Plain-text annual report
ANNUAL REPORT
2008
YEAR ENDED MARCH 31, 2008
www.smfg.co.jp/english
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
Printed in Japan
Aiming to become a globally competitive financial
services group with the highest trust
We are a group of highly qualified professionals
that can provide truly valuable financial services to our customers.
Each of us thinks and acts with pride as experts in each business area
in order to LEAD the competition in creating and delivering
customer VALUE in a continually changing business environment.
CONTENTS
● Message from the Management ...............................
2
● Outline of “LEAD THE VALUE” Plan
—SMFG’s Medium-Term Management Plan ............... 10
● Business Overview................................................................ 12
Consumer Banking...................................................................
Corporate Banking ...................................................................
Services for High-Net-Worth Individuals,
Business Owners and Employees............................................
Investment Banking..................................................................
International Banking................................................................
Treasury Markets ......................................................................
12
14
16
17
18
19
● Group Companies..................................................... 20
● Financial Highlights................................................... 22
● Financial Review ....................................................... 26
● Risk Management ..................................................... 36
● Corporate Social Responsibility (CSR) ..................... 52
● Initiatives for Enhancing Customer Satisfaction (CS)
and Quality................................................................ 53
● Corporate Governance ............................................. 54
● Internal Audit System ................................................ 55
● Compliance............................................................... 56
● Environmental Preservation Initiatives....................... 58
● Social Contribution Activities .................................... 62
● Human Resources .................................................... 66
● Financial Section and Corporate Data...................... 69
Financial Section ......................................................................
70
Corporate Data......................................................................... 199
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 tech-
nology and evolving banking industry standards and similar matters.
Sumitomo Mitsui Financial Group, Inc.
Public Relations Department
1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo 100-0006, Japan
TEL: +81-3-5512-3411
Sumitomo Mitsui Banking Corporation
Public Relations Department
1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo 100-0006, Japan
TEL: +81-3-3501-1111
September 2008
SMFG 2008 1
These activities are supported by our three core strengths:
Spirit of Innovation
We LEAD the market by
providing innovative,
globally competitive services
that meet customer needs.
Solution &
Execution
We LEAD the business by using all
the knowledge and experiences of
our group to solve the issues of our
customers, whether individuals or
corporates, identified through a deep
understanding of their needs
and f i n a n c i a l
situations
Speed
We LEAD the pace by
providing our customers
with desirable services in a
timely manner with speed
and determination.
We create new VALUE by forming teams of
specialists in various fields and providing optimal services to
our customers through two-way communication.
As a result, we will be selected as a truly trusted partner.
Aiming to become a globally competitive financial
services group with the highest trust
We are a group of highly qualified professionals
that can provide truly valuable financial services to our customers.
Each of us thinks and acts with pride as experts in each business area
in order to LEAD the competition in creating and delivering
customer VALUE in a continually changing business environment.
CONTENTS
● Message from the Management ...............................
2
● Outline of “LEAD THE VALUE” Plan
—SMFG’s Medium-Term Management Plan ............... 10
● Business Overview................................................................ 12
Consumer Banking...................................................................
Corporate Banking ...................................................................
Services for High-Net-Worth Individuals,
Business Owners and Employees............................................
Investment Banking..................................................................
International Banking................................................................
Treasury Markets ......................................................................
12
14
16
17
18
19
● Group Companies..................................................... 20
● Financial Highlights................................................... 22
● Financial Review ....................................................... 26
● Risk Management ..................................................... 36
● Corporate Social Responsibility (CSR) ..................... 52
● Initiatives for Enhancing Customer Satisfaction (CS)
and Quality................................................................ 53
● Corporate Governance ............................................. 54
● Internal Audit System ................................................ 55
● Compliance............................................................... 56
● Environmental Preservation Initiatives....................... 58
● Social Contribution Activities .................................... 62
● Human Resources .................................................... 66
● Financial Section and Corporate Data...................... 69
Financial Section ......................................................................
70
Corporate Data......................................................................... 199
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 tech-
nology and evolving banking industry standards and similar matters.
Sumitomo Mitsui Financial Group, Inc.
Public Relations Department
1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo 100-0006, Japan
TEL: +81-3-5512-3411
Sumitomo Mitsui Banking Corporation
Public Relations Department
1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo 100-0006, Japan
TEL: +81-3-3501-1111
September 2008
SMFG 2008 1
These activities are supported by our three core strengths:
Spirit of Innovation
We LEAD the market by
providing innovative,
globally competitive services
that meet customer needs.
Solution &
Execution
We LEAD the business by using all
the knowledge and experiences of
our group to solve the issues of our
customers, whether individuals or
corporates, identified through a deep
understanding of their needs
and f i n a n c i a l
situations
Speed
We LEAD the pace by
providing our customers
with desirable services in a
timely manner with speed
and determination.
We create new VALUE by forming teams of
specialists in various fields and providing optimal services to
our customers through two-way communication.
As a result, we will be selected as a truly trusted partner.
Message from the Management
We would like to thank you for your continuing support and patronage of Sumitomo Mitsui Financial Group
(SMFG). In this annual report, we review the initiatives implemented in fiscal 2007, ended March 31, 2008,
and explain our management policies for fiscal 2008.
Economic and Financial Conditions in
Fiscal 2007
During fiscal 2007, the economies of Europe held firm, while
the privatization of the operations of Japan’s postal services
in October 2007. In addition, in December 2007, the market-
ing of insurance products by banks and other financial
those of Asia showed generally rapid expansion. In contrast,
institutions was fully granted to banks.
in the wake of the subprime loan crisis, the U.S. economy
showed growing signs of a deceleration, and, in September
and subsequent months, a series of reductions in policy
interest rates was implemented. In Japan, the impact of the
subprime loan problem was marginal, but, as a result of a
slump in private housing investment, a sharp run-up in
prices of energy and raw materials, and other factors, by the
end of fiscal 2007, the economy was showing clear signs of
moving into a period of adjustment.
Principal Initiatives in Fiscal 2007
◆ We made a strong start as a “first step”
towards accomplishing our medium-term
management plan*1, while “coping with
uncertainty in business environment.”*2
*1: For further details, please refer to page 6.
*2: For further details, please refer to page 9.
Amid this economic and financial environment, with the
To increase returns to shareholders, SMFG raised its
and Sumitomo Mitsui Card as the focal points, we will work
annual cash dividend per common share by ¥5,000, to
to achieve economies of scale within the Group and, by fus-
¥12,000. As a result of this increase, we attained our
ing the business bases of alliance partners, seek to
medium-term dividend payout ratio goal of more than 20%.
maximize top-line synergies, and aim to become a “number
Fiscal 2008 Management Policies
The turbulence in the financial markets following the sub-
one credit card entity in Japan.” In addition, in the consumer
finance business, we will continue to promote our collabora-
tive relationship with Promise Co., Ltd., by increasing the
prime loan crisis has still not subsided, and concern about a
number of automated contract machines and responding to
deceleration in economic growth is mounting both in Japan
the sound needs of customers within the context of their
and overseas. Amid these conditions, we have positioned
lifestyles.
fiscal 2008 as a “year for taking step forward to accomplish-
ing the medium-term management plan, while coping with
uncertainty in business environment.” We will, therefore, con-
● Solution Providing for Corporations and
Investment Banking, Trust Business
In the financial markets, beginning in the summer of
beginning of fiscal 2007, we entered the first stage of our
tinue to pursue our two strategic initiatives of “strengthening
For our corporate customers, we will continue to offer high-
2007, long-term market interest rates moved onto a declin-
three-year medium-term management plan entitled “LEAD
targeted growth business areas” and “fortifying platform for
quality solutions that respond accurately to their diverse
ing trend, and, as a result of rising concerns about the future
THE VALUE.” Under this plan, we draw on our three core
supporting sustainable growth.”
course of the U.S. economy, the yen appreciated against the
strengths, which are “Spirit of Innovation,” “Speed,” and
U.S. dollar and the Nikkei stock price average dropped sub-
“Solution & Execution,” as well as focus on two strategic ini-
stantially compared with the end of the previous fiscal year.
tiatives on a Groupwide basis: namely, “strengthening
◆ Strengthening Targeted
Growth Business Areas
business issues by promoting closer collaboration among
Corporate Business Offices and other business offices of the
Middle Market Banking Unit, Corporate Advisory Division,
and Daiwa Securities SMBC Co. Ltd. Moreover, through the
In addition, concern about a credit crunch mounted in the
targeted growth business areas” and “fortifying platform for
● Provide Optimum Added Value to Our Customers
Private Advisory Department, we will move ahead with initia-
financial markets of Europe and the United States because
supporting sustainable growth.” The seven growth areas are
Financial Consulting for Individuals
tives in business areas where needs of individual customers
of the massive losses reported by some financial institutions
Financial consulting services for individuals; Payments &
Foremost, as we seek to strengthen our position in the
and corporate customers co-exist, such as private banking,
as a result of the subprime loan problem.
settlement services, Consumer finance; Solution providing
growth businesses, we would like to further enhance our
workplace banking and business succession consulting.
Amid this operating environment, major developments in
for corporations; Investment banking, Trust business;
“total consulting services” and provide “one-stop” shopping
Also, the Global Advisory Department, which we formed in
Japan’s financial services industry included the implementa-
Focused business areas in global markets; Proprietary
at SMBC for all types of financial services to our individual
April 2008, to enhance teamwork among offices in Japan
tion of the Financial Instruments and Exchange Law in
investment; and Credit derivative, Trading & distribution.
customers. In specific terms, this includes offering insurance
and overseas and strengthen our capabilities for offering
September 2007, which established a broad framework for
At the same time, we took decisive measures to cope
products, such as whole-life, term, medical, and other poli-
solutions to assist companies that are entering overseas
the protection of users of financial instruments and services;
with unpredictability and uncertainty in business environ-
cies, that we can now sell following their full liberalization in
markets and those corporate clients that wish to expand
the implementation of a fully revised Trust Business Law; and
ment that followed the subprime loan crisis. Specifically, we
Teisuke Kitayama
President
Sumitomo Mitsui
Financial Group, Inc.
sold our exposure to subprime-related securitized products
at an early date and made appropriate write-offs and loss
provisions. As a result of these measures, our subprime-
related exposure at the end of the fiscal year under review,
after the deduction of write-offs and loss provisions,
amounted to ¥5.5 billion. We, therefore, believe the impact of
this level of exposure will have only a marginal impact on the
Group’s financial position.
During the fiscal year under review, SMFG’s principal
subsidiary SMBC reported an increase over the previous fis-
cal year in non-consolidated banking profit of ¥79.1 billion,
owing to a combination of improvement in Gains (losses) on
bonds and an increase in interest income from an improve-
ment in the loan-to-deposit spread. These improvements
more than offset the increase in expenses. Net income for
SMFG on a consolidated basis rose ¥20.1 billion over the
previous fiscal year, to ¥461.5 billion, as the rise in Total credit
cost at SMBC and deterioration in Gains on equities were
both offset by the increase in Banking profit and improvement
in profit performance of other Group companies.
December 2007, and introducing a broader range of invest-
ment trusts and individual annuities. We would also like to
substantially improve the services we offer to individuals by
expanding the lineup of discretionary investment account
based asset management services and products of SMBC
Friend Securities, which became a wholly owned subsidiary
of SMFG in September 2006, to create a new “business
model that fuses banking and securities.” In addition, we are
working to increase the number of consultants and reinforce
the skills of personnel through further training. We will also
significantly expand our office network by actively broaden-
ing the variety of outlets through the addition of more
branches, SMBC Consulting Plazas, and SMBC Consulting
Offices, principally in Japan’s three major urban centers.
● Payment & Settlement Services, Consumer Finance
Next, in our credit card business, based on the credit card
business strategy of our group that we announced in Febru-
ary 2008, we are planning to implement a merger among
Central Finance Co., Ltd., OMC Card, Inc., and QOUQ with
a target date of April 2009. With this newly merged company
Masayuki Oku
President
Sumitomo Mitsui
Banking Corporation
2
SMFG 2008
SMFG 2008 3
Message from the Management
We would like to thank you for your continuing support and patronage of Sumitomo Mitsui Financial Group
(SMFG). In this annual report, we review the initiatives implemented in fiscal 2007, ended March 31, 2008,
and explain our management policies for fiscal 2008.
Economic and Financial Conditions in
Fiscal 2007
During fiscal 2007, the economies of Europe held firm, while
the privatization of the operations of Japan’s postal services
in October 2007. In addition, in December 2007, the market-
ing of insurance products by banks and other financial
those of Asia showed generally rapid expansion. In contrast,
institutions was fully granted to banks.
in the wake of the subprime loan crisis, the U.S. economy
showed growing signs of a deceleration, and, in September
and subsequent months, a series of reductions in policy
interest rates was implemented. In Japan, the impact of the
subprime loan problem was marginal, but, as a result of a
slump in private housing investment, a sharp run-up in
prices of energy and raw materials, and other factors, by the
end of fiscal 2007, the economy was showing clear signs of
moving into a period of adjustment.
Principal Initiatives in Fiscal 2007
◆ We made a strong start as a “first step”
towards accomplishing our medium-term
management plan*1, while “coping with
uncertainty in business environment.”*2
*1: For further details, please refer to page 6.
*2: For further details, please refer to page 9.
Amid this economic and financial environment, with the
To increase returns to shareholders, SMFG raised its
and Sumitomo Mitsui Card as the focal points, we will work
annual cash dividend per common share by ¥5,000, to
to achieve economies of scale within the Group and, by fus-
¥12,000. As a result of this increase, we attained our
ing the business bases of alliance partners, seek to
medium-term dividend payout ratio goal of more than 20%.
maximize top-line synergies, and aim to become a “number
Fiscal 2008 Management Policies
The turbulence in the financial markets following the sub-
one credit card entity in Japan.” In addition, in the consumer
finance business, we will continue to promote our collabora-
tive relationship with Promise Co., Ltd., by increasing the
prime loan crisis has still not subsided, and concern about a
number of automated contract machines and responding to
deceleration in economic growth is mounting both in Japan
the sound needs of customers within the context of their
and overseas. Amid these conditions, we have positioned
lifestyles.
fiscal 2008 as a “year for taking step forward to accomplish-
ing the medium-term management plan, while coping with
uncertainty in business environment.” We will, therefore, con-
● Solution Providing for Corporations and
Investment Banking, Trust Business
In the financial markets, beginning in the summer of
beginning of fiscal 2007, we entered the first stage of our
tinue to pursue our two strategic initiatives of “strengthening
For our corporate customers, we will continue to offer high-
2007, long-term market interest rates moved onto a declin-
three-year medium-term management plan entitled “LEAD
targeted growth business areas” and “fortifying platform for
quality solutions that respond accurately to their diverse
ing trend, and, as a result of rising concerns about the future
THE VALUE.” Under this plan, we draw on our three core
supporting sustainable growth.”
course of the U.S. economy, the yen appreciated against the
strengths, which are “Spirit of Innovation,” “Speed,” and
U.S. dollar and the Nikkei stock price average dropped sub-
“Solution & Execution,” as well as focus on two strategic ini-
stantially compared with the end of the previous fiscal year.
tiatives on a Groupwide basis: namely, “strengthening
◆ Strengthening Targeted
Growth Business Areas
business issues by promoting closer collaboration among
Corporate Business Offices and other business offices of the
Middle Market Banking Unit, Corporate Advisory Division,
and Daiwa Securities SMBC Co. Ltd. Moreover, through the
In addition, concern about a credit crunch mounted in the
targeted growth business areas” and “fortifying platform for
● Provide Optimum Added Value to Our Customers
Private Advisory Department, we will move ahead with initia-
financial markets of Europe and the United States because
supporting sustainable growth.” The seven growth areas are
Financial Consulting for Individuals
tives in business areas where needs of individual customers
of the massive losses reported by some financial institutions
Financial consulting services for individuals; Payments &
Foremost, as we seek to strengthen our position in the
and corporate customers co-exist, such as private banking,
as a result of the subprime loan problem.
settlement services, Consumer finance; Solution providing
growth businesses, we would like to further enhance our
workplace banking and business succession consulting.
Amid this operating environment, major developments in
for corporations; Investment banking, Trust business;
“total consulting services” and provide “one-stop” shopping
Also, the Global Advisory Department, which we formed in
Japan’s financial services industry included the implementa-
Focused business areas in global markets; Proprietary
at SMBC for all types of financial services to our individual
April 2008, to enhance teamwork among offices in Japan
tion of the Financial Instruments and Exchange Law in
investment; and Credit derivative, Trading & distribution.
customers. In specific terms, this includes offering insurance
and overseas and strengthen our capabilities for offering
September 2007, which established a broad framework for
At the same time, we took decisive measures to cope
products, such as whole-life, term, medical, and other poli-
solutions to assist companies that are entering overseas
the protection of users of financial instruments and services;
with unpredictability and uncertainty in business environ-
cies, that we can now sell following their full liberalization in
markets and those corporate clients that wish to expand
the implementation of a fully revised Trust Business Law; and
ment that followed the subprime loan crisis. Specifically, we
Teisuke Kitayama
President
Sumitomo Mitsui
Financial Group, Inc.
sold our exposure to subprime-related securitized products
at an early date and made appropriate write-offs and loss
provisions. As a result of these measures, our subprime-
related exposure at the end of the fiscal year under review,
after the deduction of write-offs and loss provisions,
amounted to ¥5.5 billion. We, therefore, believe the impact of
this level of exposure will have only a marginal impact on the
Group’s financial position.
During the fiscal year under review, SMFG’s principal
subsidiary SMBC reported an increase over the previous fis-
cal year in non-consolidated banking profit of ¥79.1 billion,
owing to a combination of improvement in Gains (losses) on
bonds and an increase in interest income from an improve-
ment in the loan-to-deposit spread. These improvements
more than offset the increase in expenses. Net income for
SMFG on a consolidated basis rose ¥20.1 billion over the
previous fiscal year, to ¥461.5 billion, as the rise in Total credit
cost at SMBC and deterioration in Gains on equities were
both offset by the increase in Banking profit and improvement
in profit performance of other Group companies.
December 2007, and introducing a broader range of invest-
ment trusts and individual annuities. We would also like to
substantially improve the services we offer to individuals by
expanding the lineup of discretionary investment account
based asset management services and products of SMBC
Friend Securities, which became a wholly owned subsidiary
of SMFG in September 2006, to create a new “business
model that fuses banking and securities.” In addition, we are
working to increase the number of consultants and reinforce
the skills of personnel through further training. We will also
significantly expand our office network by actively broaden-
ing the variety of outlets through the addition of more
branches, SMBC Consulting Plazas, and SMBC Consulting
Offices, principally in Japan’s three major urban centers.
● Payment & Settlement Services, Consumer Finance
Next, in our credit card business, based on the credit card
business strategy of our group that we announced in Febru-
ary 2008, we are planning to implement a merger among
Central Finance Co., Ltd., OMC Card, Inc., and QOUQ with
a target date of April 2009. With this newly merged company
Masayuki Oku
President
Sumitomo Mitsui
Banking Corporation
2
SMFG 2008
SMFG 2008 3
existing operations. In our investment banking operations,
● Focused Business Areas in Global Markets
last fiscal year, we ranked number one for the first time in the
In overseas markets, demand for funds in the natural
domestic syndicated loan league table (Note 1). We will con-
resource, energy, and other areas is strong, but in the wake
tinue to offer a diverse range of financing methods, including
of the subprime loan crisis, the competitive environment vis-
structured finance, and continue to steadily strengthen our
à-vis European and U.S. banks has changed, leading to an
Fortifying Platform for Supporting
Sustainable Growth
◆ Becoming a “Globally Competitive
Financial Services Group with the
Highest Trust”
income on a consolidated basis for SMFG of ¥480 billion.
Both of these figures will represent increases over the previ-
ous fiscal year. In addition, we are planning to increase
dividends per common share by ¥2,000, to a total of
¥14,000 for the full fiscal year (Note 2). We will continue to
capabilities for offering proposals for business expansion
expansion in opportunities for SMFG. However, the course of
Our second strategic initiative is to implement policies for
seek to attain a well-balanced growth cycle of profitability,
and restructuring through M&A as well as other solutions to
future development in the financial markets and the real
fortifying our operational platform to support sustainable
capital base, and risk assets, implying that we will expand
meet customer needs. In addition, we will move forward with
economy has become less clear than in the past. We are,
growth. In the area of compliance, which is one of the key
our capital base through the further accumulation of retained
initiatives to provide support for venture businesses and
therefore, appraising changes in the market environment
related requirements, strict and thorough observance of laws
earnings, invest in risk assets with a view to growth busi-
growth companies as well as promote activities in growth
carefully and intend to take steady initiatives, while adopting
and regulations in Japan and elsewhere will continue to be
nesses, and work to enhance our risk-return profile. By
areas, such as environment-related businesses, including
an approach that allows for both aggressive action and
implemented in order to build a stronger ethical foundation
maintaining this well-balanced flow, we aim to create sus-
trading in emission rights.
Moreover, based on the strategic alliance SMFG con-
defensive measures. In more specific terms, in those mar-
kets that are expected to show high rates of growth going
for our activities. In addition, regarding customer satisfaction
and quality enhancement, we intend to further strengthen
tainable shareholder value of our Group.
cluded with the Sumitomo Corporation Group in October
forward, such as China, Southeast Asia, the Middle East,
our systems for taking action based on our customers’ sug-
As we have outlined in this message, we are making
2007, we have formed SMFG Finance and Leasing Com-
and Eastern Europe, we will strengthen our office network,
gestions and requests.
steady advances toward attaining the targets of our
pany, Ltd., through the merger of SMBC Leasing Company,
expand the number of personnel, and take other measures
In the area of risk management, we are moving ahead
medium-term management plan with the aim of responding
Limited, and Sumisho Lease Co., Ltd., and the newly formed
to promote the development of our activities in these areas.
steadily with the measures we introduced in fiscal 2006
to the trust and confidence placed in us by our stakeholders.
company is engaged in offering a diverse range of leasing
In addition to these activities, SMBC has invested approxi-
under Basel II (the new BIS regulations) and substantially
As we continue this endeavor, we look forward to your con-
services. In addition, we intend to pursue further possibilities
mately GBP500 million and entered into collaborative
increase the sophistication of our risk management systems.
tinued support and understanding.
for offering business solutions drawing on the capabilities of
agreement with Barclays PLC, one of the leading financial
the Group as a whole. These activities include offering sys-
institutions in the United Kingdom, in June 2008.
tems development and operating services as well as
security-related consulting and other services through the
Group company JRI Solutions, Ltd.
◎ Becoming a “Globally Competitive Financial Services Group with the Highest Trust”
Fiscal 2007 to Fiscal 2009
Fiscal 2010 Onward
t
n
e
m
e
g
a
n
a
M
s
t
e
g
r
a
T
“Aim for top quality in growth business areas”
“Realize solid financial base as a global player”
“Increase returns to shareholders”
To become one of the
“top global financial services groups”
l
h
t
w
o
r
G
e
b
a
n
a
t
s
u
S
i
r
o
f
s
p
e
t
S
”
s
d
n
e
r
t
o
r
c
a
M
“
Strengthen growth businesses and
establish platform to leap forward
Further improve and expand competences
acquired through strengthening
growth businesses
Establish a solid position as a
global player leveraging
core competences
Deregulations and tightening
of regulations
Plan for strengthening competitiveness of Japan’s financial and capital markets
Economic and financial globalization
Pursue growth opportunities overseas
NYSE listing plan
“Great Investment Era”
Subprime loan crisis
Process of price adjustment in risk assets
Tide of Generational change
Expansion of ubiquitous network
We are also stepping up our support and guidance for the
Corporate Business Offices and other business offices of the
Middle Market Banking Unit to substantially reinforce and
strengthen our credit management systems.
In addition, to strengthen our systems as globalization
proceeds, we are aiming to be a “globally competitive finan-
cial services group with the highest trust” and are
July 2008
considering a listing on the New York Stock Exchange
(NYSE).
◆ Aiming to Create Sustainable
Shareholder Value
Through the various initiatives we have mentioned, we are
aiming to attain our three management targets stated in our
medium-term management plan of “aiming for top quality in
growth business areas,” “realizing solid financial base as a
Teisuke Kitayama
Masayuki Oku
global player,” and “increasing return to shareholders.”
President
Our outlook for fiscal 2008 calls for Net income on a
non-consolidated basis at SMBC of ¥390 billion and Net
Sumitomo Mitsui
Financial Group, Inc.
President
Sumitomo Mitsui
Banking Corporation
Notes: 1. Thomson Financial, Syndication Mandated Arranger Ranking for
Japan in fiscal 2007
2. Before taking account of the stock split scheduled for January 2009
4
SMFG 2008
SMFG 2008 5
existing operations. In our investment banking operations,
● Focused Business Areas in Global Markets
last fiscal year, we ranked number one for the first time in the
In overseas markets, demand for funds in the natural
domestic syndicated loan league table (Note 1). We will con-
resource, energy, and other areas is strong, but in the wake
tinue to offer a diverse range of financing methods, including
of the subprime loan crisis, the competitive environment vis-
structured finance, and continue to steadily strengthen our
à-vis European and U.S. banks has changed, leading to an
Fortifying Platform for Supporting
Sustainable Growth
◆ Becoming a “Globally Competitive
Financial Services Group with the
Highest Trust”
income on a consolidated basis for SMFG of ¥480 billion.
Both of these figures will represent increases over the previ-
ous fiscal year. In addition, we are planning to increase
dividends per common share by ¥2,000, to a total of
¥14,000 for the full fiscal year (Note 2). We will continue to
capabilities for offering proposals for business expansion
expansion in opportunities for SMFG. However, the course of
Our second strategic initiative is to implement policies for
seek to attain a well-balanced growth cycle of profitability,
and restructuring through M&A as well as other solutions to
future development in the financial markets and the real
fortifying our operational platform to support sustainable
capital base, and risk assets, implying that we will expand
meet customer needs. In addition, we will move forward with
economy has become less clear than in the past. We are,
growth. In the area of compliance, which is one of the key
our capital base through the further accumulation of retained
initiatives to provide support for venture businesses and
therefore, appraising changes in the market environment
related requirements, strict and thorough observance of laws
earnings, invest in risk assets with a view to growth busi-
growth companies as well as promote activities in growth
carefully and intend to take steady initiatives, while adopting
and regulations in Japan and elsewhere will continue to be
nesses, and work to enhance our risk-return profile. By
areas, such as environment-related businesses, including
an approach that allows for both aggressive action and
implemented in order to build a stronger ethical foundation
maintaining this well-balanced flow, we aim to create sus-
trading in emission rights.
Moreover, based on the strategic alliance SMFG con-
defensive measures. In more specific terms, in those mar-
kets that are expected to show high rates of growth going
for our activities. In addition, regarding customer satisfaction
and quality enhancement, we intend to further strengthen
tainable shareholder value of our Group.
cluded with the Sumitomo Corporation Group in October
forward, such as China, Southeast Asia, the Middle East,
our systems for taking action based on our customers’ sug-
As we have outlined in this message, we are making
2007, we have formed SMFG Finance and Leasing Com-
and Eastern Europe, we will strengthen our office network,
gestions and requests.
steady advances toward attaining the targets of our
pany, Ltd., through the merger of SMBC Leasing Company,
expand the number of personnel, and take other measures
In the area of risk management, we are moving ahead
medium-term management plan with the aim of responding
Limited, and Sumisho Lease Co., Ltd., and the newly formed
to promote the development of our activities in these areas.
steadily with the measures we introduced in fiscal 2006
to the trust and confidence placed in us by our stakeholders.
company is engaged in offering a diverse range of leasing
In addition to these activities, SMBC has invested approxi-
under Basel II (the new BIS regulations) and substantially
As we continue this endeavor, we look forward to your con-
services. In addition, we intend to pursue further possibilities
mately GBP500 million and entered into collaborative
increase the sophistication of our risk management systems.
tinued support and understanding.
for offering business solutions drawing on the capabilities of
agreement with Barclays PLC, one of the leading financial
the Group as a whole. These activities include offering sys-
institutions in the United Kingdom, in June 2008.
tems development and operating services as well as
security-related consulting and other services through the
Group company JRI Solutions, Ltd.
◎ Becoming a “Globally Competitive Financial Services Group with the Highest Trust”
Fiscal 2007 to Fiscal 2009
Fiscal 2010 Onward
t
n
e
m
e
g
a
n
a
M
s
t
e
g
r
a
T
“Aim for top quality in growth business areas”
“Realize solid financial base as a global player”
“Increase returns to shareholders”
To become one of the
“top global financial services groups”
l
h
t
w
o
r
G
e
b
a
n
a
t
s
u
S
i
r
o
f
s
p
e
t
S
”
s
d
n
e
r
t
o
r
c
a
M
“
Strengthen growth businesses and
establish platform to leap forward
Further improve and expand competences
acquired through strengthening
growth businesses
Establish a solid position as a
global player leveraging
core competences
Deregulations and tightening
of regulations
Plan for strengthening competitiveness of Japan’s financial and capital markets
Economic and financial globalization
Pursue growth opportunities overseas
NYSE listing plan
“Great Investment Era”
Subprime loan crisis
Process of price adjustment in risk assets
Tide of Generational change
Expansion of ubiquitous network
We are also stepping up our support and guidance for the
Corporate Business Offices and other business offices of the
Middle Market Banking Unit to substantially reinforce and
strengthen our credit management systems.
In addition, to strengthen our systems as globalization
proceeds, we are aiming to be a “globally competitive finan-
cial services group with the highest trust” and are
July 2008
considering a listing on the New York Stock Exchange
(NYSE).
◆ Aiming to Create Sustainable
Shareholder Value
Through the various initiatives we have mentioned, we are
aiming to attain our three management targets stated in our
medium-term management plan of “aiming for top quality in
growth business areas,” “realizing solid financial base as a
Teisuke Kitayama
Masayuki Oku
global player,” and “increasing return to shareholders.”
President
Our outlook for fiscal 2008 calls for Net income on a
non-consolidated basis at SMBC of ¥390 billion and Net
Sumitomo Mitsui
Financial Group, Inc.
President
Sumitomo Mitsui
Banking Corporation
Notes: 1. Thomson Financial, Syndication Mandated Arranger Ranking for
Japan in fiscal 2007
2. Before taking account of the stock split scheduled for January 2009
4
SMFG 2008
SMFG 2008 5
Supplementary Information Ⅰ
● Initiatives in Growth Business Areas
◎ Basic Policies
To steadily move forward toward accomplishing the medium-term management plan, we are reinforcing our initiatives in growth business
areas through both organic and inorganic approach.
Financial consulting
for individuals
Solution providing for corporations/
Investment banking, trust business
Payment & settlement service,
Consumer finance
Proprietary investment
Consolidated net business profit
¥1,022.9 billion
Consolidated net income
¥461.5 billion
Consolidated total assets
Market capitalization*1
¥112 trillion
¥6.6 trillion
Banking profit*2
¥819.7 billion
Middle Market
Consumar
Corporate
Treasury
International
(Actual figures for fiscal 2007)
Focused business areas
in global markets
● Vietnam Eximbank
● First Commercial Bank (Taiwan)
● Industrial and
Commercial Bank of China
● Kookmin Bank (Korea)
Credit derivative,
Trading & distribution
*1: As of May 23, 2008
*2: Managerial accounting basis. The graph excludes the portion supervised by Headquarters (Banking profit of negative ¥135.7 billion for fiscal 2007).
◎ Payment & Settlement Service, Consumer Finance
Implementation of Group Strategy for Credit Card Business
SMFG is aiming to become the number one credit card entity in Japan by realizing top-line synergies as it fuses the expertise, customer bases, and networks of Group card
companies as well as taking advantage of cost synergies generated by economies of scale throughout the Group.
Newly Merged Companies*2
Top-Line Synergies
● Promote teamwork in marketing alliance partner cards
● Expand subcontracted business
● Mutual complimentary functions, sharing of know-how
Cost Synergies
● Unification of systems and processing
● Centralization of merchant servicing operations
Number of cardholders: 22.29 million*3
● Original solicitation know-how and marketing
capabilities nurtured through the customers’
perspective
● Fine-tuned marketing systems linked to
installment sales business
Number of cardholders: 16.41 million*1
● Advanced technology, sophisticated
infrastructure functions (Including Sumitomo
Mitsui Card iD and other features)
● One of the largest acquirers in Japan
● Strong brand
Medium-Term Objectives
(For fiscal 2011)
Total shopping charges handled:
¥1.2 trillion
20% market share
Total operating profit:
Between ¥60-70 billion
*1: As of March 31, 2008
*2: Merger scheduled for April 2009
*3: Total cardholders of the three companies (Figures for OMC Card are as of February 29, 2008, and those for Central Finance and QUOQ are as of March 31, 2008).
◎ Solution Providing for Corporations
Through the seamless approach as “One Bank” centered on the Corporate Business Offices and other marketing channels, SMBC is well positioned to offer proposals to
contribute to solving a diverse range of customers’ management issues.
Corporate Advisory Division
Formed in Apr. 06
Formed in Apr. 07
Private Advisory Department
Principal Services and Products
(cid:129) M&A, alliances
(cid:129) Financing
(cid:129) Capital strategy, other
Principal Accomplishments in Fiscal 2007
(cid:129) Increase in the number of deals (Mar. 08)
YOY change + approx. 40%
Steady expansion in related income
YOY change + approx. 20%
(cid:129)
Principal Services and Products
(cid:129) Business succession consulting
(cid:129) Workplace banking
(cid:129) Private banking
Principal Accomplishments in Fiscal 2007
(cid:129) Business succession consulting
(new origination of related loan)
YOY change + approx. 150%
(cid:129) Workplace banking
(nomination as DC operation management institution)*2
YOY change + approx. 150%
(cid:129) Private banking
(balance of investment products)
YOY change + approx. 40%
Corporate Business
Offices, etc.
185 offices*1
Global Advisory Department
(Formed in Apr. 08)
Objective:
(cid:129)
Strengthen capabilities for offering solutions for companies expanding
their operations globally
Measures
implemented:
(cid:129) Increased overseas personnel, principally in China and other parts of Asia
(cid:129) Reinforced teamwork between domestic and overseas operations
Services and
products:
(cid:129) Restructuring global organizations, dealing with transfer pricing taxation
(cid:129) Assistance for entering overseas markets and sales activities, other
*1: Number of business locations of the
Corporate Banking Unit as of March 31, 2008
*2: Number of employees
◎ Focused Business Areas in Global Markets
Activities include expansion of the marketing network in the high-growth markets of Asia, the Middle East, Eastern Europe, and elsewhere;
aggressive promotion of strategic alliances and improvements in systems; and further improvements in selected products where the Group has competitive strengths.
Eastern Europe and Russia
2 business offices
Asia
26 business offices
Newly established offices
Strategic alliances
(cid:129) Prague Representative Office (Apr. 08)
(cid:129) Investment Agencies of the Czech Republic and Poland
(Oct. − Nov. 07)
Middle East
4 business offices
Newly established offices (cid:129) Dubai Branch (Mar. 07)
(cid:129) Doha QFC Representative Office (Apr. 08)
Proposals related to support for Japanese companies entering markets in the region
Investment in Barclays PLC
SMBC invested in Barclays through purchase of shares in a third-party
allotment (approx. GBP 500 million: Jul. 08).
Newly established offices
(cid:129) Tianjin Binhai Sub-Branch (Mar. 07)
(cid:129)
(cid:129)
Suzhou Industrial Park Sub-Branch (Apr. 07)
Beijing Branch (Feb. 08)
Strategic alliances
(cid:129) Vietnam Eximbank (Basic agreement: Nov. 07)
(cid:129)
(cid:129)
First Commercial Bank (Taiwan) (Basic agreement: Dec. 07)
Industrial and Commercial Bank of China (Basic agreement: Mar. 08)
Business promotion sysytem
(cid:129) Establishment of Asia Pacific Division (Apr. 08)
Created more flexible and responsive systems through establishment of
overall control center in the region
Specifics of the business collaboration are currently under consideration.
(cid:129) Increased number of personnel stationed overseas
Further Reinforcing Specific Products
Syndicated Loans*1
Project Finance*2
Ship Finance*3
6th
#1 among
Japanese
banks
7th
#1 among
Japanese
banks
9th
#1 among
Japanese
banks
Working to substantially
enhance capabilities in these
areas through system upgrades
and expansion in personnel
*1: Thomson Financial, Syndicated loan Mandated Arranger Ranking for 2007
*2: Thomson Financial, Project Finance Mandated Arranger Ranking for 2007
*3: Dealogic, Ship Finance Mandated Arranger Ranking for 2007
6
SMFG 2008
SMFG 2008 7
Supplementary Information Ⅰ
● Initiatives in Growth Business Areas
◎ Basic Policies
To steadily move forward toward accomplishing the medium-term management plan, we are reinforcing our initiatives in growth business
areas through both organic and inorganic approach.
Financial consulting
for individuals
Solution providing for corporations/
Investment banking, trust business
Payment & settlement service,
Consumer finance
Proprietary investment
Consolidated net business profit
¥1,022.9 billion
Consolidated net income
¥461.5 billion
Consolidated total assets
Market capitalization*1
¥112 trillion
¥6.6 trillion
Banking profit*2
¥819.7 billion
Middle Market
Consumar
Corporate
Treasury
International
(Actual figures for fiscal 2007)
Focused business areas
in global markets
● Vietnam Eximbank
● First Commercial Bank (Taiwan)
● Industrial and
Commercial Bank of China
● Kookmin Bank (Korea)
Credit derivative,
Trading & distribution
*1: As of May 23, 2008
*2: Managerial accounting basis. The graph excludes the portion supervised by Headquarters (Banking profit of negative ¥135.7 billion for fiscal 2007).
◎ Payment & Settlement Service, Consumer Finance
Implementation of Group Strategy for Credit Card Business
SMFG is aiming to become the number one credit card entity in Japan by realizing top-line synergies as it fuses the expertise, customer bases, and networks of Group card
companies as well as taking advantage of cost synergies generated by economies of scale throughout the Group.
Newly Merged Companies*2
Top-Line Synergies
● Promote teamwork in marketing alliance partner cards
● Expand subcontracted business
● Mutual complimentary functions, sharing of know-how
Cost Synergies
● Unification of systems and processing
● Centralization of merchant servicing operations
Number of cardholders: 22.29 million*3
● Original solicitation know-how and marketing
capabilities nurtured through the customers’
perspective
● Fine-tuned marketing systems linked to
installment sales business
Number of cardholders: 16.41 million*1
● Advanced technology, sophisticated
infrastructure functions (Including Sumitomo
Mitsui Card iD and other features)
● One of the largest acquirers in Japan
● Strong brand
Medium-Term Objectives
(For fiscal 2011)
Total shopping charges handled:
¥1.2 trillion
20% market share
Total operating profit:
Between ¥60-70 billion
*1: As of March 31, 2008
*2: Merger scheduled for April 2009
*3: Total cardholders of the three companies (Figures for OMC Card are as of February 29, 2008, and those for Central Finance and QUOQ are as of March 31, 2008).
◎ Solution Providing for Corporations
Through the seamless approach as “One Bank” centered on the Corporate Business Offices and other marketing channels, SMBC is well positioned to offer proposals to
contribute to solving a diverse range of customers’ management issues.
Corporate Advisory Division
Formed in Apr. 06
Formed in Apr. 07
Private Advisory Department
Principal Services and Products
(cid:129) M&A, alliances
(cid:129) Financing
(cid:129) Capital strategy, other
Principal Accomplishments in Fiscal 2007
(cid:129) Increase in the number of deals (Mar. 08)
YOY change + approx. 40%
Steady expansion in related income
YOY change + approx. 20%
(cid:129)
Principal Services and Products
(cid:129) Business succession consulting
(cid:129) Workplace banking
(cid:129) Private banking
Principal Accomplishments in Fiscal 2007
(cid:129) Business succession consulting
(new origination of related loan)
YOY change + approx. 150%
(cid:129) Workplace banking
(nomination as DC operation management institution)*2
YOY change + approx. 150%
(cid:129) Private banking
(balance of investment products)
YOY change + approx. 40%
Corporate Business
Offices, etc.
185 offices*1
Global Advisory Department
(Formed in Apr. 08)
Objective:
(cid:129)
Strengthen capabilities for offering solutions for companies expanding
their operations globally
Measures
implemented:
(cid:129) Increased overseas personnel, principally in China and other parts of Asia
(cid:129) Reinforced teamwork between domestic and overseas operations
Services and
products:
(cid:129) Restructuring global organizations, dealing with transfer pricing taxation
(cid:129) Assistance for entering overseas markets and sales activities, other
*1: Number of business locations of the
Corporate Banking Unit as of March 31, 2008
*2: Number of employees
◎ Focused Business Areas in Global Markets
Activities include expansion of the marketing network in the high-growth markets of Asia, the Middle East, Eastern Europe, and elsewhere;
aggressive promotion of strategic alliances and improvements in systems; and further improvements in selected products where the Group has competitive strengths.
Eastern Europe and Russia
2 business offices
Asia
26 business offices
Newly established offices
Strategic alliances
(cid:129) Prague Representative Office (Apr. 08)
(cid:129) Investment Agencies of the Czech Republic and Poland
(Oct. − Nov. 07)
Middle East
4 business offices
Newly established offices (cid:129) Dubai Branch (Mar. 07)
(cid:129) Doha QFC Representative Office (Apr. 08)
Proposals related to support for Japanese companies entering markets in the region
Investment in Barclays PLC
SMBC invested in Barclays through purchase of shares in a third-party
allotment (approx. GBP 500 million: Jul. 08).
Newly established offices
(cid:129) Tianjin Binhai Sub-Branch (Mar. 07)
(cid:129)
(cid:129)
Suzhou Industrial Park Sub-Branch (Apr. 07)
Beijing Branch (Feb. 08)
Strategic alliances
(cid:129) Vietnam Eximbank (Basic agreement: Nov. 07)
(cid:129)
(cid:129)
First Commercial Bank (Taiwan) (Basic agreement: Dec. 07)
Industrial and Commercial Bank of China (Basic agreement: Mar. 08)
Business promotion sysytem
(cid:129) Establishment of Asia Pacific Division (Apr. 08)
Created more flexible and responsive systems through establishment of
overall control center in the region
Specifics of the business collaboration are currently under consideration.
(cid:129) Increased number of personnel stationed overseas
Further Reinforcing Specific Products
Syndicated Loans*1
Project Finance*2
Ship Finance*3
6th
#1 among
Japanese
banks
7th
#1 among
Japanese
banks
9th
#1 among
Japanese
banks
Working to substantially
enhance capabilities in these
areas through system upgrades
and expansion in personnel
*1: Thomson Financial, Syndicated loan Mandated Arranger Ranking for 2007
*2: Thomson Financial, Project Finance Mandated Arranger Ranking for 2007
*3: Dealogic, Ship Finance Mandated Arranger Ranking for 2007
6
SMFG 2008
SMFG 2008 7
2004
2005
2006
2007
2008
2005
2006
2007
2008
Subprime related products (As of March 31, 2008)
◎ Performance in Growth Businesses (SMBC Non-Consolidated) (Note: Figures in the green circles are average compound annual growth rates.)
Customer Assets
(Investment Trusts and
Pension-Type Insurance)
Housing Loans
Consumer Finance (Term-end balance)
Unit: ¥ trillion, term-end
■ Cumulative sales of pension-type insurance
■ Balance of investment trusts
Unit: ¥ trillion
■ Securitized balance ■ Balance outstanding
Unit: ¥ billion
■ Unsecured card loans
■ Including, portion under tie-up with Promise
6
5
4
3
2
1
0
2.2
2.6
1.7
+33%
3.0
3.4
2.8
1.1
2.3
0.5
1.9
2004
2005
2006
2007
2008
(FY)
Loan Syndications
■ Amount originated (¥ trillion)
Number of origination
702
670
779
754
8.6
7.1
6.7
490
6.1
5.5
+12%
349
4.6
10
800
8
6
4
2
0
600
400
200
0
1.9
1.6
9.9
10.0
0.8
10.0
0.1
0.4
9.5
8.9
+8%
12
9
6
3
0
500
400
300
200
100
0
441
390
330
270
+20%
290
140
60
Business Select Loans (Term-end balance)
Global e-Trade Service (Number of Contracts)
Unit: ¥ billion
Unit: Thousands of contracts
Note: During FY2007, about ¥300 billion of these loans were
securitized. Managerial accounting basis including corporate
bonds.
1,800
1,500
1,200
900
600
300
0
15
15.0
13.7
11.7
10
9.7
+48%
+19%
5
0
2003
2004
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
2005
2006
2007
2008
PC Bank Web21 (Number of Contracts)
One’s Direct Customer Contracts
Number of Internet Transactions
Unit: Thousands of contract
Unit: Million customers
Unit: Millions
141
125
105
82
+24%
150
120
90
60
30
0
8.4
7.0
6.6
5.8
4.8
+21%
3.3
10
8
6
4
2
0
151
129
82
108
+36%
60
38
180
120
60
0
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
8
SMFG 2008
Supplementary Information Ⅱ
Coping with Uncertainty in Business Environment
◎ Prevent Additional Losses by Quickly Dealing with Subprime Loan Problem
To deal decisively with the Group’s exposure to subprime-related securitized products, approximately ¥350 billion of these exposures was sold, and appropriate write-
offs and loss provisions were made in the first half of fiscal 2007. As a result, as of March 31, 2008, the Group’s subprime-related exposure after provisions and
write-offs was ¥5.5 billion. We believe that possible financial impact on the Group will be marginal.
Further, the Group’s exposure to non-subprime-related securitized products was approximately ¥260 billion after write-offs and loss provisions. The majority of
the exposure was mortgage bonds guaranteed by Government Sponsored Entities (“GSEs”) with AAA ratings.
Regarding the Group’s exposure to monoline insurance companies, credit derivative transactions (credit default swaps) with monoline insurance companies that expe-
rienced a major decline in creditworthiness totaled approximately ¥30 billion. To avoid any future losses on these transactions, the full amount was written off and
recognized as loss. As a result, remaining CDS exposure to monoline insurance companies, after making provisions was approximately ¥30 billion as of March 31,
2009. Moreover, the total amount of investment and loan exposures backed by monoline insurance company guarantees as of March 31, 2008, was approximately
¥40 billion. The exposures are investment grade equivalent non-subprime-related exposures.
Balance
(before provisions and
write-offs)
(¥ billion)
Net unrealized gains (losses)
(before write-offs)
Provisions and
write-offs
Balance
(after provisions and
write-offs)
Investments to securitized products
Warehousing loans, etc.*
Total
73.5
21.1
94.6
(68.6)
—
(68.6)
68.6
20.5
89.1
4.9
0.6
5.5
Credit ratings of
underlying assets
Speculative ratings, etc..
* Among warehousing loans, etc., the balance of exposure secured by collateral other than that linked to subprime loans, as of March 31, 2008, was ¥14.3 billion (before write-offs) and
write-offs and loss provisions against these loans amounted to ¥8.4 billion. (All such loans were overseas.)
Losses recognized linked to subprime loans totaled ¥93.0
billion (comprising provisions and write-offs of ¥89.1 billion
and losses on sale of ¥3.9 billion)
(SMFG consolidated basis)
(For Reference) Products other than subprime related (As of March 31, 2008)
(¥ billion)
Balance
(before provisions and
write-offs)
Net unrealized gains (losses)
(before write-offs)
Provisions and
write-offs
Balance
(after provisions and
write-offs)
Credit ratings of
underlying assets
RMBS (Guaranteed by GSE etc.)
Cards
CLO
CMBS
Total
219.8
12.5
24.3
6.0
262.6
(1.6)
(0.6)
(3.4)
0.0
(5.6)
—
—
0.4
—
0.4
219.8
AAA
12.5
23.9
6.0
262.2
A—BBB
AAA—A
(Some securities
without ratings)
BBB
Exposure Linked to Monoline Insurance Companies (As of March 31, 2008)
(¥ billion)
Net exposure*
Loan loss reserve*
Amount of reference assets*
Exposure to CDS transactions with
monoline insurance companies
31.1
1.9
559.1
* These figures do not include the portion written off as loss (about ¥30 billion)
(¥ billion)
Balance
Loss provisions
Investments and loans, guaranteed by
monoline insurance companies
41.7
—
The claims are project finance, regional government bonds, and other
claims with investment grade equivalent, unrelated to subprime loans.
(For reference) In addition to the above exposures, there are exposures amounting to approximately ¥16.0 billion (drawn-down amount ¥10 million) including a commitment line
to an insurance company whose group member is a monoline insurance company.
(SMFG consolidated basis)
(SMFG consolidated basis)
SMFG 2008 9
2004
2005
2006
2007
2008
2005
2006
2007
2008
Subprime related products (As of March 31, 2008)
◎ Performance in Growth Businesses (SMBC Non-Consolidated) (Note: Figures in the green circles are average compound annual growth rates.)
Customer Assets
(Investment Trusts and
Pension-Type Insurance)
Housing Loans
Consumer Finance (Term-end balance)
Unit: ¥ trillion, term-end
■ Cumulative sales of pension-type insurance
■ Balance of investment trusts
Unit: ¥ trillion
■ Securitized balance ■ Balance outstanding
Unit: ¥ billion
■ Unsecured card loans
■ Including, portion under tie-up with Promise
6
5
4
3
2
1
0
2.2
2.6
1.7
+33%
3.0
3.4
2.8
1.1
2.3
0.5
1.9
2004
2005
2006
2007
2008
(FY)
Loan Syndications
■ Amount originated (¥ trillion)
Number of origination
702
670
779
754
8.6
7.1
6.7
490
6.1
5.5
+12%
349
4.6
10
800
8
6
4
2
0
600
400
200
0
1.9
1.6
9.9
10.0
0.8
10.0
0.1
0.4
9.5
8.9
+8%
12
9
6
3
0
500
400
300
200
100
0
441
390
330
270
+20%
290
140
60
Business Select Loans (Term-end balance)
Global e-Trade Service (Number of Contracts)
Unit: ¥ billion
Unit: Thousands of contracts
Note: During FY2007, about ¥300 billion of these loans were
securitized. Managerial accounting basis including corporate
bonds.
1,800
1,500
1,200
900
600
300
0
15
15.0
13.7
11.7
10
9.7
+48%
+19%
5
0
2003
2004
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
2005
2006
2007
2008
PC Bank Web21 (Number of Contracts)
One’s Direct Customer Contracts
Number of Internet Transactions
Unit: Thousands of contract
Unit: Million customers
Unit: Millions
141
125
105
82
+24%
150
120
90
60
30
0
8.4
7.0
6.6
5.8
4.8
+21%
3.3
10
8
6
4
2
0
151
129
82
108
+36%
60
38
180
120
60
0
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
2003
2004
2005
2006
2007
2008
8
SMFG 2008
Supplementary Information Ⅱ
Coping with Uncertainty in Business Environment
◎ Prevent Additional Losses by Quickly Dealing with Subprime Loan Problem
To deal decisively with the Group’s exposure to subprime-related securitized products, approximately ¥350 billion of these exposures was sold, and appropriate write-
offs and loss provisions were made in the first half of fiscal 2007. As a result, as of March 31, 2008, the Group’s subprime-related exposure after provisions and
write-offs was ¥5.5 billion. We believe that possible financial impact on the Group will be marginal.
Further, the Group’s exposure to non-subprime-related securitized products was approximately ¥260 billion after write-offs and loss provisions. The majority of
the exposure was mortgage bonds guaranteed by Government Sponsored Entities (“GSEs”) with AAA ratings.
Regarding the Group’s exposure to monoline insurance companies, credit derivative transactions (credit default swaps) with monoline insurance companies that expe-
rienced a major decline in creditworthiness totaled approximately ¥30 billion. To avoid any future losses on these transactions, the full amount was written off and
recognized as loss. As a result, remaining CDS exposure to monoline insurance companies, after making provisions was approximately ¥30 billion as of March 31,
2009. Moreover, the total amount of investment and loan exposures backed by monoline insurance company guarantees as of March 31, 2008, was approximately
¥40 billion. The exposures are investment grade equivalent non-subprime-related exposures.
Balance
(before provisions and
write-offs)
(¥ billion)
Net unrealized gains (losses)
(before write-offs)
Provisions and
write-offs
Balance
(after provisions and
write-offs)
Investments to securitized products
Warehousing loans, etc.*
Total
73.5
21.1
94.6
(68.6)
—
(68.6)
68.6
20.5
89.1
4.9
0.6
5.5
Credit ratings of
underlying assets
Speculative ratings, etc..
* Among warehousing loans, etc., the balance of exposure secured by collateral other than that linked to subprime loans, as of March 31, 2008, was ¥14.3 billion (before write-offs) and
write-offs and loss provisions against these loans amounted to ¥8.4 billion. (All such loans were overseas.)
Losses recognized linked to subprime loans totaled ¥93.0
billion (comprising provisions and write-offs of ¥89.1 billion
and losses on sale of ¥3.9 billion)
(SMFG consolidated basis)
(For Reference) Products other than subprime related (As of March 31, 2008)
(¥ billion)
Balance
(before provisions and
write-offs)
Net unrealized gains (losses)
(before write-offs)
Provisions and
write-offs
Balance
(after provisions and
write-offs)
Credit ratings of
underlying assets
RMBS (Guaranteed by GSE etc.)
Cards
CLO
CMBS
Total
219.8
12.5
24.3
6.0
262.6
(1.6)
(0.6)
(3.4)
0.0
(5.6)
—
—
0.4
—
0.4
219.8
AAA
12.5
23.9
6.0
262.2
A—BBB
AAA—A
(Some securities
without ratings)
BBB
Exposure Linked to Monoline Insurance Companies (As of March 31, 2008)
(¥ billion)
Net exposure*
Loan loss reserve*
Amount of reference assets*
Exposure to CDS transactions with
monoline insurance companies
31.1
1.9
559.1
* These figures do not include the portion written off as loss (about ¥30 billion)
(¥ billion)
Balance
Loss provisions
Investments and loans, guaranteed by
monoline insurance companies
41.7
—
The claims are project finance, regional government bonds, and other
claims with investment grade equivalent, unrelated to subprime loans.
(For reference) In addition to the above exposures, there are exposures amounting to approximately ¥16.0 billion (drawn-down amount ¥10 million) including a commitment line
to an insurance company whose group member is a monoline insurance company.
(SMFG consolidated basis)
(SMFG consolidated basis)
SMFG 2008 9
Outline of “LEAD THE VALUE” Plan
— SMFG’s Medium-Term Management Plan
In October 2006, SMFG completed the repayment of public funds,
the added value inherent in these strengths, we are aiming to be a
and, in view of major changes in the economic and competitive
globally competitive financial services group with the highest trust.
environment surrounding the Group, launched a medium-term
Accordingly, we have set the following targets during the cur-
management plan entitled “LEAD THE VALUE” plan covering the
rent medium-term management plan:
three years from fiscal 2007 to fiscal 2009.
In preparing our plan, we reaffirmed that the most important
requirement for achieving sustainable growth is to offer customers
value that exceeds their expectations and leads customers in
directions that help them to create new value. The new plan also
● Aim for top quality in growth business areas,
● Realize solid financial base as a global player, and
● Increase returns to shareholders.
◎ Concept of Strategic Initiatives in the
“LEAD THE VALUE” Plan
and a labor shortage. The magnitude of these changes has
exceeded the assumptions that formed the basis for the previous
management plan. Therefore, to continue our growth in today’s
SMFG has increased profitability by identifying strategic busi-
competitive environment, going forward, we must be sure that we
nesses with strong growth potential at early stages and developed
have an accurate grasp of macroeconomic trends that are likely to
highly productive and efficient proprietary business models to con-
bring opportunities for earning profits and competing both in
solidate its position in these business areas. As a result, the quality
Japan and at the global level. The previous policies of maximizing
of our assets has improved substantially, and net income has
earnings by restructuring and streamlining our operations are no
recovered, enabling us to complete the repayment of public funds
longer likely to be sufficient. Instead, we must make substantial
reconfirms that SMFG’s core strengths are the “Spirit of Innovation,”
To attain these targets, we are focusing on two strategic initia-
in fiscal 2006, about one-and-a-half years earlier than initially
investments aimed at growth from a medium- to long-term per-
“Speed,” and “Solution & Execution,” the drivers behind our ability
tives: namely, strengthening targeted growth business areas and
planned. Overall, we have made steady progress toward enhanc-
spective to lay the foundations for sustainable growth. This is why
to quickly make strategic businesses profitable. By drawing fully on
fortifying platform for supporting sustainable growth.
ing our profitability and strengthening our financial position.
we have identified two key strategic initiatives under our “LEAD
◎ Our Objectives under
the Medium-Term
Management Plan,
“LEAD THE VALUE” Plan
“A Globally Competitive Financial Services Group
with the Highest Trust”
“LEAD THE VALUE” Plan
Spirit of
Innovation
Speed
Solution &
Execution
Our Mission
To provide optimum value added 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
◎ Outline of “LEAD THE VALUE” Plan
“LEAD THE VALUE” Plan
Aim to become “a globally competitive
financial services group with the highest trust” by
making the most of our strengths to LEAD THE VALUE
LEAD the way in
helping customers create
and deliver new VALUE
d
n
a
s
stren gt h
Our
v a l u e a d d ed (the originsofourcorporate
Spirit of
Innovation
v
a
l
u
e
)
Speed
Solution &
Execution
Fiscal 2007 to Fiscal 2009
Strategic
Initiatives
●Strengthen targeted
growth business areas
“Seven Growth Areas”
●Fortify platform for supporting
sustainable growth
Management Targets
● Aim for top quality in growth business areas
● Realize solid financial base as a global player
● Increase returns to shareholders
(realize payout ratio of more than 20%)
Financial targets for fiscal 2009
(SMFG consolidated)
● Net income: ¥650 billion
● Net income RORA: Approx. 1%
● Tier I ratio: Approx. 8%
● Overhead ratio: 40-45%
(SMBC non-consolidated)
● ROE (SMFG consolidated):10-15%
In parallel with this improvement in performance, however, dra-
THE VALUE” plan: namely, “strengthening targeted growth busi-
matic changes have reshaped our operating environment,
ness areas” and “fortifying platform for supporting sustainable
including more-intense competition in the domestic loan market
growth.”
◎ Strategic Initiatives under the “LEAD THE VALUE” Plan
Five Macrotrends
Tide of
Generational
change
Economic and
financial
globalization
Deregulations
and tightening of
regulations
Expansion of
ubiquitous
network
“Great
Investment Era”
Strengthen Targeted Growth Business Areas: “Seven Growth Areas”
Financial consulting
services for
individuals
Solution providing
for corporations
Focused business
areas in
global markets
Payment &
settlement services,
Consumer finance
Investment banking,
Trust business
Proprietary
investment
Credit derivatives,
Trading &
distribution
Fortify Platform for Supporting Sustainable Growth
Business performance evaluation
system with medium-term
viewpoint
Framework to secure and develop
professionals
Reinforce IT and operational
infrastructure
Improve ALM and risk management,
Strengthen compliance
*Financial targets assume that there will be increases in yen policy interest rates of about 0.25% in both fiscal 2007 and fiscal 2008, that nominal GDP will expand at a rate of more than 2% per annum,
and that the yen will remain around ¥115 per U.S. dollar.
10
SMFG 2008
SMFG 2008 11
Outline of “LEAD THE VALUE” Plan
— SMFG’s Medium-Term Management Plan
In October 2006, SMFG completed the repayment of public funds,
the added value inherent in these strengths, we are aiming to be a
and, in view of major changes in the economic and competitive
globally competitive financial services group with the highest trust.
environment surrounding the Group, launched a medium-term
Accordingly, we have set the following targets during the cur-
management plan entitled “LEAD THE VALUE” plan covering the
rent medium-term management plan:
three years from fiscal 2007 to fiscal 2009.
In preparing our plan, we reaffirmed that the most important
requirement for achieving sustainable growth is to offer customers
value that exceeds their expectations and leads customers in
directions that help them to create new value. The new plan also
● Aim for top quality in growth business areas,
● Realize solid financial base as a global player, and
● Increase returns to shareholders.
◎ Concept of Strategic Initiatives in the
“LEAD THE VALUE” Plan
and a labor shortage. The magnitude of these changes has
exceeded the assumptions that formed the basis for the previous
management plan. Therefore, to continue our growth in today’s
SMFG has increased profitability by identifying strategic busi-
competitive environment, going forward, we must be sure that we
nesses with strong growth potential at early stages and developed
have an accurate grasp of macroeconomic trends that are likely to
highly productive and efficient proprietary business models to con-
bring opportunities for earning profits and competing both in
solidate its position in these business areas. As a result, the quality
Japan and at the global level. The previous policies of maximizing
of our assets has improved substantially, and net income has
earnings by restructuring and streamlining our operations are no
recovered, enabling us to complete the repayment of public funds
longer likely to be sufficient. Instead, we must make substantial
reconfirms that SMFG’s core strengths are the “Spirit of Innovation,”
To attain these targets, we are focusing on two strategic initia-
in fiscal 2006, about one-and-a-half years earlier than initially
investments aimed at growth from a medium- to long-term per-
“Speed,” and “Solution & Execution,” the drivers behind our ability
tives: namely, strengthening targeted growth business areas and
planned. Overall, we have made steady progress toward enhanc-
spective to lay the foundations for sustainable growth. This is why
to quickly make strategic businesses profitable. By drawing fully on
fortifying platform for supporting sustainable growth.
ing our profitability and strengthening our financial position.
we have identified two key strategic initiatives under our “LEAD
◎ Our Objectives under
the Medium-Term
Management Plan,
“LEAD THE VALUE” Plan
“A Globally Competitive Financial Services Group
with the Highest Trust”
“LEAD THE VALUE” Plan
Spirit of
Innovation
Speed
Solution &
Execution
Our Mission
To provide optimum value added 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
◎ Outline of “LEAD THE VALUE” Plan
“LEAD THE VALUE” Plan
Aim to become “a globally competitive
financial services group with the highest trust” by
making the most of our strengths to LEAD THE VALUE
LEAD the way in
helping customers create
and deliver new VALUE
d
n
a
s
stren gt h
Our
v a l u e a d d ed (the originsofourcorporate
Spirit of
Innovation
v
a
l
u
e
)
Speed
Solution &
Execution
Fiscal 2007 to Fiscal 2009
Strategic
Initiatives
●Strengthen targeted
growth business areas
“Seven Growth Areas”
●Fortify platform for supporting
sustainable growth
Management Targets
● Aim for top quality in growth business areas
● Realize solid financial base as a global player
● Increase returns to shareholders
(realize payout ratio of more than 20%)
Financial targets for fiscal 2009
(SMFG consolidated)
● Net income: ¥650 billion
● Net income RORA: Approx. 1%
● Tier I ratio: Approx. 8%
● Overhead ratio: 40-45%
(SMBC non-consolidated)
● ROE (SMFG consolidated):10-15%
In parallel with this improvement in performance, however, dra-
THE VALUE” plan: namely, “strengthening targeted growth busi-
matic changes have reshaped our operating environment,
ness areas” and “fortifying platform for supporting sustainable
including more-intense competition in the domestic loan market
growth.”
◎ Strategic Initiatives under the “LEAD THE VALUE” Plan
Five Macrotrends
Tide of
Generational
change
Economic and
financial
globalization
Deregulations
and tightening of
regulations
Expansion of
ubiquitous
network
“Great
Investment Era”
Strengthen Targeted Growth Business Areas: “Seven Growth Areas”
Financial consulting
services for
individuals
Solution providing
for corporations
Focused business
areas in
global markets
Payment &
settlement services,
Consumer finance
Investment banking,
Trust business
Proprietary
investment
Credit derivatives,
Trading &
distribution
Fortify Platform for Supporting Sustainable Growth
Business performance evaluation
system with medium-term
viewpoint
Framework to secure and develop
professionals
Reinforce IT and operational
infrastructure
Improve ALM and risk management,
Strengthen compliance
*Financial targets assume that there will be increases in yen policy interest rates of about 0.25% in both fiscal 2007 and fiscal 2008, that nominal GDP will expand at a rate of more than 2% per annum,
and that the yen will remain around ¥115 per U.S. dollar.
10
SMFG 2008
SMFG 2008 11
Business Overview
■ Consumer Banking
The member companies of SMFG are collaborating to enhance
the financial services they provide to consumers. Some of the
key indicators of SMBC’s performance in fiscal 2007, reflecting
the high esteem customers have for our services, include an
outstanding balance of investment trusts under management
of ¥2,974.0 billion; sales of foreign bonds and structured
bonds for the fiscal year under review of ¥127.2 billion; pen-
sion-type insurance sales of ¥389.4 billion; sales of single
premium full-life insurance of ¥51.0 billion; and mortgage loans
outstanding of ¥13,647.8 billion as of March 31, 2008.
Financial Consulting Business
SMBC’s Consumer Banking Unit continued to broaden its
product lineup in fiscal 2007, introducing new investment trusts
and life insurance products. As part of our “total consulting”
services, which offer our cus-
t o m e r s o n e - s t o p
shopping for all types
of financial services,
beginning on December
22, 2007, we expanded
our offering of life insur-
ance products. Specifically,
our insurance consultants,
who have been assigned
to 90 of our branches and have extensive experience in insur-
ance sales, are responsible for selling a total of 18 products
(offered by seven insurance companies, as of May 31, 2008),
including mainly level premium-type death benefit insurance
and medical insurance. Similarly, in our investment trust sales
activities, we are expanding our lineup of products to meet
customer needs. Our lineup of investment trusts includes
funds that invest in the stocks of companies in the emerging
economies of BRICs (Brazil, Russia, India, and China) and
funds that invest in high interest rate foreign currency instru-
ments.
Moreover, accompanying the implementation of Japan’s
Financial Instruments & Exchange Law in September 2007, we
have sharpened our focus on offering investment products that
are appropriate for the level of knowledge and experience of
our customers regarding investments, the amount of their
assets, their views of financial risk, and other aspects.
In addition, prices of stocks and other investment instru-
ments in Japan and overseas are fluctuating substantially as a
result of the subprime loan problem in the United States.
Therefore, to follow up with our customers and provide them
with timely information, we hold customer seminars to report on
asset management performance, issue monthly and special
market reports, and conduct direct mailings.
Mortgage Loan Business
To enable us to respond to the wide-ranging needs of our cus-
tomers, we have engaged in the development of new products,
as well as in the expansion and improvement of the services
we offer. For example, in October 2005, we began to offer a
new type of mortgage loan that provided insurance for repay-
ing the loan balance in the event that one of three major
medical conditions might have
occurred. As of March 31, 2008, the
cumulative amount of this type of
loan origination totaled approxi-
mately ¥660.0 billion.
In January 2008, we enhanced
the convenience of “One’s Direct,”
our Internet banking service, to
enable mortgage loan borrowers to
make advance payments on their
housing loans and to change inter-
est rate terms on a 24-hour basis. These expanded services
thus allow customers to make these changes from their homes
and to select the time to conduct these banking activities that is
most convenient for them.
Also, in April 2008, we introduced mortgage loans with a
special provision that temporarily suspends a portion of loan
repayments following natural disas-
ters. When customers’ homes are
damaged by such disasters, the
amount of loan repayments is
reduced, depending on the extent of
the damage, for a specified period.
This is the first loan of this type in the
banking industry in Japan.
Moreover, SMBC is focusing on
initiatives to deal with environmental
issues by working together with its
customers to contribute to measures to reduce global warming.
In April 2008, for example, the bank began a campaign to pro-
mote its carbon offset mortgage loan.
Settlement and Consumer Finance Business
Through our “SMBC First Pack” service, which offers a platform
for various settlement-related possibilities, we are endeavoring
to raise the level of our services. Beginning in September 2007,
we expanded our point exchange programs with other compa-
nies and added the iD ®
electronic settlement func-
tion of the Mitsui Sumitomo
Card on the SMBC CARD.
The number of sub-
scribers to the Mitsui
Sumitomo Card iD ® elec-
tronic settlement function,
which is based on a strategic alliance with
NTT DoCoMo, Inc., had climbed to about
770,000 persons as of March 31, 2008,
and the number of terminals accepting
payments via the iD ® service that were
installed on the premises of affiliated mer-
chants had expanded to about 300,000.
In the consumer finance business that
began in April 2005 through the collabora-
tion of SMBC, Promise Co., Ltd., and
converted to accept biometric identification. ATMs for visually
challenged persons had been installed in all locations, includ-
ing unmanned ATM only offices.
We are also adjusting our fees depending on the nature of
transactions and expanding the ATM network to broaden
At-Loan Co., Ltd., the number of automatic contract machines
had grown to 697 at the end of March 2008, and the balance
of loans made by SMBC and At-Loan together had expanded
to about ¥350.0 billion.
Transaction Channels
During fiscal 2007, we established new branches in the Tokyo
This ATM is equipped with a phone hand-
to enable visually
set with keys
challenged persons to conduct opera-
tions while listening to directions.
metropolitan area located in Higashi Totsuka (Kanagawa Pre-
access to services that are free of charge. For example, we
fecture), Ichikawa (Chiba Prefecture), and Osaki (Tokyo). In the
revised our ATM fee schedule as of October 2007. Fees for
Kinki region, we opened a new branch in Takarazuka
transactions conducted after banking hours on weekdays were
Nakayama (Hyogo Prefecture).
eliminated for customers using ATMs at the bank’s Head Office
Also, to strengthen our services for customers located in
and branches as well as the bank’s @B NK ATMs in conve-
the Tokai region, which is centered on Aichi Prefecture, we set
nience stores, for those who have savings account balances of
up new branches in the cities of Ikeshita and Issha. In addition,
¥100,000 or more at the time of their transactions. In addition,
in June 2008, we opened a new type of business office,
fees were eliminated for transactions through ATMs of Japan
“SMBC Park Sakae,” which will be the first of SMBC’s offices to
Post Bank and East Japan Railway Company. After-hour fees
concentrate mainly on providing information.
and usage charges were also eliminated for card loans.
We will continue to strengthen our office network in Japan’s
three main geographic areas: namely, the Tokyo metropolitan
area, the Kinki region, and the Tokai region.
Topics
◆ SMBC Retail Banking College Established
On May 7, 2008, SMBC established SMBC Retail Banking Col-
lege (RBC) to train personnel responsible for providing financial
services to individual customers.
RBC offers special training programs aimed at substantially
increasing the sophistication and quality of our consumer bank-
ing services. It has a counter zone that enables trainees to
simulate retail customer consulting, an audio visual room that
broadcasts roll-playing scenarios and enables all trainees
attending to confirm the
content, and other facilities
that speed up their acquisi-
tion of working knowledge
and skills.
On its “One’s Direct” remote banking service, SMBC is
continuing to expand the range of its offerings. Beginning in
May 2007, we began to offer the first foreign currency deposits
with interest rates linked to foreign currency markets, operating
exclusively on the Internet on a 24-hour basis on weekdays.
Also in May 2007, we linked
onto the i-ApliBanking com-
mon mobile banking platform
developed by NTT DoCoMo.
Then in July and August
2007, we strengthened mea-
sures for preventing Internet
“phishing” (short for “pass-
word harvesting fishing”)
fraud by introducing a service that closes phishing sites quickly
and provides the customer with a new type of identification.
The Internet banking services offered by One’s Direct have
been ranked highly and placed number one in Japan for the
sixth consecutive year in the independent rankings published
by Gomez, Inc. As of March 31, 2008, the number of One’s
Direct subscribers was approximately 8.4 million.
During fiscal 2007, all ATMs in our manned branches were
12
SMFG 2008
SMFG 2008 13
Business Overview
■ Consumer Banking
The member companies of SMFG are collaborating to enhance
the financial services they provide to consumers. Some of the
key indicators of SMBC’s performance in fiscal 2007, reflecting
the high esteem customers have for our services, include an
outstanding balance of investment trusts under management
of ¥2,974.0 billion; sales of foreign bonds and structured
bonds for the fiscal year under review of ¥127.2 billion; pen-
sion-type insurance sales of ¥389.4 billion; sales of single
premium full-life insurance of ¥51.0 billion; and mortgage loans
outstanding of ¥13,647.8 billion as of March 31, 2008.
Financial Consulting Business
SMBC’s Consumer Banking Unit continued to broaden its
product lineup in fiscal 2007, introducing new investment trusts
and life insurance products. As part of our “total consulting”
services, which offer our cus-
t o m e r s o n e - s t o p
shopping for all types
of financial services,
beginning on December
22, 2007, we expanded
our offering of life insur-
ance products. Specifically,
our insurance consultants,
who have been assigned
to 90 of our branches and have extensive experience in insur-
ance sales, are responsible for selling a total of 18 products
(offered by seven insurance companies, as of May 31, 2008),
including mainly level premium-type death benefit insurance
and medical insurance. Similarly, in our investment trust sales
activities, we are expanding our lineup of products to meet
customer needs. Our lineup of investment trusts includes
funds that invest in the stocks of companies in the emerging
economies of BRICs (Brazil, Russia, India, and China) and
funds that invest in high interest rate foreign currency instru-
ments.
Moreover, accompanying the implementation of Japan’s
Financial Instruments & Exchange Law in September 2007, we
have sharpened our focus on offering investment products that
are appropriate for the level of knowledge and experience of
our customers regarding investments, the amount of their
assets, their views of financial risk, and other aspects.
In addition, prices of stocks and other investment instru-
ments in Japan and overseas are fluctuating substantially as a
result of the subprime loan problem in the United States.
Therefore, to follow up with our customers and provide them
with timely information, we hold customer seminars to report on
asset management performance, issue monthly and special
market reports, and conduct direct mailings.
Mortgage Loan Business
To enable us to respond to the wide-ranging needs of our cus-
tomers, we have engaged in the development of new products,
as well as in the expansion and improvement of the services
we offer. For example, in October 2005, we began to offer a
new type of mortgage loan that provided insurance for repay-
ing the loan balance in the event that one of three major
medical conditions might have
occurred. As of March 31, 2008, the
cumulative amount of this type of
loan origination totaled approxi-
mately ¥660.0 billion.
In January 2008, we enhanced
the convenience of “One’s Direct,”
our Internet banking service, to
enable mortgage loan borrowers to
make advance payments on their
housing loans and to change inter-
est rate terms on a 24-hour basis. These expanded services
thus allow customers to make these changes from their homes
and to select the time to conduct these banking activities that is
most convenient for them.
Also, in April 2008, we introduced mortgage loans with a
special provision that temporarily suspends a portion of loan
repayments following natural disas-
ters. When customers’ homes are
damaged by such disasters, the
amount of loan repayments is
reduced, depending on the extent of
the damage, for a specified period.
This is the first loan of this type in the
banking industry in Japan.
Moreover, SMBC is focusing on
initiatives to deal with environmental
issues by working together with its
customers to contribute to measures to reduce global warming.
In April 2008, for example, the bank began a campaign to pro-
mote its carbon offset mortgage loan.
Settlement and Consumer Finance Business
Through our “SMBC First Pack” service, which offers a platform
for various settlement-related possibilities, we are endeavoring
to raise the level of our services. Beginning in September 2007,
we expanded our point exchange programs with other compa-
nies and added the iD ®
electronic settlement func-
tion of the Mitsui Sumitomo
Card on the SMBC CARD.
The number of sub-
scribers to the Mitsui
Sumitomo Card iD ® elec-
tronic settlement function,
which is based on a strategic alliance with
NTT DoCoMo, Inc., had climbed to about
770,000 persons as of March 31, 2008,
and the number of terminals accepting
payments via the iD ® service that were
installed on the premises of affiliated mer-
chants had expanded to about 300,000.
In the consumer finance business that
began in April 2005 through the collabora-
tion of SMBC, Promise Co., Ltd., and
converted to accept biometric identification. ATMs for visually
challenged persons had been installed in all locations, includ-
ing unmanned ATM only offices.
We are also adjusting our fees depending on the nature of
transactions and expanding the ATM network to broaden
At-Loan Co., Ltd., the number of automatic contract machines
had grown to 697 at the end of March 2008, and the balance
of loans made by SMBC and At-Loan together had expanded
to about ¥350.0 billion.
Transaction Channels
During fiscal 2007, we established new branches in the Tokyo
This ATM is equipped with a phone hand-
to enable visually
set with keys
challenged persons to conduct opera-
tions while listening to directions.
metropolitan area located in Higashi Totsuka (Kanagawa Pre-
access to services that are free of charge. For example, we
fecture), Ichikawa (Chiba Prefecture), and Osaki (Tokyo). In the
revised our ATM fee schedule as of October 2007. Fees for
Kinki region, we opened a new branch in Takarazuka
transactions conducted after banking hours on weekdays were
Nakayama (Hyogo Prefecture).
eliminated for customers using ATMs at the bank’s Head Office
Also, to strengthen our services for customers located in
and branches as well as the bank’s @B NK ATMs in conve-
the Tokai region, which is centered on Aichi Prefecture, we set
nience stores, for those who have savings account balances of
up new branches in the cities of Ikeshita and Issha. In addition,
¥100,000 or more at the time of their transactions. In addition,
in June 2008, we opened a new type of business office,
fees were eliminated for transactions through ATMs of Japan
“SMBC Park Sakae,” which will be the first of SMBC’s offices to
Post Bank and East Japan Railway Company. After-hour fees
concentrate mainly on providing information.
and usage charges were also eliminated for card loans.
We will continue to strengthen our office network in Japan’s
three main geographic areas: namely, the Tokyo metropolitan
area, the Kinki region, and the Tokai region.
Topics
◆ SMBC Retail Banking College Established
On May 7, 2008, SMBC established SMBC Retail Banking Col-
lege (RBC) to train personnel responsible for providing financial
services to individual customers.
RBC offers special training programs aimed at substantially
increasing the sophistication and quality of our consumer bank-
ing services. It has a counter zone that enables trainees to
simulate retail customer consulting, an audio visual room that
broadcasts roll-playing scenarios and enables all trainees
attending to confirm the
content, and other facilities
that speed up their acquisi-
tion of working knowledge
and skills.
On its “One’s Direct” remote banking service, SMBC is
continuing to expand the range of its offerings. Beginning in
May 2007, we began to offer the first foreign currency deposits
with interest rates linked to foreign currency markets, operating
exclusively on the Internet on a 24-hour basis on weekdays.
Also in May 2007, we linked
onto the i-ApliBanking com-
mon mobile banking platform
developed by NTT DoCoMo.
Then in July and August
2007, we strengthened mea-
sures for preventing Internet
“phishing” (short for “pass-
word harvesting fishing”)
fraud by introducing a service that closes phishing sites quickly
and provides the customer with a new type of identification.
The Internet banking services offered by One’s Direct have
been ranked highly and placed number one in Japan for the
sixth consecutive year in the independent rankings published
by Gomez, Inc. As of March 31, 2008, the number of One’s
Direct subscribers was approximately 8.4 million.
During fiscal 2007, all ATMs in our manned branches were
12
SMFG 2008
SMFG 2008 13
into overseas markets and to companies that are already
in Japan in the field of providing environmental certifications to
Fund-raising
■ Corporate Banking
Reinforcing Capabilities in Response
to Globalization
Japan’s overseas direct investment has continued to expand
tomers to use their equip-
ment assets, such as
machine tools and construc-
tion equipment, as collateral
for borrowings. Also, in April
since 2004. The number of customers among small and
2008, we began to offer
medium-sized enterprises (SMEs) who are expanding and
Asset Value Truck & Bus
deepening their business operations through development of
Loans, which make it possi-
activities in overseas markets, including Asia, is growing.
ble for customers to use
To respond to the needs of these customers to enter over-
their commercial vehicles,
seas markets and expand their existing overseas activities,
such as trucks and buses as
SMBC established its Global Advisory Department in April
loan collateral.
2008, which spans across the three business units responsible
We are also developing
for corporate transactions—Middle Market Banking, Corporate
other types of loans that pro-
Banking, and International Banking Units. The Global Advisory
department is based in Tokyo and has increased the number
vide funds on favorable terms to corporations that have various
qualifications. Beginning in February 2006, for example, we
of personnel stationed in Asia, principally in China, to reinforce
introduced the SMBC-ECO Loans for environmentally con-
its capabilities for gathering information and providing solu-
scious midsized companies and SMEs that have obtained
tions to customer issues.
environmental certifications. Also, beginning in December
Our new advisory department is well positioned to provide
2007, as a follow-up product, we worked together with NPO
even higher quality support for customers considering entry
KES Environmental Organization, the pioneering organization
expanding their activities overseas.
Improving Products and Services for
Midsized Companies and SMEs
To contribute to the development of the business activities of
SMEs, to develop and begin to offer the KES Support Loan,
targeted at companies that have obtained the KES Manage-
ment System Standard certification, which is administered by
the KES Environmental Organization. SMBC-ECO Loans,
including the KES Support Loans, are now widely used by our
midsized companies and SMEs, SMBC proactively takes the
customers and, on a cumulated basis, had exceeded ¥30 bil-
initiative in understanding customers’ needs and issues to be
lion as of May 31, 2008.
addressed and is well prepared to offer proposals for providing
appropriate products and services.
Products and Services for Fund-Raising
Thus far, in the area of unsecured loans, where customers
have strong needs, we were quick to develop our Business
Select Loans, which do not require guarantees by third parties,
and have promoted these loans to SMEs.
In September 2007, in addition to our offerings of unse-
cured loans available to date, we introduced a new lineup of
Wide Support Loans to
respond to customer needs
for funding to develop and
make use of real estate hold-
ings.
Moreover, for SMEs, we
are developing a range of
fund-raising methods that
are based on various types
of assets. For example, in
November 2007, we intro-
duced our Asset Value
Loans, which enable cus-
14
SMFG 2008
Also, in April 2008, we
added the Certified Com-
pany Support Loans to our
lineup of fund-raising meth-
ods. Companies eligible for
these loans are selected
from among those that have
received (a) certifications
and awards for technology
and management capabili-
ties from national and local
government entities speci-
fied by SMBC and (b) such
certifications and awards
under management qualifi-
cation certification systems
recognized by SMBC. Simi-
larly, in June 2008, we
introduced our Web Report-
ing Loans. Companies
eligible for these loans are
selected from among those
that submit electronic corpo-
rate tax returns and make
use of Web tax reporting
data services. (These are
companies that make use of the Japan national tax authorities
“e-Tax” service that enables them to transmit their tax return
data and certificates of tax payment electronically to the bank.)
Customer Needs
SMBC Products and Services
Unsecured
loans
Asset-based
financing
Business Select Loans
Wide Support Loans
Asset Value: Equipment Asset-Based
Asset Value: Truck & Bus
Qualification-
based
financing
SMBC-ECO Loans (KES Support Loans)
Certified Company Support Loans
Web Reporting Loans
Provision of
information
Value-added
services
Complimentary information services
Business Information Service
・ Management Topics
・ Columns
・ Business Knowledge
・ Book Reviews
Assistance for entering
overseas market and
trading transactions
Trade Consultants
Information Services
In addition to these financing services, in September 2007,
SMBC expanded its complimentary Business Information Ser-
vice, which it inaugurated in November 2006. The upgrading of
this service aimed to “transmit additional content” and “provide
weekly updates” and the number of companies receiving the
service has increased to more than 10,000.
Also, beginning in February 2008, the bank formed a
group of 18 Trade Consultants, who are drawn from among
persons thoroughly familiar with trade transactions and with
extensive experience in trading companies. These consultants
offer advisory services to customers engaged in trade transac-
tions, including information on conditions in overseas markets
and points for special attention when conducting export and
import business.
SMBC intends to continue to offer value-added services to
its customers that go beyond providing financing products.
national trade, SMBC is working to offer new products and ser-
vices to assist them.
As a tool to increase the efficiency of foreign trade transac-
tions for corporations conducting foreign exchange
transactions with overseas customers, SMBC offers its Global
e-Trade Service, an Internet-based foreign exchange service.
Beginning in May 2008, to provide a dedicated remittance ser-
vice, which is in demand among customers, we introduced a
lower cost Global e-Trade Service Debut Type, which is avail-
able for a monthly fee of ¥2,100.
Customer
PC
SMBC
Global e-Trade Service
Debut Type
・ Outgoing remittance
transactions to overseas
recipients
・Handling of incoming
remittance transactions
・ Notice of statements and
detailed transaction reports
・ Print-out function
Value
Door
entrance
portal
Overseas
banks
In addition, with the objective of providing global support
for domestic companies with technological capabilities in the
environmental area, beginning in March 2008, SMBC intro-
duced a service system that offers preferential trade related
fees and interest rates to customers who have cleared our
environmental technical standards based on the know-how of
Group company JRI.
SMBC will continue to actively support the activities of its
customers among midsized companies and SMEs to globalize
their operations.
Topics
◆ SMBC Provides Support for Joint Research on
Businesses Related to the Natural Environment
In June 2008, SMBC made a grant to support joint
research on environmental business to be conducted by
Annex Co., Ltd.—a company that won the SMBC Award in
the SMBC-sponsored “eco japan cup” contest for business
activities related to the natural environment—and the Incu-
bation Center of Japan’s
Keio University.
SMBC plans to con-
tinue providing support for
the further development of
environmental businesses.
Foreign Exchange Products and Services
As midsized companies and SMEs continue to globalize their
activities by entering overseas markets and conducting inter-
Examples of the “5 x Green” Greening
Units promoted by Annex. (Installed in
Marunouchi, Chiyoda-ku, Tokyo)
SMFG 2008 15
into overseas markets and to companies that are already
in Japan in the field of providing environmental certifications to
Fund-raising
■ Corporate Banking
Reinforcing Capabilities in Response
to Globalization
Japan’s overseas direct investment has continued to expand
tomers to use their equip-
ment assets, such as
machine tools and construc-
tion equipment, as collateral
for borrowings. Also, in April
since 2004. The number of customers among small and
2008, we began to offer
medium-sized enterprises (SMEs) who are expanding and
Asset Value Truck & Bus
deepening their business operations through development of
Loans, which make it possi-
activities in overseas markets, including Asia, is growing.
ble for customers to use
To respond to the needs of these customers to enter over-
their commercial vehicles,
seas markets and expand their existing overseas activities,
such as trucks and buses as
SMBC established its Global Advisory Department in April
loan collateral.
2008, which spans across the three business units responsible
We are also developing
for corporate transactions—Middle Market Banking, Corporate
other types of loans that pro-
Banking, and International Banking Units. The Global Advisory
department is based in Tokyo and has increased the number
vide funds on favorable terms to corporations that have various
qualifications. Beginning in February 2006, for example, we
of personnel stationed in Asia, principally in China, to reinforce
introduced the SMBC-ECO Loans for environmentally con-
its capabilities for gathering information and providing solu-
scious midsized companies and SMEs that have obtained
tions to customer issues.
environmental certifications. Also, beginning in December
Our new advisory department is well positioned to provide
2007, as a follow-up product, we worked together with NPO
even higher quality support for customers considering entry
KES Environmental Organization, the pioneering organization
expanding their activities overseas.
Improving Products and Services for
Midsized Companies and SMEs
To contribute to the development of the business activities of
SMEs, to develop and begin to offer the KES Support Loan,
targeted at companies that have obtained the KES Manage-
ment System Standard certification, which is administered by
the KES Environmental Organization. SMBC-ECO Loans,
including the KES Support Loans, are now widely used by our
midsized companies and SMEs, SMBC proactively takes the
customers and, on a cumulated basis, had exceeded ¥30 bil-
initiative in understanding customers’ needs and issues to be
lion as of May 31, 2008.
addressed and is well prepared to offer proposals for providing
appropriate products and services.
Products and Services for Fund-Raising
Thus far, in the area of unsecured loans, where customers
have strong needs, we were quick to develop our Business
Select Loans, which do not require guarantees by third parties,
and have promoted these loans to SMEs.
In September 2007, in addition to our offerings of unse-
cured loans available to date, we introduced a new lineup of
Wide Support Loans to
respond to customer needs
for funding to develop and
make use of real estate hold-
ings.
Moreover, for SMEs, we
are developing a range of
fund-raising methods that
are based on various types
of assets. For example, in
November 2007, we intro-
duced our Asset Value
Loans, which enable cus-
14
SMFG 2008
Also, in April 2008, we
added the Certified Com-
pany Support Loans to our
lineup of fund-raising meth-
ods. Companies eligible for
these loans are selected
from among those that have
received (a) certifications
and awards for technology
and management capabili-
ties from national and local
government entities speci-
fied by SMBC and (b) such
certifications and awards
under management qualifi-
cation certification systems
recognized by SMBC. Simi-
larly, in June 2008, we
introduced our Web Report-
ing Loans. Companies
eligible for these loans are
selected from among those
that submit electronic corpo-
rate tax returns and make
use of Web tax reporting
data services. (These are
companies that make use of the Japan national tax authorities
“e-Tax” service that enables them to transmit their tax return
data and certificates of tax payment electronically to the bank.)
Customer Needs
SMBC Products and Services
Unsecured
loans
Asset-based
financing
Business Select Loans
Wide Support Loans
Asset Value: Equipment Asset-Based
Asset Value: Truck & Bus
Qualification-
based
financing
SMBC-ECO Loans (KES Support Loans)
Certified Company Support Loans
Web Reporting Loans
Provision of
information
Value-added
services
Complimentary information services
Business Information Service
・ Management Topics
・ Columns
・ Business Knowledge
・ Book Reviews
Assistance for entering
overseas market and
trading transactions
Trade Consultants
Information Services
In addition to these financing services, in September 2007,
SMBC expanded its complimentary Business Information Ser-
vice, which it inaugurated in November 2006. The upgrading of
this service aimed to “transmit additional content” and “provide
weekly updates” and the number of companies receiving the
service has increased to more than 10,000.
Also, beginning in February 2008, the bank formed a
group of 18 Trade Consultants, who are drawn from among
persons thoroughly familiar with trade transactions and with
extensive experience in trading companies. These consultants
offer advisory services to customers engaged in trade transac-
tions, including information on conditions in overseas markets
and points for special attention when conducting export and
import business.
SMBC intends to continue to offer value-added services to
its customers that go beyond providing financing products.
national trade, SMBC is working to offer new products and ser-
vices to assist them.
As a tool to increase the efficiency of foreign trade transac-
tions for corporations conducting foreign exchange
transactions with overseas customers, SMBC offers its Global
e-Trade Service, an Internet-based foreign exchange service.
Beginning in May 2008, to provide a dedicated remittance ser-
vice, which is in demand among customers, we introduced a
lower cost Global e-Trade Service Debut Type, which is avail-
able for a monthly fee of ¥2,100.
Customer
PC
SMBC
Global e-Trade Service
Debut Type
・ Outgoing remittance
transactions to overseas
recipients
・Handling of incoming
remittance transactions
・ Notice of statements and
detailed transaction reports
・ Print-out function
Value
Door
entrance
portal
Overseas
banks
In addition, with the objective of providing global support
for domestic companies with technological capabilities in the
environmental area, beginning in March 2008, SMBC intro-
duced a service system that offers preferential trade related
fees and interest rates to customers who have cleared our
environmental technical standards based on the know-how of
Group company JRI.
SMBC will continue to actively support the activities of its
customers among midsized companies and SMEs to globalize
their operations.
Topics
◆ SMBC Provides Support for Joint Research on
Businesses Related to the Natural Environment
In June 2008, SMBC made a grant to support joint
research on environmental business to be conducted by
Annex Co., Ltd.—a company that won the SMBC Award in
the SMBC-sponsored “eco japan cup” contest for business
activities related to the natural environment—and the Incu-
bation Center of Japan’s
Keio University.
SMBC plans to con-
tinue providing support for
the further development of
environmental businesses.
Foreign Exchange Products and Services
As midsized companies and SMEs continue to globalize their
activities by entering overseas markets and conducting inter-
Examples of the “5 x Green” Greening
Units promoted by Annex. (Installed in
Marunouchi, Chiyoda-ku, Tokyo)
SMFG 2008 15
■ Services for High-Net-Worth
Individuals, Business Owners
and Employees
Private Advisory Department
SMBC’s Private Advisory Department responds to the diverse
requirements of business owners and high-net-worth individu-
als. The activities of the department span three areas. The first
is providing private banking services that include the prepara-
tion of comprehensive proposals for the management of
monetary assets that answer to customer needs. The second
is preparing carefully tailored proposals for business succes-
sion, based on the know-how the bank has accumulated from
long experience in this area and the input of outside special-
ists. The third is workplace banking services that give
proposals include specific management suggestions for vari-
ous categories of customer assets.
Proposal Preparation and Implementation
1. Profiling
Sharing thoughts with customers
and proposals for customers’
overall asset portfolios
2. Consulting
Proposals for asset allocation for
customers’ monetary asset
portfolios
4. Review
Reporting and reviewing on asset
management results
3. Action
Specific proposals for the
management of various asset
categories
Support for Business Succession
We offer tailor-made proposals to our customers who have
assistance in formulating and implementing employee benefit
concerns about passing on their businesses in the years
■ Investment Banking
Accomplishments in Fiscal 2007
SMBC won first place in the league table for mandated
arrangers of Japanese syndicated loans in fiscal 2007, draw-
ing on its strong placement capabilities and through its
aggressive initiatives to capture major deals. Also, on a global
basis, SMBC received a high rating from market participants
for arranging a large number of project finance deals, receiv-
ing “Deal of the Year” awards from major magazines. In
addition, in the field of ship financing, on a global basis, SMBC
has placed within the top 10 arrangers for the second consec-
utive year. We also improved our capabilities and support
services for potential growth companies through direct equity
investments, implemented aggressive initiatives to develop our
hybrid finance instruments to respond to the diverse needs of
our customers, and expanded into the carbon credit business
programs for supporting employees’ lifelong financial plans,
ahead. We prepare these proposals and plans with reference
and other new business fields.
including asset formation savings, housing finance, and
to the particular situation and requirements of individual cus-
defined contribution pension plans.
tomers to assist them in implementing business succession
In providing these three types of services, the department
smoothly and with an eye to further business development.
works to meet the requirements of business owners, employees,
and high-net-worth customers, by providing responsive services
through the bank’s domestic branches and by working closely
with SMFG companies and alliance partners.
Head of families
Customers
High-net-worth-Individuals
Business Owners
SMBC
Officers in charge of customers at
bank branches
Officers in charge of customers in
the Middle Market Banking Unit
Relationship management
・Asset management
requirements
・Employee benefit
programs, etc.
Private Advisory Department
・Business
succession
needs
・Asset succession/
inheritance requirements
・Provision of advice for
expanding business
operations and
other various needs
Business
strategy
Capital policy
Asset
succession
Consideration of
M&A/MBO
possibilities
Our
Solutions
Organizational
realignments
Arrangements for
tax payments
Stock price
simulations
Policies vis-à-vis
successors
Workplace Banking
We also promote transactions with the employees of corporate
clients and support the creation of employee benefit programs.
In April 2006, SMBC formed a Defined Contribution Depart-
Other related
departments
Group companies
SMFG
ment, which is responsible for
offering operating services for
Affiliated tax accountants
defined benefit plans.
Private Banking
In its private banking services, SMBC discusses and shares
thoughts with customers regarding their own assets and,
based on these discussions, in cooperation with others inside
and outside the bank, offers proposals for the allocation of
assets as well as for assisting customers in expanding their
business activities, arranging for business and asset succes-
sion, and managing their overall asset portfolios. These
16
SMFG 2008
Collaboration with Daiwa Securities SMBC
Daiwa Securities SMBC Co., Ltd., ranked first in the league
table for All Bonds in Yen in fiscal 2007 and placed second in
the league table for bookrunners for initial public offerings. In
addition, reflecting the highly favorable esteem that it has
received from market participants, Daiwa Securities SMBC
won the “Samurai Bond House of the Year” and the “Asset-
backed Securities House of the Year” awards presented by the
U.S. research company Thomson Financial. In the M&A advi-
sory field, Daiwa Securities SMBC executed a business
alliance agreement with U.S. M&A specialist Sagent Advisors
Inc. and is expected to respond proactively to expanding
cross-border M&A deals.
Syndicate Loan League Table*
Fiscal 2007
Mandated Arrangers
1. SMBC
2. Mizuho Financial Group
3. Mitsubishi UFJ Financial Group
4. Citigroup
5. Sumitomo Trust & Banking
Amount
(¥ billion)
8,048.4
7,585.9
5,881.4
953.4
396.5
Project Finance
2007 Deal of the Year Awards—Principal Deals
Award category
Region/industry
Deal name
(Country/sector)
Amount syndicated
US$ million
Magazine presenting
award
Global
Barka 2 & Al-Rusail
(Oman/IWPP)
937
Project Finance Magazine
Africa/mining
Middle East/
manufacturing
Asia-Pacific/
electric power
Ambatovy
(Madagascar/
nickel mining)
Emirates Aluminum
(Abu Dhabi/
aluminum smelting)
Crimson Power
(Philippines/acquisition
of an independent
power producer (IPP))
2,100
4,400
Project Finance Magazine
Project Finance International
Project Finance Magazine
Project Finance International
2,900
Project Finance Magazine
All Bonds in Yen Bookrunner League Table*
Amount
(¥ billion)
3,975.0
3,532.9
3,501.8
3,384.9
3,275.4
Fiscal 2007
Bookrunners
1. Daiwa Securities SMBC
2. Mizuho Financial Group
3. Nomura
4. Mitsubishi UFJ Financial Group
5. Nikko Citigroup
* Source: Thomson Financial
Topics
◆ Syndicated Loans
SMBC ranked first in the
league table for mandated
arrangers of Japanese
syndicated loans in fiscal
2007 and was selected
the “Best arranger of
loans for Japanese bor-
rowers” by Euroweek
magazine, the UK based
financial journal.
◆ Environmental Business
In October 2007, SMBC established its Environmental
Products Department with the mission of promoting envi-
ronmental business, including carbon credit business.
Also, in connection with clean development mechanism
(CDM) projects in Brazil, SMBC was the only Japanese
bank nominated for the
“Sustainable Banking
Award 2007” presented
by the Financial Times
and International Finance
Corporation.
CDM project in Brazil
(Arapucel small hydroelectric
power plant)
SMFG 2008 17
■ Services for High-Net-Worth
Individuals, Business Owners
and Employees
Private Advisory Department
SMBC’s Private Advisory Department responds to the diverse
requirements of business owners and high-net-worth individu-
als. The activities of the department span three areas. The first
is providing private banking services that include the prepara-
tion of comprehensive proposals for the management of
monetary assets that answer to customer needs. The second
is preparing carefully tailored proposals for business succes-
sion, based on the know-how the bank has accumulated from
long experience in this area and the input of outside special-
ists. The third is workplace banking services that give
proposals include specific management suggestions for vari-
ous categories of customer assets.
Proposal Preparation and Implementation
1. Profiling
Sharing thoughts with customers
and proposals for customers’
overall asset portfolios
2. Consulting
Proposals for asset allocation for
customers’ monetary asset
portfolios
4. Review
Reporting and reviewing on asset
management results
3. Action
Specific proposals for the
management of various asset
categories
Support for Business Succession
We offer tailor-made proposals to our customers who have
assistance in formulating and implementing employee benefit
concerns about passing on their businesses in the years
■ Investment Banking
Accomplishments in Fiscal 2007
SMBC won first place in the league table for mandated
arrangers of Japanese syndicated loans in fiscal 2007, draw-
ing on its strong placement capabilities and through its
aggressive initiatives to capture major deals. Also, on a global
basis, SMBC received a high rating from market participants
for arranging a large number of project finance deals, receiv-
ing “Deal of the Year” awards from major magazines. In
addition, in the field of ship financing, on a global basis, SMBC
has placed within the top 10 arrangers for the second consec-
utive year. We also improved our capabilities and support
services for potential growth companies through direct equity
investments, implemented aggressive initiatives to develop our
hybrid finance instruments to respond to the diverse needs of
our customers, and expanded into the carbon credit business
programs for supporting employees’ lifelong financial plans,
ahead. We prepare these proposals and plans with reference
and other new business fields.
including asset formation savings, housing finance, and
to the particular situation and requirements of individual cus-
defined contribution pension plans.
tomers to assist them in implementing business succession
In providing these three types of services, the department
smoothly and with an eye to further business development.
works to meet the requirements of business owners, employees,
and high-net-worth customers, by providing responsive services
through the bank’s domestic branches and by working closely
with SMFG companies and alliance partners.
Head of families
Customers
High-net-worth-Individuals
Business Owners
SMBC
Officers in charge of customers at
bank branches
Officers in charge of customers in
the Middle Market Banking Unit
Relationship management
・Asset management
requirements
・Employee benefit
programs, etc.
Private Advisory Department
・Business
succession
needs
・Asset succession/
inheritance requirements
・Provision of advice for
expanding business
operations and
other various needs
Business
strategy
Capital policy
Asset
succession
Consideration of
M&A/MBO
possibilities
Our
Solutions
Organizational
realignments
Arrangements for
tax payments
Stock price
simulations
Policies vis-à-vis
successors
Workplace Banking
We also promote transactions with the employees of corporate
clients and support the creation of employee benefit programs.
In April 2006, SMBC formed a Defined Contribution Depart-
Other related
departments
Group companies
SMFG
ment, which is responsible for
offering operating services for
Affiliated tax accountants
defined benefit plans.
Private Banking
In its private banking services, SMBC discusses and shares
thoughts with customers regarding their own assets and,
based on these discussions, in cooperation with others inside
and outside the bank, offers proposals for the allocation of
assets as well as for assisting customers in expanding their
business activities, arranging for business and asset succes-
sion, and managing their overall asset portfolios. These
16
SMFG 2008
Collaboration with Daiwa Securities SMBC
Daiwa Securities SMBC Co., Ltd., ranked first in the league
table for All Bonds in Yen in fiscal 2007 and placed second in
the league table for bookrunners for initial public offerings. In
addition, reflecting the highly favorable esteem that it has
received from market participants, Daiwa Securities SMBC
won the “Samurai Bond House of the Year” and the “Asset-
backed Securities House of the Year” awards presented by the
U.S. research company Thomson Financial. In the M&A advi-
sory field, Daiwa Securities SMBC executed a business
alliance agreement with U.S. M&A specialist Sagent Advisors
Inc. and is expected to respond proactively to expanding
cross-border M&A deals.
Syndicate Loan League Table*
Fiscal 2007
Mandated Arrangers
1. SMBC
2. Mizuho Financial Group
3. Mitsubishi UFJ Financial Group
4. Citigroup
5. Sumitomo Trust & Banking
Amount
(¥ billion)
8,048.4
7,585.9
5,881.4
953.4
396.5
Project Finance
2007 Deal of the Year Awards—Principal Deals
Award category
Region/industry
Deal name
(Country/sector)
Amount syndicated
US$ million
Magazine presenting
award
Global
Barka 2 & Al-Rusail
(Oman/IWPP)
937
Project Finance Magazine
Africa/mining
Middle East/
manufacturing
Asia-Pacific/
electric power
Ambatovy
(Madagascar/
nickel mining)
Emirates Aluminum
(Abu Dhabi/
aluminum smelting)
Crimson Power
(Philippines/acquisition
of an independent
power producer (IPP))
2,100
4,400
Project Finance Magazine
Project Finance International
Project Finance Magazine
Project Finance International
2,900
Project Finance Magazine
All Bonds in Yen Bookrunner League Table*
Amount
(¥ billion)
3,975.0
3,532.9
3,501.8
3,384.9
3,275.4
Fiscal 2007
Bookrunners
1. Daiwa Securities SMBC
2. Mizuho Financial Group
3. Nomura
4. Mitsubishi UFJ Financial Group
5. Nikko Citigroup
* Source: Thomson Financial
Topics
◆ Syndicated Loans
SMBC ranked first in the
league table for mandated
arrangers of Japanese
syndicated loans in fiscal
2007 and was selected
the “Best arranger of
loans for Japanese bor-
rowers” by Euroweek
magazine, the UK based
financial journal.
◆ Environmental Business
In October 2007, SMBC established its Environmental
Products Department with the mission of promoting envi-
ronmental business, including carbon credit business.
Also, in connection with clean development mechanism
(CDM) projects in Brazil, SMBC was the only Japanese
bank nominated for the
“Sustainable Banking
Award 2007” presented
by the Financial Times
and International Finance
Corporation.
CDM project in Brazil
(Arapucel small hydroelectric
power plant)
SMFG 2008 17
■ International Banking
are implementing initiatives flexibly and proactively.
In its international banking operations, which emanate from
SMBC’s International Banking Unit, SMFG offers various ser-
vices to customers operating globally, including corporations,
financial institutions, sovereign governments, and public entities.
Offering Tailor-Made Services for
Regional Requirements through
Our Extensive Overseas Network
To reinforce our transaction capabilities in the fast-growing Asia
and Oceania regions, in April 2008, we established a regional
head office for these regions in Singapore. Also, to strengthen
our abilities for responding appropriately to the needs of differ-
ing markets in the three principal geographical areas of Europe,
the Americas, and Asia, we created four regional management
centers, one each for Europe, the Americas, China, and the rest
of Asia/Oceania. Through this operating structure, under which
we will draw on the capabilities not only of SMBC’s network but
also the abilities of other Group companies, overseas sub-
sidiaries, and our alliance partners among local banking
institutions, we are aiming to offer cutting-edge information and
services at all times in increasingly competitive international
markets as well as optimal solutions to issues our customers
confront in various parts of the world.
Developing Our Activities in Newly Emerging
and Growth Markets
We are working to strengthen our capabilities for responding to
customer needs not only in Europe and the countries of Asia
but also in the newly emerging and growth markets, including
those of the Middle East, Central and Eastern Europe, and
Latin America. We are striving to provide optimal services that
meet the special requirements of individual markets, and, while
remaining aware of changes in the operating environment, we
Topics
◆ Strengthening Our Network
In April 2008, we newly opened representative offices in Ams-
terdam and Prague. These new offices will provide us with a
presence in the Netherlands, where a large number of Japan-
ese companies have set up operations, and in Central and
Eastern Europe, where in recent years a substantial number of
Japanese companies have established business operations.
We will rely on these representative offices to reinforce our
capabilities for gathering information to support our Japanese
customers in the three Benelux nations and the countries of
Central and Eastern Europe. Also, after becoming the first
Japanese bank to establish a branch in Dubai, which is now
the base for our business activities in the Middle East, in March
2007, we became the first Japanese bank to open a represen-
tative office in Doha in April 2008. Similarly, in China, following
the establishment of sub-branch in the Binhai New Area of
Providing Competitive Financial Products
Fourteen of the major financing projects that SMBC has under-
taken received deal of the year awards from the three leading
trade-related magazines: namely, Trade Finance, Global Trade
Review, and Trade & Forfaiting Review. Leveraging the arrang-
ing and structuring capabilities of our Global Trade Finance
Department, which derive from that department’s global activi-
ties, we plan to offer a diversity of products going forward to
provide support for the foreign trade operations of our cus-
tomers. In addition, drawing on the strengths of our network
spanning Asia/Oceania, Europe, the Middle East, and the Amer-
icas, we have attained a top-ranking position in project finance,
including private finance initiative (PFI), public private partner-
ship (PPP), and other types of arrangements in a number of key
industries, including electric power, oil and gas, and petrochem-
icals. Looking ahead, we intend to continue to respond to the
diverse needs of our customers as a top-tier bank.
