Plain-text annual report
ANNUALREPORTYEARENDEDMARCH31,20092009 ANNUALREPORTYEARENDEDMARCH31,20092009 This material contains certain forward-looking statements. Such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and actual results may
materially differ from those contained in the forward-looking statements as a result of various
factors. Important factors that might cause such a material difference include, but are not limited
to, those economic conditions referred to in this material as assumptions.
In addition, the following items are among the factors that could cause actual results to differ
materially from the forward-looking statements in this material: business conditions in the banking
industry, the regulatory environment, new legislation, competition with other financial services
companies, changing technology and evolving banking industry standards and similar matters.
AimingtobecomeagloballycompetitivefinancialservicesgroupwiththehighesttrustWeareagroupofhighlyqualifiedprofessionalsthatcanprovidetrulyvaluablefinancialservicestoourcustomers.EachofusthinksandactswithprideasexpertsineachbusinessareainordertoLEADthecompetitionincreatinganddeliveringcustomerVALUEinacontinuallychangingbusinessenvironment. CONTENTS
•Message from the Management............................... 2
•Business Overview ................................................... 10
•Group Companies .................................................... 18
•Financial Highlights .................................................. 20
•Financial Review....................................................... 24
•Risk Management..................................................... 34
•Corporate Social Responsibility (CSR)..................... 50
•Initiatives for Enhancing Customer Satisfaction (CS)
•Corporate Governance............................................. 52
•Internal Audit System ............................................... 53
•Compliance .............................................................. 54
•Environmental Preservation Initiatives ...................... 56
•Social Contribution Activities.................................... 60
•Human Resources .................................................... 64
•Financial Section and Corporate Data ..................... 67
and Quality ............................................................ 51
Financial Section ..................................................................... 68
Corporate Data ........................................................................ 195
Our Mission
• To provide optimum added value to our customers
and together with them achieve growth
• To create sustainable shareholder value through
business growth
• To provide a challenging and professionally reward-
ing work environment for our dedicated employees
Company Name: Sumitomo Mitsui Financial Group, Inc.
Business Description:
Management of banking subsidiaries (under the stipulations of
Japan’s Banking Law) and of non-bank subsidiaries, as well as per-
formance of ancillary functions
Establishment: December 2, 2002
Head Office: 1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo, Japan
Chairman of the Board: Masayuki Oku
(Concurrent President at Sumitomo Mitsui Banking Corporation)
President: Teisuke Kitayama
(Concurrent Chairman of the Board of Directors at Sumitomo Mitsui
Banking Corporation)
Capital: ¥1,420.9 billion (as of March 31, 2009)
Stock Exchange Listings:
Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
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 2009
SMFG 2009 1
SpiritofInnovationWeLEADthemarketbyprovidinginnovative,globallycompetitiveservicesthatmeetcustomerneeds.Solution&ExecutionWeLEADthebusinessbyusingalltheknowledgeandexperiencesofourgrouptosolvetheissuesofourcustomers,whetherindividualsorcorporates,identifiedthroughadeepunderstandingoftheirneedsandfinancialsituations.SpeedWeLEADthepacebyprovidingourcustomerswithdesirableservicesinatimelymannerwithspeedanddetermination.Theseactivitiesaresupportedbyourthreecorestrengths:WecreatenewVALUEbyformingteamsofspecialistsinvariousfieldsandprovidingoptimalservicestoourcustomersthroughtwo-waycommunication.Asaresult,wewillbeselectedasatrulytrustedpartner.
Message from the Management
We would like to thank you for your continued support and patronage. In this annual report, we review the
initiatives implemented in fiscal 2008, ended March 31, 2009, and explain our management policies for fiscal
2009.
Principal Initiatives in Fiscal 2008
Having designated fiscal 2008 as the year for “taking a
step forward to accomplish medium- and long-term growth,
while coping with uncertainty in business environment,” we
continued to focus on two initiatives: “strengthening tar-
geted growth business areas” and “fortifying platform for
supporting sustainable growth.”
In the period under review, uncertainty in the business
environment intensified as the global economic downturn,
caused by the financial crisis sparked by the September
2008 failure of Lehman Brothers, deepened. Against this
backdrop, SMBC increased its nonconsolidated banking
profit by ¥3.7 billion, chiefly through an increase in net
interest income in international operations and an improve-
ment in losses on bonds. However, to our great regret,
SMFG reported a consolidated net loss of ¥373.5 billion in
fiscal 2008 mainly because impairment losses on stocks
and the increase in credit cost were higher than we had
anticipated. Other factors include measures — such as an
additional loan loss provision in preparation for further eco-
nomic deterioration and a more conservative recognition of
deferred tax assets — to quickly adapt to these changes in
our business environment and promote a steady recovery
to the issuance of preferred securities and a decrease in
risk-adjusted assets resulting from the implementation of the
Advanced Internal Ratings Based (AIRB) approach under
the Basel II framework, the new BIS capital standards.
We also steadily implemented initiatives for future
growth, including establishing an intermediate holding
company for our credit card business, entering into capital
and business alliances with overseas commercial banks,
and continuously upgrading our risk management systems.
Fiscal 2009 Management Policies
The business environment is expected to remain uncertain
while various initiatives and efforts to structure a new regu-
latory framework are being implemented globally to stabi-
lize the financial system. Under these circumstances, we
have designated fiscal 2009 as a year for “establishing the
next foundation for future growth, while continuing to
strengthen businesses consistent with our philosophy of
‘following the basics.’” In the core operations of Group
companies, we will maintain stringent control of expenses,
credit cost, and risk-adjusted assets, while “realizing a
solid financial base as a global player” and “strengthening
targeted growth business areas” for medium- to long-term
of our earnings from fiscal 2009. Meanwhile, SMFG’s con-
growth.
solidated Tier I ratio at the end of March 2009 was above
8% — 8.22%, up 1.28% from the previous year — due primarily
(1) Control expenses, credit cost and
Teisuke Kitayama
President
Sumitomo Mitsui
Financial Group, Inc.
risk-adjusted assets
Our aim is to consistently sustain an overhead ratio of less
than 50% for SMBC on a nonconsolidated basis. To this
end, we are prioritizing expenditures based on scale, tim-
ing, effect and other factors, in order to better allocate our
limited resources to growth business areas and increase
business efficiency.
To control credit cost, we are further enhancing our
ability to identify and quantify risk in order to spot and rec-
tify potential problems and conduct business with a thor-
ough focus on the bottom-line profit. We have been making
steady progress in complying with Basel II capital stan-
dards. We started using the Advanced Measurement
Approach (AMA) to measure operational risk from the end
of March 2008. We continuously strive to establish a more
sophisticated risk management framework as shown in the
implementation of the AIRB approach to measure credit
2
SMFG 2009
risk from the end of March 2009. Furthermore, SMBC has
growth, thereby increasing shareholder value over the
been reinforcing its overseas credit risk management
medium and long term.
framework, including upgrading the status of the Credit
We will also continue to examine the listing of SMFG
Management Dept. within the International Banking Unit in
stock on the New York Stock Exchange to strengthen our cor-
April 2009. It also established in April 2009 the Risk
porate base for globalizing operations and other purposes.
Management Unit to more holistically manage risks (mar-
ket, liquidity, credit and operational) borne by financial
institutions.
In controlling risk-adjusted assets, we are dedicated to
maintaining SMFG’s consolidated Tier I ratio at around 8%,
one of our medium- and long-term financial goals. We are
stepping up initiatives to ensure a return that reflects the
associated risks in the current uncertain business environ-
ment, while fulfilling our mission as a financial institution to
supply funds to our creditworthy customers smoothly and
efficiently by working even harder on performing financial
intermediary services in an appropriate yet proactive manner.
We aim to establish the next foundation for our future
growth by constantly strengthening operations in line with
the fundamental principles of commercial banking under
the keyword “follow the basics.” Moreover, we will further
reinforce our platform to support sustainable growth
through a variety of measures, including continuously
ensuring that the domestic and overseas compliance sys-
tems operate effectively with regard to relevant laws and
regulations. We are also upgrading the system for gather-
ing and utilizing customer opinions and requests in order to
enhance customer satisfaction and product and service
quality.
(2) Realize a solid financial base
as a global player
Enhancement of our capital base, both in terms of quality
and quantity, is required to maintain competitiveness and
realize sustainable growth in a new global financial order
that will emerge in the future. In May 2009, we issued over
¥800 billion in new shares. We are very grateful for the sup-
port of shareholders and investors for this successful offering.
Although this capital increase diluted the value of existing
shares, in addition to a more smooth and efficient supply of
funds for customers, our core mission as a commercial bank,
the reinforced capital base will support our efforts to
increase our competitiveness and realize sustainable
(3) Strengthening targeted growth
business areas
• Solution providing for corporations,
Investment banking, trust business
SMFG is dedicated to meeting the financing needs of cor-
porate clients and formulating optimal solutions to their
management issues.
For our corporate customers, we are continually taking
measures to strengthen our financial intermediary functions,
thereby enhancing our ability to fulfill our social responsibility
as a financial institution to provide customers with sufficient
funds. We are proactively responding to the financing needs
of SMEs in particular through a variety of loan products
offered by SMBC. Business Select Loan is a loan that
requires no collateral or third-party guarantee used by more
than 40,000 companies — SMBC was the first to develop
this type of loan — and new loan products such as Wide
Support Loan and Asset Value allow SMEs to use various
assets to secure loans. We also support SMEs by
extending loans backed by credit guarantee corporations,
Masayuki Oku
President
Sumitomo Mitsui
Banking Corporation
SMFG 2009 3
• Payment & settlement services,
Consumer finance
In the credit card business, we have established a two-
company system within the Group by merging Central
Finance Co., Ltd., OMC Card, Inc., and QUOQ Inc. in April
2009 to form Cedyna Financial Corporation to operate
along with Sumitomo Mitsui Card Co., Ltd. Our aim is to
become “the number one credit card business entity in
Japan,” and we will continue to pursue economies of scale
while leveraging the strengths of each company to maxi-
mize top-line synergy. Further, in May 2009, SMBC and
ORIX Corporation reached an agreement concerning the
joint business development of ORIX Credit Corporation,
which became a consolidated subsidiary of SMBC in July.
The alliance will enable us to capture a larger share of the
Japanese consumer finance market, and make our con-
sumer finance operations more efficient and responsive to
the financing needs of creditworthy consumers.
• Focused business areas in global markets
In global markets, we will continue to bolster our competi-
tive edge products, including project finance. In addition,
we view Asia as one of the regions with excellent prospects
for strong economic growth. In China, SMBC established a
wholly owned subsidiary, Sumitomo Mitsui Banking
Corporation (China) Limited, in April 2009 in a move to bet-
ter respond to our customers’ needs in this country.
Furthermore, the Asia Pacific Division that SMBC formed in
April 2008 has enabled us to get closer to our customers in
this region and meet their needs more flexibly. Alliances are
another means of business expansion in Asia. SMBC has
formed alliances with Kookmin Bank in Korea, First
Commercial Bank in Taiwan, The Bank of East Asia in Hong
Kong and other Asian banks. With Barclays PLC, a major
British financial institution, we are exploring venues of
cooperation in wealth management, operations in South
Africa and other business fields.
including the emergency credit guarantee system.
Another priority is offering quality solutions to manage-
ment issues of corporate customers. Specifically, SMBC
established the Business Promotion & Solution Dept. in
April 2009, and consolidated branch business promotion
and support functions in order to provide corporate clients
with more in-depth assistance. In addition, we will enhance
our ability to offer solutions for issues related to corporate,
private and/or global banking by restructuring the three
specialized departments — the Corporate Advisory Div., the
Private Advisory Dept. and the Global Advisory Dept. — to
further strengthen collaboration and sharing of value,
knowledge, information and profits (V-KIP) among these
departments. This approach of concentrating resources
and know-how is being applied in investment banking like-
wise to improve the quality of products and services.
We are also taking measures to supply solutions that
draw on the resources of all Group companies to formulate
solutions. Sumitomo Mitsui Finance and Leasing (SMFL) is
developing an aircraft operating lease business, which was
added to the strategic joint business in leasing with
Sumitomo Corporation in December 2008, as well as a vari-
ety of other leasing services that offer financial and sales
solutions for both users and supplier. JSOL Corporation
(formerly Japan Research Institute Solutions) forged a cap-
ital and business alliance with the NTT Data Group in
September 2008. JSOL will further expand its services of
creating and operating IT systems as well as IT system
security consulting by accessing the development
resources and methods, and the employee training exper-
tise, of this group.
• Financial consulting for individuals
We are continually upgrading our financial consulting ser-
vices for individuals to meet a diverse spectrum of needs.
The objective is to realize “total consulting services” which
offer customers a wide range of one-stop financial ser-
vices. Specifically, SMBC is fortifying its product/service
lineup to include investment trusts, pension-type insurances,
discretionary asset management services offered by SMBC
Friend Securities and other products. In August 2009,
SMBC expanded to all branches the sale of level-premium
insurances. We are also training employees to improve
their skills in consulting.
4
SMFG 2009
Management Policies for Sustainable Growth
• Acquisition of Nikko Cordial Securities Inc.
and other businesses
In May 2009, we reached an agreement with Nikko Citi
Holdings Inc. and other related entities to purchase all
operations of Nikko Cordial Securities Inc. (excluding
selected assets and liabilities) and some businesses of
Nikko Citigroup Limited, such as domestic debt and equity
underwriting and other assets, pursuant to the approval of
relevant authorities. This acquisition gives us the opportu-
nity to create a new leading financial services group and
increase our growth potentially by combining the high-quality
customer services of Nikko Cordial Securities with the
stability and reliability of commercial banking services of
SMBC.
We expect nonconsolidated net income of ¥180 billion
at SMBC and consolidated net income of ¥220 billion at
SMFG for fiscal 2009, and intend to pay a dividend of ¥90
per share of common stock, the same level as in fiscal
2008. “More than 20% of consolidated net income” is our
payout ratio goal, and we aim to increase returns to share-
holders as our performance recovers in the coming years.
We will continue to focus our energy on maintaining the
optimum balance among earnings, capital and risk-
adjusted assets; in other words, the balance among
enhancing capital base through accumulation of retained
earnings, allocating capital for risk-adjusted assets and
investment in growth business areas, and improving our
risk-return profile, to achieve consistent growth in corporate
value. Based on these management policies, we are striv-
ing to meet stakeholder expectations through the initiatives
outlined in this message. As we proceed with this
endeavor, we look forward to your continued support and
understanding.
August 2009
Teisuke Kitayama
President
Sumitomo Mitsui
Financial Group, Inc.
Masayuki Oku
President
Sumitomo Mitsui
Banking Corporation
SMFG 2009 5
IncreasereturnstoshareholdersandenhancecapitalbasethroughaccumulationofretainedearningsDividendpayoutratiomorethan20%Overheadratiolessthan50%RORAaround1%TierIratioaround8%Improverisk-return/cost-returnprofileAllocatecapitalforrisk-adjustedassetsandinvestmentingrowingbusinessareasRisk-adjustedassetsandinvestmentforgrowthConsolidatednetincomeTierIcapital Supplementary Information I
Initiatives in Growth Business Areas
Basic Policies
SUMITOMO MITSUI Banking Corporation
Payment & settlement service, Consumer finance
6
SMFG 2009
*1AsofJun.30,09*2Beforeprovisionforgeneralreserveforpossibleloanlosses.Managerialaccountingbasis.ThegraphexcludestheportionofHeadquarters.*3TheProvisionalnameofanewcompanythatwillsucceedalloperationsofNikkoCordialSecurities(excludingselectedassetsandliabilities)andotherbusinesses*4BusinessesaretobeacquiredonOct.1,09,pursuanttotheapprovalofrelevantregulatoryauthorities.FocusedbusinessareasinglobalmarketsPayment&settlementservice,ConsumerfinanceFinancialconsultingforindividualsSolutionprovidingforcorporations/Investmentbanking,trustbusinessBarclaysPLCVietnamEximbankFirstCommercialBank(Taiwan)IndustrialandCommercialBankofChinaKookminBank(Korea)BankofEastAsia(HongKong)Totalassets¥120trillionTierIratio8.22%Marketcapitalization*1¥3.96trillionTotalassets¥107trillionLoans¥60trillionDeposits¥69trillionBankingProfit*2NewNikkoSecurities*3,4(Resultsinfiscal08)(Consolidated,Mar.31,09)(Nonconsolidated,Mar.31,09)MiddleMarketCorporateInternationalTreasuryConsumerTosteadilymoveforwardtowardachievingmedium-tolong-termgrowth,wearereinforcingourinitiativesingrowthbusinessareasthroughbothorganicandinorganicapproaches.*1EstablishedinOct.08*2TotalsharesheldbytheGroup*3NumberofcardholdersisasofMar.31,08(Mar.31,07forJCBandFeb.29,08forAeonCreditandOMCCard)49%*2100%66%SMFG’sorganizationalstructuretopromotethecreditcardbusinessSumitomoMitsuiFinancialGroupIntermediateholdingcompany*1SumitomoMitsuiCardCentralFinanceOMCCardQUOQNumberofCardholders*3(millions)…QUOQOperatingprofittargetforfiscal2011(billions)60.030.036.726.016.415.615.511.29.99.68.43.660.030.0Top-linesynergyCostsynergy37.9SMFGestablishedatwo-companysysteminthecreditcardbusinessbyformingCedynaFinancialinApr.09,tooperatealongwithSumitomoMitsuiCard.Weareaimingtobecome“thenumberonecreditcardbusinessentityinJapan”byrealizingtop-linesynergyandcostsynergy.JCBSMFGMitsubishiUFJNICOSCreditSaisonSumitomoMitsuiCardUCCardAeonCreditOricoJaccsOMCCardCentralFinanceAggregateSumitomoMitsuiCardCedynaFinancialSMFGCARD&CREDIT,INC.MergedinApr.09 Acquisition of Nikko Cordial Securities Inc. and other businesses
SUMITOMO MITSUI Banking Corporation
Focused business areas in global markets
SMFG 2009 7
*TheprovisionalnameofanewcompanythatwillsucceedalloperationsofNikkoCordialSecuritiesInc.(excludingselectedassetsandliabilities)andotherbusinesses,includingdomesticdebtandequityunderwritingofNikkoCitigroupLimited.AsacommercialbankHigh-qualitycustomerservicesSMBCNewNikkoSecurities*AimtocreateanewleadingfinancialservicesbusinessCustomerbaseStabilityandreliabilitySMFG’saddedvalue(theoriginsofourcorporatevalue)Solution&ExecutionSpeedSpiritofInnovationSMFGwillbeabletoprovidestableandsustainablehigh-qualityservicesthroughthebroadcombinednetworkunder“OneFlag”as“aleadingfinancialservicesgroupfocusedonitslong-termrelationshipswithitscustomers.”Bookrunner*1Competitive-edgefinancialproducts(Leaguetable)AllianceswithglobalfinancialinstitutionsExpansion/establishmentofchannels&strategicalliancesinAsiaLoansyndication1stFiscal071stFiscal08Bookrunner*218thFiscal075thFiscal08Mandatedarranger*19thFiscal074thFiscal08SMBCacquiredBarclays’stockthroughprivateplacement(approx.GBP500millioninJul.08).Thetwobankscontinuouslyexplorejointbusinessdevelopmentopportunities.BarclaysPLCRecentchannelexpansion/establishmentEquityinvestmentsandbusinessalliancesSMBCCapitalIndiaPrivateLimitedHanoiBranchAsiaPacificDivisionSubsidiaryinChinaIndustrialandCommercialBankofChinaEstablished:Apr.09Established:Jul.08Opened:Dec.08Established:Apr.08Shipfinance(Mar.08)Acquired0.5%ofcommonsharesofKBFinancialGroup,theholdingcompany(Dec.08)CollaborationinbusinesseswithHongKongcorporationsandsupportforJapanesecompanies(Nov.08)KookminBank(Korea)Acquired15%ofcommonsharesRetailbankingandsupportforJapanesecompanies(Nov.07)VietnamEximbankBankofEastAsia(HongKong)CollaborationinbusinesseswithTaiwanesecorporationsandsupportforJapanesecompanies(Dec.07)FirstCommercialBank(Taiwan)*1Source:ThomsonReuters*2Source:DealogicProjectfinanceDomesticGlobalGlobalWewillcontinuetobolstercompetitive-edgefinancialproducts,whilegloballyexpandingstrategicallianceswithcommercialbankswithcompetitiveedgeinAsiaandinotherglobalmarketswherehighergrowthisexpected. Supplementary Information II
Overview of Fiscal 2008 Business Performance/
Management Policy and Strategic Initiatives in Fiscal 2009
Overview of Fiscal 2008 Business Performance
Management Policy and Strategic Initiatives in Fiscal 2009
“Establishing the next foundation for future growth, while continuing to strengthen businesses
consistent with our philosophy of ‘following the basics.’”
8
SMFG 2009
CopingwithuncertaintyinbusinessenvironmentTakingastepforwardtoaccomplishingmedium-/long-termgrowthBankingprofit*increasedy-o-yAnincreaseinnetinterestincomeandanimprovementinlossesonbondsThrough;ControlledSMBC’soverheadratiotobelow50%SolutionprovidingforcorporationsInitiativestoprovideclientswithsufficientfundsUpgradedCorporateBusinessOffices&co-operatingspecializeddepts.(threespecializeddepartments–CorporateAdvisoryDiv.,PrivateAdvisoryDept.andnewlyestablishedGlobalAdvisoryDept.)TookconservativefinancialmeasuresMadeadditionalloanlossprovisionsforfutureeconomicdeteriorationRecognizeddeferredtaxassetsmoreconservativelyFortifiedproducts/servicelineupinfinancialconsultingforindividualsExpandedchannelstomarketlevel-premiuminsuranceSecuredcapitalratioabove11%,andTierIratioabove8%IssuedTierIpreferredsecurities(approx.¥1.1trillioninfiscal08)CreditcardbusinessEstablishedintermediateholdingcompanySMFGCard&CredittomanagetheGroup’scardbusinessFocusedbusinessareasinglobalmarketsStrategicallianceswithleadingcommercialbanksintheregionImplementedAIRBapproachunderBaselIIframework*SMBCnonconsolidatedBarclaysPLCKookminBank(Korea)BankofEastAsia(HongKong)FirstCommercialBank(Taiwan)Takingastepforwardtoaccomplishingmedium-/long-termgrowth,whilecopingwithuncertaintyinthebusinessenvironmentEstablishedOct.08Duetothefinancialmarketturmoil,asharpdeclineinstockprices,andaslowdownintheglobaleconomysincelastyear,werecordedimpairmentlossesonstocksandanincreaseincreditcostinfiscal2008.Inordertoquicklyadapttotheadverseenvironmentandpromoteasteadyearningsrecoveryfromfiscal2009,wemadeadditionalloanlossprovisionsinpreparationforfurthereconomicdeteriorationandrecognizeddeferredtaxassetsmoreconservatively.Managingexpenses,creditcostandrisk-adjustedassetsRealizingasolidfinancialbaseasaglobalplayerCapitalincreasethroughissuanceofcommonshares(resolvedinMay09)QualitativeandquantitativeimprovementofcapitalbaseFortifyingtargetedgrowthbusinessareasWewillcontinuetostrengthenbusinessesconsistentwithourphilosophyof“followingthebasics”Wewillmaintainstringentcontrolonexpenses,creditcost,andrisk-adjustedassets,whilerealizingasolidfinancialbaseasaglobalplayerandfortifyingtargetedgrowthbusinessareasformedium-andlong-term.ExpensesSolutionprovidingforcorporations/Investmentbanking,trustbusinessKeepSMBC’sOHRbelow50%Aimingtorealize“totalconsultingservices”Workingtoward“thenumberonecreditcardbusinessentityinJapan”CreatinganewleadingfinancialservicesgroupandincreasinggrowthpotentialMeetthefinancingneedsofSMEcustomersPrepareoptimalsolutionsformanagementissuesJointbusinessdevelopmentofORIXCreditFocusedbusinessareasinglobalmarketsEstablishedSumitomoMitsuiBankingCorporation(China)LimitedDevelopingbusinesseswithBarclaysPLC(wealthmanagement,businessinSouthAfrica)AcquisitionofNikkoCordialSecuritiesInc.andotherbusinessesFinancialconsultingforindividualsFortifyingproduct/serviceline-upEnhancingconsultants’skillsPayment&settlementservice,ConsumerfinanceRealizesynergieswithintwo-companysystemconsistingofSumitomoMitsuiCardandCedynaFinancialFortifycreditriskmanagementonaglobalbasisEnhanceourabilitytomanagerisksAllocateresourcestogrowthareasIncreaseoperationalefficiencyProvidecustomerswithsufficientfundsFulfillourroleasafinancialintermediaryoptimallyandmoreactivelyImproverisk-returnprofileofcreditportfolioCreditcostRisk-adjustedassetsSustainingconsolidatedTierIratioofapprox.8% Performance in Growth Businesses (SMBC Nonconsolidated)
(Note: Figures in the green circles are average compound annual growth rates.)
SMFG 2009 9
20052006200720092008200520062007200920082005200620072009200820052006200720092008200520062007200920082005200620072009200820052006200720092008200520062007200920082005200620072009200801234562.91.11.72.62.22.02.32.83.03.40200400600800Note:DuringFY2007,about¥300billionoftheseloansweresecuritized.Managerialaccountingbasisincludingcorporatebonds.Cumulativesalesofpension-typeinsuranceBalanceofinvestmenttrustsCustomerAssets(InvestmentTrustsandPension-TypeInsurance)Unit:¥trillion,term-endUnsecuredcardloansIncludingportionundertie-upwithPromiseConsumerFinance(Term-endbalance)Unit:¥billionSecuritizedbalanceBalanceoutstandingBusinessSelectLoansLoansguaranteedbycreditguaranteecorporationsHousingLoansUnit:¥trillionLoanSyndicationsAmountoriginated(¥trillion)NumberoforiginationGlobale-TradeService(NumberofContracts)Unit:ThousandsofcontractsLoansguaranteedbycreditguaranteecorporationsandBusinessSelectLoansUnit:¥billion,term-endbalanceNumberofInternetTransactionsUnit:MillionsSMBCDirectCustomerContractsUnit:MillioncustomersPCBankWeb21(NumberofContracts)Unit:Thousandsofcontract0601801208210815116612902461085.86.68.49.37.003060901201501051151491411250510201502461086.16.79.38.67.167070277975468511.716.512.715.013.701,0005002,0002,5003,5003,0001,5000369122.00.40.81.61.910.59.510.09.910.0270330490440390602802101400100200400300500+16%+10%+6%+2%+19%+11%+13%+9%+9% Business Overview
n Consumer Banking
The Group 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 2008, reflect-
ing the high esteem customers have for our services, include
an outstanding balance of investment trusts under manage-
ment of ¥2,040.4 billion (March 31, 2009); sales of foreign
bonds and structured bonds of ¥148.3 billion; pension-type
insurance sales of ¥325.5 billion; sales of single premium full-
life insurance of ¥37.5 billion; and mortgage loans outstand-
ing of ¥14,072.2 billion (March 31, 2009).
Financial Consulting Business
In fiscal 2008, SMBC continued to
broaden its product lineup of invest-
ment trusts, annuity insurance for indi-
viduals, life insurance policies and
other financial products.
In investment trusts, we became the
first major banking group in Japan to
start selling funds that invest primarily
in high-yield bonds in Europe. In the
individual annuity insurance category,
new products were introduced such as a policy offering a
minimum principal guarantee with a minimum holding period
of five years, and policies with nursing care provisions.
As part of our “total consulting services,” which offer our
customers one-stop-shopping for all types of financial ser-
vices, we began steadily expanding our offering of life insur-
ance products from December 2007. By the end of May
2009, the number of branches selling these policies had
increased from the initial 86 to 165. Furthermore, the number
of branch personnel selling these policies has increased from
about 250 to about 2,000. By offering 18 different insurance
policies, including whole-life, term and medical, we can now
meet a still broader range of customer needs.
The global financial crisis that began in the United States
has produced extreme volatility in the world’s stock and other
markets. We are taking many measures to keep customers up
to date with developments, for example, holding seminars
about fund performance reports, issuing monthly and special
market reports, and sending materials to customers via direct
mailing. Such activities under-
line our commitment to improv-
ing customer service after a
purchase of a financial product.
Loan Business
To enable us to respond to the wide-ranging needs of our
customers, we have developed new products, and expanded
and improved services.
10
SMFG 2009
In April 2008, SMBC became
the first bank in Japan to offer a
housing loan with a provision that
exempts borrowers from a portion
of repayments in the event of a nat-
ural disaster. Depending on the
severity of damage to the property,
borrowers’ repayments are reduced
for a certain period.
In December 2008, we intro-
duced a new type of educational
loan. Customers can apply to the Consumer Finance
Promotion Office for the loan using
automated loan contract machines
installed within SMBC branches, via
the Internet, or through other chan-
nels, every day (except January 1)
until nine in the evening. In most
cases, applicants
receive a
response on the same day. With
these benefits, the new loan offers
much greater convenience than
conventional educational loans.
Settlement and Consumer Finance Business
SMBC expanded services available
on the SMBC First Pack settlement
platform by issuing SMBC CARD
Suica starting in October 2008 under
its business alliance with East Japan
Railway Company (JR East). The new
card incorporates the JR East Suica electronic money and
automatic charging services.
SMBC CARD Suica
In addition, the iD* credit service, which is based on a
strategic alliance between SMFG and NTT DoCoMo, Inc.,
continues to grow. As of March 31, 2009, about 11.2 million
individuals had subscribed to this service and there were
about 410,000 terminals installed on the premises of affiliated
merchants.
* iD is a trademark of NTT DoCoMo, Inc.
In the consumer finance business that
began in April 2005 through the collaboration
of SMBC, Promise Co., Ltd., and At-Loan
Co., Ltd., the number of automated contract
machines had grown to 712 as of March 31,
2009, and the balance of loans made by
SMBC and At-Loan together had increased
to about ¥400.0 billion.
Transaction Channels
In fiscal 2008, SMBC opened four branches in the Tokyo area
(Centerminami, Musashikosugi and Kamakura in Kanagawa
Prefecture, and Moriya in Ibaraki Prefecture). Also, to
strengthen our services for customers located in the Tokai
region, which is centered on Aichi Prefecture, we opened
new branches in Akaike, Fujigaoka and Yagoto, all close to
train and subway stations. In June 2008, we opened “SMBC
Park Sakae,” which is the first of SMBC’s offices to concen-
trate mainly on providing information. In addition to opening
conventional staffed offices, we are installing ATMs at or near
stations of the Nagoya municipal subway system, for
increased customer convenience.
Kamakura Branch
Yagoto Branch
For the SMBC Direct online banking service, we are con-
stantly adding services to meet customers’ needs and pro-
vide greater convenience. In addition, we are introducing
highly advanced services and reinforcing security. On April 1,
2008, we reduced our foreign exchange handling fees for for-
eign currency deposits made online or by cellphone to half
the fee at our branches. Such measures make online banking
even more attractive as a convenient and low-cost service
channel for our customers.
SMBC Direct has ranked first for seven consecutive years
in the ranking of Internet banking by e-commerce website rat-
ing firm Gomez Consulting, Co., Ltd. As of March 31, 2009,
approximately 9.3 million customers had registered for this
service.
SMFG Credit Card Business Strategy
On April 1, 2009, three credit card companies – Central
Finance Co., Ltd., OMC Card, Inc., and QUOQ Inc. – merged
to form the credit card company Cedyna Financial
Corporation. Along with Sumitomo Mitsui Card Co., Ltd., the
new company is one of Japan’s largest credit card compa-
nies. With the establishment of this two-company system,
SMFG has concentrated its credit card business on Cedyna
Financial and Sumitomo Mitsui Card, which each have differ-
ent strengths.
Going forward, our goal is to capture top-line synergies
by combining the expertise, customer bases and networks of
group companies. Another objective is to benefit from cost
synergies made possible by the enormous scale of the
group. Through these initiatives, we are determined to
become the leading credit card entity in Japan.
Topics
lSMBC Retail Banking College Established
On May 7, 2008, SMBC established SMBC Retail Banking
College (RBC) to train personnel responsible for marketing
financial services to individual customers.
RBC offers special training programs aimed at sub-
stantially increasing the sophistication and quality of our
consumer banking services. It has a counter zone that
enables trainees to simulate retail customer consulting, an
audio visual room that broadcasts role-playing scenarios
and enables all trainees attending to confirm the content,
and other facilities that speed up their acquisition of work-
ing knowledge and skills.
lEnvironmental Programs
As part of our environmental commit-
ment, SMBC offers Japanese govern-
ment bonds (JGBs) for individual
investors linked to carbon credits, tree
planting and “green” electricity, so that
consumer banking customers can help protect the environ-
ment when they buy these products. One illustration is the
“Fight Global Warming” Campaign, which started in June
2008. SMBC used part of the earn-
ings from sales of JGBs for individu-
als to buy carbon credits, which were
then transferred to the Japanese gov-
ernment. This product generated
much recognition, including the 2008
Nikkei Veritas Award for Superiority
(one of Nikkei Superior Products and
Services Awards).
SMFG 2009 11
トップラインシナジーの極大化スケールメリットの追求3社合併（Ｈ21.04）(EstablishedinOctober2008)100%49%(TotalGroupinvestment)66%SumitomoMitsuiCardCentralFinanceOMCCardQUOQ(MergerinApril2009)SMFGCARD&CREDIT,INC. n Corporate Banking
Improving Products and Services for Midsized
Companies and SMEs
•Initiatives to provide easier access to financing
SMBC believes that smooth and efficient supply of funds to
customers is its main social responsibility as a financial insti-
tution. This mission is particularly vital today as companies
face severe challenges caused by the global financial crisis.
This is why we are working even harder to serve as an inter-
mediary for financing in a manner that is both responsible
and proactive.
We are committed to helping customers expand their
businesses. To accomplish this, we will continue to focus on
offering products and services that reflect a thorough under-
standing of their needs and issues.
•Products and services to meet fund-raising needs
Amid the economic uncertainty, a broad range of fund-raising
needs is emerging among companies of all sizes. To meet
these needs, SMBC is continually expanding its lineup of
loans for corporate clients. In April 2008, we introduced the
Asset Value Truck & Bus Loan, which uses commercial vehi-
cles as collateral, and the Certified Company Support Loan,
offered to corporate customers who have received official
certifications or awards specified by SMBC from national or
local government entities. Companies that have earned certi-
fication recognized by SMBC for their management systems
are also eligible. In June 2008, we started offering the Web
Report Loan to customers that use online tax reporting ser-
vices to transmit electronically to SMBC their tax return data
and certificates of tax payment made using the Japanese
national tax authorities’ “e-Tax” service.
•Environmentally responsible products and services
For midsized companies and SMEs that show a strong com-
mitment to protecting the environment, and have received
ISO14001 and other environmental management certifica-
tions, SMBC in February 2006 introduced the SMBC-ECO
Loan, which offers preferential interest rates. Since then, we
have added other versions of this loan. In December 2007,
we launched the KES Support Loan for companies that have
obtained KES Environmental Management System Standard
certification. This loan is offered in conjunction with the non-
profit KES Environmental Organization. In October 2008, the
SMBC-ECO Loan eco value up made its debut, targeting
companies that are certified under the environmental stan-
dards of a major corporation. As a first step, this new loan is
being offered to companies that have been certified under
the Fujitsu Group Environmental Management System
(FJEMS). We added the SMBC Environmental Friendliness
Assessment Loan in October 2008. To be eligible, an appli-
cant company must undergo an environmental evaluation
using SMBC’s own assessment standards. Loan terms
depend on the results of this evaluation.
To support the growth of environmental businesses,
SMBC and SMBC Consulting held an environmental business
forum in December 2008 at Eco Products 2008. Sponsored
by Japan Environmental Management Association for
Industry (JEMAI) and Nikkei Inc., this exhibition is one of the
largest environmental exhibitions in Japan. SMBC set up a
booth along with 43 of its corporate clients. At the forum, we
announced the 2008 winners of the “eco japan cup” contest
that recognizes start-up eco businesses with much potential.
Other events at the forum were a seminar on our environmen-
tal businesses and business match-up meetings for pre-
registered companies.
All these activities demonstrate our commitment to deep-
ening our support for the environmental business operations
of midsized companies and SMEs.
•Information services
Assistance in locating suitable
business partners is a field
where demand is very strong.
To provide even better ser-
vices, SMBC is reinforcing its
organization for matching cus-
tomers with potential partners
and has expanded its “all-in-
one matching” program.
Conducted by the Head Office,
this service matches many cor-
porate clients at once with the purchasing departments of
large corporations. We distribute a periodical called Business
partner at no charge to give in-depth information about these
services and describe new initiatives. Another service we are
expanding at SMBC is the Trade Consultant Program,
launched in February 2008. This has already generated a
strong response from customers. Through activities like
these, we will continue to expand our range of value-added
services that target the diversifying needs of customers.
•Responses tailored to a broad spectrum of
corporate needs
SMBC has been enhancing its network of business offices
and Business Support Offices in order to offer a broad spec-
trum of in-depth advice and support especially tailored to
meeting a diversity of corporate customer needs and helping
customers address the issues they face. We expanded the
network by opening five Business Support Offices and a
Corporate Business Office in October 2008, and 14 Business
Support Offices in April 2009.
Reinforcing services for globalizing
corporations
In Japan, there is much interest in capitalizing on the
immense opportunities presented by the emergence of a “5
billion population market” and a “pan-Asian market,” as dis-
cussed in the White Paper on International Economy and
12
SMFG 2009
Trade 2008 (Trade Policy Bureau, METI). One result has been
a major shift in the geography of earnings of Japanese com-
panies aiming to increase overseas sales. As these compa-
nies pursue global expansion strategies, they must resolve
fund-raising issues as well as gain a deeper understanding of
foreign business practices and cultures, and legal and politi-
cal systems.
SMBC established the Global Advisory Department in
April 2008 specifically to help devise solutions for cross-
border issues of customers with overseas operations. In April
2009, we combined this department with the International
Business Promotion Department. This department straddles
the three units of SMBC that do business with corporate
clients — Middle Market Banking Unit, Corporate Banking
Unit, and International Banking Unit — to support seamlessly
the foreign operations of client companies. Based in Tokyo,
the Global Advisory Department has staff members at over-
seas SMBC offices, chiefly in Asia. With a staff of about 200
professionals in foreign trade and global business operations,
the department maximizes synergies by integrating issue-
solving skills in Japan, expertise in collecting and analyzing
information, and relationships with customers and business
partners worldwide. With this infrastructure, SMBC can put
together customized solutions from a global perspective to
serve companies in Japan and their overseas subsidiaries.
We hold overseas business-related seminars with themes
of particular interest to our customers, and distribute the lat-
est information on overseas markets, enabling companies
considering launch of an overseas business to gain insight
into markets, regulations, industry trends and other matters
involving other countries. Our services are useful for compa-
nies with established overseas operations too. They can
count on SMBC for valuable assistance in areas such as
growth issues and reorganizations.
Intensifying initiatives in the public and
financial sectors
SMBC established the Public & Financial Institutions Banking
Department in fiscal 2007. One central role is creating solu-
tions for issues at regional governments, public corporations
and financial institutions. Moreover, to upgrade services for
regional customers, the department undertakes joint initia-
tives with regional governments and financial institutions.
A Cooperative Agreement for Promotion of Industry that
was entered into in July 2008 with the Miyagi Prefectural
Government and The 77 Bank, Ltd., which is based in Miyagi
Prefecture, is a prime example. Developing new supply
chains for the auto industry in the prefecture is one of the
objectives of the agreement. This cooperation also provides a
framework for helping customers to start overseas operations
or expand their sales channels in overseas markets.
This type of collaboration encompassing a regional gov-
ernment, a regional financial institution and a megabank is a
first in Japan. It enables the enormous domestic and
overseas network of
SMBC to tap into the
deep roots of The 77
Bank in its home
region. Building ties
with regional govern-
ments makes this
cooperative structure
even more effective
at promoting the growth of various industries.
Under the tripartite agreement, two seminars were held
during fiscal 2008: Automotive Industry Seminar for New
Entries and Overseas Business Seminar and Consultation.
Collaboration also includes participation in various local orga-
nizations and activities that bring together companies, univer-
sities and governments. In all cases, the goal is to increase
points of contact with customers.
SMBC also concluded an industrial promotion agreement
with the Hokkaido Government in September 2008. Under it,
we support the operations of the Hokkaido International
Business Center, which the Hokkaido Government formed to
support Hokkaido companies with their overseas operations.
In March 2009, this center held a China Business Seminar
and is now working on more ways to help Hokkaido compa-
nies do business overseas.
Collaboration with regional financial institutions is grow-
ing, too. In March 2008, we signed comprehensive agree-
ments concerning business succession services with three
banks: The First Bank of Toyama, Ltd., The Bank of Nagoya,
Ltd., and The Biwako Bank, Ltd. SMBC supports the business
succession regimes of these banks and directly assists com-
panies with succession issues.
Moving forward, we will continue to intensify initiatives that
will contribute to regional economic growth and supplying of
high value-added services to customers throughout Japan.
Topics
lCampaign to Fight Global Warming
SMBC launched the SMBC-ECO Loan, Fight Global
Warming Campaign in May 2009. During the campaign
period, SMBC purchased carbon credits in Japan that are
equivalent to five tons of greenhouse gas emissions per bor-
rower. This campaign allows midsize companies and SMEs
to contribute to the national
program to prevent global
warming through emission
rights obtained by SMBC.
The campaign demonstrates
SMBC’s dedication to increas-
ing support for environmental
businesses.
SMFG 2009 13
Support for Business and Asset Succession
SMBC specialists prepare tailored proposals for customers
with concerns about business and asset succession. We hold
a variety of seminars to supply timely information, and advise
business owners on a wide range of matters. Our consulting
services cover issues of all types involving both individuals
and companies.
Private Banking
Customers can rely on SMBC for all-inclusive financial advice
concerning financial assets. We hold discussions to share
and understand each customer’s attitude toward his or her
financial assets. After agreeing on goals, we create proposals
for asset allocation and management.
n Services for High-Net-Worth Individuals,
Business Owners and Employees
Private Advisory Department
The Private Advisory Department specializes in products and
services that meet the diverse requirements of business own-
ers and high-net-worth individuals. Activities of the depart-
ment span three areas. The first is preparing carefully tailored
proposals for business and asset succession. To create these
proposals, we combine our know-how accumulated from long
experience in this area with the input of outside specialists.
The second is private banking services that include compre-
hensive financial services for managing customers’ monetary
assets. The third area is workplace banking services to sup-
port the personnel strategies of corporate clients. This service
category includes providing assistance from a financial perspec-
tive for employee benefit programs and defined-contribution
pension plans.
By working with other SMFG companies and alliance
partners, the Private Advisory Department uses its “One
Bank” approach for the seamless provision of a broad range
of products and services. This allows the department to cover
many types of needs involving both individual and corporate
clients.
In April 2009, the Private Advisory Business Department
was established to create a unified platform to support busi-
ness and asset successions and private banking operations.
This department serves companies, business owners and
high-net-worth individuals with particularly high levels of
assets, and further improves our ability to assist customers
with succession, asset management and other needs.
Workplace Banking
Recruiting and retaining talented employees is a major issue at
all corporate clients. SMBC can help create employee benefit
programs, such as housing loans and defined-contribution
pension plans. In addition, they have access through their
employers to SMBC products and services for achieving
financial and other goals in their lives.
14
SMFG 2009
SumitomoMitsuiBankingCorporationSMFGcompaniesSupportfromspecializedunitsofSMBCExternalspecialists(taxaccountantsandotherprofessionals)SumitomoMitsuiFinancialGroupPrivateAdvisoryDepartmentBusinessgrowthneedsBusinesssuccessionneedsAssetsuccessionneedsAssetmanagementneedsAssistanceforemployeebenefitprogramsCorporateBusinessOfficeBranchesCustomersHigh-net-worthindividualsBusinessownersHeadsofwealthyfamiliesBusinessstrategyAssetmanagementTaxpaymentarrangementsAssetsuccessionPoliciesvis-à-vissuccessorsStockpricesimulationsCapitalpolicyConsiderationofM&A/MBOpossibilitiesOrganizationalrealignmentsOURSOLUTION1.SharingUnderstandingcustomerattitudestoassets,andanalyzingcurrentportfolios2.Consulting4.Review3.Action n Investment Banking
Topics
Accomplishments in Fiscal 2008
SMBC ranked first for the second consecutive year in the
league table for mandated arrangers of Japanese syndicated
loans. This was due in part to the arrangement of yen loans
for IBM and other foreign companies during the year.
Overseas, our project finance activities earned us recognition
as the “Global Bank of the Year” from Project Finance
International magazine. In the settlement services field,
SMBC is steadily raising its profile, ranking first in Japan and
in the top five in the Asia-Pacific region, a first for a Japanese
bank, in a cash management services survey conducted by
Asiamoney magazine. In addition, to assist customers with
measures to combat global warming, SMBC continued to
promote environmental businesses, focusing mainly on car-
bon credit trading.
Collaboration with Daiwa Securities SMBC
Daiwa Securities SMBC Co., Ltd., again earned a number of
honors in Japan and overseas for excellence in serving cor-
porate clients. This company ranked first in fiscal 2008 as a
bookrunner for samurai bonds and was named “Yen Bond
House of the Year 2008” by International Financing Review
magazine, and “Best Lead Manager of Yen Bonds in the
Euroweek Review of the Year 2008” by Euroweek magazine.
In May 2009, Daiwa Securities SMBC acquired Close
Brothers Corporate Finance Limited, a leading European cor-
porate finance advisory firm. This makes it possible to pro-
vide better support for the cross-border M&A activities of
Japanese corporate clients.
Fiscal 2008 Japan Syndicated Loans —
Bookrunners*
Bookrunner
Amount (¥ million)
1. Sumitomo Mitsui Financial Group
8,883,763.6
2. Mizuho Financial Group
3. Mitsubishi UFJ Financial Group
4. Citi
5. JP Morgan
8,473,285.2
7,209,887.1
742,290.6
316,342.4
Fiscal 2008 Samurai Bonds*
Bookrunner
Amount (¥ million)
1. Daiwa Securities SMBC
2. Nikko Citigroup
3. Mizuho Financial Group
4. Nomura
5. UBS
*Source: Thomson Reuters
469,033.3
421,700.0
280,800.0
208,000.0
144,933.3
lAcquisition of Businesses centered
on Nikko Cordial Securities
Since its establishment in April 1999, Daiwa Securities
SMBC has been a key player in our wholesale securities
business. In May 2009, we acquired the entire business of
Nikko Cordial Securities Inc. as well as the domestic equity
and debt underwriting business of Nikko Citigroup Limited.
As the new entity, New Nikko Securities, is the lead manag-
ing underwriter for a large number of listed companies and
has extensive skills in the distribution of securities, adding
these capabilities to the current Daiwa Securities SMBC
wholesale securities platform will position us to provide
clients with services of an even higher quality.
lProject Finance
In the PFI Awards 2008 made by Project Finance
International magazine, SMBC came out ahead of promi-
nent European and U.S. banks as the “Global Bank of the
Year.” Further demonstrating SMBC’s outstanding global
reputation was the winning of “Deal of the Year” awards by
many SMBC-arranged project finance deals.
2008 Deal of the Year Awards — Principal Deals*
Award category
Region / industry
Deal name
Amount syndicated
(million)
Americas / Power
Angamos
US$ 989
Asia Pacific /
Infrastructure
Europe / Oil
Lotos
Newcastle Coal Loader
A$ 1,200
US$ 1,800
US$ 3,300
Middle East and Africa /
Power
Ras Laffan C
*Source: Project Finance International magazine
lEnvironmental Business
SMBC has been developing many environmental busi-
nesses, chiefly through carbon credit trading, since the
October 2007 establishment of its Environmental Products
Department. In overseas initiatives, we are creating an inte-
grated environmental framework to support projects in
developing countries and the acquisition of carbon credits
by Japanese companies. We established a consulting com-
pany to support the development of clean development
mechanisms (CDMs) in an emissions project under our sub-
sidiary Banco Sumitomo Mitsui Brasileiro S.A., and entered
into a business alliance with Metropolitan Bank and Trust
Company, a leading commercial bank in the Philippines.
SMFG 2009 15
n International Banking
management has been further enhanced by placing special-
ists and streamlining the organizational framework tailored to
SMFG offers value-added services to clients (corporations,
each regional characteristic in the world.
financial institutions, governmental organizations and public
entities) operating globally by preparing tailor-made solutions
that meet various local needs, mainly through SMBC’s
Additionally, SMBC has reorganized its credit depart-
ments and newly established its Credit Management
Department within the International Banking Unit in order to
International Banking Unit. We strive to become a global
strengthen its credit and crisis management capabilities.
commercial bank, capable of delivering our strengths in vari-
ous business opportunities in this vast international market.
Global Standard Financial Products
SMBC became the first Asian financial institution ever to be
named “Global Bank of the Year” by Project Finance
International magazine in the area of project finance. SMBC
also won many “Deal of the Year” awards from numerous
financial magazines in the area of trade finance.
SMBC was chosen for the third consecutive year as the
best provider of yen cash management services in a survey
of financial institutions conducted by Asiamoney magazine in
the area of global settlement services.
Capital and Business Alliances
with Overseas Financial Institutions
Our alliance strategy in Asia is tailored to the characteristics
Core IT System Upgrades
Enhancing internal controls is as vital as expanding interna-
tional operations in order to support globalizing client needs.
Starting in fiscal 2009, SMBC is revamping its Asian account-
ing systems as part of a worldwide operations system
upgrade effort. Simultaneously, SMBC will upgrade customer
information and management administration systems.
Fostering Professionals Capable
of Offering Sophisticated Financial Solutions
We are strengthening our training and educational programs
in order to meet seamlessly and accurately customers’
increasingly diverse and advanced needs. In Asia, enhanced
seminars and e-learning programs are offered to locally hired
employees by the Asia Pacific Training Department, estab-
lished in 2007 within SMBC’s International Banking Unit, in
of each country and region. In 2008, SMBC entered into
order to provide the best solution to our customers.
strategic alliances with Kookmin Bank, the largest bank in
Korea, and the Bank of East Asia, a major Hong Kong
private-sector bank. By forging partnerships with leading
Asian local financial institutions that boast strong local busi-
ness bases, we aim to strengthen our solution providing
capability in the region, such as by expanding our Asian
denominated currency service offerings. We plan to expand
our Asian business multilaterally.
In a global context, SMBC has made an equity invest-
ment in UK’s Barclays PLC in order to deliver and comple-
ment each institution’s strengths.
Promotion of Cross-Border Transactions
In order to seamlessly provide solutions to Japanese corpora-
tions’ international business development activities and cross
border management issues, SMBC has expanded its Global
Advisory Department (established in fiscal 2008) headcount.
On another note, SMBC established a department in Osaka
(in addition to Tokyo) specifically dedicated to business with
non-Japanese companies active in the Kansai and other
western Japanese regions.
Reorganization of Risk Management
SMBC has set up departments dedicated to managing credit,
market, liquidity and operational risks in Europe and the
Americas, in order to create a comprehensive risk manage-
ment organizational framework. Furthermore, credit risk
Strengthening of Compliance System
We recognize that it is imperative to reinforce further compli-
ance in order to operate globally, by reexamining compliance
programs in accordance with guidelines established by the
Basel Committee on Banking Supervision and by enhancing
governance systems of overseas subsidiaries in China and
other countries.
On another note, we are further strengthening our anti-
money laundering measures in accordance with international
standards, by upgrading supervision capabilities through
computerization of our overseas network.
Topics
lEstablishment of Subsidiary in China
SMBC established Sumitomo Mitsui Banking Corporation
(China) Limited (head office in Shanghai) in April 2009 as a
wholly owned subsidiary, demonstrating the bank’s strong
commitment to this market. China is an important market
and we are committed to better serving our customers in
the region by continuing to
build our business base
there.
16
SMFG 2009
lExpansion of Overseas Network
We continue to enhance our overseas network in order to
improve our services to Japanese companies and increase
our presence in emerging and other growing markets.
SMBC opened a branch office in Hanoi in December
2008 to support the expansion of our clients’ activities in
Vietnam. Coupled with the opening of the Ho Chi Minh City
Branch in 2006 and the signing of the strategic alliance
agreement with the Vietnam Export Import Commercial
Joint Stock Bank (“Eximbank”) in 2007, we boast a well-
founded network and financial services delivery base in
Vietnam.
Furthermore, SMBC’s New York Branch opened its
Mexico City Representative Office in March 2009. As a result,
we became capable of seamlessly covering the North and
South American regions through the new representative
office, North American (New York, Los Angeles, San
Francisco Branches and Houston Representative Office, and
Sumitomo Mitsui Banking Corporation of Canada) and South
American (Banco Sumitomo
Mitsui Brasileiro) network.
We will continue to build our
network in the Americas in
order to deliver sophisti-
cated financial solutions
quickly.
n 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 deriv-
atives markets. To maintain and further strengthen profitability,
and while managing risk appropriately, the Treasury Unit
focuses on three goals: (a) expanding transaction volume
from its customers; (b) strengthening its asset-liability man-
agement (ALM) system and trading skills; and (c) bringing
sharper focus to portfolio management.
More Solutions and Services for Customers’
Market Transactions
SMBC is dedicated to supplying solutions that precisely
match the market transaction needs of its customers. To this
end, the Treasury Unit works with branches to create hedging
and other proposals for corporate clients that reflect shifting
trends in financial markets.
We are constantly improving the functions of i-Deal, a
system that allows clients to conclude foreign exchange
contracts over the Internet. Looking forward, the Treasury Unit
will continue working to fulfill all our customers’ market trans-
action needs by offering full support services of the highest
quality in the industry.
ALM and Trading Operations
Through its ALM and trading operations, and while controlling
market and liquidity risks, the Treasury Unit seeks to maxi-
mize earnings by targeting opportunities created by trends in
many financial markets.
We will continue to conduct suitable trading operations
that reflect changes in market conditions with the aim of gen-
erating a consistent stream of earnings.
Topics
lExpanding 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 clients to conclude foreign exchange contracts over
the Internet.
In fiscal 2008, we added a foreign exchange risk simu-
lation function to make this service even more useful for
customers.
lSound Market Operations
SMBC executes sound market operations in response to
changes in market conditions based on a conservative risk
management policy. In addition, we are constantly taking
steps to use even more advanced methods for our ALM
activities.
SMFG 2009 17
Group Companies (as of March 31, 2009)
SUMITOMO MITSUI Banking Corporation
SUMITOMO MITSUI Banking Corporation
www.smbc.co.jp/english/
Credit Ratings (as of June 30, 2009)
Moody’s
Standard & Poor’s
Fitch Ratings
R&I
JCR
Long-term Short-term
P–1
A–1
F1
a–1
J–1+
Aa2
A+
A
A+
AA–
Financial Information (Consolidated basis, years ended March 31)
2009
Billions of yen
2007
2008
2006
For the Year:
Ordinary income ....... ¥ 2,989.6 ¥ 3,411.0 ¥ 2,925.6 ¥ 2,750.2
862.0
Ordinary profit ..........
563.5
Net income (loss)......
At Year-End:
Net assets................. ¥ 4,518.6 ¥ 5,080.7 ¥ 5,412.4 ¥ 3,598.2
104,418.5
Total assets............... 115,849.3
59.2
(317.3)
716.6
401.7
734.9
351.8
108,637.7
98,570.6
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 in December 2002 through a stock
transfer as a bank holding company, and SMBC
became a wholly owned subsidiary of SMFG. In
March 2003, SMBC merged with the Wakashio
Bank, Ltd. SMBC’s competitive 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 com-
panies 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.
Company Name: Sumitomo Mitsui Banking Corporation
Business Profile: Banking
Establishment: June 6, 1996
Head Office: 1-2, Yurakucho 1-chome, Chiyoda-ku,
Tokyo, Japan
President: Masayuki Oku
Number of Employees: 21,816
Number of branches and other business locations:
In Japan:
1,528*
Branches:
482
(Including 38 specialized deposit account branches)
Subbranches:
159
1
Agency:
23
Offices handling non-banking business:
863
Automated service centers:
43
20
7
16
*The number of domestic branches excludes ATMs located in
retail convenience stores.
Branches:
Subbranches:
Representative offices:
Overseas:
SMFG CARD & CREDIT, INC.
Company Name: SMFG Card & Credit, Inc.
Business Profile: Management of subsidiaries
and affiliates
Establishment: October 1, 2008
Head Office: 1-2, Yurakucho 1-chome,
Chiyoda-ku, Tokyo, Japan
President & CEO: Kazuya Jono
(Appointed on April 1, 2009)
Number of Employees: 30
SMFG Card & Credit, Inc. (“FGCC”), was estab-
lished in October 2008 as an intermediate hold-
ing company of SMFG to hold shares of
Sumitomo Mitsui Card Co., Ltd., and Cedyna
Financial Corporation. FGCC is the core com-
pany responsible for implementing SMFG’s credit
card strategy and establishing uniform business
policies. FGCC will also create a framework for
promoting a solid partnership between Sumitomo
Mitsui Card and Cedyna Financial Corporation,
seek to realize economies of scale for the Group
as a whole, and maximize top-line synergy by
leveraging each party’s strengths.
* Cedyna Financial Corporation was formed in April 2009
through the merger of three companies: Central Finance
Co., Ltd., OMC Card, Inc., and QUOQ Inc., and has
become one of the largest consumer finance companies in
Japan.
www.smbc-card.com
(Japanese only)
affluent consumer lifestyles and make further
dramatic advances as a leading brand in its
industry sector.
Company Name: Sumitomo Mitsui Card
Credit Ratings (as of June 30, 2009)
Company, 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: 2,156
JCR
Long-term Short-term
J–1+
A+
Financial Information (Years ended March 31)
2009
Billions of yen
2007
2008
2006
For the Year:
Revenue from credit
card operations....... ¥5,858.6
180.1
Operating revenue....
22.2
Operating profit.........
At Year-End:
Number of cardholders
(in thousands).........
18,656
¥5,375.2 ¥4,753.8
157.6
14.1
168.4
16.9
¥4,181.3
148.2
25.8
16,406
14,951
14,067
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 excel-
lent 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-
tribute to the realization of comfortable and
18
SMFG 2009
Maximizationoftop-linesynergiesPursuitofeconomiesofscaleSMFGSUMITOMOMITSUIFinancialgroupSMFGCARD&CREDIT,INC. www.smfl.co.jp/english/
Sumitomo Mitsui Finance and Leasing Co., Ltd.
(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 Leasing, as a bank-
affiliated leasing company that can draw on the
financial solutions offered by other subsidiaries of
SMFG, and (b) the customer 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 is one of the leading companies in the leas-
ing industry because of its strong marketing posi-
tion based on its access to channels to users of
leased equipment and to suppliers of equipment,
its capabilities for offering high-value-added prod-
ucts and services, and its close ties with one of its
shareholders in the aircraft operating lease field.
Through anticipating future needs and offering top-
quality leasing services, SMFL is working to con-
tribute to society as a leading company in the
leasing 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: 1,562
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 inno-
vation and IT-related issues, planning and
implementation services for strategic information
systems, and outsourcing services—for cus-
tomers in financial services and a range of other
industrial sectors. In addition, JRI’s wide-ranging
activities cover the issuance of a range of infor-
mation, including research and analysis of the
Japanese and overseas economies, formulation
of policy recommendations, and assistance in
the incubation of new businesses.
In December 2008, JRI concluded a capital and
business alliance with JRI Solutions, Limited, an
SMFG company offering IT solutions to cus-
tomers across a wide range of industries, and
NTT Data Co., Ltd. And, in January 2009, JRI
Solutions began operations anew under the name
“JSOL.” Looking ahead, JRI, while maintaining
close relationships with other SMFG companies,
will draw on the diverse range of resources and
know-how of the NTT Data Group, as well as the
know-how it has accumulated, to further grow
and develop as an IT services company.
Company Name: The Japan Research Institute,
Limited
Business Profile: Systems engineering, data
processing, management
consulting, think-tank services
Establishment: November 1, 2002
Head Office:
Tokyo Head Office: 16, Ichibancho,
Chiyoda-ku, Tokyo
Osaka Head Office: 1-6-3, Shinmachi,
Nishi-ku, Osaka
President & CEO: Yasuyuki Kimoto
Number of Employees: 1,945
Credit Ratings (as of June 30, 2009)
R&I
JCR
Long-term Short-term
a–1
J–1+
A+
AA–
Financial Information (Years ended March 31)
2009
Billions of yen
2007*
2008
For the Year:
Revenue from
leasing operations...
¥895.8
¥1,054.1
Operating revenue...
947.6
708.4
Operating profit........
36.4
36.2
¥599.4
516.8
630.0
379.9
31.5
24.7
2006*
¥614.1
498.6
619.7
375.1
32.2
21.4
*The upper row of figures for 2006, and 2007 are for SMBC
Leasing and the lower row of figures are for Sumisho Lease.
www.jri.co.jp/english/
Financial Information (Years ended March 31)
For the Year:
Operating revenue...
Operating profit........
2009
¥88.0
1.0
Billions of yen
2007*
2008
2006
¥88.1
3.8
¥84.6
3.0
¥115.8
5.2
*JSOL (formerly JRI Solutions) was spun off as a separate
company in July 2006.
www.smbc-friend.co.jp
(Japanese only)
Providing a full range of securities services,
focused mainly on retail customers, SMBC
Friend Securities Co., Ltd. has one of the
strongest financial positions among Japanese
securities companies and boasts highly efficient
operations with a nationwide network of 75
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 aim-
ing to be “a leading Japanese securities com-
pany serving the retail market,” and, by offering
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: Osamu Endo
(Appointed on June 26, 2009)
Number of Employees: 2,093
Financial Information (Years ended March 31)
For the Year:
Operating revenue...
Operating profit........
2009
¥43.2
2.3
Billions of yen
2007
2008
2006
¥60.5
19.0
¥58.7
21.2
¥68.5
31.0
SMFG 2009 19
Financial Highlights
Sumitomo Mitsui Financial Group
l Consolidated
Year ended March 31
For the Year:
2009
2008
Total income ..............................................................
Total expenses ..........................................................
Net income (loss).......................................................
¥ 3,556,536
3,527,040
(373,456)
At Year-End:
Total net assets .........................................................
Total assets ...............................................................
Risk-monitored loans.................................................
Reserve for possible loan losses...............................
Net unrealized gains (losses) on other securities......
Number of employees ...............................................
