Sumitomo Mitsui Financial Group Inc Annual Report 2002

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FY2002 Annual Report · Sumitomo Mitsui Financial Group Inc

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A N N U A L R E P O R T

2002

Y E A R E N D E D M A R C H 3 1 , 2 0 0 2

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

PROFILE (As of March 31, 2002)

Total Assets

Deposits

Loans and Bills Discounted

Capital Stock

¥102,082.5 billion

Number of Employees

25,027

¥61,051.8 billion

¥59,928.3 billion

¥1,326.7 billion

Network (As of June 30, 2002)

Domestic:

Branches

1,482 locations**

595
(including 28 specialized
deposit account branches)

Consolidated Capital Ratio

10.45% (BIS Guidelines)

Shares Issued and Outstanding

Subbranches

Agencies

Ordinary Shares

5,709 million

Offices handling nonbanking business

Series 1 Type 1 Preference Shares

Series 2 Type 1 Preference Shares

Type 5 Preference Shares

67 million

100 million

800 million

Automated service centers

Overseas:

Branches

Subbranches

Long-Term Credit Ratings (As of June 30, 2002)

Representative offices

778

38 locations

Moody’s
S&P
Fitch
R&I
JCR

A3
BBB
A–
A+
AA–

* Excluding negotiable certificates of deposit

** Excluding the number of ATMs installed at corporate client facilities and

convenience stores

CONTENTS

Foreword ....................................................................

President’s Message .................................................

Topics ........................................................................

Financial Highlights ...................................................

Fiscal 2001 Results

Asset Quality ...........................................................
Progress Report on the Plan for Strengthening

Individual Business Unit Strategies .......................... 30
Consumer Banking Unit .......................................... 32
Middle Market Banking Unit .................................... 36
Corporate Banking Unit ........................................... 40
International Banking Unit ........................................ 42
Treasury Unit ........................................................... 44
Investment Banking Unit ......................................... 46

e-Business ................................................................. 48

the Financial Base of the Bank .............................. 14

Environmental Preservation Initiatives ..................... 50

Management Issues

Social Contribution .................................................... 52

IT Systems Integration ............................................. 15
Initiatives to Strengthen the Bank’s Earnings Base ... 16
Corporate Governance ............................................ 18
Internal Audit System .............................................. 19
Compliance ............................................................. 20
Risk Management ................................................... 22

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 statements in this material:
business conditions in the banking industry, the regulatory environment, new
legislation, competition with other financial services companies, changing technology
and evolving banking industry standards and similar matters.

Financial Section ....................................................... 53

Corporate Data .......................................................... 119

Sumitomo Mitsui Banking Corporation
Public Relations Department

1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006, Japan
TEL: +81-3-3501-1111

August 2002
Printed on recycled paper

Foreword

As the founding executives of Sumitomo Mitsui Banking Corporation,

we are deeply honored to present this Annual Report 2002, covering

the fiscal period following the Bank’s inception in April 2001.

SMBC’s first year of operations not only posed challenges but also

paved the way for future accomplishments. We would like to express

our sincere gratitude to the Bank’s customers, shareholders, and other

stakeholders for their support throughout the fiscal year ended March

31, 2002.

Although the business climate remains severe, we are determined

to persist and prevail. To this end, we have reaffirmed our commitment

to the following fundamental management precepts: (1) to provide

optimum added value to our customers and together with them achieve

growth, and (2) to create sustainable shareholder value through busi-

ness growth. With this commitment, we pledge to remain focused on

meeting the high expectations of all our stakeholders.

We look forward to your continuing support and encouragement as

SMBC takes bold and decisive steps toward a future of renewed

growth and prosperity.

August 2002

Akishige Okada
Chairman of the Board

Yoshifumi Nishikawa
President and Chief Executive Officer

SMBC 2002 — 1

Key Issues for Fiscal 2002
I firmly believe the real magnitude of the benefits of
merger will surface in fiscal 2002. Capitalizing on the
former banks’ speedy strategy execution, strong
business base and comprehensive range of
services, we will reap significant competitive advan-
tages and realize maximum profits. Our strengths
will not stop there, as we will continue to take deci-
sive actions to fur ther improve asset quality and
enhance earnings, which I have set out as two top
priorities for this year.

Improvement in Asset Quality
Here, our actions center on dealing resolutely with
problem assets and reducing the risks from exces-
sive stock price volatility. In fiscal 2001, SMBC was
proactive in revitalizing financial soundness by accel-
erating the resolution of problem loans.

In fiscal 2002, we continue to focus on minimizing
the occurrence of new problem loans, while quickly
executing work-outs on existing ones. To that end,
we have in place a department specifically assigned
to undertake these tasks. Concurrently, in our quest
for ever-greater speed, we will continue to effect and
indeed accelerate the reduction in our risks from
equity exposures so as to more than meet the equity
investment restriction on banks due to become effec-
tive in September 2004.

President’s Message

SMBC’s First Year in Review
Fiscal 2001 marked the first year for SMBC during
which we laid down a solid foundation and quickly
reaped the benefits of the merger. Amid the
continued adverse macroeconomic conditions in
Japan, we resolved to quickly build a formidable
institution with a sound financial base and fortitude
required to meet the challenges ahead.

On this backdrop, I am pleased to report a number of
achievements.
1. The former corporate cultures were unified under
SMBC, and we now boast a new corporate organi-
zation of integrated Group companies and
systems.

2. We reaped synergies from our substantially broad-
ened base of customers, products, and services:
a case in point was the banking profit of over ¥1 tril-
lion contributed by our profit centers, like Treasury
Unit. To maintain momentum, we set up the
Business Reform Committee to revamp our former
business practices across the board.

3. We posted significant cost cuts by focusing on:
customer convenience, through the expansion of
remote channels and the consolidation of
branches; and streamlining infrastructure, espe-
cially in administrative processing and facilities.

4. We acted to revitalize our financial condition so
we would post strong earnings from fiscal 2002.
Our focus was on problem loans, where we insti-
gated the reorganization of borrowers with large
exposures for which reserves were raised, and
also proactively reexamined the categor y of
borrowers and elevated the reser ve ratio.
Therefore, our credit costs amounted to ¥1,543.1
billion, marking a significant step toward a solid
resolution to loan nonperformance and protection
against potential risks.

2 — SMBC 2002

Further Enhancement of Earnings
We are totally committed to building an earnings
structure that can generate consistent long-term
growth. To achieve this, we have set the following
goals.

(1) Consistently Achieve Greater

Operational Efficiency

While SMBC has benefited from the momentum of
aggressive cost cutting by the two former banks, with
SMBC now commanding one of the most efficient
cost structures within the Japanese banking industry,
we still aim much higher. For example, as we accom-
plished the integration of our domestic accounting
system in July 2002, we will advance the schedule
for consolidating branches. Therefore, we stand to
reap much greater cost savings ahead.

(2) Continuously Reform Business Practices
As an ongoing process to achieve stronger earnings,
we continuously reform our business practices in
major fields and our actions are being reflected in
our positive performance. A case in point is our
corporate banking business.

Intense competition led to ingrained lending prac-
tices within the industry that tended to veer away
from a profit focus and risk rationality based on total
loan por tfolio management, whereby margins
eroded. Therefore, such legacies from the past are
overdue for reform. Based on the philosophy that
risk-taking is the main role of a lending institution,
and a bank and a customer should together share a
common recognition of credit risk, we at SMBC
adopt a multilateral approach by offering financial
solutions meeting the clients’ fund-raising, corporate
restructuring and streamlining needs in a more
consultative way to enhance the cor porate
customers’ net worth, thereby allowing us to gain
rewards more commensurate with the corresponding
risks. Through such initiatives, we will enhance our
bottom line while developing new relationships with
our customers.

In Closing
I believe one of the issues facing not only SMBC but
also the whole Japanese banking industry is to
quickly reform outdated business practices, and we
at SMBC are taking the strong lead by challenging
the status quo and offering unprecedented solutions
through our innovative and dynamic approaches.
Taking the wide view, it is my firm conviction that
SMBC’s current initiatives are conducive to consis-
tently raising the net worth for our shareholders and
contributing positively to the long-term prosperity of
the Japanese economy.

All of us at SMBC stand united in our full commit-
ment to and dedication in achieving all our goals. We
respectfully continue to seek your valued support
and guidance as SMBC marches forward with the
changing times.

Yoshifumi Nishikawa
President and Chief Executive Officer

August 2002

SMBC 2002 — 3

Topics

2001

April

Former Sakura Bank

Former Sumitomo Bank

Inception of Sumitomo Mitsui Banking Corporation

2002

January
❍ Reached ATM usage agreement with IYBANK ➀

March
❍ Transferred legal reserves to retained earnings
❍ Started full-scale marketing of Business Select

Loan ➁

April
❍ Launched Asset Management Plaza network ➂

Introduced loans for newly built housing ➃

❍ Reached basic agreement on merger of Mitsui and
Sumitomo group asset management subsidiaries ➄

June
❍ Established Business Promotion Office ➅
❍ Published disclosure pamphlet for individual

depositors ➆

July
❍ Signed UNEP Statement by Financial Institutions
on the Environment & Sustainable Development ➇

4 — SMBC 2002

➀ ATM usage agreement with IYBANK
The @B^NK ATM network is SMBC’s core 24-hour ATM service,
established and operated through a collaboration between the

Bank and am/pm Japan Co., Ltd., a convenience store operator.
@B^NK ATMs are currently located at more than 1,100 am/pm
stores.

In an effort to extend the customer convenience offered by its
@B^NK ATM network, SMBC has entered into various agreements
to expand its convenience store based service channel. In January

2002, for example, the Bank formed an agreement with IYBANK

Co., Ltd, whereby SMBC account holders can withdraw cash and

check account balances 24 hours a day at ATMs located at nation-

wide outlets of SEVEN-ELEVEN JAPAN CO., LTD. Prior to the

IYBANK agreement, SMBC had already established ATM usage

agreements with convenience store operator LAWSON, INC., and

with ATM provider E-net Co., Ltd.* As a result of its ATM-use agree-

ments with LAWSON, E-net, and IYBANK, SMBC now offers

customers round-the-clock cash-withdrawal convenience via a

network of ATMs at more than 9,800 convenience stores.
* E-net ATMs are located at outlets of FamilyMart Co., Ltd., and other

convenience store operators in Japan.

➁ Full-scale marketing of Business Select Loan
To establish and develop a greater number of relationships with

small and medium-sized companies, SMBC began full-scale

marketing of its Business Select Loan in March 2002. Rapid loan

application processing is the key feature of this product, and

eligible companies are allowed to borrow a maximum of ¥50

million with a repayment period of up to five years (three years for

uncollateralized loans). Unlike conventional business loans of this

type, where the application of funds is limited to working capital,

the Business Select Loan may be applied also to capital expendi-

tures. The product is one example of how SMBC is enabling

managers of small and medium-sized businesses to capitalize on

business opportunities in a timely manner.

➂ Asset Management Plaza network
After reviewing the organization, infrastructure, and business

model of its former Investment Service Plaza network, SMBC in

April 2002 renamed these offices Asset Management Plazas,

enhancing service capacity and expanding the network from 21

to 64 locations. These offices provide information on managing

and raising funds. In addition, Asset Management Plazas offer a

TV conference service that includes seminars on taxes, legal

issues, and various other topics of interest to clients. Looking

ahead, we intend both to

add to the Bank’s accu-

mulated know-how in

a wide range of fields

and to keep supplying

customers with increas-

ingly higher quality asset

management services.

Asset Management Plaza
TV conference service

❍
➃ Loans for newly built housing
SMBC is committed to offering simple, convenient loans with

➆ Disclosure pamphlet for individual depositors
Following a series of financial bankruptcies in Japan in recent

rapid loan application processing to assist customers in

years, the April 2002 partial termination of full protection of

purchasing homes. A recent example is our low-interest-rate loan

deposits and other liabilities has sparked heightened concerns

limited to purchases of newly built housing introduced in April

about the soundness of financial institutions. We strongly believe

2002. The Bank structured this product at a comparatively low

that a bank has a public responsibility to provide timely, easy-to-

cost thanks to the cooperation of real estate developers,

understand information. SMBC has published To Increase Your

enabling us to offer customers record-low interest rates. We also

Understanding of SMBC Management for individual depositors as

extended the marketing campaign for our housing loans with

a supplement to the Bank’s standard disclosure materials. The

reduced interest rates for borrowers meeting certain conditions.

pamphlet explains in layman’s terms the Bank’s recent financial

condition and management policies.

We will continue to implement proactive, comprehensive

disclosure initiatives to keep customers and the public informed

of our operations to further strengthen their confidence and trust.

➄ Basic agreement on merger of Mitsui and

Sumitomo group asset management subsidiaries
In November 2001, SMBC signed an agreement with Mitsui

Mutual Life Insurance Company, Sumitomo Life Insurance

Company, and Mitsui Sumitomo Insurance Company, Limited, to

form a comprehensive alliance to bolster the insurance busi-

nesses of the Mitsui and Sumitomo groups. The four companies

agreed to merge their asset management subsidiaries into a new

entity, to be named Sumitomo Mitsui Asset Management

Company, Limited, by December 2002. Synergizing the various

strengths of the former companies in offering high value-added

asset management services with outstanding operational effi-

ciency, the new company aims to become one of Japan’s

highest-ranking asset management companies with a strong

customer orientation.

➅ Business Promotion Office
Since the April 2001 merger, SMBC has been relentlessly refining

its organization, optimizing operating efficiency, and building a

framework that fully reflects customer needs. This effort has

included the use of mass media and other means to attract

potential customers. To enhance our abilities to identify the needs

of such customers and take timely actions, we opened the

Business Promotion Office on a trial basis in October 2001. We

subsequently expanded the office’s functions and made it a busi-

ness department within the Middle Market Banking Unit. One of

the office’s main activities is handling general inquiries and

responses to advertisements. Complementing the conventional

marketing activities carried out by SMBC branches, the office

also uses external and internal databases for customer-

segmented direct marketing and telemarketing to increase our

customer base.

➇ UNEP Statement by Financial Institutions
Reflecting the growing consensus behind the need for environ-

mental protection and the accelerating spread of environmental

preservation initiatives worldwide, financial institutions are

expected to play an expanding and increasingly important role in

environmental preservation. To this end, SMBC has signed the

United Nations Environment Programme (UNEP) Statement by

Financial Institutions on the Environment & Sustainable

Development, reaffirming its commitment to environmental

preservation globally.

SMBC 2002 — 5

Financial Highlights

(cid:11) Consolidated

Sumitomo Mitsui Banking Corporation and Subsidiaries

Year ended March 31
For the Year:

2002

2001

Millions of yen
2000

1999

1998

Total income ..............................................................
Total expenses...........................................................
Net income (loss).......................................................

¥ 3,809,130
4,413,469
(463,887)

¥ 4,501,200
4,095,685
132,408

At Year-End:

Total stockholders’ equity ..........................................
Total assets................................................................
Risk-monitored loans.................................................
Reserve for possible loan losses...............................
Net unrealized gains (losses) on securities ...............

¥ 2,912,619
108,005,001
6,484,367
2,159,649
(495,507)

¥ 4,012,960
119,242,661
3,256,418
1,268,853
(301,106)

5,170,720
4,828,078
124,456

5,042,021
6,507,309
(1,048,155)

4,012,912
102,263,112
3,864,758
1,632,687
1,834,215

3,931,609
103,988,877
4,107,498
1,934,627
/

5,584,031
6,153,710
(339,597)

3,398,330
117,529,874
/
2,343,038
/

Sakura Sumitomo
Bank

Bank

Sakura Sumitomo
Bank

Bank

Sakura Sumitomo
Bank

Bank

Sakura Sumitomo
Bank

Bank

Capital ratio (BIS guidelines) .....................................
ROE...........................................................................
PER (Times) ..............................................................
Number of employees ...............................................

10.45%
—
—
43,793

11.31% 10.94% 12.53% 11.60% 12.33% 10.95%
—
3.74% 4.55%
2.67% 6.05%
/
82.23
62.08
43.92
62.36
/
19,364
23,837
22,222
24,184

—
/
/

9.12% 9.23%
—
/
/

—
/
/

Per Share (Yen):

Stockholders’ equity ..................................................
Net income (loss).......................................................
Net income – diluted..................................................

¥282.85
(84.12)
—

¥333.46 ¥426.32
25.50
24.93

9.22
9.21

¥340.98 ¥415.77
18.61
— 18.17

12.58

¥331.28 ¥400.71
(124.72) (181.48)
—

—

¥446.47 ¥532.18
(80.00)
—

(25.51)
—

Notes: 1. Figures for the years ended March 31, 2001, 2000, 1999, and 1998, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

2. Total stockholders’ equity as of March 31, 2002, includes net unrealized losses on “other securities” of ¥304,837 million.
3. Unrealized gains (losses) on securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other

securities” for 2002 and 2001, and of listed or over-the-counter securities for 2000, 1999, and 1998. In principle, the values of stocks are calculated
using the average market prices during the final month for 2002 and 2001. For details, please refer to page 56.

4. Number of employees for the former Sumitomo Bank has been reported on the basis of full-time workers since 2000 and for the former Sakura Bank
since 2001. Number of employees includes locally hired overseas staff members but excludes contract employees, temporary staff, and executive
officers who are not also Board members.

(Year ended March 31)

(March 31)

Banking Profit (excluding transfer to general reserve for
possible loan losses) [Nonconsolidated]

(Billions of yen)

1,200

900

600

300

1,183.4

803.1

633.1

670.6

702.9

1998

1999

2000

2001

2002

Capital Ratio (BIS guidelines) [Consolidated]

(%)

12.33

12.53

10.95

11.60

11.31

10.94

10.45

9.23
9.12

1998
Sakura Bank

1999

2000
Sumitomo Bank

2001

2002

SMBC

(Year ended March 31)

(March 31)

Expenses and Expense Ratio
(excluding nonrecurring losses) [Nonconsolidated]

Problem Assets Based on the Financial
Reconstruction Law [Nonconsolidated]

(Billions of yen)

(%)

(Billions of yen)

800

600

400

200

808.7

56.1

778.9

727.6

53.7

50.7

700.1

670.1

46.6

36.2

1998

1999

2000

2001

2002

Expenses

Expense Ratio

6,000

4,500

3,000

1,500

5,900.0

3,813.8

3,640.5

2,822.5

1999

2000

2001

2002

6 — SMBC 2002

(cid:11) Nonconsolidated

Sumitomo Mitsui Banking Corporation

Year ended March 31
For the Year:

2002

2001

Millions of yen
2000

1999

1998

Total income ....................................................... ¥ 2,818,189
3,354,826
Total expenses....................................................
Net income (loss)................................................
(322,852)
(Appendix)

Gross banking profit (A)................................ ¥ 1,853,515
Banking profit................................................
678,811
Banking profit (excluding transfer to general
reserve for possible loan losses) .................
Expenses (excluding nonrecurring

1,183,369

losses) (B)...................................................
Expense ratio (B)/(A) ....................................

670,145
36.2%

At Year-End:

Total stockholders’ equity.................................... ¥ 3,196,492
Total assets......................................................... 102,082,581
67,629,353
Deposits..............................................................
59,928,368
Loans and bills discounted .................................
20,442,996
Securities............................................................
Risk-monitored loans..........................................
5,816,452
Problem assets based on the

Financial Reconstruction Law...........................
Reserve for possible loan losses........................
Net unrealized gains (losses) on securities ........

5,900,043
1,971,849
(481,654)

3,292,668
3,019,557
137,835

1,503,203
991,670

803,073

700,128
46.6%

4,199,937
113,727,498
70,729,773
61,747,880
27,059,978
2,732,590

2,822,459
1,095,841
(429,844)

¥ 4,115,276
3,812,705
105,935

¥ 1,434,480
678,662

702,897

727,556
50.7%

¥ 4,132,926
97,648,823
67,572,486
63,298,512
15,893,846
3,556,458

3,640,530
1,569,493
1,564,155

¥ 4,118,467
5,400,579
(749,438)

¥ 1,449,532
393,104

670,616

778,915
53.7%

¥ 4,069,991
98,740,013
65,966,930
66,008,121
12,897,462
3,720,423

3,813,771
1,788,520
311,474

5,247,243
5,946,472
(842,211)

1,441,767
601,855

633,116

808,650
56.1%

2,436,127
109,727,181
73,770,814
71,014,073
13,706,303
2,944,524

/
2,301,294
338,680

Sakura
Bank

Sumitomo
Bank

Sakura
Bank

Sumitomo
Bank

Sakura
Bank

Sumitomo
Bank

Sakura
Bank

Sumitomo
Bank

Preferred stock ................................................... ¥
Number of shares issued (Thousands).........
Common stock.................................................... ¥
Number of shares issued (Thousands).........
Pay-out ratio .......................................................
Capital ratio (BIS guidelines) ..............................
ROE....................................................................
PER (Times) .......................................................
Number of employees ........................................

650,500
967,000
676,246
5,709,424
—
11.50%
—
—
22,464

¥402,577
802,577
¥640,129
4,118,077
34.71%
11.91%
4.86%
33.27
12,558

¥250,500
167,000
¥502,348
3,141,062
36.15%
11.80%
3.72%
67.49
12,173

¥402,772
802,772
¥639,934
4,117,297
53.42%
12.50%
3.23%
69.48
14,930

¥250,500
167,000
¥502,348
3,141,062
41.63%
12.46%
3.32%
106.17
12,982

¥411,307
811,307
¥631,399
4,083,121
—
12.38%
—
/
16,330

¥250,500
167,000
¥502,348
3,141,062
—
11.94%
—
/
14,995

—
¥ 26,883
—
26,883
¥572,562
¥502,348
3,747,134 3,141,062
—
/
—
/
15,111

—
/
—
/
17,420

Per Share (Yen):

Stockholders’ equity ...........................................
Dividends:

Common stock..............................................
Preferred stock (Series I)..............................
Preferred stock (Series II).............................
Preferred stock (Series III) (Type 2)..............
Preferred stock (First series Type 1).............
Preferred stock (Second series Type 1) .......
Preferred stock (Type 5) ...............................
Net income (loss)................................................
Net income – diluted...........................................

¥332.02

¥358.43

¥451.35

¥351.38

¥439.23

¥343.09

¥428.35

¥332.07

¥362.30

4.00
/
/
/
10.50
28.50
13.70
(59.20)
—

6.00
/
15.00
13.70
/
/
/
17.28
17.24

6.00
/
/
/
10.50
28.50
/
16.59
16.25

6.00
/
15.00
13.70
/
/
/
11.24
—

6.00
/
/
/
10.50
28.50
/
14.41
14.12

7.25
/
15.00
0.04
/
/
/
(97.62)
—

6.00
/
/
/
0.03
0.08
/
(119.11)
—

8.50
22.50
15.00
/
/
/
/
(62.92)
—

8.50
/
/
/
/
/
/
(197.93)
—

Notes: 1. Figures for the years ended March 31, 2001, 2000, 1999, and 1998, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

2. As a result of the merger of the two banks, total stockholders’ equity as of April 1, 2001, stood at ¥3,772,889 million.
3. Total stockholders’ equity as of March 31, 2002, includes net unrealized losses on “other securities” of ¥297,950 million.
4. Please refer to page 107 for the definitions of risk-monitored loans and problem assets based on the Financial Reconstruction Law.
5. Unrealized gains (losses) on securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other

securities” for 2002 and 2001, and of listed or over-the-counter securities for 2000, 1999, and 1998. The values of stocks are calculated using the
average market prices during the final month for 2002 and 2001. For details, please refer to page 60.

6. Number of employees for the former Sumitomo Bank has been reported on the basis of full-time workers since 2000 and for the former Sakura Bank
since 2001. Number of employees includes locally hired overseas staff members but excludes contract employees, temporary staff, and executive
officers who are not also Board members.

7. Money delivered due to the merger (the amount equivalent to dividends from October 1, 2000 to March 31, 2001) has been included in the former

Sakura Bank’s 2001 dividends.

8. Effective from the year ended March 31, 2002, treasury stock is disclosed as a deductible item from common stock. As a result, stockholders’

equity per share and net income (loss) per share are calculated on the basis of the number of shares outstanding, less treasury stock.

SMBC 2002 — 7

Fiscal 2001 Results

Asset Quality

SMBC provides information about the status of its assets in three

different ways. First, we conduct self-assessment to calculate

❑ Self-Assessment
Self-assessment is a preparatory task prior to calculating the

appropriate write-offs and reserves by classifying borrowers

appropriate level of write-offs and reserves to ensure the Bank’s

according to their financial soundness. Second, disclosure based

asset quality. Each asset is assessed individually for its security

on “The Law Concerning Measures for the Reconstruction of the

and verity. Depending on its current condition, each borrower is

Functions of the Financial System” (the Financial Reconstruction

assigned to one of five categories: Normal Borrowers, Borrowers

Law) is used to classify problem assets. (Note: Disclosure on the

Requiring Caution, Potentially Bankrupt Borrowers, Effectively

basis of the Financial Reconstruction Law is related to self-

Bankrupt Borrowers, or Bankrupt Borrowers. The risk of default

assessment in terms of borrower category.) Third, we disclose the

and noncollection and the risk of asset devaluation are then

value of Risk-Monitored Loans based on the Banking Law, which

assessed on a scale from I to IV. As part of our efforts to bolster

excludes non-loan assets such as foreign exchange, accrued

risk management throughout the Group, our consolidated

interest, and suspense payments.

subsidiaries, in principle, employ the same standards.

Disposal of Problem Assets for Fiscal 2001
SMBC makes appropriate write-offs and reserves based on semi-

annual self-assessments conducted in compliance with the

Financial Inspection Manual prepared by the Financial Services

Agency and the Practical Guideline published by the Japanese

Institute of Certified Public Accountants.

Total credit cost for fiscal 2001, the year ended March 31,

2002, mainly reflects our preparations for coping with possible

risks accompanying claims to Borrowers Requiring Caution,

including raising the reserve ratio due to the prolonged economic

slump, and additional reserves for the possible reorganization

costs of problematic corporate borrowers. Moreover, borrowers’

deteriorating financial condition, ongoing declines in collateral

values, and the Bank’s aggressive program of off-balancing

problem assets also affected the total credit cost. As a result,

nonconsolidated total credit cost amounted to ¥1,543.1 billion for

fiscal 2001, bringing the total reserve for possible loan losses to

¥1,971.8 billion at the fiscal year-end.*

On a consolidated basis, total credit cost amounted to

¥1,703.4 billion for fiscal 2001, including the amount transferred to

the general reserve for possible loan losses, bringing the total

reserve for possible loan losses to ¥2,159.6 billion as of March 31,

2002.**

* All Classification IV assets are basically directly written off using the direct reduc-
tion method even if the assets were not classified as tax-free write-offs.
The amount of direct reduction totaled ¥1,405.1 billion.
** The amount of direct reduction totaled ¥1,824.3 billion.

Borrower Categories, Defined

Normal Borrowers

Borrowers with good business performance and in
good financial standing without identified problems

Borrowers Requiring Borrowers identified for close monitoring
Caution

Potentially Bankrupt Borrowers perceived to have a high risk of falling
Borrowers

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 or formally
declared bankrupt

Asset Classifications, Defined

Classification I

Assets not classified under Classifications II, III, or IV

Classification II

Classification III

Assets perceived to have an above-average risk of
noncollectibility

Assets for which final collection or asset value is
very doubtful and which pose a high risk of
incurring a loss

Classification IV

Assets assessed as uncollectible or worthless

8 — SMBC 2002

(cid:11) Credit Cost (Nonconsolidated; year ended March 31, 2002)

(Billions of yen)

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

Total credit cost

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¥1,038.6
283.9
663.2
37.0
8.4
50.6
(4.5)

504.5

¥1,543.1

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Reserve for possible loan losses

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Amount of direct reduction

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¥1,971.8

¥1,405.1

(cid:11) Credit Cost (Consolidated; year ended March 31, 2002)

Total credit cost

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Reserve for possible loan losses

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Amount of direct reduction

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(Billions of yen)

¥1,703.4

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¥2,159.6

¥1,824.3

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(cid:11) Reserve for Possible Loan Losses (March 31, 2002)

Reserve for possible loan losses (a)

General reserve
Specific reserve
Loan loss reserve for specific overseas countries

Risk-monitored loans (b)

Reserve ratio (a) / (b)

❑ Write-Offs and Reserves Assessments

Nonconsolidated

Consolidated

(Billions of yen)

¥1,971.8
872.3
1,084.1
15.4

¥5,816.5

33.9%

¥2,159.6
929.5
1,214.7
15.4

¥6,484.4

33.3%

Under self-assessment, each borrower is evaluated and assigned to one of five categories—Normal Borrowers, Borrowers Requiring Caution,

Potentially Bankrupt Borrowers, Effectively Bankrupt Borrowers, or Bankrupt Borrowers—and standards for write-offs and reserves are

applied to each category.

Self-Assessment Borrower Categories

Standards for Write-Offs and Reserves

Normal Borrowers

Borrowers Requiring Caution

Potentially Bankrupt Borrowers

Effectively Bankrupt/Bankrupt Borrowers

Amounts are recorded as general reserves in proportion to the expected losses over the next 12
months based on the actual past bankruptcy rate for each 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 past bankruptcy rate
for each group. The groups are “substandard borrowers” and “other.” The latter group is further
divided according to credit situation, etc.

The Bank sets specific reserves for possible loan losses on the portion of Classification III assets
(calculated for each borrower) not secured by collateral, guarantee, or other means.

Of each borrower’s assets classified as Classification III or IV assets, in principle, the Bank writes
off the full amount of Classification IV assets (deemed to be uncollectible or of no value) and sets
aside specific reserves for possible loan losses against the full amount of Classification III assets.

As part of our overall measures to strengthen risk management throughout the Group, all consolidated subsidiaries, in principle, use the

same standards as the parent Bank for write-offs and reserves.

SMBC 2002 — 9

Disclosure of Problem Assets

1. Problem Assets Based on 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.

On a nonconsolidated basis, the total value of assets in all

categories other than Normal Assets amounted to ¥5,900.0 billion

as of March 31, 2002, a ¥3,077.5 billion increase compared with

March 31, 2001. This increase is mainly due to three factors: (1)

measures taken toward borrowers with large exposures accompa-

nying their progress in restructuring, (2) the classification as

Potentially Bankrupt Borrowers of certain borrowers requiring a

significant amount of time to regain financial health, and (3) the

expansion of the scope of restructured loans for inclusion in the

Substandard Loans category. On a consolidated basis, the total

value of assets in all categories other than Normal Assets was

¥6,567.7 billion.

(cid:11) Problem Assets Based on the Financial Reconstruction Law (March 31, 2002)

Bankrupt and quasi-bankrupt assets
Doubtful assets
Substandard loans
Subtotal

Normal assets

Total

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Amount of direct reduction

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Nonconsolidated

493.5
2,970.2
2,436.3
5,900.0

60,558.9

¥66,458.9

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?@@@@@@@@

@@g
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¥ 1,405.1

?@@
?@@
?@@
?@@
?@@
?@@
?@@@@@@@@
?@@@@@@@@

Compared with
March 31, 2001

(96.4)
1,027.1
2,146.9
3,077.5

(5,598.9)

¥(2,521.4)

@@@@@@@@
@@@@@@@@
@@
@@
@@
@@
@@
@@

@@
@@
@@
@@
@@
@@
@@
@@

(Billions of yen)

Consolidated

638.2
3,263.4
2,666.1
6,567.7

61,896.4

¥68,464.1

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¥ 1,803.2

@@@@@@@@
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@@
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(cid:11) Classification under Self-Assessment, Disclosure of Problem Assets, and Write-Offs/Reserves (Nonconsolidated; March 31, 2002)

Category of
borrowers under
self-assessment

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

(Billions of yen)

Bankrupt Borrowers

Bankrupt and
quasi-bankrupt assets (1)

Portion of claims secured by
collateral or guarantees, etc. (4)

Fully reserved

Effectively Bankrupt
Borrowers

¥493.5

¥474.8

¥18.7

Doubtful assets (2)

Portion of claims secured by
collateral or guarantees, etc. (5)

¥2,970.2

¥1,572.1

Necessary
amount
reserved

¥1,398.1

Direct
write-offs
(Note 1)

Specific
reserve

¥22.4
(Note 2)

100%
(Note 3)

¥1,061.7
(Note 2)

75.9%
(Note 3)

Potentially
Bankrupt
Borrowers

Borrowers
Requiring
Caution

Substandard loans (3)
¥2,436.3

(Claims to substandard borrowers)

Normal Borrowers

Normal assets

¥60,558.9

Portion of substandard loans
secured by collateral or
guarantees, etc. (6)
¥1,099.3

Claims to borrowers requiring
caution, excluding claims to
substandard borrowers

Claims to normal
borrowers

Total

¥66,458.9

(A)=(1)+(2)+(3)

¥5,900.0

Loan loss reserve for specific overseas countries

Total reserve for possible loan losses

(B) Specific reserve + General reserve
for substandard loans

Portion secured by collateral or
guarantees, etc. (C)=(4)+(5)+(6) ¥3,146.2

Unsecured portion
(D)=(A)-(C)

Notes: 1. Includes amount of direct reduction totaling ¥1,405.1 billion.

2. Includes reserves for assets that are not subject to disclosure under the Financial Reconstruction Law disclosure standards.

(Bankrupt/effectively bankrupt borrowers: ¥3.7 billion; Potentially bankrupt borrowers: ¥11.9 billion)

3. Reserve ratios for claims to Bankrupt/Effectively Bankrupt Borrowers, Potentially Bankrupt Borrowers, Substandard Borrowers, and Borrowers

Requiring Caution: The proportion of each category’s total unsecured claims covered by reserve for possible loan losses.

4. Reserve ratios for claims to Normal Borrowers and Borrowers Requiring Caution (excluding claims to Substandard Borrowers): The proportion of
each category’s total claims covered by reserve for possible loan losses. The reserve ratio of unsecured claims to Borrowers Requiring Caution
(excluding claims to Substandard Borrowers) is shown in brackets.

5. Reserve ratio = (Specific reserve + General reserve for substandard loans)÷(Bankrupt and quasi-bankrupt assets + Doubtful assets + Substandard

loans – Portion secured by collateral, guarantee, etc.)

Coverage ratio {(B)+(C)} / (A)

76.6%

10 — SMBC 2002

General reserve for
substandard loans ¥290.8

General
reserve

¥872.3

21.8%
(Note 3)

5.1%
[9.4%]
(Note 4)

12.9%
(Note 3)

0.2%
(Note 4)

¥15.4

¥1,971.8

¥1,374.9

¥2,753.8

Reserve ratio
(Note 5)
(B) / (D)
49.9%

Classification of Problem Assets Based on the Financial Reconstruction Law

Bankrupt and Quasi-Bankrupt Assets

This category is defined as the sum of assets to Bankrupt Borrowers and Effectively Bankrupt Borrowers as categorized by
self-assessment, excluding Classification IV assets, which are fully written off. Classification III assets are fully covered by
reserves, and Classification I and II assets, the collectible portion, are secured by collateral or guarantees, etc.

Doubtful Assets

Substandard Loans

Normal Assets

This category is defined as the assets to Potentially Bankrupt Borrowers under self-assessment. Specific reserves are set aside for
Classification III assets, and Classification I and II assets, the collectible portion, are secured by collateral or guarantees, etc.

This category is defined as the sum of the loans extended to Borrowers Requiring Caution under self-assessment. This category
includes past due loans (three months or more) and restructured loans.

This category is defined as the sum, as of the term-end, of loans, securities lending, foreign exchange, accrued interest, suspense
payments, and customers’ liabilities for acceptances and guarantees that are not included in the other three categories.

2. Risk-Monitored Loans
In addition to the disclosure of problem assets in accordance with

Law. On a nonconsolidated basis, Risk-Monitored Loans

amounted to ¥5,816.5 billion as of March 31, 2002, a ¥3,083.9

the Financial Reconstruction Law, we separately disclose the

billion increase compared with March 31, 2001. On a consolidated

balance of Risk-Monitored Loans in accordance with the Banking

basis, Risk-Monitored Loans amounted to ¥6,484.4 billion.

(cid:11) Risk-Monitored Loans (March 31, 2002)

Nonconsolidated

Ratio to total loans

Compared with
March 31, 2001

Consolidated

Ratio to total loans

Bankrupt loans
Non-accrual loans
Past due loans (3 months or more)
Restructured loans

Total

¥ 195.7
3,184.5
92.3
2,344.0

¥5,816.5

0.3%
5.3
0.2
3.9

9.7%

¥ (40.0)
977.0
(10.9)
2,157.8

¥3,083.9

¥ 227.5
3,599.7
102.8
2,554.4

¥6,484.4

0.4%
5.7
0.2
4.0

10.2%

(Billions of yen)

Compared with
March 31, 2001

¥ (45.7)
1,022.2
(23.0)
2,274.4

¥3,227.9

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¥1,373.7

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¥1,768.8

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❑ Problem Assets Based on the Financial Reconstruction Law, and Risk-Monitored Loans

Category of
borrowers under
self-assessment

Problem assets based on
the Financial Reconstruction Law

Risk-monitored loans

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)

Total loans

Bankrupt loans

Non-accrual loans

Past due loans
(3 months or more)

Restructured loans

(A)

(B)

(C)

The disclosure of Risk-Monitored Loans

corresponds exactly to the disclosure of

Other
assets

problem assets based on the Financial

Reconstruction Law, except for such

non-loan assets as securities lending,

foreign exchange, accrued interest,

(C)

suspense payments, and customers’

liabilities for acceptances and guaran-

tees, which are not included in the Risk-

Monitored Loans category.

Since overdue interest from borrow-

ers classified under self-assessment as

Potentially Bankrupt Borrowers,

Effectively Bankrupt Borrowers, and

Bankrupt Borrowers is, as a rule, not

recorded as accrued interest, the

amount is not included in the problem

assets disclosed on the basis of the

Financial Reconstruction Law.

SMBC 2002 — 11

(cid:11) Problem Assets, by Domicile of Borrowers (Nonconsolidated; March 31, 2002)

Domestic

Overseas
Asia

Indonesia
Hong Kong
India
China
Others

North America
Central and South America
Western Europe
Eastern Europe

Financial Reconstruction Law Basis

Percentage

Risk-Monitored Loans

¥5,732.7

97.2%

¥5,671.2

167.3
103.6
40.8
16.0
7.0
12.3
27.5
46.4
2.1
11.4
3.8

2.8
1.7
0.7
0.3
0.1
0.2
0.4
0.8
0.0
0.2
0.1

145.3
89.3
39.1
13.9
4.8
12.0
19.5
38.9
2.1
11.2
3.8

(Billions of yen)

Percentage

97.5%

2.5
1.5
0.7
0.2
0.1
0.2
0.3
0.7
0.0
0.2
0.1

Total

¥5,900.0

100.0%

¥5,816.5

100.0%

Note: “Domestic” means the total for domestic branches, excluding the special account for international financial transactions. “Overseas” means the total for

overseas branches, including the special account for international financial transactions. The above countries and areas are categorized by the obligor’s
domicile.

(cid:11) Problem Assets, by Type of Borrowers (Nonconsolidated; March 31, 2002)

(Billions of yen)

Financial Reconstruction Law Basis

Percentage

Risk-Monitored Loans

Percentage

Domestic

Manufacturing
Agriculture, forestry, fishery

and mining
Construction
Wholesale and retail
Finance and insurance
Real estate
Transportation, communications,
and other public enterprises

Services
Municipalities
Others

Overseas

Public sector
Financial institutions
Commerce and industry
Others

Total

¥5,732.7
317.6
5.2

1,035.5
736.6
219.3
2,046.5
66.3

998.5
—
307.2

¥ 167.3
13.6
2.9
150.8
—
¥5,900.0

97.2%
5.4
0.1

17.6
12.5
3.7
34.7
1.1

16.9
—
5.2

2.8%
0.2
0.0
2.6
—
100.0%

¥5,671.2
314.6
5.2

1,014.6
725.4
216.9
2,042.6
65.1

995.5
—
291.3

¥ 145.3
13.6
2.9
128.8
—
¥5,816.5

97.5%
5.4
0.1

17.5
12.5
3.7
35.1
1.1

17.1
—
5.0

2.5%
0.2
0.1
2.2
—
100.0%

Note: “Domestic” means the total for domestic branches, excluding the special account for international financial transactions. “Overseas” means the total for

overseas branches, including the special account for international financial transactions.

12 — SMBC 2002

Off-Balancing Problem Assets
Under the provisions of the Emergency Economic Package

required in line with progress in business restructurings by

borrowers with large exposures, and to the classification as

enacted in April 2001, we are publishing the results of measures

Potentially Bankrupt Borrowers of borrowers that are likely to take

taken for the off-balancing of problem assets, as well as the

longer to regain financial soundness. As a result, we off-balanced

amount of assets that were newly classified as Bankrupt and

¥696.7 billion in the first half of fiscal 2001, and ¥584.5 billion in

Quasi-Bankrupt Assets or Doubtful Assets.

the second half of fiscal 2001. In this way, the Bank has adopted

The amount of doubtful assets rose owing to higher reserves

an aggressive program with regard to off-balancing.

(cid:11) Term-End Balance of Bankrupt and Quasi-Bankrupt Assets, and Doubtful Assets (Nonconsolidated)

September 30,
2000

March 31,
2001

Off-balanced during
first half of fiscal 2001

September 30,
2001

Off-balanced during
second half of fiscal 2001

March 31,
2002

(Billions of yen)

(1) Problem assets existing prior to and during the first half of fiscal 2000

Bankrupt and quasi-bankrupt assets
Doubtful assets
Total

¥ 621.7
2,567.9
¥3,189.6

¥ 472.7
1,353.1
¥1,825.8

(2) Problem assets classified during the second half of fiscal 2000

Bankrupt and quasi-bankrupt assets
Doubtful assets
Total

¥ 117.2
590.1
¥ 707.3

(3) Problem assets classified during the first half of fiscal 2001

(399.7)

(297.0)

Bankrupt and quasi-bankrupt assets
Doubtful assets
Total

(4) Problem assets newly classified during the second half of fiscal 2001

¥ 376.9
1,049.2
¥1,426.1

¥ 141.6
268.7
¥ 410.3

55.5
327.8
¥ 383.3

(301.6)

(208.8)

(74.1)

Bankrupt and quasi-bankrupt assets
Doubtful assets
Total

Total((1)+(2)+(3)+(4))

Bankrupt and quasi-bankrupt assets
Doubtful assets
Total

¥ 621.7
2,567.9
¥3,189.6

¥ 589.9
1,943.1
¥2,533.0

¥ 574.0
1,645.7
¥2,219.7

(696.7)

(584.5)

¥ 281.1
843.4
¥1,124.5

57.3
144.2
¥ 201.5

76.0
233.2
¥ 309.2

79.1
1,749.4
¥1,828.5

¥ 493.5
2,970.2
¥3,463.7

(cid:11) Breakdown of Off-Balancing (Nonconsolidated)

Off-balanced during
first half of fiscal 2001

Off-balanced during
second half of fiscal 2001

Disposition by borrowers’ liquidation
Reconstructive disposition
Improvement in debtors’ performance due to
reconstructive disposition
Loan sales to market
Direct write-offs
Others

Collection/repayment, etc.
Improvement in debtors’ performance

Total

(9.5)
(48.1)

—

(200.1)
(82.3)
(356.7)
(290.8)
(65.9)
(696.7)

(68.3)
(34.8)

—

(234.7)
120.2
(366.9)
(281.4)
(85.5)
(584.5)

Notes: 1. “Disposition by borrowers’ liquidation” refers to the abandonment or write-off of loans involved in bankruptcy liquidation proceedings (bankruptcy or special liquidations).

2. “Reconstructive disposition” refers to the abandonment of loans involved in rehabilitative 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.

SMBC 2002 — 13

Progress Report on the Plan for Strengthening the Financial Base of the Bank

SMBC has been raising its competitiveness and profitability

through restructuring and rationalization based on the Plan for

Rationalization Plan
As of March 31, 2002, SMBC employees numbered 25,027, well

Strengthening the Financial Base of the Bank. The Plan was

below the target of 26,200. Meanwhile, the number of domestic

drawn up in March 1999, when the two former banks accepted

branches was reduced by 14 during fiscal 2001 to 564, exceeding

infusions of public funds through subscriptions to preferred stock,

our target of 573 by nine branches. To accelerate the rationaliza-

and was revised in December 2000 when the merger application

tion of the domestic branch network, in an area with overlapping

was filed. The following is summary of the Bank’s progress in

branches, we relocated the excess branches to a core branch,

fiscal 2001, the year ended March 31, 2002, toward achieving the

and now have joint-branches at 20 locations. Including these

targets laid out in the Plan.

Earnings Plan
On a nonconsolidated basis, gross banking profit amounted to

¥1,853.5 billion, ¥425.5 billion higher than the target of ¥1,428.0

billion. Major factors contributing to this increase were strong

consolidations, the domestic branch network was reduced by a

total of 34 branches during the fiscal year. Overseas, the consoli-

dation of 12 overlapping branches was completed, thereby

reducing the overseas branch network to 21 branches, exceeding

the target of 23 by two branches.

profits from foreign-currency treasuries due to robust asset liability

Number of Employees

management (ALM) operations on declining U.S. interest rates,

and higher dividends received from overseas subsidiaries, etc.

Expenses were ¥670.1 billion, ¥57.9 billion lower than the

target of ¥728.0 billion. Despite the rise in IT systems integration-

related expenses from the merger, SMBC achieved this reduction

in expenses by various measures, including a reduction in head-

count, the consolidation of both domestic and overseas branches,

and a reduction of operating expenses by the revision of procure-

ment practices through the merger. As a result, banking profit,

excluding transfer to general reserve for possible loan losses, was

¥1,183.4 billion, ¥483.4 billion higher than the target of ¥700.0

billion. Return on equity (ROE; banking profit basis) was 33.95%,

well above the original target of 15.60%.

The Bank recorded a net loss of ¥322.8 billion, which fell short

of the original income target of ¥210.0 billion. The primary cause

was the large increase in total credit cost, including transfer to

general reser ve for possible loan losses. Such cost totaled

¥1,543.1 billion, or ¥1,343.1 billion higher than targeted, a result of

the positive measures taken to resolve the asset quality problem.

Going forward, SMBC will increase retained earnings by

expense reductions through additional restructuring, restrictions of

payouts, and other measures. By these means, SMBC intends to

maintain its resources for redemption of the preferred stock held

by the government.

(Persons)
33,000

31,000

29,000

27,000

25,000

31,325

29,298

27,142

25,027

Mar. 1999

Mar. 2000

Mar. 2001

Mar. 2002

Number of Domestic Branches

(Branches)
700

696

653

650

600

550

500

578

564

Mar. 1999

Mar. 2000

Mar. 2001

Mar. 2002

Number of Overseas Branches

(Branches)
40

Mar. 1999

Mar. 2000

Mar. 2001

Mar. 2002

14 — SMBC 2002

Management Issues

IT Systems Integration

Initial Merger Date Advanced
The initial plan of the merger agreement between the two former

and running smoothly at all domestic branches, suppor ting

SMBC’s seamless service and continuous convenience to all

banks called for the implementation of the merger, including the

customers. After the merger and throughout fiscal 2001, we

integration of the two banks’ IT systems, by the beginning of April

worked on systems development and on formulating plans for

2002. After considering the need to realize the merger benefits as

integrating the two former banks’ operational procedures with the

quickly as possible and succeed in the competitive global financial

aim of safely and efficiently achieving full IT systems integration.

services market, the management decided to advance the initial

plan’s schedule by one year, to April 1, 2001.