International Cash Management Services (CMS)
In October 2007, SMBC formed its Global Transaction Banking
Dept. and stationed staff members in Singapore, Shanghai,
New York, and London to create a global system that can
respond to the needs of corporate clients for international cash
management. According to the results of a survey conducted
in 2007 by ASIAMONEY, a magazine specializing in Asian
finance, SMBC ranked third among all banks surveyed and
number one among Japanese banks in the rankings for “Best
Electronic Banking Platform.” Going forward, we will work to
provide the most up-to-date services and information related to
overseas cash management, drawing on our global network.
Continuing Portfolio Optimization
We are working to continuing to increase our asset efficiency
Tianjin in March 2007 and another sub-branch in an industrial
park in the city of Suzhou in April 2007, we opened our Beijing
Branch in February 2008, thus bringing our network in China to
11 offices. Going forward, we plan to further strategically rein-
force our overseas network.
◆ Appointments of National Staff
at Overseas Offices
During fiscal 2007, SMBC appointed local staff officers (general
managers for marketing) as directors, one each in the Americas
and in Europe. In fiscal 2008, another national staff member in
charge of marketing to Greater China (including non-Japanese
customers located in mainland China, including Hong Kong,
and the Taiwan economic region) was appointed as director.
Looking ahead, we intend to actively appoint highly qualified
personnel, regardless of nationality, to such positions and
thereby create a management system that can respond flexibly
to the special features of regional markets.
within the framework of the Basel II requirements by taking
account of the various types of market risk in our international
business activities, managing our portfolio appropriately, and
responding quickly and flexibly to changes in the operating
environment.
Reinforcing Compliance Systems
We are fully aware that expanding our business operations on
a global scale will necessitate the further strengthening of our
compliance systems. Accordingly, we formed an International
Compliance Department within our General Affairs Department
and have newly appointed Head Office Compliance Officers
who are stationed at our overseas offices and report to the
Head Office. These officers have the roles of providing guid-
ance and conducting surveillance activities relating to
compliance at overseas offices and improving compliance
monitoring. Moreover, we are taking steps to substantially rein-
force our anti-money laundering systems since preventing
such activities has become a high-priority issue internationally.
We intend to continue working to capture business opportuni-
ties in the vast markets that characterize international business
activities and aim to become a global commercial bank with
particular strengths in Japan and the rest of Asia.
■ Treasury Markets
SMFG, through the Treasury Unit of SMBC, aims to offer
increasingly higher-value-added services to meet the ever
more sophisticated and diverse needs of its customers for
transactions in the money, foreign exchange, bond and deriva-
tives markets.
To maintain and further strengthen profitability, as it man-
ages risk appropriately, the Treasury Unit focuses on three
goals: (a) expanding transactions volume from its customers:
(b) strengthening its asset-liability management (ALM) system
and trading skills: and (c) diversifying fund management tech-
niques and conducting sharply focused portfolio management.
Enhancing Customer Convenience
In fiscal 2007, the Treasury Unit, working in collaboration with
the business units, took steps to expand its market transac-
tions services system for corporate and retail customers. We
also worked to increase the range of functions offered through
i-Deal, a system that allows customers to conclude foreign
exchange contracts over the Internet.
Looking forward, the Treasury Unit will continue working to
fulfill all our customers’ market transaction needs by providing
full support services of the highest quality in the industry.
ALM and Trading Operations
Through its ALM and trading operations, the Treasury Unit
endeavors to maximize profitability, as it controls market and
liquidity risks, by diversifying management techniques to
include alternative investments, diversifying its investment port-
folio, and taking advantage of arbitrage investment
opportunities.
We will continue to work to secure stable profits by pursu-
ing the optimal allocation of capital appropriate to the level of
risk exposure.
Customers
Corporate business offices,
branches
Treasury Unit
Treasury Marketing Dept.
Planning Dept.
Enhance customer convenience by
improving our services
Planning, research
Transactions with customers
Customer order flow
Trading Dept.
Maintenance of efficient
operations based on
order-initiated trades and
ALM hedging
Foreign exchange
transactions
Derivative
transactions
Bond transactions
CD,
CP transactions
Trading
ALM
operations
Treasury Dept.
Deposits
International
Treasury Dept.
Precise ALM
operations and
liquidity
management
Loans
Bond
investments
Alternative
investments
ALM
Fund and
bond transactions
Interbank Market
Topics
◆ Expanding Services to Meet Customer Needs
To further increase convenience for customers, SMBC con-
tinues to enhance the functions of its i-Deal system that
allows customers to conclude foreign exchange contracts
over the Internet.
In fiscal 2007, as a result of the upgrading of system
functions, individual customers are now able to conduct for-
eign currency deposit transactions on a 24-hour basis on
weekdays using real-time exchange rates via One’s Direct.
◆ Diversification of Investments and Efficient Use
of ALM
SMBC has upgraded its systems to allow for the flexible
expansion and selection of the range of investments by
centralizing interest rate, equity, and alternative invest-
ments in one department while also expanding the number
of personnel engaged in making own-account investments
at overseas offices. In addition, the bank is positioned to
conduct appropriate ALM operations in response to
changing market conditions.
18
SMFG 2008
SMFG 2008 19
■ International Banking
are implementing initiatives flexibly and proactively.
In its international banking operations, which emanate from
SMBC’s International Banking Unit, SMFG offers various ser-
vices to customers operating globally, including corporations,
financial institutions, sovereign governments, and public entities.
Offering Tailor-Made Services for
Regional Requirements through
Our Extensive Overseas Network
To reinforce our transaction capabilities in the fast-growing Asia
and Oceania regions, in April 2008, we established a regional
head office for these regions in Singapore. Also, to strengthen
our abilities for responding appropriately to the needs of differ-
ing markets in the three principal geographical areas of Europe,
the Americas, and Asia, we created four regional management
centers, one each for Europe, the Americas, China, and the rest
of Asia/Oceania. Through this operating structure, under which
we will draw on the capabilities not only of SMBC’s network but
also the abilities of other Group companies, overseas sub-
sidiaries, and our alliance partners among local banking
institutions, we are aiming to offer cutting-edge information and
services at all times in increasingly competitive international
markets as well as optimal solutions to issues our customers
confront in various parts of the world.
Developing Our Activities in Newly Emerging
and Growth Markets
We are working to strengthen our capabilities for responding to
customer needs not only in Europe and the countries of Asia
but also in the newly emerging and growth markets, including
those of the Middle East, Central and Eastern Europe, and
Latin America. We are striving to provide optimal services that
meet the special requirements of individual markets, and, while
remaining aware of changes in the operating environment, we
Topics
◆ Strengthening Our Network
In April 2008, we newly opened representative offices in Ams-
terdam and Prague. These new offices will provide us with a
presence in the Netherlands, where a large number of Japan-
ese companies have set up operations, and in Central and
Eastern Europe, where in recent years a substantial number of
Japanese companies have established business operations.
We will rely on these representative offices to reinforce our
capabilities for gathering information to support our Japanese
customers in the three Benelux nations and the countries of
Central and Eastern Europe. Also, after becoming the first
Japanese bank to establish a branch in Dubai, which is now
the base for our business activities in the Middle East, in March
2007, we became the first Japanese bank to open a represen-
tative office in Doha in April 2008. Similarly, in China, following
the establishment of sub-branch in the Binhai New Area of
Providing Competitive Financial Products
Fourteen of the major financing projects that SMBC has under-
taken received deal of the year awards from the three leading
trade-related magazines: namely, Trade Finance, Global Trade
Review, and Trade & Forfaiting Review. Leveraging the arrang-
ing and structuring capabilities of our Global Trade Finance
Department, which derive from that department’s global activi-
ties, we plan to offer a diversity of products going forward to
provide support for the foreign trade operations of our cus-
tomers. In addition, drawing on the strengths of our network
spanning Asia/Oceania, Europe, the Middle East, and the Amer-
icas, we have attained a top-ranking position in project finance,
including private finance initiative (PFI), public private partner-
ship (PPP), and other types of arrangements in a number of key
industries, including electric power, oil and gas, and petrochem-
icals. Looking ahead, we intend to continue to respond to the
diverse needs of our customers as a top-tier bank.
International Cash Management Services (CMS)
In October 2007, SMBC formed its Global Transaction Banking
Dept. and stationed staff members in Singapore, Shanghai,
New York, and London to create a global system that can
respond to the needs of corporate clients for international cash
management. According to the results of a survey conducted
in 2007 by ASIAMONEY, a magazine specializing in Asian
finance, SMBC ranked third among all banks surveyed and
number one among Japanese banks in the rankings for “Best
Electronic Banking Platform.” Going forward, we will work to
provide the most up-to-date services and information related to
overseas cash management, drawing on our global network.
Continuing Portfolio Optimization
We are working to continuing to increase our asset efficiency
Tianjin in March 2007 and another sub-branch in an industrial
park in the city of Suzhou in April 2007, we opened our Beijing
Branch in February 2008, thus bringing our network in China to
11 offices. Going forward, we plan to further strategically rein-
force our overseas network.
◆ Appointments of National Staff
at Overseas Offices
During fiscal 2007, SMBC appointed local staff officers (general
managers for marketing) as directors, one each in the Americas
and in Europe. In fiscal 2008, another national staff member in
charge of marketing to Greater China (including non-Japanese
customers located in mainland China, including Hong Kong,
and the Taiwan economic region) was appointed as director.
Looking ahead, we intend to actively appoint highly qualified
personnel, regardless of nationality, to such positions and
thereby create a management system that can respond flexibly
to the special features of regional markets.
within the framework of the Basel II requirements by taking
account of the various types of market risk in our international
business activities, managing our portfolio appropriately, and
responding quickly and flexibly to changes in the operating
environment.
Reinforcing Compliance Systems
We are fully aware that expanding our business operations on
a global scale will necessitate the further strengthening of our
compliance systems. Accordingly, we formed an International
Compliance Department within our General Affairs Department
and have newly appointed Head Office Compliance Officers
who are stationed at our overseas offices and report to the
Head Office. These officers have the roles of providing guid-
ance and conducting surveillance activities relating to
compliance at overseas offices and improving compliance
monitoring. Moreover, we are taking steps to substantially rein-
force our anti-money laundering systems since preventing
such activities has become a high-priority issue internationally.
We intend to continue working to capture business opportuni-
ties in the vast markets that characterize international business
activities and aim to become a global commercial bank with
particular strengths in Japan and the rest of Asia.
■ Treasury Markets
SMFG, through the Treasury Unit of SMBC, aims to offer
increasingly higher-value-added services to meet the ever
more sophisticated and diverse needs of its customers for
transactions in the money, foreign exchange, bond and deriva-
tives markets.
To maintain and further strengthen profitability, as it man-
ages risk appropriately, the Treasury Unit focuses on three
goals: (a) expanding transactions volume from its customers:
(b) strengthening its asset-liability management (ALM) system
and trading skills: and (c) diversifying fund management tech-
niques and conducting sharply focused portfolio management.
Enhancing Customer Convenience
In fiscal 2007, the Treasury Unit, working in collaboration with
the business units, took steps to expand its market transac-
tions services system for corporate and retail customers. We
also worked to increase the range of functions offered through
i-Deal, a system that allows customers to conclude foreign
exchange contracts over the Internet.
Looking forward, the Treasury Unit will continue working to
fulfill all our customers’ market transaction needs by providing
full support services of the highest quality in the industry.
ALM and Trading Operations
Through its ALM and trading operations, the Treasury Unit
endeavors to maximize profitability, as it controls market and
liquidity risks, by diversifying management techniques to
include alternative investments, diversifying its investment port-
folio, and taking advantage of arbitrage investment
opportunities.
We will continue to work to secure stable profits by pursu-
ing the optimal allocation of capital appropriate to the level of
risk exposure.
Customers
Corporate business offices,
branches
Treasury Unit
Treasury Marketing Dept.
Planning Dept.
Enhance customer convenience by
improving our services
Planning, research
Transactions with customers
Customer order flow
Trading Dept.
Maintenance of efficient
operations based on
order-initiated trades and
ALM hedging
Foreign exchange
transactions
Derivative
transactions
Bond transactions
CD,
CP transactions
Trading
ALM
operations
Treasury Dept.
Deposits
International
Treasury Dept.
Precise ALM
operations and
liquidity
management
Loans
Bond
investments
Alternative
investments
ALM
Fund and
bond transactions
Interbank Market
Topics
◆ Expanding Services to Meet Customer Needs
To further increase convenience for customers, SMBC con-
tinues to enhance the functions of its i-Deal system that
allows customers to conclude foreign exchange contracts
over the Internet.
In fiscal 2007, as a result of the upgrading of system
functions, individual customers are now able to conduct for-
eign currency deposit transactions on a 24-hour basis on
weekdays using real-time exchange rates via One’s Direct.
◆ Diversification of Investments and Efficient Use
of ALM
SMBC has upgraded its systems to allow for the flexible
expansion and selection of the range of investments by
centralizing interest rate, equity, and alternative invest-
ments in one department while also expanding the number
of personnel engaged in making own-account investments
at overseas offices. In addition, the bank is positioned to
conduct appropriate ALM operations in response to
changing market conditions.
18
SMFG 2008
SMFG 2008 19
www.smfg.co.jp
www.smfl.co.jp
Group Companies (as of March 31, 2008)
The companies of the Sumitomo Mitsui Financial Group (SMFG) offer
a diverse range of financial services, centered on banking opera-
tions, and including credit card services, leasing, information
services, and securities.
Company Name:
Business Description:
Our Mission
● To provide optimum added value to our customers and
together with them achieve growth
● To create sustainable shareholder value through busi-
ness growth
● To provide a challenging and professionally rewarding
work environment for our dedicated employees
Sumitomo Mitsui Financial Group, Inc.
Management of banking subsidiaries (under the
stipulations of Japan’s Banking Law) and of non-
bank subsidiaries as well as performance of ancil-
lary functions
December 2, 2002
1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo, Japan
Establishment:
Head Office:
Chairman of the Board: Masayuki Oku (Concurrent President at Sumitomo
President:
Capital:
Stock Exchange Listings: Tokyo Stock Exchange (First Section)
Mitsui Banking Corporation)
Teisuke Kitayama (Concurrent Chairman of the
Board of Directors at Sumitomo Mitsui Banking
Corporation)
¥1,420.9 billion
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
SUMITOMO MITSUI Banking Corporation
www.smbc.co.jp
Sumitomo Mitsui Banking Corporation (SMBC)
was established in April 2001 through the
merger of two leading banks: The Sakura Bank,
Limited, and The Sumitomo Bank, Limited.
Sumitomo Mitsui Financial Group, Inc., was
established through a stock transfer as a hold-
ing company, and SMBC became a wholly
owned subsidiary of SMFG. SMBC’s competi-
tive advantages include a strong customer
base, the quick implementation of strategies,
and an extensive lineup of financial products
and services that leverage the expertise of
strategic Group companies in specialized
areas. SMBC, as a core member of SMFG,
works together with other members of the
Group to offer customers highly sophisticated,
comprehensive financial services.
As the pioneer in the issuance of the VISA Card
in Japan and a leader in the domestic credit
card industry, Sumitomo Mitsui Card Company,
Limited, enjoys the strong support of its many
customers and plays a major role as one of the
strategic businesses of SMFG.
Leveraging its strong brand image and its
excellent capabilities across a wide range of
card-related services, the company provides
settlement and financing services focused
around providing credit services that meet cus-
tomer needs. Through its credit card business
operations, the company aims to actively con-
Company Name: Sumitomo Mitsui Banking Corporation
Business Profile: Banking
Establishment: June 6, 1996
Head Office: 1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo, Japan
Credit Ratings (as of June 30, 2008)
President & CEO: Masayuki Oku
Number of Employees: 17,886
Number of branches and other business locations:
In Japan:
Branches:
1,489*
473
(Including 38 specialized deposit account branches)
Subbranches:
Agency:
Offices handling
non-banking business:
Automated service centers:
Overseas:
Branches:
Subbranches:
Representative offices:
157
1
20
838
40 locations
19
6
15
* The number of domestic branches excludes ATMs located in
retail convenience stores.
Moody’s
Standard & Poor’s
Fitch Ratings
R&I
JCR
Long-term
Aa2
A+
A+
A+
AA −
Short-term
P−1
A−1
F1
a −1
J −1+
Financial Information (Consolidated basis, years ended March 31)
Billions of yen
2008
2007
2006
2005
For the Year:
Ordinary income ¥ 3,411.0 ¥ 2,925.6 ¥ 2,750.2 ¥ 2,691.3
Ordinary income (loss)
716.6
734.9
862.0
(99.7)
Net income (loss)
351.8
401.7
563.5
(278.9)
At Year-End:
Net assets
Total assets
¥ 5,080.7 ¥ 5,412.4 ¥ 3,598.2 ¥ 2,633.9
108,637.7
98,570.6 104,418.5
97,478.3
www.smbc-card.com
tribute to the realization of comfortable and
affluent consumer lifestyles and make further
dramatic advances as a leading brand in its
industry sector.
Company Name: Sumitomo Mitsui Card Company,
JCR
Long-term
A+
Short-term
J −1+
Credit Ratings (as of July 31, 2007)
Limited
Business Profile: Credit card services
Establishment: December 26, 1967
Head Office:
Tokyo Head Office: 1-2-20, Kaigan, Minato-ku, Tokyo
Osaka Head Office: 4-5-15, Imabashi, Chuo-ku, Osaka
President & CEO: Koichi Tsukihara
Number of Employees: 1,989
Financial Information (Years ended March 31)
Billions of yen
2008
2007
2006
2005
For the Year:
Revenue from
credit card operations ¥5,375.2 ¥4,753.8 ¥4,181.3 ¥3,598.7
Operating revenue
132.1
148.2
157.6
168.4
Operating profit
16.9
14.1
25.8
23.1
At Year-End:
Number of cardholders
(in thousands)
1,640.6 1,495.1
1,406.7 1,346.2
Sumitomo Mitsui Finance and Leasing (SMFL)
was created from the merger of SMBC Leasing
Company, Limited, and Sumisho Lease Co.,
Ltd., in October 2007. SMFL aims to become
the top leasing company in Japan in terms of
both quantity and quality by combining (a) the
customer base and know-how of SMBC Leas-
ing, as a bank-affiliated leasing company that
can draw on the financial solutions offered by
other subsidiaries of SMFG, and (b) the cus-
tomer base and know-how of Sumisho Lease,
as an affiliate of the Sumitomo Corporation
Group, one of Japan’s leading trading houses,
which has business relationships along the
value chains in a wide range of industries.
SMFL aims to draw on the strengths of the
differing business styles and rich experience of
its two predecessor companies to anticipate
emerging opportunities and offer high-value-
added services that “go beyond leasing” to
meet increasingly diverse customer needs, and
contribute to society by conducting high-quality
leasing activities as one of the leading compa-
nies in its industry.
Company Name: Sumitomo Mitsui Finance and
Leasing Co., Ltd.
Business Profile: Leasing
Establishment: February 4, 1963
Head Office:
Tokyo Head Office: 3-9-4 Nishi-Shimbashi, Minato-ku, Tokyo
Osaka Head Office: 3-10-19, Minami-Semba, Chuo-ku, Osaka
President & CEO: Koji Ishida
Number of Employees: 1,504
The Japan Research Institute, Limited (JRI), is a
“knowledge engineering” company that offers
high-value-added services by effectively com-
bining its capabilities in three fields: namely,
information systems integration, consulting, and
think-tank services. JRI offers consulting ser-
vices—principally focused on management
innovation and IT-related issues, planning and
implementation services for strategic informa-
tion systems, and outsourcing services—for
customers in financial services and a range of
other industrial sectors. In addition, JRI’s wide-
ranging activities cover the issuance of a range
of information, including research and analysis
of the Japanese and overseas economies, for-
mulation of policy recommendations, and
assistance in the incubation of new businesses.
In July 2006, JRI spun off part of its operations
to create JRI Solutions, Limited, with the objec-
tive of strengthening its provision of IT solutions
for corporate customers outside the Group.
Drawing on the rich base of know-how accumu-
lated in developing and operating systems for
the Group companies, JRI Solutions works to
offer the best IT solutions to a wider array of cus-
tomers in the general industrial, financial, and
public sectors.
Company Name: The Japan Research Institute, Limited
Business Profile: Systems engineering, data process-
ing, management consulting, think-
tank services
Establishment: November 1, 2002
Head Office:
Tokyo Head Office: 16 Ichibancho, Chiyoda-ku, Tokyo
Osaka Head Office: 1-5-8 Shinmachi, Nishi-ku, Osaka
President & CEO: Yasuyuki Kimoto
Number of Employees: 3,005 (Including employees of
JRI Solutions)
Credit Ratings (as of June 30, 2007)
R&I
JCR
Long-term
A+
AA −
Short-term
a −1
J −1+
Financial Information (Years ended March 31)
Billions of yen
2008*
2007*
2006*
2005*
For the Year:
Revenue from
leasing operations
¥1,040.5
¥583.6
503.4
¥615.5 ¥580.0
401.9
488.9
Operating revenue
708.4
Operating profit
36.2
630.0
379.9
31.5
24.7
619.7
375.1
32.2
21.4
589.1
356.1
28.0
18.2
* The upper row of figures for 2005, 2006, and 2007 are for SMBC
Leasing and the lower row of figures are for Sumisho Lease.
www.jri.co.jp
Financial Information (Years ended March 31)
Billions of yen
2008*
2007*
2006
2005
For the Year:
Operating revenue
Operating profit
¥122.4 ¥111.8
6.1
5.7
¥115.8 ¥111.2
6.3
5.2
* Figures for fiscal 2007 and 2008 include JRI Solutions, which was
spun off as a separate company in July 2006.
SMBC friend securities co., ltd.
www.smbc-friend.co.jp
Providing a full range of securities services,
focused mainly on retail customers, SMBC
Friend Securities has one of the strongest finan-
cial positions among Japanese securities
companies and boasts highly efficient opera-
tions with a nationwide network of 70 offices.
SMBC Friend Securities offers services closely
tailored to the needs of its customers and the
communities it serves. SMBC Friend Securities
became a wholly owned subsidiary of SMFG
through a share transfer in September 2006,
and is developing business operations jointly
with SMBC and other Group members by
strengthening its ties with these companies.
Going forward, SMBC Friend Securities is
aiming to be “a leading Japanese securities
company serving the retail market”, and, by offer-
ing high-quality products and services matching
the needs of its customers, will continue to build
strong bonds of trust with its customers.
Company Name: SMBC Friend Securities Co., Ltd.
Business Profile: Securities services
Establishment: March 2, 1948
Head Office: 7-12, Kabuto-cho, Nihonbashi, Chuo-ku,
Tokyo
President & CEO: Katsuhiko Tamaki
Number of Employees: 1,989
Financial Information (Years ended March 31)
Billions of yen
2008
2007
2006
2005
For the Year:
Operating revenue
Operating profit
¥60.5
19.0
¥58.7
21.2
¥68.5
31.0
¥52.3
18.0
20
SMFG 2008
SMFG 2008 21
www.smfg.co.jp
www.smfl.co.jp
Group Companies (as of March 31, 2008)
The companies of the Sumitomo Mitsui Financial Group (SMFG) offer
a diverse range of financial services, centered on banking opera-
tions, and including credit card services, leasing, information
services, and securities.
Company Name:
Business Description:
Our Mission
● To provide optimum added value to our customers and
together with them achieve growth
● To create sustainable shareholder value through busi-
ness growth
● To provide a challenging and professionally rewarding
work environment for our dedicated employees
Sumitomo Mitsui Financial Group, Inc.
Management of banking subsidiaries (under the
stipulations of Japan’s Banking Law) and of non-
bank subsidiaries as well as performance of ancil-
lary functions
December 2, 2002
1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo, Japan
Establishment:
Head Office:
Chairman of the Board: Masayuki Oku (Concurrent President at Sumitomo
President:
Capital:
Stock Exchange Listings: Tokyo Stock Exchange (First Section)
Mitsui Banking Corporation)
Teisuke Kitayama (Concurrent Chairman of the
Board of Directors at Sumitomo Mitsui Banking
Corporation)
¥1,420.9 billion
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
SUMITOMO MITSUI Banking Corporation
www.smbc.co.jp
Sumitomo Mitsui Banking Corporation (SMBC)
was established in April 2001 through the
merger of two leading banks: The Sakura Bank,
Limited, and The Sumitomo Bank, Limited.
Sumitomo Mitsui Financial Group, Inc., was
established through a stock transfer as a hold-
ing company, and SMBC became a wholly
owned subsidiary of SMFG. SMBC’s competi-
tive advantages include a strong customer
base, the quick implementation of strategies,
and an extensive lineup of financial products
and services that leverage the expertise of
strategic Group companies in specialized
areas. SMBC, as a core member of SMFG,
works together with other members of the
Group to offer customers highly sophisticated,
comprehensive financial services.
As the pioneer in the issuance of the VISA Card
in Japan and a leader in the domestic credit
card industry, Sumitomo Mitsui Card Company,
Limited, enjoys the strong support of its many
customers and plays a major role as one of the
strategic businesses of SMFG.
Leveraging its strong brand image and its
excellent capabilities across a wide range of
card-related services, the company provides
settlement and financing services focused
around providing credit services that meet cus-
tomer needs. Through its credit card business
operations, the company aims to actively con-
Company Name: Sumitomo Mitsui Banking Corporation
Business Profile: Banking
Establishment: June 6, 1996
Head Office: 1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo, Japan
Credit Ratings (as of June 30, 2008)
President & CEO: Masayuki Oku
Number of Employees: 17,886
Number of branches and other business locations:
In Japan:
Branches:
1,489*
473
(Including 38 specialized deposit account branches)
Subbranches:
Agency:
Offices handling
non-banking business:
Automated service centers:
Overseas:
Branches:
Subbranches:
Representative offices:
157
1
20
838
40 locations
19
6
15
* The number of domestic branches excludes ATMs located in
retail convenience stores.
Moody’s
Standard & Poor’s
Fitch Ratings
R&I
JCR
Long-term
Aa2
A+
A+
A+
AA −
Short-term
P−1
A−1
F1
a −1
J −1+
Financial Information (Consolidated basis, years ended March 31)
Billions of yen
2008
2007
2006
2005
For the Year:
Ordinary income ¥ 3,411.0 ¥ 2,925.6 ¥ 2,750.2 ¥ 2,691.3
Ordinary income (loss)
716.6
734.9
862.0
(99.7)
Net income (loss)
351.8
401.7
563.5
(278.9)
At Year-End:
Net assets
Total assets
¥ 5,080.7 ¥ 5,412.4 ¥ 3,598.2 ¥ 2,633.9
108,637.7
98,570.6 104,418.5
97,478.3
www.smbc-card.com
tribute to the realization of comfortable and
affluent consumer lifestyles and make further
dramatic advances as a leading brand in its
industry sector.
Company Name: Sumitomo Mitsui Card Company,
JCR
Long-term
A+
Short-term
J −1+
Credit Ratings (as of July 31, 2007)
Limited
Business Profile: Credit card services
Establishment: December 26, 1967
Head Office:
Tokyo Head Office: 1-2-20, Kaigan, Minato-ku, Tokyo
Osaka Head Office: 4-5-15, Imabashi, Chuo-ku, Osaka
President & CEO: Koichi Tsukihara
Number of Employees: 1,989
Financial Information (Years ended March 31)
Billions of yen
2008
2007
2006
2005
For the Year:
Revenue from
credit card operations ¥5,375.2 ¥4,753.8 ¥4,181.3 ¥3,598.7
Operating revenue
132.1
148.2
157.6
168.4
Operating profit
16.9
14.1
25.8
23.1
At Year-End:
Number of cardholders
(in thousands)
1,640.6 1,495.1
1,406.7 1,346.2
Sumitomo Mitsui Finance and Leasing (SMFL)
was created from the merger of SMBC Leasing
Company, Limited, and Sumisho Lease Co.,
Ltd., in October 2007. SMFL aims to become
the top leasing company in Japan in terms of
both quantity and quality by combining (a) the
customer base and know-how of SMBC Leas-
ing, as a bank-affiliated leasing company that
can draw on the financial solutions offered by
other subsidiaries of SMFG, and (b) the cus-
tomer base and know-how of Sumisho Lease,
as an affiliate of the Sumitomo Corporation
Group, one of Japan’s leading trading houses,
which has business relationships along the
value chains in a wide range of industries.
SMFL aims to draw on the strengths of the
differing business styles and rich experience of
its two predecessor companies to anticipate
emerging opportunities and offer high-value-
added services that “go beyond leasing” to
meet increasingly diverse customer needs, and
contribute to society by conducting high-quality
leasing activities as one of the leading compa-
nies in its industry.
Company Name: Sumitomo Mitsui Finance and
Leasing Co., Ltd.
Business Profile: Leasing
Establishment: February 4, 1963
Head Office:
Tokyo Head Office: 3-9-4 Nishi-Shimbashi, Minato-ku, Tokyo
Osaka Head Office: 3-10-19, Minami-Semba, Chuo-ku, Osaka
President & CEO: Koji Ishida
Number of Employees: 1,504
The Japan Research Institute, Limited (JRI), is a
“knowledge engineering” company that offers
high-value-added services by effectively com-
bining its capabilities in three fields: namely,
information systems integration, consulting, and
think-tank services. JRI offers consulting ser-
vices—principally focused on management
innovation and IT-related issues, planning and
implementation services for strategic informa-
tion systems, and outsourcing services—for
customers in financial services and a range of
other industrial sectors. In addition, JRI’s wide-
ranging activities cover the issuance of a range
of information, including research and analysis
of the Japanese and overseas economies, for-
mulation of policy recommendations, and
assistance in the incubation of new businesses.
In July 2006, JRI spun off part of its operations
to create JRI Solutions, Limited, with the objec-
tive of strengthening its provision of IT solutions
for corporate customers outside the Group.
Drawing on the rich base of know-how accumu-
lated in developing and operating systems for
the Group companies, JRI Solutions works to
offer the best IT solutions to a wider array of cus-
tomers in the general industrial, financial, and
public sectors.
Company Name: The Japan Research Institute, Limited
Business Profile: Systems engineering, data process-
ing, management consulting, think-
tank services
Establishment: November 1, 2002
Head Office:
Tokyo Head Office: 16 Ichibancho, Chiyoda-ku, Tokyo
Osaka Head Office: 1-5-8 Shinmachi, Nishi-ku, Osaka
President & CEO: Yasuyuki Kimoto
Number of Employees: 3,005 (Including employees of
JRI Solutions)
Credit Ratings (as of June 30, 2007)
R&I
JCR
Long-term
A+
AA −
Short-term
a −1
J −1+
Financial Information (Years ended March 31)
Billions of yen
2008*
2007*
2006*
2005*
For the Year:
Revenue from
leasing operations
¥1,040.5
¥583.6
503.4
¥615.5 ¥580.0
401.9
488.9
Operating revenue
708.4
Operating profit
36.2
630.0
379.9
31.5
24.7
619.7
375.1
32.2
21.4
589.1
356.1
28.0
18.2
* The upper row of figures for 2005, 2006, and 2007 are for SMBC
Leasing and the lower row of figures are for Sumisho Lease.
www.jri.co.jp
Financial Information (Years ended March 31)
Billions of yen
2008*
2007*
2006
2005
For the Year:
Operating revenue
Operating profit
¥122.4 ¥111.8
6.1
5.7
¥115.8 ¥111.2
6.3
5.2
* Figures for fiscal 2007 and 2008 include JRI Solutions, which was
spun off as a separate company in July 2006.
SMBC friend securities co., ltd.
www.smbc-friend.co.jp
Providing a full range of securities services,
focused mainly on retail customers, SMBC
Friend Securities has one of the strongest finan-
cial positions among Japanese securities
companies and boasts highly efficient opera-
tions with a nationwide network of 70 offices.
SMBC Friend Securities offers services closely
tailored to the needs of its customers and the
communities it serves. SMBC Friend Securities
became a wholly owned subsidiary of SMFG
through a share transfer in September 2006,
and is developing business operations jointly
with SMBC and other Group members by
strengthening its ties with these companies.
Going forward, SMBC Friend Securities is
aiming to be “a leading Japanese securities
company serving the retail market”, and, by offer-
ing high-quality products and services matching
the needs of its customers, will continue to build
strong bonds of trust with its customers.
Company Name: SMBC Friend Securities Co., Ltd.
Business Profile: Securities services
Establishment: March 2, 1948
Head Office: 7-12, Kabuto-cho, Nihonbashi, Chuo-ku,
Tokyo
President & CEO: Katsuhiko Tamaki
Number of Employees: 1,989
Financial Information (Years ended March 31)
Billions of yen
2008
2007
2006
2005
For the Year:
Operating revenue
Operating profit
¥60.5
19.0
¥58.7
21.2
¥68.5
31.0
¥52.3
18.0
20
SMFG 2008
SMFG 2008 21
Financial Highlights
Sumitomo Mitsui Financial Group
◆ Consolidated
Year ended March 31
For the Year:
2008
2007
Total income .............................................................
Total expenses .........................................................
Net income (loss) ......................................................
¥ 4,739,040
3,810,084
461,536
At Year-End:
Total net assets ........................................................
Total assets ...............................................................
Risk-monitored loans ................................................
Reserve for possible loan losses ..............................
Net unrealized gains on other securities ...................
Number of employees ...............................................
¥ 5,224,076
111,955,918
1,092,661
894,702
745,420
46,429
Selected Ratios:
Capital ratio ...............................................................
Return on Equity .......................................................
Price Earnings Ratio .................................................
10.56%
13.23%
11.06x
Per Share (Yen):
¥ 3,947,786
3,140,996
441,351
¥ 5,331,279
100,858,309
1,067,386
889,093
1,825,168
41,428
11.31%
13.07%
18.74x
Millions of yen
2006
¥ 3,803,089
2,759,726
686,841
¥ 4,454,399
107,010,575
1,243,160
1,035,468
1,373,337
40,681
12.39%
33.15%
13.72x
2005
2004
¥ 3,589,871
3,698,406
(234,201)
¥ 2,775,728
99,731,858
2,227,445
1,273,560
696,339
40,683
9.94%
—%
—x
¥ 3,669,531
3,264,636
330,414
¥ 3,070,942
102,215,172
3,297,981
1,422,486
575,612
42,014
11.37%
31.68%
14.71x
◆ Nonconsolidated
Year ended March 31
For the Year:
2008
2007
Operating income .....................................................
Dividends on investments in subsidiaries and affiliates ....
Operating expenses ..................................................
Net income ................................................................
At Year-End:
Total net assets (A) ...................................................
Total assets (B) .........................................................
Total net assets to total assets (A) / (B) ....................
Capital stock..............................................................
Number of shares issued
¥ 111,637
89,693
6,246
82,975
¥ 2,968,749
4,021,217
73.83%
1,420,877
Preferred stock ..............................................
Common stock ..............................................
Number of employees ...............................................
120,101
7,733,653
136
¥ 376,479
366,680
3,641
363,535
¥ 2,997,898
3,959,444
75.72%
1,420,877
120,101
7,733,653
131
Selected Ratios:
Millions of yen
2006
¥ 55,482
46,432
3,196
73,408
¥ 3,935,426
4,166,332
94.46%
1,420,877
950,101
7,424,172
124
2005
2004
¥ 258,866
251,735
2,644
252,228
¥ 3,319,615
3,795,110
87.47%
1,352,651
1,057,188
6,273,792
115
¥ 55,515
47,332
3,044
50,505
¥ 3,172,721
3,403,007
93.23%
1,247,650
1,132,099
5,796,010
97
Net assets .................................................................
Net income (loss) ......................................................
Net income — diluted ...............................................
¥ 424,546.01
59,298.24
56,657.41
¥ 469,228.59
57,085.83
51,494.17
¥ 400,168.89
94,733.62
75,642.93
¥164,821.08
(44,388.07)
—
¥215,454.83
52,314.75
35,865.20
Return on Equity........................................................
Price Earnings Ratio..................................................
Dividend payout ratio ................................................
2.67%
71.82x
131.37%
13.71%
23.10x
15.31%
2.38%
190.16x
46.64%
15.47%
18.95x
7.81%
1.57%
207.86x
80.97%
Notes: 1. Net unrealized gains on other securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other securities.” In principle, the value of stocks is calculated using the
average market prices during the final month of the period. For further details, please refer to page 27.
2. The number of employees has been reported on the basis of full-time workers. The number of employees includes locally hired overseas staff members but excludes contract employees and temporary staff.
3. From the fiscal year ended March 31, 2007, SMFG has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Accounting Standards Board of Japan (ASBJ) Statement No. 5) and
“Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
4. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMFG has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
5. From the fiscal year ended March 31, 2007 (fiscal 2006), the consolidated capital ratio has been calculated according to the formula specified in Financial Services Agency (FSA) Notification No. 20 issued in
fiscal 2006, which is based on Article 52-25 of the Banking Law of Japan. The capital ratio of SMFG is calculated under Basel II. Please note that in fiscal 2005 and prior years, the capital ratio was calculated
according to the formula specified in the Ministry of Finance Notification No. 62 issued in fiscal 1998, which was based on Article 52-25 of the Banking Law of Japan.
Per Share (Yen):
Net assets..................................................................
Dividends:
Common stock.....................................................
Preferred stock (Type 1) ......................................
Preferred stock (Type 2) ......................................
Preferred stock (Type 3) ......................................
Preferred stock (1st series Type 4) .....................
Preferred stock (2nd series Type 4) ....................
Preferred stock (3rd series Type 4) .....................
Preferred stock (4th series Type 4) .....................
Preferred stock (5th series Type 4) .....................
Preferred stock (6th series Type 4) .....................
Preferred stock (7th series Type 4) .....................
Preferred stock (8th series Type 4) .....................
Preferred stock (9th series Type 4) .....................
Preferred stock (10th series Type 4) ...................
Preferred stock (11th series Type 4) ...................
Preferred stock (12th series Type 4) ...................
Preferred stock (13th series Type 4) ...................
Preferred stock (1st series Type 6) .....................
Net income ................................................................
Net income — diluted ................................................
¥339,454.71
¥342,382.75
¥330,206.27
¥257,487.78
¥232,550.74
12,000
—
—
—
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
/
88,500
9,134.13
9,133.76
7,000
—
—
—
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
/
88,500
46,326.41
41,973.46
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
/
88,500
6,836.35
6,737.46
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
67,500
728
38,302.88
25,178.44
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
67,500
/
3,704.49
3,690.72
Notes: 1. All SMFG employees are seconded from SMBC and other Group companies.
2. From the fiscal year ended March 31, 2007, in calculating total net assets and total assets, SMFG has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5)
and “Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
3. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMFG has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
22
SMFG 2008
SMFG 2008 23
Financial Highlights
Sumitomo Mitsui Financial Group
◆ Consolidated
Year ended March 31
For the Year:
2008
2007
Total income .............................................................
Total expenses .........................................................
Net income (loss) ......................................................
¥ 4,739,040
3,810,084
461,536
At Year-End:
Total net assets ........................................................
Total assets ...............................................................
Risk-monitored loans ................................................
Reserve for possible loan losses ..............................
Net unrealized gains on other securities ...................
Number of employees ...............................................
¥ 5,224,076
111,955,918
1,092,661
894,702
745,420
46,429
Selected Ratios:
Capital ratio ...............................................................
Return on Equity .......................................................
Price Earnings Ratio .................................................
10.56%
13.23%
11.06x
Per Share (Yen):
¥ 3,947,786
3,140,996
441,351
¥ 5,331,279
100,858,309
1,067,386
889,093
1,825,168
41,428
11.31%
13.07%
18.74x
Millions of yen
2006
¥ 3,803,089
2,759,726
686,841
¥ 4,454,399
107,010,575
1,243,160
1,035,468
1,373,337
40,681
12.39%
33.15%
13.72x
2005
2004
¥ 3,589,871
3,698,406
(234,201)
¥ 2,775,728
99,731,858
2,227,445
1,273,560
696,339
40,683
9.94%
—%
—x
¥ 3,669,531
3,264,636
330,414
¥ 3,070,942
102,215,172
3,297,981
1,422,486
575,612
42,014
11.37%
31.68%
14.71x
◆ Nonconsolidated
Year ended March 31
For the Year:
2008
2007
Operating income .....................................................
Dividends on investments in subsidiaries and affiliates ....
Operating expenses ..................................................
Net income ................................................................
At Year-End:
Total net assets (A) ...................................................
Total assets (B) .........................................................
Total net assets to total assets (A) / (B) ....................
Capital stock..............................................................
Number of shares issued
¥ 111,637
89,693
6,246
82,975
¥ 2,968,749
4,021,217
73.83%
1,420,877
Preferred stock ..............................................
Common stock ..............................................
Number of employees ...............................................
120,101
7,733,653
136
¥ 376,479
366,680
3,641
363,535
¥ 2,997,898
3,959,444
75.72%
1,420,877
120,101
7,733,653
131
Selected Ratios:
Millions of yen
2006
¥ 55,482
46,432
3,196
73,408
¥ 3,935,426
4,166,332
94.46%
1,420,877
950,101
7,424,172
124
2005
2004
¥ 258,866
251,735
2,644
252,228
¥ 3,319,615
3,795,110
87.47%
1,352,651
1,057,188
6,273,792
115
¥ 55,515
47,332
3,044
50,505
¥ 3,172,721
3,403,007
93.23%
1,247,650
1,132,099
5,796,010
97
Net assets .................................................................
Net income (loss) ......................................................
Net income — diluted ...............................................
¥ 424,546.01
59,298.24
56,657.41
¥ 469,228.59
57,085.83
51,494.17
¥ 400,168.89
94,733.62
75,642.93
¥164,821.08
(44,388.07)
—
¥215,454.83
52,314.75
35,865.20
Return on Equity........................................................
Price Earnings Ratio..................................................
Dividend payout ratio ................................................
2.67%
71.82x
131.37%
13.71%
23.10x
15.31%
2.38%
190.16x
46.64%
15.47%
18.95x
7.81%
1.57%
207.86x
80.97%
Notes: 1. Net unrealized gains on other securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other securities.” In principle, the value of stocks is calculated using the
average market prices during the final month of the period. For further details, please refer to page 27.
2. The number of employees has been reported on the basis of full-time workers. The number of employees includes locally hired overseas staff members but excludes contract employees and temporary staff.
3. From the fiscal year ended March 31, 2007, SMFG has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Accounting Standards Board of Japan (ASBJ) Statement No. 5) and
“Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
4. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMFG has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
5. From the fiscal year ended March 31, 2007 (fiscal 2006), the consolidated capital ratio has been calculated according to the formula specified in Financial Services Agency (FSA) Notification No. 20 issued in
fiscal 2006, which is based on Article 52-25 of the Banking Law of Japan. The capital ratio of SMFG is calculated under Basel II. Please note that in fiscal 2005 and prior years, the capital ratio was calculated
according to the formula specified in the Ministry of Finance Notification No. 62 issued in fiscal 1998, which was based on Article 52-25 of the Banking Law of Japan.
Per Share (Yen):
Net assets..................................................................
Dividends:
Common stock.....................................................
Preferred stock (Type 1) ......................................
Preferred stock (Type 2) ......................................
Preferred stock (Type 3) ......................................
Preferred stock (1st series Type 4) .....................
Preferred stock (2nd series Type 4) ....................
Preferred stock (3rd series Type 4) .....................
Preferred stock (4th series Type 4) .....................
Preferred stock (5th series Type 4) .....................
Preferred stock (6th series Type 4) .....................
Preferred stock (7th series Type 4) .....................
Preferred stock (8th series Type 4) .....................
Preferred stock (9th series Type 4) .....................
Preferred stock (10th series Type 4) ...................
Preferred stock (11th series Type 4) ...................
Preferred stock (12th series Type 4) ...................
Preferred stock (13th series Type 4) ...................
Preferred stock (1st series Type 6) .....................
Net income ................................................................
Net income — diluted ................................................
¥339,454.71
¥342,382.75
¥330,206.27
¥257,487.78
¥232,550.74
12,000
—
—
—
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
/
88,500
9,134.13
9,133.76
7,000
—
—
—
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
/
88,500
46,326.41
41,973.46
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
/
88,500
6,836.35
6,737.46
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
67,500
728
38,302.88
25,178.44
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
67,500
/
3,704.49
3,690.72
Notes: 1. All SMFG employees are seconded from SMBC and other Group companies.
2. From the fiscal year ended March 31, 2007, in calculating total net assets and total assets, SMFG has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5)
and “Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
3. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMFG has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
22
SMFG 2008
SMFG 2008 23
Sumitomo Mitsui Banking Corporation
◆ Consolidated
Year ended March 31
For the Year:
2008
2007
Total income ..............................................................
Total expenses ..........................................................
Net income (loss) ......................................................
¥ 3,417,611
2,691,606
351,820
At Year-End:
Total net assets ........................................................
Total assets ..............................................................
Risk-monitored loans ................................................
Reserve for possible loan losses ..............................
Net unrealized gains on other securities ...................
Number of employees ...............................................
¥ 5,080,747
108,637,791
1,073,471
848,031
754,456
36,085
Selected Ratios:
¥ 2,971,693
2,220,971
401,795
¥ 5,412,458
98,570,638
1,047,566
860,799
1,852,971
31,718
Millions of yen
2006
¥ 2,789,433
1,903,374
563,584
¥ 3,598,294
104,418,597
1,219,383
1,006,223
1,337,192
32,918
2005
2004
¥ 2,699,202
2,875,897
(278,995)
¥ 2,633,912
97,478,308
2,186,739
1,239,882
678,527
32,868
¥ 2,843,502
2,487,197
301,664
¥ 2,722,161
99,843,258
3,229,219
1,375,921
568,407
33,895
Capital ratio ...............................................................
Return on Equity .......................................................
12.19%
9.56%
12.95%
12.95%
10.77%
30.15%
10.60%
—%
10.89%
25.38%
Per Share (Yen):
Net assets .................................................................
Net income (loss) ......................................................
Net income — diluted ......................................................
¥ 60,442.81
6,132.91
6,132.75
¥ 67,823.69
7,072.09
7,012.46
¥ 41,444.83
9,864.54
9,827.19
¥ 23,977.62
(5,300.46)
—
¥ 25,928.02
5,238.85
5,231.31
Notes: 1. Net unrealized gains on other securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other securities.” In principle, the value of stocks is calculated using the
average market prices during the final month of the period.
2. The number of employees has been reported on the basis of full-time workers. The number of employees includes locally hired overseas staff members but excludes contract employees and temporary staff.
3. From the fiscal year ended March 31, 2007, SMBC has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Accounting Standards Board of Japan (ASBJ) Statement No. 5) and
“Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
4. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMBC has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
5. From the fiscal year ended March 31, 2007 (fiscal 2006), the consolidated capital ratio has been calculated according to the formula specified in the Financial Services Agency (FSA) Notification No. 19 issued
in fiscal 2006, which is based on Article 14-2 of the Banking Law of Japan. The consolidated capital ratio of SMBC is calculated according to Basel II. Please note that in fiscal 2005 and prior years, the
capital ratio was calculated according to the formula specified in Ministry of Finance Notification No. 55 issued in fiscal 1993, which was based on Article 14-2 of the Banking Law of Japan.
◆ Nonconsolidated
Year ended March 31
For the Year:
Total income ..............................................................
Total expenses ..........................................................
Net income (loss) ......................................................
(Appendix)
Gross banking profit (A) ......................................
Banking profit ......................................................
Banking profit (before provision for general
reserve for possible loan losses) ....................
Expenses (excluding nonrecurring losses)(B) ....
At Year-End:
Total net assets .........................................................
Total assets ..............................................................
Deposits ....................................................................
Loans and bills discounted .......................................
Securities...................................................................
Risk-monitored loans ................................................
Problem assets based on the
Financial Reconstruction Law .................................
Reserve for possible loan losses ..............................
Net unrealized gains on other securities ...................
Trust assets and liabilities .........................................
Loans and bills discounted .................................
Securities.............................................................
Capital stock..............................................................
Number of shares issued (in thousands)
Preferred stock ..............................................
Common stock...............................................
Number of employees ...............................................
Selected Ratios:
Capital ratio ...............................................................
Return on Equity .......................................................
Dividend payout ratio ................................................
Overhead ratio (B) / (A) ............................................
Per Share (Yen):
Net assets .................................................................
Dividends:
Common stock.....................................................
Preferred stock (Type 1) .....................................
Preferred stock (Type 2) .....................................
Preferred stock (Type 3) .....................................
Preferred stock (1st series Type 6) .....................
Net income (loss) ......................................................
Net income — diluted ................................................
2008
2007
Millions of yen
2006
2005
2004
¥ 2,944,677
2,437,222
205,742
¥ 2,492,577
1,905,648
315,740
¥ 2,322,699
1,576,026
519,520
¥ 2,290,935
2,391,014
(136,854)
¥ 2,489,187
2,170,341
301,113
1,484,783
819,691
819,691
665,091
¥ 3,493,249
100,033,020
69,382,834
56,957,813
22,758,241
770,587
803,939
620,004
755,749
1,175,711
223,740
273,504
664,986
70
56,355
17,886
12.67%
5.64%
41.99%
44.8%
1,344,490
782,330
740,601
603,888
¥ 3,992,884
91,537,228
68,809,338
53,756,440
20,060,873
721,064
738,667
677,573
1,832,891
1,174,396
5,350
267,110
664,986
70
56,355
16,407
13.45%
10.13%
13.89%
44.9%
1,552,033
810,593
965,573
586,459
¥ 3,634,776
97,443,428
68,222,167
51,857,559
25,202,541
914,173
960,095
816,437
1,316,206
1,305,915
7,870
238,205
664,986
900
55,212
16,050
11.35%
26.57%
63.02%
37.8%
1,522,861
1,291,972
940,495
582,365
¥ 2,752,735
91,129,776
65,591,627
50,067,586
23,676,696
1,735,863
1,824,622
989,121
651,385
777,177
9,780
81,840
664,986
900
55,212
16,338
11.32%
—%
—%
38.2%
1,584,127
1,000,132
1,000,132
583,995
¥ 2,870,870
94,109,074
63,656,771
50,810,144
26,592,584
2,774,889
2,811,234
1,250,751
556,146
429,388
10,000
4,645
559,985
967
54,811
17,546
11.36%
22.49%
79.88%
36.9%
¥ 58,204.22
¥ 67,124.90
¥ 42,105.57
¥ 26,129.71
¥ 28,641.10
1,487
/
/
/
88,500
3,540.84
—
763
/
/
/
88,500
5,533.69
5,487.21
5,714
10,500
28,500
13,700
88,500
9,066.46
9,050.63
683
10,500
28,500
13,700
485
(2,718.23)
—
4,177
10,500
28,500
13,700
/
5,228.80
5,221.53
Notes: 1. For definitions of risk-monitored loans and problem assets based on the Financial Reconstruction Law, please refer to page 185.
2. Net unrealized gains on other securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other securities.” The value of stocks is calculated using the average
market prices during the final month of the period. For further details, please refer to page 32.
3. The number of employees has been reported on the basis of full-time workers. The number of employees includes locally hired overseas staff members but excludes contract employees, temporary staff, and
executive officers who are not also Board members.
4. From the fiscal year ended March 31, 2007, SMBC has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Accounting Standards Board of Japan (ASBJ) Statement No. 5) and
“Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
5. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMBC has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
6. From the fiscal year ended March 31, 2007 (fiscal 2006), the nonconsolidated capital ratio has been calculated according to the formula specified in the Financial Services Agency (FSA) Notification No. 19
issued in fiscal 2006, which is based on Article 14-2 of the Banking Law of Japan. The nonconsolidated capital ratio of SMBC is calculated according to Basel II. Please note that, in fiscal 2005 and prior years,
the capital ratio was calculated according to the formula specified in the Ministry of Finance Notification No. 55 issued in 1993, which was based on Article 14-2 of the Banking Law of Japan.
24
SMFG 2008
SMFG 2008 25
Sumitomo Mitsui Banking Corporation
◆ Consolidated
Year ended March 31
For the Year:
2008
2007
Total income ..............................................................
Total expenses ..........................................................
Net income (loss) ......................................................
¥ 3,417,611
2,691,606
351,820
At Year-End:
Total net assets ........................................................
Total assets ..............................................................
Risk-monitored loans ................................................
Reserve for possible loan losses ..............................
Net unrealized gains on other securities ...................
Number of employees ...............................................
¥ 5,080,747
108,637,791
1,073,471
848,031
754,456
36,085
Selected Ratios:
¥ 2,971,693
2,220,971
401,795
¥ 5,412,458
98,570,638
1,047,566
860,799
1,852,971
31,718
Millions of yen
2006
¥ 2,789,433
1,903,374
563,584
¥ 3,598,294
104,418,597
1,219,383
1,006,223
1,337,192
32,918
2005
2004
¥ 2,699,202
2,875,897
(278,995)
¥ 2,633,912
97,478,308
2,186,739
1,239,882
678,527
32,868
¥ 2,843,502
2,487,197
301,664
¥ 2,722,161
99,843,258
3,229,219
1,375,921
568,407
33,895
Capital ratio ...............................................................
Return on Equity .......................................................
12.19%
9.56%
12.95%
12.95%
10.77%
30.15%
10.60%
—%
10.89%
25.38%
Per Share (Yen):
Net assets .................................................................
Net income (loss) ......................................................
Net income — diluted ......................................................
¥ 60,442.81
6,132.91
6,132.75
¥ 67,823.69
7,072.09
7,012.46
¥ 41,444.83
9,864.54
9,827.19
¥ 23,977.62
(5,300.46)
—
¥ 25,928.02
5,238.85
5,231.31
Notes: 1. Net unrealized gains on other securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other securities.” In principle, the value of stocks is calculated using the
average market prices during the final month of the period.
2. The number of employees has been reported on the basis of full-time workers. The number of employees includes locally hired overseas staff members but excludes contract employees and temporary staff.
3. From the fiscal year ended March 31, 2007, SMBC has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Accounting Standards Board of Japan (ASBJ) Statement No. 5) and
“Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
4. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMBC has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
5. From the fiscal year ended March 31, 2007 (fiscal 2006), the consolidated capital ratio has been calculated according to the formula specified in the Financial Services Agency (FSA) Notification No. 19 issued
in fiscal 2006, which is based on Article 14-2 of the Banking Law of Japan. The consolidated capital ratio of SMBC is calculated according to Basel II. Please note that in fiscal 2005 and prior years, the
capital ratio was calculated according to the formula specified in Ministry of Finance Notification No. 55 issued in fiscal 1993, which was based on Article 14-2 of the Banking Law of Japan.
◆ Nonconsolidated
Year ended March 31
For the Year:
Total income ..............................................................
Total expenses ..........................................................
Net income (loss) ......................................................
(Appendix)
Gross banking profit (A) ......................................
Banking profit ......................................................
Banking profit (before provision for general
reserve for possible loan losses) ....................
Expenses (excluding nonrecurring losses)(B) ....
At Year-End:
Total net assets .........................................................
Total assets ..............................................................
Deposits ....................................................................
Loans and bills discounted .......................................
Securities...................................................................
Risk-monitored loans ................................................
Problem assets based on the
Financial Reconstruction Law .................................
Reserve for possible loan losses ..............................
Net unrealized gains on other securities ...................
Trust assets and liabilities .........................................
Loans and bills discounted .................................
Securities.............................................................
Capital stock..............................................................
Number of shares issued (in thousands)
Preferred stock ..............................................
Common stock...............................................
Number of employees ...............................................
Selected Ratios:
Capital ratio ...............................................................
Return on Equity .......................................................
Dividend payout ratio ................................................
Overhead ratio (B) / (A) ............................................
Per Share (Yen):
Net assets .................................................................
Dividends:
Common stock.....................................................
Preferred stock (Type 1) .....................................
Preferred stock (Type 2) .....................................
Preferred stock (Type 3) .....................................
Preferred stock (1st series Type 6) .....................
Net income (loss) ......................................................
Net income — diluted ................................................
2008
2007
Millions of yen
2006
2005
2004
¥ 2,944,677
2,437,222
205,742
¥ 2,492,577
1,905,648
315,740
¥ 2,322,699
1,576,026
519,520
¥ 2,290,935
2,391,014
(136,854)
¥ 2,489,187
2,170,341
301,113
1,484,783
819,691
819,691
665,091
¥ 3,493,249
100,033,020
69,382,834
56,957,813
22,758,241
770,587
803,939
620,004
755,749
1,175,711
223,740
273,504
664,986
70
56,355
17,886
12.67%
5.64%
41.99%
44.8%
1,344,490
782,330
740,601
603,888
¥ 3,992,884
91,537,228
68,809,338
53,756,440
20,060,873
721,064
738,667
677,573
1,832,891
1,174,396
5,350
267,110
664,986
70
56,355
16,407
13.45%
10.13%
13.89%
44.9%
1,552,033
810,593
965,573
586,459
¥ 3,634,776
97,443,428
68,222,167
51,857,559
25,202,541
914,173
960,095
816,437
1,316,206
1,305,915
7,870
238,205
664,986
900
55,212
16,050
11.35%
26.57%
63.02%
37.8%
1,522,861
1,291,972
940,495
582,365
¥ 2,752,735
91,129,776
65,591,627
50,067,586
23,676,696
1,735,863
1,824,622
989,121
651,385
777,177
9,780
81,840
664,986
900
55,212
16,338
11.32%
—%
—%
38.2%
1,584,127
1,000,132
1,000,132
583,995
¥ 2,870,870
94,109,074
63,656,771
50,810,144
26,592,584
2,774,889
2,811,234
1,250,751
556,146
429,388
10,000
4,645
559,985
967
54,811
17,546
11.36%
22.49%
79.88%
36.9%
¥ 58,204.22
¥ 67,124.90
¥ 42,105.57
¥ 26,129.71
¥ 28,641.10
1,487
/
/
/
88,500
3,540.84
—
763
/
/
/
88,500
5,533.69
5,487.21
5,714
10,500
28,500
13,700
88,500
9,066.46
9,050.63
683
10,500
28,500
13,700
485
(2,718.23)
—
4,177
10,500
28,500
13,700
/
5,228.80
5,221.53
Notes: 1. For definitions of risk-monitored loans and problem assets based on the Financial Reconstruction Law, please refer to page 185.
2. Net unrealized gains on other securities represent the difference between the market prices and acquisition costs (or amortized costs) of “other securities.” The value of stocks is calculated using the average
market prices during the final month of the period. For further details, please refer to page 32.
3. The number of employees has been reported on the basis of full-time workers. The number of employees includes locally hired overseas staff members but excludes contract employees, temporary staff, and
executive officers who are not also Board members.
4. From the fiscal year ended March 31, 2007, SMBC has applied “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Accounting Standards Board of Japan (ASBJ) Statement No. 5) and
“Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8).
5. The ASBJ has revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4). From the fiscal year ended March 31, 2007, SMBC has applied the revised Guidance and calculated
net assets per share by including net deferred gains (losses) on hedges.
6. From the fiscal year ended March 31, 2007 (fiscal 2006), the nonconsolidated capital ratio has been calculated according to the formula specified in the Financial Services Agency (FSA) Notification No. 19
issued in fiscal 2006, which is based on Article 14-2 of the Banking Law of Japan. The nonconsolidated capital ratio of SMBC is calculated according to Basel II. Please note that, in fiscal 2005 and prior years,
the capital ratio was calculated according to the formula specified in the Ministry of Finance Notification No. 55 issued in 1993, which was based on Article 14-2 of the Banking Law of Japan.
24
SMFG 2008
SMFG 2008 25
Financial Review
Sumitomo Mitsui Financial Group (Consolidated)
This section summarizes SMFG’s principal financial indicators
for the fiscal years ended March 31, 2008 and 2007, on a consolidated basis.
1. Operating Results
Operating results for fiscal 2007 include the results of 268 consoli-
contracted its holdings to reduce risk, during the fiscal year under
dated subsidiaries (158 in Japan and 110 overseas) and 74
review, SMBC managed its portfolio to take advantage of move-
subsidiaries and affiliates accounted for by the equity method (48
ments in interest rates in Japan and overseas and reported a
in Japan and 26 overseas).
major increase in net trading income. After taking account of
Gross profit increased ¥210.0 billion year on year, to ¥2,116.2
general and administrative expenses, credit cost, net gains on
billion. The principal reason for this increase was an improvement
stocks, equity in earnings (losses) of affiliates, and other items,
in net trading income. Although in the previous year SMBC
ordinary profit increased ¥32.5 billion, to ¥831.1 billion. Net
reported losses on the sale of bonds from its portfolio, as it
income—which is ordinary profit after taking account of extra-
◆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 ........................................................
2008 (A)
2007 (B)
268
74
181
62
◆Income Summary
Year ended March 31
Consolidated gross profit ...................................................................................................................
Net interest income ......................................................................................................................
Trust fees .....................................................................................................................................
Net fees and commissions ...........................................................................................................
Net trading income .......................................................................................................................
Net other operating income (expenses) .......................................................................................
General and administrative expenses ...............................................................................................
Credit cost (A) ....................................................................................................................................
Write-off of loans ..........................................................................................................................
Provision for specific reserve for possible loan losses .................................................................
Provision for general reserve for possible loan losses .................................................................
Others ..........................................................................................................................................
Net gains (losses) on stocks ..............................................................................................................
Equity in earnings (losses) of affiliates ...............................................................................................
Net other income (expenses) .............................................................................................................
Ordinary profit ....................................................................................................................................
Extraordinary gains (losses) ..............................................................................................................
Losses on impairment of fixed assets ..........................................................................................
Gains on collection of written-off claims (B) .................................................................................
Gains on return of securities from retirement benefits trust .........................................................
Gain due to change in equity ownership of affiliates ....................................................................
Income before income taxes and minority interests ...........................................................................
Income taxes:
Current .........................................................................................................................................
Deferred .......................................................................................................................................
Minority interests in net income .........................................................................................................
Net income .........................................................................................................................................
Total credit cost (A) + (B) ...................................................................................................................
[Reference]
Consolidated banking profit (Billions of yen) ......................................................................................
2008 (A)
¥2,116,248
1,210,383
3,752
611,993
469,571
(179,453)
(978,896)
(249,922)
(141,750)
(172,570)
99,350
(34,952)
(7,063)
(41,760)
(7,444)
831,160
97,795
(5,161)
1,355
—
103,133
928,955
(103,900)
(282,538)
(80,980)
¥ 461,536
¥ (248,566)
Millions of yen
2007 (B)
¥1,906,173
1,168,592
3,508
609,185
125,625
(738)
(888,561)
(146,186)
(81,415)
(77,446)
53,370
(40,695)
44,730
(104,170)
(13,374)
798,610
8,180
(30,548)
1,236
36,330
—
806,790
(87,818)
(218,770)
(58,850)
¥ 441,351
¥ (144,950)
Increase (decrease)
(A) – (B)
87
12
Increase (decrease)
(A) – (B)
¥ 210,075
41,791
244
2,808
343,946
(178,715)
(90,335)
(103,736)
(60,335)
(95,124)
45,980
5,743
(51,793)
62,410
5,930
32,550
89,615
25,387
119
(36,330)
103,133
122,165
(16,082)
(63,768)
(22,130)
¥ 20,185
¥(103,616)
¥ 1,022.9
¥ 924.2
¥
98.7
ordinary gains (losses), income taxes, and other items—rose
Meanwhile, loans and bills discounted rose ¥3,455.5 billion
¥20.1 billion, to ¥461.5 billion.
year on year, to ¥62,144.8 billion, and the balance of securities
In addition, deposits at the end of the fiscal year under review
increased ¥2,980.0 billion, to ¥23,517.5 billion.
rose ¥534.4 billion in comparison with March 31, 2007, to
Net assets amounted to ¥5,224.0 billion, and, of this total,
¥72,690.6 billion, and negotiable certificates of deposit increased
stockholders’ equity was ¥3,095.3 billion.
¥488.9 billion, to ¥3,078.1 billion.
◆Assets, Liabilities and Net Assets
March 31
Assets ................................................................................................................................................
Securities .....................................................................................................................................
Loans and bills discounted ..........................................................................................................
Liabilities ............................................................................................................................................
Deposits........................................................................................................................................
................................................................................................
Negotiable certificates of deposit
Net assets ..........................................................................................................................................
2008 (A)
¥111,955,918
23,517,501
62,144,874
106,731,842
72,690,624
3,078,149
5,224,076
Millions of yen
2007 (B)
¥100,858,309
20,537,500
58,689,322
95,527,029
72,156,224
2,589,217
5,331,279
Increase (decrease)
(A) – (B)
¥11,097,609
2,980,001
3,455,552
11,204,813
534,400
488,932
(107,203)
2. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2008,
other securities, including “other money held in trust”—which are
amounted to ¥762.1 billion, a decline of ¥1,050.2 billion from the
directly credited to net assets—declined ¥1,080.0 billion, to
end of the previous fiscal year, reflecting a decrease in the value
¥745.3 billion.
of equities and other factors. Of this total, net unrealized gains on
◆Unrealized Gains (Losses) on Securities
2008
Millions of yen
March 31
Net unrealized
gains (losses) (A)
Held-to-maturity securities .............................
Other securities .............................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
Other money held in trust ..............................
Total ...............................................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
¥ 16,755
745,420
936,228
(132,892)
(57,915)
(29)
762,146
936,228
(115,944)
(58,137)
(A) – (B)
¥ 29,820
(1,079,748)
(1,036,419)
24,475
(67,803)
(351)
(1,050,278)
(1,036,419)
54,669
(68,528)
Unrealized
gains
¥ 18,379
1,042,530
999,414
18,645
24,469
—
1,060,909
999,414
37,025
24,469
Unrealized
losses
Net unrealized
gains (losses) (B)
¥ 1,623
297,109
63,186
151,537
82,385
29
298,763
63,186
152,969
82,607
¥ (13,065)
1,825,168
1,972,647
(157,367)
9,888
322
1,812,424
1,972,647
(170,613)
10,391
2007
Unrealized
gains
¥ 200
2,032,120
1,987,337
1,805
42,977
322
2,032,643
1,987,337
1,825
43,480
Unrealized
losses
¥ 13,266
206,952
14,689
159,173
33,089
—
220,218
14,689
172,439
33,089
Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit bought in “Deposits with banks” and beneficiary certificates on loan trusts in “Commercial paper and other debt
purchased.”
2. Unrealized gains (losses) on stocks are mainly calculated using the average market price during the final month of the respective reporting period. The remainder of the securities are valued at the market price as
of the balance sheet date.
3. “Other securities” and “Other money held in trust” are valued and recorded on the consolidated balance sheet at market prices. The figures in the table above indicate the differences between the acquisition costs
(or amortized costs) and the balance sheet amounts.
Notes: 1. Consolidated gross profit = (Interest income – Interest expenses) + Trust fees + (Fees and commissions (income) – Fees and commissions (expenses)) + (Trading profits – Trading losses) + (Other operating
income – Other operating expenses)
2. Consolidated banking profit = SMBC’s nonconsolidated banking profit (before provision for general reserve for possible loan losses) + SMFG’s ordinary profit + Ordinary profit of other subsidiaries (excluding
nonrecurring factors) + (Ordinary profit of equity-method affiliates x Ownership ratio) – Internal transactions (dividends, etc.)
26
SMFG 2008
SMFG 2008 27
Financial Review
Sumitomo Mitsui Financial Group (Consolidated)
This section summarizes SMFG’s principal financial indicators
for the fiscal years ended March 31, 2008 and 2007, on a consolidated basis.
1. Operating Results
Operating results for fiscal 2007 include the results of 268 consoli-
contracted its holdings to reduce risk, during the fiscal year under
dated subsidiaries (158 in Japan and 110 overseas) and 74
review, SMBC managed its portfolio to take advantage of move-
subsidiaries and affiliates accounted for by the equity method (48
ments in interest rates in Japan and overseas and reported a
in Japan and 26 overseas).
major increase in net trading income. After taking account of
Gross profit increased ¥210.0 billion year on year, to ¥2,116.2
general and administrative expenses, credit cost, net gains on
billion. The principal reason for this increase was an improvement
stocks, equity in earnings (losses) of affiliates, and other items,
in net trading income. Although in the previous year SMBC
ordinary profit increased ¥32.5 billion, to ¥831.1 billion. Net
reported losses on the sale of bonds from its portfolio, as it
income—which is ordinary profit after taking account of extra-
◆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 ........................................................
2008 (A)
2007 (B)
268
74
181
62
◆Income Summary
Year ended March 31
Consolidated gross profit ...................................................................................................................
Net interest income ......................................................................................................................
Trust fees .....................................................................................................................................
Net fees and commissions ...........................................................................................................
Net trading income .......................................................................................................................
Net other operating income (expenses) .......................................................................................
General and administrative expenses ...............................................................................................
Credit cost (A) ....................................................................................................................................
Write-off of loans ..........................................................................................................................
Provision for specific reserve for possible loan losses .................................................................
Provision for general reserve for possible loan losses .................................................................
Others ..........................................................................................................................................
Net gains (losses) on stocks ..............................................................................................................
Equity in earnings (losses) of affiliates ...............................................................................................
Net other income (expenses) .............................................................................................................
Ordinary profit ....................................................................................................................................
Extraordinary gains (losses) ..............................................................................................................
Losses on impairment of fixed assets ..........................................................................................
Gains on collection of written-off claims (B) .................................................................................
Gains on return of securities from retirement benefits trust .........................................................
Gain due to change in equity ownership of affiliates ....................................................................
Income before income taxes and minority interests ...........................................................................
Income taxes:
Current .........................................................................................................................................
Deferred .......................................................................................................................................
Minority interests in net income .........................................................................................................
Net income .........................................................................................................................................
Total credit cost (A) + (B) ...................................................................................................................
[Reference]
Consolidated banking profit (Billions of yen) ......................................................................................
2008 (A)
¥2,116,248
1,210,383
3,752
611,993
469,571
(179,453)
(978,896)
(249,922)
(141,750)
(172,570)
99,350
(34,952)
(7,063)
(41,760)
(7,444)
831,160
97,795
(5,161)
1,355
—
103,133
928,955
(103,900)
(282,538)
(80,980)
¥ 461,536
¥ (248,566)
Millions of yen
2007 (B)
¥1,906,173
1,168,592
3,508
609,185
125,625
(738)
(888,561)
(146,186)
(81,415)
(77,446)
53,370
(40,695)
44,730
(104,170)
(13,374)
798,610
8,180
(30,548)
1,236
36,330
—
806,790
(87,818)
(218,770)
(58,850)
¥ 441,351
¥ (144,950)
Increase (decrease)
(A) – (B)
87
12
Increase (decrease)
(A) – (B)
¥ 210,075
41,791
244
2,808
343,946
(178,715)
(90,335)
(103,736)
(60,335)
(95,124)
45,980
5,743
(51,793)
62,410
5,930
32,550
89,615
25,387
119
(36,330)
103,133
122,165
(16,082)
(63,768)
(22,130)
¥ 20,185
¥(103,616)
¥ 1,022.9
¥ 924.2
¥
98.7
ordinary gains (losses), income taxes, and other items—rose
Meanwhile, loans and bills discounted rose ¥3,455.5 billion
¥20.1 billion, to ¥461.5 billion.
year on year, to ¥62,144.8 billion, and the balance of securities
In addition, deposits at the end of the fiscal year under review
increased ¥2,980.0 billion, to ¥23,517.5 billion.
rose ¥534.4 billion in comparison with March 31, 2007, to
Net assets amounted to ¥5,224.0 billion, and, of this total,
¥72,690.6 billion, and negotiable certificates of deposit increased
stockholders’ equity was ¥3,095.3 billion.
¥488.9 billion, to ¥3,078.1 billion.
◆Assets, Liabilities and Net Assets
March 31
Assets ................................................................................................................................................
Securities .....................................................................................................................................
Loans and bills discounted ..........................................................................................................
Liabilities ............................................................................................................................................
Deposits........................................................................................................................................
................................................................................................
Negotiable certificates of deposit
Net assets ..........................................................................................................................................
2008 (A)
¥111,955,918
23,517,501
62,144,874
106,731,842
72,690,624
3,078,149
5,224,076
Millions of yen
2007 (B)
¥100,858,309
20,537,500
58,689,322
95,527,029
72,156,224
2,589,217
5,331,279
Increase (decrease)
(A) – (B)
¥11,097,609
2,980,001
3,455,552
11,204,813
534,400
488,932
(107,203)
2. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2008,
other securities, including “other money held in trust”—which are
amounted to ¥762.1 billion, a decline of ¥1,050.2 billion from the
directly credited to net assets—declined ¥1,080.0 billion, to
end of the previous fiscal year, reflecting a decrease in the value
¥745.3 billion.
of equities and other factors. Of this total, net unrealized gains on
◆Unrealized Gains (Losses) on Securities
2008
Millions of yen
March 31
Net unrealized
gains (losses) (A)
Held-to-maturity securities .............................
Other securities .............................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
Other money held in trust ..............................
Total ...............................................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
¥ 16,755
745,420
936,228
(132,892)
(57,915)
(29)
762,146
936,228
(115,944)
(58,137)
(A) – (B)
¥ 29,820
(1,079,748)
(1,036,419)
24,475
(67,803)
(351)
(1,050,278)
(1,036,419)
54,669
(68,528)
Unrealized
gains
¥ 18,379
1,042,530
999,414
18,645
24,469
—
1,060,909
999,414
37,025
24,469
Unrealized
losses
Net unrealized
gains (losses) (B)
¥ 1,623
297,109
63,186
151,537
82,385
29
298,763
63,186
152,969
82,607
¥ (13,065)
1,825,168
1,972,647
(157,367)
9,888
322
1,812,424
1,972,647
(170,613)
10,391
2007
Unrealized
gains
¥ 200
2,032,120
1,987,337
1,805
42,977
322
2,032,643
1,987,337
1,825
43,480
Unrealized
losses
¥ 13,266
206,952
14,689
159,173
33,089
—
220,218
14,689
172,439
33,089
Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit bought in “Deposits with banks” and beneficiary certificates on loan trusts in “Commercial paper and other debt
purchased.”
2. Unrealized gains (losses) on stocks are mainly calculated using the average market price during the final month of the respective reporting period. The remainder of the securities are valued at the market price as
of the balance sheet date.
3. “Other securities” and “Other money held in trust” are valued and recorded on the consolidated balance sheet at market prices. The figures in the table above indicate the differences between the acquisition costs
(or amortized costs) and the balance sheet amounts.
Notes: 1. Consolidated gross profit = (Interest income – Interest expenses) + Trust fees + (Fees and commissions (income) – Fees and commissions (expenses)) + (Trading profits – Trading losses) + (Other operating
income – Other operating expenses)
2. Consolidated banking profit = SMBC’s nonconsolidated banking profit (before provision for general reserve for possible loan losses) + SMFG’s ordinary profit + Ordinary profit of other subsidiaries (excluding
nonrecurring factors) + (Ordinary profit of equity-method affiliates x Ownership ratio) – Internal transactions (dividends, etc.)
26
SMFG 2008
SMFG 2008 27
3. Consolidated Capital Ratio
SMFG’s consolidated capital ratio as of March 31, 2008, was
other securities, which is an item directly credited to net assets,
10.56%, which was 0.75 percentage point lower than at March 31,
declined because of the drop in stock market prices, thus con-
2007.
tributing to the overall decline in total capital.
Total capital, which is the numerator in the capital ratio calcula-
Risk-adjusted assets, the denominator in the equation,
tion equation, amounted to ¥6,665.5 billion at fiscal year-end,
amounted to ¥63,117.3 billion, which was ¥2,577.0 billion higher
which was ¥187.1 billion lower than at the end of the previous fis-
than at the end of the previous fiscal year, owing to an increase in
cal year. Although retained earnings increased for the fiscal year
lending overseas and the merger of leasing companies.
as a result of the reporting of net income, net unrealized gains on
◆Consolidated Capital Ratio
March 31
Tier I capital ........................................................................................................................................
Tier II capital included as qualifying capital ........................................................................................
Deductions .........................................................................................................................................
Total capital ........................................................................................................................................
Risk-adjusted assets ..........................................................................................................................
Consolidated capital ratio ...................................................................................................................
2008 (A)
¥ 4,381,464
3,021,872
(737,792)
6,665,543
63,117,349
10.56%
Millions of yen
2007 (B)
¥ 3,903,257
3,640,226
(690,759)
6,852,723
60,540,346
11.31%
Increase (decrease)
(A) – (B)
¥ 478,207
(618,354)
(47,033)
(187,180)
2,577,003
(0.75%)
4. Dividend Policy
In view of the public nature of its business, SMFG has set a funda-
dend of ¥12,000 per share of common stock for the fiscal year
mental policy of increasing dividends stably and continuously
ended March 31, 2008, a year-on-year increase of ¥5,000. Annual
through sustainable growth in corporate value, while enhancing
dividends on preferred stocks were paid in the predetermined
the Group’s capital to maintain a sound financial position. By the
amounts for each category of preferred stock.
fiscal year ending March 31, 2010, the final year of its “LEAD THE
SMFG will employ its retained earnings to implement strategic
VALUE” medium-term management plan, SMFG is aiming for a
initiatives that will increase its corporate value. These initiatives will
dividend payout ratio of over 20% on a consolidated net income
be centered, first, on strengthening its position in targeted growth
basis.
business areas, and, second, on fortifying the Group’s business
Based on this policy, SMFG decided to pay a term-end divi-
platform for supporting sustainable growth.
5. Deferred Tax Assets
SMFG has adopted a conservative stance regarding the recogni-
fiscal year and amounted to ¥933.4 billion. The principal cause of
tion of deferred tax assets in consideration of the need to secure a
this increase in net deferred tax assets was a decline in net unreal-
sound financial position. During the fiscal year under review, net
ized gains on other securities because of the drop in stock market
deferred tax assets, which are deferred tax assets minus deferred
prices, which reduced deferred tax liabilities.
tax liabilities, increased ¥97.2 billion from the end of the previous
◆Deferred Tax Assets
March 31
Net deferred tax assets ......................................................................................................................
Net deferred tax assets / Tier I capital × 100 .....................................................................................
2008 (A)
¥933,481
21.3%
Millions of yen
2007 (B)
¥836,270
21.4%
Increase (decrease)
(A) – (B)
¥ 97,211
(0.1%)
Sumitomo Mitsui Banking Corporation (Nonconsolidated)
This section summarizes SMFG’s principal financial indicators
for the fiscal years ended March 31, 2008 and 2007, on a nonconsolidated basis.
1. Operating Results
Gross banking profit in fiscal 2007 increased ¥140.2 billion from
fiscal year under review, SMBC managed its portfolio to take
the previous year, to ¥1,484.7 billion, and expenses (excluding
advantage of movements in interest rates in Japan and overseas
nonrecurring losses) rose ¥61.2 billion, to ¥665.0 billion. As a con-
and reported a major increase in net trading income.
sequence, banking profit (before provision for general reserve for
possible loan losses) expanded ¥79.0 billion, to ¥819.6 billion.
Expenses
Ordinary profit, calculated by adjusting banking profit (before
Expenses (excluding nonrecurring losses) increased ¥61.2 billion,
provision for general reserve for possible loan losses) for non-
to ¥665.0 billion. Although the bank continued to implement mea-
recurring items, such as total credit cost and gains on stocks,
sures to improve efficiency in existing business activities and
declined ¥62.5 billion, to ¥510.7 billion.
conducted other activities to reduce costs, the principal cause of
After adjusting ordinary profit for extraordinary gains (losses)
this increase in expenses was a higher level of expenditures to
and income taxes, net income amounted to ¥205.7 billion, repre-
increase human resources in strategic businesses and overseas
senting a decline of ¥109.9 billion from the previous fiscal year.
offices as well as expenses used for increasing business promo-
2. Income Analysis
Gross Banking Profit
tion, developing new products, and other activities directed at
business expansion.
Gross banking profit increased ¥140.2 billion over the previous fis-
Banking Profit
cal year, to ¥1,484.7 billion. The principal reason for this increase
Banking profit (before provision for general reserve for possible
was an improvement in net trading income. Although in the previ-
loan losses) increased ¥79.0 billion from the previous fiscal year, to
ous year SMBC reported losses on the sale of bonds from its
¥819.6 billion.
portfolio, as it contracted its holdings to reduce risk, during the
◆Banking Profit
Year ended March 31
Gross banking profit ...........................................................................................................................
[Gross domestic banking profit] ...................................................................................................
[Gross international banking profit] ..............................................................................................
Net interest income ......................................................................................................................
Trust fees......................................................................................................................................
Net fees and commissions............................................................................................................
Net trading income .......................................................................................................................
Net other operating income (expenses) .......................................................................................
[Gross banking profit (excluding gains (losses) on bonds)] .........................................................
Expenses (excluding nonrecurring losses) ........................................................................................
Personnel expenses .....................................................................................................................
Nonpersonnel expenses...............................................................................................................
Taxes ............................................................................................................................................
Banking profit (before provision for general reserve for possible loan losses) ..................................
[Banking profit (before provision for general reserve for
2008 (A)
¥ 1,484,783
1,198,285
286,497
970,818
3,710
332,362
440,985
(263,093)
[1,514,841]
(665,091)
(211,681)
(413,317)
(40,092)
819,691
possible loan losses and gains (losses) on bonds)] ...................................................................
Provision for general reserve for possible loan losses .......................................................................
Banking profit .....................................................................................................................................
[849,750]
—
819,691
Millions of yen
2007 (B)
¥ 1,344,490
[1,149,941]
[194,548]
937,452
3,482
353,416
101,620
(51,482)
[1,456,903]
(603,888)
(190,630)
(378,240)
(35,017)
740,601
[853,015]
41,728
782,330
Increase (decrease)
(A) – (B)
¥ 140,293
48,344
91,949
33,366
228
(21,054)
339,365
(211,611)
[57,938]
(61,203)
(21,051)
(35,077)
(5,075)
79,090
[(3,265)]
(41,728)
37,361
For reference:
◆Banking Profit by Business Unit
Year ended March 31, 2008
Banking profit (before provision for
Consumer
Banking Unit
Middle Market
Banking Unit
Corporate
Banking Unit
International
Banking Unit
Treasury
Unit
Others
Total
Billions of yen
general reserve for possible loan losses) .....
Year-on-year increase (decrease) .................
¥169.3
+7.8
¥421.2
+1.1
¥155.6
(2.7)
¥81.5
+6.8
¥127.8
+93.8
¥(135.7)
(27.7)
¥819.6
+79.1
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” includes (1) financing costs on preferred securities and subordinated debt, (2) profit earned on investing the bank’s own capital, and (3) adjustment of inter-unit transactions.
28
SMFG 2008
SMFG 2008 29
3. Consolidated Capital Ratio
SMFG’s consolidated capital ratio as of March 31, 2008, was
other securities, which is an item directly credited to net assets,
10.56%, which was 0.75 percentage point lower than at March 31,
declined because of the drop in stock market prices, thus con-
2007.
tributing to the overall decline in total capital.
Total capital, which is the numerator in the capital ratio calcula-
Risk-adjusted assets, the denominator in the equation,
tion equation, amounted to ¥6,665.5 billion at fiscal year-end,
amounted to ¥63,117.3 billion, which was ¥2,577.0 billion higher
which was ¥187.1 billion lower than at the end of the previous fis-
than at the end of the previous fiscal year, owing to an increase in
cal year. Although retained earnings increased for the fiscal year
lending overseas and the merger of leasing companies.
as a result of the reporting of net income, net unrealized gains on
◆Consolidated Capital Ratio
March 31
Tier I capital ........................................................................................................................................
Tier II capital included as qualifying capital ........................................................................................
Deductions .........................................................................................................................................
Total capital ........................................................................................................................................
Risk-adjusted assets ..........................................................................................................................
Consolidated capital ratio ...................................................................................................................
2008 (A)
¥ 4,381,464
3,021,872
(737,792)
6,665,543
63,117,349
10.56%
Millions of yen
2007 (B)
¥ 3,903,257
3,640,226
(690,759)
6,852,723
60,540,346
11.31%
Increase (decrease)
(A) – (B)
¥ 478,207
(618,354)
(47,033)
(187,180)
2,577,003
(0.75%)
4. Dividend Policy
In view of the public nature of its business, SMFG has set a funda-
dend of ¥12,000 per share of common stock for the fiscal year
mental policy of increasing dividends stably and continuously
ended March 31, 2008, a year-on-year increase of ¥5,000. Annual
through sustainable growth in corporate value, while enhancing
dividends on preferred stocks were paid in the predetermined
the Group’s capital to maintain a sound financial position. By the
amounts for each category of preferred stock.
fiscal year ending March 31, 2010, the final year of its “LEAD THE
SMFG will employ its retained earnings to implement strategic
VALUE” medium-term management plan, SMFG is aiming for a
initiatives that will increase its corporate value. These initiatives will
dividend payout ratio of over 20% on a consolidated net income
be centered, first, on strengthening its position in targeted growth
basis.
business areas, and, second, on fortifying the Group’s business
Based on this policy, SMFG decided to pay a term-end divi-
platform for supporting sustainable growth.
5. Deferred Tax Assets
SMFG has adopted a conservative stance regarding the recogni-
fiscal year and amounted to ¥933.4 billion. The principal cause of
tion of deferred tax assets in consideration of the need to secure a
this increase in net deferred tax assets was a decline in net unreal-
sound financial position. During the fiscal year under review, net
ized gains on other securities because of the drop in stock market
deferred tax assets, which are deferred tax assets minus deferred
prices, which reduced deferred tax liabilities.
tax liabilities, increased ¥97.2 billion from the end of the previous
◆Deferred Tax Assets
March 31
Net deferred tax assets ......................................................................................................................
Net deferred tax assets / Tier I capital × 100 .....................................................................................
2008 (A)
¥933,481
21.3%
Millions of yen
2007 (B)
¥836,270
21.4%
Increase (decrease)
(A) – (B)
¥ 97,211
(0.1%)
Sumitomo Mitsui Banking Corporation (Nonconsolidated)
This section summarizes SMFG’s principal financial indicators
for the fiscal years ended March 31, 2008 and 2007, on a nonconsolidated basis.
1. Operating Results
Gross banking profit in fiscal 2007 increased ¥140.2 billion from
fiscal year under review, SMBC managed its portfolio to take
the previous year, to ¥1,484.7 billion, and expenses (excluding
advantage of movements in interest rates in Japan and overseas
nonrecurring losses) rose ¥61.2 billion, to ¥665.0 billion. As a con-
and reported a major increase in net trading income.
sequence, banking profit (before provision for general reserve for
possible loan losses) expanded ¥79.0 billion, to ¥819.6 billion.
Expenses
Ordinary profit, calculated by adjusting banking profit (before
Expenses (excluding nonrecurring losses) increased ¥61.2 billion,
provision for general reserve for possible loan losses) for non-
to ¥665.0 billion. Although the bank continued to implement mea-
recurring items, such as total credit cost and gains on stocks,
sures to improve efficiency in existing business activities and
declined ¥62.5 billion, to ¥510.7 billion.
conducted other activities to reduce costs, the principal cause of
After adjusting ordinary profit for extraordinary gains (losses)
this increase in expenses was a higher level of expenditures to
and income taxes, net income amounted to ¥205.7 billion, repre-
increase human resources in strategic businesses and overseas
senting a decline of ¥109.9 billion from the previous fiscal year.
offices as well as expenses used for increasing business promo-
2. Income Analysis
Gross Banking Profit
tion, developing new products, and other activities directed at
business expansion.
Gross banking profit increased ¥140.2 billion over the previous fis-
Banking Profit
cal year, to ¥1,484.7 billion. The principal reason for this increase
Banking profit (before provision for general reserve for possible
was an improvement in net trading income. Although in the previ-
loan losses) increased ¥79.0 billion from the previous fiscal year, to
ous year SMBC reported losses on the sale of bonds from its
¥819.6 billion.
portfolio, as it contracted its holdings to reduce risk, during the
◆Banking Profit
Year ended March 31
Gross banking profit ...........................................................................................................................
[Gross domestic banking profit] ...................................................................................................
[Gross international banking profit] ..............................................................................................
Net interest income ......................................................................................................................
Trust fees......................................................................................................................................
Net fees and commissions............................................................................................................
Net trading income .......................................................................................................................
Net other operating income (expenses) .......................................................................................
[Gross banking profit (excluding gains (losses) on bonds)] .........................................................
Expenses (excluding nonrecurring losses) ........................................................................................
Personnel expenses .....................................................................................................................
Nonpersonnel expenses...............................................................................................................
Taxes ............................................................................................................................................
Banking profit (before provision for general reserve for possible loan losses) ..................................
[Banking profit (before provision for general reserve for
2008 (A)
¥ 1,484,783
1,198,285
286,497
970,818
3,710
332,362
440,985
(263,093)
[1,514,841]
(665,091)
(211,681)
(413,317)
(40,092)
819,691
possible loan losses and gains (losses) on bonds)] ...................................................................
Provision for general reserve for possible loan losses .......................................................................
Banking profit .....................................................................................................................................
[849,750]
—
819,691
Millions of yen
2007 (B)
¥ 1,344,490
[1,149,941]
[194,548]
937,452
3,482
353,416
101,620
(51,482)
[1,456,903]
(603,888)
(190,630)
(378,240)
(35,017)
740,601
[853,015]
41,728
782,330
Increase (decrease)
(A) – (B)
¥ 140,293
48,344
91,949
33,366
228
(21,054)
339,365
(211,611)
[57,938]
(61,203)
(21,051)
(35,077)
(5,075)
79,090
[(3,265)]
(41,728)
37,361
For reference:
◆Banking Profit by Business Unit
Year ended March 31, 2008
Banking profit (before provision for
Consumer
Banking Unit
Middle Market
Banking Unit
Corporate
Banking Unit
International
Banking Unit
Treasury
Unit
Others
Total
Billions of yen
general reserve for possible loan losses) .....
Year-on-year increase (decrease) .................
¥169.3
+7.8
¥421.2
+1.1
¥155.6
(2.7)
¥81.5
+6.8
¥127.8
+93.8
¥(135.7)
(27.7)
¥819.6
+79.1
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” includes (1) financing costs on preferred securities and subordinated debt, (2) profit earned on investing the bank’s own capital, and (3) adjustment of inter-unit transactions.
28
SMFG 2008
SMFG 2008 29
Nonrecurring Gains (Losses) (Credit Cost, etc.)
Ordinary Profit
Nonrecurring losses amounted to ¥308.9 billion, which was ¥99.9
As a result of the foregoing, ordinary profit totaled ¥510.7 billion,
billion higher than for the previous fiscal year. Although the item
¥62.5 billion lower than in the previous fiscal year.
“Others” among nonrecurring losses showed an improvement of
¥75.5 billion from the previous fiscal year due to a substantial
Extraordinary Gains (Losses)
reduction in the provision to the general reserve for possible losses
Net extraordinary losses amounted to ¥3.2 billion, which repre-
on investments, the bank reported write-offs related to equities and
sented a deterioration of ¥16.8 billion from the amount of
others as a result of the decline in stock prices, and net gains on
extraordinary gains reported in the prior year.
stocks declined ¥152.1 billion, to ¥141.0 billion.
Please note that total credit cost—which is the combined total
Net Income
of credit cost of ¥155.0 billion recorded under “Nonrecurring gains
Current income taxes amounted to ¥16.0 billion, and deferred
(losses),” the provision for general reserve for possible loan losses,
income taxes were ¥285.6 billion. As a result, net income
and gains on the collection of written-off claims—amounted to
decreased ¥109.9 billion, to ¥205.7 billion.
¥147.7 billion, which was ¥58.2 billion higher than in the previous
fiscal year.
◆Ordinary Profit and Net Income
Year ended March 31
Banking profit (before provision for general reserve for possible loan losses) ..................................
Provision for general reserve for possible loan losses (A) .................................................................
Banking profit .....................................................................................................................................
Nonrecurring gains (losses) ...............................................................................................................
Credit cost (B) ..............................................................................................................................
Net gains on stocks ......................................................................................................................
Gains on sale of stocks ..........................................................................................................
Losses on sale of stocks ........................................................................................................
Losses on devaluation of stocks ............................................................................................
Others ..........................................................................................................................................
Ordinary profit ....................................................................................................................................
Extraordinary gains (losses) ..............................................................................................................
Losses on disposal of fixed assets ...............................................................................................
Losses on impairment of fixed assets ..........................................................................................
Reversal of reserve for possible loan losses (C) ..........................................................................
Gains on collection of written-off claims (D) .................................................................................
Gains on return of securities from retirement benefits trust .........................................................
Losses on liquidation of subsidiary...............................................................................................
Income taxes:
Current .........................................................................................................................................
Deferred .......................................................................................................................................
Net income..........................................................................................................................................
Total credit cost (A) + (B) + (C) + (D) ................................................................................................
Provision for general reserve for possible loan losses .................................................................
Write-off of loans ..........................................................................................................................
Provision for specific reserve for possible loan losses .................................................................
Losses on sales of delinquent loans ............................................................................................
Provision for loan loss reserve for specific overseas countries ....................................................
Gains on collection of written-off claims .......................................................................................
2008 (A)
¥ 819,691
—
819,691
(308,952)
(155,011)
(141,002)
26,718
(2,311)
(165,409)
(12,937)
510,739
(3,284)
(5,849)
(4,700)
7,238
7
—
—
(16,031)
(285,680)
¥ 205,742
¥(147,765)
96,900
(121,801)
(91,603)
(33,209)
1,941
7
Millions of yen
2007 (B)
¥ 740,601
41,728
782,330
(209,017)
(131,676)
11,098
50,204
(546)
(38,559)
(88,439)
573,313
13,615
(1,680)
(3,680)
—
455
36,330
(17,809)
(16,507)
(254,680)
¥ 315,740
¥ (89,491)
41,728
(50,468)
(44,358)
(37,262)
412
455
Increase (decrease)
(A) – (B)
¥ 79,090
(41,728)
37,361
(99,935)
(23,335)
(152,100)
(23,486)
(1,765)
(126,850)
75,502
(62,574)
(16,899)
(4,169)
(1,020)
7,238
(448)
(36,330)
17,809
476
(31,000)
¥(109,998)
¥ (58,274)
55,172
(71,333)
(47,245)
4,053
1,529
(448)
3. Assets, Liabilities and Net Assets
Assets
Liabilities
SMBC’s assets as of March 31, 2008, were ¥100,033.0 billion,
Liablities as of March 31, 2008, amounted to ¥96,539.7 billion, rep-
which was ¥8,495.7 billion higher than at March 31, 2007. The
resenting an increase of ¥8,995.4 billion from the previous fiscal
principal reasons for this rise in assets were an increase in
year-end. This rise was primarily due to the increase in funds
securities of ¥2,697.3 billion and an increase in loans outstanding
raised in connection with expansion in the bank’s asset portfolio.
of ¥3,201.3 billion, mainly in loans made in overseas markets. In
the previous fiscal year, the bank took steps to improve its asset
Net Assets
portfolio by reducing the volume of interest rate risk. During the
Net assets at fiscal year-end amounted to ¥3,493.2 billion. Of this
fiscal year under review, the bank adopted a policy of restoring
total, stockholders’ equity amounted to ¥2,927.3 billion, consisting
its risk volume within the scope of controllable levels, thus leading
of ¥664.9 billion in capital stock, ¥1,367.5 billion in capital surplus
to a higher balance of assets at fiscal year-end.
(including ¥702.5 billion in other capital surplus), and ¥894.8 bil-
In addition, the balance of problem assets based on the Finan-
lion in retained earnings.
cial Reconstruction Law rose ¥65.2 billion from the end of the
Valuation and translation adjustments were ¥565.8 billion,
previous fiscal year, to ¥803.9 billion. The principal factors leading
to this increase were a rise in subprime loan related assets that
which included ¥558.1 billion in net unrealized gains on other
securities, ¥13.7 billion in deferred losses on hedges, and
required provisions for possible loan losses and the deterioration
¥21.5 billion in land revaluation excess.
of the operating and financial positions of certain obligors, which
led to a decline in their obligor grades. However, the problem
asset ratio remained at a relatively low 1.24%.
◆Assets, Liabilities and Net Assets
March 31
Assets ................................................................................................................................................
Securities .....................................................................................................................................
Loans and bills discounted ...........................................................................................................
Liabilities ............................................................................................................................................
Deposits .......................................................................................................................................
Negotiable certificates of deposit .................................................................................................
Net Assets ..........................................................................................................................................
2008 (A)
¥100,033,020
22,758,241
56,957,813
96,539,771
66,417,260
2,965,574
3,493,249
Millions of yen
2007 (B)
¥91,537,228
20,060,873
53,756,440
87,544,344
66,235,002
2,574,335
3,992,884
Increase (decrease)
(A) – (B)
¥8,495,792
2,697,368
3,201,373
8,995,427
182,258
391,239
(499,635)
30
SMFG 2008
SMFG 2008 31
Nonrecurring Gains (Losses) (Credit Cost, etc.)
Ordinary Profit
Nonrecurring losses amounted to ¥308.9 billion, which was ¥99.9
As a result of the foregoing, ordinary profit totaled ¥510.7 billion,
billion higher than for the previous fiscal year. Although the item
¥62.5 billion lower than in the previous fiscal year.
“Others” among nonrecurring losses showed an improvement of
¥75.5 billion from the previous fiscal year due to a substantial
Extraordinary Gains (Losses)
reduction in the provision to the general reserve for possible losses
Net extraordinary losses amounted to ¥3.2 billion, which repre-
on investments, the bank reported write-offs related to equities and
sented a deterioration of ¥16.8 billion from the amount of
others as a result of the decline in stock prices, and net gains on
extraordinary gains reported in the prior year.
stocks declined ¥152.1 billion, to ¥141.0 billion.
Please note that total credit cost—which is the combined total
Net Income
of credit cost of ¥155.0 billion recorded under “Nonrecurring gains
Current income taxes amounted to ¥16.0 billion, and deferred
(losses),” the provision for general reserve for possible loan losses,
income taxes were ¥285.6 billion. As a result, net income
and gains on the collection of written-off claims—amounted to
decreased ¥109.9 billion, to ¥205.7 billion.
¥147.7 billion, which was ¥58.2 billion higher than in the previous
fiscal year.
◆Ordinary Profit and Net Income
Year ended March 31
Banking profit (before provision for general reserve for possible loan losses) ..................................
Provision for general reserve for possible loan losses (A) .................................................................
Banking profit .....................................................................................................................................
Nonrecurring gains (losses) ...............................................................................................................
Credit cost (B) ..............................................................................................................................
Net gains on stocks ......................................................................................................................
Gains on sale of stocks ..........................................................................................................
Losses on sale of stocks ........................................................................................................
Losses on devaluation of stocks ............................................................................................
Others ..........................................................................................................................................
Ordinary profit ....................................................................................................................................
Extraordinary gains (losses) ..............................................................................................................
Losses on disposal of fixed assets ...............................................................................................
Losses on impairment of fixed assets ..........................................................................................
Reversal of reserve for possible loan losses (C) ..........................................................................
Gains on collection of written-off claims (D) .................................................................................
Gains on return of securities from retirement benefits trust .........................................................
Losses on liquidation of subsidiary...............................................................................................
Income taxes:
Current .........................................................................................................................................
Deferred .......................................................................................................................................
Net income..........................................................................................................................................
Total credit cost (A) + (B) + (C) + (D) ................................................................................................
Provision for general reserve for possible loan losses .................................................................
Write-off of loans ..........................................................................................................................
Provision for specific reserve for possible loan losses .................................................................
Losses on sales of delinquent loans ............................................................................................
Provision for loan loss reserve for specific overseas countries ....................................................
Gains on collection of written-off claims .......................................................................................
2008 (A)
¥ 819,691
—
819,691
(308,952)
(155,011)
(141,002)
26,718
(2,311)
(165,409)
(12,937)
510,739
(3,284)
(5,849)
(4,700)
7,238
7
—
—
(16,031)
(285,680)
¥ 205,742
¥(147,765)
96,900
(121,801)
(91,603)
(33,209)
1,941
7
Millions of yen
2007 (B)
¥ 740,601
41,728
782,330
(209,017)
(131,676)
11,098
50,204
(546)
(38,559)
(88,439)
573,313
13,615
(1,680)
(3,680)
—
455
36,330
(17,809)
(16,507)
(254,680)
¥ 315,740
¥ (89,491)
41,728
(50,468)
(44,358)
(37,262)
412
455
Increase (decrease)
(A) – (B)
¥ 79,090
(41,728)
37,361
(99,935)
(23,335)
(152,100)
(23,486)
(1,765)
(126,850)
75,502
(62,574)
(16,899)
(4,169)
(1,020)
7,238
(448)
(36,330)
17,809
476
(31,000)
¥(109,998)
¥ (58,274)
55,172
(71,333)
(47,245)
4,053
1,529
(448)
3. Assets, Liabilities and Net Assets
Assets
Liabilities
SMBC’s assets as of March 31, 2008, were ¥100,033.0 billion,
Liablities as of March 31, 2008, amounted to ¥96,539.7 billion, rep-
which was ¥8,495.7 billion higher than at March 31, 2007. The
resenting an increase of ¥8,995.4 billion from the previous fiscal
principal reasons for this rise in assets were an increase in
year-end. This rise was primarily due to the increase in funds
securities of ¥2,697.3 billion and an increase in loans outstanding
raised in connection with expansion in the bank’s asset portfolio.
of ¥3,201.3 billion, mainly in loans made in overseas markets. In
the previous fiscal year, the bank took steps to improve its asset
Net Assets
portfolio by reducing the volume of interest rate risk. During the
Net assets at fiscal year-end amounted to ¥3,493.2 billion. Of this
fiscal year under review, the bank adopted a policy of restoring
total, stockholders’ equity amounted to ¥2,927.3 billion, consisting
its risk volume within the scope of controllable levels, thus leading
of ¥664.9 billion in capital stock, ¥1,367.5 billion in capital surplus
to a higher balance of assets at fiscal year-end.
(including ¥702.5 billion in other capital surplus), and ¥894.8 bil-
In addition, the balance of problem assets based on the Finan-
lion in retained earnings.
cial Reconstruction Law rose ¥65.2 billion from the end of the
Valuation and translation adjustments were ¥565.8 billion,
previous fiscal year, to ¥803.9 billion. The principal factors leading
to this increase were a rise in subprime loan related assets that
which included ¥558.1 billion in net unrealized gains on other
securities, ¥13.7 billion in deferred losses on hedges, and
required provisions for possible loan losses and the deterioration
¥21.5 billion in land revaluation excess.
of the operating and financial positions of certain obligors, which
led to a decline in their obligor grades. However, the problem
asset ratio remained at a relatively low 1.24%.
◆Assets, Liabilities and Net Assets
March 31
Assets ................................................................................................................................................
Securities .....................................................................................................................................
Loans and bills discounted ...........................................................................................................
Liabilities ............................................................................................................................................
Deposits .......................................................................................................................................
Negotiable certificates of deposit .................................................................................................
Net Assets ..........................................................................................................................................
2008 (A)
¥100,033,020
22,758,241
56,957,813
96,539,771
66,417,260
2,965,574
3,493,249
Millions of yen
2007 (B)
¥91,537,228
20,060,873
53,756,440
87,544,344
66,235,002
2,574,335
3,992,884
Increase (decrease)
(A) – (B)
¥8,495,792
2,697,368
3,201,373
8,995,427
182,258
391,239
(499,635)
30
SMFG 2008
SMFG 2008 31
4. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2008,
trust”—which is directly credited to net assets—decreased
amounted to ¥773.8 billion, which represented a decrease of
¥1,077.4 billion, to ¥755.7 billion.
¥1,054.2 billion from the previous fiscal year-end. Net unrealized
gains on other securities, including “other money held in
◆Unrealized Gains (Losses) on Securities
2008
Millions of yen
March 31
Net unrealized
gains (losses) (A)
Held-to-maturity securities .............................
Stocks of subsidiaries and affiliates ...............
Other securities .............................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
Other money held in trust...............................
Total ...............................................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
¥ 17,075
1,054
755,749
936,324
(129,508)
(51,067)
(29)
773,849
937,378
(112,432)
(51,096)
(A) – (B)
¥ 30,139
(6,904)
(1,077,142)
(1,042,425)
21,936
(56,654)
(351)
(1,054,258)
(1,049,329)
52,258
(57,186)
Unrealized
gains
¥ 18,373
14,885
1,030,778
992,665
15,579
22,533
—
1,064,037
1,007,551
33,952
22,533
Unrealized
losses
Net unrealized
gains (losses) (B)
¥ 1,298
13,831
275,029
56,341
145,087
73,600
29
290,188
70,172
146,385
73,630
¥ (13,064)
7,958
1,832,891
1,978,749
(151,444)
5,587
322
1,828,107
1,986,707
(164,690)
6,090
2007
Unrealized
gains
¥ 200
85,505
2,028,694
1,990,476
748
37,469
322
2,114,723
2,075,981
768
37,972
Unrealized
losses
¥ 13,265
77,547
195,802
11,727
152,193
31,882
—
286,615
89,274
165,458
31,882
Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in “Cash and due from banks” and “Deposits with banks” as well as beneficiary claims on loan trusts and commodity
investment trusts in “Commercial paper and other debt purchased.”
2. Unrealized gains (losses) on stocks (excluding stocks of subsidiaries and affiliates) are calculated using the average market prices during the final month of the respective reporting period. The remainder of the
securities are valued at the market price as of the balance sheet date.
3. “Other securities” and “Other money held in trust” are valued and recorded on the balance sheet at market prices. The figures in the table above indicate the differences between the acquisition costs
(or amortized costs) and the balance sheet amounts.
The Group's Exposure of Securitized Products (Sumitomo Financial Group (Consolidated))
The figures contained in this section have been compiled for in-house management purposes and are as of March 31, 2008. Figures for the reserve for possible loan
losses do not include provisions to the general reserve for normal borrowers.
1. Securitized products
As of March 31,2008, the Group held approximately ¥270 billion in
We substantially reduced subprime-related exposure to
approximately ¥5.5 billion after write-offs and provisions. The
securitized products after write-offs and provisions, mostly to Gov-
amount of loss from the reduction was approximately ¥93 billion
ernment Sponsored Enterprises (“GSE”) etc. with high credit ratings
(¥89.1 billion) of provisions and write-offs and loss on sale of ¥3.9
of approximately ¥220 billion.
billion.
(Consolidated)
Balances
(before write-offs)*
1(a.)
Overseas
Subprime-related
Net unrealized
gains / losses
(before write-offs)
Provisions
and
write-offs (b.)
Balances
(after provisions
and write-offs)(a.-b.)
Subprime-related
Overseas
Subprime-related
March 31, 2008
(Billions of yen)
Net unrealized
gains /losses
(after write-offs)
Subprime-related
Ratings of
underlying assets,
etc.
RMBS
¥219.8
¥219.8
¥ —
¥ (1.6)
¥ —
¥ — ¥219.8
¥219.8
¥ —
¥(1.6)
¥—
Guaranteed by GSE etc.
