / ¥0,0000— — — 3,172.7 770.3 — 767.5 / ¥10,602.0 317.8 537.4 3,172.7 2,230.1 1,442.2 767.5 / ¥0,513.2 25.7 44.6 35.3 34.4 — ¥0,468.4 241.9 85.1 63.3 57.9 — ¥0000— 0.5 — 95.3 95.3 — ¥0000— — — 3,427.2 621.3 — 598.4 — ¥3,447.2 357.0 616.8 3,427.2 1,133.8 497.7 598.4 0.0 ¥0,351.4 26.6 29.4 30.8 30.6 — ¥0,523.2 213.5 44.9 156.2 134.8 — ¥0000— 0.5 — 90.7 90.7 — ¥0000— — — 3,017.9 628.1 0.5 595.7 — ¥1,374.3 359.5 592.4 3,017.9 1,335.5 677.6 595.7 0.0 ¥0,137.3 33.6 46.8 22.5 22.4 — ¥0,874.3 137.3 131.6 59.3 56.1 — ¥0,006.0 0.5 — 203.4 188.5 — ¥0000— — — 3,025.1 812.0 6.6 774.5 — ¥1,854.7 328.5 597.2 3,025.1 1,451.1 616.7 774.5 0.0 ¥0,148.5 53.0 62.8 43.2 21.7 — ¥0,113.6 300.6 277.6 34.5 29.9 — ¥00,03.0 0.5 — 67.7 67.7 — ¥0000— — — 2,863.9 485.4 6.2 452.6 — ¥0,819.5 499.4 829.4 2,863.9 991.4 400.8 452.6 0.5 Notes: 1. Japanese stocks include treasury stocks. 2. Securities lent in 2001 are included in each type of securities by the classification above. 203 CAPITAL RATIO Formerly The Sakura Bank, Limited Nonconsolidated Capital Ratio March 31 Tier I capital: Tier II capital: Deductions: Total capital: Risk-adjusted assets: Common stockholders’ equity Other Subtotal (A) 45% of unrealized gains on land General reserve for possible loan losses Qualifying subordinated debt Subtotal (B) (C) (A) + (B) – (C) = (D) On-balance-sheet Off-balance-sheet Asset equivalent of market risk Subtotal (E) Billions of yen 2001 2000 1999 ¥02,238.5 285.5 ¥02,185.5 285.4 ¥02,162.2 286.2 ¥02,524.0 ¥02,470.9 ¥02,448.4 ¥00,031.5 142.8 1,111.0 ¥00,336.4 198.8 1,286.8 ¥00,037.8 213.4 1,333.1 ¥01,285.4 ¥01,522.0 ¥01,584.4 ¥00,016.9 3,792.5 29,547.5 2,157.6 135.4 ¥00,390.9 3,992.0 29,627.5 2,151.8 137.9 ¥00,390.9 4,031.9 29,586.3 2,817.4 156.9 ¥31,840.6 ¥31,917.3 ¥32,560.7 Capital ratio (BIS guidelines) = (D) / (E) x 100 11.91% 12.50% 12.38% 204 CAPITAL RATIO Formerly The Sumitomo Bank, Limited Nonconsolidated Capital Ratio March 31 Tier I capital: Tier II capital: Deductions: Total capital: Risk-adjusted assets: Common stockholders’ equity Other Subtotal (A) 45% of unrealized gains on land General reserve for possible loan losses Qualifying subordinated debt Subtotal (B) (C) (A) + (B) – (C) = (D) On-balance-sheet Off-balance-sheet Asset equivalent of market risk Subtotal (E) Billions of yen 2001 2000 1999 ¥01,738.9 567.0 ¥01,700.0 531.0 ¥01,670.2 556.7 ¥02,305.9 ¥02,231.1 ¥02,226.9 ¥00,121.2 224.9 1,651.8 ¥00,125.1 357.5 1,651.1 ¥00,127.6 318.7 1,623.3 ¥01,997.9 ¥02,133.9 ¥02,069.6 ¥00,058.7 4,245.1 32,166.2 3,654.5 125.3 ¥00,053.7 4,311.2 31,682.4 2,787.0 110.3 ¥00,035.7 4,260.8 32,400.6 3,173.6 105.4 ¥35,946.1 ¥34,579.8 ¥35,679.7 Capital ratio (BIS guidelines) = (D) / (E) x 100 11.80% 12.46% 11.94% 205 RATIOS Formerly The Sakura Bank, Limited Yield/Interest Rate Years ended March 31 Domestic operations Interest-earning assets (A) Interest-bearing liabilities (B) (A) – (B) International operations Interest-earning assets (A) Interest-bearing liabilities (B) (A) – (B) Total Interest-earning assets (A) Interest-bearing liabilities (B) (A) – (B) Income Ratio Years ended March 31 Operating profit to total assets Operating profit to stockholders’ equity Net income to total assets Net income to stockholders’ equity 2001 2000 1.92% 1.19 0.73 5.77 6.73 (0.96) 2.50 2.00 0.50 2001 0.42% 12.29 0.18 4.86 2.38% 1.67 0.71 9.45 11.75 (2.30) 3.34 2.92 0.42 2000 0.36% 10.45 0.13 3.23 Percent 1999 2.33% 1.99 0.34 9.44 10.01 (0.57) 3.58 3.43 0.15 Percent 1999 .— .— .— .— 1998 1997 2.39% 2.01 0.38 7.31 7.30 0.01 3.59 3.33 0.26 1998 .— .— .— .— 2.44% 2.06 0.38 7.70 7.47 0.23 3.80 3.48 0.32 1997 0.11% 4.34 0.10 3.73 Notes: 1. Operating profit (net income) to total assets = Operating profit (net income) / Average balance of total assets excluding customers’ liabilities for acceptances and guarantees x 100 2. Operating profit (net income) to stockholders’ equity = (Operating profit (net income) – Preferred dividends) / {(Stockholders’ equity at beginning of the fiscal year – Number of shares of preferred stock outstanding at beginning of the fiscal year x issue price) + (Stockholders’ equity at end of the fiscal year – Number of shares of preferred stock outstanding at end of the fiscal year x Issue price)} divided by 2 x 100 3. Figures for 1999 and 1998 are not shown due to operating loss (net loss). 206 RATIOS Formerly The Sumitomo Bank, Limited Yield/Interest Rate Years ended March 31 Domestic operations Interest-earning assets (A) Interest-bearing liabilities (B) (A) – (B) International operations Interest-earning assets (A) Interest-bearing liabilities (B) (A) – (B) Total Interest-earning assets (A) Interest-bearing liabilities (B) (A) – (B) Income Ratio Years ended March 31 Operating profit to total assets Operating profit to stockholders’ equity Net income to total assets Net income to stockholders’ equity 2001 2000 1.63% 1.07 0.56 6.05 5.69 0.36 2.57 2.06 0.51 2.13% 1.60 0.53 7.56 7.14 0.42 3.21 2.77 0.44 2001 0.32% 11.78 0.10 3.72 2000 0.36% 12.69 0.10 3.32 Percent 1999 2.51% 2.04 0.47 6.75 6.51 0.24 3.57 3.25 0.32 Percent 1999 .— .— .— .— 1998 1997 2.71% 2.38 0.33 6.05 5.82 0.23 3.87 3.64 0.23 1998 .— .— .— .— 2.90% 2.55 0.35 6.07 5.57 0.50 4.14 3.76 0.38 1997 0.10% 2.89 0.07 1.98 Notes: 1. Operating profit (net income) to total assets = Operating profit (net income) / Average balance of total assets excluding customers’ liabilities for acceptances and guarantees x 100 2. Operating profit (net income) to stockholders’ equity = (Operating profit (net income) – Preferred dividends) / {(Stockholders’ equity at beginning of the fiscal year – Number of shares of preferred stock outstanding at beginning of the fiscal year x issue price) + (Stockholders’ equity at end of the fiscal year – Number of shares of preferred stock outstanding at end of the fiscal year x Issue price)} divided by 2 x 100 3. Figures for 1999 and 1998 are not shown due to operating loss (net loss). 207 Formerly The Sakura Bank, Limited Loan-Deposit Ratio March 31 Domestic operations Loan amount (A) Deposit amount (B) Loan-deposit ratio (%) 2001 2000 1999 1998 1997 Millions of yen ¥27,561,843 ¥28,836,371 ¥28,706,315 ¥28,715,881 ¥29,900,344 28,872,715 29,424,953 29,238,110 29,782,688 29,863,033 (A) / (B) Ratio by average balance for the fiscal year 93.66% 96.93% 96.56% 95.07% 96.38% 104.09% 98.21% 102.21% 103.56% 108.11% International operations Loan amount (A) Deposit amount (B) Loan-deposit ratio (%) ¥03,013,655 ¥03,103,581 ¥03,584,947 ¥06,367,890 ¥06,933,593 9,397,824 4,109,126 7,142,659 3,479,621 3,182,933 (A) / (B) Ratio by average balance for the fiscal year 73.34% 75.63% 89.19% 100.12% 112.63% 91.27% 89.15% 80.13% 73.78% 68.81% Total Loan amount (A) Deposit amount (B) Loan-deposit ratio (%) ¥30,575,498 ¥31,939,952 ¥32,291,263 ¥35,083,771 ¥36,833,937 38,270,539 33,534,079 32,965,621 36,380,770 33,342,655 (A) / (B) Ratio by average balance for the fiscal year 91.17% 94.26% 95.79% 95.58% 97.95% 101.97% 96.43% 96.85% 96.24% 97.73% Note: Deposits include negotiable certificates of deposit. Securities-Deposit Ratio March 31 Domestic operations Securities amount (A) Deposit amount (B) Securities-deposit ratio (%) 2001 2000 1999 1998 1997 Millions of yen ¥09,234,938 ¥06,079,295 ¥05,378,859 ¥05,464,860 ¥06,047,999 28,872,715 29,424,953 29,238,110 29,782,688 29,863,033 (A) / (B) Ratio by average balance for the fiscal year 31.38% 23.20% 20.35% 19.38% 18.06% 19.66% 18.69% 20.26% 20.94% 22.01% International operations Securities amount (A) Deposit amount (B) Securities-deposit ratio (%) ¥00,964,730 ¥00,832,307 ¥00,838,710 ¥00,984,512 ¥01,014,157 9,397,824 4,109,126 7,142,659 3,182,933 3,479,621 (A) / (B) Ratio by average balance for the fiscal year 23.47% 18.60% 23.91% 24.88% 26.35% 16.72% 13.78% 11.84% 10.79% 8.43% Total Securities amount (A) Deposit amount (B) Securities-deposit ratio (%) ¥10,199,669 ¥06,911,602 ¥06,217,570 ¥06,449,372 ¥07,062,157 38,270,539 33,534,079 32,965,621 36,380,770 33,342,655 (A) / (B) Ratio by average balance for the fiscal year 30.41% 22.62% 20.72% 19.94% 18.86% 19.18% 17.72% 18.22% 18.45% 18.42% Note: Deposits include negotiable certificates of deposit. 