To implement the integration of the main systems at all

Phase 2: Full Integration
After making all necessary preparations, we then proceeded to

domestic branches, we adopted a two-phased program: phase 1

the second phase, the full integration of the main systems at all

to install a provisional computer relay system, and phase 2 to

domestic branches. With a view to minimizing the risk of disrup-

achieve full IT systems integration. Regarding the systems for

tions to our customer service during the second phase, we

international banking and treasury businesses, we had already

followed a seven-part integration schedule, with the first integra-

completed their integration during the first half of fiscal 2001, the

tion taking place on April 8 and the last on July 22. As scheduled,

year ended March 31, 2002.

we gradually phased out the relay system connecting the two

former IT systems and have fully configured them into a unified

Phase 1: Provisional Connection of the Two

system.

Banks’ Existing IT Systems

Systems peripheral to our main system are scheduled to be

In the first phase, we configured a provisional computer relay

integrated in stages from August to September 2002.

system to connect the two former banks’ existing IT systems.

From the Bank’s first day of operation, this relay system was up

Toward a Fully Integrated IT System

Phase 1: IT Systems Connection
(Fiscal 2001)

Phase 2: Full IT Systems Integration
(Fiscal 2002)

·Adoption of single financial institution code (0009)
·Adoption of new bank branch numbers and names

·Integration of main IT systems at all domestic branches
·Integration of products, services, and operational procedures

Former
Sakura Bank
main system

Computer
relay system
(Employed from
April 1, 2001)

Former
Sumitomo Bank
main system

Former
Sakura
Bank
branches

Former
Sumitomo
Bank
branches

Former
Sakura Bank
main system

Computer
relay system
(Phased out,
April–July 2002)

Fully integrated
main system

Branches
(not integrated)

All branches
(integrated)

SMBC 2002 — 15

Initiatives to Strengthen the Bank’s Earnings Base

Reinforcing Earnings Power through
Business Reforms
In December 2001, SMBC established the Business Reform

Second, to bolster our ability in taking greater risks, it is

necessary to actively increase loan assets with better risk-return

profiles. To that end, SMBC has been introducing a new type of

Committee to fundamentally refor m business practices.

loan product using original scoring models for small and medium-

The primary goal of the committee, headed by the president,

sized companies, and actively extending loans based on the cash

is to pursue bankwide reforms based on two principal initiatives:

flows generated by borrowers’ business operations and assets.

(1) reform lending practices in corporate banking to enhance

Third, to strengthen the ability to provide financial solutions,

profitability as well as the soundness of its loan business, and (2)

SMBC will respond to clients’ needs for restructuring and for fund

firmly establish competitive advantages and improve profitability in

raising by providing comprehensive financial services through

consumer banking.

Corporate Banking Business
SMBC is aggressively implementing reforms in corporate banking.

debt capital market financing such as syndication and debt securi-

tization. We will also reinforce our services related to business

revitalization and M&A in order to enhance customer net worth.

Furthermore, to tap new business opportunities arising from

These include (1) reexamining domestic lending practices to

customers’ needs to improve efficiency in cash management and

improve its risk-return profile, (2) enhancing the capacity to take

accounting operations, SMBC will provide outsourcing services for

greater risks, and (3) strengthening the ability to provide financial

settlement.

solutions.

First, with respect to the reexamination of lending practices,

SMBC is developing new relationships with customers, based on

Consumer Banking Business
The reform initiatives in consumer banking include (1) the devel-

sharing a mutual recognition of the credit risk. With this common

opment of a new transaction model to suppor t customers’

yardstick, SMBC is changing the ter ms and conditions and

changing consumption patter ns, and (2) the simultaneous

lending style, applying risk-based pricing so that both parties will

improvement of customer convenience and cost-performance to

mutually consent to the new terms. Here, the goal is not simply to

make the “mass-retail” business an ever-larger profit center.

share risk acknowledgement, but to emphasize the provision of

SMBC is developing standardized and specialized transaction

financial solutions that will improve the customers’ financial condi-

models based on the principle that customers can select the

tion and enhance their corporate value. On the premise of a

financial services they need at each stage of life and the Bank will

common recognition of credit risk, SMBC will review its lending

be compensated according to the type of service provided. In

approach to make it more suitable for the use of proceeds and

addition, SMBC will continue to build a settlement infrastructure

source of repayment of the loan, clarify the terms and conditions

jointly with its Group firms in response to the market’s need for

of the loan agreement preparing for future changes in the

sophisticated and complex financial services.

customers’ financial condition, and apply a loan spread reflecting

SMBC will also actively promote consumer-financing services

the credit risk, the due date, and the source of repayment.

to support their diversifying consumption patterns of our retail

customer base. Enhancing cost-performance continues to be the

central issue in consumer banking. SMBC is actively imple-

menting several initiatives toward this goal. In addition to stream-

lining the internal systems, including productivity gains achieved

through restructuring of human resource capabilities, SMBC is

simplifying administrative procedures leading to enhanced

customer convenience.

16 — SMBC 2002

Cutting Expenses by Raising Operational Efficiency

Expense Reduction Plan

Annual Expense Plan (Announced in November 2001)

Fiscal year ended
March 31, 2002

Original target
¥728.0 billion

Plan for Strengthening
the Financial Base of
the Bank

(Submitted in December 2000)

¥98.0 billion
reduction

Implementing
restructuring
initiatives

Result
¥670.1 billion

Fiscal year ending
March 31, 2005

Original target
¥680.0 billion

Additional
¥50.0 billion
reduction

Projected target
¥630.0 billion

On course to quickly achieving
a ¥600.0 billion cost structure

Major Restructuring Initiatives (Annual Expense Plan, announced in November 2001)

(1) Cutting distribution channel expenses by
streamlining manned branch network
•To reduce by March 31, 2003 the number of domestic

(4) Workforce streamlining

•To reduce by March 31, 2004 the headcount from 27,142

at the time of the merger (March 31, 2001) to 22,600 (a

branches from 578 at the time of the merger (March 31,

reduction of 4,542)

2001) to 401 (reduction of 177 branches, or a reduction of

•Staff reductions of 2,115 were already achieved in fiscal

69 more branches than targeted in the Plan for

2001 (employees as of March 31, 2002: 25,027).

Strengthening the Financial Base of the Bank)

•Within the reduction of 177 branches, integration of 34

branches was advanced from fiscal 2002 to fiscal 2001,

the year ended March 31, 2002 (Domestic branches as of

March 31, 2002: 544)

(2) Cuts in facility-related expenses

•To reduce facility-related expenses by terminating the

lease of the Kudan Head Office, integrating the system

and back-office centers, and selling company housing

(3) Cuts in processing system-related expenses

•To exploit merger-related opportunities to streamline

our systems infrastructure and use Business Process

Reengineering to rationalize processing operations

(5) Compensation

•To review remuneration of directors (SMBC plans to make

further cuts in the number of directors and their compen-

sation)

•To reduce the provision of reserve for employee bonuses

(6) Other actions

•To reduce expenses related to outsourcing services within

the Group through the enhancement of management effi-

ciency of SMBC Group companies

SMBC 2002 — 17

Corporate Governance

SMBC takes many steps to ensure that the Bank’s corporate

❍ Nominating Committee

governance system is effective and transparent. By establishing

1. Issues related to the selection of candidates for Board

an executive officer system at the operations level, we have

directorships

divided functions between executive officers and the Board of

Directors, resulting in a strengthened role for the Board. In addi-

tion, by establishing an Advisory Board we have ensured that we

listen to the opinions of external advisors and incorporate them in

our management.

2. Issues related to the appointment of managing directors
having specific management responsibilities, and issues
related to the appointment of representative directors

3. Other major personnel issues related to directors

Oversight System
SMBC’s Board of Directors has two functions: setting policy for

Separate Operations System
Executive officers are selected by the Board to manage each of

SMBC’s businesses. As of June 30, 2002, there were 66 execu-

important management issues and overseeing the execution of

tive officers, including the president, 13 of whom are concurrently

business activities. At SMBC, we place particular emphasis on the

appointed as directors.

latter function. We employ an executive officer system that sepa-

rates decision making at the operations level from the Board’s

The Management Committee is the highest decision-making
body at the operations level. The president chairs the committee

oversight functions. In particular, the Chairman of the Board is

and selects its members from the executive officers. The

prohibited from assuming direct responsibility for operational

committee members debate important management issues, and

duties and is primarily charged with their oversight.

the president has the authority to make final decisions after

Moreover, we have reinforced the Board’s oversight functions

considering the committee’s recommendations.

by setting up three subcommittees: the Risk Management

The president designates cer tain members of the

Committee, the Compensation Committee, and the Nominating

Management Committee as Authorized Management Committee

Committee. Two outside directors, one a certified public accoun-

Members in charge of particular Head Office departments and

tant and the other a lawyer, have been appointed to each

particular credit departments within each business unit, and

committee. In particular, an outside director has been appointed

charges them with implementing the directives from the

as the Chairman of the Compensation Committee. This system

Management Committee within the businesses they oversee.

allows the supervision of operations to be conducted from a suit-

ably objective perspective.

The Board has authorized the respective committees to

debate the following issues and submit reports to the Board:

❍ Risk Management Committee
Risk Management and Compliance

Advisory Board
SMBC requires external directors to attend meetings of the Board

of Directors and its internal committees to debate issues related

to the supervision of the Bank’s operations system. To provide an

additional forum for prominent individuals from outside SMBC to

extend advice to the chairman and president on management

1. Issues related to comprehensive risk management policies

issues of all types, we have also established the Advisory Board.

and the risk management system

2. Issues related to market and liquidity risk management poli-

cies 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 Member 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

18 — SMBC 2002

Internal Audit System

The Internal Audit Unit has the responsibility to conduct objec-

Department. Responsibility of each department is determined

tively internal audits for the Bank in a process separate from the

according to the auditee and the type of risk management under

oversight exercised by the Board of Directors on the shareholders’

its charge.

behalf. The Internal Audit Unit acts independently of the Bank’s

The Audit Depar tment audits compliance as well as the

business units, the Corporate Staff Unit, and the Corporate

management of market risk, liquidity risk, processing risk, and

Services Unit to ensure that the internal audit function is executed

systems risk at Head Office departments, domestic Group compa-

in an unbiased, objective fashion.

nies, and the Bank’s Asian branches and Group companies.

The Internal Audit Unit conducts internal audits to assess the

The Audit Depar tment for the Americas and the Audit

soundness of banking operations and assets, as well as to verify

Department for Europe audit overall compliance and risk manage-

that the Bank’s internal control system, including compliance and

ment at the Bank’s branches and Group companies in the

risk management, is appropriate and effective. The results of

Americas and Europe, respectively.

these audits are periodically reported to the Board of Directors

The Inspection Department audits compliance and processing

and the Management Committee. Based on the findings of its

risk management at the Bank’s domestic branches.

examination, the Internal Audit Unit also recommends improve-

The Credit Review Department monitors credit risk manage-

ments to the internal control systems of the concerned or related

ment, including the appropriateness of ratings and self-assessment,

departments, branches, and Group companies.

at the Bank’s domestic and Asian branches and Group companies.

The Internal Audit Unit comprises the Audit Department, the

Working closely with the Audit Department for the Americas and the

Audit Department for the Americas, the Audit Department for

Audit Department for Europe, the department globally supervises

Europe, the Inspection Depar tment, and the Credit Review

the Bank’s internal audit for credit risk management.

Shareholders’ Meeting

Chairman of the Board

Board of Directors

Advisory Board
(composed of distinguished
individuals from outside
the Bank)

Risk Management
Committee

Compensation
Committee

Nominating
Committee

Directors from outside companies

President

Management Committee
(composed of executive officers)

[Subject of Audit]

Head Office

Corporate Staff Unit

Corporate Services Unit

Consumer
Banking Unit

Middle Market
Banking Unit

Corporate
Banking Unit

International
Banking Unit

Treasury
Unit

Investment
Banking Unit

Business Units

Corporate Auditors
Board of Corporate
Auditors

Head Office

Internal Audit
Unit

Audit Dept.

Audit Dept.
for the Americas

Audit Dept.
for Europe

Inspection
Dept.

Credit Review
Dept.

Internal
Audit

SMBC 2002 — 19

Compliance

Strengthening the Compliance System: A Top
Management Priority
Compliance with laws, regulations, and other social standards is a

SMBC’s Compliance System
To implement a strict compliance system, it is first necessary to

clarify the framework for observing laws and regulations.

matter of course for corporations. Ensuring compliance is a partic-

SMBC employs a dual structure whereby, firstly, each depart-

ularly important issue for banks because of their central role in the

ment and office is individually responsible for ensuring that its

financial system and socioeconomic infrastructure. Moreover,

conduct complies with laws and regulations, and secondly, our

demand for banks to behave responsibly and transparently has

independent Internal Audit Unit conducts impartial audits of

grown significantly as competition intensifies across national and

department and office compliance. To make this basic structure

industrial boundaries and the market becomes increasingly selec-

effective, we established a Compliance Committee that encom-

tive. Accordingly, strengthening the compliance system is one of

passes the entire organization. The Committee is chaired by the

our top management priorities at SMBC.

director responsible for compliance issues and includes the heads

In this context, we expect and demand that all of our directors,

of 16 departments. In addition, with a view to enhancing objectivity,

officers, and other employees give utmost value to people’s trust

the Committee has legal advisors from outside the Bank as its

in the Bank, abide by laws and regulations, maintain a high ethical

council. This framework ensures that each section of the Bank is

viewpoint, and act fairly and sincerely. SMBC firmly believes that

examined for compliance from an impartial, neutral perspective.

adherence to these aspects of compliance in our daily operations

will support our prosperity, together with that of our shareholders,

customers, other stakeholders, and society in general.

Audit Reports

Management

Directions

Auditing Role
(Internal Audit Unit)

Strict Check as
Independent Unit

Directions

Autonomous Role
(Business Units)

Thorough Advance
Check Based on
Self-Regulation

Support Role
(Compliance Group,
General Affairs Department)
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.

20 — SMBC 2002

Compliance Manual
To fur ther enhance the Bank’s compliance system, we have

Compliance Program
SMBC’s Compliance Program is a detailed, four-phased imple-

provided each and every director, officer, and employee with a

mentation plan formulated and resolved by the Board of Directors

Compliance Manual. Set out in a resolution of the Board of

to strengthen the Bank’s compliance system. The Program’s basic

Directors, this proprietary document is more than simply a list of

objective is to get the compliance system running effectively both

applicable laws and regulations. Starting off with a statement of

in the Bank and in all consolidated subsidiaries. We have made

the Bank’s “Business Mission,” the Compliance Manual then lays

concrete plans for each phase of the Program and are currently

out specific “Rules of Action.” Based on “Objectives” and “Guiding

enhancing training programs and the auditing system. In addition,

Rules,” these “Rules of Action” comprise 60 items describing rele-

a compliance officer has been assigned to each department and

vant laws and regulations as well as providing procedural guide-

branch to ensure the integrity of the Bank’s compliance frame-

lines and specific examples of conduct.

work, as well as to ensure that the Bank’s conduct is in conformity

In addition, we have established supplementary compliance

with our Compliance Manual.

rules applicable to specific organizations and operations, such as

Department Rules, Business Office Rules, and Group Company

Rules, in order to make sure that our operations are conducted in

accordance with the Compliance Manual.

Compliance Manual

Business Mission

Rules of Conduct

1. Plan
(Documentation)

Create the Bank’s
Compliance Manual
and rules

4. Review

2. Implementation

Improve the Compliance
Program and revise
the Manual and rules

Establish training and
educational systems
to inform employees
about compliance

3. Evaluation

Conduct independent
compliance inspections
in every department
and branch

Breakdown

Four Objectives

Rules of
Action

Five Guiding Rules for Each Objective

= 20 Guiding Rules

Three Rules for Each Guiding Rule

= 60 Rules of Action

Supplementary Compliance Rules

• Department Rules
• Business Office Rules
• Group Company Rules
(Other supplementary compliance rules are also provided,
as appropriate.)

SMBC 2002 — 21

Risk Management

Basic Principles
Financial and economic deregulation, globalization, and advances

established the Corporate Risk Management Department to be

completely independent of the business units to manage these

in IT are generating new business opportunities for financial

risks on a bankwide basis. This depar tment works with the

institutions. The risks accompanying these new business opportu-

Corporate Planning Department to comprehensively and system-

nities are not only increasing in number but also growing in diver-

atically manage risk.

sity and complexity. Accordingly, identifying, measuring, and

The Bank’s top management plays an active role in

controlling risks have never been more important in banking.

determining basic principles for risk management, reflecting the

At SMBC, we have established Regulations on Risk

importance of risk management at SMBC. The system works as

Management, encompassing all the fundamentals required of a

follows: The risk management departments supervising each risk

risk management framework. In addition to specifying the types

category draft a principal policy for risk management for that cate-

and areas of the risks that are to be managed according to our

gory, which is then presented for approval by the Management

strategic objectives, these rules define the basic principles for

Committee and considered by the Board’s Risk Management

appropriately controlling each type of risk. These principles include

Committee before being finalized by the Board. The Management

“risk management on a consolidated basis,” “risk management

Committee, the Board members, and the relevant risk manage-

based on quantification,” “ensuring consistency with the business

ment department heads perform risk management according to

strategy,” “framework for checks and balances,” and “verification of

the principal policy.

the actual situation by independent audit departments.”

To control market, liquidity, and credit risk, in particular, we

Risk Management System
Within the Bank, we classify risk into the following categories for

control purposes: (1) credit risk, (2) market risk, (3) liquidity risk,

(4) processing risk, (5) systems risk, and (6) other risk (settlement

risk, legal risk, reputational risk, and others). Each department is

charged with the control of risks at an appropriate level within its

own business line. To control the risks included in items (1)–(5)

above as well as settlement risk, we have designated certain

departments as risk management departments to oversee specific

risk control measures within each risk category. In addition, we

have strengthened the decision-making system at the operating

level through the Market Risk Management Committee and the

Credit Risk Management Committee, which are subcommittees

formed under the Management Committee that comprise the exec-

utive members of the Management Committee and the heads of

the departments related to risk management.

Also, to prepare for extraordinary events with the potential to

have a crucial impact on the Bank’s management and financial

condition (stress situation), we are improving and strengthening

our risk management system throughout the Bank.

Board of Directors

Endorsement of principal policies for risk management
Approval for exceptional treatments that might have a significant impact on management

Risk Management Committee

Discussion on principal policies
Discussion on exceptional treatments that might have a significant impact on management

Management
Level

Management Committee

Market Risk Management Committee

Credit Risk Management Committee

Board member in charge

Board member in charge of
Corporate Risk Management Dept.

Board member in charge of
Credit Risk Management Dept.

Sections
in Charge of
Risk Management

Corporate Planning Dept./Corporate Risk Management Dept.

Market Risk

Credit Risk

Processing Risk

Systems Risk

Other Risks

Bankwide risk
management

Liquidity Risk

Settlement Risk

Corporate Risk
Management Dept.

Credit Risk
Management Dept.

Operations
Planning Dept.

IT Planning
Dept.

Corporate
Auditors

External Auditors
(an auditing firm)

Audit Dept.
Inspection Dept.
Credit Review Dept.

Audit/verification of the actual
situation of risk management

22 — SMBC 2002

Risk Management Methodologies
The risk management departments revise the basic risk manage-

Credit Risk
Credit risk is the possibility of a loss arising from a credit event,

ment principles for each risk category on a regular basis, and

such as deterioration in the financial condition of a borrower, that

whenever necessary, to ensure that the Bank’s specific risk

causes an asset (including off-balance sheet transactions) to lose

management policies promptly and accurately reflect new develop-

value or become worthless. Overseas credits also include an

ments in the operating environment. Furthermore, in order to

element of country risk, which is closely related to credit risk. This

maintain a balance between risk and return as well as ensure the

is the risk that changes in currency values or political or economic

soundness of the Bank from an overall perspective, we employ the

situations cause a loss. Credit risk is the most significant risk to

risk capital-based management method, which allocates capital

which banks are exposed. Without adequate credit risk manage-

effectively to each department according to its role in our business

ment, the impact of the corresponding losses on a bank’s opera-

strategies to keep total exposure to credit, market, processing, and

tions can be overwhelming.

systems risk within the scope of our management resources, i.e.,

The purpose of credit risk management should be to avoid

capital. In the credit and market risk categories, in particular, the

such credit events, to keep credit risk exposure within a bank’s

maximum risk capital that can be allocated during a period is

capital, to maintain the soundness of a bank’s assets, and to

predetermined and risk capital guidelines are set as necessary

ensure returns commensurate with risk. This allows a bank to

within this limit to manage these risks. Liquidity risk is managed

build a loan portfolio that achieves highly efficient returns on

within a framework that includes plans for money gap and treasury

capital and assets.

funding. Other risk categories are managed with procedures

closely attuned to the nature of the risk, as described in the

following paragraphs.

(cid:11) Correlation between Risk Management Framework

and Risk Category

Framework

Category

1. Credit Policy
SMBC’s credit policy comprises clearly stated universal and basic

operating concepts, policies, and standards for credit operations, in

accordance with the Bank’s corporate philosophy and code of

conduct. By promoting the understanding of and strict adherence

to our credit policy among all Bank managers and employees, we

aim to achieve the global standards of credit risk management

stipulated in the New Basel Capital Accord and provide high value-

added financial services.

2. Credit Risk Assessment and Quantification
To effectively manage the risk of individual loans as well as the

credit portfolio as a whole, we first acknowledge that every credit

poses risks. We then assess the credit risk posed by each

borrower and loan using our internal rating system and quantify

Credit Risk

Banking Account Risk

Trading Account Risk

Management
Based on
Risk Capital

Market
Risk

Risk of Strategic Equity Investment

that risk for control purposes.

Other Market-Related Risks

Processing Risk/Systems Risk

Money Gap/
ALM

Liquidity Risk

Other Risks
(Settlement Risk, Legal Risk, and Others)

SMBC 2002 — 23

(1) Internal Rating System
The Bank’s internal rating system consists of two indicators: the

(2) Quantification of Credit Risk
Quantifying credit risk is more than just calculating the probability

obligor grading, which indicates the creditwor thiness of a

of default for a par ticular obligor. It must also reflect the

borrower; and the facility grading, which shows the probability of

concentration of risk toward a specific customer or industry and

collecting for each facility. Facility gradings are assigned based on

fluctuations in the value of collateral, such as real estate and

a borrower’s obligor grading in consideration of transaction terms

securities. This range of data must be analyzed to quantify the

such as guarantee, tenor, and collateral. Overseas credits are

risk of an entire portfolio or an individual loan.

subjected to a further analysis that takes into account the country

To calculate credit risk, historical data for the obligor and

ranking, an indicator derived from analyses of a country’s political

facility are entered into a database, such parameters as the prob-

and economic situation, international balance of payments, and

ability of a grade migration and the recovery ratio are set, and

external debt burden. In order to maintain the consistency of the

then the probability distribution of losses for the entire portfolio

grading system as a whole, self-assessment is conducted to

(amount of loss for a particular probability) is computed to deter-

grade borrowers of low creditworthiness.

mine the maximum potential loss in the future. We obtain an

understanding of the risk dispersion effect and concentration risk

by running a simulation of approximately 10,000 iterations. The

quantified credit risk results are then used to formulate business

plans and provide a standard against which individual credit

applications are assessed.

(cid:11) Internal Rating System

Grading

Subrating

Obligor’s Grading

Definition

Debtor Classification in
Self-Assessment System

Facility Grading

Grading

Financial Reconstruction
Law Based Disclosure
Category

Subrating

(Domestic)

a
b
c
a
b
c
a
b
c
A
B
C
A
B
C

Extremely high certainty of redemption

High certainty of redemption

Reasonable certainty of redemption

Redemption is likely, but the debtor may be affected by
large shifts in business conditions or its 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 its 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.

Normal Borrowers

A
B
C

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)

Borrowers Requiring Caution A
Borrowers Requiring Caution B
Borrowers Requiring Caution C

Substandard Borrowers

Although the debtor is not bankrupt, its 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 its business is
in deep trouble and there are no prospects for restructuring.

Effectively Bankrupt
Borrowers

The debtor is legally and formally bankrupt.

Bankrupt Borrowers

a
b
c
a
b
c
a
b
c
A
B
C
A
B
C

A
B
C

III

VII

VIII

Normal Assets

Substandard Loans

Doubtful Assets

Bankrupt and
Quasi-Bankrupt
Assets

24 — SMBC 2002

3. Framework for Managing Individual Loans
(1) Credit Assessments
Credit assessments involve a variety of financial analyses,

4. Framework for Credit Portfolio Management
In addition to managing individual loans, we apply the following

basic policies to the management of the entire credit portfolio to

including cash flow, to predict an enterprise’s capabilities for loan

maintain and improve its soundness and profitability over the

repayment and its growth prospects. These quantitative

medium- to long-term.

measures, when combined with qualitative analyses of industrial

trends, the enterprise’s R&D capabilities, the competitiveness of

its products or services, and its management caliber, result in a

comprehensive credit assessment. The loan application is also

analyzed in terms of the intended utilization of the funds, the

repayment schedule, and the state of its collateral. In this way, we

are able to arrive at an accurate and fair credit decision based on

an objective examination of all relevant factors.

Increasing the transparency of loan conditions and approval

standards for specific borrowing purposes and loan categories is

a part of our ongoing review of lending practices, and we are

revising all loan contracts with the chief aim of clarifying the

contractual conditions of the Bank’s loans. We are making steady

progress in rationalizing our credit assessment process. For

example, our Business Suppor t Offices now offer the highly

convenient Business Select Loan, which employs a credit-scoring

model. In this and other ways, the Bank is building a system

capable of efficiently meeting the funding requirements of busi-

nesses, especially small and medium-sized enterprises.

(2) Credit Monitoring System
In addition to analyzing loans at the application stage, the Credit

Monitoring System is implemented in order to reassess the

obligor’s grading and review self-assessment so that problems

can be detected at an early stage and quick and effective action

can be taken. The system includes periodic monitoring carried out

each time an obligor enterprise discloses financial results, as well

as continuous monitoring performed each time the credit condi-

tions change, as indicated in the diagram below.

(1) Risk-Taking within the Scope of Capital
To control credit risk within the scope of our capital, we calculate

the required credit risk capital through regular quantification of

credit risk, and then set credit risk capital limits for internal control

purposes and manage risk-taking activities within these limits.

(2) Controlling Concentration Risk
Because concentration of credit risk in an industry or corporate

group has the potential to severely impact a bank’s capital, SMBC

implements credit control on those industries with excessive
concentration risk. In addition to regular risk control and loan

reviews, the Bank has also established other effective risk control

methods such as credit limit guidelines for large-scale borrowers

and corporate groups. To manage country risk, we also set up

credit limit guidelines based on a country’s creditworthiness.

(3) Balancing Risk and Return
We run our credit operations on the basic principle of earning

returns that are commensurate with credit risk. From fiscal 2002,

the year ending March 31, 2003, the Bank began to negotiate with

borrowers to gain their acceptance of suitable interest rate

spreads based on a standardized interest rate structure. This is

par t of the Bank’s program to fir mly establish a balanced

risk/return management system, thereby ensuring that we are

able to consistently generate an adequate profit after deducting

the costs of credit and capital, as well as expenses.

Obligor information
processing

Creation and
Revision of
Corporate
Card/
Registration
of Financial
Statements

Obligor’s grading/grading outlook/credit policies (action plan)/facility grading decision-making flow

Nonconsoli-
dated
Financial
Grade

Consolidated
Financial
Grade

Nonconsoli-
dated Effective
Financial
Grade

Flagging
According to
Self-
Assessment
Criteria

Not Flagged

Self-Assessment
Logic

Quantitative
Assessment

Financial
Assessment

Credit Status

Qualitative
Assessment

Flagged

Normal
Borrowers

Borrowers
Requiring
Caution

Potentially
Bankrupt
Borrowers

Effectively
Bankrupt
Borrowers

Bankrupt
Borrowers

Grading Outlook Assessment

Industry
Trends

Qualitative
Risk
Factors

Final
Obligor
Grade

•Positive
•Flat
•Negative

Determination of
Credit Policies

Credit Policy Segment

Policy for Handling
Each Individual
Company

Action Plan Formulation

Restructuring
Feasibility

Basic
Approach

Specific
Action Plan

Facility Grading Assignment

SMBC 2002 — 25

(4) Reduction of Problem Loans
In order to counter concer ns of increasing losses from the

The Corporate Research Department within the Corporate

Services Unit performs research on industries as well as investi-

deterioration of existing problem loans or the appearance of new

gates the business situations of borrower enterprises to detect early

ones, we are striving to quickly reduce problem loans by conducting

signs of problems or growth potential.

loan reviews to set new responses and clarify action plans, and by

Each business unit’s credit departments conduct credit risk

strengthening our recovery and asset value maintenance strategies.

management for loans handled by their business units and manage

(5) Toward Active Portfolio Management
In addition to controlling the individual loan approval process,

we also actively manage our loan portfolio on an aggregate basis.

The Portfolio Management Department spearheads the Bank’s

use of loan securitization in the markets to proactively manage our

portfolio.

5. Credit Risk Management System
The Credit Risk Management Department within the Corporate

Staff Unit is responsible for the comprehensive management of

credit risk. This department determines credit policies, establishes

the internal grading system, develops credit risk quantification

methods, sets credit limits and approval limits, and manages

problem loans and other aspects of the loan portfolio administration.

their business units’ portfolios. The credit limits they use are based

on the baseline amounts established for each grade category, with

particular attention paid to evaluating and managing customers or

loans perceived to have particularly high credit risk.

Bankrupt or effectively bankrupt companies are in principle

handled by the Credit Administration Department, which works to

recover nonperforming loans as quickly as possible.

The Credit Review Department, the Audit Department for the

Americas, and the Audit Department for Europe operate indepen-

dently of the business units, the Corporate Staff Unit, and the

Corporate Services Unit. These departments audit the asset quality,

accuracy of gradings, self-assessments, and state of credit opera-

tions, and report their audit results directly to the Board of Directors

and the Management Committee.

Management Committee

Designated Officers

Internal Audit Unit

Credit Review Dept., Audit Dept.
for the Americas/Europe

•Formulates and proposes credit inspections
•Self-assessments, gradings (obligors and loans), audits of write-offs
and reserves
•Reports credit review results to the Board of Directors and
the Management Committee

Designated Officers

Corporate Staff Unit

Corporate Risk Management Dept.

•Aggregates risk for comprehensive management
•Plans and proposes risk quantification methods

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

Consumer
Banking Unit

Middle Market
Banking Unit

Business Units

Corporate
Banking Unit

International
Banking Unit

Investment
Banking Unit

Corporate Services Unit

Supervisory
Officers

Deputy
Supervisory Officers

Designated
Officers

Supervisory Officers
Head of
Department

Supervisory
Officers

Designated
Officers

Credit Dept.,
Consumer
Banking Unit

Credit Dept. I – III,
Middle Market
Banking Unit

Credit for
Individuals

General, Small,
and Medium-Sized
Businesses

Credit
Supervision
Dept. I, II,
Middle Market
Banking Unit
Individually
Monitored Small
and Medium-Sized
Businesses

Audit
Depart-
ments

Credit Dept. I,
Corporate
Banking Unit

Credit Dept. II, III,
Corporate
Banking Unit

Credit Dept.,
The Americas
Division/
Europe Division

Credit Dept.,
International
Banking Unit

Structured
Finance Credit
Dept.

Credit
Administration
Dept.

Corporate
Research Dept.

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

·Industry trend research
·Credit assessment of
major industry players,
grade revision directives

26 — SMBC 2002

Market/Liquidity Risk
Market/Liquidity Risk Management System
The Corporate Risk Management Department, which is indepen-

dent of the business units that handle market transactions, is

constructing an integrated system to manage market and liquidity

risk together. The department sends daily risk reports to senior

management via e-mail.

To prevent operational errors or the manipulation of transac-

tion data, it is important to establish a system of checks and

balances in the business units (front office). At SMBC, both the

processing departments (back office) and the administrative

departments (middle office) conduct backup checks. In addition,

the Bank’s independent Internal Audit Unit periodically performs

comprehensive internal audits to verify that our risk management

system is functioning properly. To enhance our most sophisticated

risk management methodologies, we adopt advanced financial

theories, technologies, and infrastructures, develop systems, and

hire and train experts.

Board of Directors

Risk Management Committee

Market
Risk
Manage-
ment

Management Committee

Market Risk Management Committee

Liquidity
Risk
Manage-
ment

ALM Committee

Board member in charge of
Corporate Risk Management Dept.

Policy

Reporting

Corporate
Auditors
External
Auditors
(an auditing
firm)
Audit
Dept.

Back Office
(Capital Markets and Treasury
Operations Dept. and back offices
of overseas branches)

Middle Office
(Corporate Risk Management Dept. and middle offices
of overseas branches)

Inspection and verification
of transactions

Model and new products approval,
Final approval, Management

Managing Departments

Other market-
related
operations
processing

Market
operations
(Treasury Unit)

International
Banking Unit
(ALM of overseas
branches and
subsidiaries)

Consolidated
subsidiaries’
market
operations

Front Office

Front/Back/Middle Offices

Market Risk
Market risk is the possibility that fluctuations in interest rates,

foreign exchange rates, or stock prices will change the market

value of financial products, leading to a loss.

The value-at-risk (VaR) method has proven effective in

controlling market risk. This method predicts the maximum poten-

tial loss for a given probability. The SMBC VaR model calculates

the maximum loss through a Monte Carlo simulation of changes

in profits and losses, i.e., 10,000 scenarios of market fluctuations

based on historical data for one year. This method accurately

measures the risk of products that have option risk and calculates

the VaR for trading operations making active use of derivatives.

Market risk can be divided into various factors: foreign

exchange rate, interest rate, equity price, and option risk. At

SMBC, we achieve fine-tuned management for each risk category

by employing the VaR method in conjunction with such suitable

indicators for managing the risk of individual financial instruments

as the basis-point-value (BPV) indicator, which measures the

potential change in earnings stated at market value for every

0.01-percentage-point fluctuation in interest rates. Whenever the

VaR is likely to exceed the guidelines owing to sharp changes in

the markets, we put contingency plans into effect and the ALM

Committee convenes extraordinary meetings.

The market risk of our strategic equity holdings held by the

units not in charge of market-related activities and the market risk

taken by our major subsidiaries are also included in the integrated

risk measurement performed by the Corporate Risk Management

Department. The VaR is regularly calculated and reported to the

Board of Directors and Management Committee.

The VaR results of the trading and banking accounts on a

consolidated basis for fiscal 2001 were as follows:

(cid:11) VaR Results

Maximum Minimum Average

Last Day of Term

(Billions of yen)

Trading Accounts

2.4

0.7

1.4

0.9

Banking Accounts

56.8

30.4

43.8

46.3

(Daily ALM risk level for the VaR model with one-sided confidence interval of 99.0%.
Figures for trading exclude specific risks.)
The VaR model for trading includes major consolidated subsidiaries.

SMBC 2002 — 27

change in earnings (interest rate spread) for a set period at a given

probability. Because 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 effect that new deposits

and loans will have on a period’s earnings.

In fiscal 2001, mark-to-market accounting was introduced,

and the effect of stock price fluctuations on the Bank’s financial

statements increased. Based on this, we recognize that strength-

ening the management of stock price fluctuation risk is one of the

Bank’s most important management goals.

To lessen the impact of stock price fluctuations, we are working

to reduce strategic equity holdings to a suitable level in accordance

with our financial strength, as shown by such indicators as the

Bank’s shareholders’ equity. More precisely, the Corporate Risk

Management Department strictly establishes guidelines for limits

on total allowable market risk, including risk related to strategic

equity holdings, and manages those guidelines.

(cid:11) Composition, by Industry, of Listed Securities Portfolio

(%)
30

F
i
s
h
e
r
i
e
s
/
F
a
r
m
i
n
g
/
F
o
r
e
s
t
r
y

(March 31, 2002)

SMBC Portfolio
TOPIX
Nikkei Average

T
e
x
t
i
l
e
s

P
u
l
p
/
P
a
p
e
r

C
h
e
m
i
c
a
l
s

M
i
n
i
n
g

C
o
n
s
t
r
u
c
t
i
o
n

F
o
o
d
P
r
o
d
u
c
t
s

S
t
e
e
l

P
h
a
r
m
a
c
e
u
t
i
c
a
l
s

P
e
t
r
o
l
e
u
m
/
C
o
a
l

R
u
b
b
e
r
P
r
o
d
u
c
t
s

G
l
a
s
s
/
M
i
n
e
r
a
l
s

M
a
c
h
i
n
e
r
y

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
l
s

O
t
h
e
r
P
r
o
d
u
c
t
s

E
l
e
c
t
r
i
c
M
a
c
h
i
n
e
r
y

T
r
a
n
s
p
o
r
t

M
a
c
h
i
n
e
r
y

P
r
e
c
i
s
i
o
n
M
a
c
h
i
n
e
r
y

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

E
l
e
c
t
r
i
c
i
t
y
/
G
a
s
U

t
i
l
i
t
i
e
s

T
e
l
e
c
o
m
m
u
n
i
c
a
t
i
o
n
s

W
a
r
e
h
o
u
s
i
n
g
/
D
i
s
t
r
i
b
u
t
i
o
n

W
h
o
l
e
s
a
l
e

R
e
t
a
i
l

B
a
n
k
i
n
g

S
e
c
u
r
i
t
i
e
s

I
n
s
u
r
a
n
c
e

S
e
r
v
i
c
e
s

R
e
a
l

E
s
t
a
t
e

O
t
h
e
r

F
i
n
a
n
c
i
a
l

Liquidity Risk
Liquidity risk is the possibility of encountering an obstacle to

raising 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 funding to cover short-term cash

outflows. Our liquidity risk management is based on a framework

consisting of setting limits and guidelines for funding gap, main-

taining a system of highly liquid supplementary funding sources,

and establishing contingency plans.

(cid:11) Marginal Profit or Loss/Daily VaR Results

(Trading Accounts, for fiscal 2001)

(Billions of yen)
3

Marginal profit or loss
Daily VaR

-1

-2

-3

Apr.
2001

May

June

July

Aug.

Sep.

Oct.

Nov.

Dec.

Feb.

Mar.

Apr.

Jan.
2002

The market occasionally undergoes extreme fluctuations that

exceed expectations. To manage market risk, therefore, it is impor-

tant to run simulations (stress tests) of situations that may occur only

once in many years. At SMBC, we run periodic stress tests to

prepare for unforeseeable swings.

The internal model used by the Bank (SMBC VaR) has been

periodically evaluated by an independent auditing firm and certified

to be appropriate. In addition, we perform back-testing on the rela-

tionship between the VaR calculated with the model and the actual

profit and loss data. The back-testing results for the trading accounts

for fiscal 2001 are shown below. A data point below the diagonal line

indicates a loss in excess of the predicted VaR for that day. On only

one day during the period did an actual loss exceed our model’s

predicted VaR. This fact demonstrates that our VaR model, with a

one-sided confidence interval of 99%, is sufficiently reliable.

(cid:11) Back-Testing Results (Trading Accounts)

Marginal Profit or Loss (Billions of yen)

2.5

2.0

1.5

1.0

0.5

-0.5

-1.0

-1.5

-2.0

-2.5

1.0

2.0

VaR (Billions of yen)

To manage the risk of our yen-denominated banking accounts,

we use gap analysis employing maturity ladders and the earnings-

at-risk (EaR) model, in addition to the VaR model. In the case

where an external factor, such as interest rates, moves in an unfa-

vorable direction, the EaR model can indicate the largest estimated

28 — SMBC 2002

In our daily risk management operations, we avoid a gradual

increase in liquidity risk by adjusting the funding gap limits and

Settlement Risk
Settlement risk is the possibility of a loss arising from a transac-

guidelines. For emergency situations, we have contingency plans

tion that cannot be settled as planned. Because this risk

in place to reduce the funding gap limits and guidelines and take

comprises elements of several types of risk, including credit risk,

other measures. To prevent the possibility of market crises inter-

liquidity risk, processing risk, and systems risk, it requires interdis-

fering with funding, we carry highly liquid assets, such as U.S.

ciplinary management. The Operations Planning Department is

Treasury bonds, and have emergency borrowing facilities in place,

charged with coordinating the management of settlement risk with

which also facilitates foreign-currency-denominated liquidity

the Credit Risk Management Department, which oversees credit

management.

Processing Risk
Processing risk is the possibility of losses arising from negligent

administration by employees, accidents, or unauthorized activities.

In our administrative regulations, the basic administrative policies
are summarized as “comprehending the risks and costs of

administration and transaction processing, and managing them

accordingly,” and “seeking to raise the quality of administration to

risk, and the Corporate Risk Management Department, which

oversees liquidity risk. We are continuing to upgrade settlement

risk management through such measures as participation in the

CLS (Continuous Linked Settlement) Bank International settle-

ment service, which aims to eliminate the settlement risk that

arises from foreign exchange transactions.

Systems Risk
Systems risk is the possibility of a loss arising from the failure,

deliver high-quality service to customers.” We have organized the

malfunction, or unauthorized use of a computer system. We have

Bank’s systems to achieve these goals.

instituted a number of basic policies to manage systems risk,

Adding new policies or making major revisions to existing

including a security policy, usage regulations, and specific

ones with regard to processing risk management requires the

management procedures. We are further strengthening safety

approval of both the Management Committee and the Board of

measures based on a needs assessment drawing on such refer-

Directors.

ences as the Financial Inspection Manual prepared by the

In our operating regulations, we have also defined specific

Financial Services Agency, and the Security Guidelines published

rules for processing risk management. The rules allocate

by the Center for Financial Industry Information Systems.

processing risk management tasks among six types of depart-

Because computer-related trouble at financial institutions now

ments: the Operations Planning Depar tment, compliance

has greater potential to impact the public, and with systems risk

departments, operations departments, transaction execution

diversifying owing to the IT revolution and the resulting expansion

departments (primarily front-office departments and branches),

of networks and rise in numbers of personal computer users, we

the Internal Audit Depar tment, and the Customer Relations

have taken the necessary steps to ensure the smooth, secure

Department. In addition, we have set up a specialized group

operation of our information systems. We have duplicated each

within the Operations Planning Department to strengthen admin-

system and infrastructure and fully proofed our east and west

istrative procedures throughout the SMBC Group.

computer centers against earthquakes and other disasters. To

We include processing risk in our calculation of risk capital

maintain the confidentiality of customer information and prevent

requirements and have allocated a certain percentage of risk

information leaks, we encrypt sensitive information, block unau-

capital to cover it, based on the quantification of the risk for fiscal

thorized external access, and implement all known countermea-

2002.

sures to secure our data. We have also established contingency

plans and conduct training as required to ensure that we are fully

prepared in the event of an emergency. To maintain security, we

will continue to revise our countermeasures as new technologies

and usage patterns emerge.

We include systems risk in our calculation of risk capital

requirements and have allocated a certain percentage of risk

capital to cover it, based on the quantification of the risk for fiscal

2002.

SMBC 2002 — 29

Individual Business Unit Strategies

Major Accomplishments in Fiscal 2001, the Year Ended March 31, 2002,
and Key Goals for Fiscal 2002, the Year Ending March 31, 2003

Consumer Banking Unit

Major Accomplishments

Key Goals

• Expanded our network of Money Lifestyle Consulting Desks
(MC Desks) offering financial advice geared to the stage of life
and lifestyle of individual customers to 240 locations as of
March 31, 2002, a year-on-year increase of 122

• Introduced a full range of new and attractive products and
services geared to meeting the needs of individual customers

• 2.4 million hits received on our One’s Direct online service in

March 2002, a year-on-year increase of 900,000

• Strengthen consumer banking profitability by refining customer
segmentation, increasing sales of highly profitable products
and services, and further improving operational efficiency

• Build the brand value of and enhance customer trust in the
SMBC Group by offering the highest level of service in
consumer banking

• Reduce the manned branch network from 578 branches at the
time of the merger in April 2001 to 401, mainly by consolidating
existing branches

Middle Market Banking Unit

Major Accomplishments

Key Goals

• Actively promoted the Business Select Loan, a financing product

expressly designed for small and medium-sized enterprises

⇒Outstanding loan balance was ¥45.9 billion as of March 31,

• Expand solutions-driven marketing backed by the collective
resources of Head Office departments, branches, and Group
companies

2002, a year-on-year increase of ¥30.8 billion

• Registered corporate users of Perfect, SMBC’s patented recon-
ciliation support service, increased to 3,400 as of March 31,
2002

⇒Year-on-year increase of 1,000 companies

• Actively promote the Business Select Loan, backed by an in-
house developed credit risk assessment model designed espe-
cially for small and medium-sized businesses, with enhanced
credit risk evaluation capabilities and rapid processing of unse-
cured loan applications

• Group companies’ factoring and management consulting busi-

• Spearhead the development of efficient settlement systems to

nesses recorded robust growth

meet the rationalization needs of businesses

⇒In factoring, the number of customers tripled and the balance
of guarantees nearly doubled to ¥53.0 billion year-on-year
⇒SMBC Consulting Co., Ltd., became the largest bank-affiliated
management consulting firm in Japan, with approximately
35,000 member companies

• Further collaborate with Group companies to expand business
⇒Promote factoring services as a solution for hedging risks asso-

ciated with the collection of trade receivables

Corporate Banking Unit

Major Accomplishments

Key Goals

• Unified front-office operations to maximize synergies inherent in

the two former banks’ combined expertise

⇒Achieved higher fee-based income, a central goal of the unit,

despite the adverse economic climate

• Enhance our ability to offer solutions for business restructuring
by bolstering cooperation with Daiwa Securities SMBC Co. Ltd.
and by strengthening the operations of the Financial Solutions
Department, Investment Banking Unit

• Established an efficient operating structure, with no overlapping

• Strengthen settlement services, particularly cash management

functions or resources

⇒Achieved significant cost reductions as a result

• Completed work on a data management infrastructure
⇒Introduced customer relationship management (CRM) for
corporate customers immediately upon the formation of
SMBC, thereby facilitating increased information-sharing

services (CMS)

• Further reinforce our prominence in the arrangement of such
credit instruments as nonrecourse loans, commitment lines,
and syndicated loans, fields where the two former banks
already had competitive advantages

30 — SMBC 2002

International Banking Unit

Major Accomplishments

Key Goals

• Reaped merger benefits at an early stage by quickly consoli-
dating the two former banks’ overseas offices and implementing
other streamlining initiatives

• Increased business with the overseas offices and subsidiaries
of Japanese companies through greater collaboration with the
Bank’s domestic operations

• Expanded CMS

• Enhanced relationships with the multinational corporations’

offices and subsidiaries in Japan

• Further improve return on assets and increase fee-based business

• Enhance liabilities-related services

• Implement “right-sizing” to create a strategic global network

Treasury Unit
Major Accomplishments

Key Goals

• Increased transaction volume by establishing a Treasury

• Increase convenience and speed of customer services to

Marketing Department

expand the volume of transactions

⇒Significant rise in direct dealing with counterparts and in the

⇒Proactive use of the Asia Sales Desks, and creation of i-Deal,

number of customers per treasury officer

an Internet dealing system for customers

• Implemented a dynamic operating system to respond more

• Manage a broad array of risks, particularly taking into account

quickly to market trends in Japan and overseas

the difficult market conditions in Japan

⇒Generated a sharp increase in earnings from foreign currency-
denominated asset liability management (ALM) operations, and
maintained high profitability in yen-denominated ALM and
trading operations

Investment Banking Unit

Major Accomplishments

Key Goals

• Offered several new products that meet the demands of our

customers, both in Japan and overseas

⇒Developed quicker, computerized methods of securitizing debt
⇒Arranged several large-scale nonrecourse loans for real estate

financing transactions

⇒Developed new types of derivatives

• Further strengthen existing businesses
⇒Continue to expand loan syndications
⇒Promote securitization as an integral part of streamlining
accounting operations, using such systems as Notes Captor, a
system that simultaneously processes multiple notes receivable
⇒Work with other SMBC Group companies to capture more

• Expanded loan syndications (syndicated loans, transferable

cross-border business

loans, and others)

• Daiwa Securities SMBC placed first in the domestic straight

bond league table for fiscal 2001

• Cultivate new business fields
⇒Promote investment management services, particularly for

defined contribution pension plans

⇒Promote services that correspond to corporate restructuring
requirements, including management buyout (MBO) financing

[Reference]
(cid:11) Banking Profit, by Business Unit

Year ended March 31, 2002

Banking Profit (excluding transfer to
general reserve for possible loan losses)

Year-on-year increase (decrease)

Consumer
Banking Unit

Middle Market
Banking Unit

Corporate
Banking Unit

Billions of yen
International
Banking Unit

¥34.5

27.3

¥377.8

23.2

¥134.8

7.2

¥25.0

(7.7)

Treasury
Unit

¥481.3

243.5

Others

Total

¥130.0

86.8

¥1,183.4

380.3

Notes: 1. Year-on-year comparisons are those used for internal reporting and exclude changes due to interest rate and foreign exchange rate fluctuations.
2. “Others” consists of (1) dividend income from subsidiaries and affiliates, (2) financing costs on preferred securities and subordinated debt, (3) profit

earned on investing the Bank’s own capital, and (4) adjustment of inter-unit transactions, etc.