219.8
219.8
Cards
CLO
Senior (*4)
Equity
CMBS
ABS-CDO
Senior (*4)
Mezzanine (*5)
Equity
12.5
24.3
22.0
2.3
6.0
12.5
24.3
22.0
2.3
—
—
—
—
—
—
—
(1.6)
(0.6)
(3.4)
(2.4)
(1.0)
0
—
—
0.4
—
0.4
—
—
—
—
—
—
—
73.5
73.5
73.5
(68.6)
68.6
68.6
66.1
66.1
66.1
(61.2)
61.2
61.2
5.3
2.1
5.3
2.1
5.3
(5.3)
5.3
5.3
(2.1)
¥(74.2)
2.1
73.5
21.1
2.1
69.0
28.9
2.1
68.6
20.5
Investments to securitized products (A)
336.1
330.1
Warehousing loans, etc. (B)
35.4
35.4
219.8
219.8
12.5
23.9
22.0
1.9
6.0
4.9
4.9
—
—
12.5
23.9
22.0
1.9
—
4.9
4.9
—
—
267.1
261.1
6.5
6.5
—
—
—
—
—
—
4.9
4.9
—
—
4.9
0.6
(1.6)
(0.6)
(3.0)
(2.4)
(0.6)
0
—
—
—
—
— AAA
— A 〜 BBB
—
— AAA 〜 A
— No ratings
— BBB
—
—
Speculative
ratings
Speculative
— ratings,
No ratings
— No ratings
¥(5.2)
¥—
Total (A+B)
¥371.5
¥365.5
¥94.6
¥97.9
¥89.1
¥273.6
¥267.6
¥5.5
Notes: 1. These figures do not include the subordinated beneficiary claims (Please refer to the next page for related figures) held by SMBC in the process of liquidating loan assets.
2. The senior debt portion is the part classified in the top tranching positions with ratings of A or higher at the time of securitization. (Tranching is the establishment of a structure according to debt seniority, from
senior to subordinated debt.)
3. The mezzanine portion is the part after the exclusion of both the senior portion and the portion lowest in seniority (equity).
4. Warehousing loans are loans made based on collateral consisting of securitized investment products held by a special-purpose company established for the purpose of securitization.
5. Ratings shown are the lower of those issued by Standard & Poor’s and Moody’s Investors Service. Ratings are shown in the ranking employed by Standard & Poor’s.
6. The Group held no asset-backed commercial paper (ABCP) as of the date.
32
SMFG 2008
SMFG 2008 33
4. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2008,
trust”—which is directly credited to net assets—decreased
amounted to ¥773.8 billion, which represented a decrease of
¥1,077.4 billion, to ¥755.7 billion.
¥1,054.2 billion from the previous fiscal year-end. Net unrealized
gains on other securities, including “other money held in
◆Unrealized Gains (Losses) on Securities
2008
Millions of yen
March 31
Net unrealized
gains (losses) (A)
Held-to-maturity securities .............................
Stocks of subsidiaries and affiliates ...............
Other securities .............................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
Other money held in trust...............................
Total ...............................................................
Stocks ......................................................
Bonds ......................................................
Others ......................................................
¥ 17,075
1,054
755,749
936,324
(129,508)
(51,067)
(29)
773,849
937,378
(112,432)
(51,096)
(A) – (B)
¥ 30,139
(6,904)
(1,077,142)
(1,042,425)
21,936
(56,654)
(351)
(1,054,258)
(1,049,329)
52,258
(57,186)
Unrealized
gains
¥ 18,373
14,885
1,030,778
992,665
15,579
22,533
—
1,064,037
1,007,551
33,952
22,533
Unrealized
losses
Net unrealized
gains (losses) (B)
¥ 1,298
13,831
275,029
56,341
145,087
73,600
29
290,188
70,172
146,385
73,630
¥ (13,064)
7,958
1,832,891
1,978,749
(151,444)
5,587
322
1,828,107
1,986,707
(164,690)
6,090
2007
Unrealized
gains
¥ 200
85,505
2,028,694
1,990,476
748
37,469
322
2,114,723
2,075,981
768
37,972
Unrealized
losses
¥ 13,265
77,547
195,802
11,727
152,193
31,882
—
286,615
89,274
165,458
31,882
Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in “Cash and due from banks” and “Deposits with banks” as well as beneficiary claims on loan trusts and commodity
investment trusts in “Commercial paper and other debt purchased.”
2. Unrealized gains (losses) on stocks (excluding stocks of subsidiaries and affiliates) are calculated using the average market prices during the final month of the respective reporting period. The remainder of the
securities are valued at the market price as of the balance sheet date.
3. “Other securities” and “Other money held in trust” are valued and recorded on the balance sheet at market prices. The figures in the table above indicate the differences between the acquisition costs
(or amortized costs) and the balance sheet amounts.
The Group's Exposure of Securitized Products (Sumitomo Financial Group (Consolidated))
The figures contained in this section have been compiled for in-house management purposes and are as of March 31, 2008. Figures for the reserve for possible loan
losses do not include provisions to the general reserve for normal borrowers.
1. Securitized products
As of March 31,2008, the Group held approximately ¥270 billion in
We substantially reduced subprime-related exposure to
approximately ¥5.5 billion after write-offs and provisions. The
securitized products after write-offs and provisions, mostly to Gov-
amount of loss from the reduction was approximately ¥93 billion
ernment Sponsored Enterprises (“GSE”) etc. with high credit ratings
(¥89.1 billion) of provisions and write-offs and loss on sale of ¥3.9
of approximately ¥220 billion.
billion.
(Consolidated)
Balances
(before write-offs)*
1(a.)
Overseas
Subprime-related
Net unrealized
gains / losses
(before write-offs)
Provisions
and
write-offs (b.)
Balances
(after provisions
and write-offs)(a.-b.)
Subprime-related
Overseas
Subprime-related
March 31, 2008
(Billions of yen)
Net unrealized
gains /losses
(after write-offs)
Subprime-related
Ratings of
underlying assets,
etc.
RMBS
¥219.8
¥219.8
¥ —
¥ (1.6)
¥ —
¥ — ¥219.8
¥219.8
¥ —
¥(1.6)
¥—
Guaranteed by GSE etc.
219.8
219.8
Cards
CLO
Senior (*4)
Equity
CMBS
ABS-CDO
Senior (*4)
Mezzanine (*5)
Equity
12.5
24.3
22.0
2.3
6.0
12.5
24.3
22.0
2.3
—
—
—
—
—
—
—
(1.6)
(0.6)
(3.4)
(2.4)
(1.0)
0
—
—
0.4
—
0.4
—
—
—
—
—
—
—
73.5
73.5
73.5
(68.6)
68.6
68.6
66.1
66.1
66.1
(61.2)
61.2
61.2
5.3
2.1
5.3
2.1
5.3
(5.3)
5.3
5.3
(2.1)
¥(74.2)
2.1
73.5
21.1
2.1
69.0
28.9
2.1
68.6
20.5
Investments to securitized products (A)
336.1
330.1
Warehousing loans, etc. (B)
35.4
35.4
219.8
219.8
12.5
23.9
22.0
1.9
6.0
4.9
4.9
—
—
12.5
23.9
22.0
1.9
—
4.9
4.9
—
—
267.1
261.1
6.5
6.5
—
—
—
—
—
—
4.9
4.9
—
—
4.9
0.6
(1.6)
(0.6)
(3.0)
(2.4)
(0.6)
0
—
—
—
—
— AAA
— A 〜 BBB
—
— AAA 〜 A
— No ratings
— BBB
—
—
Speculative
ratings
Speculative
— ratings,
No ratings
— No ratings
¥(5.2)
¥—
Total (A+B)
¥371.5
¥365.5
¥94.6
¥97.9
¥89.1
¥273.6
¥267.6
¥5.5
Notes: 1. These figures do not include the subordinated beneficiary claims (Please refer to the next page for related figures) held by SMBC in the process of liquidating loan assets.
2. The senior debt portion is the part classified in the top tranching positions with ratings of A or higher at the time of securitization. (Tranching is the establishment of a structure according to debt seniority, from
senior to subordinated debt.)
3. The mezzanine portion is the part after the exclusion of both the senior portion and the portion lowest in seniority (equity).
4. Warehousing loans are loans made based on collateral consisting of securitized investment products held by a special-purpose company established for the purpose of securitization.
5. Ratings shown are the lower of those issued by Standard & Poor’s and Moody’s Investors Service. Ratings are shown in the ranking employed by Standard & Poor’s.
6. The Group held no asset-backed commercial paper (ABCP) as of the date.
32
SMFG 2008
SMFG 2008 33
(Reference) Subordinated beneficiaries in securitization of SMBC’s loans
SMBC holds a part of its securitized loan receivables as subordi-
nated beneficiaries.
As of March 31, 2008, SMBC held approximately ¥250 billion
in those subordinated beneficiaries. Most of the securitized
assets are domestic residential mortgage loans with low default
rates. SMBC properly conducts self-assessment and has made
the necessary write-offs and provisions for the subordinated
beneficiaries. No subsidiary other than SMBC has those subordi-
nated beneficiaries mentioned above.
Receivables of
residential mortgage loans
Receivables of
loans to corporations
Total
Balance
¥245.5
7.9
¥253.4
(Billions of yen)
March 31, 2008
Overseas
Subprime-related
Loan loss
reserve
¥—
—
¥—
¥—
—
¥—
¥ —
1.5
¥1.5
2. Transactions with Monoline Insurance Companies
Monoline insurance companies guarantee payment on underlying
or reference assets. Our recognition of profit or loss on the transac-
rated investment grade or equivalent, and do not include
subprime-related assets.
tons with monoline insurance companies is basically affected by
We conduct self-assessment to these exposures and, in the
the credit conditions and prices of underlying or reference assets,
fiscal year ended March 31, 2008, due to the substantial deteriora-
and is also affected by the credit conditions of monoline insurance
tion in creditworthiness of certain monoline insurance companies,
companies.
we made loss provisions for the entire amount of the exposure to
these companies and conducted a series of transactions (realized
Credit derivatives (Credit Default Swap [CDS*]) transactions with
loss of approximately ¥30 billion) to set the upper limit of a loss
monoline insurance companies
amount associated with the exposure amount in order to avoid any
In CDS brokerage transactions, positions are covered through
additional losses.
transactions with monoline insurance companies. As of March 31,
2008, the Group’s exposure** to monoline insurance companies,
all with high credit ratings, after loss provision totaled approxi-
mately ¥30 billion. Reference assets of these CDS transactions are
(Consolidated)
* Derivatives to hedge credit risks.
** Mark-to-market value claimable to monoline insurance companies for net
loss of reference assets on the settlement
March 31, 2008
Net exposure
Loan loss reserve
(Billions of yen)
(Billions of yen)
Amount of reference assets
As of Mar. 31
Exposure to CDS transactions with monoline insurance companies
¥31.1
¥1.9
¥559.1
Notes: 1. Excluding figures related to the portion to which losses (¥30 billion) have been realized through write-off
2. The credit ratings of counterparty monoline insurance companies (excluding those to which losses have been realized) are equal to or above AA, most of them are rated AAA by S&P or Moody's.
Loans and investments guaranteed by monoline insurance companies, etc.
As of March 31, 2008, the Group held approximately ¥40 billion of
exposure in loans and investments guaranteed by monoline insur-
(Consolidated)
ance companies.
Underlying assets are those of project finance and local
government bonds rated investment grade or equivalent, and
include no subprime-related assets. We conduct self-assessment
on these loans and investments.
Loans and investments guaranteed or
insured by monoline insurance companies
Reference: In addition, we had approximately ¥16 billion in commitment contracts (drawn down amount:
¥10 million) to insurance companies with monoline insurance companies as Group members.
There are no indications so far that the creditworthiness of these insurance companies are at
issue.
(Billions of yen)
March 31, 2008
Balance
Loss provisions
¥41.7
¥—
3. Leveraged Loans
As of March 31, 2008, the Group’s balance of financing for
borrowers, and, diversify the exposure especially for overseas
mergers and acquisitions of whole or part of companies was
portfolio in order to reduce concentration risk. At the same time,
approximately ¥840 billion and undrawn commitments for them
in credit risk management, we monitor each of such transactions
was approximately ¥120 billion.
individually, making loss provisions properly, thereby maintaining
In providing loans and commitment lines for mergers and
the quality of both domestic and overseas portfolios.
acquisitions, we carefully scrutinize stability of cash flow of the
(Consolidated)
Europe
Japan
United States
Asia (excluding Japan)
Total
Loans
March 31, 2008
Undrawn commitments
Loss provisions
(Billions of yen)
¥325.4
232.3
195.4
89.6
¥842.7
¥ 11.0
17.9
81.2
8.0
¥118.1
—
¥13.7
1.3
0.5
¥15.5
Notes: 1. Above figures include the amount to be sold of approximately ¥80 billion. Loss on sales is expected to be below 10% to its face value, currently.
2. Above figures do not include leveraged loans which are underlying assets included in securitized products exposure shown on page 33.
4. Asset Backed Commercial Paper (ABCP) Programs as Sponsor
The Group sponsors issuance of ABCPs, whose reference assets
As of March 31, 2008, the total notional amount of reference
are such as clients' receivables or other claims, in order to fulfill
assets of sponsored ABCP programs was approximately ¥960 bil-
clients' financing needs. Specifically, as a sponsor, we provide ser-
lion. Most of the reference assets are high-grade claims of
vices to special purpose vehicles, which are set up for clients'
corporate clients and do not include subprime loan related assets.
financing needs, for purchase of claims, financing, issuance and
In addition, regarding the exposure of liquidity and credit supports,
sales of ABCPs. We also provide liquidity and credit supports for
we properly conduct self-assessment, making provisions and
such special purpose vehicles.
write-offs properly.
March 31, 2008
Support for programs
(Billions of yen)
Types of reference assets
Notional amount of
reference assets
Overseas
Subprime-related
Loss provisions
Liquidity support
Credit support
Claims on corporations
Claims on financial institutions
Retail loan claims
Other claims
Total
¥828.6
¥192.3
65.4
40.1
25.1
2.1
—
40.1
25.1
2.1
¥961.3
¥259.6
¥—
—
—
—
—
¥—
¥0.1
—
—
—
—
¥0.1
yes
no
yes
yes
yes
yes
no
yes
yes
yes
Note:The maximum amount of credit supports provided for overseas ABCP program is limited to 10% of the balance of reference assets. On the other hand, the maximum amount of credit supports provided for domestic
ABCP programs are limited to the balance of 100% of reference assets.
Reference:In addition, we provide liquidity and credit supports for ABCP programs which are sponsored by other banks. Total national amount of reference assets of such programs are approximately ¥110 billion.
5. Other
SMFG has no securities issued by Structured Investment Vehicles.
34
SMFG 2008
SMFG 2008 35
(Reference) Subordinated beneficiaries in securitization of SMBC’s loans
SMBC holds a part of its securitized loan receivables as subordi-
nated beneficiaries.
As of March 31, 2008, SMBC held approximately ¥250 billion
in those subordinated beneficiaries. Most of the securitized
assets are domestic residential mortgage loans with low default
rates. SMBC properly conducts self-assessment and has made
the necessary write-offs and provisions for the subordinated
beneficiaries. No subsidiary other than SMBC has those subordi-
nated beneficiaries mentioned above.
Receivables of
residential mortgage loans
Receivables of
loans to corporations
Total
Balance
¥245.5
7.9
¥253.4
(Billions of yen)
March 31, 2008
Overseas
Subprime-related
Loan loss
reserve
¥—
—
¥—
¥—
—
¥—
¥ —
1.5
¥1.5
2. Transactions with Monoline Insurance Companies
Monoline insurance companies guarantee payment on underlying
or reference assets. Our recognition of profit or loss on the transac-
rated investment grade or equivalent, and do not include
subprime-related assets.
tons with monoline insurance companies is basically affected by
We conduct self-assessment to these exposures and, in the
the credit conditions and prices of underlying or reference assets,
fiscal year ended March 31, 2008, due to the substantial deteriora-
and is also affected by the credit conditions of monoline insurance
tion in creditworthiness of certain monoline insurance companies,
companies.
we made loss provisions for the entire amount of the exposure to
these companies and conducted a series of transactions (realized
Credit derivatives (Credit Default Swap [CDS*]) transactions with
loss of approximately ¥30 billion) to set the upper limit of a loss
monoline insurance companies
amount associated with the exposure amount in order to avoid any
In CDS brokerage transactions, positions are covered through
additional losses.
transactions with monoline insurance companies. As of March 31,
2008, the Group’s exposure** to monoline insurance companies,
all with high credit ratings, after loss provision totaled approxi-
mately ¥30 billion. Reference assets of these CDS transactions are
(Consolidated)
* Derivatives to hedge credit risks.
** Mark-to-market value claimable to monoline insurance companies for net
loss of reference assets on the settlement
March 31, 2008
Net exposure
Loan loss reserve
(Billions of yen)
(Billions of yen)
Amount of reference assets
As of Mar. 31
Exposure to CDS transactions with monoline insurance companies
¥31.1
¥1.9
¥559.1
Notes: 1. Excluding figures related to the portion to which losses (¥30 billion) have been realized through write-off
2. The credit ratings of counterparty monoline insurance companies (excluding those to which losses have been realized) are equal to or above AA, most of them are rated AAA by S&P or Moody's.
Loans and investments guaranteed by monoline insurance companies, etc.
As of March 31, 2008, the Group held approximately ¥40 billion of
exposure in loans and investments guaranteed by monoline insur-
(Consolidated)
ance companies.
Underlying assets are those of project finance and local
government bonds rated investment grade or equivalent, and
include no subprime-related assets. We conduct self-assessment
on these loans and investments.
Loans and investments guaranteed or
insured by monoline insurance companies
Reference: In addition, we had approximately ¥16 billion in commitment contracts (drawn down amount:
¥10 million) to insurance companies with monoline insurance companies as Group members.
There are no indications so far that the creditworthiness of these insurance companies are at
issue.
(Billions of yen)
March 31, 2008
Balance
Loss provisions
¥41.7
¥—
3. Leveraged Loans
As of March 31, 2008, the Group’s balance of financing for
borrowers, and, diversify the exposure especially for overseas
mergers and acquisitions of whole or part of companies was
portfolio in order to reduce concentration risk. At the same time,
approximately ¥840 billion and undrawn commitments for them
in credit risk management, we monitor each of such transactions
was approximately ¥120 billion.
individually, making loss provisions properly, thereby maintaining
In providing loans and commitment lines for mergers and
the quality of both domestic and overseas portfolios.
acquisitions, we carefully scrutinize stability of cash flow of the
(Consolidated)
Europe
Japan
United States
Asia (excluding Japan)
Total
Loans
March 31, 2008
Undrawn commitments
Loss provisions
(Billions of yen)
¥325.4
232.3
195.4
89.6
¥842.7
¥ 11.0
17.9
81.2
8.0
¥118.1
—
¥13.7
1.3
0.5
¥15.5
Notes: 1. Above figures include the amount to be sold of approximately ¥80 billion. Loss on sales is expected to be below 10% to its face value, currently.
2. Above figures do not include leveraged loans which are underlying assets included in securitized products exposure shown on page 33.
4. Asset Backed Commercial Paper (ABCP) Programs as Sponsor
The Group sponsors issuance of ABCPs, whose reference assets
As of March 31, 2008, the total notional amount of reference
are such as clients' receivables or other claims, in order to fulfill
assets of sponsored ABCP programs was approximately ¥960 bil-
clients' financing needs. Specifically, as a sponsor, we provide ser-
lion. Most of the reference assets are high-grade claims of
vices to special purpose vehicles, which are set up for clients'
corporate clients and do not include subprime loan related assets.
financing needs, for purchase of claims, financing, issuance and
In addition, regarding the exposure of liquidity and credit supports,
sales of ABCPs. We also provide liquidity and credit supports for
we properly conduct self-assessment, making provisions and
such special purpose vehicles.
write-offs properly.
March 31, 2008
Support for programs
(Billions of yen)
Types of reference assets
Notional amount of
reference assets
Overseas
Subprime-related
Loss provisions
Liquidity support
Credit support
Claims on corporations
Claims on financial institutions
Retail loan claims
Other claims
Total
¥828.6
¥192.3
65.4
40.1
25.1
2.1
—
40.1
25.1
2.1
¥961.3
¥259.6
¥—
—
—
—
—
¥—
¥0.1
—
—
—
—
¥0.1
yes
no
yes
yes
yes
yes
no
yes
yes
yes
Note:The maximum amount of credit supports provided for overseas ABCP program is limited to 10% of the balance of reference assets. On the other hand, the maximum amount of credit supports provided for domestic
ABCP programs are limited to the balance of 100% of reference assets.
Reference:In addition, we provide liquidity and credit supports for ABCP programs which are sponsored by other banks. Total national amount of reference assets of such programs are approximately ¥110 billion.
5. Other
SMFG has no securities issued by Structured Investment Vehicles.
34
SMFG 2008
SMFG 2008 35
Risk Management
Basic Approach
Financial and economic deregulation, globalization, and advances
categories are constantly reviewed, and new categories may be
added in response to changes in the operating environment. The
Risk Management System
Top management plays an active role in determining SMFG’s
Risk Capital-Based Management
(1) Framework
in IT are generating new business opportunities for financial institu-
Corporate Risk Management Department works with the Corporate
Groupwide basic policies for risk management. The system works
In order to maintain a balance between risk and return as well as
tions. The risks accompanying these new business opportunities
Planning Department to comprehensively and systematically man-
as follows: The basic policies for risk management are determined
ensure the soundness of the Group from an overall perspective,
are not only increasing in number but also growing in diversity and
age all these categories of risk across the entire Group.
by the Management Committee before being authorized by the
we employ the risk capital-based management method. We mea-
complexity. Accordingly, identifying, measuring, and controlling
Board. The Management Committee, the designated Board mem-
sure “risk capital” based on value at risk (VaR), etc. as a uniform
risks have never been more important in the management of a
(2) Fundamental Principles and Basic Policies for Risk Management
bers, and the relevant risk management departments perform risk
basic measure of credit, market, and operational risks, taking
financial holding company.
SMFG’s Groupwide basic policies for risk management stipulate
management according to the basic policies.
account of the special characteristics of each type of risk and the
SMFG has encapsulated the basic principles to be employed
the fundamental principles for risk management that must be fol-
Risk management systems are in place at the individual Group
business activities of each Group company. We then allocate capi-
in risk management in the manual entitled Regulations on Risk
lowed, and spell out risk management procedures from various
companies in accordance with SMFG’s Groupwide basic policies
tal appropriately and effectively to each unit to keep total exposure
Management. In the manual, we have specified the basic policies
perspectives. These include managing risk on a consolidated
for risk management. For example, at SMBC, specific departments
to various risks within the scope of our resources, i.e., capital. In
for risk management: 1) Set forth SMFG’s Groupwide basic poli-
accounting basis, managing risk using quantification methods,
have been appointed to oversee the handling of the four risk cate-
this framework, risk capital includes credit concentration risk and
cies for risk management after specifying the categories of risk to
ensuring consistency with business strategies, setting up a system
gories listed above, in addition to risks associated with settlement.
interest rate risk in the banking book which are taken into account
which these policies apply; 2) Provide all necessary guidance to
of checks and balances, contingency planning for emergencies
Each risk category is managed taking into account the particular
under the Second Pillar of Basel II. In addition, we conduct capital
Group companies to enable them to follow the basic risk manage-
and serious situations, and verifying preparedness to handle all
characteristics of that category. In addition, the Corporate Risk
risk-based management activities on a consolidated basis, includ-
ment policies set forth by SMFG and set up their own appropriate
conceivable risk situations. In addition, there are specific opera-
Management Department—independent of the operating units—
ing each Group company.
risk management systems; and 3) Monitor the implementation of
tional policies for implementing appropriate management of risk by
comprehensively and systematically manages all categories of risk
Liquidity risk is managed within the context of cash-flow plans
risk management by all Group companies to ensure that their
all Group companies.
practices meet the relevant standards.
(1) Types of Risk to Be Managed
Under SMFG’s Groupwide basic policies for risk management,
all Group companies periodically carry out reviews of the basic
management policies for each risk category, or whenever deemed
in cooperation with the Corporate Planning Department.
and funding gap. Other risk categories are managed with proce-
Furthermore, under our system top management plays an
dures closely attuned to the nature of the risk, as described in the
active role in the drafting of basic policies for risk management.
following paragraphs.
The decision-making process for addressing credit, market, and
At SMFG, we classify risk into the following categories: (1) credit
necessary, thus ensuring that the policies followed at any time are
liquidity risks at the operating level is strengthened by the Credit
(2) Risk Capital Limit
risk, (2) market risk, (3) liquidity risk, and (4) operational risk
the most appropriate. The management of SMFG constantly moni-
Risk Management Committee and the Market Risk Management
In the case of credit and market risks, we set maximum risk capital
(including processing risk and systems risk). In addition, we pro-
tors the conduct of risk management at Group companies,
Committee, which are subcommittees of the Management Commit-
limits, which indicate the maximum risk that may be taken during
vide individually tailored guidance to help Group companies
providing guidance when necessary.
tee. The Management Committee is also attended by the relevant
the period, taking account the level of stress stipulated in business
identify categories of risk that need to be addressed. Risk
department heads.
■ SMFG’s Risk Management System
plans. In addition, for operational risk, we also allocate risk capital,
and, for the Group as a whole, we set total risk capital allocations
within SMFG’s capital. In the case of credit and market risks, risk
■ Risk Management Framework
36
SMFG 2008
SMFG 2008 37
Risk Management
Basic Approach
Financial and economic deregulation, globalization, and advances
categories are constantly reviewed, and new categories may be
added in response to changes in the operating environment. The
Risk Management System
Top management plays an active role in determining SMFG’s
Risk Capital-Based Management
(1) Framework
in IT are generating new business opportunities for financial institu-
Corporate Risk Management Department works with the Corporate
Groupwide basic policies for risk management. The system works
In order to maintain a balance between risk and return as well as
tions. The risks accompanying these new business opportunities
Planning Department to comprehensively and systematically man-
as follows: The basic policies for risk management are determined
ensure the soundness of the Group from an overall perspective,
are not only increasing in number but also growing in diversity and
age all these categories of risk across the entire Group.
by the Management Committee before being authorized by the
we employ the risk capital-based management method. We mea-
complexity. Accordingly, identifying, measuring, and controlling
Board. The Management Committee, the designated Board mem-
sure “risk capital” based on value at risk (VaR), etc. as a uniform
risks have never been more important in the management of a
(2) Fundamental Principles and Basic Policies for Risk Management
bers, and the relevant risk management departments perform risk
basic measure of credit, market, and operational risks, taking
financial holding company.
SMFG’s Groupwide basic policies for risk management stipulate
management according to the basic policies.
account of the special characteristics of each type of risk and the
SMFG has encapsulated the basic principles to be employed
the fundamental principles for risk management that must be fol-
Risk management systems are in place at the individual Group
business activities of each Group company. We then allocate capi-
in risk management in the manual entitled Regulations on Risk
lowed, and spell out risk management procedures from various
companies in accordance with SMFG’s Groupwide basic policies
tal appropriately and effectively to each unit to keep total exposure
Management. In the manual, we have specified the basic policies
perspectives. These include managing risk on a consolidated
for risk management. For example, at SMBC, specific departments
to various risks within the scope of our resources, i.e., capital. In
for risk management: 1) Set forth SMFG’s Groupwide basic poli-
accounting basis, managing risk using quantification methods,
have been appointed to oversee the handling of the four risk cate-
this framework, risk capital includes credit concentration risk and
cies for risk management after specifying the categories of risk to
ensuring consistency with business strategies, setting up a system
gories listed above, in addition to risks associated with settlement.
interest rate risk in the banking book which are taken into account
which these policies apply; 2) Provide all necessary guidance to
of checks and balances, contingency planning for emergencies
Each risk category is managed taking into account the particular
under the Second Pillar of Basel II. In addition, we conduct capital
Group companies to enable them to follow the basic risk manage-
and serious situations, and verifying preparedness to handle all
characteristics of that category. In addition, the Corporate Risk
risk-based management activities on a consolidated basis, includ-
ment policies set forth by SMFG and set up their own appropriate
conceivable risk situations. In addition, there are specific opera-
Management Department—independent of the operating units—
ing each Group company.
risk management systems; and 3) Monitor the implementation of
tional policies for implementing appropriate management of risk by
comprehensively and systematically manages all categories of risk
Liquidity risk is managed within the context of cash-flow plans
risk management by all Group companies to ensure that their
all Group companies.
practices meet the relevant standards.
(1) Types of Risk to Be Managed
Under SMFG’s Groupwide basic policies for risk management,
all Group companies periodically carry out reviews of the basic
management policies for each risk category, or whenever deemed
in cooperation with the Corporate Planning Department.
and funding gap. Other risk categories are managed with proce-
Furthermore, under our system top management plays an
dures closely attuned to the nature of the risk, as described in the
active role in the drafting of basic policies for risk management.
following paragraphs.
The decision-making process for addressing credit, market, and
At SMFG, we classify risk into the following categories: (1) credit
necessary, thus ensuring that the policies followed at any time are
liquidity risks at the operating level is strengthened by the Credit
(2) Risk Capital Limit
risk, (2) market risk, (3) liquidity risk, and (4) operational risk
the most appropriate. The management of SMFG constantly moni-
Risk Management Committee and the Market Risk Management
In the case of credit and market risks, we set maximum risk capital
(including processing risk and systems risk). In addition, we pro-
tors the conduct of risk management at Group companies,
Committee, which are subcommittees of the Management Commit-
limits, which indicate the maximum risk that may be taken during
vide individually tailored guidance to help Group companies
providing guidance when necessary.
tee. The Management Committee is also attended by the relevant
the period, taking account the level of stress stipulated in business
identify categories of risk that need to be addressed. Risk
department heads.
■ SMFG’s Risk Management System
plans. In addition, for operational risk, we also allocate risk capital,
and, for the Group as a whole, we set total risk capital allocations
within SMFG’s capital. In the case of credit and market risks, risk
■ Risk Management Framework
36
SMFG 2008
SMFG 2008 37
capital limits are sub-divided into guidelines or ceilings for each
(3) Credit Policy
business including VaR and loss limits. Therefore, by strictly
SMBC’s credit policy comprises clearly stated universal and basic
observing the VaR and loss limits, and other factors, SMFG main-
operating concepts, policies, and standards for credit operations,
tains the soundness of the Group as a whole.
in accordance with the business mission and rules of conduct.
Implementation of Basel II
The Basel Capital Accord, an international agreement for ensuring
SMBC is promoting the understanding of and strict adherence
to its credit policy among all its managers and employees. By con-
ducting risk-sensitive credit management in accordance with
the soundness of banks through adherence to BIS capital ade-
Basel II and other capital adequacy regulations, SMBC aims to
quacy regulations, was revised in response to the diversification
enhance shareholder value and play a key part in society by
of the banking business and the increasing sophistication of risk
providing high-value-added financial services.
management technology. The revised BIS regulations, known
as Basel II, became effective from March 31, 2007 in Japan.
Basel II requires banks to implement internal controls to serve
2. Credit Risk Management System
At SMBC, the Credit & Investment Planning Department within the
as the basis for capital calculation, and to strengthen their risk
Corporate Staff Unit is responsible for the comprehensive manage-
management framework. It also requires disclosure of information
ment of credit risk. This department drafts and administers credit
to encourage market discipline in risk management.
policies, the internal rating system, credit authority guidelines, and
We have been implementing initiatives to strengthen our risk
credit application guidelines, and manages NPLs (non-performing
management framework, taking into account Basel II and other
loans) and other aspects of credit portfolio management. The
considerations.
department also cooperates with the Corporate Risk Management
Details of the initiatives are provided below, and detailed infor-
Department in quantifying credit risk (risk capital and risk-
mation on the capital ratio is provided in the discussion on Capital
weighted assets) and controls the bank’s entire credit risk. Further,
Ratio Information appearing in the Financial Section.
the Credit Portfolio Management Department within the Credit &
Credit Risk
1. Basic Approach to Credit Risk Management
(1) Definition of Credit Risk
Investment Planning Department has been strengthening its active
portfolio management function whereby loan securitization and
other market transactions are used to stabilize the portfolio’s credit
risk for a more sophisticated portfolio.
Credit risk is the possibility of a loss arising from a credit event,
The Corporate Research Department within the Corporate Ser-
such as deterioration in the financial condition of a borrower, that
vices Unit performs research on industries as well as investigates
causes an asset (including off-balance sheet transactions) to lose
the business situations of borrower enterprises to detect early
■ SMBC’s Credit Risk Management System
3.Credit Risk Management Methods
(1) Credit Risk Assessment and Quantification
balance sheet and qualitative factors to derive the obligor grade.
In the event that the borrower is domiciled overseas, internal rat-
value or become worthless.
signs of problems or growth potential. The Credit Administration
At SMBC, to effectively manage the risk involved in individual
ings for credit are made after taking into consideration country risk,
Overseas credits also include an element of country risk,
Department is responsible for handling NPLs of borrowers classi-
loans as well as the credit portfolio as a whole, we first acknowl-
which represents an assessment of the credit quality of each coun-
which is closely related to credit risk. This is the risk of loss caused
fied as potentially bankrupt or lower, and draws up plans for their
edge that every loan entails credit risks, assesses the credit risk
try, based on its political and economic situation, as well as its
by changes in foreign exchange, or political or economic situa-
workouts, including write-offs, and corporate rehabilitation. The
posed by each borrower and loan using an internal rating system,
current account balance and external debt. Self-assessment is the
tions.
department closely liaises with the Group company SMBC Busi-
ness Servicing Co., Ltd., which engages in related services, and
and quantifies that risk for control purposes.
obligor grading process for assigning lower grades, and the bor-
rower categories used in self-assessment are consistent with the
(2) Fundamental Principles for Credit Risk Management
works to efficiently reduce the amount of NPLs by such means as
(a) Internal Rating System
obligor grade categories.
All Group companies follow the fundamental principles established
the sell-off of claims.
There is an internal rating system for each asset control category
Obligor grades and facility grades are reviewed once a year
by SMFG to assess and manage credit risk on a Groupwide basis
The credit departments within each business unit conduct
set according to portfolio characteristics. For example, credits to
and, whenever necessary, such as when there are changes in the
and further raise the level of accuracy and comprehensiveness of
credit risk management for loans handled by their units and man-
commercial and industrial (C&I) companies, individuals for busi-
credit situation.
Groupwide credit risk management. Each Group company must
age their units’ portfolios. The credit limits they use are based on
ness purposes (domestic only), sovereigns, public-sector entities,
There are also grading systems for SME loans, loans to indi-
comprehensively manage credit risk according to the nature of its
the baseline amounts established for each grading category, with
and financial institutions are assigned an “obligor grade,” which
viduals, and project finance and other structured finance tailored
business, and assess and manage credit risk of individual loans
particular attention paid to evaluating and managing customers or
indicates the borrower’s creditworthiness, and/or “facility grade,”
according to the risk characteristics of these types of assets.
and credit portfolios quantitatively and using consistent standards.
loans perceived to have particularly high credit risk.
which indicates the collectibility of assets taking into account
The Credit & Investment Planning Department centrally man-
Credit risk is the most significant risk to which SMFG is
The Credit Review Department, operating independently of the
transaction conditions such as guarantee/collateral, and tenor. An
ages the internal rating systems, and properly designs, operates,
exposed. Without effective credit risk management, the impact of
business units, audits asset quality, accuracy of gradings, self-
obligor grade is determined by first assigning a financial grade
supervises, and validates the grading models. It validates the
the corresponding losses on operations can be overwhelming.
assessment, and state of credit risk management, and reports the
using a financial strength grading model and data obtained from
grading models (including statistical validation) of main assets
The purpose of credit risk management is to keep credit risk
results directly to the Board of Directors and the Management
the obligor’s financial statements. The financial grade is then
following the procedures manual once a year, to ensure their effec-
exposure to a permissible level relative to capital, to maintain the
Committee.
adjusted taking into account the actual state of the obligor’s
tiveness and suitability.
soundness of assets, and to ensure returns commensurate with
SMBC has established the Credit Risk Committee, as a con-
risk. This leads to a loan portfolio that achieves high returns on
sultative body, to round out its oversight system for undertaking
capital and assets.
flexible and efficient control of credit risk, and ensuring the overall
soundness of the bank’s loan operations.
38
SMFG 2008
SMFG 2008 39
capital limits are sub-divided into guidelines or ceilings for each
(3) Credit Policy
business including VaR and loss limits. Therefore, by strictly
SMBC’s credit policy comprises clearly stated universal and basic
observing the VaR and loss limits, and other factors, SMFG main-
operating concepts, policies, and standards for credit operations,
tains the soundness of the Group as a whole.
in accordance with the business mission and rules of conduct.
Implementation of Basel II
The Basel Capital Accord, an international agreement for ensuring
SMBC is promoting the understanding of and strict adherence
to its credit policy among all its managers and employees. By con-
ducting risk-sensitive credit management in accordance with
the soundness of banks through adherence to BIS capital ade-
Basel II and other capital adequacy regulations, SMBC aims to
quacy regulations, was revised in response to the diversification
enhance shareholder value and play a key part in society by
of the banking business and the increasing sophistication of risk
providing high-value-added financial services.
management technology. The revised BIS regulations, known
as Basel II, became effective from March 31, 2007 in Japan.
Basel II requires banks to implement internal controls to serve
2. Credit Risk Management System
At SMBC, the Credit & Investment Planning Department within the
as the basis for capital calculation, and to strengthen their risk
Corporate Staff Unit is responsible for the comprehensive manage-
management framework. It also requires disclosure of information
ment of credit risk. This department drafts and administers credit
to encourage market discipline in risk management.
policies, the internal rating system, credit authority guidelines, and
We have been implementing initiatives to strengthen our risk
credit application guidelines, and manages NPLs (non-performing
management framework, taking into account Basel II and other
loans) and other aspects of credit portfolio management. The
considerations.
department also cooperates with the Corporate Risk Management
Details of the initiatives are provided below, and detailed infor-
Department in quantifying credit risk (risk capital and risk-
mation on the capital ratio is provided in the discussion on Capital
weighted assets) and controls the bank’s entire credit risk. Further,
Ratio Information appearing in the Financial Section.
the Credit Portfolio Management Department within the Credit &
Credit Risk
1. Basic Approach to Credit Risk Management
(1) Definition of Credit Risk
Investment Planning Department has been strengthening its active
portfolio management function whereby loan securitization and
other market transactions are used to stabilize the portfolio’s credit
risk for a more sophisticated portfolio.
Credit risk is the possibility of a loss arising from a credit event,
The Corporate Research Department within the Corporate Ser-
such as deterioration in the financial condition of a borrower, that
vices Unit performs research on industries as well as investigates
causes an asset (including off-balance sheet transactions) to lose
the business situations of borrower enterprises to detect early
■ SMBC’s Credit Risk Management System
3.Credit Risk Management Methods
(1) Credit Risk Assessment and Quantification
balance sheet and qualitative factors to derive the obligor grade.
In the event that the borrower is domiciled overseas, internal rat-
value or become worthless.
signs of problems or growth potential. The Credit Administration
At SMBC, to effectively manage the risk involved in individual
ings for credit are made after taking into consideration country risk,
Overseas credits also include an element of country risk,
Department is responsible for handling NPLs of borrowers classi-
loans as well as the credit portfolio as a whole, we first acknowl-
which represents an assessment of the credit quality of each coun-
which is closely related to credit risk. This is the risk of loss caused
fied as potentially bankrupt or lower, and draws up plans for their
edge that every loan entails credit risks, assesses the credit risk
try, based on its political and economic situation, as well as its
by changes in foreign exchange, or political or economic situa-
workouts, including write-offs, and corporate rehabilitation. The
posed by each borrower and loan using an internal rating system,
current account balance and external debt. Self-assessment is the
tions.
department closely liaises with the Group company SMBC Busi-
ness Servicing Co., Ltd., which engages in related services, and
and quantifies that risk for control purposes.
obligor grading process for assigning lower grades, and the bor-
rower categories used in self-assessment are consistent with the
(2) Fundamental Principles for Credit Risk Management
works to efficiently reduce the amount of NPLs by such means as
(a) Internal Rating System
obligor grade categories.
All Group companies follow the fundamental principles established
the sell-off of claims.
There is an internal rating system for each asset control category
Obligor grades and facility grades are reviewed once a year
by SMFG to assess and manage credit risk on a Groupwide basis
The credit departments within each business unit conduct
set according to portfolio characteristics. For example, credits to
and, whenever necessary, such as when there are changes in the
and further raise the level of accuracy and comprehensiveness of
credit risk management for loans handled by their units and man-
commercial and industrial (C&I) companies, individuals for busi-
credit situation.
Groupwide credit risk management. Each Group company must
age their units’ portfolios. The credit limits they use are based on
ness purposes (domestic only), sovereigns, public-sector entities,
There are also grading systems for SME loans, loans to indi-
comprehensively manage credit risk according to the nature of its
the baseline amounts established for each grading category, with
and financial institutions are assigned an “obligor grade,” which
viduals, and project finance and other structured finance tailored
business, and assess and manage credit risk of individual loans
particular attention paid to evaluating and managing customers or
indicates the borrower’s creditworthiness, and/or “facility grade,”
according to the risk characteristics of these types of assets.
and credit portfolios quantitatively and using consistent standards.
loans perceived to have particularly high credit risk.
which indicates the collectibility of assets taking into account
The Credit & Investment Planning Department centrally man-
Credit risk is the most significant risk to which SMFG is
The Credit Review Department, operating independently of the
transaction conditions such as guarantee/collateral, and tenor. An
ages the internal rating systems, and properly designs, operates,
exposed. Without effective credit risk management, the impact of
business units, audits asset quality, accuracy of gradings, self-
obligor grade is determined by first assigning a financial grade
supervises, and validates the grading models. It validates the
the corresponding losses on operations can be overwhelming.
assessment, and state of credit risk management, and reports the
using a financial strength grading model and data obtained from
grading models (including statistical validation) of main assets
The purpose of credit risk management is to keep credit risk
results directly to the Board of Directors and the Management
the obligor’s financial statements. The financial grade is then
following the procedures manual once a year, to ensure their effec-
exposure to a permissible level relative to capital, to maintain the
Committee.
adjusted taking into account the actual state of the obligor’s
tiveness and suitability.
soundness of assets, and to ensure returns commensurate with
SMBC has established the Credit Risk Committee, as a con-
risk. This leads to a loan portfolio that achieves high returns on
sultative body, to round out its oversight system for undertaking
capital and assets.
flexible and efficient control of credit risk, and ensuring the overall
soundness of the bank’s loan operations.
38
SMFG 2008
SMFG 2008 39
(b) Quantification of Credit Risk
(2) Framework for Managing Individual Loans
(b) Credit Monitoring System
To manage country risk, SMBC also has credit limit guidelines
Credit risk quantification refers to the process of estimating the
(a) Credit Assessment
At SMBC, in addition to analyzing loans at the application stage,
based on each country’s creditworthiness.
degree of credit risk of a portfolio or individual loan taking into
At SMBC, credit assessment of corporate loans involves a variety
the Credit Monitoring System is utilized to reassess obligor grades,
account not just the obligor’s probability of default (PD), but also
of financial analyses, including cash flow, to predict an enterprise’s
and review self-assessment and credit policies so that problems
(c) Balancing Risk and Returns
the concentration of risk in a specific customer or industry and the
capability of loan repayment and its growth prospects. These
can be detected at an early stage and quick and effective action
Against the background of increasing sophistication in methods
loss impact of fluctuations in the value of collateral, such as real
quantitative measures, when combined with qualitative analyses of
can be taken. The system includes periodic monitoring carried out
of managing credit risk, SMBC is engaged in a new type of un-
estate and securities.
industrial trends, the enterprise’s R&D capabilities, the competi-
each time an obligor enterprise discloses financial results, as well
secured loans. Meanwhile, the bank runs credit operations on the
Specifically, first, the PD by grade, LGD (loss given default),
tiveness of its products or services, and its management caliber,
as continuous monitoring performed each time credit conditions
basic principle of earning returns that are commensurate with the
credit quality correlation among obligors, and other parameter val-
result in a comprehensive credit assessment. The loan application
change, as indicated in the diagram below.
credit risk involved, and makes every effort to reduce capital and
ues are estimated using historical data of obligors and facilities
is analyzed in terms of the intended utilization of the funds and the
credit costs as well as general and administrative expenses.
stored in a database to calculate the credit risk. Then, based on
repayment schedule. Thus, SMBC is able to arrive at an accurate
(3) Framework for Credit Portfolio Management
these parameters, we run a simulation of 10,000 iterations of simul-
and fair credit decision based on an objective examination of all
At SMBC, in addition to managing individual loans, SMBC applies
(d) Reduction and Prevention of Non-Performing Loans
taneous default using the Monte Carlo method to calculate our
relevant factors.
the following basic policies to the management of the entire credit
On NPLs and potential NPLs, SMBC carries out regular loan
maximum loss exposure to the estimate amount of the maximum
Increasing the understandability to customers of loan condi-
portfolio to maintain and improve its soundness and profitability
reviews to clarify handling policies and action plans, enabling it to
losses that may be incurred. Based on these quantitative results,
tions and approval standards for specific borrowing purposes and
over the medium-to-long term.
we allocate risk capital. Please note that the PD and LGD values
loan categories is a part of SMBC’s ongoing review of lending
swiftly implement measures to prevent deterioration of borrowers’
business situations, support business recoveries, collect on loans,
are, in principle, the same values as those used for calculating the
practices, which includes the revision of loan contract forms with
(a) Risk-Taking within the Scope of Capital
and enhance loan security.
capital ratio.
the chief aim of clarifying lending conditions utilizing financial
To keep credit risk exposure to a permissible level relative to
Risk quantification is also executed for purposes such as to
covenants. SMBC is also making steady progress in rationalizing
capital, SMBC sets credit risk capital limits for internal control
(e) Toward Active Portfolio Management
determine the portfolio’s risk concentration, or to simulate eco-
its credit assessment process.
purposes. Under these limits, separate guidelines are issued for
SMBC makes active use of credit derivatives, loan securitization,
nomic movements (stress tests), and the results are used for
To respond proactively and promptly to customers’ funding
each business unit and marketing unit. Also issued are specialized
and other instruments to proactively and flexibly manage its port-
making optimal decisions across the whole range of business
needs—particularly those of SMEs—we employ a standardized
guidelines for each business unit and business type, such as real
folio to stabilize credit risk.
operations, including formulating business plans and providing a
credit risk assessment process for SMEs that uses a credit-scoring
estate finance, fund investment, and investment in securitization
standard against which individual credit applications are
model. With this process, we are building a regime for efficiently
products. Regular monitoring is conducted to make sure that these
(4) Self-Assessment, Write-Offs, and Provisions
assessed.
marketing our Business Select Loan and other SME loans.
guidelines are being followed, thus ensuring appropriate overall
(a) Self-Assessment
■ SMBC’s Obligor Grading System
In the field of housing loans for indi-
viduals, we employ a credit assessment
model based on credit data amassed
and analyzed by SMBC over many
years. This model enables our loan
officers to efficiently make rational
decisions on housing loan applications,
and to reply to the customers without
delay. It also facilitates the effective
management of credit risk, as well as the
flexible setting of interest rates.
We also provide loans to individuals
who rent out properties such as apart-
ments. The loan applications are
subjected to a precise credit risk
assessment process utilizing a risk-
assessment model that factors in the
projected revenue from the rental busi-
ness. The process is also used to
provide advice to such customers on
how to revise their business plans.
management of credit risk.
(b) Controlling Concentration Risk
SMBC conducts rigorous self-assessment of asset quality using
criteria based on the Financial Inspection Manual of the Financial
Services Agency and the Practical Guideline published by the
Because the concentration of credit risk in an industry or corporate
Japanese Institute of Certified Public Accountants. Self-assess-
group has the potential to substantially impair capital, SMBC
ment is the latter stage of the obligor grading process for
implements measures to prevent the excessive concentration
determining the borrower’s ability to fulfill debt obligations, and the
of loans in an industry and to control large exposure to individual
obligor grade criteria are consistent with the categories used in
companies or corporate groups by setting guidelines for maximum
self-assessment.
loan amounts.
■ SMBC’s Credit Monitoring System
40
SMFG 2008
SMFG 2008 41
(b) Quantification of Credit Risk
(2) Framework for Managing Individual Loans
(b) Credit Monitoring System
To manage country risk, SMBC also has credit limit guidelines
Credit risk quantification refers to the process of estimating the
(a) Credit Assessment
At SMBC, in addition to analyzing loans at the application stage,
based on each country’s creditworthiness.
degree of credit risk of a portfolio or individual loan taking into
At SMBC, credit assessment of corporate loans involves a variety
the Credit Monitoring System is utilized to reassess obligor grades,
account not just the obligor’s probability of default (PD), but also
of financial analyses, including cash flow, to predict an enterprise’s
and review self-assessment and credit policies so that problems
(c) Balancing Risk and Returns
the concentration of risk in a specific customer or industry and the
capability of loan repayment and its growth prospects. These
can be detected at an early stage and quick and effective action
Against the background of increasing sophistication in methods
loss impact of fluctuations in the value of collateral, such as real
quantitative measures, when combined with qualitative analyses of
can be taken. The system includes periodic monitoring carried out
of managing credit risk, SMBC is engaged in a new type of un-
estate and securities.
industrial trends, the enterprise’s R&D capabilities, the competi-
each time an obligor enterprise discloses financial results, as well
secured loans. Meanwhile, the bank runs credit operations on the
Specifically, first, the PD by grade, LGD (loss given default),
tiveness of its products or services, and its management caliber,
as continuous monitoring performed each time credit conditions
basic principle of earning returns that are commensurate with the
credit quality correlation among obligors, and other parameter val-
result in a comprehensive credit assessment. The loan application
change, as indicated in the diagram below.
credit risk involved, and makes every effort to reduce capital and
ues are estimated using historical data of obligors and facilities
is analyzed in terms of the intended utilization of the funds and the
credit costs as well as general and administrative expenses.
stored in a database to calculate the credit risk. Then, based on
repayment schedule. Thus, SMBC is able to arrive at an accurate
(3) Framework for Credit Portfolio Management
these parameters, we run a simulation of 10,000 iterations of simul-
and fair credit decision based on an objective examination of all
At SMBC, in addition to managing individual loans, SMBC applies
(d) Reduction and Prevention of Non-Performing Loans
taneous default using the Monte Carlo method to calculate our
relevant factors.
the following basic policies to the management of the entire credit
On NPLs and potential NPLs, SMBC carries out regular loan
maximum loss exposure to the estimate amount of the maximum
Increasing the understandability to customers of loan condi-
portfolio to maintain and improve its soundness and profitability
reviews to clarify handling policies and action plans, enabling it to
losses that may be incurred. Based on these quantitative results,
tions and approval standards for specific borrowing purposes and
over the medium-to-long term.
we allocate risk capital. Please note that the PD and LGD values
loan categories is a part of SMBC’s ongoing review of lending
swiftly implement measures to prevent deterioration of borrowers’
business situations, support business recoveries, collect on loans,
are, in principle, the same values as those used for calculating the
practices, which includes the revision of loan contract forms with
(a) Risk-Taking within the Scope of Capital
and enhance loan security.
capital ratio.
the chief aim of clarifying lending conditions utilizing financial
To keep credit risk exposure to a permissible level relative to
Risk quantification is also executed for purposes such as to
covenants. SMBC is also making steady progress in rationalizing
capital, SMBC sets credit risk capital limits for internal control
(e) Toward Active Portfolio Management
determine the portfolio’s risk concentration, or to simulate eco-
its credit assessment process.
purposes. Under these limits, separate guidelines are issued for
SMBC makes active use of credit derivatives, loan securitization,
nomic movements (stress tests), and the results are used for
To respond proactively and promptly to customers’ funding
each business unit and marketing unit. Also issued are specialized
and other instruments to proactively and flexibly manage its port-
making optimal decisions across the whole range of business
needs—particularly those of SMEs—we employ a standardized
guidelines for each business unit and business type, such as real
folio to stabilize credit risk.
operations, including formulating business plans and providing a
credit risk assessment process for SMEs that uses a credit-scoring
estate finance, fund investment, and investment in securitization
standard against which individual credit applications are
model. With this process, we are building a regime for efficiently
products. Regular monitoring is conducted to make sure that these
(4) Self-Assessment, Write-Offs, and Provisions
assessed.
marketing our Business Select Loan and other SME loans.
guidelines are being followed, thus ensuring appropriate overall
(a) Self-Assessment
■ SMBC’s Obligor Grading System
In the field of housing loans for indi-
viduals, we employ a credit assessment
model based on credit data amassed
and analyzed by SMBC over many
years. This model enables our loan
officers to efficiently make rational
decisions on housing loan applications,
and to reply to the customers without
delay. It also facilitates the effective
management of credit risk, as well as the
flexible setting of interest rates.
We also provide loans to individuals
who rent out properties such as apart-
ments. The loan applications are
subjected to a precise credit risk
assessment process utilizing a risk-
assessment model that factors in the
projected revenue from the rental busi-
ness. The process is also used to
provide advice to such customers on
how to revise their business plans.
management of credit risk.
(b) Controlling Concentration Risk
SMBC conducts rigorous self-assessment of asset quality using
criteria based on the Financial Inspection Manual of the Financial
Services Agency and the Practical Guideline published by the
Because the concentration of credit risk in an industry or corporate
Japanese Institute of Certified Public Accountants. Self-assess-
group has the potential to substantially impair capital, SMBC
ment is the latter stage of the obligor grading process for
implements measures to prevent the excessive concentration
determining the borrower’s ability to fulfill debt obligations, and the
of loans in an industry and to control large exposure to individual
obligor grade criteria are consistent with the categories used in
companies or corporate groups by setting guidelines for maximum
self-assessment.
loan amounts.
■ SMBC’s Credit Monitoring System
40
SMFG 2008
SMFG 2008 41
gories: Normal Borrowers, Borrowers Requiring Caution,
Borrowers Requiring Caution
At the same time, self-assessment is a preparatory task for
ensuring SMBC’s asset quality and calculating the appropriate
level of write-offs and provisions. Each asset is assessed individu-
ally for its security and collectibility. Depending on the borrower’s
current situation, the borrower is assigned to one of five cate-
Potentially Bankrupt Borrowers, Effectively Bankrupt Borrowers,
and Bankrupt Borrowers. Based on the borrower’s category, claims
on the borrower are classified into Classification I, II, III, and IV
assets according to their default and impairment risk levels, taking
into account such factors as collateral and guarantees. As part of
our efforts to bolster risk management throughout the Group, our
consolidated subsidiaries carry out self-assessment in substan-
tially the same manner.
Borrower Categories, Defined
Normal
Borrowers
Borrowers
Requiring Caution
Potentially Bankrupt
Borrowers
Effectively Bankrupt
Borrowers
Bankrupt
Borrowers
Borrowers with good earnings performances and no significant
financial problems
Borrowers identified for close monitoring
Borrowers perceived to have a high risk of falling into bank-
ruptcy
Borrowers that may not have legally or formally declared bank-
ruptcy but are essentially bankrupt
Borrowers that have been legally or formally declared bankrupt
Asset Classifications, Defined
Self-Assessment Borrower Categories
Standards for Write-Offs and Provisions
Normal Borrowers
The expected loss amount for the next 12 months is
calculated for each grade based on the grade’s histori-
cal bankruptcy rate, and the total amount is recorded
as “provision for the general reserve for possible loan
losses.”
These assets are divided into groups according to the
level of default risk. Amounts are recorded as provi-
sions for the general reserve in proportion to the
expected losses based on the historical bankruptcy
rate of each group. The groups are “claims on
Substandard Borrowers” and “claims on other
Borrowers Requiring Caution.” The latter group is fur-
ther subdivided according to the borrower’s financial
position, credit situation, and other factors. Further,
when cash flows can be estimated reasonably accu-
rately, the discount cash flow (DCF) method is applied
mainly to large claims for calculating the provision
amount.
A provision for the specific reserve for possible loan
losses is made for the portion of Classification III
assets (calculated for each borrower) not secured by
collateral, guarantee, or other means. Further, when
cash flows can be estimated reasonably accurately, the
DCF method is applied mainly to large claims for cal-
culating the provision amount.
Classification III asset and Classification IV asset
amounts for each borrower are calculated, and the full
amount of Classification IV assets (deemed to be
uncollectible or of no value) is written off in principle
and provision for the specific reserve is made for the
full amount of Classification III assets.
Potentially Bankrupt Borrowers
Effectively Bankrupt/
Bankrupt Borrowers
Notes
General reserve
Provisions made in accordance with general inherent default risk of
loans, unrelated to specific individual loans or other claims
Specific reserve
Provisions made for claims that have been found uncollectible in part
or in total (individually evaluated claims)
Classification I
Assets not classified under Classifications II, III, or IV
Discounted Cash Flow Method
Classification II
Assets perceived to have an above-average risk of uncollectibility
Classification III
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
(b) Asset Write-Offs and Provisions
In cases where claims have been determined to be uncollectible,
or deemed to be uncollectible, write-offs signify the recognition of
losses on the account books with respect to such claims. Write-
offs can be made either in the form of loss recognition by offsetting
uncollectible amounts against corresponding balance sheet items,
referred to as a direct write-off, or else by recognition of a loan loss
provision on a contra-asset account in the amount deemed uncol-
lectible, referred to as an indirect write-off. Recognition of indirect
write-offs is generally known as provision for the reserve for possi-
ble loan losses.
SMBC’s write-off and provision criteria for each self-assess-
ment borrower category are shown in the table below. As part of
our overall measures to strengthen risk management throughout
the Group, all consolidated subsidiaries use substantially the same
standards as SMBC for write-offs and provisions.
SMBC uses the discounted cash flow (DFC) method to calcu-
late the provision amounts for large claims on Substandard
Borrowers and Potentially Bankrupt Borrowers when the cash
flow from repayment of principal and interest received can be
estimated reasonably accurately. SMBC then makes provisions
equivalent to the excess of the book value of the claims over
the said cash inflow discounted by the initial contractual inter-
est rate or the effective interest rate at the time of origination.
One of the major advantages of the DCF method over conven-
tional methods of calculating the provision amount is that it
enables effective evaluation of each individual borrower.
However, as the provision amount depends on the future cash
flow estimated on the basis of the borrower’s business recon-
struction plan and DCF formula input values, such as the
discount rate and the probability of the borrower going into
bankruptcy, SMBC makes every effort to utilize up-to-date and
correct data to realize the most accurate estimates possible.
(c) Disclosure of Problem Assets
Problem assets are loans and other claims of which recovery of
either principal or interest appears doubtful, and are disclosed in
accordance with the Banking Law (in which they are referred to as
“risk-monitored loans”) and the Financial Reconstruction Law
(where they are referred to as “problem assets”). Problem assets
42
SMFG 2008
are classified based on the borrower categories assigned during
liquidity risks in an integrated manner. The department not only
self-assessment. For detailed information on results of self-assess-
monitors the current risk situations, but also reports regularly to the
ments, write-offs, provisions, and disclosure of problem assets,
Management Committee and the Board of Directors. Furthermore,
please refer to page 186.
4. Market Credit Risk Management
Financial products, such as funds, securitized products, and credit
SMBC’s ALM Committee meets on a monthly basis to examine
reports on the state of observance of the bank’s limits on market
and liquidity risks, and to review and discuss the bank’s ALM poli-
cies.
derivatives, that have indirect risk arising from the assets under-
To prevent unforeseen processing errors as well as fraudulent
lying these products, such as bonds, loan obligations, and other
transactions, it is important to establish a system of checks on the
assets (the underlying assets), are recognized as transactions that
business units (front office). At SMBC, both the processing depart-
combine the characteristics of the credit risk of the underlying
ments (back office) and the administrative departments (middle
assets and “market risk” that arises from the buying and selling of
office) conduct the checks. In addition, SMBC’s independent Inter-
these products. This is referred to as market credit risk.
nal Audit Unit periodically performs comprehensive internal audits
For these types of products, we manage credit risk using the
to verify that the risk management system is functioning properly.
methods of analysis and assessment already described for credit
risk, but, for the sake of complete risk management, we also apply
the methods for management of market risk described in the
following section on management of market and liquidity risk.
In addition, we have established guidelines based on the
characteristics of these types of risk and appropriately manage the
risk of losses.
Market and Liquidity Risks
1. Basic Approach to Market and Liquidity Risk Manage-
ment
(1) Definitions of Market and Liquidity Risk
Market risk is the possibility that fluctuations in interest rates, for-
eign exchange rates, or stock prices will change the market value
of financial products, leading to a loss.
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.
(2) Fundamental Principles for Market and Liquidity Risk Management
SMFG is working to further enhance the effectiveness of its quanti-
tative management of market and liquidity risks across the entire
Group by setting allowable risk limits; ensuring the transparency
of the risk management process; clearly separating front-office,
middle-office, and back-office operations; and establishing
a highly efficient system of mutual checks and balances.
2. Market and Liquidity Risk Management System
On the basis of SMFG’s Groupwide basic policies for risk manage-
ment, SMBC’s Board of Directors authorizes important matters
relating to the management of market and liquidity risks, such as
basic policies and risk limits, which are decided by the Manage-
ment Committee. Additionally, the bank’s Corporate Risk
Management Department, which is independent of business units
that directly handle market transactions, manages market and
■ SMBC’s Market Risk and Liquidity Risk Management System
.
SMFG 2008 43
gories: Normal Borrowers, Borrowers Requiring Caution,
Borrowers Requiring Caution
At the same time, self-assessment is a preparatory task for
ensuring SMBC’s asset quality and calculating the appropriate
level of write-offs and provisions. Each asset is assessed individu-
ally for its security and collectibility. Depending on the borrower’s
current situation, the borrower is assigned to one of five cate-
Potentially Bankrupt Borrowers, Effectively Bankrupt Borrowers,
and Bankrupt Borrowers. Based on the borrower’s category, claims
on the borrower are classified into Classification I, II, III, and IV
assets according to their default and impairment risk levels, taking
into account such factors as collateral and guarantees. As part of
our efforts to bolster risk management throughout the Group, our
consolidated subsidiaries carry out self-assessment in substan-
tially the same manner.
Borrower Categories, Defined
Normal
Borrowers
Borrowers
Requiring Caution
Potentially Bankrupt
Borrowers
Effectively Bankrupt
Borrowers
Bankrupt
Borrowers
Borrowers with good earnings performances and no significant
financial problems
Borrowers identified for close monitoring
Borrowers perceived to have a high risk of falling into bank-
ruptcy
Borrowers that may not have legally or formally declared bank-
ruptcy but are essentially bankrupt
Borrowers that have been legally or formally declared bankrupt
Asset Classifications, Defined
Self-Assessment Borrower Categories
Standards for Write-Offs and Provisions
Normal Borrowers
The expected loss amount for the next 12 months is
calculated for each grade based on the grade’s histori-
cal bankruptcy rate, and the total amount is recorded
as “provision for the general reserve for possible loan
losses.”
These assets are divided into groups according to the
level of default risk. Amounts are recorded as provi-
sions for the general reserve in proportion to the
expected losses based on the historical bankruptcy
rate of each group. The groups are “claims on
Substandard Borrowers” and “claims on other
Borrowers Requiring Caution.” The latter group is fur-
ther subdivided according to the borrower’s financial
position, credit situation, and other factors. Further,
when cash flows can be estimated reasonably accu-
rately, the discount cash flow (DCF) method is applied
mainly to large claims for calculating the provision
amount.
A provision for the specific reserve for possible loan
losses is made for the portion of Classification III
assets (calculated for each borrower) not secured by
collateral, guarantee, or other means. Further, when
cash flows can be estimated reasonably accurately, the
DCF method is applied mainly to large claims for cal-
culating the provision amount.
Classification III asset and Classification IV asset
amounts for each borrower are calculated, and the full
amount of Classification IV assets (deemed to be
uncollectible or of no value) is written off in principle
and provision for the specific reserve is made for the
full amount of Classification III assets.
Potentially Bankrupt Borrowers
Effectively Bankrupt/
Bankrupt Borrowers
Notes
General reserve
Provisions made in accordance with general inherent default risk of
loans, unrelated to specific individual loans or other claims
Specific reserve
Provisions made for claims that have been found uncollectible in part
or in total (individually evaluated claims)
Classification I
Assets not classified under Classifications II, III, or IV
Discounted Cash Flow Method
Classification II
Assets perceived to have an above-average risk of uncollectibility
Classification III
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
(b) Asset Write-Offs and Provisions
In cases where claims have been determined to be uncollectible,
or deemed to be uncollectible, write-offs signify the recognition of
losses on the account books with respect to such claims. Write-
offs can be made either in the form of loss recognition by offsetting
uncollectible amounts against corresponding balance sheet items,
referred to as a direct write-off, or else by recognition of a loan loss
provision on a contra-asset account in the amount deemed uncol-
lectible, referred to as an indirect write-off. Recognition of indirect
write-offs is generally known as provision for the reserve for possi-
ble loan losses.
SMBC’s write-off and provision criteria for each self-assess-
ment borrower category are shown in the table below. As part of
our overall measures to strengthen risk management throughout
the Group, all consolidated subsidiaries use substantially the same
standards as SMBC for write-offs and provisions.
SMBC uses the discounted cash flow (DFC) method to calcu-
late the provision amounts for large claims on Substandard
Borrowers and Potentially Bankrupt Borrowers when the cash
flow from repayment of principal and interest received can be
estimated reasonably accurately. SMBC then makes provisions
equivalent to the excess of the book value of the claims over
the said cash inflow discounted by the initial contractual inter-
est rate or the effective interest rate at the time of origination.
One of the major advantages of the DCF method over conven-
tional methods of calculating the provision amount is that it
enables effective evaluation of each individual borrower.
However, as the provision amount depends on the future cash
flow estimated on the basis of the borrower’s business recon-
struction plan and DCF formula input values, such as the
discount rate and the probability of the borrower going into
bankruptcy, SMBC makes every effort to utilize up-to-date and
correct data to realize the most accurate estimates possible.
(c) Disclosure of Problem Assets
Problem assets are loans and other claims of which recovery of
either principal or interest appears doubtful, and are disclosed in
accordance with the Banking Law (in which they are referred to as
“risk-monitored loans”) and the Financial Reconstruction Law
(where they are referred to as “problem assets”). Problem assets
42
SMFG 2008
are classified based on the borrower categories assigned during
liquidity risks in an integrated manner. The department not only
self-assessment. For detailed information on results of self-assess-
monitors the current risk situations, but also reports regularly to the
ments, write-offs, provisions, and disclosure of problem assets,
Management Committee and the Board of Directors. Furthermore,
please refer to page 186.
4. Market Credit Risk Management
Financial products, such as funds, securitized products, and credit
SMBC’s ALM Committee meets on a monthly basis to examine
reports on the state of observance of the bank’s limits on market
and liquidity risks, and to review and discuss the bank’s ALM poli-
cies.
derivatives, that have indirect risk arising from the assets under-
To prevent unforeseen processing errors as well as fraudulent
lying these products, such as bonds, loan obligations, and other
transactions, it is important to establish a system of checks on the
assets (the underlying assets), are recognized as transactions that
business units (front office). At SMBC, both the processing depart-
combine the characteristics of the credit risk of the underlying
ments (back office) and the administrative departments (middle
assets and “market risk” that arises from the buying and selling of
office) conduct the checks. In addition, SMBC’s independent Inter-
these products. This is referred to as market credit risk.
nal Audit Unit periodically performs comprehensive internal audits
For these types of products, we manage credit risk using the
to verify that the risk management system is functioning properly.
methods of analysis and assessment already described for credit
risk, but, for the sake of complete risk management, we also apply
the methods for management of market risk described in the
following section on management of market and liquidity risk.
In addition, we have established guidelines based on the
characteristics of these types of risk and appropriately manage the
risk of losses.
Market and Liquidity Risks
1. Basic Approach to Market and Liquidity Risk Manage-
ment
(1) Definitions of Market and Liquidity Risk
Market risk is the possibility that fluctuations in interest rates, for-
eign exchange rates, or stock prices will change the market value
of financial products, leading to a loss.
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.
(2) Fundamental Principles for Market and Liquidity Risk Management
SMFG is working to further enhance the effectiveness of its quanti-
tative management of market and liquidity risks across the entire
Group by setting allowable risk limits; ensuring the transparency
of the risk management process; clearly separating front-office,
middle-office, and back-office operations; and establishing
a highly efficient system of mutual checks and balances.
2. Market and Liquidity Risk Management System
On the basis of SMFG’s Groupwide basic policies for risk manage-
ment, SMBC’s Board of Directors authorizes important matters
relating to the management of market and liquidity risks, such as
basic policies and risk limits, which are decided by the Manage-
ment Committee. Additionally, the bank’s Corporate Risk
Management Department, which is independent of business units
that directly handle market transactions, manages market and
■ SMBC’s Market Risk and Liquidity Risk Management System
.
SMFG 2008 43
3. Market and Liquidity Risk Management Methods
(1) Market Risk Management
(b) Back-Testing Results
The relationship between the VaR calculated with the model and
The bank manages market risk by setting maximum limits for
the actual profit and loss data is back-tested daily. The back-test-
“VaR” and maximum loss. These limits are set within the “market
ing results for SMBC’s trading accounts for fiscal 2007 are shown
risk capital limit” which is determined taking into account the
below. A data point below the diagonal line indicates a loss in
bank’s shareholders’ equity and other principal indicators of the
excess of the predicted VaR for that day; however, as in fiscal
bank’s financial position and management resources.
2006, there were no such excess losses during fiscal 2007. This
Market risk can be divided into various factors: foreign
demonstrates that the SMBC VaR model, with a one-sided confi-
exchange rate, interest rate, equity price, and option risks. Fine-
dence interval of 99.0%, is sufficiently reliable.
tuned management of each risk category is achieved by
employing the VaR method in conjunction with suitable indicators
for managing the risk of individual financial instruments such as
the BPV indicator.
Please note that, in the case of interest rate fluctuation risk, the
methods for recognizing the dates for maturity of demand deposits
(current accounts and ordinary deposit accounts that can be with-
drawn at any time) and the method for estimating the time of
cancellation prior to maturity of time deposits and consumer hous-
ing loans differ substantially. At SMBC, the maturity of demand
deposits that are expected to be left with the bank for a prolonged
period is regarded to be five years (2.5 years on average). The
cancellation prior to maturity of time deposits and consumer hous-
ing loans is estimated based on historical data.
(a) VaR Results
The results of VaR calculations for fiscal 2007 are shown in the
table below. SMBC’s internal VaR model makes use of historical
data to prepare scenarios for market fluctuations, and, by con-
ducting simulations of gains and losses, the model estimates the
maximum losses that may occur. (This is known as the historical
simulation method.) This internal SMBC model is evaluated period-
ically by an independent auditing firm to assess its
appropriateness and accuracy.
■ VaR Results
Glossary of Terms
1. VaR (Value at risk)
The largest predicted loss that is possible given a fixed confi-
dence interval. For example, VaR indicates, for a holding period
of one day and a confidence interval of 99.0%, the maximum
loss that may occur as a result of market fluctuations in one day
with a probability of 1%.
2. BPV (Basis point value)
The amount of change in assessed value as a result of a one
basis point (0.01%) movement in interest rates.
3. Trading
A market operation for generating profit by taking advantage of
short-term fluctuations in market values and differences in value
among markets.
4. Banking
A market operation for generating profit through management of
interest rates, terms, and other aspects of assets (loans, bonds,
etc.) and liabilities (deposits, etc.).
■ Back-Testing Results (Trading Book)
SMFG (consolidated) SMBC (consolidated) SMBC (non-consolidated)
■ Decline in Economic Value Based on Outlier Framework
(Billions of yen)
SMBC (consolidated)
SMBC (non-consolidated)
March 31, 2007 March 31, 2008 March 31, 2007 March 31, 2008
165.8
119.7
33.6
3.4
407.4
154.2
196.1
36.7
151.3
112.5
28.1
2.9
398.5
149.7
193.9
36.6
Total
Impact of yen
interest rates
Impact of U.S. dollar
interest rates
Impact of Euro
interest rates
Percentage of Tier I + Tier II
2.1%
5.4%
2.1%
5.8%
Note: “Decline in economic value” is the decline of present value after interest rate shocks
(1st and 99th percentile of observed interest rate changes using a 1-year holding
period and 5 years of observations).
■ Composition, by Industry, of Listed Equity Portfolio
(March 31, 2008)
(c) Stress Testing
The market occasionally undergoes extreme fluctuations that
exceed projections. To manage market risk, therefore, it is impor-
tant to run simulations of situations that may occur only once in
many years (stress tests). At SMBC, monthly stress tests using
scenarios of past market fluctuations, those not related to past
market fluctuations, and specific-factor driven market fluctuations
are conducted to prepare for unforeseeable swings.
(d) Outlier Framework
In the event the economic value of a bank declines by more than
20% of the sum of Tier I and Tier II capital (“outlier ratio”) as a
result of interest rate shocks, the bank falls into the category of
“outlier bank”, as stipulated under the Second Pillar of Basel II.
As of March 31, 2008, the outlier ratio was less than 6%, sub-
stantially below the 20% criterion.
(e) Managing Risk of Stocks Held for Strategic Purposes
The Corporate Risk Management Department establishes limits on
allowable risk for strategic equity investments, and monitors the
observance of those limits to keep stock price fluctuation risk
within acceptable parameters.
SMBC aims to keep the stock price fluctuation risk associated
with its strategic equity investments at a level appropriate to the
financial strength of the bank. To achieve this, we have been
reducing the balance of our strategic stock holdings, and the bal-
ance now stands at approximately 50% of Tier I capital.
(2) Liquidity Risk
At SMBC, liquidity risk is regarded as one of the major risks. So as
not to be overly dependent on market-based funding to cover
funding sources, and establishing contingency plans.
short-term cash outflows, SMBC’s liquidity risk management is
In daily risk management operations, SMBC prevents a cumu-
based on a framework consisting of setting funding gap limits and
lative increase in liquidity risk by setting the funding gap limits and
guidelines, maintaining a system of highly liquid supplementary
guidelines. For emergency situations, there are contingency plans
44
SMFG 2008
SMFG 2008 45
3. Market and Liquidity Risk Management Methods
(1) Market Risk Management
(b) Back-Testing Results
The relationship between the VaR calculated with the model and
The bank manages market risk by setting maximum limits for
the actual profit and loss data is back-tested daily. The back-test-
“VaR” and maximum loss. These limits are set within the “market
ing results for SMBC’s trading accounts for fiscal 2007 are shown
risk capital limit” which is determined taking into account the
below. A data point below the diagonal line indicates a loss in
bank’s shareholders’ equity and other principal indicators of the
excess of the predicted VaR for that day; however, as in fiscal
bank’s financial position and management resources.
2006, there were no such excess losses during fiscal 2007. This
Market risk can be divided into various factors: foreign
demonstrates that the SMBC VaR model, with a one-sided confi-
exchange rate, interest rate, equity price, and option risks. Fine-
dence interval of 99.0%, is sufficiently reliable.
tuned management of each risk category is achieved by
employing the VaR method in conjunction with suitable indicators
for managing the risk of individual financial instruments such as
the BPV indicator.
Please note that, in the case of interest rate fluctuation risk, the
methods for recognizing the dates for maturity of demand deposits
(current accounts and ordinary deposit accounts that can be with-
drawn at any time) and the method for estimating the time of
cancellation prior to maturity of time deposits and consumer hous-
ing loans differ substantially. At SMBC, the maturity of demand
deposits that are expected to be left with the bank for a prolonged
period is regarded to be five years (2.5 years on average). The
cancellation prior to maturity of time deposits and consumer hous-
ing loans is estimated based on historical data.
(a) VaR Results
The results of VaR calculations for fiscal 2007 are shown in the
table below. SMBC’s internal VaR model makes use of historical
data to prepare scenarios for market fluctuations, and, by con-
ducting simulations of gains and losses, the model estimates the
maximum losses that may occur. (This is known as the historical
simulation method.) This internal SMBC model is evaluated period-
ically by an independent auditing firm to assess its
appropriateness and accuracy.
■ VaR Results
Glossary of Terms
1. VaR (Value at risk)
The largest predicted loss that is possible given a fixed confi-
dence interval. For example, VaR indicates, for a holding period
of one day and a confidence interval of 99.0%, the maximum
loss that may occur as a result of market fluctuations in one day
with a probability of 1%.
2. BPV (Basis point value)
The amount of change in assessed value as a result of a one
basis point (0.01%) movement in interest rates.
3. Trading
A market operation for generating profit by taking advantage of
short-term fluctuations in market values and differences in value
among markets.
4. Banking
A market operation for generating profit through management of
interest rates, terms, and other aspects of assets (loans, bonds,
etc.) and liabilities (deposits, etc.).
■ Back-Testing Results (Trading Book)
SMFG (consolidated) SMBC (consolidated) SMBC (non-consolidated)
■ Decline in Economic Value Based on Outlier Framework
(Billions of yen)
SMBC (consolidated)
SMBC (non-consolidated)
March 31, 2007 March 31, 2008 March 31, 2007 March 31, 2008
165.8
119.7
33.6
3.4
407.4
154.2
196.1
36.7
151.3
112.5
28.1
2.9
398.5
149.7
193.9
36.6
Total
Impact of yen
interest rates
Impact of U.S. dollar
interest rates
Impact of Euro
interest rates
Percentage of Tier I + Tier II
2.1%
5.4%
2.1%
5.8%
Note: “Decline in economic value” is the decline of present value after interest rate shocks
(1st and 99th percentile of observed interest rate changes using a 1-year holding
period and 5 years of observations).
■ Composition, by Industry, of Listed Equity Portfolio
(March 31, 2008)
(c) Stress Testing
The market occasionally undergoes extreme fluctuations that
exceed projections. To manage market risk, therefore, it is impor-
tant to run simulations of situations that may occur only once in
many years (stress tests). At SMBC, monthly stress tests using
scenarios of past market fluctuations, those not related to past
market fluctuations, and specific-factor driven market fluctuations
are conducted to prepare for unforeseeable swings.
(d) Outlier Framework
In the event the economic value of a bank declines by more than
20% of the sum of Tier I and Tier II capital (“outlier ratio”) as a
result of interest rate shocks, the bank falls into the category of
“outlier bank”, as stipulated under the Second Pillar of Basel II.
As of March 31, 2008, the outlier ratio was less than 6%, sub-
stantially below the 20% criterion.
(e) Managing Risk of Stocks Held for Strategic Purposes
The Corporate Risk Management Department establishes limits on
allowable risk for strategic equity investments, and monitors the
observance of those limits to keep stock price fluctuation risk
within acceptable parameters.
SMBC aims to keep the stock price fluctuation risk associated
with its strategic equity investments at a level appropriate to the
financial strength of the bank. To achieve this, we have been
reducing the balance of our strategic stock holdings, and the bal-
ance now stands at approximately 50% of Tier I capital.
(2) Liquidity Risk
At SMBC, liquidity risk is regarded as one of the major risks. So as
not to be overly dependent on market-based funding to cover
funding sources, and establishing contingency plans.
short-term cash outflows, SMBC’s liquidity risk management is
In daily risk management operations, SMBC prevents a cumu-
based on a framework consisting of setting funding gap limits and
lative increase in liquidity risk by setting the funding gap limits and
guidelines, maintaining a system of highly liquid supplementary
guidelines. For emergency situations, there are contingency plans
44
SMFG 2008
SMFG 2008 45
in place to reduce the funding gap limits and guidelines and other
whole Group by establishing an effective system for identification,
scenarios in each business process through a regular risk control
Internal Control Factors (BEICFs), and scenarios analysis through
measures. To prevent the possibility of market crises interfering
assessment, controlling, and monitoring of material operational risk
assessment to estimate the loss severity and frequency. Opera-
risk control assessments. In addition, the operational risk equiva-
with funding, SMBC carries highly liquid assets, such as U.S. Trea-
and a system for executing contingency and business continuity
tional risk impact is assessed for each risk scenario. When
lent amount (hereinafter, “required capital”) calculated under the
sury securities, and has emergency borrowing facilities in place,
plans. In view of the inclusion of operational risk in the framework
high-severity scenarios are identified, each branch/department
AMA must cover the maximum loss comparable to a one-year
which also enable foreign currency-denominated liquidity manage-
of the capital adequacy requirements of Basel II, SMFG has been
establishes a risk mitigation plan and the Operational Risk
holding period and a 99.9 percentile confidence interval.
ment.
Operational Risk
1. Basic Approach to Operational Risk Management
(1) Definition of Operational Risk
Operational risk is the risk of loss resulting from inadequate or
working on a continuing basis to create a more sophisticated
quantification model and to enhance operational risk management
throughout the Group.
2. Operational Risk Management System
SMFG has designed and implemented an operational risk
Management Department monitors the progress. Furthermore,
The basic framework of the AMA quantification model of SMFG
operational risk is quantified using the internal loss data and sce-
and SMBC is outlined in the diagram below. Among the four ele-
narios, and the results of quantification are used to manage and
ments, internal loss data and the results of scenarios analysis
reduce operational risk.
through risk control assessment are input directly into the quantifi-
The generation of internal loss data, scenarios identified
cation model described later in this section to calculate required
through risk control assessments, and status of risk mitigation
capital and risk-weighted assets (= required capital divided by
failed internal processes, people and systems or from external
management framework for Groupwide basic policies for risk
activities are regularly reported to the director in charge of the
8%). In addition, external loss data and BEICFs are used in verify-
events. Specifically, Basel II (The New Basel Capital Accord)---
management.
Operational Risk Management Department. In addition, there is
ing the assessment of scenarios, along with internal loss data, to
which, in addition to processing risk and system risk, also covers
At SMBC, the Management Committee makes decisions on
the Operational Risk Committee, comprising all relevant units of
increase objectivity, accuracy, and completeness.
legal risk, personnel risk, and physical asset risk---defines the fol-
important matters such as basic policies for operational risk man-
the bank, where operational risk information is reported and risk
The specific content and method of collection and use of the
lowing seven types of events that may lead to the risk of loss: (1)
agement, and these decisions are authorized by the SMBC Board
mitigation plans are discussed. In this way, we realize a highly
four elements are described below. At present, 18 Group compa-
internal fraud, (2) external fraud, (3) employment practices and
of Directors. In addition, SMBC has established its Operational
effective operational risk management framework. The operational
nies have adopted the AMA, including SMFG and SMBC, and all
workplace safety, (4) clients, products and business practices, (5)
Risk Management Department, within its General Affairs Depart-
risk situation is also reported to the Management Committee and
Group companies collect and make use of the four elements.
damage to physical assets, (6) business disruption and system
ment, as an integrated operational risk management department.
failures, and (7) execution, delivery, and process management.
This department works together with the Corporate Risk Manage-
ment Department, which is responsible for the quantification of
(2) Fundamental Principles for Operational Risk Management
operational risk, and with other departments responsible for con-
SMFG and SMBC have drawn up the Regulations on Operational
trolling processing risk and system risk.
Risk Management to define the basic rules to be observed in the
The operational risk management framework is described in
conduct of operational risk management across the entire Group.
more detail in the later part of this section, but it can be outlined as
Under these regulations, SMFG and SMBC have been working to
follows: operational risk is managed by (1) collecting and analyz-
enhance the operational risk management framework across the
ing internal loss data and (2) comprehensively identifying risk
■ SMBC’s Operational Risk Management System
■ Basic Framework of Operational Risk Measurement of SMFG and SMBC
the Board of Directors on a regular basis, for review of the basic
policies on operational risk management. Moreover, the bank’s
Internal Audit Department conducts periodic audits to ensure that
the operational risk management system is functioning properly.
3. Operational Risk Management Methodology
As previously defined, operational risk covers a wide range of
events, including the risk of losses due to errors in operation, sys-
tem failures, and natural disasters. Also, operational risk events
can occur virtually anywhere and everywhere. Thus, it is essential
to check whether material operational risks have been overlooked,
monitor the overall status of risks, and manage/control them. To
this end, it is necessary to be able to quantify risks using a mea-
surement methodology that can be applied to all types of
operational risk, and to comprehensively and comparatively cap-
ture the status of and changes in potential operational risks of
business processes. Also, from the viewpoint of internal control,
the measurement methodology used to a create risk mitigation
plan must be such that the implementation of the plan quantita-
tively reduces operational risk.
SMFG and SMBC have received an approval from Japan’s
Financial Services Agency for the application of the Advanced
Measurement Approaches (AMA), which is the most sophisticated
measurement method out of the three cited methods under Basel
II for measurement of operational risk. SMFG and SMBC have
adopted the AMA for operational risk management and for calcu-
lating operational risk-weighted assets. It was used for calculating
the March-end 2008 capital adequacy ratio.
When using the AMA, regulations require that the internal
measurement system (hereinafter, the “quantification model”) must
use four data elements (hereinafter, the “four elements”): namely,
internal loss data, external loss data, Business Environment and
46
SMFG 2008
SMFG 2008 47
in place to reduce the funding gap limits and guidelines and other
whole Group by establishing an effective system for identification,
scenarios in each business process through a regular risk control
Internal Control Factors (BEICFs), and scenarios analysis through
measures. To prevent the possibility of market crises interfering
assessment, controlling, and monitoring of material operational risk
assessment to estimate the loss severity and frequency. Opera-
risk control assessments. In addition, the operational risk equiva-
with funding, SMBC carries highly liquid assets, such as U.S. Trea-
and a system for executing contingency and business continuity
tional risk impact is assessed for each risk scenario. When
lent amount (hereinafter, “required capital”) calculated under the
sury securities, and has emergency borrowing facilities in place,
plans. In view of the inclusion of operational risk in the framework
high-severity scenarios are identified, each branch/department
AMA must cover the maximum loss comparable to a one-year
which also enable foreign currency-denominated liquidity manage-
of the capital adequacy requirements of Basel II, SMFG has been
establishes a risk mitigation plan and the Operational Risk
holding period and a 99.9 percentile confidence interval.
ment.
Operational Risk
1. Basic Approach to Operational Risk Management
(1) Definition of Operational Risk
Operational risk is the risk of loss resulting from inadequate or
working on a continuing basis to create a more sophisticated
quantification model and to enhance operational risk management
throughout the Group.
2. Operational Risk Management System
SMFG has designed and implemented an operational risk
Management Department monitors the progress. Furthermore,
The basic framework of the AMA quantification model of SMFG
operational risk is quantified using the internal loss data and sce-
and SMBC is outlined in the diagram below. Among the four ele-
narios, and the results of quantification are used to manage and
ments, internal loss data and the results of scenarios analysis
reduce operational risk.
through risk control assessment are input directly into the quantifi-
The generation of internal loss data, scenarios identified
cation model described later in this section to calculate required
through risk control assessments, and status of risk mitigation
capital and risk-weighted assets (= required capital divided by
failed internal processes, people and systems or from external
management framework for Groupwide basic policies for risk
activities are regularly reported to the director in charge of the
8%). In addition, external loss data and BEICFs are used in verify-
events. Specifically, Basel II (The New Basel Capital Accord)---
management.
Operational Risk Management Department. In addition, there is
ing the assessment of scenarios, along with internal loss data, to
which, in addition to processing risk and system risk, also covers
At SMBC, the Management Committee makes decisions on
the Operational Risk Committee, comprising all relevant units of
increase objectivity, accuracy, and completeness.
legal risk, personnel risk, and physical asset risk---defines the fol-
important matters such as basic policies for operational risk man-
the bank, where operational risk information is reported and risk
The specific content and method of collection and use of the
lowing seven types of events that may lead to the risk of loss: (1)
agement, and these decisions are authorized by the SMBC Board
mitigation plans are discussed. In this way, we realize a highly
four elements are described below. At present, 18 Group compa-
internal fraud, (2) external fraud, (3) employment practices and
of Directors. In addition, SMBC has established its Operational
effective operational risk management framework. The operational
nies have adopted the AMA, including SMFG and SMBC, and all
workplace safety, (4) clients, products and business practices, (5)
Risk Management Department, within its General Affairs Depart-
risk situation is also reported to the Management Committee and
Group companies collect and make use of the four elements.
damage to physical assets, (6) business disruption and system
ment, as an integrated operational risk management department.
failures, and (7) execution, delivery, and process management.
This department works together with the Corporate Risk Manage-
ment Department, which is responsible for the quantification of
(2) Fundamental Principles for Operational Risk Management
operational risk, and with other departments responsible for con-
SMFG and SMBC have drawn up the Regulations on Operational
trolling processing risk and system risk.
Risk Management to define the basic rules to be observed in the
The operational risk management framework is described in
conduct of operational risk management across the entire Group.
more detail in the later part of this section, but it can be outlined as
Under these regulations, SMFG and SMBC have been working to
follows: operational risk is managed by (1) collecting and analyz-
enhance the operational risk management framework across the
ing internal loss data and (2) comprehensively identifying risk
■ SMBC’s Operational Risk Management System
■ Basic Framework of Operational Risk Measurement of SMFG and SMBC
the Board of Directors on a regular basis, for review of the basic
policies on operational risk management. Moreover, the bank’s
Internal Audit Department conducts periodic audits to ensure that
the operational risk management system is functioning properly.
3. Operational Risk Management Methodology
As previously defined, operational risk covers a wide range of
events, including the risk of losses due to errors in operation, sys-
tem failures, and natural disasters. Also, operational risk events
can occur virtually anywhere and everywhere. Thus, it is essential
to check whether material operational risks have been overlooked,
monitor the overall status of risks, and manage/control them. To
this end, it is necessary to be able to quantify risks using a mea-
surement methodology that can be applied to all types of
operational risk, and to comprehensively and comparatively cap-
ture the status of and changes in potential operational risks of
business processes. Also, from the viewpoint of internal control,
the measurement methodology used to a create risk mitigation
plan must be such that the implementation of the plan quantita-
tively reduces operational risk.
SMFG and SMBC have received an approval from Japan’s
Financial Services Agency for the application of the Advanced
Measurement Approaches (AMA), which is the most sophisticated
measurement method out of the three cited methods under Basel
II for measurement of operational risk. SMFG and SMBC have
adopted the AMA for operational risk management and for calcu-
lating operational risk-weighted assets. It was used for calculating
the March-end 2008 capital adequacy ratio.
When using the AMA, regulations require that the internal
measurement system (hereinafter, the “quantification model”) must
use four data elements (hereinafter, the “four elements”): namely,
internal loss data, external loss data, Business Environment and
46
SMFG 2008
SMFG 2008 47
(1) Internal Loss Data
(4) Scenario Analysis through Risk Control Assessments
As an effective mechanism for mitigating risks, the maximum
operational risk losses for Group companies other than those
Internal loss data are defined as “the information on events in which
Risk control assessment is defined as “risk management method-
loss occurring once in 100 years (“scenario exposure”) is calcu-
applying the AMA. Then, the required capital and risk-weighted
SMFG and SMBC incur losses resulting from the realization of
ology to (a) identify material operational risks, and describe them
lated for each scenario derived through the risk control
assets for SMFG and the SMBC Group are measured by aggregat-
operational risk.” At SMFG and SMBC, internal loss data are col-
in terms of risk scenarios, (b) assess the risks and the effective-
assessment, and then a magnitude rating is provided by classify-
ing these figures.
lected for all cases where the gross loss amount is at least one yen
ness of controls, and (c) estimate the frequency and severity of
ing them into five categories according to the severity of loss. Risk
The outline of the quantification model for SMBC is as follows.
(the threshold amount), and seven years of internal loss data are
risk scenarios.” SMFG and SMBC apply this methodology to their
mitigation plans are developed by the relevant business units for
First, we generate a loss frequency distribution (number of loss
directly used in the quantification of required capital for operational
principal business activities.
risk.
(2) External Loss Data
The purpose of risk control assessment is to identify material
and potential operational risks pertinent to business processes, to
measure them, and to develop and carry out a risk mitigation plan
those scenarios with high-severity risk identified through magni-
incidents over a one-year period) based on the number of histori-
tude rating.
cal internal losses. Then, we generate a loss severity distribution
The principal features of this risk control assessment method
(amount of loss per loss incident) based on internal losses and
are (1) “objectivity”, which is realized by estimating the frequency
frequency of “low-frequency and high-severity” events obtained
External loss data are defined as “the information on events in
to manage the risks. Another purpose of risk control assessment is
of losses based on historical internal loss experience and by
through the risk control assessment.
which other banks, etc., incur losses resulting from the realization
to estimate the frequency of low-frequency and high-severity
estimating the severity of losses based on the transaction amounts
By using the loss severity and loss frequency distributions, the
of operational risk.” SMFG and other Group companies collect
events for each scenario (which may be difficult to estimate using
pertinent to the scenarios, and (2) an appropriate level of “sensitiv-
aggregated loss severity distribution is generated by conducting
external loss data where such losses may occur within the Group.
internal loss data alone).
ity” because changes in the business environment and the
Monte Carlo simulations and by generating various combinations
Please note that SMFG and SMBC have compiled external loss
During the process of periodic risk control assessment, opera-
implementation of risk mitigation measures can be reflected in the
of loss occurrence and loss amount which are simulated by
data for more than 5,000 cases over the past seven years, which
tional risks inherent in various business processes are recognized
frequency and severity of losses by changing the assessment of
changing these two factors. 99.0% VaR is calculated from the
are indirectly used in quantifying required capital for operational
as “scenarios.” The risk and control conditions for each scenario
risk and control as well as transactions amounts.
resulting aggregated loss severity distribution.
risk.
are assessed, and the frequency of occurrence and amount of
losses are estimated based on them. The assessment process
(5) Measurement Using Quantification Models
tioned later in the section of “Capital Ratio Information” to compute
Finally, we multiply 99.0% VaR by a conversion factor men-
(3) Business Environment and Internal Control Factors (BEICFs)
comprises three steps: (i) initial assessment, (ii) Operational Risk
SMFG, SMBC, and other Group companies using the AMA measure
99.9% VaR.
BEICFs are defined as “indicators of operational risk profiles of
Management Department review, and (iii) final assessment.
the maximum operational loss with a 99.9 percentile confidence
This quantification model takes into account not only empirical
SMFG and SMBC that reflect underlying business risk factors and
Through the process, the frequency of “low-frequency and high-
interval and a holding period of one year (hereinafter referred to as
internal loss data but also potential risk (scenarios) identified in the
an assessment of the effectiveness of the internal control factors.”
severity” events for each scenario are estimated in terms of four
99.9% VaR) by using the four elements. In addition, 99.9% VaR is
risk control assessment. An important feature of this model is that it
The Group periodically collects data relating to changes in laws
loss amounts (¥100 million, ¥1 billion, ¥5 billion, and ¥10 billion).
measured on an SMFG consolidated basis, SMBC consolidated
enables us to measure and reflect the “low-frequency and high
and regulations, changes in internal rules and process, and launch
Please note that SMFG and SMBC have identified more than 8,000
basis, and SMBC nonconsolidated basis. The operational risk is
severity” events of operational risk. Moreover, by introducing a
of new business and products pertinent to the Group’s business
risk scenarios for the Group on a consolidated basis.
measured for each of seven event types defined under Basel II,
conversion factor, it is unnecessary to directly estimate 99.9% VaR,
operations.
■ Flowchart for Risk Control Assessment (Example)
and then, by calculating the simple sum for all event types, 99.9%
which tends to have a lower accuracy, and stable estimation
VaR is measured for each company applying the AMA. Meanwhile,
results can be obtained by estimating 99.0% VaR which can be
the Basic Indicator Approach is applied to estimate maximum
estimated with higher accuracy.
48
SMFG 2008
SMFG 2008 49
(1) Internal Loss Data
(4) Scenario Analysis through Risk Control Assessments
As an effective mechanism for mitigating risks, the maximum
operational risk losses for Group companies other than those
Internal loss data are defined as “the information on events in which
Risk control assessment is defined as “risk management method-
loss occurring once in 100 years (“scenario exposure”) is calcu-
applying the AMA. Then, the required capital and risk-weighted
SMFG and SMBC incur losses resulting from the realization of
ology to (a) identify material operational risks, and describe them
lated for each scenario derived through the risk control
assets for SMFG and the SMBC Group are measured by aggregat-
operational risk.” At SMFG and SMBC, internal loss data are col-
in terms of risk scenarios, (b) assess the risks and the effective-
assessment, and then a magnitude rating is provided by classify-
ing these figures.
lected for all cases where the gross loss amount is at least one yen
ness of controls, and (c) estimate the frequency and severity of
ing them into five categories according to the severity of loss. Risk
The outline of the quantification model for SMBC is as follows.
(the threshold amount), and seven years of internal loss data are
risk scenarios.” SMFG and SMBC apply this methodology to their
mitigation plans are developed by the relevant business units for
First, we generate a loss frequency distribution (number of loss
directly used in the quantification of required capital for operational
principal business activities.
risk.
(2) External Loss Data
The purpose of risk control assessment is to identify material
and potential operational risks pertinent to business processes, to
measure them, and to develop and carry out a risk mitigation plan
those scenarios with high-severity risk identified through magni-
incidents over a one-year period) based on the number of histori-
tude rating.
cal internal losses. Then, we generate a loss severity distribution
The principal features of this risk control assessment method
(amount of loss per loss incident) based on internal losses and
are (1) “objectivity”, which is realized by estimating the frequency
frequency of “low-frequency and high-severity” events obtained
External loss data are defined as “the information on events in
to manage the risks. Another purpose of risk control assessment is
of losses based on historical internal loss experience and by
through the risk control assessment.
which other banks, etc., incur losses resulting from the realization
to estimate the frequency of low-frequency and high-severity
estimating the severity of losses based on the transaction amounts
By using the loss severity and loss frequency distributions, the
of operational risk.” SMFG and other Group companies collect
events for each scenario (which may be difficult to estimate using
pertinent to the scenarios, and (2) an appropriate level of “sensitiv-
aggregated loss severity distribution is generated by conducting
external loss data where such losses may occur within the Group.
internal loss data alone).
ity” because changes in the business environment and the
Monte Carlo simulations and by generating various combinations
Please note that SMFG and SMBC have compiled external loss
During the process of periodic risk control assessment, opera-
implementation of risk mitigation measures can be reflected in the
of loss occurrence and loss amount which are simulated by
data for more than 5,000 cases over the past seven years, which
tional risks inherent in various business processes are recognized
frequency and severity of losses by changing the assessment of
changing these two factors. 99.0% VaR is calculated from the
are indirectly used in quantifying required capital for operational
as “scenarios.” The risk and control conditions for each scenario
risk and control as well as transactions amounts.
resulting aggregated loss severity distribution.
risk.
are assessed, and the frequency of occurrence and amount of
losses are estimated based on them. The assessment process
(5) Measurement Using Quantification Models
tioned later in the section of “Capital Ratio Information” to compute
Finally, we multiply 99.0% VaR by a conversion factor men-
(3) Business Environment and Internal Control Factors (BEICFs)
comprises three steps: (i) initial assessment, (ii) Operational Risk
SMFG, SMBC, and other Group companies using the AMA measure
99.9% VaR.
BEICFs are defined as “indicators of operational risk profiles of
Management Department review, and (iii) final assessment.
the maximum operational loss with a 99.9 percentile confidence
This quantification model takes into account not only empirical
SMFG and SMBC that reflect underlying business risk factors and
Through the process, the frequency of “low-frequency and high-
interval and a holding period of one year (hereinafter referred to as
internal loss data but also potential risk (scenarios) identified in the
an assessment of the effectiveness of the internal control factors.”
severity” events for each scenario are estimated in terms of four
99.9% VaR) by using the four elements. In addition, 99.9% VaR is
risk control assessment. An important feature of this model is that it
The Group periodically collects data relating to changes in laws
loss amounts (¥100 million, ¥1 billion, ¥5 billion, and ¥10 billion).
measured on an SMFG consolidated basis, SMBC consolidated
enables us to measure and reflect the “low-frequency and high
and regulations, changes in internal rules and process, and launch
Please note that SMFG and SMBC have identified more than 8,000
basis, and SMBC nonconsolidated basis. The operational risk is
severity” events of operational risk. Moreover, by introducing a
of new business and products pertinent to the Group’s business
risk scenarios for the Group on a consolidated basis.
measured for each of seven event types defined under Basel II,
conversion factor, it is unnecessary to directly estimate 99.9% VaR,
operations.
■ Flowchart for Risk Control Assessment (Example)
and then, by calculating the simple sum for all event types, 99.9%
which tends to have a lower accuracy, and stable estimation
VaR is measured for each company applying the AMA. Meanwhile,
results can be obtained by estimating 99.0% VaR which can be
the Basic Indicator Approach is applied to estimate maximum
estimated with higher accuracy.
48
SMFG 2008
SMFG 2008 49
Please note that the accuracy of quantification model outputs
and SMBC implement risk mitigation measures to high-severity risk
described above is secured through the regular ex ante and ex
scenarios identified in the previously mentioned magnitude rating.
4. Processing Risk
Processing risk is the possibility of losses arising from negligent
To prevent any computer system breakdowns, we have taken
numerous measures, including the duplication of various systems
post facto verification processes.
In addition to the above, the operational risk-weighted assets
processing by employees, accidents, or unauthorized activities.
and infrastructures, constant maintenance of our computer system
The breakdown of risk-weighted assets by event type for the
calculated using the quantification methods are allocated to the
SMFG recognizes that all operations entail processing risk. We
to ensure steady, uninterrupted operation, and the establishment
Group on a consolidated basis, computed with the previously
business units of SMBC and other Group companies, as part of
are, therefore, working to raise the level of sophistication of our
of a disaster-prevention system consisting of computer centers
described quantification method, is as follows.
initiatives to mitigate risk for the Group as a whole.
management of processing risk across the whole Group by ensur-
in eastern and western Japan. And to maintain the confidentiality
Specifically, (1) at the beginning of each fiscal year, the opera-
ing that each branch conducts its own regular investigations of
of customer information and prevent information leaks, sensitive
■ Breakdown of Consolidated Risk-Weighted Assets by Event Type
(As of March 31, 2008)
Event Type
(1) Internal fraud
(2) External fraud
(3) Employment practices and workplace safety
(4) Clients, products, and business practices
(5) Damage to physical assets
(6) Business disruption and systems failure
(7) Execution, delivery, and process management
Note: Only risk-weighted assets calculated under the AMA.
(6) Risk Mitigation Initiatives
Percentage
9 ％
8 ％
2 ％
8 ％
12 ％
4 ％
57 ％
tional risk-weighted assets calculated using the internal loss data
and the scenario exposure determined from the risk control
assessment are allocated to each business unit and Group com-
pany, (2) during the fiscal year, each business unit and Group
company work to prevent the realization of operational risk and
improve scenario control by implementing risk mitigation mea-
sures, (3) during the first and second halves of the fiscal year, the
measurements of risk-weighted assets of each business unit and
Group company and an analysis of factors causing the change
from the previous half-year period (including the frequency and
severity of scenario) are fed back to the business units and Group
companies for revising their plans, and, (4) finally, at the end of the
fiscal year, by comparing the planned versus actual results, we
endeavor to enhance the awareness of operational risk, improve
the effectiveness of operational risk management, and mitigate
To mitigate risk using the quantitative results of the AMA, SMFG
operational risk within the Group as a whole.
■ The Group’s Operational Risk Mitigation Activities on a Semi-Annual Basis
processing risk; minimizing losses in the event of processing
information is encrypted, unauthorized external access is blocked,
errors or negligence by drafting exhaustive contingency plans;
and all known countermeasures to secure data are implemented.
and carrying out thorough quantification of the risk under manage-
There are also contingency plans and training sessions held as
ment.
necessary to ensure full preparedness in the event of an emer-
In the administrative regulations of SMBC, in line with SMFG’s
gency. To maintain security, countermeasures are revised as new
Groupwide basic policies for risk management, the basic adminis-
technologies and usage patterns emerge.
trative regulations are defined as “comprehending the risks and
costs of administration and transaction processing, and managing
them accordingly,” and “seeking to raise the quality of administra-
Settlement Risk
Settlement risk is the possibility of a loss arising from a transaction
tion to deliver high-quality service to customers.” Adding new
that cannot be settled as planned. Because this risk comprises
policies or making major revisions to existing ones for processing
elements of several types of risk, including credit, liquidity, pro-
risk management requires the approval of both the Management
cessing, and systems risk, it requires interdisciplinary
Committee and the Board of Directors.
management.
In the administrative regulations, SMBC has also defined
At SMBC, the Operations Planning Department is responsible
specific rules for processing risk management. The rules allocate
for coordinating the management of settlement risk with the Credit
processing risk management tasks among six types of depart-
& Investment Planning Department, which oversees credit risk,
ments: operations planning departments, compliance
and the Corporate Risk Management Department, which oversees
departments, operations departments, transaction execution
liquidity risk.
departments (primarily front-office departments, branches, and
branch service offices), internal audit departments, and the cus-
tomer support departments. In addition, there is a specialized
group within the Operations Planning Department to strengthen
administrative procedures throughout the Group.
5. Systems Risk
Systems risk is the possibility of a loss arising from the failure,
malfunction, or unauthorized use of computer systems.
SMFG recognizes that reliable computer systems are essential
for the effective implementation of management strategy in view of
the IT revolution. We strive to minimize systems risk by drafting
regulations and specific management standards, including a
security policy. We also have contingency plans with the goal of
minimizing losses in the event of a system failure. The develop-
ment of such a systems risk management system ensures that the
Group as a whole is undertaking adequate risk management.
At SMBC, safety measures are strengthened according to risk
assessment based on the Financial Services Agency’s Financial
Inspection Manual, and the Security Guidelines published by the
Center for Financial Industry Information Systems (FISC).
Computer-related trouble at financial institutions now has
greater potential to impact the public, with systems risk diversify-
ing owing to the IT revolution, and the resulting expansion of
networks and the rise in the number of personal computer users.
50
SMFG 2008
SMFG 2008 51
Please note that the accuracy of quantification model outputs
and SMBC implement risk mitigation measures to high-severity risk
described above is secured through the regular ex ante and ex
scenarios identified in the previously mentioned magnitude rating.
4. Processing Risk
Processing risk is the possibility of losses arising from negligent
To prevent any computer system breakdowns, we have taken
numerous measures, including the duplication of various systems
post facto verification processes.
In addition to the above, the operational risk-weighted assets
processing by employees, accidents, or unauthorized activities.
and infrastructures, constant maintenance of our computer system
The breakdown of risk-weighted assets by event type for the
calculated using the quantification methods are allocated to the
SMFG recognizes that all operations entail processing risk. We
to ensure steady, uninterrupted operation, and the establishment
Group on a consolidated basis, computed with the previously
business units of SMBC and other Group companies, as part of
are, therefore, working to raise the level of sophistication of our
of a disaster-prevention system consisting of computer centers
described quantification method, is as follows.
initiatives to mitigate risk for the Group as a whole.
management of processing risk across the whole Group by ensur-
in eastern and western Japan. And to maintain the confidentiality
Specifically, (1) at the beginning of each fiscal year, the opera-
ing that each branch conducts its own regular investigations of
of customer information and prevent information leaks, sensitive
■ Breakdown of Consolidated Risk-Weighted Assets by Event Type
(As of March 31, 2008)
Event Type
(1) Internal fraud
(2) External fraud
(3) Employment practices and workplace safety
(4) Clients, products, and business practices
(5) Damage to physical assets
(6) Business disruption and systems failure
(7) Execution, delivery, and process management
Note: Only risk-weighted assets calculated under the AMA.
(6) Risk Mitigation Initiatives
Percentage
9 ％
8 ％
2 ％
8 ％
12 ％
4 ％
57 ％
tional risk-weighted assets calculated using the internal loss data
and the scenario exposure determined from the risk control
assessment are allocated to each business unit and Group com-
pany, (2) during the fiscal year, each business unit and Group
company work to prevent the realization of operational risk and
improve scenario control by implementing risk mitigation mea-
sures, (3) during the first and second halves of the fiscal year, the
measurements of risk-weighted assets of each business unit and
Group company and an analysis of factors causing the change
from the previous half-year period (including the frequency and
severity of scenario) are fed back to the business units and Group
companies for revising their plans, and, (4) finally, at the end of the
fiscal year, by comparing the planned versus actual results, we
endeavor to enhance the awareness of operational risk, improve
the effectiveness of operational risk management, and mitigate
To mitigate risk using the quantitative results of the AMA, SMFG
operational risk within the Group as a whole.