¥ 4,611,764
119,637,224
1,586,317
1,077,852
(33,176)
48,079
Selected Ratios:
Capital ratio ...............................................................
Return on Equity........................................................
Price Earnings Ratio..................................................
11.47%
—%
—x
Per Share (Yen):
¥ 4,739,040
3,810,084
461,536
¥ 5,224,076
111,955,918
1,092,661
894,702
745,420
46,429
10.56%
13.23%
11.06x
Millions of yen
2007
¥ 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
2006
2005
¥
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
¥ 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
Net assets..................................................................
Net income (loss).......................................................
Net income — diluted ................................................
¥2,790.27
(497.39)
—
¥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)
—
Notes: 1. “Net unrealized gains (losses) on other securities” represent the difference between the market prices and acquisition costs (or amortized costs) of
“other securities.” In principle, the values of stocks are calculated using the average market prices during the final month. For details, please refer to
page 25.
2. “Number of employees” has been reported on the basis of full-time workers. “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, in calculating total net assets and total assets, 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 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, 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 the
Financial Services Agency (“FSA”) Notification No. 20 issued in fiscal 2006, which is based on Article 52-25 of the Banking Act of Japan. The consoli-
dated 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 Act of
Japan.
6. “Net income — diluted” per share for the fiscal years ended March 31, 2009 and 2005 is not reported due to a net loss.
7. SMFG implemented a 100-for-1 stock split of common stock on January 4, 2009. If the stock split had been implemented in the prior years, per share
information would be as follows:
Year ended March 31
Net assets..........................................................................................
Net income (loss) ..............................................................................
Net income — diluted........................................................................
Yen
2008
¥4,245.46
592.98
566.57
2007
¥4,692.29
570.86
514.94
2006
¥4,001.69
947.34
756.43
2005
¥1,648.21
(443.88)
—
20
SMFG 2009
l Nonconsolidated
Year ended March 31
For the Year:
2009
2008
Millions of yen
2007
2006
2005
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
¥ 134,772
117,051
8,790
103,468
¥2,977,547
4,057,313
73.39%
1,420,877
Preferred stock...............................................
Common stock ...............................................
Number of employees ...............................................
103,401
789,080,477
167
Selected Ratios:
Return on Equity........................................................
Price Earnings Ratio..................................................
Dividend payout ratio.................................................
3.52%
28.79x
75.96%
Per Share (Yen):
¥ 111,637
89,693
6,246
82,975
¥2,968,749
4,021,217
73.83%
1,420,877
120,101
7,733,653
136
2.67%
71.82x
131.37%
¥ 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
13.71%
23.10x
15.31%
¥
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
2.38%
190.16x
46.64%
¥ 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
15.47%
18.95x
7.81%
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 ................................................
¥3,389.38
¥339,454.71
¥342,382.75
¥330,206.27
¥257,487.78
90
/
/
/
135,000
135,000
135,000
135,000
/
/
/
/
135,000
135,000
135,000
135,000
/
88,500
118.43
—
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
Notes: 1. All SMFG employees are on secondment assignment from SMBC, etc.
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.
4. SMFG implemented a 100-for-1 stock split of common stock on January 4, 2009. If the stock split had been implemented in the prior years, per share
information would be as follows:
Year ended March 31
Net assets..........................................................................................
Dividends:
Common stock.............................................................................
Net income ........................................................................................
Net income — diluted........................................................................
2008
¥3,394.55
2007
¥3,423.83
2006
¥3,302.06
2005
¥2,574.88
Yen
120
91.34
91.34
70
463.26
419.73
30
68.36
67.37
30
383.03
251.78
SMFG 2009 21
Sumitomo Mitsui Banking Corporation
l Consolidated
Year ended March 31
For the Year:
2009
2008
Total income ..............................................................
Total expenses ..........................................................
Net income (loss).......................................................
¥ 2,991,839
2,941,009
(317,306)
At Year-End:
Total net assets .........................................................
Total assets ...............................................................
Risk-monitored loans.................................................
Reserve for possible loan losses...............................
Net unrealized gains (losses) on other securities......
Number of employees ...............................................
¥ 4,518,647
115,849,385
1,561,824
1,011,845
(59,758)
37,345
Selected Ratios:
Capital ratio ...............................................................
Return on Equity........................................................
13.54%
—%
Per Share (Yen):
Net assets..................................................................
Net income (loss).......................................................
Net income — diluted ................................................
¥41,492.54
(5,740.34)
—
¥ 3,417,611
2,691,606
351,820
¥ 5,080,747
108,637,791
1,073,471
848,031
754,456
36,085
12.19%
9.56%
¥60,442.81
6,132.91
6,132.75
Millions of yen
2007
¥ 2,971,693
2,220,971
401,795
¥ 5,412,458
98,570,638
1,047,566
860,799
1,852,971
31,718
12.95%
12.95%
¥67,823.69
7,072.09
7,012.46
2006
2005
¥
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
10.77%
30.15%
¥41,444.83
9,864.54
9,827.19
¥ 2,699,202
2,875,897
(278,995)
¥ 2,633,912
97,478,308
2,186,739
1,239,882
678,527
32,868
10.60%
—%
¥23,977.62
(5,300.46)
—
Notes: 1. “Net unrealized gains (losses) on other securities” represent the difference between the market prices and acquisition costs (or amortized costs) of
“other securities.” In principle, the values of stocks are calculated using the average market prices during the final month.
2. “Number of employees” has been reported on the basis of full-time workers. “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, in calculating total net assets and total assets, SMBC 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).
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
FSA Notification No. 19 issued in fiscal 2006, which is based on Article 14-2 of the Banking Act of Japan. The consolidated capital ratio of SMBC 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. 55 issued in fiscal 1993, which was based on Article 14-2 of the Banking Act of Japan.
6. “Net income — diluted” per share for the fiscal years ended March 31, 2009 and 2005 is not reported due to a net loss.
22
SMFG 2009
l 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 (losses) 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 ................................................
2009
2008
Millions of yen
2007
2006
2005
¥ 2,548,073
2,520,286
(301,116)
¥ 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)
1,524,856
747,647
823,377
701,479
¥ 2,546,493
107,478,218
76,905,708
60,241,266
28,000,515
1,137,058
1,194,170
791,885
(42,701)
1,262,993
222,030
392,812
664,986
70
56,355
21,816
13.85%
—%
—%
46.0%
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%
¥41,404.62
¥58,204.22
¥67,124.90
¥42,105.57
¥26,129.71
1,638
/
/
/
88,500
(5,453.06)
—
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)
—
Notes: 1. Please refer to page 152 for the definitions of risk-monitored loans and problem assets based on the Financial Reconstruction Law.
2. “Net unrealized gains (losses) on other securities” represent the difference between the market prices and acquisition costs (or amortized costs) of
“other securities.” The values of stocks are calculated using the average market prices during the final month. For details, please refer to page 30.
3. “Number of employees” has been reported on the basis of full-time workers. “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, in calculating total net assets and total assets, SMBC 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).
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 FSA Notification No. 19 issued in fiscal 2006, which is based on Article 14-2 of the Banking Act of Japan. The nonconsolidated capital ratio of
SMBC 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. 55 issued in fiscal 1993, which was based on Article 14-2 of the Banking Act of Japan.
7. “Net income — diluted” per share for the fiscal years ended March 31, 2009 and 2005 is not reported due to a net loss. For the year ended March
31, 2008, it is not reported because no potentially dilutive shares have been issued.
SMFG 2009 23
Financial Review
Sumitomo Mitsui Financial Group (Consolidated)
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
The following is a summary of SMFG’s consolidated financial results for the fiscal year ended March 31, 2009.
1. Operating Results
Operating results for fiscal 2008 include the results of 288
consolidated subsidiaries (167 in Japan and 121 overseas)
and 79 subsidiaries and affiliates accounted for by the equity
method (50 in Japan and 29 overseas).
Gross profit increased ¥49.6 billion year on year, to
¥2,165.8 billion. The principal reasons for this increase were
1) higher net interest income from improvement in net
interest margins in overseas operations, and 2) higher net
trading income due to trading operations taking advantage
of interest-rate trends in Japan and overseas and reduction of
sub-prime exposures. After adjusting for general and
administrative expenses, credit cost, net losses on stocks,
equity in losses of affiliates, and other items, ordinary profit
decreased ¥785.8 billion, to ¥45.3 billion. The chief factors
here were poor business conditions at our customers due to
adverse economic trends at home and abroad, an increase in
credit cost from additional loan loss provisions for further
economic deterioration, and a jump in net losses on stocks
from the global stock market crash.
After adjusting ordinary profit for extraordinary gains and
losses, income taxes, and other items, net loss was ¥373.4
billion, a decrease of ¥834.9 billion from the previous fiscal
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 ..............................
2009 (A)
2008 (B)
288
79
268
74
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 recoveries of written-off claims (B) .....................................................
Gains on change in equity .................................................................................
Income before income taxes and minority interests ................................................
Income taxes:
Current ..............................................................................................................
Deferred .............................................................................................................
Minority interests in net income ..............................................................................
Net income (loss) ....................................................................................................
Total credit cost (A) + (B) ........................................................................................
[Reference]
Consolidated banking profit (Billions of yen) ...........................................................
2009 (A)
¥2,165,880
1,338,453
2,122
557,178
211,738
56,386
(1,063,419)
(769,484)
(302,353)
(297,400)
(104,145)
(65,585)
(183,677)
(94,876)
(9,111)
45,311
(15,815)
(7,363)
1,708
—
29,495
(72,238)
(262,405)
(68,308)
¥ (373,456)
¥ (767,775)
Millions of yen
2008 (B)
¥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)
Increase (decrease)
(A) – (B)
20
5
Increase (decrease)
(A) – (B)
¥ 49,632
128,070
(1,630)
(54,815)
(257,833)
235,839
(84,523)
(519,562)
(160,603)
(124,830)
(203,495)
(30,633)
(176,614)
(53,116)
(1,667)
(785,849)
(113,610)
(2,202)
353
(103,133)
(899,460)
31,662
20,133
12,672
¥(834,992)
¥(519,209)
Notes: 1. Consolidated gross profit = (Interest income – Interest expenses) + Trust fees + (Fees and commissions – Fees and commissions payments)
+ (Trading income – 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 + Other subsidiaries’ ordinary profit (excluding nonrecurring factors) + Equity method affiliates’ ordinary profit
x Ownership ratio – Internal transactions (dividends, etc.)
24
SMFG 2009
¥
728.7
¥ 1,022.9
¥ (294.2)
year’s net income. The main factors were recording of an
extraordinary gain on change in equity following the merger
of a leasing subsidiary in the previous fiscal year, and a more
conservative recognition of deferred tax assets based on the
harsh business conditions the bank is facing.
Deposits (excluding negotiable certificates of deposit) at
the end of the fiscal year under review rose ¥2,878.8 billion
in comparison with March 31, 2008, to ¥75,569.4 billion,
and negotiable certificates of deposit increased ¥4,383.1
billion, to ¥7,461.2 billion.
Meanwhile, loans and bills discounted rose ¥2,990.4 bil-
lion year on year, to ¥65,135.3 billion, and the balance of
securities increased ¥5,180.6 billion, to ¥28,698.1 billion.
Net assets amounted to ¥4,611.7 billion, and, of this total,
stockholders’ equity was ¥2,599.1 billion, lower than a year
earlier due to a decrease in retained earnings from recording
of a net loss.
Assets, Liabilities and Net Assets
March 31
Assets......................................................................................................................
Securities ...........................................................................................................
Loans and bills discounted.................................................................................
Liabilities..................................................................................................................
Deposits .............................................................................................................
Negotiable certificates of deposit .......................................................................
Net assets ...............................................................................................................
2009 (A)
¥119,637,224
28,698,164
65,135,319
115,025,460
75,569,497
7,461,284
4,611,764
Millions of yen
2008 (B)
¥111,955,918
23,517,501
62,144,874
106,731,842
72,690,624
3,078,149
5,224,076
Increase (decrease)
(A) – (B)
¥7,681,306
5,180,663
2,990,445
8,293,618
2,878,873
4,383,135
(612,312)
2. Unrealized Gains (Losses) on Securities
Net unrealized losses on securities as of March 31, 2009
amounted to ¥6.6 billion, a decrease of ¥768.8 billion from
the previous fiscal year’s net unrealized gains, reflecting a
decrease in the value of equities and other factors. Of this
total, net unrealized losses on other securities including
“other money held in trust” — which are directly debited to
net assets — totaled ¥33.4 billion, a decrease of ¥778.8 bil-
lion from the gains of the previous term.
Unrealized Gains (Losses) on Securities
March 31
Held-to-maturity securities ....................
Other securities ....................................
Stocks ..............................................
Bonds...............................................
Others ..............................................
Other money held in trust......................
Total ......................................................
Stocks ..............................................
Bonds...............................................
Others ..............................................
Net unrealized
gains (losses) (A)
¥26,741
(33,176)
7,062
(2,826)
(37,412)
(262)
(6,697)
7,062
24,419
(38,180)
2009
Millions of yen
(A) – (B)
¥ 9,986
(778,596)
(929,166)
130,066
20,503
(233)
(768,843)
(929,166)
140,363
19,957
Unrealized
gains
¥ 28,155
356,834
287,380
21,534
47,920
—
384,990
287,380
49,690
47,920
Unrealized
losses
¥ 1,414
390,011
280,317
24,360
85,332
262
391,688
280,317
25,270
86,100
2008
Net unrealized
gains (losses) (B)
¥ 16,755
745,420
936,228
(132,892)
(57,915)
(29)
Unrealized
gains
¥ 18,379
1,042,530
999,414
18,645
24,469
—
762,146
936,228
(115,944)
(58,137)
1,060,909
999,414
37,025
24,469
Unrealized
losses
¥ 1,623
297,109
63,186
151,537
82,385
29
298,763
63,186
152,969
82,607
Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in “Cash and due from banks” and “Deposits with banks” and
beneficiary claims on loan trust in “Monetary claims bought,” etc.
2. Unrealized gains (losses) on stocks (including foreign stocks) are mainly calculated using the average market price during the final month of the
respective reporting period. The rest of the securities are valuated at the market price as of the balance sheet date.
3. “Other securities” and “Other money held in trust” are valuated 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.
4. Floating-rate Japanese government bonds which SMFG held as “Other securities” had been carried on the consolidated balance sheet at market
values. From the fiscal year ended March 31, 2009, such bonds have been carried at their reasonably estimated amounts in accordance with the
“Practical Solution on Measurement of Fair Value of Financial Assets” (Accounting Standards Board of Japan Practical Issues Task Force No. 25). As
a result of this accounting change, compared with the former accounting method, “Securities,” “Net unrealized gains (losses) on other securities”
and “Minority interests” increased by ¥117,757 million, ¥67,741 million and ¥2,508 million, respectively, and “Deferred tax assets” decreased by
¥47,508 million.
SMFG 2009 25
3. Consolidated Capital Ratio
SMFG’s consolidated capital ratio as of March 31, 2009 was
11.47%, 0.91 percentage point higher than at March 31,
2008.
Total capital, which is the numerator in the capital ratio
calculation equation, amounted to ¥6,047.8 billion at fiscal
year-end, which was ¥617.7 billion lower than at the end of
the previous fiscal year. This was due chiefly to lower
retained earnings for the fiscal year following the reporting
Consolidated Capital Ratio
of a net loss, and greater net unrealized losses on other secu-
rities. Risk-adjusted assets, the denominator in the equation,
amounted to ¥52,726.5 billion, which was ¥10,390.8 bil-
lion lower than at the end of the previous fiscal year, owing
chiefly to implementation on March 31, 2009 of the
Advanced Internal Ratings-Based Approach for measure-
ment of credit risk-adjusted assets.
March 31
Tier I capital .....................................................................................................
Tier II capital included as qualifying capital .....................................................
Deductions.......................................................................................................
Total capital .....................................................................................................
Risk-adjusted assets .......................................................................................
2009 (A)
¥ 4,335,085
2,420,968
(708,241)
6,047,812
52,726,507
Millions of yen
2008 (B)
¥ 4,381,464
3,021,872
(737,792)
6,665,543
63,117,349
Increase (decrease)
(A) – (B)
¥ (46,379)
(600,904)
29,551
(617,731)
(10,390,842)
Consolidated capital ratio ................................................................................
Tier I capital ratio .............................................................................................
11.47%
8.22%
10.56%
6.94%
0.91%
1.28%
4. Dividend Policy
In view of the public nature of its business, SMFG has set a
fundamental policy of increasing dividends stably and con-
tinuously through sustainable growth in corporate value,
while enhancing the Group’s capital to maintain a sound
financial position. By the fiscal year ending March 31, 2010,
the final year of its “LEAD THE VALUE” medium-term
management plan, SMFG aims for a dividend payout ratio of
over 20% on a consolidated net income basis.
Despite this policy, SMFG regrets to announce that it
decided to pay a reduced annual dividend of ¥90 per share of
common stock for the fiscal year ended March 31, 2009, a
year-on-year decrease of ¥30, after taking into account a stock
split implemented in January 2009, and the net loss caused
by the turmoil in financial markets, plunging stock prices
and rapid deterioration in the global economy since 2008.
Annual dividends on preferred stocks were paid in the prede-
termined amounts for each category of preferred stock.
SMFG will employ its retained earnings to implement
strategic initiatives that will increase its corporate value.
These measures will be centered, first, on strengthening its
position in targeted growth business areas, and, second, on
fortifying the Group’s business platform for supporting sus-
tainable growth.
5. Deferred Tax Assets
During the fiscal year under review, net deferred tax assets,
which are deferred tax assets minus deferred tax liabilities,
decreased ¥103.1 billion from the end of the previous fiscal
year to ¥830.3 billion, due chiefly to adoption of a more
conservative approach to their recognition, including
tougher stress-testing regarding future profitability.
Deferred Tax Assets
March 31
Net deferred tax assets ...................................................................................
Net deferred tax assets / Tier I capital × 100 ...................................................
2009 (A)
¥830,370
19.2%
Millions of yen
2008 (B)
¥933,481
21.3%
Increase (decrease)
(A) – (B)
¥(103,111)
(2.1)%
26
SMFG 2009
Sumitomo Mitsui Banking Corporation (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
The following is a summary of SMBC’s nonconsolidated financial results for the fiscal year ended March 31, 2009.
1. Operating Results
Gross banking profit in fiscal 2008 increased ¥40 billion
from the previous fiscal year, to ¥1,524.8 billion, and
expenses (excluding nonrecurring losses) rose ¥36.3 billion,
to ¥701.4 billion. As a consequence, banking profit (before
provision for general reserve for possible loan losses)
expanded ¥3.6 billion, to ¥823.3 billion.
Ordinary profit, calculated by adjusting banking profit
(before provision for general reserve for possible loan losses)
for nonrecurring items, such as total credit cost and losses on
stocks, declined ¥474.6 billion, to ¥36 billion.
After adjustment of ordinary profit for extraordinary losses
and income taxes, SMBC posted a net loss of ¥301.1 billion,
representing a decline of ¥506.8 billion from the previous
fiscal year’s net income.
2. Income Analysis
Gross Banking Profit
Gross banking profit increased ¥40 billion over the previous
fiscal year, to ¥1,524.8 billion. The principal reasons for this
rise were an improvement in net interest income on better
net interest margins in overseas operations, and higher net
trading income due to trading operations taking advantage
of interest-rate trends in Japan and overseas and reduction of
sub-prime exposures.
Expenses
Expenses (excluding nonrecurring losses) increased ¥36.3
billion, to ¥701.4 billion, due chiefly to computer system
outlays for growth business areas and capital of investment
in premises and facilities to improve customer services.
Banking Profit
Banking profit (before provision for general reserve for possi-
ble loan losses) increased ¥3.6 billion from the previous fis-
cal year, to ¥823.3 billion.
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
possible loan losses and gains (losses) on bonds)].........................................
Provision for general reserve for possible loan losses ............................................
Banking profit ..........................................................................................................
2009 (A)
¥1,524,856
[1,147,202]
[377,654]
1,018,389
2,074
293,824
175,038
35,530
[1,498,728]
(701,479)
(236,966)
(426,231)
(38,282)
823,377
[797,248]
(75,730)
747,647
Banking Profit by Business Unit
Year ended March 31, 2009
Banking profit (before provision for
Billions of yen
Consumer Middle Market Corporate
International
Banking Unit Banking Unit Banking Unit Banking Unit
general reserve for possible loan losses) .................
¥138.7
Year-on-year increase (decrease) ..............................
(30.6)
¥317.1
(104.1)
¥165.2
¥110.2
9.6
28.7
Millions of yen
2008 (B)
¥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
[849,750]
—
819,691
Increase (decrease)
(A) – (B)
¥ 40,073
[(51,083)]
[91,157]
47,571
(1,636)
(38,538)
(265,947)
298,623
[(16,113)]
(36,388)
(25,285)
(12,914)
1,810
3,686
[(52,502)]
(75,730)
(72,044)
Treasury
Unit
¥228.9
101.1
Others
Total
¥(136.7)
¥823.3
(1.0)
3.6
Notes: 1. Year-on-year comparisons are those used for internal reporting and exclude changes due to interest rate and foreign exchange rate fluctuations.
2. “Others” consists of (1) 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, etc.
SMFG 2009 27
Nonrecurring Losses (Credit Cost, etc.)
Nonrecurring losses amounted to ¥711.5 billion, which was
¥402.6 billion more than for the previous fiscal year. The main
factors were poor business conditions at our customers due to
adverse economic trends at home and abroad, and an increase in
credit cost, of ¥319.3 billion to ¥474.3 billion, mainly for addi-
tional loan loss provisions for further economic deterioration.
Please note that total credit cost — which is the combined
total of credit cost of ¥474.3 billion recorded under
“Nonrecurring losses,” provision for general reserve for possi-
ble loan losses, and gains on the recoveries of written-off
claims — amounted to ¥550 billion, which was ¥402.3 billion
higher than in the previous fiscal year.
Ordinary Profit
As a result of the foregoing, ordinary profit totaled ¥36 billion,
¥474.6 billion lower than in the previous fiscal year.
Extraordinary Gains (Losses)
Net extraordinary losses amounted to ¥8.2 billion, which
represented an increase of ¥4.9 billion from the prior year.
Net Income (Loss)
Current income taxes amounted to ¥23.7 billion, and deferred
income taxes were ¥305.1 billion. As a result, SMBC posted a
net loss of ¥301.1 billion, a decrease of ¥506.8 billion from the
previous year’s net income.
Ordinary Profit and Net Income (Loss)
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 (losses) 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 ................................................................
Gains on reversal of reserve for possible loan losses (C)..................................
Gains on recoveries of written-off claims (D) .....................................................
Income taxes:
2009 (A)
¥ 823,377
(75,730)
747,647
(711,591)
(474,358)
(220,429)
7,066
(4,348)
(223,147)
(16,803)
36,055
(8,269)
(2,139)
(6,138)
—
8
Millions of yen
2008 (B)
¥ 819,691
—
Increase (decrease)
(A) – (B)
¥ 3,686
(75,730)
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
(72,044)
(402,639)
(319,347)
(79,427)
(19,652)
(2,037)
(57,738)
(3,866)
(474,684)
(4,985)
3,710
(1,438)
(7,238)
1
Current ...............................................................................................................
Deferred .............................................................................................................
(23,748)
(305,154)
Net income (loss) ....................................................................................................
¥(301,116)
(16,031)
(285,680)
¥ 205,742
(7,717)
(19,474)
¥(506,858)
Total credit cost (A) + (B) + (C) + (D) ......................................................................
¥(550,079)
¥(147,765)
¥(402,314)
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 recoveries of written-off claims ...........................................................
(75,730)
(231,412)
(182,346)
(60,182)
(417)
8
96,900
(121,801)
(91,603)
(33,209)
1,941
7
(172,630)
(109,611)
(90,743)
(26,973)
(2,358)
1
28
SMFG 2009
Net Assets
Net assets at fiscal year-end amounted to ¥2,546.4 billion. Of
this total, stockholders’ equity amounted to ¥2,532.2 billion,
consisting of ¥664.9 billion in capital stock, ¥1,367.5 billion
in capital surplus (including ¥702.5 billion in other capital
surplus), and ¥499.6 billion in retained earnings.
Valuation and translation adjustments were ¥14.2 billion,
which included ¥52.7 billion in net unrealized losses on other
securities, ¥45.3 billion in net deferred gains on hedges, and
¥21.6 billion in land revaluation excess.
3. Assets, Liabilities and Net Assets
Assets
SMBC’s assets as of March 31, 2009, totaled ¥107,478.2 bil-
lion, which was ¥7,445.1 billion higher than a year earlier.
The principal reasons for this rise were a ¥5,242.2 billion
increase in securities due to trading operations taking advan-
tage of interest-rate trends in Japan and overseas, and an
increase in loans outstanding of ¥3,283.4 billion due to our
proactive response to strong borrowing demand in Japan and
overseas.
Liabilities
Liabilities as of March 31, 2009, amounted to ¥104,931.7
billion, an increase of ¥8,391.9 billion from the previous fis-
cal year-end. This rise was primarily due to steady increases
in deposits and negotiable certificates of deposit.
Assets, Liabilities and Net Assets
March 31
Assets......................................................................................................................
Securities ...........................................................................................................
Loans and bills discounted.................................................................................
Liabilities..................................................................................................................
Deposits .............................................................................................................
Negotiable certificates of deposit .......................................................................
Net Assets ...............................................................................................................
2009 (A)
¥107,478,218
28,000,515
60,241,266
104,931,725
69,499,997
7,405,710
2,546,493
Millions of yen
2008 (B)
¥100,033,020
22,758,241
56,957,813
96,539,771
66,417,260
2,965,574
3,493,249
Increase (decrease)
(A) – (B)
¥7,445,198
5,242,274
3,283,453
8,391,954
3,082,737
4,440,136
(946,756)
SMFG 2009 29
4. Unrealized Gains (Losses) on Securities
Net unrealized losses on securities as of March 31, 2009
amounted to ¥18.6 billion, which represented a decrease of
¥792.4 billion from the gain at the previous fiscal year-end,
due mainly to greater unrealized losses on stocks. Net
unrealized losses on other securities, including “other money
held in trust,” which is directly debited to net assets,
increased by ¥798.6 billion from the previous year’s gains, to
¥42.9 billion.
Unrealized Gains (Losses) on Securities
2009
Millions of yen
March 31
Held-to-maturity securities....................
Stocks of subsidiaries and affiliates .....
Other securities ....................................
Stocks .............................................
Bonds ..............................................
Others .............................................
Other money held in trust .....................
Total
...................................................
Stocks .............................................
Bonds ..............................................
Others .............................................
Net unrealized
gains (losses)(A)
¥27,851
(3,536)
(42,701)
(16,545)
(1,241)
(24,914)
(262)
(18,649)
(20,082)
26,609
(25,176)
(A) – (B)
¥ 10,776
(4,590)
(798,450)
(952,869)
128,267
26,153
(233)
(792,498)
(957,460)
139,041
25,920
Unrealized
gains
¥ 28,155
—
337,535
273,058
16,910
47,566
—
365,691
273,058
45,066
47,566
Unrealized
losses
¥ 304
3,536
380,237
289,604
18,152
72,480
262
384,341
293,140
18,456
72,743
2008
Net unrealized
gains (losses)(B)
Unrealized
gains
¥ 17,075
1,054
755,749
936,324
(129,508)
(51,067)
(29)
773,849
937,378
(112,432)
(51,096)
¥ 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
¥ 1,298
13,831
275,029
56,341
145,087
73,600
29
290,188
70,172
146,385
73,630
Notes: 1. The figures above include unrealized gains (losses) on negotiable certificates of deposit in “Cash and due from banks” and “Deposits with banks” and
beneficiary claims on loan trust in “Monetary claims bought,” etc.
2. Unrealized gains (losses) on stocks (excluding stocks of subsidiaries and affiliates) (including foreign stocks) are calculated using the average mar-
ket price during the final month of the respective reporting period. The rest of the securities are valuated at the market price as of the balance sheet
date.
3. “Other securities” and “Other money held in trust” are valuated 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.
4. Floating-rate Japanese government bonds which SMBC held as “Other securities” had been carried on the balance sheet at market values. From the
fiscal year ended March 31, 2009, such bonds have been carried at their reasonably estimated amounts in accordance with the “Practical Solution
on Measurement of Fair Value of Financial Assets” (Accounting Standards Board of Japan Practical Issues Task Force No. 25). As a result of this
accounting change, compared with the former accounting method, “Securities” and “Net unrealized gains (losses) on other securities” increased by
¥113,203 million and ¥67,209 million, respectively, and “Deferred tax assets” decreased by ¥45,994 million.
30
SMFG 2009
Exposure of Securitized Products (Sumitomo Mitsui Financial Group (Consolidated))
The figures contained in this section have been compiled on a managerial accounting basis.
1. Securitized Products
As of March 31, 2009, securitized products after write-offs
and provisions (excluding Government Sponsored
Enterprises (“GSE”) etc.; likewise below) held by the Group
totaled ¥0.3 billion in sub-prime related assets and ¥36.6
billion in non-sub-prime exposures. In fiscal 2008, realized
losses on securitized products (write-offs and provisions)
totaled ¥4.6 billion including sub-prime exposures and ¥4.2
billion excluding sub-prime related assets.
Sub-prime Related Products
March 31, 2009
March 31, 2008
(Billions of yen)
Investments to securitized products
Warehousing Loans etc.
¥0.3
—
Balances
(after provisions Change from Overseas Change from gains/losses Change from (after provisions Overseas
and write-offs)
Net unrealized
Balances
and write-offs)
Mar. 2008
¥(4.6)
(0.6)
Mar. 2008 (after write-offs) Mar. 2008
¥—
¥(4.6)
¥—
(0.6)
—
—
¥0.3
—
¥4.9
0.6
¥4.9
0.6
Net unrealized Ratings of
underlying
gains/losses
(after write-offs) assets, etc.
¥— Speculative
ratings
—
Total
Notes: 1. Warehousing loans are loans made based on collateral consisting of securitized investment products held by a special-purpose company estab-
¥(5.2)
¥(5.2)
¥0.3
¥5.5
¥5.5
¥0.3
¥—
¥—
¥—
lished for the purpose of securitization.
2. Credit ratings are in principle indicated by the lower of Standard & Poor’s (“S&P”) ratings and Moody’s Investors Service (“Moody’s”) ratings.
Notation of credit ratings follows the notation system of S&P.
Products Other Than Sub-prime Related (Excludes GSE etc.)
March 31, 2009
March 31, 2008
(Billions of yen)
Balances
(after provisions Change from Overseas Change from gains/losses Change from (after provisions Overseas
and write-offs)
Net unrealized
Balances
and write-offs)
Net unrealized Ratings of
underlying
gains/losses
(after write-offs) assets, etc.
Mar. 2008 (after write-offs) Mar. 2008
¥0.2
¥ (8.4)
¥(0.4)
¥12.5
¥12.5
¥(0.6) BBB
Cards
CLO
Senior
Equity
CMBS
Investments to securitized products
Warehousing Loans etc.
¥ 4.1
5.1
5.0
0.1
20.8
30.0
6.6
Mar. 2008
¥ (8.4)
(18.8)
(17.0)
(1.8)
14.8
(12.4)
0.7
¥ 4.1
5.1
5.0
0.1
—
9.2
6.6
Total
Notes: 1. “Senior” means the upper tranche under senior-subordinate structure.
¥(11.7)
¥36.6
¥15.8
(18.8)
(17.0)
(1.8)
—
(27.2)
0.7
(1.1)
(1.1)
—
(0.2)
(1.7)
—
1.9
1.3
0.6
(0.2)
1.9
—
23.9
22.0
1.9
6.0
42.4
5.9
23.9
22.0
1.9
—
36.4
5.9
(3.0)
(2.4) AAA
(0.6) No ratings
0.0 AAA~BBB
(3.6)
—
¥(26.5)
¥(1.7)
¥1.9
¥48.3
¥42.3
¥(3.6)
2. Credit ratings are in principle indicated by the lower of S&P ratings and Moody’s ratings. Notation of credit ratings follows the notation system of S&P.
3. There is no amount of RMBS (excludes GSE etc.) and ABCP.
4. Excludes GSE etc. (see below) and SMBC’s exposure to subordinated beneficiaries owned through the securitization of SMBC’s loan receivables
(see next page).
Government Sponsored Enterprises (“GSE”) etc.
March 31, 2009
March 31, 2008
(Billions of yen)
Balances Change from Overseas Change from gains/losses Change from Balances
Mar. 2008
Mar. 2008
Mar. 2008
Net unrealized
Net unrealized Ratings, etc.
Overseas gains/losses
GSE etc.
Notes: 1. GSE etc. includes GNMA, FNMA and FHLMC.
¥275.2
¥55.4
¥275.2
¥55.4
¥3.1
¥4.7
¥219.8
¥219.8
¥(1.6) AAA
Besides RMBS, SMFG held bonds issued by GSEs (FNMA and Federal Home Loan Banks) of ¥3.3 billion.
2. Credit ratings are in principle indicated by the lower of S&P ratings and Moody’s ratings. Notation of credit ratings follows the notation system of S&P.
3. The amount of losses on sales related to GSE etc. in the fiscal year ended March 31, 2009 was ¥3.1 billion.
SMFG 2009 31
Subordinated Beneficiaries in Securitization of SMBC’s Loans
SMBC holds a part of its securitized loan receivables as
subordinated beneficiaries. As of March 31, 2009, SMBC
held approximately ¥260 billion in those subordinated
beneficiaries.
Most of the securitized assets are domestic residential
mortgage loans with low default rates. SMBC properly con-
ducts self-assessment and has made the necessary write-offs
and provisions for the subordinated beneficiaries. No sub-
sidiary other than SMBC has those subordinated beneficia-
ries mentioned above.
March 31, 2009
March 31, 2008
(Billions of yen)
Receivables of residential mortgage loans
¥250.8
Balances
Change from Overseas
Mar. 2008
¥5.3
¥—
Receivables of loans to corporations
7.1
(0.8)
—
Sub-prime
related
¥—
—
Total
¥—
Note: Reserves do not include general reserve for possible loan losses for normal borrowers.
¥257.9
¥4.5
¥—
Reserve for
possible loan Balances
losses
Overseas
Sub-prime
related
Reserve for
possible loan
losses
¥ —
1.5
¥1.5
¥245.5
7.9
¥253.4
¥—
—
¥—
¥—
—
¥—
¥ —
1.5
¥1.5
2. Transactions with Monoline Insurance Companies
Monoline insurance companies guarantee payment on under-
lying or reference assets. Our recognition of profit or loss on
the transactions with monoline insurance companies is basi-
cally affected by the credit conditions of monoline insurance
companies, after taking into account the credit conditions
and prices of underlying or reference assets.
As of March 31, 2009, the Group’s exposure** to monoline
insurance companies totaled approximately ¥130 billion.
Please note that reference assets of these CDS transactions
are rated investment grade or equivalent, and do not include
sub-prime related assets.
In fiscal 2008, realized losses totaled ¥4.6 billion.
Credit Derivatives (Credit Default Swap [CDS])
Transactions with Monoline Insurance Companies
In CDS* brokerage transactions, positions are covered
through transactions with monoline insurance companies.
* Derivatives used to hedge against credit risk
** Mark-to-market value claimable to monoline insurance companies for
net loss of reference assets on the settlement
March 31, 2009
March 31, 2008
March 31, 2009
March 31, 2008
Net
exposure
Reserve for
Change from possible loan
Mar. 2008
losses
Net
exposure
Reserve for
possible loan
losses
Amount of
reference Change from
Mar. 2008
assets
Amount of
reference
assets
¥132.0
¥100.9
¥5.0
¥31.1
¥1.9
¥536.7
¥(22.4)
¥559.1
(Billions of yen)
Exposure to CDS transactions with
monoline insurance companies
Loans and Investments Guaranteed by Monoline
Insurance Companies, etc.
As of March 31, 2009, the Group held approximately ¥12
billion of exposure in loans and investments guaranteed by
monoline insurance companies. Underlying assets include
those of project finance rated investment grade or equiva-
lent, and include no sub-prime related assets. We conduct
self-assessment on these loans and investments.
Loans and investments guaranteed or
insured by monoline insurance companies
March 31, 2009
March 31, 2008
Exposure
Reserve for
Change from possible loan Exposure
losses
Mar. 2008
Reserve for
possible loan
losses
(Billions of yen)
¥12.3
¥(29.4)
¥0.0
¥41.7
¥0.0
Reference: In addition, we had ¥1.5 billion in commitment contracts (undrawn) to insurance companies with
monoline insurance as group members.
32
SMFG 2009
3. Leveraged Loans
As of March 31, 2009, the Group’s balance of financing for
mergers and acquisitions of whole or part of companies was
approximately ¥740 billion and undrawn commitments for
them was approximately ¥140 billion.
In providing loans and commitment lines for mergers and
acquisitions, we carefully scrutinize stability of cash flow of
the borrowers, and, diversify the exposure especially for over-
seas portfolio in order to reduce concentration risk. At the
same time, in credit risk management, we monitor each of
such transactions individually, making loss provisions as
needed, thereby maintaining the quality of both domestic
and overseas portfolios.
(Billions of yen)
Europe
Japan
United States
Asia (excluding Japan)
Total
March 31, 2009
March 31, 2008
Loans
Change from
Mar. 2008
Undrawn
commitments
¥306.0
¥(19.4)
¥ 34.2
179.9
179.0
78.8
(52.4)
(16.4)
(10.8)
29.2
70.0
3.9
Reserve for
Change from possible loan
Mar. 2008
losses
Loans
Undrawn
commitments
Reserve for
possible loan
losses
¥23.2
11.3
(11.2)
(4.1)
¥ 2.8
¥325.4
¥ 11.0
13.4
4.1
2.3
232.3
195.4
89.6
17.9
81.2
8.0
¥ —
13.7
1.3
0.5
¥743.7
¥(99.0)
¥137.3
¥19.2
¥22.6
¥842.7
¥118.1
¥15.5
Notes: 1. Above figures include the amount to be sold of approximately ¥9 billion.
In the fiscal year ended March 31, 2009, we sold leveraged loans of approximately ¥90 billion, and loss on the sale amounted to approximately ¥20
billion.
2. Above figures do not include leveraged loans which are included in underlying assets of “1. Securitized Products.”
3. Reserves do not include general reserve for possible loan losses for normal borrowers.
4. Asset Backed Commercial Paper (“ABCP”) Programs as Sponsor
To fulfill clients’ financing needs, the Group sponsors
issuance of ABCPs, whose reference assets include particular
clients’ receivables or other claims. Specifically, as a sponsor,
we provide services to special purpose vehicles, which are set
up for clients’ financing needs, for purchase of claims,
financing, issuance and sales of ABCPs. We also provide liq-
uidity and credit supports for such special purpose vehicles.
As of March 31, 2009, the total notional amount of refer-
ence assets of sponsored ABCP programs was approximately
¥710 billion. Most of the reference assets are high-grade
claims of corporate clients and do not include sub-prime loan
related assets. In addition, regarding the exposure of liquidity
and credit supports, we properly conduct self-assessment,
making appropriate provisions and write-offs as needed.
March 31, 2009
March 31, 2008
Support for programs
(Billions of yen)
Types of reference assets
Claims on corporations
Claims on financial institutions
Retail loan claims
Other claims
Total
Notional
Reserve for
amount of
reference Change from Overseas Change from possible
loan losses
assets
¥659.9 ¥(168.7) ¥212.3
¥20.0
Mar. 2008
Mar. 2008
assets
¥— ¥828.6
Notional
amount of
reference Overseas
¥192.3
¥0.1
yes
Reserve for
possible
loan losses
Liquidity
support
Credit
support
—
19.7
28.4
0.6
(65.4)
(20.4)
3.3
(1.5)
—
19.7
28.4
0.6
—
(20.4)
3.3
(1.5)
—
—
—
—
65.4
40.1
25.1
2.1
—
40.1
25.1
2.1
no
—
— yes
— yes
— yes
¥708.6 ¥(252.7) ¥261.0
¥ 1.4
¥— ¥961.3
¥259.6
¥0.1
yes
no
yes
yes
yes
Note: Reserves do not include general reserve for possible loan losses for normal borrowers.
Reference: In addition, we provide liquidity and credit supports for ABCP programs which are sponsored by other banks.
Total notional amount of reference assets of such programs is approximately ¥100 billion.
5. Others
We have no securities issued by structured investment vehicles.
SMFG 2009 33
Risk Management
Basic Approach
As risks in the financial services increase in diversity and com-
(2) Fundamental Principles and Basic Policies for Risk
Management
plexity, risk management—identifying, measuring, and controlling
SMFG’s Groupwide basic policies for risk management stipulate
risk—has never been more important in the management of a
the fundamental principles for risk management that must be fol-
financial holding company.
lowed, and spell out risk management procedures from various
SMFG has encapsulated the basic principles to be employed
perspectives. These include managing risk on a consolidated
in risk management in the manual entitled Regulations on Risk
accounting basis, managing risk using quantification methods,
Management. In the manual, we have specified the basic policies
ensuring consistency with business strategies, setting up a sys-
for risk management: 1) Set forth SMFG’s Groupwide basic poli-
tem of checks and balances, contingency planning for emergen-
cies for risk management after specifying the categories of risk to
cies and serious situations, and verifying preparedness to handle
which these policies apply; 2) Provide all necessary guidance to
all conceivable risk situations. In addition, there are specific
Group companies to enable them to follow the basic risk manage-
operational policies for implementing appropriate management
ment policies set forth by SMFG and set up their own appropriate
of risk by all Group companies.
risk management systems; and 3) Monitor the implementation of
Under SMFG’s Groupwide basic policies for risk manage-
risk management by all Group companies to ensure that their
ment, all Group companies periodically carry out reviews of the
basic management policies for each risk category, or whenever
deemed necessary, thus ensuring that the policies followed at
any time are the most appropriate. The management of SMFG
constantly monitors the conduct of risk management at Group
companies, providing guidance when necessary.
practices meet the relevant standards.
(1) Types of Risk to Be Managed
At SMFG, we classify risk into the following categories: (1) credit
risk, (2) market risk, (3) liquidity risk and (4) operational risk
(including processing risk and systems risk). In addition, we pro-
vide individually tailored guidance to help Group companies
identify categories of risk that need to be addressed. Risk cate-
gories are constantly reviewed, and new categories may be
added in response to changes in the operating environment. The
Corporate Risk Management Depar tment works with the
Corporate Planning Department to comprehensively and system-
atically manage all these categories of risk across the entire
Group.
n SMFG’s Risk Management System
SMFG
Board of Directors
Corporate Auditors
Management Committee
External Audit
Designated Board Members
Audit Dept.
Guidance for
drafting of basic
policies
Monitoring
Corporate Risk
Management
Dept.
Credit Risk
Market Risk
Liquidity Risk
Operational Risk
Corporate-wide
Risk Management
Corporate Planning Dept./
Corporate Risk
Management Dept.
Report
General Affairs Dept.
Processing Risk
IT Planning Dept.
Systems Risk
34
SMFG 2009
Board of Directors
Management
Committee
Credit Risk
Management Committee
Market Risk
Management Committee
Corporate Auditors
External Audit
Designated
Board Members
Board Member in Charge of Risk Management Unit
Internal Audit Unit
Credit & Investment
Planning Dept.
Credit Risk
Risk
Manage-
ment Unit
Corporate Risk
Management
Dept.
Market Risk
Liquidity Risk
Operational Risk
Settle-
ment
Risk
Bank-wide
Risk Management
Corporate Planning
Dept./Corporate Risk
Management Dept.
Operations Planning Dept.
Processing Risk
IT Planning Dept.
Systems Risk
Other Departments
Other Risks
SMBC
SMFG
Card & Credit
Sumitomo
Mitsui Card
Sumitomo
Mitsui
Finance &
Leasing
Japan
Research
Institute
SMBC
Friend
Securities
Risk Management System
Top management plays an active role in determining SMFG’s
Furthermore, under our system top management plays an
active role in the approval of basic policies for risk management.
Groupwide basic policies for risk management. The system
The decision-making process for addressing credit, market, and
works as follows: The basic policies for risk management are
liquidity risk at the operating level is strengthened by the Credit
determined by the Management Committee before being autho-
Risk Management Committee and the Market Risk Management
rized by the Board. The Management Committee, the designated
Committee, which are subcommittees of the Management
board members, and the relevant risk management departments
Committee. The Management Committee is also attended by the
perform risk management according to the basic policies.
relevant department heads.
Risk management systems are in place at the individual
Group companies in accordance with SMFG’s Groupwide basic
policies for risk management. For example, at SMBC, specific
departments have been appointed to oversee the handling of the
four risk categories listed above, in addition to risks associated
with settlement. Each risk category is managed taking into
account the particular characteristics of that category. In
addition, the Risk Management Unit has been established—
independent of the business units—and the risk management
framework has been strengthened by consolidating the functions
for managing major risks—credit, market, liquidity and opera-
tional—into the Risk Management Unit and enhancing our
across-the-board risk monitoring ability. A board member is
assigned to oversee the Risk Management Unit comprising the
Corporate Risk Management Depar tment and Credit &
Investment Planning Depar tment. The Corporate Risk
Management Department—the unit’s planning department—
comprehensively and systematically manages all categories of
risk in cooperation with the Corporate Planning Department.
Moreover, the Internal Audit Unit—independent of all business
units—conducts periodic audits to ensure that the management
system is functioning properly.
n Risk Management Framework
Risk Capital-Based Management
(1) Framework
In order to maintain a balance between risk and return as well as
ensure the soundness of the Group from an overall perspective,
we employ the risk capital-based management method. We mea-
sure “risk capital” based on value at risk (VaR), etc. as a uniform
basic measure of credit, market, and operational risk, taking
account of the special characteristics of each type of risk and the
business activities of each Group company. We then allocate
capital appropriately and effectively to each unit to keep total
exposure to various risks within the scope of our resources, i.e.,
capital. In this framework, risk capital includes credit concentra-
tion risk and interest rate risk in the banking book which are taken
into account under the Second Pillar of Basel II. In addition, we
conduct capital risk-based management activities on a consoli-
dated basis, including each Group company.
Liquidity risk is managed within the context of cash-flow
plans and funding gap. Other risk categories are managed with
procedures closely attuned to the nature of the risk, as described
in the following paragraphs.
Framework
Risk Category
Credit Risk
Credit risk is the possibility of a loss arising from a credit event, such as deterioration in the financial condition of
a borrower, that causes an asset (including off-balance sheet transactions) to lose value or become worthless.
Market
Risk
Risk
Capital-Based
Management
Banking Risk/Trading Risk
Strategic Equity Investment Risk
Market risk is the possibility that fluctuations in interest rates, foreign exchange rates, or stock
prices will change the market value of financial products, leading to a loss.
Other Market-Related Risks
Operational Risk
Processing Risk
Systems Risk
Operational risk is the possibility of losses arising from inadequate or failed internal
processes, people, and systems or from external events.
Processing risk is the possibility of losses arising from negligent processing by
employees, accidents, or unauthorized activities.
Systems risk is the possibility of a loss arising from the failure, malfunction, or
unauthorized use of computer systems.
ALM/
Funding Gap
Liquidity Risk
Liquidity risk is the risk that there may be difficulties in raising funds needed for settlements,
as a result of the mismatching or uses of funds and sources of funds or unexpected outflows
of funds, circumstances that may make it necessary to raise funds at higher rates than normal.
Management
by Risk Type
Other Risks
(Settlement Risk and Others)
—
SMFG 2009 35
(2) Risk Capital Limit
In the case of credit and market risk, we set maximum risk capital
credit risk of individual loans and credit portfolios quantitatively
and using consistent standards.
limits, which indicate the maximum risk that may be taken during
Credit risk is the most significant risk to which SMFG is
the period, taking account the level of stress stipulated in busi-
exposed. Without effective credit risk management, the impact of
ness plans. In addition, for operational risk, we also allocate risk
the corresponding losses on operations can be overwhelming.
capital, and, for the Group as a whole, we set total risk capital
The purpose of credit risk management is to keep credit risk
allocations within SMFG’s capital. In the case of credit and mar-
exposure to a permissible level relative to capital, to maintain the
ket risk, risk capital limits are sub-divided into guidelines or ceil-
soundness of Groupwide assets, and to ensure returns commen-
ings for each business including VaR and loss limits. Therefore,
surate with risk. This leads to a loan portfolio that achieves high
by strictly observing the VaR and loss limits, and other factors,
returns on capital and assets.
SMFG maintains the soundness of the Group as a whole.
Implementation of Basel II
The Basel Capital Accord, an international agreement for ensur-
ing the soundness of banks through adherence to BIS capital
(3) Credit Policy
SMBC’s credit policy comprises clearly stated universal and
basic operating concepts, policies, and standards for credit
operations, in accordance with the business mission and rules of
adequacy regulations, was revised in response to the diversifica-
conduct.
tion of the banking business and the increasing sophistication of
SMBC is promoting the understanding of and strict adher-
risk management technology. The revised BIS regulations, known
ence to its credit policy among all its managers and employees.
as Basel II, became effective from March 31, 2007 in Japan.
By conducting risk-sensitive credit management, SMBC aims to
Basel II requires banks to implement internal controls to
enhance shareholder value and play a key part in society by pro-
serve as the basis for capital calculation, and to strengthen their
viding high-value-added financial services.
risk management framework. It also requires disclosure of infor-
mation to encourage market discipline in risk management.
We have been implementing initiatives to strengthen our risk
management framework, taking into account Basel II and other
considerations. At March 31, 2009, we introduced the advanced
internal ratings-based (IRB) approach in Basel II.
Details of the initiatives are provided below, and detailed
information on the capital ratio is provided in the discussion on
Capital Ratio Information appearing in the Financial Section and
Corporate Data.
Credit Risk
1. Basic Approach to Credit Risk Management
(1) Definition of Credit Risk
Credit risk is the possibility of a loss arising from a credit event,
such as deterioration in the financial condition of a borrower, that
causes an asset (including off-balance sheet transactions) to
lose value or become worthless.
Overseas credits also include an element of country risk,
which is closely related to credit risk. This is the risk of loss
caused by changes in foreign exchange, or political or economic
situations.
(2) Fundamental Principles for Credit Risk Management
All Group companies follow the fundamental principles estab-
lished by SMFG to assess and manage credit risk on a
Groupwide basis and further raise the level of accuracy and
comprehensiveness of Groupwide credit risk management. Each
Group company must comprehensively manage credit risk
according to the nature of its business, and assess and manage
36
SMFG 2009
2. Credit Risk Management System
At SMBC, the Credit & Investment Planning Department within the
Risk Management Unit is responsible for the comprehensive man-
agement of credit risk. This department drafts and administers
credit policies, the internal rating system, credit authority guide-
lines, and credit application guidelines, and manages non-
performing loans (NPLs) and other aspects of credit portfolio
management. The department also cooperates with the Corporate
Risk Management Department in quantifying credit risk (risk capi-
tal and risk-weighted assets) and controls the bank’s entire credit
risk. Further, the Credit Portfolio Management Department within
the Credit & Investment Planning Department has been strength-
ening 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.
The Corporate Research Department within the Corporate
Services Unit performs research on industries as well as investi-
gates the business situations of borrower enterprises to detect
early signs of problems or growth potential. The Credit
Administration Department is responsible for handling NPLs of
borrowers classified as potentially bankrupt or lower, and draws
up plans for their workouts, including write-offs, and corporate
rehabilitation. The department closely liaises with the Group com-
pany SMBC Servicer Co., Ltd., which engages in related ser-
vices, and works to efficiently reduce the amount of NPLs by
such means as the sell-off of claims.
The credit departments within each business unit conduct credit
risk management along with branches, for loans handled by their
units and manage their units’ portfolios. The credit limits they use are
based on the baseline amounts established for each grading cate-
gory, with particular attention paid to evaluating and managing cus-
tomers or loans perceived to have particularly high credit risk.
Committee.
The Internal Audit Unit, operating independently of the busi-
SMBC has established the Credit Risk Committee, as a con-
ness units, audits asset quality, accuracy of gradings and self-
sultative body, to round out its oversight system for undertaking
assessment, and state of credit risk management, and reports
flexible and efficient control of credit risk, and ensuring the over-
the results directly to the Board of Directors and the Management
all soundness of the bank’s loan operations.
n SMBC’s Credit Risk Management System
Board of Directors
Corporate Auditors
Management Committee
External Audit (Auditing Firm)
Risk Management Unit
Corporate Risk Management Dept.
•Aggregates risk for comprehensive management
•Plans and proposes risk quantification methods
Credit & Investment Planning Dept.
•Aggregates credit risk for unified management
•Plans and proposes basic credit policies
•Drafts, administers, and examines internal rating system
Credit Portfolio Management Dept.
•Undertakes active portfolio management
Internal Audit Unit
Internal Audit Dept.
•Audits credit risk management
Credit Review Dept.
•Audits self-assessments, grading (obligors and facilities), and
effectiveness of write-offs and reserves
Corporate Services Unit
Corporate Research Dept.
•Industry trend research
•Credit assessment of major industry players
Credit Administration Dept.
•Manages problem assets (plans, implements corporate rehabilitation
program, sells off the revitalized company)
Business Units
Consumer Banking Unit
Middle Market Banking Unit
Corporate Banking Unit
International Banking Unit
Investment Banking Unit
Credit
Dept.
Credit Dept.
Credit Dept.
I & II
Credit Dept.
Credit for Individuals
Small-and Medium-Sized Entity
Large Domestic Corporations
Credit Dept., Americas Div.
Credit Dept., Europe Div.
Asia Credit Dept.
Credit Management Dept.
Overseas Corporations
Structured Finance
Structured Finance Credit Dept.
Domestic Structured Finance
3. Credit Risk Management Methods
(1) Credit Risk Assessment and Quantification
At SMBC, to effectively manage the risk involved in individual
loans as well as the credit portfolio as a whole, we first acknowl-
edge that every loan entails credit risks, assess the credit risk
posed by each borrower and loan using an internal rating sys-
tem, and quantify that risk for control purposes.
(a) Internal Rating System
There is an internal rating system for each asset control category
set according to portfolio characteristics. For example, credits to
commercial and industrial (C&I) companies, individuals for busi-
ness purposes (domestic only), sovereigns, public-sector enti-
ties, and financial institutions are assigned an “obligor grade,”
which indicates the borrower’s creditworthiness, and/or “facility
grade,” which indicates the collectibility of assets taking into
account transaction conditions such as guarantee/collateral, and
tenor. An obligor grade is determined by first assigning a
financial grade using a financial strength grading model and
data obtained from the obligor’s financial statements. The finan-
cial grade is then adjusted taking into account the actual state of
the obligor’s balance sheet and qualitative factors to derive the
obligor grade. In the event that the borrower is domiciled over-
seas, internal ratings for credit are made after taking into consid-
eration country rank, which represents an assessment of the
credit quality of each country, based on its political and eco-
nomic situation, as well as its current account balance and exter-
nal debt. Self-assessment is the obligor grading process for
assigning lower grades, and the borrower categories used in
self-assessment are consistent with the obligor grade categories.
Obligor grades and facility grades are reviewed once a year,
and, whenever necessary, such as when there are changes in
the credit situation.
There are also grading systems for small-and medium-sized
entity (SME) loans, loans to individuals, and project finance and
other structured finance tailored according to the risk
SMFG 2009 37
characteristics of these types of assets.
Risk quantification is also executed for purposes such as to
The Credit & Investment Planning Department centrally man-
determine the portfolio’s risk concentration, or to simulate eco-
ages the internal rating systems, and properly designs, operates,
nomic movements (stress tests), and the results are used for
supervises, and validates the grading models. It validates the
making optimal decisions across the whole range of business
grading models (including statistical validation) of main assets
operations, including formulating business plans and providing a
following the procedures manual once a year, to ensure their
standard against which individual credit applications are
effectiveness and suitability.
assessed.
(b) Quantification of Credit Risk
Credit risk quantification refers to the process of estimating the
degree of credit risk of a portfolio or individual loan taking into
(2) Framework for Managing Individual Loans
(a) Credit Assessment
At SMBC, credit assessment of corporate loans involves a variety
account not just the obligor’s probability of default (PD), but also
of financial analyses, including cash flow, to predict an enter-
the concentration of risk in a specific customer or industry and
prise’s capability of loan repayment and its growth prospects.
the loss impact of fluctuations in the value of collateral, such as
real estate and securities.
These quantitative measures, when combined with qualitative
analyses of industrial trends, the enterprise’s R&D capabilities,
Specifically, first, the PD by grade, loss given default (LGD),
the competitiveness of its products or services, and its manage-
credit quality correlation among obligors, and other parameter
ment caliber, result in a comprehensive credit assessment. The
values are estimated using historical data of obligors and facili-
loan application is analyzed in terms of the intended utilization of
ties stored in a database to calculate the credit risk. Then, based
the funds and the repayment schedule. Thus, SMBC is able to
on these parameters, we run a simulation of 10,000 iterations of
arrive at an accurate and fair credit decision based on an objec-
simultaneous default using the Monte Carlo method to calculate
tive examination of all relevant factors.
our maximum loss exposure to the estimated amount of the maxi-
Increasing the understandability to customers of loan condi-
mum losses that may be incurred. Based on these quantitative
tions and approval standards for specific borrowing purposes
results, we allocate risk capital. Please note that the PD and LGD
and loan categories is a part of SMBC’s ongoing review of lend-
values are, in principle, the same values as those used for calcu-
ing practices, which includes the revision of loan contract forms
lating the capital ratio.
with the chief aim of clarifying lending conditions utilizing finan-
n SMBC’s Obligor Grading System
cial covenants.
SMBC is also making steady progress in rationalizing its
Obligor Grade
Domestic
Overseas
(C&I), etc.
(C&I), etc.
Definition
J1
G1
Very high certainty of debt repayment
J2
G2
High certainty of debt repayment
J3
G3
Satisfactory certainty of debt repayment
J4
G4
Debt repayment is likely but this could change in cases of
significant changes in economic trends or business
environment
J5
G5
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
J6
G6
Currently no problem with debt repayment, but there are
unstable business and financial factors that could lead to debt
repayment problems
Borrower
Category
Financial Reconstruction
Law Based Disclosure
Category
(Domestic)
Normal
Borrowers
Normal Assets
J7
G7
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
Substandard Loans
J8
G8
Currently not bankrupt, but experiencing business difficulties,
making insufficient progress in restructuring, and highly
likely to go bankrupt
J9
G9
Though not yet legally or formally bankrupt, has serious
business difficulties and rehabilitation is unlikely; thus,
effectively bankrupt
J10
G10
Legally or formally bankrupt
Potentially
Bankrupt
Borrowers
Effectively
Bankrupt
Borrowers
Bankrupt
Borrowers
Doubtful Assets
Bankrupt and
Quasi-Bankrupt
Assets
credit assessment process. To respond proac-
tively and promptly to customers’ funding
needs—par ticularly those of SMEs—we
employ a standardized credit risk assessment
process for SMEs that uses a credit-scoring
model. With this process, we are building a
regime for efficiently marketing our Business
Select Loan and other SME loans.
In the field of housing loans for individuals,
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 apartments. The loan
applications are subjected to a precise credit
risk assessment process utilizing a risk assess-
ment model that factors in the projected
38
SMFG 2009
revenue from the rental business. The process is also used to
provide advice to such customers on how to revise their business
(b) Controlling Concentration Risk
Because the concentration of credit risk in an industry or corpo-
plans.
(b) Credit Monitoring System
At SMBC, in addition to analyzing loans at the application stage,
the Credit Monitoring System is utilized to reassess obligor
grades and review self-assessment and credit policies so that
problems can be detected at an early stage, and quick and
effective action can be taken. The system includes periodic mon-
rate group has the potential to substantially impair capital, SMBC
implements measures to prevent the excessive concentration of
loans in an industry and to control large exposure to individual
companies or corporate groups by setting guidelines for maxi-
mum loan amounts.
To manage country risk, SMBC also has credit limit guide-
lines based on each country’s creditworthiness.
itoring carried out each time an obligor enterprise discloses
(c) Researching Borrowers More Rigorously and Balancing Risk
financial results, as well as continuous monitoring performed
and Returns
each time credit conditions change, as indicated in the diagram
Against a backdrop of drastic change in the business environ-
below.
(3) Framework for Credit Portfolio Management
In addition to managing individual loans, SMBC applies the fol-
lowing basic policies to the management of the entire credit port-
folio to maintain and improve its soundness and profitability over
the mid to long term.
(a) Risk-Taking within the Scope of Capital
To keep credit risk exposure to a permissible level relative to cap-
ital, SMBC sets credit risk capital limits for internal control pur-
poses. Under these limits, separate guidelines are issued for
each business unit and marketing unit, such as for real estate
ment, SMBC rigorously researches borrower companies’ actual
conditions. It runs credit operations on the basic principle of
earning returns that are commensurate with the credit risk
involved, and makes every effort to reduce credit and capital
costs as well as general and administrative expenses.
(d) Prevention and Reduction of Non-Performing Loans
On NPLs and potential NPLs, SMBC carries out regular loan
reviews to clarify handling policies and action plans, enabling it
to swiftly implement measures to prevent deterioration of borrow-
ers’ business situations, support business recoveries, collect on
loans, and enhance loan security.
finance, fund investment, and investment in securitization prod-
ucts. Regular monitoring is conducted to make sure that these
(e) Toward Active Portfolio Management
SMBC makes active use of credit derivatives, loan asset sales,
guidelines are being followed, thus ensuring appropriate overall
and other instruments to proactively and flexibly manage its port-
management of credit risk.
folio to stabilize credit risk.
n SMBC’s Credit Monitoring System
Obligor Information
Processing
Flow of Obligor Grading/Grading Outlook/Credit Policies/Action Plans/Facility Grading Assignment
Registration
of Financial
Statements/
Creation and
Revision of
Corporate
Card
Nonconsoli-
dated
Financial
Grade
Consolidated
Financial
Grade
Effective
Financial
Grade
Flagging
According to
Self-
Assessment
Criteria
Not Flagged
Self-Assessment
Logic
Quantitative
Assessment
Financial
Assessment
Credit Status
Qualitative
Assessment
Flagged
Normal
Borrowers
Borrowers
Requiring
Caution
Potentially
Bankrupt
Borrowers
Effectively
Bankrupt
Borrowers
Bankrupt
Borrowers
Grading Outlook Assessment
Performance
Trends
+
Qualitative
Risk
Factors
Final
Obligor
Grade
•Positive
•Flat
•Negative
Determination of
Credit Policies
Credit Policy Segment
Policy for Handling
Each Individual
Company
Action Plan Formulation
Restructuring
Feasibility
Basic
Approach
Specific
Action Plan
Facility Grading Assignment
SMFG 2009 39
(4) Self-Assessment, Asset Write-Offs and Provisions,
deemed uncollectible, referred to as an indirect write-off.
and Disclosure of Problem Assets
Recognition of indirect write-offs is generally known as provision
(a) Self-Assessment
SMBC conducts rigorous self-assessment of asset quality using
for the reserve for possible loan losses.
