Sumitomo Mitsui Financial Group Inc Annual Report 2012

FY2012 Annual Report · Sumitomo Mitsui Financial Group Inc

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ANNUAL REPORT
YEAR ENDED MARCH 31, 2012

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Beyond our boundaries. Beyond our imagination.

We are qualified professionals to provide valuable financial services to our customers based
on our three core strengths — “Spirit of Innovation,” “Speed” and “Solution & Execution.”

Spirit of Innovation

We lead the market by providing innova-

tive, 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 custom-

ers, whether individuals or corporates,

identified through a deep understanding

of their needs and financial situations.

Our Three Core Strengths

Speed

We lead the pace by providing our cus-

tomers with desirable services in a timely

manner with speed and determination.

CONTENTS

• Message from Top Management ............................ 2
• Business Overview ................................................. 6
Consumer Banking ................................................................. 6
Corporate Banking ................................................................. 8
Services for Business Owners,
High-Net Worth Individuals and Employees ......................... 10
Investment Banking ................................................................ 11
International Banking .............................................................. 12
Treasury Markets .................................................................... 13
Transaction Business .............................................................. 14
• Group Companies .................................................. 15
• Financial Highlights ................................................. 19
• Financial Review ..................................................... 23
• Risk Management .................................................. 32
• Corporate Social Responsibility (CSR) .................... 46
• Initiatives for Enhancing Customer Satisfaction (CS)

and Quality ........................................................... 48
• Corporate Governance ........................................... 49
• Internal Audit System ............................................. 50
• Compliance ............................................................ 51
• Environmental Preservation Initiatives ..................... 53
• Social Contribution Activities .................................. 56
• Human Resources .................................................. 60
• Financial Section and Corporate Data .................... 67
Financial Section .................................................................... 68
Corporate Data ...................................................................... 211

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This document 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:
deterioration of Japanese and global economic conditions and
financial markets; declines in the value of our securities portfolio; our
ability to successfully implement our business strategy through our
subsidiaries, affiliates and alliance partners; exposure to new risks as
we expand the scope of our business; and incurrence of significant
credit-related costs. 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 document. 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 registration statement on Form 20-F and other docu-
ments submitted to the U.S. Securities and Exchange Commission,
as well as earnings press releases, for a more detailed description of
the risks and uncertainties that may affect our financial conditions and
results of operations, and investors’ decisions.

September 2012

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 2012 1

Message from Top Management

Dear Fellow Stakeholders,
We sincerely thank you for your continued support and patronage. In this annual report, we would
like to present our initiatives implemented in fiscal 2011 (fiscal year ended March 2012) and our
management policies going forward.

In fiscal 2011, SMFG’s consolidated net income increased by ¥42.6 billion to ¥518.5 billion with
a ROE of 10.4%. Fiscal 2011 was the first year of our medium-term management plan, and we
made a good start toward achieving its targets, including better-than-expected results on financial
targets (Table 1). Going forward, we will continue to focus on international business and synergies
between SMBC and SMBC Nikko as our growth drivers and on the 3C – cross-selling, credit con-
trol, and cost control.

Principal Initiatives in Fiscal 2011

In fiscal 2011, the U.S. and European economies started

to decelerate in the summer of 2011, primarily due to the

European debt crisis triggered by the financial problems

in Greece and tight monetary policies adopted in emerg-

ing countries, but there were signs of recovery in the U.S.

economy towards the fiscal year-end. Meanwhile, despite

setbacks in the aftermath of the March 2011 earthquake

and tsunami, the Japanese economy showed some signs

of recovery last summer as manufacturing activities recov-

ered nearly to their pre-disaster levels. However, the pace

of recovery slowed down thereafter due to factors such as

the stagnant global economy, consistent strong yen and

damages caused by floods in Thailand.

Against this backdrop, we dedicated ourselves to

facilitating financing to our clients and ensuring the smooth

operation of our payment and settlement platform to help

spur the post-disaster recovery. In addition, we launched our

medium-term management plan for the three-year period

from fiscal 2011 to fiscal 2013, with the twin management

targets of achieving top quality in strategic business areas,

and a solid financial base and corporate infrastructure to

meet the challenges of financial regulations and highly com-

petitive environment (Table 2). We have been proactively

strengthening initiatives in order to achieve these targets.

As a result, SMFG’s consolidated ordinary profit

increased by ¥110.1 billion to ¥935.6 billion, net income

increased by ¥42.6 billion to ¥518.5 billion with a ROE of

10.4%, due mainly to the following achievements:

- an increase in gross banking profit of SMBC’s Marketing

Units led by International Banking Unit

- a high level of profit generated by SMBC’s Treasury Unit as

in the previous fiscal year

- a decrease in total credit cost from an improvement in

asset quality by SMBC and group companies

At the same time, we made steady progress towards

achieving the financial targets of the medium-term manage-

ment plan.

Koichi Miyata
President
Sumitomo Mitsui Financial Group, Inc.

SMFG 2012

above 6% nearly 7.5%

with proactive ideas and actions. While maintaining our focus

Management Policies in Fiscal 2012

Fiscal 2012, the second year of the medium-term manage-

ment plan, is the year for us to move forward steadily toward

the achievement of the plan by fully capturing opportunities

on the development of international business and synergies

between SMBC and SMBC Nikko as our growth drivers

and on the 3C, we will continue to strengthen initiatives in

strategic business areas and to establish a solid financial

base and corporate infrastructure.

◎ Strengthening initiatives in strategic

business areas

We will further strengthen initiatives in the five strategic busi-

ness areas: financial consulting for retail customers; tailor-

made solutions for corporate clients; commercial banking in

emerging markets, especially Asia; broker-dealer/investment

banking; and non-asset businesses including payment &

settlement services and asset management.

● Financial consulting for retail customers

We will fully identify the needs and desire of each customer

segment and offer the optimal set of products and services.

Specifically, we will continue to make every effort to improve

our financial consulting capabilities for retail customers,

whose needs are diversifying, through initiatives including

expanding the product line-up of securities intermediary

Table 1: Progress of financial targets
in the medium-term management plan

Core Tier I ratio*1
(pro-forma)

FY3/2011

FY3/2012

FY3/2014
Target

Based on the definition as
at the full implementation
of Basel III*2

Based on the definition as
at the initial implementation
of Basel III

above 8% above 9%

Consolidated net
income RORA

Consolidated overhead
ratio

SMBC non-consolidated
overhead ratio

Overseas banking profit
ratio*3

FY3/2011

FY3/2012

FY3/2014
Target

0.8%

0.9%

0.8%

52.5%

53.5%

50%-55%

45.6%

46.9%

45%–50%

23.3%

26.0%

30%

*1 Common Equity Tier 1 ratio under Basel III. SMFG consolidated
*2 Regulatory adjustments are fully deducted
*3 Based on the medium-term management plan – exchange rate assumption

of 1USD=JPY85 for FY3/2012 to FY3/2014

On strategic initiatives, we have implemented the follow-

ing measures. In the international business, we expanded

our network and headcount in emerging markets, mainly

in Asia, to support the development of SMBC’s business.

We also enhanced our group’s overseas business portfolio.

SMBC and Sumitomo Mitsui Finance and Leasing, in a joint

effort with Sumitomo Corporation, executed an agreement

to acquire the aircraft leasing business of The Royal Bank of

Scotland Group in the U.K. In synergies between SMBC and

SMBC Nikko, we enhanced Nikko’s wholesale securities

business capabilities for handling Japanese corporations’

requirements for cross-border M&A, through a business

and capital alliance with Moelis & Company, and global

equity offerings. In addition, we further strengthened the

cooperation between SMBC and SMBC Nikko in securities

intermediary business. In the consumer finance/credit card

business, we implemented full measures to deal with refund

claims and increased SMFG’s stakes in SMBC Consumer

Finance (formerly Promise) and Cedyna to 100% to increase

the flexibility of business management.

Takeshi Kunibe
President and CEO
Sumitomo Mitsui Banking Corporation

SMFG 2012 3

business and reinforcing the insurance business of SMBC.

issuing of Euro/Yen convertible bonds. In addition, we will

At the same time, we will strengthen our client base by pro-

further promote SMBC Nikko Securities’ collaboration with

moting collaboration between Middle Market Banking Unit

SMBC.

and Consumer Banking Unit of SMBC; and cross-selling

on a group-wide basis. In addition, we will offer products

and services addressing customers’ important life events.

We will also enhance transaction services and consumer

finance business for retail customers on a group-wide basis

by consolidating the management function of group compa-

nies engaged in these businesses into the newly established

Consumer Finance & Transaction Business Department.

● Tailor-made solutions for corporate clients

● Non-asset businesses including payment &
settlement services and asset management

Transaction services is a profitable business that does not

require the use of assets and is effective in improving our risk

return profile. In April of this year, we established Transaction

Business Planning Department that devises long-term, inte-

grated transaction services business strategies for our group

and manages settlement risk, and Transaction Business

Division that promotes transaction services businesses

In our business for domestic corporate clients, against a

for corporate clients. Moving forward, we will enhance the

backdrop of changing external business climate, we are

transaction services business by accommodating the trans-

seeing a rise in the number of corporations seriously consid-

action services needs and accompanying financing needs

ering business restructuring including M&As and MBOs. In

of corporate clients the world over in a more integrated and

order to fully address our corporate clients’ needs and man-

flexible manner. Regarding our asset management business,

agement challenges, we will reinforce our solution providing

we will reinforce the collaboration within our group and with

capabilities and lending business by evolving organizational

overseas asset management companies.

framework for marketing and optimizing staff allocation.

● Commercial banking in emerging markets,

especially Asia

In the emerging markets, we will capture business opportu-

nities by accommodating Japanese clients’ needs, including

supporting their international business development, more

effectively and in a more integrated manner; and reinforcing

growth businesses including infrastructure finance and trade

finance. We will do so by expanding our global network,

promoting collaboration between domestic and overseas

offices and between business units, and strengthening

marketing functions for investment banking business in Asia.

In addition, we will secure stable foreign-currency funding

sources to accommodate increases in overseas assets.

◎ Establish a solid financial base and

corporate infrastructure

In order to strengthen our corporate infrastructure to support

the sustainable development of our international business,

we will upgrade our risk management system, develop

human resources with international business capabilities and

promote national staff. We will also upgrade our group-wide

management capabilities by diversifying and enhancing busi-

ness portfolio while reinforcing strategic business areas; and

pursuing operational efficiency through business process

re-engineering. Regarding compliance, we will address the

changing regulatory environment and further strengthen our

group-wide compliance and control system.

● Broker-dealer/Investment banking

In order to more effectively address the diversified needs of

Capital and Shareholder Return Polices

clients, we will reinforce SMBC Nikko Securities, the prin-

In the medium-term management plan, we have set a Core

cipal driver of our securities business. We will continue to

Tier I ratio (Common Equity Tier I ratio under Basel III)* target

expand its established retail business by offering products

of 8% as of March 31, 2014. This means that we will aim

accommodating the changing market conditions and inves-

to achieve a Core Tier I ratio of approximately 1 percent-

tor sentiment. We will also strengthen its wholesale business

age point higher than the Basel III required level of 7% five

to enhance its ability to address the requirements of our

years earlier than the Basel III full implementation deadline of

corporate clients for cross-border M&As, by leveraging the

March 2019. The Core Tier I ratio as of March 31, 2012 was

alliance with Moelis & Company, global equity offerings and

nearly 7.5%.

SMFG 2012

Looking ahead, Global Systemically Important Financial

Institutions (G-SIFIs) may be required to have additional loss

absorption capacity in the form of a capital surcharge. We

believe we will be able to secure a sufficient level of capital

for the possible G-SIFI capital surcharge by implementing

the initiatives in our medium-term management plan and

maintaining our globally top-level operational efficiency,

thereby steadily building up retained earnings.
* SMFG consolidated; pro forma; all regulatory adjustments are deducted.

Meanwhile, SMFG’s basic shareholder return policy is to

secure a consolidated payout ratio of over 20% through the

stable and consistent distribution of profit, while enhancing

retained earnings to maintain financial soundness in light of

the public nature of our business as a bank holding com-

pany; and to achieve sustainable growth of enterprise value.

For fiscal 2012, we forecast consolidated ordinary profit

of ¥910 billion and net income of ¥480 billion. Meanwhile,

the annual cash dividend per share forecast for fiscal 2012

is ¥100, unchanged from the previous fiscal year, and the

half of which, ¥50, will be paid as an interim dividend. We

have not changed our cash dividend forecast because we

continue to focus on building up retained earnings to meet

new global capital regulations and are confident of securing

an appropriate consolidated dividend payout ratio.

The outlook for the Japanese and overseas economies

remains unclear, uncertain, and unstable. However, we

believe that we can meet your expectations through the

initiatives we have described. We hope that we can continue

to count on your understanding and support in the years

Table 2: Overview of the medium-term
management plan (Announced May 2011)

Basic Policy

To be a globally competitive and trusted financial services group
by maximizing our strengths of Spirit of Innovation, Speed and
Solution & Execution.

Management plan for the coming three years

Medium-term Management Plan (Fiscal 2011 - Fiscal 2013)

Management
targets

• Top quality in strategic business areas
• A solid financial base and corporate infrastructure to
meet the challenges of financial regulations and
highly competitive environment

Steadily improve financial soundness,
profitability and growth in a balanced way

Financial
objectives

• Achieve the level of Core Tier I ratio 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 especially in Asia by
capturing growing business opportunities

Key initiatives to achieve management targets and financial objectives

Strategic
business areas

Financial consulting
for retail customers

Tailor-made solutions
for corporate clients

Commercial banking
in emerging markets,
especially Asia

Broker-dealer/
Investment banking

Non-asset business including
payment & settlement services
and asset management

ahead.

Corporate base

• Implement best practice in management throughout the SMFG group
• Develop a solid corporate infrastructure to support the growing international network
• Maximize operational efficiency

September 2012

Table 3: Management Principles: 3C
Team SMFG, Team SMBC

Koichi Miyata
President
Sumitomo Mitsui
Financial Group, Inc.

Takeshi Kunibe
President and CEO
Sumitomo Mitsui
Banking Corporation

● Cross-Selling

● Credit Control

● Cost Control

SMFG 2012 5

Business Overview

■ Consumer Banking

SMFG group companies work cooperatively to provide better
and highly appreciated services for individual clients.

SMBC strives to enhance its products and services to
appropriately meet the diverse needs of individual clients in
accordance with one of its corporate values of “Providing value-
added services to each client.”

Asset Management

SMBC has a wide range of invest-
ment trust products to meet the
diversifying asset management
needs of its clients. In fiscal 2011,
the bank implemented measures to
further expand its series of products,
by offering new funds for investing in
the following three types of invest-
ment products: (1) foreign-currency
denominated portfolios which flex-
ibly control the allocation of the fund
according to any changes due to
interest rates and/or foreign exchange rates while continuing
to invest in three types of assets: high-yield emerging market
corporate bonds, high-dividend stocks, and real estate, (2) U.S.
stocks, and (3) overseas convertible corporate bonds.

SMBC and SMBC Nikko Securities
Inc. donated the equivalent to 50%
of the commissions earned from the
sales of investment trust products
of Japanese stocks during the
period of June 1 to August 31, 2011
to the local governments of four
particular prefectures (Iwate, Miyagi,
Fukushima and Ibaraki Prefectures)
severely damaged by the Great East
Japan Earthquake.

In June 2010, for continuing

to contribute the environmental safety, we officially named the
Japanese government bonds (JGBs) for retail investors (formerly
known as the “Reconstruction Bonds for Retail Investors” since
December 2011) the “SMBC Green Program.” In fiscal 2011,
we worked to reduce the emission of greenhouse gas in Japan
and support small-to-medium-sized enterprises in the northeast
of Japan through our carbon credit framework developed par-
ticularly for the northeastern areas. As a new JGB initiative for
retail investors, we launched the sales of the “Reconstruction
Supporters’ Bonds for Retail Investors” in March 2012 to be
used as a source to fund recovery after the earthquake disaster.
We have added three new currencies, namely, the Mexican
peso, the Turkish lira (fiscal 2011) and the Brazilian real (April
2012) to our selection of foreign currency deposits in order
to accommodate the increasing needs of clients for foreign-

SMFG 2012

currency denominated asset management.

SMBC, working with SMBC Nikko Securities, continues to
offer its wide-range of clients the intermediary service for finan-
cial products of such as foreign bonds and yen-denominated
bonds. We enhanced the series of structured bonds and
existing bonds in fiscal 2011 to further promote the cooperative
business of the bank and securities firm.

Life Insurance and Estate
SMBC offers life insurance policies over the counter at its
branches throughout Japan. In fiscal 2011, we launched and
increased the number of products, including (1) foreign-currency
denominated plans for our pension-type, fixed-amount insur-
ance for individuals, (2) yen-denominated fixed-amount whole
life insurance plans, providing functions of death payout and
long-term asset formation, and (3) medical insurance such as
a single-premium type of lifelong coverage for a wide-range of
illnesses and injuries. For clients
who may have difficulties coming
to the bank, we offer automated
processing services for requests
which can be made at ATMs or
through the internet, without visit-
ing a branch, in order to appropri-
ately accommodate the needs of
clients.

ATM screen

The bank also offers services for will trusts to assist with
facilitation of inheritance related matters by providing compre-
hensive support for preparation, storing and execution of wills
for clients of all ages.

Consumer Loans and Settlement
SMBC has further expanded its range of products and services
for clients who are faced with emergencies or under extraor-
dinary circumstances. For instance, we offer housing loans
for clients with the indemnity for three major serious illnesses
which brings the borrower’s outstanding balance to zero in the
event that the client is diagnosed by doctors with the prescribed
conditions of cancer, heart
attack or stroke, etc. We
also provide housing loans
offering a partial repayment
waiver which depends on
the extent of damages, in
the event that the borrower’s
own home is damaged or
destroyed by natural disasters.
We also substantially improved the convenience for clients
requesting housing loans by enabling them to complete their
applications for making either full or partial prepayments, or
changing the interest rate to floating or fixed, by utilizing the
SMBC Direct, the online banking service.

In order to appropriately respond to the “Act Concerning
Temporary Measures to Facilitate Financing for Small and

Medium-Sized Enterprises, etc.,” SMBC has appointed special-
ists at all bank branches to provide consultations and assistance
for clients having difficulties in making repayments for their mort-
gage, as well as eight special Loan Support Offices nationwide.
For housing finance clients who were affected by the Great East
Japan Earthquake, we offer housing loans with special rates,
and we also offer our existing clients consultation services on
loan repayments. The bank is implementing measures to provide
further expedited and personalized services and support for
clients having difficulties with making housing loan repayments.

As for SMBC unsecured consumer loans (card loans), guar-
anteed by SMBC Consumer Finance Co., Ltd.*1, we extensively
improved our products in October 2011, making it more conve-
nient for clients, such as raising the maximum contract amount
from ¥5 million to ¥8 million, and lowering the minimum interest
rate from 5.0% to 4.0%.

As one of our foreign-exchange services,
SMBC offers the delivery service of foreign cur-
rency to clients’ home or workplace payable on
receipt. We added four new currencies to our
range handled, including the Vietnamese dong,
bringing the total to 36, as of March 2012. The
service has become further convenient espe-
cially for clients who have limited time available
prior to traveling to overseas or making business
trips.

*1 SMBC Consumer Finance Co., Ltd. was formerly known as Promise

Co., Ltd. The corporate name was changed on July 1, 2012.

Transaction Channels
As for SMBC Direct, the online banking services, we consistently
enhance services and improve convenience to accommodate
the needs of clients while developing advanced services and
strengthening security. In October 2011, we began to offer the
“SMBC Direct Global Service” which enables clients overseas
to process their transactions online. Previously, when clients in
overseas make their deposits in Japan or transfers to recipients
in Japan, they had to make arrangements by mail or fax. The
launch of this new online banking service substantially improves
convenience for clients.

For rapidly increasing number of clients who use smart-
phones, we have launched a website especially for those smart-
phone users, facilitating the operations for inquiring or viewing
balances and making transfers, etc. We have also launched a
smartphone-based profit management application, the “Smart
Shushi,” for businesspersons having limited time to spare. The
Android*2-based system was launched in September 2011,
while the iOS*3 (iPhone) ver-
sion was released in January
improving
2012. We are
the convenience for clients
by increasing our service
channels.

*2 Android is the trademark or registered trademark of Google Inc.
*3 iPhone is the trademark of Apple Inc. registered in the United States

and other countries.

Our call centers located in Tokyo, Kobe and Fukuoka for
retail clients receive calls from online clients who prefer to speak
with our staff on important issues. The operations of thses three
call centers enhance our system of offering services such as
consultation for asset management and loans, or inquiries on
information for financial services on the telephone, by accom-
modating to the lifestyle and needs of our clients.

Topics

◆ Business Jointly-Operated by SMBC and SMBC

Nikko Securities

SMBC and SMBC Nikko Securities, as the group, are improv-
ing their capabilities to provide individual clients with financial
products and services by focusing on four areas of business
operations of intermediary services for individual clients:
financial instruments, fund wrap services, clients referrals and
banking agency services.

SMBC and SMBC Nikko Securities are each facilitat-
ing the sharing of their expertise by sending SMBC Nikko
Securities personnel having knowledge and experiences of
asset management to SMBC.
We remain committed to providing services to further
enhance the integration of banking and securities in diverse
areas such as products/services, marketing, personnel in
order to fully satisfy the needs of clients.

◆ Review of marketing structure at the head office

of the Consumer Banking Unit

The head office of SMBC’s Consumer Banking Unit has
gone through organizational changes in April 2012 in order
to better market and to become more client-oriented, further
providing products and services appropriately meeting the
needs of clients. Specifically, we reorganized the consumer
banking and Consumer Loan Departments into the “Retail
Business Department” and the “Consumer Loan Department”
under the reorganized Retail Business Department, in order
to further strengthen marketing functions for promoting com-
plex transactions around major life events. Furthermore, we
established the “Wealth Management Department,” which
consolidated functions for asset management, inheritance
and will trusts, etc., in the “Financial Consulting Department”
in order to strengthen business promotion.

SMFG 2012 7

■ Corporate Banking

Improving Products and Services for
Mid-sized Companies and SME’s
•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 corpo-
rate clients. To this end, SMBC established its Middle Market
Facilitating Financing Department in December 2009 under the
Planning Department of the Middle Market 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.
• Development of solutions to meet corporate clients’
needs in the areas of environmental protection, risk
management and food safety

The issues faced by companies are becoming more diversified
every year, including natural resources, energy-saving and global
warming of environmental issues; disaster countermeasures;
and food safety, etc. The bank develops various solutions to
assist and support clients who have promptly responded to
such issues.

SMBC’s Environmental Assessment Loan/Private Placement
Bond, which was offered in 2008 to support environmental man-
agement for our clients, initiated SMBC to develop a number of
financial products such as the SMBC Environmental Assessment
Loan/Private Placement Bond eco value up which supports
mid-sized companies and SMEs in their commitment to envi-
ronmental management, launched in 2010; and the SMBC
Sustainable Building Assessment Loan/Private Placement Bond
launched in 2011, which includes appraisals of environmental
performance and risk readiness in office and condominium build-
ings built or owned by clients. The SMBC Business Continuity
Assessment Loan package supports measures taken by clients
to ensure business succession. The SMBC Food and Agriculture
Assessment Loan/Private Placement Bond evaluates measures
undertaken by food products-related companies to ensure food
safety and healthy and safe agriculture.
We will continue to assist and support clients who proac-
tively implement forward-looking measures for diverse issues by
developing these solutions.
•Service of providing Information
SMBC’s “Intermediary Services”
provide services to meet the needs
of our clients to be referred to new
business partners, and the “One-
time Matching” of a large number of
clients for procurement purposes for
major corporations.
We also held our fourth SMFG
Environmental Business Forum in
December 2011, which was a part
of “Eco-Products 2011” in Tokyo Big

Sight, for the promotion of environmental businesses. At this
annual event, we arranged approximately 1,000 business meet-
ings to match the increasing energy and environmental procure-
ment needs of major corporations with the growing needs of
SMEs for new distribution channels. At this event, our Group
companies exhibited diverse environmental solutions, held panel
discussions, and provided environmental information.

Furthermore, the bank and SMBC Nikko Securities made
an announcement for the new system of the “IPO Navigator”
in July 2010, an online information providing service offered
free of charge to registered clients considering an IPO. This is
a platform for delivering information required for an IPO. As of
March 31, 2012, 431 companies were registered for this ser-
vice. In February 2012, the third IPO seminar was held in Tokyo.
The guest speaker for the seminar was Kentaro Takamura, the
president of 3-D Matrix, Ltd. which was listed on the “JASDAQ
Growth” market in October 2011 and for whom SMBC Nikko
Securities served as the lead man-
ager for its IPO. He spoke on his
experience of listing the company.
He was warmly received by the
participants of the seminar.

Enhancing Services for Companies Expanding
Overseas
An increasing number of our corporate clients are expanding
their businesses overseas. As such, they are faced with growing
needs to address not limited to such issues as fund procure-
ment and management but also including different business
practices, cultures and interpretation of legal, accounting, and
taxation systems.

SMBC has strengthened its integrated system for domestic
and international branch offices to properly respond to its clients
in providing solutions for cross-border issues.

SMBC organizes and hold seminars for individual countries
such as China, other countries in Asia, and South America, to
provide information on a regular basis on economy and invest-
ment environment in each country. For clients considering to
expand their businesses overseas, the bank provides the latest
information on local conditions, regulations and business trends,
etc. For clients who are already operating their businesses glob-
ally, we provide high-quality support and solutions tailored to
their needs for business expansion and reorganization, etc.

SMFG 2012

Strengthening Measures for Greater China
As the economic integration continues in Greater China (PRC,
Hong Kong and Taiwan), and the renminbi is becoming more
an international currency, we still anticipate that more Japanese
companies may enter into the Chinese market or develop their
business to capture growing business opportunities.

In order to strengthen the integrated support system for
clients whose business covers both Japanese and Chinese
markets, 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 in fiscal 2010. The same was done for the Hong Kong and
Taipei branches in fiscal 2011.

The “South China Department” was established in Japan in
October 2011 in order to respond promptly and flexibly to the
needs of mostly Japanese corporations operating in southern
China. Following the opening of the Shenzhen Branch in May
2011, the bank plans to reopen the Chongqing office as the
locally-incorporated branch office in the first six months of 2012.
The bank is also proactively enhancing offshore renminbi
products and services as the needs of clients for these transac-
tions associated with cross-border renminbi settlements are
increasing, not limited to in Hong Kong market but also in
Japan, as a result of the increased trade settlements with China.
We continue to comprehensively provide our customized
services to our clients by supporting their head offices in Japan
and business operations in China.

Enhanced Initiatives for Public and Financial
Sectors
As the 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 to expand 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 plans to further develop its
growing industries strategically. Since fiscal 2010, we have also
established operational alliances with the Kansai Urban Banking
Corporation, Mie Bank, Ltd. and five other banks to better
support companies expanding their businesses into overseas
markets.

Our initiatives for the current fiscal year are focused on sup-
porting local public corporations which have incurred substantial
damages 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

◆ Establishment of joint venture fund with NEC

Group

NEC Capital Solutions Limited and SMBC Venture Capital Co.,
Ltd. jointly established the Innovative Venture Fund Investment
Limited Partnership in April 2012, invested by the Organization for
Small & Medium Enterprises and Regional Innovation, JAPAN and
SMBC Strategic Fund NO.1 Investment Limited Partnership.
We leverage the synergy generated from NEC Group’s tech-
nology and SMBC’s financial solution providing capabilities to
support technology venture companies from their start-up stage.

Fund structure

NEC Group

Organization for Small &
Medium Enter prises and
Regional Innovation, JAPAN

SMFG

Identifying candidates
with leading technology

Providing risk capital
Public assistance for enterprises

Identifying candidates
Investment know-how’s

Investments

Innovative Venture Fund Investment Limited Partnership (¥3.5 billion)

Investment and training

Technology venture
companies

◆ SMBC Business Continuity Assessment Loan/

Private Placement Bond

Lately, we have seen an increasing number of companies which
have been unable to continue to operate their business due to
extraordinary events of swine flu, epidemics and major floods.
Concurrently, the diversification and globalization of companies
and the increasing supply chains have been adversely affected by
unexpected events. The needs for risk management seem to have
increased especially after the Great East Japan Earthquake on
March 11, 2011. In light of such social background and based on
the evaluation standards jointly developed by SMBC and InterRisk
Research Institute & Consulting, Inc.*, in November 2011, SMBC
began to offer the “SMBC Business Continuity Assessment Loan/
Private Placement Bonds” which advises on planning for busi-
ness continuity plans (BCP), development of business continuity
management system (BCMS) and promoting measures; SMBC
is setting forth the business continuity planning (BCP); evaluating
the development and operations status of business continuity
management system (BCMS); and providing loans or determining
purchasing terms and conditions according to such evaluation
results. There have been approximately ten issues of “SMBC
Business Continuity Assessment Loan/Private Placement Bonds”
since June 2012 for companies including Nippon Flour Mills Co.,
Ltd., the first company to concur with the concept of the said
bonds.

In March 2012, SMFG organized free business succession
plan seminars participated in by approximately 660 clients in
Tokyo and Osaka for providing measures to assist clients with
their business succession issues.

The bank supports establishing of organizational structures
for assisting companies to deal with business succession-related
issues if and when they are faced with major events. The bank
contributes to realization of a sustainable society by supporting
measures to improve financial risk management for companies.

* InterRisk Research Institute & Consulting, Inc.
MS&AD Insurance Group Holdings, Inc., the consulting company engaged
in the risk management business.

SMFG 2012 9

■ Services for Business Owners,
High-Net Worth Individuals and
Employees

Private Advisory Department
SMBC’s Private Advisory Department (“PAD”) provides ser-

vices for both individuals and corporate clients by working

with other SMBC Group companies and alliance partners.

To ensure that business owners can facilitate transfers

of their important businesses and assets, PAD offers the

following services: (1) business and asset transfers for which

we present proposals and provide information based on

our extensive experience and knowledge accumulated over

the years, and the additional expertise provided by alliance

partners such as major tax accounting firms; (2) asset man-

agement and support services which provide comprehensive

financial services tailored to meet the financial asset needs

of high-net worth individuals; and (3) workplace banking

services which support the HR and financial strategies of

our corporate clients to assist with the development and

management of benefit programs and defined-contribution

pension systems.

Business owners

Customers
High-net worth individuals

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 Department

SMFG Group
companies

Outside specialists (major tax accounting firms and other professionals)

Barclays PLC

Support for Business and Asset Transfers
PAD presents customized proposals for clients who may

be concerned or have problems with transfers of their busi-

nesses and assets. We also offer a variety of seminars to

provide our clients with up-to-date information and advice,

and we are asked to provide consultations from many busi-

ness owners and high-net worth individuals.

Support for Asset Management
Understanding and sharing client’s attitude toward financial

assets, we offer comprehensive advices on asset allocation and

management. In June 2010, we have started providing new

asset management services, through the tri-party alliance of

Topics

SMBC, SMBC Nikko Securities Inc. and Barclays Bank
PLC of the United Kingdom have jointly established SMBC
Barclays Department in SMBC Nikko Securities to meet vari-
ous asset management needs of high-net worth individuals
such as business owners.

◆ Global investment information
We provide investment information by leveraging Barclays’
global research capabilities to assist clients to make their
investment decisions.

◆ Financial Personality Assessment (“FPA”)
Based on the results of FPA ( a tool developed by Barclays
utilizing behavioral economic studies for understanding the
behavioral patterns for making investment-related decisions
and actions), we offer asset management advice optimized
for each client.

◆ Diverse products and services
Wide range of products made available by the dedicated
product team within SMBC Barclays Department.

SMBC Group

Partnership

• Provide wide range of comprehensive
• Provide wide range of comprehensive

life-plan services
life-plan services

• Propose asset management using
• Propose asset management using
SMBC-transacted instruments
SMBC-transacted instruments

Take stake
(1.4%, as of
December 2011)

SMBC Barclays
Department

Customers

• Provide array of
• Provide array of

asset management
asset management
services leveraging
services leveraging
Barclays’ expertise
Barclays’ expertise

Life Planning Support for Employees
Changes in the social environment, such as the increasing

aged population and greater mobility in employment and

diversification in life planning, may substantially affect corpo-

rate clients’ management strategies.

We support clients in creating and managing employees’

financial benefit programs and defined-contribution pen-

sion plans by using the products and services

offered by the bank and its affiliated

companies for responding

to personnel and financial

issues that corporate cli-

SMBC, Barclays Bank PLC, and SMBC Nikko Securities to

ents face.

respond to various asset management needs of our clients.

SMFG 2012

On enhancement of measures in the
Asia-Pacific region
The Investment Banking Dept., Asia was newly established in
April 2012, consolidating functions and human resources of the
Investment Banking Unit, for the purpose of flexibly respond-
ing to the diversifying and sophisticated needs of clients in the
overseas market of the Asia-Pacific region which is anticipated
to significantly grow, mainly in the fields of natural resources and
infrastructure. We strive to promptly support clients’ overseas
business development by comprehensively proposing products
developed by the Investment Banking Unit.

Topics

◆Infrastructure finance
SMBC indicated the “enhancement of infrastructure
finance” as one of the goals set forth in the Medium-Term
Management Plan announced in May 2011, in order to
accelerate the capture of the economic growth of the emerg-
ing markets concentrated in Asia. In February 2012, the
bank joined the group of financial institutions which support
infrastructure projects for companies based in Singapore.
In March 2012, the bank executed an agreement for invest-
ment and business alliance with PT Indonesia Infrastructure
Finance, the government-affiliated financial institution, for the
improvement and development of infrastructure in Indonesia.
We will further improve our high value-added services which
have contributed to the economic development in each
country including the improvement of infrastructure, by taking
advantage of our expertise and experiences accumulated
and gained from the project finance.

Furthermore, the “Growing Industrial Cluster Project
Team,” which was established in July 2010 as the cross-
departmental organization, was commissioned to conduct
the feasibility study, along with Toshiba Corp., NTT Data
Corporation and ITOCHU Corporation, for the Facilitation
Project of the Industrial Complex in Thailand which was
entrusted to the Japan Research Institute, Limited by the
Ministry of Economy, Trade and Industry of Japan in March
2012.

The bank established the “Growth Industry Cluster Dept.”
under the Project & Export Finance Dept. in April 2012, to
further strengthen our support provided to clients for diverse
businesses such as feasibility study and financing.
* The “industry cluster” is used to describe the situation in which
new businesses are created by mutually utilizing intellectual
resources shared by the extensive network of industry-academic-
government in diverse fields.

■ Investment Banking

SMFG offers and provides the most appropriate solutions for our
clients’ diverse needs such as fund raising and fund management;
M&A; and risk hedging, in order to assist their business develop-
ment or enhancement of their corporate value by consolidating
resources of the Group companies including the Investment
Banking Unit of SMBC and SMBC Nikko Securities Inc.

Cooperation with SMBC Nikko Securities
SMBC Nikko Securities, as the core securities firm for the
Group, further expands its business operations while working
closely with SMBC in both retail and wholesale businesses.

As for the retail business, SMBC and SMBC Nikko
Securities work closely together to meet diversifying needs of
individual clients by providing securities intermediary service and
making business introductions.

As for the wholesale business, the Group substantially
expanded its overseas securities business operations. As a
result, the ranking for bookrunners significantly improved to the
3rd place in the league table published by Thomson Reuters for
fiscal 2011 (“Global Equity & Equity-Related Underwriting Value
in Japan”) with a market share of 18.1% (the 11th place in the
previous year).

As for M&A financial advisory services, the Group has estab-
lished the business structure which is capable of consistently
sustaining the solid and stable business position by closely
working with SMBC and steadily capturing individual transac-
tions. As a result, the Group placed second in the ranking of
the M&A advisory category for publicly announced mergers of
Japanese companies, having the market share of 3.1% (hav-
ing been in the third place in the previous year). Furthermore,
SMBC and SMBC Nikko Securities executed a capital alliance
agreement with Moelis & Company (hereinafter, “Moelis”), the
U.S. independent investment bank, in January 2012, for further
enhancing their existing business relations. The Group strives to
consistently make proposals to increase clients’ corporate value
by appropriately responding to Japanese companies’ diverse
needs for cross-border M&A by utilizing the global network
established by Moelis.

: Office locations of SMBC Nikko Securities

: Office locations of Moelis

Chicago Boston

London

Frankfurt

Luxembourg

Dubai

Beijing

Shanghai

Tokyo
Hong Kong

Palo Alto
Los Angeles

Singapore (SMBC Office)

Jakarta

Sydney

April 1, 2012

New York

Houston

SMFG 2012 11

(JPY billion)

200.0

150.0

100.0

50.0

57.3

Overseas banking profit (left)

Overseas profit ratio (right)

147.1

154.8

30%

126.3

132.6

83.3

90.6

72.3

26%

23%

20%

40%

30%

20%

10%

Fiscal 2004

2005

2006

2007

2008

2009

2010

2011

2013

(target)

Overseas loan balance*2

($ billion)

(JPY billion)
200.0

EMEA
Americas
Asia

Overseas banking profit (left)
Overseas profit ratio (right)

150.0

100.0

57.3

50.0

10.1

3.7
72.3

9.0

90.6

83.3

72.3

57.3

3.4

3.4
83.3
2.5

126.3

132.6

10.4
126.3

132.6

90.6

20%
20%

154.8

147.1
12.8

147.1

154.8

4.0
23%
23%
3.8

23%
23%

26%
26%

3.4

3.0

3.9

7%
7%

3.0

3.1

Fiscal 2004

7%
7%
Fiscal
Fiscal 2004

2008
2005

2006

2007

2009
2006

2005

5.0

2011
2010

2011

2010

2008

2009

2007

2008

2009

2010

2011

¥6 trillion increase
compared to
40%
March 2011

40%

30%

20%

20%
¥3.5 trillion increase
10%
compared to
March 2011
0%

10%

2013
(target)

2014
(target)
2013
(target)

*1 Internal management accounting (undisclosed) basis. Aggregate of SMBC
and major overseas subsidiary banks. The ratio for earnings generated by
overseas banks in fiscal 2011 was based on the exchange rate of ¥85 to $1
as set forth in the Medium-Term Management Plan.