■ The Group’s Operational Risk Mitigation Activities on a Semi-Annual Basis
processing risk; minimizing losses in the event of processing
information is encrypted, unauthorized external access is blocked,
errors or negligence by drafting exhaustive contingency plans;
and all known countermeasures to secure data are implemented.
and carrying out thorough quantification of the risk under manage-
There are also contingency plans and training sessions held as
ment.
necessary to ensure full preparedness in the event of an emer-
In the administrative regulations of SMBC, in line with SMFG’s
gency. To maintain security, countermeasures are revised as new
Groupwide basic policies for risk management, the basic adminis-
technologies and usage patterns emerge.
trative regulations are defined as “comprehending the risks and
costs of administration and transaction processing, and managing
them accordingly,” and “seeking to raise the quality of administra-
Settlement Risk
Settlement risk is the possibility of a loss arising from a transaction
tion to deliver high-quality service to customers.” Adding new
that cannot be settled as planned. Because this risk comprises
policies or making major revisions to existing ones for processing
elements of several types of risk, including credit, liquidity, pro-
risk management requires the approval of both the Management
cessing, and systems risk, it requires interdisciplinary
Committee and the Board of Directors.
management.
In the administrative regulations, SMBC has also defined
At SMBC, the Operations Planning Department is responsible
specific rules for processing risk management. The rules allocate
for coordinating the management of settlement risk with the Credit
processing risk management tasks among six types of depart-
& Investment Planning Department, which oversees credit risk,
ments: operations planning departments, compliance
and the Corporate Risk Management Department, which oversees
departments, operations departments, transaction execution
liquidity risk.
departments (primarily front-office departments, branches, and
branch service offices), internal audit departments, and the cus-
tomer support departments. In addition, there is a specialized
group within the Operations Planning Department to strengthen
administrative procedures throughout the Group.
5. Systems Risk
Systems risk is the possibility of a loss arising from the failure,
malfunction, or unauthorized use of computer systems.
SMFG recognizes that reliable computer systems are essential
for the effective implementation of management strategy in view of
the IT revolution. We strive to minimize systems risk by drafting
regulations and specific management standards, including a
security policy. We also have contingency plans with the goal of
minimizing losses in the event of a system failure. The develop-
ment of such a systems risk management system ensures that the
Group as a whole is undertaking adequate risk management.
At SMBC, safety measures are strengthened according to risk
assessment based on the Financial Services Agency’s Financial
Inspection Manual, and the Security Guidelines published by the
Center for Financial Industry Information Systems (FISC).
Computer-related trouble at financial institutions now has
greater potential to impact the public, with systems risk diversify-
ing owing to the IT revolution, and the resulting expansion of
networks and the rise in the number of personal computer users.
50
SMFG 2008
SMFG 2008 51
Corporate Social Responsibility (CSR)
Initiatives for Enhancing Customer Satisfaction (CS) and Quality
Contributing to
the Sustainable Development of Society
As a new comprehensive financial services group for the 21st cen-
Key Points of CSR Activities
The key points of our CSR activities are as follows. First of all, we
have created a solid management framework, including corporate
tury, Sumitomo Mitsui Financial Group (SMFG) strives to respond
governance, internal auditing, compliance, and risk management
to the expectations of society, and, by fulfilling its responsibilities,
systems. Second, we offer higher added value to our four major
to earn the highest trust of society.
stakeholder groups in the following ways.
To earn such trust, we offer added value to four major stake-
• We endeavor to develop and prosper with our customers
holder groups and entities: namely, customers, shareholders and
by offering top-quality, high-value-added products and
the market, the environment and society, and our employees.
services.
Working closely with Group companies, SMFG is taking initiatives to enhance customer satisfaction and the quality of Group services
and products. SMFG calls meetings of its Group Customer Satisfaction Committee periodically to review reports based on analyses
of the Voice of the Customer (VOC) and discuss measures to increase customer satisfaction.
At SMBC, we created the Quality Management Department in April
establish bankwide CS enhancement measures.
2006, with the aim of drawing fully on VOC to make improvements
The Head Office departments also analyze the VOC data them-
in the bank’s business and management. The Quality Management
selves and employ the results to make improvements in products
Through these activities, the Group contributes to the sustainable
• We maintain sound management through disclosing
Department is primarily responsible for analyzing the VOC data.
and services.
development of society as a whole.
Basic CSR Policies
As a basis for implementing its CSR activities, SMFG has formu-
appropriate information, designing and operating robust
internal control systems, and managing to increase share-
holder value.
• We implement initiatives on a continuing and active basis to
lated a definition of CSR and a set of business ethics that articulate
contribute to society and preserve the natural environment.
its basic principles for the Group.
SMFG’s Definition of CSR
In the conduct of its business activities, SMFG fulfills its social responsibilities by
contributing to the sustainable development of society as a whole through offering
higher added value to (i) customers, (ii) shareholders and the market, (iii) the envi-
ronment and society, and (iv) employees.
Basic CSR Principles: SMFG Business Ethics
Ⅰ. Providing Customer-Centric Services
We intend to be a financial services group that has the complete trust and
support of our customers. For this purpose, we will always provide services that
meet the true needs of our customers to assure their satisfaction and earn confi-
dence in the Group.
Ⅱ. Maintaining Sound Management
We intend to be a financial services group that maintains fair, transparent, and
sound management based on the principle of self-responsibility. For this purpose,
along with earning the firm confidence of our shareholders, our customers, and
the general public, we take a long-term view of our business and operate it effi-
ciently, and actively disclose accurate business information about the Group.
Through these activities, we work to maintain continued growth based on a
sound financial position.
Ⅲ. Contributing to Social Development
We intend to be a financial services group that contributes to the healthy develop-
ment of society. For this purpose, we recognize the importance of our mission to
serve as a crucial part of the public infrastructure and also our social responsibili-
ties. Based on this recognition, we undertake business operations that contribute
to the steady development of Japan and the rest of the world, and endeavor, as a
good corporate citizen, to make a positive contribution to society.
Ⅳ. Creating a Free and Active Business Environment
We intend to be a financial services group for which all officers and employees
work with pride and commitment. For this purpose, we respect people and
develop employees with extensive professional knowledge and capabilities,
thereby creating a free and active business environment.
Ⅴ. Maintaining High Compliance Standards
We intend to be a financial services group that always keeps in mind the impor-
tance of compliance. For this purpose, we reflect our awareness of Business
Ethics in our business activities at all times. In addition, we respond promptly to
directives from auditors and inspectors. Through these actions, we observe all
laws and regulations, and uphold moral standards in our business practices.
• We work to foster a free and active business environment
that emphasizes respect for individuals and allows employ-
ees to realize their full potential.
Finally, we ultimately contribute to the continuing development
of society as a whole through all these activities.
■ Our Perspective on CSR
Making contributions to the sustainable development of society as a whole
For customers
For shareholders
and the market
For society and the
natural environment
For employees
CSR initiatives of Group
Offering
high-value-added
products and services
Conducting sound
management
Engaging in social,
community, and
environment-related
activities
Fostering a corporate
culture that
respects individuals
Building on a solid management structure
(with robust corporate governance, internal audit, compliance, risk management,
information disclosure, and other systems firmly in place)
Implementing CSR Activities and
Business Growth Strategies in Tandem
SMFG and the Group companies position CSR activities as the
basis for the effective implementation of business growth strate-
gies and conduct these activities in tandem with their strategies to
attain management objectives.
The proper conduct of CSR activities is clearly an integral part
of “management itself,” and commitment to serious implementa-
tion of CSR initiatives is the shortest path to reaching management
objectives.
52
SMFG 2008
Reports of this department are then discussed by the CS and Qual-
ity Improvement Committee, whose members include the chairman
and directors who are members of the bank’s Management Com-
CS and Quality Improvement Committee
CS and Quality Improvement Committee, which is chaired by the
mittee, and these reports are used proactively to enhance the
president of SMBC, meets periodically to hear reports on the spe-
satisfaction of our customers and the quality of our services.
In parallel with these activities, we are undertaking a wide
cific opinions that customers have expressed and to review the
fluctuations in the number of opinions expressed from month to
range of initiatives for improving customer satisfaction and quality.
month. The committee also receives reports on the results of
These include conducting questionnaire surveys to obtain the
analyses of VOC and proposals for improvements, and members
opinions of a broader range of customers by interviewing them at
of management represented on the committee listen to these
our branches and offices and via mail. Also, to provide services
reports and consider appropriate courses of action.
that will meet with greater customer satisfaction, we are conduct-
In addition, to instill the awareness of making our activities
ing related training and educational programs.
more customer centric, we prepare documents containing points
VOC Database
We have also created a VOC database, a record of the opinions that
based on specific examples and distribute these throughout the
bank. We also arrange for study meetings and implement other
measures, and the content of these activities is reported to mem-
our customers have expressed, principally at our branches, and are
bers of management for their consideration.
working to make this database widely available within the bank. In
Moreover, to enhance customer satisfaction and the quality of
addition, the data is analyzed and used by the Quality Management
our products and services from a broader point of view, we invite
Department to provide guidance to our branches and to make
specialists familiar with these and related areas to provide their
improvement proposals to the Head Office departments so they can
advice.
■ Activities to Obtain and Act on Voice Of the Customers
Guidance and measures
Directives
Related
departments
Opinions
Analysis
Reports
Customers
Branches
and
other offices
Inputs
VOC Database
Suggestions
for improvement
Response
Analysis/
management
Guidance and measures
Quality
Management
Dept.
Directives
Reports
Management
Committee
CS and
Quality
Improvement
Committee,
etc.
SMFG 2008 53
Corporate Social Responsibility (CSR)
Initiatives for Enhancing Customer Satisfaction (CS) and Quality
Contributing to
the Sustainable Development of Society
As a new comprehensive financial services group for the 21st cen-
Key Points of CSR Activities
The key points of our CSR activities are as follows. First of all, we
have created a solid management framework, including corporate
tury, Sumitomo Mitsui Financial Group (SMFG) strives to respond
governance, internal auditing, compliance, and risk management
to the expectations of society, and, by fulfilling its responsibilities,
systems. Second, we offer higher added value to our four major
to earn the highest trust of society.
stakeholder groups in the following ways.
To earn such trust, we offer added value to four major stake-
• We endeavor to develop and prosper with our customers
holder groups and entities: namely, customers, shareholders and
by offering top-quality, high-value-added products and
the market, the environment and society, and our employees.
services.
Working closely with Group companies, SMFG is taking initiatives to enhance customer satisfaction and the quality of Group services
and products. SMFG calls meetings of its Group Customer Satisfaction Committee periodically to review reports based on analyses
of the Voice of the Customer (VOC) and discuss measures to increase customer satisfaction.
At SMBC, we created the Quality Management Department in April
establish bankwide CS enhancement measures.
2006, with the aim of drawing fully on VOC to make improvements
The Head Office departments also analyze the VOC data them-
in the bank’s business and management. The Quality Management
selves and employ the results to make improvements in products
Through these activities, the Group contributes to the sustainable
• We maintain sound management through disclosing
Department is primarily responsible for analyzing the VOC data.
and services.
development of society as a whole.
Basic CSR Policies
As a basis for implementing its CSR activities, SMFG has formu-
appropriate information, designing and operating robust
internal control systems, and managing to increase share-
holder value.
• We implement initiatives on a continuing and active basis to
lated a definition of CSR and a set of business ethics that articulate
contribute to society and preserve the natural environment.
its basic principles for the Group.
SMFG’s Definition of CSR
In the conduct of its business activities, SMFG fulfills its social responsibilities by
contributing to the sustainable development of society as a whole through offering
higher added value to (i) customers, (ii) shareholders and the market, (iii) the envi-
ronment and society, and (iv) employees.
Basic CSR Principles: SMFG Business Ethics
Ⅰ. Providing Customer-Centric Services
We intend to be a financial services group that has the complete trust and
support of our customers. For this purpose, we will always provide services that
meet the true needs of our customers to assure their satisfaction and earn confi-
dence in the Group.
Ⅱ. Maintaining Sound Management
We intend to be a financial services group that maintains fair, transparent, and
sound management based on the principle of self-responsibility. For this purpose,
along with earning the firm confidence of our shareholders, our customers, and
the general public, we take a long-term view of our business and operate it effi-
ciently, and actively disclose accurate business information about the Group.
Through these activities, we work to maintain continued growth based on a
sound financial position.
Ⅲ. Contributing to Social Development
We intend to be a financial services group that contributes to the healthy develop-
ment of society. For this purpose, we recognize the importance of our mission to
serve as a crucial part of the public infrastructure and also our social responsibili-
ties. Based on this recognition, we undertake business operations that contribute
to the steady development of Japan and the rest of the world, and endeavor, as a
good corporate citizen, to make a positive contribution to society.
Ⅳ. Creating a Free and Active Business Environment
We intend to be a financial services group for which all officers and employees
work with pride and commitment. For this purpose, we respect people and
develop employees with extensive professional knowledge and capabilities,
thereby creating a free and active business environment.
Ⅴ. Maintaining High Compliance Standards
We intend to be a financial services group that always keeps in mind the impor-
tance of compliance. For this purpose, we reflect our awareness of Business
Ethics in our business activities at all times. In addition, we respond promptly to
directives from auditors and inspectors. Through these actions, we observe all
laws and regulations, and uphold moral standards in our business practices.
• We work to foster a free and active business environment
that emphasizes respect for individuals and allows employ-
ees to realize their full potential.
Finally, we ultimately contribute to the continuing development
of society as a whole through all these activities.
■ Our Perspective on CSR
Making contributions to the sustainable development of society as a whole
For customers
For shareholders
and the market
For society and the
natural environment
For employees
CSR initiatives of Group
Offering
high-value-added
products and services
Conducting sound
management
Engaging in social,
community, and
environment-related
activities
Fostering a corporate
culture that
respects individuals
Building on a solid management structure
(with robust corporate governance, internal audit, compliance, risk management,
information disclosure, and other systems firmly in place)
Implementing CSR Activities and
Business Growth Strategies in Tandem
SMFG and the Group companies position CSR activities as the
basis for the effective implementation of business growth strate-
gies and conduct these activities in tandem with their strategies to
attain management objectives.
The proper conduct of CSR activities is clearly an integral part
of “management itself,” and commitment to serious implementa-
tion of CSR initiatives is the shortest path to reaching management
objectives.
52
SMFG 2008
Reports of this department are then discussed by the CS and Qual-
ity Improvement Committee, whose members include the chairman
and directors who are members of the bank’s Management Com-
CS and Quality Improvement Committee
CS and Quality Improvement Committee, which is chaired by the
mittee, and these reports are used proactively to enhance the
president of SMBC, meets periodically to hear reports on the spe-
satisfaction of our customers and the quality of our services.
In parallel with these activities, we are undertaking a wide
cific opinions that customers have expressed and to review the
fluctuations in the number of opinions expressed from month to
range of initiatives for improving customer satisfaction and quality.
month. The committee also receives reports on the results of
These include conducting questionnaire surveys to obtain the
analyses of VOC and proposals for improvements, and members
opinions of a broader range of customers by interviewing them at
of management represented on the committee listen to these
our branches and offices and via mail. Also, to provide services
reports and consider appropriate courses of action.
that will meet with greater customer satisfaction, we are conduct-
In addition, to instill the awareness of making our activities
ing related training and educational programs.
more customer centric, we prepare documents containing points
VOC Database
We have also created a VOC database, a record of the opinions that
based on specific examples and distribute these throughout the
bank. We also arrange for study meetings and implement other
measures, and the content of these activities is reported to mem-
our customers have expressed, principally at our branches, and are
bers of management for their consideration.
working to make this database widely available within the bank. In
Moreover, to enhance customer satisfaction and the quality of
addition, the data is analyzed and used by the Quality Management
our products and services from a broader point of view, we invite
Department to provide guidance to our branches and to make
specialists familiar with these and related areas to provide their
improvement proposals to the Head Office departments so they can
advice.
■ Activities to Obtain and Act on Voice Of the Customers
Guidance and measures
Directives
Related
departments
Opinions
Analysis
Reports
Customers
Branches
and
other offices
Inputs
VOC Database
Suggestions
for improvement
Response
Analysis/
management
Guidance and measures
Quality
Management
Dept.
Directives
Reports
Management
Committee
CS and
Quality
Improvement
Committee,
etc.
SMFG 2008 53
Corporate Governance
Internal Audit System
Our Stance on Corporate Governance
SMFG and its Group companies follow the SMFG management
three major Group companies, namely, Sumitomo Mitsui Card,
Sumitomo Mitsui Finance and Leasing, and JRI, the SMFG director
An Outline of the Group’s Internal Audit System
In addition to the SMFG Auditing Committee, which functions as a
compliance and the management of risk at SMBC’s Head Office
departments, its domestic and overseas branches, and at all other
philosophy as a universal guide for Group management and posi-
in charge of each of these subsidiaries serves as a part-time direc-
governance committee reporting to the Board of Directors, we
business offices of subsidiaries in Japan and overseas. Auditing of
tion this philosophy as the anchor for corporate action. To
tor of these companies.
have established the Internal Auditing Committee, which is a part
operations in Head Office departments focuses on material issues
implement the ideas contained in our Group philosophy, we
Furthermore, to maintain the soundness of management,
of the Group Management Committee to give a higher profile to
that arise in the management of specific operations and categories
believe one of the issues with highest priority is strengthening and
SMFG has established internal control systems to ensure the
the internal auditing functions and facilitate effective conduct of
of risk. These auditing activities emphasize the verification of “Tar-
improving our corporate governance system.
proper conduct of company operations following the Japanese
internal audits. The Internal Auditing Committee meets every quar-
geted Audit Items” across the whole of the bank’s organization.
The SMFG Corporate Governance System
SMFG employs the “corporate auditor” governance model in
Company Law. Designing and implementing an internal control
system, to strengthen management systems, is regarded as a
major issue, and initiatives are under way to enhance such internal
which statutory auditors oversee the execution of business by the
control systems.
directors. At SMFG, we have five corporate auditors, three of
whom are outside auditors. The auditors monitor the execution of
business operations of SMFG and its subsidiaries by attending
The SMBC Corporate Governance System
SMBC employs the corporate auditor governance model. Of the
meetings of the Board of Directors and listen to reports on opera-
six statutory auditors appointed, three are from outside the bank.
tions from the directors and others. They also examine documents
To ensure sound and transparent management, SMBC separates
relating to important decisions and receive reports from the inter-
the two functions of management decision making at the opera-
nal audit departments, representatives of subsidiaries of SMFG,
tional level and the overall supervision of the conduct of duties by
ter, and its members discuss important matters related to internal
Moreover, audits of branches and offices are not limited just to
auditing based on reports prepared by the departments responsi-
checking for control and other deficiencies but also include point-
ble for internal audits. There is also the Audit Department, which is
ing to any issues related to compliance and risk management and
an internal auditing unit that is independent of the operational
making recommendations for corrective action.
departments of the Group.
In other Group companies, internal audit departments have
The Audit Department conducts internal audits of the opera-
been formed suited to the respective nature of each company’s
tions of all the Group’s units and departments to contribute to
lines of business.
optimal management and ensure the proper conduct of the
Group’s operations and the soundness of its assets. These audits
also have the function of verifying that the Group’s internal control
systems, including compliance and risk management, are operat-
Initiatives to Enhance the Sophistication
and Efficiency of Internal Auditing
The Audit Department has adopted methods following the stan-
and the CPAs.
the management of the bank. For this purpose, the bank employs
ing appropriately and effectively. The Audit Department is also
dards of the Institute of Internal Auditors (IIA)*, an international
The chairman of SMFG serves as the chairman of the Board of
a system under which executive officers are responsible for opera-
responsible for the overall supervision of the internal audit systems
organization. The Audit Department conducts risk-based audits and
Directors of SMFG. This separates the role of the president, whose
tional duties, while the supervisory functions are performed
of Group companies. It monitors the appropriateness and effec-
works to apply best practices to Group companies.
responsibility is the overall supervision of business activities of
principally by the Board.
tiveness of the internal audit systems at Group companies by
To fulfill effectively its role as the department in overall charge
SMFG and other Group companies, from the role of supervising
The chairman of the bank serves as the chairman of the Board
verifying past data related to internal auditing and monitoring
of internal auditing, the Audit Department is constantly endeavor-
management. To enhance the effectiveness of the Board, we have
of Directors, and, to clearly separate his functions from those of the
activities, which include inspections and other activities based on
ing to advance the professional skills of personnel engaged in
appointed outside directors and formed four governance commit-
president of the bank, who is responsible for the overall supervi-
actual samples, and, when deemed necessary, by conducting
internal auditing. Activities include collecting the latest information
tees: namely, the Auditing Committee, the Risk Management
sion of the bank’s activities, the chairman does not simultaneously
audits. Based on these activities, the Audit Department provides
on internal auditing from inside and outside Japan and disseminat-
Committee, the Compensation Committee, and the Nominating
serve as an executive officer and is primarily responsible for
recommendations and guidance to the business units and depart-
ing it to all Group companies. Also, the Audit Department
Committee. Outside directors have been appointed to all four of
supervising management’s execution of their duties. As at SMFG
ments as well as Group companies.
organizes training courses, led by outside experts, for the staff of
these committees to provide for corporate governance from an
and to ensure a robust supervisory function, outside directors are
At SMBC, we have formed auditing departments that are inde-
Group companies and encourages them to obtain international
objective perspective. As the need for objectivity is particularly
appointed to the Board of Directors. At SMBC, three outside direc-
pendent of bank units involved in marketing and other business
qualifications to enhance their professional knowledge and skills in
acute in the case of the Auditing Committee and the Compensa-
tors currently serve on the Board, which has a total membership of
activities. Within the Internal Audit Unit of SMBC, we have formed
internal auditing. To improve further the effectiveness of auditing,
tion Committee, outside directors serve as the chairmen of these
thirteen.
two departments: the Internal Audit Department and the Credit
we also take active measures on a Groupwide basis to assess the
committees. To ensure that the execution of the Group’s business
Executive officers are appointed by the Board to manage the
Review Department. As at SMFG, SMBC has set up its Internal
quality of our internal auditing in the light of IIA standards.
operations is in conformity both with legal regulations and gener-
operation of SMBC’s businesses. As of June 30, 2008, SMBC has
ally accepted practices, the outside directors have been selected
70 executive officers, including the president, and eight serve con-
from among the ranks of specialists (including CPAs, lawyers, and
currently as directors. The Management Committee of SMBC is the
consultants).
highest decision-making body at the operational level and is under
SMFG has created the Group Management Committee to
the direct supervision of the Board of Directors. The president
serve as the top decision-making body, and it is under the direct
chairs this committee and selects its members from the executive
supervision of the Board of Directors and chaired by the president
officers. The committee members consider important management
of SMFG. This committee is composed of directors chosen by the
issues based on policies set by the Board of Directors, and the
president. Its role is to consider important matters related to the
president has the authority to make the final decision after consid-
execution of business and to make decisions for or against the
ering the committee’s recommendations.
execution of matters in accord with the basic policies of the Board
The president designates certain members of the Manage-
of Directors. SMFG also has a Group Strategy Committee that
ment Committee to be Authorized Management Committee
serves as a forum for the top managers of SMFG and all other
members in charge of particular Head Office departments or units.
Group companies to exchange opinions and information on their
All of these designated individuals are in charge of implementing
respective business plans. To enable SMFG to monitor the execu-
the directives of the Management Committee within the businesses
tion of day-to-day business operations at SMBC, six SMFG
they oversee.
directors (including three outside directors) of the total of nine
SMFG directors (including three outside directors) also serve
as directors of SMBC. To monitor the conduct of operations at
54
SMFG 2008
Auditing Committee, which is a part of the Management Committee
and is responsible for examining and conducting deliberations on
reports on important matters submitted by the Internal Audit Unit.
SMBC’s Internal Audit Unit is responsible for auditing legal
* The Institute of Internal Auditors (IIA) was founded in 1941 in the United States as an
organization dedicated to helping raise the level of specialization and professionalism
of internal auditing staff. In addition to conducting theoretical and practical research on
internal auditing, the IIA administers examinations for Certified Internal Auditor ® (CIA®),
which is the internationally recognized qualification in this field.
SMFG
Shareholders’ Meeting
Corporate Auditors/
Board of Corporate Auditors
SMBC
Shareholders’ Meeting
Board of Directors
Corporate Auditors/
Board of Corporate Auditors
Office of Corporate Auditors
Board of Directors
Nominating
Committee
Compensation
Committee
Risk Management
Committee
Auditing
Committee
Group Strategy
Committee
Group Management Committee
Internal Auditing Committee
Business units subject to auditing
Office of Corporate Auditors
Management Committee
Internal Auditing Committee
Business units
subject to auditing
All Departments
Internal
audits
Audit
Department
Head Office/Business Units
Internal
audits
Internal Audit Unit
Internal Audit Department
Credit Review Department
M
o
n
i
t
o
r
i
n
g
Auditing
SMFG 2008 55
Corporate Governance
Internal Audit System
Our Stance on Corporate Governance
SMFG and its Group companies follow the SMFG management
three major Group companies, namely, Sumitomo Mitsui Card,
Sumitomo Mitsui Finance and Leasing, and JRI, the SMFG director
An Outline of the Group’s Internal Audit System
In addition to the SMFG Auditing Committee, which functions as a
compliance and the management of risk at SMBC’s Head Office
departments, its domestic and overseas branches, and at all other
philosophy as a universal guide for Group management and posi-
in charge of each of these subsidiaries serves as a part-time direc-
governance committee reporting to the Board of Directors, we
business offices of subsidiaries in Japan and overseas. Auditing of
tion this philosophy as the anchor for corporate action. To
tor of these companies.
have established the Internal Auditing Committee, which is a part
operations in Head Office departments focuses on material issues
implement the ideas contained in our Group philosophy, we
Furthermore, to maintain the soundness of management,
of the Group Management Committee to give a higher profile to
that arise in the management of specific operations and categories
believe one of the issues with highest priority is strengthening and
SMFG has established internal control systems to ensure the
the internal auditing functions and facilitate effective conduct of
of risk. These auditing activities emphasize the verification of “Tar-
improving our corporate governance system.
proper conduct of company operations following the Japanese
internal audits. The Internal Auditing Committee meets every quar-
geted Audit Items” across the whole of the bank’s organization.
The SMFG Corporate Governance System
SMFG employs the “corporate auditor” governance model in
Company Law. Designing and implementing an internal control
system, to strengthen management systems, is regarded as a
major issue, and initiatives are under way to enhance such internal
which statutory auditors oversee the execution of business by the
control systems.
directors. At SMFG, we have five corporate auditors, three of
whom are outside auditors. The auditors monitor the execution of
business operations of SMFG and its subsidiaries by attending
The SMBC Corporate Governance System
SMBC employs the corporate auditor governance model. Of the
meetings of the Board of Directors and listen to reports on opera-
six statutory auditors appointed, three are from outside the bank.
tions from the directors and others. They also examine documents
To ensure sound and transparent management, SMBC separates
relating to important decisions and receive reports from the inter-
the two functions of management decision making at the opera-
nal audit departments, representatives of subsidiaries of SMFG,
tional level and the overall supervision of the conduct of duties by
ter, and its members discuss important matters related to internal
Moreover, audits of branches and offices are not limited just to
auditing based on reports prepared by the departments responsi-
checking for control and other deficiencies but also include point-
ble for internal audits. There is also the Audit Department, which is
ing to any issues related to compliance and risk management and
an internal auditing unit that is independent of the operational
making recommendations for corrective action.
departments of the Group.
In other Group companies, internal audit departments have
The Audit Department conducts internal audits of the opera-
been formed suited to the respective nature of each company’s
tions of all the Group’s units and departments to contribute to
lines of business.
optimal management and ensure the proper conduct of the
Group’s operations and the soundness of its assets. These audits
also have the function of verifying that the Group’s internal control
systems, including compliance and risk management, are operat-
Initiatives to Enhance the Sophistication
and Efficiency of Internal Auditing
The Audit Department has adopted methods following the stan-
and the CPAs.
the management of the bank. For this purpose, the bank employs
ing appropriately and effectively. The Audit Department is also
dards of the Institute of Internal Auditors (IIA)*, an international
The chairman of SMFG serves as the chairman of the Board of
a system under which executive officers are responsible for opera-
responsible for the overall supervision of the internal audit systems
organization. The Audit Department conducts risk-based audits and
Directors of SMFG. This separates the role of the president, whose
tional duties, while the supervisory functions are performed
of Group companies. It monitors the appropriateness and effec-
works to apply best practices to Group companies.
responsibility is the overall supervision of business activities of
principally by the Board.
tiveness of the internal audit systems at Group companies by
To fulfill effectively its role as the department in overall charge
SMFG and other Group companies, from the role of supervising
The chairman of the bank serves as the chairman of the Board
verifying past data related to internal auditing and monitoring
of internal auditing, the Audit Department is constantly endeavor-
management. To enhance the effectiveness of the Board, we have
of Directors, and, to clearly separate his functions from those of the
activities, which include inspections and other activities based on
ing to advance the professional skills of personnel engaged in
appointed outside directors and formed four governance commit-
president of the bank, who is responsible for the overall supervi-
actual samples, and, when deemed necessary, by conducting
internal auditing. Activities include collecting the latest information
tees: namely, the Auditing Committee, the Risk Management
sion of the bank’s activities, the chairman does not simultaneously
audits. Based on these activities, the Audit Department provides
on internal auditing from inside and outside Japan and disseminat-
Committee, the Compensation Committee, and the Nominating
serve as an executive officer and is primarily responsible for
recommendations and guidance to the business units and depart-
ing it to all Group companies. Also, the Audit Department
Committee. Outside directors have been appointed to all four of
supervising management’s execution of their duties. As at SMFG
ments as well as Group companies.
organizes training courses, led by outside experts, for the staff of
these committees to provide for corporate governance from an
and to ensure a robust supervisory function, outside directors are
At SMBC, we have formed auditing departments that are inde-
Group companies and encourages them to obtain international
objective perspective. As the need for objectivity is particularly
appointed to the Board of Directors. At SMBC, three outside direc-
pendent of bank units involved in marketing and other business
qualifications to enhance their professional knowledge and skills in
acute in the case of the Auditing Committee and the Compensa-
tors currently serve on the Board, which has a total membership of
activities. Within the Internal Audit Unit of SMBC, we have formed
internal auditing. To improve further the effectiveness of auditing,
tion Committee, outside directors serve as the chairmen of these
thirteen.
two departments: the Internal Audit Department and the Credit
we also take active measures on a Groupwide basis to assess the
committees. To ensure that the execution of the Group’s business
Executive officers are appointed by the Board to manage the
Review Department. As at SMFG, SMBC has set up its Internal
quality of our internal auditing in the light of IIA standards.
operations is in conformity both with legal regulations and gener-
operation of SMBC’s businesses. As of June 30, 2008, SMBC has
ally accepted practices, the outside directors have been selected
70 executive officers, including the president, and eight serve con-
from among the ranks of specialists (including CPAs, lawyers, and
currently as directors. The Management Committee of SMBC is the
consultants).
highest decision-making body at the operational level and is under
SMFG has created the Group Management Committee to
the direct supervision of the Board of Directors. The president
serve as the top decision-making body, and it is under the direct
chairs this committee and selects its members from the executive
supervision of the Board of Directors and chaired by the president
officers. The committee members consider important management
of SMFG. This committee is composed of directors chosen by the
issues based on policies set by the Board of Directors, and the
president. Its role is to consider important matters related to the
president has the authority to make the final decision after consid-
execution of business and to make decisions for or against the
ering the committee’s recommendations.
execution of matters in accord with the basic policies of the Board
The president designates certain members of the Manage-
of Directors. SMFG also has a Group Strategy Committee that
ment Committee to be Authorized Management Committee
serves as a forum for the top managers of SMFG and all other
members in charge of particular Head Office departments or units.
Group companies to exchange opinions and information on their
All of these designated individuals are in charge of implementing
respective business plans. To enable SMFG to monitor the execu-
the directives of the Management Committee within the businesses
tion of day-to-day business operations at SMBC, six SMFG
they oversee.
directors (including three outside directors) of the total of nine
SMFG directors (including three outside directors) also serve
as directors of SMBC. To monitor the conduct of operations at
54
SMFG 2008
Auditing Committee, which is a part of the Management Committee
and is responsible for examining and conducting deliberations on
reports on important matters submitted by the Internal Audit Unit.
SMBC’s Internal Audit Unit is responsible for auditing legal
* The Institute of Internal Auditors (IIA) was founded in 1941 in the United States as an
organization dedicated to helping raise the level of specialization and professionalism
of internal auditing staff. In addition to conducting theoretical and practical research on
internal auditing, the IIA administers examinations for Certified Internal Auditor ® (CIA®),
which is the internationally recognized qualification in this field.
SMFG
Shareholders’ Meeting
Corporate Auditors/
Board of Corporate Auditors
SMBC
Shareholders’ Meeting
Board of Directors
Corporate Auditors/
Board of Corporate Auditors
Office of Corporate Auditors
Board of Directors
Nominating
Committee
Compensation
Committee
Risk Management
Committee
Auditing
Committee
Group Strategy
Committee
Group Management Committee
Internal Auditing Committee
Business units subject to auditing
Office of Corporate Auditors
Management Committee
Internal Auditing Committee
Business units
subject to auditing
All Departments
Internal
audits
Audit
Department
Head Office/Business Units
Internal
audits
Internal Audit Unit
Internal Audit Department
Credit Review Department
M
o
n
i
t
o
r
i
n
g
Auditing
SMFG 2008 55
Compliance
Compliance Systems at SMFG
Compliance at SMBC
Basic Compliance Policies
As a financial services group offering a multiplicity of products and
the state of autonomously implemented compliance functions at
those companies. The three main important areas for strengthen-
Strengthening Compliance Systems
Compliance with laws, regulations, and other social standards is a
Issuance of a Compliance Manual
To assist management and staff in choosing proper courses of
services, SMFG is intensifying its efforts to maintain high standards
ing oversight in fiscal 2008 are (a) the actual monitoring of
basic requirement for corporations in general. Especially for
action, SMBC has prepared its Compliance Manual containing 60
of compliance to carry out its mission as an important part of the
activities at Group companies; (b) ensuring strict observance of
banks, compliance is a particularly important issue because of
principles for action that provide objectives and guidance. This
nation’s public infrastructure and fulfill its social responsibilities.
Japan’s Anti-Monopoly Law; and (c) strengthening measures to
their public mission and social responsibilities as key players in the
manual has been approved by the Board of Directors, and all
Through these efforts, SMFG is becoming a truly outstanding
control conflicts of interest.
global corporate group.
At SMFG, we have positioned compliance as one of the princi-
pal supports of our Business Ethics (please refer to page 52),
Improvements in Monitoring Activities
As revisions are made in finance-related laws, such as Japan’s
financial system and socioeconomic infrastructure.
SMBC, in line with the basic policy of SMFG, requires all its
management and staff have been fully apprised of its contents.
Preparation of Compliance Programs
management and staff to assign the highest value to maintaining
With the objectives of ensuring that compliance systems function
people’s trust, abiding by relevant laws and regulations, upholding
effectively and making necessary improvement in compliance sys-
which serve as the basic principles for fulfilling our corporate
Financial Instruments and Exchange Act, close attention to regula-
high ethical standards, and acting fairly and sincerely. SMBC,
tems within SMBC and its consolidated subsidiaries, the Board of
social responsibility (CSR). Accordingly, we regard strengthening
tions and actions taken is even more important than in the past for
therefore, positions maintaining high standards of compliance as
Directors prepares a specific plan for compliance-related activities
our compliance systems as one of our top management priorities.
ensuring compliance. As a consequence, careful monitoring is
one of its most important management priorities.
each fiscal year, including review and necessary revisions of regu-
Group Management from
a Compliance Perspective
As a financial holding company, SMFG seeks to maintain and
needed for the early identification of signs of emerging problems
and for taking corrective action.
Accordingly, SMFG has prescribed methods for monitoring
activities of Group companies in its Compliance Manuals for
Management of the Compliance System
SMBC adopts a basic, two-tiered structure to ensure compliance.
lations and training. In fiscal 2008, activities in progress include
implementing measures for upgrading and increasing the effec-
tiveness of various monitoring activities, strengthening the
First, each department and office is held individually responsible
functions of compliance officers, continuing the various measures
enhance systems for providing appropriate direction, guidance,
Group Companies as well as procedures for supervising and
for making before the fact decisions that ensure its conduct com-
related to revisions in the Financial Instruments and Exchange Act,
and monitoring for the compliance and related systems of Group
auditing the implementation of these activities. By taking these
plies with laws and regulations. Second, an independent, Internal
changes in the regulations for the sale of insurance products
companies to ensure the sound and proper conduct of business
measures SMFG is working to strengthen its compliance systems
Auditing Unit conducts rigorous audits of department and branch
through bank branches, and strengthening systems, education,
activities throughout the entire Group.
through improvements in monitoring activities.
compliance.
Specific activities include holding regular meetings that are
attended by representatives of Group companies, as well as meet-
ings with individual companies, with the objective of overseeing
Corporate Auditors
Audit Dept.
Group Business
Management Dept.
Audit
Report
Sumitomo Mitsui Financial Group, Inc.
Board of Directors
Group Management Committee
Directions
Report
Discuss
Compliance Committees
General Affairs Dept.
Audit/
Monitoring
Group Company
Audit/
Monitoring
Compliance System
Oversight and Guidelines
Report
Departments and Offices
General Manager responsible for compliance
Compliance Officers to assist General Managers
Management
Report
Group Companies
SMBC, Sumitomo Mitsui Card, SMBC Leasing, JRI, and SMBC Friend Securities
To maintain this two-tiered structure and ensure it is operating
and training, as well as the monitoring of compliance.
Appointment of Compliance Officers
effectively, the Compliance Unit, which includes the General Affairs
In addition to the compliance officers appointed within the bank’s
Department and the Legal Department, plans and implements
departments and branches, we have appointed Area Compliance
systems and system improvements to secure compliance, acting
Officers, who are independent from frontline departments, within
under directions from management. The Compliance Unit also pro-
certain of our business units is including the Middle Market Bank-
vides guidance and conducts monitoring activities regarding the
ing Unit and the Consumer Banking Unit. These officers are
activities of all departments and branches, and assists depart-
responsible for directing and overseeing compliance regarding
ments and branches make compliance decisions.
transactions carried out by the staff of our branches and other
The framework of SMBC’s compliance system is shown in the
diagram at the bottom of this page. To ensure that this framework
frontline offices.
Formation of the Compliance Committee
functions effectively, SMBC also engages in the activities
To ensure that compliance issues related to various operations
described in the following paragraphs.
within the bank are reviewed and discussed comprehensively, we
have formed the Compliance Committee, which has members
drawn from across the organization. This committee is chaired by
the director responsible for compliance issues and includes the
heads of relevant departments. To enhance the fairness and
objectivity of the committee’s deliberations, outside members also
participate in the Compliance Committee meetings.
■ Overview of SMBC’s Compliance System
Board of Directors, Management Committee
Audit
Corporate Auditors
Directions
Report
Compliance Unit
Directions, Monitoring, and
Legal Support
Discuss
Compliance Committees
Consult
General Affairs Dept. (overall control), Legal Dept.
Head Office departments
Discuss
General
Manager
Area Compliance Officers
Report and Discuss
Front-line Offices
(Corporate Business Offices, Branches)
General Managers
Compliance Office
Internal Audit Dept.
56
SMFG 2008
SMFG 2008 57
Compliance Officers
Compliance Officers
Report
Audit
Compliance
Compliance Systems at SMFG
Compliance at SMBC
Basic Compliance Policies
As a financial services group offering a multiplicity of products and
the state of autonomously implemented compliance functions at
those companies. The three main important areas for strengthen-
Strengthening Compliance Systems
Compliance with laws, regulations, and other social standards is a
Issuance of a Compliance Manual
To assist management and staff in choosing proper courses of
services, SMFG is intensifying its efforts to maintain high standards
ing oversight in fiscal 2008 are (a) the actual monitoring of
basic requirement for corporations in general. Especially for
action, SMBC has prepared its Compliance Manual containing 60
of compliance to carry out its mission as an important part of the
activities at Group companies; (b) ensuring strict observance of
banks, compliance is a particularly important issue because of
principles for action that provide objectives and guidance. This
nation’s public infrastructure and fulfill its social responsibilities.
Japan’s Anti-Monopoly Law; and (c) strengthening measures to
their public mission and social responsibilities as key players in the
manual has been approved by the Board of Directors, and all
Through these efforts, SMFG is becoming a truly outstanding
control conflicts of interest.
global corporate group.
At SMFG, we have positioned compliance as one of the princi-
pal supports of our Business Ethics (please refer to page 52),
Improvements in Monitoring Activities
As revisions are made in finance-related laws, such as Japan’s
financial system and socioeconomic infrastructure.
SMBC, in line with the basic policy of SMFG, requires all its
management and staff have been fully apprised of its contents.
Preparation of Compliance Programs
management and staff to assign the highest value to maintaining
With the objectives of ensuring that compliance systems function
people’s trust, abiding by relevant laws and regulations, upholding
effectively and making necessary improvement in compliance sys-
which serve as the basic principles for fulfilling our corporate
Financial Instruments and Exchange Act, close attention to regula-
high ethical standards, and acting fairly and sincerely. SMBC,
tems within SMBC and its consolidated subsidiaries, the Board of
social responsibility (CSR). Accordingly, we regard strengthening
tions and actions taken is even more important than in the past for
therefore, positions maintaining high standards of compliance as
Directors prepares a specific plan for compliance-related activities
our compliance systems as one of our top management priorities.
ensuring compliance. As a consequence, careful monitoring is
one of its most important management priorities.
each fiscal year, including review and necessary revisions of regu-
Group Management from
a Compliance Perspective
As a financial holding company, SMFG seeks to maintain and
needed for the early identification of signs of emerging problems
and for taking corrective action.
Accordingly, SMFG has prescribed methods for monitoring
activities of Group companies in its Compliance Manuals for
Management of the Compliance System
SMBC adopts a basic, two-tiered structure to ensure compliance.
lations and training. In fiscal 2008, activities in progress include
implementing measures for upgrading and increasing the effec-
tiveness of various monitoring activities, strengthening the
First, each department and office is held individually responsible
functions of compliance officers, continuing the various measures
enhance systems for providing appropriate direction, guidance,
Group Companies as well as procedures for supervising and
for making before the fact decisions that ensure its conduct com-
related to revisions in the Financial Instruments and Exchange Act,
and monitoring for the compliance and related systems of Group
auditing the implementation of these activities. By taking these
plies with laws and regulations. Second, an independent, Internal
changes in the regulations for the sale of insurance products
companies to ensure the sound and proper conduct of business
measures SMFG is working to strengthen its compliance systems
Auditing Unit conducts rigorous audits of department and branch
through bank branches, and strengthening systems, education,
activities throughout the entire Group.
through improvements in monitoring activities.
compliance.
Specific activities include holding regular meetings that are
attended by representatives of Group companies, as well as meet-
ings with individual companies, with the objective of overseeing
Corporate Auditors
Audit Dept.
Group Business
Management Dept.
Audit
Report
Sumitomo Mitsui Financial Group, Inc.
Board of Directors
Group Management Committee
Directions
Report
Discuss
Compliance Committees
General Affairs Dept.
Audit/
Monitoring
Group Company
Audit/
Monitoring
Compliance System
Oversight and Guidelines
Report
Departments and Offices
General Manager responsible for compliance
Compliance Officers to assist General Managers
Management
Report
Group Companies
SMBC, Sumitomo Mitsui Card, SMBC Leasing, JRI, and SMBC Friend Securities
To maintain this two-tiered structure and ensure it is operating
and training, as well as the monitoring of compliance.
Appointment of Compliance Officers
effectively, the Compliance Unit, which includes the General Affairs
In addition to the compliance officers appointed within the bank’s
Department and the Legal Department, plans and implements
departments and branches, we have appointed Area Compliance
systems and system improvements to secure compliance, acting
Officers, who are independent from frontline departments, within
under directions from management. The Compliance Unit also pro-
certain of our business units is including the Middle Market Bank-
vides guidance and conducts monitoring activities regarding the
ing Unit and the Consumer Banking Unit. These officers are
activities of all departments and branches, and assists depart-
responsible for directing and overseeing compliance regarding
ments and branches make compliance decisions.
transactions carried out by the staff of our branches and other
The framework of SMBC’s compliance system is shown in the
diagram at the bottom of this page. To ensure that this framework
frontline offices.
Formation of the Compliance Committee
functions effectively, SMBC also engages in the activities
To ensure that compliance issues related to various operations
described in the following paragraphs.
within the bank are reviewed and discussed comprehensively, we
have formed the Compliance Committee, which has members
drawn from across the organization. This committee is chaired by
the director responsible for compliance issues and includes the
heads of relevant departments. To enhance the fairness and
objectivity of the committee’s deliberations, outside members also
participate in the Compliance Committee meetings.
■ Overview of SMBC’s Compliance System
Board of Directors, Management Committee
Audit
Corporate Auditors
Directions
Report
Compliance Unit
Directions, Monitoring, and
Legal Support
Discuss
Compliance Committees
Consult
General Affairs Dept. (overall control), Legal Dept.
Head Office departments
Discuss
General
Manager
Area Compliance Officers
Report and Discuss
Front-line Offices
(Corporate Business Offices, Branches)
General Managers
Compliance Office
Internal Audit Dept.
56
SMFG 2008
SMFG 2008 57
Compliance Officers
Compliance Officers
Report
Audit
Environmental Preservation Initiatives
The Group recognizes environmental preservation to be one of its most important man-
agement issues. Based on our Group Environmental Policy, we are implementing
initiatives to preserve and achieve harmony with the natural environment in our corpo-
rate activities. SMFG is a signatory to the “Statement by Financial Institutions on the
Environment and Sustainable Development” of the United Nations Environment Pro-
gramme (UNEP) and participates in the national movement “Team Minus 6%,” which is sponsored by the Japanese government.
The Group Environmental Policy
Recognizing the importance of realizing a sustainable society, SMFG is making continuous efforts to harmonize environmental preserva-
tion and corporate activities, in order to support the economy and contribute to the general well-being of society as a whole.
● We provide environment-friendly financial products, information, and solutions that help our customers in their efforts to preserve the
eco-system.
● We devise ways to reduce levels of environmental risk posed by our own activities and those of society at large.
● We are determined to fulfill our social responsibilities through the conservation of resources, energy saving, and the reduction of waste.
● We enforce a policy of strict adherence to environment-related laws and regulations.
● We practice a high level of disclosure of information relating to the Group’s environmental activities, and make ceaseless efforts to
improve our contribution to environmental preservation, incorporating the views of our staff and concerned persons from outside the Group.
● We place a high priority on thoroughly educating our staff in our environmental principles, and in ensuring that they conform to these
principles in the performance of their work.
● We actively and effectively conduct environmentally aware management, and make continuous efforts to improve our system for tackling
environmental issues, including by setting targets for each business term and reviewing them when deemed advisable.
● These policies are published on the Group’s website, and are also available in printed form upon request.
June 29, 2005
Teisuke Kitayama
President
Sumitomo Mitsui Financial Group, Inc.
Three Pillars of Group’s Activities
The three pillars of our environmental action plan are to “reduce environmental impact,” “manage environmental risk,” and “promote environ-
mental businesses.” The Group CSR Committee systematically sets environmental objectives for various activities and follows the PDCA
(plan, do, check, and act) cycle in these environmental activities. SMFG and principal Group companies have obtained ISO 14001 certifica-
tion, the international standard for environmental management systems.
Group CSR Committee Environmental Action Plan and the PDCA Cycle
● Major Initiatives by Group Companies
Objectives and Initiatives
SMBC
Sumitomo
Mitsui
Card
SMBC
Finance and
Leasing
Reduce environmental
impact
Reducing energy consumption
Promoting green procurement
Providing training on environmental issues
Manage environmental Dealing with environmental risk in lending activities
risk
Promoting sale of items for reuse
Promote
environmental
businesses
Providing funding and lease financing for environment-friendly businesses, etc.
Promoting carbon credits business
Providing environmental policy consulting
Promoting environment-conserving businesses, such as energy
service companies (ESCOs) and energy service providers (ESPs)
Providing information, suggestions for policies and measures
◯
◯
◯
◯
—
◯
◯
—
—
◯
◯
◯
◯
—
—
—
—
—
—
—
◯
◯
◯
◯
◯
◯
◯
—
◯
—
JRI
◯
◯
◯
—
—
—
◯
◯
◯
◯
SMBC
Friend
Securities
◯
◯
◯
—
—
—
—
—
—
—
Reducing Environmental Impact
SMFG sets objectives each year for the reduction in use of electric
Analysis Department (EAD) has established its own internal proce-
dures for social and environmental risk assessment in accordance
power and other sources of energy and is actively engaged in
with the Equator Principles, and EAD keeps updating its risk
reaching these energy conservation goals. We conduct “Is conser-
assessment operation.
vation visible?” campaigns to lower energy use along with
autonomous energy use reduction efforts. In addition, SMBC has
made its Head Office “carbon neutral” through the procurement of
“green” sources of energy and purchases of carbon credits.*
Moreover, Sumitomo Mitsui Card has attained carbon neutral sta-
tus for its Osaka Head Office, and SMFG Finance and Leasing has
reached this status for its Tokyo Head Office, both through the pur-
chase of carbon credits.
* Carbon credits are also referred to as “Kyoto credits,” “emission allowances,” and “Certified
Emission Reductions (CER)”. In this annual report, we use “carbon credits” to refer to these and
the other concepts recognized under the Kyoto Protocol.
Managing Environmental Risk
● Dealing with Soil Contamination and Asbestos Risk
To deal with the risk that land pledged as collateral by borrowers
may be contaminated, SMBC requires contamination risk assess-
Promoting Environmental Businesses
The Group considers providing assistance to companies engaged
ment for land meeting certain criteria. When the risk is judged to
in environmental business as an effective way to provide assis-
be high, the assessed value of the potential risk is subtracted from
tance to society and the international community through its
the value of the collateral.
business activities.
In addition, similar measures are taken regarding asbestos
SMBC, in particular, formed the Eco-Biz Promotion Council in
risk. When there is a concern about possible asbestos pollution,
fiscal 2005 to discuss periodically the development of sophisti-
risk assessments are conducted for asset collateral meeting cer-
cated and efficient products and services that contribute to
tain criteria, and SMBC encourages its customers to implement
environmental maintenance and improvement.
assessment surveys of such risk. Regarding its own premises,
SMBC conducts surveys of asbestos risk and takes appropriate
removal measures.
● Adoption of the “Equator Principles”
SMBC has adopted the Equator Principles which are a set of
guidelines for financial institutions to conduct assessment and
management of social and environmental impacts related to
financing of large-scale development projects. The Environment
Financial intermediary functions
Information-dissemination functions
● Nurturing, supporting, and creating
● Publishing SAFE, an environmental
environmental businesses
information magazine
● Supporting carbon credits business,
etc.
● Holding of environmental seminars
● Making suggestions for policies, etc.
58
SMFG 2008
SMFG 2008 59
Environmental Preservation Initiatives
The Group recognizes environmental preservation to be one of its most important man-
agement issues. Based on our Group Environmental Policy, we are implementing
initiatives to preserve and achieve harmony with the natural environment in our corpo-
rate activities. SMFG is a signatory to the “Statement by Financial Institutions on the
Environment and Sustainable Development” of the United Nations Environment Pro-
gramme (UNEP) and participates in the national movement “Team Minus 6%,” which is sponsored by the Japanese government.
The Group Environmental Policy
Recognizing the importance of realizing a sustainable society, SMFG is making continuous efforts to harmonize environmental preserva-
tion and corporate activities, in order to support the economy and contribute to the general well-being of society as a whole.
● We provide environment-friendly financial products, information, and solutions that help our customers in their efforts to preserve the
eco-system.
● We devise ways to reduce levels of environmental risk posed by our own activities and those of society at large.
● We are determined to fulfill our social responsibilities through the conservation of resources, energy saving, and the reduction of waste.
● We enforce a policy of strict adherence to environment-related laws and regulations.
● We practice a high level of disclosure of information relating to the Group’s environmental activities, and make ceaseless efforts to
improve our contribution to environmental preservation, incorporating the views of our staff and concerned persons from outside the Group.
● We place a high priority on thoroughly educating our staff in our environmental principles, and in ensuring that they conform to these
principles in the performance of their work.
● We actively and effectively conduct environmentally aware management, and make continuous efforts to improve our system for tackling
environmental issues, including by setting targets for each business term and reviewing them when deemed advisable.
● These policies are published on the Group’s website, and are also available in printed form upon request.
June 29, 2005
Teisuke Kitayama
President
Sumitomo Mitsui Financial Group, Inc.
Three Pillars of Group’s Activities
The three pillars of our environmental action plan are to “reduce environmental impact,” “manage environmental risk,” and “promote environ-
mental businesses.” The Group CSR Committee systematically sets environmental objectives for various activities and follows the PDCA
(plan, do, check, and act) cycle in these environmental activities. SMFG and principal Group companies have obtained ISO 14001 certifica-
tion, the international standard for environmental management systems.
Group CSR Committee Environmental Action Plan and the PDCA Cycle
● Major Initiatives by Group Companies
Objectives and Initiatives
SMBC
Sumitomo
Mitsui
Card
SMBC
Finance and
Leasing
Reduce environmental
impact
Reducing energy consumption
Promoting green procurement
Providing training on environmental issues
Manage environmental Dealing with environmental risk in lending activities
risk
Promoting sale of items for reuse
Promote
environmental
businesses
Providing funding and lease financing for environment-friendly businesses, etc.
Promoting carbon credits business
Providing environmental policy consulting
Promoting environment-conserving businesses, such as energy
service companies (ESCOs) and energy service providers (ESPs)
Providing information, suggestions for policies and measures
◯
◯
◯
◯
—
◯
◯
—
—
◯
◯
◯
◯
—
—
—
—
—
—
—
◯
◯
◯
◯
◯
◯
◯
—
◯
—
JRI
◯
◯
◯
—
—
—
◯
◯
◯
◯
SMBC
Friend
Securities
◯
◯
◯
—
—
—
—
—
—
—
Reducing Environmental Impact
SMFG sets objectives each year for the reduction in use of electric
Analysis Department (EAD) has established its own internal proce-
dures for social and environmental risk assessment in accordance
power and other sources of energy and is actively engaged in
with the Equator Principles, and EAD keeps updating its risk
reaching these energy conservation goals. We conduct “Is conser-
assessment operation.
vation visible?” campaigns to lower energy use along with
autonomous energy use reduction efforts. In addition, SMBC has
made its Head Office “carbon neutral” through the procurement of
“green” sources of energy and purchases of carbon credits.*
Moreover, Sumitomo Mitsui Card has attained carbon neutral sta-
tus for its Osaka Head Office, and SMFG Finance and Leasing has
reached this status for its Tokyo Head Office, both through the pur-
chase of carbon credits.
* Carbon credits are also referred to as “Kyoto credits,” “emission allowances,” and “Certified
Emission Reductions (CER)”. In this annual report, we use “carbon credits” to refer to these and
the other concepts recognized under the Kyoto Protocol.
Managing Environmental Risk
● Dealing with Soil Contamination and Asbestos Risk
To deal with the risk that land pledged as collateral by borrowers
may be contaminated, SMBC requires contamination risk assess-
Promoting Environmental Businesses
The Group considers providing assistance to companies engaged
ment for land meeting certain criteria. When the risk is judged to
in environmental business as an effective way to provide assis-
be high, the assessed value of the potential risk is subtracted from
tance to society and the international community through its
the value of the collateral.
business activities.
In addition, similar measures are taken regarding asbestos
SMBC, in particular, formed the Eco-Biz Promotion Council in
risk. When there is a concern about possible asbestos pollution,
fiscal 2005 to discuss periodically the development of sophisti-
risk assessments are conducted for asset collateral meeting cer-
cated and efficient products and services that contribute to
tain criteria, and SMBC encourages its customers to implement
environmental maintenance and improvement.
assessment surveys of such risk. Regarding its own premises,
SMBC conducts surveys of asbestos risk and takes appropriate
removal measures.
● Adoption of the “Equator Principles”
SMBC has adopted the Equator Principles which are a set of
guidelines for financial institutions to conduct assessment and
management of social and environmental impacts related to
financing of large-scale development projects. The Environment
Financial intermediary functions
Information-dissemination functions
● Nurturing, supporting, and creating
● Publishing SAFE, an environmental
environmental businesses
information magazine
● Supporting carbon credits business,
etc.
● Holding of environmental seminars
● Making suggestions for policies, etc.
58
SMFG 2008
SMFG 2008 59
Nurturing and Supporting Environmental Businesses
● SMBC Eco-Loans
SMBC began to offer loan products with preferential interest rates
environmental technologies. Separately
from the eco japan cup contest, SMBC
works with universities in Japan to
to companies that have obtained various types of environmental
select those venture companies that
certifications in February 2007 with the aim of encouraging small
have potential to commercialize their
and medium-sized enterprises (SMEs) to engage in more environ-
technologies. SMBC gives assistance
mentally friendly activities.
Features of Eco-Loans: To enhance the convenience of these loans for SMEs,
we have expanded the list of environmental certifications beyond ISO 14001 to
include a total of more than 20 NPOs and local government entities in Japan
that have their own environmental certifications.
Outstanding balance: As of March 31, 2008, 475 Eco-Loans had been
made in the total amount of ¥30 billion.
● Global ECOBIZ Assist
Begun by SMBC in March 2008, this program offers preferential
interest rates and fees to support the trade activities and entry into
overseas markets of SMEs that manufacture and develop environ-
mental equipment activities.
Objectives of ECOBIZ Assist: This program is intended to provide assistance
in the globalization of Japanese SMEs that have superior environmental tech-
nologies and disseminate information about Japan’s environmental technology
to the rest of the world.
Eligibility: SMEs that are engaged in manufacturing and developing envi-
ronmental equipment in the fields of water, waste materials, new energy, the
atmosphere, energy conservation, and other areas (soil pollution remediation,
greening, recovery of natural areas, etc.)
● Environmental Advisory Business
In the environmental field, Group company JRI is emphasizing the
provision of outsourcing services for the operation, maintenance,
and management of environmental facilities as well as environ-
mental advisory services.
● eco japan cup
Since fiscal 2006, SMBC and Japan’s Ministry of the Environment
to them jointly with the universities and
thereby provides support for their R&D
activities.
● THE 5TH ECO-PRODUCTS INTERNATIONAL FAIR
THE 5TH ECO-PRODUCTS INTERNATIONAL FAIR is a compre-
hensive event that showcases a wide range of products and
services that are environmentally friendly. The fair planned for
March 2009 will be the fifth annual event in this series. The fair held
in March 2008 was presented in Hanoi, Vietnam, and participants
included 91 companies and organizations from nine countries,
including Japan.
The press conference held on June 10, 2008, in the Philip-
pines to announce THE 5TH ECO-PRODUCTS INTERNATIONAL
FAIR was attended by key members of the planning committee for
the fair, including Teisuke Kitayama, chairman of SMBC, Shigeo
Takenaka, Secretary-General of the Asian Productivity Organiza-
tion (APO), and the chair of the advisory committee for the fair
Amelita Ramos, wife of a former president of the Philippines.
● Environmental Business Networking Event
Beginning in 2006, responding to the need to expand distribution
channels to potential customers of companies supplying environ-
mental products and services, SMBC and SMBC Consulting jointly
Carbon Credits Related Business Activities
The Group has engaged in business activities related to carbon
bon credits SMBC purchases under the campaign will be trans-
ferred to the Japanese government for free to help the nation
credits, including introductions of available carbon credits to poten-
reach its target under the Kyoto protocol.
tial buyers since 2005.
● Small-Lot Carbon Credits Purchase Service
Beginning in June 2007, SMBC began to offer a service for pur-
● Carbon Neutral Leases
Sumitomo Mitsui Finance and Leasing has been contributing to the
chase of small-lot carbon credits (joint purchase by several
environment by offering lease financing for energy-conserving
companies is acceptable) making use of money trust scheme. Fur-
machinery and equipment in collaboration with ESCO enterprises.
ther, to enhance the buyer’s CSR activities, the buyer can choose
In August 2007, it introduced carbon neutral leases. This is a new
whether to receive or donate the deposit interest earned on the
service that renders the greenhouse gases released by leased
trust assets between the period of the start of the money trust and
assets neutral through the allocation of carbon credits to these
the settlement of carbon credit purchase.
assets. As a result of the implementation of this service, we are in a
Joint purchasing company A
Truster and beneficiary
Joint purchasing company B
Truster and beneficiary
Money trust (€)
Beneficiary rights
Money trust (€)
Beneficiary rights
SMBC
(trust)
Trustee
Buyer of
the ERPA
Emission Reductions
Purchase Agreement
(ERPA)
Overseas
corporations, etc.
Developer of the emission
reductions project
Seller of the ERPA
Environmental preservation
organizations
Donations
Ministry of the Environment,
Ministry of Economy, Trade and Industry
(Account for custody of carbon credits)
The CDM* Executive Board
(Account for custody of carbon credits)
* Clean Development Mechanism
● Carbon Offsetting through Housing Loans
Beginning in April 2008, SMBC began a campaign to provide sup-
port for carbon offsetting to prevent global warming through
housing loans made to individual customers. Under this program,
home buyers purchase environmentally friendly houses with loans
provided by SMBC, and, for customers who agree to take steps to
reduce greenhouse gases, SMBC purchases carbon credits
equivalent to one ton of greenhouse gases per household. These
credits are then trans-
ferred to the Japanese
government, thus
making possible car-
bon offsetting through
the joint efforts of cus-
tomers and the bank.
much better position to support the activities of companies that
want to take the initiative in conducting environmentally friendly
business activities.
Contribution to
the environment
GHG emission
reduction
CSR report
Information Provision and Dissemination
● Publication of Environmental Magazine SAFE
SMFG has published this magazine on
a bimonthly basis to provide information
on the environment to its customers and
other parties since 1996. Content
includes interviews with the top man-
agement of companies that conduct
sophisticated environmental activities
and information on environmental regu-
latory trends. In addition, a related
“Environmental Seminar” is held each
year to provide additional information on
the environment.
http://www.smfg.co.jp/responsibility/csrinfo/safe.html
● Signatory to the Carbon Disclosure Project (CDP)
SMFG is a signatory to the Carbon Disclosure Project (CDP).
● “Fight Global Warming” Campaign for Marketing Japanese
Today, institutional investors and financial institutions with an inter-
have jointly sponsored the “eco japan cup,” which is a contest for
have held Environmental Business Networking Events. About 500
Government Bonds for Individual Investors
est in climate change around the globe are requiring information
selecting the best environment business plans and ideas. This
companies have
contest has the aim of promoting the development of a recycling-
oriented economy and society that are symbiotic with the natural
environment.
attended, and about 600
business discussions
have been held at these
One of the ideas behind this contest is to nurture venture com-
events.
panies in the environmental field and support the development of
Starting in June 2008, SMBC has conducted its “Fight Global
disclosure related to the stance of companies and others as well
Warming” campaign for marketing Japanese government bonds
as their initiatives related to environmental issues. The CDP aims to
(JGB) for individual investors. Under this campaign, which is
gather this information and make the results available.
designed to contribute to greenhouse gas (GHG) emission reduc-
tion as part of its efforts to fight global warming, for every
individual investor who purchases Japanese government bonds
worth one million yen or more, SMBC will buy carbon credits worth
500 kilograms of carbon dioxide (CO2). Two thousand tons of car-
60
SMFG 2008
SMFG 2008 61
Nurturing and Supporting Environmental Businesses
● SMBC Eco-Loans
SMBC began to offer loan products with preferential interest rates
environmental technologies. Separately
from the eco japan cup contest, SMBC
works with universities in Japan to
to companies that have obtained various types of environmental
select those venture companies that
certifications in February 2007 with the aim of encouraging small
have potential to commercialize their
and medium-sized enterprises (SMEs) to engage in more environ-
technologies. SMBC gives assistance
mentally friendly activities.
Features of Eco-Loans: To enhance the convenience of these loans for SMEs,
we have expanded the list of environmental certifications beyond ISO 14001 to
include a total of more than 20 NPOs and local government entities in Japan
that have their own environmental certifications.
Outstanding balance: As of March 31, 2008, 475 Eco-Loans had been
made in the total amount of ¥30 billion.
● Global ECOBIZ Assist
Begun by SMBC in March 2008, this program offers preferential
interest rates and fees to support the trade activities and entry into
overseas markets of SMEs that manufacture and develop environ-
mental equipment activities.
Objectives of ECOBIZ Assist: This program is intended to provide assistance
in the globalization of Japanese SMEs that have superior environmental tech-
nologies and disseminate information about Japan’s environmental technology
to the rest of the world.
Eligibility: SMEs that are engaged in manufacturing and developing envi-
ronmental equipment in the fields of water, waste materials, new energy, the
atmosphere, energy conservation, and other areas (soil pollution remediation,
greening, recovery of natural areas, etc.)
● Environmental Advisory Business
In the environmental field, Group company JRI is emphasizing the
provision of outsourcing services for the operation, maintenance,
and management of environmental facilities as well as environ-
mental advisory services.
● eco japan cup
Since fiscal 2006, SMBC and Japan’s Ministry of the Environment
to them jointly with the universities and
thereby provides support for their R&D
activities.
● THE 5TH ECO-PRODUCTS INTERNATIONAL FAIR
THE 5TH ECO-PRODUCTS INTERNATIONAL FAIR is a compre-
hensive event that showcases a wide range of products and
services that are environmentally friendly. The fair planned for
March 2009 will be the fifth annual event in this series. The fair held
in March 2008 was presented in Hanoi, Vietnam, and participants
included 91 companies and organizations from nine countries,
including Japan.
The press conference held on June 10, 2008, in the Philip-
pines to announce THE 5TH ECO-PRODUCTS INTERNATIONAL
FAIR was attended by key members of the planning committee for
the fair, including Teisuke Kitayama, chairman of SMBC, Shigeo
Takenaka, Secretary-General of the Asian Productivity Organiza-
tion (APO), and the chair of the advisory committee for the fair
Amelita Ramos, wife of a former president of the Philippines.
● Environmental Business Networking Event
Beginning in 2006, responding to the need to expand distribution
channels to potential customers of companies supplying environ-
mental products and services, SMBC and SMBC Consulting jointly
Carbon Credits Related Business Activities
The Group has engaged in business activities related to carbon
bon credits SMBC purchases under the campaign will be trans-
ferred to the Japanese government for free to help the nation
credits, including introductions of available carbon credits to poten-
reach its target under the Kyoto protocol.
tial buyers since 2005.
● Small-Lot Carbon Credits Purchase Service
Beginning in June 2007, SMBC began to offer a service for pur-
● Carbon Neutral Leases
Sumitomo Mitsui Finance and Leasing has been contributing to the
chase of small-lot carbon credits (joint purchase by several
environment by offering lease financing for energy-conserving
companies is acceptable) making use of money trust scheme. Fur-
machinery and equipment in collaboration with ESCO enterprises.
ther, to enhance the buyer’s CSR activities, the buyer can choose
In August 2007, it introduced carbon neutral leases. This is a new
whether to receive or donate the deposit interest earned on the
service that renders the greenhouse gases released by leased
trust assets between the period of the start of the money trust and
assets neutral through the allocation of carbon credits to these
the settlement of carbon credit purchase.
assets. As a result of the implementation of this service, we are in a
Joint purchasing company A
Truster and beneficiary
Joint purchasing company B
Truster and beneficiary
Money trust (€)
Beneficiary rights
Money trust (€)
Beneficiary rights
SMBC
(trust)
Trustee
Buyer of
the ERPA
Emission Reductions
Purchase Agreement
(ERPA)
Overseas
corporations, etc.
Developer of the emission
reductions project
Seller of the ERPA
Environmental preservation
organizations
Donations
Ministry of the Environment,
Ministry of Economy, Trade and Industry
(Account for custody of carbon credits)
The CDM* Executive Board
(Account for custody of carbon credits)
* Clean Development Mechanism
● Carbon Offsetting through Housing Loans
Beginning in April 2008, SMBC began a campaign to provide sup-
port for carbon offsetting to prevent global warming through
housing loans made to individual customers. Under this program,
home buyers purchase environmentally friendly houses with loans
provided by SMBC, and, for customers who agree to take steps to
reduce greenhouse gases, SMBC purchases carbon credits
equivalent to one ton of greenhouse gases per household. These
credits are then trans-
ferred to the Japanese
government, thus
making possible car-
bon offsetting through
the joint efforts of cus-
tomers and the bank.
much better position to support the activities of companies that
want to take the initiative in conducting environmentally friendly
business activities.
Contribution to
the environment
GHG emission
reduction
CSR report
Information Provision and Dissemination
● Publication of Environmental Magazine SAFE
SMFG has published this magazine on
a bimonthly basis to provide information
on the environment to its customers and
other parties since 1996. Content
includes interviews with the top man-
agement of companies that conduct
sophisticated environmental activities
and information on environmental regu-
latory trends. In addition, a related
“Environmental Seminar” is held each
year to provide additional information on
the environment.
http://www.smfg.co.jp/responsibility/csrinfo/safe.html
● Signatory to the Carbon Disclosure Project (CDP)
SMFG is a signatory to the Carbon Disclosure Project (CDP).
● “Fight Global Warming” Campaign for Marketing Japanese
Today, institutional investors and financial institutions with an inter-
have jointly sponsored the “eco japan cup,” which is a contest for
have held Environmental Business Networking Events. About 500
Government Bonds for Individual Investors
est in climate change around the globe are requiring information
selecting the best environment business plans and ideas. This
companies have
contest has the aim of promoting the development of a recycling-
oriented economy and society that are symbiotic with the natural
environment.
attended, and about 600
business discussions
have been held at these
One of the ideas behind this contest is to nurture venture com-
events.
panies in the environmental field and support the development of
Starting in June 2008, SMBC has conducted its “Fight Global
disclosure related to the stance of companies and others as well
Warming” campaign for marketing Japanese government bonds
as their initiatives related to environmental issues. The CDP aims to
(JGB) for individual investors. Under this campaign, which is
gather this information and make the results available.
designed to contribute to greenhouse gas (GHG) emission reduc-
tion as part of its efforts to fight global warming, for every
individual investor who purchases Japanese government bonds
worth one million yen or more, SMBC will buy carbon credits worth
500 kilograms of carbon dioxide (CO2). Two thousand tons of car-
60
SMFG 2008
SMFG 2008 61
Social Contribution Activities
Fundamental approach to social contribution activities
SMFG and its Group companies, due to the public service nature of the financial services industry, recognize the importance of using
business operations to contribute to the development of society. In addition to this contribution to society through day-to-day business
operations, we must also act as a responsible corporate citizen by engaging in activities that help lay the foundations for a better soci-
ety in the future. In the spirit of corporate citizenship, SMFG and its Group companies will fulfill their social obligations through a broad
range of activities.
Policy on social contribution activities
SMFG and its Group companies understand their role as responsible corporate citizens, and undertake activities that contribute to the
realization of a prosperous and sustainable society. We maintain an extensive social contribution program by planning and executing
social contribution activities at the corporate level, as well as encouraging employees to volunteer for worthwhile activities.
The central elements of our social contribution activities
SMFG and its Group companies position the following four sectors as the core fields for social contributions:
1) social welfare; 2) local and international communities; 3) environment; and 4) culture, art and education.
Activities Contributing to Social Welfare
Group companies undertake a wide range of social welfare activi-
● Providing Opportunities to Experience Volunteer Activities
SMBC provides opportunities for its staff and their families to expe-
ties that contribute to creating a more-affluent society.
rience volunteer activities. During fiscal 2007, SMBC held a
● Collection and Donation of Voided Postcards, Unused Prepaid
Offering Support to Physically Challenged Persons through
Telephone Cards, and Used Postage Stamps
Demonstrations of Service Dogs Assisting Persons with Sight,
SMFG collects voided postcards from Group employees,
Hearing, and Other Disabilities,” “International Cooperation Semi-
exchanges them for new postal stamps, and donates the stamps
nar for Learning about the Life of Children in Developing Countries
to volunteer organizations to help them cover their postal costs. In
and Sorting Foreign Coins Received at the Bank Branches and
addition to these SMFG activities, SMBC collects unused prepaid
Other Offices,” and “Seminar on First-Aid Methods, Including the
number of these events, including three entitled: “Learning about
Contribution Activities for Local and Overseas Communities
We undertake a variety of activities that contribute to the develop-
ment of local communities in Japan, and international communities
overseas.
● SMBC Volunteer Fund
The SMBC Volunteer Fund makes contributions to volunteer orga-
nizations, including those described below. Funds are raised from
SMBC employees who volunteer to have ¥100 deducted from their
In addition, the fund also made contributions for emergency disaster relief,
including the following:
* Donations were made in fiscal 2007 to provide relief after the following
disasters: The Noto Peninsula earthquake in Japan, the earthquake
and tsunami in the Solomon Islands, the Niigata-Chuetsu offshore
earthquake, floods in Kumamoto Prefecture in Japan, a major earth-
quake in Peru, forest fires in Southern California, and a cyclone in
Bangladesh.
* Donations were provided in May 2008 to offer assistance for damage
following the cyclone in Myanmar, and the major earthquake in China’s
salaries each month. As of June 2008, about 10,000 employees
Sichuan Province. Also, in June 2008, assistance was provided follow-
were participating in the program.
Major Donations by the Fund in Fiscal 2007:
* Donations to economically disadvantaged
areas of Cambodia to repair and expand
older school facilities and to build a work
training facility for female students
* Payment of costs for publishing picture
books and hosting training seminars on
reading for teachers in Cambodia
* Donations for setting up school libraries in
Laos and operating culture centers there
for art education
ing the Iwate-Miyagi inland earthquake.
● Opening of accounts for donations to disaster victims
When major natural disasters occur, either in Japan or overseas,
SMBC will open special accounts to collect donations for relief and
allows anyone wishing to make donations to the account without
fund transfer charges. SMBC also solicits donations for such
causes from its employees and those of Group company Japan
Research Institute (JRI). During fiscal 2007, donations were made
from these special accounts to offer relief following the Noto Penin-
sula earthquake in Japan, the earthquake and tsunami in the
Solomon Islands, the Niigata-Chuetsu offshore earthquake, floods
* Scholarships for primary school students in Laos and for members of
in Kumamoto Prefecture in Japan, the major earthquake in Peru,
minority groups in that country to attend teacher training schools as
and the cyclone in Bangladesh. Donations were also made avail-
well as funding for a health care and hygiene project in Laos
* Scholarships for girls in rural areas of China
* Payments for medical treatment of persons in Afghanistan
who have been injured as a result of conflicts or by land mines
* Donations for the distribution of textbooks to health and educational
facilities as well as the provision of technical guidance in Nepal as part
of projects related to the improvement in nutritional conditions and edu-
able in May 2008 to provide assistance for damage following the
cyclone in Myanmar, and the major earthquake in China’s Sichuan
Province, and, in June 2008, for assistance following the Iwate-
Miyagi inland earthquake.
● Activities of YUI, SMBC’s Volunteer Organization
SMBC also provides active support for YUI, an in-house volunteer
telephone cards, Sumitomo Mitsui Card collects used postage
Use of Arm Slings and Automated External Defibrillators (AEDs), to
cation in that country
stamps and prepaid cards from employees, and both Group com-
Assist Persons Injured as a Result of Disasters or Suffering from
panies donate them to volunteer organizations. Similarly, SMBC
Emergency Medical Problems.” In addition, SMBC provides
Friend Securities also collects used postage stamps for donation
employees with information on various volunteer activities and
to volunteer groups.
encourages their participation in such events.
● Sign-Language Courses
To assist employees in communicating with and providing high
level services to aurally challenged customers, SMBC has offered
sign-language courses to its employees each year since 1997.
This is one of the many ways that SMBC makes social contribu-
tions through its business activities. In fiscal 2007, about 80 SMBC
employees enrolled in the course, which was conducted in 10 ses-
sions. Also, in 2005, the bank began to hold annual lectures to
provide opportunities for aurally challenged guest speakers,
assisted by interpreters, to
● Donations to Organizations Assisting Senior Citizens
SMBC Friend Securities has launched an investment trust that
share their impressions of
invests in companies that respond to the needs of Japan’s senior
daily life using sign language.
citizens, and, in March 2008, donated a portion of the income from
This event was held for the
the marketing of this trust to organizations that help seniors to lead
fourth consecutive year in
healthy and fulfilling lives.
April 2008 and was attended
by about 1,200 employees.
* Assistance to a project in Myanmar for improving the living environ-
organization that provides the opportunity for SMBC employees to
ment for women through training in health and hygiene, activities to
increase the literacy rate, teaching sewing skills, and other areas
* Donations to programs in Bangladesh to assist extremely economically
disadvantaged women in raising their incomes
* Support for a water hygiene improvement project at primary schools in
Sudan in Africa
* Donations to a primary school lunch project in Burkina Faso in Africa
* Assistance for surgical expenses and scholarships for primary, middle,
plan and carry out welfare activities. YUI activities conducted on a
continuing basis include social events held for persons living in
homes for the speech-challenged, holding of charity bazaars for
selling items collected from employees, and events to provide
opportunities for senior citizens to sing their favorite songs. In fis-
cal 2007, other activities included sending picture books collected
by YUI volunteers to children in Laos, with translations of the cap-
and high school students in Indonesia as well as funding for a project
tions and explanations pasted into the books, and holding of
to assist newborn babies
charity bazaars for the sale of handicraft goods.
* Support for trips and other activities for families who have young
children with terminal illnesses and want to enrich their memories of
their children during their remaining time together
* Donations to an international exchange program for children between
the ages of 12 and 13
* Sponsorship of a workshop at a primary school for a puppet play
company composed of speech- and aurally-challenged persons
* Sharing a portion of the expenses related to the establishment of
Japan’s first school for training in Japanese sign language
62
SMFG 2008
SMFG 2008 63
Social Contribution Activities
Fundamental approach to social contribution activities
SMFG and its Group companies, due to the public service nature of the financial services industry, recognize the importance of using
business operations to contribute to the development of society. In addition to this contribution to society through day-to-day business
operations, we must also act as a responsible corporate citizen by engaging in activities that help lay the foundations for a better soci-
ety in the future. In the spirit of corporate citizenship, SMFG and its Group companies will fulfill their social obligations through a broad
range of activities.
Policy on social contribution activities
SMFG and its Group companies understand their role as responsible corporate citizens, and undertake activities that contribute to the
realization of a prosperous and sustainable society. We maintain an extensive social contribution program by planning and executing
social contribution activities at the corporate level, as well as encouraging employees to volunteer for worthwhile activities.
The central elements of our social contribution activities
SMFG and its Group companies position the following four sectors as the core fields for social contributions:
1) social welfare; 2) local and international communities; 3) environment; and 4) culture, art and education.
Activities Contributing to Social Welfare
Group companies undertake a wide range of social welfare activi-
● Providing Opportunities to Experience Volunteer Activities
SMBC provides opportunities for its staff and their families to expe-
ties that contribute to creating a more-affluent society.
rience volunteer activities. During fiscal 2007, SMBC held a
● Collection and Donation of Voided Postcards, Unused Prepaid
Offering Support to Physically Challenged Persons through
Telephone Cards, and Used Postage Stamps
Demonstrations of Service Dogs Assisting Persons with Sight,
SMFG collects voided postcards from Group employees,
Hearing, and Other Disabilities,” “International Cooperation Semi-
exchanges them for new postal stamps, and donates the stamps
nar for Learning about the Life of Children in Developing Countries
to volunteer organizations to help them cover their postal costs. In
and Sorting Foreign Coins Received at the Bank Branches and
addition to these SMFG activities, SMBC collects unused prepaid
Other Offices,” and “Seminar on First-Aid Methods, Including the
number of these events, including three entitled: “Learning about
Contribution Activities for Local and Overseas Communities
We undertake a variety of activities that contribute to the develop-
ment of local communities in Japan, and international communities
overseas.
● SMBC Volunteer Fund
The SMBC Volunteer Fund makes contributions to volunteer orga-
nizations, including those described below. Funds are raised from
SMBC employees who volunteer to have ¥100 deducted from their
In addition, the fund also made contributions for emergency disaster relief,
including the following:
* Donations were made in fiscal 2007 to provide relief after the following
disasters: The Noto Peninsula earthquake in Japan, the earthquake
and tsunami in the Solomon Islands, the Niigata-Chuetsu offshore
earthquake, floods in Kumamoto Prefecture in Japan, a major earth-
quake in Peru, forest fires in Southern California, and a cyclone in
Bangladesh.
* Donations were provided in May 2008 to offer assistance for damage
following the cyclone in Myanmar, and the major earthquake in China’s
salaries each month. As of June 2008, about 10,000 employees
Sichuan Province. Also, in June 2008, assistance was provided follow-
were participating in the program.
Major Donations by the Fund in Fiscal 2007:
* Donations to economically disadvantaged
areas of Cambodia to repair and expand
older school facilities and to build a work
training facility for female students
* Payment of costs for publishing picture
books and hosting training seminars on
reading for teachers in Cambodia
* Donations for setting up school libraries in
Laos and operating culture centers there
for art education
ing the Iwate-Miyagi inland earthquake.
● Opening of accounts for donations to disaster victims
When major natural disasters occur, either in Japan or overseas,
SMBC will open special accounts to collect donations for relief and
allows anyone wishing to make donations to the account without
fund transfer charges. SMBC also solicits donations for such
causes from its employees and those of Group company Japan
Research Institute (JRI). During fiscal 2007, donations were made
from these special accounts to offer relief following the Noto Penin-
sula earthquake in Japan, the earthquake and tsunami in the
Solomon Islands, the Niigata-Chuetsu offshore earthquake, floods
* Scholarships for primary school students in Laos and for members of
in Kumamoto Prefecture in Japan, the major earthquake in Peru,
minority groups in that country to attend teacher training schools as
and the cyclone in Bangladesh. Donations were also made avail-
well as funding for a health care and hygiene project in Laos
* Scholarships for girls in rural areas of China
* Payments for medical treatment of persons in Afghanistan
who have been injured as a result of conflicts or by land mines
* Donations for the distribution of textbooks to health and educational
facilities as well as the provision of technical guidance in Nepal as part
of projects related to the improvement in nutritional conditions and edu-
able in May 2008 to provide assistance for damage following the
cyclone in Myanmar, and the major earthquake in China’s Sichuan
Province, and, in June 2008, for assistance following the Iwate-
Miyagi inland earthquake.
● Activities of YUI, SMBC’s Volunteer Organization
SMBC also provides active support for YUI, an in-house volunteer
telephone cards, Sumitomo Mitsui Card collects used postage
Use of Arm Slings and Automated External Defibrillators (AEDs), to
cation in that country
stamps and prepaid cards from employees, and both Group com-
Assist Persons Injured as a Result of Disasters or Suffering from
panies donate them to volunteer organizations. Similarly, SMBC
Emergency Medical Problems.” In addition, SMBC provides
Friend Securities also collects used postage stamps for donation
employees with information on various volunteer activities and
to volunteer groups.
encourages their participation in such events.
● Sign-Language Courses
To assist employees in communicating with and providing high
level services to aurally challenged customers, SMBC has offered
sign-language courses to its employees each year since 1997.
This is one of the many ways that SMBC makes social contribu-
tions through its business activities. In fiscal 2007, about 80 SMBC
employees enrolled in the course, which was conducted in 10 ses-
sions. Also, in 2005, the bank began to hold annual lectures to
provide opportunities for aurally challenged guest speakers,
assisted by interpreters, to
● Donations to Organizations Assisting Senior Citizens
SMBC Friend Securities has launched an investment trust that
share their impressions of
invests in companies that respond to the needs of Japan’s senior
daily life using sign language.
citizens, and, in March 2008, donated a portion of the income from
This event was held for the
the marketing of this trust to organizations that help seniors to lead
fourth consecutive year in
healthy and fulfilling lives.
April 2008 and was attended
by about 1,200 employees.
* Assistance to a project in Myanmar for improving the living environ-
organization that provides the opportunity for SMBC employees to
ment for women through training in health and hygiene, activities to
increase the literacy rate, teaching sewing skills, and other areas
* Donations to programs in Bangladesh to assist extremely economically
disadvantaged women in raising their incomes
* Support for a water hygiene improvement project at primary schools in
Sudan in Africa
* Donations to a primary school lunch project in Burkina Faso in Africa
* Assistance for surgical expenses and scholarships for primary, middle,
plan and carry out welfare activities. YUI activities conducted on a
continuing basis include social events held for persons living in
homes for the speech-challenged, holding of charity bazaars for
selling items collected from employees, and events to provide
opportunities for senior citizens to sing their favorite songs. In fis-
cal 2007, other activities included sending picture books collected
by YUI volunteers to children in Laos, with translations of the cap-
and high school students in Indonesia as well as funding for a project
tions and explanations pasted into the books, and holding of
to assist newborn babies
charity bazaars for the sale of handicraft goods.
* Support for trips and other activities for families who have young
children with terminal illnesses and want to enrich their memories of
their children during their remaining time together
* Donations to an international exchange program for children between
the ages of 12 and 13
* Sponsorship of a workshop at a primary school for a puppet play
company composed of speech- and aurally-challenged persons
* Sharing a portion of the expenses related to the establishment of
Japan’s first school for training in Japanese sign language
62
SMFG 2008
SMFG 2008 63
● SMBC Program for Contributing to Local Communities
Beginning in fiscal 2007, SMBC
● Establishment of Scholarships and Lecture Sponsorships for Chinese Universities
Beginning in fiscal 2008, SMBC has established a scholarship pro-
has begun to promote activities
gram for several universities in China, including Soochow
that are planned by its branches
University and Shanghai International Studies University. Along
and other offices in Japan to con-
with this program, SMBC has also begun to provide endowed
tribute to local communities. Thus
courses in Chinese universities.
far, these activities have included
cleanup activities for areas in the
vicinity of SMBC branches and
● SMBC GLOBAL FOUNDATION
One of the principal activities of the SMBC Global Foundation is
the outdoors, the planting of trees
providing scholarships to university students in Asian countries,
and flowers around branches,
and, since 1994, it has offered educational support to more than
● Neighborhood Cleanup Programs
● Children’s Illustration Contest
* SMFG sets aside
one day a year as
“SMFG Cleanup
Day,” and its
employees partici-
pate in cleanup
events in the
Kugenuma and Suma coastal areas. During fiscal 2007, 117 employees of
Group companies participated in these events.
* At SMBC, interested employees have helped to clean up riverside areas
since April 2004, and, in April 2008, about 260 participants cleaned up the
Since fiscal 2007, SMBC has
sponsored an illustration contest
for primarily schoolchildren on the
theme “The Kind of Work I Would
Like to Do.” About 3,000 illustra-
tions were submitted for the first
year’s contest. We prepared an original bank passbook featuring
the works of winners in the contest. In addition, the winning works
were placed on display in SMBC’s branches nationwide.
sign-language study classes, and
5,000 students in five countries. In 2006, the foundation added
Koshien Beach area in Hyogo Prefecture.
● Financial and Economic Education
around the world in the lobbies of SMBC branches.
The foundation is also active in the United States and Canada,
exhibitions of children’s art from
Malaysia and Vietnam to the list of countries receiving its support.
● Support for UNICEF
where it mainly provides support for educational and cultural activ-
ities. The foundation’s programs are an important part of SMBC’s
* SMBC is a member corporation of the steering committee of UNICEF Coin
activities for contributing to international society.
Aid and cooperates in the organization’s fund-raising activities. To this end,
SMBC places coin collection boxes in its branches and offices in Japan
and calls for donations from the general public. The coins collected are
sorted by currency with the cooperation of SMBC Green Service Co., Ltd.,
a Group company, before being delivered to the Japan Committee for
UNICEF. In fiscal 2007, about 510,000 foreign coins (approximately 2.3
tons) and 40,000 foreign currency bills were collected at SMBC branches,
airports in Japan, and other locations. Donations collected also included
about ¥6 million in Japanese coins and bills. Since these activities began in
● SMBC Foundation for International Cooperation
Established in 1990, the SMBC Foundation aims to assist in nurtur-
ing the human resources necessary to achieve sustainable growth
in developing economies as well as promote international
exchange activities. Through fiscal 2007, the foundation has pro-
vided financial support for 44 students from Asian countries to
enable them to attend universities in Japan. The foundation also
1992, the total amount of donations has run up to ¥780 million.
offers subsidies to research institutes and researchers undertaking
SMBC also cooperates with the Japan Committee for UNICEF by
projects related to developing countries.
Environmental Activities
We also sponsor activities that contribute to the preservation of the
natural environment.
● SMBC’s Environmental Program NPO C.C.C Furano Field
SMBC also provides support to an environmental project imple-
mented by screenwriter Sou Kuramoto in the Furano area of
Hokkaido. Activities under this project include enlisting the assis-
tance of volunteers in planting seedlings in golf courses that have
gone out of business with the goal of restoring these former forest
areas to their once pristine condition. This project also sponsors
environmental education activities that enable persons to experi-
ence nature with their five senses. SMBC and its employees with
an interest in this project and their families participate in and help
conduct tours in the area to experience and enable others to expe-
rience nature firsthand.
implementing the UNICEF Donation Account program. This program
enables customers to donate their interest earnings after tax to UNICEF
and SMBC provides a matching donation.
SMBC collects donations of foreign coins
The coins and bills collected are sorted by cur-
and bills for UNICEF at its branches.
rency and then delivered to UNICEF.
* Sumitomo Mitsui Card and VJA group companies collects donations from
VISA cardholders every year through its World Present point service for
member companies of the VISA Japan Association. These donations are
then given to the Japan Committee for UNICEF. Since the start of the pro-
gram in 1992, total donations have exceeded ¥200 million. Beginning in
April 2007, we have also commenced donations to the Japanese National
Commission for UNESCO and the World Wildlife Fund Japan (WWF-
Japan). Sumitomo Mitsui Card also issues cards that automatically make
donations to specific charities, such as the UNICEF VISA Card and the Red
Feather VISA Card (offered in cooperation with the Central Community
Chest of Japan). To contribute further to a better society, Sumitomo Mitsui
Card also makes its own donations to the working funds of all these organi-
zations from its card business revenues.
64
SMFG 2008
SMBC engages in a range of edu-
cational activities to promote the
understanding of finance and eco-
nomics. For example, the bank
supported to issue a book entitled
“What Does Bank Do?” and pro-
vides a section on its web site
called “Exciting Exploration of Banking Activities.” SMBC is also a
sponsor of the Kidzania Tokyo job-experience theme park for chil-
dren and offers bank tours for primary school students during
summer vacation entitled “Summer Vacation Fun! Let’s Explore
Banking Activities!” Among other educational activities, SMBC also
supports the “Finance Park,” an educational program on econom-
ics for junior high and high school students in Tokyo’s Shinagawa
Ward, holds finance and economics seminars at universities, and
conducts other similar programs.
● Student Internship Program
JRI instituted its internship program in 1999, in recognition of the
growing importance placed on giving students the opportunity to
spend time in different workplaces prior to their graduation to gain
a better understanding of work activities. Since fiscal 2006, the
program has been sponsored jointly with JRI Solutions, and, in fis-
cal 2007, about 80 university students were accepted. The interns
were assigned to IT systems, consulting, think tank, and many
other workplaces, allowing them the opportunity to experience a
wide range of work experience.
* At Sumitomo Mitsui Finance and Leasing, employees of Osaka Head
Office are contributing to the beautification of the community through their
continuing participation on a voluntary basis in a regular early-morning
neighborhood cleanup conducted along Midosuji Street, a major thorough-
fare.
* Employees of JRI and JRI Solutions respond to calls from local communi-
ties and participate in cleanup activities, mainly in the vicinity of their Tokyo
and Osaka headquarters.
● Contributions to Private Nature Conservation Groups
JRI undertakes research for the Eco Fund, an investment trust that
targets environmentally responsible companies, to assist this fund
in making selections of companies appropriate for investment. JRI
then donates part of the fees received for this research to private-
sector nature conservation groups.
Contributing to Cultural, Artistic, and Education Activities
We also sponsor cultural, artistic and educational events.
● Sponsoring of Charity Concert Entitled “A Toy Box of Favorite
Works”
Since fiscal 2006, SMBC has sponsored a charity concert to pro-
vide support for the world’s children who have been injured by
wars, natural disasters, and other disasters. SMBC’s employee
music societies perform a range of musical pieces that appeal to
everyone from children to adults. Donations are collected from the
audience at the concerts, and artwork submitted by children
around the world is displayed in the concert hall lobby. In addition,
a charity bazaar is held featuring items for sale that have been
handcrafted by SMBC employees. This event was held for the third
time in April 2008,
and, as in the previ-
ous year, it was
presented in the
Casals Hall in Nihon
University with a
large number in
attendance.
SMFG 2008 65
● SMBC Program for Contributing to Local Communities
Beginning in fiscal 2007, SMBC
● Establishment of Scholarships and Lecture Sponsorships for Chinese Universities
Beginning in fiscal 2008, SMBC has established a scholarship pro-
has begun to promote activities
gram for several universities in China, including Soochow
that are planned by its branches
University and Shanghai International Studies University. Along
and other offices in Japan to con-
with this program, SMBC has also begun to provide endowed
tribute to local communities. Thus
courses in Chinese universities.
far, these activities have included
cleanup activities for areas in the
vicinity of SMBC branches and
● SMBC GLOBAL FOUNDATION
One of the principal activities of the SMBC Global Foundation is
the outdoors, the planting of trees
providing scholarships to university students in Asian countries,
and flowers around branches,
and, since 1994, it has offered educational support to more than
● Neighborhood Cleanup Programs
● Children’s Illustration Contest
* SMFG sets aside
one day a year as
“SMFG Cleanup
Day,” and its
employees partici-
pate in cleanup
events in the
Kugenuma and Suma coastal areas. During fiscal 2007, 117 employees of
Group companies participated in these events.
* At SMBC, interested employees have helped to clean up riverside areas
since April 2004, and, in April 2008, about 260 participants cleaned up the
Since fiscal 2007, SMBC has
sponsored an illustration contest
for primarily schoolchildren on the
theme “The Kind of Work I Would
Like to Do.” About 3,000 illustra-
tions were submitted for the first
year’s contest. We prepared an original bank passbook featuring
the works of winners in the contest. In addition, the winning works
were placed on display in SMBC’s branches nationwide.
sign-language study classes, and
5,000 students in five countries. In 2006, the foundation added
Koshien Beach area in Hyogo Prefecture.
● Financial and Economic Education
around the world in the lobbies of SMBC branches.
The foundation is also active in the United States and Canada,
exhibitions of children’s art from
Malaysia and Vietnam to the list of countries receiving its support.
● Support for UNICEF
where it mainly provides support for educational and cultural activ-
ities. The foundation’s programs are an important part of SMBC’s
* SMBC is a member corporation of the steering committee of UNICEF Coin
activities for contributing to international society.
Aid and cooperates in the organization’s fund-raising activities. To this end,
SMBC places coin collection boxes in its branches and offices in Japan
and calls for donations from the general public. The coins collected are
sorted by currency with the cooperation of SMBC Green Service Co., Ltd.,
a Group company, before being delivered to the Japan Committee for
UNICEF. In fiscal 2007, about 510,000 foreign coins (approximately 2.3
tons) and 40,000 foreign currency bills were collected at SMBC branches,
airports in Japan, and other locations. Donations collected also included
about ¥6 million in Japanese coins and bills. Since these activities began in
● SMBC Foundation for International Cooperation
Established in 1990, the SMBC Foundation aims to assist in nurtur-
ing the human resources necessary to achieve sustainable growth
in developing economies as well as promote international
exchange activities. Through fiscal 2007, the foundation has pro-
vided financial support for 44 students from Asian countries to
enable them to attend universities in Japan. The foundation also
1992, the total amount of donations has run up to ¥780 million.
offers subsidies to research institutes and researchers undertaking
SMBC also cooperates with the Japan Committee for UNICEF by
projects related to developing countries.
Environmental Activities
We also sponsor activities that contribute to the preservation of the
natural environment.
● SMBC’s Environmental Program NPO C.C.C Furano Field
SMBC also provides support to an environmental project imple-
mented by screenwriter Sou Kuramoto in the Furano area of
Hokkaido. Activities under this project include enlisting the assis-
tance of volunteers in planting seedlings in golf courses that have
gone out of business with the goal of restoring these former forest
areas to their once pristine condition. This project also sponsors
environmental education activities that enable persons to experi-
ence nature with their five senses. SMBC and its employees with
an interest in this project and their families participate in and help
conduct tours in the area to experience and enable others to expe-
rience nature firsthand.
implementing the UNICEF Donation Account program. This program
enables customers to donate their interest earnings after tax to UNICEF
and SMBC provides a matching donation.
SMBC collects donations of foreign coins
The coins and bills collected are sorted by cur-
and bills for UNICEF at its branches.
rency and then delivered to UNICEF.
* Sumitomo Mitsui Card and VJA group companies collects donations from
VISA cardholders every year through its World Present point service for
member companies of the VISA Japan Association. These donations are
then given to the Japan Committee for UNICEF. Since the start of the pro-
gram in 1992, total donations have exceeded ¥200 million. Beginning in
April 2007, we have also commenced donations to the Japanese National
Commission for UNESCO and the World Wildlife Fund Japan (WWF-
Japan). Sumitomo Mitsui Card also issues cards that automatically make
donations to specific charities, such as the UNICEF VISA Card and the Red
Feather VISA Card (offered in cooperation with the Central Community
Chest of Japan). To contribute further to a better society, Sumitomo Mitsui
Card also makes its own donations to the working funds of all these organi-
zations from its card business revenues.
64
SMFG 2008
SMBC engages in a range of edu-
cational activities to promote the
understanding of finance and eco-
nomics. For example, the bank
supported to issue a book entitled
“What Does Bank Do?” and pro-
vides a section on its web site
called “Exciting Exploration of Banking Activities.” SMBC is also a
sponsor of the Kidzania Tokyo job-experience theme park for chil-
dren and offers bank tours for primary school students during
summer vacation entitled “Summer Vacation Fun! Let’s Explore
Banking Activities!” Among other educational activities, SMBC also
supports the “Finance Park,” an educational program on econom-
ics for junior high and high school students in Tokyo’s Shinagawa
Ward, holds finance and economics seminars at universities, and
conducts other similar programs.
● Student Internship Program
JRI instituted its internship program in 1999, in recognition of the
growing importance placed on giving students the opportunity to
spend time in different workplaces prior to their graduation to gain
a better understanding of work activities. Since fiscal 2006, the
program has been sponsored jointly with JRI Solutions, and, in fis-
cal 2007, about 80 university students were accepted. The interns
were assigned to IT systems, consulting, think tank, and many
other workplaces, allowing them the opportunity to experience a
wide range of work experience.
* At Sumitomo Mitsui Finance and Leasing, employees of Osaka Head
Office are contributing to the beautification of the community through their
continuing participation on a voluntary basis in a regular early-morning
neighborhood cleanup conducted along Midosuji Street, a major thorough-
fare.
* Employees of JRI and JRI Solutions respond to calls from local communi-
ties and participate in cleanup activities, mainly in the vicinity of their Tokyo
and Osaka headquarters.
● Contributions to Private Nature Conservation Groups
JRI undertakes research for the Eco Fund, an investment trust that
targets environmentally responsible companies, to assist this fund
in making selections of companies appropriate for investment. JRI
then donates part of the fees received for this research to private-
sector nature conservation groups.
Contributing to Cultural, Artistic, and Education Activities
We also sponsor cultural, artistic and educational events.
● Sponsoring of Charity Concert Entitled “A Toy Box of Favorite
Works”
Since fiscal 2006, SMBC has sponsored a charity concert to pro-
vide support for the world’s children who have been injured by
wars, natural disasters, and other disasters. SMBC’s employee
music societies perform a range of musical pieces that appeal to
everyone from children to adults. Donations are collected from the
audience at the concerts, and artwork submitted by children
around the world is displayed in the concert hall lobby. In addition,
a charity bazaar is held featuring items for sale that have been
handcrafted by SMBC employees. This event was held for the third
time in April 2008,
and, as in the previ-
ous year, it was
presented in the
Casals Hall in Nihon
University with a
large number in
attendance.
SMFG 2008 65
Human Resources
SMFG and the Group companies strive to create a workplace for their human resources where each and every employee can take pride in
and be highly motivated about his or her work. In the following pages, we would like to introduce some of SMBC’s initiatives in the human
resources area.
Four Goals of SMBC’s Human Resource Management
The primary goal of SMBC is to develop together with its four pri-
mary stakeholder groups: its customers, shareholders and market,
society and environment, and employees. To achieve this goal,
● Providing Support for a Good Work-Life Balance
In fiscal 2007, SMBC established its Child-Care Subsidy Fund,
which reimburses employees for up to ￥50,000 for monthly after-
school child-care and babysitting expenses. In addition, we have
SMBC has established four objectives for its human resource man-
created a new system for the reimbursement of transportation
agement system.
● To promote the creation of an even more powerful business culture
and practices that will enable SMBC to compete in global markets
● Develop staff with specialized professional skills who can
expenses for going to and from care centers and other child facili-
ties. Also, in June 2008, we increased the number of days that
employees can take off for taking care of a sick family member,
and also lengthened the periods for shorter working hours, time off
provide customers with value-added services
for taking care of a sick child, and the provision of a child-care
● Motivate employees even more strongly by respecting their
individuality and encouraging them to seek personal fulfillment
● Foster a corporate culture that encourages a forward-looking
and creative attitude
Creating a Corporate Culture that Derives Strength from Diversity
● Employing a Diversity of Human Resources
SMBC is implementing initiatives to create a workplace where gen-
subsidy to the third year of primary school. We are listening to the
needs of our employees and working to create more enhanced
systems to achieve a good balance between work and household
requirements. For example, to date, more than 20 male employees
have made use of our system for allowing husbands to take short
periods of about two weeks off to assist with child rearing. In addi-
tion, our monthly lectures to provide support for employees
planning to return to work after time off for child rearing have
der, nationality, and other superficial characteristics are not an
entered their third year, and more than 450 persons have attended
issue and where a diversity of personnel can make active contribu-
these sessions. Also, to promote communication between employ-
tions. The ratio of women newly hired for the year beginning in
ees and their families, we sponsor our SMBC Children’s Visitation
April 2008 for generalist and consumer services positions
Program, which allows children to visit their mothers or fathers at
exceeded 40%, and the number of women holding managerial
work. These visits also provide an opportunity for educating family
positions has increased substantially. In April 2007, we appointed
members about the work of SMBC and about finance and eco-
two non-Japanese officers as executive directors to strengthen our
nomics.
investment banking services in Europe and the Americas, and, in
Japan, we are also actively hiring individuals of foreign nationality.
In fiscal 2008, the current fiscal year, we will establish a Diver-
sity and Inclusion Department within our Human Resources Dept.
and implement other initiatives for creating a corporate culture that
derives strengthen from diversity.
● Employing Physically Challenged Persons
We have established a special corporation, SMBC Green Service
Co., Ltd., that promotes the employment of persons with disabili-
ties. We make arrangements for many physically challenged
persons and representatives from other companies with an interest
in employing persons with disabilities to visit SMBC and partici-
pate in practical training. As a result, we have received awards
from many sources for our significant contributions to the employ-
ment of the physically challenged. In addition, we encourage our
personnel to participate actively in skill competitions for the dis-
abled that are sponsored by city and local governments in Japan.
In the past, we have sent a number of our physically challenged
employees to participate in the National Skill Competition for the
Disabled (known as the “Abilinpic”). Please note that, as of March
2008, 2.05% of our employees had physical disabilities, which is
well above the 1.8% required under relevant legal provisions.
66
SMFG 2008
● Work relocations
To enable employees with job categories that do not normally provide
for relocation transfers to request reassignments to other locations due
to marriage, relocation of one’s spouse, or other reasons.
● Leave for taking care of sick children
Employees may take leaves to care for sick children who are in their
third year of primary school or younger. (Leaves are up to 5 days a year
for one child and 10 days a year for two or more children.)
● Half-day vacation time
Employees can use their annual allotment of vacation days in half-day
increments, to give them the flexibility to attend school events and take
care of other personal matters.
● System for rehiring former employees
Employees who have resigned due to marriage, childbirth, child rearing,
or caring for a parent can apply to be rehired within five years of their
resignations.
● Parental leave
Employees are allowed to take parental leave until the child is 24 months
old.
● Shorter working hours
For employees with children in school up to the end of the third year of
primary school, SMBC has two types of systems that employees may
choose from to give them time to drop off children at a daycare center
and pick them up at the end of the day. One system enables them to
shorten their working day, and the other makes it possible to designate
one day each week as a day off.
● Leave for caring for senior or disabled family members
Employees may take leaves of absence to take care of a disabled or
elderly family member.
● Child-care subsidies
For employees with children up to the end of the third year of primary
school, SMBC offers subsidies up to a monthly limit of ¥50,000 to pay for
after-school care and babysitting.
● Subsidies for transportation to and from child-care centers
To help pay for transportation costs to and from child-care centers and
other such transportation expenses, SMBC offers a system that pays the
cost of having parents take a detour to the care center, etc., from their
regular commuting route.
● Child-care support system
To lighten the economic burden of child rearing for employees, we
provide child-care center and babysitting services through an employee
benefit services outsourcing company at a discount.
A session of SMBC Children’s Visitation Program
Training Staff with Specialized Professional Skills
● Training for Younger Employees
To provide a high level of motivation for growth and development
among younger personnel, SMBC has instituted its Rising Rookie
Program and the SMBC Retail Banking College. Instruction in busi-
ness knowledge and skills, which formerly was conducted over
several years, has now been concentrated into a period of six
months and is conducted efficiently by combining on-the-job train-
ing and classroom courses. In addition, we have built new training
facilities in Nagoya, Tokyo, and Osaka to meet the growing need
for training courses.
● Training at Overseas Offices
We are also devoting resources to the training of international staff.
In fiscal 2007, we newly formed the Asia Pacific Training Depart-
ment within our Planning Dept., International Banking Unit, and
established a training room in Singapore. For employees in the
Asian and Oceanian regions, we conduct various types of training
programs, focused on business training and development of
capabilities and skills. Through these activities we are taking the
initiative in developing our human resources on a global scale.
Personnel Systems
● Expanding In-House Recruitment Systems
To raise the level of specialized knowledge as financial profession-
als among all employees, it is indispensable to provide systems for
employees to gain a grasp of their aptitudes and skills and make
their own decisions on the fields where they will show and take full
advantage of their capabilities. One of the systems that SMBC has
created to support employees in designing their own careers on
their own initiative is the in-house recruitment system, which has
three entry points: namely, the training entry point, the job entry
point, and the post-entry point.
In the case of the job entry point, SMBC holds its SMBC Job
Forum, which is an in-house seminar where 50 or more depart-
ments introduce their work and appeal to other employees to join
them. This forum not only increases interest in the in-house recruit-
ment system but also improves understanding among staff about a
wide range of jobs within the bank, thus providing employees with
the opportunity to think about their career design. In fiscal 2007, a
total of more than 1,000 young to mid-career employees, in east-
ern and western Japan together, attended these seminars.