SMBC’s write-off and provision criteria for each self-assess-
criteria based on the Financial Inspection Manual of the Financial
ment borrower category are shown in the table below. As part of
Services Agency and the Practical Guideline published by the
our overall measures to strengthen risk management throughout
Japanese Institute of Certified Public Accountants. Self-assess-
the Group, all consolidated subsidiaries use substantially the
ment is the latter stage of the obligor grading process for deter-
same standards as SMBC for write-offs and provisions.
mining the borrower’s ability to fulfill debt obligations, and the
obligor grade criteria are consistent with the categories used in
self-assessment.
At the same time, self-assessment is a preparatory task for
Self-Assessment
Borrower Categories
Standards for Write-Offs and Provisions
ensuring SMBC’s asset quality and calculating the appropriate
Normal Borrowers
level of write-offs and provisions. Each asset is assessed individ-
ually for its security and collectibility. Depending on the bor-
rower’s current situation, the borrower is assigned to one of five
categories: Normal Borrowers, Borrowers Requiring Caution,
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 lev-
els, taking into account such factors as collateral and guaran-
tees. As part of our efforts to bolster risk management throughout
the Group, our consolidated subsidiaries carry out self-assess-
ment in substantially the same manner.
Borrower Categories, Defined
Normal Borrowers
Borrowers with good earnings performances and no significant
financial problems
Borrowers Requiring Caution
Borrowers identified for close monitoring
Potentially Bankrupt Borrowers
Borrowers perceived to have a high risk of falling into bank-
ruptcy
Effectively Bankrupt Borrowers
Borrowers that may not have legally or formally declared bank-
ruptcy but are essentially bankrupt
Notes
Bankrupt Borrowers
Borrowers that have been legally or formally declared bankrupt
Borrowers Requiring Caution
Potentially Bankrupt Borrowers
Effectively Bankrupt/ Bankrupt
Borrowers
General reserve
Specific reserve
The expected loss amount for the next 12 months is calculated
for each grade based on the grade’s historical 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 provisions for the gen-
eral 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 further sub-
divided according to the borrower’s financial position, credit
situation, and other factors. Further, when cash flows can be
estimated reasonably accurately, the discounted 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 calculating 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.
Provisions made in accordance with general inherent default
risk of loans, unrelated to specific individual loans or other
claims
Provisions made for claims that have been found uncollectible
in part or in total (individually evaluated claims)
Asset Classifications, Defined
Classification I
Classification II
Classification III
Assets not classified under Classifications II, III, or IV
Assets perceived to have an above-average risk of
uncollectibility
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 offset-
ting 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
40
SMFG 2009
Discounted Cash Flow Method
SMBC uses the discounted cash flow (DCF) method to calculate
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 interest
rate or the effective interest rate at the time of origination. One of
the major advantages of the DCF method over conventional
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 reconstruction plan and the
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
2. Market and Liquidity Risk Management System
On the basis of SMFG’s Groupwide basic policies for risk man-
either principal or interest appears doubtful, and are disclosed in
agement, SMBC’s Board of Directors authorizes important mat-
accordance with the Banking Law (in which they are referred to
ters relating to the management of market and liquidity risks,
as “risk-monitored loans”) and the Financial Reconstruction Law
such as basic policies and risk limits, which are decided by the
(where they are referred to as “problem assets”). Problem assets
Management Committee. Additionally, the SMBC’s Corporate
are classified based on the borrower categories assigned during
Risk Management Department, which is independent of business
self-assessment. For detailed information on results of self-
units that directly handle market transactions, manages market
assessments, asset write-offs and provisions, and disclosure of
and liquidity risks in an integrated manner. The department not
problem assets at March 31, 2009, please refer to page 153.
only monitors the current risk situations, but also reports regularly
4. Market Credit Risk Management
Financial products, such as funds, securitized products, and
credit derivatives, that have indirect risk arising from the assets
underlying these products, such as bonds, loan obligations, and
other assets (the underlying assets), are recognized as transac-
tions that combine the characteristics of the credit risk of the
underlying assets and “market risk” that arises from the buying
and selling of these products. This is referred to as market credit
risk.
For these types of products, we manage credit risk using the
methods of analysis and assessment in detail of characteristics
of underlying assets, but, for the sake of complete risk manage-
ment, we also apply the methods for management of market risk
described in the following section “Market and Liquidity Risks.”
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
Management
(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 quan-
titative 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.
to the Management Committee and the Board of Directors.
Furthermore, 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
SMBC’s ALM policies.
To prevent unforeseen processing errors as well as fraudu-
lent transactions, it is important to establish a system of checks
on the business units (front office). At SMBC, both the processing
departments (back office) and the administrative departments
n SMBC’s Market Risk and Liquidity Risk Management
System
Board of Directors
Market
Risk
Manage-
ment
Management Committee
Market Risk Management Committee
ALM Committee
Board Member in Charge of
Risk Management Unit
Policy
Reporting
Liquidity
Risk
Manage-
ment
Corporate
Auditors
External
Audit
(auditing firm)
Internal
Audit Dept.
Back Office
(Back offices of Japan
and overseas branches)
Middle Office
(Corporate Risk Management Dept.)
Inspection and verification
of transactions
Model and new products approval,
Final approval, Management
Managing Dept.s
Other market-
related
operations
Market
operations
(Treasury Unit)
Market
operations
(International
Banking Unit)
Market
operations
(Group companies)
Front Office
Front/Back/Middle Offices
SMFG 2009 41
(middle office) conduct the checks. In addition, SMBC’s indepen-
maximum losses that may occur (This is known as the historical
dent Internal Audit Unit periodically performs comprehensive
simulation method). This internal SMBC model is evaluated
internal audits to verify that the risk management system is func-
periodically by an independent auditing firm to assess its
tioning properly.
appropriateness and accuracy.
3. Market and Liquidity Risk Management Methods
(1) Market Risk Management
SMBC manages market risk by setting maximum limits for “VaR”
and maximum loss. These limits are set within the “market risk
capital limit” which is determined taking into account the bank’s
shareholders’ equity and other principal indicators of the bank’s
financial position and management resources.
Market risk can be divided into various factors: foreign
exchange rate, interest rate, equity price, and option risks.
Finetuned 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 withdrawn at any time) and the method for estimating the
time of cancellation prior to maturity of time deposits and con-
sumer loans differ substantially. At SMBC, the maturity of demand
deposits that are expected to be left with the bank for a pro-
longed period is regarded to be five years (2.5 years on aver-
age). The cancellation prior to maturity of time deposits and
consumer loans is estimated based on historical data.
(a) VaR Results
The results of VaR calculations for fiscal 2008 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
(b) Back-Testing Results
The relationship between the VaR calculated with the model and
the actual profit and loss data is back-tested daily. The back-test-
ing results for SMBC’s trading accounts for fiscal 2008 are shown
below. A data point below the diagonal line indicates a loss in
excess of the predicted VaR for that day; however, as in fiscal
2007, there were no such excess losses during fiscal 2008. This
demonstrates that the SMBC VaR model, with a one-sided confi-
dence interval of 99.0%, is sufficiently reliable.
Glossary
1. VaR (Value at risk)
The largest predicted loss that is possible given a fixed con-
fidence 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 fluctua-
tions 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 advan-
tage of short-term fluctuations in market values and differ-
ences in value among markets.
4. Banking
A market operation for generating profit through manage-
ment of interest rates, terms, and other aspects of assets
(loans, bonds, etc.) and liabilities (deposits, etc.).
n VaR Results
June 2008
Sept. 2008
Dec. 2008
Mar. 2009
Maximum
Minimum
Average
SMFG (consolidated)
SMBC (consolidated)
SMBC (nonconsolidated)
Trading Book
Banking Book
Trading Book
Banking Book
Trading Book
Banking Book
(Billions of yen)
1.9
2.1
2.1
2.0
2.8
1.4
2.0
31.4
29.0
36.6
41.4
43.9
26.9
34.2
1.9
2.1
2.1
2.0
2.8
1.4
2.0
28.3
26.0
34.4
39.2
41.8
24.0
31.5
1.1
1.6
1.9
1.6
2.3
1.1
1.5
24.9
23.0
31.4
35.9
38.9
20.9
28.2
Note: VaR for a one-day holding period with a one-sided confidence interval of 99.0% [computed daily using historical simulation
method (based on four years of historical observations)]. The VaR model for the trading book includes principal consolidated
subsidiaries. Figures for the trading book exclude specific risks.
42
SMFG 2009
n Back-Testing Results (Trading Book)
SMFG (consolidated)
SMBC (consolidated)
SMBC (nonconsolidated)
4.0
3.0
2.0
1.0
0
-1.0
-2.0
-3.0
-4.0
Marginal Profit or Loss (¥ billion)
0
1
2
3
4
VaR (¥ billion)
4.0
3.0
2.0
1.0
0
-1.0
-2.0
-3.0
-4.0
Marginal Profit or Loss (¥ billion)
0
1
2
4
3
VaR (¥ billion)
4.0
3.0
2.0
1.0
0
-1.0
-2.0
-3.0
-4.0
Marginal Profit or Loss (¥ billion)
0
1
2
3
4
VaR (¥ billion)
(c) Stress Testing
The market occasionally undergoes extreme fluctuations that
crises interfering with funding, SMBC carries highly liquid assets,
such as U.S. Treasury securities, and has emergency borrowing
exceed projections. To manage market risk, therefore, it is impor-
facilities in place, which also enable foreign currency-denomi-
tant to run simulations of situations that may occur only once in
nated liquidity management.
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.
Total
Impact of yen
interest rates
Impact of U.S. dollar
interest rates
Impact of Euro
interest rates
n Decline in Economic Value Based on Outlier Framework
(Billions of yen)
SMBC (consolidated)
SMBC (nonconsolidated)
March 31, 2008 March 31, 2009 March 31, 2008 March 31, 2009
407.4
154.2
196.1
36.7
588.4
272.4
202.4
60.4
398.5
149.7
193.9
36.6
561.7
249.3
200.0
60.1
As of March 31, 2009, the outlier ratio was less than 9%, sub-
Percentage of Tier I + Tier II
5.4%
8.6%
5.8%
8.9%
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 has been reducing strategic equity investments, and
the balance now stands at less than 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
short-term cash outflows, SMBC’s liquidity risk management is
based on a framework consisting of setting funding gap limits
and guidelines, maintaining a system of highly liquid supplemen-
tary funding sources, and establishing contingency plans.
In daily risk management operations, SMBC prevents a
cumulative increase in liquidity risk by setting the funding gap
limits and guidelines. For emergency situations, there are contin-
gency plans in place to reduce the funding gap limits and guide-
lines and other measures. To prevent the possibility of market
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).
n Composition, by Industry, of Listed Equity Portfolio
(%)
25
20
15
10
5
0
(March 31, 2009)
SMBC Portfolio
TOPIX
Nikkei Average
T
e
x
t
i
l
e
s
P
u
l
p
/
P
a
p
e
r
C
h
e
m
i
c
a
l
s
M
i
n
i
n
g
C
o
n
s
t
r
u
c
t
i
o
n
F
o
o
d
P
r
o
d
u
c
t
s
S
t
e
e
l
P
h
a
r
m
a
c
e
u
t
i
c
a
l
s
P
e
t
r
o
l
e
u
m
/
C
o
a
l
R
u
b
b
e
r
P
r
o
d
u
c
t
s
G
l
a
s
s
/
M
n
e
r
a
l
s
i
R
e
t
a
i
l
B
a
n
k
i
n
g
W
h
o
l
e
s
a
l
e
M
a
c
h
n
e
r
y
i
M
e
t
a
l
P
r
o
d
u
c
t
s
N
o
n
f
e
r
r
o
u
s
M
e
t
a
l
s
O
t
h
e
r
P
r
o
d
u
c
t
s
E
l
e
c
t
r
i
c
M
a
c
h
i
n
e
r
y
T
r
a
n
s
p
o
r
t
M
a
c
h
n
e
r
y
i
P
r
e
c
i
s
i
o
n
M
a
c
h
i
n
e
r
y
A
i
r
T
r
a
n
s
p
o
r
t
M
a
r
i
n
e
T
r
a
n
s
p
o
r
t
O
v
e
r
l
a
n
d
T
r
a
n
s
p
o
r
t
E
l
e
c
t
r
i
c
i
t
y
/
G
a
s
U
t
i
l
i
t
i
e
s
T
e
l
e
c
o
m
m
u
n
i
c
a
t
i
o
n
s
W
a
r
e
h
o
u
s
i
n
g
/
D
i
s
t
r
i
b
u
t
i
o
n
F
i
s
h
e
r
i
e
s
/
F
a
r
m
n
g
/
F
o
r
e
s
t
r
y
i
S
e
r
v
i
c
e
s
R
e
a
l
E
s
t
a
t
e
I
n
s
u
r
a
n
c
e
O
t
h
e
r
F
i
n
a
n
c
i
a
l
S
e
c
u
r
i
t
i
e
s
/
C
o
m
m
o
d
i
t
y
F
u
t
u
r
e
s
T
r
a
d
i
n
g
SMFG 2009 43
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
failed internal processes, people and systems or from external
events. Specifically, Basel II—which, in addition to processing
risk and systems risk, also covers legal risk, personnel risk, and
physical asset risk—defines the following seven types of events
that may lead to the risk of loss: (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 system failures, and (7) exe-
cution, delivery, and process management.
(2) Fundamental Principles for Operational Risk Management
SMFG and SMBC have drawn up the Regulations on Operational
Risk Management to define the basic rules to be observed in the
conduct of operational risk management across the entire Group.
Under these regulations, SMFG and SMBC have been working to
enhance the operational risk management framework across the
whole Group by establishing an effective system for identifica-
tion, assessment, controlling, and monitoring of material opera-
tional risk and a system for executing contingency and business
continuity plans. In view of the inclusion of operational risk in the
framework of the capital adequacy requirements of Basel II,
SMFG has been 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 man-
agement framework for Groupwide basic policies for risk man-
agement.
At SMBC, the Management Committee makes decisions on
important matters such as basic policies for operational risk man-
agement, and these decisions are authorized by the SMBC
Board of Directors. In addition, SMBC has established its
Operational Risk Management Department, within the Corporate
Risk Management Department as an integrated operational risk
management department. This department works together with
other departments responsible for controlling processing risk and
systems risk.
The operational risk management framework is described in
more detail in the later part of this section, but it can be outlined
as follows: operational risk is managed by (1) collecting and ana-
lyzing internal loss data, and (2) comprehensively identifying risk
scenarios in each business process through a regular risk control
assessment to estimate the loss severity and frequency.
Operational risk impact is assessed for each risk scenario. When
high-severity scenarios are identified, each branch/department
establishes a risk mitigation plan and the Operational Risk
Management Department monitors the progress. Furthermore,
operational risk is quantified using the internal loss data and sce-
narios, and the results of quantification are used to manage and
reduce operational risk.
The generation of internal loss data, scenarios identified
through risk control assessments, and status of risk mitigation
n SMBC’s Operational Risk Management System
Corporate Auditors
External Audit
(Auditing Firm)
Internal Audit Dept.
Auditing of management
and measurement system
Audit
Board of Directors
Management Committee
Decision and authorization of important matters related
to operational risk management
Direction
Reporting
Operational Risk Committee
Board Member in Charge of Risk Management Unit
Direction
Reporting
Corporate Risk Management Dept.
Measurement of
operational risk
Operational Risk Management Dept.
Integrated Operational Risk
Supervisory Dept.
Reporting
Generation of scenarios and development of risk
mitigation actions through risk control assessments
Reflection of internal loss data,
external loss data and BEICFs in scenarios
Reporting on operational
risk information,
discussion on measures
for risk mitigation
Feedback of
measurement
results related to
operational risk
and direction for
risk mitigation
Reporting
Internal loss data
Head Office departments
Consumer
Banking
Middle Market
Banking
Corporate
Banking
Treasury
Investment
Banking
International
Banking
44
SMFG 2009
activities are regularly reported to the director in charge of the
The basic framework of the AMA quantification model of
Operational Risk Management Department. In addition, there is
SMFG and SMBC is outlined in the diagram below. Among the
the Operational Risk Committee, comprising all relevant units of
four elements, collected internal loss data and the results of sce-
the bank, where operational risk information is reported and risk
narios analysis through risk control assessment are input directly
mitigation plans are discussed. In this way, we realize a highly
into the quantification model described later in this section to cal-
effective operational risk management framework. The opera-
culate required capital and risk-weighted assets (= required cap-
tional risk situation is also repor ted to the Management
ital divided by 8%). In addition, external loss data and BEICFs
Committee and the Board of Directors on a regular basis, for
are used in verifying the assessment of scenarios, along with
review of the basic policies on operational risk management.
internal loss data, to increase objectivity, accuracy, and com-
Moreover, the bank’s independent Internal Audit Department con-
pleteness.
ducts periodic audits to ensure that the operational risk manage-
The specific content and method of collection and use of the
ment 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,
system 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
four elements are described below. At present, 20 Group compa-
nies have adopted the AMA, including SMFG and SMBC, and all
Group companies collect and make use of the four elements.
n Basic Framework of Operational Risk Measurement
of SMFG and SMBC
overlooked, monitor the overall status of risks, and manage/con-
(1) Internal loss data
(4)
Scenarios
analysis through
risk control
assessments
Data
inputs
(5)
Measurements
using
the quantification
models
(2) External loss data
Verifi-
cation
(3) BEICFs
(6) Activities to mitigate risk
trol them. To this end, it is necessary to be able to quantify risks
using a measurement methodology that can be applied to all
types of operational risk, and to comprehensively and compara-
tively capture the status of and changes in potential operational
risks of business processes. Also, from the viewpoint of internal
control, the measurement methodology used to create a risk miti-
gation plan must be such that the implementation of the plan
quantitatively 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 sophisti-
cated 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
calculating operational risk-weighted assets. It has been used for
calculating the capital adequacy ratio since March 31, 2008.
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, inter nal loss data, exter nal loss data, Business
Environment and Internal Control Factors (BEICFs), and scenar-
ios analysis through risk control assessments. In addition, the
operational risk equivalent amount (hereinafter, “required capi-
tal”) calculated under the AMA must cover the maximum loss
comparable to a one-year holding period and a 99.9 percentile
confidence interval.
SMFG 2009 45
(1) Internal Loss Data
Internal loss data are defined as “the information on events in
(4) Scenario Analysis through Risk Control Assessments
Risk control assessment is defined as “risk management method-
which SMFG and SMBC incur losses resulting from the realization
ology to (a) identify material operational risks, and describe them
of operational risk.” At SMFG and SMBC, internal loss data are
in terms of risk scenarios, (b) assess the risks and the effective-
collected for all cases where the gross loss amount is at least
ness of controls, and (c) estimate the frequency and severity of
one yen (the threshold amount), and seven years of internal loss
risk scenarios.” SMFG and SMBC apply this methodology to their
data are directly used in the quantification of required capital for
principal business activities.
operational risk.
(2) External Loss Data
External loss data are defined as “the information on events in
which other banks, etc., incur losses resulting from the realization
of operational risk.” SMFG and other Group companies collect
external loss data where such losses may occur within the
Group. Please note that SMFG and SMBC have compiled exter-
nal loss data for more than 6,000 cases over the past eight years,
which are indirectly used in quantifying required capital for oper-
ational risk.
(3) Business Environment and Internal Control Factors
(BEICFs)
BEICFs are defined as “indicators of operational risk profiles of
SMFG and SMBC that reflect underlying business risk factors
and an assessment of the effectiveness of the internal control
factors.” The Group periodically collects data relating to changes
in laws and regulations, changes in internal rules and processes,
and launch of new business and products pertinent to the
Group’s business operations.
n Flowchart for Risk Control Assessment (Example)
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 to manage the risks. Another purpose of risk control assess-
ment is to estimate the frequency of low-frequency and high-
severity events for each scenario (which may be difficult to
estimate using internal loss data alone).
During the process of periodic risk control assessment, oper-
ational risks inherent in various business processes are recog-
nized as “scenarios.” The risk and control conditions for each
scenario are assessed, and the frequency of occurrence and
amount of losses are estimated based on them. The assessment
process comprises three steps: (i) initial assessment, (ii)
Operational Risk Management Department review, and (iii) final
assessment. Through the process, the frequency of “low-fre-
quency and high-severity” events for each scenario are esti-
mated in terms of four loss amounts (¥100 million, ¥1 billion, ¥5
billion, and ¥10 billion). Please note that SMFG and SMBC have
identified more than 9,000 risk scenarios for the Group on a con-
solidated basis.
As an effective mechanism for mitigating operational risks,
(i) Initial Assessment
(ii) Operational Risk Management Department Review
(iii) Final Assessment
Deriving
scenarios
Identify risk patterns
inherent in business
processes and
develop a
comprehensive set of
scenarios
Assessment of
scenarios
Conduct assessment
of risks and controls
by scenario
Estimate the
frequency of losses
for scenarios
Estimate the
frequency of losses
by scenario, taking
account of past
internal loss data
Estimate the severity
of losses
for scenarios
Estimate the severity
of losses by scenario,
taking account of the
amount of
transactions used in
various operations
Assess the magnitude
of scenarios
Verification of
magnitude rating
Calculation
of required
capital
Calculate the
maximum loss once
in 100 years and
assess the magnitude
and classify into five
categories
Estimate the frequency
of the “low-frequency and
high-severity” loss cases
Estimate the frequency
of the “low-frequency
and high-severity”
loss cases that are
difficult to estimate
using internal loss
data alone
Check magnitude
rating empirically
against each risk
scenario
Develop risk
mitigation plans
Develop risk
mitigation plans by
scenario, focusing on
those with higher
magnitude rating
Review
of scenario
assessment
Implementation
of risk mitigation
measures
46
SMFG 2009
the maximum loss occurring once in 100 years (hereinafter, “sce-
applying the AMA. Meanwhile, the Basic Indicator Approach
nario exposure”) is calculated for each scenario derived through
(BIA) is applied to estimate maximum operational risk losses for
the risk control assessment, and then a magnitude rating is pro-
Group companies other than those applying the AMA. Then, the
vided by classifying them into five categories according to the
required capital and risk-weighted assets for SMFG and SMBC
severity of loss. Risk mitigation plans are developed by the rele-
Group are measured by aggregating these figures.
vant business units for those scenarios with high-severity risk
The outline of the quantification model for SMBC is as fol-
identified through magnitude rating.
lows. First, we generate a loss frequency distribution (number of
The principal features of this risk control assessment method
loss incidents over a one-year period) based on the number of
are (1) “objectivity,” which is realized by estimating the frequency
historical internal losses. Then, we generate a loss severity distri-
of losses based on historical internal loss experience and by esti-
bution (amount of loss per loss incident) based on internal losses
mating the severity of losses based on the transaction amounts
and frequency of “low-frequency and high-severity” events
pertinent to the scenarios, and (2) an appropriate level of “sensi-
obtained through the risk control assessment.
tivity,” because changes in the business environment and the
By using the loss frequency and loss severity distributions,
implementation of risk mitigation measures can be reflected in
the aggregated loss severity distribution is generated by
the frequency and severity of losses by changing the assess-
conducting Monte Carlo simulations and by generating various
ment of risk and control as well as transactions amounts.
combinations of loss occurrence and loss amount which are sim-
(5) Measurement Using Quantification Models
SMFG, SMBC, and other Group companies using the AMA mea-
sure the maximum operational loss with a 99.9 percentile confi-
dence interval and a holding period of one year (hereinafter
referred to as 99.9% VaR) by using the four elements. In addition,
99.9% VaR is measured on an SMFG consolidated basis, SMBC
consolidated basis, and SMBC nonconsolidated basis. The
operational risk is measured for each of seven event types
defined under Basel II, and then, by calculating the simple sum
for all event types, 99.9% VaR is measured for each company
ulated by changing these two factors. 99.0% VaR is calculated
from the resulting aggregated loss severity distribution.
Finally, we multiply 99.0% VaR by a conversion factor
mentioned later in the section of “Capital Ratio Information” to
compute 99.9% VaR.
This quantification model takes into account not only empiri-
cal internal loss data but also potential risk (scenarios) identified
in the risk control assessment. An important feature of this model
is that it enables us to measure and reflect the “low-frequency
and high severity” events of operational risk. Moreover, by intro-
ducing a conversion factor, it is unnecessary to directly estimate
n Measurement Using Quantification Models
Distribution of Loss Frequency
(
f
r
e
q
u
e
n
c
y
)
(
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
P
r
o
b
a
b
i
l
i
t
y
o
f
o
c
c
u
r
r
e
n
c
e
0.20
0.15
0.10
0.05
0
0
5
10
15
Number of incidents/year
20
Distribution of Loss Severity
0.30
0.25
0.20
0.15
0.10
0.05
0
0
2
4
6
Loss per incident
Repeat (e.g., 1 million times)
Sampling of the
number of losses
from the distribution
(e.g., 5 incidents)
25
30
8
10
Calculate aggregated
annual loss amount
(e.g., 450)
Total
Sampling of the amounts
of losses corresponding
to the above number of
losses from the distribution
of losses (e.g., 50, 100, 80,
150, 70)
Aggregated Loss Distribution
Frequency x Severity
x conversion factor
99.0% 99.9%
Aggregated annual loss amounts
(
f
r
e
q
u
e
n
c
y
)
0.4
0.3
0.2
0.1
0
P
r
o
b
a
b
i
l
i
t
y
o
f
o
c
c
u
r
r
e
n
c
e
SMFG 2009 47
99.9% VaR, which tends to have a lower accuracy, and stable
estimation results can be obtained by estimating 99.0% VaR
(6) Risk Mitigation Initiatives
To mitigate risk using the quantitative results of the AMA, SMFG
which can be estimated with higher accuracy.
and SMBC implement risk mitigation measures to high-severity risk
Please note that the accuracy of quantification model outputs
scenarios identified in the previously mentioned magnitude rating.
described above is secured through the regular ex ante and ex
In addition to the above, the operational risk-weighted assets
post facto verification processes.
calculated using the quantification methods are allocated to the
The breakdown of risk-weighted assets by event type for the
business units of SMBC and other Group companies, as part of
Group on a consolidated basis, computed with the previously
initiatives to mitigate risk for the Group as a whole.
described quantification method, is as follows.
Specifically, (1) at the beginning of each fiscal year, the oper-
n Breakdown of Consolidated Risk-Weighted Assets
by Event Type
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 system failures
(7) Execution, delivery, and process management
Note: Only risk-weighted assets calculated under the AMA.
(March 31, 2009)
Percentage
9%
8%
2%
24%
11%
4%
42%
ational 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 operational risk within the Group as a whole.
n SMFG’s Operational Risk Mitigation Activities on a Semi-Annual Basis
Objectives
Management Process/Roles of Organizational Units
Planning
Implementation
Assessment and Review
Magnitude rating
assignment of risk
scenarios
Mitigation of
high-impact
operational risk
within the Group as
a whole
Preparation of plans for risk
mitigation for high-impact risk
scenarios based on risk control
assessments
Implementation of risk mitigation
measures
Decision to implement plans made by
the Operational Risk Committee
Implementation by the department
responsible for the risk scenario
Plans for operational
risk assets
Autonomous risk
management by
business units
and Group
companies as a
whole
Calculation of planned targets of
each business unit and Group
company under the AMA
Prevention of internal loss occurrence,
and improvements in risk and control
of risk scenarios
Decision to implement related
operating plans of each department
and Group company made by the
Management Committee and other
decision-making and related bodies
Implementation by the responsible
department within each business unit
and Group company
Reassessment of scenarios by taking
account of the implementation of risk
mitigation measures. Review of
scenarios targeted for risk mitigation,
followed by the further development
and implementation of risk mitigation
activities
Decision to implement plans, etc.,
made by the Operational Risk
Committee
Results of measurements and
analysis of changes from the previous
half-year period (including the
frequency and severity of scenario)
are fed back to each business unit
and Group company
Feedback of results from the unit in
overall charge of operational risk,
plus an assessment by the
Management Committee and others
of planned versus actual results at the
end of the period
48
SMFG 2009
4. Processing Risk
Processing risk is the possibility of losses arising from negligent
Computer-related trouble at financial institutions now has
greater potential to impact society, with systems risk diversifying
processing by employees, accidents, or unauthorized activities.
owing to the IT revolution, the resulting expansion of networks
SMFG recognizes that all operations entail processing risk.
and the rise in the number of personal computer users. To pre-
We are, therefore, working to raise the level of sophistication of
vent any computer system breakdowns, we have taken numerous
our management of processing risk across the whole Group by
measures, including constant maintenance of our computer sys-
ensuring that each branch conducts its own regular investiga-
tem to ensure steady and uninterrupted operation, duplication of
tions of processing risk; minimizing losses in the event of pro-
various systems and infrastructures, and the establishment of a
cessing errors or negligence by drafting exhaustive contingency
disaster-prevention system consisting of computer centers in
plans; and carrying out thorough quantification of the risk under
eastern and western Japan. And to maintain the confidentiality of
management.
customer information and prevent information leaks, sensitive
In the administrative regulations of SMBC, in line with SMFG’s
information is encrypted, unauthorized external access is
Groupwide basic policies for risk management, the basic
blocked, and all known countermeasures to secure data are
administrative regulations are defined as “comprehending the
implemented. There are also contingency plans and training ses-
risks and costs of administration and transaction processing, and
sions held as necessary to ensure full preparedness in the event
managing them accordingly,” and “seeking to raise the quality of
of an emergency. To maintain security, countermeasures are
administration to deliver high-quality service to customers.”
revised as new technologies and usage patterns emerge.
Settlement Risk
Settlement risk is the possibility of a loss arising from a transac-
tion that cannot be settled as planned. Because this risk com-
prises elements of several types of risk, including credit, liquidity,
processing, and systems risk, it requires interdisciplinary man-
agement.
At SMBC, the Operations Planning Department is responsible
for coordinating the management of settlement risk with the
Credit & Investment Planning Department, which oversees credit
risk, and the Corporate Risk Management Department, which
oversees liquidity risk.
Adding new policies or making major revisions to existing ones
for processing risk management requires the approval of both
the Management Committee and the Board of Directors.
In the administrative regulations, SMBC has also defined
specific rules for processing risk management. The rules allocate
processing risk management tasks among six types of depart-
ments: operations planning departments, compliance depart-
ments, operations depar tments, transaction execution
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 essen-
tial 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, includ-
ing a security policy. We also have contingency plans with the
goal of minimizing losses in the event of a system failure. The
development 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 pub-
lished by the Center for Financial Industry Information Systems
(FISC).
SMFG 2009 49
Corporate Social Responsibility (CSR)
Contributing to
the Sustainable Development of Society
As a new comprehensive financial services group for the 21st
century, Sumitomo Mitsui Financial Group (SMFG) strives to
respond to the expectations of society, and, by fulfilling its
responsibilities, to earn the highest trust of society.
To earn such trust, we offer added value to four major stake-
holder groups and entities: namely, customers, shareholders and
the market, the environment and society, and our employees.
Through these activities, the Group contributes to the sustainable
development of society as a whole.
Basic CSR Policies
As a basis for implementing its CSR activities, SMFG has formu-
lated a definition of CSR and a set of business ethics that articu-
late its basic principles for the Group.
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 corpo-
rate governance, internal auditing, compliance, and risk man-
agement systems. Second, we offer higher added value to our
four major stakeholder groups in the following ways.
• We endeavor to develop and prosper with our customers
by offering top-quality, high-value-added products and ser-
vices.
• We maintain sound management through disclosing appro-
priate information, designing and operating robust internal
control systems, and managing to increase shareholder
value.
• We implement initiatives on a continuing and active basis to
contribute to society and preserve the natural environment.
• 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 develop-
SMFG’s Definition of CSR
ment of society as a whole through all these activities.
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 environment and society, and (iv) employees.
n Our Perspective on CSR
Basic CSR Principles: SMFG Business Ethics
Making contributions to the sustainable development of society as a whole
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
For customers
that meet the true needs of our customers to assure their satisfaction and
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 imple-
mentation of CSR initiatives is the shortest path to reaching man-
agement objectives.
earn confidence 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 efficiently, 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
development 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 responsibilities. 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 employ-
ees work with pride and commitment. For this purpose, we respect people
and develop employees with extensive professional knowledge and capabil-
ities, 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
importance 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.
50
SMFG 2009
Initiatives for Enhancing Customer Satisfaction (CS) and Quality
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 Customers (VOC) and discuss measures to increase customer satisfaction.
At SMBC, we created the Quality Management Department in
April 2006, with the aim of drawing fully on VOC to make
improvements in the bank’s business and management. The
Quality Management Department is primarily responsible for ana-
lyzing the VOC data. Reports of this department are then dis-
cussed by the CS and Quality Improvement Committee, whose
members include the chairman and directors who are members
of the bank’s Management Committee, and these reports are
used proactively to enhance the satisfaction of our customers
and the quality of our services.
In parallel with these activities, we are undertaking a wide
range of initiatives for improving customer satisfaction and qual-
ity. These include conducting questionnaire surveys to obtain the
opinions of a broader range of customers by interviewing them at
our branches and offices and via mail. Also, to provide services
that will meet with greater customer satisfaction, we are conduct-
ing related training and educational programs.
VOC Database
We have also created a VOC database, a record of the opinions
that our customers have expressed, principally at our branches,
and are working to make this database widely available within
the bank. In addition, the data is analyzed and used by the
Quality Management Department to provide guidance to our
branches and to make improvement proposals to the Head
Office departments so they can establish bankwide CS enhance-
ment measures.
The Head Office departments also analyze the VOC data
themselves and employ the results to make improvements in
products and services.
CS and Quality Improvement Committee
CS and Quality Improvement Committee, which is chaired by the
president of SMBC, meets periodically to hear reports on the
specific opinions that customers have expressed and to review
the fluctuations in the number of opinions expressed from month
to month. The committee also receives reports on the results of
analyses of VOC and proposals for improvements, and members
of management represented on the committee listen to these
reports and consider appropriate courses of action.
In addition, to instill the awareness of making our activities
more customer centric, we prepare documents containing points
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-
bers of management for their consideration.
Moreover, to enhance customer satisfaction and the quality of
our products and services from a broader point of view, we invite
specialists familiar with these and related areas to provide their
advice.
n 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 2009 51
Corporate Governance
Our Stance on Corporate Governance
SMFG and its Group companies follow the SMFG management
at three major Group companies, namely, SMFG Card & Credit,
Inc., Sumitomo Mitsui Finance and Leasing Co., Ltd., and The
philosophy as a universal guide for Group management and
Japan Research Institute, Limited, the SMFG director in charge of
position this philosophy as the anchor for corporate action. To
each of these subsidiaries serves as a director (and can be an
implement the ideas contained in our Group philosophy, we
outside director) of these companies.
believe one of the issues with highest priority is strengthening
Furthermore, to maintain the soundness of management,
and improving our corporate governance system.
SMFG has established internal control systems to ensure the
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
which statutory auditors oversee the execution of business by the
major issue, and initiatives are under way to enhance such inter-
proper conduct of company operations following the Japanese
directors. At SMFG, we have six corporate auditors, three of
nal control systems.
whom are outside auditors. The auditors monitor the execution of
business operations of SMFG and its subsidiaries by attending
meetings of the Board of Directors and listen to reports on opera-
The SMBC Corporate Governance System
SMBC employs the corporate auditor governance model. Of the
tions from the directors and others. They also examine docu-
six statutory auditors appointed, three are from outside the bank.
ments relating to important decisions and receive reports from
To ensure sound and transparent management, SMBC separates
the internal audit departments, representatives of subsidiaries of
the two functions of management decision-making at the opera-
SMFG, and the CPAs.
tional level and the overall supervision of the conduct of duties by
The chairman of SMFG serves as the chairman of the Board
the management of the bank. For this purpose, the bank employs
of Directors of SMFG. This separates the role of the president,
a system under which executive officers are responsible for oper-
whose responsibility is the overall supervision of business activi-
ational duties, while the supervisory functions are performed
ties of SMFG and other Group companies, from the role of super-
principally by the Board.
vising management. To enhance the effectiveness of the Board,
The chairman of the bank serves as the chairman of the
we have appointed outside directors and formed four gover-
Board of Directors, and, to clearly separate his functions from
nance committees: namely, the Auditing Committee, the Risk
those of the president of the bank, who is responsible for the
Management Committee, the Compensation Committee, and the
overall supervision of the bank’s activities, the chairman does not
Nominating Committee. Outside directors have been appointed
simultaneously serve as an executive officer and is primarily
to all four of these committees to provide for corporate gover-
responsible for supervising management’s execution of their
nance from an objective perspective. As the need for objectivity
duties. As at SMFG and to ensure a robust supervisory function,
is particularly acute in the case of the Auditing Committee and
outside directors are appointed to the Board of Directors. At
the Compensation Committee, outside directors serve as the
SMBC, three outside directors currently serve on the Board,
chairmen of these committees. To ensure that the execution of
which has a total membership of sixteen.
the Group’s business operations is in conformity both with legal
Executive officers are appointed by the Board to manage the
regulations and generally accepted practices, the outside direc-
operation of SMBC’s businesses. As of June 30, 2009, SMBC has
tors have been selected from among the ranks of specialists
70 executive officers, including the president, and eleven serve
(including CPAs, lawyers, and consultants).
concurrently as directors. The Management Committee of SMBC
SMFG has created the Group Management Committee to
is the highest decision-making body at the operational level and
serve as the top decision-making body, and it is under the direct
is under the direct supervision of the Board of Directors. The
supervision of the Board of Directors and chaired by the presi-
president chairs this committee and selects its members from the
dent of SMFG. This committee is composed of directors chosen
executive officers. The committee members consider important
by the president. Its role is to consider important matters related
management issues based on policies set by the Board of
to the execution of business and to make decisions for or against
Directors, and the president has the authority to make the final
the execution of matters in accord with the basic policies of the
decision after considering the committee’s recommendations.
Board of Directors. SMFG also has a Group Strategy Committee
that serves as a forum for the top managers of SMFG and all
other Group companies to exchange opinions and information on
their respective business plans. To enable SMFG to monitor the
The president designates certain members of the Management
Committee to be Authorized Management Committee members
in charge of particular Head Office departments or units. All of
these designated individuals are in charge of implementing the
execution of day-to-day business operations at SMBC, eight
directives of the Management Committee within the businesses
SMFG directors (including three outside directors) of the total of
they oversee.
nine SMFG directors (including three outside directors) also
serve as directors of SMBC. To monitor the conduct of operations
52
SMFG 2009
Internal Audit System
An Outline of the Group’s Internal Audit System
In addition to the SMFG Auditing Committee, which functions as
domestic and overseas branches - and SMBC group companies.
Auditing of operations of head office departments is conducted by
a governance committee reporting to the Board of Directors, we
assessing the appropriateness of all internal control systems of
have established the Internal Auditing Committee, which is a part
each department. In addition, audits of head office departments
of the Group Management Committee, to give a higher profile to
focus on material issues that arise in the management of specific
the internal auditing functions and facilitate effective conduct of
operations and categories of risk. These auditing activities empha-
internal audits. The Internal Auditing Committee meets every
size the verification of “Targeted Audit Items” across the whole of
quarter, and its members discuss important matters related to
the bank’s organization.
internal auditing based on reports prepared by the departments
Moreover, audits of branches and offices are not limited just to
responsible for inter nal audits. There is also the Audit
checking for control and other deficiencies but also include pointing
Department, which is an internal auditing unit that is independent
out compliance and risk management problems and making rec-
of the operational departments of the Group.
ommendations for corrective action. In other Group companies,
The Audit Department conducts internal audits of the opera-
internal audit departments have been formed suited to the respec-
tions of all the Group’s units and departments to contribute to
tive nature of each company’s 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 oper-
Initiatives to Enhance the Sophistication and
Efficiency of Internal Auditing
The Audit Department has adopted methods following the stan-
ating appropriately and effectively. The Audit Department is also
dards of the Institute of Internal Auditors (IIA)*, an international
responsible for the overall supervision of the internal audit sys-
organization. The Audit Department conducts risk-based audits
tems of Group companies. It monitors the appropriateness and
and works to apply best practices to Group companies.
effectiveness of the internal audit systems at Group companies
To fulfill effectively its role as the department in overall charge
by verifying past data related to internal auditing and monitoring
of internal auditing, the Audit Department is constantly endeavor-
activities, which include inspections and other activities based on
ing to advance the professional skills of personnel engaged in
actual samples, and, when deemed necessary, by conducting
internal auditing. Activities include collecting the latest information
audits. Based on these activities, the Audit Department provides
on internal auditing from inside and outside Japan and disseminat-
recommendations and guidance to the business units and
ing it to all Group companies. Also, the Audit Department orga-
departments as well as Group companies.
nizes training courses, led by outside experts, for the staff of
At SMBC, we have formed auditing departments that are inde-
Group companies and encourages them to obtain international
pendent of bank units involved in marketing and other business
qualifications to enhance their professional knowledge and skills in
activities. Within the Internal Audit Unit of SMBC, we have formed
internal auditing. To improve further the effectiveness of auditing,
two departments: the Internal Audit Department and the Credit
we also take active measures on a Groupwide basis to assess the
Review Department. As at SMFG, SMBC has an Internal Auditing
quality of our internal auditing in the light of IIA standards.
Committee which is a part of its Management Committee and
responsible for examining and conducting deliberations on reports
on important matters submitted by the Internal Audit Unit.
The Internal Audit Unit is responsible for auditing compliance
and risk management at SMBC - its head office departments,
* 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.
Corporate Auditors/
Board of Corporate Auditors
Office of Corporate Auditors
SMBC
Shareholders’ Meeting
Board of Directors
Management Committee
Internal Auditing Committee
Corporate Auditors/
Board of Corporate Auditors
Office of Corporate Auditors
SMFG
Shareholders’ Meeting
Nominating
Committee
Board of Directors
Risk Management
Compensation
Committee
Committee
Auditing
Committee
Group Strategy
Committee
Group Management Committee
Internal Auditing Committee
Business units subject to auditing
All Departments
Internal
Audits
Audit
Department
Business units subject
to auditing
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 2009 53
Compliance
Compliance Systems at SMFG
Basic Compliance Policies
As a financial services group offering a multiplicity of products
prevent money laundering at Group companies, and (c) the assess-
ment of progress in compliance at Group companies.
and services, SMFG is intensifying its efforts to maintain high
standards of compliance to carry out its mission as an important
part of the nation’s public infrastructure and fulfill its social
responsibilities. Through these efforts, SMFG is becoming a truly
Hotline for Reporting Improper Accounting and
Auditing Activities
SMFG has established the SMFG Accounting and Auditing
outstanding global corporate group.
Hotline to provide a channel for individuals within and outside the
At SMFG, we have positioned compliance as one of the prin-
Group to report improper activities. This hotline enables us to
cipal supports of our Business Ethics (please refer to page 50),
quickly identify and take action against fraud and other miscon-
which serve as the basic principles for fulfilling our corporate
duct involving accounting and auditing at SMFG and its consoli-
social responsibility (CSR). Accordingly, we regard strengthening
dated subsidiaries.
our compliance systems as one of our top management priorities.
Group Management from a Compliance
Perspective
As a financial holding company, SMFG seeks to maintain and
enhance systems for providing appropriate direction, guidance,
and monitoring for the compliance and related systems of Group
companies to ensure the sound and proper conduct of business
activities throughout the entire Group.
Specific activities include holding regular meetings that are
attended by representatives of Group companies, as well as
meetings with individual companies, with the objective of over-
seeing the state of autonomously implemented compliance func-
tions at those companies. The three main areas for strengthening
oversight in fiscal 2009 are (a) the creation of mechanisms to
Reports can be submitted by post or e-mail as follows.
Post
SMFG Accounting and Auditing Hotline
Iwata Godo Attorneys and Counsellors at Law
10th floor, Marunouchi Building
2-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-6310
e-mail
smfghotline@iwatagodo.com
* The hotline accepts alerts of improper activities concerning accounting
and auditing at SMFG and its consolidated subsidiaries.
* Anonymous reports are accepted, but, if possible, please provide per-
sonal information such as your name and contact number.
* Please provide as much detail as you can regarding the activities. An
investigation may not be possible if the description is too vague.
* Personal information will not be disclosed to a third party without your
deal with possible conflict of interest issues arising from amend-
consent, or unless required by law.
ments to firewall regulations, (b) stronger measures to
Sumitomo Mitsui Financial Group, Inc.
Audit
Report
Corporate Auditors
Audit Dept.
Group Business
Management
Dept.
Board of Directors
Management Committee
Directions
Report
General Affairs Dept.
Audit/Monitoring
Group Company
Audit/Monitoring
Group Company
Compliance System
Oversight and
Guidelines
Report
Departments and Offices
General Manager responsible for compliance
Compliance Officers to assist General Managers
Management
Report
Compliance Committee
Group Companies
SMBC, Sumitomo Mitsui Card, Sumitomo Mitsui Finance and Leasing, JRI, and SMBC Friend Securities
54
SMFG 2009
Compliance at SMBC
Strengthening Compliance Systems
Compliance with laws, regulations, and other social standards is
Issuance of a Compliance Manual
To assist management and staff in choosing proper courses of
a basic requirement for corporations in general. Especially for
action, SMBC has prepared its Compliance Manual containing 60
banks, compliance is a particularly important issue because of
principles for action that provide objectives and guidance. This
their public mission and social responsibilities as key players in
manual has been approved by the Board of Directors, and all
the financial system and socioeconomic infrastructure.
management and staff have been fully apprised of its contents.
SMBC, in line with the basic policy of SMFG, requires all its
management and staff to assign the highest value to maintaining
Preparation of Compliance Programs
With the objectives of ensuring that compliance systems function
people’s trust, abiding by relevant laws and regulations, uphold-
effectively and making necessary improvements in compliance
ing high ethical standards, and acting fairly and sincerely. SMBC,
systems within SMBC and its consolidated subsidiaries, the
therefore, positions maintenance of high standards of compli-
Board of Directors prepares a specific plan for compliance-
ance as one of its most important management priorities, and is
related activities each fiscal year, including review of and neces-
committed to always abiding by the Banking Law, Financial
sar y revisions to regulations and training. In fiscal 2009,
Instruments and Exchange Act and other legislation and taking
measures focusing on better adapting our compliance posture to
preventive measures against financial activities of anti-social
social change are being implemented, including creating mecha-
forces.
Management of the Compliance System
SMBC adopts a basic, two-tiered structure to ensure compliance.
nisms to manage conflict of interest issues arising from amend-
ments to firewall regulations, providing more detailed
explanations of credit policy to SMEs for smooth and efficient
financing, and taking further preventive measures against finan-
First, each department and office is held individually responsible
cial activities of anti-social forces.
for making before the fact decisions that ensure its conduct com-
plies with laws and regulations. Second, an independent, Internal
Appointment of Compliance Officers
In addition to the compliance officers appointed within the bank’s
Audit Unit conducts rigorous audits of department and branch
depar tments and branches, we have appointed Area
compliance.
Compliance Officers, who are independent from frontline depart-
To maintain this two-tiered structure and ensure it is operating
ments, within certain of our business units including the Middle
effectively, the Compliance Unit, which includes the General
Market Banking Unit and the Consumer Banking Unit. These offi-
Affairs Department and the Legal Department, plans and imple-
cers are responsible for directing and overseeing compliance
ments systems and system improvements to secure compliance,
regarding transactions carried out by the staff of our branches
acting under directions from management. The Compliance Unit
and other frontline offices.
also provides guidance and conducts monitoring activities
regarding the activities of all departments and branches, and
assists departments and branches make compliance decisions.
The framework of SMBC’s compliance system is shown in the
diagram at the bottom of this page. To ensure that this framework
functions effectively, SMBC also engages in the activities
described in the following paragraphs.
Formation of the Compliance Committee
To ensure that compliance issues related to various operations
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.
n Compliance System Overview
Board of Directors, Management Committee
Directions
Report
Compliance Unit
General Affairs Dept.
(overall control), Legal Dept.
Directions,
Monitoring and
Legal Support
Discuss
Compliance
Committees
Report
and
Discuss
Audit
Corporate
Auditors
Head Office Departments
Directions
General
Manager
Area Compliance Officers
Front-Line Offices
(Corporate Business Offices, Branches)
General Managers
Compliance Officers
Compliance Officers
Report
Audit
Internal
Audit
Dept.
SMFG 2009 55
Environmental Preservation Initiatives
The Group recognizes environmental preservation to be one of its most important
management 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
Programme (UNEP) and participates in the national movement “Team Minus 6%,” which is sponsored by the Japanese government.
The Group Environmental Policy
Basic Concepts
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.
Specific Environmental Policies
• 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 tack-
ling 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 envi-
ronmental 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 certifi-
cation, the international standard for environmental management systems.
Group CSR Committee
Environmental Action Plan and the PDCA Cycle
Chairman
Director of SMFG
Supervisory Unit
SMFG Corporate Planning Dept.
Group CSR Committee
• Committee members
n SMFG
n SMBC
n SMFG Card & Credit
n Sumitomo Mitsui Card
n Sumitomo Mitsui Finance and Leasing
n JRI
n SMBC Friend Securities
• Strategy Advisor
n JRI
56
SMFG 2009
The Group Environmental
Policy
Implementation of
environmental initiatives
Reduce environmental
impact
Manage environmental risk
Promote environment-related
businesses
PLAN
DO
CHECK
ACT
Reducing Environmental Impact
SMFG sets objectives each year for the reduction in its use of
Promoting Environmental Businesses
The Group considers helping companies engaged in environ-
electric power and other sources of energy and is actively
mental business as an effective way of supporting society and
engaged in reaching these energy conservation goals. We con-
the international community through its business activities.
duct “Is conservation visible?” campaigns to lower energy use
SMBC, in particular, formed the cross-organizational Eco-Biz
along with autonomous energy use reduction efforts. In addition,
Promotion Council in fiscal 2005 to discuss periodically the
SMBC has made its Head Office “carbon neutral” through the
development of sophisticated and efficient products and services
procurement of “green” sources of energy and purchases of car-
that contribute to environmental maintenance and improvement.
bon credits.* Moreover, Sumitomo Mitsui Card has attained car-
bon neutral status for its Osaka Head Office, and Sumitomo
Mitsui Finance and Leasing has reached this status for its Tokyo
Head Office, both through the purchase 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-
ment for land meeting certain criteria. When the risk is judged to
be high, the assessed value of the potential risk is subtracted
from the value of the collateral. In addition, similar measures are
taken regarding asbestos risk. When there is a concern about
possible asbestos pollution, risk assessments are conducted for
asset collateral meeting certain criteria, and SMBC encourages
its customers to implement 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, a set of guidelines for
financial institutions to conduct assessment and management of
social and environmental impacts related to the financing of
large-scale development projects. The Environment Analysis
Department (EAD) has established its own internal procedures
for social and environmental risk assessment in accordance with
the Equator Principles, and EAD keeps updating its risk assess-
ment operation.
nFlow Chart of SMBC’s Social and Environmental
Risk Assessment
Project Information
Screening
t
n
e
m
t
r
a
p
e
D
s
s
y
a
n
A
i
l
s
r
e
m
o
t
s
u
C
Covenants Compliance
Environmental Monitoring
s
e
h
c
n
a
r
B
g
n
d
n
e
L
i
Environmental Review
Environmental Monitoring
Social and Environmental
Risk Assessment
Credit Departments
Topics
lSMBC Receives Fuji Sankei Group Award
At the ceremony for the 18th Global Environment Awards,
sponsored by the Fuji Sankei Group, SMBC received the Fuji
Sankei Communications Group Prize for excellence in develop-
ing advanced environmentally responsible products and ser-
vices. This was the first time a major bank has received this
award, which is one of Japan’s most prestigious honors in the
environmental field.
l“Fight Global Warming Campaign” Honored at 2008
Nikkei Superior Products and Services Awards
SMBC received the 2008 Nikkei Veritas Award for Superiority
for its “Fight Global Warming Campaign” at the Nikkei Superior
Products and Services Awards ceremony. During the cam-
paign, part of the earnings from the sales of Japanese govern-
ment bonds (JGBs) for individuals is used to purchase carbon
credits. SMBC then gives these credits to the Japanese gov-
ernment. The first of its kind, this program has generated a
strong response as a way to allow customers to combat envi-
ronmental issues while earning a return from investing in JGBs.
t
n
e
m
n
o
r
i
v
n
E
SMFG 2009 57
Environmental Initiatives by Group Companies
Customers
Corporate
Program/Product
SAFE environmental magazine
Signatory to Carbon Disclosure
Project (CDP)
SMBC-ECO Loan
SMBC Environmental Friendliness
Assessment Loan
Global ECOBIZ Assist
eco japan cup
Company
Sumitomo
Mitsui Financial
Group
Sumitomo
Mitsui Banking
Corporation
(SMBC)
Description
Started in 1996, this bimonthly magazine contains interviews with top management of
companies, analyses of business trends and other useful information for corporate
environmental activities.
SMFG participates in the CDP, in which institutional investors and financial institutions
ask companies to disclose environmental policies and information at their own initiative
to prepare reports.
This loan offers reductions on loan interest rates of up to 0.5% for SMEs with environ-
mental management systems certified by any of more than 20 sources, including certi-
fication systems of NPOs and local governments. In October 2008, the SMBC-ECO
Loan eco value up was added to include environmental certification systems of large
companies, to support a broader range of corporate environmental activities.
Loans extended: Approximately ¥47 billion to 800 companies (as of March 31, 2009)
Terms and conditions of this loan depend on the results of an assessment of a
company’s environmental friendliness using standards prepared by The Japan
Research Institute, Limited (JRI). Once the loan is provided, JRI submits a simplified
diagnosis sheet to notify the borrower of the assessment results.
Loans extended: ¥18.5 billion to eight companies (as of March 31, 2009)
This program supports the globalization of Japanese companies with environmental tech-
nologies by offering preferential fees and interest rates on loans for international trade. It
offers these to midsize and SME companies that develop and manufacture equipment
related to water, waste materials, new energy, the atmosphere, energy conservation and
other areas (soil pollution remediation, greening, recovery of natural areas, etc.).
This is a contest for selecting companies that have practical environmental technolo-
gies and ideas. SMBC gives assistance to those venture companies jointly with
Japanese universities and thereby provides support for their R&D activities.
PICK UP
Eco-Products International Fair
Carbon-credit related business
activities (matching, advisory, trust
and consulting activities)
SMBC Environmental Business Forum SMBC and SMBC Consulting Co., Ltd. jointly held multifunctional events at Eco-
Products, one of Japan’s largest environmental exhibitions. This forum combined many
types of events such as environmental seminar, business matching etc.
At the fifth (March 2009) fair, SMFG president Teisuke Kitayama chaired the planning
committees and oversaw the booths, international conferences and other activities. He
will have the same role at the 2010 fair.
SMBC serves customers with needs involving carbon credits by using overseas offices,
trust functions and other resources to offer products and services such as introduction
of sellers in developing countries, advisory service to support transactions, trust prod-
ucts, and financing. SMBC established a consulting company in Brazil to assist in
development of Clean Development Mechanism (CDM) projects.
SMBC started direct purchases and sales of Kyoto credits in June 2009.
SMBC and Group companies are working on a program for assisting emission reduction
activities by using the domestic credit system that began in October 2008.
SMBC and UNICEF started this program to target both the causes and results of cli-
mate change. When participating companies buy carbon credits to fight global warm-
ing, monetary contributions to the program are also made to aid a developing country
(Mozambique) that is suffering from the effects of global warming.
Started in August 2007, this is a new service that renders the greenhouse gases
released by leased assets neutral through the allocation of carbon credits to these
assets. The goal is to provide more support to companies that protect the environment
through their own activities.
Carbon credit trading
Assistance in using the domestic
credit system
“Climate & Children Supporters”
Carbon-neutral leases
PICK UP
Environmental advisory business
Consulting business for the amended SMFL is enhancing environmental advisory services for companies in response to the
enactment of Japan’s amended Energy Conservation Law. This includes comprehen-
Energy Conservation Law
sive energy conservation proposals that utilize leases.
This business is involved in many projects centered on waste treatment and energy.
The objective is to combat global warming and support the growth of environmental
companies by creating new businesses.
JRI is providing consulting services for a national project near Tianjin, China to
construct an environmentally-friendly city. The city is based on the concept of harmony
with the environment, including conserving, recycling and efficient use of resources.
Between April and September 2008, SMBC conducted a campaign targeting cus-
tomers who purchased an environmentally responsible house with loans provided by
SMBC. For each household, SMBC purchased a one-ton carbon credit and then gave
the credits to the Japanese government.
Consulting for construction of Tianjin
Eco-city
PICK UP
Individuals Carbon offset mortgage loans
Environmental campaign using JGBs
for individuals
DWS New Resource Technology Fund To adapt to global shifts and growth in demand patterns, this fund invests mainly in
stocks of companies worldwide with excellent growth prospects involving businesses
associated with three themes of infrastructure, food and clean energy.
SMBC has been conducting environmental campaigns for every issue of these bonds
since June 2008. Starting with the “Fight Global Warming Campaign,” for each pur-
chase of at least ¥1 million, SMBC purchases a 0.5-ton carbon credit and gives the
credit to the Japanese government. SMBC also carried out a tree-planting campaign
with the cooperation of an NPO, and an “energy of the future” campaign.
By December 2008, over a million people had joined our campaign to cut paper use by
distributing credit card statements online.
Web Meisai Eco-Toku Campaign
58
SMFG 2009
Sumitomo
Mitsui Finance
and Leasing
Co., Ltd.
(SMFL)
The Japan
Research
Institute,
Limited (JRI)
Sumitomo
Mitsui Banking
Corporation
(SMBC)
Sumitomo
Mitsui Card
Company,
Limited
SMBC Environmental Business Forum in
Eco-Products 2008
exhibition, the SMBC Environmental Business Forum attracted
much attention at Eco-Products 2008.
Many visitors to Eco-Products 2008 came to the SMBC
SMBC and SMBC Consulting held the SMBC Environmental
Business Forum in Eco-Products 2008, one of Japan’s largest
environmental exhibitions. The forum combined three types of
events: environmental business matching, environmental semi-
nars, and a hands-on environmental event experience. Forty-three
SMEs that are SMBC customers set up booths. The matching ser-
vice arranged a total of 540 matches for environmental busi-
nesses during the forum.
Visitors to the forum saw presentations by SMFG companies
and departments on environmental products and initiatives. Our
customers also conducted presentations to explain their most
advanced environmental initiatives and university researchers
explained the results of their stud-
ies. In addition, the forum included
a hands-on event experience for
the general public. With this multi-
tude of activities, going well
beyond the normal scope of an
The front of the SMBC booth
Advisory Services for Compliance with
Amended Energy Conservation Law
There are signs of increased capital investment in environmen-
tal and energy conservation measures ahead of the entry into
effect of the amended Energy Conservation Law in April 2010.
To meet these needs, Sumitomo Mitsui Finance and
Leasing (SMFL) is offering customers comprehensive energy
conservation proposals centered on methods for lowering
energy consumption. SMFL provides leases for environmental
equipment and devices that cut greenhouse gas emissions or
conserve energy. It is also enhancing its advisory services.
Conserving energy using methods such as energy service
company (ESCO) leasing, is one field of expertise. SMFL also
provides extensive information on legally mandated environ-
mental reports. SMFL will continue to refine its expertise in
assisting customers to obtain the economic advantages of
leasing environmental equipment — leasing eliminates the
lump-sum initial investment required for equipment purchases
and the leased equipment reduces emissions, energy con-
sumption and operating
expenses.
n Example of Cost Saving
Profit for
customer
Service fee
Environmental Business Forum,
enabling us to attract some 2,000
visitors over the three days of semi-
nars and other events. The Forum
was a great success.
Hundreds of companies found
prospective business partners at the
matching booth.
A wide range of stakeholders held
environmental seminars.
Eco-Products 2008
•Name: The 10th Eco-Products 2008 — Eco Style Fair
•Dates: December 11 to 13, 2008
•Venue: Tokyo International Exhibition Center “TOKYO BIG
SIGHT” (East Hall)
•Organized by: Japan Environmental Management
Association for Industry (JEMAI), Nikkei Inc.
•Exhibitors: 750 companies and organizations, 1,700 booths
•Number of visitors: 173,917 (164,903 in previous year)
Eco-Products International Fair 2009
The fifth Eco-Products International Fair 2009 took place
in March 2009 in Metro Manila, Philippines. SMFG presi-
dent Teisuke Kitayama chaired the preparations commit-
tee and assisted in the operation of the fair.
This international fair is held every year in order to
contribute to the growth of environmental businesses in
the Asia-Oceania region and making these businesses
more competitive. In 2009, 36 Japanese companies took
part along with 128 companies and associations from the
Philippines, Singapore and Malaysia, setting a new
record for participation. More than merely a business
exhibition, the fair was an international conference that
brought together government representatives, including
ministers, and prominent members of the academic and
business communities — key front-line players in politics
and economics.
Decrease
Cost of
energy
Cost of
energy
With existing
equipment
With environmental
equipment
•Diagnosis fee
•Cost of equipment
•Cost of installation
•Maintenance, etc.
President Kitayama explains
SMBC’s local environmental pro-
grams to Philippines President
Maria Macapagal-Arroyo.
Representatives of SMBC and JRI
took part in the Environment and
Finance conference that was held
on the fair’s second day.
SMFG 2009 59
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 society 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 exe-
cuting 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
•Sign-Language Courses
To assist employees in communicating with and offering high
level services to aurally challenged customers, SMBC has pro-
vided sign-language courses
to its employees each year
since 1997. This is one of the
many ways
that SMBC
makes social contributions
through its business activi-
ties. In fiscal 2008, 125
SMBC employees enrolled in
the course, which was conducted in 10 sessions. Also, in 2005,
the bank began to hold annual lectures to provide opportunities
for aurally challenged guest speakers, assisted by interpreters,
to share their impressions of daily life using sign language. This
event was held for the fifth consecutive year in April 2009 and
was attended by about 460 employees.