*2 Internal management accounting (undisclosed basis, conversion based on
the exchange rate at the end of each fiscal period). Aggregate of SMBC,
($ million)
Sumitomo Mitsui Banking Corporation Europe Limited, and Sumitomo Mitsui
EMEA
Banking Corporation (China) Limited.
Americas
Asia

Increased from
fiscal 2010

400

300

200

Business expansion in emerging markets and
enhancement of our competitive products
SMBC established marketing departments in New York and

100

London to specialize in emerging markets. The Global Business

Fiscal

2010

2011

Strategy Dept. of the Tokyo Head Office mainly handles busi-

2013
(target)

ness development of emerging countries.

4th

($ billion)

Furthermore, we have designated and further strengthened
Clients survey (Asia-Pacific overall ranking)*

Major companies

Midsized companies 4th

Cash
management
services

($ billion)
EMEA
EMEA
Americas
Americas
Asia
Asia

the areas of infrastructure-related project finance, trade finance
¥6 trillion increase
compared to
¥6 trillion increase
and transaction banking (cash management services, etc.) as
Target
March 2011
compared to
our growth-anticipated areas in order to further capture growing
March 2011
Top 3 in Asia in
business opportunities in the emerging countries including Asia.
cash management
services
(foreign banks)
¥3.5 trillion increase
3.8
Asia*2
compared to
¥3.5 trillion increase
Global
1st consecutively for six years
5.0
March 2011
compared to
March 2011
5th
2014
2014
(target)
7th
(target)

10.1
3.4
Mandated Arranger (2011)*1
3.7
3.0
Yen settlement
3.4
services

3.0
Syndicated loans
2008
Fiscal

1st among
Japanese banks
consecutively for
12.8
six years
4.0

Smaller companies 3rd

Financial institutions 1st

Project finance

5.0
9th
2011
3rd

Fiscal

2010

2011

2009

2008

2009

10.1

10.4

12.8

10.4

3.7

9.0

3.9

3.4

3.1

2.5

3.4

4.0

3.8

3.0

9.0

3.4

2.5

3.1

3.0

3.9

3.4

*1 Thomson Reuters
*2 Syndicated Loans: Asia (excluding Japan), Project Finance: Asia-Pacific

(including Australia and Japan)

Trade finance-related earnings

($ million)

400
($ million)

EMEA
EMEA
Americas
Americas
Asia
Asia

Increased from
fiscal 2010

is capable of consistently providing up-to-date information and

■ International Banking

The International Banking Unit of SMFG strives to provide high

value-added services appropriate to the specific local needs of

its globally-operating clients of business corporations, financial

institutions, governmental organizations and public entities.

SMBC strives to become the global commercial bank which

services by closely cooperating with SMFG group companies

and overseas subsidiaries throughout the world, concentrating

mainly on the three regional divisions of Asia-Pacific, Americas

and Europe.

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

in order to improve their services provided for Japanese compa-

nies and to enhance their exposure in emerging markets.

Established

Country

April 2011

Malaysia

April 2011

May 2011

India

China

September 2011

Netherlands

Sumitomo Mitsui Banking Corporation
Malaysia Berhad

New Delhi Representative Office

Sumitomo Mitsui Banking Corporation
(China) Limited Shenzhen Branch

Sumitomo Mitsui Banking Corporation
Europe Limited Amsterdam Branch

February 2012

Cambodia

Phnom Penh Representative Office

February 2012

Turkey

Istanbul Representative Office

May 2012

Peru

Lima Representative Office

Enhancement of International Businesses
SMBC has launched its Medium-Term Management Plan for

the goal of achieving a raise of the ratio for overseas earnings

to approximately 30% during the period of fiscal years 2011

to 2013 and it is aggressively investing resources in overseas

300

200

100

400

300

200

100

businesses.

Overseas banking profit and ratio*1

(JPY billion)
200.0

Overseas banking profit (left)
Overseas profit ratio (right)

150.0

100.0

50.0

147.1

154.8

30%

126.3

132.6

83.3

90.6

72.3

26%
26%

23%
23%

20%
20%

57.3

7%
7%

Fiscal 2004

2005

2006

2007

2008

2009

2010

2011

2013
(target)

Fiscal
0

2010
Fiscal

2010

2011

2013
(target)

Leading products

Clients survey (Asia-Pacific overall ranking)*

Major companies

4th

Target

Cash
Cash
management
management
services
services

Major companies

4th

Midsized companies 4th

Smaller companies 3rd

1st among
1st among
Japanese banks
Japanese banks
consecutively for
consecutively for
six years
six years

Target
Top 3 in Asia in
Top 3 in Asia in
cash management
cash management
services
services
(foreign banks)
(foreign banks)

Yen settlement
services

Financial institutions 1st

1st consecutively for six years

Financial institutions 1st
* Survey conducted by Asiamoney magazine (August 2011 edition)

1st consecutively for six years

40%

30%

20%

10%

SMFG 2012

($ billion)

EMEA

Americas

Asia

10.1

3.7

3.4

3.0

9.0

3.4

2.5

3.1

10.4

3.4

3.0

3.9

12.8

4.0

3.8

5.0

Fiscal

2008

2009

2010

2011

¥6 trillion increase

compared to

March 2011

¥3.5 trillion increase

compared to

March 2011

2014

(target)

Increased from

fiscal 2010

EMEA

Americas

Asia

($ million)

400

300

200

100

Fiscal

2010

2011

2013

(target)

Clients survey (Asia-Pacific overall ranking)*

Major companies

4th

Cash

services

management

Midsized companies 4th

Smaller companies 3rd

1st among

Japanese banks

consecutively for

six years

Target

Top 3 in Asia in

cash management

services

(foreign banks)

Yen settlement

services

Financial institutions 1st

1st consecutively for six years

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

◆ Expanded Offerings of Currencies of Asia and

Other Emerging Markets

In order to meet our clients’ market transactional needs,
we are increasing our selection of foreign currencies, mainly
Asian and other emerging-market currencies. We also brief
our clients on the latest changes affecting foreign-exchange
transactions through seminars conducted by economists
specialized in Asian financial markets and through various
foreign-exchange-related tools that we provide to our clients.

◆ Expanded Online Foreign-Exchange Transaction

Services

We have further improved the i-Deal system, which allows
our clients to execute their foreign exchange transactions on
the Internet, for greater convenience. Since May 2011, we
have been substantially upgrading the system by enhancing
functions and facilitating its use. We remain committed to
optimizing services for our clients.

Topics

◆ Joint acquisition of the aircraft-leasing business

of the Royal Bank of Scotland

On June 1, 2012, SMBC, Sumitomo Mitsui Finance and
Leasing, and Sumitomo Corporation jointly acquired the
aircraft-leasing business of the Royal Bank of Scotland group,
one of the major British financial institutions. This business
was newly launched as SMBC Aviation Capital which is
intended to capture the growing aviation demand in emerging
countries including Asia for further business expansion.

■ Treasury Markets

Through the Treasury Unit of SMBC, the Group offers higher

value-added services to meet further sophisticated and diverse

needs of its clients for transactions in the money, foreign

exchange, bond and derivative markets.

More Solutions and Services for Clients’
Market Transactions
SMBC’s Treasury Unit offers solutions appropriate for the market

transactional needs of its clients by working with branches to

present to its corporate clients with pertinent proposals for such

as hedging transactions, reflecting the shifting trends in the

financial markets.

The Unit also continues to improve the functions of i-Deal,

a system which allows our clients to execute their foreign

exchange transactions on the Internet. It will continue to support

clients by meeting their market transactional needs and offering

the highest level of services in the industry.

ALM and Trading Operations
The Treasury Unit strives to ensure sound Asset-Liability

Management (“ALM”) and stable earnings by comprehensively

controlling the balance of assets, such as loans and liabilities

including deposits, through ALM operations.

The Unit is committed to maximizing its earnings in trading

operations by consistently selecting the best possible means

for the interest-rate, foreign-exchange, commodities and other

marketplaces.

SMFG 2012 13

■ Transaction Business

Strengthening Transaction Business
SMBC established the “Transaction Business Division,” which

consist of the “Electronic Commerce Banking Department,”

“Global Advisory Department” and “Asset Finance Department”.

The newly established Transaction Business Division strength-

ens the cooperation among departments and flexibly provides

products and services in more integrated manner to meet the

transaction needs and other related financial needs of its corpo-

rate clients.

SMFG and SMBC established the “Transaction Business

Planning Department” in order to strengthen functions of stra-

tegic and business planning for the entire Transaction business

and also improve the settlement system and infrastructure, in

terms of mid-to-long term and cross-departmental plan for the

Transaction business.

We will support transaction business for our domestic and

overseas clients under this new framework.

Transaction Business

Clients

Identifying needs

Front office operations

Small and
Medium
Corporations

Large
Corporations

Global
Corporations

Allocated to
appropriate departments

Transaction Business Division

Providing information,
solutions

Global Advisory Dept.

(Foreign exchange, overseas business advisory services)

Electronic Commerce Banking Dept.

(Domestic remittance and cash management services)

Asset Finance Dept.

(Off-Balancing and supplier financing)

n
t
e
g
r
a
t
e
d
m
a
n
a
g
e
m
e
n
t

Collaboration

Transaction Business
Planning Department

Transaction-related
departments

Transaction-related
group companies

and overseas clients’ settlement and cash management needs.

We continue to improve and enhance electronic banking

services, for the “PC Bank Web21” in order to support our cli-

ents’ daily cash management, “Global e-Trade Service” in order

to support foreign exchange and trade transactions in Japan,

and “SMAR&TS” in overseas etc.

We also continue to strengthen our support for our clients

in Japan and overseas by providing high value-added informa-

tion; providing the system to support cash and financial man-

agement for the corporate group; improving foreign currency

transactions including renminbi; enhancing solutions for supply

chain financing, etc.; and allocating specialized professionals.

New Businesses and High Value-Added
Services, on a SMFG Group-Wide Basis
SMFG is proactively implementing the new settlement system

of electronic monetary claims. We are also working to develop

financial schemes utilizing the SMBC electronic monetary

claims, new settlement service and financial schemes utilizing

the “Densai Net” which is expected to become widespread.

Furthermore, we continue to enhance the settlement agency

services and “SMFG-BPO (Business Process Outsourcing)

Service” in order to support the diversifying settlement needs

and overall businesses of our clients on a group basis.

Enhancing each Settlement System and
Settlement Infrastructure
It is imperative that we appropriately enhance the settlement

system and settlement infrastructure which support the pro-

vision of secure settlement services for our clients. We are

actively involved in various industrial initiatives, such as SWIFT*

and BOJ-Net. We also engage in the Japanese Government

Bond settlement cycle reform to reduce settlement-related

risks.

* Society for Worldwide Interbank Financial Telecommunication

A member-owned cooperative that provides the communications platform
connected more than 10,000 financial institutions in 210 countries.

Strengthening Settlement Products to
Respond to Clients’ Needs
SMBC is enhancing settlement products to respond to domestic

Topics

◆ SMBC received the certification for the comple-
tion of trial period for providing cash manage-
ment services utilizing SWIFT

SMBC began providing cash management services in March
2012 for international corporate clients utilizing SWIFT in nine
countries in Asia and Japan, and we have become the first
bank in Asia to receive the certification for “Bank Readiness”
(certifying completion of trial period).

SMFG 2012

Group Companies (as of March 31, 2012)

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, consumer finance leasing, information
services, and securities.

Business Mission
• To found our own prosperity on providing valuable
services which help our customers to build their
prosperity

• To create sustainable value for our shareholders

founded on growth in our business

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

Group Structure

Sumitomo Mitsui Financial Group

Consolidated total assets

Consolidated Tier I ratio

¥143 trillion

12.28%

100%

SUMITOMO MITSUI Banking Corporation

Sumitomo Mitsui Banking Corporation

Total assets

Deposits

Loans

¥119 trillion

¥76 trillion

¥56 trillion

Number of retail accounts

approx. 27 million

Number of corporate loan clients

approx. 110,000

* As of Jun. 30, 2011 for percentage of the voting rights and as of Mar. 31, 2012 for other figures.

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)
Capital: ¥2,337.8 billion
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.

100%

SMFG Card & Credit

(Credit card services)

66%

Sumitomo Mitsui Card

NTT DOCOMO

34%

100%

Became a wholly-owned subsidiary (May 2011)
Cedyna

Became a wholly-owned subsidiary (April 2012)

SMBC Consumer Finance

(Consumer finance)

Sumitomo Mitsui Finance and Leasing

40%

(Leasing)

Sumitomo
Corporation

Japan Research Institute

(Information services)

SMBC Friend Securities

Became a wholly-owned subsidiary (Oct. 2009)

(Securities)

SMBC Nikko Securities

100%

60%

100%

SMFG 2012 15

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 implementa-
tion of strategies, and an extensive lineup of
financial products and services that leverage
the expertise of strategic Group companies in
specialized areas. SMBC, as a core member
of SMFG, works together with other members
of the Group to offer customers highly sophisti-
cated, 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: 22,686
Number of branches and other business locations:

Credit Ratings (as of June 30, 2012)

Moody’s
Standard & Poor’s
Fitch Ratings
R&I
JCR

Long-term Short-term
P–1
A–1
F1
a–1
J–1+

Aa3
A+
A
A+
AA–

In Japan:
1,548*
498
Branches:
(Including 41 specialized deposit account branches)
156
Sub-branches:
Banking agencies:
4
Offices handling non-banking business: 22
868
Automated service centers:
35
Overseas:
15
Branches:
10
Sub-branches:
10
Representative offices:

Financial Information (Consolidated basis, years ended March 31)

2012

Billions of yen
2010
2011

2009

For the Year:
Ordinary income .....
Ordinary profit .......
Net income (loss) ....
At Year-End:
¥7,276.7
Net assets...............
Total assets ............ 138,251.6

¥2,687.9
857.9
533.8

¥2,711.3
751.2
450.8

¥2,579.9
557.7
332.4

¥2,989.6
59.2
(317.3)

¥6,983.1
132,715.6

¥6,894.5
120,041.3

¥4,518.6
115,849.3

* 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 Company, Limited and Cedyna
Financial Corporation. FGCC is the core company
responsible for implementing SMFG’s credit card
strategy 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.

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: Satoru Nakanishi (Appointed on April 2, 2012)
Number of Employees: 27

SMFG SUMITOMO MITSUI Financial group

SMFG CARD & CREDIT, INC.

Maximization of
top-line synergies

Pursuit of economies of scale

www.smbc-card.com
(Japanese only)

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.

Company Name: Sumitomo Mitsui Card

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: 2,323

Credit Ratings (as of June 30, 2012)

R&I
JCR

Long-term Short-term
a–1
J–1+

A+
AA–

Financial Information (Years ended March 31)

2012

Billions of yen
2010
2011

2009

For the Year:
Revenue from credit
card operations ........ ¥7,560.6
182.2
Operating revenue ......
43.1
Operating profit ..........
At Year-End:
Number of cardholders
(in thousands) ...........

21,647

¥6,896.2
185.2
32.6

¥6,209.0
183.5
24.3

¥5,858.6
180.1
22.2

20,770

20,504

18,655

SMFG 2012

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 SMFG, it strives to become
“the number one credit card business 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.

www.cedyna.co.jp/english/

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: 2,863

Credit Ratings (as of June 30, 2012)

JCR

Long-term Short-term
J–1

Financial Information (Years ended March 31)

Billions of yen

2012

2011

2010

2009
OMC* CF*

QQ*

For the Year:
Operating revenue .. ¥176.2 ¥203.2 ¥223.9 ¥137.7 ¥80.6 ¥44.8
Operating profit ......
(5.2)
0.8
At Year-End:
Number of cardholders
(in thousands) ............ 21,091 22,513 24,933

(27.6)

(40.8)

(1.4)

6.9

* OMC: OMC Card, Inc.
CF: Central Finance Co., Ltd.
QQ: QUOQ Inc.

www.promise.co.jp/english/

Since its establishment in 1962, with the origi-
nal goal of striving to be the best in offering
innovative financial services for consumers,
Promise Co., Ltd., currently known as SMBC
Consumer Finance Co., Ltd., has developed
convenient loan products for individuals to
accommodate to the changing times and has
created an appropriate system for offering
loan consultation services and executing loan
agreements.

In December 2011, Promise became
a consolidated subsidiary of SMFG, and
its corporate name was changed to SMBC
Consumer Finance in July 2012. The former
name of Promise has been widely-known by
many consumers; therefore, Promise as the
brand name will continue to be used for both

services and products.

Based on a corporate philosophy of
“the company and employees to become
accepted and trusted by customers and to
strive to mutually benefit and prosper with
the society,” SMBC Consumer Finance, as a
member of SMFG, will continue to develop its
specialized services in pursuit of sustainable
growth.

Company Name: SMBC Consumer Finance Co., Ltd.

(Name changed July 1, 2012)

Business Profile: Consumer finance business
Establishment: March 20, 1962
Head Office: 1-2-4, Otemachi, Chiyoda-ku, Tokyo
President & CEO: Ken Kubo
Number of Employees: 1,756

Credit Ratings (as of June 30, 2012)

Moody’s
R&I
JCR

Long-term Short-term

Ba1
A–
A–

—
—
—

Financial Information (Years ended March 31)

2012

Billions of yen
2010
2011

2009

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

¥172.2
(166.6)

¥187.5
(54.1)

¥212.7
11.7

¥243.0
(57.1)

www.smfl.co.jp/english/

Sumitomo Mitsui Finance and Leasing
Company, Limited (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 portfo-
lios and expert knowledge of SMBC Leasing
Company based on the financial solution for-
mulation 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 Company, Limited

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
Number of Employees: 1,447

Credit Ratings (as of June 30, 2012)

R&I
JCR

Long-term Short-term
a–1
J–1+

A+
AA–

Financial Information (Years ended March 31)

2012

Billions of yen
2010
2011

2009

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

¥770.9
816.8
59.4

¥800.8
812.8
50.2

¥733.6
894.7
43.8

¥895.8
947.6
36.4

SMFG 2012 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: 2-18-1 Higashi-Gotanda,

Shinagawa-ku, Tokyo

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

President & CEO: Junsuke Fujii

(Appointed on April 1, 2012)

Number of Employees: 2,123

www.jri.co.jp/english/

Financial Information (Years ended March 31)

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

2012

¥87.5
0.8

Billions of yen
2010
2011

¥84.8
1.5

¥81.7
0.9

2009

¥88.0
1.0

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: 1,969

Financial Information (Years ended March 31)

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

2012

¥47.5
8.3

Billions of yen
2010
2011

¥53.2
10.2

¥67.4
22.7

2009

¥43.2
2.3

www.smbcnikko.co.jp/en

Company Name: SMBC Nikko Securities Inc.

(name changed on April 1, 2011)

Credit Ratings (as of June 30, 2012)

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: 7,384

Moody’s
Standard & Poor’s
R&I
JCR

Long-term Short-term
P–1
A–1
a–1
—

A1
A+
A+
AA–

Financial Information (Years ended March 31)

2012

2011

Billions of yen
2010

2009
*3

For the Year:
Operating
revenue ......... ¥233.6
Operating
income ..........

39.9

¥218.6

¥85.6

¥104.9

¥164.1

38.5

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 securi-
ties 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
becoming “one of the leading Japanese
securities companies in the retail securities
market,” offering high-quality products and
services accommodating the needs of its cli-
ents and building trust for its clients.

SMBC Nikko Securities Inc. (formerly Nikko
Cordial Securities Inc.), which was established
in July 1918, has developed solid relationships
of trust with its individuals and corporate cli-
ents over the last nine decades. It became
a member of the SMFG Group in October
2009. In April 2011, its corporate name was
changed to SMBC Nikko Securities from
Nikko Cordial Securities. Consistently working
closely with SMBC, SMBC Nikko Securities
provides comprehensive and highly sophisti-
cated securities and investment banking ser-
vices.

As a core member of SMFG, SMBC Nikko
Securities strives to become the leading
securities and investment banking company
in Japan.

SMFG 2012

Financial Highlights

Sumitomo Mitsui Financial Group

◆ Consolidated

Year ended March 31
For the Year:

2012

2011

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

¥ 3,973,075
3,020,108
518,536
665,232

At Year-End:

¥ 7,254,976
143,040,672
1,804,951
978,933
474,984
64,225

Selected Ratios:

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

16.93%
10.27%
7.28x

Per Share (Yen):

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

¥3,856.37
374.26
373.99

¥ 3,862,660
3,035,346
475,895
413,375

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

16.63%
9.76%
7.68x

¥3,533.47
336.85
336.78

Millions of yen
2010

¥ 3,184,688
2,626,590
271,559
803,705

¥ 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

2009

2008

¥ 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)
—

¥ 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

¥424,546.01
59,298.24
56,657.41

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. For the calculation of consolidated comprehensive income for fiscal 2009, SMFG has retroactively adopted the “Accounting Standard for Presentation of

Comprehensive Income” (ASBJ Statement No. 25, issued on June 30, 2010).

4. SMFG has retroactively adopted the “Guidance on Accounting Standard for Earnings per Share,” (ASBJ Guidance No. 4) to “Net income — diluted” per

share for fiscal 2010. This change has a little impact on the calculation of diluted net income per share.

5. 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.

6. 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 ...............................................................................................................................................................................

Yen
2008
¥4,245.46
592.98
566.57

SMFG 2012 19

2009

2008

◆ Nonconsolidated

Year ended March 31
For the Year:

2012

2011

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

¥ 181,372
166,272
24,902
149,919

¥4,527,629
6,153,461
73.57%
2,337,895

¥ 222,217
206,865
24,467
191,539

¥4,842,914
6,237,655
77.64%
2,337,895

Millions of yen
2010

¥ 133,379
118,818
16,641
66,176

¥4,805,574
6,152,774
78.10%
2,337,895

¥ 134,772
117,051
8,790
103,468

¥2,977,547
4,057,313
73.39%
1,420,877

Preferred stock ....................................................
—
Common stock .................................................... 1,414,055,625
215

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

70,001
1,414,055,625
192

70,001
1,414,055,625
183

103,401
789,080,477
167

Selected Ratios:

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

3.27%
25.43x
92.55%

4.02%
19.68x
76.09%

1.59%
57.41x
213.41%

3.52%
28.79x
75.96%

¥ 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%

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

¥3,317.44

¥3,282.75

¥3,256.32

¥3,389.38

¥339,454.71

100
/
/
/
/
/
/
/
/
/
/
/
/
/
107.06
107.04

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

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

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

2. “Net income — diluted” per share for fiscal 2010 was calculated by retroactive application of “Guidance on Accounting Standard for Earnings per Share,”

(ASBJ Guidance No. 4). Had this Guidance not been applied, “Net income — diluted” per share would have come to ¥131.41 in fiscal 2010.

3. 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:

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

Yen
2008
¥3,394.55

120
91.34
91.34

SMFG 2012

Sumitomo Mitsui Banking Corporation

◆ Consolidated

Year ended March 31
For the Year:

2012

2011

¥ 2,715,700
1,838,390
533,816
632,889

At Year-End:

¥ 7,276,706
138,251,602
1,659,306
867,653
390,602
50,768

Selected Ratios:

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

19.63%
9.63%

Per Share (Yen):

¥53,960.98
5,024.23
5,023.33

¥ 2,714,944
1,972,065
450,832
363,689

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

19.16%
8.42%

¥50,344.52
4,184.89
4,184.07

Millions of yen
2010

¥ 2,597,675
2,039,296
332,497
835,851

¥ 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

2009

2008

¥ 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)
—

¥ 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

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. For the calculation of consolidated comprehensive income for fiscal 2009, SMBC has retroactively adopted the “Accounting Standard for Presentation of

Comprehensive Income” (ASBJ Statement No. 25, issued on June 30, 2010).

4. 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 2012 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 .................................................

2012

2011

Millions of yen
2010

2009

2008

¥ 2,021,042
1,329,050
477,973

¥ 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

1,532,511
856,796

813,015
719,495

¥ 5,709,663
119,037,469
84,392,835
56,411,492
42,441,134
1,143,053

1,182,847
689,215
388,982
1,891,853
235,829
424,478
1,770,996

70
106,248
22,686

21.91%
8.64%
33.00%
46.9%

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%

¥53,738.81

¥50,317.86

¥48,799.31

¥41,404.62

¥58,204.22

1,485
—
4,498.64
—

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
—

Notes: 1. Please refer to page 166 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 is not reported because no potentially dilutive shares have been issued.

SMFG 2012

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, 2012.

1. Operating Results
Operating results for fiscal year 2011 include the results
of 337 consolidated subsidiaries and 43 subsidiaries and
affiliates accounted for by the equity method.

In fiscal 2011, gross profit increased by ¥89.7 billion

year-on-year to ¥2,594.4 billion due to an increase in
net fees and commissions and the contribution of newly
consolidated subsidiaries. The increase in net fees and com-
missions is attributable mainly to an increase in fees related
to overseas loans and domestic loan syndication achieved

by SMBC. Ordinary profit after adjustment for general and
administrative expenses, credit cost, net losses on stocks,
equity in losses of affiliates and other items increased by
¥110.1 billion year-on-year to ¥935.5 billion thanks to
factors such as a decrease in credit cost, mainly due to
the tailored efforts of SMBC to assist certain borrowers to
improve their business and financial conditions. Net income
after adjustment for extraordinary gains (losses) and income
taxes increased by ¥42.6 billion to ¥518.5 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 ...................................

2012 (A)

2011 (B)

337
43

327
47

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 ........................................................................................................................
Recoveries of written-off claims (B) ..............................................................................
Net losses on stocks .....................................................................................................
Equity in losses of affiliates ...........................................................................................
Net other income (expenses).........................................................................................
Ordinary profit ...............................................................................................................
Extraordinary gains (losses)...........................................................................................
Gains on step acquisitions ........................................................................................
Losses on impairment of fixed assets .......................................................................
Recoveries of written-off claims (C)...........................................................................
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) + (C).................................................................................
[Reference]
Consolidated net business profit (Billions of yen) .........................................................

2012 (A)
¥2,594,482
1,341,369
1,770
823,580
198,192
229,568
(1,421,363)
(126,055)
(90,305)
(111,227)
106,512
(31,035)
4,800
(27,880)
(31,122)
(57,289)
935,571
17,395
25,050
(3,861)
—
952,966

(103,478)
(207,860)
641,627
(123,090)
¥ 518,536
¥ (121,255)

Millions of yen

2011 (B)
¥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
12,655
(5,411)
2,813
827,313

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

Increase (decrease)
(A) – (B)

10
(4)

Increase (decrease)
(A) – (B)
¥ 89,752
23,718
(565)
57,350
(38,901)
48,149
(66,041)
94,107
66,266
(47,653)
91,593
(16,100)
4,800
64,069
(17,803)
(58,741)
110,143
15,511
12,395
1,550
(2,813)
125,653

(6,032)
(64,535)
55,085
(12,444)
¥ 42,641
¥ 96,093

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. “Recoveries of written-off claims” which were included in “Extraordinary gains (losses)” are included in “Ordinary profit” since the fiscal year

beginning on or after April 1, 2011.

3. 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 2012 23

¥ 1,013.9

¥ 1,002.0

¥ 11.9

Deposits (excluding negotiable certificates of deposit) as of

to ¥42,529.9 billion.

March 31, 2012 increased by ¥2,129.6 billion year-on-year
to ¥84,128.5 billion, and the negotiable certificates of deposit
increased by ¥227.3 billion to ¥8,593.6 billion.

Meanwhile, loans and bills discounted as of March
31, 2012 increased by ¥1,372.2 billion year-on-year to
¥62,720.5 billion, and securities increased by ¥2,577.8 billion

Net assets were ¥7,254.9 billion. Of this amount,

stockholders’ equity was ¥5,014.3 billion mainly due to the
recording of net income, the acquisition and cancellation of
Preferred stock (1st series Type 6), and the payment of cash
dividends.

Assets, Liabilities and Net Assets

March 31
Assets ............................................................................................................................ ¥143,040,672
42,529,950
62,720,599
135,785,696
84,128,561
8,593,638
7,254,976

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

2012 (A)

Millions of yen

2011 (B)
¥137,803,098
39,952,123
61,348,355
130,671,024
81,998,940
8,366,323
7,132,073

Increase (decrease)
(A) – (B)
¥5,237,573
2,577,826
1,372,243
5,114,671
2,129,621
227,315
122,902

2. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2012
increased by ¥113.3 billion year-on-year to ¥544.1 billion,
primarily because of an increase in the unrealized gains of
foreign currency bonds. Of this amount, net unrealized gains

on other securities, which are directly debited to net assets,
were ¥474.9 billion, a year-on-year increase of ¥104.0
billion.

Unrealized Gains (Losses) on Securities

Millions of yen

Consolidated
balance sheet
amount

March 31
Held-to-maturity securities ................. ¥ 5,286,267
Other securities .................................. 37,558,730
Stocks .............................................
2,406,170
Bonds ............................................. 27,684,484
Others .............................................
7,468,076
Other money held in trust ...................
22,430
Total .................................................... 42,867,429
Stocks .............................................
2,406,170
Bonds ............................................. 32,957,653
Others .............................................
7,503,605

Net unrealized
gains (losses)
(A)
¥ 69,184
474,984
271,461
111,815
91,708
(46)
544,122
271,461
180,998
91,662

2012

(A) – (B)
¥ 9,327
104,085
(40,495)
35,045
109,535
(88)
113,323
(40,495)
44,359
109,458

Unrealized
gains
¥ 69,288
746,928
490,074
118,164
138,689
—
816,216
490,074
187,444
138,697

Unrealized
losses
¥ 103
271,943
218,613
6,348
46,981
46
272,093
218,613
6,445
47,034

2011

Consolidated
balance sheet
amount
¥ 4,189,272
35,972,442
2,486,258
25,560,012
7,926,170
22,569
40,184,285
2,486,258
29,734,790
7,963,235

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

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

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, 2012 and 2011, included gains of ¥196 million and ¥1,153 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,
2012 and 2011, were reduced by ¥196 million and ¥1,153 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 2012

3. Consolidated Capital Ratio
Consolidated capital ratio as of March 31, 2012 increased
by 0.30 percentage point year-on-year to 16.93%.

Total capital, the numerator in the consolidated capital
ratio calculation, increased by ¥210.8 billion year-on-year
to ¥8,643.7 billion due to the recording of net income and

the acquisition and cancellation of Preferred stock (1st
series Type 6). Risk-weighted assets, the denominator in
the calculation, increased by ¥349.5 billion year-on-year to
¥51,043.2 billion, mainly due to the consolidation of Promise
Co., Ltd.

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

2012 (A)
¥ 6,272,260
2,771,125
(399,634)
8,643,751
51,043,232

Millions of yen

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

16.93%
12.28%

16.63%
12.47%

Increase (decrease)
(A) – (B)

(51,734)
234,167
28,448
210,880
349,536

0.30%
(0.19)%

4. Dividend Policy
The basic shareholder return policy of SMFG is to sustain
a consolidated payout ratio of over 20% through the stable
and consistent distribution of profit, while enhancing retained
earnings to maintain financial soundness in light of the public
nature of its business as a bank holding company, by ensur-
ing the sustainable growth of enterprise value. Dividends
from retained earnings are basically distributed 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 2011 business per-
formance, SMFG has decided to pay an annual dividend
of ¥100 per share of common stock for the fiscal year,
unchanged from the previous fiscal year. SMFG will employ
its retained earnings to increase its enterprise value by aiming
for top quality in strategic business areas, and establishing
a solid financial base and corporate infrastructure to meet
the challenges of financial regulations and highly competitive
environment.

5. Deferred Tax Assets
Net deferred tax assets as of March 31, 2012 decreased by
¥274.0 billion year-on-year to ¥350.1 billion. SMFG takes a

conservative approach to recognizing deferred tax assets in
order to maintain its sound financial position.

Deferred Tax Assets

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

Millions of yen

2012 (A)
¥350,182

2011 (B)
¥624,219

Increase (decrease)
(A) – (B)
(274,036)

5.6%

9.9%

(4.3)%

SMFG 2012 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, 2012.

1. Operating Results
Gross banking profit in fiscal 2011 increased by ¥0.7 billion
year-on-year to ¥1,532.5 billion, and expenses (excluding
nonrecurring losses) increased by ¥20.2 billion to ¥719.4 bil-
lion. As a result, banking profit (before provision for general
reserve for possible loan losses) decreased by ¥19.5 billion
to ¥813.0 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 ¥99.6 billion year-on-year to ¥695.3 billion.
Net income after adjustment for ordinary profit for extraor-

dinary gains and losses and income taxes increased by
¥56.7 billion year-on-year to ¥477.9 billion.

2. Income Analysis
Gross Banking Profit
Gross banking profit increased by ¥0.7 billion year-on-year
to ¥1,532.5 billion. This was mainly due to an increase in
net fees and commissions, attributable to an increase in
fees related to overseas loans and domestic loan syndica-
tion. These factors were partly offset by a decrease in net
interest income due to a stagnant balance of loans and bills
discounted, amid sluggish financing demand in Japan, and
deterioration in the interest margin due to lower interest rates.

Expenses
Expenses (excluding nonrecurring losses) increased by
¥20.2 billion year-on-year to ¥719.4 billion. This was mainly
due to the proactive allocation of resources into focused
business areas, such as overseas businesses, while reex-
amining and controlling ordinary expenses.

Banking Profit
Banking profit (before provision for general reserve for pos-
sible loan losses) decreased by ¥19.5 billion year-on-year to
¥813.0 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 ................................................................................................................

2012 (A)
¥1,532,511
[1,097,760]
[434,750]
956,878
1,716
318,907
84,051
170,957
[1,379,974]
(719,495)
(259,782)
(422,854)
(36,858)
813,015

[660,478]
43,780
856,796

Banking Profit by Business Unit

Millions of yen

2011 (B)
¥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

Increase (decrease)
(A) – (B)
¥ 752
[(16,569)]
[17,321]
(10,946)
(582)
16,240
(67,019)
63,059
[(4,664)]
(20,298)
(9,940)
(11,383)
1,025
(19,547)

[(24,963)]
31,445
11,899

Year ended March 31, 2012
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

¥94.2
(4.6)

¥200.1
(18.4)

¥174.4
6.5

¥132.5
17.6

¥300.1
(12.7)

¥(88.3)
(8.0)

¥813.0
(19.6)

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

2. “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 2012

Nonrecurring Losses (Credit Cost, etc.)
Nonrecurring losses decreased by ¥87.7 billion year-on-year
to ¥161.4 billion. This improvement was mainly due to a ¥72.1
billion decrease in net losses on stocks to ¥15.1 billion, due to
reduced write-offs, and a ¥3.9 billion decrease in credit cost
to ¥103.6 billion, as a result of tailored efforts to assist certain
borrowers to improve their business and financial conditions.
Net total credit cost — the sum of credit cost of ¥103.6 bil-
lion recorded under “Nonrecurring losses,” provision for gen-
eral reserve for possible loan losses, and gains on recoveries of
written-off claims — decreased by ¥35.6 billion year-on-year to
¥58.6 billion.

Ordinary Profit
As a result of the foregoing, ordinary profit increased by ¥99.6
billion year-on-year to ¥695.3 billion.

Extraordinary Gains (Losses)
Extraordinary losses decreased by ¥3.5 billion year-on-year to
¥3.3 billion.

Net Income
Current income taxes amounted to ¥44.7 billion, and deferred
income taxes were ¥169.3 billion. As a result, net income
increased by ¥56.7 billion year-on-year to ¥477.9 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) ............................................................................................................
Recoveries of written-off claims (C)...........................................................................
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 .......................................................................
Recoveries of written-off claims (D) ...........................................................................

Income taxes:

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

Net total credit cost (A) + (B) + (C) + (D) ........................................................................
Provision for general reserve for possible loan losses ..............................................
Write-off of loans .......................................................................................................
Provision for specific reserve for possible loan losses ..............................................
Losses on sales of delinquent loans .........................................................................
Provision for loan loss reserve for specific overseas countries .................................
Recoveries of written-off claims ................................................................................

2012 (A)
¥813,015
43,780
856,796
(161,453)
(103,662)
1,234
(15,153)
20,562
(7,074)
(28,642)
(43,871)
695,342
(3,349)
(717)
(2,632)
—

(44,703)
(169,315)
¥477,973

¥ (58,647)
43,780
(15,797)
(59,196)
(28,767)
98
1,234

Millions of yen

2011 (B)
¥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

Increase (decrease)
(A) – (B)
¥(19,547)
31,445
11,899
87,740
3,998
1,234
72,132
(1,109)
(5,470)
78,711
10,376
99,638
3,515
1,619
1,656
(1,055)

(2,317)
(44,042)
¥ 56,793

¥ 35,622
31,445
54,978
(32,092)
(19,074)
185
179

Note: “Recoveries of written-off claims” which were included in “Extraordinary gains (losses)” are included in “Nonrecurring gains (losses)” since the fiscal year begin-

ning on or after April 1, 2011.

SMFG 2012 27

3. Assets, Liabilities and Net Assets
Assets
Total assets as of March 31, 2012 increased by ¥3,552.5
billion year-on-year to ¥119,037.4 billion. This was attribut-
able mainly to a ¥2,587.7 billion increase in securities due to
an increase in the balance of Japanese government bonds
and a ¥1,173.8 billion increase in overseas loans.

Liabilities
Liabilities as of March 31, 2012 increased by ¥3,402.1 bil-
lion year-on-year to ¥113,327.8 billion. The main reason for
the increase in liabilities was a ¥1,767.6 billion increase in
individual and corporate deposits in Japan.

Net Assets
Net assets as of March 31, 2012 amounted to ¥5,709.6
billion. Of this amount, stockholders’ equity was ¥5,297.3
billion, comprising ¥1,770.9 billion in capital stock, ¥2,481.2
billion in capital surplus (including ¥710.2 billion in other
capital surplus), ¥1,255.1 billion in retained earnings, and a
deduction of ¥210.0 billion in treasury stock.

Valuation and translation adjustments were ¥412.2 billion,

comprising ¥281.1 billion in net unrealized gains on other
securities, ¥105.3 billion in net deferred gains on hedges,
and ¥25.7 billion in land revaluation excess.

Assets, Liabilities and Net Assets

March 31
Assets ............................................................................................................................ ¥119,037,469
42,441,134
56,411,492
113,327,806
75,804,088
8,588,746
5,709,663

2012 (A)

Millions of yen

2011 (B)
¥115,484,907
39,853,432
55,237,613
109,925,614
74,036,469
8,406,816
5,559,293

Increase (decrease)
(A) – (B)
¥3,552,561
2,587,702
1,173,878
3,402,191
1,767,618
181,929
150,370

SMFG 2012

4. Unrealized Gains (Losses) on Securities
Net unrealized gains on securities as of March 31, 2012
increased by ¥98.6 billion year-on-year to ¥435.3 billion,
mainly due to an increase in the unrealized gains of foreign
currency bonds. Of this amount, net unrealized gains on

other securities, which are directly debited to net assets,
amounted to ¥388.9 billion, a year-on-year increase of ¥83.3
billion.