208 Formerly The Sumitomo Bank, Limited Loan-Deposit Ratio March 31 Domestic operations Loan amount (A) Deposit amount (B) Loan-deposit ratio (%) 2001 2000 1999 1998 1997 Millions of yen ¥27,055,225 ¥27,291,435 ¥27,697,845 ¥27,710,654 ¥26,769,806 23,349,654 28,491,587 26,215,137 24,524,245 28,072,348 (A) / (B) Ratio by average balance for the fiscal year 94.95% 101.03% 97.21% 101.48% 105.65% 110.38% 112.99% 112.50% 114.64% 117.44% International operations Loan amount (A) Deposit amount (B) Loan-deposit ratio (%) ¥04,117,157 ¥04,067,125 ¥06,019,012 ¥08,219,648 ¥09,830,305 16,484,173 12,865,798 8,704,106 6,786,172 6,157,482 (A) / (B) Ratio by average balance for the fiscal year 47.30% 54.94% 66.05% 73.99% 88.69% 73.94% 63.88% 62.39% 59.63% 60.48% Total Loan amount (A) Deposit amount (B) Loan-deposit ratio (%) ¥31,172,382 ¥31,358,560 ¥33,716,858 ¥35,930,302 ¥36,600,112 39,833,827 37,195,694 33,001,309 37,390,044 34,229,831 (A) / (B) Ratio by average balance for the fiscal year 83.80% 90.52% 91.61% 96.11% 102.16% 100.33% 96.09% 92.63% 91.88% 93.36% Note: Deposits include negotiable certificates of deposit. Securities-Deposit Ratio March 31 Domestic operations Securities amount (A) Deposit amount (B) Securities-deposit ratio (%) 2001 2000 1999 1998 1997 Millions of yen ¥14,650,585 ¥07,885,988 ¥05,406,537 ¥05,865,650 ¥05,150,899 23,349,654 28,491,587 24,524,245 26,215,137 28,072,348 (A) / (B) Ratio by average balance for the fiscal year 51.42% 39.86% 28.09% 26.07% 20.62% 22.14% 23.91% 22.76% 22.05% 23.39% International operations Securities amount (A) Deposit amount (B) Securities-deposit ratio (%) ¥02,209,724 ¥01,096,256 ¥01,273,355 ¥01,391,280 ¥00,853,410 16,484,173 12,865,798 8,704,106 6,786,172 6,157,482 (A) / (B) Ratio by average balance for the fiscal year 25.38% 17.22% 17.80% 17.39% 18.76% 14.08% 10.81% 6.28% 5.17% 4.57% Total Securities amount (A) Deposit amount (B) Securities-deposit ratio (%) ¥16,860,309 ¥08,982,244 ¥06,679,892 ¥07,256,931 ¥06,004,310 39,833,827 37,195,694 37,390,044 33,001,309 34,229,831 (A) / (B) Ratio by average balance for the fiscal year 45.32% 34.70% 26.24% 24.37% 20.24% 19.92% 19.40% 16.23% 15.07% 15.43% Note: Deposits include negotiable certificates of deposit. 209 CAPITAL Formerly The Sakura Bank, Limited Changes in Capital Stock Fiscal year 1995 Fiscal year 1996 Fiscal year 1998 Millions of yen Capital stock ¥0,524,445 599,445 1,042,706 Capital increase ¥050,035 75,000 443,260 Notes Conversion of convertible bonds ¥50,035 million Allotment to third parties ¥75,000 million Allotment to third parties ¥443,260 million Changes in Number of Shares Outstanding Thousands of shares Number of shares outstanding Number of shares issued Notes Fiscal year 1995 Common stock Preferred stock (Series I) Fiscal year 1996 Common stock Preferred stock (Series I) Preferred stock (Series II) Fiscal year 1997 Common stock Preferred stock (Series I) Preferred stock (Series II) Fiscal year 1998 Common stock Preferred stock (Series II) Preferred stock (Series III (type 2)) Fiscal year 1999 Common stock Preferred stock (Series II) Preferred stock 3,424,,163 48,710 108,637 (1,290) Conversion of convertible bonds (April 1, 1995–March 31, 1996) Conversion of preferred stock (April 1, 1995–March 31, 1996) 3,424,163 48,710 — — 75,000 75,000 Allotment to third parties (Issue price ¥2,000/Capitalized amount ¥1,000) 3,747,134 — 322,971 (48,710) 26,883 (48,117) 4,083,121 335,987 11,307 (15,576) 800,000 800,000 4,117,297 2,772 34,176 (8,535) Conversion of preferred stock (April 1, 1997–March 31, 1998) Allotment to third parties (Issue price ¥315/Capitalized amount ¥158) Conversion of preferred stock (April 1, 1998–March 31, 1999) Allotment to third parties (Issue price ¥1,000/Capitalized amount ¥500) Conversion of preferred stock (April 1, 1999–March 31, 2000) Conversion of preferred stock (April 1, 2000–March 31, 2001) (Series III (type 2)) 800,000 — Fiscal year 2000 Common stock Preferred stock (Series II) Preferred stock (Series III (type 2)) 4,118,077 2,577 780 (195) 800,000 — Balance of Outstanding Convertible Bonds There is no corresponding item. 210 CAPITAL Formerly The Sumitomo Bank, Limited Changes in Capital Stock Millions of yen Capital stock Capital increase Fiscal year 1989 ¥0,344,228 ¥087,655 Fiscal year 1990 501,825 157,596 Fiscal year 1991 Fiscal year 1993 Fiscal year 1998 502,323 502,348 752,848 498 25 250,500 Changes in Number of Shares Outstanding Thousands of shares Number of shares outstanding Number of shares issued Fiscal year 1989 2,829,209 50,000 3,032 252,379 Fiscal year 1990 3,140,610 169,744 196 141,460 435 15 — 3,141,046 3,141,062 3,141,062 Fiscal year 1991 Fiscal year 1993 Fiscal year 1998 Common stock Preferred stock Notes Public offering ¥82,900 million Conversion of convertible bonds ¥4,755 million Rights offering (at a price over par-value but less than market value) ¥157,312 million Conversion of convertible bonds ¥283 million Conversion of convertible bonds ¥498 million Conversion of convertible bonds ¥25 million Allotment to third parties ¥250,500 million Notes Public offering (October 1) Conversion of convertible bonds (April 1, 1989–March 31, 1990) Allocation of bonus stock (May 19) Rights offering (April 1) Conversion of convertible bonds (April 1, 1990–March 31, 1991) Allocation of bonus stock (May 18) Conversion of convertible bonds (April 1, 1991–March 31, 1992) Conversion of convertible bonds (April 1, 1993–March 31, 1994) (first series type I) 67,000 67,000 Preferred stock (second series type I) 100,000 100,000 Allotment to third parties (Issue price ¥3,000/capitalized amount ¥1,500) Allotment to third parties (Issue price ¥3,000/capitalized amount ¥1,500) Balance of Outstanding Convertible Bonds Type and issue date US$ convertible bonds January 30, 1989 Yen convertible bonds* June 26, 1996 Issue amount Interest rate Maturity Outstanding balance at March 31, 2001 Conversion price (May 31, 2001) US$300 million 3.125% March 31, 2004 US$8,660,000 ¥3,606.90 ¥100 billion 0.375% May 31, 2001 ¥100 billion ¥1,095.00 * Yen convertible bonds were converted into common stock at May 31, 2001. 211 Formerly The Sakura Bank, Limited Total Outstanding Shares March 31, 2001 Common stock Preferred stock (Series II) Preferred stock (Series III (Type 2)) Total Stock exchange listings 4,118,077,946 2,577,000 800,000,000 4,920,654,946 Registered, par value (¥50) Registered, non par value Registered, non par value Common stocks of the Bank had been listed on Tokyo Stock Exchange (First section), Osaka Securities Exchange (First section), Sapporo Stock Exchange, Frankfurt Stock Exchange, SWX Swiss Exchange, Paris Bourse, and London Stock Exchange, but were delisted due to merger etc. Number of Shares, Classified by Type of Shareholders a. Common Stock March 31, 2001 Japanese government and local government Financial institutions Securities companies Other institutions Foreign institutions [Individuals] Individuals and others Total Less than one unit (shares) Number of shareholders Number of share units held 6 266 57 5,713 625 [35] 71,938 78,605 / 7,264 1,364,639 117,178 1,459,200 790,115 [119] 360,605 4,099,001 19,076,946 Percentage of total 0.18% 33.29 2.86 35.60 19.27 [0.00] 8.80 100.00 .0/ Notes: 1. Of 79,008 shares in treasury stock, 79 units are included in ‘individuals and others’ and the remaining 8 shares are included in ‘less than one unit’. 2. ‘Other institutions’ and ‘less than one unit’ include 33 units and 1,617 shares held by the Securities Custody Association, respectively. 3. One unit consists of 1,000 shares b. Preferred Stock (Series II) March 31, 2001 Financial institutions c. Preferred Stock (Series III (Type 2)) March 31, 2001 Financial institutions Number of shareholders 1 Number of shareholders 1 Number of share units held 2,577 Number of share units held 800,000 Percentage of total 100.00% Percentage of total 100.00% 212 Formerly The Sumitomo Bank, Limited Total Outstanding Shares March 31, 2001 Common stock Preferred stock (first series type I) Preferred stock (second series type I) Total June 29, 2001 Common stock Preferred stock (first series type I) Preferred stock (second series type I) Preferred stock (type V) Preferred stock (type VI) Total 3,141,062,101 67,000,000 100,000,000 3,308,062,101 5,703,233,046 67,000,000 100,000,000 800,000,000 2,577,000 6,672,810,046 Registered, par value (¥50) Registered, non par value Registered, non par value Registered, par value (¥50) Registered, non par value Registered, non par value Registered, non par value Registered, non par value Note: Upon merger, the Bank issued 2,470,846,767 shares of common stock, 800,000,000 shares of preferred stock (type V), and 2,577,000 shares of preferred stock (type VI) on April 2, 2001. And Yen convertible bonds were converted into 91,324,178 shares of common stock on May 31, 2001. Stock exchange listings Tokyo Stock Exchange (First Section) Osaka Securities Exchange (First Section) Nagoya Stock Exchange (First Section) Sapporo Stock Exchange London Stock Exchange Number of Shares, Classified by Type of Shareholders a. Common Stock March 31, 2001 Japanese government and local government Financial institutions Securities companies Other institutions Foreign institutions [Individuals] Individuals and others Total Less than one unit (shares) Number of shareholders Number of share units held 2 358 50 3,705 730 [24] 45,147 49,992 / 4,108 1,164,676 28,548 1,407,011 345,908 [93] 179,799 3,130,050 11,012,101 Percentage of total 10.13% 37.21 0.91 44.95 11.05 [0.00] 5.75 100.00% / Notes: 1. Of 9,501 shares in treasury stock, 9 units are included in ‘individuals and others’ and the remaining 501 shares are included in ‘less than one unit.’ 2. ‘Other institutions’ and ‘less than one unit’ include 230 units and 3,650 shares held by the Securities Custody Association, respectively. 