•Providing Opportunities to
Experience Volunteer Activities
SMBC provides opportunities for its staff and their families to expe-
rience volunteer activities. During fiscal 2008, SMBC held a num-
ber of these events, including three entitled: “Learning about
Offering Support to Physically Challenged Persons through
Demonstrations of Service Dogs Assisting Persons with Sight,
Hearing, and Other Disabilities,” “International Cooperation Seminar
for Learning about the Life of Children in Developing Countries and
Sorting Foreign Coins Received at the Bank Branches and Other
Offices,” and “Seminar on First-Aid Methods, Including the Use of
Arm Slings and Automated External Defibrillators (AEDs), to Assist
Persons Injured as a Result of Disasters or Suffering from
Emergency Medical Problems.” In addition, SMBC provides
60
SMFG 2009
employees with information on various volunteer activities and
encourages their participation in such events.
•Collection and Donation of Voided Postcards, Unused
Prepaid Telephone Cards, and Used Postage Stamps
SMFG collects voided postcards from Group employees,
exchanges them for new postal stamps, and donates the stamps
to volunteer organizations to help them cover their postal costs. In
addition, SMBC collects unused prepaid telephone cards,
Sumitomo Mitsui Finance and Leasing collects PET bottle caps,
and SMBC Friend Securities collects PET bottle caps and used
postage stamps from employees, donating them to volunteer
organizations.
•Donations to Organizations Assisting Senior Citizens
Since fiscal 2007, SMBC Friend Securities has been donating
annually part of the income from a fund that invests in companies
contributing to the betterment of the aging population to organiza-
tions that assist and provide nursing care for the elderly.
Contribution Activities for Local and Overseas
Communities
•Volunteer Fund
SMBC has a system in which employees who volunteer have ¥100
deducted from their salaries each month to fund donations to
organizations that perform volunteer work in Japan and other
• Wells and toilets for schools and other clean-water projects in
Sudan
• In Madagascar, free restorative surgery by Japanese physi-
cians for people injured by war
• In Japan, funds for trips and other activities to create memo-
rable experiences for children with terminal diseases and
countries. As of May 2009, more than 11,000 employees were
their families
participating in this program. SMBC group member SAKURA KCS
Corp. started its own volunteer fund in April 2009 as part of activi-
• Workshops and performances at elementary schools in
Japan by a puppet play company composed of speech- and
ties to commemorate its 40th anniversary, with participation by
aurally-challenged persons
about 830 employees, some 70% of the entire workforce.
• A portion of education fees at Japan’s first school that con-
The following is a list of major activities funded in part by the
ducts classes entirely in Japanese sign language
SMBC Volunteer Fund in fiscal 2008.
• Ten months’ funding for assistance-dog candidate puppy
born in 2008
• Reconstruction of after-school home facilities for children in
Croatia, which is still feeling the effects of the Balkan War of
the 1990s
• Printed 3,000 folklore picture books and trained librarians in
In addition, the SMBC Volunteer Fund made emergency-relief
donations for victims of the cyclone in Myanmar, the Great
Sichuan Ear thquake in China, the Iwate-Miyagi-Nairiku
Earthquake in Japan, flooding in Aichi prefecture, and other nat-
Cambodia (total of 21,000 books since 2002)
ural disasters.
• Constructed libraries at two elementary schools in Laos (total
of 15 libraries since 2002) and operated a children’s culture
center
• Organic farming and fish-farming programs at elementary
and junior high schools in Thailand to improve nutrition for
children and help people become economically self-reliant
•Opening of accounts for donations to disaster victims
When major natural disasters occur, either in Japan or overseas,
SMBC opens special accounts to collect donations for relief with-
out the usual fund transfer charges. SMBC also solicits donations
for such causes from its employees and those of Group company
• Training of healthcare center staff for better nutrition and dis-
Japan Research Institute.
ease prevention among women and children in Nepal
• Sewing and reading lessons in Myanmar to assist women fac-
ing economic and social challenges
In fiscal 2008, donation accounts were established for relief
efforts following the cyclone in Myanmar, the Great Sichuan
Earthquake, the Iwate-Miyagi-Nairiku Earthquake, and flooding in
• Micro-finance business and job training for the poorest
Aichi prefecture.
women in agricultural villages in Bangladesh
Furthermore, following the Great Sichuan Earthquake,
• In Indonesia, scholarships for elementary to high school stu-
Sumitomo Mitsui Card collected donations made by customers
dents and infant care programs
using its credit cards.
• In the Philippines, reading classes for mothers and organic
farming training to give mothers and children more nutritious
diets
• Scholarships for girls in poor villages in China
• Japan-China high school student exchange, school visitation,
home stay, company visits and other programs
• In Afghanistan, funds to construct a rehabilitation clinic for
landmine victims and other people in need
• School meal program for elementary schools in Burkina Faso
•Activities of YUI, SMBC’s Volunteer Organization
SMBC also provides active support for YUI, an in-house volun-
teer organization that provides opportunities for SMBC employ-
ees to plan and carry out volunteer activities. YUI activities
conducted on a regular basis include social events at schools for
the aurally challenged, holding charity bazaars for items col-
lected from employees, handicraft goods and donated items,
and events to provide opportunities for senior citizens to sing
their favorite songs in front of an audience.
SMFG 2009 61
• SMBC Program for Contributing
to Local Communities
• Participation in “TABLE FOR TWO”
In June 2009, SMBC introduced a nutritiously balanced, low-
Since fiscal 2007,
calorie fixed menu at its employee cafeterias with a ¥20 donation
SMBC has been
included in the meal price to fund meals at schools in developing
promoting activities
countries. This program serves two purposes: providing nutritious
planned
by
its
meals for children in developing
branches and other
countries who suffer from hunger
offices in Japan to
and malnutrition, and encourag-
contribute to local
ing employees in Japan to
communities. Thus
change to diets that help prevent
far, these activities have included cleaning up the local environ-
the onset of lifestyle diseases.
ment, such as a park, and areas in the vicinity of SMBC
branches, the planting of trees and flowers around branches,
sign-language study classes, exhibitions of children’s art from
around the world and concerts in the lobbies of SMBC branches.
•Support for UNICEF
SMBC is a member corporation of the steering committee of
UNICEF Coin 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
• Scholarships for University Students in China
SMBC has established a scholarship program in China for stu-
dents at Suzhou University and Shanghai International Studies
University.
• SMBC Global Foundation
Based in the United States, this foundation has distributed schol-
general public. The coins collected are sorted by currency with
arships to more than 5,000 university students in seven Asian
the cooperation of SMBC Green Service Co., Ltd., a Group com-
countries since its establishment in 1994. The foundation is
pany, before being delivered to UNICEF. SMBC also cooperates
active in the United States and Canada. In 2009, the mayor of
with UNICEF by implementing the UNICEF Donation Account pro-
New York City proclaimed May 17 “SMBC Day” in recognition of
gram. This program enables customers to donate their interest
the foundation’s many contributions to the city.
earnings after tax to UNICEF and SMBC provides a matching
donation.
Sumitomo Mitsui Card and VJA group companies collect
• SMBC Foundation for International Cooperation
Established in 1990, the SMBC Foundation aims to assist in
donations from VISA cardholders every year through its World
developing the human resources necessary to achieve sustain-
Present point service for member companies of the VISA Japan
Association. These donations are then transferred to the Japan
Committee for UNICEF. Since the start of the program in 1992,
able growth in developing economies as well as promote interna-
tional exchange activities. Since its inception, the foundation has
provided financial support for 7-8 students from Asian countries
total donations have exceeded ¥280 million. Beginning in April
2008, we also commenced donations to the Japanese National
Commission for UNESCO and WWF Japan (the World Wide Fund
for Nature 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).
Sumitomo Mitsui Card also makes its own donations to the working
funds of all these organizations from its card business revenues.
each year to enable them to attend universities in Japan. The
foundation also offers subsidies to research institutes and
researchers undertaking projects related to developing countries.
Environmental Activities
• Neighborhood Cleanup Programs
SMFG holds an “SMFG Clean-up Day” in which Group employ-
ees volunteer to pick up litter on beaches. In 2008, 117 employ-
ees participated in this activity.
SMBC Friend Securities held its own beach cleanup events
in Chiba and Hyogo Prefectures. About 200 employees took part.
In addition, employees of Sumitomo Mitsui Finance and Leasing
and Japan Research Institute regularly participate in cleanup
activities near their offices.
SMBC collects donations of foreign
coins and bills for UNICEF at its
branches.
The coins and bills collected are sorted by
currency and then delivered to UNICEF.
62
SMFG 2009
•Charity Concert
SMBC has been arranging charity concerts since fiscal 2006 to
support children worldwide who have suffered from wars, natural
disasters and other misfortunes. SMBC’s employee music soci-
eties perform a range of musical pieces that appeal to everyone
from children to adults. Donations are collected from the audi-
ence at the concert, 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. The 4th concert was held in
June 2009 at Nihon University Casals Hall with a large number in
attendance.
•SMBC Environmental Program
NPO C.C.C Furano Field
SMBC also provides support
to an environmental project
implemented by screenwriter
Soh Kuramoto in Furano,
Hokkaido. The bank is pro-
viding support for planting
seedlings at a country club
that has been shut down in Furano for reafforestation of the area.
Employee volunteers and their families are invited to tour the pro-
ject site to explore nature at first hand.
•Support for Nature Conservation Groups
Japan Research Institute undertakes research for the Eco Fund,
•Financial and Economic Education
SMBC welcomes school field trips to bank branches and other
an investment trust that targets environmentally responsible com-
locations. Other financial and economic education activities
panies, to assist this fund in making selections of companies
include a publication called What Does Bank Do?, a financial
appropriate for investment. The company then donates part of
education game on the SMBC website, support for Kidzania (job-
the fees received for this research to private sector nature con-
experience theme park for children), holding seminars on finance
servation groups.
and economics, internship programs, and many other programs.
Sumitomo Mitsui Card also donated funds to nature-protection
Sumitomo Mitsui Card and Japan Research Institute also provide
organizations as one way to mark the 40th anniversary of its
instructors for classes at universities.
establishment.
Contributing to Cultural, Artistic, and Education
Activities
•Children’s Illustration Contest
SMBC held its first illustration contest for elementary school chil-
dren in Japan in fiscal 2007. The following year’s contest attracted
approximately 2,000 entries. Winners were presented with original
bank passbooks featuring their own entries. In addition, the win-
ning works were displayed at SMBC branches throughout Japan
for the enjoyment of our customers.
•Student Internship Program
Japan Research Institute and SMBC Friend Securities welcome
student interns to their offices every year to learn about career
opportunities. In fiscal 2008, these two companies accepted
about 50 and 20 university student interns, respectively.
SMFG 2009 63
Human Resources
SMFG and the Group companies strive to create a workplace where each and every employee can take pride and be highly motivated
about his or her work. In the following pages, we would like to introduce SMBC’s initiatives in the human resources area.
Four Goals of SMBC’s Human Resource
Management
1. Promote the creation of an even more powerful business
culture and practices that will enable SMBC to compete in
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 2008, more than 800 young to mid-
career employees, in eastern and western Japan together,
global markets
attended these seminars.
2. Develop staff with specialized professional skills who can
provide customers with high-value-added services
3. Motivate employees even more strongly by respecting
their individuality and encouraging them to seek personal
fulfillment
4. Foster a corporate culture that encourages a forward-looking
and creative attitude
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 provides basic practical train-
ing programs in consumer banking, corporate banking, and
operations under separate programs known as the Retail
Banking College, the Corporate Banking College, and the
Banking Operations College. Instruction in business knowledge
and skills, which was formerly conducted over several years, has
been concentrated into a period of only about six months for new
employees, using a combination of on-the-job training and class-
room courses. This system provides for a concentrated learning
experience without placing an undue burden on new employees.
Corporate Banking College
•Expanding In-House Recruitment Systems
To support employees in designing their own careers on their own
initiative we operate an 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 departments introduce their work and solicit
other employees to join them. This forum not only increases inter-
est in the in-house recruitment system but also improves
64
SMFG 2009
Job Forum
Creating a Corporate Culture that
Derives Strength from Diversity
•Employing a Diversity of Human Resources
SMBC is implementing initiatives to create a workplace where
gender, nationality, and other superficial characteristics are not
an issue and where a diversity of personnel can make active
contributions. The ratio of women newly hired for the year begin-
ning in April 2009 for generalist and consumer services positions
was around 40%, and the number of women holding managerial
positions has increased substantially. In fiscal 2008, we estab-
lished a Diversity and Inclusion Department within our Human
Resources Department and implemented other initiatives for cre-
ating a corporate culture that derives strength from diversity.
•The New Business Career Path
In fiscal 2008, we revamped our existing support staff career
tracks by establishing the Business Career Path for those wishing
to broaden their work activities and roles. We have introduced a
“corporate course” and an “operation course” for work and career
paths. We have also created managerial levels and opened up
fields where motivated employees can make even greater contri-
butions, while valuing lifestyle and career considerations. In addi-
tion, we have hired temporary and contract employees working at
our branches as regular employees on the Business Career Path
(about 2,000 in fiscal 2008; some 400 in fiscal 2009).
•Initiatives at Overseas Offices
SMBC has a strong commitment to training local staff at overseas
units. The training facility established in Singapore by the Asia
Pacific Training Department covers a broad range of subjects for
employees in this region. Sessions are focused primarily on busi-
ness training and the development of capabilities and skills.
Through these activities, we are taking the initiative in developing
human resources on a global scale.
As of April 2009, SMBC had three non-Japanese executive
officers, one each in Asia, the United States and Europe. In addi-
tion, we are aggressively recruiting foreign employees in Japan.
Credit administration training session in Singapore
•Employing Physically Challenged Persons
SMBC has established a special company called SMBC Green
Service Co., Ltd. that provides employment opportunities for the
physically challenged. In December 2008, this company set up
an office in Kobe for the purpose of creating jobs for the mentally
challenged. To upgrade their skills, we encourage our employees
to participate actively in competitions for the physically chal-
lenged. Over the years, we have sent a number of our employees
to the National Skill Competition for the Disabled (known as the
“Abilympics”), three of whom were winners in the fiscal 2008
competition. As of March 2009, physically challenged persons
Systems for a More Flexible Work Environment
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 leave to care for sick children who are in
their third year of primary school or younger. (Leaves are up to
five days a year for one child and ten 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 family member 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 chil-
dren 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 leave of absence to take care of a dis-
abled or elderly family member.
account for 1.95% of our employees, well above the legally
Systems to Provide Financial Support for Child-Rearing
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 cen-
ters 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 dis-
count.
mandatory 1.8%.
•Providing Support for a Good Work-Life Balance
SMBC has an employee support program that provides a range
of assistance for achieving a proper balance between work and
home. For example, we reimburse employees for up to ¥50,000
for monthly after-school child-care and babysitting expenses and
we have extended the duration of all child-related programs to
the end of the third year of elementary school. More than 20 male
employees have used the short-term (about two weeks) child-
care leave system. Our monthly lecture program for assisting
employees returning to work after time off for child-rearing is now
in its fourth year. A total of 600 or so employees have attended
these sessions. Giving families a better understanding of jobs at
SMBC is another goal. For this purpose, we conduct the SMBC
Children’s Visitation Program each year so that children can see
the work their parents do at SMBC. In March 2009, SMBC
received the Kurumin certification from the Japanese Ministry of
Health, Labour and Welfare in recognition of our activities to sup-
port child-rearing.
Children’s Visitation Program
Kurumin
SMFG 2009 65
The programs explained thus far are all activities at SMBC, and
similar initiatives are being extended to other Group companies.
To start their own programs for employees, Sumitomo Mitsui
Card, Sumitomo Mitsui Finance and Leasing, SMBC Friend
Securities and Japan Research Institute each completed a Work-
Life Balance Guidebook in fiscal 2008, based on actual experi-
ence at SMBC.
Work-Life Balance Guidebook
Heightening Awareness of Individual Rights
At SMBC, we have included in our principles of action the con-
Staff Profile
March 31
Number of employees*
Male
Female
2007
19,723
13,424
6,299
2008
20,273
13,457
6,816
2009
23,543
13,669
9,874
Average age
39 yrs 0 mths
38 yrs 7 mths
36 yrs 9 mths
Male
Female
41 yrs 2 mths
40 yrs 10 mths
40 yrs 5 mths
34 yrs 5 mths
34 yrs 2 mths
31 yrs 8 mths
Average years of service
16 yrs 8 mths
15 yrs 11 mths
13 yrs 10 mths
Male
Female
18 yrs 2 mths
17 yrs 5 mths
16 yrs 11 mths
13 yrs 7 mths
12 yrs 11 mths
9 yrs 6 mths
Ratio of employees with
disabilities (% of total)**
2.03%
2.05%
1.95%
*
The number of full-time employees, including employees temporarily dis-
patched to other companies and organizations. The following have all been
excluded from this total: executive 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
cepts that “we will respect the individual human dignity of our
April 1
2005
2006
2007
2008
2009
Number of newly employed
female graduates***
Ratio of newly employed females
to total new employees
208
252
380
518
388
38.1
36.3
40.0
41.3
40.3
*** Includes generalist staff and consumer service staff. Business Career Path
employees are excluded.
Fiscal
2004
2005
2006
2007
2008
Number of women in
managerial positions****
Number taking leave for
child-rearing
Men taking such leave
Number of career hires
**** As of the end of the fiscal year
193
235
280
354
456
70
—
88
89
—
181
126
6
156
163
22
500
222
27
136
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 posi-
tions 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)
lSMBC Named as One of the Best 25 Companies in Japan in
the “Great Place to Work” Rankings
In January 2009, SMBC was selected for the second year run-
ning 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 sur-
vey 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 survey of employees receives
a weighting of two-thirds in deter-
mining the final results.
66
SMFG 2009
Financial Section and Corporate Data
Financial Data
SMFG
Consolidated Balance Sheets ..................................... 68
Consolidated Statements of Operations ..................... 70
Consolidated Statements of
Changes in Net Assets ............................................... 71
Corporate Data
Sumitomo Mitsui Financial Group, Inc.
Board of Directors, Corporate Auditors,
and Executive Officers .......................................... 195
SMFG Organization ................................................ 195
Consolidated Statements of Cash Flows.................... 73
Sumitomo Mitsui Banking Corporation
Notes to Consolidated Financial Statements.............. 75
Independent Auditors’ Report ..................................... 123
Board of Directors, Corporate Auditors,
and Executive Officers .......................................... 196
SMBC Organization ................................................ 198
SMBC
Supplemental Information ........................................... 124
SMFG
Income Analysis (Consolidated) .................................. 129
Assets and Liabilities (Consolidated) .......................... 132
Capital (Nonconsolidated) ........................................... 135
SMBC
Income Analysis (Consolidated) .................................. 138
Assets and Liabilities (Consolidated) .......................... 141
Income Analysis (Nonconsolidated) ............................ 143
Deposits (Nonconsolidated) ........................................ 147
Loans (Nonconsolidated) ............................................ 149
Securities (Nonconsolidated) ...................................... 154
Ratios (Nonconsolidated) ............................................ 156
Capital (Nonconsolidated) ........................................... 158
Others (Nonconsolidated) ........................................... 159
Trust Assets and Liabilities (Nonconsolidated) ........... 161
Capital Ratio Information
SMFG
Capital Ratio Information (Consolidated) .................... 162
SMBC
Capital Ratio Information............................................. 193
Principal Subsidiaries and Affiliates
Principal Domestic Subsidiaries ............................. 200
Principal Overseas Subsidiaries ............................. 201
Principal Affiliates ................................................... 202
International Directory................................................ 203
SMFG 2009
67
SMFG
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 29) ...............................................................
Call loans and bills bought (Note 10) ...................................................................
Receivables under resale agreements.................................................................
Receivables under securities borrowing transactions ..........................................
Monetary claims bought (Notes 10 and 29) .........................................................
Trading assets (Notes 3, 10 and 29)....................................................................
Money held in trust (Note 29)...............................................................................
Securities (Notes 4, 10 and 29)............................................................................
Loans and bills discounted (Notes 5 and 10) .......................................................
Foreign exchanges...............................................................................................
Lease receivables and investment assets (Notes 10 and 28)..............................
Other assets (Notes 6 and 10) .............................................................................
Tangible fixed assets (Notes 7, 10 and 16)..........................................................
Intangible fixed assets (Note 8)............................................................................
Lease assets (Notes 9 and 28) ............................................................................
Deferred tax assets (Note 24) ..............................................................................
Customers’ liabilities for acceptances and guarantees ........................................
Reserve for possible loan losses .........................................................................
Total assets .........................................................................................................
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
¥ 3,800,890
1,440,804
633,655
10,487
1,820,228
1,024,050
4,924,961
8,985
28,698,164
65,135,319
885,082
1,968,347
4,257,251
1,008,801
361,884
—
857,658
3,878,504
(1,077,852)
¥119,637,224
¥ 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
$
38,694
14,668
6,451
107
18,530
10,425
50,137
91
292,153
663,090
9,010
20,038
43,340
10,270
3,684
—
8,731
39,484
(10,973)
$1,217,930
68
SMFG 2009
Consolidated Balance Sheets
SMFG
(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, 15 and 28)..................................................................
Reserve for employee bonuses ...........................................................................
Reserve for executive bonuses............................................................................
Reserve for employee retirement benefits (Note 27) ...........................................
Reserve for executive retirement benefits............................................................
Reserve for reimbursement of deposits ...............................................................
Reserve under the special laws ..........................................................................
Deferred tax liabilities (Note 24)...........................................................................
Deferred tax liabilities for land revaluation (Note 16) ...........................................
Acceptances and guarantees (Note 10)...............................................................
Total liabilities .....................................................................................................
Net assets (Note 25)
Capital stock (Note 17) ........................................................................................
Capital surplus .....................................................................................................
Retained earnings ................................................................................................
Treasury stock .....................................................................................................
Total stockholders’ equity ..................................................................................
Net unrealized gains (losses) on other securities (Notes 24 and 29)...................
Net deferred losses on hedges (Note 30) ............................................................
Land revaluation excess (Note 16) ......................................................................
Foreign currency translation adjustments ............................................................
Total valuation and translation adjustments .....................................................
Stock acquisition rights (Note 31) ........................................................................
Minority interests .................................................................................................
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)
2009
2008
2009
¥ 83,030,782
2,499,113
778,993
7,589,283
3,597,658
4,644,699
281,145
1,019,342
3,683,483
60,918
3,803,046
27,659
513
35,643
7,965
11,767
432
27,287
47,217
3,878,504
115,025,460
1,420,877
57,245
1,245,085
(124,024)
2,599,183
(14,649)
(20,835)
35,159
(129,068)
(129,394)
66
2,141,908
4,611,764
¥119,637,224
¥ 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
$ 845,269
25,441
7,930
77,260
36,625
47,284
2,862
10,377
37,499
620
38,716
282
5
363
81
120
4
278
481
39,484
1,170,981
14,465
583
12,675
(1,263)
26,460
(149)
(212)
358
(1,314)
(1,317)
1
21,805
46,949
$1,217,930
SMFG 2009 69
SMFG
Consolidated Statements of Operations
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.......................................................................
Interest on lease transactions .........................................................................
Other interest income......................................................................................
Trust fees .............................................................................................................
Fees and commissions (Note 18) ........................................................................
Trading income (Note 19) ....................................................................................
Other operating income (Note 20)........................................................................
Other income (Note 22)........................................................................................
Total income........................................................................................................
Expenses
Interest expenses.................................................................................................
Interest on deposits.........................................................................................
Interest on borrowings and rediscounts ..........................................................
Interest on payables under repurchase agreements ......................................
Interest on payables under securities lending transactions ............................
Interest on bonds and short-term bonds ........................................................
Other interest expenses..................................................................................
Fees and commissions payments (Note 18)........................................................
Other operating expenses (Note 21)....................................................................
General and administrative expenses..................................................................
Provision for reserve for possible loan losses......................................................
Other expenses (Note 23)....................................................................................
Total expenses ....................................................................................................
Income before income taxes and minority interests .........................................
Income taxes (Note 24):
Current ............................................................................................................
Deferred ..........................................................................................................
Minority interests in net income............................................................................
Net income (loss) ...............................................................................................
See accompanying notes to consolidated financial statements.
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
¥2,087,348
1,564,768
299,616
1,750
4,506
42,738
77,772
96,195
2,122
672,752
211,738
529,599
52,973
3,556,536
748,894
374,359
85,274
7,298
59,962
89,256
132,743
115,574
473,212
1,063,419
402,807
723,131
3,527,040
29,495
¥2,145,451
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
935,067
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
72,238
262,405
68,308
¥ (373,456)
103,900
282,538
80,980
¥ 461,536
$21,250
15,930
3,050
18
46
435
792
979
22
6,849
2,155
5,391
539
36,206
7,623
3,811
868
74
610
909
1,351
1,177
4,817
10,826
4,101
7,362
35,906
300
736
2,671
695
$ (3,802)
70
SMFG 2009
Consolidated Statements of Changes in Net Assets
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
SMFG
Year ended March 31
Stockholders’ equity
Capital stock
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
¥1,420,877
¥1,420,877
$14,465
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
—
¥1,420,877
—
¥1,420,877
—
$14,465
Capital surplus
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Disposal of treasury stock..........................................................................
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
57,826
(580)
(580)
57,245
¥
57,773
53
53
57,826
¥
589
(6)
(6)
583
$
Retained earnings
Balance at the end of the previous fiscal year ................................................
Decrease in retained earnings at the beginning of the fiscal year due to
accounting change of overseas subsidiaries ................................................
1,740,610
1,386,436
17,720
(3,132)
—
(32)
Changes in the fiscal year:
Cash dividends .........................................................................................
Net income (loss) .......................................................................................
Increase due to increase in subsidiaries....................................................
Increase due to decrease in subsidiaries...................................................
Decrease due to increase in subsidiaries ..................................................
Decrease due to decrease in subsidiaries .................................................
Reversal of land revaluation excess ..........................................................
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
Treasury stock
(118,833)
(373,456)
19
8
(14)
(1)
(114)
(492,392)
¥1,245,085
(110,215)
461,536
268
7
(100)
(3)
2,681
354,173
¥1,740,610
(1,210)
(3,802)
0
0
(0)
(0)
(1)
(5,013)
$12,675
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Purchase of treasury stock ........................................................................
Disposal of treasury stock..........................................................................
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
(123,989)
(123,454)
(1,263)
(943)
907
(35)
¥ (124,024)
(901)
367
(534)
¥ (123,989)
(10)
10
(0)
$ (1,263)
Total stockholders’ equity
Balance at the end of the previous fiscal year ................................................
Decrease in retained earnings at the beginning of the fiscal year due to
accounting change of overseas subsidiaries ................................................
3,095,324
2,741,632
31,511
(3,132)
—
(32)
Changes in the fiscal year:
Cash dividends ..........................................................................................
Net income (loss) .......................................................................................
Purchase of treasury stock ........................................................................
Disposal of treasury stock..........................................................................
Increase due to increase in subsidiaries....................................................
Increase due to decrease in subsidiaries...................................................
Decrease due to increase in subsidiaries ..................................................
Decrease due to decrease in subsidiaries .................................................
Reversal of land revaluation excess ..........................................................
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
(118,833)
(373,456)
(943)
326
19
8
(14)
(1)
(114)
(493,008)
¥2,599,183
(110,215)
461,536
(901)
420
268
7
(100)
(3)
2,681
353,692
¥3,095,324
(1,210)
(3,802)
(10)
4
0
0
(0)
(0)
(1)
(5,019)
$26,460
SMFG 2009
71
SMFG
Consolidated Statements of Changes in Net Assets
(Continued)
Year ended March 31
Valuation and translation adjustments
Net unrealized gains (losses) on other securities
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
Net deferred losses on hedges
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year ..............................................................
Land revaluation excess
Balance at the end of the previous fiscal year ...............................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
Foreign currency translation adjustments
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
Total valuation and translation adjustments
Balance at the end of the previous fiscal year ...............................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year ...................................................................
Balance at the end of the fiscal year...............................................................
Stock acquisition rights
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
¥ 550,648
¥1,262,135
$ 5,606
(565,298)
(565,298)
¥ (14,649)
(711,486)
(711,486)
¥ 550,648
(5,755)
(5,755)
$ (149)
(75,233)
(87,729)
(766)
54,397
54,397
¥ (20,835)
34,910
248
248
35,159
¥
12,495
12,495
¥ (75,233)
37,605
(2,694)
(2,694)
34,910
¥
554
554
$ (212)
355
3
3
358
$
(27,323)
(30,656)
(278)
(101,744)
(101,744)
¥ (129,068)
3,333
3,333
¥ (27,323)
(1,036)
(1,036)
$ (1,314)
483,002
1,181,353
4,917
(612,396)
(612,396)
¥ (129,394)
(698,351)
(698,351)
¥ 483,002
(6,234)
(6,234)
$ (1,317)
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year...............................................................
¥
43
22
22
66
14
29
29
43
¥
1
0
0
1
$
Minority interests
Balance at the end of the previous fiscal year ................................................
Changes in the fiscal year:
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year....................................................................
Balance at the end of the fiscal year ..............................................................
1,645,705
1,408,279
16,753
496,202
496,202
¥2,141,908
237,426
237,426
¥1,645,705
5,052
5,052
$21,805
Total net assets
Balance at the end of the previous fiscal year ................................................
Decrease in retained earnings at the beginning of the fiscal year due to
accounting change of overseas subsidiaries ................................................
5,224,076
5,331,279
53,182
(3,132)
—
(32)
Changes in the fiscal year:
Cash dividends ..........................................................................................
Net income (loss) .......................................................................................
Purchase of treasury stock .......................................................................
Disposal of treasury stock..........................................................................
Increase due to increase in subsidiaries ...................................................
Increase due to decrease in subsidiaries...................................................
Decrease due to increase in subsidiaries ..................................................
Decrease due to decrease in subsidiaries .................................................
Reversal of land revaluation excess ..........................................................
Net changes in items other than stockholders’ equity in the fiscal year.....
Net changes in the fiscal year ...................................................................
Balance at the end of the fiscal year...............................................................
See accompanying notes to consolidated financial statements.
(118,833)
(373,456)
(943)
326
19
8
(14)
(1)
(114)
(116,171)
(609,180)
¥4,611,764
(110,215)
461,536
(901)
420
268
7
(100)
(3)
2,681
(460,895)
(107,203)
¥5,224,076
(1,210)
(3,802)
(10)
4
0
0
(0)
(0)
(1)
(1,182)
(6,201)
$46,949
72
SMFG 2009
Consolidated Statements of Cash Flows
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Year ended March 31
Cash flows from operating activities:
Income before income taxes and minority interests........................................
Depreciation ...................................................................................................
Depreciation of fixed assets............................................................................
Depreciation of lease assets...........................................................................
Losses on impairment of fixed assets.............................................................
Amortization of goodwill ..................................................................................
Equity in losses of affiliates.............................................................................
Losses 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) losses from money held in trust....................................................
Net exchange losses ......................................................................................
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 payables under securities lending transactions .......................
Net change in foreign exchanges (assets)......................................................
Net change in foreign exchanges (liabilities) ..................................................
Net change in lease receivables and investment assets ................................
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 operating activities .........................................................
SMFG
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
¥
29,495
123,025
—
—
7,363
8,388
94,876
—
191,190
102
(630)
2,273
58
1,350
(2,087,348)
748,894
155,831
134
184,195
10,847
—
(912,601)
1,028,101
(3,439,852)
3,031,427
4,384,033
475,829
764,080
409,341
119,941
(1,186,720)
1,857,241
2,261
(19,280)
46,904
244,242
(283,810)
(19,878)
2,132,561
(765,686)
137,137
7,475,320
(107,266)
7,368,053
¥
928,955
—
83,346
403,775
5,161
10,520
41,760
$
300
1,252
—
—
75
85
966
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
—
1,946
1
(6)
23
1
14
(21,250)
7,624
1,586
1
1,875
110
—
(9,290)
10,466
(35,018)
30,861
44,630
4,844
7,779
4,167
1,221
(12,081)
18,907
23
(196)
478
2,486
(2,889)
(202)
21,710
(7,795)
1,396
76,100
(1,092)
75,008
SMFG 2009
73
SMFG
Consolidated Statements of Cash Flows
(Continued)
Year ended March 31
Cash flows from investing activities:
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
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 ................................................................
Purchases of stocks of subsidiaries................................................................
Proceeds from sale of stocks of subsidiaries..................................................
Purchases of treasury stocks of subsidiaries..................................................
Proceeds from purchase of stocks of subsidiaries resulting in change in
scope of consolidation ..................................................................................
Purchases of stocks of subsidiaries resulting in change in scope of
consolidation .................................................................................................
¥(53,213,459)
34,674,690
12,176,246
(2,135)
0
(175,632)
12,081
(74,489)
58
—
—
(21,925)
363
(20,000)
¥(50,073,494)
35,014,774
10,504,800
(5,378)
796
(71,301)
16,592
(64,918)
252
(457,070)
51,141
—
198
—
355
—
(8,675)
(2,951)
$(541,723)
352,995
123,956
(22)
0
(1,788)
123
(758)
0
—
—
(223)
4
(204)
4
(88)
Proceeds from sale of investments in subsidiaries resulting in change in
scope of consolidation ..................................................................................
Net cash used in investing activities..................................................................
13,264
(6,639,254)
—
(5,086,559)
135
(67,589)
Cash flows from financing activities:
Proceeds from issuance of subordinated borrowings .....................................
Repayment of subordinated borrowings .........................................................
Proceeds from issuance of subordinated bonds and bonds with
stock acquisition rights ..................................................................................
Repayment of subordinated bonds and bonds with stock
acquisition rights ...........................................................................................
Dividends paid ................................................................................................
Proceeds from contributions paid by minority stockholders............................
Repayments to minority stockholders .............................................................
Dividends paid to minority stockholders..........................................................
Purchases of treasury stock............................................................................
Proceeds from sale of treasury stock..............................................................
Net cash provided by financing activities..........................................................
Effect of exchange rate changes on cash and due from banks .......................
Net change in cash and due from banks ...........................................................
Cash and due from banks at beginning of year ................................................
Change in cash and due from banks due to
merger of consolidated subsidiaries................................................................
Change in cash and due from banks due to
newly consolidated subsidiaries ......................................................................
Change in cash and due from banks due to
exclusion of consolidated subsidiaries............................................................
5,000
(92,500)
40,000
(76,000)
380,600
214,000
(316,874)
(118,758)
1,046,529
(460,564)
(90,162)
(943)
326
352,652
(17,315)
1,064,136
2,736,752
—
0
—
(47,000)
(110,099)
141,500
—
(60,239)
(901)
853
102,112
(8,465)
789,676
1,927,024
1,183
18,870
(3)
51
(942)
3,875
(3,226)
(1,209)
10,654
(4,689)
(918)
(9)
3
3,590
(176)
10,833
27,861
—
0
—
Cash and due from banks at end of year ..........................................................
¥ 3,800,890
¥ 2,736,752
$ 38,694
See accompanying notes to consolidated financial statements.
74
SMFG 2009
Notes to Consolidated Financial Statements
SMFGSMFG
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Years ended March 31, 2009 and 2008
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 out-
standing 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 Act 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 state-
ments in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act 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 and affiliated companies were
based on accounting records maintained in conformity with generally
accepted accounting principles (“GAAP”) prevailing in the respective
countries of their domicile. Effective as from the fiscal year starting
April 1, 2008, their accounting principles are in principle integrated
with those of SMFG’s accounting policies for purposes of consolida-
tion unless they apply different accounting principles and standards
as required under U.S. GAAP or International Financial Reporting
Standards in which case a certain limited number of items are
adjusted based on their materiality. This change did not result in sig-
nificant differences or impact on the consolidated financial statements
of SMFG.
The accompanying consolidated financial statements have been
restructured and translated into English from the consolidated finan-
cial statements of SMFG prepared in accordance with Japanese
GAAP.
Some supplementary information included in the statutory
Japanese language consolidated financial statements, but not neces-
sarily required for fair presentation, is not presented in the accompa-
nying consolidated financial statements.
Amounts less than 1 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, 2009, which was ¥98.23 to
US$1. These 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 subsidiary
when the company substantially controls the operations of
the enterprise, 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:
2008
268
2009
288
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.
SMBC Finance Service Co., Ltd.
SMBC Friend Securities Co., Ltd.
The Japan Research Institute, Limited
SMBC Capital Markets, Inc.
Changes in the consolidated subsidiaries in the fiscal
year ended March 31, 2009 are as follows:
53 companies including SMM Auto Finance, Inc. were
newly consolidated due mainly to acquisition of stocks.
17 companies including Sakura Information Systems
Co., Ltd. were excluded from the scope of consolidation
because they were no longer subsidiaries due to a decrease
in shareholding ratio and other reasons.
Furthermore, 16 companies including SMFL
FOMALHAUT 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.
226 subsidiaries including SMLC MAHOGANY CO.,
LTD. are operators of silent partnerships for lease transac-
tions 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 immaterial, and as such, they do not
hinder a rational judgment of SMFG’s financial position
and results of operations when excluded from the scope of
consolidation.
SMFG 2009
75
SMFG
Notes to Consolidated Financial Statements
(b) Application of the equity method
Japanese accounting standards also require that any uncon-
solidated subsidiaries and affiliates which SMFG is able to
exercise material influence over their financial and operat-
ing 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.
2008
3
2009
4
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 the attributable portions to SMFG from their total
amounts in terms of net income and retained earnings are
immaterial, and as such, they do not hinder a rational
judgment of SMFG’s financial position and results of oper-
ations when excluded from the scope of equity method.
Bangkok SMBC Consulting Co., Ltd. was regarded as an
(c) The balance sheet dates of consolidated subsidiaries
2009
1
6
2
5
2
4
125
15
7
121
(i) The balance sheet dates of the consolidated subsidiaries
are as follows:
March 31
2008
—
May 31 .............................................
June 30.............................................
6
July 31 ............................................
2
September 30 ...................................
7
October 31 ......................................
2
November 30....................................
2
December 31 ....................................
122
January 31 ........................................
7
February 28/29 .................................
6
114
March 31 ..........................................
(ii) The financial statements of subsidiaries with balance
sheets dated May 31, July 31, September 30, November 30
and January 31 are consolidated after the accounts were pro-
visionally closed as of March 31 for the purpose of consolida-
tion. The financial statements of subsidiaries with balance
sheets dated June 30 are consolidated after the accounts were
provisionally closed as of December 31 or March 31. For
subsidiaries with balance sheets dated October 31, financial
statements are consolidated based on the provisional finan-
cial statements closed as of January 31 or March 31. Other
subsidiaries are consolidated on the basis of their respective
balance sheet dates.
Overseas consolidated subsidiaries with balance sheets
dated December 31 were established in January and
February 2009. Their financial statements are consolidated
after the accounts were provisionally closed as of March 31.
Appropriate adjustments are made for material transac-
tions during the periods between their respective balance
sheet dates and consolidated balance sheet dates.
unconsolidated subsidiary accounted for by the equity
method from this fiscal year because it became a subsidiary
due to an increase in shareholding ratio.
(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:
2008
71
2009
75
Sumitomo Mitsui Auto Service Company, Limited
Promise Co., Ltd.
Central Finance Co., Ltd.
OMC Card, Inc.
Daiwa Securities SMBC Co. Ltd.
Daiwa SMBC Capital Co., Ltd.
Daiwa SB Investments Ltd.
Sumitomo Mitsui Asset Management Company, Limited
Changes in the affiliates accounted for by the equity
method in the fiscal year ended March 31, 2009 are as
follows:
4 companies including Vietnam Export Import
Commercial Joint Stock Bank newly became affiliated
companies accounted for by the equity method due mainly
to acquisition of shares.
5 companies including Sakura Information Systems Co.,
Ltd. were excluded from the scope of consolidation due to a
decrease in shareholding ratio and were treated as affiliated
companies accounted for by the equity method.
2 companies including Japan Pension Navigator Co.,
Ltd. were excluded from the scope of affiliated companies
accounted for by the equity method because they became
consolidated subsidiaries due to an increase in shareholding
ratio.
3 companies including F BALANCE Inc. were also
excluded due mainly to liquidation.
(iii) Unconsolidated subsidiaries that are not accounted for
by the equity method
226 subsidiaries including SMLC MAHOGANY CO.,
LTD. are operators of silent partnerships for lease transac-
tions 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
76
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(d) Special purpose entities
(i) Outline of special purpose entities and transactions
SMBC provides loans, credit lines and liquidity lines to 14
special purpose entities (“SPEs”) for their funding needs
and issuing of commercial paper. 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 lim-
ited liabilities. SMBC has no voting rights in the SPEs and
sends no directors or employees. Accordingly, SMFG does
not consolidate these SPEs.
The combined assets and liabilities of the 14 SPEs as of
their most recent closing dates of 2009 were ¥3,140,527
million ($31,971 million) and ¥3,140,894 million
($31,975 million), respectively. The respective amounts of
2008 were ¥3,219,524 million and ¥3,219,835 million.
(ii) The amounts of principal transactions with these SPEs in
the years ended March 31, 2009 and 2008 were as follows:
Balances
March 31
Millions of yen
2009
2008
Millions of
U.S. dollars
2009
Income
Year ended March 31
Millions of yen
2009
2008
Millions of
U.S. dollars
2009
Loans and bills
discounted...............
Credit lines ...............
Liquidity lines...........
¥1,851,401
824,149
394,533
¥1,803,952
905,533
326,074
$18,848
8,390
4,016
Interest on loans and
discounts .................
Fees and commissions ...
¥26,092
2,133
¥25,194
2,509
$266
22
(2) Trading assets/liabilities and trading income/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
sheet on a trade date basis. Income and losses on trading-
purpose transactions are recognized on a trade date basis, and
recorded as “Trading income” or “Trading losses.”
Securities and monetary claims purchased for trading
purposes are stated at the fiscal year-end fair value, and finan-
cial derivatives such as swaps, futures and options are stated at
amounts that would be settled if the transactions were termi-
nated at the consolidated balance sheet date.
“Trading income” and “Trading losses” include interest
received or paid during the fiscal year. The year-on-year valua-
tion differences of securities and monetary claims are also
recorded in the above-mentioned accounts. As for the deriva-
tives, 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) Other than securities classified for 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 those classified for trading purpose,
held-to-maturity securities and investments in unconsoli-
dated subsidiaries and affiliates are classified as “other secu-
rities” (available-for-sale securities). Stocks (including
foreign 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.”
(b) Securities included in money held in trust are carried using
the same method used for securities mentioned above.
(4) Derivative transactions
Derivative transactions, other than those classified as trading
derivatives, are carried at fair value, with revaluation gain or
loss included in the income or loss, unless they are designated
as effective hedging instruments.
(5) Depreciation
(a) Tangible fixed assets
Tangible fixed assets owned by SMFG and SMBC are gen-
erally stated at cost less accumulated depreciation.
Tangible fixed assets are depreciated using the straight-line
method over the estimated useful lives of the respective
assets. Others are depreciated using the declining-balance
method. The estimated useful lives of major items are as
follows:
Buildings: 7 to 50 years
Others: 2 to 20 years
Other consolidated subsidiaries depreciate their tangible
fixed assets primarily using the straight-line method over
the estimated useful lives of the respective assets.
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 corpo-
rate 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 resid-
ual values are depreciated over 5 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.
SMFG 2009
77
SMFG
Notes to Consolidated Financial Statements
(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 sub-
sidiaries is depreciated using the straight-line method over
its estimated useful life (basically 5 years).
(c) Lease assets
Lease assets with respect to non-transfer ownership finance
leases, which are recorded in “Tangible fixed assets,” are
depreciated using the straight-line method, assuming that
lease term is its expected lifetime and residual value is zero.
(6) Reserve for possible loan losses
The reserve for possible loan losses of major consolidated sub-
sidiaries 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.
For claims on borrowers that are not currently bankrupt but
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 recov-
eries 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 the future collec-
tion from principal and interest (calculated using the ratio-
nally estimated cash flows discounted at the initial contractual
interest rate) and the book value.
For other claims, a reserve is provided for based on the his-
torical 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.
The 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 borrow-
ers 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 ¥717,010
million ($7,299 million) and ¥518,594 million at March 31,
2009 and 2008, respectively.
(7) Reserve for employee bonuses
The 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
The 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
The 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 9 years, over the employ-
ees’ estimated average remaining service period from the fiscal
year of its incurrence.
Unrecognized net actuarial gain or loss is amortized using
the straight-line method, primarily over 9 years, over the
employees’ average remaining service period, commencing
from the next fiscal year of incurrence.
(10) Reserve for executive retirement benefits
The 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
The reserve for reimbursement of deposits which were derec-
ognized as liabilities under certain conditions is provided for
the possible losses on the future claims of withdrawal based on
historical reimbursements. Formerly, deposits which had been
derecognized as liabilities were expensed when they were actu-
ally 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 inter-
ests for the fiscal year ended March 31, 2008 decreased by
¥10,417 million as compared with the former method.
78
SMFG 2009
(12) Reserve under the special laws
The reserve under the special laws is a reserve for eventual
future operating losses from financial instruments transactions
pursuant to Article 46-5 and Article 48-3 of the Financial
Instruments and Exchange Act.
(13) Translation of foreign currency assets and liabilities
Assets and liabilities of SMFG and SMBC denominated in for-
eign currencies and accounts of SMBC overseas branches are
translated into Japanese yen mainly at the exchange rates
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 rates prevailing at their respective balance
sheet dates.
(14) Lease transactions
(a) Recognition of income on finance leases
Interest income is allocated to each period.
(b) Recognition of income on operating leases
Primarily, lease-related income is recognized on a straight-
line basis over the term of the lease, based on the contrac-
tual amount of lease fees per month.
(c) Recognition of income and expenses on installment sales
Primarily, installment-sales-related income and installment-
sales-related expenses are recognized on a due-date accrual
basis over the period 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.
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 classify-
ing 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 assesses the effec-
tiveness of such individual hedges.
As a result of the application of JICPA Industry Audit
Committee Report No. 24, SMBC discontinued the appli-
cation 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
Notes to Consolidated Financial Statements
SMFG
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 on “macro hedge” (before deducting
tax effect) at March 31, 2009 and 2008 were ¥6,921 mil-
lion ($70 million) and ¥17,608 million, respectively. Gross
amounts of deferred hedge gains on “macro hedge” (before
deducting tax effect) at March 31, 2009 and 2008 were
¥5,688 million ($58 million) and ¥13,358 million,
respectively.
(b) Hedging against currency fluctuations
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 trans-
actions 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 denomi-
nated 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 trans-
actions 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.
SMFG 2009
79
SMFG
Notes to Consolidated Financial Statements
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 consol-
idated 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.
(18) Goodwill
Goodwill on SMBC Friend Securities Co., Ltd. and Sumitomo
Mitsui Finance and Leasing Company, Limited is amortized
using the straight-line method over 20 years. Goodwill on
other companies is charged or credited to income directly
when incurred or benefited.
The treatment of non-transfer ownership finance lease
transactions which commenced before April 1, 2008 was as
follows:
(i) Lessee side
Future minimum lease payments, excluding the interest
portion, at March 31, 2008 are considered as acquisition
cost and recorded as lease assets in either “Tangible fixed
assets” or “Intangible fixed assets,” assuming they had been
acquired at the beginning of the fiscal year.
(ii) Lessor side
Appropriate book value, net of accumulated depreciation,
of lease assets at March 31, 2008 was recorded as the
beginning balance of “Lease receivables and investment
assets.”
Accordingly, this accounting change has the following
impact on the consolidated financial statements as of and
for the fiscal year ended March 31, 2009 as compared with
the previous accounting method:
Lease receivables and investment assets ...... ¥1,968,347
Tangible fixed assets
Millions Millions of
U.S. dollars
of yen
$20,038
Lease assets .............................................
7,206
73
(19) Statements of cash flows
Intangible fixed assets
For the purposes of presenting the consolidated statements of
cash flows, cash and cash equivalents represent cash and due
from banks.
(20) Application of new accounting standards
(a) Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial
Statements
“Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial
Statements” (Accounting Standard Board of Japan (“ASBJ”)
Practical Issues Task Force No. 18, issued on May 17,
2006) became effective from the fiscal year beginning on
and after April 1, 2008. Accordingly, SMFG has applied it
from this fiscal year. This accounting method has decreased
retained earnings at April 1, 2008 by ¥3,132 million ($32
million), but has no material impact on the profit or loss
for the fiscal year ended March 31, 2009.
(b) Accounting Standard for Lease Transactions
Non-transfer ownership finance leases had been accounted
for using the same method as for operating leases.
However, “Accounting Standard for Lease Transactions”
(ASBJ Statement No. 13, issued on March 30, 2007) and
“Implementation Guidance on Accounting Standard for
Lease Transactions” (ASBJ Guidance No. 16, issued on
March 30, 2007) became effective from the fiscal year
beginning on and after April 1, 2008. Accordingly, SMFG
has applied them from the fiscal year ended March 31,
2009.
Lease assets .............................................
Loans and bills discounted .........................
Lease assets ................................................
Other assets ...............................................
Other liabilities .........................................
480
(138,788)
(1,205,021)
(662,005)
(32,205)
5
(1,413)
(12,267)
(6,739)
(328)
Interest income
Interest on lease transactions................... ¥ 77,772
(7,659)
Interest on loans and discounts ...............
$ 792
(78)
Interest expenses
Other interest expenses...........................
(639)
(7)
Other operating income
Lease-related income...............................
Installment-related income .....................
Other......................................................
(503,389)
(242,763)
(810)
Other operating expenses
Lease-related expenses.............................
Installment-related expenses ...................
General and administrative expenses..........
(472,005)
(206,456)
(178)
(5,125)
(2,471)
(8)
(4,805)
(2,102)
(2)
As a result, income before income taxes and minority
interests for the fiscal year ended March 31, 2009 increased
by ¥2,423 million ($25 million).
(c) 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 compared with the former
method.
80
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(22) Change in method of valuation of certain securities
Floating-rate Japanese government bonds which SMFG held
as “Other securities — AFS securities” had been carried on the
consolidated balance sheet at market values. From the fiscal
year ended March 31, 2009, such bonds have been carried at
their reasonably estimated amounts in accordance with the
“Practical Solution on Measurement of Fair Value of Financial
Assets” (ASBJ Practical Issues Task Force No. 25, issued on
October 28, 2008). As a result of this accounting change,
compared with the former accounting method at March 31,
2009, “Securities,” “Net unrealized gains on other securities”
and “Minority interests” increased by ¥117,757 million
($1,199 million), ¥67,741 million ($690 million) and ¥2,508
million ($26 million), respectively, and “Deferred tax assets”
decreased by ¥47,508 million ($484 million).
SMFG has rationally calculated the fair values of floating-
rate Japanese government bonds by discounting future cash
flows estimated from their yields and other factors, using dis-
count rates determined based on their yields. Yield and
volatility are the main parameters for calculating the fair
value.
(23) Transactions with related parties
SMFG has applied “Accounting Standard for Related Party
Disclosures” (ASBJ Statement No. 11, issued on October 17,
2006) and “Guidance on Accounting Standard for Related
Party Disclosures” (ASBJ Guidance No. 13, issued on October
17, 2006) from the fiscal year ended March 31, 2009. There
are no material transactions with related parties to be reported
in the fiscal years ended March 31, 2009 and 2008.
(d) Provisions on the scope of securities stipulated by regula-
tions 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 par-
tially 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 Act. SMFG, accordingly, has applied the
revised accounting standards and practices from the fiscal
year ended March 31, 2008.
(21) Changes in presentation
(a) Lease assets related to operating leases on lessor side (March
31, 2009: ¥180,273 million ($1,835 million); March 31,
2008: ¥99,183 million) had been included in “Lease
assets.” From the fiscal year ended March 31, 2009, they
are included in the following items because they have been
immaterial:
March 31
Tangible fixed assets
Millions Millions of
U.S. dollars
of yen
2009
2009
Buildings.................................................
Land ........................................................
Other tangible fixed assets .......................
¥52,681
68,131
59,460
Intangible fixed assets
Software...................................................
0
$536
694
605
0
(b) “Losses (gains) on sale of subsidiaries’ shares and gains on
change in equity of subsidiary” which had been reported in
“Net cash provided by operating activities” in the fiscal
year ended March 31, 2008, were ¥(5,622) million ($(57)
million) in the fiscal year ended March 31, 2009. They are
included in “Other” from the fiscal year ended March 31,
2009 because they have been immaterial.
3. Trading Assets
Trading assets at March 31, 2009 and 2008 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.............................................................................................
Millions of yen
2009
¥ 293,956
470
13,428
4,052,928
564,178
¥4,924,961
2008
¥ 230,442
3,043
10,440
2,995,314
884,370
¥4,123,611
Millions of
U.S. dollars
2009
$ 2,992
5
137
41,260
5,743
$50,137
SMFG 2009
81
SMFG
Notes to Consolidated Financial Statements
4. Securities
Securities at March 31, 2009 and 2008 consisted of the following:
March 31
Japanese government bonds*1..............................................................................
Japanese local government bonds.........................................................................
Japanese corporate bonds*2..................................................................................
Japanese stocks*1, 3, 4............................................................................................
Other*1, 3, 4..........................................................................................................
Millions of yen
2009
2008
¥14,734,419
338,688
3,899,189
2,755,683
6,970,184
¥28,698,164
¥ 9,339,978
439,228
3,880,773
3,749,762
6,107,758
¥23,517,501
Millions of
U.S. dollars
2009
$149,999
3,448
39,695
28,053
70,958
$292,153
*1 Unsecured loaned securities for which borrowers have the right to sell or pledge in the amount of ¥33,312 million ($339 million) and ¥81,071 million are included in Japanese gov-
ernment bonds, Japanese stocks and other at March 31, 2009 and 2008, 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 these securities,
¥1,717,335 million ($17,483 million) are pledged, and ¥188,715 million ($1,921 million) are held in hand at March 31, 2009. The respective amounts at March 31, 2008 were
¥1,758,728 million and ¥504,363 million.
*2 Japanese corporate bonds include privately placed bonds (stipulated by Article 2-3 of the Financial Instruments and Exchange Act) which are guaranteed by banking subsidiaries in
the amount of ¥2,304,890 million ($23,464 million) and ¥2,179,347 million at March 31, 2009 and 2008, respectively.
*3 Japanese stocks and other include investments in unconsolidated subsidiaries and affiliates of ¥469,965 million ($4,784 million) and ¥494,129 million at March 31, 2009 and 2008,
respectively.
*4 Japanese stocks and other include investments in jointly controlled entities of ¥14,756 million ($150 million) and ¥13,263 million at March 31, 2009 and 2008, respectively.
5. Loans and Bills Discounted
(1) Loans and bills discounted at March 31, 2009 and 2008 consisted of the following:
March 31
Bills discounted...................................................................................................
Loans on notes .....................................................................................................
Loans on deeds.....................................................................................................
Overdrafts ...........................................................................................................
Millions of yen
2009
2008
¥
257,759
2,852,998
53,489,947
8,534,613
¥65,135,319
¥
360,859
3,241,541
50,169,292
8,373,180
¥62,144,874
(2) Loans and bills discounted included the following “Risk-monitored loans” stipulated in the Banking Act:
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
2009
2008
¥ 292,088
1,019,352
36,162
238,713
¥1,586,317
¥
73,472
607,226
26,625
385,336
¥1,092,661
Millions of
U.S. dollars
2009
$
2,624
29,044
544,538
86,884
$663,090
Millions of
U.S. dollars
2009
$ 2,974
10,377
368
2,430
$16,149
*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 3 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).”
82
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(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, 2009 and 2008 was ¥686,407 million ($6,988 million) and ¥807,712
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 amounts of unused commitments at March 31, 2009 and 2008 were ¥39,983,526
million ($407,040 million) and ¥40,694,898 million, respectively, and the amounts of unused commitments whose original contract terms are
within 1 year or unconditionally cancelable at any time at March 31, 2009 and 2008 were ¥34,012,566 million ($346,254 million) and
¥34,502,051 million, respectively.
Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not nec-
essarily 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, 2009 and 2008 consisted of the following:
March 31
Prepaid expenses..................................................................................................
Accrued income...................................................................................................
Deferred assets.....................................................................................................
Financial derivatives* ..........................................................................................
Other ..................................................................................................................
* Referred to in Note 30
7. Tangible Fixed Assets
Tangible fixed assets at March 31, 2009 and 2008 consisted of the following:
March 31
Buildings.............................................................................................................
Land* ..................................................................................................................
Lease assets ..........................................................................................................
Construction in progress......................................................................................
Other tangible fixed assets...................................................................................
Total ..................................................................................................................
Accumulated depreciation ...................................................................................
* Includes land revaluation excess referred to in Note 16.
8. Intangible Fixed Assets
Intangible fixed assets at March 31, 2009 and 2008 consisted of the following:
March 31
Software...............................................................................................................
Goodwill .............................................................................................................
Lease assets ..........................................................................................................
Other intangible fixed assets................................................................................
Millions of yen
2009
¥
35,305
265,015
868,188
1,406,092
1,682,648
¥4,257,251
2008
¥
39,901
296,130
1,423,253
1,492,890
1,699,412
¥4,951,587
Millions of yen
2009
¥ 296,219
531,726
7,206
3,527
170,121
¥1,008,801
¥ 616,324
2008
¥235,729
463,225
—
3,755
117,700
¥820,411
¥557,958
Millions of yen
2009
¥163,522
186,793
480
11,087
¥361,884
2008
¥141,419
178,645
—
12,460
¥332,525
Millions of
U.S. dollars
2009
$
360
2,698
8,838
14,314
17,130
$43,340
Millions of
U.S. dollars
2009
$ 3,016
5,413
73
36
1,732
$10,270
$ 6,274
Millions of
U.S. dollars
2009
$1,665
1,901
5
113
$3,684
SMFG 2009
83
SMFG
Notes to Consolidated Financial Statements
9. Lease Assets
Lease assets at March 31, 2008 consisted of the following:
March 31
Equipment and others......................................................................................................................................................
Accumulated depreciation................................................................................................................................................
10. Assets Pledged as Collateral
Assets pledged as collateral at March 31, 2009 and 2008 consisted of the following:
March 31
Assets pledged as collateral:
Millions of yen
2009
2008
Cash and due from banks and Deposits with banks .........................................
Call loans and bills bought .............................................................................
Monetary claims bought .................................................................................
Trading assets.................................................................................................
Securities ........................................................................................................
Loans and bills discounted ..............................................................................
Lease receivables and investment assets ...........................................................
Tangible fixed assets.......................................................................................
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 ............................................................................
¥ 339,948
259,186
2,020
610,146
8,049,756
3,062,015
41,993
11,153
2,165
27,060
1,266,265
778,993
6,332,775
594,121
1,970,209
4,587
134,530
¥ 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
Millions of yen
2008
¥3,781,960
(2,356,863)
¥1,425,097
Millions of
U.S. dollars
2009
$ 3,461
2,639
21
6,211
81,948
31,172
427
114
22
275
12,891
7,930
64,469
6,048
20,057
47
1,370
In addition to the assets presented above, the following assets were pledged as collateral for cash settlements, variation margins of futures
market transactions and certain other purposes at March 31, 2009 and 2008:
March 31
Cash and due from banks and Deposits with banks ..............................................
Trading assets......................................................................................................
Securities .............................................................................................................
Monetary claims bought ......................................................................................
Loans and bills discounted ...................................................................................
Millions of yen
2009
¥
19,380
52,843
11,172,095
—
284,157
2008
¥
7,745
601,560
3,344,984
427
888,532
Millions of
U.S. dollars
2009
$
197
538
113,734
—
2,893
At March 31, 2009, other assets included surety deposits of ¥85,892 million ($874 million) and variation margins of futures market transac-
tions of ¥6,252 million ($64 million). At March 31, 2008, other assets included surety deposits of ¥85,979 million and variation margins of
futures market transactions of ¥11,546 million.
84
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
11. Deposits
Deposits at March 31, 2009 and 2008 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, 2009 and 2008 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....................................................................
Millions of yen
2009
2008
¥ 6,588,074
34,078,361
815,336
5,162,137
25,039,089
7,461,284
3,886,497
¥83,030,782
¥ 6,070,443
33,876,958
867,515
4,668,292
23,133,834
3,078,149
4,073,580
¥75,768,773
Millions of yen
2009
¥
7,473
407
13,997
3,575,780
¥3,597,658
2008
¥
20,046
3,881
10,196
2,637,192
¥2,671,316
Millions of
U.S. dollars
2009
$ 67,068
346,924
8,300
52,552
254,903
75,957
39,565
$845,269
Millions of
U.S. dollars
2009
$
76
4
143
36,402
$36,625
13. Borrowed Money
Borrowed money at March 31, 2009 and 2008 consisted of the following:
March 31
Millions of yen
2009
2008
Millions of
U.S. dollars
2009
Average
interest rate*1
2009
Due
Borrowed money*2 .......................................................... ¥4,644,699 ¥4,279,034
$47,284
0.98% Jan. 2009 — Perpetual
*1 Average interest rate represents the weighted average interest rate based on the balances and rates at respective year-end of SMBC and other consolidated subsidiaries.
*2 Includes subordinated debt of ¥436,000 million ($4,439 million) and ¥523,500 million at March 31, 2009 and 2008, respectively.
The repayment schedule over the next 5 years on borrowed money at March 31, 2009 was as follows:
March 31
Millions of yen
2009
Millions of U.S. dollars
2009
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 ................................................................................................
¥3,281,412
345,727
262,172
201,250
138,268
$33,405
3,520
2,669
2,049
1,408
SMFG 2009
85
SMFG
Notes to Consolidated Financial Statements
14. Bonds
Bonds at March 31, 2009 and 2008 consisted of the following:
March 31
Issuer
Millions of yen*1
Description
2009
2008
Millions of
U.S. dollars
2009
Interest rate*2
(%)
2009
Due
¥
— $ 1,163
0.19–0.59 Apr. 2009–Jun. 2009
SMBC:
Short-term bonds, payable in Yen................................
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, payable in Yen................................
