Sumitomo Mitsui Financial Group Inc Annual Report 2011

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FY2011 Annual Report · Sumitomo Mitsui Financial Group Inc

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ANNUAL REPOR T
YEAR ENDED MARCH 31, 2011

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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.

CONTENTS

•Message from Top Management ............................... 2
•Business Overview.................................................... 8

Consumer Banking ..................................................................
8
Corporate Banking ................................................................... 10
Services for High Networth Individuals,
Business Owners and Employees ......................................... 12
Investment Banking ................................................................. 13
International Banking ............................................................... 14
Treasury Markets...................................................................... 15

and Quality ............................................................ 49

•Group Companies .................................................... 16
•Financial Highlights ................................................... 19
•Financial Review ....................................................... 23
•Risk Management ..................................................... 32
•Corporate Social Responsibility (CSR) ....................... 48
•Initiatives for Enhancing Customer Satisfaction (CS)
•Corporate Governance ............................................. 50
•Internal Audit System ................................................ 51
•Compliance .............................................................. 52
•Environmental Preservation Initiatives ........................ 54
•Social Contribution Activities ..................................... 58
•Human Resources .................................................... 62
•Financial Section and Corporate Data ....................... 69

Financial Section ...................................................................... 70
Corporate Data ........................................................................ 211

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This material contains “forward-looking statements” (as defined in
the U.S. Private Securities Litigation Reform Act of 1995), regarding
the intent, belief or current expectations of us and our managements
with respect to our future financial condition and results of operations.
In many cases but not all, these statements contain words such as
“anticipate,” “estimate,” “expect,” “intend,” “may,” “plan,” “probability,”
“risk,” “project,” “should,” “seek,” “target” and similar expressions.
Such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and actual results
may differ from those expressed in or implied by such forward-looking
statements contained or deemed to be contained herein. The risks
and uncertainties which may affect future performance include the
fragility of any economic recovery, both globally and in Japan; our
ability to successfully implement its business and capital strategy; the
success of our business alliances including those in the consumer
finance industry; exposure to new risks as we expand the scope of
our business; significant credit-related costs; declines in the value of
our securities portfolio. Given these and other risks and uncertainties,
you should not place undue reliance on forward-looking statements,
which speak only as of the date of this material. We undertake no
obligation to update or revise any forward-looking statements.

Please refer to our most recent disclosure documents such as

our annual report or the registration statement on Form 20-F filed
with the U.S. Securities and Exchange Commission, as well as our
earnings press release for a more detailed description of the risks and
uncertainties that may affect our financial conditions, our operating
results, and investors’ decisions.

September 2011

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 2011 1

Message from Top Management

We extend our deepest sympathies and heartfelt condolences to all those who have suffered and the families and

friends of those who tragically lost their lives in the Great East Japan Earthquake which struck Northeastern Japan

in March 2011. We pray for the earliest recovery for the affected people and areas.

We would like to thank all of our stakeholders for your continued support and patronage.

We, Koichi Miyata and Takeshi Kunibe, succeeded the management in April 2011, and assumed the positions

of President of Sumitomo Mitsui Financial Group and President and CEO of Sumitomo Mitsui Banking Corporation,

respectively. In this annual report, we would like to present our initiatives implemented in fiscal 2010 and our

management policies going forward.

Principal Initiatives in Fiscal 2010

earnings of consolidated subsidiaries such as Kansai Urban

Banking Corporation and Cedyna.

In fiscal 2010, we implemented our initiatives to secure a resilient

Also, in order to achieve medium- to long-term growth, we

capital base and enhance our business portfolio in order to achieve

made steady progress in strengthening our focused business areas

sustainable growth in accordance with the following two manage-

by enhancing collaboration between SMBC’s domestic and overseas

ment policies: 1) “forward looking” — transforming our business

branches, expanding our overseas channel network especially in

model to grow steadily under a new regulatory and competitive

Asia, strengthening alliances with major local banks, and improving

environment, and 2) emphasizing return on risks and costs in order

capabilities of SMBC Nikko Securities. To accelerate our business

to improve our asset quality and thoroughly control expenses and

development as a global player, we listed on the New York Stock

credit costs.

Exchange in November 2010.

SMFG’s consolidated ordinary profit increased by ¥266.7 billion

to ¥825.4 billion and net income increased by ¥204.3 billion to

¥475.9 billion. This significant increase was due mainly to:

- an increase in SMBC’s banking profit due to an increase in gains

on sale of bonds by successfully managing interest-rate fluctuation,

Management Policies Going Forward
—Overview of the Medium-term Management Plan—

- a decrease in total credit cost as a result of tailored efforts to assist

In May 2011, we launched our medium-term management plan

clients to improve their businesses and financial condition, and,

starting from fiscal 2011 and ending in 2013, for the first three years

- an earnings contribution of SMBC Nikko Securities (for-

of the second decade of our business operations; our group was

merly Nikko Cordial Securities), in addition to the improved

originally formed at the establishment of SMBC in 2001.

I sincerely believe that my mission as President of SMFG is to orchestrate the

group in its next stage of development by further strengthening cooperation

among our group companies and improving our ability to act with speed, leverag-

ing our existing business platform and corporate infrastructure we have created as

a leading financial services group.

We, the SMFG group, strive to enhance our capabilities to comprehensively

provide our clients with diverse and sophisticated financial products and services,

including broker/dealer services in addition to our core commercial banking

services.

Koichi Miyata
President
Sumitomo Mitsui Financial Group, Inc.

SMFG 2011

Enhance risk-return profile
by improving asset quality

Aim for top-level cost efficiency
among global players

SMFG’s consolidated
net income RORA (SMFG):

approx. 0.8%

SMFG’s consolidated overhead ratio:
50-55%
SMBC’s non-consolidated overhead ratio: 45-50%

Profitability

Steady
improvement

Financial soundness

Growth

Achieve sufficient Core Tier I ratio
as required for a global player

Expand overseas business by capturing growing
business opportunities especially in Asia

Core Tier I ratio:

approx. 8%

Overseas banking profit ratio:

approx. 30%

* The figures in the chart are targeted goals for fiscal 2013.
Core Tier I ratio: Calculated based on the definition under Basel III in 2019; all regulatory adjustments are deducted, excluding net unrealized
gains (losses) on other securities (SMFG consolidated).
Overseas banking profit ratio: Managerial accounting basis.

In order to implement our new medium-term management plan,

Having that in mind, we will strive to further accommodate our

first of all, we will proactively strive to facilitate our financial intermedi-

clients’ financial needs in a timely and effective manner in Japan,

ary services to fulfill our corporate social responsibility as a leading

our geographic original domain, and establish a globally competitive

financial services group in Japan, which is faced with unprecedented

business platform, financial base and corporate infrastructure by

difficult challenges resulting from the Great East Japan Earthquake

focusing on our five strategic business areas, while addressing new

last March. We firmly support Japan’s reconstruction financially, and

financial regulations and other issues.

are making every effort as a financial institution to put our economy

back on track for sustainable growth of the global economy.

My mission as President and CEO of SMBC is to move the company

forward quickly and steadily for the next level of growth, building on our

business franchise, capital foundation and sense of unity, which we have

created and strengthened in the first decade of our operations.

“Provide the most sophisticated products and services to our clients,”

“Act with global perspective” and “Constantly innovate, proactively

respond to the changes in business environment and stay ahead of the

times” — these are my principles for SMBC.

Takeshi Kunibe
President and CEO
Sumitomo Mitsui Banking Corporation

SMFG 2011 3

◎ Management Targets
For the first three years of the second decade of the SMBC and

◎ Strategic Initiatives
In order to achieve the aforementioned management and financial

SMFG group, we set two management targets in order to accom-

targets, we have designated the following five business areas as

plish our basic policy of becoming a globally competitive financial

critical strategic businesses for management:

services group with the highest trust of our clients and stakeholders

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

“Solution & Execution.” The first target is to achieve top quality in

strategic business areas, and the second target is to establish a solid

financial base and corporate infrastructure to be able to address the

new financial regulations and competitive business environment.

◎ Financial Targets
In order to appropriately address the strengthening of financial regu-

lations globally, we are required to focus further on enhancement of

risk-return and cost-return profiles and steadily expand bottom-line

profit. Therefore, we need to capture overseas business oppor-

tunities especially in rapidly growing Asian markets in addition to

sustaining and further strengthening our solid business operations

in Japan.

Having this in mind, we strive to achieve well-balanced and

steady improvement of “financial soundness,” “profitability” and

“growth,” and we have set the following four objectives for the next

three fiscal years:

• Financial consulting for individuals

• Solution providing for corporations

• Commercial banking in emerging markets, especially in Asia

• Broker-dealer/Investment banking

• Non-asset business such as payment & settlement services and

asset management

The growth of these business areas will be driven under two main

initiatives of pursuing “synergies between SMBC and SMBC Nikko

Securities” and “global expansion.” We will execute these initiatives

on a group-wide basis, and also establish a solid financial base and

corporate infrastructure that support these initiatives.

An “unpredictable,” “uncertain,” and “unstable” business environ-

ment still remains, due mainly to the diverse implications of the

Great East Japan Earthquake to the Japanese economy, as well

as fiscal deficits in the developed countries and soaring commodity

prices. Furthermore, the global strengthening of financial regula-

tions requires banks, in the private sector, to achieve more efficient

asset allocation, higher capital efficiency and more stringent liquidity

• Achieve sufficient Core Tier I ratio as required for a global player

management.

• Enhance risk-return profile by improving asset quality

On the other hand, business opportunities are expanding rapidly

• Aim for top-level cost efficiency among global players

in emerging countries especially in Asia, where financial needs are

• Expand overseas business by capturing growing business oppor-

increasing as their economies substantially grow and Japanese

tunities especially in Asia

companies are developing their businesses.

Against this backdrop, we will move forward responding

proactively and flexibly to the continuously evolving environment,

making every effort to increase our shareholders’ value and striving

to become a top-tier global financial services group.

SMFG 2011

Become a globally competitive financial services group with the highest trust

Basic policies

of our stakeholders by maximizing our strengths of

“Spirit of Innovation,” “Speed” and “Solution & Execution.”

Corporate slogan:
LEAD THE VALUE

Management plan for coming three years

Strongly support Japan’s reconstruction on the financial front

Medium-term management plan (fiscal 2011 - 2013)

M
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● Aim for top quality in strategic business areas

● Establish a financial base and corporate infrastructure strong enough to address

the new financial regulations and competitive environment

Fiscal
2013
targets

Core Tier I ratio:

approx. 8%

Consolidated net income RORA

approx. 0.8%

Consolidated overhead ratio

Overhead ratio

50-55%

45-50%

Overseas banking profit ratio

approx. 30%

Well-balanced and steady improvement of “financial soundness,” “profitability” and “growth”

● Achieve sufficient Core Tier I ratio as required for a global player

● Enhance risk-return profile by improving asset quality

● Aim for top-level cost efficiency among global players

● Expand overseas business by capturing growing business opportunities especially in Asia

Profitability

Steady
improvement

Key initiatives to achieve management and financial targets

Financial
soundness

Growth

S
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g
c
b
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s
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● Financial consulting for individuals

● Solution providing for corporations

● Commercial banking in emerging markets, especially in Asia

● Broker-dealer/Investment banking

● Non-asset business such as payment & settlement services and

asset management

C
o
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p
o
r
a
t
e
b
a
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e

● Strengthen group-wide management capabilities

● Strengthen corporate infrastructure to support

our global expansion

● Pursue efficient operation

Macroeconomic trends

Market trends

Global regulatory trends

Business environment

●

Continuing low growth rate in domes-
tic market and yen appreciation

Continuing high growth rates in emerg-
ing markets including Asia

Risks associated with fiscal deficits in
developed countries and inflation in
emerging countries

●

Decreasing financing needs in domes-
tic market and accelerating global
expansion by Japanese corporations

Increasing financial needs in over-
seas markets, especially in emerging
countries

Changing investment and borrow-
ing practices of individuals as a result
of an aging population in domestic
market

●

Implementation of new capital regula-
tions (Basel III)

Proposals for additional capital require-
ments for “Systematically Important
Financial Institutions”

SMFG 2011 5

◎ Two main initiatives for strategic business areas

• Initiatives to pursue synergies between SMBC and SMBC Nikko Securities

SMBC Nikko Securities, which is the principal business operation

Specifically in the wholesale business, we are enhancing the

of our securities business, has been consistently earning profits

capabilities of SMBC Nikko Securities to accommodate the needs

from its established retail business and increasing its market share

of Japanese corporate clients for tapping into global capital markets

in the wholesale business. While strengthening its cross-sell with

and cross-boarder M&As by increasing its overseas staff, while

SMBC, SMBC Nikko Securities has fortified its wholesale business

improving its sales and trading capabilities for institutional investors

by installing a market transaction system, enhancing its equity sales

in Japan, other Asian countries, the U.S. and Europe.

capabilities targeting institutional investors by establishing the Equity

Concurrently, we are accelerating the alignment of SMBC

Research Division and developing its overseas operations by com-

and SMBC Nikko Securities through the redeployment of human

mencing business operations in London, New York, Hong Kong and

resources and greater collaboration, in order to respond to the grow-

Shanghai.

ing and diversifying need for wealth management of Japanese indi-

We will continue to strengthen the wholesale capabilities of

vidual clients and provide advanced financial solutions for Japanese

SMBC Nikko Securities and promote its cooperation with other

corporate clients. We strive to further strengthen our solid business

group companies including SMBC.

operations in Japan by implementing these initiatives.

Strengthen wholesale securities business of SMBC Nikko Securities

● Increase overseas personnel and business operations
✔ Global offerings
✔ Cross-border M&As, etc.
● Strengthen sales and trading capabilities for institutional investors in Japan,

other Asia countries, the U.S. and Europe

Strengthen cross-sell among SMBC Nikko Securities, SMBC and other group companies

Meeting clients’
diversifying needs

• Initiatives for global expansion

Our competitors of top-tier financial institutions develop their

Through such initiatives, we strive to increase our overseas

business operations globally, while sustaining their solid business

banking profit ratio to 30% in fiscal 2013 from 23% in fiscal

operations in their home countries. We similarly strive to develop a

2010 and grow our banking profits in Asia by 50% in fiscal 2013

platform for achieving top quality in commercial banking operations

compared with fiscal 2010.

in emerging markets mainly in Asia where higher growth is expected

to capture expanding business opportunities, while sustaining and

further strengthening our solid business operations in Japan.

Specifically, we are strengthening our business operations by

enhancing our channel network and allocating human resources

focusing on Asia. We will also proactively respond to the needs for

(JPY bn)
150.0

■ Banking profit at the International Banking Unit* (left)
■ Overseas banking profit ratio (right)

30%

23%

deposits, foreign exchange and other services related to payment

100.0

and settlement which are expected to grow in emerging countries

experiencing high economic growth and to the increasing demand

for infrastructure financing in emerging countries. We are also

expanding the collaboration of business operations and redeploy-

ment of human resources between SMBC’s domestic and overseas

offices in order to effectively and quickly accommodate the needs of

our corporate clients in Japan for their global business expansion.

50.0

Fiscal
2004

2005

2006

2007

2008

2009

2010

2013

*Managerial accounting basis.
Sum of SMBC and its overseas subsidiaries.

SMFG 2011

30%

20%

10%

◎ Establish a solid financial base and corporate

infrastructure

Meanwhile, our basic policy on returns to shareholders is to

increase returns consistently and continuously through the sustain-

Our group has been rapidly expanding our business operations as

able growth of enterprise value, by sustaining a consolidated payout

each group company has been growing to become a major player in

ratio of over 20%, while prudently managing the level of retained

its business area and we have increased the number of group com-

earnings to maintain our financial soundness in view of the public

panies through acquisitions, including SMBC Nikko Securities. Also,

nature of banking business operations.

in order to meet the global strengthening of financial regulations, we

In order to achieve these two goals, we will proactively allocate

are required to focus further on the enhancement of our risk-return

risk-adjusted assets into strategic business areas while controlling

and cost-return profiles and steadily expand our bottom-line profit.

aggregate volume of risk-adjusted assets by reducing low-yielding

Therefore, we will strengthen our group management capabilities

assets, and strengthen our capital base by consistently accumulat-

including risk management, control consolidated overhead ratio at

ing retained earnings. We will consider any increases of shareholders

50-55% and develop human resources required for global business

returns, by taking into account the level of our regulatory capital,

expansions.

payout ratio and dividends.

◎ Capital Policy and Returns for Shareholders
In the medium-term management plan, we have set a management

goal to achieve Core Tier I ratio* of approximately 8% on March

We shall sincerely and faithfully pursue these initiatives to meet

the expectations of our stakeholders.

31, 2014. This means that we will strive to achieve a capital ratio

September 2011

of approximately 1% higher than the Basel III required level of 7%

by five years earlier than the Basel III full implementation deadline of

March 2019.

* Calculated based on the definition under Basel III in 2019; all regulatory
adjustments are deducted from Common Equity Tier I, excluding net unreal-
ized gains (losses) on other securities (SMFG consolidated).

◎ Group Structure*

Sumitomo Mitsui Financial Group

Consolidated total assets

¥138 trillion

Consolidated Tier I ratio

12.47%

100%

SUMITOMO MITSUI Banking Corporation

Sumitomo Mitsui Banking Corporation

Total assets

Deposits

Loans

¥115 trillion

¥74 trillion

¥55 trillion

Number of retail accounts

approx. 26 million

Number of corporate loan clients

approx. 119,000

* As of Jun. 30, 2011 for shareholding ratio and as of Mar. 31, 2011 for other figures.

60%

100%

22%

51%

Koichi Miyata
President
Sumitomo Mitsui
Financial Group, Inc.

Takeshi Kunibe
President and CEO
Sumitomo Mitsui
Banking Corporation

Sumitomo Mitsui Finance and Leasing

Japan Research Institute

Became a wholly-owned subsidiary (Oct. 2009)

SMBC Nikko Securities

40%

(Leasing)

Sumitomo
Corporation

(System engineering and
management consulting, etc.)

(Securities)

(Credit card)

34%

Sumitomo Mitsui Card

NTT DOCOMO

Became a wholly-owned subsidiary (May 2011)
Cedyna

SMBC Friend Securities

SMFG Card & Credit

66%

100%

Promise

Became a consolidated subsidiary (Jul. 2009)

(Consumer finance)

ORIX Credit Corporation

SMFG 2011 7

Business Overview

■ Consumer Banking

SMFG Group companies are enhancing their financial services
for clients. Some of SMBC’s noteworthy achievements in
this area for fiscal 2010 are investment trusts outstanding of
¥2.725 trillion (as of March 31, 2011); foreign bonds and yen-
denominated bond sales of ¥198 billion; pension-type insurance
sales of ¥192.1 billion; single premium whole life insurance sales
of ¥200.5 billion; and housing loans outstanding of ¥14.4908
trillion (as of March 31, 2011).

Financial Consulting Business

In fiscal 2010, SMBC continued to
enhance its product line up of invest-
ment trusts, pension-type insurance,
life insurance and other financial
products.

For investment trusts, the bank
has expanded its product range to
include funds which invest in emerg-
ing market sovereign bonds and
corporate bonds, funds which invest
mainly in bonds issued by worldwide
public utilities companies, and
Australian dollar-denominated foreign investment trusts which
invest in international high-yield bonds.

SMBC increased its number of
funds to a total of 33 (as of March
31, 2011) for transactions avail-
able exclusively on the Internet and
mobile phones; this particular service
was launched in October 2009. The
bank also conducted its time-limited
campaign of charging no load and
discounts on sales commissions, and
cash back campaigns to clients.

As for insurance products, we
respond to our clients’ needs by selling
level-premium life insurance products at all branches in Japan
and enabling those clients having difficulties coming down to
our branch during regular banking hours to request information
materials and application forms through ATMs (started from
August 2010) and the Internet (started from February 2011).
In addition, the bank began offering four new types of over-
the-counter products:
1) pension-type insur-
ance which switches
to a stable investment
strategy after securing
the targeted profit;
2) a whole-life policy,
of which the insured
increases
amount

ATM screen

SMFG 2011

proportionally to fund performance while guaranteeing a
minimum death coverage; 3) whole-life insurance with an option
enabling conversion to medical or nursing-care insurance; and
4) whole-life insurance with added-coverage for cancer surger-
ies and hospitalization.

As for Japanese government
bonds for individuals, SMBC started
offering three-year maturity products
in June 2010 in addition to our existing
five- and ten-year maturity products.
We continue to offer a wide
range of foreign-currency and yen-
denominated bonds appropriate
for our clients’ needs. In April 2010,
SMBC began financial instruments
intermediary services for individuals as
an agent of SMBC Nikko Securities, in addition to SMBC Friend
Securities. In January 2011, the operations of SMBC Friend
Securities related to SMBC’s financial instruments intermediary
and other services were integrated into those of SMBC Nikko
Securities.
We believe that it is important to support and follow up our
clients even after they have purchased our products. As part of
our fulfilling this commitment, we take numerous measures to
keep clients up-to-date with new developments — by having
seminars regarding funds performances, monthly issuances
of special market reports, and mailing of financial statements
detailing assets performance.

Loan Business
We develop new products and services to enable us to respond to
the diversified needs of our clients. For instance, our housing loan
with insurance for major serious illnesses had an outstanding loan
balance of ¥1,750 billion, as of March 31, 2011.

In September 2010, SMBC began accepting accelerated
full-sum repayments of housing loans through the SMBC Direct
online banking service. With this service, over-the-counter
procedures can now be completed at home or other remote
locations. This service significantly contributed to maximizing
convenience for our clients.

Consequently, we are accommodating the diverse needs
of our housing loan clients via the Internet along with existing
services for partial early repayment and the option to change the
interest rate to either floating or fixed rates.

Following the enactment of the “Act Concerning Temporary
Measures to Facilitate Financing for Small and Medium-Sized
Enterprises, etc.,” we appointed specialists to provide consulta-
tions and assistance with clients having difficulties in repaying
their mortgage at all bank branches as well as at the nine special
Loan Support Offices located nationwide.
We will continue to provide more personalized and expe-
dited support and services for such clients.

Settlement and Consumer
Finance Business
In March 2011, we began offering a
new service “SMBC First Pack Debut,”
which was especially designed for stu-
dents between the ages of 18 and 23,
under our settlement service platform
of “SMBC First Pack.” When students
make automatic bill payments for their
mobile phones using the account reg-
istered with the service, they are not
charged in the month following the next month, for after busi-
ness hours service fees for ATMs located at domestic branches
and @BΛNK ATMs installed at convenience stores and other
locations. Such services are designed specifically for the needs
and lifestyle of students.

The iD* credit service, which was created as a result of the
strategic alliance of SMFG and NTT DoCoMo, Inc., continues to
further evolve. As of March 31, 2011, there were approximately
15.84 million subscribers for this service and approximately
510,000 terminals for such credit services installed on the prem-
ises of affiliated merchants.

* “iD” is a trademark of NTT DoCoMo, Inc.

As of the end of March 2011, there were 719 automatic
contract machines for our consumer finance business with
Promise Co., Ltd., and the outstanding balance of card loans
made by the bank and guaranteed by Promise was approxi-
mately ¥340 billion. At-Loan Co., Ltd., the former business part-
ner for this affiliation was absorbed and merged into Promise in
April 2011, as part of a reorganization plan.

Transaction Channels
For SMBC Direct online banking services, we are constantly
adding highly advanced services to meet our clients’ needs to
improve convenience and reinforce security. In November 2010,
we launched an online overseas remittance service for individual
clients through SMBC Direct, improving the service previously
offered only at our branches. This is another way for us to better
accommodate our clients by simplifying the procedures, increas-
ing their choices and maximizing convenience. As of March 31,
2011, there were approximately 10.86 million registered clients.

Our call centers located in Tokyo, Kobe and Fukuoka for
our retail clients also take calls from our retail online clients who
prefer to speak with our staff on important issues. The operation
of these three call centers enhances our services by offering
telephone consultations for inquiries on asset management or
loans, as well as any information related to our financial services
to provide the type of services best accommodated to the life-
style and needs of our clients.

Topics

◆ Joint Business Operations of SMBC and SMBC

Nikko Securities

SMBC Nikko Securities became a wholly-owned subsidiary
of SMBC on October 1, 2009, the milestone event which has
further enhanced our Group to be able to offer our clients
more competitive products and services.

Since October 2009, SMBC has been working with
SMBC Nikko Securities to offer investment trust products,
organize seminars, and provide financial instruments interme-
diary services for our individual clients.

In April 2010, SMBC began financial instruments inter-
mediary services for individuals as an agent of SMBC Nikko
Securities, in addition to SMBC Friend Securities. In June
2010, SMBC expanded the services’ portfolio to include
structured bonds, and started to offer a single premium whole
life insurance with variable benefit, jointly developed for the
first time with SMBC Nikko Securities for over-the-counter
sales. In October 2010, SMBC Nikko Securities also became
SMBC’s banking agent. Further, in January 2011, the opera-
tions of SMBC Friend Securities related to the financial instru-
ments intermediary and other services were integrated into
those of SMBC Nikko Securities. We continue to proactively
develop both our banking and securities businesses.

A seminar jointly held with SMBC Nikko Securities

An SMBC ATM installed at SMBC Nikko Securities’
Sendai Branch

SMFG 2011 9

■ Corporate Banking

Improving Products and Services for
Mid-sized Companies and SMEs
•Initiatives to facilitate financing
SMBC believes that facilitating the efficient supply of funds to
its clients is one of its main social responsibilities as a financial
institution. We are making our best efforts, under increasingly
difficult global financial conditions, to proactively facilitate financ-
ing appropriate to the needs of our mid-sized and SME cor-
porate clients. SMBC established its Middle Market Facilitating
Financing Department in December 2009 under the Planning
Department of the Corporate Banking Unit.
We will continue to implement initiatives to identify the con-
stantly changing needs and issues of our corporate clients, and
offer customized products and services in order to support their
business development.
•Environmentally friendly products and services
In order to respond to society’s greater demand for the envi-
ronmental commitments of our clients including not only major
companies but also mid-sized companies and SMEs, SMBC
has been augmenting its loan products with environmental
incentives, creating an environmental business information sec-
tion under the bank’s homepage, and offering seminars. The
cumulative total of such loans provided was approximately ¥350
billion as of March 31, 2011.

Furthermore, our environmental initiatives have been publicly
recognized. We received the “2009 Nikkei Superior Products
and Services Award” in January 2010, and the “Grand Prize by
the Ministry of Environment” at “the 7th Eco-Products Awards”
in November 2010, for our “SMBC Environmental Assessment
Loan/Private Placement Bonds.”

•Information services
SMBC has been strengthening its internal systems for business-
matching, resulting in a dramatic increase in the number of busi-
ness meetings we have arranged between possible partners. In
particular, in our “all-in-one matching” program, which simulta-
neously matches a substantial number of our corporate clients
with the purchasing departments of major corporations, we
have enhanced our corporate client information database. This
enables us to supply our corporate clients with more information
on the purchasing needs of major corporations.
We also held the SMFG Environmental Business Forum in
December 2010 which formed a part of “Eco-Products 2010” in
Tokyo Big Sight, for the promotion of environmental businesses.
At this annual event, we arranged approximately 670 business
meetings to match the increasing environmental procurement

needs of major corporations with
the growing needs of SMEs for new
distribution channels.

At this event, our Group compa-
nies exhibited diverse environmental
solutions, and also held panel dis-
cussions and provided environmental
information.

Furthermore,

the bank and
SMBC Nikko Securities installed the
“IPO Navigator” in July 2010, an
online information service offered for
free of charge to registered clients
considering an IPO. Information nec-
essary for an IPO is provided by the
platform, of which the contents are
supplied by nine advisory companies
and two sponsor companies. During
its six months of operation, more
than 260 companies have registered
with this program. SMBC and SMBC
Nikko Securities continue to support
our clients planning for an IPO.

Enhancing Services for Globalizing
Corporations
An increasing number of our corporate clients are expanding
their businesses overseas, and are faced with the growing need
to address such issues as differences in business practices;
cultures; legal, accounting, and taxation systems, the interpreta-
tion of these systems; as well as funding.

SMBC established its Global Advisory Department (GAD)
to specifically assist the development of solutions for the cross-
border issues of globally expanding clients. GAD works to
further strengthen our domestic and overseas support for the
overseas business operations of such companies.
We provide overseas business-related seminars on Brazil
and global issues, not limited to China or other Asian markets,
and also provide the latest overseas economic or market infor-
mation, including local conditions, details of regulations, industry
trends, and other relevant issues, for our clients considering to
newly develop their businesses overseas; and we also provide
high quality support and solutions for the needs of our clients
who have already established their business operations over-
seas, including business development and reorganization. We
are constantly enhancing our system to support the globalization
of our clients’ businesses.

Strengthening Measures for Greater China
As the economic integration continues in Greater China (PRC,
Hong Kong and Taiwan), inter-company trading and funding
have been actively increasing. A substantial number of Japanese
companies have expanded business into China, and it is antici-
pated that this entry and expansion by such companies into the

SMFG 2011

growing Chinese market will further accelerate in the foreseeable
future.

In order to more effectively meet the needs of such clients
whose business straddles the Japanese and Chinese markets,
in fiscal 2010, SMBC transferred its business responsibilities
for the planning, promotion, and management of transactions
between its Chinese subsidiary of Sumitomo Mitsui Banking
Corporations (China) Limited and Japanese corporate clients
from the International Banking Unit to the Corporate Banking
Unit. The same was done for the Hong Kong and Taipei
branches in fiscal 2011.

The Shenzhen Branch of Sumitomo Mitsui Banking
Corporation (China) Limited began its business operations on
May 20, 2011. Under the Group network, including branches in
Hong Kong and Guangzhou, we are strengthening our support
for our clients’ businesses in southern China.

In banking operations, we established a “Fund for
Supporting Companies Expanding their Business Operations in
China” in cooperation with Chinese companies in fiscal 2010.
The fund provides for equity and other types of investments for
Japanese companies expanding their businesses into China.
We also support such Japanese companies in Japan and China
by providing them with necessary assistance and support for
the globalization of their businesses. We continue to compre-
hensively provide our customized services to our clients by
supporting their head offices in Japan and business operations
in China.

Enhanced Initiatives for the Public and
Financial Sectors
As our Japanese economy continuously evolves, the responsibil-
ities of local government and financial institutions are becoming
more sophisticated and diversified. We believe that an exten-
sive international network, and accurate and timely collection
of information are necessary for supporting regional industrial
promotion, attracting companies, building social infrastructure,
creating environmental measures, and supporting local compa-
nies expanding their businesses into overseas markets.

In order to respond to the needs of our clients, the Group
provides diverse services by using its networks in Japan and
overseas, while pursuing alliances with local government agen-
cies and financial institutions. We executed an alliance agree-
ment with the city of Kita-Kyushu in June 2011 for the industrial
promotion of Kita-Kyushu, which strategically plans to further
develop its growing industries. Since fiscal 2010, we have also
established operational alliances with the Kansai Urban Banking
Corporation, Mie Bank, Ltd. and four other banks to better
support companies expanding their businesses into overseas
markets.

Our bank Group also offers diverse services for public ben-
efit corporations which are faced with the need to modify their
business or financial strategies due to the recent amendments
to regulations governing such corporations.

Our initiatives for the current fiscal year are focused on

supporting local public corporations that have incurred sub-
stantial damage due to the Great East Japan Earthquake for
their recovery, in accordance with the recovery plan submitted
by each prefecture, including Miyagi Prefecture, with which
we executed a Cooperative Agreement for the Promotion of
Industry in fiscal 2008.

Topics

◆ IPO Seminars
SMBC and SMBC Nikko Securities jointly held their first
“IPO Seminar” in February 2011. The seminar was held for
IPO Navigator members with speakers from SMBC Nikko
Securities and the Japan Research Institute. It was extremely
successful and attended by approximately 120 members
mostly from eastern Japan. We also held our second seminar
in Osaka in July 2011 especially
for our clients in western Japan,
in order to continue supporting
our clients who are planning for
IPO by providing them with high-
quality information and content.

IPO seminar

◆ Launching of the “SMBC Food and Agricultural

Assessment Loan”

SMBC has launched its “SMBC Food and Agricultural
Assessment Loan,” a type of loan which offers favorable
terms and conditions based on the assessment results of
surveys and interviews on the level of contributions made
by the borrower in the areas of food or agricultural improve-
ments, in accordance with the assessment standards set
forth by the Japan Research Institute. We approved our first
such loan to Asahi Breweries, Ltd., who contributed to the
designing of the loan by giving us their opinions.

SMBC will continue to support initiatives for “improve-
ments of eating habits” and the “development of the agricul-
tural, forestry and fisheries industries” in Japan by providing
the “SMBC Food and Agricultural Assessment Loan.”

Assessment explanation and
discussion

Loan Certificate awarded to Asahi Breweries, Ltd.

SMFG 2011 11

■ Services for High Networth Individuals,
Business Owners and Employees

allocation and management. It strives to provide diverse asset
management services and, established a joint-venture business
in June 2010.

Topics

◆ Joint-venture businesses within our asset man-

agement services

SMBC, SMBC Nikko Securities and Barclays PLC estab-
lished “SMBC Barclays Wealth Division” within SMBC Nikko
Securities to provide new asset management services
leveraging the knowledge of Barclays Wealth, known for its
leading global private banking services.

The purposes of this joint-venture business are for
expanding our product portfolio, improving research skills,
and meeting the need for high
quality asset management pro-
posals for business owners and
high networth individuals. We
experimentally began offering the
services in some of our branches
in June 2010, and will roll out
these services at all branches
in Japan during the fiscal year
ending March 31, 2012, in order
to assist as many clients as
possible.

Life Planning Support for Employees
The management environment for SMBC’s corporate clients is
undergoing dramatic changes, as the life planning needs of their
employees are becoming diversified.

In responding to the challenges presented by such changes
for our corporate clients’ personnel matters and financial strate-
gies, PAD utilizes the diverse financial products and services
offered by SMBC to support our corporate clients by creating
employee financial benefit programs and defined-contribution
pension plans.

Furthermore, the SMBC products and services are offered
to employees, through their employers, in an effort to achieve
their financial or other life planning goals.

Private Advisory Department
The Private Advisory Department (PAD) of SMBC specializes
in products and services which meet the diverse requirements
of business owners and high networth individuals. Activities of
this department cover three types of business operations as
follows. One such business operation is the business and asset
transfer for which we offer our services based on our extensive
knowledge and experience accumulated over the years, and the
additional expertise provided by alliance partners such as major
tax accounting firms. The second business is the private bank-
ing services which provide comprehensive financial services for
managing our clients’ financial assets. The third business is the
workplace banking services that support the HR strategies of
our corporate clients. This particular business provides assis-
tance for designing the employee savings and other employee
financial benefit programs, and defined-contribution pension
plans.

PAD consistently provides diverse products and services
for both individuals and corporate clients by working with other
SMBC Group companies and alliance partners.

High-net-worth individuals

Customers
Business owners

Heads of wealthy families

Sumitomo Mitsui Financial Group

Sumitomo Mitsui Banking Corporation

Corporate Business Office

Branches

Private Advisory Department

Business
growth
needs

Business
succession
needs

Asset
succession
needs

Financial benefit
program needs

Revised
defined-contribution
pension plan needs

Support from specialized
units of SMBC

SMBC Nikko Securities
SMBC Barclays Wealth Division

SMFG companies

Outside specialists (major tax accounting firms and other professionals)

Barclays PLC

Support for Business and Asset Transfers
PAD specialists prepare customized proposals for business
owners concerned about their business and asset transfers.
Our customized and diverse consulting services cover various
matters for both individuals and companies. We offer a variety of
seminars to provide our clients with up-to-date information and
advice.

Private Banking
PAD offers comprehensive financial advisory services for our cli-
ents’ financial assets by truly understanding their financial goals
and providing appropriate advice for their risk profiles. Based on
discussions on their goals, it prepares proposals for their asset

SMFG 2011

■ Investment Banking

Topics

◆ Expansion of Securities Businesses in Overseas

Markets

The SMBC’s subsidiaries, SMBC Nikko Capital Markets
Limited (UK) and SMBC Nikko Securities America, Inc. (US),
have begun and are expanding their securities business
operations in London and New York, respectively. SMBC
Nikko Securities’ wholly owned subsidiaries in Hong Kong
and Shanghai also commenced securities business and M&A
advisory service operations in January 2011.

June 30, 2011

◆Environmental Business
SMBC established its Environmental Products Department
in October 2007 to promote its environmental businesses.
It also developed a cross-organizational “Growing Industrial
Cluster*1 Project Team” in July 2010 to promote businesses
associated with four growing industrial sectors. It cross-
organizationally promotes efforts aimed at expanding, identi-
fying and creating mid- to long-term business opportunities
for our clients by cooperating with industries, government
and universities, and collecting information from the domestic
and international networks.

As a result of these measures, a CDM*2 project, which
we supported in Singapore for the trading of emission credits,
became the country’s first such large project to be registered
by the United Nations, and we provided financing by utiliz-
ing the Nippon Export and Investment Insurance (“NEXI”) for
Vietnam’s first hydroelectric power generation business by the
private sector. These initiatives contributed to our nomination
for the award of “Sustainable Bank of the Year 2011 (Cross-
Regional category),” organized by the Financial Times and the
International Finance Corporation.
*1 The four growing industrial sectors are: the “Environment,” “New

Energy,” “Water” and “Natural Resources.”

*2 “Clean Development Mechanism”

SMFG consolidates the resources from the Investment Banking
Unit of SMBC and SMBC Nikko Securities and other Group
companies to assist its clients with their business develop-
ment and enhancement of their corporate value by providing
optimized solutions for the needs of its clients in areas such as
fund-raising and asset management, M&A, risk-hedging, and
payment and settlement.

As the businesses of our corporate clients become further
globalized and the number of investors increases, SMBC Nikko
Securities has began its operations of M&A advisory services,
underwriting bonds and brokerage services (for Japanese
stocks) at its overseas offices. We plan to further globalize our
operations, and respond appropriately and timely to the sophis-
ticated financial needs of our clients.

Collaboration with SMBC Nikko Securities
As of April 1, 2011, Nikko Cordial Securities, which became
a wholly owned subsidiary of SMBC on October 1, 2009,
changed its corporate name to SMBC Nikko Securities Inc. As
the core securities firm for the Group, it has expanded its retail
and wholesale businesses by closely working with SMBC.

In the league tables published by Thomson Reuters for fiscal
2010, SMFG was ranked fourth in the M&A advisory services
category for publicly announced mergers involving Japanese
companies with a market share of 19.2%. We placed fifth for
underwriting amount for the “Japanese Corporate Bonds”
category (market share of 16.6%). We continue to strengthen
the cooperation between SMBC Nikko Securities and SMBC
and to respond to the diverse needs of our clients for raising
capital from the market, cross-border M&A transactions and
securitization.

Number of referrals by SMBC to SMBC Nikko
Securities

1,000

■ Investment Management ■ Investment banking businesses

800

600

400

200

2009
Oct.-Dec.

2010
Jan.-Mar.

2010
Apr.-Jun.

2010
Jul.-Sept.

2010
Oct.-Dec.

2011
Jan.-Mar.

Underwriting amount for
“Japanese Corporate Bonds” Market share*

SMBC Nikko Securities

16.6%

6.2%

1st

FY2009

FY2010

Fiscal 2013 (Target)

*Source: Thomson Reuters
Underwriting amount for “Japanese Corporate Bonds”
Information contained in this document for the period prior to September 2009 is
based on the information provided by the former Nikko Cordial Securities Inc.

SMFG 2011 13

■ International Banking

SMFG offers value-added services to its clients (corporations,

financial institutions, governmental organizations and public enti-

ties) operating globally by creating tailor-made solutions which

meet diverse local needs, mainly through SMBC’s International

Banking Unit.

SMBC has three regional headquarters: in Europe, the

United States and the Asia-Pacific region; and subsidiaries in

such emerging markets as China, Russia, Brazil and Malaysia.

Through this network, it has established a system which quickly

and flexibly responds to the diverse needs of each region. It

strives to become a global commercial bank which can exten-

sively demonstrate its strengths for the diverse business oppor-

tunities in the international market.

Expansion of Overseas Network
SMBC is working to expand its overseas network of branches

to improve their services for the Japanese companies and to

enhance their presence in emerging markets.

SMBC (China) opened two new branches and two new

sub-branches in the fiscal year 2010: Shenyang branch and

Shanghai (Pixi) Sub-branch in June and July 2010, respectively,

and Changshu Sub-branch and Shenzhen branch in January

and May 2011, respectively. The SMBC Group will use its net-

work in China, which consists of branches and offices in 15

locations, to enhance the quality of its financial services.

management subsidiary of Kotak Mahindra Bank* in India, for

the establishment of infrastructure funds in India.