3. One unit consists of 1,000 shares b. Preferred Stock (First Series Type I) March 31, 2001 Financial institutions c. Preferred Stock (Second Series Type I) March 31, 2001 Financial institutions Number of shareholders 1 Number of shareholders 1 Number of share units held 67,000 Number of share units held 100,000 Percentage of total 100.00% Percentage of total 100.00% 213 Formerly The Sakura Bank, Limited Number of Shares of Voting Stock March 31, 2001 Shares without voting rights Treasury stock Other Shares less than one unit Shares with voting rights 802,577,000 7,518,000 4,091,483,000 19,076,946 Notes: 1. ‘Other’ of ‘shares with voting rights’ includes 33,000 shares held by the Securities Custody Association. 2. ‘Shares less than one unit’ includes 8 shares of the Bank’s treasury stock, 496 shares held by The Minato Bank, Ltd., 357 shares held by Sakura Mortgage Co., Ltd., 800 shares held by Sakura Friend Securities Co., Ltd., and 1,617 shares held by Securities Custody Association as follows: Number of Shares of Treasury Stock March 31, 2001 Holder of treasury stock The Sakura Bank, Limited The Minato Bank, Limited Sakura Mortgage Co., Ltd. Sakura Friend Securities Co., Ltd. Total Number of shares held in the name of Holder Others Total Percentage of total shares issued 72,000 6,623,000 487,000 336,000 7,518,000 — — — — — 72,000 6,623,000 487,000 336,000 7,518,000 0.00% 0.16% 0.01% 0.00% 0.18% Note: The above figures do not include 7,000 shares held in the Bank’s nominee name. They are included in ‘other’ of ‘shares with voting rights’ in the schedule above. 214 Formerly The Sumitomo Bank, Limited Number of Shares of Voting Stock March 31, 2001 Shares without voting rights Treasury stock Other Shares less than one unit Shares with voting rights 167,000,000 8,321,000 3,121,729,000 11,012,101 Notes: 1. ‘Other’ of ‘shares with voting rights’ and ‘shares less than one unit’ include 230,000 shares and 3,650 shares held by the Security Custody Asso- ciation, respectively. 2. ‘Shares less than one unit’ includes 501 shares of the Bank’s treasury stock and cross-holding shares held by the Bank’s consolidated subsidiaries, as follows: March 31, 2001 SB Leasing Company, Limited Sumigin General Finance Company Limited The Bank of Kansai, Ltd. The Sumitomo Credit Service Company, Limited Number of shares held 384 36 179 270 Number of Shares of Treasury Stock March 31, 2001 Holder of treasury stock The Sumitomo Bank, Limited SB Leasing Company, Limited Sumigin General Finance Company Limited The Bank of Kansai, Ltd. Daiwa Securities SB Capital Markets Co. Ltd. The Sumitomo Credit Service Company, Limited Total Number of shares held in the name of Holder Others Total Percentage of total shares issued 4,000 2,276,000 1,567,000 1,114,000 2,046,000 1,314,000 8,321,000 — — — — — — — 4,000 2,276,000 1,567,000 1,114,000 2,046,000 1,314,000 8,321,000 0.00% 0.07 0.04 0.03 0.06 0.04 0.26% Note: The above figures do not include 5,000 shares held in the Bank’s nominee name. They are included in ‘other’ of ‘shares with voting rights’ in the schedule above. 215 Formerly The Sakura Bank, Limited Principal Shareholders a. Common Stock March 31, 2001 Shareholders Nippon Life Insurance Company The Taiyo Mutual Life Insurance Company Mitsui Mutual Life Insurance Company Japan Trustee Services Bank, Ltd. (Trust account) The Chase Manhattan Bank, N.A. London (Standing Proxy:The Fuji Bank, Limited) Toyota Mortor Corporation The Nomura Securities Co., Ltd. The Dai-ichi Mutual Life Insurance Company State Street Bank and Trust Company (Standing Proxy:The Fuji Bank, Limited) The Toyo Trust and Banking Co., Ltd. (Trust account) Mitsui Fudosan Co., Ltd. The Mitsubishi Trust and Banking Corporation (Trust account) Morgan Stanley & Co. International Limited (Standing Proxy: Morgan Stanley Dean Witter & Co.) Mitsui & Co., Ltd. Composite Trust Trustee The Sakura Trust & Banking Co., Ltd. (Entrust TOSHIBA CORPORATION) The Tokyo Electric Power Company, Incorporated Nippon Life Insurance Company (Special account for pensions) Mitsui Marine and Fire Insurance Co., Ltd UBS AG London Asia Equities (Standing Proxy: UBS Warburg (Japan) Limited) The Chuo Mitsui Trust and Banking Company, Limited The Sakura Bank Employee Shareholders’ Association Boston Deposit BSDT Treaty Clients Omnibus (Standing Proxy: The Bank of Tokyo–Mitsubishi, Ltd.) The Dowa Fire & Marine Insurance Co., Ltd Chase Nominees REBGI Treaty Jasdec Lending (Standing Proxy: The Bank of Tokyo–Mitsubishi, Ltd.) The Chuo Mitsui Trust and Banking Company, Limited (Pension trust account) Toray Industries, Inc. Oji Paper Co.,Ltd. Nippon Mitsubishi Oil Corporation Mitsui Chemicals, Inc. The Chase Manhattan Bank NA London SL Omnibus Account (Standing Proxy: The Fuji Bank, Limited) b. Preferred Stock (Series II) March 31, 2001 Shareholder Sakura Finance (Bermuda) Trust c. Preferred Stock (Series III) (Type 2) March 31, 2001 Shareholder The Resolution and Collection Corporation 216 Number of shares held (thousands) 147,758 147,752 127,752 99,921 94,505 89,588 83,290 65,855 64,526 59,855 56,557 54,958 50,579 50,277 48,756 46,107 45,435 45,046 36,840 35,324 33,601 31,862 31,815 31,108 29,263 27,129 27,115 24,363 21,405 21,256 Percentage of total shares issued 3.58 3.58 3.10 2.42 2.29 2.17 2.02 1.59 1.56 1.45 1.37 1.33 1.22 1.22 1.18 1.11 1.10 1.09 0.89 0.85 0.81 0.77 0.77 0.75 0.71 0.65 0.65 0.59 0.51 0.51 Number of shares held (thousands) Percentage of total shares issued 2,577 100.00% Number of shares held (thousands) 800,000 Percentage of total shares issued 100.00% Formerly The Sumitomo Bank, Limited Principal Shareholders a. Common Stock As of March 31, 2001 Shareholders Sumitomo Life Insurance Company Japan Trustee Services Bank, Ltd. (Trust account) Nippon Life Insurance Company Matsushita Electric Industrial Co., Ltd. The Mitsubishi Trust and Banking Corporation (Trust account) Sanyo Electric Co., Ltd. Sumitomo Corporation The Sumitomo Trust and Banking Co., Ltd. Kubota Corporation Kajima Corporation The Sumitomo Marine and Fire Insurance Company, Limited Takeda Chemical Industries, Ltd. Sumitomo Chemical Company, Limited The Taiyo Mutual Life Insurance Co. Kondo Cotton Spinning Co., Ltd. Nippon Steel Corporation The Toyo Trust and Banking Co., Ltd. (Trust account) Sumitomo Metal Industries, Ltd. Nippon Sheet Glass Company, Limited Shionogi & Co., Ltd. The Kansai Electric Power Company, Incorporated Mizuho Trust & Banking Co., Ltd. (Trust account) The Dai-ichi Mutual Life Insurance Company NEC Corporation Bridgestone Corporation Daiwa Securities Group Inc. Chuo Mitsui Trust and Banking Company, Limited (Tokkin trust trustee) The Nomura Trust and Banking Co., Ltd. (Investment trust account) The Chase Manhattan Bank NA London The Dai-ichi Mutual Life Insurance Company (Special account) b. Preferred Stock (First Series Type I) March 31, 2001 Shareholder The Resolution and Collection Corporation c. Preferred Stock (Second Series Type I) March 31, 2001 Shareholder The Resolution and Collection Corporation Number of shares held (thousands) 149,001 127,500 124,890 103,570 69,997 62,337 52,008 51,352 39,499 39,387 38,802 38,218 33,581 33,558 31,596 31,411 28,333 26,929 24,219 22,911 22,711 22,507 21,735 19,817 19,771 18,769 18,545 17,788 17,751 17,626 Percentage of total shares issued 4.74% 4.05 3.97 3.29 2.22 1.98 1.65 1.63 1.25 1.25 1.23 1.21 1.06 1.06 1.00 1.00 0.90 0.85 0.77 0.72 0.72 0.71 0.69 0.63 0.62 0.59 0.59 0.56 0.56 0.56 Number of shares held (thousands) 67,000 Number of shares held (thousands) 100,000 Percentage of total shares issued 100.00% Percentage of total shares issued 100.00% 217 Formerly The Sakura Bank, Limited Per Share Data Years ended March 31 Dividends on common share [Interim dividends on common share] Net income (loss) Stockholders’ equity Payout ratio (%) 2001 2000 ¥006.00 [3.00] 17.28 358.43 34.71% ¥006.00 [3.00] 11.24 351.38 53.42% Yen 1999 ¥007.25 [4.25] (97.62) 343.09 .