Sumitomo Mitsui Financial Group Inc Annual Report 2010

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FY2010 Annual Report · Sumitomo Mitsui Financial Group Inc

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ANNUAL REPORT

2010

YEAR ENDED MARCH 31, 2010

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Aiming to become a globally competitive financial
services group with the highest trust

We are a group of highly qualified professionals

that can provide truly valuable financial services to our customers.

Each of us thinks and acts with pride as experts in each business area

in order to LEAD the competition in creating and delivering

customer VALUE in a continually changing business environment.

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.

CONTENTS

(cid:129)Message from the Management .............................. 2
(cid:129)Business Overview .................................................. 10

Consumer Banking ................................................................. 10

Corporate Banking.................................................................. 12

Services for High Networth Individuals,

Business Owners and Employees ....................................... 14

Investment Banking ................................................................ 15

International Banking .............................................................. 16

Treasury Markets .................................................................... 17

and Quality ........................................................... 51

(cid:129)Group Companies ................................................... 18
(cid:129)Financial Highlights ................................................. 21
(cid:129)Financial Review ...................................................... 25
(cid:129)Risk Management .................................................... 34
(cid:129)Corporate Social Responsibility (CSR) .................... 50
(cid:129)Initiatives for Enhancing Customer Satisfaction (CS)
(cid:129)Corporate Governance ............................................ 52
(cid:129)Internal Audit System .............................................. 53
(cid:129)Compliance ............................................................. 54
(cid:129)Environmental Preservation Initiatives ..................... 56
(cid:129)Social Contribution Activities ................................... 60
(cid:129)Human Resources ................................................... 64
(cid:129)Financial Section and Corporate Data .................... 69

Financial Section..................................................................... 69

Corporate Data ....................................................................... 205

Sumitomo Mitsui Financial Group, Inc.
Public Relations Department

September 2010

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

Notice of Address Change

The head offices of Sumitomo Mitsui Financial Group, Inc.
and Sumitomo Mitsui Banking Corporation will move to the
following addresses on October 18, 2010.

Sumitomo Mitsui Financial Group, Inc.
Public Relations Department

1-2, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-0005, Japan
TEL: +81-3-3282-8111

Sumitomo Mitsui Banking Corporation
Public Relations Department

1-2, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-0005, Japan
TEL: +81-3-3282-1111

SMFG 2010 1

These activities are supported by our three core strengths:

Spirit of Innovation

We LEAD the market by
providing innovative,
globally competitive services
that meet customer needs.

Solution &
Execution

We LEAD the business by using all
the knowledge and experiences of
our group to solve the issues of our
customers, whether individuals
or corporates, identified through a
deep understanding of their needs

and financial situations.

Speed

We LEAD the pace by
providing our customers
with desirable services in a
timely manner with speed
and determination.

We create new VALUE by forming teams of

specialists in various fields and providing optimal services to

our customers through two-way communication.

As a result, we will be selected as a truly trusted partner.

Message from the Management

We would like to thank you for your continued support and patronage. In this annual report, we review the

initiatives implemented in fiscal 2009, ended March 31, 2010, and explain our management policies for fiscal

2010.

Principal Initiatives in Fiscal 2009

policy of increasing dividends stably and continuously through

sustainable growth in enterprise value and achieving a dividend

Having designated fiscal 2009 as the year for “establishing the

payout ratio of over 20% on a consolidated net income basis. As

next foundation for future growth, while continuing to strengthen

SMFG recorded consolidated net income in fiscal 2009 versus

business consistent with our philosophy of ‘Follow the Basics,’”

consolidated net loss of the previous fiscal year and the amount

we have been implementing initiatives to control expenses, credit

was higher than the forecast announced in November 2009, we

costs and risk-adjusted assets in the core operation of our group

have decided to increase the annual dividend for common shares

companies. Additionally, to achieve growth over the medium and

by ¥10 to ¥100 per share.

long term, we continued to focus on two strategic initiatives: “real-

Regarding our medium-term management plan, or “LEAD

izing a solid financial base as a global player” and “strengthening

THE VALUE” plan that ended in March 2010, the macroeco-

targeted growth business areas.”

nomic reality has diverged substantially from the plan’s original

Specifically, at SMBC we reinforced our efforts to reduce

assumptions, particularly since fiscal 2008, amid increasingly

expenses during fiscal 2009, and kept the overhead ratio to

uncertain business environment in domestic and overseas mar-

below 50%. We also took measures to reduce credit costs mainly

kets. Accordingly, we were unable to attain the originally targeted

through measures tailored to the business circumstances of our

level of earnings for fiscal 2009. We, however, have been making

corporate borrowers. SMFG took steps to strengthen its capital

steady progress in realizing the strategic initiatives – strengthen-

base during fiscal 2009, principally through a common equity

ing targeted growth business areas, and fortifying platforms to

offering totaling ¥861.0 billion completed in July 2009, followed

support sustainable growth.

by another offering totaling ¥973.0 billion completed in February

2010. Consequently, our consolidated Tier I ratio at the end of

March 2010 was 11.15%, an increase of 2.93% compared with

the end of March 2009. In addition, in October 2009 we laid the

foundation for the next stage of strong growth by consolidating

Nikko Cordial Securities into the Group as a wholly-owned subsid-

iary of SMBC.

As a result of these initiatives, consolidated ordinary profit

for fiscal 2009 was ¥558.7 billion, a year-on-year increase of

¥513.4 billion, while consolidated net income also increased, by

¥645.0 billion year on year, to ¥271.5 billion. In view of the public

nature of our business, while enhancing the Group’s capital to

maintain a sound financial position, we have set a fundamental

Teisuke Kitayama
President

Sumitomo Mitsui
Financial Group, Inc.

Management Policies in Fiscal 2010

The business environment surrounding financial institutions is

changing greatly amid the global discussion about financial regu-

latory and supervisory reform to prevent another financial crisis.

Under these circumstances, we have designated our manage-

ment policies for fiscal 2010 as 1) “forward looking” - transforming

our business model to grow steadily under a new regulatory and

competitive environment and 2) emphasizing return on risks and

costs, in order to improve asset quality and thoroughly control

expenses and credit costs, so as to secure a resilient capital

base and reinforce our business portfolio to achieve sustainable

growth.

(1) Securing a resilient capital base

During fiscal 2009 we took steps to establish a resilient capital

base through the issuance of new shares, among other measures.

Moving forward, our focus will shift to steps such as reducing

stock price fluctuation risks associated with our stockholdings,

and building up retained earnings by reinforcing a business port-

folio to achieve sustainable growth. Through these measures, we

aim to maintain over around 10% of consolidated Tier I ratio.

Meanwhile, as a result of the common equity offerings exe-

cuted during fiscal 2009, the number of SMFG’s ordinary shares

issued reached approximately 1.4 billion shares, or more than

90% of the authorized ordinary shares of 1.5 billion stipulated

in SMFG’s Articles of Incorporation. We believe that securing

strategic flexibility, which will enable us to further strengthen

our targeted growth business areas, is essential to enhancing

SMFG’s medium- to long-term enterprise value. For this reason,

SMFG 2010

at the ordinary general shareholders meeting held in June 2010,

Overseas operations, centered on Asia

we proposed and received approval to increase the number of

Regarding SMFG’s operations in the Asia-Pacific region, in May

authorized ordinary shares to 3.0 billion.

2010 we established the Financial Products Marketing Dept.,

which has taken charge of certain functions hitherto performed

by the representative offices of individual departments of SMBC’s

Investment Banking Unit. This is part of our efforts to offer fast

and appropriate solutions to customers whose financial needs

are becoming more diversified and sophisticated. Regarding

our operations in China, in April 2009 we established Sumitomo

Mitsui Banking Corporation (China) Limited to facilitate even more

closely tailored individual solutions for customers who operate

globally. With effect from April 2010, the responsibility for planning

and management of business with Japanese corporate custom-

ers was transferred from the Planning Dept., International Banking

Unit, to the Planning Dept., Corporate Banking Unit & Middle

Market Banking Unit. This change allows us to offer seamless

services both inside and outside Japan. In addition, in June 2010,

we received permission to establish a subsidiary in Malaysia, and

preparation is currently underway for its establishment in the first

half of 2011. As well as expanding our network of business base

in this way, we have also formed alliances with leading banks

in Asia to enable us to offer even higher value-added services.

These banks include Kookmin Bank in Korea, First Commercial

Bank in Taiwan, Eximbank in Vietnam, The Bank of East Asia in

Hong Kong, Bank Central Asia in Indonesia, and Kotak Mahindra

Bank in India.

In European and American markets, we will continue to bol-

ster our competitive-edge products, including project finance.

Through a business alliance with a South African subsidiary of the

major British financial institution Barclays PLC, we are strengthen-

ing our ability to provide services to Japanese companies operat-

ing in South Africa.

Masayuki Oku
President

Sumitomo Mitsui
Banking Corporation

(2) Reinforcing our business portfolio to

achieve sustainable growth

We will focus on targeted growth business areas to pursue profit-

ability, as well as review current businesses to fortify the bottom-

line profit. At the same time, we will further enhance customer

responsiveness by leveraging advisory functions and increase

productivity by improving business processes.
● Fortify bottom-line profit by reviewing current

businesses

Facilitating financing to customers in an appropriate and proac-

tive manner is one of our management priorities.

SMBC has always worked hard on delivering optimal products

and services to customers based on a thorough understanding of

their needs and issues. Further, pursuant to the “Act concerning

Temporary Measures to Facilitate Financing for SMEs, etc.,” which

took effect in December 2009, we are enhancing our capability to

meet their needs, including establishing consulting desks for

SMEs and retail customers to address their financing concerns.

In addition to meeting customers’ financing needs, we will

continue to control and reduce credit costs and expenses and

rebalance our asset portfolio for more growth and profitability

in order to improve the risk-return profile and fortify bottom-line

profit.

The economic situation in Europe remains uncertain, but our

credit exposure in Portugal, Italy, Ireland, Greece, and Spain as

of March 31, 2010 totaled approximately ¥300 billion and was

mainly to large corporations and project-finance related. In the

case of Greece, where the economic situation is a particularly

serious cause for concern, the amount of exposure is not so large

and is mostly secured by collateral. We therefore believe that the

associated risks from this source are limited.
● Pursue profitability by focusing on targeted

growth business areas

Nikko Cordial Securities

Nikko Cordial Securities in March 2010 drew up a three-year

medium-term management plan, up to the end of fiscal 2012,

with a prospect of “becoming a No. 1 general securities company

in Japan, which is excellent both in quality and in quantity and

globally competitive.” Maintaining a low-cost operation using

IT, Nikko Cordial Securities aims for sustainable expansion of

its businesses centered on the retail business, and creation of

new businesses centered on the wholesale business. It has

also adopted an active stance on employment of personnel and

enhancement of personnel development programs, while increas-

ing system investment and improving the organizational structure

of the head office in response to the full-line business operation.

SMFG 2010 3

We also take into account the discussions being held on the

to further raise our profile in Japan’s evolving consumer finance

introduction of liquidity standards, and are taking steps to ensure

more stable funding and investment in foreign currencies.

Payment & settlement services, and Consumer finance

In the credit card business, we have established a two-company

system within the Group, centered on Sumitomo Mitsui Card and

Cedyna. Our aim is to become “the number one credit card busi-

ness 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.

Cedyna is now implementing initiatives for investment in

new businesses and system development to increase enterprise

value and speed up cost restructuring. To accelerate such initia-

tives, and to further clarify the positioning of Cedyna as one of

the Group’s core business entities in the credit card business

and enhance Cedyna’s capital base, the intermediate holding

company SMFG Card & Credit acquired new shares issued by

Cedyna through a third-party allotment in May 2010.

In the consumer finance business, our goal is to create an

even better foundation for meeting the sound financing needs of

individual consumers, capitalizing on strategic alliances of Group

companies to capture market share and thereby become more

efficient. As part of this strategy, ORIX Credit Corporation became

a consolidated subsidiary of SMBC in July 2009. In March 2010

market and target an even broader array of customer needs.
● Further enhance customer responsiveness by

leveraging advisory functions

Solution providing for corporations, investment banking and
trust businesses

We remain strongly committed to delivering to our corporate

clients high-quality solutions that precisely target a broad range

of management issues. Specifically, SMBC has three special-

ized departments, Corporate Advisory Division, Private Advisory

Department and Global Advisory Department, that operate cross-

sectionally across business segments — consumer, corporate

and overseas. This structure facilitates the pooling among these

departments of “V-KIP” — value, knowledge, information and

profits. As a result, we can deliver more tailored support to corpo-

rate clients and upgrade our ability to provide solutions. Sumitomo

Mitsui Finance and Leasing is engaged in aircraft operating lease

business, one of the strategic joint businesses in leasing with

Sumitomo Corporation, as well as a variety of other leasing ser-

vices that offer financial and sales solutions for both users and

suppliers. In addition, Japan Research Institute offers a lineup of

high value-added services by continuously strengthening services

that range from consulting for managerial innovation and IT utiliza-

tion to the planning and creation of strategic IT systems.

we reviewed the consumer finance business model, which we

Financial consulting for individuals

call “cascade strategy,” jointly operated by SMBC, Promise and

Our aim is to harness the total capabilities of the Group to estab-

At-Loan, and the three companies reached a basic agreement on

lish SMBC as the leading bank in the field of full-line personal

the absorption-type merger between Promise and At-Loan with

financial services for individuals. To this end, we are working to

Promise as the surviving company. Through these moves, we aim

realize even higher levels of customer convenience, principally

Management policy under the new financial regime

New financial regime

Our strategy

Benchmark targets

Basel Committee
“Consultative proposal
to strengthen the resilience
of the banking sector”

Reorganization in
global financial
industry /
Rebuilding
business model

Securing a
resilient capital base

Reinforcing business
portfolio to achieve
sustainable growth

Maintain over
around 10% of
consolidated
Tier I ratio

Target around
10% of
consolidated
ROE in the
medium term

SMFG 2010

by reinforcing our online financial services. We also continue to

Concerning SMFG’s listing on the New York Stock Exchange,

strive to realize “total consulting services” which offers customers

we aim to build a framework that will greatly accelerate our drive

a wide range of one-stop financial services to meet diversifying

to develop our business as a global player. Expanding and diver-

financial needs of individual customers. For example, in August

sifying our investor base by securing access to the world’s largest

2009, all branches of SMBC started selling level-premium insur-

securities market is a key piece of the framework and, to this

ances, and after making Nikko Cordial Securities SMBC’s wholly-

end, we are pursuing further financial transparency and greater

owned subsidiary in October 2009, through cooperation with

convenience for investors. We are currently making final-stage

Nikko Cordial Securities, we have commenced a range of new

preparations for listing on the NYSE within fiscal 2010.

services including the sale of jointly developed investment trusts,

joint seminars and financial instruments intermediary service for

individuals. In May 2010 we also began handling single-premium

type variable permanent life insurances jointly developed with

Nikko Cordial Securities.

Fiscal 2010 Outlook and Policies
Going Forward

In June 2010 SMBC, Nikko Cordial Securities, and Barclays

Outlook for fiscal 2010

PLC reached an agreement to commence joint operation in

private banking in Japan. Individual customers of SMBC will

be introduced to “SMBC Barclays Wealth Division,” which has

been set up within Nikko Cordial Securities. The Division will offer

investment solutions making use of unique strengths and the

know-how of Barclays Wealth, which is a leading global wealth

manager and a division of Barclays.

We are pursuing still closer collaboration between SMFG’s

banking and securities businesses in the field of financial services

for individuals, in order to offer a wider lineup of products and

services. For this purpose, in addition to the start of the finan-

cial instruments intermediary service for individuals by SMBC

and Nikko Cordial Securities, by the end of January 2011 Nikko

Cordial Securities will take over the services for individuals cur-

rently being offered by SMBC Friend Securities in collaboration

with SMBC. Meanwhile, with the goal of increasing the number

of customers using the services of SMBC Friend Securities, we

are expanding the company’s product lineup and diversifying

its information dissemination channels by holding investment

seminars, among other measures.
● Further increase productivity by improving

business processes

We aim to maintain SMBC’s non-consolidated overhead ratio at

below 50%. We will do this by prioritizing expenses based on

size, timing, and effectiveness and adopt a stronger focus on our

targeted growth business areas in the allocation of the expenses

budget, while taking measures to raise operational efficiency.

These measures will be implemented in tandem with our

constant efforts to thoroughly comply with laws and regulations

both within and outside Japan and create a strong compliance

system. Specifically, SMBC aims to ensure consumer protection

by enhancing its framework for explaining financial products and

services to its customers. SMBC is also taking measures to miti-

gate potential conflicts of interest and avoid all transactions with

anti-social forces, and is pressing forward with the reinforcement

of its system for the prevention of money laundering.

With regard to customer satisfaction and the enhancement of

service quality, we intend to create a stronger system for ensur-

ing that customers’ requests are reflected in our management

decisions.

We expect consolidated ordinary profit of ¥690 billion, a year-

on-year increase of ¥131.3 billion and consolidated net income

of ¥340 billion, a ¥68.5 billion increase from the previous fiscal

year. This is based mainly on an increase in profit at SMBC and a

steady recovery in earnings of certain subsidiaries and affiliates.

We are planning an annual dividend of ¥100 per share of common

stock, the same level as the previous fiscal year, and half of the

amount (¥50 per share) will be paid as an interim dividend.

Dedicated to medium- to long-term growth in enterprise value

The business environment of financial institutions is changing

radically as regulators discuss the global reform of financial

regulations in order to prevent another financial crisis, but our

basic policy remains unchanged, namely, to become a “globally

competitive financial services group with the highest trust” by

maximizing our strengths of “Spirit of Innovation,” “Speed” and

“Solution & Execution.” While securing a resilient capital base,

we look forward, anticipate future changes and steadily transform

our business model. Through such means, we aim for sustainable

growth in enterprise value in order to meet the expectations of our

stakeholders. We ask for your support and understanding as we

endeavor to achieve these goals.

September 2010

Teisuke Kitayama
President
Sumitomo Mitsui
Financial Group, Inc.

Masayuki Oku
President
Sumitomo Mitsui
Banking Corporation

SMFG 2010 5

Supplementary Information

Key Achievements in Fiscal 2009

Management policy for fiscal 2009

“Establishing the next foundation for future growth, while continuing to strengthen businesses consistent
with our philosophy of ‘Follow the Basics’”

Managing expenses & credit costs

Realizing a solid capital base as a global player

Overhead ratio

SMBC non-consolidated

Controlled below
50%

YOY change
+1.1%

47.1%

Total credit cost

SMBC non-consolidated

Substantially
reduced

YOY change
+ ¥295.4 billion

¥(254.7) billion

●

Raised common equity (¥1.8 trillion in total)

Repurchased hybrid securities (¥293 billion in total)

Conversion of preferred shares held by Goldman Sachs into common equity

Tier I ratio

Achieved
targeted level

Compared with
Mar. 09
+2.93%

SMFG consolidated

11.15%

Steady income growth

Initiatives to fortify targeted growth business areas

Net income

Increased

YOY change
+ JPY 645.0 bn
Compared with Nov. 09
forecast + ¥51.6 billion

SMFG consolidated

¥271.6 billion
[Consolidated ROE:7.5%]

Dividend for common share

Increased

YOY change
+ ¥10 / share

¥100 / share

Made Nikko Cordial Securities a wholly-owned
subsidiary and started its business as a new
securities and investment banking company

Made ORIX Credit a consolidated subsidiary

Signed MOU on mutual business cooperation
with Bank Central Asia (Indonesia)

Subscribed new shares of The Bank of East Asia (Hong Kong)

Management Policy in Fiscal 2010

Management policy in fiscal 2010

✔

“Forward looking”
~Transforming our business model to grow steadily under a new regulatory and competitive
environment
Emphasizing return on risks and costs, in order to improve asset quality and thoroughly control
expenses and credit costs

Pursue profitability by focusing on targeted growth business areas

Fortify bottom-line profit by reviewing current business

Further enhance customer responsiveness by leveraging advisory functions

Further increase productivity by improving business processes

[SMFG’s targeted growth business areas]

Overseas business especially in Asia

Solution providing for corporations / Investment banking, trust business

Retail / Wholesale securities business

Financial consulting for individuals

Payment & settlement services, consumer finance

●

Improving risk-return profile by rebalancing our assets while meeting

customers’ financing needs / Controlling credit costs and expenses

Steadily accumulating earnings based on our management plan

Minimizing risks to our capital posed by volatility in our equity holdings

Initiatives toward NYSE listing

Reinforcing business portfolio to achieve sustainable growth

Securing a resilient capital base

Target around 10% of consolidated ROE in the medium term

Maintain over around 10% of consolidated Tier I ratio

SMFG 2010

Overseas Business

In the medium to long term, we aim to increase the proportion of Banking profit from International Banking Unit to overall Marketing units, which was 20% in fiscal 2009,
by allocating more capital and resources into overseas business, especially in Asia where high growth is expected.

Trends of Banking profit in International Banking Unit*1

Products with a competitive edge

■ International Banking Unit (Left axis)
■ Proportion to Marketing units (Right axis)

(USD bn)

1.5

1.0

0.5

0.0

Project finance

Global ranking (Year 2009)*2

Loan syndication

Global ranking (Year 2009)*4

5th

6th

Awarded Global
Arranger of the Year*3

Ranked at 1st among foreign
banks in China*5

Cash management providers’ ranking
(in Asia Pacific)*6

CMS*7 as voted by Corporates

JPY CMS*7 as voted by Financial Institutions

Large Corporates

Medium Corporates

Small Corporates

20%

30%

20%

10%

Fiscal

2004

2005

2006

2007

2008

2009

4th

3rd

1st

*1 Sum of SMBC and its overseas subsidiaries (exchanged to USD at respective term-end FX rate). Managerial accounting basis
*2 Source: Project finance mandated arranger (Project Finance International) *3 Source: Infrastructure Journal
*4 Source: Syndicated loan bookrunner ranking (Thomson Reuters) *5 Source: “Basis Point” (Reuter LPC)
*6 Source: “ASIAMONEY”: “The Cash Management Poll 2009” (Aug. 09) *7 “CMS” stands for “Cash Management Service”

(Reference) Business Expansions in Asia

1st among Japanese banks for the four consecutive years

Strategic partners*1

Overseas channel network*2

Channel network
Established after fiscal 2009

China

Korea

Taiwan

Bank of China
Industrial and Commercial Bank of China
Agricultural Bank of China

Kookmin Bank

First Commercial Bank

Hong Kong

Bank of East Asia

Philippines

Metrobank

Vietnam

Vietnam Eximbank

Malaysia

RHB Bank

Indonesia

Bank Central Asia

India

Standard Charterered Bank
Kotak Mahindra Bank

●
●

Established SMBC (China) (April 2009)
Functions such as planning and managing SMBC
(China)’s business development for Japanese companies
were shifted from the Planning Dept., International
Banking Unit to the Planning Dept., Corporate Banking
Unit & Middle Market Banking Unit (April 2010)

●

Received approval to establish a
subsidiary bank in Malaysia (June
2010)

Established Financial Products Marketing Dept.
(May 2010)

*1 Bold print indicates the strategic partners in which SMBC has an investment in equity (includes equity investments currently planned)
*2 Network of SMBC and principal overseas subsidiaries

SMFG 2010 7

Strategy for Securities Business (Nikko Cordial Securities)

Nikko Cordial Securities has made a good start in both its retail and wholesale businesses as our securities body. Going forward, we will pursue an
integrated business model spanning banking and securities services businesses by accelerating cooperation between SMBC and Nikko Cordial Securities.

Expansion of customer base

Medium-term management plan

Customer assets

(Unit: ¥ trillion)
40

■ Stock ■ Bonds ■ Investment trusts ■ Other

23.5

25.9

After becoming a
wholly-owned subsidiary

28.1

Number of
accounts (1,000)

2008/3

2,461

2009/3

2,481

2010/3

2,511

Number of successful deals in referral service

Aim to become No.1 general securities company in Japan which is

excellent both in quality and in quantity and globally competitive

Net operating revenue

■ After becoming a wholly-owned subsidiary

Wholesale business
[100]

Retail business
[200]

(JPY bn)
300

200

100

Investment banking business
23%

Over 200 deals
Investment management
77%

Investment banking business
17%

Over 400 deals

Investment management
83%

0
Fiscal

3Q, fiscal 2009

4Q, fiscal 2009

2004

2005

2006

2007

2008

2009

2012

Targeted ordinary profit in
fiscal 2012 JPY 100 bn

SMFG’s Group Structure*1

Sumitomo Mitsui Financial Group

Consolidated total assets

¥123 trillion

Consolidated Tier I ratio

11.15%

100%

SUMITOMO MITSUI Banking Corporation

Sumitomo Mitsui Banking Corporation

60%

100%

Total assets

Deposits

Loans

¥104 trillion

¥70 trillion

¥57 trillion

Number of customer deposit accounts
(individual customers)

approx. 26 mn

Number of corporate borrowers

approx. 128,000

66%

69%

22%

51%

Promise *3

ORIX Credit

Sumitomo Mitsui Finance and Leasing

Japan Research Institute

40%

(Leasing)

Sumitomo
Corporation

(System engineering and
management consulting, etc.)

Nikko Cordial Securities

(Securities)

SMBC Friend Securities

SMFG Card & Credit

(Credit card)

34%

Sumitomo Mitsui Card

NTT DOCOMO

Cedyna

(Consumer finance)

100%

SANYO SHINPAN*3

*1 As of Mar. 31, 2010. Stake (%) is as of August 31, 2010. *2 Total voting shares held by SMFG group. *3 Promise and Sanyo Shinpan planned to merge in Oct. 2010.

SMFG 2010

Performance in Growth Businesses (SMBC Nonconsolidated)

Customer Assets
(Investment Trusts and Pension-Type Insurance)

Unit: ¥ trillion

Cumulative sales of pension-type insurance
Balance of investment trusts

Housing Loans*

Unit: ¥ trillion

Consumer Finance

Securitized balance
Balance outstanding

Unit: ¥ billion

Unsecured card loans
Of which, portion under tie-up with Promise

1.9

1.6

9.9

10.0

0.8
10.0

2.1

11.0

2.0

10.5

2.2

2.6

2.9

3.0

3.4

2.0

3.3

2.6

1.7

2.8

520

490

310

280

440

390

210

140

330

500

400

300

200

100

3/06

3/07

3/08

3/09

3/10

3/06

3/07

3/08

3/09

3/10

3/06

3/07

3/08

3/09

3/10

* Owner-occupied homes

Loan Syndications

Amount originated (¥ trillion)

Number of originations

Loans guaranteed by credit guarantee
corporations and Business Select Loans

Global e-Trade Service
(Number of Contracts)

Unit: ¥ billion

Unit: Thousands of contracts

Business Select Loans
Loans guaranteed by credit guarantee corporations

1,000

800

600

400

200

0
Fiscal

8.6
754

780

7.0

702

6.7

9.3

7.6

685

531

3,500

3,000

2,500

2,000

1,500

1,000

500

17.1

16.5

15.0

13.7

11.7

2005

2006 2007

2008

2009

3/06

3/07

3/08

3/09

3/10

3/06

3/07

3/08

3/09

3/10

PC Bank Web21 (Number of Contracts)

SMBC Direct Customer Contracts

Number of Internet Transactions

Unit: Thousands of contract

Unit: Million customers

Unit: Millions

154

149

141

125

105

150

120

10.1

9.3

8.4

7.4

6.6

179

166

151

129

108

180

120

3/06

3/07

3/08

3/09

3/10

3/06

3/07

3/08

3/09

3/10

3/06

3/07

3/08

3/09

3/10

SMFG 2010 9

Business Overview

■ 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 2009,
reflecting the high esteem customers have for our services,
include an outstanding balance of investment trusts under
management of ¥2,620.7 billion (March 31, 2010); sales of
foreign bonds and yen-denominated bonds of ¥212.7 billion;
pension-type insurance sales of ¥381.8 billion; sales of single
premium full life insurance of ¥60.9 billion; and mortgage
loans outstanding of ¥14,497.5 billion (March 31, 2010).

Financial Consulting Business

In fiscal 2009, SMBC continued to
broaden its product lineup of invest-
ment trusts, annuity insurance for
individuals, life insurance policies
and other financial products.

In investment trusts, SMBC
expanded our lineup of investment
targets to include funds such as
those investing in bonds issued by
emerging countries, while allow-
ing customers to select from a
number of currencies including the
Australian dollar and the Brazilian Real for hedging purposes,
and funds primarily focused on the World Bank Green Bonds.
Since October 2009 we have launched funds with customer
access only via the Internet or mobile phones, and as of July
1, 2010 the number of such funds had reached thirty. In these
ways, we are responding to a wide range of customer needs.

In the field of life insurance policies, in August 2009
we expanded our over-the-counter sales of life insurance
products at all our branches in Japan. By offering 20 dif-
ferent insurance policies (as of March 31, 2010), including
whole-life, term and medical, we can now meet a still broader
range of customer needs. We have also further expanded our
insurance policy lineup, including offering annuity insurance
for individuals in which the annuity amount is set at a higher-
than-normal level for an initial specified period.

In our financial products intermediation business, we
diversified our product lineup by offering yen-denominated
bonds for the first time, as well as subscription of SMBC’s
subordinated bonds (yen-denominated) and sale of foreign
bonds.

It is important to support customers after they have
bought our products. As part of this commitment, we take
many measures to keep customers up-to-date with devel-
opments — for example, holding seminars about fund
performance, issuing monthly and special market reports,
and sending customers statements detailing assets via direct
mailing.

Loan Business
To enable us to respond to the wide-ranging needs of our custom-
ers, we have developed new products, and enhanced services.

In February 2010, following our introduction in December
2008 of an unsecured educational loan, we began offering
loans for car purchases (guaranteed by Promise Co., Ltd.)
and a general-purpose unsecured loan. Customers can
apply for these loans to the Consumer Finance Promotion
Office, every day (except January 1) up to nine in the eve-
ning using the automated loan contract machines installed
within SMBC branches, the Internet, or other channels. In
most cases, applicants receive a response on the same day.
Such advantages mean these new loan products offer much
greater convenience than conventional loans.

As a result of these initiatives, more than 3,000 customers
per year have applied for our unsecured educational loans,
the first of this type of product to be
offered.

The “Act concerning Temporary
Measures to Facilitate Financing
for Small and Medium-Sized
Enterprises, etc.” was enforced on
December 4, 2009, with facilitating
financing to housing loan borrowers
as one of the objectives. In line with
this objective, SMBC has set up the
Consumer Facilitating Financing
Dept. within the Planning Dept. of the Consumer Banking Unit.
We have also appointed specialist staff for providing consult-
ing and other forms of assistance tailored to the individual
circumstances of customers experiencing difficulties repaying
their housing loans, at all bank branches as well as within the
nine special Loan Support Offices located nationwide.
We will continue working to provide closely tailored sup-
port services for such customers, and are working to improve
the speed and precision of these services.

Settlement and Consumer Finance Business
The iD* credit service, which is based on a strategic alliance
between SMFG and NTT DoCoMo, Inc., continues to grow.
As of March 31, 2010, subscribers to this service and the
terminals for accessing the service located on the premises
of affiliated merchants totaled approximately 14.2 million and
440,000, respectively.

*iD is a trademark of NTT DoCoMo, Inc.

The consumer finance business collab-
oratively launched in April 2005 by SMBC,
Promise Co., Ltd. and At-Loan Co., Ltd.,
continues to grow also. There were 716 auto-
mated contract machines and the balance of
loans made by SMBC and At-Loan together
totaled approximately ¥423.5 billion, as of
March 31, 2010.

SMFG 2010

Transaction Channels
In fiscal 2009, SMBC opened new branches in 14 locations:
Wakabadai in Tokyo, Hiyoshi and Shonandai in Kanagawa
Prefecture, Chiba New Town in Chiba Prefecture, Tsukuba in
Ibaraki Prefecture, Tenpaku-Ueda, Okazaki, Gokiso, Nonami,
Irinaka, and Kanayama in Aichi Prefecture, and Izumi-Chuo,
Shoji, and Komyoike in Osaka Prefecture.

Also, in the Tokai Region centered on Aichi Prefecture,
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.

We opened a third call center in June 2009, in Fukuoka,
to serve retail customers, along with existing facilities in Tokyo
and Kobe. We also offer telephone-based services for online
users who prefer to discuss important matters with a real per-
son. Operating three centers enhances our capacity to offer
telephone consulting on asset management and loans, as
well as other information services, and tailor financial services
to the lifestyle and needs of each customer.

Wakabadai Branch

Nonami Branch

For the SMBC Direct online banking service, we are con-
stantly adding highly advanced services to meet customer
needs and deliver greater convenience, and reinforcing
security. In October 2009 we began a major expansion of
the scope of our banking services offered via the Internet
and mobile phones. For example, customers with an ATM
card can check the balance in their savings account over the
Internet. This is just one of the steps we have taken to further
enhance the convenience of our online services.

SMBC Direct has come first for seven consecutive years
in the ranking of Internet banking by e-commerce website
rating firm Gomez Consulting Co., Ltd. As of March 31, 2010,
there were approximately 10.12 million registered customers.

Topics

l Businesses Operated Jointly with Nikko Cordial

Securities

Nikko Cordial Securities became a subsidiary of SMBC
on October 1, 2009, in a move that further enhanced the
ability of all Group companies to offer our customers com-
petitive products and services.

A number of joint initiatives have been implemented
since then: three new investment trust products devel-
oped jointly by SMBC and Nikko Cordial Securities were
launched on the market, the two companies held joint sem-
inars, and also proactively introduced customers to each
other when either one was better suited to deal with their
specific requirements. On April 19, 2010, we expanded our
financial instruments intermediary service for individuals to
include Nikko Cordial Securities as an agent to execute the
actual transactions. The same service operated with SMBC
Friend Securities is scheduled to be integrated into Nikko
Cordial Securities by January 31, 2011.

Further joint activities that combine banking and secu-
rities transactions are planned, including Nikko Cordial
Securities conducting banking agency business.

A joint seminar held with Nikko Cordial Securities

SMFG 2010 11

■ Corporate Banking

Improving Products and Services for Midsized
Companies and SMEs
(cid:129)Initiatives to provide easier access to financing
SMBC believes that the smooth and efficient supply of funds
to its clients is its main social responsibility as a financial insti-
tution. With companies facing growing challenges caused by
the global financial crisis, we are making every effort to facili-
tate financing to our corporate clients — midsized companies
and SMEs — proactively and more tailored to their needs. To
this end, in December 2009, SMBC established the Middle
Market Facilitating Financing Department within the Planning
Department of the Corporate Banking Unit.
We will continue to implement initiatives to identify the
ever-changing needs and issues of our corporate clients and
offer more tailored products and services in order to support
their business growth.
(cid:129)Products and services to meet financing needs
Amid the economic uncertainty, a broad range of financing
needs is emerging. In order to meet these needs, we are con-
stantly expanding our lineup of loans for our corporate clients.
In 2008, SMBC introduced the Certified Company Support
Loan for companies who have received SMBC designated
national/local management-related certification or award; the
Web Report Loan for companies using the Japanese national
tax authorities’ e-Tax service; and the Asset Value Truck and
Bus Loan which uses commercial vehicles as collateral (loan
features were upgraded in 2009).
(cid:129)Environmentally responsible products and services
In October 2008, SMBC launched the SMBC Environmental
Assessment Loan/Private Placement Bonds. To be eligible, an
applicant company must undergo an environmental evalua-
tion using Japan Research Institute’s assessment standards.
Loan terms depend on the evaluation results, which are
disclosed to the applicant company to help improve its envi-
ronmental protection measures. As of March 31, 2010, about
30 companies had raised approximately ¥100 billion in loans
and bonds. SMBC announces these transactions to the public
through SMBC press releases, newspaper advertisements
and other forms of mass media, receiving high marks from our
clients. In January 2010, this loan/bond product won the 2009
Nikkei Superior Products and Services Award for Superiority
from Nikkei Inc., indicating the high regard in which it is held
by Japanese society as a whole.

Another initiative was the “Fight Global Warming
Campaign” held from May through July 2009 in connection
with SMBC-ECO Loan for companies with environmental
management certifications. During the campaign period,
SMBC used part of the earnings from the SMBC-ECO Loan to
purchase and write off carbon credits equivalent to five tons
of CO2 emissions per borrower, enabling the borrowers to
play a part in combating global warming.

In April 2010, we added companies reporting their energy
consumption to the Tokyo Metropolitan Government under
its initiatives on reducing global warming to the scope of
companies eligible for the SMBC-ECO Loan. In this way, we
are supporting those midsized companies and SMEs that are
taking a proactive approach to environmental issues.

In addition, SMBC extends loans under two programs
operated by the Ministry of the Environment in which the
government pays the interest. One program is for supporting
initiatives aimed at reaching the goals of the Kyoto Protocol,
in which investments in facilities that reduce greenhouse
gas emissions are partly subsidized. The other program is to
support the acceleration of countermeasures against global
warming. The Japanese government has set a high target of
25% reduction in the emission of greenhouse gases, and we
believe this financing mechanism will provide invaluable sup-
port for the environmental initiatives of Japanese industries.
(cid:129)Information services
SMBC has been strengthening its internal systems for busi-
ness-matching, resulting in a dramatic increase in the number
of business meetings we have arranged between possible
partners. In particular, in our “all-in-one matching” program,
which simultaneously matches a large number of corporate
clients with the purchasing departments of large corporations,
we have enhanced our corporate client information database,
and are able to supply information on the purchasing needs
of major corporations to more corporate clients.
We will continue enhancing our ability to provide a wide
spectrum of information to our clients.

Reinforcing Services for Globalizing
Corporations
An increasing number of our corporate clients are setting
up businesses overseas, and they face a growing need to
address issues such as differences in business practices;
cultures; legal, accounting, and taxation systems, and inter-
pretation of such systems; as well as funding.

At SMBC, the Global Advisory Department was estab-
lished to specifically help devise solutions for cross-border
issues of globally operating clients. The department works
to provide seamless support for the operations of companies
both inside and outside Japan by straddling the three units
of SMBC that do business with corporate clients – the Middle
Market Banking Unit, the Corporate Banking Unit, and the
International Banking Unit. Based in Tokyo, the department
has staff members at SMBC offices overseas, chiefly in Asia.
With about 200 professionals in the fields of foreign trade
and global business operations, the department maximizes
synergies by integrating issue-solving skills with expertise in
collecting and analyzing information, and by making effective
use of relationships with clients and business partners world-
wide. Thanks to this infrastructure, we can devise customized
solutions from a global perspective to serve both companies
in Japan and their overseas subsidiaries.

SMFG 2010

We hold overseas business-related seminars with themes
of particular interest to our clients, and distribute the latest
information on overseas markets, enabling companies con-
sidering the launch of an overseas business to gain insight
into local conditions, regulations, industry trends, and other
relevant matters. Our services are also useful for companies
with established overseas operations who can count on us
for valuable assistance in areas such as growth strategy and
reorganization.

Intensifying Initiatives in the Chinese Market
China is a major driver of global economic growth and many
Japanese companies have already set up operations there,
targeting the market that continues to grow. Japanese cor-
porations’ entry into and business development in China is
projected to accelerate in the coming years.

To be able to more effectively meet the needs of such
clients whose business straddles the Japanese and Chinese
markets, at the beginning of fiscal 2010 SMBC appointed a
director to be responsible for overseeing its Chinese subsid-
iary Sumitomo Mitsui Banking Corporation (China) Limited. It
also transferred responsibility for the planning, promotion, and
management of transactions between the SMBC subsidiary
in China and Japanese corporations from the International
Banking Unit to a domestic banking unit. The aim of this move
was to integrate SMBC services for clients’ head offices in
Japan and their local subsidiaries in China, facilitating the
smooth transaction of business and enabling us to deliver
more closely tailored services.

Intensifying Initiatives in the Public and
Financial Sectors
We are working to create solutions for issues of regional
governments, public corporations and financial institutions.
Moreover, to upgrade services for regional clients, we under-
take joint initiatives with regional governments and financial
institutions.

In October 2009 SMBC was selected as the primary
financial institution for the Tokyo Metropolitan Government’s
Eco Finance Project. In partnership with Sumitomo Mitsui
Finance & Leasing and other financial institutions, SMBC
has created a number of financial products and programs,
such as mortgage loans, leasing plans, and so on, that are
designed to help improve the environment. These products
proved popular, and over 300 applications for the mortgage
loan had been received by the end of fiscal 2009.

Tokyo Metropolitan Government Eco Finance Project

Tokyo Metropolitan
Government

Deposits

Primary financial institution: SMBC
(Project management, Overall coordination, Trust accounts)

Profits from fund management

SMBC

The Tokyo
Tomin Bank

Seibu Shinkin
Bank

Sumitomo Mitsui
Finance & Leasing

Marketing of financial products with environmental benefits

Individuals and business owners

In July 2008 SMBC signed a Cooperative Agreement
for the Promotion of Industry with the Miyagi Prefectural
Government and The 77 Bank, Ltd. In the third venture under
this agreement, the three partners initiated a project to help
companies in Miyagi Prefecture become more environmen-
tally responsible as well as cut
costs. Subsidies are provided
by the prefectural government to
help companies purchase equip-
ment that contribute to energy
conservation and cost-cutting.
We are taking a variety of steps to
make this project a success, such
as holding seminars.
We will continue to step up initiatives that contribute to
regional economic growth while delivering high value-added
services to clients throughout Japan.

Seminar on energy conservation
and cost-cutting

Topics

l Business Alliance in the Environment Business

in China

In November 2009, SMBC together with the Japan
Research Institute signed a basic agreement with the
Tianjin Eco-City Administrative Committee on initiatives
to attract Japanese business corporations to the Tianjin
Eco-city project.

The Tianjin Eco-City project is the first large-scale
project in China to build an ecologically friendly city to
have been approved at the national government level.
The new city will feature various measures to harmonize
human activities with the natural environment, measures
for conserving natural resources, and an efficient system
of resource recycling.

The environment business is expected to show signifi-
cant further development in China along with the growth
of the country’s overall market, and SMBC intends to play
an important role in introducing Japanese companies to
projects where they can make a major contribution.

SMBC is strongly committed to delivering enhanced
services for Japanese corporate clients in the process of
setting up businesses in China or planning to do so.

The signing ceremony for the agreement
on the Tianjin Eco-City project.

SMFG 2010 13

Private Banking
Customers can rely on PAD for all-inclusive financial advice
concerning financial assets. We share and understand
customers’ financial goals, including risk profiles, through
a series of discussions with each customer. After agreeing
on the goals, we create proposals for asset allocation and
management.

1. Sharing
Understanding customers’
financial goals, and
analyzing current portfolios

Business
strategy

2. Consulting

Organizational
restructuring

Asset
management

OUR
SOLUTION

M&A/MBO

Capital policy

Tax payment
arrangements

Asset
succession

Stock price
simulations

Succession
plan

4. Review

3. Action

Workplace Banking
The management environment for SMBC’s corporate cus-
tomers is undergoing dramatic changes that are giving rise
to various issues in the field of HR strategy. PAD employs
the wide range of financial products and services offered
by SMBC to prepare solutions to these issues, and supports
corporate customers to create employee financial benefit
programs and defined-contribution pension plans.

Further, employees can obtain SMBC products and
services for achieving financial and other goals in their lives
through their employers in addition to SMBC marketing
channels.

■ Services for High Networth Individuals,
Business Owners and Employees

Private Advisory Department
The Private Advisory Department (PAD) of SMBC specializes
in products and services that meet the diverse requirements
of business owners and high networth individuals. Activities
of this department span three areas. The first is carefully
tailored support services for business and asset succes-
sion. We combine the extensive know-how of our own staff,
accumulated over many years of experience, with the input
of alliance partners such as leading tax accountancy firms.
The second area is private banking services, which include
comprehensive financial services for managing customers’
financial assets. These services, too, are offered in collabora-
tion with alliance partners. The third area is workplace bank-
ing services to support the HR strategies of corporate clients.
This service category includes providing assistance in the
design of employee savings and other employee financial
benefit programs, and defined-contribution pension plans.

By working with other SMBC Group companies and alli-
ance partners, PAD uses its “One Bank” approach to provide
seamlessly a broad range of products and services. This
allows the department to cover many types of needs involving
both individual and corporate clients.

Support for Business and Asset Succession
PAD 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.

High networth individuals

Customers
Business owners

Heads of wealthy families

Sumitomo Mitsui Banking Corporation

Corporate Business Office

Branches

Private Advisory Department

Business
growth
needs

Business
succession
needs

Asset
succession
needs

Asset
management
needs

Assistance for
employee benefit
programs

Support from specialized
units of SMBC

SMFG companies

Sumitomo Mitsui Financial Group

Alliance partners (leading tax accountancy firms and other professionals)

SMFG 2010

■ Investment Banking

Accomplishments in Fiscal 2009
SMBC was awarded the best arranger of syndicated loans
in the Japanese market by Euroweek Asia magazine. It was
also awarded “Global Arranger of the Year” by Infrastructure
Journal in project finance for infrastructure development for
its seawater desalination project finance deal in the Australian
state of Victoria, and other projects. In addition, in settlement
services, SMBC is steadily increasing its profile, ranking first
for two consecutive years among Japanese banks in the
Asia-Pacific region, in a cash management services survey
conducted by Asiamoney magazine.

Collaboration with Nikko Cordial Securities
Since October 2009, Nikko Cordial Securities, Inc. (NCS) has
been operating as a full-line securities company by adding
wholesale capabilities to its retail securities business. SMBC
has been referring its customers to NCS since the latter
half of fiscal 2009, and as a result, NCS closed more than
100 deals introduced by SMBC in underwriting and M&A.
Benefiting from the collaboration between SMBC and NCS,
in the league tables published by Thomson Reuters, SMFG
was third in the ranking of bookrunners in the “Japanese
Corporate Bonds” category with a market share of 20.0% in
the second half of fiscal 2009, and fourth with a market share
of 8.8% in the “Global Equity & Equity-Related – Underwriting
Value in Japan” category. SMFG will continue to strengthen
further collaboration between SMBC and NCS so as to meet
the diverse needs of our customers, including fund raising
through capital markets, cross-border M&A, and debt securi-
tization, more fully.

Japanese Corporate Bonds*1

Rank

Bookrunner

Oct. 2009 – Mar. 2010

Proceeds
(¥ mil)

Market
share

Number
of deals

1 Mitsubishi UFJ Financial Group

913,567.1 21.4%

2 Mizuho Financial Group

877,981.5 20.5%

3 Sumitomo Mitsui Financial Group

855,233.5 20.0%

4 Nomura Holdings, Inc.

819,153.9 19.1%

5 Daiwa Securities Group Inc.

760,928.5 17.8%

6 Barclays Capital

7 Shinkin Central Bank

8 Citi

9 Goldman Sachs & Co.

14,600.0

0.3%

10,000.0

0.2%

8,750.0

0.2%

6,000.0

0.1%

10 Bank of America Merrill Lynch

5,000.0

0.1%

Global Equity & Equity-Related – Underwriting
Value in Japan*1

Rank

Underwriter

Oct. 2009 – Mar. 2010

Proceeds
(US$m)

Market
share

Number
of deals

1 Nomura Holdings, Inc.

19,816.7 34.8%

2 Mitsubishi UFJ Financial Group

5,856.2 10.3%

3 Daiwa Securities Group Inc.

5,375.9

9.4%

4 Sumitomo Mitsui Financial Group

5,004.8

8.8%

5 Mizuho Financial Group

6 Goldman Sachs & Co.

7 Morgan Stanley

8 Citi

9 JP Morgan

4,745.7

8.3%

4,091.0

7.2%

3,465.3

6.1%

2,117.8

3.7%

1,792.0

3.1%

10 Bank of America Merrill Lynch

1,761.6

3.1%

*1 Source: Thomson Reuters

Topics

l Reinforcing our operations in Asia
In May 2010 SMBC established the Financial Products
Marketing Department in Singapore, by integrating certain
functions performed by various departments of Investment
Banking Unit at its Singapore branch. This will enable us to
meet the increasingly diversifying and sophisticated needs
of our customers in Asia more flexibly. This department will
provide a diversity of investment banking products such
as debt securitization and derivatives, and will enable us
to offer prompt and appropriate financial solutions to our
customers more swiftly.

lProject Finance
SMBC is highly respected globally for its ability in project
finance. It became the first financial institution from the
Asia-Pacific region to be awarded “Global Arranger of the
Year” for 2009 by Infrastructure Journal. In addition, SMBC
placed among the top five global arrangers in the league
table published by Project Finance International magazine.