Unrealized Gains (Losses) on Securities

Millions of yen

Non-
consolidated
balance sheet
amount

March 31
Held-to-maturity securities ................. ¥ 5,163,764
Stocks of subsidiaries and affiliates ...
2,324,041
Other securities .................................. 35,440,979
Stocks .............................................
2,250,672
Bonds ............................................. 26,306,672
Others .............................................
6,883,634
Other money held in trust ...................
5,805
Total .................................................... 42,934,589
Stocks .............................................
3,472,964
Bonds ............................................. 31,470,436
Others .............................................
7,991,189

2012

(A) – (B)
¥ 8,972
6,449
83,361
(47,015)
32,425
97,950
(88)
98,692
(44,140)
41,398
101,435

Net unrealized
gains (losses)
(A)
¥ 67,902
(21,499)
388,982
228,453
104,356
56,172
(46)
435,338
217,149
172,259
45,930

Unrealized
gains
¥ 67,993
622
672,572
466,871
109,504
96,196
—
741,188
467,494
177,497
96,196

Unrealized
losses
¥ 90
22,122
283,590
238,418
5,148
40,024
46
305,850
250,345
5,238
50,266

2011

Non-
consolidated
balance sheet
amount
¥ 4,071,733
2,228,437
33,980,684
2,338,455
24,303,221
7,339,007
8,875
40,289,730
3,494,297
28,374,954
8,420,478

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

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

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, 2012 and 2011, included gains of ¥196 million and ¥1,153 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,
2012 and 2011, were reduced by ¥196 million and ¥1,153 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 2012 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.

Total

March 31, 2012

(Billions of yen)

March 31, 2011

Balances
(after provisions
and write-offs)
¥49.4
0.7
19.4
0.1
¥69.6

Change from
Mar. 31, 2011
¥46.8
(0.8)
6.7
(0.0)
¥52.7

Overseas

¥49.4
0.7
7.4
0.1
¥57.6

Change from
Mar. 31, 2011
¥46.8
(0.8)
7.4
(0.0)
¥53.4

Net unrealized
gains/losses
(after write-offs)
¥0.2
1.5
0.6
0.1
¥2.4

Change from
Mar. 31, 2011
¥0.3
0.3
0.5
(0.2)
¥0.9

Balances
(after provisions
and write-offs)
¥ 2.6
1.5
12.7
0.1
¥16.9

Overseas

¥2.6
1.5
—
0.1
¥4.2

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

Notes: 1. Balance of sub-prime related products is approximately ¥0.1 billion.

2. There is no amount of ABCP.
3. Excludes RMBS issued by GSE and Japan Housing Finance Agency, 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, 2012.

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

Exposure to CDS transactions with
monoline insurance companies

March 31, 2012

March 31, 2011

March 31, 2012

Net
exposure

Change from
Mar. 31, 2011

Reserve for
possible loan
losses

Net
exposure

Reserve for
possible loan
losses

Amount of
reference
assets

Change from
Mar. 31, 2011

March 31, 2011
Amount of
reference
assets

¥3.0

¥0.1

¥1.0

¥2.9

¥0.8

¥236.1

¥(85.2)

¥321.3

(Billions of yen)

Notes: 1. Reference assets do not include sub-prime related assets.

2. SMFG recorded loss on such transactions of approximately ¥0.2 billion in the fiscal year ended March 31, 2012.

Loans and Investments Guaranteed by Monoline Insurance Companies, etc.

Loans and investments guaranteed or
insured by monoline insurance companies

(Billions of yen)

March 31, 2012

March 31, 2011

Exposure

Change from
Mar. 31, 2011

Reserve for
possible loan
losses

Exposure

Reserve for
possible loan
losses

¥7.6

¥(1.8)

¥0.0

¥9.4

¥0.0

Note: Underlying assets do not include sub-prime related assets.

3. Leveraged Loans

Europe
Japan
United States
Asia (excluding Japan)

Total

(Billions of yen)

March 31, 2012

March 31, 2011

Loans

¥151.2
131.0
75.6
62.0
¥419.8

Change from
Mar. 31, 2011

Undrawn
commitments

Change from
Mar. 31, 2011

¥ (45.7)
(52.5)
(1.6)
(3.4)
¥(103.2)

¥20.7
22.3
51.1
5.7
¥99.8

¥ (2.7)
6.8
(15.0)
(2.0)
¥(12.9)

Reserve for
possible loan
losses
¥ 4.7
1.3
5.0
—
¥11.0

Loans

Undrawn
commitments

¥196.9
183.5
77.2
65.4
¥523.0

¥ 23.4
15.5
66.1
7.7
¥112.7

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

Notes: 1. Above figures include the amount to be sold of approximately ¥8 billion. In the fiscal year ended March 31, 2012, we sold leveraged loans of approximately

¥34 billion, and loss on the sale amounted to approximately ¥13 billion.

2. Above figures do not include leveraged loans which are included in underlying assets of “1. Securitized Products.”
3. Reserve for possible loan losses do not include general reserve for possible loan losses against normal borrowers.

SMFG 2012

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

March 31, 2012

March 31, 2011

(Billions of yen)

Notional
amount

¥599.9

Change from
Mar. 31, 2011
¥126.7

Overseas

¥230.9

Change from
Mar. 31, 2011
¥36.2

Notional
amount

Overseas

¥473.2

¥194.7

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 are approximately ¥46 billion.

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

SMFG 2012 31

Risk Management

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

Risk Management Department works with the Corporate Planning

Department to comprehensively and systematically manage all

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

these categories of risk across the entire Group.

never been more important in the management of a financial holding

(2) Fundamental Principles and Basic Policies for Risk

company.

Management

SMFG has encapsulated the basic principles to be employed

SMFG’s Groupwide basic policies for risk management stipulate the

in risk management in the manual entitled Regulations on Risk

fundamental principles for risk management that must be followed,

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

and spell out risk management procedures from various perspec-

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

tives. These include managing risk on a consolidated accounting

for risk management after specifying the categories of risk to which

basis, managing risk using quantification methods, ensuring con-

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

sistency with business strategies, setting up a system of checks

companies to enable them to follow the basic risk management

and balances, contingency planning for emergencies and serious

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

situations, and verifying preparedness to handle all conceivable

management systems; and 3) Monitor the implementation of risk

risk situations. In addition, there are specific operational policies

management by all Group companies to ensure that their practices

for implementing appropriate management of risk by all Group

meet the relevant standards.

companies.

(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-

Under SMFG’s Groupwide basic policies for risk management,

all Group companies periodically carry out reviews of the basic

management policies for each risk category, or whenever deemed

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,

ries are constantly reviewed, and new categories may be added in

providing guidance when necessary.

response to changes in the operating environment. The Corporate

■SMFG’s Risk Management System

SMFG

Board of Directors

Corporate Auditors

Management Committee

External Audit

Designated Board Members

Audit Dept.

Guidance for
drafting of basic
policies

Monitoring

Corporate-wide
Risk Management

Corporate Planning Dept./
Corporate Risk
Management Dept.

Report

Corporate Risk
Management
Dept.

Credit Risk

Market Risk

Liquidity Risk

Operational Risk

General Affairs Dept.

Processing Risk

IT Planning Dept.

System Risk

SMFG 2012

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

Bank-wide
Risk Management

Corporate Planning
Dept./Corporate Risk
Management Dept.

Settle-
ment
Risk

Credit & Investment
Planning Dept.

Credit Risk

Risk
Manage-
ment Unit

Corporate Risk
Management
Dept.

Market Risk

Liquidity Risk

Operational Risk

Operations Planning Dept.

Processing Risk

IT Planning Dept.

System Risk

Transaction Business Planning Dept.

Other Departments

Other Risks

SMBC

SMBC Nikko
Securities

SMFG
Card & Credit

Sumitomo
Mitsui Card

Cedyna

Sumitomo Mitsui
Finance & Leasing

Japan
Research
Institute

SMBC
Friend
Securities

SMBC
Consumer
Finance

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.

to ensure that the management system is functioning properly.

Furthermore, under our system top management plays an

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

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

liquidity risk at the operating level is strengthened by the Credit

Risk Management Committee and the Market Risk Management

Committee, which are subcommittees of the Management

Committee. The Management Committee is also attended by the

Risk management systems are in place at the individual Group

relevant department heads.

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 cat-

egories listed above, in addition to risks associated with settlement.

Integrated Risk Management

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

Each risk category is managed taking into account the particular

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

characteristics of that category. In addition, the Risk Management

employ the risk capital-based management method. We measure

Unit has been established—independent of the business units—

“risk capital” based on value at risk (VaR), etc. as a uniform basic

and the risk management framework has been strengthened by

measure of credit, market, and operational risk, taking account of

consolidating the functions for managing major risks—credit, mar-

the special characteristics of each type of risk and the business

ket, liquidity and operational—into the Risk Management Unit and

activities of each Group company. We then allocate capital appro-

enhancing our across-the-board risk monitoring ability. A board

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

member is assigned to oversee the Risk Management Unit com-

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

prising the Corporate Risk Management Department and Credit &

In the case of credit and market risk, we set maximum risk

Investment Planning Department. The Corporate Risk Management

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

Department—the unit’s planning department—comprehensively and

during the period, taking account the level of stress stipulated in

systematically manages all categories of risk in cooperation with

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

the Corporate Planning Department. Moreover, the Internal Audit

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

Unit—independent of all business units—conducts periodic audits

allocations within SMFG’s capital. Risk capital limits are subdivided

■ Risk Management Framework

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 2012 33

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.

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

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

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

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

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

its financial condition.

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

requirements for internationally active banks, and it has been applied

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

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

the Advanced Measurement Approach (AMA) for operational risk

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

These Basel II regulations, as a measure to respond to the

financial crisis at that time, were issued in July 2009 for the pur-

pose of enhancing the framework mainly through the review of how

to handle securitized products and trading accounts (Basel 2.5).

In Japan the application of the regulations started at the end of

December 2011.

Basel III was also issued in December 2010 as a new framework

of capital requirements including the enhancement of international

regulatory standards on bank capital adequacy and introduction of

regulatory standards on liquidity. SMFG will take appropriate mea-

sures for the phase-in of this new framework from the end of March

2013.

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

tion on the capital ratio is provided in the discussion on Capital Ratio

Information appearing in the Financial Section and Corporate Data.

SMFG 2012

Credit Risk
1. Basic Approach to Credit Risk Management

(1) Definition of Credit Risk
Credit risk is the possibility of a loss arising from a credit event, such

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

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

become worthless.

Overseas credits also include an element of country risk, which

is closely related to credit risk. This is the risk of loss caused by

changes in foreign exchange, or political or economic situations.

(2) Fundamental Principles for Credit Risk Management
All Group companies follow the fundamental principles established

by SMFG to assess and manage credit risk on a Groupwide basis

and further raise the level of accuracy and comprehensiveness of

Groupwide credit risk management. Each Group company must

comprehensively manage credit risk according to the nature of its

business, and assess and manage credit risk of individual loans and

credit portfolios quantitatively and using consistent standards.

Credit risk is the most significant risk to which SMFG is

exposed. Without effective credit risk management, the impact of

the corresponding losses on operations can be overwhelming.

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

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

accordance with the business mission and rules of conduct.

SMBC is promoting the understanding of and strict adherence

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

ducting risk-sensitive credit management, SMBC aims to enhance

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

value-added financial services.

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

the Risk Management Unit is responsible for the comprehensive

management of credit risk. This department drafts and administers

credit policies, the internal rating system, credit authority guidelines,

and credit application guidelines, and manages non-performing

loans (NPLs) and other aspects of credit portfolio management. The

department also cooperates with the Corporate Risk Management

Department in quantifying credit risk (risk capital and risk-weighted

assets) and controls the bank’s entire credit risk. Further, the Credit

Portfolio Management Department within the Credit & Investment

Planning Department has been strengthening its active portfolio

management function for stable credit portfolios mainly through

credit derivatives and the sales of loans.

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

The Corporate Research Department within the Corporate

sultative body, to round out its oversight system for undertaking

Services Unit performs research on industries as well as investi-

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

gates the business situations of borrower enterprises to detect early

soundness of the bank’s loan operations.

signs of problems or growth potential. The Credit Administration

Department is responsible for handling NPLs of borrowers classi-

3. Credit Risk Management Methods

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.

(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

The Credit Departments within each business unit conduct credit

risk management along with branches, for loans handled by their

risk for control purposes.

(a) Internal Rating System

units and manage their units’ portfolios. The credit limits they use

There is an internal rating system for each asset control category

are based on the baseline amounts established for each grading

set according to portfolio characteristics. For example, credits to

category, with particular attention paid to evaluating and managing

commercial and industrial (C&I) companies, individuals for business

customers or loans perceived to have particularly high credit risk.

purposes (domestic only), sovereigns, public-sector entities, and

The Internal Audit Unit, operating independently of the business

financial institutions are assigned an “obligor grade,” which indi-

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

cates the borrower’s creditworthiness, and/or “facility grade,” which

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

indicates the collectibility of assets taking into account transaction

to the Board of Directors and the Management Committee.

conditions such as guarantee/collateral, and tenor. An obligor grade

■ SMBC’s Credit Risk Management System

Board of Directors

Corporate Auditors

Management Committee

External Audit (Auditing Firm)

Risk Management Unit

Corporate Risk Management Dept.

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

Credit & Investment Planning Dept.

•Aggregates credit risk for unified management

•Plans and proposes basic credit policies

•Drafts, administers, and examines internal rating system

Credit Portfolio Management Dept.
•Undertakes active portfolio management

Internal Audit Unit

Internal Audit Dept.

•Audits credit risk management

Credit Review Dept.

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

Corporate Services Unit

Corporate Research Dept.

•Industry trend research
•Credit assessment of major industry players

Credit Administration Dept.

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

Business Units

Consumer Banking Unit

Middle Market Banking Unit

Corporate Banking Unit

International Banking Unit

Investment Banking Unit

Credit
Dept.

Credit Dept.

Credit Dept.
I & II

Credit Dept.

Credit for Individuals

Small and Medium-Sized 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

SMFG 2012 35

is determined by first assigning a financial grade using a financial

(b) Quantification of Credit Risk

strength grading model and data obtained from the obligor’s

Credit risk quantification refers to the process of estimating the

financial statements. The financial grade is then adjusted taking

degree of credit risk of a portfolio or individual loan taking into

into account the actual state of the obligor’s balance sheet and

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

qualitative factors to derive the obligor grade. In the event that the

concentration of risk in a specific customer or industry and the loss

borrower is domiciled overseas, internal ratings for credit are made

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

after taking into consideration country rank, which represents an

and securities.

assessment of the credit quality of each country, based on its politi-

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

cal and economic situation, as well as its current account balance

credit quality correlation among obligors, and other parameter

and external debt. Self-assessment is the obligor grading process

values are estimated using historical data of obligors and facilities

for assigning lower grades, and the borrower categories used in

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

self-assessment are consistent with the obligor grade categories.

these parameters, we run a simulation of simultaneous default using

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.

(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

quantitative measures, when combined with qualitative analyses of

■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

Borrower
Category

Financial Reconstruction
Law Based Disclosure
Category

(Domestic)

Normal Assets

Increasing the understandability to customers

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

the competitiveness of its products or services,

and its management caliber, result in a compre-

hensive 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.

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 con-

tract forms with the chief aim of clarifying lending

conditions utilizing financial covenants.

SMBC is also making steady progress in

rationalizing its credit assessment process. To

respond proactively and promptly to customers’

funding needs—particularly those of SMEs—we

employ a standardized credit risk assessment

process for SMEs that uses a credit-scoring

model. With this process, we are building a

Normal
Borrowers

Debt repayment is likely but this could change in cases of
significant changes in economic trends or business
environment

No problem with debt repayment over the short term, but not
satisfactory over the mid to long term and the situation could
change in cases of significant changes in economic trends or
business environment

Currently no problem with debt repayment, but there are
unstable business and financial factors that could lead to debt
repayment problems

Close monitoring is required due to problems in meeting loan
terms and conditions, sluggish/unstable business, or financial
problems

Borrowers
Requiring Caution

J7R

G7R

(Of which Substandard Borrowers)

Substandard Borrowers

Substandard Loans

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

Bankrupt and
Quasi-Bankrupt
Assets

SMFG 2012

regime for efficiently marketing our Business Select Loan and other

SMBC sets credit risk capital limits for internal control purposes.

SME loans.

Under these limits, separate guidelines are issued for each business

In the field of housing loans for individuals, we employ a credit

unit and marketing unit, such as for real estate finance, fund invest-

assessment model based on credit data amassed and analyzed

ment, and investment in securitization products. Regular monitoring

by SMBC over many years. This model enables our loan officers

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

to efficiently make rational decisions on housing loan applications,

thus ensuring appropriate overall management of credit risk.

and to reply to the customers without delay. It also facilitates the

(b) Controlling Concentration Risk

effective management of credit risk, as well as the flexible setting of

Because the concentration of credit risk in an industry or corporate

interest rates.

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

We also provide loans to individuals who rent out properties

ments measures to prevent the excessive concentration of loans in

such as apartments. The loan applications are subjected to a

an industry and to control large exposure to individual companies or

precise credit risk assessment process utilizing a risk assessment

corporate groups by setting guidelines for maximum loan amounts.

model that factors in the projected revenue from the rental business.

To manage country risk, SMBC also has credit limit guidelines

The process is also used to provide advice to such customers on

based on each country’s creditworthiness.

how to revise their business plans.

(b) Credit Monitoring System

and Returns

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

Against a backdrop of drastic change in the business environ-

the Credit Monitoring System is utilized to reassess obligor grades

ment, SMBC rigorously researches borrower companies’ actual

and review self-assessment and credit policies so that problems

conditions. It runs credit operations on the basic principle of earning

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

returns that are commensurate with the credit risk involved, and

can be taken. The system includes periodic monitoring carried out

makes every effort to reduce credit and capital costs as well as

each time an obligor enterprise discloses financial results, as well

general and administrative expenses.

as continuous monitoring performed each time credit conditions

(d) Prevention and Reduction of Non-Performing Loans

change, as indicated in the diagram below.

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

basic policies to the management of the entire credit portfolio to maintain

and improve its soundness and profitability over the mid to long term.

(a) Risk-Taking within the Scope of Capital

To keep credit risk exposure to a permissible level relative to capital,

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

■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 2012 37

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

Requiring

Caution

Potentially

Bankrupt

Borrowers

Effectively

Bankrupt

Borrowers

Bankrupt

Borrowers

Final

Obligor

Grade

Grading Outlook Assessment

Performance

Trends

Qualitative

Risk

Factors

•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

other instruments to proactively and flexibly manage its portfolio to

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

stabilize credit risk.

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

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

possible loan losses.

and Disclosure of Problem Assets

(a) Self-Assessment

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

borrower category are shown in the table below. As part of our over-

SMBC conducts rigorous self-assessment of asset quality using

all measures to strengthen risk management throughout the Group,

criteria based on the Financial Inspection Manual of the Financial

all consolidated subsidiaries use substantially the same standards

Services Agency and the Practical Guideline published by the

as SMBC for write-offs and provisions.

Japanese Institute of Certified Public Accountants. Self-assessment

is the latter stage of the obligor grading process for determining the

borrower’s ability to fulfill debt obligations, and the obligor grade

Self-Assessment
Borrower Categories

Standards for Write-Offs and
Provisions

criteria are consistent with the categories used in self-assessment.

Normal Borrowers

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

Borrowers Requiring Caution

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

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

Asset Classifications, Defined

Classification I

Classification II

Classification III

Assets not classified under Classifications II, III, or IV

Assets perceived to have an above-average risk of
uncollectibility

Assets for which final collection or asset value is very 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

SMFG 2012

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)

Potentially Bankrupt Borrowers

Effectively Bankrupt/ Bankrupt
Borrowers

General reserve

Notes

Specific reserve

Discounted Cash Flow Method

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

Management Committee. Additionally, at SMBC, the Corporate Risk

accordance with the Banking Act (in which they are referred to

Management Department, which is the planning department of the

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

Risk Management Unit, an independent of the business units that

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

directly handle market transactions, manages market and liquidity

classified based on the borrower categories assigned during self-

risks in an integrated manner. The Corporate Risk Management

assessment. For detailed information on results of self-assessments,

Department not only monitors the current risk situations, but also

asset write-offs and provisions, and disclosure of problem assets at

reports regularly to the Management Committee and the Board

March 31, 2012, please refer to page 167.

of Directors. Furthermore, SMBC’s ALM Committee meets on a

4. Risk Management of Marketable Credit Transactions
Financial products, such as investments in funds, securitized

monthly basis to examine reports on the state of observance of

SMBC’s limits on market and liquidity risks, and to review and dis-

cuss the SMBC’s ALM operation.

products, and credit derivatives, that bear indirect risk arising from

To prevent unforeseen processing errors as well as fraudulent

underlying assets such as bonds and loan obligations, are consid-

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

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

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

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

ments (back office) and the administrative departments (middle

as financial products. This is referred to as marketable credit risk.

office) conduct the checks. In addition, the Internal Audit Unit of

For these types of products, we manage credit risk analyzing

SMBC periodically performs comprehensive internal audits to verify

and assessing the characteristics of the underlying assets, but, for

that the risk management framework is functioning properly.

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.

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

■ 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)

management, SMBC’s Board of Directors authorizes important

Front Office

Front/Middle/Back Offices

matters relating to the management of market and liquidity risks,

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

SMFG 2012 39

3. Market and Liquidity Risk Management Methods

testing results for SMBC’s trading accounts for fiscal 2011 are

(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 2011 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 estimates the maximum

losses that may occur (this is known as the historical simulation

method). This internal SMBC model is evaluated periodically by

an independent auditing firm to assess its appropriateness and

accuracy.

(b) Back-Testing Results

The relationship between the VaR calculated with the model and

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

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 2010, there were no such excess losses during

fiscal 2011. This demonstrates that the SMBC VaR model, with a

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

The market occasionally undergoes extreme fluctuations that

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

tant to run simulations of unforeseen situations that may occur in

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

a monthly basis assuming various scenarios, and has measures in

place for irregular events.

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 2011

Sept. 2011

Dec. 2011

Mar. 2012

Maximum

Minimum

Average

SMFG (consolidated)

SMBC (consolidated)

SMBC (nonconsolidated)

Trading Book

Banking Book

Trading Book

Banking Book

Trading Book

Banking Book

(Billions of yen)

9.0

9.5

10.0

12.6

5.9

8.9

40.4

38.8

36.3

32.0

53.6

31.8

38.9

8.3

8.5

8.9

9.3

11.8

5.4

8.2

39.4

38.0

35.5

31.3

52.2

31.0

38.0

2.1

1.3

3.2

1.2

3.9

1.2

2.3

35.8

34.5

31.4

27.8

47.9

27.6

34.2

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 2012

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

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)

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

1.0

2.0

4.0
3.0
VaR (¥ billion)

Actual Profit or Loss (¥ billion)

■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)

(d) Outlier Framework

In the event the economic value of a bank declines by more than

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

of interest rate shocks, the bank falls into the category of “outlier

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

Total

As of March 31, 2012, the outlier ratio was around 3%, sub-

Actual Profit or Loss (¥ billion)

Actual Profit or Loss (¥ billion)
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
0

observance of those limits in order to control stock price fluctuation

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

■ Decline in Economic Value Based on Outlier Framework

SMBC (consolidated)

SMBC (nonconsolidated)

March 31, 2011 March 31, 2012 March 31, 2011 March 31, 2012

(Billions of yen)

696.4

530.5

141.9

16.0

240.2

144.3

87.3

1.3

660.3

497.4

139.6

15.6

233.9

142.7

85.5

1.1

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

risk.

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

SMBC has been reducing its strategic equity investments and

3.0
4.0
0
the outstanding amount is now significantly below the amount
VaR (¥ billion)

1.0

2.0

1.0

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 consist-

ing of setting funding gap limits and guidelines, maintaining highly

Actual Profit or Loss (¥ billion)

liquid supplementary funding sources, and establishing contingency

4.0

plans.

3.0

2.0

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

funding to cover cash outflows, SMBC sets funding gap limits and
0
guidelines. The funding gap limits and guidelines are set Bank-wide

1.0

-1.0

and for each region, taking into account cash management plans,

-2.0

-3.0

external environment, funding status, characteristics of local cur-

-4.0

rency and other factors. Additionally, a risk limit is set by currency as
0
3.0
2.0
4.0
VaR (¥ billion)
needed to achieve more rigorous management.

1.0

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

manages highly liquid supplementary funding sources, whereby

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

and has emergency borrowing facilities.

In addition, for emergency situations, there are contingency

plans in place for addressing funding liquidity risk that include an

action plan with measures for reducing funding gap limits and

guidelines.

Percentage of Tier I + Tier II

7.8%

2.6%

7.7%

2.6%

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).

2.0

■ Composition, by Industry, of Listed Equity Portfolio

4.0
3.0
VaR (¥ billion)

(%)
25

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(March 31, 2012)

SMBC Portfolio
TOPIX
Nikkei Average

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SMFG 2012 41

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 set forth 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 risks

and a system for executing contingency and business continuity

plans. Based on the framework of Basel II, SMFG has been continu-

ously pursuing sophisticated quantification of operational risks and

advanced Groupwide management.

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’s Board

of Directors. In addition, SMBC has established the system to com-

prehensively manage operational risks by setting up the Corporate

Risk Management Department to oversee overall management of

operational risks together with other departments responsible for

processing risks and system risks.

As the brief overview, this system operates by collecting and

analyzing internal loss data occurred at each department or branch

as well as comprehensively specifying scenarios involving opera-

tional risks based on the operational procedures of each branch on

regular-basis and estimating the loss amount and frequency of the

occurrence of such losses based on each scenario. Risk severities

are quantified for each scenario and for those scenarios having high

severities the risk mitigation plan will be developed by the relevant

department and the status on the progress of such risk mitiga-

tion plan will be followed up by the Corporate Risk Management

Department. Furthermore, operational risks are quantified, and

quantitatively managed by utilizing the collected internal loss data

and scenarios.

These occurrences of internal loss data, severity of scenarios

■SMBC’s Operational Risk Management System

Corporate Auditors

External Audit
(Auditing Firm)

Internal Audit Dept.

Board of Directors

Management Committee

Direction

Reporting

Operational Risk Committee

Audit

Board Member in Charge of Risk Management Unit

Direction

Reporting

Corporate Risk Management Dept.

Supervisor of overall operational risk management
Measurement of operational risk

Feedback of measurement results related to operational risk
Monitoring of progress in risk mitigation plans

Generation of scenarios and development of risk
mitigation actions

Reflection of internal loss data, external
loss data and BEICFs in scenarios

Reporting

Internal loss data

Head Office departments

Consumer
Banking

Middle Market
Banking

Corporate
Banking

Treasury

Investment
Banking

International
Banking

SMFG 2012

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

Audit

Board Member in Charge of Risk Management Unit

Direction

Reporting

Operational Risk Committee

Reporting on operational

risk information,

discussion on measures

for risk mitigation

Corporate Risk Management Dept.

Operational Risk Management Dept.

Measurement of

operational risk

Integrated Operational Risk

Supervisory Dept.

Reporting

Feedback of

measurement

results related to

operational risk

and direction for

risk mitigation

Internal loss data

Head Office departments

Decision and authorization of important matters

related to operational risk management

Reporting on operational

risk information,

discussion on measures

for risk mitigation

Auditing of management

and measurement system

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

and status on risk mitigation are regularly reported to the director in

charge of the Corporate Risk Management Department. In addition,

(2) External Loss Data
External loss data are defined as “the information for events which

there is the Operational Risk Committee, comprising all relevant

other banks, etc. incur losses due to operational risks.”

units of the bank, where operational risk information is reported and

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

effective operational risk management framework. The operational

risk situation is also reported to the Management Committee and

the Board of Directors on a regular basis, for review of the basic

policies on operational risk management. Moreover, the bank’s

independent Internal Audit Department conducts periodic audits to

ensure that the operational risk management system is functioning

properly.

3. Operational Risk Management Methodology
As previously defined, operational risks cover a wide-range of cases,

including the risks of losses due to errors in operation, system fail-

ures, and natural disasters. Also, operational risk events can occur

virtually anywhere and everywhere. Thus, it is essential to check

whether material operational risks have been overlooked, monitor

the overall status of risks, and manage/control them. To this end,

it is necessary to be able to quantify risks using a measurement

methodology that can be applied to all types of operational risks,

and to comprehensively and comparatively capture the status of

and changes in potential operational risks of business processes.

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 risks.

SMFG and SMBC adopted, at the end of March 2008, the

Advanced Measurement Approach (AMA) set forth by Basel II for

calculating capital requirements for operational risks and the AMA

has been utilized for the management of operational risks since then.

The basic framework for quantifying operational risks consists

of internal loss data, external loss data, Business Environment and

Internal Control Factors (BEICFs) and scenario analysis. Out of the

above-mentioned four factors, internal loss data and the results

of scenario analysis (hereinafter, the “assumption data”) are input

into the internal measurement system (hereinafter, the “quantifi-

cation model”) developed by SMBC; and capital requirements for

operational risks and risk asset (capital requirements for operational

risks is divided by 8%) is calculated. In addition, external loss data

and BEICFs along with internal loss data are used for verifying

the assessment of scenarios to increase objectivity, accuracy and

completeness.

SMFG, including the Group companies to which the AMA is

applied, collect the four elements. This is outlined as follows.

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

SMFG incur losses due to operational risks.”

(3) Business Environment and Internal Control Factors

(BEICFs)

BEICFs are defined as “factors affecting operational risks which are

associated with conditions of business environment and internal

control of SMFG.”

(4) Scenario Analysis
Scenario analysis is defined as a “methodology which identifies

assumed cases involving any material operational risks and describe

them in terms of risk scenario, and estimate the frequency and

severity of risk scenarios.” SMFG’s principal business operations are

applicable for this methodology.

The purposes of scenario analysis are to identify any potential

risks underlying in our business operations; to measure risks based

on the possibility of occurrence of the said potential risks; and to

review and execute any required measures. Furthermore, another

purpose of the scenario analysis is to estimate the frequency of low-

frequency and high-severity events for each scenario (which may be

difficult to estimate using internal loss data alone).

(5) Measurement Using the Quantification Model
The quantification model produces the distribution of loss frequency

and loss severity based on the internal loss data and scenario

data; and it also produces the loss distribution based on the said

distribution of loss frequency (distribution of losses in a year) and

the distribution of loss severity (distribution of loss amount per case)

by making scenarios of the various combination of frequencies

and amount of losses according to the Monte Carlo simulations;

and it calculates the maximum amount of loss expected, due to

operational risks, based on the assumption of one-sided confidence

interval of 99.9% and the holding period of one year. The measure-

ment units are SMFG consolidated basis, SMBC consolidated basis

and SMBC non-consolidated basis; and it is measured according

to each of seven event types set forth by Basel II and the capital

■ Basic Framework of Operational Risk Measurement

Internal Loss Data

External Loss Data

Verifi-
cation

Scenario Data

BEICFs

Data
input

Calculation of Capital
Requirements for
Operational Risk
Using Quantification
Model

Risk Mitigation Initiatives

SMFG 2012 43

requirements for operational risks are calculated based on AMA by

simply consolidating the amounts of all event types.

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

The measurement accuracy is ensured by implementing the

processing by employees, accidents, or unauthorized activities.

regularly conducted verifications of the said quantification model at

SMFG recognizes that all operations entail processing risk.

pre- and post-occurrences.

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

Meanwhile, as for the capital requirements for operational risks

our management of processing risk across the whole Group by

of other Group companies not applicable for AMA and in prepara-

ensuring that each branch conducts its own regular investigations

tion to become applicable for AMA, it is calculated according to the

of processing risk; minimizing losses in the event of processing

Basic Indicator Approach (BIA), and the capital requirements for

errors or negligence by drafting exhaustive contingency plans; and

operational risks for SMFG consolidated basis and SMBC consoli-

carrying out thorough quantification of the risk under management.

dated basis are calculated by consolidating such amount calculated

In the administrative regulations of SMBC, in line with

based on BIA with the capital requirements for operational risks

SMFG’s Groupwide basic policies for risk management, the basic

calculated based on AMA.

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

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

and SMBC implement risk mitigation measures for high severity sce-

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

narios. Furthermore, the risk assets calculated by quantification are

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

allocated to each business unit of SMBC and other Group companies

ing risk management requires the approval of both the Management

for increasing awareness of operational risks internally in the Group

Committee and the Board of Directors.

companies, improving the effectiveness of their operational risk man-

In the administrative regulations, SMBC has also defined specific

agement and mitigating operational risks of the entire Group.

rules for processing risk management. The rules allocate processing

■Measurement Using the Quantification Model

Distribution of Loss Frequency

(
f
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q
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c
y
)

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f

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r
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e

0.20

0.15

0.10

0.05

15
Number of incidents/year

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

(
f
r
e
q
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e
n
c
y
)

P
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a
b

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f

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r
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n
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e

0.30

0.25

0.20

0.15

0.10

0.05

Distribution of Loss Severity

Loss per incident

SMFG 2012

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

Total

Sampling of the amounts
of losses corresponding
to the above number of
losses from the distribution
of losses (e.g., 50, 100, 80,
150, 70)

risk management tasks among six types of departments: operations

planning departments, compliance departments, operations depart-

ments, transaction execution departments (primarily front-office

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

departments, and the customer support departments. In addi-

tion, there is a specialized group within the Operations Planning

Department to strengthen administrative procedures throughout the

Group.

Repeat (e.g., 1 million times)

Aggregated Loss Distribution

Frequency x Severity

99.9%

Aggregated annual loss amount

(
f
r
e
q
u
e
n
c
y
)

0.4

0.3

0.2

0.1

P
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o
b
a
b

i
l
i
t
y

o
f

o
c
c
u
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r
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x conversion factor

99.0%

Settlement Risk

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

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

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

and system risk, it requires interdisciplinary management.

At SMBC, the Transaction Business Planning Department acts

as coordinator and works together with the Credit & Investment

Planning Department responsible for credit risk, the Corporate Risk

Management Department responsible for liquidity risk, and the

Operations Planning Department responsible for processing risk to

improve risk management.

5. System Risk Management
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).

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-

terns emerge.

SMFG 2012 45

Corporate Social Responsibility (CSR)

Key Items of CSR Activities
The key items of our CSR activities are as follows:
First, we shall develop a solid management system by improving
and enhancing corporate governance, internal audit, compliance
and risk management systems.

Second, we shall provide greater value for our four major groups

of stakeholders as follows:

• We shall advance together with our clients by providing highly

valued products and services.

• We shall strive to maintain a sound management and maxi-
mize shareholder value by having appropriate disclosure of
information and improving the internal control system.

• We shall strive to contribute to the society and preserve the
earth’s environment by consistently and proactively involving
and participating in the social and environmental activities and
programs.

• We shall promote free-spirited and open-minded business
culture under which individual employees are respected and
allowed to exercise each individual’s full potential.

Lastly, we shall strive to ultimately contribute to the sustainable

development of society through such activities.

■ CSR Values for SMFG

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
environmental
activities and
programs

Corporate
culture respecting
the individuals

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

Contributing to
the Sustainable Development of Society
Today, mankind is faced with diverse issues such as global warming,
rapid population growth, and declining birthrate and aging of the
population in the advanced countries. How can we, as a provider of
comprehensive financial services, contribute to resolving such social
issues for the sustainable development of the society. We believe
that it would be our corporate social responsibility to practice by
asking ourselves what we could and should do.

Basic CSR Policies
SMFG has set forth the definition and common principles for “busi-
ness ethics” for CSR in order to clearly describe and effectively
promote CSR activities in 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.

SMFG’s Group-Wide CSR Philosophy: “Business Ethics”

• 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 2012

Four prioritized issues faced by the Group as a
financial institution
As a comprehensive financial services provider, the Group proac-
tively promotes and pioneers initiatives for resolving four critical
issues which may substantially affect the society (reconstruction for
earthquake damages, environment, declining birthrate and aging of
population and globalization).

(1) Support for Reconstruction for the Great East

Japan Earthquake

The Group shall consistently address and accommodate major
issues for reconstruction of the areas affected by the earthquake
by partnering with diverse stakeholders such as businesses, local
governments and Non-Profit Organizations.

For details, please see page 59 (earthquake disaster recovery

support activities).

(2) Environment
The Group shall strengthen diverse initiatives, not limited to achiev-
ing the low-carbon society, but also resolving issues associated with
water, soil contamination, energy, biodiversity, etc.

For details, please see pages 53-55 (environmental activities).

(3) Declining birthrate and aging of population
The Group shall contribute to developing initiatives which allow
senior citizens to have comfortable and active lives. In anticipation
that many employees may be involved with raising children and
caring for the elderly, the Group shall also enhance the system and
culture which support employees being able to balance work and to
raise children/caring for elderly.

For details, please see page 59 (declining birthrate and aging of

population).

(4) Globalization
In anticipation of further business development in the international
society, the Group is moving forward with globalization in Japan and
overseas. As for CSR, we strive to improve sharing of information
and to enhance cooperation with overseas branches to commonly
share diversity in thinking in Japan and overseas.

Support for initiatives in Japan and overseas
As a corporate citizen of the global society, SMFG is fully aware of
the social impact of the financial institution, and it shall support the
following initiatives in Japan and overseas (the action guidelines for
the corporate activities and principles).

Initiatives supported by SMFG in Japan and overseas

• United Nations Global Compact

Ten principles proposed by the United Nations concerning human rights,

labor, environment and corruption prevention

• UNEP Finance Initiative (UNEP FI)

Organization which pursues, develops and promotes the ideal financial

institutions which pay attention to the environment and sustainability.