SMBC 2002 — 31

Increased opportunities to diversify and pursue new business

models afforded by deregulation and advances in information

technology (IT) have made consumer banking one of the most

attractive markets for banks in recent years. At the same time,

competition has intensified as a result of financial group mergers

and entrants from other sectors. With these factors at play, it is

significant that SMBC currently ranks No. 1 in consumer banking

in Japan in investment trust balance, individual loan balance, and

number of individual customer accounts*. We intend to leverage

this advantageous position to offer higher value-added financial
services. To sustain our lead, we will continue to draw upon our

formidable product and service expertise, our channel develop-

ment capabilities, and our highly skilled financial consultants.

Our frontline operations are positioned in line with our main

customer segments: asset building, asset management, and

private banking. For each of these segments, we have developed

sophisticated business models. Our Block Consumer Business

Offices, branch network, Consumer Loan Promotion Offices, and

Call Centers provide the most appropriate channels and

processes to meet each customer’s needs.

* As of March 31, 2002, the investment trust balance for individuals was

¥1.4 trillion, loans to individuals stood at ¥13.5 trillion, and the number of

ordinary bank accounts held by individuals was 27 million.

Brand Strategy
The central theme of SMBC’s consumer banking operations is
“O ne’s next,” which refers to our goal of helping customers
develop the next step of their financial plans according to stage

of life. To implement a detailed brand-building strategy, in fiscal

2002, the year ending March 31, 2003, we began assigning brand

managers to all branches. With a brand-value-enhancing strategy

that focuses on providing individualized customer attention, we

aim to make SMBC the most trusted of the leading banks.

Consumer Banking Unit

32 — SMBC 2002

Strategic Transformation of the Manned
Branch Network
We have been strategically transforming the Bank’s branches

In July 2001, we introduced the Comprehensive Report

Service as part of the Monthly Voice newsletter. These monthly

reports contain all information related to individual customers’

from operational processing centers to marketing and sales

SMBC accounts, including data on the distribution of assets,

bases by reviewing the branch network from the perspective of

account balances, deposits and withdrawals, and investment

market location, nature, and scale to determine the most suitable

gains and losses.

functions and configuration. In fiscal 2001, we reduced 14

Drawing on the latest advances in financial IT, the Bank

branches. In addition, prior to the completion of IT systems inte-

provides services to increase customer convenience in day-to-day

gration of our domestic branch network in July 2002, in an area

banking transactions. A highly popular example is our O ne’s

with overlapping branches,
we relocated the excess

branches to a core branch,

and now have joint-branches

at 20 locations. By continuing

our strategy of consolidating

overlapping branches, we

intend to reduce the number of
branches from 578 as of the
merger in April 2001 to 401.

Broad Lineup of Products and Services
To enhance convenience and meet the needs of customers at

D irect online service, which allows registered customers to
access such services as fund transfers, balance inquiries, time

deposit and foreign currency deposit transactions, and investment

trust transactions via the telephone, Inter net, or Inter net-

accessible mobile phone. In March 2002, O ne’s Direct logged

2.4 million hits, a year-on-year increase of 900,000 hits.

SMBC also provides a lineup of loan products corresponding

to customers’ changing financial requirements at different stages

of life. Our Consumer Loan Promotion Office network plays a key

role by matching information and loan proposals to individual

requirements. As a result of our individualized approach and

comprehensive offerings, the Bank’s loans to individuals totaled

¥13,472.5 billion as of March 31, 2002. In April 2002, we intro-

each stage of life, SMBC offers a wide-ranging lineup of products

duced a loan for newly built housing featuring preferential interest

and services.

rates, attracting a growing number of home buyers. We intend to

SMBC provides numerous savings and investment products,

continue offering consumer banking products and services that

including the most extensive selection of investment trusts of any

set SMBC apart from the competition.

Japanese bank. We introduced two new trusts in fiscal 2001—one

in June 2001 and another in January 2002—and enhanced our

investment trust sales capabilities. As a result, investment trust

sales to individuals totaled ¥1,485.3 billion as of March 31, 2002. As

of June 30, 2002, our roster comprised 53 investment trusts

managed by 25 companies.

We also offer a diverse array of time deposits that match indi-

vidual customers’ savings plans. Our introduction of a new type of

time deposit, offered in combination with other financial product

such as investment trust or foreign currency deposit, met with

extremely favorable customer response, recording sales of

approximately ¥670.0 billion in fiscal 2001. We also offer foreign

currency time deposits bearing high interest rates (1.0 percentage

point higher than our nor mal rates for such products when

customers par ticipate via SMBC’s online ser vice, and 0.8

percentage point higher when these deposits are initiated at

branches) for a limited six-month campaign running through

September 2002.

Consumer Loan Promotion Office

SMBC 2002 — 33

Asset-Building Segment
The asset-building segment is primarily composed of customers

As of June 30, 2002, SMBC had established a network of 64

Asset Management Plazas as the main channel for offering asset-

with relatively long-term horizons, that is, customers accumulating

management services to clients. These facilities feature private

assets either for down payments on housing loans or for retirement.

consultation spaces, seminar rooms equipped with TV conference

We offer a flexible range of service delivery options to accommo-

systems, and plasma display panels providing financial and

date our customers’ diverse lifestyles, from manned branches and

promotional information to customers.

Call Centers, the Bank’s marketing and sales promotion hubs, to

By providing individualized service and satisfying a broad

telephone banking, Internet banking, and other remote channels.

range of customer needs, we aim to establish SMBC as the

To increase flexibility and promptness in meeting customers’

leading brand for asset-management services.

requirements, SMBC began assigning an Area Marketing Officer to
each Block Consumer Business Office in fiscal 2002.

Moreover, specially trained professionals at the Bank’s Money

Lifestyle Consulting Desks (MC Desks) offer financial advice

geared to each individual customer’s stage of life and lifestyle. As of

March 31, 2002, the Bank had established 240 MC Desks, an

increase of 122 compared with a year earlier. Located at selected

Private-Banking Segment
In the private-banking segment, the Bank caters chiefly to high

net worth individuals and to owners of high-growth businesses

who are planning or have already completed public offerings or

listings. We offer such individuals customized, long-ter m

consulting with strategic capital planning and investment manage-

manned branches, MC Desks are a one-stop source of financial

ment components.

counseling and investment and loan vehicles, including investment

trusts, foreign currency deposits, and such loan products as

primary and secondary mortgages, loans for home renovation, and

loans for education and other needs.

By offering suitable products and services tailored to the asset-

building needs of individual customers at each stage of life, we are

confident of ensuring that SMBC remains the main, lifelong bank for

our customers.

Money Lifestyle Consulting Desk

Asset-Management Segment
The Bank assigns highly skilled financial consultants to Block

Consumer Business Offices to meet the needs of customers

seeking sophisticated, objective investment advice. Our financial

consultants employ the Bank’s Total Portfolio Plan for Financial

Assets to offer tailor-made solutions for comprehensive manage-

ment of each customer’s assets and debts.

34 — SMBC 2002

In our strategic capital planning business, we advise on public

offerings, succession planning, and the many other requirements

of high net wor th individuals, drawing on our staff of private

bankers with experience in complex corporate transactions and

advanced inter national product knowledge. On the asset-

management side, we develop and provide customized products

and services based on each customer’s market perspective.

Our services in all areas of the private-banking business are

based on building long-term relationships and becoming each

customer’s trusted partner.

Payment and Settlement Services
The ways individuals settle their financial obligations are changing

in line with rapid technological progress in the information and

communications fields and the increasing diversification of

lifestyles. In response, we have been enhancing our One’s Direct

online banking service to accommodate customer transactions via

remote channels (such as the telephone, Internet, and Internet-

accessible mobile phone), and strengthening and expanding

remote channel functions to further complement the Bank’s tradi-

tional branch network. Our customers increasingly use remote

channels for everyday banking transactions. As of March 31,

2002, SMBC’s remote channel service had 4.6 million registered

users.

Through an alliance with convenience store operator am/pm
Japan Co., Ltd., we offer our @B^NK ATM service, which is now
available 24 hours a day at more than 1,100 am/pm outlets

throughout Japan. Moreover, as a result of alliances with E-net

Co., Ltd., LAWSON, INC., and IYBANK Co., Ltd, SMBC customers

At-Loan Co., Ltd., SMBC’s joint venture (founded in June

are able to access their bank accounts via a growing number of

2000 and called the Sakura Loan Partner, Limited, until adopting

ATMs located at several convenience store chains throughout Japan.

its present name in August 2001) offers the precedent-setting

SMBC currently provides round-the-clock cash-withdrawal conve-

@Loan product group of small-sum, unsecured loans for individ-

nience via a network of ATMs at more than 9,800 convenience

uals, which differ from traditional bank loans in Japan. To market

stores.

these loans, Japan Net Bank started deploying @LoanBOX, an

We will continue to proactively expand our ATM network and

advanced loan consultation ATM, at am/pm convenience stores in

strengthen the One’s Direct online service to firmly establish the

the Tokyo metropolitan area. As of June 30, 2002, the @LoanBOX

SMBC brand as the bank offering the highest degree of conve-

network had expanded to 406 locations. At-Loan plans to continue

nience for ever yday banking needs, while at the same time
slashing costs.

promoting and enhancing customer recognition of the
@LoanBOX network via television and other media. At the same

time, the @LoanBOX network is being extended to the western

region of Japan.

SMBC and its Group companies will continue to implement

new business models for financing and settlement ser vices,

particularly in the areas of credit cards and unsecured loans.

Call Center

Drawing on the Financial Service Capabilities of
the SMBC Group
SMBC first reorganized its credit card business in April 2001,

changing the name of the Sumitomo Credit Service Company,

Limited, to Sumitomo Mitsui Card Company, Limited. Then in July,

we transferred the UC Card Division of Sakura Card CO., Ltd.,

to Sumitomo Mitsui Card. Having merged our credit card busi-

nesses, and, as Japan’s pioneering Visa™ card issuer, SMBC

@BVNK ATM (left) and @LoanBOX ATM

(cid:11) Remote Channels: Registered Users and

now boasts one of the nation’s leading credit card operations with

Number of Transactions

its Mitsui Sumitomo Visa Card. By offering the most widely

accepted credit card in the world, featuring safety, convenience,

and reassurance, we will continue to raise the value of the

Mitsui Sumitomo Visa Card brand.

In October 2000, we inaugurated the Japan Net Bank,

Limited, Japan’s first exclusively Internet-based bank. Japan Net

Bank combines the convenience of 24-hour accessibility seven

days a week with high interest rates on deposits and low service

charges. Together with our joint-venture partners and affiliated

companies, we will leverage the Internet and related IT to maxi-

mize the convenience of Japan Net Bank. As a result, we expect

Japan Net Bank to become the bank of choice for Internet-based
customers, as well as a key banking model for the 21st century.

(Transactions, in thousands)
3,000

(Registered users, in thousands of persons)
5,000

Total registered users
Remote channel transactions (total SMBC)
Total Internet and mobile phone transactions
Total telephone-banking transactions

Merger

June 1997: SMBC becomes the first
among Japanese city banks to offer
a telephone-banking service

Jan. 1997: SMBC becomes the first
among Japanese banks to offer
an Internet-banking service

2,500

2,000

1,500

1,000

500

0
Mar. 1997 Mar. 1998 Mar. 1999 Mar. 2000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

Apr. 2001 Mar. 2002

SMBC 2002 — 35

Middle Market Banking Unit

Leveraging the largest banking customer base in Japan, the

Middle Market Banking Unit is focused on building a solutions-

driven business capable of quickly addressing the diversifying

needs of customers by deploying the resources of the Bank’s

Head Office departments and branches, and by further enhancing

competitiveness.

Solutions-Driven Marketing
Experts at Corporate Business Offices throughout Japan and the

Bank’s Head Office specialists function as a unified team to offer

sophisticated financial services to small and medium-sized enter-

prises. Our solutions-driven marketing activities respond quickly to

a broad spectrum of management and financial needs, including

derivatives, electronic banking (EB), overseas business support,

M&A, MBO, factoring, securitization, syndication, and initial public

offerings (IPO).

In fiscal 2001, the year ended March 31, 2002, the Business

Reengineering Depar tment, within the Business Promotion

Department, was established to provide assistance to the rapidly

growing number of small and medium-sized companies restruc-

turing their businesses amid the protracted recession in Japan by

advising them on strategies for increasing corporate net worth. To

this end, in addition to our core banking services including securi-

tization and syndication, we draw on the resources of Group

companies to provide financial advice and consulting services.

SMBC’s Head Office departments, branches, and Group

companies will continue to focus their collective resources on

solutions-driven marketing to firmly reinforce the SMBC brand.

36 — SMBC 2002

Serving Growth Enterprises
Creating new businesses and industries is required to revitalize

We developed an in-house credit risk assessment model

designed especially for small and medium-sized businesses. Our

the Japanese economy. Within the Business Promotion

promotion of the Business Select Loan, backed by enhanced

Department, the New Business Promotion Department focuses

credit risk evaluation capabilities and attractive features such as

on developing business with customers in such high-growth fields

an increased loan ceiling of ¥50 million and a lengthened

as IT, biotechnology, environmental services, and health care.

maximum repayment period of three years for unsecured loans,

Drawing on the Bank’s extensive knowledge and experience, our

was particularly fruitful. During the March–May 2002 period, we

staff first analyze and evaluate a company’s technological capabil-

conducted a promotional campaign consisting of TV commercials

ities, marketability, and growth prospects and then suggest appro-

and newspaper advertisements aimed at increasing customer

priate sources of capital such as a new business support fund, an
unsecured financing system. The Group’s venture-capital wing,

brand recognition of the Business Select Loan. As a result, the
combined balance of the Business Select Loan and the Business

SMBC Capital Co., Ltd., actively supports companies in the start-

Fast Loan as of March 31, 2002, stood at ¥45.9 billion, a year-on-

up stages with their capital requirements. For clients planning to

year increase of ¥30.8 billion.

take their companies public, our IPO specialists join forces with

Another theme is identifying the special needs of small and

Daiwa Securities SMBC Co. Ltd. to advise on and implement

medium-sized businesses and sole proprietorships participating in

appropriate capital-raising strategies and to offer other services.

franchise chains. SMBC’s Business Owner Banking Department

Services for Small Businesses
SMBC’s Business Support Offices exclusively serve small and

medium-sized companies and sole proprietorships in Japan. This

focus enables us to provide products and services that accurately

offers fund-raising arrangements that are in line with the business

structure of each franchising operation.

SMBC will continue to expand the ser vices provided by

Business Support Offices, as well as enhance the Business

Select Loan to attract more small and medium-sized business

target the needs of these clients.

clients.

In fiscal 2001, in addition to offering loans guaranteed by

credit guarantee corporations, we particularly promoted two loan

products that facilitate quick responses to small and medium-

sized companies’ funding needs: the Business Select Loan and

the Business Fast Loan.

Business Support Office

Advertisement for Business
Select Loan

Poster promoting SMBC to small
and medium-sized businesses

SMBC 2002 — 37

(cid:11) Perfect Reconciliation Support Service Performance

(¥ millions)
1,400

(Companies)
4,000

1,200

1,000

800

600

400

200

Total commissions

Registered users
(companies)

3,500

3,000

2,500

2,000

1,500

1,000

500

FY2000
2nd half

FY2001
1st half

FY2001
2nd half

(cid:11) EB Registered Users

(Thousands of companies)
100

Mar. 2001 Sep. 2001 Mar. 2002

EB registered users
(excluding companies using
ANSER homeuse service)

Spearheading the Development of Efficient
Settlement Systems
Our settlement and cash management professionals deliver

sophisticated solutions to meet the requirements of individual

businesses.

In February 2000, we were granted a patent on the business

model for our Perfect reconciliation support service, which entails

establishing incoming remittance accounts for the collection of

trade receivables and using account number information instead

of names to confirm incoming payments, thereby greatly expe-
diting the account reconciliation process. This service has been

well received since its launch, with the number of companies

using the service rising to approximately 3,400 as of March 31,

2002, a year-on-year increase of some 1,000 companies. To facili-

tate further innovations, we have established the e-Business

Patent Depar tment within the Electronic Commerce Banking

Department.

We also established the Global Cash Management

Department within the Electronic Commerce Banking Department

to enhance our cash management services for global corporate

groups seeking to improve the efficiency of their cash manage-

ment operations. We offer a range of solutions based on our

conviction that effective group management begins with cash

management.

More than ever before, domestic businesses are also working

to raise the efficiency of their payment systems. To tap into this

demand, we have assembled a full lineup of PC-based banking

services that meet the needs of various business scales.

In autumn 2001, we introduced the PC Navi Web, an Internet

banking system that is being warmly received by the market for its

24-hour accessibility. As of March 31, 2002, approximately 9,000

companies were using this service.

To promote business-to-business (B2B) e-commerce, SMBC

in cooperation with the Japan Research Institute, Limited (JRI),

set up the SMBC Global e-Trade Consortium in December 2001.

After conducting initial field tests, we are now considering

commercializing this system in cooperation with approximately

150 participating companies.

Furthermore, plans for fiscal 2002, the year ending March 31,

2003, call for the establishment of an electronic authentication

bureau compliant with Identrus, an international provider of digital

identities, to develop various digital certification and settlement

systems for e-commerce as well as electronic data interchange

services for international trade finance.

38 — SMBC 2002

Leveraging the Group’s Total Strengths
SMBC is strengthening cooperation among Group companies and

Our strategic subsidiary Financial Link Company, Limited, is a

one-stop source of financial ser vices such as outsourcing

pooling the Group’s financial resources to deliver sophisticated

services for settlement and cash management, areas taking

solutions to meet customer needs and maximize the Group’s

on increasing impor tance in line with the growth in B2B and

consolidated income.

business-to-consumer (B2C) e-commerce. Our goal is to coordi-

SMBC Finance Co., Ltd., and SMBC FACTORS CO., LTD., for

nate SMBC and Group companies’ resources to provide a

instance, are enhancing their factoring services to meet the

complete range of optimal settlement ser vices for diverse

growing need among corporations for credit-enhancing instru-

customer needs.

ments. Group companies showed strong performances in the

In addition to the above, JRI provides management consulting

factoring business in fiscal 2001, with the client base tripling and
the balance of guarantees doubling to ¥53.0 billion compared with

services; SMBC Leasing Company, Limited, handles customers’
leasing needs; and Mitsui Finance Service Co., Ltd., Sakura

the previous fiscal year. Group companies are continuing to strive

Finance Service Co., Ltd., and QUOQ Inc. serve as collection

ahead in fiscal 2002 by providing quick responses to customers’

agents. Finally, through Daiwa Securities SMBC, the Bank

factoring needs, including payment guarantees for hedging the

provides top-flight investment banking services.

risk of possible losses on trade receivables and debt securitization

Acting as a single unit, SMBC and Group companies provide

to meet their off-balancing needs.

a comprehensive range of products and services for consistently

Furthermore, we are deepening our cooperation with SMBC

meeting all of our customers’ needs.

Consulting Co., Ltd., the largest bank-affiliated management

consulting firm in Japan, with some 35,000 member clients.

SMBC Consulting provides quick and value-added solutions to all

problems concerning corporate management by offering manage-

ment consulting and information services for everything from

simple management issues to human resource development

support, in addition to holding management seminars for client

companies.

Close ties with SMBC Capital enable SMBC to meet growing

businesses’ full range of needs, from financial support to the

development of IPO strategies.

Corporate Business Office

SMBC 2002 — 39

Corporate Banking Unit

40 — SMBC 2002

Since SMBC’s formation, the Corporate Banking Unit has focused

on establishing a single point of contact where customers can

gain access to all of the Bank’s services. The Corporate Banking

Unit’s mission is to continuously extend the highest-quality solu-

tions to Japan’s leading corporations. To achieve this, it was first

of all necessary to assemble an effective marketing framework.

Here, the goal was the formation of a strong front-office organiza-

tion freed of all barriers that separated the two former banks.

Most of the measures required to establish a new and fully

integrated SMBC service platform for corporate customers were
completed during fiscal 2001, the year ended March 31, 2002.

Looking ahead, we intend to carry out a dramatic revision of our

asset-based businesses to make them more competitive, as well as

to undertake further initiatives to increase our volume of fee-based

businesses. At the same time, we will implement further cost-cutting

measures to bolster SMBC’s ability to compete in all markets.

Highlights of Fiscal 2001
With the inauguration of a unified front-office system during fiscal

2001, the Corporate Banking Unit concentrated on three vital

strategies: (1) fostering a single corporate culture for the new

bank, (2) establishing a unified transaction approach to customers

toward which the two for mer banks had taken divergent

approaches, and (3) combining synergistically the expertise in

selling products and services that each of the former banks

brought to SMBC.

Our main objective as a new bank was to quickly reinforce the

relationships with each customer, while creating greater value and

more innovation than the sum total of the two banks before the

merger. We have achieved this through customer relationship

management (CRM). After analyzing information on more than

10,000 prominent corporate customers, we came up with solu-

tions drawing equally on the resources of both former banks. This

approach was instrumental to many of SMBC’s first-year accom-

plishments in asset securitization, corporate customer alliances,

and other areas.

Strategic Themes for Fiscal 2002
During fiscal 2002, we will continue to focus on increasing fee-

based income. At the same time, we plan to further restructure

our lending business, the most fundamental element of the

banking operations.

To increase income from fees and commissions, we are

focusing on providing customized solutions for corporate alliances,

corporate business reorganizations, and restructuring programs, a

strategy we began implementing in the second half of fiscal 2001.

Balance sheet management is another area where we anticipate

higher fee-based income. We intend to emphasize these activities

during fiscal 2002 in an effor t to extend ser vices that offer

income levels that are commensurate with the level of risk taken.

increasing value to customers. Regarding settlement services, a

All of these offerings imply enhanced customer services, which in

core banking business, we will actively leverage our cash manage-

turn mean increased business opportunities for the Bank in the

ment services (CMS) expertise to serve more customers.

future. This future-oriented perspective necessitates that we

In the lending business, we aim both to set interest rates that

acquire information now even in areas where customers’ needs

accurately reflect the risks associated with each loan and to

will not soon become evident. Only by viewing each customer

supply sophisticated services that match the requirements of

relationship from medium- and long-term standpoints can we

each borrower. Our lending business entails much more than

extend services that cover a broadened and enhanced array of

conventional loans; also included is the arrangement of such

solutions.

credit instruments as nonrecourse loans, commitment lines, and
syndicated loans. The goal here is to provide customers with a

broad selection of credit alternatives to match their needs.

With computer systems integration scheduled for completion

Leveraging the Financial Power of the
SMBC Group
The Corporate Banking Unit works closely with leasing, financing,

in the first half of fiscal 2002, the front-office organization will soon

and consulting companies within the SMBC Group as well as with

become unified in every sense. We will use this base to offer

Daiwa Securities SMBC Co. Ltd. to provide customers with solu-

products and services that precisely address the requirements of

tions that cannot be developed independently.

each corporate customer.

Medium-Term Strategy
The objective of the Corporate Banking Unit is the consistent and

Cooperation with various divisions of the Bank and SMBC

Group companies is essential to providing solutions in those

areas that we intend to emphasize, such as corporate restruc-

turing and balance sheet management. SMBC Group companies

continuous creation of value for customers, not merely the provi-

are specialists in their respective business fields and have the

sion of individual products and services on an ad hoc basis. To

know-how to provide solutions that meet the exacting demands of

realize this goal, we must skillfully deploy IT. As well, we must

customers.

accumulate information about each customer’s needs and utilize

This does not mean that the business departments with direct

that information to supply a large volume of highly sophisticated

contact with customers simply act as conduits to pass on

solutions.

customer requirements. They work closely with the Financial

Reflecting this theme, each of our strategic business initia-

Solutions Department within the Investment Banking Unit and

tives in fiscal 2002 comprises more than one-off services. Rather,

capitalize on the Bank’s database to formulate optimal solutions.

our integrative, proactive approach ensures that we offer compre-

Taking advantage of the total capabilities of Group compa-

hensive, far-sighted solutions for business reorganizations and

nies, SMBC will continue to respond with the right solutions to

restructurings, a full range of settlement-related services, and

meet the increasingly sophisticated needs of large corporations.

Formulating sophisticated solutions that work for customers

SMBC 2002 — 41

International Banking Unit

42 — SMBC 2002

The International Banking Unit is responsible mainly for serving

two customer segments: (1) all customers outside Japan,

including Japanese and non-Japanese companies, financial insti-

tutions, sovereign governments, and public entities; and (2) the

Japanese offices and subsidiaries of multinational corporations.

Major accomplishments in fiscal 2001, the year ended March 31,

2002, and key goals for fiscal 2002 are outlined below.

Major Accomplishments

(1) Reaped merger benefits early on by quickly consoli-
dating the two former banks’ overseas offices and
implementing other streamlining initiatives

After the merger of the two for mer banks, we consolidated

overseas offices with overlapping functions and raised the

efficiency of the resulting operations. At the same time, we

consolidated offices and liquidated equity instruments with less

strategic significance. As a result, we substantially reduced

expenses without sacrificing the quality of our customer service.

(2) Increased business with the overseas offices and
subsidiaries of Japanese companies through greater
collaboration with the Bank’s domestic operations
In an effort to translate SMBC’s large, integrated base of blue-chip

domestic companies into increased overseas business volume,

we worked more closely with the Bank’s domestic operations.

Specifically, we established an effective information-sharing

system with the Bank’s Corporate Banking Unit and Middle

Market Banking Unit, and created a system for obtaining the

support of other business units such as the Investment Banking

Unit. As a result, we were able to increase the volume of transac-

tions with Japanese clients overseas, especially in foreign

exchange and deposits.

(3) Expanded the cash management service business
In another move to expand our fee-based business, we effectively

marketed services for improving corporate cash management, as

well as enhanced our processing capabilities. One benefit of

these efforts was a large increase in the number of international

cash management service (CMS) contracts, particularly in Asia.

We were also able to achieve increases in fees and commissions

from clearing services and custody business.

(4) Enhanced relationships with multinationals expanding

into Japan

To fully leverage our business with multinational corporations

based outside Japan, we are prioritizing the promotion of closer

ties with their Japanese offices and subsidiaries. The unit’s Global

Client Business Department, responsible for servicing these

offices and subsidiaries, maintains close contact with the Bank’s

overseas offices serving the head offices of these customers in

In sum, during fiscal 2002, we will continue to conduct

order to quickly identify their specific needs in Japan, and, in

exhaustive reviews of our conventional asset-based businesses

certain cases, directly negotiates with the head offices. By capital-

and profit structure. Throughout this undertaking, we will remain

izing on the Bank’s global relationships, the Global Client

focused on our goal of significantly raising the Bank’s return on

Business Department expanded its volume of transactions.

assets. At the same time, we will establish a more efficient plat-

For the International Banking Unit, fiscal 2001 was a period of

form for serving customers worldwide.

great significance. With our rapid implementation of merger-

related initiatives, we were able to quickly benefit from a newly

unified and efficient operating structure, as well as broaden our

customer base.

Key Goals

(1) Further improve return on assets and expand fee-

based business

The International Banking Unit will continue to improve asset effi-

ciency by aggressively restructuring its asset portfolio while

proactively strengthening its fee-based business to maximize

profits. One important activity is the review of the Bank’s lending

practices with an eye to realizing returns that are commensurate

with associated risks, while rapidly increasing the asset portfolio’s

liquidity. To build assets that yield higher returns, we are concen-

trating increasingly on specialized financing products such as

trade finance, structured finance, and project finance. To expand

our fee-based business, we will continue to invest our manage-

ment resources in personnel and information management

systems in order to enhance our services in such key fields as

CMS, clearing, custody, and foreign exchange.

(2) Strengthen liabilities-related services
Liabilities-related services are another priority. In concert with the

Treasury Unit, we are expanding our deposit base to ensure

stable fund raising. In particular, we are emphasizing liabilities-

related services, which mainly entails marketing our CMS busi-

ness, especially in Asia, to increase the volume of deposits.

(3) Implement “right-sizing” to create a strategic global

network

Right-sizing is another important theme of the International

Banking Unit. To utilize our network more efficiently and flexibly,

we are building an infrastructure that corresponds to the scale of

our operations by aggressively allocating our resources into

strategic regions, as exemplified by the Bank’s recent opening of a

branch in Taipei. At the same time, we are reviewing business

processes from the perspective of enhancing productivity.

Accordingly, we are creating an increasingly strategic and

dynamic global service network.

Regional Structure and Collaboration with Other
Business Units and SMBC Group Companies
The Bank’s international banking operation is conducted by three

divisions: the Asia Pacific Division, the Americas Division, and the

Europe Division. This tripartite structure enables each division to

extend services that accurately correspond to the distinctive char-

acteristics and requirements of its market.

In the Americas and in Europe, marketing activities are

segmented by business rather than by region. There are three

businesses: (1) business with Japanese companies, a diverse

sector that includes many blue-chip corporations; (2) business
with non-Japanese companies with whom the Bank has devel-

oped solid relationships over the years through marketing activi-

ties; and (3) marketing of sophisticated financial products. Each

business is conducted by a corporate banking department. In

each of these businesses, we provide solutions of the highest

level by applying our specialized knowledge and by collaborating

with other business units and SMBC Group companies.

In the Asia Pacific region, customer needs and associated

risks vary greatly from country to country. We maintain the largest

presence of all Japanese banks in this region, as we respond to

a wide range of demands with speed and agility.

Strategic Outlook
In the medium and long term, the International Banking Unit will

continue to focus on building a solid profit structure that is more

fee-based. Concurrently, we will pursue new types of business

models with a view to contributing to the advancement of such

business models throughout SMBC. Finally, we will continue to

form alliances with overseas financial institutions offering comple-

mentary types of services in an effort to provide an ever-widening

range of services to our customers around the world.

Brochures highlighting SMBC’s custodian services

Yen Clearing Web Reporting Service
Overseas financial institutions holding SMBC Yen
Clearing Accounts can access their accounts via
the Internet.

SMBC 2002 — 43

Treasury Unit

44 — SMBC 2002

The Treasury Unit operates in the domestic and international

money, foreign exchange, securities, and derivatives markets to

serve the hedging and dealing needs of our customers and take

advantage of arbitrage opportunities, while controlling market and

liquidity risk at appropriate levels.

Highlights of Fiscal 2001
The two former banks’ detailed preparations for the merger, which

ensured that computer systems and risk management structures

were fully integrated and functional, enabled the Treasury Unit to

start operating from a single dealing room immediately upon

SMBC’s formation at the beginning of April 2001. This positive

start paved the way for the Treasury Unit’s strong performance

during the Bank’s first year of operations.

To meet the significant increase in the number of transactions

with customers, we established the Treasur y Marketing

Depar tment, an organization dedicated solely to improving

customer services and boosting sales activities. The new depart-

ment provides an all-in-one service for market-based products,

with accelerated response time and in-depth market information

for customers. We also increased the number of treasury officers

specializing in foreign exchange-related services and strength-

ened our ability to process customer requests for foreign

exchange forward agreements on a 24-hour basis. In addition, we

focused actively on developing new products—small-lot transac-

tions using weather derivatives, for example—to broaden our

lineup.

In our banking and trading operations, we effectively managed

the increase in market and liquidity risk arising from the merger,

as well as conducted trading operations on our own account to

take full advantage of evolving market trends. In the banking field,

this resulted in new position-taking in anticipation of falling interest

rates in Japan and overseas as well as a timely shift in positions

from yen to foreign currencies. Our trading operation, for its part,

successfully forecast market trends and enjoyed increased prof-

itability. As a result of these and other actions, the Treasury Unit

ear nings for fiscal 2001, the year ended March 31, 2002,

increased more than ¥200.0 billion as compared to fiscal 2000

(the combined figure of the two former banks).

Strategic Themes for Fiscal 2002
For fiscal 2002, the Treasur y Unit is totally committed to

responding to the increasingly diversified and sophisticated

demands of our clients. One major advance has been to offer

even more value by adding new products and bolstering the unit’s

ability to handle a broadened array of transactions.

In Asia, we maintain sales desks in Tokyo, Hong Kong, and

Singapore, forming a solid base for supporting customers in

funding, foreign exchange, and derivatives. Our customers can

rely on us to provide a wide range of information and advice on a

global scale. These desks also enhance our ability to rapidly

handle customer transactions. Furthermore, we plan to introduce

i-Deal, an Internet dealing system that will allow customers to

directly purchase foreign exchange forward agreements, revise

the terms of certain agreements, and access a host of market

data, including SMBC research reports. Much more than just a
direct-trading channel, i-Deal offers many complementary func-

tions that will enhance its value to customers in many aspects of

their operations.

In Japan, market participants have become highly sensitive to

credit risk. Accordingly, we will pay increased attention to

Key Goals
The Treasury Unit has two basic goals: (1) to capture the No. 1

share of market-based products by supplying customers with

services of the highest quality in the industry, and (2) to generate

a steady flow of high-level earnings from trading activities by

dynamically managing our market positions. With these goals in

mind, we will continuously increase our expertise in financial engi-

neering techniques, invest in state-of-the-art information manage-

ment systems, and enhance our ability to monitor and analyze

markets. Underpinning these activities is our personnel system,
which enables the Bank to attract talented and motivated individ-

uals by consistently offering remuneration packages tailored

exclusively to each individual’s performance. Finally, because

infrastructure and our ability to deploy it are also important, we will

continue to upgrade systems and refine expertise in risk manage-

managing market and liquidity risk in the conduct of our trading

ment, compliance, and back-office operations.

operations. In our banking operations, we will continue to maintain

positions that afford adequate protection in the event of an upturn

in interest rates. In trading operations, we intend to increase profit-

generating opportunities presented by customer transactions and

asset liability management (ALM) operations. Finally, we will

continually enhance our ability to take on risk by fine-tuning our

risk management framework.

(cid:2) Treasury Unit Operation Chart

Customers

Corporate Business Office and branches

Front office

Planning Dept.,
Treasury Unit

Treasury Marketing
Dept.

Deposits

Treasury Dept.

International Treasury Dept.

Upgrading services
in pursuit of
enhanced customer
satisfaction

Loans

ALM operations and
liquidity management

Planning/Research Customer transactions

Banking services

Treasury
Unit

ALM
Operations, etc.

Money/
Securities
transactions

Customer Order Flows

Foreign exchange trading
Derivatives trading
CD-CP trading

Trading Dept.

Efficient operations based on
customer order flows and
ALM hedging flows

Trading

Interbank Market

SMBC 2002 — 45

Investment Banking Unit

46 — SMBC 2002

Highlights of Fiscal 2001
Upon SMBC’s inception, the Investment Banking Unit immediately

embarked on building a solid foundation by integrating a highly

skilled team of specialists with a lineup of advanced financial

products and services. From the start, our goal has been to provide

corporate customers with optimal solutions, particularly for the

raising of capital, risk-hedging tools, and business restructuring.

During fiscal 2001, the year ended March 31, 2002, SMBC’s

name value within the investment banking business was firmly

established. Of particular note was growth in syndicated loans:
SMBC achieved an increase of more than 40% in the total amount

of domestic arrangements as compared to fiscal 2000 (the

combined figure of the two former banks).

In addition, we made progress in our services for securitizing

debt by developing cutting-edge balance sheet management

mechanisms. Specifically, leveraging the information-gathering

capacity of the Internet we developed a mechanism that simulta-

neously achieves pooling of small receivables, revolving credit,

and consolidation to maximize the benefits of securitization. This

mechanism has been particularly well received by our customers.

Nonrecourse loans, where cash flows of a specific business

are the sole source of loan repayment, is another strategic field.

We are playing a leading role in financing for the Roppongi 6-

chome District Redevelopment Project (photo, left), an immense

undertaking in metropolitan Tokyo, which demonstrates SMBC’s

expertise in raising huge funds for large projects.

To meet the critical risk-management needs of clients, our

derivatives sales engineers stationed at 11 major operating bases

in Japan can propose sophisticated risk-hedging tools based not

only on interest rates and currencies but also on weather patterns

and commodities. No matter what our customers need, we stand

prepared to provide optimal solutions. In the field of weather

derivatives, ahead of other banks we have developed small-lot

standardized products for each season of the year that meet our

customers’ requirements for managing weather-related risks in

various types of business.

Strategic Focus on Growing Markets
We will continue to position loan syndications as one of our core

businesses. In this regard, we are taking steps to achieve further

growth in this area in fiscal 2002. The securitization business is

another strategic market, as it offers various means to help

customers use their capital as efficiently as possible. Accordingly,

we will place increasing importance on developing new mecha-

nisms and concomitant systems to bring securitization services to

a broader spectrum of customers. In other market sectors where

we maintain solid positions, notably, derivatives and corporate

bond trustee ser vices, SMBC will

strengthen its standing among leading

financial institutions.

(cid:2) Investment Banking Unit Organization

Domestic

Business restructuring is a growing

Planning Dept., Investment Banking Unit

need among corporate customers. In this

field, we have been pooling our resources

Structured Finance Credit Dept.
Asset Management Planning Dept., Investment Banking Unit

with other Group companies to make

Structured Finance Dept.

• Planning for investment banking services
• Inspection of investment banking transactions
• Planning for defined contribution pension funds,

investment management services

• Securitization, project finance, institutional

finance, lease financing, leveraged buyouts/
management buyouts, nonrecourse loans

further inroads in such areas as M&A

advisory services and MBO financings.
Another business that we are expanding
into is cross-border transactions.

Drawing on Groupwide
Resources
Daiwa Securities SMBC Co. Ltd., estab-

lished through an alliance between

SMBC and Daiwa Securities Group Inc.,

for ms the nucleus of our investment

banking strategy. The company’s activi-

ties, ranging from wholesale securities

distribution and M&A advisory services

to securitization, have more recently

expanded into such businesses as prin-

cipal financing. During fiscal 2001, Daiwa

Securities SMBC made steady progress

toward fir mly establishing itself as

Japan’s most powerful investment bank.

A significant achievement in this regard

was the company’s first-place ranking in

the domestic straight bond league table

for fiscal 2001. Building deeper ties with

SMBC is likely to be a key factor in

Daiwa Securities SMBC’s ability to

further improve its stature and operating

results.

Financial Solutions Dept., Investment Banking Unit • Provision of total solution services

Derivatives and Financial Engineering Dept.

• Development and sales of derivatives

Syndications Dept.

• Syndicated loan origination and placements

Corporate Finance Services Dept.

• Corporate bond trustee services

M&A Advisory Services Dept.

• Mergers and acquisitions

e-Business, Media and Telecom Dept.

• Business support for IT-related companies

Daiwa Securities SMBC Co. Ltd.

• Wholesale securities business

Sakura Friend Securities Co., Ltd.
Meiko National Securities Co., Ltd.

• Securities retailing

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 plans

Overseas

Structured Finance Dept. (Americas, Europe and Asia)

• Project finance

Syndications Dept. (Americas, Europe and Asia)

• Syndication

SMBC Capital Markets, Inc.
SMBC Capital Markets Limited
SMBC Derivative Products Limited

• Derivatives business

SMBC Securities, Inc.
Overseas subsidiaries of Daiwa Securities SMBC Co. Ltd.

• Wholesale securities business

SMBC Leasing and Finance, Inc.

• Lease financing

We are responding quickly to oppor tunities arising from

In investment management services, we have been restruc-

changes in Japan’s pension systems. Dramatic changes in

turing our business with the goal of establishing an operation

pension regulations are currently a pressing management issue

worthy of a leading bank. To this end, in December 2002 we will

for many Japanese companies. In response, Japan Pension

form Sumitomo Mitsui Asset Management Company, Limited, by

Navigator Co., Ltd., formed chiefly by financial companies in the

combining our 100%-owned subsidiary SAKURA INVESTMENT

Mitsui and Sumitomo groups, is assisting companies in setting up

MANAGEMENT CO., LTD., and four asset-management

corporate defined contribution pension plans, now attracting much

subsidiaries of Mitsui Mutual Life Insurance Company, Sumitomo

attention in Japan. Meanwhile, we also serve individuals who are

Life Insurance Company, and Mitsui Sumitomo Insurance

considering the establishment of individual defined contribution

Company, Limited.

pension plans, allowed since January 4, 2002, by providing a full

line of information and services, including asset management, at

99 branches throughout Japan.

SMBC 2002 — 47

e-Business

e-Business and IT Strategy
One of our chief goals is to firmly establish SMBC as Japan’s

leading financial institution in e-business. To this end, we are

committed to providing the highest-caliber services on the

Internet.

SMBC and its Group companies have moved quickly to form

alliances with corporate partners with cutting-edge IT, content,

intranet and extranet infrastructures, and extensive customer

bases. Through these alliances, SMBC has established portal

sites, e-money, an Internet bank and an Internet securities house,

and many other e-business models. Moreover, our business

alliances have provided access to new marketing techniques. As

a result, SMBC is successfully enhancing its banking functions in

step with Japan’s increasingly Internet-based society.

Looking ahead, growth in the business-to-business (B2B) and

business-to-consumer (B2C) e-commerce shows no signs of

slowing. At the core of our current online initiatives are the Bank’s

two main Internet banking gateways: One’s Direct for individual

consumers, and Value Door for corporate clients. To meet new

business requirements certain to accompany the growing role of

the Internet, the Bank intends to draw on the collective resources

of Group companies. Importantly, we remain poised to respond to

the emergence of new kinds of e-business, in all cases committed

to offering settlement, credit, and other Internet services that

promise to be secure as well as user-friendly.

Initiatives for Corporate Clients

SMBC Financial Link
SMBC Financial Link is SMBC’s comprehensive package of corpo-

rate financial services launched in August 2001 with the aim of

creating a unified brand image for the entire range of B2B services

offered by the SMBC Group. As a one-stop portal site, SMBC

Financial Link offers a full line of financial services, including settle-

ments, extensions of credit, authorizations, and bill collections, to

corporate clients either conducting Internet-based businesses or

using the Internet for specific business purposes. To establish this

new brand of ser vice package, in May 2002 SMBC founded

Financial Link Company, Limited, as a strategic subsidiary.

Some selected financial products already began to be in

service under the name of SMBC Financial Link in March 2002.*
The new products employ uniform data specifications by XML in

the provision of all products and services to minimize the systems

development requirements of clients. This uniformity also stream-

lines and accelerates clearing and settlement operations. Looking

forward, SMBC Financial Link plans to bolster ties with other

SMBC Group companies to offer clients an even broader array of

products and services.

* Five products currently in service are Corporate Net Settlement Service
(EBPP; Electronic Bill Presentment and Payment), Invoice Combining
Service, Accounts Receivable Reconciliation Service, Transfer Service of
Factoring Request, and Transfer Service of Bill Collection Request.

New Internet business initiatives

(cid:2) SMBC Financial Link

DLJdirect SFG Securities Inc.

The Japan Net Bank, Limited

Alliances with other banks and business sectors

Electronic authentication,
switching to electronic settlements

Consumer-oriented portal site
linked to all NetDebit member merchants
Shopping Square

Business support portal site for
small and medium-sized companies
NETdeBIZ.com

Digital broadcasting
network-based e-money service
incorporating contactless IC technology
Edy

SMBC Financial Link

Buyer

e-Commerce
market operator

Seller

Financial Link Company, Limited

Financing
Factoring,
Charges forward,
net lease

Settlement
Complete, Perfect,
B2B house card,
escrow

Servicer
Collection service,
PAYWEB

Authentication
Electronic authentication,
switching to electronic
settlements

B2C

B2B

SMBC Group

Settlement service for
Internet transactions
NetDebit

Comprehensive Corporate Financial Package
SMBC Financial Link

e-Payment service that eliminates
the need for promissory notes
Smart Clear

ne’s Direct
Gateway to Internet banking services for
individual consumers

Value Door
Gateway to Internet banking services
for companies

Supporting the transition to an Internet-based society

SMBC
Leasing
Company,
Limited

SMBC
Finance
Co., Ltd.

Sumitomo
Mitsui Card
Company,
Limited

SMBC

QUOQ Inc.

Mitsui
Finance
Service
Co., Ltd.

Group
companies

Smart Clear to Replace Bills Payable
In January 2002, SMBC became the first Japanese bank to offer

Smart Clear service, a cash advance mechanism without bills

payable and bills discounted. The service enables supplier

companies to apply for cash advances on their accounts receiv-

able to SMBC via Internet without either preparing and sending

any application form via facsimile or presenting any document.

This service also helps a paying company to reduce the issuance

of bills payable by simply transmitting data of its accounts payable

to SMBC in place of issuing the bills payable to suppliers.
Furthermore, the Smart Clear service automatically returns trade

payable data to the paying company, furthering the reengineering

48 — SMBC 2002

of accounting operations. In addition, operating hours for

dramatic growth in both the purchase amount and the number of

accepting requests for cash advances on accounts receivable

transactions by NetDebit.

from suppliers have been extended. Thus, the convenient features

Shopping Square, the portal site of all NetDebit member

of Smart Clear make this service extremely user-friendly.

merchants, is provided by SMBC on its Website so that

SMBC intends to vigorously promote the Smart Clear service

consumers can enjoy Internet shopping with the convenience

to both paying and supplier companies.

provided by NetDebit.