Global Initial Mandated Lead Arrangers*2

Jan. – Dec. 2009

Rank

Mandated Arranger

1 State Bank of India

2 Calyon

3 BNP Paribas S.A.

4 Société Générale

5 Sumitomo Mitsui Financial Group, Inc.

*2 Source: Project Finance International

Volume
(US$m)

19,944.9

7,359.6

5,836.1

4,283.7

4,025.1

SMFG 2010 15

■ International Banking

SMFG offers value-added services to clients (corporations,

financial institutions, governmental organizations and public

entities) operating globally by creating tailor-made solu-

tions that meet various local needs, mainly through SMBC’s

International Banking Unit.

SMBC has three regional headquarters — Europe, the

Americas and the Asia-Pacific region — and subsidiaries in

the emerging markets of China, Russia and Brazil. With this

network, we have the speed and flexibility to respond to dif-

fering needs in each region. We endeavor to become a global

commercial bank, capable of delivering our strengths in vari-

ous business opportunities in this vast international market.

Expansion of Overseas Network
We are working to expand our overseas branch network to

enhance services for Japanese companies and increase our

presence in the emerging markets.

Considerable progress is being made in developing the

infrastructure in Africa, and in March 2010 SMBC enhanced

the functions of its Johannesburg Representative Office in

a move to better serve the needs of our customers, mainly

Japanese corporations that are planning to set up businesses

in Africa or expand their existing operations there. In May

2010, SMBC signed an agreement on a business alliance

with Absa Bank Limited, one of the largest private-sector

banks in South Africa and a subsidiary of Barclays PLC of

the United Kingdom. This builds on the capital and business

alliance entered into with Barclays PLC in 2008. We hope

to leverage Absa’s wide marketing base in South Africa to

further enhance our services.

Capital and Business Alliances
with Prominent Asian Financial Institutions
Our alliance strategy in Asia is tailored to the characteristics

of each country and region. We aim to strengthen our solution

providing capability in the region, such as by expanding our

Asian currency denominated services.

In July 2009, SMBC established an alliance with PT Bank

Central Asia Tbk, the largest privately owned commercial

bank in Indonesia. Forming this partnership positions us

to better provide our customers with solutions that include

stable local-currency financing, cash management services,

and other corporate finance activities. In the same month,

SMBC signed a technical service agreement, including risk

management, with its capital and business alliance partner

Vietnam Export Import Commercial Joint Stock Bank. Then,

in December 2009, through private placement, SMBC

acquired shares of The Bank of East Asia, Ltd., a major

private-sector bank in Hong Kong. The bank was already

one of our business partners, and this investment has further

strengthened our collaborative ties.

We will continue to forge ties with leading financial institu-

tions, while organically growing our marketing network in

Asia — a multifaceted approach to expanding our business

operations in Asia.

Core IT System Upgrades
Starting in fiscal 2009, SMBC has been revamping its Asian

accounting systems and customer information and manage-

ment administration systems as part of a worldwide opera-

tions system upgrade to support corporate clients operating

globally.

Strengthening of Risk Management
As part of a broader strategy for reinforcing our credit cost

control framework, SMBC has enhanced its credit monitoring

system, and has set up dedicated credit management units

in Europe and the United States.

SMBC has also reinforced coordination between the

Credit Management Department of the International Banking

Unit, which was established in fiscal 2009, and the credit

portfolio management (CPM) functions of regional head-

quarters to create an even more effective hedging system to

minimize the impact of economic fluctuations.

Strengthening of Compliance System
The global regulatory environment is changing rapidly, and

we are focusing our efforts on creating a compliance system

capable of swiftly responding to BIS guidelines and the regu-

latory authorities of countries across the globe.

SMBC has taken various steps to computerize adminis-

trative processes at its overseas offices and introduce more

advanced management systems in order to create an anti-

money laundering system in line with international standards.

Moving forward, we will continue to tighten controls on the

operational side still further.

Fostering Professionals Needed to Realize
Overseas Business Growth
We are strengthening our training and educational programs

in order to meet seamlessly and accurately customers’

increasingly diverse and advanced needs. We station promis-

ing young employees at our overseas offices or dispatch them

to specialist overseas financial institutions outside the Group.

In this way, we are developing employees with invaluable

expertise in international business. In Asia, where our opera-

tions are growing noticeably, SMBC’s Asia Pacific Training

Department is constantly enhancing seminars and e-learning

programs for our national staff in order to strengthen their abil-

ity to deliver the best solutions to our customers.

SMFG 2010

Topics

lEnvironmental Business Opportunities Overseas
We are reinforcing our initiatives in the global environ-
mental business. In Asia, SMBC is one of the advisors in
the Tianjin Eco-City project in northern China. In March
2010, SMBC signed a financing agreement on a renew-
able energy development project and other matters with
the International Finance Corporation and Environmental
Cooperation-Asia (ECO-Asia), a regional program of the
United States Agency for International Development. On
April 20, 2010, SMBC signed a memorandum of under-
standing on the promotion of environmental business in
Malaysia with the Federation of Malaysian Manufacturers
(FMM) and
the NGO Green Purchasing Network
Association Malaysia (GPNM). In the Americas, SMBC
signed a memorandum on a business alliance in emis-
sions trading with the Banco de la Republica Oriental del
Uruguay (a major financial institution administered by the
government of Uruguay). This is the latest move in our
continued expansion of our network of business alliances
in South America, which began with Banco do Brasil, a
leading Brazilian commercial bank, in August 2006.

trends in financial markets.

We are constantly improving the functions of i-Deal, a

system that allows clients to conclude foreign exchange con-

tracts over the Internet. Moving forward, the Treasury Unit will

continue working to fulfill all our customers’ market transaction

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 maximize

earnings by targeting opportunities created by trends in many

financial markets.

We will continue to conduct trading operations that take

advantage of changes in market conditions in order to gener-

ate a consistent stream of earnings.

SMFG President Kitayama with representatives of FMM and GPNM at the
signing ceremony

■ 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

derivatives markets. To maintain and further strengthen profit-

ability, 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

Topics

l Issuance of A$-denominated bonds for individual

investors

We have been diversifying our longer-term procurement
channels to adapt more effectively to new regulations and
cope with an increasingly competitive market. In March
2010, SMBC issued corporate bonds denominated in
Australian dollars for individual investors.

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 2010 17

Group Companies (as of March 31, 2010)

The companies of the Sumitomo Mitsui Financial Group (SMFG) offer
a diverse range of financial services, centered on banking operations,
and including credit card services, leasing, information services, and
securities.

Our Mission
(cid:129) To provide optimum added value to our customers

and together with them achieve growth

(cid:129) To create sustainable shareholder value through

business growth

(cid:129) To provide a challenging and professionally reward-
ing work environment for our dedicated employees

www.smfg.co.jp/english/

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 performance of ancillary functions
Establishment: December 2, 2002
Head Office: 1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo, Japan

(As of October 18, 2010: 1-2, Marunouchi 1-chome, Chiyodaku,
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: ¥2,337.8 billion (as of March 31, 2010)
Stock Exchange Listings:
Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)

SUMITOMO MITSUI Banking Corporation
SUMITOMO MITSUI Banking Corporation

www.smbc.co.jp/english/

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
(As of October 18, 2010: 1-2, Marunouchi
1-chome, Chiyodaku, Tokyo Japan)

President: Masayuki Oku
Number of Employees: 22,460
Number of branches and other business locations:

In Japan:
1,549*
Branches:
494
(Including 38 specialized deposit account branches)
164
Subbranches:
1
Agency:
23
Offices handling non-banking business:
867
Automated service centers:
34
Overseas:
15
Branches:
6
Subbranches:
13
Representative offices:
* The number of domestic branches excludes ATMs located at
the business sites of companies and at retail convenience stores.

Credit Ratings (as of June 30, 2010)

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)

2010

Billions of yen
2008
2009

2007

For the Year:
Ordinary income .....
Ordinary profit ........
Net income (loss) ....
At Year-End:
¥6,894.5
Net assets ...............
Total assets ............ 120,041.3

¥2,579.9
557.7
332.4

¥2,989.6
59.2
(317.3)

¥3,411.0
734.9
351.8

¥2,925.6
716.6
401.7

¥4,518.6
115,849.3

¥5,080.7
108,637.7

¥5,412.4
98,570.6

SMFG CARD & CREDIT, INC.

SMFG Card & Credit, Inc. (“FGCC”), was
established in October 2008 as an intermedi-
ate holding 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.

SMFG 2010

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
(As of October 18, 2010: 1-2,
Marunouchi 1-chome,
Chiyodaku, Tokyo
Japan)
President & CEO: Kazuya Jono
Number of Employees: 36

SMFG SUMITOMO MITSUI Financial group

SMFG CARD & CREDIT, INC.

Maximization of
top-line synergies

Pursuit of economies of scale

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
customer needs. Through its credit card busi-
ness operations, the company aims to actively
contribute to the realization of comfortable and

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, 2010)

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, Imab ashi,

Chuo-ku, Osaka

President & CEO: Koichi Tsukihara
Number of Employees: 2,247

JCR

Long-term Short-term
J–1+

A+

Financial Information (Years ended March 31)

2010

Billions of yen
2008
2009

2007

For the Year:
Revenue from credit
card operations ......... ¥6,209.0
183.6
Operating revenue......
Operating profit...........
24.3
At Year-End:
Number of cardholders
(in thousands) ...........

20,504

¥5,858.7
180.2
22.3

¥5,375.2
168.4
16.9

¥4,753.8
157.6
14.1

18,655

16,406

14,951

www.cedyna.co.jp/english/

Cedyna Financial Corporation was formed
in April 2009 through the merger of OMC
Card, Inc., Central Finance Co., Ltd. and
QUOQ Inc., bringing together the customer
bases, marketing capabilities and propri-
etary know-how of these credit card com-
panies. It aims, in alliance with fellow SMFG
Group member Sumitomo Mitsui Card, to
become “the number one credit card busi-
ness entity in Japan.” As one of Japan’s
largest consumer finance companies offer-
ing a fusion of the credit card, consumer
credit and solutions businesses, Cedyna
provides products and services of great
value to its customers.

Company Name: Cedyna Financial Corporation
Business Profile: Credit-card services, consumer
credit
Establishment: September 11, 1950
Head Office:
Head Office: 3-23-20 Marunouchi, Naka-ku,

Nagoya

Tokyo Head Office: 2-16-4 Konan, Minato-ku,
Tokyo

President & CEO: Hajime Yamashita
Number of Employees: 3,223

Credit Ratings (as of June 30, 2010)

Standard & Poor’s
JCR

Long-term Short-term
A–2
J–1

A–
A

Financial Information (Years ended March 31)

2010

Billions of yen
2009
CF*

OMC*

QQ*

For the Year:
Revenue from credit
card operations .........
Operating revenue......
Operating profit...........
At Year-End:
Number of cardholders
(in thousands) ...........

¥223.9
(40.8)

¥137.7
6.9

¥80.6
(1.4)

¥44.8
(5.2)

24,933

* OMC: OMC Card, Inc.
CF: Central Finance Co., Ltd.
QQ: QUOQ 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 com-
pany in Japan in terms of both quantity and
quality by leveraging (a) the financial solu-
tions offered by other subsidiaries of SMFG,
and (b) business relationships along the
value chains in a wide range of industries
held by the Sumitomo Corporation Group,
one of Japan’s leading trading houses.
SMFL is one of the leading companies in
the leasing industry, known for its capabili-
ties for offering high-value-added products
and services, because of its strong market-
ing position based on its access to chan-

nels to users of leased equipment and to
suppliers of equipment, as well as having
business in the aircraft operating lease
field. SMFL is working to contribute to soci-
ety as a leading leasing company by antici-
pating future needs and offering top quality
leasing services.

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: 1,538

Credit Ratings (as of June 30, 2010)

R&I
JCR

Long-term Short-term
a–1
J–1+

A+
AA–

Financial Information (Years ended March 31)

For the Year:
Revenue from
leasing operations

2010

Billions of yen
2008
2009

¥733.6

¥895.8

¥1,054.1

Operating revenue ....

894.7

947.6

708.4

Operating profit .........

43.9

36.4

36.2

2007*

¥599.4
516.8
630.0
379.9
31.5
24.7

* The upper row of figures for 2007 are for SMBC Leasing and the
lower row of figures are for Sumisho Lease.

SMFG 2010 19

www.jri.co.jp/english/

Financial Information (Years ended March 31)

For the Year:
Operating revenue ....
Operating profit .........

2010

¥81.7
0.9

Billions of yen
2008
2009

¥88.0
1.0

¥88.1
3.8

2007*

¥84.6
3.0

* JSOL (formerly JRI Solutions) was spun off as a separate
company in July 2006.

The Japan Research Institute, Limited (JRI), con-
ducts “knowledge engineering” activities which
effectively combine three functions: information
systems integration, consulting, and think-tank
services. All activities are guided by the funda-
mental philosophy of “creating new value for the
client.” JRI offers unique added value in many
fields by leveraging IT expertise to plan and
assemble strategic data systems and provide out-
sourcing services. Additionally, its activities span
consulting for corporate management strategies
and governmental administrative reform, research
and analysis on both domestic and foreign eco-
nomic issues, and policy recommendation, as
well as formulation of, and support for, start-up
incubation in new markets and industries.

In December 2008, JRI concluded a capital
and business alliance with NTT Data Co., Ltd.
and JRI Solutions, Limited, an SMFG Group
company offering IT solutions to custom-
ers across a wide range of industries. And, in

January 2009, JRI Solutions began operations
anew under the name “JSOL.” Looking ahead,
JRI Group, while maintaining close relation-
ships with other SMFG Group 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 a total IT service provider.

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: 2-2-4, Tosabori,
Nishi-ku, Osaka

President & CEO: Yasuyuki Kimoto
Number of Employees: 2,061

www.smbc-friend.co.jp
(Japanese only)

Providing a full range of securities ser-
vices, 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. SMBC Friend Securities offers
services closely tailored to the needs of its
customers and the communities it serves. It
became a wholly owned subsidiary of SMFG
through a share transfer in September 2006,
and is developing business operations jointly
with other SMFG Group companies.
SMBC Friend Securities will continue to

move steadily forward toward its goal of
becoming “a leading Japanese securities
company in the retail market,” offering high-
quality products and services matching the
needs of its customers and building strong
bonds of trust with them.

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
Number of Employees: 2,197

Financial Information (Years ended March 31)

For the Year:
Operating revenue ...
Operating profit.......

2010

¥67.4
22.8

Billions of yen
2008
2009

¥43.2
2.3

¥60.5
19.0

2007

¥58.7
21.2

www.nikko.co.jp/SEC/e-home.html

Since its establishment in July 1918, Nikko
Cordial Securities Inc. — then known as
Kawashimaya Shoten — has grown with
its customers for over 90 years. It started
a new chapter in Nikko Cordial’s history
in October 2009 as a member of SMFG
Group. One of the largest full-service secu-
rities and investment banking firms in Japan
and a provider of high-quality products and
services, Nikko Cordial Securities is work-
ing with SMBC to create a new business
model integrating banking and securities
activities. It aims to become the number
one securities company in Japan by deliv-
ering still more value.

Company Name: Nikko Cordial Securities Inc.
Business Profile: Securities services
Establishment: June 15, 2009

Nikko Cordial De-merger Preparatory
Company Ltd. was established to
succeed all of the operations (excluding
selected assets and liabilities) of former
Nikko Cordial Securities Inc. and certain
businesses of former Nikko Citigroup Ltd.
through a corporate spin-off from Nikko
Citi Holdings, Inc. On October 1, 2009, it
started operating under the trade name
“Nikko Cordial Securities Inc.”
Head Office: 3-1, Marunouchi 3-chome,

Chiyoda-ku, Tokyo
President & CEO: Eiji Watanabe
Number of Employees: 6,533

Credit Ratings (as of June 30, 2010)

Moody’s
Standard & Poor’s
R&I
JCR

Long-term Short-term
P–1
A–1
a–1

Aa2
A
A+
AA–

Financial Information (Years ended March 31)

2010
Nikko Cordial Securities
From June 2009
(started operating under this
trade name in October)

2009

Former
Nikko Cordial
Securities

1H
Former Nikko
Cordial Securities

For the Year:
Operating
revenue .........
Operating
profit .............

¥85.6

20.9

¥104.9

23.5

¥164.1

19.6

* Expenses related to preparatory costs prior to the start
of operations were posted during the period from June
to September.

SMFG 2010

Financial Highlights

Sumitomo Mitsui Financial Group

l Consolidated

Year ended March 31
For the Year:

2010

2009

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

¥ 3,184,688
2,626,590
271,559

At Year-End:

¥ 7,000,805
123,159,513
1,529,484
1,068,329
586,414
57,888

Selected Ratios:

¥ 3,556,536
3,527,040
(373,456)

¥ 4,611,764
119,637,224
1,586,317
1,077,852
(33,176)
48,079

Capital ratio ..................................................................
Return on Equity ..........................................................
Price Earnings Ratio ....................................................

15.02%
7.63%
12.44x

11.47%
—%
—x

Per Share (Yen):

Millions of yen
2008

¥ 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

2007

2006

¥ 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

¥ 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

Net assets ....................................................................
Net income (loss) .........................................................
Net income — diluted ...................................................

¥3,391.75
248.40
244.18

¥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

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 26.

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
consolidated capital ratio of SMFG is calculated under Basel II. Please note that in fiscal 2005, 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 year ended March 31, 2009 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 ...........................................................................................................................
Net income — diluted ...........................................................................................................

2008
¥4,245.46
592.98
566.57

Yen
2007
¥4,692.29
570.86
514.94

2006
¥4,001.69
947.34
756.43

SMFG 2010 21

l Nonconsolidated

Year ended March 31
For the Year:

2010

2009

Millions of yen
2008

2007

2006

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

¥ 133,379
118,818
16,641
66,176

¥4,805,574
6,152,774
78.10%
2,337,895

¥ 134,772
117,051
8,790
103,468

¥2,977,547
4,057,313
73.39%
1,420,877

Preferred stock ....................................................
70,001
Common stock .................................................... 1,414,055,625
183

Number of employees ..................................................

103,401
789,080,477
167

Selected Ratios:

Return on Equity ..........................................................
Price Earnings Ratio ....................................................
Dividend payout ratio ...................................................

1.59%
57.41x
213.41%

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%

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 (1st series Type 6) ..........................
Net income ..................................................................
Net income — diluted ...................................................

¥3,256.32

¥3,389.38

¥339,454.71

¥342,382.75

¥330,206.27

100
/
/
/
67,500
67,500
67,500
67,500
/
/
/
/
67,500
67,500
67,500
67,500
88,500
53.82
—

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

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:

2008
¥3,394.55

Common stock .................................................................................................................
Net income ...........................................................................................................................
Net income — diluted ...........................................................................................................

120
91.34
91.34

Yen
2007
¥3,423.83

70
463.26
419.73

2006
¥3,302.06

30
68.36
67.37

SMFG 2010

Sumitomo Mitsui Banking Corporation

l Consolidated

Year ended March 31
For the Year:

2010

2009

¥ 2,597,675
2,039,296
332,497

At Year-End:

¥ 6,894,564
120,041,369
1,498,271
1,007,160
523,444
47,837

Selected Ratios:

Capital ratio ..................................................................
Return on Equity ..........................................................

16.68%
8.64%

Per Share (Yen):

¥49,036.12
4,240.20
4,236.01

¥ 2,991,839
2,941,009
(317,306)

¥ 4,518,647
115,849,385
1,561,824
1,011,845
(59,758)
37,345

13.54%
—%

¥41,492.54
(5,740.34)
—

Millions of yen
2008

¥ 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

2007

2006

¥ 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

¥ 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

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, 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 year ended March 31, 2009 is not reported due to a net loss.

SMFG 2010 23

l Nonconsolidated

Year ended March 31
For the Year:

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:

2010

2009

Millions of yen
2008

2007

2006

¥ 2,087,777
1,633,026
317,995

¥ 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

1,455,275
778,589

769,522
685,752

¥ 5,397,949
103,536,394
77,630,639
56,619,058
28,536,200
1,068,017

1,100,685
758,178
521,377
1,403,236
221,970
457,585
1,770,996

70
106,248
22,460

18.28%
8.28%
48.06%
47.1%

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%

¥48,799.31

¥41,404.62

¥58,204.22

¥67,124.90

¥42,105.57

1,620
/
/
/
88,500
4,051.75
—

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

Notes: 1. Please refer to page 161 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 31.
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, 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, 2008 and after is not reported because no potentially dilutive shares have

been issued.

SMFG 2010

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, 2010.

1. Operating Results
Operating results for fiscal 2009 include the results of 307
consolidated subsidiaries and 58 subsidiaries and affiliates
accounted for by the equity method.

Gross profit increased ¥70.7 billion year on year, to

¥2,236.6 billion. The principal reasons for this increase were
1) an increase in net interest income in SMBC’s international
operations as a result of a decline in U.S. interest rates and
an improvement in net interest margins, and 2) an increase

in net fees and commissions resulting from the acquisition
of Nikko Cordial Securities. After adjusting for general and
administrative expenses, credit cost, net losses on stocks,
equity in losses of affiliates, and other items, ordinary profit
increased ¥513.4 billion year on year, to ¥558.7 billion. The
main factors were decreases in both credit cost and losses on
devaluation of stocks resulting from the recovery in stock
prices.

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 .....................................

2010 (A)

2009 (B)

307
58

288
79

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 .......................................................................................
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) .............................................................
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) .................................................................

2010 (A)
¥2,236,634
1,380,912
1,778
608,616
194,087
51,238
(1,161,302)
(473,937)
(176,672)
(184,257)
(17,944)
(95,063)
(10,078)
(21,542)
(11,003)
558,769
(671)
(12,856)
968
558,097

(104,110)
(74,759)
(107,668)
¥ 271,559
¥ (472,968)

Millions of yen

2009 (B)
¥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)

Increase (decrease)
(A) – (B)

19
(21)

Increase (decrease)
(A) – (B)
¥ 70,754
42,459
(344)
51,438
(17,651)
(5,148)
(97,883)
295,547
125,681
113,143
86,201
(29,478)
173,599
73,334
(1,892)
513,458
15,144
(5,493)
(740)
528,602

(31,872)
187,646
(39,360)
¥645,015
¥294,807

¥ 832.3

¥ 728.7

¥ 103.6

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
✕ Ownership ratio – Internal transactions (dividends, etc.)

SMFG 2010 25

After adjusting ordinary profit for extraordinary gains
and losses, income taxes, and other items, net income was
¥271.5 billion, a year-on-year increase of ¥645.0 billion
from the previous fiscal year’s net loss.

Deposits (excluding negotiable certificates of deposit) at
the end of the fiscal year under review rose ¥3,079.0 billion
in comparison with March 31, 2009, to ¥78,648.5 billion,
and negotiable certificates of deposit decreased ¥465.6

billion, to ¥6,995.6 billion.

Meanwhile, loans and bills discounted decreased ¥2,434.2
billion year on year, to ¥62,701.0 billion, and the balance of
securities decreased ¥74.1 billion, to ¥28,623.9 billion.

Net assets amounted to ¥7,000.8 billion, and, of this total,
stockholders’ equity was ¥4,644.6 billion, due to issuance of
new shares and an increase in retained earnings from record-
ing of net income.

Assets, Liabilities and Net Assets

March 31
Assets ............................................................................................................................ ¥123,159,513
28,623,968
62,701,033
116,158,708
78,648,595
6,995,619
7,000,805

Securities ...................................................................................................................
Loans and bills discounted ........................................................................................
Liabilities ........................................................................................................................
Deposits .....................................................................................................................
Negotiable certificates of deposit ...............................................................................
Net assets ......................................................................................................................

2010 (A)

Millions of yen

2009 (B)
¥119,637,224
28,698,164
65,135,319
115,025,460
75,569,497
7,461,284
4,611,764

Increase (decrease)
(A) – (B)
¥3,522,289
(74,196)
(2,434,286)
1,133,248
3,079,098
(465,665)
2,389,041

2. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2010
amounted to ¥645.0 billion, an increase of ¥651.7 billion
from the previous fiscal year-end, reflecting an increase in the
value of equities and other factors. Of this total, net

unrealized gains on other securities including “other money
held in trust” — which are directly debited to net assets —
totaled ¥586.4 billion, an increase of ¥619.9 billion from the
losses of the previous term.

Unrealized Gains (Losses) on Securities

2010

Millions of yen

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)
¥ 58,610
586,414
410,984
123,658
51,771
62
645,087
410,984
182,369
51,733

(A) – (B)
¥ 31,869
619,590
403,922
126,484
89,183
324
651,784
403,922
157,950
89,913

Unrealized
gains
¥ 59,344
799,355
543,745
131,821
123,788
157
858,858
543,745
191,162
123,950

Unrealized
losses
¥ 734
212,941
132,761
8,163
72,017
95
213,770
132,761
8,793
72,216

Net unrealized
gains (losses) (B)
¥26,741
(33,176)
7,062
(2,826)
(37,412)
(262)
(6,697)
7,062
24,419
(38,180)

2009
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

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 trusts 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.
Among net unrealized gains (losses) on other securities as of March 31, 2010, ¥105 million that is recognized in the fiscal year's earnings by apply-
ing fair value hedge accounting is not included in net assets.

4. Floating-rate Japanese government bonds which SMFG held as “Other securities” are carried on the consolidated balance sheet at their reasonably
estimated amounts in accordance with the “Practical Solution on Measurement of Fair Value for Financial Assets” (ASBJ Practical Issues Task Force
No. 25).

5. “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, partially revised on March 10, 2008) and “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, issued on March 10, 2008) became effective from the fiscal year
ending on and after March 31, 2010. SMFG has applied them from the fiscal year ended March 31, 2010.
As a result of this accounting change, compared with the former accounting method, “Monetary claims bought” increased by ¥8,710 million,
“Securities” increased by ¥41,914 million, “Net unrealized gains (losses) on other securities” increased by ¥39,315 million, “Deferred tax assets”
related to net unrealized gains (losses) on other securities decreased by ¥27,056 million, and “Reserve for possible loan losses” decreased by
¥34,999 million.

SMFG 2010

3. Consolidated Capital Ratio
SMFG’s consolidated capital ratio as of March 31, 2010 was
15.02%, 3.55 percentage points higher than at March 31,
2009.

Total capital, which is the numerator in the capital ratio
calculation equation, rose ¥2,080.4 billion year on year, to
¥8,128.2 billion. This was due mainly to increases in

capital stock and capital surplus resulting from the issu-
ance of new shares. Risk-adjusted assets, the denominator
in the equation, increased ¥1,357.9 billion year on year, to
¥54,084.4 billion due mainly to the acquisition of Nikko
Cordial Securities.

Consolidated Capital Ratio

March 31
Tier I capital ...................................................................................................................
Tier II capital included as qualifying capital ...................................................................
Deductions .....................................................................................................................
Total capital ....................................................................................................................
Risk-adjusted assets .....................................................................................................
Consolidated capital ratio ..............................................................................................
Tier I capital ratio ...........................................................................................................

2010 (A)
¥ 6,032,280
2,563,853
(467,906)
8,128,228
54,084,471

Millions of yen

2009 (B)
¥ 4,335,085
2,420,968
(708,241)
6,047,812
52,726,507

Increase (decrease)
(A) – (B)
¥1,697,195
142,885
240,335
2,080,416
1,357,964

15.02%
11.15%

11.47%
8.22%

3.55%
2.93%

4. Dividend Policy
In view of the public nature of its business, SMFG has set a
fundamental policy of increasing dividends stably and contin-
uously through sustainable growth in enterprise value, while
enhancing the Group’s capital to maintain a sound financial
position. SMFG aims for a dividend payout ratio of over
20% on a consolidated net income basis, and its fundamen-
tal policy is to distribute dividends from retained earnings
twice a year in the form of an interim dividend and a yearend
dividend. An interim dividend can be declared by the Board
of Directors, with September 30 of each year as the recorded
date, but the approval of shareholders at the annual general
meeting is required to pay a yearend dividend.

After taking into account the fiscal 2009 business perfor-

mance, SMFG has decided to pay a term-end dividend of
¥100 per share of common stock for the fiscal year, a year-on
year increase of ¥10, and the predetermined amounts for each
category of preferred stock.

SMFG will employ its retained earnings to increase its
enterprise value by investing mainly in growth business areas
in order to build a business portfolio for achieving sustainable
growth.

5. Deferred Tax Assets
Net deferred tax assets decreased ¥128.3 billion from the
end of the previous fiscal year to ¥702.0 billion. This was
mainly attributable to the posting of income before income
taxes and an increase in deferred tax liabilities resulting from
an improvement in unrealized gains on other securities due

to higher stock prices.

SMFG takes a conservative approach to recognizing
deferred tax assets in order to secure a sound financial
position.

Deferred Tax Assets

March 31
Net deferred tax assets .................................................................................................
Net deferred tax assets / Tier I capital × 100 .................................................................

Millions of yen

2010 (A)
¥702,065

2009 (B)
¥830,370

Increase (decrease)
(A) – (B)
¥(128,305)

11.6%

19.2%

(7.6)%

SMFG 2010 27

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, 2010.

1. Operating Results
Gross banking profit in fiscal 2009 decreased ¥69.5 bil-
lion from the previous fiscal year, to ¥1,455.2 billion, and
expenses (excluding nonrecurring losses) declined ¥15.7
billion, to ¥685.7 billion. As a result, banking profit
(before provision for general reserve for possible loan losses)
decreased ¥53.8 billion, to ¥769.5 billion.

Ordinary profit — banking profit (before provision for

general reserve for possible loan losses) adjusted for non-
recurring items such as total credit cost and net gains on
stocks — increased ¥426.6 billion, to ¥462.7 billion.

After adjustment of ordinary profit for extraordinary losses

and income taxes, SMBC posted net income of ¥317.9 bil-
lion, a year-on-year increase of ¥619.1 billion.

2. Income Analysis
Gross Banking Profit
Gross banking profit decreased ¥69.5 billion year on year,
to ¥1,455.2 billion. This was due mainly to a decrease in
foreign exchange-related gains resulting from the economic
slowdown. This factor more than offset the higher net trad-
ing income.

Expenses
Expenses (excluding nonrecurring losses) decreased ¥15.7 bil-
lion to ¥685.7 billion, due mainly to more restrained opera-
tions in light of the severe overall business environment.

Banking Profit
Banking profit (before provision for general reserve for pos-
sible loan losses) decreased ¥53.8 billion from the previous
fiscal year, to ¥769.5 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 .......................................................................................
[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 .................................................................................................................

2010 (A)
¥1,455,275
[1,117,224]
[338,050]
1,046,382
1,736
286,714
115,356
5,085
[1,418,005]
(685,752)
(245,728)
(403,265)
(36,759)
769,522

[732,252]
9,067
778,589

Banking Profit by Business Unit

Millions of yen

2009 (B)
¥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

Increase (decrease)
(A) – (B)
¥(69,581)
[(29,978)]
[(39,604)]
27,993
(338)
(7,110)
(59,682)
(30,445)
[(80,723)]
15,727
(8,762)
22,966
1,523
(53,855)

[(64,996)]
84,797
30,942

Year ended March 31, 2010
Banking profit (before provision for
general reserve for possible loan losses) .................
Year-on-year increase (decrease) ..............................

Consumer
Banking Unit

Middle Market
Banking Unit

Corporate
Banking Unit

Billions of yen
International
Banking Unit

Treasury
Unit

Others

Total

¥103.0
(4.6)

¥254.2
(39.7)

¥164.0
19.5

¥114.6
30.6

¥256.5
29.9

¥(122.8)
(89.6)

¥769.5
(53.9)

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” consist 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 2010

Ordinary Profit
As a result of the foregoing, ordinary profit totaled ¥462.7 bil-
lion, ¥426.6 billion higher than in the previous fiscal year.

Extraordinary Gains (Losses)
Extraordinary losses amounted to ¥7.9 billion, a decrease of
¥0.2 billion from the previous year.

Net Income
Current income taxes amounted to ¥44.9 billion, and deferred
income taxes were ¥91.7 billion. As a result, net income
increased ¥619.1 billion to ¥317.9 billion year on year.

Nonrecurring Losses (Credit Cost, etc.)
Nonrecurring losses amounted to ¥315.8 billion, an improve-
ment of ¥395.7 billion from the previous fiscal year. The main
factor was a decrease of ¥210.5 billion in credit cost, to ¥263.8
billion, due to the effects of the government’s economic stimu-
lus package and SMBC’s business improvement and other
measures tailored to each customer’s individual circumstances.
In addition, SMBC recorded net gain on stocks of ¥3.8 billion
versus net losses on stocks of ¥220.4 billion in the previous fis-
cal year, an improvement of ¥224.2 billion, owing to gains on
sale of stocks and a decrease in losses on devaluation of stocks
due to the market’s recovery.

Total credit cost — the sum of credit cost recorded under
“Nonrecurring losses,” provision for general reserve for possible
loan losses, and gains on recoveries of written-off claims —
amounted to ¥254.6 billion, a year-on-year decrease of ¥295.4
billion.

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) ..........................................................................................
Gains (losses) on disposal of fixed assets .................................................................
Losses on impairment of fixed assets ........................................................................
Gains on recoveries of written-off claims (C) .............................................................

2010 (A)
¥ 769,522
9,067
778,589
(315,839)
(263,805)
3,857
56,719
(886)
(51,975)
(55,892)
462,749
(7,999)
2,448
(10,525)
77

Income taxes:

Current .......................................................................................................................
Deferred .....................................................................................................................
Net income (loss) ...........................................................................................................

(44,997)
(91,757)
¥ 317,995

Total credit cost (A) + (B) + (C) ......................................................................................
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 ...................................................................

¥(254,660)
9,067
(102,663)
(92,114)
(69,259)
232
77

Millions of yen

2009 (B)
¥ 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

(23,748)
(305,154)
¥(301,116)

¥(550,079)
(75,730)
(231,412)
(182,346)
(60,182)
(417)
8

Increase (decrease)
(A) – (B)
¥ (53,855)
84,797
30,942
395,752
210,553
224,286
49,653
3,462
171,172
(39,089)
426,694
270
4,587
(4,387)
69

(21,249)
213,397
¥619,111

¥295,419
84,797
128,749
90,232
(9,077)
649
69

SMFG 2010 29

Net Assets
Net assets at fiscal year-end amounted to ¥5,397.9 billion. Of
this total, stockholders’ equity amounted to ¥4,949.0 billion,
consisting of ¥1,770.9 billion in capital stock, ¥2,473.5 bil-
lion in capital surplus (including ¥702.5 billion in other capi-
tal surplus), and ¥704.4 billion in retained earnings.

Valuation and translation adjustments were ¥448.9 billion,

comprising ¥379.3 billion in net unrealized gains on other
securities, ¥48.0 billion in net deferred gains on hedges, and
¥21.5 billion in land revaluation excess.

3. Assets, Liabilities and Net Assets
Assets
In spite of efforts to ensure a smooth supply of funds to our
customers, SMBC’s assets as of March 31, 2010 decreased
¥3,941.8 billion from the previous fiscal year-end, to a total
of ¥103,536.3 billion. This was due mainly to a ¥3,622.2
billion year on year decrease in loans and bills discounted,
due to the weak borrowing demand in Japan and SMBC’s
conservative stance on asset operations overseas.

Liabilities
Liabilities as of March 31, 2010 amounted to ¥98,138.4
billion, a decrease of ¥6,793.2 billion from the previous fis-
cal year-end. This is mainly due to a decrease of ¥4,153.7
billion in payables under securities lending transactions con-
ducted as part of overall funding activities, and the amount
declined in line with the decrease in assets.

Assets, Liabilities and Net Assets

March 31
Assets ............................................................................................................................ ¥103,536,394
28,536,200
56,619,058
98,138,445
70,457,266
7,173,373
5,397,949

2010 (A)

Millions of yen

2009 (B)
¥107,478,218
28,000,515
60,241,266
104,931,725
69,499,997
7,405,710
2,546,493

Increase (decrease)
(A) – (B)

¥(3,941,824)
535,685
(3,622,208)
(6,793,280)
957,269
(232,337)
2,851,456

SMFG 2010

4. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2010
amounted to ¥565.8 billion versus net unrealized losses of
¥18.6 billion in the previous fiscal year-end, an increase of
¥584.5 billion, due mainly to improvements in stocks and

bonds. Net unrealized gains on other securities, including
“other money held in trust,” which is directly debited to net
assets, increased by ¥564.4 billion from the previous year’s
losses, to ¥521.4 billion.

Unrealized Gains (Losses) on Securities

2010

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)
¥ 57,903
(13,471)
521,377
371,459
116,145
33,772
62
565,872
365,979
174,049
25,843

(A) – (B)
¥ 30,052
(9,935)
564,078
388,004
117,386
58,686
324
584,521
386,061
147,440
51,019

Unrealized
gains
¥ 58,530
—
738,870
518,132
123,064
97,674
157
797,558
518,132
181,594
97,831

Unrealized
losses
¥ 626
13,471
217,493
146,672
6,918
63,901
95
231,686
152,153
7,545
71,987

Net unrealized
gains (losses) (B)
¥27,851
(3,536)
(42,701)
(16,545)
(1,241)
(24,914)
(262)
(18,649)
(20,082)
26,609
(25,176)

2009
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

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 trusts 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

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 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.
Among net unrealized gains (losses) on other securities as of March 31, 2010, ¥105 million that is recognized in the fiscal year's earnings by apply-
ing fair value hedge accounting is not included in net assets.

4. Floating-rate Japanese government bonds which SMBC held as “Other securities” are carried on the balance sheet 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).
5. “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, partially revised on March 10, 2008) became effective from the fiscal year

ending on and after March 31, 2010. SMBC has applied them from the fiscal year ended March 31, 2010.
As a result of this accounting change, compared with the former accounting method, “Monetary claims bought” increased by ¥8,710 million, Bonds
in “Securities” increased by ¥46,708 million, Stocks in “Securities” increased by ¥1,217 million, “Net unrealized gains (losses) on other securities”
increased by ¥39,714 million, Other securities in “Securities” decreased by ¥604 million, “Deferred tax assets” related to Net unrealized gains
(losses) on other securities decreased by ¥27,178 million, and “Reserve for possible loan losses” decreased by ¥29,909 million.

SMFG 2010 31

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, 2010, the Group held ¥0.1 billion in
sub-prime related securitized products and ¥16.5 billion
other than sub-prime related products after write-offs and
provisions. Those figures exclude Government Sponsored

Sub-prime Related Products

Enterprises (“GSE”) etc. The amount of loss on securitized
products for the fiscal year ended March 31, 2010 was ¥0.2
billion for sub-prime related products and no amount of loss
for other than sub-prime related products.

(Billions of yen)

March 31, 2010

March 31, 2009

Investments to securitized products

Total

Balances
(after provisions
and write-offs)
¥0.1
¥0.1

Change from
Mar. 31, 2009
¥(0.2)
¥(0.2)

Overseas

¥0.1
¥0.1

Change from
Mar. 31, 2009
¥(0.2)
¥(0.2)

Net unrealized
gains/losses
(after write-offs)
¥0.0
¥0.0

Change from
Mar. 31, 2009
¥0.0
¥0.0

Balances
(after provisions
and write-offs)
¥0.3
¥0.3

Products Other Than Sub-prime Related (Excludes GSE etc.)

Overseas

Net unrealized
gains/losses
(after write-offs)

Ratings of
underlying
assets, etc.

¥0.3
¥0.3

¥ — Speculative
¥ —

ratings

(Billions of yen)

March 31, 2010

March 31, 2009

Cards
CLO

Senior
Equity
CMBS

Investments to securitized products
Warehousing Loans, etc.

Total

Balances
(after provisions
and write-offs)

Change from
Mar. 31, 2009
¥ — ¥ (4.1)
(2.2)
(2.2)
(0.0)
(7.2)
(13.5)
(6.6)
¥(20.1)

2.9
2.8
0.1
13.6
16.5
—
¥16.5

Overseas

Change from
Mar. 31, 2009
¥ — ¥ (4.1)
(2.2)
2.9
(2.2)
2.8
(0.0)
0.1
—
—
(6.3)
2.9
(6.6)
—
¥(12.9)
¥2.9

Net unrealized
gains/losses
(after write-offs)
¥ —
0.5
(0.2)
0.7
0.0
0.5
—
¥0.5

Change from
Mar. 31, 2009
¥0.4
1.6
0.9
0.7
0.2
2.2
—
¥2.2

Balances
(after provisions
and write-offs)
¥ 4.1
5.1
5.0
0.1
20.8
30.0
6.6
¥36.6

Overseas

¥ 4.1
5.1
5.0
0.1
—
9.2
6.6
¥15.8

Ratings of
underlying
assets, etc.

Net unrealized
gains/losses
(after write-offs)
¥(0.4)
(1.1)
(1.1) AAA~AA
— No ratings
(0.2) AAA~BBB
(1.7)
—
¥(1.7)

Notes: 1. “Senior” means the upper tranche under senior-subordinate structure.

2. Warehousing loans are loans made based on collateral consisting of securitized investment products held by a special-purpose company estab-

lished for the purpose of securitization.

3. 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.

4. There is no amount of RMBS (excludes GSE etc.) and ABCP.
5. Excludes GSE and SMBC’s exposure to subordinated beneficiaries owned through the securitization of SMBC’s loan receivables (see below).

Government Sponsored Enterprises etc.

GSE etc.

March 31, 2010

March 31, 2009

Balances

Change from
Mar. 31, 2009
¥35.9 ¥(239.3)

Overseas

Change from
Mar. 31, 2009
¥35.9 ¥(239.3)

Net unrealized
gains/losses

Change from
Mar. 31, 2009

Balances

Overseas

Net unrealized
gains/losses

Ratings, etc.

¥0.2

¥(2.9) ¥275.2

¥275.2

¥3.1

AAA

(Billions of yen)

Notes: 1. GSE etc. includes GNMA, FNMA and FHLMC. Besides RMBS, SMFG held bonds issued by GSEs (FNMA, FHLMC and Federal Home Loan Banks) of

¥142.1 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 gains on sales related to GSE etc. in the fiscal year ended March 31, 2010 was ¥3.1 billion.

Subordinated Beneficiaries in Securitization of SMBC’s Loans

Receivables of residential mortgage loans
Receivables of loans to corporations

Total

March 31, 2010

March 31, 2009

Balances

¥248.8
7.8
¥256.6

Change from
Mar. 31, 2009
¥(2.0)
0.7
¥(1.3)

Overseas

¥ —
—
¥ —

Sub-prime
related
¥ —
—
¥ —

Reserve for
possible loan
losses

Balances

Overseas

¥ — ¥250.8
7.1
¥257.9

3.0
¥3.0

¥ —
—
¥ —

Sub-prime
related
¥ —
—
¥ —

Reserve for
possible loan
losses
¥ —
1.5
¥1.5

(Billions of yen)

Notes: 1. No subsidiary other than SMBC has those subordinated beneficiaries mentioned above.
2. Reserves do not include general reserve for possible loan losses for normal borrowers.

SMFG 2010

2. Transactions with Monoline Insurance Companies
Credit Derivatives (Credit Default Swap [“CDS”]) Transactions with Monoline Insurance Companies

Exposure to CDS transactions with
monoline insurance companies

March 31, 2010

March 31, 2009

March 31, 2010

Net
exposure

Change from
Mar. 31, 2009

Reserve for
possible loan
losses

Net
exposure

Reserve for
possible loan
losses

Amount of
reference
assets

Change from
Mar. 31, 2009

March 31, 2009
Amount of
reference
assets

¥48.5

¥(83.5)

¥13.6

¥132.0

¥5.0

¥503.1

¥(33.6)

¥536.7

(Billions of yen)

Loans and Investments Guaranteed by Monoline Insurance Companies, etc.

Loans and investments guaranteed or
insured by monoline insurance companies

(Billions of yen)

March 31, 2010

March 31, 2009

Exposure

Change from
Mar. 31, 2009

Reserve for
possible loan
losses

Exposure

Reserve for
possible loan
losses

¥9.5

¥(2.8)

¥0.0

¥12.3

¥0.0

Reference: In addition, we had ¥0.7 billion in commitment contracts (fully-drawn) to insurance companies with monoline

insurance as group members.

3. Leveraged Loans

Europe
Japan
United States
Asia (excluding Japan)

Total

(Billions of yen)

March 31, 2010

March 31, 2009

Loans

¥261.1
176.2
113.2
59.6
¥610.1

Change from
Mar. 31, 2009

Undrawn
commitments

Change from
Mar. 31, 2009

¥ (44.9)
(3.7)
(65.8)
(19.2)
¥(133.6)

¥ 28.8
11.8
73.5
9.4
¥123.5

¥ (5.4)
(17.4)
3.5
5.5
¥(13.8)

Reserve for
possible loan
losses
¥ 6.2
12.7
12.2
2.3
¥33.4

Loans

Undrawn
commitments

¥306.0
179.9
179.0
78.8
¥743.7

¥ 34.2
29.2
70.0
3.9
¥137.3

Reserve for
possible loan
losses
¥ 2.8
13.4
4.1
2.3
¥22.6

Notes: 1. Above figures include the amount to be sold of approximately ¥10 billion.

In the fiscal year ended March 31, 2010, we sold leveraged loans of approximately ¥51 billion, and loss on the sale amounted to approximately ¥12
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

March 31, 2010

March 31, 2009

Support for programs

(Billions of yen)

Types of reference assets

Claims on corporations
Claims on financial institutions
Retail loan claims
Other claims

Total

Overseas

Change from
Mar. 31, 2009

Notional
amount of
reference
assets
¥467.8 ¥(192.1) ¥105.1 ¥(107.2)
(2.0)
(12.6)
(0.6)
¥501.3 ¥(207.3) ¥138.6 ¥(122.4)

(2.0)
(12.6)
(0.6)

17.7
15.8
—

Reserve for
possible
loan losses

Notional
amount of
reference
assets
¥ — ¥659.9
19.7
28.4
0.6
¥ — ¥708.6

—
—
—

Overseas

Reserve for
possible
loan losses

Liquidity
support

Credit
support

¥212.3
19.7
28.4
0.6
¥261.0

¥ — Yes
— Yes
— Yes
— Yes

¥ —

Yes
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 ¥52 billion.