• CDP (Carbon Disclosure Project)

Initiatives which measures, manages and reduces effects of climate changes

by prompting institutional investors and business managers to have

dialogues regarding such climate changes

• Equator Principles

Environmental and social standards which are set forth based on the

International Finance Corporation (IFC) guidelines for project finance projects

• Principles for Financial Action toward a Sustainable Society

(Principles for Financial Action for the 21st Century)

Principles of action for financial institutions in Japan for the purpose of

expanding and improving the quality of environmental finance

Integral Implementation of CSR Activities and
Business Strategies
CSR activities are the foundation for SMFG Group’s business strate-
gies as well as the management policies and goals.
We consistently verify and confirm whether the direction of
business strategies of maximizing the “Spirit of Innovativeness,”
“Speed” and “Solution & Execution,” promoted by the Group, is
appropriately reflecting the basic CSR policy in our management
policies of “becoming a globally competitive financial group with
the highest trust of our clients and stakeholders.” Furthermore, we
properly reflect needs of our clients and society in our CSR activities.
Completely and fully achieving CSR is truly the “management itself,”
and we also believe that seriously committing to the implementation
of CSR is thought to be the shortest path for achieving our manage-
ment policies and goals.

Strengthening CSR management by utilizing the
ISO26000 standards
The Group manages CSR by regularly having discussions with each
group company led mainly by the “Group CSR Committee.” The
research and study sessions regarding the international guidance
standards of “ISO26000” (promulgated in November 2010) have
been conducted starting December 2010 at the CSR liaison com-
mittee meetings held by CSR officers of each group company. The
measures taken by SMBC for main issues are discussed at these
research and study sessions for effectively achieving the CSR man-
agement while further comprehending the guidance standards.

SMFG 2012 47

Initiatives for Enhancing Customer Satisfaction (CS) and Quality

The bank has set up the Quality Management Dept. which
is responsible for developing plans and preparing systems for
improvement of CS and Quality. Additionally, this department holds
meetings for the “CS and Quality Improvement Committee,” which is
chaired by the President, to discuss appropriate cross-departmental
measures for the entire bank in order to achieve greater satisfaction
by customers.

Clients always come first
SMBC sets forth detailed action principles under the “Clients
always come first” of the “Compliance Manual,” along with the
above-mentioned “Management Principles,” in order to enforce
the attitude of “Clients always come first.” Furthermore, the
bank raises awareness for the attitude of “Clients always come
first” for all employees through group training seminars and
study sessions conducted at branches. During such training
seminars and study sessions, the bank specifically incorporates
clients’ opinions and requests for the implementation of “Clients
always come first” attitude into daily business activities.

SMFG strives to improve CS and Quality of the entire Group and
to become the “highly-trusted” financial services group, through
implementation of such measures.

SMFG’s Initiatives
SMFG shall implement measures to improve CS and Quality while
cooperating among group companies by setting forth the “To found
our own prosperity on providing valuable services which help our
customers to build their prosperity” as one of our management
principles.

SMFG regularly holds meetings for the “Group CS Committee”
which is chaired by the senior management executive of the plan-
ning section of the Group for promoting cooperation among group
companies. The committee discusses and exchanges opinions and
ideas regarding opinions and suggestions received from our clients
or CS promotion policies, and it strives to further improve CS and
Quality of the entire Group.

Measures Taken by SMBC
The head office of SMBC analyzes opinions and suggestions
received from our clients and proactively incorporates such opinions
and suggestions received from our clients into our management
and training seminars for employees for improvement of products
and services based on such analysis.

Responding to customers’ opinions and requests
The customers’ opinions and requests, which are received at
branches or made through our toll-free telephone service, are col-
lected and registered into the database for “Voice of the Customers”
(VOC), along with data received from CS surveys and questionnaires
conducted by our bank. The said registered data are widely shared
among all departments of the Bank.

Based on such registered data for VOC, there may be cases
in which the head office departments may advise branches, review
individual products and services, or consider measures to be taken
for the entire bank.

■ Measures to improve Customer Satisfaction (CS) and Quality of the Bank

Toll-free telephone service (domestic calls only), CS surveys and questionnaires

Customers

Opinions

Input

Voice of the
Customers (VOC)
Database

Analysis

Guidance at the branch

Branches
and other
offices

Response

Improvement of products and services

Management Principles / Compliance Manual

Training seminars and study sessions

Head office
departments

Reports

CS and
Quality
Improvement
Committee

Quality
Management
Dept.

Directives

SMFG 2012

Corporate Governance

Our Position on Corporate Governance
SMFG and its Group companies follow the SMFG manage-
ment philosophy set forth as the universal guide for the Group
management and consider this philosophy as the foundation for
any corporate activities. We believe that the strengthening and
enhancement of corporate governance is one of the top priori-
tized issues in order to achieve the management philosophy.

The SMFG Corporate Governance System
SMFG implements the corporate auditor system, whereby
six corporate auditors are appointed, out of which three are
outside auditors. The said appointed corporate auditors audit
business operations of SMFG and subsidiaries by attending
important meetings including the Board of Directors meetings
and receiving reports from directors on the business opera-
tions and reviewing material documents for major business
decisions while reading reports on interviews conducted by the
internal audit department, subsidiaries and external accounting
auditors.

As for the Board, the chairman of SMFG serves as the
chairman of the Board of Directors for SMFG. The role of the
chairman is clearly separated from responsibilities of the presi-
dent who oversees the overall business operations.

Furthermore, the establishment of internal governance com-
mittees under the Board and appointment of outside directors
enhance the effectiveness of the Board.

The Board set up

internal committees:

the
four
Auditing Committee, the Risk Management Committee, the
Compensation Committee, and the Nominating Committee. All
three outside directors have been appointed for these com-
mittees in order to objectively oversee corporate governance.
As the objectivity is explicitly required for both Accounting
Committee and Compensation Committee, the outside directors
are appointed to further enhance such required objectivity.

The outside directors, who are expert professionals (certified
public accountants, attorneys, business management con-
sultants), are selected to ensure the execution of the Group’s
business operations in conformity with both legal regulations
and generally accepted practices.

The Group Management Committee is set up under the
Board to serve as the top decision-making body. The Group
Management Committee is chaired by the president of SMFG
and the directors are appointed by the president.

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 Group Strategy Committee is set up for matters related
to business plans of each Group company and to exchange
opinions, discuss and report on the management of SMFG and
each of the Group companies.

Furthermore, ten directors (out of which three directors are

outside directors) out of twelve directors (out of which three
directors are outside directors) of SMFG also serve as the
directors for SMBC to oversee its business execution. As for
the four major Group companies of SMFG Card & Credit, Inc.,
Sumitomo Mitsui Finance and Leasing Co., Ltd., The Japan
Research Institute, Limited and SMBC Consumer Finance Co.,
Ltd. (formerly known as Promise Co., Ltd until the end of June,
2012), the SMFG directors also serve as the directors for each
of these subsidiaries to oversee their business.

Furthermore, in order to maintain the sound management,
SMFG sets forth a system, which firmly maintains the appropri-
ateness of SMFG’s business operations, as the internal control
regulations, pursuant to the Japanese Company Law; and
SMFG considers that the development of a solid management
system is an important management issue by further improving
the internal control system.

The SMBC Corporate Governance System
SMBC implements the corporate auditor system by appointing
six corporate auditors, out of which three corporate auditors are
outside auditors. SMBC implements the executive officer system
by dividing functions of “business execution” and “overseeing
function” in order to increase the transparency and soundness of
management. The executive officers execute business operations
and the Board serves mainly as the overseeing function.

The chairman of the bank also serves as the chairman of the
Board; segregates his functions and duties from the president of
the bank who controls the overall business operations; does not
concurrently hold the position of executive officer; and mainly
oversees the business execution. Furthermore, SMBC further
strengthens the overseeing function by appointing three outside
directors out of eighteen directors for the bank.

The executive officers, who manage business operations,
are appointed by the Board. There are a total of seventy-two
executive officers, including the president, as of June 30, 2012
(out of seventy-two executive officers, thirteen executive officers
concurrently serve as directors).

The Management Committee is set up under the Board
to serve as the highest decision-making body for the bank.
The Management Committee is chaired by the president of the
bank, and the executive officers are appointed by the president.
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.

Furthermore, pursuant to the decisions made by the Board,
the president designates certain members of the Management
Committee to be Authorized Management Committee members
in charge of particular Head Office departments or units. All of
these designated individuals are in charge of implementing the
directives of the Management Committee within the businesses
they oversee.

SMFG 2012 49

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,
the Internal Auditing Committee is set up as part of the
Management Committee, taking into consideration its critical
role and responsibility for the internal audit for the management,
in order to effectively facilitate the internal audits. The Internal
Auditing Committee meets every quarter, and its members
discuss on important internal auditing matters based on reports
prepared by the departments responsible for conducting internal
audits. Under such structure, the Audit Department is set up as
the independently operated internal auditing unit of the Group.

The Audit Department conducts internal audits on the oper-
ations of all of the Group’s units and departments for optimal
management, proper operations of the Group and the sound-
ness of their assets. These audits also have the functions of
verifying whether the Group’s internal control systems, including
compliance and risk management, are appropriately and effec-
tively operated. Additionally the Audit Department is responsible
for the overall supervision of the internal audit systems of the
Group companies, for its appropriateness and effectiveness
by verifying the accumulated internal audit data and monitoring
activities, including inspections and any other activities based
on the actual sample data; and conducting audits as deemed
necessary. Based on these activities, the Audit Department
provides recommendations and guidance to the business units
and departments as well as to the Group companies.

At SMBC, we have established the Internal Audit Unit which
is independently operated from other business activities. Under
the said Internal Audit Unit, the Internal Audit Department and
the Credit Review Department are set up. Similarly for SMFG,
SMBC also sets up an Internal Auditing Committee, which is
responsible for discussing and reporting important matters
proposed by the Internal Audit Unit, as the committee partially
constituting its Management Committee.

The Internal Audit Unit is responsible for auditing compli-
ance and risk management at SMBC (head office departments,
domestic and overseas branches) and SMBC Group compa-
nies. The audit of operations of the head office departments
is conducted by assessing for appropriateness of overall
internal control systems of each department, in perspective of

functionality of procedures for the “Plan, Do, Check and Act”
(PDCA) method. In addition to these individual audits for each
department, we also focus on specific businesses or specified
critical issues associated with risk management to conduct
the “Audit of Targeted Items” for verifying the bank’s overall or
cross-departmental conditions of the internal control systems.
Moreover, audits of branches and offices are not limited
to simply inspecting for any inadequacies but also specifying
and pointing out issues for the overall internal control systems,
including any problem items associated with compliance and
risk management; and making proposals for improvement mea-
sures or corrective actions.

For other Group companies, internal audit departments
have been set up according to the respective business charac-
teristics of such Group companies.

Initiatives to Enhance the Sophistication and
Efficiency of Internal Audit
The Audit Department has adopted methods in accordance
with the standards of the Institute of Internal Auditors (IIA)*, an
international organization. The Audit Department conducts risk-
based audits and the Group companies also conduct the same.
The Audit Department, as the controlling department for
the Group’s overall internal audit systems, strives to enhance
the expertise of internal auditors such as collection of internal
and external up-to-date information related to internal audit
and forwarding such information to the Group companies;
implementation of seminars conducted by outside profession-
als for the Group companies; and promoting the acquisition of
international qualification for internal audit.

Also, the Audit Department organizes training programs
taught by outside experts for the staff of the Group companies,
encouraging them to learn international standards to enhance
their professional knowledge and skills for internal audit. To
further improve the effectiveness of audit, we also proactively
take measures on a group-wide basis to assess the quality of
our internal audit while taking into account the 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 2012

Compliance

Compliance Systems at SMFG

Basic Compliance Policies
SMFG strives to further strengthen its compliance systems in
order to be able to fulfill its public mission and corporate social
responsibilities as a financial services group offering diversified
products and services for becoming a truly outstanding global
corporate group.

For compliance policies, SMFG sets forth its “Business
Ethics” (on page 46) 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 in Compliance Perspective
As a financial holding company, SMFG strives to maintain a
compliance system which provides the appropriate direc-
tions, guidance and monitoring for 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. For fiscal 2012, we
are focusing on the following issues to further strengthen the
compliance-related management of the Group companies:
(a) Direction and management of Group companies for further
development of business operations; and (b) Strengthening of
the compliance system on a consolidated basis.

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 activities 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
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 or 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 adequate information is not
provided.

* 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*, SMBC Consumer Finance, Sumitomo Mitsui Finance and Leasing,
JRI, SMBC Friend Securities, and SMBC Nikko Securities

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

SMFG 2012 51

any transactions associated with anti-social organizations; and
improvement of overseas compliance system.

Appointment of Compliance Officers
In addition to appointing compliance officers to each branch and
department of the bank, the “Area Compliance Officers”, who
independently operate from areas of business promotion, are
appointed for the Middle Market Banking Unit and Consumer
Banking Unit of branches and offices to directly supervise and
manage compliance activities.

Set up 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 compre-
hensively 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 received 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:

Mondays through Fridays
(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:

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

Compliance Systems at SMBC

Strengthening the Compliance System
It is generally required for all corporations to be in compliance
with laws, regulations and other social standards. It is essential
for banks to be fully in compliance to fulfill their public missions
and corporate social responsibilities as financial institutions.

In accordance with the basic policies of SMFG, SMBC
requires its management and staff to give utmost consideration
to people’s trust in the Bank, abide by laws and regulations,
maintain 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 any other
related ordinances, and elimination of anti-social organizations.

Compliance System and its Management
The basic structure of SMBC’s compliance system is a dual
structure whereby firstly, each department and office will be indi-
vidually responsible for making preliminary decisions to ensure
that its conducts are in compliance with laws and regulations,
and secondly, an independent Internal Audit Unit will conduct
impartial audits of observance of the compliance system by
individual departments and offices.

In order for the basic dual structure to be maintained and
to effectively function, the Compliance Unit, consisting of the
General Affairs Department and the Legal Department will, at
the direction of management, plan and promote systems to
ensure observance of the compliance system. The Compliance
Unit will issue instructions to and monitor the conduct of each
department and office in SMBC, and assist such department
and offices to make appropriate judgments regarding their
observance of the compliance system.

SMBC commits to the following operations for the said

compliance structure to work effectively.

Preparation of a Compliance Manual
SMBC has prepared its Compliance Manual by stating its objec-
tives, guiding rules and 60 rules of action in order to assist the
management and staff in selecting optimal actions. This manual
has been approved by the Board of Directors.

Development of Compliance Program
The Board of Directors develops the detailed annual plan for
compliance-related activities for each fiscal year, including
amendments to the rules and regulations, training, etc. for the
effective operation of the compliance system for SMBC and
its consolidated subsidiaries. Especially during fiscal 2012,
SMBC proceeds to strengthen overall compliance system to
promptly respond to any environmental changes, such as the
further development of a system for sales of financial instru-
ments; strengthening of measures for anti-money laundering
or financial crimes; strengthening of the system to eliminate

SMFG 2012

Environmental Preservation Initiatives

Basic views for environmental preservation

The Group recognizes environmental preservation as one of its most important management issues. Based on our Group Environmental
Policy, we are implementing initiatives to preserve the natural environment and achieve the corporate harmony.

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 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: 1) “Reduction of impacts on environment,” 2) “Management of environmental
risks,” and “Promotion of environmental businesses.” We have set environmental objectives for each environmental activity and follow
the procedures of Plan, Do, Check, and Act (PDCA) for such environmental activities.

Environmental Management System (EMS) based on ISO14001 certification
The environmental management certification of ISO14001 has been obtained by SMFG and its major companies (SMBC, Sumitomo
Mitsui Card, Sumitomo Mitsui Finance and Leasing (SMFL), Japan Research Institute (JRI), SMBC Friend Securities, and SMBC Nikko
Securities). In 1998, SMBC was the first bank in Japan to obtain this certification. The Group has developed the structure to promote
EMS which is organized and managed mainly by the Corporate Planning Department and senior environmental officers.

Signing of the “Principles for Financial Actions
(the principles for financial actions for the 21st
Century) for achieving the sustainable society”
“Principles for Financial Action towards a Sustainable Society”
were adopted in October 2011, by SMBC, SMBC Friend
Securities, SMBC Nikko Securities, Minato Bank, Kansai Urban
Banking Corporation (KUBC), and Japan Net Bank.

The principles have been set forth by the Drafting Committee
for the Japanese version of PRI after having seven meetings
which started in September 2010, attended and participated
by diverse financial institutions including SMBC, SMBC Nikko
Securities, for the purposes of making the environmental financ-
ing widely-known and improving the quality of environmental
financing.

The Group continues to expand its environmental financing

activities in Japan based on these principles.

Environmental Action Plan and PDCA Procedures

The Group Environmental
Policy

Implementation of
environmental initiatives

Reduce environmental
implications

Manage environmental risks

Promote environmental
businesses

SMFG

PLAN

CHECK

ACT

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 2012 53

SMFG Card & Credit

SMBC

Sumitomo Mitsui Card

SMBC Friend Securities

Japan Research Institute

Sumitomo Mitsui

Finance and Leasing

Corporate Planning Dept.

General Affairs Dept.

Operational Section

SMBC Nikko Securities

Communications Dept.

Managing Environmental Risks
• Environmental and social risks in loan (credit) activities

SMBC believes it is important to take into account the envi-
ronmental risks for conducting credit assessment. Factoring
environmental risks in the credit assessment (environmental
Credit risks) is stipulated in SMBC’s Credit Policy, which sets
forth the universal and basic philosophies, guidelines and rules
for credit operations. For example, to deal with the risks of soil
and asbestos contamination in real estate pledged as collateral,
SMBC requires contamination risk assessment for such real-
estate collateral meeting certain criteria. If contamination risks
are found to be high, the assessed value of the potential risks
will be deducted from its value. Furthermore, our Credit Policy
clearly stipulates that the credit, which is used for the produc-
tion of cluster bombs, is prohibited.

• Managing environmental and social risks in extensive devel-

opment projects

Extensive development projects may have significant impacts
on environmental society. Accordingly, the international society
requires financial institutions to conduct a thorough review of
impact which such projects may have on the environment and
the society when providing financial support.

SMBC has adopted the Equator Principles which pledge
to the society that financial institutions shall thoroughly review
impact of extensive development projects on the environment
and the society when providing financial support for such proj-
ects. The Environment Analysis Department has been estab-
lished to assess the environmental risks.

• Lawful disposal of properties at the expiration of leases

SMFL is completely in compliance with environment-related laws
and regulations to prevent contamination of the environment
due to illegal disposals of industrial waste materials triggered by
the expiration of leases. In addition, multi-phased assessment
mainly in terms of compliance, local research and interviews are
conducted annually in order to prudently select the most appro-
priate company which handles transportation and disposing of
waste materials at the time of expiration of lease.

Environmental Businesses
• Environmental contributions through core businesses

The Group considers that environmental businesses are means
to preserve and improve the global environment while pursuing
its core business operations as a financial institution. SMBC
has been regularly holding the cross-organizational “Eco-biz
Promotion Council,” starting from fiscal 2005, for the devel-
opment of advanced and efficient products and services.
Presently, each of group companies has become a member of
this Conference for participating in periodical discussions.

Reducing Environmental Impact
• Initiatives for Carbon Neutrality

SMBC has made its Head Office “carbon neutral” through the
purchases of “green energies and carbon credits*.” Tokyo and
Osaka head offices of SMFL are also carbon neutral.

In addition, SMBC Friend Securities is proceeding with
converting its corporate vehicles into more environment-friendly
vehicles while making the rest of unconverted vehicles carbon
neutral for the amount equivalent to CO2 emitted.

* In general, the “carbon credits” are also referred to as “emission allow-

ances.” In this annual report, we use “carbon credits.”

• Promotion of IT greenization of financial systems

SMBC is moving forward with IT greenization of terminals and
ATMs at branches. The new “CUTE” terminals installed at
branches, which were jointly developed by NEC Corporation
and Oki Electric Industry Co., Ltd., realize the paperless environ-
ment by electronically converting and processing hard copies of
records and data/information such as ID documents and ATM
transaction details (ATM journals). This process electronically
converts the amount equivalent to approximately 3.1 million of
A4-sized papers annually to achieve paperless environment.

SMBC donated part of the costs saved by the installation
of CUTE to the Tokyo Metropolitan Government’s Green Tokyo
Fund, specifically for the “Creating Umi-no-Mori (Sea Forest)”
project. We also gave a donation to the University of Tokyo’s
“Life in Green Project” for the construction of research facilities
for botanical studies.

• Proactively using clean energies

In December 2011, we reopened the
SMBC branches in Shimo-Takaido
(Tokyo) and Konan (Hyogo) after con-
verting them into environment-friendly
model branches. The discarded forest
thinning was partially used for the
architectural design of these building
structures of two branches. The exterior
walls were built by utilizing green plants;
the roofs were installed with solar panels
and light collecting equipment; and the interiors were installed
with LED lighting and energy-saving air-conditioning facilities.

The environmental systems will be regularly inspected for
the degree of effectiveness for environment-friendliness and
those facilities and equipment which are highly effective for
environment-friendliness will be considered for the installation
for new buildings in the future.

Solar power equipment was installed on the roof of the
Group’s principal computing center in June 2012, as a part of
the voluntary energy-saving measures.
We began using the new system starting July 2012.

SMBC Friend Securities converts its branches to more
environment-friendly interiors such as tiled carpets made of
materials which have carbon credits, at the time of relocation or
renovation.

SMFG 2012

Initiatives for Environmental Businesses by Group Companies

Company

SMFG

Program / Product

“SAFE,” corporate environmental
magazine
SMFG Environmental Business Forum

SMBC*1 /
JRI*2
SMBC

SMBC Environmental Assessment
Loans and Private Placement Bonds

SMBC-ECO Loan

Ministry of the Environment and
Ministry of Economy, Trade and Industry
subsidized-interest financing program
Carbon-credits related business
activities (advisory and consultation
services)

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

Environmental campaign program for
JGBs for individuals

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

eco japan cup

Description

Started in 1996, this bimonthly magazine contains interviews with top management of environmentally advanced companies, analyses of busi-
ness trends, and other beneficial information for corporate environmental activities. It can be viewed online at SMFG’s website (in Japanese).
SMBC organized the major three-day event at Eco-Products, one of Japan’s largest environmental exhibitions. Over 1,000 business meetings
were arranged under themes of “energy” and “environment,” with participants, including companies from South Korea and Singapore, in the
international business-matching activities.
Terms and conditions for loans and bonds are set forth according to the assessment conducted pursuant to the environmental assessment standards
originally created by SMBC and JRI, and SMBC determines terms and conditions for the loan or bond according to the results of such assessment.

This loan product offers reductions of interest rates up to 0.25% for SMEs certified with environmental management systems by more than 20
organizations, including NPOs and local governments.
Under this program, companies may conditionally receive loans from financial institutions, with interest subsidized by the government, to finance
capital investment which reduces CO2 emissions. SMBC supports companies taking environmental initiatives as one of the financial institutions
authorized to provide loans under this program.
SMBC supports and advices clients, who may have needs for carbon-credits for their businesses with overseas companies, by providing them with
business contacts in developing countries, giving advices and financing for their transactions.
SMBC has the consulting company as its subsidiary in Brazil which supports the development of Clean Development Mechanism (CDM) projects; and
it also invests in and provides environmental advice on the sustainability funds managed by Banco Nacional de Desenvolvimento Econômico e Social.
SMBC was the first bank to become the carbon-credits trader in June 2009 and began trading carbon credits directly with clients.
In March 2012, the bank executed a Memorandum of Understanding with the development bank of Mongolia for financial cooperation for
financing environmental and infrastructure projects which reduce emissions of global warming gases. SMBC continues to develop the solid
global network by similarly executing MOU with local financial institutions and economic organizations in Philippines, Brazil and other countries
for the promotion of financing for renewable energies projects and carbon-credits trading businesses.
We have contributed to global environmental protection by: 1) trading the amount equivalent to 100kg of carbon credits; and 2) forestation in the
area equivalent to 1m2 per each individual who purchased JGBs. Concurrently, we also have initiatives for supporting the recovery and reconstruc-
tion of areas affected by the Great East Japan Earthquake by obtaining the partial domestic credits generated from northeastern Japan.
This fund invests in shares of companies located in countries where high growth is anticipated through their environmental preservation
activities, focusing on “green new deals” for economic recovery based on measures required for global environment.

This fund is the first fund in the world to invest in green bonds issued by the World Bank (data provided by Nikko Asset Management Co., Ltd.).
A portion of earnings from the fund is donated to the Japan Committee for UNICEF and the Japanese Red Cross Society to be used to resolve
any social conflicts around the world.
The fund invests in a certain class of World Bank-issued green bonds.
This is the contest for selecting and recognizing companies which have practical environmental technologies and ideas. SMBC also makes
arrangements for venture companies to conduct research and development jointly with Japanese universities and contribute to research grants.

Carbon-neutral leases

Proposals for energy-related policies

Amendment to the Act on the Rational
Use of Energy
Trading of used machinery and
equipment
Promotion of CSR and environmental
management
Environmental advisory business

The first new business in the leasing industry started in August 2007 of providing services to make greenhouse gasses emitted by the use of
leased assets carbon neutral by allocating carbon credits.
SMFL is strengthening its consulting services to appropriately respond to the Amendment to the Act on the Rational Use of Energy, and it also
plans to propose comprehensive energy-saving solutions by leveraging the lease.
Machineries and facilities with expired leases or those purchased back from clients are sold by SMFL to other clients who may need such machineries or
facilities. Through such purchases and sales, SMFL strives to become the environment-friendly leasing company committed to recycling and reusing.
JRI supports companies for their CSR and environmental management by assisting them with the development of CSR management strategies
and conducting carbon-credit research and investigation.
JRI manages many new environment-related projects mainly focusing on energies and waste disposals. It strives to contribute to resolving
issues associated with global warming and development of businesses contributing to environment, rather than developing new businesses.
It makes proposals for policies such as how the next-generation energy systems should be; the road map plan for separating the generation and
transmission of electrical power; or how the electric power portfolios should be based on the projection of demand and supply of power until 2030.
Cooperation with the Eco-Point program We participate in the eco-points business promoted by the Ministry of Environment and we also provide Sumitomo Mitsui VISA Gift Cards as
gifts in exchange for eco points accumulated for the said eco-points business. Furthermore, we also donate the amount equivalent to 0.1% of
the face value of the said Gift Cards to non-profit organizations, for plantation in deforested areas and other environmental protection activities.
SMCC is proactively promoting the use of online account statements (breakdown of credits and debits is e-mailed and the details are posted on
its website) for conserving paper and helping to reduce CO2 emissions.
We issue socially contributing environmental credit cards such as “Chikyuni Yasashii Card” and “Cedyna Card AXU,” and the part of payments
for such cards are donated to environmental preservation organizations.
SMBC Friend marketed the World Bank green bonds issued by the World Bank in November 2011. The funds raised by such bonds are to
support projects which respond to preventing global warming and resolving any issues originated from global warming, in accordance with the
assessment standards set forth by the World Bank.
Promoting the usage of online account statements

Issuance of socially contributing
environmental cards

Web Registration Campaign

Nikko*3

SMBC /
Nikko

SMBC /
SMFL*4
SMFL

JRI

SMCC*5

SMCC /
Cedyna
Cedyna

Friend *6 World Bank green bonds

Electronic statement service

Friend /
Nikko
Minato*7 Minato Eco-Monogatari Carbon Offset

Time Deposits

KUBC*8

Minato ECO Loan / Private Placement
Bond
Eco-Time Deposits
Support for Power-Saving Measures
Housing loans for smart homes

Donation of the part of housing loans to
environmental fund

“Forestry carbon offset usage fee,” a sum equivalent to 0.05% of ¥6 billion (an amount of money to be raised), will be released by Minato
Bank. The money released will be used to maintain the forest environment in Hyogo Prefecture through Hyogo Prefectural Federations of Forest
Owners Cooperative Associations.
In certain cases, Minato Bank offers preferential interest rates for loans and preferential underwriting fees for private placement bonds only for
corporations which have obtained the certification for environmental management system.
KUBC supports households in saving energies by offering them with special interest rate for their deposit as long as they fill out the designated
“energy-saving checklist.”
It is now possible for KUBC to offer the same terms and conditions such as loan term and interest rate for loans for purchasing homes pre-
installed with solar power generation systems or for costs for installation of such systems. The bank is committed to supporting the adoption of
solar power and revitalization of the housing market.
KUBC donates a certain percentage of the housing loans used to purchase the homes installed with specified solar power generation systems in the subdivisions
in the Katata district of Otsu-city in Shiga prefecture to the Ohmi Environment Conservation Foundation which is dedicated to preservation of Lake Biwa.

*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 Card Company, Limited *6 SMBC Friend Securities Co., Ltd. *7 THE MINATO BANK, LTD. *8 Kansai Urban Banking Corporation

SMFG 2012 55

Social Contribution Activities

Fundamental approach for social contribution activities
SMFG and its Group companies recognize that it is important to consider the public nature of the financial institution and contrib-
ute to the development of society through business operations. In addition to the contribution to society through daily business
operations, we should act as a “responsible corporate citizen” by engaging in activities which may assist in making the better
society in the future. SMFG and its Group companies will pursue diverse social contribution activities in order to fulfill responsibili-
ties as a “responsible corporate citizen.”

Policy for social contribution activities
SMFG and its Group companies fully understand their roles as responsible corporate citizens, and perform social contribution activi-
ties for realizing a prosperous and sustainable society. We continue to plan and execute social contribution activities as the corporate
citizen while supporting volunteer activities of employees, in order to proactively perform social contribution activities.

The backbone for our social contribution activities
SMFG and its Group companies consider the following four areas as the core areas for social contributions activities:

1) social welfare; 2) local and international communities; 3) the environment; and 4) cultures, arts and education.

Social Welfare Activities
• Collection and Donation of Mistakenly-Written Postage-

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

• Group Blood Donation Program

SMBC, Sumitomo Mitsui Card, SMBC Consumer Finance and
SMBC Nikko Securities encourage employees to donate their
blood at the workplace. The total of 785 employees from four
companies participated in this program in fiscal 2011.

• Installation of Charitable Vending Machines

The head office of SMBC is installed with vending machines for
the program which make contributions to welfare organizations
every time a drink is purchased from these vending machines.
The bank also sells products made by organizations which
assist and support the physically-challenged.

Local and Overseas Communities

• SMBC Volunteer Fund

SMBC has a system for volunteering employees to have ¥100
deducted from their monthly salaries to donate to volunteer orga-
nizations. Over 12,000 employees participate in this program, as of
May 2012. The organizations are selected based on thorough inves-
tigations and discussions by the panel of experts and volunteering
employees. In fiscal 2011, donations were made to 28 organizations
which work to resolve issues for economical difficulties in Japan and

SMFG 2012

overseas.
Overseas

• The school meals program
for elementary schools in
Burkina Faso support basic
healthcare
in Southern
Sudan; needlework train-
ing in Myanmar supports
revenue-raising activities; and
the establishment of literacy infrastructure environment in
Cambodia, as well as other projects.

Japan

• The operations of shelter program to protect children who are
victims of abuse, hospices for children, and support projects
for asylum seekers to become self-supportive in Japan.

918 employees of the Group company, Sakura KCS (approxi-
mately 80% of the company’s total employees), have volunteered
(as of March 2012) for welfare and environmental contribution
activities.

• Opening of Emergency Accounts and Accepting

Donations for Major Disasters

SMBC has set up an account having no transfer charges
through which clients may make donations in the event of
major disasters in Japan and overseas. Concurrently, it encour-
ages employees of SMBC and the Group to make donations.
Since fiscal 2011, donations have been accepted after the
Kii Peninsula was hit by Typhoon No. 12 and the areas were
affected by the Great East Japan Earthquake. The bank also
transferred donations collected for northern and central parts of
Thailand affected by the recent flooding in that area.

•Pro Bono Activities

The bank is also engaged in pro bono activities in which volun-
teers offer their business and professional expertise and skills
for the public. In fiscal 2011, the bank supported three non-
profit organizations dedicated to revitalizing the economy of the
Kansai region and resolving social issues through employees

offering their time for pro bono activities. SMBC launched
programs such as giving advice about managing donations in
fiscal 2012 as part of the pro bono project, and helped three
non-profit organizations to obtain and maintain the certification
given to the certified non-profit organization status.

•Activities of YUI, SMBC’s Volunteer Organization

SMBC also provides support through the volunteer activities
of YUI, an in-house volunteer organization which provides
opportunities for SMBC employees to plan and perform volun-
teer activities. YUI regularly performs volunteer activities in the
community, including social events at schools for the hearing-
impaired, beach cleaning, and the singing performances for
senior citizens.

•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-ups of the local environment of such as parks and other
areas in the vicinity of SMBC branches, and participation in local
festivals and events. Similarly, SMBC Nikko Securities is proac-
tively involved in local clean-ups and volunteer activities.

•Development of “Customer Service Plaza”

SMBC Consumer Finance considers that it is its social responsi-
bility to take measures for assisting people having problems with
accumulated debts. We have created offices called “Customer
Service Plaza” in 21 locations throughout Japan as the office
to communicate with the local community. The services include
counseling, social contributions and local relations. We strive to
make these offices as the places where local community mem-
bers may casually consult on any financial matters. We also
offer seminars and events providing consultations on borrowing,
debt repayment and other money matters; counseling services;
and advising on problems with money which may be originated
from suspicious activities.

•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 installs donation boxes for foreign currency coins at
the entrances of all manned branches and offices in Japan,
encouraging clients to donate, and it sorts such collected coins
by each currency for delivery to UNICEF.

•Support through Products and Services

SMBC offers clients the ordinary deposit account of which the
accrued interest (after tax) is donated to the UNICEF Donation
Account, and SMBC also matches the donations to the amount
donated by its clients.

Sumitomo Mitsui Card collects donations from cardholders
through the World Gifts Point Service of VJA group companies,
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 com-
pany. It also accepts online credit card donations and credit
card payments of other social contributions and donates a
portion of credit card payments made by clients 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

The head offices of SMBC, Sumitomo Mitsui Card and SMFL
participate in the program which provides donations to the
nonprofit organization of the “TABLE FOR TWO International” to
fund school meals in developing countries, for every low-calorie
meal ordered for lunch. SMBC, Sumitomo Mitsui Card, SMFL,
SMBC Friend Securities and SMBC Nikko Securities have also
installed vending machines which sell drinks donating part of
their sales to TABLE FOR TWO International.

•Social Contribution Activities of In-House Foundations

SMBC Global Foundation, based in the United States, has
provided scholarships to more than 6,000 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 the participa-
tion in school beautification programs by volunteers from SMBC
and Japan Research Institute (JRI). The foundation also provides
matching gifts for SMBC employees.

SMBC Foundation for International Cooperation, which
was established in 1990, strives to assist in developing human
resources required to achieve sustainable growth in develop-
ing economies as well as to promote international exchange
activities. Since its establishment, the foundation has provided
financial support for 7-8 students from Asian countries every
year, enabling them to attend universities in Japan. The founda-
tion 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 2011,
approximately 235 employees participated in this activity in
Kanagawa and Hyogo prefectures.

SMBC Friend Securities organized its own beach clean-up
events in Chiba and Hyogo Prefectures. A total of 103 employ-
ees participated. In addition, 51 employees of Minato Bank par-
ticipated in clean-up activities at Suma Beach. JRI was involved
in a clean-up in Osaka, “Clean Osaka 2011,” and Kansai Urban
Banking Corporation (KUBC) participated in clean-up activities
at Lake Biwa. In autumn 2010, SMBC Nikko Securities estab-
lished the “Green Week” for environmental protection and social
contribution activities. A total of 4,695 employees and their fam-
ily members participated in clean-ups and other group activities
in fiscal 2011. Meanwhile Cedyna, SMFL and SMBC Consumer
Finance also continued with clean-up activities in areas around
their premises.

SMFG 2012 57

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

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

• 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.

• Support for Junior Eco Clubs’ All-Japan Festival

SMBC supported the 2012 Junior Eco Club’s All-Japan Festival,
organized by Japan Environment Association, by providing an
information booth at the event.

Contributing to Cultural, Artistic, and Educational
Activities
•Charity Concerts

Since 2006, SMBC has been holding musical concerts for
charity performed by volunteer employees to support under-
privileged children worldwide. The donations are collected from
the audiences of concerts and also from the sales of employ-
ees’ handcrafted products. In 2012, donations were sent to
children affected by the Great East Japan Earthquake and to
children in Cambodia and Vietnam. In addition, people taking
refuge in Tokyo from the said earthquake were also invited to the
concerts.

• Musical Concerts Held in the Reception Lobbies of

Branches

At the SMBC Tokyo Head Office, Osaka Head Office, KUBC’s
Head Office and Biwako Main Office, lobby concerts are held
for the general public with free of charge.

•Support for Cultural and Artistic Ventures

For supporting Kabuki and other traditional performing arts in
Japan, Sumitomo Mitsui Card donates stage curtains to the
National Theatre and the National Engei Hall. The company
also supports the development of classical arts and talented
performers by co-sponsoring children’s Kabuki performances.

SMBC Friend Securities supports cultural and artistic
activities by sponsoring special art exhibitions 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. In addition to allowing elementary school
children up to high school students to visit banking premises
at any time, the bank supports diverse financial and economic
educational activities, including publishing a book titled “What
Does a Bank Do?,” providing financial, educational 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).

SMBC Consumer Finance organized the event of card
games for elementary school students to teach the origin
and the functions of money and offered lectures on finance
for students and adults, primarily at its “Customer Service
Plaza” offices. A total of 511 such events were organized in
fiscal 2011. SMBC, Sumitomo Mitsui Card, SMFL, JRI, SMBC
Nikko Securities and Minato Bank also sent instructors to teach
classes at universities. SMBC Friend Securities provides its free
online education program and practical experience program,
“You • You Toshi” (Individual self-composed Investment) for inex-
perienced investors.

Contributions Made to Local Communities by Overseas Offices
Overseas offices of the Group support projects which contribute to the achievement of Millennium Development Goals such as resolving
poverty in developing countries, supporting education and medical services, and supporting women for advancement or achieving equal
treatment, through contributions made to non-profit and non-governmental organizations, including SMBC’s Volunteer Fund, in addition
to independent initiatives tailored to specific issues and cultures of individual countries and regions.
• SMBC (China) established a scholarship program for students of Zhejiang University, Sun Yat-sen University, Soochow University, East China Normal University, Shanghai

International Studies University and Tianjin Foreign Studies University.

• The employees and their families of Suzhou Branch of SMBC (China) volunteered for clean-up activities on Tianping Mountain.
• SMBC’s Hong Kong Branch gave donations to support the orchestra made up of young Asian musicians.
• SMBC’s Seoul Branch gave donations to the “National Japanese Drama Competition for Students” to provide opportunities for Korean students to learn Japanese and further

understand Japanese cultures.