Employees attending the SMBC Job Forum to learn about in-house job opportunities
● Establishing a New Business Career Path
Beginning in fiscal 2008, we will realign our existing support staff
career track by establishing the Business Career Path, which will
expand the range of work activities and raise interest among
employees in different career opportunities. Among job types, we
will introduce a “corporate course” and an “operation course”
among work and career paths. We will also create managerial lev-
els and, valuing the lifestyles and career views of motivated
employees, open up fields where they can make even greater con-
tributions. In addition, from among temporary and contract
employees working at our branches, we will hire about 2,000 of
these staff as regular employees to go on the Business Career
Path.
Local staff participating in a training session in Singapore
SMFG 2008 67
Human Resources
SMFG and the Group companies strive to create a workplace for their human resources where each and every employee can take pride in
and be highly motivated about his or her work. In the following pages, we would like to introduce some of SMBC’s initiatives in the human
resources area.
Four Goals of SMBC’s Human Resource Management
The primary goal of SMBC is to develop together with its four pri-
mary stakeholder groups: its customers, shareholders and market,
society and environment, and employees. To achieve this goal,
● Providing Support for a Good Work-Life Balance
In fiscal 2007, SMBC established its Child-Care Subsidy Fund,
which reimburses employees for up to ￥50,000 for monthly after-
school child-care and babysitting expenses. In addition, we have
SMBC has established four objectives for its human resource man-
created a new system for the reimbursement of transportation
agement system.
● To promote the creation of an even more powerful business culture
and practices that will enable SMBC to compete in global markets
● Develop staff with specialized professional skills who can
expenses for going to and from care centers and other child facili-
ties. Also, in June 2008, we increased the number of days that
employees can take off for taking care of a sick family member,
and also lengthened the periods for shorter working hours, time off
provide customers with value-added services
for taking care of a sick child, and the provision of a child-care
● Motivate employees even more strongly by respecting their
individuality and encouraging them to seek personal fulfillment
● Foster a corporate culture that encourages a forward-looking
and creative attitude
Creating a Corporate Culture that Derives Strength from Diversity
● Employing a Diversity of Human Resources
SMBC is implementing initiatives to create a workplace where gen-
subsidy to the third year of primary school. We are listening to the
needs of our employees and working to create more enhanced
systems to achieve a good balance between work and household
requirements. For example, to date, more than 20 male employees
have made use of our system for allowing husbands to take short
periods of about two weeks off to assist with child rearing. In addi-
tion, our monthly lectures to provide support for employees
planning to return to work after time off for child rearing have
der, nationality, and other superficial characteristics are not an
entered their third year, and more than 450 persons have attended
issue and where a diversity of personnel can make active contribu-
these sessions. Also, to promote communication between employ-
tions. The ratio of women newly hired for the year beginning in
ees and their families, we sponsor our SMBC Children’s Visitation
April 2008 for generalist and consumer services positions
Program, which allows children to visit their mothers or fathers at
exceeded 40%, and the number of women holding managerial
work. These visits also provide an opportunity for educating family
positions has increased substantially. In April 2007, we appointed
members about the work of SMBC and about finance and eco-
two non-Japanese officers as executive directors to strengthen our
nomics.
investment banking services in Europe and the Americas, and, in
Japan, we are also actively hiring individuals of foreign nationality.
In fiscal 2008, the current fiscal year, we will establish a Diver-
sity and Inclusion Department within our Human Resources Dept.
and implement other initiatives for creating a corporate culture that
derives strengthen from diversity.
● Employing Physically Challenged Persons
We have established a special corporation, SMBC Green Service
Co., Ltd., that promotes the employment of persons with disabili-
ties. We make arrangements for many physically challenged
persons and representatives from other companies with an interest
in employing persons with disabilities to visit SMBC and partici-
pate in practical training. As a result, we have received awards
from many sources for our significant contributions to the employ-
ment of the physically challenged. In addition, we encourage our
personnel to participate actively in skill competitions for the dis-
abled that are sponsored by city and local governments in Japan.
In the past, we have sent a number of our physically challenged
employees to participate in the National Skill Competition for the
Disabled (known as the “Abilinpic”). Please note that, as of March
2008, 2.05% of our employees had physical disabilities, which is
well above the 1.8% required under relevant legal provisions.
66
SMFG 2008
● Work relocations
To enable employees with job categories that do not normally provide
for relocation transfers to request reassignments to other locations due
to marriage, relocation of one’s spouse, or other reasons.
● Leave for taking care of sick children
Employees may take leaves to care for sick children who are in their
third year of primary school or younger. (Leaves are up to 5 days a year
for one child and 10 days a year for two or more children.)
● Half-day vacation time
Employees can use their annual allotment of vacation days in half-day
increments, to give them the flexibility to attend school events and take
care of other personal matters.
● System for rehiring former employees
Employees who have resigned due to marriage, childbirth, child rearing,
or caring for a parent can apply to be rehired within five years of their
resignations.
● Parental leave
Employees are allowed to take parental leave until the child is 24 months
old.
● Shorter working hours
For employees with children in school up to the end of the third year of
primary school, SMBC has two types of systems that employees may
choose from to give them time to drop off children at a daycare center
and pick them up at the end of the day. One system enables them to
shorten their working day, and the other makes it possible to designate
one day each week as a day off.
● Leave for caring for senior or disabled family members
Employees may take leaves of absence to take care of a disabled or
elderly family member.
● Child-care subsidies
For employees with children up to the end of the third year of primary
school, SMBC offers subsidies up to a monthly limit of ¥50,000 to pay for
after-school care and babysitting.
● Subsidies for transportation to and from child-care centers
To help pay for transportation costs to and from child-care centers and
other such transportation expenses, SMBC offers a system that pays the
cost of having parents take a detour to the care center, etc., from their
regular commuting route.
● Child-care support system
To lighten the economic burden of child rearing for employees, we
provide child-care center and babysitting services through an employee
benefit services outsourcing company at a discount.
A session of SMBC Children’s Visitation Program
Training Staff with Specialized Professional Skills
● Training for Younger Employees
To provide a high level of motivation for growth and development
among younger personnel, SMBC has instituted its Rising Rookie
Program and the SMBC Retail Banking College. Instruction in busi-
ness knowledge and skills, which formerly was conducted over
several years, has now been concentrated into a period of six
months and is conducted efficiently by combining on-the-job train-
ing and classroom courses. In addition, we have built new training
facilities in Nagoya, Tokyo, and Osaka to meet the growing need
for training courses.
● Training at Overseas Offices
We are also devoting resources to the training of international staff.
In fiscal 2007, we newly formed the Asia Pacific Training Depart-
ment within our Planning Dept., International Banking Unit, and
established a training room in Singapore. For employees in the
Asian and Oceanian regions, we conduct various types of training
programs, focused on business training and development of
capabilities and skills. Through these activities we are taking the
initiative in developing our human resources on a global scale.
Personnel Systems
● Expanding In-House Recruitment Systems
To raise the level of specialized knowledge as financial profession-
als among all employees, it is indispensable to provide systems for
employees to gain a grasp of their aptitudes and skills and make
their own decisions on the fields where they will show and take full
advantage of their capabilities. One of the systems that SMBC has
created to support employees in designing their own careers on
their own initiative is the in-house recruitment system, which has
three entry points: namely, the training entry point, the job entry
point, and the post-entry point.
In the case of the job entry point, SMBC holds its SMBC Job
Forum, which is an in-house seminar where 50 or more depart-
ments introduce their work and appeal to other employees to join
them. This forum not only increases interest in the in-house recruit-
ment system but also improves understanding among staff about a
wide range of jobs within the bank, thus providing employees with
the opportunity to think about their career design. In fiscal 2007, a
total of more than 1,000 young to mid-career employees, in east-
ern and western Japan together, attended these seminars.
Employees attending the SMBC Job Forum to learn about in-house job opportunities
● Establishing a New Business Career Path
Beginning in fiscal 2008, we will realign our existing support staff
career track by establishing the Business Career Path, which will
expand the range of work activities and raise interest among
employees in different career opportunities. Among job types, we
will introduce a “corporate course” and an “operation course”
among work and career paths. We will also create managerial lev-
els and, valuing the lifestyles and career views of motivated
employees, open up fields where they can make even greater con-
tributions. In addition, from among temporary and contract
employees working at our branches, we will hire about 2,000 of
these staff as regular employees to go on the Business Career
Path.
Local staff participating in a training session in Singapore
SMFG 2008 67
Heightening Awareness of Individual Rights
At SMBC, we have included in our principles of action the con-
cepts that “we will respect the individual human dignity of our
customers and employees” and “we will not permit discrimination
of any kind.” We are implementing the following initiatives to
heighten the awareness of all employees regarding individual
rights.
● Conducting training meetings for manager level staff (once a
year), and personnel newly appointed to management
positions and staff who have recently joined the bank
● Holding study meetings to discuss individual rights issues, with
manager level personnel leading these sessions (twice a year)
● Soliciting slogans promoting individual rights from manage-
ment and staff (once a year)
Also, in fiscal 2007, SMBC began to participate in the United
Nations Global Compact, thereby agreeing to embrace, support
and enact 10 principles in the areas of human rights, labor stan-
dards, the environment, and anti-corruption.
● SMBC Among the Best 25 Companies in Japan as “A Great Place to Work”
In January 2008, SMBC was selected as one of the best companies in
Japan as a place to work in the survey conducted by Great Place to
Work® Institute Japan.
* Great Place to Work® Institute, Inc., a U.S. company, is a survey
organization that supplies data for the annual list of the “100 Best
Places to Work®” published by Fortune magazine. The survey has two
major components, a survey of the internal systems and corporate
culture of respondent companies and a questionnaire survey of the
employees of these companies. The results of the survey of
employees receive a weighting of two-thirds in determining the final
results.
Staff Profile
March 31
Number of employees*
Male
Female
Average age
Male
Female
Average years of service
Male
Female
Ratio of employees
with disabilities
(% of total)**
2006
20,322
13,955
6,367
39.0
41.3
34.0
16.9
18.4
13.4
2007
19,723
13,424
6,299
39.0
41.2
34.5
16.8
18.2
13.7
2008
20,273
13,457
6,816
38.7
40.10
34.2
15.11
17.5
12.11
1.99%
2.03%
2.05%
* The number of full-time employees, including employees temporarily dispatched to other
companies and organizations. The following have all been excluded from this total: execu-
tive officers, employees on short-term contracts, part-time employees, temporary staff
employees, and local staff at overseas branches.
** As of March 1 of the respective years
April 1
2004
2005
2006
2007
2008
Number of newly employed
female graduates***
Ratio of newly employed
females to total new employees
143
208
252
380
518
36.2
38.1
36.3
40.0
41.3
*** Includes key employees, which includes generalist staff and consumer service staff.
General office employees are excluded.
Fiscal
2004
2005
2006
2007
2008
167
193
235
280
354
126
163
61
—
7
70
—
88
89
—
6
22
500
181
156
Number of women in
managerial positions****
Number taking leave
for child rearing
Men taking such leaves
Number of career hires
**** As of the end of the fiscal year
● SMBC Receives Award for Promotion of Gender Equality and Work-
Home Compatibility from Japan’s Ministry of Health, Labour and Welfare.
SMBC received an award for excellence in the gender equality pro-
motion section of the award given by the Tokyo Labor Department as
part of the fiscal 2007 corporate awards for gender equality and work-
home compatibility sponsored by the Ministry of Health, Labour and
Welfare. We received this award as “a company taking active initiatives
to draw fully on the abilities of female employees.” SMBC was cited for
having “a wide range of departments that promote the employment of
women” and “having support systems for attaining a balance between
work and home responsibilities.
68
SMFG 2008
Financial Section and Corporate Data
Financial Section
SMFG
Corporate Data
Sumitomo Mitsui Financial Group, Inc.
Consolidated Balance Sheets........................................ 70
Board of Directors, Corporate Auditors,
Consolidated Statements of Income.............................. 72
Consolidated Statements of
Changes in Net Assets ............................................... 73
Consolidated Statements of Cash Flows....................... 74
Notes to Consolidated Financial Statements................. 76
Independent Auditors’ Report ........................................ 122
and Executive Officers ........................................... 199
SMFG Organization .................................................. 199
Sumitomo Mitsui Banking Corporation
Board of Directors, Corporate Auditors,
and Executive Officers ........................................... 200
SMBC Organization .................................................. 202
SMBC
Supplemental Information.............................................. 123
Principal Subsidiaries and Affiliates
SMFG
Principal Domestic Subsidiaries ................................ 204
Principal Overseas Subsidiaries ............................... 205
Principal Affiliates ...................................................... 206
Income Analysis (Consolidated) .................................... 128
International Directory ................................................ 207
Assets and Liabilities (Consolidated)............................. 131
Capital (Nonconsolidated) ............................................. 134
Capital Ratio Information (Consolidated)....................... 138
SMBC
Income Analysis (Consolidated) .................................... 171
Assets and Liabilities (Consolidated)............................. 174
Income Analysis (Nonconsolidated) .............................. 176
Deposits (Nonconsolidated)........................................... 180
Loans (Nonconsolidated)............................................... 182
Securities (Nonconsolidated)......................................... 187
Ratios (Nonconsolidated) .............................................. 189
Capital (Nonconsolidated) ............................................. 191
Others (Nonconsolidated).............................................. 192
Trust Assets and Liabilities (Nonconsolidated).............. 194
Capital Ratio Information ............................................... 197
SMFG 2008 69
Consolidated Balance Sheets
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
March 31
Assets
Cash and due from banks (Note 10)...................................................................
Deposits with banks (Notes 10 and 31) ..............................................................
Call loans and bills bought ..................................................................................
Receivables under resale agreements ...............................................................
Receivables under securities borrowing transactions.........................................
Commercial paper and other debt purchased (Notes 10 and 31).......................
Trading assets (Notes 3, 10 and 31)...................................................................
Money held in trust (Note 31)..............................................................................
Securities (Notes 4, 10 and 31) ..........................................................................
Loans and bills discounted (Notes 5 and 10)......................................................
Foreign exchanges .............................................................................................
Other assets (Notes 6 and 10)............................................................................
Tangible fixed assets (Notes 7 and 17) ..............................................................
Intangible fixed assets (Note 8) ..........................................................................
Lease assets (Note 9).........................................................................................
Deferred tax assets (Note 26).............................................................................
Customers’ liabilities for acceptances and guarantees.......................................
Reserve for possible loan losses ........................................................................
Total assets .......................................................................................................
Millions of yen
Millions of
U.S. dollars (Note 1)
2008
2007
2008
¥
2,736,752
2,280,573
595,802
357,075
1,940,170
1,153,070
4,123,611
7,329
23,517,501
62,144,874
893,567
4,951,587
820,411
332,525
1,425,097
985,528
4,585,141
(894,702)
¥111,955,918
¥
1,927,024
2,109,831
1,107,078
76,551
2,276,894
963,916
3,277,885
2,924
20,537,500
58,689,322
881,436
3,349,949
817,567
234,896
1,001,346
887,224
3,606,050
(889,093)
¥100,858,309
$
27,316
22,762
5,947
3,564
19,365
11,509
41,158
73
234,729
620,270
8,919
49,422
8,188
3,319
14,224
9,837
45,764
(8,930)
$1,117,436
70
SMFG 2008
(Continued)
March 31
Liabilities and net assets
Liabilities
Deposits (Notes 10 and 11) ................................................................................
Call money and bills sold (Note 10) ....................................................................
Payables under repurchase agreements (Note 10) ............................................
Payables under securities lending transactions (Note 10)..................................
Trading liabilities (Notes 10 and 12) ...................................................................
Borrowed money (Notes 10 and 13) ...................................................................
Foreign exchanges .............................................................................................
Short-term bonds (Note 14) ................................................................................
Bonds (Note 14)..................................................................................................
Due to trust account............................................................................................
Other liabilities (Notes 10 and 15).......................................................................
Reserve for employee bonuses ..........................................................................
Reserve for executive bonuses...........................................................................
Reserve for employee retirement benefits (Note 29) ..........................................
Reserve for executive retirement benefits ..........................................................
Reserve for reimbursement of deposits ..............................................................
Reserve under special laws (Note 16) ................................................................
Deferred tax liabilities (Note 26)..........................................................................
Deferred tax liabilities for land revaluation (Note 17) ..........................................
Acceptances and guarantees (Note 10) .............................................................
Total liabilities ...................................................................................................
Net assets (Note 27)
Capital stock (Note 19) .......................................................................................
Capital surplus ....................................................................................................
Retained earnings...............................................................................................
Treasury stock (Note 27) ....................................................................................
Total stockholders’ equity ...............................................................................
Net unrealized gains on other securities (Note 31).............................................
Net deferred losses on hedges ...........................................................................
Land revaluation excess (Note 17) .....................................................................
Foreign currency translation adjustments ...........................................................
Total valuation and translation adjustments..................................................
Stock acquisition rights (Note 33) .......................................................................
Minority interests (Note 18).................................................................................
Total net assets.................................................................................................
Total liabilities and net assets .........................................................................
See accompanying notes to consolidated financial statements.
Millions of yen
Millions of
U.S. dollars (Note 1)
2008
2007
2008
¥ 75,768,773
2,638,142
1,832,467
5,732,042
2,671,316
4,279,034
301,123
769,100
3,969,308
80,796
3,916,427
29,267
1,171
38,701
7,998
10,417
1,118
52,046
47,446
4,585,141
106,731,842
1,420,877
57,826
1,740,610
(123,989)
3,095,324
550,648
(75,233)
34,910
(27,323)
483,002
43
1,645,705
5,224,076
¥111,955,918
¥ 74,745,441
2,286,698
140,654
1,516,342
1,942,973
3,214,137
323,890
439,600
4,093,525
65,062
2,981,714
27,513
—
34,424
7,371
—
1,137
50,953
49,536
3,606,050
95,527,029
1,420,877
57,773
1,386,436
(123,454)
2,741,632
1,262,135
(87,729)
37,605
(30,656)
1,181,353
14
1,408,279
5,331,279
¥100,858,309
$ 756,251
26,331
18,290
57,212
26,663
42,709
3,006
7,676
39,618
806
39,090
292
12
386
80
104
11
519
474
45,764
1,065,294
14,182
577
17,373
(1,237)
30,895
5,496
(751)
349
(273)
4,821
0
16,426
52,142
$1,117,436
SMFG 2008 71
Consolidated Statements of Income
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Year ended March 31
Income
Interest income:
Interest on loans and discounts .....................................................................
Interest and dividends on securities ..............................................................
Interest on receivables under resale agreements..........................................
Interest on receivables under securities borrowing transactions ...................
Interest on deposits with banks .....................................................................
Other interest income ....................................................................................
Trust fees ............................................................................................................
Fees and commissions (Note 20) .......................................................................
Trading profits (Note 21) .....................................................................................
Other operating income (Note 22) ......................................................................
Other income (Note 24) ......................................................................................
Total income......................................................................................................
Expenses
Interest expenses:
Interest on deposits .......................................................................................
Interest on borrowings and rediscounts .........................................................
Interest on payables under repurchase agreements .....................................
Interest on payables under securities lending transactions ...........................
Interest on bonds and short-term bonds ........................................................
Other interest expenses.................................................................................
Fees and commissions (Note 20) .......................................................................
Trading losses (Note 21).....................................................................................
Other operating expenses (Note 23)...................................................................
General and administrative expenses.................................................................
Provision for reserve for possible loan losses.....................................................
Other expenses (Note 25)...................................................................................
Total expenses ..................................................................................................
Income before income taxes and minority interests .....................................
Income taxes (Note 26):
Current ...........................................................................................................
Deferred .........................................................................................................
Minority interests in net income ..........................................................................
Net income.........................................................................................................
See accompanying notes to consolidated financial statements.
Millions of yen
Millions of
U.S. dollars (Note 1)
2008
2007
2008
¥1,583,837
333,255
7,044
7,032
101,120
113,160
3,752
704,283
469,571
1,212,635
203,346
4,739,040
546,794
71,391
7,404
45,499
95,051
168,926
92,289
—
1,392,089
978,896
71,278
340,463
3,810,084
928,955
¥1,404,060
369,770
7,098
4,857
96,763
96,517
3,508
705,998
127,561
1,003,632
128,017
3,947,786
500,555
50,984
18,354
60,856
91,223
88,502
96,812
1,936
1,004,370
888,561
23,663
315,175
3,140,996
806,790
103,900
282,538
80,980
¥ 461,536
87,818
218,770
58,850
¥ 441,351
$15,808
3,326
70
70
1,009
1,130
38
7,030
4,687
12,103
2,030
47,301
5,458
713
74
454
949
1,686
921
—
13,895
9,770
711
3,398
38,029
9,272
1,037
2,820
808
$ 4,607
72
SMFG 2008
Consolidated Statements of Changes in Net Assets
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Millions of yen
Year ended March 31, 2008
Capital
stock
Capital
surplus
Retained
earnings
Treasury
stock
Total
stockholders’
equity
Net
unrealized
gains on other
securities
Stockholders’ equity
Valuation and translation adjustments
Foreign
currency
translation
adjustments
Land
revaluation
excess
Net deferred
losses on
hedges
Total
valuation and
translation
adjustments
Stock
acquisition
rights
Minority
interests
Total net
assets
Balance at March 31, 2007 .............................
¥ 1,420,877
¥ 57,773
¥ 1,386,436
¥ (123,454)
¥ 2,741,632
¥ 1,262,135
¥(87,729)
¥ 37,605
¥(30,656)
¥ 1,181,353
¥ 14
¥ 1,408,279
¥ 5,331,279
Changes in the year
Cash dividends ......................................................
Net income.............................................................
Acquisition of own shares......................................
Disposal of treasury shares....................................
53
Increase due to increase in subsidiaries.................
Increase due to decrease in subsidiaries................
Decrease due to increase in subsidiaries ...............
Decrease due to decrease in subsidiaries...............
Transfer from land revaluation excess....................
Net changes in the items other than
stockholders’ equity in the year...........................
(110,215)
461,536
268
7
(100)
(3)
2,681
(901)
367
(110,215)
461,536
(901)
420
268
7
(100)
(3)
2,681
(711,486)
12,495
Net changes in the year..........................................
—
53
354,173
(534)
353,692
(711,486)
12,495
(110,215)
461,536
(901)
420
268
7
(100)
(3)
2,681
(2,694)
(2,694)
3,333
3,333
(698,351)
(698,351)
29
29
237,426
(460,895)
237,426
(107,203)
Balance at March 31, 2008 .............................
¥1,420,877
¥57,826
¥1,740,610
¥(123,989)
¥3,095,324
¥ 550,648
¥(75,233)
¥34,910
¥(27,323)
¥ 483,002
¥43
¥1,645,705
¥5,224,076
Millions of yen
Year ended March 31, 2007
Capital
stock
Capital
surplus
Retained
earnings
Treasury
stock
Total
stockholders’
equity
Net
unrealized
gains on other
securities
Stockholders’ equity
Valuation and translation adjustments
Foreign
currency
translation
adjustments
Land
revaluation
excess
Net deferred
losses on
hedges
Total
valuation and
translation
adjustments
Stock
acquisition
rights
Minority
interests
Total net
assets
Balance at March 31, 2006 .............................
¥ 1,420,877
¥ 1,229,225
¥
992,064
¥
(4,393)
¥ 3,637,773
¥
819,927
¥
—
¥ 38,173
¥ (41,475)
¥
816,625
¥—
¥ 1,113,025
¥ 5,567,424
Changes in the year
Increase due to exchange of shares........................
221,365
Cash dividends ......................................................
Net income.............................................................
Acquisition of own shares......................................
Disposal of treasury shares....................................
Retirement of treasury shares.................................
Increase due to increase in subsidiaries.................
Increase due to decrease in subsidiaries................
Decrease due to increase in subsidiaries ...............
Decrease due to decrease in subsidiaries...............
Transfer from land revaluation excess....................
Net changes in the items other than
stockholders’ equity in the year...........................
3,459
(1,396,277)
221,365
(47,951)
441,351
(1,519,599)
(1,519,599)
4,260
7,720
1,396,277
—
396
22
(16)
(5)
575
(47,951)
441,351
396
22
(16)
(5)
575
442,207
(87,729)
Net changes in the year..........................................
—
(1,171,452)
394,372
(119,061)
(896,141)
442,207
(87,729)
221,365
(47,951)
441,351
(1,519,599)
7,720
—
396
22
(16)
(5)
575
(568)
(568)
10,818
10,818
364,728
364,728
14
14
295,254
659,996
295,254
(236,144)
Balance at March 31, 2007 .............................
¥ 1,420,877
¥
57,773
¥ 1,386,436
¥ (123,454)
¥ 2,741,632
¥ 1,262,135
¥ (87,729)
¥ 37,605
¥ (30,656)
¥ 1,181,353
¥ 14
¥ 1,408,279
¥ 5,331,279
Millions of U.S. dollars (Note 1)
Year ended March 31, 2008
Capital
stock
Capital
surplus
Retained
earnings
Treasury
stock
Total
stockholders’
equity
Net
unrealized
gains on other
securities
Stockholders’ equity
Valuation and translation adjustments
Foreign
currency
translation
adjustments
Land
revaluation
excess
Net deferred
losses on
hedges
Total
valuation and
translation
adjustments
Stock
acquisition
rights
Minority
interests
Total net
assets
Balance at March 31, 2007 .............................
$ 14,182
$ 577
$ 13,838
$ (1,232)
$ 27,365
$12,597
$ (876)
$ 376
$ (306)
$11,791
$ 0
$ 14,056
$ 53,212
Changes in the year
Cash dividends ......................................................
Net income.............................................................
Acquisition of own shares......................................
Disposal of treasury shares....................................
0
Increase due to increase in subsidiaries.................
Increase due to decrease in subsidiaries................
Decrease due to increase in subsidiaries ...............
Decrease due to decrease in subsidiaries...............
Transfer from land revaluation excess....................
Net changes in the items other than
stockholders’ equity in the year...........................
(1,100)
4,607
(1,100)
4,607
(9)
4
(9)
4
2
0
(1)
(0)
27
2
0
(1)
(0)
27
Net changes in the year..........................................
—
0
3,535
(5)
3,530
(7,101)
(7,101)
125
125
(27)
(27)
33
33
(6,970)
(6,970)
Balance at March 31, 2008 .............................
$14,182
$577
$17,373
$(1,237)
$30,895
$ 5,496
$(751)
$349
$(273)
$ 4,821
See accompanying notes to consolidated financial statements.
(1,100)
4,607
(9)
4
2
0
(1)
(0)
27
0
0
$0
2,370
2,370
(4,600)
(1,070)
$16,426
$52,142
SMFG 2008 73
Consolidated Statements of Cash Flows
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Year ended March 31
1. Cash flows from operating activities:
Income before income taxes and minority interests .................................
Depreciation of fixed assets......................................................................
Depreciation of lease assets.....................................................................
Losses on impairment of fixed assets.......................................................
Amortization of goodwill............................................................................
Equity in losses of affiliates.......................................................................
Losses (gains) on sale of subsidiaries’ shares and
gains on change in equity of subsidiary.................................................
Net change in reserve for possible loan losses ........................................
Net change in reserve for employee bonuses ..........................................
Net change in reserve for executive bonuses...........................................
Net change in reserve for employee retirement benefits ..........................
Net change in reserve for executive retirement benefits ..........................
Net change in reserve for reimbursement of deposits ..............................
Interest income .........................................................................................
Interest expenses .....................................................................................
Net losses on securities............................................................................
Net gains from money held in trust ...........................................................
Net exchange losses (gains) ....................................................................
Net losses from disposal of fixed assets...................................................
Net gains from disposal of lease assets ...................................................
Net change in trading assets ....................................................................
Net change in trading liabilities .................................................................
Net change in loans and bills discounted .................................................
Net change in deposits ............................................................................
Net change in negotiable certificates of deposit ......................................
Net change in borrowed money (excluding subordinated debt) ...............
Net change in deposits with banks ...........................................................
Net change in call loans and bills bought and others ...............................
Net change in receivables under securities borrowing transactions.........
Net change in call money and bills sold and others..................................
Net change in commercial paper ..............................................................
Net change in payables under securities lending transactions.................
Net change in foreign exchanges (assets) ...............................................
Net change in foreign exchanges (liabilities) ............................................
Net change in short-term bonds (liabilities) ..............................................
Issuance and redemption of bonds (excluding subordinated bonds) .......
Net change in due to trust account ...........................................................
Interest received .......................................................................................
Interest paid ..............................................................................................
Other, net..................................................................................................
Subtotal ...................................................................................................
Income taxes paid.....................................................................................
Net cash provided by (used in) operating activities.................................
Millions of yen
Millions of
U.S. dollars (Note 1)
2008
2007
2008
¥
928,955
83,346
403,775
5,161
10,520
41,760
¥
806,790
78,869
335,399
30,548
4,858
104,170
$ 9,272
832
4,030
51
105
417
106
(26,197)
1,289
1,146
2,178
295
10,417
(2,145,451)
935,067
29,146
(227)
355,913
1,550
(2,436)
(864,864)
747,776
(3,372,601)
776,786
497,697
333,136
(241,409)
34,765
336,724
2,044,633
—
4,215,699
(14,713)
(22,916)
42,500
(220,801)
15,733
2,146,724
(924,191)
(326,054)
5,840,942
(58,353)
5,782,588
(5,072)
(146,971)
2,128
—
(2,639)
7,371
—
(1,979,069)
810,476
71,686
(0)
(103,541)
3,067
(1,364)
767,067
(969,090)
(1,376,693)
1,307,266
(136,304)
1,141,752
(157,092)
(612,297)
(320,243)
(5,994,528)
(10,000)
(1,230,782)
66,917
(124,047)
55,700
(198,091)
(253,534)
1,966,949
(774,678)
197,841
(6,637,179)
(123,561)
(6,760,740)
1
(262)
13
11
22
3
104
(21,414)
9,333
291
(2)
3,552
15
(24)
(8,632)
7,464
(33,662)
7,753
4,968
3,325
(2,410)
347
3,361
20,408
—
42,077
(147)
(229)
424
(2,204)
157
21,427
(9,224)
(3,254)
58,299
(583)
57,716
74
SMFG 2008
(Continued)
Year ended March 31
2. Cash flows from investing activities:
Millions of yen
Millions of
U.S. dollars (Note 1)
2008
2007
2008
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 tangible fixed assets ...........................................................
Proceeds from sale of tangible fixed assets .............................................
Purchases of intangible fixed assets ........................................................
Proceeds from sale of intangible fixed assets ..........................................
Purchases of lease assets........................................................................
Proceeds from sale of lease assets..........................................................
Proceeds from sale of stocks of subsidiaries............................................
Purchases of stocks of subsidiaries..........................................................
Net cash provided by (used in) investing activities .................................
(50,073,494)
35,014,774
10,504,800
(5,378)
796
(71,301)
16,592
(64,918)
252
(457,070)
51,141
198
(2,951)
(5,086,559)
(35,085,809)
21,544,154
18,886,454
—
—
(193,614)
8,474
(57,506)
6
(383,526)
48,392
3,745
(1,317)
4,769,454
3. Cash flows from financing activities:
Proceeds from issuance of subordinated debt .........................................
Repayment of subordinated debt..............................................................
Proceeds from issuance of subordinated bonds and bonds with
40,000
(76,000)
20,000
(83,000)
stock acquisition rights...........................................................................
214,000
196,951
Repayment of subordinated bonds and bonds with
stock acquisition rights...........................................................................
Dividends paid ..........................................................................................
Proceeds from minority stockholders........................................................
Dividends paid to minority stockholders ...................................................
Purchases of treasury stock .....................................................................
Proceeds from sale of treasury stock .......................................................
Net cash provided by (used in) financing activities .................................
4. Effect of exchange rate changes on cash and due from banks ..............
(47,000)
(110,099)
141,500
(60,239)
(901)
853
102,112
(8,465)
(181,283)
(47,926)
360,362
(46,724)
(1,474,644)
11,320
(1,244,945)
3,434
5. Net change in cash and due from banks ...................................................
789,676
(3,232,797)
6. Cash and due from banks at beginning of year........................................
1,927,024
5,159,822
7. Change in cash and due from banks due to
merger of consolidated subsidiaries ......................................................
1,183
8. Change in cash and due from banks due to
newly consolidated subsidiaries.............................................................
18,870
9. Change in cash and due from banks due to
exclusion of consolidated subsidiaries..................................................
(3)
—
0
—
(499,785)
349,484
104,849
(54)
8
(712)
166
(648)
2
(4,562)
510
2
(29)
(50,769)
399
(759)
2,136
(469)
(1,099)
1,412
(601)
(9)
9
1,019
(84)
7,882
19,234
12
188
(0)
10. Cash and due from banks at end of year ..................................................
¥ 2,736,752
¥ 1,927,024
$ 27,316
See accompanying notes to consolidated financial statements.
SMFG 2008 75
Notes to Consolidated Financial Statements
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Years ended March 31, 2008 and 2007
1. Basis of Presentation
Sumitomo Mitsui Financial Group, Inc. (“SMFG”) was established on
December 2, 2002 as a holding company for the SMFG group through a
statutory share transfer (kabushiki iten) of all of the outstanding equity
securities of Sumitomo Mitsui Banking Corporation (“SMBC”) in
exchange for SMFG’s newly issued securities. SMFG is a joint stock
corporation with limited liability (Kabushiki Kaisha) incorporated under
the Company Law of Japan. Upon formation of SMFG and completion of
the statutory share transfer, SMBC became a direct wholly-owned
subsidiary of SMFG.
SMFG has prepared the accompanying consolidated financial
statements in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Law and its related accounting
regulations, and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements from
International Financial Reporting Standards.
The accounts of overseas subsidiaries are based on their accounting
records maintained in conformity with generally accepted accounting
principles prevailing in the respective countries of domicile.
The accompanying consolidated financial statements have been
restructured and translated into English from the consolidated financial
statements of SMFG 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
financial statements.
Amounts less than one million yen have been omitted. As a result,
the totals in Japanese yen shown in the financial statements do not
necessarily agree with the sum of the individual amounts.
The translation of the Japanese yen amounts into U.S. dollars is
included solely for the convenience of readers outside Japan, using the
prevailing exchange rate at March 31, 2008, which was ¥100.19 to
US$1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have
been, or could in the future be, converted into U.S. dollars at that rate.
2. Significant Accounting Policies
(1) Consolidation and equity method
(a) Scope of consolidation
Japanese accounting standards on consolidated financial
statements require a company to consolidate any subsidiaries
when 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.
(i) Consolidated subsidiaries
The number of consolidated subsidiaries is as follows:
March 31
Consolidated subsidiaries ...................
Principal companies:
2007
181
2008
268
Sumitomo Mitsui Banking Corporation
THE MINATO BANK, LTD.
Kansai Urban Banking Corporation
Sumitomo Mitsui Banking Corporation Europe Limited
Manufacturers Bank
Sumitomo Mitsui Finance and Leasing Company, Limited
Sumitomo Mitsui Card Company, Limited
QUOQ Inc.
76
SMFG 2008
SMBC Finance Service Co., Ltd.
SMBC Friend Securities Co., Ltd.
The Japan Research Institute, Limited
SMBC Capital Markets, Inc.
Changes in consolidated subsidiaries in the fiscal year
ended March 31, 2008 are as follows:
Thirty-three companies including QUOQ Inc. were newly
consolidated due mainly to an increase in the shareholding
ratio. Seventy-six companies including MG Leasing
Corporation were also consolidated due to a merger between
SMBC Leasing Company, Limited and Sumisho Lease Co., Ltd.
Six companies including SMFG Corporate Recovery
Servicer Co., Ltd. were excluded from the scope of
consolidation because they were no longer subsidiaries due to
liquidation and other reasons. Also, sixteen companies
including SMLC ANTLIA Co., Ltd. were excluded from the
scope of consolidation and became unconsolidated
subsidiaries that are not accounted for by the equity method
because they became operators of silent partnerships for lease
transactions.
(ii) Unconsolidated subsidiaries
Principal company:
SBCS Co., Ltd.
Two hundred and thirty-eight subsidiaries including
SMLC MAHOGANY Co., Ltd. are operators of silent
partnerships for lease transactions and their assets and
profits/losses do not belong to them substantially. Therefore,
they have been excluded from the scope of consolidation
pursuant to Article 5 Paragraph 1 Item 2 of the Consolidated
Financial Statements Regulations.
Other unconsolidated subsidiaries are also excluded from
the scope of consolidation because their total amounts in
terms of total assets, ordinary income, net income and
retained earnings are so immaterial that they do not hinder a
rational judgment of SMFG’s financial position and results of
operations when excluded from the scope of consolidation.
Information on the fourteen special purpose entities, which
are not regarded as subsidiaries pursuant to Article 8 Paragraph
7 of the Financial Statements Regulations, is reported in Note
35. “Implementation Guidance on Disclosures about Certain
Special Purpose Entities” (Accounting Standards Board of
Japan (“ASBJ”) Guidance No. 15, issued on March 29, 2007)
is effective from the fiscal year beginning on or after April 1,
2007, and SMFG has applied the guidance from the fiscal year
ended March 31, 2008.
(b) Application of the equity method
Japanese accounting standards also require that any
unconsolidated subsidiaries and affiliates which SMFG is able
to exercise material influence over their financial and
operating policies be accounted for by the equity method.
(i) Unconsolidated subsidiaries accounted for by the equity
method
The number of unconsolidated subsidiaries accounted for by
the equity method is as follows:
March 31
Unconsolidated subsidiaries...............
Principal company:
SBCS Co., Ltd.
2007
3
2008
3
(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method
is as follows:
March 31
Affiliates ............................................
Principal companies:
2007
59
2008
71
Sumitomo Mitsui Auto Service Company, Limited
Promise Co., Ltd.
Central Finance Co., Ltd.
OMC Card, Inc.
Daiwa Securities SMBC Co. Ltd.
NIF SMBC Ventures Co., Ltd.
Daiwa SB Investments Ltd.
Sumitomo Mitsui Asset Management Company, Limited
Changes in affiliates accounted for by the equity method in
the fiscal year ended March 31, 2008 are as follows:
Twenty-five companies including Central Finance Co.,
Ltd. newly became affiliated companies accounted for by the
equity method due mainly to acquisition of shares.
Three companies including QUOQ Inc. were excluded
from the scope of affiliated companies accounted for by the
equity method because they became consolidated subsidiaries.
Ten companies including NIF Capital Management Co., Ltd.
were also excluded due mainly to merger.
(iii) Unconsolidated subsidiaries that are not accounted for
by the equity method
Two hundred and thirty-eight subsidiaries including SMLC
MAHOGANY Co., Ltd. are operators of silent partnerships
for lease transactions and their assets and profits/losses do not
belong to them substantially. Therefore, they have not been
accounted for by the equity method pursuant to Article 10
Paragraph 1 Item 2 of the Consolidated Financial Statements
Regulations.
(iv) Affiliates that are not accounted for by the equity method
Principal company:
Daiwa SB Investments (USA) Ltd.
Affiliates that are not accounted for by the equity method
are excluded from the scope of equity method because their
total amounts in terms of net income and retained earnings
are so immaterial that they do not hinder a rational judgment
of SMFG’s financial position and results of operations when
excluded from the scope of equity method.
(c) The balance sheet dates of consolidated subsidiaries
(i) The balance sheet dates of the consolidated subsidiaries
are as follows:
2007
March 31
2
June 30 ..............................................
1
July 31...............................................
7
September 30.....................................
2
October 31.........................................
2
November 30.....................................
70
December 31 .....................................
1
January 31 .........................................
3
February 28/29 ..................................
March 31 ...........................................
93
(ii) The subsidiaries whose balance sheet dates are July 31,
September 30, November 30 and January 31 are
2008
6
2
7
2
2
122
7
6
114
consolidated after the accounts were provisionally closed as
of March 31 for the purpose of consolidation. In case of the
subsidiaries whose balance sheet dates are June 30, they
are consolidated after the accounts were provisionally
closed as of December 31 or March 31. As for the
subsidiaries whose balance sheet dates are October 31,
their financial statements are consolidated based on the
provisional financial statements closed as of January 31
or March 31, respectively. The other subsidiaries are
consolidated on the basis of their respective balance sheet
dates.
Appropriate adjustments are made for material
transactions during the periods from their respective
balance sheet dates to the consolidated balance sheet date.
(2) Trading assets/liabilities and trading profits/losses
Transactions for trading purposes (seeking gains arising from
short-term changes in interest rates, currency exchange rates,
or market prices of securities and other market related indices
or from variation among markets) are included in “Trading
assets” or “Trading liabilities” on the consolidated balance
sheets on a trade date basis. Profits and losses on trading-
purpose transactions are recognized on a trade date basis, and
recorded as “Trading profits” or “Trading losses.”
Securities and monetary claims purchased for trading
purposes are stated at the fiscal year-end market value, and
financial derivatives such as swaps, futures and options are
stated at amounts that would be settled if the transactions
were terminated at the consolidated balance sheet date.
“Trading profits” and “Trading losses” include interest
received or paid during the fiscal year. The year-on-year
valuation differences of securities and monetary claims are
also recorded in the above-mentioned accounts. As for the
derivatives, assuming that the settlement will be made in
cash, the year-on-year valuation differences are also recorded
in the above-mentioned accounts.
(3) Securities
(a) As for securities other than trading purposes, debt
securities that consolidated subsidiaries have the positive
intent and ability to hold to maturity are classified as
held-to-maturity securities and are carried at amortized
cost (straight-line method) using the moving-average
method.
Investments in unconsolidated subsidiaries and affiliates
that are not accounted for by the equity method are
carried at cost using the moving-average method.
Securities other than trading purpose securities, held-
to-maturity securities and investments in unconsolidated
subsidiaries and affiliates are classified as “other securities”
(available-for-sale securities). Stocks in other securities
that have market prices are carried at their average market
prices during the final month of the fiscal year, and bonds
and others that have market prices are carried at their
fiscal year-end market prices (cost of securities sold is
calculated using primarily the moving-average method).
Other securities with no available market prices are
carried at cost or amortized cost using the moving-average
method. Net unrealized gains (losses) on other securities,
net of income taxes, are included in “Net assets.”
SMFG 2008 77
(b) Securities included in money held in trust are carried in
the same method as for securities mentioned above.
(4) Derivative transactions
Derivative transactions, other than those classified as trading
derivatives, are carried at fair value, though some consolidated
overseas subsidiaries account for derivative transactions in
accordance with their local accounting standards.
(5) Depreciation
(a) Tangible fixed assets and lease assets
Tangible fixed assets are generally stated at cost less
accumulated depreciation. Depreciation of tangible fixed
assets and equipment owned by SMFG and SMBC is
calculated using the straight-line method and the
declining-balance method over the estimated useful lives
of the respective assets, respectively. The estimated useful
lives of major items are as follows:
Buildings: 7 to 50 years
Equipment: 2 to 20 years
Other consolidated subsidiaries depreciate their tangible
fixed assets and lease assets primarily using the straight-line
method over the estimated useful lives of the respective assets
and the straight-line method over the lease term based on the
residual value of assets at the end of the lease term,
respectively.
In accordance with the amendment of the corporate tax
laws in the fiscal year ended March 31, 2008, the tangible
fixed assets acquired on or after April 1, 2007 are depreciated
based on the depreciation method under the amended
corporate tax laws. This accounting change had no material
impact on the consolidated financial statements for the fiscal
year ended March 31, 2008.
As for the tangible fixed assets acquired before April 1,
2007, from the fiscal year ended March 31, 2008, their
residual values are depreciated over five years using the
straight-line method after the fiscal year in which the
depreciable limit is reached. This accounting change had no
material impact on the consolidated financial statements for
the fiscal year ended March 31, 2008.
(b) Intangible fixed assets
Depreciation of intangible fixed assets is calculated using the
straight-line method.
Capitalized software for internal use owned by SMFG and
its consolidated domestic subsidiaries is depreciated using the
straight-line method over its estimated useful life (basically
five years).
(6) Reserve for possible loan losses
Reserve for possible loan losses of major consolidated
subsidiaries is provided for as described below in accordance
with the internal standards for write-offs and provisions.
For claims on borrowers that have entered into bankruptcy,
special liquidation proceedings or similar legal proceedings
(“bankrupt borrowers”) or borrowers that are not legally or
formally insolvent but are regarded as substantially in the
same situation (“effectively bankrupt borrowers”), a reserve is
provided for based on the amount of claims, after the write-off
stated below, net of the expected amount of recoveries from
collateral and guarantees.
are perceived to have a high risk of falling into bankruptcy
(“potentially bankrupt borrowers”), a reserve is provided for in
the amount deemed necessary based on an overall solvency
assessment of the claims, net of the expected amount of
recoveries from collateral and guarantees.
Discounted Cash Flows (“DCF”) method is used for claims on
borrowers whose cash flows from collection of principals and
interest can be rationally estimated, and SMBC applies it to
claims on large potentially bankrupt borrowers and claims on
large borrowers requiring close monitoring that have been
classified as “Past due loans (3 months or more)” or
“Restructured loans” whose total loans from SMBC exceed a
certain amount. SMBC establishes a reserve for possible loan
losses using the DCF method for such claims in the amount of
the difference between the present value of principal and interest
(calculated using the rationally estimated cash flows discounted
at the initial contractual interest rate) and the book value.
For other claims, a reserve is provided based on the
historical loan-loss ratio.
For claims originated in certain specific overseas countries, an
additional reserve is provided for in the amount deemed
necessary based on the assessment of political and economic
conditions.
Branches and credit supervision departments assess all claims
in accordance with the internal rules for self-assessment of
assets, and the Credit Review Department, independent from
these operating sections, reviews their assessment. The reserves
are provided for based on the results of these assessments.
Reserve for possible loan losses of other consolidated
subsidiaries for general claims is provided for in the amount
deemed necessary based on the historical loan-loss ratios, and
for doubtful claims in the amount deemed uncollectible based
on assessment of each claim.
For collateralized or guaranteed claims on bankrupt
borrowers and effectively bankrupt borrowers, the amount
exceeding the estimated value of collateral and guarantees is
deemed to be uncollectible and written off against the total
outstanding amount of the claims. The amount of write-off
was ¥518,594 million ($5,176 million) and ¥490,123 million
at March 31, 2008 and 2007, respectively.
(7) Reserve for employee bonuses
Reserve for employee bonuses is provided for payment of
bonuses to employees, in the amount of estimated bonuses,
which are attributable to the respective fiscal year.
(8) Reserve for executive bonuses
Reserve for executive bonuses is provided for payment of
bonuses to executives, in the amount of estimated bonuses,
which are attributable to the respective fiscal year.
(9) Reserve for employee retirement benefits
Reserve for employee retirement benefits is provided for
payment of retirement benefits to employees, in the amount
deemed accrued at the fiscal year-end, based on the projected
retirement benefit obligation and the fair value of plan assets
at the fiscal year-end.
Unrecognized prior service cost is amortized using the straight-
line method, primarily over nine years, over the employees’
estimated average remaining service period at incurrence.
For claims on borrowers that are not currently bankrupt but
Unrecognized net actuarial gain (loss) is amortized using
78
SMFG 2008
the straight-line method, primarily over nine years within the
employees’ average remaining service period, commencing
from the next fiscal year of incurrence.
(10) Reserve for executive retirement benefits
Reserve for executive retirement benefits is provided for
payment of retirement benefits to directors, corporate auditors
and other executive officers, in the amount deemed accrued at
the fiscal year-end based on the internal regulations.
(11) Reserve for reimbursement of deposits
Reserve for reimbursement of deposits which were
derecognized as liabilities under certain conditions is provided
for the possible losses on the future claims of withdrawal based
on the historical reimbursement experience. Formerly,
deposits which had been derecognized as liabilities were
expensed when they were actually reimbursed. However, from
the fiscal year ended March 31, 2008, such reserve is provided
for in the estimated amount as described above in accordance
with the “Treatment for Auditing of Reserve under Special
Taxation Measures Law, Reserve under Special Laws and
Reserve for Retirement Benefits to Directors and Corporate
Auditors” (Japanese Institute of Certified Public Accountants
(“JICPA”) Audit and Assurance Practice Committee Report
No. 42) of April 13, 2007.
As a result, “Income before income taxes and minority
interests” for the fiscal year ended March 31, 2008 decreased
by ¥10,417 million ($104 million) as compared with the
former method.
(12) Reserve under special laws
Reserve under special laws is a reserve for contingent liabilities
from financial instruments transactions pursuant to Article
46-5 and Article 48-3 of the Financial Instruments and
Exchange Law. Reserve for contingent liabilities from
financial futures and securities transactions, which were
formerly recognized in accordance with Article 81 of the
Financial Futures Transactions Law and Article 51 of the
Securities and Exchange Law, respectively, are stated as
Reserve for contingent liabilities from financial instruments
transactions from the fiscal year ended March 31, 2008 in
accordance with the enforcement of the Financial Instruments
and Exchange Law on September 30, 2007.
(13) Translation of foreign currency assets and liabilities
Assets and liabilities of SMFG and SMBC denominated in
foreign currencies and accounts of SMBC overseas branches 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.
Other 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.
(14) Lease transactions
Financing leases of SMFG and its consolidated domestic
subsidiaries, excluding those in which the ownership of the
property is transferred to the lessee, are accounted for in the
same method as operating leases.
Standards for recognizing lease-related income on lease
transactions and income/expenses on installment sales are as
follows:
(a) Recognition of lease-related income on lease transactions
Primarily, 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.
(b) Recognition of income and expenses on installment sales
Primarily, installment-sales-related income and
installment-sales-related expenses are recognized on a due-
date basis over the full term of the installment sales.
(15) Hedge accounting
(a) Hedging against interest rate changes
As for the hedge accounting method applied to hedging
transactions for interest rate risk arising from financial assets
and liabilities, SMBC applies deferred hedge accounting at
March 31, 2008, and deferred hedge accounting or fair value
hedge accounting at March 31, 2007.
SMBC applies deferred hedge accounting stipulated in
“Treatment for Accounting and Auditing of Application of
Accounting Standard for Financial Instruments in Banking
Industry” (JICPA Industry Audit Committee Report No.
24) to portfolio hedges on groups of large-volume, small-
value monetary claims and debts.
As for the portfolio hedges to offset market fluctuation,
SMBC assesses the effectiveness of such hedges by
classifying the hedged items (such as deposits and loans)
and the hedging instruments (such as interest rate swaps)
by their maturity. As for the portfolio hedges to fix cash
flows, SMBC assesses the effectiveness of such hedges by
verifying the correlation between the hedged items and the
hedging instruments.
As for the individual hedges, SMBC also assesses the
effectiveness of such individual hedges at March 31, 2008.
At March 31, 2007, SMBC basically applied deferred
hedge accounting, but applied fair value hedge accounting
to hedging transactions for reducing the market volatility
of bonds classified as other securities that were held for the
purpose of Asset and Liability Management.
As a result of the application of JICPA Industry Audit
Committee Report No. 24, SMBC discontinued the
application of hedge accounting or applied fair value hedge
accounting to a portion of the hedging instruments using
“macro hedge,” which had been applied in order to manage
interest rate risk arising from large-volume transactions in
loans, deposits and other interest-earning assets and
interest-bearing liabilities as a whole using derivatives
pursuant to “Temporary Treatment for Accounting and
Auditing of Application of Accounting Standard for
Financial Instruments in Banking Industry” (JICPA
Industry Audit Committee Report No. 15). The deferred
hedge losses and gains related to such a portion of hedging
instruments are charged to “Interest income” or “Interest
expenses” over a 12-year period (maximum) according to
their maturity from the fiscal year ended March 31, 2004.
Gross amounts of deferred hedge losses and gains on “macro
hedge” (before deducting tax effect) at March 31, 2008 were
¥17,608 million ($176 million) and ¥13,358 million ($133
million), respectively. The respective amounts at March 31,
2007 were ¥41,522 million and ¥29,583 million.
SMFG 2008 79
(b) Hedging against currency fluctuations
(18) Goodwill
Goodwill on Sumitomo Mitsui Finance and Leasing Company,
Limited is amortized using the straight-line method over 20
years. Goodwill on SMBC Friend Securities Co., Ltd. and
SMBC Leasing Company, Limited is amortized using the
straight-line method over 20 years and 5 years, respectively.
Goodwill on other companies is charged or credited to income
directly when incurred or benefited.
(19) Statements of cash flows
For the purposes of presenting the consolidated statements of
cash flows, cash and cash equivalents represent cash and due
from banks.
(20) New accounting standards
(a) From the fiscal year ended March 31, 2008, SMFG has
applied Article 30-2 of the “Accounting Practices for Tax
Effect Accounting on Consolidated Financial Statements”
(JICPA Accounting Practice Committee Report No. 6,
issued on March 29, 2007) to sales of investments such as
shares of subsidiaries within the group companies. As a
result, net income for the fiscal year ended March 31, 2008
decreased by ¥18,939 million ($189 million) compared
with the former method.
(b) Provisions on the scope of securities stipulated by
regulations such as the “Accounting Standards for
Financial Instruments” (ASBJ Statement No. 10) and the
“Accounting Practices for Financial Instruments” (JICPA
Accounting Practice Committee Report No. 14) were
partially revised on June 15 and July 4, 2007, respectively,
and became effective from the fiscal year ending on and
after the implementation day of the Financial Instruments
and Exchange Law. SMFG, accordingly, has applied the
revised accounting standards and practices from the fiscal
year ended March 31, 2008.
SMBC applies deferred hedge accounting stipulated in
“Treatment of Accounting and Auditing Concerning
Accounting for Foreign Currency Transactions in Banking
Industry” (JICPA Industry Audit Committee Report No.
25) to currency swap and foreign exchange swap
transactions executed for the purpose of lending or
borrowing funds in different currencies.
Pursuant to JICPA Industry Audit Committee Report
No. 25, SMBC assesses the effectiveness of currency swap
and foreign exchange swap transactions executed for the
purpose of offsetting the risk of changes in currency
exchange rates by verifying that there are foreign-currency
monetary claims and debts corresponding to the foreign-
currency positions.
In order to hedge risk arising from volatility of exchange
rates for stocks of subsidiaries and affiliates and other
securities (excluding bonds) denominated in foreign
currencies, SMBC applies deferred hedge accounting or fair
value hedge accounting, on the conditions that the hedged
securities are designated in advance and that sufficient on-
balance (actual) or off-balance (forward) liability exposure
exists to cover the cost of the hedged securities
denominated in the same foreign currencies.
(c) Transactions between consolidated subsidiaries
As for derivative transactions between consolidated
subsidiaries or internal transactions between trading
accounts and other accounts (or among internal sections),
SMBC manages the interest rate swaps and currency swaps
that are designated as hedging instruments in accordance
with the non-arbitrary and strict criteria for external
transactions stipulated in JICPA Industry Audit
Committee Report No. 24 and No. 25. Therefore, SMBC
accounts for the gains or losses that arise from interest rate
swaps and currency swaps in its earnings or defers them,
rather than eliminating them.
Certain other consolidated subsidiaries apply the
deferred hedge accounting or the special treatment for
interest rate swaps. A consolidated domestic subsidiary (a
leasing company) partly applies the accounting method
that is permitted by “Temporary Treatment for
Accounting and Auditing of Application of Accounting
Standard for Financial Instruments in Leasing Industry”
(JICPA Industry Audit Committee Report No. 19).
(16) Consumption taxes
National and local consumption taxes of SMFG and its
consolidated domestic subsidiaries are accounted for using the
tax-excluded method.
(17) Valuation of consolidated subsidiaries’ assets and liabilities
Assets and liabilities of consolidated subsidiaries including the
portion attributable to the minority stockholders are valued
for consolidation at fair value when SMFG acquires control.
80
SMFG 2008
3. Trading Assets
Trading assets at March 31, 2008 and 2007 consisted of the following:
March 31
Trading securities...............................................................................................
Derivatives of trading securities..........................................................................
Derivatives of securities related to trading transactions .......................................
Trading-related financial derivatives...................................................................
Other trading assets............................................................................................
4. Securities
Securities at March 31, 2008 and 2007 consisted of the following:
March 31
Japanese government bonds*1 .............................................................................
Japanese local government bonds........................................................................
Japanese corporate bonds ....................................................................................
Japanese stocks*1, 2 ..............................................................................................
Other*2 ...............................................................................................................
Millions of yen
2008
2007
¥ 230,442
3,043
10,440
2,995,314
884,370
¥4,123,611
¥
53,288
373
2,344
2,125,214
1,096,664
¥3,277,885
Millions of yen
2008
2007
¥ 9,339,978
439,228
3,880,773
3,749,762
6,107,758
¥23,517,501
¥ 7,640,069
571,103
4,066,497
4,747,601
3,512,228
¥20,537,500
Millions of
U.S. dollars
2008
$ 2,300
31
104
29,896
8,827
$41,158
Millions of
U.S. dollars
2008
$ 93,223
4,384
38,734
37,426
60,962
$234,729
*1 Unsecured loaned securities for which borrowers have the right to sell or pledge in the amount of ¥81,071 million ($809 million) and ¥2,188 million are included in Japanese
government bonds and Japanese stocks at March 31, 2008 and 2007, respectively.
SMBC has the right to sell or pledge, some of the unsecured borrowed securities, securities under resale agreements and securities borrowed with cash collateral. Of them,
¥1,758,728 million ($17,554 million) of securities are pledged, and ¥504,363 million ($5,034 million) of securities are held in hand at March 31, 2008. The respective amounts at
March 31, 2007 were ¥2,088,859 million and ¥154,192 million.
*2 Japanese stocks and other include investments in unconsolidated subsidiaries and affiliates of ¥494,129 million ($4,932 million) and ¥430,090 million at March 31, 2008 and 2007,
respectively.
5. Loans and Bills Discounted
(1) Loans and bills discounted at March 31, 2008 and 2007 consisted of the following:
March 31
Bills discounted..................................................................................................
Loans on notes ....................................................................................................
Loans on deeds....................................................................................................
Overdrafts ..........................................................................................................
Millions of yen
2008
2007
¥
360,859
3,241,541
50,169,292
8,373,180
¥62,144,874
¥
454,164
3,781,841
46,485,666
7,967,649
¥58,689,322
(2) Loans and bills discounted included the following “Risk-monitored loans” stipulated in the Banking Law:
March 31
Risk-monitored loans:
Bankrupt loans*1............................................................................................
Non-accrual loans*2 .......................................................................................
Past due loans (3 months or more)*3...............................................................
Restructured loans*4 ......................................................................................
Millions of yen
2008
2007
¥
73,472
607,226
26,625
385,336
¥1,092,661
¥
60,715
507,289
22,018
477,362
¥1,067,386
Millions of
U.S. dollars
2008
$
3,602
32,354
500,741
83,573
$620,270
Millions of
U.S. dollars
2008
$
733
6,061
266
3,846
$10,906
*1 “Bankrupt loans” are loans, after write-off, to legally bankrupt borrowers as defined in Article 96-1-3 and 96-1-4 of the Enforcement Ordinance No. 97 of the Japanese Corporate
Tax Law (issued in 1965) and on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because
they are past due for a considerable period of time or for other reasons.
*2 “Non-accrual loans” are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and loans on which interest payments are deferred in order to support
the borrowers’ recovery from financial difficulties.
*3 “Past due loans (3 months or more)” are loans on which the principal or interest is past due for three months or more, excluding “Bankrupt loans” and “Non-accrual loans.”
*4 “Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g., reduction of the original interest rate, deferral of interest payments,
extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “Bankrupt loans,” “Non-accrual loans” and
“Past due loans (3 months or more).”
SMFG 2008 81
(3) Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Audit Committee Report No. 24. SMFG’s
banking subsidiaries have rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and foreign
exchanges bought without restrictions. The total face value at March 31, 2008 and 2007 was ¥807,712 million ($8,062 million) and
¥915,318 million, respectively.
(4) Commitment line contracts on overdrafts and loans are agreements to lend to customers, up to a prescribed amount, as long as there is no
violation of any condition established in the contracts. The amount of unused commitments at March 31, 2008 and 2007 was ¥40,694,898
million ($406,177 million) and ¥40,947,052 million, respectively, and the amount of unused commitments whose original contract terms
are within one year or unconditionally cancelable at any time at March 31, 2008 and 2007 was ¥34,502,051 million ($344,366 million) and
¥34,769,824 million, respectively.
Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not
necessarily represent actual future cash flow requirements. Many of these commitments include clauses under which SMBC and other
consolidated subsidiaries can reject an application from customers or reduce the contract amounts in the event that economic conditions
change, SMBC and other consolidated subsidiaries need to secure claims, or other events occur. In addition, SMBC and other consolidated
subsidiaries may request the customers to pledge collateral such as premises and securities at the time of the contracts, and take necessary
measures such as monitoring customers’ financial positions, revising contracts when need arises and securing claims after the contracts are
made.
6. Other Assets
Other assets at March 31, 2008 and 2007 consisted of the following:
March 31
Prepaid expenses.................................................................................................
Accrued income..................................................................................................
Deferred assets....................................................................................................
Financial derivatives ...........................................................................................
Other .................................................................................................................
7. Tangible Fixed Assets
Tangible fixed assets at March 31, 2008 and 2007 consisted of the following:
March 31
Buildings ...........................................................................................................
Land* .................................................................................................................
Construction in progress.....................................................................................
Other tangible fixed assets..................................................................................
Total ..................................................................................................................
Accumulated depreciation ..................................................................................
* Includes land revaluation excess referred to in Note 17.
8. Intangible Fixed Assets
Intangible fixed assets at March 31, 2008 and 2007 consisted of the following:
March 31
Software .............................................................................................................
Goodwill ............................................................................................................
Other intangible fixed assets...............................................................................
Millions of yen
2008
2007
¥
39,901
296,130
1,423,253
1,492,890
1,699,412
¥4,951,587
¥
38,293
280,115
725,893
702,211
1,603,435
¥3,349,949
Millions of yen
2008
¥235,729
463,225
3,755
117,700
¥820,411
¥557,958
2007
¥226,593
476,059
703
114,211
¥817,567
¥555,288
Millions of yen
2008
¥141,419
178,645
12,460
¥332,525
2007
¥123,151
100,850
10,894
¥234,896
Millions of
U.S. dollars
2008
$
398
2,956
14,205
14,901
16,962
$49,422
Millions of
U.S. dollars
2008
$2,353
4,623
37
1,175
$8,188
$5,569
Millions of
U.S. dollars
2008
$1,412
1,783
124
$3,319
82
SMFG 2008
9. Lease Assets
Lease assets at March 31, 2008 and 2007 were as follows:
March 31
Equipment and others ........................................................................................
Accumulated depreciation ..................................................................................
10. Assets Pledged as Collateral
Assets pledged as collateral at March 31, 2008 and 2007 consisted of the following:
March 31
Assets pledged as collateral:
Millions of yen
2008
2007
¥ 3,781,960
(2,356,863)
¥ 1,425,097
¥ 2,593,445
(1,592,098)
¥ 1,001,346
Millions of
U.S. dollars
2008
$ 37,748
(23,524)
$ 14,224
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
Cash and due from banks, and Deposits with banks.......................................
Trading assets................................................................................................
Securities.......................................................................................................
Loans and bills discounted.............................................................................
Other assets (installment account receivable, etc.)..........................................
Liabilities corresponding to assets pledged as collateral:
Deposits ........................................................................................................
Call money and bills sold...............................................................................
Payables under repurchase agreements...........................................................
Payables under securities lending transactions ...............................................
Trading liabilities..........................................................................................
Borrowed money ...........................................................................................
Other liabilities.............................................................................................
Acceptances and guarantees ...........................................................................
¥ 158,679
673,261
8,334,432
952,137
3,008
25,381
1,135,000
1,714,479
5,379,076
150,283
1,447,744
14,499
140,917
¥ 104,328
202,292
3,043,253
934,423
1,946
20,588
1,335,000
128,695
1,250,450
84,532
1,112,257
23,207
167,153
$ 1,584
6,720
83,186
9,503
30
253
11,328
17,112
53,689
1,500
14,450
145
1,406
In addition to the assets presented above, the following assets were pledged as collateral for cash settlements, variation margins of futures
markets and certain other purposes at March 31, 2008 and 2007:
March 31
Cash and due from banks, and Deposits with banks ............................................
Trading assets.....................................................................................................
Securities............................................................................................................
Commercial paper and other debt purchased.......................................................
Loans and bills discounted ..................................................................................
Millions of yen
2008
¥
7,745
601,560
3,344,984
427
888,532
2007
¥
6,761
500,158
3,946,194
—
535,770
Millions of
U.S. dollars
2008
$
77
6,004
33,386
4
8,868
At March 31, 2008, other assets included surety deposits of ¥85,979 million ($858 million) and initial margins of futures markets of
¥11,546 million ($115 million). At March 31, 2007, other assets included surety deposits and intangibles of ¥94,129 million and variation
margins of futures markets of ¥3,140 million.
SMFG 2008 83
11. Deposits
Deposits at March 31, 2008 and 2007 consisted of the following:
March 31
Current deposits................................................................................................
Ordinary deposits..............................................................................................
Savings deposits ................................................................................................
Deposits at notice..............................................................................................
Time deposits....................................................................................................
Negotiable certificates of deposit.......................................................................
Other deposits...................................................................................................
12. Trading Liabilities
Trading liabilities at March 31, 2008 and 2007 consisted of the following:
March 31
Trading securities sold for short sales.................................................................
Derivatives of trading securities.........................................................................
Derivatives of securities related to trading transactions......................................
Trading-related financial derivatives..................................................................
13. Borrowed Money
Borrowed money at March 31, 2008 and 2007 consisted of the following:
Millions of yen
2008
2007
¥ 6,070,443
33,876,958
867,515
4,668,292
23,133,834
3,078,149
4,073,580
¥75,768,773
¥ 6,631,965
33,667,482
933,026
5,364,306
22,279,749
2,589,217
3,279,695
¥74,745,441
Millions of yen
2008
2007
¥
20,046
3,881
10,196
2,637,192
¥2,671,316
¥
16,415
288
1,975
1,924,294
¥1,942,973
Millions of
U.S. dollars
2008
$ 60,589
338,127
8,659
46,594
230,900
30,723
40,659
$756,251
Millions of
U.S. dollars
2008
$
200
39
102
26,322
$26,663
March 31
Bills rediscounted ...............................................
Other borrowings*2 .............................................
Millions of yen
2008
2007
¥
—
4,279,034
¥4,279,034
¥
—
3,214,137
¥3,214,137
Millions of
U.S. dollars
2008
$ —
42,709
$42,709
Average
interest rate*1
2008
—%
1.36
1.36%
Due
—
Jan. 2008–Perpetual
*1 Average interest rate represents the weighted average interest rate based on the balances and rates at the respective year-end of SMBC and other consolidated subsidiaries.
*2 Includes subordinated debt of ¥523,500 million ($5,225 million) and ¥559,500 million at March 31, 2008 and 2007, respectively.
The repayment schedule over the next five years on borrowed money at March 31, 2008 was as follows:
March 31
Within 1 year.......................................................................................................................
After 1 year through 2 years .................................................................................................
After 2 years through 3 years................................................................................................
After 3 years through 4 years................................................................................................
After 4 years through 5 years................................................................................................
Millions of yen
2008
¥2,716,753
345,299
297,834
179,362
183,480
Millions of U.S. dollars
2008
$ 2,711
3,446
2,973
1,790
1,831
84
SMFG 2008
14. Bonds
Bonds at March 31, 2008 and 2007 consisted of the following:
March 31
Issuer
Description
SMBC:
Straight bonds, payable in Yen ....................................
Straight bonds, payable in Euroyen..............................
Subordinated bonds, payable in Yen ............................
Subordinated bonds, payable in Euroyen......................
Subordinated bonds, payable in U.S. dollars ................
Subordinated bonds, payable in British pound sterling ...
Subordinated bonds, payable in Euro ...........................
Subordinated bonds, payable in Euro ...........................
Other consolidated subsidiaries:
Straight bonds, payable in Yen ....................................
Straight bonds, payable in U.S. dollars ........................
Straight bonds, payable in British pound sterling ........
Subordinated bonds, payable in Yen ............................
Subordinated bonds, payable in U.S. dollars ................
Short-term bonds.........................................................
Millions of yen*1
2008
2007
Millions of
U.S. dollars
2008
Interest rate
(%)
*2
Due
¥1,484,978
[389,700]
26,900
599,873
813,500
297,415
($2,968,509 thousand)
2,402
(£12,000 thousand)
109,889
( 694,888 thousand)
197,436
( 1,248,489 thousand)
¥1,692,060
[405,500]
38,900
519,880
731,300
350,461
($2,967,747 thousand)
2,782
(£12,000 thousand)
109,261
( 694,207 thousand)
196,341
( 1,247,482 thousand)
$14,822
0.52–2.60
April 2008-May 2025
268
5,987
8,120
2,969
0.10–5.48686
1.71–2.62
0.92–2.99875
5.625–8.15
Mar. 2012-Feb. 2037
Jun. 2010-Dec. 2017
May 2012-Perpetual
Nov. 2011-Perpetual
24
1,097
1,971
6.98
4.375
4.375
Perpetual
Perpetual
Oct. 2014
173,044
[80,000]
1,141
($10,000 thousand)
1,811
(£8,000 thousand)
[1,811]
160,725
174,504
[64,902]
2,382
($20,000 thousand)
[1,191]
1,866
(£8,000 thousand)
[5,000]
100,190
($1,000,000 thousand)
769,100
[769,100]
¥ 4,738,408
155,694
[500]
118,090
($1,000,000 thousand)
439,600
[439,600]
¥4,533,125
1,727
0.26–3.19375
Apr. 2008-Jul. 2017
11
18
1,604
1,000
7.00
3.95
May 2009
Oct. 2008
1.45-4.95
Sep. 2008-Perpetual
8.50
Jun. 2009
7,676
0.695–1.20
Apr. 2008-Jul. 2008
$47,294
*1 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.
*2 Interest rates indicate nominal interest rates which are applied at the consolidated balance sheet dates. Therefore, they may differ from actual interest rates.
The redemption schedule over the next five years on bonds at March 31, 2008 was as follows:
March 31
Within 1 year ...................................................................................................................................
After 1 year through 2 years .............................................................................................................
After 2 years through 3 years ............................................................................................................
After 3 years through 4 years ............................................................................................................
After 4 years through 5 years ............................................................................................................
Millions of yen
2008
¥1,245,611
553,484
317,052
273,004
341,942
15. Other Liabilities
Other liabilities at March 31, 2008 and 2007 consisted of the following:
March 31
Accrued expenses................................................................................................
Unearned income ...............................................................................................
Income taxes payable ..........................................................................................
Financial derivatives ...........................................................................................
Other .................................................................................................................
Millions of yen
2008
2007
¥ 235,326
192,974
56,772
1,404,616
2,026,738
¥3,916,427
¥ 169,803
180,374
56,292
868,169
1,707,075
¥2,981,714
Millions of
U.S. dollars
2008
$12,432
5,524
3,165
2,725
3,413
Millions of
U.S. dollars
2008
$ 2,349
1,926
567
14,019
20,229
$39,090
SMFG 2008 85
16. Reserve Under Special Laws
Reserve under special laws at March 31, 2008 and 2007 consisted of the following:
March 31
Reserve for contingent liabilities from financial instruments transactions ...........
Reserve for contingent liabilities from financial futures transactions ...................
Reserve for contingent liabilities from securities transactions..............................
Millions of yen
2008
¥1,118
—
—
¥1,118
2007
¥ —
18
1,118
¥ 1,137
Millions of
U.S. dollars
2008
$11
—
—
$11
17. Land Revaluation Excess
SMBC revaluated its own land for business activities in accordance
with the “Law Concerning Land Revaluation” (the “Law”) effective
March 31, 1998 and the law concerning amendment of the Law
effective March 31, 2001. The income taxes corresponding to the
net unrealized gains are deferred and reported in “Liabilities” as
“Deferred tax liabilities for land revaluation,” and the net unrealized
gains, net of deferred taxes, are reported as “Land revaluation excess”
in “Net assets”.
Certain other consolidated subsidiaries revaluated their own land
for business activities in accordance with the Law. The income taxes
corresponding to the net unrealized gains are deferred and reported
in “Liabilities” as “Deferred tax liabilities for land revaluation” and
the net unrealized gains, net of deferred taxes, are reported as “Land
revaluation excess” in “Net assets.”
18. Minority Interests
SB Treasury Company L.L.C.*, a subsidiary of SMBC, issued
noncumulative perpetual preferred securities, totaling $1,800
million in February 1998. SB Equity Securities (Cayman), Limited,
a subsidiary of SMBC, issued noncumulative perpetual preferred
securities, totaling ¥340,000 million in February and March 1999.
Sakura Preferred Capital (Cayman) Limited, a subsidiary of SMBC,
issued noncumulative perpetual preferred securities, totaling
¥283,750 million in December 1998 and March 1999. SMFG
* See Note 38.
Date of the revaluation
SMBC:
March 31, 1998 and March 31, 2002
Certain other consolidated subsidiaries:
March 31, 1999 and March 31, 2002
Method of revaluation (stipulated in Article 3-3 of the Law)
SMBC:
Fair values were determined by applying appropriate
adjustments for land shape and timing of appraisal to the
values stipulated in Article 2-3, 2-4 or 2-5 of the
Enforcement Ordinance of the Law concerning Land
Revaluation (the Enforcement Ordinance No. 119) effective
March 31, 1998.
Certain other consolidated subsidiaries:
Fair values were determined based on the values stipulated
in Article 2-3 and 2-5 of the Enforcement Ordinance
No. 119.
Preferred Capital USD 1 Limited and SMFG Preferred Capital GBP
1 Limited, subsidiaries of SMFG, issued noncumulative perpetual
preferred securities, totaling $1,650 million and £500 million,
respectively, in December 2006. SMFG Preferred Capital JPY 1
Limited, subsidiaries of SMFG, issued noncumulative perpetual
preferred securities, totaling ¥135,000 million in February 2008.
These subsidiaries are consolidated and the preferred securities are
accounted for as minority interests.
86
SMFG 2008
19. Capital Stock
Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2008 and 2007 were as follows:
March 31
Common stock .........................................................................................
Preferred stock (Type 1)............................................................................
Preferred stock (Type 2)............................................................................
Preferred stock (Type 3)............................................................................
Preferred stock (Type 4)............................................................................
Preferred stock (Type 5)............................................................................
Preferred stock (Type 6)............................................................................
Preferred stock (Type 7)............................................................................
Preferred stock (Type 8)............................................................................
Preferred stock (Type 9)............................................................................
Total ........................................................................................................
* See Note 27
All of the preferred stock is noncumulative and nonparticipating
for dividend payments, and shareholders of the preferred stock are not
entitled to vote at a general meeting of shareholders except when the
proposal to pay the prescribed dividends to shareholders is not
submitted to the general meeting of shareholders or is rejected at the
general meeting of shareholders.
In the event that SMFG pays dividends, SMFG shall pay to holders
of shares of its preferred stock, in preference to the holders of its
common stock, cash dividends in the amounts as described below. If
preferred interim dividends stipulated in the Articles of Incorporation
of SMFG were paid during the relevant fiscal year, the amount of such
preferred interim dividends shall be subtracted from such amount of
annual preferred dividends. Preferred stock (Type 4) bears an annual
noncumulative dividend of ¥135,000 per share and, in the event
SMFG pays an interim dividend, holders are entitled to receive
¥67,500 in preference to common shareholders.
Preferred stock (Type 6) bears an annual noncumulative dividend of
¥88,500 per share and, in the event SMFG pays an interim dividend,
holders are entitled to receive ¥44,250 in preference to common
shareholders. Holders of preferred stock are not entitled to any further
dividends in excess of the amount as described above.
In the event of SMFG’s voluntary or involuntary liquidation,
holders of its preferred stock will be entitled, equally in rank as
among themselves and in preference over shares of its common stock,
Number of shares
2008
2007
Authorized
Issued
Authorized
Issued
15,000,000
—
—
—
50,100
167,000
70,001
167,000
115,000
115,000
15,684,101
7,733,653.77
—
—
—
50,100
—
70,001
—
—
—
7,853,754.77
15,000,000
35,000
100,000
695,000
135,000
250,000
300,000
—
—
—
16,515,000
7,733,653.77
—
—
—
50,100
—
70,001
—
—
—
7,853,754.77
to receive out of SMFG’s residual assets upon liquidation a
distribution of ¥3,000,000 per share for Type 4 and Type 6 preferred
stock. Holders of preferred stock are not entitled to any further
dividends or other participation or distribution of SMFG’s residual
assets upon SMFG’s liquidation.
SMFG may, subject to the requirements provided in the Company
Law, purchase any shares of the preferred stock then outstanding at
any time and retire such preferred stock out of distributable amounts
of SMFG. SMFG may also, subject to the requirements provided in
the Company Law, redeem all or some of preferred stock (Type 6) out
of distributable amounts of SMFG at any time on and after March 31,
2011 at a price of ¥3,000,000 per share.
Preferred stock (Type 4) is convertible to common stock at any
time through February 7, 2028. Such preferred stock is convertible at
a conversion price, which is ¥318,800 as of March 31, 2008, subject
to anti-dilution adjustment, and to downward reset if the market
price of SMFG’s common stock at the time of conversion is less than
the then-applicable conversion price. The reset is subject to a floor
price, which is ¥105,100 as of March 31, 2008 and is subject to anti-
dilution adjustment. Preferred stock (Type 4) outstanding on the last
day of the applicable conversion period will be mandatorily converted
into shares of its common stock on the immediately following day.
Preferred stock (Type 6) is non-convertible.
SMFG 2008 87
20. Fees and Commissions
Fees and commissions for the fiscal years ended March 31, 2008 and 2007 consisted of the following:
Year ended March 31
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 yen
2008
2007
Millions of
U.S. dollars
2008
¥ 73,822
133,645
35,118
16,028
7,144
47,117
128,575
72,376
190,455
¥704,283
¥ 31,612
60,677
¥ 92,289
¥ 65,698
132,836
48,650
16,581
7,322
45,961
117,197
77,971
193,778
¥705,998
¥ 27,200
69,612
¥ 96,812
$ 737
1,334
351
160
71
470
1,283
723
1,901
$7,030
$ 315
606
$ 921
21. Trading Income
Trading income for the fiscal years ended March 31, 2008 and 2007 consisted of the following:
Year ended March 31
Trading profits:
Gains on trading securities ............................................................................
Gains on securities related to trading transactions .........................................
Gains on trading-related financial derivatives ................................................
Other ............................................................................................................
Trading losses:
Losses on securities related to trading transactions .........................................
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
¥ 21,406
2,934
438,365
6,865
¥469,571
¥ 15,109
—
109,208
3,244
¥127,561
¥
¥
—
—
¥
¥
1,936
1,936
22. Other Operating Income
Other operating income for the fiscal years ended March 31, 2008 and 2007 consisted of the following:
Year ended March 31
Gains on sale of bonds ........................................................................................
Gains on redemption of bonds ............................................................................
Lease-related income...........................................................................................
Gains on foreign exchange transactions...............................................................
Gains on financial derivatives .............................................................................
Other .................................................................................................................
Millions of yen
2008
2007
¥ 108,350
88
893,448
—
1,099
209,648
¥1,212,635
¥
28,180
1,119
744,881
56,800
—
172,649
¥1,003,632
88
SMFG 2008
$ 214
29
4,375
69
$4,687
$ —
$ —
Millions of
U.S. dollars
2008
$ 1,081
1
8,918
—
11
2,092
$12,103
23. Other Operating Expenses
Other operating expenses for the fiscal years ended March 31, 2008 and 2007 consisted of the following:
Year ended March 31
Losses on sale of bonds........................................................................................
Losses on redemption of bonds............................................................................
Losses on devaluation of bonds............................................................................
Bond issuance costs ............................................................................................
Lease-related expenses.........................................................................................
Losses on foreign exchange transactions ..............................................................
Losses on financial derivatives.............................................................................
Other .................................................................................................................
Millions of yen
2008
2007
¥
29,380
35,860
67,045
756
794,468
254,927
—
209,651
¥1,392,089
¥ 139,302
3,534
—
799
674,662
—
22,809
163,262
¥1,004,370
24. Other Income
Other income for the fiscal years ended March 31, 2008 and 2007 consisted of the following:
Year ended March 31
Gains on sale of stocks and other securities .........................................................
Gains on money held in trust .............................................................................
Gains on disposal of fixed assets..........................................................................
Collection of written-off claims ..........................................................................
Gains on change in equity due to mergers of subsidiaries....................................
Gains on return of securities from retirement benefits trust ................................
Gains on sale of a subsidiary’s shares and change in equity of the subsidiary........
Other .................................................................................................................
Millions of yen
2008
¥ 61,509
250
10,988
1,355
103,133
—
—
26,108
¥203,346
2007
¥ 62,793
0
4,730
1,236
—
36,330
4,226
18,700
¥128,017
25. Other Expenses
Other expenses for the fiscal years ended March 31, 2008 and 2007 consisted of the following:
Year ended March 31
Write-off of loans ...............................................................................................
Losses on sale of stocks and other securities.........................................................
Losses on devaluation of stocks and other securities.............................................
Losses on money held in trust .............................................................................
Losses on sale of delinquent loans .......................................................................
Equity in losses of affiliates.................................................................................
Losses on disposal of fixed assets .........................................................................
Losses on impairment of fixed assets* .................................................................
Other .................................................................................................................
Millions of yen
2008
¥141,750
5,737
62,835
23
35,300
41,760
12,538
5,161
35,355
¥340,463
2007
¥ 81,415
1,499
16,562
—
39,302
104,170
7,798
30,548
33,876
¥315,175
Millions of
U.S. dollars
2008
$
293
358
669
8
7,930
2,544
—
2,093
$13,895
Millions of
U.S. dollars
2008
$ 614
2
110
14
1,029
—
—
261
$2,030
Millions of
U.S. dollars
2008
$1,415
57
627
0
352
417
125
52
353
$3,398
SMFG 2008 89
* Losses on impairment of fixes assets consisted of the following:
Year ended
March 31
Area
Tokyo metropolitan area ...................................
Kinki area.........................................................
Other................................................................
Purpose of use
2008
Branches (4 branches)
Idle assets (27 items)
Other (2 items)
Branches (5 branches)
Idle assets (18 items)
Branches (9 branches)
Idle assets (13 items)
Type
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
Land and premises, etc.
¥
Land and premises, etc.
Land and premises, etc.
41
1,196
69
298
3,086
17
451
¥25,799
1,782
—
839
443
—
1,683
$ 0
12
1
3
31
0
5
At the consolidated subsidiary SMBC, every branch, which
continuously manages and determines income and expenses, is the
smallest unit of the asset group for recognition and measurement of
impairment loss. Assets such as corporate headquarters facilities,
training facilities, data and system centers, and health and recreational
facilities which do not produce cash flows that can be attributed to
individual assets are treated as common-use assets. As for idle assets,
impairment loss is measured individually. At other consolidated
subsidiaries, a branch is generally the smallest asset grouping unit.
SMBC and other subsidiaries reduced the carrying amounts of
long-lived assets, of which investments are not expected to be fully
recovered-SMBC reduced the carrying amounts of idle assets and
other consolidated subsidiaries reduced the carrying amounts of
long-lived assets of their branches and idle assets-to their recoverable
amounts, and recognized the losses as “losses on impairment of fixed
assets,” which is included in “Other expenses.” The recoverable
amount is calculated using net realizable value which is basically
determined by subtracting the expected disposal cost from the
appraisal value based on the Real Estate Appraisal Standard.
26. Income Taxes
(1) Significant components of deferred tax assets and liabilities at March 31, 2008 and 2007 were as follows:
March 31
Deferred tax assets:
Net operating loss carryforwards .........................................................
Write-off of securities..........................................................................
Reserve for possible loan losses ............................................................
Write-off of loans ................................................................................
Reserve for employee retirement benefits.............................................
Deferred gain or loss on hedges ...........................................................
Depreciation........................................................................................
Other ..................................................................................................
Subtotal ..............................................................................................
Valuation allowance ............................................................................
Total deferred tax assets.......................................................................
Deferred tax liabilities:
Net unrealized gains on other securities...............................................
Leveraged lease ....................................................................................
Gains on securities contributed to employee retirement benefits trust...
Securities returned from employee retirement benefits trust ................
Undistributed earnings of subsidiaries.................................................
Other ..................................................................................................
Total deferred tax liabilities.................................................................
Net deferred tax assets..............................................................................
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
¥ 863,604
332,355
212,043
104,729
66,012
51,455
8,730
127,474
1,766,405
(491,685)
1,274,720
(191,661)
(62,256)
(42,263)
(20,282)
(12,506)
(12,268)
(341,238)
¥ 933,481
¥1,170,595
284,084
191,150
101,611
75,582
60,247
9,256
120,304
2,012,833
(457,174)
1,555,659
(569,723)
(60,724)
(42,408)
(20,312)
(10,600)
(15,619)
(719,388)
¥ 836,270
$ 8,620
3,317
2,117
1,045
659
514
87
1,272
17,631
(4,908)
12,723
(1,913)
(621)
(422)
(202)
(125)
(123)
(3,406)
$ 9,317
90
SMFG 2008
(2) SMFG and its domestic consolidated subsidiaries are subject
to Japanese national and local income taxes, which, in the
aggregate, would result in an effective statutory tax rate of
approximately 40.69% for the years ended March 31, 2008
and 2007. A reconciliation of the effective income tax rate
reflected in the accompanying consolidated statements of
income to the statutory tax rate for the years ended March 31,
2008 and 2007 was as follows:
Statutory tax rate ..........................................................................................................................
Valuation allowance ..............................................................................................................
Equity in losses of affiliates....................................................................................................
Gains on changes in equity....................................................................................................
Unrealized gains....................................................................................................................
Other ....................................................................................................................................
Effective income tax rate ...............................................................................................................
27. Changes in Net Assets
(1) Type and number of shares issued and treasury shares are as follows:
2008
40.69%
2.10
1.83
(4.52)
3.04
(1.54)
41.60%
2007
40.69%
(6.94)
5.25
—
—
(1.00)
38.00%
Year ended March 31, 2008
Shares issued
Number of shares
March 31,
2007
Increase
Decrease
March 31,
2008
Common stock ............................................................................
Preferred stock (1st series Type 4) ...............................................
Preferred stock (2nd series Type 4) ..............................................
Preferred stock (3rd series Type 4)...............................................
Preferred stock (4th series Type 4)...............................................
Preferred stock (5th series Type 4)...............................................
Preferred stock (6th series Type 4)...............................................
Preferred stock (7th series Type 4)...............................................
Preferred stock (8th series Type 4)...............................................
Preferred stock (9th series Type 4)...............................................
Preferred stock (10th series Type 4).............................................
Preferred stock (11th series Type 4).............................................
Preferred stock (12th series Type 4).............................................
Preferred stock (1st series Type 6) ...............................................
Total ......................................................................................
7,733,653.77
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
7,853,754.77
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,733,653.77
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
7,853,754.77
Treasury shares
Common stock ............................................................................
Total ......................................................................................
168,630.95
168,630.95
*1
895.01
895.01
*2
528.55
528.55
168,997.41
168,997.41
*1 Increase in number of treasury common shares:
● 895.01 shares due to purchase of fractional shares
*2 Decrease in number of treasury common shares:
● 234.55 shares due to sale of fractional shares and delivery of shares in connection with exercising of stock options
● 294 shares due to sale of shares of SMFG’s common stock owned by subsidiaries
SMFG 2008 91
Year ended March 31, 2007
Shares issued
Common stock ............................................................................
Preferred stock (Type 1) ..............................................................
Preferred stock (Type 2) ..............................................................
Preferred stock (Type 3) ..............................................................
Preferred stock (1st series Type 4) ...............................................
Preferred stock (2nd series Type 4) ..............................................
Preferred stock (3rd series Type 4)...............................................
Preferred stock (4th series Type 4)...............................................
Preferred stock (5th series Type 4)...............................................
Preferred stock (6th series Type 4)...............................................
Preferred stock (7th series Type 4)...............................................
Preferred stock (8th series Type 4)...............................................
Preferred stock (9th series Type 4)...............................................
Preferred stock (10th series Type 4).............................................
Preferred stock (11th series Type 4).............................................
Preferred stock (12th series Type 4).............................................
Preferred stock (1st series Type 6) ...............................................
Total ......................................................................................
Treasury shares
Common stock ............................................................................
Preferred stock (Type 1) ..............................................................
Preferred stock (Type 2) ..............................................................
Preferred stock (Type 3) ..............................................................
Total ......................................................................................
*1 Increase in number of common shares issued:
Number of shares
March 31,
2006
Increase
Decrease
March 31,
2007
7,424,172.77
35,000
100,000
695,000
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
8,374,273.77
6,307.15
—
—
—
6,307.15
*1
309,481
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
309,481
*5
*2
170,936.41
35,000
*3
100,000
*4
695,000
1,000,936.41
*2
*3
*4
—
35,000
100,000
695,000
—
—
—
—
—
—
—
—
—
—
—
—
—
830,000
*5
*2
*3
*4
8,612.61
35,000
100,000
695,000
838,612.61
7,733,653.77
—
—
—
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
7,853,754.77
168,630.95
—
—
—
168,630.95
● 249,015 shares due to issuance of new shares related to the share exchange with SMBC Friend Securities Co., Ltd. on September 1, 2006
● 60,466 shares due to exercising of rights to request acquisition of common shares with respect to preferred stock (Type 3) on September 29, 2006
*2 Increase in number of treasury shares of preferred stock (Type 1):
● 35,000 shares due to acquisition of own shares on May 17, 2006 pursuant to the resolution of the ordinary general meeting of shareholders held on June 29, 2005
Decrease in number of shares issued and treasury shares of preferred stock (Type 1):
● 35,000 shares due to retirement of treasury shares on May 17, 2006
*3 Increase in number of treasury shares of preferred stock (Type 2):
● 100,000 shares due to acquisition of own shares on May 17 and September 6, 2006 pursuant to the resolution of the ordinary general meetings of shareholders held on
June 29, 2005 and June 29, 2006
Decrease in number of shares issued and treasury shares of preferred stock (Type 2):
● 100,000 shares due to retirement of treasury shares on May 17 and September 6, 2006
*4 Increase in number of treasury shares of preferred stock (Type 3):
● 645,000 shares due to acquisition of own shares on September 29 and October 11, 2006 pursuant to the resolution of the ordinary general meeting of shareholders held on
June 29, 2006
● 50,000 shares due to acquisition of own shares on September 29, 2006 as a result of exercising of rights to request acquisition of common shares
Decrease in number of shares issued and treasury shares of preferred stock (Type 3):
● 695,000 shares due to retirement of treasury shares on September 29 and October 11, 2006
*5 Increase in number of treasury common shares:
● 60,466 shares due to acquisition of own shares on October 17, 2006 pursuant to the resolution of the ordinary general meeting of shareholders held on June 29, 2006
● 1,265.41 shares due to purchase of fractional shares
● 109,205 shares owned by consolidated subsidiaries and affiliates in connection with the share exchange with SMBC Friend Securities Co., Ltd.
Decrease in number of treasury common shares:
● 182.61 shares due to sale of fractional shares and delivery of shares in connection with exercising of stock options
● 8,430 shares due to sale of shares of SMFG’s common stock owned by subsidiaries and affiliates
92
SMFG 2008
(2) Information on stock acquisition rights is as follows:
Year ended March 31, 2008
SMFG ...................................
Consolidated subsidiaries ......
Total.....................................
Detail of stock
acquisition rights
Type of
shares
March 31,
2007
Stock options
—
—
—
—
—
Year ended March 31, 2007
SMFG ...................................
Consolidated subsidiaries ......
Total.....................................
Detail of stock
acquisition rights
Type of
shares
March 31,
2006
Stock options
—
—
—
—
—
Number of shares
Increase
Decrease
—
—
—
—
Number of shares
Increase
Decrease
—
—
—
—
March 31,
2008
—
—
March 31,
2007
—
—
Millions of yen
March 31,
2008
¥ —
43
¥43
Millions of yen
March 31,
2007
¥ —
14
¥14
Millions of
U.S. dollars
March 31,
2008
$ —
0
$ 0
Millions of
U.S. dollars
March 31,
2007
$ —
0
$ 0
(3) Information on dividends is as follows:
(a) Dividends paid in the fiscal year ended March 31, 2007
Type of shares
Common stock ..................................................................
Preferred stock (Type 1) ....................................................
Preferred stock (Type 2) ....................................................
Preferred stock (Type 3) ....................................................
Preferred stock (1st series Type 4) .....................................
Preferred stock (2nd series Type 4) ....................................
Preferred stock (3rd series Type 4).....................................
Preferred stock (4th series Type 4).....................................
Preferred stock (5th series Type 4).....................................
Preferred stock (6th series Type 4).....................................
Preferred stock (7th series Type 4).....................................
Preferred stock (8th series Type 4).....................................
Preferred stock (9th series Type 4).....................................
Preferred stock (10th series Type 4)...................................
Preferred stock (11th series Type 4)...................................
Preferred stock (12th series Type 4)...................................
Preferred stock (1st series Type 6) .....................................
Millions of yen, except per share amount
Aggregate amount
of dividends
Cash dividends
per share
Record date
Effective date
¥22,253
367
2,850
9,521
563
563
563
563
563
563
563
563
563
563
563
563
6,195
¥
3,000
10,500
28,500
13,700
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
88,500
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
March 31, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
June 29, 2006
Date of resolution: Ordinary general meeting of shareholders held on June 29, 2006
(b) Dividends paid in the fiscal year ended March 31, 2008
Type of shares
Common stock..................................................................
Preferred stock (1st series Type 4) .....................................
Preferred stock (2nd series Type 4)....................................
Preferred stock (3rd series Type 4) ....................................
Preferred stock (4th series Type 4) ....................................
Preferred stock (5th series Type 4) ....................................
Preferred stock (6th series Type 4) ....................................
Preferred stock (7th series Type 4) ....................................
Preferred stock (8th series Type 4) ....................................
Preferred stock (9th series Type 4) ....................................
Preferred stock (10th series Type 4) ..................................
Preferred stock (11th series Type 4) ..................................
Preferred stock (12th series Type 4) ..................................
Preferred stock (1st series Type 6) .....................................
Millions of yen, except per share amount
Aggregate amount
of dividends
Cash dividends
per share
Record date
Effective date
¥53,660
563
563
563
563
563
563
563
563
563
563
563
563
6,195
¥
7,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
135,000
88,500
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
March 31, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
June 28, 2007
Date of resolution: Ordinary general meeting of shareholders held on June 28, 2007
SMFG 2008 93
Type of shares
Common stock..................................................................
Preferred stock (1st series Type 4) .....................................
Preferred stock (2nd series Type 4)....................................
Preferred stock (3rd series Type 4) ....................................
Preferred stock (4th series Type 4) ....................................
Preferred stock (5th series Type 4) ....................................
Preferred stock (6th series Type 4) ....................................
Preferred stock (7th series Type 4) ....................................
Preferred stock (8th series Type 4) ....................................
Preferred stock (9th series Type 4) ....................................
Preferred stock (10th series Type 4) ..................................
Preferred stock (11th series Type 4) ..................................
Preferred stock (12th series Type 4) ..................................
Preferred stock (1st series Type 6) .....................................
Millions of yen, except per share amount
Aggregate amount
of dividends
Cash dividends
per share
¥38,326
281
281
281
281
281
281
281
281
281
281
281
281
3,097
¥ 5,000
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250
Record date
Effective date
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
September 30, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
December 7, 2007
Date of resolution: Meeting of the Board of Directors held on November 19, 2007
(c) Dividends to be paid in the fiscal year ending March 31, 2009
Type of shares
Common stock .....................................
Preferred stock (1st series Type 4) ........
Preferred stock (2nd series Type 4) .......
Preferred stock (3rd series Type 4)........
Preferred stock (4th series Type 4)........
Preferred stock (5th series Type 4)........
Preferred stock (6th series Type 4)........
Preferred stock (7th series Type 4)........
Preferred stock (8th series Type 4)........
Preferred stock (9th series Type 4)........
Preferred stock (10th series Type 4)......
Preferred stock (11th series Type 4)......
Preferred stock (12th series Type 4)......
Preferred stock (1st series Type 6) ........
Aggregate amount
of dividends
Millions of yen, except per share amount
Cash dividends
per share
Source
of dividends
Record date
¥53,655
281
281
281
281
281
281
281
281
281
281
281
281
3,097
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
¥ 7,000
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
Effective date
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
Date of resolution: Ordinary general meeting of shareholders held on June 27, 2008
28. Cash Flows
(1) Fiscal year ended March 31, 2008
(a) QUOQ Inc. and two other companies became consolidated subsidiaries of SMFG due to increases in the voting rights in the fiscal
year ended March 31, 2008. Their major assets and liabilities are as follows:
Assets.........................................................................................................................
Other assets...........................................................................................................
Customers’ liabilities for acceptances and guarantees .............................................
Liabilities ...................................................................................................................
Borrowed money ...................................................................................................
Acceptances and guarantees...................................................................................
Millions of yen
Millions of U.S. dollars
¥1,504,288
548,428
891,593
¥1,471,831
436,628
891,593
$15,014
5,474
8,899
$14,690
4,358
8,899
94
SMFG 2008
(b) The major assets and liabilities which were acquired due to a merger between SMBC Leasing Company, Limited and Sumisho Lease
Co., Ltd. are as follows:
Assets..........................................................................................................................
Lease assets .............................................................................................................
Loans and bills discounted......................................................................................
Liabilities ....................................................................................................................
Borrowed money ....................................................................................................
Short-term bonds ...................................................................................................
Millions of yen
Millions of U.S. dollars
¥1,392,490
632,224
329,069
¥1,249,703
571,741
393,000
$13,898
6,310
3,284
$12,473
5,707
3,923
(c) SMBC Auto Leasing Company, Limited and one other company were excluded from the scope of consolidation due to a merger with
Sumisho Auto Leasing Corporation in the fiscal year ended March 31, 2008. Their major assets and liabilities are as follows:
Assets..........................................................................................................................
Lease assets .............................................................................................................
Liabilities ....................................................................................................................
Borrowed money ....................................................................................................
Short-term bonds ...................................................................................................
Millions of yen
Millions of U.S. dollars
¥ 305,751
221,725
¥ 289,379
144,561
106,000
$ 3,052
2,213
$ 2,888
1,443
1,058
(2) Fiscal year ended March 31, 2007
Capital surplus increased by ¥221,365 million due to the fact that SMFG made SMBC Friend Securities into a wholly-owned subsidiary
through a share exchange and delivered common stocks in the fiscal year ended March 31, 2007.
29. Employee Retirement Benefits
(1) Outline of employee retirement benefits
Consolidated subsidiaries in Japan have contributory funded
defined benefit pension plans such as employee pension plans,
qualified pension plans and lump-sum severance indemnity
plans. A consolidated subsidiary in Japan adopts the defined-
contribution pension plan. Certain domestic consolidated
subsidiaries have a general type of employee pension plans.
They may grant additional benefits in cases where certain
requirements are met when employees retire.
Some overseas consolidated subsidiaries adopt defined-
benefit pension plans and defined-contribution pension plans.
SMBC and some consolidated subsidiaries in Japan
contributed some of their marketable equity securities to
employee retirement benefits trust.
(2) Projected benefit obligation
March 31
Projected benefit obligation
Plan assets
Unfunded projected benefit obligation
Unrecognized net actuarial gain or loss
Unrecognized prior service cost
Net amount recorded on the consolidated
balance sheet
Prepaid pension cost
Reserve for employee retirement benefits
(A) ..........................................
(B)...........................................
(C)=(A)+(B) ...........................
(D) ..........................................
(E) ...........................................
(F)=(C)+(D)+(E)......................
(G) ..........................................
(F) – (G) ...................................
Millions of yen
2008
¥ (919,082)
975,920
56,838
153,949
(37,118)
173,669
212,370
¥ (38,701)
2007
¥ (910,139)
1,186,060
275,921
(83,905)
(48,257)
143,757
178,182
(34,424)
¥
Millions of
U.S. dollars
2008
$ (9,174)
9,741
567
1,537
(370)
1,734
2,120
$ (386)
Notes : 1. Some consolidated subsidiaries adopt the simple method in calculating the projected benefit obligation.
2. Plan assets related to the general type of the welfare pension plan at March 31, 2007 amounted to ¥19,648 million, and were not included in the “Plan assets”
shown above.
SMFG 2008 95
(3) Pension expenses
Year ended March 31
Service cost...............................................................................................
Interest cost on projected benefit obligation .............................................
Expected return on plan assets ..................................................................
Amortization of unrecognized net actuarial gain or loss ............................
Amortization of unrecognized prior service cost........................................
Other (nonrecurring additional retirement allowance paid and other) .......
Pension expenses ......................................................................................
Gains on return of employee retirement benefits trust ..............................
Total ........................................................................................................
Millions of yen
2008
¥ 19,947
22,414
(32,407)
4,546
(11,182)
2,544
¥ 5,863
—
¥ 5,863
2007
¥ 20,082
22,325
(30,184)
3,305
(11,175)
3,254
¥ 7,607
(36,330)
¥(28,722)
Millions of
U.S. dollars
2008
$ 199
224
(323)
45
(112)
26
$ 59
—
$ 59
Notes: 1. Pension expenses of consolidated subsidiaries which adopt the simple method are included in “Service cost.”
2. Premium paid to defined-contribution pension is included in “Other.”
(4) Assumptions
The principal assumptions used in determining benefit obligation and pension expenses at or for the fiscal years ended March 31, 2008
and 2007 were as follows:
Year ended March 31
Discount rate.........................................................................................
Expected rate of return on plan assets ....................................................
2008
1.4% to 2.5%
0% to 4.5%
2007
1.4% to 2.5%
0% to 4.5%
Estimated amounts of retirement benefits are allocated to each period by the straight-line method.
Unrecognized prior service cost is amortized using the straight-line method within the employees’ average remaining service period at
incurrence, over mainly 9 years for the fiscal years ended March 31, 2008 and 2007.
Unrecognized net actuarial gain or loss is amortized using the straight-line method within the employees’ average remaining service
period, commencing from the next fiscal year of incurrence, over mainly 9 years for the fiscal years ended March 31, 2008 and 2007.
30. Lease Transactions
(1) Financing leases
A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value for financing leases without transfer of
ownership at March 31, 2008 and 2007 was as follows:
(a) Lessee side
Millions of yen
March 31
Equipment....
Other ............
Total.............
Acquisition
cost
¥14,741
483
¥15,224
2008
Accumulated
depreciation
¥6,544
313
¥6,858
Net book
value
¥8,196
170
¥8,366
Acquisition
cost
¥11,843
721
¥12,564
2007
Accumulated
depreciation
¥5,188
423
¥5,612
Net book
value
¥6,654
298
¥6,952
Millions of U.S. dollars
2008
Accumulated
depreciation
Net book
value
Acquisition
cost
$147
5
$152
$65
3
$68
$82
2
$84
Future minimum lease payments excluding interest at March 31, 2008 and 2007 were as follows:
March 31
Due within one year .................................................................................
Due after one year.....................................................................................
Millions of yen
2008
¥4,007
4,791
¥8,798
2007
¥3,006
4,205
¥7,212
Millions of
U.S. dollars
2008
$40
48
$88
Total lease expenses for the years ended March 31, 2008 and
2007 were ¥3,914 million ($39 million) and ¥3,046 million,
respectively. Assumed depreciation for the years ended March
31, 2008 and 2007 amounted to ¥3,702 million ($37 million)
and ¥2,690 million, respectively. Assumed depreciation is
calculated using the straight-line method over the lease term
of the respective assets without residual values. The difference
between the minimum lease payments and the acquisition
costs of the lease assets represents interest expenses. The
allocation of such interest expenses over the lease term is
calculated using the effective interest method. Interest
expenses for the years ended March 31, 2008 and 2007
amounted to ¥177 million ($2 million) and ¥179 million,
respectively.
96
SMFG 2008
(b) Lessor side
Millions of yen
March 31
Acquisition
cost
2008
Accumulated
depreciation
Net book
value
Acquisition
cost
2007
Accumulated
depreciation
Equipment....
Other ............
Total.............
¥3,111,499
557,804
¥3,669,303
¥2,021,324
322,065
¥2,343,389
¥1,090,174
235,739
¥1,325,914
¥1,812,599
692,551
¥2,505,150
¥1,186,663
384,134
¥1,570,797
Net book
value
¥625,936
308,416
¥934,353
Future lease payments receivable excluding interest at March 31, 2008 and 2007 were as follows:
Millions of U.S. dollars
2008
Accumulated
depreciation
Acquisition
cost
Net book
value
$31,056
5,567
$36,623
$20,175
3,214
$23,389
$10,881
2,353
$13,234
March 31
Due within one year .................................................................................
Due after one year.....................................................................................
At March 31, 2008 and 2007, future lease payments
receivable shown above included subleases of ¥6,693 million
($67 million) and ¥5,057 million (due within one year:
¥3,331 million ($33 million) and ¥2,214 million) on the
lessor side, respectively. The amount on the lessee side was
almost the same and was included in the future minimum
lease payments shown in (a).
Total lease income for the years ended March 31, 2008 and
2007 was ¥478,069 million ($4,772 million) and ¥403,316
million, respectively. Depreciation for the years ended March
Millions of yen
2008
¥ 446,616
928,716
¥1,375,333
2007
¥307,152
629,981
¥937,133
Millions of
U.S. dollars
2008
$ 4,458
9,269
$13,727
31, 2008 and 2007 amounted to ¥392,325 million ($3,916
million) and ¥324,614 million, respectively. Interest income
represents the difference between the sum of the lease
payments receivable and estimated salvage values, and the
acquisition costs of the lease assets. The allocation of such
interest income over the lease term is calculated using the
effective interest method. Interest income for the years ended
March 31, 2008 and 2007 amounted to ¥68,576 million
($684 million) and ¥52,856 million, respectively.
(2) Operating leases
(a) Lessee side
Future minimum lease payments at March 31, 2008 and 2007 were as follows:
March 31
Due within one year .................................................................................
Due after one year.....................................................................................
(b) Lessor side
Future lease payments receivable at March 31, 2008 and 2007 were as follows:
March 31
Due within one year .................................................................................
Due after one year.....................................................................................
Millions of yen
2008
¥14,287
63,723
¥78,010
2007
¥14,164
55,124
¥69,288
Millions of yen
2008
¥ 12,848
42,130
¥ 54,978
2007
¥18,861
53,625
¥72,487
Millions of
U.S. dollars
2008
$ 143
636
$ 779
Millions of
U.S. dollars
2008
$128
421
$549
Future lease payments receivable at March 31, 2008 and 2007 amounting to ¥36,396 million ($363 million) and ¥47,816 million,
respectively, on the lessor side referred to in (1) and (2) above were pledged as collateral for borrowings.
SMFG 2008 97
31. Market Value of Marketable Securities and Money Held in Trust
(1) Securities
The amounts shown in the following tables include trading securities and short-term bonds classified as “Trading assets,” negotiable
certificates of deposit bought classified as “Deposits with banks,” and beneficiary claims on loan trusts classified as “Commercial paper
and other debt purchased,” in addition to “Securities” stated in the consolidated balance sheets.
(a) Securities classified as trading purposes
March 31
Millions of yen
2008
2007
Consolidated balance sheet amount...........................................................