5. Others
We have no securities issued by structured investment vehicles.

SMFG 2010 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

financial holding company.

followed, 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 poli-

ensuring consistency with business strategies, setting up a sys-

cies for risk management: 1) Set forth SMFG’s Groupwide basic

tem of checks and balances, contingency planning for emergen-

policies for risk management after specifying the categories of

cies and serious situations, and verifying preparedness to handle

risk to which these policies apply; 2) Provide all necessary guid-

all conceivable risk situations. In addition, there are specific

ance to Group companies to enable them to follow the basic

operational policies for implementing appropriate management

risk management policies set forth by SMFG and set up their

of risk by all Group companies.

own appropriate risk management systems; and 3) Monitor the

Under SMFG’s Groupwide basic policies for risk manage-

implementation of risk management by all Group companies to

ment, all Group companies periodically carry out reviews of the

ensure that their 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 system risk). In addition, we

provide individually tailored guidance to help Group companies

identify categories of risk that need to be addressed. Risk cat-

egories are constantly reviewed, and new categories may be

added in response to changes in the operating environment.

The Corporate Risk Management Department works with the

Corporate Planning Department to comprehensively and sys-

tematically manage all these categories of risk across the entire

Group.

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.

Risk Management System
Top management plays an active role in determining SMFG’s

Groupwide basic policies for risk management. The system

works as follows: The basic policies for risk management are

determined by the Management Committee before being autho-

rized by the Board. The Management Committee, the designated

board members, and the relevant risk management departments

perform risk management according to the basic policies.

■SMFG’s Risk Management System

SMFG

Board of Directors

Corporate Auditors

Management Committee

External Audit

Designated Board Members

Audit Dept.

Corporate Risk
Management
Dept.

Credit Risk

Market Risk

Liquidity Risk

Operational Risk

Corporate-wide
Risk Management

Corporate Planning Dept./
Corporate Risk
Management Dept.

General Affairs Dept.

Processing Risk

IT Planning Dept.

System Risk

SMFG 2010

Guidance for
drafting of basic
policies

Monitoring

Report

SMBC

SMFG
Card & Credit

Sumitomo
Mitsui Card

Cedyna
Financial

Sumitomo Mitsui
Finance & Leasing

Japan
Research
Institute

SMBC
Friend
Securities

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

Settle-
ment
Risk

Operational Risk

Bank-wide
Risk Management

Corporate Planning
Dept./Corporate Risk
Management Dept.

Operations Planning Dept.

Processing Risk

IT Planning Dept.

System Risk

Other Departments

Other Risks

Risk management systems are in place at the individual

Risk Capital-Based Management

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 asso-

ciated 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 Department and Credit & Investment Planning

Department. 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.

Furthermore, under our system top management plays an

active role in the approval of basic policies for risk management.

The decision-making process for addressing credit, market, and

liquidity risk at the operating level is strengthened by the Credit

Risk Management Committee and the Market Risk Management

Committee, which are subcommittees of the Management

Committee. The Management Committee is also attended by the

relevant department heads.

■ Risk Management Framework

(1) Framework
In order to maintain a balance between risk and return as well

as ensure the soundness of the Group from an overall perspec-

tive, we employ the risk capital-based management method.

We measure “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 concentration 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 risk capital-based management activities

on a consolidated 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.

(2) Risk Capital Limit
In the case of credit and market risk, we set maximum risk capital

limits, which indicate the maximum risk that may be taken during

the period, taking account the level of stress stipulated in busi-

ness plans. In addition, for operational risk, we also allocate risk

capital, and, for the Group as a whole, we set total risk capital

allocations within SMFG’s capital. In the case of credit and market

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, stock prices,
or other market prices will change the market value of financial products, leading to a loss.

Other Market-Related Risks

Operational Risk

Processing Risk

System 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.

System 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 of uses of funds and sources of funds or unexpected outflows
of funds, which may make it necessary to raise funds at higher rates than normal levels.

Management
by Risk Type

Other Risks
(Settlement Risk and Others)

—

SMFG 2010 35

risk, risk capital limits are sub-divided into guidelines or ceil-

the corresponding losses on operations can be overwhelming.

ings for each business including VaR and loss limits. Therefore,

The purpose of credit risk management is to keep credit risk

by strictly observing the VaR and loss limits, and other factors,

exposure to a permissible level relative to capital, to maintain

SMFG maintains the soundness of the Group as a whole.

the soundness of Groupwide assets, and to ensure returns com-

Implementation of Basel II
The Basel Capital Accord, an international agreement for ensur-

ing the soundness of banks through adherence to BIS capital

adequacy regulations, was revised in response to the diversifica-

tion of the banking business and the increasing sophistication of

risk management technology. The revised BIS regulations, known

as Basel II, became effective from March 31, 2007 in Japan.

Basel II requires banks to implement internal controls to serve

as the basis for capital calculation, and to strengthen their risk

management framework. It also requires disclosure of information

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. We introduced the advanced internal ratings-

based (IRB) approach for credit risk on March 31, 2009, and the

Advanced Measurement Approach (AMA) for operational risk on

March 31, 2008.

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

established 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

credit risk of individual loans and credit portfolios quantitatively

and using consistent standards.

Credit risk is the most significant risk to which SMFG is

exposed. Without effective credit risk management, the impact of

SMFG 2010

mensurate with risk. This leads to a loan portfolio that achieves

high returns on capital and assets.

(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 conduct.

SMBC is promoting the understanding of and strict adher-

ence to its credit policy among all its managers and employees.

By conducting risk-sensitive credit management, SMBC aims

to enhance shareholder value and play a key part in society by

providing high-value-added financial services.

2. Credit Risk Management System
At SMBC, the Credit & Investment Planning Department within

the Risk Management Unit is responsible for the comprehensive

management of credit risk. This department drafts and admin-

isters credit policies, the internal rating system, credit authority

guidelines, 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 capital 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 strengthening its active portfolio management function

whereby loan securitization and other market transactions are

used to stabilize the portfolio’s credit risk for a more sophisticated

portfolio.

The Corporate Research Department within the Corporate

Services Unit performs research on industries as well as

investigates 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

company SMBC Servicer Co., Ltd., which engages in related

services, 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 category, with particular attention paid to evaluating and

managing customers or loans perceived to have particularly high

credit risk.

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 overall

the results directly to the Board of Directors and the Management

soundness of the bank’s loan operations.

Committee.

■ SMBC’s Credit Risk Management System

Board of Directors

Corporate Auditors

Management Committee

External Audit (Auditing Firm)

Risk Management Unit

Corporate Risk Management Dept.

(cid:129)Aggregates risk for comprehensive management
(cid:129)Plans and proposes risk quantification methods

Credit & Investment Planning Dept.

(cid:129)Aggregates credit risk for unified management

(cid:129)Plans and proposes basic credit policies

(cid:129)Drafts, administers, and examines internal rating system

Credit Portfolio Management Dept.
(cid:129)Undertakes active portfolio management

Internal Audit Unit

Internal Audit Dept.

(cid:129)Audits credit risk management

Credit Review Dept.

(cid:129)Audits self-assessments, grading (obligors and facilities), and
effectiveness of write-offs and reserves

Corporate Services Unit

Corporate Research Dept.

(cid:129)Industry trend research
(cid:129)Credit assessment of major industry players

Credit Administration Dept.

(cid:129)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 Enterprises

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 system,

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

business purposes (domestic only), sovereigns, public-sector

entities, 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 financial

grade is then adjusted taking into account the actual state of the

obligor’s balance sheet and qualitative factors to derive the obli-

gor grade. In the event that the borrower is domiciled overseas,

internal ratings for credit are made after taking into consideration

country rank, which represents an assessment of the credit qual-

ity of each country, based on its political and economic situation,

as well as its current account balance and external 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

enterprises (SME) loans, loans to individuals, and project finance

and other structured finance tailored according to the risk

SMFG 2010 37

characteristics of these types of assets.

Risk quantification is also executed for purposes such as

The Credit & Investment Planning Department centrally man-

to determine the portfolio’s risk concentration, or to simulate

ages the internal rating systems, and properly designs, operates,

economic 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 provid-

following the procedures manual once a year, to ensure their

ing a 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

account not just the obligor’s probability of default (PD), but also

the concentration of risk in a specific customer or industry and

the loss impact of fluctuations in the value of collateral, such as

real estate and securities.

Specifically, first, the PD by grade, loss given default (LGD),

credit quality correlation among obligors, and other parameter

values are estimated using historical data of obligors and facili-

ties stored in a database to calculate the credit risk. Then, based

on these parameters, we run a simulation of simultaneous default

using the Monte Carlo method to calculate our maximum loss

exposure to the estimated amount of the maximum losses that

may be incurred. Based on these quantitative results, we allocate

risk capital.

■SMBC’s Obligor Grading System

Obligor Grade

Domestic
(C&I), etc.

Overseas
(C&I), etc.

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

Borrower
Category

Financial Reconstruction
Law Based Disclosure
Category

(Domestic)

Normal
Borrowers

Normal Assets

(2) Framework for Managing Individual Loans
(a) Credit Assessment
At SMBC, credit assessment of corporate loans involves a variety

of financial analyses, including cash flow, to predict an enter-

prise’s capability of loan repayment and its growth prospects.

These quantitative measures, when combined with qualitative

analyses of industrial trends, the enterprise’s R&D capabilities,

the competitiveness of its products or services, and its manage-

ment caliber, result in a comprehensive credit assessment. The

loan application is analyzed in terms of the intended utilization

of the funds and the repayment schedule. Thus, SMBC is able to

arrive at an accurate and fair credit decision based on an objec-

tive examination of all relevant factors.

Increasing the understandability to customers of loan condi-

tions and approval standards for specific borrowing purposes

and loan categories is a part of SMBC’s ongoing review of lend-

ing practices, which includes the revision of loan contract forms

with the chief aim of clarifying lending conditions utilizing financial

covenants.

SMBC is also making steady progress in rationalizing its

credit assessment process. To respond pro-

actively and promptly to customers’ funding

needs—particularly 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.

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

We also provide loans to individuals who

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

J10

G10

Legally or formally bankrupt

Potentially
Bankrupt
Borrowers

Effectively
Bankrupt
Borrowers

Bankrupt
Borrowers

Doubtful Assets

rent out properties such as apartments. The

Bankrupt and
Quasi-Bankrupt
Assets

loan applications are subjected to a precise

credit risk assessment process utilizing a risk

assessment model that factors in the projected

revenue from the rental business. The process

SMFG 2010

is also used to provide advice to such customers on how to

revise their business plans.

(b) Controlling Concentration Risk
Because the concentration of credit risk in an industry or corpo-

rate group has the potential to substantially impair capital, SMBC

(b) Credit Monitoring System
At SMBC, in addition to analyzing loans at the application stage,

implements measures to prevent the excessive concentration of

loans in an industry and to control large exposure to individual

the Credit Monitoring System is utilized to reassess obligor

companies or corporate groups by setting guidelines for maxi-

grades and review self-assessment and credit policies so that

mum loan amounts.

problems can be detected at an early stage, and quick and

To manage country risk, SMBC also has credit limit guidelines

effective action can be taken. The system includes periodic

based on each country’s creditworthiness.

monitoring carried out each time an obligor enterprise discloses

financial results, as well as continuous monitoring performed

each time credit conditions change, as indicated in the diagram

and Returns

below.

(3) Framework for Credit Portfolio Management
In addition to managing individual loans, SMBC applies the

following basic policies to the management of the entire credit

portfolio 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

capital, SMBC sets credit risk capital limits for internal control

purposes. Under these limits, separate guidelines are issued for

each business unit and marketing unit, such as for real estate

finance, fund investment, and investment in securitization prod-

ucts. Regular monitoring is conducted to make sure that these

guidelines are being followed, thus ensuring appropriate overall

management of credit risk.

Against a backdrop of drastic change in the business environ-

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.

(e) Toward Active Portfolio Management
SMBC makes active use of credit derivatives, loan asset sales,

and other instruments to proactively and flexibly manage its port-

folio to stabilize credit risk.

■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

(cid:129)Positive
(cid:129)Flat
(cid:129)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 2010 39

(4) Self-Assessment, Asset Write-Offs and Provisions,

amount 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

for the reserve for possible loan losses.

SMBC’s write-off and provision criteria for each self-

using criteria based on the Financial Inspection Manual of the

assessment borrower category are shown in the table below.

Financial Services Agency and the Practical Guideline published

As part of our overall measures to strengthen risk management

by the Japanese Institute of Certified Public Accountants. Self-

throughout the Group, all consolidated subsidiaries use substan-

assessment is the latter stage of the obligor grading process for

tially the same standards as SMBC for write-offs and provisions.

determining 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

ensuring SMBC’s asset quality and calculating the appropri-

ate level of write-offs and provisions. Each asset is assessed

individually for its security and collectibility. Depending on the

borrower’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 guarantees.

Self-Assessment
Borrower Categories

Normal Borrowers

Borrowers Requiring Caution

As part of our efforts to bolster risk management throughout the

Potentially Bankrupt Borrowers

Group, our consolidated subsidiaries carry out self-assessment

in substantially the same manner.

Borrower Categories, Defined

Effectively Bankrupt/ Bankrupt
Borrowers

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
bankruptcy

Effectively Bankrupt Borrowers

Borrowers that may not have legally or formally declared
bankruptcy but are essentially bankrupt

Bankrupt Borrowers

Borrowers that have been legally or formally declared bankrupt

General reserve

Notes

Specific reserve

Standards for Write-Offs and Provisions

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
general reserve in proportion to the expected losses based
on the historical bankruptcy rate of each group. The groups
are “claims on Substandard Borrowers” and “claims on other
Borrowers Requiring Caution.” The latter group is further
subdivided 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

offsetting uncollectible amounts against corresponding balance

sheet items, referred to as a direct write-off, or else by recog-
nition of a loan loss provision on a contra-asset account in the

SMFG 2010

Discounted Cash Flow Method

SMBC uses the discounted cash flow (DCF) method to cal-
culate 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.

either principal or interest appears doubtful, and are disclosed

in accordance with the Banking Law (in which they are referred

to as “risk-monitored loans”) and the Financial Reconstruction

Law (where they are referred to as “problem assets”). Problem

assets are classified based on the borrower categories assigned

during self-assessment. For detailed information on results of

self-assessments, asset write-offs and provisions, and disclosure

of problem assets at March 31, 2010, please refer to page 162.

4. Market Credit Risk Management
Financial products, such as investments in funds, securitized

products, and credit derivatives, that bear indirect risk arising

from underlying assets such as bonds and loan obligations, are

considered to be exposed to both credit risk from the underlying

assets as well as “market risk” and “liquidity risk” that arise from

their trading as financial 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 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 Risks
Market risk is the possibility that fluctuations in interest rates,

foreign exchange rates, stock prices, or other market prices will

change the market value of financial products, leading to a loss.

Liquidity risk is the risk that there may be difficulties in raising

funds needed for settlements, as a result of the mismatching

of uses of funds and sources of funds or unexpected outflows

of funds, which may make it necessary to raise funds at higher

rates than normal levels.

(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

control system of mutual checks and balances.

2. Market and Liquidity Risk Management System
On the basis of SMFG’s Groupwide basic policies for risk

management, SMBC’s Board of Directors authorizes important

matters relating to the management of market and liquidity risks,

such as basic policies and risk limits, which are decided by the

Management Committee. Additionally, at SMBC, the Corporate

Risk Management Department, which is the planning department

of the Risk Management Unit, an independent of the business

units that directly handle market transactions, manages mar-

ket and liquidity risks in an integrated manner. The Corporate

Risk Management Department not only monitors the current

risk situations, but also reports regularly 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 SMBC’s limits on market and liquidity

risks, and to review and discuss the SMBC’s ALM operation.

To prevent unforeseen processing errors as well as fraudulent

transactions, it is important to establish a system of checks on

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

■ 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

Final approval and Management of Model,
new products and risk limits

Managing Depts.

Other market-
related
operations

Market
operations
(Treasury Unit)

Market
operations
(International
Banking Unit)

Market
operations
(Group companies)

Front Office

Front/Middle/Back Offices

SMFG 2010 41

departments (back office) and the administrative departments

the maximum losses that may occur (this is known as the his-

(middle office) conduct the checks. In addition, the Internal Audit

torical simulation method). This internal SMBC model is evaluated

Unit of SMBC periodically performs comprehensive internal

periodically by an independent auditing firm to assess its

audits to verify that the risk management framework is functioning

appropriateness and accuracy.

properly.

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 rates, interest rates, equity prices and option risks.

SMBC manages each of these risk categories by employing the

VaR method as well as supplemental indicators suitable for man-

aging the risk of each risk factor, such as the BPV.

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

consumer loans differ substantially. At SMBC, the maturity of

demand deposits that are expected to be left with the bank for

a prolonged period is regarded to be five years (2.5 years on

average). The cancellation prior to maturity of time deposits and

consumer loans is estimated based on historical data.

(a) VaR Results
The results of VaR calculations for fiscal 2009 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

(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-

testing results for SMBC’s trading accounts for fiscal 2009

are shown at the top of the next page. A data point below the

diagonal line indicates a loss in excess of the predicted VaR for

that day; however, as in fiscal 2008, there were no such excess

losses during fiscal 2009. This demonstrates that the SMBC VaR

model, with a one-sided confidence interval of 99.0%, is suf-
ficiently reliable.

Glossary
1. VaR (Value at risk)
The largest predicted loss that is possible given a fixed
confidence interval. For example, VaR indicates, for a hold-
ing period of one day and a confidence interval of 99.0%,
the maximum loss that may occur as a result of market fluc-
tuations 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.).

■VaR Results

June 2009

Sept. 2009

Dec. 2009

Mar. 2010

Maximum

Minimum

Average

SMFG (consolidated)

SMBC (consolidated)

SMBC (nonconsolidated)

Trading Book

Banking Book

Trading Book

Banking Book

Trading Book

Banking Book

(Billions of yen)

2.7

2.0

1.7

1.5

2.8

1.2

1.6

42.2

43.7

33.3

33.8

44.0

31.8

37.7

2.7

2.0

1.7

1.5

2.8

1.2

1.6

40.3

42.1

32.0

32.8

42.4

30.9

36.2

2.3

1.6

1.4

1.2

2.5

0.8

1.3

36.7

38.6

28.4

28.9

39.0

27.1

32.5

Note: VaR for a one-day holding period with a one-sided confidence interval of 99.0% [computed daily using the historical simulation
method (based on four years of historical observations)]. Principal consolidated subsidiaries are included and specific risks for
the trading book are excluded.

SMFG 2010

■Back-Testing Results (Trading Book)
SMFG (consolidated)

3.0

2.0

1.0

-1.0

-2.0

-3.0

Actual Profit or Loss (¥ billion)

0.5

1.0

1.5

2.0

2.5

3.0
VaR (¥ billion)

3.0

2.0

1.0

-1.0

-2.0

-3.0

SMBC (consolidated)

Actual Profit or Loss (¥ billion)

0.5

1.0

1.5

2.0

2.5

3.0
VaR (¥ billion)

3.0

2.0

1.0

-1.0

-2.0

-3.0

SMBC (nonconsolidated)

Actual Profit or Loss (¥ billion)

0.5

1.0

1.5

2.0

2.5

3.0
VaR (¥ billion)

(c) Stress Testing
The market occasionally undergoes extreme fluctuations that
exceed projections. To manage market risk, therefore, it is impor-

To minimize the impact of crises on the SMBC’s funding,

SMBC manages highly liquid supplementary funding sources,
whereby SMBC maintains high quality liquid assets, such as

tant to run simulations of unforeseen situations that may occur in

government bonds and has emergency borrowing facilities.

financial markets (stress testing). To prepare for unforeseeable

In addition, for emergency situations, there are contingency

market swings, SMBC performs stress testing on a monthly

plans in place for addressing funding liquidity risk that include

basis based on various scenarios including historical simulations

an action plan with measures for reducing funding gap limits and

which reflect past market fluctuations.

guidelines.

(d) Outlier Framework
In the event the economic value of a bank declines by more than

20% of the sum of Tier I and Tier II capital (“outlier ratio”) as a

result of interest rate shocks, the bank falls into the category of

“outlier bank,” as stipulated under the Second Pillar of Basel II.

As of March 31, 2010, the outlier ratio was around 6%, sub-

stantially below the 20% criterion.

(e) Managing Risk of Stocks Held for Strategic Purposes
The Corporate Risk Management Department establishes limits

on allowable risk for strategic equity investments, and monitors

the observance of those limits in order to control stock price

fluctuation risk.

SMBC has been reducing its strategic equity investments and

the outstanding amount is now significantly below the amount

of Tier I capital, the maximum level permitted under the Act on

Financial Institutions (,etc.)’, Limits for Share, etc. Holdings.

(2) Liquidity Risk Management
At SMBC, liquidity risk is regarded as one of the major risks.

SMBC’s liquidity risk management is based on a framework con-

sisting of setting funding gap limits and guidelines, maintaining

highly liquid supplementary funding sources, and establishing

contingency plans.

So as not to be overly dependent on short-term market-based

funding to cover cash outflows, SMBC sets funding gap limits and

guidelines. The funding gap limits and guidelines are set Bank-

wide and for each region, taking into account cash management

plans, external environment, funding status, characteristics of

local currency and other factors. Additionally, a risk limit is set by

currency as needed to achieve more rigorous management.

■ Decline in Economic Value Based on Outlier Framework

SMBC (consolidated)

SMBC (nonconsolidated)

March 31, 2009 March 31, 2010 March 31, 2009 March 31, 2010

(Billions of yen)

Total

Impact of yen
interest rates
Impact of U.S. dollar
interest rates
Impact of Euro
interest rates

588.4

272.4

202.4

60.4

532.7

396.7

90.3

33.2

561.7

249.3

200.0

60.1

490.8

357.9

88.6

32.8

Percentage of Tier I + Tier II

8.6%

6.1%

8.9%

5.8%

Note: “Decline in economic value” is the decline of present value after interest rate
shocks (1st and 99th percentile of observed interest rate changes using a
1-year holding period and 5 years of observations).

■ Composition, by Industry, of Listed Equity Portfolio

(%)
25

(March 31, 2010)

SMBC Portfolio
TOPIX
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SMFG 2010 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 system 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) execution,

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

identification, assessment, controlling, and monitoring of material

operational 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 cre-

ate a more sophisticated quantification model and to enhance

operational risk management throughout the Group.

2. Operational Risk Management System
SMFG has designed and implemented an operational risk

management framework for Groupwide basic policies for risk

management.

At SMBC, the Management Committee makes decisions

on important matters such as basic policies for operational

risk management, 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

system 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

analyzing 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

scenarios, 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

activities are regularly reported to the director in charge of the

■SMBC’s Operational Risk Management System

Corporate Auditors

External Audit
(Auditing Firm)

Internal Audit Dept.

Auditing of management
and measurement system

Board of Directors

Management Committee

Decision and authorization of important matters related
to operational risk management

Direction

Reporting

Operational Risk Committee

Audit

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

Internal loss data

Head Office departments

Reporting on operational
risk information,
discussion on measures
for risk mitigation

Feedback of
measurement
results related to
operational risk
and direction for
risk mitigation

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

Consumer
Banking

Middle Market
Banking

Corporate
Banking

Treasury

Investment
Banking

International
Banking

SMFG 2010

Operational Risk Management Department. In addition, there

The basic framework of the AMA quantification model of

is the Operational Risk Committee, comprising all relevant units

SMFG and SMBC is outlined in the diagram below. Among the

of the bank, where operational risk information is reported and

four elements, collected internal loss data and the results of

risk mitigation plans are discussed. In this way, we realize a

scenarios analysis through risk control assessment are input

highly effective operational risk management framework. The

directly into the quantification model described later in this

operational risk situation is also reported to the Management

section to calculate required capital and risk-weighted assets

Committee and the Board of Directors on a regular basis, for

(= required capital divided by 8%). In addition, external loss data

review of the basic policies on operational risk management.

and BEICFs are used in verifying the assessment of scenarios,

Moreover, the bank’s independent Internal Audit Department

along with internal loss data, to increase objectivity, accuracy,

conducts periodic audits to ensure that the operational risk man-

and completeness.

agement 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

overlooked, monitor the overall status of risks, and manage/

control them. To this end, it is necessary to be able to quantify

risks using a measurement methodology that can be applied

to all types of operational risk, and to comprehensively and

comparatively capture the status of and changes in potential

operational risks of business processes. Also, from the viewpoint

The specific content and method of collection and use of the

four elements are described below. At present, 21 Group compa-

nies have adopted the AMA, including SMFG and SMBC, and all

Group companies collect and make use of the four elements.

■ Basic Framework of Operational Risk Measurement

of SMFG and SMBC

(1) Internal Loss Data

(2) External Loss Data

Verifi-
cation

of internal control, the measurement methodology used to create

(3) BEICFs

a risk mitigation 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 Approach (AMA), which is the most sophisticated

measurement method out of the three cited methods under Basel

II for measurement of operational risk. SMFG and SMBC have

adopted the AMA for operational risk management and for cal-

culating 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, internal loss data, external loss data, Business

Environment and Internal Control Factors (BEICFs), and sce-

narios analysis through risk control assessments. In addition,

the operational risk equivalent amount (hereinafter, “required

capital”) calculated under the AMA must cover the maximum loss

comparable to a one-year holding period and a 99.9 percentile

confidence interval.

(4)
Scenario
Analysis through
Risk Control
Assessments

Data
input

(5)
Measurement
Using the
Quantification
Model

(6) Risk Mitigation Initiatives

SMFG 2010 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 external loss

data for more than 7,000 cases over the past nine years, which

are indirectly used in quantifying required capital for operational

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.

■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 mitiga-

tion plan to manage the risks. Another purpose of risk control

assessment 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,

operational risks inherent in various business processes are

recognized as “scenarios.” The risk and control conditions

for each scenario are assessed, and the frequency of occur-

rence and amount of losses are estimated based on them. The

assessment process comprises three steps: (i) initial assess-

ment, (ii) Operational Risk Management Department review, and

(iii) final assessment. Through the process, the frequency of

“low-frequency and high-severity” events for each scenario are

estimated 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 10,000 risk scenarios for the Group on

a consolidated basis.

As an effective mechanism for mitigating operational risks,

the maximum loss occurring once in 100 years (hereinafter,

(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

SMFG 2010

“scenario exposure”) is calculated for each scenario derived

Group companies other than those applying the AMA. Then, the

through the risk control assessment, and then a magnitude rating

required capital and risk-weighted assets for SMFG and SMBC

is provided by classifying them into five categories according to

Group are measured by aggregating these figures.

the severity of loss. Risk mitigation plans are developed by the

The outline of the quantification model for SMBC is as follows.

relevant business units for those scenarios with high-severity risk

First, we generate a loss frequency distribution (number of loss

identified through magnitude rating.

incidents over a one-year period) based on the number of histori-

The principal features of this risk control assessment method

cal internal losses. Then, we generate a loss severity distribution

are (1) “objectivity,” which is realized by estimating the frequency

(amount of loss per loss incident) based on internal losses and

of losses based on historical internal loss experience and by esti-

frequency of “low-frequency and high-severity” events obtained

mating the severity of losses based on the transaction amounts

through the risk control assessment.

pertinent to the scenarios, and (2) an appropriate level of “sen-

By using the loss frequency and loss severity distribu-

sitivity,” because changes in the business environment and the

tions, the aggregated loss severity distribution is generated by

implementation of risk mitigation measures can be reflected in

conducting Monte Carlo simulations and by generating various

the frequency and severity of losses by changing the assessment

combinations of loss occurrence and loss amount which are

of risk and control as well as transactions amounts.

simulated by changing these two factors. 99.0% VaR is calcu-

(5) Measurement Using the Quantification Model
SMFG, SMBC, and other Group companies using the AMA

measure the maximum operational loss with a 99.9 percentile

confidence 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

applying the AMA. Meanwhile, the Basic Indicator Approach

(BIA) is applied to estimate maximum operational risk losses for

■Measurement Using the Quantification Model

Distribution of Loss Frequency

lated 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

99.9% VaR, which tends to have a lower accuracy, and stable

estimation results can be obtained by estimating 99.0% VaR

which can be estimated with higher accuracy.

Repeat (e.g., 1 million times)

(
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
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r
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n
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e

P
r
o
b
a
b

i
l
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o
f

o
c
c
u
r
r
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n
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e

0.20

0.15

0.10

0.05

15
Number of incidents/year

Sampling of the
number of losses
from the distribution
(e.g., 5 incidents)

0.30

0.25

0.20

0.15

0.10

0.05

Distribution of Loss Severity

Loss per incident

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)

Calculate aggregated
annual loss amount
(e.g., 450)

Total

Aggregated Loss Distribution

Frequency x Severity

x conversion factor

99.0% 99.9%

Aggregated annual loss amount

(
f
r
e
q
u
e
n
c
y
)

0.4

0.3

0.2

0.1

P
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o
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c
u
r
r
e
n
c
e

SMFG 2010 47

Please note that the accuracy of quantification model outputs

described above is secured through the regular ex ante and ex

post facto verification processes.

(6) Risk Mitigation Initiatives
To mitigate risk using the quantitative results of the AMA, SMFG

and SMBC implement risk mitigation measures to high-severity risk

The breakdown of risk-weighted assets by event type for the

scenarios identified in the previously mentioned magnitude rating.

Group on a consolidated basis, computed with the previously

In addition to the above, the operational risk-weighted assets

described quantification method, is as follows.

■ 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, 2010)

Percentage

10%

20%

16%

42%

calculated using the quantification methods are allocated to the

business units of SMBC and other Group companies, as part of

initiatives to mitigate risk for the Group as a whole.

Specifically, (1) at the beginning of each fiscal year, the

operational 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 company, (2) during the fiscal year, each business unit

and Group company work to prevent the realization of opera-

tional risk and improve scenario control by implementing risk

mitigation measures, (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 busi-

ness 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.

■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

SMFG 2010

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

processing by employees, accidents, or unauthorized activities.

SMFG recognizes that all operations entail processing risk.

We are, therefore, working to raise the level of sophistication of

our management of processing risk across the whole Group by

ensuring that each branch conducts its own regular investiga-

tions of processing risk; minimizing losses in the event of pro-

cessing errors or negligence by drafting exhaustive contingency

plans; and carrying out thorough quantification of the risk under

management.

In the administrative regulations of SMBC, in line with SMFG’s

Groupwide basic policies for risk management, the basic

administrative regulations are defined as “comprehending the

risks and costs of administration and transaction processing, and

managing them accordingly,” and “seeking to raise the quality

of administration to deliver high-quality service to customers.”

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.

Computer-related trouble at financial institutions now has

greater potential to impact society, with system risk diversifying

owing to the IT revolution, the resulting expansion of networks

and the rise in the number of personal computer users. To pre-

vent any computer system breakdowns, we have taken numer-

ous measures, including constant maintenance of our computer

system to ensure steady and uninterrupted operation, duplication

of various systems and infrastructures, and the establishment of

a disaster-prevention system consisting of computer centers in

eastern and western Japan. And to maintain the confidentiality

of customer information and prevent information leaks, sensi-

tive information is encrypted, unauthorized external access is

blocked, and all known countermeasures to secure data are

implemented. There are also contingency plans and training

sessions held as necessary to ensure full preparedness in the

event of an emergency. To maintain security, countermeasures

are revised as new technologies and usage patterns emerge.

Settlement Risk

In the administrative regulations, SMBC has also defined

Settlement risk is the possibility of a loss arising from a trans-

specific rules for processing risk management. The rules

action that cannot be settled as planned. Because this risk

allocate processing risk management tasks among six types

comprises elements of several types of risk, including credit,

of departments: operations planning departments, compliance

liquidity, processing, and system risk, it requires interdisciplinary

departments, operations departments, transaction execution

management.

departments (primarily front-office departments, branches, and

At SMBC, the Operations Planning Department is respon-

branch service offices), internal audit departments, and the cus-

sible for coordinating the management of settlement risk with the

tomer support departments. In addition, there is a specialized

Credit & Investment Planning Department, which oversees credit

group within the Operations Planning Department to strengthen

risk, and the Corporate Risk Management Department, which

administrative procedures throughout the Group.

oversees liquidity risk.

5. System Risk
System 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 system risk

by drafting regulations and specific management standards,

including a security policy. We also have contingency plans with

the goal of minimizing losses in the event of a system failure.

The development of such a system risk management system

ensures that the Group as a whole is undertaking adequate risk

management.

At SMBC, safety measures are strengthened according to risk

assessment based on the Financial Services Agency’s Financial

Inspection Manual, and the Security Guidelines published by the

Center for Financial Industry Information Systems (FISC).

SMFG 2010 49

Corporate Social Responsibility (CSR)

Key Points of CSR Activities
The key points of our CSR activities are as follows. First of all,
we have created a solid management framework, including
corporate governance, internal auditing, compliance, and risk
management systems. Second, we offer higher added value to
our four major stakeholder groups in the following ways.

(cid:129) We endeavor to develop and prosper with our customers
by offering top-quality, high-value-added products and
services.

(cid:129) We maintain sound management through disclosing appro-
priate information, designing and operating robust internal
control systems, and managing to increase shareholder
value.

(cid:129) We implement initiatives on a continuing and active basis to
contribute to society and preserve the natural environment.

(cid:129) 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 sustainable develop-

ment of society through all these activities.

■ The SMFG CSR Concept

Contributing to the Sustainable Development of Society

Customers

Shareholders
and the Market

The Environment
and Society

Employees

Group CSR Initiatives

High value-added
products and
services

Sound
Management

Social and
community
activities and
environmental
activities

Corporate
culture that respects
the individual

Solid management structure
(corporate governance, internal controls, compliance, risk
management, information disclosure, etc.)

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
implementation of CSR initiatives is the shortest path to reaching
management objectives.

Contributing to
the Sustainable Development of Society
SMFG’s goal is to earn the highest trust of society by meeting
the public’s expectations and fulfilling its social responsibilities.
Earning the highest level of trust requires the balanced provision
of value to our four constituencies: customers, shareholders
and the market, the environment and society, and employees.
Through this process, we aim to contribute to the sustainable
development of society as a whole, and to fulfill our corporate
social responsibility.

Basic CSR Policies
As a basis for implementing its CSR activities, SMFG has
formulated a definition of CSR and a set of business ethics that
articulate its basic principles for the Group.

SMFG’s Definition of CSR

In the conduct of its business activities, SMFG fulfills its social responsibilities

by contributing to the sustainable development of society as a whole through

offering higher added value to (i) customers, (ii) shareholders and the market,

(iii) the environment and society, and (iv) employees.

Common SMFG CSR Philosophy: Business Ethics

I. Satisfactory Customer Services

We intend to be a financial services group that has the complete trust and

support of our customers. For this purpose, we will always provide services

that meet the true needs of our customers to assure their satisfaction and

earn confidence in the Group.

II. 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. With such 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. Free and Active Business Environment

We intend to be a financial services group for which all officers and

employees work with pride and commitment. For this purpose, we respect

people and develop employees with extensive professional knowledge and

capabilities, thereby creating a free and active business environment.

V. Compliance

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.

SMFG 2010

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
analyzing 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
quality. 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
conducting 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 enhancement
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
members 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.

■ 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 2010 51

Corporate Governance

Our Stance on Corporate Governance
SMFG and its Group companies follow the SMFG management

philosophy as a universal guide for Group management and

position this philosophy as the anchor for corporate action. To

three major Group companies, namely, SMFG Card & Credit,

Inc., Sumitomo Mitsui Finance and Leasing Co., Ltd., and The

Japan Research Institute, Limited, the SMFG director in charge

of 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

and improving our corporate governance system.

The SMFG Corporate Governance System
SMFG employs the “corporate auditor” governance model in

which statutory auditors oversee the execution of business by

Furthermore, to maintain the soundness of management,

SMFG has established internal control systems to ensure the

proper conduct of company operations following the Japanese

Company Law. Designing and implementing an internal control

system, to strengthen management systems, is regarded as a

major issue, and initiatives are under way to enhance such inter-

the 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-

tions from the directors and others. They also examine docu-

ments relating to important decisions and receive reports from

the internal audit departments, representatives of subsidiaries of

SMFG, and the CPAs.

The chairman of SMFG serves as the chairman of the Board

of Directors of SMFG. This separates the role of the president,

whose responsibility is the overall supervision of business

The SMBC Corporate Governance System
SMBC employs the corporate auditor governance model. Of the

six statutory auditors appointed, three are from outside the bank.

To ensure sound and transparent management, SMBC separates

the two functions of management decision-making at the opera-

tional level and the overall supervision of the conduct of duties by

the management of the bank. For this purpose, the bank employs

a system under which executive officers are responsible for

operational duties, while the supervisory functions are performed

activities of SMFG and other Group companies, from the role of

principally by the Board.

supervising management. To enhance the effectiveness of the

Board, we have appointed outside directors and formed four

governance committees: namely, the Auditing Committee, the

Risk Management Committee, the Compensation Committee,

and the Nominating Committee. Outside directors have been

appointed to all four of these committees to provide for corpo-

rate governance from an objective perspective. As the need

for objectivity is particularly acute in the case of the Auditing

Committee and the Compensation Committee, outside directors

The chairman of the bank serves as the chairman of the

Board of Directors, and, to clearly separate his functions from

those of the president of the bank, who is responsible for the

overall supervision of the bank’s activities, the chairman does

not simultaneously serve as an executive officer and is primar-

ily responsible for supervising management’s execution of their

duties. As at SMFG and to ensure a robust supervisory func-

tion, outside directors are appointed to the Board of Directors.

At SMBC, three outside directors currently serve on the Board,

serve as the chairmen of these committees. To ensure that the

which has a total membership of sixteen.

execution of the Group’s business operations is in conformity

both with legal regulations and generally accepted practices, the

outside directors have been selected from among the ranks of

specialists (including CPAs, lawyers, and consultants).

SMFG has created the Management Committee to serve as

the top decision-making body, and it is under the direct super-

vision of the Board of Directors and chaired by the president

of SMFG. This committee is composed of directors chosen by

the president. Its role is to consider important matters related to

the execution of business and to make decisions for or against

the execution of matters in accord with the basic policies of the

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 execution of day-to-day business operations at SMBC, 10

Executive officers are appointed by the Board to manage

the operation of SMBC’s businesses. As of June 30, 2010, SMBC

has 72 executive officers, including the president, and 12 serve

concurrently as directors. The Management Committee of SMBC

is the highest decision-making body at the operational level and

is under the direct supervision of the Board of Directors. The

president chairs this committee and selects its members from

the executive officers. The committee members consider impor-

tant management issues based on policies set by the Board of

Directors, and the president has the authority to make the final

decision after considering the committee’s recommendations.

The president designates certain members of

the

Management Committee to be Authorized Management

Committee members in charge of particular Head Office depart-

ments or units. All of these designated individuals are in charge

of implementing the directives of the Management Committee

SMFG directors (including three outside directors) of the total of

within the businesses they oversee.

11 SMFG directors (including three outside directors) also serve

as directors of SMBC. To monitor the conduct of operations at

SMFG 2010

Internal Audit System

An Outline of the Group’s Internal Audit System
In addition to the SMFG Auditing Committee, which functions

as a governance committee reporting to the Board of Directors,

we have established the Internal Auditing Committee, which is a

part of the Management Committee, to give a higher profile to the

internal auditing functions and facilitate effective conduct of inter-

nal audits. The Internal Auditing Committee meets every quarter,

domestic and overseas branches - and SMBC group companies.

Auditing of operations of head office departments is conducted

by assessing the appropriateness of all internal control systems

of each department. In addition, audits of head office depart-

ments focus on material issues that arise in the management of

specific operations and categories of risk. These auditing activi-

ties emphasize the verification of “Targeted Audit Items” across

and its members discuss important matters related to internal

the whole of the bank’s organization.

auditing based on reports prepared by the departments respon-

sible for internal audits. There is also the Audit Department, which

is an internal auditing unit that is independent of the operational

departments of the Group.

The Audit Department conducts internal audits of the opera-

tions of all the Group’s units and departments to contribute to

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-

ating appropriately and effectively. The Audit Department is also

responsible for the overall supervision of the internal audit sys-

tems of Group companies. It monitors the appropriateness and

effectiveness of the internal audit systems at Group companies

by verifying past data related to internal auditing and monitoring

activities, which include inspections and other activities based on

actual samples, and, when deemed necessary, by conducting

audits. Based on these activities, the Audit Department provides

recommendations and guidance to the business units and

departments as well as Group companies.

At SMBC, we have formed auditing departments that are

independent of bank units involved in marketing and other busi-

ness activities. Within the Internal Audit Unit of SMBC, we have

formed two departments: the Internal Audit Department and the

Credit Review Department. As at SMFG, SMBC has an Internal

Auditing 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,

Moreover, audits of branches and offices are not limited just

to checking for control and other deficiencies but also include

pointing out compliance and risk management problems and

making recommendations for corrective action. In other Group

companies, internal audit departments have been formed suited

to the respective nature of each company’s lines of business.

Initiatives to Enhance the Sophistication and
Efficiency of Internal Auditing
The Audit Department has adopted methods following the stan-

dards of the Institute of Internal Auditors (IIA)*, an international

organization. The Audit Department conducts risk-based audits

and works to apply best practices to Group companies.

To fulfill effectively its role as the department in overall charge

of internal auditing, the Audit Department is constantly endeavor-

ing to advance the professional skills of personnel engaged in

internal auditing. Activities include collecting the latest informa-

tion on internal auditing from inside and outside Japan and dis-

seminating it to all Group companies. Also, the Audit Department

organizes training courses, led by outside experts, for the staff of

Group companies and encourages them to obtain international

qualifications to enhance their professional knowledge and skills in

internal auditing. To improve further the effectiveness of auditing,

we also take active measures on a Groupwide basis to assess the

quality of our internal auditing in the light of IIA standards.

* The Institute of Internal Auditors (IIA) was founded in 1941 in the United States as an
organization dedicated to helping raise the level of specialization and professionalism
of internal auditing staff. In addition to conducting theoretical and practical research on
internal auditing, the IIA administers examinations for Certified Internal Auditor (CIA),
which is the internationally recognized qualification in this field.

SMFG

Shareholders’ Meeting

Nominating
Committee

Board of Directors
Risk Management
Compensation
Committee
Committee

Auditing
Committee

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

Group Strategy
Committee

Management Committee

Internal Auditing Committee

Business units subject
to auditing

Business units subject to auditing

All Departments

Internal
Audits

Audit
Department

Head Office/Business Units

Internal
Audits

Internal Audit Unit
Internal Audit Department
Credit Review Department

M
o
n
i
t
o
r
i
n
g

Auditing

SMFG 2010 53

Compliance

Compliance Systems at SMFG

Basic Compliance Policies
As a financial services group offering a multiplicity of products

and services, SMFG is intensifying its efforts to maintain high

Hotline for Reporting Improper Accounting and
Auditing Activities
SMFG has established the SMFG Accounting and Auditing

standards of compliance to carry out its mission as an impor-

Hotline to provide a channel for individuals within and outside

tant part of the nation’s public infrastructure and fulfill its social

the Group to report improper activities. This hotline enables

responsibilities. Through these efforts, SMFG is becoming a truly

us to quickly identify and take action against fraud and other

outstanding global corporate group.

misconduct involving accounting and auditing at SMFG and its

At SMFG, we have positioned compliance as one of the

consolidated subsidiaries.

principal supports of our Business Ethics (please refer to page

50), which serve as the basic principles for fulfilling our corporate

social responsibility (CSR). Accordingly, we regard strengthening

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

overseeing the state of autonomously implemented compliance

functions at those companies. The priority areas for strengthen-

ing oversight in fiscal 2010 include (a) guidance and oversight

of Group companies to deal with a changing regulatory envi-

ronment, and (b) creation of an internal management structure

appropriate for a comprehensive financial services group. These

measures will enable us to strengthen compliance management

at the individual Group company level.

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 account-

ing and auditing at SMFG and its consolidated subsidiaries.

* Anonymous reports are accepted, but, if possible, please provide

personal 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 consent, or unless required by law.

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

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, SMFG Card & Credit*, Sumitomo Mitsui Finance and Leasing, JRI, and SMBC Friend Securities

* SMFG Card & Credit, Inc. is an intermediary holding company for Sumitomo Mitsui Card and Cedyna.

SMFG 2010

Compliance at SMBC

Strengthening Compliance Systems
Compliance with laws, regulations, and other social standards

Issuance of a Compliance Manual
To assist management and staff in choosing proper courses of

is 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.

SMBC, in line with the basic policy of SMFG, requires all its

management and staff to assign the highest value to maintaining

management and staff have been fully apprised of its contents.
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

related activities each fiscal year, including review of and

is committed to always abiding by the Banking Law, Financial

necessary revisions to regulations and training. In fiscal 2010,

Instruments and Exchange Act and other legislation and taking

measures focusing on better adapting our compliance posture

preventive measures against financial activities of anti-social

to social change are being implemented, including a review of

forces.

our marketing practices for derivative and other products which

entail risk, creating more effective mechanisms for resolving

Management of the Compliance System
SMBC adopts a basic, two-tiered structure to ensure compliance.

complaints and conflict in anticipation of establishment of a new

Japanese financial-sector ADR (Alternative Dispute Resolution)

First, each department and office is held individually responsible

mechanism, further measures to facilitate financing to SMEs and

for making before the fact decisions that ensure its conduct com-

mortgage borrowers, and taking further preventive measures

plies with laws and regulations. Second, an independent, Internal

Audit Unit conducts rigorous audits of department and branch

compliance.

against financial activities of anti-social forces.
Appointment of Compliance Officers
In addition to the compliance officers appointed within the bank’s

To maintain this two-tiered structure and ensure it is operat-

departments and branches, we have appointed Area Compliance

ing effectively, the Compliance Unit, which includes the General

Officers, who are independent from frontline departments,

Affairs Department and the Legal Department, plans and imple-

within certain of our business units including the Middle Market

ments systems and system improvements to secure compliance,

Banking Unit and the Consumer Banking Unit. These officers are

acting under directions from management. The Compliance

responsible for directing and overseeing compliance regarding

Unit also provides guidance and conducts monitoring activities

transactions carried out by the staff of our branches and other

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

frontline offices.
Formation of the Compliance Committee
To ensure that compliance issues related to various operations

the diagram at the bottom of this page. To ensure that this frame-

within the bank are reviewed and discussed comprehensively,

work functions effectively, SMBC also engages in the activities

we have formed the Compliance Committee, which has members

described in the following paragraphs.

■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
Committee

Report
and
Discuss

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.

Audit

Corporate
Auditors

Head Office Departments

Directions

General
Managers

Area Compliance Officers

Front-Line Offices
(Corporate Business Offices, Branches)

General Managers

Compliance Officers

Report

Audit

Internal
Audit
Dept.

SMFG 2010 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 corporate activities. SMFG is a signatory to the “Statement by Financial Institutions on

the Environment and Sustainable Development” of the United Nations Environment Programme (UNEP).

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
(cid:129) We provide environment-friendly financial products, information, and solutions that help our customers in their efforts to preserve the

eco-system.

(cid:129) We devise ways to reduce levels of environmental risk posed by our own activities and those of society at large.
(cid:129) We are determined to fulfill our social responsibilities through the conservation of resources, energy saving, and the reduction of

waste.

(cid:129) We enforce a policy of strict adherence to environment-related laws and regulations.
(cid:129) 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.

(cid:129) 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.

(cid:129) 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.

(cid:129) These policies are published on the Group’s website, and are also available in printed form upon request.