SMBC continues to develop its banking networks and expand

Asian businesses in diversified ways by establishing alliances with

major local financial institutions in Asia.

* Kotak Mahindra Bank, with which we have established a capital and
operating alliance, is the core bank of the Kotak Mahindra Group.

Core IT System Upgrades
SMBC is pursuing its overseas business development and the

advancement of information processing and management sys-

tems in order to further support the global development of our

clients’ businesses. SMBC has upgraded the Asian accounting

system as part of its plan to promote the strengthening of its

overseas administrative system. Furthermore, it also works to

further advance client information and business management

systems.

Strengthening of Risk Management
SMBC is continuously enhancing its credit monitoring system

as part of its plan to reinforce its credit cost control system,

and it has also established specialized credit management

departments in Europe and the United States, in addition

to the International Credit Management and regional Credit

Departments.

Having established the Risk Management Department

Groups in Europe and the United States, it is building a com-

prehensive risk management system especially made for the

local markets.

Strengthening of Compliance System
As the global trend towards strengthening financial regulations

continue, and based on the understanding that it is essential

to further strengthen the compliance system as our business

grows, we are further focusing on enhancing the management

system by improving the collection and analysis of information

related to regulatory changes, and providing such management

resources as human resources.

Capital Strategies and Business Alliances with
Major Asian Financial Institutions
The alliance strategies in Asian countries are specifically planned

In responding to the strengthening of regulations related

to economic sanctions in each country, we continue to pursue

more sophisticated and efficient means to prevent money-

to take the advantage of the special attributes of each country

laundering and financing for terrorist activities.

and region. We plan to enhance our solutions such as expand-

ing our Asian currencies services for each region.

In December 2010, the bank executed a Memorandum of

Understanding on Mutual Business Cooperation with RHB Bank

Development of Professional Human Resources
Required for Overseas Business Growth
We are further improving our training and educational programs

Berhad, Malaysia’s fourth-largest bank by market capitalization

in order to respond appropriately and promptly to the increas-

(as of the end of March 2011), a strategic partner for around the

ingly diverse and highly sophisticated needs of our clients. To

last 30 years. The bank aims to further strengthen this alliance

gain international financial experience, we place our promising

relationship.

employees in our overseas offices or at the overseas special-

Additionally, in March 2011, the bank executed the

ized financial institutions outside of the Group. As SMBC’s first

Cooperative Agreement with Kotak Mahindra (UK) Ltd., an asset

attempt, it invited employees, including overseas national staff,

SMFG 2011

to attend intensive educational training in Tokyo. Furthermore,

We continue to improve the functions of i-Deal, a system

we continue to focus on the development of human resources in

which allows our clients to execute their foreign exchange

Asia, where our business continues to develop tremendously, by

transactions on the Internet. The Treasury Unit continues to fully

providing our national staff with seminars and e-learning programs

support our clients by meeting their market transactional needs

developed by the Asia Pacific Training Department, in order for

and offering the highest level of services in the industry.

them to be able to offer the best solutions for our clients.

Topics

◆Overseas Environmental Business Opportunities
SMBC is enhancing its initiatives for global environmental
businesses.

It has provided co-financing as the lead bank for the
commercial solar power generation business project which is
scheduled to start in the fiscal year 2014 in Spain. This financing
utilized the insurance system of Nippon Export and Investment
Insurance (“NEXI”), and was its first project to support Japanese
companies going overseas for the purpose of engaging in power
generation businesses utilizing renewable energies.

SMBC continues to strengthen its initiatives for renew-
able energy businesses, and to proactively promote the
development of overseas environmental businesses.

■ Treasury Markets

SMFG strives to offer increasingly high valued services to meet

more sophisticated and diverse needs of its clients for trans-

actions in the money, foreign exchange, bond and derivatives

markets through the Treasury Unit of SMBC. In order to maintain

and further enhance profitability while managing risks appro-

priately, the Treasury Unit focuses on the following three goals

of: (a) increasing volumes generated from clients’ transactions;

(b) strengthening its Asset-Liability Management (ALM) system

and trading skills; and (c) ensuring portfolio management of its

assets and liabilities.

More Solutions and Services for Clients’
Market Transactions
SMBC offers solutions appropriate for the market transactional

needs of its clients by working with branches to present to its

corporate clients with the proposals for such as hedging trans-

actions, reflecting the shifting trends in the financial markets.

ALM and Trading Operations
The Treasury Unit pursues to maximize its earnings through the

ALM and trading operations, while controlling the market and

liquidity risks, by searching for trends in the various financial

markets.

We strive to perform appropriate ALM and trading opera-

tions by responding to the changes in the financial market to

generate consistent earnings.

Customers

Corporate Business Offices, Branches

Treasury Unit

Planning Dept.

Treasury Marketing Dept.

Enhance customer convenience by improving our services

Planning and research

Transactions with customers

Customer order flow

Trading Dept.

Efficient operations
based on
order-initiated trades
and ALM hedging

Foreign exchange
transactions
Derivative
transactions
Bond
transactions
CD, CP
transactions

ALM
operations

Deposits
Loans
Bonds
Alternative
investments

Treasury Dept.
International
Treasury Dept.

Precise ALM
operations and
liquidity
management

Trading

ALM (Asset Liability Management)

Fund and bond transactions

Interbank Market

Topics

◆ Issuance of U.S. Dollar-denominated Straight

Bonds in the Global Markets

For the environmental changes in the foreseeable future, we
are taking measures to diversify the medium- to long-term
fund procurement channels. In January 2011, we again
issued the U.S. Dollar-denominated straight bonds in the
United States and other global markets, following the issu-
ance in 2010.
◆ Expanded Offerings of Currencies of Asia and

Other Emerging Markets

In order to meet our clients’ market transaction needs, we are
increasing our line-up of foreign currencies, mainly Asian and
also other emerging-market currencies. We are also com-
mitted to updating our clients with the information related to
the foreign exchange transactions by offering seminars con-
ducted by economists specialized in Asian financial markets.

SMFG 2011 15

Group Companies (as of March 31, 2011)

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
• To provide optimum added value to our customers

and together with them achieve growth

• To create sustainable shareholder value through

business growth

• To provide a challenging and professionally reward-
ing work environment for our dedicated employees

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
Act) and of non-bank subsidiaries, as well as the performance of ancillary functions
Establishment: December 2, 2002
Head Office: 1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan
Chairman of the Board: Masayuki Oku
President: Koichi Miyata
(Concurrent Director at Sumitomo Mitsui Banking Corporation)
(Appointed on April 1, 2011)
Capital: ¥2,337.8 billion (as of March 31, 2011)
Stock Exchange Listings:
Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
Note: American Depositary Receipts (ADRs) are listed on the New York Stock

Exchange.

SUMITOMO MITSUI Banking Corporation
SUMITOMO MITSUI Banking Corporation

www.smbc.co.jp/global/index.html

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 exper-
tise of strategic Group companies in specialized
areas. SMBC, as a core member of SMFG, works
together with other members of the Group to offer
customers highly sophisticated, comprehensive
financial services.

Company Name: Sumitomo Mitsui Banking Corporation
Business Profile: Banking
Establishment: June 6, 1996
Head Office: 1-2, Marunouchi 1-chome, Chiyoda-ku,

Tokyo, Japan

President and CEO: Takeshi Kunibe (Concurrent
Director at Sumitomo Mitsui
Financial Group)

Number of Employees: 22,524
Number of branches and other business locations:

Credit Ratings (as of June 30, 2011)

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–

In Japan:
1,547*
Branches:
493
(Including 38 specialized deposit account branches)
164
Sub-branches:
Banking agencies:
2
Offices handling non-banking business: 23
865
Automated service centers:
33
Overseas:
15
Branches:
7
Sub-branches:
11
Representative offices:

Financial Information (Consolidated basis, years ended March 31)

2011

Billions of yen
2009
2010

2008

For the Year:
Ordinary income .....
Ordinary profit .......
Net income (loss) ....
At Year-End:
Net assets...............
¥6,983.1
Total assets ............ 132,715.6

¥2,711.3
751.2
450.8

¥2,579.9
557.7
332.4

¥2,989.6
59.2
(317.3)

¥3,411.0
734.9
351.8

¥6,894.5
120,041.3

¥4,518.6
115,849.3

¥5,080.7
108,637.7

* The number of domestic branches excludes ATMs located at
the business sites of companies and at retail convenience stores.

SMFG CARD & CREDIT, INC.

SMFG Card & Credit, Inc. (“FGCC”) was estab-
lished in October 2008 as an intermediate holding
company of SMFG to hold shares of Sumitomo
Mitsui Card Co., Ltd., and Cedyna Financial
Corporation. FGCC is the core company respon-
sible for implementing SMFG’s credit card strat-
egy and establishing uniform business policies.
FGCC also creates a framework for promoting a
solid partnership between Sumitomo Mitsui Card
and Cedyna Financial Corporation, seeks to real-
ize economies of scale for the Group as a whole,
and maximizes top-line synergy by leveraging each
party’s strengths.

SMFG 2011

Company Name: SMFG Card & Credit, Inc.
Business Profile: Management of subsidiaries and affiliates
Establishment: October 1, 2008
Head Office: 1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan
President & CEO: Ikuhiko Morikawa (Appointed on April 1, 2011)
Number of Employees: 32

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
excellent 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
affluent consumer lifestyles and make further

dramatic advances as a leading brand in its
industry sector.

www.smbc-card.com
(Japanese only)

Company Name: Sumitomo Mitsui Card

Credit Ratings (as of June 30, 2011)

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: Hideo Shimada

Number of Employees: 2,300

(Appointed on June 29, 2011)

JCR

Long-term Short-term
J–1+

A+

Financial Information (Years ended March 31)

2011

Billions of yen
2009
2010

2008

For the Year:
Revenue from credit
card operations ........ ¥6,896.3
185.2
Operating revenue ......
Operating profit ..........
32.6
At Year-End:
Number of cardholders
(in thousands) ...........

20,770

¥6,209.0
183.5
24.3

¥5,858.6
180.1
22.2

¥5,375.2
168.3
16.8

20,504

18,655

16,406

www.cedyna.co.jp/english/

Cedyna Financial Corporation was formed in
April 2009 as a result of the merger of OMC
Card, Inc., Central Finance Co., Ltd. and
QUOQ Inc., consolidating their client bases,
marketing capabilities and expert knowledge.
As a member of the SMFG Group, it strives
to become “the number one credit card busi-
ness entity in Japan” by closely working with
Sumitomo Mitsui Card.
Concurrently, as a leading consumer
finance company, it also provides the highest
level of service for diverse consumer finan-
cial needs including credit cards, consumer
credit, and solution marketing.

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: 3,096

Credit Ratings (as of June 30, 2011)

JCR

Long-term Short-term
J–1

Financial Information (Years ended March 31)

2011

2010

Billions of yen
2009
OMC* CF*

QQ*

For the Year:
Operating revenue ......
Operating profit ..........
At Year-End:
Number of cardholders
(in thousands) ...........

¥203.2
0.8

¥223.9 ¥137.7 ¥80.6 ¥44.8
(5.2)

(40.8)

(1.4)

6.9

22,513

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 formed in October 2007
as a result of the merger of SMBC Leasing
Company, Limited and Sumisho Lease Co.,
Ltd. SMFL strives to become one of the top
leasing companies in Japan in terms of both
quantity and quality by consolidating and
leveraging the client portfolios and expert
knowledge of SMBC Leasing Company
based on the financial solution formulation
capabilities of the SMFG Group, and those
of Sumisho Lease Company based on its
industrial association with the Sumitomo
Corporation Group.
SMFL meets the diversifying needs of our
clients by providing high value-added ser-
vices that go beyond the conventional level

of leasing services, based on its decades of
combined experiences of the different back-
grounds and characteristics of the two com-
panies. SMFL strives to contribute to society
as a leading leasing company through quality
leasing operations.

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: Yoshinori Kawamura

(Appointed on June 29, 2011)

Number of Employees: 1,485

Credit Ratings (as of June 30, 2011)

R&I
JCR

Long-term Short-term
a–1
J–1+

A+
AA–

Financial Information (Years ended March 31)

2011

Billions of yen
2009
2010

2008

For the Year:
Leasing transaction
volume ....................
Operating revenue ....
Operating profit ........

¥800.8

¥733.6

¥895.8

¥1,054.1

812.8
50.2

894.7
43.8

947.6
36.4

708.4
36.2

SMFG 2011 17

The Japan Research Institute, Limited (JRI),
an intelligence engineering company, provides
high value-added information system, con-
sultation and think-tank services. In addition
to providing financial consultation services
on management reform, IT, the planning and
development of strategic information systems
and outsourcing, it also conducts diverse
activities including domestic and international
economic research and analysis, policy rec-
ommendations and business incubation.

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: 2,101

www.jri.co.jp/english/

Financial Information (Years ended March 31)

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

2011

¥84.8
1.5

Billions of yen
2009
2010

¥81.7
0.9

¥88.0
1.0

2008

¥88.1
3.8

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

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: 2,034

Financial Information (Years ended March 31)

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

2011

¥53.2
10.2

Billions of yen
2009
2010

¥67.4
22.7

¥43.2
2.3

2008

¥60.5
19.0

www.smbcnikko.co.jp/en

SMBC Nikko Securities strives to become
the leading securities and investment banking
company in Japan.

Company Name: SMBC Nikko Securities Inc.

(name changed on April 1, 2011)

Business Profile: Securities services
Establishment: June 15, 2009
Head Office: 3-1, Marunouchi 3-chome,

Chiyoda-ku, Tokyo
President & CEO: Eiji Watanabe
Number of Employees: 6,975

Credit Ratings (as of June 30, 2011)

Moody’s
Standard & Poor’s
R&I
JCR

Long-term Short-term
P–1
A–1
a–1
—

Aa3
A+
A+
AA–

Financial Information (Years ended March 31)

2011

For the Year:
Operating
revenue ......... ¥218.6
Operating
income ..........

38.5

Billions of yen
2010

2009
*3

¥85.6

¥104.9

¥164.1

20.9

23.5

19.6

*1 Formerly Nikko Cordial Securities (1H)
*2 Nikko Cordial Securities, June 2009 (expenses related

to preparatory costs prior to the start of operations were
posted during the period from June to September)

*3 Formerly Nikko Cordial Securities

SMBC Friend Securities Co., Ltd. is a secu-
rities company with one of the best financial
foundations and efficient operations in the
industry, and provides a full range of securi-
ties services focusing mainly on retail clients.
SMBC Friend Securities provides highly effi-
cient nationwide network operations offering
services closely tailored to the needs of its
clients and the communities while operating
a new business model of online financial con-
sulting services.
SMBC Friend Securities will continue to
develop consistently toward its goal of becom-
ing “one of the leading Japanese securities
companies in the retail securities market,”
offering high-quality products and services
accommodating the needs of its clients and
building trust for its clients.

SMBC Nikko Securities Inc. (formerly Nikko
Cordial Securities Inc.), which was established
in July 1918, has developed solid relation-
ships of trust with its corporate clients over
the last nine decades. It became a member
of the SMFG Group in October 2009, bring-
ing its accumulated knowledge and sub-
stantial client base to closely work with and
leverage the extensive service network and
business relations of SMBC. In April 2011,
its corporate name was changed to SMBC
Nikko Securities from Nikko Cordial Securities
in order to define its status as the principal
securities company of the Group. As such,
SMBC Nikko Securities provides comprehen-
sive and highly sophisticated financial services
by consistently working closely with SMBC in
order to pursue comprehensive securities and
investment banking businesses.

SMFG 2011

Financial Highlights

Sumitomo Mitsui Financial Group

◆ Consolidated

Year ended March 31
For the Year:

2011

2010

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

¥ 3,862,660
3,035,346
475,895
413,375

At Year-End:

¥ 7,132,073
137,803,098
1,646,369
1,058,945
370,899
61,555

Selected Ratios:

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

16.63%
9.76%
7.68x

Per Share (Yen):

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

¥3,533.47
336.85
336.78

¥ 3,184,688
2,626,590
271,559
—

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

15.02%
7.63%
12.44x

¥3,391.75
248.40
244.18

Millions of yen
2009

¥ 3,556,536
3,527,040
(373,456)
—

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

11.47%
—%
—x

¥2,790.27
(497.39)
—

2008

2007

¥ 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

¥ 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

¥424,546.01
59,298.24
56,657.41

¥469,228.59
57,085.83
51,494.17

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 24.
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. The consolidated capital ratio is 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.

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 ..............................................................................................................................................................
Net income .............................................................................................................................................................
Net income — diluted .............................................................................................................................................

2008
¥4,245.46
592.98
566.57

2007
¥4,692.29
570.86
514.94

Yen

SMFG 2011 19

◆ Nonconsolidated

Year ended March 31
For the Year:

2011

2010

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

¥ 222,217
206,865
24,467
191,539

¥4,842,914
6,237,655
77.64%
2,337,895

¥ 133,379
118,818
16,641
66,176

¥4,805,574
6,152,774
78.10%
2,337,895

Millions of yen
2009

¥ 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
192

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

70,001
1,414,055,625
183

103,401
789,080,477
167

Selected Ratios:

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

4.02%
19.68x
76.09%

1.59%
57.41x
213.41%

3.52%
28.79x
75.96%

2008

2007

¥ 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%

Per Share (Yen):

Net assets ....................................................................
Dividends:

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) ..........................
Net income ..................................................................
Net income — diluted .................................................

¥3,282.75

¥3,256.32

¥3,389.38

¥339,454.71

¥342,382.75

100
/
/
/
/
/
/
/
/
/
/
/
/
88,500
131.42
131.41

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

Notes: 1. All SMFG employees are on secondment assignment from SMBC, etc.

2. 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:

Yen

2008
¥3,394.55

2007
¥3,423.83

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

120
91.34
91.34

70
463.26
419.73

SMFG 2011

Sumitomo Mitsui Banking Corporation

◆ Consolidated

Year ended March 31
For the Year:

2011

2010

¥ 2,714,944
1,972,065
450,832
363,689

At Year-End:

¥ 6,983,132
132,715,674
1,529,587
943,077
305,968
48,219

Selected Ratios:

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

19.16%
8.42%

Per Share (Yen):

¥50,344.52
4,184.89
4,184.07

¥ 2,597,675
2,039,296
332,497
—

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

16.68%
8.64%

¥49,036.12
4,240.20
4,236.01

Millions of yen
2009

¥ 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)
—

2008

2007

¥ 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

¥ 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

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. The consolidated capital ratio is 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.

SMFG 2011 21

◆ 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:

Common stock ........................................................
Preferred stock (1st series Type 6) ..........................
Net income (loss) .........................................................
Net income — diluted .................................................

2011

2010

Millions of yen
2009

2008

2007

¥ 2,110,588
1,521,748
421,180

¥ 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

1,531,759
844,897

832,562
699,197

¥ 5,559,293
115,484,907
82,443,286
55,237,613
39,853,432
1,090,605

1,126,269
711,522
305,621
1,576,094
237,383
444,664
1,770,996

70
106,248
22,524

21.45%
7.87%
35.53%
45.6%

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%

¥50,317.86

¥48,799.31

¥41,404.62

¥58,204.22

¥67,124.90

1,388
88,500
3,905.80
—

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

Notes: 1. Please refer to page 169 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 29.

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. The nonconsolidated capital ratio is 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.

5. “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 2011

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, 2011.

1. Operating Results
Operating results for fiscal 2010 include the results of 327
consolidated subsidiaries and 47 subsidiaries and affiliates
accounted for by the equity method.

In fiscal 2010, net interest income decreased due mainly

to deterioration in interest margins on deposits and loans
resulting from lower interest rates in Japan. However, SMBC
increased gains on bonds by quickly responding to fluctua-
tions in market interest rates, and SMFG’s net fees and
commissions increased mainly because of an increase in
the number of consolidated subsidiaries. As a result, gross
profit increased by ¥268.0 billion year on year to ¥2,504.7

billion. After adjusting for general and administrative
expenses, credit cost, net losses on stocks, equity in losses
of affiliates and other items, ordinary profit increased by
¥266.6 billion year on year to ¥825.4 billion, due mainly to
a decrease in SMBC’s credit cost as a result of the tailored
efforts to assist certain debtors to improve their businesses
and financial conditions.

After adjusting ordinary profit for extraordinary gains
and losses, income taxes, and other items, net income
increased by ¥204.3 billion year on year to ¥475.8 billion.

Number of Consolidated Subsidiaries, and Subsidiaries and Affiliates Accounted for by the Equity Method

March 31
Consolidated subsidiaries .............................................................................................
Subsidiaries and affiliates accounted for by the equity method ...................................

2011 (A)

2010 (B)

327
47

307
58

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 losses on stocks .....................................................................................................
Equity in 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 .....................................................................................................................
Income before minority interests ...................................................................................
Minority interests in net income ...................................................................................
Net income ....................................................................................................................
Net total credit cost (A) + (B) .........................................................................................
[Reference]
Consolidated net business profit (Billions of yen) .........................................................

2011 (A)
¥2,504,730
1,317,651
2,335
766,230
237,093
181,419
(1,355,322)
(220,162)
(156,571)
(63,574)
14,919
(14,935)
(91,949)
(13,319)
1,452
825,428
1,884
(5,411)
2,813
827,313

(97,446)
(143,325)
586,542
(110,646)
¥ 475,895
¥ (217,348)

Millions of yen

2010 (B)
¥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)
379,227
(107,668)
¥ 271,559
¥ (472,968)

Increase (decrease)
(A) – (B)

20
(11)

Increase (decrease)
(A) – (B)
¥268,096
(63,261)
557
157,614
43,006
130,181
(194,020)
253,775
20,101
120,683
32,863
80,128
(81,871)
8,223
12,455
266,659
2,555
7,445
1,845
269,216

6,664
(68,566)
207,315
(2,978)
¥204,336
¥255,620

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 net business 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 2011 23

¥ 1,002.0

¥ 832.3

¥ 169.7

Deposits (excluding negotiable certificates of deposit) at
the end of the fiscal year under review rose by ¥3,350.3 bil-
lion in comparison with March 31, 2010 to ¥81,998.9 billion,
and negotiable certificates of deposit increased by ¥1,370.7
billion to ¥8,366.3 billion.

Meanwhile, loans and bills discounted decreased by

¥1,352.6 billion year on year to ¥61,348.3 billion, and the
balance of securities increased by ¥11,328.1 billion to
¥39,952.1 billion.

Net assets amounted to ¥7,132.0 billion, and, of this total,

stockholders’ equity was ¥4,921.4 billion, due mainly to
recording of net income.

Assets, Liabilities and Net Assets

March 31
Assets ............................................................................................................................ ¥137,803,098
39,952,123
61,348,355
130,671,024
81,998,940
8,366,323
7,132,073

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

2011 (A)

Millions of yen

2010 (B)
¥123,159,513
28,623,968
62,701,033
116,158,708
78,648,595
6,995,619
7,000,805

Increase (decrease)
(A) – (B)
¥14,643,585
11,328,155
(1,352,678)
14,512,316
3,350,345
1,370,704
131,268

2. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2011
amounted to ¥430.7 billion, a decrease of ¥214.2 billion
from the previous fiscal year-end, reflecting a decrease 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,
amounted to ¥370.9 billion, a decrease of ¥215.5 billion
from the previous fiscal year-end.

Unrealized Gains (Losses) on Securities

2011

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)
¥ 59,857
370,899
311,956
76,770
(17,827)
42
430,799
311,956
136,639
(17,796)

(A) – (B)
¥ 1,247
(215,515)
(99,028)
(46,888)
(69,598)
(20)
(214,288)
(99,028)
(45,730)
(69,529)

Unrealized
gains
¥ 61,389
720,864
487,773
108,640
124,449
42
782,295
487,773
170,021
124,500

Unrealized
losses
¥ 1,531
349,965
175,817
31,870
142,277
—
351,496
175,817
33,382
142,297

Net unrealized
gains (losses) (B)
¥ 58,610
586,414
410,984
123,658
51,771
62
645,087
410,984
182,369
51,733

2010
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

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.
Net unrealized gains (losses) on other securities, as of March 31, 2011 and 2010, included gains of ¥1,153 million and ¥105 million, respectively, which
were recognized in the statements of income by applying fair value hedge accounting. As a result, the amounts recorded in net assets, as of March 31,
2011 and 2010, were reduced by ¥1,153 million and ¥105 million, respectively.

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” (Accounting Standards Board of Japan
(“ASBJ”) Practical Issues Task Force No. 25).

SMFG 2011

3. Consolidated Capital Ratio
SMFG’s consolidated capital ratio as of March 31, 2011
was 16.63%, 1.61 percentage points higher than at March
31, 2010.

Total capital, which is the numerator in the capital ratio
calculation equation, rose by ¥304.6 billion year on year

to ¥8,432.8 billion. This was due mainly to recording of
net income. Risk-adjusted assets, the denominator in the
equation, decreased by ¥3,390.7 billion year on year to
¥50,693.6 billion due in part to a reduction in corporate
exposures.

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

2011 (A)
¥ 6,323,995
2,536,958
(428,082)
8,432,871
50,693,696

Millions of yen

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

Increase (decrease)
(A) – (B)
¥ 291,715
(26,895)
39,824
304,643
(3,390,775)

16.63%
12.47%

15.02%
11.15%

1.61%
1.32%

4. Dividend Policy
In view of the public nature of its business, SMFG has set a
fundamental policy of increasing profit distribution stably and
continuously 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 funda-
mental 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 2010 business perfor-
mance, SMFG has decided to pay a term-end dividend of
¥100 per share of common stock for the fiscal year.

SMFG will employ its retained earnings to increase its
enterprise value by aiming for top quality in strategic busi-
ness areas, and establishing a solid financial base and cor-
porate infrastructure enough to address the new financial
regulations and competitive environment.

5. Deferred Tax Assets
Net deferred tax assets decreased by ¥77.8 billion from the
end of the previous fiscal year to ¥624.2 billion.

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

2011 (A)
¥624,219

2010 (B)
¥702,065

Increase (decrease)
(A) – (B)
¥(77,846)

9.9%

11.6%

(1.7)%

SMFG 2011 25

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, 2011.

1. Operating Results
Gross banking profit in fiscal 2010 increased by ¥76.4 billion
from the previous fiscal year to ¥1,531.7 billion, and
expenses (excluding nonrecurring losses) rose by ¥13.4 bil-
lion to ¥699.1 billion. As a result, banking profit (before pro-
vision for general reserve for possible loan losses) increased
by ¥63.0 billion to ¥832.5 billion.

Ordinary profit — banking profit (before provision for

general reserve for possible loan losses) adjusted for nonre-
curring items such as credit cost and net losses on stocks —
increased by ¥132.9 billion to ¥595.7 billion.

After adjustment of ordinary profit for extraordinary gains
and losses and income taxes, SMBC posted net income of
¥421.1 billion, a year-on-year increase of ¥103.1 billion.

2. Income Analysis
Gross Banking Profit
Gross banking profit increased by ¥76.4 billion year on year
to ¥1,531.7 billion. This was mainly due to increased gains
on bonds by quickly responding to fluctuations in market
interest rates, and higher total fees for loan-related services
at the International Banking Unit.

Expenses
Expenses (excluding nonrecurring losses) increased by
¥13.4 billion to ¥699.1 billion. This increase was due mainly
to costs associated with a bolstering of personnel in stra-
tegic business domains and investments made in previous
fiscal years in branches and computer systems, which out-
weighed the benefits of ongoing cost-cutting measures in
publicity and advertising expenses and building and mainte-
nance expenses.

Banking Profit
Banking profit (before provision for general reserve for pos-
sible loan losses) increased by ¥63.0 billion from the previ-
ous fiscal year to ¥832.5 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 ................................................................................................................

2011 (A)
¥1,531,759
[1,114,329]
[417,429]
967,825
2,299
302,667
151,070
107,897
[1,384,638]
(699,197)
(249,842)
(411,471)
(37,883)
832,562

[685,441]
12,335
844,897

Banking Profit by Business Unit

Millions of yen

2010 (B)
¥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

Increase (decrease)
(A) – (B)
¥ 76,484

[(2,895)]
[79,379]
(78,557)
563
15,953
35,714
102,812
[(33,367)]
(13,445)
(4,114)
(8,206)
(1,124)
63,040

[(46,811)]
3,268
66,308

Year ended March 31, 2011
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

Head Office
Account

Total

¥97.5
3.6

¥222.2
(24.1)

¥165.3
(3.0)

¥128.6
25.1

¥312.8
56.1

¥(93.8)
5.4

¥832.6
63.1

Notes: 1. Year-on-year comparisons are those used for internal reporting and exclude changes due to interest rate and foreign exchange rate fluctuations.

2. “Head Office Account” consists of (1) financing costs on preferred securities and subordinated debt, (2) profit earned on investing the Bank’s own capital,

and (3) adjustment of inter-unit transactions, etc.

SMFG 2011

Nonrecurring Losses (Credit Cost, etc.)
Nonrecurring losses amounted to ¥249.1 billion, an improve-
ment of ¥66.6 billion from the previous fiscal year. This was
due mainly to a ¥156.1 billion drop in credit cost to ¥107.6 bil-
lion, as a result of the tailored efforts to assist certain debtors to
improve their businesses and financial conditions, which out-
weighed the impact of a ¥91.1 billion worsening in net losses
on stocks to ¥87.2 billion, due to increased write-offs.

Net total credit cost — the sum of credit cost of ¥107.6 bil-
lion recorded under “Nonrecurring losses,” provision for gen-
eral reserve for possible loan losses, and gains on recoveries of
written-off claims — amounted to ¥94.2 billion, a year-on-year
decrease of ¥160.3 billion.

Ordinary Profit
As a result of the foregoing, ordinary profit totaled ¥595.7 bil-
lion, ¥132.9 billion higher than in the previous fiscal year.

Extraordinary Gains (Losses)
Extraordinary losses amounted to ¥6.8 billion, a decrease of
¥1.1 billion from the previous year.

Net Income
Current income taxes amounted to ¥42.3 billion, and deferred
income taxes were ¥125.2 billion. As a result, net income
increased by ¥103.1 billion year on year to ¥421.1 billion.

Ordinary Profit and Net Income

Year ended March 31
Banking profit (before provision for general reserve for possible loan losses) ..............
Provision for general reserve for possible loan losses (A) .............................................
Banking profit ................................................................................................................
Nonrecurring gains (losses) ...........................................................................................
Credit cost (B) ............................................................................................................
Net gains (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).............................................................

Income taxes:

Current .......................................................................................................................
Deferred .....................................................................................................................
Net income ....................................................................................................................

Net 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 ..................................................................

2011 (A)
¥832,562
12,335
844,897
(249,193)
(107,660)
(87,285)
21,671
(1,604)
(107,353)
(54,247)
595,704
(6,864)
(2,336)
(4,288)
1,055

(42,386)
(125,273)
¥421,180

¥ (94,269)
12,335
(70,775)
(27,104)
(9,693)
(87)
1,055

Millions of yen

2010 (B)
¥ 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

(44,997)
(91,757)
¥ 317,995

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

Increase (decrease)
(A) – (B)
¥ 63,040
3,268
66,308
66,646
156,145
(91,142)
(35,048)
(718)
(55,378)
1,645
132,955
1,135
(4,784)
6,237
978

2,611
(33,516)
¥103,185

¥160,391
3,268
31,888
65,010
59,566
(319)
978

SMFG 2011 27

Net Assets
Net assets at fiscal year-end amounted to ¥5,559.2 billion.
Of this total, stockholders’ equity amounted to ¥5,188.2 bil-
lion, consisting of ¥1,770.9 billion in capital stock, ¥2,481.2
billion in capital surplus (including ¥710.2 billion in other
capital surplus), and ¥935.9 billion in retained earnings.

Valuation and translation adjustments were ¥371.0 billion,

comprising ¥229.8 billion in net unrealized gains on other
securities, ¥121.1 billion in net deferred gains on hedges,
and ¥20.0 billion in land revaluation excess.

3. Assets, Liabilities and Net Assets
Assets
SMBC’s assets as of March 31, 2011 increased by
¥11,948.5 billion from the previous fiscal year-end to a total
of ¥115,484.9 billion. This increase was due chiefly to a
¥11,317.2 billion increase in securities due to an increase in
the balance of Japanese government bonds held.

Liabilities
Liabilities as of March 31, 2011 amounted to ¥109,925.6
billion, an increase of ¥11,787.1 billion from the previous
fiscal year-end. The main reason for the increase in liabilities
was a ¥3,579.2 billion increase in deposits due to the rising
total value of deposits held by individuals and of corporate
deposits in Japan, and increases in fund procurement in the
borrowed money and other markets.

Assets, Liabilities and Net Assets

March 31
Assets ............................................................................................................................ ¥115,484,907
39,853,432
55,237,613
109,925,614
74,036,469
8,406,816
5,559,293

2011 (A)

Millions of yen

2010 (B)
¥103,536,394
28,536,200
56,619,058
98,138,445
70,457,266
7,173,373
5,397,949

Increase (decrease)
(A) – (B)
¥11,948,513
11,317,232
(1,381,445)
11,787,169
3,579,203
1,233,443
161,344

SMFG 2011

4. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2011
amounted to ¥336.6 billion, a decrease of ¥229.2 billion
from the previous fiscal year-end, reflecting a decrease 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,
amounted to ¥305.6 billion, a decrease of ¥215.7 billion
from the previous fiscal year-end.

Unrealized Gains (Losses) on Securities

2011

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)
¥ 58,930
(27,948)
305,621
275,468
71,931
(41,778)
42
336,646
261,289
130,861
(55,505)

(A) – (B)
¥ 1,027
(14,477)
(215,756)
(95,991)
(44,214)
(75,550)
(20)
(229,226)
(104,690)
(43,188)
(81,348)

Unrealized
gains
¥ 60,394
521
662,003
468,639
99,888
93,476
42
722,962
469,161
160,282
93,518

Unrealized
losses
¥ 1,463
28,470
356,382
193,170
27,956
135,254
—
386,315
207,871
29,420
149,023

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

2010
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

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.
Net unrealized gains (losses) on other securities, as of March 31, 2011 and 2010, included gains of ¥1,153 million and ¥105 million, respectively, which
were recognized in the statements of income by applying fair value hedge accounting. As a result, the amounts recorded in net assets, as of March 31,
2011 and 2010, were reduced by ¥1,153 million and ¥105 million, respectively.

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 for Financial Assets” (ASBJ Practical Issues Task Force No. 25).

SMFG 2011 29

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

Cards
CLO
CMBS
RMBS, etc.

Balances
(after provisions
and write-offs)
¥ 2.6
1.5
12.7
1.3
¥18.1

Change from
Mar. 31, 2010
¥2.6
(1.4)
(0.9)
1.2
¥1.5

March 31, 2011

Overseas

¥2.6
1.5
—
0.1
¥4.2

Change from
Mar. 31, 2010
¥2.6
(1.4)
—
(0.0)
¥1.2

Net unrealized
gains/losses
(after write-offs)
¥(0.1)
1.2
0.1
0.3
¥ 1.5

Change from
Mar. 31, 2010
¥(0.1)
0.7
0.1
0.3
¥ 1.0

(Billions of yen)

March 31, 2010

Balances
(after provisions
and write-offs)

Overseas

Net unrealized
gains/losses
(after write-offs)

¥ — ¥— ¥—
0.5
0.0
0.0
¥0.5

2.9
13.6
0.1
¥16.6

2.9
—
0.1
¥3.0

Total
Notes: 1. RMBS, etc. include approximately ¥0.1 billion of sub-prime related products.

2. There is no amount of ABCP.
3. Excludes GSE and SMBC's exposure to subordinated beneficiaries owned through the securitization of SMBC's loan receivables.
4. No loss was recorded on securitized products in the fiscal year ended March 31, 2011.

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

March 31, 2011

March 31, 2010

March 31, 2011

Net
exposure

Change from
Mar. 31, 2010

Reserve for
possible loan
losses

Net
exposure

Reserve for
possible loan
losses

Amount of
reference
assets

Change from
Mar. 31, 2010

March 31, 2010
Amount of
reference
assets

(Billions of yen)

Exposure to CDS transactions with
monoline insurance companies
Notes: 1. Reference assets are rated investment grade or equivalent, and do not include sub-prime related assets.

¥(45.6)

¥48.5

¥0.8

¥2.9

¥13.6

2. SMFG recorded loss on such transactions of approximately ¥3.7 billion in the fiscal year ended March 31, 2011.

Loans and Investments Guaranteed by Monoline Insurance Companies, etc.

(Billions of yen)

March 31, 2011

March 31, 2010

Exposure

Change from
Mar. 31, 2010

Reserve for
possible loan
losses

Exposure

Reserve for
possible loan
losses

¥321.3

¥(181.8)

¥503.1

Loans and investments guaranteed or
insured by monoline insurance companies
Note: Underlying assets are those of project finance, etc., which are rated investment grade or equivalent, and include no sub-prime related assets.

¥(0.1)

¥0.0

¥9.4

¥9.5

¥0.0

3. Leveraged Loans

Europe
Japan
United States
Asia (excluding Japan)

March 31, 2011

March 31, 2010

(Billions of yen)

Loans

Change from
Mar. 31, 2010

Undrawn
commitments

Change from
Mar. 31, 2010

¥196.9
183.5
77.2
65.4
¥523.0

¥(64.2)
7.3
(36.0)
5.8
¥(87.1)

¥ 23.4
15.5
66.1
7.7
¥112.7

¥ (5.4)
3.7
(7.4)
(1.7)
¥(10.8)

Reserve for
possible loan
losses
¥ 7.5
12.7
11.0
1.0
¥32.2

Loans

Undrawn
commitments

¥261.1
176.2
113.2
59.6
¥610.1

¥ 28.8
11.8
73.5
9.4
¥123.5

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

Total
Notes: 1. Above figures include the amount to be sold of approximately ¥3 billion.

In the fiscal year ended March 31, 2011, we sold leveraged loans of approximately ¥24 billion, and loss on the sale amounted to approximately ¥3 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.

SMFG 2011

4. Asset Backed Commercial Paper (ABCP) Programs as Sponsor
We sponsor issuance of ABCP, whose reference assets are
such as clients’ receivables, in order to fulfill clients’ financ-
ing needs. Most of the reference assets are high-grade

claims of corporate clients and do not include sub-prime
related assets.

Reference assets related to ABCP programs as sponsor
Reference: In addition, we provide liquidity supports for ABCP programs which are sponsored by other banks.
Total notional amount of reference assets of such programs is approximately ¥47 billion.

¥473.2

¥(28.1) ¥194.7

Notional
amount

Change from
Mar. 31, 2010

Overseas

Change from
Mar. 31, 2010
¥56.1

Notional
amount

Overseas

¥501.3

¥138.6

March 31, 2011

March 31, 2010

(Billions of yen)

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

SMFG 2011 31

Risk Management

Basic Approach
As risks in the financial services increase in diversity and complexity,

(2) Fundamental Principles and Basic Policies for Risk

Management

risk management—identifying, measuring, and controlling risk—has

SMFG’s Groupwide basic policies for risk management stipulate the

never been more important in the management of a financial holding

fundamental principles for risk management that must be followed,

company.

and spell out risk management procedures from various perspec-

SMFG has encapsulated the basic principles to be employed

tives. These include managing risk on a consolidated accounting

in risk management in the manual entitled Regulations on Risk

basis, managing risk using quantification methods, ensuring con-

Management. In the manual, we have specified the basic policies

sistency with business strategies, setting up a system of checks

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

and balances, contingency planning for emergencies and serious

for risk management after specifying the categories of risk to which

situations, and verifying preparedness to handle all conceivable

these policies apply; 2) Provide all necessary guidance to Group

risk situations. In addition, there are specific operational policies

companies to enable them to follow the basic risk management

for implementing appropriate management of risk by all Group

policies set forth by SMFG and set up their own appropriate risk

companies.

management systems; and 3) Monitor the implementation of risk

Under SMFG’s Groupwide basic policies for risk management,

management by all Group companies to ensure that their practices

all Group companies periodically carry out reviews of the basic

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 catego-

ries 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 systematically manage all

these categories of risk across the entire Group.

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 authorized by the

Board. The Management Committee, the designated board mem-

bers, 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 2011

Guidance for
drafting of basic
policies

Monitoring

Report

SMBC

SMBC Nikko
Securities

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

Integrated Risk 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 associ-

ated 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 operational—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 plan-

ning 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 man-

agement 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) Risk Capital-Based Management
In order to maintain a balance between risk and return as well as

ensure the soundness of the Group from an overall perspective, we

employ the risk capital-based management method. We 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 appro-

priately and effectively to each unit to keep total exposure to various

risks within the scope of our resources, i.e., capital.