Eliminating the need for
promissory notes to
make payments

Paying
company

Internet

(1) Transmission of
payment data

SMBC

Smart Clear
e-payment
service

Rationalization of
accounting process

Internet

(2) Request for
quick collection

(3) Payment

Quick collection

Supplier
company

NETdeBIZ.com
As a new marketing challenge using the Internet, SMBC collabo-

rates with prominent companies in various industries such as

NEC Corporation, Mitsui Sumitomo Insurance Company, Limited,

MITSUI & CO., LTD., and Nikkei Business Publications, Inc., to

offer NETdeBIZ.com, an innovative business support site to

extend assistance to small and medium-sized companies.

On the NETdeBIZ.com site and via e-mail, SMBC and other

participating companies provide corporate clients with solutions

that help to expand sales channels and support operational effi-

ciency. The site also offers specialized information on taxation,

accounting, and legal affairs.

Currently, NETdeBIZ.com serves approximately 20,000 regis-

tered members, chiefly company top management and executives.

(http://www.netdebiz.com/)

Membership
(free registration)

NETdeBIZ.com
site

Member database

Information-gathering

Content
(information on member firms)

Access

Approach by e-mail

Sales staff

Business Web Marketing
Consortium members
(currently, 25 enterprises
and trade associations)

Small and medium-
sized businesses
(key person)

B2C Market

NetDebit@Shopping Square
SMBC provides NetDebit, an Internet settlement service for

consumers that enables simple and secured real-time debiting of

Internet shoppers’ bank accounts at the point of purchase. In

fiscal 2001, the year ended March 31, 2002, SMBC widened the

scope of this service to the Internet-accessible mobile phone plat-

for m. At the same time, many merchants, including major
consumer electronics retailers and large travel agencies, newly

joined as NetDebit members as a result of our effor t to spur

Drawing on the SMBC Group’s strengths to fully develop

NetDebit, we are working together with Sumitomo Mitsui Card

Company, Limited, to encourage other financial institutions to join

and offer this service to their customers. Through this alliance,

SMBC aims to establish NetDebit as the de facto standard among

Internet settlement services in Japan. In fiscal 2001, four banks

newly began providing the NetDebit service.

(cid:2) NetDebit Internet Settlement Service for Consumers
NetDebit service customer

(1) Order

NetDebit-registered
merchant

(7) Order and settlement notice

(3) Settlement processing screen

(2) Settlement request

(4) Enter ID and
password to
execute settlement

(6) Settlement notice

(5) Execution of fund transfer

NetDebit service banks
(SMBC, Japan Net Bank, and others)

Edy Prepaid e-Money Service
Edy is a prepaid electronic money (e-money) service incorpo-

rating a contactless IC system, which is being applied extensively

in public transport tickets and passes. One of the advantages of

Edy is that it can be used for paying for purchases not only at

convenience stores and fast-food restaurant chains but also for

purchases of digital contents on the Internet, such as music,

games, and software. Edy is currently based on a contactless IC

card, that has no exposed communication terminal on its surface

and requires no physical contact for processing data between IC

reader/writers. Contactless IC can be incorporated in devices of

any shape. In Japan, for example, the mobile phone is one of the

most popular consumer electronics products and is a highly

promising candidate for incorporating Edy. Furthermore, contact-

less IC, with its enormous data storage and quick processing

capabilities, has much room for adding functions to e-money. To

exploit the technological advantages of Edy and contactless IC,

we plan to eventually offer Edy as something more than just a

new method of micropayment. Our goal is to create a more

comprehensive and universal e-money service that also incorpo-

rates, for example, a security pass, company employee ID, points

program, and many other applications that correspond to what

consumers want.

SMBC 2002 — 49

Environmental Preservation Initiatives

With the enactment of SMBC’s proprietary Environmental Policy,

which lays out the guiding principles for our environmental initia-

Supporting Customers’ Environmental Measures
1. In cooperation with the Japan Research Institute, Limited (JRI),

tives, we have reaffirmed the Bank’s commitment to environ-

the Bank offers consulting services on all aspects of environ-

mental preservation. In 1998, we became the first Japanese bank

mental management.

to acquire ISO14001 certification for our environmental manage-

ment system (EMS).* In our environmental policies, we empha-

size environmental risk management and support our customers’

environmental measures. With this basic policy orientation, and

under the leadership of our internal Environmental Initiatives

Committee, which has overall responsibility for the Bank’s environ-

mental initiatives, we conduct environmental preservation activi-

ties throughout our entire organization.

SMBC’s holistic approach to preserving the environment

focuses on three initiatives: (1) reducing our own environmental

impact, (2) assessing environmental risks, and (3) supporting our

customers’ environmental measures.

*SMBC’s Headquarters, Otemachi Head Office, and Kobe Head Office are
ISO14001 certified.

Reducing Our Environmental Impact
1. We employ electronic record-keeping to reduce our use of

Customers

SMBC

JRI

•Assistance in acquiring ISO certification
•Environmental accounting
•Soil contamination
•Energy conservation
•Environmental PFI (Private Finance Initiative) and other initiatives

2. We provide easy access to environment-related information via

the bimonthly environmental magazine SAFE. Since March

2002, this magazine has been accessible through SMBC’s

Website*, where we also make available one year’s worth of

paper, recycle to the extent possible the paper that we use, and

back issues of SAFE.

vigorously implement various programs aimed at reducing our

consumption of electricity, gas, and water.

Starting March 2002, SAFE is accessible through SMBC’s Website.

(Back issues for one year can also be viewed.)

Wastepaper recycling for fiscal 2001, the year ended
March 31, 2002

(Headquarters and four Head Office buildings):

Quantity recycled

Recycling ratio

1,260 tons

83.2 %

2. The Bank offers an environmental education program to all

employees at domestic offices, departments, and branches.

3. We par ticipate in the Green Power cer tification system,

whereby we purchase electricity that is derived from renewable

energy sources.

http://www.smbc.co.jp/aboutus/html/kankyo/kankyo.html

*Available on SMBC’s Japanese-language Website only

3. We extend loans to fund environmental programs.

4. SMBC conducts corporate environmental seminars.

Seminars held at our Otemachi Head Office and Osaka Head

Office in March 2002 drew participants representing nearly 400

companies.

ISO14001 certification

Green Power certification

Assessing Environmental Risks
SMBC actively par ticipates in joint seminars with financial

institutions and other companies to collect and study data and

analyses of environmental risks such as soil contamination and

other forms of environmental degradation.

50 — SMBC 2002

SMBC corporate environmental seminar

During fiscal 2002, we are focusing especially on the following

(4) Investor relations

In North America and Europe, corporate environmental ratings

are now commonly employed as a factor in evaluating compa-

nies. Specifically, pension funds and other institutional

investors are increasingly taking into account individual

companies’ environmental activities when making investment

decisions. In this context, the Bank will continue to pursue a

proactive investor relations program targeted at investors and

research organizations.

Environmental Business Promotion System

(1)
Services for corporate clients
Services for corporate clients

Planning Department, Corporate Banking Unit;
Business Promotion Department, Middle Market Banking Unit

Planning Department, Investment Banking Unit;
Derivatives and Financial Engineering Department;
Structured Finance Department

(4)
Investor relations
Investor relations
Investor Relations
Department,
Corporate Planning
Department;
Public Relations
Department

JRI

Public Relations
Department

(3)
Services related to
Services related to
emission rights
emission rights
and other
and other
environment-related
environment-related
product markets
product markets
Planning Department,
Treasury Unit

(2)
Services for consumers
Services for consumers
Planning Department,
Consumer Banking Unit

Monthly plenary reporting sessions

Reflecting the Bank’s conviction that the environment is a key

management issue, we will continue to pursue these and a range

of other environment-oriented initiatives. By maintaining the focus

of these initiatives on global environmental preservation, SMBC

intends to reduce the economic risks associated with environ-

mental degradation and gain society’s increasing trust as a

responsible corporate citizen.

activities:

Participation in Tokyo Metropolitan Government’s
Project to Establish a CO2-Reduction Voucher Market
In an effort to slow the advance of global warming, the Tokyo

Metropolitan Government has initiated a project to establish a
market for trading CO2-reduction certificate vouchers. We have
been an active participant in this project since its inception, and

we also assist the Tokyo Metropolitan Government in an advisory

capacity.

Environmental Business Forum: Pursuing
Environment-Related Business Opportunities
To deepen SMBC’s involvement in environment-related

businesses, we formed the Environmental Business Forum jointly

with JRI, with whom we have also formed an advisory alliance.

Under the auspices of the Bank’s Public Relations Department,

this in-house project team aims to examine and capitalize on

opportunities arising from public- and private-sector initiatives to

preserve the environment as well as from individuals’ growing

environmental consciousness. Specifically, the Environmental

Business Forum intends to cultivate a new profit profile for the

Bank. To fully realize the potential business opportunities outlined

in (1) to (4), below, the Environmental Business Forum has set up

investigative committees as required to study designated fields,

and monthly meetings are held to facilitate information-sharing.

(1) Corporate client services

We will energetically provide information, extend credit,

and offer other relevant support to those corporate clients

proactively addressing environmental issues and developing

proprietary environment-related businesses.

a. Conduct surveys and other research regarding eco-businesses

b. Develop loan products specifically geared to eco-financing

c. Form sales strategies that prioritize environmental issues

d. Produce an environmental awareness manual for distribution to

all sales personnel

(2) Consumer services

We will investigate the range of consumer-oriented financial

products and services linked to environmental issues, offered

by financial institutions both in Japan and overseas.

(3) Markets for environment-related financial products

and services
The Kyoto Protocol, a 1997 agreement calling for the global-

scale reduction of greenhouse gas emissions, is expected to

result in the creation of new environment-related financial

markets. To the Bank, such markets represent increased

investment and loan oppor tunities. Accordingly, we will

examine investment opportunities and business prospects

arising from newly established markets for environment-

related financial products.

SMBC 2002 — 51

Social Contribution

Aiming to grow and develop together with society, SMBC makes

we place at all of our branches, as well as from collection boxes at

social contributions through a wide range of activities. Carried out

such locations as airports. SMBC also has created a UNICEF

under the leadership of the Corporate Citizenship Department,

Donation Account, through which participating Bank customers

these activities encompass two main areas: social welfare and

donate their net interest to UNICEF and the Bank donates an

international cooperation. SMBC also encourages and supports

amount equivalent to customer donations. In these ways, SMBC

employees’ participation in volunteer activities.

supports UNICEF’s programs designed to help needy children in

Social Welfare
SMBC not only organizes and participates in a diverse range of

social welfare activities, but also supports organizations devoted

to social welfare causes to promote the creation of a more benev-

olent society.

SMBC Volunteer Fund

developing countries.

SMBC Global Foundation

The SMBC Global Foundation provides scholarships to university

students in Asian countries. Currently, the foundation is providing

educational suppor t in Thailand, China, Indonesia, and

Singapore. In addition, the foundation is expanding its social

contribution and other activities in the United States.

The SMBC Volunteer Fund makes donations both to domestic

SMBC Foundation

and international volunteer organizations dedicated to providing

assistance in case of disasters and economic difficulties. This

fund is financed by willing SMBC employees who make a volun-

tary contribution of ¥100 per month. In fiscal 2001, the year ended

March 31, 2002, SMBC donated approximately 16,000 of the two

founding banks’ uniforms to African countries suffering from

clothing shortages, with the shipping cost paid for out of this fund.

Volunteering for the Japan Braille Library

Under the guidance of voice-recording specialists, retired and

Through its education and international exchange programs, the

SMBC Foundation aims to help nurture the human resources neces-

sary to achieve sustainable development in developing countries. To

this end, the foundation offers scholarships to students and provides

subsidies to researchers and research institutions around the world

undertaking projects related to developing countries.

Supporting Employees’ Volunteer Activities
Believing that volunteer service gives employees an enhanced

current SMBC employees and their family members volunteer

understanding of society, SMBC actively supports employees’

their time to make tape-recorded readings for hearing- and

participation in volunteer activities.

speech-impaired persons, which the Bank then donates to the

YUI Volunteer Organization

Japan Braille Library, in Tokyo. As of April 30, 2002, SMBC had

YUI is an SMBC volunteer organization conceived and managed

presented 669 titles, totaling 3,231 audiotapes, to the library.

collectively by member employees. The organization takes its

Donating Voided Postcards and Unused Telephone Cards

name from “yui,” a word used during the Edo period (1603 – 1868)

SMBC encourages employees of the Bank and Group companies

to refer to the cooperative

to donate voided or otherwise unusable postcards and unused

nature of agricultural work,

telephone cards to volunteer groups.

International Cooperation
As a global financial institution, SMBC engages in a variety of

international cooperation activities through its worldwide network

of branches.

Aiding Victims of September 11 Terrorist Attacks

In addition to official donations made by the Bank, the members
of management and employees of SMBC and other Group compa-

nies made private donations to aid victims of the September 11

terrorist attacks in the United States. Moreover, the Bank estab-

lished a special account for donations from the general public.

Supporting UNICEF

The Bank is an active promoter

of UNICEF Coin Aid, a foreign

coin collection donation

program. In cooperation with

Group company SMBC Green

Service Co., Ltd., we periodi-

cally collect and sor t by
currency the coins from the

UNICEF collection boxes that

52 — SMBC 2002

Coins collected by SMBC for
UNICEF are sorted into their
respective currencies.

which relied for success on

positive, mutually supportive

relations among all community

members. During fiscal 2001,

proceeds from bazaars and
movie screenings sponsored by
YUI were donated to various

social welfare organizations.

Sign-Language Courses

Member-donated goods are sold
in order to raise funds for various
social welfare organizations.

SMBC offers annual sign-language courses to interested

employees, thereby promoting communication with and enhanced

understanding of persons with hearing disabilities. These courses

not only contribute to improving the level of SMBC’s customer

service but also enable and encourage employees to engage in

volunteer activities requiring the use of sign language.

Seminars for Experiencing Volunteer Activities

SMBC holds after-work seminars that allow employees to experi-

ence an array of volunteer activities, such as preparing picture

books for children in developing countries and “experiencing” life

as an elderly person. As a further step to encourage employees’

participation in volunteer activities, the Bank provides a variety of

information related to volunteering.

Financial Section

CONTENTS

Financial Review (Consolidated) ............................... 54

Summary of Significant Differences

Financial Review (Nonconsolidated) ......................... 57

Consolidated Balance Sheet ..................................... 61

Consolidated Statement of Operations..................... 62

Consolidated Statement of

between Japanese GAAP and U.S. GAAP .............. 89

Income Analysis (Consolidated) ................................ 92

Assets/Liabilities (Consolidated) ............................... 95

Income Analysis (Nonconsolidated) .......................... 97

Stockholders’ Equity ................................................ 63

Deposits (Nonconsolidated) ...................................... 102

Consolidated Statement of Cash Flows.................... 64

Loans (Nonconsolidated) ........................................... 104

Notes to Consolidated Financial Statements ........... 66

Securities (Nonconsolidated)..................................... 108

Report of Independent Public Accountants.............. 86

Capital Ratio ............................................................... 110

Supplemental Information.......................................... 87

Ratios (Nonconsolidated)........................................... 111

Combined Consolidated

Capital (Nonconsolidated) ......................................... 113

Balance Sheet (Unaudited) ................................... 87

Combined Consolidated

Statement of Income (Unaudited) ......................... 88

Others (Nonconsolidated) .......................................... 117

SMBC 2002 — 53

The following is a summary of the consolidated and nonconsolidated financial statements for the year ended March 31,
2002. Figures for the year ended March 31, 2001, are combined figures for the former Sakura Bank and the former
Sumitomo Bank.

Financial Review (Consolidated)
1. Operating Results
Consolidated results for fiscal 2001, the year ended March
31, 2002, include the results of 144 consolidated sub-
sidiaries (98 in Japan and 46 overseas) and 38 subsidiaries
and affiliates accounted for by the equity method (10 in
Japan and 28 overseas). Compared with fiscal 2000, the
number of consolidated subsidiaries declined by five and
that of affiliates by three.

Consolidated gross profit posted a year-on-year increase of

¥239.8 billion, to ¥2,077.7 billion. The deduction of gen-
eral and administrative expenses, total credit cost, and other
items resulted in an operating loss of ¥580.6 billion, a
¥1,075.2 billion decrease compared with the figure for the
previous fiscal year. This loss was chiefly the result of lower
nonconsolidated earnings due to an increase in credit cost,
including off-balancing, or the removal of nonperforming
loans from the balance sheet. Extraordinary losses, income
taxes, and minority interests resulted in a net loss of ¥463.9
billion, a ¥596.3 billion decrease compared with the figure
for the previous fiscal year.

Deposits (excluding negotiable certificates of deposit) as of
March 31, 2002, were ¥64,986.0 billion, a ¥1,936.9 billion

increase over the figure as of March 31, 2001. Loans and
bills discounted as of March 31, 2002, declined ¥1,891.5
billion from the figure at the previous fiscal year-end, to
¥63,645.6 billion, and securities decreased ¥6,617.9 billion,
to ¥20,694.6 billion.

For fiscal 2001, the Bank newly adopted mark-to-market

accounting for other securities and other money held in
trust. (Please refer to Note 29, beginning on page 75 of the
“Notes to Consolidated Financial Statements,” for more
information.) As a result, other securities are valued at the
market prices on the consolidated balance sheet, and the dif-
ference between acquisition costs and market values (unreal-
ized gains or losses) is itemized as “Net unrealized losses on
other securities” under “Stockholders’ equity” on the consol-
idated balance sheet. As of March 31, 2002, net unrealized
losses on other securities and other money held in trust
totaled ¥499.3 billion, and net unrealized losses on other
securities was ¥304.8 billion.

Consequently, total assets as of March 31, 2002, declined

¥11,237.7 billion from the previous fiscal year-end, to
¥108,005.0 billion.

Number of Consolidated Subsidiaries, and Subsidiaries and Affiliates Accounted for by the Equity Method

March 31
Consolidated subsidiaries...................................................................................................
Subsidiaries and affiliates accounted for by the equity method..........................................

2002 (A)
144
38

2001 (B)
149
41

Increase (decrease)
(A)–(B)
(5)
(3)

54 — SMBC 2002

Income Summary

Year 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 .....................................................
Others ............................................................................................................................

Gains (losses) on stocks.....................................................................................................
Equity in earnings of affiliates ..............................................................................................
Other income (expenses) ...................................................................................................

Operating profit (loss) .........................................................................................................
Extraordinary gains (losses) ...............................................................................................
Income (loss) before income taxes and minority interests..................................................
Income taxes, current ........................................................................................................
deferred .......................................................................................................
Minority interests in net income ..........................................................................................

2002 (A)
¥2,077,681
1,449,783
319,532
129,432
178,932

¥ (935,553)
(1,703,363)
(391,923)
(681,457)
(527,445)
(102,537)

¥ (17,808)
2,964
(4,547)

¥ (580,628)
(23,710)
(604,338)
(101,860)
289,305
(46,993)

Millions of yen

2001 (B)
¥1,837,905
1,323,534
316,315
109,036
89,016

¥ (940,889)
(992,909)
(814,423)
(258,539)
209,539
(129,484)

¥ 468,467
44,362
77,681

¥ 494,617
(89,102)
405,514
(65,530)
(198,227)
(9,346)

Increase (decrease)
(A)–(B)
¥ 239,776
126,249
3,217
20,396
89,916

¥ 5,336
(710,454)
422,500
(422,918)
(736,984)
26,947

¥ (486,275)
(41,398)
(82,228)

¥(1,075,245)
65,392
(1,009,852)
(36,330)
487,532
(37,647)

Net income (loss)................................................................................................................

¥ (463,887)

¥ 132,408

¥ (596,295)

[Reference]
Consolidated banking profit (Billions of yen).......................................................................

991.9

833.2

158.7

Notes: 1. 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)

2. Consolidated banking profit = Nonconsolidated banking profit (excluding transfer to general reserve for possible loan losses)

+ Subsidiaries’ operating profit (excluding temporary factors) + Affiliates’ operating profit x Ownership ratio – Internal transactions (dividends, etc.)

Assets, Liabilities, and Stockholders’ Equity

Millions of yen

March 31
Assets .................................................................................................................................
Loans and bills discounted ............................................................................................
Securities .......................................................................................................................
Liabilities .............................................................................................................................
Deposits (excluding negotiable certificates of deposit)..................................................
Minority interests.................................................................................................................
Stockholders’ equity............................................................................................................

Increase (decrease)
(A)–(B)

2002 (A)

2001 (B)
¥108,005,001 ¥119,242,661 ¥(11,237,660)
(1,891,505)
65,537,091
(6,617,866)
27,312,498
(10,130,570)
114,239,104
1,936,925
63,049,051
(6,748)
990,595
(1,100,341)
4,012,960

63,645,586
20,694,632
104,108,534
64,985,976
983,847
2,912,619

SMBC 2002 — 55

2. Unrealized Gains (Losses) on Securities
As of March 31, 2002, net unrealized losses on securities
were ¥498.4 billion, an ¥823.9 billion decline compared
with the figure as of April 1, 2001, at the time of the merger.
Net unrealized losses on other securities and other money
held in trust amounted to ¥499.3 billion as of March 31,
2002, an ¥824.9 billion decline compared with the figure as
of April 1, 2001. This significant amount of unrealized losses

Unrealized Gains (Losses) on Securities

on other securities is attributable to a ¥603.4 billion decline
in the March 31, 2002, market value of stocks compared
with their April 1, 2001, market value. This drop reflects
Japan’s persistent economic downturn as well as the fall in
stock prices sparked by global economic uncertainty in the
wake of the September 2001 terrorist attacks in the United
States.

March 31, 2002, and April 1, 2001
Held-to-maturity securities............
Other securities ...........................
Stocks......................................
Bonds ......................................
Others......................................
Other money held in trust .............

Total..............................................
Stocks......................................
Bonds ......................................
Others......................................

March 31, 2002

April 1, 2001*

Millions of yen

Net unrealized
gains (losses) (A)
¥ 892
(495,507)
(509,305)
36,459
(22,661)
(3,825)

(498,440)
(509,305)
36,634
(25,769)

(A)–(B)
¥ 972
(824,657)
(603,394)
(73,994)
(147,266)
(211)

(823,894)
(603,394)
(73,822)
(146,676)

Unrealized
gains

¥ 1,262
260,042
192,620
58,810
8,610
135

261,440
192,620
59,303
9,515

Unrealized
losses
¥ (370)
(755,549)
(701,926)
(22,351)
(31,271)
(3,960)

(759,881)
(701,926)
(22,669)
(35,284)

Net unrealized
gains (losses) (B)
¥ (80)
329,150
94,089
110,453
124,605
(3,614)

Unrealized
gains
¥ 49
661,071
408,737
113,651
138,680
811

325,454
94,089
110,456
120,907

661,931
408,737
113,654
139,538

Unrealized
losses

¥ (130)
(331,920)
(314,648)
(3,195)
(14,074)
(4,426)

(336,478)
(314,648)
(3,196)
(18,630)

Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in “deposits with banks” and commercial papers as well

as claims on loan trust in “commercial paper and other debt purchased.”

2. In principle, the values of stocks as of March 31, 2002, are calculated using the average market prices during the final month of the year ended

March 31, 2002. The values of bonds and others are calculated using market prices as of March 31, 2002.

3. Unrealized gains (losses) as of April 1, 2001 (after the merger), are calculated by evaluating the book values of the former Sakura Bank’s other secu-

rities that had unrealized losses at the market prices as of March 31, 2001.

4. “Other securities” and “other money held in trust” as of March 31, 2002, are valued at market price. Consequently, the figures in the above table

indicate the differences between the acquisition costs (or amortized costs) and the balance sheet amounts.

* Figures reflects adjustments for merger accounting.

3. Consolidated Capital Ratio (BIS Guidelines)
As of March 31, 2002, the Bank’s consolidated capital ratio
(BIS guidelines) was 10.45%. (Please refer to the “Capital
Ratio” section on page 110 for more information.)

Total capital, which constitutes the numerator in the capi-

tal ratio calculation equation, was ¥7,060.8 billion as of
March 31, 2002. This decline resulted from the adjustment
for merger accounting and the inclusion of unrealized losses

Consolidated Capital Ratio (BIS Guidelines)

on other securities in Tier I capital. Risk-adjusted assets, the
denominator in the equation used to calculate the capital
ratio, stood at ¥67,548.0 billion. This decline is mainly
attributable to the adjustment for merger accounting and a
decline in balance sheet assets resulting chiefly from the
Bank’s adoption of mark-to-market accounting for other
securities.

March 31
Tier I capital (A)............................................................................................................................ ¥ 3,719,366
3,504,772
Tier II capital (B)...........................................................................................................................
(163,331)
Deductions (C) .............................................................................................................................

Sakura Bank Sumitomo Bank
¥ 2,496,449 ¥ 2,258,261
1,995,364
(103,632)

1,351,627
(13,752)

Total capital (D) = (A) + (B) – (C) ................................................................................................. ¥ 7,060,807

¥ 3,834,324 ¥ 4,149,993

Risk-adjusted assets (E) .............................................................................................................. ¥67,548,012
Capital ratio (BIS guidelines) = (D)/(E) × 100...............................................................................

10.45%

¥33,891,414 ¥37,925,221

11.31%

10.94%

Millions of yen

2002

2001

56 — SMBC 2002

Financial Review (Nonconsolidated)
1. Operating Results
Banking profit (excluding transfer to general reserve for pos-
sible loan losses) increased ¥380.3 billion to ¥1,183.4 bil-
lion, the result of a ¥350.3 billion year-on-year increase in
gross banking profit and a ¥30.0 billion decrease in expenses
(excluding nonrecurring losses).

The operating loss, calculated by adjusting banking profit
(excluding transfer to general reserve for possible loan losses)
for nonrecurring items including total credit cost and losses
on stocks, was ¥522.1 billion.

Total credit cost (including transfer to general reserve for
possible loan losses) amounted to ¥1,543.1 billion, the result
of accelerated off-balancing of problem assets during the
period as well as a review of classifications of borrowers and
associated increases in reserve ratios to prepare the Bank for
possible future deterioration in asset quality. Losses on stocks
totaled ¥130.7 billion.

After deducting extraordinary losses and income taxes
from the operating loss, the net loss amounted to ¥322.8
billion.

2. Income Analysis
Gross Banking Profit
Gross banking profit increased ¥350.3 billion over the previ-
ous fiscal year’s figure, to ¥1,853.5 billion. Gross banking
profit from domestic operations decreased ¥2.8 billion from
the figure for the previous fiscal year. Although net gains on
bonds increased ¥47.0 billion compared with the previous
fiscal year’s figure, net interest income declined ¥29.8 billion

Banking Profit

as the loan balance fell owing to a downturn in demand for
loans among corporate borrowers. Meanwhile, gross banking
profit from international operations rose ¥353.1 billion over
the previous fiscal year’s result, largely owing to a ¥265.6
billion increase in net interest income, including favorable
gains on foreign currency denominated treasuries due to the
decline in U.S. dollar based interest rates and growth in divi-
dends from overseas subsidiaries. A ¥34.1 billion increase in
trading profit is also a contribution to a favorable perfor-
mance in international operations.

Expenses
Expenses (excluding nonrecurring losses) decreased ¥30.0
billion compared with the figure for the previous fiscal year,
to ¥670.1 billion. This was mainly attributable to a ¥22.2
billion decline in personnel expenses largely due to a reduc-
tion in employees, which offset a ¥16.6 billion rise in sys-
tems integration expenses related to the merger. The
integration of branches within Japan and overseas and revi-
sions to the procurement system led to a ¥4.0 billion
decrease in nonpersonnel expenses. The remainder of the
decrease in expenses was due to a ¥3.8 billion decline in
taxes.

Banking Profit
Banking profit (excluding transfer to general reserve for pos-
sible loan losses) increased ¥380.3 billion over the previous
fiscal year’s figure, to ¥1,183.4 billion. Banking profit
decreased ¥312.9 billion, to ¥678.8 billion.

Year ended March 31
Gross banking profit............................................................................................................
Gross banking profit (excluding 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 ..........................................................
Expenses (excluding nonrecurring losses) .........................................................................
Personnel expenses ......................................................................................................
Nonpersonnel 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 gains (losses) on bonds) ..........................................................

2002 (A)
¥1,853,515
1,786,954
1,476,512
165,272
121,289
90,440
1,256,373
597,141

¥ (504,558)
(670,145)
(271,788)
(366,637)
(31,719)

¥ 678,811
1,183,369

Millions of yen

2001 (B)
¥1,503,203
1,494,407
1,240,731
150,692
95,385
16,393
1,259,215
243,987

¥ 188,596
(700,128)
(294,004)
(370,589)
(35,533)

¥ 991,670
803,073

Increase (decrease)
(A)–(B)
¥ 350,312
292,547
235,781
14,580
25,904
74,047
(2,842)
353,154

¥(693,154)
29,983
22,216
3,952
3,814

¥(312,859)
380,296

1,116,808

794,277

322,531

SMBC 2002 — 57

Nonrecurring Losses (Credit Costs, etc.)
Nonrecurring losses amounted to ¥1,200.9 billion, with a
credit cost of ¥1,038.5 billion as the main component. (Total
credit cost, including transfer to general reserve for possible
loan losses, amounted to ¥1,543.1 billion.) Other nonrecurring
items included losses on stocks of ¥130.7 billion, mainly
attributable to the devaluation of stocks based on the Bank’s
self-assessment of its stock portfolio. (Please refer to the “Asset
Quality” section beginning on page 8 for more information on
problem-loan balances and progress in reducing such loans.)

Operating Profit (Loss)
As a result of the foregoing, the operating loss amounted to
¥522.1 billion, an ¥881.3 billion decrease compared with the
figure for the previous fiscal year.

Extraordinary Gains (Losses)
The major components of extraordinary gains (losses) of
¥14.5 billion were a gain of ¥22.2 billion from distributions
received from the dissolution of subsidiaries and ¥14.2 bil-
lion in losses on the disposition of premises and equipment.
The loss was largely due to restructuring and merger-related
measures that were implemented ahead of schedule. In par-
ticular, the Bank recorded losses on sales of closed branches
and abolished employee housing, as well as losses related to
their restoration or disposition. Another component of the
loss was amortization of ¥20.2 billion in net transition
obligations from initial application of the new accounting
standard for employee retirement benefits.

Net Income (Loss)
The current portion of income taxes totaled ¥32.7 billion,
while the deferred portion was ¥246.5 billion under tax-effect
accounting. As a result, the net loss was ¥322.8 billion, a
¥460.7 billion decrease compared with the figure for the previ-
ous fiscal year.

Operating Profit and Net Income

Year ended March 31
Banking profit (excluding transfer to general reserve for possible loan losses)..................
Transfer to general reserve for possible loan losses ..........................................................

Banking profit......................................................................................................................
Nonrecurring 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...............................................................................

new accounting standard for employee retirement benefits ........................................
Income taxes, current .........................................................................................................
Income taxes, deferred .......................................................................................................

Effect of the introduction of enterprise taxes on the banking industry

2002 (A)
¥ 1,183,369
(504,558)

¥ 678,811
(1,200,917)
(1,543,078)
(283,895)
(663,184)
(37,034)
(8,363)
(50,589)
4,546
(130,689)
54,196
(54,300)
(130,585)

¥ (522,106)
(14,531)
(14,201)

(20,167)
(32,737)
246,522

Millions of yen

2001 (B)
¥ 803,073
188,596

¥ 991,670
(632,502)
(819,103)
(741,432)
(156,496)
(52,917)
(31,745)
(25,108)
2
311,421
496,241
(66,761)
(118,057)

¥ 359,167
(86,056)
(30,533)

(56,528)
(9,526)
(125,747)

Increase (decrease)
(A)–(B)
¥ 380,296
(693,154)

¥(312,859)
(568,415)
(723,975)
457,537
(506,688)
15,883
23,382
(25,481)
4,544
(442,110)
(442,045)
12,461
(12,528)

¥(881,273)
71,525
16,332

36,361
(23,211)
372,269

by the Osaka Prefectural Government ........................................................................

—

(32,038)

32,038

Net income (loss)................................................................................................................

¥ (322,852)

¥ 137,835

¥(460,687)

Note: Total credit cost includes transfer to general reserve for possible loan losses.

58 — SMBC 2002

3. Assets, Liabilities, and Stockholders’ Equity
Assets
Nonconsolidated bank assets as of March 31, 2002, were
¥102,082.6 billion, an ¥11,644.9 billion decrease compared
with the figure as of March 31, 2001. Loans and bills dis-
counted decreased ¥1,819.5 billion, to ¥59,928.4 billion,
owing to weak corporate loan demand amid the prolonged
economic slump. Securities decreased ¥6,617.0 billion, to
¥20,443.0 billion, owing to the sale and redemption of
short-term Japanese government bonds purchased in the sec-
ond half of the year ended March 31, 2001, as interest rates
declined.

Liabilities
Liabilities as of March 31, 2002, were ¥98,886.1 billion, a
¥10,641.5 billion decrease from the figure as of March 31,
2001. The termination of full deposit insurance caused
deposits to increase ¥2,010.5 billion, to ¥61,051.8 billion.
Negotiable certificates of deposit decreased ¥5,110.9 billion,
to ¥6,577.5 billion.

Stockholders’ Equity
Stockholders’ equity was ¥3,196.5 billion as of March 31,
2002, a ¥1,003.4 billion decrease compared with the figure
as of March 31, 2001. A partial reason for this decline was
the ¥427.0 billion reduction in equity of the former Sakura
Bank prior to the transfer of its equity to SMBC upon the
merger. This reduction comprised two items: charges result-
ing from the revaluation of land used for business operations
and the application of mark-to-market accounting on securi-
ties where unrealized losses existed, and the provision of a
reserve for unrecognized obligation for payments of employ-
ees’ prior-service retirement benefits. Also contributing to
the decline in stockholders’ equity were the net loss of
¥322.8 billion as well as net unrealized losses on other secu-
rities of ¥298.0 billion, the result of tax-effect accounting
adjustments to net unrealized losses on other securities and
other money held in trust, in accordance with the newly
adopted mark-to-market accounting standard. On the other
hand, the conversion of yen-denominated convertible bonds
maturing in 2001 to common stock contributed ¥100.0 bil-
lion to stockholders’ equity.

As of March 31, 2002, there were 5,709 million shares of
common stock and 967 million shares of preferred stock of
the Bank outstanding. Excluding preferred stock, stockhold-
ers’ equity per share was ¥332.02.

Assets, Liabilities, and Stockholders’ Equity

Millions of yen

March 31
Assets .................................................................................................................................
Loans and bills discounted ............................................................................................
Securities .......................................................................................................................
Liabilities .............................................................................................................................
Deposits.........................................................................................................................
Negotiable certificates of deposit...................................................................................
Stockholders’ equity............................................................................................................

Increase (decrease)
(A)–(B)

2002 (A)

2001 (B)
¥102,082,581 ¥113,727,498 ¥(11,644,917)
(1,819,512)
61,747,880
59,928,368
(6,616,982)
20,442,996
27,059,978
(10,641,471)
98,886,088 109,527,559
2,010,500
59,041,313
61,051,813
(5,110,920)
11,688,459
6,577,539
(1,003,445)
4,199,937
3,196,492

SMBC 2002 — 59

4. Unrealized Gains (Losses) on Securities
As of March 31, 2002, net unrealized losses on securities
amounted to ¥484.4 billion, a ¥679.1 billion decline com-
pared with the figure as of April 1, 2001, at the time of the
merger. Net unrealized losses on other securities and on
other money held in trust, which are deducted from stock-
holders’ equity beginning from the fiscal year under review
in accordance with the adoption of mark-to-market account-
ing, amounted to ¥485.5 billion, a ¥682.3 billion decline

Unrealized Gains (Losses) on Securities

compared with the figure as of April 1, 2001.

The significant amount of unrealized losses on other secu-
rities is attributable to a ¥594.7 billion decline in net unre-
alized gains on stocks compared with the figure as of April
1, 2001. This drop reflects Japan’s persistent economic
downturn as well as the fall in stock prices sparked by global
economic uncertainty in the wake of the September 2001
terrorist attacks in the United States.

March 31, 2002

April 1, 2001*

Millions of yen

Net unrealized
gains (losses) (A)

March 31, 2002, and April 1, 2001
Held-to-maturity securities.................... ¥ 1,146
(101)
Stocks of subsidiaries and affiliates .....
(481,654)
Other securities ....................................
Stocks .............................................
(500,897)
37,783
Bonds ..............................................
(18,540)
Others .............................................
(3,825)
Other money held in trust .....................

Total

...................................................
Stocks .............................................
Bonds ..............................................
Others .............................................

(484,434)
(500,999)
38,214
(21,650)

(A)–(B)
¥ 1,206
2,000
(682,065)
(594,680)
(67,182)
(20,204)
(211)

(679,069)
(592,680)
(66,751)
(19,638)

Unrealized
gains

¥ 1,165
12,740
244,238
180,943
55,597
7,696
135

258,279
193,684
56,029
8,566

Unrealized
losses
¥ (19)
(12,841)
(725,892)
(681,841)
(17,814)
(26,236)
(3,960)

(742,714)
(694,683)
(17,814)
(30,216)

Net unrealized
gains (losses) (B)
¥ (60)
(2,101)
200,411
93,783
104,965
1,664
(3,614)

Unrealized
gains
¥ 1
6,249
505,260
387,839
107,521
9,899
811

194,635
91,681
104,965
(2,012)

512,324
394,089
107,521
10,713

Unrealized
losses

¥ (61)
(8,351)
(304,849)
(294,056)
(2,556)
(8,236)
(4,426)

(317,690)
(302,408)
(2,556)
(12,725)

Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in “deposits with banks” and commercial papers as well as

claims on loan trust in “commercial paper and other debt purchased.”

2. The values of stocks excluding stocks of subsidiaries and affiliates as of March 31, 2002, are calculated using average market prices during the final

month of the year ended March 31, 2002. The values of bonds and others are calculated using market prices at March 31, 2002.

3. Unrealized gains (losses) as of April 1, 2001 (after the merger), are calculated by evaluating the book values of the former Sakura Bank’s other secu-

rities that had unrealized losses at the market prices as of March 31, 2001.

4. “Other securities” and “other money held in trust” as of March 31, 2002, are valued at market prices. Consequently, the figures in the above table

indicate the differences between the acquisition costs (or amortized costs) and the balance sheet amounts.

* Figures reflect adjustments for merger accounting.

5. Dividend Policy
Given its public nature and respecting the interests of stock-
holders, the Bank subscribes to a fundamental policy of pay-
ing dividends as deemed appropriate in view of the need to
increase capital and preserve sound management. After
appropriating retained earnings to increase capital and in
recognition of the year’s large net loss, the Bank paid an

annual dividend of ¥4.00 per share of common stock, ¥2.00
less than for the previous fiscal year. Annual dividends for
preferred stock were set at ¥10.50 per share for First series
Type 1, ¥28.50 per share for Second series Type 1, and
¥13.70 per share for Type 5, unchanged from the previous
fiscal year.

60 — SMBC 2002

Consolidated Balance Sheet

Sumitomo Mitsui Banking Corporation and Subsidiaries

March 31, 2002

Assets
Cash and due from banks (Note 9) ................................................................................................
Deposits with banks (Notes 9, 29) .................................................................................................
Call loans and bills bought .............................................................................................................
Receivables under resale agreements...........................................................................................
Commercial paper and other debt purchased (Note 29) ................................................................
Trading assets (Notes 3, 9, 29) ......................................................................................................
Money held in trust (Note 29) .........................................................................................................
Securities (Notes 4, 9, 29)..............................................................................................................
Loans and bills discounted (Notes 5, 9) .........................................................................................
Foreign exchanges.........................................................................................................................
Other assets (Notes 6, 9) ...............................................................................................................
Premises and equipment (Notes 7, 9, 16)......................................................................................
Lease assets (Note 8) ....................................................................................................................
Deferred tax assets (Note 25) ........................................................................................................
Deferred tax assets for land revaluation (Note 16) ........................................................................
Goodwill .........................................................................................................................................
Customers’ liabilities for acceptances and guarantees ..................................................................
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 (Note 9) ..........................................................
Other liabilities (Notes 9, 15) ..........................................................................................................
Reserve for employee bonuses .....................................................................................................
Reserve for employee retirement benefits (Note 26) .....................................................................
Reserve for possible losses on loans sold .....................................................................................
Other reserves ...............................................................................................................................
Deferred tax liabilities (Note 25) .....................................................................................................
Deferred tax liabilities for land revaluation (Notes 16, 25) .............................................................
Acceptances and guarantees (Note 9)...........................................................................................
Total liabilities ..............................................................................................................................

Millions of yen

Millions of
U.S. dollars (Note 1)

¥ 2,128,742
3,503,554
720,154
793,266
461,879
3,278,105
33,860
20,694,632
63,645,586
795,755
6,447,644
1,207,589
927,120
1,882,464
726
18,518
3,625,047
(2,159,649)
¥108,005,001

¥ 71,648,073
10,775,484
1,468,504
1,167,500
2,331,500
2,889,907
299,610
3,505,820
1,106
3,174,799
2,861,669
21,606
147,972
86,371
336
39,206
64,015
3,625,047
¥104,108,534

$ 15,976
26,293
5,405
5,953
3,466
24,601
254
155,307
477,640
5,972
48,388
9,063
6,958
14,127
5
139
27,205
(16,208)
$810,544

$537,697
80,867
11,021
8,762
17,497
21,688
2,248
26,310
8
23,826
21,476
162
1,110
648
3
294
480
27,205
$781,302

Minority interests (Note 17) .........................................................................................................

983,847

$ 7,384

Stockholders’ equity (Note 18)
Preferred stock; authorized 970,000,000 shares and issued 967,000,000 shares ........................
Common stock; authorized 15,000,000,000 shares and issued 5,709,424,395 shares ................
Capital surplus (Note 18) ...............................................................................................................
Land revaluation excess (Note 16) ................................................................................................
Retained earnings (Note 18) ..........................................................................................................
Net unrealized losses on other securities (Note 29) ......................................................................
Foreign currency translation adjustments ......................................................................................
Treasury stock................................................................................................................................
Parent bank stock held by subsidiaries ..........................................................................................
Total stockholders’ equity...........................................................................................................
Total liabilities, minority interests and stockholders’ equity...................................................

650,500
676,246
1,326,758
121,244
475,357
(304,837)
(15,174)
(283)
(17,191)
¥ 2,912,619
¥108,005,001

See accompanying notes to consolidated financial statements.

$ 4,882
5,075
9,957
910
3,567
(2,288)
(114)
(2)
(129)
$ 21,858
$810,544

SMBC 2002 — 61

Consolidated Statement of Operations

Sumitomo Mitsui Banking Corporation and Subsidiaries

Year ended March 31, 2002

Income
Interest income:

Millions of yen

Millions of
U.S. dollars (Note 1)

Interest on loans and discounts ................................................................................................
Interest and dividends on securities..........................................................................................
Interest on receivables under resale agreements .....................................................................
Interest on deposits with banks.................................................................................................
Other interest income................................................................................................................
Fees and commissions (Note 19) ..................................................................................................
Trading profits (Note 20) ................................................................................................................
Other operating income (Note 21)..................................................................................................
Other income (Note 22)..................................................................................................................
Total income .................................................................................................................................

Expenses
Interest expenses:

Interest on deposits...................................................................................................................
Interest on borrowings and rediscounts ....................................................................................
Interest on payables under repurchase agreements.................................................................
Interest on bonds and convertible bonds ..................................................................................
Other interest expenses ............................................................................................................
Fees and commissions (Note 19) ..................................................................................................
Trading losses (Note 20) ................................................................................................................
Other operating expenses (Note 23) ..............................................................................................
General and administrative expenses ............................................................................................
Transfer to reserve for possible loan losses ..................................................................................
Other expenses (Notes 24, 25) ......................................................................................................
Total expenses .............................................................................................................................
Loss before income taxes and minority interests ....................................................................
Income taxes (Note 25):

Current ......................................................................................................................................
Deferred ....................................................................................................................................

Minority interests in net income......................................................................................................
Net loss .........................................................................................................................................

¥1,426,139
318,508
8,399
186,892
236,745
387,280
129,450
845,583
270,130
¥3,809,130

¥ 347,077
75,989
29,238
86,926
187,670
67,747
17
666,651
935,553
1,204,335
812,261
¥4,413,469
¥ 604,338

¥ 101,860
(289,305)
¥ (187,445)
¥
46,993
¥ 463,887

$10,703
2,390
63
1,402
1,777
2,907
971
6,346
2,027
$28,586

$ 2,605
570
219
652
1,409
508
0
5,003
7,021
9,038
6,096
$33,121
$ 4,535

$ 764
(2,171)
$ (1,407)
$
353
$ 3,481

Per share data:

Net loss .....................................................................................................................................
Declared dividends on common stock ......................................................................................
Declared dividends on preferred stock (First series Type 1).....................................................
Declared dividends on preferred stock (Second series Type 1) ..............................................
Declared dividends on preferred stock (Type 5) ......................................................................

¥84.12
4.00
10.50
28.50
13.70

$0.63
0.03
0.08
0.21
0.10

See accompanying notes to consolidated financial statements.

Yen

U.S. dollars (Note 1)

62 — SMBC 2002

Consolidated Statement of Stockholders’ Equity

Sumitomo Mitsui Banking Corporation and Subsidiaries

Millions of yen

Preferred
stock

Common
stock

Capital
surplus

Land
revaluation
excess

Retained
earnings

Net
unrealized
losses on
other
securities

Foreign
currency
translation
adjustments

¥250,500
400,309

¥502,348 ¥ 643,080
991,326

123,542

¥167,613
42,690

¥319,924 ¥ — ¥(32,171)

296,313

Other*

Total

¥(14,144) ¥1,837,151
1,854,139

(42)

20,366

(96,404)

(20,939)

(4,555)

(101,533)

Year ended March 31, 2002

Balance at March 31, 2001 ..........................
Merger with The Sakura Bank, Limited .......
Change due to increase/decrease

of subsidiaries and affiliates .......................

Conversion of preferred stock to

common stock ............................................

(309)

309

Conversion of convertible bonds to

common stock ............................................
Change of effective tax rates and others......
Cash dividends paid ....................................
Transfer from capital surplus to

retained earnings (Note 18)........................
Revaluation of land.......................................
Transfer from land revaluation excess to

retained earnings........................................
Merger with a subsidiary ..............................
Net loss ........................................................
Adoption of accounting standards for

financial instruments...................................

Change of foreign currency translation

adjustments ................................................

Change of treasury stock and parent bank

stock held by subsidiaries ..........................
Balance at March 31, 2002 .........................

50,045

49,954

(444)

(48,848)

(60,132)

(11,199)

357,614

60,132
12,864
(463,887)

(357,614)

(304,837)

37,935

¥650,500

¥676,246 ¥1,326,758

¥121,244

¥475,357 ¥(304,837) ¥(15,174)

1,267

1,267
¥(17,475) ¥2,912,619

Year ended March 31, 2002

Balance at March 31, 2001 ..........................
Merger with The Sakura Bank, Limited .......
Change due to increase/decrease of

subsidiaries and affiliates ...........................

Conversion of preferred stock to

Preferred
stock

Common
stock

$1,880
3,004

$3,770
927

Capital
surplus

$4,826
7,440

common stock ............................................