—% 1998 1997 ¥008.50 [4.25] (62.92) 332.07 .—% ¥008.50 [4.25] 14.10 380.72 60.27% Notes: 1. Dividends per share (interim dividends per share) are common stock dividends. (Dividends for 2001 is calculated by assuming delivered money due to merger is in place of year-end dividends.) 2. Net income (loss) per share is computed by deducting preferred dividends (including delivered money due to merger as for the year ended March 31, 2001) from net income (loss), divided by the weighted average number of shares of common stock outstanding during the fiscal year. 3. Stockholders’ equity per share is computed by deducting the number of shares of preferred stock outstanding at fiscal year-end multiplied by the issue price from shareholders’ equity, divided by the number of shares of common stock outstanding at fiscal year-end. Common Stock Price Range Years ended March 31 Highest Lowest Highest Lowest 2001 ¥858 477 2000 ¥1,045 358 Yen 1999 ¥0,404 165 Yen 1998 ¥0,975 325 1997 ¥1,250 600 March 2001 February 2001 January 2001 December 2000 November 2000 October 2000 ¥710 477 ¥740 635 ¥743 646 ¥714 644 ¥823 629 ¥858 766 Notes: 1. The above figures are stock prices quoted at the Tokyo Stock Exchange (First Section). 2. Preferred stock (Series II) and preferred stock (Series III (Type 2)) is not listed on exchange, nor registered with the Securities Dealers Association of Japan as trading securities on the over-the-counter market. 218 Formerly The Sumitomo Bank, Limited Per Share Data Years ended March 31 Dividends on common share [Interim dividends on common share] Net income (loss) Stockholders’ equity Payout ratio (%) 2001 2000 ¥006.00 [3.00] 16.59 451.35 36.15% ¥006.00 [3.00] 14.41 439.23 41.63% Yen 1999 ¥006.00 [3.00] (119.11) 428.35 .—% 1998 1997 ¥008.50 [4.25] (197.93) 362.30 .—% ¥008.50 [4.25] 11.24 568.73 75.59% Notes: 1. Net income (loss) per share is computed by deducting preferred dividends from net income (loss), divided by the weighted average number of shares of common stock outstanding during the fiscal year. 2. Stockholders’ equity per share is computed by deducting the number of shares of preferred stock outstanding at end of the fiscal year multiplied by the issue price from stockholders’ equity, divided by the number of shares of common stock outstanding at end of the fiscal year. Common Stock Price Range Years ended March 31 Highest Lowest Highest Lowest 2001 ¥1,640 867 2000 ¥1,902 1,271 Yen 1999 ¥1,710 860 Yen 1998 1997 ¥1,950 1,100 ¥2,260 1,220 March 2001 February 2001 January 2001 December 2000 November 2000 October 2000 ¥1,195 867 ¥1,248 1,070 ¥1,270 1,087 ¥1,212 1,100 ¥1,385 1,077 ¥1,448 1,284 Notes: 1. The above figures are stock prices quoted at the Tokyo Stock Exchange (First Section). 2. Preferred stock (first series type I) and preferred stock (second series type I) are not listed on exchange, nor registered with the Securities Dealers Association of Japan as trading securities on the over-the-counter market. 219 OTHERS Formerly The Sakura Bank, Limited Employees March 31 Number of employees Average age (years–months) Average length of employment (years–months) Average monthly salary (yen) 2001 2000 1999 1998 1997 13,632 38–7 16–10 ¥515,897 14,930 37–11 16–2 ¥502,428 16,330 38–0 16–5 ¥502,574 17,420 38–0 16–5 ¥496,583 18,733 37–5 15–11 ¥488,753 Note: Temporary, part-time and overseas local staff are excluded from the above calculations. Number of Offices March 31 Domestic network: Main offices and branches Sub-branches Agency Overseas network: Branches Sub-branches Representative offices Total 2001 2000 1999 1998 1997 323 32 4 16 2 3 380 381 40 4 18 2 6 451 414 50 7 18 2 12 503 432 56 7 23 2 15 535 439 61 9 24 3 17 553 Note: ‘Main offices and branches’ includes International Business Operations Dept. (2001, 2 branches; 2000, 2 branches; 1999, 2 branches; 1998, 2 branches; 1997, 2 branches) and Specialized deposit account branch (2001, 4 branches: 2000, 2 branches), and ATM administration branch (2001, 1 branch; 2000, 1 branch). Automated Service Centers March 31 Automated service centers 2001 1,485 2000 1,046 1999 504 1998 478 1997 472 220 OTHERS Formerly The Sumitomo Bank, Limited Employees March 31 Number of employees Average age (years–months) Average length of employment (years–months) Average monthly salary (yen) 2001 2000 1999 1998 1997 13,526 37–5 15–5 ¥504,168 14,394 36–11 14–11 ¥493,991 14,995 37–0 15–2 ¥488,834 15,111 37–0 15–2 ¥493,658 15,563 36–9 14–11 ¥491,301 Note: Temporary, part-time and overseas local staff are excluded from the above calculations. Number of Offices March 31 Domestic network: Main offices and branches Sub-branches Agency Overseas network: Branches Sub-branches Representative offices Total 2001 2000 1999 1998 1997 270 47 1 17 3 16 354 285 47 1 18 3 17 371 286 52 1 21 4 17 381 305 55 1 37 5 20 423 310 40 1 39 2 25 417 Note: ‘Main offices and branches’ includes specialized deposit account branch (2001, 8 branches; 2000, 8 branches; 1999, 2 branches). Automated Service Centers March 31 Automated service centers 2001 000346 2000 463 1999 513 1998 478 1997 445 221 Formerly The Sakura Bank, Limited Domestic Exchange Transactions Years ended March 31 2001 2000 Billions of yen 1999 1998 1997 Exchange for remittance Destined for various parts of the country: Number of accounts (thousands) Amount Received from various parts of the country: 139,818 ¥367,882.4 161,329 ¥0,330,932.6 165,185 ¥0,434,924.7 166,545 ¥0,457,657.4 164,287 ¥0,433,520.9 Number of accounts (thousands) Amount 121,137 526,742.4 153,883 558,293.3 155,487 712,307.1 155,844 713,346.2 153,128 659,570.8 Collection Destined for various parts of the country: Number of accounts (thousands) Amount Received from various parts of the country: 5,103 ¥014,212.5 5,542 ¥0,14,142.2 6,199 ¥0,15,927.2 6,981 ¥0,18,739.2 7,165 ¥0,18,656.2 Number of accounts (thousands) Amount 745 2,440.8 765 2,040.3 828 1,901.3 896 2,253.3 951 2,222.2 Total ¥911,278.3 ¥905,408.5 ¥1,165,060.5 ¥1,191,996.3 ¥1,113,970.2 Foreign Exchange Transactions Years ended March 31 Outward exchanges: Foreign bills sold Foreign bills bought Incoming exchanges: Foreign bills payable Foreign bills receivable Total 2001 2000 1999 1998 1997 Millions of U.S. dollars $385,950 61,227 $0,418,646 58,931 $413,983 62,923 $0,488,918 78,110 $0,457,172 65,812 $454,809 14,190 $0,557,928 16,481 $483,395 16,435 $0,555,470 37,219 $0,560,660 59,033 $916,177 $1,051,988 $976,737 $1,159,719 $1,142,678 Note: The above figures include foreign exchange transactions by overseas branches. Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees March 31 Securities Commercial claims Commercial goods Real estate Other Subtotal Guaranteed Unsecured Total 222 Billions of yen 2001 2000 1999 ¥0,003.2 253.8 6.5 30.5 12.9 ¥0,003.0 156.6 4.4 40.1 10.1 ¥0,011.2 154.3 5.7 49.7 15.4 ¥0,307.0 ¥0,214.4 ¥0,236.5 396.6 1,933.8 371.6 1,938.1 468.5 2,251.6 ¥2,637.6 ¥2,524.3 ¥2,956.7 Formerly The Sumitomo Bank, Limited Domestic Exchange Transactions Years ended March 31 2001 2000 Billions of yen 1999 1998 1997 Exchange for remittance Destined for various parts of the country: Number of accounts (thousands) Amount Received from various parts of the country: 210,761 ¥418,710.3 216,051 ¥430,898.0 209,683 ¥424,602.4 185,004 ¥432,219.3 167,409 ¥405,531.6 Number of accounts (thousands) Amount 120,318 357,069.1 113,405 326,166.3 109,098 350,240.0 107,100 411,147.9 102,541 407,441.1 Collection Destined for various parts of the country: Number of accounts (thousands) Amount Received from various parts of the country: 2,190 ¥005,478.0 2,324 ¥005,787.8 2,361 ¥006,381.4 2,615 ¥007,585.0 2,552 ¥007,378.2 Number of accounts (thousands) Amount 2,233 8,061.4 2,217 7,691.3 2,431 9,129.0 2,535 10,460.6 3,048 9,348.8 Total ¥789,319.0 ¥770,543.5 ¥790,352.9 ¥861,412.8 ¥829,699.9 Foreign Exchange Transactions Years ended March 31 Outward exchanges: Foreign bills sold Foreign bills bought Incoming exchanges: Foreign bills payable Foreign bills receivable Total 2001 2000 1999 1998 1997 Millions of U.S. dollars $436,562 139,033 $337,735 105,431 $493,705 303,917 $499,041 271,235 $0,542,337 317,368 $316,992 10,044 $902,633 $280,984 7,571 $731,724 $157,285 7,103 $962,011 $201,530 11,399 $0,220,467 14,646 $983,207 $1,094,819 Note: The above figures include foreign exchange transactions by overseas branches. Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees March 31 Securities Commercial claims Commercial goods Real estate Other Subtotal Guaranteed Unsecured Total Billions of yen 2001 2000 1999 ¥0,001.6 4.1 1.4 21.2 19.7 ¥0,002.6 13.4 2.2 19.4 18.2 ¥00,01.8 17.3 0.4 32.0 1.8 ¥00,48.2 ¥00,56.1 ¥00,53.5 187.9 3,419.1 831.0 2,036.4 286.8 2,784.1 ¥3,655.3 ¥2,923.5 ¥3,124.5 223 Corporate Data Organization Directors, Executive Officers and Auditors Principal Subsidiaries and Affiliates International Directory 226 228 230 233 225 Organization (As of June 30, 2001) Corporate Staff Unit Public Relations Dept. Corporate Citizenship Dept. Corporate Planning Dept. Investor Relations Dept. Financial Research Dept. Financial Accounting Dept. Subsidiaries and Affiliates Dept. Portfolio Management Dept. Equity Portfolio Management Dept. Corporate Risk Management Dept. Market Risk Management Dept. Risk Management Systems Dept. Credit Risk Management Dept. General Affairs Dept. Kobe General Affairs Dept. Legal Dept. Customer Relations Dept. Human Resources Dept. Training Institute Counseling Dept. Human Resources Development Dept. Shareholders' Meeting Board of Directors Management Committee Corporate Auditors/ Board of Corporate Auditors Office of Corporate Auditors 226 Corporate Services Unit Administrative Services Dept. 　　Secretariat IT Planning Dept. Systems Development Dept.Ⅰ Systems Development Dept.Ⅱ International and Market Systems Dept. Operations Planning Dept. 　　International and Market Operations Dept. 　　Settlement and Clearing Services Dept. e-Business Planning Dept. Electronic Commerce Banking Dept. 　　Global Cash Management Dept. 　　e-Business Patent Dept. Corporate Research Dept. Credit Administration Dept. Operations Supporting Dept. Loan Administration and Operations Dept. Consumer Loan Administration and Operations Dept. International Business Operations Dept. Capital Markets and Treasury Operations Dept. Corporate Accounting Operations Dept. Internal Audit Unit Audit Dept. Audit Dept. for the Americas Audit Dept. for Europe Inspection Dept. Credit Review Dept. Consumer Banking Unit Planning Dept., Consumer Banking Unit Subsidiaries and Affiliates Dept., Consumer Banking Unit Sales Channel Planning Dept., Consumer Banking Unit Branch Banking Dept., Consumer Banking Unit Products and Marketing Dept., Consumer Banking Unit Private Banking Dept. Asset Management Services Dept., Consumer Banking Unit Consumer Business Dept. Consumer Loan Business Dept. Investment Products Business Dept., Consumer Banking Unit Operations and Systems Dept., Consumer Banking Unit Credit Dept., Consumer Banking Unit Middle Market Banking Unit Planning Dept., Middle Market Banking Unit Operations and Systems Dept., Middle Market Banking Unit Business Promotion Dept., Middle Market Banking Unit International Business Promotion Dept., Middle Market Banking Unit New Business Promotion Dept., Middle Market Banking Unit Public Institutions Banking Dept. Kobe Public Institutions Banking Dept. Business Owner Banking Dept. Credit Dept.Ⅰ, Middle Market Banking Unit Credit Dept.Ⅱ, Middle Market Banking Unit Credit Dept.Ⅲ, Middle Market Banking Unit Credit Supervision Dept.Ⅰ, Middle Banking Unit Credit Supervision Dept.Ⅱ, Middle Banking Unit Corporate Banking Unit Planning Dept., Corporate Banking Unit Credit Dept.Ⅰ, Corporate Banking Unit Credit Dept.Ⅱ, Corporate Banking Unit Credit Dept.Ⅲ, Corporate Banking Unit International Banking Unit Planning Dept., International Banking Unit Operations and Systems Dept., International Banking Unit Global Institutional Banking Dept. Global Investors Services Dept. Credit Dept., International Banking Unit Treasury Unit Planning Dept., Treasury Unit Treasury Dept. International Treasury Dept. Trading Dept. Treasury Marketing Dept. Investment Banking Unit Planning Dept., Investment Banking Unit Structured Finance Credit Dept. Asset Management Planning Dept., Investment Banking Unit Structured Finance Dept. Financial Solutions Dept., Investment Banking Unit Derivatives and Financial Engineering Dept. Syndications Dept. M&A Advisory Services Dept. Corporate Finance Services Dept. Block Consumer Business Office Branch Public Institutions Operating Office Consumer Investment Services Office Consumer Loan Promotion Office Call Center Middle Market Banking Division Corporate Business Office Public Institutions Business Office Business Support Office Tokyo Corporate Banking DivisionⅠ Tokyo Corporate Banking DivisionⅡ Osaka Corporate Banking Division Nagoya Corporate Banking Division Corporate Banking Dept. Asia Pacific Division Asia Pacific Dept. The Americas Division Planning Dept., The Americas Division Credit Dept., The Americas Division Europe Division Planning Dept., Europe Division Credit Dept., Europe Division Global Client Business Dept. Branch/Representative Office in Asia Pacific Departments of the Americas Division Departments of Europe Division e-Business, Media and Telecom Dept. 227 Directors, Executive Officers and Auditors (As of June 30, 2001) BOARD OF DIRECTORS Chairman of the Board President Deputy Presidents Senior Managing Directors Akishige Okada Yoshifumi Nishikawa* Youhei Shiraga* Akio Asuke* Hirokazu Ishikawa* Shunichi Okuyama* Tsutomu Sakuma* Hidemitsu Nakao* Michiyoshi Kuriyama* Takeharu Nagata* Hidenori Hiramatsu* Tadashi Inoue* Keizo Ogawa* Masayuki Oku* Hideharu Kadowaki* Takemasa Tsukamoto* Managing Directors Teisuke Kitayama* Ryuzo Kodama* Shigetada Takahashi* Kenjiro Noda* Tadashi Hirota* Mutsuhiko Matsumoto* Toichiro Mizushima* Kakuei Miyagi* Yoshiaki Yamauchi Yoichiro Yamakawa Hiroshi Sakuma Nagayuki Yoshida Hiroshi Kii Toyosaburo Hirano Tomoyuki Watanabe Gaishi Hiraiwa Katsuya Onishi Josei Itoh Yasutaka Okamura Directors CORPORATE AUDITORS Corporate Auditors 228 General Affairs Dept., Kobe General Affairs Dept., Legal Dept., Customer Relations Dept., Human Resources Dept., Human Resources Development Dept., Administrative Services Dept. and Treasury Unit Deputy President stationed at Osaka and Investment Banking Unit Corporate Banking Unit International Banking Unit Human Resources Dept. and Human Resources Development Dept. Consumer Banking Unit Middle Market Banking Unit Corporate Research Dept., Credit Administration Dept., Credit Dept. II, Corporate Banking Unit and Credit Dept. III, Corporate Banking Unit Audit Dept., Audit Dept. for the Americas, Audit Dept. for Europe, Inspection Dept. and Credit Review Dept. Middle Market Banking Unit (stationed at Osaka) Middle Market Banking Unit (stationed at Kobe) Public Relations Dept., Corporate Planning Dept., Financial Accounting Dept., Subsidiaries and Affiliates Dept. and e-Business Planning Dept. Portfolio Management Dept., Corporate Risk Management Dept. and Credit Risk Management Dept. IT Planning Dept., Systems Development Dept. I, Systems Development Dept. II, International and Market Systems Dept., Operations Planning Dept. and Electronic Commerce Banking Dept. Corporate Planning Dept., Financial Accounting Dept. and Subsidiaries and Affiliates Dept. Head of The Americas Division Credit Dept. I, Middle Market Banking Unit and Credit Supervision Dept. II, Middle Market Banking Unit (Tokyo) Head of Tokyo Corporate Banking Division I Credit Dept. II, Middle Market Banking Unit and Credit Supervision Dept. I, Middle Market Banking Unit Consumer Banking Unit Planning Dept., Middle Market Banking Unit, Business Promotion Dept., Middle Market Banking Unit, Public Institutions Banking Dept., Kobe Public Institutions Banking Dept. and Business Owner Banking Dept. Head of Tokyo Middle Market Banking Division III *Executive Officers EXECUTIVE OFFICERS Managing Directors Directors Ryoji Miura Kouichi Yanagimura Jumpei Ishii Koji Ishida Takao Umino Morio Kusunoki Kiyoshi Shibuya Koichi Tsukihara Shinpei Nihei