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

business 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. Risk capital limits are subdivided

into guidelines or ceilings for each business including VaR and loss

limits. Therefore, by strictly observing the VaR and loss limits, and

other factors, SMFG maintains the soundness of the Group as a

whole.

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.

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 2011 33

Liquidity risk is managed within the context of cash-flow plans

Credit risk is the most significant risk to which SMFG is

and funding gap. Other risk categories are managed with proce-

exposed. Without effective credit risk management, the impact of

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

the corresponding losses on operations can be overwhelming.

following paragraphs.

(2) Stress Testing
In the current volatile business environment, stress testing to analyze

and estimate the adverse effects of events such as an economic

recession and market volatility on the business and financial condi-

tions of financial institutions is increasingly essential. When estab-

lishing a management plan, SMFG also conducts stress tests using

The purpose of credit risk management is to keep credit risk

exposure to a permissible level relative to capital, to maintain the

soundness of Groupwide assets, and to ensure returns commen-

surate 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

a number of stress events to analyze and estimate their impact on

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

its financial condition.

accordance with the business mission and rules of conduct.

SMBC is promoting the understanding of and strict adherence

Implementation of Basel II
Basel II is an international agreement on the minimum capital

to its credit policy among all its managers and employees. By con-

ducting risk-sensitive credit management, SMBC aims to enhance

requirements for internationally active banks, and it has been applied

shareholder value and play a key part in society by providing high-

since March 31, 2007, to the internationally active banks in Japan.

value-added financial services.

Under the Basel II framework, there are multiple approaches

to calculating the capital requirements. We have adopted the

advanced internal ratings-based (IRB) approach for credit risk and

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

the Advanced Measurement Approach (AMA) for operational risk

the Risk Management Unit is responsible for the comprehensive

since March 31, 2009 and March 31, 2008 respectively.

management of credit risk. This department drafts and adminis-

Details of our initiatives are provided below, and detailed infor-

ters credit policies, the internal rating system, credit authority

mation on the capital ratio is provided in the discussion on Capital

guidelines, and credit application guidelines, and manages non-

Ratio Information appearing in the Financial Section and Corporate

performing loans (NPLs) and other aspects of credit portfolio

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.

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 investi-

gates the business situations of borrower enterprises to detect early

signs of problems or growth potential. The Credit Administration

Department is responsible for handling NPLs of borrowers classi-

fied 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.

SMFG 2011

The Internal Audit Unit, operating independently of the business

SMBC has established the Credit Risk Committee, as a con-

units, audits asset quality, accuracy of gradings and self-assessment,

sultative body, to round out its oversight system for undertaking

and state of credit risk management, and reports the results directly

flexible and efficient control of credit risk, and ensuring the overall

to the Board of Directors and the Management Committee.

soundness of the bank’s loan operations.

■ SMBC’s Credit Risk Management System

Risk Management Unit

Corporate Risk Management Dept.

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

Credit & Investment Planning Dept.

•Aggregates credit risk for unified management

•Plans and proposes basic credit policies

•Drafts, administers, and examines internal rating system

Credit Portfolio Management Dept.
•Undertakes active portfolio management

Board of Directors

Corporate Auditors

Management Committee

External Audit (Auditing Firm)

Internal Audit Unit

Internal Audit Dept.

•Audits credit risk management

Credit Review Dept.

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

Corporate Services Unit

Corporate Research Dept.

•Industry trend research
•Credit assessment of major industry players

Credit Administration Dept.

•Manages problem assets (plans, implements corporate rehabilitation
program, sells off the revitalized company)

Business Units

Consumer Banking Unit

Middle Market Banking Unit

Corporate Banking Unit

International Banking Unit

Investment Banking Unit

Credit
Dept.

Credit Dept.

Credit Dept.
I & II

Credit Dept.

Credit for Individuals

Small and Medium-Sized 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 acknowledge 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 cat-
egory 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 obligor

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 quality 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.

SMFG 2011 35

Obligor grades and facility grades are reviewed once a year,

the Monte Carlo method to calculate our maximum loss exposure to

and, whenever necessary, such as when there are changes in the

the estimated amount of the maximum losses that may be incurred.

credit situation.

Based on these quantitative results, we allocate risk capital.

There are also grading systems for small and medium-sized

Risk quantification is also executed for purposes such as to

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

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

and other structured finance tailored according to the risk charac-

movements (stress tests), and the results are used for making

teristics of these types of assets.

optimal decisions across the whole range of business operations,

The Credit & Investment Planning Department centrally man-

including formulating business plans and providing a standard

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

against which individual credit applications are assessed.

supervises, and validates the grading models. It validates the grad-

ing models (including statistical validation) of main assets following

the procedures manual once a year, to ensure their effectiveness

and suitability.

(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 facilities

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

these parameters, we run a simulation of simultaneous default using

■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

(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 enterprise’s

capability of loan repayment and its growth prospects. These quan-

titative measures, when combined with qualitative analyses of indus-

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

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

comprehensive credit assessment. The loan application is 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 objective examination of all relevant factors.

Increasing the understandability to customers of loan conditions

and approval standards for specific borrowing purposes and loan

categories is a part of SMBC’s ongoing review of lending 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

Borrower
Category

Financial Reconstruction
Law Based Disclosure
Category

(Domestic)

Normal
Borrowers

Normal Assets

assessment process. To respond proactively and

promptly to customers’ funding needs—particu-

larly 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 custom-

ers without delay. It also facilitates the effective

management of credit risk, as well as the flexible

setting of interest rates.

We also provide loans to individuals who

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

rent out properties such as apartments. The

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

loan applications are subjected to a precise

Bankrupt and
Quasi-Bankrupt
Assets

credit risk assessment process utilizing a risk

assessment model that factors in the projected

revenue from the rental business. The process is

also used to provide advice to such customers

on how to revise their business plans.

SMFG 2011

(b) Credit Monitoring System

corporate groups by setting guidelines for maximum loan amounts.

At SMBC, in addition to analyzing loans at the application stage,

To manage country risk, SMBC also has credit limit guidelines

the Credit Monitoring System is utilized to reassess obligor grades

based on each country’s creditworthiness.

and review self-assessment and credit policies so that problems

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

can be taken. The system includes periodic monitoring carried out

and Returns

each time an obligor enterprise discloses financial results, as well

Against a backdrop of drastic change in the business environ-

as continuous monitoring performed each time credit conditions

ment, SMBC rigorously researches borrower companies’ actual

change, as indicated in the diagram below.

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 borrowers’ busi-

ness 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 portfolio to

stabilize credit risk.

(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 invest-

ment, and investment in securitization products. Regular monitoring

is conducted to make sure that these guidelines are being followed,

thus ensuring appropriate overall management of credit risk.

(b) Controlling Concentration Risk

Because the concentration of credit risk in an industry or corporate

group has the potential to substantially impair capital, SMBC imple-

ments measures to prevent the excessive concentration of loans in

an industry and to control large exposure to individual companies or

■SMBC’s Credit Monitoring System

Obligor Information
Processing

Registration
of Financial
Statements/
Creation and
Revision of
Corporate
Card

Flow of Obligor Grading/Grading Outlook/Credit Policies/Action Plans/Facility Grading Assignment

Nonconsoli-
dated
Financial
Grade

Consolidated
Financial
Grade

Effective
Financial
Grade

Not Flagged

Flagging
According to
Self-
Assessment
Criteria

Flagged

Self-Assessment
Logic

Quantitative
Assessment

Financial
Assessment

Credit Status

Qualitative
Assessment

Normal
Borrowers

Borrowers
Requiring
Caution

Potentially
Bankrupt
Borrowers

Effectively
Bankrupt
Borrowers

Bankrupt
Borrowers

Grading Outlook Assessment

Performance
Trends

Qualitative
Risk
Factors

Final
Obligor
Grade

•Positive
•Flat
•Negative

Determination of
Credit Policies

Credit Policy Segment

Policy for Handling
Each Individual
Company

Action Plan Formulation

Restructuring
Feasibility

Basic
Approach

Specific
Action Plan

Facility Grading Assignment

SMFG 2011 37

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

write-offs is generally known as provision for the reserve for possible

and Disclosure of Problem Assets

loan losses.

(a) Self-Assessment

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

SMBC conducts rigorous self-assessment of asset quality using

assessment borrower category are shown in the table below.

criteria based on the Financial Inspection Manual of the Financial

As part of our overall measures to strengthen risk management

Services Agency and the Practical Guideline published by the

throughout the Group, all consolidated subsidiaries use substantially

Japanese Institute of Certified Public Accountants. Self-assessment

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

is the latter stage of the obligor grading process for 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 appropriate level

of write-offs and provisions. Each asset is assessed individually

for its security and collectibility. Depending on the borrower’s cur-

rent 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 bor-

rower are classified into Classification I, II, III, and IV assets accord-

ing to their default and impairment risk levels, taking into account

such factors as collateral and guarantees. As part of our efforts to

bolster risk management throughout the Group, our consolidated

Potentially Bankrupt Borrowers

subsidiaries carry out self-assessment in substantially the same

manner.

Borrower Categories, Defined

Normal Borrowers

Borrowers with good earnings performances and no
significant financial problems

Borrowers Requiring Caution

Borrowers identified for close monitoring

Potentially Bankrupt Borrowers

Effectively Bankrupt Borrowers

Borrowers perceived to have a high risk of falling into
bankruptcy

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

Effectively Bankrupt/ Bankrupt
Borrowers

General reserve

Notes

Specific reserve

Self-Assessment
Borrower Categories

Standards for Write-Offs and
Provisions

Normal Borrowers

Borrowers Requiring Caution

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 “provi-
sion 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 uncollect-
ible in part or in total (individually evaluated claims)

Asset Classifications, Defined

Discounted Cash Flow Method

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 doubt-
ful and which pose a high risk of incurring a loss

Classification IV

Assets assessed as uncollectible or worthless

(b) Asset Write-Offs and Provisions

In cases where claims have been determined to be uncollectible,

or deemed to be uncollectible, write-offs signify the recognition of
losses on the account books with respect to such claims. Write-

offs can be made either in the form of loss recognition by offsetting

uncollectible amounts against corresponding balance sheet items,

referred to as a direct write-off, or else by recognition of a loan loss

provision on a contra-asset account in the amount deemed uncol-

lectible, referred to as an indirect write-off. Recognition of indirect

SMFG 2011

SMBC uses the discounted cash flow (DCF) method to calculate
the provision amounts for large claims on Substandard Borrowers
and Potentially Bankrupt Borrowers when the cash flow from
repayment of principal and interest received can be estimated
reasonably accurately. SMBC then makes provisions equivalent
to the excess of the book value of the claims over the said cash
inflow discounted by the initial contractual interest rate or the
effective interest rate at the time of origination. One of the major
advantages of the DCF method over conventional methods of
calculating the provision amount is that it enables effective evalua-
tion 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 uti-
lize up-to-date and correct data to realize the most accurate esti-
mates possible.

Problem assets are loans and other claims of which recovery of

either principal or interest appears doubtful, and are disclosed in

accordance with the Banking Act (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, 2011, please refer to page 170.

4. Risk Management of Marketable Credit Transactions
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 consid-

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 market 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 dis-

ered to be exposed to both credit risk from the underlying assets as

cuss the SMBC’s ALM operation.

well as “market risk” and “liquidity risk” that arise from their trading

as financial products. This is referred to as marketable 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 management,

we also apply the methods for management of market and liquidity

risks.

In addition, we have established guidelines based on the char-

acteristics 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 highly

efficient system of mutual checks and balances.

To prevent unforeseen processing errors as well as fraudu-

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

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

■ 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 2011 39

departments (back office) and the administrative departments

historical simulation method). This internal SMBC model is evaluated

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

periodically by an independent auditing firm to assess its

Unit of SMBC periodically performs comprehensive internal audits to

appropriateness and accuracy.

verify that the risk management framework is functioning properly.

(b) Back-Testing Results

3. Market and Liquidity Risk Management Methods

The relationship between the VaR calculated with the model and

(1) Market Risk Management
SMBC manages market risk by setting maximum limits for VaR and

maximum loss. These limits are set within the “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 managing 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 depos-

its (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 2010 are shown in

the table below. SMBC’s internal VaR model makes use of

historical data to prepare scenarios for market fluctuations and,

by conducting simulations of gains and losses, the model esti-

mates the maximum losses that may occur (this is known as the

the actual profit and loss data is back-tested daily. The back-

testing results for SMBC’s trading accounts for fiscal 2010 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 2009, there were no such excess losses during

fiscal 2010. This demonstrates that the SMBC VaR model, with a

one-sided confidence interval of 99.0%, is sufficiently reliable.

Glossary
1. VaR (Value at risk)
The largest predicted loss that is possible given a fixed con-
fidence interval. For example, VaR indicates, for a holding
period of one day and a confidence interval of 99.0%, the
maximum loss that may occur as a result of market fluctua-
tions in one day with a probability of 1%.

2. BPV (Basis point value)
The amount of change in assessed value as a result of a one
basis point (0.01%) movement in interest rates.

3. Trading
A market operation for generating profit by taking advantage
of short-term fluctuations in market values and differences in
value among markets.

4. Banking
A market operation for generating profit through management
of interest rates, terms, and other aspects of assets (loans,
bonds, etc.) and liabilities (deposits, etc.).

■VaR Results

June 2010

Sept. 2010

Dec. 2010

Mar. 2011

Maximum

Minimum

Average

SMFG (consolidated)

SMBC (consolidated)

SMBC (nonconsolidated)

Trading Book

Banking Book

Trading Book

Banking Book

Trading Book

Banking Book

(Billions of yen)

8.1

7.5

7.1

6.8

9.3

5.8

7.9

38.2

39.8

45.5

48.6

50.9

29.7

40.5

6.9

7.0

6.8

6.5

8.7

5.4

7.2

37.1

39.0

44.4

47.4

49.6

28.8

39.4

1.9

2.3

2.0

1.3

3.6

1.3

2.2

33.7

36.0

40.4

43.1

45.4

25.2

35.7

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)].

SMFG 2011

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

SMBC (consolidated)

SMBC (nonconsolidated)

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

Actual Profit or Loss (¥ billion)

1.0

2.0

3.0
4.0
VaR (¥ billion)

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

Actual Profit or Loss (¥ billion)

1.0

2.0

4.0
3.0
VaR (¥ billion)

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

Actual Profit or Loss (¥ billion)

1.0

2.0

3.0
4.0
VaR (¥ billion)

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

The market occasionally undergoes extreme fluctuations that

manages highly liquid supplementary funding sources, whereby

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

SMBC maintains high quality liquid assets, such as U.S. treasuries

tant to run simulations of unforeseen situations that may occur in

and has emergency borrowing facilities.

financial markets (stress testing). The bank conducts stress tests

In addition, for emergency situations, there are contingency

on a monthly basis assuming various scenarios, and has measures

plans in place for addressing funding liquidity risk that include an

in place for irregular events.

action plan with measures for reducing funding gap limits and

(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, 2011, the outlier ratio was around 8%, 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 cur-

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

needed to achieve more rigorous management.

guidelines.

■ Decline in Economic Value Based on Outlier Framework

SMBC (consolidated)

SMBC (nonconsolidated)

March 31, 2010 March 31, 2011 March 31, 2010 March 31, 2011

(Billions of yen)

Total

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

532.7

396.7

90.3

33.2

696.4

530.5

141.9

16.0

490.8

357.9

88.6

32.8

660.3

497.4

139.6

15.6

Percentage of Tier I + Tier II

6.1%

7.8%

5.8%

7.7%

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, 2011)

SMBC Portfolio
TOPIX
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SMFG 2011 41

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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 sys-

tem 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 create a more sophisticated

quantification model and to enhance operational risk management

throughout the Group.

■SMBC’s Operational Risk Management System

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

ment 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 man-

agement, and these decisions are authorized by the SMBC Board

of Directors. In addition, SMBC has established its Operational Risk

Management Department, within the Corporate Risk Management

Department as an integrated operational risk management depart-

ment. 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 Operational

Risk Management Department. In addition, there is the Operational

Risk Committee, comprising all relevant units of the bank, where

operational risk information is reported and risk mitigation plans

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 2011

are discussed. In this way, we realize a highly effective operational

The basic framework of the AMA quantification model of

risk management framework. The operational risk situation is also

SMFG and SMBC is outlined in the diagram below. Among

reported to the Management Committee and the Board of Directors

the four elements, collected internal loss data and the results of

on a regular basis, for review of the basic policies on operational

scenarios analysis through risk control assessment are input

risk management. Moreover, the bank’s independent Internal Audit

directly into the quantification model described later in this sec-

Department conducts periodic audits to ensure that the operational

tion to calculate required capital and risk-weighted assets

risk management system is functioning properly.

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

3. Operational Risk Management Methodology
As previously defined, operational risk covers a wide range of

and BEICFs are used in verifying the assessment of scenarios,

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

completeness.

events, including the risk of losses due to errors in operation, sys-

The specific content, method of collection and use of the four

tem failures, and natural disasters. Also, operational risk events

elements are described below. In each group company the same

can occur virtually anywhere and everywhere. Thus, it is essential

four elements are collected and utilized.

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 measure-

■ Basic Framework of Operational Risk Measurement

ment methodology that can be applied to all types of operational

of SMFG and SMBC

risk, and to comprehensively and comparatively capture the status

of and changes in potential operational risks of business processes.

(1) Internal Loss Data

(4)
Scenario
Analysis through
Risk Control
Assessments

Data
input

(5)
Measurement
Using the
Quantification
Model

(2) External Loss Data

Verifi-
cation

(3) BEICFs

(6) Risk Mitigation Initiatives

Also, from the viewpoint of internal control, the measurement meth-

odology used to create 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 calculat-

ing 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 scenarios 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.

SMFG 2011 43

(1) Internal Loss Data
Internal loss data are defined as “the information on events in which

of controls, and (c) estimate the frequency and severity of risk sce-

narios.” SMFG and SMBC apply this methodology to their principal

SMFG and SMBC incur losses resulting from the realization of oper-

business activities.

ational risk.” At SMFG and SMBC, internal loss data are collected

The purpose of risk control assessment is to identify material

for all cases where the gross loss amount is at least one yen (the

and potential operational risks pertinent to business processes, to

threshold amount), and seven years of internal loss data are directly

measure them, and to develop and carry out a risk mitigation plan

used in the quantification of required capital for operational risk.

to manage the risks. Another purpose of risk control assessment is

(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.

(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.

(4) Scenario Analysis through Risk Control Assessments
Risk control assessment is defined as “risk management methodol-

ogy to (a) identify material operational risks, and describe them in

terms of risk scenarios, (b) assess the risks and the effectiveness

■Flowchart for Risk Control Assessment (Example)

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, opera-

tional risks inherent in various business processes are recognized as

“scenarios.” The risk and control conditions for each scenario are

assessed, and the frequency of occurrence and amount of losses

are estimated based on them. The assessment process comprises

three steps: (i) initial assessment, (ii) Operational Risk Management

Department review, and (iii) final assessment. Through the process,

the frequency of “low-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).

As an effective mechanism for mitigating operational risks, the

maximum loss occurring once in 100 years (hereinafter, “scenario

exposure”) is calculated for each scenario derived through the risk

control assessment, and then a magnitude rating is provided by

classifying them into five categories according to the severity of

loss. Risk mitigation plans are developed by the relevant business

units for those scenarios with high-severity risk identified through

magnitude rating.

(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 2011

The principal features of this risk control assessment method

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

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

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

losses based on historical internal loss experience and by estimating

through the risk control assessment.

the severity of losses based on the transaction amounts pertinent to

By using the loss frequency and loss severity distribu-

the scenarios, and (2) an appropriate level of “sensitivity,” because

tions, the aggregated loss severity distribution is generated by

changes in the business environment and the implementation of risk

conducting Monte Carlo simulations and by generating various

mitigation measures can be reflected in the frequency and severity

combinations of loss occurrence and loss amount which are simu-

of losses by changing the assessment of risk and control as well as

lated by changing these two factors. 99.0% VaR is calculated from

transactions amounts.

(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 Group companies

other than those applying the AMA. Then, the required capital and

risk-weighted assets for SMFG and SMBC Group are measured by

aggregating these figures.

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

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

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

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

■Measurement Using the Quantification Model

Distribution of Loss Frequency

(
f
r
e
q
u
e
n
c
y
)

P
r
o
b
a
b

i
l
i
t
y

o
f

o
c
c
u
r
r
e
n
c
e

0.20

0.15

0.10

0.05

15
Number of incidents/year

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

(
f
r
e
q
u
e
n
c
y
)

P
r
o
b
a
b

i
l
i
t
y

o
f

o
c
c
u
r
r
e
n
c
e

0.30

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)

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 com-

pute 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 introducing 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.

Please note that the accuracy of quantification model outputs

described above is secured through the regular ex ante and ex post

facto verification processes.

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

Group on a consolidated basis, computed with the previously

described quantification method, is as follows.

Repeat (e.g., 1 million times)

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
r
o
b
a
b

i
l
i
t
y

o
f

o
c
c
u
r
r
e
n
c
e

SMFG 2011 45

■ 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, 2011)

Percentage

19%

40%

(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 sce-

narios identified in the previously mentioned magnitude rating.

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

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 opera-

tional risk-weighted assets calculated using the internal loss data

and the scenario exposure determined from the risk control assess-

ment 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 operational risk and improve sce-

nario 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 business units and Group companies for revising their

plans, and, (4) finally, at the end of the fiscal year, by comparing the

planned versus actual results, we endeavor to enhance the aware-

ness 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 2011

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 investigations

of processing risk; minimizing losses in the event of processing

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

Computer-related trouble at financial institutions now has great

potential to impact society, with system risk diversifying owing to

advances in IT and expansion of business fields. To prevent any

computer system breakdowns, we have taken numerous 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, sensitive information is encrypted,

unauthorized external access is blocked, and all known counter-

measures to secure data are implemented. There are also contin-

gency 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 pat-

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

terns emerge.

new policies or making major revisions to existing ones for process-

ing risk management requires the approval of both the Management

Committee and the Board of Directors.

Settlement Risk

In the administrative regulations, SMBC has also defined specific

Settlement risk is the possibility of a loss arising from a transaction

rules for processing risk management. The rules allocate processing

that cannot be settled as planned. Because this risk comprises ele-

risk management tasks among six types of departments: operations

ments of several types of risk, including credit, liquidity, processing,

planning departments, compliance departments, operations depart-

and system risk, it requires interdisciplinary management.

ments, transaction execution departments (primarily front-office

At SMBC, the Operations Planning Department is responsible

departments, branches, and branch service offices), internal audit

for coordinating the management of settlement risk with the Credit &

departments, and the customer support departments. In addi-

Investment Planning Department, which oversees credit risk, and the

tion, there is a specialized group within the Operations Planning

Corporate Risk Management Department, which oversees liquidity

Department to strengthen administrative procedures throughout the

risk.

Group.

5. System Risk
System risk is the possibility of a loss arising from the failure, mal-

function, or unauthorized use of computer systems.

SMFG recognizes that reliable computer systems are essential

for the effective implementation of management strategy in view

of the IT revolution. We strive to minimize 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 2011 47

Corporate Social Responsibility (CSR)

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

• We shall endeavor to develop and prosper with our customers
by offering top-quality, highly-valued products and services.
• We shall maintain the solid management by disclosing appro-
priate information, developing our internal control system and
operate solid management to maximize our shareholders’
value.

• We shall contribute to society and preserve the natural

environment by continuously and proactively implementing
initiatives including social and environmental activities.

• We shall foster a free and active business environment which
respects individuals and allows each employee to realize his
or her full potential.

Lastly, we shall strive to ultimately contribute to the sustainable

development of society through such activities.

■ SMFG CSR Values

Contributing to the Sustainable Development of Society

Customers

Shareholders and
the Market

The Environment
and Society

Employees

CSR Group Initiatives

Highly-valued
products and
services

Sound
Management

Social and
community
activities and
environmental
activities

Corporate
culture respecting
the individual

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

Integrally Implementing CSR Activities and
Business Strategies
CSR activities are considered the foundation of the business
strategies of SMFG and Group companies as well as the fulfillment
of management policies and business goals.

Completely and fully performing CSR activities is undoubtedly
the essence of “management itself,” and sincerely committing to the
implementation of CSR initiatives is considered the shortest path for
achieving management policies and business goals.

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 us to equally provide the most
value to our customers, our shareholders and the market, the
environment and society, and our employees. Through this process,
we strongly believe that contributing to the sustainable development
of society as a whole is vital for us to fulfill our corporate social
responsibilities.

Basic CSR Policies
In implementing CSR activities, SMFG has defined CSR and put in
place a set of common principles regarding business ethics 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 2011

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 the Group’s services and
products. SMFG regularly holds its Group Customer Satisfaction Committee meetings to review reports on the analyses of the Voice of the
Customers (VOC), and discuss measures to increase customer satisfaction.

SMBC has created the Quality Management Department to
establish the structure to proactively utilize the VOC in order to
improve the bank’s businesses and management. The Quality
Management Department is primarily responsible for analyzing the
VOC data. Reports prepared by this department are discussed
by the CS and Quality Improvement Committee, consisting of
the president and directors who are also members of the bank’s
Management Committee, and such reports are to be proactively
applied to enhance the satisfaction of our clients and the quality of
our services offered.

Concurrently with these activities, we have been undertaking a
wide range of initiatives for improving the customer satisfaction and
quality. Such initiatives include offering a toll-free telephone service
and conducting surveys to obtain the opinions of our diverse clients
visiting our branches and offices, or mailing them such surveys. We
also provide training and educational programs to our employees in
order to offer the kind of services to further satisfy our clients.

VOC Database
We record in the VOC database the opinions of our clients collected
mainly at our branches, and we share such database within the
bank. Furthermore, such data collected is analyzed and utilized by
the Quality Management Department to provide guidance for our
branches and propose any improvements to Head Office depart-
ments for the overall CS measures for the bank.

Head Office departments also analyze such VOC data and
apply the results to make appropriate improvements in our products
and services.

CS and Quality Improvement Committee
The CS and Quality Improvement Committee, which is chaired by
the president of SMBC, meets regularly to review reports on the
specific opinions expressed by our clients, and discuss and analyze
any monthly changes to the number of opinions collected. The
committee also reviews reports on the results of the analyses of the
VOC, and considers appropriate improvement measures.

Furthermore, the reports on the regularly held educational

programs or initiatives are submitted to the CS and Quality
Improvement Committee to further enhance and establish our
awareness of “Our Clients Always Come First.”

■ 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 2011 49

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
implement the ideas contained in our Group philosophy, we
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
the directors. At SMFG, we have six corporate auditors, three of
whom are outside auditors. The auditors monitor the execution
of business operations of SMFG and its subsidiaries by attend-
ing meetings of the Board of Directors and listen to reports on
operations from the directors and others. They also examine
documents relating to important decisions and receive reports
from the internal audit departments, representatives of subsid-
iaries 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
activities of SMFG and other Group companies, from the role of
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 cor-
porate 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
serve as the chairmen of these committees. To ensure that the
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 supervi-
sion 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
SMFG directors (including three outside directors) of the total of
12 SMFG directors (including three outside directors) also serve
as directors of SMBC. To monitor the conduct of operations at

SMFG 2011

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 outside director) of these companies.

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
internal control systems.

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 operational 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 func-
tions are performed principally by the Board.

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 primarily
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,
which has a total membership of sixteen.

Executive officers are appointed by the Board to manage
the operation of SMBC’s businesses. As of June 30, 2011,
SMBC has 73 executive officers, including the president, and 11
serve concurrently as directors. The Management Committee
of SMBC is the highest decision-making body at the opera-
tional 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 important 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
within the businesses they oversee.

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 internal audits. The Internal Auditing Committee meets every
quarter, and its members discuss important matters related
to internal auditing based on reports prepared by the depart-
ments responsible for internal audits. There is also the Audit
Department, which is an internal auditing unit that is indepen-
dent 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 man-
agement, are operating appropriately and effectively. The Audit
Department is also responsible for the overall supervision of
the internal audit systems 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 guid-
ance 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
business 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 compli-
ance and risk management at SMBC — its head office depart-
ments, 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 departments focus on material issues that arise in
the management of specific operations and categories of risk.
These auditing activities emphasize the verification of “Targeted
Audit Items” across the whole of the bank’s organization.
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 information
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 2011 51

Compliance

Compliance Systems at SMFG

Basic Compliance Policies
SMFG strives to further strengthen its compliance systems so
that it may fulfill its public mission and corporate social responsi-
bilities as a financial services group offering diversified products
and services, and thereby become a truly outstanding global
corporate group.

For compliance policies, SMFG sets forth its “Business
Ethics” (on page 48) as the common CSR principles for the
Group, and considers the strengthening of such Business Ethics
as one of the critical issues for the management.

Group Management from a Compliance
Perspective
As a financial holding company, SMFG strives to maintain a
compliance system which provides the appropriate directions,
guidance and monitoring related to compliance for its Group
companies.

Specifically, SMFG manages and monitors the self-sustaining
compliance functions of individual Group companies through
regular meetings attended by all Group companies and meetings
with individual companies. The following compliance issues will
be strengthened for the fiscal year 2011: (a) Responding appro-
priately to the regulatory environment, and strengthening the
compliance structure of overseas offices; and (b) Strengthening
the compliance structure of the Group.

Reporting System for Inappropriate Accounting
and Auditing Activities
SMFG has implemented the “SMFG Accounting and Auditing
Hotline” to provide the means for individuals in and out of the
Group to report inappropriate accounting and auditing activi-
ties. This hotline quickly identifies and takes appropriate actions
against any fraudulent activity or any misconduct associated
with accounting and auditing at SMFG and its consolidated
subsidiaries.

Reports may be submitted by regular mail or e-mail to the following
respective addresses.

Mailing address:
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 address:
smfghotline@iwatagodo.com

* The hotline accepts any alerts of inappropriate activities concerning

accounting and auditing at SMFG and its consolidated subsidiaries.

* Anonymous reports are also accepted; however, if possible, providing
personal information such as your name and contact information would
be appreciated and helpful.

* Please provide as much detail as possible for such inappropriate activi-
ties. An investigation may not be feasible if information is not adequate.

* Personal information will not be disclosed to any third parties without

your consent, unless such disclosure is 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 2011

Compliance at SMBC

Strengthening the Compliance System
To be in compliance with laws, regulations, and other social
standards is basically and generally required for all corporations.
Especially for banks, compliance-related issues are particularly
important as their public missions and corporate social respon-
sibilities are considered critical in the financial markets.

In accordance with the basic policies of SMFG, SMBC
requires its management and staff to have the highest values to
gain public trust, abide by relevant laws and regulations, uphold
high ethical standards, and act fairly and sincerely. Therefore,
SMBC considers that being fully in compliance is one of the
most critical issues for management to appropriately deal with
the issues related to the Banking Law, the Financial Instruments
and Exchange Act, compliance with other related ordinances,
and elimination of anti-social organizations.

Management of the Compliance System
SMBC adopts a two-tiered structure as its basic compliance
system as follows. At the first level, each department and office
is individually responsible for making preliminary decisions to
ensure that its conduct is in compliance with laws and regula-
tions. At the next level, the independent Internal Audit Unit con-
ducts strict audits of such departments or offices.

In order to maintain this two-tiered structure and ensure
its effective operation, the Compliance Unit, made up of the
General Affairs Department and the Legal Department, plans
and implements the kind of systems and improvements to be
in compliance, under the directions of the management. The
Compliance Unit also provides guidance for and monitors the
activities of all departments and branches, and assists such
departments and branches to make appropriate compliance-
related decisions.

SMBC commits to the following activities to ensure that

such compliance structure functions effectively.

Preparation of a Compliance Manual
SMBC has prepared its Compliance Manual by stating the
objectives, guidance and 60 compliance principles in order to
assist the management and staff to be fully in compliance. This
manual has been approved by the Board of Directors.

Development of Compliance Programs
The Board of Directors develops a specific annual plan for
compliance-related activities for each fiscal year, including
amendments to the rules and regulations and training, for the
objectives of the compliance system for SMBC and its con-
solidated subsidiaries to function effectively. During the fiscal
year 2011, SMBC will continue to strengthen its compliance
measures in order to quickly adapt to any changes in the social
environment. Such measures include strengthening the moni-
toring of marketing and sales of risk products, appropriately
managing conflicts of interest as the cooperation among Group

companies intensify further, responding to amendments to the
Act on Prevention of Transfer of Criminal Proceeds, further
strengthening measures to eliminate transactions associated
with anti-social organizations, and strengthening the overseas
compliance measures appropriate for the growing overseas
operation and further strengthened regulations of each country.

Appointment of Compliance Officers
In addition to appointing compliance officers to each branch
and department of the bank, the “Area Compliance Officers,”
who independently function from frontline departments, are
appointed for the Middle Market Banking Unit and Consumer
Banking Unit to direct and oversee compliance activities at the
branches and offices.

Creation of the Compliance Committee
The Compliance Committee, which consists of cross-
departmental compliance members, chaired by the director
in charge of compliance, has been created in order to com-
prehensively review and discuss compliance related issues.
To enhance fair and objective deliberations by the Compliance
Committee, outside members are also invited to participate in
such Compliance Committee meetings.

For the handling of any complaints from and conflicts with our
clients, SMBC has executed agreements, respectively, with the
Japanese Bankers Association, a designated dispute resolution
agency under the Banking Act, and the Trust Companies
Association of Japan, a Designated Dispute Resolution
Organization under the Trust Business Act and Act on Provision,
etc. of Trust Business by Financial Institutions.

Japanese Bankers Association:

Contact information: Consultation office,

Japanese Bankers Association

Telephone numbers: (Japan) 0570-017109 or 03-5252-3772

Business hours:

Monday through Friday
(except public and bank holidays)
9:00 am to 5:00 pm

Trust Companies Association of Japan:

Contact information: Consultation office, Trust Companies

Association of Japan

Telephone numbers: (Japan) 0120-817335 or 03-3241-7335

Business hours:

Monday through Friday
(except public and bank holidays)
9:00 am to 5:15 pm

SMFG 2011 53

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 our initiatives to preserve and achieve harmony
with the natural environment in our corporate activities. SMFG officially signed the “Statement by Financial
Institutions on the Environment and Sustainable Development” of the United Nations Environment Programme
(“UNEP”) in July 2002.

The Group Environmental Policy
Basic concepts
Recognizing the importance of realizing a sustainable society, SMFG is continuously making efforts to preserve and achieve harmony
with the natural environment in its corporate activities in order to support the economy and contribute to the betterment of society as a
whole.

Specific environmental policies
• We provide environment friendly financial products, information and solutions which support our clients in their efforts to preserve the

eco-system.

• We devise means to reduce environmental risks posed by our own activities and the society.
• We are determined to fulfill our social responsibilities through the conservation of resources and energy and the reduction of waste.
• We strictly comply with the environment-related laws and regulations.
• We practice the highest level of information disclosure related to the Group’s environmental activities and consistently improve our

efforts to contribute to environmental preservation by communicating with our staff as well as the third parties.

• We place high priority on thoroughly educating our staff about our environmental principles to ensure that they conform to these prin-

ciples in the performance of their work.

• We actively and effectively implement “environmental management,” and make continuous efforts to improve our system to deal with

environmental issues by setting goals and targets for every fiscal year and reviewing them as deemed necessary.

• These policies are disclosed on the Group’s website, and the printed version is available upon request.

Three pillars of the Group’s activities
The three pillars of our environmental action plan are to
“reduce environmental implications,” “manage environ-
mental risks,” and “promote environmental businesses.”
We set forth environmental objectives for various activities
and follow PDCA (plan, do, check, and act) procedures in
such environmental activities.

SMFG and principal Group companies have obtained
ISO14001 certification, the international standard for
Environmental Management Systems (EMS).

EMS Enhancement System

Environmental Action Plan and PDCA Procedures

The Group Environmental
Policy

Implementation of
environmental initiatives

Reduce environmental
implications

Manage environmental risks

Promote environmental
businesses

PLAN

CHECK

ACT

SMFG

Officer in charge of environmental issues:
Officer responsible for environment management: GM of Group CSR Dept., Corporate Planning Dept.
ISO14001 Secretariat:

Officer in charge of Corporate Planning Dept.

Group CSR Dept., Corporate Planning Dept.

SMFG Card & Credit

SMBC

Sumitomo Mitsui Card

Sumitomo Mitsui
Finance and Leasing

SMBC Friend Securities

Japan Research Institute

Corporate Planning Dept.

General Affairs Dept.

Operational Section

SMBC Nikko Securities

Communications Dept.

SMFG 2011

Reducing Environmental Impact
• Initiatives for Carbon Neutrality

SMFG sets forth objectives each fiscal year for reducing its use
of electric power and other energy resources, and it is actively
engaged in achieving these energy conservation goals.

SMBC ensures that its head offices are carbon neutral by
using Green Energy and trading carbon credits*. Sumitomo
Mitsui Finance and Leasing’s Tokyo Head Office is also carbon
neutral.

In addition, SMBC Friend Securities and Sumitomo Mitsui
Auto Service Company, Limited are converting their automobiles
to more environment-friendly ones for their transport needs and
making their transportation carbon neutral by offsetting emission
volumes.

* “Carbon credits” are also referred to as “emission allowances.” In this annual

report, we use “carbon credits.”

• Responding to the Amendments to the Rational Use of

Energy Act

Under the Amendments to the Rational Use of Energy Act of
April 2010, companies using 1,500kl or more energy (crude oil
equivalent) per annum are now required to establish an energy
consumption management system and develop a medium-
to long-term energy efficiency improvement plan for reducing
energy consumption by at least 1% per year.

The Group is taking measures to reduce its energy usage in
its business operations at all locations, in accordance with this
law, and developing consultation business to meet the needs
of our clients for energy conservation and the reduction of CO2
emissions.

• Greening IT Operations

SMBC has been promoting greening IT operations at its branch
terminals and ATMs. The new CUTE* terminals for over-the-
counter transactions, which are jointly developed with NEC
Corporation and Oki Electric Industry Co., Ltd., have made it
possible to convert paper-based documents, such as images
of driver’s license and other forms of IDs into electronic images
and to store them quickly. The CUTE terminals have reduced
approximately 3 million A4-size sheets of paper annually. SMBC
donated part of the cost saved from paper reduction by the
CUTE to the Tokyo Metropolitan Government’s Green Tokyo
Fund, specifically for the “Creating Umi-no-Mori (Sea Forest)”
project, one of the four projects’ funds. We also donated to the
University of Tokyo’s “Life in Green Project” for the construction
of research facilities for botanical studies.
We are further promoting efforts to make our offices more
paperless and efficient through various measures, such as
converting the records of ATM’s transactional data (called “ATM
Journal”) and reports submitted to the Head Office in electronic
format. These efforts will make a great contribution in the saving
of the equivalent of 28 million A4-size sheets of paper annually.

* CUTE: Common User Terminal Engine

• Environmental measures taken in the Head Office building

SMFG and SMBC moved to a new Head Office building in
October 2010. The new building is designed to achieve a 30%
reduction in annual CO2 emissions, compared with the aver-
age office building in Tokyo, by implementing environmental
measures, such as rainwater storage facilities, photovoltaic

power-generation, rooftop-greening, motion sensors and
recycled material usage. We have taken various other measures
to achieve efficient administrative operations by co-sharing
office spaces and promoting
paperless meetings.

• Eco-Friendly Branches

In order to generate new and
creative ideas on energy-
saving at branches, the bank
publicly began soliciting ideas
by newly creating the “SMBC
eco-banking office prize” for
the “eco japan cup 2010,” a competition open to the public for
new environmental businesses held annually for which SMBC
is one of the sponsors. Prize-winning ideas will be incorporated
into the planning and designing of environment-friendly model
branches of the bank.

Environment-friendly model branch

SMBC Friend Securities is converting its branches to more
environment-friendly ones at the time of branch relocation
or renovation by installing carpet tiles made of materials with
carbon-offset initiatives.

Managing Environmental Risks
• Dealing with Soil Contamination and Asbestos Risks

In order to deal with the risk of contamination of the borrower’s
collateral land, SMBC requires contamination risk assessment
to be conducted for the land to meet certain criteria. When it
is considered that the contamination risk is high, the assessed
value of such potential risks is deducted from the assessment
value of the collateral.

Similarly with the risk of asbestos exposure, the assessed
value of this risk is deducted from the assessment value of the
collateral. SMBC also recommends to its clients that they con-
duct such contamination assessments. SMBC conducts such
contamination assessments and properly removes asbestos
from its buildings.

• Adoption of the “Equator Principles”

SMBC has adopted the Equator Principles, a set of principles
for determining, assessing and managing the social and envi-
ronmental risk of project financing. Its Environment Analysis
Department assesses the social and environmental risk of large
projects in accordance with such Principles.