¥ 114,242
[114,242]
1,249,142
[398,291]
25,400
885,875
690,800
207,782
1,484,978
[389,700]
26,900
599,873
813,500
297,415
($2,115,273 thousand) ($2,968,509 thousand)
2,402
(£12,000 thousand)
109,889
( 694,888 thousand)
197,436
( 1,249,496 thousand) ( 1,248,489 thousand)
90,312
( 695,570 thousand)
162,234
—
126,342
[65,621]
910
($10,000 thousand)
[910]
—
173,044
[80,000]
1,141
($10,000 thousand)
1,811
(£8,000 thousand)
[1,811]
160,725
[5,000]
100,190
($1,000,000 thousand) ($1,000,000 thousand)
146,451
[23,815]
98,230
12,717
0.10–2.014 Apr. 2009–May 2025
259
9,018
7,032
2,115
—
919
1,652
0.00–2.08433 Mar. 2012–Feb. 2037
1.48063–2.80 Jun. 2010–Feb. 2019
0.88375–2.97 Nov. 2014–Perpetual
5.625–8.00 Nov. 2011–Perpetual
—
4.375
4.375
—
Perpetual
Oct. 2014
1,286
0.00–3.19375 Apr. 2009–Jul. 2017
10
—
1,491
1,000
7.00
—
May 2009
—
1.45–4.95 Aug. 2009–Perpetual
8.50
Jun. 2009
[98,230]
905,100
[905,100]
¥4,702,826
769,100
[769,100]
¥4,738,408
9,214 0.27998–1.88742 Apr. 2009–Aug. 2009
$47,876
*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 1 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 5 years on bonds at March 31, 2009 was as follows:
March 31
Millions of yen
2009
Millions of U.S. dollars
2009
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 ................................................................................................
¥1,606,211
314,653
271,915
336,406
277,472
$16,352
3,203
2,768
3,425
2,825
86
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
15. Other Liabilities
Other liabilities at March 31, 2009 and 2008 consisted of the following:
March 31
Accrued expenses.................................................................................................
Unearned income.................................................................................................
Income taxes payable ...........................................................................................
Financial derivatives*1.........................................................................................
Lease liabilities*2.................................................................................................
Other ..................................................................................................................
Millions of yen
2009
¥ 268,050
177,998
45,105
1,317,303
23,594
1,970,993
¥3,803,046
2008
¥ 235,326
192,974
56,772
1,404,616
—
2,026,738
¥3,916,427
Millions of
U.S. dollars
2009
$ 2,729
1,812
459
13,411
240
20,065
$38,716
*1 Referred to in Note 30
*2 Average interest rate on lease liabilities for the year ended March 31, 2009 was 3.75%. Non-transfer ownership finance lease with the lease term commenced before April 1, 2008 is
excluded from calculations of average interest rate.
The repayment schedule over the next 5 years on lease liabilities at March 31, 2009 was as follows:
March 31
Millions of yen
2009
Millions of U.S. dollars
2009
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 ................................................................................................
¥6,592
4,605
2,743
1,873
1,172
$67
47
28
19
12
16. Land Revaluation Excess
SMBC and another consolidated subsidiary revaluated their own land
for business activities in accordance with the “Law Concerning Land
Revaluation” (the “Law”) effective March 31, 1998 and the law con-
cerning amendment of the Law effective March 31, 2001. The
income taxes corresponding to the net unrealized gains are 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.”
A certain affiliate revaluated its own land for business activities in
accordance with the Law. The net unrealized gains, net of deferred
taxes, are reported as “Land revaluation excess” in “Net assets.”
Date of the revaluation
SMBC:
March 31, 1998 and March 31, 2002
Another consolidated subsidiary and an affiliate:
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) effec-
tive March 31, 1998.
Another consolidated subsidiary and an affiliate:
Fair values were determined based on the values stipulated
in Article 2-3 and 2-5 of the Enforcement Ordinance
No. 119.
SMFG 2009
87
SMFG
Notes to Consolidated Financial Statements
17. Capital Stock
Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2009 and 2008 were as follows:
Number of shares
2009*
2008
March 31
Common stock.......................................................................................... 1,500,000,000
50,100
Preferred stock (Type 4)............................................................................
167,000
Preferred stock (Type 5)............................................................................
70,001
Preferred stock (Type 6) ............................................................................
Preferred stock (Type 7)............................................................................
167,000
115,000
Preferred stock (Type 8)............................................................................
Preferred stock (Type 9)............................................................................
115,000
Total......................................................................................................... 1,500,684,101
Authorized
Issued
789,080,477
33,400
—
70,001
—
—
—
789,183,878
Authorized
15,000,000
50,100
167,000
70,001
167,000
115,000
115,000
15,684,101
Issued
7,733,653.77
50,100
—
70,001
—
—
—
7,853,754.77
* SMFG implemented a 100-for-1 stock split of shares of common stock effective on January 4, 2009.
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 sub-
mitted 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 com-
mon stock, cash dividends in the amounts as described below. If pre-
ferred 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, hold-
ers of its preferred stock will be entitled, equally in rank as among
themselves and in preference over shares of its common stock, to
receive out of SMFG’s residual assets upon liquidation a distribution
of ¥3,000,000 per share in the case of Type 4 and Type 6 preferred
stock. Holders of preferred stock are not entitled to any further divi-
dends or other participation or distribution of SMFG’s residual assets
upon SMFG’s liquidation.
SMFG may, subject to the requirements provided in the Company
Act, 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 Act, 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 ¥3,188 as of March 31, 2009, 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 ¥1,051 as of March 31, 2009 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.
88
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
18. Fees and Commissions
Fees and commissions for the fiscal years ended March 31, 2009 and 2008 consisted of the following:
Millions of yen
2009
2008
Millions of
U.S. dollars
2009
Year ended March 31
Fees and commissions:
Deposits and loans ..........................................................................................
Remittances and transfers ...............................................................................
Securities-related business ..............................................................................
Agency ...........................................................................................................
Safe deposits ...................................................................................................
Guarantees .....................................................................................................
Credit card business........................................................................................
Investment trusts............................................................................................
Other .............................................................................................................
Fees and commissions payments:
Remittances and transfers ...............................................................................
Other .............................................................................................................
¥ 77,840
131,455
33,872
14,673
6,914
50,852
141,117
37,370
178,654
¥672,752
¥ 30,211
85,362
¥115,574
¥ 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
19. Trading Income
Trading income for the fiscal years ended March 31, 2009 and 2008 consisted of the following:
Year ended March 31
Gains on trading securities ..................................................................................
Gains on securities related to trading transactions................................................
Gains on trading-related financial derivatives ......................................................
Other ..................................................................................................................
Millions of yen
2009
¥ 23,876
1,221
179,255
7,386
¥211,738
2008
¥ 21,406
2,934
438,365
6,865
¥469,571
20. Other Operating Income
Other operating income for the fiscal years ended March 31, 2009 and 2008 consisted of the following:
Year ended March 31
Gains on sale of bonds .........................................................................................
Gains on redemption of bonds .............................................................................
Lease-related income............................................................................................
Gains on financial derivatives ..............................................................................
Other ..................................................................................................................
Millions of yen
2009
¥149,037
57
252,966
7,142
120,396
¥529,599
2008
¥ 108,350
88
893,448
1,099
209,648
¥1,212,635
$ 792
1,338
345
149
70
518
1,437
381
1,819
$6,849
$ 308
869
$1,177
Millions of
U.S. dollars
2009
$ 243
12
1,825
75
$2,155
Millions of
U.S. dollars
2009
$1,517
1
2,575
73
1,225
$5,391
SMFG 2009
89
SMFG
Notes to Consolidated Financial Statements
21. Other Operating Expenses
Other operating expenses for the fiscal years ended March 31, 2009 and 2008 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 ...............................................................
Other ..................................................................................................................
Millions of yen
2009
¥ 68,882
45,852
7,049
606
194,349
14,984
141,487
¥473,212
2008
¥
29,380
35,860
67,045
756
794,468
254,927
209,651
¥1,392,089
22. Other Income
Other income for the fiscal years ended March 31, 2009 and 2008 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...........................................................................
Recoveries of written-off claims ...........................................................................
Gains on change in equity due to mergers of subsidiaries.....................................
Other ..................................................................................................................
Millions of yen
2009
¥15,242
98
1,297
1,708
—
34,627
¥52,973
2008
¥ 61,509
250
10,988
1,355
103,133
26,108
¥203,346
23. Other Expenses
Other expenses for the fiscal years ended March 31, 2009 and 2008 consisted of the following:
Millions of yen
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 ..................................................................................................................
*Losses on impairment of fixed assets consisted of the following:
Year ended
March 31
Area
Purpose of use
2009
2009
¥302,353
7,802
191,117
232
62,549
94,876
12,144
7,363
44,692
¥723,131
Type
2008
¥141,750
5,737
62,835
23
35,300
41,760
12,538
5,161
35,355
¥340,463
Millions of
U.S. dollars
2009
$ 701
467
72
6
1,978
153
1,440
$4,817
Millions of
U.S. dollars
2009
$155
1
13
17
—
353
$539
Millions of
U.S. dollars
2009
$3,078
79
1,946
2
637
966
124
75
455
$7,362
Millions of yen
2009
2008
Millions of
U.S. dollars
2009
Tokyo metropolitan area ....................................... Branch (1 branch)
Land and buildings, etc.
¥
Corporate assets (1 item)
Idle assets (24 items)
Other (6 items)
Kinki area ............................................................. Branches (5 branches)
Idle assets (10 items)
Other (4 items)
Land and buildings, etc.
Other .................................................................... Branches (—)
Land and buildings, etc.
Idle assets (9 items)
57
4,700
664
444
389
607
318
—
179
¥
41
—
1,196
69
298
3,086
—
17
451
$ 1
48
7
4
4
6
3
—
2
90
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
At SMBC, a branch, which continuously manages and determines its income and expenses, is the smallest unit of asset group for recognition
and measurement of impairment loss of fixed assets. 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 corporate assets.
As for idle assets, impairment loss is measured individually. At other consolidated subsidiaries, a branch or other group is the smallest asset
grouping unit as well.
In the fiscal year under review, SMBC and other subsidiaries reduced the carrying amounts of long-lived assets of which investments are not
expected to be fully recovered to their recoverable amounts, and recognized the losses as “losses on impairment of fixed assets,” which is
included in “Other expenses.” SMBC reduced the carrying amounts of corporate assets and idle assets, and other consolidated subsidiaries
reduced the carrying amounts of long-lived assets of their branches and idle assets. 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.
24. Deferred Tax Assets and Liabilities
(1) Significant components of deferred tax assets and liabilities at March 31, 2009 and 2008 were as follows:
March 31
Deferred tax assets:
Millions of yen
2009
2008
Net operating loss carryforwards ...........................................................
Write-off of securities ...........................................................................
Reserve for possible loan losses ..............................................................
Write-off of loans..................................................................................
Net unrealized gains (losses) on other securities.....................................
Reserve for employee retirement benefits...............................................
Net deferred losses on hedges ................................................................
Depreciation .........................................................................................
Other ....................................................................................................
Subtotal ................................................................................................
Valuation allowance ..............................................................................
Total deferred tax assets ........................................................................
Deferred tax liabilities:
Net unrealized gains (losses) on other securities.....................................
Leveraged lease......................................................................................
Gains on securities contributed to employee retirement benefits trust ...
Securities returned from employee retirement benefits trust ..................
Undistributed earnings of overseas subsidiaries .....................................
Other ....................................................................................................
Total deferred tax liabilities ..................................................................
Net deferred tax assets ..............................................................................
¥ 718,553
354,168
307,586
141,102
72,185
64,968
14,125
9,058
132,911
1,814,660
(851,725)
962,935
(26,133)
(29,167)
(42,263)
(14,711)
(2,206)
(18,082)
(132,564)
¥ 830,370
¥ 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
Millions of
U.S. dollars
2009
$ 7,315
3,606
3,131
1,437
735
661
144
92
1,353
18,474
(8,671)
9,803
(266)
(297)
(430)
(150)
(23)
(184)
(1,350)
$ 8,453
(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, 2009 and 2008. A reconciliation of the
effective income tax rate reflected in the accompanying consolidated statements of operations to the statutory tax rate for the years ended
March 31, 2009 and 2008 was as follows:
Statutory tax rate..............................................................................................................................
Valuation allowance .....................................................................................................................
Equity in losses of affiliates...........................................................................................................
Gains on changes in equity ...........................................................................................................
Unrealized gains...........................................................................................................................
Undistributed earnings of overseas subsidiaries.............................................................................
Dividends exempted for income tax purposes ...............................................................................
Other ...........................................................................................................................................
Effective income tax rate ..................................................................................................................
2009
40.69%
1,033.93
130.88
—
—
(34.92)
(6.24)
(29.80)
1,134.54%
2008
40.69%
2.10
1.83
(4.52)
3.04
—
—
(1.54)
41.60%
SMFG 2009
91
SMFG
Notes to Consolidated Financial Statements
25. Changes in Net Assets
(1) Type and number of shares issued and treasury shares are as follows:
Year ended March 31, 2009
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....................................................................................
Treasury shares
Common stock ..........................................................................
Preferred stock (5th series Type 4).............................................
Preferred stock (6th series Type 4).............................................
Preferred stock (7th series Type 4).............................................
Preferred stock (8th series Type 4).............................................
Total....................................................................................
*1 Increase in number of common shares issued:
March 31,
2008
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
168,997.41
—
—
—
—
168,997.41
Number of shares
Increase
Decrease
March 31,
2009
781,346,823.23*1
—
—
—
—
—
—
—
—
—
—
—
—
—
781,346,823.23
— 789,080,477
4,175
—
4,175
—
4,175
—
4,175
—
4,175*2
—
4,175*2
—
4,175*2
—
4,175*2
—
4,175
—
4,175
—
4,175
—
4,175
—
70,001
—
789,183,878
16,700
16,887,475.04*3 28,006.45*3
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
16,904,175.04
44,706.45
17,028,466
—
—
—
—
17,028,466
• 157,151 shares due to exercising of rights to request acquisition of common shares with respect to preferred stock (5th through 8th series Type 4) on April 30, 2008
• 781,189,672.23 shares due to the stock split implemented on January 4, 2009
*2 Increase in number of treasury preferred shares (Type 4):
• 4,175 shares due to acquisition of own shares on April 30, 2008 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 (5th through 8th series Type 4):
• 4,175 shares due to retirement of treasury shares on May 16, 2008
*3 Increase in number of treasury common shares:
• 68,904.66 shares due to purchase of fractional shares and shares less than one unit
• 539 shares due to acquisition of shares owned by shareholders who opposed the exchange of subsidiary company shares for SMFG shares
• 16,818,031.38 shares due to the stock split implemented on January 4, 2009
Decrease in number of treasury common shares:
• 28,006.45 shares due to sale of fractional shares and shares less than one unit
92
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
Year ended March 31, 2008
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....................................................................................
Treasury shares
March 31,
2007
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
Number of shares
Increase
Decrease
March 31,
2008
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 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
Common stock ..........................................................................
Total....................................................................................
168,630.95
168,630.95
895.01*1
895.01
528.55*2
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
(2)
Information on stock acquisition rights is as follows:
Year ended March 31, 2009 acquisition rights
Detail of stock
Type of
shares
March 31,
2008
Number of shares
Increase
Decrease
March 31,
2009
Millions of yen
March 31,
2009
SMFG ............................
Consolidated
subsidiaries ..................
Total..............................
Stock options
—
—
—
—
—
—
—
—
—
—
—
¥ —
66
¥ 66
Year ended March 31, 2008 acquisition rights
Detail of stock
Type of
shares
March 31,
2007
Number of shares
Increase
Decrease
March 31,
2008
Millions of yen
March 31,
2008
SMFG ............................
Consolidated
subsidiaries ..................
Total..............................
Stock options
—
—
—
—
—
—
—
—
—
—
—
¥ —
43
¥ 43
Millions of
U.S. dollars
March 31,
2009
$ —
1
$ 1
(3)
Information on dividends is as follows:
(a) 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) ..................................................
of dividends
¥53,660
563
563
563
563
563
563
563
563
563
563
563
563
6,195
Date of resolution: Ordinary general meeting of shareholders held on June 28, 2007
Millions of yen, except per share amount
Aggregate amount Cash dividends
Record date
per share
¥ 7,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
135,000 March 31, 2007
88,500 March 31, 2007
Effective date
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
SMFG 2009
93
SMFG
Notes to Consolidated Financial Statements
Millions of yen, except per share amount
Aggregate amount Cash dividends
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) ..................................................
of dividends
¥38,326
281
281
281
281
281
281
281
281
281
281
281
281
3,097
Date of resolution: Meeting of the Board of Directors held on November 19, 2007
(b) Dividends paid in the fiscal year ended March 31, 2009
per share
¥ 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 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
September 30, 2007 December 7, 2007
Millions of yen, except per share amount
Aggregate amount Cash dividends
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) ..................................................
of dividends
¥53,655
281
281
281
281
281
281
281
281
281
281
281
281
3,097
Record date
per share
¥ 7,000 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
67,500 March 31, 2008
44,250 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
Millions of yen, except per share amount
Aggregate amount Cash dividends
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 (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) ..................................................
of dividends
¥54,753
281
281
281
281
281
281
281
281
3,097
per share
¥ 7,000
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250
Record date
Effective date
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
September 30, 2008 December 5, 2008
Date of resolution: Meeting of the Board of Directors held on November 14, 2008
94
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(c) Dividends to be paid in the fiscal year ending March 31, 2010
Millions of yen, except per share amount
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 (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
¥15,707
281
281
281
281
281
281
281
281
3,097
Source
of dividends
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Retained earnings
Date of resolution: Ordinary general meeting of shareholders held on June 26, 2009
Cash dividends
per share
¥
Record date
20 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
67,500 March 31, 2009
44,250 March 31, 2009
Effective date
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
June 26, 2009
26. Cash Flows
Fiscal year ended March 31, 2008
(1) QUOQ Inc. and 2 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 ..............................................................................
Millions of yen
¥1,504,288
548,428
891,593
Liabilities ....................................................................................................................................................
Borrowed money ....................................................................................................................................
Acceptances and guarantees....................................................................................................................
¥1,471,831
436,628
891,593
(2) 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......................................................................................................................
Millions of yen
¥1,392,490
632,224
329,069
Liabilities ....................................................................................................................................................
Borrowed money ....................................................................................................................................
Short-term bonds ...................................................................................................................................
¥1,249,703
571,741
393,000
(3) SMBC Auto Leasing Company, Limited and 1 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.............................................................................................................................................
Millions of yen
¥305,751
221,725
Liabilities ....................................................................................................................................................
Borrowed money ....................................................................................................................................
Short-term bonds ...................................................................................................................................
¥289,379
144,561
106,000
SMFG 2009
95
SMFG
Notes to Consolidated Financial Statements
27. 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 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 con-
solidated subsidiaries in Japan contributed some of their marketable equity securities to employee retirement benefits trusts.
(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
2009
¥(918,081)
742,917
(175,164)
382,151
(26,420)
180,566
216,209
¥ (35,643)
2008
¥(919,082)
975,920
56,838
153,949
(37,118)
173,669
212,370
¥ (38,701)
Note: Some consolidated subsidiaries adopt the simple method in calculating the projected benefit obligation.
(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)........
Total.........................................................................................................
Millions of yen
2009
¥20,574
22,445
(31,192)
33,301
(11,159)
3,934
¥37,902
2008
¥19,947
22,414
(32,407)
4,546
(11,182)
2,544
¥ 5,863
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
Millions of
U.S. dollars
2009
$(9,346)
7,563
(1,783)
3,890
(269)
1,838
2,201
$ (363)
Millions of
U.S. dollars
2009
$209
229
(317)
339
(114)
40
$386
The principal assumptions used in determining benefit obligation and pension expenses at or for the fiscal years ended March 31, 2009
and 2008 were as follows:
Year ended March 31
Discount rate ....................................................................................
Expected rate of return on plan assets................................................
2009
1.4% to 2.5%
0% to 4.1%
2008
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
from the fiscal year of its incurrence, over mainly 9 years for the fiscal years ended March 31, 2009 and 2008.
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, 2009 and 2008.
96
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
28. Lease Transactions
Fiscal year ended March 31, 2009
(1) Financing leases
(a) Lessee side
(i) Lease assets
Tangible fixed assets mainly consisted of branches and equipment. Intangible fixed assets are software.
(ii) Depreciation method of lease assets
Depreciation method of lease assets is reported in Note 2. (5) Depreciation.
(b) Lessor side
(i) Breakdown of lease investment assets
March 31, 2009
Millions of yen
Millions of U.S. dollars
Lease receivables .....................................................................................................
Residual value ........................................................................................................
Unearned interest income.......................................................................................
Total ......................................................................................................................
(ii) The scheduled collections of lease receivables and investment assets are as follows:
¥1,444,731
111,273
(247,788)
¥1,308,216
$14,708
1,133
(2,523)
$13,318
Lease payments receivable related to lease receivables
March 31, 2009
Within 1 year.........................................................................................................
More than 1 year to 2 years.....................................................................................
More than 2 years to 3 years ...................................................................................
More than 3 years to 4 years ...................................................................................
More than 4 years to 5 years ...................................................................................
More than 5 years ...................................................................................................
Total ......................................................................................................................
Lease payments receivable related to investment assets
March 31, 2009
Millions of yen
Millions of U.S. dollars
¥244,758
179,297
129,660
79,425
49,624
56,683
¥739,450
$2,492
1,825
1,320
809
505
577
$7,528
Millions of yen
Millions of U.S. dollars
Within 1 year.........................................................................................................
More than 1 year to 2 years.....................................................................................
More than 2 years to 3 years ...................................................................................
More than 3 years to 4 years ...................................................................................
More than 4 years to 5 years ...................................................................................
More than 5 years ...................................................................................................
Total ......................................................................................................................
(iii) Non-transfer ownership finance leases, which commenced in fiscal years beginning before April 1, 2008, are valued at their
¥ 445,841
324,231
232,671
155,177
91,276
195,533
¥1,444,731
$ 4,539
3,301
2,369
1,580
929
1,990
$14,708
appropriate book value, net of accumulated depreciation, as of March 31, 2008, and recorded as the beginning balance of “Lease
receivables and investment assets.” Moreover, interest on such non-transfer ownership finance leases during the remaining term
of the leases is allocated over the lease term using the straight-line method. As a result of this accounting treatment, income
before income taxes for the fiscal year ended March 31, 2009 was ¥58,833 million ($599 million) less than it would have been if
such transactions had been treated in a similar way to sales of the underlying assets.
(2) Operating leases
(a) Lessee side
Future minimum lease payments on operating leases which were not cancelable at March 31, 2009 were as follows:
March 31, 2009
Millions of yen
Millions of U.S. dollars
Due within 1 year ...................................................................................................
Due after 1 year ......................................................................................................
Total.......................................................................................................................
¥13,122
52,925
¥66,047
$133
539
$672
(b) Lessor side
Future minimum lease payments on operating leases which were not cancelable at March 31, 2009 were as follows:
March 31, 2009
Millions of yen
Millions of U.S. dollars
Due within 1 year ...................................................................................................
Due after 1 year ......................................................................................................
Total.......................................................................................................................
¥18,435
79,007
¥97,442
$188
804
$992
SMFG 2009
97
SMFG
Notes to Consolidated Financial Statements
Future lease payments receivable on operating leases which were not cancelable amounting to ¥1,438 million ($15 million) on the
lessor side were pledged as collateral for borrowings.
Fiscal year ended March 31, 2008
(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 was as follows:
(a) Lessee side
March 31
Equipment ............................................................................
Other.....................................................................................
Total .....................................................................................
Acquisition
cost
¥14,741
483
¥15,224
Future minimum lease payments excluding interests at March 31, 2008 were as follows:
Millions of yen
2008
Accumulated
depreciation
¥6,544
313
¥6,858
March 31
Due within 1 year ..................................................................................................................................................
Due after 1 year .....................................................................................................................................................
Net book
value
¥8,196
170
¥8,366
Millions of yen
2008
¥4,007
4,791
¥8,798
Total lease expenses for the year ended March 31, 2008 were ¥3,914 million. Assumed depreciation for the year ended March 31, 2008
amounted to ¥3,702 million. 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 year ended March 31, 2008 amounted to ¥177 million.
(b) Lessor side
March 31
Equipment ............................................................................
Other.....................................................................................
Total .....................................................................................
Acquisition
cost
¥3,111,499
557,804
¥3,669,303
Future lease payments receivable excluding interests at March 31, 2008 were as follows:
Millions of yen
2008
Accumulated
depreciation
¥2,021,324
322,065
¥2,343,389
March 31
Due within 1 year ..................................................................................................................................................
Due after 1 year .....................................................................................................................................................
Net book
value
¥1,090,174
235,739
¥1,325,914
Millions of yen
2008
¥ 446,616
928,716
¥1,375,333
At March 31, 2008, future lease payments receivable shown above included subleases of ¥6,693 million (due within 1 year: ¥3,331
million) on the lessor side. 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 year ended March 31, 2008 was ¥478,069 million. Depreciation for the year ended March 31, 2008
amounted to ¥392,325 million. Interest income represents the difference between the sum of the lease payments receivable and esti-
mated residual 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 year ended March 31, 2008 amounted to ¥68,576 million.
(2) Operating leases
(a) Lessee side
Future minimum lease payments at March 31, 2008 were as follows:
March 31
Due within 1 year ..................................................................................................................................................
Due after 1 year .....................................................................................................................................................
Millions of yen
2008
¥14,287
63,723
¥78,010
98
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(b) Lessor side
Future lease payments receivable at March 31, 2008 were as follows:
March 31
Due within 1 year ..................................................................................................................................................
Due after 1 year .....................................................................................................................................................
Millions of yen
2008
¥12,848
42,130
¥54,978
Future lease payments receivable at March 31, 2008 amounting to ¥36,396 million on the lessor side referred to in (1) and (2) above
were pledged as collateral for borrowings.
29. Fair 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 “Monetary claims
bought,” in addition to “Securities” stated in the consolidated balance sheets.
(a) Securities classified as trading purposes
March 31
Consolidated balance sheet amount ..........................................................
Valuation gains included in the earnings for the fiscal year.......................
Millions of yen
2009
¥858,134
502
2008
¥1,114,812
313
Millions of
U.S. dollars
2009
$8,736
5
(b) Bonds classified as held-to-maturity with fair value
March 31
Japanese government bonds..................................
Japanese local government bonds..........................
Japanese corporate bonds ......................................
Other ...................................................................
Total ....................................................................
March 31
Japanese government bonds..................................
Japanese local government bonds..........................
Japanese corporate bonds ......................................
Other ...................................................................
Total ....................................................................
March 31
Japanese government bonds..................................
Japanese local government bonds..........................
Japanese corporate bonds ......................................
Other ...................................................................
Total ....................................................................
Note: Fair value is calculated using market prices at the fiscal year-end.
Millions of yen
2009
Fair value
¥1,596,291
97,265
396,215
8,676
¥2,098,449
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
¥22,582
962
4,611
—
¥28,155
¥ 295
9
605
504
¥1,414
¥22,286
953
4,006
(504)
¥26,741
Millions of yen
2008
Fair value
¥ 625,028
98,903
394,679
8,985
¥1,127,597
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
¥10,747
1,591
4,608
(192)
¥16,755
¥12,035
1,591
4,752
—
¥18,379
¥1,287
—
143
192
¥1,623
Millions of U.S. dollars
2009
Fair value
$16,251
990
4,034
88
$21,363
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
$227
10
41
(5)
$273
$230
10
47
—
$287
$ 3
0
6
5
$14
Consolidated
balance sheet
amount
¥1,574,004
96,312
392,209
9,181
¥2,071,708
Consolidated
balance sheet
amount
¥ 614,281
97,311
390,070
9,178
¥1,110,841
Consolidated
balance sheet
amount
$16,024
980
3,993
93
$21,090
SMFG 2009
99
SMFG
Notes to Consolidated Financial Statements
(c) Other securities with fair value
March 31
Stocks...................................................................
Bonds...................................................................
Japanese government bonds.............................
Japanese local government bonds.....................
Japanese corporate bonds.................................
Other ...................................................................
Total ....................................................................
Acquisition
cost
Consolidated
balance sheet
amount
¥ 1,978,015 ¥ 1,985,078
14,008,076
14,010,902
13,160,414
13,158,932
242,376
242,419
605,286
609,550
6,010,732
6,048,145
¥22,037,063 ¥22,003,887
Millions of yen
2009
Net unrealized
gains (losses)
¥ 7,062
(2,826)
1,482
(43)
(4,264)
(37,412)
¥(33,176)
Millions of yen
2008
Unrealized
gains
¥287,380
21,534
20,029
499
1,005
47,920
¥356,834
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 ¥ 2,890,952
9,731,353
8,725,687
341,916
663,750
5,237,455
¥17,114,341 ¥17,859,762
9,864,246
8,858,202
342,677
663,366
5,295,371
Net unrealized
gains (losses)
Unrealized
gains
¥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
Unrealized
losses
¥280,317
24,360
18,547
542
5,270
85,332
¥390,011
Unrealized
losses
¥ 63,186
151,537
149,439
1,069
1,028
82,385
¥297,109
March 31
Stocks...................................................................
Bonds...................................................................
Japanese government bonds.............................
Japanese local government bonds.....................
Japanese corporate bonds.................................
Other ...................................................................
Total ....................................................................
Notes: 1. Consolidated balance sheet amount is calculated as follows:
Millions of U.S. dollars
2009
Acquisition
cost
$ 20,137
142,634
133,961
2,468
6,205
61,571
$224,342
Consolidated
balance sheet
amount
$ 20,209
142,605
133,976
2,467
6,162
61,190
$224,004
Net unrealized
gains (losses)
Unrealized
gains
Unrealized
losses
$ 72
(29)
15
(1)
(43)
(381)
$(338)
$2,926
219
204
5
10
488
$3,633
$2,854
248
189
6
53
869
$3,971
Stocks (including foreign stocks): Average market prices during 1 month before the fiscal year-end
Bonds and other: Market prices at the fiscal year-end or fair value based on DCF method on certain Japanese government bonds at March 31, 2009
2. Other securities with fair value are considered as impaired if the fair value declines materially below the acquisition cost and such decline is not considered as recov-
erable. In such a case, the fair value is recognized as the consolidated balance sheet amount and the amount of write-down is accounted for as valuation loss for the
fiscal year. Valuation losses for the fiscal years ended March 31, 2009 and 2008 were ¥156,721 million ($1,595 million) and ¥96,455 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: Issuers that are legally bankrupt or formally declared bankrupt.
Effectively bankrupt issuers: Issuers that are not legally bankrupt but regarded as substantially bankrupt.
Potentially bankrupt issuers: Issuers that are not bankrupt now, but are perceived to have a high risk of falling into bankruptcy.
Issuers requiring caution: Issuers that are identified for close monitoring.
Normal issuers: Issuers other than the above 4 categories of issuers.
Fair value is lower than acquisition cost.
Fair value is 30% or more lower than acquisition cost.
Fair value is 50% or more lower than acquisition cost.
(d) Held-to-maturity bonds sold during the years ended March 31, 2009 and 2008
There are no corresponding transactions.
(e) Other securities sold during the years ended March 31, 2009 and 2008
Year ended March 31
Millions of yen
2009
2008
Sales amount ............................................................................................
Gains on sales...........................................................................................
Losses on sales ..........................................................................................
¥34,610,449
158,285
75,997
¥35,013,724
169,352
33,521
Millions of
U.S. dollars
2009
$352,341
1,611
774
100
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(f) Securities with no available market value
March 31
Bonds classified as held-to-maturity
Millions of yen
Consolidated
balance sheet
amount
2009
2008
Beneficiary claims on accounts receivable, etc. ......................................
Unlisted foreign securities.....................................................................
¥
9,996
—
¥
11,672
7
Other securities
Unlisted stocks (excluding OTC stocks) ................................................
Unlisted bonds......................................................................................
Unlisted foreign securities.....................................................................
Other ....................................................................................................
332,450
2,901,693
800,543
564,348
377,123
2,826,953
724,557
567,374
Millions of
U.S. dollars
Consolidated
balance sheet
amount
2009
$
102
—
3,384
29,540
8,150
5,745
(g) Change of classification of securities
There are no corresponding transactions.
(h) Redemption schedule of other securities with maturities and held-to-maturity bonds
Millions of yen
2009
March 31
Bonds ...............................................................................................
Japanese government bonds .........................................................
Japanese local government bonds .................................................
Japanese corporate bonds .............................................................
Other................................................................................................
Total.................................................................................................
Within 1 year
After 1 year
through 5 years
After 5 years
through 10 years
¥3,416,761 ¥11,895,495
9,376,045
2,802,254
232,744
32,001
2,286,704
582,504
1,077,576
4,272,647
¥4,494,337 ¥16,168,143
¥1,987,483
1,133,529
73,889
780,064
788,691
¥2,776,174
After 10 years
¥1,659,495
1,422,588
52
236,853
609,101
¥2,268,597
March 31
Bonds ...............................................................................................
Japanese government bonds .........................................................
Japanese local government bonds .................................................
Japanese corporate bonds .............................................................
Other................................................................................................
Total.................................................................................................
Within 1 year
After 1 year
through 5 years
After 5 years
through 10 years
¥2,572,065 ¥ 7,672,897
5,205,946
142,937
2,324,013
3,847,580
¥3,397,364 ¥11,520,477
1,919,514
142,310
510,240
825,298
¥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
2008
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 U.S. dollars
2009
Within 1 year
After 1 year
through 5 years
After 5 years
through 10 years
After 10 years
$34,783
28,527
326
5,930
10,970
$45,753
$121,098
95,450
2,369
23,279
43,497
$164,595
$20,233
11,540
752
7,941
8,029
$28,262
$16,894
14,482
1
2,411
6,201
$23,095
March 31
Consolidated balance sheet amount ..........................................................
Valuation gains (losses) included in the earnings for the fiscal year ...........
Millions of yen
2009
¥1,416
(3)
2008
¥1,488
3
Millions of
U.S. dollars
2009
$14
(0)
SMFG 2009
101
SMFG
Notes to Consolidated Financial Statements
(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.
(3) Net unrealized gains (losses) on other securities and other money held in trust
Millions of yen
2009
¥7,830
7,568
(262)
—
262
2008
¥5,870
5,841
(29)
—
29
Millions of yen
March 31
Net unrealized gains (losses).....................................................................
Other securities.....................................................................................
Other money held in trust.....................................................................
(–) Deferred tax liabilities ........................................................................
Net unrealized gains (losses) on other securities
(before following adjustment).................................................................
(–) Minority interests ...............................................................................
(+) SMFG’s interest in net unrealized gains (losses) on valuation of other
securities held by affiliates accounted for by the equity method ........
Net unrealized gains (losses) on other securities........................................
2009
¥(34,044)
(33,781)
(262)
14,428
(48,472)
(5,400)
28,422
¥(14,649)
2008
¥745,330
745,359
(29)
192,478
552,851
1,632
(570)
¥550,648
Note: Net unrealized gains (losses) included foreign currency translation adjustments on non-marketable securities denominated in foreign currency.
Millions of
U.S. dollars
2009
$80
77
(3)
—
3
Millions of
U.S. dollars
2009
$(347)
(344)
(3)
146
(493)
(55)
289
$(149)
30. Derivative Transactions
Interest rate derivatives
(1)
March 31
Transactions listed on exchange
Interest rate futures:
Millions of yen
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
¥ 17,636,094 ¥
19,571,966
1,254,229
1,557,621
¥ (41,578)
51,493
¥ (41,578)
51,493
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 ..........................................
—
15,742,690
395,948,961
186,295,438
186,981,391
22,579,384
—
97,966
283,809,494
135,517,151
132,487,292
15,712,303
—
114
207,729
4,508,393
(4,300,450)
4,399
Interest rate swaptions:
Sold..........................................................................................................
Bought.....................................................................................................
2,690,323
2,802,501
1,789,900
2,143,328
Caps:
Sold..........................................................................................................
Bought.....................................................................................................
27,834,072
13,867,378
12,451,630
6,122,525
Floors:
Sold .........................................................................................................
Bought.....................................................................................................
Other:
Sold..........................................................................................................
Bought.....................................................................................................
Total .............................................................................................................
3,351,169
5,116,400
1,177,521
3,454,028
/
1,816,123
2,810,008
575,022
2,000,040
/
102
SMFG 2009
—
114
207,729
4,508,393
(4,300,450)
4,399
(65,983)
65,627
(5,342)
3,263
(21,272)
8,036
(65,983)
65,627
(5,342)
3,263
(21,272)
8,036
(32,707)
100,656
¥ 270,036
(32,707)
100,656
¥ 270,036
Notes to Consolidated Financial Statements
SMFG
Millions of yen
2008
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
March 31
Transactions listed on exchange
Interest rate futures:
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
—
31
171,368
1,948,325
(1,770,092)
(1,749)
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
(62,141)
66,519
(13,437)
7,195
(10,171)
2,566
(23,224)
59,900
¥ 204,169
(23,224)
59,900
¥ 204,169
March 31
Transactions listed on exchange
Interest rate futures:
Millions of U.S. dollars
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold .........................................................................................................
Bought ....................................................................................................
$ 179,539
199,246
$ 12,768
15,857
$ (423)
524
$ (423)
524
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..............................................................................................................
—
160,264
4,030,835
1,896,523
1,903,506
229,862
27,388
28,530
283,356
141,173
34,116
52,086
11,987
35,163
/
—
997
2,889,234
1,379,590
1,348,746
159,954
18,222
21,819
126,760
62,328
18,488
28,606
5,854
20,361
/
—
1
2,115
45,896
(43,779)
45
(672)
668
(54)
33
(217)
82
—
1
2,115
45,896
(43,779)
45
(672)
668
(54)
33
(217)
82
(333)
1,025
$ 2,749
(333)
1,025
$ 2,749
Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Fair value of transactions listed on exchange is calculated using the closing prices on the Tokyo Financial Exchange and others.
Fair value of OTC transactions is calculated using discounted present value and option pricing models.
SMFG 2009
103
SMFG
Notes to Consolidated Financial Statements
(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
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
¥22,343,204
¥14,918,715
¥(138,309)
¥(107,046)
863,862
964,627
44,250,845
4,448,659
4,356,557
/
863,862
955,373
4,431,723
2,475,706
2,411,169
/
(13,907)
30,040
108,517
(269,220)
303,847
¥ 20,967
(13,907)
30,040
108,517
(269,220)
303,847
¥ 52,231
Millions of yen
2008
Contract amount
Total
Over 1 year
Fair
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 U.S. dollars
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
$227,458
$151,875
$(1,408)
$(1,090)
8,794
9,820
450,482
45,288
44,351
/
8,794
9,726
45,116
25,203
24,546
/
(141)
306
1,105
(2,741)
3,093
$ 214
(141)
306
1,105
(2,741)
3,093
$ 532
Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations. 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 currency and whose fair values are already reflected to the consolidated balance sheets;
and
(c) Those that are allotted to financial assets/liabilities denominated in foreign currency, and the financial assets/liabilities are eliminated in the process of
consolidation.
2. Fair value is calculated using discounted present value and option pricing models.
104
SMFG 2009
(3) Equity derivatives
March 31
Transactions listed on exchange
Equity price index futures:
Notes to Consolidated Financial Statements
SMFG
Millions of yen
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
¥ 14,239
14,533
¥ —
—
¥ (632)
636
¥ (632)
636
Equity price index options:
Sold..........................................................................................................
Bought.....................................................................................................
2,218
144
—
—
(17)
3
(17)
3
Over-the-counter transactions
Equity options:
Sold..........................................................................................................
Bought.....................................................................................................
Total..............................................................................................................
219,238
219,238
/
145,209
145,209
/
(63,785)
63,785
¥ (9)
(63,785)
63,785
¥ (9)
March 31
Transactions listed on exchange
Equity price index futures:
Millions of yen
2008
Contract amount
Total
Over 1 year
Fair
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 U.S. dollars
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
Equity price index options:
Sold..........................................................................................................
Bought.....................................................................................................
Over-the-counter transactions
Equity options:
Sold..........................................................................................................
Bought.....................................................................................................
Total..............................................................................................................
$ 145
148
23
1
2,232
2,232
/
$ —
—
—
—
1,478
1,478
/
$ (6)
6
(0)
0
(649)
649
$ (0)
$ (6)
6
(0)
0
(649)
649
$ (0)
Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Fair value of transactions listed on exchange is calculated using the closing prices on the Tokyo Stock Exchange and others.
Fair value of OTC transactions is calculated using option pricing models.
SMFG 2009
105
SMFG
Notes to Consolidated Financial Statements
(4) Bond derivatives
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..............................................................................................................
March 31
Transactions listed on exchange
Bond futures:
Millions of yen
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
¥976,285
964,958
15,000
—
—
44,076
450,000
450,000
/
¥ —
—
¥(9,158)
8,638
¥(9,158)
8,638
—
—
—
44,059
—
—
/
1
—
—
561
1
—
—
561
—
1
¥ 44
—
1
¥ 44
Millions of yen
2008
Contract amount
Total
Over 1 year
Fair
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:
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
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
$9,939
9,823
153
—
—
449
4,581
4,581
/
$ —
—
—
—
—
449
—
—
/
$(93)
88
0
—
—
5
—
0
$ 0
$(93)
88
0
—
—
5
—
0
$ 0
Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Fair value of transactions listed on exchange is calculated using the closing prices on the Tokyo Stock Exchange and others.
Fair value of OTC transactions is calculated using discounted present value and option pricing models.
106
SMFG 2009
(5) Commodity derivatives
March 31
Transactions listed on exchange
Commodity futures:
Notes to Consolidated Financial Statements
SMFG
Millions of yen
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
¥
—
156
¥ —
—
¥ —
25
¥ —
25
Over-the-counter transactions
Commodity swaps:
Receivable fixed price/payable floating price ............................................
Receivable floating price/payable fixed price ............................................
Commodity options:
Sold..........................................................................................................
Bought.....................................................................................................
Total..............................................................................................................
295,434
243,608
14,335
39,276
/
246,531
194,760
11,786
33,637
/
37,408
27,707
(779)
2,015
¥66,376
37,408
27,707
(779)
2,015
¥66,376
March 31
Transactions listed on exchange
Commodity futures:
Millions of yen
2008
Contract amount
Total
Over 1 year
Fair
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:
Millions of U.S. dollars
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
$ —
2
$ —
—
Over-the-counter transactions
Commodity swaps:
Receivable fixed price/payable floating price ............................................
Receivable floating price/payable fixed price ............................................
Commodity options:
Sold..........................................................................................................
Bought.....................................................................................................
Total..............................................................................................................
3,008
2,480
146
400
/
2,510
1,983
120
342
/
$ —
0
381
282
(8)
21
$676
$ —
0
381
282
(8)
21
$676
Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Fair value of transactions listed on exchange is calculated using the closing prices on the New York Mercantile Exchange and others.
Fair 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 2009
107
SMFG
Notes to Consolidated Financial Statements
(6) Credit derivative transactions
March 31
Over-the-counter transactions
Credit default options:
Millions of yen
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
Total..............................................................................................................
¥1,179,621
1,325,430
/
¥1,167,801
1,308,288
/
¥(209,630)
229,275
¥ 19,644
¥(209,630)
229,275
¥ 19,644
March 31
Over-the-counter transactions
Credit default options:
Millions of yen
2008
Contract amount
Total
Over 1 year
Fair
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 U.S. dollars
2009
Contract amount
Total
Over 1 year
Fair
value
Valuation
gains (losses)
Sold..........................................................................................................
Bought.....................................................................................................
Total..............................................................................................................
$12,009
13,493
/
$11,888
13,319
/
$(2,134)
2,334
200
$
$(2,134)
2,334
$ 200
Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.
Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above.
2. Fair 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 2009
Notes to Consolidated Financial Statements
SMFG
31. Stock Options
Share-based compensation expenses of ¥22 million ($0 million) and ¥29 million are accounted for as general and administrative expenses in the
fiscal years ended March 31, 2009 and 2008, respectively.
Outline of stock options and changes is 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...............................................................................................
* “Number of stock options” is reported in consideration of the 100-for-1 stock split implemented on January 4, 2009.
June 27, 2002
Directors and employees of SMFG and SMBC: 677
Common shares: 162,000
August 30, 2002
N.A.
N.A.
June 28, 2004 to June 27, 2012
June 27, 2002
(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...................................................................................................
* Number of stock as of the previous fiscal year-end is reported in consideration of the 100-for-1 stock split implemented on January 4, 2009.
108,100
—
—
—
108,100
—
—
—
—
—
Price information (Yen)
Date of resolution
Exercise price .................................................................................................
Average exercise price ....................................................................................
Fair value at the grant date ............................................................................
June 27, 2002
¥6,698
—
—
(2) A consolidated subsidiary, Kansai Urban Banking Corporation
(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 Directors and Directors and Directors and Directors and
employees
65
employees
183
employees
174
employees
44
employees
45
234,000
July 31, 2002
N.A.
N.A.
238,000
July 31, 2001
N.A.
N.A.
Common shares Common shares Common shares Common shares Common shares
306,000
July 31, 2003
N.A.
N.A.
June 29, 2003 June 28, 2004 June 28, 2005 June 30, 2006 June 30, 2007
to June 27,
2013
399,000
July 30, 2004
N.A.
N.A.
464,000
July 29, 2005
N.A.
N.A.
to June 29,
2015
to June 28,
2011
to June 29,
2014
to June 27,
2012
SMFG 2009
109
SMFG
Notes to Consolidated Financial Statements
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 .................................................................................................
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...........................................................................
Date of resolution
Exercise price ...............................................................................................
Average exercise price ..................................................................................
Fair value at the grant date...........................................................................
110
SMFG 2009
June 29, 2006 June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008
Directors
9
Directors
10
Officers not
doubling as
directors 14
Employees 46
Officers not
doubling as
directors 14
Employees 48
Directors 9
Officers not
doubling as
directors 16
Employees 45
Common shares Common shares Common shares Common shares Common shares
174,000
July 31, 2007
N.A.
N.A.
June 30, 2008 June 30, 2008 June 29, 2009 June 29, 2009 June 28, 2010
to June 28,
2017
289,000
July 31, 2008
N.A.
N.A.
115,000
July 31, 2006
N.A.
N.A.
112,000
July 31, 2007
N.A.
N.A.
162,000
July 31, 2006
N.A.
N.A.
to June 28,
2017
to June 27,
2018
to June 29,
2016
to June 29,
2016
June 28, 2001 June 27, 2002 June 27, 2003 June 29, 2004 June 29, 2005
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
122,000
—
4,000
6,000
112,000
158,000
—
—
—
158,000
230,000
—
2,000
—
228,000
330,000
—
1,000
—
329,000
451,000
—
—
—
451,000
June 29, 2006 June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008
162,000
—
—
162,000
—
—
162,000
—
—
162,000
115,000
—
—
115,000
—
—
115,000
—
—
115,000
174,000
—
—
—
174,000
112,000
—
—
—
112,000
—
289,000
—
—
289,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
June 28, 2001 June 27, 2002 June 27, 2003 June 29, 2004 June 29, 2005
¥179
313
—
¥202
313
—
¥313
—
—
¥131
—
—
¥155
317
—
June 29, 2006 June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008
¥461
—
96
¥490
—
138
¥490
—
138
¥461
—
96
¥302
—
37
Notes to Consolidated Financial Statements
SMFG
(c) Valuation technique used for valuating fair value of stock options
Stock options granted in the fiscal year ended March 31, 2009 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 27, 2008
39.99%
5 years
¥5 per share
1.13%
*1 Calculated based on the actual stock prices during the 5 years from June 2003 to June 2008
*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, 2008
*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.
32. 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
Millions of yen
2009
Banking business
Leasing business
Other business
Total
Elimination
Consolidated
¥
¥
2,773,183
65,756
2,838,940
2,800,453
38,486
¥ 332,465
5,511
337,976
306,585
31,391
¥
¥ 447,194
306,084
753,279
681,077
72,201
¥
¥
¥
3,552,843
377,352
3,930,196
3,788,116
142,080
¥
¥
— ¥
(377,352)
(377,352)
(280,583)
(96,769)
¥
3,552,843
—
3,552,843
3,507,532
45,311
Assets.............................................
Depreciation ..................................
Losses on impairment of fixed assets...
Capital expenditure........................
¥114,704,051
70,803
6,541
124,546
¥2,918,254
25,491
—
102,240
¥8,222,027
26,722
821
23,326
¥125,844,333
123,017
7,363
250,113
¥(6,207,109)
7
—
7
¥119,637,224
123,025
7,363
250,121
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
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
¥
¥
— ¥
(327,788)
(327,788)
(299,720)
(28,067)
¥
4,623,545
—
4,623,545
3,792,384
831,160
Assets.............................................
Depreciation ..................................
Losses on impairment of fixed assets...
Capital expenditure........................
¥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
SMFG 2009
111
SMFG
Notes to Consolidated Financial Statements
Banking business
Leasing business
Other business
Total
Elimination
Consolidated
Millions of U.S. dollars
2009
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
$
$
28,231
670
28,901
28,509
392
Assets.............................................
Depreciation .................................
Losses on impairment of fixed assets...
Capital expenditure........................
$1,167,709
721
67
1,268
$ 3,385
56
3,441
3,122
319
$
$29,708
259
—
1,041
$ 4,553
3,115
7,668
6,933
735
$
$83,702
272
8
237
$ 36,169
3,841
40,010
38,564
1,446
$
$1,281,119
1,252
75
2,546
$
$
—
(3,841)
(3,841)
(2,856)
(985)
$(63,189)
0
—
0
$ 36,169
—
36,169
35,708
461
$
$1,217,930
1,252
75
2,546
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 ¥4,117,977 million ($41,922 million) and ¥4,101,536 million at March 31, 2009 and 2008, respec-
tively, which mainly consist of investments in subsidiaries and affiliates.
4. Ordinary income represents total income excluding gains on disposal of fixed assets, recoveries of written-off claims 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. (20) (b), non-transfer ownership finance leases were formerly accounted for using the same method as for operating leases. “Accounting
Standard for Lease Transactions” (ASBJ Statement No. 13, issued on March 30, 2007) and “Implementation Guidance on Accounting Standard for Lease
Transactions” (ASBJ Guidance No. 16, issued on March 30, 2007) became effective from the fiscal year beginning on and after April 1, 2008, and SMFG has
applied them from the fiscal year ended March 31, 2009. As a result of the accounting change, Ordinary income of “Leasing business” for the year ended March 31,
2009 decreased by ¥691,719 million ($7,042 million) as compared with the former method. Ordinary expenses of “Banking business” and “Other business”
increased by ¥22 million ($0 million) and ¥1 million ($0 million), respectively, and Ordinary expenses of “Leasing business” decreased by ¥694,173 million ($7,067
million). In terms of Ordinary profit, “Banking business” decreased by ¥22 million ($0 million) and “Other business” decreased by ¥1 million ($0 million), while
“Leasing business” increased by ¥2,453 million ($25 million). Assets of “Banking business” and “Other business” increased by ¥7,447 million ($76 million) and
¥27,348 million ($278 million), respectively, while Assets of “Leasing business” decreased by ¥36,473 million ($371 million).
6. As mentioned in Note 2. (11), formerly, deposits which were derecognized as liabilities were expensed when they were actually reimbursed. However, from the fis-
cal 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 as compared with the former method.
(2) Geographic segment information
Year ended March 31
I. Ordinary income
Japan
The Americas
Europe and
Middle East Asia and Oceania
Total
Elimination
Consolidated
Millions of yen
2009
(1) External customers .... ¥
(2) Intersegment .............
Total ..............................
Ordinary expenses...............
Ordinary profit (loss) .......... ¥
2,886,164
125,334
3,011,499
3,026,816
(15,317)
II. Assets ................................. ¥102,162,307
¥
230,755
95,462
326,218
282,617
¥
43,600
¥10,054,434
¥ 245,279
6,959
252,238
255,544
¥
(3,305)
¥5,537,019
¥ 190,644
22,639
213,284
172,847
¥
40,436
¥5,157,482
¥
3,552,843
250,396
3,803,239
3,737,825
¥
65,414
¥122,911,244
¥
— ¥
(250,396)
(250,396)
(230,293)
3,552,843
—
3,552,843
3,507,532
¥
45,311
¥(3,274,020) ¥119,637,224
(20,102) ¥
Year ended March 31
I. Ordinary income
Japan
The Americas
Europe and
Middle East Asia and Oceania
Total
Elimination
Consolidated
Millions of yen
2008
(1) External customers ....
(2) Intersegment .............
Total ..............................
Ordinary expenses...............
Ordinary profit ...................
II. Assets .................................
¥ 3,911,887
121,804
4,033,692
3,359,217
¥
674,474
¥96,694,481
¥ 280,556
59,437
339,994
240,378
¥
99,615
¥7,590,359
¥ 249,321
11,000
260,321
249,869
¥
10,451
¥4,875,150
¥ 181,780
39,046
220,826
156,831
¥
63,994
¥5,501,957
¥
4,623,545
231,289
4,854,834
4,006,298
¥
848,536
¥114,661,949
112
SMFG 2009
¥
— ¥
4,623,545
—
4,623,545
3,792,384
¥
831,160
¥(2,706,030) ¥111,955,918
(231,289)
(231,289)
(213,913)
(17,375) ¥
Notes to Consolidated Financial Statements
SMFG
Millions of U.S. dollars
2009
Year ended March 31
I. Ordinary income
(1) External customers ....
(2) Intersegment.............
Total .............................
Ordinary expenses...............
Ordinary profit (loss) ..........
II. Assets ................................
Japan
The Americas
Europe and
Middle East Asia and Oceania
Total
Elimination
Consolidated
$
29,382
1,276
30,658
30,814
$
(156)
$1,040,032
$ 2,349
972
3,321
2,877
$ 444
$102,356
$ 2,497
71
2,568
2,602
$ (34)
$56,368
$ 1,941
230
2,171
1,759
$
412
$52,504
$ 36,169
2,549
38,718
38,052
$ 666
$1,251,260
$
—
(2,549)
(2,549)
(2,344)
$
(205)
$(33,330)
$ 36,169
—
36,169
35,708
$ 461
$1,217,930
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 Middle East includes the United Kingdom, Germany, France and others; Asia and
Oceania includes China, Singapore, Australia and others except Japan.
3. Assets in Elimination include unallocated corporate assets of ¥4,117,977 million ($41,922 million) and ¥4,101,536 million at March 31, 2009 and 2008, respec-
tively, which mainly consist of investments in subsidiaries and affiliates.
4. Ordinary income represents total income excluding gains on disposal of fixed assets, recoveries of written-off claims 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. (20) (b), non-transfer ownership finance leases were formerly accounted for using the same method as for operating leases. “Accounting
Standard for Lease Transactions” (ASBJ Statement No. 13, issued on March 30, 2007) and “Implementation Guidance on Accounting Standard for Lease
Transactions” (ASBJ Guidance No. 16, issued on March 30, 2007) became effective from the fiscal year beginning on and after April 1, 2008, and SMFG has
applied them from the fiscal year ended March 31, 2009. As a result of the accounting change, Ordinary income of “Japan” and Ordinary expenses of “Japan” for the
year ended March 31, 2009 decreased by ¥676,849 million ($6,890 million) and ¥679,279 million ($6,915 million) as compared with the former method; Ordinary
profit of “Japan” increased by ¥2,430 million ($25 million). Assets of “Japan” decreased by ¥29,782 million ($303 million).
6. As mentioned in Note 2. (11), formerly, deposits which were derecognized as liabilities were expensed when they were actually reimbursed. However, from the fis-
cal 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 as compared with the former method.
(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
2009
¥ 666,679
3,552,843
2008
¥ 711,657
4,623,545
Millions of
U.S. dollars
2009
$ 6,787
36,169
18.8%
15.4%
18.8%
Notes: 1. Consolidated ordinary income from overseas operations is presented as a counterpart of overseas sales of companies in other industries.
2. The table above shows ordinary income from transactions of overseas branches of SMBC 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.
33. Business Combinations
Fiscal year ended March 31, 2009
There is no material information to be reported.
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
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 agree-
ments, SMBC Leasing and Sumisho Lease merged on October 1,
2007, and SMBC Auto Leasing and Sumisho Auto Lease also merged
on the same day.
SMFG 2009
113
SMFG
Notes to Consolidated Financial Statements
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)
(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 distribu-
tion 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.
(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 ................................................
Millions of yen
¥140,648
24,750
¥165,398
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 discus-
sion 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.
114
SMFG 2009
(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.
5. Goodwill, reason for recognizing goodwill, amortization method
and amortization period
(1) Amount of goodwill
¥88,090 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
6. Amounts of assets and liabilities acquired on the day of the busi-
ness combination
(1) Assets
Total assets........................................................
Lease assets ....................................................
Loans and bills discounted .............................
(2) Liabilities
Total liabilities..................................................
Borrowed money ...........................................
Short-term bonds...........................................
Millions of yen
¥1,392,490
632,224
329,069
Millions of yen
¥1,249,703
571,741
393,000
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 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 combina-
tions had completed on the commencement date of the fiscal
year and the actual ordinary income and other income informa-
tion which is recorded in the consolidated statement of income
is as follows:
Millions of yen
¥277,442
Ordinary income ...............................................
35,319
Ordinary profit..................................................
30,938
Net income .......................................................
(2) Calculation method of the pro-forma amounts and material
assumptions
The pro-forma amounts are calculated retroactively to the com-
mencement 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 cases where the
business combinations were actually completed on the com-
mencement date of the fiscal year.
The pro-forma information mentioned above has not been
audited by KPMG AZSA & Co.
Notes to Consolidated Financial Statements
SMFG
A merger of auto leasing companies
1. Outline of the business combination of auto leasing companies
Auto Leasing was dissolved. (Name of the merged company:
Sumitomo Mitsui Auto Service Company, Limited)
(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 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.
(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 Auto Leasing as the surviving company, and SMBC
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).
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)
Ordinary income ...............................................
Ordinary profit..................................................
Net income .......................................................
Millions of yen
¥69,752
2,237
1,254
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 com-
panies accounted for by the equity method.
34. Per Share Data
March 31
Yen
2009
2008
Net assets per share..............................................................................................
¥2,790.27
¥424,546.01
Year ended March 31
Net income (loss) per share ..................................................................................
Net income per share (diluted).............................................................................
Yen
2009
¥(497.39)
—
2008
¥59,298.24
56,657.41
U.S. dollars
2009
$28.41
U.S. dollars
2009
$(5.06)
—
Notes: 1. Net income (loss) per share and net income per share (diluted) are calculated based on the following. Net income per share (diluted) for the fiscal year ended March 31, 2009 is
not reported due to a net loss.
Year ended March 31
Millions of yen, except number of shares
2009
2008
Millions of U.S. dollars
2009
Net income (loss) per share:
Net income (loss) ....................................................................................................................
Amount not attributable to common stockholders ...................................................................
Dividends on preferred stock ............................................................................................
Net income (loss) 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.....................................................................................................
¥(373,456)
10,704
10,704
(384,160)
772,348
—
—
—
—
—
—
¥461,536
12,958
12,958
448,577
7,564
6,751
6,763
(11)
471
471
0
$(3,802)
109
109
(3,911)
/
—
—
—
/
/
/
Outline of dilutive securities which were not included in the calculation of “Net income per share (diluted)” for the fiscal year ended March 31, 2009 because they do not have
dilutive effect:
Preferred stock (type 4)
33 thousand shares outstanding
Stock acquisition rights: 1 type
(Number of stock acquisition rights: 1,081 units)
SMFG 2009
115
SMFG
Notes to Consolidated Financial Statements
2. Net assets per share is calculated based on the following:
Millions of yen, except number of shares
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) .........................................................................................
2009
¥4,611,764
2,457,530
310,203
5,352
66
2,141,908
2,154,233
772,052
2008
¥5,224,076
2,012,532
360,303
6,479
43
1,645,705
3,211,544
7,564
Millions of U.S. dollars
2009
$46,949
25,018
3,158
54
1
21,805
21,931
/
3. SMFG implemented a 100-for-1 stock split of common stock effective on January 4, 2009. If the stock split had been implemented in the previous fiscal year, per share infor-
mation would be as follows:
As of and year ended March 31
Yen
2008
Net assets per share...................................................................................................................................................................................
¥4,245.46
Net income per share ................................................................................................................................................................................
Net income per share (diluted)..................................................................................................................................................................
592.98
566.57
35. Subsequent Events
1. Business combinations of subsidiaries: Merger of credit card
companies
(1) Outline of the merger
(a) Company profiles
Surviving company: OMC Card, Inc. (Credit card business)
Merged company: Central Finance Co., Ltd. (Shopping
credit business and general credit business)
Merged company: QUOQ Inc. (Shopping credit business
and general credit business)
(b) Reasons for the merger
The credit card market is growing steadily, propelled by the
expansion into new areas of settlement, such as for small pur-
chases, the growing popularity of reward point programs,
and other developments. Further substantial growth of the
industry is anticipated with the greater use of credit cards to
pay for public services charges and in other fields. At the
same time, the business environment surrounding the indus-
try is changing dramatically — development of new tech-
nologies and new services, such as electronic money;
investment in systems that can respond to customers’ needs
for more in-depth, sophisticated and diverse services; enact-
ment of laws on money lending business; etc. — and the
industry is at a major turning point. In the shopping credit
business, the Installment Sales Act is being revised amid the
trend to strengthen consumer protection. Under these cir-
cumstances, the companies need to restructure their opera-
tions in order to establish new business models.
On April 1, 2009, Central Finance Co., Ltd., OMC Card,
Inc. (“OMC Card”) and QUOQ Inc. (“QUOQ”) merged to
create one of the largest consumer finance companies in
Japan with a high level of specialization and flexibility in its
core businesses of credit cards and shopping credit by com-
bining the customer bases, marketing capabilities, know-
how and other resources of the 3 companies.
(c) Date of merger
April 1, 2009
(d) Legal form of the business combinations
The merger was a merger procedure by absorption with
OMC Card as the surviving company. (New name of the
company: Cedyna Financial Corporation)
116
SMFG 2009
(2) Outline of accounting method
SMFG applies the accounting procedures stipulated by Articles
39, 42 and 48 of the “Accounting Standard for Business
Divestitures” (ASBJ Statement No. 7).
(3) Name of the business segment, in which the subsidiary was
included, in the segment information
Other business
(4) Approximate amounts of the subsidiary’s earnings included in
the consolidated statement of operations for the fiscal year
ended March 31, 2009:
Ordinary income:
Ordinary loss:
Net loss:
¥44,596 million ($454 million)
¥8,454 million ($86 million)
¥3,206 million ($33 million)
(5) Status after the business combination
QUOQ and its subsidiaries are excluded from the scope of con-
solidation, and Cedyna Financial Corporation has become an
affiliated company accounted for by the equity method.
2. SMFG resolved at the meeting of the Board of Directors held on
April 28, 2009 to authorize the redemption in full of the preferred
securities issued by its overseas special purpose subsidiary. Outline
of the preferred securities to be redeemed is as follows.