• SMBC’s Hanoi Branch provided international school students with vocational experiences.
• SMBC’s New York Branch donated PCs and other equipment to elementary schools in the Philippines through non-profit organizations.
• SMBC’s Sydney Branch participated in volunteer and donation activities associated with children, intractable diseases, refugees and earthquake disasters, provided by its CSR committee.
• Manufacturers Bank employees participate in events which raise awareness for the prevention of heart disease and make donations to event-sponsoring groups.
• Employees of Sumitomo Mitsui Banking Corporation Europe (SMBCE) conducted volunteer activities in their spare time. SMBCE contributes to charitable organizations through

an in-house fund, and also uses a matching-gift program under which it donates a certain amount for every donation made by its employees.

• SMBCE provided opportunities for students to gain work experience and business skills and also provided opportunities for underprivileged young people to participate in the

student work experience program.

• Donations to the Japanese Language Speech Contest made by the European office of JRI.

SMFG 2012

Measures for Addressing Decreasing Birth Rate
and Aging Population
• Implementation of Universal Design and Universal

Service at branches

The following initiatives were undertaken to assist clients at
branches of SMBC, Minato Bank and KUBC.

• Installation of ATMs for the visually-impaired
• Installation of hearing aids at branches
• Installation of communication boards and similar devices
for writing messages for those clients having difficulties
hearing

• Installation of Automated External Defibrillators (AEDs)*
• Installation of walking-stick holding brackets (SMBC and

Minato Bank)

• Establishment of priority seating for senior citizens and

mobility-impaired people (Minato Bank)

* AEDs are also installed at SMBC Friend Securities and SMBC Nikko

Securities

Additionally, staffs, trained in the knowledge and the means
to support senior citizens and physically-challenged clients, are
allocated to all branches of SMBC and Minato Bank.

• Business development for accommodating the soci-

ety with extremely large number of senior citizens

SMBC has clarified guidelines for collateral management and
other matters to support building of rental housing for the senior
citizens, demand for which is expected to increase hereafter.
We plan to assist and support in developing the system for
senior citizens to have safe, vivacious and meaningful life while
appropriately accommodating the needs of such society.

Supporting the Recovery after the Great East
Japan Earthquake
• Volunteer Activities for the areas affected by the Great

East Japan Earthquake

In April 2011, SMBC established the “special leave of absence
for disaster relief volunteer activities,” and it began allowing
employees to regularly go to the disaster affected areas for
volunteering activities. Up until to May 2012, an aggregate of
approximately 180 employees had volunteered and participated
in cleaning the dirt, assisting in the restoration of damaged
photographs and removal of rubble accumulated in the disaster
affected areas.

In April 2011, SMBC Nikko Securities also implemented
the volunteer leave program, and in July, approximately 350
newly-hired employees, who were lead by executives and other
employees, undertook clean-up activities in the disaster affected
areas.

• Support for the Affected Areas by staff of “Customer

Service Plaza”

SMBC Consumer Finance supported the disaster volunteer
centers set up in the affected areas by providing staff members
who have telephone handling skills from the Customer Service
Plazas of Sendai and Morioka and 19 other locations.

• Implementation of recommendations for “Recovery

and Reconstruction for Japan after the Earthquake”
JRI has been making proposals to prepare for the future in
response to the multiple implications caused by the Great East
Japan Earthquake as the “Complex Major Disaster,” and also
for proper recovery and reconstruction in Japan.

• Donation Activities by Redeeming Points Accumulated

from Using Credit Cards

Sumitomo Mitsui Card and Cedyna accepted donations from
clients using their credit cards, and also donated to the disaster
affected areas by redeeming the points accumulated by clients
from using credit cards.

• Support Fund for Great East Japan Earthquake

In June 2011, SMBC established the system of “Great East
Japan Earthquake Support Fund” for making donations to the
disaster affected areas by deducting ¥400 from employee’s
monthly salaries. The bank made donations collected at the
head office and branches in addition to the amount matched
by the bank to the government authorities of four prefectures
affected by the earthquake in October 2011, to four organi-
zations in Miyagi Prefecture for cooperating with the bank for
volunteer activities in March and May 2012. The said donation
programs will continue until the end of June 2014.

• Seminar on support measures for recovery in Miyagi

Prefecture

In September 2011, the bank teamed up with the prefectural
government of Miyagi Prefecture and The 77 Bank, Ltd. to orga-
nize a seminar on the industrial recovery in Miyagi Prefecture.
The keynote address for the seminar was made by the Governor
of Miyagi Prefecture, Yoshihiro Murai, who spoke on the current
conditions and implications of the earthquake and also on the
“Recovery Plan for Miyagi Prefecture.” A total of 382 companies
and 571 individual clients, made up primarily of clients of the
two banks, attended the seminar.

•Volunteering for interaction with evacuees in Tokyo

The interaction meetings for the people evacuated to Tokyo
from disaster affected areas have been regularly held, partici-
pated by volunteering employees of SMBC in addition to mainly
the staff of the YUI volunteer organization.

SMFG 2012 59

Human Resources

SMFG and its Group companies strive to create the kind of
work environment in which every employee feels proud and is
able to develop his or her full potential and capabilities. In the
following pages, we describe some of the activities initiated by
SMBC and other Group companies, including Sumitomo Mitsui
Card, Cedyna, SMBC Consumer Finance, 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 encourages

values of forward-looking, creative attitudes 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 employ-
ees with training program consisting of basic practical training,
the Retail Banking College, the Corporate Banking College and
the Banking Operations College. Our employees may acquire
the required business knowledge and skills through on-the-job
(OJT) training and seminars. The bank creates more practical
training programs by assigning mentors and training instructors
to newly hired employees and regional head office departments,
respectively (OJT training is supported by the head office).

Following the amendments to the Money Lending Business
Law, Sumitomo Mitsui Card has enhanced the development
of professional expert employees in the credit business. We
have taken measures to proactively support our employees in
becoming licensed money lending officers by regularly holding
in-house seminars and educating them in product knowledge
and related subjects. Cedyna strives to promote high profes-
sional 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 business and with
specific objectives. SMBC Consumer Finance is implementing
the competency-development training based on its person-
nel system for training human resources to have high social
values and responsibilities. Furthermore, we help employees

SMFG 2012

grow and advance by promoting education that teaches those
subject matters required to be in full compliance with the Money
Lending Business Law and other legislation. SMBC Consumer
Finance has been supporting the development of employees.
SMFL has established “SMFL Standards,” which annually set
forth the human resources development plan for sogoshoku
(management-track) employees of not more than five years with
the company. SMFL has created the “Young Employees’ Growth
Plan & Guide,” based on the SMFL Standards, and it has also
established an in-house business school which supplements
OJT training. JRI believes that its human resources provide
added value, which is translated into solutions and proposals.
With that in mind, it 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 continu-
ously advancing sophistication and diversification of the securi-
ties business. Under a new marketing system introduced in May
2012, we are strengthening the training of subordinates by sec-
tion chiefs and the management functions, to make OJT more
effective for newly-hired employees. SMBC Nikko Securities, as
a comprehensive securities and investment banking firm, is fur-
ther strengthening its educational programs to develop employ-
ees with expert knowledge and to improve their professional
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.” Minato Bank
has consistently implemented the Minato Retail-business
College (“MRC”) system which improves the quality of consul-
tation services offered to its individual clients. Kansai Urban
Banking has a basic training program designed for staff in their
first six years of employment with the bank, made for developing
energetic employees. Another training system is Kansai Urban
Business School, created to teach basic banking expertise and
foster employee self-awareness. The bank is also creating locally
based exams as a measure to become a bank which puts more
emphasis on the local area and which prospers with the local
community. We are further
strengthening the train-
ing systems in respective
Group companies.

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 workplace
diversity (e.g. gender, nationality). 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 more challenges in per-
forming 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’
performances are evaluated not simply in terms of one fiscal
year’s achievements but also 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. To enhance the overseas market presence and internal
globalization of the company, the bank is increasing the num-
ber of employees with overseas experience. It substantially
increased the number of employees taking language classes
and encouraged employment of those with overseas study
experiences or a desire to study abroad and of those employed
locally by overseas offices and subsidiaries. It has also promoted
the exchanges of employees between offices in Japan and
overseas. At SMFL, over-
training programs
seas
were expanded mainly for
young employees in order
to strengthen the training of
global personnel, in addi-
tion to sending employees
to language schools.

SMBC Global Corporate Banker Training

•Providing Support for a Better 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 of parental
leave, leave for taking care of ill children, and shorter working
hours. Such programs provide better employee benefits than
those mandated by law. In addition, SMBC, Sumitomo Mitsui
Card, JRI and Minato Bank provide child-care allowances, while
SMBC, Sumitomo Mitsui Card, Cedyna, SMBC Consumer
Finance, SMFL, Minato Bank and Kansai Urban Banking have
implemented a program for rehiring former employees. These
programs assist the Group’s employees in realizing a good
work-life balance. There are also four workplace-visiting plans
for employees’ children and other family members to give them
an opportunity to better understand what their parents do for
work. The program is available at SMBC, Sumitomo Mitsui Card,
SMFL, JRI, and SMBC Friend Securities. JRI also organizes
“Mama & Papa Lunches” where employees exchange informa-
tion on raising children. SMBC has the “Go Home Early - Family
Day,” while SMFL encourages employees to take their summer
vacations and to reduce overtime hours. SMBC Consumer
Finance and SMBC Nikko Securities have 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. SMBC, SMBC
Consumer Finance and Minato Bank regularly provide training
programs for employees coming back to work after maternity
leave. SMBC, Sumitomo Mitsui Card, Cedyna, SMBC Consumer
Finance, JRI and Minato Bank have all obtained “Kurumin certi-
fication” 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.

•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
began the operations of its Kobe Branch, followed by its
Unagidani Office in Osaka in February 2009. They created jobs
not only for the physically-challenged but also for the mentally-
challenged. As of March 2012, physically-challenged employees
accounted for 1.99% of our total number of employees, more
than the legally mandated level of 1.8%.

SMBC Consumer Finance recovery support
seminar

Children’s Visitation Day

SMFG 2012 61

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 January 2012, SMBC was selected for the fifth consecutive
year as one of the best companies in Japan to work according to
the survey conducted by Great Place to Work® Institute Japan.
* Great Place to Work® Institute, Inc., which was incorporated in
the U.S., is a research organization which provides data for the list
of the “100 Best Places to Work” published annually by Fortune
magazine. The survey consists of two main sections: a survey on
the internal systems and corporate culture of respondent com-
panies, and a questionnaire survey by the employees of these
companies. The employee survey carries a two-thirds weight in
determining final results.

◆

Sumitomo Mitsui Card

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

2010

2011

2012

2,247
1,133
50.42%
1,114
49.58%
36 yrs 4 mos.
39 yrs 10 mos.
32 yrs 10 mos.
10 yrs 7 mos.
11 yrs 6 mos.
9 yrs 7 mos.

2,300
1,146
49.83%
1,154
50.17%
36 yrs 8 mos.
40 yrs 0 mos.
33 yrs 5 mos.
11 yrs 0 mos.
12 yrs 0 mos.
10 yrs 0 mos.

2,323
1,141
49.12%
1,182
50.88%
37 yrs 1 mos.
40 yrs 4 mos.
34 yrs 0 mos.
11 yrs 7 mos.
12 yrs 8 mos.
10 yrs 7 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.

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

2010

2011

2012

54.8%

59.7%

49.0%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<6>

<2>

<6>

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. The promotional campaigns for creating the
corporate statement of promoting individual human rights are
also organized to motivate our employees to reflect on indi-
vidual human rights and to come up with the statement for such
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 reflect and come up
with an individual human rights statement. SMFG and its Group
companies participate in the “United Nations Global Compact,”
and also endorse and support its 10 principles in the areas of

Employees
SMBC
◆

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

Male
Female

2010

2011

2012

25,122
13,793
54.90%
11,329
45.10%
36 yrs 2 mos.
40 yrs 2 mos.
31 yrs 3 mos.
13 yrs 3 mos.
16 yrs 8 mos.
9 yrs 0 mos.

25,073
13,546
54.03%
11,527
45.97%
36 yrs 5 mos.
40 yrs 3 mos.
31 yrs 11 mos.
13 yrs 5 mos.
16 yrs 9 mos.
9 yrs 7 mos.

24,602
13,274
53.95%
11,328
46.05%
36 yrs 9 mos.
40 yrs 4 mos.
32 yrs 8 mos.
13 yrs 9 mos.
16 yrs 8 mos.
10 yrs 3 mos.

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

584

766

962

1.90%

1.95%

1.99%

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

2011

2010

April 1
Number of new hires
Number of newly employed female
graduates****
Ratio of newly employed females to
total new employees
**** Includes sogoshoku staff and consumer service staff. Business Career Path

35.9%

32.6%

32.9%

2012

569

204

572

610

188

199

employees are excluded.

Fiscal
Number of employees taking
parental leave

Number of career hires

SMFG 2012

2009

2010

2011

331

<29>
11

476

<26>
6

683

<27>
11

◆

Cedyna

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

2010

2011

2012

3,466
2,062
59.49%
1,404
40.51%
37 yrs 8 mos.
40 yrs 8 mos.
33 yrs 2 mos.
13 yrs 4 mos.
15 yrs 7 mos.
9 yrs 11 mos.

3,340
2,021
60.51%
1,319
39.49%
38 yrs 7mos.
41 yrs 5 mos.
34 yrs 4 mos.
14 yrs 2 mos.
16 yrs 4 mos.
11 yrs 0 mos.

3,192
1,980
62.03%
1,212
37.97%
39 yrs 6mos.
42 yrs 1 mos.
35 yrs 5 mos.
15 yrs 5 mos.
17 yrs 4 mos.
12 yrs 1 mos.

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

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

2010

2011

2012

43.8%

50.0%

0.0%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<3>

<0>

◆

Sumitomo Mitsui Finance and Leasing
2011

2010

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

1,666
1,035
62.12%
631
37.88%
37 yrs 3 mos.
40 yrs 3 mos.
32 yrs 4 mos.
12 yrs 5 mos.
15 yrs 2 mos.
8 yrs 0 mos.

1,648
1,025
62.20%
623
37.80%
37 yrs 8 mos.
40 yrs 6 mos.
33 yrs 0 mos.
12 yrs 10 mos.
15 yrs 6 mos.
8 yrs 7 mos.

2012

1,618
1,007
62.24%
611
37.76%
38 yrs 2 mos.
40 yrs 10 mos.
33 yrs 10 mos.
13 yrs 4 mos.
15 yrs 9 mos.
9 yrs 5 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).

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

2010

2011

2012

3.6%

13.6%

15.8%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<0>

◆

SMBC Consumer Finance
2010

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

2,757
1,625
58.94%
1,132
41.06%
36 yrs 10 mos.
39 yrs 3 mos.
33 yrs 4 mos.
12 yrs 9 mos.
15 yrs 5 mos.
8 yrs 10 mos.

2011

2012

2,038
1,263
61.97%
775
38.03%
36 yrs 4 mos.
38 yrs 0 mos.
33 yrs 7 mos.
12 yrs 3 mos.
14 yrs 4 mos.
8 yrs 11 mos.

1,971
1,234
62.61%
737
37.39%
37 yrs 2 mos.
38 yrs 9 mos.
34 yrs 5 mos.
13 yrs 1 mos.
15 yrs 1 mos.
9 yrs 9 mos.

◆

Japan Research Institute
2010

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

2011

2012

2,322
1,792
77.17%
530
22.83%
39 yrs 0 mos.
39 yrs 11 mos.
35 yrs 9 mos.
9 yrs 11 mos.
10 yrs 3 mos.
8 yrs 8 mos.

2,323
1,782
76.71%
541
23.29%
39 yrs 1 mos.
39 yrs 9 mos.
36 yrs 4 mos.
9 yrs 9 mos.
10 yrs 3 mos.
8 yrs 6 mos.

2,272
1,726
75.97%
546
24.03%
39 yrs 3 mos.
40 yrs 1 mos.
36 yrs 7 mos.
10 yrs 2 mos.
10 yrs 6 mos.
8 yrs 11 mos.

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

2010

2011

2012

68.8%

73.9%

68.8%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

138

<0>

2011

2010

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees
** Includes only sogoshoku staff. Ippanshoku staff are excluded.

28.0%

37.7%

2012

39.5%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<6>

<7>

<6>

SMFG 2012 63

◆

SMBC Friend Securities

◆

THE MINATO BANK

2010

2011

2012

2010

2011

2012

March 31
Number of employees*

Average age

Male

Female

Male
Female

Percentage of total

1,897
1,359
71.64%
538
28.36%
37 yrs 7 mos.
39 yrs 8 mos.
32 yrs 5 mos.
14 yrs 0 mos.
15 yrs 9 mos.
9 yrs 5 mos.

2,072
1,462
70.56%
610
29.44%
36 yrs 11 mos.
39 yrs 4 mos.
31 yrs 4 mos.
13 yrs 3 mos.
15 yrs 4 mos.
8 yrs 5 mos.

1,846
1,336
72.37%
510
27.63%
38 yrs 4 mos.
40 yrs 4 mos.
33 yrs 1 mos.
14 yrs 9 mos.
Male
16 yrs 6 mos.
Female
10 yrs 2 mos.
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 agen-
cies, and national staff at overseas branches.

Average years of service

2010

April 1
Number of new hires
Number of newly employed female
graduates**
Ratio of newly employed females to
total new employees
** Both non-area specified and area specified staff

45.9%

148

2011

2012

149

151

53.0%

49.0%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<0>

<5>

March*
Number of employees**

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

6,584
4,057
61.62%
2,527
38.38%
38 yrs 1 mos.
39 yrs 6 mos.
35 yrs 9 mos.
12 yrs 1 mos.
12 yrs 9 mos.
11 yrs 1 mos.

7,094
4,449
62.71%
2,645
37.29%
38 yrs 11 mos.
40 yrs 3 mos.
36 yrs 8 mos.
11 yrs 11 mos.
12 yrs 4 mos.
11 yrs 2 mos.

7,513
4,771
63.50%
2,742
36.50%
38 yrs 11 mos.
40 yrs 2 mos.
36 yrs 10 mos.
11 yrs 10 mos.
12 yrs 2 mos.
11 yrs 4 mos.

Male
Female
As of March 1 of the respective years

*
** 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.

2010

April 1
Number of new hires***
Number of newly employed female
graduates
Ratio of newly employed females to
total new employees
*** Professional staff (Classes I-II), FA, and specialists

34.0%

159

2011

2012

493

190

388

165

38.5%

42.5%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

207

<0>

229

<0>

248

<1>

March 31
Number of employees*

Average age

Male

Female

Percentage of total

2,152
1,320
61.34%
832
38.66%
40 yrs 3 mos.
43 yrs 9 mos.
34 yrs 11 mos.
14 yrs 10 mos.
19 yrs 2 mos.
8 yrs 1 mos.

2,179
1,337
61.36%
842
38.64%
41 yrs 10 mos.
45 yrs 0 mos.
37 yrs 0 mos.
15 yrs 7 mos.
Male
19 yrs 6 mos.
Female
9 yrs 9 mos.
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.

2,166
1,337
61.73%
829
38.27%
40 yrs 4 mos.
43 yrs 8 mos.
35 yrs 0 mos.
15 yrs 3 mos.
19 yrs 3 mos.
9 yrs 0 mos.

Male
Female

Average years of service

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

2010

2011

2012

18.8%

20.5%

23.8%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<1>

<2>

March 31
Number of employees*

Male

Percentage of total

Female

Percentage of total

Average age

Male
Female

Average years of service

2,880
1,989
69.06%
891
30.94%
39 yrs 9 mos.
43 yrs 5 mos.
31 yrs 7 mos.
16 yrs 8 mos.
19 yrs 10 mos.
9 yrs 5 mos.

2,809
1,929
68.67%
880
31.33%
39 yrs 10 mos.
43 yrs 4 mos.
32 yrs 3 mos.
16 yrs 8 mos.
19 yrs 9 mos.
10 yrs 1 mos.

2,712
1,850
68.22%
862
31.78%
40 yrs 1 mos.
43 yrs 5 mos.
32 yrs 11 mos.
16 yrs 11 mos.
19 yrs 10 mos.
10 yrs 9 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.

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

2010

2011

2012

43.3%

58.1%

60.4%

Fiscal
Number of employees taking
parental leave

2009

2010

2011

<0>

◆

SMBC Nikko Securities

◆

Kansai Urban Banking

2010

2011

2012

2010

2011

2012

SMFG 2012

• The combined employment ratio for persons with disabilities for the above nine companies was 1.92% as of March 2012.

Main Work-Life Balance Support Systems (Employee Support Programs)

Parental leave

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

SMBC

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

Sumitomo Mitsui
Card

Up to 3 years old

Cedyna

Leave for taking care of
sick children

Up to March 31 in the 6th
grade of elementary school
(10 days per annum for one
child; 20 days for two or more
children)

Up to March 31 in the 6th
grade of elementary school
(5 days per annum for one
child; 10 days for two or more
children)

Shorter working hours

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.

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).

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 March 31 in the 3rd
grade of elementary school
Employees can reduce daily
working hours to a minimum of
6 hours (and a maximum of 8
hours), by taking off 30-minute
blocks

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).

SMBC Consumer
Finance

Sumitomo Mitsui
Finance and
Leasing

Japan Research
Institute

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
reduce working hours
in
increments of 30 minutes for a
maximum reduction of 2 hours
30 minutes per day.

Restrictions on
overtime

Exemption from
late-night work

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

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

Up to entry into elemen-
tary 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
• Shorter working hours 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
• Maternity leave (for men)

• A grace period for job rotation
• Leave to care for sick family members
• Shorter working hours to care for sick

family members

• Paid leave by the hour, half-day paid

leave

• Leave before and after maternity
• Child-care leave (2 days)
• Company-visiting day (2 days a year)
• Rehiring of former employees who quit
for child-care or care-giving reasons
• Husband’s maternity leave (3 days)

Up to entry into elemen-
tary school

• Work relocations
• System for rehiring former employees

Up to entry into elemen-
tary school

For employees who are
pregnant or have given
birth within previous 12
months

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

• 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

Up to entry into junior
high school

• Use of designated day-care center at

discounted rates

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 elemen-
tary school

Kansai Urban
Banking

18 months or maximum of
2 years 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 entry into elementary
school, employees can opt for
6-hour working day

Up to entry into elemen-
tary school

• 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)

• Maternity leave (to help spouse)
• Leave to care for sick family members
• Shorter working hours to care for sick

family members
• Child-care allowance
• System for rehiring former employees

• System for rehiring former employees
• Leave to care for sick family members
• Home helpers provided

SMFG 2012 65

SMFG 2012

Financial Section and Corporate Data

Financial Data

SMFG

Consolidated Balance Sheets ..................................... 68

Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income ... 70

Consolidated Statements of
Changes in Net Assets .............................................. 71

Consolidated Statements of Cash Flows .................... 73

Notes to Consolidated Financial Statements .............. 75

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 Auditor’s Report ..................................... 136

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

SMBC

Supplemental Information ........................................... 137

SMFG

Income Analysis (Consolidated) .................................. 143

Assets and Liabilities (Consolidated)........................... 146

Capital (Nonconsolidated) ........................................... 149

SMBC

Income Analysis (Consolidated) .................................. 152

Assets and Liabilities (Consolidated)........................... 155

Income Analysis (Nonconsolidated) ............................ 157

Deposits (Nonconsolidated) ........................................ 161

Loans (Nonconsolidated)............................................. 163

Securities (Nonconsolidated) ...................................... 168

Ratios (Nonconsolidated) ............................................ 170

Capital (Nonconsolidated) ........................................... 172

Others (Nonconsolidated)............................................ 173

Trust Assets and Liabilities (Nonconsolidated) ............ 175

Capital Ratio Information

SMFG

Capital Ratio Information (Consolidated) .................... 176

SMBC

Capital Ratio Information ............................................. 202

Compensation

SMFG

Compensation (Consolidated) ..................................... 204

SMBC

Compensation ............................................................. 207

Principal Subsidiaries and Affiliates

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

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

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

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

SMFG 2012 67

SMFG

Consolidated Balance Sheets

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries

March 31

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

Assets
Cash and due from banks (Notes 9 and 29) .........................................................
Deposits with banks (Notes 9 and 29)..................................................................
Call loans and bills bought (Notes 9 and 29) ........................................................
Receivables under resale agreements (Note 29) ..................................................
Receivables under securities borrowing transactions (Note 29) ..........................
Monetary claims bought (Notes 9 and 29) ...........................................................
Trading assets (Notes 3, 9 and 29) .......................................................................
Money held in trust (Notes 29 and 30) .................................................................
Securities (Notes 4, 9, 29 and 30) ........................................................................
Loans and bills discounted (Notes 5, 9 and 29) ...................................................
Foreign exchanges (Note 29) ...............................................................................
Lease receivables and investment assets (Notes 9, 28 and 29) ..........................
Other assets (Notes 6, 9, 29 and 31) ....................................................................
Tangible fixed assets (Notes 7, 9 and 15) .............................................................
Intangible fixed assets (Note 8) ............................................................................
Deferred tax assets (Note 24) ...............................................................................
Customers’ liabilities for acceptances and guarantees .......................................
Reserve for possible loan losses (Note 29) ..........................................................
Total assets ..........................................................................................................

¥ 4,588,858
3,127,432
1,291,818
227,749
4,539,555
1,361,289
8,196,944
23,878
42,529,950
62,720,599
1,280,636
1,699,759
4,622,756
1,180,522
799,773
404,034
5,424,045
(978,933)
¥143,040,672

¥ 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

$ 55,873
38,079
15,729
2,773
55,273
16,575
99,804
291
517,837
763,674
15,593
20,696
56,286
14,374
9,738
4,919
66,042
(11,919)
$1,741,637

SMFG 2012

(Continued)

March 31

Consolidated Balance Sheets

SMFG

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

Liabilities and net assets
Liabilities
Deposits (Notes 9, 10 and 29) ..............................................................................
Call money and bills sold (Notes 9 and 29) ..........................................................
Payables under repurchase agreements (Notes 9 and 29) ..................................
Payables under securities lending transactions (Notes 9 and 29) .......................
Commercial paper (Note 29) ................................................................................
Trading liabilities (Notes 9, 11 and 29)..................................................................
Borrowed money (Notes 9, 12 and 29).................................................................
Foreign exchanges (Note 29) ...............................................................................
Short-term bonds (Notes 13 and 29)....................................................................
Bonds (Notes 13 and 29) ......................................................................................
Due to trust account (Note 29) .............................................................................
Other liabilities (Notes 9, 14, 28, 29 and 31) ........................................................
Reserve for employee bonuses ............................................................................
Reserve for executive bonuses ............................................................................
Reserve for employee retirement benefits (Note 27) ............................................
Reserve for executive retirement benefits ............................................................
Reserve for point service program .......................................................................
Reserve for reimbursement of deposits ...............................................................
Reserve for losses on interest repayment ............................................................
Reserve under the special laws ...........................................................................
Deferred tax liabilities (Note 24) ...........................................................................
Deferred tax liabilities for land revaluation (Note 15) ............................................
Acceptances and guarantees (Note 9) .................................................................
Total liabilities ......................................................................................................

Net assets (Note 25)
Capital stock (Note 16) ........................................................................................
Capital surplus .....................................................................................................
Retained earnings ................................................................................................
Treasury stock .....................................................................................................
Total stockholders’ equity ...................................................................................
Net unrealized gains on other securities (Notes 23, 24 and 30) ...........................
Net deferred losses on hedges (Notes 23, 24 and 31) .........................................
Land revaluation excess (Notes 15 and 23) .........................................................
Foreign currency translation adjustments (Note 23) ............................................
Total accumulated other comprehensive income ..............................................
Stock acquisition rights (Note 32) ........................................................................
Minority interests .................................................................................................
Total net assets ....................................................................................................
Total liabilities and net assets .............................................................................

See accompanying notes to consolidated financial statements.

¥ 92,722,199
2,144,599
1,676,902
5,810,730
1,193,249
6,248,061
8,839,648
302,580
949,388
4,641,927
443,723
4,762,961
48,516
2,875
45,911
2,577
19,350
10,980
401,276
421
53,852
39,915
5,424,045
135,785,696

2,337,895
759,800
2,152,654
(236,037)
5,014,313
330,433
(32,122)
39,158
(141,382)
196,087
692
2,043,883
7,254,976
¥143,040,672

¥ 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

$1,128,969
26,112
20,418
70,750
14,529
76,075
107,630
3,684
11,559
56,519
5,403
57,993
591
35
559
31
236
134
4,886
5
656
486
66,042
1,653,302

28,466
9,251
26,210
(2,874)
61,053
4,023
(391)
477
(1,721)
2,388
8
24,886
88,335
$1,741,637

SMFG 2012 69

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

2012

2011

Millions of
U.S. dollars (Note 1)
2012

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 24):

¥1,631,592
1,226,546
242,086
5,890
6,823
29,742
68,943
51,560
1,770
955,680
198,192
1,110,566
75,272
3,973,075

290,223
134,476
51,522
3,694
6,852
77,816
15,860
132,099
880,998
1,421,363
4,244
291,179
3,020,108
952,966

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

103,478
207,860
641,627
123,090
¥ 518,536

¥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

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

$19,866
14,934
2,948
72
83
362
839
628
22
11,636
2,413
13,522
916
48,375

3,534
1,637
627
45
84
948
193
1,608
10,727
17,306
52
3,545
36,772
11,603

1,260
2,531
7,812
1,498
$ 6,314

(Consolidated Statements of Comprehensive Income)

Millions of yen

Year ended March 31

Income before minority interests ........................................................................
Other comprehensive income (Note 23) .............................................................
Net unrealized gains (losses) on other securities .............................................
Net deferred gains (losses) on hedges .............................................................
Land revaluation excess ...................................................................................
Foreign currency translation adjustments ........................................................
Share of other comprehensive income of affiliates ..........................................
Total comprehensive income ..............................................................................
Comprehensive income attributable to shareholders of the parent ...................
Comprehensive income attributable to minority interests ...............................

See accompanying notes to consolidated financial statements.

2012

¥641,627
23,605
69,103
(22,964)
5,613
(23,496)
(4,651)
665,232
541,270
123,961

2011

¥586,542
(173,166)
(150,002)
29,587
—
(60,928)
8,176
413,375
343,920
69,455

Millions of
U.S. dollars (Note 1)
2012

$7,812
287
841
(279)
68
(286)
(57)
8,099
6,590
1,509

SMFG 2012

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

2012

2011

Millions of
U.S. dollars (Note 1)
2012

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

¥2,337,895

$28,466

Net changes in the fiscal year.......................................................................
Balance at the end of the fiscal year ................................................................

—
¥2,337,895

—
$28,466

Capital surplus

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

978,851

978,897

11,918

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

(9,047)
(210,003)
(219,050)
¥ 759,800

(46)
—
(46)
¥ 978,851

(110)
(2,557)
(2,667)
$ 9,251

Retained earnings

Balance at the beginning of the 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 ....................................................
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

1,776,433

1,451,945

21,629

(142,010)
518,536
15
1
(7)
(16)
(90)
(208)
376,220
¥2,152,654

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

(1,729)
6,314
0
0
(0)
(0)
(1)
(3)
4,581
$26,210

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

(171,760)

(124,061)

(2,091)

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

(321,521)
47,242
210,003
(64,276)
¥ (236,037)

(47,759)
60
—
(47,699)
¥ (171,760)

(3,915)
575
2,557
(783)
$ (2,874)

Total stockholders’ equity

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

Cash dividends .............................................................................................
Net income ...................................................................................................
Purchase of treasury stock ...........................................................................
Disposal of treasury stock ............................................................................
Cancellation 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 ....................................................
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 ................................................................

4,921,419

4,644,677

59,922

(142,010)
518,536
(321,521)
38,194
—
15
1
(7)
(16)
(90)
(208)
92,893
¥5,014,313

(152,878)
475,895
(47,759)
13
—
13
3
(13)
(10)
(126)
1,604
276,742
¥4,921,419

(1,729)
6,314
(3,915)
465
—
0
0
(0)
(0)
(1)
(3)
1,131
$61,053

SMFG 2012 71

SMFG

Consolidated Statements of Changes in Net Assets

(Continued)

Year ended March 31

Accumulated other comprehensive income
Net unrealized gains on other securities

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

¥ 272,306

¥ 412,708

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

58,127
58,127
¥ 330,433

(140,402)
(140,402)
¥ 272,306

$ 3,316

707
707
$ 4,023

Net deferred losses on hedges

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

(9,701)

(39,367)

(118)

(22,420)
(22,420)
¥ (32,122)

29,666
29,666
¥ (9,701)

Land revaluation excess

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

33,357

34,955

5,800
5,800
¥ 39,158

(1,597)
(1,597)
¥ 33,357

(273)
(273)
$ (391)

406

71
71
$ 477

Foreign currency translation adjustments

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

(122,889)

(101,650)

(1,496)

(18,493)
(18,493)
¥ (141,382)

(21,238)
(21,238)
¥ (122,889)

Total accumulated other comprehensive income

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

173,073

306,646

23,013
23,013
¥ 196,087

(133,573)
(133,573)
¥ 173,073

Stock acquisition rights

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

262

429
429
¥ 692

180
180
¥ 262

Minority interests

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

2,037,318

2,049,400

6,564
6,564
¥2,043,883

(12,081)
(12,081)
¥2,037,318

Total net assets

Balance at the beginning of the fiscal year ......................................................
Changes in the fiscal year:

Cash dividends .............................................................................................
Net income ...................................................................................................
Purchase of treasury stock ...........................................................................
Disposal of treasury stock ............................................................................
Cancellation 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 ....................................................
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 ................................................................

7,132,073

7,000,805

(142,010)
518,536
(321,521)
38,194
—
15
1
(7)
(16)
(90)
(208)
30,008
122,902
¥7,254,976

(152,878)
475,895
(47,759)
13
—
13
3
(13)
(10)
(126)
1,604
(145,474)
131,268
¥7,132,073

See accompanying notes to consolidated financial statements.

SMFG 2012

(225)
(225)
$ (1,721)

2,108

280
280
$ 2,388

5
5
$ 8

24,806

80
80
$24,886

86,839

(1,729)
6,314
(3,915)
465
—
0
0
(0)
(0)
(1)
(3)
365
1,496
$88,335

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 losses on interest repayment ..................................
Interest income .................................................................................................
Interest expenses .............................................................................................
Net gains on securities .....................................................................................
Net losses from money held in trust .................................................................
Net exchange losses ........................................................................................
Net 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 operating activities..........................................................

SMFG

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

¥ 952,966
165,113
3,861
21,681
—
(25,050)
31,122
(90,007)
2,816
378
(5,083)
(194)
422
1,056
(25,756)
(1,631,592)
290,223
(130,612)
1,464
16,145
3,765
(1,588,903)
1,029,341
(828,051)
2,299,767
228,846
(1,994,204)
462,914
(793,288)
200,855
472,525
856,129
97,497
(205,926)
46,712
30,875
(233,809)
352,424
227,552
1,663,901
(295,539)
327,828
1,940,166
(101,981)
1,838,185

¥ 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

$ 11,603
2,010
47
264
—
(305)
379
(1,096)
34
5
(62)
(2)
5
13
(314)
(19,866)
3,534
(1,590)
18
197
46
(19,346)
12,533
(10,082)
28,001
2,786
(24,281)
5,636
(9,659)
2,445
5,753
10,424
1,187
(2,507)
569
376
(2,847)
4,291
2,771
20,259
(3,598)
3,992
23,623
(1,242)
22,381

SMFG 2012 73

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 ...................................................
Purchases of treasury stocks of subsidiaries ...................................................
Proceeds from purchase of stocks of subsidiaries resulting in change in
scope of consolidation ...................................................................................
Purchases of stocks of subsidiaries resulting in change in scope of
consolidation ..................................................................................................
Proceeds from sale of stocks of subsidiaries resulting in change in
scope of consolidation ...................................................................................
Net cash used in investing activities ..................................................................
Cash flows from financing activities:

Proceeds from issuance of subordinated borrowings ......................................
Repayment of subordinated borrowings ..........................................................
Proceeds from issuance of subordinated bonds and bonds with
stock acquisition rights ....................................................................................
Repayment of subordinated bonds and bonds with stock
acquisition rights .............................................................................................
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 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 ....................................
Cash and due from banks at the end of the year ..............................................

See accompanying notes to consolidated financial statements.

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

¥(50,614,876)
32,372,433
15,925,697
(3,011)
1,540
(131,154)
30,343
(101,447)
24
—
(1,773)

¥(67,169,471)
36,624,700
19,626,268
(6,942)
5,236
(182,839)
6,966
(101,624)
528
314
—

—

59,408

(67,369)

(10,756)

50
(2,589,543)

—
(11,148,211)

106,000
(103,000)

80,000
(87,500)

557,360

256,751

(306,471)
(141,921)
—
—
(93,125)
(321,521)
2,390
(14)
183
(300,119)
(4,757)
(1,056,236)
5,645,094
¥ 4,588,858

(314,900)
(152,612)
471
(309)
(97,609)
(47,759)
13
(1,001)
17
(364,438)
(7,185)
2,273,901
3,371,193
¥ 5,645,094

$(616,277)
394,161
193,908
(37)
19
(1,597)
369
(1,235)
0
—
(22)

—

(820)

1
(31,530)

1,291
(1,254)

6,786

(3,731)
(1,728)
—
—
(1,134)
(3,915)
29
(0)
2
(3,654)
(58)
(12,861)
68,734
$ 55,873

SMFG 2012

Notes to Consolidated Financial Statements

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries
Years ended March 31, 2012 and 2011

SMFG

1. Basis of Presentation
Sumitomo Mitsui Financial Group, Inc. (“SMFG”) was established
on December 2, 2002 as a holding company for the SMFG group
through a statutory share transfer (kabushiki iten) of all of the out-
standing equity securities of Sumitomo Mitsui Banking Corporation
(“SMBC”) in exchange for SMFG’s newly issued securities. SMFG
is a joint stock corporation with limited liability (Kabushiki Kaisha)
incorporated under the 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, 2012, which was ¥82.13 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

337 companies
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.
SMBC Nikko Securities Inc.
Sumitomo Mitsui Finance and Leasing Company, Limited
Sumitomo Mitsui Card Company, Limited
Cedyna Financial Corporation
Promise Co., Ltd. (“Promise”)
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, 2012 are as follows:
7 companies including Promise were included in the
scope of consolidated subsidiaries as a result of a tender
offer for shares of Promise by SMBC and a subscription by
SMFG for new shares issued by Promise by way of third-
party allotment. 30 companies including Minato Equity
Support Investment Limited Partnership were also newly
consolidated due to establishment and other reasons.
18 companies including SMBC Support & Solution
Co., Ltd. were excluded from the scope of consolidated
subsidiaries because they were no longer subsidiaries due
mainly to mergers.
9 companies including Rouge 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.