■ Flow chart of the Social and Environmental Risk Assessment

of SMBC

Project Information

Screening

t
n
e
m

s
t
n
e

i
l

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

t
n
e
m
n
o
r
i
v
n
E

SMFG 2011 55

Environmental businesses
The Group considers that environmental businesses are part of its core business operations, through which it contributes to the con-
tinued well-being and improvement of the global environment. In fiscal 2005, SMBC started its cross-organizational Eco-Biz Promotion
Council, for periodical discussion of the development of sophisticated and efficient products and services for environmental maintenance
and improvement. Other SMFG Group companies have become members of this Council, meeting on a regular basis.

Environmental Initiatives by Group Companies

Company

Clients

Program/Product

SMFG

Corporate

SAFE environmental magazine

SMBC*1/
JRI*2
SMBC

SMFG Environmental Business Forum

SMBC Environmental Assessment Loan/
Private Placement Bond

SMBC-ECO Loan

Ministry of Environment’s interest-
subsidized financing program

Carbon-credit related business
activities (matching, advisory, trust and
consultation activities)

Carbon credit trading
Strengthening alliances with interna-
tional and financial institutions

“Climate & Children Supporters”

Individuals

Environmental campaign using JGBs
for individuals

Nikko*3

SMBC/
Nikko

Nikko World Trust – Nikko Green New
Deal Fund (JPY Non-hedged Class)/
(JPY Hedged Class)
Green Bonds

SMBC Nikko World Bank Bond Fund

SMBC /
SMFL*4

Individuals
Corporate

eco japan cup

SMFL

Corporate

Carbon-neutral leases

Trading of used machinery and
equipment

Description

Started in 1996, this bimonthly magazine contains interviews with top management of environmentally advanced companies,
analyses of business and the latest regulatory trends, and other useful information for corporate environmental activities. It can be
viewed online at SMFG’s website (in Japanese). http://www.smfg.co.jp/responsibility/csrinfo/safe.html
SMBC holds multifunctional programs, including environmental seminars and business matching opportunities at the Eco-Products
event, one of Japan’s largest environmental exhibitions.
Terms and conditions of this loan/bond depend on the results of an assessment of a company’s environmental friendliness using
standards established by SMBC and JRI. Clients can choose the fund procurement method — loans or private placement bonds.

This loan offers reductions on interest rates of up to 0.25% for SMEs with environmental management systems certified by any of
more than 20 organizations, including NPOs and local governments.
Under this program, companies may receive loans from financial institutions, with interest subsidized by the government to finance
global warming-related capital investment, provided that they set and achieve CO2 emission reduction targets during a specified
period. As one of the financial institutions authorized to provide loans under this program, the bank supports companies taking
environmental initiatives.
SMBC serves clients with needs associated with carbon credits by using overseas offices for their trust operations and other
resources to offer products and services such as introducing sellers in developing countries, providing advisory services to support
transactions, offering trust products and financing. SMBC established a consultation company in Brazil to assist in development of
Clean Development Mechanism (CDM) projects.
In June 2009, SMBC became a carbon credit trader, the first Japanese bank to trade carbon credits directly with clients.
In April 2010, the bank executed a Memorandum of Understanding with the Federation of Malaysian Manufacturers and Green
Purchasing Network Association Malaysia for the promotion of environmental businesses in Malaysia. In efforts to further establish
a more solid global network, SMBC has formed business alliances with local financial institutions and economic organizations in
the Philippines, Brazil and other countries for the promotion of financing for renewable energy projects and carbon-credit trading.
An original program of SMBC which supports measures to prevent global warming through the trading of carbon credits while
helping children affected by drastic climate changes through UNICEF. When participating companies trade carbon credits to
prevent global warming, they automatically support elementary schools in Mozambique which is known for its frequent droughts
and natural disasters, having built 17 wells and 44 toilets under the UNICEF water management and public hygiene project. (as of
June 30, 2010)
We have been contributing to global environmental protection by 1) trading the equivalent of 100kg of carbon credits and
2) planting trees equivalent to the number of trees planted in 1m2 for the number of individuals who purchased JGBs. Concurrently,
we have been supporting the recovery and reconstruction of areas struck by the Great East Japan Earthquake by trading carbon
credits generated in northeastern Japan.
The Green New Deal is an economic recovery policy based on global environmental initiatives. This fund invests by purchasing
stocks of companies in countries where high growth in green businesses is anticipated.

“Green Bonds”, the purpose of which is to promote environmental preservation, is the generic name given to the various bonds
offered by SMBC Nikko Securities starting in 2010. Funds raised from these bonds must be used for environmental protection
measures.
This is the first fund in the world to invest in the green bonds issued by the World Bank (data provided by Nikko Asset Management
Co., Ltd.)
The funds raised by the issuances of these bonds should essentially be used only for loans for projects to prevent global warming
in emerging countries.
Furthermore, a portion of earnings from the fund will be donated to the Japan Committee for UNICEF and the Japanese Red Cross
Society for the resolution of social conflicts around the world.
This is a contest for selecting companies which have practical environmental technologies and ideas. SMBC also arranges for
venture companies to conduct R&D jointly with Japanese universities and the funding of their R&D activities.
http://www.eco-japan-cup.com/ (in Japanese only)
The first new service in the leasing industry started in August 2007, which renders the greenhouse gases released by leased
assets neutral through the allocation of carbon credits to these assets. The goal is to provide further support to companies that
protect the environment through their own activities.
Machinery and facilities with expired leases or bought back from the client are sold by SMFL to clients needing such items.
Through the purchase and sale of used machinery, SMFL aims to become an environment-friendly leaser committed to the
recycling and reuse of products.

*1 Sumitomo Mitsui Banking Corporation *2 The Japan Research Institute Limited *3 SMBC Nikko Securities Inc. *4 Sumitomo Mitsui Finance and Leasing Co., Ltd.
*5 Sumitomo Mitsui Banking Corporation (China) Limited *6 The Japan Research Institute (Shanghai) Consulting Co., Ltd. *7 Sumitomo Mitsui Card Company, Limited
*8 SMBC Friend Securities Co., Ltd. *9 THE MINATO BANK, LTD. *10 Kansai Urban Banking Corporation

SMFG 2011

Company

Clients

Program/Product

JRI

Corporate,
other

Environmental advisory business

Energy-saving industrial initiative with
Guangdong Province

JRI /
SMBC /
SMBCCN*5 /
JRIS *6
SMCC*7
SMCC /
Cedyna
Cedyna

Friend *8

Friend /
Nikko
Minato*9

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

Individuals

Chip recycling
Web Registration Campaign

Socially contributing environmental
cards
Global environmental sustainability
bonds

Electronic statement service

Corporate Minato ECO Loan/Private Placement

Bond

Individuals Minato ECO product purchasing loan
Minato ECO housing loan

KUBC*10

Individuals Mother Lake eco-time deposits

Housing loan for solar power
generation
Donation to environmental fund by
housing loans

Description

This business is involved in many projects mainly for waste treatment and energy. Its objective is to prevent global warming and
support the growth of environmental companies by creating new businesses.
In November 2010, we executed a memorandum with the Department of Science and Technology of Guangdong Province on a
joint promotion of industries which conserve energy and reduce carbon emissions. We plan to promote low-carbon and energy-
saving industries and Energy Service Companies, including measures such as policy research for energy-saving and the promotion
of technological transfers through collaborative model projects by Japanese and Chinese companies.
Leveraging its environmental business expertise, JRI is creating a plan for the use of renewable energy at the Tianjin Eco-City,
China’s 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 project.

Rare metal extracted from IC chips installed in expired credit cards, are recycled.
SMCC is vigorously promoting the use of online account statements (credit/debit sums are e-mailed and the details posted on its
website) as a means of conserving paper and helping cut CO2 emissions.
We issue socially contributing environmental credit cards such as “Chikyuni Yasashii Card” and “Cedyna Card AXU” which donate
part of the payments made by such cards to environment preservation organizations.
SMBC Friend Securities marketed global environmental sustainability bonds issued by the European Reconstruction and
Development Bank (ERDB) during the period from November 30 to December 21, 2010. The funds raised by such bonds are used
to support natural energy development, forestry regeneration and other environmental projects selected by the ERDB based on its
evaluation standards.
Promoting the usage of online account statements

Minato Bank offers preferential interest rates on loans and preferential fees on underwriting of private placement bonds for
corporations which have acquired an environmental management system certification.
Minato Bank offers environment-friendly loans to clients purchasing and installing new-energy or energy-saving equipment. It
additionally offers housing loans with discounted interest rates to clients (a) purchasing homes installed with such equipment,
(b) renovating their homes to be energy efficient, (c) refinancing housing loans of energy efficient homes or (d) constructing or
purchasing new homes which meet the residential environmental efficiency standards set forth by the city of Kobe (Comprehensive
Assessment System for Environmentally Efficient Construction).
KUBC offers time deposits, through which clients may contribute the amount equivalent to 0.01% of their deposit balance to the
“The Mother Lake-Shiga Support Fund,” which preserves the natural environment of Lake Biwa. In April 2011, KUBC donated
¥5.25 million to this Fund, which is equivalent to 0.01% of ¥52.5 billion, the outstanding balance as of February 28, 2011.
The bank has launched a campaign in which applicable interest rate cuts of up to 1.0% a year are offered to clients who take out
housing loans for residences in which solar power generation facilities are installed.
When clients purchase homes which are installed with designated solar power generation systems and located in the subdivisions
in the Katata district of Otsu-city, Shiga Prefecture, a certain percentage of the housing loan amount is donated to the Ohmi
Environment Conservation Foundation, the activities of which are dedicated to the preservation of Lake Biwa.

Environmental Business Forum at Eco-Products
2010

Issuance of “Cedyna Card AXU” to preserve
bio-diversity

In order to preserve bio-diversity, we issued the Cedyna Card
AXU in May 2010, through which environmental contributions
may be made. In addition to the basic functions of regular
credit cards, this Card offers ecological options including
participation in ecological nature tours under the “Green
Selection” program; shop LOHAS products and services with
the concept of preserving the environment and bio-diversity,
under the “Green Shopping” program; and donates 0.1% of
the payments made by the Card to environment preserva-
tion organizations under the “Green Contribution” program; to
make the usage of this Card more interesting and enjoyable.

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

SMFG conducted business matching, set up booths
having catalogs available, and offered lectures, seminars, and
other programs, targeting different types of stakeholders, such
as those who are planning to newly enter the environmental
business field, considering expanding their marketing chan-
nels, and reviewing the information collected. By offering such
opportunities, SMFG provided forums for the representatives of
companies in the environmental field to expand their network
business contacts and exchange information.

During the three-day exhibition, we held 17 seminars on
various topics, as well as two panel discussions. 659 busi-
ness matchings were arranged, and 28 companies had booths
marketing their products and services.
Consequently, the SMFG
Environmental Business Forum
hosted a substantial number of
business negotiations for new
environmental technologies,
products, and services.

SMFG 2011 57

Social Contribution Activities

Fundamental approach on 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 by 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

• Collection and Donation of Mistakenly-Written Postage-

Prepaid Postcards and Recycling of Other Used Items
SMFG collects mistakenly-written postage-prepaid postcards
from Group employees, exchanges them for new postage
stamps, and donates the stamps to volunteer organizations to
help them cover their postage costs. In addition, SMBC col-
lects unused prepaid telephone cards, Sumitomo Mitsui Card,
Sumitomo Mitsui Finance and Leasing (SMFL) and Cedyna
collect PET bottle caps, and Sumitomo Mitsui Card and SMBC
Friend Securities collect used postage stamps from employees,
donating them to volunteer organizations. SMBC and SMBC
Friend Securities also donate products given by the companies
to their shareholders.

• Sign-Language Courses

In order to enhance the capabilities of our employees allowing
them to better communicate and offer personalized services
to assist the hearing-challenged, sign-language workshops are
held annually by SMBC. In fiscal 2010, the bank also organized
seminars explaining the daily problems faced by the hearing-
challenged, interpreted by a sign-language interpreter.

• Volunteer Activities, and Blood Donation Campaigns

SMBC offers educational workshops for volunteer activities in
to encourage
order
its
to
employees
participate in voluntary
activities. In fiscal 2010,
workshops were orga-
nized in Tokyo, Nagoya
and Osaka, simulating
experiences of global

SMFG 2011

poverty, diversity, environment and other related issues.

SMBC Friend Securities organizes personal awareness
sessions during which our employees can actually experience
some of the difficulties encountered and experienced by our
senior citizens by using wheelchairs. At the same time, “Senior
Citizen Simulation” sessions are also organized.

Blood donation campaigns at the workplace are organized

by SMBC, Sumitomo Mitsui Card and SMBC Nikko Securities.

• Sale of Products Made by Social Welfare

Organizations

In the SMBC Head Office building, employees can buy products

made by NPOs employing the physically challenged.

Volunteer Activities for Local and Overseas
Communities
• Volunteer Fund

SMBC has a system in which volunteering employees may have

¥100 deducted monthly from their salaries to donate to volunteer

organizations. As of June 2011, more than 11,000 employees par-

ticipated in this program. The following are some of the 23 activities

funded by the SMBC Volunteer Fund in fiscal 2010.

Overseas

• School meals program for elementary schools in Burkina

Faso

• School library opened in Laos
• Support for elementary education in Afghanistan by perform-

ing the kamishibai (storytelling using pictures)

• In Indonesia, scholarships for intermediate and high school

students, and a health program for infants

• Clean water project for elementary schools in Sudan

• Improvement and expansion of elementary school facilities

in deprived areas in China

• Support mothers with children through health and literacy
programs organized by agricultural organizations in the
Philippines

• Project for helping women become self-supporting in

Myanmar

• Support for the improvement of living standards of deprived

women and elderly people in rural Bangladesh

Japan

• For terminally ill young children, SMBC provides funds for

family trips

• Sponsorship for workshops held at primary schools for pup-
pet plays performed by speech- and hearing-challenged
persons

• Support for the training of guide dogs (Wakaba program)

At Group member SAKURA KCS Corp., as of February
2011, 891 employees (approximately 80% of the company’s
total employees) have participated as volunteers by engaging in
welfare and environmental contribution activities.

• Supporting Education in Developing Countries by

Recycling Used Books

Sumitomo Mitsui Card collects old unwanted books from
employees to send to libraries in developing countries. It also
asks its cardholders to participate in this effort.

•Activities of YUI, SMBC’s Volunteer Organization

SMBC also provides support for YUI, an in-house volunteer
organization which provides opportunities for SMBC employees
to plan and perform volunteer activities. YUI volunteer activi-
ties performed regularly include social events at schools for the
hearing-challenged, beach-cleaning, and the organization of
singing performances by senior citizens. Other activities include
holding charitable bazaars for the sale of hand-crafted products.

• Contributing to Local Communities

SMBC has been promoting and performing volunteer activities
planned by its branches and other offices in Japan to contribute
to local communities. These activities include branch tours,
clean up of the local environment, 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 lobbies of SMBC branches. Similarly,
SMBC Nikko Securities is proactively involved in clean-ups and
volunteer activities at its branches, assisting in resolving issues
and problems faced by local communities and supporting the
development of local society.

• Local Community Contributions by Overseas Offices

Overseas offices conducted
the following activities in fiscal
2010.

• Sumitomo Mitsui Banking
Corporation (China) Limited
established a scholarship
program for students of
Zhejiang University, Shanghai International Studies University,
Sun Yat-sen University, and other universities.

• SMBC’s Hong Kong Branch gave donations in support of an

orchestra composed of young Asian musicians.

• SMBC’s Seoul Branch assisted South Korean students in
improving their Japanese language skills and in aquiring a
deeper understanding of Japanese culture through dona-
tions to a nationwide Japanese drama convention.

• SMBC’s Labuan Branch in Malaysia, following its relocation,
donated desks, chairs and cabinets to occupational training
centers for the disabled.

• SMBC’s Hanoi Branch provided international school stu-

dents with vocational experiences.

• SMBC’s Bangkok Branch assisted farmers in northeast
Thailand by donating underground water storage tanks and
assisting with vegetable planting and harvesting.

• Employees of Sumitomo Mitsui Banking Corporation Europe
(SMBCE) conducted volunteer activities in their time off.
SMBCE contributes to charitable organizations through an
in-house fund and also uses a matching gifts program under
which it donates a certain amount for every donation made
by its employees.

• The European office of the Japan Research Institute (JRI)

made a donation
in support of a
Japanese-language
speech contest.

•Donation Boxes for Foreign Currency Coins

SMBC cooperates in fundraising activities by UNICEF. As a
member of the UNICEF foreign currency coin donation com-
mittee, it places donation boxes for foreign currency coins at
the entrances of all manned branches and offices in Japan, and
sorts such collected coins by currency for delivery to UNICEF.

• Support through Products and Services

SMBC offers ordinary deposit accounts from which the accrued
interest (after tax) is donated to UNICEF, and SMBC also
makes donations matching the amount donated by its clients.
Sumitomo Mitsui Card collects donations from cardholders
through the World Gifts Point Service of VJA group companies,

SMFG 2011 59

and it also provides matching donations to UNICEF, UNESCO,
the World Wildlife Fund Japan and the World Food Program in
addition to donations given directly to UNICEF by the company.
It also offers the UNICEF VISA Card and other social contribu-
tion credit cards and donates a portion of credit card payments
to charitable organizations.
Cedyna contributes to the Japan National Council of
Protective Care Homes for Children and other organizations by
issuing social contribution credit cards such as the ATOM Card,
which supports “Realizing children’s dreams.” It also collects
donations from cardholders using “points” accumulated from
their purchases, and also accepts online donations.

• Participation in the “TABLE FOR TWO” Program

SMBC’s Head Office has a program that provides donations to
the nonprofit organization TABLE FOR TWO International to fund
school meals in developing countries, for every low-calorie meal
ordered for lunch. SMBC Friend Securities has also installed
vending machines selling healthy drinks, donating part of their
sales to TABLE FOR TWO International.

• Social Contribution

Activities of In-House
Foundations

Based in the United States,
SMBC Global Foundation
has provided scholarships to
more than 5,000 university
students in Asian countries
since its establishment in
1994. In the United States, it supports educational trips to
Japan organized by a high school located in Harlem, New York
City, and volunteer employees of SMBC and JRI to participate
in school beautification programs. The foundation also provides
matching gifts for SMBC employees.

Established in 1990, the SMBC Foundation for International
Cooperation strives to assist in developing human resources
necessary to achieve sustainable growth in developing econo-
mies as well as to promote international exchange activities.
Since its inception, the foundation has provided financial sup-
port for 7-8 students from Asian countries each year, enabling
them to attend universities in Japan. The foundation also offers
subsidies to research institutes and researchers undertaking
projects related to developing countries.

Environmental Activities
• Participation in Environmental Preservation Initiatives

SMFG organizes “SMFG Clean-up Day” on which Group
employees volunteer to clean up beaches. In fiscal 2010,
some 120 employees participated in this activity in Kanagawa
and Hyogo prefectures. SMBC Friend Securities organized its
own beach cleanup events in Chiba and Hyogo Prefectures.
Approximately 101 employees participated. In addition, employ-
ees of Cedyna, SMFL and JRI regularly participate in such
cleanup activities near their offices.

SMFG 2011

In autumn 2010, SMBC Nikko Securities established “Green
Week” for environmental protection and social contribution
activities. A total of 2,211 employees and their family members
participated in clean-ups and other group activities.

• SMBC Environmental Program NPO C.C.C Furano Field

SMBC also provides support to an environmental project in
Furano, Hokkaido implemented by screenwriter, Soh Kuramoto.
SMBC is providing support for forestation in a closed-down golf
course in Furano. It supports environmental education programs
under which children explore nature by using their five senses.

• Donations through Marketing of the World Bank

Green Fund

SMBC and SMBC Nikko Securities donate a portion of the
earnings from the “SMBC Nikko World Bank Bond Fund” (sim-
ply referred to as “World Bank Green Fund”) to the Japanese
Red Cross Society and the Japan Committee for UNICEF.

• Support for the EARTH PHOTO CONTEST

SMFL supports a photography contest for communicating the
importance of resolving environmental problems and encourag-
ing people to take action. The company presents the Sumitomo
Mitsui Finance and Leasing Prize for outstanding photographic
entries.

Contributing to Cultural, Artistic, and Educational
Activities
•Concerts Held in the Reception Lobbies of Branches

At the SMBC Head Office and Osaka Head Office, we hold lobby
concerts for the general public free of charge. The concerts held
last March and April were organized to raise donations for the
disaster recovery and reconstruction efforts after the Great East
Japan Earthquake.

•Support for Cultural and Artistic Ventures

For supporting kabuki and other traditional performing arts in
Japan, Sumitomo Mitsui Card donated stage curtains to the

National Theatre and the National Engei Hall. The company
also supports the development of talented performers by co-
sponsoring children kabuki performances. SMBC Friend Securities
supports cultural and artistic activities by specially sponsoring
art exhibitions such as those by Gyoshu Hayami (the traditional
Japanese painter) shown at the Yamatane Museum of Art.

SMBC and Cedyna support the promotion of music culture

by sponsoring classical music concerts.

•Financial and Economic Education

SMBC and SMBC Nikko Securities organize vocational work-
shops for elementary school students to experience working
in the financial industry. The bank supports diverse financial
and economic education activities, including publishing a book
called “What Does a Bank Do?,” providing financial educational
on-line games on the SMBC website, co-sponsoring Kidzania (a
vocational experience theme park for children), and supporting
Shinagawa Financial Park (economic training programs for junior
high school students).

Sumitomo Mitsui Card, SMFL, JRI and SMBC Nikko
Securities send instructors for classes at universities.
Additionally, in November 2010, SMBC Friend Securities began
its free online education program and practical experience
program, “You • You Toshi” (self-composed Investment) for inex-
perienced investors.

•Students Internship Program

SMBC, JRI and SMBC Friend Securities offer internship pro-
grams for students. In fiscal 2010, SMBC invited 16 students
allowing them to gain actual banking operational experience
at various departments of the Head Office. JRI invited five stu-
dents to help gain a thorough understanding of environmental
and energy businesses for the next generation. SMBC Friend
Securities invited 26 students to learn about financial instru-
ments and the securities business.

Emergency Reconstruction Assistance and
Support for the Regions Devastated by the Great
East Japan Earthquake
•Disaster-relief Donations

SMFG and its Group companies have donated an aggregate
of approximately ¥600 million for the reconstruction of regions
devastated by the Great East Japan Earthquake, out of which
SMBC and SMBC Nikko Securities donated ¥300 million and
¥100 million, respectively. The Group also took other initiatives
including collecting donations from employees and donating the
amount equivalent to the donations given by employees.

Furthermore, SMBC opened an account solely for donations
for disaster-relief efforts, and solicited donations from our clients
and also from our employees of all Group companies, including
the bank and SMBC Nikko Securities. Sumitomo Mitsui Card
and Cedyna also accept donations charged to credit cards.

•Charity Concerts

Since 2006, SMBC has held
charity concerts performed
by employees to support
unfortunate children world-
wide. The donations are col-
lected from the audiences
of concerts and also from
the sales of employees’ handcrafted products. In May 2011,
the bank delivered musical instruments, as part of its support
for disaster victims of the Great East Japan Earthquake, to the
elementary and intermediate schools which were substantially
damaged by the earthquake and tsunami. In addition, people
taking refuge in Tokyo were also invited to the concerts.

•Volunteer Activities

In April, SMBC implemented a special leave of absence for
disaster relief volunteer activities, and in June, it began allow-
ing employees to actually go to the disaster areas for regular
volunteering. By early July, 65 employees had participated in
such volunteer activities as the clean-up of homes and restor-
ing photographs by taking advantage of this volunteer leave
program.

In April, SMBC Nikko Securities also implemented the volun-
teer leave program, and in July, it sent approximately 360 newly
hired employees to the disaster areas for volunteer activities.

In order to assist our clients affected by the Great East
Japan Earthquake as much as possible, SMBC continued to
open its Sendai branch on non-business days, and provided the
over-the-counter payment services to our clients who had lost
their deposit books, certificates or registered seals (provided
that they had other types of identification). We also began offer-
ing housing loans with preferential interest rates for our clients
whose homes were lost or damaged by the earthquake, and
special funding facilities for our corporate clients.

SMFG 2011 61

Human Resources

SMFG and its Group companies strive to create the kind of
work environment which every employee feels proud of and is
able to develop his or her full potential and capabilities in. In
the following pages, we introduce some of the activities initi-
ated by the human resources department of SMBC and other
Group companies, including Sumitomo Mitsui Card, Cedyna,
Sumitomo Mitsui Finance and Leasing (SMFL), the Japan
Research Institute (JRI), SMBC Friend Securities, SMBC Nikko
Securities, The Minato Bank and Kansai Urban Banking.

Five Goals of SMBC’s Human Resources
Development

1. To develop professional and specialized employees who can

provide our clients with highly valued products and services.

2. To maintain and strengthen our sound business manage-

ment enabling SMBC to globally compete in the market.

3. To cultivate the kind of corporate culture which encour-

ages values of forward-looking, creative attitude and mutual

cooperation.

4. To be conscious of the social responsibilities of the Group,

and cultivate the kind of corporate culture that contributes to

the sound development of society.

5. To encourage employees to respect their individuality based

on an understanding of diversity and personal fulfillment.

Training Employees with Specialized
Professional Skills
In order to motivate and encourage younger employees and to
promote their personal development, the bank provides basic
practical training programs in three areas: the Retail Banking
College; the Corporate Banking College and the Banking
Operations College. Our employees are able to acquire the
required business knowledge and skills through on-the-job
training and seminars. The bank enhances its training programs
by assigning mentors to newly hired employees and the Training
Institute’s instructors to regional head office departments.

Following the amendments to the Money Lending Business
Law, Sumitomo Mitsui Card has increased its efforts toward
the development of professional expert employees in the credit
business. We have taken measures to proactively support our
employees to become licensed money lending officers by regu-
larly holding in-house seminars, educating them with knowledge
on products and other related subjects. Cedyna strives to
promote high professional standards and encourage the setting
of challenging goals. Younger employees are encouraged to
work in various departments to learn and gain business skills
and diverse work experience. They strengthen their professional
skills by taking programs at different levels for each type of busi-
ness and with specific objectives. SMFL has established “SMFL
Standards,” which annually sets forth the human resources
development plan for sogoshoku (management-track) employ-
ees of not more than five years with the company. SMFL has

SMFG 2011

created the “Young Employees’ Growth Plan & Guide,” based
on the SMFL Standards, and it has also established an in-house
business school which supplements on-the-job training. JRI
believes that its human resources provide added value, which
is translated into its solutions and proposals. With that in
mind, JRI has established the Staff Development Department
in the Computer System Division, and the Human Resources
Incubation Center in the Comprehensive Research Division
for the well-planned development of human resources. SMBC
Friend Securities has started to offer its accredited in-house
classes for our young employees to acquire business skills
to enhance their knowledge and improve their skills, in order
for the company to respond appropriately to the continuously
advancing sophistication and diversification of the securities
business. It has also introduced a tutoring program for effective
on-the-job training of new employees. SMBC Nikko Securities,
as a comprehensive securities and investment banking firm,
is further strengthening its educational programs to develop
employees with expert knowledge and improve their profes-
sional skills by providing its newly hired employees with OJT
personally assisted by instructors, follow-up seminars and other
programs such as the “new employee instructor program.” The
Minato Bank has consistently implemented the system of the
Minato Retail-business College (“MRC”) which improves the
quality of consultation services offered to its individual clients.
Kansai Urban Banking has a basic training program designed
for the first five years of employment with the bank in order to
develop an energetic group of employees. It has also created
a system to develop potential mid-management employees
and promote the careers of younger and female employees. As
described above, each Group company is further strengthening
its educational system.

Employees’ Training Seminar at SMBC Nikko
Securities

Training Seminar at Kansai Urban Banking

Creating a Corporate Culture which Derives
Strength from Diversity
•Human Resources Diversity

The Group is implementing its initiatives to create diversity (e.g.
gender, nationality) at work. In April 2008, the Diversity and
Inclusion Department was established in the Human Resources
Department, and other initiatives were implemented for creating
the kind of corporate culture which derives its strength from
diversity.

•Personnel System

In order to motivate employees to take on more challenges in
performing difficult tasks for promotion, SMBC has introduced a
new workplace hierarchy system in which job rankings are more
finely subdivided. This system will make it possible for talented
individuals to be quickly promoted to mid-management levels.
In order to enhance a sense of unity as “Team SMBC” and to
achieve a proactive and energetic bank, our employees’ per-
formances are evaluated not simply in terms of one fiscal year’s
achievements but also evaluated on their overall contributions to
the company.

•Developing Employees for Global Operations

In order to respond to the rapid globalization of society and busi-
nesses, SMBC is striving to develop global human resources
with practical language skills and an international business
sense. In fiscal 2010, in order to enhance the overseas market
presence and internal globalization of the company, the bank
substantially increased the number of employees taking lan-
guage classes or having overseas business experience, and
those employed locally by overseas offices and subsidiaries, and
promoted the exchange of
employees between offices
in Japan and overseas.

Discussion session

•Employing Persons with Disabilities

SMBC has established a special company called SMBC Green
Service Co., Ltd. which provides employment opportunities for
the physically-challenged. In December 2008, the company
opened its Kobe Branch, and the Unagidani Office in Osaka in
February 2009 for creating jobs not limited to the physically-
challenged but also including the mentally-challenged. As of
March 2011, physically-challenged employees accounted for
1.95% of our total number of employees, more than the legally
mandated level of 1.8%.

•Providing Support for Good Work-Life Balance

The Group has an employee support program which provides
assistance and support for maintaining a proper work-life bal-
ance. In fiscal 2008, Sumitomo Mitsui Card, SMFL, JRI, and
SMBC Friend Securities developed their “Work-Life Balance
Guidebook,” based on actual experiences at SMBC. All Group
companies have already implemented the programs for parental
leave, leave for taking care of ill children, and shorter working
hours. Such programs provide more employee benefits than
those mandated by law. In addition, SMBC, Sumitomo Mitsui
Card, and JRI provide child-care subsidies, while SMBC,
Sumitomo Mitsui Card, Cedyna, SMFL, and Kansai Urban
Banking have implemented a program for rehiring former
employees. These programs assist and support in realizing a
good work-life balance for the Group’s employees. There is
also an annual visitation day for the employee’s children and
other family members to give them an opportunity to see the
employee at work at SMBC, Sumitomo Mitsui Card, SMFL,
JRI, and SMBC Friend Securities. JRI also organizes “Mama &
Papa Lunches” for an opportunity for employees to exchange
information on raising children. SMBC has promoted a “Go
Home Early to the Family Day,” while SMFL has a campaign to
encourage employees to take their summer vacations and to
reduce overtime work. SMBC Nikko Securities has introduced
an online support program for employees returning to work after
parental leave. Cedyna was awarded the “Best Balance Award”
in 2010, under the “Promotion of Work Life Balance Certification
System” organized by Shinjuku Ward in Tokyo, recognized for
its diverse human resources programs and achievements. The
Minato Bank regularly provides training programs for employees
coming back to work after maternity leave. SMBC, Sumitomo
Mitsui Card, Cedyna, JRI and The Minato Bank have all obtained
“Kurumin certification” issued by the Japanese Ministry of
Health, Labour and Welfare, for programs in compliance with
the Law to Promote Measures to Support the Development of
the Next Generation.

Children’s Visitation Day

SMFG 2011 63

Enhancing Awareness of Individual Rights
SMBC has implemented in its corporate principles of action
concepts which state that “we will respect the individual human
dignity of our clients and employees” and “we will not allow
any discrimination.” Training seminars and study sessions
on human rights issues and discrimination are organized for
general managers of branches and departments, employees
newly-appointed to management positions, and newly hired
employees. Campaigns for creating slogans promoting individual
human rights are also organized to motivate our employees to
reflect and think about individual human rights and to come up
with a slogan for the campaign.

Kansai Urban Banking is implementing measures to further
enhance awareness of individual human rights by organizing
human rights awareness study sessions for each regional group
and inviting employees to think and come up with an individual
human rights slogan. SMFG and its Group companies partici-
pate in the “United Nations Global Compact,” and also endorse
and support its 10 principles in the areas of human rights, labor
standards, environment and anti-corruption measures.

◆ SMBC was Named as One of the Best 25 Companies to Work in

Japan in the “Great Place to Work” Ranking
In March 2011, SMBC was selected for the forth consecutive
year as one of the best companies in Japan to work in the survey
conducted by Great Place to Work® Institute Japan.
* Great Place to Work® Institute, Inc., incorporated in the U.S.,
is a survey organization which provides data for the annual list of
the “100 Best Places to Work” published by Fortune magazine.
The survey consists of two main sections: a survey on the internal
systems and corporate culture of
respondent companies, and a ques-
tionnaire survey by the employees
of these companies. The employee
survey carries a two-thirds weight in
determining final results.

Staff Profile
◆

SMBC

March 31

Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2011

23,543

13,669

58.06%

9,874

41.94%

25,122

13,793

54.90%

11,329

45.10%

25,073

13,546

54.03%

11,527

45.97%

36 yrs 9 mos.

36 yrs 2 mos.

36 yrs 5 mos.

40 yrs 5 mos.

40 yrs 2 mos.

40 yrs 3 mos.

31 yrs 8 mos.

31 yrs 3 mos.

31 yrs 11 mos.

Average years of service

13 yrs 10 mos.

13 yrs 3 mos.

13 yrs 5 mos.

Male
Female

Number of women in
managerial positions**
Ratio of employees with
disabilities (% of total)***

16 yrs 11 mos.

16 yrs 8 mos.

16 yrs 9 mos.

9 yrs 6 mos.

9 yrs 0 mos.

9 yrs 7 mos.

456

584

766

1.95%

1.90%

1.95%

The number of full-time employees, including employees seconded to other
companies and organizations. The following list of employees is deducted from
the total number of employees: executive officers, employees on short-term
contracts, part-time employees, employees of temporary employment agencies,
and national staff at overseas branches.

** As of each March 31; job grades above assistant vice president
*** 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

2009

2010

2011

962

388

569

204

572

188

40.3%

35.9%

32.9%

**** Includes sogoshoku staff and consumer service staff. Business Career Path

employees are excluded.

Fiscal

Number of employees taking
parental leave

Men taking such leave
Number of career hires

2008

222

136

2009

331

2010

476

SMFG 2011

◆

Sumitomo Mitsui Card

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2011

2,156

1,112

51.58%

1,044

48.42%

2,247

1,133

50.42%

1,114

49.58%

2,300

1,146

49.83%

1,154

50.17%

36 yrs 2 mos.

36 yrs 4 mos.

36 yrs 8 mos.

39 yrs 8 mos.

39 yrs 10 mos.

40 yrs 0 mos.

32 yrs 6 mos.

32 yrs 10 mos.

33 yrs 5 mos.

◆

Sumitomo Mitsui Finance and Leasing
2010

2009

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

1,640

1,023

62.38%

617

37.62%

1,666

1,035

62.12%

631

37.88%

2011

1,648

1,025

62.20%

623

37.80%

37 yrs 1 mos.

37 yrs 3 mos.

37 yrs 8 mos.

40 yrs 2 mos.

40 yrs 3 mos.

40 yrs 6 mos.

32 yrs 0 mos.

32 yrs 4 mos.

33 yrs 0 mos.

Average years of service

10 yrs 3 mos.

10 yrs 7 mos.

11 yrs 0 mos.

Average years of service

12 yrs 1 mos.

12 yrs 5 mos.

12 yrs 10 mos.

9 yrs 4 mos.

11 yrs 2 mos.

11 yrs 6 mos.

Male
Female
The number of full-time employees, including employees seconded to other
companies and organizations. The following list of employees is deducted from
the total number of employees: executive officers, employees on short-term
contracts, part-time employees, employees of temporary employment agencies,
and national staff at overseas branches.

10 yrs 0 mos.

12 yrs 0 mos.

9 yrs 7 mos.

7 yrs 6 mos.

15 yrs 2 mos.

15 yrs 6 mos.

14 yrs 10 mos.

Male
Female
The number of full-time employees, including employees seconded to other
companies and organizations. The following list of employees is deducted from
the total number of employees: 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).

8 yrs 7 mos.

8 yrs 0 mos.

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees

** Includes contract employees

2009

2010

2011

67.3%

54.8%

59.7%

April 1
Number of new hires
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees

2009

2010

2011

5.0%

3.6%

13.6%

Fiscal

2008

2009

2010

Fiscal

2008

2009

2010

Number of employees taking paren-
tal leave
Men taking such leave

Number of employees taking paren-
tal leave

◆

Cedyna

March 31**
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2011

4,485

2,787

62.14%

1,698

37.86%

3,466

2,062

59.49%

1,404

40.51%

3,340

2,021

60.51%

1,319

39.49%

39 yrs 9 mos.

37 yrs 8 mos.

38 yrs 7mos.

43 yrs 2 mos.

40 yrs 8 mos.

41 yrs 5 mos.

34 yrs 1 mos.

33 yrs 2 mos.

34 yrs 4 mos.

Average years of service

14 yrs 11 mos.

13 yrs 4 mos.

14 yrs 2 mos.

17 yrs 7 mos.

Male
Female
Excluding employees seconded from other companies, employees on short-
term contracts and part-time employees.

9 yrs 11 mos.

15 yrs 7 mos.

10 yrs 6 mos.

11 yrs 0 mos.

16 yrs 4 mos.

** As of March 31, 2009, the total number of employees includes employees of

OMC Card, Inc., Central Finance Co., Ltd., and QUOQ Inc.

April 1
Number of new hires
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees

2009

2010

2011

58.2%

43.8%

50.0%

Fiscal

2008

2009

2010

Number of employees taking paren-
tal leave***
Men taking such leave
*** For fiscal year 2008, the total number of employees includes employees of

OMC Card, Inc., Central Finance Co., Ltd., and QUOQ Inc.

◆

Japan Research Institute
2009

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2010

2011

2,215

1,732

78.19%

483

21.81%

2,322

1,792

77.17%

530

22.83%

2,323

1,782

76.71%

541

23.29%

38 yrs 11 mos.

39 yrs 0 mos.

39 yrs 1 mos.

39 yrs 8 mos.

39 yrs 11 mos.

39 yrs 9 mos.

35 yrs 11 mos.

35 yrs 9 mos.

36 yrs 4 mos.

Average years of service

9 yrs 7 mos.

9 yrs 11 mos.

9 yrs 9 mos.

8 yrs 7 mos.

10 yrs 3 mos.

9 yrs 11 mos.

10 yrs 3 mos.

8 yrs 6 mos.

8 yrs 8 mos.

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees

2009

2010

2011

147

31.3%

28.0%

37.7%

** Includes only sogoshoku staff. Ippanshoku staff are excluded.

Fiscal

2008

2009

2010

Number of employees taking paren-
tal leave
Men taking such leave

SMFG 2011 65

◆

SMBC Friend Securities

◆

THE MINATO BANK

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2011

2,011

1,434

71.31%

577

28.69%

2,072

1,462

70.56%

610

29.44%

1,897

1,359

71.64%

538

28.36%

36 yrs 9 mos.

36 yrs 11 mos.

37 yrs 7 mos.

39 yrs 1 mos.

39 yrs 4 mos.

39 yrs 8 mos.

31 yrs 1 mos.

31 yrs 4 mos.

32 yrs 5 mos.

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2011

2,121

1,348

63.55%

773

36.45%

2,152

1,320

61.34%

832

38.66%

2,166

1,337

61.73%

829

38.27%

40 yrs 10 mos.

40 yrs 3 mos.

40 yrs 4 mos.

44 yrs 2 mos.

43 yrs 9 mos.

43 yrs 8 mos.

35 yrs 2 mos.

34 yrs 11 mos.

35 yrs 0 mos.

Average years of service

13 yrs 2 mos.

13 yrs 3 mos.

14 yrs 0 mos.

Average years of service

15 yrs 2 mos.

14 yrs 10 mos.

15 yrs 3 mos.

8 yrs 3 mos.

15 yrs 4 mos.

15 yrs 1 mos.

15 yrs 9 mos.

9 yrs 5 mos.

8 yrs 5 mos.

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees

2009

2010

2011

232

117

148

149

50.4%

45.9%

53.0%

** Both non-area specified and area specified staff

Fiscal

2008

2009

2010

Number of employees taking paren-
tal leave

◆

SMBC Nikko Securities

March*
Number of employees**

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009

2010

2011

6,004

3,578

59.59%

2,426

40.41%

6,584

4,057

61.62%

2,527

38.38%

7,094

4,449

62.71%

2,645

37.29%

37 yrs 2 mos.

38 yrs 1 mos.

38 yrs 11 mos.

39 yrs 6 mos.

40 yrs 3 mos.

34 yrs 7 mos.

35 yrs 9 mos.

36 yrs 8 mos.

Average years of service

12 yrs 0 mos.

12 yrs 1 mos.