(2)

Millions of U.S. dollars (Note 1)
Net
unrealized
losses on
other
securities

Retained
earnings

Land
revaluation
excess

Foreign
currency
translation
adjustments

$1,258
320

$2,401
2,224

$ —

$(242)

Other*

$(106)
(1)

Total

$13,787
13,914

153

(724)

(157)

(34)

(762)

Conversion of convertible bonds to

common stock ............................................
Change of effective tax rates and others......
Cash dividends paid ....................................
Transfer from capital surplus to

retained earnings (Note 18)........................
Revaluation of land.......................................
Transfer from land revaluation excess to

financial instruments...................................

Change of foreign currency translation

adjustments ................................................

Change of treasury stock and parent bank

stock held by subsidiaries ..........................
Balance at March 31, 2002 .........................

376

375

(3)

(367)

(451)

(85)

2,684

451
97
(3,481)

(2,684)

(2,288)

285

$4,882

$5,075

$9,957

$ 910

$3,567

$(2,288)

$(114)

10
$(131)

10
$21,858

See accompanying notes to consolidated financial statements.

*Other includes treasury stock and parent bank stock held by subsidiaries.

SMBC 2002 — 63

—

100,000
(444)
(11,199)

—
(48,848)

—
12,876
(463,887)

(304,837)

37,935

—

751
(3)
(85)

—
(367)

—
97
(3,481)

(2,288)

285

Consolidated Statement of Cash Flows

Sumitomo Mitsui Banking Corporation and Subsidiaries

Year ended March 31, 2002

1. Cash flows from operating activities:

Millions of yen

Millions of
U.S. dollars (Note 1)

Loss before income taxes and minority interests .................................................................
Depreciation of premises, equipment and others ................................................................
Depreciation of lease assets ...............................................................................................
Amortization of goodwill .......................................................................................................
Equity in earnings of affiliates ..............................................................................................
Net change in reserve for possible loan losses ...................................................................
Net change in reserve for possible losses on loans sold .....................................................
Net change in reserve for employee bonuses .....................................................................
Net change in reserve for employee retirement benefits .....................................................
Interest income ....................................................................................................................
Interest expenses.................................................................................................................
Net gains on securities.........................................................................................................
Net loss from money held in trust ........................................................................................
Net exchange gains .............................................................................................................
Net losses from disposition of premises and equipment......................................................
Net losses from disposition of lease assets .........................................................................
Gain on sale of business operation......................................................................................
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, bills bought and receivables under resale agreements ...............
Net change in pledged money for securities borrowing transactions...................................
Net change in call money, bills sold 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) .......................................................................
Issuance and redemption of bonds (excluding subordinated bonds)...................................
Interest received ..................................................................................................................
Interest paid .........................................................................................................................
Other, net .............................................................................................................................
Subtotal...............................................................................................................................
Income taxes paid................................................................................................................
Net cash used in operating activities ..................................................................................

¥ (604,338)
96,374
306,044
4,806
(2,964)
884,174
(58,895)
21,606
(42,469)
(2,176,685)
726,901
(64,057)
56
(160,717)
23,052
995
(5,000)
(757,328)
1,030,514
1,794,503
1,887,932
(4,989,141)
(456,519)
2,018,942
1,904,425
(2,196,808)
(3,020,667)
(569,827)
(1,715,984)
(56,299)
48,749
359,901
2,342,208
(829,888)
(1,070,901)
¥(5,327,304)
(54,205)
¥(5,381,510)

$ (4,535)
723
2,297
36
(22)
6,635
(442)
162
(319)
(16,335)
5,455
(481)
0
(1,206)
173
7
(38)
(5,684)
7,734
13,467
14,168
(37,442)
(3,426)
15,152
14,292
(16,486)
(22,669)
(4,276)
(12,878)
(422)
366
2,701
17,578
(6,228)
(8,037)
$(39,980)
(407)
$(40,387)

64 — SMBC 2002

(Continued)

Millions of yen

Millions of
U.S. dollars (Note 1)

2. 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 lease assets ...................................................................................................
Proceeds from sale of lease assets .....................................................................................
Purchases of stock of subsidiaries.......................................................................................
Proceeds from sale of stock of subsidiaries.........................................................................
Proceeds from sale of business operation ...........................................................................
Net cash provided by investing activities ...........................................................................

3. 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 .....................................................................................................................
Payment of delivered money due to merger ........................................................................
Capital contributions from minority stockholders .................................................................
Dividends paid to minority stockholders...............................................................................
Purchases of treasury stock.................................................................................................
Proceeds from sale of treasury stock...................................................................................
Proceeds from sale of parent bank stocks held by subsidiaries ..........................................
Net cash used in financing activities ...................................................................................

4. Effect of exchange rate changes on cash and due from banks ........................................

5. Net change in cash and due from banks .............................................................................

6. Cash and due from banks at beginning of year..................................................................

¥(39,722,661)
32,828,672
12,828,207
(5,011)
42,663
(73,354)
134,704
(342,964)
37,736
(599)
416
5,000
¥ 5,732,808

128,000
(278,000)
201,198
(262,361)
(11,101)
(17,839)
9,000
(39,064)
(8,539)
8,286
1,607
(268,813)

3,595

86,079

868,132

7. Change in cash and due from banks due to merger ..........................................................

1,075,527

8. Change in cash and due from banks due to merger of consolidated subsidiaries.........

9. Change in cash and due from banks due to newly consolidated subsidiaries ...............

2,544

96,459

$(298,106)
246,369
96,272
(38)
320
(551)
1,011
(2,574)
283
(4)
3
38
$ 43,023

961
(2,086)
1,510
(1,969)
(83)
(134)
67
(293)
(64)
62
12
$ (2,017)

646

6,515

8,072

724

10. Cash and due from banks at end of year.............................................................................

¥ 2,128,742

$ 15,976

See accompanying notes to consolidated financial statements.

SMBC 2002 — 65

Notes to Consolidated Financial Statements

Sumitomo Mitsui Banking Corporation and Subsidiaries
Year ended March 31, 2002

1. Basis of Financial Statements
On April 1, 2001, The Sumitomo Bank, Limited merged with The
Sakura Bank, Limited and succeeded its assets, liabilities, all the
claims, obligations and employees, and changed its corporate name to
Sumitomo Mitsui Banking Corporation (the “Bank”).

The Bank and its consolidated domestic subsidiaries maintain their
official accounting records in Japanese yen and in accordance with the
provisions set forth in the Japanese Commercial Code and accounting
principles and practices generally accepted in Japan (“Japanese GAAP”).
The accounts of overseas consolidated subsidiaries are based on their
accounting records maintained in conformity with generally accepted
accounting principles and practices prevailing in the respective coun-
tries of domicile.

Certain accounting principles and practices generally accepted in
Japan are different from International Accounting Standards and stan-
dards in other countries in certain respects as to application and disclo-
sure requirements. Accordingly, the accompanying financial statements
are intended for use by those who are informed about Japanese account-
ing principles and practices.

The accompanying consolidated financial statements have been
restructured and translated into English (with some expanded descrip-
tions and the inclusion of consolidated statements of stockholders’
equity) from the consolidated financial statements of the Bank prepared
in accordance with Japanese GAAP.

Some supplementary information included in the statutory Japanese

language consolidated financial statements, but not required for fair
presentation is not presented in the accompanying consolidated finan-
cial statements.

In the elimination of investments in subsidiaries, the assets
and liabilities of the subsidiaries, including the portion attrib-
utable to minority stockholders, are evaluated using the fair
value at the time the Bank acquired control of the respective
subsidiaries.

Goodwill on Sumitomo Mitsui Card Company, Limited, is

amortized using the straight-line method over five years.
Goodwill on the other entities is charged or credited to income
directly.

Japanese accounting standards also require any non-

consolidated subsidiaries and affiliates on which the Bank is
able to exercise material influence over their financial and oper-
ating policies are to be accounted for by the equity method.
Equity in earnings of affiliates was ¥2,964 million ($22 mil-
lion) recorded as other income for the year ended March 31,
2002.

(2) Statement of cash flows

For the purposes of the consolidated statement of cash flows,
cash and cash equivalents represent cash and due from banks.

“Depreciation of premises and equipment” and

“Depreciation of other assets” in “Other” in operating activi-
ties were separately presented for the year ended March 31,
2001, but are included in “Depreciation of premises, equip-
ment and others” from this fiscal year. Depreciation of
premises and equipment was ¥59,459 million ($446 million)
and Depreciation of other assets was ¥36,914 million ($277
million) for the year ended March 31, 2002.

Significant non-money transactions consisted of the

Amounts less than one million yen have been omitted. As a result,

following:

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 mat-
ter of arithmetical computation only, at the rate of ¥133.25 to US$1,
the exchange rate prevailing at March 31, 2002. The translations
should not be construed as a representation 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 inter-
company balances and transactions have been eliminated.
Japanese accounting standards on consolidated financial
statements require a company to consolidate any subsidiaries of
which the company substantially controls the operations, even
if it is not a majority owned subsidiary. Control is defined as
the power to govern the decision making body of an enterprise.
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 signif-
icant transaction during the period from their fiscal year-end to
March 31, the Bank makes certain adjustments to the consoli-
dated financial statements to be comprehensive.

66 — SMBC 2002

(i) Merger with The Sakura Bank, Limited
Assets and liabilities that were succeeded due to the
merger with The Sakura Bank, Limited, consisted of the
following:

Millions of
Millions of yen U.S. dollars

Assets.......................................................... ¥48,245,020
9,743,394
30,575,498

Securities ................................................
Loans and bills discounted ......................

Liabilities.................................................... ¥46,390,838
33,534,079

Deposits..................................................

$362,064
73,121
229,460

$348,149
251,663

(ii) Conversion of convertible bonds

Millions of
Millions of yen U.S. dollars

Increase of capital stock due to conversion
of convertible bonds ..................................
Increase of capital surplus due to
conversion of convertible bonds.................
Decrease of convertible bonds
due to conversion ......................................

¥ 50,045

$376

49,954

375

¥100,000

$751

(iii) As mentioned in Note 18, the Bank transferred
Capital surplus of ¥357,614 million ($2,684 million) to
Retained earnings during the year ended March 31, 2002.

(3) Trading assets and liabilities

Financial instruments, such as derivatives and trading securi-
ties, which are held for the short term in anticipation of mar-
ket gains, are recorded at fair value. Such gains and losses are
included in trading profits or losses on the consolidated state-
ment of operations. Trading assets and liabilities are recorded
at trade date.

(4) Securities

As for securities other than those in the trading portfolio, debt
securities that the Bank and consolidated subsidiaries have the
intent and ability to hold to maturity (held-to-maturity secu-
rities) 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 sub-
sidiaries and affiliates are defined as other securities. Prior to
April 1, 2001, debt securities in other securities were carried
at amortized cost using the moving-average method and
equity securities classified as other securities were carried at
cost using the moving-average method.

Effective April 1, 2001, the accounting standard for finan-
cial instruments was adopted on other securities. Stocks classi-
fied as other securities that have market value are carried at
the average market value during the final month of the fiscal
year, and other securities excluding such marketable stocks
that have market value are carried at market value at the bal-
ance sheet date. Other securities that do not have market value
are carried at cost or amortized cost, using the moving-average
method. Net unrealized gains (losses) on other securities are
recognized, net of applicable income taxes, as a separate com-
ponent of stockholders’ equity.

Securities included in money held in trust account are car-

ried in the same manner as for securities mentioned above.
As a result of the adoption of the accounting standard for
financial instruments on other securities, the total amount of
Securities and Money held in trust decreased by ¥499,332
million ($3,747 million) and Net unrealized losses on other
securities of ¥304,837 million ($2,288 million) is reported on
the consolidated balance sheet. Declines in the fair value of
other securities are charged to earnings when declines are
determined to be other than temporary.

(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 for the purpose of hedging are recorded

on an accrual basis using the short-cut method (exceptional
treatment 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 portfo-
lio hedge on liabilities.

Other domestic subsidiaries use the deferred hedge account-

ing or the short-cut method for interest rate swaps.

Net amount of deferred unrealized gains on hedging instru-

ments to which hedge accounting is applied is reported in
Other liabilities. Gross deferred unrealized losses and gross
deferred unrealized gains on hedging instruments at March
31, 2002, were ¥1,071,749 million ($8,043 million) and
¥1,156,384 million ($8,678 million), respectively.

(7) Non-accrual loans

Loans are generally placed on non-accrual status when such
loans are classified as Bankrupt, Effectively Bankrupt or
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 accu-
mulated depreciation. The Bank computes depreciation for
premises using the straight-line method over the estimated
useful lives of the respective assets. The depreciation for equip-
ment is computed using the declining-balance method over
the estimated useful lives of the respective assets. The esti-
mated useful lives of major items are as follows:

Buildings 7 to 50 years
Equipment 3 to 20 years

Depreciation of premises and equipment owned by consoli-

dated 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 life (mainly five
years) at the Bank and consolidated domestic subsidiaries, and
is included in other assets.

SMBC 2002 — 67

(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 con-
solidated subsidiaries classify a borrower into one of the fol-
lowing five risk categories according to the borrower’s credit
risk: Bankrupt Borrowers who are legally bankrupt,
Effectively Bankrupt Borrowers who are regarded as substan-
tially 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 bankrupt in
future, Borrowers Requiring Caution or Normal Borrowers.

For collateral and/or guaranteed loans to Bankrupt

Borrowers and Effectively Bankrupt Borrowers, the Bank rec-
ognizes a portion exceeding the appraised value of collateral
and/or the amount deemed collectible from guarantees of those
loans as irrecoverable, and writes off the portion. For the year
ended March 31, 2002, the Bank and the consolidated sub-
sidiaries made such write-offs of ¥1,824,274 million ($13,691
million).

For loans to Bankrupt Borrowers and Effectively Bankrupt
Borrowers, the Bank provides specific reserves. The amounts of
the specific reserves are calculated by deducting the estimated
disposal value of collateral and/or the amount deemed col-
lectible from guarantees, from the book balances of those loans
which remain after the write-offs.

The Bank also provides specific reserves for loans to
Potentially Bankrupt Borrowers based on the estimated
amount of recoveries from the collateral and/or guarantees and
other pertinent indicators specific to the borrowers.

The Bank also provides general reserves for loans to
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 origi-
nated in certain countries based on management’s assessment
of economic or political conditions of such countries.

Reserve for possible loan losses of other consolidated sub-
sidiaries is provided for general claims by the amount deemed
necessary based on the historical loan-loss ratio, and for doubt-
ful 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 is provided for contin-
gent losses arising from decline of market value of underlying
collateral for loans sold to the Cooperative Credit Purchasing
Company, Limited.

(12) Reserve for employee bonuses

Reserve for employee bonuses is provided, in provision for
payment of bonuses to employees, by the amount of estimated
bonuses, which are attributable to respective fiscal year. Prior
to April 1, 2001, accrued bonuses to employees were included
in Other liabilities, but effective April 1, 2001, Reserve for

employee bonuses is reported in accordance with “Concerning
Financial Statement Titles to Be Used for Accrued Bonuses for
Employees” (Research Center Review Information No. 15
issued by JICPA). Consequently, Other liabilities decreased by
¥21,606 million ($162 million) and Reserve for employee
bonuses increased by the same amount at March 31, 2002 as
compared with the former manner.

Prior to April 1, 2001, change of accrued bonuses to

employees was included in “Other” in the consolidated state-
ment of cash flows, but effective April 1, 2001, Net change in
reserve for employee bonuses is reported. Consequently, Other
decreased by ¥21,606 million ($162 million) and Net change
in reserve for employee bonuses increased by the same amount
for the year ended March 31, 2002 as compared with the for-
mer manner.

(13) Reserve for employee retirement benefits

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 the lump-sum payment is, in
general, calculated based on length of service, basic salary at
the time of retirement and reason for retirement. In addition,
the Bank has defined benefit pension plans which cover sub-
stantially all employees.

Reserve for employee retirement benefits and prepaid pen-

sion cost are recorded based on an actuarial computation,
which uses the present value of the projected benefit obliga-
tion and pension assets, due to employee’s credited years of
services at the balance sheet date. Prior service costs are amor-
tized using the straight-line method over certain years (mainly
10 years) within the average remaining service period of active
employees. 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 remain-
ing service period of active employees. Unrecognized net
obligation from initial application of the new accounting stan-
dard for employee retirement benefits is amortized using the
straight-line method over five years.

(14) Translation of foreign currencies

The Bank’s assets and liabilities denominated in foreign cur-
rencies and overseas branches’ accounts are translated into
Japanese yen mainly at the exchange rate prevailing at the
consolidated balance sheet date, with the exception of stocks of
subsidiaries and affiliates translated at rates prevailing at the
time of acquisition.

Consolidated subsidiaries’ assets and liabilities denominated

in foreign currencies are translated into Japanese yen at the
exchange rate prevailing at their respective balance sheet dates.

(15) Lease transactions

Financing leases where the ownership of the property is
deemed to be transferred to the lessee are capitalized, while
other financing 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.

68 — SMBC 2002

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.

(16) Amounts per share

Net income (loss) per share is computed by deducting divi-
dends 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 sub-
sidiaries, 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.

(17) Adoption of new accounting standards

Prior to April 1, 2001, unsecured borrowed securities and
securities under resale agreements were reported on the consol-
idated balance sheet as Securities in custody in Other assets
and Trading account securities borrowed or Securities bor-
rowed in Other liabilities by the same amounts. Effective
April 1, 2001, they are not reported on the consolidated bal-
ance sheet in accordance with the revision of the accounting
standards for financial instruments. Consequently, Other
assets and Other liabilities decreased by ¥3,098,200 million
($23,251 million) at March 31, 2002, as compared with the
former manner.

3. Trading Assets
Trading assets at March 31, 2002 consisted of the following:

March 31, 2002
Trading securities .............................................................
Derivatives on trading securities .......................................
Derivatives on securities related to trading transactions.....
Trading-related financial derivatives .................................
Other trading assets ..........................................................

Millions of
Millions of yen U.S. dollars

¥ 122,808
91
12
2,291,438
863,755
¥3,278,105

922
1
0
17,196
6,482
$24,601

4. Securities
Securities at March 31, 2002 consisted of the following:

Millions of
Millions of yen U.S. dollars

March 31, 2002
Japanese government bonds* ............................................ ¥10,113,872
500,052
Japanese local government bonds ......................................
1,430,388
Japanese corporate bonds...................................................
5,223,394
Japanese stocks**..............................................................
3,426,924
Other**............................................................................
¥20,694,632

$ 75,901
3,753
10,735
39,200
25,718
$155,307

* Includes ¥999 million ($7 million) of unsecured loaned securities for which borrowers
have rights to sell or pledge and loaned securities of ¥827 million ($6 million) for
which borrowers have rights to pledge but no rights to sell.
As for the unsecured borrowed securities for which the Bank has rights to sell or
pledge and the securities which the Bank purchased under resale agreements, that are
permitted to sell or pledge without restrictions, ¥3,534,532 million ($26,526 mil-
lion) of securities are pledged, ¥533,241 million ($4,002 million) of securities are
held in hand as of the consolidated balance sheet date. The Bank may pledge the bor-
rowed securities as well.

** Japanese stocks and other include investments in nonconsolidated subsidiaries and

affiliates of ¥187,937 million ($1,410 million).

5. Loans and Bills Discounted
Loans and bills discounted at March 31, 2002 consisted of the following:
Millions of
Millions of yen U.S. dollars

March 31, 2002
Bills discounted ................................................................ ¥
Loans on notes...................................................................
Loans on deeds ..................................................................
Overdrafts.........................................................................

940,422
8,408,524
42,655,561
11,641,078
¥63,645,586

7,057
63,103
320,117
87,363
$477,640

The following summarizes the non-accrual loans at March 31, 2002:

March 31, 2002
Bankrupt loans..................................................................
Non-accrual loans .............................................................
Total non-accrual loans .................................................

Millions of
Millions of yen U.S. dollars

¥ 227,484
3,599,750
¥3,827,234

$ 1,707
27,015
$28,722

In addition to the non-accrual loans, the Bank also classifies loans
overdue by three months or longer as substandard loans, and such loan
balances at March 31, 2002 were ¥102,762 million ($771 million).
Restructured loans are loans for which the Bank has adjusted the
terms of the loans in favor of borrowers as a means of financial assis-
tance. These restructured loans are also classified as substandard and
amounted to ¥2,554,371 million ($19,170 million) at March 31,
2002.

6. Other Assets
Other assets at March 31, 2002 consisted of the following:

March 31, 2002
Accrued income ................................................................
Deferred assets ..................................................................
Financial derivatives..........................................................
Pledged money for securities borrowing transactions.........
Other................................................................................

Millions of
Millions of yen U.S. dollars

¥ 316,826
453,059
1,397,056
3,020,519
1,260,182
¥6,447,644

$ 2,378
3,400
10,485
22,668
9,457
$48,388

7. Premises and Equipment
Premises and equipment at March 31, 2002 consisted of the following:
Millions of
Millions of yen U.S. dollars

March 31, 2002
Land* ...............................................................................
Buildings..........................................................................
Equipment and others.......................................................
Total.............................................................................
Accumulated depreciation.................................................

¥ 674,355
558,503
635,777
¥1,868,636
(661,047)
¥1,207,589

$ 5,061
4,192
4,771
$14,024
(4,961)
$ 9,063

* Includes land revaluation excess for land referred to in Note 16.

8. Lease Assets
Lease assets at March 31, 2002 were as follows:

March 31, 2002
Equipment and others.......................................................
Accumulated depreciation.................................................

Millions of
Millions of yen U.S. dollars

¥2,330,602
(1,403,481)
¥ 927,120

$17,491
(10,533)
$ 6,958

SMBC 2002 — 69

9. Assets Pledged as Collateral
Assets pledged as collateral at March 31, 2002 consisted of the
following:

March 31, 2002
Assets pledged as collateral

Millions of
Millions of yen U.S. dollars

Cash and due from banks and Deposits with banks .......
Trading assets ...............................................................
Securities ......................................................................
Loans and bills discounted ............................................
Other assets ..................................................................
Premises and equipment ...............................................

63,325
621,047
9,062,227
3,239,033
1,311
547

Liabilities corresponding to assets pledged as collateral

Deposits........................................................................
Call money and bills sold ..............................................
Payables under repurchase agreements ..........................
Trading liabilities .........................................................
Borrowed money...........................................................
Pledged money for securities lending transactions.........
Other liabilities ............................................................
Acceptances and guarantees ..........................................

9,621
8,394,800
1,118,531
39,986
117,463
2,517,123
10,888
45,571

475
4,661
68,009
24,308
10
4

72
63,000
8,394
300
882
18,890
82
342

In addition to the assets presented above, the following assets were

pledged as collateral for exchange settlements, initial margins of
futures markets and certain other purposes at March 31, 2002:

March 31, 2002
Cash and due from banks and Deposits with banks ...........
Trading assets ...................................................................
Securities ..........................................................................
Loans and bills discounted ................................................

Millions of
Millions of yen U.S. dollars

¥ 101,722
296
2,880,100
58,095

763
2
21,614
436

Premises and equipment included surety deposits and intangibles
of ¥125,258 million ($940 million) at March 31, 2002. Other assets
included initial margins of futures markets of ¥20,984 million ($157
million).

10. Deposits
Deposits at March 31, 2002 consisted of the following:

Millions of
Millions of yen U.S. dollars

March 31, 2002
Current deposits................................................................ ¥ 4,765,722
25,150,251
Ordinary deposits..............................................................
1,412,372
Savings deposits ................................................................
6,074,691
Deposits at notice .............................................................
23,472,643
Time deposits ...................................................................
6,662,097
Negotiable certificates of deposit ......................................
4,110,293
Other deposits ..................................................................
¥71,648,073

$ 35,765
188,745
10,599
45,589
176,155
49,997
30,847
$537,697

11. Trading Liabilities
Trading liabilities at March 31, 2002 consisted of the following:

Millions of
Millions of yen U.S. dollars

12,811
79
2,318,608
¥2,331,500

96
1
17,400
$17,497

12. Borrowed Money
Borrowed money at March 31, 2002 consisted of the following:

March 31, 2002
Bills rediscounted.............................
Other borrowings**.........................

Millions of
yen
58,784
2,831,122
¥2,889,907

Millions of
U.S. dollars
441
21,247
$21,688

Average rate*
3.98%
2.01
2.05%

* Average rate represents the weighted average rate based on the balances and rates at

respective year-end of the Bank and consolidated subsidiaries.

** Includes subordinated debt obligation of ¥1,001,047 million ($7,513 million).

The repayment schedule within five years on borrowed money at

March 31, 2002 is shown as follows:

1 year or less
¥1,059,676

1 to 2 years
¥228,513

Millions of yen
2 to 3 years
¥392,209

3 to 4 years
¥252,090

4 to 5 years
¥101,658

1 year or less
$7,953

1 to 2 years
$1,715

Millions of U.S. dollars
2 to 3 years
$2,943

3 to 4 years
$1,892

4 to 5 years
$763

13. Bonds
Bonds at March 31, 2002 consisted of the following:
March 31, 2002

Issuer
The Bank:

Description

Straight bonds, payable in Yen
Straight bonds, payable in Euro Yen
Straight bonds, payable in U.S. dollars

Subordinated bonds, payable in Yen
Subordinated bonds, payable in Euro Yen
Subordinated bonds, payable in U.S. dollars

Consolidated subsidiaries:

Straight bonds, payable in Yen
Straight bonds, payable in U.S. dollars

Straight bonds, payable in Australian dollars

Straight bonds, payable in other foreign currency

Subordinated bonds, payable in Yen

Subordinated bonds, payable in U.S. dollars

Subordinated bonds, payable in other foreign currency

Millions of
yen*
¥1,337,923
8,000
159,900
($1,200,000 thousand)
413,000
193,000
19,854
($149,000 thousand)
181,195
34,273
($261,300 thousand)
[22,801]
113
(A$2,000 thousand)
4,373
[1,532]
787,709
[1,000]
364,198
($2,733,200 thousand)
2,279
¥3,505,820

Millions of
U.S. dollars
$10,041
60
1,200

Rate
(%)
0.51—2.117
1.685—3.00
4.32—6.10

Due
May 2003—Mar. 2013
Nov. 2009—Mar. 2012
Nov. 2003—Sep. 2005

3,099
1,448
149

1,360
257

5,912

2,735

17
$26,310

0.64063—2.36
0.64—2.72
5.93—8.10

Nov. 2007—perpetual
Sep. 2008—Mar. 2017
Mar. 2009—Nov. 2011

0.13—3.15
0—12.00

Mar. 2002—Dec. 2021
Jan. 2002—Jun. 2021

7.00

Oct. 2005

5.22—6.34

Oct. 2002—Jul. 2013

0—5.15

Feb. 2003—perpetual

2.37—8.50

Jul. 2007—perpetual

5.62—7.50

Perpetual

* Figures in ( ) are the balances in the original currency of the foreign currency denominated bonds, and figures in [ ] are the amounts to be redeemed within one year.

70 — SMBC 2002

The redemption schedule within five years on bonds at March 31,

2002 is shown as follows:

1 year or less
¥88,723

1 to 2 years
¥127,825

Millions of yen
2 to 3 years
¥402,580

3 to 4 years
¥643,062

4 to 5 years
¥409,522

1 year or less
$666

1 to 2 years
$959

Millions of U.S. dollars
2 to 3 years
$3,021

3 to 4 years
$4,826

4 to 5 years
$3,073

14. Convertible Bonds
Convertible bonds at March 31, 2002 consisted of the following:

March 31, 2002
Convertible bonds payable in U.S. dollars:

Millions of
Millions of yen U.S. dollars

31⁄8% due 2004, convertible into
common stock at ¥3,606.90 per share .........................

¥1,106

15. Other Liabilities
Other liabilities at March 31, 2002 consisted of the following:

March 31, 2002
Accrued expenses ..............................................................
Unearned income ..............................................................
Income taxes payable.........................................................
Financial derivatives..........................................................
Other................................................................................

Millions of
Millions of yen U.S. dollars

¥ 191,853
134,785
100,150
904,873
1,530,006
¥2,861,669

$ 1,440
1,011
752
6,791
11,482
$21,476

16. Land Revaluation Excess
Pursuant to the Enforcement Ordinance for the Law Concerning Land
Revaluation (the “Law”) effective March 31, 1998, the Bank and its
domestic subsidiary recorded their own land for business activities 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 related deferred tax liabilities are
reported in liabilities as Deferred tax liabilities for land revaluation.
The unrecorded revaluation losses at March 31, 2002 were ¥91,507
million ($687 million).

Pursuant to the Law, as amended, effective March 31, 2001, the

Bank revalued the land for business activities that was succeeded
from SMBC Property Management Service Co., Ltd. at March 31,
2002 due to the merger with it. The net unrealized losses on the
land, net of applicable income taxes, was deducted from Land revalu-
ation excess, and the related deferred tax assets were deducted from
Deferred tax liabilities for land revaluation. The book value of the
land of ¥248,659 million ($1,866 million) before the revaluation was
revaluated at ¥169,520 million ($1,272 million) at March 31, 2002.
In addition, a consolidated subsidiary revaluated its land for busi-
ness activities and the income taxes corresponding to the revaluated
losses is recognized as Deferred tax assets for land revaluation and the
revaluated losses, net of the corresponding taxes, are deducted from
Land revaluation excess. The book value of the land of ¥4,280 million
($32 million) before the revaluation was revaluated at ¥2,541 million
($19 million) at March 31, 2002.

17. Minority Interests
SB Treasury Company, L. L. C., a subsidiary of the Bank, issued float-
ing noncumulative preferred securities, totaling $1,800 million in
February 1998. SB Equity Securities (Cayman), Limited, a subsidiary

of the Bank, issued floating noncumulative preferred securities, total-
ing ¥340,000 million in February and March 1999. Sakura Preferred
Capital (Cayman) Limited, a subsidiary of the Bank, issued noncumu-
lative preferred securities, totaling ¥283,750 million in December
1998 and March 1999. These subsidiaries are consolidated and the
preferred securities are accounted for as minority interests.

18. Stockholders’ Equity
Prior to October 1, 2001, under the Banking Law of Japan, the Bank
was required to appropriate as an earned surplus reserve an amount
equal to at least 20 percent of cash disbursements in each period until
the earned surplus reserve equaled 100 percent of the amount of capi-
tal (total amount of preferred stock and common stock). Capital sur-
plus and earned surplus reserve were not available for distribution 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.

The Commercial Code of Japan provided that at least one-half of

the proceeds from shares issued at prices in excess of par value be
included in capital. In conformity therewith, the Bank has divided
the paid-in amount of the stock issued upon conversion of bonds and
notes into common stock equally between common stock and capital
surplus.

Effective October 1, 2001, pursuant to the Article 289-2 of the
amended Commercial Code and the Article 18-2 of the amended
Banking Law, Earned surplus reserve is appropriated until the total
amount of both Earned surplus reserve and Capital surplus equals to
the amount of capital. The excess of the total amount over the
amount of capital may be transferred to retained earnings by resolu-
tion of stockholders. The Bank transferred Capital surplus of
¥357,614 million ($2,684 million) to retained earnings during the
year ended March 31, 2002. As for the nonconsolidated balance
sheet, the Bank transferred capital surplus of ¥357,614 million
($2,684 million) and earned surplus reserve of ¥241,421 million
($1,812 million) to retained earnings of ¥599,035 million ($4,496
million) during the year ended March 31, 2002.

In accordance with the Law Concerning Emergency Measures for

the Early Strengthening of the Functions of the Financial System,
Sumitomo and Sakura issued noncumulative preferred stock in the
aggregate amount of ¥1,301,000 million (the first issuance of 67 mil-
lion shares at total amount of ¥201,000 million and the second
issuance of 100 million shares at total amount of ¥300,000 million
by Sumitomo and the issuance of 800 million shares at total amount
of ¥800,000 million by Sakura). All of the preferred stock had been
subscribed by The Resolution and Collection Corporation, Limited
on March 30, 1999. The noncumulative preferred stocks are
redeemable at the option of the Bank at any time. ¥201,000 million
of the preferred stock are convertible into common stock of the Bank
at any time from May 1, 2002 until February 26, 2009, ¥300,000
million of the preferred stock are convertible into common stock of
the Bank at any time from August 1, 2005 until February 26, 2009
and ¥800,000 million of the preferred stock are convertible into com-
mon stock of the Bank at any time from October 1, 2002 until
September 30, 2009, in each case subject to certain adjustments to
the conversion period.

SMBC 2002 — 71

19. Fees and Commissions
Fees and commissions for the year ended March 31, 2002 consisted of
the following:

23. Other Operating Expenses
Other operating expenses for the year ended March 31, 2002 con-
sisted of the following:

Year ended March 31, 2002
Fees and commissions (income):

Deposits and loans ........................................................
Remittances and transfers .............................................
Securities-related business.............................................
Agency .........................................................................
Safe deposits .................................................................
Guarantees....................................................................
Credit card business ......................................................
Investment trusts ..........................................................
Other............................................................................

Fees and commissions (expenses):

Remittances and transfers .............................................
Other............................................................................

Millions of
Millions of yen U.S. dollars

¥ 30,346
104,827
24,299
16,100
6,080
26,167
84,849
17,892
76,716
¥387,280

¥ 21,052
46,695
¥ 67,747

$ 228
787
182
121
45
197
637
134
576
$2,907

$ 158
350
$ 508

20. Trading Income
Trading income for the year ended March 31, 2002 consisted of the
following:

Year ended March 31, 2002
Trading profits:

Gains on trading securities............................................
Gains on trading-related financial derivatives................
Other............................................................................

Millions of
Millions of yen U.S. dollars

¥
6,654
121,752
1,043
¥129,450

$ 50
913
8
$971

Year ended March 31, 2002
Losses on sale of bonds ......................................................
Losses on redemption of bonds ..........................................
Losses on devaluation of bonds ..........................................
Bond issuance costs ...........................................................
Lease-related expenses .......................................................
Other................................................................................

Millions of
Millions of yen U.S. dollars

¥ 51,270
3,202
7,082
2,161
500,908
102,026
¥666,651

$ 385
24
53
16
3,759
766
$5,003

24. Other Expenses
Other expenses for the year ended March 31, 2002 consisted of the
following:

Year ended March 31, 2002
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............................................
Transfer to reserve for possible losses on loans sold ............
Losses on delinquent loans sold .........................................
Losses on disposition of premises and equipment...............
Amortization of unrecognized net transition
obligation for employee retirement benefits ....................
Losses on disposal of software ............................................
Other................................................................................

Millions of
Millions of yen U.S. dollars

¥391,923
60,759
148,537
1,867
38,712
64,504
27,478

23,493
2,166
52,819
¥812,261

$2,941
456
1,115
14
291
484
206

176
16
397
$6,096

25. Income Taxes

Trading losses:

(1) Significant components of deferred tax assets and liabilities at

Losses on securities related to trading transactions ........

March 31, 2002 were as follows:

March 31, 2002
Deferred tax assets:

Millions of
Millions of yen U.S. dollars

Reserve for possible loan losses ........................
Write-off of loans............................................
Write-off of securities .....................................
Net unrealized losses on other securities ..........
Net operation loss carryforwards .....................
Reserve for employee retirement benefits ........
Reserve for possible losses on loans sold...........
Depreciation ...................................................
Other ..............................................................
Subtotal ..........................................................
Valuation allowance ........................................
Total deferred tax assets ..................................

¥ 864,823
411,374
216,211
192,753
127,307
109,651
33,547
11,084
94,746
2,061,500
(110,435)
¥1,951,065

$ 6,490
3,087
1,623
1,447
955
823
252
83
711
15,471
(829)
$14,642

Deferred tax liabilities:

Leveraged lease................................................
Gains on securities contributed to employee
retirement benefits trust................................
Undistributed earnings of subsidiaries.............
Other ..............................................................
Total deferred tax liabilities ............................
Net deferred tax assets.........................................

¥ (48,644)

$ (365)

(23,660)
(10,209)
(25,293)
(107,807)
¥1,843,257

(177)
(77)
(190)
(809)
$13,833

21. Other Operating Income
Other operating income for the year ended March 31, 2002 consisted
of the following:

Year ended March 31, 2002
Gains on foreign exchange transactions .............................
Gains on financial derivatives............................................
Gains on sale of bonds.......................................................
Gains on redemption of bonds...........................................
Lease-related income .........................................................
Other................................................................................

Millions of
Millions of yen U.S. dollars

¥ 17,290
14,908
134,493
26
567,884
110,980
¥845,583

$ 130
112
1,009
0
4,262
833
$6,346

22. Other Income
Other income for the year ended March 31, 2002 consisted of the
following:

Year ended March 31, 2002
Gains on sale of stocks and other securities........................
Gains on money held in trust ............................................
Equity in earnings of affiliates...........................................
Gains on disposition of premises and equipment ...............
Collection of written-off claims.........................................
Gain on liquidation of a subsidiary....................................
Gain on sale of business operation .....................................
Other................................................................................

Millions of
Millions of yen U.S. dollars

¥191,487
1,810
2,964
4,426
1,305
18,381
5,000
44,755
¥270,130

$1,437
14
22
33
10
138
37
336
$2,027

72 — SMBC 2002

(2) A reconciliation of the effective income tax rate reflected in

26. Employee Retirement Benefits

the accompanying consolidated statement of operations to the
statutory tax rate for the year ended March 31, 2002 was as
follows:
Statutory tax rate ..................................................
Valuation allowance........................................
Dividends from overseas subsidiaries...............
Other..............................................................
Effective income tax rate .......................................
(3) With the implementation of the “Metropolitan ordinance

38.62 %
(4.45)%
(4.11)%
0.96 %
31.02 %

regarding the imposition of enterprise taxes through external
standards taxation on banks in Tokyo” (Tokyo Metropolitan
Ordinance No. 145, April 1, 2000) (“the metropolitan ordi-
nance”), enterprise taxes relating to banks in Tokyo which had
been hitherto levied on income were changed to be levied on
gross banking profit.

The Bank recorded enterprise tax of ¥19,862 million ($149
million) in Other expenses for the year ended March 31, 2002
as a result of the metropolitan ordinance. The implementation
of the metropolitan ordinance resulted in a reduction of the
effective statutory tax rate used by the Bank to calculate
deferred tax assets and liabilities. Consequently, Deferred tax
assets, Deferred tax liabilities for land revaluation and stock-
holders’ equity at March 31, 2002 decreased by ¥96,420 mil-
lion ($724 million), ¥3,694 million ($28 million) and
¥92,726 million ($696 million), respectively, as compared
with the amount that would be if the metropolitan ordinance
had not been implemented.

With the implementation of the “Municipal Ordinance
regarding the imposition of enterprise taxes through external
standards taxation on banks in Osaka” (Osaka Municipal
Ordinance No. 131, June 9, 2000) (“the municipal ordi-
nance”), enterprise taxes relating to banks in Osaka which had
been hitherto levied on income were also changed to be levied
on gross banking profit.

The Bank recorded enterprise tax of ¥10,137 million ($76
million) in Other expenses for the year ended March 31, 2002
as a result of the municipal ordinance. The implementation of
the municipal ordinance also resulted in a reduction of the
effective statutory tax rate used by the Bank to calculate
deferred tax assets and liabilities. Consequently, Deferred tax
assets, Deferred tax liabilities for land revaluation and stock-
holders’ equity at March 31, 2002 decreased by ¥46,396
million ($348 million), ¥1,798 million ($13 million) and
¥44,597 million ($335 million), respectively, as compared
with the amount that would be if the municipal ordinance had
not been implemented.

(1) Outline of employee retirement benefits

The Bank and consolidated subsidiaries in Japan have contrib-
utory funded defined benefit pension plans such as contribu-
tory 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 some consolidated subsidiaries in Japan
contributed certain marketable equity securities to an
employee retirement benefit trust.

(2) Projected benefit obligation

March 31, 2002
Projected benefit
obligation
Pension assets
Unfunded projected
benefit obligation
Unrecognized net
transition obligation
for application of new
accounting standard
Unrecognized actuarial
gain or loss
Unrecognized
past service liabilities
Net amount recorded on
the consolidated balance
sheet
Prepaid pension cost
(other assets)
Reserve for employee
retirement benefits

(3) Pension expenses

Millions of
Millions of yen U.S. dollars

(A) ..............................
(B) ..............................

¥(1,175,959)
777,088

$(8,825)
5,832

(C)=(A)+(B) ................

¥ (398,871)

$(2,993)

(D)..............................

70,280

528

(E)...............................

241,353

1,811

(F)...............................

(60,707)

(456)

(G)=(C)+(D)+(E)+(F)...

¥ (147,944)

$(1,110)

(H)..............................

(G)–(H).......................

¥ (147,972)

$(1,110)

March 31, 2002
Service cost..........................................................
Interest cost on projected benefit obligation ........
Expected return on plan assets.............................
Amortization of net transition obligation ............
Amortization of unrecognized actuarial loss.........
Amortization of past service liabilities.................
Other (non-recurring additional
retirement allowance paid and other).................
Pension expenses .................................................

Millions of
Millions of yen U.S. dollars

¥26,338
38,164
(34,633)
23,493
5,660
(4,884)

10,414
¥64,553

$198
286
(260)
176
43
(37)

78
$484

(4) Assumptions

The principal assumptions used in determining benefit obliga-
tion and pension expenses at or for the year ended March 31,
2002 were as follows:
(a) Discount rate: 2.5% to 3.5%
(b) Expected rate of return on plan assets: 0.0% to 5.3%
(c) Allocation of estimated amount of retirement benefits:
Allocated to each period by the straight-line method

(d) Period of amortization of prior service costs:

Mainly 10 years

(e) Term to amortize unrecognized net actuarial gain or loss:

Mainly 10 years

(f ) Term to amortize unrecognized net obligation from initial
application of new accounting standard: Mainly 5 years

SMBC 2002 — 73

27. Lease Transactions

(1) Financing leases

A summary of assumed amounts of acquisition cost, accumu-
lated depreciation and net book value for financing leases
without transfer of ownership at March 31, 2002 was as follows:
(a) Lessee side

March 31, 2002
Acquisition cost..................
Accumulated depreciation ...
Net book value ...................

Equipment
¥17,475
8,663
¥ 8,812

Millions of yen
Other
¥237
157
¥ 80

Total
¥17,713
8,820
¥ 8,893

March 31, 2002
Acquisition cost..................
Accumulated depreciation ...
Net book value ...................

Equipment
$131
65
$ 66

Millions of U.S. dollars
Other
$2
1
$1

Total
$133
66
$ 67

Future minimum lease payments excluding interests at

March 31, 2002 were as follows:

March 31, 2002
Due within one year ............................................
Due after one year ...............................................

Millions of
Millions of yen U.S. dollars

¥3,055
6,130
¥9,185

$23
46
$69

Total lease expenses for the year ended March 31, 2002
were ¥4,210 million ($32 million). Assumed depreciation
charges for the year ended March 31, 2002 amounted to
¥3,848 million ($29 million). Assumed depreciation charges
is calculated using the straight-line method over the lease
term of the respective assets. The difference between the mini-
mum lease payments and the acquisition costs of the lease
assets represents interest expenses. The allocation of such
interest expenses over the lease term is computed using the
effective interest method. Interest expenses for the year ended
March 31, 2002 amounted to ¥325 million ($2 million).
(b) Lessor side

March 31, 2002
Acquisition cost..................
Accumulated depreciation ...
Net book value ...................

Equipment
¥2,019,480
1,241,098
¥ 778,382

Millions of yen
Other
¥279,759
145,377
¥134,381

Total
¥2,299,239
1,386,476
¥ 912,763

March 31, 2002
Acquisition cost..................
Accumulated depreciation ...
Net book value ...................

Equipment
$15,156
9,314
$ 5,842

Millions of U.S. dollars
Other
$2,099
1,091
$1,008

Total
$17,255
10,405
$ 6,850

Future lease payments receivable excluding interests at

March 31, 2002 were as follows:

March 31, 2002
Due within one year ............................................
Due after one year ...............................................

Millions of
Millions of yen U.S. dollars

¥286,293
654,334
¥940,628

$2,148
4,911
$7,059

Total lease income for the year ended March 31, 2002 was

¥368,795 million ($2,768 million). Assumed depreciation
charges for the year ended March 31, 2002 amounted to
¥305,584 million ($2,293 million). Depreciation is calculated
using the straight-line method over the lease term of the
respective assets without salvage values. The difference
between the lease payments receivable and the acquisition
costs of the lease assets represents interest income. The alloca-
tion of such interest income over the lease term is computed
using the effective interest method. Interest income for the
year ended March 31, 2002 was ¥60,569 million ($455
million).

(2) Operating leases

(a) Lessee side
Future minimum lease payments at March 31, 2002 were as
follows:

March 31, 2002
Due within one year ............................................
Due after one year ...............................................

Millions of
Millions of yen U.S. dollars

¥ 20,698
126,186
¥146,885

$ 155
947
$1,102

(b) Lessor side
Future lease payments receivable at March 31, 2002 were as
follows:

March 31, 2002
Due within one year ............................................
Due after one year ...............................................

Millions of
Millions of yen U.S. dollars

¥ 366
900
¥1,266

$ 3
7
$10

Future lease payments receivable of ¥117,699 million ($883
million) on the lessor side referred to in (1) and (2) above were
pledged as collateral for borrowings at March 31, 2002.

28. Loan Commitments
Commitment line contracts on overdrafts and loans are agreements to
lend to customers when they apply for borrowing, to a prescribed
amount, as long as there is no violation of any condition established
in the contracts. The amount of unused commitments was
¥27,038,063 million ($202,912 million), and the amount of unused
commitments whose original contract terms are within one year or
unconditionally cancelable at any time was ¥24,508,364 million
($183,928 million) at March 31, 2002. Since many of these commit-
ments 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 consolidated subsidiaries can reject an
application from customers or reduce the contract amounts in case
economic conditions are changed, the Bank and consolidated sub-
sidiaries need to secure claims or 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 con-
tracts, and take necessary measures such as grasping customers’ finan-
cial positions, revising contracts when need arises and securing claims
after the conclusion of the contracts.

74 — SMBC 2002

29. Market Value of Marketable Securities

(1) Securities

The market value of marketable securities at March 31, 2002 was as follows:

In addition to Securities in the consolidated balance sheet, trading securities, negotiable certificates of deposit and commercial paper

in Trading assets, negotiable certificates of deposit in Deposits with banks, and commercial papers and claims on loan trust in
Commercial paper and other debt purchased are included in the amounts of following tables.
(i) Securities classified as trading

March 31, 2002
Consolidated balance sheet amount.........................................................................................
Losses included in profit/loss during the year ..........................................................................

Millions of yen
¥986,563
15,011

Millions of U.S. dollars
$7,404
113

(ii) Bonds classified as held-to-maturity with market value

March 31, 2002
Japanese government bonds ...........................................
Japanese local government bonds ...................................
Corporate bonds.............................................................
Other.............................................................................
Total..............................................................................

Consolidated
balance sheet
amount
¥157,807
23,330
—
32,980
¥214,118

Consolidated
balance sheet
amount

$1,185
175
—
247
$1,607

Note: Market value is calculated by using market prices at the fiscal year-end.

(iii) Other securities with market value

March 31, 2002
Stocks ............................................................................
Bonds ............................................................................
Japanese government bonds......................................
Japanese local government bonds..............................
Corporate bonds .......................................................
Other.............................................................................
Total..............................................................................