Masahide Hirasawa Mitsuaki Yahagi Yasufumi Kitamoto Shiro Kawajiri Yasuyuki Kimoto Daisuke Saji Hideaki Shigi Kuniaki Tsuyada Kenjiro Nakano Shigeru Nishiyama Koichi Maeda Hitoshi Yoshimatsu Shigenobu Aikyo Hitoshi Inuga Osamu Endo Sadao Kobayashi Jun Suzuki Shuntaro Higashi Kengo Miyauchi Hiromichi Miyauchi Kozo Yoneda Shigeo Imafuku Yusaku Omori Nobuyuki Kameoka Hiroaki Shukuzawa Hirosumi Tsusue Akira Matsumoto Fuminori Yoshitake Kohei Katsukawa Kazuhisa Kishikawa Hiroki Nishio Hajime Yamashita Yoshihiro Yoshimura Head of Tokyo Corporate Banking Division II General Manager, Human Resources Dept. Head of Tokyo Middle Market Banking Division V General Manager, Corporate Planning Dept. Deputy Head of The Americas Division Credit Dept. III, Middle Market Banking Unit, Credit Supervision Dept. II (Osaka), Middle Market Banking Unit Credit Dept. III, Corporate Banking Unit, General Manager, Credit Dept. III, Corporate Banking Unit Head of Osaka Corporate Banking Division Head of Tokyo Middle Market Banking Division IV General Manager, General Affairs Dept. Investment Banking Unit General Manager, Credit Risk Management Dept. IT Planning Dept., Systems Development Dept. I, Systems Development Dept. II, International and Market Systems Dept. and Operations Planning Dept. Head of Europe Division Head of Tokyo Middle Market Banking Division II Head of Kanagawa & Tokai Middle Market Banking Division Head of Tokyo Middle Market Banking Division I General Manager, Planning Dept., Investment Banking Unit Credit Dept. II, Corporate Banking Unit General Manager, Tokyo Corporate Banking Dept. X General Manager, Singapore Branch General Manager, Planning Dept., Middle Market Banking Unit Head of Kobe Middle Market Banking Division Head of Nagoya Corporate Banking Division Head of Asia Pacific Division General Manager, Tokyo Corporate Banking Dept. VII General Manager, Planning Dept., International Banking Unit General Manager, Credit Dept. I, Middle Market Banking Unit Head of Osaka Middle Market Banking Division I General Manager, Tokyo Corporate Banking Dept. II General Manager, Credit Dept. II, Corporate Banking Unit General Manager, Credit Review Dept. General Manager, Credit Dept. I, Corporate Banking Unit General Manager, Planning Dept., Treasury Unit General Manager, Tokyo Corporate Banking Dept. III General Manager, Audit Dept. General Manager, Business Promotion Dept., Middle Market Banking Unit Head of Osaka Middle Market Banking Division II General Manager, Planning Dept., Consumer Banking Unit General Manager, Planning Dept., Corporate Banking Unit Head of Regional Cities Corporate Banking Division General Manager, Bangkok Branch, Chonburi Branch and Ayudhya Branch 229 Principal Subsidiaries and Affiliates (As of July 1, 2001) DOMESTIC Company Name Principal Subsidiaries SMBC Business Service Co., Ltd. SMBC International Business Co., Ltd. SMBC Property Research Service Co., Ltd. SMBC Green Service Co., Ltd. SMBC International Operations Co., Ltd. SMBC Center Service Co., Ltd. SMBC Delivery Service Co., Ltd. SMBC Consumer Loan Operations Co., Ltd. SMBC Loan Adviser Co., Ltd. SMBC Learning Support Co., Ltd. Sakura Staff Service Co., Ltd. (Note 1) IZUMI OFFICE SERVICE CO., LTD. (Note 1) Sakura Office Service Co., Ltd. (Note 1) Issued Capital Percentage of Parent (Millions of yen) Company’s Ownership* Established Main Business 40 20 30 30 40 100 30 30 10 10 30 30 30 100 100 100 100 100 100 100 100 100 100 100 100 100 (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) September 24, 1976 Banking clerical work September 28, 1983 Banking clerical work February 1, 1984 Banking clerical work March 15, 1990 Banking clerical work December 21, 1994 Banking clerical work October 16, 1995 Banking clerical work January 31, 1996 Banking clerical work November 7, 1997 Banking clerical work April 1, 1998 Consulting and agency services for consumer loans May 27, 1998 Seminar organizer November 24, 1972 Temporary manpower service July 15, 1982 Temporary manpower service January 7, 1985 Temporary manpower service October 3, 1994 Disposal of real estate collateral October 7, 1994 Disposal of real estate collateral June 6, 1996 Commercial banking March 11, 1999 Servicer August 16, 2000 Factoring Sakura Total Maintenance Co., Ltd. (Note 2) 300 100 Sumigin Total Maintenance Company, Limited (Note 2) 300 THE WAKASHIO BANK, LTD. SMBC Business Servicing Co., Ltd. Sakura Factors Co., Ltd. 20,831 500 3,000 100 100 100 100 Sakura Guarantee Co., Ltd. 15,220 99.13 (0.45) July 14, 1976 Credit guarantee SAKURA INVESTMENT MANAGEMENT CO., LTD. 1,280 96.10 (0) September 27, 1993 Investment advisory and investment trust management Sumigin General Finance Company, Limited 71,705 80.68 (18.46) December 5, 1972 Mortgage securities, factoring and loans The Sakura Loan Partner, Limited (Note 3) 10,000 70 (0) June 8, 2000 Loans SAKURA CARD CO., Ltd. 7,438 68.25 (27.25) February 23, 1983 Credit card services The Japan Net Bank, Limited 20,000 60 (0) September 19, 2000 Commercial banking via Internet The Bank of Kansai, Ltd. THE MINATO BANK, LTD. 32,500 49.98 (18.98) July 1, 1922 Commercial banking 24,779 48.54 (1.76) September 6, 1949 Commercial banking Sumitomo Mitsui Card Company, Limited Mitsui Finance Service Co., Ltd. 4,115 1,100 46.88 (34.11) December 26, 1967 Credit card services 43.63 (34.54) December 22, 1979 Collecting agent and factoring Sakura Finance Service Co., Ltd. 200 39.98 (10.47) July 12, 1979 Collecting agent and factoring SMBC Capital Co., Ltd. 2,500 39.80 (60.20) August 1, 1995 Venture capital Sakura Friend Securities Co., Ltd. 26,139 37.47 (6.27) April 20, 1932 Securities SB Leasing Company, Limited (Note 4) 30,100 37.48 (47.67) September 2, 1968 Leasing Sakura Mortgage Co., Ltd. 18,182 29.45 (10.68) October 14, 1983 Mortgage securities The Japan Research Institute, Limited Sakura KCS Corporation Sakura Information Systems Co., Ltd. SUMIGIN GUARANTEE COMPANY, LIMITED 2,000 2,054 600 350 5 5 5 5 (47.72) February 20, 1969 Economic research, system engineering, data processing and management consulting (47.89) March 29, 1969 System engineering and data processing (64.46) November 29, 1972 System engineering and data processing (75) June 30, 1984 Credit guarantee SMBC Consulting Co., Ltd. 1,100 4.54 (77.27) May 1, 1981 Management consulting * ( ) indicates the percentage of ownership by subsidiaries and affiliated companies excluding the parent company. 230 Issued Capital Percentage of Parent Company Name (Millions of yen) Company’s Ownership* Established Main Business SMBC Property Management Service Co., Ltd. SMBC Loan Servicer Co., Ltd. SAKURA LEASING CO., LTD. Principal Affiliates 12 500 208 0 0 0 (100) (100) (100) January 23, 1998 Management of real estate for rent July 28, 1999 March 23, 1988 Servicer Leasing Daiwa Securities SMBC Co. Ltd. 205,600 40 (0) February 5, 1999 Wholesale securities Daiwa SB Investments Ltd. 2,000 30.39 (13.57) April 1, 1999 Investment advisory and investment trust Japan Pension Navigator Co., Ltd. 2,500 30 (0) September 21, 2000 Operation and administration of defined contribution pension plans DLJdirect SFG Securities Inc. 3,000 21.25 (0) March 24, 1999 Securities via Internet Meiko National Securities Co., Ltd. 27,270 19.86 (7.51) March 2, 1948 Securities QUOQ Inc. 1,000 5 (34.85) April 5, 1978 Purchase of monetary assets and credit guarantee Notes: 1. Sakura Staff Service Co., Ltd., IZUMI OFFICE SERVICE CO., LTD., and Sakura Office Service Co., Ltd., will merge into SMBC Staff Services Co., Ltd., in October 2001. 2. Sakura Total Maintenance Co., Ltd., and Sumigin Total Maintenance Company, Limited, will merge into SMBC Total Maintenance Co., Ltd., in August 2001. 3. The Sakura Loan Partner, Limited, will change its name to At-Loan Co., Ltd., in August 2001. 