193 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 Consolidated Financial Statements
Regulations.

SMFG 2012 75

SMFG

Notes to Consolidated Financial Statements

Other unconsolidated subsidiaries including SBCS Co.,
Ltd. 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, as such, they do not hinder a rational judg-
ment of SMFG’s financial position and results of operations
when excluded from the scope of consolidation.

(b) Application of the equity method

Japanese accounting standards also require that any
unconsolidated subsidiaries and affiliates which SMFG is
able to exercise material influence over their financial and
operating policies be accounted for by the equity method.
(i) Unconsolidated subsidiaries accounted for by the equity

method
4 companies
Principal company:
SBCS Co., Ltd.
(ii) Equity method affiliates

39 companies
Principal companies:
Sumitomo Mitsui Auto Service Company, Limited
Daiwa SB Investments Ltd.

Changes in the equity method affiliates in the fiscal year
ended March 31, 2012 are as follows:
Hitachi Capital Auto Lease Corporation became
equity method affiliates through acquisition of shares by
Sumitomo Mitsui Auto Service Company, Limited. 5 other
companies also became equity method affiliates due to
increase of significance and other reasons.
6 companies including Promise were excluded from
the scope of equity method affiliates because they were no
longer equity method affiliates through a tender offer for
shares of Promise by SMBC and a subscription by SMFG
for new shares issued by Promise by way of third-party
allotment. 4 companies including At-Loan Co., Ltd. were
excluded from the scope of equity method affiliates because
they were no longer equity method affiliates due mainly to
mergers.
(iii) Unconsolidated subsidiaries that are not accounted for

by the equity method

193 subsidiaries including SMLC MAHOGANY CO.,
LTD. are operators of silent partnerships for lease transac-
tions and their assets and profits/losses do not belong
to them substantially. Therefore, they have not been
accounted for by the equity method pursuant to Article 10,
Paragraph 1, Item 2 of Consolidated Financial Statements
Regulations.
(iv) Affiliates that are not accounted for by the equity

method

Principal company:
Daiwa SB Investments (USA) Ltd.

SMFG 2012

Affiliates that are not accounted for by the equity
method are also excluded from the scope of equity method
because their total amounts in terms of net income and
retained earnings are immaterial, and as such, they do not
hinder a rational judgment of SMFG’s financial position
and results of operations when excluded from the scope of
equity method.

(i) The balance sheet dates of the consolidated subsidiaries

are as follows:

1 company
May 31 ..................................................
5 companies
June 30 .................................................
2 companies
July 31 ..................................................
3 companies
September 30 ........................................
1 company
October 31 ............................................
November 30 ........................................
8 companies
December 31 ......................................... 122 companies
January 31 .............................................
19 companies
9 companies
February 29 ...........................................
March 31 ............................................... 167 companies

(ii) The subsidiaries with balance sheets dated May
31, June 30, July 31, September 30, November 30 are
consolidated using the financial statements as of March
31 for the purpose of consolidation. The subsidiaries with
balance sheets dated October 31 are consolidated using the
financial statements as of January 31. Certain subsidiaries
with balance sheets dated December 31 and January 31 are
consolidated using the financial statements as of March 31.
Other subsidiaries are consolidated using them on their
respective balance sheet dates.
Appropriate adjustments were made for material transac-
tions during the periods between their respective balance
sheet dates and the consolidated closing date.

(d) Special purpose entities

(i) Outline of special purpose entities and transactions
SMBC, a consolidated subsidiary of SMFG, provides
credit lines, liquidity lines and loans to 13 special purpose
entities (“SPEs”) for their fund 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.
The combined assets and liabilities of the 13 SPEs as of
their most recent closing dates of 2012 were ¥2,175,773
million ($26,492 million) and ¥2,175,548 million
($26,489 million), respectively. SMBC has no voting rights
in the SPEs and sends no directors or employees.
(ii) The amount of principal transactions with the SPEs as
of and for the fiscal years ended March 31, 2012 and 2011
were as follows:

Millions of yen

2012

March 31
Loans and bills
discounted .................. ¥1,486,284 ¥1,592,714
593,578
Credit lines ...................
291,991
Liquidity lines ..............

723,383
352,547

2011

Millions of
U.S. dollars
2012

$18,097
8,808
4,293

Notes to Consolidated Financial Statements

SMFG

Year ended March 31
Interest on loans and
discounts ....................
Fees and commissions ...

Millions of yen

2012

2011

¥13,388
1,842

¥15,978
1,665

Millions of
U.S. dollars
2012

$163
22

(2) Trading assets/liabilities and trading income/losses

Transactions for trading purposes (seeking gains arising from
short-term changes in interest rates, currency exchange rates,
or market prices of securities and other market related indices
or from variation among markets) are included in “Trading
assets” or “Trading liabilities” on the consolidated balance
sheet on a trade date basis. Profit and losses on trading-
purpose transactions are recognized on a trade date basis and
recorded as “Trading income” and “Trading losses” on the
consolidated statements of income.
Securities and monetary claims purchased for trading
purposes are stated at the fiscal year-end market value, and
financial derivatives such as swaps, futures and options are
stated at amounts that would be settled if the transactions
were terminated at the consolidated balance sheet date.
“Trading income” and “Trading losses” include interest
received or paid during the fiscal year. The year-on-year
valuation differences of securities and monetary claims are
also recorded in the above-mentioned accounts. As for the
derivatives, assuming that the settlement will be made in
cash, the year-on-year valuation differences are also recorded in
the above-mentioned accounts.

(3) Securities

(a) Debt securities that consolidated subsidiaries have the

positive intent and ability to hold to maturity are classified
as held-to-maturity securities and are carried at amortized
cost (straight-line method) using the moving-average
method.

Investments in unconsolidated subsidiaries and affiliates
that are not accounted for by the equity method are carried
at cost using the moving-average method.
Securities other than trading purpose securities, held-
to-maturity securities and investments in unconsolidated
subsidiaries and affiliates are classified as “other securities”
(available-for-sale securities). Stocks in other securities
that have market prices are carried at their average market
prices during the final month of the fiscal year, and bonds
and others that have market prices are carried at their fiscal
year-end market prices (cost of securities sold is calculated
using primarily the moving-average method). Other secu-
rities which are 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, excluding those for trading purposes,
are carried at fair value.

(5) Depreciation

(a) Tangible fixed assets (excluding lease assets)

Buildings owned by SMFG and SMBC are depreciated
using the straight-line method. 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 terms are their expected lifetime and salvage values
are 0.

(6) Reserve for possible loan losses

The reserve for possible loan losses of major consolidated
subsidiaries is provided as detailed 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 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 in the
amount deemed necessary based on an overall solvency assess-
ment of the claims, net of the expected amount of recoveries
from collateral and guarantees.
Discounted cash flows (“DCF”) method is used for claims
on borrowers whose cash flows from collection of principals
and interest can be rationally estimated and SMBC applies
it to claims on large potentially bankrupt borrowers and
claims on large borrowers requiring close monitoring that
have been classified as “Past due loans (3 months or more)” or
“Restructured loans,” whose total loans from SMBC exceed a
certain amount. SMBC establishes a reserve for possible loan
losses using the DCF method for such claims in the amount
of the difference between the present value of principal and
interest (calculated using the rationally estimated cash flows
discounted at the initial contractual interest rate) and the book
value.

SMFG 2012 77

SMFG

Notes to Consolidated Financial Statements

For other claims, a reserve is provided based on the histori-
cal loan-loss ratio.
For claims originated in specific overseas countries, an
additional reserve is provided in the amount deemed necessary
based on the assessment of political and economic conditions.
Branches and credit supervision departments assess all
claims in accordance with the internal rules for self-assessment
of assets, and the Credit Review Department, independent
from these operating sections, audits their assessment. The
reserve is provided based on the results of these assessments.
The reserve for possible loan losses of SMFG and other
consolidated subsidiaries for general claims is provided in the
amount deemed necessary based on the historical loan-loss
ratios, and for doubtful claims in the amount deemed uncol-
lectible 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 ¥685,871
million ($8,351 million) and ¥867,866 million at March 31,
2012 and 2011, 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 within the
employees’ average remaining service period at incurrence.
Unrecognized net actuarial gain or loss is amortized using
the straight-line method, primarily over 9 years within the
employees’ average remaining service period, commencing
from the next fiscal year of incurrence.
(10) Reserve for executive retirement benefits

The reserve for executive retirement benefits is provided for
payment of retirement benefits to directors, corporate auditors
and other executive officers, in the amount deemed accrued at
the fiscal year-end based on the internal regulations.

(11) Reserve for 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.

SMFG 2012

(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 losses on interest repayment

The reserve for losses 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 contingent
liabilities and provided for compensation for losses from
securities related transactions or derivative transactions, pursu-
ant 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 full 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 basis over
the full 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.

Notes to Consolidated Financial Statements

SMFG

As for the portfolio hedges to offset market fluctuation,
SMBC assesses the effectiveness of such hedges by clas-
sifying the hedged items (such as deposits and loans) and
the hedging instruments (such as interest rate swaps) by
their maturity. As for the portfolio hedges to fix cash flows,
SMBC assesses the effectiveness of such hedges by verifying
the correlation between the hedged items and the hedging
instruments.
As for the individual hedges, SMBC also 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, 2012 and
2011 were ¥309 million ($4 million) and ¥999 million,
respectively. Gross amounts of deferred hedge gains on
“macro hedge” (before deducting tax effect) at March 31,
2012 and 2011 were ¥188 million ($2 million) and ¥960
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
subsidiaries or internal transactions between trading
accounts and other accounts (or among internal sections),
SMBC manages the interest rate swaps and currency swaps
that are designated as hedging instruments in accordance
with the strict criteria for external transactions stipulated
in JICPA Industry Audit Committee Report No. 24 and
No. 25. Therefore, SMBC accounts for the gains or losses
that arise from interest rate swaps and currency swaps in its
earnings or defers them, rather than eliminating them.
Certain other consolidated subsidiaries apply the
deferred hedge accounting or fair value hedge accounting
or the special treatment for interest rate swaps.

(18) Amortization of goodwill

Goodwill on SMBC Friend Securities Co., Ltd., Sumitomo
Mitsui Finance and Leasing Company, Limited, SMBC Nikko
Securities Inc., Kansai Urban Banking Corporation, Cedyna
Financial Corporation and Promise Co., Ltd. is amortized
using the straight-line method over 20 years. Goodwill on
other companies is charged or credited to income directly
when incurred.

(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) Unapplied Accounting Standards, etc.

(Revisions of Accounting Standard for Consolidated Financial
Statements (ASBJ Statement No. 22, revised on March 25,
2011), etc.)
A special purpose entity (“SPE”) that meets certain
requirements was previously assumed not to be regarded as
a subsidiary of the entity that either had invested in the SPE
or assigned assets to the SPE. Following the revisions of the
aforementioned accounting standard, etc., the treatment is
only applied to a case where a company has assigned assets
to an SPE. SMFG intends to adopt the revised accounting
standard, etc. from the beginning of the fiscal year commenc-
ing on April 1, 2013.
As a result of the adoption of the revised accounting
standard, etc., SPEs that have previously not been regarded as
a subsidiary of SMFG but whose assets have not been assigned
by SMFG will be additionally included in the scope of consoli-
dation, resulting in inclusion of assets, liabilities, profits and
losses of the SPEs in the consolidated financial statements of
SMFG. Effects of adoption of the revised accounting standard,
etc. are currently examined.

SMFG 2012 79

SMFG

Notes to Consolidated Financial Statements

(22) Additional Information

(a) Changes of Accounting Procedures and Presentation

SMFG has adopted “Accounting Standard for Accounting
Changes and Error Corrections” (ASBJ Statement No. 24,
issued on December 4, 2009) and “Guidance on
Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Guidance No. 24, issued on December
4, 2009) for changes in accounting policies and corrections
of figures from the fiscal year ended March 31, 2012.

(b) Effects of changes in the corporate income tax rate

2011) and the “Act on Special Measures for Securing
Financial Resources Necessary to Implement Measures
for Reconstruction following the Great East Japan
Earthquake” (Act No. 117, 2011) on December 2, 2011,
the corporate income tax rate will be lowered and a
special restoration surtax will be imposed from fiscal years
beginning on or after April 1, 2012. Additionally, the
act for the use of tax loss carryforwards has been amended
and, from fiscal years beginning on or after April 1, 2012,
the use of tax loss carryforwards will be limited to the
equivalent of 80% of taxable income before deducting tax
loss carryforwards. As a result of this change, net income
decreased by ¥39,589 million ($482 million) for the year
ended March 31, 2012.

3. Trading Assets
Trading assets at March 31, 2012 and 2011 consisted of the following:

March 31
Trading securities ................................................................................................
Derivatives of trading securities ...........................................................................
Derivatives of securities related to trading transactions ........................................
Trading-related financial derivatives ....................................................................
Other trading assets .............................................................................................

Millions of yen

2012
¥4,027,609
3,419
19,503
3,888,692
257,718
¥8,196,944

2011
¥2,817,536
3,857
5,338
3,514,859
291,305
¥6,632,898

Millions of
U.S. dollars
2012
$49,039
42
237
47,348
3,138
$99,804

4. Securities
Securities at March 31, 2012 and 2011 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
U.S. dollars
2012
$357,081
5,782
38,423
31,842
84,709
$517,837
*1 Unsecured loaned securities for which borrowers have the right to sell or pledge in the amount of ¥51,022 million ($621 million) and ¥50,935 million are included in Japanese

2011
¥25,934,346
544,409
3,256,034
2,741,796
7,475,535
¥39,952,123

2012
¥29,327,057
474,884
3,155,712
2,615,168
6,957,128
¥42,529,950

Millions of yen

government bonds in Securities and in trading securities in Trading assets at March 31, 2012 and 2011, respectively.
SMBC has the right to sell or pledge, some of the unsecured borrowed securities, securities under resale agreements and securities borrowed with cash collateral. Of these securities,
¥1,961,135 million ($23,878 million) are pledged, and ¥378,167 million ($4,604 million) are held in hand at March 31, 2012. The respective amounts at March 31, 2011 were
¥3,032,285 million and ¥232,420 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 ¥1,851,841 million ($22,548 million) and ¥1,969,902 million at March 31, 2012 and 2011, respectively.

*3 Japanese stocks and other include investments in unconsolidated subsidiaries and affiliates of ¥231,200 million ($2,815 million) and ¥279,829 million at March 31, 2012 and 2011,

respectively.

*4 Japanese stocks and other include investments in jointly controlled entities of ¥107,866 million ($1,313 million) and ¥97,868 million at March 31, 2012 and 2011, respectively.

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

5. Loans and Bills Discounted

(1) Loans and bills discounted at March 31, 2012 and 2011 consisted of the following:

March 31
Bills discounted ...............................................................................................
Loans on notes .................................................................................................
Loans on deeds .................................................................................................
Overdrafts .......................................................................................................

Millions of yen

2012
¥ 202,971
2,070,729
53,647,541
6,799,356
¥62,720,599

2011
¥ 184,822
2,176,918
51,925,319
7,061,295
¥61,348,355

(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

2012

2011

¥ 74,218
1,145,347
22,502
562,882
¥1,804,951

¥ 90,777
1,031,828
25,438
498,323
¥1,646,369

Millions of
U.S. dollars
2012
$ 2,471
25,213
653,203
82,787
$763,674

Millions of
U.S. dollars
2012

$ 904
13,945
274
6,854
$21,977

*1 “Bankrupt loans” are loans, after write-off, to legally bankrupt borrowers as defined in Articles 96-1-3 and 96-1-4 of the Enforcement Ordinance No. 97 of the Japanese Corporate

Tax Law (issued in 1965) and on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest
because they are past due for a considerable period of time or for other reasons.

*2 “Non-accrual loans” are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and loans on which interest payments are deferred in order to

support the borrowers’ recovery from financial difficulties.

*3 “Past due loans (3 months or more)” are loans on which the principal or interest is past due for 3 months or more, excluding “Bankrupt loans” and “Non-accrual loans.”
*4 “Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g., reduction of the original interest rate, deferral of interest

payments, extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “Bankrupt loans,” “Non-accrual
loans” and “Past due loans (3 months or more).”

(3) Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Audit Committee Report No. 24. SMFG’s
banking subsidiaries have rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and foreign
exchanges bought without restrictions. The total face value at March 31, 2012 and 2011 was ¥754,204 million ($9,183 million) and
¥667,310 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, 2012 and 2011 were
¥47,220,313 million ($574,946 million) and ¥45,842,366 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, 2012 and 2011 were ¥39,753,611 million
($484,033 million) and ¥39,563,617 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, 2012 and 2011 consisted of the following:

March 31
Prepaid expenses ..................................................................................................
Accrued income ...................................................................................................
Deferred assets .....................................................................................................
Financial derivatives* ..........................................................................................
Other ..................................................................................................................

* Referred to in Note 31

Millions of yen

2012
¥ 35,779
259,380
779,599
1,264,676
2,283,320
¥4,622,756

2011
¥ 34,563
236,357
821,139
1,294,264
2,218,407
¥4,604,732

Millions of
U.S. dollars
2012
$ 436
3,158
9,492
15,399
27,801
$56,286

SMFG 2012 81

SMFG

Notes to Consolidated Financial Statements

7. Tangible Fixed Assets
Tangible fixed assets at March 31, 2012 and 2011 consisted of the following:

Millions of yen

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.

2012
¥ 361,205
555,179
9,063
12,585
242,488
¥1,180,522
¥ 750,082

2011
¥ 350,494
551,839
10,527
4,464
251,583
¥1,168,908
¥ 717,073

8. Intangible Fixed Assets
Intangible fixed assets at March 31, 2012 and 2011 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, 2012 and 2011 consisted of the following:

March 31
Assets pledged as collateral:

Millions of yen

2012
¥282,797
397,537
200
119,237
¥799,773

2011
¥262,068
352,790
361
58,995
¥674,216

Millions of yen

2012

2011

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

¥ 294,382
490,255
7,096
3,715,510
7,281,341
2,572,382
7,740
14,336
4,412

19,144
825,000
1,676,902
5,180,034
513,941
4,312,097
10,149
109,212

¥ 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

Millions of
U.S. dollars
2012
$ 4,398
6,760
110
153
2,953
$14,374
$ 9,133

Millions of
U.S. dollars
2012
$3,443
4,840
3
1,452
$9,738

Millions of
U.S. dollars
2012

$ 3,584
5,969
86
45,239
88,656
31,321
94
175
54

233
10,045
20,418
63,071
6,258
52,503
124
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, 2012 and 2011:

March 31
Cash and due from banks and Deposits with banks ..............................................
Trading assets ......................................................................................................
Securities .............................................................................................................

2012
¥ 23,993
86,879
24,367,992

2011
¥ 32,987
177,403
20,790,338

Millions of yen

Millions of
U.S. dollars
2012
$ 292
1,058
296,700

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

At March 31, 2012, other assets included surety deposits of ¥124,516 million ($1,516 million), variation margins of futures market
transactions of ¥17,906 million ($218 million) and other variation margins of ¥66,197 million ($806 million). At March 31, 2011, other assets
included surety deposits of ¥119,299 million, variation margins of futures market transactions of ¥18,029 million and other variation margins
of ¥84,382 million.

10. Deposits
Deposits at March 31, 2012 and 2011 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, 2012 and 2011 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, 2012 and 2011 consisted of the following:

Millions of yen

March 31
Borrowed money*2 ...................................................... ¥8,839,648 ¥10,769,668

2011

2012

Millions of yen

2012
¥ 7,685,782
40,474,217
690,036
4,497,785
26,866,418
8,593,638
3,914,321
¥92,722,199

2011
¥ 7,046,031
38,444,302
721,677
4,931,391
26,891,477
8,366,323
3,964,058
¥90,365,263

Millions of yen

2012
¥2,172,857
7,453
17,455
4,050,294
¥6,248,061

2011
¥1,623,046
1,803
5,639
3,617,812
¥5,248,302

Millions of
U.S. dollars
2012
$ 93,581
492,807
8,402
54,764
327,121
104,634
47,660
$1,128,969

Millions of
U.S. dollars
2012
$26,456
91
212
49,316
$76,075

Millions of
U.S. dollars
2012
$107,630

Average
interest rate*1
2012
0.57%

Due
Jan. 2012–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 ¥374,250 million ($4,557 million) and ¥371,232 million at March 31, 2012 and 2011, respectively.

The repayment schedule over the next 5 years on borrowed money at March 31, 2012 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
2012
¥6,931,770
427,578
518,920
284,518
118,829

Millions of U.S. dollars
2012
$84,400
5,206
6,318
3,464
1,447

SMFG 2012 83

SMFG

Notes to Consolidated Financial Statements

13. Bonds
Bonds at March 31, 2012 and 2011 consisted of the following:

March 31

Issuer

Description

SMBC:
Short-term bonds, payable in Yen ..........................

Straight bonds, payable in Yen ..............................

Straight bonds, payable in Euroyen ........................

Straight bonds, payable in 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 ..............................

Straight bonds, payable in U.S. dollars ..................

Straight bonds, payable in Renminbi .....................

Subordinated bonds, payable in Yen ......................

Millions of yen*1

2012

2011

Millions of
U.S. dollars
2012

Interest rate*2
(%)
2012

Due

¥ 19,999
[19,999]
1,233,795
[216,897]
15,900

574,424
($6,994,089 thousand)
82,799
(A$969,891 thousand)
[46,096]
1,586,411
[39,999]
346,494
209,352
($2,549,037 thousand)
[61,341]
117,717
(€1,072,787 thousand)

265,916
[49,700]
60,496
($500,000 thousand)
[60,496]
6,520
(RMB¥500,000 thousand)
142,099

¥ 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)

113,411
{26,010}
—

$ 243

0.08

Apr. 2012

15,023

0.12571–1.716 Apr. 2012–May 2025

194

0.00–4.58546 Mar. 2036–Feb. 2037

6,994

1.5112–3.95

Jul. 2013–Jan. 2022

1,008

4.28–5.76 Mar. 2013–Dec. 2014

19,316

1.03586–2.80 Jun. 2012–Dec. 2026

4,219
2,549

0.44571–2.97 May 2017–Perpetual
4.85–8.00 Jun. 2012–Perpetual

1,433

4.00–4.375 Nov. 2020–Perpetual

3,238

0.31938–8.15 Apr. 2012–Mar. 2042

737

5.95

Jun. 2012

—

2.50–3.00 Sep. 2013–Sep. 2014

125,798

1,730

2.01–4.50 Mar. 2018–Perpetual

Short-term bonds, payable in Yen ..........................

929,388
[929,388]
¥5,591,316

1,142,198
{1,142,198}
¥5,049,293

11,316

0.112–0.3000002 Apr. 2012–Dec. 2012

$68,079

*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, 2012 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
2012
¥1,423,939
454,897
446,103
607,538
487,148

Millions of U.S. dollars
2012
$17,338
5,539
5,432
7,397
5,931

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

14. Other Liabilities
Other liabilities at March 31, 2012 and 2011 consisted of the following:

March 31
Accrued expenses .................................................................................................
Unearned income .................................................................................................
Income taxes payable ...........................................................................................
Financial derivatives*1 .........................................................................................
Lease liabilities*2 .................................................................................................
Other ..................................................................................................................

Millions of yen

2012
¥ 137,287
154,480
59,789
895,750
54,169
3,461,483
¥4,762,961

2011
¥ 132,089
167,880
47,431
818,962
64,436
2,957,458
¥4,188,259

Millions of
U.S. dollars
2012
$ 1,672
1,881
728
10,906
660
42,146
$57,993

*1 Referred to in Note 31
*2 Average interest rate on lease liabilities for the year ended March 31, 2012 was 7.00%. 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, 2012 was as follows:

Millions of yen
2012
¥18,382
12,926
8,994
6,279
2,704

Millions of U.S. dollars
2012
$224
157
110
76
33

15. Land Revaluation Excess
SMBC and another consolidated subsidiary revaluated their own land
for business activities in accordance with “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

Another 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).

Another 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).

16. Capital Stock
Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2012 and 2011 were as follows:

Number of shares

2012

2011

March 31
Common stock ........................................................................................ 3,000,000,000 1,414,055,625
—
Preferred stock (Type 5) ...........................................................................
—
Preferred stock (Type 6) ...........................................................................
—
Preferred stock (Type 7) ...........................................................................
—
Preferred stock (Type 8) ...........................................................................
Preferred stock (Type 9) ...........................................................................
—
Total ........................................................................................................ 3,000,634,001 1,414,055,625

167,000
70,001
167,000
115,000
115,000

Authorized

Issued

Authorized
3,000,000,000
167,000
70,001
167,000
115,000
115,000
3,000,634,001

Issued
1,414,055,625
—
70,001
—
—
—
1,414,125,626

SMFG 2012 85

SMFG

Notes to Consolidated Financial Statements

17. Fees and Commissions
Fees and commissions for the fiscal years ended March 31, 2012 and 2011 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

2012

2011

¥ 92,397
126,984
90,350
18,896
6,325
71,066
208,853
142,940
197,865
¥955,680

¥ 33,301
98,797
¥132,099

¥ 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

18. Trading Income
Trading income for the fiscal years ended March 31, 2012 and 2011 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

2012
¥114,978
7,634
74,328
1,251
¥198,192

2011
¥ 94,234
1,538
140,157
1,162
¥237,093

19. Other Operating Income
Other operating income for the fiscal years ended March 31, 2012 and 2011 consisted of the following:

Year ended March 31
Gains on sale of bonds .........................................................................................
Gains on redemption of bonds .............................................................................
Lease-related income ............................................................................................
Gains on foreign exchange transactions ................................................................
Gains on financial derivatives ..............................................................................
Other ..................................................................................................................

Millions of yen

2012
¥ 176,344
119
789,509
23,270
—
121,322
¥1,110,566

2011
¥ 209,496
105
693,492
—
11,336
125,231
¥1,039,662

20. Other Operating Expenses
Other operating expenses for the fiscal years ended March 31, 2012 and 2011 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

2012
¥ 13,616
5,692
—
2,528
718,104
—
2,537
138,518
¥880,998

2011
¥ 47,874
7,194
984
2,701
627,378
44,556
—
127,554
¥858,243

SMFG 2012

Millions of
U.S. dollars
2012

$ 1,125
1,546
1,100
230
77
865
2,543
1,741
2,409
$11,636

$ 405
1,203
$ 1,608

Millions of
U.S. dollars
2012
$1,400
93
905
15
$2,413

Millions of
U.S. dollars
2012
$ 2,147
2
9,613
283
—
1,477
$13,522

Millions of
U.S. dollars
2012
$ 166
69
—
31
8,743
—
31
1,687
$10,727

Notes to Consolidated Financial Statements

SMFG

21. Other Income
Other income for the fiscal years ended March 31, 2012 and 2011 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

2012
¥15,654
10
2,741
4,800
25,050
27,014
¥75,272

2011
¥27,523
203
884
2,813
12,655
29,427
¥73,507

22. Other Expenses
Other expenses for the fiscal years ended March 31, 2012 and 2011 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

2012
¥ 90,305
11,659
31,875
1,474
25,364
31,122
6,507
3,861
—

—
89,008
¥291,179

2011
¥156,571
4,551
114,921
352
6,834
13,319
5,914
5,411
14,530

3,552
20,921
¥346,881

Millions of
U.S. dollars
2012
$191
0
33
58
305
329
$916

Millions of
U.S. dollars
2012
$1,099
142
388
18
309
379
79
47
—

—
1,084
$3,545

Year ended
March 31
Tokyo metropolitan area ........................................ Branches (11 branches)

Purpose of use
2012

Area

Type
Land and buildings, etc.

Corporate assets (—)
Idle assets (38 items)
Other (4 items)

Kinki area ............................................................. Branches (31 branches)

Land and buildings, etc.

Idle assets (41 items)
Other (1 item)

Other .................................................................... Branch (1 branch)

Land and buildings, etc.

Idle assets (16 items)

Millions of yen

2012
¥ 198
—
1,168
58
393
1,630
2
27
381

2011
¥ —
254
1,070
461
69
3,542
—
—
13

Millions of
U.S. dollars
2012
$ 2
—
14
1
5
20
0
0
5

At SMBC, a branch, which continuously manages and determines its income and expenses, is the smallest unit of asset group for recognition
and measurement of impairment loss of fixed assets. Assets such as corporate headquarters facilities, training facilities, data and system centers,
and health and recreational facilities which do not produce cash flows that can be attributed to individual assets are treated as corporate assets.
As for idle assets, impairment loss is measured individually. At SMFG and other consolidated subsidiaries, a branch or other group is the small-
est asset grouping unit as well.
SMBC and other consolidated 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 2012 87

SMFG

Notes to Consolidated Financial Statements

23. Other Comprehensive Income
Fiscal year ended March 31, 2012
Reclassification adjustment and tax effect of other comprehensive income

March 31
Net unrealized gains on other securities:

Amount arising during the fiscal year .............................................................................
Reclassification adjustment .............................................................................................
Before adjustment to tax effect ....................................................................................
Tax effect ....................................................................................................................
Net unrealized gains on other securities ......................................................................

Deferred losses on hedges:

Amount arising during the fiscal year .............................................................................
Reclassification adjustment .............................................................................................
Adjustment on the cost of the assets ...............................................................................
Before adjustment to tax effect ....................................................................................
Tax effect ....................................................................................................................
Deferred losses on hedges ............................................................................................

Revaluation reserve for land:

Amount arising during the fiscal year .............................................................................
Reclassification adjustment .............................................................................................
Before adjustment to tax effect ....................................................................................
Tax effect ....................................................................................................................
Revaluation reserve for land ........................................................................................

Foreign currency translation adjustment:

Amount arising during the fiscal year .............................................................................
Reclassification adjustment .............................................................................................
Before adjustment to tax effect ....................................................................................
Tax effect ....................................................................................................................
Foreign currency translation adjustment .....................................................................

Share of other comprehensive income of associates accounted for by equity method

Amount arising during the fiscal year .............................................................................
Reclassification adjustment .............................................................................................
Before adjustment to tax effect ....................................................................................
Tax effect ....................................................................................................................
Share of other comprehensive income of associates accounted for by equity method .....
Total other comprehensive income ...........................................................................

Millions of yen
2012

Millions of U.S. dollars
2012

¥241,713
(136,762)
104,950
(35,846)
69,103

(26,643)
(7,882)
(16)
(34,543)
11,578
(22,964)

—
—
—
5,613
5,613

(24,429)
1,059
(23,369)
(126)
(23,496)

(7,105)
2,453
(4,651)
—
(4,651)
¥ 23,605

$2,943
(1,665)
1,278
(437)
841

(324)
(96)
(0)
(420)
141
(279)

—
—
—
68
68

(297)
13
(284)
(2)
(286)

(87)
30
(57)
—
(57)
$ 287

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

24. Deferred Tax Assets and Liabilities

(1) Significant components of deferred tax assets and liabilities at March 31, 2012 and 2011 were as follows:

March 31
Deferred tax assets:

Millions of yen

2012

2011

Reserve for possible loan losses ...............................................................
Net operating loss carryforwards ............................................................
Write-off of securities ............................................................................
Write-off of loans ...................................................................................
Reserve for employee retirement benefits ...............................................
Net unrealized gains on other securities .................................................
Net deferred losses on hedges .................................................................
Depreciation ..........................................................................................
Other .....................................................................................................
Subtotal .................................................................................................
Valuation allowance ...............................................................................
Total deferred tax assets .........................................................................

Deferred tax liabilities:

Net unrealized 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 subsidiaries ...................................................
Other .....................................................................................................
Total deferred tax liabilities ...................................................................
Net deferred tax assets ...............................................................................

¥ 506,971
383,270
224,012
115,438
68,402
39,485
18,425
12,554
212,036
1,580,597
(942,722)
637,874

(146,715)
(19,692)
(38,524)
(9,298)
(5,684)
(67,776)
(287,692)
¥ 350,182

¥ 454,603
273,415
316,010
161,174
77,284
33,236
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

Millions of
U.S. dollars
2012

$ 6,173
4,667
2,727
1,405
833
481
224
153
2,582
19,245
(11,478)
7,767

(1,787)
(240)
(469)
(113)
(69)
(825)
(3,503)
$ 4,264

(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, 2012 and 2011. 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, 2012 and 2011 was as follows:

Statutory tax rate ...............................................................................................................................
Valuation allowance .......................................................................................................................
Dividends exempted for income tax purposes .................................................................................
Gains on step acquisitions ..............................................................................................................
Effects of changes in the corporate income tax rate .........................................................................
Equity in losses of affiliates ............................................................................................................
Other .............................................................................................................................................
Effective income tax rate ....................................................................................................................

2012
40.69%
(11.76)
(1.15)
(1.07)
4.42
1.33
0.21
32.67%

2011
40.69%
(11.53)
(1.17)
(0.62)
—
0.66
1.07
29.10%

(3) Reversal of deferred tax assets and liabilities from changes in the corporate income tax rate

Following the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc. for the Purpose of Creating a Taxation
System Responding to Changes in Economic and Social Structures” (Act No. 114, 2011) and the “Act on Special Measures for Securing
Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake” (Act No. 117,
2011) on December 2, 2011, the corporate income tax rate will be lowered and a special restoration surtax will be imposed from fiscal
years beginning on or after April 1, 2012.

In line with these changes the effective statutory tax rate in fiscal 2012 and after used by SMFG’s domestic consolidated subsidiaries

in Japan for the calculation of deferred tax assets and deferred tax liabilities has consequently been revised. As a result, “Deferred tax
assets” decreased by 21,119 million ($257 million), “Net unrealized gains (losses) on other securities” increased by ¥19,290 million
($235 million), “Net deferred gains (losses) on hedges” decreased by ¥2,587 million ($31 million), and “Income tax adjustments”
recorded during the fiscal year ended March 31, 2012 increased by ¥42,119 million ($513 million). Similarly, “Deferred tax liabilities
for land revaluation” decreased by ¥5,613 million ($68 million), while “Land revaluation excess” increased by the same amount.

SMFG 2012 89

SMFG

Notes to Consolidated Financial Statements

The effective statutory tax rate used by Sumitomo Mitsui Banking Corporation (“SMBC”), a consolidated subsidiary of SMFG, for
the calculation of deferred tax assets and deferred tax liabilities was reduced from the current rate of 40.63% to 37.94% for temporary
differences and other items expected to be eliminated during the period beginning from the consolidated fiscal year beginning on April
1, 2012 through the consolidated fiscal year beginning on April 1, 2014, and to 35.57% for temporary differences and other items
expected to be eliminated in the fiscal year beginning on April 1, 2015 and thereafter.
As a result of these changes in tax rates, “Deferred tax assets” decreased by ¥6,592 million ($80 million), “Net unrealized gains
(losses) on other securities” increased by ¥16,479 million ($201 million), “Net deferred gains (losses) on hedges” decreased by ¥2,417
million ($29 million), and “Income tax adjustments” recorded during the fiscal year ended March 31, 2012 increased by ¥20,655
million ($251 million). Moreover, “Deferred tax liabilities for land revaluation” decreased by ¥5,538 million ($67 million), and “Land
revaluation excess” increased by the same amount.

25. Changes in Net Assets

(1) Type and number of shares issued and treasury stock are as follows:

Year ended March 31, 2012
Shares issued

March 31,
2011

Number of shares

Increase

Decrease

March 31,
2012

Common stock ................................................... 1,414,055,625
70,001
Preferred stock (First series Type 6) ....................
Total .............................................................. 1,414,125,626

—
—
—

—
70,001*1
70,001

1,414,055,625
—
1,414,055,625

Treasury stock

Common stock ...................................................
Preferred stock (First series Type 6) ....................
Total ..............................................................

32,581,914
—
32,581,914

45,686,368*2
70,001*1

45,756,369

15,328,723*2
70,001*1

15,398,724

62,939,559
—
62,939,559

*1 Increase in number of treasury stock of the First Series Type 6 Preferred Stock:

• 70,001 shares due to acquisition of the treasury stock that was executed on April 1, 2011 in accordance with the provision of Article 18 of the Articles of Incorporation of

SMFG

Decrease in number of both treasury stock and shares issued of the First Series Type 6 Preferred Stock:
• 70,001 shares respectively due to cancellation of those shares that was executed on April 1, 2011
*2 Increase in number of treasury common shares issued:

• 45,686,368 shares due to purchase of fractional shares and also acquisition of SMFG shares through market purchases in accordance with the provision of Article 8 of the

Articles of Incorporation of SMFG that were subsequently delivered to the shareholders of Promise Co., Ltd. in consideration for a share exchange

Decrease in number of treasury common shares issued:
• 15,328,723 shares due to reduction of 7,363 shares through sale of fractional shares and exercise of stock options and reduction of 15,321,360 shares through the alloca-
tion of SMFG shares held by SMFG Card & Credit, Inc., a consolidated subsidiary of SMFG for the purpose of acquiring 100% stake of Cedyna Financial Corporation, to
the shareholders of Cedyna Financial Corporation on May 1, 2011, and sale of SMFG shares by consolidated subsidiaries

Year ended March 31, 2011
Shares issued

March 31,
2010

Number of shares

Increase

Decrease

March 31,
2011

—
—
—

1,414,055,625
70,001
1,414,125,626

Treasury stock

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:

• 37,591 shares due to purchase of fractional shares

• 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:
• 5,177 shares due to sale of fractional shares

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(2) Information on stock acquisition rights is as follows:

Year ended March 31, 2012
SMFG ..............................
Consolidated subsidiary ...
Total ................................

Year ended March 31, 2011
SMFG ..............................
Consolidated subsidiary ...
Total ................................