(1) Issuer
SB Equity Securities (Cayman), Limited
(2) Type of securities issued
Non-cumulative perpetual preferred securities
(3) Redemption amount
¥340,000 million ($3,461 million)
(4) Scheduled redemption date
June 30, 2009
(5) Reason for redemption
Optional redemption
3. Acquisition of Nikko Cordial Securities Inc. and other businesses
(1) Objectives
SMBC reached an agreement on May 1, 2009 with Nikko Citi
Holdings Inc. (“Nikko Citi HD”), a wholly owned subsidiary
of Citigroup Inc. (“Citigroup”), and other related entities
wherein SMBC would acquire 1) all shares in New Nikko
Securities (tentative name; the shares referred to hereinafter as
Notes to Consolidated Financial Statements
SMFG
“New Nikko Securities Stock”) which will succeed to all opera-
tions of Nikko Cordial Securities Inc. (“Nikko Cordial”), which
engages mainly in the retail securities business (excluding
selected assets and liabilities; the “Retail Business”), and some
businesses including the domestic debt and equity underwrit-
ing and other businesses of Nikko Citigroup Limited (“Nikko
Citi”), which engages mainly in the wholesale securities busi-
ness (the “Wholesale Business”; the Retail Business and the
Wholesale Business collectively referred to hereinafter as the
“Target Businesses”), 2) shares or partnership interests in affili-
ates and Civil Law partnerships relating to the Target
Businesses (“Affiliates, etc.”; the shares referred to hereinafter
as “Affiliate Stock, etc.”) and 3) other assets (such as trademarks
relating to the “Nikko” brand and shares held for strategic rea-
sons; hereafter “Other Assets”; New Nikko Securities Stock,
Affiliate Stock, etc., and Other Assets collectively referred to
hereinafter as “Target Shares, etc.”), all of which are either
directly or indirectly owned by Nikko Citi HD, pursuant to
approval of relevant authorities.
SMFG’s growth principle is to offer valuable services based
on “Spirit of innovation,” “Speed,” and “Solution & Execution”
to expand the customer base as a financial services group cen-
tered on a commercial bank. Through this transaction, SMFG
plans to create a new leading financial services group and
increase potential growth by combining stability and reliability
that a commercial bank holds with New Nikko Securities’
high-quality customer services.
(2) Counterparties to the acquisition of New Nikko Securities
Stock
Nikko Citi Holdings Inc.
Nikko Cordial Securities Inc.
Nikko Citi Business Services Inc.
(3) Overview of New Nikko Securities
(a) Business line
Securities business
(b) Operating performance and financial position of New Nikko
Securities
Operating performance and financial position of New
Nikko Securities are not reported because it has not yet been
established. Non-consolidated operating performance and
financial position of Nikko Cordial Securities Inc., which
will be at the core of New Nikko Securities’ operations, are
as follows:
Fiscal year ended March 31
2009
2008
Millions of yen
Millions of
U.S. dollars
2009
Operating revenues ...
Net operating
revenues ..................
Operating profit ........
Ordinary profit..........
Net income (loss) ......
Net assets ..................
Total assets................
¥ 164,135
¥ 222,810
$ 1,671
158,942
19,685
22,158
(3,626)
393,392
1,466,956
217,878
50,945
51,182
23,890
420,600
1,523,908
1,618
200
226
(37)
4,005
14,934
(4) Effective Date
October 1, 2009 (tentative)
(5) Acquisition price, etc.
(a) Acquisition price
( i ) Total acquisition value for Target Shares, etc. (excluding
shares held for strategic policy reasons (listed stock))
¥545 billion ($5.5 billion) (note that this figure will be
adjusted based on net assets, etc. at New Nikko Securities
and Affiliates, etc. at the point in time on the effective date)
(ii) Shares held for strategic reasons (listed stock)
Price equivalent to 95% of the market closing price as of 4
business days prior to the date immediately preceding the
effective date (¥28.5 billion ($0.3 billion) if calculated by
using 95% of the closing price as of March 31, 2009)
(b) Shares held and shareholding ratio before and after the
transaction
While the number of New Nikko Securities Stock to be
acquired is unclear as New Nikko Securities is an entity
which has not yet been established, SMBC plans to acquire
100% of New Nikko Securities Stock.
(6) Fund for the acquisition
Entire amount is expected to be funds on hand.
4. SMFG resolved at the meeting of the Board of Directors held on
May 28, 2009 to issue and offer new shares with a payment date of
June 22, 2009, as set forth below:
(1) Type and number of shares issued:
Total number of shares of common stock of SMFG set forth in
(a) through (c) below:
219,700,000 shares
(a) Number of shares in the Japanese public offering:
102,200,000 shares
(b) Number of shares to be purchased by the international man-
agers (“International Managers,” and collectively with the
Japanese underwriters, the “Underwriters”) in the overseas
offering (the “International Offering”):
102,200,000 shares
(c) Number of shares subject to an option to purchase addi-
tional newly issued shares of common stock granted to the
International Managers in connection with the International
Offering:
15,300,000 shares
(2) Issue price:
¥3,766 per share ($38 per share)
(3) Total issue price:
¥827,390 million ($8,423 million)
(4) Amount of capital stock increase:
¥413,695 million ($4,211 million)
(5) Use of proceeds:
SMFG planned to use the proceeds to subscribe for newly
issued shares of SMBC common stock.
SMFG 2009
117
SMFG
Notes to Consolidated Financial Statements
SMFG resolved at the meeting of the Board of Directors held on
May 28, 2009 to issue 15,300,000 shares of its common stock by way
of third-party allotment to Daiwa Securities SMBC Co. Ltd. in con-
nection with SMFG’s secondary offering of shares through Daiwa
Securities SMBC’s exercise of an over-allotment option, as set forth
below:
(1) Type and number of shares issued:
SMFG Common stock
15,300,000 shares (maximum)
(2) Issue price:
¥3,766 per share ($38 per share)
(3) Total issue price:
¥57,619 million ($587 million) (maximum)
(4) Amount of capital stock increase:
¥28,809 million ($293 million) (maximum)
(5) Allottee:
Daiwa Securities SMBC Co. Ltd.
(6) Subscription date:
July 24, 2009
(7) Payment date:
July 27, 2009
(8) Use of proceeds:
SMFG planned to use the proceeds to subscribe for newly
issued shares of SMBC common stock.
(9) Other:
Daiwa Securities SMBC planned to accept the number of new
shares of SMFG common stock that are issued (15,300,000
shares) via over-allotment excluding the number of shares pur-
chased through stabilization and syndicate cover transactions in
order to return borrowed shares. Accordingly, all or a part of
the new shares issued via allotment may not be subscribed for,
resulting in a decrease in the maximum number of new shares
issued via allotment or in the cancellation of the entire issuance
due to forfeiture.
118
SMFG 2009
36. Parent Company
(1) Nonconsolidated Balance Sheets
Sumitomo Mitsui Financial Group, Inc.
March 31
Assets
Notes to Consolidated Financial Statements
SMFG
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
Current assets ..........................................................................................
¥
23,730
¥
68,956
$
242
Cash and due from banks.....................................................................
1,281
53,735
Prepaid expenses .................................................................................
Deferred tax assets...............................................................................
Accrued income ....................................................................................
Accrued income tax refunds .................................................................
Other current assets .............................................................................
22
39
19
21,844
522
21
359
56
14,267
515
13
0
1
0
223
5
Fixed assets .............................................................................................
4,033,583
3,952,260
41,062
Tangible fixed assets ............................................................................
Buildings ...........................................................................................
Equipment.........................................................................................
Intangible fixed assets ..........................................................................
Software............................................................................................
Investments and other assets...............................................................
Investments in subsidiaries and affiliates..........................................
Deferred tax assets...........................................................................
2
0
2
11
11
4
0
4
9
9
4,033,568
4,028,093
5,475
3,952,246
3,950,642
1,603
Total assets..............................................................................................
¥4,057,313
¥4,021,217
0
0
0
0
0
41,062
41,007
55
$41,304
Liabilities and net assets
Liabilities
Current liabilities .......................................................................................
¥1,079,566
Short-term borrowings ..........................................................................
1,078,030
¥1,052,242
1,049,030
$10,990
10,975
Accounts payable .................................................................................
Accrued expenses ................................................................................
Income taxes payable...........................................................................
Business office taxes payable ..............................................................
Reserve for employees bonuses ..........................................................
Reserve for executive bonuses ............................................................
Other current liabilities ..........................................................................
Fixed liabilities ..........................................................................................
Reserve for executive retirement benefits ............................................
298
120
372
5
102
—
637
199
199
223
173
1,539
4
81
74
1,114
225
225
3
1
4
0
1
—
6
2
2
Total liabilities ..........................................................................................
1,079,766
1,052,468
10,992
Net assets
Stockholders’ equity
Capital stock ........................................................................................
1,420,877
1,420,877
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 .......................................................................................
916,163
642,355
273,808
683,907
30,420
653,487
(43,400)
2,977,547
2,977,547
930,386
642,355
288,031
700,679
30,420
670,259
(83,194)
2,968,749
2,968,749
Total liabilities and net assets.................................................................
¥4,057,313
¥4,021,217
14,465
9,327
6,539
2,788
6,962
310
6,652
(442)
30,312
30,312
$41,304
SMFG 2009
119
SMFG
Notes to Consolidated Financial Statements
(2) Nonconsolidated Statements of Income
Sumitomo Mitsui Financial Group, Inc.
Year ended March 31
Millions of yen
2009
2008
Operating income ....................................................................................
¥134,772
¥111,637
Dividends on investments in subsidiaries and affiliates........................
Fees and commissions received from subsidiaries ..............................
Operating expenses ................................................................................
General and administrative expenses ..................................................
117,051
17,721
8,790
8,790
Operating profit ......................................................................................
125,982
Nonoperating income..............................................................................
Interest income on deposits..................................................................
Fees and commissions ........................................................................
Other nonoperating income ..................................................................
Nonoperating expenses ..........................................................................
Interest on borrowings ..........................................................................
Fees and commissions payments ........................................................
Losses on devaluation of stocks of affiliate ..........................................
Other nonoperating expenses ..............................................................
151
110
14
27
23,824
11,910
11,912
—
0
Ordinary profit..........................................................................................
102,309
89,693
21,944
6,246
6,246
105,391
466
298
14
153
16,794
11,012
1,263
4,518
—
89,063
Income before income taxes ..................................................................
102,309
89,063
Income taxes:
Current.............................................................................................
Deferred...........................................................................................
2,393
(3,552)
5,470
618
Millions of
U.S. dollars (Note 1)
2009
$1,372
1,192
180
89
89
1,283
1
1
0
0
242
121
121
—
0
1,042
1,042
25
(36)
Net income...............................................................................................
¥103,468
¥ 82,975
$1,053
Per share data:
Net income............................................................................................
¥118.43
Net income — diluted ...........................................................................
—
¥91.34
91.34
* Reflects the 100-for-1 stock split effective on January 4, 2009.
2009
2008*
2009
$1.21
—
Yen
U.S. dollars (Note 1)
120
SMFG 2009
Notes to Consolidated Financial Statements
SMFG
(3) Nonconsolidated Statements of Changes in Net Assets
Sumitomo Mitsui Financial Group, Inc.
Year ended March 31
Stockholders’ equity
Capital stock
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
Balance at the end of the previous fiscal year ......................................
¥1,420,877
¥1,420,877
$14,465
Changes in the fiscal year:
Net changes in the fiscal year...........................................................
—
—
Balance at the end of the fiscal year.....................................................
¥1,420,877
¥1,420,877
—
$14,465
Capital surplus
Capital reserve
Balance at the end of the previous fiscal year ..................................
642,355
642,355
6,539
Changes in the fiscal year:
Net changes in the fiscal year .......................................................
—
—
Balance at the end of the fiscal year.................................................
¥ 642,355
¥ 642,355
—
$ 6,539
Other capital surplus
Balance at the end of the previous fiscal year ..................................
288,031
288,113
2,933
Changes in the fiscal year:
Disposal of treasury stock .............................................................
Net changes in the fiscal year .......................................................
(14,222)
(14,222)
(82)
(82)
(145)
(145)
Balance at the end of the fiscal year.................................................
¥ 273,808
¥ 288,031
$ 2,788
Total capital surplus
Balance at the end of the previous fiscal year ......................................
930,386
930,469
9,472
Changes in the fiscal year:
Disposal of treasury stock.................................................................
Net changes in the fiscal year...........................................................
(14,222)
(14,222)
(82)
(82)
(145)
(145)
Balance at the end of the fiscal year.....................................................
¥ 916,163
¥ 930,386
$ 9,327
SMFG 2009
121
SMFG
Notes to Consolidated Financial Statements
(Continued)
Year ended March 31
Retained earnings
Other retained earnings
Voluntary reserve
Millions of yen
Millions of
U.S. dollars (Note 1)
2009
2008
2009
Balance at the end of the previous fiscal year ..............................
¥
30,420
¥
30,420
$
310
Changes in the fiscal year:
Net changes in the fiscal year ...................................................
—
—
Balance at the end of the fiscal year .............................................
¥
30,420
¥
30,420
—
$
310
Retained earnings brought forward
Balance at the end of the previous fiscal year ..............................
670,259
698,709
6,823
Changes in the fiscal year:
Cash dividends..........................................................................
Net income ................................................................................
Net changes in the fiscal year ...................................................
(120,240)
103,468
(16,772)
(111,425)
82,975
(28,450)
(1,224)
1,053
(171)
Balance at the end of the fiscal year .............................................
¥ 653,487
¥ 670,259
$ 6,652
Total retained earnings
Balance at the end of the previous fiscal year ......................................
700,679
729,129
7,133
Changes in the fiscal year:
Cash dividends .................................................................................
Net income........................................................................................
Net changes in the fiscal year...........................................................
(120,240)
103,468
(16,772)
(111,425)
82,975
(28,450)
(1,224)
1,053
(171)
Balance at the end of the fiscal year.....................................................
¥ 683,907
¥ 700,679
$ 6,962
Treasury stock
Balance at the end of the previous fiscal year ......................................
(83,194)
(82,578)
Changes in the fiscal year:
Purchase of treasury stock ...............................................................
Disposal of treasury stock.................................................................
Net changes in the fiscal year...........................................................
(943)
40,736
39,793
(901)
285
(616)
(847)
(9)
414
405
Balance at the end of the fiscal year.....................................................
¥ (43,400)
¥ (83,194)
$ (442)
Total stockholders’ equity
Balance at the end of the previous fiscal year ......................................
2,968,749
2,997,898
30,223
Changes in the fiscal year:
Cash dividends .................................................................................
Net income........................................................................................
Purchase of treasury stock ...............................................................
Disposal of treasury stock.................................................................
Net changes in the fiscal year...........................................................
(120,240)
103,468
(943)
26,513
8,798
(111,425)
82,975
(901)
202
(29,149)
(1,224)
1,053
(9)
269
89
Balance at the end of the fiscal year.....................................................
¥2,977,547
¥2,968,749
$30,312
Total net assets
Balance at the end of the previous fiscal year ......................................
2,968,749
2,997,898
30,223
Changes in the fiscal year:
Cash dividends .................................................................................
Net income........................................................................................
Purchase of treasury stock ...............................................................
Disposal of treasury stock.................................................................
Net changes in the fiscal year...........................................................
(120,240)
103,468
(943)
26,513
8,798
(111,425)
82,975
(901)
202
(29,149)
(1,224)
1,053
(9)
269
89
Balance at the end of the fiscal year.....................................................
¥2,977,547
¥2,968,749
$30,312
122
SMFG 2009
Independent Auditors’ Report
To the Board of Directors of
Sumitomo Mitsui Financial Group, Inc.:
SMFG
We have audited the accompanying consolidated balance sheets of Sumitomo Mitsui Financial Group, Inc. (“SMFG”)
and subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of operations, 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, 2009 and 2008, 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 35 to the consolidated financial statements,
1. SMFG resolved at the meeting of the Board of Directors held on April 28, 2009 to authorize the redemption in
full of the preferred securities issued by its overseas special purpose subsidiary.
2. Sumitomo Mitsui Banking Corporation, a consolidated subsidiary of SMFG, reached an agreement on May 1,
2009 with Nikko Citi Holdings Inc. and other related entities to acquire Nikko Cordial Securities Inc. and other
businesses.
3. SMFG resolved at the meeting of the Board of Directors held on May 28, 2009 to issue and offer new shares and
received payments for issuance of new shares by way of public offering on June 22, 2009.
The consolidated financial statements as of and for the year ended March 31, 2009 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 26, 2009
SMFG 2009
123
SMBC
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 .........................................
Monetary claims bought .......................................................................................
Trading assets......................................................................................................
Money held in trust...............................................................................................
Securities .............................................................................................................
Loans and bills discounted...................................................................................
Foreign exchanges...............................................................................................
Lease receivables and investment assets ...........................................................
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
Millions of U.S. dollars
2009
2008
2009
¥ 3,771,699
1,383,618
633,655
10,487
1,815,195
964,849
4,836,484
8,985
28,295,724
66,082,719
885,082
131,869
2,670,337
786,755
141,522
—
792,081
3,650,162
(1,011,845)
¥115,849,385
¥ 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
$
38,397
14,086
6,451
107
18,479
9,822
49,236
91
288,056
672,735
9,010
1,342
27,185
8,009
1,441
—
8,064
37,159
(10,301)
$1,179,369
124
SMFG 2009
Supplemental Information
SMBC
(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 ...............................................................
Reserve under the special laws ...........................................................................
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 (losses) 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 ............................................................................
Notes: 1. Amounts less than one million yen have been omitted.
Millions of yen
Millions of U.S. dollars
2009
2008
2009
¥ 83,124,568
2,499,113
778,993
7,577,109
3,606,319
2,908,479
281,145
114,242
3,565,376
60,918
3,037,797
19,963
167
13,506
6,613
11,767
0
27,275
47,217
3,650,162
111,330,737
664,986
1,603,672
448,750
2,717,409
(60,148)
(20,306)
35,099
(120,606)
(165,961)
66
1,967,133
4,518,647
¥115,849,385
¥ 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
$ 846,224
25,442
7,930
77,136
36,713
29,609
2,862
1,163
36,296
620
30,925
203
2
138
67
120
0
278
481
37,159
1,133,368
6,770
16,326
4,568
27,664
(612)
(207)
357
(1,228)
(1,690)
1
20,026
46,001
$1,179,369
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 ¥98.23 to US$1, the exchange rate prevailing at March 31, 2009.
SMFG 2009
125
SMBC
SMBC
Supplemental Information
Consolidated Statements of Operations (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.......................................................................
Interest on lease transactions .........................................................................
Other interest income......................................................................................
Trust fees .............................................................................................................
Fees and commissions ........................................................................................
Trading income ....................................................................................................
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 payments........................................................................
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 (loss) ...............................................................................................
Millions of yen
Millions of U.S. dollars
2009
2008
2009
¥1,986,520
1,544,701
297,938
1,748
4,496
42,446
3,962
91,227
2,074
518,688
191,842
250,475
42,238
2,991,839
721,585
374,568
66,617
7,261
59,958
81,380
131,798
124,611
196,656
900,572
389,786
607,796
2,941,009
50,830
¥2,122,630
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
913,651
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
35,294
277,961
54,882
¥ (317,306)
40,791
265,384
68,007
¥ 351,820
$20,223
15,725
3,033
18
46
432
40
929
21
5,280
1,953
2,550
430
30,457
7,345
3,813
678
74
610
828
1,342
1,269
2,002
9,168
3,968
6,188
29,940
517
359
2,829
559
$ (3,230)
Per share data:
Net income (loss) ............................................................................................
¥(5,740.34)
Net income — diluted......................................................................................
—
¥6,132.91
6,132.75
$(58.43)
—
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 ¥98.23 to US$1, the exchange rate prevailing at March 31, 2009.
Yen
U.S. dollars
126
SMFG 2009
Supplemental Information
SMBC
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 ..........................................
Monetary claims bought .......................................................................................
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
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 executive retirement benefits............................................................
Reserve for point service program .......................................................................
Reserve for reimbursement of deposits ...............................................................
Reserve under the special laws ...........................................................................
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 (losses) on other securities ................................................
Net deferred gains (losses) on hedges ................................................................
Land revaluation excess ......................................................................................
Total valuation and translation adjustments .....................................................
Total net assets...................................................................................................
Total liabilities and net assets ............................................................................
Millions of yen
Millions of U.S. dollars
2009
2008
2009
¥ 2,597,429
2,697,579
255,095
48,113
1,815,195
396,183
3,885,704
8,985
28,000,515
60,241,266
748,149
2,259,982
696,680
126,070
668,343
3,826,694
(791,885)
(1,888)
¥107,478,218
¥ 76,905,708
2,479,743
773,534
7,561,013
2,705,478
4,663,553
282,360
114,242
3,319,693
60,918
2,163,237
10,720
—
4,992
2,359
10,873
0
46,599
3,826,694
104,931,725
664,986
1,367,548
499,666
2,532,201
(52,741)
45,359
21,673
14,291
2,546,493
¥107,478,218
¥ 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
$
26,442
27,462
2,597
490
18,479
4,033
39,557
92
285,051
613,268
7,616
23,007
7,092
1,283
6,804
38,957
(8,062)
(19)
$1,094,149
$ 782,915
25,244
7,875
76,973
27,542
47,476
2,875
1,163
33,795
620
22,022
109
—
51
24
111
0
474
38,956
1,068,225
6,769
13,922
5,087
25,778
(537)
462
221
146
25,924
$1,094,149
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 ¥98.23 to US$1, the exchange rate prevailing at March 31, 2009.
SMFG 2009
127
SMBC
Supplemental Information
Nonconsolidated Statements of Operations (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 income ....................................................................................................
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 payments........................................................................
Other operating expenses....................................................................................
General and administrative expenses .................................................................
Provision for reserve for possible loan losses......................................................
Other expenses....................................................................................................
Total expenses ....................................................................................................
Income before income taxes ..............................................................................
Income taxes:
Millions of yen
Millions of U.S. dollars
2009
2008
2009
¥1,758,423
1,346,185
293,992
1,341
4,488
38,040
74,376
2,074
415,228
175,038
163,277
34,029
2,548,073
740,065
320,243
152,905
7,066
59,885
68,418
131,546
121,404
127,747
722,285
260,749
548,033
2,520,286
27,786
¥1,866,277
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
895,469
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
$17,901
13,704
2,993
14
46
387
757
21
4,227
1,782
1,662
347
25,940
7,534
3,260
1,557
72
610
696
1,339
1,236
1,300
7,353
2,655
5,579
25,657
283
Current ............................................................................................................
Deferred .........................................................................................................
Net income (loss) ................................................................................................
23,748
305,154
¥ (301,116)
16,031
285,680
¥ 205,742
242
3,107
$ (3,066)
Per share data:
Net income (loss) ............................................................................................
¥(5,453.06)
¥3,540.84
Net income — diluted......................................................................................
—
—
$(55.51)
—
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 ¥98.23 to US$1, the exchange rate prevailing at March 31, 2009.
Yen
U.S. dollars
128
SMFG 2009
SMFG
Income Analysis (Consolidated)
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Operating Income, Classified by Domestic and Overseas Operations
2009
2008
Millions of yen
Year ended March 31
Domestic Overseas
operations
operations Elimination
Total
Domestic Overseas
operations
operations Elimination
Total
Interest income .................................................... ¥1,561,085
495,194
Interest expenses ................................................
1,065,890
Net interest income....................................................
¥618,228
341,615
276,613
¥(91,965)
(87,945)
(4,019)
¥2,087,348 ¥1,542,313
529,520
1,012,792
748,863
1,338,484
¥669,690
457,127
212,562
¥(66,551) ¥2,145,451
935,056
1,210,394
(51,591)
(14,960)
Trust fees...................................................................
Fees and commissions ........................................
Fees and commissions payments .......................
Net fees and commissions ........................................
Trading income ....................................................
Trading losses .....................................................
Net trading income ....................................................
Other operating income .......................................
Other operating expenses ...................................
Net other operating income (expenses) ....................
2,122
592,845
105,882
486,962
194,201
3,449
190,751
503,422
438,969
64,453
—
80,926
10,590
70,335
29,779
8,791
20,987
26,403
34,574
(8,171)
—
(1,019)
(899)
(119)
(12,241)
(12,241)
—
(226)
(331)
105
2,122
672,752
115,574
557,178
211,738
—
211,738
529,599
473,212
3,752
633,655
82,800
550,855
470,388
15,242
455,145
1,165,090
1,362,029
56,386
(196,938)
—
71,996
10,537
61,459
30,848
16,423
14,425
47,612
30,081
17,530
—
(1,368)
(1,047)
(320)
(31,665)
(31,665)
—
3,752
704,283
92,289
611,993
469,571
—
469,571
(67)
(21)
(45)
1,212,635
1,392,089
(179,453)
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 (2009, ¥30 million; 2008, ¥10 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
Millions of yen
Year ended March 31
Interest-earning assets....................................
Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................
Lease receivables and investment assets...
Average balance
¥80,327,278
53,272,205
21,707,712
392,838
17,008
2009
Interest
¥1,561,085
1,145,251
270,374
5,403
89
687,341
848,609
1,837,506
4,506
11,257
70,747
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 .........................................................
¥87,827,514
66,460,734
4,072,822
2,727,860
436,712
¥ 495,194
196,916
24,331
12,527
2,066
4,182,183
5,463,776
765,144
3,481,382
59,962
125,225
6,678
65,248
Earnings yield Average balance
2008
Interest
¥1,542,313
1,135,110
287,879
13,186
382
7,032
34,957
—
¥74,364,561
51,170,802
18,046,377
644,293
67,129
980,818
1,891,531
—
¥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
Earnings yield
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
1.94%
2.15
1.25
1.38
0.53
0.66
1.33
3.85
0.56%
0.30
0.60
0.46
0.47
1.43
2.29
0.87
1.87
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 (2009, ¥824,712 million; 2008, ¥804,987
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 (2009, ¥8,583 million; 2008, ¥2,771 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2009, ¥8,583 million; 2008, ¥2,771 million) and corre-
sponding interest (2009, ¥30 million; 2008, ¥10 million).
SMFG 2009
129
SMFG
Income Analysis (Consolidated)
Overseas Operations
Average balance
Year ended March 31
Interest-earning assets.................................... ¥16,094,115
11,650,846
1,350,840
384,028
103,425
Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................
Lease receivables and investment assets...
—
1,936,988
160,047
Interest-bearing liabilities ................................ ¥ 9,633,089
6,968,130
710,309
580,174
546,903
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 .........................................................
—
452,531
—
265,035
2009
Interest
¥618,228
486,109
35,424
9,283
1,661
—
35,982
7,025
¥341,615
134,070
23,579
9,996
5,232
—
20,929
—
17,328
Millions of yen
Earnings yield Average balance
3.84%
4.17
2.62
2.42
1.61
—
1.86
4.39
3.55%
1.92
3.32
1.72
0.96
—
4.62
—
6.54
¥12,801,800
8,859,850
1,139,851
268,662
278,935
—
1,850,524
—
¥ 8,952,948
7,101,518
660,930
314,091
207,412
—
316,935
—
268,000
2008
Interest
¥669,690
467,419
62,162
12,827
6,661
—
71,221
—
¥457,127
256,776
36,045
12,675
6,802
—
18,465
—
17,447
Earnings yield
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
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 (2009, ¥89,200 million; 2008, ¥75,496
million).
Total of Domestic and Overseas Operations
Year ended March 31
Interest-earning assets....................................
Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................
Lease receivables and investment assets...
Average balance
¥94,925,190
63,459,263
23,342,579
776,867
120,433
2009
Interest
¥2,087,348
1,550,081
299,616
14,686
1,750
687,341
2,470,670
1,997,553
4,506
42,738
77,772
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 .........................................................
¥95,678,084
73,111,647
4,783,132
3,308,035
983,616
¥ 748,863
326,447
47,911
22,524
7,298
4,182,183
4,452,520
765,144
3,746,418
59,962
62,750
6,678
82,577
Millions of yen
Earnings yield Average balance
2008
Interest
¥2,145,451
1,557,823
333,255
26,014
7,044
Earnings yield
2.48%
2.63
1.71
2.85
2.04
¥86,343,910
59,129,159
19,485,192
912,955
346,065
980,818
3,523,849
—
7,032
101,120
—
¥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
0.72
2.87
—
1.05%
0.68
1.59
0.98
2.38
2.23
1.25
0.83
2.28
2.20%
2.44
1.28
1.89
1.45
0.66
1.73
3.89
0.78%
0.45
1.00
0.68
0.74
1.43
1.41
0.87
2.20
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 (2009, ¥913,415 million; 2008, ¥881,666
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 (2009, ¥8,583 million; 2008, ¥2,771 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2009, ¥8,583 million; 2008, ¥2,771 million) and corre-
sponding interest (2009, ¥30 million; 2008, ¥10 million).
130
SMFG 2009
Income Analysis (Consolidated)
SMFG
Fees and Commissions
2009
2008
Millions of yen
Year ended March 31
Domestic Overseas
operations
operations Elimination
Fees and commissions..............................................
Deposits and loans ..............................................
Remittances and transfers...................................
Securities-related business..................................
Agency.................................................................
Safe deposits .......................................................
Guarantees ..........................................................
Credit card business ............................................
¥592,845
21,805
123,080
33,872
14,673
6,911
43,792
141,117
¥80,926
56,034
8,535
0
—
3
7,360
—
¥(1,019)
—
(161)
—
—
—
(300)
—
Total
¥672,752
77,840
131,455
33,872
14,673
6,914
50,852
141,117
Domestic Overseas
operations
operations Elimination
¥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)
—
Total
¥704,283
73,822
133,645
35,118
16,028
7,144
47,117
128,575
Fees and commissions payments .............................
Remittances and transfers...................................
¥105,882
26,796
¥10,590
3,576
¥ (899)
(161)
¥115,574
30,211
¥ 82,800
26,683
¥10,537
5,103
¥(1,047)
(174)
¥ 92,289
31,612
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.
Trading Income
2009
2008
Millions of yen
Year ended March 31
Domestic Overseas
operations
operations Elimination
Total
Domestic Overseas
operations
operations Elimination
Total
Trading income.......................................................... ¥194,201
23,210
Gains on trading securities ..................................
Gains on securities related to
trading transactions ...........................................
Gains on trading-related financial derivatives......
Others ..................................................................
1,174
162,430
7,386
¥29,779
666
¥(12,241)
—
¥211,738
23,876
¥470,388
21,082
¥30,848
324
¥(31,665)
—
¥469,571
21,406
46
29,066
—
—
(12,241)
—
1,221
179,255
7,386
2,705
439,734
6,865
228
30,296
—
—
(31,665)
—
2,934
438,365
6,865
Trading losses ........................................................... ¥ 3,449
—
Losses on trading securities ................................
Losses on securities related to
trading transactions ...........................................
Losses on trading-related financial derivatives....
Others ..................................................................
—
3,449
—
¥ 8,791
—
¥(12,241)
—
¥
—
8,791
—
—
(12,241)
—
—
—
—
—
—
¥ 15,242
—
¥16,423
—
¥(31,665)
—
¥
—
15,242
—
—
16,423
—
—
(31,665)
—
—
—
—
—
—
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 2009
131
SMFG
Assets and Liabilities (Consolidated)
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Deposits and Negotiable Certificates of Deposit
Year-End Balance
March 31
Domestic operations:
Millions of yen
2009
2008
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others .....................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
¥41,462,895
23,463,313
3,882,490
68,808,699
6,032,611
¥74,841,310
Overseas operations:
¥40,874,881
21,905,957
4,066,787
66,847,626
2,261,006
¥69,108,632
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others .....................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
Grand total ....................................................................................................
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
¥ 4,608,327
1,227,876
6,793
5,842,997
817,143
¥ 6,660,140
¥75,768,773
¥ 5,181,014
1,575,776
4,007
6,760,798
1,428,673
¥ 8,189,471
¥83,030,782
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
2009
2008
Manufacturing ..........................................................................................
Agriculture, forestry, fisheries and mining .................................................
Construction.............................................................................................
Transportation, communications and public enterprises..........................
Wholesale and retail ................................................................................
Finance and insurance.............................................................................
Real estate...............................................................................................
Services ...................................................................................................
Municipalities ...........................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
¥ 6,992,808
149,678
1,274,948
3,387,724
5,051,330
4,306,969
7,627,384
5,605,333
1,058,239
19,409,786
¥54,864,204
12.75% ¥ 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
100.00% ¥52,687,441
0.27
2.32
6.17
9.21
7.85
13.90
10.22
1.93
35.38
10.81%
0.28
2.58
5.81
10.14
8.48
14.79
11.24
1.61
34.26
100.00%
Overseas operations:
Public sector ............................................................................................
Financial institutions.................................................................................
Commerce and industry...........................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Total ..............................................................................................................
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
32,848
621,385
7,862,965
940,234
100.00% ¥ 9,457,433
¥62,144,874
35,350
501,739
8,602,419
1,131,605
¥10,271,115
¥65,135,319
0.34% ¥
4.88
83.75
11.03
0.35%
6.57
83.14
9.94
100.00%
—
—
¥
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.
132
SMFG 2009
Assets and Liabilities (Consolidated)
SMFG
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
2009
¥ 691,539
385,050
1,261
¥1,077,852
¥ 717,010
2009
¥ 292,088
1,019,352
36,162
238,713
¥1,586,317
¥ 607,936
2008
¥593,714
300,987
0
¥894,702
¥518,594
2008
¥
73,472
607,226
26,625
385,336
¥1,092,661
¥ 433,447
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 ............................................................................
Notes: Definition of problem asset categories
Millions of yen
¥
2009
505,666
865,603
281,917
1,653,186
70,894,602
¥72,547,788
717,010
¥
¥
2008
206,634
507,167
418,841
1,132,643
69,001,954
¥70,134,597
518,594
¥
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
3 categories above
SMFG 2009
133
SMFG
Assets and Liabilities (Consolidated)
Securities
Year-End Balance
March 31
Domestic operations:
Millions of yen
2009
2008
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:
¥14,734,419
338,688
3,899,189
2,536,410
5,136,736
¥26,645,444
¥
—
—
—
—
1,833,447
¥ 1,833,447
¥ 9,339,978
439,228
3,880,773
3,492,468
4,236,572
¥21,389,021
¥
—
—
—
—
1,871,186
¥ 1,871,186
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Japanese stocks ......................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Total ..............................................................................................................
Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other
—
—
—
257,294
—
¥
257,294
¥23,517,501
—
—
—
219,272
—
¥
219,272
¥28,698,164
¥
¥
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
Domestic Overseas
operations
operations Elimination
Total
Domestic Overseas
operations
operations Elimination
2009
2008
Millions of yen
Trading assets: ......................................................... ¥3,934,682 ¥1,011,003
6,931
—
—
Trading securities ................................................
Derivatives of trading securities...........................
Securities related to trading transactions.............
Derivatives of securities related to
287,025
470
—
¥(20,723)
—
—
—
¥4,924,961 ¥3,664,024
223,360
3,043
—
293,956
470
—
¥490,723
7,082
—
—
¥(31,135)
—
—
—
Total
¥4,123,611
230,442
3,043
—
trading transactions ...........................................
Trading-related financial derivatives ....................
Other trading assets ............................................
13,428
3,069,579
564,178
—
1,004,072
—
—
(20,723)
—
13,428
4,052,928
564,178
10,440
2,542,809
884,370
—
483,640
—
—
(31,135)
—
10,440
2,995,314
884,370
Trading liabilities: ...................................................... ¥2,684,086 ¥ 934,296
341
—
Trading securities sold for short sales .................
Derivatives of trading securities...........................
Securities related to trading transactions
7,131
407
¥(20,723)
—
—
¥3,597,658 ¥2,310,732
19,312
3,881
7,473
407
¥391,720
733
—
¥(31,135)
—
—
¥2,671,316
20,046
3,881
sold for short sales.............................................
Derivatives of securities related to
trading transactions ...........................................
Trading-related financial derivatives ....................
Other trading liabilities .........................................
—
—
—
—
—
—
—
—
13,997
2,662,549
—
—
933,954
—
—
(20,723)
—
13,997
3,575,780
—
10,196
2,277,341
—
—
390,986
—
—
(31,135)
—
10,196
2,637,192
—
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.
134
SMFG 2009
SMFG
Capital (Nonconsolidated)
Sumitomo Mitsui Financial Group, Inc.
Change in Number of Shares Issued and Capital Stock
Number of shares
issued
Changes
Balances
April 1, 2004 — March 31, 2005*1 ...
March 29, 2005*2 .............................
April 1, 2005 — March 31, 2006*3 ...
January 31, 2006*4 ..........................
February 28, 2006*5.........................
May 17, 2006*6 ................................
August 11, 2006*7............................
September 1, 2006*8 .......................
September 6, 2006*9 .......................
September 29, 2006*10 ....................
October 11, 2006*11.........................
April 30, 2008*12 ..............................
May 16, 2008*13...............................
January 4, 2009*14........................... 781,189,672.23
332,869.96
70,001
922,593.28
80,000
40,700
(68,000)
—
249,015
(67,000)
(439,534)
(195,000)
157,151
(16,700)
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
8,010,905.77
7,994,205.77
789,183,878
Millions of yen
Capital stock
Capital reserve
Changes
¥ —
105,001
—
45,220
23,005
—
—
—
—
—
—
—
—
—
Balances
¥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
1,420,877
1,420,877
1,420,877
Changes
¥
—
105,001
—
45,220
23,005
—
(1,000,000)
221,365
—
—
—
—
—
—
Balances
¥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
642,355
642,355
642,355
Remarks:
*1 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
*2 Allotment to third parties: Preferred stock (1st series Type 6): 70,001 shares
Issue price: ¥3,000 thousand Capitalization: ¥1,500 thousand
*3 Conversion of 107,087 shares of preferred stock (13th series Type 4) to 1,029,680.28 shares of common stock
*4 Public offering: Common stock: 80,000 shares
Issue price: ¥1,130 thousand Capitalization: ¥565 thousand
*5 Allotment to third parties: Common stock: 40,700 shares
Issue price: ¥1,130 thousand Capitalization: ¥565 thousand
*6 Repurchase and cancellation of 35,000 shares of preferred stock (Type 1) and 33,000 shares of preferred stock (Type 2)
*7 Capital reserve was transferred to other capital surplus pursuant to Article 448-1 of the Company Act.
*8 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)
*9 Repurchase and cancellation of 67,000 shares of preferred stock (Type 2)
*10 Repurchase and cancellation of 500,000 shares of preferred stock (Type 3) and increase in shares of common stock of 60,466
*11 Repurchase and cancellation of 195,000 shares of preferred stock (Type 3)
*12 Increase in shares of common stock of 157,151 as a result of exercise of rights to purchase all the shares of preferred stock (5th to 8th series Type 4)
*13 Decrease in shares of preferred stock (Type 4) of 16,700 as a result of cancellation of all the shares of preferred stock (5th to 8th series Type 4)
*14 Increase in shares of common stock of 781,189,672.23 as a result of 100-for-1 stock split
Note: Capital stock and capital reserve increased by ¥413,695 million each and the number of shares of common stock increased by 219,700,000 as a result of
the public offering on June 22, 2009.
Number of Shares Issued
March 31, 2009
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 (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...............................................................................................................................................................................
Number of shares issued
789,080,477
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
789,183,878
SMFG 2009
135
SMFG
Capital (Nonconsolidated)
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, 2009
Japanese government and local government................................................................
Financial institutions ......................................................................................................
Securities companies ....................................................................................................
Other institutions............................................................................................................
Foreign institutions ........................................................................................................
Foreign individuals.........................................................................................................
Individuals and others....................................................................................................
Total...............................................................................................................................
—
Fractional shares (shares) .............................................................................................
Notes: 1. Of 3,688,418 shares in treasury stock, 36,884 units are included in “Individuals and others” and the remaining 18 shares are included in “Fractional
4,887
2,840,389
89,465
1,418,712
2,601,110
263
914,621
7,869,447
2,135,777
7
404
87
7,586
992
66
208,691
217,833
—
36.10
1.14
18.03
33.05
0.00
11.62
100.00%
Number of
shareholders
Number of
units
Percentage of
total
0.06%
shares.”
2. “Other institutions” includes 237 units held by the Securities Custody Association.
3. The number of shares constituting one unit is 100.
Principal Shareholders
a. Common Stock
March 31, 2009
Number of
shares
Percentage of
shares outstanding
Japan Trustee Services Bank, Ltd. (Trust Account)........................................................................................
60,645,100
7.68%
Japan Trustee Services Bank, Ltd. (Trust Account 4G)..................................................................................
50,694,100
The Master Trust Bank of Japan, Ltd. (Trust Account) ...................................................................................
42,597,400
Nippon Life Insurance Company.....................................................................................................................
15,466,682
Sumitomo Mitsui Banking Corporation............................................................................................................
13,340,000
Mellon Bank, N.A. as Agent for its Client Mellon Omnibus US Pension*........................................................
9,571,835
SSBT OD05 Omnibus Account China Treaty Clients**...................................................................................
9,091,200
The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders**....................................
8,359,500
Japan Trustee Services Bank, Ltd. (The Sumitomo Trust & Banking Co., Ltd.’s Retrust Account and
Sumitomo Life Insurance Company Retirement Benefit Trust Account).......................................................
7,700,000
Sumitomo Life Insurance Company ................................................................................................................
7,140,000
6.42
5.39
1.96
1.69
1.21
1.15
1.05
0.97
0.90
Total ................................................................................................................................................................ 224,605,817
28.46%
* Standing agent: Mizuho Corporate Bank, Ltd.’s Kabutocho Custody & Proxy Department within the Settlement & Clearing Services Division
** Standing agent: Sumitomo Mitsui Banking Corporation’s Global Securities Business Department
b. Preferred Stock (1st series Type 4)
March 31, 2009
Shareholder
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
Number of
shares
Percentage of
shares outstanding
4,175
100.00%
d. Preferred Stock (3rd series Type 4)
March 31, 2009
Shareholder
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
Number of
shares
Percentage of
shares outstanding
4,175
100.00%
c. Preferred Stock (2nd series Type 4)
e. Preferred Stock (4th series Type 4)
March 31, 2009
Shareholder
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
Number of
shares
Percentage of
shares outstanding
4,175
100.00%
March 31, 2009
Shareholder
The Goldman Sachs Group, Inc.
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
Number of
shares
Percentage of
shares outstanding
4,175
100.00%
136
SMFG 2009
Capital (Nonconsolidated)
SMFG
f. Preferred Stock (9th series Type 4)
March 31, 2009
Shareholder
GSSM Holding II Corp.
Number of
shares
Percentage of
shares outstanding
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
4,175
100.00%
j. Preferred Stock (1st series Type 6)
March 31, 2009
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
g. Preferred Stock (10th series Type 4)
March 31, 2009
Shareholder
GSSM Holding II Corp.
Number of
shares
Percentage of
shares outstanding
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
4,175
100.00%
h. Preferred Stock (11th series Type 4)
March 31, 2009
Shareholder
GSSM Holding II Corp.
Number of
shares
Percentage of
shares outstanding
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
4,175
100.00%
i. Preferred Stock (12th series Type 4)
March 31, 2009
Shareholder
GSSM Holding II Corp.
Number of
shares
Percentage of
shares outstanding
(Standing agent: Goldman
Sachs Japan Co., Ltd.) .....................
4,175
100.00%
COMPANY LIMITED ........................
16,667
23.81
Mitsui Sumitomo Insurance
Company, Limited.............................
Total....................................................
Notes: 1. Pursuant to Article 67 of the Enforcement Ordinance of the
10,000
70,001
14.29
100.00%
Company Act, the exercise of voting rights of common shares
held by our subsidiary SMBC is not entitled.
2. The following reports on shareholdings (including their amend-
ment 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, 2009, we did not include them
in the list of principal shareholders shown above. The contents of
the reports are summarized as follows:
Submitters
Filing date
Number of
shares*1, 2, 3
Percentage
of shares
outstanding
Alliance Bernstein L.P. .............. Sept. 19, 2008
336,354
4.26%
*1 Includes shares held by co-shareholders.
*2 As of September 15, 2008
*3 Does not reflect the 100-for-1 stock split effective on January 4, 2009.
Stock Options
March 31
Number of shares granted ..........................................................................................................
Type of stock................................................................................................................................
Issue price....................................................................................................................................
Amount capitalized when shares are issued................................................................................
Exercise period of stock options ..................................................................................................
Note: Former SMBC issued and granted stock options to certain directors and employees pursuant to the resolution of the ordinary general meeting of share-
108,100 shares
Common stock
¥6,698 per share
¥3,349 per share
From June 28, 2004 to June 27, 2012
2009
holders 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
High .......................................................................
Low ........................................................................
Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).
2008
¥1,210,000
633,000
¥9,640
2,585
2009
Yen
2007
¥1,390,000
1,010,000
2006
¥1,370,000
659,000
2005
¥854,000
599,000
2. SMFG implemented 100-for-1 stock split on January 4, 2009. Stock prices for the year ended March 31, 2009 are reported assuming that the stock
split had been effective from April 1, 2008.
3. Preferred stocks are not listed on exchanges.
Six-Month Performance
Yen
High ................................................................
Low.................................................................
Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).
¥4,610
2,685
October 2008
¥6,720
3,150
November 2008 December 2008
¥4,110
2,926
January 2009
¥4,250
3,050
February 2009
¥3,770
2,735
March 2009
¥4,070
2,585
2. SMFG implemented 100-for-1 stock split on January 4, 2009. Stock prices above are reported assuming that the stock split had been effective from
April 1, 2008.
3. Preferred stocks are not listed on exchanges.
SMFG 2009
137
SMBC
Income Analysis (Consolidated)
Sumitomo Mitsui Banking Corporation and Subsidiaries
Operating Income, Classified by Domestic and Overseas Operations
2009
2008
Millions of yen
Year ended March 31
Domestic Overseas
operations
operations Elimination
Total
Domestic Overseas
operations
operations Elimination
Total
Interest income .................................................... ¥1,466,092
469,307
Interest expenses ................................................
996,784
Net interest income....................................................
¥610,270
335,909
274,360
¥(89,841)
(83,661)
(6,179)
¥1,986,520 ¥1,518,852
503,975
1,014,876
721,554
1,264,966
¥668,838
457,941
210,897
¥(65,060) ¥2,122,630
913,640
1,208,989
(48,276)
(16,784)
Trust fees...................................................................
Fees and commissions ........................................
Fees and commissions payments .......................
Net fees and commissions ........................................
Trading income ....................................................
Trading losses .....................................................
Net trading income ....................................................
Other operating income .......................................
Other operating expenses ...................................
Net other operating income (expenses) ....................
2,074
438,721
114,918
323,803
174,304
3,449
170,854
230,448
170,926
59,521
—
80,929
10,590
70,338
29,779
8,791
20,987
20,051
25,730
(5,678)
—
(962)
(897)
(65)
(12,241)
(12,241)
—
(24)
—
(24)
2,074
518,688
124,611
394,077
191,842
—
191,842
250,475
196,656
53,818
3,710
479,366
108,379
370,986
449,958
15,242
434,715
208,285
459,726
(251,440)
—
71,996
10,537
61,459
30,848
16,423
14,425
18,986
1,550
17,436
—
(1,309)
(1,047)
(261)
(31,665)
(31,665)
—
3,710
550,053
117,869
432,184
449,141
—
449,141
(2)
(0)
(2)
227,270
461,276
(234,006)
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
tions 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 (2009, ¥30 million; 2008, ¥10 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
Millions of yen
Average balance
Year ended March 31
Interest-earning assets.................................... ¥79,343,082
54,408,361
21,519,840
375,755
16,674
Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................
684,275
801,981
4,496
10,986
2009
Interest
¥1,466,092
1,124,991
268,696
5,287
87
Interest-bearing liabilities ................................ ¥85,639,021
66,523,917
4,094,711
2,736,245
430,988
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 .........................................................
4,179,957
4,036,960
67,214
3,332,131
¥ 469,307
196,972
24,451
12,571
2,028
59,958
107,661
478
63,573
Earnings yield Average balance
2008
Interest
¥1,518,852
1,115,012
288,315
13,128
382
Earnings yield
2.02%
2.14
1.61
2.08
0.57
¥75,205,377
52,218,671
17,931,827
632,627
67,129
980,818
1,840,501
7,032
34,684
¥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
0.72
1.88
0.64%
0.37
0.59
0.52
0.58
2.23
2.20
0.68
2.01
1.85%
2.07
1.25
1.41
0.52
0.66
1.37
0.55%
0.30
0.60
0.46
0.47
1.43
2.67
0.71
1.91
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 (2009, ¥818,050 million; 2008, ¥791,342
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 (2009, ¥8,583 million; 2008, ¥2,771 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2009, ¥8,583 million; 2008, ¥2,771 million) and corre-
sponding interest (2009, ¥30 million; 2008, ¥10 million).
138
SMFG 2009
Income Analysis (Consolidated)
SMBC
3.83%
4.18
2.62
2.42
1.61
—
1.86
3.52%
1.92
3.32
1.72
0.96
—
4.39
—
6.54
2.12%
2.37
1.30
1.92
1.46
0.66
1.75
0.77%
0.45
1.00
0.68
0.74
1.43
1.48
0.71
2.25
Overseas Operations
Average balance
Year ended March 31
Interest-earning assets.................................... ¥15,945,396
11,584,510
1,350,798
384,028
103,425
Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................
—
1,930,859
Interest-bearing liabilities ................................ ¥ 9,534,917
6,968,130
710,309
580,174
546,903
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 .........................................................
—
354,359
—
265,035
2009
Interest
¥610,270
484,291
35,424
9,283
1,661
—
35,964
¥335,909
134,070
23,579
9,996
5,232
—
15,544
—
17,328
Millions of yen
Earnings yield Average balance
2008
Interest
¥668,838
466,604
62,162
12,827
6,661
Earnings yield
5.26%
5.31
5.45
4.77
2.39
¥12,724,231
8,789,302
1,139,822
268,662
278,935
—
1,844,837
—
71,185
¥ 8,833,141
7,101,518
660,930
314,091
207,412
—
197,127
—
268,000
¥457,941
256,777
36,045
12,675
6,802
—
10,436
—
17,447
—
3.86
5.18%
3.62
5.45
4.04
3.28
—
5.29
—
6.51
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 (2009, ¥88,670 million; 2008, ¥75,204
million).
Total of Domestic and Overseas Operations
Average balance
Year ended March 31
Interest-earning assets.................................... ¥93,549,650
64,569,148
22,870,639
759,784
120,099
Loans and bills discounted.........................
Securities ...................................................
Call loans and bills bought .........................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................
684,275
2,419,248
4,496
42,446
2009
Interest
¥1,986,520
1,530,130
297,938
14,570
1,748
Interest-bearing liabilities ................................ ¥93,434,902
73,178,249
4,805,020
3,316,420
977,892
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 .........................................................
4,179,957
2,967,596
67,214
3,597,166
¥ 721,554
326,538
48,030
22,567
7,261
59,958
44,050
478
80,902
Millions of yen
Earnings yield Average balance
2008
Interest
¥2,122,630
1,538,387
333,692
25,955
7,044
Earnings yield
2.44%
2.56
1.75
2.88
2.04
¥86,842,369
60,139,056
19,071,650
901,289
346,065
980,818
3,468,732
7,032
100,826
¥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
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 (2009, ¥906,513 million; 2008, ¥866,367
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 (2009, ¥8,583 million; 2008, ¥2,771 million). “Interest-bearing liabilities” are
shown after deduction of amounts equivalent to the average balance of money held in trust (2009, ¥8,583 million; 2008, ¥2,771 million) and corre-
sponding interest (2009, ¥30 million; 2008, ¥10 million).
SMFG 2009 139
SMBC
Income Analysis (Consolidated)
Fees and Commissions
2009
2008
Millions of yen
Year ended March 31
Domestic Overseas
operations
operations Elimination
Fees and commissions..............................................
Deposits and loans ..............................................
Remittances and transfers...................................
Securities-related business..................................
Agency.................................................................
Safe deposits .......................................................
Guarantees ..........................................................
Credit card business ............................................
¥438,721
22,533
124,143
20,291
14,691
6,911
41,790
6,493
¥80,929
56,034
8,535
0
—
3
7,360
—
Fees and commissions payments .............................
Remittances and transfers...................................
¥114,918
26,796
¥10,590
3,576
¥(962)
—
(161)
—
—
—
(276)
—
¥(897)
(161)
Total
¥518,688
78,568
132,518
20,291
14,691
6,915
48,875
6,493
Domestic Overseas
operations
operations Elimination
¥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)
—
Total
¥550,053
74,503
135,135
15,176
16,044
7,144
46,621
6,878
¥124,611
30,211
¥108,379
26,683
¥10,537
5,103
¥(1,047)
(174)
¥117,869
31,612
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
tions comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
Trading Income
2009
2008
Millions of yen
Year ended March 31
Domestic Overseas
operations
operations Elimination
Total
Domestic Overseas
operations
operations Elimination
Trading income.......................................................... ¥174,304
3,313
Gains on trading securities ..................................
Gains on securities related to
trading transactions ...........................................
Gains on trading-related financial derivatives......
Others ..................................................................
1,174
162,430
7,386
¥29,779
666
¥(12,241)
—
¥191,842
3,979
¥449,958
652
¥30,848
324
¥(31,665)
—
46
29,066
—
—
(12,241)
—
1,221
179,255
7,386
2,705
439,734
6,865
228
30,296
—
—
(31,665)
—
Total
¥449,141
976
2,934
438,365
6,865
Trading losses ........................................................... ¥ 3,449
—
Losses on trading securities ................................
Losses on securities related to
trading transactions ...........................................
Losses on trading-related financial derivatives....
Others ..................................................................
—
3,449
—
¥ 8,791
—
¥(12,241)
—
¥ — ¥ 15,242
—
—
¥16,423
—
¥(31,665)
—
¥ —
—
—
8,791
—
—
(12,241)
—
—
—
—
—
15,242
—
—
16,423
—
—
(31,665)
—
—
—
—
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
tions comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
140
SMFG 2009
Assets and Liabilities (Consolidated)
Sumitomo Mitsui Banking Corporation and Subsidiaries
Deposits and Negotiable Certificates of Deposit
Year-End Balance
March 31
Domestic operations:
SMBC
Millions of yen
2009
2008
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others .....................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
¥41,544,906
23,465,803
3,884,852
68,895,562
6,035,411
¥74,930,974
Overseas operations:
¥40,937,520
21,906,417
4,076,061
66,919,999
2,307,506
¥69,227,505
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others .....................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
Grand total ....................................................................................................
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
¥ 4,613,034
1,227,907
6,793
5,847,735
817,143
¥ 6,664,878
¥75,892,384
¥ 5,185,137
1,575,776
4,007
6,764,920
1,428,673
¥ 8,193,594
¥83,124,568
tions 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
2009
2008
Manufacturing ..........................................................................................
Agriculture, forestry, fisheries and mining .................................................
Construction.............................................................................................
Transportation, communications and public enterprises..........................
Wholesale and retail ................................................................................
Finance and insurance.............................................................................
Real estate...............................................................................................
Services ...................................................................................................
Municipalities ...........................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
¥ 6,986,393
149,268
1,274,261
3,380,038
5,030,129
5,496,504
7,598,081
5,762,527
1,058,239
19,133,674
¥55,869,119
12.50% ¥ 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
100.00% ¥53,551,882
0.28
2.28
6.05
9.00
9.84
13.60
10.31
1.89
34.25
10.55%
0.27
2.54
5.70
9.94
10.35
14.48
11.36
1.58
33.23
100.00%
Overseas operations:
Public sector ............................................................................................
Financial institutions.................................................................................
Commerce and industry...........................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Total ..............................................................................................................
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
32,848
621,385
7,826,252
940,232
100.00% ¥ 9,420,719
¥62,972,601
35,350
501,739
8,544,905
1,131,604
¥10,213,599
¥66,082,719
0.35% ¥
4.91
83.66
11.08
0.35%
6.60
83.07
9.98
100.00%
—
—
¥
tions comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Japan offshore banking accounts are included in overseas operations’ accounts.
SMFG 2009
141
SMBC
Assets and Liabilities (Consolidated)
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
2009
¥ 290,237
997,888
36,119
237,579
¥1,561,824
¥ 590,174
Millions of yen
2008
¥
73,176
589,280
26,625
384,388
¥1,073,471
¥ 416,706
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
2009
2008
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Japanese stocks ......................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
¥14,734,414
338,688
3,878,294
2,407,718
5,103,160
¥26,462,276
Overseas operations:
¥ 9,339,958
439,228
3,876,433
3,431,541
4,202,554
¥21,289,716
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Japanese stocks ......................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
............................................................................................................
¥
—
—
—
—
1,833,447
¥ 1,833,447
¥28,295,724
¥
—
—
—
—
1,871,186
¥ 1,871,186
¥23,160,903
Total
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
tions 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
March 31
Domestic Overseas
operations
operations Elimination
Total
Domestic Overseas
operations
operations Elimination
Total
2009
2008
Millions of yen
Trading assets: ......................................................... ¥3,846,205 ¥1,011,003
6,931
—
—
Trading securities ................................................
Derivatives of trading securities...........................
Securities related to trading transactions.............
Derivatives of securities related to
185,122
455
—
¥(20,723) ¥4,836,484 ¥3,621,893
192,053
180,670
455
3,026
—
—
—
—
—
trading transactions ...........................................
Trading-related financial derivatives ....................
Other trading assets ............................................
13,428
3,083,019
564,178
—
1,004,072
—
—
(20,723)
—
13,428
4,066,368
564,178
10,440
2,543,384
884,370
¥490,723
7,082
—
—
—
483,640
—
¥(31,135) ¥4,081,480
187,753
3,026
—
—
—
—
—
(31,135)
—
10,440
2,995,890
884,370
¥391,720
733
—
¥(31,135) ¥2,671,554
19,718
3,871
—
—
Trading liabilities: ...................................................... ¥2,692,747 ¥ 934,296
341
—
Trading securities sold for short sales .................
Derivatives of trading securities...........................
Securities related to trading transactions
2,370
389
¥(20,723) ¥3,606,319 ¥2,310,969
18,984
3,871
2,711
389
—
—
sold for short sales.............................................
Derivatives of securities related to
trading transactions ...........................................
Trading-related financial derivatives ....................
Other trading liabilities .........................................
—
—
—
—
—
—
—
—
13,997
2,675,989
—
—
933,954
—
—
(20,723)
—
13,997
3,589,220
—
10,196
2,277,917
—
—
390,986
—
—
(31,135)
—
10,196
2,637,768
—
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-
tions comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.
2. Intersegment transactions are reported in the “Elimination” column.
142
SMFG 2009
Total
¥1,758,423
[9,284]
740,034
[9,284]
1,018,389
2,074
415,228
121,404
293,824
175,038
—
175,038
163,277
127,747
35,530
¥1,524,856
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
1.86%
Income Analysis (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Gross Banking Profit, Classified by Domestic and International Operations
Millions of yen
SMBC
Year ended March 31
Domestic
operations
Interest income .......................................... ¥1,184,053
2009
International
operations
¥583,654
Interest expenses.......................................
253,773
495,545
Domestic
operations
¥1,172,852
2008
International
operations
¥702,275
258,227
646,082
930,279
Net interest income .........................................
2,074
Trust fees ........................................................
322,455
Fees and commissions ..............................
102,214
Fees and commissions payments..............
220,241
Net fees and commissions ..............................
10,763
Trading income ..........................................
—
Trading losses............................................
10,763
Net trading income ..........................................
46,440
Other operating income .............................
62,596
Other operating expenses..........................
(16,156)
Net other operating income (expenses) ..........
Gross banking profit ........................................ ¥1,147,202
Gross banking profit rate (%) ..........................
Notes: 1. Domestic operations include yen-denominated transactions by domestic branches, while international operations include foreign-currency-
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
88,109
—
92,772
19,190
73,582
164,275
—
164,275
116,837
65,150
51,686
¥377,654
1.76%
1.65%
1.96%
1.75%
1.82%
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 (2009, ¥30 million; 2008, ¥10
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 5 100
Average Balance, Interest and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations
Millions of yen
2009
2008
Average balance
Year ended March 31
Interest-earning assets.................................... ¥69,174,259 ¥1,184,053
[9,284]
962,176
190,320
851
8
Loans and bills discounted.........................
Securities ...................................................
Call loans ..................................................
Receivables under resale agreements ......
Receivables under securities
[2,101,755]
48,534,275
17,380,685
102,047
1,806
Interest
borrowing transactions .............................
Bills bought ................................................
Deposits with banks ...................................
682,464
54,955
45,750
4,488
1,074
422
Interest-bearing liabilities ................................ ¥70,686,399 ¥ 253,773
123,812
24,063
10,653
2,043
Deposits .....................................................
Negotiable certificates of deposit ...............
Call money .................................................
Payables under repurchase agreements ...
Payables under securities
57,747,050
4,062,350
2,661,112
434,189
lending transactions .................................
Borrowed money ........................................
Short-term bonds .......................................
Bonds .........................................................
1,877,785
1,716,288
67,214
2,020,588
8,422
17,185
478
27,771
Earnings yield Average balance
Interest
1.71%
1.98
1.09
0.83
0.49
0.65
1.95
0.92
0.35%
0.21
0.59
0.40
0.47
0.44
1.00
0.71
1.37
¥65,570,970 ¥1,172,852
[8,851]
944,703
192,292
2,369
137
[2,187,759]
46,675,889
15,123,121
317,648
25,001
967,810
21,588
9,639
6,955
600
34
¥67,276,143 ¥ 258,227
126,555
14,781
10,190
630
57,309,691
2,538,711
2,098,638
110,193
1,095,930
1,901,820
—
2,105,556
5,872
19,738
—
25,297
Earnings yield
1.78%
2.02
1.27
0.74
0.55
0.71
2.78
0.35
0.38%
0.22
0.58
0.48
0.57
0.53
1.03
—
1.20
Notes: 1. “Interest-earning assets” are shown after deduction of the average balance of noninterest earning deposits (2009, ¥756,651 million; 2008, ¥740,846
million). “Interest-bearing liabilities” are shown after deduction of amounts equivalent to the average balance of money held in trust (2009, ¥8,583
million; 2008, ¥2,771 million) and corresponding interest (2009, ¥30 million; 2008, ¥10 million).
2. Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and international oper-
ations and related interest expenses. As net interest figures are shown for interest rate swaps and similar instruments, some figures for domestic and
international operations do not add up to their sums.
SMFG 2009
143
SMBC
Income Analysis (Nonconsolidated)
International Operations
2009
Millions of yen
Year ended March 31
Interest-earning assets.................................... ¥19,248,223
Average balance
Interest
¥583,654
Earnings yield Average balance
3.03%
¥16,324,446
Loans and bills discounted.........................