Three Pillars of Group’s Activities
The three pillars of our environmental action plan are to

“reduce environmental impact,” “manage environmental

risk,” and “promote environmental businesses.” We set

environmental objectives for various activities and follow

the PDCA (plan, do, check, and act) cycle in these envi-

ronmental activities. SMFG and principal Group companies

have obtained ISO 14001 certification, the international

standard for environmental management systems (EMS).

EMS Enhancement System

Environmental Action Plan and the PDCA Cycle

The Group Environmental
Policy

Implementation of
environmental initiatives

Reduce environmental
impact

Manage environmental risk

Promote environmental
businesses

PLAN

CHECK

ACT

SMFG

Officer in charge of environment:
Officer responsible for environment management: GM of Group CSR Dept., Corporate Planning Dept.
ISO 14001 Secretariat:

Officer in charge of Corporate Planning Dept.

Group CSR Dept., Corporate Planning Dept.

SMFG Card & Credit

SMBC

Nikko Cordial Securities

Sumitomo Mitsui Card

Sumitomo Mitsui
Finance and Leasing

SMBC Friend Securities

Japan Research Institute

Corporate Planning Dept.

Communications Dept.

Corporate Planning Dept.

General Affairs Dept.

Operational Section

SMFG 2010

Reducing Environmental Impact
(cid:129) Realizing Carbon Neutrality

SMFG sets objectives each year for reduction in its use of electric

determining, assessing and managing social and environmental

risk in project financing. Its Environment Analysis Department

assesses the social and environmental risk of large-scale projects

power and other sources of energy and is actively engaged in

in accordance with the Equator Principles.

reaching these energy conservation goals.

SMBC has made its Head Office “carbon neutral” through

the procurement of “green” sources of energy and purchases of

carbon credits.* Sumitomo Mitsui Finance and Leasing’s Tokyo

Head Office is also carbon neutral.

■ Flow Chart of SMBC’s Social and Environmental

Risk Assessment

Project Information

Screening

n
e
m

* Carbon credits are also referred to as “Kyoto credits,” “emission allow-
ances,” and “Certified Emission Reductions (CER).” In this annual report,
we use “carbon credits” to refer to these and the other concepts recog-
nized under the Kyoto Protocol.

(cid:129) Response to Amended Act on the Rational Use of Energy

In April 2010, the amendments to the Act on the Rational Use

of Energy came into effect, and as a result, the standard unit

for evaluation of energy management was changed from the

individual factory or office building to the entire company.

Companies using 1,500kl or more of energy (crude oil equivalent)

per annum are now required to establish an energy consumption

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

Environmental Review

Environmental Monitoring

Social and Environmental
Risk Assessment

Credit Departments

t
r
a
p
e
D
s
s
y
a
n
A

n
e
m
n
o
r
i
v
n
E

management system and draw up medium- to long-term plans for
improving energy efficiency, with the aim of reducing the volume

Promoting Environmental Businesses
The Group pursues environmental business as an effective way

of energy consumed by at least 1% per year. In response, the

of contributing to society and the international community.

Group is taking measures to reduce energy consumption at all

SMBC, in particular, formed the cross-organizational Eco-

workplaces, and is also developing a consultancy business to

Biz Promotion Council in fiscal 2005 to discuss periodically the

meet the needs of customers attempting to conserve energy and
reduce CO2 emissions.

development of sophisticated and efficient products and services

that contribute to environmental maintenance and improvement.

(cid:129) Greening Bank Operations

SMBC has been steadily applying green IT to its branch terminals

and ATMs. The new CUTE terminal for handling over-the-counter

transactions, which was jointly developed with NEC Corporation

Topics

and Oki Electric Industry Co., Ltd., uses highly functional image

processing to electronically store documents, mainly copies of

driver’s license and other forms of IDs, for a reduction in paper

usage of 3 million A4 sheets per year. SMBC donated part of the

cost savings resulting from the introduction of this system to the

Tokyo Metropolitan Government’s Green Tokyo Fund, specifically

for the “Creating Umi-no-Mori (Sea Forest)” project, one of the

fund’s four greening projects.

In April 2010, SMBC began storing ATM transaction data,

which had hitherto been printed out on paper (the “ATM Journal”),

in the CUTE operations processing server. This is expected to

save 28 million A4 sheets annually.

Managing Environmental Risk
(cid:129) 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 deducted from

the value of the collateral.

In addition, similar measures are taken regarding asbestos

risk — risk assessments are conducted for asset collateral meet-

ing certain criteria, and the assessed value of the potential risk is

deducted from the value of the collateral. SMBC also encourages

its customers to have structures surveyed more comprehensively

for asbestos pollution. Regarding its own premises, SMBC sur-

veys and properly removes asbestos from structures.

(cid:129) Adoption of the “Equator Principles”

SMBC has adopted the Equator Principles, a set of principles for

l SMBC Environmental Assessment Loan/Private

Placement Bond
SMBC wins 2009 Nikkei Veritas Superiority Award
SMBC received the Nikkei Veritas Award for Superiority at
the 2009 Nikkei Superior Products and Services Awards for
its SMBC Environmental Assessment Loan/Private Placement
Bond, a financial product developed in collaboration with the
Japan Research Institute. In this product, the environmental
friendliness of the business operations of a corporate customer
seeking to raise funds is assessed using JRI’s own assess-
ment standards. The terms and conditions of the loan or bond
are then set in accordance with the results of the assessment.
SMBC has received high praise for
this product, which aims to support
companies that are helping to pre-
serve the global environment.

l New Bank Branch Terminal

— CUTE
Receives Special Award in Green IT AWARD 2009
The new CUTE terminal used in our branches, jointly devel-
oped by SMBC with NEC Corporation and Oki Electric Industry
Co., Ltd., received a special award at the Green IT AWARD
2009, held by the Green IT Promotion Council. The award was
given for CUTE’s significant contribution to reducing the envi-
ronmental impact of bank operations by realizing paperless
processing using IT, as well as for being a good example of
how companies in different industries can collaborate to help
preserve the environment. This is the first time the award has
been received by a bank.

SMFG 2010 57

Environmental Initiatives by Group Companies

Company Customers
SMFG

Corporate

Program/Product
SAFE environmental magazine

SMFG Environmental Business Forum

SMBC*1

SMBC-ECO Loan

SMBC
JRI*2

SMBC Environmental Assessment Loan/
Private Placement Bond

Eco-Products International Fair

Ministry of Environment’s interest-free
financing program

Global ECOBIZ Assist

Assistance in using the domestic
carbon credit system
Carbon-credit related business
activities (matching, advisory, trust and
consulting activities)

Carbon credit trading

Matching Business

Strengthening alliances with
international and financial institutions

“Climate & Children Supporters”

Individuals

SMBC Nikko World Bank Green Fund

DWS New Resource Technology Fund

Environmental campaign using JGBs
for individuals

SMBC
SMFL*3

Individuals
Corporate

Leading the Tokyo Metropolitan
Government’s Eco-Finance Project

Corporate

eco japan cup

SMFL

Carbon-neutral leases

Consulting business related to amended
Act on the Rational Use of Energy
Environmental advisory business

Consulting for construction of Tianjin
Eco-City, and attracting Japanese
companies

JRI

JRI
SMBC
SMBCCN*4
JRIS*5
SMCC*6

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.
SMBC and SMBC Consulting Co., Ltd. jointly hold multifunctional events at Eco-Products, one of Japan’s largest environmental
exhibitions. This forum combines many types of events such as environmental seminar, business matching, etc.
This loan offers reductions on loan interest rates of up to 0.25% for SMEs with environmental management systems certified by
any of more than 20 companies and organizations, including local governments.

Terms and conditions of this loan/bond depend on the results of an assessment of a company’s environmental friendliness using
standards established by the JRI. Customers can choose the fund procurement method — loans or private placement bonds.
Loans extended: ¥100 billion to 30 companies (as of March 31, 2010)
At the fifth (March 2009) and sixth (March 2010) fair, SMFG president Teisuke Kitayama chaired the planning committees and
oversaw the booths, international conferences and other activities.
The Ministry of the Environment operates a special interest-free financing program to support the attainment of the objectives
under the Kyoto Protocol. Companies receive loans from financial institutions with interest subsidized by the government to
finance capital investment, on condition that they set CO2 emission reduction targets and achieve them within a specified period.
As one of the financial institutions authorized to make loans under this program, SMBC provides support for companies tackling
environmental issues.
This program supports the globalization of Japanese companies with environmental technologies 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.).
SMBC and Group companies are working on a program for assisting CO2 emission reduction activities by using the domestic
carbon credit system that began in October 2008.
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 products, and financing. SMBC established a consulting company in Brazil to assist in development of Clean Development
Mechanism (CDM) projects.
In June 2009, SMBC became a carbon credit dealer, the first Japanese bank to purchase and sell carbon credits directly with
customers.
SMBC utilizes its network of overseas offices to introduce valuable partners in developing countries for corporate customers
planning to set up or expand business operations overseas.
In March 2010, with the aim of providing financing for renewable energy projects and developing its carbon credits trading and
other businesses, SMBC signed a memorandum of understanding with International Finance Corporation (IFC) and Environmental
Cooperation-Asia (ECO-Asia), a regional program of the United States Agency for International Development (USAID). SMBC has
been forging business alliances with local financial institutions and economic organizations in Malaysia, the Philippines, Brazil and
other countries as part of an effort to build a stronger global network.
SMBC and UNICEF started this program to target both the causes and results of climate change. When participating companies
buy carbon credits to fight global warming, monetary contributions to the program are also made to aid a developing country
(Mozambique) that is suffering from the effects of global warming.
SMBC and Nikko Cordial Securities started marketing “SMBC Nikko World Bank Green Fund,” launched by Nikko Asset Management
Co., Ltd. in collaboration with the World Bank. The fund is the world’s first fund that invests in World Bank green bonds.
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 an environmental campaign for each issue of Japanese government bonds (JGBs) since June 2008.
Since June 2010, when SMBC began handling a new series of three-year JGBs for individuals, SMBC has used part of its earnings
from the sale of these bonds to purchase a 100kg carbon credit per customer, and transfers the credits gratis to the Japanese
government, thereby helping to reduce Japan’s volume of greenhouse gas emissions.
SMBC has been selected as a core financial institution in the Eco-Finance Project being implemented by the Tokyo Metropolitan
Government over a 5-year period starting in fiscal 2009. In this project, the fund deposited by the Tokyo Metropolitan Government
with SMBC is used to meet a wide range of needs, conditioned on satisfying certain environmental standards, from financing and
leasing for corporate clients to mortgage loans, automobile loans, and fixed-term deposits for individuals.
This is a contest for selecting companies that have practical environmental technologies and ideas. SMBC gives assistance to
those venture companies jointly with Japanese universities and thereby provides support for their R&D activities.
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.
SMFL is enhancing environmental advisory services for companies in response to the amended Act on the Rational Use of Energy.
This includes comprehensive 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.
Leveraging its environmental business expertise, JRI is creating a plan for the use of renewable energy at the Tianjin Eco-City,
China’s first national project for an environmentally sustainable city. SMBC, SMBCCN and JRIS have signed a basic agreement
with the Tianjin Eco-City Administrative Committee on initiatives to attract Japanese companies to the Tianjin Eco-City project.

Individuals Web Registration Campaign

SMCC is vigorously promoting the use of online account statements (the total bill amount is e-mailed and the details are posted on
its website) as a means of conserving paper and helping cut CO2 emissions.

*1 Sumitomo Mitsui Banking Corporation *2 The Japan Research Institute Limited *3 Sumitomo Mitsui Finance and Leasing Co., Ltd. *4 Sumitomo Mitsui Banking Corporation (China) Limited
*5 The Japan Research Institute (Shanghai) Consulting Co., Ltd. *6 Sumitomo Mitsui Card Company, Limited

SMFG 2010

SMFG Environmental Business Forum at
Eco-Products 2009

Advisory services for the Tianjin Eco-City
Project

The Eco-Products exhibition, held each December, is one of Japan’s largest environ-
mental exhibitions. Following on from last year’s event, SMFG once again held the
SMFG Environmental Business Forum, comprising different types of environmental
business events.

Targeting many different types of stakeholder, such as those seeking to newly
enter the environmental business field, those looking to expand their marketing
channels, and those examining their options regarding information gathering, SMFG
conducted business matching, set up booths with catalogs, and held lectures, semi-
nars, and other programs. By these means, SMFG provided forums for representatives
of companies in the environmental field to meet and exchange information, thereby
giving rise to new business opportunities.

Over the three-day duration of the exhibition, we held 17 seminars on various
topics, as well as panel discussions. About 500 cases of business matching were
arranged, and 41 companies had booths showcasing their products and services.
In all, the SMFG Environmental Business Forum hosted a large number of business
negotiations on new environmental technologies,
products, and services.

The Tianjin Eco-City project is a large-scale eco-friendly urban development project
being undertaken in China at the national government level, in line with the country’s
policy on the environment and energy. The development of the Eco-City is guided by
22 quantitative key performance indicators which are set at high levels, such as a
renewable energy utilization rate of 20% or higher and a green building* rate of 100%,
in order to harmonize human activities with the natural environment, conserve natural
resources, and efficiently recycle resources.

The Japan Research Institute (JRI) has drawn up the plan for achieving the
renewable energy utilization rate of 20% or higher, including the technologies and
their implementation methodology. SMBC, meanwhile, has signed a business alliance
agreement with Tianjin Eco-City Administrative Committee, together with Sumitomo
Mitsui Banking Corporation (China) Limited, JRI, and the Japan Research Institute
(Shanghai) Consulting Co., Ltd., to attract Japanese companies to the Tianjin Eco-City
project.

Moving forward, SMBC will further reinforce the services to Japanese companies
setting up operations in the area by enhancing the collaboration with both Tianjin
City and the Tianjin Eco-City project. JRI will actively promote initiatives for launching
environment-/energy-related projects not only in the Tianjin Eco-City, but in many other
parts of China, too.

Hundreds of companies found prospec-
tive business partners at the matching
booth.

SMFG Booth

Artist’s rendition of Tianjin Eco-City when
completed

* “Green building” here refers to minimizing the building’s impact on the environment, and

to use “people-friendly” methods of construction and urban planning.

SMBC Begins Handling World Bank Green Fund

Eco-Products International Fair 2010

On February 1, 2010, SMBC and Nikko Cordial Securities commenced handling of the
SMBC Nikko World Bank Green Fund, an investment trust launched by Nikko Asset
Management Co., Ltd.

This fund is the world’s first fund
developed in cooperation with the World
Bank that invests in World Bank green
bonds. The World Bank green bonds
support World Bank-funded projects in
developing countries to mitigate global
warming. A portion of the profits from this
green fund will be donated to UNICEF and
the Japanese Red Cross.

This international fair is held every year to promote the growth of environmental
businesses in the Asia-Pacific region and increase their global competitiveness by
making their supply chains more eco-friendly. SMBC was a member of the Preparatory
Committee in 2009 and 2010. The sixth Eco-Products International Fair, held in March
2010 in Jakarta, Indonesia, was the largest ever with 164 Asian companies and
organizations participating, and more than 90,000 visitors during the 4-day event.

At the international conference held parallel to the fair, lectures were given and
panel discussions by world leaders and specialists on environmental issues from many
countries were held. SMBC and JRI participated in a session on “Eco Business and
Climate Change,” and representatives of the two companies made presentations on
the outlook for and initiatives on carbon credits business in Asia.

Total asset value: ¥16,784 million (as
of May 31, 2010)

Panel discussion at the international
conference

President Teisuke Kitayama of SMFG
explains the carbon credits business
to Muhaimin Iskandar, Minister of
Manpower and Transmigration of
Indonesia.

SMFG 2010 59

Social Contribution Activities

Fundamental approach to social contribution activities

SMFG and its Group companies, in consideration of 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

executing social contribution activities at the corporate level, as well as encouraging employees to volunteer for worthwhile activities.

The central elements of our social contribution activities

SMFG and its Group companies position the following four sectors as the core fields for social contributions: 1) social welfare;

2) local and international communities; 3) the environment; and 4) culture, the arts and education.

Activities Contributing to Social Welfare
(cid:129) Sign-Language Courses

To enhance the ability of our employees to communicate with

and offer high-level services to hearing-impaired customers,

SMBC holds sign-language courses and seminars for inter-

ested employees. In fiscal 2009, we held one-day introductory

stamps to volunteer organizations to help them cover their post-

age costs. In addition, SMBC collects unused prepaid telephone

cards, Sumitomo Mitsui Finance and Leasing collects PET bottle

caps, SMBC Friend Securities collects PET bottle caps and used

postage stamps, and Sumitomo Mitsui Card collects used post-

age stamps and used prepaid cards from employees, donating

courses that were also attended by employees of Sumitomo

them to volunteer organizations.

Mitsui Card, the Japan Research Institute, and SMBC Friend

Securities. Also in fiscal 2009, SMBC held training sessions for

employees to improve their communication skills, which included

using basic sign language, and learn about consideration for

the needs of both hearing-impaired customers and others.

These courses were

also attended by

employees of other

Group companies

and the Nikko Cordial

Securities Group.

(cid:129) Volunteer Activities, and Blood Donation Drives

In fiscal 2009, SMBC held courses on the environment, focus-

ing on the issue of biodiversity, which were attended by SMBC

employees and family members. SMBC also provided employees

with information on various volunteer activities and encouraged

them to participate. Blood donation drives were also held at

SMBC and Sumitomo Mitsui Card.

(cid:129) 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 postage stamps, and donates the

SMFG 2010

(cid:129) Installation of Charity Vending Machines; Sale of

Products Made by Social Welfare Organizations

SMBC has installed vending machines at its head office under a

program in which contributions are made to welfare organizations

with every purchase of a soft drink from these machines. SMBC

also holds regular events where employees can buy products

made by NPOs employing persons with disabilities and NPOs

engaged in international cooperation initiatives.

(cid:129) Donations to Organizations Assisting Senior Citizens

SMBC Friend Securities has been donating part of the income

from a fund that invests in companies contributing to the bet-

terment of the aging population to organizations that assist and

provide nursing care for the elderly.

Topics

l SMBC Receives Commendation from Tokyo Metropolitan
Governor for Contributions to Metropolitan Social
Welfare Initiative

In January 2010 SMBC received a commendation from the
Governor of Tokyo for contributions to an initiative to make Tokyo
into a city with a high level of social welfare services. This was in
recognition of SMBC’s various measures to promote the use of
universal design and provide universal service throughout Japan.

Contribution Activities for Local and Overseas
Communities
(cid:129)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. As of July 2010,

more than 12,000 employees were participating in this program.

The following are some of the 27 activities funded by the

SMBC Volunteer Fund in fiscal 2009.
Overseas

(cid:129) Funding construction of an orphanage in Cambodia

(cid:129) School library opened in Laos

(cid:129) Operation of a clinic for refugees repatriated to Pakistan

(cid:129) Support for regional activities in Nepal to enable children to

attend school

(cid:129) Livelihood support for the most disadvantaged section of the

population in Myanmar, including the elderly and persons

2009, and have contributed to reforestation projects in Hyogo

Prefecture, educational activities for the prevention of cancer,

and projects to help children in developing countries.

(cid:129)Opening of Accounts for Donations to Disaster Victims

When major natural disasters occur, SMBC opens special

accounts to collect donations for relief efforts without the usual

fund transfer charges. SMBC also solicits donations for such

causes from its own employees and those of other Group

companies including Nikko Cordial Securities. In fiscal 2009,

accounts were established for relief efforts for the victims of the

July torrential rains in the Chugoku and Northern Kyushu regions

and Typhoon No. 9 in August, both in Japan, as well as Typhoon

Ketsana in the Philippines, the 2009 Samoa earthquake, the

2009 Sumatra earthquake, the 2010 Chile earthquake, and the

2010 Haiti earthquake. Following the Haiti earthquake in January,

Sumitomo Mitsui Card collected donations made by customers

with disabilities

using its credit cards.

(cid:129) Clean water project for schools in Southern Sudan

(cid:129) Measures to raise income levels in Bangladesh, including

microfinancing initiatives, and other support efforts

(cid:129) School meals program for elementary schools in Burkina

Faso

(cid:129) In Indonesia, scholarships for middle school and high school

students, a health program targeting infants, and others

Japan

(cid:129) For terminally ill young children, SMBC funds trips for them

and their families, to make their wish come true.

(cid:129) Offering opportunities for school students with hearing impair-

ments to meet and interact with members of a drama troupe

(cid:129) Funding for raising and training puppies to become assis-

tance dogs, including feeding, veterinary medical care and

obedience classes

In addition to the above, the SMBC Volunteer Fund also

donated money to help the victims of such overseas natural

disasters as the September 2009 Sumatra earthquake, the

Philippine Typhoon Ketsana, the 2009 Samoa earthquake,

and the 2010 Haiti earthquake, as well as natural disasters in

Japan including the catastrophic heavy rains in the Chugoku

and Northern Kyushu regions in July 2009, and Typhoon No. 9 in

August.

At Group member SAKURA KCS Corp., as of June 2010,

(cid:129)Activities of YUI, SMBC’s Volunteer Organization

SMBC also provides active support for YUI, an in-house volunteer

organization that provides opportunities for SMBC employees to

plan and carry out volunteer activities. YUI activities conducted

on a regular basis include social events at schools for the

hearing-impaired, holding charity bazaars for items collected

from employees, and visits to facilities for the elderly. In addition

to the continued activities mentioned above, volunteers in Tokyo

and Osaka conducted

tree-planting activities

on the slopes of Mount

Fuji to mark the 10th

anniversary of

the

establishment of YUI.

(cid:129) Contributing to

Local Communities

SMBC has been promoting and carrying out activities planned

by its branches and other offices in Japan to contribute to local

communities, including branch tours, cleaning up the local envi-

ronment, such as parks and other areas in the vicinity of SMBC

branches, participation in local festivals and events, exhibitions

of children’s art from around the world and concerts in the lob-

approximately 900 employees (around 80% of the company’s

bies of SMBC branches.

total staff) have enrolled in their volunteer fund since fiscal

Nikko Cordial Securities also takes part in these activities at

all its branches nationwide. The company has organized tours

of its branches, including hands-on work experience, as well as

local cleanup activities.

Nikko Cordial Securities employees clean up a
sidewalk near a branch.

SMFG 2010 61

(cid:129) Local Community Contribution by Overseas Offices

SMBC overseas offices conducted the following activities in fiscal

(cid:129) Participation in “TABLE FOR TWO”

At SMBC’s head office, we operate a system through the non-

2009.

profit organization TABLE FOR TWO International of providing

(cid:129) Sumitomo Mitsui Banking Corporation (China) Limited

donations to fund school meals in developing countries. The

established a scholarship program for students of Suzhou

price of a nutritiously balanced, low-calorie lunch plate offered

University, Shanghai International Studies University, and

at the head-office employee cafeteria includes a ¥20 donation,

other universities.

the price of one school meal. Vending machines have also been

(cid:129) SMBC’s Hong Kong Branch gave donations in support of an

installed selling health drinks whose price includes a donation to

orchestra composed of young Asian musicians.

TABLE FOR TWO International.

(cid:129) SMBC’s Seoul Branch gave donations in support of a

Japanese-language drama festival aimed at promoting

understanding of Japanese culture.

(cid:129) Social Contribution Activities of In-House Foundations

Based in the United States,

(cid:129) SMBC’s Bangkok Branch arranged lectures at a business

SMBC Global Foundation

school by an SMBC senior economist, and gave donations to

has distributed scholarships

support facilities assisting children suffering from poverty in

to more than 5,000 university

outlying districts of Bangkok.

students in Asian countries

(cid:129) SMBC’s Hanoi Branch gave donations to a Japanese ophthal-

since its establishment in

mologist who provides free treatment.

1994.

(cid:129) Employees of Sumitomo Mitsui Banking Corporation Europe

In the United States, it

conducted volunteer activities in their time off. Also, the

supports study trips to Japan

money saved from switching to e-cards from traditional greet-

organized by a high school in the Harlem area New York City.

ing cards was donated to charity organizations.

Established in 1990, the SMBC Foundation for International

(cid:129) The European office of the Japan Research Institute made a

Cooperation aims to assist in developing the human resources

donation in support of a Japanese-language speech contest.

necessary to achieve sustainable growth in developing econo-

(cid:129) Volunteer employees of SMBC and the Japan Research

mies as well as promote international exchange activities. Since

Institute based in the

United States partici-

pate in school beauti-

fication programs. The

employees also give

donations, which are

matched by SMBC

Global Foundation.

(cid:129)Support for UNICEF

SMBC is a member corporation of the steering committee of

its inception, the foundation has provided financial support for

7-8 students from Asian countries each year, to enable them to

attend universities in Japan. The foundation also offers subsi-

dies to research institutes and researchers undertaking projects

related to developing countries.

Environmental Activities
(cid:129) Participation in Environmental Preservation Initiatives

SMFG holds an “SMFG Clean-up Day” in which Group employ-

ees volunteer to pick up litter on beaches. In 2009, some 130

UNICEF Coin Aid and cooperates in the organization’s fund-

employees participated in this activity at two sites in Kanagawa

raising activities. To this end, SMBC places coin collection boxes

and Hyogo prefectures.

in its branches and offices in Japan and calls for donations from

SMBC Friend Securities held its own beach cleanup events

the general public. The coins collected are sorted by currency

in Chiba and Hyogo prefectures. About 130 employees took part.

before being delivered to UNICEF.

In addition, employees of Sumitomo Mitsui Finance and Leasing

SMBC also cooperates with UNICEF by implementing the

and Japan Research Institute regularly participate in cleanup

UNICEF Donation Account program. This program enables cus-

activities near their offices.

tomers to donate their interest earnings after tax to UNICEF and

SMBC employees volunteered in the Sea Forest (tree-

SMBC provides a matching donation.

planting) project organized by

the Tokyo Metropolitan

Sumitomo Mitsui Card and VJA group companies collect

Government, and also made donations to the project.

donations to UNICEF, UNESCO, the World Wide Fund for Nature

Japan, and the World Food Program from holders of their cards

through the World Present point service. Sumitomo Mitsui Card

also makes its own donations to UNICEF, matching those of the

cardholders.

In addition, 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), and

also makes its own donations to the working funds of all these

organizations from its card business revenues.

SMFG 2010

(cid:129) 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. SMBC is providing

support for reafforestation of

a golf course belonging to a

country club that was shut

down in Furano. C.C.C Furano Field holds educational courses

on environment, in particular exploring nature fully using the five

a charity bazaar is held featuring items for sale that have been

handcrafted by SMBC employees.

(cid:129)Children’s Illustration Contest

SMBC held its first illustration contest for elementary school

children in Japan in fiscal 2007. In fiscal 2009, the contest saw

a large number of entries from children featuring unique ideas on

the theme of “Our Greener Future.” Winners were presented with

original bank passbooks featuring

their own entries. In addition, the

winning works were displayed

at SMBC branches throughout

Japan for the enjoyment of our

senses. Employees and their families are invited to tour the proj-

customers.

ect site to learn about and experience nature at first hand.

(cid:129) Biodiversity Courses Held

In fiscal 2009, SMBC held courses in Tokyo, Osaka and Nagoya

that enabled employees and family members to learn about bio-

diversity and become more closely involved in the tree-planting

(cid:129)Support for Cultural and Artistic Ventures

In support of the classical performing arts of Japan, Sumitomo

Mitsui Card donated a drop curtain to the National Theatre for the

National Engei Hall. The company also helps foster the next gen-

eration of Kabuki artists through sponsorship of performances by

movement by personally making “acorn cubes” (cubes of

children.

SMBC Friend Securities provides support for cultural and

artistic activities through sponsorship of art exhibitions such as

the works of Gyoshu Hayami (a painter of the traditional Nihonga

style) at the Yamatane Museum of Art.

(cid:129)Financial and Economic Education

SMBC welcomes school field trips to bank branches and other

locations. Other financial and economic education activities

include a publication called What Does Bank Do?, a financial

education game on the SMBC website, support for Kidzania (job-

experience theme park for children), internship programs, and

many other programs. Sumitomo Mitsui Card, Japan Research

Institute and Nikko Cordial Securities also provide instructors for

classes at universities. Nikko Cordial Securities also organizes

tours and classes for students and members of the general

public to foster a deeper understanding of the work of securities

companies and the securities investment business.

(cid:129)Student Internship Program

The Japan Research Institute welcomes student interns every

year to learn about career opportunities. The interns deepen

their understanding of the work performed by JRI by studying

at offices where next-generation business ventures are being

created in the fields of the environment and energy. SMBC Friend

Securities also offers internships every year. In fiscal 2009, 22

interns studied financial products and the securities business.

earth and compost planted with an oak seedling). To teach the

courses, staff were invited from the Gobaimidori division of Annex

Co., Ltd., which was the recipi-

ent of the SMBC Prize in the

ecological contest eco japan

cup 2007 (an open competition

for environmental business

ventures), of which SMBC was

one of the sponsors.

(cid:129) Support for EARTH PHOTO CONTEST

Sumitomo Mitsui Finance and Leasing supports a photography

contest aimed at communicating the importance of solving envi-

ronmental problems and spurring people to action. The company

presents the Sumitomo Mitsui Finance and Leasing Prize for

outstanding photographic entries.

Contributing to Cultural, Artistic, and Education
Activities
(cid:129)Charity Concert Held

SMBC has been arranging a charity concert, “A Toy Box of

Favorite Works,” every year since fiscal 2006, to support children

worldwide who have suffered from wars and natural disasters.

SMBC’s employee music societies, choir, chamber ensemble

and wind ensemble, perform a range of pieces from classical

favorites to Japanese songs, including anime songs, that appeal

to everyone from children to adults. Donations are collected from

the audience at the concert, and artwork submitted by children

around the world is displayed in the concert hall lobby. In addition,

SMFG 2010 63

Human Resources

SMFG and the Group companies strive to create a workplace

(management-track) staff up to their fifth year in the company.

for their human resources where each and every employee can

SMFL has created “Young Employees’ Growth Plan & Guide,”

take pride in and be highly motivated about his or her work. In

based on the SMFL Standards and has also opened an in-house

the following pages, we would like to introduce some of initiatives

business school that will be used to supplement on-the-job train-

in the human resources area taken by SMBC, as well as by other

ing from the current fiscal year onward.

Group companies including Sumitomo Mitsui Card, Sumitomo

The credo of Japan Research Institute (JRI) on human

Mitsui Finance and Leasing, the Japan Research Institute, SMBC

resources is that its staff is the source of added value in its

Friend Securities, and Nikko Cordial Securities.

solutions and proposals. In line with this, JRI has set up the

Five Goals of SMBC’s Human Resource
Management

Staff Development Department within the Computer System

Division, and the Human Resources Incubation Center within the

Comprehensive Research Division for well-planned development

1. Maintain and strengthen sound business management to

of human resources.

enable SMBC to compete in global markets

To improve young employees’ knowledge and raise their

2. Develop staff with specialized professional skills who can

skills so as to enable the company to cope effectively with the

provide customers with higher-value-added products and

diversification and increasing sophistication of the securities busi-

services

ness, SMBC Friend Securities has started a course of classes for

3. Motivate employees even more strongly by respecting

acquisition of in-house skill accreditation. It has also introduced

their individuality based on understanding of the inherent

a tutor system to raise the effectiveness of on-the-job training for

value of diversity and encouraging them to seek personal

new employees.

fulfillment

As a full-line securities company which needs to nurture a

4. Foster a corporate culture that encourages a forward-

wide variety of financial professionals, Nikko Cordial Securities

looking and creative attitude and places value on mutual

is working to provide enhanced training to impart the necessary

collaboration

knowledge and skills in each specialist area. It has designated

5. Be mindful of the social responsibilities of the Group,

the first three years after entering the company as the crucial

and nurture a corporate culture that will contribute to the

training period for young staff members, and is putting its full

healthy development of society

Training Staff with Specialized Professional
Skills
To provide a higher level of motivation for growth and develop-

corporate resources into cre-

ating an effective employee

development program.

In these ways, all Group

companies are taking mea-

ment among younger personnel, SMBC provides basic practical

sures to reinforce their human

training programs in consumer banking, corporate banking, and

resources development systems.

operations under separate programs known as the Retail Banking

College, Corporate Banking College, and Banking Operations

College. Employees acquire the necessary business knowledge

and skills through a combina-

tion of on-the-job training and

classroom courses. SMBC

is currently reinforcing its

training system by assigning

mentors to new recruits at

the workplace and placing

regional and head-office men-

tors at the Training Institute.

Corporate Banking College

Following the amendment of the Money Lending Business

Law, Sumitomo Mitsui Card has been putting increased effort into

the development of staff with professional expertise in the credit

Staff training at Nikko Cordial Securities

Creating a Corporate Culture that Derives
Strength from Diversity
(cid:129)Human Resources Diversity

The Group is implementing initiatives to create diversity (e.g.

gender, nationality) in the workplace. At SMBC, 40% of the new

university graduates hired for fiscal 2010 for sogoshoku and con-

sumer services positions were women, and the number of women

holding managerial positions has been increasing. In fiscal 2008,

the Diversity and Inclusion Department was established within

the Human Resources Department and other initiatives were

launched for creating a corporate culture that derives strength

from diversity.

(cid:129)Revision of Personnel System

To enable motivated employees to take on the challenge of

business. Measures taken include active support for employees

performing more difficult work in a higher-level post, SMBC has

to become registered money lending officers, and regularly hold-

introduced a new workplace hierarchy system in which job rank-

ing in-house workshops on products and other topics.

ings are more finely subdivided. This should make it easier for

Sumitomo Mitsui Finance and Leasing (SMFL) has estab-

talented individuals to be quickly promoted to mid-management

lished “SMFL Standards,” which sets forth a human resources

levels. We are also aiming to create a more seamless organiza-

development plan and methods for realizing its human resources

tional system in which an employee’s performance is evaluated

goal for each year. This is targeted principally at sogoshoku

not simply in terms of a single year’s achievements on the job,

SMFG 2010

but also from the perspective of contribution to the company as

There are also annual Children’s Visitation Day and Family

a whole.

(cid:129)Creation of New Job Titles

SMBC has launched a new title, “Senior,” for ippanshoku (general

Visitation Day to give employees’ family members a better under-

standing of employees’ work at SMBC, Sumitomo Mitsui Card,

SMFL, JRI, and SMBC Friend Securities. JRI also holds “Mama &

work) employees on the Business Career Path working in front-

Papa Lunches” as forums for information exchange between

office positions at the Middle Market Banking Unit. Sumitomo

employees who are raising children while working. SMBC has

Mitsui Card has likewise instituted a new ippanshoku employee

instituted a “Go Home Early to the Family Day,” while SMFL is

position using the term “Leader.” In this way, we are expanding

pursuing a campaign to encourage employees to reduce the

the playing field for ippanshoku staff so that they can be pro-

amount of overtime work. Nikko Cordial Securities has introduced

moted to managerial positions.

(cid:129)Developing Staff Needed for Global Operations

As a result of the growth of SMBC’s operations on the global

an online support system for employees returning to work after

parental leave. SMBC, Sumitomo Mitsui Card, and JRI have all

received the Kurumin certification from the Japanese Ministry

stage, proficiency in foreign languages is becoming increasingly

of Health, Labour and Welfare in recognition of their activities in

vital. To answer this need, SMBC is expanding its programs for

support of child rearing.

employees to study at language schools, and is assigning more

All Group companies are

young employees to overseas offices.

doing their utmost to create

SMBC is strongly committed to training national staff at its

systems that ensure a good

overseas operations. The training facility established in Singapore

work-life balance, as well as

by the Asia Pacific Training Department covers a broad range

workplaces where employees

of subjects for employees in this region. Sessions are focused

can fully demonstrate their

primarily on business training and the development of capabilities

abilities. We plan to pursue

and skills. Furthermore, SMBC is taking steps to develop human

such measures still further in

Children’s Visitation Program

resources on a global scale by providing education in the his-

the future.

tory of the bank and its management philosophy to newly-hired

national staff during their training courses.

(cid:129)Employing Persons with Disabilities

SMBC has established a special company called SMBC Green

Heightening Awareness of Individual Rights
At SMBC, we have included in our principles of action the con-

cepts that “we will respect the individual human dignity of our

Service Co., Ltd. that provides employment opportunities for

customers and employees” and “we will not permit discrimina-

people with physical disabilities. In December 2008, the company

tion of any kind.” We are implementing the following initiatives

opened the Kobe Branch, and in February 2009 the Unagidani

to heighten the awareness of all employees regarding individual

Office in Osaka for the purpose of creating jobs not only for

rights.

physically but also for mentally impaired persons. In addition, to

(cid:129) Conducting training meetings for manager-level staff (once a

upgrade their skills, SMBC encourages its employees to partici-

year), and personnel newly appointed to management positions

pate actively in skill competitions for the disabled. Over the years,

and staff who have recently joined the bank

a number of its employees have participated in the National Skill

(cid:129) Holding study meetings to discuss individual rights issues, with

Competition for the Disabled (known as the “Abilympics”), three

manager-level personnel leading these sessions (twice a year)

of whom were winners in the fiscal 2008 and 2009 competition.

(cid:129) Soliciting slogans promoting individual rights from management

As of March 2010, disabled people accounted for 1.90% of our

and staff (once a year)

employees, above the legally mandatory level of 1.8%.

(cid:129)Providing Support for a Good Work-Life Balance

The Group has an employee support program that provides a

range of assistance for achieving a proper balance between work

and home. In fiscal 2008, Sumitomo Mitsui Card, SMFL, SMBC

Friend Securities, and JRI all drew up their own Work-Life Balance

Guidebook, based on actual experiences at SMBC. All Group

companies, including Nikko Cordial Securities, already operate

systems for parental leave, leave for taking care of sick children,

shorter working hours, restricted overtime work, and exemption

from late-night work. All these systems provide employee benefits

exceeding those mandated by law. In addition, SMBC, Sumitomo

Mitsui Card, and JRI provide child-care subsidies, while SMBC,

Sumitomo Mitsui Card, and SMFL operate a system for the rehir-

ing of former employees. These systems all help realize a good

work-life balance for the Group’s employees.

l SMBC Named as One of the Best 25 Companies in Japan in

the “Great Place to Work” Rankings
In March 2010, SMBC was selected for the third year running
as one of the best companies in Japan as a place to work in
the survey conducted by Great Place to Work® Institute Japan.
* Great Place to Work® Institute, Inc., a U.S. company, is a
survey organization that supplies data for the annual list of the
“100 Best Places to Work” published by Fortune magazine.
The survey has two major components: a survey of the internal
systems and corporate culture of respondent companies, and a
questionnaire survey of the employ-
ees of these companies. The survey
of employees receives a weighting
of two-thirds in determining the final
results.

SMFG 2010 65

Staff Profile
(cid:2)

SMBC

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2008

2009

2010

20,273

13,457

66.38%

6,816

33.62%

23,543

13,669

58.06%

9,874

41.94%

25,122

13,793

54.90%

11,329

45.10%

38 yrs 7 mths

36 yrs 9 mths

36 yrs 2 mths

40 yrs 10 mths

40 yrs 5 mths

40 yrs 2 mths

34 yrs 2 mths

31 yrs 8 mths

31 yrs 3 mths

Average years of service

15 yrs 11 mths

13 yrs 10 mths

13 yrs 3 mths

Male
Female

Ratio of employees with
disabilities (% of total)**

17 yrs 5 mths

16 yrs 11 mths

16 yrs 8 mths

12 yrs 11 mths

9 yrs 6 mths

9 yrs 0 mths

2.05%

1.95%

1.90%

The number of full-time employees, including employees seconded to other
companies and organizations. The following have all been excluded from this
total: executive officers, employees on short-term contracts, part-time employ-
ees, employees of temporary employment agencies, and national staff at over-
seas branches.

** As of March 1 of the respective years

April 1
Number of new hires
Number of newly employed female
graduates***
Ratio of newly employed females to
total new employees

2008

1,254

518

2009

2010

962

388

569

204

41.3%

40.3%

35.9%

*** Includes sogoshoku staff and consumer service staff. Business Career Path

employees are excluded.

Fiscal

2007

2008

2009

Number of women in managerial
positions****
Number of employees taking leave
for child-rearing

Men taking such leave
Number of career hires

**** As of the end of the fiscal year

(cid:2)

Sumitomo Mitsui Card

354

163

500

456

222

136

584

331

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2008

2009

2010

1,989

1,075

54.05%

914

45.95%

2,156

1,112

51.58%

1,044

48.42%

2,247

1,133

50.42%

1,114

49.58%

36 yrs 4 mths

36 yrs 2 mths

36 yrs 4 mths

39 yrs 8 mths

39 yrs 10 mths

32 yrs 2 mths

32 yrs 6 mths

32 yrs 10 mths

Average years of service

10 yrs 3 mths

10 yrs 7 mths

Male
Female

10 yrs 9 mths

11 yrs 2 mths

11 yrs 6 mths

9 yrs 6 mths

9 yrs 4 mths

9 yrs 7 mths

SMFG 2010

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees

** Includes contract employees

2008

2009

2010

114

69.3%

67.3%

54.8%

(cid:2)

Sumitomo Mitsui Finance and Leasing
2009

2008

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

1,575

1,022

64.89%

553

35.11%

1,640

1,023

62.38%

617

37.62%

2010

1,666

1,035

62.12%

631

37.88%

37 yrs 2 mths

37 yrs 1 mths

37 yrs 3 mths

40 yrs 2 mths

40 yrs 3 mths

31 yrs 9 mths

32 yrs 0 mths

32 yrs 4 mths

Average years of service

12 yrs 1 mths

12 yrs 5 mths

Male
Female

14 yrs 6 mths

14 yrs 10 mths

15 yrs 2 mths

7 yrs 8 mths

7 yrs 6 mths

8 yrs 0 mths

The number of full-time employees, including employees seconded to other
companies and organizations. The following have all been excluded from this
total: employees seconded from other companies and organizations, executive
officers, employees on short-term contracts, part-time employees, employees
of temporary employment agencies, and full-time employees of affiliates
(including overseas subsidiaries).

April 1
Number of new hires
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees

2008

2009

2010

10.4%

5.0%

3.6%

(cid:2)

Japan Research Institute
2008

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2,060

1,618

78.54%

442

21.46%

2,215

1,732

78.19%

483

21.81%

2,322

1,792

77.17%

530

22.83%

39 yrs 1 mths

38 yrs 11 mths

39 yrs 0 mths

40 yrs 0 mths

39 yrs 8 mths

39 yrs 11 mths

36 yrs 0 mths

35 yrs 11 mths

35 yrs 9 mths

Average years of service

9 yrs 8 mths

9 yrs 7 mths

9 yrs 11 mths

Male
Female

10 yrs 0 mths

9 yrs 11 mths

10 yrs 3 mths

8 yrs 8 mths

8 yrs 7 mths

8 yrs 8 mths

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees

2008

2009

2010

139

147

28.1%

31.3%

28.0%

** Includes only sogoshoku staff. Ippanshoku staff are excluded.

(cid:2)

SMBC Friend Securities

(cid:2)

Nikko Cordial Securities

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2008

2009

2010

1,911

1,354

70.85%

557

29.15%

2,011

1,434

71.31%

577

28.69%

2,072

1,462

70.56%

610

29.44%

36 yrs 9 mths

36 yrs 11 mths

39 yrs 3 mths

39 yrs 1 mths

39 yrs 4 mths

30 yrs 9 mths

31 yrs 1 mths

31 yrs 4 mths

March*
Number of employees**

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2008

2009

2010

7,137

4,184

58.62%

2,953

41.38%

6,004

3,578

59.59%

2,426

40.41%

6,584

4,057

61.62%

2,527

38.38%

37 yrs 8 mths

37 yrs 2 mths

38 yrs 1 mths

38 yrs 11 mths

39 yrs 6 mths

36 yrs 0 mths

34 yrs 7 mths

35 yrs 9 mths

Average years of service

13 yrs 3 mths

13 yrs 2 mths

13 yrs 3 mths

Average years of service

11 yrs 7 mths

12 yrs 0 mths

12 yrs 1 mths

Male
Female

15 yrs 4 mths

15 yrs 1 mths

15 yrs 4 mths

8 yrs 1 mths

8 yrs 3 mths

8 yrs 5 mths

Male
Female

12 yrs 6 mths

13 yrs 0 mths

12 yrs 9 mths

10 yrs 4 mths

10 yrs 7 mths

11 yrs 1 mths

The number of full-time employees, including employees seconded to other
companies and organizations. The following have all been excluded from this
total: employees on short-term contracts, part-time employees, employees of
temporary employment agencies, and national staff at overseas branches.

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees

2008

2009

2010

280

132

232

117

148

47.1%

50.4%

45.9%

** Both non-area specified and area specified staff

As of March 1 of the respective years

*
** The number of full-time employees, including employees seconded to other
companies and organizations. The following have all been excluded from this
total: executive officers, employees on short-term contracts, part-time employ-
ees, employees of temporary employment agencies, and national staff at over-
seas branches.

April 1
Number of new hires***
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees

*** Professional staff (Classes I-II) and FA

2008

2009

2010

408

136

182

159

33.3%

29.1%

34.0%

(cid:129) The combined employment ratio for persons with disabilities for the above six companies was 1.88% as of March 2010.

Principal Work-Life Balance Systems (Employee Support Programs)

SMBC

Sumitomo Mitsui Card

Sumitomo Mitsui Finance
and Leasing

SMBC Friend Securities

Japan Research Institute

Nikko Cordial Securities

Parental leave

18 months or maximum of
2 years in case of inability to
place in daycare center

1 year or maximum of 18
months in case of inability to
place in daycare center

18 months or maximum of
2 years in case of inability to
place in daycare center

Up to 3 years old

Leave for taking
care of sick
children

Shorter working
hours

Restrictions on
overtime

Exemption from
late-night work

Other principal
systems

Up to March 31 in the 6th
grade of elementary school
(10 days per annum for one
child; 20 days for two or more
children)

Up to March 31 in the 6th
grade of elementary school
(5 days per annum for one
child; 10 days for two or more
children)

Employees can choose shorter
working hours for each day or
fewer days worked per week,
both applicable up to March
31 in the 6th grade of child’s
elementary school.

Employees can choose shorter
working hours for each day or
fewer days worked per week,
both applicable up to March 31
in the 3rd grade of the child’s
elementary school.

No restrictions on children’s
age or number of days leave

Up to March 31 in the 3rd
grade of elementary school
(5 days per annum for one
child; 10 days for two or more
children)

Up to March 31 in the 6th
grade of elementary school
(5 days per annum for one
child; 10 days for two or more
children)

Up to entry into elementary
school

Employees can reduce daily
working hours to a minimum
of 5 hours 30 minutes up to
March 31 in the 6th grade of
the child’s elementary school.

Employees can reduce daily
working hours to between 6
hours and 6 hours 50 minutes
up to March 31 in the 3rd
grade of the child’s elementary
school.

Employees can choose to work
6 hours per day (9:30 to 16:30)
up to March 31 in the 3rd
grade of the child’s elemen-
tary school (this system can be
combined with flextime).

Up to child’s entry into junior
high school, employees can
reduce working hours in incre-
ments of 30 minutes for a
maximum reduction of 2 hours
30 minutes per day.