4. SB Leasing Company, Limited, will change its name to SMBC Leasing Company Limited, in September 2001. OVERSEAS Company Name Principal Subsidiaries Country Issued Capital Percentage of Parent Company’s Ownership* Established Main Business Sumitomo Mitsui Finance Australia Limited Australia A$62.5 million 100 (0) June 29, 1984 Finance PT Bank Sumitomo Mitsui Indonesia Indonesia Rp1,502.4 billion 97.63 (0) August 22, 1989 Commercial banking SMBC Capital India Limited Sakura Finance Hong Kong Limited Sakura Finance Asia Limited India P.R.C. P.R.C. Rs230 million 75 US$21,000 100 US$65.5 million 100 Sakura Finance Australia Limited Australia A$54 million 100 Sakura Merchant Bank (Singapore) Limited Singapore S$4 million 100 (0) (0) (0) (0) (0) October 21, 1995 Leasing July 25, 1973 Finance October 17, 1977 Finance March 27, 1986 April 18, 1990 Finance Finance Thai Sakura Finance Company Thai Sakura Securities Company Bangkok SMBC Systems Ltd. Thailand Thailand Thailand B150 million 99.99 (0) January 18, 1972 Finance B195 million 99.99 (0) March 1, 2000 Securities B20 million 10 (36) January 11, 1991 Development and sales of software, and computation SMBC Management Service Co., Ltd. Thailand B64 million SBCS Co., Ltd. SMSB Thailand Thailand B140 million B64 million SB Leasing (Singapore) Pte. Ltd. Singapore S$7.5 million Sumitomo Mitsui Finance Australia (Securities) Limited Australia A$100,000 SB Leasing (Hong Kong) Limited Hong Kong HK$70 million SB Leasing (Thailand) Co., Ltd. SB Leasing (Guangzhou) Co., Ltd. Thailand P.R.C. B60 million US$10 million SB Leasing (Malaysia) Sdn. Bhd. Malaysia MYR250,000 10 10 10 0 0 0 0 0 0 Manufacturers Bank U.S.A. US$80.8 million 100 Sumitomo Mitsui Banking Corporation of Canada Canada C$121.87 million 100 (90) (90) (90) (100) (100) November 28, 1996 Consulting March 2, 1989 Consulting August 1, 2000 Consulting May 7, 1980 Leasing April 29, 1987 Securities (100) September 26, 1989 Leasing (49) February 28, 1996 Leasing (100) September 26, 1996 Leasing (48.99) November 26, 1996 Leasing (0) (0) June 26, 1962 Commercial banking April 1, 2001 Commercial banking * ( ) indicates the percentage of ownership by subsidiaries and affiliated companies excluding the parent company. 231 Company Name Country Issued Capital Percentage of Parent Company’s Ownership* Established Main Business Banco Sumitomo Mitsui Brasileiro S.A. Brazil $R116.3 million 100 (0) October 6, 1958 Commercial banking SMBC Finance (Bermuda) Limited Bermuda US$12,000 100 SMBC Capital Markets, Inc SMBC Leasing and Finance, Inc. SMBC Securities, Inc. SMBC Financial Services, Inc. U.S.A. U.S.A. U.S.A. U.S.A. SFVI Limited Sakura Preferred Capital (Cayman), Limited Sumitomo Finance (Asia) Limited British Virgin Islands British West Indies British West Indies US$100 99.90 (0.10) December 4, 1986 Investments and derivatives US$1,620 97.84 (2.16) November 9, 1990 Leasing US$100 99.90 (0.10) August 8, 1990 Securities US$300 100 US$300 100 (0) (0) (0) August 8, 1990 Investments May 10, 1985 Investments July 30, 1997 Investments ¥10 million 100 (0) November 12, 1998 Long- and mid-term finance US$35 million 100 (0) September 26, 1973 Investments Sakura Capital Funding (Cayman) Limited British West US$100,000 100 (0) July 15, 1992 Long- and mid-term finance Sakura Finance (Cayman) Limited Indies British West Indies US$100,000 100 (0) February 11, 1991 Long- and mid-term finance Sumitomo Mitsui Finance Dublin Limited Ireland US$12 million 100 September 29, 1989 Finance US$297 million 100 April 18, 1995 US$300 million 0 (100) April 18, 1995 Derivatives Derivatives (0) (0) SMBC Capital Markets Limited SMBC Derivative Products Limited Sakura Finance International Limited Sakura Trust International Limited Sumitomo Finance International plc SMBC International Finance N.V. U.K. U.K. U.K. U.K. U.K. Netherlands Antilles £100 million 100 £250,000 100 £200 million 100 US$200,000 100 Sumitomo Mitsui Finanz (Deutschland) GmbH Germany DM50,000 100 Submarine Curaçao N.V. Netherlands US$17,000 40 (0) (0) (0) (0) (0) (0) September 13, 1973 Securities May 25, 1984 Trustee business and fiscal agency business July 1, 1991 Investments June 25, 1990 Loans June 14, 1985 June 26, 1996 Leasing Finance Principal Affiliates P.T. Exim SB Leasing Indonesia Rp50.0 billion SMBC Metro Investment Corp. Philippines P600 million P.T. Perjahl Leasing Indonesia Indonesia Rp25,001 million P.R.C. US$5 million 10 40 25 25 (40) March 16, 1985 Leasing (0) (0) (0) August 9, 1995 Investments and loans August 28, 1975 Leasing September 25, 1985 Leasing China United International Leasing Co., Ltd. China International Finance Company Limited (Shenzhen) Bangkok SMBC Leasing Co., Ltd. Bangkok SMBC Consulting Company Limited P.R.C. Y100 million 25 (0) December 8, 1986 Loans Thailand Thailand B60 million B5 million 10 10 (30) (35) July 16, 1987 Leasing April 21, 1997 Investments and consulting * ( ) indicates the percentage of ownership by subsidiaries and affiliated companies excluding the parent company. 232 International Directory (As of July 2, 2001) ASIA, OCEANIA Branches and Representative Offices Hong Kong Branch 7th, 8th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Special Administrative Region, The People’s Republic of China Tel: 852 (2206) 2000 Fax: 852 (2206) 2888 Shanghai Branch 30F, HSBC Tower, 101 Yin Cheng East Road, Pudong New Area, Shanghai, The People’s Republic of China Tel: 86 (21) 6841-5000 Fax: 86 (21) 6841-0144 Tianjin Branch Room No.1210,Tianjin International Building, No.75 Nan Jing Lu,Tianjin, The People’s Republic of China Tel: 86 (22) 2330-3334 Fax: 86 (22) 2331-3834 Guangzhou Branch 31F, Office Tower, CITIC Plaza, 233 Tianhe North Road, Guangzhou, The People’s Republic of China Tel: 86 (20) 8752-0168 Fax: 86 (20) 8752-0672 Yangpu Branch Yangpu Land Development Co., Ltd. Office, Yangpu Economic Development Zone, Hainan, The People’s Republic of China Tel: 86 (890) 882-2701 Fax: 86 (890) 882-2706 Suzhou Branch 10th Floor-D, Kings Tower, 12 Shishan Road, Suzhou New District, Suzhou, Jiangsu, The People’s Republic of China Tel: 86 (512) 825-8205 Fax: 86 (512) 825-6121 General Representative Office in China 2902, Jing Guang Centre, Hujialou, Chaoyang District, Beijing, The People’s Republic of China Tel: 86 (10) 6597-3351 Fax: 86 (10) 6597-3002 Labuan Branch Level 12 (B&C), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 Labuan, Federal Territory, Malaysia Tel: 60 (87) 410955 Fax: 60 (87) 410959 Dalian Representative Office Room No. 703, Dalian Civil Aviation Hotel, 143 Zhong Shan Lu, Dalian, The People’s Republic of China Tel: 86 (411) 363-7611 Fax: 86 (411) 363-7615 Labuan Branch Kuala Lumpur Marketing Office Letter Box No. 25, 29th Floor, UBN Tower, 10, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia Tel: 60 (3) 2026-8392 Fax: 60 (3) 2026-8395 Chongqing Representative Office 3F, Holiday Inn Yangtze Chongqing, 15 Nan Ping Bei Lu, Chongqing, The People’s Republic of China Tel: 86 (23) 6280-3394 Fax: 86 (23) 6280-3748 Shenyang Representative Office Room No. 606, Gloria Plaza Hotel Shenyang, No. 32 Yingbin Street, Shenhe District, Shenyang, The People’s Republic of China Tel: 86 (24) 2252-8310 Fax: 86 (24) 2252-8769 Taipei Representative Office Area B, 11th Floor Hung Kuo Building, 167 Tun Hua North Road, Taipei, Taiwan Tel: 886 (2) 2719-1911 Fax: 886 (2) 2712-0439 Seoul Branch Young Poong Bldg. 7F, 33, Seorin-Dong, Chongro-ku, Seoul, 110-752, Korea Tel: 82 (2) 732-1801 Fax: 82 (2) 399-6330 Singapore Branch 3 Temasek Avenue, #06-01, Centennial Tower, Singapore 039190, Singapore Tel: 65-882-0000/0001 Fax: 65-887-0220/0330 Kuala Lumpur Representative Office Letter Box No. 25, 29th Floor, UBN Tower, 10, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia Tel: 60 (3) 2026-8392 Fax: 60 (3) 2026-8395 Jakarta Representative Office Summitmas II, 8th Floor, JI. Jendral. Sudirman Kav. 61-62, Jakarta 12190, Indonesia Tel: 62 (21) 525-1733 Fax: 62 (21) 525-1770 Ho Chi Minh Representative Office Unit C, 4th Floor, OSIC Building, 8 Nguyen Hue Street, District 1, Ho Chi Minh City, Vietnam Tel: 84 (8) 8231244 Fax: 84 (8) 8231241 Yangon Representative Office Room No. 603-604, 6th Floor, FMI Centre, 380 Bogyoke Aung San Street, Yangon, Myanmar Tel: 95 (1) 248060 Fax: 95 (1) 248061 Bangkok Branch Boon-Mitr Building, 138 Silom Road, Bangkok 10500, Thailand Tel: 66 (2) 353-8000 Fax: 66 (2) 353-8100 233 Ayudhya Branch 3rd Floor, Bank of Asia Building, 5-255, Pailing, Ayudhya District, Ayudhya Province, Thailand Tel: 66 (35) 245842 Fax: 66 (35) 212547 Chonburi Branch 6th Floor, Bangkok Bank Building, 98, Sukhumvit Road, Sriracha District, Chonburi Province, Thailand Tel: 66 (38) 770584~7 Fax: 66 (38) 770588 Manila Representative Office 20th Floor, Rufino Pacific Tower, 6784 Ayala Avenue, Makati City, Metro Manila, The Philippines Tel: 63 (2) 841-0098/9 Fax: 63 (2) 811-0877 Mumbai Branch 15th Floor, Jolly Maker Chambers No. 2, 225, Nariman Point, Mumbai 400021, India Tel: 91 (22) 288-0025 Fax: 91 (22) 288-0026 New Delhi Branch