Detail of stock
acquisition rights
Stock options
—

Type of
shares
—
—

March 31,
2011
—
—

Number of shares

Increase
—
—

Decrease
—
—

March 31,
2012
—
—

Detail of stock
acquisition rights
Stock options
—

Type of
shares
—
—

March 31,
2010
—
—

Number of shares

Increase
—
—

Decrease
—
—

March 31,
2011
—
—

Millions of
U.S. dollars
March 31,
2012
$7
1
$8

Millions of yen
March 31,
2012
¥598
94
¥692

Millions of yen
March 31,
2011
¥170
91
¥262

(3) Information on dividends is as follows:

(a) Dividends paid in the fiscal year ended March 31, 2011

Type of shares
Common stock ......................................................
Preferred stock (First 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

Effective date

Date of resolution: Ordinary general meeting of shareholders held on June 29, 2010

Type of shares
Common stock ......................................................
Preferred stock (First 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

Millions of yen, except per share amount
Cash dividends
per share
¥ 50
44,250

Record date

September 30, 2010 December 3, 2010
September 30, 2010 December 3, 2010

(b) Dividends paid in the fiscal year ended March 31, 2012

Type of shares
Common stock ......................................................
Preferred stock (First series Type 6) ........................

Aggregate amount
of dividends
¥70,514
3,097

Millions of yen, except per share amount
Cash dividends
per share
¥ 50
44,250

Record date
March 31, 2011
March 31, 2011

Effective date
June 29, 2011
June 29, 2011

Date of resolution: Ordinary general meeting of shareholders held on June 29, 2011

Type of shares
Common stock ......................................................

Aggregate amount
of dividends
¥70,514

Date of resolution: Meeting of the Board of Directors held on November 14, 2011

Millions of yen, except per share amount
Cash dividends
per share
¥50

Record date

September 30, 2011 December 2, 2011

Effective date

Type of shares
Common stock ......................................................

Aggregate amount
of dividends
¥68,230

Date of resolution: Ordinary general meeting of shareholders held on June 28, 2012

Millions of yen, except per share amount
Source
of dividends
Retained earnings

Cash dividends
per share
¥50

Record date

Effective date
March 31, 2012 June 28, 2012

SMFG 2012 91

SMFG

Notes to Consolidated Financial Statements

26. Cash Flows
Fiscal year ended March 31, 2012

7 companies including Promise Co., Ltd. were newly consolidated following a tender offer by SMBC for shares and a subscription by SMFG
for new shares by way of a third-party allotment. Major assets and liabilities as of the beginning of consolidation and a summary of share
acquisition cost and net expenses for the acquisition are as follows:

Assets ...................................................................................................................................
[Loans and bills discounted] ..............................................................................................
[Customers’ liabilities for acceptances and guarantees] ......................................................
Liabilities .............................................................................................................................
[Borrowed money] ............................................................................................................
[Reserve for losses on interest repayment] .........................................................................
[Acceptances and guarantees] ............................................................................................
Stock acquisition rights ........................................................................................................
Minority interests .................................................................................................................
Goodwill ..............................................................................................................................

Stock acquisition cost of the 7 companies .............................................................................
Cash and cash equivalents of the 7 companies .......................................................................
Fair value of common stock of Promise owned before business combination ..........................
Fair value of common stock of Promise additionally acquired through subscription for
shares issued by way of third-party allotment .....................................................................

Millions of yen
¥1,671,681
795,148
564,528
(1,511,980)
(300,884)
(367,220)
(564,528)
(56)
(3,576)
57,300

213,369
(4,300)
(21,699)

(119,999)

Millions of U.S. dollars
$20,354
9,682
6,874
(18,410)
(3,664)
(4,471)
(6,874)
(1)
(43)
698

2,598
(53)
(264)

(1,461)

Difference: Expenses required for acquisition of the 7 companies ..........................................

¥ 67,369

$ 820

Fiscal year ended March 31, 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 .........................................................

Millions of yen
¥2,631,525
438,497
803,639
1,124,290

Liabilities .............................................................................................................................
Borrowed money ...............................................................................................................
Acceptances and guarantees ..............................................................................................

¥2,520,313
989,790
1,124,290

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

27. Employee Retirement Benefits

(1) Outline of employee retirement benefits

Consolidated subsidiaries in Japan have contributory funded defined-benefit pension plans such as employee pension plans and lump-
sum severance indemnity plans. Certain domestic consolidated subsidiaries in Japan adopt the defined-contribution pension plan and
have a general type of employee pension plans. They may grant additional benefits 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) ...........................

2012
¥(990,449)
902,254
(88,194)
261,128
(6,624)

166,309
212,221
¥ (45,911)

Note: Some consolidated subsidiaries adopt the simple method in calculating the projected benefit obligation.

2011
¥(976,271)
883,255
(93,016)
266,775
(10,365)

163,393
207,997
¥ (44,604)

(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 ..........................................................................................................

2012
¥24,646
24,013
(27,169)
38,736
(6,542)
5,136
¥58,820

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.”

2011
¥23,505
23,621
(27,624)
45,902
(6,229)
4,812
¥63,988

(4) Assumptions

Millions of
U.S. dollars
2012
$(12,060)
10,986
(1,074)
3,180
(81)

2,025
2,584
$ (559)

Millions of
U.S. dollars
2012

$300
292
(331)
472
(80)
63
$716

The principal assumptions used in determining benefit obligation and pension expenses at or for the fiscal years ended March 31, 2012
and 2011 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

2011
1.4% to 2.5%
5.4% to 9.0%
0% to 4.0%
5.5% to 5.6%

1.15% to 2.5%
4.7% to 7.0%
0% to 4.1%
3.8% to 5.5%

2012

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, 2012 and 2011.
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, 2012 and 2011.

SMFG 2012 93

SMFG

Notes to Consolidated Financial Statements

28. 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.

(b) Lessor side

(i) Breakdown of lease investment assets

March 31
Lease receivables ...................................................................................
Residual value ......................................................................................
Unearned interest income .....................................................................
Total .....................................................................................................

2012
¥1,172,940
89,463
(179,638)
¥1,082,766

2011
¥1,241,757
95,359
(206,317)
¥1,130,799

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

2012
¥229,520
172,714
95,022
60,591
46,063
93,592
¥697,504

2011
¥230,050
160,632
111,555
53,371
40,555
84,682
¥680,846

Lease payments receivable related to investment assets

Millions of yen

2012
¥ 365,967
283,506
185,126
126,973
73,022
138,342
¥1,172,940

2011
¥ 389,029
288,064
210,604
129,630
77,517
146,911
¥1,241,757

Millions of
U.S. dollars
2012
$14,282
1,089
(2,187)
$13,184

Millions of
U.S. dollars
2012
$2,795
2,103
1,157
738
561
1,139
$8,493

Millions of
U.S. dollars
2012
$ 4,456
3,452
2,254
1,546
889
1,685
$14,282

(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, 2012 was ¥8,849 million ($108 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, 2012 and 2011 were as follows:

March 31
Due within 1 year .................................................................................
Due after 1 year ....................................................................................
Total .....................................................................................................

2012
¥ 42,247
294,411
¥336,658

2011
¥ 34,804
267,049
¥301,854

Millions of yen

Millions of
U.S. dollars
2012
$ 514
3,585
$4,099

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(b) Lessor side

Future minimum lease payments on operating leases which were not cancelable at March 31, 2012 and 2011 were as follows:

2012
¥ 35,329
158,814
¥194,143

2011
¥ 36,995
156,549
¥193,545

Millions of yen

Millions of
U.S. dollars
2012
$ 430
1,934
$2,364

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.

29. 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, consumer finance,
and system development and information processing.
Its 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, and sale
of insurance products.
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”). At SMBC, SMFG’s major
consolidated subsidiary, derivative transactions for ALM
purposes are undertaken by the Treasury Department and
the International Treasury Department of the Treasury
Unit, while derivative transactions for trading purposes
are undertaken by the Trading Department of the Treasury
Unit.

(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.

(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

SMFG 2012 95

SMFG

Notes to Consolidated Financial Statements

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, Credit Portfolio Management Department
within the Credit & Investment Planning Department
works to stabilize SMBC’s overall credit portfolio
through using credit derivatives and selling loan
claims.

In addition to these, the Internal Audit Unit, operat-
ing independently from the business units, audits asset

SMFG 2012

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
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
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

Notes to Consolidated Financial Statements

SMFG

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. Regarding banking book (market opera-
tions for generating profit through management of
interest rates, terms, and other aspects of assets (loans,
bonds, etc.) and liabilities (deposits, etc.)) and trading
book (market operations for generating profit by
taking advantage of short-term fluctuations in market
values and differences in value among markets), SMBC
calculates the maximum loss that may occur as a result
of market fluctuations in one day with a probability
of 1% based on four years of historical observation.
Concerning the holding of shares (listed shares) for the
purpose of strategic investment, SMBC calculated the
maximum loss based on the same method as used for
banking book and trading book as of March 31, 2011.
From the fiscal year ended March 31, 2012, SMBC
calculates the maximum loss that may occur as a result
of market fluctuation in one year with a probability of
1% based on ten years of historical observation.
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, 2012, total VaR of SMBC and other
major consolidated subsidiaries was ¥32.0 billion in the
banking book, ¥10.0 billion in the trading book and
¥897.9 billion in the holding of 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 fluctuating
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

SMFG 2012 97

SMFG

Notes to Consolidated Financial Statements

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.

(2) Fair value of financial instruments

(a) “Consolidated balance sheet amount,” “Fair value” and “Net unrealized gains (losses)” of financial instruments as of March 31,

2012 and 2011 are as follows. The amounts shown in the following table do not include financial instruments whose fair values are
extremely difficult to determine, such as unlisted stocks classified as “other securities,” and stocks of subsidiaries and affiliates.

March 31

1) Cash and due from banks and Deposits with banks*1 .......................
2) Call loans and bills bought*1 ...........................................................
3) Receivables under resale agreements ................................................
4) Receivables under securities borrowing transactions ........................
5) Monetary claims bought*1 ...............................................................
6) Trading assets

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

Bond classified as held-to-maturity ..............................................
Other securities ...........................................................................
9) Loans and bills discounted ...............................................................
Reserve for possible loan losses*1 .................................................

10) Foreign exchanges*1 ........................................................................
11) Lease receivables and investment assets*1 .........................................
Total assets ......................................................................................
1) Deposits ..........................................................................................
2) Negotiable certificates of deposit .....................................................
3) Call money and bills sold .................................................................
4) Payables under repurchase agreements .............................................
5) Payables under securities lending transactions .................................
6) Commercial paper ...........................................................................
7) Trading liabilities

Trading securities sold for short sales ...........................................
8) Borrowed money .............................................................................
9) Foreign exchanges ...........................................................................
10) Short-term bonds .............................................................................
11) Bonds ..............................................................................................
12) Due to trust account ........................................................................
Total liabilities ................................................................................
Derivative transactions*2

Consolidated balance
sheet amount
¥ 7,711,078
1,290,685
227,749
4,539,555
1,354,400

4,285,328
23,878

5,277,668
36,403,944
62,720,599
(757,820)
61,962,778
1,276,510
1,690,977
¥126,044,556
¥ 84,128,561
8,593,638
2,144,599
1,676,902
5,810,730
1,193,249

2,172,857
8,839,648
302,580
949,388
4,641,927
443,723
¥120,897,808

Millions of yen
2012

Fair value
¥ 7,715,673
1,291,614
228,471
4,539,555
1,360,792

4,285,328
23,878

5,346,853
36,403,944

63,076,899
1,281,154
1,771,120
¥127,325,285
¥ 84,136,544
8,593,118
2,144,599
1,676,902
5,810,730
1,193,249

2,172,857
8,856,720
302,580
949,385
4,771,814
443,723
¥121,052,227

Hedge accounting not applied .....................................................
Hedge accounting applied ...........................................................
Total ................................................................................................

¥ (102,744)
308,082
¥ 205,338

Net unrealized gains
(losses)
¥ 4,594
928
722
—
6,391

—
—

69,184
—

1,114,120
4,643
80,143
¥1,280,729
¥ 7,982
(519)
(0)
—
—
—

—
17,072
—
(3)
129,886
—
¥ 154,418

¥ —
—
¥ —

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

March 31

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

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 2012 99

SMFG

Notes to Consolidated Financial Statements

Millions of U.S. dollars
2012

March 31

Securities classified as trading purposes ........................................
7) Money held in trust .........................................................................
8) Securities

Consolidated balance
sheet amount
$ 93,889
15,715
2,773
55,273
16,491

52,177
291

64,260
443,248
763,675
(9,227)
754,448
15,542
20,589
$1,534,696
$1,024,334
104,635
26,112
20,418
70,750
14,529

26,456
107,630
3,684
11,560
56,519
5,403
$1,472,030

Fair value
$ 93,945
15,726
2,782
55,273
16,569

52,177
291

65,102
443,248

768,013
15,599
21,565
$1,550,290
$1,024,431
104,628
26,112
20,418
70,750
14,529

26,456
107,838
3,684
11,560
58,101
5,403
$1,473,910

$ (1,251)
3,751
$ 2,500

Net unrealized gains
(losses)
$ 56
11
9
—
78

—
—

842
—

13,565
57
976
$15,594
$ 97
(7)
(0)
—
—
—

—
208
—
(0)
1,582
—
$ 1,880

$ —
—
$ —

*1 The amounts 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. Debts and credits arising from derivative transactions are presented on a net basis, with a net debt
presented in square brackets.

(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

100

SMFG 2012

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.

Notes to Consolidated Financial Statements

SMFG

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.

SMFG 2012 101

SMFG

Notes to Consolidated Financial Statements

(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

2012

2011

Millions of U.S.
dollars
2012

Monetary claims bought without market prices*1 ........................................

¥ 6,062

¥ 7,606

$ 74

Securities:

Unlisted stocks, etc.*2, 4 ..............................................................................
Investments in partnership, etc.*3, 4 .............................................................
Total ................................................................................................................
*1 They are beneficiary claims that (a) behave more like equity than debt, (b) do not have market prices, and (c) it is difficult to rationally estimate fair values.
*2 They are 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 They are 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

278,869
340,113
¥626,589

271,149
345,987
¥623,198

3,301
4,213
$7,588

changes in their balance sheets and statements of income.

*4 Unlisted stocks and investments in partnership totaling ¥9,292 million ($113 million) and ¥15,076 million were written-down in the fiscal years ended March 31, 2012 and

2011, 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 ............................................
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
¥ 6,723,816
1,264,667
168,028
4,539,555
950,515
8,586,192
310,255
210,000
17,934
81,321
1,000
8,275,936
7,128,558
44,336
551,651
551,389
13,712,810
1,276,515
522,191
¥37,744,292

Millions of yen
2012

After 1 year
through 5 years
¥ 3,166
27,150
59,721
—
129,125
26,436,600
4,773,397
4,465,000
159,310
149,086
—
21,663,203
14,798,646
233,668
1,893,545
4,737,343
23,762,958
1,276
919,013
¥51,339,012

After 5 years
through 10 years
¥ —
—
—
—
69,604
3,252,686
181,500
170,000
—
8,000
3,500
3,071,186
2,399,100
12,738
348,066
311,281
8,932,653
—
114,458
¥12,369,403

After 10 years
¥ —
—
—
—
194,114
629,654
—
—
—
—
—
629,654
—
42
58,126
571,486
8,445,738
—
40,969
¥9,310,476

102

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

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

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

Within 1 year
$ 81,868
15,398
2,046
55,273
11,573
104,544
3,778
2,557
219
990
12
100,766
86,796
540
6,717
6,713
166,965
15,543
6,358
459,568

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

Millions of U.S. dollars
2012

After 1 year
through 5 years
$ 39
331
727
—
1,572
321,887
58,120
54,365
1,940
1,815
—
263,767
180,186
2,845
23,055
57,681
289,333
16
11,190
625,095

After 5 years
through 10 years
$ —
—
—
—
848
39,604
2,210
2,070
—
97
43
37,394
29,211
155
4,238
3,790
108,762
—
1,394
150,608

After 10 years
¥ —
—
—
—
193,178
547,556
—
—
—
—
—
547,556
—
44
58,833
488,678
11,235,643
—
39,086
¥12,015,464

After 10 years
$ —
—
—
—
2,363
7,667
—
—
—
—
—
7,667
—
1
708
6,958
102,834
—
499
113,363

*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 ..........................................................................................

2012
¥ —
28,667
1,116,378
2,845
5,960

2011

¥ 2,043
27,402
998,936
616
8,685

Millions of yen

Millions of
U.S. dollars
2012
$ —
349
13,593
35
73

*2 Does not include “Monetary claims bought” and “Loans and bills discounted” without tenure totaling ¥1,789 million ($22 million) and ¥6,750,883 million ($82,198 million) at
March 31, 2012, respectively. Does not include “Monetary claims bought” and “Loans and bills discounted” without tenure totaling ¥4,047 million and ¥6,717,074 million at
March 31, 2011, respectively.

SMFG 2012 103

SMFG

Notes to Consolidated Financial Statements

(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
¥ 79,446,175
8,535,575
2,144,599
1,676,902
5,810,730
1,193,249
6,931,770
302,580
949,400
474,539
443,723
¥107,909,247

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

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
$ 967,322
103,927
26,112
20,418
70,750
14,529
84,400
3,684
11,560
5,778
5,403
$1,313,883

* Demand deposits are included in “Within 1 year.” Deposits include current deposits.

Millions of yen
2012

After 1 year
through 5 years
¥4,052,815
58,062
—
—
—
—
1,349,848
—
—
1,995,686
—
¥7,456,413

After 5 years
through 10 years
¥ 362,805
—
—
—
—
—
323,272
—
—
1,912,623
—
¥2,598,701

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 U.S. dollars
2012

After 1 year
through 5 years
$49,346
707
—
—
—
—
16,436
—
—
24,299
—
$90,788

After 5 years
through 10 years
$ 4,417
—
—
—
—
—
3,936
—
—
23,288
—
$31,641

After 10 years
¥266,577
—
—
—
—
—
234,757
—
—
260,837
—
¥762,172

After 10 years
¥227,549
—
—
—
—
—
158,043
—
—
293,153
—
¥678,746

After 10 years
$3,246
—
—
—
—
—
2,858
—
—
3,176
—
$9,280

104

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

30. 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 (losses) included in the earnings for the fiscal year .............

2012

¥16,879

2011

¥(6,863)

Millions of yen

(b) Bonds classified as held-to-maturity

March 31
Bonds with unrealized gains:

Consolidated balance
sheet amount

Japanese government bonds ................................................................
Japanese local government bonds ........................................................
Japanese corporate bonds ....................................................................
Other ..................................................................................................
Subtotal ..........................................................................................

Bonds with unrealized losses:

¥4,787,498
175,423
237,210
2,695
¥5,202,828

¥ 70,020
2,302
713
10,402
¥ 83,438
¥5,286,267

March 31
Bonds with unrealized gains:

Consolidated balance
sheet amount

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

Millions of yen
2012

Fair value

¥4,849,443
178,243
241,726
2,703
¥5,272,117

¥ 69,930
2,298
710
10,396
¥ 83,335
¥5,355,452

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 U.S.
dollars
2012

$206

Net unrealized
gains (losses)

¥61,944
2,819
4,515
8
¥69,288

¥ (90)
(3)
(3)
(6)
¥ (103)
¥69,184

Net unrealized
gains (losses)

¥52,821
2,721
5,837
8
¥61,389

¥ (1,463)
(39)
(9)
(19)
¥ (1,531)
¥59,857

SMFG 2012 105

SMFG

Notes to Consolidated Financial Statements

Millions of U.S. dollars
2012

March 31
Bonds with unrealized gains:

Consolidated balance
sheet amount

Bonds with unrealized losses:

$58,292
2,136
2,888
33
$63,349

$ 852
28
9
127
$ 1,016
$64,365

March 31
Other securities with unrealized gains:

Consolidated balance
sheet amount

Stocks .................................................................................................
Bonds .................................................................................................
Japanese government bonds ............................................................
Japanese local government bonds ....................................................
Japanese corporate bonds .................................................................
Other ..................................................................................................
Subtotal ..........................................................................................

Other securities with unrealized losses:

¥ 1,193,663
24,475,020
21,717,683
289,456
2,467,880
4,649,021
¥30,317,706

¥ 946,993
3,209,463
2,751,854
7,702
449,906
2,461,368
¥ 6,617,825
¥36,935,531

March 31
Other securities with unrealized gains:

Consolidated balance
sheet amount

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

Fair value

$59,046
2,170
2,943
33
$64,192

$ 851
28
9
127
$ 1,015
$65,207

Millions of yen
2012

Acquisition cost

¥ 703,589
24,356,856
21,654,331
287,307
2,415,217
4,510,332
¥29,570,777

¥ 1,165,606
3,215,812
2,752,509
7,717
455,585
2,508,349
¥ 6,889,769
¥36,460,546

Millions of yen
2011

Acquisition cost

¥ 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

Net unrealized
gains (losses)

$754
34
55
0
$843

$ (1)
(0)
(0)
(0)
$ (1)
$842

Net unrealized
gains (losses)

¥ 490,074
118,164
63,351
2,149
52,663
138,689
¥ 746,928

¥(218,613)
(6,348)
(654)
(15)
(5,678)
(46,981)
¥(271,943)
¥ 474,984

Net unrealized
gains (losses)

¥ 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

106

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

March 31
Other securities with unrealized gains:

Other securities with unrealized losses:

Millions of U.S. dollars
2012

Consolidated balance
sheet amount

Acquisition cost

Net unrealized
gains (losses)

$ 14,534
298,003
264,431
3,524
30,048
56,606
$369,143

$ 11,530
39,078
33,506
94
5,478
29,969
$ 80,577
$449,720

$ 8,567
296,565
263,660
3,498
29,407
54,917
$360,049

$ 14,192
39,155
33,514
94
5,547
30,541
$ 83,888
$443,937

$ 5,967
1,438
771
26
641
1,689
$ 9,094

$(2,662)
(77)
(8)
(0)
(69)
(572)
$(3,311)
$ 5,783

Notes: 1. Net unrealized gains (losses) on other securities shown above include gains of ¥196 million ($2 million) for the fiscal year ended March 31, 2012 and ¥1,153 million

for the fiscal year ended March 31, 2011 that are recognized in the fiscal year’s earnings by applying fair value hedge accounting.

2. Other securities whose fair values are extremely difficult to determine are as follows:

Millions of yen

March 31
Stocks .........................................................................................................................
Other .........................................................................................................................
Total ...........................................................................................................................

2012
¥265,512
357,686
¥623,198

2011
¥274,329
352,260
¥626,589

Millions of U.S. dollars
2012
$3,233
4,355
$7,588

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 fiscal year ended March 31, 2012 and 2011

There are no corresponding transactions.

(e) Consolidated balance sheet amounts of other securities sold during the fiscal year ended March 31, 2012 and 2011

Year ended March 31
Stocks .....................................................................................................
Bonds .....................................................................................................
Japanese government bonds ................................................................
Japanese local government bonds ........................................................
Japanese corporate bonds ....................................................................
Other .....................................................................................................
Total .......................................................................................................

Sales amount
¥ 33,752
16,676,636
16,261,807
178,423
236,405
15,598,701
¥32,309,090

Sales amount
¥ 47,019
18,058,502
17,690,062
137,365
231,074
18,652,000
¥36,757,522

Millions of yen
2012
Gains on sales
¥ 8,921
39,724
38,204
553
966
143,163
¥191,809

Millions of yen
2011
Gains on sales
¥ 11,371
71,653
69,180
907
1,566
152,588
¥235,613

Losses on sales
¥ (3,221)
(2,586)
(2,115)
(256)
(214)
(16,788)
¥(22,596)

Losses on sales
¥ (3,203)
(32,572)
(31,297)
(633)
(641)
(16,204)
¥(51,980)

SMFG 2012 107

SMFG

Notes to Consolidated Financial Statements

Sales amount
$ 411
203,052
198,001
2,173
2,878
189,927
$393,390

Millions of U.S. dollars
2012
Gains on sales
$ 108
484
465
7
12
1,743
$2,335

Losses on sales

$ (39)
(32)
(26)
(3)
(3)
(204)
$(275)

(f) Change of classification of securities

There are no corresponding transactions.

(g) Write-down of securities

Other securities with fair value are considered as impaired if the fair value decreases materially below the acquisition cost and such
decline is not considered as recoverable. The fair value is recognized as the consolidated balance sheet amount and the amount of
write-down is accounted for as valuation loss for the fiscal year. Valuation losses for the fiscal years ended March 31, 2012 and 2011
were ¥27,988 million ($341 million) and ¥109,921 million, respectively. The rule for determining “material decline” is as follows
and is based on the classification of issuers under the rules of 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
Valuation gains (losses) included in the earnings for the fiscal year .............

2012
¥(2)

2011
¥1

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

2012
¥22,430
22,477
(46)
—
(46)

2011
¥22,569
22,527
42
42
—

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
2012
$(0)

Millions of
U.S. dollars
2012
$273
274
(1)
—
(1)

108

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(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 .....................................................

2012
¥474,803
474,849
(46)
138,439
336,363
13,124

7,194
¥330,433

2011
¥369,852
369,810
42
102,593
267,259
7,125

12,172
¥272,306

Millions of
U.S. dollars
2012
$5,781
5,782
(1)
1,686
4,095
160

88
$4,023

Notes: 1. Gains of ¥196 million ($2 million) for the fiscal year ended March 31, 2012 and ¥1,153 million for the fiscal year ended March 31, 2011 recognized in the fiscal

year’s earnings by applying fair value hedge accounting are deducted from net unrealized gains on other securities.

2. Net unrealized gains included foreign currency translation adjustments on non-marketable securities denominated in foreign currencies.

31. 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:

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 13,701,646
12,963,619

¥ 2,323,383
1,931,357

¥ (9,067)
9,046

Interest rate options:

16,413
49,239

—
—

(1)
5

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

4,433,489
4,386,457
369,468,218
169,758,863
173,687,207
25,888,092

37,687
68,390
281,215,701
132,573,198
132,110,404
16,402,974

Interest rate swaptions:

4,070,533
3,114,421

2,032,320
1,987,178

Caps:

15,725,631
6,947,188

11,272,029
3,066,687

Floors:

Sold ...................................................................................................
Bought ...............................................................................................

Other:

877,557
7,991,968

—
3,589,273
/

250,823
1,984,956

—
1,798,757
/

(166)
(148)
75,045
5,648,845
(5,573,527)
(3,475)

(56,297)
49,318

(6,675)
6,717

(4,549)
4,192

(166)
(148)
75,045
5,648,845
(5,573,527)
(3,475)

(56,297)
49,318

(6,675)
6,717

(4,549)
4,192

—
19,137
¥ 86,557

SMFG 2012 109

SMFG

Notes to Consolidated Financial Statements

March 31
Listed
Interest rate futures:

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

Interest rate options:

16,628
420,747

—
—

(1)
(12)

Over-the-counter
Forward rate agreements:

—
19,504,719
356,885,048
158,333,988
170,756,972
27,653,869

—
314,376
267,296,032
120,027,611
129,214,787
17,913,499

Interest rate swaptions:

3,391,868
2,924,852

Caps:

20,895,278
9,178,858

Floors:

Other:

882,481
8,551,945

578,528
1,678,256
/

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

March 31
Listed
Interest rate futures:

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 166,829
157,843

$ 28,289
23,516

$ (110)
110

Interest rate options:

200
600

—
—

(0)
0

Over-the-counter
Forward rate agreements:

53,981
53,409
4,498,578
2,066,953
2,114,784
315,209

Interest rate swaptions:

49,562
37,921

Caps:

191,472
84,588

Floors:

Other:

10,685
97,309

—
43,702
/

459
833
3,424,031
1,614,187
1,608,552
199,720

24,745
24,196

137,246
37,339

3,054
24,168

—
21,901
/

(2)
(2)
913
68,779
(67,862)
(42)

(685)
600

(81)
82

(55)
51

(2)
(2)
913
68,779
(67,862)
(42)

(685)
600

(81)
82

(55)
51

—
233
$ 1,054

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.

110

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

(b) Currency derivatives

March 31
Listed
Currency futures:

¥ 295,297
1,119,349

¥ —
—

Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

19,742,032

12,527,350

(396,973)

(38,094)

654,616
702,295
36,189,143

2,904,319
2,744,179
/

473,930
530,318
2,989,559

1,623,064
1,504,605
/

(16,082)
27,032
84,518

(229,554)
315,643
¥(215,415)

(16,082)
27,032
84,518

(229,554)
315,643
¥143,463

Millions of yen
2011

March 31
Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

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

March 31
Listed
Currency futures:

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 3,595
13,629

$ —
—

Over-the-counter
Currency swaps .......................................................................................
Currency swaptions:

240,375

152,531

(4,833)

7,970
8,551
440,632

35,362
33,413
/

5,770
6,457
36,400

19,762
18,320
/

(196)
329
1,029

(2,795)
3,843
$(2,623)

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.

$ —
—

(463)

(196)
329
1,029

(2,795)
3,843
$1,747

SMFG 2012 111

SMFG

Notes to Consolidated Financial Statements

March 31
Listed
Equity price index futures:

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥298,239
71,550

¥ —
—

¥ (6,384)
913

Equity price index options:

390
240

—
—

(1)
2

Over-the-counter
Equity options:

194,646
197,500

192,842
191,432

Equity index forward contracts:

Equity index swaps:

Receivable equity index/payable short-term floating rate ....................
Receivable short-term floating rate/payable equity index ....................
Total .......................................................................................................

—
21,965

8,795
9,495
/

—
—

7,295
7,895
/

(49,023)
49,205

—
822

(154)
152
¥ (4,467)

(49,023)
49,205

—
822

(154)
152
¥ (4,467)

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

¥ —
—

Equity price index options:

6,200
4,456

—
—

Over-the-counter
Equity options:

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

March 31
Listed
Equity price index futures:

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$3,631
871

Equity price index options:

5
3

Over-the-counter
Equity options:

2,370
2,405

Equity index forward contracts:

Equity index swaps:

—
267

107
116
/

$ —
—

—
—

2,348
2,331

—
—

89
96
/

$ (77)
11

(0)
0

(597)
599

—
10

(2)
2
$ (54)

$ (77)
11

(0)
0

(597)
599

—
10

(2)
2
$ (54)

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.

112

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

(d) Bond derivatives

March 31
Listed
Bond futures:

¥2,804,083
2,565,575

Bond futures options:

92,483
181,010

Over-the-counter
Forward bond agreements:

Bond options:

1,150
2,924

38,894
38,894
/

¥—
—

—
—

—
—
/

¥(1,426)
1,791

35
(53)

126
30

35
(53)

126
30

(53)
115
¥ 566

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

Bond futures options:

29,100
58,800

—
—

Over-the-counter
Forward bond agreements:

Bond options:

2,994
33,313

24,843
24,843
/

—
32,096

—
—
/

27
(31)

48
739

27
(31)

48
739

(162)
129
¥ (461)

March 31
Listed
Bond futures:

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$34,142
31,238

Bond futures options:

1,126
2,204

Over-the-counter
Forward bond agreements:

Bond options:

14
36

474
474
/

$—
—

—
—

—
—
/

$(17)
22

0
(0)

2
0

(1)
1
$ 7

$(17)
22

0
(0)

2
0

(1)
1
$ 7

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.

SMFG 2012 113

SMFG

Notes to Consolidated Financial Statements

(e) Commodity derivatives

March 31
Listed
Commodity futures:

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥ 5,949
5,788

¥ —
—

¥ 107
(116)

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:

139,982
111,479
13,822

12,779
4,929
/

117,754
91,310
13,014

10,821
4,177
/

(29,523)
57,246
1,500

(223)
58
¥29,049

(29,523)
57,246
1,500

(223)
58
¥29,049

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)

Over-the-counter
Commodity swaps:

Commodity options:

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

March 31
Listed
Commodity futures:

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$ 72
70

$ —
—

Over-the-counter
Commodity swaps:

Commodity options:

1,704
1,357
168

156
60
/

1,434
1,112
158

132
51
/

$ 1
(1)

(359)
697
18

(3)
1
$354

$ 1
(1)

(359)
697
18

(3)
1
$354

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.

114

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(f) Credit derivative transactions

March 31
Over-the-counter
Credit default options:

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

¥793,663
783,152
/

¥649,116
575,684
/

¥(18,420)
19,385
¥ 964

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

March 31
Over-the-counter
Credit default options:

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

Valuation
gains (losses)

$9,663
9,536
/

$7,904
7,009
/

$(224)
236
$ 12

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
deposits

Millions of yen
2012

Contract amount

Total

Over 1 year

Fair value

¥ 739,170
7,306,784
36,107,314
24,074,085
12,003,883
29,345

¥ — ¥ (146)
(96)
27,467
443,546
(416,369)
290

356,484
29,296,886
18,722,477
10,565,063
9,345

March 31

Hedge accounting method
Deferral hedge method

Interest futures:

Type of derivative

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 .......
Receivable floating rate/payable floating rate ...

Interest rate swaps: .............................................. Loans and bills discounted;

Receivable fixed rate/payable fixed rate............
Receivable floating rate/payable fixed rate .......
Receivable floating rate/payable floating rate ...
Total ....................................................................

borrowed money; bonds
payable

330,000
—

3,340
3,340

—
7,850
1,641
1,361
280
218,688
3,000
193,688
22,000
/

3,340
3,340

—
—
—
—
—
137,515
1,000
125,515
11,000
/

2,719
—

265
(265)

—
0
(43)
(39)
(3)

(Note 3)

¥ 29,900

SMFG 2012 115

SMFG

Notes to Consolidated Financial Statements

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;

Receivable fixed rate/payable floating rate .......
Receivable floating rate/payable fixed rate .......
Receivable floating rate/payable floating rate ...
Total ....................................................................

borrowed money; bonds
payable

Principal items hedged
Interest-earning/bearing
financial assets/liabilities
such as loans and bills
discounted, other securi-
ties (bonds), deposits and
negotiable certificates of
deposits

March 31

Hedge accounting method
Deferral hedge method

Interest futures:

Type of derivative

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 .......
Receivable floating rate/payable floating rate ...

Interest rate swaps: .............................................. Loans and bills discounted;

borrowed money; bonds
payable

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

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

$ 9,000
88,966
439,636
293,122
146,157
357

$ —
4,340
356,714
227,962
128,638
114

$ (2)
(1)
334
5,401
(5,070)
3

4,018
—

41
41

—
96
20
17
3
2,663
37
2,358
268
/

4,018
—

41
41

—
—
—
—
—
1,674
12
1,528
134
/

33
—

3
(3)

—
0
(0)
(0)
(0)

(Note 3)

$ 364

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 “29. Financial Instruments.”

116

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(b) Currency derivatives

March 31

Hedge accounting method
Deferral hedge method

Type of derivative

Principal items hedged
Currency swap ..................................................... Foreign currency denomi-
Forward foreign exchange ....................................

nated loans and bills
discounted; other securities
(bonds); deposits; foreign
currency exchange, etc.

Millions of yen
2012

Contract amount

Total
¥3,315,230
244,547

Over 1 year
¥2,666,423
—

Fair value
¥278,690
211

Recognition of gain or loss
on the hedging instrument

Allocation method

Currency swaps. ................................................... Deposits; borrowed

36,306

32,133

(383)

money; bonds payable

Currency swap ..................................................... Other securities (bonds);
Forward foreign exchange ....................................
Total ....................................................................

borrowed money

70,320
3,179
/

8,465
3,179
/

(Note 3)

¥278,518

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

Type of derivative

Principal items hedged
Currency swap ..................................................... 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 swap ..................................................... Deposits

12,038

11,139

(248)

Currency swap ..................................................... 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 swap ..................................................... Foreign currency denomi-
Forward foreign exchange ....................................

nated loans and bills
discounted; other securities
(bonds); deposits; foreign
currency exchange, etc.

Millions of U.S. dollars
2012

Contract amount

Total
$40,366
2,978

Over 1 year
$32,466
—

Fair value
$3,393
3

Recognition of gain or loss
on the hedging instrument

Allocation method

Currency swap ..................................................... Deposits; borrowed

money; bonds payable

borrowed money

442

856
39
/

391

103
39
/

(5)

(Note 3)

$3,391

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 “29. Financial Instruments.”

SMFG 2012 117

SMFG

Notes to Consolidated Financial Statements

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

Millions of yen
2012

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

¥ —
13,056
/

¥ —
9,175
/

¥ —
(335)
¥(335)

Type of derivative

Equity price index swaps:

Principal items hedged
Other securities (equity)

Total

Over 1 year

Fair value

Millions of yen
2011

Contract amount

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

¥ —
21,521
/

¥ —
11,078
/

¥ —
(623)
¥(623)

Millions of U.S. dollars
2012

Contract amount

Total

Over 1 year

Fair value

$ —
159
/

$ —
112
/

$—
(4)
$ (4)

Note: Fair value is calculated using discounted present value.

118

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

32. Stock Options
1. Share-based compensation expenses which were accounted for as general and administrative expenses in the fiscal years ended March 31,

2012 and 2011 are as follows:

Year ended March 31
Share-based compensation expenses .................................................................

2012
¥431

2011
¥180

Millions of yen

2. Outline of stock options and changes is as follows:

Millions of
U.S. dollars
2012
$5

(1) SMFG

(a) Outline of stock options
Date of resolution
Title and number of grantees ....

June 27, 2002
Directors and employees of
SMFG and SMBC: 677

July 28, 2010
Directors of SMFG: 8

July 29, 2011
Directors of SMFG: 9

Number of stock options*1 .....
Grant date ..............................
Condition for vesting ..............

Common shares: 162,000*2
August 30, 2002
N.A.

Requisite service period ..........

N.A.

Exercise period .......................

June 28, 2004 to June 27, 2012

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
Stock acquisition right holders
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

Corporate auditors of SMFG: 3
Executive officers of SMFG: 2
Directors, corporate auditors,
executive officers of SMBC: 71
Common shares: 268,200
August 16, 2011
Stock acquisition right holders
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, 2011 to the closing of
the ordinary general meeting of
shareholders of SMFG for the fiscal
year ended March 31, 2012.
August 16, 2011 to
August 15, 2041

*1 Reported in terms of shares of stock.
*2 Reported in consideration of the 100-for-1 stock split implemented on January 4, 2009.

(b) Stock options granted and changes
Number of stock options
Date of resolution
Before vested

June 27, 2002

July 28, 2010

July 29, 2011

Previous fiscal year-end ........................................................
Granted ...............................................................................
Forfeited ..............................................................................
Vested..................................................................................
Outstanding ........................................................................

After vested

Previous fiscal year-end ........................................................
Vested..................................................................................
Exercised .............................................................................
Forfeited ..............................................................................
Exercisable ...........................................................................