Securities ...................................................
Call loans ..................................................
Receivables under resale agreements ......
Receivables under securities
borrowing transactions .............................
Bills bought ................................................
Deposits with banks ...................................
10,196,514
5,079,312
279,225
116,634
—
—
2,370,678
Interest-bearing liabilities ................................ ¥19,236,867
[2,101,755]
8,892,776
693,692
654,909
545,774
Deposits .....................................................
Negotiable certificates of deposit ...............
Call money .................................................
Payables under repurchase agreements ...
Payables under securities
lending transactions .................................
Borrowed money ........................................
Bonds .........................................................
2,281,411
2,536,355
1,316,342
375,128
103,672
6,953
1,332
—
—
37,617
¥495,545
[9,284]
149,683
22,685
11,920
5,022
51,463
113,145
40,168
3.67
2.04
2.49
1.14
—
—
1.58
2.57%
1.68
3.27
1.82
0.92
2.25
4.46
3.05
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
2008
Interest
¥702,275
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
Earnings yield
4.30%
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
Notes: 1. “Interest-earning assets” are shown after deduction of the average balance of noninterest earning deposits (2009, ¥92,824 million; 2008, ¥78,914
million).
2. Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and international oper-
ations and related interest expenses. As net interest figures are shown for interest rate swaps and similar instruments, some figures for domestic and
international operations do not add up to their sums.
3. 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
Average balance
Year ended March 31
Interest-earning assets.................................... ¥86,320,727
58,730,789
22,459,998
381,273
118,440
Loans and bills discounted.........................
Securities ...................................................
Call loans ..................................................
Receivables under resale agreements ......
Receivables under securities
2009
Interest
¥1,758,423
1,337,305
293,992
7,805
1,341
borrowing transactions .............................
Bills bought ................................................
Deposits with banks ...................................
682,464
54,955
2,416,428
4,488
1,074
38,040
Interest-bearing liabilities ................................ ¥87,821,511
66,639,826
4,756,043
3,316,021
979,963
Deposits .....................................................
Negotiable certificates of deposit ...............
Call money .................................................
Payables under repurchase agreements ...
Payables under securities
lending transactions .................................
Borrowed money ........................................
Short-term bonds .......................................
Bonds .........................................................
4,159,197
4,252,644
67,214
3,336,931
¥ 740,034
273,495
46,748
22,573
7,066
59,885
130,331
478
67,939
Millions of yen
Earnings yield Average balance
2008
Interest
¥1,866,277
1,326,278
322,287
19,403
3,762
6,955
600
92,946
¥79,707,657
54,248,936
18,651,550
686,218
267,822
967,810
21,588
3,434,421
¥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
Earnings yield
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
2.03%
2.27
1.30
2.04
1.13
0.65
1.95
1.57
0.84%
0.41
0.98
0.68
0.72
1.43
3.06
0.71
2.03
Notes: 1. “Interest-earning assets” are shown after deduction of the average balance of noninterest earning deposits (2009, ¥849,475 million; 2008, ¥819,761
million). “Interest-bearing liabilities” are shown after deduction of amounts equivalent to the average balance of money held in trust (2009, ¥8,583
million; 2008, ¥2,771 million) and corresponding interest (2009, ¥30 million; 2008, ¥10 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.
144
SMFG 2009
Income Analysis (Nonconsolidated)
SMBC
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 ........................................
Short-term bonds .......................................
Bonds............................................................
Volume-related Rate-related
2009
increase
(decrease)
¥61,677
36,842
24,720
(1,608)
(115)
(1,915)
652
272
¥12,243
937
9,020
2,251
1,524
3,506
—
(1,875)
478
(1,020)
increase
(decrease)
¥(50,476)
(19,368)
(26,693)
90
(13)
(551)
(178)
115
¥(16,696)
(3,681)
260
(1,788)
(112)
(956)
—
(676)
—
3,494
Net
increase
(decrease)
¥11,200
17,473
(1,972)
(1,517)
(128)
(2,467)
474
388
¥ (4,453)
(2,743)
9,281
463
1,412
2,550
—
(2,552)
478
2,473
Volume-related Rate-related
2008
increase
(decrease)
¥ (494)
(653)
(9,691)
(6)
10
(552)
(31)
(82)
¥ (30)
(0)
(23)
381
(74)
716
(110)
3,291
—
(436)
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
International Operations
Millions of yen
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 Rate-related
2009
increase
(decrease)
¥88,656
96,517
31,654
(3,473)
(1,579)
(23,542)
¥76,854
3,740
2,796
5,802
3,302
30,157
42,043
(5,153)
increase
(decrease)
¥(207,277)
(102,964)
(57,976)
(6,607)
(713)
(31,751)
¥(227,391)
(154,348)
(12,797)
(7,628)
(3,838)
(18,317)
(12,147)
(5,843)
Net
increase
(decrease)
¥(118,621)
(6,447)
(26,322)
(10,080)
(2,292)
(55,294)
¥(150,537)
(150,607)
(10,000)
(1,826)
(536)
11,839
29,895
(10,997)
Volume-related Rate-related
2008
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
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)
Total of Domestic and International Operations
Millions of yen
Volume-related Rate-related
2009
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 ........................................
Short-term bonds .......................................
Bonds ..........................................................
increase
(decrease)
¥134,713
102,052
49,850
(7,154)
(1,796)
(1,915)
652
(22,770)
¥ 54,601
2,706
15,816
5,999
4,924
30,506
—
23,057
478
(5,033)
increase
(decrease)
¥(242,567)
(91,025)
(78,146)
(4,443)
(624)
(551)
(178)
(32,135)
¥(210,025)
(156,058)
(16,536)
(7,362)
(4,047)
(16,117)
—
4,285
—
(3,489)
Note: Volume/rate variance is prorated according to changes in volume and rate.
Net
increase
(decrease)
¥(107,853)
11,026
(28,295)
(11,598)
(2,421)
(2,467)
474
(54,905)
¥(155,423)
(153,351)
(719)
(1,363)
876
14,389
—
27,343
478
(8,523)
Volume-related Rate-related
2008
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)
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
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
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
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
SMFG 2009 145
SMBC
Income Analysis (Nonconsolidated)
Fees and Commissions
Year ended March 31
Fees and commissions ...................................
Deposits and loans ....................................
Remittances and transfers .........................
Securities-related business ........................
Agency .......................................................
Safe deposits .............................................
Guarantees ................................................
Domestic
operations
¥322,455
10,866
96,014
17,256
11,777
6,472
21,005
2009
International
operations
¥92,772
40,973
27,122
2,818
—
—
9,679
Fees and commissions payments...................
Remittances and transfers .........................
¥102,214
20,385
¥19,190
7,770
Millions of yen
Domestic
operations
¥361,444
10,720
97,341
13,592
13,094
6,688
22,734
¥ 98,409
20,109
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
Total
¥415,228
51,840
123,136
20,075
11,777
6,472
30,684
¥121,404
28,155
Trading Income
Year ended March 31
Trading income ...............................................
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
¥10,763
3,313
—
—
7,449
2009
International
operations
¥164,275
—
Millions of yen
Total
¥175,038
3,313
Domestic
operations
¥8,531
652
1,221
1,221
163,054
—
163,054
7,449
¥ —
—
¥
—
—
—
—
—
—
—
—
¥
—
—
—
—
—
—
—
7,878
¥ —
—
—
—
—
2008
International
operations
¥432,454
—
Total
¥440,985
652
2,934
2,934
429,520
—
429,520
7,878
¥
¥
—
—
—
—
—
—
—
—
—
—
Note: Figures represent net gains after offsetting income against expenses.
Net Other Operating Income (Expenses)
Year ended March 31
Net other operating income (expenses) ..........
Gains (losses) on bonds ............................
Gains on derivatives ..................................
Losses on foreign exchange transactions ...
General and Administrative Expenses
Domestic
operations
¥(16,156)
(32,420)
12,680
—
2009
International
operations
¥51,686
58,548
898
(2,472)
Millions of yen
Total
¥35,530
26,128
13,578
(2,472)
Domestic
operations
¥ 8,383
(10,007)
3,046
—
2008
International
operations
¥(271,477)
(20,051)
3,767
(252,589)
Total
¥(263,093)
(30,058)
6,813
(252,589)
Millions of yen
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................................................................................................................................................
Note: Because expenses reported on page 27 exclude nonrecurring losses, they are not reconciled with the figures reported in the above table.
2009
¥205,624
25,634
31,835
60,889
50,647
8,373
6,812
5,441
3,765
7,455
11,349
38,282
266,173
¥722,285
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
146
SMFG 2009
Deposits (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Deposits and Negotiable Certificates of Deposit
Year-End Balance
March 31
Domestic operations:
SMBC
Millions of yen
2009
2008
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
¥39,432,942
19,984,641
1,136,752
60,554,335
6,047,604
¥66,601,940
International operations:
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
Grand total ....................................................................................................
Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice
¥ 4,900,826
1,342,381
2,702,454
8,945,662
1,358,105
¥10,303,767
¥76,905,708
2. Fixed-term deposits = Time deposits + Installment savings
59.2% ¥38,810,626
30.0
18,564,178
1.7
1,167,168
90.9
58,541,973
9.1
2,209,667
100.0% ¥60,751,641
47.6% ¥ 4,074,876
13.0
916,959
26.2
2,883,450
86.8
7,875,286
13.2
755,906
100.0% ¥ 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%
—
Average Balance
Year ended March 31
Domestic operations:
Millions of yen
2009
2008
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
¥38,108,576
19,165,009
473,464
57,747,050
4,062,350
¥61,809,401
International operations:
Liquid deposits .........................................................................................
Fixed-term deposits .................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
Negotiable certificates of deposit .............................................................
Total .........................................................................................................
Grand total ....................................................................................................
Notes: 1. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice
¥ 4,623,996
1,104,938
3,163,841
8,892,776
693,692
¥ 9,586,469
¥71,395,870
¥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
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
Individual .......................................................................................................
Corporate ......................................................................................................
Total ..............................................................................................................
Notes: 1. Figures are before adjustment on interoffice accounts in transit.
Millions of yen
2009
2008
¥34,889,209
31,335,180
¥66,224,389
52.7% ¥33,987,919
47.3
30,538,230
100.0% ¥64,526,149
52.7%
47.3
100.0%
2. Negotiable certificates of deposit are excluded.
3. Accounts at overseas branches and Japan offshore banking accounts are excluded.
SMFG 2009
147
SMBC
Deposits (Nonconsolidated)
Balance of Investment Trusts, Classified by Type of Customer
2008
March 31
¥2,974,007
Individual .......................................................................................................
176,591
Corporate ......................................................................................................
¥3,150,598
............................................................................................................
Total
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.
2009
¥2,040,366
201,138
¥2,241,504
Millions of yen
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 ......................................................................................................
............................................................................................................
Fixed interest rates ..................................................................................
Floating interest rates ..............................................................................
Others ......................................................................................................
Total
Note: The figures above do not include installment savings.
2009
¥ 7,494,172
6,278,535
700
1,214,936
4,045,532
3,963,667
4,500
77,365
5,583,297
5,533,874
21,510
27,911
1,660,255
1,640,874
18,885
495
1,251,850
1,229,574
18,990
3,285
1,291,870
781,847
491,636
18,386
¥21,326,977
19,428,374
556,222
1,342,381
Millions of yen
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
148
SMFG 2009
Loans (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Balance of Loans and Bills Discounted
Year-End Balance
March 31
Domestic operations:
SMBC
Millions of yen
2009
2008
Loans on notes ........................................................................................
Loans on deeds .......................................................................................
Overdrafts ................................................................................................
Bills discounted ........................................................................................
Subtotal....................................................................................................
International operations:
Loans on notes ........................................................................................
Loans on deeds .......................................................................................
Overdrafts ................................................................................................
Bills discounted ........................................................................................
Subtotal....................................................................................................
Total ..............................................................................................................
¥ 1,932,245
37,914,257
9,780,746
216,066
¥49,843,316
¥
454,926
9,853,939
88,613
470
¥10,397,950
¥60,241,266
¥ 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
Average Balance
Year ended March 31
Domestic operations:
Millions of yen
2009
2008
Loans on notes ........................................................................................
Loans on deeds .......................................................................................
Overdrafts ................................................................................................
Bills discounted ........................................................................................
Subtotal....................................................................................................
¥ 1,978,289
36,221,243
10,094,088
240,653
¥48,534,275
¥ 2,197,327
34,625,555
9,572,162
280,843
¥46,675,889
International operations:
Loans on notes ........................................................................................
Loans on deeds .......................................................................................
Overdrafts ................................................................................................
Bills discounted ........................................................................................
Subtotal....................................................................................................
Total ..............................................................................................................
Note: The average balance of foreign-currency-denominated transactions by domestic branches in international operations is calculated by the monthly
530,865
6,935,439
96,039
10,702
¥ 7,573,047
¥54,248,936
502,065
9,559,202
132,123
3,124
¥10,196,514
¥58,730,789
¥
¥
current method.
Balance of Loans and Bills Discounted, Classified by Purpose
March 31
Funds for capital investment .........................................................................
Funds for working capital ..............................................................................
Total ..............................................................................................................
Millions of yen
2009
2008
¥21,398,268
38,842,997
¥60,241,266
35.5% ¥20,934,771
64.5
36,023,042
100.0% ¥56,957,813
36.8%
63.2
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 ..............................................................................................................
¥
2009
496,562
974,977
—
6,700,496
527,776
8,699,811
21,371,798
30,169,656
¥60,241,266
Millions of yen
¥
2008
670,902
1,124,816
—
6,834,925
648,222
9,278,868
21,143,991
26,534,953
¥56,957,813
SMFG 2009
149
SMBC
Loans (Nonconsolidated)
Balance of Loans and Bills Discounted, Classified by Maturity
Millions of yen
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.
2009
¥ 9,736,533
9,926,623
7,543,515
2,383,107
8,815,570
6,797,016
2,018,554
3,470,099
2,629,283
840,816
18,423,079
17,261,520
1,161,559
9,869,360
9,869,360
—
¥60,241,266
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
Balance of Loan Portfolio, Classified by Industry
March 31
Domestic offices:
Millions of yen
2009
2008
Manufacturing ..........................................................................................
Agriculture, forestry, fisheries and mining ................................................
Construction.............................................................................................
Transportation, communications and public enterprises..........................
Wholesale and retail ................................................................................
Finance and insurance.............................................................................
Real estate...............................................................................................
Services ...................................................................................................
Municipalities ...........................................................................................
Others ......................................................................................................
Subtotal....................................................................................................
¥ 6,632,207
143,591
1,088,910
3,208,281
4,632,637
5,967,376
6,222,052
5,260,544
970,577
17,115,639
¥51,241,816
12.9% ¥ 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
100.0% ¥48,877,589
0.3
2.1
6.3
9.0
11.7
12.1
10.3
1.9
33.4
10.8%
0.3
2.4
5.9
10.0
12.4
12.9
11.2
1.6
32.5
100.0%
Overseas offices:
Public sector ............................................................................................
0.3%
8.4
Financial institutions.................................................................................
Commerce and industry...........................................................................
84.0
7.3
Others ......................................................................................................
100.0%
Subtotal....................................................................................................
—
Total ..............................................................................................................
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches). Overseas operations comprise the operations of SMBC’s
19,835
679,195
6,790,929
590,262
100.0% ¥ 8,080,224
¥56,957,813
25,567
524,236
7,708,512
741,134
¥ 8,999,450
¥60,241,266
0.3% ¥
5.8
85.7
8.2
—
¥
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
2009
¥51,241,816
35,667,854
69.6%
2008
¥48,877,589
36,129,519
73.9%
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.)
150
SMFG 2009
Loans (Nonconsolidated)
SMBC
Consumer Loans Outstanding
March 31
Consumer loans ............................................................................................
Housing loans ..........................................................................................
Residential purpose ............................................................................
Others ......................................................................................................
2009
¥15,002,856
14,077,130
10,509,845
925,726
2008
¥14,581,772
13,647,753
10,033,842
934,018
Note: Housing loans include general-purpose loans used for housing purposes as well as housing loans and apartment house acquisition loans.
Millions of yen
Breakdown of Reserve for Possible Loan Losses
Year ended March 31, 2009
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 ......................................................
*Transfer from reserves by reversal or origination method
Note: Figures in brackets [ ] indicate foreign exchange translation adjustments.
Balance at beginning Increase during
the fiscal year
¥506,649
Millions of yen
Decrease during the fiscal year
Objectives
—
¥
Others
¥428,663*
Balance at end
of the fiscal year
¥506,649
284,818
86,503
102,471*
284,818
71,309
15,005
13,301*
71,039
417
¥791,885
—
¥86,503
0*
¥531,135
417
¥791,885
¥479,484
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 ......................................................
Balance at beginning Increase during
the fiscal year
¥430,919
Millions of yen
Decrease during the fiscal year
Objectives
—
¥
Others
¥527,819*
Balance at end
of the fiscal year
¥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
of the fiscal year
¥428,663
[2,256]
188,975
[109]
28,307
[86]
0
¥617,639
[2,365]
¥332,924
[886]
of the fiscal year
¥527,819
[2,987]
144,800
[23]
12,670
[19]
1,941
¥674,562
[3,011]
¥295,552
[2,762]
*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 amount of direct reduction.
Millions of yen
2009
¥231,412
2008
¥121,801
Specific Overseas Loans
March 31
Ukraine..........................................................................................................
Iceland...........................................................................................................
Pakistan ........................................................................................................
Argentina.......................................................................................................
Total ..............................................................................................................
Ratio of the total amounts to total assets ......................................................
Number of countries......................................................................................
2009
¥3,456
1,160
64
4
¥4,686
0.00%
4
Millions of yen
2008
¥—
—
—
4
¥ 4
0.00%
1
SMFG 2009 151
SMBC
Loans (Nonconsolidated)
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
2009
¥ 196,062
744,692
32,549
163,753
¥1,137,058
¥ 419,511
Millions of yen
2008
¥ 48,734
437,699
23,747
260,405
¥770,587
¥291,246
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 ............................................................................
Notes: Definition of problem asset categories
¥
2009
319,627
678,240
196,303
1,194,170
66,028,576
¥67,222,747
¥
479,484
Millions of yen
¥
2008
117,757
402,028
284,153
803,939
63,928,140
¥64,732,080
¥
333,811
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
3 categories above
Problem Assets Based on the Financial Reconstruction Law, and Risk-Monitored Loans
152
SMFG 2009
Categoryofborrowersunderself-assessmentProblemassetsbasedontheFinancialReconstructionLawRisk-monitoredloansOtherassetsBankruptloansNon-accrualloansPastdueloans(3monthsormore)RestructuredloansBankruptBorrowersTotalloansTotalloansOtherassetsBankruptandquasi-bankruptassetsSubstandardloans(Normalassets)DoubtfulassetsNormalBorrowersEffectivelyBankruptBorrowersPotentiallyBankruptBorrowersBorrowersRequiringCautionABCC Classification under Self-Assessment, Disclosure of Problem Assets, and Write-Offs/Reserves
Loans (Nonconsolidated)
SMBC
Notes: 1. Includes amount of direct reduction totaling ¥479.5 billion.
2. Includes reserves for assets that are not subject to disclosure under the Financial Reconstruction Law. (Bankrupt/Effectively Bankrupt Borrowers:
¥11.7 billion; Potentially Bankrupt Borrowers: ¥7.3 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) / (Bankrupt and quasi-bankrupt assets + Doubtful assets + Substandard
loans – Portion secured by collateral or guarantees, etc.)
Off-Balancing Problem Assets
March 31, 2007
¿
Bankrupt and quasi-bankrupt assets ....
Doubtful assets .....................................
Total ......................................................
¥108.9
300.1
¥409.0
Fiscal 2007
New occurrences Off-balanced
¥ (62.9)
(281.0)
¥(343.9)
¥ 71.8
382.9
¥454.7
Bankrupt and quasi-bankrupt assets ....
Doubtful assets .....................................
Total ......................................................
Billions of yen
March 31, 2008
¡
¥117.8
402.0
¥519.8
Increase/
Decrease
¡ – ¿
¥ 8.9
101.9
¥110.8
Fiscal 2008
New occurrences Off-balanced
¥ (63.9)
(382.7)
¥(446.6)
¥265.7
659.0
¥924.7
March 31, 2009
¬
¥319.6
678.3
¥997.9
Increase/
Decrease
¬ – ¡
¥201.8
276.3
¥478.1
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 ¥84.7 billion for fiscal 2007 and ¥201.2 billion in fiscal 2008, recognized as “new occurrences” in the first
halves of the terms, were included in the amounts off-balanced in the respective second halves.
SMFG 2009 153
Categoryofborrowersunderself-assessmentMarch31,2009ProblemassetsbasedontheFinancialReconstructionLawReserveforpossibleloanlossesBankruptBorrowersEffectivelyBankruptBorrowersPotentiallyBankruptBorrowersBorrowersRequiringCautionNormalBorrowersClassificationunderself-assessmentClassificationIClassificationIIClassificationIIIReserveratioNPLratio(A)/(4)1.78%(Note5)LoanlossreserveforspecificoverseascountriesTotalreserveforpossibleloanlosses(B)Specificreserve+GeneralreserveforsubstandardloansGeneralreserveforsubstandardloans¥56.1¥91.2¥34.4(Note2)53.76%(Note3)Reserveratio(B)/(D)67.27%(Note6)100%(Note3)66.09%(Note3)5.94%[10.47%](Note4)13.09%(Note3)0.27%(Note4)¥250.4(Note2)¥506.7¥0.4¥340.9¥791.9¥319.6¥678.3¥196.3¥66,028.5Total(4)(A)=(1)+(2)+(3)¥67,222.7¥1,194.2¥296.9¥299.4¥22.7¥378.9Portionsecuredbycollateralorguarantees,etc.(C)=(5)+(6)+(7)¥687.5Coverageratio{(B)+(C)}/(A)Unsecuredportion(D)=(A)–(C)¥506.786.11%ClassificationIV(Billionsofyen)SpecificreserveGeneralreserveBankruptandquasi-bankruptassets(1)ClaimstonormalborrowersPortionofclaimssecuredbycollateralorguarantees,etc.(5)FullyreservedNecessaryamountreservedDirectwrite-offs(Note1)Portionofclaimssecuredbycollateralorguarantees,etc.(6)Portionofsubstandardloanssecuredbycollateralorguarantees,etc.(7)Claimstoborrowersrequiringcaution,excludingclaimstosubstandardborrowersDoubtfulassets(2)Substandardloans(3)(Claimstosubstandardborrowers)Normalassets SMBC
Securities (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Balance of Securities
Year-End Balance
March 31
Domestic operations:
Millions of yen
2009
2008
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
¥14,156,993
230,074
3,461,950
2,674,474
299,183
/
/
¥20,822,677
¥
—
—
—
—
7,177,837
5,909,304
1,268,533
¥ 7,177,837
¥28,000,515
¥ 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
Average Balance
Year ended March 31
Domestic operations:
Millions of yen
2009
2008
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Japanese stocks ......................................................................................
Others ......................................................................................................
Foreign bonds .....................................................................................
Foreign stocks.....................................................................................
Subtotal....................................................................................................
International operations:
¥10,443,471
291,620
3,417,624
2,787,330
440,638
/
/
¥17,380,685
¥ 7,341,261
470,333
3,632,377
2,904,058
775,090
/
/
¥15,123,121
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Japanese stocks ......................................................................................
Others ......................................................................................................
Foreign bonds .....................................................................................
Foreign stocks.....................................................................................
Subtotal....................................................................................................
............................................................................................................
¥
—
—
—
—
5,079,312
3,781,077
1,298,234
¥ 5,079,312
¥22,459,998
¥
—
—
—
—
3,528,429
2,255,870
1,272,559
¥ 3,528,429
¥18,651,550
Total
Note: The average balance of foreign-currency-denominated transactions by domestic branches in international operations is calculated by the monthly
current method.
154
SMFG 2009
Securities (Nonconsolidated)
SMBC
Balance of Securities Held, Classified by Maturity
March 31
One year or less
Millions of yen
2009
2008
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others ......................................................................................................
Foreign bonds .....................................................................................
Foreign stocks.....................................................................................
¥ 2,766,864
6,583
459,270
769,913
747,013
32
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
5,382,532
34,858
827,275
2,929,003
2,874,357
—
3,633,747
120,299
1,180,058
1,277,275
1,249,202
—
361,833
67,956
374,270
345,942
313,155
—
639,034
323
384,222
442,824
418,981
—
1,372,980
52
236,853
443,260
306,593
136,666
—
—
—
2,674,474
1,268,801
—
1,131,834
Japanese government bonds...................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Japanese stocks ......................................................................................
Others ......................................................................................................
Foreign bonds .....................................................................................
Foreign stocks.....................................................................................
¥14,156,993
230,074
3,461,950
2,674,474
7,477,021
5,909,304
1,268,533
¥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
SMFG 2009 155
SMBC
Ratios (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Income Ratio
Percentage
Year ended March 31
Ordinary profit to total assets ........................................................................
Ordinary profit to stockholders’ equity...........................................................
Net income to total assets.............................................................................
Net income to stockholders’ equity ...............................................................
Notes: 1. Ordinary profit (net income) to total assets = Ordinary profit (net income) / Average balance of total assets excluding customers’ liabilities for accep-
2009
0.03%
1.06
—
—
14.28
0.22
5.64
2008
0.56%
tances and guarantees 5 100
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 5 Issue price) + (Net assets at end of the fiscal year –
Number of shares of preferred stock outstanding at end of the fiscal year 5 Issue price)} divided by 2 5 100
3. Net income to total assets and net income to stockholders’ equity for the year ended March 31, 2009 are not reported due to a net loss.
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
2009
1.71%
1.23
0.48
3.03%
2.99
0.04
2.03%
1.63
0.40
2008
1.78%
1.25
0.53
4.30%
4.43
(0.13)
2.34%
1.91
0.43
Millions of yen
2009
2008
Loans and bills discounted (A).................................................................
Deposits (B) .............................................................................................
Loan-deposit ratio (%)
(A) / (B) ...............................................................................................
Ratio by average balance for the fiscal year.......................................
International operations
Loans and bills discounted (A).................................................................
Deposits (B) .............................................................................................
Loan-deposit ratio (%)
(A) / (B) ...............................................................................................
Ratio by average balance for the fiscal year.......................................
Total
Loans and bills discounted (A).................................................................
Deposits (B) .............................................................................................
Loan-deposit ratio (%)
(A) / (B) ...............................................................................................
Ratio by average balance for the fiscal year.......................................
Note: Deposits include negotiable certificates of deposit.
¥49,843,316
66,601,940
74.83%
78.52
¥10,397,950
10,303,767
100.91%
106.36
¥60,241,266
76,905,708
78.33%
82.26
¥47,935,924
60,751,641
78.90%
77.99
¥ 9,021,889
8,631,193
104.52%
81.61
¥56,957,813
69,382,834
82.09%
78.47
156
SMFG 2009
Ratios (Nonconsolidated)
SMBC
Securities-Deposit Ratio
March 31
Domestic operations
Securities (A) ...........................................................................................
Deposits (B) .............................................................................................
Securities-deposit ratio (%)
(A) / (B) ...............................................................................................
Ratio by average balance for the fiscal year.......................................
International operations
Securities (A) ...........................................................................................
Deposits (B) .............................................................................................
Securities-deposit ratio (%)
(A) / (B) ...............................................................................................
Ratio by average balance for the fiscal year.......................................
Total
Securities (A) ...........................................................................................
Deposits (B) .............................................................................................
Securities-deposit ratio (%)
(A) / (B) ...............................................................................................
Ratio by average balance for the fiscal year.......................................
Note: Deposits include negotiable certificates of deposit.
Millions of yen
2009
2008
¥20,822,677
66,601,940
31.26%
28.11
¥ 7,177,837
10,303,767
69.66%
52.98
¥28,000,515
76,905,708
36.40%
31.45
¥16,730,573
60,751,641
27.53%
25.26
¥ 6,027,667
8,631,193
69.83%
38.02
¥22,758,241
69,382,834
32.80%
26.98
SMFG 2009 157
SMBC
Capital (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
Changes in Number of Shares Issued and Capital Stock
March 30, 2005*1 .............................
April 1, 2004 — March 31, 2005*2 ...
August 9, 2005*3..............................
May 17, 2006*4 ................................
September 6, 2006*5 .......................
September 29, 2006*6 .....................
October 11, 2006*7 ..........................
October 31, 2006*8 ..........................
Number of shares
issued
Changes
70,001
264,140
—
214,194
173,770
601,757
153,181
(830,000)
Balances
55,848,808
56,112,948
56,112,948
56,327,142
56,500,912
57,102,669
57,255,850
56,425,850
Millions of yen
Capital stock
Capital reserve
Changes
¥105,001
—
—
—
—
—
—
—
Balances
¥664,986
664,986
664,986
664,986
664,986
664,986
664,986
664,986
Changes
¥105,001
—
(344,900)
—
—
—
—
—
Balances
¥1,009,933
1,009,933
665,033
665,033
665,033
665,033
665,033
665,033
Remarks:
*1 Allotment to third parties: Preferred stock (1st series Type 6): 70,001 shares
Issue price: ¥3,000 thousand Capitalization: ¥1,500 thousand
*2 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
*3 Capital reserve was transferred to other capital surplus pursuant to Article 289-2 of the Commercial Code and Article 18-2 of the Banking Act
*4 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
*5 Conversion of 67,000 shares of preferred stock (Type 2) to 173,770 shares of common stock
*6 Conversion of 500,000 shares of preferred stock (Type 3) to 601,757 shares of common stock
*7 Conversion of 195,000 shares of preferred stock (Type 3) to 153,181 shares of common stock
*8 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, 2009
Common stock...............................................................................................................................................................
Preferred stock (1st series Type 6)................................................................................................................................
Total...............................................................................................................................................................................
Number of shares issued
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, 2009
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, 2009
Sumitomo Mitsui Financial Group, Inc. ....................................................................................................
Number of
shares
70,001
Percentage of
shares outstanding
100.00%
158
SMFG 2009
Others (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
SMBC
Employees
March 31
Number of employees ...................................................................................
Average age (years–months)........................................................................
Average length of employment (years–months) ...........................................
Average annual salary (thousands of yen)....................................................
Notes: 1. Temporary and part-time staff are excluded from the above calculations but includes overseas local staff. Executive officers who do not concurrently
2008
17,886
35–11
13–2
¥8,290
2009
21,816
35–6
12–5
¥8,258
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 .............................................................................
2009
482
159
1
20
7
16
2008
473
157
1
19
6
15
Total ..............................................................................................................
Note: “Main offices and branches” includes the International Business Operations Dept. (2009, 2 branches; 2008, 2 branches), specialized deposit account
671
685
branches (2009, 38 branches; 2008, 38 branches) and ATM administration branches (2009, 17 branches; 2008, 17 branches).
Number of Automated Service Centers
March 31
Automated service centers............................................................................
2009
30,112
2008
28,120
Domestic Exchange Transactions
Year ended March 31
Exchange for remittance:
Destined for various parts of the country:
Millions of yen
2009
2008
Number of accounts (thousands)........................................................
Amount................................................................................................
418,744
¥ 752,361,420
Received from various parts of the country:
Number of accounts (thousands)........................................................
Amount................................................................................................
303,475
¥ 842,122,120
Collection:
Destined for various parts of the country:
Number of accounts (thousands)........................................................
Amount................................................................................................
3,121
8,345,032
¥
Received from various parts of the country:
Number of accounts (thousands)........................................................
Amount................................................................................................
............................................................................................................
Total
1,163
2,933,632
¥
¥1,605,762,205
405,059
¥ 871,073,089
301,655
¥ 881,410,435
3,444
9,101,611
¥
1,214
2,801,793
¥
¥1,764,386,929
SMFG 2009
159
2008
$1,143,759
597,763
$ 685,135
30,156
$2,456,815
2008
¥
10,334
25,040
4,373
62,754
13,943
¥ 116,446
535,278
4,013,337
¥4,665,062
SMBC
Others (Nonconsolidated)
Foreign Exchange Transactions
Year ended March 31
Outward exchanges:
Foreign bills sold ......................................................................................
Foreign bills bought..................................................................................
Incoming exchanges:
Foreign bills payable ................................................................................
Foreign bills receivable ............................................................................
............................................................................................................
Total
Note: The figures above include foreign exchange transactions by overseas branches.
Millions of U.S. dollars
2009
$1,285,824
696,353
$ 735,705
30,633
$2,748,515
Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees
Millions of yen
2009
¥
7,291
17,762
5,292
53,769
6,945
91,061
396,284
3,339,348
¥3,826,694
¥
March 31
Securities ......................................................................................................
Commercial claims........................................................................................
Commercial goods ........................................................................................
Real estate ....................................................................................................
Others ...........................................................................................................
Subtotal .........................................................................................................
Guaranteed ...................................................................................................
Unsecured.....................................................................................................
............................................................................................................
Total
160
SMFG 2009
Trust Assets and Liabilities (Nonconsolidated)
Sumitomo Mitsui Banking Corporation
SMBC
Statements 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........................................................................
Tangible fixed assets ...............................................................................
Equipment...........................................................................................
Intangible fixed assets .............................................................................
Other intangible fixed assets...............................................................
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.............................................................................
Money in trusts other than money trusts..................................................
Security trusts ..........................................................................................
Monetary claims trusts .............................................................................
Equipment trusts ......................................................................................
Composite trusts ......................................................................................
Other trusts ..............................................................................................
Total liabilities ..........................................................................................
Notes: 1. Amounts less than 1 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.
4. Excludes trusts whose monetary values are difficult to calculate.
Millions of yen
2009
2008
¥ 222,030
222,030
392,812
222,231
39,629
130,522
428
3,096
501,399
73,967
427,431
45
45
33
33
4,329
54,687
60,918
22,179
22,179
1,462
1,462
¥1,262,993
¥ 359,986
161,817
220,287
3,102
437,734
10
78,569
1,485
¥1,262,993
¥ 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
SMFG 2009
161
SMFG
Capital Ratio Information
Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
The consolidated capital ratio 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 advanced internal ratings-based (IRB) approach for calculating credit risk-weighted asset amounts at the
end of March 2009. The foundation IRB approach was used for the prior fiscal year ended on March 31, 2008. Further, SMFG has
implemented market risk controls, and, in calculating the amount corresponding to operational risk, the Advanced Measurement Approach
(AMA).
“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 this report.
n Scope of Consolidation
1. Consolidated Capital Ratio Calculation
• Number of consolidated subsidiaries: 288
Please refer to “Principal Subsidiaries and Affiliates” on page 200 for their names and business outline.
• Scope of consolidated subsidiaries for 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: 230
SMLC MAHOGANY Co., Ltd. (Office rental, etc.)
SBCS Co., Ltd. (Venture capital and consulting)
Principal subsidiaries:
• Number of financial affiliates subject to deduction from capital: 103
Please refer to “Principal Subsidiaries and Affiliates” on page 200 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.
162
SMFG 2009
Capital Ratio Information
SMFG
SMFG
n Capital Structure Information (Consolidated Capital Ratio (First Standard))
Regarding the calculation of the capital ratio, 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-weighted assets:
Tier I risk-weighted
capital ratio:
Total risk-weighted
capital ratio:
Required capital:
Capital stock..................................................................................................
Capital surplus ..............................................................................................
Retained earnings .........................................................................................
Treasury stock...............................................................................................
Cash dividends to be paid ............................................................................
Unrealized losses on other securities ...........................................................
Foreign currency translation adjustments .....................................................
Stock acquisition rights .................................................................................
Minority interests ...........................................................................................
Goodwill and others ......................................................................................
Gain on sale on securitization transactions...................................................
Amount equivalent to 50% of expected losses in excess of provision ..........
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-weighted assets (E).......................................................................
Millions of yen
2009
¥ 1,420,877
57,245
1,245,085
(124,024)
(21,059)
(14,649)
(129,068)
66
2,147,100
(186,792)
(42,102)
(17,590)
—
4,335,085
—
37,211
80,374
—
2,303,382
2,420,968
2,420,968
708,241
¥ 6,047,812
¥41,703,547
7,693,647
265,723
3,063,589
¥52,726,507
2008
¥ 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
(A) / (E) x 100................................................................................................
8.22%
6.94%
(D) / (E) x 100................................................................................................
(E) x 8% ........................................................................................................
11.47%
¥ 4,218,120
10.56%
¥ 5,049,387
* “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.
(Reference)
The consolidated capital ratio (First Standard) as of March 31, 2009, calculated using the foundation IRB approach is 10.27%.
SMFG 2009
163
SMFG
Capital Ratio Information
n 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
2009
2008
¥4,909.4
3,200.6
2,782.6
28.4
161.6
228.1
833.1
345.6
95.0
392.5
287.7
160.8
55.5
71.4
71.1
0.3
180.5
125.7
281.7
656.5
5,565.9
4.2
3.1
0.4
0.7
—
—
17.0
21.3
245.1
¥5,832.3
¥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
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 IRB 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 exposures based on the standardized approach.
4. “Other exposures” includes estimated lease residual values, purchased receivables (including exposures to qualified corporate enterprises and others), long settlement
transactions and other assets.
n Internal Ratings-Based (IRB) Approach
1. Scope
SMFG and the following consolidated subsidiaries have adopted the advanced IRB approach for exposures as of March 31, 2009.
(1) Domestic Operations
Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Card Company, Limited and SMBC Guarantee 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, SMBC Derivative Products Limited and SMBC Capital Markets (Asia) Limited
SMBC Finance Service Co., Ltd. has adopted the foundation IRB approach.
Among consolidated subsidiaries that have adopted the standardized approach for exposures as of March 31, 2009, THE MINATO
BANK, LTD. is scheduled to adopt the foundation IRB approach from March 31, 2010. Sumitomo Mitsui Finance and Leasing Co., Ltd.
and Kansai Urban Banking Corporation are currently reviewing their schedules for adoption of the approach which was originally planned
for March 31, 2010.
Note: Directly controlled SPCs and limited partnerships for investment of consolidated subsidiaries using the advanced IRB approach have also adopted the
advanced IRB approach. Further, the advanced IRB approach is applied to equity exposures on a group basis, including equity exposures of
consolidated subsidiaries applying the standardized approach.
164
SMFG 2009
Capital Ratio Information
SMFG
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 commercial/industrial (C&I) companies,
individuals for business purposes (domestic only), sovereigns, public sector entities, and financial institutions. Business loans such
as apartment construction loans, and small-and medium-sized entity (SME) loans with 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 37). 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 Probability of Default (PD) 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 purpose, 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).
• Loss given defaults (LGDs) used in the calculation of credit risk-weighted assets are estimated based on historical loss experience
of credits in default, taking into account the possibility of estimation errors.
Obligor Grade
Domestic
Corporate
Overseas
Corporate
J1
J2
J3
J4
J5
J6
J7
G1
G2
G3
G4
G5
G6
G7
J7R
G7R
J8
J9
J10
G8
G9
G10
Definition
Very high certainty of debt repayment
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
Of which Substandard Borrowers
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
Legally or formally bankrupt
Borrower Category
Normal Borrowers
Borrowers Requiring Caution
Substandard Borrowers
Potentially Bankrupt Borrowers
Effectively Bankrupt Borrowers
Bankrupt Borrowers
SMFG 2009 165
SMFG
Capital Ratio Information
(B) Portfolio
a. Domestic Corporate, Sovereign and Bank Exposures
Billions of yen
Exposure amount
March 31, 2009
Total
On-balance Off-balance Undrawn
amount
sheet assets sheet assets
J1-J3 ................................... ¥22,896.4 ¥16,440.3 ¥ 6,456.0 ¥4,124.9
510.4
J4-J6 ................................... 11,785.4
78.4
2,241.2
J7 (excluding J7R) ..............
Japanese government and
local municipal corporations..... 20,025.1 19,936.9
4,767.9
Other ...................................
1,243.6
Default (J7R, J8-J10) ..........
Total .................................... ¥63,611.9 ¥53,480.3 ¥10,131.7 ¥4,867.3
88.2
580.5
71.9
9,153.6
1,938.0
2,631.8
303.3
5,348.4
1,315.4
10.6
136.7
Weighted
average
CCF
75.00%
75.00
75.00
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
0.09% 34.11%
1.32
11.86
29.16
30.38
—% 18.11%
—
50.90
— 126.04
75.00
75.00
6.2 100.00
—
0.00
1.50
100.00
—
35.04
38.41
54.85
—
—
—
53.20
—
0.18
63.05
20.64
—
March 31, 2008
Total
On-balance Off-balance Undrawn
amount
sheet assets sheet assets
Billions of yen
Exposure amount
J1-J3 ................................... ¥18,826.6 ¥13,563.7 ¥ 5,263.0
3,010.3
J4-J6 ................................... 13,657.5 10,647.2
J7 (excluding J7R) ..............
232.0
1,588.6
Japanese government and
1,158.7
local municipal corporations..... 15,013.1 13,854.4
849.0
5,309.2
Other ...................................
32.0
905.6
Default (J7R, J8-J10) ..........
Total .................................... ¥56,413.7 ¥45,868.7 ¥10,545.0
6,158.2
937.6
1,820.6
¥ —
—
—
—
—
—
¥ —
Weighted
average
CCF
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
—%
—
—
0.10% 44.74%
1.10
11.50
41.31
42.34
—% 23.61%
69.45
—
— 174.93
0.00
—
—
1.54
— 100.00
—
—
41.65
43.29
42.77
—
—
—
—
—
0.49
74.03
—
—
Notes: 1. In line with the adoption of the advanced IRB approach on March 31, 2009, credit conversion factor (CCF) and ELdefault information is now disclosed.
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
March 31, 2009
Exposure amount
Total
On-balance Off-balance Undrawn
amount
sheet assets sheet assets
Weighted
average
CCF
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
G1-G3 ................................. ¥22,863.0 ¥14,594.6 ¥8,268.4 ¥3,062.3
145.6
975.9
G4-G6 .................................
63.1
459.2
G7 (excluding G7R) ............
20.3
107.0
Other ...................................
270.7
Default (G7R, G8-G10) .......
Total .................................... ¥24,675.9 ¥16,003.9 ¥8,672.0 ¥3,292.7
207.6
142.3
43.8
9.9
768.3
316.9
63.2
260.8
75.00%
75.00
75.00
75.00
1.5 100.00
—
0.14% 30.24%
1.76
19.85
1.09
100.00
—
34.30
32.42
40.16
73.74
—
—% 17.28%
—
81.87
— 170.42
86.42
—
94.41
66.19
—
—
March 31, 2008
Total
On-balance Off-balance Undrawn
amount
sheet assets sheet assets
Billions of yen
Exposure amount
Weighted
average
CCF
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
G1-G3 ................................. ¥21,243.9 ¥12,861.7 ¥8,382.2
240.8
G4-G6 .................................
96.3
G7 (excluding G7R) ............
18.4
Other ...................................
Default (G7R, G8-G10) .......
46.0
Total .................................... ¥22,552.0 ¥13,768.3 ¥8,783.7
985.7
176.0
75.5
70.9
744.8
79.7
57.2
24.9
¥ —
—
—
—
—
¥ —
0.17% 39.04%
—%
1.71
—
23.72
—
—
1.38
— 100.00
—
—
44.42
44.89
44.89
44.63
—
—% 27.20%
— 106.65
— 239.05
— 112.32
—
—
—
—
166
SMFG 2009
Capital Ratio Information
SMFG
B. Specialized Lending (SL)
(A) Rating Procedures
• “Specialized lending” is sub-classified into “project finance,” “object finance,” “commodity 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 are 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 commodity finance exposures as of March 31, 2009.
• 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. Slotting Criteria Applicable Portion
(a) Project Finance, Object Finance and IPRE
Billions of yen
March 31
Strong:
Risk
weight
Project
finance
2009
Object
finance
Residual term less than 2.5 years ..................
Residual term 2.5 years or more ....................
50%
70%
¥ 107.2
771.1
¥ 8.3
163.1
Good:
IPRE
¥ —
—
Residual term less than 2.5 years ..................
Residual term 2.5 years or more ....................
Satisfactory.........................................................
Weak ..................................................................
Default ................................................................
Total ...................................................................
Note: Since March 31, 2009, a portion of object finance, and IPRE have been calculated using the PD/LGD approach.
22.5
187.2
23.8
68.0
3.6
¥1,183.3
—
—
—
—
—
¥171.4
70%
90%
115%
250%
—
—
—
—
—
—
¥ —
Project
finance
2008
Object
finance
IPRE
¥ 123.4
583.0
¥ 7.3
67.5
¥ 423.3
705.0
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
(b) HVCRE
March 31
Strong:
Risk
weight
Billions of yen
2009
2008
Residual term less than 2.5 years ..................
Residual term 2.5 years or more ....................
70%
95%
¥ — ¥ 3.9
—
—
Good:
Residual term less than 2.5 years ..................
Residual term 2.5 years or more ....................
Satisfactory.........................................................
Weak ..................................................................
Default ................................................................
Total ...................................................................
95%
120%
140%
250%
—
46.6
79.9
162.0
22.1
3.1
¥313.6
76.3
105.1
201.5
—
—
¥386.8
b. PD/LGD Approach Applicable Portion, Other Than Slotting Criteria Applicable Portion
(a) Object Finance
March 31, 2009
Total
On-balance Off-balance
sheet assets sheet assets
Undrawn
amount
Billions of yen
Exposure amount
Weighted
average
CCF
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
G1-G3 .................................
G4-G6 .................................
G7 (excluding G7R) ............
Other ...................................
Default (G7R, G8-G10) .......
Total ....................................
Note: Since March 31, 2009, a portion of object finance has been calculated using the PD/LGD approach.
¥ 49.4
30.5
9.2
10.8
3.1
¥103.0
¥ 9.5
10.0
0.1
0.0
—
¥19.7
¥ 7.2
8.1
0.1
0.0
0.1
¥15.4
¥42.2
22.5
9.2
10.7
3.0
¥87.6
75.00%
75.00
75.00
75.00
0.78% 19.17%
1.20
20.08
4.94
— 100.00
—
—
20.39
37.66
19.72
71.45
—
—% 44.23%
—
51.90
— 209.69
67.76
—
94.41
63.89
—
—
SMFG 2009 167
SMFG
Capital Ratio Information
(b) IPRE
March 31, 2009
Total
On-balance Off-balance Undrawn
amount
sheet assets sheet assets
Billions of yen
Exposure amount
Weighted
average
CCF
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
J1-J3 ................................... ¥ 925.9 ¥ 820.5
480.1
J4-J6 ...................................
59.5
J7 (excluding J7R) ..............
66.3
Other ...................................
—
Default (J7R, J8-J10) ..........
Total .................................... ¥1,577.4 ¥1,426.3
Note: Since March 31, 2009, IPRE has been calculated using the PD/LGD approach.
¥105.4
43.5
0.2
2.0
—
¥151.1
523.6
59.6
68.3
—
¥ —
4.2
—
2.7
—
¥6.9
—%
75.00
—
75.00
—
—
0.10% 36.48%
1.55
13.43
4.23
—
—
32.00
35.10
37.84
—
—
—% 19.72%
72.26
—
— 158.37
— 116.66
—
—
—
—
(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
Loan To Value (LTV) calculated based on the assessment value of collateral real estate. 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.
(B) Portfolio
March 31, 2009
Mortgage loans
PD segment:
Not delinquent
Billions of yen
Exposure amount
Total
On-balance Off-balance
sheet assets sheet assets
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
Use model ..................... ¥ 9,551.6
840.5
Other .............................
63.0
Delinquent ..........................
121.1
Default..........................................
Total ............................................. ¥10,576.1
¥ 9,471.1
840.5
56.8
120.5
¥10,488.9
¥80.5
—
6.1
0.6
¥87.2
0.38%
0.83
35.47
100.00
—
38.94%
56.72
42.47
48.48
—
—%
—
—
45.46
—
24.30%
68.49
242.06
37.79
—
Billions of yen
Exposure amount
Total
On-balance Off-balance
sheet assets sheet assets
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
March 31, 2008
Mortgage loans
PD segment:
Not delinquent
Use model ..................... ¥ 9,086.6
853.1
Other .............................
51.5
Delinquent ..........................
Default..........................................
114.9
Total ............................................. ¥10,106.1
Notes: 1. “Other” includes loans guaranteed by employers.
¥ 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
43.27
—
—%
—
—
40.94
—
25.59%
70.76
249.90
29.07
—
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.
168
SMFG 2009
Capital Ratio Information
SMFG
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 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.
(B) Portfolio
March 31, 2009
Total
Balance
Increase
Exposure amount
On-balance
sheet assets
Off-balance
sheet
assets
Undrawn
amount
Billions of yen
Card loans
PD segment:
Not delinquent... ¥ 542.1 ¥ 477.7
12.4
Delinquent ......
Credit card balances
PD segment:
12.8
¥ 64.4
0.4
¥ — ¥ 167.8
3.5
—
Weighted Weighted Weighted Weighted Weighted
average
average
average
risk weight
LGD
CCF
average
ELdefault
average
PD
38.37% 1.86% 85.89%
11.56
22.19
76.35
—% 49.01%
— 206.51
Not delinquent...
Delinquent ......
Default .....................
979.3
7.9
24.0
648.7
6.7
21.0
330.7
1.2
3.1
—
—
—
4,008.1
—
—
1.15
8.25
—
80.05
— 100.00
Total
....................... ¥1,566.1 ¥1,166.3
¥399.7
¥ — ¥4,179.4
—
—
79.86
82.99
89.29
—
—
26.88
— 121.48
86.10
82.40
—
—
March 31, 2008
Total
Balance
Increase
Exposure amount
On-balance
sheet assets
Off-balance
sheet
assets
Undrawn
amount
Billions of yen
Weighted Weighted Weighted Weighted Weighted
average
average
average
risk weight
LGD
CCF
average
ELdefault
average
PD
Card loans
PD segment:
Not delinquent... ¥ 451.3 ¥ 379.3
58.7
Delinquent ......
Credit card balances
PD segment:
59.9
Not delinquent...
Delinquent ......
Default .....................
978.3
7.0
22.3
653.0
5.7
19.6
¥ 71.9
1.2
¥ — ¥ 146.2
8.6
—
49.18%
14.24
2.04% 83.41%
47.35
90.63
—% 51.67%
— 257.00
325.3
1.2
2.7
—
—
—
3,795.9
—
—
1.14
8.57
—
75.37
— 100.00
79.82
82.68
88.51
—
26.80
— 137.44
83.99
81.79
....................... ¥1,518.7 ¥1,116.4
—
Total
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
¥ — ¥3,950.7
¥402.3
—
—
—
—
amount by the CCF.
2. “Weighted 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.”
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 exclusive grading model and 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. PDs and LGDs are estimated
SMFG 2009 169
SMFG
Capital Ratio Information
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 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.
(B) Portfolio
March 31, 2009
Business loans
PD segment:
Not delinquent
Billions of yen
Exposure amount
On-balance
sheet assets
Total
Off-balance
sheet assets
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
Use model ............
Other ....................
Delinquent .................
¥1,339.0
381.3
551.8
¥1,322.3
380.6
548.5
¥ 16.7
0.8
3.3
1.01%
0.67
25.13
59.94%
61.95
67.72
—%
—
—
56.15%
28.28
98.83
Consumer loans
PD segment:
Not delinquent
Use model ............
Other ....................
Delinquent .................
Default.................................
Total ....................................
342.3
214.9
47.8
153.4
¥3,030.6
260.4
213.0
47.7
151.8
¥2,924.2
81.9
1.9
0.2
1.6
¥106.4
1.33
1.80
24.60
100.00
—
52.18
62.13
46.49
72.99
—
—
—
—
67.26
—
55.55
77.49
111.02
71.59
—
Billions of yen
Exposure amount
On-balance
sheet assets
Total
Off-balance
sheet assets
Weighted
average
PD
Weighted
average
LGD
Weighted
average
ELdefault
Weighted
average
risk weight
March 31, 2008
Business loans
PD segment:
Not delinquent
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
67.08
—
—
—
—
61.85
—
51.07
81.19
120.99
65.39
—
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.
(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
39) 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.
170
SMFG 2009
(B) Portfolio
a. Equity Exposure Amounts
March 31
Capital Ratio Information
SMFG
Billions of yen
2009
2008
Market-based approach ..........................................................................................................
Simple risk weight method .................................................................................................
Listed equities (300%) ..................................................................................................
Unlisted equities (400%) ...............................................................................................
Internal models method......................................................................................................
PD/LGD approach...................................................................................................................
Grandfathered equity exposures.............................................................................................
......................................................................................................................................
Total
Notes: 1. The above exposures are “equity exposures” stipulated in the Notification and differ from “stocks” described in the consolidated financial statements.
¥ 221.0
219.7
40.6
179.1
1.3
533.3
1,895.6
¥2,650.0
¥ 238.8
191.0
60.1
130.9
47.9
504.2
2,892.9
¥3,636.0
2. The “Grandfathered equity exposures” amount was calculated in accordance with Supplementary Provision No. 15 of the Notification.
b. PD/LGD Approach
Billions of yen
Exposure
amount
March 31
111.66%
J1-J3 ...........................................................
J4-J6 ...........................................................
194.76
440.46
J7 (excluding J7R) ......................................
275.48
Other ...........................................................
—
Default (J7R, J8-J10) ..................................
—
Total ............................................................
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
0.08%
0.60
9.89
2.60
100.00
—
¥472.4
16.1
6.3
38.4
0.0
¥533.3
Exposure
amount
¥481.8
10.4
11.1
0.9
0.1
¥504.2
Weighted
average
risk weight
114.28%
209.86
442.73
106.93
—
—
2009
Weighted
average
PD
0.07%
0.66
10.14
0.17
100.00
—
2008
Weighted
average
PD
Weighted
average
risk weight
financial statements.
2. “Other” includes exposures to overseas corporate 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 equity exposures 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-
weighted 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 1250% (in other cases).
(B) Portfolio
March 31
Exposures under Article 145 of the Notification ......................................................................
Billions of yen
2009
¥743.6
2008
¥1,010.8
(4) Analysis of Actual Losses
A. Year-on-Year Comparison of Actual Losses
SMFG recorded total credit costs (the total of the general provisions, non-performing loan write-offs, and gains on collection of
written-off claims) of ¥767.8 billion on a consolidated basis for fiscal 2008, a year-on-year increase of ¥519.2 billion.
SMBC recorded ¥550.1 billion in total credit costs on a nonconsolidated basis in fiscal 2008, a year-on-year increase of ¥402.3
billion. In terms of exposure category, the credit cost for corporate exposures increased ¥268.1 billion year-on-year, to ¥411.4 billion.
The principal factors were increased credit costs due to the dramatically worsening economic environment in Japan and overseas, and
our making of additional provisions for future economic deterioration. The credit cost for bank exposures rose ¥22.6 billion year-on-
year, to ¥22.7 billion. Factors accounting for this increase included the incurring of credit cost in connection with certain claims on
overseas financial institutions caused by the turmoil in financial markets. The credit cost for other retail exposures rose ¥8.3 billion
year-on-year, to ¥68.1 billion, principally due to higher default rates.
SMFG 2009 171
SMFG
Capital Ratio Information
Total Credit Costs
Fiscal 2008 (A)
Fiscal 2007 (B)
Fiscal 2006
Billions of yen
SMFG (consolidated) total...........................................
SMBC (consolidated) total...........................................
SMBC (nonconsolidated) total.....................................
Corporate exposures..............................................
Sovereign exposures .............................................
Bank exposures .....................................................
Residential mortgage exposures............................
QRRE.....................................................................
Other retail exposures............................................
¥767.8
724.4
550.1
411.4
(0.4)
22.7
0.5
0.0
68.1
¥248.6
221.6
147.8
143.2
0.4
0.0
0.1
0.0
59.8
¥145.0
122.9
89.5
58.7
(0.7)
0.0
0.5
(0.1)
43.9
Increase
(decrease)
(A) – (B)
¥519.2
502.8
402.3
268.1
(0.8)
22.6
0.4
0.0
8.3
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 amounts indicate gains generated by the reversal of provisions, etc.
4. Credit costs for residential mortgage exposures and QRRE guaranteed by consolidated subsidiaries are not included in the total credit costs of SMBC
(nonconsolidated).
B. Comparison of Estimated and Actual Losses
Fiscal 2008
Estimated loss amounts
Fiscal 2007
Estimated loss amounts
Billions of yen
After deduction
of reserves
Actual
loss amounts
After deduction
of reserves
Actual
loss amounts
SMFG (consolidated) total ..........................
SMBC (consolidated) total ..........................
SMBC (nonconsolidated) total ....................
Corporate exposures .............................
Sovereign exposures .............................
Bank exposures .....................................
Residential mortgage exposures ...........
QRRE ....................................................
Other retail exposures ...........................
¥248.6
221.6
147.8
143.2
0.4
0.0
0.1
0.0
59.8
Notes: 1. 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
¥767.8
724.4
550.1
411.4
(0.4)
22.7
0.5
0.0
68.1
¥ —
—
311.4
252.6
9.6
4.9
4.1
0.1
53.1
¥ —
—
323.9
278.6
7.5
5.9
3.6
0.1
65.9
¥ —
—
954.2
806.7
9.0
6.1
4.0
0.1
128.3
¥ —
—
887.7
778.6
11.2
5.1
4.6
0.1
88.2
145 of the Notification are excluded.
2. The “Estimated loss amounts” are the estimate losses (EL) at the beginning of the term.
3. Representing the estimated loss amount “After deduction of reserves” for possible losses on substandard loans or below.
4. Estimated loss amounts are totals calculated under the advanced IRB approach.
n Standardized Approach
1. Scope
The following consolidated subsidiaries have adopted the standardized approach for exposures as of March 31, 2009 (i.e. consolidated
subsidiaries not listed in the “Internal Ratings-Based (IRB) Approach: 1. Scope” on page 164).
(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
(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 145 of the Notification, and risk weights corresponding to
country risk scores published by the Organization for Economic Co-operation and Development (OECD) are applied to claims on sovereigns
and financial institutions.
172
SMFG 2009
Capital Ratio Information
SMFG
3. Exposure Balance by Risk Weight Segment
March 31
Billions of yen
2009
Assigned
country risk score
2008
Assigned
country risk score
0% .....................................................................................
10% ...................................................................................
20% ...................................................................................
35% ...................................................................................
50% ...................................................................................
75% ...................................................................................
100% .................................................................................
150% .................................................................................
Total...................................................................................
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
¥ 1,208.0
547.1
748.8
1,356.8
156.7
1,835.1
6,397.6
24.5
¥12,274.7
¥ 1,681.0
579.8
686.5
1,410.7
188.6
1,670.4
6,247.0
43.5
¥12,507.4
¥ 96.0
—
318.4
—
1.1
—
0.3
—
¥415.8
¥143.0
—
290.0
—
1.1
—
0.1
—
¥434.1
exposure has been included.
2. Securitization exposures have not been included.
n 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 management 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, appraisal value, and current condition, 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 to 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
C&I companies. 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 protection 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 Techniques
At SMBC, there is a framework in place for controlling concentration 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 36). Further, exposures to
these obligors are monitored on a group basis, taking into account 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.
SMFG 2009 173
SMFG
Capital Ratio Information
2. Exposure Balance after CRM
March 31
Billions of yen
2009
2008
Eligible financial
collateral
Eligible real
estate collateral
Eligible financial
collateral
Eligible real
estate collateral
Advanced IRB approach....................................................
Foundation IRB approach..................................................
Corporate exposures.....................................................
Sovereign exposures ....................................................
Bank exposures ............................................................
Standardized approach .....................................................
Total...................................................................................
Note: In line with the shift to the advanced IRB approach on March 31, 2009, most qualified collateral is taken into account in the LGD calculation. As a result, there exist no
¥ —
3,081.8
3,080.3
1.4
0.1
—
¥3,081.8
—
5,070.6
997.0
1,107.4
2,966.2
104.6
¥5,175.2
¥ —
0
0
—
—
184.9
¥184.9
¥ —
84.5
84.5
—
—
—
¥84.5
¥
exposures after CRM, with the exception of certain consolidated subsidiaries which have adopted the foundation IRB approach.
March 31
Billions of yen
2009
Guarantee
Credit derivative
Advanced IRB approach ...................................................................................................................
Corporate exposures ....................................................................................................................
Sovereign exposures ....................................................................................................................
Bank exposures ............................................................................................................................
Residential mortgage exposures ..................................................................................................
QRRE ...........................................................................................................................................
Other retail exposures ..................................................................................................................
Standardized approach .....................................................................................................................
Total ..................................................................................................................................................
¥7,846.1
7,157.5
249.4
215.5
223.6
—
0.1
290.6
¥8,136.7
¥281.0
281.0
—
—
—
—
—
—
¥281.0
March 31
Billions of yen
2008
Guarantee
Credit derivative
Foundation IRB approach .................................................................................................................
Corporate exposures ....................................................................................................................
Sovereign exposures ....................................................................................................................
Bank exposures ............................................................................................................................
Residential mortgage exposures ..................................................................................................
QRRE ...........................................................................................................................................
Other retail exposures ..................................................................................................................
Standardized approach .....................................................................................................................
Total ..................................................................................................................................................
Note: In line with the shift to the advanced IRB approach on March 31, 2009, the scope of qualified collateral has expanded and guarantee-based exposures after CRM have greatly
¥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
increased.
n 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
174
SMFG 2009
Capital Ratio Information
SMFG
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
2009
¥5,963.9
3,638.4
9,602.3
3,912.9
5,290.4
—
1.7
—
206.7
190.7
5,087.1
4,515.2
—
—
—
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
(after taking into account credit risk mitigation effect of collateral) .......................................
¥4,238.4
Note: The net credit equivalent amount was the same before and after taking into account the CRM effect of collateral as the IRB approach and simple approach of the
¥4,515.2
standardized approach have been adopted.
(2) Notional Principal Amounts of Credit Derivatives
Credit Default Swaps
March 31
Billions of yen
2009
2008
Notional principal
amount
Of which
for CRM
Notional principal
amount
Protection purchased ..................................................
Protection provided .....................................................
Note: The “Notional principal amount” is defined as the total of “amounts subject to calculation of credit equivalents” and “amounts employed for CRM.”
¥1,559.0
1,134.7
¥ 846.8
1,107.5
¥281.0
—
Of which
for CRM
¥302.5
—
n 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 swap 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 ratings-based approach, the supervisory formula, and the internal assessment approach. The methods are used as follows.
• First, securitization exposures are examined and the 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.
SMFG 2009 175
SMFG
Capital Ratio Information
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 are 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 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, in accordance with the Notification.