Acquisition
cost
¥ 5,364,801
¥11,265,202
9,919,406
468,707
877,088
¥ 3,039,987
¥19,669,991

Acquisition
cost
$ 40,261
$ 84,542
74,442
3,518
6,582
$ 22,814
$147,617

Millions of yen

Net unrealized
gains (losses)
¥415
(240)
—
717
¥892

Millions of U.S. dollars

Net unrealized
gains (losses)

$3
(2)
—
6
$7

Gains
¥ 493
—
—
769
¥1,262

Gains
$ 4
—
—
6
$10

Millions of yen

Net unrealized
gains (losses)
¥(509,305)
¥ 36,459
36,658
8,013
(8,212)
¥ (22,661)
¥(495,507)

Millions of U.S. dollars

Net unrealized
gains (losses)
$(3,822)
$ 274
275
60
(61)
$ (170)
$(3,718)

Gains
¥192,620
¥ 58,810
41,284
9,887
7,638
¥
8,610
¥260,042

Gains
$1,446
$ 441
310
74
57
$
65
$1,952

Market value
¥158,223
23,089
—
33,697
¥215,011

Market value
$1,188
173
—
253
$1,614

Consolidated
balance sheet
amount
¥ 4,855,495
¥11,301,661
9,956,064
476,721
868,875
¥ 3,017,326
¥19,174,483

Consolidated
balance sheet
amount
$ 36,439
$ 84,816
74,717
3,578
6,521
$ 22,644
$143,899

Losses
¥ 77
240
—
52
¥370

Losses
$1
2
—
0
$3

Losses
¥701,926
¥ 22,351
4,626
1,873
15,851
¥ 31,271
¥755,549

Losses

$5,268
$ 167
35
14
118
$ 235
$5,670

Note: Market value is calculated by using the average market price for one month before the consolidated fiscal year-end as for stocks and using the market prices at the con-

solidated fiscal year-end as for bonds and others.

SMBC 2002 — 75

(iv) Bonds sold during the year ended March 31, 2002 that are classified as held-to-maturity
There are no corresponding items.
(v) Other securities sold during the year ended March 31, 2002

Year ended March 31, 2002
Other securities ...................

Sales amount
¥32,067,887

(vi) Securities with no available market value

March 31, 2002
Bonds classified as held-to-maturity

Millions of yen
Gains on sales
¥321,317

Losses on sales
¥95,118

Sales amount
$240,660

Millions of U.S. dollars
Gains on sales
$2,411

Losses on sales
$714

Millions of yen
Consolidated
balance sheet amount

Millions of U.S. dollars
Consolidated
balance sheet amount

Nonlisted foreign securities...............................................................................................
Other................................................................................................................................

Other securities

Nonlisted foreign securities...............................................................................................
Nonlisted bonds................................................................................................................
Nonlisted stocks (excluding OTC stocks)..........................................................................
Other................................................................................................................................

¥ 13,080
18,246

¥349,227
561,512
179,961
109,478

(vii) Change of classification of securities
There are no corresponding items.
(viii) Redemption schedule of other securities with maturities and bonds classified as held-to-maturity

98
137

$2,621
4,214
1,351
822

March 31, 2002
Bonds ............................................................................................................
Japanese government bonds......................................................................
Japanese local government bonds .............................................................
Japanese corporate bonds..........................................................................
Other.............................................................................................................
Total..............................................................................................................

(2) Money held in trust

(i) Money held in trust classified as trading

Millions of yen

1 year or less
¥2,315,514
2,179,224
25,647
110,643
¥ 469,356
¥2,784,871

1 to 5 years
¥7,488,398
6,340,438
130,937
1,017,022
¥2,044,658
¥9,533,057

5 to 10 years
¥1,966,674
1,324,773
342,159
299,741
¥ 153,680
¥2,120,354

Millions of U.S. dollars

1 year or less

1 to 5 years

$17,377
16,354
193
830
$ 3,523
$20,900

$56,198
47,583
983
7,632
$15,345
$71,543

5 to 10 years
$14,759
9,942
2,568
2,249
$ 1,154
$15,913

Over 10 years

¥273,699
269,435
1,307
2,956
¥517,756
¥791,456

Over 10 years

$2,054
2,022
10
22
$3,886
$5,940

March 31, 2002
Consolidated balance sheet amount.........................................................................................
Gains included in profit/loss during the year ..........................................................................

Millions of yen
¥3,715
—

Millions of U.S. dollars

$28
—

(ii) Money held in trust classified as held-to-maturity
There are no corresponding items.
(iii) Other money held in trust

March 31, 2002
Other money held in trust..............................................

Acquisition
cost
¥33,969

Acquisition
cost

Consolidated
balance sheet
amount

¥30,144

Consolidated
balance sheet
amount

$255

$226

Millions of yen

Net unrealized
gains (losses)
¥(3,825)

Millions of U.S. dollars

Net unrealized
gains (losses)
$(29)

Gains

¥135

Losses

¥3,960

Gains

Losses

$30

(3) Net unrealized gains (losses) on other securities and other money held in trust

March 31, 2002
Net unrealized gains (losses) ...................................................................................................
Other securities.................................................................................................................
Other money held in trust.................................................................................................
(+) Deferred tax assets.............................................................................................................
Net unrealized gains (losses) on other securities (before following adjustment)........................
(–) 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 (losses) on other securities ......................................................................

Millions of yen
¥(499,280)
(495,455)
(3,825)
191,016
¥(308,264)
(4,225)
¥

(797)
¥(304,837)

Millions of U.S. dollars
$(3,747)
(3,718)
(29)
1,434
$(2,313)
(31)
$

(6)
$(2,288)

Note: Net unrealized gains (losses) included foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

76 — SMBC 2002

30. Derivative Transactions
Interest rate derivatives

(1)

March 31, 2002
Transactions listed on exchange
Interest rate futures:

Millions of yen

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Interest rate options:

8,943,374
6,928,597

542,286
341,900

574,331 ¥
701,914

—
—

3,429
(3,190)

(22)
48

3,429
(3,190)

(22)
48

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............................................

9,174,207
3,024,390
¥268,046,524
128,429,893
124,541,252
14,722,791

580,000
780,000
¥169,004,153
79,655,118
76,679,066
12,361,681

13
(248)
37,188
2,593,978
(2,548,948)
(5,459)

Swaptions:

Caps:

Floors:

Other:

March 31, 2002
Transactions listed on exchange
Interest rate futures:

1,118,152
952,425

5,446,040
4,622,975

400,233
621,113

14,352
188,333
/

523,065
592,115

¥ (21,895)
19,321

4,319,041
3,586,333

235,877
325,744

13,852
62,889
/

(7,950)
11,040

(9,240)
12,622

(9,170)
2,390
34,335

(7,950)
11,040

(9,240)
12,622

(9,170)
2,390
34,335

Millions of U.S. dollars

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Interest rate options:

67,117
51,997

4,310
5,268

4,070
2,566

—
—

26
(24)

(0)
0

26
(24)

(0)
0

Over-the-counter transactions
Forward rate agreements:

68,850
22,697
$2,011,606
963,827
934,644
110,490

4,353
5,854
$1,268,324
597,787
575,453
92,771

0
(2)
279
19,467
(19,129)
(41)

Swaptions:

Caps:

Floors:

Other:

8,391
7,148

40,871
34,694

3,004
4,661

108
1,413
/

3,925
4,444

32,413
26,914

1,770
2,445

104
472
/

$ (164)
145

(60)
83

(69)
95

(69)
18
258

(60)
83

(69)
95

(69)
18
258

Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statement of operations.

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 ¥490 million ($4 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.

SMBC 2002 — 77

(2) Currency derivatives

March 31, 2002
Over-the-counter transactions
Currency swaps ..............................................................................................
Forward foreign exchange ..............................................................................
Currency options

Other

Millions of yen

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

¥15,732,720
¥ 1,319,768

¥8,809,028
¥ 336,625

11,641
10,956

2,362
4,209

293,341
457,727
/

¥ 293,341
457,727
/

¥(46,698)
¥ (2,439)

(877)
931

¥ (3,163)
6,145
¥(46,102)

¥(46,698)
¥ (2,439)

(877)
931

¥ (3,163)
6,145
¥(46,102)

Millions of U.S. dollars

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

$118,069
9,904
$

87
82

2,201
3,435
/

$66,109
$ 2,526

18
32

$ 2,201
3,435
/

$(350)
$ (18)

(7)
7

$ (24)
46
$(346)

$(350)
$ (18)

(7)
7

$ (24)
46
$(346)

Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statement of operations.

Derivative transactions to which the hedge accounting method is applied and the transaction referred to in Note 3 below, 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 ¥715 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:

(a) Those that are revaluated at fiscal year-end and the revaluated gains (losses) are accounted for in the consolidated statement of operations.
(b) Those that are allotted to financial assets/liabilities denominated in foreign currency and whose market values are already reflected in the amount of the financial

assets/liabilities on the consolidated balance sheet.

(c) Those that are allotted to financial assets/liabilities denominated in 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, 2002
Transactions listed on exchange
Currency futures:

Millions of yen
Contract amount

Millions of U.S. dollars
Contract amount

Sold........................................................................................................................
Bought...................................................................................................................

Currency options:

Over-the-counter transactions
Forward foreign exchange ............................................................................................
Currency options:

—
—

¥42,123,544

¥ 3,161,699
3,736,356

—
—

$316,124

$ 23,728
28,040

78 — SMBC 2002

(3) Equity derivatives

March 31, 2002
Transactions listed on exchange
Stock price index futures:

Stock price index options:

Over-the-counter transactions
Equity options:

Stock price index swaps:

Receivable equity index/payable floating rate ...........................................
Receivable floating rate/payable equity index ...........................................

Other:

March 31, 2002
Transactions listed on exchange
Stock price index futures:

Stock price index options:

Over-the-counter transactions
Equity options:

Stock price index swaps:

Receivable equity index/payable floating rate ...........................................
Receivable floating rate/payable equity index ...........................................

Other:

Millions of yen

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

55
211

¥ —
—

¥ —
11,664

¥98,375
69,016
/

¥ —
—

¥21,566
—
/

0
0

¥ —
—

¥ —
25

¥(4,531)
796
¥(3,709)

0
0

¥ —
—

¥ —
25

¥(4,531)
796
¥(3,709)

Millions of U.S. dollars

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

0
2

$ —
—

$ —
88

$738
518
/

$ —
—

$162
—
/

$ 0
0

$ —
—

$ —
0

$(34)
6
$(28)

$ 0
0

$ —
—

$ —
0

$(34)
6
$(28)

Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statement of operations.

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.

SMBC 2002 — 79

(4) Bond derivatives

March 31, 2002
Transactions listed on exchange
Bond futures:

Millions of yen

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Bond futures options:

¥13,300
13,300

¥ —
5,000

¥ —
—

Over-the-counter transactions
Bond options:

¥23,064
28,155
/

¥17,384
4,953
/

¥(78)
90

¥ —
11

¥(11)
0
¥ 11

¥(78)
90

¥ —
11

¥(11)
0
¥ 11

March 31, 2002
Transactions listed on exchange
Bond futures:

Bond futures options:

Over-the-counter transactions
Bond options:

Millions of U.S. dollars

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

$100
100

$ —
38

$173
211
/

$ —
—

$130
37
/

$(1)
1

$—
0

$(0)
0
$ 0

$(1)
1

$—
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 operations.

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.

(5) Commodity derivatives

March 31, 2002
Over-the-counter transactions
Commodity swaps:

Millions of yen

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Receivable fixed price/payable floating price ............................................
Receivable floating price/payable fixed price ............................................

Commodity options:

¥1,918
1,918

¥5,026
5,026
/

¥1,796
1,796

¥4,469
4,469
/

¥ 504
(361)

¥(1,070)
1,107
¥ 180

¥ 504
(361)

¥(1,070)
1,107
¥ 180

March 31, 2002
Over-the-counter transactions
Commodity swaps:

Millions of U.S. dollars

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Receivable fixed price/payable floating price ............................................
Receivable floating price/payable fixed price ............................................

Commodity options:

$14
14

$38
38
/

$13
13

$34
34
/

$ 4
(3)

$(8)
8
$ 1

$ 4
(3)

$(8)
8
$ 1

Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statement of operations.

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.

80 — SMBC 2002

(6) Credit derivative transactions

March 31, 2002
Over-the-counter transactions
Credit default options:

Millions of yen

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Other:

¥ 51,166
49,684

¥ 16,354
223,044
/

¥43,807
37,903

¥14,514
80,496
/

(774)
1,428

¥ (2,584)
14,895
¥12,965

(774)
1,428

¥ (2,584)
14,895
¥12,965

March 31, 2002
Over-the-counter transactions
Credit default options:

Millions of U.S. dollars

Contract amount

Total

Over 1 year

Market
value

Net valuated
gains (losses)

Other:

$ 384
373

$ 123
1,674
/

$329
284

$109
604
/

$ (6)
11

$ (20)
112
$ 97

$ (6)
11

$ (20)
112
$ 97

Notes: 1. The above transactions are valuated at market value and the valuated gains (losses) are accounted for in the consolidated statement of operations.

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 the price of the reference assets and contract term.
3. “Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred.

SMBC 2002 — 81

31. Segment Information

(1) Business segment information

Year ended March 31, 2002
I. Operating income

Banking business

Leasing

Other

Total

Elimination

Consolidated

Millions of yen

(1) External customers .......................
(2) Intersegment ................................

Total .................................................
Operating expenses ..............................

2,698,303
264,276

2,962,579
3,536,635

¥ 585,108
5,262

¥ 590,370
565,781

¥ 496,291
205,584

¥ 701,875
504,598

3,779,702
475,123

4,254,825
4,607,015

— ¥

(475,123)

¥ (475,123)
(246,684)

3,779,702
—

3,779,702
4,360,330

(580,628)

Operating profit (loss)..........................

(574,055)

24,589

¥ 197,277

(352,189)

¥ (228,438)

II. Assets, depreciation and
capital expenditure
Assets ................................................
Depreciation......................................
Capital expenditure ...........................

Year ended March 31, 2002
I. Operating income

¥105,898,627
79,019
101,295

¥1,723,850
345,405
305,198

¥6,766,939
19,623
25,238

¥114,389,418
444,048
431,732

¥(6,384,416)
—
—

¥108,005,001
444,048
431,732

Banking business

Leasing

Other

Total

Elimination

Consolidated

Millions of U.S. dollars

(1) External customers .......................
(2) Intersegment ................................

Total .................................................
Operating expenses ..............................

$ 20,250
1,983

$ 22,233
26,541

Operating profit (loss)..........................

$ (4,308)

$794,736
593
760

$ 4,391
39

$ 4,430
4,246

184

$12,937
2,592
2,291

$ 3,724
1,543

$ 5,267
3,787

$ 1,480

$50,784
147
189

$ 28,365
3,565

$ 31,930
34,574

$ (2,644)

$858,457
3,332
3,240

—
(3,565)

$ (3,565)
(1,851)

$ (1,714)

$ 28,365
—

$ 28,365
32,723

$ (4,358)

$(47,913)
—
—

$810,544
3,332
3,240

Notes: 1. The business segmentation is determined based on the Bank’s internal administrative purposes.

2. “Other” includes securities, credit card, investment banking, loans, factoring, mortgage securities, venture capital, system development and information processing.
3. As mentioned in Note 2 (17) “Adoption of new accounting standards,” prior to April 1, 2001, unsecured loaned securities and securities under repurchase agree-

ments were recognized as “Securities in custody” in Other assets and “Trading account securities borrowed” or “Securities borrowed” in Other liabilities by the same
amounts. Effective April 1, 2001, they are not reported on the consolidated balance sheet in accordance with the revision of the accounting standards for financial
instruments. Consequently, Assets of “Banking business” decreased by ¥3,098,200 million ($23,251 million) at March 31, 2002, as compared with the former
manner.

4. As mentioned in Note 2 (4) “Securities,” effective April 1, 2001, the method of valuation on other securities and other money held in trust complied with the

accounting standards for financial instruments. Consequently, Assets of “Banking business,” “Leasing” and “Other” decreased by ¥301,413 million ($2,262 mil-
lion), ¥999 million ($7 million) and ¥4,325 million ($32 million) at March 31, 2002, as compared with the former manner, respectively.

5. Operating income represents total income excluding gains on disposition of premises and equipment, collection of written-off claims, gain on sale of business opera-

tion 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 benefits and other extraordinary expenses.

82 — SMBC 2002

(2) Geographic segment information

Year ended March 31, 2002
I. Operating income

Japan

The Americas

Europe

Millions of yen
Asia and Oceania

Total

Elimination

Consolidated

(1) External customers ........
(2) Intersegment.................

¥ 2,934,322
276,404

Total..................................
Operating expenses...............

¥ 3,210,727
3,895,821

¥ 418,104
85,450

¥ 503,554
290,884

¥ 210,831
122,428

¥ 333,260
304,545

¥ 216,443
76,812

¥ 293,256
240,295

Operating profit (loss) ..........

¥ (685,093)

¥ 212,670

28,714

52,961

3,779,702
561,096

4,340,799
4,731,546

— ¥ 3,779,702
—

(561,096)

¥ (561,096) ¥
(371,215)

3,779,702
4,360,330

(390,746)

¥ (189,881) ¥

(580,628)

II. Assets .................................

¥96,551,202

¥7,122,548

¥3,210,741

¥4,057,313

¥110,941,806

¥(2,936,804) ¥108,005,001

Year ended March 31, 2002
I. Operating income

Japan

The Americas

Europe

Millions of U.S. dollars
Asia and Oceania

Total

Elimination

Consolidated

(1) External customers ........
(2) Intersegment.................

Total..................................
Operating expenses...............

$ 22,021
2,075

$ 24,096
29,237

Operating profit (loss) ..........

$ (5,141)

II. Assets .................................

$724,587

$ 3,138
641

$ 3,779
2,183

$ 1,596

$53,452

$ 1,582
919

$ 2,501
2,286

215

$24,096

$ 1,624
576

$ 2,200
1,803

397

$30,449

$ 28,365
4,211

$ 32,576
35,509

$ (2,933)

$832,584

—
(4,211)

$ (4,211)
(2,786)

$ (1,425)

$(22,040)

$ 28,365
—

$ 28,365
32,723

$ (4,358)

$810,544

Notes: 1. The geographic segmentation is decided based on the degrees of following factors: geographic proximity, similarity of economic activities and relationship of busi-

ness 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. As mentioned in Note 2 (17) “Adoption of new accounting standards,” prior to April 1, 2001, unsecured loaned securities and securities under repurchase agree-

ments were recognized as “Securities in custody” in Other assets and “Trading account securities borrowed” or “Securities borrowed” in Other liabilities by the same
amounts. Effective April 1, 2001, they are not reported on the consolidated balance sheet in accordance with the revision of the accounting standards for financial
instruments. Consequently, Assets of “Japan” decreased by ¥3,098,200 million ($23,251 million) at March 31, 2002, as compared with the former manner.
4. As mentioned in Note 2 (4) “Securities,” effective April 1, 2001, the method of valuation on other securities and other money held in trust complied with the

accounting standards for financial instruments. Consequently, Assets of “Japan,” “The Americas” and “Europe” decreased by ¥307,871 million ($2,310 million),
¥562 million ($4 million) and ¥696 million ($5 million) at March 31, 2002 and “Asia and Oceania” increased by ¥2,391 million ($18 million) at March 31, 2002,
as compared with the former manner, respectively.

5. Operating income represents total income excluding gains on disposition of premises and equipment, recoveries of written-off claims, gain on sale of business opera-

(3) Operating income from overseas operations

Year ended March 31, 2002
Operating income from overseas operations (A).......................................................................

Consolidated operating income (B) .........................................................................................

Millions of yen
¥ 845,379

3,779,702

(A)/(B) ....................................................................................................................................

22.4%

Millions of U.S. dollars
$ 6,344

28,365

22.4%

Note: The above table shows operating income from transactions of the Bank’s overseas branches and overseas consolidated subsidiaries, excluding internal income.

32. Subsequent Event
Appropriations of retained earnings
The following appropriations of retained earnings of the Bank at March 31, 2002 were approved by the ordinary general meeting of sharehold-
ers held on June 27, 2002:

Cash dividends,

¥4.00 per share on common stock ........................................................................
¥10.50 per share on preferred stock (First series Type 1).......................................
¥28.50 per share on preferred stock (Second series Type 1) ...................................
¥13.70 per share on preferred stock (Type 5) ........................................................

Millions of yen
¥22,835
703
2,850
10,960

Millions of U.S. dollars

$171
5
21
82

SMBC 2002 — 83

33. Parent Company

(1) Nonconsolidated Balance Sheet

Sumitomo Mitsui Banking Corporation
March 31, 2002
Assets

Millions of yen

Millions of U.S. dollars

Cash and due from banks................................................................................................ ¥ 1,871,121

Deposits with banks .........................................................................................................

3,587,308

Call loans and bills bought ...............................................................................................

Receivables under resale agreements ............................................................................

Commercial paper and other debt purchased..................................................................

620,406

432,730

146,650

Trading assets .................................................................................................................

2,705,648

Money held in trust...........................................................................................................

33,858

Securities .........................................................................................................................

20,442,996

Loans and bills discounted...............................................................................................

59,928,368

Foreign exchanges ..........................................................................................................

779,142

Other assets.....................................................................................................................

5,344,106

Premises and equipment .................................................................................................

Deferred tax assets..........................................................................................................

Customers’ liabilities for acceptances and guarantees....................................................

890,981

1,741,114

5,529,996

Reserve for possible loan losses .....................................................................................

(1,971,849)

Total assets .................................................................................................................... ¥102,082,581

$ 14,042

26,922

4,656

3,247

1,101

20,305

254

153,418

449,744

5,847

40,106

6,687

13,066

41,501

(14,798)

$766,098

Liabilities and stockholders’ equity

Liabilities

Deposits ........................................................................................................................... ¥ 67,629,353

$507,537

Call money and bills sold .................................................................................................

10,752,791

Payables under repurchase agreements .........................................................................

Commercial paper............................................................................................................

Trading liabilities ..............................................................................................................

Borrowed money..............................................................................................................

Foreign exchanges ..........................................................................................................

1,100,446

1,001,000

1,797,086

3,406,286

300,162

Bonds...............................................................................................................................

2,133,754

Convertible bonds ............................................................................................................

1,106

Other liabilities .................................................................................................................

4,962,176

Reserve for employee bonuses .......................................................................................

Reserve for employee retirement benefits .......................................................................

Reserve for possible losses on loans sold.......................................................................

Other reserves .................................................................................................................

Deferred tax liabilities for land revaluation .......................................................................

11,342

116,854

80,576

63,137

80,696

8,258

7,512

13,487

25,563

2,253

16,013

37,240

877

605

474

Acceptances and guarantees ..........................................................................................

5,529,996

Total liabilities ................................................................................................................ ¥ 98,886,088

41,501

$742,109

Stockholders’ equity

Preferred stock; authorized 970,000,000 shares and issued 967,000,000 shares.......... ¥

650,500

$ 4,882

Common stock; authorized 15,000,000,000 shares and issued 5,709,424,395 shares .....

676,246

Capital surplus .................................................................................................................

1,326,758

Land revaluation excess ..................................................................................................

Retained earnings............................................................................................................

100,346

740,874

Net unrealized losses on other securities ........................................................................

(297,950)

Treasury stock .................................................................................................................

(283)

Total stockholders’ equity ............................................................................................ ¥ 3,196,492

Total liabilities and stockholders’ equity..................................................................... ¥102,082,581

5,075

9,957

753

5,560

(2,236)

(2)

$ 23,989

$766,098

Note: 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 ¥133.25 to US$1, the exchange rate prevailing at March 31, 2002.

84 — SMBC 2002

(2) Nonconsolidated Statement of Operations
Sumitomo Mitsui Banking Corporation
Year ended March 31, 2002
Income

Interest income:

Millions of yen

Millions of U.S. dollars

Interest on loans and discounts......................................................................

¥1,261,307

$ 9,466

Interest and dividends on securities ...............................................................

Other interest income .....................................................................................

Fees and commissions............................................................................................

Trading profits .........................................................................................................

Other operating income...........................................................................................

Other income...........................................................................................................

504,732

426,920

239,645

121,414

150,886

113,281

3,788

3,204

1,799

911

1,132

850

Total income ..........................................................................................................

¥2,818,189

$21,150

Expenses

Interest expenses:

Interest on deposits ........................................................................................

¥ 337,679

$ 2,534

Interest on borrowings 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 .......................................................................................................

Total expenses ......................................................................................................

Loss before income taxes .......................................................................................

Income taxes:

Current ...........................................................................................................

Deferred .........................................................................................................

Net loss ..................................................................................................................

147,932

231,064

74,373

125

60,445

696,775

1,158,947

647,482

¥3,354,826

¥ 536,637

¥ 32,737

(246,522)

¥ 322,852

1,110

1,734

558

454

5,229

8,698

4,859

$25,177

$ 4,027

$ 246

(1,850)

$ 2,423

Year ended March 31, 2002
Per share data:

Yen

U.S. dollars

Net loss ..........................................................................................................

¥ 59.20

$ 0.44

Declared dividends on common stock............................................................

Declared dividends on preferred stock (First series Type 1)..........................

Declared dividends on preferred stock (Second series Type 1).....................

Declared dividends on preferred stock (Type 5) ............................................

4.00

10.50

28.50

13.70

0.03

0.08

0.21

0.10

Note: 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 ¥133.25 to US$1, the exchange rate prevailing at March 31, 2002.

SMBC 2002 — 85

Report of Independent Public Accountants

To The Board of Directors of
Sumitomo Mitsui Banking Corporation

We have audited the accompanying consolidated balance sheet of Sumitomo Mitsui Banking Corporation and sub-
sidiaries as of March 31, 2002, and the related consolidated statements of operations, stockholders’ equity and cash
flows for the year then ended, expressed in Japanese yen. Our audit was 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 posi-
tion of Sumitomo Mitsui Banking Corporation and subsidiaries as of March 31, 2002, and the consolidated results of
their operations and their cash flows for the year then ended in conformity with accounting principles generally
accepted in Japan (Note 1) applied on a basis consistent with that of the preceding year, except as noted in the fol-
lowing paragraph.

As explained in Note 2, effective April 1, 2001, Sumitomo Mitsui Banking Corporation and subsidiaries
prospectively adopted the Japanese accounting standard for financial instruments on Other securities.

Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements have been trans-
lated from Japanese yen on the basis set forth in Note 1.

Tokyo, Japan
June 27, 2002

86 — SMBC 2002

Supplemental Information

Combined Consolidated Balance Sheet (Unaudited)
Sumitomo Mitsui Banking Corporation and Subsidiaries

March 31, 2001

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 ..............................................................................................................................................
Lease assets.................................................................................................................................................................
Deferred tax assets.......................................................................................................................................................
Goodwill ........................................................................................................................................................................
Customers’ liabilities for acceptances and guarantees.................................................................................................
Reserve for possible loan losses ..................................................................................................................................
Total assets .................................................................................................................................................................

Liabilities, minority interests 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 .........................................................................................................................................................
Pledged money for securities lending transactions ......................................................................................................
Other liabilities ..............................................................................................................................................................
Reserve for employee retirement benefits ....................................................................................................................
Reserve for possible losses on loans sold....................................................................................................................
Other reserves ..............................................................................................................................................................
Deferred tax liabilities ..................................................................................................................................................
Deferred tax liabilities for land revaluation ....................................................................................................................
Acceptances and guarantees ......................................................................................................................................
Total liabilities .............................................................................................................................................................

Millions of yen

¥ 3,764,400
3,755,464
507,614
2,905,306
259,016
2,490,982
75,120
27,312,498
65,537,091
738,761
5,657,250
1,566,892
827,134
1,156,514
6,224
3,951,237
(1,268,853)
¥119,242,661

¥ 74,696,023
9,941,070
5,262,187
1,736,153
1,270,014
3,460,782
250,907
3,195,061
101,106
4,607,098
5,413,152
39,688
145,266
651
24,640
144,055
3,951,237
¥114,239,104

Minority interests ........................................................................................................................................................

990,595

Stockholders’ equity
Capital stock .................................................................................................................................................................
Capital surplus ..............................................................................................................................................................
Land revaluation excess ...............................................................................................................................................
Retained earnings.........................................................................................................................................................
Foreign currency translation adjustments .....................................................................................................................
Treasury stock ..............................................................................................................................................................
Parent bank stock held by subsidiaries ........................................................................................................................
Total stockholders’ equity .........................................................................................................................................
Total liabilities, minority interests and stockholders’ equity .................................................................................

¥ 1,795,554
1,542,601
230,669
515,984
(53,110)
(46)
(18,692)
¥ 4,012,960
¥119,242,661

Notes: 1. Amounts less than one million yen have been omitted.

2. Amounts are prepared for the former Sakura Bank and the former Sumitomo Bank on a combined basis.

SMBC 2002 — 87

Combined Consolidated Statement of Income (Unaudited)
Sumitomo Mitsui Banking Corporation and Subsidiaries

Year ended March 31, 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 .....................................................................................................................................................
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 ................................................................................................................................................................
Transfer to other reserves ................................................................................................................................................
Total expenses................................................................................................................................................................
Income before income taxes and minority interests...................................................................................................
Income taxes:

Current ........................................................................................................................................................................
Deferred ......................................................................................................................................................................

Minority interests in net income ........................................................................................................................................
Net income ......................................................................................................................................................................

Notes: 1. Amounts less than one million yen have been omitted.

2. Amounts are prepared for the former Sakura Bank and the former Sumitomo Bank on a combined basis.

Millions of yen

¥1,659,745
328,449
10,861
436,827
412,097
111,183
649,681
892,350
¥4,501,200

¥ 643,840
178,210
22,224
268,071
95,781
2,146
560,664
940,889
48,973
1,334,874
2
¥4,095,685
¥ 405,514

65,530
198,227
¥ 263,757
9,346
¥
¥ 132,408

88 — SMBC 2002

Summary of Significant Differences between Japanese GAAP
and U.S. GAAP
The consolidated financial statements of the Bank and its subsidiaries presented in this annual report conform with generally
accepted accounting principles in Japan (“Japanese GAAP”). Such principles vary from the accounting principles generally
accepted in the United States (“U.S. GAAP”). Significant differences between Japanese GAAP and U.S. GAAP are summarized
as follows:

Japanese GAAP

U.S. GAAP

Consolidated Subsidiaries
The consolidated financial statements include all enterprises
that are controlled by the parent, irrespective of the percent-
age of the voting shares owned.

Control is defined as the power to govern the decision

making body of an enterprise.

Equity Method of Accounting
Affiliates are enterprises over which the Bank has material
influences over their financial and operating policies.

Investments in nonconsolidated subsidiaries or affiliates
are accounted for by the equity method in the consolidated
financial statements.

Business Combinations
Currently, there are no established accounting principles for
business combinations.

Accounting treatment that is similar to the pooling-of-
interest method is normally used for business combinations
in accordance with the Commercial Code of Japan. Under
the accounting treatment, the balance sheet items of the
acquired company are combined with those of the acquiring
company at their carrying amount or fair value, and the
effect of such pooling shall not be reflected in prior years’
financial statements.

Securities
Prior to April 1, 2001, debt securities 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 included in
the current period income. Securities of subsidiaries and
affiliates are carried at cost in the nonconsolidated financial
statements. Other securities (available-for-sale securities) can
be carried at cost.

Effective April 1, 2001, other securities (available-for-
sale securities) are carried at fair value with unrealized gains
or losses recorded directly to equity, net of taxes.

Accounting for Derivatives and Hedging Activities
Prior to April 1, 2000, derivative instruments for trading
purposes were accounted for at fair values, while other deriv-
ative instruments were accounted for on an accrual basis.

Effective April 1, 2000, derivative instruments are car-
ried 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

Consolidated Subsidiaries
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.

Equity Method of Accounting
Investments representing ownership of 20% to 50% of the
outstanding voting shares are accounted for by the equity
method.

Business Combinations
Effective July 1, 2001, SFAS No. 141, Accounting for
Business Combinations, prescribes the purchase method for
all business combinations. The purchase method requires the
valuation of the acquired assets and liabilities based on fair
market values at the time of combination. The difference
between the fair market values of the net assets and the con-
sideration paid represents goodwill.

Previously, there were two mutually exclusive methods
of accounting for business combinations – purchase method
and pooling-of-interests method.

Securities
Investments in marketable equity and all debt securities are
classified at acquisition, according to management’s intent,
into one of the following categories: trading, available-for-
sale or held-to-maturity. Trading securities are marked to
fair value, with the resulting unrealized gain or loss recog-
nized to income. Available-for-sale securities should be
marked to fair value, with the resulting unrealized gain or
loss recorded to other comprehensive income. Held-to-
maturity securities are carried at amortized cost.

Accounting for Derivatives and Hedging Activities
Effective for all fiscal years beginning after June 15, 2000,
SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended, requires the recognition of
all derivatives as assets or liabilities in the balance sheet
measured at fair value. Changes in the fair values of deriva-
tives are included in earnings unless the derivative qualifies
for hedge accounting criteria. The changes in the fair value
of derivatives qualifying for hedge accounting criteria
depend on the intended use.

SMBC 2002 — 89

derivative instruments as either an asset or liability until the
related losses or gains on the hedged items are recognized.
Also effective April 1, 2000, a bank is permitted to
adopt “Macro Hedge Accounting” as a hedge accounting
method, under which the bank manages the total interest
rate risk arising from various financial assets and liabilities
as a whole by using financial derivative transactions.

Accounting for Sales of Loans with Recourse
Certain loan participations which meet specified criteria are
allowed to be accounted for as sales, even though the loans
are not legally isolated from the transferor.

Restructured Loans
Discounted present value is not usually used to measure
impairment of a loan. Reserve for restructured loans is com-
puted based on historical loss experience.

For derivatives designated as hedging the exposure to

changes in the fair value of an asset or liability or a firm
commitment, the gain or loss is recognized in earnings in
the period of change together with the offsetting loss or gain
on the hedged item.

For derivatives designated as hedging the exposure to
variable cash flows of a forecasted transaction, the effective
portion of the derivative’s gain or loss is initially reported as
a component of other comprehensive income.

For derivatives designated as hedging the foreign cur-
rency exposure of a net investment in a foreign operation,
the gain or loss is reported in other comprehensive income as
part of the cumulative translation adjustment.

Such “Macro Hedge Accounting” under Japanese GAAP

is not permissible.

Accounting for Sales of Loans with Recourse
Under U.S. GAAP, pursuant to SFAS No. 140, financial
assets are recorded as sold and removed from the balance
sheet only when legal title has passed and the purchaser
obtains the asset free of conditions that constrain it from
taking advantage of the right to pledge or sell the asset.
Sales that are not free of such constraints are recorded as a
financing. A transfer of assets qualifying as a sale under U.S.
GAAP but in connection with which the seller has retained
recourse would result in recording liability for the estimated
recourse.

Restructured Loans
SFAS No. 114 requires that impaired loans, including trou-
bled debt restructurings, 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 collat-
eral if the loan is collateral-dependent.

Accrued Interest on Non-Performing Loans
The Bank places into the non-accrual status the loans which
management assessed as “Bankrupt,” “Effectively Bankrupt”
or “Potentially Bankrupt.” Accrued interest related to such
loans is written-off.

Accrued Interest on Non-Performing Loans
Loans are generally placed on non-accrual status when they
become 90 days past due or when they are deemed uncol-
lectible based on management’s assessment. Accrued interest
related to such loans is reversed against interest income.

Impairment of Long-Lived Assets
Currently, there is no requirement for considering the
impairment of long-lived assets.

Goodwill
Goodwill that is the excess of investment cost over the par-
ent’s share of the underlying equity in net assets of the sub-
sidiary at the date of acquisition and that is created in
consolidation procedures shall be amortized within 20 years.

90 — SMBC 2002

Impairment of Long-Lived Assets
SFAS No. 144 requires to recognize an impairment loss only
if the carrying amount of a long-lived asset is not recoverable
from its undiscounted cash flows and to measure an impair-
ment loss as the difference between the carrying amount and
fair value of the long-lived assets. The impairment loss shall
be included in the current period income.

Goodwill
Prior to the effective date of SFAS No. 142, goodwill was
amortized over its estimated economic life, not to exceed 40
years.

Under SFAS No. 142 effective from the fiscal year begin-

ning after December 15, 2001, goodwill shall not be

amortized but rather shall be tested at least annually for
impairment.

Earned Surplus Reserve
Such earned surplus reserve is not provided for under U.S.
GAAP.

Land Revaluation Excess
Such land revaluation excess is not permissible.

Earned Surplus Reserve
Under the Banking Law of Japan, an amount equivalent to
at least 20% of cash disbursements paid was appropriated
and was set aside as earned surplus reserve in the retained
earnings up to the amount of common stock.

Effective October 1, 2001, such earned surplus reserve is

recorded until the total of both earned surplus reserve and
capital surplus equals to the amount of common stock. The
excess of the total amount over the amount of common stock
may be transferred to retained earnings by resolution of
stockholders.

Land Revaluation Excess
Land which had been recorded at acquired cost was allowed
to be revalued at fair value at one time during a fiscal year
beginning after March 31, 1998. The resulting gains were
recorded in land revaluation excess as a separate component
in the stockholders’ equity, net of tax.

The land shall not be revaluated after the initial revalua-

tion even in case that the fair value declined.

Guarantees
Guarantees, including standby letters of credit and the
related reimbursement obligations of customers, are pre-
sented on the balance sheet with assets of equal amounts.

Guarantees
Such guarantees and reimbursement obligations are dis-
closed in the footnotes and not presented on the balance
sheet.

Loan Fees
Loan origination fees are recognized when income is
received.

Loan Fees
Loan origination fees are deferred and recognized over the
life of the loan as an adjustment of yield based on the effec-
tive interest method.

Directors’ Bonuses
Directors’ bonuses are charged directly to retained earnings
by resolution of stockholders.

Directors’ Bonuses
Directors’ compensation is generally expensed on an accrual
basis.

Leases
Unless transfer of ownership occurs, financing leases may be
accounted for as operating leases accompanied with suffi-
cient footnote disclosure.

Other Comprehensive Income
There are no specific accounting principles for reporting
comprehensive income.

Leases
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.

Other Comprehensive Income
U.S. GAAP requires that all items that are required to be
recognized under accounting standards as components of
comprehensive income be reported in a financial statement
that is displayed with the same prominence as other finan-
cial statements. Comprehensive income includes all changes
in stockholders’ equity during an accounting period except
those resulting from investments by or distributions to own-
ers, including certain items not included in the current
results of operations.

SMBC 2002 — 91

Income Analysis (Consolidated)

Figures for the year ended March 31, 2001, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

Operating Income, Classified by Domestic and Overseas Operations

2002

2001

Millions of yen

Year ended March 31

Domestic Overseas
operations
Interest income .................................................... ¥1,819,009
Interest expenses ................................................
360,290
1,458,719
Net interest income....................................................

¥589,709
409,743
179,965

Domestic Overseas
operations
Total
¥(232,032) ¥2,176,685 ¥1,812,813
529,224
726,673
1,283,588
(188,671) 1,450,012

¥805,881
703,823
102,058

(43,361)

operations Elimination

Fees and commissions (income) ......................... ¥ 354,832
Fees and commissions (expenses) .....................
63,414
291,418
Net fees and commissions ........................................

Trading profits...................................................... ¥ 85,097
Trading losses .....................................................
17
85,080
Net trading income ....................................................

Other operating income ....................................... ¥ 816,461
649,877
Other operating expenses ...................................
166,583
Net other operating income .......................................

¥ 32,591
4,523
28,067

¥ 55,418
11,066
44,352

¥ 29,940
16,787
13,153

¥ (143) ¥ 387,280 ¥ 374,973
86,982
287,990

67,747
319,532

(189)
46

¥ (11,066) ¥ 129,450 ¥ 66,464
4,745
61,718

(11,066)
—

17
129,432

(818) ¥ 845,583 ¥ 627,753
522,862
104,889

666,651
178,932

(13)
(804)

¥ 37,208
8,929
28,279

¥ 49,464
2,146
47,317

¥ 22,087
37,884
(15,798)

¥(182,811) ¥2,435,884
1,111,653
1,324,231

(121,394)
(61,415)

(84) ¥ 412,097
95,781
316,315

(130)
45

(4,744) ¥ 111,183
2,146
(4,744)
109,036
—

(158) ¥ 649,681
560,664
89,016

(81)
(76)

operations Elimination

Total

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and its overseas consolidated subsidiaries.

2. Income and expenses for money held in trust are included in “other operating income” and “other operating expenses.” Fund-raising expenses are

net of expenses (2002, ¥228 million; 2001, ¥695 million) related to the management of money held in trust.

3. Intracompany transactions are transactions between domestic and international operations. These appear in “Elimination” column.

Figures for 2001 (interest income and interest expense resulting from lending and borrowing between domestic and international operations are
amounts before eliminations) for the former Sakura Bank included in the total combined figures for the former Sakura Bank and the former Sumitomo
Bank are inclusive of eliminations. Elimination amounts are for total combined figures. Fees and commissions income and expenses, trading profits
and losses, and other operating income and expenses are amounts net of eliminations between domestic and international operations.

Average Balance, Interest, and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations

Millions of yen

2002

2001

Average balance

Year ended March 31
Interest-earning assets.................................... ¥84,574,993
Loans and bills discounted......................... 57,973,398
Securities ................................................... 22,156,662
336,582
Call loans and bills bought .........................
1,197,172
Receivables under resale agreements ......
1,934,334
Deposits with banks ...................................

Interest
¥1,819,009
1,161,518
433,302
2,589
880
75,625

Interest-bearing liabilities ................................ ¥82,843,054
Deposits .................................................... 54,312,471
9,995,709
Negotiable certificates of deposit ...............
9,308,952
Call money and bills sold ...........................
2,100,808
Payables under repurchase agreements ...
953,296
Commercial paper......................................
Borrowed money ........................................
3,867,103
2,035,170
Bonds .........................................................

¥ 360,290
125,876
6,273
4,320
870
1,168
96,919
33,250

Earnings yield Average balance

2.15%
2.00
1.96
0.77
0.07
3.91

0.43%
0.23
0.06
0.05
0.04
0.12
2.51
1.63

Interest
¥83,391,233 ¥1,812,813
1,301,637
324,707
6,890
1,137
133,684

60,184,475
19,218,107
569,697
278,995
2,277,637

¥80,360,198
53,292,606
8,827,824
7,156,390
2,579,529
854,474
5,655,172
887,721

¥ 529,224
248,589
25,835
20,986
7,512
4,730
139,831
16,844

Earnings yield
2.17%
2.16
1.69
1.21
0.41
5.87

0.66%
0.47
0.29
0.29
0.29
0.55
2.47
1.90

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries.

2. As a rule, average balances are computed by using daily balances. However, some domestic consolidated subsidiaries use weekly, monthly, or

semiannual balances instead.

3. Interest-earning assets are shown after deduction of the average balances of noninterest earning deposits (2002, ¥760,008 million; 2001, ¥652,763

million).

4. Income and expenses resulting from money held in trust are included in “other income” and “other expenses.” Therefore, interest-earning assets are
shown after deduction of the average balances of money held in trust (2002, ¥69,400 million; 2001, ¥136,160 million), and interest-bearing liabilities
are shown after deduction of an amount equivalent to the average balance of interest expenses on money held in trust (2002, ¥69,400 million; 2001,
¥136,160 million) and interest (2002, ¥223 million; 2001, ¥688 million).

92 — SMBC 2002

Overseas Operations

Average balance

Year ended March 31
Interest-earning assets.................................... ¥13,051,522
7,784,038
1,807,077
91,331
290,477
2,579,922

Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Deposits with banks ...................................

Interest-bearing liabilities ................................ ¥10,748,871
7,459,876
242,460
236,637
1,008,476
9,365
247,734
1,474,464

Deposits ....................................................
Negotiable certificates of deposit ...............
Call money and bills sold ...........................
Payables under repurchase agreements ...
Commercial paper......................................
Borrowed money ........................................
Bonds .........................................................

2002

Interest
¥589,709
302,448
74,060
2,599
7,518
111,428

¥409,743
205,954
9,133
6,058
28,367
422
10,117
53,710

Millions of yen

Earnings yield Average balance

4.52%
3.89
4.10
2.85
2.59
4.32

3.81%
2.76
3.77
2.56
2.81
4.51
4.08
3.64

¥14,004,309
9,119,275
1,020,045
121,609
249,572
3,044,190

¥13,116,824
8,664,202
202,877
210,344
349,206
18,831
1,552,967
1,265,359

2001

Interest
¥805,881
456,806
65,388
5,821
9,723
190,438

¥703,823
364,720
10,192
8,382
14,712
1,179
72,039
43,501

Earnings yield
5.75%
5.01
6.41
4.79
3.90
6.26

5.37%
4.21
5.02
3.98
4.21
6.26
4.64
3.44

Notes: 1. Overseas operations comprise the operations of the Bank’s overseas branches and its overseas consolidated subsidiaries.

2. As a rule, average balances are computed by using daily balances. However, some overseas consolidated subsidiaries use weekly, monthly, or

semiannual balances instead.

3. Interest-earning assets are shown after deduction of the average balances of noninterest earning deposits (2002, ¥7,736 million; 2001, ¥24,925

million).

4. Income and expenses resulting from money held in trust are included in “other income” and “other expenses.” Therefore, interest-earning assets are
shown after deduction of the average balances of money held in trust (2002, ¥149 million; 2001, ¥139 million), and interest-bearing liabilities are
shown after deduction of an amount equivalent to the average balance of interest expenses on money held in trust (2002, ¥149 million; 2001, ¥139
million) and interest (2002, ¥5 million; 2001, ¥7 million).

Total of Domestic and Overseas Operations

2002

Millions of yen

Average balance

Year ended March 31
Interest-earning assets.................................... ¥96,453,607
Loans and bills discounted......................... 64,597,200
Securities .................................................. 23,960,480
427,913
Call loans and bills bought .........................
1,487,650
Receivables under resale agreements ......
4,505,131
Deposits with banks ...................................

Interest
¥2,176,685
1,420,950
318,508
5,189
8,399
186,892

Interest-bearing liabilities ................................ ¥92,418,184
Deposits .................................................... 61,762,389
Negotiable certificates of deposit ............... 10,238,168
9,545,589
Call money and bills sold ...........................
Payables under repurchase agreements ...
3,109,284
Commercial paper......................................
962,661
2,954,602
Borrowed money ........................................
3,506,374
Bonds .........................................................

¥ 726,673
331,670
15,406
10,378
29,238
1,590
64,020
86,779

Earnings yield Average balance

2.26%
2.20
1.33
1.21
0.56
4.15

0.79%
0.54
0.15
0.11
0.94
0.17
2.17
2.47

¥93,608,730
65,933,881
20,107,211
673,105
528,568
5,054,838

¥89,961,701
61,741,491
8,995,072
7,348,243
2,928,735
873,306
3,970,746
2,150,889

2001

Interest
¥2,435,884
1,647,263
328,449
12,480
10,861
318,624

¥1,111,653
607,985
35,855
29,138
22,224
5,908
100,690
60,182

Earnings yield
2.60%
2.50
1.63
1.85
2.05
6.30

1.24%
0.98
0.40
0.40
0.76
0.68
2.54
2.80

Notes: 1. The above figures comprise totals for domestic and overseas operations after intersegment eliminations.

2. As a rule, average balances are computed by using daily balances. However, some consolidated subsidiaries use weekly, monthly, or semiannual

balances instead.

3. Interest-earning assets are shown after deduction of the average balances of noninterest earning deposits (2002, ¥766,910 million; 2001, ¥676,935

million).