Dr. Gopal Das Bhawan, Ground Floor, 28 Barakhamba Road, New Delhi 110001, India Tel: 91 (11) 373-7637~41 Fax: 91 (11) 373-7642 Subsidiaries Sumitomo Mitsui Finance Australia Limited Level 40, The Chifley Tower 2, Chifley Square, Sydney, NSW 2000, Australia Tel: 61 (2) 9376-1800 Fax: 61 (2) 9376-1863 PT Bank Sumitomo Mitsui Indonesia Summitmas II, 10th Floor JI. Jendral Sudirman Kav. 61-62, Jakarta 12190, Indonesia Tel: 62 (21) 522-7011 Fax: 62 (21) 522-7022 SMBC Capital India Limited 21, Mittal Chambers, 228 Nariman Point, Mumbai-400021, India Tel: 91 (22) 288-4361 Fax: 91 (22) 288-4367 SMBC Metro Investment Corp. 20th Floor, Rufino Pacific Tower, 6784 Ayala Avenue, Makati City, Metro Manila, The Philippines Tel: 63 (2) 811-0845~52 Fax: 63 (2) 811-0876~77 Sakura Finance Hong Kong Limited Level 24, One Pacific Place, 88 Queensway, Hong Kong Sakura Finance Asia Limited Level 24, One Pacific Place, 88 Queensway, Hong Kong Tel: 852 (2864) 9300 Fax: 852 (2861) 2316 Sakura Finance Australia Limited Level 40, The Chifley Tower 2, Chifley Square, Sydney, NSW 2000, Australia Sakura Merchant Bank (Singapore) Limited 3 Temasek Avenue, #06-01 Centennial Tower, Singapore 039190, Singapore Thai Sakura Finance Company 14th Floor, Ramaland Building, 952 Rama IV Road, Bangrak, Bangkok 10500, Thailand Tel: 66 (2) 632-9610 Fax: 66 (2) 632-9611 Thai Sakura Securities Company 12th Floor, Ramaland Building, 952 Rama IV Road, Bangrak, Bangkok 10500, Thailand P.T. Perjahl Leasing Indonesia Mid Plaza Building LT 9, JI. Jendral Sudirman Kav. 10-11, Jakarta 10220, Indonesia Tel: 62 (21) 570-6221, 6225 Fax: 62 (21) 570-6199 China United International Leasing Co., Ltd. Room 3303, Office Tower, CITIC Plaza, 233 Tianhe North Road, Guangzhou, The People’s Republic of China Tel: 86 (20) 8752-0177 Fax: 86 (20) 8752-0399 China International Finance Company Limited (Shenzhen) 33F International Financial Building, 23 Jian She Road, Shenzhen, The People’s Republic of China Tel: 86 (755) 225-1059 Fax: 86 (755) 223-7566 Bangkok SMBC Leasing Co., Ltd. 19th Fl. Sathorn City Tower, 175 South Sathorn Road, Bangkok, Thailand Tel: 66 (2) 679-6161 Fax: 66 (2) 679-6160 Bangkok SMBC Systems Ltd. 19th Floor, Q, House Sathorn Building, 11 South Sathorn Road, Bangkok, Thailand Tel: 66 (2) 679-1878~80 Fax: 66 (2) 679-1882 SMBC Management Service Co., Ltd. 7th Floor Unit B, Boon-Mitr Building, 138 Silom Road, Suriyawongse, Bangrak, Bangkok 10500, Thailand Tel: 66 (2) 632-9610 Fax: 66 (2) 632-9611 Bangkok SMBC Consulting Company Limited 11th Floor, Ramaland Building, 952 Rama IV Road, Bangrak, Bangkok 10500, Thailand Tel: 66 (2) 632-9210 SBCS Co., Ltd. 7th Floor Unit A3 and B5-6, Boon-Mitr Building, 138 Silom Road, Suriyawongse, Bangrak, Bangkok 10500, Thailand Tel: 66 (2) 237-6295~8 Fax: 66 (2) 237-6299 234 AMERICAS Branches and Representative Offices New York Branch 277 Park Avenue, New York, NY 10172, U.S.A. Tel: 1 (212) 224-4000 Fax: 1 (212) 593-9522 Cayman Branch P.O. Box 694, Edward Street, George Town, Grand Cayman, Cayman Islands Chicago Branch Sears Tower, Suite 4010, 233 South Wacker Drive, Chicago, IL 60606, U.S.A. Tel: 1 (312) 876-0525 Fax: 1 (312) 876-6436 Los Angeles Branch 777 South Figueroa Street, Suite 2600, Los Angeles, CA 90017, U.S.A. Tel: 1 (213) 955-0800 Fax: 1 (213) 623-6832 San Francisco Branch 555 California Street, Suite 3350, San Francisco, CA 94104, U.S.A. Tel: 1 (415) 616-3000 Fax: 1 (415) 397-1475 Seattle Representative Office 1201 Third Avenue, Suite 5320, Seattle, WA 98101, U.S.A. Tel: 1 (206) 625-1010 Fax: 1 (206) 623-8551 Subsidiaries Manufacturers Bank 515 South Figueroa Street, Los Angeles, CA 90071, U.S.A. Tel: 1 (213) 489-6200 Fax: 1 (213) 489-6254 SMSB 7th Floor Unit B6, Boon-Mitr Building, 138 Silom Road, Suriyawongse, Bangrak, Bangkok 10500, Thailand SB Leasing (Singapore) Pte. Ltd. 1 Shenton Way, #19-05, Singapore 068803, Singapore Tel: 65-224-2955 Fax: 65-225-3570 Sumitomo Mitsui Finance Australia (Securities) Limited Level 40, The Chifley Tower 2, Chifley Square, Sydney, NSW 2000, Australia SB Leasing (Hong Kong) Limited 21st Floor, World-wide House, 2104B, 19 Des Voeux Road, Central, Hong Kong Tel: 852 (2523) 4155 Fax: 852 (2845) 9246 SB Leasing (Thailand) Co., Ltd. 19th Floor, Ramaland Building, 952 Rama IV Road, Suriyawong, Bangrak, Bangkok 10500, Thailand Tel: 66 (2) 632-9250 Fax: 66 (2) 632-9258 SB Leasing (Guangzhou) Co., Ltd. Room 1211-1212, Metro Plaza, 183, Tian He Bei Lu, Guangzhou, The People’s Republic of China Tel: 86 (20) 8755-0021 Fax: 86 (20) 8755-0422 SB Leasing (Malaysia) Sdn. Bhd. Letter Box No.58, 11th Floor, UBN Tower, 10 Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia Tel: 60 (3) 2026-2619 Fax: 60 (3) 2026-2627 SMBC Capital Markets Limited Hong Kong Branch 7th, 8th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Special Administrative Region, The People’s Republic of China Tel: 852 (2532) 8500 Fax: 852 (2532) 8505 Sumitomo Mitsui Banking Corporation of Canada Ernst & Young Tower, Suite 1400, P.O. Box 172, Toronto Dominion Centre, Toronto, Ontario M5K 1H6, Canada Tel: 1 (416) 368-4766 Fax: 1 (416) 367-3565 Banco Sumitomo Mitsui Brasileiro S.A. Av. Paulista, 37-12˚ andar Paraiso, São Paulo, Brazil Tel: 55 (11) 3178-8000 Fax: 55 (11) 289-1668 SMBC Capital Markets, Inc. 277 Park Avenue, New York NY 10172, U.S.A. Tel: 1 (212) 224-5000 Fax: 1 (212) 224-5111 SMBC Leasing and Finance, Inc. 277 Park Avenue, New York NY 10172, U.S.A. Tel: 1 (212) 224-5200 Fax: 1 (212) 224-5222 SMBC Securities, Inc. 277 Park Avenue, New York NY 10172, U.S.A. Tel: 1 (212) 224-5300 Fax: 1 (212) 224-5333 235 Sumitomo Finance International plc Temple Court, 11 Queen Victoria Street, London EC4N 4UQ, U.K. Tel: 44 (20) 7842-3000 Fax: 44 (20) 7842-3090 Sumitomo Mitsui Finanz (Deutschland) GmbH Prinzenalee 7, 40549 Düsseldorf, Federal Republic of Germany Principal Affiliate P.T. Exim SB Leasing Summitmas I, 8th Floor, JI. Jend. Sudirman Kav. 61-62, Jakarta 12069, Indonesia Tel: 62 (21) 520-1265 Fax: 62 (21) 520-0154 EUROPE, MIDDLE-EAST, AFRICA Branches and Representative Offices London Branch Temple Court, 11 Queen Victoria Street, London EC4N 4TA, U.K. Tel: 44 (20) 7786-1000 Fax: 44 (20) 7236-0049 Düsseldorf Branch Prinzenallee 7, 40549 Düsseldorf, Federal Republic of Germany Tel: 49 (211) 3619223 Fax: 49 (211) 3619236 Brussels Branch Avenue des Arts, 58, Bte. 18, 1000 Brussels, Belgium Tel: 32 (2) 551-5000 Fax: 32 (2) 513-4100 Paris Branch 20, Rue de la Ville l’Evêque, 75008 Paris, France Tel: 33 (1) 44 (71) 40-00 Fax: 33 (1) 44 (71) 40-50 Madrid Representative Office Serrano 16, 28001 Madrid, Spain Tel: 34 (91) 576-6196 Fax: 34 (91) 577-7525 Bahrain Representative Office No. 406 & 407 (Entrance 3, 4th Floor) Manama Centre, Government Road, Manama, State of Bahrain Tel: 973 223211 Fax: 973 224424 Tehran Representative Office 4th Floor, 80 Nezami Gangavi Street, Vali-e-Asr Avenue, Tehran 14348, Islamic Republic of Iran Tel: 98 (21) 879-4586 Fax: 98 (21) 879-4569 Tashkent Representative Office International Banking and Finance Center 1, Turab Tura Street, 700003, Tashkent, Uzbekistan 236 Cairo Representative Office 12th Floor, Nile Tower Building, 21-23 Giza Street, Giza, Cairo, Arab Republic of Egypt Tel: 20 (2) 570-3644 Fax: 20 (2) 570-3655 Johannesburg Representative Office Suite No. 2, Ground Floor, Gleneagles Building, Fairway Office Park, 52 Grosvenor Road, Bryanston, Sandton, South Africa (Postal address: Private Bag x134 Bryanston 2021, South Africa) Tel: 27 (11) 706-8675 Fax: 27 (11) 706-4927 Subsidiaries Sumitomo Mitsui Finance Dublin Limited La Touche House, International Finance Services Centre, Custom House Docks, Dublin 1, Ireland Tel: 353 (1) 670-0066 Fax: 353 (1) 670-0353 SMBC Capital Markets Limited Temple Court, 11 Queen Victoria Street, London EC4N 4TA, U.K. Tel: 44 (20) 7786-1400 Fax: 44 (20) 7248-5905 SMBC Derivative Products Limited Temple Court, 11 Queen Victoria Street, London EC4N 4TA, U.K. Tel: 44 (20) 7786-1400 Fax: 44 (20) 7248-5905 Sakura Finance International Limited Temple Court, 11 Queen Victoria Street, London EC4N 4TA, U.K. Tel: 44 (20) 7842-3000 Fax: 44 (20) 7842-3340 Sakura Trust International Limited Temple Court, 11 Queen Victoria Street, London EC4N 4TA, U.K. Tel: 44 (20) 7248-3076 Fax: 44 (20) 7329-4934 http://www.smbc.co.jp/ SUMITOMO MITSUI BANKING CORPORATION 2001 3 Pr inted i n Ja pa n 

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