Valuation gains included in the earnings for the fiscal year .......................
¥1,114,812
313
¥1,149,952
438
(b) Bonds classified as held-to-maturity with market value
March 31
Japanese government bonds .................................................
Japanese local government bonds .........................................
Japanese corporate bonds .....................................................
Other...................................................................................
Total....................................................................................
Consolidated
balance sheet
amount
¥ 614,281
97,311
390,070
9,178
¥1,110,841
Market value
¥ 625,028
98,903
394,679
8,985
¥1,127,597
Millions of yen
2008
Net unrealized
gains (losses)
¥10,747
1,591
4,608
(192)
¥16,755
Millions of yen
2007
Unrealized
gains
¥12,035
1,591
4,752
—
¥18,379
March 31
Japanese government bonds .................................................
Japanese local government bonds .........................................
Japanese corporate bonds .....................................................
Other...................................................................................
Total....................................................................................
Consolidated
balance sheet
amount
¥ 629,762
97,102
380,142
5,445
¥1,112,452
Market value
¥ 621,717
95,307
376,735
5,626
¥1,099,387
Net unrealized
gains (losses)
Unrealized
gains
¥ (8,045)
(1,794)
(3,406)
180
¥ (13,065)
¥ 20
—
—
180
¥ 200
Millions of
U.S. dollars
2008
$11,127
3
Unrealized
losses
¥1,287
—
143
192
¥1,623
Unrealized
losses
¥ 8,065
1,794
3,406
—
¥13,266
March 31
Japanese government bonds .................................................
Japanese local government bonds .........................................
Japanese corporate bonds .....................................................
Other...................................................................................
Total....................................................................................
Note: Market value is calculated using market prices at the fiscal year-end.
Millions of U.S. dollars
2008
Consolidated
balance sheet
amount
$ 6,131
971
3,893
92
$11,087
Market value
$ 6,238
987
3,939
90
$11,254
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
$107
16
46
(2)
$167
$120
16
47
—
$183
$13
—
1
2
$16
98
SMFG 2008
(c) Other securities with market value
Millions of yen
2008
March 31
Stocks ..................................................................................
Bonds ..................................................................................
Japanese government bonds ............................................
Japanese local government bonds ....................................
Japanese corporate bonds ................................................
Other...................................................................................
Total....................................................................................
Acquisition
cost
Consolidated
balance sheet
amount
¥ 1,954,723
9,864,246
8,858,202
342,677
663,366
5,295,371
¥17,114,341
¥ 2,890,952
9,731,353
8,725,687
341,916
663,750
5,237,455
¥17,859,762
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
¥936,228
(132,892)
(132,515)
(760)
383
(57,915)
¥745,420
¥ 999,414
18,645
16,924
308
1,412
24,469
¥1,042,530
¥ 63,186
151,537
149,439
1,069
1,028
82,385
¥297,109
March 31
Millions of yen
2007
Acquisition
cost
Consolidated
balance sheet
amount
Net unrealized
gains (losses)
Unrealized
gains
Stocks ..................................................................................
Bonds ..................................................................................
Japanese government bonds ............................................
Japanese local government bonds ....................................
Japanese corporate bonds ................................................
Other...................................................................................
Total....................................................................................
¥ 1,953,767
8,481,507
7,150,792
482,555
848,158
2,754,061
¥13,189,336
¥ 3,926,414
8,324,140
7,010,306
474,001
839,831
2,763,949
¥15,014,504
¥1,972,647
(157,367)
(140,485)
(8,554)
(8,327)
9,888
¥1,825,168
¥1,987,337
1,805
1,182
119
503
42,977
¥2,032,120
Unrealized
losses
¥ 14,689
159,173
141,668
8,674
8,830
33,089
¥206,952
March 31
Stocks ..................................................................................
Bonds ..................................................................................
Japanese government bonds ............................................
Japanese local government bonds ....................................
Japanese corporate bonds ................................................
Other...................................................................................
Total....................................................................................
Millions of U.S. dollars
2008
Acquisition
cost
$ 19,510
98,456
88,415
3,420
6,621
52,853
$170,819
Consolidated
balance sheet
amount
$ 28,854
97,130
87,092
3,413
6,625
52,275
$178,259
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
$9,344
(1,326)
(1,323)
(7)
4
(578)
$7,440
$ 9,975
186
169
3
14
244
$10,405
$ 631
1,512
1,492
10
10
822
$2,965
Notes:
1. Consolidated balance sheet amount is calculated as follows:
Stocks
Bonds and other
: Average market prices during one month before the fiscal year-end
: Market prices at the fiscal year-end
2. Other securities with market value are considered as impaired if the market value declines materially below the acquisition cost and such decline is not considered as
recoverable. In such a case, the market value is recognized as the consolidated balance sheet amount and the amount of the write-down is accounted for as a valuation
loss for the fiscal year. Valuation losses for the fiscal years ended March 31, 2008 and 2007 were ¥96,455 million ($963 million) and ¥7,296 million, respectively.
The rule for determining “material decline” is as follows and is based on the classification of the issuing company under self-assessment of assets.
Bankrupt/ Effectively bankrupt/ Potentially bankrupt issuers
Issuers requiring caution
Normal issuers
Bankrupt issuers
Effectively bankrupt issuers
Potentially bankrupt issuers
bankruptcy.
Issuers requiring caution
Normal issuers
: Market value is lower than acquisition cost.
: Market value is 30% or more lower than acquisition cost.
: Market value is 50% or more lower than acquisition cost.
: Issuers that are legally bankrupt or formally declared bankrupt.
: Issuers that are not legally bankrupt but regarded as substantially bankrupt.
: Issuers that are not bankrupt now, but are perceived to have a high risk of falling into
: Issuers that are identified for close monitoring.
: Issuers other than the above four categories of issuers.
SMFG 2008 99
(d) Held-to-maturity bonds sold during the years ended March 31, 2008 and 2007
There are no corresponding transactions.
(e) Other securities sold during the year
Year ended March 31
Millions of yen
2008
2007
Sales amount ............................................................................................
Gains on sales...........................................................................................
Losses on sales ..........................................................................................
¥35,013,724
169,352
33,521
¥21,543,637
87,911
141,143
(f) Securities with no available market value
March 31
Bonds classified as held-to-maturity
Millions of yen
Consolidated
balance sheet
amount
2008
2007
Unlisted foreign securities ...................................................................
Other ..................................................................................................
¥
7
11,672
¥
17
5,422
Other securities
Unlisted stocks (excluding OTC stocks) ..............................................
Unlisted bonds ....................................................................................
Unlisted foreign securities ...................................................................
Other ..................................................................................................
377,123
2,826,953
724,557
567,374
402,141
2,846,521
595,286
476,942
(g) Change of classification of securities
There are no corresponding transactions.
Millions of
U.S. dollars
2008
$349,473
1,690
335
Millions of
U.S. dollars
Consolidated
balance sheet
amount
2008
$
0
116
3,764
28,216
7,232
5,663
100
SMFG 2008
(h) Redemption schedule of other securities with maturities and held-to-maturity bonds
March 31
Bonds ........................................................................................................
Japanese government bonds..................................................................
Japanese local government bonds..........................................................
Japanese corporate bonds ......................................................................
Other ........................................................................................................
Total .........................................................................................................
March 31
Bonds ........................................................................................................
Japanese government bonds..................................................................
Japanese local government bonds..........................................................
Japanese corporate bonds ......................................................................
Other ........................................................................................................
Total .........................................................................................................
March 31
Bonds ........................................................................................................
Japanese government bonds..................................................................
Japanese local government bonds..........................................................
Japanese corporate bonds ......................................................................
Other ........................................................................................................
Total .........................................................................................................
(2) Money held in trust
(a) Money held in trust classified as trading purposes
Millions of yen
2008
Within 1 year
¥2,572,065
1,919,514
142,310
510,240
825,298
¥3,397,364
After 1 year
through 5 years
After 5 years
through 10 years
¥ 7,672,897
5,205,946
142,937
2,324,013
3,847,580
¥11,520,477
¥1,675,020
521,200
153,582
1,000,238
580,263
¥2,255,284
After 10 years
¥1,739,846
1,693,316
398
46,131
562,258
¥2,302,105
Millions of yen
2007
Within 1 year
¥3,564,060
2,824,945
101,824
637,290
665,251
¥4,229,311
After 1 year
through 5 years
After 5 years
through 10 years
¥4,284,559
1,872,346
161,564
2,250,648
495,728
¥4,780,288
¥2,346,081
956,640
307,293
1,082,146
701,134
¥3,047,215
After 10 years
¥2,082,953
1,986,136
421
96,396
956,785
¥3,039,739
Millions of U.S. dollars
2008
Within 1 year
After 1 year
through 5 years
After 5 years
through 10 years
After 10 years
$25,672
19,159
1,420
5,093
8,237
$33,909
$ 76,583
51,961
1,426
23,196
38,403
$114,986
$16,718
5,202
1,533
9,983
5,792
$22,510
$17,365
16,901
4
460
5,612
$22,977
March 31
Consolidated balance sheet amount...........................................................
Valuation gains included in the earnings for the fiscal year .......................
Millions of yen
2008
¥1,488
3
2007
—
—
(b) Money held in trust classified as held-to-maturity
There are no corresponding transactions.
(c) Other money held in trust
March 31
Acquisition cost
Consolidated balance sheet amount
Net unrealized gains (losses)
Unrealized gains
Unrealized losses
Note: Consolidated balance sheet amount is calculated using market prices at the fiscal year-end.
Millions of yen
2008
¥ 5,870
5,841
(29)
—
29
2007
¥2,602
2,924
322
322
—
Millions of
U.S. dollars
2008
$15
0
Millions of
U.S. dollars
2008
$ 58
58
(0)
—
0
SMFG 2008 101
(3) Net unrealized gains on other securities and other money held in trust
March 31
Net unrealized gains.................................................................................
Other securities ...................................................................................
Other money held in trust ...................................................................
(–) Deferred tax liabilities .........................................................................
Net unrealized gains on other securities
(before following adjustment)................................................................
(–) Minority interests................................................................................
(+) SMFG’s interest in net unrealized gains on
valuation of other securities held by affiliates
accounted for by the equity method...................................................
Net unrealized gains on other securities....................................................
Millions of yen
2008
¥745,330
745,359
(29)
192,478
552,851
1,632
2007
¥1,825,564
1,825,242
322
567,845
1,257,719
8,589
(570)
¥550,648
13,004
¥1,262,135
Millions of
U.S. dollars
2008
$7,439
7,439
(0)
1,921
5,518
16
(6)
$5,496
Note: Net unrealized gains include foreign currency translation adjustments on non-marketable securities denominated in foreign currency.
32. Derivative Transactions
(1) Interest rate derivatives
March 31
Transactions listed on exchange
Interest rate futures:
Millions of yen
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥ 28,529,253
31,429,238
¥ 1,219,498
2,102,835
¥
(79,013)
84,575
¥
(79,013)
84,575
Interest rate options:
Sold ...................................................................................................
Bought...............................................................................................
411,164
411,164
—
—
(49)
51
(49)
51
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 .....................................
—
5,487,572
431,702,347
204,294,602
204,725,780
22,565,295
—
189,577
306,921,182
148,030,995
143,672,565
15,101,309
Interest rate swaptions:
Sold ...................................................................................................
Bought...............................................................................................
3,948,380
3,332,135
2,108,111
2,261,063
Caps:
Sold ...................................................................................................
Bought...............................................................................................
31,659,913
15,801,704
20,654,248
9,592,055
Floors:
Sold ...................................................................................................
Bought...............................................................................................
Other:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
3,612,695
5,876,742
2,366,908
4,965,301
/
1,156,798
2,307,702
1,161,375
3,143,768
/
—
31
171,368
1,948,325
(1,770,092)
(1,749)
(62,141)
66,519
(13,437)
7,195
(10,171)
2,566
—
31
171,368
1,948,325
(1,770,092)
(1,749)
(62,141)
66,519
(13,437)
7,195
(10,171)
2,566
(23,224)
59,900
204,169
¥
(23,224)
59,900
204,169
¥
102
SMFG 2008
March 31
Transactions listed on exchange
Interest rate futures:
Millions of yen
2007
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥ 60,107,669
58,921,496
¥
3,490,131
3,573,504
¥ 4,557
(3,229)
¥ 4,557
(3,229)
Interest rate options:
Sold ...................................................................................................
Bought...............................................................................................
118,090
—
—
—
(20)
—
(20)
—
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 .....................................
400,000
11,162,242
445,985,618
213,209,584
212,837,074
19,815,084
—
125,008
333,381,100
162,321,475
156,710,751
14,229,818
Interest rate swaptions:
Sold ...................................................................................................
Bought...............................................................................................
3,163,737
3,380,799
1,550,186
2,002,072
Caps:
Sold ...................................................................................................
Bought...............................................................................................
21,500,368
12,022,208
14,937,062
8,260,827
Floors:
Sold ...................................................................................................
Bought...............................................................................................
Other:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
842,962
3,569,523
1,950,131
4,049,334
/
709,538
2,042,491
1,368,826
2,440,410
/
278
(35)
57,891
(292,629)
342,402
13,821
(40,755)
61,695
(27,574)
16,947
(2,931)
1,342
(11,465)
27,040
¥ 83,740
278
(35)
57,891
(292,629)
342,402
13,821
(40,755)
61,695
(27,574)
16,947
(2,931)
1,342
(11,465)
27,040
¥ 83,740
March 31
Transactions listed on exchange
Interest rate futures:
Millions of U.S. dollars
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
$ 284,752
313,696
$
12,172
20,988
$
(789)
844
$
(789)
844
Interest rate options:
Sold ...................................................................................................
Bought...............................................................................................
4,104
4,104
—
—
(0)
1
(0)
1
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 .....................................
Interest rate swaptions:
Sold ...................................................................................................
Bought...............................................................................................
Caps:
Sold ...................................................................................................
Bought...............................................................................................
Floors:
Sold ...................................................................................................
Bought...............................................................................................
Other:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
—
54,772
4,308,837
2,039,072
2,043,375
225,225
39,409
33,258
315,999
157,717
36,058
58,656
23,624
49,559
/
—
1,892
3,063,391
1,477,503
1,434,001
150,727
21,041
22,568
206,151
95,739
11,546
23,033
11,592
31,378
/
—
0
1,710
19,446
(17,667)
(17)
(620)
664
(134)
72
(102)
26
—
0
1,710
19,446
(17,667)
(17)
(620)
664
(134)
72
(102)
26
(232)
598
2,038
$
(232)
598
2,038
$
Notes: 1. The above transactions are valued at market value and the valuation gains (losses) are accounted for in the consolidated statements of income. Derivative transactions
to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Market value of transactions listed on exchange is calculated using the closing prices on the Tokyo Financial Exchange and others.
Market value of OTC transactions is calculated using discounted present value and option pricing models.
SMFG 2008 103
(2) Currency derivatives
March 31
Over-the-counter transactions
Currency swaps ........................................................................................
Currency swaptions:
Sold ...................................................................................................
Bought...............................................................................................
Forward foreign exchange ........................................................................
Currency options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
March 31
Over-the-counter transactions
Currency swaps ........................................................................................
Currency swaptions:
Sold ...................................................................................................
Bought...............................................................................................
Forward foreign exchange ........................................................................
Currency options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
March 31
Over-the-counter transactions
Currency swaps ........................................................................................
Currency swaptions:
Sold ...................................................................................................
Bought...............................................................................................
Forward foreign exchange ........................................................................
Currency options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
Millions of yen
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
¥22,379,597
¥13,103,269
¥ (43,029)
¥ 160,284
829,741
930,422
56,377,725
6,126,597
5,963,302
/
824,731
908,013
5,755,015
2,706,432
2,662,166
/
(10,592)
27,161
140,241
(289,853)
315,610
¥ 139,537
(10,592)
27,161
140,241
(289,853)
315,610
¥ 342,851
Millions of yen
2007
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
¥20,642,376
¥12,660,922
¥ 42,405
¥ 55,918
866,633
896,229
61,066,579
4,501,193
4,344,112
/
863,798
890,206
5,056,679
2,381,131
2,195,492
/
3,489
4,146
(104,438)
3,487
4,149
(104,438)
(159,703)
98,237
¥ (115,862)
(159,703)
98,237
¥ (102,349)
Millions of U.S. dollars
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
$ 223,372
$ 130,784
$ (429)
$ 1,600
8,282
9,287
562,708
61,150
59,520
/
8,232
9,063
57,441
27,013
26,571
/
(106)
271
1,400
(2,893)
3,150
$ 1,393
(106)
271
1,400
(2,893)
3,150
$ 3,422
Notes: 1. The above transactions are valued at market value and the valuation gains (losses) are accounted for in the consolidated statements of income. The amounts above do
not include the following:
(a) Derivative transactions to which the deferred hedge accounting method is applied;
(b) Those that are allotted to financial assets/liabilities denominated in foreign currencies and whose market values are already reflected to the consolidated balance
sheets; and
(c) Those that are allotted to financial assets/liabilities denominated in foreign currencies, and the financial assets/liabilities are eliminated in the process of
consolidation.
2. Market value is calculated using discounted present value and option pricing models.
104
SMFG 2008
(3) Equity derivatives
March 31
Transactions listed on exchange
Equity price index futures:
Millions of yen
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥ 86,574
41,498
¥
—
—
¥
64
151
¥
64
151
Over-the-counter transactions
Equity options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
260,068
260,068
/
260,068
260,068
/
(32,730)
32,730
216
¥
(32,730)
32,730
216
¥
March 31
Transactions listed on exchange
Equity price index futures:
Millions of yen
2007
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥ 13,146
19,646
¥
—
—
¥(150)
403
¥(150)
403
Over-the-counter transactions
Equity options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
17,000
252,092
/
17,000
105,043
/
587
(587)
¥ 252
587
(587)
¥ 252
March 31
Transactions listed on exchange
Equity price index futures:
Millions of U.S. dollars
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
$ 864
414
$ —
—
Over-the-counter transactions
Equity options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
2,596
2,596
/
2,596
2,596
/
$
1
1
(327)
327
2
$
$
1
1
(327)
327
2
$
Notes: 1. The above transactions are valued at market value and the valuation gains (losses) are accounted for in the consolidated statements of income.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Market value of transactions listed on exchange is calculated using the closing prices on the Tokyo Stock Exchange and others.
Market value of OTC transactions is calculated using option pricing models.
SMFG 2008 105
(4) Bond derivatives
March 31
Transactions listed on exchange
Bond futures:
Millions of yen
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥1,659,033
1,635,163
¥ —
—
Bond futures options:
Sold ...................................................................................................
Bought...............................................................................................
—
14,500
Over-the-counter transactions
Forward bond agreements:
Sold ...................................................................................................
Bought...............................................................................................
Bond options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
—
59,577
240,000
240,000
/
—
—
—
57,239
—
—
/
¥ 173
(762)
—
65
—
1,246
(425)
975
¥1,272
¥ 173
(762)
—
65
—
1,246
(425)
975
¥1,272
March 31
Transactions listed on exchange
Bond futures:
Millions of yen
2007
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥667,769
655,089
¥
—
—
¥1,895
(1,680)
¥1,895
(1,680)
Over-the-counter transactions
Forward bond agreements:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
—
69,970
/
—
65,498
/
—
1,575
¥1,791
—
1,575
¥1,791
March 31
Transactions listed on exchange
Bond futures:
Sold ...................................................................................................
Bought...............................................................................................
Bond futures options:
Sold ...................................................................................................
Bought...............................................................................................
Over-the-counter transactions
Forward bond agreements:
Sold ...................................................................................................
Bought...............................................................................................
Bond options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
Millions of U.S. dollars
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
$16,559
16,321
—
145
—
595
2,395
2,395
/
$ —
—
—
—
—
571
—
—
/
$ 2
(8)
—
1
—
12
(4)
10
$13
$ 2
(8)
—
1
—
12
(4)
10
$13
Notes: 1. The above transactions are valued at market value and the valuation gains (losses) are accounted for in the consolidated statements of income.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Market value of transactions listed on exchange is calculated using the closing prices on the Tokyo Stock Exchange and others.
Market value of OTC transactions is calculated using discounted present value and option pricing models.
106
SMFG 2008
(5) Commodity derivatives
March 31
Transactions listed on exchange
Commodity futures:
Millions of yen
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥
—
208
¥
—
—
¥
—
2
¥
—
2
Over-the-counter transactions
Commodity swaps:
Receivable fixed price/payable floating price ......................................
Receivable floating price/payable fixed price ......................................
Commodity options:
Sold ...................................................................................................
Bought...............................................................................................
Total .......................................................................................................
296,505
220,340
18,211
38,455
/
267,523
193,772
7,165
26,786
/
(137,666)
213,001
(2,011)
6,595
¥ 79,921
(137,666)
213,001
(2,011)
6,595
¥ 79,921
March 31
Transactions listed on exchange
Commodity futures:
Sold ...................................................................................................
Bought...............................................................................................
¥
Commodity futures options:
Sold ...................................................................................................
Bought...............................................................................................
Over-the-counter transactions
Commodity swaps:
Receivable fixed price/payable floating price ......................................
Receivable floating price/payable fixed price ......................................
Receivable fixed price/payable fixed price...........................................
Commodity options:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
March 31
Transactions listed on exchange
Commodity futures:
Millions of yen
2007
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
237
359
949
949
359,881
259,581
17,821
7,624
38,356
/
¥
—
—
—
—
311,948
209,132
—
7,058
30,957
/
¥
(3)
6
(43)
43
¥
(3)
6
(43)
43
(69,212)
157,000
29
(945)
6,304
¥ 93,180
(69,212)
157,000
29
(945)
6,304
¥ 93,180
Millions of U.S. dollars
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
$ —
2
$ —
—
$ —
0
$ —
0
Over-the-counter transactions
Commodity swaps:
Receivable fixed price/payable floating price ......................................
Receivable floating price/payable fixed price ......................................
Commodity options:
Sold ...................................................................................................
Bought...............................................................................................
Total .......................................................................................................
2,959
2,199
182
384
/
2,670
1,934
72
267
/
(1,374)
2,126
(20)
66
798
$
(1,374)
2,126
(20)
66
798
$
Notes: 1. The above transactions are valued at market value and the valuation gains (losses) are accounted for in the consolidated statements of income.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Market value of transactions listed on exchange is calculated using the closing prices on the New York Mercantile Exchange and others.
Market value of OTC transactions is calculated based on factors such as price of the relevant commodity and contract term.
3. Commodity derivatives are transactions on fuel and metal.
SMFG 2008 107
(6) Credit derivative transactions
March 31
Over-the-counter transactions
Credit default options:
Millions of yen
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥1,421,367
1,912,377
¥1,302,732
1,710,521
Other:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
10
10
/
—
—
/
¥(39,531)
77,378
(2)
2
¥ 37,846
¥(39,531)
77,378
(2)
2
¥ 37,846
March 31
Over-the-counter transactions
Credit default options:
Millions of yen
2007
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
¥1,322,651
1,514,279
¥1,295,611
1,509,279
Other:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
40
40
/
—
—
/
¥2,628
(1,816)
(3)
3
¥ 812
¥2,628
(1,816)
(3)
3
¥ 812
March 31
Over-the-counter transactions
Credit default options:
Millions of U.S. dollars
2008
Contract amount
Total
Over 1 year
Market
value
Valuation
gains (losses)
Sold ...................................................................................................
Bought...............................................................................................
$14,187
19,088
$13,003
17,073
Other:
Sold ...................................................................................................
Bought...............................................................................................
Total........................................................................................................
0
0
/
—
—
/
$(395)
773
(0)
0
$ 378
$(395)
773
(0)
0
$ 378
Notes: 1. The above transactions are valued at market value and the valuation gains (losses) are accounted for in the consolidated statements of income.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Market value is calculated using discounted present value and option pricing models.
3. “Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred.
108
SMFG 2008
33. Stock Options
SMFG applied the “Accounting Standard for Share-based Payment” and the related guidance from the fiscal year beginning on April 1, 2006.
These accounting standards require companies to recognize compensation expense for stock acquisition rights based on the fair value at the
grant date and over the vesting periods for stock acquisition rights newly granted on and after May 1, 2006. Share-based compensation expense
of ¥29 million ($0 million) and ¥14 million are accounted for as general and administrative expenses in the fiscal year ended March 31, 2008
and 2007, respectively.
Outline of stock options and changes are as follows:
(1) SMFG
(a) Outline of stock options
Date of resolution
Title and number of grantees.......................................................................................
Number of stock options .............................................................................................
Grant date...................................................................................................................
Condition for vesting ..................................................................................................
Requisite service period...............................................................................................
Exercise period ............................................................................................................
(b) Stock options granted and changes
Number of stock options
Date of resolution
Before vested
Previous fiscal year-end..........................................................................................
Granted.................................................................................................................
Forfeited................................................................................................................
Vested ...................................................................................................................
Outstanding ..........................................................................................................
After vested
Previous fiscal year-end..........................................................................................
Vested ...................................................................................................................
Exercised ...............................................................................................................
Forfeited................................................................................................................
Exercisable ............................................................................................................
Price information (Yen)
Date of resolution
Exercise price ..............................................................................................................
Average exercise price .................................................................................................
Fair value at the grant date..........................................................................................
(2) A consolidated subsidiary, Kansai Urban Banking Corporation
June 27, 2002
Directors and employees of SMFG and SMBC: 677
Common shares: 1,620
August 30, 2002
N.A.
N.A.
June 28, 2004 to June 27, 2012
June 27, 2002
—
—
—
—
—
1,116
—
35
—
1,081
June 27, 2002
¥ 669,775
1,188,285
—
(a) Outline of stock options
Date of resolution
Title and number of grantees ...................................................
Number of stock options..........................................................
Grant date................................................................................
Condition for vesting ...............................................................
Requisite service period ...........................................................
Exercise period.........................................................................
June 28, 2001
June 27, 2002
June 27, 2003
June 29, 2004
June 29, 2005
Directors and
employees
45
Common shares
238,000
July 31, 2001
N.A.
N.A.
June 29, 2003
to June 28,
2011
Directors and
employees
44
Common shares
234,000
July 31, 2002
N.A.
N.A.
June 28, 2004
to June 27,
2012
Directors and
employees
65
Common shares
306,000
July 31, 2003
N.A.
N.A.
June 28, 2005
to June 27,
2013
Directors and
employees
174
Common shares
399,000
July 30, 2004
N.A.
N.A.
June 30, 2006
to June 29,
2014
Directors and
employees
183
Common shares
464,000
July 29, 2005
N.A.
N.A.
June 30, 2007
to June 29,
2015
Date of resolution
Title and number of grantees ...................................................
Number of stock options..........................................................
Grant date................................................................................
Condition for vesting ...............................................................
Requisite service period ...........................................................
Exercise period.........................................................................
June 29, 2006
June 29, 2006
June 28, 2007
June 28, 2007
Directors
9
Common shares
162,000
July 31, 2006
N.A.
N.A.
June 30, 2008
to June 29,
2016
Officers not
doubling as
directors 14
Employees 46
Common shares
115,000
July 31, 2006
N.A.
N.A.
June 30, 2008
to June 29,
2016
Directors
10
Common shares
174,000
July 31, 2007
N.A.
N.A.
June 29, 2009
to June 28,
2017
Officers not
doubling as
directors 14
Employees 48
Common shares
112,000
July 31, 2007
N.A.
N.A.
June 29, 2009
to June 28,
2017
SMFG 2008 109
(b) Stock options granted and changes
Number of stock options
Date of resolution
Before vested
June 28, 2001
June 27, 2002
June 27, 2003
June 29, 2004
June 29, 2005
Previous fiscal year-end ......................................................
Granted..............................................................................
Forfeited.............................................................................
Vested ................................................................................
Outstanding.......................................................................
After vested
Previous fiscal year-end ......................................................
Vested ................................................................................
Exercised ............................................................................
Forfeited.............................................................................
Exercisable .........................................................................
—
—
—
—
—
174,000
—
52,000
—
122,000
—
—
—
—
—
174,000
—
16,000
—
158,000
—
—
—
—
—
256,000
—
26,000
—
230,000
—
—
—
—
—
363,000
—
33,000
—
330,000
464,000
—
—
464,000
—
—
464,000
13,000
—
451,000
Date of resolution
Before vested
June 29, 2006
June 29, 2006
June 28, 2007
June 28, 2007
Previous fiscal year-end ......................................................
Granted..............................................................................
Forfeited.............................................................................
Vested ................................................................................
Outstanding.......................................................................
After vested
Previous fiscal year-end ......................................................
Vested ................................................................................
Exercised ............................................................................
Forfeited.............................................................................
Exercisable .........................................................................
162,000
—
—
—
162,000
—
—
—
—
—
115,000
—
—
—
115,000
—
—
—
—
—
—
174,000
—
—
174,000
—
—
—
—
—
—
112,000
—
—
112,000
—
—
—
—
—
Price information (Yen)
Date of resolution
June 28, 2001
June 27, 2002
June 27, 2003
June 29, 2004
June 29, 2005
Exercise price ...........................................................................
Average exercise price ..............................................................
Fair value at the grant date.......................................................
¥155
¥415
—
¥131
¥358
—
¥179
¥360
—
¥202
¥380
—
¥313
¥335
—
Date of resolution
June 29, 2006
June 29, 2006
June 28, 2007
June 28, 2007
Exercise price ...........................................................................
Average exercise price ..............................................................
Fair value at the grant date.......................................................
¥490
—
¥138
¥490
—
¥138
¥461
—
¥ 96
¥461
—
¥ 96
(c) Valuation technique used for valuating fair value of stock options
Stock options granted in the fiscal year ended March 31, 2008 were valued using the Black-Scholes option pricing model and the
principal parameters were as follows:
Date of resolution
Expected volatility *1 ................................................................................................
Average expected life*2.............................................................................................
Expected dividends*3 ...............................................................................................
Risk-free interest rate*4 ............................................................................................
June 28, 2007
36.91%
5 years
¥5 per share
1.39%
*1 Calculated based on the actual stock prices during the five years from June 2002 to June 2007.
*2 The average expected life could not be estimated rationally due to an insufficient amount of data. Therefore, it was estimated assuming that the options were exercised at the
midpoint of the exercise period.
*3 The actual dividends on common stock for the fiscal year ended March 31, 2007.
*4 Japanese government bond yield corresponding to the average expected life.
(d) Method of estimating number of stock options vested
Only the actual number of forfeited stock options is reflected because it is difficult to rationally estimate the actual number of stock
options that will be forfeited in the future.
110
SMFG 2008
34. Segment Information
(1) Business segment information
Year ended March 31
I. Ordinary income
(1) External customers...........................
(2) Intersegment....................................
Total .....................................................
Ordinary expenses.....................................
Ordinary profit .........................................
II. Assets, depreciation, losses on impairment
of fixed assets and capital expenditure
Assets....................................................
Depreciation..........................................
Losses on impairment of fixed assets ......
Capital expenditure ...............................
Year ended March 31
I. Ordinary income
(1) External customers...........................
(2) Intersegment....................................
Total .....................................................
Ordinary expenses.....................................
Ordinary profit .........................................
II. Assets, depreciation, losses on impairment
of fixed assets and capital expenditure
Assets....................................................
Depreciation..........................................
Losses on impairment of fixed assets ......
Capital expenditure ...............................
Year ended March 31
I. Ordinary income
(1) External customers...........................
(2) Intersegment....................................
Total .....................................................
Ordinary expenses.....................................
Ordinary profit .........................................
II. Assets, depreciation, losses on impairment
of fixed assets and capital expenditure
Assets....................................................
Depreciation..........................................
Losses on impairment of fixed assets ......
Capital expenditure ...............................
Millions of yen
2008
Banking business
Leasing business
Other business
Total
Elimination
Consolidated
¥ 3,185,057
58,113
3,243,171
2,501,702
741,469
¥
¥ 945,193
20,644
965,837
921,338
44,499
¥
¥ 493,293
249,030
742,324
669,064
73,259
¥
¥
¥
4,623,545
327,788
4,951,333
4,092,105
859,228
¥
¥
—
¥
4,623,545
(327,788)
(327,788)
(299,720)
(28,067)
—
4,623,545
3,792,384
831,160
¥
¥107,336,930
61,223
4,740
99,277
¥3,020,106
399,910
109
458,002
¥6,707,715
25,972
310
36,007
¥117,064,752
487,106
5,161
593,286
¥ (5,108,833)
16
—
3
¥111,955,918
487,122
5,161
593,290
Millions of yen
2007
Banking business
Leasing business
Other business
Total
Elimination
Consolidated
¥ 2,689,086
53,714
2,742,800
1,993,893
748,907
¥
¥ 783,119
20,831
803,951
759,103
44,847
¥
¥ 429,052
220,369
649,421
609,781
39,640
¥
¥
¥
3,901,259
294,914
4,196,173
3,362,779
833,394
¥
¥
—
(294,914)
(294,914)
(260,130)
(34,784)
¥
¥
3,901,259
—
3,901,259
3,102,649
798,610
¥97,525,686
59,908
4,661
216,612
¥2,241,572
336,712
—
390,455
¥5,663,614
17,630
25,887
27,565
¥105,430,874
414,251
30,548
634,633
¥(4,572,564)
16
—
13
¥100,858,309
414,268
30,548
634,647
Banking business
Leasing business
Millions of U.S. dollars
2008
Other business
Total
Elimination
Consolidated
$
$
31,791
580
32,371
24,970
7,401
$1,071,334
611
47
991
$ 9,434
206
9,640
9,196
444
$
$30,144
3,992
1
4,571
$ 4,923
2,486
7,409
6,678
731
$
$
$
46,148
3,272
49,420
40,844
8,576
$
$
—
$
46,148
(3,272)
(3,272)
(2,992)
(280)
—
46,148
37,852
8,296
$
$66,950
259
3
359
$1,168,428
4,862
52
5,922
$ (50,991)
0
—
0
$1,117,436
4,862
52
5,922
Notes:1. The business segmentation is classified based on SMFG’s internal management purpose. Ordinary income and ordinary profit are presented as counterparts of sales and
operating profit of companies in other industries.
2. “Other business” includes securities, credit card, investment banking, loans, venture capital, system development and information processing.
3. Assets in Elimination include unallocated corporate assets of ¥4,101,536 million ($40,938 million) and ¥4,012,414 million at March 31, 2008 and 2007, respectively,
which mainly consist of investments in subsidiaries and affiliates.
4. Ordinary income represents total income excluding gains on disposal of fixed assets, collection of written-off claims, gains on change in equity due to mergers of
subsidiaries, gains on return of securities from employee retirement benefits trust and others.
Ordinary expenses represent total expenses excluding losses on disposal of fixed assets, losses on impairment of fixed assets and others.
5. As mentioned in Note 2. (11), formerly, deposits which were derecognized as liabilities were expensed when they were actually reimbursed. However, from the fiscal
year ended March 31, 2008, such reserve is provided in the estimated amount based on the historical reimbursement experience in accordance with the “Treatment for
Auditing of Reserve under Special Taxation Measures Law, Reserve under Special Laws and Reserve for Retirement Benefits to Directors and Corporate Auditors”
(JICPA Audit and Assurance Practice Committee Report No. 42) of April 13, 2007. As a result, Ordinary profit of “Banking business” for the year ended March 31,
2008 decreased by ¥10,417 million ($104 million) each as compared with the former method.
SMFG 2008 111
(2) Geographic segment information
Millions of yen
2008
Year ended March 31
I. Ordinary income
Japan
The Americas
(1) External customers..
(2) Intersegment.........
Total ..........................
Ordinary expenses ..........
Ordinary profit ..............
¥ 3,911,887
121,804
4,033,692
3,359,217
674,474
¥
¥ 280,556
59,437
339,994
240,378
99,615
¥
Europe and
Middle East
¥ 249,321
11,000
260,321
249,869
10,451
¥
Asia and Oceania
Total
Elimination
Consolidated
¥ 181,780
39,046
220,826
156,831
63,994
¥
¥
¥
4,623,545
231,289
4,854,834
4,006,298
848,536
¥
¥
—
¥
4,623,545
(231,289)
(231,289)
(213,913)
(17,375)
—
4,623,545
3,792,384
831,160
¥
II. Assets ............................
¥ 96,694,481
¥7,590,359
¥4,875,150
¥5,501,957
¥114,661,949
¥ (2,706,030)
¥111,955,918
Millions of yen
2007
Year ended March 31
I. Ordinary income
Japan
The Americas
(1) External customers..
(2) Intersegment.........
Total ..........................
Ordinary expenses ..........
Ordinary profit ..............
¥ 3,238,374
98,720
3,337,094
2,686,461
650,633
¥
¥ 247,208
46,833
294,042
222,992
71,049
¥
Europe and
Middle East
¥ 203,585
9,974
213,559
177,377
36,182
¥
Asia and Oceania
Total
Elimination
Consolidated
¥ 212,090
59,802
271,892
202,955
68,937
¥
¥
¥
3,901,259
215,330
4,116,589
3,289,786
826,802
¥
¥
—
(215,330)
(215,330)
(187,137)
(28,192)
¥
¥
3,901,259
—
3,901,259
3,102,649
798,610
II. Assets ............................
¥89,301,196
¥ 5,775,716
¥ 3,190,553
¥ 4,514,648
¥102,782,115
¥ (1,923,805)
¥100,858,309
Millions of U.S. dollars
2008
Year ended March 31
I. Ordinary income
(1) External customers..
(2) Intersegment.........
Total ..........................
Ordinary expenses ..........
Ordinary profit ..............
Japan
The Americas
$ 39,045
1,215
40,260
33,528
6,732
$
$ 2,801
593
3,394
2,400
994
$
Europe and
Middle East
$ 2,488
110
2,598
2,494
104
$
Asia and Oceania
Total
Elimination
Consolidated
$ 1,814
390
2,204
1,565
639
$
$
$
46,148
2,308
48,456
39,987
8,469
$
$
—
$
46,148
(2,308)
(2,308)
(2,135)
(173)
—
46,148
37,852
8,296
$
II. Assets ............................
$965,111
$75,760
$48,659
$54,915
$1,144,445
$ (27,009)
$1,117,436
Notes: 1. The geographic segmentation is classified based on the degrees of the following factors: geographic proximity, similarity of economic activities and relationship of
business activities among regions. Ordinary income and ordinary profit are presented as counterparts of sales and operating profit of companies in other industries.
2. The Americas includes the United States, Brazil, Canada and others; Europe and the Middle East includes the United Kingdom, Germany, France and others; Asia
and Oceania includes Hong Kong, Singapore, Australia and others except Japan.
3. Assets in Elimination include unallocated corporate assets of ¥4,101,536 million ($40,938 million) and ¥4,012,414 million at March 31, 2008 and 2007,
respectively, which mainly consist of investments in subsidiaries and affiliates.
4. Ordinary income represents total income excluding gains on disposal of fixed assets, collection of written-off claims, gains on change in equity due to mergers of
subsidiaries, gains on return of securities from employee retirement benefits trust and others.
Ordinary expenses represent total expenses excluding losses on disposal of fixed assets, losses on impairment of fixed assets and others.
5. As mentioned in Note 2. (11), formerly, deposits which were derecognized as liabilities were expensed when they were actually reimbursed. However, from the fiscal
year ended March 31, 2008, such reserve is provided in the estimated amount based on the historical reimbursement experience in accordance with the “Treatment
for Auditing of Reserve under Special Taxation Measures Law, Reserve under Special Laws and Reserve for Retirement Benefits to Directors and Corporate Auditors”
(JICPA Audit and Assurance Practice Committee Report No. 42) of April 13, 2007. As a result, Ordinary profit of “Japan” for the year ended March 31, 2008
decreased by ¥10,417 million ($104 million) each as compared with the former method.
112
SMFG 2008
(3) Ordinary income from overseas operations
Year ended March 31
Consolidated ordinary income from overseas operations (A) ......................
Consolidated ordinary income (B).............................................................
(A) / (B)....................................................................................................
Millions of yen
2008
¥ 711,657
4,623,545
2007
¥ 662,884
3,901,259
15.4%
17.0%
Millions of
U.S. dollars
2008
$ 7,103
46,148
15.4%
Notes: 1. Consolidated ordinary income from overseas operations is presented as a counterpart of overseas sales of companies in other industries.
2. The above table shows ordinary income from transactions of overseas branches of domestic consolidated banking subsidiaries and transactions of overseas consolidated
subsidiaries, excluding internal income. These extensive transactions are not categorized by transaction party, and the geographic segment information is not
presented because such information is not available.
35. Special Purpose Entities
SMBC, a consolidated subsidiary of SMFG, provides loans, credit
lines and liquidity lines to fourteen special purpose entities (“SPEs”)
for their fund needs and issuing of commercial papers. The SPEs are
engaged in purchases of monetary claims such as receivables from
SMBC customers, and incorporated under the laws of the Cayman
Islands or as intermediate corporations with limited liabilities.
The combined assets and liabilities of the fourteen SPEs as of their
most recent closing dates were ¥3,219,524 million ($32,134
million) and ¥3,219,835 million ($32,137 million), respectively.
SMBC has no voting rights in the SPEs and sends no directors or
employees.
The amounts of principal transactions with these SPEs in the year
ended March 31, 2008 are as follows:
As of and year ended March 31
Millions of yen
2008
Balances
Loans and bills discounted .......................................................
Credit lines..............................................................................
Liquidity lines .........................................................................
¥1,803,952
905,533
326,074
Interest on loans and discounts..................................................
Fees and commissions ...............................................................
—
As of and year ended March 31
Millions of U.S. dollars
2008
Loans and bills discounted .......................................................
Credit lines..............................................................................
Liquidity lines .........................................................................
Balances
$18,005
9,038
3,255
Interest on loans and discounts..................................................
Fees and commissions ...............................................................
—
Income
¥25,194
2,509
—
Income
$251
25
—
36. Business Combinations
Fiscal year ended March 31, 2008
SMFG, SMBC Leasing Company, Limited (“SMBC Leasing”) and
SMBC Auto Leasing Company, Limited (“SMBC Auto Leasing”)
reached a final agreement with Sumitomo Corporation, Sumisho
Lease Co., Ltd. (“Sumisho Lease”) and Sumisho Auto Leasing
Corporation (“Sumisho Auto Lease”) on July 30, 2007 concerning
strategic joint businesses in leasing and auto leasing business and
mergers of two businesses (a merger between SMBC Leasing and
A merger of leasing companies
1. Outline of the business combination of leasing companies
(1) Name and business of the acquired company
Sumisho Lease (Leasing business)
Sumisho Lease, and a merger between SMBC Auto Leasing and
Sumisho Auto Lease). They also concluded “Basic Agreement
Concerning the Joint Business” and “Merger Agreement” with
respect to the two businesses. In accordance with the merger
agreements, SMBC Leasing and Sumisho Lease merged on October 1,
2007, and SMBC Auto Leasing and Sumisho Auto Lease also merged
on the same day.
(2) Reason for the business combination
SMBC Leasing and Sumisho Lease have merged with the
aim of achieving the highest leasing volume in Japan by
leveraging the blue-chip customer bases of both the SMFG
Group and the Sumitomo Corporation Group, and to create
a high quality leasing company that can respond accurately
and timely to market needs which are becoming
increasingly sophisticated, by combining and blending the finance
know-how of SMBC Leasing as a subsidiary of a bank and the
product and distribution know-how of Sumisho Lease as a subsidiary
of a trading company, thereby promoting diversification and
differentiation of products and providing more value-added products
going beyond traditional approaches.
SMFG 2008 113
(3) Date of the business combination
October 1, 2007
(4) Legal form of business combination
The merger was a merger procedure by absorption with Sumisho Lease as the surviving company and SMBC Leasing was dissolved.
(Name of the merged company: Sumitomo Mitsui Finance and Leasing Company, Limited)
(5) Name of a controlling entity after the business combination
Sumitomo Mitsui Financial Group, Inc.
(6) Percentage share of voting rights SMFG has acquired
55%
2. Period of the acquired company’s financial results included in the consolidated financial statements
From October 1, 2007 to March 31, 2008
3. Acquisition cost of the acquired company
45% of the fair value of SMBC Leasing’s common stock.................................................
45% of the fair value of SMBC Leasing’s preferred stock ................................................
Acquisition cost .............................................................................................................
¥ 140,648
24,750
¥ 165,398
$1,404
247
$1,651
Millions of yen
Millions of U.S. dollars
4. Merger ratio, calculation method, number of shares delivered and valuation
(1) Merger ratio
Common stock
Sumisho Lease 1 : SMBC Leasing 1.4859*
Preferred stock
Sumisho Lease 1 : SMBC Leasing 5.7050*
* The amounts are rounded down to the nearest ten-thousandth.
(2) Basis for calculation of the merger ratio
In order to ensure the fairness and reasonableness of the merger ratio (hereinafter referred to as the “merger ratio”), SMBC Leasing and
Sumisho Lease conducted negotiation and discussion based on the analysis of the merger ratio provided by each financial advisor, Daiwa
Securities SMBC Co. Ltd., appointed by SMBC Leasing, and Nomura Securities Co., Ltd., appointed by Sumisho Lease, respectively.
(3) Number of shares delivered and value
52,422,762 shares of common stock of Sumisho Lease were allocated for 31,375,000 shares (30,000,000 shares of common stock and
1,375,000 shares of preferred stock) of SMBC Leasing (44,578,289 shares of Sumisho Lease’s common stock for SMBC Leasing’s
common stock and 7,844,473 shares of Sumisho Lease’s common stock for SMBC Leasing’s preferred stock). Total estimated value
amounted to ¥367,552 million ($3,669 million).
5. Goodwill, reason for recognizing goodwill, amortization method and amortization period
(1) Amount of goodwill
¥88,090 million ($879 million)
(2) Reason for recognizing goodwill
SMFG accounted for the difference between the acquisition cost and the increased amount of interests in Sumisho Lease as goodwill.
(3) Method and term to amortize goodwill
Straight-line method over 20 years
114
SMFG 2008
6. Amounts of assets and liabilities acquired on the day of the business combination
(1) Assets
Total assets ....................................................................................................................
Lease assets ...............................................................................................................
Loans and bills discounted ........................................................................................
¥ 1,392,490
632,224
329,069
$13,898
6,310
3,284
Millions of yen
Millions of U.S. dollars
(2) Liabilities
Total liabilities ..............................................................................................................
Borrowed money.......................................................................................................
Short-term bonds......................................................................................................
¥ 1,249,703
571,741
393,000
$12,473
5,707
3,923
Millions of yen
Millions of U.S. dollars
7. Approximate amounts of impact on the consolidated statement of income for the fiscal year ended March 31, 2008, assuming that the
business combinations had been completed on the commencement date of the fiscal year.
(1) The difference between the pro-forma ordinary income and other income information assuming that the business combinations had
been completed on the commencement date of the fiscal year and the actual ordinary income and other income information which is
recorded in the consolidated statement of income is as follows.
Millions of yen
Millions of U.S. dollars
Ordinary income............................................................................................................
Ordinary profit ..............................................................................................................
Net income....................................................................................................................
¥ 277,442
35,319
30,938
$2,769
353
309
(2) Calculation method of the pro-forma amounts and material assumptions
The pro-forma amounts are calculated retroactively to the commencement date of the fiscal year based on the amounts stated in
Sumisho Lease’s statement of income for the period from April 1, 2007 to September 30, 2007. However, such amounts do not
indicate the results of operations in case the business combinations are actually completed on the commencement date of the fiscal year.
The pro-forma information mentioned above has not been audited by KPMG AZSA & Co.
A merger of auto leasing companies
1. Outline of the business combination of auto leasing companies
(1) Name and business of the companies
Acquiring company: Sumisho Auto Lease (Auto leasing business)
Acquired company: SMBC Auto Leasing (Auto leasing business)
(2) Reason for the business combination
Sumisho Auto Lease and SMBC Auto Leasing have merged
to survive and thrive in the auto leasing industry that is
becoming increasingly competitive and to establish a
structure to capture the number one market share by
capitalizing on the high-quality customer bases of both the
Sumitomo Corporation Group and the SMFG Group and
combining the high-value-added services of Sumisho Auto
(3) Date of the business combination
October 1, 2007
(4) Legal form of business combination
Lease based on its value chain and business network of SMBC Auto
Leasing. Another aim of the merger is to achieve better customer
satisfaction by combining and blending the product and distribution
know-how of Sumisho Auto Lease as a subsidiary of a trading
company, and the finance know-how of SMBC Auto Leasing as a
subsidiary of a bank, thereby pursuing various services.
The merger was a merger procedure by absorption with Sumisho Auto Leasing as the surviving company, and SMBC Auto Leasing
was dissolved. (Name of the merged company: Sumitomo Mitsui Auto Service Company, Limited)
2. Outline of accounting method
SMFG will apply the accounting procedures stipulated by Article 20 of the “Accounting Standard for Business Divestitures” (ASBJ Statement
No. 7).
SMFG 2008 115
3. Name of the business segment, in which the subsidiary was included, in the segment information
Leasing business
4. Consolidated statement of income for the fiscal year included the following earnings of SMBC Auto Leasing: (approximate amounts)
Millions of yen
Millions of U.S. dollars
Ordinary income............................................................................................................
Ordinary profit ..............................................................................................................
Net income....................................................................................................................
¥69,752
2,237
1,254
$696
22
13
5. Status after the business combination
SMBC Auto Leasing and its subsidiaries are excluded from the scope of consolidation, and Sumitomo Mitsui Auto Service Company,
Limited and its subsidiaries have become affiliated companies accounted for by the equity method.
Fiscal year ended March 31, 2007
1. Outline of the transactions
(1) Name and business of combined entity
SMBC Friend Securities Co., Ltd. (“SMBC Friend Securities”)
Securities business
(2) Form of reorganization
Exchange of shares
(3) Name of the entity after the reorganization
Sumitomo Mitsui Financial Group, Inc. (“SMFG”)
(4) Outline and purpose of the transaction
In accordance with the stabilization of the Japanese
financial system, Japanese households’ portfolios have
shown clear signs of a shift from savings to investment,
and their investment needs are expected to become
further diversified. At the same time, we believe that new
types of asset management services will become popular
among individual investors who improve their financial
knowledge and have an increased interest in portfolio
management based on asset allocation concepts.
In view of these trends, SMFG will further strengthen cooperation
among group companies by making SMBC Friend Securities a
wholly-owned subsidiary, establishing a new business model
distinct from the conventional one by combining banking and
securities businesses and maximizing synergies between them.
With such initiatives, SMFG will try to make every effort to
enhance the enterprise value of the whole group.
2. Accounting method
SMFG applied the following accounting treatments stipulated by the Accounting Standard for Business Combinations to the
consolidated and nonconsolidated financial statements:
“Chapter 3 Accounting Standard for Business Combinations, Article 4 Accounting treatment for the transactions under common
control, Paragraph 2 Transactions with minority shareholders.”
3. Additional acquisition of subsidiary’s shares
(1) Acquisition cost
Common shares........................................................................................................................................
Expenses for acquiring the common shares ...............................................................................................
Acquisition cost .......................................................................................................................................
(2) Share exchange ratio, its basis for determination, number of shares delivered and its values
Millions of yen
¥ 221,365
160
¥ 221,525
(a) Type of shares and share exchange ratio
Common shares
SMFG 1: SMBC Friend Securities 0.0008
(b) Basis for determination of share exchange ratio
SMFG appointed Goldman Sachs ( Japan) Ltd. as its financial advisor and SMBC Friend Securities appointed Merrill Lynch
Japan Securities Co., Ltd. as its financial advisor. SMFG and SMBC Friend Securities comprehensively considered numerous
factors including results of the analyses provided by their respective financial advisors, and discussed and agreed to the above.
(c) Number of shares delivered and values
249,015 shares
¥221,525 million
116
SMFG 2008
(3) Goodwill, reason for recognizing goodwill, amortization method and amortization term
(a) Amount of goodwill
¥99,995 million
(b) Reason for recognizing goodwill
SMFG accounted for the difference between the acquisition cost of additional shares of common stock of SMBC Friend
Securities, and the decrease in minority interests, as goodwill.
(c) Method and term to amortize goodwill
Straight-line method over 20 years
37. Per Share Data
March 31
Yen
2008
2007
U.S. dollars
2008
Net assets per share ............................................................................................
¥424,546.01
¥469,228.59
$ 4,237.41
Year ended March 31
Yen
2008
2007
Net income per share..........................................................................................
Net income per share (diluted) ...........................................................................
¥59,298.24
56,657.41
¥57,085.83
51,494.17
U.S. dollars
2008
$591.86
565.50
Notes: 1. The ASBJ revised “Guidance on Accounting Standard for Earnings per Share” (ASBJ Guidance No. 4, issued on September 25, 2002) on January 31, 2006, and the
revised Guidance was applicable from the fiscal year ending on or after May 1, 2006, the implementation date of the Company Law. Effective April 1, 2006, SMFG
applied the revised Guidance and calculated net assets per share by including net deferred gains (losses) on hedges. This accounting change decreased net assets per share
at March 31, 2007 by ¥11,596.71 compared with the former method.
2. Net income per share and net income per share (diluted) are calculated based on the following:
Year ended March 31
Net income per share
Net income...........................................................................................................
Amount not attributable to common stockholders ................................................
Dividends on preferred stock ...........................................................................
Net income attributable to common stock ............................................................
Average number of common stock during the year (in thousands) .........................
Net income per share (diluted)
Adjustment for net income ...................................................................................
Dividends on preferred stock ...........................................................................
Stock acquisition rights issued by subsidiaries and affiliates.............................
Increase in number of common stock (in thousands)..............................................
Preferred stock ................................................................................................
Stock acquisition rights ...................................................................................
3. Net assets per share is calculated based on the following:
March 31
Net assets..............................................................................................................
Amounts excluded from Net assets .......................................................................
Preferred stock ................................................................................................
Dividends on preferred stock ...........................................................................
Stock acquisition rights ...................................................................................
Minority interests............................................................................................
Net assets attributable to common stock at the fiscal year-end ..............................
Number of common stock at the fiscal year-end used for
the calculation of Net assets per share (in thousands)..........................................
Millions of yen,
except number of shares
2008
2007
Millions of
U.S. dollars
2008
¥ 461,536
12,958
12,958
448,577
7,564
6,751
6,763
(11)
471
471
0
¥ 441,351
12,958
12,958
428,392
7,504
6,748
6,763
(14)
945
945
0
Millions of yen,
except number of shares
2008
¥ 5,224,076
2,012,532
360,303
6,479
43
1,645,705
3,211,544
2007
¥ 5,331,279
1,781,555
360,303
12,958
14
1,408,279
3,549,724
7,564
7,565
$ 4,607
129
129
4,477
/
67
68
(0)
/
/
/
Millions of
U.S. dollars
2008
$52,142
20,087
3,596
65
0
16,426
32,055
/
SMFG 2008 117
38. Subsequent Events
(1) The following appropriation of retained earnings of SMFG at March 31, 2008 was approved by the ordinary general meeting of
shareholders held on June 27, 2008:
Cash dividends,
¥7,000 per share on common stock..................................................................
¥67,500 per share on preferred stock (1st to 12th series Type 4)......................
¥44,250 per share on preferred stock (1st series Type 6) ..................................
Millions of yen
¥53,655
3,381
3,097
Millions of
U.S. dollars
$ 536
34
31
(2) SMFG resolved at the meeting of the Board of Directors held on April 28, 2008 to authorize the redemption in full of the preferred
securities issued by its overseas special purpose subsidiary. The outline of the preferred securities to be redeemed is as follows.
Issuer .....................................
Type of securities issued .........
Total redemption amount.......
Scheduled redemption date ....
Reason for redemption ...........
SB Treasury Company L.L.C.
Non-cumulative perpetual preferred securities
$1,800 million
June 30, 2008
Optional redemption
(3) SMFG resolved at the meeting of the Board of Directors held on April 28, 2008 to issue preferred securities through overseas special
purpose subsidiaries and establish wholly-owned subsidiaries in Cayman Island. The preferred securities issued on May 12, 2008 were as
follows.
Issuer.........................
SMFG Preferred Capital USD 2 Limited
An overseas special purpose subsidiary established in the Cayman Islands, the voting rights of
which are wholly owned by SMFG
Type of securities.......
U.S. Dollar denominated Non-cumulative Perpetual Preferred Securities
The preferred securities are not convertible or exchangeable into common stock of SMFG.
Total issue amount ....
Dividends..................
Issue price..................
Use of proceeds..........
Ranking ....................
Method of offering.....
Listing.......................
Issue date...................
$1,800 million
8.75% per annum (fixed rate)
$1,000 per preferred security
To be ultimately provided to SMBC, a banking subsidiary of SMFG, as perpetual subordinated loans
The preferred securities rank, as to liquidation preferences, effectively pari passu with preferred stock of SMFG
Offered in euro market. Also, offered in the U.S. market through private placement to qualified institutional investors.
Singapore Exchange Securities Trading Limited
May 12, 2008
(4) Fractional shares will be eliminated when the electronic share
certificate system is introduced at the same time as the January
2009 implementation of the “Law for Partial Amendment of the
Laws Related to Transfer of Bonds, etc., to Streamline Settlement
with respect to Transactions of Stock, etc.” (Law No. 88 of 2004).
In order to eliminate the fractional shares, SMFG resolved to
execute a 100 for 1 common stock split and adopt a unit share
system, under which the number of shares constituting one unit
will be 100, at the meeting of the Board of Directors held on May
16, 2008, subject to the approval of the amendment of the articles
of incorporation at the 6th ordinary general meeting of
shareholders and the general meeting of holders of class shares with
respect to each class of shares that will be held on June 27, 2008.
If the stock split had been implemented on April 1, 2006, per
share information for the fiscal years ended March 31, 2008 and
2007 would be as follows.
Year ended March 31
Net assets per share ............................................................................................
Net income per share .........................................................................................
Net income per share (diluted) ...........................................................................
Yen
2008
¥ 4,245.46
592.98
566.57
2007
¥4,692.29
570.86
514.94
U.S. dollars
2008
$42.37
5.92
5.65
118
SMFG 2008
39. Parent Company
(1) Nonconsolidated Balance Sheets
Sumitomo Mitsui Financial Group, Inc.
March 31
Assets
Current assets ...........................................................................................
Cash and due from banks.....................................................................
Prepaid expenses .................................................................................
Deferred tax assets ...............................................................................
Accrued income...................................................................................
Accrued income tax refunds.................................................................
Other current assets.............................................................................
Fixed assets...............................................................................................
Tangible fixed assets............................................................................
Buildings .......................................................................................
Equipment .....................................................................................
Intangible fixed assets .........................................................................
Software .........................................................................................
Investments and other assets................................................................
Investments in securities ................................................................
Investments in subsidiaries and affiliates ........................................
Deferred tax assets..........................................................................
Total assets .............................................................................................
Liabilities and net assets
Liabilities
Current liabilities ................................................................................
Short-term borrowings ...................................................................
Accounts payable............................................................................
Accrued expenses............................................................................
Income taxes payable......................................................................
Business office taxes payable...........................................................
Reserve for employee bonuses.........................................................
Reserve for executive bonuses .........................................................
Other current liabilities..................................................................
Fixed liabilities ........................................................................................
Reserve for executive retirement benefits .............................................
Total liabilities .......................................................................................
Net assets
Stockholders’ equity
Capital stock .......................................................................................
Capital surplus ....................................................................................
Capital reserve................................................................................
Other capital surplus......................................................................
Retained earnings................................................................................
Other retained earnings..................................................................
Voluntary reserve ......................................................................
Retained earnings brought forward ...........................................
Treasury stock .....................................................................................
Total stockholders’ equity.....................................................................
Total net assets.......................................................................................
Total liabilities and net assets ...............................................................
Millions of yen
2008
2007
Millions of
U.S. dollars (Note 1)
2008
¥
68,956
53,735
21
359
56
14,267
515
3,952,260
4
0
4
9
9
3,952,246
—
3,950,642
1,603
¥4,021,217
¥1,052,242
1,049,030
223
173
1,539
4
81
74
1,114
225
225
1,052,468
1,420,877
930,386
642,355
288,031
700,679
700,679
30,420
670,259
(83,194)
2,968,749
2,968,749
¥4,021,217
¥ 109,364
37,073
21
265
23
71,377
603
3,850,079
7
0
6
20
20
3,850,052
20
3,847,716
2,315
¥3,959,444
¥ 961,372
959,030
108
48
964
4
83
—
1,132
174
174
961,546
1,420,877
930,469
642,355
288,113
729,129
729,129
30,420
698,709
(82,578)
2,997,898
2,997,898
¥3,959,444
$
688
536
0
4
1
142
5
39,448
0
0
0
0
0
39,448
—
39,432
16
$40,136
$10,503
10,470
2
2
16
0
1
1
11
2
2
10,505
14,182
9,286
6,411
2,875
6,993
6,993
303
6,690
(830)
29,631
29,631
$40,136
SMFG 2008 119
(2) Nonconsolidated Statements of Income
Sumitomo Mitsui Financial Group, Inc.
Year ended March 31
Operating income ..................................................................................
Dividends on investments in subsidiaries and affiliates ........................
Fees and commissions received from subsidiaries .................................
Operating expenses................................................................................
General and administrative expenses ...................................................
Operating profit .....................................................................................
Non-operating income...........................................................................
Interest income on deposits .................................................................
Fees and commissions income..............................................................
Other non-operating income ...............................................................
Non-operating expenses........................................................................
Interest on borrowings ........................................................................
Amortization of organization costs ......................................................
Fees and commissions expenses............................................................
Losses on devaluation of stocks of affiliate............................................
Other non-operating expenses .............................................................
Ordinary profit.......................................................................................
Income before income taxes .................................................................
Income taxes:
current ...........................................................................................
deferred..........................................................................................
Net income .............................................................................................
Millions of yen
2008
¥111,637
89,693
21,944
6,246
6,246
105,391
466
298
14
153
16,794
11,012
—
1,263
4,518
—
89,063
2007
¥376,479
366,680
9,798
3,641
3,641
372,838
234
213
20
0
8,594
4,311
301
3,978
—
3
364,477
89,063
364,477
Millions of
U.S. dollars (Note 1)
2008
$1,114
895
219
62
62
1,052
5
3
0
2
168
110
—
13
45
—
889
889
5,470
618
¥ 82,975
2,918
(1,975)
¥363,535
55
6
$ 828
Yen
2008
2007
U.S. dollars (Note 1)
2008
Per share data:
Net income.......................................................................................................
Net income — diluted......................................................................................
¥9,134.13
9,133.76
¥46,326.41
41,973.46
$91.17
91.16
120
SMFG 2008
(3) Nonconsolidated Statements of Changes in Net Assets
Sumitomo Mitsui Financial Group, Inc.
Capital surplus
Millions of yen
Stockholders’ equity
Retained earnings
Other retained earnings
Year ended March 31, 2008
Capital
stock
Capital
reserve
Other
capital
surplus
Total
capital
surplus
Voluntary
reserve
Retained
earnings brought
forward
Total
retained
earnings
Treasury
stock
Total
stockholders’
equity
Total
net assets
Balance at March 31, 2007..........................
¥1,420,877
¥642,355
¥288,113
¥930,469
¥30,420
¥ 698,709
¥ 729,129
¥(82,578)
¥2,997,898
¥2,997,898
Changes in the year
Cash dividends ..............................................
Net income ...................................................
Acquisition of own shares ..............................
Disposal of treasury shares .............................
Net changes in the year .................................
—
—
(111,425)
(111,425)
82,975
82,975
(82)
(82)
(82)
(82)
—
(28,450)
(28,450)
(111,425)
(111,425)
82,975
82,975
(901)
202
(901)
202
(29,149)
(29,149)
(901)
285
(616)
Balance at March 31, 2008..........................
¥1,420,877
¥642,355
¥288,031
¥930,386
¥30,420
¥ 670,259
¥ 700,679
¥(83,194)
¥2,968,749
¥2,968,749
Capital surplus
Millions of yen
Stockholders’ equity
Retained earnings
Other retained earnings
Year ended March 31, 2007
Capital
stock
Capital
reserve
Other
capital
surplus
Total
capital
surplus
Voluntary
reserve
Retained
earnings brought
forward
Total
retained
earnings
Treasury
stock
Total
stockholders’
equity
Total
net assets
Balance at March 31, 2006..........................
¥1,420,877
¥1,420,989
¥ 684,406
¥ 2,105,396
¥30,420
¥383,126
¥413,546
¥
(4,393)
¥3,935,426
¥ 3,935,426
Changes in the year
Transfer of capital reserve to other capital surplus ...
(1,000,000)
1,000,000
Increase due to exchange of shares..................
221,365
—
221,365
Cash dividends ..............................................
Net income ...................................................
Acquisition of own shares ..............................
Disposal of treasury shares .............................
Retirement of treasury shares.........................
(15)
(15)
(1,396,277)
(1,396,277)
(47,951)
363,535
(47,951)
363,535
—
—
221,365
(47,951)
363,535
221,365
(47,951)
363,535
(1,474,644)
(1,474,644)
(1,474,644)
182
1,396,277
167
—
167
—
Net changes in the year .................................
—
(778,634)
(396,292)
(1,174,927)
—
315,583
315,583
(78,184)
(937,527)
(937,527)
Balance at March 31, 2007..........................
¥1,420,877
¥ 642,355
¥ 288,113
¥ 930,469
¥30,420
¥698,709
¥729,129
¥ (82,578)
¥2,997,898
¥ 2,997,898
Capital surplus
Millions of U.S. dollars (Note 1)
Stockholders’ equity
Retained earnings
Other retained earnings
Year ended March 31, 2008
Capital
stock
Capital
reserve
Other
capital
surplus
Total
capital
surplus
Voluntary
reserve
Retained
earnings brought
forward
Total
retained
earnings
Treasury
stock
Total
stockholders’
equity
Total
net assets
Balance at March 31, 2007..........................
$14,182
$6,411
$2,876
$9,287
$303
$ 6,974
$ 7,277
$(824)
$29,922
$29,922
Changes in the year
Cash dividends ..............................................
Net income ...................................................
Acquisition of own shares ..............................
Disposal of treasury shares .............................
Net changes in the year .................................
—
—
(1)
(1)
(1)
(1)
Balance at March 31, 2008..........................
$14,182
$6,411
$2,875
$9,286
(1,112)
828
(1,112)
828
—
$303
(284)
$ 6,690
(284)
$ 6,993
(1,112)
828
(9)
2
(291)
(1,112)
828
(9)
2
(291)
(9)
3
(6)
$(830)
$29,631
$29,631
SMFG 2008 121
Independent Auditors’ Report
To the Board of Directors of
Sumitomo Mitsui Financial Group, Inc.
We have audited the accompanying consolidated balance sheets of Sumitomo Mitsui Financial Group, Inc. (“SMFG”)
and consolidated subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of income,
changes in net assets and cash flows for the years then ended, expressed in Japanese yen. These consolidated financial
statements are the responsibility of SMFG’s management. Our responsibility is to independently express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of SMFG and subsidiaries as of March 31, 2008 and 2007, and the consolidated results
of their operations and their cash flows for the years then ended, in conformity with accounting principles generally
accepted in Japan.
As discussed in Note 38 to the consolidated financial statements,
1. SMFG resolved at the meeting of the Board of Directors held on April 28, 2008 to authorize the redemption in
full of the preferred securities issued by an overseas special purpose subsidiary.
2. SMFG resolved at the meeting of the Board of Directors held on April 28, 2008 to establish overseas special
purpose subsidiaries and to issue preferred securities through the subsidiaries on May 12, 2008.
The consolidated financial statements as of and for the year ended March 31, 2008 have been translated into United
States dollars solely for convenience of the readers. We have recomputed the translation, and in our opinion, the
consolidated financial statements expressed in Japanese yen have been translated into United States dollars on the
basis set forth in Note 1 to the consolidated financial statements.
Tokyo, Japan
June 27, 2008
122
SMFG 2008
Supplemental Information
Consolidated Balance Sheets (Unaudited)
Sumitomo Mitsui Banking Corporation and Subsidiaries
March 31
Assets
Cash and due from banks...................................................................................
Deposits with banks ............................................................................................
Call loans and bills bought ..................................................................................
Receivables under resale agreements ...............................................................
Receivables under securities borrowing transactions.........................................
Commercial paper and other debt purchased.....................................................
Trading assets ....................................................................................................
Money held in trust..............................................................................................
Securities ............................................................................................................
Loans and bills discounted..................................................................................
Foreign exchanges .............................................................................................
Other assets........................................................................................................
Tangible fixed assets ..........................................................................................
Intangible fixed assets ........................................................................................
Lease assets.......................................................................................................
Deferred tax assets.............................................................................................
Customers’ liabilities for acceptances and guarantees.......................................
Reserve for possible loan losses ........................................................................
Total assets .......................................................................................................
Millions of yen
2008
2007
¥
2,720,542
2,226,977
570,802
357,075
1,940,170
1,091,663
4,081,480
7,329
23,160,903
62,972,601
893,567
3,024,123
756,449
125,013
27,125
920,834
4,609,160
(848,031)
¥ 108,637,791
¥ 1,907,823
2,046,199
1,102,078
76,551
2,276,894
960,591
3,262,341
2,924
20,304,639
59,617,850
881,436
1,630,049
755,891
101,219
26,922
804,627
3,673,396
(860,799)
¥ 98,570,638
Millions of
U.S. dollars
2008
$
27,154
22,227
5,697
3,564
19,365
10,896
40,737
73
231,170
628,532
8,919
30,184
7,550
1,248
271
9,191
46,004
(8,464)
$1,084,318
SMFG 2008 123
(Continued)
March 31
Liabilities and net assets
Liabilities
Deposits ..............................................................................................................
Call money and bills sold ....................................................................................
Payables under repurchase agreements ............................................................
Payables under securities lending transactions..................................................
Trading liabilities .................................................................................................
Borrowed money.................................................................................................
Foreign exchanges .............................................................................................
Short-term bonds ................................................................................................
Bonds..................................................................................................................
Due to trust account............................................................................................
Other liabilities ....................................................................................................
Reserve for employee bonuses ..........................................................................
Reserve for executive bonuses...........................................................................
Reserve for employee retirement benefits ..........................................................
Reserve for executive retirement benefits ..........................................................
Reserve for reimbursement of deposits ..............................................................
Other reserves ....................................................................................................
Deferred tax liabilities..........................................................................................
Deferred tax liabilities for land revaluation ..........................................................
Acceptances and guarantees .............................................................................
Total liabilities ...................................................................................................
Net assets
Capital stock .......................................................................................................
Capital surplus ....................................................................................................
Retained earnings...............................................................................................
Total stockholders’ equity ...............................................................................
Net unrealized gains on other securities.............................................................
Net deferred losses on hedges ...........................................................................
Land revaluation excess .....................................................................................
Foreign currency translation adjustments ...........................................................
Total valuation and translation adjustments..................................................
Stock acquisition rights .......................................................................................
Minority interests.................................................................................................
Total net assets.................................................................................................
Total liabilities and net assets .........................................................................
Millions of yen
2008
2007
¥ 75,892,384
2,653,142
1,828,672
5,732,042
2,671,554
2,742,166
301,123
—
3,804,208
80,796
3,087,166
20,427
688
17,084
6,695
10,417
0
51,868
47,446
4,609,160
103,557,043
664,986
1,603,512
861,508
3,130,008
558,013
(74,990)
34,844
(28,468)
489,398
43
1,461,297
5,080,747
¥108,637,791
¥74,826,561
2,286,698
140,654
1,516,342
1,941,142
2,034,633
323,890
3,500
3,929,325
65,062
2,279,167
18,919
—
13,382
6,233
—
18
49,714
49,536
3,673,396
93,158,180
664,986
1,603,512
581,619
2,850,119
1,269,385
(87,571)
37,526
(37,194)
1,182,145
14
1,380,179
5,412,458
¥98,570,638
Millions of
U.S. dollars
2008
$ 757,485
26,481
18,252
57,212
26,665
27,370
3,005
—
37,970
806
30,813
204
7
170
67
104
0
518
474
46,004
1,033,607
6,637
16,005
8,599
31,241
5,570
(749)
348
(284)
4,885
0
14,585
50,711
$1,084,318
Notes: 1. Amounts less than one million yen have been omitted.
2. 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 ¥100.19 to US$1, the exchange rate prevailing at March 31, 2008.
124
SMFG 2008
Consolidated Statements of Income (Unaudited)
Sumitomo Mitsui Banking Corporation and Subsidiaries
Year ended March 31
Income
Interest income:
Interest on loans and discounts .....................................................................
Interest and dividends on securities ..............................................................
Interest on receivables under resale agreements..........................................
Interest on receivables under securities borrowing transactions ...................
Interest on deposits with banks .....................................................................
Other interest income ....................................................................................
Trust fees ............................................................................................................
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 .....................................
Interest on payables under securities lending transactions ...........................
Interest on bonds and short-term bonds ........................................................
Other interest expenses.................................................................................
Fees and commissions .......................................................................................
Trading losses.....................................................................................................
Other operating expenses...................................................................................
General and administrative expenses.................................................................
Provision for reserve for possible loan losses.....................................................
Other expenses...................................................................................................
Total expenses ..................................................................................................
Income before income taxes and minority interests .....................................
Income taxes:
Current ...........................................................................................................
Deferred .........................................................................................................
Minority interests in net income ..........................................................................
Net income.........................................................................................................
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
¥1,564,343
333,692
7,044
7,032
100,826
109,692
3,710
550,053
449,141
227,270
64,803
3,417,611
547,205
57,306
7,384
45,499
89,279
166,975
117,869
—
461,276
821,897
56,364
320,546
2,691,606
726,004
¥1,377,189
369,548
7,098
4,857
96,700
94,840
3,482
577,435
118,589
197,172
124,779
2,971,693
500,904
41,320
18,353
60,856
88,353
86,996
111,413
1,936
236,292
768,498
19,940
286,105
2,220,971
750,722
40,791
265,384
68,007
¥ 351,820
47,601
238,764
62,561
¥ 401,795
$15,614
3,331
70
70
1,006
1,095
37
5,490
4,483
2,268
647
34,111
5,462
572
74
454
891
1,667
1,176
—
4,604
8,203
563
3,199
26,865
7,246
407
2,649
678
$ 3,512
Per share data:
Net income.....................................................................................................
Net income — diluted ....................................................................................
¥6,132.91
6,132.75
¥7,072.09
7,012.46
$61.21
61.21
Yen
U.S. dollars
Notes: 1. Amounts less than one million yen have been omitted.
2. 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 ¥100.19 to US$1, the exchange rate prevailing at March 31, 2008.
SMFG 2008 125
Nonconsolidated Balance Sheets (Unaudited)
Sumitomo Mitsui Banking Corporation
March 31
Assets
Cash and due from banks...................................................................................
Deposits with banks ............................................................................................
Call loans and bills bought ..................................................................................
Receivables under resale agreements ...............................................................
Receivables under securities borrowing transactions.........................................
Commercial paper and other debt purchased.....................................................
Trading assets ....................................................................................................
Money held in trust..............................................................................................
Securities ............................................................................................................
Loans and bills discounted..................................................................................
Foreign exchanges .............................................................................................
Other assets........................................................................................................
Tangible fixed assets ..........................................................................................
Intangible fixed assets ........................................................................................
Deferred tax assets.............................................................................................
Customers’ liabilities for acceptances and guarantees.......................................
Reserve for possible loan losses ........................................................................
Reserve for possible losses on investments.......................................................
Total assets .......................................................................................................
Liabilities and net assets/stockholders’ equity
Liabilities
Deposits ..............................................................................................................
Call money and bills sold ....................................................................................
Payables under repurchase agreements ............................................................
Payables under securities lending transactions..................................................
Trading liabilities .................................................................................................
Borrowed money.................................................................................................
Foreign exchanges .............................................................................................
Bonds..................................................................................................................
Due to trust account............................................................................................
Other liabilities ....................................................................................................
Reserve for employee bonuses ..........................................................................
Reserve for executive bonuses...........................................................................
Reserve for executive retirement benefits ..........................................................
Reserve for point service program......................................................................
Reserve for reimbursement of deposits ..............................................................
Other reserves ....................................................................................................
Deferred tax liabilities for land revaluation ..........................................................
Acceptances and guarantees .............................................................................
Total liabilities ...................................................................................................
Net assets
Capital stock .......................................................................................................
Capital surplus ....................................................................................................
Retained earnings...............................................................................................
Total stockholders’ equity ...............................................................................
Net unrealized gains on other securities.............................................................
Net deferred losses on hedges ...........................................................................
Land revaluation excess .....................................................................................
Total valuation and translation adjustments..................................................
Total net assets.................................................................................................
Total liabilities and net assets .........................................................................
Notes: 1. Amounts less than one million yen have been omitted.
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
¥ 2,526,553
2,421,977
374,083
328,544
1,900,294
447,538
3,638,676
7,329
22,758,241
56,957,813
836,917
2,196,999
676,072
106,469
823,251
4,665,062
(620,004)
(12,801)
¥100,033,020
¥ 69,382,834
2,656,142
1,825,481
5,732,042
2,307,304
3,798,333
301,958
3,539,110
80,796
2,178,263
8,857
496
4,800
1,870
9,587
0
46,827
4,665,062
96,539,771
664,986
1,367,548
894,839
2,927,374
558,103
(13,787)
21,558
565,874
3,493,249
¥100,033,020
¥ 1,734,199
2,265,361
1,006,657
39,725
2,213,314
333,524
2,914,023
2,924
20,060,873
53,756,440
835,617
1,442,066
678,581
87,615
743,605
4,177,816
(677,573)
(77,547)
¥ 91,537,228
¥ 68,809,338
2,291,128
104,640
1,516,342
1,578,730
3,371,846
329,695
3,647,483
65,062
1,588,683
8,892
—
4,757
990
—
18
48,917
4,177,816
87,544,344
664,986
1,367,548
761,028
2,793,563
1,259,814
(84,733)
24,240
1,199,320
3,992,884
¥ 91,537,228
$ 25,217
24,174
3,734
3,279
18,967
4,467
36,318
73
227,151
568,498
8,353
21,928
6,748
1,063
8,217
46,562
(6,188)
(128)
$998,433
$692,513
26,511
18,220
57,212
23,029
37,911
3,014
35,324
807
21,741
88
5
48
19
96
0
467
46,562
963,567
6,637
13,650
8,931
29,218
5,571
(138)
215
5,648
34,866
$998,433
2. 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 ¥100.19 to US$1, the exchange rate prevailing at March 31, 2008.
126
SMFG 2008
Nonconsolidated Statements of Income (Unaudited)
Sumitomo Mitsui Banking Corporation
Year ended March 31
Income
Interest income:
Interest on loans and discounts .....................................................................
Interest and dividends on securities ..............................................................
Interest on receivables under resale agreements..........................................
Interest on receivables under securities borrowing transactions ...................
Interest on deposits with banks .....................................................................
Other interest income ....................................................................................
Trust fees ............................................................................................................
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 .....................................
Interest on payables under securities lending transactions ...........................
Interest on bonds ...........................................................................................
Other interest expenses.................................................................................
Fees and commissions .......................................................................................
Trading losses.....................................................................................................
Other operating expenses...................................................................................
General and administrative expenses.................................................................
Provision for reserve for possible loan losses.....................................................
Other expenses...................................................................................................
Total expenses ..................................................................................................
Income before income taxes............................................................................
Income taxes:
Current ...........................................................................................................
Deferred .........................................................................................................
Net income.........................................................................................................
Millions of yen
2008
2007
Millions of
U.S. dollars
2008
¥ 1,346,282
322,287
3,762
6,955
92,946
94,042
3,710
452,527
440,985
121,812
59,364
2,944,677
474,314
126,925
6,189
45,496
76,463
166,080
120,165
—
384,906
659,992
—
376,689
2,437,222
507,454
¥1,166,967
369,039
4,064
4,827
77,722
83,548
3,482
465,171
103,719
106,725
107,309
2,492,577
430,045
103,090
16,523
60,770
73,483
84,809
111,754
2,098
158,207
609,816
450
254,598
1,905,648
586,928
16,031
285,680
¥ 205,742
16,507
254,680
¥ 315,740
$13,437
3,217
38
69
928
939
37
4,517
4,401
1,216
592
29,391
4,734
1,267
62
454
763
1,658
1,199
—
3,842
6,587
—
3,760
24,326
5,065
160
2,851
$ 2,054
Per share data:
Net income..........................................................................................................
Net income — diluted..........................................................................................
¥ 3,540.84
—
¥5,533.69
5,487.21
$ 35.34
—
Yen
U.S. dollars
Notes: 1. Amounts less than one million yen have been omitted.
2. 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 ¥100.19 to US$1, the exchange rate prevailing at March 31, 2008.
SMFG 2008 127
Income Analysis (Consolidated)
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Operating Income, Classified by Domestic and Overseas Operations
2008
2007
Millions of yen
Year ended March 31
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
Interest income ............................................
Interest expenses.........................................
Net interest income ............................................
Trust fees ...........................................................
Fees and commissions (income) .................
Fees and commissions (expenses) ............
Net fees and commissions.................................
Trading profits ..............................................
Trading losses..............................................
Net trading income.............................................
Other operating income ...............................
Other operating expenses............................
Net other operating income (expenses).............
¥ 1,542,313
529,520
1,012,792
3,752
633,655
82,800
550,855
470,388
15,242
455,145
1,165,090
1,362,029
(196,938)
¥ 669,690
457,127
212,562
—
71,996
10,537
61,459
30,848
16,423
14,425
47,612
30,081
17,530
¥ (66,551)
(51,591)
(14,960)
—
(1,368)
(1,047)
(320)
(31,665)
(31,665)
—
(67)
(21)
(45)
¥ 2,145,451
935,056
1,210,394
3,752
704,283
92,289
611,993
469,571
—
469,571
1,212,635
1,392,089
(179,453)
¥1,441,457
432,558
1,008,898
3,508
647,473
89,805
557,668
127,667
10,720
116,946
981,643
988,511
(6,868)
¥593,892
409,364
184,528
—
59,223
7,353
51,870
21,459
12,780
8,679
22,977
16,052
6,924
¥ (56,280)
(31,450)
(24,829)
—
(698)
(345)
(352)
(21,564)
(21,564)
—
(988)
(193)
(794)
¥ 1,979,069
810,471
1,168,597
3,508
705,998
96,812
609,185
127,561
1,936
125,625
1,003,632
1,004,370
(738)
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.
2. Income and expenses resulting from money held in trust are included in “Other income” and “Other expenses.” Therefore, “Interest expenses” are
shown after deduction of expenses (2008, ¥10 million; 2007, ¥5 million) related to the management of money held in trust.
3. Intersegment transactions are reported in the “Elimination” column.
Average Balance, Interest and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans and bills bought .................
Receivables under resale agreements....
Receivables under securities
¥ 74,364,561
51,170,802
18,046,377
644,293
67,129
2008
Interest
¥ 1,542,313
1,135,110
287,879
13,186
382
borrowing transactions .....................
Deposits with banks ............................
980,818
1,891,531
7,032
34,957
Interest-bearing liabilities..........................
Deposits .............................................
Negotiable certificates of deposit ........
Call money and bills sold.....................
Payables under repurchase agreements...
Payables under securities
lending transactions ........................
Commercial paper ...............................
Borrowed money .................................
Short-term bonds ................................
Bonds ..................................................
¥ 81,183,731
65,494,311
2,557,627
2,087,888
103,567
¥ 529,520
244,013
15,057
10,853
601
2,041,013
—
4,400,327
494,241
3,726,666
45,499
—
75,888
4,105
73,497
Millions of yen
Earnings yield
Average balance
2007
Interest
¥ 1,441,457
1,004,005
330,791
17,383
94
¥ 76,132,613
51,620,802
19,820,864
784,972
41,945
1,329,318
1,054,974
4,857
26,901
¥ 80,928,373
65,159,829
2,365,296
2,908,959
157,722
¥ 432,558
177,510
5,858
4,286
431
2,301,547
712
3,530,322
370,939
3,784,043
60,856
1
53,287
1,503
68,789
Earnings yield
1.89%
1.94
1.67
2.21
0.23
0.37
2.55
0.53%
0.27
0.25
0.15
0.27
2.64
0.24
1.51
0.41
1.82
2.07%
2.22
1.60
2.05
0.57
0.72
1.85
0.65%
0.37
0.59
0.52
0.58
2.23
—
1.72
0.83
1.97
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries.
2. In principle, average balances are calculated 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 balance of noninterest earning deposits (2008, ¥804,987 million; 2007,
¥1,096,906 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 balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million) and
corresponding interest (2008, ¥10 million; 2007, ¥5 million).
128
SMFG 2008
Overseas Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans and bills bought .................
Receivables under resale agreements....
Receivables under securities
¥12,801,800
8,859,850
1,139,851
268,662
278,935
2008
Interest
¥ 669,690
467,419
62,162
12,827
6,661
borrowing transactions .....................
Deposits with banks ............................
—
1,850,524
—
71,221
Interest-bearing liabilities..........................
Deposits .............................................
Negotiable certificates of deposit ........
Call money and bills sold.....................
Payables under repurchase agreements...
Payables under securities
lending transactions ........................
Commercial paper ...............................
Borrowed money .................................
Short-term bonds ................................
Bonds ..................................................
¥ 8,952,948
7,101,518
660,930
314,091
207,412
—
—
316,935
—
268,000
¥ 457,127
256,776
36,045
12,675
6,802
—
—
18,465
—
17,447
Millions of yen
Earnings yield
Average balance
5.23%
5.28
5.45
4.77
2.39
—
3.85
5.11%
3.62
5.45
4.04
3.28
—
—
5.83
—
6.51
¥11,234,586
7,838,766
1,109,300
200,194
145,659
—
1,530,875
¥ 8,996,910
6,985,307
738,076
325,729
352,703
—
—
159,086
—
348,240
2007
Interest
¥593,892
401,333
62,710
10,824
7,003
—
72,925
¥409,364
282,707
37,618
14,520
17,923
—
—
7,199
—
20,930
Earnings yield
5.29%
5.12
5.65
5.41
4.81
—
4.76
4.55%
4.05
5.10
4.46
5.08
—
—
4.53
—
6.01
Notes: 1. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas consolidated
subsidiaries.
2. In principle, average balances are calculated 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 balance of noninterest earning deposits (2008, ¥75,496 million; 2007, ¥48,701 million).
Total of Domestic and Overseas Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans and bills bought .................
Receivables under resale agreements....
Receivables under securities
¥86,343,910
59,129,159
19,485,192
912,955
346,065
2008
Interest
¥ 2,145,451
1,557,823
333,255
26,014
7,044
borrowing transactions .....................
Deposits with banks ............................
980,818
3,523,849
7,032
101,120
Interest-bearing liabilities..........................
Deposits .............................................
Negotiable certificates of deposit ........
Call money and bills sold.....................
Payables under repurchase agreements...
Payables under securities
lending transactions ........................
Commercial paper ...............................
Borrowed money .................................
Short-term bonds ................................
Bonds ..................................................
¥89,014,453
72,376,887
3,218,557
2,401,980
310,979
¥ 935,056
495,690
51,103
23,529
7,404
2,041,013
—
3,815,693
494,241
3,994,667
45,499
—
47,862
4,105
90,945
Millions of yen
Earnings yield
Average balance
2007
Interest
¥1,979,069
1,375,851
369,770
28,208
7,098
¥86,851,328
58,785,489
21,188,587
985,167
187,604
1,329,318
2,487,172
4,857
96,763
¥89,150,368
72,045,922
3,103,373
3,234,688
510,425
¥ 810,471
457,078
43,476
18,807
18,354
2,301,547
712
3,015,247
370,939
4,132,284
60,856
1
32,175
1,503
89,719
Earnings yield
2.28%
2.34
1.75
2.86
3.78
0.37
3.89
0.91%
0.63
1.40
0.58
3.60
2.64
0.24
1.07
0.41
2.17
2.48%
2.63
1.71
2.85
2.04
0.72
2.87
1.05%
0.68
1.59
0.98
2.38
2.23
—
1.25
0.83
2.28
Notes: 1. The figures above comprise totals for domestic and overseas operations after intersegment eliminations.
2. In principle, average balances are calculated 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 balance of noninterest earning deposits (2008, ¥881,666 million; 2007, ¥1,146,135
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 balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million) and
corresponding interest (2008, ¥10 million; 2007, ¥5 million).
SMFG 2008 129
Fees and Commissions
2008
2007
Millions of yen
Year ended March 31
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
Fees and commissions (income) .......................
Deposits and loans ......................................
Remittances and transfers ...........................
Securities-related business..........................
Agency .........................................................
Safe deposits ...............................................
Guarantees ..................................................
Credit card ...................................................
¥633,655
24,604
125,254
35,060
16,028
7,140
43,376
128,575
¥ 71,996
49,217
8,568
58
—
4
4,150
—
¥(1,368)
—
(177)
—
—
—
(410)
—
¥ 704,283
73,822
133,645
35,118
16,028
7,144
47,117
128,575
¥647,473
25,034
123,671
48,378
16,581
7,317
45,102
117,197
¥59,223
40,664
9,166
271
—
4
1,266
—
¥ (698)
—
(1)
—
—
0
(407)
—
¥ 705,998
65,698
132,836
48,650
16,581
7,322
45,961
117,197
Fees and commissions (expenses) ...................
Remittances and transfers ...........................
¥ 82,800
26,683
¥ 10,537
5,103
¥(1,047)
(174)
¥ 92,289
31,612
¥ 89,805
25,135
¥ 7,353
2,262
¥ (345)
(198)
¥ 96,812
27,200
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.
2. Intersegment transactions are reported in “Elimination” column.
Trading Income
Year ended March 31
Trading profits ....................................................
Gains on trading securities ..........................
Gains on securities related to
trading transactions...................................
Gains on trading-related
2008
2007
Millions of yen
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
¥470,388
21,082
¥ 30,848
324
¥ (31,665)
—
¥469,571
21,406
¥127,667
15,071
¥ 21,459
37
¥ (21,564)
—
¥127,561
15,109
2,705
228
—
2,934
—
—
—
—
financial derivatives...................................
Others ..........................................................
439,734
6,865
30,296
—
(31,665)
—
438,365
6,865
109,351
3,244
21,422
—
(21,564)
—
109,208
3,244
Trading losses ...................................................
Losses on trading securities ........................
Losses on securities related to
¥ 15,242
—
¥ 16,423
—
¥ (31,665)
—
¥
trading transactions...................................
—
—
—
Losses on trading-related
financial derivatives...................................
Others ..........................................................
15,242
—
16,423
—
(31,665)
—
—
—
—
—
—
¥ 10,720
—
¥12,780
—
¥ (21,564)
—
¥
1,936
—
1,928
8,791
—
7
—
1,936
12,773
—
(21,564)
—
—
—
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
130
SMFG 2008
Assets and Liabilities (Consolidated)
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
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:
Liquid deposits ...............................................................................................
Fixed-term deposits .......................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Negotiable certificates of deposit ...................................................................
Total ...............................................................................................................
Grand total ..........................................................................................................
Millions of yen
2008
2007
¥40,874,881
21,905,957
4,066,787
66,847,626
2,261,006
¥69,108,632
¥ 4,608,327
1,227,876
6,793
5,842,997
817,143
¥ 6,660,140
¥75,768,773
¥41,266,689
21,273,509
3,271,453
65,811,653
1,883,747
¥67,695,400
¥ 5,330,090
1,006,239
8,241
6,344,570
705,470
¥ 7,050,041
¥74,745,441
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries 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
March 31
Domestic operations:
Millions of yen
2008
2007
Manufacturing ................................................................................................
Agriculture, forestry, fisheries and mining......................................................
Construction...................................................................................................
Transportation, communications and public enterprises ...............................
Wholesale and retail ......................................................................................
Finance and insurance ..................................................................................
Real estate.....................................................................................................
Services .........................................................................................................
Municipalities .................................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Overseas operations:
Public sector ..................................................................................................
Financial institutions ......................................................................................
Commerce and industry.................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 5,695,551
146,244
1,360,402
3,061,792
5,343,724
4,469,767
7,790,969
5,924,091
846,982
18,047,914
¥ 52,687,441
¥
32,848
621,385
7,862,965
940,234
¥ 9,457,433
¥ 62,144,874
10.81%
0.28
2.58
5.81
10.14
8.48
14.79
11.24
1.61
34.26
100.00%
0.35%
6.57
83.14
9.94
100.00%
—
¥ 5,598,883
139,509
1,435,589
3,038,681
5,507,322
4,189,606
7,630,563
6,238,878
648,704
17,216,194
¥ 51,643,934
¥
35,783
481,228
5,950,135
578,240
¥ 7,045,387
¥ 58,689,322
10.84%
0.27
2.78
5.88
10.66
8.11
14.78
12.08
1.26
33.34
100.00%
0.51%
6.83
84.45
8.21
100.00%
—
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.
2. Japan offshore banking accounts are included in overseas operations’ accounts.
SMFG 2008 131
Reserve for possible loan losses
March 31
General reserve ..................................................................................................
Specific reserve ..................................................................................................
Loan loss reserve for specific overseas countries ..............................................
Reserve for possible loan losses ........................................................................
Amount of direct reduction ..................................................................................
Risk-Monitored Loans
March 31
Bankrupt loans ....................................................................................................
Non-accrual loans ...............................................................................................
Past due loans (3 months or more).....................................................................
Restructured loans..............................................................................................
Total ....................................................................................................................
Amount of direct reduction ..................................................................................
Notes: Definition of risk-monitored loan categories
Millions of yen
Millions of yen
2008
¥ 593,714
300,987
0
¥ 894,702
¥ 518,594
2008
¥
73,472
607,226
26,625
385,336
¥ 1,092,661
¥ 433,447
2007
¥ 683,589
203,562
1,941
¥ 889,093
¥ 490,123
2007
¥
60,715
507,289
22,018
477,362
¥1,067,386
¥ 430,335
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.
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 ....................................................................................................................
2008
¥
206,634
507,167
418,841
1,132,643
69,001,954
¥70,134,597
Amount of direct reduction ..................................................................................
¥
518,594
2007
¥
193,792
384,817
506,024
1,084,632
64,815,607
¥65,900,240
¥
490,123
Millions of yen
Note: Definition of problem asset categories
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
132
SMFG 2008
Securities
Year-End Balance
March 31
Domestic operations:
Millions of yen
2008
2007
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Subtotal..........................................................................................................
Overseas operations:
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Subtotal..........................................................................................................
Unallocated corporate assets:
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 9,339,978
439,228
3,880,773
3,492,468
4,236,572
¥ 21,389,021
¥
—
—
—
—
¥ 1,871,186
¥ 1,871,186
¥
—
—
—
257,294
—
¥
257,294
¥ 23,517,501
¥ 7,640,069
571,103
4,066,497
4,468,620
2,306,641
¥19,052,932
¥
—
—
—
—
1,205,587
¥ 1,205,587
¥
—
—
—
278,980
—
¥
278,980
¥20,537,500
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.
2. “Others” include foreign bonds and foreign stocks.
Trading Assets and Liabilities
March 31
Trading assets: ..................................................
Trading securities ........................................
Derivatives of trading securities ...................
Securities related to trading transactions.....
Derivatives of securities related to
2008
2007
Millions of yen
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
¥ 3,664,024
223,360
3,043
—
¥ 490,723
7,082
—
—
¥ (31,135)
—
—
—
¥ 4,123,611
230,442
3,043
—
¥2,906,229
27,932
373
—
¥397,304
25,355
—
—
¥ (25,647)
—
—
—
¥3,277,885
53,288
373
—
trading transactions ..................................
Trading-related financial derivatives ............
Other trading assets ....................................
10,440
2,542,809
884,370
—
483,640
—
—
(31,135)
—
10,440
2,995,314
884,370
2,344
1,778,913
1,096,664
—
371,949
—
—
(25,647)
—
2,344
2,125,214
1,096,664
Trading liabilities: ..............................................
Trading securities sold for short sales .........
Derivatives of trading securities ...................
Securities related to trading transactions.....
Derivatives of securities related to
¥ 2,310,732
19,312
3,881
—
¥ 391,720
733
—
—
¥ (31,135)
—
—
—
¥ 2,671,316
20,046
3,881
—
¥1,572,595
12,065
288
—
¥396,026
4,349
—
—
¥ (25,647)
—
—
—
¥1,942,973
16,415
288
—
trading transactions ..................................
Trading-related financial derivatives ............
Other trading liabilities .................................
10,196
2,277,341
—
—
390,986
—
—
(31,135)
—
10,196
2,637,192
—
1,975
1,558,265
—
—
391,676
—
—
(25,647)
—
1,975
1,924,294
—
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
SMFG 2008 133
Capital (Nonconsolidated)
Sumitomo Mitsui Financial Group, Inc.
Change in Number of Shares Issued and Capital Stock
April 1, 2003 — March 31, 2004*1........
August 8, 2003*2 ..................................
April 1, 2004 — March 31, 2005*3........
March 29, 2005*4..................................
April 1, 2005 — March 31, 2006*5........
January 31, 2006*6...............................
February 28, 2006*7 .............................
May 17, 2006*8.....................................
August 11, 2006*9 ................................
September 1, 2006*10...........................
September 6, 2006*11...........................
September 29, 2006*12.........................
October 11, 2006*13 .............................
Millions of yen
Number of shares
issued
Capital stock
Capital reserve
Changes
Balances
Changes
Balances
Changes
Balances
8.61
—
332,869.96
70,001
922,593.28
80,000
40,700
(68,000)
—
249,015
(67,000)
(439,534)
(195,000)
6,928,109.53
6,928,109.53
7,260,979.49
7,330,980.49
8,253,573.77
8,333,573.77
8,374,273.77
8,306,273.77
8,306,273.77
8,555,288.77
8,488,288.77
8,048,754.77
7,853,754.77
¥
—
—
—
105,001
—
45,220
23,005
—
—
—
—
—
—
¥1,247,650
1,247,650
1,247,650
1,352,651
1,352,651
1,397,871
1,420,877
1,420,877
1,420,877
1,420,877
1,420,877
1,420,877
1,420,877
¥
—
(499,503)
—
105,001
—
45,220
23,005
—
(1,000,000)
221,365
—
—
—
¥1,747,266
1,247,762
1,247,762
1,352,764
1,352,764
1,397,984
1,420,989
1,420,989
420,989
642,355
642,355
642,355
642,355
Remarks:
*1 Conversion of 1 share of preferred stock (13th series Type 4) to 9.61 shares of common stock
*2 Capital reserve was transferred to other capital surplus pursuant to Article 289-2 of the Commercial Code.
*3 Conversion of 32,000 shares of preferred stock (Type 1), 105,000 shares of preferred stock (Type 3) and 7,912 shares of preferred stock (13th series Type
4) to 477,781.96 shares of common stock
*4 Allotment to third parties:
Preferred stock (1st series Type 6):
70,001 shares
Issue price: ¥3,000 thousand Capitalization: ¥1,500 thousand
*5 Conversion of 107,087 shares of preferred stock (13th series Type 4) to 1,029,680.28 shares of common stock
*6 Public offering:
Common stock: 80,000 shares
Issue price: ¥1,130 thousand Capitalization: ¥565 thousand
*7 Allotment to third parties:
Common stock: 40,700 shares
Issue price: ¥1,130 thousand Capitalization: ¥565 thousand
*8 Repurchase and cancellation of 35,000 shares of preferred stock (Type 1) and 33,000 shares of preferred stock (Type 2)
*9 Capital reserve was transferred to other capital surplus pursuant to Article 448-1 of the Company Law.
*10 Increase in the number of common stock as a result of share exchange for making SMBC Friend Securities Co., Ltd. as our wholly-owned subsidiary (share
exchange ratio: 1-to-0.0008)
*11 Repurchase and cancellation of 67,000 shares of preferred stock (Type 2)
*12 Repurchase and cancellation of 500,000 shares of preferred stock (Type 3) and increase in shares of common stock of 60,466
*13 Repurchase and cancellation of 195,000 shares of preferred stock (Type 3)
*14 On April 30, 2008, all the rights to purchase shares related to SMFG’s 5th series, Type 4 preferred stock; 6th series, Type 4 preferred stock; 7th series,
Type 4 preferred stock; and 8th series, Type 4 preferred stock were exercised. As a result, the number of SMFG’s common stock outstanding increased
157,151 shares.
*15 On May 16, 2008, SMFG cancelled all 5th series, Type 4 preferred stock; 6th series, Type 4 preferred stock; 7th series, Type 4 preferred stock; and 8th
series, Type 4 preferred stock. As a consequence, the number of Type 4 preferred stock decreased 16,700 shares.
134
SMFG 2008
Number of Shares Issued
March 31, 2008
Number of Shares Issued
Common stock ..............................................................................................................................................................
Preferred stock (1st series Type 4) ...............................................................................................................................
Preferred stock (2nd series Type 4) .............................................................................................................................
Preferred stock (3rd series Type 4) ..............................................................................................................................
Preferred stock (4th series Type 4) ..............................................................................................................................
Preferred stock (5th series Type 4) ..............................................................................................................................
Preferred stock (6th series Type 4) ..............................................................................................................................
Preferred stock (7th series Type 4) ..............................................................................................................................
Preferred stock (8th series Type 4) ..............................................................................................................................
Preferred stock (9th series Type 4) ..............................................................................................................................
Preferred stock (10th series Type 4) ............................................................................................................................
Preferred stock (11th series Type 4) ............................................................................................................................
Preferred stock (12th series Type 4) ............................................................................................................................
Preferred stock (1st series Type 6) ...............................................................................................................................
Total ..............................................................................................................................................................................
7,733,653.77
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
7,853,754.77
Stock Exchange Listings
Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
Number of Common Shares, Classified by Type of Shareholders
March 31, 2008
Japanese government and local government ......................................................................
Financial institutions ............................................................................................................
Securities companies ..........................................................................................................
Other institutions ..................................................................................................................
Foreign institutions ..............................................................................................................
Foreign individuals ...............................................................................................................
Individuals and others ..........................................................................................................
Total .....................................................................................................................................
Fractional shares..................................................................................................................
Number of
shareholders
Number of
shares
Percentage of
total
6
434
120
7,486
1,002
43
172,744
181,835
—
4,751
2,456,588
76,241
1,397,932
3,047,023
130
727,326
7,709,991
23,662.77
0.06%
31.86
0.99
18.13
39.52
0.00
9.44
100.00
—
Notes: 1. Of 68,516.41 shares in treasury stock, 68,516 shares are included in “Individuals and others” and the remaining 0.41 shares are included in
“Fractional shares.”
2. “Other institutions” includes 358 shares held by the Securities Custody Association.
Principal Shareholders
a. Common Stock
March 31, 2008
Number of
shares
Percentage of
shares outstanding
The Master Trust Bank of Japan, Ltd. (Trust Account)..................................................................................
Japan Trustee Services Bank, Ltd. (Trust Account) ......................................................................................
Nippon Life Insurance Company ...................................................................................................................
State Street Bank and Trust Company*.........................................................................................................
State Street Bank and Trust Company 505103*............................................................................................
Hero & Co.** ..................................................................................................................................................
JPMorgan Chase Bank 380055* ...................................................................................................................
Sumitomo Mitsui Banking Corporation ..........................................................................................................
Mellon Bank, N.A. as Agent for its Client Mellon Omnibus US Pension***....................................................
Japan Trustee Services Bank, Ltd. (Trust Account 4) ...................................................................................
Total...............................................................................................................................................................
492,814.00
488,489.00
154,667.42
142,599.00
128,919.00
113,913.00
101,502.00
100,481.00
97,445.00
77,481.00
1,898,310.42
6.37%
6.31
1.99
1.84
1.66
1.47
1.31
1.29
1.26
1.00
24.54%
Standing agent: Mizuho Corporate Bank, Ltd.’s Kabutocho Custody & Proxy Department within the Settlement & Clearing Services Division
*
** Standing agent: Sumitomo Mitsui Banking Corporation, Securities Finance Marketing Department
*** Standing agent: The Hongkong and Shanghai Banking Corporation Limited’s Tokyo Branch Custody Department
SMFG 2008 135
b. Preferred Stock (1st series Type 4)
j. Preferred Stock (9th series Type 4)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ................
4,175
100.00%
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
c. Preferred Stock (2nd series Type 4)
k. Preferred Stock (10th series Type 4)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
d. Preferred Stock (3rd series Type 4)
l. Preferred Stock (11th series Type 4)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
e. Preferred Stock (4th series Type 4)
m. Preferred Stock (12th series Type 4)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
f. Preferred Stock (5th series Type 4)
n. Preferred Stock (1st series Type 6)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
March 31, 2008
Shareholder
Sumitomo Life Insurance Company ....
Nippon Life Insurance Company ....
MITSUI LIFE INSURANCE
Number of
shares
23,334
20,000
Percentage of
shares outstanding
33.33%
28.57
COMPANY LIMITED ...................
16,667
23.81
g. Preferred Stock (6th series Type 4)
Mitsui Sumitomo Insurance
Number of
shares
Percentage of
shares outstanding
Company, Limited........................
Total................................................
10,000
70,001
14.29
100.00%
March 31, 2008
Shareholder
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
Notes: 1. Pursuant to Article 67 of the Enforcement Ordinance of the
Company Law, the exercise of voting rights of common shares
held by our subsidiary SMBC is not entitled.
2. The following reports on shareholdings (including their
amendment reports) were submitted to the authorities. However,
as we could not confirm how many shares are in beneficial
possession of the submitters as of March 31, 2008, we did not
include them in the list of principal shareholders shown above.
The contents of the reports are summarized as follows:
Submitters
Capital Research and
Filing date
Number of
shares*
Percentage
of shares
outstanding
Management Company .............. May 9, 07
Alliance Bernstein L.P. .................. Sep. 21, 07
379,830
413,431
4.91%
5.35
* Includes shares held by co-shareholders.
h. Preferred Stock (7th series Type 4)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
i. Preferred Stock (8th series Type 4)
March 31, 2008
Shareholder
Number of
shares
Percentage of
shares outstanding
GSSM Holding II Corp.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) ...............
4,175
100.00%
136
SMFG 2008
Stock Options
March 31
2008
Number of shares granted ..............................................................................................................
Type of stock...................................................................................................................................
Issue price.......................................................................................................................................
Amount capitalized when shares are issued...................................................................................
Exercise period of stock options .....................................................................................................
1,081 shares
Common stock
¥669,775 per share
¥334,888 per share
From June 28, 2004 to June 27, 2012
Note: Former SMBC issued and granted stock options to certain directors and employees pursuant to the resolution of the ordinary general meeting of
shareholders held on June 27, 2002. SMFG succeeded the obligations related to the stock options at the time of its establishment pursuant to the
resolution of the preferred shareholders’ meeting held on September 26, 2002 and the extraordinary shareholders’ meeting held on September 27, 2002.
Common Stock Price Range
Stock Price Performance
Year ended March 31
2008
2007
Yen
2006
2005
2004
High...................................................................................
Low....................................................................................
¥ 1,210,000
633,000
¥ 1,390,000
1,010,000
¥ 1,370,000
659,000
¥ 854,000
599,000
¥ 780,000
162,000
Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).
2. Preferred stocks are not listed on exchanges.
Six-Month Performance
October 2007
November 2007 December 2007
January 2008
February 2008
March 2008
Yen
High .........................................................
Low ..........................................................
¥1,000,000
803,000
¥ 951,000
707,000
¥ 980,000
801,000
¥877,000
700,000
¥860,000
738,000
¥751,000
633,000
Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).