4. Income and expenses resulting from money held in trust are included in “other income” and “other expenses.” Therefore, interest-earning assets are
shown after deduction of the average balances of money held in trust (2002, ¥69,549 million; 2001, ¥136,299 million), and interest-bearing liabilities
are shown after deduction of an amount equivalent to the average balance of interest expenses on money held in trust (2002, ¥69,549 million; 2001,
¥136,299 million) and interest (2002, ¥228 million; 2001, ¥695 million).

SMBC 2002 — 93

Fees and Commissions

Year ended March 31
Fees and commissions (income)...............................
Deposits and loans ..............................................
Remittances and transfers...................................
Securities-related business..................................
Agency.................................................................
Safe deposits .......................................................
Guarantees ..........................................................
Credit card ...........................................................

2002

2001

Millions of yen

Domestic Overseas
operations
¥354,832
12,868
98,857
24,269
16,069
6,073
24,176
84,849

operations Elimination
¥(143)
—
(0)
—
—
—
(142)
—

¥32,591
17,478
5,970
30
31
6
2,133
—

Total
¥387,280
30,346
104,827
24,299
16,100
6,080
26,167
84,849

Domestic Overseas
operations
¥374,973
19,449
97,888
31,395
11,470
5,731
24,534
66,110

operations Elimination
¥ (84)
—
(0)
—
—
—
(84)
—

¥37,208
20,163
6,120
86
973
5
1,675
—

Total
¥412,097
39,613
104,009
31,482
12,445
5,738
26,126
66,110

Fees and commissions (expenses) ...........................
Remittances and transfers...................................

¥ 63,414
19,359

¥ 4,523
1,693

¥(189)
(0)

¥ 67,747
21,052

¥ 86,982
20,923

¥ 8,929
2,355

¥(130)
(0)

¥ 95,781
23,280

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and overseas consolidated subsidiaries.

2. Intracompany transactions, that is, transactions between domestic and international operations are reported in elimination column. Figures for 2001
for the former Sakura Bank included in the total combined figures for the former Sakura Bank and the former Sumitomo Bank are the amounts net of
eliminations for transactions between domestic and international operations.

Trading Income

Year ended March 31
Trading profits............................................................
Gains on trading securities ..................................
Gains on securities related to trading transactions ...
Gains on trading-related financial derivatives......
Others ..................................................................

2002

2001

Millions of yen

Domestic Overseas
operations
¥85,097
1,272
—
82,782
1,043

operations Elimination
¥(11,066)
—
—
(11,066)
—

¥55,418
5,382
—
50,036
—

Total
¥129,450
6,654
—
121,752
1,043

Domestic Overseas
operations
¥66,464
7,994
600
53,496
4,370

operations Elimination
¥(4,744)
—
—
(4,744)
—

¥49,464
9,708
2,033
37,672
48

Trading losses ...........................................................
Losses on trading securities ................................
Losses on securities related to trading transactions...
Losses on trading-related financial derivatives....
Others ..................................................................

17
—
17
—
—

¥11,066
—
—
11,066
—

¥(11,066)
—
—
(11,066)
—

17
—
17
—
—

¥ 4,745
0
—
4,744
—

¥ 2,146
190
—
1,166
789

¥(4,744)
—
—
(4,744)
—

Total
¥111,183
17,703
2,634
86,424
4,419

2,146
190
—
1,166
789

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and overseas consolidated subsidiaries.

94 — SMBC 2002

Assets/Liabilities (Consolidated)

Figures as of March 31, 2001 and 2000, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

Deposits and Negotiable Certificates of Deposit
Year-End Balance

March 31
Domestic operations:

Liquid deposits..........................................................................................................
Fixed-term deposits ..................................................................................................
Others ......................................................................................................................
Subtotal ....................................................................................................................
Negotiable certificates of deposit..............................................................................
Total..........................................................................................................................

Overseas operations:

2002

¥32,824,002
22,837,970
4,099,619
¥59,761,592
¥ 6,283,136
¥66,044,728

¥ 4,579,035
634,673
10,674
¥ 5,224,383
¥ 378,960
¥ 5,603,344
¥71,648,073

Millions of yen
2001

¥24,230,767
25,687,067
3,860,298
¥53,778,134
¥11,475,495
¥65,253,629

¥ 8,670,224
575,859
24,830
¥ 9,270,916
¥ 171,476
¥ 9,442,392
¥74,696,023

2000

¥23,165,366
25,247,331
3,528,595
¥51,941,294
¥10,244,222
¥62,185,516

¥ 6,073,367
557,186
16,198
¥ 6,646,753
¥ 137,670
¥ 6,784,424
¥68,969,940

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and overseas consolidated subsidiaries.

2. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice
3. Fixed-term deposits = Time deposits + Installment savings

Balance of Loan Portfolio, Classified by Industry
Year-End Balance

2002

2001

2000

March 31
Domestic operations:

Millions of yen

Percent

Millions of yen

Percent

Millions of yen

Percent

Manufacturing ............................................ ¥ 7,847,614
204,176
Agriculture, forestry, fisheries and mining...
3,148,042
Construction ...............................................
Transportation, communications,

2,948,100
and other public enterprises.....................
7,672,699
Wholesale and retail ..................................
4,257,910
Finance and insurance...............................
Real estate .................................................
9,401,219
Services .....................................................
6,985,944
Municipalities .............................................
404,860
Others ........................................................
14,904,395
Subtotal ...................................................... ¥57,774,965

Overseas operations:

Public sector .............................................. ¥ 183,344
Financial institutions...................................
355,561
Commerce and industry .............................
5,119,312
212,401
Others ........................................................
Subtotal ...................................................... ¥ 5,870,621
Total ................................................................ ¥63,645,586

13.58% ¥ 7,842,034
211,637
3,279,569

0.36
5.45

13.27% ¥ 7,600,339
282,521
3,354,636

0.36
5.55

5.10
13.28
7.37
16.27
12.09
0.70
25.80

3,084,005
8,198,397
4,240,797
9,841,488
7,427,651
356,354
14,629,235
100.00% ¥59,111,176

3.12% ¥ 267,485
305,435
6.06
5,739,023
87.20
113,967
3.62
100.00% ¥ 6,425,914
¥65,537,091

5.22
13.87
7.17
16.65
12.56
0.60
24.75

2,892,707
8,128,809
4,227,814
9,166,841
8,098,068
436,728
14,610,658
100.00% ¥58,799,132

4.16% ¥ 211,045
358,022
4.75
5,786,763
89.31
119,125
1.78
100.00% ¥ 6,474,958
¥65,274,091

12.93%
0.48
5.71

4.92
13.82
7.19
15.59
13.77
0.74
24.85
100.00%

3.26%
5.53
89.37
1.84
100.00%

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and overseas consolidated subsidiaries.

2. Japan offshore banking accounts are included in overseas offices’ accounts.
3. Percentages indicate the composition ratio.

SMBC 2002 — 95

Risk-Monitored Loans

March 31
Bankrupt loans...............................................................................................................
Non-accrual loans..........................................................................................................
Past due loans (3 months or more) ...............................................................................
Restructured loans ........................................................................................................
Total...............................................................................................................................

2002
¥ 227,484
3,599,750
102,762
2,554,371
¥6,484,367

Notes: Definition of risk-monitored loans

Millions of yen
2001
¥ 273,127
2,577,517
125,779
279,994
¥3,256,418

2000
¥ 263,609
2,936,540
118,985
545,621
¥3,864,758

1. Bankrupt loans: Credits for which accrued interest is not accounted in revenue; credits extended to borrowers that are undergoing bankruptcy,

corporate reorganization, and rehabilitation proceedings; or debtors receiving orders of disposition by suspension of business at bill clearinghouses

2. Non-accrual loans: Credits for which accrued interest is not accounted in revenue; credits, excluding loans to bankrupt borrowers and loans with

grace for interest payment, to assist in corporate reorganization or to support business

3. Past due loans (3 months or more): Loans with payment of principal or interest in arrears for more than 3 months, calculated from the day following

the contractual due date, excluding borrowers in categories 1. and 2.

4. Restructured loans: Loans to borrowers in severe financial condition given certain favorable terms and conditions to assist in corporate rehabilitation

or to support business, excluding borrowers in categories 1. through 3.

Securities
Year-End Balance

March 31
Domestic operations:

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Others.......................................................................................................................
Securities lent ...........................................................................................................
Subtotal ....................................................................................................................

Overseas operations:

2002

¥10,038,543
500,052
1,430,388
5,216,483
2,043,610
—
¥19,229,077

¥ 75,329
—
—
—
1,390,225
—
¥ 1,465,554
¥20,694,632

Millions of yen
2001

¥15,519,430
342,889
1,255,179
6,941,634
1,961,317
—
¥26,020,452

¥ 75,014
—
—
—
1,217,030
—
¥ 1,292,045
¥27,312,498

2000

¥ 5,359,502
496,596
1,161,884
6,908,333
1,124,513
17,974
¥15,068,807

—
—
442
4,034
824,314
—
¥ 828,791
¥15,897,599

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and overseas consolidated subsidiaries.

2. Other securities include foreign bonds and foreign stocks.
3. Securities lent as of March 31, 2002 and 2001, are included in each type of securities by the classification above.

Trading Assets and Liabilities

2002

2001

Millions of yen

Domestic Overseas
March 31
operations
Trading assets: ...................................................... ¥2,701,948
20,526
91
—

Trading securities ............................................
Derivatives of trading securities....................
Securities related to trading transactions ...
Derivatives of securities related to

¥590,902
102,282
—
—

trading transactions.......................................
Trading-related financial derivatives............
Other trading assets........................................

12
1,817,563
863,755

—
488,620
—

operations Elimination

Total

Domestic Overseas
operations

operations Elimination

Total

¥(14,745) ¥3,278,105 ¥2,334,093
166,613
122,808
19
91
—
—

—
—
—

¥165,249
122,175
—
5,403

¥(8,361) ¥2,490,982
288,789
19
5,403

—
—
—

—

12
(14,745) 2,291,438
863,755

—

18
995,635
1,171,806

—
35,296
2,372

—
(8,361)

18
1,022,571
— 1,174,179

Trading liabilities:................................................... ¥1,785,230
50
79
—

Trading securities sold for short sales.........
Derivatives of trading securities....................
Securities related to trading transactions ...
Derivatives of securities related to

trading transactions.......................................
Trading-related financial derivatives............
Other trading liabilities ....................................

0
1,785,099
—

¥561,014
12,760
—
—

—
548,254
—

¥(14,745) ¥2,331,500 ¥1,101,038
14,440
12,811
0
79
—
—

—
—
—

—

0
(14,745) 2,318,608
—

—

9
1,086,586
—

¥177,336
3,800
—
3,756

—
169,780
—

¥(8,361) ¥1,270,014
18,240
0
3,756

—
—
—

—
(8,361)
—

9
1,248,006
—

Notes: 1. Domestic operations comprise the operations of the Bank (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas

operations comprise the operations of the Bank’s overseas branches and overseas consolidated subsidiaries.
2. Internal transactions between domestic operations and overseas operations are shown in “Elimination” column.

Figures for 2001 for the former Sakura Bank included in the total combined figures for the former Sakura Bank and the former Sumitomo Bank are the
amounts net of eliminations for transactions between domestic and international operations.

96 — SMBC 2002

Income Analysis (Nonconsolidated)

Figures for the years ended March 31, 2001 and 2000, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

Gross Banking Profit, Classified by Domestic and International Operations

Millions of yen

Year ended March 31

Domestic
operations
Interest income .......................................... ¥1,202,035

2002

International
operations
¥994,778

Interest expenses.......................................

122,677

597,623

Net interest income .........................................

1,079,358
Fees and commissions (income) ............... ¥ 184,996
Fees and commissions (expenses) ...........
62,721
122,274
Net fees and commissions ..............................
Trading profits ............................................ ¥ 1,112
107
Trading losses............................................
1,004
Net trading income ..........................................
Other operating income ............................. ¥ 72,655
18,919
Other operating expenses..........................
Net other operating income.............................
53,735
Gross banking profit ........................................ ¥1,256,373
Gross banking profit rate (%) ..........................

1.60%

397,154
¥ 54,648
11,651
42,997
¥120,302
17
120,284
¥ 78,231
41,526
36,705
¥597,141

Total

¥2,192,961
[3,853]
716,448
[3,853]
1,476,512
¥ 239,645
74,373
165,272
¥ 121,414
125
121,289
¥ 150,886
60,445
90,440
¥1,853,515

2001

Domestic
operations
¥1,301,298

International
operations
¥978,265

192,100

846,730

1,109,197
¥ 179,041
66,045
112,995
¥ 9,179
—
9,179
¥ 42,439
14,596
27,841
¥1,259,215

131,534
¥ 52,738
15,041
37,697
¥ 86,204
—
86,204
¥ 31,047
42,496
(11,450)
¥243,987

Total
¥2,275,679
[3,885]
1,034,946
[3,885]
1,240,731
¥ 231,780
81,087
150,692
¥ 95,385
—
95,385
¥ 73,476
57,082
16,393
¥1,503,203

3.57%

2.02%

1.71%

1.48%

1.68%

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 (2002, ¥228 million;

2001, ¥695 million).

3. Figures in brackets [ ] indicate interest payments between domestic and international operations. As net interest figures are shown for interest rate

swaps and similar instruments, some figures for domestic and international operations do not add up to their sums.

4. Gross banking profit rate = Gross banking profit/Average balance of interest-earning assets ✕ 100

Average Balance, Interest, and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations

Millions of yen

2002

2001

Year ended March 31
Interest-earning assets.................................... ¥78,080,748

Average balance

Interest
¥1,202,035

Loans and bills discounted......................... 53,576,051
Securities ................................................... 19,687,304
Call loans ...................................................
148,181
1,172,550
Receivables under resale agreements ......
84,967
Bills bought ................................................
20,383
Deposits with banks ...................................

983,235
178,027
135
873
27
26

Interest-bearing liabilities ................................ ¥72,477,777
[3,387,145]
Deposits ..................................................... 47,259,727
9,972,010
Negotiable certificates of deposit ...............
Call money .................................................
3,691,136
Payables under repurchase agreements ...
2,110,550
Bills sold .....................................................
5,571,248
Commercial paper......................................
807,392
Borrowed money ........................................
1,191,746
1,858,675
Bonds .........................................................

¥ 122,677
[3,853]
44,206
6,218
1,283
873
1,253
970
32,969
31,237

Earnings yield Average balance

1.53%

1.83
0.90
0.09
0.07
0.03
0.13

0.16%

0.09
0.06
0.03
0.04
0.02
0.12
2.76
1.68

Interest
¥73,581,868 ¥1,301,298
[2,326]
1,103,789
185,681
92
1,130
878
30

55,306,043
17,488,774
25,551
277,192
282,060
11,722

¥70,146,084 ¥ 192,100
[1,559]
80,147
25,801
12,667
5,368
2,041
4,543
39,957
20,883

[591,090]
47,095,702
8,813,953
6,093,793
2,579,529
952,300
794,830
1,695,179
1,147,858

Earnings yield
1.76%

1.99
1.06
0.36
0.40
0.31
0.26

0.27%

0.17
0.29
0.20
0.20
0.21
0.57
2.35
1.81

Notes: 1. Interest-earning assets are shown after deduction of the average balance of noninterest earning deposits (2002, ¥711,320 million; 2001, ¥639,633
million). Interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of interest expenses on money held in
trust (2002, ¥66,057 million; 2001, ¥130,046 million) and corresponding interest (2002, ¥111 million; 2001, ¥369 million).

2. Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and international oper-
ations and related interest expenses. As net interest figures are shown for interest rate swaps and similar instruments, some figures for domestic and
international operations do not add up to their sums.

3. Bond interest includes amortization of discount on bonds.

SMBC 2002 — 97

International Operations

Average balance

Year ended March 31
Interest-earning assets.................................... ¥16,683,507
[3,387,145]
7,059,547
3,738,953
134,124
69,514
—
4,458,268

Loans and bills discounted.........................
Securities ...................................................
Call loans ...................................................
Receivables under resale agreements ......
Bills bought ................................................
Deposits with banks ...................................

2002

Interest
¥994,778
[3,853]
273,612
326,705
4,296
908
—
185,058

Millions of yen

Earnings yield Average balance

5.96%

3.87
8.73
3.20
1.30
—
4.15

¥16,433,417
[591,090]
7,517,989
2,146,468
167,690
38,209
—
4,977,935

Interest-bearing liabilities ................................ ¥17,842,154

¥597,623

3.34%

¥15,454,388

Deposits ..................................................... 10,450,595
Negotiable certificates of deposit ...............
214,841
287,094
Call money .................................................
Payables under repurchase agreements ...
684,262
—
Bills sold .....................................................
—
Commercial paper......................................
Borrowed money ........................................
2,473,270
—
Bonds .........................................................

279,042
8,211
7,523
16,506
—
—
103,931
—

2.67
3.82
2.62
2.41
—
—
4.20
—

11,952,437
176,862
291,515
42,859
2,276
—
2,649,024
—

2001

Interest
¥978,265
[1,559]
397,355
162,494
10,135
484
—
313,787

¥846,730
[2,326]
521,390
10,142
14,060
2,144
53
—
136,294
—

Earnings yield
5.95%

5.28
7.57
6.04
1.26
—
6.30

5.47%

4.36
5.73
4.82
5.00
2.34
—
5.14
—

Notes: 1. Interest-earning assets are shown after deduction of the average balance of noninterest earning deposits (2002, ¥31,353 million; 2001, ¥27,870 mil-
lion). Interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of interest expenses on money held in trust
(2002, ¥3,490 million; 2001, ¥6,248 million) and corresponding interest (2002, ¥116 million; 2001, ¥325 million).

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 T T middle rate at the end of the previous month is applied to nonexchange transactions of the month concerned.

Total of Domestic and International Operations

Average balance

Year ended March 31
Interest-earning assets.................................... ¥91,377,110
Loans and bills discounted......................... 60,635,599
Securities ................................................... 23,426,257
282,306
Call loans ...................................................
1,242,064
Receivables under resale agreements ......
84,967
Bills bought ................................................
4,478,651
Deposits with banks ...................................

Interest-bearing liabilities ................................ ¥86,932,786
Deposits ..................................................... 57,710,322
Negotiable certificates of deposit ............... 10,186,852
3,978,230
Call money .................................................
Payables under repurchase agreements ...
2,794,813
Bills sold .....................................................
5,571,248
807,392
Commercial paper......................................
Borrowed money ........................................
3,665,017
1,858,675
Bonds .........................................................

2002

Interest
¥2,192,961
1,256,848
504,732
4,432
1,781
27
185,085

¥ 716,448
323,249
14,430
8,807
17,379
1,253
970
136,900
31,237

Millions of yen

2001

Earnings yield Average balance

2.39%
2.07
2.15
1.56
0.14
0.03
4.13

0.82%
0.56
0.14
0.22
0.62
0.02
0.12
3.73
1.68

Interest
¥89,424,194 ¥2,275,679
1,501,144
348,176
10,229
1,614
878
313,817

62,824,034
19,635,244
193,242
315,402
282,060
4,989,658

¥85,009,383 ¥1,034,946
601,538
35,944
26,729
7,512
2,095
4,543
176,252
20,883

59,048,140
8,990,815
6,385,308
2,622,388
954,576
764,830
4,344,205
1,147,858

Earnings yield
2.54%
2.38
1.77
5.29
0.51
0.31
6.28

1.21%
1.01
0.39
0.41
0.28
0.21
0.57
4.05
1.81

Notes: 1. Interest-earning assets are shown after deduction of the average balance of noninterest earning deposits (2002, ¥742,674 million; 2001, ¥667,505
million). Interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of interest expenses on money held in
trust (2002, ¥69,548 million; 2001, ¥136,294 million) and corresponding interest (2002, ¥228 million; 2001, ¥695 million).

2. Figures in the table above indicate the net average balances of amounts adjusted for interdepartmental lending and borrowing activities between

domestic and international operations and related interest expenses.

3. Bond interest includes amortization of discount on bonds.

98 — SMBC 2002

Breakdown of Interest Income and Interest Expenses
Domestic Operations

Year ended March 31
Interest income................................................
Loans and bills discounted.........................
Securities ...................................................
Call loans ...................................................
Receivables under resale agreements ......
Bills bought ................................................
Deposits with banks ...................................
Effect of a change in accounting standard ...

Interest expenses............................................
Deposits .....................................................
Negotiable certificates of deposit ...............
Call money .................................................
Payable under repurchase agreements .....
Bills sold .....................................................
Commercial paper......................................
Borrowed money ........................................
Bonds .........................................................
Effect of a change in accounting standard ...

Volume-related Rate-related

2002

increase
(decrease)

¥76,258
(33,749)
21,754
156
1,269
(372)
15
—

¥ 6,190
278
3,008
(3,658)
(831)
2,419
70
(13,166)
12,054
—

increase
(decrease)
¥(175,520)
(86,803)
(29,408)
(113)
(1,526)
(477)
(19)
—

¥ (75,614)
(36,219)
(22,591)
(7,725)
(3,663)
(3,208)
(3,642)
6,179
(1,700)
—

Millions of yen

Net
increase
(decrease)
¥ (99,262)
(120,552)
(7,654)
43
(257)
(850)
(3)
—

¥ (69,423)
(35,941)
(19,582)
(11,383)
(4,494)
(788)
(3,572)
(6,987)
10,354
—

Volume-related Rate-related

2001

increase
(decrease)

¥67,612
(31,492)
47,381
(10)
—
63
(1)
—

¥25,955
(4,341)
322
1,227
—
737
1,149
1,271
13,910
—

increase
(decrease)
¥(171,556)
4,481
(22,459)
7
—
725
(1)
—

¥(111,745)
(9,131)
12,525
4,603
—
1,120
1,783
(8,508)
(54)
—

Net
increase
(decrease)
¥(288,456)
(27,011)
24,921
(2)
—
787
(3)
(184,511)

¥(270,301)
(13,474)
12,848
5,831
—
1,858
2,933
(7,237)
13,857
(184,511)

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) and rate-related increase (decrease) does not include effect of a change

in accounting standard.

International Operations

Volume-related Rate-related

2002

increase
(decrease)
¥ 14,909
(23,027)
135,949
(1,744)
408
—
(30,138)
—

¥116,360
(59,295)
1,893
(210)
16,028
(26)
—
(8,602)
—
—

increase
(decrease)
¥

1,603
(100,713)
28,261
(4,095)
15
—
(98,589)
—

¥(365,468)
(183,051)
(3,824)
(6,326)
(1,666)
(26)
—
(23,760)
—
—

Millions of yen

Net
increase
(decrease)
¥ 16,512
(123,741)
164,210
(5,839)
423
—
(128,727)
—

¥(249,108)
(242,347)
(1,930)
(6,536)
14,361
(53)
—
(32,363)
—
—

Volume-related Rate-related

2001

increase
(decrease)

¥199,975
(40,910)
6,670
1,102
—
—
150,425
—

¥168,316
75,672
(2,619)
3,925
—
33
—
(12,032)
—
—

increase
(decrease)
¥ 44,026
81,114
62,183
1,533
—
—
53,951
—

¥ 30,809
115,330
972
653
—
(6)
—
23,661
—
—

Net
increase
(decrease)
¥(187,875)
40,202
68,853
2,635
—
—
204,377
(431,879)

¥(232,753)
191,004
(1,647)
4,580
—
26
—
11,629
—
(431,879)

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) and rate-related increase (decrease) does not include effect of a change

in accounting standard.

SMBC 2002 — 99

Total of Domestic and International Operations

Millions of yen

Volume-related Rate-related

2002

increase
(decrease)
¥48,913
(50,848)
74,062
3,401
2,000
(372)
(29,604)
—

¥22,921
(13,334)
4,254
(7,966)
524
2,462
70
(26,105)
12,054
—

increase
(decrease)
¥(131,631)
(193,447)
82,493
(9,198)
(1,834)
(477)
(99,127)
—

¥(341,419)
(264,954)
(25,767)
(9,955)
9,342
(3,303)
(3,642)
(13,245)
(1,700)
—

Net
increase
(decrease)
¥ (82,718)
(244,296)
156,555
(5,797)
166
(850)
(128,732)
—

¥(318,498)
(278,289)
(21,513)
(17,921)
9,867
(841)
(3,572)
(39,351)
10,354
—

Volume-related Rate-related

2001

increase
(decrease)

¥178,634
(57,204)
80,262
(960)
—
63
149,750
—

¥111,713
2,190
1,203
3,005
—
829
1,149
(6,485)
13,910
—

increase
(decrease)
¥ (39,634)
70,396
13,513
3,593
—
725
54,622
—

565
175,339
9,997
7,405
—
1,055
1,783
10,878
(54)
—

Net
increase
(decrease)
¥(479,718)
13,190
93,776
2,632
—
787
204,374
(618,718)

¥(506,440)
177,530
11,200
10,412
—
1,884
2,933
4,391
13,857
(618,718)

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) and rate-related increase (decrease) does not include effect of a change

in accounting standard.

Fees and Commissions

Year ended March 31
Fees and commissions (income) ....................
Deposits and loans ....................................
Remittances and transfers .........................
Securities-related business ........................
Agency .......................................................
Safe deposits .............................................
Guarantees ................................................

Millions of yen

Domestic
operations
¥184,996
10,889
80,077
12,801
13,625
5,779
3,427

2002

International
operations
¥54,648
17,916
20,432
1,032
—
—
4,204

Total
¥239,645
28,805
100,509
13,834
13,625
5,779
7,631

2001

Domestic
operations

International
operations

¥179,041
14,605
80,204
14,532
9,767
5,600
2,233

¥52,738
22,666
21,434
47
1,025
0
4,356

Total
¥231,780
37,272
101,639
14,580
10,792
5,600
6,590

Fees and commissions (expenses).................
Remittances and transfers .........................

¥ 62,721
15,088

¥11,651
5,545

¥ 74,373
20,634

¥ 66,045
15,516

¥15,041
7,026

¥ 81,087
22,543

Trading Income

Year ended March 31
Trading profits .................................................
Gains on trading securities ........................
Gains on securities related to

trading transactions..................................

Gains on trading-related

financial derivatives..................................
Others ........................................................

Trading losses.................................................
Losses on trading securities ......................
Losses on securities related to

trading transactions..................................

Losses on trading-related

financial derivatives..................................
Others ........................................................

Millions of yen

2002

International
operations
¥120,302
—

Total
¥121,414
—

2001

Domestic
operations

International
operations

¥9,179
5,267

¥86,204
0

Total
¥95,385
5,267

—

606

120,302
—

120,302
1,112

—
3,911

85,598
—

85,598
3,911

Domestic
operations
¥1,112
—

—

—
1,112

¥ 107
107

—

—
—

17
—

—
—

125
107

¥ —
—

—
—

—

—
—

—

—
—

¥ —
—

—

—
—

Note: Figures represent net gains (losses) after offsetting income against expenses.

100 — SMBC 2002

Net Other Operating Income

Year ended March 31
Net other operating income.............................
Gains (losses) on bonds ............................
Gains (losses) on foreign

exchange transactions .............................

General and Administrative Expenses

Millions of yen

Domestic
operations
¥53,735
55,358

2002

International
operations
¥36,705
11,202

Domestic
operations

¥27,841
8,368

2001

International
operations
¥(11,450)
427

Total
¥16,393
8,794

Total
¥90,440
66,560

—

10,439

—

(10,258)

Year ended March 31
Salaries and related expenses ......................................................................................
Retirement payment ......................................................................................................
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 ....................................................................................
Others ............................................................................................................................
Total...............................................................................................................................

2002
¥223,215
—
—
31,555
34,705
65,577
82,134
4,412
9,334
7,608
3,349
7,730
5,404
34,237
187,508
¥696,775

Millions of yen
2001

¥242,004
—
—
31,142
34,851
41,988
90,716
3,139
10,010
8,551
3,791
12,751
6,838
35,533
190,662
¥711,987

2000
¥253,178
39,124
7,186
—
62,765
44,435
101,188
2,367
10,774
8,946
3,621
11,822
6,374
37,546
191,869
¥781,208

Note: Because expenses reported on page 57 exclude nonrecurring losses, they are not reconciled with the figures reported in the above table.

SMBC 2002 — 101

Deposits (Nonconsolidated)

Figures as of and for the years ended March 31, 2001 and 2000, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

Deposits and Negotiable Certificates of Deposit
Year-End Balance

2002

2001

2000

March 31
Domestic operations:

Millions of yen

Percentage

Millions of yen

Percentage

Millions of yen

Percentage

Liquid deposits ........................................... ¥31,350,536
19,982,869
Fixed-term deposits ...................................
Others ........................................................
967,330
Subtotal ...................................................... ¥52,300,736
Negotiable certificates of deposit ............... ¥ 6,267,860
Total ........................................................... ¥58,568,596

International operations:

Liquid deposits ........................................... ¥ 4,720,017
949,692
Fixed-term deposits ...................................
Others ........................................................
3,081,367
Subtotal ...................................................... ¥ 8,751,076
Negotiable certificates of deposit ............... ¥
309,679
Total ........................................................... ¥ 9,060,756
Grand total ...................................................... ¥67,629,353

53.5% ¥23,168,824
22,518,100
34.1
720,823
1.7
¥46,407,750
89.3
¥11,508,790
10.7
100.0% ¥57,916,540

52.1% ¥ 8,787,766
794,383
10.5
3,051,409
34.0
¥12,633,562
96.6
¥ 179,669
3.4
100.0% ¥12,813,232
¥70,729,773

Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice

2. Fixed-term deposits = Time deposits + Installment savings
3. Percentage indicates the composition ratio.

40.0% ¥23,022,951
23,626,565
38.9
1,051,903
1.2
¥47,701,421
80.1
¥10,233,960
19.9
100.0% ¥57,935,381

6.2
23.8
98.6
1.4

68.6% ¥ 6,049,476
998,698
2,442,326
¥ 9,490,503
¥ 146,600
100.0% ¥ 9,637,103
¥67,572,486

39.7%
40.8
1.8
82.3
17.7
100.0%

62.8%
10.4
25.3
98.5
1.5
100.0%

Average Balance

Year ended March 31
Domestic operations:

Liquid deposits..........................................................................................................
Fixed-term deposits ..................................................................................................
Others.......................................................................................................................
Subtotal ....................................................................................................................
Negotiable certificates of deposit..............................................................................
Total..........................................................................................................................

International operations:

Liquid deposits..........................................................................................................
Fixed-term deposits ..................................................................................................
Others.......................................................................................................................
Subtotal ....................................................................................................................
Negotiable certificates of deposit..............................................................................
Total..........................................................................................................................
Grand total .....................................................................................................................

2002

¥24,764,664
21,980,498
514,564
¥47,259,727
¥ 9,972,010
¥57,231,738

¥ 6,856,855
796,962
2,796,777
¥10,450,595
¥
214,841
¥10,665,437
¥67,897,175

Millions of yen
2001

¥22,677,798
23,964,212
453,687
¥47,095,702
¥ 8,813,953
¥55,909,656

¥ 7,962,793
983,544
3,006,095
¥11,952,437
¥
176,862
¥12,129,299
¥68,038,955

2000

¥22,320,967
26,853,371
444,216
¥49,618,558
¥ 8,342,182
¥57,960,740

¥ 5,933,668
1,099,893
2,892,338
¥ 9,925,900
¥ 223,458
¥10,149,358
¥68,110,098

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 Type of Depositor

March 31
Millions of yen
Individual ......................................................... ¥30,110,733
Corporate ........................................................
24,503,958
Total ................................................................ ¥54,614,691

Percentage

Millions of yen
55.1% ¥28,309,433
20,473,769
44.9
100.0% ¥48,783,202

Percentage

Millions of yen
58.0% ¥28,196,230
21,686,841
42.0
100.0% ¥49,883,071

Percentage
56.5%
43.5
100.0%

2002

2001

2000

Notes: 1. Figures are before adjustment on interoffice accounts in transit.

2. Negotiable certificates of deposit are excluded.
3. Accounts at overseas branches and Japan offshore banking accounts are excluded.
4. Percentage indicates the composition ratio.

102 — SMBC 2002

Balance of Investment Trusts, Classified by Type of Customer

March 31
Individual .......................................................................................................................
Corporate.......................................................................................................................
Total...............................................................................................................................

2002
¥1,485,311
86,711
¥1,572,022

Millions of yen
2001
¥1,192,223
165,848
¥1,358,072

2000
¥ 878,348
186,543
¥1,064,891

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.

2002
¥ 8,332,787
7,924,906
—
¥ 3,604,678
3,581,854
—
¥ 5,599,317
5,592,722
—
¥ 1,701,294
1,697,715
—
¥ 1,135,179
1,127,185
1,500
¥ 559,304
521,985
—
¥20,932,561
20,446,369
1,500

Millions of yen
2001
¥10,525,269
10,142,426
381
¥ 4,077,739
4,024,547
96
¥ 5,559,685
5,553,590
20
¥ 1,623,113
1,620,630
134
¥ 951,891
943,425
5,117
¥ 574,761
532,199
24
¥23,312,465
22,816,820
5,772

2000
¥11,399,442
10,499,387
1,179
¥ 3,993,622
3,937,667
1,066
¥ 5,804,682
5,792,249
3,360
¥ 1,510,935
1,499,220
3,292
¥ 1,450,257
1,445,875
3,252
466,302
423,533
110
¥24,625,244
23,597,933
12,262

SMBC 2002 — 103

Loans (Nonconsolidated)

In principle, figures as of and for the years ended March 31, 2001 and 2000, are combined figures for the former Sakura Bank and the former
Sumitomo Bank.

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:

Average Balance

Year ended March 31
Domestic operations:

International operations:

2002

¥ 6,895,403
34,298,736
11,567,085
857,189
¥53,618,414

¥ 1,002,166
5,136,672
170,476
638
¥ 6,309,954
¥59,928,368

2002

¥ 6,679,940
35,133,057
10,972,299
790,752
¥53,576,051

¥ 1,058,147
5,785,859
215,157
383
¥ 7,059,547
¥60,635,599

Millions of yen
2001

¥ 6,888,732
34,780,031
11,843,557
1,104,745
¥54,617,068

¥ 1,028,519
5,851,273
249,081
1,937
¥ 7,130,812
¥61,747,880

Millions of yen
2001

¥ 6,230,406
35,031,027
13,098,494
946,115
¥55,306,043

¥ 1,052,174
6,159,610
300,275
5,930
¥ 7,517,989
¥62,824,034

2000

¥ 5,500,146
35,200,257
14,426,708
1,000,692
¥56,127,806

¥ 977,123
5,837,356
348,098
8,125
¥ 7,170,706
¥63,298,512

2000

¥ 5,893,869
35,080,004
14,904,142
996,742
¥56,874,762

¥ 1,159,438
6,683,198
557,704
8,091
¥ 8,408,433
¥65,283,195

Note: The average balance of foreign-currency-denominated transactions by domestic branches in international operations is calculated by the monthly

current method.

Balance of Loans and Bills Discounted, Classified by Purpose

Millions of yen
March 31
Funds for capital investment ........................... ¥23,277,789
Funds for working capital ................................
36,650,579
Total ................................................................ ¥59,928,368

Percentage

Millions of yen
38.8% ¥24,367,997
37,379,882
61.2
100.0% ¥61,747,880

Percentage

Millions of yen
39.5% ¥24,716,409
38,582,102
60.5
100.0% ¥63,298,512

Percentage
39.0%
61.0
100.0%

2002

2001

2000

Note: Percentage indicates the composition ratio.

Breakdown of Loan Collateral

March 31
Securities .......................................................................................................................
Commercial claims ........................................................................................................
Commercial goods.........................................................................................................
Real estate ....................................................................................................................
Others ............................................................................................................................
Subtotal .........................................................................................................................
Guaranteed....................................................................................................................
Unsecured .....................................................................................................................
Total...............................................................................................................................

2002
¥ 1,171,780
1,098,954
4,430
9,309,699
831,093
¥12,415,959
¥23,864,117
23,648,291
¥59,928,368

Millions of yen
2001
960,691
1,293,632
15,736
10,419,117
555,680
¥13,244,861
¥24,906,661
23,596,356
¥61,747,880

2000
¥ 870,350
1,398,270
8,434
11,055,583
928,409
¥14,261,050
¥25,919,435
23,118,025
¥63,298,512

104 — SMBC 2002

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...............................................................................................................................

Note: Loans with a maturity of one year or less are not classified by floating or fixed interest rates.

2002
¥16,085,851
/
/
¥10,058,898
7,076,540
2,982,358
¥ 6,058,896
4,401,939
1,656,956
¥ 2,572,696
1,957,333
615,363
¥13,527,762
12,854,843
672,918
¥11,624,262
11,624,262
—
¥59,928,368

Millions of yen
2001
¥16,357,074
/
/
¥10,620,614
6,493,070
4,127,544
¥ 6,327,100
4,257,520
2,069,581
¥ 2,868,002
1,937,381
930,620
¥13,276,286
11,138,333
2,137,951
¥12,298,801
12,297,681
1,045
¥61,747,880

2000
¥14,053,196
/
/
¥ 9,304,047
4,965,513
4,338,533
¥ 6,841,194
4,163,655
2,677,537
¥ 2,856,409
1,767,945
1,088,463
¥15,213,736
12,738,214
2,475,520
¥15,029,927
15,029,175
752
¥63,298,512

Loan Portfolio, Classified by Industry

March 31
Domestic offices:

2002

2001

2000

Millions of yen

Percentage

Millions of yen

Percentage

Millions of yen

Percentage

Manufacturing ............................................ ¥ 7,493,045
Agriculture, forestry, fisheries, and mining ...
183,675
Construction ...............................................
2,841,574
Transportation, communications, and

2,838,889
other public enterprises............................
7,161,690
Wholesale and retail ..................................
Finance and insurance...............................
5,244,899
Real estate .................................................
8,549,534
6,364,140
Services .....................................................
Municipalities .............................................
337,514
13,474,520
Others ........................................................
Subtotal ...................................................... ¥54,489,488

Overseas offices:

Public sector .............................................. ¥ 182,437
Financial institutions...................................
372,246
Commerce and industry .............................
4,689,758
Others ........................................................
194,437
Subtotal ...................................................... ¥ 5,438,880
Total ................................................................ ¥59,928,368

13.8% ¥ 7,455,390
188,821
2,929,161

0.3
5.2

13.4% ¥ 7,418,427
271,288
3,198,134

0.3
5.3

5.2
13.2
9.6
15.7
11.7
0.6
24.7

2,982,196
7,631,138
4,850,179
9,222,242
6,720,406
304,143
13,267,524
100.0% ¥55,551,203

3.4% ¥
6.8
86.2
3.6

264,021
378,764
5,488,219
65,669
100.0% ¥ 6,196,676
¥61,747,880

5.4
13.7
8.7
16.6
12.1
0.6
23.9

2,848,209
7,872,269
4,858,979
8,715,561
7,507,905
436,659
13,863,105
100.0% ¥56,990,540

4.3% ¥
6.1
88.6
1.0

207,853
433,469
5,595,092
71,554
100.0% ¥ 6,307,972
¥63,298,512

13.0%
0.5
5.6

5.0
13.8
8.5
15.3
13.2
0.8
24.3
100.0%

3.3%
6.9
88.7
1.1
100.0%

Notes: 1. Japan offshore banking accounts are included in overseas offices’ accounts.

2. Percentage indicates the composition ratio.

Loans to Individuals/Small and Medium-Sized Corporations

March 31
Total domestic loans (A) ................................................................................................
Loans to small and medium-sized corporations, etc. (B)...............................................
(B)/(A) ............................................................................................................................

2002
¥54,489,488
38,780,331

Millions of yen
2001
¥55,551,203
40,471,298

2000
¥56,990,540
41,459,140

71.2%

72.9%

72.7%

Notes: 1. The figures above exclude outstanding balance of loans at overseas branches and of Japan offshore banking accounts.

2. Small and medium-sized corporations are individuals or companies with capital stock of ¥300 million or less, or an operating staff of 300 or fewer
employees. (Exceptions to these capital stock and staff restrictions include wholesalers: ¥100 million, 100 employees; retailers: ¥50 million, 50
employees; and service industry companies: ¥50 million, 100 employees.)

SMBC 2002 — 105

Consumer Loans Outstanding

March 31
Consumer loans ............................................................................................................
Housing loans...........................................................................................................
Housing loans for own housing ...........................................................................
Others.......................................................................................................................

2002
¥13,472,598
11,949,427
7,820,305
1,523,171

Millions of yen
2001
¥13,484,760
11,791,249
7,445,152
1,693,511

2000
¥13,683,512
11,829,524
/
1,853,988

Note: Housing loans include general-purpose loans used for housing purposes, such as housing loans and apartment house acquisition loans.

Breakdown of Reserve for Possible Loan Losses

Year ended March 31, 2002
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 .................................

8,358

Total ................................................................

674,799
[(3,757)]

Balance at beginning Amount transferred
from Sakura Bank
¥145,197
[(2,370)]

of the fiscal year
¥226,830
[(1,877)]

Millions of yen

Increase during
the fiscal year
¥ 872,338

Decrease during the fiscal year

Objectives
¥ —

Others
¥372,027*

Balance at end
of the fiscal year
¥ 872,338

439,611
[(1,879)]
24,327
[(1,633)]

270,451
[(109)]
20,137
[(109)]

11,634
[(3)]

427,282
[(2,482)]

1,084,065

289,180

420,881*

1,084,065

39,850

10,641

33,822*

39,850

15,445

—

19,992*

15,445

1,971,849

289,180

812,901

1,971,849

*Transfer from reserves by reversal or origination method

Note: Figures in brackets [ ] indicate foreign exchange translation adjustments.

The Sakura Bank, Limited

Year ended March 31, 2001
General reserve for possible loan losses................................

Balance at beginning
of the fiscal year
¥197,263
[1,539]

Millions of yen

Increase during
the fiscal year
¥142,826

Decrease during the fiscal year

Objectives
—
¥

Others
¥197,263*

Balance at end
of the fiscal year
¥142,826

Specific reserve for estimated loan losses

on certain doubtful loans.......................................................

454,002

270,342

193,454

260,548*

270,342

For nonresident loans ........................................................

32,990

20,028

11,030

21,960*

20,028

Reserve for possible losses on

specific overseas loans.........................................................

Total ........................................................................................

7,660

[(10)]

658,926
[1,528]

11,631

—

7,660*

11,631

424,799

193,454

465,472

424,799

*Transfer from reserves by reversal or origination method

Note: Figures in brackets [ ] indicate foreign exchange translation adjustments.

The Sumitomo Bank, Limited

Year ended March 31, 2001
General reserve for possible loan losses................................

Balance at beginning
of the fiscal year
¥362,009

Increase during
the fiscal year
¥224,953

Decrease during the fiscal year

Objectives
—
¥

Others
¥362,009*

Balance at end
of the fiscal year
¥224,953

Millions of yen

Specific reserve for estimated loan losses

on certain doubtful loans.......................................................

For nonresident loans ........................................................

[(4,435)]

544,349
[(5,235)]
40,498
[(5,027)]

437,731

253,320

291,028*

437,731

22,693

16,110

24,387*

22,693

Reserve for possible losses on

specific overseas loans.........................................................

12,351

8,358

—

12,351*

8,358

Total ........................................................................................

918,709
[(9,670)]

671,042

253,320

665,388

671,042

*Transfer from reserves by reversal or origination method

Note: Figures in brackets [ ] indicate foreign exchange translation adjustments.

106 — SMBC 2002

Write-off of Loans

Year ended March 31
Write-off of loans ...........................................................................................................

2002

¥283,895

Note: Write-off of loans includes amount of direct reduction.

Millions of yen
2001
¥741,432

2000
¥477,838

Specific Overseas Loans

March 31
Indonesia .......................................................................................................................
Argentina .......................................................................................................................
Algeria ...........................................................................................................................
Others ............................................................................................................................
Total...............................................................................................................................
Ratio of the total amounts to total assets ......................................................................
Number of countries ......................................................................................................

2002
¥138,482
8,378
4,139
1,300
¥152,300

Millions of yen
2001
¥184,611
—
4,480
3,819
¥192,911

2000
¥175,999
—
4,536
7,157
¥187,696

0.15%
9

0.17%
9

0.19%
14

Risk-Monitored Loans

2002
¥ 195,653
3,184,459
92,324
2,344,016
¥5,816,452

Notes: Definition of risk-monitored loans

Millions of yen
2001
¥ 235,654
2,207,504
103,226
186,206
¥2,732,590

2000
¥ 229,633
2,503,785
75,598
747,441
¥3,556,458

1. Bankrupt loans: Credits for which accrued interest is not accounted in revenue, credits extended to borrowers that are undergoing bankruptcy,

corporate reorganization and rehabilitation proceedings or debtors receiving orders of disposition by suspension of business at bill clearing houses

2. Non-accrual loans: Credits for which accrued interest is not accounted in revenue, credits, excluding loans to bankrupt borrowers and loans with

grace for interest payment to assist in corporate reorganization or to support business

3. Past due loans (3 months or more): Loans with payment of principal or interest in arrears for more than 3 months, calculated from the day following

the contractual due date, excluding borrowers in categories 1. and 2.

4. Restructured loans: Loans to borrowers in severe financial condition given certain favorable terms and conditions to assist in corporate rehabilitation

or support business, excluding borrowers in categories 1. through 3.

Problem Assets Based on the Financial Reconstruction Law

March 31
Bankrupt and quasi-bankrupt assets .............................................................................
Doubtful assets .............................................................................................................
Substandard loans.........................................................................................................
Total of problem assets .................................................................................................
Normal assets................................................................................................................
Total...............................................................................................................................

2002
¥ 493.5
2,970.2
2,436.3
¥ 5,900.0
¥60,558.9
¥66,458.9

Notes: Definition of problem assets

Billions of yen
2001
¥ 589.9
1,943.1
289.4
¥ 2,822.5
¥66,157.8
¥68,980.3

2000

585.5
2,232.0
823.0
¥ 3,640.5
¥66,034.7
¥69,675.2

These assets are disclosed based on the provisions of Article 7 of the Financial Reconstruction Law (Law No. 132 of 1998) and classified into the 4
categories based on financial position and business performance of obligors in accordance with Article 6 of the Law. Assets in question include loans
and bills discounted, foreign exchanges, accrued interest, and advance payment in “other assets,” customers’ liabilities for acceptance and guaran-
tees, and securities lent under the loan for consumption or leasing agreements.
1. Bankrupt and quasi-bankrupt assets: Credits to borrowers undergoing bankruptcy, corporate reorganization, and rehabilitation proceedings, as well

as claims of a similar nature

2. Doubtful assets: Credits for which final collection of principal and interest in line with original agreements is highly improbable due to deterioration of

financial position and business performance, but not insolvency of the borrower

3. Substandard loans: Past due loans (3 months or more) and restructured loans, excluding 1. and 2.
4. Normal assets: Credits to borrowers with good business performance and in financial standing without identified problems and not classified into the

three categories above

SMBC 2002 — 107

Securities (Nonconsolidated)

Figures as of and for the years ended March 31, 2001 and 2000, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

Balance of Securities
Year-End Balance

March 31
Domestic operations:

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Securities lent ...........................................................................................................
Others.......................................................................................................................
Foreign bonds .....................................................................................................
Foreign stocks .....................................................................................................
Subtotal ....................................................................................................................