11 yrs 11 mos.

12 yrs 9 mos.

12 yrs 4 mos.

11 yrs 1 mos.

11 yrs 2 mos.

Male
Female
As of March 1 of the respective years

13 yrs 0 mos.

10 yrs 7 mos.

*
** The number of full-time employees. The following list of employees is deducted
from the total number of employees: executive officers, employees seconded to
other companies and organizations 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

2009

2010

2011

182

159

493

190

29.1%

34.0%

38.5%

*** Professional staff (Classes I-II), FA, and specialists

Fiscal

2008

2009

2010

19 yrs 4 mos.

Male
Female
The number of full-time employees including executives and employees sec-
onded to other companies or organizations.
Excluded employees on short-term contracts, and part-time employees.

19 yrs 2 mos.

8 yrs 1 mos.

8 yrs 0 mos.

19 yrs 3 mos.

9 yrs 0 mos.

April 1
Number of new hires
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees

2009

2010

2011

20.6%

18.8%

20.5%

Fiscal

2008

2009

2010

Number of employees taking paren-
tal leave
Men taking such leave

◆

Kansai Urban Banking

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

2009**

2010

2011

1,890

1,282

67.83%

608

32.17%

2,880

1,989

69.06%

891

30.94%

2,809

1,929

68.67%

880

31.33%

39 yrs 10 mos.

39 yrs 9 mos.

39 yrs 10 mos.

43 yrs 9 mos.

43 yrs 5 mos.

43 yrs 4 mos.

31 yrs 6 mos.

31 yrs 7 mos.

32 yrs 3 mos.

Average years of service

16 yrs 7 mos.

16 yrs 8 mos.

19 yrs 11 mos.

19 yrs 10 mos.

Male
Female
Total is for full-time non-executive employees of the bank, including employees
seconded to other companies and organizations. Excluded are executive offi-
cers, employees on short-term contracts, part-time employees, employees of
temporary employment agencies.

10 yrs 1 mos.

19 yrs 9 mos.

9 yrs 5 mos.

** Up to March 31, 2009, figures are those of prior to the merger with The

Biwako Bank, Ltd.

April 1
Number of new hires
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees

2009

2010

2011

137

58.4%

43.3%

58.1%

Fiscal***
Number of employees taking paren-
tal leave

2008

2009

2010

*** Up to fiscal 2009, figures are those prior to the merger with The Biwako Bank,

Number of employees taking paren-
tal leave

SMFG 2011

177

207

229

Ltd.

• The combined employment ratio for persons with disabilities for the above nine companies was 1.87% as of March 2011.

Principal Work-Life Balance Systems (Employee Support Programs)
Leave for taking care of
sick children

Shorter working hours

Parental leave

Restrictions on overtime

Exemption from
late-night work

18 months or maximum of
2 years in case of inability to
place in daycare center

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)

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 elementary
school.

SMBC

Up to March 31 in the 6th
grade of elementary school

18 months or maximum of
2 years in case of inability to
place in daycare center

Sumitomo Mitsui
Card

Up to 3 years old

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 3rd grade of elementary
school.

Up to March 31 in the 3rd
grade of elementary school (5
days per annum for one child;
no upper limit)

Up to March 31 in the 3rd
grade of elementary school
(Employees can choose to work
5, 6, or 7 hours a day).

Up to March 31 in the 3rd
grade of elementary school

Up to entry into elementary
school

Cedyna

Sumitomo Mitsui
Finance and
Leasing

Japan Research
Institute

1 year or maximum of 18
months in case of inability to
place in daycare center

No restrictions on children’s
age or number of days leave

18 months or maximum of
2 years in case of inability to
place in daycare center

Up to March 31 in the 6th
grade of elementary school (5
days per annum for one child;
no upper limit)

Employees can reduce daily
working hours to a minimum
of 5 hours 30 minutes up to
March 31 in the 6th grade of
elementary school.

Employees can choose to work
4, 5, 6 or 7 hours per day up
to March 31 in the 3rd grade
of elementary school (this
system can be combined with
flextime).

Up to entry into elementary
school

• Work relocations
• System for rehiring former

employees

Up to entry into elementary
school

For employees who are preg-
nant or have given birth within
previous 12 months

18 months or maximum of
2 years in case of inability to
place in daycare center

SMBC Friend
Securities

Up to 3 years old

SMBC Nikko
Securities

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)

Employees can reduce daily
working hours to between 6
hours and 6 hours 50 minutes
up to March 31 in the 3rd
grade of elementary school.

Up to entry into elementary
school (5 days per annum for
one child; 10 days for two or
more children)

Up to child’s entry into junior
high school, employees can
in
reduce working hours
increments of 30 minutes for a
maximum reduction of 2 hours
30 minutes per day.

Up to March 31 in the 3rd
grade of elementary school

Up to entry into junior high
school

Up to 3 years old

THE MINATO BANK

Up to entry into elementary
school (5 days per annum for
one child; 10 days for two or
more children)

Up to entry into elementary
school, employees can opt for
6-hour working day

Up to entry into elementary
school

• Maternity
spouse)

leave

(to help

Kansai Urban
Banking

1 year or maximum of 18
months in case of inability to
place in daycare center

Up to entry into elementary
school (5 days per annum for
one child; 10 days for two or
more children)

Up to 3 years old, employees
can opt for 6-hour working day

Up to entry into elementary
school

Other principal systems

• Work relocations
• Child-care subsidies
• Leave to care for sick family

members

• Shorter working hours to care

for sick family members

• System for rehiring former

employees

• Work relocations
• Child-care subsidies
• Leave to care for sick family

members

• System for rehiring former

employees

• Maternity leave and work
• Short-term childcare leave
• Leave to care for sick family

members

• System for rehiring former

employees on

• Maternity leave (for men)

• Child-care subsidies
• Leave to care for sick family

members

• Shorter working hours to care

for sick family members

• More time off and shorter
working hours to care for
sick family members

• Days off to care for sick

family members

• Leave to care for sick family

members

• Shorter working hours to care

for sick family members

• Use of designated day-care
center at discounted rates
• Leave to care for sick family

members

• Special days off to care for

sick family members

• Shorter working hours to care

for sick family members

• Staggered working hours

(shift system)

• Leave to care for sick family

members

• Shorter working hours to care

for sick family members

• System for rehiring former

employees

• Leave to care for sick family

members

• Home helpers provided

SMFG 2011 67

SMFG 2011

Financial Section and Corporate Data

Financial Data

SMFG

Consolidated Balance Sheets ..................................... 70

Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income ... 72

Consolidated Statements of
Changes in Net Assets .............................................. 73

Consolidated Statements of Cash Flows .................... 75

Notes to Consolidated Financial Statements .............. 77

Corporate Data

Sumitomo Mitsui Financial Group, Inc.

Board of Directors, Corporate Auditors,
and Executive Officers .......................................... 211

SMFG Organization ................................................. 211

Sumitomo Mitsui Banking Corporation

Board of Directors, Corporate Auditors,
and Executive Officers .......................................... 212

Independent Auditors’ Report ..................................... 139

SMBC Organization ................................................ 214

SMBC

Principal Subsidiaries and Affiliates

Supplemental Information ........................................... 140

Principal Domestic Subsidiaries ............................. 216

SMFG

Income Analysis (Consolidated) .................................. 146

Principal Overseas Subsidiaries ............................. 217

Principal Affiliates .................................................... 218

Assets and Liabilities (Consolidated)........................... 149

International Directory ................................................. 219

Capital (Nonconsolidated) ........................................... 152

SMBC

Income Analysis (Consolidated) .................................. 155

Assets and Liabilities (Consolidated)........................... 158

Income Analysis (Nonconsolidated) ............................ 160

Deposits (Nonconsolidated) ........................................ 164

Loans (Nonconsolidated)............................................. 166

Securities (Nonconsolidated) ...................................... 171

Ratios (Nonconsolidated) ............................................ 173

Capital (Nonconsolidated) ........................................... 175

Others (Nonconsolidated)............................................ 176

Trust Assets and Liabilities (Nonconsolidated) ............ 178

Capital Ratio Information

SMFG

Capital Ratio Information (Consolidated) .................... 179

SMBC

Capital Ratio Information ............................................. 209

SMFG 2011 69

SMFG

Consolidated Balance Sheets

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries

March 31

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

Assets
Cash and due from banks (Notes 9 and 30) .........................................................
Deposits with banks (Notes 9 and 30)..................................................................
Call loans and bills bought (Notes 9 and 30) ........................................................
Receivables under resale agreements (Note 30) ..................................................
Receivables under securities borrowing transactions (Note 30) ..........................
Monetary claims bought (Notes 9 and 30) ...........................................................
Trading assets (Notes 3, 9 and 30) .......................................................................
Money held in trust (Notes 30 and 31) .................................................................
Securities (Notes 4, 9, 30 and 31) ........................................................................
Loans and bills discounted (Notes 5, 9 and 30) ...................................................
Foreign exchanges (Note 30) ...............................................................................
Lease receivables and investment assets (Notes 9, 29 and 30) ..........................
Other assets (Notes 6, 9, 30 and 32) ....................................................................
Tangible fixed assets (Notes 7, 9 and 15) .............................................................
Intangible fixed assets (Note 8) ............................................................................
Deferred tax assets (Note 25) ...............................................................................
Customers’ liabilities for acceptances and guarantees .......................................
Reserve for possible loan losses (Note 30) ..........................................................
Total assets ..........................................................................................................

¥ 5,645,094
3,588,811
851,636
131,104
4,740,410
1,122,307
6,632,898
24,011
39,952,123
61,348,355
1,077,024
1,734,169
4,604,732
1,168,908
674,216
644,736
4,921,500
(1,058,945)
¥137,803,098

¥ 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

$ 67,890
43,161
10,242
1,577
57,010
13,497
79,770
289
480,483
737,803
12,953
20,856
55,379
14,058
8,108
7,754
59,188
(12,735)
$1,657,283

SMFG 2011

(Continued)

March 31

Consolidated Balance Sheets

SMFG

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

Liabilities and net assets
Liabilities
Deposits (Notes 9, 10 and 30) ..............................................................................
Call money and bills sold (Notes 9 and 30) ..........................................................
Payables under repurchase agreements (Notes 9 and 30) ..................................
Payables under securities lending transactions (Notes 9 and 30) .......................
Commercial paper (Note 30) ................................................................................
Trading liabilities (Notes 9, 11 and 30)..................................................................
Borrowed money (Notes 9, 12 and 30).................................................................
Foreign exchanges (Note 30) ...............................................................................
Short-term bonds (Notes 13 and 30)....................................................................
Bonds (Notes 13 and 30) ......................................................................................
Due to trust account (Note 30) .............................................................................
Other liabilities (Notes 9, 14, 29, 30 and 32) ........................................................
Reserve for employee bonuses ............................................................................
Reserve for executive bonuses ............................................................................
Reserve for employee retirement benefits (Note 28) ............................................
Reserve for executive retirement benefits ............................................................
Reserve for point service program .......................................................................
Reserve for reimbursement of deposits ...............................................................
Reserve for loss on interest repayment ................................................................
Reserve under the special laws ...........................................................................
Deferred tax liabilities (Note 25) ...........................................................................
Deferred tax liabilities for land revaluation (Note 15) ............................................
Acceptances and guarantees (Note 9) .................................................................
Total liabilities ......................................................................................................

Net assets (Note 26)
Capital stock (Note 16) ........................................................................................
Capital surplus .....................................................................................................
Retained earnings ................................................................................................
Treasury stock .....................................................................................................
Total stockholders’ equity ...................................................................................
Net unrealized gains on other securities (Notes 23, 25 and 31) ...........................
Net deferred losses on hedges (Notes 23, 25 and 32) .........................................
Land revaluation excess (Note 15) .......................................................................
Foreign currency translation adjustments (Note 23) ............................................
Total accumulated other comprehensive income ..............................................
Stock acquisition rights (Note 33) ........................................................................
Minority interests .................................................................................................
Total net assets ....................................................................................................
Total liabilities and net assets .............................................................................

See accompanying notes to consolidated financial statements.

¥ 90,365,263
2,629,407
726,365
5,713,233
337,120
5,248,302
10,769,668
256,160
1,183,198
3,866,095
216,171
4,188,259
45,176
2,496
44,604
2,728
18,927
9,923
59,812
392
20,517
45,698
4,921,500
130,671,024

2,337,895
978,851
1,776,433
(171,760)
4,921,419
272,306
(9,701)
33,357
(122,889)
173,073
262
2,037,318
7,132,073
¥137,803,098

¥ 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

$1,086,774
31,622
8,736
68,710
4,054
63,119
129,521
3,081
14,230
46,495
2,600
50,370
543
30
536
33
228
119
719
5
247
550
59,188
1,571,510

28,117
11,772
21,364
(2,066)
59,187
3,275
(117)
401
(1,478)
2,081
3
24,502
85,773
$1,657,283

SMFG 2011 71

SMFG

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
(Consolidated Statements of Income)

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

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 25):

¥1,612,599
1,208,389
251,311
2,351
8,464
18,592
71,589
51,900
2,335
897,461
237,093
1,039,662
73,507
3,862,660

294,947
139,424
49,251
2,753
8,847
68,947
25,723
131,230
858,243
1,355,322
48,720
346,881
3,035,346
827,313

Current ..............................................................................................................
Deferred ............................................................................................................
Income before minority interests ........................................................................
Minority interests in net income ...........................................................................
Net income ...........................................................................................................

97,446
143,325
586,542
110,646
¥ 475,895

¥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

104,110
74,759

107,668
¥ 271,559

$19,394
14,533
3,022
28
102
224
861
624
28
10,793
2,851
12,504
884
46,454

3,547
1,677
592
33
107
829
309
1,578
10,321
16,300
586
4,172
36,504
9,950

1,172
1,724
7,054
1,331
$ 5,723

(Consolidated Statements of Comprehensive Income)

Millions of yen

Year ended March 31

Income before minority interests ........................................................................
Other comprehensive income (Note 23)

Net unrealized losses on other securities .........................................................
Net deferred gains on hedges ..........................................................................
Foreign currency translation adjustments ........................................................
Share of other comprehensive income of
associates accounted for by equity method ..................................................
Total other comprehensive income ..................................................................
Total comprehensive income (Note 24) ..............................................................
Comprehensive income attributable to shareholders of the parent company ....
Comprehensive income attributable to minority interests ...............................

See accompanying notes to consolidated financial statements.

2011

¥586,542

(150,002)
29,587
(60,928)

8,176
(173,166)
413,375
343,920
69,455

2010

¥—

—
—
—

—
—
—
—
—

Millions of
U.S. dollars (Note 1)
2011

$7,054

(1,804)
356
(733)

98
(2,083)
4,971
4,136
835

SMFG 2011

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

2011

2010

Millions of
U.S. dollars (Note 1)
2011

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

¥2,337,895

¥1,420,877

$28,117

Issuance of new shares ................................................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

—
—
¥2,337,895

917,018
917,018
¥2,337,895

—
—
$28,117

Capital surplus

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

978,897

57,245

11,772

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

—
(46)
—
(46)
¥ 978,851

928,094
(108)
(6,333)
921,652
¥ 978,897

—
(0)
—
(0)
$11,772

Retained earnings

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

Cash dividends ............................................................................................
Net income ...................................................................................................
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 ................................................................

Treasury stock

1,451,945

1,245,085

17,462

(152,878)
475,895
13
3
(13)
(10)
—
(126)
1,604
324,488
¥1,776,433

(71,174)
271,559
8
3
(11)
(1)
6,333
—
141
206,859
¥1,451,945

(1,839)
5,723
0
0
(0)
(0)
—
(1)
19
3,902
$21,364

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(124,061)

(124,024)

(1,492)

Purchase of treasury stock ...........................................................................
Disposal of treasury stock ............................................................................
Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

(47,759)
60
(47,699)
¥ (171,760)

(189)
152
(36)
¥ (124,061)

(574)
0
(574)
$ (2,066)

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

4,644,677

2,599,183

55,859

—
(152,878)
475,895
(47,759)
13
13
3
(13)
(10)
—
(126)
1,604
276,742
¥4,921,419

1,845,113
(71,174)
271,559
(189)
43
8
3
(11)
(1)
6,333
(6,333)
141
2,045,493
¥4,644,677

—
(1,839)
5,723
(574)
0
0
0
(0)
(0)
—
(1)
19
3,328
$59,187

SMFG 2011 73

SMFG

Consolidated Statements of Changes in Net Assets

(Continued)

Year ended March 31

Accumulated other comprehensive income
Net unrealized gains (losses) on other securities

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

¥ 412,708

¥ (14,649)

$ 4,963

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

(140,402)
(140,402)
¥ 272,306

427,358
427,358
¥ 412,708

Net deferred losses on hedges

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(39,367)

(20,835)

29,666
29,666
¥ (9,701)

(18,531)
(18,531)
¥ (39,367)

Land revaluation excess

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

34,955

35,159

(1,597)
(1,597)
¥ 33,357

(204)
(204)
¥ 34,955

Foreign currency translation adjustments

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

(101,650)

(129,068)

(21,238)
(21,238)
¥ (122,889)

27,418
27,418
¥ (101,650)

Total accumulated other comprehensive income

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

306,646

(129,394)

(133,573)
(133,573)
¥ 173,073

436,040
436,040
¥ 306,646

Stock acquisition rights

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

180
180
¥ 262

15
15
¥ 81

Minority interests

Balance at the end of the previous fiscal year..................................................
Changes in the fiscal year:

2,049,400

2,141,908

(12,081)
(12,081)
¥2,037,318

(92,508)
(92,508)
¥2,049,400

Total net assets

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

See accompanying notes to consolidated financial statements.

7,000,805

4,611,764

—
(152,878)
475,895
(47,759)
13
13
3
(13)
(10)
—
(126)
1,604
(145,474)
131,268
¥7,132,073

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

SMFG 2011

(1,688)
(1,688)
$ 3,275

(473)

356
356
$ (117)

420

(19)
(19)
$ 401

(1,222)

(256)
(256)
$ (1,478)

3,688

(1,607)
(1,607)
$ 2,081

2
2
$ 3

24,647

(145)
(145)
$24,502

84,195

—
(1,839)
5,723
(574)
0
0
0
(0)
(0)
—
(1)
19
(1,750)
1,578
$85,773

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 ...................................................................................
Gains on negative goodwill ..............................................................................
Gains on step acquisitions ...............................................................................
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 point service program .............................................
Net change in reserve for reimbursement of deposits .....................................
Net change in reserve for loss on interest repayment ......................................
Interest income .................................................................................................
Interest expenses .............................................................................................
Net gains 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

2011

2010

Millions of
U.S. dollars (Note 1)
2011

¥ 827,313
154,267
5,411
22,938
(409)
(12,655)
13,319
(13,433)
1,057
163
(2,987)
(5,642)
(1,420)
(1,810)
(17,566)
(1,612,599)
294,947
(61,648)
148
280,834
5,029
7,813
256,101
1,401,384
3,628,657
1,380,003
4,569,942
(1,196,723)
(18,924)
700,211
165,025
26,333
1,397,458
(7,663)
64,083
152,703
(101,780)
515,688
56,617
1,635,444
(309,401)
(279,956)
13,918,277
(124,540)
13,793,737

¥ 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)

$ 9,950
1,855
65
276
(5)
(152)
160
(162)
13
2
(36)
(68)
(17)
(22)
(211)
(19,394)
3,547
(741)
2
3,377
60
94
3,080
16,854
43,640
16,597
54,960
(14,392)
(228)
8,421
1,985
317
16,806
(92)
771
1,836
(1,224)
6,202
681
19,669
(3,721)
(3,367)
167,388
(1,498)
165,890

SMFG 2011 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 ..................................................
Proceeds from sale of 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 ..................................................................................................
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 ........................................................
Purchases of treasury stock of subsidiaries .....................................................
Proceeds from sale of treasury stock of subsidiaries .......................................
Net cash provided by (used in) 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 ...................................................................
Cash and due from banks at the end of the year ..............................................

See accompanying notes to consolidated financial statements.

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

¥(67,169,471)
36,624,700
19,626,268
(6,942)
5,236
(182,839)
6,966
(101,624)
528
314

¥(46,300,009)
32,626,376
14,263,916
(9,748)
27
(156,154)
37,114
(82,287)
111
—

$(807,811)
440,465
236,034
(83)
63
(2,199)
84
(1,222)
6
4

59,408

—

715

(10,756)
(11,148,211)

80,000
(87,500)

(537,007)
(157,661)

8,000
(78,000)

256,751

611,172

(314,900)
—
(152,612)
471
(309)
(97,609)
(47,759)
13
(1,001)
17
(364,438)
(7,185)
2,273,901
3,371,193

(639,981)
1,824,896
(71,063)
388,000
(492,987)
(98,791)
(189)
43
—
—
1,451,099
(302)
(587,786)
3,800,890

(129)
(134,073)

962
(1,052)

3,088

(3,787)
—
(1,836)
6
(4)
(1,174)
(574)
0
(12)
0
(4,383)
(87)
27,347
40,543

—
¥ 5,645,094

158,089
¥ 3,371,193

—
$ 67,890

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Years ended March 31, 2011 and 2010

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 Companies 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 are
in principle integrated with those of SMFG’s accounting policies for
purposes of consolidation unless they apply different accounting prin-
ciples 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.
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, 2011, which was ¥83.15 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 ..............

2011
327

2010
307

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
SMBC Friend Securities Co., Ltd.
Nikko Cordial Securities Inc.
Sumitomo Mitsui Finance and Leasing Company, Limited
Sumitomo Mitsui Card Company, Limited
Cedyna Financial Corporation
SMBC Finance Service Co., Ltd.
The Japan Research Institute, Limited
SMBC Capital Markets, Inc.

Changes in the consolidated subsidiaries in the fiscal
year ended March 31, 2011 are as follows:
9 companies including Cedyna Financial Corporation
were newly consolidated through a third-party allotment of
new shares issued by the company. 38 companies including
SMBC Venture Capital Co., Ltd. were newly consolidated
due mainly to acquisitions of stocks.
12 companies including SB Equity Securities (Cayman),
Limited were excluded from the scope of consolidation
because they were no longer subsidiaries due mainly to
liquidation.
15 companies including Soir Leasing 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.

206 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.

SMFG 2011 77

SMFG

Notes to Consolidated Financial Statements

(i) Unconsolidated subsidiaries accounted for by the equity

method

(i) The balance sheet dates of the consolidated subsidiaries

The number of unconsolidated subsidiaries accounted for
by the equity method is as follows:
March 31
Unconsolidated subsidiaries ..........

2010
4

2011
4

Principal company:
SBCS Co., Ltd.
(ii) Equity method affiliates
The number of the equity method affiliates is as follows:
2010
March 31
54
Affiliates.......................................

2011
43

Principal companies:
Sumitomo Mitsui Auto Service Company, Limited
Promise Co., Ltd.
Daiwa SB Investments Ltd.

Changes in the equity method affiliates in the fiscal year
ended March 31, 2011 are as follows:
4 companies including Famima Credit Corporation
became equity method affiliates due mainly to acquisitions
of stocks.
6 companies including Cedyna Financial Corporation
were excluded from the scope of equity method affiliates
because they became consolidated subsidiaries through a
third-party allotment of new shares issued by the company.
9 companies including Daiwa SMBC Capital Co., Ltd.
were also excluded due mainly to sales of stocks.
(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.

are as follows:

March 31
June 30 ........................................
July 31 .........................................
September 30 ...............................
October 31 ...................................
November 30 ...............................
December 31 ................................
January 31 ....................................
February 28 ..................................
March 31 ......................................

2011
4
2
3
1
7
119
18
7
166

2010
4
2
5
2
5
120
18
8
143

(ii) The subsidiaries with balance sheets dated June 30,
July 31, September 30, November 30 and January 31 are
consolidated using the financial statements as of March
31 for the purpose of consolidation. The subsidiary with
balance sheets dated October 31 is consolidated using the
financial statements as of January 31. Certain subsidiaries
with balance sheets dated December 31 are consolidated
using the financial statements as of March 31. Other
subsidiaries are consolidated using the financial statements
on their respective balance sheet dates.
Appropriate adjustments are made for material
transactions during the periods between their respective
balance sheet dates and the consolidated closing date, if the
financial statements of the consolidated subsidiaries were
based on dates other than March 31.

(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 2011 were ¥2,274,626
million ($27,356 million) and ¥2,274,424 million
($27,353 million), respectively. The respective amounts of
2010 were ¥2,261,647 million and ¥2,261,476 million.
(ii) The amount of principal transactions with the SPEs as
of and for the fiscal years ended March 31, 2011 and 2010
were as follows:

Millions of yen

2011

March 31
Loans and bills
discounted .................. ¥1,592,714 ¥1,630,152
670,385
Credit lines ...................
279,947
Liquidity lines ..............

593,578
291,991

2010

Millions of
U.S. dollars
2011

$19,155
7,139
3,512

Millions of
U.S. dollars
2011

$192
20

SMFG 2011

Year ended March 31
Interest on loans and
discounts ....................
Fees and commissions ...

Millions of yen

2011

2010

¥15,978
1,665

¥17,520
2,288

Notes to Consolidated Financial Statements

SMFG

(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 related
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 with no available market
prices, are carried at cost using the moving-average
method. Net unrealized gains (losses) on other securities,
net of income taxes, are 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. Others are depreciated using
the declining-balance method. The estimated useful lives
of major items are as follows:

Buildings: 7 to 50 years
Others: 2 to 20 years

Other consolidated subsidiaries depreciate their tangible
fixed assets primarily using the straight-line method over
the estimated useful lives of the respective assets.

(b) Intangible fixed assets

Intangible fixed assets are depreciated using the straight-
line method. Capitalized software for internal use owned
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

SMFG 2011 79

SMFG

Notes to Consolidated Financial Statements

from these operating sections, reviews their assessment. The
reserves are provided for based on the results of these
assessments.
The reserve for possible loan losses of other consolidated
subsidiaries for general claims is provided for in the amount
deemed necessary based on the historical loan-loss ratios, and
for doubtful claims in the amount deemed uncollectible based
on assessment of each claim.
For collateralized or guaranteed claims on bankrupt borrow-
ers and effectively bankrupt borrowers, the amount exceeding
the estimated value of collateral and guarantees is deemed to
be uncollectible and written off against the total outstanding
amount of the claims. The amount of write-off was ¥867,866
million ($10,437 million) and ¥843,781 million at March 31,
2011 and 2010, respectively.
(7) Reserve for employee bonuses

The reserve for employee bonuses is provided for payment of
bonuses to employees, in the amount of estimated bonuses,
which are attributable to the respective fiscal year.

(8) Reserve for executive bonuses

The reserve for executive bonuses is provided for payment of
bonuses to executives, in the amount of estimated bonuses,
which are attributable to the respective fiscal year.

(9) Reserve for employee retirement benefits

The reserve for employee retirement benefits is provided for
payment of retirement benefits to employees, in the amount
deemed accrued at the fiscal year-end, based on the projected
retirement benefit obligation and the fair value of plan assets
at the fiscal year-end.
Unrecognized prior service cost is amortized using the
straight-line method, primarily over 9 years, over the employ-
ees’ estimated average remaining service period from the fiscal
year of its incurrence.
Unrecognized net actuarial gain or loss is amortized using
the straight-line method, primarily over 9 years, over the
employees’ average remaining service period, commencing
from the next fiscal year of incurrence.
“Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)” (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 point service program

The reserve for point service program is provided for the
potential future redemption of points awarded to customers
under the “SMBC Point Pack,” credit card points programs,
and other customer points award programs. The amount
is calculated by converting the outstanding points into a
monetary amount, and rationally estimating and recognizing
the amount that will be redeemed in the future.

(12) 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.
(13) Reserve for loss on interest repayment

The reserve for loss on interest repayment is provided for the
possible losses on future claims of repayment of interest based
on historical interest repayment experience.

(14) 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.

(15) 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.
(16) Lease transactions

(a) Recognition of income on finance leases

Interest income is allocated to each period, based on the
interest method.

(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.

(17) Hedge accounting

(a) Hedging against interest rate changes

As for the hedge accounting method applied to hedging
transactions for interest rate risk arising from financial
assets and liabilities, SMBC applies deferred hedge
accounting.
SMBC applies deferred hedge accounting stipulated in
“Treatment for Accounting and Auditing of Application
of Accounting Standard for Financial Instruments in
Banking Industry” (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.

SMFG 2011

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, 2011 and 2010
were ¥999 million ($12 million) and ¥2,470 million,
respectively. Gross amounts of deferred hedge gains on
“macro hedge” (before deducting tax effect) at March
31, 2011 and 2010 were ¥960 million ($12 million) and
¥2,416 million, respectively.

(b) Hedging against currency fluctuations

SMBC applies deferred hedge accounting stipulated in
“Treatment of Accounting and Auditing Concerning
Accounting for Foreign Currency Transactions in Banking
Industry” (JICPA Industry Audit Committee Report
No. 25) to currency swap and foreign exchange swap trans-
actions executed for the purpose of lending or borrowing
funds in different currencies.
Pursuant to JICPA Industry Audit Committee Report
No. 25, SMBC assesses the effectiveness of currency swap
and foreign exchange swap transactions executed for
the purpose of offsetting the risk of changes in currency
exchange rates by verifying that there are foreign-currency
monetary claims and debts corresponding to the foreign-
currency positions.

In order to hedge risk arising from volatility of exchange

rates for stocks of subsidiaries and affiliates and other
securities (excluding bonds) denominated in foreign
currencies, SMBC applies deferred hedge accounting or
fair value hedge accounting, on the conditions that the
hedged securities are designated in advance and that 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

Notes to Consolidated Financial Statements

SMFG

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, fair value hedge accounting or
the special treatment for interest rate swaps. A consolidated
domestic subsidiary (a leasing company) partly applies
the accounting method that is permitted by “Temporary
Treatment for Accounting and Auditing of Application of
Accounting Standard for Financial Instruments in Leasing
Industry” (JICPA Industry Audit Committee Report
No. 19).

(18) Amortization of goodwill

Goodwill on SMBC Friend Securities Co., Ltd., Sumitomo
Mitsui Finance and Leasing Company, Limited, Nikko Cordial
Securities Inc., Kansai Urban Banking Corporation and
Cedyna Financial Corporation is amortized using the straight-
line method over 20 years. Goodwill on other companies
is charged or credited to income directly when incurred or
benefited.

(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) Consumption taxes

National and local consumption taxes of SMFG and its
consolidated domestic subsidiaries are accounted for using the
tax-excluded method.

(21) 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.

(22) 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 had 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)

SMFG 2011 81

SMFG

Notes to Consolidated Financial Statements

As a result, income before income taxes and minority
interests increased by ¥19,251 million as compared with
the former method.

(b) Accounting standard for asset retirement obligations

“Accounting Standard for Asset Retirement Obligations”
(ASBJ Statement No. 18, issued on March 31, 2008) and
“Guidance on Accounting Standard for Asset Retirement
Obligations” (ASBJ Guidance No. 21, issued on March 31,
2008) became effective for fiscal years beginning on or after
April 1, 2010. Accordingly, income before income taxes
and minority interests decreased by ¥4,215 million ($51
million) compared with the previous accounting method.

“Accounting Standard for Business Combinations”
(ASBJ Statement No. 21, revised on December 26,
2008), “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, issued on December
26, 2008), “Partial Amendment to Accounting Standard
for Research and Development Costs” (ASBJ Statement
No. 23, issued on December 26, 2008), “Accounting
Standard for Business Divestitures” (ASBJ Statement
No. 7, revised on December 26, 2008), “Accounting
Standard for Equity Method of Accounting for Investments”
(ASBJ Statement No. 16, announced on December
26, 2008) and “Guidance on Accounting Standard for
Business Combinations and Accounting Standard for
Business Divestitures” (ASBJ Guidance No. 10, revised on
December 26, 2008) became effective for fiscal years begin-
ning on or after April 1, 2010, and SMFG has applied
them from the fiscal year ended March 31, 2011.

(23) Changes in presentation

(a) Consolidated balance sheets

“Other liabilities” as of March 31, 2010, included “Reserve
for point service program” of ¥14,091 million and “Reserve
for loss on interest repayment” of ¥9,735 million. From
the fiscal year ended March 31, 2011, they are presented
individually because the amounts have become significant.

(b) Consolidated statements of income

SMFG presents “Income before minority interests” on
the consolidated statement of income from the fiscal year
ended March 31, 2011 because “Cabinet Office Ordinance
of Partial Amendment to Regulation for Terminology,
Forms and Preparation of Financial Statements” (Cabinet
Office Ordinance No. 5, March 24, 2009) became effective
for fiscal years beginning on or after April 1, 2010.

In the fiscal year ended March 31, 2010, “Other, net”
included “Net change in reserve for point service program”
and “Net change in reserve for loss on interest repayment,”
a decrease of ¥879 million and an increase of ¥1,040
million, respectively. From the fiscal year ended March 31,
2011, they are presented individually because the amounts
have become significant.

(24) Accounting standard for equity method of accounting for

investments
SMFG has applied “Accounting Standard for Equity Method
of Accounting for Investments” (ASBJ Statement No. 16,
issued on March 10, 2008) and “Practical Solution on

Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method” (ASBJ Practical
Issues Task Force No. 24, issued on March 10, 2008) because
they became effective for the fiscal years beginning on or after
April l, 2010. This accounting change had no impact on the
consolidated financial statements.

(25) Accounting standard for presentation of comprehensive

income
“Accounting Standard for Presentation of Comprehensive
Income” (ASBJ Statement No. 25, issued June 30, 2010)
became effective for consolidated financial statements for the
fiscal years ending on or after March 31, 2011. Accordingly,
SMFG has applied this standard and presents “Valuation and
transaction adjustments” and “Total valuation and transaction
adjustments” as of and for the fiscal year ended March 31,
2010 as “Accumulated other comprehensive income” and
“Total accumulated other comprehensive income” as of and for
the fiscal year ended March 31, 2011, respectively.

(26) 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.”

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

3. Trading Assets
Trading assets at March 31, 2011 and 2010 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, 2011 and 2010 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

2011
¥2,817,536
3,857
5,338
3,514,859
291,305
¥6,632,898

2010
¥2,779,725
1,246
6,931
3,642,477
278,307
¥6,708,688

Millions of yen

2011
¥25,934,346
544,409
3,256,034
2,741,796
7,475,535
¥39,952,123

2010
¥16,738,321
422,648
3,548,359
2,967,641
4,946,997
¥28,623,968

Millions of
U.S. dollars
2011
$33,885
47
64
42,271
3,503
$79,770

Millions of
U.S. dollars
2011
$311,899
6,547
39,159
32,974
89,904
$480,483

*1 Unsecured loaned securities for which borrowers have the right to sell or pledge in the amount of ¥50,935 million ($613 million) and ¥41,826 million are included in Japanese

government bonds in Securities and in trading securities in Trading assets at March 31, 2011 and 2010, respectively.
SMBC has the right to sell or pledge, some of the unsecured borrowed securities, securities under resale agreements and securities borrowed with cash collateral. Of these securities,
¥3,032,285 million ($36,468 million) are pledged, and ¥232,420 million ($2,795 million) are held in hand at March 31, 2011. The respective amounts at March 31, 2010 were
¥3,840,308 million and ¥133,566 million.

*2 Japanese corporate bonds include private placement bonds (stipulated by Article 2-3 of the Financial Instruments and Exchange Act) which are guaranteed by banking subsidiaries in

the amount of ¥1,969,902 million ($23,691 million) and ¥2,136,145 million at March 31, 2011 and 2010, respectively.

*3 Japanese stocks and other include investments in unconsolidated subsidiaries and affiliates of ¥279,829 million ($3,365 million) and ¥321,897 million at March 31, 2011 and 2010,

respectively.

*4 Japanese stocks and other include investments in jointly controlled entities of ¥97,868 million ($1,177 million) and ¥94,369 million at March 31, 2011 and 2010, respectively.

5. Loans and Bills Discounted

(1) Loans and bills discounted at March 31, 2011 and 2010 consisted of the following:

March 31
Bills discounted ...............................................................................................
Loans on notes .................................................................................................
Loans on deeds .................................................................................................
Overdrafts .......................................................................................................

Millions of yen

2011
¥ 184,822
2,176,918
51,925,319
7,061,295
¥61,348,355

2010
¥ 196,382
2,324,520
52,839,032
7,341,097
¥62,701,033

(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

2011

2010

¥ 90,777
1,031,828
25,438
498,323
¥1,646,369

¥ 165,131
1,075,782
38,315
250,256
¥1,529,484

Millions of
U.S. dollars
2011
$ 2,223
26,181
624,477
84,922
$737,803

Millions of
U.S. dollars
2011

$ 1,092
12,409
306
5,993
$19,800

*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).”

SMFG 2011 83

SMFG

Notes to Consolidated Financial Statements

(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, 2011 and 2010 was ¥667,310 million ($8,025 million) and
¥617,381 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, 2011 and 2010 were
¥45,842,366 million ($551,321 million) and ¥41,957,592 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, 2011 and 2010 were ¥39,563,617 million
($475,810 million) and ¥36,373,235 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, 2011 and 2010 consisted of the following:

March 31
Prepaid expenses ..................................................................................................
Accrued income ...................................................................................................
Deferred assets .....................................................................................................
Financial derivatives* ..........................................................................................
Other ..................................................................................................................

* Referred to in Note 32

7. Tangible Fixed Assets
Tangible fixed assets at March 31, 2011 and 2010 consisted of the following:

March 31
Buildings ............................................................................................................
Land* ..................................................................................................................
Lease assets ..........................................................................................................
Construction in progress ......................................................................................
Other tangible fixed assets ...................................................................................
Total ....................................................................................................................
Accumulated depreciation ...................................................................................
* Includes land revaluation excess referred to in Note 15.

Millions of yen

2011
¥ 34,563
236,357
821,139
1,294,264
2,218,407
¥4,604,732

2010
¥ 30,643
239,422
488,712
1,079,708
1,771,559
¥3,610,046

Millions of yen

2011
¥ 350,494
551,839
10,527
4,464
251,583
¥1,168,908
¥ 717,073

2010
¥ 314,461
544,075
8,159
8,206
206,222
¥1,081,125
¥ 671,298

Millions of
U.S. dollars
2011
$ 416
2,843
9,875
15,565
26,680
$55,379

Millions of
U.S. dollars
2011
$ 4,215
6,637
126
54
3,026
$14,058
$ 8,624

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

8. Intangible Fixed Assets
Intangible fixed assets at March 31, 2011 and 2010 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, 2011 and 2010 consisted of the following:

March 31
Assets pledged as collateral:

Millions of yen

2011
¥262,068
352,790
361
58,995
¥674,216

2010
¥215,563
363,507
367
46,809
¥626,248

Millions of yen

2011

2010

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

¥ 2,859
327,259
1,926
2,565,106
8,586,487
2,149,928
10,436
15,019
5,102

26,053
955,000
726,365
5,078,535
356,577
5,119,245
11,140
110,568

¥ 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

Millions of
U.S. dollars
2011
$3,152
4,243
4
709
$8,108

Millions of
U.S. dollars
2011

$ 34
3,936
23
30,849
103,265
25,856
126
181
61

313
11,485
8,736
61,077
4,288
61,566
134
1,330

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, 2011 and 2010:

March 31
Cash and due from banks and Deposits with banks ..............................................
Trading assets ......................................................................................................
Securities .............................................................................................................
Loans and bills discounted ...................................................................................

Millions of yen

2011
¥ 32,987
177,403
20,790,338
—

2010
¥ 25,804
111,283
14,233,542
1,171,863

Millions of
U.S. dollars
2011
$ 397
2,134
250,034
—

At March 31, 2011, other assets included surety deposits of ¥119,299 million ($1,435 million), variation margins of futures market transac-
tions of ¥18,029 million ($217 million) and other variation margins of ¥84,382 million ($1,015 million). At March 31, 2010, other assets
included surety deposits of ¥102,085 million, variation margins of futures market transactions of ¥8,457 million and other variation margins of
¥83,768 million.

SMFG 2011 85

SMFG

Notes to Consolidated Financial Statements

10. Deposits
Deposits at March 31, 2011 and 2010 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, 2011 and 2010 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 ....................................................................

12. Borrowed Money
Borrowed money at March 31, 2011 and 2010 consisted of the following:

Millions of yen

March 31
Borrowed money*2 ...................................................... ¥10,769,668 ¥5,470,578

2010

2011

Millions of yen

2011
¥ 7,046,031
38,444,302
721,677
4,931,391
26,891,477
8,366,323
3,964,058
¥90,365,263

2010
¥ 6,871,401
35,153,531
750,961
5,363,534
26,888,129
6,995,619
3,621,037
¥85,644,215

Millions of yen

2011
¥1,623,046
1,803
5,639
3,617,812
¥5,248,302

2010
¥1,582,808
2,367
6,961
3,474,589
¥5,066,727

Millions of
U.S. dollars
2011
$ 84,739
462,349
8,679
59,307
323,409
100,617
47,674
$1,086,774

Millions of
U.S. dollars
2011
$19,520
22
68
43,509
$63,119

Millions of
U.S. dollars
2011
$129,521

Average
interest rate*1
2011
0.45%

Due
Jan. 2011–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 ¥371,232 million ($4,465 million) and ¥378,729 million at March 31, 2011 and 2010, respectively.