Up to March 31 in the 6th
grade of elementary school

Up to March 31 in the 3rd
grade of elementary school

Up to entry into elementary
school

Up to March 31 in the 3rd
grade of elementary school

Up to entry into elementary
school

Up to entry into junior high
school

Up to March 31 in the 6th
grade of elementary school

Up to March 31 in the 3rd
grade of elementary school

Up to entry into elementary
school

Up to March 31 in the 3rd
grade of elementary school

(cid:129) Work relocations
(cid:129) System for rehiring former

(cid:129) Leave to care for sick family

members

employees

(cid:129) Shorter working hours to care

members

For employees who are preg-
nant or have given birth within
1 year

(cid:129) Child-care subsidies
(cid:129) Leave to care for sick family

Up to entry into junior high
school

(cid:129) Use of designated day-care
center at discounted rates
(cid:129) Leave to care for sick family

(cid:129) Work relocations
(cid:129) Child-care subsidies
(cid:129) Leave to care for sick family

members

(cid:129) Shorter working hours to care

(cid:129) System for rehiring former

for sick family members

employees

(cid:129) System for rehiring former

employees

for sick family members

(cid:129) Shorter working hours to care

members

for sick family members

(cid:129) Special days off to care for

sick family members

(cid:129) Staggered working hours

(shift system)

SMFG 2010 67

SMFG 2010

Financial Section and Corporate Data

Financial Data

SMFG

Consolidated Balance Sheets ..................................... 70

Consolidated Statements of Operations ...................... 72

Consolidated Statements of
Changes in Net Assets ............................................... 73

Corporate Data

Sumitomo Mitsui Financial Group, Inc.

Board of Directors, Corporate Auditors,
and Executive Officers .......................................... 205

SMFG Organization ................................................ 205

Consolidated Statements of Cash Flows ..................... 75

Sumitomo Mitsui Banking Corporation

Notes to Consolidated Financial Statements ............... 77

Independent Auditors’ Report ...................................... 132

Board of Directors, Corporate Auditors,
and Executive Officers .......................................... 206

SMBC Organization ................................................ 208

Principal Subsidiaries and Affiliates

Principal Domestic Subsidiaries .............................. 210

Principal Overseas Subsidiaries ............................. 211

Principal Affiliates .................................................... 212

International Directory ................................................. 213

SMBC

Supplemental Information ............................................ 133

SMFG

Income Analysis (Consolidated) .................................. 138

Assets and Liabilities (Consolidated) ........................... 141

Capital (Nonconsolidated) ........................................... 144

SMBC

Income Analysis (Consolidated) .................................. 147

Assets and Liabilities (Consolidated) ........................... 150

Income Analysis (Nonconsolidated) ............................ 152

Deposits (Nonconsolidated) ........................................ 156

Loans (Nonconsolidated) ............................................. 158

Securities (Nonconsolidated) ....................................... 163

Ratios (Nonconsolidated) ............................................ 165

Capital (Nonconsolidated) ........................................... 167

Others (Nonconsolidated) ............................................ 168

Trust Assets and Liabilities (Nonconsolidated) ............ 170

Capital Ratio Information

SMFG

Capital Ratio Information (Consolidated) ..................... 171

SMBC

Capital Ratio Information ............................................. 203

SMFG 2010 69

SMFG

Consolidated Balance Sheets

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries

March 31

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

Assets
Cash and due from banks (Notes 9 and 28) .........................................................
Deposits with banks (Notes 9 and 28)..................................................................
Call loans and bills bought (Notes 9 and 28) ........................................................
Receivables under resale agreements (Note 28) ..................................................
Receivables under securities borrowing transactions (Note 28) ..........................
Monetary claims bought (Notes 9 and 28) ...........................................................
Trading assets (Notes 3, 9 and 28) .......................................................................
Money held in trust (Note 28) ...............................................................................
Securities (Notes 4, 9 and 28) ..............................................................................
Loans and bills discounted (Notes 5, 9 and 28) ...................................................
Foreign exchanges (Note 28) ...............................................................................
Lease receivables and investment assets (Notes 9, 27 and 28) ..........................
Other assets (Notes 6, 9 and 28) ..........................................................................
Tangible fixed assets (Notes 7, 9 and 15) .............................................................
Intangible fixed assets (Note 8) ............................................................................
Deferred tax assets (Note 23) ...............................................................................
Customers’ liabilities for acceptances and guarantees .......................................
Reserve for possible loan losses (Note 28) ..........................................................
Total assets ..........................................................................................................

¥ 3,371,193
2,468,478
1,121,145
25,226
5,440,622
1,006,738
6,708,688
18,734
28,623,968
62,701,033
1,107,289
1,839,662
3,610,046
1,081,125
626,248
728,586
3,749,056
(1,068,329)
¥123,159,513

¥ 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

$ 36,230
26,528
12,049
271
58,470
10,819
72,098
201
307,619
673,842
11,900
19,771
38,797
11,619
6,730
7,830
40,291
(11,481)
$1,323,584

SMFG 2010

(Continued)

March 31

Consolidated Balance Sheets

SMFG

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

Liabilities and net assets
Liabilities
Deposits (Notes 9, 10 and 28) ..............................................................................
Call money and bills sold (Notes 9 and 28) ..........................................................
Payables under repurchase agreements (Notes 9 and 28) ..................................
Payables under securities lending transactions (Notes 9 and 28) .......................
Commercial paper (Note 28) ................................................................................
Trading liabilities (Notes 9, 11 and 28)..................................................................
Borrowed money (Notes 9, 12 and 28).................................................................
Foreign exchanges (Note 28) ...............................................................................
Short-term bonds (Notes 13 and 28)....................................................................
Bonds (Notes 13 and 28) ......................................................................................
Due to trust account (Note 28) .............................................................................
Other liabilities (Notes 9, 14, 27 and 28) ..............................................................
Reserve for employee bonuses ............................................................................
Reserve for executive bonuses ............................................................................
Reserve for employee retirement benefits (Note 26) ............................................
Reserve for executive retirement benefits ............................................................
Reserve for reimbursement of deposits ...............................................................
Reserve under the special laws ...........................................................................
Deferred tax liabilities (Note 23) ...........................................................................
Deferred tax liabilities for land revaluation (Note 15) ............................................
Acceptances and guarantees (Note 9) .................................................................
Total liabilities ......................................................................................................

Net assets (Note 24)
Capital stock (Note 16) ........................................................................................
Capital surplus .....................................................................................................
Retained earnings ................................................................................................
Treasury stock .....................................................................................................
Total stockholders’ equity ...................................................................................
Net unrealized gains (losses) on other securities (Notes 23 and 28) ....................
Net deferred losses on hedges (Notes 23 and 30) ...............................................
Land revaluation excess (Note 15) .......................................................................
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.

¥ 85,644,215
2,119,557
1,120,860
4,315,774
310,787
5,066,727
5,470,578
192,299
1,212,178
3,422,672
159,554
3,193,146
43,443
2,333
41,691
8,216
11,734
393
26,520
46,966
3,749,056
116,158,708

2,337,895
978,897
1,451,945
(124,061)
4,644,677
412,708
(39,367)
34,955
(101,650)
306,646
81
2,049,400
7,000,805
¥123,159,513

¥ 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

$ 920,411
22,779
12,046
46,381
3,340
54,452
58,792
2,066
13,027
36,783
1,715
34,316
467
25
448
88
126
4
285
505
40,291
1,248,347

25,125
10,520
15,604
(1,333)
49,916
4,435
(423)
375
(1,092)
3,295
1
22,025
75,237
$1,323,584

SMFG 2010 71

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

$18,225
13,842
2,592
10
58
159
801
763
19
7,838
2,086
4,869
1,189
34,226

3,384
1,935
475
15
66
791
102
1,298
4,318
12,480
2,167
4,581
28,228
5,998

1,119
804
1,157
$ 2,918

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 17) .........................................................................
Trading income (Note 18) .....................................................................................
Other operating income (Note 19) ........................................................................
Other income (Note 21) ........................................................................................
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 17) ........................................................
Other operating expenses (Note 20) ....................................................................
General and administrative expenses ..................................................................
Provision for reserve for possible loan losses ......................................................
Other expenses (Note 22) .....................................................................................
Total expenses .....................................................................................................
Income before income taxes and minority interests .........................................
Income taxes (Note 23):

¥1,695,805
1,287,955
241,216
902
5,413
14,757
74,542
71,018
1,778
729,364
194,087
453,012
110,638
3,184,688

314,893
180,021
44,174
1,390
6,165
73,652
9,489
120,748
401,773
1,161,302
201,620
426,252
2,626,590
558,097

¥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

Current ..............................................................................................................
Deferred ............................................................................................................
Minority interests in net income ...........................................................................
Net income (loss) .................................................................................................

104,110
74,759
107,668
¥ 271,559

72,238
262,405
68,308
¥ (373,456)

See accompanying notes to consolidated financial statements.

SMFG 2010

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

2010

2009

Millions of
U.S. dollars (Note 1)
2010

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

¥1,420,877

$15,270

Issuance of new shares ................................................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

917,018
917,018
¥2,337,895

—
—
¥1,420,877

9,855
9,855
$25,125

Capital surplus

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

57,245

57,826

615

Issuance of new shares ................................................................................
Disposal of treasury stock ............................................................................
Decrease due to decrease in affiliates ..........................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

928,094
(108)
(6,333)
921,652
¥ 978,897

—
(580)
—
(580)
¥ 57,245

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 .................................................
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 ....................................................
Increase due to decrease in affiliates ...........................................................
Reversal of land revaluation excess .............................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

1,245,085

1,740,610

—

(3,132)

(71,174)
271,559
8
3
(11)
(1)
6,333
141
206,859
¥1,451,945

(118,833)
(373,456)
19
8
(14)
(1)
—
(114)
(492,392)
¥1,245,085

Treasury stock

9,974
(1)
(68)
9,905
$10,520

13,381

—

(765)
2,918
0
0
(0)
(0)
68
2
2,223
$15,604

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(124,024)

(123,989)

(1,333)

Purchase of treasury stock ...........................................................................
Disposal of treasury stock ............................................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

(189)
152
(36)
¥ (124,061)

(943)
907
(35)
¥ (124,024)

Total stockholders’ equity

Issuance of new shares ................................................................................
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 ....................................................
Increase due to decrease in affiliates ...........................................................
Decrease due to decrease in affiliates ..........................................................
Reversal of land revaluation excess .............................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

2,599,183

3,095,324

—

(3,132)

1,845,113
(71,174)
271,559
(189)
43
8
3
(11)
(1)
6,333
(6,333)
141
2,045,493
¥4,644,677

—
(118,833)
(373,456)
(943)
326
19
8
(14)
(1)
—
—
(114)
(493,008)
¥2,599,183

(2)
2
(0)
$ (1,333)

27,933

—

19,829
(765)
2,918
(2)
1
0
0
(0)
(0)
68
(68)
2
21,983
$49,916

SMFG 2010 73

SMFG

Consolidated Statements of Changes in Net Assets

(Continued)

Year ended March 31

Valuation and translation adjustments
Net unrealized gains (losses) on other securities

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

¥ (14,649)

¥ 550,648

$ (157)

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 ................................................................

427,358
427,358
¥ 412,708

(565,298)
(565,298)
¥ (14,649)

Net deferred losses on hedges

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(20,835)

(75,233)

(18,531)
(18,531)
¥ (39,367)

54,397
54,397
¥ (20,835)

Land revaluation excess

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

35,159

34,910

(204)
(204)
¥ 34,955

248
248
¥ 35,159

Foreign currency translation adjustments

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(129,068)

(27,323)

27,418
27,418
¥ (101,650)

(101,744)
(101,744)
¥ (129,068)

Total valuation and translation adjustments

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(129,394)

483,002

436,040
436,040
¥ 306,646

(612,396)
(612,396)
¥ (129,394)

Stock acquisition rights

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

15
15
¥ 81

22
22
¥ 66

Minority interests

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

2,141,908

1,645,705

(92,508)
(92,508)
¥2,049,400

496,202
496,202
¥2,141,908

Total net assets

Issuance of new shares ................................................................................
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 ....................................................
Increase due to decrease in affiliates ...........................................................
Decrease due to decrease in affiliates ..........................................................
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 ................................................................

4,611,764

5,224,076

—

(3,132)

1,845,113
(71,174)
271,559
(189)
43
8
3
(11)
(1)
6,333
(6,333)
141
343,547
2,389,041
¥7,000,805

—
(118,833)
(373,456)
(943)
326
19
8
(14)
(1)
—
—
(114)
(116,171)
(609,180)
¥4,611,764

See accompanying notes to consolidated financial statements.

SMFG 2010

4,592
4,592
$ 4,435

(224)

(199)
(199)
$ (423)

377

(2)
(2)
$ 375

(1,387)

295
295
$ (1,092)

(1,391)

4,686
4,686
$ 3,295

0
0
$ 1

23,019

(994)
(994)
$22,025

49,562

—

19,829
(765)
2,918
(2)
1
0
0
(0)
(0)
68
(68)
2
3,692
25,675
$75,237

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 .....................................................................................................
Losses on impairment of fixed assets ..............................................................
Amortization of goodwill ...................................................................................
Equity in losses of affiliates ..............................................................................
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 (gains) losses on securities ........................................................................
Net losses from money held in trust .................................................................
Net exchange losses ........................................................................................
Net (gains) losses from disposal of fixed 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 borrowings) ............
Net change in deposits with banks ..................................................................
Net change in call loans and bills bought and others ......................................
Net change in receivables under securities borrowing transactions ................
Net change in call money and bills sold and others .........................................
Net change in commercial paper .....................................................................
Net change in payables under securities lending transactions ........................
Net change in foreign exchanges (assets) ........................................................
Net change in foreign exchanges (liabilities) ....................................................
Net change in 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 (used in) operating activities ..........................................

SMFG

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

¥ 558,097
136,860
12,856
18,634
21,542
(1,419)
7,543
813
903
204
(43)
(1,695,805)
314,893
(19,837)
245
83,038
(11,176)
(983,770)
1,195,098
3,591,071
1,918,359
(462,243)
541,021
(770,291)
(474,477)
(3,226,847)
(473,642)
310,787
(3,409,463)
(220,622)
(89,277)
202,531
168,836
(211,844)
98,635
1,760,370
(341,821)
(321,815)
(1,772,056)
(108,864)
(1,880,921)

¥ 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

$ 5,998
1,471
138
200
231
(15)
81
9
10
2
(0)
(18,225)
3,384
(213)
3
892
(120)
(10,572)
12,844
38,593
20,616
(4,968)
5,814
(8,278)
(5,099)
(34,679)
(5,090)
3,340
(36,641)
(2,371)
(959)
2,177
1,814
(2,277)
1,060
18,919
(3,674)
(3,459)
(19,044)
(1,170)
(20,214)

SMFG 2010 75

SMFG

Consolidated Statements of Cash Flows

(Continued)

Year ended March 31

Cash flows from investing activities:

Purchases of securities ....................................................................................
Proceeds from sale of securities ......................................................................
Proceeds from maturity of securities ................................................................
Purchases of money held in trust .....................................................................
Proceeds from sale of money held in trust .......................................................
Purchases of tangible fixed assets ...................................................................
Proceeds from sale of tangible fixed assets .....................................................
Purchases of intangible fixed assets ................................................................
Proceeds from sale of intangible fixed 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 ..................................................................................................
Proceeds from sale of stocks of subsidiaries resulting in change in
scope of consolidation ...................................................................................
Net cash used in investing activities ..................................................................
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 .............................................................................................
Proceeds from issuance of stocks ...................................................................
Dividends paid ..................................................................................................
Proceeds from contributions paid by minority stockholders ............................
Repayment to minority stockholders ................................................................
Dividends paid to minority stockholders ..........................................................
Purchases of treasury stock .............................................................................
Proceeds from disposal 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 the beginning of the year ....................................
Change in cash and due from banks due to
merger of consolidated subsidiary ...................................................................
Change in cash and due from banks due to
newly consolidated subsidiaries ......................................................................
Cash and due from banks at the end of the year ..............................................

See accompanying notes to consolidated financial statements.

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

¥(46,300,009)
32,626,376
14,263,916
(9,748)
27
(156,154)
37,114
(82,287)
111
—
—
—

¥(53,213,459)
34,674,690
12,176,246
(2,135)
0
(175,632)
12,081
(74,489)
58
(21,925)
363
(20,000)

—

355

(537,007)

(8,675)

—
(157,661)

13,264
(6,639,254)

8,000
(78,000)

5,000
(92,500)

611,172

380,600

(639,981)
1,824,896
(71,063)
388,000
(492,987)
(98,791)
(189)
43
1,451,099
(302)
(587,786)
3,800,890

(316,874)
—
(118,758)
1,046,529
(460,564)
(90,162)
(943)
326
352,652
(17,315)
1,064,136
2,736,752

158,089

—

$(497,582)
350,633
153,293
(105)
0
(1,678)
399
(884)
1
—
—
—

—

(5,771)

—
(1,694)

86
(838)

6,568

(6,878)
19,612
(764)
4,170
(5,298)
(1,062)
(2)
1
15,595
(3)
(6,316)
40,847

1,699

—
¥ 3,371,193

0
¥ 3,800,890

—
$ 36,230

SMFG 2010

Notes to Consolidated Financial Statements

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Years ended March 31, 2010 and 2009

SMFG

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
statements 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 gener-
ally 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
consolidation 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
significant differences or impact on the consolidated financial state-
ments of SMFG.
The accompanying consolidated financial statements have been
restructured and translated into English from the consolidated
financial statements of SMFG prepared in accordance with Japanese
GAAP.
Some supplementary information included in the statutory
Japanese language consolidated financial statements, but not
necessarily required for fair presentation, is not presented in the
accompanying 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 prevail-
ing exchange rate at March 31, 2010, which was ¥93.05 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 ..............

2010
307

2009
288

Principal companies:
Sumitomo Mitsui Banking Corporation
THE MINATO BANK, LTD.
Kansai Urban Banking Corporation
Sumitomo Mitsui Banking Corporation Europe Limited
Sumitomo Mitsui Banking Corporation (China) Limited
Manufacturers Bank
Sumitomo Mitsui Finance and Leasing Company, Limited
Sumitomo Mitsui Card Company, Limited
SMBC Finance Service Co., Ltd.
SMBC Friend Securities Co., Ltd.
Nikko Cordial Securities Inc.
The Japan Research Institute, Limited
SMBC Capital Markets, Inc.

Changes in the consolidated subsidiaries in the fiscal
year ended March 31, 2010 are as follows:
62 companies including Nikko Cordial Securities Inc.
were newly consolidated due mainly to acquisition of
shares.
35 companies including QUOQ Inc. were excluded from
the scope of consolidation because they were no longer
subsidiaries due to merger and other reasons.
Furthermore, 8 companies including Apricot Navigation
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.

214 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.

(b) Application of the equity method

Japanese accounting standards also require that any
unconsolidated subsidiaries and affiliates which SMFG is
able to exercise material influence over their financial and
operating policies be accounted for by the equity method.
(i) Unconsolidated subsidiaries accounted for by the equity

method

The number of unconsolidated subsidiaries accounted for
by the equity method is as follows:
March 31
Unconsolidated subsidiaries ..........

2009
4

2010
4

Principal company:
SBCS Co., Ltd.

SMFG 2010 77

SMFG

Notes to Consolidated Financial Statements

(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity
method is as follows:
March 31
Affiliates.......................................

2010
54

2009
75

Principal companies:
Sumitomo Mitsui Auto Service Company, Limited
Promise Co., Ltd.
Cedyna Financial Corporation
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, 2010 are as follows:
16 companies including P.T. Nikko Securities Indonesia
newly became affiliated companies accounted for by the
equity method due mainly to acquisition of shares.
2 companies including AJCC CORPORATION 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.
35 companies including Daiwa Securities SMBC Co. Ltd.
were also excluded due to a sale of stocks and other reasons.
(iii) Unconsolidated subsidiaries that are not accounted for

by the equity method

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
operations when excluded from the scope of equity method.

(i) The balance sheet dates of the consolidated subsidiaries

are as follows:

March 31
May 31 .........................................
June 30 ........................................
July 31 .........................................
September 30 ...............................
October 31 ...................................
November 30 ...............................
December 31 ................................
January 31 ....................................
February 28 ..................................
March 31 ......................................

2010
—
4
2
5
2
5
120
18
8
143

2009
1
6
2
5
2
4
125
15
7
121

SMFG 2010

(ii) The financial statements of subsidiaries with balance
sheets dated May 31, June 30, July 31, September 30,
November 30 and January 31 are consolidated after
the accounts are provisionally closed as of March 31
for the purpose of consolidation. For subsidiaries with
balance sheets dated October 31, financial statements are
consolidated based on the provisional financial 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 March 2010. Their
financial statements are consolidated after the accounts are
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.

(d) Special purpose entities

(i) Outline of special purpose entities and transactions
SMBC provides loans, credit lines and liquidity lines to 12
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
limited 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 12 SPEs as of
their most recent closing dates of 2010 were ¥2,261,647
million ($24,306 million) and ¥2,261,476 million
($24,304 million), respectively. The respective amounts of
2009 were ¥3,140,527 million and ¥3,140,894 million.
(ii) The amount of principal transactions with the SPEs as
of and for the fiscal years ended March 31, 2010 and 2009
were as follows:

Millions of yen

2010

March 31
Loans and bills
discounted .................. ¥1,630,152 ¥1,851,401
824,149
Credit lines ...................
394,533
Liquidity lines ..............

670,385
279,947

2009

Year ended March 31
Interest on loans and
discounts ....................
Fees and commissions ...

Millions of yen

2010

2009

¥17,520
2,288

¥26,092
2,133

Millions of
U.S. dollars
2010

$17,519
7,205
3,009

Millions of
U.S. dollars
2010

$188
25

(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” and “Trading losses.”
Securities and monetary claims purchased for trading

purposes are stated at the fiscal year-end fair value, and
financial derivatives such as swaps, futures and options are
stated at amounts that would be settled if the transactions
were terminated on the consolidated balance sheet date.
“Trading income” and “Trading losses” include interest
received or paid during the fiscal year. The year-on-year
valuation differences of securities and monetary claims are
also recorded in the above-mentioned accounts. As for the
derivatives, assuming that the settlement will be made in
cash, the year-on-year valuation differences are also recorded in
the above-mentioned accounts.

(3) Securities

(a) 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 trading purpose securities, held-
to-maturity securities and investments in unconsolidated
subsidiaries and affiliates are classified as “other securities”
(available-for-sale securities). Stocks (including foreign
stocks) in other securities that have market prices are car-
ried 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, for which it is extremely
difficult to determine fair value, are carried at cost using
the moving-average method. Net unrealized gains (losses)
on other securities, net of income taxes, are included in
“Net assets,” after deducting the amount that is reflected
in the fiscal year’s earnings by applying fair value hedge
accounting.

(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

Buildings owned by SMFG and SMBC are depreciated
using the straight-line method over the estimated useful
lives of the respective assets. Assets other than buildings
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.

(b) Intangible fixed assets

Intangible fixed assets are depreciated using the straight-
line method. Capitalized software for internal use owned

Notes to Consolidated Financial Statements

SMFG

by SMFG and its consolidated domestic subsidiaries is
depreciated over its estimated useful life (basically 5 years).

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 salvage value is 0.

(6) Reserve for possible loan losses

The reserve for possible loan losses of major consolidated
subsidiaries is provided for as described below in accordance
with the internal standards for write-offs and provisions.
For claims on borrowers that have entered into bankruptcy,
special liquidation proceedings or similar legal proceedings
(“bankrupt borrowers”) or borrowers that are not legally or
formally insolvent but are regarded as substantially in the
same situation (“effectively bankrupt borrowers”), a reserve is
provided for based on the amount of claims, after the write-off
stated below, net of the expected amount of recoveries from
collateral and guarantees.
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
recoveries from collateral and guarantees.
The discounted cash flows (“DCF”) method is used for
claims on borrowers whose cash flows from collection of
principal 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 collection from principal and interest (calculated using
the rationally estimated cash flows discounted at the initial
contractual interest rate) and the book value.
For other claims, a reserve is provided for based on the
historical loan-loss ratio.
For claims originated in specific overseas countries, an addi-
tional 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

SMFG 2010 79

SMFG

Notes to Consolidated Financial Statements

amount of the claims. The amount of write-off was ¥843,781
million ($9,068 million) and ¥717,010 million at March 31,
2010 and 2009, 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.

(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
contractual amount of lease fees per month.

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.

(9) Reserve for employee retirement benefits

(15) Hedge accounting

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.
“Partial Amendments to Accounting Standard for
Retirement Benefits (Part3)” (Accounting Standard Board of
Japan (“ASBJ”) Statement No. 19, issued on July 31, 2008)
became effective from the fiscal year beginning on and after
April 1, 2009. Accordingly, SMFG has applied them from the
fiscal year ended March 31, 2010. This accounting method
has no impact on the consolidated financial statements for the
fiscal year ended March 31, 2010.
(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
derecognized as liabilities under certain conditions is provided
for the possible losses on the future claims of withdrawal based
on the historical reimbursements.

(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 of the Financial Instruments and
Exchange Act.

(13) Translation of foreign currency assets and liabilities

Assets and liabilities of SMFG and SMBC denominated in
foreign currencies and accounts of SMBC overseas branches are
translated into Japanese yen mainly at the exchange 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.

SMFG 2010

(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” (Japanese Institute of Certified Public
Accountants (“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 clas-
sifying 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
effectiveness of such individual hedges.
As a result of the application of JICPA Industry Audit
Committee Report No. 24, SMBC discontinued the
application of hedge accounting or applied fair value hedge
accounting to a portion of the hedging instruments using
“macro hedge,” which had been applied in order to manage
interest rate risk arising from large-volume transactions
in loans, deposits and other interest-earning assets and
interest-bearing liabilities as a whole using derivatives
pursuant to “Temporary Treatment for Accounting and
Auditing of Application of Accounting Standard for
Financial Instruments in Banking Industry” (JICPA
Industry Audit Committee Report No. 15). The deferred
hedge losses and gains related to such a portion of hedging
instruments are charged to “Interest income” or “Interest
expenses” over a 12-year period (maximum) according to
their maturity from the fiscal year ended March 31, 2004.
Gross amounts of deferred hedge losses on “macro hedge”
(before deducting tax effect) at March 31, 2010 and 2009
were ¥2,470 million ($27 million) and ¥6,921 million,
respectively. Gross amounts of deferred hedge gains on
“macro hedge” (before deducting tax effect) at March 31,
2010 and 2009 were ¥2,416 million ($26 million) and
¥5,688 million, respectively.

Notes to Consolidated Financial Statements

SMFG

(b) Hedging against currency fluctuations

(18) Amortization of goodwill

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 suf-
ficient on-balance (actual) or off-balance (forward) liability
exposure exists to cover the cost of the hedged securities
denominated in the same foreign currencies.

SMBC applies fair value hedge accounting to individual
hedges offsetting the price fluctuation of the shares that are
classified under other securities, and that are held for the
purpose of strategic investment, and accordingly evaluates
the effectiveness of such individual hedges.
(d) Transactions between consolidated subsidiaries

As for derivative transactions between consolidated sub-
sidiaries 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 transac-
tions stipulated in JICPA Industry Audit Committee
Report No. 24 and No. 25. Therefore, SMBC accounts for
the gains or losses that arise from interest rate swaps and
currency swaps in its earnings or defers them, rather than
eliminating them.
Certain other consolidated subsidiaries apply the
deferred hedge accounting or fair value hedge account-
ing or the special treatment for interest rate swaps. A
consolidated domestic subsidiary (a leasing company)
partly applies the accounting method that is permitted
by “Temporary Treatment for Accounting and Auditing
of Application of Accounting Standard for Financial
Instruments in Leasing Industry” (JICPA Industry Audit
Committee Report No. 19).

(16) Consumption taxes

National and local consumption taxes of SMFG and its
consolidated domestic subsidiaries are accounted for using the
tax-excluded method.

(17) Valuation of consolidated subsidiaries’ assets and liabilities

Assets and liabilities of consolidated subsidiaries including the
portion attributable to the minority stockholders are valued
for consolidation at fair value when SMFG acquires control.

Goodwill on SMBC Friend Securities Co., Ltd., Sumitomo
Mitsui Finance and Leasing Company, Limited, Nikko Cordial
Securities Inc. and Kansai Urban Banking Corporation is
amortized using the straight-line method over 20 years.
Goodwill on other companies was charged or credited to
income directly when incurred or benefited.

(19) Statements of cash flows

For the purposes of presenting the consolidated statements of
cash flows, cash and cash equivalents represent cash and due
from banks.

(20) Application of new accounting standards

(a) Accounting standard for financial instruments

“Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, partially revised on March 10, 2008)
and “Implementation Guidance on Disclosures about Fair
Value of Financial Instruments” (ASBJ Guidance No. 19,
issued on March 10, 2008) became effective from the
fiscal year ending on and after March 31, 2010. SMFG
has applied them from the fiscal year ended March 31,
2010. Accordingly, this accounting change has the fol-
lowing impact on the consolidated financial statements as
compared with the previous accounting method:

Monetary claims bought .............
Securities ....................................
Net unrealized gains (losses)
on other securities .....................
Deferred tax assets ......................
Reserve for possible loan losses ...

Millions
of yen
¥ 8,710
41,914

39,315
(27,056)
(34,999)

Millions of
U.S. dollars
$ 94
450

423
(291)
(376)

As a result, income before income taxes and minority
interests increased by ¥19,251 million ($207 million) as
compared with the former method.

(b) 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” (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 the fiscal year ended March
31, 2009. This accounting method has decreased retained
earnings at April 1, 2008 by ¥3,132 million, but has no
material impact on the profit or loss for the fiscal year
ended March 31, 2009.

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 begin-
ning on and after April 1, 2008. Accordingly, SMFG has
applied them from the fiscal year ended March 31, 2009.
The treatment of non-transfer ownership finance lease
transactions which commenced before April 1, 2008 was as
follows:

SMFG 2010 81

SMFG

Notes to Consolidated Financial Statements

(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:

Millions
of yen

Lease receivables and investment assets ........ ¥1,968,347
Tangible fixed assets:

Lease assets ..............................................

7,206

Intangible fixed assets:

Lease assets ..............................................
Loans and bills discounted ...........................
Lease assets ..................................................
Other assets .................................................
Other liabilities ...........................................

480
(138,788)
(1,205,021)
(662,005)
(32,205)

Interest income:

Interest on lease transactions .................... ¥ 77,772
(7,659)
Interest on loans and discounts ................

Interest expenses:

Other interest expenses ............................

(639)

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)

As a result, income before income taxes and minority
interests for the fiscal year ended March 31, 2009 increased
by ¥2,423 million.

(21) Changes in presentation

(a) Lease assets related to operating leases on lessor side (March
31, 2009: ¥180,273 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
of yen
2009

Buildings .................................................
Land ........................................................
Other tangible fixed assets .......................

¥52,681
68,131
59,460

Intangible fixed assets:

Software ...................................................

SMFG 2010

(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 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.

(22) Issuance of new shares

On June 22, 2009, SMFG issued 219,700 thousand new
shares of common stock at ¥3,766 per share (issue price) for
final allocation by underwriters at ¥3,928 per share (offer
price). Furthermore, in connection with the over-allotment
of 15,300 thousand shares of common stock offered for sale
at ¥3,928 per share (sales price) in the public offering, SMFG
issued 8,931 thousand new shares of common stock at ¥3,766
per share (issue price) through third-party allocation to the
underwriter who conducted the over-allotment on July 27,
2009. The purchase agreement for the offering prescribes that
the total amount of issue price be treated as the total amount
of subscription price and no underwriting commission be
paid. Accordingly, other expenses do not include the amount
equivalent to the underwriting commission for the offering
in the amount of ¥37,038 million. Out of the issue price per
share, ¥1,883 is accounted for as capital stock and ¥1,883 as
capital surplus.
On January 27, 2010, SMFG issued 340,000 thousand new
shares of common stock at ¥2,702.81 per share (issue price)
for final allocation by underwriters at ¥2,804 per share (offer
price). Furthermore, in connection with the over-allotment
of 20,000 thousand shares of common stock offered for sale
at ¥2,804 per share (sales price) in the public offering, SMFG
issued 20,000 thousand new shares of common stock at
¥2,702.81 per share (issue price) through third-party alloca-
tion to the underwriter who conducted the over-allotment on
February 10, 2010. The purchase agreement for the offering
prescribes that the total amount of issue price be treated as the
total amount of subscription price and no underwriting com-
mission be paid. Accordingly, other expenses do not include
the amount equivalent to the underwriting commission for the
offering in the amount of ¥36,428 million. Out of the issue
price per share, ¥1,351.405 is accounted for as capital stock
and ¥1,351.405 as capital surplus.
Equity of ¥11,075 million attributable to SMFG, which
a consolidated subsidiary and an equity method affiliated
company of SMFG recorded as earnings under the purchase
agreement for the offering, was accounted for as “Capital
surplus.”

(23) Change in method of valuation of certain securities

Floating-rate Japanese government bonds which SMFG Group
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 for
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

Notes to Consolidated Financial Statements

SMFG

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 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
discount rates determined based on their yields. Yield and
volatility are the main parameters for calculating the fair
value.

(24) 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, 2010 and 2009.

3. Trading Assets
Trading assets at March 31, 2010 and 2009 consisted of the following:

March 31
Trading securities ................................................................................................
Derivatives of trading securities ...........................................................................
Derivatives of securities related to trading transactions ........................................
Trading-related financial derivatives ....................................................................
Other trading assets .............................................................................................

4. Securities
Securities at March 31, 2010 and 2009 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

2010
¥2,779,725
1,246
6,931
3,642,477
278,307
¥6,708,688

2009
¥ 293,956
470
13,428
4,052,928
564,178
¥4,924,961

Millions of yen

2010
¥16,738,321
422,648
3,548,359
2,967,641
4,946,997
¥28,623,968

2009
¥14,734,419
338,688
3,899,189
2,755,683
6,970,184
¥28,698,164

Millions of
U.S. dollars
2010
$29,874
13
75
39,145
2,991
$72,098

Millions of
U.S. dollars
2010
$179,885
4,542
38,134
31,893
53,165
$307,619

*1 Unsecured loaned securities for which borrowers have the right to sell or pledge in the amount of ¥41,826 million ($450 million) are included in Japanese government bonds in

Securities and in trading securities in Trading assets at March 31, 2010 and such securities in the amount of ¥33,312 million are included in Japanese government bonds and other in
Securities at March 31, 2009.
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,
¥3,840,308 million ($41,271 million) are pledged, and ¥133,566 million ($1,435 million) are held in hand at March 31, 2010. The respective amounts at March 31, 2009 were
¥1,717,335 million and ¥188,715 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 ¥2,136,145 million ($22,957 million) and ¥2,304,890 million at March 31, 2010 and 2009, respectively.

*3 Japanese stocks and other include investments in unconsolidated subsidiaries and affiliates of ¥321,897 million ($3,459 million) and ¥469,965 million at March 31, 2010 and 2009,

respectively.

*4 Japanese stocks and other include investments in jointly controlled entities of ¥94,369 million ($1,014 million) and ¥14,756 million at March 31, 2010 and 2009, respectively.

5. Loans and Bills Discounted

(1) Loans and bills discounted at March 31, 2010 and 2009 consisted of the following:

March 31
Bills discounted ...............................................................................................
Loans on notes .................................................................................................
Loans on deeds .................................................................................................
Overdrafts .......................................................................................................

Millions of yen

2010
¥ 196,382
2,324,520
52,839,032
7,341,097
¥62,701,033

2009
¥ 257,759
2,852,998
53,489,947
8,534,613
¥65,135,319

Millions of
U.S. dollars
2010
$ 2,111
24,981
567,856
78,894
$673,842

SMFG 2010 83

SMFG

Notes to Consolidated Financial Statements

(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

2010

2009

¥ 165,131
1,075,782
38,315
250,256
¥1,529,484

¥ 292,088
1,019,352
36,162
238,713
¥1,586,317

Millions of
U.S. dollars
2010

$ 1,775
11,561
412
2,689
$16,437

*1 “Bankrupt loans” are loans, after write-off, to legally bankrupt borrowers as defined in Articles 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).”

(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, 2010 and 2009 was ¥617,381 million ($6,635 million) and
¥686,407 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, 2010 and 2009 were
¥41,957,592 million ($450,914 million) and ¥39,983,526 million, respectively, and the amounts of unused commitments whose origi-
nal contract terms are within 1 year or unconditionally cancelable at any time at March 31, 2010 and 2009 were ¥36,373,235 million
($390,900 million) and ¥34,012,566 million, respectively.
Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does
not necessarily represent actual future cash flow requirements. Many of these commitments include clauses under which SMBC and
other consolidated subsidiaries can reject an application from customers or reduce the contract amounts in the event that economic
conditions change, SMBC and other consolidated subsidiaries need to secure claims, or other events occur. In addition, SMBC and other
consolidated subsidiaries may request the customers to pledge collateral such as premises and securities at the time of the contracts, and
take necessary measures such as monitoring customers’ financial positions, revising contracts when such need arises and securing claims
after the contracts are made.

6. Other Assets
Other assets at March 31, 2010 and 2009 consisted of the following:

March 31
Prepaid expenses ..................................................................................................
Accrued income ...................................................................................................
Deferred assets .....................................................................................................
Financial derivatives* ..........................................................................................
Other ..................................................................................................................

* Referred to in Note 30

Millions of yen

2010
¥ 30,643
239,422
488,712
1,079,708
1,771,559
¥3,610,046

2009
¥ 35,305
265,015
868,188
1,406,092
1,682,648
¥4,257,251

Millions of
U.S. dollars
2010
$ 329
2,573
5,252
11,604
19,039
$38,797

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

7. Tangible Fixed Assets
Tangible fixed assets at March 31, 2010 and 2009 consisted of the following:

Millions of yen

March 31
Buildings ............................................................................................................
Land* ..................................................................................................................
Lease assets ..........................................................................................................
Construction in progress ......................................................................................
Other tangible fixed assets ...................................................................................
Total ....................................................................................................................
Accumulated depreciation ...................................................................................

2010
¥ 314,461
544,075
8,159
8,206
206,222
¥1,081,125
¥ 671,298

2009
¥ 296,219
531,726
7,206
3,527
170,121
¥1,008,801
¥ 616,324

* Includes land revaluation excess referred to in Note 15.

8. Intangible Fixed Assets
Intangible fixed assets at March 31, 2010 and 2009 consisted of the following:

March 31
Software ..............................................................................................................
Goodwill .............................................................................................................
Lease assets ..........................................................................................................
Other intangible fixed assets ................................................................................

9. Assets Pledged as Collateral
Assets pledged as collateral at March 31, 2010 and 2009 consisted of the following:

March 31
Assets pledged as collateral:

Millions of yen

2010
¥215,563
363,507
367
46,809
¥626,248

2009
¥163,522
186,793
480
11,087
¥361,884

Millions of yen

2010

2009

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 .............................................................................

¥ 703
367,035
1,870
2,337,389
4,649,170
1,631,290
15,478
16,165
3,087

24,992
642,100
1,120,860
3,664,591
365,974
1,468,005
14,611
123,733

¥ 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

Millions of
U.S. dollars
2010
$ 3,380
5,847
88
88
2,216
$11,619
$ 7,214

Millions of
U.S. dollars
2010
$2,317
3,906
4
503
$6,730

Millions of
U.S. dollars
2010

$ 8
3,944
20
25,120
49,964
17,531
166
174
33

269
6,901
12,046
39,383
3,933
15,777
157
1,330

SMFG 2010 85

SMFG

Notes to Consolidated Financial Statements

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, 2010 and 2009:

March 31
Cash and due from banks and Deposits with banks ..............................................
Trading assets ......................................................................................................
Securities .............................................................................................................
Loans and bills discounted ...................................................................................

2010
¥ 25,804
111,283
14,233,542
1,171,863

2009
¥ 19,380
52,843
11,172,095
284,157

Millions of yen

Millions of
U.S. dollars
2010
$ 277
1,196
152,967
12,594

At March 31, 2010, other assets included surety deposits of ¥102,085 million ($1,097 million), variation margins of futures market transac-
tions of ¥8,457 million ($91 million) and other variation margins of ¥83,768 million ($900 million). At March 31, 2009, other assets included
surety deposits of ¥85,892 million and variation margins of futures market transactions of ¥6,252 million.

10. Deposits
Deposits at March 31, 2010 and 2009 consisted of the following:

March 31
Current deposits ..................................................................................................
Ordinary deposits ................................................................................................
Savings deposits ...................................................................................................
Deposits at notice ................................................................................................
Time deposits ......................................................................................................
Negotiable certificates of deposit .........................................................................
Other deposits .....................................................................................................

11. Trading Liabilities
Trading liabilities at March 31, 2010 and 2009 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

2010
¥ 6,871,401
35,153,531
750,961
5,363,534
26,888,129
6,995,619
3,621,037
¥85,644,215

2009
¥ 6,588,074
34,078,361
815,336
5,162,137
25,039,089
7,461,284
3,886,497
¥83,030,782

Millions of yen

2010
¥1,582,808
2,367
6,961
3,474,589
¥5,066,727

2009
¥ 7,473
407
13,997
3,575,780
¥3,597,658

Millions of
U.S. dollars
2010
$ 73,846
377,792
8,071
57,642
288,964
75,181
38,915
$920,411

Millions of
U.S. dollars
2010
$17,010
26
75
37,341
$54,452

12. Borrowed Money
Borrowed money at March 31, 2010 and 2009 consisted of the following:

March 31
Borrowed money*2 ...................................................... ¥5,470,578

2010

2009
¥4,644,699

Millions of yen

Millions of
U.S. dollars
2010
$58,792

Average
interest rate*1
2010
0.65%

Due
Jan. 2010 — 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 borrowings of ¥378,729 million ($4,070 million) and ¥436,000 million at March 31, 2010 and 2009, respectively.

The repayment schedule over the next 5 years on borrowed money at March 31, 2010 was as follows:

March 31
Within 1 year .....................................................................................................................
After 1 year through 2 years ...............................................................................................
After 2 years through 3 years ..............................................................................................
After 3 years through 4 years ..............................................................................................
After 4 years through 5 years ..............................................................................................

Millions of yen
2010
¥4,156,807
325,880
262,602
140,698
263,870

Millions of U.S. dollars
2010
$44,673
3,502
2,822
1,512
2,836

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

13. Bonds
Bonds at March 31, 2010 and 2009 consisted of the following:

March 31

Issuer

Description

SMBC:
Short-term bonds, payable in Yen ..........................

Straight bonds, payable in Yen ..............................

Straight bonds, payable in Euroyen ........................
Straight bonds, payable in Australian dollars ............

Subordinated bonds, payable in Yen ......................

Subordinated bonds, payable in Euroyen ................
Subordinated bonds, payable in U.S. dollars ............

Subordinated bonds, payable in Euro .....................

Other consolidated subsidiaries:
Straight bonds, payable in Yen ..............................

Straight bonds, payable in U.S. dollars ..................

Subordinated bonds, payable in Yen ......................

Subordinated bonds, payable in U.S. dollars ............

Short-term bonds, payable in Yen ..........................

Millions of yen*1

2010

2009

Millions of
U.S. dollars
2010

Interest rate*2
(%)
2010

Due

¥ 164,678
[164,678]
1,032,907
[149,198]
20,900
46,031
(A$539,895 thousand)
1,383,521
[149,798]
593,800
102,371
($1,100,179 thousand)
41,162
(€329,591 thousand)
—

89,738
[62,842]
—

112,239
[140]
—

1,047,500
[1,047,500]
¥4,634,851

¥ 114,242
[114,242]
1,249,142
[398,291]
25,400
—

$ 1,770

0.105–0.14 Apr. 2010–Jun. 2010

11,101

0.10–2.60 Apr. 2010–May 2025

225
495

0.00–4.55944 Mar. 2012–Feb. 2037
Mar. 2013

5.76

885,875

14,869

1.15–2.80

Jun. 2010–Jul. 2019

690,800
207,782
($2,115,273 thousand)
90,312
(€695,570 thousand)
162,234
(€1,249,496 thousand)

126,342
[65,621]
910
($10,000 thousand)
[910]
146,451
[23,815]
98,230
($1,000,000 thousand)
[98,230]
905,100
[905,100]
¥4,702,826

6,381
1,100

0.50313–2.97 May 2015–Perpetual
5.625–8.00 Nov. 2011–Perpetual

442

—

4.375

—

Perpetual

—

964

0.26868–3.50 Mar. 2010–Jul. 2017

—

1,206

1.0475–4.95 Mar. 2011–Perpetual

—

11,257

0.112–0.79367 Apr. 2010–Dec. 2010

$49,810

*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, 2010 was as follows:

March 31
Within 1 year ....................................................................................................................
After 1 year through 2 years ...............................................................................................
After 2 years through 3 years ..............................................................................................
After 3 years through 4 years ..............................................................................................
After 4 years through 5 years ..............................................................................................

Millions of yen
2010
¥1,574,202
261,143
383,327
267,070
269,494

Millions of U.S. dollars
2010
$16,918
2,806
4,120
2,870
2,896

SMFG 2010 87

SMFG

Notes to Consolidated Financial Statements

14. Other Liabilities
Other liabilities at March 31, 2010 and 2009 consisted of the following:

March 31
Accrued expenses .................................................................................................
Unearned income .................................................................................................
Income taxes payable ...........................................................................................
Financial derivatives*1 .........................................................................................
Lease liabilities*2 .................................................................................................
Other ..................................................................................................................

Millions of yen

2010
¥ 144,338
174,931
56,708
818,105
58,742
1,940,320
¥3,193,146

2009
¥ 268,050
177,998
45,105
1,317,303
23,594
1,970,993
¥3,803,046

Millions of
U.S. dollars
2010
$ 1,551
1,880
610
8,792
631
20,852
$34,316

*1 Referred to in Note 30
*2 Average interest rate on lease liabilities for the year ended March 31, 2010 was 3.52%. 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, 2010 was as follows:

Millions of yen
2010
¥18,371
14,033
10,175
6,327
3,510

Millions of U.S. dollars
2010
$197
151
109
68
38

15. 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
concerning 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 adjust-
ments for land shape and timing of appraisal to the values
stipulated in Articles 2-3, 2-4 or 2-5 of the Enforcement
Ordinance of the Law Concerning Land Revaluation (the
Enforcement Ordinance No. 119) effective March 31, 1998.

Another consolidated subsidiary and an affiliate:

Fair values were determined based on the values stipulated in
Articles 2-3 and 2-5 of the Enforcement Ordinance
No. 119.

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

16. Capital Stock
Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2010 and 2009 were as follows:

Number of shares

2010

2009*

Authorized

March 31
Common stock ........................................................................................ 1,500,000,000 1,414,055,625
—
Preferred stock (Type 4) ...........................................................................
—
Preferred stock (Type 5) ...........................................................................
70,001
Preferred stock (Type 6) ...........................................................................
—
Preferred stock (Type 7) ...........................................................................
—
Preferred stock (Type 8) ...........................................................................
—
Preferred stock (Type 9) ...........................................................................
Total ........................................................................................................ 1,500,684,101 1,414,125,626

50,100
167,000
70,001
167,000
115,000
115,000

Issued

Authorized
1,500,000,000
50,100
167,000
70,001
167,000
115,000
115,000
1,500,684,101

Issued
789,080,477
33,400
—
70,001
—
—
—
789,183,878

* 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
submitted to the general meeting of shareholders or is rejected at the
general meeting of shareholders.