2. Preferred stocks are not listed on exchanges.
SMFG 2008 137
Capital Ratio Information
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
The consolidated capital ratio at the end of March 2007 and thereafter is calculated using the method stipulated in “Standards for Bank
Holding Company to Examine the Adequacy of Its Capital Based on Assets, Etc. Held by It and Its Subsidiaries Pursuant to Article 52-25 of
the Banking Law” (Notification 20 issued by the Japanese Financial Services Agency in 2006; hereinafter referred to as “the Notification”).
In addition to the method stipulated in the Notification to calculate the consolidated capital ratio (referred to as “First Standard” in the
Notification), SMFG has adopted the foundation internal ratings-based approach for calculating credit risk-weighted asset amounts and
implemented market risk controls. In calculating the amount corresponding to operational risk, SMFG has used the advanced measurement
approaches. Please note that the basic indicator approach was employed for the prior fiscal year ended March 31, 2007.
“Capital Ratio Information” was prepared based on the Notification and the terms and details in the section may differ from the terms and
details in other sections of the Annual Report.
■ Scope of Consolidation
1. Consolidated Capital Ratio Calculation
● Number of consolidated subsidiaries: 268
Please refer to “Principal Subsidiaries and Affiliates” on page 204 for their names and business outline.
● Scope of consolidated subsidiaries for the calculation of the consolidated capital ratio is based on the scope of consolidated subsidiaries for
preparing consolidated financial statements.
● There are no affiliates to which the proportionate consolidation method is applied.
● There are no companies engaged exclusively in ancillary banking business or in developing new businesses as stipulated in Article 52-23 of
the Banking Law.
2. Deduction from Capital
● Number of nonconsolidated subsidiaries subject to deduction from capital: 241
Principal subsidiaries:
SMLC MAHOGANY Co., Ltd. (Office rental, etc.)
SBCS Co., Ltd. (Venture capital and consulting)
● Number of financial affiliates subject to deduction from capital: 96
Please refer to “Principal Subsidiaries and Affiliates” on page 204 for their names and business outline.
3. Restrictions on Movement of Funds and Capital within Holding Company Group
There are no special restrictions on movement of funds and capital among SMFG and its group companies.
4. Companies Subject to Deduction from Capital with Capital below Basel II Required Amount and Total Shortfall Amount
Not applicable.
138
SMFG 2008
■ Capital Structure Information (Consolidated Capital Ratio (First Standard))
Regarding the calculation of capital ratio as of March 31, 2007, certain procedures were performed by KPMG AZSA & Co. pursuant to
“Treatment of Inspection of the Capital Ratio Calculation Framework Based on Agreed-Upon Procedures” (JICPA Industry Committee Report
No. 30). The certain procedures performed by the external auditor are not part of the audit of consolidated financial statements. The certain
procedures performed on our internal control framework for calculating the capital ratio are based on procedures agreed upon by SMFG and the
external auditor and are not a validation of appropriateness of the capital ratio itself or opinion on the internal controls related to the capital
ratio calculation.
March 31
Tier I capital:
Tier II capital:
Deductions*:
Total qualifying capital:
Risk-adjusted assets:
Tier I risk-adjusted
capital ratio:
Total risk-adjusted
capital ratio:
Required capital:
Capital stock...........................................................................................
Capital surplus........................................................................................
Retained earnings ..................................................................................
Treasury stock........................................................................................
Cash dividends to be paid ......................................................................
Foreign currency translation adjustments ..............................................
Stock acquisition rights...........................................................................
Minority interests ....................................................................................
Goodwill and others................................................................................
Gain on sale on securitization transactions............................................
Deductions of deferred tax assets..........................................................
Total Tier I capital (A) .............................................................................
Unrealized gains on other securities after 55% discount .......................
Land revaluation excess after 55% discount..........................................
General reserve for possible loan losses ...............................................
Excess amount of provision ...................................................................
Subordinated debt ..................................................................................
Total Tier II capital..................................................................................
Tier II capital included as qualifying capital (B) ......................................
(C) ..........................................................................................................
(D) = (A) + (B) - (C) ................................................................................
On-balance sheet items .........................................................................
Off-balance sheet items .........................................................................
Market risk items ....................................................................................
Operational risk ......................................................................................
Total risk-adjusted assets (E).................................................................
Millions of yen
2008
2007
¥ 1,420,877
57,826
1,740,610
(123,989)
(60,135)
(27,323)
43
1,643,903
(178,645)
(44,045)
(47,657)
4,381,464
334,313
37,220
59,517
67,758
2,523,062
3,021,872
3,021,872
737,792
¥ 6,665,543
¥ 49,095,397
10,239,755
430,220
3,351,976
¥ 63,117,349
¥ 1,420,877
57,773
1,386,436
(123,454)
(66,619)
(30,656)
14
1,399,794
(100,850)
(40,057)
—
3,903,257
825,432
39,367
35,309
175,921
2,564,195
3,640,226
3,640,226
690,759
¥ 6,852,723
¥ 47,394,806
8,713,413
412,044
4,020,082
¥ 60,540,346
(A) / (E) x 100 .........................................................................................
6.94%
6.44%
(D) / (E) x 100.........................................................................................
(E) x 8%..................................................................................................
10.56%
11.31%
¥ 5,049,387
¥ 4,843,227
* “Deductions” refers to deductions stipulated in Article 8-1 of the Notification and includes willful holding of securities issued by other financial institutions and
securities stipulated in Clause 2.
SMFG 2008 139
■ Capital Requirements
March 31
Capital requirements for credit risk:
Internal ratings-based approach.....................................................................................................
Corporate exposures:................................................................................................................
Corporate exposures (excluding specialized lending)..........................................................
Sovereign exposures............................................................................................................
Bank exposures....................................................................................................................
Specialized lending ..............................................................................................................
Retail exposures:.......................................................................................................................
Residential mortgage exposures..........................................................................................
Qualifying revolving retail exposures....................................................................................
Other retail exposures ..........................................................................................................
Equity exposures:......................................................................................................................
Grandfathered equity exposures ..........................................................................................
PD/LGD approach ................................................................................................................
Market-based approach .......................................................................................................
Simple risk weight method ..............................................................................................
Internal models method...................................................................................................
Credit risk-weighted assets under Article 145 of the Notification ..............................................
Securitization exposures ...........................................................................................................
Other exposures........................................................................................................................
Standardized approach ..................................................................................................................
Total capital requirements for credit risk.........................................................................................
Capital requirements for market risk:
Standardized measurement method ..............................................................................................
Interest rate risk.........................................................................................................................
Equity position risk ....................................................................................................................
Foreign exchange risk ...............................................................................................................
Commodities risk.......................................................................................................................
Options ......................................................................................................................................
Internal models method ..................................................................................................................
Total capital requirements for market risk ......................................................................................
Capital requirements for operational risk .......................................................................................
Total amount of capital requirements .............................................................................................
Billions of yen
2008
2007
¥5,294.7
3,351.0
2,943.4
42.8
137.3
227.5
844.3
336.8
123.6
383.9
368.6
245.3
53.1
70.1
59.7
10.4
241.5
164.1
325.3
677.6
¥5,972.3
9.2
6.9
0.2
2.0
—
—
25.3
34.4
268.2
¥6,274.9
¥5,155.6
3,185.5
2,836.8
42.8
126.6
179.3
763.6
332.1
81.1
350.4
424.6
336.2
35.7
52.7
52.7
—
301.5
158.9
321.3
487.1
¥5,642.7
4.7
3.2
0.6
0.9
—
—
28.2
33.0
321.6
¥5,997.2
Notes: 1. Capital requirements for credit risk are capital equivalents to “credit risk-weighted assets x 8%” under the standardized approach and “credit risk-weighted assets x 8% + expected
loss amount” under the internal ratings-based approach. Regarding exposures to be deducted from capital, the deduction amount is added to the amount of required capital.
2. The above amounts are after credit risk mitigation.
3. Securitization exposures include such exposure based on the standardized approach.
4. “Other exposures” includes estimated lease residual values, purchased receivables (including exposure to qualified corporate enterprises and others), and other assets.
■ Internal Ratings-Based (IRB) Approach
1. Scope
SMFG and the following consolidated subsidiaries have adopted the foundation IRB approach for exposures.
(1) Domestic Operations
Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Card Company, Limited, SMBC Guarantee Co., Ltd. and SMBC Finance
Service Co., Ltd.
(2) Overseas Operations
Sumitomo Mitsui Banking Corporation Europe Limited, Sumitomo Mitsui Banking Corporation of Canada, Banco Sumitomo Mitsui
Brasileiro S.A., PT Bank Sumitomo Mitsui Indonesia, SMBC Leasing and Finance, Inc., SMBC Capital Markets, Inc., SMBC Capital
Markets Limited, and SMBC Derivative Products Limited
Further, of consolidated subsidiaries that have adopted the standardized approach for exposures as of March 31, 2008, Sumitomo Mitsui
Finance and Leasing Co., Ltd., THE MINATO BANK, LTD., and Kansai Urban Banking Corporation are scheduled to adopt the foundation
IRB approach from March 31, 2010.
Note: Directly controlled SPCs and limited partnerships for investment of consolidated subsidiaries using the foundation IRB approach have also adopted the foundation IRB approach.
Further, the IRB approach is applied to equity exposures on a group basis, including equity exposures of consolidated subsidiaries applying the standardized approach.
140
SMFG 2008
2. Exposures by Asset Class
(1) Corporate Exposures
A. Corporate, Sovereign and Bank Exposures
(A) Rating Procedures
●
“Corporate, sovereign and bank exposures” includes credits to domestic and overseas C&I companies, individuals for business
purposes (domestic only), sovereigns, public sector entities, and financial institutions. Business loans such as apartment
construction loans, and SME loans with the standardized screening process (hereinafter referred to as “standardized SME loans”)
are, in principle, included in “retail exposures”. However, credits of more than ¥100 million are treated as corporate exposures in
accordance with the Notification.
● An obligor is assigned an obligor grade by first assigning a financial grade using a financial strength grading model and data
●
obtained from the obligor’s financial statements. The financial grade is then adjusted taking into account the actual state of the
obligor’s balance sheet and qualitative factors to derive the obligor grade (for details, please refer to “Credit Risk Assessment and
Quantification” on page 39). Different rating series are used for domestic and overseas obligors - J1 ~ J10 for domestic obligors
and G1 ~ G10 for overseas obligors - as shown below due to differences in actual default rate levels and portfolios’ grade
distribution. Different PD (Probability of Default) values are applied also.
In addition to the above basic rating procedure which builds on the financial grade assigned at the beginning, in some cases, the
obligor grade is assigned based on the parent company’s credit quality or credit ratings published by external rating agencies. The
Japanese government, local authorities and other public sector entities with special basis for existence and unconventional
financial statements are assigned obligor grades based on their attributes (for example, “local municipal corporations”), as the data
on these obligors are not suitable for conventional grading models. Further, credits to individuals for business purposes, business
loans and standardized SME loans are assigned obligor grades using grading models developed specifically for these exposures.
● PDs used for calculating credit risk-weighted assets are estimated based on the default experience for each grade and taking into
account the possibility of estimation errors. In addition to internal data, external data are used to estimate and validate PDs. The
definition of default is the definition stipulated in the Notification (an event that would lead to an exposure being classified as
“substandard loans,” “doubtful assets” or “bankrupt and quasi-bankrupt assets” occurring to the obligor).
Obligor Grade
Domestic
Corporate
Domestic
Corporate
J1
J2
J3
J4
J5
J6
J7
G1
G2
G3
G4
G5
G6
G7
Very high certainty of debt repayment
Normal Borrowers
Definition
Borrower Category
High certainty of debt repayment
Satisfactory certainty of debt repayment
Debt repayment is likely but this could change in
cases of significant changes in economic trends or
business environment
No problem with debt repayment over the short
term, but not satisfactory over the mid - to long -
term and the situation could change in cases of
significant changes in economic trends or business
environment
Currently no problem with debt repayment, but
there are unstable business and financial factors
that could lead to debt repayment problems
Close monitoring is required due to problems in
meeting loan terms and conditions, sluggish/unstable
business, or financial problems
Borrowers Requiring Caution
J7R
G7R
Of which substandard borrowers
Substandard Borrowers
J8
J9
G8
G9
Currently not bankrupt, but experiencing business
difficulties, making insufficient progress in
restructuring, and highly likely to go bankrupt
Though not yet legally or formally bankrupt, has
serious business difficulties and rehabilitation is
unlikely; thus, effectively bankrupt
Potentially Bankrupt Borrowers
Effectively Bankrupt Borrowers
J10
G10
Legally or formally bankrupt
Bankrupt Borrowers
SMFG 2008 141
(B) Portfolio
a. Domestic Corporate, Sovereign and Bank Exposures
Total
¥18,826.6
13,657.5
1,820.6
15,013.1
6,158.2
937.6
¥56,413.7
Total
¥18,261.6
14,378.6
1,978.0
March 31, 2008
J1-J3 .....................................................
J4-J6 .....................................................
J7 (excluding J7R) ................................
Japanese government and
local municipal corporations ............
Other.....................................................
Default (J7R, J8-J10)............................
Total......................................................
March 31, 2007
J1-J3 .....................................................
J4-J6 .....................................................
J7 (excluding J7R) ................................
Japanese government and
local municipal corporations ............
Other.....................................................
Default (J7R, J8-J10)............................
Total......................................................
Notes: 1. “LGD” stands for loss given default.
Billions of yen
Exposure amount
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
¥13,563.7
10,647.2
1,588.6
¥ 5,263.0
3,010.3
232.0
0.10%
1.10
11.50
44.74%
41.31
42.34
13,854.4
5,309.2
905.6
¥45,868.7
1,158.7
849.0
32.0
¥10,545.0
0.00
1.54
100.00
—
41.65
43.29
42.77
—
Billions of yen
Exposure amount
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
¥13,350.4
11,355.4
1,759.6
10,983.0
6,793.1
991.9
¥53,386.2
10,875.2
6,016.1
965.0
¥44,321.7
¥ 4,911.1
3,023.2
218.4
107.8
777.0
26.9
¥ 9,064.5
0.10%
0.84
10.67
44.97%
41.78
40.63
0.00
1.26
100.00
—
44.70
43.48
43.45
—
Weighted-
average
risk weight
23.61%
69.45
174.93
0.49
74.03
—
—
Weighted-
average
risk weight
22.88%
63.13
161.66
0.46
70.91
—
—
2. “Other” includes exposures guaranteed by credit guarantee corporations, exposures to public sector entities and voluntary organizations, and exposures to
obligors not assigned obligor grades because they have yet to close their books (for example, newly established companies), as well as business loans and
standardized SME loans of more than ¥100 million.
b. Overseas Corporate, Sovereign and Bank Exposures
Billions of yen
Exposure amount
March 31, 2008
G1-G3 ...................................................
G4-G6 ...................................................
G7 (excluding G7R) .............................
Other.....................................................
Default (G7R, G8-G10).........................
Total......................................................
Total
¥ 21,243.9
985.7
176.0
75.5
70.9
¥ 22,552.0
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
¥12,861.7
744.8
79.7
57.2
24.9
¥13,768.3
¥8,382.2
240.8
96.3
18.4
46.0
¥8,783.7
0.17%
1.71
23.72
1.38
100.00
—
39.04%
44.42
44.89
44.89
44.63
—
Billions of yen
Exposure amount
March 31, 2007
G1-G3 ...................................................
G4-G6 ...................................................
G7 (excluding G7R) .............................
Other.....................................................
Default (G7R, G8-G10).........................
Total......................................................
Total
¥ 12,579.4
670.4
152.0
163.6
88.7
¥ 13,654.1
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
¥6,984.1
478.4
71.5
121.5
77.8
¥7,733.3
¥5,595.3
192.0
80.5
42.1
10.9
¥5,920.8
0.22%
1.71
27.13
0.94
100.00
—
43.73%
44.66
44.89
44.88
44.95
—
Weighted-
average
risk weight
27.20%
106.65
239.05
112.32
—
—
Weighted-
average
risk weight
38.57%
105.65
251.83
86.24
—
—
Note: “Other” includes exposures to obligors not assigned obligor grades because they have yet to close their books (for example, newly established companies).
142
SMFG 2008
B. Specialized Lending (SL)
(A) Rating Procedures
●
“Specialized lending” is sub-classified into “project finance,” “object finance,” “commodities finance,” “income-producing real
estate” (IPRE) and “high-volatility commercial real estate” (HVCRE) in accordance with the Notification. Project finance is
financing of a single project, such as a power plant or transportation infrastructure, and cash flows generated by the project is the
primary source of repayment. Object finance includes aircraft finance and ship finance, and IPRE and HVCRE include real estate
finance (a primary example is non-recourse real estate finance). There were no commodities finance exposures as of March 31, 2008.
● Each SL product is assigned a grade using grading models based primarily on the expected loss ratio, and qualitative assessment.
As with obligor grades, there are ten grade levels but the definition of each grade differs from that of the obligor grade which is
focused on PD.
The credit risk-weighted asset amount for the SL category is calculated by mapping the expected loss-based facility grades to
the below five categories of the Notification.
(B) Portfolio
a. Project Finance, Object Finance and IPRE
March 31
Strong:
Risk weight
Project
finance
2008
Object
finance
IPRE
Project
finance
2007
Object
finance
IPRE
Billions of yen
Residual term less than 2.5 years ................
Residual term 2.5 years or more ..................
50%
70%
¥ 123.4
583.0
¥
7.3
67.5
¥ 423.3
705.0
¥ 100.4
435.9
¥ 3.2
64.8
¥ 274.6
695.7
Good:
Residual term less than 2.5 years ................
Residual term 2.5 years or more ..................
Satisfactory........................................................
Weak .................................................................
Default ...............................................................
Total ..................................................................
70%
90%
115%
250%
—
28.3
285.3
40.5
15.4
5.0
¥1,080.9
—
15.2
16.0
4.7
0.1
¥ 110.9
53.4
132.0
83.2
10.7
—
¥1,407.5
34.8
146.8
31.4
22.7
3.6
¥ 775.6
1.0
10.0
9.0
8.2
—
¥ 96.3
44.7
105.0
56.4
1.5
—
¥1,177.9
b. HVCRE
March 31
Strong:
Risk weight
Billions of yen
2008
2007
Residual term less than 2.5 years ...............
Residual term 2.5 years or more .................
70%
95%
¥
3.9
—
¥
5.9
5.6
Good:
Residual term less than 2.5 years ...............
Residual term 2.5 years or more .................
Satisfactory .......................................................
Weak ................................................................
Default ..............................................................
Total..................................................................
95%
120%
140%
250%
—
76.3
105.1
201.5
—
—
¥ 386.8
86.8
46.4
162.0
—
—
¥306.7
(2) Retail Exposures
A. Residential Mortgage Exposures
(A) Rating Procedures
●
“Residential mortgage exposures” includes mortgage loans to individuals and some real estate loans in which the property consists
of both residential and commercial facilities such as a store or rental apartment units, but excludes apartment construction loans.
● Mortgage loans are rated as follows.
Mortgage loans are allocated to a portfolio segment with similar risk characteristics in terms of (a) default risk determined using
loan contract information, results of an exclusive grading model and a borrower category under self-assessment executed in
accordance with the financial inspection manual of the Japanese FSA, and (b) recovery risk at the time of default determined using
LTV (Loan To Value) calculated based on the assessment value of collateral real estate. PDs and LGDs are estimated based on the
default experience for each segment and taking into account the possibility of estimation errors.
Further, the portfolio is subdivided based on the lapse of years from the contract date, and the effectiveness of segmentation in
terms of default risk and recovery risk is validated periodically.
Internal data are used to estimate and validate PDs and LGDs. The definition of default is the definition stipulated in the
Notification.
SMFG 2008 143
(B) Portfolio
March 31, 2008
Mortgage loans
PD segment:
Not delinquent
Billions of yen
Exposure amount
Total
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
Weighted-
average
risk weight
Use model .............................
Other .....................................
Delinquent ..................................
Default ..................................................
Total......................................................
¥ 9,086.6
853.1
51.5
114.9
¥ 10,106.1
¥ 8,993.8
853.1
44.8
114.2
¥10,005.9
¥ 92.8
—
6.6
0.8
¥100.2
0.39%
0.78
38.53
100.00
—
40.15%
61.05
44.49
40.94
—
25.59%
70.76
249.90
29.07
—
Billions of yen
Exposure amount
Total
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
Weighted-
average
risk weight
March 31, 2007
Mortgage loans
PD segment:
Not delinquent
Use model .............................
Other .....................................
Delinquent ..................................
Default ..................................................
Total......................................................
¥ 8,925.2
915.3
39.1
119.3
¥ 9,998.9
¥ 8,818.8
915.3
31.9
116.7
¥ 9,882.7
¥ 106.4
—
7.3
2.6
¥ 116.2
0.32%
0.62
26.34
100.00
—
45.91%
70.60
51.49
46.09
—
25.11%
67.60
287.54
26.54
—
Notes: 1. “Other” includes loans guaranteed by employers.
2. “Delinquent” loans are past due loans and loans to obligors categorized as “Borrowers Requiring Caution” that do not satisfy the definition of default stipulated
in the Notification.
3. The EL default weighted average is included in the LGD weighted average for default. Please note that the LGD weighted average for default as of March 31,
2007 was 48.21% and as of March 31, 2008 was 43.27%.
144
SMFG 2008
B. Qualifying Revolving Retail Exposures (QRRE)
(A) Rating Procedures
●
“Qualifying revolving retail exposures” includes card loans and credit card balances.
● Card loans and credit card balances are rated as follows.
Card loans and credit card balances are allocated to a portfolio segment with similar risk characteristics determined based, for card
loans, on the credit quality of the loan guarantee company, credit limit, settlement account balance and payment history, and, for
credit card balances, on repayment history and frequency of use.
PDs and LGDs used to calculate credit risk-weighted asset amounts are estimated based on the default experience for each
segment and taking into account the possibility of estimation errors.
Further, the effectiveness of segmentation in terms default risk and recovery risk is validated periodically; internal data are used
to estimate and validate PDs and LGDs; and the definition of default is the definition stipulated in the Notification.
(B) Portfolio
March 31, 2008
Card loans
PD segment:
Billions of yen
Exposure amount
On-balance sheet assets
Total
Balance
Increase
Off-balance
sheet
assets
Undrawn
amount
Average
CCF
Weighted-
average
PD
Weighted-
average
LGD
Weighted-
average
risk weight
Not delinquent .....
Delinquent ...........
¥ 451.3
59.9
¥ 379.3
58.7
¥ 71.9
1.2
¥ —
—
¥ 146.2
8.6
49.18%
14.24
2.04%
47.35
83.41%
90.63
51.67%
257.00
Credit card balances
PD segment:
Not delinquent .....
Delinquent ...........
Default ...........................
Total ..............................
March 31, 2007
Card loans
PD segment:
978.3
7.0
22.3
¥1,518.7
653.0
5.7
19.6
¥1,116.4
325.3
1.2
2.7
¥402.3
—
—
—
¥ —
3,795.9
—
—
¥ 3,950.7
8.57
—
—
—
1.14
75.37
100.00
—
79.82
82.68
81.79
—
26.80
137.44
83.99
—
Billions of yen
Exposure amount
On-balance sheet assets
Total
Balance
Increase
Off-balance
sheet
assets
Undrawn
amount
Average
CCF
Weighted-
average
PD
Weighted-
average
LGD
Weighted-
average
risk weight
Not delinquent .....
Delinquent ...........
¥ 430.4
29.9
¥ 356.3
29.2
¥ 74.1
0.7
¥ —
—
¥ 141.8
4.3
52.24%
15.33
2.45%
9.81
79.11%
81.16
58.93%
126.30
Credit card balances
PD segment:
Not delinquent .....
Delinquent ...........
Default ...........................
Total ..............................
904.3
6.0
14.4
¥1,385.1
599.4
4.9
12.3
¥1,002.1
305.0
1.1
2.2
¥ 383.0
—
—
—
¥ —
3,497.3
—
—
¥3,643.4
8.72
—
—
—
1.09
71.46
100.00
—
80.49
83.42
83.22
—
26.27
152.96
48.93
—
Notes: 1. The on-balance sheet exposure amount is estimated by estimating the amount of increase in each transaction balance and not by multiplying the undrawn
amount by CCF (credit conversion factor).
2. “Average CCF” is the “on-balance sheet exposure amount ÷ undrawn amount” and provided for reference only. It is not used for estimating on-balance sheet
exposure amounts.
3. Past due loans of less than three months are recorded in “delinquent.”
4. The EL default weighted average is included in the LGD weighted average for default. Please note that the LGD weighted average for default as of March 31,
2007 was 87.13% and as of March 31, 2008 was 88.51%.
SMFG 2008 145
C. Other Retail Exposures
(A) Rating Procedures
●
“Other retail exposures” includes business loans such as apartment construction loans, standardized SME loans, and consumer
loans such as My Car Loan.
● Business loans, standardized SME loans and consumer loans are rated as follows.
a. Business loans and standardized SME loans are allocated to a portfolio segment with similar risk characteristics in terms of (a)
default risk determined using loan contract information, results of an exclusive grading model and a borrower category under
self-assessment executed in accordance with the financial inspection manual of the Japanese FSA, and (b) recovery risk
determined based on, for standardized SME loans, obligor attributes and, for business loans, LTV. PD and LGD are estimated
based on the default experience for each segment and taking into account the possibility of estimation errors.
b. Rating procedures for consumer loans depends on whether the loan is collateralized. Collateralized consumer loans are allocated
to a portfolio segment using the same standards as for mortgage loans of “A. Residential Mortgage Exposures.”
Uncollateralized consumer loans are allocated to a portfolio segment based on account history. PDs and LGDs are estimated
based on the default experience for each segment and taking into account the possibility of estimation errors.
Further, the effectiveness of segmentation in terms default risk and recovery risk is validated periodically, and internal data
are used to estimate and validate PDs and LGDs. The definition of default is the definition stipulated in the Notification.
(B) Portfolio
March 31, 2008
Business loans
PD segment:
Not delinquent
Billions of yen
Exposure amount
Total
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
Weighted-
average
risk weight
Use model .............................
Other .....................................
Delinquent ..................................
¥1,506.6
231.9
524.7
¥ 1,485.0
231.6
520.8
¥ 21.7
0.4
3.9
1.16%
1.25
11.72
62.77%
56.70
67.99
59.31%
57.41
110.04
Consumer loans
PD segment:
Not delinquent
Use model .............................
Other .....................................
Delinquent ..................................
Default ..................................................
Total......................................................
319.5
240.8
38.0
214.3
¥3,075.9
302.9
238.7
37.6
211.4
¥ 3,028.0
16.6
2.1
0.3
2.8
¥ 47.9
1.63
1.81
31.17
100.00
—
43.46
65.68
47.27
61.85
—
51.07
81.19
120.99
65.39
—
Billions of yen
Exposure amount
Total
On-balance
sheet assets
Off-balance
sheet assets
Weighted-
average PD
Weighted-
average LGD
Weighted-
average
risk weight
March 31, 2007
Business loans
PD segment:
Not delinquent
Use model .............................
Other .....................................
Delinquent ..................................
¥1,805.5
208.7
352.2
¥1,790.1
208.7
348.5
¥ 15.4
0.0
3.7
1.82%
1.78
10.99
60.42%
53.09
60.21
64.34%
62.24
98.65
Consumer loans
PD segment:
Not delinquent
Use model .............................
Other .....................................
Delinquent ..................................
Default ..................................................
Total......................................................
370.1
249.3
37.2
195.8
¥3,218.8
356.3
247.1
36.9
184.0
¥3,171.5
13.8
2.3
0.3
11.8
¥ 47.3
1.47
1.76
23.10
100.00
—
45.11
66.29
49.81
56.46
—
51.30
64.45
116.06
44.71
—
Notes: 1. “Business loans” includes apartment construction loans and standardized SME loans.
2. “Other” includes loans guaranteed by employers.
3. Delinquent” loans are past due loans and loans to obligors categorized as “Borrowers Requiring Caution” that do not satisfy the definition of default stipulated
in the Notification.
4. The EL default weighted average is included in the LGD weighted average for default. Please note that the LGD weighted average for default as of March 31,
2007 was 60.04% and as of March 31, 2008 was 67.08%.
146
SMFG 2008
(3) Equity Exposures and Credit Risk-Weighted Assets under Article 145 of the Notification
A. Equity Exposures
(A) Rating Procedures
When acquiring equities subject to the PD/LGD approach, issuers are assigned obligor grades using the same rules as those of general
credits to C&I companies, sovereigns and financial institutions. The obligors are monitored (for details, please refer to page 41) and
their grades are revised if necessary (credit risk-weighted asset amount is set to 1.5 times when they are not monitored individually). In
the case there is no credit transaction with the issuer or it is difficult to obtain financial information, internal grades are assigned using
ratings of external rating agencies if it is a qualifying investment. In the case it is difficult to obtain financial information and it is not
a qualifying investment, the simple risk weight method under the market-based approach is applied.
(B) Portfolio
a. Equity Exposure Amounts
March 31
Market-based approach ....................................................................................................
Simple risk weight method...........................................................................................
Listed equities (300%) ............................................................................................
Unlisted equities (400%).........................................................................................
Internal models method ...............................................................................................
PD/LGD approach.............................................................................................................
Grandfathered equity exposures.......................................................................................
Total ..................................................................................................................................
Billions of yen
2008
¥ 238.8
191.0
60.1
130.9
47.9
504.2
2,892.9
¥ 3,636.0
2007
¥ 166.8
166.8
45.6
121.2
—
367.5
3,965.0
¥ 4,499.3
Notes: 1. The above exposures are equity exposures stipulated in the Notification and differ from “stocks” described in the consolidated financial statements.
2. The “Grandfathered equity exposures” amount was calculated in accordance with Supplementary Provision No. 15 of the Notification.
b. PD/LGD Approach
March 31
J1-J3.....................................................
J4-J6.....................................................
J7 (excluding J7R)................................
Other.....................................................
Default (J7R, J8-J10)............................
Total......................................................
Billions of yen
2008
2007
Exposure
amount
Weighted-
average PD
¥ 481.8
10.4
11.1
0.9
0.1
¥ 504.2
0.08%
0.60
9.89
2.60
100.00
—
Weighted-
average risk
weight
111.66%
194.76
440.46
275.48
—
—
Exposure
amount
Weighted-
average PD
¥ 350.0
8.9
4.4
4.2
0.0
¥ 367.5
0.05%
0.47
9.30
2.24
100.00
—
Weighted-
average
risk weight
104.84%
176.29
432.42
275.00
—
—
Notes: 1. The above exposures are “equity exposures” stipulated in the Notification to which the PD/LGD approach is applied and differ from “stocks” of consolidated
financial statements.
2. “Other” includes exposures to public sector entities.
B. Credit Risk-Weighted Assets under Article 145 of the Notification
(A) Outline of method for calculating credit risk assets
Exposures under Article 145 of the Notification include credits to funds. In the case of such exposures, in principle, each underlying
asset of the fund is assigned an obligor grade to calculate the asset’s credit risk-weighted asset amount and the amounts are totaled to
derive the credit risk-weighted asset amount of the fund. When stocks account for more than half of the underlying assets of the
fund, or it is difficult to directly calculate the credit risk-weighted asset amount of individual underlying assets, the credit risk-
weighted asset amount of the fund is calculated using the simple majority adjustment method, in which credit risk assets are
calculated using a risk weight of 400% (when the risk weighted average of individual assets underlying the portfolio is less than
400%) or a risk weight of 1,250% (in other cases).
(B) Portfolio
March 31
Billions of yen
2008
2007
Exposures under Article 145 of the Notification................................................................
¥ 1,010.8
¥ 1,896.2
SMFG 2008 147
(4) Analysis of Actual Losses
A. Year-On-Year Comparison of Actual Losses
SMFG recorded total credit costs (general provisions, nonperforming loan write-offs, and gains on collection of written-off claims) of
¥248.6 billion on a consolidated basis in fiscal 2007, a year-on-year increase of ¥103.6 billion.
SMBC recorded ¥147.8 billion in total credit costs on a nonconsolidated basis in fiscal 2007, a year-on-year increase of ¥58.3 billion.
In terms of credit exposure category, credit costs for corporate exposures increased ¥84.6 billion, to ¥143.2 billion. The principal factors
accounting for this increase were the removal of nonperforming exposure from the balance sheets, a decline in the amount of reversal of
reserves for possible loan losses accompanying the improvement in obligor classification of loan customers and as a result of other factors,
and the emergence of unexpected deterioration in the standing of a portion of obligors as a result of worsening of industry conditions. In
addition, credit costs for other retail exposures increased ¥15.8 billion, to ¥59.8 billion, mainly due to higher default rates.
Total Credit Costs
Billions of yen
Fiscal 2007
Fiscal 2006
Fiscal 2005
Fiscal 2007 increase
(decrease) from
Fiscal 2006
SMFG (consolidated) total ...........................................
SMBC (consolidated) total ...........................................
SMBC (nonconsolidated) total .....................................
Corporate exposures ..............................................
Sovereign and bank exposures ..............................
Residential mortgage exposures ............................
QRRE......................................................................
Other retail exposures.............................................
¥ 248.6
221.6
147.8
143.2
0.5
0.1
0.0
59.8
¥ 145.0
122.9
89.5
58.7
(0.7)
0.5
(0.1)
43.9
¥ 302.0
275.0
230.9
49.1
(0.4)
(0.1)
0.7
33.6
¥ 103.6
98.7
58.3
84.6
1.2
(0.4)
0.1
15.8
Notes: 1. The above amounts do not include gains/losses on equity exposures, exposures on capital market-driven transactions (such as bonds) and exposures under Article 145 of
the Notification that were recognized as gains/losses on bonds and stocks in the income statement.
2. Exposure category amounts do not include general provisions for Normal Borrowers.
3. Bracketed fiscal year amount indicates gains generated by the reversal of provisions, etc.
4. Credit costs for residential mortgages and QRRE guaranteed by consolidated subsidiaries are not included in the total credit costs of SMBC (nonconsolidated).
B. Comparison of Estimated and Actual Losses
Billions of yen
Estimated loss amounts
After deduction
of reserves
Actual losses
(Fiscal 2007)
SMFG (consolidated) total .........................................................................................
SMBC (consolidated) total .........................................................................................
SMBC (nonconsolidated) total ...................................................................................
Corporate exposures ............................................................................................
Sovereign and bank exposures ............................................................................
Residential mortgage exposures ..........................................................................
QRRE ...................................................................................................................
Other retail exposures ..........................................................................................
¥ —
—
741.1
637.4
10.8
4.5
0.1
88.3
¥ —
—
164.8
111.5
9.0
4.0
0.1
53.3
¥248.6
221.6
147.8
143.2
0.5
0.1
0.0
59.8
Notes: 1. The “Estimated loss amounts” are the EL for the end of fiscal 2006. Amounts on consumer loans guaranteed by SMBC’s consolidated subsidiaries or its affiliates as
well as on equity exposures and other exposures subject to Article 145 of the Notification are excluded.
2. Representing the estimated loss amount “After deduction of reserves” for possible losses on substandard loans or below.
148
SMFG 2008
■ Standardized Approach
1. Scope
The following consolidated subsidiaries have adopted the standardized approach for exposures as of March 31, 2008. (i.e. consolidated
subsidiaries not listed in the “Internal Ratings-Based (IRB) Approach: 1. Scope” on page 140.)
(1) Consolidated subsidiaries planning to adopt phased rollout of the foundation IRB approach
Sumitomo Mitsui Finance and Leasing Co., Ltd., THE MINATO BANK, LTD., and Kansai Urban Banking Corporation. These three
subsidiaries are scheduled to adopt the foundation IRB approach from March 31, 2010.
(2) Other consolidated subsidiaries
These are consolidated subsidiaries judged not to be significant in terms of credit risk management based on the type of business, scale,
and other factors. These subsidiaries will adopt the standardized approach on a permanent basis.
2. Credit Risk-Weighted Asset Calculation Methodology
A 100% risk weight is applied to claims on corporates in accordance with Article 45 of the Notification, and risk weights corresponding to
country risk scores published by the Organization for Economic Cooperation and Development (OECD) are applied to claims on sovereigns
and financial institutions.
3. Exposure Balance by Risk Weight Segment
March 31
Billions of yen
2008
Assigned country
risk score
2007
Assigned country
risk score
0% .........................................................................................................
10% .......................................................................................................
20% .......................................................................................................
35% .......................................................................................................
50% .......................................................................................................
75% .......................................................................................................
100% .....................................................................................................
150% .....................................................................................................
Total ......................................................................................................
¥ 1,208.0
547.1
748.8
1,356.8
156.7
1,835.1
6,397.6
24.5
¥12,274.7
¥ 96.0
—
318.4
—
1.1
—
0.3
—
¥ 415.8
¥ 1,078.7
562.3
574.4
1,247.5
97.7
643.5
5,128.1
16.6
¥ 9,348.9
¥ 83.7
—
261.9
—
1.9
—
0.4
—
¥ 348.0
Notes: 1. The above amounts are exposures after credit risk mitigation (but before deduction of direct write-offs). Please note that for off-balance sheet assets the amount of
exposure has been included.
2. Securitization exposures have not been included.
SMFG 2008 149
■ Credit Risk Mitigation Techniques
1. Credit Risk Management Policy and Procedures
In calculating credit risk-weighted asset amounts, SMFG takes into account credit risk mitigation (CRM) techniques. Specifically, amounts
are adjusted for eligible financial or real estate collateral, guarantees, and credit derivatives or by netting loans against the obligors’ deposits
with SMFG financial institutions. The methods and scope of these adjustments and methods of supervision are as follows.
(1) Scope and Management
A. Collateral (Eligible Financial or Real Estate Collateral)
SMBC designates deposits and securities as eligible financial collateral and land and buildings as eligible real estate collateral.
Real estate collateral is evaluated by taking into account its fair value, appraised value, and current conditions, as well as our lien
position. Real estate collateral must maintain sufficient collateral value in the event security rights must be exercised due to delinquency.
However, during the period from acquiring the rights to exercising the rights, the property may deteriorate or suffer damages from
earthquakes or other natural disasters, or there may be changes in the lien position due to, for example, attachment or establishment of
liens by a third party. Therefore, the regular monitoring of collateral is implemented according the type of property and the type of
security interest.
B. Guarantees and Credit Derivatives
Guarantors are sovereigns, municipal corporations, credit guarantee corporations and other public entities, financial institutions, and
commercial/industrial (C&I) corporations. Counterparties to credit derivative transactions are mostly domestic and overseas banks and
securities companies.
Credit risk-weighted asset amounts are calculated taking into account credit risk mitigation of guarantees and credit derivatives
acquired from entities with sufficient ability to provide production, such as sovereigns, municipal corporations, and other public sector
entities of comparable credit quality, and financial institutions and C&I companies with sufficient credit ratings.
C. Netting of Loans against Deposits
SMBC verifies the legal effectiveness of netting arrangements for loans and deposits for each transaction. Specifically, lending transactions
subject to the netting of loans against deposits are stipulated in the “Agreement on Bank Transactions,” and fixed-term deposits that
have fixed maturity dates and cannot be transferred to third-party entities are subject to netting. Regarding deposits with us submitted
as collateral, their effect as credit risk mitigation is taken into account under the eligible financial collateral framework described in A.
above.
Further, maturity dates and balances (including the post-netting situation) are monitored for subject loans and deposits in accordance
with the Notification. When there is a maturity/currency mismatch, netting is executed after making adjustments as stipulated in the
Notification, and the credit risk-weighted asset amount is calculated after netting.
(2) Concentration of Credit Risk and Market Risk Accompanying Application of Credit Risk Mitigation (CRM) Techniques
At SMBC, there is a framework in place for controlling concentrations of risk in obligors with large exposures, which includes credit limit
guidelines, risk concentration monitoring, and reporting to the Credit Risk Committee (please refer to page 38). Further, exposures to these
obligors are monitored on a group basis, taking account of risk concentration in their parent companies in cases of guaranteed exposures.
When marketable financial products (for example, credit derivatives) are used as credit risk mitigants, market risk generated by these
products is controlled by setting upper limits.
150
SMFG 2008
2. Exposure Balance after CRM
March 31
Billions of yen
2008
2007
Eligible financial
collateral
Eligible real
estate collateral
Eligible financial
collateral
Eligible real
estate collateral
Foundation IRB approach .....................................................................
Corporate exposures........................................................................
Sovereign exposures........................................................................
Bank exposures................................................................................
Standardized approach .........................................................................
Total ......................................................................................................
¥ 5,070.6
997.0
1,107.4
2,966.2
104.6
¥ 5,175.2
¥ 3,081.8
3,080.3
1.4
0.1
—
¥ 3,081.8
¥ 2,325.5
1,675.0
0.1
650.4
133.4
¥ 2,458.9
¥ 2,661.4
2,660.2
1.2
0.1
—
¥ 2,661.4
Billions of yen
2008
2007
March 31
Guarantee
Credit derivative
Guarantee
Credit derivative
Foundation IRB approach .....................................................................
Corporate exposures........................................................................
Sovereign exposures........................................................................
Bank exposures................................................................................
Residential mortgage exposures......................................................
QRRE ...............................................................................................
Other retail exposures ......................................................................
Standardized approach .........................................................................
Total ......................................................................................................
¥ 5,078.6
4,189.8
245.2
399.9
243.6
—
0.2
120.4
¥ 5,199.0
¥ 302.5
302.5
—
—
—
—
—
—
¥ 302.5
¥ 3,659.7
3,044.9
58.3
294.8
261.3
—
0.4
90.2
¥ 3,749.9
¥ 226.0
226.0
—
—
—
—
—
—
¥ 226.0
■ Derivative Transactions and Long Settlement Transactions
1. Risk Management Policy and Procedures
(1) Policy on Collateral Security and Impact of Deterioration of Our Credit Quality
Collateralized derivative is a CRM technique in which collateral is delivered or received regularly in accordance with replacement cost.
The Group conducts collateralized derivative transactions as necessary, thereby reducing credit risk. In the event our credit quality
deteriorates, however, the counterparty may demand additional collateral, but its impact is deemed to be insignificant.
(2) Netting
Netting is another CRM technique, and “close-out netting” is the main type of netting. In close-out netting, when a default event, such
as bankruptcy, occurs to the counterparty, all claims against, and obligations to, the counterparty, regardless of maturity and currency,
are netted out to create a single claim or obligation.
Close-out netting is applied to foreign exchange and swap transactions covered under a master agreement with a net-out clause or
other means of securing legal effectiveness, and the effect of CRM is taken into account only for such claims and obligations.
2. Credit Equivalent Amounts
(1) Derivative Transactions and Long Settlement Transactions
A. Calculation Method
Current exposure method
SMFG 2008 151
B. Credit Equivalent Amounts
March 31
Gross replacement cost........................................................................................................
Gross add-on amount...........................................................................................................
Gross credit equivalent amount............................................................................................
Foreign exchange related transactions ...........................................................................
Interest rate related transactions.....................................................................................
Gold related transactions ................................................................................................
Equities related transactions ...........................................................................................
Precious metals (excluding gold) related transactions ....................................................
Other commodity related transactions.............................................................................
Credit default swaps........................................................................................................
Reduction in credit equivalent amount due to netting ..........................................................
Net credit equivalent amount................................................................................................
Collateral amount .................................................................................................................
Qualifying financial collateral...........................................................................................
Qualifying real estate collateral .......................................................................................
Net credit equivalent amount
Billions of yen
2008
¥ 4,796.6
3,977.6
8,774.2
4,116.3
4,244.9
—
2.1
—
289.5
121.4
4,535.8
4,238.4
170.7
60.2
110.4
2007
¥ 2,901.8
3,931.1
6,832.9
2,932.7
3,616.1
—
2.3
—
265.1
16.7
3,253.1
3,579.8
216.6
122.7
93.9
(after taking into account credit risk mitigation effect of collateral) ....................................
¥ 4,238.4
¥ 3,579.8
Note: The net credit equivalent amount was the same before and after taking into account the CRM effect of collateral as the foundation IRB approach and simple
approach of the standardized approach have been adopted.
(2) Notional Principal Amounts of Credit Derivatives
March 31
Billions of yen
2008
2007
Notional principal
amount
Of which for CRM
Notional principal
amount
Of which for CRM
Protection purchased ...................................................
Protection provided ......................................................
¥ 1,559.0
1,134.7
¥302.5
—
¥1,260.4
1,067.4
¥ 226.0
—
Note: The “Notional principal amount” is defined as the total of “amounts subject to calculation of credit equivalents” and “amounts employed for CRM.”
152
SMFG 2008
■ Securitization Exposures
1. Risk Management Policies and Procedures
Definition of securitization exposure has been clarified in order to properly identify, measure, evaluate and report risks, and a risk
management department, independent of business units, has been established to centrally manage risks from recognizing
securitization exposures to measuring, evaluating and reporting credit risk-weighted assets.
The Group takes one of the following positions in securitization transactions.
● Originator (a direct or indirect originator of underlying assets or a sponsor of an ABCP conduit or a similar program that acquires
exposures from third-party entities)
Investor
●
● Other (for example, provider of swaps for preventing a mismatch between the dividend on trust beneficiary rights and cash flows
generated by underlying assets on which the rights are issued)
2. Credit Risk-Weighted Asset Calculation Methodology
There are three methods of calculating the credit risk-weighted asset amount of securitization exposures subject to the IRB approach:
the external ratings-based approach, supervisory formula, and the internal assessment approach. The methods are used as follows.
● First, securitization exposures are examined and the external ratings-based approach is applied to qualifying exposures.
● The remaining exposures are examined and the supervisory formula is applied to qualifying exposures.
● The remaining exposures are deducted from capital.
The credit risk-weighted asset amount for securitization exposures subject to the standardized approach is calculated mostly using
ratings published by qualifying rating agencies or based on weighted average risk weights of underlying assets as stipulated in the
Notification.
3. Accounting Policy on Securitization Transactions
Accounting treatment of securitization of financial assets is as follows. Extinguishment of financial assets is recognized when the
contractual rights over the financial assets is exercised, forfeited or control over the rights is transferred to a third-party, and the
difference between the book value of the financial assets and the amount received/paid is recorded as the term’s gain/loss. When the
control over the contractual rights is not deemed to have been transferred, the securitization transaction is treated as a financial
transaction such as a mortgage loan.
When a portion of financial assets satisfies the extinguishment condition, the extinguishment of the said portion is recognized and
the difference between the book value of the extinguished portion and the amount received/paid is recorded as the term’s gain/loss.
The book value of the extinguished portion is calculated by allocating the book value of the financial assets based on the proportion of
the financial assets’ fair value that the extinguished portion represents.
Further, the remaining portion is subject to self-assessment, and write-offs and provisions are made as necessary.
4. Qualifying External Ratings Agencies
When computing credit risk-weighted asset amounts for securitization exposures using the external rating-based approach under the
IRB approach or standardized approach, the risk weights are determined by mapping the ratings of qualifying rating agencies to the
risk weights stipulated in the Notification. The qualifying rating agencies are Rating and Investment Information, Inc. (R&I), Japan
Credit Rating Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), Standard & Poor’s Ratings Services (S&P), and Fitch
Ratings Ltd. (Fitch). When more than one rating is available for an exposure, the second smallest risk weight is used.
SMFG 2008 153
5. Portfolio
(1) Securitization Transactions as Originator
A. As Originator (excluding as Sponsor)
(A) Underlying Assets
Claims on corporates ...................................
Mortgage loans ............................................
Retail loans (excluding mortgage loans)......
Other claims.................................................
Total .............................................................
March 31, 2008
Underlying asset amount
Billions of yen
Fiscal 2007
Asset
transfer
type
¥ 171.3
1,751.7
64.1
148.4
¥ 2,135.5
Total
¥ 273.8
1,751.7
260.2
295.7
¥ 2,581.4
Synthetic
type
Securitized
amount
Default
amount
Loss
amount
Gains/losses
on sales
¥102.5
—
196.1
147.3
¥445.9
¥ 657.9
312.3
154.2
129.5
¥ 1,253.9
¥ 7.5
0.6
43.4
0.1
¥ 51.6
¥ 0.3
0.1
6.6
1.0
¥ 8.1
¥ —
15.9
—
0.0
¥15.9
March 31, 2007
Underlying asset amount
Billions of yen
Fiscal 2006
Asset
transfer
type
Total
Synthetic
type
Securitized
amount
Default
amount
Loss
amount
Gains/losses
on sales
Claims on corporates ...................................
Mortgage loans ............................................
Retail loans (excluding mortgage loans)......
Other claims.................................................
Total .............................................................
¥ 330.2
1,550.9
450.4
174.7
¥ 2,506.3
¥ 181.5
1,550.9
—
5.9
¥ 1,738.4
¥148.7
—
450.4
168.8
¥768.0
¥ 520.5
789.7
341.2
0.4
¥ 1,651.7
¥ 13.3
0.3
20.1
0.0
¥ 33.7
¥ 4.3
0.0
2.1
0.2
¥ 6.6
¥ —
26.8
—
—
¥26.8
Notes: 1. The above amounts include the amount of underlying assets securitized during the term without entailing securitization exposure.
2. The “Default amount” is the total of underlying assets which are past due three months or more and defaulted underlying assets.
3. Other claims” includes claims on PFI (Private Finance Initiative) businesses and lease fees.
4. Following Articles 230 and 248 of the Notification, there were no amounts that represent exposure to products subject to early call provisions to investors.
5. There were no credit risk-weighted assets calculated using Supplementary Provision 15 of the Notification.
(B) Securitization Exposures
a. Underlying Assets by Asset Type
March 31
Claims on corporates.......................
Mortgage loans................................
Retail loans
(excluding mortgage loans) ..........
Other claims ....................................
Total.................................................
b. Risk Weights
March 31
Billions of yen
2008
2007
Term-end
balance
To be deducted
from capital
Increase in
capital
equivalent
Term-end
balance
To be deducted
from capital
Increase in
capital
equivalent
¥ 139.8
170.1
80.0
90.9
¥ 480.8
¥ 5.3
35.9
12.8
20.5
¥74.4
¥ —
44.0
—
—
¥44.0
¥183.4
142.7
111.1
8.4
¥445.6
¥ 1.7
29.9
6.8
8.4
¥ 46.7
¥ —
40.1
—
—
¥ 40.1
Billions of yen
2008
2007
Term-end
balance
Required
capital
Term-end
balance
Required
capital
20% or less....................................................................................
100% or less..................................................................................
650% or less..................................................................................
1250% or less................................................................................
Capital deduction...........................................................................
Total ..............................................................................................
¥ 264.5
5.7
2.0
—
208.6
¥ 480.8
¥ 2.2
0.1
0.7
—
74.4
¥77.5
¥175.1
76.7
2.0
—
191.8
¥445.6
¥ 1.2
1.0
0.7
—
46.7
¥ 49.6
154
SMFG 2008
B. As Sponsor
(A) Underlying Assets
March 31, 2008
Underlying asset amount
Billions of yen
Fiscal 2007
Total
¥790.6
3.8
54.1
64.9
¥913.5
Asset
transfer
type
¥790.6
3.8
54.1
64.9
¥913.5
Synthetic
type
Securitized
amount
¥ —
—
—
—
¥ —
¥ 6,305.8
—
142.4
214.1
¥ 6,662.3
Billions of yen
Default
amount
¥156.8
0.6
1.2
1.5
¥160.1
Loss
amount
¥154.9
0.6
3.3
1.3
¥160.1
March 31, 2007
Underlying asset amount
Fiscal 2006
Total
¥ 1,014.3
—
37.1
124.2
¥ 1,175.6
Asset
transfer
type
¥ 1,014.3
—
37.1
124.2
¥ 1,175.6
Synthetic
type
Securitized
amount
Default
amount
¥ —
—
—
—
¥ —
¥ 5,898.5
—
0.5
175.0
¥ 6,074.0
¥206.0
—
0.0
1.5
¥207.5
Loss
amount
¥204.8
—
0.0
1.3
¥206.0
Claims on corporates ....................................
Mortgage loans .............................................
Retail loans (excluding mortgage loans) .......
Other claims ..................................................
Total ..............................................................
Claims on corporates ....................................
Mortgage loans .............................................
Retail loans (excluding mortgage loans) .......
Other claims ..................................................
Total ..............................................................
Notes: 1. The above amounts include the amount of underlying assets securitized during the term without entailing securitization exposure.
2. The “Default amount” is the amount of defaulted underlying assets and those past due three months or more.
3. The “Default amount” and “Loss amount” when acting as a sponsor of securitization of customer claims are estimated using the following methods and
alternative data are used as it is difficult to obtain relevant data in a timely manner because the underlying assets are recovered by the customer.
(1) “Default amount” estimation method
● For securitization transactions subject to the external ratings-based approach, the amount is estimated based on information on underlying assets
obtainable from customers, etc.
● For securitization transactions subject to the supervisory formula, the amount is estimated based on obtainable information on, or default rate of,
each obligor. Further, when it is difficult to estimate the amount using either method, it is conservatively estimated by assuming that the
underlying asset is a default asset.
(2) “Loss amount” estimation method
● For securitization transactions subject to the external ratings-based approach, the amount is the same amount as the default amount estimated
conservatively in (1) above.
● For securitization transactions subject to supervisory formula, when expected loss ratios of defaulted underlying assets can be determined, the
amount is estimated using the ratios. When it is difficult to determine the ratios, the amount is the same amount as the default amount estimated
in (1) above.
4. “Other claims” includes lease fees.
5. Following Articles 230 and 248 of the Notification, there were no amounts that represent exposure to products subject to early call provisions to investors.
6. There were no credit risk-weighted assets calculated using Supplementary Provision 15 of the Notification.
(B) Securitization Exposures
a. Underlying Assets by Asset Type
March 31
Claims on corporates.......................
Mortgage loans................................
Retail loans
(excluding mortgage loans) ..........
Other claims ....................................
Total.................................................
Note: “Other claims” includes lease fees.
Billions of yen
2008
2007
Term-end
balance
To be deducted
from capital
Increase in
capital
equivalent
Term-end
balance
To be deducted
from capital
Increase in
capital
equivalent
¥ 608.1
3.8
54.1
59.7
¥ 725.7
¥ 0.1
—
—
—
¥ 0.1
¥ —
—
—
—
¥ —
¥807.7
—
37.1
100.3
¥945.1
¥ 13.1
—
—
—
¥ 13.1
¥ —
—
—
—
¥ —
SMFG 2008 155
b. Risk Weights
March 31
Billions of yen
2008
2007
Term-end
balance
Required
capital
Term-end
balance
Required
capital
20% or less....................................................................................
100% or less..................................................................................
650% or less..................................................................................
1250% or less................................................................................
Capital deduction...........................................................................
Total ..............................................................................................
¥ 634.1
91.5
—
—
0.1
¥ 725.7
¥ 3.9
2.6
—
—
0.1
¥ 6.6
¥809.4
103.1
18.9
—
13.7
¥945.1
¥ 5.6
3.7
2.4
—
13.1
¥ 24.9
(2) Securitization Transactions in which the Group is the Investor
A. Securitization Exposures
(A) Underlying Assets by Asset Type
March 31
Claims on corporates.......................
Mortgage loans................................
Retail loans
(excluding mortgage loans) ..........
Other claims ....................................
Total.................................................
Billions of yen
2008
2007
Term-end
balance
To be deducted
from capital
Increase in
capital
equivalent
Term-end
balance
To be deducted
from capital
Increase in
capital
equivalent
¥ 339.5
—
15.0
24.6
¥ 379.1
¥66.0
—
—
10.6
¥76.6
¥ —
—
—
—
¥ —
¥301.6
379.3
17.8
124.0
¥822.8
¥ 76.9
—
—
1.3
¥ 78.2
¥ —
—
—
—
¥ —
Notes: 1. “Other claims” includes securitization products.
2. There were no credit risk-weighted assets calculated using Supplementary Provision 15 of the Notification.
(B) Risk Weights
March 31
Billions of yen
2008
2007
Term-end
balance
Required
capital
Term-end
balance
Required
capital
20% or less....................................................................................
100% or less..................................................................................
650% or less..................................................................................
1250% or less................................................................................
Capital deduction...........................................................................
Total ..............................................................................................
¥ 228.4
35.0
0.6
—
115.1
¥ 379.1
¥ 1.5
1.6
0.1
—
76.6
¥79.9
¥668.5
26.2
—
—
128.1
¥822.8
¥ 4.7
1.6
—
—
78.2
¥ 84.4
■ Equity Exposures in Banking Book
1. Risk Management Policy and Procedures
Securities in the banking book are properly managed, for example, by setting upper limits on the allowable amount of risk under the
market or credit risk management framework selected according to their holding purpose and risk characteristics. For securities held as
“other securities,” the upper limits are also set in terms of price fluctuation risk.
Regarding stocks of subsidiaries, assets and liabilities of subsidiaries are managed on a consolidated basis, and risks related to stocks of
affiliates are recognized separately. Their risk as equity is not measured as upper limits on the allowable amount of risk are set for stocks of
subsidiaries and affiliates, and the limits are established within the “risk capital limit” of SMFG, taking into account the financial and
business situations of the subsidiaries and affiliates.
2. Valuation of Securities in Banking Book and Other Significant Accounting Policies
Stocks of subsidiaries and affiliates are carried at amortized cost using the moving-average method. Other securities with market prices are
carried at their average market prices during the final month of the fiscal year. Securities other than these securities are carried at their fiscal
year-end market prices (cost of securities sold is calculated using primarily the moving-average method) and those with no available market
prices are carried at cost using the moving-average method.
Net unrealized gains (losses) on other securities, net of income taxes, are reported as a component of “net assets.” Derivative transactions
are carried at fair value.
156
SMFG 2008
3. Consolidated Balance Sheet Amounts and Fair Values
March 31
Listed equity exposures ....................................................
Stocks of subsidiaries and affiliates and
equity exposures other than above ................................
Total ..................................................................................
Billions of yen
2008
2007
Balance sheet
amount
Fair value
Balance sheet
amount
Fair value
¥ 2,913.3
¥ 2,913.3
¥ 3,980.3
¥ 3,980.3
670.5
¥ 3,583.8
—
—
¥
519.0
¥ 4,499.3
—
—
¥
4. Gains (Losses) on Sale and Devaluation of Stocks of Subsidiaries and Affiliates and Equity Exposures
Gains (losses) ................................................................................................................................
Gains on sale ............................................................................................................................
Losses on sale ..........................................................................................................................
Devaluation ...............................................................................................................................
Note: The above amounts are “gains (losses) on stocks and other securities” in the consolidated statements of income.
Billions of yen
Fiscal 2007
Fiscal 2006
¥ (7.1)
61.5
5.7
62.8
¥ 44.7
62.8
1.5
16.6
5. Unrealized Gains (Losses) Recognized on Consolidated Balance Sheet but Not on Consolidated Statements of Income
March 31
Unrealized gains (losses) recognized on
Billions of yen
2008
2007
consolidated balance sheet but not on consolidated statements of income ...............................
¥ 940.3
¥ 1,982.6
Note: The above amount is for stocks of Japanese companies and foreign stocks with market prices.
6. Unrealized Gains (Losses) Not Recognized on Consolidated Balance Sheet or Consolidated Statements of Income
March 31
Unrealized gains (losses) not recognized on
Billions of yen
2008
2007
consolidated balance sheet or consolidated statements of income ............................................
¥ (24.4)
¥ 65.7
Note: The above amount is for stocks of affiliates with market prices.
SMFG 2008 157
■ Exposure Balance by Type of Assets, Geographic Region, Industry and Residual Term
1. Exposure Balance by Type of Asset, Geographic Region and Industry
March 31, 2008
Loans, etc.
Bonds
Derivatives
Other
Total
Billions of yen
Domestic operations (excluding offshore banking accounts)
Manufacturing............................................................
Agriculture, forestry, fishery and mining ....................
Construction ..............................................................
Transport, information, communications and utilities ...
Wholesale and retail..................................................
Financial and insurance ............................................
Real estate ................................................................
Services.....................................................................
Local municipal corporations.....................................
Other industries .........................................................
Subtotal .....................................................................
Overseas operations and offshore banking accounts
Sovereigns ................................................................
Financial institutions ..................................................
C&I companies ..........................................................
Others........................................................................
Subtotal .....................................................................
Total................................................................................
¥ 8,402.1
317.4
1,745.7
4,173.9
6,719.0
10,540.0
8,580.1
6,681.9
2,592.3
19,574.7
¥69,327.1
¥
335.1
3,651.6
10,512.3
1,956.8
¥16,455.8
¥85,782.9
¥
130.0
0.1
38.0
127.6
49.3
965.7
263.0
107.5
604.9
12,709.5
¥14,995.5
¥
791.2
337.1
223.9
290.9
¥ 1,643.0
¥16,638.5
¥ 2,453.7
61.3
147.6
757.4
682.3
273.5
285.5
658.2
6.1
4,935.8
¥10,261.4
¥
—
0.0
—
347.3
347.3
¥
¥10,608.8
¥ 11,536.1
392.6
1,947.2
5,236.2
8,095.9
13,109.9
9,184.5
7,543.5
3,207.8
37,226.2
¥ 97,479.8
¥
1,135.7
4,938.8
11,113.9
2,597.9
¥ 19,786.2
¥ 117,266.0
¥ 550.3
13.7
16.0
177.3
645.4
1,330.7
55.9
95.9
4.4
6.2
¥2,895.8
¥
9.4
950.1
377.7
2.9
¥1,340.1
¥4,235.9
Billions of yen
March 31, 2007
Loans, etc.
Bonds
Derivatives
Other
Total
Domestic operations (excluding offshore banking accounts)
Manufacturing............................................................
Agriculture, forestry, fishery and mining ....................
Construction ..............................................................
Transport, information, communications and utilities ...
Wholesale and retail..................................................
Financial and insurance ............................................
Real estate ................................................................
Services.....................................................................
Local municipal corporations.....................................
Other industries .........................................................
Subtotal .....................................................................
Overseas operations and offshore banking accounts
Sovereigns ................................................................
Financial institutions ..................................................
C&I companies ..........................................................
Others........................................................................
Subtotal .....................................................................
Total................................................................................
¥ 8,135.7
179.1
1,772.1
3,793.9
6,982.3
7,593.2
8,766.4
7,010.9
1,133.8
18,412.1
¥63,779.4
¥
315.8
2,473.8
8,964.0
2,075.2
¥13,828.8
¥77,608.2
¥
132.7
1.1
57.9
137.7
64.3
1,275.2
89.1
65.6
750.2
7,912.8
¥10,486.5
¥
82.5
243.9
258.8
350.4
¥
935.5
¥11,422.0
¥ 400.5
9.0
14.6
97.7
433.6
1,217.3
40.0
87.5
1.1
160.7
¥2,461.9
¥
8.4
805.3
263.0
41.3
¥1,117.9
¥3,579.8
¥ 2,846.4
66.7
185.3
880.6
685.1
322.3
262.0
515.1
2.6
3,771.8
¥ 9,537.9
¥
—
0.0
—
293.8
¥ 293.8
¥ 9,831.6
¥ 11,515.2
255.9
2,029.8
4,909.9
8,165.2
10,408.0
9,157.5
7,679.1
1,887.7
30,257.3
¥ 86,265.7
¥
406.6
3,523.0
9,485.7
2,760.7
¥ 16,176.0
¥ 102,441.7
Notes: 1. The above amounts are exposure amounts after credit risk mitigation.
2. The above amounts do not include equity exposures and credit risk-weighted assets under Article 145 of the Notification.
3. “Loans, etc.” includes loans, commitments and off-balance sheet assets except other derivatives, and “Other” includes equity exposures and standardized approach applied
funds.
4. “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated
subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries.
158
SMFG 2008
2. Exposure Balance by Type of Asset and Residual Term
March 31, 2008
Loans, etc.
Bonds
Derivatives
Other
Total
Billions of yen
To 1 year ................................................................................
More than 1 year to 3 years...................................................
More than 3 years to 5 years .................................................
More than 5 years to 7 years .................................................
More than 7 years ..................................................................
No fixed maturity ....................................................................
Total........................................................................................
¥ 27,614.5
13,973.9
12,047.3
4,836.6
21,409.4
5,901.1
¥ 85,782.9
¥ 3,003.3
4,301.5
5,687.3
873.0
2,773.3
—
¥16,638.5
¥ 653.2
1,452.3
1,048.3
476.4
605.7
—
¥4,235.9
Billions of yen
¥
373.7
927.9
1,158.8
310.1
191.8
7,646.5
¥ 10,608.8
¥ 31,644.8
20,655.6
19,941.8
6,496.0
24,980.2
13,547.7
¥ 117,266.0
March 31, 2007
Loans, etc.
Bonds
Derivatives
Other
Total
To 1 year ................................................................................
More than 1 year to 3 years...................................................
More than 3 years to 5 years .................................................
More than 5 years to 7 years .................................................
More than 7 years ..................................................................
No fixed maturity ....................................................................
Total........................................................................................
¥ 22,237.0
11,762.0
11,734.2
4,508.1
20,365.9
7,000.9
¥ 77,608.2
¥ 3,747.2
1,628.6
1,451.8
1,382.4
3,212.1
—
¥ 11,422.0
¥ 389.4
1,232.6
1,058.7
431.9
467.2
—
¥ 3,579.8
¥ 176.6
503.0
621.5
162.9
110.4
8,257.2
¥ 9,831.6
¥ 26,550.3
15,126.2
14,866.1
6,485.3
24,155.7
15,258.2
¥ 102,441.7
Notes: 1. The above amounts are exposure amounts after credit risk mitigation.
2. The above amounts do not include equity exposures and credit risk-weighted assets under Article 145 of the Notification.
3. “Loans, etc.” includes loans, commitments and off-balance sheet assets except other derivatives, and “Other” includes equity exposures and standardized approach
applied funds.
4. “No fixed maturity” includes exposures not classified by residual term.
3. Term-end Balance of Exposures Past Due 3 Months or More or Defaulted and Their Breakdown
(1) By Geographic Region
March 31
Domestic operations (excluding offshore banking accounts)....................................................
Overseas operations and offshore banking accounts...............................................................
Asia ......................................................................................................................................
North America ......................................................................................................................
Other regions .......................................................................................................................
Total ..........................................................................................................................................
Billions of yen
2008
¥ 1,759.4
140.7
42.0
83.2
15.4
¥ 1,900.0
2007
¥ 1,948.3
135.0
81.9
42.3
10.8
¥ 2,083.3
Notes: 1. The above amounts are credits subject to self-assessment, including mainly off-balance sheet credits to obligors categorized as “Substandard Borrowers” or lower
under self-assessment.
2. The above amounts include partial direct write-offs (direct reductions).
3. “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic
consolidated subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas
consolidated subsidiaries, and the term-end balances are calculated based on the obligor’s domicile country.
SMFG 2008 159
(2) By Industry
March 31
Domestic operations (excluding offshore banking accounts)
Manufacturing ......................................................................................................................
Agriculture, forestry, fishery and mining...............................................................................
Construction.........................................................................................................................
Transport, information, communications and utilities...........................................................
Wholesale and retail ............................................................................................................
Financial and insurance .......................................................................................................
Real estate...........................................................................................................................
Services ...............................................................................................................................
Other industries....................................................................................................................
Subtotal................................................................................................................................
Overseas operations and offshore banking accounts
Financial institutions.............................................................................................................
C&I companies.....................................................................................................................
Others ..................................................................................................................................
Subtotal................................................................................................................................
Total ..........................................................................................................................................
Billions of yen
2008
2007
¥ 180.4
7.1
153.4
96.9
288.6
38.2
325.1
347.0
322.6
¥ 1,759.4
¥
1.0
139.7
—
¥ 140.7
¥ 1,900.0
¥ 123.6
6.3
196.4
155.8
170.5
16.6
556.5
452.2
270.4
¥ 1,948.3
¥
1.1
133.9
—
¥ 135.0
¥ 2,083.3
Notes: 1. The above amounts are credits subject to self-assessment, including mainly off-balance sheet credits to obligors categorized as “Substandard Borrowers” or lower
under self-assessment.
2. The above amounts include partial direct write-offs (direct reductions).
3. “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic
consolidated subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas
consolidated subsidiaries.
4. Term-end Balances of General Reserve for Possible Loan Losses, Specific Reserve for Possible Loan Losses and Loan Loss Reserve for Specific
Overseas Countries
(1) By Geographic Region
March 31
General reserve for possible loan losses.........................................................
Loan loss reserve for specific overseas countries ...........................................
Specific reserve for possible loan losses.........................................................
Domestic operations (excluding offshore banking accounts) .....................
Overseas operations and offshore banking accounts ................................
Asia........................................................................................................
North America........................................................................................
Other regions.........................................................................................
Total.................................................................................................................
2008
¥ 593.7
0.0
819.6
738.5
81.1
10.1
68.1
2.9
¥1,413.3
Billions of yen
2007
Increase (decrease)
¥ 683.6
1.9
693.7
661.0
32.7
14.1
12.9
5.7
¥1,379.2
¥ (89.9)
(1.9)
125.9
77.5
48.4
(4.0)
55.2
(2.8)
¥ 34.1
Notes: 1. “Specific reserve for possible loan losses” includes partial direct write-offs (direct reductions).
2. “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic
consolidated subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas
consolidated subsidiaries, and the term-end balances are calculated based on the obligor’s domicile country.
160
SMFG 2008
(2) By Industry
March 31
General reserve for possible loan losses.........................................................
Loan loss reserve for specific overseas countries ...........................................
Specific reserve for possible loan losses.........................................................
Domestic operations (excluding offshore banking accounts) .....................
Manufacturing........................................................................................
Agriculture, forestry, fishery and mining ................................................
Construction ..........................................................................................
Transport, information, communications and utilities ............................
Wholesale and retail ..............................................................................
Financial and insurance.........................................................................
Real estate ............................................................................................
Services.................................................................................................
Other industries .....................................................................................
Overseas operations and offshore banking accounts ................................
Financial institutions ..............................................................................
C&I companies ......................................................................................
Others....................................................................................................
Total.................................................................................................................
2008
¥ 593.7
0.0
819.6
738.5
76.3
1.3
71.3
49.2
142.7
19.2
110.9
135.2
132.4
81.1
0.9
80.2
—
¥1,413.3
Billions of yen
2007
Increase (decrease)
¥ 683.6
1.9
693.7
661.0
43.6
0.4
37.5
48.7
82.7
8.7
157.7
154.6
127.1
32.7
0.9
31.8
—
¥1,379.2
¥ (89.9)
(1.9)
125.9
77.5
32.7
0.9
33.8
0.5
60.0
10.5
(46.8)
(19.4)
5.3
48.4
(0.0)
48.4
—
¥ 34.1
Notes: 1. “Specific reserve for possible loan losses” includes partial direct write-offs (direct reductions).
2. “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic
consolidated subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas
consolidated subsidiaries.
5. Loan Write-Offs by Industry
Billions of yen
Fiscal 2007
Fiscal 2006
Domestic operations (excluding offshore banking accounts)
Manufacturing ...........................................................................................................................
Agriculture, forestry, fishery and mining....................................................................................
Construction..............................................................................................................................
Transport, information, communications and utilities................................................................
Wholesale and retail .................................................................................................................
Financial and insurance ............................................................................................................
Real estate................................................................................................................................
Services ....................................................................................................................................
Other industries.........................................................................................................................
Subtotal.....................................................................................................................................
Overseas operations and offshore banking accounts
Financial institutions..................................................................................................................
C&I companies..........................................................................................................................
Others .......................................................................................................................................
Subtotal.....................................................................................................................................
Total ...............................................................................................................................................
¥ 25.7
0.3
16.0
11.3
42.6
(0.0)
(3.6)
24.7
18.7
¥135.7
¥
0.0
6.0
—
6.0
¥
¥141.8
¥ 10.6
0.0
5.6
14.9
21.3
1.1
(10.2)
16.2
25.4
¥ 84.9
¥ 0.0
(3.5)
—
¥ (3.5)
¥ 81.4
Note: “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated
subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries.
SMFG 2008 161
■ Market Risk
1. Scope
The following approaches are used to calculate market risk equivalent amounts.
(1) Internal Models Approach
General market risk of SMBC, Sumitomo Mitsui Banking Corporation Europe Limited, SMBC Capital Markets, Inc., SMBC Capital
Markets Limited, and SMBC Derivative Products Limited
(2) Standardized Measurement Method
● Specific risk
● General market risk of consolidated subsidiaries other than SMBC, Sumitomo Mitsui Banking Corporation Europe Limited, SMBC
Capital Markets, Inc., SMBC Capital Markets Limited, and SMBC Derivative Products Limited
2. Valuation Method Corresponding to Transaction Characteristics
All assets and liabilities held in the trading book - therefore, subject to calculation of the market risk equivalent amount - are transactions with
high market liquidity. Securities and monetary claims are carried at the fiscal year-end market price, and derivatives such as swaps, futures and
options are stated at amounts that would be settled if the transactions were terminated at the consolidated balance sheet date.
■ Interest Rate Risk in Banking Book
Interest rate risk in the banking book fluctuates significantly depending on the method of recognizing maturity of demand deposits (such as
current accounts and ordinary deposits which funds can be withdrawn on demand) and the method of predicting early withdrawal from fixed-
term deposits and prepayment of consumer loans. Key assumptions made by SMBC in measuring interest rate risk in the banking book are as
follows.
1. Method of Recognizing Maturity of Demand Deposits
The total amount of demand deposits expected to remain with the bank for the long term (with 50% of the lowest balance during the past 5
years as the upper limit) is recognized as a core deposit amount and interest rate risk is measured for each maturity with 5 years as the
maximum term (the average is 2.5 years).
2. Method of Estimating Early Withdrawal from Fixed-term Deposits and Prepayment of Consumer Loans
The rate of early withdrawal from fixed-term deposits and the rate of prepayment of consumer loans are estimated and the rates are used to
calculate cash flows used for measuring interest rate risk.
VaR Results
Billions of yen
Fiscal 2007
Fiscal 2006
Trading
Banking
Trading
Banking
Fiscal year-end..................................................................
Maximum...........................................................................
Minimum............................................................................
Average.............................................................................
¥ 2.2
4.3
2.1
2.8
¥ 23.3
59.3
20.9
31.3
¥ 2.9
4.7
2.1
2.9
¥ 47.6
78.9
36.8
51.6
Notes: 1. The VaR results for a one-day holding period with a one-sided confidence interval of 99.0%, computed daily using historical simulation method based on data collected
over a four-year period.
2. Includes principal consolidated subsidiaries.
3. Figures for the trading book exclude specific risks.
162
SMFG 2008
■ Operational Risk
1. Operational Risk Equivalent Amount Calculation Methodology
SMFG has adopted the Advanced Measurement Approaches (AMA) for exposures as of March 31, 2008. The following consolidated
subsidiaries have also adopted the AMA, and the remaining consolidated subsidiaries have adopted the Basic Indicator Approach (BIA).
Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Card Company, Limited, The Japan Research Institute, Limited, SMBC
Friend Securities Co., Ltd., The Japan Net Bank, Limited, SMBC Guarantee Co., Ltd., SMBC Finance Service Co., Ltd., THE MINATO
BANK, LTD., SMBC Center Service Co., Ltd., SMBC Delivery Service Co., Ltd., SMBC Green Service Co., Ltd., SMBC International
Business Co., Ltd., SMBC International Operations Co., Ltd., SMBC Loan Business Service Co., Ltd., SMBC Market Service Co., Ltd.,
SMBC Loan Administration and Operations Service Co., Ltd., and Sumitomo Mitsui Banking Corporation Europe Limited.
Further, the following companies that have adopted the BIA are making preparations to adopt the AMA: Kansai Urban Banking
Corporation (for exposures as of September 30, 2008), Sumitomo Mitsui Finance and Leasing Company, Limited (for exposures as of March
31, 2009), and QUOQ Inc. (for exposures as of March 31, 2011).
2. Outline of the AMA
An outline of the AMA for operational risk management is described in the section on Risk Management. In this section, we would like to
present an explanation of the preparation of data that is input into the quantification model and the verification of scenario assessment using
internal loss data, external loss data, and Business Environment and Internal Control Factors (BEICFs). We will also give an outline of the
methodology for measuring the operational risk equivalent amount (“required capital”) using the quantification model.
Internal loss data
External loss data
BEICFs
B. Verification
(1) Scenario Analysis through
Risk Control Assessments
(2) Measurement using
quantification model
A. Data input
Risk mitigation initiatives
(1) Scenario Analysis through Risk Control Assessments
A. Preparation of Data Input into the Quantification Model
In order to estimate the frequency of occurrence of “low-frequency and high-severity” events, which is the purpose of risk control
assessment, we estimate the loss frequency in terms of four loss amounts (¥100 million, ¥1 billion, ¥5 billion, and ¥10 billion) for
each scenario, then input the total amount by loss event type for each entity, namely, SMFG (consolidated), SMBC (consolidated),
and SMBC (nonconsolidated), into the quantification model.
At SMFG and SMBC, by using a different assessment method according to loss event type and organizational classification, we
obtain a proper grasp of operational risk profile of the Group. The following section provides typical calculation examples for
scenarios of SMBC domestic business offices.
SMFG 2008 163
(A) Deriving and Scoring Scenarios
a. Deriving Scenarios
In order to grasp all potential risks of a business/product, we first identify “business processes & /products” stipulated in the
“Common Procedures of Operations”. Then, we derive all possible scenarios for the generation of a loss event of prescribed
magnitude by breaking down the operation process of each “business processes &/ products” into “processing types”.
We evaluate each individual scenario on an operation process basis.
Classification of Business, Products and Processing Type (Example)
(Example)
Product
Business
Exchange forward contract
Conclusion of exchange forward contract
Operation process
(a) Explanation to customer
Explanation
(b) Request for preparation of application form
Receipt and check
(c) Presentation of conditions to customer,
conclusion of contract
Agreements and contracts
(d) Conclusion of the deal with Market Operations
Internal transfer
Promotion Department
(e) Entry of contract implementation form
System entries
(f) Exchange of forward contract
Issuance, notification and reporting
(a) Explanation
(b) Attribute confirmation
(c) Receipt and check
(d) Issuance, notification and reporting
(e) Internal transfer
Processing type
(f) Application, decision and authorization
(g) Agreements and contracts
(h) Preparation of vouchers, etc. and making entries
(i) System entries
(j) Management during contract period
(k) Safekeeping, depositing and withdrawal
b. Scenario Assessment
In order to assess scenarios, it is necessary to quantify loss frequency and amount for each scenario. At SMBC, in order to
quantify loss frequency for each scenario, we execute risk control assessments on each scenario.
In risk assessment, in order to measure the easiness of loss occurrence in each operation process before taking into account
the risk management (control) situation, we set standards for various assessment items - transaction volume, volatility of
transaction volume, time limits and so on - and the operation process is scored on how well the standards are met.
Risk Scoring (Examples)
Perspective
Risk Items
What to Assess
Score
Easiness of
making an error
(a) Transaction volume
Largeness of annual processing volume
(b) Volatility of transaction volumes
Degree of concentration of processing on specific dates
(c) Time limits
Shortness of deadlines and degree of urgency
(d) Complexity of process
Degree of processing complexity, processing volume per task
(e) Complexity of products
Product complexity
Easiness of an error leading
to a clerical accident
(f) Deal with outside party
(g) Booking of business products
Easiness of error in transferring actual items/funds to customer/other bank leading to
loss accident
Easiness of error in handling of, or in notifying actions to be taken on, products with
market risk leading to loss event
1
0
2
1
0
0
0
164
SMFG 2008
Control assessment is executed from the perspective of preventive control and detection & recovery control. We set
standards for various items - establishment of manuals and procedures, processing authority and pre-process check, post-
process check, and so on - and the operation process is scored on how well the standards are met.
Control Assessment (Examples)
Perspective
Risk Items
What to Assess
Score
Design of procedures
(a) Establishment of manuals and procedures
Whether rules/ procedures/etc. have been documented or updated
(b) Details of manuals and procedures
Whether there are rules for accurate processing execution without omissions and whether
they are effective (excluding those included in below three risk items)
Authority and verification
(c) Processing authority and pre-process check
Assess processing authority, pre-process check
(d) Post-process check
Assess post-process check and accident detection measures
(assess only preventive measures)
System situation
(e) Degree of system processing
System processing
1
0
1
0
0
(B) Quantifying Loss Frequency of Each Scenario
a. Generation of “Average Frequency Table” for Domestic Business Offices
To quantify loss frequency for domestic branches, we assume future loss frequency is similar to historical loss frequency. And
we generate an average frequency table, which is used to estimate future loss frequency. The average frequency table comprises
rows of total risk score and columns of total control score and the number of loss occurrences in a one-year period for each
combination of scores is given.
As risk and control assessment items are expected to have different loss occurrence contribution ratios, we analyze their loss
occurrence contribution ratios for each assessment item by executing a regression analysis and weight each assessment item.
Average Frequency Table (Example)
Total Score
2.0
2.4
2.8
3.2
3.6
4.0
Control
(Times/Year)
Risk
5.5
4.5
3.5
2.5
1.5
0.5
5.5
4.5
3.5
2.5
1.5
0.5
2.40
b. Quantifying Loss Frequency of Each Scenario
Total risk assessment score and total control assessment score are calculated for each scenario taking into account the weight of
each assessment item described above. Then, the loss frequency of each scenario (the number of times the loss event described
in the scenario occurs during a one-year period) is estimated using the average frequency table.
(C) Quantifying Loss Amount for Each Scenario
In order to quantify the loss amount for each scenario, we generate loss distribution for each “business process & product” by
using the historical transaction data of SMBC. Specifically, we assume that the historical transaction volume follows a
logarithmic normal (log-normal) distribution for each “business process & product” and generate the log-normal distribution.
SMFG 2008 165
(D) Estimating the Frequency of Occurrence of the “Low-Frequency and High-Severity” Events
In order to estimate the probability of occurrence in terms of four loss amounts (¥100 million, ¥1 billion, ¥5 billion, and ¥10
billion) for each scenario, we use a cumulative distribution function estimated for each scenario.
Because we assume the log-normal distribution to each “business process & product”, in case one loss event occurs in a one-year
period, maximum potential loss is the cumulative distribution function based on log-normal distribution. Therefore, in this case,
we estimate the probability of occurrence of four loss amounts by substituting each loss amount for the maximum loss amount of
cumulative distribution function.
In case that one loss event occurs in a one-year period, the method described above is followed. However, in case that several
numbers of loss events occur in a one-year period, it is conceivable that the events occurred independently of each other.
Therefore, the probability of occurrence of several loss events can be calculated by the probability of one loss event raised to the
power of its loss frequency.
As we quantify the loss frequency for each scenario using the average frequency table,we are able to estimate the probability of
four loss amounts by the probability raised to the power of loss frequency derived from the frequency table.
After estimating the loss frequency in terms of the four loss amounts for each scenario, we sum results for each loss event type
and input them into the quantification model for SMFG (consolidated), SMBC (consolidated), and SMBC (nonconsolidated).
B. Verification of Scenarios Using Three Data Elements
At SMFG and SMBC, the verifications of the assessments of scenarios using internal loss data, external loss data, and BEICFs
(hereinafter, “3 data elements”) is implemented quarterly. Specifically, SMFG and SMBC use these data and information and use
them to determine, on a quarterly basis, whether there are any scenarios that have been omitted and whether the assessments of the
scenarios are appropriate to ensure the completeness and appropriateness of the scenarios.
(A) Reassessment of Scenarios Using Internal Loss Data
Both SMFG and SMBC, in principle, compile internal loss data on all gross loss amounts of at least one yen. From the data,
internal loss data which fulfill the established criteria are drawn, and the content of the related loss events is considered; then,
a judgment is made regarding whether or not to review the scenario in question. Specifically, we pose a number of issues to
consider, such as whether the scenario exists at SMBC, and, if so, whether the deviation between the actual loss and the assessed
value of the scenario is within the tolerance range. In considering these issues, we follow a set pattern of logical reasoning in
making a decision on whether the scenario should be revised.
When we decide it is necessary to revise the scenario, we make a reassessment based on the internal loss data. In this process,
we consider redeveloping and reassessing the scenario and other related matters to ensure that the internal loss data is properly
reflected in the scenario.
(B) Reassessment of Scenarios Using External Loss Data
At SMFG and SMBC, we have a database containing more than 5,000 cases of external losses that have been taken from the mass
media, including newspapers, and purchased from data vendors. A framework has been created to enable the sharing of this
database across the Group.
From this database, we draw external loss data which fulfill the established criteria, and the content of the related loss events is
considered; then, a judgment is made regarding whether or not to revise the scenario in question. Specifically, we pose a number
of issues to consider, such as whether the scenarios in question exist at SMBC, and, if so, whether the deviation between the
actual loss and the assessed value of the scenario is within the tolerance range. In considering these issues, we follow a set pattern
of logical reasoning in making a decision on whether the scenario should be reviewed.
When we decide it is necessary for the scenario to be reviewed, we make a reassessment based on the external loss data. In this
process, we consider deriving and reassessing the scenario and other related matters to ensure that the external loss data is
properly reflected in the scenario.
166
SMFG 2008
(C) Reassessment of Scenarios using BEICFs
At SMFG and SMBC, we compile data related to changes in laws and regulations, changes in internal rules, policies and
procedures, and new business, products and process, all of which are business environment and internal control factors (BEICFs).
We use this information to consider periodically whether our scenarios should be reconsidered, and, even for events other than
those listed previously, when major changes occur in the business environment, our systems provide, as necessary, for the
consideration of whether scenarios should be revised.
When we decide it is necessary for the scenario to be reviewed, we make a reassessment based on the information related to
changes and other factors in BEICFs. In this process, we consider redeveloping and reassessing the scenario and other related
matters to ensure that the changes in BEICFs are properly reflected in our scenarios.
(2) Measurement using Quantification Models
When calculating operational risk using the quantification model, firstly, we input seven-year historical internal loss data and the data
on the frequency of “low-frequency and high-severity” events in terms of four loss amounts, which have been estimated through risk
control assessments, and generate a loss distribution. Secondly, we use this distribution to estimate the maximum loss amount with a
99.0 percentile confidence interval (hereinafter referred to as 99.0% VaR). Thirdly, we multiply this maximum loss by a number, which
we call “the risk capital conversion factor”, to estimate 99.9% VaR.Finally, we calculate required capital by using a multiplier that has
been determined based on the number of times in which actual losses have exceeded predicted losses through the use of back testing. In
estimation of the aggregated loss distribution, we need to estimate the loss severity and frequency distribution.
In addition, we confirm whether the quantification model is functioning appropriately and conservatively in measuring operational
risk by implementing various types of sensitivity analysis and verification tests.
The following chart puts the main points of this quantification method in order and explains how the results of measurement are
verified.
A. Estimation with the Quantification Model
(B) Estimation of the Loss Frequency
Distribution
Sampling of the number
of losses from
the distribution
Reiteration
Aggregated Loss Distribution
Frequency x Severity
Calculation of
annual loss amount
(
f
r
e
q
u
e
n
c
y
)
P
r
o
b
a
b
i
l
i
t
y
o
f
o
c
c
u
r
r
e
n
c
e
0.4
0.3
0.2
0.1
0
(C)
Times the risk capital
conversion factor
99.0
99.9
Total
Amount of annual losses
(A) Estimation of Loss Severity
Distribution
Sampling of the amount of
losses of the cases drawn
from the distribution
(D) Calculation of required capital
B. Verification of Quantification Model
(A) Verification of Quantification Accuracy
(B) Implementation of Regular Verification Process
(Pre-testing, Back testing)
SMFG 2008 167
A. Measurement using the Quantification Model
(A) Estimation of Loss Severity Distribution
a. Smoothed Bootstrap Method
We employ the “smoothed bootstrap” method for generating the loss distribution.The smoothed bootstrap method is one of
the methods that connect the distribution, of the realized risk and the potential risk event, smoothly. Under this method, no
assumptions are made about the shape of the distribution as a whole, but assumptions are on the individual distribution
related to realized individual losses. Therefore, this method takes advantage of the widely known parametric method as well as
the non-parametric one.
Under the non-parametric method, if we use historical internal loss data to generate the loss severity distribution, we are
not able to create the samples outside the actual observation points, and also it is particularly difficult to create a distribution
with a fat tail. However, through the use of the method that can combine such data (on actual observations) with data on
potential risks, it becomes possible to create large losses that occur rarely (with a potential impact) and that have not actually
been found in historical internal loss data. In generating the distribution, while “high-frequency low-severity” events are based
on sufficient historical internal loss data volume, for “low-frequency high-severity” events in the tail of the distribution, the
historical internal data volume is insufficient. This approach makes it possible to reflect the severity (frequency of occurrence)
of potential risk that has been assessed in the risk control assessments. In this way, using this model, realized risks and
potential risks can be combined with congruity.
In estimating the loss distribution under this method, the Kernell function is applied to the loss data to derive “Kernell
estimate” by the pile-up of functions. In particular, the log-normal distribution is applied as the Kernell function.
b. Supplementing Results of Risk Control Assessments with Extreme Value Theory
In order to capture potential risks, a statistical method known as Extreme Value Theory is used in addition to the results of
risk control assessments. Extreme Value Theory is the statistical assessment method by which risks that may occur in the
future accompanying larger losses than the actually observed ones in the internal loss data can be quantified, and fulfills the
role of supplementing the risk control assessments.
Gaining a grasp of realized risk
Collection of internal loss data
(Example)
Period
Amount of loss
Capturing potential risks
Statistical estimates from internal loss data
(Extreme Value Theory)
Estimates from risk control assessments
Loss occurrence for the last 7
years (or period actually collected)
2003 / 1H
2004 / 1H
2005 / 1H
2005 / 1H
2005 / 2H
5,000,000
10,000,000
8,000,000
15,000,000
7,000,000
Estimates of potential risk
that may emerge
(Example)
Amount of loss
Frequency of occurrence
¥100 million or more
Once in 5 years
¥1 billion or more
Once in 10 years
¥5 billion or more
Once in 50 years
¥10 billion or more
Once in 100 years
Body part of the “high- frequency low- severity”
loss severity distribution
Tail part of the “low- frequency high- severity”
loss severity distribution
Combination of the loss severity distributions
Smoothed bootstrap method
Smoothed bootstrap method
Body part
Tail part
Amount of losses
¥100
million
〜
¥1
billion
〜
¥5
billion
〜
¥10
billion
〜
F
r
e
q
u
e
n
c
y
o
f
o
c
c
u
r
r
e
n
c
e
168
SMFG 2008
(B) Estimation of Loss Frequency Distribution
The Poisson distribution is used for generating the loss frequency distribution. To estimate the Poisson distribution, it is
necessary to estimate the average number of annual losses, but in this model, we do not simply take the annual average of all cases
of losses for the entire period (several fiscal years) but instead, estimate the annual average number of loss cases for each fiscal year
individually. Through this approach, we are able to take account of the deviations in the historical incidence of losses for different
periods and are able to estimate loss cases that may occur in the future more appropriately.
(C) Risk Capital Conversion Factor (cid:2)
We calculate 99.0% VaR from the estimated aggregated loss distribution, and then multiply the risk capital conversion
factor (cid:2) (gamma) in order to compute 99.9% VaR. By introducing (cid:2) it is unnecessary to estimate 99.9% VaR directly which can
be estimated with lower accuracy, and it provides with stable estimation results by estimating 99.0% VaR which can be
estimated with higher accuracy.
The factor (cid:2) means the ratio between 99.9% VaR and 99.0% VaR. In other words, it is the risk profile of the loss distribution
and an indicator for the characteristics of the tail part of the distribution. The risk profile of the loss distribution is different for
each loss event type, by which the calculation is performed. In addition, we have verified statistically that it could differ among
SMFG (consolidated), SMBC (consolidated), and SMBC (nonconsolidated). To reflect their characteristics, we set a different value
of (cid:2) for each entity. There is a tendency for (cid:2) to become smaller, etc., when there is a distribution of large expected losses or
when the tail of the distribution is highly dense.
When setting (cid:2) initially, we conduct an analysis, taking into account the possibility of changes in the risk profiles of many
types of loss distributions, and set values that maintain the stability and the conservativeness of capital. In addition, we assess
changes in the risk profiles of the most recent loss distributions, including the present one, and, when changes are above a certain
level, we conduct a review of the (cid:2) values. This makes it possible to keep values of (cid:2) appropriate to changes in the risk profile of
the loss distribution and calculate stable values of required capital.
(D) Calculation of Required Capital
We calculate required capital by multiplying the 99.9% VaR calculated in the previous section by the multiplier for each loss
event type that has been determined based on the number of breaches in back testing. As will be mentioned later, back testing
is conducted periodically, and, when realized risk is found to be greater than the risks estimated with the quantification model
(back testing excess), we take necessary steps, such as multiplying by the multiplier determined through prior analysis, to
maintain the conservativeness of required capital estimates.
We then added the required capital amounts calculated for each loss event type to compute the required capital for SMFG
(consolidated), SMBC (consolidated), and SMBC (nonconsolidated).
Please note that in calculating required capital, we do not subtract expected losses.
B. Verification of the Quantification Model
We conduct a range of sensitivity and verification tests to ensure that the measurement results of the quantification model are
appropriate (quantification accuracy) and to confirm that our model is capable of measuring the amounts corresponding to the
maximum losses from operational risk that may be incurred for a one year holding period, with a one-sided 99.9 percentile confidence
interval. In the following paragraphs, we would like to explain the methods for assessing the quantification accuracy of our
measurements and the framework we have in place for regular verifications.
(A) Verification of Quantification Accuracy
We have confirmed the reliability of the quantification model through a verification process from various perspectives.
Specifically, we obtain a quantitative grasp of the possibilities for variation in measurement results that may arise from
preconditions or assumptions made at the time the models were designed. In particular, we assess the possibilities for
underestimating required capital and the possible magnitude of such underestimates. Then, in our periodic verification
framework, which is described below, we make analyses of how to compensate for such underestimates. We apply our
understanding of the possibilities for underestimation to the multiplier derived from back testing, and, if the accuracy of the
quantification model deteriorates, we introduce a framework for making adjustments in the multiplier to avoid underestimating
the amount of required capital.
SMFG 2008 169
(B) Implementation of Regular Verification Process
To confirm the appropriateness of the quantification model on a continuing basis, we conduct a regular verification process.
Specifically, there are two types of verifications. One is back testing, which enables us to make a comprehensive judgment on the
appropriateness of measurement results, and the other is pre-testing, in which we verify the accuracy of the quantification model
prior to conducting actual measurements. In the following paragraphs, we present an explanation of these two test types.
a. Back Testing
In conducting back tests, we compare the estimates made by the quantification model with the maximum loss arising from
business activities to verify on an ex post fact basis whether the measurement results obtained from the model are conservative
enough and appropriate. When actual losses become greater than the losses estimated by the model (actual losses exceed the
estimate when back tests are conducted), we apply the multiplier factor in accordance with the number of excesses in order to
ensure conservativeness of quantification results.
Back testing is a well-known method for verifying comprehensively the appropriateness of VaR (statistical) models. We
employ the test to obtain the maximum loss amount with the given confidence interval which the tests work effectively. By
comparing the test results with the losses that actually occur, we increase the effectiveness of back testing.
b. Pre-testing
Pre-testing is conducted periodically, prior to use of the model for actual measurements, to verify whether the possibility of
underestimation is increasing (model risk is rising), since it is possible that the multiplier used in back testing may lead to
underestimation. As a result of pre-test verifications, we are able to confirm, on a continuing basis, whether the multiplier
used in back testing are conservative enough or whether model risk is emerging.
3. Usage of Insurance to Mitigate Risk
SMFG had not taken measures to mitigate operational risk through insurance coverage for exposures as of March 31, 2008.
4. Required Capital by Operational Risk Measurement Method
The amount of required capital to cover operational risk by measurement method was as follows for exposures as of March 31, 2008.
(¥ billion)
Amount of Required Capital
Advanced Measurement Approaches
Basic Indicator Approach
Total
224.5
43.7
268.2
170
SMFG 2008
Income Analysis (Consolidated)
Sumitomo Mitsui Banking Corporation and Subsidiaries
Operating Income, Classified by Domestic and Overseas Operations
2008
2007
Millions of yen
Year ended March 31
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
Interest income ............................................
Interest expenses.........................................
Net interest income ............................................
Trust fees ...........................................................
Fees and commissions (income) .................
Fees and commissions (expenses) .............
Net fees and commissions.................................
Trading profits ..............................................
Trading losses..............................................
Net trading income.............................................
Other operating income ...............................
Other operating expenses............................
Net other operating income (expenses).............
¥1,518,852
503,975
1,014,876
3,710
479,366
108,379
370,986
449,958
15,242
434,715
208,285
459,726
(251,440)
¥ 668,838
457,941
210,897
—
71,996
10,537
61,459
30,848
16,423
14,425
18,986
1,550
17,436
¥ (65,060)
(48,276)
(16,784)
—
(1,309)
(1,047)
(261)
(31,665)
(31,665)
—
(2)
(0)
(2)
¥2,122,630
913,640
1,208,989
3,710
550,053
117,869
432,184
449,141
—
449,141
227,270
461,276
(234,006)
¥1,411,367
419,280
992,086
3,482
518,851
104,406
414,445
118,694
10,720
107,974
179,271
225,707
(46,435)
¥593,969
408,872
185,097
—
59,223
7,353
51,870
21,459
12,780
8,679
18,294
10,759
7,535
¥ (55,102)
(31,373)
(23,728)
—
(639)
(345)
(293)
(21,564)
(21,564)
—
(394)
(174)
(219)
¥1,950,234
796,779
1,153,455
3,482
577,435
111,413
466,021
118,589
1,936
116,653
197,172
236,292
(39,120)
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Income and expenses resulting from money held in trust are included in “Other income” and “Other expenses.” Therefore, “Interest expenses” are
shown after deduction of expenses (2008, ¥10 million; 2007, ¥5 million) related to the management of money held in trust.
3. Intersegment transactions are reported in the “Elimination” column.
Average Balance, Interest and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans and bills bought .................
Receivables under resale agreements....
Receivables under securities
¥ 75,205,377
52,218,671
17,931,827
632,627
67,129
2008
Interest
¥1,518,852
1,115,012
288,315
13,128
382
borrowing transactions .....................
Deposits with banks ............................
980,818
1,840,501
7,032
34,684
Interest-bearing liabilities..........................
Deposits .............................................
Negotiable certificates of deposit ........
Call money and bills sold.....................
Payables under repurchase agreements...
Payables under securities
lending transactions ........................
Borrowed money .................................
Short-term bonds ................................
Bonds ..................................................
¥ 79,264,153
65,551,997
2,600,739
2,094,184
101,085
¥ 503,975
244,101
15,325
10,894
582
2,041,013
3,030,071
1,450
3,565,619
45,499
66,531
9
71,821
Millions of yen
Earnings yield
Average balance
2007
Interest
¥ 1,411,367
975,869
330,569
17,367
94
¥76,675,402
52,294,389
19,724,688
777,805
41,945
1,329,318
1,027,774
4,857
26,863
¥79,416,907
65,216,658
2,563,245
2,908,959
157,630
¥ 419,280
177,587
6,064
4,294
430
2,301,547
2,288,969
3,560
3,627,408
60,856
47,872
14
67,408
Earnings yield
1.84%
1.87
1.68
2.23
0.23
0.37
2.61
0.53%
0.27
0.24
0.15
0.27
2.64
2.09
0.40
1.86
2.02%
2.14
1.61
2.08
0.57
0.72
1.88
0.64%
0.37
0.59
0.52
0.58
2.23
2.20
0.68
2.01
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries.
2. In principle, average balances are calculated 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 balance of noninterest earning deposits (2008, ¥791,342 million; 2007, ¥1,088,877
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 balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million) and
corresponding interest (2008, ¥10 million; 2007, ¥5 million).
SMFG 2008 171
Domestic Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans and bills bought .................
Receivables under resale agreements....
Receivables under securities
¥ 12,724,231
8,789,302
1,139,822
268,662
278,935
borrowing transactions .....................
Deposits with banks ............................
—
1,844,837
Interest-bearing liabilities..........................
Deposits .............................................
Negotiable certificates of deposit ........
Call money and bills sold.....................
Payables under repurchase agreements...
Payables under securities
lending transactions ........................
Borrowed money .................................
Short-term bonds ................................
Bonds ..................................................
¥ 8,833,141
7,101,518
660,930
314,091
207,412
—
197,127
—
268,000
2008
Interest
¥ 668,838
466,604
62,162
12,827
6,661
—
71,185
¥ 457,941
256,777
36,045
12,675
6,802
—
10,436
—
17,447
Millions of yen
Earnings yield
Average balance
5.26%
5.31
5.45
4.77
2.39
—
3.86
5.18%
3.62
5.45
4.04
3.28
—
5.29
—
6.51
¥ 11,228,957
7,836,742
1,109,298
200,194
145,659
—
1,527,271
¥ 8,929,624
6,985,307
738,076
325,729
352,703
—
91,801
—
348,240
2007
Interest
¥ 593,969
401,424
62,710
10,824
7,003
—
72,910
¥ 408,872
282,707
37,618
14,520
17,923
—
2,931
—
20,930
Earnings yield
5.29%
5.12
5.65
5.41
4.81
—
4.77
4.58%
4.05
5.10
4.46
5.08
—
3.19
—
6.01
Notes: 1. Overseas operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. In principle, average balances are calculated 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 balance of noninterest earning deposits (2008, ¥75,204 million; 2007, ¥48,320 million).
Total of Domestic and Overseas Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans and bills bought .................
Receivables under resale agreements....
Receivables under securities
¥ 86,842,369
60,139,056
19,071,650
901,289
346,065
2008
Interest
¥ 2,122,630
1,538,387
333,692
25,955
7,044
borrowing transactions .....................
Deposits with banks ............................
980,818
3,468,732
7,032
100,826
Interest-bearing liabilities..........................
Deposits .............................................
Negotiable certificates of deposit ........
Call money and bills sold.....................
Payables under repurchase agreements...
Payables under securities
lending transactions ........................
Borrowed money .................................
Short-term bonds ................................
Bonds ..................................................
¥ 87,009,800
72,436,730
3,261,670
2,408,276
308,497
¥ 913,640
495,834
51,370
23,570
7,384
2,041,013
2,358,205
1,450
3,833,620
45,499
33,736
9
89,269
Millions of yen
Earnings yield
Average balance
2007
Interest
¥1,950,234
1,348,997
369,548
28,192
7,098
¥87,160,682
59,486,052
20,833,987
978,000
187,604
1,329,318
2,457,987
4,857
96,700
¥87,602,397
72,104,532
3,301,321
3,234,688
510,333
¥ 796,779
457,221
43,683
18,815
18,353
2,301,547
1,735,608
3,560
3,975,649
60,856
22,504
14
88,338
Earnings yield
2.24%
2.27
1.77
2.88
3.78
0.37
3.93
0.91%
0.63
1.32
0.58
3.60
2.64
1.30
0.40
2.22
2.44%
2.56
1.75
2.88
2.04
0.72
2.91
1.05%
0.68
1.57
0.98
2.39
2.23
1.43
0.68
2.33
Notes: 1. The figures above comprise totals for domestic and overseas operations after intersegment eliminations.
2. In principle, average balances are calculated 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 balance of noninterest earning deposits (2008, ¥866,367 million; 2007, ¥1,136,823
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 balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2008, ¥2,771 million; 2007, ¥2,607 million) and
corresponding interest (2008, ¥10 million; 2007, ¥5 million).
172
SMFG 2008
Fees and Commissions
Millions of yen
2008
2007
Year ended March 31
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
Fees and commissions (income)................................
Deposits and loans ...............................................
Remittances and transfers....................................
Securities-related business ..................................
Agency..................................................................
Safe deposits........................................................
Guarantees...........................................................
Credit card ............................................................
¥479,366
25,285
126,743
15,118
16,044
7,140
42,864
6,878
¥ 71,996
49,217
8,568
58
—
4
4,150
—
¥ (1,309)
—
(177)
—
—
—
(393)
—
¥550,053
74,503
135,135
15,176
16,044
7,144
46,621
6,878
¥518,851
25,649
124,972
35,484
16,594
7,318
44,860
6,903
¥ 59,223
40,664
9,166
271
—
4
1,266
—
¥ (639)
—
(0)
—
—
—
(391)
—
¥577,435
66,313
134,137
35,756
16,594
7,322
45,734
6,903
Fees and commissions (expenses)............................
Remittances and transfers....................................
¥108,379
26,683
¥ 10,537
5,103
¥ (1,047)
(174)
¥117,869
31,612
¥104,406
25,135
¥ 7,353
2,262
¥ (345)
(198)
¥111,413
27,200
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
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...................................................................
Millions of yen
2008
2007
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
¥449,958
652
¥ 30,848
324
¥ (31,665)
—
¥449,141
976
¥118,694
6,099
¥ 21,459
37
¥ (21,564)
—
¥118,589
6,136
2,705
439,734
6,865
228
30,296
—
—
(31,665)
—
2,934
438,365
6,865
—
109,351
3,244
—
21,422
—
—
(21,564)
—
—
109,208
3,244
Trading losses ............................................................
Losses on trading securities .................................
Losses on securities related to
trading transactions ...........................................
Losses on trading-related financial derivatives............
Others...................................................................
¥ 15,242
—
¥ 16,423
—
¥ (31,665)
—
¥
—
15,242
—
—
16,423
—
—
(31,665)
—
—
—
—
—
—
¥ 10,720
—
¥ 12,780
—
¥ (21,564)
—
¥
1,936
—
1,928
8,791
—
7
12,773
—
—
(21,564)
—
1,936
—
—
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
SMFG 2008 173
Assets and Liabilities (Consolidated)
Sumitomo Mitsui Banking Corporation and Subsidiaries
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:
Liquid deposits ...............................................................................................
Fixed-term deposits .......................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Negotiable certificates of deposit ...................................................................
Total ...............................................................................................................
Grand total ..........................................................................................................
Millions of yen
2008
2007
¥ 40,937,520
21,906,417
4,076,061
66,919,999
2,307,506
¥ 69,227,505
¥ 4,613,034
1,227,907
6,793
5,847,735
817,143
¥ 6,664,878
¥ 75,892,384
¥ 41,307,135
21,273,969
3,273,252
65,854,357
1,920,747
¥ 67,775,104
¥ 5,331,444
1,006,300
8,241
6,345,986
705,470
¥ 7,051,456
¥ 74,826,561
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its 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
March 31
Domestic operations:
Millions of yen
2008
2007
Manufacturing ................................................................................................
Agriculture, forestry, fisheries and mining......................................................
Construction...................................................................................................
Transportation, communications and public enterprises ...............................
Wholesale and retail ......................................................................................
Finance and insurance ..................................................................................
Real estate.....................................................................................................
Services .........................................................................................................
Municipalities .................................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Overseas operations:
Public sector ..................................................................................................
Financial institutions ......................................................................................