The repayment schedule over the next 5 years on borrowed money at March 31, 2011 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
2011
¥8,948,213
503,992
347,268
284,237
268,479

Millions of U.S. dollars
2011
$107,615
6,061
4,176
3,418
3,229

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

13. Bonds
Bonds at March 31, 2011 and 2010 consisted of the following:

March 31

Issuer

SMBC:

Description

Short-term bonds, payable in Yen ..........................

Straight bonds, payable in Yen ..............................

Straight bonds, payable in Euroyen ........................

Straight bonds, payable in U.S. dollars ..................

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

Subordinated bonds, payable in Yen ......................

Short-term bonds, payable in Yen ..........................

Millions of yen*1

2011

2010

Millions of
U.S. dollars
2011

Interest rate*2
(%)
2011

Due

¥ 40,999
{40,999}
1,233,898
{197,793}
20,900
{5,000}
290,823
($3,497,576 thousand)
46,444
(A$539,931 thousand)
1,373,255
{49,999}
447,494
88,182
($1,060,522 thousand)
{1,995}
125,885
(€1,071,181 thousand)

¥ 164,678
{164,678}
1,032,907
{149,198}
20,900

$ 493

0.10

Apr. 2011

14,839

0.12–1.813 Apr. 2011–May 2025

251

0.00–4.66895 Mar. 2012–Feb. 2037

—

3,498

1.95–3.15

Jul. 2013–Jan. 2016

46,031
(A$539,895 thousand)
1,383,521
{149,798}
593,800
102,371
($1,100,179 thousand)

41,162
(€329,591 thousand)

559

5.76

Mar. 2013

16,515

1.04625–2.80 Jun. 2011–Dec. 2020

5,382
1,060

0.44–2.97 May 2016–Perpetual
5.625–8.00 Nov. 2011–Perpetual

1,514

4.00–4.375 Nov. 2020–Perpetual

113,411
{26,010}
125,798

1,142,198
{1,142,198}
¥5,049,293

89,738
{62,842}
112,239
{140}
1,047,500
{1,047,500}
¥4,634,851

1,364

0.30417–4.95 Apr. 2011–Jan. 2041

1,513

1.80–4.50 Jun. 2016–Perpetual

13,737

0.121–0.45 Apr. 2011–Aug. 2011

$60,725

*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, 2011 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
2011
¥1,464,015
375,313
405,297
270,100
609,627

Millions of U.S. dollars
2011
$17,607
4,514
4,874
3,248
7,332

SMFG 2011 87

SMFG

Notes to Consolidated Financial Statements

14. Other Liabilities
Other liabilities at March 31, 2011 and 2010 consisted of the following:

March 31
Accrued expenses .................................................................................................
Unearned income .................................................................................................
Income taxes payable ...........................................................................................
Financial derivatives*1 .........................................................................................
Lease liabilities*2 .................................................................................................
Other ..................................................................................................................

Millions of yen

2011
¥ 132,089
167,880
47,431
818,962
64,436
2,957,458
¥4,188,259

2010
¥ 144,338
174,931
56,708
818,105
58,742
1,940,320
¥3,193,146

Millions of
U.S. dollars
2011
$ 1,589
2,019
570
9,849
775
35,568
$50,370

*1 Referred to in Note 32
*2 Average interest rate on lease liabilities for the year ended March 31, 2011 was 4.60%. 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, 2011 was as follows:

Millions of yen
2011
¥21,680
15,680
10,496
6,712
4,288

Millions of U.S. dollars
2011
$261
189
126
81
52

15. Land Revaluation Excess
SMBC and certain consolidated subsidiary revaluated their own land
for business activities in accordance with the “Act on Revaluation of
Land” (the “Act”) (Act No. 34, effective March 31, 1998) and “Act
for Partial Revision of Act on Revaluation of Land” (Act No. 19,
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 Act. 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
A consolidated subsidiary and an affiliate:
March 31, 1999 and March 31, 2002

Method of revaluation (stipulated in Article 3-3 of the Act)

SMBC:

Fair values were determined by applying appropriate
adjustments for land shape and timing of appraisal to the
values stipulated in Article 2-3, 2-4 or 2-5 of “Order for
Enforcement of Act on Revaluation of Land” (Cabinet Order
No. 119 of March 31, 1998).

A consolidated subsidiary and an affiliate:

Fair values were determined based on the values stipulated
in Articles 2-3 and 2-5 of “Order for Enforcement of Act on
Revaluation of Land” (Cabinet Order No. 119 of March 31,
1998).

SMFG 2011

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, 2011 and 2010 were as follows:

Number of shares

2011

2010

Authorized

March 31
Common stock ........................................................................................ 3,000,000,000 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 ........................................................................................................ 3,000,634,001 1,414,125,626

—
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
1,414,055,625
—
—
70,001
—
—
—
1,414,125,626

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
Companies 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 Companies 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 2011 89

SMFG

Notes to Consolidated Financial Statements

17. Fees and Commissions
Fees and commissions for the fiscal years ended March 31, 2011 and 2010 consisted of the following:

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

Millions of yen

2011

¥ 82,604
127,856
71,277
18,054
6,507
62,762
185,970
163,706
178,720
¥897,461

¥ 33,958
97,272
¥131,230

2010

¥ 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

18. Trading Income
Trading income for the fiscal years ended March 31, 2011 and 2010 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

2011
¥ 94,234
1,538
140,157
1,162
¥237,093

2010
¥ 63,424
2,254
127,833
576
¥194,087

19. Other Operating Income
Other operating income for the fiscal years ended March 31, 2011 and 2010 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

2011
¥ 209,496
105
693,492
11,336
125,231
¥1,039,662

2010
¥ 90,942
10
243,237
—
118,823
¥453,012

20. Other Operating Expenses
Other operating expenses for the fiscal years ended March 31, 2011 and 2010 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

2011
¥ 47,874
7,194
984
2,701
627,378
44,556
—
127,554
¥858,243

2010
¥ 30,122
17,401
331
1,197
201,932
1,591
17,011
132,186
¥401,773

SMFG 2011

Millions of
U.S. dollars
2011

$ 993
1,538
857
217
78
755
2,237
1,969
2,149
$10,793

$ 408
1,170
$ 1,578

Millions of
U.S. dollars
2011
$1,133
18
1,686
14
$2,851

Millions of
U.S. dollars
2011
$ 2,520
1
8,340
136
1,506
$12,503

Millions of
U.S. dollars
2011
$ 576
87
12
32
7,545
536
—
1,534
$10,322

Notes to Consolidated Financial Statements

SMFG

21. Other Income
Other income for the fiscal years ended March 31, 2011 and 2010 consisted of the following:

Year ended March 31
Gains on sale of stocks and other securities ..........................................................
Gains on money held in trust ...............................................................................
Gains on disposal of fixed assets ...........................................................................
Recoveries of written-off claims ...........................................................................
Gains on step acquisitions ...................................................................................
Other ..................................................................................................................

Millions of yen

2011
¥27,523
203
884
2,813
12,655
29,427
¥73,507

2010
¥ 57,231
130
17,179
968
—
35,128
¥110,638

22. Other Expenses
Other expenses for the fiscal years ended March 31, 2011 and 2010 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* ..................................................................
Provision for reserve for loss on interest repayment ..............................................
Influence amount as a result of the application of Accounting Standard for
Asset Retirement Obligations ............................................................................
Other ..................................................................................................................

*Losses on impairment of fixed assets consisted of the following:

Millions of yen

2011
¥156,571
4,551
114,921
352
6,834
13,319
5,914
5,411
14,530

3,552
20,921
¥346,881

2010
¥176,672
34,814
32,495
375
76,439
21,542
6,003
12,856
—

—
65,052
¥426,252

Millions of
U.S. dollars
2011
$331
2
11
34
152
354
$884

Millions of
U.S. dollars
2011
$1,883
55
1,382
4
82
160
71
65
175

43
252
$4,172

Year ended
March 31
Tokyo metropolitan area ........................................ Branch (—)

Area

Purpose of use
2011

Corporate assets (5 items)
Idle assets (39 items)
Other (4 items)

Kinki area ............................................................. Branches (4 branches)
Corporate assets (—)
Idle assets (42 items)
Other (—)

Other .................................................................... Corporate assets (—)
Idle assets (5 items)
Other (—)

Type
Land and buildings, etc.

Land and buildings, etc.

Millions of yen

2011
2010
¥ — ¥ 13
8,295
1,511
335
164
35
1,436
256
21
281
503

254
1,070
461
69
—
3,542
—
—
13
—

Millions of
U.S. dollars
2011
$ —
3
13
6
1
—
43
—
—
0
—

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 their
branches, corporate assets, idle assets and others. 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 2011 91

SMFG

Notes to Consolidated Financial Statements

23. Other Comprehensive Income
Other comprehensive income for the fiscal year ended March 31, 2010 consisted of the following:

Year ended March 31
Other comprehensive income .................................................................................................................................................
Net unrealized gains on other securities .............................................................................................................................
Net deferred losses on hedges .............................................................................................................................................
Foreign currency translation adjustments ...........................................................................................................................
Share of other comprehensive income of associates accounted for by equity method ............................................................

24. Comprehensive Income
Comprehensive income for the fiscal year ended March 31, 2010 consisted of the following:

Year ended March 31
Comprehensive income ..........................................................................................................................................................
Comprehensive income attributable to shareholders of the parent company ........................................................................
Comprehensive income attributable to minority interests ..................................................................................................

25. Deferred Tax Assets and Liabilities

(1) Significant components of deferred tax assets and liabilities at March 31, 2011 and 2010 were as follows:

March 31
Deferred tax assets:

Net operating loss carryforwards ............................................................
Write-off of securities ............................................................................
Reserve for possible loan losses ...............................................................
Write-off of loans ...................................................................................
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 ...............................................................................

Millions of yen

2011

2010

¥ 273,415
316,010
454,603
161,174
33,236
77,284
6,848
10,857
249,420
1,582,851
(739,055)
843,795

(101,791)
(23,459)
(44,015)
(12,967)
(4,502)
(32,840)
(219,576)
¥ 624,219

¥ 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

Millions of yen
2010
¥424,477
465,868
(19,065)
(4,399)
(17,926)

Millions of yen
2010
¥803,705
707,804
95,900

Millions of
U.S. dollars
2011

$ 3,288
3,801
5,467
1,938
400
929
82
131
3,000
19,036
(8,888)
10,148

(1,224)
(282)
(530)
(156)
(54)
(395)
(2,641)
$ 7,507

(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, 2011 and 2010. A reconciliation of the
effective income tax rate reflected in the accompanying consolidated statements of income to the statutory tax rate for the years ended
March 31, 2011 and 2010 was as follows:

Statutory tax rate ...............................................................................................................................
Valuation allowance .......................................................................................................................
Dividends exempted for income tax purposes .................................................................................
Gains on step acquisitions ..............................................................................................................
Equity in losses of affiliates ............................................................................................................
Other .............................................................................................................................................
Effective income tax rate ....................................................................................................................

SMFG 2011

2011
40.69%
(11.53)
(1.17)
(0.62)
0.66
1.07
29.10%

2010
40.69%
(10.81)
—
—
1.91
0.26
32.05%

Notes to Consolidated Financial Statements

SMFG

26. Changes in Net Assets

(1) Type and number of shares issued and treasury shares are as follows:

Year ended March 31, 2011
Shares issued

March 31,
2010

Number of shares

Increase

Decrease

Common stock ................................................... 1,414,055,625
70,001
Preferred stock (1st series Type 6) ......................
Total .............................................................. 1,414,125,626

Treasury shares

—
—
—

March 31,
2011

1,414,055,625
70,001
1,414,125,626

Common stock ...................................................
Total ..............................................................

17,070,100
17,070,100

15,516,991*
15,516,991

5,177*
5,177

32,581,914
32,581,914

* Increase in number of treasury common shares issued:

(cid:129) 37,591 shares due to purchase of fractional shares

(cid:129) 15,479,400 shares due to acquisition of SMFG shares by SMFG Card & Credit, Inc., a wholly-owned subsidiary of SMFG, in connection with making Cedyna Financial

Corporation a wholly-owned subsidiary of SMFG Card & Credit through the share exchange

Decrease in number of treasury common shares issued:
(cid:129) 5,177 shares due to sale of fractional shares

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

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) ....................
Total ..............................................................

*1 Increase in number of common shares issued:

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

(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 2011 93

SMFG

Notes to Consolidated Financial Statements

(2) Information on stock acquisition rights is as follows:

Year ended March 31, 2011
SMFG ..............................
Consolidated subsidiary ...
Total ................................

Year ended March 31, 2010
SMFG ..............................
Consolidated subsidiary ...
Total ................................

Detail of stock
acquisition rights
Stock options
—

Type of
shares
—
—

March 31,
2010
—
—

Number of shares

Increase
—
—

Decrease
—
—

March 31,
2011
—
—

Detail of stock
acquisition rights
Stock options
—

Type of
shares
—
—

March 31,
2009
—
—

Number of shares

Increase
—
—

Decrease
—
—

March 31,
2010
—
—

Millions of
U.S. dollars
March 31,
2011
$2
1
$3

Millions of yen
March 31,
2011
¥170
91
¥262

Millions of yen
March 31,
2010
¥—
81
¥81

(3) Information on dividends is as follows:

(a) 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

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

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

Effective date

Record 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

(b) Dividends paid in the fiscal year ended March 31, 2011

Type of shares
Common stock ......................................................
Preferred stock (1st series Type 6) ..........................

Aggregate amount
of dividends
¥77,567
3,097

Millions of yen, except per share amount
Cash dividends
per share
¥ 55
44,250

Record date
March 31, 2010
March 31, 2010

Effective date
June 29, 2010
June 29, 2010

Date of resolution: Ordinary general meeting of shareholders held on June 29, 2010

Type of shares
Common stock ......................................................
Preferred stock (1st series Type 6) ..........................

Aggregate amount
of dividends
¥70,515
3,097

Date of resolution: Meeting of the Board of Directors held on November 12, 2010

SMFG 2011

Millions of yen, except per share amount
Cash dividends
per share
¥ 50
44,250

Record date

Effective date

September 30, 2010 December 3, 2010
September 30, 2010 December 3, 2010

Notes to Consolidated Financial Statements

SMFG

Type of shares
Common stock ......................................................
Preferred stock (1st series Type 6) ..........................

Aggregate amount
of dividends
¥70,514
3,097

Date of resolution: Ordinary general meeting of shareholders held on June 29, 2011

27. Cash Flows
Fiscal year ended March 31, 2011

Millions of yen, except per share amount
Source
of dividends
Retained earnings
Retained earnings

Cash dividends
per share
¥ 50
44,250

Record date

Effective date
March 31, 2011 June 29, 2011
March 31, 2011 June 29, 2011

Significant non-money transactions
Cedyna Financial Corporation and 8 other companies were newly consolidated through a third-party allotment of new shares issued by the
company. Their major assets and liabilities are as follows:

Assets ...................................................................................................................................
Loans and bills discounted ................................................................................................
Other assets ......................................................................................................................
Customers’ liabilities for acceptances and guarantees .........................................................

Liabilities .............................................................................................................................
Borrowed money ...............................................................................................................
Acceptances and guarantees ..............................................................................................

Millions of yen
¥2,631,525
438,497
803,639
1,124,290

¥2,520,313
989,790
1,124,290

Millions of U.S. dollars
$31,648
5,274
9,665
13,521

$30,310
11,904
13,521

Fiscal year ended March 31, 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)

(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:

Millions of yen
¥1,113,801
795,445
89,968

¥1,078,769
1,033,256

(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:

Millions of yen
¥730,001
401,031
258,620

Liabilities ..................................................................................................................................................................
Borrowed money ....................................................................................................................................................
Acceptances and guarantees ...................................................................................................................................

¥714,850
343,002
258,620

SMFG 2011 95

SMFG

Notes to Consolidated Financial Statements

28. Employee Retirement Benefits

(1) Outline of employee retirement benefits

Consolidated subsidiaries in Japan have contributory and non-contributory funded or unfunded 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 pension plan. Certain domestic consolidated subsidiaries have a general type of employee pension
plans. They may grant additional benefits in cases where certain requirements are met when employees retire.
Some overseas consolidated subsidiaries adopt defined benefit pension plans and defined-contribution pension plans. SMBC and some
consolidated subsidiaries in Japan contributed some of their marketable equity securities to employee retirement benefits 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) ...........................

2011
¥(976,271)
883,255
(93,016)
266,775
(10,365)

163,393
207,997
¥ (44,604)

Note: Some consolidated subsidiaries adopt the simple method in calculating the projected benefit obligation.

2010
¥(938,161)
891,366
(46,794)
226,268
(15,234)

164,240
205,931
¥ (41,691)

(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 ..........................................................................................................

2011
¥23,505
23,621
(27,624)
45,902
(6,229)
4,812
¥63,988

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.”

2010
¥21,052
22,459
(23,883)
60,456
(11,167)
4,229
¥73,146

(4) Assumptions

Millions of
U.S. dollars
2011
$(11,741)
10,622
(1,119)
3,208
(124)

1,965
2,501
$ (536)

Millions of
U.S. dollars
2011

$283
284
(332)
552
(75)
58
$770

The principal assumptions used in determining benefit obligation and pension expenses at or for the fiscal years ended March 31, 2011
and 2010 were as follows:
Year ended March 31
Discount rate .............................................................. Domestic consolidated subsidiaries
Overseas consolidated subsidiaries
Expected rate of return on plan assets ......................... Domestic consolidated subsidiaries
Overseas consolidated subsidiaries

1.4% to 2.5%
5.4% to 9.0%
0% to 4.0%
5.5% to 5.6%

2010
1.4% to 2.5%

0% to 4.0%

2011

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, 2011 and 2010.
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, 2011 and 2010.

29. 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 2011

Notes to Consolidated Financial Statements

SMFG

(b) Lessor side

(i) Breakdown of lease investment assets

March 31
Lease receivables ...................................................................................
Residual value ......................................................................................
Unearned interest income .....................................................................
Total .....................................................................................................

2011
¥1,241,757
95,359
(206,317)
¥1,130,799

2010
¥1,343,868
103,095
(233,640)
¥1,213,323

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

2011
¥230,050
160,632
111,555
53,371
40,555
84,682
¥680,846

2010
¥242,087
173,269
109,219
75,511
32,981
73,660
¥706,728

Lease payments receivable related to investment assets

Millions of yen

2011
¥ 389,029
288,064
210,604
129,630
77,517
146,911
¥1,241,757

2010
¥ 407,746
306,937
220,648
152,399
79,417
176,720
¥1,343,868

Millions of
U.S. dollars
2011
$14,934
1,147
(2,481)
$13,600

Millions of
U.S. dollars
2011
$2,767
1,932
1,341
642
488
1,018
$8,188

Millions of
U.S. dollars
2011
$ 4,679
3,464
2,533
1,559
932
1,767
$14,934

(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, 2011 was ¥10,115 million ($122 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, 2011 and 2010 were as follows:

March 31
Due within 1 year .................................................................................
Due after 1 year ....................................................................................
Total .....................................................................................................

2011
¥ 34,804
267,049
¥301,854

2010
¥17,153
69,742
¥86,895

Millions of yen

Millions of
U.S. dollars
2011
$ 418
3,212
$3,630

(b) Lessor side

Future minimum lease payments on operating leases which were not cancelable at March 31, 2011 and 2010 were as follows:

2011
¥ 36,995
156,549
¥193,545

2010
¥ 23,585
122,599
¥146,185

Millions of yen

Millions of
U.S. dollars
2011
$ 445
1,883
$2,328

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 2011 97

SMFG

Notes to Consolidated Financial Statements

30. Financial Instruments

(1) Status of financial instruments

(a) Policies on financial instruments

SMFG conducts banking and other financial services such
as securities, leasing, credit card, invest banking, consumer
finance, and venture capital. Its banking business includes
deposit taking, lending, securities trading, securities
investment, domestic and foreign exchange transactions,
brokerage, etc. of financial futures transactions, etc., cor-
porate bond trust services, trust business, sale of securities
investment trusts, sale of insurance products, and securities
intermediary services.
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.

SMFG 2011

(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 Note 2. (17) 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.

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 credit 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, operat-
ing independently from the business units, audits asset
quality, credit 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

Notes to Consolidated Financial Statements

SMFG

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 one 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

SMFG 2011 99

SMFG

Notes to Consolidated Financial Statements

Department, which is independent from the business
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 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 and, based on 4 years of historical
observation, calculates the maximum loss that may
occur as a result of market fluctuations in 1 day with a
probability of 1%.
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).

— Quantitative information on market risks
As of March 31, 2011, total VaR of SMBC and other
major consolidated subsidiaries was ¥48.6 billion in
the banking book (market operations for generating
profit through management of interest rates, terms,
and other aspects of assets (loans, bonds, etc.) and
liabilities (deposits, etc.)), ¥6.8 billion in the trading
book (market operations for generating profit by taking
advantage of short-term fluctuations in market values
and differences in value among markets) and ¥114.1
billion in the holding of shares (listed shares) for the
purpose of strategic investment.
However, it should be noted that these figures are
statistical figures that change according to changes in
the assumptions and the calculation methods, and may
not cover the risk of future market conditions fluctuat-
ing drastically compared to market fluctuations of the
past.
— 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.

100

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

(2) Fair value of financial instruments

(a) Consolidated balance sheet amounts, fair values and net unrealized gains or losses of financial instruments as of March 31, 2011 and
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

Hedge accounting not applied .....................................................
Hedge accounting applied ...........................................................
Total ................................................................................................

Consolidated balance
sheet amount
¥ 9,227,272
850,997
131,104
4,740,410
1,110,692

3,108,841
24,011

4,182,273
34,871,036
61,348,355
(812,542)
60,535,813
1,072,850
1,719,905
¥121,575,209
¥ 81,998,940
8,366,323
2,629,407
726,365
5,713,233
337,120

1,623,046
10,769,668
256,160
1,183,198
3,866,095
216,171
¥117,685,729

Millions of yen
2011

Fair value
¥ 9,233,629
851,482
131,145
4,740,410
1,117,128

3,108,841
24,011

4,242,131
34,871,036

61,586,792
1,076,542
1,816,390
¥122,799,543
¥ 82,015,066
8,365,839
2,629,406
726,365
5,713,233
337,120

1,623,046
10,780,649
256,160
1,183,198
3,952,658
216,171
¥117,798,915

¥ 16,149
357,952
¥ 374,101

Net unrealized gains
(losses)
¥ 6,357
484
40
—
6,435

—
—

59,857
—

1,050,978
3,692
96,485
¥1,224,333
¥ 16,126
(484)
(0)
—
—
—

—
10,981
—
—
86,563
—
¥ 113,186

¥ —
—
¥ —

SMFG 2011 101

SMFG

Notes to Consolidated Financial Statements

March 31

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

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

¥ 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 2011

Notes to Consolidated Financial Statements

SMFG

Millions of U.S. dollars
2011

March 31

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

Consolidated balance
sheet amount
$ 110,971
10,235
1,577
57,010
13,358

37,388
289

50,298
419,375
737,803
(9,772)
728,031
12,903
20,684
$1,462,119
$ 986,157
100,617
31,622
8,736
68,710
4,054

19,520
129,521
3,081
14,230
46,495
2,600
$1,415,343

$ 194
4,305
$ 4,499

Fair value
$ 111,048
10,240
1,577
57,010
13,435

37,388
289

51,018
419,375

740,671
12,947
21,845
$1,476,843
$ 986,351
100,611
31,622
8,736
68,710
4,054

19,520
129,653
3,081
14,230
47,536
2,600
$1,416,704

$ 194
4,305
$ 4,499

Net unrealized gains
(losses)
$ 77
5
0
—
77

—
—

720
—

12,640
44
1,161
$14,724
$ 194
(6)
(0)
—
—
—

—
132
—
—
1,041
—
$ 1,361

$ —
—
$ —

*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 and Deposits with 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 and Deposits with 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 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 interest rate and a credit
risk premium.
Regarding claims on bankrupt borrowers, effectively

SMFG 2011 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 Issues
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 using the same method applied
to the estimation of a loan loss. 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.

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 fair 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.

104

SMFG 2011

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

2011

2010

Millions of U.S.
dollars
2011

Monetary claims bought without market prices*1 ........................................

¥ 7,606

¥ 7,889

$ 92

Securities:

Unlisted stocks, etc.*2, 4 ..............................................................................
Investments in partnership, etc.*3, 4 .............................................................
Total ................................................................................................................
*1 Beneficiary claims on loan trusts 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.
*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

291,922
354,422
¥654,234

278,869
340,113
¥626,589

3,354
4,090
$7,536

in their balance sheets and statements of income.

*4 Unlisted stocks and investments in partnership totaling ¥15,076 million ($181 million) and ¥26,770 million were written-down in the fiscal years ended March 31, 2011 and

2010, respectively.

(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, 2 .........................................
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
¥ 7,945,095
842,638
131,104
4,740,410
751,345
13,702,861
165,782
155,000
5,032
4,750
1,000
13,537,079
11,517,890
18,033
642,634
1,358,521
13,013,773
1,074,722
540,645
¥42,742,597

Millions of yen
2011

After 1 year
through 5 years
¥ 2,938
8,998
—
—
98,873
16,893,389
3,708,714
3,315,000
166,107
226,607
1,000
13,184,674
7,620,372
278,781
1,835,259
3,450,261
21,474,032
1,685
938,489
¥39,418,406

After 5 years
through 10 years
¥ —
—
—
—
58,080
5,309,448
304,400
290,000
100
8,800
5,500
5,005,048
2,944,300
69,793
405,417
1,585,536
7,911,639
—
106,288
¥13,385,457

After 10 years
¥ —
—
—
—
193,178
547,556
—
—
—
—
—
547,556
—
44
58,833
488,678
11,235,643
—
39,086
¥12,015,464

SMFG 2011 105

SMFG

Notes to Consolidated Financial Statements

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

Within 1 year
$ 95,551
10,134
1,577
57,010
9,036
164,797
1,994
1,864
61
57
12
162,803
138,519
217
7,729
16,338
156,510
12,925
6,502
$514,042

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

Millions of U.S. dollars
2011

After 1 year
through 5 years
$ 35
108
—
—
1,189
203,168
44,603
39,868
1,998
2,725
12
158,565
91,646
3,353
22,072
41,494
258,257
20
11,287
$474,064

After 5 years
through 10 years
$ —
—
—
—
699
63,854
3,661
3,488
1
106
66
60,193
35,410
839
4,876
19,068
95,149
—
1,278
$160,980

After 10 years
¥ —
—
—
—
189,786
717,074
—
—
—
—
—
717,074
364,500
46
60,592
291,934
10,884,978
—
40,375
¥11,832,214

After 10 years
$ —
—
—
—
2,323
6,585
—
—
—
—
—
6,585
—
0
708
5,877
135,125
—
470
$144,503

*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 ..........................................................................................

Millions of yen

2011

¥ 2,043
27,402
998,936
616
8,685

2010
¥ 3,196
16,989
1,213,627
3,286
10,048

Millions of
U.S. dollars
2011
$ 25
330
12,014
7
104

*2 Does not include “Monetary claims bought” and “Loans and bills discounted” without tenure totaling ¥4,047million ($49 million) and ¥6,717,074 million ($80,783 million) at

March 31, 2011, respectively. Does not include “Loans and bills discounted” without tenure totaling ¥6,829,836 million at March 31, 2010.

106

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

(5) Redemption schedule of bonds, borrowed money and other interest-bearing debts

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
¥ 76,809,748
8,197,688
2,629,407
726,365
5,713,233
337,120
8,948,213
256,160
1,183,210
280,805
216,171
¥105,298,124

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

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
$ 923,749
98,589
31,622
8,736
68,710
4,054
107,615
3,081
14,230
3,377
2,600
$1,266,363

* Demand deposits are included in “Within 1 year.” Deposits include current deposits.

Millions of yen
2011

After 1 year
through 5 years
¥4,611,848
168,634
—
—
—
—
1,403,977
—
—
1,660,338
—
¥7,844,799

After 5 years
through 10 years
¥ 348,749
—
—
—
—
—
259,433
—
—
1,633,465
—
¥2,241,648

Millions of yen
2010

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

Millions of U.S. dollars
2011

After 1 year
through 5 years
$55,464
2,028
—
—
—
—
16,885
—
—
19,968
—
$94,345

After 5 years
through 10 years
$ 4,194
—
—
—
—
—
3,120
—
—
19,645
—
$26,959

After 10 years
¥227,549
—
—
—
—
—
158,043
—
—
293,153
—
¥678,746

After 10 years
¥251,172
—
—
—
—
—
148,392
—
—
408,790
—
¥808,356

After 10 years
$2,737
—
—
—
—
—
1,901
—
—
3,525
—
$8,163

SMFG 2011 107

SMFG

Notes to Consolidated Financial Statements

31. 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.
(a) Securities classified as trading purposes

March 31
Valuation gains included in the earnings for the fiscal year ........................

(b) Bonds classified as held-to-maturity

Millions of yen

2011

¥(6,863)

2010

¥(2,583)

Millions of U.S.
dollars
2011

$(83)

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:

¥3,384,266
159,618
237,233
4,193
¥3,785,310

¥ 379,873
11,899
1,887
10,301
¥ 403,962
¥4,189,272

March 31
Bonds with unrealized gains:

Consolidated balance
sheet amount

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
2011

Fair value

¥3,437,088
162,339
243,070
4,201
¥3,846,700

¥ 378,410
11,860
1,878
10,282
¥ 402,430
¥4,249,130

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)

¥52,821
2,721
5,837
8
¥61,389

¥ (1,463)
(39)
(9)
(19)
¥ (1,531)
¥59,857

Net unrealized
gains (losses)

¥49,221
3,079
7,039
4
¥59,344

¥ (626)
(2)
(1)
(104)
¥ (734)
¥58,610

108

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

March 31
Bonds with unrealized gains:

Bonds with unrealized losses:

Consolidated balance
sheet amount

$40,701
1,920
2,853
50
$45,524

$ 4,568
143
23
124
$ 4,858
$50,382

Millions of U.S. dollars
2011

Fair value

$41,336
1,952
2,923
51
$46,262

$ 4,550
143
23
124
$ 4,840
$51,102

Millions of yen
2011

Net unrealized
gains (losses)

$635
32
70
1
$738

$ (18)
(0)
(0)
(0)
$ (18)
$720

Consolidated balance
sheet amount

Acquisition cost

Net unrealized
gains (losses)

March 31
Other securities with unrealized gains:

Stocks .................................................................................................
Bonds .................................................................................................
Japanese government bonds ............................................................
Japanese local government bonds ....................................................
Japanese corporate bonds .................................................................
Other ..................................................................................................
Subtotal ..........................................................................................

Other securities with unrealized losses:

¥ 1,341,992
12,365,024
9,468,315
199,005
2,697,703
3,125,508
¥16,832,525

¥ 869,937
13,194,988
12,701,891
173,886
319,210
4,448,401
¥18,513,327
¥35,345,852

March 31
Other securities with unrealized gains:

Consolidated balance
sheet amount

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

¥ 854,218
12,256,383
9,423,084
197,609
2,635,688
3,001,059
¥16,111,661

¥ 1,045,754
13,226,858
12,729,163
175,423
322,272
4,590,679
¥18,863,292
¥34,974,953

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

¥ 487,773
108,640
45,230
1,395
62,014
124,449
¥ 720,864

¥(175,817)
(31,870)
(27,271)
(1,536)
(3,062)
(142,277)
¥(349,965)
¥ 370,899

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

SMFG 2011 109

SMFG

Notes to Consolidated Financial Statements

March 31
Other securities with unrealized gains:

Other securities with unrealized losses:

Millions of U.S. dollars
2011

Consolidated balance
sheet amount

Acquisition cost

Net unrealized
gains (losses)

$ 16,139
148,708
113,870
2,394
32,444
37,589
$202,436

$ 10,462
158,689
152,759
2,091
3,839
53,499
$222,650
$425,086

$ 10,273
147,401
113,326
2,377
31,698
36,092
$193,766

$ 12,577
159,072
153,087
2,109
3,876
55,210
$226,859
$420,625

$ 5,866
1,307
544
17
746
1,497
$ 8,670

$(2,115)
(383)
(328)
(18)
(37)
(1,711)
$(4,209)
$ 4,461

Notes: 1. Net unrealized gains (losses) on other securities shown above include gains of ¥1,153 million ($14 million) for the fiscal year ended March 31, 2011 and ¥105

million for the fiscal year ended March 31, 2010 that are recognized in the fiscal year’s earnings by applying fair value hedge accounting.

2. Consolidated balance sheet amounts of other securities whose fair values are extremely difficult to determine are as follows:

March 31
Stocks .........................................................................................................................
Other .........................................................................................................................
Total ...........................................................................................................................

2011
¥274,329
352,260
¥626,589

2010
¥285,123
369,111
¥654,234

Millions of yen

Millions of U.S. dollars
2011
$3,299
4,237
$7,536

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 years ended March 31, 2011 and 2010

There are no corresponding transactions.

(e) Other securities sold during the years ended March 31, 2011 and 2010

Year ended March 31
Stocks .....................................................................................................
Bonds .....................................................................................................
Japanese government bonds ................................................................
Japanese local government bonds ........................................................
Japanese corporate bonds ....................................................................
Other .....................................................................................................
Total .......................................................................................................

Sales amount
¥ 47,019
18,058,502
17,690,062
137,365
231,074
18,652,000
¥36,757,522

Sales amount
¥ 107,588
20,061,150
19,422,804
196,472
441,872
12,193,240
¥32,361,979

Millions of yen
2011

Gains on sales
¥ 11,371
71,653
69,180
907
1,566
152,588
¥235,613

Millions of yen
2010
Gains on sales
¥ 50,898
35,397
32,937
634
1,825
61,872
¥148,167

Losses on sales
¥ (3,203)
(32,572)
(31,297)
(633)
(641)
(16,204)
¥(51,980)

Losses on sales
¥ (3,556)
(6,154)
(5,915)
(103)
(136)
(24,367)
¥(34,079)

110

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

Millions of U.S. dollars
2011

Sales amount
$ 566
217,180
212,749
1,652
2,779
224,317
$442,063

Gains on sales
$ 137
862
832
11
19
1,835
$2,834

Losses on sales

$ (38)
(392)
(376)
(8)
(8)
(195)
$(625)

(f) Change of classification of securities

There are no corresponding transactions.

(g) Write-down of securities

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
balance sheet amount and the amount of write-down is accounted for as valuation loss for the fiscal year. Valuation losses for the
fiscal years ended March 31, 2011 and 2010 were ¥109,921 million ($1,322 million) and ¥19,519 million, respectively. 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.

(2) Money held in trust

(a) Money held in trust classified as trading purposes

March 31
Consolidated balance sheet amount ............................................................
Valuation gains included in the earnings for the fiscal year ........................

2011
¥1,441
1

2010
¥1,483
13

Millions of yen

(b) Money held in trust classified as held-to-maturity

There are no corresponding transactions.

March 31
Consolidated balance sheet amount ............................................................
Acquisition cost .........................................................................................
Net unrealized gains (losses) ......................................................................
Unrealized gains ....................................................................................
Unrealized losses ....................................................................................

2011
¥22,569
22,527
42
42
—

2010
¥17,250
17,188
62
157
(95)

Millions of yen

Notes: 1. Consolidated balance sheet amount is calculated using market prices at the fiscal year-end.

2. “Unrealized gains” and “Unrealized losses” are breakdowns of “Net unrealized gains (losses)” respectively.

Millions of
U.S. dollars
2011
$17
0

Millions of
U.S. dollars
2011
$271
271
0
0
—

SMFG 2011 111

SMFG

Notes to Consolidated Financial Statements

(3) Net unrealized gains on other securities and other money held in trust

Millions of yen

March 31
Net unrealized gains ..................................................................................
Other securities .....................................................................................
Other money held in trust .....................................................................
(–) Deferred tax liabilities ..........................................................................
Net unrealized gains on other securities (before adjustment) ......................
(–) Minority interests .................................................................................
(+) SMFG’s interest in net unrealized gains on valuation of other

securities held by the equity method affiliates ....................................
Net unrealized gains on other securities .....................................................

2011
¥369,852
369,810
42
102,593
267,259
7,125

12,172
¥272,306

2010
¥586,154
586,091
62
168,758
417,396
7,991

3,304
¥412,708

Millions of
U.S. dollars
2011
$4,448
4,448
0
1,234
3,214
85

146
$3,275

Notes: 1. Net unrealized gains on other securities included gains of ¥1,153 million ($14 million) for the fiscal year ended March 31, 2011 and ¥105 million for the fiscal year

ended March 31, 2010 that are recognized in the fiscal year’s earnings by applying fair value hedge accounting.

2. Net unrealized gains included foreign currency translation adjustments on non-marketable securities denominated in foreign currencies.

32. Derivative Transactions

(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.
(a) Interest rate derivatives

March 31
Listed
Interest rate futures:

Interest rate options:

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

Interest rate swaptions:

Caps:

Floors:

Sold ...................................................................................................
Bought ...............................................................................................

Other:

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 36,061,333
33,791,946

¥ 2,080,554
2,088,859

¥ (13,057)
12,150

16,628
420,747

—
—

(1)
(12)

—
19,504,719
356,885,048
158,333,988
170,756,972
27,653,869

3,391,868
2,924,852

20,895,278
9,178,858

882,481
8,551,945

578,528
1,678,256
/

—
314,376
267,296,032
120,027,611
129,214,787
17,913,499

2,347,307
2,076,786

5,852,048
2,985,925

278,959
8,419,741

333,204
937,592
/

—
(704)
95,050
3,822,736
(3,725,094)
(1,507)

(75,573)
72,362

(10,084)
7,603

(10,006)
7,460

—
(704)
95,050
3,822,736
(3,725,094)
(1,507)

(75,573)
72,362

(10,084)
7,603

(10,006)
7,460

(14,089)
42,041
¥ 113,136

112

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

Millions of yen
2010

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

March 31
Listed
Interest rate futures:

¥ 27,455,094
32,231,909

¥ 1,429,658
1,234,295

¥ (26,886)
30,344

Over-the-counter
Forward rate agreements:

—
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:

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:

Interest rate options:

Over-the-counter
Forward rate agreements:

Interest rate swaptions:

Caps:

Floors:

Other:

Millions of U.S. dollars
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 433,690
406,397

$ 25,022
25,122

$ (157)
146

200
5,060

—
—

(0)
(0)

—
234,573
4,292,063
1,904,197
2,053,602
332,578

40,792
35,176

251,296
110,389

10,613
102,850

6,958
20,183
/

—
3,781
3,214,625
1,443,507
1,553,996
215,436

28,230
24,976

70,379
35,910

3,355
101,260

4,007
11,276
/

—
(9)
1,143
45,974
(44,800)
(18)

(909)
870

(121)
91

(120)
90

—
(9)
1,143
45,974
(44,800)
(18)

(909)
870

(121)
91

(120)
90

(169)
506
$ 1,361

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

2. Fair value of transactions listed on exchange is calculated using the closing prices on the Tokyo Financial Exchange and others.

Fair value of OTC transactions is calculated using discounted present value and option pricing models.

SMFG 2011 113

SMFG

Notes to Consolidated Financial Statements

(b) Currency derivatives

March 31
Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥20,597,671

¥12,937,360

¥(392,609)

¥ (28,299)

711,681
948,904
50,708,557

3,054,155
2,935,419
/

672,001
695,468
19,400,525

1,996,329
1,894,947
/

(23,439)
38,789
114,272

(300,544)
420,803
¥(142,728)

(23,439)
38,789
114,272

(300,544)
420,803
¥221,581

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)

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

3,855,995
3,850,518

Other:

51
42
/

—
—
/

1
0
¥ 8,620

March 31
Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

Millions of U.S. dollars
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$247,717

$155,591

$(4,722)

$ (340)

8,559
11,412
609,844

36,731
35,303
/

8,082
8,364
233,320

24,009
22,790
/

(282)
466
1,374

(3,614)
5,061
$(1,717)

(282)
466
1,374

(3,614)
5,061
$2,665

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

2. Fair value is calculated using discounted present value and option pricing models.

114

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

March 31
Listed
Equity price index futures:

Equity price index options:

Over-the-counter
Equity options:

March 31
Listed
Equity price index futures:

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥129,122
46,212

¥ —
—

6,200
4,456

201,781
203,957
/

—
—

200,642
200,642
/

¥ 1,689
283

(203)
116

(41,359)
41,430
¥ 1,956

¥ 1,689
283

(203)
116

(41,359)
41,430
¥ 1,956

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)

March 31
Listed
Equity price index futures:

Equity price index options:

Over-the-counter
Equity options:

Millions of U.S. dollars
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$1,553
556

75
54

2,427
2,453
/

$ —
—

—
—

2,413
2,413
/

$ 20
3

(2)
1

(497)
498
$ 23

$ 20
3

(2)
1

(497)
498
$ 23

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

2. Fair value of transactions listed on exchange is calculated using the closing prices on the Tokyo Stock Exchange and others.