In the event that SMFG pays dividends, SMFG shall pay to
holders of shares of its preferred stock, in preference to the holders
of its common stock, cash dividends in the amounts as described
below. If preferred interim dividends stipulated in the Articles of
Incorporation of SMFG were paid during the relevant fiscal year, the
amount of such preferred interim dividends shall be subtracted from
such amount of annual preferred dividends. Preferred stock (Type 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 6 preferred stock. Holders
of preferred stock are not entitled to any further dividends or other
participation or distribution of SMFG’s residual assets upon SMFG’s
liquidation.
SMFG may, subject to the requirements provided in the Company
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 6) is non-convertible.

SMFG 2010 89

SMFG

Notes to Consolidated Financial Statements

17. Fees and Commissions
Fees and commissions for the fiscal years ended March 31, 2010 and 2009 consisted of the following:

Millions of yen

2010

2009

Millions of
U.S. dollars
2010

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 ...............................................................................................................

¥ 70,592
125,792
54,363
14,763
6,684
49,365
143,770
96,243
167,789
¥729,364

¥ 31,050
89,697
¥120,748

¥ 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

18. Trading Income
Trading income for the fiscal years ended March 31, 2010 and 2009 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

2010
¥ 63,424
2,254
127,833
576
¥194,087

2009
¥ 23,876
1,221
179,255
7,386
¥211,738

19. Other Operating Income
Other operating income for the fiscal years ended March 31, 2010 and 2009 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

2010
¥ 90,942
10
243,237
—
118,823
¥453,012

2009
¥149,037
57
252,966
7,142
120,396
¥529,599

20. Other Operating Expenses
Other operating expenses for the fiscal years ended March 31, 2010 and 2009 consisted of the following:

Year ended March 31
Losses on sale of bonds .........................................................................................
Losses on redemption of bonds .............................................................................
Losses on devaluation of bonds .............................................................................
Bond issuance costs ..............................................................................................
Lease-related expenses ..........................................................................................
Losses on foreign exchange transactions ...............................................................
Losses on financial derivatives ..............................................................................
Other ..................................................................................................................

Millions of yen

2010
¥ 30,122
17,401
331
1,197
201,932
1,591
17,011
132,186
¥401,773

2009
¥ 68,882
45,852
7,049
606
194,349
14,984
—
141,487
¥473,212

SMFG 2010

$ 759
1,352
584
159
72
530
1,545
1,034
1,803
$7,838

$ 334
964
$1,298

Millions of
U.S. dollars
2010
$ 682
24
1,374
6
$2,086

Millions of
U.S. dollars
2010
$ 978
0
2,614
—
1,277
$4,869

Millions of
U.S. dollars
2010
$ 324
187
3
13
2,170
17
183
1,421
$4,318

Notes to Consolidated Financial Statements

SMFG

21. Other Income
Other income for the fiscal years ended March 31, 2010 and 2009 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 ...........................................................................
Other ..................................................................................................................

Millions of yen

2010
¥ 57,231
130
17,179
968
35,128
¥110,638

2009
¥15,242
98
1,297
1,708
34,627
¥52,973

22. Other Expenses
Other expenses for the fiscal years ended March 31, 2010 and 2009 consisted of the following:

Year ended March 31
Write-off of loans.................................................................................................
Losses on sale of stocks and other securities ..........................................................
Losses on devaluation of stocks and other securities ..............................................
Losses on money held in trust ..............................................................................
Losses on sale of delinquent loans .........................................................................
Equity in losses of affiliates ..................................................................................
Losses on disposal of fixed assets ..........................................................................
Losses on impairment of fixed assets* ..................................................................
Other ..................................................................................................................

*Losses on impairment of fixed assets consisted of the following:

Millions of yen

2010
¥176,672
34,814
32,495
375
76,439
21,542
6,003
12,856
65,052
¥426,252

2009
¥302,353
7,802
191,117
232
62,549
94,876
12,144
7,363
44,692
¥723,131

Millions of
U.S. dollars
2010
$ 615
1
185
10
378
$1,189

Millions of
U.S. dollars
2010
$1,899
374
349
4
821
232
65
138
699
$4,581

Year ended
March 31
Tokyo metropolitan area ........................................ Branch (1 branch)

Area

Purpose of use
2010

Type
Land and buildings, etc.

Corporate assets (6 items)
Idle assets (31 items)
Other (4 items)

Kinki area ............................................................. Branch (1 branch)

Land and buildings, etc.

Corporate assets (2 items)
Idle assets (38 items)
Other (2 items)

Other .................................................................... Corporate assets (3 items) Land and buildings, etc.

Idle assets (10 items)
Other (2 items)

Millions of yen

2010
¥ 13
8,295
1,511
335
164
35
1,436
256
21
281
503

2009
¥ 57
4,700
664
444
389
—
607
318
—
179
—

Millions of
U.S. dollars
2010
$ 0
89
16
4
2
0
15
3
0
3
5

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.
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, corporate assets 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.

SMFG 2010 91

SMFG

Notes to Consolidated Financial Statements

23. Deferred Tax Assets and Liabilities

(1) Significant components of deferred tax assets and liabilities at March 31, 2010 and 2009 were as follows:

March 31
Deferred tax assets:

Millions of yen

2010

2009

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 ...............................................................................

¥ 485,533
282,386
438,537
140,597
20,707
74,489
27,290
12,392
245,743
1,727,678
(739,555)
988,123

(169,312)
(28,392)
(42,261)
(13,956)
(3,388)
(28,746)
(286,057)
¥ 702,065

¥ 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

Millions of
U.S. dollars
2010

$ 5,218
3,035
4,713
1,511
223
800
293
133
2,641
18,567
(7,948)
10,619

(1,820)
(305)
(454)
(150)
(36)
(309)
(3,074)
$ 7,545

(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, 2010 and 2009. 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, 2010 and 2009 was as follows:

Statutory tax rate ...............................................................................................................................
Valuation allowance .......................................................................................................................
Equity in losses of affiliates ............................................................................................................
Undistributed earnings of overseas subsidiaries ..............................................................................
Dividends exempted for income tax purposes .................................................................................
Other .............................................................................................................................................
Effective income tax rate ....................................................................................................................

2010
40.69%
(10.81)
1.91
—
—
0.26
32.05%

2009
40.69%

1,033.93
130.88
(34.92)
(6.24)
(29.80)
1,134.54%

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

24. Changes in Net Assets

(1) Type and number of shares issued and treasury shares are as follows:

Year ended March 31, 2010
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 (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,
2009

789,080,477
4,175
4,175
4,175
4,175
4,175
4,175
4,175
4,175
70,001
789,183,878

17,028,466
—
—
—
—
—
—
—
—
17,028,466

Number of shares

Increase

Decrease

624,975,148*1

—
—
—
—
—
—
—
—
—
624,975,148

54,672*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
88,072

—
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
4,175*2
—
33,400

13,038*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
46,438

March 31,
2010

1,414,055,625
—
—
—
—
—
—
—
—
70,001
1,414,125,626

17,070,100
—
—
—
—
—
—
—
—
17,070,100

*1 Increase in number of common shares issued:

(cid:129) 559,700,000 shares due to issuance of new shares by way of public offering on June 22, 2009 and January 27, 2010

(cid:129) 28,931,300 shares due to issuance of new shares by way of third-party allotment on July 27, 2009 and February 10, 2010
(cid:129) 36,343,848 shares due to exercising of rights to request acquisition of common shares with respect to preferred stock (1st through 4th and 9th through 12th series Type

4) on January 28, 2010

*2 Increase in number of treasury preferred shares (Type 4):

(cid:129) 4,175 shares due to acquisition of own shares on January 28, 2010 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 (1st through 4th and 9th through 12th series Type 4):
(cid:129) 4,175 shares due to retirement of treasury shares on February 8, 2010
*3 Increase in number of treasury common shares:
(cid:129) 54,672 shares due to purchase of fractional shares
Decrease in number of treasury common shares:
(cid:129) 12,990 shares due to sale of fractional shares
(cid:129) 48 shares due to sale by affiliates accounted for by the equity method

SMFG 2010 93

SMFG

Notes to Consolidated Financial Statements

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

781,346,823.23*1

—
—
—
—
—
—
—
—
—
—
—
—
—
781,346,823.23

16,887,475.04*3
4,175*2
4,175*2
4,175*2
4,175*2

16,904,175.04

—
—
—
—
—
4,175*2
4,175*2
4,175*2
4,175*2
—
—
—
—
—
16,700

28,006.45*3
4,175*2
4,175*2
4,175*2
4,175*2

44,706.45

March 31,
2009

789,080,477
4,175
4,175
4,175
4,175
—
—
—
—
4,175
4,175
4,175
4,175
70,001
789,183,878

17,028,466
—
—
—
—
17,028,466

(cid:129) 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

(cid:129) 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):

(cid:129) 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):
(cid:129) 4,175 shares due to retirement of treasury shares on May 16, 2008
*3 Increase in number of treasury common shares:

(cid:129) 68,904.66 shares due to purchase of fractional shares and shares less than 1 unit
(cid:129) 539 shares due to acquisition of shares owned by shareholders who opposed the exchange of subsidiary company shares for SMFG shares
(cid:129) 16,818,031.38 shares due to the stock split implemented on January 4, 2009

Decrease in number of treasury common shares:
(cid:129) 28,006.45 shares due to sale of fractional shares and shares less than 1 unit

(2) Information on stock acquisition rights is as follows:

Year ended March 31, 2010
SMFG ..............................
Consolidated subsidiary ...
Total ................................

Year ended March 31, 2009
SMFG ..............................
Consolidated subsidiary ...
Total ................................

Detail of stock
acquisition rights
Stock options
—

Type of
shares
—
—

March 31,
2009
—
—

Number of shares

Increase
—
—

Decrease
—
—

March 31,
2010
—
—

Detail of stock
acquisition rights
Stock options
—

Type of
shares
—
—

March 31,
2008
—
—

Number of shares

Increase
—
—

Decrease
—
—

March 31,
2009
—
—

Millions of
U.S. dollars
March 31,
2010
$—
1
$ 1

Millions of yen
March 31,
2010
¥—
81
¥81

Millions of yen
March 31,
2009
¥—
66
¥66

SMFG 2010

(3) Information on dividends is as follows:

(a) Dividends paid in the fiscal year ended March 31, 2009

Type of shares
Common stock ......................................................
Preferred stock (1st series Type 4) ..........................
Preferred stock (2nd series Type 4) .........................
Preferred stock (3rd series Type 4) .........................
Preferred stock (4th series Type 4) .........................
Preferred stock (5th series Type 4) .........................
Preferred stock (6th series Type 4) .........................
Preferred stock (7th series Type 4) .........................
Preferred stock (8th series Type 4) .........................
Preferred stock (9th series Type 4) .........................
Preferred stock (10th series Type 4) .......................
Preferred stock (11th series Type 4) .......................
Preferred stock (12th series Type 4) .......................
Preferred stock (1st series Type 6) ..........................

Aggregate amount
of dividends
¥53,655
281
281
281
281
281
281
281
281
281
281
281
281
3,097

Date of resolution: Ordinary general meeting of shareholders held on June 27, 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 (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
¥54,753
281
281
281
281
281
281
281
281
3,097

Date of resolution: Meeting of the Board of Directors held on November 14, 2008

(b) Dividends paid in the fiscal year ended March 31, 2010

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

Date of resolution: Ordinary general meeting of shareholders held on June 26, 2009

Notes to Consolidated Financial Statements

SMFG

Millions of yen, except per share amount
Cash dividends
per share
¥ 7,000
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250

Record date
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008

Effective date
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008
June 27, 2008

Effective date

Record date

Millions of yen, except per share amount
Cash dividends
per share
¥ 7,000
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250

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

Millions of yen, except per share amount
Cash dividends
per share
¥ 20
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250

Record date
March 31, 2009
March 31, 2009
March 31, 2009
March 31, 2009
March 31, 2009
March 31, 2009
March 31, 2009
March 31, 2009
March 31, 2009
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

SMFG 2010 95

SMFG

Notes to Consolidated Financial Statements

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
¥45,629
281
281
281
281
281
281
281
281
3,097

Date of resolution: Meeting of the Board of Directors held on November 13, 2009

Record date

Effective date

Millions of yen, except per share amount
Cash dividends
per share
¥ 45
67,500
67,500
67,500
67,500
67,500
67,500
67,500
67,500
44,250

September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009
September 30, 2009 December 4, 2009

Type of shares
Common stock ......................................................
Preferred stock (1st series Type 6) ..........................

Aggregate amount
of dividends
¥77,567
3,097

Date of resolution: Ordinary general meeting of shareholders held on June 29, 2010

25. Cash Flows
Fiscal year ended March 31, 2010

Millions of yen, except per share amount
Source
of dividends
Retained earnings
Retained earnings

Cash dividends
per share
¥ 55
44,250

Record date

Effective date
March 31, 2010 June 29, 2010
March 31, 2010 June 29, 2010

(1) Reconciliation of the opening balance and the net cash payment for acquisition with respect to acquisition of 18 companies including

Nikko Cordial Securities Inc. is as follows:

Assets ...................................................................................................................................
Trading assets ...................................................................................................................
Liabilities .............................................................................................................................
Call money and bills sold ..................................................................................................
Borrowed money ...............................................................................................................
Minority interests .................................................................................................................
Goodwill ..............................................................................................................................
Acquisition costs for the 18 companies’ stocks ......................................................................
The 18 companies’ cash and due from banks .........................................................................
Net cash payment for acquisition of the 18 companies ..........................................................

Millions of yen
¥ 1,953,475
786,535
¥(1,552,271)
(321,000)
(295,020)
(711)
167,607
568,099
(58,246)
¥ (509,853)

Millions of U.S. dollars
$ 20,994
8,453
$(16,682)
(3,450)
(3,171)
(8)
1,801
6,105
(626)
$ (5,479)

(2) The major assets and liabilities which were acquired due to a merger between Kansai Urban Banking Corporation and The Biwako

Bank, Limited are as follows:

Assets ...................................................................................................................................
Loans and bills discounted ................................................................................................
Securities ..........................................................................................................................

Millions of yen
¥1,113,801
795,445
89,968

Millions of U.S. dollars
$11,970
8,549
967

Liabilities .............................................................................................................................
Deposits ...........................................................................................................................

¥1,078,769
1,033,256

$11,593
11,104

(3) QUOQ Inc. and 1 other company were excluded from the scope of consolidation due to a merger with OMC Card, Inc. Their major

assets and liabilities are as follows:

Assets ...................................................................................................................................
Other assets ......................................................................................................................
Customers’ liabilities for acceptances and guarantees .........................................................

Millions of yen
¥730,001
401,031
258,620

Millions of U.S. dollars
$7,845
4,310
2,779

Liabilities .............................................................................................................................
Borrowed money ...............................................................................................................
Acceptances and guarantees ..............................................................................................

¥714,850
343,002
258,620

$7,682
3,686
2,779

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

26. 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. Consolidated subsidiaries in Japan have adopted the defined-contribution pen-
sion plan. Certain domestic consolidated subsidiaries have a general type of employee pension plans. They may grant additional benefits
in cases where certain requirements are met when employees retire.
Some overseas consolidated subsidiaries adopt defined benefit pension plans and defined-contribution pension plans. SMBC and some
consolidated subsidiaries in Japan contributed some of their marketable equity securities to employee retirement benefits trusts.

(2) Projected benefit obligation

Millions of yen

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) ............................

2010
¥(938,161)
891,366
(46,794)
226,268
(15,234)

164,240
205,931
¥ (41,691)

Note: Some consolidated subsidiaries adopt the simple method in calculating the projected benefit obligation.

2009
¥(918,081)
742,917
(175,164)
382,151
(26,420)

180,566
216,209
¥ (35,643)

(3) Pension expenses

Millions of yen

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 ..........................................................................................................

2010
¥21,052
22,459
(23,883)
60,456
(11,167)
4,229
¥73,146

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.”

2009
¥20,574
22,445
(31,192)
33,301
(11,159)
3,934
¥37,902

(4) Assumptions

Millions of
U.S. dollars
2010
$(10,082)
9,579
(503)
2,432
(164)

1,765
2,213
$ (448)

Millions of
U.S. dollars
2010

$226
241
(257)
650
(120)
46
$786

The principal assumptions used in determining benefit obligation and pension expenses at or for the fiscal years ended March 31, 2010
and 2009 were as follows:
Year ended March 31
Discount rate .................................................................................................................
Expected rate of return on plan assets ............................................................................

2010
1.4% to 2.5%
0% to 4.0%

2009
1.4% to 2.5%
0% to 4.1%

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, 2010 and 2009.
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, 2010 and 2009.

27. Lease Transactions

(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.

SMFG 2010 97

SMFG

Notes to Consolidated Financial Statements

(b) Lessor side

(i) Breakdown of lease investment assets

March 31
Lease receivables ...................................................................................
Residual value ......................................................................................
Unearned interest income .....................................................................
Total .....................................................................................................

2010
¥1,343,868
103,095
(233,640)
¥1,213,323

2009
¥1,444,731
111,273
(247,788)
¥1,308,216

Millions of yen

(ii) The scheduled collections of lease receivables and investment assets are as follows:
Lease payments receivable related to lease receivables

Millions of yen

March 31
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 .....................................................................................................

2010
¥242,087
173,269
109,219
75,511
32,981
73,660
¥706,728

2009
¥244,758
179,297
129,660
79,425
49,624
56,683
¥739,450

Lease payments receivable related to investment assets

Millions of yen

2010
¥ 407,746
306,937
220,648
152,399
79,417
176,720
¥1,343,868

2009
¥ 445,841
324,231
232,671
155,177
91,276
195,533
¥1,444,731

Millions of
U.S. dollars
2010
$14,442
1,108
(2,511)
$13,039

Millions of
U.S. dollars
2010
$2,602
1,862
1,174
811
354
792
$7,595

Millions of
U.S. dollars
2010
$ 4,382
3,299
2,371
1,638
853
1,899
$14,442

(iii) Non-transfer ownership finance leases, which commenced in fiscal years beginning before April 1, 2008, are valued at their
appropriate book value, net of accumulated depreciation, as of March 31, 2008, and recorded as the beginning balance of fiscal 2008
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 and minority interests” for the fiscal year ended March 31, 2010 was ¥13,282 million ($143 million) more 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, 2010 and 2009 were as follows:

March 31
Due within 1 year .................................................................................
Due after 1 year ....................................................................................
Total .....................................................................................................

2010
¥17,153
69,742
¥86,895

2009
¥13,122
52,925
¥66,047

Millions of yen

Millions of
U.S. dollars
2010
$184
750
$934

(b) Lessor side

Future minimum lease payments on operating leases which were not cancelable at March 31, 2010 and 2009 were as follows:

2010
¥ 23,585
122,599
¥146,185

2009
¥18,435
79,007
¥97,442

Millions of yen

Millions of
U.S. dollars
2010
$ 253
1,318
$1,571

Future lease payments receivable on operating leases which were not cancelable amounting to ¥0 million ($0 million) on the lessor
side were pledged as collateral for borrowings.

SMFG 2010

28. Financial Instruments

(1) Status of financial instruments

(a) Policies on financial instruments

SMFG conducts banking and other financial services such
as leasing, securities, credit card, asset management and
venture capital. Its banking business includes deposit
taking, lending, securities trading and investment, remit-
tance, foreign exchange, custody of funds and other assets
related to financial futures transactions, bond subscription
agent, trust business, over-the-counter sales of securities
investment trusts and insurance products, and securities
intermediation.
These services entail holding of financial assets such as
loans and bills discounted, bonds, and stocks. Meanwhile,
SMFG raises funds through deposit taking, borrowing,
bond offering, etc. Furthermore, it undertakes derivative
transactions to meet customers’ hedging needs, to control
market risk associated with deposit taking and lending
(“ALM purposes”), and to make profit on short-term
fluctuations in interest rates, foreign exchange rates, etc.
(“trading purposes”).

(b) Details of financial instruments and associated risks

i) Financial assets

The main financial assets held by SMFG include loans
to foreign and domestic companies and domestic
individuals, and securities such as bonds (government
and corporate bonds) and stocks (foreign and domestic
stocks), etc. Bonds such as government bonds are held
for both trading and ALM purposes, and certain bonds
are held as held-to-maturity securities. Stocks are held
mainly for strategic purposes. These assets expose
SMFG to credit risk, market risk and liquidity risk.
Credit risk is the risk of loss arising from nonperfor-
mance of obligations by the borrower or issuer due to
factors such as deterioration in the borrower’s/issuer’s
financial conditions. Market risk is the risk stemming
from fluctuations in interest rates, exchange rates, or
share prices. Liquidity risk is the risk arising from
difficulty executing transactions in desired quantities
at appropriate prices due to low market liquidity. These
risks are properly monitored and managed based on
“(c) Risk management framework for financial instru-
ments” below.
ii) Financial liabilities

Financial liabilities of SMFG include borrowed money
and bonds, etc. in addition to deposits. Deposits mainly
comprise deposits of domestic and foreign companies
and domestic individuals. Borrowed money and bonds
include subordinated borrowings and subordinated
bonds. Also, financial liabilities, like financial assets,
expose SMFG to not only market risk but also funding
liquidity risk: the risk of SMFG not being able to
raise funds due to market turmoil, deterioration in
its creditworthiness or other factors. These risks are
properly monitored and managed based on “(c) Risk
management framework for financial instruments”
below.

Notes to Consolidated Financial Statements

SMFG

iii) Derivative transactions

Derivatives handled by SMFG include foreign exchange
futures; futures, forwards, swaps and options related to
interest rates, currencies, equities, bonds and commodi-
ties; and credit and weather derivatives.
Major risks associated with derivatives include
market risk, liquidity risk, and credit risk arising
from nonperformance of contractual obligations due to
deterioration in the counterparty’s financial conditions.
These risks are properly monitored and managed based
on “(c) Risk management framework for financial
instruments” below.
Hedge accounting is applied to derivative transac-
tions executed for ALM purposes, as necessary. Hedging
instruments, hedged items, hedging policy and the
method to assess the effectiveness of hedging are
described in “2. Significant Accounting Policies,
(15) Hedge accounting.”

(c) Risk management framework for financial instruments
The fundamental matters on risk management for
SMFG are set forth in “Risk Management Regulations.”
SMFG’s Management Committee establishes the basic
risk management policy, based on the Regulations, which
is then approved by the Board of Directors. SMFG has a
risk management system based on the basic policy. The
Corporate Risk Management Department, which, together
with the Corporate Planning Department, controls risk
management across SMFG by monitoring the development
and implementation of SMFG’s risk management system,
and gives appropriate guidance as needed. Under this
framework, SMFG comprehensively and systematically
manages risks.
i) Management of credit risk

SMFG conducts integrated management of credit risk
according to its operational characteristics, and the
credit risk inherent in its entire portfolio as well as the
risk in individual credits are managed quantitatively
and continuously.
i. Credit risk management system
At SMBC, basic policies on credit risk management
and other significant matters require the resolution of
the Management Committee and the approval of the
Board of Directors.
The Credit & Investment Planning Department
of the Risk Management Unit is responsible for the
comprehensive management of credit risk. This depart-
ment establishes, revises or abolishes credit policies,
the internal rating system, credit authority regulations,
credit application regulations, and manages non-
performing loans and other aspects of credit portfolio
management. The department also controls SMBC’s
total credit risk by quantifying credit risk (i.e. calculat-
ing risk capital and risk-weighted assets) in cooperation
with the Corporate Risk Management Department.
The department also monitors risk situations and
regularly reports to the Management Committee and
the Board of Directors.

SMFG 2010 99

SMFG

Notes to Consolidated Financial Statements

Moreover, the Credit Portfolio Management
Department within the Credit & Investment Planning
Department works to stabilize SMBC’s overall credit
portfolio through market transactions such as loan
securitization. In the Corporate Services Unit, the
Corporate Research Department analyzes industries
as well as investigates the borrower’s business situ-
ation to detect early signs of problems. The Credit
Administration Department is responsible for formu-
lating and implementing measures to reduce SMBC’s
exposures mainly to borrowers classified as potentially
bankrupt or lower.
The Credit Departments of Consumer Banking Unit,
Middle Market Banking Unit and other business units
play a central role in credit screening and managing
their units’ credit portfolios. Each business unit estab-
lishes its credit limits based on the baseline amounts
for each borrower grading category. Borrowers or loans
perceived to have high credit risk undergo intensive
evaluation and administration by the unit’s Credit
Department.
Moreover, the Credit Risk Committee, a consultative
body straddling the business units, rounds out SMBC’s
oversight system for undertaking flexible and efficient
control of credit risk and ensuring the overall soundness
of the bank’s loan operations.

In addition to these, the Internal Audit Unit,

operating independently from the business units, audits
asset quality, grading accuracy, self-assessment, and
appropriateness of credit risk management system, and
reports the results directly to the Board of Directors
and the Management Committee.
ii. Method of credit risk management
SMBC properly manages the credit risk inherent in
individual loans and the entire portfolio by assessing
and quantifying the credit risk of each borrower/
loan using the internal rating system. In addition to
management of individual loans through credit screen-
ing and monitoring, it manages the credit portfolio
as described below in order to secure and improve
the credit portfolio’s soundness and medium-term
profitability.
— Appropriate risk-taking within the scope of capital
To limit credit risks to a permissible level relative to
capital, “credit risk capital limit” has been established
for internal control purposes. Under this limit, a
general guideline and designated guidelines for real
estate finance, investment in funds and securitization
products, etc. are set for each business unit. Regular
monitoring is conducted to ensure that these guidelines
are being followed.
— Controlling concentration risk
Concentration of risk in specific borrowers/industries/
countries could severely reduce a bank’s capital should
it materialize. SMBC therefore implements measures
to prevent concentration of credit risk in specific
industries, and control large exposures to individual
borrowers by setting guidelines for maximum loan
amounts and conducting thorough loan reviews. To

manage country risk, SMBC also has credit limit
guidelines based on each country’s creditworthiness.
— Greater understanding of actual corporate condi-
tions and balancing returns and risks
SMBC runs credit operations on the basic principle of
thoroughly understanding actual corporate conditions
and gaining profit commensurate with the level of
credit risk entailed, and makes every effort to improve
profit at after-cost (credit cost, capital cost and
overhead) level.
— Reduction and prevention of non-performing loans
On non-performing loans and potential non-performing
loans, SMBC carries out loan reviews to clarify credit
policies and action plans, enabling it to swiftly imple-
ment measures to prevent deterioration of borrowers’
business situations, support business recoveries, collect
on loans, and enhance loan security.
— Approaches to active portfolio management
SMBC is committed to agile portfolio management,
such as using credit derivatives and selling loan claims,
to stabilize its credit portfolio.

In regards to financial instruments such as invest-
ments in certain funds, securitized products and credit
derivatives that indirectly retain risks related to assets
such as corporate bonds and loan claims (underlying
assets), such instruments entail market and liquidity
risks in addition to credit risk, since such instruments
are traded on the market. Credit risk management for
these instruments involving detailed analysis and evalu-
ation of characteristics of underlying assets is performed
while market risk is comprehensively managed within
the framework for managing market and liquidity
risks. Moreover, guidelines have been established based
on the characteristics of each type of risk.

In regards to credit risk of derivative transactions,

the potential exposure based on the market price is
regularly calculated and properly managed. When
the counterparty is a financial institution with whom
SMBC frequently conducts derivative transactions,
measures such as a close-out netting provision, which
provide that offsetting credit exposures between the
2 parties will be combined into a single net payment
from 1 party to the other in case of bankruptcy or other
default event, are implemented to reduce credit risk.

ii) Management of market and liquidity risks

SMFG manages market and liquidity risks by setting
allowable risk limits; ensuring the transparency of the
risk management process; and clearly separating front-
office, middle-office, and back-office operations for a
highly efficient system of mutual checks and balances.
i. Market and liquidity risk management systems
At SMBC, important matters such as basic policies for
managing market and liquidity risks and risk manage-
ment framework are determined by the Management
Committee and then approved by the Board of
Directors.
The aforementioned Corporate Risk Management
Department, which is independent from the business

100

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

units that directly handle business transactions,
manages market and liquidity risks in an integrated
manner. The department also monitors market and
liquidity risk situations and regularly reports to the
Management Committee and the Board of Directors.
Furthermore, SMBC’s cross-departmental “ALM
Committee” reports on the state of observance of
market risk capital and liquidity risk capital limits, and
deliberates on administration of ALM policies. SMBC
also has a system whereby front-office departments,
middle-office departments and back-office departments
check each other’s work in order to prevent clerical
errors, unauthorized transactions, etc.

In addition, SMBC’s Internal Audit Unit, which
is independent from other departments, periodically
performs comprehensive internal audits to verify that
the risk management framework is properly function-
ing and reports the audit results to the Management
Committee, the Board of Directors and other concerned
committees and departments.
ii. Market and liquidity risk management methodology
— Market risk management
SMBC manages market risk by setting maximum loss
and VaR (value at risk: maximum potential loss for a
given probability) within the market risk capital limit
that is set taking into account stockholders’ equity
and other factors and in accordance with the market
transaction policies.
SMBC uses the historical simulation method (a
method for estimating the maximum loss by running
simulations of changes in profit and loss on market
fluctuation scenarios based on historical data) to
measure VaR.
Regarding risks associated with foreign exchange
rates, interest rates, equity risk, option prices and

other market risk factors, SMBC manages such risks by
setting a maximum limit on the indicator suited for
each market risk factor such as BPV (basis point value:
denotes the change in value of a financial instrument
resulting from a 0.01 percentage-point change in the
yield).
— Liquidity risk management
At SMBC, funding liquidity risk is managed based on
a framework consisting of setting funding gap limits
and guidelines, maintaining a system of highly liquid
supplementary funding sources, and establishing con-
tingency plans. SMBC tries to avoid excessive reliance
on short-term funds by managing funding gap limits
and guidelines and has established a contingency plan
covering emergency action plans such as reducing fund-
ing gap limits and guidelines. In addition, to ensure
smooth fulfillment of transactions in face of market
turmoil, SMBC holds assets such as U.S. treasuries that
can be sold immediately and emergency committed
lines as supplemental liquidity.
Moreover, to manage the liquidity risk of marketable
instruments, derivative transactions, etc., SMBC has
trading limits for each business office classified by
currency, instrument, transaction period, etc. As for
financial futures, etc., risks are managed by restricting
positions within a certain percentage of open interest in
the entire market.

(d) Supplementary explanations about matters concerning fair

value of financial instruments
Fair values of financial instruments are based on their
market prices and, in cases where market prices are not
available, reasonably calculated prices. Such prices have
been calculated using certain assumptions, and may differ
if calculated based on different assumptions.

SMFG 2010 101

SMFG

Notes to Consolidated Financial Statements

(2) Fair value of financial instruments

(a) Consolidated balance sheet amounts, fair values and net unrealized gains (losses) of financial instruments as of March 31, 2010 are as
follows. The amounts shown in the following table do not include financial instruments whose fair values are extremely difficult to
determine, such as unlisted stocks classified as “other securities,” and stocks of subsidiaries and affiliates.

March 31

1) Cash and due from banks and Deposits with banks*1 .......................
2) Call loans and bills bought*1 ...........................................................
3) Receivables under resale agreements ................................................
4) Receivables under securities borrowing transactions ........................
5) Monetary claims bought*1 ...............................................................
6) Trading assets

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

Bond classified as held-to-maturity ..............................................
Other securities ...........................................................................
9) Loans and bills discounted ...............................................................
Reserve for possible loan losses*1 .................................................

10) Foreign exchanges*1 ........................................................................
11) Lease receivables and investment assets*1 .........................................
Total assets ......................................................................................
1) Deposits ..........................................................................................
2) Negotiable certificates of deposit .....................................................
3) Call money and bills sold .................................................................
4) Payables under repurchase agreements .............................................
5) Payables under securities lending transactions .................................
6) Commercial paper ...........................................................................
7) Trading liabilities

Trading securities sold for short sales ...........................................
8) Borrowed money .............................................................................
9) Foreign exchanges ...........................................................................
10) Short-term bonds .............................................................................
11) Bonds ..............................................................................................
12) Due to trust account ........................................................................
Total liabilities ................................................................................
Derivative transactions*2

Consolidated balance
sheet amount
¥ 5,838,781
1,119,705
25,226
5,440,622
997,290

3,058,033
18,734

3,272,012
24,383,712
62,701,033
(801,234)
61,899,799
1,101,719
1,824,961
¥108,980,596
¥ 78,648,595
6,995,619
2,119,557
1,120,860
4,315,774
310,787

1,582,808
5,470,578
192,299
1,212,178
3,422,672
159,554
¥105,551,287

Hedge accounting not applied .....................................................
Hedge accounting applied ...........................................................
Total ................................................................................................

¥ 245,128
183,211
¥ 428,339

Millions of yen
2010

Fair value
¥ 5,839,844
1,121,304
25,226
5,440,622
1,010,523

3,058,033
18,734

3,330,623
24,383,712

62,891,684
1,105,607
1,933,129
¥110,159,045
¥ 78,674,772
6,995,575
2,119,557
1,120,860
4,315,774
310,787

1,582,808
5,489,347
192,299
1,212,178
3,514,970
159,554
¥105,688,486

¥ 245,128
183,211
¥ 428,339

Net unrealized gains
(losses)
¥ 1,063
1,598
—
—
13,233

—
—

58,610
—

991,885
3,888
108,168
¥1,178,449
¥ 26,176
(43)
(0)
—
—
—

—
18,768
—
—
92,298
—
¥ 137,199

¥ —
—
¥ —

102

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

Millions of U.S. dollars
2010

March 31

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

Consolidated balance
sheet amount
$ 62,749
12,033
271
58,470
10,718

32,864
201

35,164
262,050
673,842
(8,610)
665,232
11,840
19,613
$1,171,205
$ 845,229
75,181
22,779
12,046
46,381
3,340

17,010
58,792
2,067
13,027
36,783
1,715
$1,134,350

$ 2,634
1,969
$ 4,603

Fair value
$ 62,760
12,051
271
58,470
10,860

32,864
201

35,794
262,050

675,891
11,882
20,775
$1,183,869
$ 845,511
75,181
22,779
12,046
46,381
3,340

17,010
58,994
2,067
13,027
37,775
1,715
$1,135,825

$ 2,634
1,969
$ 4,603

Net unrealized gains
(losses)
$ 11
18
—
—
142

—
—

630
—

10,659
42
1,162
$12,664
$ 282
(0)
(0)
—
—
—

—
202
—
—
992
—
$ 1,475

$ —
—
$ —

*1 Loans and bills discounted do not include general reserve for possible loan losses and specific reserve for possible loan losses. The reserves for possible losses on “Cash and

due from banks,” “Call loans and bills bought,” “Monetary claims bought,” “Foreign exchanges,” and “Lease receivables and investment assets” are deducted directly from
“Consolidated balance sheet amount” since they are immaterial.

*2 The amounts collectively represent the derivative transactions which are recorded on “Trading assets,” “Trading liabilities,” “Other assets” and “Other liabilities.” Debts and

credits arising from derivative transactions are presented on a net basis.

(b) Fair value calculation methodology for financial

instruments
Assets
1) Cash and due from banks, 2) Call loans and bills bought,
3) Receivables under resale agreements, 4) Receivables
under securities borrowing transactions, 9) Loans and
bills discounted, 10) Foreign exchanges, and 11) Lease
receivables and investment assets:
Of these transactions, the book values of dues from banks
without maturity and overdrafts with no specified repay-
ment dates are regarded to approximate their fair values;
thus, their fair values are their book values.
For short-term transactions with remaining life as of the
end of the fiscal year not exceeding 6 months, their fair

values are, in principle, their book value as book values are
regarded to approximate fair values.
The fair value of those with a remaining life of more
than 6 months is, in principle, the present value of
future cash flows (calculated by discounting estimated
future cash flows, taking into account factors such as the
borrower’s internal rating and pledged collateral, using a
rate comprising of a risk-free interest rate and an overhead
ratio). Certain consolidated subsidiaries of SMFG calculate
the present value by discounting the estimated future cash
flows computed based on the contractual interest rate,
using a rate comprising a risk-free rate and a credit risk
premium.
Regarding claims on bankrupt borrowers, effectively

SMFG 2010 103

SMFG

Notes to Consolidated Financial Statements

bankrupt borrowers and potentially bankrupt borrowers,
expected losses on such claims are calculated based on
either the present value of expected future cash flows or the
expected recoverable amount from collateral or guarantees.
Since the claims’ balance sheet amounts at the closing
date minus the current expected amount of loan losses
approximate their fair values, such amounts are regarded as
their fair values.
5) Monetary claims bought:
The fair values of monetary claims bought with market
prices, such as beneficial interests in commodities invest-
ment trusts, are based on their market prices as of the end
of the fiscal year. The fair values of subordinated trust
beneficiary interests related to securitized housing loans
are based on the assessed value of underlying assets minus
the assessed value of senior beneficial interests, etc. The
fair values of other transactions are, in principle, based on
prices calculated using methods similar to the methods
applied to 9) Loans and bills discounted.
6) Trading assets:
The fair values of bonds and other securities held for trad-
ing purposes are, in principle, based on their market price
at the final date of the fiscal year.
7) Money held in trust:
The fair values of money held in trust are, in principle,
based on the market prices of securities held in trust
calculated using methods similar to the methods applied to
8) Securities.
8) Securities:
In principle, the fair values of stocks (including foreign
stocks) are based on the average market price during 1
month before the end of the fiscal year. The fair values of
bonds and securities with market prices other than stocks
are prices calculated based on their market prices on the
final date of the fiscal year.

In light of the “Practical Solution on Measurement of
Fair Value for Financial Assets” (ASBJ Practical Issue Task
Force No. 25), the fair values of floating-rate Japanese
government bonds are based on the present value of future
cash flows (the government bond yield is used to discount
and estimate future cash flows). Bond yield and yield
volatility are the main price parameters. The fair values
of those without market prices, such as private-placement
bonds, are based on the present value of future cash flows
calculated by discounting estimated future cash flows tak-
ing into account the borrower’s internal rating and pledged
collateral by a rate comprising a risk-free interest rate and
an overhead ratio. However, the fair values of bonds issued
by bankrupt borrowers, effectively bankrupt borrowers and
potentially bankrupt borrowers are based on the bond’s face
value after the deduction of the expected amount of a loss
on the bond computed by using the same method applied
to the estimation of a loan loss. Meanwhile, the fair values
of publicly offered investment trusts are calculated based
on the published net asset value (NAV) per share, while
those of private placement investment trusts are calculated
based on the NAV published by securities firms and other
financial institutions.

104

SMFG 2010

Liabilities
1) Deposits, 2) Negotiable certificates of deposit and
12) Due to trust account:
The fair values of demand deposits and deposits without
maturity are based on their book values as at the end of the
fiscal year. The fair values of short-term transactions with
remaining life as of the end of the fiscal year not exceeding
6 months are also based on their book values, as their book
values are regarded to approximate their market values.
The fair values of transactions with a remaining life of
more than 6 months are, in principle, based on the present
value of future cash flows calculated using the rate applied
to the same type of deposits that are newly accepted until
the end of the remaining life.
3) Call money and bills sold, 4) Payables under repurchase
agreements, 5) Payables under securities lending transac-
tions, 6) Commercial paper, 8) Borrowed money,
10) Short-term bonds and 11) Bonds:
The fair values of short-term transactions with remaining
life as of the end of the fiscal year not exceeding 6 months
are based on their book values, as their book values are
regarded to approximate their fair values. For transactions
with a remaining life of more than 6 months, their fair
values are, in principle, based on the present value of future
cash flows calculated using the refinancing rate applied to
the same type of instruments for the remaining life. The
fair values of bonds are based on the present value of future
cash flows calculated using the rate derived from the data
on the yields of benchmark bonds and publicly-offered
subordinated bonds published by securities firms.
7) Trading liabilities:
The fair values of bonds sold for short sales and other
securities for trading purposes are, in principle, based on
their market prices on the final date of the fiscal year.
9) Foreign exchanges:
The fair values of foreign currency-denominated deposits
without maturity received from other banks are based on
their book values as at the end of the fiscal year.
The fair values of foreign exchange related short-term
borrowings are based on their book values, as their book
values are regarded to approximate their fair values.
Derivatives transactions
The fair values of exchange-traded derivatives are based on
their closing prices. With regard to OTC transactions, the
fair values of interest rate, currency, stock, bond and credit
derivatives are based on their settlement prices as at the
end of the fiscal year calculated based on the present value
of the expected future cash flows or using valuation tech-
niques such as the option pricing model. The fair values
of commodity derivatives transactions are based on their
settlement prices as at the end of the fiscal year, calculated
based on the derivative instrument’s components, includ-
ing price and contract term.

Notes to Consolidated Financial Statements

SMFG

(3) Consolidated balance sheet amounts of financial instruments whose fair values are extremely difficult to determine are as follows:

March 31
Monetary claims bought:

Millions of yen
2010

Millions of U.S. dollars
2010

Monetary claims bought without market prices*1 ........................................................

¥ 7,889

Securities:

Unlisted stocks, etc.*2, 4 ..............................................................................................
Investments in partnership, etc.*3, 4 .............................................................................
Total ................................................................................................................................

291,922
354,422
¥654,234

$ 85

3,137
3,809
$7,031

*1 Beneficiary claims that (a) behave more like equity than debt, (b) do not have market prices, and (c) for which it is difficult to rationally estimate fair values. They include com-

modity investments and beneficiary claims on loan trusts.

*2 Not included in the scope of fair value disclosure since there are no market prices and it is extremely difficult to determine their fair values.
*3 Capital contributions with no market prices. The above-stated amount includes the book value amount of investments in the partnership of which the SMFG records net changes

in their balance sheets and statements of income.

*4 Unlisted stocks and investments in partnership totaling ¥26,770 million ($288 million) was written-off in the fiscal year ended March 31, 2010.

(4) Redemption schedule of monetary claims bought and securities with maturities

March 31
Deposits with banks .....................................................
Call loans and bills bought ...........................................
Receivables under resale agreements .............................
Receivables under securities borrowing transactions .....
Monetary claims bought*1 ............................................
Securities*1 ..................................................................
Bonds classified as held-to-maturity ..........................
Japanese government bonds ..................................
Japanese local government bonds ..........................
Japanese corporate bonds .......................................
Other ....................................................................
Other securities with maturity ..................................
Japanese government bonds ..................................
Japanese local government bonds ..........................
Japanese corporate bonds .......................................
Other ....................................................................
Loans and bills discounted*1, 2 ......................................
Foreign exchanges*1 .....................................................
Lease receivables and investment assets*1 ......................
Total .............................................................................

Within 1 year
¥ 4,728,741
1,120,590
25,226
5,440,622
649,799
9,638,321
69,571
65,000
1,595
2,976
—
9,568,749
8,226,690
25,723
675,629
640,706
13,552,411
1,101,482
565,311
¥36,822,506

Millions of yen
2010

After 1 year
through 5 years
¥ 2,685
555
—
—
93,698
11,344,537
2,713,680
2,410,000
113,592
188,087
2,000
8,630,856
3,456,218
216,764
2,130,381
2,827,491
22,297,810
2,520
1,000,911
¥34,742,718

After 5 years
through 10 years
¥ —
—
—
—
62,313
3,138,161
483,955
390,000
38,972
50,283
4,700
2,654,206
1,712,053
20,276
363,670
558,206
7,923,621
—
114,874
¥11,238,970

After 10 years
¥ —
—
—
—
189,786
717,074
—
—
—
—
—
717,074
364,500
46
60,592
291,934
10,884,978
—
40,375
¥11,832,214

SMFG 2010 105

SMFG

Notes to Consolidated Financial Statements

Within 1 year
$ 50,819
12,043
271
58,470
6,983
103,582
748
699
17
32
—
102,834
88,411
276
7,261
6,886
145,647
11,838
6,075
$395,728

Millions of U.S. dollars
2010

After 1 year
through 5 years
$ 29
6
—
—
1,007
121,919
29,164
25,900
1,221
2,021
22
92,755
37,144
2,329
22,895
30,387
239,632
27
10,757
$373,377

After 5 years
through 10 years
$ —
—
—
—
670
33,725
5,201
4,191
419
540
51
28,525
18,399
219
3,908
5,999
85,154
—
1,235
$120,784

After 10 years
$ —
—
—
—
2,040
7,706
—
—
—
—
—
7,706
3,917
1
651
3,137
116,980
—
434
$127,160

*1 The amounts shown in the table above do not include amounts for claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers and other

claims for which redemption is unlikely. The amounts for such claims are as follows:

March 31
Monetary claims bought ....................................................................................................................................
Securities ...........................................................................................................................................................
Loans and bills discounted .................................................................................................................................
Foreign exchanges .............................................................................................................................................
Lease receivables and investment assets ..............................................................................................................

*2 Does not include loans without tenure totaling ¥6,829,836 million ($73,400 million).

(5) Redemption schedule of bonds, borrowed money and other interest-bearing debts

Millions of U.S. dollars
2010
$ 34
183
13,043
35
108

Millions of yen
2010
¥ 3,196
16,989
1,213,627
3,286
10,048

Millions of yen
2010

March 31
Deposits* ....................................................................
Negotiable certificates of deposit ..................................
Call money and bills sold ..............................................
Payables under repurchase agreements ..........................
Payables under securities lending transactions ..............
Commercial paper ........................................................
Borrowed money ..........................................................
Foreign exchanges ........................................................
Short-term bonds ..........................................................
Bonds ...........................................................................
Due to trust account .....................................................
Total .............................................................................

Within 1 year
¥73,936,151
6,959,781
2,119,557
1,120,860
4,315,774
310,787
4,156,807
192,299
1,212,200
362,002
159,554
¥94,845,775

After 1 year
through 5 years
¥4,093,970
35,838
—
—
—
—
993,051
—
—
1,181,035
—
¥6,303,896

After 5 years
through 10 years
¥ 365,131
—
—
—
—
—
172,326
—
—
1,471,394
—
¥2,008,852

After 10 years
¥251,172
—
—
—
—
—
148,392
—
—
408,790
—
¥808,356

106

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

Millions of U.S. dollars
2010

After 1 year
through 5 years
$43,998
385
—
—
—
—
10,672
—
—
12,692
—
$67,747

After 5 years
through 10 years
$ 3,924
—
—
—
—
—
1,852
—
—
15,813
—
$21,589

After 10 years
$2,699
—
—
—
—
—
1,595
—
—
4,393
—
$8,687

March 31
Deposits* .....................................................................
Negotiable certificates of deposit ..................................
Call money and bills sold ..............................................
Payables under repurchase agreements ..........................
Payables under securities lending transactions ..............
Commercial paper ........................................................
Borrowed money ..........................................................
Foreign exchanges ........................................................
Short-term bonds ..........................................................
Bonds ...........................................................................
Due to trust account .....................................................
Total .............................................................................

Within 1 year
$ 794,585
74,796
22,779
12,046
46,381
3,340
44,673
2,067
13,027
3,890
1,715
$1,019,299

* Demand deposits are included in “Within 1 year.” Deposits include current deposits.

29. Fair Value Information

(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.

Fiscal year ended March 31, 2010
(a) Securities classified as trading purposes

March 31
Valuation gains included in the earnings for the fiscal year .......................................

Millions of yen
2010
¥(2,583)

Millions of U.S. dollars
2010
$(28)

(b) Bonds classified as held-to-maturity

March 31
Bonds with unrealized gains:

Consolidated balance
sheet amount

Japanese government bonds ................................................................
Japanese local government bonds ........................................................
Japanese corporate bonds ....................................................................
Other ..................................................................................................
Subtotal ..........................................................................................