International operations:

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Others.......................................................................................................................
Foreign bonds .....................................................................................................
Foreign stocks .....................................................................................................
Subtotal ....................................................................................................................
Total...............................................................................................................................

2002

¥ 9,599,109
429,412
1,183,562
5,595,410
/
21,308
/
/
¥16,828,804

¥ —
—
—
—
3,614,192
2,863,638
750,553
¥ 3,614,192
¥20,442,996

Millions of yen
2001

¥15,271,104
323,252
995,423
7,167,659
/
128,079
/
/
¥23,885,523

¥ —
—
—
—
3,174,454
2,253,757
920,696
¥ 3,174,454
¥27,059,978

Notes: 1. Japanese stocks include treasury stocks as of March 31, 2001 and 2000.

2. Securities lent as of March 31, 2002 and 2001, are included in each type of securities by the classification above.

Average Balance

Year ended March 31
Domestic operations:

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Others.......................................................................................................................
Foreign bonds .....................................................................................................
Foreign stocks .....................................................................................................
Subtotal ....................................................................................................................

International operations:

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Others.......................................................................................................................
Foreign bonds .....................................................................................................
Foreign stocks .....................................................................................................
Subtotal ....................................................................................................................
Total...............................................................................................................................

2002

¥11,707,532
393,236
1,061,395
6,494,197
30,941
/
/
¥19,687,304

¥ —
—
—
—
3,738,953
2,851,256
887,696
¥ 3,738,953
¥23,426,257

Millions of yen
2001

¥ 9,091,904
427,162
1,007,948
6,798,958
162,799
/
/
¥17,488,774

¥ —
—
—
—
2,146,468
1,359,686
786,781
¥ 2,146,468
¥19,635,244

2000

¥ 5,291,625
491,698
1,031,827
6,973,606
15,814
160,709
/
/
¥13,965,283

¥ —
—
—
—
1,928,563
1,162,239
766,323
¥ 1,928,563
¥15,893,846

2000

¥ 4,954,402
494,200
982,547
6,457,912
193,254
/
/
¥13,082,320

¥ —
—
—
—
2,023,066
1,261,240
761,825
¥ 2,023,066
¥15,105,386

Notes: 1. Japanese stocks include treasury stocks for the years ended March 31, 2001 and 2000.
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.

108 — SMBC 2002

Balance of Securities Held, Classified by Maturity

March 31
One year or less

One–three years

Three–five years

Five–seven years

Seven–10 years

More than 10 years

No designated term

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Others.......................................................................................................................
Foreign bonds .....................................................................................................
Foreign stocks .....................................................................................................
Securities lent ...........................................................................................................

Total

Japanese government bonds ...................................................................................
Japanese local government bonds...........................................................................
Japanese corporate bonds .......................................................................................
Japanese stocks.......................................................................................................
Others.......................................................................................................................
Foreign bonds .....................................................................................................
Foreign stocks .....................................................................................................
Securities lent ...........................................................................................................

2002

¥2,155,760
25,433
87,161
219,992
218,291
/

¥3,613,404
41,395
340,745
1,784,002
1,783,941
/

¥2,392,875
69,013
469,994
160,972
160,315
/

¥ 465,271
96,921
133,812
68,426
67,652
/

¥ 771,568
196,077
149,948
57,934
57,289
/

¥ 200,230
570
1,900
510,543
508,912
/

¥ —
—
—
5,595,410
833,629
67,236
750,553
/

¥9,599,109
429,412
1,183,562
5,595,410
3,635,501
2,863,638
750,553
/

Millions of yen
2001

¥ 7,020,507
24,803
132,201
470,765
461,148
/

¥ 4,135,860
30,372
219,562
677,665
658,274
/

¥ 1,507,521
24,187
368,357
443,331
414,947
/

¥ 482,210
58,671
87,960
99,217
69,085
/

¥ 2,125,002
184,652
184,339
186,710
157,090
/

¥ —
563
3,000
497,940
493,209
/

¥ —
—
—
7,167,659
926,900
—
920,696
/

¥15,271,104
323,252
995,423
7,167,659
3,302,535
2,253,757
920,696
/

2000

¥1,187,598
24,973
310,069
285,242
268,405
663

¥1,515,682
45,987
235,906
350,292
317,754
1,023

¥ 986,540
20,311
212,834
145,111
122,810
677

¥ 685,670
28,781
119,113
76,616
48,799
—

¥ 916,130
371,074
144,896
166,387
133,814
—

¥ —
566
9,004
276,408
270,650
—

¥ —
—
—
6,973,606
789,209
—
766,323
13,451

¥5,291,625
491,698
1,031,827
6,973,606
2,089,273
1,162,239
766,323
15,814

Notes: 1. Japanese stocks include treasury stocks as of March 31, 2001 and 2000.

2. Securities lent as of March 31, 2002 and 2001, are included in each type of securities by the classification above.

SMBC 2002 — 109

Capital Ratio

Consolidated Capital Ratio

March 31
Tier I capital:

Tier II capital:

2002

Common stockholders’ equity............. ¥ 2,735,278
984,088
Minority interests.................................
Subtotal (A) ......................................... ¥ 3,719,366
45% of unrealized gains on land......... ¥
82,931
General reserve for

929,461
possible loan losses..........................
2,577,490
Qualifying subordinated debt ..............
Subtotal............................................... ¥ 3,589,883
Tier II capital included as

Millions of yen

2001

2000

Sakura Bank
¥ 2,112,528
383,921
¥ 2,496,449
46,670
¥

Sumitomo Bank
¥ 1,652,114
606,147
¥ 2,258,261
122,193
¥

Sakura Bank
Sumitomo Bank
¥ 2,121,368 ¥ 1,625,039
578,865
¥ 2,440,605 ¥ 2,203,904
51,672 ¥ 126,143
¥

319,237

163,151
1,141,806
¥ 1,351,627

232,707
1,653,197
¥ 2,008,098

227,338
1,382,246

365,408
1,652,889
¥ 1,661,257 ¥ 2,144,442

qualifying capital (B).......................... ¥ 3,504,772
(C) ....................................................... ¥ 163,331
Deductions:
(D) = (A) + (B) - (C)............................ ¥ 7,060,807
Total capital:
Risk-adjusted assets: On-balance-sheet ............................... ¥62,532,180
Off-balance-sheet ...............................
4,803,181
Asset equivalent of market risk ...........
212,650
Subtotal (E) ......................................... ¥67,548,012

¥ 1,351,627
¥
13,752
¥ 3,834,324
¥31,812,599
1,924,737
154,078
¥33,891,414

¥ 1,995,364
¥
103,632
¥ 4,149,993
¥34,609,029
3,096,291
219,900
¥37,925,221

999 ¥

¥ 1,661,257 ¥ 2,144,442
¥
—
¥ 4,100,864 ¥ 4,348,346
¥30,676,736 ¥34,744,749
2,510,855
221,112
¥32,721,599 ¥37,476,716

1,824,204
220,657

Capital ratio
(BIS guidelines) = (D)/(E) × 100...

10.45%

11.31%

10.94%

12.53%

11.60%

Nonconsolidated Capital Ratio

March 31
Tier I capital:

Tier II capital:

2002

Common stockholders’ equity............. ¥ 3,057,390
Others .................................................
869,793
Subtotal (A) ......................................... ¥ 3,927,183
73,568
45% of unrealized gains on land......... ¥
General reserve for

possible loan losses..........................
872,338
Qualifying subordinated debt ..............
2,544,424
Subtotal............................................... ¥ 3,490,330
Tier II capital included as

Millions of yen

2001

2000

Sakura Bank
¥ 2,238,502
285,575
¥ 2,524,077
31,596
¥

Sumitomo Bank
¥ 1,738,916
567,059
¥ 2,305,975
121,230
¥

Sakura Bank
Sumitomo Bank
¥ 2,185,522 ¥ 1,700,055
531,070
¥ 2,470,975 ¥ 2,231,125
36,450 ¥ 125,180
¥

285,453

142,826
1,111,006
¥ 1,285,429

224,953
1,651,808
¥ 1,997,991

198,802
1,286,823

357,574
1,651,168
¥ 1,522,076 ¥ 2,133,922

qualifying capital (B).......................... ¥ 3,409,200
(C) ....................................................... ¥
55,349
Deductions:
Total capital:
(D) = (A) + (B) - (C)............................ ¥ 7,281,033
Risk-adjusted assets: On-balance-sheet ............................... ¥57,965,018
5,192,299
Off-balance-sheet ...............................
Asset equivalent of market risk ...........
139,300
Subtotal (E) ......................................... ¥63,296,617

¥ 1,285,429
¥
16,999
¥ 3,792,507
¥29,547,565
2,157,620
135,433
¥31,840,619

¥ 1,997,991
¥
58,766
¥ 4,245,199
¥32,166,297
3,654,538
125,350
¥35,946,185

999 ¥

¥ 1,522,076 ¥ 2,133,922
¥
53,766
¥ 3,992,051 ¥ 4,311,281
¥29,627,511 ¥31,682,488
2,787,025
110,350
¥31,917,316 ¥34,579,863

2,151,879
137,925

Capital ratio
(BIS guidelines) = (D)/(E) × 100...

11.50%

11.91%

11.80%

12.50%

12.46%

110 — SMBC 2002

Ratios (Nonconsolidated)

In principle, figures as of and for the year ended March 31, 2001, are combined figures for the former Sakura Bank and the former Sumitomo Bank.

Income Ratio

Year ended March 31
Operating profit to total assets.......................................................................................
Operating profit to stockholders’ equity .........................................................................
Net income to total assets .............................................................................................
Net income to stockholders’ equity ................................................................................

Percentage

2001

Sakura Bank
0.42%

12.29
0.18
4.86

Sumitomo Bank

0.32%

11.78
0.10
3.72

2002
—
—
—
—

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 ✕ 100

2. Operating profit (net income) to stockholders’ equity = (Operating profit (net income) – Preferred dividends) / {(Stockholders’ equity at beginning of
Issue price) + (Stockholders’ equity at end of the

the fiscal year – Number of shares of preferred stock outstanding at beginning of the fiscal year ✕
fiscal year – Number of shares of preferred stock outstanding at end of the fiscal year ✕

Issue price)} divided by 2 ✕ 100

3. Figures for 2002 are not shown due to operating loss (net loss).

Yield/Interest Rate

Year ended March 31
Domestic operations

Percentage

2002

2001

Interest-earning assets (A) ....................................................................................................................
Interest-bearing liabilities (B) .................................................................................................................
(A) - (B).................................................................................................................................................

International operations

Total

1.53%
0.98
0.55

5.96%
3.79
2.17

2.39%
1.59
0.80

1.76%
1.13
0.63

5.95%
6.07
(0.12)

2.54%
2.03
0.51

SMBC 2002 — 111

Loan-Deposit Ratio

March 31
Domestic operations

Millions of yen

2002

2001

Loan amount (A) ....................................................................................................................................
Deposit amount (B)................................................................................................................................
Loan-deposit ratio (%)

¥53,618,414
58,568,596

¥54,617,068
57,916,540

(A)/(B) ...............................................................................................................................................
Ratio by average balance for the fiscal year ....................................................................................

91.54%
93.61

94.30%
98.92

International operations

¥ 6,309,954
9,060,756

¥ 7,130,812
12,813,232

69.64%
66.19

55.65%
61.98

Total

¥59,928,368
67,629,353

¥61,747,880
70,729,773

88.61%
89.30

87.30%
92.33

Note: Deposits include negotiable certificates of deposit.

Securities-Deposit Ratio

March 31
Domestic operations

Millions of yen

2002

2001

Securities amount (A) ............................................................................................................................
Deposit amount (B)................................................................................................................................
Securities-deposit ratio (%)

¥16,828,804
58,568,596

¥23,885,523
57,916,540

28.73%
34.39

41.24%
31.28

International operations

¥ 3,614,192
9,060,756

¥ 3,174,454
12,813,232

39.88%
35.05

24.77%
17.69

Total

¥20,442,996
67,629,353

¥27,059,978
70,729,773

30.22%
34.50

38.25%
28.85

Note: Deposits include negotiable certificates of deposit.

112 — SMBC 2002

Capital (Nonconsolidated)

Changes in Number of Shares Outstanding and Capital Stock

March 31, 1999 ..............................
April 2, 2001 ...................................
March 9, 2002 ................................
March 15, 2002 ..............................
April 1, 2001 – March 31, 2002 ......
April 1, 2001 – March 31, 2002 ......

Thousands of shares
Number of shares
outstanding

Changes

167,000
3,273,423
—
—
91,324
3,614

Outstanding
balances

3,308,062
6,581,485
6,581,485
6,581,485
6,672,810
6,676,424

Millions of yen

Capital stock

Capital surplus

Changes

¥250,500
523,851
—
—
50,045
—

Balances

¥ 752,848
1,276,700
1,276,700
1,276,700
1,326,746
1,326,746

Changes

¥250,500
991,326
(357,614)
11
49,954
—

Balances

¥ 643,080
1,634,407
1,276,792
1,276,804
1,326,758
1,326,758

Remarks:
March 31, 1999:

Allotment to third parties:

Preferred stock (First series Type 1): 67,000 thousand shares

Issue price:
Capitalization:

¥3,000
¥1,500

Preferred stock (Second series Type 1): 100,000 thousand shares

Issue price:
Capitalization:

¥3,000
¥1,500

April 2, 2001:
March 9, 2002:

March 15, 2002:
April 1, 2001 – March 31, 2002:
April 1, 2001 – March 31, 2002:

Merger with The Sakura Bank, Limited (merger ratio: 1-to-0.6)
Withdrawal from capital reserve pursuant to Article 289-2 of the Commercial Code of Japan and Article
18-2 of the Bank Law
Merger with SMBC Property Management Service Co., Ltd., a wholly owned subsidiary of the Bank
Conversion of convertible bonds into common stock
Conversion of preferred stock into common stock

Balance of Outstanding Convertible Bonds

Type and issue date
US$ convertible bonds

Issue amount

Interest rate

Maturity

Outstanding
balance at
March 31, 2002

Conversion
price
(May 31, 2002)

January 30, 1989......................

US$300 million

3.125%

March 31, 2004

US$8,660,000

¥3,606.90

Total Outstanding Shares
March 31, 2002
Common stock ..............................................................................................................................................................
Preferred stock (First series Type 1) .............................................................................................................................
Preferred stock (Second series Type 1) ........................................................................................................................
Preferred stock (Type 5) ................................................................................................................................................
Total ..............................................................................................................................................................................

Number of shares issued
5,709,424,395
67,000,000
100,000,000
800,000,000
6,676,424,395

Stock Exchange Listings
Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
Sapporo Securities Exchange
London Stock Exchange

SMBC 2002 — 113

Number of Shares, Classified by Type of Shareholders
a. Common Stock

March 31, 2002
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

7
449
122
8,508
761
57
137,618
147,465
/

Number of
share units held
4,897
2,199,770
95,306
2,176,809
642,653
278
554,360
5,673,795
35,629,395

Percentage of
total
0.09%

38.77
1.68
38.36
11.33
0.00
9.77
100.00%

Notes: 1. Of 449,559 shares in treasury stock, 449 units are included in “individuals and others” and the remaining 559 shares are included in “less than one

unit.” Treasury stock (449,559 shares) is carried on the shareholders’ register, and the actual number of shares as of March 31, 2002, is 434,559
shares.

2. “Other institutions” includes 200 units held by the Securities Custody Association.
3. One unit consists of 1,000 shares.

b. Preferred Stock (First series Type 1)

March 31, 2002
Financial institutions ......................................................................................................

Number of
shareholders

Number of
share units held
67,000

Percentage of
total
100.00%

c. Preferred Stock (Second series Type 1)

March 31, 2002
Financial institutions ......................................................................................................

Number of
shareholders

Number of
share units held
100,000

Percentage of
total
100.00%

d. Preferred Stock (Type 5)

March 31, 2002
Financial institutions ......................................................................................................

Number of
shareholders

Number of
share units held
800,000

Percentage of
total
100.00%

Number of Voting Rights
Total Outstanding Shares

Number of shares of nonvoting stock
Number of shares of voting stock with

restriction (Treasury stock, etc.)

Number of shares of voting stock with

restriction (Others)

Voting stock (Treasury stock, etc.)

Voting stock (Others)
Shares less than one unit
Total outstanding shares
Total voting rights

Number of shares

Number of voting rights

Preferred stock

967,000,000

(Treasury stock)
Common stock
(Cross-holding shares)
Common stock
Common stock
Common stock

—

434,000

13,620,000
5,659,741,000
35,629,395
6,676,424,395
—

—

5,659,741
—
—
5,659,741

Notes: 1. “Voting stock (Others)” includes 200,000 shares (200 voting rights) held by the Security Custody Association.

2. “Shares less than one unit” includes 559 shares of the Bank’s treasury stock and cross-holding shares held by the Bank’s consolidated subsidiaries,

as follows:
March 31, 2002
THE MINATO BANK, LTD. ....................................................................
SMBC Leasing Company, Limited ........................................................
Sumitomo Mitsui Card Company, Limited ............................................
The Bank of Kansai, Ltd. .......................................................................
SMBC Mortgage Co., Ltd. .....................................................................
Sakura Friend Securities Co., Ltd. ........................................................

Number of shares held

97
384
270
179
414
600

114 — SMBC 2002

Number of Shares of Treasury Stock

March 31, 2002
Holders of treasury stock
Sumitomo Mitsui Banking Corporation ....................................................
THE MINATO BANK, LTD. ......................................................................
Daiwa Securities SMBC Co. Ltd. .............................................................
SMBC Leasing Company, Limited ...........................................................
Sumitomo Mitsui Card Company, Limited ...............................................
The Bank of Kansai, Ltd. ..........................................................................
SMBC Mortgage Co., Ltd. ........................................................................
Sakura Friend Securities Co., Ltd. ...........................................................
Total..........................................................................................................

Number of shares held in the name of

Holder
434,000
5,260,000
3,159,000
2,276,000
1,314,000
1,114,000
292,000
205,000
14,054,000

Others
—
—
—
—
—
—
—
—
—

Total
434,000
5,260,000
3,159,000
2,276,000
1,314,000
1,114,000
292,000
205,000
14,054,000

Percentage of total
shares outstanding
0.00%
0.09
0.05
0.03
0.02
0.01
0.00
0.00
0.24%

Notes: 1. The above figures do not include 15,000 shares (15 voting rights) held in the Bank’s nominee name. They are included in “Voting stock (Others)” in

the table of “Number of Voting Rights.”

2. Percentage of total shares outstanding is calculated based on the total number of shares of common stock outstanding.

Principal Shareholders
a. Common Stock
March 31, 2002
Shareholders
Sumitomo Life Insurance Company ....................................................................................................
Japan Trustee Services Bank, Ltd. (Trust Account) ............................................................................
Nippon Life Insurance Company .........................................................................................................
The Mitsubishi Trust and Banking Corporation (Trust Account) ..........................................................
The Taiyo Mutual Life Insurance Company .........................................................................................
UFJ Trust Bank Limited (Trust Account A) ..........................................................................................
Matsushita Electric Industrial Co., Ltd. ................................................................................................
Mitsui Mutual Life Insurance Company................................................................................................
The Chase Manhattan Bank, N.A. London .........................................................................................
SANYO ELECTRIC CO., LTD. ...........................................................................................................
Mitsui Sumitomo Insurance Company, Limited ...................................................................................
The Dai-ichi Mutual Life Insurance Company ......................................................................................
TOYOTA MOTOR CORPORATION ...................................................................................................
SUMITOMO CORPORATION ............................................................................................................
The Sumitomo Trust and Banking Company, Limited ........................................................................
Euroclear Bank S.A./N.V. ....................................................................................................................
Mitsui Asset Trust and Banking Company, Limited (Pension Trust Account)......................................
KUBOTA CORPORATION .................................................................................................................
Takeda Chemical Industries, Ltd. .......................................................................................................
Mitsui Fudosan Co., Ltd. .....................................................................................................................
The SMBC Employee Stockholders’ Association ................................................................................
MITSUI & CO., LTD. ...........................................................................................................................
Kondo Cotton Spinning Co., Ltd. ........................................................................................................
State Street Bank and Trust Company ................................................................................................
Composite Trust Trustee Mitsui Asset Trust and Banking Company, Limited

(Entrust TOSHIBA CORPORATION).................................................................................................
NIPPON STEEL CORPORATION ......................................................................................................
SUMITOMO CHEMICAL COMPANY, LIMITED .................................................................................
The Tokyo Electric Power Company, Incorporated ............................................................................
The Kansai Electric Power Company, Incorporated ...........................................................................
KAJIMA CORPORATION ...................................................................................................................

Number of shares
held (thousands)

228,378
210,918
204,364
184,993
122,109
107,002
103,570
76,651
67,979
64,113
60,200
53,771
53,753
52,008
51,203
49,888
43,486
39,499
39,074
33,934
31,927
30,166
30,056
29,290

29,253
29,147
28,544
28,313
28,026
26,776

Percentage of
shares outstanding
4.00%
3.69
3.57
3.24
2.13
1.87
1.81
1.34
1.19
1.12
1.05
0.94
0.94
0.91
0.89
0.87
0.76
0.69
0.68
0.59
0.55
0.52
0.52
0.51

0.51
0.51
0.49
0.49
0.49
0.46

b. Preferred Stock (First series Type 1)
March 31, 2002
Shareholder
The Resolution and Collection Corporation .........................................................................................

Number of shares
held (thousands)

67,000

Percentage of
shares outstanding
100.00%

SMBC 2002 — 115

c. Preferred Stock (Second series Type 1)
March 31, 2002
Shareholder
The Resolution and Collection Corporation .........................................................................................

Number of shares
held (thousands)

100,000

Percentage of
shares outstanding
100.00%

d. Preferred Stock (Type 5)
March 31, 2002
Shareholder
The Resolution and Collection Corporation .........................................................................................

Number of shares
held (thousands)

800,000

Percentage of
shares outstanding
100.00%

Common Stock Price Range
Five-Year Stock Price Performance

Year ended March 31
High........................................................................................
Low ........................................................................................
Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

2002
¥1,240
406

2001
¥1,640
867

Yen

2000
¥1,902
1,271

1999
¥1,710
860

1998
¥1,950
1,100

2. Preferred stock (First series Type 1), Preferred stock (Second series Type 1), and Preferred stock (Type 5) are neither listed on exchanges nor regis-

tered with the Securities Dealers Association of Japan as trading securities on the over-the-counter market.

3. The former Sumitomo Bank’s stock prices are shown up to the year ended March 31, 2001.

The high and low stock prices for each year in the four-year period ended March 31, 2001, for the former Sakura Bank are as follows:

The Sakura Bank, Limited

Year ended March 31

High ...........................................................................................................

Low ............................................................................................................

Yen

2001

¥858

477

2000

¥1,045

358

1999

¥404

165

1998

¥975

325

Six-Month Performance

March 2002

High ................................................................
Low.................................................................
Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

¥640
490

February 2002
¥509
406

January 2002
¥587
466

Yen

December 2001 November 2001 October 2001

¥674
479

¥775
618

¥916
699

2. Preferred stock (First series Type 1), Preferred stock (Second series Type 1), and Preferred stock (Type 5) are neither listed on exchanges nor regis-

tered with the Securities Dealers Association of Japan as trading securities on the over-the-counter market.

116 — SMBC 2002

Others (Nonconsolidated)

In principle, figures as of and for the years ended March 31, 2001 and 2000, are combined figures for the former Sakura Bank and the former
Sumitomo Bank.

Employees

March 31
Number of employees.............................................................
Average age (years–months)..................................................
Average length of employment (years–months) .....................
Average monthly salary (thousands of yen)............................
Notes: 1. Temporary, part-time, and overseas local staff are excluded from the above calculations.

2002
25,027
38–3
16–4
¥496

Sakura Bank
13,632
38–7
16–10
¥515

2001

2000

Sumitomo Bank
13,526
37–5
15–5
¥504

Sakura Bank
14,930
37–11
16–2
¥502

Sumitomo Bank
14,394
36–11
14–11
¥493

2. Average monthly salary includes overtime pay in March but excludes bonus.
3. Employees are required to retire at the end of the month when they reach 60.
4. Number of employees as of March 31, 2002, including locally hired overseas staff members but excluding employees temporarily transferred to

other companies, totaled 22,464.

Number of Offices
March 31
Domestic network:

2002

2001

2000

Main offices and branches........................................................................................
Subbranches ............................................................................................................
Agency......................................................................................................................

Overseas network:

Branches ..................................................................................................................
Subbranches ............................................................................................................
Representative offices ..............................................................................................
Total...............................................................................................................................

590
96
5

21
2
16
730

593
79
5

33
5
21
736

666
87
5

36
5
23
822

Note: “Main offices and branches” includes International Business Operations Dept. (2002, 2 branches; 2001, 2 branches; 2000, 2 branches), specialized

deposit account branch (2002, 23 branches; 2001, 12 branches; 2000, 10 branches), and ATM administration branch (2002, 1 branch; 2001, 1 branch;
2000, 1 branch).

Number of Automated Service Centers
March 31
Automated service centers ............................................................................................

2002
11,479

2001
3,222

2000
1,509

Domestic Exchange Transactions

Year ended March 31
Exchange for remittance:

Destined for various parts of the country:

2002

Millions of yen
2001

2000

Number of accounts (thousands) ........................................................................
377,380
Amount ................................................................................................................ ¥ 625,250,208 ¥ 786,592,817 ¥ 761,830,689

350,579

339,801

Received from various parts of the country:

Number of accounts (thousands) ........................................................................
Amount ................................................................................................................

264,008
754,026,135

241,455
883,811,562

267,288
884,459,621

Collection:

Destined for various parts of the country:

6,376

7,293

19,690,632 ¥

7,866
19,930,046

Received from various parts of the country:

2,982
9,731,710
Total............................................................................................................................... ¥1,406,521,112 ¥1,700,597,387 ¥1,675,952,069

2,978
10,502,373

2,584
7,692,390

SMBC 2002 — 117

Foreign Exchange Transactions

Year ended March 31
Outward exchanges:

2002

Millions of U.S. dollars
2001

2000

Foreign bills sold.......................................................................................................
Foreign bills bought ..................................................................................................

$ 529,638
101,593

$ 822,512
200,260

$ 756,381
164,362

Incoming exchanges:

Foreign bills payable.................................................................................................
Foreign bills receivable.............................................................................................
Total...............................................................................................................................

$ 635,462
20,854
$1,287,548

$ 771,801
24,234
$1,818,810

$ 838,912
24,052
$1,783,712

Note: The above figures include foreign exchange transactions by overseas branches.

Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees

2002

13,322
257,213
13,456
58,580
47,386
¥ 389,958
571,126
4,568,910
¥5,529,996

Millions of yen
2001

4,908
258,005
7,966
51,828
32,677
¥ 355,390
584,587
5,353,048
¥6,293,027

2000

5,692
170,088
6,731
59,661
28,410
¥ 270,588
1,202,691
3,974,588
¥5,447,870

118 — SMBC 2002

Corporate Data

Organization .................................................................... 120

Directors, Corporate Auditors, and Executive Officers ... 122

Principal Subsidiaries and Affiliates ................................ 124

International Directory ..................................................... 127

SMBC 2002 — 119

Corporate Data

Organization (As of June 30, 2002)

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

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.

Office of Corporate Auditors

Internal Audit Unit

Audit Dept.
Audit Dept. for the Americas
Audit Dept. for Europe
Inspection Dept.
Credit Review Dept.

120 — SMBC 2002

Consumer Banking Unit

Planning Dept., Consumer Banking Unit

Block Consumer Business Office

Sales Channel Planning Dept., Consumer Banking Unit

Branch Banking Dept., Consumer Banking Unit

Corporate Employees Business Promotion Dept.
Products and Marketing Dept., Consumer Banking Unit

Consumer Loan Business Dept.
Investment Products Business Dept., Consumer Banking Unit

Private Banking Dept.
Operations and Systems Dept., Consumer Banking Unit
Credit Dept., Consumer Banking Unit

Middle Market Banking Unit

Planning Dept., Middle Market Banking Unit

Middle Market Banking Division

Operations and Systems Dept., Middle Market Banking Unit
Business Promotion Dept., Middle Market Banking Unit

Business Reengineering Dept.
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 Market Banking Unit
Credit Supervision Dept. II, Middle Market Banking Unit

Branch
Public Institutions Operations Office
Consumer Loan Promotion Office
Call Center
Consumer Loan Servicing Center

Corporate Business Office
Public Institutions Business Office
Business Support Office
Business Promotion Office

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

Tokyo Corporate Banking Division I
Tokyo Corporate Banking Division II
Osaka Corporate Banking Division
Nagoya Corporate Banking Division

Corporate Banking Dept.

International Banking Unit
Planning Dept., International Banking Unit

Asia Pacific Division

Operations and Systems Dept., International Banking Unit

Asia Pacific Dept.

Global Institutional Banking Dept.
Global Investors Services Dept.
Credit Dept., International Banking Unit

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

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.

e-Business, Media and Telecom Dept.

SMBC 2002 — 121

Directors, Corporate Auditors, and Executive Officers (As of June 30, 2002)

BOARD OF DIRECTORS

CORPORATE AUDITORS

Chairman of the Board

Akishige Okada

President

Yoshifumi Nishikawa*

Deputy Presidents

Michiyoshi Kuriyama*
General Affairs Dept., Kobe General Affairs Dept., Legal Dept.,
Customer Relations Dept., Human Resources Dept., Human
Resources Development Dept., Administrative Services Dept.

Takeharu Nagata*
Corporate Research Dept., Credit Administration Dept., Credit Dept. II,
Corporate Banking Unit and Credit Dept. III, Corporate Banking Unit

Hidenori Hiramatsu*
Audit Dept., Audit Dept. for the Americas, Audit Dept. for Europe,
Inspection Dept., Credit Review Dept.

Senior Managing Directors

Tadashi Inoue*
Corporate Banking Unit

Masayuki Oku*
Public Relations Dept., Corporate Planning Dept., Financial
Accounting Dept., Subsidiaries and Affiliates Dept., and e-Business
Planning Dept.

Hideharu Kadowaki*
Portfolio Management Dept., Corporate Risk Management Dept., and
Credit Risk Management Dept.

Takemasa Tsukamoto*
IT Planning Dept., Systems Development Dept. I, Systems
Development Dept. II, International and Market Systems Dept.,
Operations Planning Dept., and Electronic Commerce Banking Dept.

Managing Directors

Teisuke Kitayama*
International Banking Unit

Shigetada Takahashi*
Credit Dept. I, Middle Market Banking Unit, Credit Dept. II, Middle
Market Banking Unit, and Credit Supervision Dept. I, Middle Market
Banking Unit

Kenjiro Noda*
Treasury Unit and Investment Banking Unit

Mutsuhiko Matsumoto*
Consumer Banking Unit

Toichiro Mizushima*
Middle Market Banking Unit

Directors

Yoshiaki Yamauchi

Yoichiro Yamakawa

*Executive Officers

122 — SMBC 2002

Corporate Auditors

Hiroshi Kii

Toyosaburo Hirano

Tomoyuki Watanabe

Kinrou Nakamura

Shoh Nasu

Katsuya Onishi

Josei Itoh

EXECUTIVE OFFICERS

Managing Directors

Jumpei Ishii
Head of Tokyo Middle Market Banking Division V and Head of
Kanagawa Middle Market Banking Division

Koji Ishida
Head of Tokyo Corporate Banking Division I

Takao Umino
Head of Nagoya Corporate Banking Division and Head of Tokai Middle
Market Banking Division

Morio Kusunoki
Credit Dept. III, Middle Market Banking Unit, Credit Supervision Dept.
II, Middle Market Banking Unit, and General Manager, Credit
Supervision Dept. II, Middle Market Banking Unit

Koichi Tsukihara
Middle Market Banking Unit

Shinpei Nihei
Middle Market Banking Unit (stationed at Tokyo)

Masahide Hirasawa
General Affairs Dept., Kobe General Affairs Dept., Legal Dept., and
Customer Relations Dept.,
General Manager, General Affairs Dept. and Kobe General Affairs Dept.

Mitsuaki Yahagi
Head of Tokyo Corporate Banking Division II

Yasuyuki Kimoto
Head of Europe Division

Kenjiro Nakano
Head of Osaka Corporate Banking Division

Shigeru Nishiyama
Credit Dept. I, Corporate Banking Unit

Koichi Maeda
Credit Dept. II, Corporate Banking Unit

Hitoshi Yoshimatsu
General Manager, Singapore Branch

Directors

Shiro Kawajiri
IT Planning Dept., Systems Development Dept. I, Systems
Development Dept. II, International and Market Systems Dept., and
Operations Planning Dept.

Shigenobu Aikyo
General Manager, Planning Dept., Middle Market Banking Unit

Hitoshi Inuga
Head of Kobe Middle Market Banking Division

Osamu Endo
Head of Tokyo Middle Market Banking Division III

Sadao Kobayashi
Head of Asia Pacific Division

Jun Suzuki
General Manager, Audit Dept.

Shuntaro Higashi
Head of The Americas Division

Kengo Miyauchi
General Manager, Credit Dept. I, Middle Market Banking Unit

Hiromichi Miyauchi
Head of Osaka Middle Market Banking Division I

Shigeo Imafuku
General Manager, Credit Dept. II, Corporate Banking Unit

Yusaku Omori
General Manager, Credit Review Dept.

Shunji Ono
General Manager, Public Institutions Banking Dept.

Shigeru Kawamura
General Manager, Operations Planning Dept.

Junji Tanehashi
General Manager, Corporate Planning Dept.

Mitsumasa Wada
General Manager, IT Planning Dept.

Takeshi Sawaizumi
Head of Osaka Middle Market Banking Division II

Masaaki Shimojima
Head of Regional Cities Corporate Banking Division

Masanobu Tomitaka
General Manager, Credit Dept. III, Middle Market Banking Unit

Yuji Harada
General Manager, Planning Dept., International Banking Unit

Takahiro Matsusaka
General Manager, Himeji Corporate Business Office

Takashi Yamaguchi
General Manager, Business Promotion Dept., Middle Market
Banking Unit

Takashi Ueda
General Manager, Osaka Corporate Banking Division I

Wataru Ohara
General Manager, Credit Dept. II, Middle Market Banking Unit

Nobuyuki Kameoka
General Manager, Credit Dept. I, Corporate Banking Unit

Toshiaki Kawai
General Manager, International Treasury Dept.

Hiroaki Shukuzawa
Treasury Unit and General Manager, Planning Dept., Treasury Unit

Yoshinori Kawamura
General Manager, Structured Finance Dept.

Hirosumi Tsusue
Human Resources Dept. and Human Resources Development Dept.

Hideo Shimada
General Manager, Planning Dept., Investment Banking Unit

Kohei Katsukawa
Head of Tokyo Middle Market Banking Division IV

Kazuhisa Kishikawa
General Manager, Planning Dept., Consumer Banking Unit

Hiroki Nishio
General Manager, Planning Dept., Corporate Banking Unit

Hajime Yamashita
Head of Tokyo Middle Market Banking Division I

Yoshihiro Yoshimura
General Manager, Bangkok Branch, Chonburi Branch, and Ayudhya
Branch

Masato Ueda
Head of Tokyo Middle Market Banking Division II

Hitoshi Sogabe
General Manager (Osaka), Planning Dept., Middle Market Banking Unit

Katsumi Tamai
General Manager, Branch Banking Dept., Consumer Banking Unit

Tsutomu Harata
General Manager, Osaka Corporate Banking Division II

Yasuhisa Furukawa
General Manager, Tokyo Corporate Banking Dept. VI

Fukuzo Yasuo
General Manager, Tokyo Corporate Banking Dept. II

SMBC 2002 — 123

Principal Subsidiaries and Affiliates (As of March 31, 2002)

Domestic Principal Subsidiaries

Company Name

SMBC Staff Service Co., Ltd.

SMBC Learning Support Co., Ltd.

SMBC Center Service Co., Ltd.

SMBC Delivery Service Co., Ltd.

SMBC Business Service Co., Ltd.

SMBC Green Service Co., Ltd.

SMBC International Operations Co., Ltd.

SMBC International Business Co., Ltd.

SMBC Consumer Loan Operations Co., Ltd.

SMBC Property Research Service Co., Ltd.

SMBC Total Maintenance Co., Ltd.

Issued Capital Percentage of Bank’s
(Millions of Yen) Voting Rights* (%)

100

450

100

Established

Main Business

July 15, 1982

Temporary manpower service

May 27, 1998

Seminar organizer

October 16, 1995

Banking clerical work

January 31, 1996

Banking clerical work

September 24, 1976

Banking clerical work

March 15, 1990

Banking clerical work

December 21, 1994

Banking clerical work

September 28, 1983

Banking clerical work

November 7, 1997

Banking clerical work

February 1, 1984

Banking clerical work

October 7, 1994

Disposal of real estate collateral

Sumitomo Mitsui Card Company, Limited

79,115

46.9

(53.1)

December 26, 1967

Credit card services

SAKURA CARD CO., Ltd.

At-Loan Co., Ltd.

7,438

68.5

(27.3)

February 23, 1983

Credit card services

17,500

52.0

June 8, 2000

Loans

SMBC Loan Adviser Co., Ltd.

100

April 1, 1998

Consulting and agency services for
consumer loans

The Japan Net Bank, Limited

Sakura Guarantee Co., Ltd. **

Sansei Guarantee Co., Ltd.

SMBC Loan Servicer Co., Ltd.

SB Auto Leasing Company

SMBC Finance Co., Ltd.

20,000

57.0

September 19, 2000

Commercial banking via Internet

87,720

(100)

July 14, 1976

Credit guarantee

100

April 1, 1974

Credit guarantee

500

(100)

July 28, 1999

Servicer

Leasing

200

(90)

January 6, 1995

71,705

80.7

(18.5)

December 5, 1972

Mortgage securities, factoring, and loans

SMBC Leasing Company, Limited

57,600

37.5

(47.7)

September 2, 1968

SMBC FACTORS CO., LTD.

3,000

100

August 16, 2000

Factoring

SMBC Capital Co., Ltd.

SMBC Consulting Co., Ltd.

SMBC Mortgage Co., Ltd.

2,500

39.8

(60.2)

August 1, 1995

Venture capital

1,100

50.0

(50.0)

May 1, 1981

Management consulting and information service

18,182

47.0

(10.7)

October 14, 1983

Mortgage securities

Mitsui Finance Service Co., Ltd.

1,100

43.6

(34.5)

December 22, 1979

Collecting agent and factoring

Sakura Finance Service Co., Ltd.

SMBC Business Servicing Co., Ltd.

200

500

40.0

(10.5)

July 12, 1979

Collecting agent and factoring

100

March 11, 1999

Servicer

Sakura Friend Securities Co., Ltd.

26,139

37.5

(6.3)

April 20, 1932

Securities

SAKURA INVESTMENT MANAGEMENT CO., LTD.

1,280

100

September 27, 1993

The Japan Research Institute, Limited

3,000

4.9

(49.3)

February 20, 1969

Investment advisory and investment trust
management
Economic research, system engineering, data
processing, and management consulting

Sakura Information Systems Co., Ltd.

600

5.0

(35.0)

November 29, 1972

System engineering and data processing

SAKURA KCS Corporation

THE MINATO BANK, LTD.

The Bank of Kansai, Ltd.

2,054

5.0

(47.9)

March 29, 1969

System engineering and data processing

24,908

48.4

(1.7)

September 6, 1949

Commercial banking

32,500

49.9

(19.3)

July 1, 1922

Commercial banking

THE WAKASHIO BANK, LTD.

20,831

100

June 6, 1996

Commercial banking

* Figures in parentheses indicate voting rights held by the Bank’s nonconsolidated subsidiaries and affiliates as a percentage of total voting rights.
** Sakura Guarantee Co., Ltd., changed its name to SMBC Guarantee Co., Ltd., on April 1, 2002.

124 — SMBC 2002

Overseas Principal Subsidiaries

Company Name

Country

Issued Capital

Percentage of Bank’s
Voting Rights* (%)

Established

Main Business

Manufacturers Bank

Sumitomo Mitsui Banking
Corporation of Canada
Banco Sumitomo Mitsui
Brasileiro S.A.
PT Bank Sumitomo Mitsui
Indonesia

U.S.A.

Canada

Brazil

US$80.78 million

100

June 26, 1962

Commercial banking

C$121.87 million

100

April 1, 2001

Commercial banking

R$200.88 million

100

October 6, 1958

Commercial banking

Indonesia

Rp1,502.4 billion

97.6

August 22, 1989

Commercial banking

SMBC Leasing and Finance, Inc.

U.S.A.

US$1,620

89.7

(10.3)

November 9, 1990

Leasing

Sumitomo Mitsui Finanz
(Deutschland) GmbH

SMBC Capital Markets, Inc.

SMBC Securities, Inc.

Germany

U.S.A.

€25,000

100

June 14, 1985

Leasing

US$100

90.0

(10.0)

December 4, 1986

Investments and derivatives

US$100

90.0

(10.0)

August 8, 1990

Securities

SMBC Financial Services, Inc.

U.S.A.

US$300

100

August 8, 1990

Investments

Sumitomo Finance (Asia) Limited

British West Indies

US$35 million

100

September 26, 1973

Investments

SBTC, Inc.

U.S.A.

US$1

100

January 26, 1998

Investments

SB Equity Securities
(Cayman), Limited

British West Indies

¥1 million

100

December 15, 1998

Finance

SFVI Limited

British Virgin Islands

US$300

100

July 30, 1997

Investments

Sakura Finance (Cayman) Limited

British West Indies

US$100,000

100

February 11, 1991

Finance

Sakura Capital Funding
(Cayman) Limited
Sakura Preferred Capital
(Cayman) Limited

British West Indies

US$100,000

100

July 15, 1992

Finance

British West Indies

¥10 million

100

November 12, 1998

Finance

SMBC International Finance N.V.

Netherlands Antilles

US$200,000

100

June 25, 1990

Finance

SMBC Capital Markets Limited

U.K.

US$297 million

100

April 18, 1995

Derivatives

SMBC Derivative Products
Limited
Sumitomo Finance
International plc

U.K.

US$300 million

(100)

April 18, 1995

Derivatives

£200 million

100

July 1, 1991

Investments

Sakura Trust International Limited**

U.K.

£250,000

100

May 25, 1984

Trustee business and fiscal
agency business

Sumitomo Mitsui Finance
Dublin Limited

Ireland

US$12 million

100

September 19, 1989

Finance

Sakura Finance Asia Limited

P.R.C.

US$65 million

100

October 17, 1977

Finance

Sumitomo Mitsui Finance
Australia Limited

Australia

A$62 million

100

June 29, 1984

Finance

Sakura Finance Australia Limited

Australia

A$54 million

100

March 27, 1986

Finance

Sakura Merchant Bank
(Singapore) Limited

Singapore

S$4 million

100

April 18, 1990

Finance

* Figures in parentheses indicate voting rights held by the Bank’s nonconsolidated subsidiaries and affiliates as a percentage of total voting rights.
** Sakura Trust International Limited was liquidated on May 24, 2002.

SMBC 2002 — 125

Domestic Principal Affiliates

Company Name

Issued Capital Percentage of Bank’s
(Millions of Yen) Voting Rights* (%)

Established

Main Business

Daiwa Securities SMBC Co. Ltd.

205,600

40.0

February 5, 1999

Wholesale securities

Daiwa Securities SMBC Principal
Investment Co. Ltd.

500

—

(100)

September 4, 2001

Investments

Meiko National Securities Co., Ltd.

27,270

20.6

(7.6)

March 2, 1948

Securities

DLJdirect SFG Securities Inc.

3,000

21.3

March 24, 1999

Securities via Internet

Daiwa SB Investments Ltd.

2,000

30.4

(13.6)

April 1, 1999

Investment advisory and investment trust

Japan Pension Navigator Co., Ltd.

2,500

30.0

September 21, 2000

QUOQ Inc.

1,000

5.0

(34.9)

April 5, 1978

Operation and administration of defined
contribution pension plans
Purchase of monetary assets and
credit guarantee

* Figures in parentheses indicate voting rights held by the Bank’s nonconsolidated subsidiaries and affiliates as a percentage of total voting rights.

126 — SMBC 2002

International Directory (As of June 30, 2002)

Asia, Oceania

Branches and Representative Offices

Hong Kong Branch
7th & 8th Floors, 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

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

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

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 Branch
Aurora International Building 9F,
No. 2, Sec. 5 Hsin Yi Rd.,
Taipei, Taiwan
Tel: 886 (2) 2720-8100
Fax: 886 (2) 2720-8287

Seoul Branch
Young Poong Bldg. 7F,
33, Seorin-Dong, Jongno-gu,
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

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

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

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

SMBC 2002 — 127

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
Jolly Maker Chambers No. 2,
15th Floor, 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
12069, Indonesia
Tel: 62 (21) 522-7011
Fax: 62 (21) 522-7022

China International Finance
Company Limited (Shenzhen)
33F International Financial Building,
23 Jian She Road, Shenzhen,
The People’s Republic of China
Tel: 86 (755) 225-1509
Fax: 86 (755) 223-7566

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 Asia Limited
7th & 8th Floors, One International
Finance Centre 1 Harbour View
Street, Central, Hong Kong Special
Administrative Region,
The People’s Republic of China
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, #07-04,
Centennial Tower, Singapore
039190, Singapore

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 3313, Office Tower, CITIC
Plaza, 233 Tianhe North Road,
Guangzhou,
The People’s Republic of China
Tel: 86 (20) 8752-0177
Fax: 86 (20) 8752-0397

BSL Leasing Co., Ltd.
19th Fl. Sathorn City Tower,
175 South Sathorn Road,
Bangkok, Thailand
Tel: 66 (2) 679-6144
Fax: 66 (2) 679-6160

Bangkok SMBC Systems Ltd.
19th Floor, Q, House Sathorn
Building, 11 South Sathorn Road,
Bangkok, 10120 Thailand
Tel: 66 (2) 679-1878~80
Fax: 66 (2) 679-1882

SMBC Management Service
Co., Ltd.
7th Floor Unit B6, 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
Boon-Mitr Building, 138 Silom Road,
Suriyawongse, 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

SMSB Co.,Ltd.
7th Floor Unit B6, Boon-Mitr
Building, 138 Silom Road,
Suriyawongse, Bangrak, Bangkok
10500, Thailand

128 — SMBC 2002

Americas

Subsidiaries

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

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

Manufacturers Bank
515 South Figueroa Street,
Los Angeles, CA 90071, U.S.A.
Tel: 1 (213) 489-6200
Fax: 1 (213) 489-6254

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 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

SMBC 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

SMBC Leasing (Hong Kong)
Limited
21st Floor, World-wide House,
2104B, 19 Des Voeux Road,
Central, Hong Kong Special
Administrative Region,
The People’s Republic of China
Tel: 852 (2523) 4155
Fax: 852 (2845) 9246

SMBC 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

SMBC 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

SMBC 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 Floors, 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

SMBC 2002 — 129

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
Prinzenallee 7, 40549 Düsseldorf,
Federal Republic of Germany

Principal Affiliate

P.T. Exim SB Leasing
Summitmas I, 8th Floor, JI. Jendral,
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

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
Financial 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 Trust International Limited
Temple Court, 11 Queen Victoria
Street, London EC4N 4TA, U.K.
Tel: 44 (20) 7248-3076
Fax: 44 (20) 7329-4934

130 — SMBC 2002

SMBC Website

➤ http://www.smbc.co.jp/global/

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