Fair value of OTC transactions is calculated using option pricing models.

SMFG 2011 115

SMFG

Notes to Consolidated Financial Statements

(d) Bond derivatives

March 31
Listed
Bond futures:

Bond futures options:

Over-the-counter
Forward bond agreements:

Bond options:

March 31
Listed
Bond futures:

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥1,227,129
1,141,914

¥ —
—

¥(1,601)
388

29,100
58,800

2,994
33,313

24,843
24,843
/

—
—

—
32,096

—
—
/

27
(31)

48
739

27
(31)

48
739

(162)
129
¥ (461)

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:

Bond futures options:

Over-the-counter
Forward bond agreements:

Bond options:

Millions of U.S. dollars
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$14,758
13,733

350
707

36
401

299
299
/

$ —
—

—
—

—
386

—
—
/

$(19)
5

0
(0)

0
9

(2)
1
$ (6)

$(19)
5

0
(0)

0
9

(2)
1
$ (6)

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

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.

116

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

(e) Commodity derivatives

March 31
Listed
Commodity futures:

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:

March 31
Listed
Commodity futures:

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 4,566
5,573

¥ —
—

¥ 19
(24)

197,189
143,052
25

18,952
7,742
/

167,741
115,341
—

14,871
6,067
/

(52,883)
94,816
0

(43)
308
¥42,194

(52,883)
94,816
0

(43)
308
¥42,194

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:

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:

Over-the-counter
Commodity swaps:

Commodity options:

Millions of U.S. dollars
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 55
67

$ —
—

$ 0
(0)

2,371
1,720
0

228
93
/

2,017
1,387
—

179
73
/

(636)
1,140
0

(1)
4
$ 507

(636)
1,140
0

(1)
4
$ 507

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
2. Fair value of transactions listed on exchange is calculated using the closing prices on the New York Mercantile Exchange and others.

Fair value of OTC transactions is calculated based on factors such as price of the relevant commodity and contract term.

3. Commodity derivatives are transactions on fuel and metal.

SMFG 2011 117

SMFG

Notes to Consolidated Financial Statements

(f) Credit derivative transactions

March 31
Over-the-counter
Credit default options:

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥1,004,667
1,107,470
/

¥695,622
602,404
/

¥(12,098)
14,148
¥ 2,049

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
2011

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$12,083
13,319
/

$8,366
7,245
/

$(145)
170
$ 25

Notes: 1. The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

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.

(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
deposit

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 .......

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

118

SMFG 2011

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

¥ 1,080,929
9,861,263
36,637,577
24,170,619
12,437,041
29,916

¥ 1,080,929
—
30,969,355
19,172,729
11,767,209
29,416

¥ (421)
(223)
20,313
314,269
(294,567)
611

460,983
—

460,899
—

1,085
—

2,562
2,562

—
7,850
3,832
3,832
190,477
13,500
152,777
24,200
/

2,562
2,562

—
7,850
2,354
2,354
162,237
4,000
136,237
22,000
/

410
(410)

—
0
(108)
(108)

(Note 3)

¥ 20,644

Notes to Consolidated Financial Statements

SMFG

Principal items hedged
Interest-earning/bearing
financial assets/liabilities
such as loans and bills
discounted, other securi-
ties (bonds), deposits and
negotiable certificates of
deposit

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

Interest rate swaps: .............................................. Loans and bills discounted;

Receivable floating rate/payable fixed rate .......

other securities (bonds)

Special treatment for
interest rate swaps

Interest rate swaps: .............................................. Loans and bills discounted;

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
deposit

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 .......

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
2011

Contract amount

Total

Over 1 year

Fair value

$ 13,000
118,596
440,620
290,687
149,573
360

$ 13,000
—
372,452
230,580
141,518
354

$ (5)
(3)
244
3,780
(3,543)
7

5,544
—

31
31

—
94
46
46
2,291
162
1,838
291
/

5,543
—

31
31

—
94
28
28
1,951
48
1,638
265
/

13
—

5
(5)

—
0
(1)
(1)

(Note 3)

$ 248

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).

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 “30. Financial Instruments.”

SMFG 2011 119

SMFG

Notes to Consolidated Financial Statements

(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

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
2011

Contract amount

Total
¥2,776,330
9,615

Over 1 year
¥1,882,407
—

Fair value
¥338,351
(172)

Currency swaps. ................................................... Deposits

12,038

11,139

(248)

Currency swaps. ................................................... Deposits; borrowed money
Forward foreign exchange ....................................
Total ....................................................................

11,739
103,553
/

11,405
3,179
/

(Note 3)

¥337,930

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)

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
2011

Contract amount

Total
$33,389
116

Over 1 year
$22,639
—

Fair value
$4,069
(2)

145

141
1,245
/

134

137
38
/

(3)

(Note 3)

$4,064

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. Forward foreign 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 “30. Financial Instruments.”

120

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

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

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

Millions of yen
2011

Contract amount

Total

Over 1 year

Fair value

¥ —
21,521
/

¥ —
11,078
/

¥ —
(623)
¥(623)

Millions of yen
2010

Contract amount

Type of derivative

Equity price index swaps:

Principal items hedged
Other securities (equity)

Total

Over 1 year

Fair value

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

¥ —
9,534
/

¥ —
(276)
¥(276)

Millions of U.S. dollars
2011

Contract amount

Total

Over 1 year

Fair value

$ —
259
/

$ —
133
/

$—
(7)
$ (7)

Note: Fair value is calculated using discounted present value.

SMFG 2011 121

SMFG

Notes to Consolidated Financial Statements

33. Stock Options
1. Share-based compensation expenses which were accounted for as general and administrative expenses in the fiscal years ended March 31,

2011 and 2010 are as follows:

Year ended March 31
Share-based compensation expenses .................................................................

2. Outline of stock options and changes is as follows:

(1) SMFG

Millions of yen

2011
¥180

2010
¥15

Millions of
U.S. dollars
2011
$2

(a) Outline of stock options
Date of resolution
Title and number of grantees ...... Directors and employees of SMFG and SMBC: 677

June 27, 2002

Number of stock options* ..........
Grant date ..................................
Condition for vesting ..................

Common shares: 162,000
August 30, 2002
N.A.

Requisite service period ..............

N.A.

Exercise period ...........................
* “Number of stock options” is reported in consideration of the 100-for-1 stock split implemented on January 4, 2009.

June 28, 2004 to June 27, 2012

July 28, 2010
Directors of SMFG: 8
Corporate auditors of SMFG: 3
Executive officers of SMFG: 2
Directors, corporate auditors, executive officers of SMBC: 69
Common shares: 102,600
August 13, 2010
A stock acquisition right holder may exercise
stock acquisition rights from the day when
they are relieved of their positions either as a
director, corporate auditor or executive officer
of SMFG and SMBC.
June 29, 2010 to the closing of the ordinary
general meeting of shareholders of SMFG for the
fiscal year ended March 31, 2011.
August 13, 2010 to August 12, 2040

(b) Stock options granted and changes
Number of stock options
Date of resolution
Before vested

June 27, 2002

July 28, 2010

Previous fiscal year-end ..............................................................................................
Granted .....................................................................................................................
Forfeited ....................................................................................................................
Vested........................................................................................................................
Outstanding ..............................................................................................................

After vested

Previous fiscal year-end* ............................................................................................
Vested........................................................................................................................
Exercised ...................................................................................................................
Forfeited ....................................................................................................................
Exercisable .................................................................................................................

—
—
—
—
—

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.

—
102,600
—
—
102,600

—
—
—
—
—

Price information (Yen)
Date of resolution
Exercise price .................................................................................................................
Average exercise price ....................................................................................................
Fair value at the grant date ............................................................................................

June 27, 2002

July 28, 2010

¥6,649
—
—

¥ 1
—
2,215

122

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

Stock options granted in the fiscal year ended March 31, 2011 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 Expected volatility is calculated based on the closing price of common shares of SMFG on each trading day in the 4 years between August 14, 2006 and August 13, 2010.
*2 The average expected life could not be estimated rationally due to insufficient amount of data.

July 28, 2010
51.44%
4 years
¥100 per share
0.23%

Therefore, it was estimated based on average assumption periods of directors of SMFG and SMBC.

*3 Expected dividends are based on the actual dividends on common stock for the fiscal year ended March 31, 2011.
*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.

(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 2011 123

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 ................................................ 104,000
—
Vested..........................................................................
—
Exercised .....................................................................
10,000
Forfeited ......................................................................
94,000
Exercisable ...................................................................

138,000
—
12,000
—
126,000

222,000
—
—
12,000
210,000

325,000
—
—
23,000
302,000

451,000
—
—
20,000
431,000

162,000
—
—
—
162,000

Date of resolution
Before vested

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009

—
—
—
—
—

— 289,000
—
—
—
—
— 289,000
—

350,000
—
—
—
— 350,000

After vested

Previous fiscal year-end ................................................ 115,000
—
Vested..........................................................................
Exercised .....................................................................
—
—
Forfeited ......................................................................
Exercisable ................................................................... 115,000

174,000
—
—
—
174,000

112,000

—
— 289,000
—
—
—
—
289,000
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
—
—

¥131
144
—

¥179
—
—

¥202
—
—

¥313
—
—

¥490
—
138

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009
¥461
—
96

¥193
—
51

¥302
—
37

¥461
—
96

¥490
—
138

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.

124

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

34. Segment Information
Fiscal years ended March 31, 2011 and 2010
1. Outline of reportable segments

SMFG Group’s reportable segment is defined as an operating segment for which discrete financial information is available and reviewed by
the Board of Directors regularly in order to make decisions about resources to be allocated to the segment and assess its performance.
Besides banking business, SMFG Group companies conduct businesses such as securities, leasing, credit card, invest banking, consumer
finance, and venture capital. The primary businesses, “Banking business,” “Securities services,” “Leasing,” and “Credit card services,” are
separate, reportable segments, and other businesses are aggregated as “Other business.”
“Banking business” includes deposit taking, lending, securities trading, securities investment, domestic and foreign exchange transactions,
brokerage, etc. of financial futures transactions, etc., corporate bond trust services, trust business, sale of securities investment trusts, sale of
insurance products, and securities intermediary services. SMBC assesses business performance by classifying businesses into 5 business units
based on client segment: Consumer banking unit, Middle market banking unit, Corporate banking unit, International banking unit and
Treasury unit.

2. Method of calculating profit and loss amount by reportable segment

Accounting method applied to the reported business segment is the same as described in “Significant Accounting Policies.” However, profit or
loss of the equity method affiliates is recorded in “Other profit or loss” in the amount of ordinary profit multiplied by the ownership ratio.
SMFG does not assess assets by business segment.

3. Information on profit and loss amount by reportable segment

Millions of yen
Banking business

Consumer
Year ended March 31, 2011
banking unit
Gross profit ........................... ¥387,790
337,529
50,261
(290,292)
(26,343)
—

Interest income ..................
Non-interest income ..........
Expenses ................................
Depreciation ......................
Other profit or loss ................
Consolidated net
business profit ..................... ¥ 97,498

Middle market
banking unit
¥443,862
272,866
170,996
(221,725)
(22,209)
—

Corporate
banking unit
¥201,244
131,355
69,889
(35,986)
(5,252)
—

SMBC
International
banking unit
¥186,503
107,708
78,795
(57,935)
(6,148)
—

Treasury
unit
¥330,720
136,318
194,402
(17,897)
(3,220)
—

Subtotal

Head office
account
¥(18,359) ¥1,531,759
967,825
(17,950)
(408)
563,934
(699,197)
(75,362)
(71,030)
(7,858)
—

Others

Total

¥241,752 ¥1,773,512
149,761 1,117,586
655,925
(834,227)
(81,279)
(34,428)

91,990
(135,030)
(10,249)
— (34,428)

¥222,137

¥165,258

¥128,568

¥312,823

¥(93,721) ¥ 832,562

¥ 72,294 ¥ 904,856

Securities services

Leasing

Millions of yen

SMBC
Friend
Securities
Co., Ltd.
¥52,989
626
52,362
(42,728)
(2,089)
—

Nikko
Cordial
Securities
Inc.
¥205,188
(2,722)
207,911
(166,645)
(2,439)
—

Sumitomo Mitsui
Finance and
Leasing Company,
Limited
¥95,260
60,059
35,201
(28,125)
(3,098)
(16,911)

Others
¥ 3,423
778
2,644
(3,029)
(1,202)
(5,596)

Total
¥261,600
(1,317)
262,918
(212,404)
(5,732)
(5,596)

Others
¥4,130
(3,407)
7,538
(9,851)
(567)
13,082

Total
¥99,390
56,651
42,739
(37,976)
(3,665)
(3,828)

¥10,260

¥ 38,542

¥(5,203) ¥ 43,599

¥50,224

¥7,361

¥57,585

Year ended March 31, 2011
Gross profit ...........................
Interest income ..................
Non-interest income ..........
Expenses ................................
Depreciation ......................
Other profit or loss ................
Consolidated net
business profit .....................

Millions of yen

Credit card services

Sumitomo
Mitsui Card
Company,
Limited
¥182,307
22,941
159,366
(129,823)
(8,078)
(19,880)

Cedyna
Financial
Corporation
¥134,402
36,802
97,600
(97,517)
(7,547)
(37,514)

Others

¥5,795
2,550
3,245
(2,086)
(2,767)
4

Total
¥322,506
62,293
260,213
(229,426)
(18,393)
(57,389)

Other
business
Grand total
¥ 75,611 ¥2,532,622
100,369 1,335,583
(24,757) 1,197,039
12,952 (1,301,083)
(121,710)
(12,639)
(229,544)
(128,301)

¥ 32,604 ¥ (628)

¥3,714

¥ 35,690 ¥ (39,737) ¥1,001,994

SMFG 2011 125

SMFG

Notes to Consolidated Financial Statements

Millions of yen
Banking business

Consumer
Year ended March 31, 2010
banking unit
Gross profit ........................... ¥391,695
357,215
34,480
(288,724)
(27,044)
—

Middle market
banking unit
¥472,866
298,183
174,683
(218,652)
(21,870)
—

Corporate
banking unit
¥197,224
125,853
71,371
(33,268)
(4,789)
—

SMBC
International
banking unit
¥169,135
110,135
59,000
(54,493)
(4,842)
—

Treasury
unit

Head office
account

Total

Others

Subtotal
¥272,848 ¥ (48,492) ¥1,455,275 ¥213,979 ¥1,669,255
135,460 1,181,843
187,552
487,411
85,296
(803,300)
(16,333)
(78,580)
(3,493)
(132,759)
—

(32,555) 1,046,382
408,892
(15,937)
(685,752)
(74,282)
(68,855)
(6,817)
—

78,519
(117,547)
(9,725)
— (132,759)

¥254,214

¥163,956

¥114,642

¥256,515 ¥(122,775) ¥ 769,522 ¥ (36,327) ¥ 733,194

Securities services

Leasing

Millions of yen

Year ended March 31, 2010
Gross profit ...........................
Interest income ..................
Non-interest income ..........
Expenses ................................
Depreciation ......................
Other profit or loss ................
Consolidated net
business profit .....................

SMBC
Friend
Securities
Co., Ltd.
¥67,205
598
66,606
(44,413)
(2,495)
—

Nikko
Cordial
Securities
Inc.
¥100,511
(1,382)
101,893
(76,968)
(1,109)
—

Sumitomo Mitsui
Finance and
Leasing Company,
Limited
¥97,218
59,841
37,377
(28,508)
(3,064)
(24,814)

Others
¥12,313
4,711
7,602
(12,448)
(512)
(2,674)

Total
¥109,531
64,552
44,979
(40,956)
(3,577)
(27,488)

Total

Others
¥ (6,317) ¥161,398
(247)
161,646
(124,267)
(5,000)
13,702

536
(6,854)
(2,886)
(1,395)
13,702

¥22,792

¥ 23,542

¥ 4,499

¥ 50,834

¥43,896

¥ (2,809) ¥ 41,086

Millions of yen

Credit card services

Sumitomo
Mitsui Card
Company,
Limited

Year ended March 31, 2010
Gross profit ........................... ¥183,594
27,531
156,063
(135,739)
(7,795)
(23,539)

Total

Others
¥ (210) ¥183,383
29,264
154,118
(137,909)
(11,559)
(40,417)

1,733
(1,944)
(2,170)
(3,763)
(16,878)

Other
business
Grand total
¥19,269 ¥2,142,838
9,982 1,285,395
857,443
9,287
(1,099,886)
6,547
(108,148)
(9,431)
(210,660)
(23,697)

¥(19,259) ¥ 5,056

¥ 2,119 ¥ 832,290

Millions of U.S. dollars
Banking business

Consumer
banking unit
$4,664
4,059
605
(3,491)
(317)
—

Middle market
banking unit
$5,338
3,282
2,056
(2,667)
(267)
—

Corporate
banking unit
$2,420
1,580
840
(433)
(63)
—

SMBC
International
banking unit
$2,243
1,295
948
(697)
(74)
—

Treasury
unit
$3,977
1,639
2,338
(215)
(39)
—

Head office
account
$ (220)
(215)
(5)
(906)
(94)
—

Subtotal
$18,422
11,640
6,782
(8,409)
(854)
—

Others
$2,907
1,801
1,106
(1,624)
(124)
(414)

Total
$21,329
13,441
7,888
(10,033)
(978)
(414)

$1,173

$2,671

$1,987

$1,546

$3,762

$(1,126)

$10,013

$ 869

$10,882

126

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

Millions of U.S. dollars

Securities services

SMBC
Friend
Securities
Co., Ltd.

$637
7
630
(514)
(25)
—

Nikko
Cordial
Securities
Inc.
$2,468
(32)
2,500
(2,004)
(29)
—

Others

$ 41
9
32
(37)
(15)
(67)

Total
$3,146
(16)
3,162
(2,555)
(69)
(67)

Sumitomo Mitsui
Finance and
Leasing Company,
Limited
$1,145
722
423
(338)
(37)
(203)

Leasing

Others

$ 50
(41)
91
(118)
(7)
157

Total
$1,195
681
514
(456)
(44)
(46)

$123

$ 464

$(63)

$ 524

$ 604

$ 89

$ 693

Millions of U.S. dollars

Credit card services

Sumitomo
Mitsui Card
Company,
Limited

$2,193
276
1,917
(1,561)
(97)
(240)

Cedyna
Financial
Corporation
$1,616
442
1,174
(1,173)
(91)
(451)

Others

$70
31
39
(25)
(33)
0

Total
$3,879
749
3,130
(2,759)
(221)
(691)

Other
business

$ 909
1,207
(298)
156
(152)
(1,543)

Grand total
$30,458
16,062
14,396
(15,647)
(1,464)
(2,761)

$ 392

$ (8)

$45

$ 429

$ (478)

$12,050

Notes: 1. Consolidated net business profit = SMBC’s nonconsolidated banking profit + SMFG’s ordinary profit + Other subsidiaries’ ordinary profit (excluding nonrecurring factors)

+ Equity method affiliates’ ordinary profit ✕ Ownership ratio – Internal transactions (dividends, etc.)

2. Other profit or loss = Nonoperating profit or loss of consolidated subsidiaries except SMBC + Equity method affiliates’ ordinary profit ✕ Ownership ratio, etc.
3. Consolidated net business profit of SMBC Friend Securities Co., Ltd., Nikko Cordial Securities Inc., Sumitomo Mitsui Finance and Leasing Company, Limited, Sumitomo
Mitsui Card Company, Limited, and Cedyna Financial Corporation is operating profit of each company, and nonoperating profits or losses of the companies are classified
into “Others” in each segment. For the figures on Cedyna Financial Corporation which became a consolidated subsidiary in the 1st quarter of the fiscal year ended March
31, 2011, consolidated net business profit amount is sum of Operating profit in the 1st quarter ✕ Ownership ratio + Operating profit from the 2nd quarter through the
4th quarter of the fiscal year ended March 31, 2011. For the figures on Nikko Cordial Securities Inc. which became a consolidated subsidiary in the 3rd quarter of the fiscal
year ended March 31, 2010, consolidated net business profit amount is Operating profit for the 2nd half term of the fiscal year ended March 31, 2010.

4. “Other business” includes profit or loss to be offset as internal transactions between segments.

4. Difference between total amount of consolidated net business profit by reportable segment and ordinary profit on consolidated statements of

income (adjustment of difference)

Year ended March 31
Profit
Consolidated net business profit ......................................................................
Credit costs of SMBC .......................................................................................
Gains (losses) on stocks of SMBC .....................................................................
Amortization of unrecognized retirement benefit obligation of SMBC .............
Ordinary profit of consolidated subsidiaries other than reportable segment ......
Amortization of goodwill other than reportable segment .................................
Adjustment of profit or loss of equity method affiliates ....................................
Others .............................................................................................................
Ordinary profit on consolidated statements of income ......................................

Millions of yen

2011

2010

¥1,001,994
(95,324)
(87,285)
(38,019)
81,530
(16,268)
(11,841)
(9,355)
¥ 825,428

¥832,290
(254,737)
3,857
(47,107)
84,225
(13,108)
(29,193)
(17,456)
¥558,769

Millions of
U.S. dollars
2011

$12,050
(1,146)
(1,050)
(457)
981
(196)
(142)
(113)
$ 9,927

Notes: 1. Credit cost = Provision for reserve for possible loan losses (excluding translation adjustment of general reserve for possible loan losses) + Write-off of loans + Losses on sales

of delinquent loans

2. Gains (losses) on stocks = Gains on sale of stocks – Losses on sale of stocks – Losses on devaluation of stocks
3. Adjustment of profit or loss of equity method affiliates = Equity method affiliates’ net income ✕ Ownership ratio – Equity method affiliates’ ordinary profit ✕ Ownership

ratio

SMFG 2011 127

SMFG

Notes to Consolidated Financial Statements

5. Additional information

SMFG has applied “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement
No. 17, issued on March 27, 2009) and “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related
Information” (ASBJ Guidance No. 20, issued on March 21, 2008) from the fiscal year ended March 31, 2011.

6. Related information

(1) Business segment information

Year ended March 31, 2011
Ordinary income to external customers

Millions of yen

Millions of U.S. dollars

Banking Business .......................................................................................................
Securities Services ......................................................................................................
Leasing ......................................................................................................................
Credit Card Services ...................................................................................................
Other Business ...........................................................................................................
Total ..........................................................................................................................

¥2,329,933
270,861
305,165
755,444
184,455
¥3,845,861

$28,021
3,258
3,670
9,085
2,218
$46,252

Notes: 1. Ordinary income is presented as a counterpart of sales of companies in other industries.

2. Ordinary income represents total income excluding gains on disposal of fixed assets, gains on recoveries of written-off claims and other extraordinary gains.

(2) Geographic segment information

(a) Ordinary income

Year ended March 31, 2011
Japan .......................................................................................................................
The Americas ..........................................................................................................
Europe and Middle East ...........................................................................................
Asia and Oceania .....................................................................................................
Total ........................................................................................................................

Millions of yen
¥3,433,235
158,377
88,061
166,186
¥3,845,861

Millions of U.S. dollars
$41,290
1,905
1,059
1,998
$46,252

Notes: 1. Ordinary income is presented as a counterpart of sales of companies in other industries.

2. Ordinary income from transactions by SMFG and its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated

subsidiaries is categorized as Japan. Ordinary income from transactions by overseas branches of domestic consolidated banking subsidiaries and overseas
consolidated subsidiaries is categorized as The Americas, Europe and Middle East, or Asia and Oceania, based on their locations and in consideration of their
geographic proximity and other factors.

3. 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.

4. Ordinary income represents total income excluding gains on disposal of fixed assets, gains on recoveries of written-off claims and other extraordinary gains.

(b) Tangible fixed assets

Millions of yen
¥1,093,077
12,639
59,557
3,634
¥1,168,908

Millions of U.S. dollars
$13,146
152
716
44
$14,058

(3) Information by major customer

There are no major customers individually accounting for 10% or more of ordinary income.

7. Information on losses on impairment of fixed assets by reportable segment

Year ended March 31, 2011
Banking Business .................................................................................................................
Securities Services .................................................................................................................
Leasing .................................................................................................................................
Credit Card Services .............................................................................................................
Other Business .....................................................................................................................
Total .....................................................................................................................................

Millions of yen
¥4,739
306
—
—
365
¥5,411

Millions of U.S. dollars

$57
4
—
—
4
$65

128

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

8. Information on amortization of goodwill and unamortized balance by reportable segment

Year ended March 31, 2011
Banking Business ............................................................
Securities Services ............................................................
Leasing ............................................................................
Credit Card Services ........................................................
Other Business ................................................................
Total ................................................................................

Millions of yen

Millions of U.S. dollars

Amortization
of goodwill
¥ 555
14,122
5,316
419
2,525
¥22,938

Unamortized
balance
¥ 10,457
244,455
88,481
9,396
—
¥352,790

Amortization
of goodwill
$ 7
170
64
5
30
$276

Unamortized
balance
$ 126
2,940
1,064
113
—
$4,243

9. Information on gains on negative goodwill by reportable segment
There is no material information to be reported for the fiscal year ended March 31, 2011.
0. Information on total credit cost by reportable segment
1

Millions of yen
¥144,601
(21)
7,979
46,573
18,216
¥217,348

Millions of U.S. dollars
$1,739
(0)
96
560
219
$2,614

Notes: 1. Total credit cost = Provision for reserve for possible loan losses + Write-off of loans + Losses on sales of delinquent loans + Gains on recoveries of written-off claims

2. “Other business” includes profit or loss to be offset as internal transactions between segments.

Fiscal year ended March 31, 2010

(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

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 at March 31, 2010, 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. (22) (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 and Ordinary profit of “Banking business” increased by
¥19,251 million as compared with the former method. Assets of “Banking business” increased by ¥59,270 million and Assets of “Other business” decreased by ¥703
million.

SMFG 2011 129

SMFG

Notes to Consolidated Financial Statements

(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 ...................................
2,344,349
Ordinary expenses ...................
Ordinary profit ........................ ¥ 384,555
II. Assets ...................................... ¥107,412,125

¥ 205,016
106,215
311,232
171,438
¥ 139,794
¥8,255,658

Europe and
Middle East

¥ 126,121
2,641
128,763
115,093
¥ 13,669
¥4,931,900

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)

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 at March 31, 2010, 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. (22) (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 and Ordinary profit of “Japan” increased by ¥19,251 million as
compared with the former method. Assets of “Japan,” “Europe and Middle East” and “Asia and Oceania” increased by ¥58,612 million, ¥341 million and ¥181
million, respectively. Assets of “The Americas” decreased by ¥567 million.

(3) Ordinary income from overseas operations

Year ended March 31
Consolidated ordinary income from overseas operations (A) .................................................................................
Consolidated ordinary income (B) ........................................................................................................................
(A) / (B) ...............................................................................................................................................................
Notes: 1. Consolidated ordinary income from overseas operations is presented as a counterpart of overseas sales of companies in other industries.

Millions of yen
2010
¥ 459,354
3,166,465

14.5%

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.

35. Business Combinations
Fiscal year ended March 31, 2011

Cedyna Financial Corporation consolidated as a subsidiary through a
third-party allotment of new shares
SMFG Card & Credit, Inc. (“FGCC”), a wholly-owned subsidiary of
SMFG, subscribed all the new shares issued by way of a third-party
allotment by Cedyna Financial Corporation (“Cedyna”), an equity
method affiliate of SMFG, on May 31, 2010. Cedyna became a
consolidated subsidiary of SMFG. The outline of the business
combination is as follows:
1. Outline of the business combination

(1) Name of the acquired company and its business

Cedyna (Credit Card Services)

(2) Main reasons for the business combination

FGCC subscribed new shares issued by way of a third-party
allotment by Cedyna and made Cedyna a consolidated
subsidiary of SMFG in order to accelerate and ensure Cedyna’s
management restructuring including its investments in new
businesses and systems developments to increase the corporate
value as well as its cost restructuring, to further clarify the
positioning of Cedyna as one of the core business entities,
together with Sumitomo Mitsui Card Company, Limited of

SMFG Group’s credit card services and to enhance Cedyna’s
capital base.

(3) Date of business combination
May 31, 2010
(4) Legal form of the business combinations

Consolidated as a subsidiary through a third-party allotment
of new shares

(5) Name of the controlling entity after the business combination

Sumitomo Mitsui Financial Group, Inc.

(6) Percentage share of voting rights SMFG has acquired
Percentage share of voting rights owned before
business combination .............................................
Percentage share of voting rights additionally
acquired at the date of business combination .........
Percentage share of voting rights after acquisition ...

48%

21%
69%

(7) Main reason for deciding to acquire the company

It is because SMFG acquired a majority of voting rights of
Cedyna and consolidated it as a subsidiary.

2. Period of the acquired company’s financial results included in the

consolidated statements of income
From April 1, 2010 to March 31, 2011

Note that as the deemed acquisition date is June 30, 2010,
gain or loss related to the acquired company for the period from
April 1, 2010 to June 30, 2010 is presented as gain or loss from

130

SMFG 2011

investments by the equity method in the consolidated statements
of income.

3. Acquisition cost of the acquired company

Fair value of common stock
of Cedyna owned before
business combination ............
Fair value of common stock
of Cedyna additionally
acquired at the date of
business combination ............
Expenses directly required
for acquisition ......................
Acquisition cost of
the acquired company ...........

Millions of yen

Millions of
U.S. dollars

¥35,901

$ 432

49,999

203

601

¥86,104

$1,036

4. Difference between acquisition cost of the acquired company
and total acquisition cost of individual transactions leading to
acquisition

Acquisition cost of
the acquired company ...........
Total acquisition cost of
individual transactions
leading to acquisition ...........
Difference
(gains on step acquisitions) ...

Millions of yen

Millions of
U.S. dollars

¥86,104

$1,035

74,437

895

¥11,667

$ 140

5. Goodwill, reason for recognizing goodwill, amortization method

and amortization period
(1) Amount of goodwill

¥9,671 million ($116 million)

(2) Reason for recognizing goodwill

SMFG accounted for the difference between the acquisition
cost and the equivalent amount of SMFG’s interests in Cedyna
as goodwill.

(3) Method and term to amortize goodwill
Straight-line method over 20 years

6. Amounts of assets and liabilities acquired on the day of the busi-

ness combination
(1) Assets

Total assets .............................
Loans and bills discounted ......
Other assets ............................
Customer’s liabilities for
acceptances and guarantees ...

(2) Liabilities

Total liabilities .......................
Borrowed money ....................
Acceptances and guarantees ....

Millions of yen
¥2,631,525
438,497
803,639

Millions of
U.S. dollars
$31,648
5,274
9,665

Millions of yen
¥2,520,313
989,790
1,124,290

Millions of
U.S. dollars
$30,310
11,904
13,521

7. Approximate amounts of impact on the consolidated statements

of income for the fiscal year ended March 31, 2011, 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

Notes to Consolidated Financial Statements

SMFG

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 statements of income is as
follows:

Ordinary income ....................
Ordinary profit .......................
Net income ............................

Millions of yen
¥213,686
(5,584)
(2,257)

Millions of
U.S. dollars
$2,570
(67)
(27)

Note: Ordinary income is presented as a counterpart 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 Cedyna and its consolidated subsidiaries’ statements
of income for the period from April 1, 2010 to June 30, 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 LLC.

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)

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

SMFG’s interest in KUBC’s common stock ..........
SMFG’s interest in KUBC’s preferred stock .........
Acquisition cost ...................................................

Millions of yen
¥ 7,182
40,000
¥47,182

SMFG 2011 131

1,124,290

13,521

(5) Name of the controlling entity after the business combination

SMFG

Notes to Consolidated Financial Statements

4. Merger ratio, calculation method, number of shares delivered and

(2) Liabilities

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
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.

(3) Number of shares delivered and value

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 of KUBC (Type 1)
Preferred stock of KUBC (Type 2)

¥12,803 million
¥19,025 million
¥16,500 million

5. Goodwill, reason for recognizing goodwill, amortization method

and amortization period
(1) Amount of goodwill
¥11,056 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

6. Amounts of assets and liabilities acquired on the day of the busi-

ness combination
(1) Assets

Total assets ..........................................................
Loans and bills discounted ...................................
Securities .............................................................

Millions of yen
¥1,113,801
795,445
89,968

Total liabilities ....................................................
Deposits ..............................................................

Millions of yen
¥1,078,769
1,033,256

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

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
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

132

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

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.

36. Per Share Data

March 31
Net assets per share .............................................................................................

2011
¥3,533.47

Year ended March 31
Net income per share ...........................................................................................
Net income per share (diluted) ............................................................................
Notes: 1. Net income per share and Net income per share (diluted) are calculated based on the following.

2011
¥336.85
336.78

Yen

2010
¥3,391.75

2010
¥248.40
244.18

Millions of yen, except number of shares

Year ended March 31
Net income per share:

Net income ..........................................................................................................................
Amount not attributable to common stockholders ...............................................................
Dividends on preferred stock...........................................................................................
Net income attributable to common stock ...........................................................................
Average number of common stock during the year (in thousands) ........................................

Net income per share (diluted):

Adjustment for net income ..................................................................................................
Dividends on preferred stock...........................................................................................
Adjustment for dilutive shares issued by subsidiaries and affiliates ..................................
Increase in number of common stock (in thousands) ............................................................
Preferred stock ................................................................................................................
Stock acquisition rights ..................................................................................................

2011

¥475,895
6,195
6,195
¥469,700
1,394,390

¥ (73)
—
(73)
68
—
68

2010

¥271,559
8,449
8,449
¥263,109
1,059,227

¥ 1,931
2,254
(322)
26,191
26,191
—

U.S. dollars
2011
$42.50

U.S. dollars
2011
$4.05
4.05

Millions of U.S. dollars
2011

$5,723
74
74
$5,649
/

$ (1)
—
(1)
/
/
/

Outline of dilutive shares which were not included in the calculation of “Net income per share (diluted)” for the fiscal years ended March 31, 2011 and 2010 because they do
not have dilutive effect:

Stock acquisition rights: 1 type

(Number of stock acquisition rights issued by resolution at the general shareholders’ meeting on June 27, 2002: 1,081 units)

2. Net assets per share is calculated based on the following:

Millions of yen, except number of shares

March 31
Net assets .................................................................................................................................
Amounts excluded from Net assets ...........................................................................................
Preferred stock .....................................................................................................................
Dividends on preferred stock ...............................................................................................
Stock acquisition rights .......................................................................................................
Minority interests ................................................................................................................
Net assets attributable to common stock at the fiscal year-end ..................................................

Number of common stock at the fiscal year-end used for the calculation of
Net assets per share (in thousands) ..........................................................................................

2011
¥7,132,073
2,250,681
210,003
3,097
262
2,037,318
¥4,881,392

1,381,473

2010
¥7,000,805
2,262,582
210,003
3,097
81
2,049,400
¥4,738,223

1,396,985

Millions of U.S. dollars
2011
$85,774
27,068
2,526
37
3
24,502
$58,706

SMFG 2011 133

(2) Share exchange ratio, its basis for determination, number of

shares delivered
(a) Type of shares and share exchange ratio

Common shares
SMFG 1 : Cedyna 0.06
Note: 0.06 shares of SMFG common stock was allotted and delivered per

share of Cedyna common stock.

(b) Basis for determination of share exchange ratio

Nikko Cordial Securities Inc. and Nomura Securities Co.,
Ltd. were appointed by FGCC and Cedyna, respectively,
as third party valuation institutions in order to ensure
the fairness and appropriateness in determining the share
exchange ratio for the Share Exchange. FGCC and Cedyna
engaged in negotiations and discussions with reference to
the share exchange ratio analysis provided by the above
third party valuation institutions and with consideration
for SMFG’s and Cedyna’s financial conditions, performance
trends and stock price movements. As a result, FGCC and
Cedyna each determined that the share exchange ratio set
forth in (a) above was beneficial to the shareholders of both
SMFG and Cedyna.

14,702 thousand common shares of SMFG

SMFG

Notes to Consolidated Financial Statements

37. Subsequent Events
1. Acquisition and cancellation of preferred stock

SMFG resolved, at a meeting of the Board of Directors held on
February 28, 2011, to acquire its preferred stock (1st series Type 6),
in accordance with the provisions of Article 18 of the Articles of
Incorporation of SMFG and to cancel its preferred stock (1st series
Type 6) in accordance with the provisions of Article 178 of the
Companies Act, as described below. According to the resolution,
SMFG acquired and cancelled its preferred stock (1st series Type 6)
on April 1, 2011. Capital surplus was reduced by the cancellation.
(1) Class of shares to be acquired and cancelled: Preferred stock

(1st series Type 6)

(2) Total number of shares to be acquired and cancelled: 70,001

(3) Total amount of acquisition: ¥210,003,000,000

2. Transactions under common control
Making Cedyna Financial Corporation a wholly-owned subsidiary
SMFG Card & Credit, Inc. (“FGCC”) made Cedyna Financial
Corporation (“Cedyna”) a wholly-owned subsidiary by a share
exchange with an effective date of May 1, 2011 (the “Share
Exchange”). The outline of transactions under common control is
as follows:
(1) Outline of the transactions

(a) Name and business of combined entities

Acquisition company: FGCC (Management of subsidiaries
and affiliates)
Acquired company: Cedyna (Credit Card Services)

(b) Date of business combination

May 1, 2011

Exchange of shares

(d) Name of the entity after the business combination

Sumitomo Mitsui Financial Group, Inc.

(e) Purpose of the transactions

SMFG and FGCC decided to organize a system which
allowed more timely and flexible decision making in order
to “establish the number one credit card business entity in
Japan.”

134

SMFG 2011

38. Parent Company

(1) Nonconsolidated Balance Sheets

Sumitomo Mitsui Financial Group, Inc.

March 31
Assets
Current assets ...........................................................................................
Cash and due from banks .....................................................................
Prepaid expenses ..................................................................................
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 ..........................................
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 ...........................................................................................

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 ........................................................................
Stock acquisition rights ...........................................................................
Total net assets .........................................................................................
Total liabilities and net assets ..................................................................

Notes to Consolidated Financial Statements

SMFG

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

¥ 96,397
54,154
29
32
41,382
798
6,141,258
0
0
0
8
8
6,141,248
6,141,248
¥6,237,655

¥1,001,841
997,030
940
3,054
25
5
107
91
586
392,900
392,900
—
1,394,741

2,337,895
1,833,027
1,559,374
273,652
715,303

30,420
684,883
(43,482)
4,842,743
170
4,842,914
¥6,237,655

¥ 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

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

$ 1,159
651
0
0
498
10
73,858
0
0
0
0
0
73,858
73,858
$75,017

$12,049
11,991
12
37
0
0
1
1
7
4,725
4,725
—
16,774

28,117
22,045
18,754
3,291
8,602

366
8,236
(523)
58,241
2
58,243
$75,017

SMFG 2011 135

SMFG

Notes to Consolidated Financial Statements

(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 .....................................................

2011
¥222,217
206,865
15,352

24,467
7,999
16,468
197,750

110
68
1
40

6,317
6,290
26
—
—
0
191,543

—
—

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

Income before income taxes ...................................................................
Income taxes:

191,543

71,846

Current ...................................................................................................
Deferred .................................................................................................
Net income ................................................................................................

3
—
¥191,539

154
5,514
¥ 66,176

Millions of
U.S. dollars (Note 1)
2011
$2,672
2,488
184

294
96
198
2,378

1
1
0
0

75
75
0
—
—
0
2,304

—
—

2,304

0
—
$2,304

Per share data:

Net income ............................................................................................
Net income — diluted ...........................................................................

¥131.42
131.41

¥53.82
—

$1.58
1.58

Yen

2011

2010

U.S. dollars (Note 1)
2011

136

SMFG 2011

Notes to Consolidated Financial Statements

SMFG

(3) Nonconsolidated Statements of Changes in Net Assets

Sumitomo Mitsui Financial Group, Inc.