5. Portfolio
(1) Securitization Transactions as Originator
A. As Originator (excluding as Sponsor)
(A) Underlying Assets
March 31, 2009
Underlying asset amount
Asset
transfer type
Synthetic
type
Total
Claims on corporates............................. ¥ 151.7
1,712.1
Mortgage loans ......................................
Retail loans
201.7
(excluding mortgage loans) .................
284.5
Other claims...........................................
Total....................................................... ¥2,350.0
¥ 151.7
1,712.1
80.1
87.2
¥2,031.0
¥ —
—
121.7
197.3
¥318.9
March 31, 2008
Underlying asset amount
Asset
transfer type
Synthetic
type
Total
Claims on corporates............................. ¥ 273.8
1,751.7
Mortgage loans ......................................
Retail loans
¥ 171.3
1,751.7
¥102.5
—
Billions of yen
Fiscal 2008
Securitized
amount
¥348.9
91.4
2.4
113.1
¥555.8
Default
amount
¥10.7
1.0
19.6
0.1
¥31.5
Loss
amount
¥ 1.4
0.3
14.5
1.1
¥17.2
Gains/losses
on sales
¥ —
5.6
—
0.0
¥5.6
Billions of yen
Fiscal 2007
Securitized
amount
¥ 657.9
312.3
Default
amount
¥ 7.5
0.6
Loss
amount
Gains/losses
on sales
¥0.3
0.1
6.6
1.0
¥8.1
¥ —
15.9
—
0.0
¥15.9
260.2
(excluding mortgage loans) .................
Other claims...........................................
295.7
Total....................................................... ¥2,581.4
Notes: 1. The above amounts include the amount of underlying assets securitized during the term without entailing securitization exposure.
64.1
148.4
¥2,135.5
154.2
129.5
¥1,253.9
196.1
147.3
¥445.9
43.4
0.1
¥51.6
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 Private Finance Initiative (PFI) 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.
176
SMFG 2009
Capital Ratio Information
SMFG
(B) Securitization Exposures
a. Underlying Assets by Asset Type
March 31
Claims on corporates ............................
Mortgage loans .....................................
Retail loans (excluding mortgage loans) ...
Other claims ..........................................
Total ......................................................
Term-end
balance
¥ 52.0
178.4
45.4
147.6
¥423.4
Billions of yen
2009
To be
deducted
from capital
¥ 1.9
35.1
13.9
9.3
¥60.3
Increase
in capital
equivalent
¥ —
42.1
—
—
¥42.1
2008
To be
deducted
from capital
¥ 5.3
35.9
12.8
20.5
¥74.4
Increase
in capital
equivalent
¥ —
44.0
—
—
¥44.0
Term-end
balance
¥139.8
170.1
80.0
90.9
¥480.8
b. Risk Weights
March 31
Billions of yen
2009
2008
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.......................................................................
¥194.8
20.0
2.0
—
206.7
¥423.4
¥ 1.4
0.6
0.7
—
60.3
¥63.0
¥264.5
5.7
2.0
—
208.6
¥480.8
¥ 2.2
0.1
0.7
—
74.4
¥77.5
B. As Sponsor
(A) Underlying Assets
Claims on corporates ............................
Mortgage loans .....................................
Retail loans (excluding mortgage loans) ...
Other claims ..........................................
Total ......................................................
Billions of yen
March 31, 2009
Underlying asset amount
Asset
transfer type
Synthetic
type
¥ 796.9
—
142.4
116.7
¥1,056.0
¥ —
—
—
—
¥ —
Total
¥ 796.9
—
142.4
116.7
¥1,056.0
Securitized
amount
¥6,093.3
—
619.1
163.3
¥6,875.7
Billions of yen
Fiscal 2008
Default
amount
¥124.0
0.9
5.4
3.1
¥133.5
Fiscal 2007
March 31, 2008
Underlying asset amount
Asset
transfer type
Total
Synthetic
type
Securitized
amount
Default
amount
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.
¥6,305.8
—
142.4
214.1
¥6,662.3
¥790.6
3.8
54.1
64.9
¥913.5
¥790.6
3.8
54.1
64.9
¥913.5
¥ —
—
—
—
¥ —
¥156.8
0.6
1.2
1.5
¥160.1
Loss
amount
¥121.8
0.9
6.9
3.0
¥132.6
Loss
amount
¥154.9
0.6
3.3
1.3
¥160.1
2. The “Default amount” is the total of underlying assets which are past due three months or more and defaulted underlying assets.
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 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 ratings-based approach, the amount is the same amount as the default amount estimated conservatively in (1)
above.
• For securitization transactions subject to the 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.
SMFG 2009 177
SMFG
Capital Ratio Information
(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.
Term-end
balance
¥648.4
—
122.4
111.7
¥882.5
Billions of yen
2009
To be
deducted
from capital
Increase
in capital
equivalent
¥1.2
—
—
—
¥1.2
¥ —
—
—
—
¥ —
2008
To be
deducted
from capital
Increase
in capital
equivalent
¥0.1
—
—
—
¥0.1
¥ —
—
—
—
¥ —
Term-end
balance
¥608.1
3.8
54.1
59.7
¥725.7
b. Risk Weights
March 31
Billions of yen
2009
2008
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.......................................................................
¥826.0
55.3
—
—
1.2
¥882.5
¥6.0
1.6
—
—
1.2
¥8.8
¥634.1
91.5
—
—
0.1
¥725.7
¥3.9
2.6
—
—
0.1
¥6.6
(2) Securitization Transactions in which the Group Is the Investor
Securitization Exposures
(A) Underlying Assets by Asset Type
Billions of yen
March 31
2009
To be
deducted
from capital
Increase
in capital
equivalent
Term-end
balance
Claims on corporates ............................
Mortgage loans .....................................
Retail loans (excluding mortgage loans) ...
Other claims ..........................................
Total ......................................................
Notes: 1. “Other claims” includes securitization products.
¥261.7
—
5.4
15.3
¥282.4
¥50.1
—
—
1.0
¥51.1
¥ —
—
—
—
¥ —
2008
To be
deducted
from capital
Increase
in capital
equivalent
¥66.0
—
—
10.6
¥76.6
¥ —
—
—
—
¥ —
Term-end
balance
¥339.5
—
15.0
24.6
¥379.1
2. There were no credit risk-weighted assets calculated using Supplementary Provision 15 of the Notification.
(B) Risk Weights
March 31
Billions of yen
2009
2008
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.......................................................................
¥146.7
26.7
6.7
—
102.3
¥282.4
¥ 0.4
1.7
0.8
—
51.1
¥54.0
¥228.4
35.0
0.6
—
115.1
¥379.1
¥ 1.5
1.6
0.1
—
76.6
¥79.9
178
SMFG 2009
Capital Ratio Information
SMFG
n 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
(including foreign stocks) 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 and net of income taxes are reported as a component of “net assets.” Derivative
transactions are carried at fair value.
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
2009
2008
Balance sheet amount
Fair value
Balance sheet amount
¥1,939.1
¥1,939.1
¥2,913.3
706.7
¥2,645.8
—
¥ —
670.5
¥3,583.8
Fair value
¥2,913.3
—
¥ —
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 operations.
¥(183.7)
15.2
7.8
191.1
¥ (7.1)
61.5
5.7
62.8
Billions of yen
Fiscal 2008
Fiscal 2007
5. Unrealized Gains (Losses) Recognized on Consolidated Balance Sheet but Not on Consolidated Statements of Operations
March 31
Billions of yen
2009
Unrealized gains (losses) recognized on consolidated balance sheet
but not on consolidated statements of operations.................................................................
¥6.0
Note: The above amount is for stocks of Japanese companies and foreign stocks with market prices.
2008
¥940.3
6. Unrealized Gains (Losses) Not Recognized on Consolidated Balance Sheet or Consolidated Statements of Operations
March 31
Unrealized gains (losses) not recognized on
Billions of yen
2009
consolidated balance sheet or consolidated statements of operations.................................
¥(49.7)
Note: The above amount is for stocks of affiliates with market prices.
2008
¥(24.4)
SMFG 2009 179
SMFG
Capital Ratio Information
n Exposure Balance by Type of Assets, Geographic Region, Industry and Residual Term
1. Exposure Balance by Type of Assets, Geographic Region and Industry
Billions of yen
March 31, 2009
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.................................................................................
¥10,224.7
241.6
1,668.8
4,714.2
6,576.8
11,915.5
8,173.3
6,540.2
1,772.1
20,607.4
¥72,434.6
¥ 1,544.9
2,766.4
10,294.4
1,997.4
¥16,603.0
¥89,037.6
¥ 134.5
0.1
47.4
102.0
83.1
981.7
363.0
123.7
468.1
18,948.3
¥21,251.7
¥ 895.1
265.7
213.0
246.1
¥ 1,619.8
¥22,871.6
¥ 605.5
15.7
12.3
191.3
627.3
1,427.4
54.9
89.4
5.8
30.6
¥3,060.2
¥ 5.0
940.1
498.3
11.5
¥1,454.8
¥4,515.0
Billions of yen
¥1,872.6
29.4
153.5
697.6
568.7
315.3
170.8
612.0
77.6
4,756.3
¥9,253.8
¥ —
49.4
—
346.0
¥ 395.4
¥9,649.2
¥ 12,837.3
286.8
1,882.0
5,705.1
7,855.8
14,639.9
8,762.0
7,365.3
2,323.6
44,342.6
¥106,000.4
¥ 2,444.9
4,021.5
11,005.7
2,600.9
¥ 20,073.1
¥126,073.4
March 31, 2008
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.................................................................................
Notes: 1. The above amounts are exposure amounts after CRM.
¥ 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
¥ 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
¥ 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
2. The above amounts do not include securitization 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.
180
SMFG 2009
Capital Ratio Information
SMFG
2. Exposure Balance by Type of Assets and Residual Term
Billions of yen
March 31, 2009
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.................................................................................
¥28,106.8
15,529.8
11,562.0
5,031.3
22,396.3
6,411.5
¥89,037.6
¥ 4,055.7
8,851.1
5,875.1
960.1
3,129.6
—
¥22,871.6
¥ 600.8
1,413.2
1,106.2
579.0
815.9
—
¥4,515.0
Billions of yen
¥ 399.4
938.8
1,106.5
277.3
180.6
6,746.7
¥9,649.2
¥ 33,162.7
26,732.9
19,649.7
6,847.7
26,522.3
13,158.2
¥126,073.4
March 31, 2008
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.................................................................................
Notes: 1. The above amounts are exposure amounts after CRM.
¥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
¥ 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
2. The above amounts do not include securitization 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
Billions of yen
2009
2008
Domestic operations (excluding offshore banking accounts) ...........................................
Overseas operations and offshore banking accounts ......................................................
Asia ..............................................................................................................................
North America ..............................................................................................................
Other regions................................................................................................................
Total...................................................................................................................................
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
¥1,759.4
140.7
42.0
83.2
15.4
¥1,900.0
¥2,174.3
297.3
23.4
218.3
55.6
¥2,471.6
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 2009 181
SMFG
Capital Ratio Information
(2) By Industry
March 31
Billions of yen
2009
2008
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 ........................................................................................................................
¥ 206.5
5.3
166.7
130.6
269.7
60.5
720.3
342.7
272.0
¥2,174.3
Overseas operations and offshore banking accounts
¥ 180.4
7.1
153.4
96.9
288.6
38.2
325.1
347.0
322.6
¥1,759.4
Financial institutions .....................................................................................................
C&I companies .............................................................................................................
Subtotal ........................................................................................................................
Total...................................................................................................................................
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
1.0
139.7
¥ 140.7
¥1,900.0
62.3
235.1
¥ 297.3
¥2,471.6
¥
¥
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
2009
Billions of yen
2008
Increase (decrease)
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 ..........................................................................................................
Notes: 1. “Specific reserve for possible loan losses” includes partial direct write-offs (direct reductions).
¥ 691.5
1.3
1,102.1
970.4
131.7
19.3
75.8
36.5
¥1,794.9
¥ 593.7
0.0
819.6
738.5
81.1
10.1
68.1
2.9
¥1,413.3
¥ 97.8
1.3
282.5
231.9
50.6
9.2
7.7
33.6
¥381.6
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.
182
SMFG 2009
Capital Ratio Information
SMFG
(2) By Industry
March 31
2009
Billions of yen
2008
Increase (decrease)
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................................................................................
........................................................................................................
Total
Notes: 1. “Specific reserve for possible loan losses” includes partial direct write-offs (direct reductions).
¥ 691.5
1.3
1,102.1
970.4
128.1
1.2
91.2
45.9
173.3
21.1
224.1
147.1
138.4
131.7
32.0
99.7
¥1,794.9
¥ 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
¥ 97.8
1.3
282.5
231.9
51.8
(0.1)
19.9
(3.3)
30.6
1.9
113.2
11.9
6.0
50.6
31.1
19.5
¥381.6
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 2008
Fiscal 2007
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
¥ 46.1
0.7
32.4
11.3
54.7
9.6
52.9
28.2
44.6
¥280.5
¥ 25.7
0.3
16.0
11.3
42.6
(0.0)
(3.6)
24.7
18.7
¥135.7
Financial institutions ............................................................................................................
C&I companies ....................................................................................................................
Others..................................................................................................................................
Subtotal ...............................................................................................................................
Total ........................................................................................................................................
Note: “Domestic operations” comprises the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated
¥ 0.0
6.0
—
¥ 6.0
¥141.8
¥ 5.6
16.3
—
¥ 21.9
¥302.4
subsidiaries. “Overseas operations” comprises the operations of the overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries.
SMFG 2009 183
SMFG
Capital Ratio Information
n 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, SMBC Derivative Products Limited, and SMBC Capital Markets (Asia) 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, SMBC Derivative Products Limited, and SMBC Capital Markets (Asia) 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.
3. VaR Results (Trading Book)
Billions of yen
Fiscal 2008
Fiscal 2007
Fiscal year-end........................................................................................................................
Maximum.................................................................................................................................
Minimum..................................................................................................................................
Average...................................................................................................................................
Notes: 1. The VaR results for a one-day holding period with a one-sided confidence interval of 99.0%, computed daily using the historical simulation method based on data
¥2.2
4.3
2.1
2.8
¥2.0
2.8
1.4
2.0
collected over a four-year period.
2. Figures for the trading book exclude specific risks.
3. Includes principal consolidated subsidiaries.
n 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.
3. VaR Results (Banking Book)
Billions of yen
Fiscal 2008
Fiscal 2007
Fiscal year-end........................................................................................................................
Maximum.................................................................................................................................
Minimum..................................................................................................................................
Average...................................................................................................................................
Notes: 1. The VaR results for a one-day holding period with a one-sided confidence interval of 99.0%, computed daily using the historical simulation method based on data
¥23.3
59.3
20.9
31.3
¥41.4
43.9
26.9
34.2
collected over a four-year period.
2. Includes principal consolidated subsidiaries.
184
SMFG 2009
Capital Ratio Information
SMFG
n Operational Risk
1. Operational Risk Equivalent Amount Calculation Methodology
SMFG adopted the Advanced Measurement Approaches (AMA) for exposures as of March 31, 2008. As of March 31, 2009, 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., Sumitomo Mitsui Finance and Leasing Co., Ltd., Kansai Urban Banking Corporation, 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.
Among companies which had previously adopted the BIA, Sumitomo Mitsui Finance and Leasing Co., Ltd. and Kansai Urban Banking
Corporation adopted the AMA for exposures as of March 31, 2009.
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.
(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 2009 185
InternallossdataExternallossdataB.VerificationA.DatainputRiskmitigationinitiatives(1)ScenarioAnalysisthroughRiskControlAssessments(2)MeasurementusingquantificationmodelBEICFs SMFG
Capital Ratio Information
(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.
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.
186
SMFG 2009
(Example)ProductOperationprocess(a)Explanationtocustomer(b)Requestforpreparationofapplicationform(c)Presentationofconditionstocustomer,conclusionofcontract(d)ConclusionofthedealwithMarketOperationsPromotionDepartment(e)Entryofcontractimplementationform(f)ExchangeofforwardcontractExplanationReceiptandcheckAgreementsandcontractsInternaltransferSystementriesIssuance,notificationandreporting(a)Explanation(b)Attributeconfirmation(c)Receiptandcheck(d)Issuance,notificationandreporting(e)Internaltransfer(f)Application,decisionandauthorization(g)Agreementsandcontracts(h)Preparationofvouchers,etc.andmakingentries(i)Systementries(j)Managementduringcontractperiod(k)Safekeeping,depositingandwithdrawalBusinessClassificationofBusiness,ProductsandProcessingType(Example)ExchangeforwardcontractProcessingtypeConclusionofexchangeforwardcontract102100010100RiskScoring(Examples)ControlAssessment(Examples)AverageFrequencyTable(Example)PerspectiveEasinessofmakinganerrorDesignofproceduresAuthorityandverificationSystemsituation(a)Transactionvolume(b)Volatilityoftransactionvolumes(c)Timelimits(d)Complexityofprocess(e)Complexityofproducts(f)Dealwithoutsideparty(g)Bookingofbusinessproducts(a)Establishmentofmanualsandprocedures(b)Detailsofmanualsandprocedures(c)Processingauthorityandpre-processcheck(d)Post-processcheck(e)SystemprocessingLargenessofannualprocessingvolumeDegreeofconcentrationofprocessingonspecificdatesShortnessofdeadlinesanddegreeofurgencyDegreeofprocessingcomplexity,processingvolumepertaskProductcomplexityWhetherrules/procedures/etc.havebeendocumentedorupdatedAssessprocessingauthority,pre-processcheckDegreeofsystemprocessingEasinessofanerrorleadingtoaclericalaccidentRiskItemsWhattoAssessScorePerspective(Times/Year)RiskItemsWhattoAssessScoreEasinessoferrorintransferringactualitems/fundstocustomer/otherbankleadingtolossaccidentEasinessoferrorinhandlingof,orinnotifyingactionstobetakenon,productswithmarketriskleadingtolosseventWhethertherearerulesforaccurateprocessingexecutionwithoutomissionsandwhethertheyareeffective(excludingthoseincludedinbelowthreeriskitems)Assesspost-processcheckandaccidentdetectionmeasures(assessonlypreventivemeasures) Capital Ratio Information
SMFG
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.
(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.
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 2009 187
10002.02.42.83.23.64.05.54.55.53.54.52.53.52.401.52.50.51.50.510100ControlAssessment(Examples)AverageFrequencyTable(Example)makinganerrorDesignofproceduresAuthorityandverificationSystemsituation(d)Complexityofprocess(e)Complexityofproducts(f)Dealwithoutsideparty(g)Bookingofbusinessproducts(a)Establishmentofmanualsandprocedures(b)Detailsofmanualsandprocedures(c)Processingauthorityandpre-processcheck(d)Post-processcheck(e)SystemprocessingDegreeofprocessingcomplexity,processingvolumepertaskProductcomplexityWhetherrules/procedures/etc.havebeendocumentedorupdatedAssessprocessingauthority,pre-processcheckDegreeofsystemprocessingEasinessofanerrorleadingtoaclericalaccidentPerspectiveTotalScoreControlRisk(Times/Year)RiskItemsWhattoAssessScoreEasinessoferrorintransferringactualitems/fundstocustomer/otherbankleadingtolossaccidentEasinessoferrorinhandlingof,orinnotifyingactionstobetakenon,productswithmarketriskleadingtolosseventWhethertherearerulesforaccurateprocessingexecutionwithoutomissionsandwhethertheyareeffective(excludingthoseincludedinbelowthreeriskitems)Assesspost-processcheckandaccidentdetectionmeasures(assessonlypreventivemeasures)210002.02.42.83.23.64.05.54.55.53.54.52.53.52.401.52.50.51.50.510100ControlAssessment(Examples)AverageFrequencyTable(Example)EasinessofmakinganerrorDesignofproceduresAuthorityandverificationSystemsituation(c)Timelimits(d)Complexityofprocess(e)Complexityofproducts(f)Dealwithoutsideparty(g)Bookingofbusinessproducts(a)Establishmentofmanualsandprocedures(b)Detailsofmanualsandprocedures(c)Processingauthorityandpre-processcheck(d)Post-processcheck(e)SystemprocessingShortnessofdeadlinesanddegreeofurgencyDegreeofprocessingcomplexity,processingvolumepertaskProductcomplexityWhetherrules/procedures/etc.havebeendocumentedorupdatedAssessprocessingauthority,pre-processcheckDegreeofsystemprocessingEasinessofanerrorleadingtoaclericalaccidentPerspectiveTotalScoreControlRisk(Times/Year)RiskItemsWhattoAssessScoreEasinessoferrorintransferringactualitems/fundstocustomer/otherbankleadingtolossaccidentEasinessoferrorinhandlingof,orinnotifyingactionstobetakenon,productswithmarketriskleadingtolosseventWhethertherearerulesforaccurateprocessingexecutionwithoutomissionsandwhethertheyareeffective(excludingthoseincludedinbelowthreeriskitems)Assesspost-processcheckandaccidentdetectionmeasures(assessonlypreventivemeasures) SMFG
Capital Ratio Information
(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 log-normal distribution function 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, potential loss can be regarded as likewise arising from log-normal distribution. Therefore, in this case, we estimate the
probability of occurrence of four loss amounts by substituting each loss amount for the loss amount of log-normal distribution.
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 for loss events over a one-year period, we are
able to estimate the probability of four loss amounts by the probability arising from the above log-normal distribution function,
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”) are 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 6,000 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.
188
SMFG 2009
Capital Ratio Information
SMFG
(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.
SMFG 2009 189
0.40.30.20.1099.099.9A.MeasurementUsingQuantificationModels(D)CalculationofrequiredcapitalAggregatedLossDistributionFrequencySeverityB.VerificationofQuantificationModel(A)VerificationofQuantificationAccuracy(B)ImplementationofRegularVerificationProcess(Pre-testing,Backtesting)(B)EstimationoftheLossFrequencyDistributionReiterationProbabilityofoccurrence(frequency)AmountofannuallossesTimestheriskcapitalconversionfactorTotalSamplingofthenumberoflossesfromthedistributionCalculationofannuallossamountSamplingoftheamountoflossesofthecasesdrawnfromthedistribution(A)EstimationofLossSeverityDistribution(C) SMFG
Capital Ratio Information
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.
190
SMFG 2009
5,000,00010,000,0008,000,00015,000,0007,000,000GainingagraspofrealizedriskCapturingpotentialrisksCollectionofinternallossdataStatisticalestimatesfrominternallossdata(ExtremeValueTheory)EstimatesfromriskcontrolassessmentsBodypartofthe“high-frequencylow-severity”lossseveritydistributionTailpartofthe“low-frequencyhigh-severity”lossseveritydistributionCombinationofthelossseveritydistributionsSmoothedbootstrapmethodLossoccurrenceforthelast7years(orperiodactuallycollected)Estimatesofpotentialriskthatmayemerge(Example)(Example)PeriodAmountoflossFrequencyofoccurrence2003/1H2004/1H2005/1H2005/1H2005/2H¥100millionormore¥1billionormore¥5billionormore¥10billionormoreOncein5yearsOncein10yearsOncein50yearsOncein100yearsAmountoflossSmoothedbootstrapmethodBodypartAmountoflossesTailpartFrequencyofoccurrence¥100million¥1billion¥5billion¥10billion Capital Ratio Information
SMFG
(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 c
We calculate 99.0% VaR from the estimated aggregated loss distribution, and then multiply the risk capital conversion
factor c (gamma) in order to compute 99.9% VaR. By introducing c 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 c 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 c for
each entity. There is a tendency for c 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 c 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 c values. This makes it possible to keep values of c 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 add 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 2009 191
SMFG
Capital Ratio Information
(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 facto 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, 2009.
4. Required Capital by Operational Risk Measurement Method
March 31
Advanced Measurement Approaches .....................................................................................
Basic Indicator Approach ........................................................................................................
Total ........................................................................................................................................
Billions of yen
2009
¥223.5
21.6
¥245.1
2008
¥224.5
43.7
¥268.2
192
SMFG 2009
SMBC
Capital Ratio Information
Sumitomo Mitsui Banking Corporation and Subsidiaries
n Capital Structure Information (Consolidated Capital Ratio (International Standard))
Millions of yen
March 31
Tier I capital:
Tier II capital:
Deductions:
Total qualifying capital:
Risk-weighted assets:
Capital stock..................................................................................................
Capital surplus ..............................................................................................
Retained earnings .........................................................................................
Cash dividends to be paid.............................................................................
Unrealized losses on other securities ...........................................................
Foreign currency translation adjustments .....................................................
Stock acquisition rights .................................................................................
Minority interests ...........................................................................................
Goodwill and others ......................................................................................
Gain on sale on securitization transactions...................................................
Amount equivalent to 50% of expected losses in excess of provision ..........
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 .............................................................................................
Amount obtained by multiplying by 12.5 the excess of the amount
obtained by multiplying the old required capital by the rate prescribed
by the Notification over the new required capital ........................................
Total risk-weighted assets (E).......................................................................
¥
2009
664,986
1,603,672
448,750
(19,947)
(60,148)
(120,606)
66
1,972,044
(0)
(42,102)
(3,207)
4,443,507
—
37,211
58,610
—
2,303,618
2,399,439
2,399,439
284,199
¥ 6,558,747
¥37,853,376
7,364,078
248,081
2,882,871
¥
2008
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
83,273
¥48,431,681
—
¥59,013,736
Tier I risk-weighted
capital ratio:
Total risk-weighted
capital ratio:
Required capital:
(A) / (E) 5 100 ...............................................................................................
9.17%
7.63%
(D) / (E) 5 100 ...............................................................................................
(E) 5 8% ........................................................................................................
13.54%
¥ 3,874,534
12.19%
¥ 4,721,098
(Reference)
The consolidated capital ratio (International Standard) as of March 31, 2009, calculated using the foundation IRB approach is 11.99%.
SMFG 2009 193
SMBC
Capital Ratio Information
n Capital Structure Information (Nonconsolidated Capital Ratio (International Standard))
Millions of yen
March 31
Tier I capital:
Tier II capital:
Deductions:
Total qualifying capital:
Risk-weighted assets:
Capital stock..................................................................................................
Capital reserve ..............................................................................................
Other capital surplus .....................................................................................
Other retained earnings ................................................................................
Other .............................................................................................................
Cash dividends to be paid.............................................................................
Unrealized losses on other securities ...........................................................
Gain on sale on securitization transactions...................................................
Amount equivalent to 50% of expected losses in excess of provision ..........
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 .............................................................................................
Amount obtained by multiplying by 12.5 the excess of the amount
obtained by multiplying the old required capital by the rate prescribed
by the Notification over the new required capital ........................................
Total risk-weighted assets (E) .......................................................................
¥
2009
664,986
665,033
702,514
501,178
813,353
(19,947)
(52,741)
(42,102)
(36,100)
(29,108)
3,167,065
—
30,722
—
—
3,171,369
3,202,092
3,167,065
294,838
¥ 6,039,292
¥34,131,307
6,518,178
193,298
2,160,664
¥
2008
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
572,410
¥43,575,860
—
¥51,698,842
Tier I risk-weighted
capital ratio:
Total risk-weighted
capital ratio:
Required capital:
(A) / (E) 5 100 ...............................................................................................
7.26%
7.27%
(D) / (E) 5 100 ...............................................................................................
(E) 5 8% ........................................................................................................
13.85%
¥ 3,486,068
12.67%
¥ 4,135,907
(Reference)
The nonconsolidated capital ratio (International Standard) as of March 31, 2009, calculated using the foundation IRB approach is 12.28%.
194
SMFG 2009
Corporate Data
Sumitomo Mitsui Financial Group, Inc.
■ Board of Directors, Corporate Auditors, and Executive Officers (as of June 30, 2009)
BOARD OF DIRECTORS
Masayuki Oku
Chairman of the Board and Representative Director
Teisuke Kitayama
President and Representative Director
Fumihiko Tanizawa
Senior Managing Director
Audit Dept.
Takeshi Kunibe
Director
Public Relations Dept., Corporate Planning Dept.,
Financial Accounting Dept., Strategic Financial Planning Dept.,
Subsidiaries & Affiliates Dept.
Satoru Nakanishi
Director
Consumer Business Planning Dept.
Junsuke Fujii
Director
General Affairs Dept., Human Resources Dept.,
Corporate Risk Management Dept.
Shigeru Iwamoto
Director (outside)
Yoshinori Yokoyama
Director (outside)
Kuniaki Nomura
Director (outside)
CORPORATE AUDITORS
Hiroki Nishio
Corporate Auditor
Yoji Yamaguchi
Corporate Auditor
Hideo Sawayama
Corporate Auditor
Hiroshi Araki
Corporate Auditor (outside)
Ikuo Uno
Corporate Auditor (outside)
Satoshi Ito
Corporate Auditor (outside)
EXECUTIVE OFFICERS
Wataru Ohara
Deputy President
Corporate Risk Management Dept.
Hideo Shimada
Senior Managing Director
IT Planning Dept.
Director of The Japan Research Institute, Limited
Tetsuya Kubo
Senior Managing Director
Investment Banking Planning Dept.
Kazuya Jono
Managing Director
Card Business Dept.
President of SMFG Card & Credit, Inc.
■ SMFG Organization (as of June 30, 2009)
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.
Card Business 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 2009 195
Sumitomo Mitsui Banking Corporation
■ Board of Directors, Corporate Auditors, and Executive Officers (as of June 30, 2009)
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
Corporate Advisory Division
Wataru Ohara*
Risk Management Unit (Corporate Risk Management Dept.,
Credit & Investment Planning Dept.)
Yoshinori Kawamura*
Head of Corporate Banking Unit and International Banking Unit
Global Advisory Dept.
Senior Managing Directors
Hideo Shimada*
IT Planning Dept., IT Business Promotion Dept., Operations Planning
Dept., Operations Support Dept., Director of The Japan Research
Institute, Limited
Keiichi Ando*
Corporate Research Dept., Credit Administration Dept.
Deputy Head of Corporate Banking Unit (Credit Dept.) and Investment
Banking Unit (Structured Finance Credit Dept., Trust Services Dept.)
Takeshi Kunibe*
Public Relations Dept., Corporate Planning Dept., Financial
Accounting Dept., Strategic Financial Planning Dept., Subsidiaries &
Affiliates Dept.
Tetsuya Kubo*
Head of Investment Banking Unit
Satoru Nakanishi*
Head of Consumer Banking Unit
Junsuke Fujii*
Human Resources Dept., Human Resources Development Dept.,
Quality Management Dept., General Affairs Dept., Legal Dept.,
Administrative Services Dept.
Koichi Miyata*
Head of Treasury Unit
Human Resources Dept., Human Resources Development Dept.
Directors (outside)
Shigeru Iwamoto
Yoshinori Yokoyama
Kuniaki Nomura
*Executive Officers
CORPORATE AUDITORS
Nobuo Tsukuni
Corporate Auditor
196
SMFG 2009
Hiroki Yaze
Corporate Auditor
Hiroshi Araki
Corporate Auditor (outside)
Ikuo Uno
Corporate Auditor (outside)
Satoshi Ito
Corporate Auditor (outside)
Hiroki Nishio
Corporate Auditor
EXECUTIVE OFFICERS
Managing Directors
Koki Nomura
Deputy Head of Middle Market Banking Unit (in charge of East Japan)
Kazumasa Hashimoto
Deputy Head of Middle Market Banking Unit (in charge of West Japan)
Kozo Masaki
Deputy Head of Middle Market Banking Unit and International Banking Unit
Global Advisory Dept.
Chairman of Sumitomo Mitsui Banking Corporation (China) Limited
Jun Mizoguchi
Head of Europe Division
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.
President of SMFG Card & Credit, Inc.
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. I)
Yoshihiko Shimizu
Internal Audit Dept., Credit Review Dept.
Yuichiro Takada
Tokyo Corporate Banking Division (Tokyo Corporate Banking Depts. I,
II, and III)
Koichi Danno
Head of The Asia Pacific Division
Hiroshi Minoura
Head of The Americas Division
Mitsunori Watanabe
Tokyo Corporate Banking Division (Tokyo Corporate Banking Depts.
IV, V, and VI)
Yujiro Ito
General Affairs Dept., Legal Dept., Administrative Services Dept.
Shuichi Kageyama
Osaka Corporate Banking Division (Osaka Corporate Banking Depts.
I, II, and III)
Seiichiro Takahashi
Deputy Head of Treasury Unit
Ichiro Onishi
Deputy Head of Consumer Banking Unit
Kazunori Okuyama
Vice Chairman and President of Sumitomo Mitsui Banking Corporation
(China) Limited
Hidetoshi Furukawa
Nagoya Corporate Banking Division (Nagoya Corporate Banking Dept.)
Head of Nagoya Middle Market Banking Division
Fumitoshi Onodera
Head of Tokyo Toshin Middle Market Banking Division
and Yokohama Middle Market Banking Division
Ikuhiko Morikawa
Deputy Head of Consumer Banking Unit
Directors
Katsunori Okubo
General Manager, Hong Kong Branch
Kazuhiro Shibata
Deputy Head of Middle Market Banking Unit
Hiroyuki Iwami
General Manager, Tokyo Corporate Banking Dept. III
Yuichiro Ueda
General Manager, Credit Dept., Corporate Banking Unit
Shusuke Kurose
IT Planning Dept., IT Business Promotion Dept., Operations Planning
Dept., Operations Support Dept.
Nobuaki Kurumatani
General Manager, Corporate Planning Dept.
Toshimi Tagata
General Manager, Real Estate Finance Dept.
Masaki Tachibana
Deputy Head of Corporate Advisory Division
Kohei Hirota
Head of Shinjuku Middle Market Banking Division, Saitama Ikebukuro
Middle Market Banking Division and Shibuya Middle Market Banking
Division
Yoshimi Miura
General Manager, Nagoya Corporate Banking Dept.
William M. Ginn
General Manager, Corporate Banking Dept.-II, Americas Division
and Specialized Finance Dept., Americas Division
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
Director of Sumitomo Mitsui Banking Corporation Europe Limited
Hikota Koshika
Head of Kobe Middle Market Banking Division
Ryosuke Harada
Deputy Head of Middle Market Banking Unit (Credit Dept. II)
Haruhide Maeda
General Manager, Himeji Corporate Business Office
Nobuo Iida
Head of Osaka Kita Middle Market Banking Division
and Osaka Minami Middle Market Banking Division
Takahiko Kato
General Manager, Singapore Branch
Hiroshi Kobayashi
(Special Appointive Director)
Toru Nagamoto
General Manager, Internal Audit Dept.
Atsuhiko Inoue
General Manager, Osaka Corporate Banking Dept. I
Shogo Sekimoto
General Manager, Tokyo Corporate Banking Dept. I
Toshiyuki Teramoto
General Manager, Credit Dept. I, Middle Market Banking Unit
Manabu Narita
General Manager, Planning Dept., Corporate Banking Unit & Middle
Market Banking Unit
Chris Chan Chi Keung
General Manager, Corporate Banking Dept., Greater China
Shinichi Hayashida
General Manager, Credit Management Dept., International Banking Unit
Shunso Matsuda
General Manager, Nihonbashi Corporate Business Office
Tadashi Matsuhashi
Head of Tokyo Higashi Middle Market Banking Division
Etsutaka Inoue
General Manager, Hibiya Corporate Business Office-II
Katsuhiko Kanabe
General Manager, IT Planning Dept.
Hisaya Kuroyanagi
General Manager, Global Advisory Dept.
Yasushi Sakai
General Manager, Financial Accounting Dept.
Hiroshi Mishima
General Manager, Planning Dept., Treasury Unit
Jun Ota
General Manager, Planning Dept., Investment Banking Unit
Yasuyuki Kawasaki
General Manager, Human Resources Dept.
Fumiaki Kurahara
General Manager, Structured Finance Dept.
Makoto Takashima
General Manager, Planning Dept., International Banking Unit
Ryoji Yukino
General Manager, Planning Dept., Consumer Banking Unit
SMFG 2009 197
Consumer
Banking Unit
Middle Market
Banking Unit
Corporate
Banking Unit
International
Banking Unit
Treasury Unit
Investment
Banking Unit
■ SMBC Organization (as of June 30, 2009)
Internal Audit Unit
Internal Audit 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.
IT Planning Dept.
IT Business Promotion Dept.
Human Resources Dept.
Training Institute
Counseling Dept.
Diversity and Inclusion Dept.
Human Resources Development Dept.
Quality Management Dept.
Customer Relations Dept.
Risk Management Unit
Corporate Risk Management Dept.
Operational Risk Management Dept.
Risk Management Systems Dept.
Credit & Investment Planning Dept.
Credit Portfolio Management Dept.
Compliance Unit
General Affairs 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.
Credit Business Dept.
Shareholders’
Meeting
Board of
Directors
Management
Committee
Corporate Auditors/
Corporate Auditors/
Board of Corporate Auditors
Board of Corporate Auditors
Office of Corporate Auditors
198
SMFG 2009
Planning Dept., Consumer Banking Unit
Consumer Compliance Dept.
Marketing Dept.
Next W (cid:129)ing Project Dept.
Financial Consulting Dept.
Financial Consulting R&D Dept.
Consumer Loan Dept.
Mass Retail Dept.
Credit Dept., Consumer Banking Unit
Business Promotion & Solution Dept., Middle Market 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.
Planning Dept., Corporate Banking Unit &
Middle Market Banking Unit
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
Risk Management Dept., Americas Division
Compliance Dept., Americas Division
Planning Dept., Europe Division
Credit Dept., Europe Division
Risk Management Dept., Europe Division
Planning Dept., Asia Pacific Division
Asia Credit Dept., International Banking Unit
Credit Management 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
Strategic Products Dept.
Syndication Dept.
Structured Finance Dept.
Shipping Finance Dept.
Environmental Products Dept.
Real Estate Finance Dept.
REIT Investment Dept.
M&A Advisory Services Dept.
Merchant Banking Dept.
Financial Engineering Dept.
Securities Marketing Dept.
Securities Direct Sales Dept.
Structured Finance Credit Dept.
Trust Services Dept.
Trust Business Operations Dept.
Stock Execution Dept.
Settlement Finance Unit
Electronic Commerce Banking Dept.
Global Transaction Banking Dept.
Asset Finance Dept.
Global Securities Business Dept.
Block Consumer Business Office
Middle Market Banking Division
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
Real Estate Corporate Business Office
Public Institutions Business Office
Business Support Office
Corporate Advisory Division
Tokyo Corporate Banking Division
Osaka Corporate Banking Division
Nagoya Corporate Banking Division
Corporate Banking Dept.
Americas Division
Europe Division
Asia Pacific Division
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 Asia Pacific Division
Universal Banking Dept.
Private Advisory Dept.
Private Advisory Business Dept.
Corporate Employees Business Dept.
Defined Contribution Dept.
Global Advisory Dept.
Branch Service Office
Head /Main Service Office
Public Institutions Operations Office
SMFG 2009 199
Principal Subsidiaries and Affiliates (as of March 31, 2009)
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
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
34,000
0
(65.99)
Sumitomo Mitsui Finance and Leasing Company, Limited
The Japan Research Institute, Limited
SMBC Friend Securities Co., Ltd.
SMFG Card & Credit, Inc.
SAKURA CARD CO., LTD.
QUOQ Inc.*1
SMM Auto Finance, 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 Co., Ltd.
SMBC Consulting Co., Ltd.
SMBC Support & Solution Co., Ltd.
SMBC Servicer Co., Ltd.
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.
15,000
10,000
27,270
100
7,438
4,750
7,700
37,250
100,010
10
187,720
10
71,705
10
160
1,100
10
1,000
2,054
27,484
47,039
90
10
10
100
30
30
20
40
70
10
10
30
—
—
—
—
—
—
Jun. 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
Mar. 2, 1948
Securities
Oct. 1, 2008
Business management
60
100
100
100
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)
0
(12.82)
Apr. 5, 1978
Credit card services
(56)
41
Sept. 17, 1993
Automotive financing
(59.70)
59.70
Sept. 19, 2000
Commercial banking
(100)
100
Apr. 1, 2004
Management support services
(100)
(100)
0
0
(100)
Apr. 1, 1998
Consulting and agency services for
consumer loans
(100)
Jul. 14, 1976
Credit guarantee
(100)
100
Apr. 1, 2004
Management support services
(100)
(100)
(100)
0
0
0
(100)
Dec. 5, 1972
Loans, collecting agent and factoring
(100)
Jul. 1, 2004
Clerical work outsourcer
(100)
Sept. 29, 2000
(100)
50
(25)
May 1, 1981
Data processing service and e-trading
consulting
Management consulting and seminar
organizer
(100)
(100)
100
100
Apr. 1, 1996
Help desk and system support
Mar. 11, 1999
Servicer
(50.21)
27.53
(5.00)
Mar. 29, 1969
System engineering and data processing
(46.34)
45.10
(1.23)
Sept. 6, 1949
Commercial banking
(68.26)
56.42
(0.16)
Jul. 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
Jul. 15, 1982
Temporary manpower service
May 27, 1998
Seminar organizer
Apr. 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
Japan Pension Navigator Co., Ltd.
1,600
0
(69.71)
69.71
Sept. 21, 2000
Defined contribution plan administrator
Note: Figures in parentheses ( ) in the voting rights columns indicate voting rights held indirectly via subsidiaries and affiliates.
200
SMFG 2009
■ Principal Overseas Subsidiaries
Company Name
Country
Issued Capital
Percentage of
SMFG’s Voting
Rights (%)
Percentage of
SMBC’s Voting
Rights (%)
Established
Main Business
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$1,600 million
US$80.786 million
C$169 million
R$409.357 million
0
0
0
0
(100)
(100)
(100)
(100)
100
100
100
100
Mar. 5, 2003
Commercial banking
Jun. 26, 1962
Commercial banking
Apr. 1, 2001
Commercial banking
Oct. 6, 1958
Commercial banking
Indonesia
Rp1,502.4 billion
0
(99.00)
99.00
Aug. 22, 1989
Commercial banking
SMBC Leasing and Finance, Inc.
U.S.A.
SMBC Capital Markets, Inc.
SMBC Securities, Inc.
U.S.A.
U.S.A.
SMBC Financial Services, Inc.
U.S.A.
SMBC Cayman LC Limited*2
Cayman Islands
US$1,620
US$100
US$100
US$3 million
US$500
Sumitomo Finance (Asia) Limited
Cayman Islands
US$35 million
SBTC, Inc.
U.S.A.
US$50 million
SB Treasury Company L.L.C.
U.S.A.
US$470 million
SB Equity Securities (Cayman),
Limited
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$334.691 million
SMBC Capital Partners LLC
U.S.A.
US$10,000
SMBC MVI SPC
Cayman Islands
US$195 million
SMBC DIP Limited
Cayman Islands
US$8 million
SMBC Capital Markets Limited
SMBC Derivative Products
Limited
SMBC Capital India Private
Limited
Sumitomo Mitsui Finance Dublin
Limited
U.K.
U.K.
India
US$797 million
US$300 million
Rs400 million
Ireland
US$18 million
Sakura Finance Asia Limited
Hong Kong
US$65.5 million
Sumitomo Mitsui Finance
Australia Limited
SMFG Preferred Capital USD 1
Limited
Australia
A$156.5 million
Cayman Islands
US$1,650.35 million
100
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(100)
89.69
(7.69)
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
Jul. 30, 1997
Investments
Feb. 11, 1991
Finance
Nov. 12, 1998
Finance
Jun. 25, 1990
Finance
(100)
0
(100)
Apr. 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)
Apr. 18, 1995
Derivatives and investments
(100)
99.99
(0.01)
Apr. 3, 2008
Advisory services
(100)
(100)
(100)
100
100
100
—
Sept. 19, 1989
Finance
Oct. 17, 1977
Investments
Jun. 29, 1984
Investments
Nov. 28, 2006
Finance
SMFG 2009 201
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 USD 2
Limited
SMFG Preferred Capital GBP 2
Limited
SMFG Preferred Capital JPY 1
Limited
SMFG Preferred Capital USD 3
Limited
SMFG Preferred Capital JPY 2
Limited
SMBC Preferred Capital USD 1
Limited
SMBC Preferred Capital GBP 1
Limited
SMBC Preferred Capital USD 2
Limited
SMBC Preferred Capital GBP 2
Limited
SMBC Preferred Capital JPY 1
Limited
SMBC Preferred Capital USD 3
Limited
SMBC Preferred Capital JPY 2
Limited
■ Principal Affiliates
Company Name
Cayman Islands
£500.1 million
100
Cayman Islands
US$1,800 million
Cayman Islands
£250 million
Cayman Islands
¥135,000 million
Cayman Islands
US$1,350 million
Cayman Islands
¥698,900 million
Cayman Islands
US$1,664 million
Cayman Islands
£505 million
Cayman Islands
US$1,811 million
Cayman Islands
£251.5 million
Cayman Islands
¥137,000 million
Cayman Islands
US$1,358 million
Cayman Islands
¥706,500 million
100
100
100
100
100
0
0
0
0
0
0
0
(100)
(100)
(100)
(100)
(100)
(100)
(100)
—
—
—
—
—
—
100
100
100
100
100
100
100
Nov. 28, 2006
Finance
Oct. 25, 2007
Finance
Oct. 25, 2007
Finance
Jan. 11, 2008
Finance
Jul. 8, 2008
Finance
Nov. 3, 2008
Finance
Nov. 28, 2006
Finance
Nov. 28, 2006
Finance
Oct. 25, 2007
Finance
Oct. 25, 2007
Finance
Jan. 11, 2008
Finance
Jul. 8, 2008
Finance
Nov. 19, 2008
Finance
Issued Capital
(Millions of Yen)
Percentage of
SMFG’s Voting
Rights (%)
Percentage of
SMBC’s Voting
Rights (%)
Established
Main Business
Daiwa Securities SMBC Co. Ltd.
255,700
40
—
Feb. 5, 1999
Securities
Daiwa SMBC Capital Co., Ltd.
18,767
0
(40.18)
40.18
Oct. 20, 1983
Venture capital
Daiwa Securities SMBC Principal
Investments Co., Ltd.
Daiwa SB Investments Ltd.
Sumitomo Mitsui Asset Management
Company, Limited
JSOL Corporation
Sakura Information Systems Co., Ltd.
1,200
0
(100)
2,000
43.96
—
—
Oct. 1, 2001
Investments, fund management
Apr. 1, 1999
Investment advisory and investment trust
management
2,000
5,000
600
(27.5)
27.5
Dec. 1, 2002
Investment advisory and investment trust
management
(50)
(49)
—
49
Jul. 3, 2006
System engineering and data processing
Nov. 29, 1972
System engineering and data processing
(15.07)
15.07
May 24, 1989
Commercial banking
0
0
0
0
Vietnam Export Import Commercial Joint Stock
Bank
VND7,219.999
billion
Promise Co., Ltd.
At-Loan Co., Ltd.
SANYO SHINPAN FINANCE CO., LTD.
POCKET CARD Co., LTD.
Central Finance Co., Ltd.*1
OMC Card, Inc.*1
80,737
0
(22.02)
22.02
Mar. 20, 1962
Consumer loans
10,912
16,268
0
0
(100)
49.99
(50.00)
Jun. 8, 2000
Consumer loans
(100)
0
(100)
Nov. 22, 1946
Consumer loans
11,268
0
(47.02)
4.99
(42.02)
May 25, 1982
Credit card services
23,254
0
(24.73)
51,343
0
(48.81)
—
—
Jan. 28, 1960
Credit card services
Sept. 11, 1950
Credit card services
Sumitomo Mitsui Auto Service Company,
Limited
*1 Central Finance Co., Ltd., OMC Card, Inc. and QUOQ Inc. merged to form a new SMFG affiliate, Cedyna Financial Corporation, on April 1, 2009.
*2 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
Feb. 21, 1981
Leasing
6,950
39.99
—
prior to the claims of SMBC, as the direct or indirect holder of the equity in such subsidiary.
202
SMFG 2009
International Directory (as of June 30, 2009)
Asia and Oceania
SMBC Branches and
Representative Offices
Hong Kong Branch
7th & 8th Floor, One International
Finance Centre, 1 Harbour View
Street, Central, Hong Kong
Special Administrative Region,
The People’s Republic of China
Tel: 852 (2206) 2000
Fax: 852 (2206) 2888
Shanghai Branch
11F, Shanghai World Financial
Center, 100 Century Avenue,
Pudong New Area, Shanghai
200120, The People’s Republic of
China
Tel: 86 (21) 3860-9000
Fax: 86 (21) 3860-9999
Dalian Representative Office
Senmao Building 9F, 147
Zhongshan Lu, Dalian 116011,
The People’s Republic of China
Tel: 86 (411) 8370-7873
Fax: 86 (411) 8370-7761
Chongqing Representative Office
27F, Metropolitan Tower, 68
Zourong Road, Yuzhong District,
Chongqing 400010, 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
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,
Taiwan
Tel: 886-2-2720-8100
Fax: 886-2-2720-8287
Seoul Branch
Young Poong Bldg. 7F, 33,
Seorin-dong, Jongno-gu,
Seoul, 110-752, Korea
Tel: 82-2-732-1801
Fax: 82-2-399-6330
Singapore Branch
3 Temasek Avenue #06-01,
Centennial Tower, Singapore
039190, The Republic of
Singapore
Tel: 65-6882-0001
Fax: 65-6887-0330
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
Ho Chi Minh City Branch
9th Floor, The Landmark,
5B Ton Duc Thang Street,
District 1, Ho Chi Minh City,
Vietnam
Tel: 84 (8) 3520-2525
Fax: 84 (8) 3822-7762
Hanoi Branch
1105, 11th Floor, Pacific Place
Building, 83B Ly Thuong Kiet
Street, Hanoi, Vietnam
Tel: 84 (4) 3946-1100
Fax: 84 (4) 3946-1133
Yangon Representative Office
Room Number 717/718, 7th Floor,
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
SMFG 2009 203
SMBC Principal Subsidiaries/
Affiliates
SMFG Network
Sumitomo Mitsui Banking
Corporation (China) Limited
Head Office (Shanghai)
11F, Shanghai World Financial
Center, 100 Century Avenue,
Pudong New Area, Shanghai
200120, The People’s Republic of
China
Tel: 86 (21) 3860-9000
Fax: 86 (21) 3860-9999
Sumitomo Mitsui Banking
Corporation (China) Limited
Beijing Branch
Unit1601,16F, North Tower,
Beijing Kerry Centre, No.1, Guang
Hua Road, Chao Yang District,
Beijing 100020, The People’s
Republic of China
Tel: 86 (10) 5920-4500
Fax: 86 (10) 5915-1080
Sumitomo Mitsui Banking
Corporation (China) Limited
Tianjin Branch
12F, 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
Sumitomo Mitsui Banking
Corporation (China) Limited
Tianjin Binhai Sub-Branch
8F, E2B, Binhai Financial Street,
No. 20, Guangchang East Road,
TEDA, Tianjin 300457, The
People’s Republic of China
Tel: 86 (22) 6622-6677
Fax: 86 (22) 6628-1333
Sumitomo Mitsui Banking
Corporation (China) Limited
Guangzhou Branch
12F, 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
Sumitomo Mitsui Banking
Corporation (China) Limited
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
Sumitomo Mitsui Banking
Corporation (China) Limited
Suzhou Industrial Park
Sub-Branch
16F, International Building, No. 2,
Suhua Road, Suzhou Industrial
Park, Jiangsu Province 215021,
The People’s Republic of China
Tel: 86 (512) 6288-5018
Fax: 86 (512) 6288-5028
Sumitomo Mitsui Banking
Corporation (China) Limited
Hangzhou Branch
23F, Golden Plaza, No.118, Qing
Chun Road, Xia Cheng District,
Hangzhou, Zhejiang 310003,
The People’s Republic of China
Tel: 86 (571) 2889-1111
Fax: 86 (571) 2889-6699
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
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
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 Metro Investment
Corporation
20th Floor, Rufino Pacific Tower,
6784 Ayala Avenue, Makati City,
Metro Manila, The Philippines
Tel: 63-2-8110845
Fax: 63-2-8110876
204
SMFG 2009
Vietnam Export Import
Commercial Joint Stock Bank
7 Le Thi Hong Gam Street,
Nguyen Thai Binh Ward, District
1, Ho Chi Minh City, Vietnam
Tel: 84 (8) 3821-0055
Fax: 84 (8) 3829-6063
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
BSL Leasing Co., Ltd.
19th Floor, Sathorn City Tower,
175 South Sathorn Road,
Bangkok, Thailand
Tel: 66 (2) 670-4700
Fax: 66 (2) 679-6160
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) 5054-1677
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
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
Sumitomo Mitsui Finance and
Leasing (China) Co., Ltd.
Shanghai Branch
Unit 2301-2303,Lippo Plaza,
222 Middle Huaihai Road,
Luwan District, Shanghai, 200021
The People’s Republic of China
Tel: 86(21)5396-5522
Fax: 86(21)5396-5552
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
SMFG 2009 205
SMBC Principal Subsidiaries/
Affiliates
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, Suite 1400,
P.O. Box 172, Toronto Dominion
Centre, Toronto, Ontario M5K
1H6, Canada
Tel: 1 (416) 368-4766
Fax: 1 (416) 367-3565
Banco Sumitomo Mitsui Brasileiro
S.A.
Avenida Paulista, 37-11 e 12
andar, Sao Paulo-SP-CEP 01311-
902, 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
JRI America, Inc.
277 Park Avenue, New York,
NY 10172, U.S.A.
Tel: 1 (212) 224-4200
Fax: 1 (212) 224-4611
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, PO Box 506559
Dubai, United Arab Emirates
Tel: 971 (4) 428-8000
Fax: 971 (4) 428-8001
Madrid Representative Office
Villanueva, 12-1. B, 28001 Madrid,
Spain
Tel: 34 (91) 576-6196
Fax: 34 (91) 577-7525
(Premises relocated on August 7, 2009)
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
Fax: 420-224-832-933
The 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, Texas
77002, U.S.A.
Tel: 1 (713) 277-3500
Fax: 1 (713) 277-3555
Mexico City Representative Office
Torre Altiva Boulevard Manuel
Avila Camacho 138 Piso 2, Loc. B
Lomas de Chapultepec, 11000
Mexico, D.F.
Tel: 52 (55) 2623-0200
Fax: 52 (55) 2623-1375
206
SMFG 2009
ZAO Sumitomo Mitsui Rus Bank
Krasnopresnenskaya
naberezhnaya 18, block C,
20th Floor, Moscow 123317,
Russian Federation
(Operations scheduled to commence
during 2009)
Sumitomo Mitsui Finance Dublin
Limited
La Touche House, I.F.S.C.,
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
SMFL Aircraft Capital Corporation
B.V.
World Trade Center Amsterdam,
Strawinskylaan 907,
1077 XX Amsterdam,
The Netherlands
Tel: 31-20-575-2570
Fax: 31-20-575-2571
Bahrain Representative Office
No. 406 & 407 (Entrance 3, 4th
Floor) Manama Centre,
Government Road, Manama,
State of Bahrain
Tel: 973-17223211
Fax: 973-17224424
Tehran Representative Office
4th Floor, 80 Nezami Gangavi
Street, Vali-e-Asr Avenue, Tehran
14348, Islamic Republic of Iran
Tel: 98 (21) 8879-4586/4569
Fax: 98 (21) 8820-6523
Doha QFC Office
Office 1901, 19th Floor, Qatar
Financial Centre Tower,
Diplomatic Area-West bay, Doha,
Qatar, P.O. Box 23769
Tel: 974-496-7572
Fax: 974-496-7576
Cairo Representative Office
Flat No. 6 of the 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 Rivonia Road, Sandhurst,
Sandton 2196, South Africa
Tel: 27 (11) 502-1780
Fax: 27 (11) 502-1790
SMBC Principal Subsidiaries/
Affiliates
SMFG Network
Sumitomo Mitsui Banking
Corporation Europe Limited
Head Office
99 Queen Victoria Street, London
EC4V 4EH, U.K.
Tel: 44 (20) 7786-1000
Fax: 44 (20) 7236-0049
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 (02) 7636-1700
Fax: 39 (02) 7636-1701
Sumitomo Mitsui Banking
Corporation Europe Limited
Moscow Representative Office
Room Number 305, Building 5,
Ilyinka St. 3/8 Moscow, 109012
Russian Federation
Tel: 7 (495) 789-3973
Fax: 7 (495) 789-3975
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
SMFG 2009 207
**SMBCE:Sumitomo Mitsui Banking Corporation Europe Limited
Sumitomo Mitsui Finance Dublin Limited
Sumitomo Mitsui
Banking Corporation
Europe Limited
SMBC Capital
Markets Limited
SMBCE** Paris Branch
Madrid Representative Office
SMBC Amsterdam
Representative Office
Brussels Branch
SMBCE**
Moscow Representative Office
ZAO Sumitomo Mitsui Rus Bank
Prague Representative Office
Düsseldorf Branch
SMBCE** Milan Branch
Tehran Representative Office
Cairo Representative Office
Bahrain Representative Office
Dubai Branch
Doha QFC Office
SMBC Capital India
Private Limited
Johannesburg Representative Office
GLOBAL NETWORK
Sumitomo Mitsui Finance Australia Limited
Sydney Branch
Asia and Oceania
■ Sumitomo Mitsui Banking Corporation (China) Limited
■ Sumitomo Mitsui Banking Corporation (China) Limited
■ Labuan Branch Kuala Lumpur Marketing Office
Head Office (Shanghai)
■ Sumitomo Mitsui Banking Corporation (China) Limited
Tianjin Branch
■ Sumitomo Mitsui Banking Corporation (China) Limited
Guangzhou Branch
■ Sumitomo Mitsui Banking Corporation (China) Limited
Suzhou Branch
■ Sumitomo Mitsui Banking Corporation (China) Limited
Hangzhou Branch
■ Sumitomo Mitsui Banking Corporation (China) Limited
Beijing Branch
■ Sumitomo Mitsui Banking Corporation (China) Limited
Tianjin Binhai Sub-Branch
Suzhou Industrial Park Sub-Branch
■ Shanghai Branch
■ Dalian Representative Office
■ Chongqing Representative Office
■ Shenyang Representative Office
■ Hong Kong Branch
SMBC Capital Markets Limited Hong Kong Branch
■ Taipei Branch
■ Seoul Branch
■ Singapore Branch
■ Labuan Branch
Kuala Lumpur Representative Office
■ Ho Chi Minh City Branch
■ Hanoi Branch
■ Vietnam Export Import Commercial Joint Stock Bank
■ Yangon Representative Office
■ Bangkok Branch
■ Manila Representative Office
SMBC Metro Investment Corporation
■ Sydney Branch
Sumitomo Mitsui Finance Australia Limited
■ PT Bank Sumitomo Mitsui Indonesia
■ SMBC Capital India Private Limited
208
SMFG 2009
Overseas service network (as of June 30, 2009)
Branches*: 15 Sub-Branches*: 5
Representative Offices: 14 Total: 34
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
Manufacturers Bank
Sumitomo Mitsui Banking Corporation of Canada
New York Branch
SMBC Capital Markets, Inc.
SMBC Leasing and Finance, Inc.
SMBC Securities, Inc.
Tianjin Branch
Tianjin Binhai Sub-Branch
Dalian
Representative
Office
Seoul
Branch
Suzhou Branch
Suzhou Industrial Park Sub-Branch
Head Office (Shanghai)
Shanghai Branch
Chongqing
Representative Office
Hanoi Branch
Hangzhou
Branch
Guangzhou
Branch
Taipei Branch
Houston Representative Office
Mexico City
Representative Office
Cayman Branch
Yangon Representative Office
Hong Kong Branch
SMBC Capital Markets Limited
Hong Kong Branch
Bangkok Branch
Manila Representative Office
SMBC Metro Investment Corp.
Labuan Branch
Kuala Lumpur Marketing Office
Kuala Lumpur Representative Office
Ho Chi Minh City Branch
Vietnam Export Import
Commercial Joint Stock Bank
Labuan Branch
Singapore Branch
PT Bank Sumitomo Mitsui Indonesia
Banco Sumitomo Mitsui Brasileiro S.A.
Indicates branch or sub-branch of
Sumitomo Mitsui Banking Corporation (China) Limited
The Americas
Europe, Middle East and Africa
■ New York Branch
■ Sumitomo Mitsui Banking Corporation
■ Sumitomo Mitsui Banking Corporation
SMBC Capital Markets, Inc.
SMBC Leasing and Finance, Inc.
SMBC Securities, Inc.
■ Los Angeles Branch*
■ San Francisco Branch*
■ Houston Representative Office*
■ Mexico City Representative Office*
■ Cayman Branch
■ Manufacturers Bank
■ Sumitomo Mitsui Banking Corporation of
Canada
■ Banco Sumitomo Mitsui Brasileiro S.A.
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
■ ZAO Sumitomo Mitsui Rus Bank
(Operations scheduled to commence during 2009)
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 2009 209
SpiritofInnovationWeLEADthemarketbyprovidinginnovative,globallycompetitiveservicesthatmeetcustomerneeds.Solution&ExecutionWeLEADthebusinessbyusingalltheknowledgeandexperiencesofourgrouptosolvetheissuesofourcustomers,whetherindividualsorcorporates,identifiedthroughadeepunderstandingoftheirneedsandfinancialsituationsSpeedWeLEADthepacebyprovidingourcustomerswithdesirableservicesinatimelymannerwithspeedanddetermination.Theseactivitiesaresupportedbyourthreecorestrengths:WecreatenewVALUEbyformingteamsofspecialistsinvariousfieldsandprovidingoptimalservicestoourcustomersthroughtwo-waycommunication.Asaresult,wewillbeselectedasatrulytrustedpartner. SpiritofInnovationWeLEADthemarketbyprovidinginnovative,globallycompetitiveservicesthatmeetcustomerneeds.Solution&ExecutionWeLEADthebusinessbyusingalltheknowledgeandexperiencesofourgrouptosolvetheissuesofourcustomers,whetherindividualsorcorporates,identifiedthroughadeepunderstandingoftheirneedsandfinancialsituationsSpeedWeLEADthepacebyprovidingourcustomerswithdesirableservicesinatimelymannerwithspeedanddetermination.Theseactivitiesaresupportedbyourthreecorestrengths:WecreatenewVALUEbyformingteamsofspecialistsinvariousfieldsandprovidingoptimalservicestoourcustomersthroughtwo-waycommunication.Asaresult,wewillbeselectedasatrulytrustedpartner. www.smfg.co.jp/english
Printed in Japan
2009
Continue reading text version or see original annual report in PDF
format above