Bonds with unrealized losses:

¥2,551,114
151,580
239,417
2,195
¥2,944,308

¥ 320,098
2,700
411
15,121
¥ 338,331
¥3,282,639

Millions of yen
2010

Fair value

¥2,600,336
154,660
246,457
2,199
¥3,003,653

¥ 319,472
2,697
410
15,017
¥ 337,596
¥3,341,250

Net unrealized
gains (losses)

¥49,221
3,079
7,039
4
¥59,344

¥ (626)
(2)
(1)
(104)
¥ (734)
¥58,610

SMFG 2010 107

SMFG

Notes to Consolidated Financial Statements

Millions of U.S. dollars
2010

March 31
Bonds with unrealized gains:

Consolidated balance
sheet amount

Bonds with unrealized losses:

$27,417
1,629
2,573
23
$31,642

$ 3,440
29
4
163
$ 3,636
$35,278

March 31
Other securities with unrealized gains:

Consolidated balance
sheet amount

Stocks .................................................................................................
Bonds .................................................................................................
Japanese government bonds ............................................................
Japanese local government bonds ....................................................
Japanese corporate bonds .................................................................
Other ..................................................................................................
Subtotal ..........................................................................................

Other securities with unrealized losses:

¥ 1,604,127
13,863,729
10,769,980
196,170
2,897,578
2,494,792
¥17,962,649

¥ 786,294
3,580,276
3,097,128
72,197
410,951
2,542,531
¥ 6,909,102
¥24,871,752

Fair value

$27,946
1,662
2,649
23
$32,280

$ 3,433
29
4
162
$ 3,628
$35,908

Millions of yen
2010

Acquisition cost

¥ 1,060,381
13,731,907
10,707,770
194,047
2,830,090
2,371,004
¥17,163,293

¥ 919,055
3,588,439
3,099,871
72,313
416,253
2,614,548
¥ 7,122,043
¥24,285,337

Net unrealized
gains (losses)

$529
33
76
0
$638

$ (7)
(0)
(0)
(1)
$ (8)
$630

Net unrealized
gains (losses)

¥ 543,745
131,821
62,209
2,123
67,488
123,788
¥ 799,355

¥(132,761)
(8,163)
(2,743)
(116)
(5,302)
(72,017)
¥(212,941)
¥ 586,414

March 31
Other securities with unrealized gains:

Other securities with unrealized losses:

Millions of U.S. dollars
2010

Consolidated balance
sheet amount

Acquisition cost

Net unrealized
gains (losses)

$ 17,240
148,992
115,744
2,108
31,140
26,811
$193,043

$ 8,450
38,477
33,285
776
4,416
27,324
$ 74,251
$267,294

$ 11,396
147,575
115,075
2,085
30,415
25,481
$184,452

$ 9,877
38,565
33,314
777
4,474
28,098
$ 76,540
$260,992

$ 5,844
1,417
669
23
725
1,330
$ 8,591

$(1,427)
(88)
(29)
(1)
(58)
(774)
$(2,289)
$ 6,302

Notes: 1. Net unrealized gains (losses) on other securities shown above include gains of ¥105 million ($1 million) that are recognized in the fiscal year’s earnings by applying

fair value hedge accounting.

108

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

2. Consolidated balance sheet amounts of other securities whose fair values are extremely difficult to determine are as follows:
Millions of yen
2010
¥285,123
369,111
¥654,234

March 31
Stocks ............................................................................................................................................
Other ............................................................................................................................................
Total ..............................................................................................................................................

Millions of U.S. dollars
2010
$3,064
3,967
$7,031

These amounts are not included in “(c) Other securities” since there are no market prices and it is extremely difficult to determine their fair values.

(d) Held-to-maturity bonds sold during the year ended March 31, 2010

There are no corresponding transactions.

(e) Other securities sold during the year ended March 31, 2010

Year ended March 31
Stocks .....................................................................................................
Bonds .....................................................................................................
Japanese government bonds ................................................................
Japanese local government bonds ........................................................
Japanese corporate bonds ....................................................................
Other .....................................................................................................
Total .......................................................................................................

Sales amount
¥ 107,588
20,061,150
19,422,804
196,472
441,872
12,193,240
¥32,361,979

Sales amount
$ 1,156
215,595
208,735
2,111
4,749
131,040
$347,791

(f) Change of classification of securities

There are no corresponding transactions.

(g) Write-down of securities

Millions of yen
2010
Gains on sales
¥ 50,898
35,397
32,937
634
1,825
61,872
¥148,167

Millions of U.S. dollars
2010
Gains on sales
$ 547
380
354
7
19
665
$1,592

Losses on sales
¥ (3,556)
(6,154)
(5,915)
(103)
(136)
(24,367)
¥(34,079)

Losses on sales

$ (38)
(66)
(64)
(1)
(1)
(262)
$(366)

Securities (excluding stocks of subsidiaries and affiliates) with fair value are considered as impaired if the fair value declines materi-
ally below the acquisition cost and such decline is not considered as recoverable. 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 loss
for the fiscal year was ¥19,519 million ($210 million). The rule for determining “material decline” is as follows and is based on the
classification of issuers 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.

Fiscal year ended March 31, 2009
(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

SMFG 2010 109

SMFG

Notes to Consolidated Financial Statements

(b) Bonds classified as held-to-maturity with fair value

Consolidated
balance sheet
amount

March 31
Japanese government bonds ............................................... ¥1,574,004
96,312
Japanese local government bonds .......................................
392,209
Japanese corporate bonds ...................................................
Other ................................................................................
9,181
Total .................................................................................. ¥2,071,708

Fair value
¥1,596,291
97,265
396,215
8,676
¥2,098,449

Note: Fair value is calculated using market prices at the fiscal year-end.

Acquisition
cost

Consolidated
balance sheet
amount

March 31
Stocks ................................................................................ ¥ 1,978,015 ¥ 1,985,078
14,008,076
Bonds ................................................................................ 14,010,902
13,160,414
Japanese government bonds ........................................... 13,158,932
242,376
242,419
Japanese local government bonds ...................................
609,550
Japanese corporate bonds ...............................................
605,286
6,010,732
6,048,145
Other ................................................................................
Total .................................................................................. ¥22,037,063 ¥22,003,887

Millions of yen
2009

Net unrealized
gains (losses)
¥22,286
953
4,006
(504)
¥26,741

Millions of yen
2009

Net unrealized
gains (losses)
¥ 7,062
(2,826)
1,482
(43)
(4,264)
(37,412)
¥(33,176)

Unrealized
gains
¥22,582
962
4,611
—
¥28,155

Unrealized
losses
¥ 295
9
605
504
¥1,414

Unrealized
gains
¥287,380
21,534
20,029
499
1,005
47,920
¥356,834

Unrealized
losses
¥280,317
24,360
18,547
542
5,270
85,332
¥390,011

Notes: 1. Consolidated balance sheet amount is calculated as follows:

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 the DCF method on certain Japanese government bonds

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 recover-
able. 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 loss for the fiscal year ended March 31, 2009 was ¥156,721 million. The rule for determining “material decline” is as follows and is based on the
classification of issuers 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.

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.

Issuers requiring caution: Issuers that are identified for close monitoring.

Normal issuers: Issuers other than the above 4 categories of issuers.

(d) Held-to-maturity bonds sold during the year ended March 31, 2009

There are no corresponding transactions.

(e) Other securities sold during the year ended March 31, 2009

Year ended March 31
Sales amount ..............................................................................................................................................................
Gains on sales .............................................................................................................................................................
Losses on sales .............................................................................................................................................................

(f) Securities with no available market value

March 31
Bonds classified as held-to-maturity:

Millions of yen
2009
¥34,610,449
158,285
75,997

Millions of yen

Consolidated
balance sheet
amount
2009

Beneficiary claims on accounts receivable, etc. .......................................................................................................

¥ 9,996

Other securities:

Unlisted stocks (excluding OTC stocks) ..................................................................................................................
Unlisted bonds .......................................................................................................................................................
Unlisted foreign securities ......................................................................................................................................
Other ......................................................................................................................................................................

332,450
2,901,693
800,543
564,348

110

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

(g) Change of classification of securities

There are no corresponding transactions.

(h) Redemption schedule of other securities with maturities and held-to-maturity bonds

March 31
Bonds ........................................................................................
Japanese government bonds ...................................................
Japanese local government bonds ...........................................
Japanese corporate bonds .......................................................
Other ........................................................................................
Total ..........................................................................................

Within 1 year
¥3,416,761
2,802,254
32,001
582,504
1,077,576
¥4,494,337

(2) Money held in trust

(a) Money held in trust classified as trading purposes

Millions of yen
2009

After 1 year
through 5 years
¥11,895,495
9,376,045
232,744
2,286,704
4,272,647
¥16,168,143

After 5 years
through 10 years
¥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
Consolidated balance sheet amount ............................................................
Valuation gains (losses) included in the earnings for the fiscal year .............

2010
¥1,483
13

2009
¥1,416
(3)

Millions of yen

(b) Money held in trust classified as held-to-maturity

There are no corresponding transactions.

March 31
Acquisition cost .........................................................................................
Consolidated balance sheet amount ............................................................
Net unrealized gains (losses) ......................................................................
Unrealized gains ....................................................................................
Unrealized losses ....................................................................................

2010
¥17,188
17,250
62
157
(95)

Note: Consolidated balance sheet amount is calculated using market prices at the fiscal year-end.

2009
¥7,830
7,568
(262)
—
(262)

Millions of yen

(3) Net unrealized gains (losses) on other securities and other money held in trust

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 .........................................

2010
¥586,154
586,091
62
168,758

417,396
7,991

3,304
¥412,708

2009
¥(34,044)
(33,781)
(262)
14,428

(48,472)
(5,400)

28,422
¥(14,649)

Millions of
U.S. dollars
2010
$16
0

Millions of
U.S. dollars
2010
$184
185
1
2
(1)

Millions of
U.S. dollars
2010
$6,299
6,299
0
1,813

4,486
86

35
$4,435

Notes: 1. Net unrealized gains (losses) on other securities as of March 31, 2010 included gains of ¥105 million ($1 million) that are recognized in the fiscal year’s earnings by

applying fair value hedge accounting.

2. Net unrealized gains (losses) included foreign currency translation adjustments on non-marketable securities denominated in foreign currencies.

30. Derivative Transactions
Fiscal year ended March 31, 2010

(1) Derivative transactions to which the hedge accounting method is not applied

The following tables set forth the contract amount or the amount equivalent to the principal, fair value, valuation gains (losses) and cal-
culation method of the relevant commodities by category with respect to derivative transactions to which the hedge accounting method
is not applied at the end of the fiscal year. Contract amount does not indicate the market risk relating to derivative transactions.

SMFG 2010 111

SMFG

Notes to Consolidated Financial Statements

(a) Interest rate derivatives

March 31
Listed
Interest rate futures:

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 27,455,094
32,231,909

¥ 1,429,658
1,234,295

¥ (26,886)
30,344

Over-the-counter
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 ......................................

—
25,246,604
364,973,058
168,753,817
170,326,998
25,798,196

—
907,098
264,226,831
124,132,310
122,682,985
17,317,488

Interest rate swaptions:

2,691,761
2,467,679

Caps:

24,121,287
11,007,401

Floors:

Sold ...................................................................................................
Bought ...............................................................................................

1,761,137
10,689,965

Other:

732,102
2,526,134
/

1,954,642
2,051,889

7,413,055
3,766,465

659,758
2,103,435

342,078
1,235,256
/

—
(340)
125,966
4,254,072
(4,118,551)
(6,016)

(59,016)
64,750

(13,228)
7,726

(18,523)
11,058

—
(340)
125,966
4,254,072
(4,118,551)
(6,016)

(59,016)
64,750

(13,228)
7,726

(18,523)
11,058

(23,327)
81,184
¥ 179,707

March 31
Listed
Interest rate futures:

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 295,057
346,393

$ 15,364
13,265

$ (289)
326

Over-the-counter
Forward rate agreements:

—
271,323
3,922,333
1,813,582
1,830,489
277,251

Interest rate swaptions:

Caps:

Floors:

Other:

28,928
26,520

259,229
118,296

18,927
114,884

7,868
27,148
/

—
9,749
2,839,622
1,334,039
1,318,463
186,109

21,006
22,051

79,667
40,478

7,090
22,605

3,676
13,275
/

—
(4)
1,354
45,718
(44,262)
(65)

(634)
696

(142)
83

(199)
119

—
(4)
1,354
45,718
(44,262)
(65)

(634)
696

(142)
83

(199)
119

(251)
872
$ 1,931

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

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.

112

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥22,944,557

¥15,000,880

¥(197,861)

¥ (37,404)

(b) Currency derivatives

March 31
Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

3,855,995
3,850,518

Other:

51
42
/

—
—
/

1
0
¥ 8,620

812,380
962,113
34,515,123

787,350
861,923
3,923,138

2,479,933
2,378,255

(14,820)
30,552
116,047

(313,707)
388,407

(14,820)
30,552
116,047

(313,707)
388,407

1
0
¥169,077

March 31
Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

Other:

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$246,583

$161,213

$(2,126)

$ (402)

8,731
10,340
370,931

41,440
41,381

1
0
/

8,462
9,263
42,162

26,652
25,559

—
—
/

(159)
328
1,247

(3,371)
4,174

0
0
$ 93

(159)
328
1,247

(3,371)
4,174

0
0
$1,817

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

2. Fair value is calculated using discounted present value and option pricing models.

March 31
Listed
Equity price index futures:

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 57,478
35,779

¥ —
—

¥ (1,416)
955

Equity price index options:

1,825
225

—
—

(1)
1

Over-the-counter
Equity options:

226,398
233,424

152,641
225,474

Other:

114
294
/

—
—
/

(45,488)
45,680

(0)
16
¥ (253)

(45,488)
45,680

(0)
16
¥ (253)

SMFG 2010 113

SMFG

Notes to Consolidated Financial Statements

March 31
Listed
Equity price index futures:

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 618
385

Equity price index options:

20
2

Over-the-counter
Equity options:

2,433
2,509

Other:

1
3
/

$ —
—

—
—

1,640
2,423

—
—
/

$ (15)
10

(0)
0

(489)
491

(0)
0
$ (3)

$ (15)
10

(0)
0

(489)
491

(0)
0
$ (3)

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

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.

(d) Bond derivatives

March 31
Listed
Bond futures:

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥1,320,583
1,232,748

¥ —
—

¥5,799
(6,710)

Bond futures options:

8,652
209,652

—
—

Over-the-counter
Forward bond agreements:

Bond options:

—
42,092

270,000
270,000
/

—
39,082

—
—
/

5
256

—
919

5
256

—
919

(247)
262
¥ 285

March 31
Listed
Bond futures:

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$14,192
13,248

Bond futures options:

93
2,253

Over-the-counter
Forward bond agreements:

Bond options:

—
452

2,902
2,902
/

$ —
—

—
—

—
420

—
—
/

$62
(72)

0
3

—
10

(3)
3
$ 3

$62
(72)

0
3

—
10

(3)
3
$ 3

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

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.

114

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

(e) Commodity derivatives

March 31
Listed
Commodity futures:

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 11,998
12,235

¥ —
—

¥ (160)
154

Over-the-counter
Commodity swaps:

Receivable fixed price/payable floating price.......................................
Receivable floating price/payable fixed price.......................................
Receivable floating price/payable floating price ..................................

Commodity options:

213,634
172,127
7

22,674
25,623
/

199,442
159,140
7

16,019
16,355
/

(48,721)
101,006
0

(198)
1,821
¥ 53,902

(48,721)
101,006
0

(198)
1,821
¥ 53,902

March 31
Listed
Commodity futures:

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 129
131

$ —
—

$ (2)
2

Over-the-counter
Commodity swaps:

Commodity options:

2,296
1,850
0

244
275
/

2,143
1,710
0

172
176
/

(524)
1,086
0

(2)
19
$ 579

(524)
1,086
0

(2)
19
$ 579

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.
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.

(f) Credit derivative transactions

March 31
Over-the-counter
Credit default options:

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥1,174,089
1,362,339
/

¥1,079,228
1,078,463
/

¥(73,555)
76,421
¥ 2,865

March 31
Over-the-counter
Credit default options:

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$12,618
14,641
/

$11,598
11,590
/

$(790)
821
$ 31

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

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.

SMFG 2010 115

SMFG

Notes to Consolidated Financial Statements

(2) Derivative transactions to which the hedge accounting method is applied

The following tables set forth the contract amount or the amount equivalent to the principal, fair value and calculation method of the
relevant commodities by category with respect to derivative transactions to which the hedge accounting method is applied at the end of
the fiscal year. Contract amount does not indicate the market risk relating to derivative transactions.
(a) Interest rate derivatives

Principal items hedged
Interest-earning/bearing
financial assets/liabilities
such as loans and bills
discounted, other securi-
ties (bonds), deposits and
negotiable certificates of
deposits

March 31

Hedge accounting method
Deferral hedge method

Type of derivative

Interest rate futures:

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 ............................................................

Recognition of gain or loss
on the hedging instrument
Special treatment for
interest rate swaps

Interest rate swaps: .............................................. Loans and bills discounted;

Receivable floating rate/payable fixed rate .......

other securities (bonds)

Interest rate swaps: .............................................. Loans and bills discounted;

Receivable fixed rate/payable floating rate .......
Receivable floating rate/payable fixed rate .......
Receivable floating rate/payable floating rate ...
Total ....................................................................

borrowed money;
Bonds

Principal items hedged
Interest-earning/bearing
financial assets/liabilities
such as loans and bills
discounted, other securi-
ties (bonds), deposits and
negotiable certificates of
deposits

March 31

Hedge accounting method
Deferral hedge method

Type of derivative

Interest rate futures:

Interest rate swaptions:

Sold .................................................................
Bought ............................................................

Caps:

Sold .................................................................
Bought ............................................................

Floors:

Sold .................................................................
Bought ............................................................

Recognition of gain or loss
on the hedging instrument
Special treatment for
interest rate swaps

Interest rate swaps: .............................................. Loans and bills discounted;

Receivable floating rate/payable fixed rate .......

other securities (bonds)

Interest rate swaps: .............................................. Loans and bills discounted;

borrowed money;
Bonds

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

¥ 687,343
15,799,182
33,670,699
22,949,812
10,661,052
59,833

¥ 372,196
—
27,749,612
18,482,089
9,237,689
29,833

¥ (126)
1,862
23,415
321,049
(298,913)
1,278

470,930
751

460,558
—

—
600

—
—

171
7,850
72,655
72,655
9,135,218
25,500
9,077,718
32,000
/

—
7,850
69,368
69,368
9,105,823
14,500
9,063,623
27,700
/

(605)
(1)

—
0

(0)
0
(4,662)
(4,662)

(Note 3)

¥ 19,880

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

$ 7,387
169,792
361,856
246,640
114,573
643

$ 4,000
—
298,223
198,625
99,277
321

$ (1)
20
252
3,450
(3,212)
14

5,061
8

—
6

2
84
781
781
98,175
274
97,557
344
/

4,950
—

—
—

—
84
745
745
97,859
156
97,406
297
/

(7)
(0)

—
0

(0)
0
(50)
(50)

(Note 3)

$ 214

Notes: 1. SMFG 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).

116

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

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.

3. Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money or other transaction that is subject to the

hedge. Therefore such fair value is included in the fair value of the relevant transaction subject to the hedge in “28. Financial Instruments.”

(b) Currency derivatives

March 31

Hedge accounting method
Deferral hedge method

Recognition of gain or loss
on the hedging instrument

Allocation method

March 31

Hedge accounting method
Deferral hedge method

Recognition of gain or loss
on the hedging instrument

Allocation method

Type of derivative

Principal items hedged
Currency swaps. ................................................... Foreign currency denomi-
Forward foreign exchange ....................................

nated loans and bills
discounted; other securities
(bonds); deposits; foreign
currency exchange, etc.

Millions of yen
2010

Contract amount

Total
¥2,058,317
10,152

Over 1 year
¥1,849,783
—

Fair value
¥163,796
111

Currency swaps. ................................................... Deposits

19,785

—

(301)

Currency swaps. ................................................... Deposits; borrowed money
Forward foreign exchange ....................................
Total ....................................................................

7,866
124,361
/

6,635
—
/

(Note 3)

¥163,607

Type of derivative

Principal items hedged
Currency swaps. ................................................... Foreign currency denomi-
Forward foreign exchange ....................................

nated loans and bills
discounted; other securities
(bonds); deposits; foreign
currency exchange, etc.

Currency swaps. ................................................... Deposits

Millions of U.S. dollars
2010

Contract amount

Total
$22,121
109

Over 1 year
$19,879
—

Fair value
$1,760
1

213

85
1,336
/

—

71
—
/

(3)

(Note 3)

$1,758

Notes: 1. SMFG applies deferred hedge accounting stipulated in “Treatment for Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in

Banking Industry” (JICPA Industry Audit Committee Report No. 25).

2. Fair value is calculated using discounted present value.
3. Foreign forward exchange amounts treated by the allocation method are treated with the deposit or other transaction that is subject to the hedge. Therefore such fair

value is included in the fair value of the relevant transaction subject to the hedge in “28. Financial Instruments.”

March 31

Hedge accounting method
Recognition of gain or loss
on the hedging instrument

March 31

Hedge accounting method
Recognition of gain or loss
on the hedging instrument

Type of derivative

Equity price index swaps:

Principal items hedged
Other securities (equity)

Receivable equity index/payable floating rate ...
Receivable floating rate/payable equity index ...
Total ....................................................................

Type of derivative

Equity price index swaps:

Principal items hedged
Other securities (equity)

Receivable equity index/payable floating rate ...
Receivable floating rate/payable equity index ...
Total ....................................................................

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

¥ —
9,534
/

¥ —
(276)
¥(276)

Millions of U.S. dollars
2010

Contract amount

Total

Over 1 year

Fair value

$ —
102
/

$—
(3)
$ (3)

Note: Fair value is calculated using discounted present value.

SMFG 2010 117

SMFG

Notes to Consolidated Financial Statements

Fiscal year ended March 31, 2009
(1) Interest rate derivatives

March 31
Listed
Interest rate futures:

Millions of yen
2009

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 17,636,094
19,571,966

¥ 1,254,229
1,557,621

¥ (41,578)
51,493

Over-the-counter
Forward rate agreements:

—
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

Interest rate swaptions:

2,690,323
2,802,501

1,789,900
2,143,328

Caps:

27,834,072
13,867,378

12,451,630
6,122,525

Floors:

Other:

3,351,169
5,116,400

1,177,521
3,454,028
/

1,816,123
2,810,008

575,022
2,000,040
/

—
114
207,729
4,508,393
(4,300,450)
4,399

(65,983)
65,627

(5,342)
3,263

(21,272)
8,036

—
114
207,729
4,508,393
(4,300,450)
4,399

(65,983)
65,627

(5,342)
3,263

(21,272)
8,036

(32,707)
100,656
¥ 270,036

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.

(2) Currency derivatives

Millions of yen
2009

March 31
Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

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

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 currencies and whose fair values are already reflected in the consolidated balance

sheets; and

(c) Those that are allotted to financial assets/liabilities denominated in foreign currencies, and the financial assets/liabilities are eliminated in the process of

consolidation.

2. Fair value is calculated using discounted present value and option pricing models.

118

SMFG 2010

(3) Equity derivatives

March 31
Listed
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)

¥ 14,239
14,533

¥ —
—

¥ (632)
636

Equity price index options:

2,218
144

—
—

(17)
3

Over-the-counter
Equity options:

219,238
219,238
/

145,209
145,209
/

(63,785)
63,785
¥ (9)

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

Fair value of OTC transactions is calculated using option pricing models.

(4) Bond derivatives

March 31
Listed
Bond futures:

Millions of yen
2009

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥976,285
964,958

Bond futures options:

15,000
—

Over-the-counter
Forward bond agreements:

Bond options:

—
44,076

450,000
450,000
/

¥ —
—

—
—

—
44,059

—
—
/

¥(9,158)
8,638

1
—

—
561

1
—

—
561

—
1
¥ 44

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of operations.

Fair value of OTC transactions is calculated using discounted present value and option pricing models.

SMFG 2010 119

SMFG

Notes to Consolidated Financial Statements

(5) Commodity derivatives

March 31
Listed
Commodity futures:

Millions of yen
2009

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ —
156

¥ —
—

¥ —
25

Over-the-counter
Commodity swaps:

Receivable fixed price/payable floating price.......................................
Receivable floating price/payable fixed price.......................................

295,434
243,608

Commodity options:

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

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.

(6) Credit derivative transactions

March 31
Over-the-counter
Credit default options:

Millions of yen
2009

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥1,179,621
1,325,430
/

¥1,167,801
1,308,288
/

¥(209,630)
229,275
¥ 19,644

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.

31. Stock Options
1. Share-based compensation expenses which were accounted for as general and administrative expenses in the fiscal years ended March 31,

2010 and 2009 are as follows:

Year ended March 31
Share-based compensation expenses .................................................................

2010
¥15

2009
¥22

Millions of yen

Millions of
U.S. dollars
2010
¥0

2. Outline of stock options and changes is as follows:

(1) SMFG

(a) Outline of stock options
Date of resolution
Title and number of grantees ............................................................... Directors and employees of SMFG and SMBC: 677
Number of stock options* ...................................................................
Grant date ...........................................................................................
Condition for vesting ...........................................................................
Requisite service period .......................................................................
Exercise period ....................................................................................

Common shares: 162,000
August 30, 2002
N.A.
N.A.
June 28, 2004 to June 27, 2012

June 27, 2002

* “Number of stock options” is reported in consideration of the 100-for-1 stock split implemented on January 4, 2009.

120

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

(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 .......................................................................................

June 27, 2002

—
—
—
—
—

108,100
—
—
—
108,100

* 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.

Price information (Yen)
Date of resolution
Exercise price .......................................................................................
Average exercise price ..........................................................................
Fair value at the grant date ..................................................................

June 27, 2002
¥6,649
—
—

(2) Kansai Urban Banking Corporation

June 28, 2001 June 27, 2002 June 27, 2003 June 29, 2004 June 29, 2005 June 29, 2006

(a) Outline of stock options
Date of resolution
Title and number of grantees ........................................... Directors and
employees
45

Number of stock options ................................................. Common shares

238,000

Grant date ....................................................................... July 31, 2001
Condition for vesting .......................................................
Requisite service period ...................................................
Exercise period ................................................................ June 29, 2003
to June 28,
2011

N.A.

Directors and
employees
44

Directors and
employees
65

Directors and
employees
174

Directors and
employees
183

Directors
9

Common shares
234,000

Common shares
306,000

Common shares
399,000

Common shares
464,000

Common shares
162,000

July 31, 2002

July 31, 2003

July 30, 2004

July 29, 2005

July 31, 2006

N.A.

June 28, 2004
to June 27,
2012

June 28, 2005
to June 27,
2013

June 30, 2006
to June 29,
2014

June 30, 2007
to June 29,
2015

June 30, 2008
to June 29,
2016

Date of resolution
Title and number of grantees .......................................... Officers not
doubling as
directors 14
Employees 46

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009
Officers not
Directors 11
doubling as
Officers not
directors 14
doubling as
Employees 48
directors 14
Employees 57

Directors 9
Officers not
doubling as
directors 16
Employees 45

Directors
10

Number of stock options ................................................. Common shares

115,000

Grant date ....................................................................... July 31, 2006
Condition for vesting .......................................................
Requisite service period ...................................................
Exercise period ................................................................ June 30, 2008
to June 29,
2016

N.A.

Common shares
174,000

Common shares
112,000

Common shares
289,000

Common shares
350,000

July 31, 2007

July 31, 2008

July 31, 2009

N.A.

June 29, 2009
to June 28,
2017

June 28, 2010
to June 27,
2018

June 27, 2011
to June 26,
2019

SMFG 2010 121

SMFG

Notes to Consolidated Financial Statements

(b) Stock options granted and changes
Number of stock options
Date of resolution
Before vested

June 28, 2001 June 27, 2002 June 27, 2003 June 29, 2004 June 29, 2005 June 29, 2006

Previous fiscal year-end ................................................
Granted .......................................................................
Forfeited ......................................................................
Vested..........................................................................
Outstanding ................................................................

—
—
—
—
—

After vested

Previous fiscal year-end ................................................ 112,000
—
Vested..........................................................................
8,000
Exercised .....................................................................
—
Forfeited ......................................................................
Exercisable ................................................................... 104,000

158,000
—
20,000
—
138,000

228,000
—
6,000
—
222,000

329,000
—
—
4,000
325,000

451,000
—
—
—
451,000

162,000
—
—
—
162,000

Date of resolution
Before vested

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009

— 174,000
—
—
—
—
— 174,000
—
—

After vested

112,000
—
—
112,000

289,000

—
— 350,000
—
—
—
—
350,000
— 289,000

Previous fiscal year-end ................................................ 115,000
—
Vested..........................................................................
— 174,000
—
Exercised .....................................................................
—
—
—
Forfeited ......................................................................
174,000
Exercisable ................................................................... 115,000

—
112,000
—
—
112,000

—
—
—
—
—

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 ..............................................

June 28, 2001 June 27, 2002 June 27, 2003 June 29, 2004 June 29, 2005 June 29, 2006

¥155
200
—

¥131
163
—

¥179
200
—

¥202
—
—

¥313
—
—

¥490
—
138

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009
¥461
—
96

¥490
—
138

¥193
—
51

¥461
—
96

¥302
—
37

Stock options granted in the fiscal year ended March 31, 2010 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 ....................................................................
*1 Calculated based on the actual stock prices during the 5 years from June 2004 to June 2009
*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

June 26, 2009
49.10%
5 years
¥3 per share
0.70%

midpoint of the exercise period.

*3 The actual dividends on common stock for the fiscal year ended March 31, 2009
*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.

122

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

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
2010

Banking business Leasing business Other business

Total

Elimination

Consolidated

¥ 2,281,797
46,765
2,328,562
1,880,076
¥ 448,486

¥ 322,691
5,484
328,176
284,948
¥ 43,228

¥ 561,976
242,343
804,319
683,373
¥ 120,946

¥ 3,166,465
294,593
3,461,058
2,848,397
¥ 612,661

¥ —
(294,593)
(294,593)
(240,700)
¥ (53,892)

¥ 3,166,465
—
3,166,465
2,607,696
¥ 558,769

Assets ..............................................
Depreciation ....................................
Losses on impairment of fixed assets ...
Capital expenditure ..........................

¥111,831,177
78,608
11,396
108,434

¥2,735,416
28,501
988
88,583

¥13,570,744
29,746
470
41,424

¥128,137,338
136,856
12,856
238,441

¥(4,977,824)
4
—
0

¥123,159,513
136,860
12,856
238,441

Year ended March 31
I. Ordinary income

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

Banking business Leasing business Other business

Total

Elimination

Consolidated

Millions of U.S. dollars
2010

Year ended March 31
I. Ordinary income

$ 24,522
503
25,025
20,205
$ 4,820

Assets ..............................................
Depreciation ....................................
Losses on impairment of fixed assets ...
Capital expenditure ..........................

$1,201,840
845
122
1,165

$ 3,468
59
3,527
3,063
$ 464

$29,397
306
11
952

$ 6,040
2,604
8,644
7,344
$ 1,300

$145,843
320
5
445

$ 34,030
3,166
37,196
30,612
$ 6,584

$1,377,080
1,471
138
2,562

$ —
(3,166)
(3,166)
(2,587)
$ (579)

$(53,496)
0
—
0

$ 34,030
—
34,030
28,025
$ 6,005

$1,323,584
1,471
138
2,562

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 ¥6,214,065 million ($66,782 million) and ¥4,117,977 million at March 31, 2010 and 2009, 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 other extraordinary gains. Ordinary expenses

represent total expenses excluding losses on disposal of fixed assets, losses on impairment of fixed assets and other extraordinary expenses.

5. As mentioned in Note 2. (20) (a), “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, partially revised on March 10, 2008) and

“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, issued on March 10, 2008) became effective from
the fiscal year ending on and after March 31, 2010, and SMFG has applied them from the fiscal year ended March 31, 2010. As a result of the accounting change,
Ordinary expenses of “Banking business” for the year ended March 31, 2010 decreased by ¥19,251 million ($207 million) and Ordinary profit of “Banking business”
increased by ¥19,251 million ($207 million) as compared with the former method. Assets of “Banking business” increased by ¥59,270 million ($637 million) and
Assets of “Other business” decreased by ¥703 million ($8 million).

SMFG 2010 123

SMFG

Notes to Consolidated Financial Statements

6. As mentioned in Note 2. (20) (c), 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 as compared with the former method. Ordinary expenses of “Banking business” and “Other business” increased by ¥22 million and
¥1 million, respectively, and Ordinary expenses of “Leasing business” decreased by ¥694,173 million. In terms of Ordinary profit, “Banking business” decreased by
¥22 million and “Other business” decreased by ¥1 million, while “Leasing business” increased by ¥2,453 million. Assets of “Banking business” and “Other business”
increased by ¥7,447 million and ¥27,348 million, respectively, while Assets of “Leasing business” decreased by ¥36,473 million.

(2) Geographic segment information

Year ended March 31
I. Ordinary income

Japan

The Americas

(1) External customers ......... ¥ 2,707,111
21,793
(2) Intersegment .................
2,728,905
Total ...................................
Ordinary expenses ...................
2,344,349
Ordinary profit ........................ ¥ 384,555
II. Assets ...................................... ¥107,412,125

¥ 205,016
106,215
311,232
171,438
¥ 139,794
¥8,255,658

Year ended March 31
I. Ordinary income

Japan

The Americas

(1) External customers ......... ¥ 2,886,164
125,334
(2) Intersegment .................
3,011,499
Total ...................................
Ordinary expenses ...................
3,026,816
Ordinary profit (loss) ............... ¥ (15,317)
II. Assets ...................................... ¥102,162,307

¥ 230,755
95,462
326,218
282,617
¥ 43,600
¥10,054,434

Year ended March 31
I. Ordinary income

Japan

The Americas

Millions of yen
2010
Asia and
Oceania

Total

Elimination

Consolidated

¥ 128,216
3,856
132,072
69,893
¥ 62,178
¥5,638,760

¥ 3,166,465
134,507
3,300,973
2,700,774
¥ 600,198
¥126,238,444

¥ — ¥ 3,166,465
—
3,166,465
2,607,696
¥ 558,769
¥123,159,513

(134,507)
(134,507)
(93,077)
¥ (41,429)
¥(3,078,930)

Millions of yen
2009
Asia and
Oceania

Total

Elimination

Consolidated

¥ 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

¥ — ¥ 3,552,843
—
3,552,843
3,507,532
¥ 45,311
¥119,637,224

(250,396)
(250,396)
(230,293)
¥ (20,102)
¥(3,274,020)

Europe and
Middle East

¥ 126,121
2,641
128,763
115,093
¥ 13,669
¥4,931,900

Europe and
Middle East

¥ 245,279
6,959
252,238
255,544
¥ (3,305)
¥5,537,019

Millions of U.S. dollars
2010
Asia and
Oceania

Europe and
Middle East

Total

Elimination

Consolidated

(1) External customers .........
(2) Intersegment .................
Total ...................................
Ordinary expenses ...................
Ordinary profit ........................
II. Assets ......................................

$ 29,093
234
29,327
25,194
$ 4,133
$1,154,348

$ 2,203
1,142
3,345
1,843
$ 1,502
$88,723

$ 1,356
28
1,384
1,237
$ 147
$53,003

$ 1,378
41
1,419
751
$ 668
$60,599

$ 34,030
1,445
35,475
29,025
$ 6,450
$1,356,673

$ —
(1,445)
(1,445)
(1,000)
$ (445)
$(33,089)

$ 34,030
—
34,030
28,025
$ 6,005
$1,323,584

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 ¥6,214,065 million ($66,782 million) and ¥4,117,977 million at March 31, 2010 and 2009, 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 other extraordinary gains. Ordinary expenses

represent total expenses excluding losses on disposal of fixed assets, losses on impairment of fixed assets and other extraordinary expenses.

5. As mentioned in Note 2. (20) (a), “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, partially revised on March 10, 2008) and

“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, issued on March 10, 2008) became effective from
the fiscal year ending on and after March 31, 2010, and SMFG has applied them from the fiscal year ended March 31, 2010. As a result of the accounting change,
Ordinary expenses of “Japan” for the year ended March 31, 2010 decreased by ¥19,251 million ($207 million) and Ordinary profit of “Japan” increased by ¥19,251
million ($207 million) as compared with the former method. Assets of “Japan,” “Europe and Middle East” and “Asia and Oceania” increased by ¥58,612 million
($630 million), ¥341 million ($4 million) and ¥181 million ($2 million), respectively. Assets of “The Americas” decreased by ¥567 million ($6 million).

6. As mentioned in Note 2. (20) (c), non-transfer ownership finance leases were formerly accounted for using the same method as for operating leases. “Accounting

124

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

(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

2010
¥ 459,354
3,166,465

2009
¥ 666,679
3,552,843

Millions of
U.S. dollars
2010
¥ 4,937
34,030

14.5%

18.8%

14.5%

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, 2010

A merger of subsidiary bank
Kansai Urban Banking Corporation (“KUBC”), a consolidated sub-
sidiary of SMFG, merged with The Biwako Bank, Limited (“Biwako
Bank”) on March 1, 2010. The outline of the merger is as follows:
1. Outline of the business combination

(1) Name of the acquired company and its business

Biwako Bank (Banking business)
(2) Reason for the business combination

KUBC and Biwako Bank merged in order to become a
regional bank with top-level financial soundness and a broad
operating base in the Kansai area with a view to realizing a
more stable operation as a regional financial institution.

(3) Date of the business combination

March 1, 2010

(4) Legal form of business combination

The merger was a merger by absorption with KUBC as the
surviving company. (Name of the new company: Kansai Urban
Banking Corporation)

and Biwako Bank appointed Daiwa Securities Capital
Markets Co. Ltd. and The Goldman Sachs Group, Inc.,
respectively, as their financial advisors and requested
them to calculate the merger ratio of common stock.
After conducting negotiations and discussions taking into
account factors such as their financial conditions, asset
quality and future prospects, the analysis of the merger
ratio provided by each financial advisor and results of due
diligence they carried out on each other, the 2 banks agreed
and decided on the above merger ratio of common stock as
being appropriate.

(b) Preferred stocks (Type 1 and Type 2)

Market prices of preferred stocks (Type 1 and Type 2) issued
by Biwako Bank were not available (in contrast to common
stock which market price was available). KUBC therefore
decided to set the same conditions as those of Biwako Bank’s
preferred stocks on KUBC’s newly-issued preferred stocks,
taking the merger ratio of common stock into account.

(5) Name of the controlling entity after the business combination

(3) Number of shares delivered and value

Sumitomo Mitsui Financial Group, Inc.

(6) Percentage share of voting rights SMFG has acquired

56%

2. Period of the acquired company’s financial results included in the

consolidated financial statements

From March 1, 2010 to March 31, 2010
3. Acquisition cost of the acquired company

Millions of yen

Millions of
U.S. dollars

SMFG’s interest in
KUBC’s common stock ............
SMFG’s interest in
KUBC’s preferred stock ...........
Acquisition cost .........................

¥ 7,182

40,000
¥47,182

$ 77

430
$507

4. Merger ratio, calculation method, number of shares delivered and

valuation
(1) Merger ratio

Common stock
KUBC 1 : Biwako Bank 0.75
Preferred stock (Type 1) KUBC 1 : Biwako Bank 1
Preferred stock (Type 2) KUBC 1 : Biwako Bank 1

(2) Basis for calculation of the merger ratio

(a) Common stock

In order to ensure the fairness of the merger ratio, KUBC

Number of shares delivered
Common stock of KUBC
Preferred stock of KUBC (Type 1)
Preferred stock of KUBC (Type 2)
Value

103,532,913 shares
27,500,000 shares
23,125,000 shares

Common stock of
KUBC
Preferred stock
(Type 1) of KUBC
Preferred stock
(Type 2) of KUBC

¥12,803 million ($138 million)

¥19,025 million ($204 million)

¥16,500 million ($177 million)

5. Goodwill, reason for recognizing goodwill, amortization method

and amortization period
(1) Amount of goodwill

¥11,056 million ($119 million)
(2) Reason for recognizing goodwill

SMFG accounted for the difference between the acquisition
cost and the equivalent amount of SMFG’s interests in Biwako
Bank as goodwill.

(3) Method and term to amortize goodwill
Straight-line method over 20 years

SMFG 2010 125

SMFG

Notes to Consolidated Financial Statements

6. Amounts of assets and liabilities acquired on the day of the busi-

ness combination
(1) Assets

Millions of yen

Total assets ................................ ¥1,113,801
795,445
Loans and bills discounted .........
89,968
Securities ...................................

(2) Liabilities

Total liabilities .......................... ¥1,078,769
1,033,256
Deposits ....................................

Millions of yen

Millions of
U.S. dollars
$11,970
8,549
967

Millions of
U.S. dollars
$11,593
11,104

7. Approximate amounts of impact on the consolidated statement of
operations for the fiscal year ended March 31, 2010, assuming that
the business combinations had been completed on the commence-
ment date of the fiscal year
(1) The difference between the ordinary income and other income
data estimated, assuming that the business combinations had
been completed on the commencement date of the fiscal year
and the actual ordinary income and other income data that are
recorded in the consolidated statement of income is as follows:

Ordinary income .......................
Ordinary profit ..........................
Net income ...............................

Millions of yen
¥25,832
705
183

Millions of
U.S. dollars
$278
8
2

Note: Ordinary income is presented as counterparts of sales of companies in other

industries.

(2) Calculation method of the approximate amounts and material

assumptions
The approximate amounts were calculated retroactively to the
commencement date of the fiscal year based on the amounts
stated in Biwako Bank’s statement of income for the period from
April 1, 2009 to February 28, 2010, including the amount of
amortization of goodwill for the same period and are different
from results of operation if the business combination had been
completed on the commencement date of the fiscal year.
The information mentioned above has not been audited by
KPMG AZSA & Co.

A merger of credit card companies
A consolidated subsidiary, QUOQ Inc. (“QUOQ”) and equity
method affiliates, Central Finance Co., Ltd. (“CF”) and OMC Card,
Inc. (“OMC Card”) merged on April 1, 2009. The new company was
named Cedyna Financial Corporation and became an equity method
affiliate of SMFG. The outline of the merger is as follows:
1. Outline of the business combination

(1) Company profiles

Surviving company: OMC Card (Credit card business)
Merged company: CF (Shopping credit business
and general credit business)
Merged company: QUOQ (Shopping credit business
and general credit business)

(2) Reasons for the business combination

The credit card market is growing steadily, propelled by the

126

SMFG 2010

expansion into new areas of settlement, such as for small
purchases, 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 industry is
changing dramatically — development of new technologies
and new services, such as electronic money; investment
in systems that can respond to customers’ needs for more
in-depth, sophisticated and diverse services; enactment 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 circumstances,
the companies need to restructure their operations in order to
establish new business models.
On April 1, 2009, CF, OMC Card and 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 combining
the customer bases, marketing capabilities, know-how and
other resources of the 3 companies.

(3) Date of business combination

April 1, 2009

(4) Legal form of the business combination

The merger was a merger by absorption with OMC Card as
the surviving company. (Name of the new company: Cedyna
Financial Corporation)

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, 2010
SMFG did not record profit or loss of QUOQ and its subsidiaries
because they were excluded from the scope of consolidation at the
beginning of the fiscal year.

5. Status after the business combination

QUOQ and its subsidiaries are excluded from the scope of consoli-
dation, and Cedyna Financial Corporation has become an affiliated
company accounted for by the equity method.

Fiscal year ended March 31, 2009
There is no material information to be reported.

Notes to Consolidated Financial Statements

SMFG

34. Per Share Data

March 31
Net assets per share .............................................................................................

2010
¥3,391.75

2009
¥2,790.27

Yen

Year ended March 31
Net income (loss) per share ..................................................................................
Net income per share (diluted) ............................................................................

2010
¥248.40
244.18

2009
¥(497.39)
—

U.S. dollars
2010
$36.45

U.S. dollars
2010
$2.67
2.62

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
Net income (loss) per share:

Millions of yen, except number of shares

2010

2009

Millions of U.S. dollars
2010

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 ................................................................................................................

¥271,559
8,449
8,449
¥263,109
1,059,227

¥ 1,931
2,254
(322)
26,191
26,191

¥(373,456)
10,704
10,704
¥(384,160)
772,348

¥ —
—
—
—
—

$2,919
91
91
$2,828
/

$ 21
24
(3)
/
/

Outline of dilutive securities which were not included in the calculation of “Net income per share (diluted)” for the fiscal year ended March 31, 2010 because they do not have
dilutive effect:

2. Net assets per share is calculated based on the following:

March 31
Net assets .................................................................................................................................
Amounts excluded from Net assets ...........................................................................................
Preferred stock .....................................................................................................................
Dividends on preferred stock ...............................................................................................
Stock acquisition rights .......................................................................................................
Minority interests ................................................................................................................
Net assets attributable to common stock at the fiscal year-end ..................................................

Number of common stock at the fiscal year-end used for the calculation of
Net assets per share (in thousands) ..........................................................................................

Stock acquisition rights: 1 type

(Number of stock acquisition rights: 1,081 units)

Millions of yen, except number of shares

2010
¥7,000,805
2,262,582
210,003
3,097
81
2,049,400
¥4,738,223

2009
¥4,611,764
2,457,530
310,203
5,352
66
2,141,908
¥2,154,233

Millions of U.S. dollars
2010
$75,237
24,316
2,257
33
1
22,025
$50,921

1,396,985

772,052

SMFG 2010 127

SMFG

Notes to Consolidated Financial Statements

35. Parent Company

(1) Nonconsolidated Balance Sheets

Sumitomo Mitsui Financial Group, Inc.

March 31
Assets
Current assets ...........................................................................................
Cash and due from banks .....................................................................
Prepaid expenses ..................................................................................
Deferred tax assets................................................................................
Accrued income ....................................................................................
Accrued income tax refunds .................................................................
Other current assets ..............................................................................
Fixed assets ..............................................................................................
Tangible fixed assets .............................................................................
Buildings ............................................................................................
Equipment..........................................................................................
Intangible fixed assets ...........................................................................
Software .............................................................................................
Investments and other assets ...............................................................
Investments in subsidiaries and affiliates ..........................................
Deferred tax assets ............................................................................
Total assets ...............................................................................................

Liabilities and net assets
Liabilities
Current liabilities ........................................................................................
Short-term borrowings ..........................................................................
Accounts payable ..................................................................................
Accrued expenses .................................................................................
Income taxes payable ...........................................................................
Business office taxes payable ...............................................................
Reserve for employees bonuses ...........................................................
Reserve for executive bonuses .............................................................
Other current liabilities ...........................................................................
Fixed liabilities ...........................................................................................
Bonds ....................................................................................................
Reserve for executive retirement benefits .............................................
Total liabilities ...........................................................................................

¥ 111,033
86,283
26
—
223
24,065
435
6,041,740
1
0
1
8
8
6,041,729
6,041,729
—
¥6,152,774

¥ 954,073
948,030
1,541
3,299
3
5
101
71
1,020
393,126
392,900
226
1,347,199

Net assets
Stockholders’ equity

Capital stock ..........................................................................................
Capital surplus .......................................................................................
Capital reserve ...................................................................................
Other capital surplus..........................................................................
Retained earnings ..................................................................................