Commerce and industry.................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 5,647,304
145,627
1,358,113
3,054,126
5,319,595
5,543,367
7,755,616
6,084,951
846,982
17,796,195
¥ 53,551,882
¥
32,848
621,385
7,826,252
940,232
¥ 9,420,719
¥ 62,972,601
10.55%
0.27
2.54
5.70
9.94
10.35
14.48
11.36
1.58
33.23
100.00%
0.35%
6.60
83.07
9.98
100.00%
—
¥ 5,594,929
139,509
1,435,549
3,035,500
5,502,101
5,169,458
7,626,700
6,371,973
648,704
17,021,236
¥52,545,664
¥
35,783
481,228
5,977,548
577,624
¥ 7,072,185
¥59,617,850
10.65%
0.27
2.73
5.78
10.47
9.84
14.51
12.13
1.23
32.39
100.00%
0.51%
6.80
84.52
8.17
100.00%
—
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Japan offshore banking accounts are included in overseas operations’ accounts.
174
SMFG 2008
Risk-Monitored Loans
March 31
Bankrupt loans ....................................................................................................
Non-accrual loans ...............................................................................................
Past due loans (3 months or more).....................................................................
Restructured loans..............................................................................................
Total ....................................................................................................................
Amount of direct reduction ..................................................................................
Note: Definition of risk-monitored loan categories
Millions of yen
2008
¥
73,176
589,280
26,625
384,388
¥ 1,073,471
¥ 416,706
2007
¥
60,068
488,812
22,018
476,665
¥ 1,047,566
¥ 407,910
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:
Millions of yen
2008
2007
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Subtotal..........................................................................................................
Overseas operations:
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 9,339,958
439,228
3,876,433
3,431,541
4,202,554
¥ 21,289,716
¥
—
—
—
—
1,871,186
¥ 1,871,186
¥ 23,160,903
¥ 7,640,064
571,103
4,066,497
4,535,384
2,286,002
¥ 19,099,052
¥
—
—
—
—
1,205,587
¥ 1,205,587
¥ 20,304,639
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. “Others” include foreign bonds and foreign stocks.
Trading Assets and Liabilities
2008
2007
Millions of yen
March 31
Trading assets: .................................................
Trading securities.........................................
Derivatives of trading securities ...................
Securities related to trading transactions.....
Derivatives of securities related to
trading transactions...................................
Trading-related financial derivatives ............
Other trading assets.....................................
Trading liabilities: ..............................................
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 .................................
Domestic
operations
Overseas
operations
Elimination
Total
Domestic
operations
Overseas
operations
Elimination
Total
¥ 3,621,893
180,670
3,026
—
¥ 490,723
7,082
—
—
¥ (31,135)
—
—
—
¥ 4,081,480
187,753
3,026
—
¥2,890,685
12,388
373
—
10,440
2,543,384
884,370
—
483,640
—
—
(31,135)
—
10,440
2,995,890
884,370
2,344
1,778,913
1,096,664
¥ 2,310,969
18,984
3,871
—
¥ 391,720
733
—
—
¥ (31,135)
—
—
—
¥ 2,671,554
19,718
3,871
—
¥1,570,763
10,247
275
—
10,196
2,277,917
—
—
390,986
—
—
(31,135)
—
10,196
2,637,768
—
1,975
1,558,265
—
¥397,304
25,355
—
—
—
371,949
—
¥396,026
4,349
—
—
—
391,676
—
¥ (25,647)
—
—
—
¥3,262,341
37,744
373
—
—
(25,647)
—
2,344
2,125,214
1,096,664
¥ (25,647)
—
—
—
¥1,941,142
14,597
275
—
—
(25,647)
—
1,975
1,924,294
—
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas
operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
SMFG 2008 175
Income Analysis (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Gross Banking Profit, Classified by Domestic and International Operations
Millions of yen
Year ended March 31
Domestic
operations
2008
International
operations
Interest income....................................
¥1,172,852
¥ 702,275
Interest expenses ................................
258,227
646,082
Net interest income ..................................
Trust fees .................................................
Fees and commissions (income).........
Fees and commissions (expenses).....
Net fees and commissions .......................
Trading profits .....................................
Trading losses .....................................
Net trading income ...................................
Other operating income.......................
Other operating expenses ...................
Net other operating income (expenses) ...
Gross banking profit .................................
Gross banking profit rate (%) ...................
914,625
3,710
361,444
98,409
263,035
8,531
—
8,531
59,530
51,146
8,383
¥1,198,285
56,193
—
91,082
21,755
69,327
432,454
—
432,454
62,281
333,759
(271,477)
¥ 286,497
Total
¥ 1,866,277
[8,851]
895,458
[8,851]
970,818
3,710
452,527
120,165
332,362
440,985
—
440,985
121,812
384,906
(263,093)
¥ 1,484,783
Domestic
operations
2007
International
operations
¥1,037,393
¥669,110
133,203
635,846
904,189
3,479
385,202
95,323
289,878
4,047
162
3,885
42,813
94,305
(51,491)
¥1,149,941
33,263
2
79,969
16,431
63,538
99,671
1,936
97,735
63,912
63,902
9
¥194,548
Total
¥1,706,170
[332]
768,717
[332]
937,452
3,482
465,171
111,754
353,416
103,719
2,098
101,620
106,725
158,207
(51,482)
¥1,344,490
1.82%
1.75%
1.86%
1.74%
1.34%
1.67%
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 amounts equivalent to interest expenses on money held in trust (2008, ¥10 million; 2007, ¥5 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 x 100
Average Balance, Interest and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations
Year ended March 31
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans.............................................
Receivables under resale agreements...
Receivables under securities
borrowing transactions .....................
Bills bought..........................................
Deposits with banks ............................
Average balance
¥ 65,570,970
[2,187,759]
46,675,889
15,123,121
317,648
25,001
2008
Interest
¥ 1,172,852
[8,851]
944,703
192,292
2,369
137
967,810
21,588
9,639
6,955
600
34
Millions of yen
Earnings yield
Average balance
1.78%
2.02
1.27
0.74
0.55
0.71
2.78
0.35
¥ 66,077,961
[171,786]
47,188,557
16,763,472
336,503
20,304
1,320,720
55,212
51,428
2007
Interest
¥1,037,393
[332]
817,842
197,538
1,151
37
4,827
102
203
Earnings yield
1.56%
1.73
1.17
0.34
0.18
0.36
0.18
0.39
Interest-bearing liabilities..........................
¥ 67,276,143
¥ 258,227
0.38%
¥ 67,955,018
¥ 133,203
0.19%
Deposits ..............................................
Negotiable certificates of deposit ........
Call money ..........................................
Payables under repurchase agreements ...
Payables under securities
lending transactions .........................
Bills sold ..............................................
Borrowed money .................................
Bonds ..................................................
57,309,691
2,538,711
2,098,638
110,193
1,095,930
—
1,901,820
2,105,556
126,555
14,781
10,190
630
5,872
—
19,738
25,297
0.22
0.58
0.48
0.57
0.53
—
1.03
1.20
57,374,302
2,666,349
1,918,389
165,270
878,167
956,126
1,540,098
2,236,416
59,125
6,183
3,731
452
2,412
220
16,532
23,297
0.10
0.23
0.19
0.27
0.27
0.02
1.07
1.04
Notes: 1. “Interest-earning assets” are shown after deduction of the average balance of noninterest earning deposits (2008, ¥740,846 million; 2007,
¥1,021,949 million). “Interest-bearing liabilities” are shown after deduction of amounts equivalent to the average balance of money held in trust
(2008, ¥2,771 million; 2007, ¥2,607 million) and corresponding interest (2008, ¥10 million; 2007, ¥5 million).
2. Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and international
operations 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.
176
SMFG 2008
International Operations
2008
2007
Millions of yen
Year ended March 31
Average balance
Interest
Earnings yield
Average balance
Interest
Earnings yield
Interest-earning assets.............................
¥ 16,324,446
¥ 702,275
4.30%
¥ 14,513,250
¥ 669,110
4.61%
Loans and bills discounted ..................
Securities.............................................
Call loans.............................................
Receivables under resale agreements...
Receivables under securities
borrowing transactions .....................
Bills bought..........................................
Deposits with banks ............................
Interest-bearing liabilities..........................
Deposits ..............................................
Negotiable certificates of deposit .......
Call money ..........................................
Payables under repurchase agreements ...
Payables under securities
lending transactions ........................
Bills sold ..............................................
Borrowed money .................................
Bonds ..................................................
7,573,047
3,528,429
368,569
242,821
—
—
3,424,782
¥ 16,253,405
[2,187,759]
8,670,545
608,181
336,120
186,890
944,513
—
1,593,890
1,473,709
381,575
129,994
17,033
3,625
—
—
92,911
¥ 646,082
[8,851]
300,291
32,686
13,746
5,558
39,623
—
83,250
51,165
5.03
3.68
4.62
1.49
—
—
2.71
3.97%
3.46
5.37
4.08
2.97
4.19
—
5.22
3.47
6,371,044
4,095,307
452,724
98,709
—
—
2,281,869
¥ 14,324,084
[171,786]
8,475,843
519,589
332,255
316,813
1,389,030
—
1,359,685
1,440,949
325,518
171,500
22,351
4,026
—
—
77,519
¥ 635,846
[332]
337,174
27,561
14,986
16,071
58,357
—
67,618
50,186
5.10
4.18
4.93
4.07
—
—
3.39
4.43%
3.97
5.30
4.51
5.07
4.20
—
4.97
3.48
Notes: 1. “Interest-earning assets” are shown after deduction of the average balance of noninterest earning deposits (2008, ¥78,914 million; 2007, ¥51,778 million).
2. Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and international
operations 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. The average balance of foreign-currency-denominated transactions by domestic branches in international operations is calculated by the monthly
current method, under which the TT middle rate at the end of the previous month is applied to nonexchange transactions of the month concerned.
Total of Domestic and International Operations
Year ended March 31
Average balance
Interest-earning assets.............................
Loans and bills discounted ..................
Securities.............................................
Call loans.............................................
Receivables under resale agreements...
Receivables under securities
borrowing transactions .....................
Bills bought..........................................
Deposits with banks ............................
¥ 79,707,657
54,248,936
18,651,550
686,218
267,822
967,810
21,588
3,434,421
2008
Interest
¥1,866,277
1,326,278
322,287
19,403
3,762
6,955
600
92,946
Interest-bearing liabilities..........................
Deposits ..............................................
Negotiable certificates of deposit ........
Call money ..........................................
Payables under repurchase agreements ...
Payables under securities
lending transactions .........................
Bills sold ..............................................
Borrowed money .................................
Bonds ..................................................
¥ 81,341,789
65,980,237
3,146,892
2,434,759
297,083
¥ 895,458
426,846
47,467
23,936
6,189
2,040,443
—
3,495,710
3,579,266
45,496
—
102,988
76,463
Millions of yen
Earnings yield
Average balance
2007
Interest
¥ 1,706,170
1,143,361
369,039
23,503
4,064
4,827
102
77,722
¥ 80,419,426
53,559,601
20,858,779
789,228
119,013
1,320,720
55,212
2,333,298
¥ 82,107,317
65,850,146
3,185,938
2,250,645
482,083
¥ 768,717
396,300
33,745
18,718
16,523
2,267,198
956,126
2,899,784
3,677,365
60,770
220
84,150
73,483
Earnings yield
2.12%
2.13
1.76
2.97
3.41
0.36
0.18
3.33
0.93%
0.60
1.05
0.83
3.42
2.68
0.02
2.90
1.99
2.34%
2.44
1.72
2.82
1.40
0.71
2.78
2.70
1.10%
0.64
1.50
0.98
2.08
2.22
—
2.94
2.13
Notes: 1. “Interest-earning assets” are shown after deduction of the average balance of noninterest earning deposits (2008,¥819,761 million; 2007, ¥1,073,727
million). “Interest-bearing liabilities” are shown after deduction of amounts equivalent to the average balance of money held in trust (2008, ¥2,771
million; 2007, ¥2,607 million) and corresponding interest (2008, ¥10 million; 2007, ¥5 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.
SMFG 2008 177
Breakdown of Interest Income and Interest Expenses
Domestic Operations
Millions of yen
Year ended March 31
Interest income.........................................
Loans and bills discounted ..................
Securities.............................................
Call loans.............................................
Receivables under resale agreements....
Receivables under securities
borrowing transactions .....................
Bills bought..........................................
Deposits with banks ............................
Interest expenses .....................................
Deposits ..............................................
Negotiable certificates of deposit ........
Call money ..........................................
Payables under repurchase agreements...
Payables under securities
lending transactions .........................
Bills sold ..............................................
Borrowed money .................................
Bonds ..................................................
International Operations
Year ended March 31
Interest income.........................................
Loans and bills discounted ..................
Securities.............................................
Call loans.............................................
Receivables under resale agreements....
Deposits with banks ............................
Interest expenses .....................................
Deposits ..............................................
Negotiable certificates of deposit ........
Call money ..........................................
Payables under repurchase agreements...
Payables under securities
lending transactions .........................
Borrowed money .................................
Bonds ..................................................
Volume-related
increase
(decrease)
¥ (494)
(653)
(9,691)
(6)
10
¥
(552)
(31)
(82)
(30)
(0)
(23)
381
(74)
716
(110)
3,291
(436)
Volume-related
increase
(decrease)
¥ 50,809
56,435
(11,902)
(2,083)
878
22,144
¥ 43,285
(15,010)
4,756
(539)
(7,179)
(9,363)
12,100
999
Total of Domestic and International Operations
Year ended March 31
Interest income.........................................
Loans and bills discounted ..................
Securities.............................................
Call loans.............................................
Receivables under resale agreements....
Receivables under securities
borrowing transactions .....................
Bills bought..........................................
Deposits with banks ............................
Interest expenses .....................................
Deposits ..............................................
Negotiable certificates of deposit ........
Call money ..........................................
Payables under repurchase agreements...
Payables under securities
lending transactions .........................
Bills sold ..............................................
Borrowed money .................................
Bonds ..................................................
Volume-related
increase
(decrease)
¥ (1,349)
14,889
(19,578)
(1,538)
898
¥
(552)
(31)
21,353
(443)
784
(17)
1,617
(7,085)
(10,151)
(110)
17,538
(587)
2008
Rate-related
increase
(decrease)
¥135,953
127,514
4,445
1,223
89
2,680
528
(86)
¥125,053
67,430
8,621
6,076
252
2,743
(110)
(85)
2,437
2008
Rate-related
increase
(decrease)
¥(17,643)
(377)
(29,603)
(3,234)
(1,279)
(6,751)
¥(33,049)
(21,873)
367
(700)
(3,333)
(9,370)
3,530
(19)
2008
Rate-related
increase
(decrease)
¥ 161,456
168,028
(27,172)
(2,562)
(1,199)
2,680
528
(6,130)
¥ 127,183
29,762
13,740
3,600
(3,248)
(5,123)
(110)
1,298
3,567
Note: Volume/rate variance is prorated according to changes in volume and rate.
178
SMFG 2008
Volume-related
increase
(decrease)
2007
Rate-related
increase
(decrease)
Net
increase
(decrease)
¥135,459
126,860
(5,246)
1,217
99
2,127
497
(169)
¥125,023
67,429
8,597
6,458
178
3,459
(220)
3,206
2,000
¥
402
20,326
(13,816)
0
(1)
(39)
(3)
12
¥ (1,860)
194
(231)
(3)
(1)
0
(84)
7,902
(2,358)
Millions of yen
Net
increase
(decrease)
¥ 33,165
56,057
(41,505)
(5,318)
(401)
15,392
¥ 10,235
(36,883)
5,124
(1,240)
(10,512)
(18,733)
15,631
979
Volume-related
increase
(decrease)
¥53,903
55,744
1,020
5,794
(1,236)
(124)
¥51,712
35,042
19,049
6,920
6,227
(14,233)
645
3,873
Millions of yen
Net
increase
(decrease)
¥ 160,107
182,917
(46,751)
(4,100)
(301)
2,127
497
15,223
¥ 126,740
30,546
13,722
5,218
(10,334)
(15,274)
(220)
18,837
2,980
Volume-related
increase
(decrease)
¥25,620
48,167
(18,666)
2,847
(1,966)
(39)
(3)
925
¥ (6,084)
7,416
(1,268)
201
1,603
(9,529)
(84)
21,774
(2,211)
¥ 38,697
14,071
24,173
1,087
36
4,254
99
191
¥ 80,642
47,431
5,562
3,661
446
2,322
191
(7,937)
1,033
2007
Rate-related
increase
(decrease)
¥173,784
62,364
40,481
5,162
903
27,189
¥153,386
86,705
1,674
2,871
3,491
14,477
6,432
2,681
2007
Rate-related
increase
(decrease)
¥254,003
104,340
70,525
9,196
1,667
4,254
99
26,343
¥302,800
161,957
27,323
13,248
8,560
12,096
191
(14,733)
7,441
Net
increase
(decrease)
¥ 39,100
34,397
10,356
1,087
35
4,214
95
203
¥ 78,782
47,625
5,331
3,658
445
2,322
106
(35)
(1,325)
Net
increase
(decrease)
¥227,688
118,109
41,501
10,956
(333)
27,065
¥205,098
121,748
20,723
9,791
9,718
243
7,077
6,555
Net
increase
(decrease)
¥279,624
152,507
51,858
12,044
(298)
4,214
95
27,268
¥296,716
169,373
26,055
13,449
10,164
2,566
106
7,041
5,230
Fees and Commissions
Year ended March 31
Fees and commissions (income)..............
Deposits and loans..............................
Remittances and transfers ..................
Securities-related business .................
Agency ................................................
Safe deposits.......................................
Guarantees..........................................
Domestic
operations
¥ 361,444
10,720
97,341
13,592
13,094
6,688
22,734
Fees and commissions (expenses) ..........
Remittances and transfers ..................
¥ 98,409
20,109
Trading Income
Millions of yen
2008
International
operations
¥ 91,082
41,739
28,311
1,291
—
—
6,567
¥ 21,755
9,538
Total
¥ 452,527
52,459
125,653
14,883
13,094
6,688
29,302
¥ 120,165
29,647
Domestic
operations
¥385,202
10,717
96,938
21,874
14,085
6,855
22,054
¥ 95,323
19,071
Millions of yen
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 .................................................
Domestic
operations
¥ 8,531
652
2008
International
operations
¥ 432,454
—
Total
¥ 440,985
652
—
2,934
2,934
—
7,878
¥ —
—
—
—
—
429,520
—
429,520
7,878
¥
¥
—
—
—
—
—
—
—
—
—
—
Domestic
operations
¥4,047
—
—
—
4,047
¥ 162
162
—
—
—
Note: Figures represent net gains after offsetting income against expenses.
Net Other Operating Income (Expenses)
2007
International
operations
¥79,969
32,022
27,389
1,391
—
—
6,775
¥16,431
5,927
2007
International
operations
¥99,671
—
—
99,671
—
¥ 1,936
—
1,936
—
—
Total
¥465,171
42,739
124,327
23,265
14,085
6,855
28,829
¥111,754
24,999
Total
¥103,719
—
¥
—
99,671
4,047
2,098
162
1,936
—
—
Year ended March 31
Net other operating income (expenses) ...
Gains (losses) on bonds......................
Gains (losses) on derivatives ..............
Gains (losses) on foreign exchange
Millions of yen
Domestic
operations
¥ 8,383
(10,007)
3,046
2008
International
operations
¥ (271,477)
(20,051)
3,767
Total
¥ (263,093)
(30,058)
6,813
Domestic
operations
¥(51,491)
(74,703)
(1,449)
2007
International
operations
¥
9
(37,709)
(16,156)
Total
¥ (51,482)
(112,413)
(17,606)
transactions........................................
—
(252,589)
(252,589)
—
55,243
55,243
General and Administrative Expenses
Year ended March 31
Salaries and related expenses............................................................................
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 ....................................................................................................................
Millions of yen
2008
¥183,791
(1,610)
29,216
52,247
45,003
7,152
6,297
4,998
3,638
7,351
14,476
40,092
267,335
¥659,992
2007
¥162,778
(309)
26,816
49,671
47,863
5,301
5,451
4,876
3,057
7,048
12,714
35,017
249,528
¥609,816
Note: Because expenses reported on page 29 exclude nonrecurring losses, they are not reconciled with the figures reported in the above table.
SMFG 2008 179
Deposits (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Deposits and Negotiable Certificates of Deposit
Year-End Balance
March 31
Domestic operations:
Millions of yen
2008
2007
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 ..........................................................................................................
¥ 38,810,626
18,564,178
1,167,168
58,541,973
2,209,667
¥ 60,751,641
¥ 4,074,876
916,959
2,883,450
7,875,286
755,906
¥ 8,631,193
¥ 69,382,834
63.9%
30.6
1.9
96.4
3.6
100.0%
47.2%
10.6
33.4
91.2
8.8
100.0%
—
¥ 39,134,235
18,280,780
607,734
58,022,750
1,911,160
¥ 59,933,911
¥ 4,847,481
720,700
2,644,069
8,212,251
663,174
¥ 8,875,426
¥ 68,809,338
65.3%
30.5
1.0
96.8
3.2
100.0%
54.6%
8.1
29.8
92.5
7.5
100.0%
—
Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice
2. Fixed-term deposits = Time deposits + Installment savings
Average Balance
Year ended March 31
Domestic operations:
Millions of yen
2008
2007
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 ..........................................................................................................
¥ 38,317,885
18,407,942
583,864
57,309,691
2,538,711
¥ 59,848,403
¥ 4,864,807
1,003,417
2,802,319
8,670,545
608,181
¥ 9,278,726
¥ 69,127,129
¥ 38,595,455
18,211,722
567,125
57,374,302
2,666,349
¥ 60,040,652
¥ 4,747,817
893,630
2,834,395
8,475,843
519,589
¥ 8,995,432
¥ 69,036,085
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
2008
2007
Individual.............................................................................................................
Corporate ............................................................................................................
Total ....................................................................................................................
¥ 33,987,919
30,538,230
¥ 64,526,149
52.7%
47.3
100.0%
¥ 33,623,712
29,057,052
¥ 62,680,764
53.6%
46.4
100.0%
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.
180
SMFG 2008
Balance of Investment Trusts, Classified by Type of Customer
March 31
Individual.............................................................................................................
Corporate ............................................................................................................
Total ....................................................................................................................
Millions of yen
2008
¥ 2,974,007
176,591
¥ 3,150,598
2007
¥3,421,470
123,922
¥3,545,392
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 ...................................................................................
Others ...........................................................................................................
Three — six months............................................................................................
Fixed interest rates .......................................................................................
Floating interest rates ...................................................................................
Others ...........................................................................................................
Six months — one year.......................................................................................
Fixed interest rates .......................................................................................
Floating interest rates ...................................................................................
Others ...........................................................................................................
One — two years ...............................................................................................
Fixed interest rates .......................................................................................
Floating interest rates ...................................................................................
Others ...........................................................................................................
Two — three years..............................................................................................
Fixed interest rates .......................................................................................
Floating interest rates ...................................................................................
Others ...........................................................................................................
Three years or more ...........................................................................................
Fixed interest rates .......................................................................................
Floating interest rates ...................................................................................
Others ...........................................................................................................
Total ...................................................................................................................
Fixed interest rates .......................................................................................
Floating interest rates ...................................................................................
Others ............................................................................................................
Note: The figures above do not include installment savings.
2008
¥ 6,233,757
5,370,359
100
863,297
3,753,558
3,713,423
3,000
37,135
5,249,056
5,195,489
40,550
13,016
1,574,862
1,560,535
11,750
2,576
1,337,092
1,263,600
73,059
432
1,332,765
850,967
481,296
500
¥ 19,481,091
17,954,375
609,756
916,959
Millions of yen
2007
¥ 5,779,472
5,120,459
—
659,012
3,848,742
3,817,056
—
31,685
4,864,342
4,840,188
1,200
22,954
1,483,625
1,466,005
13,650
3,970
1,468,884
1,454,359
12,050
2,474
1,556,364
1,102,449
453,312
602
¥19,001,432
17,800,519
480,212
720,700
SMFG 2008 181
Loans (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Balance of Loans and Bills Discounted
Year-End Balance
March 31
Domestic operations:
Millions of yen
2008
2007
Loans on notes ..............................................................................................
Loans on deeds .............................................................................................
Overdrafts ......................................................................................................
Bills discounted ..............................................................................................
Subtotal..........................................................................................................
International operations:
Loans on notes ..............................................................................................
Loans on deeds .............................................................................................
Overdrafts ......................................................................................................
Bills discounted ..............................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 2,061,876
35,965,609
9,622,647
285,790
¥ 47,935,924
¥
491,480
8,421,557
97,013
11,837
¥ 9,021,889
¥ 56,957,813
¥ 2,460,937
35,242,150
9,190,227
368,778
¥47,262,094
¥
587,967
5,802,753
95,220
8,404
¥ 6,494,346
¥53,756,440
Average Balance
Year ended March 31
Domestic operations:
Millions of yen
2008
2007
Loans on notes ..............................................................................................
Loans on deeds .............................................................................................
Overdrafts ......................................................................................................
Bills discounted ..............................................................................................
Subtotal..........................................................................................................
International operations:
Loans on notes ..............................................................................................
Loans on deeds .............................................................................................
Overdrafts ......................................................................................................
Bills discounted ..............................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 2,197,327
34,625,555
9,572,162
280,843
¥ 46,675,889
¥
530,865
6,935,439
96,039
10,702
¥ 7,573,047
¥ 54,248,936
¥ 2,606,379
35,279,808
8,994,841
307,527
¥47,188,557
¥
568,081
5,676,262
118,873
7,826
¥ 6,371,044
¥53,559,601
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
March 31
Millions of yen
2008
2007
Funds for capital investment ...............................................................................
Funds for working capital ....................................................................................
Total ....................................................................................................................
¥ 20,934,771
36,023,042
¥ 56,957,813
36.8%
63.2
100.0%
¥ 20,710,260
33,046,180
¥ 53,756,440
38.5%
61.5
100.0%
Breakdown of Loans and Bills Discounted, Classified by Collateral
March 31
Securities ............................................................................................................
Commercial claims..............................................................................................
Commercial goods ..............................................................................................
Real estate..........................................................................................................
Others .................................................................................................................
Subtotal...............................................................................................................
Guaranteed .........................................................................................................
Unsecured...........................................................................................................
Total ....................................................................................................................
2008
¥
670,902
1,124,816
—
6,834,925
648,222
9,278,868
21,143,991
26,534,953
¥ 56,957,813
Millions of yen
2007
¥
765,605
1,078,115
—
6,685,582
329,637
8,858,940
21,732,934
23,164,565
¥53,756,440
182
SMFG 2008
Balance of Loans and Bills Discounted, Classified by Maturity
March 31
One year or less..................................................................................................
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.
2008
¥ 9,041,643
8,589,738
6,813,129
1,776,609
8,610,480
6,770,462
1,840,018
3,565,191
2,823,756
741,434
17,431,098
16,482,691
948,407
9,719,661
9,719,661
—
¥ 56,957,813
Millions of yen
2007
¥ 8,772,225
7,741,633
6,048,170
1,693,463
7,843,601
6,118,653
1,724,948
3,287,700
2,692,523
595,176
16,825,830
15,862,230
963,599
9,285,448
9,285,448
—
¥53,756,440
Balance of Loan Portfolio, Classified by Industry
March 31
Domestic offices:
Millions of yen
2008
2007
Manufacturing ................................................................................................
Agriculture, forestry, fisheries and mining......................................................
Construction...................................................................................................
Transportation, communications and public enterprises ...............................
Wholesale and retail ......................................................................................
Finance and insurance ..................................................................................
Real estate.....................................................................................................
Services .........................................................................................................
Municipalities .................................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Overseas offices:
Public sector ..................................................................................................
Financial institutions ......................................................................................
Commerce and industry.................................................................................
Others ............................................................................................................
Subtotal..........................................................................................................
Total ....................................................................................................................
¥ 5,284,513
138,440
1,153,752
2,891,612
4,902,333
6,083,560
6,310,993
5,453,700
780,942
15,877,739
¥ 48,877,589
¥
19,835
679,195
6,790,929
590,262
¥ 8,080,224
¥ 56,957,813
10.8%
0.3
2.4
5.9
10.0
12.4
12.9
11.2
1.6
32.5
100.0%
0.3%
8.4
84.0
7.3
100.0%
—
¥ 5,236,097
132,196
1,224,951
2,886,168
5,089,297
5,675,905
6,369,243
5,742,376
592,238
15,242,033
¥ 48,190,509
¥
19,029
287,898
5,038,808
220,195
¥ 5,565,931
¥ 53,756,440
10.9%
0.3
2.5
6.0
10.6
11.8
13.2
11.9
1.2
31.6
100.0%
0.3%
5.2
90.5
4.0
100.0%
—
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches). Overseas operations comprise the operations of SMBC’s
overseas branches.
2. Japan offshore banking accounts are included in overseas offices’ accounts.
Loans to Individuals/Small and Medium-Sized Enterprises
March 31
Total domestic loans (A) .....................................................................................
Loans to individuals, and small and medium-sized enterprises (B) ....................
(B) / (A) ...............................................................................................................
Millions of yen
2008
¥ 48,877,589
36,129,519
73.9%
2007
¥48,190,509
36,276,238
75.3%
Notes: 1. The figures above exclude the outstanding balance of loans at overseas branches and of Japan offshore banking accounts.
2. Small and medium-sized enterprises 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.)
SMFG 2008 183
Consumer Loans Outstanding
March 31
Consumer loans..................................................................................................
Housing loans ................................................................................................
Residential purpose ..................................................................................
Others ............................................................................................................
Millions of yen
2008
¥ 14,581,772
13,647,753
10,033,842
934,018
2007
¥14,492,814
13,557,521
9,918,884
935,292
Note: Housing loans include general-purpose loans used for housing purposes as well as housing loans and apartment house acquisition loans.
Breakdown of Reserve for Possible Loan Losses
Year ended March 31, 2008
General reserve for possible loan losses.....................................
Specific reserve for possible loan losses.....................................
For nonresident loans.............................................................
Loan loss reserve for specific overseas countries .......................
Total.............................................................................................
Amount of direct reduction...........................................................
Millions of yen
Balance at
beginning of
the fiscal year
Increase
during
the fiscal year
Decrease during the fiscal year
Objectives
Others
Balance at
end of
the fiscal year
¥527,819
[2,987]
144,800
[23]
12,670
[19]
1,941
¥674,562
[3,011]
¥295,552
[2,762]
¥ 430,919
¥
—
¥527,819*
¥430,919
189,084
47,319
97,481*
189,084
28,394
6,034
6,636*
28,394
0
¥ 620,004
—
¥ 47,319
1,941*
¥627,242
0
¥620,004
¥333,811
*Transfer from reserves by reversal or origination method
Note: Figures in brackets [ ] indicate foreign exchange translation adjustments.
Year ended March 31, 2007
Millions of yen
Balance at
beginning of
the fiscal year
Increase
during
the fiscal year
Decrease during the fiscal year
Objectives
Others
Balance at
end of
the fiscal year
General reserve for possible loan losses.....................................
¥ 574,302
¥ 530,807
¥
—
¥ 574,302*
¥ 530,807
Specific reserve for possible loan losses.....................................
For nonresident loans.............................................................
Loan loss reserve for specific overseas countries .......................
Total.............................................................................................
[(1,766)]
241,566
[(19)]
18,096
[(19)]
2,354
¥ 818,223
[(1,786)]
144,824
141,100
100,465*
144,824
12,690
1,720
16,375*
12,690
1,941
¥ 677,573
—
¥ 141,100
2,354*
¥ 677,123
1,941
¥ 677,573
Amount of direct reduction...........................................................
¥ 604,309
¥ 298,314
[(687)]
*Transfer from reserves by reversal or origination method
Note: Figures in brackets [ ] indicate foreign exchange translation adjustments.
Write-off of Loans
Year ended March 31
Write-off of loans.................................................................................................
Note: Write-off of loans include the amount of direct reduction.
Specific Overseas Loans
March 31
Indonesia ............................................................................................................
Argentina.............................................................................................................
Total ....................................................................................................................
Ratio of the total amounts to total assets............................................................
Number of countries............................................................................................
Millions of yen
2008
¥121,801
2007
¥ 50,468
Millions of yen
2008
¥ —
4
¥ 4
0.00%
1
2007
¥ 32,574
3
¥ 32,578
0.03%
2
184
SMFG 2008
Risk-Monitored Loans
March 31
Bankrupt loans ....................................................................................................
Non-accrual loans ...............................................................................................
Past due loans (3 months or more).....................................................................
Restructured loans..............................................................................................
Total ....................................................................................................................
Amount of direct reduction ..................................................................................
Note: Definition of risk-monitored loan categories
Millions of yen
2008
¥ 48,734
437,699
23,747
260,405
¥ 770,587
¥ 291,246
2007
¥ 33,754
357,632
20,543
309,133
¥ 721,064
¥ 266,873
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.
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 ....................................................................................................................
Amount of direct reduction ..................................................................................
2008
¥
117,757
402,028
284,153
803,939
63,928,140
¥ 64,732,080
¥
333,811
2007
¥
108,893
300,097
329,677
738,667
60,542,238
¥61,280,906
¥
298,314
Millions of yen
Note: Definition of problem asset categories
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 private
placement bonds, loans and bills discounted, foreign exchanges, accrued interest, and advance payment in “other assets,” customers’ liabilities for
acceptance and guarantees, 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
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
Total loans
Other assets
Bankrupt Borrowers
Effectively Bankrupt Borrowers
Bankrupt and
quasi-bankrupt assets
Potentially Bankrupt Borrowers
Doubtful assets
Borrowers Requiring Caution
Substandard loans
Normal Borrowers
(Normal assets)
A
Bankrupt loans
Non-accrual loans
Past due loans (3 months or more)
Restructured loans
B
C
C
SMFG 2008 185
Classification under Self-Assessment, Disclosure of Problem Assets, and Write-Offs/Reserves
March 31, 2008
Category of
borrowers under
self-assessment
Bankrupt Borrowers
Effectively Bankrupt
Borrowers
Potentially
Bankrupt
Borrowers
Borrowers
Requiring
Caution
Problem assets based on
the Financial Reconstruction Law
Classification under self-assessment
Classification I Classification II Classification III
Classification IV
(Billions of yen)
Reserve for possible
loan losses
Reserve ratio
Bankrupt and
quasi-bankrupt assets (1)
Portion of claims secured by
collateral or guarantees, etc. (5) Fully reserved
¥117.8
¥104.3
¥13.5
Direct
write-offs
(Note 1)
¥18.3
(Note 2)
100%
(Note 3)
Doubtful assets (2)
Portion of claims secured by
collateral or guarantees, etc. (6)
¥402.0
¥180.8
Necessary
amount
reserved
¥221.2
Substandard loans (3)
¥284.1
(Claims to substandard borrowers)
Normal Borrowers
Normal assets
¥63,928.2
Portion of substandard loans
secured by collateral or
guarantees, etc. (7)
¥85.2
Claims to borrowers requiring
caution, excluding claims to
substandard borrowers
Claims to normal
borrowers
Total (4)
¥64,732.1
(A) = (1) + (2) + (3)
¥803.9
Loan loss reserve for specific overseas countries
NPL ratio (A) / (4)
1.24%
(Note 5)
Total reserve for possible loan losses
(B) Specific reserve + General reserve
for substandard loans
Portion secured by collateral or
guarantees, etc. (C) = (5) + (6) + (7) ¥370.3
Unsecured portion
(D) = (A) - (C)
Specific
reserve
General
reserve
¥170.8
(Note 2)
77.21%
(Note 3)
General reserve
for substandard
loans ¥88.5
¥430.9
¥0.0
¥620.0
¥277.6
¥433.6
44.57%
(Note 3)
6.25%
[10.38%]
(Note 4)
14.56%
(Note 3)
0.20%
(Note 4)
Reserve ratio
(B) / (D)
64.02%
(Note 6)
Coverage ratio { (B) + (C) } / (A)
80.60%
Notes: 1. Includes amount of direct reduction totaling ¥333.8 billion.
2. Includes reserves for assets that are not subject to disclosure under the Financial Reconstruction Law. (Bankrupt/Effectively Bankrupt Borrowers:
¥4.8 billion; Potentially Bankrupt Borrowers: ¥6.6 billion)
3. Reserve ratios for claims on 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 on 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 for unsecured claims on Borrowers Requiring Caution
(excluding claims to Substandard Borrowers) is shown in brackets.
5. Ratio of problem assets to total assets subject to the Financial Reconstruction Law
6. Reserve ratio = (Specific reserve + General reserve for substandard loans) (cid:3) (Bankrupt and quasi-bankrupt assets + Doubtful assets +
Substandard loans — Portion secured by collateral or guarantees, etc.)
Off-Balancing Problem Assets
March 31,
2006
1
Fiscal 2006
New occurrences
Off-balanced
Bankrupt and quasi-bankrupt assets ................
Doubtful assets .................................................
Total..................................................................
¥164.5
473.4
¥637.9
¥ 56.8
300.8
¥ 357.6
¥(112.4)
(474.1)
¥(586.5)
Bankrupt and quasi-bankrupt assets ................
Doubtful assets .................................................
Total..................................................................
Fiscal 2007
New occurrences
Off-balanced
¥ 71.8
382.9
¥454.7
¥ (62.9)
(281.0)
¥(343.9)
Billions of yen
March 31,
2007
2
¥ 108.9
300.1
¥ 409.0
Increase/
Decrease
2 — 1
¥ (55.6)
(173.3)
¥(228.9)
March 31,
2008
3
¥ 117.8
402.0
¥ 519.8
Increase/
Decrease
3 — 2
¥
8.9
101.9
¥ 110.8
Notes: 1. The off-balancing (also known as “final disposal”) of problem assets refers to the removal of such assets from the bank’s balance sheet by way of
sale, direct write-off or other means.
2. The figures shown in the above table under “new occurrences” and “off-balanced” are simple additions of the figures for the first and second halves
of the two periods reviewed. Amounts of ¥78.8 billion for fiscal 2006 and ¥84.7 billion in fiscal 2007, recognized as “new occurrences” in the first
halves of the terms, were included in the amounts off-balanced in the respective second halves.
186
SMFG 2008
Securities (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Balance of Securities
Year-End Balance
March 31
Domestic operations:
Millions of yen
2008
2007
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 ....................................................................................................................
¥ 8,799,249
331,178
3,506,181
3,668,150
425,814
/
/
¥ 16,730,573
¥
—
—
—
—
6,027,667
4,812,110
1,215,556
¥ 6,027,667
¥ 22,758,241
¥ 6,927,353
520,708
3,831,945
4,830,277
932,657
/
/
¥17,042,942
¥
—
—
—
—
3,017,931
1,699,133
1,318,798
¥ 3,017,931
¥20,060,873
Average Balance
Year ended March 31
Domestic operations:
Millions of yen
2008
2007
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 ....................................................................................................................
¥ 7,341,261
470,333
3,632,377
2,904,058
775,090
/
/
¥ 15,123,121
¥
—
—
—
—
3,528,429
2,255,870
1,272,559
¥ 3,528,429
¥ 18,651,550
¥ 8,566,945
550,770
3,804,985
2,920,211
920,559
/
/
¥16,763,472
¥
—
—
—
—
4,095,307
2,821,607
1,273,700
¥ 4,095,307
¥20,858,779
Note: The average balance of foreign-currency-denominated transactions by domestic branches in international operations is calculated by the monthly
current method.
SMFG 2008 187
Balance of Securities Held, Classified by Maturity
March 31
One year or less
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
One — three years
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
Three — five years
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
Five — seven years
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
Seven — 10 years
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
More than 10 years
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
No designated term
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
Total
Japanese government bonds ........................................................................
Japanese local government bonds ...............................................................
Japanese corporate bonds ...........................................................................
Japanese stocks ...........................................................................................
Others ...........................................................................................................
Foreign bonds...........................................................................................
Foreign stocks ..........................................................................................
Millions of yen
2008
2007
¥ 1,637,379
64,060
349,571
471,036
456,965
—
1,448,219
43,929
1,104,278
2,227,909
2,163,254
141
3,639,495
70,114
1,028,132
1,523,728
1,478,032
—
292,217
102,245
576,636
174,050
122,496
1,595
146,871
50,430
401,459
413,635
384,846
—
1,635,066
398
46,102
386,561
206,517
180,043
—
—
—
3,668,150
1,256,560
—
1,033,775
¥ 8,799,249
331,178
3,506,181
3,668,150
6,453,481
4,812,110
1,215,556
¥ 2,784,983
83,763
555,185
413,472
349,371
—
456,226
72,335
1,175,630
265,958
153,931
15,835
897,565
60,149
931,372
138,547
84,577
—
583,079
212,590
635,881
173,241
136,925
—
301,441
91,447
437,479
532,189
410,492
7,976
1,904,058
421
96,396
783,940
563,835
220,105
—
—
—
4,830,277
1,643,238
—
1,074,880
¥ 6,927,353
520,708
3,831,945
4,830,277
3,950,589
1,699,133
1,318,798
188
SMFG 2008
Ratios (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Income Ratio
Year ended March 31
Ordinary profit to total assets ..............................................................................
Ordinary profit to stockholders’ equity.................................................................
Net income to total assets...................................................................................
Net income to stockholders’ equity .....................................................................
Percentage
2008
0.56%
14.28
0.22
5.64
2007
0.62%
18.57
0.34
10.13
Notes: 1. Ordinary profit (net income) to total assets = Ordinary profit (net income) / Average balance of total assets excluding customers’ liabilities for
acceptances and guarantees x 100
2. Ordinary profit (net income) to stockholders’ equity = (Ordinary profit (net income) - Preferred dividends) / {(Stockholders’ equity at beginning of the
fiscal year - Number of shares of preferred stock outstanding at beginning of the fiscal year x Issue price) + (Net assets at end of the fiscal year -
Number of shares of preferred stock outstanding at end of the fiscal year x Issue price)} divided by 2 x 100
Yield/Interest Rate
Year ended March 31
Domestic operations
Interest-earning assets (A) ............................................................................
Interest-bearing liabilities (B) .........................................................................
(A) – (B) ..........................................................................................................
International operations
Interest-earning assets (A) ............................................................................
Interest-bearing liabilities (B) .........................................................................
(A) – (B) ..........................................................................................................
Total
Interest-earning assets (A) ............................................................................
Interest-bearing liabilities (B) .........................................................................
(A) – (B) ..........................................................................................................
Loan-Deposit Ratio
March 31
Domestic operations
Percentage
2008
1.78%
1.25
0.53
4.30%
4.43
(0.13)
2.34%
1.91
0.43
2007
1.56%
0.98
0.58
4.61%
4.90
(0.29)
2.12%
1.66
0.46
Millions of yen
2008
2007
Loans and bills discounted (A).......................................................................
Deposits (B) ..................................................................................................
Loan-deposit ratio (%)
(A) / (B) ....................................................................................................
Ratio by average balance for the fiscal year.............................................
¥ 47,935,924
60,751,641
¥ 47,262,094
59,933,911
78.90%
77.99
78.85%
78.59
International operations
Loans and bills discounted (A).......................................................................
Deposits (B) ..................................................................................................
Loan-deposit ratio (%)
(A) / (B) ....................................................................................................
Ratio by average balance for the fiscal year.............................................
¥ 9,021,889
8,631,193
¥ 6,494,346
8,875,426
104.52%
81.61
73.17%
70.82
Total
Loans and bills discounted (A).......................................................................
Deposits (B) ..................................................................................................
Loan-deposit ratio (%)
(A) / (B) ....................................................................................................
Ratio by average balance for the fiscal year.............................................
¥ 56,957,813
69,382,834
¥ 53,756,440
68,809,338
82.09%
78.47
78.12%
77.58
Note: Deposits include negotiable certificates of deposit.
SMFG 2008 189
Securities-Deposit Ratio
March 31
Domestic operations
Millions of yen
2008
2007
Securities (A) ................................................................................................
Deposits (B) ..................................................................................................
Securities-deposit ratio (%)
(A) / (B) ....................................................................................................
Ratio by average balance for the fiscal year.............................................
¥ 16,730,573
60,751,641
¥ 17,042,942
59,933,911
27.53%
25.26
28.43%
27.92
International operations
Securities (A) ................................................................................................
Deposits (B) ..................................................................................................
Securities-deposit ratio (%)
(A) / (B) ....................................................................................................
Ratio by average balance for the fiscal year.............................................
¥ 6,027,667
8,631,193
¥ 3,017,931
8,875,426
69.83%
38.02
34.00%
45.52
Total
Securities (A) ................................................................................................
Deposits (B) ..................................................................................................
Securities-deposit ratio (%)
(A) / (B) ....................................................................................................
Ratio by average balance for the fiscal year.............................................
¥ 22,758,241
69,382,834
¥ 20,060,873
68,809,338
32.80%
26.98
29.15%
30.21
Note: Deposits include negotiable certificates of deposit.
190
SMFG 2008
Capital (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Changes in Number of Shares Issued and Capital Stock
Number of shares
issued
Capital stock
Capital reserve
Changes
Balances
Changes
Balances
Changes
Balances
Millions of yen
April 1, 2004*1 ...........................................
September 21, 2004*2...............................
March 30, 2005*3 ......................................
April 1, 2004 — March 31, 2005*4 ............
August 9, 2005*5 .......................................
May 17, 2006*6 .........................................
September 6, 2006*7.................................
September 29, 2006*8 ..............................
October 11, 2006*9 ...................................
October 31, 2006*10 ..................................
—
2
70,001
264,140
—
214,194
173,770
601,757
153,181
(830,000)
55,778,805
55,778,807
55,848,808
56,112,948
56,112,948
56,327,142
56,500,912
57,102,669
57,255,850
56,425,850
¥
—
—
105,001
—
—
—
—
—
—
—
¥559,985
559,985
664,986
664,986
664,986
664,986
664,986
664,986
664,986
664,986
¥ (220,966)
246,205
105,001
—
(344,900)
—
—
—
—
—
¥ 658,726
904,932
1,009,933
1,009,933
665,033
665,033
665,033
665,033
665,033
665,033
Remarks:
*1 Reduction in capital reserve due to a corporate split resulting from the spin-off of certain subsidiaries
*2 Share exchange due to a restructuring of Group companies
*3 Allotment to third parties:
Preferred stock (1st series Type 6): 70,001 shares
Issue price: ¥3,000 thousand
Capitalization: ¥1,500 thousand
*4 Conversion of 32,000 shares of preferred stock (Type 1) and 105,000 shares of preferred stock (Type 3) to 401,140 shares of common stock
*5 Capital reserve was transferred to other capital surplus pursuant to Article 289-2 of the Commercial Code and Article 18-2 of the Banking Law
*6 Conversion of 35,000 shares of preferred stock (Type 1) and 33,000 shares of preferred stock (Type 2) to 214,194 shares of common stock
*7 Conversion of 67,000 shares of preferred stock (Type 2) to 173,770 shares of common stock
*8 Conversion of 500,000 shares of preferred stock (Type 3) to 601,757 shares of common stock
*9 Conversion of 195,000 shares of preferred stock (Type 3) to 153,181 shares of common stock
*10 Cancellation of 35,000 shares of preferred stock (Type 1), 100,000 shares of preferred stock (Type 2) and 695,000 shares of preferred stock (Type 3)
Number of Shares Issued
March 31, 2008
Number of shares issued
Common stock ...........................................................................................................................................................
Preferred stock (1st series Type 6) ............................................................................................................................
Total ...........................................................................................................................................................................
56,355,849
70,001
56,425,850
Note: The shares above are not listed on any stock exchange.
Principal Shareholders
a. Common Stock
March 31, 2008
Number of
shares
Percentage of
shares outstanding
Sumitomo Mitsui Financial Group, Inc. ..................................................................................................
56,355,849
100.00%
b. Preferred Stock (1st series Type 6)
March 31, 2008
Number of
shares
Percentage of
shares outstanding
Sumitomo Mitsui Financial Group, Inc. ..................................................................................................
70,001
100.00%
SMFG 2008 191
Others (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Employees
March 31
Number of employees.........................................................................................
Average age (years–months)..............................................................................
Average length of employment (years–months) ................................................
Average annual salary (thousands of yen) .........................................................
2008
17,886
35–11
13–2
¥8,290
2007
16,407
36–4
13–8
¥7,712
Notes: 1. Temporary and part-time staff are excluded from the above calculations but includes overseas local staff. Executive officers who do not concurrently
serve as Directors are excluded from “Number of employees.”
2. “Average annual salary” includes bonus, overtime pay and other fringe benefits.
3. Overseas local staff are excluded from the above calculations other than “Number of employees.”
Number of Offices
March 31
Domestic network:
Main offices and branches .............................................................................
Subbranches..................................................................................................
Agency ...........................................................................................................
Overseas network:
Branches........................................................................................................
Subbranches..................................................................................................
Representative offices ...................................................................................
Total ....................................................................................................................
2008
473
157
1
19
6
15
671
2007
463
156
1
18
5
13
656
Note: “Main offices and branches” includes the International Business Operations Dept. (2008, 2 branches; 2007, 2 branches), specialized deposit account
branches (2008, 38 branches; 2007, 38 branches) and ATM administration branches (2008, 17 branches; 2007, 17 branches).
Number of Automated Service Centers
March 31
Automated service centers .................................................................................
2008
28,120
2007
25,283
Domestic Exchange Transactions
Year ended March 31
Exchange for remittance:
Destined for various parts of the country:
Millions of yen
2008
2007
Number of accounts (thousands)..............................................................
Amount .....................................................................................................
405,059
¥ 871,073,089
Received from various parts of the country:
Number of accounts (thousands)..............................................................
Amount .....................................................................................................
301,655
¥ 881,410,435
Collection:
Destined for various parts of the country:
Number of accounts (thousands)..............................................................
Amount .....................................................................................................
3,444
9,101,611
¥
Received from various parts of the country:
Number of accounts (thousands)..............................................................
Amount .....................................................................................................
Total ....................................................................................................................
1,214
¥
2,801,793
¥1,764,386,929
387,493
¥ 713,802,911
295,072
¥ 842,628,980
4,201
10,897,627
¥
1,218
¥
3,545,842
¥1,570,875,362
192
SMFG 2008
Foreign Exchange Transactions
Year ended March 31
Outward exchanges:
Millions of U.S. dollars
2008
2007
Foreign bills sold ............................................................................................
Foreign bills bought .......................................................................................
Incoming exchanges:
Foreign bills payable ......................................................................................
Foreign bills receivable ..................................................................................
Total ....................................................................................................................
$1,143,759
597,763
$ 685,135
30,156
$2,456,815
Note: The figures above include foreign exchange transactions by overseas branches.
Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees
Millions of yen
March 31
Securities ............................................................................................................
Commercial claims..............................................................................................
Commercial goods ..............................................................................................
Real estate..........................................................................................................
Others .................................................................................................................
Subtotal...............................................................................................................
Guaranteed .........................................................................................................
Unsecured...........................................................................................................
Total ....................................................................................................................
2008
¥
10,334
25,040
4,373
62,754
13,943
¥ 116,446
535,278
4,013,337
¥4,665,062
$ 913,008
422,390
$ 670,892
28,076
$2,034,368
2007
¥
17,427
22,217
4,451
58,403
28,780
¥ 131,280
454,673
3,591,862
¥4,177,816
SMFG 2008 193
Trust Assets and Liabilities (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Statement of Trust Assets and Liabilities
March 31
Assets:
Loans and bills discounted ............................................................................
Loans on deeds ........................................................................................
Securities .......................................................................................................
Japanese government bonds ...................................................................
Corporate bonds .......................................................................................
Foreign securities .....................................................................................
Other securities.........................................................................................
Securities held in custody accounts...............................................................
Monetary claims.............................................................................................
Monetary claims for housing loans ...........................................................
Other monetary claims..............................................................................
Premises and equipment ...............................................................................
Equipment.................................................................................................
Other claims...................................................................................................
Call loans .......................................................................................................
Due from banking account ............................................................................
Cash and due from banks .............................................................................
Deposits with banks..................................................................................
Others ............................................................................................................
Others .......................................................................................................
Total assets ...................................................................................................
Liabilities:
Designated money trusts ...............................................................................
Specified money trusts ..................................................................................
Pecuniary trusts other than money trusts ......................................................
Security trusts ................................................................................................
Monetary claims trusts ...................................................................................
Composite trusts ............................................................................................
Other trusts ....................................................................................................
Total liabilities ................................................................................................
Notes: 1. Amounts less than one million yen have been omitted.
2. SMBC has no co-operative trusts under other trust bank’s administration as of year-end.
3. SMBC does not deal with any trusts with principal indemnification.
Year-End Balance of Money Trusts and Others
March 31
Money trusts .......................................................................................................
Pension trusts .....................................................................................................
Asset formation benefit trusts .............................................................................
Loan trusts ..........................................................................................................
Total ....................................................................................................................
Year-End Balance of Trusts with Principal Indemnification
There are no corresponding items.
Risk-Monitored Loans Related with Trusts with Principal Indemnification
There are no corresponding items.
Balance of Principal Amounts of Money Trusts and Loan Trusts, Classified by Maturity
Millions of yen
March 31
Money trusts:
Less than one year ........................................................................................
One — two years ...........................................................................................
Two — five years ...........................................................................................
Five years and more ......................................................................................
No designated term .......................................................................................
Total ...............................................................................................................
Loan trusts:
Less than one year ........................................................................................
One — two years ...........................................................................................
Two — five years ...........................................................................................
Five years and more ......................................................................................
No designated term .......................................................................................
Total ...............................................................................................................
2008
¥
6,457
79,747
50,334
213,028
—
¥ 349,568
¥
¥
—
—
—
—
—
—
194
SMFG 2008
Millions of yen
2008
2007
¥ 223,740
223,740
273,504
202,845
12,000
58,358
300
3,451
571,072
84,419
486,653
25
25
1,318
263
80,796
20,000
20,000
1,540
1,540
¥1,175,711
¥ 292,193
61,864
223,130
3,462
501,920
91,600
1,540
¥1,175,711
2008
¥ 354,058
—
—
—
¥ 354,058
Millions of yen
¥
5,350
5,350
267,110
168,798
12,000
86,312
—
3,000
703,199
123,148
580,051
25
25
1,245
—
65,062
129,401
129,401
—
—
¥1,174,396
¥ 358,058
91,741
—
3,000
598,236
123,359
—
¥1,174,396
2007
¥449,800
—
—
—
¥449,800
2007
¥ 71,658
15,871
111,503
244,253
—
¥443,287
¥
¥
—
—
—
—
—
—
Year-End Balance of Money Trusts and Others
March 31
Money trusts:
Loans and bills discounted ............................................................................
Securities .......................................................................................................
Subtotal..........................................................................................................
Pension trusts:
Loans and bills discounted ............................................................................
Securities .......................................................................................................
Subtotal..........................................................................................................
Asset formation benefit trusts:
Loans and bills discounted ............................................................................
Securities .......................................................................................................
Subtotal..........................................................................................................
Loan trusts:
Loans and bills discounted ............................................................................
Securities .......................................................................................................
Subtotal..........................................................................................................
Total of loans and bills discounted......................................................................
Total of securities................................................................................................
Total ....................................................................................................................
Year-End Balance of Loans and Bills Discounted
March 31
Loans on deeds ..................................................................................................
Loans on notes ...................................................................................................
Bills discounted ...................................................................................................
Total ....................................................................................................................
Year-End Balance of Loans and Bills Discounted, Classified by Maturity
March 31
Loans and bills discounted
One year or less ............................................................................................
One — three years ........................................................................................
Three — five years ........................................................................................
Five — seven years .......................................................................................
More than seven years ..................................................................................
Total ...............................................................................................................
Balance of Loans and Bills Discounted, Classified by Collateral
March 31
Securities ............................................................................................................
Commercial claims..............................................................................................
Real estate..........................................................................................................
Factory ................................................................................................................
Fund....................................................................................................................
Ships and vessels ...............................................................................................
Others .................................................................................................................
Subtotal...............................................................................................................
Guaranteed .........................................................................................................
Unsecured...........................................................................................................
Total ....................................................................................................................
Millions of yen
Millions of yen
Millions of yen
2008
¥
3,740
270,476
¥ 274,216
¥
¥
¥
¥
—
—
—
—
—
—
¥
—
—
—
¥
¥
3,740
¥ 270,476
¥ 274,216
2008
¥ 3,740
—
—
¥ 3,740
2008
¥
2,540
—
—
220,000
1,200
¥ 223,740
Millions of yen
2008
¥
—
—
—
—
—
—
—
—
—
223,740
¥ 223,740
¥
¥
2007
¥
5,350
267,110
¥272,460
¥
¥
¥
¥
—
—
—
—
—
—
¥
—
—
—
¥
¥
5,350
¥267,110
¥272,460
2007
¥5,350
—
—
¥5,350
2007
¥1,350
1,800
1,000
—
1,200
¥5,350
2007
¥ —
—
—
—
—
—
—
¥ —
¥ —
5,350
¥5,350
SMFG 2008 195
Balance of Loans and Bills Discounted, Classified by Purpose
March 31
Millions of yen
2008
2007
Funds for capital investment ...............................................................................
Funds for working capital ....................................................................................
Total ....................................................................................................................
¥
1,000
222,740
¥ 223,740
0.45%
99.55
100.00%
¥1,000
4,350
¥5,350
18.69%
81.31
100.00%
Breakdown of Loan Portfolio, Classified by Industry
March 31
Millions of yen
2008
2007
Manufacturing .....................................................................................................
Agriculture, forestry, fisheries and mining...........................................................
Construction........................................................................................................
Transportation, communications and public enterprises.....................................
Wholesale and retail ...........................................................................................
Finance and insurance........................................................................................
Real estate..........................................................................................................
Services ..............................................................................................................
Municipalities ......................................................................................................
Others .................................................................................................................
Total ....................................................................................................................
¥
1,000
100,000
—
1,040
—
1,200
120,000
500
—
—
¥ 223,740
0.45%
44.70
—
0.46
—
0.54
53.63
0.22
—
—
100.00%
¥1,000
—
—
1,650
1,000
1,200
—
500
—
—
¥5,350
18.69%
—
—
30.84
18.69
22.43
—
9.35
—
—
100.00%
Loans to Individuals/Small and Medium-Sized Corporations
Balance of Loans
March 31
Total to individuals, and small and medium-sized enterprises (A)......................
Total loans (B).....................................................................................................
(A) / (B) ...............................................................................................................
Number of Loans Lent
March 31
Total to individuals, and small and medium-sized enterprises (C)......................
Total loans (D) ....................................................................................................
(C) / (D) ...............................................................................................................
Millions of yen
Number of loans
2008
¥
1,040
223,740
0.46%
2008
2
7
28.57%
2007
¥1,650
5,350
30.84%
2007
3
7
42.85%
Note: Small and medium-sized enterprises 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.)
Year-End Balance of Securities Related with Money Trusts and Others
March 31
Millions of yen
2008
2007
Japanese government bonds..............................................................................
Japanese local government bonds .....................................................................
Short-term Japanese corporate bonds ...............................................................
Japanese corporate bonds .................................................................................
Japanese stocks .................................................................................................
Others .................................................................................................................
Total ....................................................................................................................
¥ 199,818
—
—
12,000
—
58,658
¥ 270,476
73.87%
—
—
4.44
—
21.69
100.00%
¥168,798
—
—
12,000
—
86,312
¥267,110
63.20%
—
—
4.49
—
32.31
100.00%
196
SMFG 2008
Capital Ratio Information
Sumitomo Mitsui Banking Corporation and Subsidiaries
■ Capital Structure Information (Consolidated Capital Ratio (International Standards))
March 31
Tier I capital:
Tier II capital:
Deductions:
Total qualifying capital:
Risk-adjusted assets:
Tier I risk-adjusted
capital ratio:
Total risk-adjusted
capital ratio:
Required capital:
Capital stock...........................................................................................
Capital surplus........................................................................................
Retained earnings ..................................................................................
Cash dividends.......................................................................................
Foreign currency translation adjustments ..............................................
Stock acquisition rights...........................................................................
Minority interests ....................................................................................
Goodwill and others................................................................................
Gain on sale on securitization transactions............................................
Total Tier I capital (A) .............................................................................
Unrealized gains on other securities after 55% discount .......................
Land revaluation excess after 55% discount..........................................
General reserve for possible loan losses ...............................................
Excess amount of provision ...................................................................
Subordinated debt ..................................................................................
Total Tier II capital..................................................................................
Tier II capital included as qualifying capital (B) ......................................
(C) ..........................................................................................................
(D) = (A) + (B) - (C) ................................................................................
On-balance sheet items .........................................................................
Off-balance sheet items .........................................................................
Market risk items ....................................................................................
Operational risk ......................................................................................
Total risk-adjusted assets (E).................................................................
Millions of yen
2008
2007
¥
664,986
1,603,512
861,508
(15,383)
(28,468)
43
1,462,222
(2)
(44,045)
4,504,375
338,561
37,220
44,969
89,794
2,523,062
3,033,608
3,033,608
339,552
¥ 7,198,431
¥ 45,445,432
10,194,881
402,197
2,971,224
¥ 59,013,736
¥
664,986
1,603,512
581,619
—
(37,194)
14
1,374,169
(4)
(40,057)
4,147,047
830,321
39,367
28,115
193,977
2,564,195
3,655,976
3,655,976
320,319
¥ 7,482,705
¥ 44,878,966
8,756,301
401,455
3,701,598
¥ 57,738,321
(A) / (E) x 100 .........................................................................................
7.63%
7.18%
(D) / (E) x 100.........................................................................................
(E) x 8%..................................................................................................
12.19%
12.95%
¥ 4,721,098
¥ 4,619,065
SMFG 2008 197
■ Capital Structure Information (Nonconsolidated Capital Ratio (International Standards))
March 31
Tier I capital:
Tier II capital:
Deductions:
Total qualifying capital:
Risk-adjusted assets:
Tier I risk-adjusted
capital ratio:
Total risk-adjusted
capital ratio:
Required capital:
Capital stock...........................................................................................
Capital reserve .......................................................................................
Other capital surplus ..............................................................................
Other retained earnings..........................................................................
Other ......................................................................................................
Cash dividends.......................................................................................
Gain on sale on securitization transactions............................................
Deductions of deferred tax assets..........................................................
Total Tier I capital (A) .............................................................................
Unrealized gains on other securities after 55% discount .......................
Land revaluation excess after 55% discount..........................................
General reserve for possible loan losses ...............................................
Excess amount of provision ...................................................................
Subordinated debt ..................................................................................
Total Tier II capital..................................................................................
Tier II capital included as qualifying capital (B) ......................................
(C) ..........................................................................................................
(D) = (A) + (B) - (C) ................................................................................
On-balance sheet items .........................................................................
Off-balance sheet items .........................................................................
Market risk items ....................................................................................
Operational risk ......................................................................................
Total risk-adjusted assets (E).................................................................
Millions of yen
2008
2007
¥
664,986
665,033
702,514
894,560
953,936
(15,383)
(44,045)
(58,930)
3,762,673
339,932
30,774
—
8,282
2,683,172
3,062,160
3,062,160
272,393
¥ 6,552,440
¥ 40,580,140
8,619,697
257,905
2,241,099
¥ 51,698,842
¥
664,986
665,033
702,514
760,100
933,063
—
(40,057)
—
3,685,641
824,998
32,920
—
32,467
2,710,870
3,601,257
3,601,257
286,295
¥ 7,000,603
¥ 40,755,261
7,871,270
334,631
3,053,199
¥ 52,014,363
(A) / (E) x 100 .........................................................................................
7.27%
7.08%
(D) / (E) x 100.........................................................................................
(E) x 8%..................................................................................................
12.67%
13.45%
¥ 4,135,907
¥ 4,161,149
198
SMFG 2008
Corporate Data
Sumitomo Mitsui Financial Group, Inc.
■ Board of Directors, Corporate Auditors, and Executive Officers (as of June 30, 2008)
BOARD OF DIRECTORS
Masayuki Oku
Chairman of the Board and Representative Director
Teisuke Kitayama
President and Representative Director
Hiroki Nishio
Senior Managing Director and Representative Director
Audit Dept.
Osamu Endo
Director
Consumer Business Planning Dept.
Junsuke Fujii
Director
General Affairs Dept., Human Resources Dept.,
Corporate Risk Management Dept.
Takeshi Kunibe
Director
Public Relations Dept., Corporate Planning Dept.,
Financial Accounting Dept., Strategic Financial Planning Dept.,
Subsidiaries & Affiliates Dept.
Yoshiaki Yamauchi
Director (outside)
Yoichiro Yamakawa
Director (outside)
Yoshinori Yokoyama
Director (outside)
■ SMFG Organization (as of June 30, 2008)
CORPORATE AUDITORS
Masahide Hirasawa
Corporate Auditor
Yoji Yamaguchi
Corporate Auditor
Katsuya Onishi
Corporate Auditor (outside)
Hiroshi Araki
Corporate Auditor (outside)
Ikuo Uno
Corporate Auditor (outside)
EXECUTIVE OFFICERS
Wataru Ohara
Senior Managing Director
Corporate Risk Management Dept.
Hideo Shimada
Senior Managing Director
IT Planning Dept.
Tetsuya Kubo
Managing Director
Investment Banking Planning Dept.
Shareholders’
Meeting
Board of Directors
Auditing Committee
Risk Management Committee
Compensation Committee
Nominating Committee
Group Strategy
Committee
Management
Committee
Corporate Auditors/
Board of Corporate
Auditors
Office of Corporate Auditors
Public Relations Dept.
Corporate Planning Dept.
Investor Relations Dept.
Group CSR Dept.
Financial Accounting Dept.
Strategic Financial Planning Dept.
Subsidiaries & Affiliates Dept.
Consumer Business Planning Dept.
Investment Banking Planning Dept.
IT Planning Dept.
General Affairs Dept.
Human Resources Dept.
Corporate Risk Management Dept.
Audit Dept.
Group Business Management Dept.
SMFG 2008 199
Sumitomo Mitsui Banking Corporation
■ Board of Directors, Corporate Auditors, and Executive Officers (as of June 30, 2008)
BOARD OF DIRECTORS
Chairman of the Board
Teisuke Kitayama
President
Masayuki Oku*
Vice Chairman of the Board
Kenjiro Nakano
Deputy Presidents
Shigenobu Aikyo*
Head of Middle Market Banking Unit
Osamu Endo*
Head of Consumer Banking Unit
Hirosumi Tsusue*
Head of Corporate Banking Unit,
International Business Promotion Dept., Global Advisory Division
Senior Managing Directors
Akira Kitamura*
Corporate Research Dept., Credit Administration Dept.,
Deputy Head of Corporate Banking Unit (Credit Dept.),
Investment Banking Unit (Structured Finance Credit Dept.),
Corporate Advisory Division
Wataru Ohara*
Corporate Risk Management Dept., Credit & Investment Planning Dept.,
Trust Services Dept.
Yoshinori Kawamura*
Head of International Banking Unit
Hideo Shimada*
IT Planning Dept., Operations Planning Dept., Operations Support
Dept., Director of JRI
Directors (outside)
Yoshiaki Yamauchi
Yoichiro Yamakawa
Yoshinori Yokoyama
*Executive Officers
CORPORATE AUDITORS
Nobuo Tsukuni
Corporate Auditor
Hiroki Yaze
Corporate Auditor
Katsuya Onishi
Corporate Auditor (outside)
Hiroshi Araki
Corporate Auditor (outside)
200
SMFG 2008
Ikuo Uno
Corporate Auditor (outside)
Masahide Hirasawa
Corporate Auditor
EXECUTIVE OFFICERS
Managing Directors
Keiichi Ando
Osaka Corporate Banking Division
(Osaka Corporate Banking Dept. I, II, and III)
Satoru Nakanishi
Nagoya Corporate Banking Division (Nagoya Corporate Banking
Dept.), and Head of the Nagoya Middle Market Banking Division
Koki Nomura
Deputy Head of Middle Market Banking Unit (in charge of East Japan)
Junsuke Fujii
Human Resources Dept.,
Human Resources Development Dept., Quality Management Dept.,
General Affairs Dept., Legal Dept., and Administrative Services Dept.
Tetsuya Kubo
Investment Banking Unit
Takeshi Kunibe
Public Relations Dept., Corporate Planning Dept.,
Financial Accounting Dept., Strategic Financial Planning Dept.,
Subsidiaries & Affiliates Dept.
Fumihiko Tanizawa
Internal Audit Dept. and Credit Review Dept.
Koichi Miyata
Head of Treasury Unit, Human Resources Dept. and
Human Resources Development Dept.
Kazumasa Hashimoto
Deputy Head of Middle Market Banking Unit (in charge of West Japan)
Kozo Masaki
Head of China Division, and General Manager, Shanghai Branch
Jun Mizoguchi
Head of Europe Division, and President of Sumitomo Mitsui Banking
Corporation Europe Limited
Tatsuo Yamanaka
Head of Corporate Advisory Division
Kazuya Jono
Deputy Head of Consumer Banking Unit
Head of Private Advisory Dept.
Hideo Hiyama
Deputy Head of International Banking Unit
Naoyuki Kawamoto
General Manager, Corporate Risk Management Dept.
Koichi Minami
Deputy Head of Middle Market Banking Unit (Credit Dept. II)
Yoshihiko Shimizu
General Manager, Planning Dept., Corporate Banking Unit
& Middle Market Banking Unit
Yuichiro Takada
Tokyo Corporate Banking Division
(Corporate Banking Dept.s I, II, and III)
Koichi Danno
Head of Asia Pacific Division
Hiroshi Minoura
Head of Americas Division
Mitsunori Watanabe
Tokyo Corporate Banking Division
(Corporate Banking Dept.s IV, V, and VI)
Directors
Tsuyoshi Isono
Chairman of SMBC Capital Markets, Inc.
Yujiro Ito
General Manager, General Affairs Dept.
Seiichiro Takahashi
General Manager, Planning Dept., Treasury Unit
Hidetoshi Furukawa
Deputy Head of Corporate Banking Unit,
International Banking Unit,
International Banking Unit, Global Advisory Division
Ikuhiko Morikawa
General Manager, Planning Dept., Consumer Banking Unit
Takayuki Hayakawa
Head of Tokyo Higashi Middle Market Banking Division
Katsunori Okubo
General Manager, Hong Kong Branch
Kenichi Gogami
General Manager, Quality Management Dept.
Takashi Saito
Assistant Head of Corporate Advisory Division
Ryusuke Itakura
Deputy Head of Consumer Banking Unit (in charge of West Japan)
Shuichi Kageyama
Head of Kyoto Hokuriku Middle Market Banking Division,
and General Manager
Kazuhiro Shibata
Deputy Head of Corporate Banking Unit (Credit Dept. I)
Kuniaki Fujiwara
General Manager, Kobe Block Consumer Business Office
Hiroyuki Iwami
General Manager, Tokyo Corporate Banking Dept. III
Yuichiro Ueda
General Manager, Credit Dept., Corporate Banking Unit
Hiroyasu Okano
General Manager, Private Banking Business Office
Shusuke Kurose
IT Planning Dept.
Tatsuya Nishimoto
General Manager, Shibuya Corporate Business Office,
General Manager, Yokohama Corporate Business Office
Masahiro Fuchizaki
Operations Planning Dept. and
Operations Support Dept.
Nobuaki Kurumatani
General Manager, Corporate Planning Dept.
Toshimi Tagata
General Manager, Real Estate Finance Dept.
Masaki Tachibana
General Manager, Human Resources Dept.
Kohei Hirota
Head of Osaka Minami Middle Market Banking Division II
Yoshimi Miura
General Manager, Nagoya Corporate Banking Dept.
William M. Ginn
General Manager, Specialized Industries Dept., and The Americas
Division and Chairman of SMBC Leasing and Finance, Inc.
Nicholas Andrew Pitts-Tucker
Co-General Manager, Structured Finance Dept., Europe Division,
and International Finance Dept., Europe Division, and Executive
Director, General Manager, Co-Head of International & Structured
Finance Department
Sumitomo Mitsui Banking Corporation Europe Ltd.
Hikota Koshika
Head of Kobe Middle Market Banking Division
Ryosuke Harada
Head of Tokyo Toshin Middle Market Banking Division
Haruhide Maeda
General Manager, Himeji Corporate Business Office
Nobuo Iida
Head of Osaka Kita Middle Market Banking Division
Takahiko Kato
General Manager, Singapore Branch
Ichiro Onishi
General Manager, Tokyo Chu-o Block Consumer Business Office
Kazunori Okuyama
Head of Shinjuku Middle Market Banking Division, and Head of
Saitama Ikebukuro Middle Market Banking Division
Fumitoshi Onodera
General Manager, Tokyo Corporate Banking Dept. IV
Hiroshi Kobayashi
General Manager, Planning Dept., Investment Banking Unit
Toru Nagamoto
General Manager, Compliance Audit Group
Atsuhiko Inoue
General Manager, Osaka Corporate Banking Dept. I
Shogo Sekimoto
General Manager, Tokyo Corporate Banking Dept. I
Toshiyuki Teramoto
General Manager, Corporate Credit Dept. I, Middle Market Banking Unit
Manabu Narita
General Manager, Shinjuku Nishiguchi Middle Market Banking
Division I
Chris Chan Chi Keung
General Manager, Greater China Corporate Banking Dept.
SMFG 2008 201
I
G
P
Internal Audit Unit
Internal Audit Dept.
Internal Audit Planning Dept.
Credit Review Dept.
Corporate Staff Unit
Public Relations Dept.
Corporate Planning Dept.
Financial Research Dept.
CSR Dept.
Financial Accounting Dept.
Equity Portfolio Management Dept.
Strategic Financial Planning Dept.
Subsidiaries & Affiliates Dept.
Corporate Risk Management Dept.
Risk Management Systems Dept.
Credit & Investment Planning Dept.
Credit Portfolio Management Dept.
IT Planning Dept.
Human Resources Dept.
Training Institute
Counseling Dept.
Diversity and Inclusion Dept.
Human Resources Development Dept.
Quality Management Dept.
Customer Relations Dept.
Compliance Unit
General Affairs Dept.
Operational Risk Management Dept.
Antimonopoly Law Monitoring Dept.
Financial Products Compliance Dept.
Financial Crime Prevention Dept.
International Compliance Dept.
Legal Dept.
Corporate Services Unit
Administrative Services Dept.
Secretariat
Operations Planning Dept.
Operations Support Dept.
Corporate Research Dept.
Credit Administration Dept.
Trust Services Dept.
Trust Business Operations Dept.
Consumer
Banking Unit
Middle Market
Banking Unit
Corporate
Banking Unit
International
Banking Unit
Treasury Unit
Investment
Banking Unit
■ SMBC Organization (as of June 30, 2008)
Shareholders’
Meeting
Board of
Directors
Management
Committee
Corporate Auditors/
Board of Corporate Auditors
Office of Corporate Auditors
202
SMFG 2008
International Business Promotion Dept.
Global Advisory Dept.
Planning Dept., Corporate Banking Unit & Middle Market Banking Unit
Middle Market Solution Dept.
Private Advisory Dept.
Private Banking Dept.
Stock Execution Dept.
Corporate Employees Business Dept.
Defined Contribution Dept.
Succession Business Dept.
Planning Dept., Consumer Banking Unit
Block Consumer Business Office
Middle Market Banking Division
Tokyo Corporate Banking Division
Osaka Corporate Banking Division
Nagoya Corporate Banking Division
Americas Division
Europe Division
China Division
Asia Pacific Division
et
Marketing Dept.
Next W-ing Project Dept.
Financial Consulting Dept.
Financial Consulting R&D Dept.
Consumer Loan Dept.
Mass Retail Dept.
Credit Dept., Consumer Banking Unit
Public & Financial Institutions Banking Dept.
Small and Medium Enterprises Marketing Dept.
Credit Dept. I, Middle Market Banking Unit
Credit Monitoring Dept.
Credit Dept. II, Middle Market Banking Unit
Credit Monitoring Dept.
Credit Dept., Corporate Banking Unit
Planning Dept., International Banking Unit
IT & Business Administration Planning Dept.
Asia Pacific Training Dept.
Planning Dept., Americas Division
Credit Dept., Americas Division
Compliance Dept., Americas Division
Planning Dept., Europe Division
Credit Dept., Europe Division
Planning Dept., China Division
Planning Dept., Asia Pacific Division
Credit Dept., International Banking Unit
Environment Analysis Dept.
Planning Dept., Treasury Unit
Treasury Dept.
International Treasury Dept.
Trading Dept.
Treasury Marketing Dept.
Planning Dept., Investment Banking Unit
R&D Dept.
Syndication Dept.
Structured Finance Dept.
Shipping Finance Dept.
Environmental Products Dept.
Real Estate Finance Dept.
REIT Investment Dept.
M&A Advisory Services Dept.
Investment Development Dept.
Merchant Banking Dept.
Financial Engineering Dept.
Securities Marketing Dept.
Securities Direct Sales Dept.
Structured Finance Credit Dept.
Settlement Finance Unit
Electronic Commerce Banking Dept.
Global Transaction Banking Dept.
Asset Finance Dept.
Global Securities Business Dept.
Branch
Consumer Loan Promotion Office
Apartment House Loan Promotion Office
Loan Support Office
Private Banking Dept.
Direct Banking Dept.
Consumer Finance Promotion Office
Corporate Business Office
Business Promotion Office
Financial Development Office
Public Institutions Business Office
Business Support Office
Corporate Advisory Division
Corporate Banking Dept.
Global Institutional Banking Dept.
Global Client Business Dept.
Global Corporate Investment Dept.
Global Trade Finance Dept.
Branches/Representative
Offices in North East Asia
Departments of Americas Division
Departments of Europe Division
Branches/Representative Offices
in China Division
Branches/Representative
Office in Asia Pacific Division
Branch Service Office
Head/Main Service Office
Public Institutions Operations Office
SMFG 2008 203
Principal Subsidiaries and Affiliates (as of March 31, 2008)
All companies shown hereunder are consolidated subsidiaries or affiliates of Sumitomo Mitsui Financial Group, Inc.
Those printed in green ink are consolidated subsidiaries or affiliates of Sumitomo Mitsui Banking Corporation.
■ Principal Domestic Subsidiaries*2
Company Name
Issued Capital
(Millions of Yen)
Percentage of
SMFG’s Voting
Rights (%)
Percentage of
SMBC’s Voting
Rights (%)
Established
Main Business
Sumitomo Mitsui Banking Corporation
664,986
100
Sumitomo Mitsui Card Company, Limited
Sumitomo Mitsui Finance and Leasing Co., Ltd.
The Japan Research Institute, Limited
JRI Solutions, Limited
SMBC Friend Securities Co., Ltd.
SAKURA CARD CO., Ltd.
QUOQ Inc.
The Japan Net Bank, Limited
SMBC Loan Business Planning Co., Ltd.
SMBC Loan Adviser Co., Ltd.
SMBC Guarantee Co., Ltd.
SMBC Finance Business Planning Co., Ltd.
SMBC Finance Service Co., Ltd.
SMBC Business Support Co., Ltd.
Financial Link Company, Limited
SMBC Consulting Co., Ltd.
SMBC Support & Solution Co., Ltd.
SMBC Servicer Co., Ltd.
Sakura Information Systems Co., Ltd.*2
SAKURA KCS Corporation
THE MINATO BANK, LTD.
Kansai Urban Banking Corporation
SMBC Staff Service Co., Ltd.
SMBC Learning Support Co., Ltd.
SMBC PERSONNEL SUPPORT CO., LTD.
SMBC Center Service Co., Ltd.
SMBC Delivery Service Co., Ltd.
SMBC Green Service Co., Ltd.
SMBC International Business Co., Ltd.
SMBC International Operations Co., Ltd.
SMBC Loan Business Service Co., Ltd.
SMBC Market Service Co., Ltd.
SMBC Loan Administration and Operations Service Co., Ltd.
SMBC Property Research Service Co., Ltd.
34,000
15,000
65.99
55.00
10,000
100
5,000
0
(100)
27,270
100
—
—
—
—
—
—
June 6, 1996
Commercial banking
Dec. 26, 1967
Credit card services
Feb. 4, 1963
Leasing
Nov. 1, 2002
System engineering, data processing,
management consulting, and economic research
July 3, 2006
System engineering, data processing
Mar. 2, 1948
Securities
7,438
4,750
37,250
100,010
10
187,720
10
71,705
10
160
1,100
10
1,000
600
2,054
27,484
37,040
90
10
10
100
30
30
20
40
70
10
10
30
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(95.74)
85.14
(10.59)
Feb. 23, 1983
Credit card services
(56.53)
11.0
(32.82)
April 5, 1978
Credit card services
(59.70)
59.70
Sept. 19, 2000
Commercial banking
100
April 1, 2004
Management support services
0
0
(100)
April 1, 1998
Consulting and agency services for
consumer loans
(100)
July 14, 1976
Credit guarantee
100
April 1, 2004
Management support services
(100)
Dec. 5, 1972
Loans, collecting agent and factoring
(100)
July 1, 2004
Clerical work outsourcer
(100)
(100)
(100)
(100)
(100)
(100)
(100)
0
0
0
(100)
Sept. 29, 2000
(100)
50
(50)
May 1, 1981
Data processing service and e-trading
consulting
Management consulting and seminar
organizer
(100)
(100)
(66)
100
100
66
April 1, 1996
Help desk and system support
Mar. 11, 1999
Servicer
Nov. 29, 1972
System engineering and data processing
(50.22)
27.53
(5.00)
Mar. 29, 1969
System engineering and data processing
(46.34)
45.10
(1.23)
Sept. 6, 1949
Commercial banking
(58.00)
42.30
(5.94)
July 1, 1922
Commercial banking
(100)
(100)
(100)
(100)
(100)
(100)
(100)
(100)
(100)
(100)
(100)
(100)
100
100
100
100
100
100
100
100
100
100
100
100
July 15, 1982
Temporary manpower service
May 27, 1998
Seminar organizer
April 15, 2002
Banking clerical work
Oct. 16, 1995
Banking clerical work
Jan. 31, 1996
Banking clerical work
Mar. 15, 1990
Banking clerical work
Sept. 28, 1983
Banking clerical work
Dec. 21, 1994
Banking clerical work
Sept. 24, 1976
Banking clerical work
Feb. 3, 2003
Banking clerical work
Feb. 3, 2003
Banking clerical work
Feb. 1, 1984
Banking clerical work
*1 On April 1, 2008, both Sumitomo Mitsui Banking Corporation and Sumitomo Financial Group included PRIMUS Financial Services, Inc., within the scope of
consolidation.
*2 On April 1, 2008, Sakura Information Services, Inc., became an affiliate of both Sumitomo Mitsui Banking Corporation and Sumitomo Financial Group.
204
SMFG 2008
■ Principal Overseas Subsidiaries
Company Name
Country
Issued Capital
Sumitomo Mitsui Banking
Corporation Europe Limited
Manufacturers Bank
Sumitomo Mitsui Banking
Corporation of Canada
Banco Sumitomo Mitsui
Brasileiro S.A.
PT Bank Sumitomo Mitsui
Indonesia
U.K.
U.S.A.
Canada
Brazil
US$1,700 million
US$80.786 million
C$169 million
R$409.357 million
Indonesia
Rp1,502.4 billion
SMBC Leasing and Finance, Inc.
U.S.A.
SMBC Capital Markets, Inc.
SMBC Securities, Inc.
SMBC Financial Services, Inc.
U.S.A.
U.S.A.
U.S.A.
US$1,620
US$100
US$100
US$3 million
SMBC Cayman LC Limited *
Cayman Islands
US$1,375 million
Sumitomo Finance (Asia) Limited
Cayman Islands
US$35 million
SBTC, Inc.
SB Treasury Company L.L.C.
SB Equity Securities (Cayman),
Limited
U.S.A.
U.S.A.
US$50 million
US$470 million
Cayman Islands
¥25,000 million
SFVI Limited
British Virgin Islands
US$300
Sakura Finance (Cayman) Limited
Cayman Islands
US$100,000
Sakura Preferred Capital
(Cayman) Limited
Cayman Islands
¥10 million
SMBC International Finance N.V.
Netherlands Antilles
US$200,000
SMBC Leasing Investment LLC
U.S.A.
US$344,620 million
SMBC Capital Partners LLC
U.S.A.
US$10,000
SMBC MVI SPC
Cayman Islands
US$45 million
SMBC DIP Limited
Cayman Islands
US$1 million
SMBC Capital Markets Limited
SMBC Derivative Products
Limited
Sumitomo Finance
International plc
Sumitomo Mitsui Finance Dublin
Limited
U.K.
U.K.
U.K.
US$547 million
US$300 million
£90 million
Ireland
US$18 million
Sakura Finance Asia Limited
Hong Kong
US$65.5 million
Percentage of
SMFG’s Voting
Rights (%)
Percentage of
SMBC’s Voting
Rights (%)
Established
Main Business
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(100)
(100)
(100)
(100)
100
100
100
100
Mar. 5, 2003
Commercial banking
June 26, 1962
Commercial banking
April 1, 2001
Commercial banking
Oct. 6, 1958
Commercial banking
(99)
99
Aug. 22, 1989
Commercial banking
(100)
89.7
(7.7)
Nov. 9, 1990
Leasing, investments
(100)
(100)
(100)
(100)
(100)
(100)
90
90
100
100
100
100
(10)
Dec. 4, 1986
Derivatives and investments
(10)
Aug. 8, 1990
Securities, investments
Aug. 8, 1990
Feb. 7, 2003
Investments,
investment advisor
Credit guarantee,
bond investment
Sept. 26, 1973
Investments
Jan. 26, 1998
Investments
(100)
0
(100)
Jan. 26, 1998
Loans
(100)
(100)
(100)
(100)
(100)
100
100
100
100
100
Dec. 15, 1998
Finance
July 30, 1997
Investments
Feb. 11, 1991
Finance
Nov. 12, 1998
Finance
June 25, 1990
Finance
(100)
0
(100)
April 7, 2003
Investments in leasing
(100)
(100)
(100)
(100)
100
100
100
100
Dec. 18, 2003
Holding and trading securities
Sept. 9, 2004
Mar. 16, 2005
Loans, buying/
selling of monetary claims
Loans, buying/
selling of monetary claims
Mar. 13, 1990
Derivatives and investments
(100)
0
(100)
April 18, 1995
Derivatives and investments
(100)
(100)
(100)
(100)
100
100
100
100
0
July 1, 1991
Investments
Sept. 19, 1989
Finance
Oct. 17, 1977
Investments
June 29, 1984
Finance
Nov. 28, 2006
Finance
Sumitomo Mitsui Finance
Australia Limited
SMFG Preferred Capital USD 1
Limited
Australia
A$156.5 million
Cayman Islands
US$1,650 million
100
* SMBC Cayman LC Limited, like other subsidiaries of SMBC, is a separate corporate entity with its own separate creditors and the claims of such creditors are
prior to the claims of SMBC, as the direct or indirect holder of the equity in such subsidiary.
Note: Figures in parentheses ( ) in the voting rights column indicate voting rights held indirectly via subsidiaries and/or affiliates.
SMFG 2008 205
Company Name
Country
Issued Capital
Percentage of
SMFG’s Voting
Rights (%)
Percentage of
SMBC’s Voting
Rights (%)
Established
Main Business
SMFG Preferred Capital GBP 1
Limited
SMFG Preferred Capital JPY 1
Limited
SMBC Preferred Capital USD 1
Limited
SMBC Preferred Capital GBP 1
Limited
SMBC Preferred Capital JPY 1
Limited
Cayman Islands
£500 million
Cayman Islands
¥135,000 million
Cayman Islands
US$1,664 million
Cayman Islands
£505 million
Cayman Islands
¥137,000 million
100
100
0
0
0
(100)
(100)
(100)
0
0
100
100
100
Nov. 28, 2006
Finance
Jan. 11, 2008
Finance
Nov. 28, 2006
Finance
Nov. 28, 2006
Finance
Jan. 11, 2008
Finance
Daiwa SB Investments Ltd.
2,000
43.96
■ Principal Affiliates
Company Name
Daiwa Securities SMBC Co. Ltd.
NIF SMBC Ventures Co., Ltd.
Daiwa Securities SMBC Principal
Investments Co. Ltd.
Japan Pension Navigator Co., Ltd.*
Sumitomo Mitsui Asset Management
Company, Limited
Promise Co., Ltd.
At–Loan Co., Ltd.
Sanyo Shinpan Finance Co., Ltd.
POCKETCARD Co., LTD.
Central Finance Co., Ltd.
OMC Card, Inc.
Sumitomo Mitsui Auto Service
Company, Limited
Issued Capital
(Millions of Yen)
Percentage of
SMFG’s Voting
Rights (%)
Percentage of
SMBC’s Voting
Rights (%)
Established
Main Business
255,700
40
—
Feb. 5, 1999
Securities
18,767
2,000
0
0
(100)
(40)
40
(40)
Oct. 20, 1983
Venture capital
—
—
30
Sept. 4, 2001
Investments
April 1, 1999
Investment advisory and investment trust
management
Sept. 21, 2000
Investment management, investment
advisory, and agency services
(30)
(17.50)
17.50
Dec. 1, 2002
Investment management, investment
advisory, and agency services
(22.02)
22.02
Mar. 20, 1962
Consumer loans
(100)
49.99
(50.00)
June 8, 2000
Consumer loans
(100)
0
(100)
Nov. 22, 1946
Consumer loans
(47.02)
4.99
(42.02)
May 25, 1982
Credit card services
1,600
2,000
80,737
10,912
16,268
11,268
0
0
0
0
0
0
23,254
9.41
(15.35)
43,343
0
(32.61)
15.33
32.61
Jan. 28, 1960
Credit card services
Sept. 11, 1950
Credit card services
6,950
39.99
—
Feb. 21, 1981
Leasing
* On April 1, 2008, Sumitomo Mitsui Banking Corporation included Japan Pension Navigator Co., Ltd., within the scope of consolidation.
206
SMFG 2008
International Directory (as of June 30, 2008)
Asia and Oceania
SMBC
Branches, Sub-Branches and
Representative Offices
Beijing Branch
16th Floor, North Tower, Beijing
Kerry Center No. 1, Guanghua
Road, Chaoyang District, Beijing,
The People’s Republic of China
Tel: 86 (10) 5920-4500
Fax: 86 (10) 5915-1080
Hong Kong Branch
7th and 8th Floor, One International
Finance Centre, 1 Harbour View
Street, Central, Hong Kong
Special Administrative Region,
The People’s Republic of China
Tel: 852-2206-2000
Fax: 852-2206-2888
Shanghai Branch
11th Floor, Shanghai World
Financial Center, 100 Century
Avenue, Pudong New Area,
Shanghai,
The People’s Republic of China
Tel: 86 (21) 3860-9000
Fax: 86 (21) 3860-9999
Tianjin Branch
12th Floor, The Exchange Tower 2,
189 Nanjing Road, Heping District,
Tianjin 300051,
The People’s Republic of China
Tel: 86 (22) 2330-6677
Fax: 86 (22) 2319-2111
Tianjin Binhai Sub-Branch
8F, E2B, Binhai Financial Street,
No. 20, Guangchang East Road,
TEDA, Tianjin, The People’s
Republic of China
Tel: 86 (22) 6622-6677
Fax: 86 (22) 6628-1333
Guangzhou Branch
12th Floor, International Finance
Place, No. 8 Huaxia Road, Tianhe
District, Guangzhou 510623,
The People’s Republic of China
Tel: 86 (20) 3819-1888
Fax: 86 (20) 3810-2028
Suzhou Branch
23F, Metropolitan Towers,
No.199 Shi Shan Road,
Suzhou New District,
Suzhou, Jiangsu, 215011
The People’s Republic of China
Tel: 86 (512) 6825-8205
Fax: 86 (512) 6825-6121
Suzhou Industrial Park Sub-
Branch
16F, International Building, No. 2,
Suhua Road, Suzhou Industrial
Park, Jiangsu, The People’s
Republic of China
Tel: 86 (512) 6288-5018
Fax: 86 (512) 6288-5028
Hangzhou Branch
23F, Golden Plaza, No. 118,
Qing Chun Road, Xia Cheng
District, Hangzhou, Zhejiang 310006
The People’s Republic of China
Tel: 86 (571) 2889-1111
Fax: 86 (571) 2889-6699
Beijing Representative Office*
2902, Jing Guang Centre, Hujialou,
Chaoyang District, Beijing, 100020
The People’s Republic of China
Tel: 86 (10) 6597-3351
Fax: 86 (10) 6597-3002
Dalian Representative Office
Senmao Building 9F, 147
Zhongshan Lu, Dalian,
Liaoning 116011
The People’s Republic of China
Tel: 86 (411) 8370-7873
Fax: 86 (411) 8370-7761
Chongqing Representative Office
5F, Holiday Inn Yangtze Chongqing,
15 Nan Ping Bei Lu,
Chongqing, 400060
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,
Liaoning 110013
The People’s Republic of China
Tel: 86 (24) 2252-8310
Fax: 86 (24) 2252-8769
Taipei Branch
Aurora International Building 9F,
No. 2, Hsin Yi Rd. Sec. 5,
Taipei, 110 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
* Procedures are under way to close the Beijing Representative Office.
SMFG 2008 207
Singapore Branch
3 Temasek Avenue, #06-01,
Centennial Tower,
Singapore 039190,
The Republic of Singapore
Tel: 65-6882-0000/0001
Fax: 65-6887-0220/0330
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
Hanoi Representative Office
Suite 1001, 10th Floor, Hanoi
Central Office Building, 44B Ly
Thuong Kiet Street, Hanoi, Vietnam
Tel: 84 (4) 936-3830
Fax: 84 (4) 936-3831
Ho Chi Minh City Branch
9th Floor, The Landmark,
5B Ton Duc Thang Street, District 1,
Ho Chi Minh City, Vietnam
Tel: 84 (8) 520-2525
Fax: 84 (8) 822-7762
Yangon Representative Office
Room No. 717/718, Traders Hotel,
223 Sule Pagoda Road,
Pabedan Township,
Yangon, Myanmar
Tel: 95 (1) 242828 ext.7717
Fax: 95 (1) 381227
Bangkok Branch
8th-10th Floor, Q.House
Lumpini Building, 1 South
Sathorn Road, Tungmahamek,
Sathorn, Bangkok 10120 Thailand
Tel: 66 (2) 353-8000
Fax: 66 (2) 353-8282
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
Sydney Branch
Level 35, The Chifley Tower, 2
Chifley Square, Sydney,
NSW 2000, Australia
Tel: 61 (2) 9376-1800
Fax: 61 (2) 9376-1863
SMBC Principal Subsidiaries/
Affiliates
SMFG Network
Sumitomo Mitsui Finance
Australia Limited
Level 35, The Chifley Tower, 2
Chifley Square, Sydney,
NSW 2000, Australia
Tel: 61 (2) 9376-1800
Fax: 61 (2) 9376-1863
PT Bank Sumitomo Mitsui
Indonesia
Summitmas II, 10th Floor,
JI. Jendral Sudirman Kav. 61-62,
Jakarta 12190, Indonesia
Tel: 62 (21) 522-7011
Fax: 62 (21) 522-7022
SMBC Metro Investment
Corpration
20th Floor, Rufino Pacific Tower,
6784 Ayala Avenue, Makati City,
Metro Manila, The Philippines
Tel: 63 (2) 811-0845
Fax: 63 (2) 811-0876
BSL Leasing Co., Ltd.
19th Fl. Sathorn City Tower,
175 South Sathorn Road,
Bangkok, Thailand
Tel: 66 (2) 670-4700
Fax: 66 (2) 679-6160
208
SMFG 2008
Sumitomo Mitsui Finance and
Leasing (China) Co., Ltd.
Room 2502-2503, Goldlion Tower,
138, Ti Yu Dong Road,
Guangzhou, 510620
The People’s Republic of China
Tel: 86 (20) 8755-0021
Fax: 86 (20) 8755-0422
SMFL 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
Sumitomo Mitsui Auto Leasing
& Service (Thailand) Co., Ltd.
161, Nuntawan Building, 10th Floor,
Rajdamri Road,
Khwaeng Lumpinee,
Khet Pathumwan,
Bangkok Metropolis, Thailand
Tel: 66 2252-9511
Fax: 66 2255-3130
SBCS Co., Ltd.
10th Floor, Q.House Lumpini
Building, 1 South Sathorn Road,
Tungmahamek, Sathorn,
Bangkok 10120 Thailand
Tel: 66 (2) 677-7270~5
Fax: 66 (2) 677-7279
SMBC Capital Markets Limited
Hong Kong Branch
7th Floor, One International Finance
Centre, 1 Harbour View Street,
Central, Hong Kong
Special Administrative Region,
The People’s Republic of China
Tel: 852-2532-8500
Fax: 852-2532-8505
SMBC Capital India Private Limited
B-14/A, Qutab Institutional Area,
Katwaria Sarai,
New Delhi-1100016 India
Tel: 91 (11) 4607-8366
Fax: 91 (11) 4607-8355
The Japan Research Institute
(Shanghai) Solution Co., Ltd.
15F, Shanghai World
Financial Center,
100 Century Avenue,
Pudong New Area,
Shanghai, 200120 The People’s
Republic of China
Tel: 86 (21) 5054-1688
Fax: 86 (21) 5054-6122
The Japan Research Institute
(Shanghai) Consulting Co., Ltd.
15F, Shanghai World
Financial Center,
100 Century Avenue,
Pudong New Area,
Shanghai, 200120 The People’s
Republic of China
Tel: 86 (21) 5044-1677
Fax: 86 (21) 5054-6122
Sumitomo Mitsui Finance and
Leasing (Singapore) Pte. Ltd.
152 Beach Road,
Gateway East #21-5,
Singapore 189721
Tel: 65-6224-2955
Fax: 65-6225-3570
Sumitomo Mitsui Finance and
Leasing (Hong Kong) Ltd.
Room 2703, Tower I,
Admiralty Centre, 18 Harcourt
Road, Hong Kong Special
Administrative Region,
The People’s Republic of China
Tel: 852-2523-4155
Fax: 852-2845-9246
SMFL Leasing (Thailand) Co., Ltd.
30th Floor, Q. House
Lumpini Building,
1 South Sathorn Road,
Tungmahamek, Sathorn,
Bangkok 10120, Thailand
Tel: 66 (2) 677-7400
Fax: 66 (2) 677-7413
SMFG 2008 209
Sumitomo Finance (Asia) Limited
P.O. Box 694, Edward Street,
George Town, Grand Cayman,
Cayman Islands
JRI America, Inc.
277 Park Avenue, New York,
NY 10172, U.S.A.
Tel: 1 (212) 224-4200
Fax: 1 (212) 224-4611
Americas
SMBC
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
601 South Figueroa Street
Suite 1800, Los Angeles,
CA 90017, U.S.A.
Tel: 1 (213) 452-7800
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
Houston Representative Office
Two Allen Center, 1200 Smith Street,
Suite 1140 Houston, TX 77002,
U.S.A.
Tel: 1 (713) 277-3500
Fax: 1 (713) 277-3555
SMBC Principal Subsidiaries
SMFG Network
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, Toronto
Dominion Centre, Suite 1400,
P.O. Box 172, 222 Bay Street,
Toronto, Ontario M5K 1H6, Canada
Tel: 1 (416) 368-4766
Fax: 1 (416) 367-3565
Banco Sumitomo Mitsui Brasileiro S.A.
Avenida Paulista, 37,
São Paulo, Brazil
Tel: 55 (11) 3178-8000
Fax: 55 (11) 3289-1668
SMBC Capital Markets, Inc.
277 Park Avenue, New York,
NY 10172, U.S.A.
Tel: 1 (212) 224-5100
Fax: 1 (212) 224-5181
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
SFVI Limited
P.O. Box 961,
30 De Castro Street,
Road Town, Tortola,
British Virgin Islands
210
SMFG 2008
Europe, Middle-East and Africa
SMBC
Branches and Representative
Offices
Düsseldorf Branch
Prinzenallee 7, 40549 Düsseldorf,
Federal Republic of Germany
Tel: 49 (211) 36190
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
Dubai Branch
Building One, 5th Floor, Gate
Precinct, Dubai International
Financial Centre, P.O. Box 506559
Dubai, United Arab Emirates
Tel: 971 (4) 428-8000
Fax: 971 (4) 428-8001
SMBC Amsterdam Representative
Office
Strawinskylaan 1733 Toren D-12,
1077XX Amsterdam,
The Netherlands
Tel: 31 (20) 718-3888
Fax: 31 (20) 718-3889
Prague Representative Office
International Business Centre,
Pobrezni 3 186 00, Prague 8,
Czech Republic
Tel: 420-224-832-911
Tel: 420-224-832-933
Madrid Representative Office
Serrano 16, 28001 Madrid, Spain
Tel: 34 (91) 576-6196
Fax: 34 (91) 577-7525
Doha QFC Office
Unit 1504, The Ministry of Economy
and Commerce Building,
P.O. Box 23769, Doha, Qatar
Tel: 974-496-7572
Tel: 974-496-7576
Bahrain Representative Office
No. 406 & 407 (Entrance 3, 4th Floor)
Manama Centre, Government Road,
Manama, State of Bahrain
Tel: 973-1722-3211
Fax: 973-1722-4424
Tehran Representative Office
4th Floor, 80 Nezami Gangavi
Street, Vali-e-Asr Avenue, Tehran
14348, Islamic Republic of Iran
Tel: 98 (21) 8879-4586
Fax: 98 (21) 8820-6523
Cairo Representative Office
Flat No. 6, 14th Fl., 3 Ibn
Kasir Street, Cornish El Nile,
Giza, Arab Republic of Egypt
Tel: 20 (2) 3761-7657
Fax: 20 (2) 3761-7658
Johannesburg Representative
Office
Building Four, First Floor,
Commerce Square, 39 Rivona Road,
Sadhurst, Sandton, Republic of
South Africa
Tel: 27 (11) 502-1780
Fax: 27 (11) 502-1790
SMBC Principal Subsidiaries
SMFG Network
Sumitomo Mitsui Banking
Corporation Europe Limited
99 Queen Victoria Street, London
EC4V 4EH, U.K.
Tel: 44 (20) 7786-1000
Fax: 44 (20) 7236-0049
SMBC Capital Markets Limited
99 Queen Victoria Street, London
EC4V 4EH, U.K.
Tel: 44 (20) 7786-1400
Fax: 44 (20) 7786-1490
SMBC Derivative Products Limited
99 Queen Victoria Street, London
EC4V 4EH, U.K.
Tel: 44 (20) 7786-1400
Fax: 44 (20) 7786-1490
Sumitomo Mitsui Banking
Corporation Europe Limited
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
Sumitomo Mitsui Banking
Corporation Europe Limited
Milan Branch
Via della Spiga 30/ Via Senato 25,
20121 Milan, Italy
Tel: 39 (027) 636-1700
Fax: 39 (027) 636-1701
Sumitomo Mitsui Banking
Corporation Europe Limited
Moscow Representative Office
Room No. 305, Building 5,
Ilyinka St. 3/8 Moscow, 109012
Russian Federation
Tel: 7 (495) 789-3973
Fax: 7 (495) 789-3975
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
JRI Europe, Limited
99 Queen Victoria Street, London
EC4V 4EH, U.K.
Tel: 44 (20) 7406-2700
Fax: 44 (20) 7406-2799
SMFG 2008 211
**SMBCE=Sumitomo Mitsui Banking Corporation Europe Limited
Sumitomo Mitsui Finance Dublin Limited
SMBCE** Moscow Representative Office
Sumitomo Mitsui Banking
Corporation Europe Limited
Amsterdam Representative Office
Brussels Branch
Prague Representative Office
SMBC Capital Markets Limited
Düsseldorf Branch
SMBCE** Paris Branch
SMBCE** Milan Branch
Madrid Representative Office
Cairo Representative Office
Tehran Representative Office
Bahrain Representative Office
Dubai Branch
Doha Representative Office
Yang
Johannesburg Representative Office
GLOBAL NETWORK
Sumitomo Mitsui Finance Australia Limited
Sydney Branch
Asia and Oceania
■ Beijing Branch
■ Shanghai Branch
■ Tianjin Branch
■ Tianjin Binhai Sub-Branch
■ Guangzhou Branch
■ Suzhou Branch
■ Suzhou Industrial Park Sub-Branch
■ Hangzhou Branch
■ Dalian Representative Office
■ Chongqing Representative Office
212
SMFG 2008
■ Shenyang Representative Office
■ Beijing Representative Office***
■ Hong Kong Branch
SMBC Capital Markets Limited Hong Kong Branch
■ Taipei Branch
■ Seoul Branch
■ Singapore Branch
■ Labuan Branch
■ Labuan Branch Kuala Lumpur Marketing Office
Kuala Lumpur Representative Office
■ Ho Chi Minh City Branch
■ Hanoi Representative Office
■ Yangon Representative Office
■ Bangkok Branch
■ Manila Representative Office
■ Sydney Branch
Sumitomo Mitsui Finance Australia Limited
■ PT Bank Sumitomo Mitsui Indonesia
*** Procedures are under way to close the Beijing Representative Office.
Overseas service network (as of June 30, 2008)
Branches*: 19 Sub-Branches*: 6
Representative Offices*: 16 Total: 41
Also showing principal overseas subsidiaries
* Number of each status is based on the definition in Japan
Los Angeles Branch
San Francisco Branch
Shenyang Representative Office
Beijing Branch
Beijing Representative Office
Tianjin Binhai Sub-Branch
Dalian Representative Office
Tianjin Branch
Suzhou Industrial Park Sub-Branch
Seoul Branch
Suzhou Branch
Shanghai Branch
Manufacturers Bank
Sumitomo Mitsui Banking Corporation of Canada
New York Branch
SMBC Capital Markets, Inc.
SMBC Leasing and Finance, Inc.
Houston Representative Office
Cayman Branch
Chongqing Representative Office
Hangzhou Branch
Hanoi Representative Office
Guangzhou Branch
Taipei Branch
Yangon Representative Office
Hong Kong Branch
SMBC Capital Markets Limited Hong Kong Branch
Bangkok Branch
Manila Representative Office
Labuan Branch Kuala Lumpur
Marketing Office
Kuala Lumpur Representative Office
Ho Chi Minh City Branch
Labuan Branch
Singapore Branch
PT Bank Sumitomo Mitsui Indonesia
Banco Sumitomo Mitsui Brasileiro S.A.
The Americas
■ New York Branch
SMBC Capital Markets, Inc.
SMBC Leasing and Finance, Inc.
■ Los Angeles Branch*
■ San Francisco Branch*
■ Houston Representative Office*
■ Cayman Branch
■ Manufacturers Bank
■ Sumitomo Mitsui Banking
Corporation of Canada
■ Banco Sumitomo Mitsui Brasileiro S.A.
Europe, Middle East and Africa
■ Sumitomo Mitsui Banking
Corporation Europe Limited
SMBC Capital Markets Limited
■ Sumitomo Mitsui Banking Corporation
Europe Limited Paris Branch
■ Sumitomo Mitsui Banking Corporation
Europe Limited Milan Branch
■ Düsseldorf Branch
■ Brussels Branch
■ SMBC Amsterdam Representative Office
■ Madrid Representative Office
■ Prague Representative Office
■ Sumitomo Mitsui Banking Corporation
Europe Limited Moscow Representative
Office
■ Sumitomo Mitsui Finance Dublin Limited
■ Dubai Branch
■ Doha QFC Office
■ Bahrain Representative Office
■ Tehran Representative Office
■ Cairo Representative Office
■ Johannesburg Representative Office
SMFG 2008 213
ANNUAL REPORT
2008
YEAR ENDED MARCH 31, 2008
www.smfg.co.jp/english
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
Printed in Japan
Continue reading text version or see original annual report in PDF
format above