Year ended March 31
Stockholders’ equity
Capital stock

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

¥2,337,895

¥1,420,877

$28,117

Issuance of new shares .....................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

—
—
¥2,337,895

917,018
917,018
¥2,337,895

—
—
$28,117

Capital surplus

Capital reserve

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

1,559,374

642,355

18,754

Issuance of new shares .................................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

—
—
¥1,559,374

917,018
917,018
¥1,559,374

—
—
$18,754

Other capital surplus

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

273,699

273,808

3,291

Disposal of treasury stock .............................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

(46)
(46)
¥ 273,652

(108)
(108)
¥ 273,699

(0)
(0)
$ 3,291

Total capital surplus

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

1,833,073

916,163

22,045

Issuance of new shares .................................................................
Disposal of treasury stock .............................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

—
(46)
(46)
¥1,833,027

917,018
(108)
916,909
¥1,833,073

—
(0)
(0)
$22,045

Retained earnings

Other retained earnings
Voluntary reserve

Balance at the end of the previous fiscal year ...............................
Changes in the fiscal year:

30,420

366

Net changes in the fiscal year ....................................................
Balance at the end of the fiscal year..............................................

—
¥ 30,420

—
$ 366

Retained earnings brought forward

Balance at the end of the previous fiscal year ...............................
Changes in the fiscal year:

647,622

653,487

7,788

Cash dividends ..........................................................................
Net income .................................................................................
Net changes in the fiscal year ....................................................
Balance at the end of the fiscal year..............................................

(154,278)
191,539
37,260
¥ 684,883

(72,041)
66,176
(5,865)
¥ 647,622

(1,856)
2,304
448
$ 8,236

Total retained earnings

Balance at the end of the previous fiscal year ...................................
Changes in the fiscal year:

678,042

683,907

8,154

Cash dividends ..............................................................................
Net income .....................................................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

(154,278)
191,539
37,260
¥ 715,303

(72,041)
66,176
(5,865)
¥ 678,042

(1,856)
2,304
448
$ 8,602

SMFG 2011 137

SMFG

Notes to Consolidated Financial Statements

(Continued)

Year ended March 31
Stockholders’ equity
Treasury stock

Millions of yen

2011

2010

Millions of
U.S. dollars (Note 1)
2011

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

¥ (43,437)

¥ (43,400)

$ (522)

Purchase of treasury stock ................................................................
Disposal of treasury stock .................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

(105)
60
(45)
¥ (43,482)

(189)
152
(37)
¥ (43,437)

(1)
0
(1)
$ (523)

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

Stock acquisition rights

Balance at the end of the previous fiscal year.......................................
Changes in the fiscal year:

Net changes in items other than stockholders’
equity in the fiscal year ....................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

Total net assets

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 items other than stockholders’
equity in the fiscal year ....................................................................
Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

4,805,574

2,977,547

57,794

—
(154,278)
191,539
(105)
13
37,169
¥4,842,743

1,834,037
(72,041)
66,176
(189)
43
1,828,026
¥4,805,574

—
(1,856)
2,304
(1)
0
447
$58,241

—

170
170
¥ 170

—
—
¥ —

2
2
$ 2

4,805,574

2,977,547

57,794

—
(154,278)
191,539
(105)
13

1,834,037
(72,041)
66,176
(189)
43

170
37,340
¥4,842,914

—
1,828,026
¥4,805,574

—
(1,856)
2,304
(1)
0

2
449
$58,243

138

SMFG 2011

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, 2011 and 2010, and the related consolidated statements of income, changes in net
assets and cash flows for the years then ended, and the consolidated statement of comprehensive income for the year
ended March 31, 2011 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 state-
ments 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, 2011 and 2010, 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.

Additional Information:
As discussed in Note 37 to the consolidated financial statements, SMFG acquired and cancelled its 1st series Type 6
preferred stock on April 1, 2011, based on a resolution at the meeting of the Board of Directors held on February 28,
2011.

The consolidated financial statements as of and for the year ended March 31, 2011 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, 2011

SMFG 2011 139

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

2011

2010

¥ 5,539,966
3,537,476
851,636
131,104
4,699,667
1,076,044
6,590,920
19,326
39,748,394
61,959,049
1,077,024
114,560
2,643,552
828,698
409,917
568,966
3,862,442
(943,077)
¥132,715,674

¥ 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

Millions of
U.S. dollars
2011

$ 66,626
42,543
10,242
1,577
56,520
12,941
79,265
232
478,032
745,148
12,953
1,378
31,793
9,966
4,930
6,843
46,452
(11,342)
$1,596,099

140

SMFG 2011

(Continued)

Supplemental Information

SMBC

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 point service program .......................................................................
Reserve for reimbursement of deposits ...............................................................
Reserve for loss on interest repayment ................................................................
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 on other securities ..............................................................
Net deferred losses on hedges ............................................................................
Land revaluation excess .......................................................................................
Foreign currency translation adjustments ............................................................
Total accumulated other comprehensive income ..............................................
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

2011

2010

Millions of
U.S. dollars
2011

¥ 90,576,587
2,629,407
726,365
5,712,348
337,120
5,209,441
8,631,713
256,160
417,788
3,783,297
216,171
3,238,158
35,592
2,001
17,383
1,666
2,249
9,923
2,600
69
18,352
45,698
3,862,442
125,732,541

1,770,996
2,717,397
929,336
5,417,730
239,717
(8,921)
33,294
(119,696)
144,394
91
1,420,915
6,983,132
¥132,715,674

¥ 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

$1,089,315
31,622
8,736
68,699
4,054
62,651
103,809
3,081
5,024
45,500
2,600
38,944
428
24
209
20
27
119
31
1
221
550
46,452
1,512,117

21,299
32,681
11,176
65,156
2,883
(107)
400
(1,440)
1,736
1
17,089
83,982
$1,596,099

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 ¥83.15 to US$1, the exchange rate prevailing at March 31, 2011.

SMFG 2011 141

SMBC

Supplemental Information

Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income (Unaudited)
Sumitomo Mitsui Banking Corporation and Subsidiaries
(Consolidated Statements of Income)

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:

¥1,485,778
1,153,471
248,988
2,351
8,429
18,439
4,369
49,729
2,299
665,109
212,920
297,766
51,070
2,714,944

268,627
139,543
28,434
2,751
8,743
66,922
22,231
137,944
143,012
1,094,576
42,427
285,477
1,972,065
742,878

59,719
150,503
532,656
81,823
¥ 450,832

142

SMFG 2011

Millions of yen

2011

2010

Millions of
U.S. dollars
2011

¥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

69,246
75,282

81,352
¥ 332,497

$17,868
13,872
2,994
28
101
222
53
598
28
7,999
2,561
3,581
614
32,651

3,231
1,678
342
33
105
805
268
1,659
1,720
13,164
510
3,433
23,717
8,934

718
1,810
6,406
984
$ 5,422

Supplemental Information

SMBC

(Continued)

(Consolidated Statements of Comprehensive Income)

Year ended March 31
Income before minority interests ........................................................................
Other comprehensive income

Net unrealized losses on other securities .........................................................
Net deferred gains on hedges ..........................................................................
Foreign currency translation adjustments ........................................................
Share of other comprehensive income of
associates accounted for by equity method ..................................................
Total other comprehensive income ..................................................................
Total comprehensive income ..............................................................................
Comprehensive income attributable to shareholders of the parent company ....
Comprehensive income attributable to minority interests ...............................

Millions of yen

2011
¥532,656

2010

¥—

(150,926)
29,408
(59,493)

12,044
(168,966)
363,689
322,474
41,215

—
—
—

—
—
—
—
—

Millions of
U.S. dollars
2011

$6,406

(1,815)
354
(716)

145
(2,032)
4,374
3,878
496

Per share data:

Net income .......................................................................................................
Net income — diluted ......................................................................................

¥4,184.89
4,184.07

¥4,240.20
4,236.01

$50.33
50.32

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 ¥83.15 to US$1, the exchange rate prevailing at March 31, 2011.

Yen

U.S. dollars

SMFG 2011 143

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 ...............................................................
Deferred tax liabilities for land revaluation ...........................................................
Acceptances and guarantees ...............................................................................
Total liabilities ......................................................................................................

Net assets
Capital stock ........................................................................................................
Capital surplus .....................................................................................................
Retained earnings ................................................................................................
Total stockholders’ equity ...................................................................................
Net unrealized gains on other securities ..............................................................
Net deferred gains 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

2011

2010

¥ 4,793,275
3,308,910
288,120
96,665
402,928
509,773
3,623,461
10,316
39,853,432
55,237,613
1,000,964
1,994,996
717,568
142,321
376,899
3,852,949
(711,522)
(13,769)
¥115,484,907

¥ 82,443,286
2,272,758
503,315
4,760,920
337,120
3,015,835
5,952,326
272,253
40,999
3,670,355
216,171
2,521,061
10,019
692
—
1,586
8,872
45,091
3,852,949
109,925,614

1,770,996
2,481,273
935,992
5,188,262
229,885
121,109
20,035
371,030
5,559,293
¥115,484,907

¥ 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

Millions of
U.S. dollars
2011

$ 57,646
39,794
3,465
1,162
4,846
6,131
43,577
124
479,296
664,313
12,038
23,993
8,630
1,712
4,533
46,337
(8,557)
(166)
$1,388,874

$ 991,501
27,333
6,053
57,257
4,054
36,270
71,586
3,274
493
44,141
2,600
30,320
121
8
—
19
107
542
46,337
1,322,016

21,299
29,841
11,256
62,396
2,765
1,456
241
4,462
66,858
$1,388,874

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 ¥83.15 to US$1, the exchange rate prevailing at March 31, 2011.

144

SMFG 2011

Supplemental Information

SMBC

Millions of yen

2011

2010

Millions of
U.S. dollars
2011

Nonconsolidated Statements of Income (Unaudited)
Sumitomo Mitsui Banking Corporation

Year ended March 31
Income
Interest income .....................................................................................................
Interest on loans and discounts .......................................................................
Interest and dividends on securities .................................................................
Interest on receivables under resale agreements .............................................
Interest on receivables under securities borrowing transactions .....................
Interest on deposits with banks .......................................................................
Other interest income .......................................................................................
Trust fees ..............................................................................................................
Fees and commissions .........................................................................................
Trading 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:

¥1,259,403
962,113
240,380
757
2,263
13,725
40,164
2,299
439,770
151,070
218,075
39,969
2,110,588

291,595
110,415
89,770
1,814
7,247
63,048
19,299
137,103
110,177
738,447
19,473
224,951
1,521,748
588,839

¥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

42,386
125,273
¥ 421,180

44,997
91,757
¥ 317,995

$15,146
11,571
2,891
9
27
165
483
27
5,289
1,817
2,623
481
25,383

3,507
1,328
1,080
22
87
758
232
1,649
1,325
8,881
234
2,705
18,301
7,082

510
1,507
$ 5,065

Per share data:

¥3,905.80
—

¥4,051.75
—

$46.97
—

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 ¥83.15 to US$1, the exchange rate prevailing at March 31, 2011.

Yen

U.S. dollars

SMFG 2011 145

SMFG

Income Analysis (Consolidated)

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries

Operating Income, Classified by Domestic and Overseas Operations

Millions of yen

Year ended March 31

Domestic
operations
Interest income ..................................................... ¥1,345,979
281,315
Interest expenses ..................................................
Net interest income ................................................... 1,064,663
2,335
Trust fees ...................................................................
806,591
Fees and commissions .........................................
120,594
Fees and commissions payments ........................
685,997
Net fees and commissions ........................................
251,626
Trading income......................................................
6,732
Trading losses .......................................................
244,894
Net trading income ....................................................
961,912
Other operating income ........................................
821,014
Other operating expenses.....................................
140,898
Net other operating income (expenses) ....................

2011

Overseas
operations Elimination

Total

¥356,800
103,355
253,444
—
92,975
11,046
81,929
2,787
10,589
(7,801)
77,934
37,504
40,429

(89,739)
(439)
—
(2,105)
(410)
(1,695)
(17,321)
(17,321)

¥(90,179) ¥1,612,599
294,931
1,317,668
2,335
897,461
131,230
766,230
237,093
—
— 237,093
1,039,662
858,243
181,419

(183)
(274)
91

Domestic
operations
¥1,392,919
297,268
1,095,650
1,778
651,331
111,320
540,011
186,117
8,313
177,804
401,898
355,904
45,993

2010

Overseas
operations Elimination
¥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)
(101,319)
(1,352)
—
(2,622)
(1,495)
(1,126)
(20,932)
(20,932)
—
(210)
(98)
(112)

Total
¥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

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 (2011, ¥16 million; 2010, ¥20 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
¥93,247,748
54,156,879
31,216,834
355,148
26,178

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

4,243,613
343,704
1,626,041

¥98,130,523
70,966,834
7,144,913
1,613,628
445,349
4,629,220
—
8,118,619
1,190,706
3,810,547

2011
Interest
¥1,345,979
1,006,690
228,045
2,250
32

8,464
1,566
62,998

¥ 281,315
71,673
12,396
2,166
573
8,847
—
106,979
2,006
76,662

Earnings yield

1.44%
1.86
0.73
0.63
0.12

0.20
0.46
3.87

0.29%
0.10
0.17
0.13
0.13
0.19
—
1.32
0.17
2.01

Average balance
¥86,229,707
55,382,826
24,828,351
343,760
13,958

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

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 consolidated subsidiaries use weekly, monthly or quarterly balances

instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2011, ¥1,188,255 million; 2010, ¥965,438

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 (2011, ¥21,928 million; 2010, ¥12,392 million). “Interest-bearing liabilities” are shown
after deduction of amounts equivalent to the average balance of money held in trust (2011, ¥21,928 million; 2010, ¥12,392 million) and corresponding
interest (2011, ¥16 million; 2010, ¥20 million).

146

SMFG 2011

Income Analysis (Consolidated)

SMFG

Overseas Operations

Average balance
¥15,642,630
9,620,423
1,978,236
771,389
69,728

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

—
2,285,316
184,752

¥10,510,807
6,702,036
2,013,996
326,104
597,909
—
328,969
421,821
—
105,117

2011
Interest
¥356,800
265,568
39,734
7,055
2,319

—
17,583
8,591

¥103,355
36,716
19,268
1,621
2,180
—
1,164
9,958
—
6,745

Millions of yen

Earnings yield
2.28%
2.76
2.01
0.91
3.33

Average balance
¥16,461,908
11,059,619
1,656,478
812,878
13,963

—
0.77
4.65

0.98%
0.55
0.96
0.50
0.36
—
0.35
2.36
—
6.42

—
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

Earnings yield
2.46%
2.84
1.88
0.63
6.36

—
0.65
4.13

1.01%
0.54
0.89
0.28
0.20
—
0.24
2.65
—
5.98

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 consolidated subsidiaries use weekly, monthly or quarterly balances

instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2011, ¥103,935 million; 2010, ¥156,583

million).

Total of Domestic and Overseas Operations

Year ended March 31
Interest-earning assets .............................................. ¥107,061,829
62,448,896
32,845,940
1,126,538
95,907

Loans and bills discounted ...................................
Securities ..............................................................
Call loans and bills bought ....................................
Receivables under resale agreements ..................

Average balance

2011
Interest
¥1,612,599
1,199,083
251,311
9,305
2,351

4,243,613
2,484,913
1,810,793

8,464
18,592
71,589

Interest-bearing liabilities .......................................... ¥106,745,754
77,485,196
9,158,909
1,939,732
1,043,259
4,629,220
328,969
7,228,342
1,190,706
3,522,765

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

¥ 294,931
107,758
31,665
3,788
2,753
8,847
1,164
44,298
2,006
66,940

Millions of yen

Earnings yield

1.51%
1.92
0.77
0.83
2.45

0.20
0.75
3.95

0.28%
0.14
0.35
0.20
0.26
0.19
0.35
0.61
0.17
1.90

Average balance
¥100,773,612
64,723,468
26,505,349
1,156,638
27,922

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

¥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

¥ 314,872
145,979
34,042
6,271
1,390
6,165
194
37,708
2,902
70,749

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

Notes: 1. The figures above comprise totals for domestic and overseas operations after intersegment eliminations.

2. In principle, average balances are calculated by using daily balances. However, some consolidated subsidiaries use weekly, monthly or quarterly balances

instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2011, ¥1,288,655 million; 2010, ¥1,123,299

million).

4. Income and expenses resulting from money held in trust are included in “Other income” and “Other expenses.” Therefore, “Interest-earning assets” are

SMFG 2011 147

SMFG

Income Analysis (Consolidated)

Fees and Commissions

Domestic
Year ended March 31
operations
Fees and commissions .............................................. ¥806,591
21,264
119,605
70,803
18,054
6,505
52,403
185,970
161,632

Deposits and loans ...............................................
Remittances and transfers ....................................
Securities-related business ...................................
Agency ..................................................................
Safe deposits ........................................................
Guarantees ............................................................
Credit card business .............................................
Investment trusts ..................................................

Millions of yen

2011

Overseas
operations Elimination

¥92,975
61,373
8,253
631
—
2
10,559
—
2,073

¥(2,105)
(33)
(2)
(156)
—
—
(200)
—
—

Total
¥897,461
82,604
127,856
71,277
18,054
6,507
62,762
185,970
163,706

Domestic
operations
¥651,331
20,660
118,012
54,380
14,763
6,681
40,468
143,770
—

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
—

Fees and commissions payments ............................. ¥120,594
27,927

Remittances and transfers ....................................

¥11,046
6,149

¥ (410)
(118)

¥131,230
33,958

¥111,320
26,285

¥10,923
4,920

¥(1,495)
(155)

¥120,748
31,050

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.
3. “Investment trusts” are reported as sub-account of “Fees and commissions” from the fiscal year ended March 31, 2011, because their significance

increased.

Trading Income

2011

2010

Millions of yen

Domestic
Year ended March 31
operations
Trading income .......................................................... ¥251,626
92,932

Gains on trading securities ...................................

Overseas
operations Elimination

¥ 2,787
1,301

¥(17,321)
—

Total
¥237,093
94,234

Domestic
operations
¥186,117
63,212

Overseas
operations Elimination

¥28,902
211

¥(20,932)
—

Total
¥194,087
63,424

Gains on securities related to
trading transactions ............................................
Gains on trading-related financial derivatives .......
Others ...................................................................

1,019
156,512
1,162

519
966
—

—
(17,321)
—

1,538
140,157
1,162

2,254
120,075
576

—
28,691
—

—
(20,932)
—

2,254
127,833
576

Trading losses............................................................ ¥ 6,732
—

Losses on trading securities .................................

¥10,589
—

¥(17,321)
—

¥ — ¥ 8,313
—

—

¥12,619
—

¥(20,932)
—

¥ —
—

Losses on securities related to
trading transactions ............................................
Losses on trading-related financial derivatives .....
Others ...................................................................

—
6,732
—

—
10,589
—

—
(17,321)
—

—
—
—

—
8,313
—

—
12,619
—

—
(20,932)
—

—
—
—

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.

148

SMFG 2011

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

2011

2010

¥46,333,358
25,357,704
3,855,153
75,546,217
5,997,958
¥81,544,175

¥ 4,810,044
1,533,773
108,904
6,452,722
2,368,364
¥ 8,821,087
¥90,365,263

¥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

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

2011

2010

Manufacturing..............................................................................................
Agriculture, forestry, fisheries and mining ...................................................
Construction ................................................................................................
Transportation, communications and public enterprises ............................
Wholesale and retail ....................................................................................
Finance and insurance ................................................................................
Real estate, goods rental and leasing .........................................................
Services .......................................................................................................
Municipalities ...............................................................................................
Others ..........................................................................................................
Subtotal .......................................................................................................

Overseas operations:

Public sector ................................................................................................
Financial institutions ....................................................................................
Commerce and industry ..............................................................................
Others ..........................................................................................................
Subtotal .......................................................................................................
Total .................................................................................................................

¥ 6,001,645
148,994
962,259
3,829,628
4,238,042
3,991,865
7,761,065
3,847,475
1,230,912
20,393,976
¥52,405,866

¥ 35,733
608,810
7,475,110
822,834
¥ 8,942,489
¥61,348,355

11.45%
0.28
1.84
7.31
8.09
7.62
14.81
7.34
2.35
38.91
100.00%

0.40%
6.81
83.59
9.20
100.00%
—

¥ 6,694,906
153,473
1,095,482
3,271,221
4,497,698
4,299,050
8,210,117
4,077,881
1,117,092
20,606,900
¥54,023,825

¥ 43,100
543,997
7,223,161
866,948
¥ 8,677,208
¥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%
—

Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic

consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking subsidiaries and
overseas consolidated subsidiaries.

2. Japan offshore banking accounts are included in overseas operations’ accounts.

SMFG 2011 149

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

2011
¥ 696,154
362,137
653
¥1,058,945
¥ 867,866

Risk-Monitored Loans

March 31
Bankrupt loans ................................................................................................
Non-accrual loans ...........................................................................................
Past due loans (3 months or more) .................................................................
Restructured loans ..........................................................................................
Total .................................................................................................................
Amount of direct reduction ..............................................................................

2011
¥ 90,777
1,031,828
25,438
498,323
¥1,646,369
¥ 735,638

Millions of yen

2010
¥ 702,606
365,087
636
¥1,068,329
¥ 843,781

2010
¥ 165,131
1,075,782
38,315
250,256
¥1,529,484
¥ 727,633

Notes: Definition of risk-monitored loan categories

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

2011
¥ 281,611
875,837
532,873
1,690,321
67,868,754
¥69,559,075
¥ 867,866

Millions of yen

2010
¥ 392,424
881,239
298,179
1,571,842
68,431,335
¥70,003,177
¥ 843,781

Notes: Definition of problem asset categories

1. Bankrupt and quasi-bankrupt assets: Credits to borrowers undergoing bankruptcy, corporate reorganization, and rehabilitation proceedings, as well as

claims of a similar nature

2. Doubtful assets: Credits for which final collection of principal and interest in line with original agreements is highly improbable due to deterioration of

financial position and business performance, but not insolvency of the borrower

3. Substandard loans: Past due loans (3 months or more) and restructured loans, excluding 1. and 2.
4. Normal assets: Credits to borrowers with good business performance and in financial standing without identified problems and not classified into the 3

categories above

150

SMFG 2011

Assets and Liabilities (Consolidated)

SMFG

Securities
Year-End Balance

March 31
Domestic operations:

Millions of yen

2011

2010

Overseas operations:

Unallocated corporate assets:

¥25,934,346
544,409
3,256,034
2,696,843
5,778,370
¥38,210,004

¥ —
—
—
—
1,697,165
¥ 1,697,165

¥ —
—
—
44,953
—
¥ 44,953
¥39,952,123

¥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

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 ........................................................... ¥6,149,138
Trading securities .................................................. 2,778,917
3,857
Derivatives of trading securities ............................
—
Securities related to trading transactions .............

Derivatives of securities related to
5,338
trading transactions ............................................
Trading-related financial derivatives ..................... 3,070,072
290,952
Other trading assets..............................................

2011

2010

Millions of yen

Overseas
operations Elimination

¥(34,836)

¥518,595
38,619
—
—

Total
¥6,632,898
— 2,817,536
3,857
—
—
—

Domestic
operations
¥6,156,853
2,747,496
1,246
—

¥587,881
32,229
—
—

Overseas
operations Elimination

¥(36,046)

Total
¥6,708,688
— 2,779,725
1,246
—
—
—

—
479,623
353

—
(34,836)
—

5,338
3,514,859
291,305

6,931
3,123,235
277,943

—
555,288
363

—
(36,046)
—

6,931
3,642,477
278,307

Trading liabilities ........................................................ ¥4,670,219
Trading securities sold for short sales .................. 1,622,216
1,803
Derivatives of trading securities ............................

¥612,920
830
—

¥(34,836)

¥5,248,302
— 1,623,046
1,803
—

¥4,470,010
1,582,808
2,367

¥632,763
—
—

¥(36,046)

¥5,066,727
— 1,582,808
2,367
—

Securities related to trading transactions
sold for short sales ..............................................

—

Derivatives of securities related to
5,638
trading transactions ............................................
Trading-related financial derivatives ..................... 3,040,560
—
Other trading liabilities ..........................................

1
612,088
—

—
(34,836)
—

5,639
3,617,812
—

6,961
2,877,873
—

—
632,763
—

—
(36,046)
—

6,961
3,474,589
—

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 2011 151

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

(68,000)
—
249,015
(67,000)
(439,534)
(195,000)
157,151
(16,700)

May 17, 2006*1 ........................................
August 11, 2006*2 ....................................
September 1, 2006*3 ...............................
September 6, 2006*4 ...............................
September 29, 2006*5 .............................
October 11, 2006*6 ..................................
April 30, 2008*7 ........................................
May 16, 2008*8 ........................................
January 4, 2009*9 .................................... 781,189,672.23
June 22, 2009*10 ...................................... 219,700,000
July 27, 2009*11 .......................................
8,931,300
January 27, 2010*12 ................................. 340,000,000
January 28, 2010*13 .................................
36,343,848
February 8, 2010*14 .................................
(33,400)
February 10, 2010*15 ...............................
20,000,000

Balances
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
¥ —
—
—
—
—
—
—
—
—
413,695
16,817
459,477
—
—
27,028

Balances
¥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

Changes
¥ —
(1,000,000)
221,365
—
—
—
—
—
—
413,695
16,817
459,477
—
—
27,028

Balances
¥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

Remarks:
*1 Repurchase and cancellation of 35,000 shares of preferred stock (Type 1) and 33,000 shares of preferred stock (Type 2)
*2 Capital reserve was transferred to other capital surplus pursuant to Article 448-1 of the Companies Act.
*3 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)

*4 Repurchase and cancellation of 67,000 shares of preferred stock (Type 2)
*5 Repurchase and cancellation of 500,000 shares of preferred stock (Type 3) and increase in shares of common stock of 60,466
*6 Repurchase and cancellation of 195,000 shares of preferred stock (Type 3)
*7 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)
*8 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)
*9 Increase in shares of common stock of 781,189,672.23 as a result of 100-for-1 stock split
*10 Public offering: Common stock: 219,700,000 shares

*11 Allotment to third parties: Common stock: 8,931,300 shares

Issue price: ¥3,766 Capitalization: ¥1,883

*12 Public offering: Common stock: 340,000,000 shares

Issue price: ¥2,702.81 Capitalization: ¥1,351.405

Issue price: ¥3,766 Capitalization: ¥1,883

*13 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)

*14 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)
*15 Allotment to third parties: Common stock: 20,000,000 shares

Issue price: ¥2,702.81 Capitalization: ¥1,351.405

Note: The number of shares of preferred stock (Type 6) decreased by 70,001 as a result of repurchase and cancellation of all the shares of preferred stock (1st series

Type 6) on April 1, 2011.

Number of Shares Issued

March 31, 2011
Common stock ...............................................................................................................................................................
Preferred stock (1st series Type 6) .................................................................................................................................
Total ................................................................................................................................................................................

Number of shares issued
1,414,055,625
70,001
1,414,125,626

152

SMFG 2011

Capital (Nonconsolidated)

SMFG

Stock Exchange Listings
Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Nagoya Stock Exchange (First Section)
New York Stock Exchange*
* SMFG listed its ARDs on the New York Stock Exchange as of November 1, 2010.

Number of Common Shares, Classified by Type of Shareholders

March 31, 2011
Japanese government and local government ..................................................................
Financial institutions .........................................................................................................
Securities companies .......................................................................................................
Other institutions ..............................................................................................................
Foreign institutions ...........................................................................................................
Foreign individuals ...........................................................................................................
Individuals and others ......................................................................................................
Total ..................................................................................................................................
Fractional shares (shares) .................................................................................................

Number of
shareholders

7
394
105
9,032
938
141
342,025
352,642
—

Number of
units

4,774
4,144,500
717,865
1,664,643
5,538,375
714
2,049,686
14,120,557
1,999,925

Percentage of
total
0.03%

29.35
5.08
11.79
39.22
0.01
14.52
100.00%
—

Notes: 1. Of 3,762,514 shares in treasury stock, 37,625 units are included in “Individuals and others” and the remaining 14 shares are included in “Fractional shares.”

2. “Other institutions” include 28 units held by the Securities Custody Association.
3. The number of shares constituting 1 unit is 100.

Principal Shareholders
a. Common Stock

March 31, 2011
Japan Trustee Services Bank, Ltd. (Trust Account) ......................................................................................
The Master Trust Bank of Japan, Ltd. (Trust Account) .................................................................................
SSBT OD05 Omnibus Account — Treaty Clients*.......................................................................................
Japan Trustee Services Bank, Ltd. (Trust Account 9) ...................................................................................
Mellon Bank, N.A. as Agent for its Client Mellon Omnibus US Pension** ...................................................
State Street Bank and Trust Company 505225** .........................................................................................
SMFG Card & Credit, Inc. ............................................................................................................................
Nippon Life Insurance Company ..................................................................................................................
NATSCUMCO*** ...........................................................................................................................................
State Street Bank and Trust Company 505103** .........................................................................................
Total ..............................................................................................................................................................

Number of
shares
87,939,818
77,122,200
30,843,478
29,508,900
17,222,912
17,198,714
15,479,400
15,466,682
14,356,349
13,927,694
319,066,147

Percentage of
shares outstanding
6.21%
5.45
2.18
2.08
1.21
1.21
1.09
1.09
1.01
0.98
22.56%

* Standing agent: The HongKong and Shanghai Banking Corporation Limited’s Tokyo Branch
** Standing agent: Mizuho Corporate Bank, Ltd.
*** Standing agent: Sumitomo Mitsui Banking Corporation
Note: Pursuant to Article 67 of the Enforcement Ordinance of the Companies Act, the exercise of voting rights of common shares held by SMFG Card & Credit, Inc.

is restricted.

b. Preferred Stock (1st series Type 6)

March 31, 2011
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%

SMFG 2011 153

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

2011

108,100 shares
Common stock
¥6,649 per share
¥3,325 per share
From June 28, 2004 to June 27, 2012

Date of resolution: Ordinary general meeting of shareholders held on June 27, 2002

2011

102,600 shares
Common stock
¥2,216 per share
¥1,108 per share
From August 13, 2010 to August 12, 2040

Date of resolution: Meeting of the Board of Directors held on July 28, 2010
Note: Former SMBC issued and granted stock options to certain directors and employees pursuant to the resolution of the ordinary general meeting of shareholders
held on June 27, 2002. SMFG succeeded the obligations related to the stock options at the time of its establishment pursuant to the resolution of the preferred
shareholders’ meeting held on September 26, 2002 and the extraordinary shareholders’ meeting held on September 27, 2002.

Common Stock Price Range
Stock Price Performance

Year ended March 31
High .......................................................................................
Low ........................................................................................

2011
¥3,355
2,235

2010
¥4,520
2,591

Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

Yen
2009
¥9,640
2,585

2008
¥1,210,000
633,000

2007
¥1,390,000
1,010,000

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 2010
¥2,533
2,349

November 2010
¥2,685
2,325

December 2010
¥2,949
2,543

January 2011
¥3,090
2,791

February 2011
¥3,225
2,757

March 2011
¥3,190
2,235

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.

154

SMFG 2011

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 ..................................................... ¥1,227,312
241,960
Interest expenses ..................................................
985,352
Net interest income ...................................................
2,299
Trust fees ...................................................................
574,092
Fees and commissions .........................................
127,305
Fees and commissions payments ........................
446,786
Net fees and commissions ........................................
227,454
Trading income......................................................
6,732
Trading losses .......................................................
220,722
Net trading income ....................................................
249,252
Other operating income ........................................
135,821
Other operating expenses.....................................
113,430
Net other operating income (expenses) ....................

Millions of yen

2011

Overseas
operations Elimination
¥(73,281)
¥331,747
(73,372)
100,023
91
231,724
—
—
(1,961)
92,978
(407)
11,046
(1,553)
81,932
(17,321)
2,787
(17,321)
10,589
—
(7,801)
(53)
48,567
—
7,190
(53)
41,376

Total
¥1,485,778
268,610
1,217,168
2,299
665,109
137,944
527,165
212,920
—
212,920
297,766
143,012
154,753

Domestic
operations
¥1,302,315
272,565
1,029,750
1,736
502,032
118,326
383,705
148,600
8,313
140,287
140,284
103,485
36,799

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

Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas operations

comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

2. Income and expenses resulting from money held in trust are included in “Other income” and “Other expenses.” Therefore, “Interest expenses” are shown

after deduction of expenses (2011, ¥16 million; 2010, ¥20 million) related to the management of money held in trust.

3. Intersegment transactions are reported in the “Elimination” column.

Average Balance, Interest and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥91,909,190
54,710,171
31,053,391
352,721
26,178

Loans and bills discounted .........................
Securities ....................................................
Call loans and bills bought .........................
Receivables under resale agreements ........
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................

Millions of yen

2011

Interest
¥1,227,312
953,365
225,723
2,248
32

Earnings yield
1.34%
1.74
0.73
0.64
0.12

Average balance
¥85,101,802
56,291,108
24,649,455
337,927
13,958

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

4,202,003
292,234

8,429
1,419

0.20
0.49

2,277,769
268,117

5,394
1,704

0.24
0.64

Interest-bearing liabilities ............................... ¥95,026,491
71,099,847
7,197,270
1,613,567
443,352

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

4,545,844
—
6,205,133
359,916
3,347,596

¥ 241,960
71,691
12,453
2,166
571

8,743
—
89,516
564
59,612

0.25%
0.10
0.17
0.13
0.13

0.19
—
1.44
0.16
1.78

¥89,290,815
68,567,643
7,227,930
1,855,873
607,324

¥ 272,565
106,566
18,280
2,853
668

2,829,428
—
4,462,011
238,247
3,292,435

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

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 consolidated subsidiaries use weekly, monthly or quarterly balances

instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2011, ¥1,143,287 million; 2010, ¥946,938

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 (2011, ¥18,676 million; 2010, ¥12,392 million). “Interest-bearing liabilities” are shown
after deduction of amounts equivalent to the average balance of money held in trust (2011, ¥18,676 million; 2010, ¥12,392 million) and corresponding
interest (2011, ¥16 million; 2010, ¥20 million).

SMFG 2011 155

SMBC

Income Analysis (Consolidated)

Overseas Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥15,061,087
9,530,458
1,585,317
771,389
69,728

—
2,282,712

—
17,572

Millions of yen

2011

Interest
¥331,747
263,531
23,265
7,055
2,319

Earnings yield
2.20%
2.77
1.47
0.91
3.33

Average balance
¥16,085,915
10,971,078
1,459,443
812,878
13,963

2010

Interest
¥389,577
312,374
22,821
5,158
887

Earnings yield
2.42%
2.85
1.56
0.63
6.36

—
0.77

0.96%
0.55
0.96
0.50
0.36

—
2,152,553

—
14,066

¥11,763,523
7,472,669
1,811,253
1,205,537
364,451

¥116,457
40,606
16,102
3,416
713

¥100,023
36,716
19,268
1,621
2,180

Interest-bearing liabilities ............................... ¥10,438,017
6,702,044
2,013,996
326,104
597,909

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

—
328,969
349,022
—
105,117
Notes: 1. Overseas operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

—
82,513
387,573
—
158,169

—
1,164
6,751
—
6,745

—
0.35
1.93
—
6.42

—
194
9,308
—
9,459

—
0.65

0.99%
0.54
0.89
0.28
0.20

—
0.24
2.40
—
5.98

2. In principle, average balances are calculated by using daily balances. However, some consolidated subsidiaries use weekly, monthly or quarterly balances

instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2011, ¥103,430 million; 2010, ¥156,324

million).

Total of Domestic and Overseas Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥105,509,373
62,929,036
32,638,709
1,124,111
95,907

Millions of yen

2011

Interest
¥1,485,778
1,144,168
248,988
9,303
2,351

Earnings yield
1.41%
1.82
0.76
0.83
2.45

Average balance
¥99,271,616
65,563,988
26,108,898
1,150,805
27,922

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

4,202,003
2,432,539

8,429
18,439

0.20
0.76

2,277,769
2,208,380

5,394
14,650

0.24
0.66

Interest-bearing liabilities ............................... ¥103,967,089
77,622,970
9,211,266
1,939,672
1,041,262

4,545,844
328,969
5,242,563
359,916
3,452,714

¥ 268,610
107,821
31,721
3,787
2,751

8,743
1,164
23,481
564
66,357

0.26%
0.14
0.34
0.20
0.26

0.19
0.35
0.45
0.16
1.92

¥99,138,171
75,827,957
9,039,183
3,061,410
971,775

¥ 295,615
146,051
34,382
6,270
1,381

2,829,428
82,513
3,151,386
238,247
3,450,605

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

Notes: 1. The figures above comprise totals for domestic and overseas operations after intersegment eliminations.

2. In principle, average balances are calculated by using daily balances. However, some consolidated subsidiaries use weekly, monthly or quarterly balances

instead.

3. “Interest-earning assets” are shown after deduction of the average balance of noninterest-earning deposits (2011, ¥1,239,571 million; 2010, ¥1,103,197

million).

4. Income and expenses resulting from money held in trust are included in “Other income” and “Other expenses.” Therefore, “Interest-earning assets” are

156

SMFG 2011

Income Analysis (Consolidated)

SMBC

Fees and Commissions

Domestic
Year ended March 31
operations
Fees and commissions .............................................. ¥574,092
22,057
120,616
58,728
16,274
6,505
39,403
6,208
145,850

Millions of yen

2011

Overseas
operations Elimination

¥92,978
61,373
8,253
631
—
2
10,559
—
2,073

¥(1,961)
(11)
(1)
(156)
—
—
(184)
—
—

Total
¥665,109
83,419
128,869
59,203
16,274
6,507
49,778
6,208
147,923

Domestic
operations
¥502,032
21,425
119,075
48,897
14,782
6,681
39,475
6,179
—

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
—

Fees and commissions payments ............................. ¥127,305
27,927

Remittances and transfers ....................................

¥11,046
6,149

¥ (407)
(118)

¥137,944
33,958

¥118,326
26,285

¥10,923
4,920

¥(1,493)
(155)

¥127,756
31,050

Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas operations

comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

increased.

Trading Income

2011

2010

Millions of yen

Domestic
Year ended March 31
operations
Trading income .......................................................... ¥227,454
68,760

Gains on trading securities ...................................

Overseas
operations Elimination
¥(17,321)
—

¥ 2,787
1,301

Total
¥212,920
70,062

Domestic
operations
¥148,600
25,694

Overseas
operations Elimination
¥(20,932)
—

¥28,902
211

Total
¥156,570
25,906

1,019
156,512
1,162

519
966
—

—
(17,321)
—

1,538
140,157
1,162

2,254
120,075
576

—
28,691
—

—
(20,932)
—

2,254
127,833
576

Trading losses............................................................ ¥ 6,732
—

Losses on trading securities .................................

¥10,589
—

¥(17,321)
—

¥ — ¥ 8,313
—

—

¥12,619
—

¥(20,932)
—

¥ —
—

—
6,732
—

—
10,589
—

—
(17,321)
—

—
—
—

—
8,313
—

—
12,619
—

—
(20,932)
—

—
—
—

Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas operations

comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

2. Intersegment transactions are reported in the “Elimination” column.

SMFG 2011 157

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

2011

2010

¥46,475,850
25,358,154
3,858,755
75,692,760
6,054,758
¥81,747,518

¥ 4,818,026
1,533,773
108,904
6,460,703
2,368,364
¥ 8,829,068
¥90,576,587

¥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

Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas operations

comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

2. Liquid deposits = Current deposits + Ordinary deposits + Savings deposits + Deposits at notice
3. Fixed-term deposits = Time deposits + Installment savings

Balance of Loan Portfolio, Classified by Industry
Year-End Balance

March 31
Domestic operations:

Millions of yen

2011

2010

¥ 5,997,719
148,770
961,596
3,816,458
4,216,614
5,241,692
7,729,135
3,954,440
1,230,912
19,796,115
¥53,093,455

11.30%
0.28
1.81
7.19
7.94
9.87
14.56
7.45
2.32
37.28
100.00%

¥ 6,689,718
153,199
1,094,835
3,261,007
4,475,464
5,271,565
8,179,721
4,192,580
1,117,092
20,374,612
¥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%

Overseas operations:

¥ 43,100
543,997
7,142,983
866,945
¥ 8,597,027
¥63,406,825

¥ 35,733
621,657
7,385,370
822,832
¥ 8,865,594
¥61,959,049

0.40%
7.01
83.31
9.28
100.00%
—

0.50%
6.33
83.09
10.08
100.00%
—

comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

2. Japan offshore banking accounts are included in overseas operations’ accounts.

158

SMFG 2011

Assets and Liabilities (Consolidated)

SMBC

Risk-Monitored Loans

2011
¥ 90,171
958,729
14,226
466,459
¥1,529,587
¥ 716,192

Millions of yen

2010
¥ 162,969
1,047,913
38,249
249,139
¥1,498,271
¥ 710,815