Other retained earnings

Voluntary reserve ...........................................................................
Retained earnings brought forward ...............................................
Treasury stock .......................................................................................
Total stockholders’ equity ........................................................................
Total net assets .........................................................................................
Total liabilities and net assets ..................................................................

2,337,895
1,833,073
1,559,374
273,699
678,042

30,420
647,622
(43,437)
4,805,574
4,805,574
¥6,152,774

128

SMFG 2010

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

¥ 23,730
1,281
22
39
19
21,844
522
4,033,583
2
0
2
11
11
4,033,568
4,028,093
5,475
¥4,057,313

¥1,079,566
1,078,030
298
120
372
5
102
—
637
199
—
199
1,079,766

1,420,877
916,163
642,355
273,808
683,907

30,420
653,487
(43,400)
2,977,547
2,977,547
¥4,057,313

$ 1,193
927
0
—
2
259
5
64,930
0
0
0
0
0
64,930
64,930
—
$66,123

$10,253
10,188
17
35
0
0
1
1
11
4,225
4,223
2
14,478

25,125
19,700
16,759
2,941
7,287

327
6,960
(467)
51,645
51,645
$66,123

Notes to Consolidated Financial Statements

SMFG

(2) Nonconsolidated Statements of Income
Sumitomo Mitsui Financial Group, Inc.

Millions of yen

Year ended March 31
Operating income .....................................................................................
Dividends on investments in subsidiaries and affiliates ........................
Fees and commissions received from subsidiaries ...............................

Operating expenses .................................................................................
General and administrative expenses ...................................................
Interest on bonds...................................................................................
Operating profit ........................................................................................

Nonoperating income ...............................................................................
Interest income on deposits ..................................................................
Fees and commissions ..........................................................................
Other nonoperating income ...................................................................

Nonoperating expenses ...........................................................................
Interest on borrowings ...........................................................................
Fees and commissions payments .........................................................
Amortization of stock issuance cost .....................................................
Amortization of bond issuance cost ......................................................
Other nonoperating expenses ...............................................................
Ordinary profit ...........................................................................................

Extraordinary loss .....................................................................................
Losses on sales of stocks of affiliate .....................................................

2010
¥133,379
118,818
14,560

16,641
8,353
8,287
116,737

369
347
2
19

22,572
9,115
4,104
9,324
28
0
94,534

22,688
22,688

2009
¥134,772
117,051
17,721

8,790
8,790
—
125,982

151
110
14
27

23,824
11,910
11,912
—
—
0
102,309

—
—

Income before income taxes ...................................................................
Income taxes:

71,846

102,309

Current ...................................................................................................
Deferred .................................................................................................
Net income ................................................................................................

154
5,514
¥ 66,176

2,393
(3,552)
¥103,468

Millions of
U.S. dollars (Note 1)
2010
$1,434
1,277
157

179
90
89
1,255

4
4
0
0

243
98
44
100
1
0
1,016

244
244

772

2
59
$ 711

Per share data:

Net income ............................................................................................
Net income — diluted ............................................................................

¥53.82
—

¥118.43
—

$0.58
—

Yen

2010

2009

U.S. dollars (Note 1)
2010

SMFG 2010 129

SMFG

Notes to Consolidated Financial Statements

(3) Nonconsolidated Statements of Changes in Net Assets

Sumitomo Mitsui Financial Group, Inc.

Year ended March 31
Stockholders’ equity
Capital stock

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

¥1,420,877

$15,270

Issuance of new shares .....................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

917,018
917,018
¥2,337,895

—
—
¥1,420,877

9,855
9,855
$25,125

Capital surplus

Capital reserve

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

642,355

6,903

Issuance of new shares .................................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

917,018
917,018
¥1,559,374

—
—
¥ 642,355

9,855
9,855
$16,758

Other capital surplus

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

273,808

288,031

2,943

Disposal of treasury stock .............................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

(108)
(108)
¥ 273,699

(14,222)
(14,222)
¥ 273,808

(1)
(1)
$ 2,942

Total capital surplus

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

916,163

930,386

9,846

Issuance of new shares .................................................................
Disposal of treasury stock .............................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

917,018
(108)
916,909
¥1,833,073

—
(14,222)
(14,222)
¥ 916,163

9,855
(1)
9,854
$19,700

130

SMFG 2010

Notes to Consolidated Financial Statements

SMFG

Millions of yen

2010

2009

Millions of
U.S. dollars (Note 1)
2010

(Continued)

Year ended March 31
Stockholders’ equity
Retained earnings

Other retained earnings
Voluntary reserve

Balance at the end of the previous fiscal year ...............................
Changes in the fiscal year:

¥ 30,420

$ 327

Net changes in the fiscal year ....................................................
Balance at the end of the fiscal year..............................................

—
¥ 30,420

—
$ 327

Retained earnings brought forward

Balance at the end of the previous fiscal year ...............................
Changes in the fiscal year:

653,487

670,259

7,023

Cash dividends ..........................................................................
Net income .................................................................................
Net changes in the fiscal year ....................................................
Balance at the end of the fiscal year..............................................

(72,041)
66,176
(5,865)
¥ 647,622

(120,240)
103,468
(16,772)
¥ 653,487

(774)
711
(63)
$ 6,960

Total retained earnings

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

683,907

700,679

7,350

Cash dividends ..............................................................................
Net income .....................................................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

(72,041)
66,176
(5,865)
¥ 678,042

(120,240)
103,468
(16,772)
¥ 683,907

(774)
711
(63)
$ 7,287

Treasury stock

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

(43,400)

(83,194)

(467)

Purchase of treasury stock ................................................................
Disposal of treasury stock .................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

(189)
152
(37)
¥ (43,437)

(943)
40,736
39,793
¥ (43,400)

(2)
2
(0)
$ (467)

Total stockholders’ equity

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

Issuance of new shares .....................................................................
Cash dividends ..................................................................................
Net income ........................................................................................
Purchase of treasury stock ................................................................
Disposal of treasury stock .................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

Total net assets

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

2,977,547

2,968,749

31,999

1,834,037
(72,041)
66,176
(189)
43
1,828,026
¥4,805,574

—
(120,240)
103,468
(943)
26,513
8,798
¥2,977,547

19,710
(774)
711
(2)
1
19,646
$51,645

2,977,547

2,968,749

31,999

1,834,037
(72,041)
66,176
(189)
43
1,828,026
¥4,805,574

—
(120,240)
103,468
(943)
26,513
8,798
¥2,977,547

19,710
(774)
711
(2)
1
19,646
$51,645

SMFG 2010 131

SMFG

Independent Auditors’ Report

To the Board of Directors of
Sumitomo Mitsui Financial Group, Inc.:

We have audited the accompanying consolidated balance sheets of Sumitomo Mitsui Financial Group, Inc. (“SMFG”)
and subsidiaries as of March 31, 2010 and 2009, 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, 2010 and 2009, 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.

The consolidated financial statements as of and for the year ended March 31, 2010 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 29, 2010

132

SMFG 2010

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 ..........................................................................................
Deferred tax assets ..............................................................................................
Customers’ liabilities for acceptances and guarantees .......................................
Reserve for possible loan losses ..........................................................................
Total assets ..........................................................................................................

Millions of yen

2010

2009

¥ 3,358,994
2,424,160
1,106,145
25,226
5,414,500
956,024
6,619,258
18,734
28,422,362
63,406,825
1,107,289
123,706
2,415,605
812,334
404,338
679,380
3,753,642
(1,007,160)
¥120,041,369

¥ 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

Millions of
U.S. dollars
2010

$ 36,099
26,052
11,888
271
58,189
10,274
71,137
201
305,453
681,428
11,900
1,330
25,960
8,730
4,345
7,301
40,340
(10,824)
$1,290,074

SMFG 2010 133

SMBC

Supplemental Information

(Continued)

March 31
Liabilities and net assets
Liabilities
Deposits ...............................................................................................................
Call money and bills sold .....................................................................................
Payables under repurchase agreements ..............................................................
Payables under securities lending transactions ...................................................
Commercial paper ................................................................................................
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 1 million yen have been omitted.

Millions of yen

2010

2009

Millions of
U.S. dollars
2010

¥ 85,792,098
2,119,557
1,120,860
4,313,334
310,787
5,042,720
4,030,914
192,299
381,678
3,339,672
159,554
2,441,434
35,415
1,808
19,259
6,863
11,734
34
26,167
46,966
3,753,642
113,146,805

1,770,996
2,709,682
668,074
5,148,753
377,456
(38,516)
34,897
(99,481)
274,356
81
1,471,373
6,894,564
¥120,041,369

¥ 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

$ 922,000
22,779
12,046
46,355
3,340
54,194
43,320
2,067
4,102
35,891
1,715
26,238
380
19
207
74
126
0
281
505
40,340
1,215,979

19,033
29,120
7,180
55,333
4,056
(414)
375
(1,069)
2,948
1
15,813
74,095
$1,290,074

2. For the convenience of 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 ¥93.05 to US$1, the exchange rate prevailing at March 31, 2010.

134

SMFG 2010

Supplemental Information

SMBC

Millions of yen

2010

2009

Millions of
U.S. dollars
2010

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:

¥1,598,464
1,264,688
238,944
902
5,394
14,650
4,088
69,795
1,736
580,142
156,570
156,355
104,405
2,597,675

295,635
180,433
28,383
1,381
6,120
70,129
9,186
127,756
112,560
988,409
173,073
341,859
2,039,296
558,379

¥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

69,246
75,282
81,352
¥ 332,497

35,294
277,961
54,882
¥ (317,306)

$17,179
13,592
2,568
10
58
157
44
750
18
6,235
1,683
1,680
1,122
27,917

3,177
1,939
305
15
66
753
99
1,373
1,210
10,622
1,860
3,674
21,916
6,001

744
809
875
$ 3,573

Per share data:

Net income (loss) ..............................................................................................
Net income — diluted .......................................................................................

¥4,240.20
4,236.01

¥(5,740.34)
—

$45.57
45.52

Notes: 1. Amounts less than 1 million yen have been omitted.

2. For the convenience of 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 ¥93.05 to US$1, the exchange rate prevailing at March 31, 2010.

Yen

U.S. dollars

SMFG 2010 135

SMBC

Supplemental Information

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 ...................................................
Commercial paper ................................................................................................
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 .............................................................................
Notes: 1. Amounts less than 1 million yen have been omitted.

Millions of yen

2010

2009

¥ 2,863,985
2,408,004
514,179
45,594
1,703,828
435,027
3,670,091
10,724
28,536,200
56,619,058
743,446
1,823,647
705,036
133,323
456,556
3,625,868
(758,178)
—
¥103,536,394

¥ 77,630,639
1,554,374
492,311
3,407,301
310,787
2,909,131
2,747,767
214,526
164,678
3,245,992
159,554
1,600,879
10,207
426
5,147
1,862
10,634
—
46,352
3,625,868
98,138,445

1,770,996
2,473,558
704,485
4,949,040
379,353
48,020
21,535
448,909
5,397,949
¥103,536,394

¥ 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

Millions of
U.S. dollars
2010

$ 30,779
25,879
5,526
490
18,311
4,675
39,442
115
306,676
608,480
7,990
19,598
7,577
1,433
4,906
38,967
(8,148)
—
$1,112,696

$ 834,290
16,705
5,291
36,618
3,340
31,264
29,530
2,305
1,770
34,884
1,715
17,204
110
5
55
20
114
—
498
38,967
1,054,685

19,033
26,583
7,571
53,187
4,077
516
231
4,824
58,011
$1,112,696

2. For the convenience of 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 ¥93.05 to US$1, the exchange rate prevailing at March 31, 2010.

136

SMFG 2010

Supplemental Information

SMBC

Millions of yen

2010

2009

Millions of
U.S. dollars
2010

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:

¥1,380,280
1,067,390
229,411
193
4,061
13,863
65,360
1,736
412,960
115,356
85,788
91,654
2,087,777

333,919
146,198
107,927
982
6,103
64,598
8,107
126,246
80,703
735,181
85,084
271,891
1,633,026
454,750

¥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

Current ..............................................................................................................
Deferred ............................................................................................................
Net income (loss) .................................................................................................

44,997
91,757
¥ 317,995

23,748
305,154
¥ (301,116)

$14,834
11,471
2,466
2
44
149
702
18
4,438
1,240
922
985
22,437

3,589
1,571
1,160
11
66
694
87
1,357
867
7,901
914
2,922
17,550
4,887

484
986
$ 3,417

Per share data:

¥4,051.75
—

¥(5,453.06)
—

$43.54
—

Notes: 1. Amounts less than 1 million yen have been omitted.

2. For the convenience of 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 ¥93.05 to US$1, the exchange rate prevailing at March 31, 2010.

Yen

U.S. dollars

SMFG 2010 137

SMFG

Income Analysis (Consolidated)

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries

Operating Income, Classified by Domestic and Overseas Operations

Year ended March 31

Domestic
operations
Interest income ..................................................... ¥1,392,919
297,268
Interest expenses ..................................................
Net interest income ................................................... 1,095,650
1,778
Trust fees ...................................................................
651,331
Fees and commissions .........................................
111,320
Fees and commissions payments ........................
540,011
Net fees and commissions ........................................
186,117
Trading income......................................................
8,313
Trading losses .......................................................
177,804
Net trading income ....................................................
401,898
Other operating income ........................................
355,904
Other operating expenses.....................................
45,993
Net other operating income (expenses) ....................

Millions of yen

2010

Overseas
operations Elimination

Total

¥405,558
118,923
286,634
—
80,655
10,923
69,731
28,902
12,619
16,283
51,325
45,967
5,358

¥(102,672) ¥1,695,805
314,872
1,380,933
1,778
729,364
120,748
608,616
194,087
—
194,087
453,012
401,773
51,238

(101,319)
(1,352)
—
(2,622)
(1,495)
(1,126)
(20,932)
(20,932)
—
(210)
(98)
(112)

Domestic
operations
¥1,561,085
495,194
1,065,890
2,122
592,845
105,882
486,962
194,201
3,449
190,751
503,422
438,969
64,453

2009

Overseas
operations Elimination
¥618,228
341,615
276,613
—
80,926
10,590
70,335
29,779
8,791
20,987
26,403
34,574
(8,171)

¥(91,965)
(87,945)
(4,019)
—
(1,019)
(899)
(119)
(12,241)
(12,241)
—
(226)
(331)
105

Total
¥2,087,348
748,863
1,338,484
2,122
672,752
115,574
557,178
211,738
—
211,738
529,599
473,212
56,386

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 (2010, ¥20 million; 2009, ¥30 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 ..................

Average balance
¥86,229,707
55,382,826
24,828,351
343,760
13,958

Receivables under securities
borrowing transactions .......................................
Deposits with banks ..............................................
Lease receivables and investment assets ............

Interest-bearing liabilities ..........................................
Deposits ...............................................................
Negotiable certificates of deposit .........................
Call money and bills sold ......................................
Payables under repurchase agreements ..............
Payables under securities lending transactions ...
Commercial paper.................................................
Borrowed money ...................................................
Short-term bonds ..................................................
Bonds ....................................................................

2,293,522
319,399
1,763,180

¥91,491,665
68,495,143
6,939,707
1,857,443
612,826
2,859,188
—
5,842,252
1,084,084
3,591,097

2010
Interest
¥1,392,919
1,058,896
218,390
2,499
15

5,413
1,819
66,477

¥ 297,268
106,542
17,939
2,855
677
6,165
—
117,900
2,902
69,577

Earnings yield

1.62%
1.91
0.88
0.73
0.11

0.24
0.57
3.77

0.32%
0.16
0.26
0.15
0.11
0.22
—
2.02
0.27
1.94

Average balance
¥80,327,278
53,272,205
21,707,712
392,838
17,008

687,341
848,609
1,837,506

¥87,827,514
66,460,734
4,072,822
2,727,860
436,712
4,182,183
—
5,463,776
765,144
3,481,382

2009
Interest
¥1,561,085
1,145,251
270,374
5,403
89

4,506
11,257
70,747

¥ 495,194
196,916
24,331
12,527
2,066
59,962
—
125,225
6,678
65,248

Earnings yield

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 (2010, ¥965,438 million; 2009, ¥824,712

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 (2010, ¥12,392 million; 2009, ¥8,583 million). “Interest-bearing liabilities”
are shown after deduction of amounts equivalent to the average balance of money held in trust (2010, ¥12,392 million; 2009, ¥8,583 million) and
corresponding interest (2010, ¥20 million; 2009, ¥30 million).

138

SMFG 2010

Income Analysis (Consolidated)

SMFG

Overseas Operations

Average balance
¥16,461,908
11,059,619
1,656,478
812,878
13,963

Interest-bearing liabilities ..........................................
Deposits ................................................................
Negotiable certificates of deposit .........................
Call money and bills sold ......................................
Payables under repurchase agreements ..............
Payables under securities lending transactions ...
Commercial paper.................................................
Borrowed money ...................................................
Short-term bonds ..................................................
Bonds ....................................................................

—
2,154,320
195,486

¥11,816,818
7,472,668
1,811,253
1,205,537
364,451
—
82,513
440,869
—
158,169

2010
Interest
¥405,558
314,641
31,115
5,158
887

—
14,078
8,065

¥118,923
40,606
16,102
3,416
713
—
194
11,669
—
9,459

Millions of yen

Earnings yield
2.46%
2.84
1.88
0.63
6.36

Average balance
¥16,094,115
11,650,846
1,350,840
384,028
103,425

—
0.65
4.13

1.01%
0.54
0.89
0.28
0.20
—
0.24
2.65
—
5.98

—
1,936,988
160,047

¥ 9,633,089
6,968,130
710,309
580,174
546,903
—
—
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

Earnings yield
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

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,

quarterly or semiannual balances instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2010, ¥156,583 million; 2009, ¥89,200

million).

Total of Domestic and Overseas Operations

Year ended March 31
Interest-earning assets .............................................. ¥100,773,612
64,723,468
26,505,349
1,156,638
27,922

Loans and bills discounted ...................................
Securities ..............................................................
Call loans and bills bought ....................................
Receivables under resale agreements ..................

Average balance

2010
Interest
¥1,695,805
1,280,297
241,216
7,657
902

2,293,522
2,259,797
1,958,655

5,413
14,757
74,542

Interest-bearing liabilities .......................................... ¥101,186,263
75,750,461
8,750,961
3,062,980
977,278
2,859,188
82,513
4,580,881
1,084,084
3,552,249

Deposits ................................................................
Negotiable certificates of deposit .........................
Call money and bills sold ......................................
Payables under repurchase agreements ..............
Payables under securities lending transactions ...
Commercial paper.................................................
Borrowed money ...................................................
Short-term bonds ..................................................
Bonds ....................................................................

¥ 314,872
145,979
34,042
6,271
1,390
6,165
194
37,708
2,902
70,749

Millions of yen

Earnings yield

1.68%
1.98
0.91
0.66
3.23

0.24
0.65
3.81

0.31%
0.19
0.39
0.20
0.14
0.22
0.24
0.82
0.27
1.99

Average balance
¥94,925,190
63,459,263
23,342,579
776,867
120,433

687,341
2,470,670
1,997,553

¥95,678,084
73,111,647
4,783,132
3,308,035
983,616
4,182,183
—
4,452,520
765,144
3,746,418

2009
Interest
¥2,087,348
1,550,081
299,616
14,686
1,750

4,506
42,738
77,772

¥ 748,863
326,447
47,911
22,524
7,298
59,962
—
62,750
6,678
82,577

Earnings yield

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, quarterly or

semiannual balances instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2010, ¥1,123,299 million; 2009,

¥913,415 million).

SMFG 2010 139

SMFG

Income Analysis (Consolidated)

Fees and Commissions

Domestic
Year ended March 31
operations
Fees and commissions .............................................. ¥651,331
20,660
118,012
54,380
14,763
6,681
40,468
143,770

Deposits and loans ...............................................
Remittances and transfers ....................................
Securities-related business ...................................
Agency ..................................................................
Safe deposits ........................................................
Guarantees ............................................................
Credit card business .............................................

Millions of yen

2010

Overseas
operations Elimination

¥80,655
49,988
7,782
0
—
2
9,138
—

¥(2,622)
(55)
(2)
(16)
—
—
(242)
—

Total
¥729,364
70,592
125,792
54,363
14,763
6,684
49,365
143,770

Domestic
operations
¥592,845
21,805
123,080
33,872
14,673
6,911
43,792
141,117

2009

Overseas
operations Elimination

¥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

Fees and commissions payments ............................. ¥111,320
26,285

Remittances and transfers ....................................

¥10,923
4,920

¥(1,495)
(155)

¥120,748
31,050

¥105,882
26,796

¥10,590
3,576

¥ (899)
(161)

¥115,574
30,211

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

2010

2009

Millions of yen

Domestic
Year ended March 31
operations
Trading income .......................................................... ¥186,117
63,212

Gains on trading securities ...................................

Overseas
operations Elimination

¥28,902
211

¥(20,932)
—

Total
¥194,087
63,424

Domestic
operations
¥194,201
23,210

Overseas
operations Elimination

¥29,779
666

¥(12,241)
—

Total
¥211,738
23,876

Gains on securities related to
trading transactions ............................................
Gains on trading-related financial derivatives .......
Others ...................................................................

2,254
120,075
576

—
28,691
—

—
(20,932)
—

2,254
127,833
576

1,174
162,430
7,386

46
29,066
—

—
(12,241)
—

1,221
179,255
7,386

Trading losses............................................................ ¥ 8,313
—

Losses on trading securities .................................

¥12,619
—

¥(20,932)
—

¥ —
—

¥ 3,449
—

¥ 8,791
—

¥(12,241)
—

¥ —
—

Losses on securities related to
trading transactions ............................................
Losses on trading-related financial derivatives .....
Others ...................................................................

—
8,313
—

—
12,619
—

—
(20,932)
—

—
—
—

—
3,449
—

—
8,791
—

—
(12,241)
—

—
—
—

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.

140

SMFG 2010

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:

Liquid deposits ............................................................................................
Fixed-term deposits ....................................................................................
Others ..........................................................................................................
Subtotal .......................................................................................................
Negotiable certificates of deposit ................................................................
Total .............................................................................................................

Overseas operations:

Millions of yen

2010

2009

¥42,901,390
25,125,350
3,613,206
71,639,946
5,166,704
¥76,806,651

¥ 5,238,038
1,762,779
7,831
7,008,648
1,828,914
¥ 8,837,563
¥85,644,215

¥41,462,895
23,463,313
3,882,490
68,808,699
6,032,611
¥74,841,310

¥ 5,181,014
1,575,776
4,007
6,760,798
1,428,673
¥ 8,189,471
¥83,030,782

Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other

domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.

2. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice
3. Fixed-term deposits = Time deposits + Installment savings

Balance of Loan Portfolio, Classified by Industry
Year-End Balance

March 31
Domestic operations:

Millions of yen
2010

March 31
Domestic operations:

Millions of yen
2009

153,473
1,095,482

Manufacturing...................................... ¥ 6,694,906
Agriculture, forestry,
fisheries and mining ...........................
Construction ........................................
Transportation, communications
3,271,221
and public enterprises .......................
4,497,698
Wholesale and retail ............................
4,299,050
Finance and insurance ........................
8,210,117
Real estate, goods rental and leasing ...
4,077,881
Services ...............................................
1,117,092
Municipalities .......................................
20,606,900
Others ..................................................
Subtotal ............................................... ¥54,023,825

Overseas operations:

Public sector ........................................ ¥ 43,100
543,997
Financial institutions ............................
7,223,161
Commerce and industry ......................
866,948
Others ..................................................
Subtotal ............................................... ¥ 8,677,208
Total ......................................................... ¥62,701,033

12.39%

0.28
2.03

6.05
8.33
7.96
15.20
7.55
2.07
38.14
100.00%

0.50%
6.27
83.24
9.99
100.00%

—

149,678
1,274,948

Manufacturing...................................... ¥ 6,992,808
Agriculture, forestry,
fisheries and mining ...........................
Construction ........................................
Transportation, communications
3,387,724
and public enterprises .......................
5,051,330
Wholesale and retail ............................
4,306,969
Finance and insurance ........................
7,627,384
Real estate ...........................................
5,605,333
Services ...............................................
1,058,239
Municipalities .......................................
Others ..................................................
19,409,786
Subtotal ............................................... ¥54,864,204

Overseas operations:

Public sector ........................................ ¥ 35,350
501,739
Financial institutions ............................
8,602,419
Commerce and industry ......................
Others ..................................................
1,131,605
Subtotal ............................................... ¥10,271,115
Total ......................................................... ¥65,135,319

12.75%

0.27
2.32

6.17
9.21
7.85
13.90
10.22
1.93
35.38
100.00%

0.34%
4.88
83.75
11.03
100.00%
—

Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other

domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.

2. Japan offshore banking accounts are included in overseas operations’ accounts.
3. In accordance with the revision of the Japan Standard Industrial Classification (in November 2007), from the fiscal year beginning on April 1, 2009,

the sector classification has been partly changed. “Goods rental and leasing” is included in others in fiscal 2008.

SMFG 2010 141

SMFG

Assets and Liabilities (Consolidated)

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 ..............................................................................

2010
¥ 702,606
365,087
636
¥1,068,329
¥ 843,781

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

2010
¥ 165,131
1,075,782
38,315
250,256
¥1,529,484
¥ 727,633

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

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

2010
¥ 392,424
881,239
298,179
1,571,842
68,431,335
¥70,003,177
¥ 843,781

Millions of yen

2009
¥ 505,666
865,603
281,917
1,653,186
70,894,602
¥72,547,788
¥ 717,010

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

142

SMFG 2010

Assets and Liabilities (Consolidated)

SMFG

Securities
Year-End Balance

March 31
Domestic operations:

Millions of yen

2010

2009

Overseas operations:

Unallocated corporate assets:

¥16,738,321
422,648
3,548,359
2,924,446
3,492,404
¥27,126,180

¥ —
—
—
—
1,454,593
¥ 1,454,593

¥ —
—
—
43,194
—
¥ 43,194
¥28,623,968

¥14,734,419
338,688
3,899,189
2,536,410
5,136,736
¥26,645,444

¥ —
—
—
—
1,833,447
¥ 1,833,447

¥ —
—
—
219,272
—
¥ 219,272
¥28,698,164

Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other

domestic consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking
subsidiaries and overseas consolidated subsidiaries.

2. “Others” include foreign bonds and foreign stocks.

Trading Assets and Liabilities

Domestic
March 31
operations
Trading assets ........................................................... ¥6,156,853
Trading securities .................................................. 2,747,496
1,246
Derivatives of trading securities ............................
—
Securities related to trading transactions .............

Derivatives of securities related to
6,931
trading transactions ............................................
Trading-related financial derivatives ..................... 3,123,235
277,943
Other trading assets..............................................

2010

2009

Millions of yen

Overseas
operations Elimination

¥(36,046)

¥587,881
32,229
—
—

Overseas
operations Elimination

Total
¥6,708,688
— 2,779,725
1,246
—
—
—

Domestic
operations
¥3,934,682 ¥1,011,003
6,931
—
—

287,025
470
—

¥(20,723)
—
—
—

Total
¥4,924,961
293,956
470
—

—
555,288
363

—
(36,046)
—

6,931
3,642,477
278,307

13,428
3,069,579
564,178

—
1,004,072
—

—
(20,723)
—

13,428
4,052,928
564,178

Trading liabilities ........................................................ ¥4,470,010
Trading securities sold for short sales .................. 1,582,808
2,367
Derivatives of trading securities ............................

¥632,763
—
—

¥(36,046)

¥5,066,727
— 1,582,808
2,367
—

¥2,684,086 ¥ 934,296
341
—

7,131
407

¥(20,723)
—
—

¥3,597,658
7,473
407

Securities related to trading transactions
sold for short sales ..............................................

—

Derivatives of securities related to
6,961
trading transactions ............................................
Trading-related financial derivatives ..................... 2,877,873
—
Other trading liabilities ..........................................

—
632,763
—

—
(36,046)
—

6,961
3,474,589
—

13,997
2,662,549
—

—
933,954
—

—
(20,723)
—

13,997
3,575,780
—

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 2010 143

SMFG

Capital (Nonconsolidated)

Sumitomo Mitsui Financial Group, Inc.

Change in Number of Shares Issued and Capital Stock

Number of shares issued

Capital stock

Capital reserve

Millions of yen

Changes
922,593.28
80,000
40,700
(68,000)
—
249,015
(67,000)
(439,534)
(195,000)
157,151
(16,700)

April 1, 2005 — March 31, 2006*1 ...........
January 31, 2006*2 ..................................
February 28, 2006*3 .................................
May 17, 2006*4 ........................................
August 11, 2006*5 ....................................
September 1, 2006*6 ...............................
September 6, 2006*7 ...............................
September 29, 2006*8 .............................
October 11, 2006*9 ..................................
April 30, 2008*10 ......................................
May 16, 2008*11 .......................................
January 4, 2009*12 ................................... 781,189,672.23
June 22, 2009*13 ...................................... 219,700,000
July 27, 2009*14 .......................................
8,931,300
January 27, 2010*15 ................................. 340,000,000
January 28, 2010*16 .................................
36,343,848
February 8, 2010*17 .................................
(33,400)
February 10, 2010*18 ...............................
20,000,000

Balances
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
1,008,883,878
1,017,815,178
1,357,815,178
1,394,159,026
1,394,125,626
1,414,125,626

Changes
¥ —
45,220
23,005
—
—
—
—
—
—
—
—
—
413,695
16,817
459,477
—
—
27,028

Balances
¥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
1,834,572
1,851,389
2,310,867
2,310,867
2,310,867
2,337,895

Remarks:
*1 Conversion of 107,087 shares of preferred stock (13th series Type 4) to 1,029,680.28 shares of common stock
*2 Public offering: Common stock: 80,000 shares

Issue price: ¥1,130 thousand Capitalization: ¥565 thousand

*3 Allotment to third parties: Common stock: 40,700 shares

Changes
¥ —
45,220
23,005
—
(1,000,000)
221,365
—
—
—
—
—
—
413,695
16,817
459,477
—
—
27,028

Balances
¥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
1,056,050
1,072,868
1,532,345
1,532,345
1,532,345
1,559,374

Issue price: ¥1,130 thousand Capitalization: ¥565 thousand
*4 Repurchase and cancellation of 35,000 shares of preferred stock (Type 1) and 33,000 shares of preferred stock (Type 2)
*5 Capital reserve was transferred to other capital surplus pursuant to Article 448-1 of the Company Act.
*6 Increase in the number of common stock as a result of share exchange for making SMBC Friend Securities Co., Ltd. our wholly-owned subsidiary (share

exchange ratio: 1-to-0.0008)

*7 Repurchase and cancellation of 67,000 shares of preferred stock (Type 2)
*8 Repurchase and cancellation of 500,000 shares of preferred stock (Type 3) and increase in shares of common stock of 60,466
*9 Repurchase and cancellation of 195,000 shares of preferred stock (Type 3)
*10 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)
*11 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)
*12 Increase in shares of common stock of 781,189,672.23 as a result of 100-for-1 stock split
*13 Public offering: Common stock: 219,700,000 shares

*14 Allotment to third parties: Common stock: 8,931,300 shares

Issue price: ¥3,766 Capitalization: ¥1,883

*15 Public offering: Common stock: 340,000,000 shares

Issue price: ¥2,702.81 Capitalization: ¥1,351.405

Issue price: ¥3,766 Capitalization: ¥1,883

*16 Increase in shares of common stock of 36,343,848 as a result of exercise of rights to purchase all the shares of preferred stock (1st to 4th and 9th to 12th

series Type 4)

*17 Decrease in shares of preferred stock (Type 4) of 33,400 as a result of cancellation of all the shares of preferred stock (1st to 4th and 9th to 12th series

Type 4)

*18 Allotment to third parties: Common stock: 20,000,000 shares

Issue price: ¥2,702.81 Capitalization: ¥1,351.405

Number of Shares Issued

March 31, 2010
Common stock ...............................................................................................................................................................
Preferred stock (1st series Type 6) .................................................................................................................................
Total ................................................................................................................................................................................

Number of shares issued
1,414,055,625
70,001
1,414,125,626

144

SMFG 2010

Capital (Nonconsolidated)

SMFG

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, 2010
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 3,730,100 shares in treasury stock, 37,301 units are included in “Individuals and others.”

2. “Other institutions” include 28 units held by the Securities Custody Association.
3. The number of shares constituting 1 unit is 100.

Number of
shareholders

8
430
110
9,819
964
147
356,146
367,624
—

Number of
units

4,926
4,033,863
519,408
1,554,454
5,848,545
1,190
2,157,496
14,119,882
2,067,425

Percentage of
total
0.03%

28.57
3.68
11.01
41.42
0.01
15.28
100.00%
—

Principal Shareholders
a. Common Stock

March 31, 2010
Japan Trustee Services Bank, Ltd. (Trust Account) ......................................................................................
The Master Trust Bank of Japan, Ltd. (Trust Account) .................................................................................
Japan Trustee Services Bank, Ltd. (Trust Account 9) ...................................................................................
The Chase Manhattan Bank, N.A. London SECS Lending Omnibus Account* ...........................................
SSBT OD05 Omnibus Account China Treaty Clients** .................................................................................
State Street Bank and Trust Company 505223* ..........................................................................................
State Street Bank and Trust Company 505225* ..........................................................................................
Nippon Life Insurance Company ..................................................................................................................
Mellon Bank, N.A. as Agent for its Client Mellon Omnibus US Pension* .....................................................
The Chase Manhattan Bank 385036* ...........................................................................................................
Total ..............................................................................................................................................................

* Standing agent: Mizuho Corporate Bank, Ltd.
** Standing agent: The HongKong and Shanghai Banking Corporation Limited’s Tokyo Branch

Number of
shares
87,907,618
71,826,900
26,442,000
21,990,703
18,141,191
17,697,920
17,664,774
15,466,682
14,761,477
14,565,800
306,465,065

Percentage of
shares outstanding
6.21%
5.07
1.86
1.55
1.28
1.25
1.24
1.09
1.04
1.03
21.67%

b. Preferred Stock (1st series Type 6)

March 31, 2010
Sumitomo Life Insurance Company .............................................................................................................
Nippon Life Insurance Company ...................................................................................................................
MITSUI LIFE INSURANCE COMPANY LIMITED ..........................................................................................
Mitsui Sumitomo Insurance Company, Limited ...........................................................................................
Total ..............................................................................................................................................................

Number of
shares
23,334
20,000
16,667
10,000
70,001

Percentage of
shares outstanding
33.33%
28.57
23.81
14.29
100.00%

Note: Pursuant to Article 67 of the Enforcement Ordinance of the Company Act, the exercise of voting rights of common shares held by our subsidiary SMBC

is restricted.

SMFG 2010 145

SMFG

Capital (Nonconsolidated)

Stock Options

March 31
Number of shares granted............................................................................................................
Type of stock ................................................................................................................................
Issue price ....................................................................................................................................
Amount capitalized when shares are issued ................................................................................
Exercise period of stock options ..................................................................................................

2010

108,100 shares
Common stock
¥6,649 per share
¥3,325 per share
From June 28, 2004 to June 27, 2012

Note: Former SMBC issued and granted stock options to certain directors and employees pursuant to the resolution of the ordinary general meeting of share-

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 ........................................................................................

2010
¥4,520
2,591

2009
¥9,640
2,585

Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

Yen
2008
¥1,210,000
633,000

2007
¥1,390,000
1,010,000

2006
¥1,370,000
659,000

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 (1st series Type 6) are not listed on exchanges.

Six-Month Performance

Yen

High ..............................................................
Low ...............................................................

October 2009
¥3,500
2,960

November 2009
¥3,290
2,610

December 2009
¥3,080
2,630

January 2010
¥3,160
2,591

February 2010
¥2,982
2,767

March 2010
¥3,150
2,848

Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

2. Preferred stocks (1st series Type 6) are not listed on exchanges.

146

SMFG 2010

SMBC

Income Analysis (Consolidated)

Sumitomo Mitsui Banking Corporation and Subsidiaries

Operating Income, Classified by Domestic and Overseas Operations

Year ended March 31

Domestic
operations
Interest income ..................................................... ¥1,302,315
272,565
Interest expenses ..................................................
Net interest income ................................................... 1,029,750
1,736
Trust fees ...................................................................
502,032
Fees and commissions .........................................
118,326
Fees and commissions payments ........................
383,705
Net fees and commissions ........................................
148,600
Trading income......................................................
8,313
Trading losses .......................................................
140,287
Net trading income ....................................................
140,284
Other operating income ........................................
103,485
Other operating expenses.....................................
36,799
Net other operating income (expenses) ....................

Millions of yen

2010

Overseas
operations Elimination
¥(93,427)
¥389,577
(93,407)
116,457
(19)
273,119
—
—
(2,549)
80,658
(1,493)
10,923
(1,055)
69,735
(20,932)
28,902
(20,932)
12,619
—
16,283
(12)
16,083
—
9,074
(12)
7,008

Total
¥1,598,464
295,615
1,302,849
1,736
580,142
127,756
452,385
156,570
—
156,570
156,355
112,560
43,795

Domestic
operations
¥1,466,092
469,307
996,784
2,074
438,721
114,918
323,803
174,304
3,449
170,854
230,448
170,926
59,521

2009

Overseas
operations Elimination
¥(89,841)
¥610,270
(83,661)
335,909
(6,179)
274,360
—
—
(962)
80,929
(897)
10,590
70,338
(65)
(12,241)
29,779
(12,241)
8,791
—
20,987
(24)
20,051
—
25,730
(24)
(5,678)

Total
¥1,986,520
721,554
1,264,966
2,074
518,688
124,611
394,077
191,842
—
191,842
250,475
196,656
53,818

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 (2010, ¥20 million; 2009, ¥30 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
Average balance
Interest-earning assets ................................... ¥85,101,802
56,291,108
24,649,455
337,927
13,958

Loans and bills discounted .........................
Securities ....................................................
Call loans and bills bought .........................
Receivables under resale agreements ........
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................

2010

Interest
¥1,302,315
1,036,964
216,124
2,495
15

Earnings yield
1.53%
1.84
0.88
0.74
0.11

Average balance
¥79,343,082
54,408,361
21,519,840
375,755
16,674

2009

Interest
¥1,466,092
1,124,991
268,696
5,287
87

Earnings yield
1.85%
2.07
1.25
1.41
0.52

2,277,769
268,117

5,394
1,704

0.24
0.64

684,275
801,981

4,496
10,986

0.66
1.37

Interest-bearing liabilities ............................... ¥89,290,815
68,567,643
7,227,930
1,855,873
607,324

Deposits......................................................
Negotiable certificates of deposit ...............
Call money and bills sold ............................
Payables under repurchase agreements ....
Payables under securities
lending transactions .................................
Commercial paper ......................................
Borrowed money ........................................
Short-term bonds .......................................
Bonds .........................................................

2,829,428
—
4,462,011
238,247
3,292,435

¥ 272,565
106,566
18,280
2,853
668

6,120
—
104,896
468
60,201

0.31%
0.16
0.25
0.15
0.11

0.22
—
2.35
0.20
1.83

¥85,639,021
66,523,917
4,094,711
2,736,245
430,988

¥ 469,307
196,972
24,451
12,571
2,028

4,179,957
—
4,036,960
67,214
3,332,131

59,958
—
107,661
478
63,573

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 (2010, ¥946,938 million; 2009, ¥818,050

million).

SMFG 2010 147

SMBC

Income Analysis (Consolidated)

Overseas Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥16,085,915
10,971,078
1,459,443
812,878
13,963

—
2,152,553

—
14,066

Interest-bearing liabilities ............................... ¥11,763,523
7,472,669
1,811,253
1,205,537
364,451

Deposits .....................................................
Negotiable certificates of deposit ...............
Call money and bills sold ............................
Payables under repurchase agreements ....
Payables under securities
lending transactions .................................
Commercial paper ......................................
Borrowed money ........................................
Short-term bonds .......................................
Bonds .........................................................

—
82,513
387,573
—
158,169

¥116,457
40,606
16,102
3,416
713

—
194
9,308
—
9,459

Millions of yen

2010

Interest
¥389,577
312,374
22,821
5,158
887

Earnings yield
2.42%
2.85
1.56
0.63
6.36

Average balance
¥15,945,396
11,584,510
1,350,798
384,028
103,425

2009

Interest
¥610,270
484,291
35,424
9,283
1,661

Earnings yield
3.83%
4.18
2.62
2.42
1.61

—
0.65

0.99%
0.54
0.89
0.28
0.20

—
0.24
2.40
—
5.98

—
1,930,859

—
35,964

¥ 9,534,917
6,968,130
710,309
580,174
546,903

¥335,909
134,070
23,579
9,996
5,232

—
—
354,359
—
265,035

—
—
15,544
—
17,328

—
1.86

3.52%
1.92
3.32
1.72
0.96

—
—
4.39
—
6.54

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,

quarterly or semiannual balances instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2010, ¥156,324 million; 2009, ¥88,670

million).

Total of Domestic and Overseas Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥99,271,616
65,563,988
26,108,898
1,150,805
27,922

Millions of yen

2010

Interest
¥1,598,464
1,257,034
238,944
7,653
902

Earnings yield
1.61%
1.92
0.92
0.67
3.23

Average balance
¥93,549,650
64,569,148
22,870,639
759,784
120,099

2009

Interest
¥1,986,520
1,530,130
297,938
14,570
1,748

Earnings yield
2.12%
2.37
1.30
1.92
1.46

2,277,769
2,208,380

5,394
14,650

0.24
0.66

684,275
2,419,248

4,496
42,446

0.66
1.75

Interest-bearing liabilities ............................... ¥99,138,171
75,827,957
9,039,183
3,061,410
971,775

2,829,428
82,513
3,151,386
238,247
3,450,605

¥ 295,615
146,051
34,382
6,270
1,381

6,120
194
21,919
468
69,660

0.30%
0.19
0.38
0.20
0.14

0.22
0.24
0.70
0.20
2.02

¥93,434,902
73,178,249
4,805,020
3,316,420
977,892

¥ 721,554
326,538
48,030
22,567
7,261

4,179,957
—
2,967,596
67,214
3,597,166

59,958
—
44,050
478
80,902

0.77%
0.45
1.00
0.68
0.74

1.43
—
1.48
0.71
2.25

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, quarterly or

semiannual balances instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2010, ¥1,103,197 million; 2009,

¥906,513 million).

148

SMFG 2010

Income Analysis (Consolidated)

SMBC

Fees and Commissions

Domestic
Year ended March 31
operations
Fees and commissions .............................................. ¥502,032
21,425
119,075
48,897
14,782
6,681
39,475
6,179

Millions of yen

2010

Overseas
operations Elimination

¥80,658
49,988
7,782
0
—
2
9,138
—

¥(2,549)
(55)
(1)
—
—
—
(232)
—

Total
¥580,142
71,357
126,856
48,897
14,782
6,684
48,381
6,179

Domestic
operations
¥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
—

2009

Overseas
operations Elimination

¥(962)
—
(161)
—
—
—
(276)
—

¥(897)
(161)

Total
¥518,688
78,568
132,518
20,291
14,691
6,915
48,875
6,493

¥124,611
30,211

Fees and commissions payments ............................. ¥118,326
26,285

Remittances and transfers ....................................

¥10,923
4,920

¥(1,493)
(155)

¥127,756
31,050

¥114,918
26,796

¥10,590
3,576

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

2010

2009

Millions of yen

Domestic
Year ended March 31
operations
Trading income .......................................................... ¥148,600
25,694

Gains on trading securities ...................................

Overseas
operations Elimination
¥(20,932)
—

¥28,902
211

Total
¥156,570
25,906

Domestic
operations
¥174,304
3,313

Overseas
operations Elimination
¥(12,241)
—

¥29,779
666

Total
¥191,842
3,979

2,254
120,075
576

—
28,691
—

—
(20,932)
—

2,254
127,833
576

1,174
162,430
7,386

46
29,066
—

—
(12,241)
—

1,221
179,255
7,386

Trading losses............................................................ ¥ 8,313
—

Losses on trading securities .................................

¥12,619
—

¥(20,932)
—

¥ —
—

¥ 3,449
—

¥ 8,791
—

¥(12,241)
—

¥ —
—

—
8,313
—

—
12,619
—

—
(20,932)
—

—
—
—

—
3,449
—

—
8,791
—

—
(12,241)
—

—
—
—

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.

SMFG 2010 149

SMBC

Assets and Liabilities (Consolidated)

Sumitomo Mitsui Banking Corporation and Subsidiaries

Deposits and Negotiable Certificates of Deposit
Year-End Balance

March 31
Domestic operations:

Overseas operations:

Millions of yen

2010

2009

¥42,959,169
25,125,800
3,617,857
71,702,827
5,246,004
¥76,948,832

¥ 5,243,318
1,763,200
7,831
7,014,351
1,828,914
¥ 8,843,265
¥85,792,098

¥41,544,906
23,465,803
3,884,852
68,895,562
6,035,411
¥74,930,974

¥ 5,185,137
1,575,776
4,007
6,764,920
1,428,673
¥ 8,193,594
¥83,124,568

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. 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
2010

March 31
Domestic operations:

Millions of yen
2009

153,199
1,094,835

Manufacturing...................................... ¥ 6,689,718
Agriculture, forestry,
fisheries and mining ...........................
Construction ........................................
Transportation, communications
3,261,007
and public enterprises .......................
4,475,464
Wholesale and retail ............................
5,271,565
Finance and insurance ........................
8,179,721
Real estate, goods rental and leasing ...
4,192,580
Services ...............................................
1,117,092
Municipalities .......................................
20,374,612
Others ..................................................
Subtotal ............................................... ¥54,809,798

12.20%

0.28
2.00

5.95
8.17
9.62
14.92
7.65
2.04
37.17
100.00%

149,268
1,274,261

Manufacturing...................................... ¥ 6,986,393
Agriculture, forestry,
fisheries and mining ...........................
Construction ........................................
Transportation, communications
3,380,038
and public enterprises .......................
5,030,129
Wholesale and retail ............................
5,496,504
Finance and insurance ........................
7,598,081
Real estate ...........................................
5,762,527
Services ...............................................
1,058,239
Municipalities .......................................
Others ..................................................
19,133,674
Subtotal ............................................... ¥55,869,119

12.50%

0.28
2.28

6.05
9.00
9.84
13.60
10.31
1.89
34.25
100.00%

Overseas operations:

Public sector ........................................ ¥ 43,100
543,997
Financial institutions ............................
7,142,983
Commerce and industry ......................
866,945
Others ..................................................
Subtotal ............................................... ¥ 8,597,027
Total ......................................................... ¥63,406,825
Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas opera-

Public sector ........................................ ¥ 35,350
501,739
Financial institutions ............................
8,544,905
Commerce and industry ......................
Others ..................................................
1,131,604
Subtotal ............................................... ¥10,213,599
Total ......................................................... ¥66,082,719

0.35%
4.91
83.66
11.08
100.00%
—

0.50%
6.33
83.09
10.08
100.00%

—

tions comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

the sector classification has been partly changed. “Goods rental and leasing” is included in others in fiscal 2008.

150

SMFG 2010

Assets and Liabilities (Consolidated)

SMBC

Risk-Monitored Loans

2010
¥ 162,969
1,047,913
38,249
249,139
¥1,498,271
¥ 710,815

Millions of yen

2009
¥ 290,237
997,888
36,119
237,579
¥1,561,824
¥ 590,174