—
—
—
—
—

108,100
—
—
—
108,100

102,600
—
1,900
26,300
74,400

—
26,300
500
—
25,800

—
268,200
2,000
5,900
260,300

—
5,900
—
—
5,900

Price information (Yen)
Date of resolution
Exercise price ...........................................................................
Average exercise price ..............................................................
Fair value at the grant date ......................................................

June 27, 2002

July 28, 2010

July 29, 2011

¥6,649
—
—

¥ 1
2,336
2,215

¥ 1
—
1,872

SMFG 2012 119

SMFG

Notes to Consolidated Financial Statements

Stock options granted in the fiscal year ended March 31, 2012 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 17, 2007 and August 16, 2011.
*2 The average expected life could not be estimated rationally due to insufficient amount of data.

July 29, 2011
51.64%
4 years
¥100 per share
0.30%

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, 2012.
*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

(a) Outline of stock options
Date of resolution
Title and number of grantees ...........................................

Number of stock options .................................................

June 28, 2001 June 27, 2002 June 27, 2003 June 29, 2004 June 29, 2005 June 29, 2006

Directors and
employees
45

Directors and
employees
44

Directors and
employees
65

Directors and
employees
174

Directors and
employees
183

Directors
9

Common shares
238,000

Common shares
234,000

Common shares
306,000

Common shares
399,000

Common shares
464,000

Common shares
162,000

Grant date ....................................................................... July 31, 2001
Condition for vesting .......................................................
Requisite service period ...................................................
Exercise period ................................................................

N.A.

June 29, 2003
to June 28,
2011

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

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009
Officers not
Officers not
Directors 11
doubling as
doubling as
Officers not
directors 14
directors 14
doubling as
Employees 48
Employees 46
directors 14
Employees 57

Directors 9
Officers not
doubling as
directors 16
Employees 45

Directors
10

Number of stock options .................................................

Common shares
115,000

Common shares
174,000

Common shares
112,000

Common shares
289,000

Common shares
350,000

Grant date ....................................................................... July 31, 2006
Condition for vesting .......................................................
Requisite service period ...................................................
Exercise period ................................................................

N.A.

June 30, 2008
to June 29,
2016

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

120

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(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 ................................................
Vested..........................................................................
Exercised .....................................................................
Forfeited ......................................................................
Exercisable ...................................................................

94,000
—
10,000
84,000

126,000
—
14,000
6,000
— 106,000

210,000
—
—
18,000
192,000

302,000
—
—
17,000
285,000

431,000
—
—
39,000
392,000

162,000
—
—
—
162,000

Date of resolution
Before vested

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009

—
—
—
—
—

— 350,000
—
—
—
—
— 350,000
—
—

After vested

Previous fiscal year-end ................................................ 115,000
—
Vested..........................................................................
Exercised .....................................................................
—
—
Forfeited ......................................................................
Exercisable ................................................................... 115,000

174,000
—
—
—
174,000

112,000
—
—
—
112,000

289,000

—
— 350,000
—
—
—
—
350,000
289,000

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
143
—

¥131
145
—

¥179
—
—

¥202
—
—

¥313
—
—

¥490
—
138

June 29, 2006 June 28, 2007 June 28, 2007 June 27, 2008 June 26, 2009
¥461
—
96

¥461
—
96

¥302
—
37

¥193
—
51

¥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.

SMFG 2012 121

SMFG

Notes to Consolidated Financial Statements

33. Segment Information
Fiscal years ended March 31, 2012 and 2011
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, consumer finance, and
system development and information processing. 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
banking unit
Year ended March 31, 2012
Gross profit ........................... ¥383,666
326,923
56,743
(289,506)
(27,400)
—

Interest income ..................
Non-interest income ..........
Expenses ................................
Depreciation ......................
Other profit or loss ................
Consolidated net
business profit ..................... ¥ 94,160

Middle market
banking unit
¥422,825
256,800
166,025
(222,756)
(23,177)
—

Corporate
banking unit
¥212,650
136,592
76,058
(38,214)
(5,558)
—

SMBC
International
banking unit
¥197,436
111,625
85,811
(64,941)
(7,102)
—

Treasury
unit
¥319,333
123,120
196,213
(19,206)
(3,443)
—

Subtotal

Head office
account
¥ (3,398) ¥1,532,511
956,878
575,632
(719,495)
(75,503)

1,818
(5,217)
(84,872)
(8,823)
—

Others

Total

¥231,326 ¥1,763,837
1,113,505
156,627
650,331
74,698
(851,257)
(131,761)
(85,858)
(10,354)
(20,529)
— (20,529)

¥200,069

¥174,436

¥132,495

¥300,127

¥(88,271) ¥ 813,015

¥ 79,035 ¥ 892,050

Securities services

Leasing

Millions of yen

SMBC
Friend
Securities
Co., Ltd.
¥47,395
503
46,891
(39,083)
(1,862)
(7)

SMBC
Nikko
Securities
Inc.
¥221,254
(2,536)
223,790
(180,076)
(3,044)
(1,206)

Sumitomo Mitsui
Finance and
Leasing Company,
Limited
¥88,546
55,791
32,755
(28,100)
(3,136)
(1,027)

Others
¥9,219
1,285
7,934
(5,356)
(655)
(1,327)

Total
¥277,869
(747)
278,617
(224,516)
(5,561)
(2,541)

Others
¥ 5,215
(1,062)
6,277
(11,429)
(785)
9,212

Total
¥93,761
54,728
39,032
(39,529)
(3,921)
8,185

¥ 8,305

¥ 39,970

¥2,535

¥ 50,811

¥59,419

¥ 2,998

¥62,417

Year ended March 31, 2012
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
¥179,322
18,544
160,777
(126,589)
(8,839)
(9,587)

Cedyna
Financial
Corporation
¥160,083
36,379
123,704
(120,545)
(9,888)
(67,201)

Others

¥6,527
1,939
4,588
(5,096)
(1,229)
2,889

Total
¥345,933
56,863
289,070
(252,232)
(19,958)
(73,899)

Other
business
Grand total
¥128,680 ¥2,610,082
125,160 1,349,510
3,520 1,260,572
(6,992) (1,374,526)
(129,403)
(14,103)
(221,609)
(132,824)

¥ 43,144

¥ (27,662)

¥4,320

¥ 19,802

¥ (11,136) ¥1,013,946

122

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

Millions of yen
Banking business

Consumer
banking unit
Year ended March 31, 2011
Gross profit ........................... ¥387,790
337,529
50,261
(290,292)
(26,343)
—

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)
563,934
(408)
(699,197)
(75,362)
(71,030)
(7,858)
—

Others

Total

¥241,752 ¥1,773,512
149,761 1,117,586
655,925
91,990
(834,227)
(135,030)
(81,279)
(10,249)
(34,428)
— (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

Millions of U.S. dollars
Banking business

Consumer
banking unit
$4,671
3,981
690
(3,525)
(334)
—

Middle market
banking unit
$5,148
3,127
2,021
(2,712)
(282)
—

Corporate
banking unit
$2,589
1,663
926
(465)
(68)
—

SMBC
International
banking unit
$2,404
1,359
1,045
(791)
(86)
—

Treasury
unit
$3,888
1,499
2,389
(234)
(42)
—

Head office
account
$ (41)
22
(63)
(1,033)
(107)
—

Subtotal
$18,659
11,651
7,008
(8,760)
(919)
—

Others
$2,817
1,907
910
(1,605)
(126)
(250)

Total
$21,476
13,558
7,918
(10,365)
(1,045)
(250)

$1,146

$2,436

$2,124

$1,613

$3,654

$(1,074)

$ 9,899

$ 962

$10,861

SMFG 2012 123

SMFG

Notes to Consolidated Financial Statements

Millions of U.S. dollars

Securities services

SMBC
Friend
Securities
Co., Ltd.
$577
6
571
(476)
(23)
(0)

SMBC
Nikko
Securities
Inc.
$2,694
(31)
2,725
(2,193)
(37)
(15)

Others

$112
16
96
(65)
(8)
(16)

Total
$3,383
(9)
3,392
(2,734)
(68)
(31)

Sumitomo Mitsui
Finance and
Leasing Company,
Limited
$1,078
679
399
(342)
(38)
(12)

Leasing

Others

$ 64
(13)
77
(139)
(10)
112

Total
$1,142
666
476
(481)
(48)
100

$101

$ 486

$ 31

$ 618

$ 724

$ 37

$ 761

Millions of U.S. dollars

Credit card services

Sumitomo
Mitsui Card
Company,
Limited

$2,183
225
1,958
(1,541)
(108)
(117)

Cedyna
Financial
Corporation
$1,949
443
1,506
(1,468)
(120)
(818)

Others

$80
24
56
(62)
(15)
35

Total
$4,212
692
3,520
(3,071)
(243)
(900)

Other
business
$1,567
1,524
43
(85)
(172)
(1,617)

Grand total
$31,780
16,431
15,349
(16,736)
(1,576)
(2,698)

$ 525

$ (337)

$53

$ 241

$ (135)

$12,346

Notes: 1. Consolidated net business profit = SMBC’s nonconsolidated banking profit + SMFG’s nonconsolidated 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., SMBC Nikko 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.

4. “Other business” includes profit or loss to be offset as internal transactions between segments.

124

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

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 .....................................................................................................
Total credit cost of SMBC ...............................................................................................................
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
2012

¥1,013,946
(58,647)
(15,153)
(31,632)
81,398
(14,996)
(5,553)
(33,790)
¥ 935,571

Millions of
U.S. dollars
2012

$12,346
(714)
(185)
(385)
991
(183)
(68)
(411)
$11,391

Notes: 1. Total 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 – Recoveries of written-off claims

2. 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

Year ended March 31
Profit
Consolidated net business profit .....................................................................................................
Credit costs of SMBC ......................................................................................................................
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

¥1,001,994
(95,324)
(87,285)
(38,019)
81,530
(16,268)
(11,841)
(9,355)
¥ 825,428

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

ratio

SMFG 2012 125

SMFG

Notes to Consolidated Financial Statements

5. Related information

(1) Business segment information

Year ended March 31, 2012
Ordinary income to external customers

Millions of yen

Millions of U.S. dollars

Banking Business .......................................................................................................
Securities Services ......................................................................................................
Leasing ......................................................................................................................
Credit Card Services ...................................................................................................
Other Business ...........................................................................................................
Total ..........................................................................................................................

Year ended March 31, 2011
Ordinary income to external customers

¥2,245,549
285,252
326,814
852,577
235,088
¥3,945,282

Millions of yen

¥2,329,933
270,861
305,165
755,444
184,455
¥3,845,861

$27,342
3,473
3,979
10,381
2,862
$48,037

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, 2012
Japan .......................................................................................................................
The Americas ..........................................................................................................
Europe and Middle East ...........................................................................................
Asia and Oceania .....................................................................................................
Total ........................................................................................................................

Year ended March 31, 2011
Japan .......................................................................................................................
The Americas ..........................................................................................................
Europe and Middle East ...........................................................................................
Asia and Oceania .....................................................................................................
Total ........................................................................................................................

Notes: 1. Ordinary income is presented as a counterpart of sales of companies in other industries.

Millions of yen
¥3,400,848
169,271
138,987
236,175
¥3,945,282

Millions of yen
¥3,433,235
158,377
88,061
166,186
¥3,845,861

Millions of U.S. dollars
$41,408
2,061
1,692
2,876
$48,037

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.

126

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

(b) Tangible fixed assets

(3) Information by major customer

There are no major customers individually accounting for 10% or more of ordinary income.

6. Information on losses on impairment of fixed assets by reportable segment

Year ended March 31, 2012
Banking Business .................................................................................................................
Securities Services .................................................................................................................
Leasing .................................................................................................................................
Credit Card Services .............................................................................................................
Other Business .....................................................................................................................
Total .....................................................................................................................................

Year ended March 31, 2011
Banking Business .................................................................................................................
Securities Services .................................................................................................................
Leasing .................................................................................................................................
Credit Card Services .............................................................................................................
Other Business .....................................................................................................................
Total .....................................................................................................................................

7. Information on amortization of goodwill and unamortized balance by reportable segment

Millions of yen
¥1,100,866
14,333
57,842
7,479
¥1,180,522

Millions of yen
¥1,093,077
12,639
59,557
3,634
¥1,168,908

Millions of yen
¥3,264
383
—
108
104
¥3,861

Millions of yen
¥4,739
306
—
—
365
¥5,411

Millions of U.S. dollars
$13,404
175
704
91
$14,374

Millions of U.S. dollars

$40
5
—
1
1
$47

Millions of yen

Millions of U.S. dollars

Amortization
of goodwill
$ 6
172
65
12
9
$264

Unamortized
balance
$ 120
2,805
1,013
213
689
$4,840

Year ended March 31, 2012
Banking Business ............................................................
Securities Services ............................................................
Leasing ............................................................................
Credit Card Services ........................................................
Other Business ................................................................
Total ................................................................................

Year ended March 31, 2011
Banking Business ............................................................
Securities Services ............................................................
Leasing ............................................................................
Credit Card Services ........................................................
Other Business ................................................................
Total ................................................................................

Amortization
of goodwill
¥ 545
14,108
5,307
956
762
¥21,681

Unamortized
balance
¥ 9,904
230,347
83,173
17,527
56,584
¥397,537

Millions of yen

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

8. Information on gains on negative goodwill by reportable segment
There is no material information to be reported for the fiscal year ended March 31, 2012 and 2011.

SMFG 2012 127

SMFG

Notes to Consolidated Financial Statements

9. Information on total credit cost by reportable segment

Millions of yen
¥ 83,903
1,213
(3,611)
36,830
2,919
¥121,255

Millions of yen
¥144,601
(21)
7,979
46,573
18,216
¥217,348

Millions of U.S. dollars
$1,022
15
(44)
448
35
$1,476

Notes: 1. Total credit cost = Provision for reserve for possible loan losses + Write-off of loans + Losses on sales of delinquent loans – Recoveries of written-off claims

2. “Other business” includes profit or loss to be offset as internal transactions between segments.

(3) Date of business combination

December 7, 2011

(4) Legal form of the business combination

Consolidated as a subsidiary through a tender offer for shares
of Promise by SMBC and a subscription by SMFG for new
shares issued by Promise by way of third-party allotment
(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 through tender offer ................................
Percentage share of voting rights additionally
acquired through subscription for shares issued
by way of third-party allotment .............................
Percentage share of voting rights after acquisition ...

22%

72%

4%
98%

(7) Main reason the company was acquired

SMFG acquired a majority of voting rights of Promise 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, 2011 to March 31, 2012

Note that as the deemed acquisition date is December 31, 2011,
gain or loss related to the acquired company for the period from
April 1, 2011 to December 31, 2011 is presented as gain or loss
from investments by the equity method in the consolidated state-
ments of income.

34. Business Combinations
Fiscal year ended March 31, 2012

Promise Co., Ltd. consolidated as a subsidiary through a tender offer
for shares and a subscription for new shares issued by way of third-
party allotment
Sumitomo Mitsui Banking Corporation (“SMBC”), a consolidated
subsidiary of SMFG, implemented a tender offer for the purpose of
acquiring the shares of common stock, the first series of stock acquisi-
tion rights for the stock compensation-type stock options, the second
series of stock acquisition rights for the stock compensation-type
stock options, the third series of stock acquisition rights for the stock
compensation-type stock options and the euro yen callable bonds
with stock acquisition rights due 2015 issued by Promise Co., Ltd.
(“Promise”). In addition, SMFG fully subscribed shares issued by
Promise through the third-party allotment executed on December
26, 2011. As a result of the above, SMFG consolidated Promise as a
subsidiary, which had been formerly an equity method affiliates of
SMFG. The outline of the business combination through acquisition
is as follows:

1. Outline of the business combination

(1) Name of the acquired company and its business

Promise (Consumer finance)

(2) Main reasons for the business combination

Our basic policy is to acquire 100% stake of Promise aiming
for strengthening financial base of Promise and to building up
a corporate infrastructure accommodating group-wide prompt
and flexible decision making. Through the initiatives, we aim
to strengthen the collaboration between Promise and SMFG
group companies, and expand consumer finance business
centering on Promise which has a competitive advantage in
the industry. To this end, we made Promise our consolidated
subsidiary through a tender offer by SMBC and a subscription
of third-party allotment by SMFG in fiscal 2011.

128

SMFG 2012

3. Acquisition cost of the acquired company

Fair value of common stock of
Promise owned before
business combination ...............
Fair value of common stock of
Promise additionally acquired
through tender offer ................
Fair value of common stock of
Promise additionally acquired
through subscription for shares
issued by way of third-party
allotment .................................
Expenses directly required
for acquisition .........................
Acquisition cost of the
acquired company ....................

Millions of yen

Millions of
U.S. dollars

¥ 21,699

$ 264

70,995

865

119,999

1,461

674

¥213,369

$2,598

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

¥213,369

$2,598

188,318

¥ 25,050

2,293

$ 305

5. Goodwill, reason for recognizing goodwill, amortization method

and amortization period
(1) Amount of goodwill

¥57,300 million ($698 million)
(2) Reason for recognizing goodwill

SMFG accounted for the difference between the acquisition
cost and the equivalent amount of SMFG’s interests in
Promise 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

business combination
(1) Assets

Millions of yen

Total assets ................................ ¥1,671,681
795,148

Loans and bills discounted .....
Customers’ liabilities for
acceptances and guarantees ...

564,528

6,874

Millions of
U.S. dollars
$20,354
9,682

(2) Liabilities

Millions of yen

Total liabilities .......................... ¥1,511,980
300,884

Borrowed money ....................
Reserve for losses on
interest repayment ...............
Acceptances and guarantees ...

367,220
564,528

Millions of
U.S. dollars
$18,410
3,664

4,471
6,874

Notes to Consolidated Financial Statements

SMFG

7. Approximate amounts and their calculation method of impact on
the consolidated statements of income for the fiscal year ended
March 31, 2012, assuming that the business combinations had
been completed on the commencement date of the fiscal year
(1) Estimates of the differences between the ordinary income and
other income data, 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 statements of income are
as follows:

Ordinary income .......................
Ordinary profit ..........................
Net income ...............................

Millions of yen
¥143,349
(152,690)
(186,332)

Millions of
U.S. dollars
$1,745
(1,859)
(2,269)

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 Promise and its consolidated subsidiaries’ statements
of income for the period from April 1, 2011 to December 31,
2011, 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 commence-
ment date of the fiscal year.
The information mentioned above has not been audited by
KPMG AZSA LLC.

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

(1) Name and business of combined entities

Acquisition company: FGCC (Management of subsidiaries and
affiliates)
Acquired company: Cedyna (Credit card services)

(2) Date of business combination

May 1, 2011

(3) Form of reorganization
Exchange of shares

(4) Name of the entity after the reorganization
Sumitomo Mitsui Financial Group, Inc.
(5) Outline and purpose of the transaction

SMFG and FGCC decided that they needed to establish a sys-
tem which allowed more timely and flexible decision-making
in order to take various measures to “establish the number one
credit card business entity in Japan.” Therefore, SMFG made
Cedyna a wholly-owned subsidiary of FGCC.

2. Accounting methods

SMFG applies the accounting procedures stipulated by Articles 45
and 46 of the “Accounting Standard for Business Combinations”
(ASBJ Statement No. 21).

SMFG 2012 129

SMFG

Notes to Consolidated Financial Statements

3. Acquisition cost of the additionally acquired stocks of subsidiaries

Fair value of common stock of
Cedyna additionally acquired ...
Expenses directly required for
acquisition .................................
Acquisition cost of the
additionally acquired stocks
of subsidiaries ..........................

Millions of yen

Millions of
U.S. dollars

¥37,535

$457

¥37,616

$458

4. Share exchange ratio, its basis for determination, number of shares

delivered
(1) 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.

(2) Basis for determination of share exchange ratio

Nikko Cordial Securities Inc. (currently SMBC Nikko
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 negotia-
tions 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 move-
ments. As a result, FGCC and Cedyna each determined that
the share exchange ratio set forth in (1) above was beneficial
to the shareholders of both SMFG and Cedyna, and SMFG,
FGCC and Cedyna agreed and decided.

(3) Number of shares delivered

14,702 thousand common shares of SMFG

5. Goodwill, reason for recognizing goodwill, amortization method

and amortization period
(1) Amount of goodwill

¥9,087 million ($111 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

35. Per Share Data

March 31
Net assets per share .............................................................................................

2012
¥3,856.37

2011
¥3,533.47

Yen

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.

2012
¥374.26
373.99

2011
¥336.85
336.78

U.S. dollars
2012
$46.95

U.S. dollars
2012
$4.56
4.55

Year ended March 31
Net income per share:

Millions of yen, except number of shares

2012

2011

Millions of U.S. dollars
2012

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

¥518,536
—
—
¥518,536
1,385,505

Net income per share (diluted):

Adjustment for net income ..................................................................................................
Adjustment for dilutive shares issued by subsidiaries and affiliates ..................................
Increase in number of common stock (in thousands) ............................................................
Stock acquisition rights ..................................................................................................

¥ (278)
(278)
243
243

¥475,895
6,195
6,195
¥469,700
1,394,390

¥ (73)
(73)
54
54

$6,314
—
—
$6,314
/

$ (3)
(3)
/
/

Outline of dilutive shares which were not included in the calculation of “Net income per share (diluted)” for the fiscal years ended March 31, 2012 and 2011 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)

*The number of shares to be issued upon exercise of each stock acquisition right is 100 common shares of SMFG.

130

SMFG 2012

Notes to Consolidated Financial Statements

SMFG

2. Net assets per share is calculated based on the following:

March 31
Net assets .................................................................................................................................
Amounts excluded from Net assets ...........................................................................................
Preferred stock .....................................................................................................................
Dividends on preferred stock ...............................................................................................
Stock acquisition rights .......................................................................................................
Minority interests ................................................................................................................
Net assets attributable to common stock at the fiscal year-end ..................................................

Number of common stock at the fiscal year-end used for the calculation of
Net assets per share (in thousands) ..........................................................................................

Millions of yen, except number of shares

2012
¥7,254,976
2,044,575
—
—
692
2,043,883
¥5,210,400

2011
¥7,132,073
2,250,681
210,003
3,097
262
2,037,318
¥4,881,392

Millions of U.S. dollars
2012
$88,335
24,894
—
—
8
24,886
$63,441

1,351,116

1,381,473

(Application of New Accounting Standards)
SMFG has adopted the “Accounting Standard for Earnings Per Share” (Accounting Standards Board of Japan (“ASBJ”) Statement No.2), “Guidance on Accounting Standard
for Earnings Per Share” (ASBJ Guidance No.4) and “Practical Solution on Accounting for Earnings Per Share” (ASBJ PITF No.9) starting from the fiscal year beginning on
April 1, 2011. This change has a little impact on the calculation of diluted net income per share.

36. Subsequent Events

Making Promise Co., Ltd. a wholly-owned subsidiary
SMFG made Promise Co., Ltd. (“Promise”) a wholly-owned
subsidiary by a share exchange with an effective date of April 1, 2012
(the “Share Exchange”). The outline of transactions under common
controls is as follows:
1. Outline of the transactions

(1) Name and business of combined entities

Acquisition company: Sumitomo Mitsui Financial Group, Inc.
(Bank holding company)
Acquired company: Promise (Consumer finance)

(2) Date of business combination

April 1, 2012

(3) Form of reorganization
Exchange of shares

(4) Name of the entity after the reorganization
Sumitomo Mitsui Financial Group, Inc.
(5) Outline and purpose of the transaction

SMFG has considered it as our basic policy to wholly-own
Promise in order to i) strengthen Promise’s financial base to
effectively achieve expansion of the consumer finance business
with Promise acting at its core in SMFG through further
enforcement of cooperation between Promise and SMFG group
companies and the establishment of a competitive advantage
in the industry of Promise as the initiative, and ii) build up
an infrastructure accommodating more timely and flexible
group-wide decision making. In line with this policy, SMFG
made Promise a wholly-owned subsidiary.

2. Share exchange ratio, its basis for determination, number of shares

delivered
(1) Type of shares and share exchange ratio

Common shares
SMFG 1: Promise 0.36
* 0.36 shares of SMFG common stock was allotted and
delivered per share of Promise common stock.
(2) Basis for determination of share exchange ratio

SMFG and Promise separately appointed a financial advisor or
third party valuation institution, both independent of the two
companies, in order to ensure fairness and appropriateness in
determining the share exchange ratio for the Share Exchange.
SMFG appointed Goldman Sachs Japan Co. Ltd. as the
financial advisor while Promise appointed Houlihan Lokey
K.K. as the third party valuation institution. To determine the
share exchange ratio, SMFG and Promise separately considered
it carefully with reference to the share exchange ratio provided
by the above financial advisor and third party valuation
institution, with which they also engaged in discussions and
negotiations. With regard to the valuation of Promise’s share
price, SMFG and Promise took account of the tender offer
price for Promise’s common stocks, undertaken by SMBC
prior to the Share Exchange as a bench mark in addition to the
conditions and results of the tender offer, SMFG’s share price
movements and other factors.
As a result, SMFG and Promise concluded that the share
exchange ratio set forth in (1) above was reasonable and ben-
eficial to the shareholders of the two companies, subsequently
agreeing and accepting it for the transaction.

(3) Number of shares delivered

45,660 thousand common shares of SMFG

SMFG 2012 131

SMFG

Notes to Consolidated Financial Statements

37. 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 ....................................................................................................
Total liabilities ...........................................................................................

¥ 101,852
67,323
29
17
33,266
1,216
6,051,608
0
0
0
16
16
6,051,591
6,051,591
¥6,153,461

¥1,232,931
1,228,030
990
3,082
16
6
127
83
594
392,900
392,900
1,625,831

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

2,337,895
1,622,966
1,559,374
63,592
721,096

30,420
690,676
(154,926)
4,527,031
598
4,527,629
¥6,153,461

132

SMFG 2012

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

¥ 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

$ 1,240
820
0
0
405
15
73,683
0
0
0
0
0
73,683
73,683
$74,923

$15,012
14,952
12
38
0
0
2
1
7
4,784
4,784
19,796

28,465
19,761
18,987
774
8,780

370
8,410
(1,886)
55,120
7
55,127
$74,923

Notes to Consolidated Financial Statements

SMFG

(2) Nonconsolidated Statements of Income
Sumitomo Mitsui Financial Group, Inc.

Millions of yen

Year ended March 31
Operating income .....................................................................................
Dividends on investments in subsidiaries and affiliates ........................
Fees and commissions received from subsidiaries ...............................

Operating expenses .................................................................................
General and administrative expenses ...................................................
Interest on bonds...................................................................................
Operating profit ........................................................................................

Nonoperating income ...............................................................................
Interest income on deposits ..................................................................
Fees and commissions income .............................................................
Other nonoperating income ...................................................................

Nonoperating expenses ...........................................................................
Interest on borrowings ...........................................................................
Fees and commissions payments .........................................................
Other nonoperating expenses ...............................................................
Ordinary profit ...........................................................................................

2012
¥181,372
166,272
15,100

24,902
8,434
16,468
156,470

109
88
0
19

6,657
6,485
163
8
149,922

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

Income before income taxes ...................................................................
Income taxes:

149,922

191,543

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

3
¥149,919

3
¥191,539

Millions of
U.S. dollars (Note 1)
2012
$2,208
2,024
184

303
103
200
1,905

1
1
0
0

81
79
2
0
1,825

1,825

0
$1,825

Per share data:

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

¥107.06
107.04

¥131.42
131.42

$1.30
1.30

Yen

2012

2011

U.S. dollars (Note 1)
2012

SMFG 2012 133

SMFG

Notes to Consolidated Financial Statements

(3) Nonconsolidated Statements of Changes in Net Assets

Sumitomo Mitsui Financial Group, Inc.

Year ended March 31
Stockholders’ equity
Capital stock

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

Balance at the beginning of the fiscal year ...........................................
Changes in the fiscal year:

¥2,337,895

$28,465

Net changes in the fiscal year............................................................
Balance at the end of the fiscal year .....................................................

—
¥2,337,895

—
$28,465

Capital surplus

Capital reserve

Balance at the beginning of the fiscal year ........................................
Changes in the fiscal year:

1,559,374

18,987

Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

—
¥1,559,374

—
$18,987

Other capital surplus

Balance at the beginning of the fiscal year ........................................
Changes in the fiscal year:

273,652

273,699

3,332

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

(57)
(210,003)
(210,060)
¥ 63,592

(46)
—
(46)
¥ 273,652

(1)
(2,557)
(2,558)
$ 774

Total capital surplus

Balance at the beginning of the fiscal year ........................................
Changes in the fiscal year:

1,833,027

1,833,073

22,319

(57)
(210,003)
(210,060)
¥1,622,966

(46)
—
(46)
¥1,833,027

(1)
(2,557)
(2,558)
$19,761

Retained earnings

Other retained earnings
Voluntary reserve

Balance at the beginning of the fiscal year ....................................
Changes in the fiscal year:

30,420

370

Net changes in the fiscal year ....................................................
Balance at the end of the fiscal year..............................................

—
¥ 30,420

—
$ 370

Retained earnings brought forward

Balance at the beginning of the fiscal year ....................................
Changes in the fiscal year:

684,883

647,622

8,339

Cash dividends ..........................................................................
Net income .................................................................................
Net changes in the fiscal year ....................................................
Balance at the end of the fiscal year..............................................

(144,126)
149,919
5,792
¥ 690,676

(154,278)
191,539
37,260
¥ 684,883

(1,754)
1,825
71
$ 8,410

Total retained earnings

Balance at the beginning of the fiscal year ........................................
Changes in the fiscal year:

715,303

678,042

8,709

Cash dividends ..............................................................................
Net income .....................................................................................
Net changes in the fiscal year ........................................................
Balance at the end of the fiscal year .................................................

(144,126)
149,919
5,792
¥ 721,096

(154,278)
191,539
37,260
¥ 715,303

(1,754)
1,825
71
$ 8,780

134

SMFG 2012

(Continued)

Year ended March 31
Stockholders’ equity
Treasury stock

Notes to Consolidated Financial Statements

SMFG

Millions of yen

2012

2011

Millions of
U.S. dollars (Note 1)
2012

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

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

Total stockholders’ equity

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

Cash dividends ..................................................................................
Net income ........................................................................................
Purchase of treasury stock ................................................................
Disposal of treasury stock .................................................................
Cancellation 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:

Cash dividends ..................................................................................
Net income ........................................................................................
Purchase of treasury stock ................................................................
Disposal of treasury stock .................................................................
Cancellation 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 .....................................................

¥ (43,482)

¥ (43,437)

$ (529)

(321,521)
74
210,003
(111,444)
¥ (154,926)

(105)
60
—
(45)
¥ (43,482)

(3,915)
1
2,557
(1,357)
$ (1,886)

4,842,743

4,805,574

58,964

(144,126)
149,919
(321,521)
17
—
(315,711)
¥4,527,031

(154,278)
191,539
(105)
13
—
37,169
¥4,842,743

(1,754)
1,825
(3,915)
0
—
(3,844)
$55,120

170

—

427
427
¥ 598

170
170
¥ 170

5
5
$ 7

4,842,914

4,805,574

58,966

(144,126)
149,919
(321,521)
17
—

(154,278)
191,539
(105)
13
—

427
(315,284)
¥4,527,629

170
37,340
¥4,842,914

(1,754)
1,825
(3,915)
0
—

5
(3,839)
$55,127

SMFG 2012 135

SMFG

Independent Auditor’s Report

To the Board of Directors of
Sumitomo Mitsui Financial Group, Inc.:

We have audited the accompanying consolidated financial statements of Sumitomo Mitsui Financial Group, Inc.
(“SMFG”) and subsidiaries, which comprise the consolidated balance sheets as at March 31, 2012 and 2011, and the
consolidated statements of income, comprehensive income, changes in net assets and cash flows for the years then
ended, and basis of presentation, significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accor-
dance with accounting principles generally accepted in Japan, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatements,
whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We con-
ducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on our judgement, including the assessment of
the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making
those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
SMFG and subsidiaries as at March 31, 2012 and 2011, and their financial performance and cash flows for the years
then ended in accordance with accounting principles generally accepted in Japan.

Convenience Translation

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March
31, 2012 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dol-
lar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to the consolidated
financial statements.

June 28, 2012
Tokyo, Japan

136

SMFG 2012

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

2012

2011

¥ 4,526,372
3,073,702
1,291,818
227,749
4,493,570
1,271,745
8,101,100
17,763
42,379,194
63,584,767
1,280,636
143,978
2,609,882
849,074
514,332
340,592
4,412,973
(867,653)
¥138,251,602

¥ 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

Millions of
U.S. dollars
2012

$ 55,112
37,425
15,729
2,773
54,713
15,484
98,638
216
516,001
774,197
15,593
1,753
31,777
10,338
6,262
4,147
53,732
(10,564)
$1,683,326

SMFG 2012 137

SMBC

Supplemental Information

(Continued)

March 31
Liabilities and net assets
Liabilities
Deposits ...............................................................................................................
Call money and bills sold .....................................................................................
Payables under repurchase agreements ..............................................................
Payables under securities lending transactions ...................................................
Commercial paper ................................................................................................
Trading liabilities ...................................................................................................
Borrowed money ..................................................................................................
Foreign exchanges ...............................................................................................
Short-term bonds .................................................................................................
Bonds ...................................................................................................................
Due to trust account ............................................................................................
Other liabilities ......................................................................................................
Reserve for employee bonuses ............................................................................
Reserve for executive bonuses ............................................................................
Reserve for employee retirement benefits............................................................
Reserve for executive retirement benefits ............................................................
Reserve for point service program .......................................................................
Reserve for reimbursement of deposits ...............................................................
Reserve for losses 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 ................................................................................................
Treasury stock ......................................................................................................
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

2012

2011

Millions of
U.S. dollars
2012

¥ 93,133,430
2,144,599
1,676,902
5,809,603
1,193,249
6,208,087
6,835,091
302,580
244,988
4,540,708
443,723
3,539,191
38,118
2,419
23,766
1,465
3,230
10,980
336,956
98
52,811
39,915
4,412,973
130,974,895

1,770,996
2,717,397
1,299,484
(210,003)
5,577,875
286,413
(30,674)
39,078
(139,425)
155,391
94
1,543,345
7,276,706
¥138,251,602

¥ 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

$1,133,732
26,112
20,417
70,737
14,529
75,589
83,223
3,684
2,983
55,287
5,403
43,092
464
29
289
18
39
134
4,103
1
643
486
53,732
1,594,726

21,563
33,087
15,822
(2,557)
67,915
3,488
(374)
476
(1,698)
1,892
1
18,792
88,600
$1,683,326

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 ¥82.13 to US$1, the exchange rate prevailing at March 31, 2012.

138

SMFG 2012

Supplemental Information

SMBC

Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income (Unaudited)
Sumitomo Mitsui Banking Corporation and Subsidiaries
(Consolidated Statements of Income)

Millions of yen

2012

2011

Millions of
U.S. dollars
2012

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:

¥1,503,442
1,168,180
238,443
5,890
6,788
29,512
4,905
49,720
1,736
689,790
178,791
274,440
67,498
2,715,700

264,340
134,661
30,356
3,694
6,828
75,962
12,837
138,337
64,269
1,142,170
13,411
215,861
1,838,390
877,310

63,156
190,576
623,577
89,760
¥ 533,816

¥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

$18,306
14,224
2,903
72
83
359
60
605
21
8,399
2,177
3,341
822
33,066

3,219
1,640
370
45
83
925
156
1,684
783
13,907
163
2,628
22,384
10,682

769
2,320
7,593
1,093
$ 6,500

SMFG 2012 139

SMBC

Supplemental Information

(Continued)

(Consolidated Statements of Comprehensive Income)

Millions of yen

Year ended March 31
Income before minority interests ........................................................................
Other comprehensive income .............................................................................
Net unrealized gains (losses) on other securities .............................................
Net deferred gains (losses) on hedges .............................................................
Land revaluation excess ...................................................................................
Foreign currency translation adjustments ........................................................
Share of other comprehensive income of affiliates ..........................................
Total comprehensive income ..............................................................................
Comprehensive income attributable to shareholders of the parent ...................
Comprehensive income attributable to minority interests ...............................

2012
¥623,577
9,312
53,988
(21,897)
5,613
(23,912)
(4,479)
632,889
544,544
88,345

2011
¥532,656
(168,966)
(150,926)
29,408
—
(59,493)
12,044
363,689
322,474
41,215

Millions of
U.S. dollars
2012

$7,593
113
657
(267)
68
(291)
(54)
7,706
6,630
1,076

Per share data:

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

¥5,024.23
5,023.33

¥4,184.89
4,184.07

$61.17
61.16

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 ¥82.13 to US$1, the exchange rate prevailing at March 31, 2012.

Yen

U.S. dollars

140

SMFG 2012

Supplemental Information

SMBC

Nonconsolidated Balance Sheets (Unaudited)
Sumitomo Mitsui Banking Corporation

March 31
Assets
Cash and due from banks ....................................................................................
Deposits with banks .............................................................................................
Call loans and bills bought ...................................................................................
Receivables under resale agreements .................................................................
Receivables under securities borrowing transactions ..........................................
Monetary claims bought .......................................................................................
Trading assets ......................................................................................................
Money held in trust ...............................................................................................
Securities ..............................................................................................................
Loans and bills discounted ..................................................................................
Foreign exchanges ...............................................................................................
Other assets .........................................................................................................
Tangible fixed assets ............................................................................................
Intangible fixed assets ..........................................................................................
Deferred tax assets ..............................................................................................
Customers’ liabilities for acceptances and guarantees .......................................
Reserve for possible loan losses ..........................................................................
Reserve for possible losses on investments ........................................................
Total assets ..........................................................................................................

Liabilities and net assets
Liabilities
Deposits ...............................................................................................................
Call money and bills sold .....................................................................................
Payables under repurchase agreements ..............................................................
Payables under securities lending transactions ...................................................
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 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 ................................................................................................
Treasury stock ......................................................................................................
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

2012

2011

¥ 4,192,690
2,426,035
547,240
203,768
726,677
626,146
3,777,835
7,253
42,441,134
56,411,492
1,024,074
1,981,695
730,939
154,892
185,428
4,299,577
(689,215)
(10,195)
¥119,037,469

¥ 84,392,835
1,877,900
562,867
4,539,644
1,193,249
3,503,085
5,181,294
341,400
19,999
4,215,610
443,723
2,693,465
10,798
609
2,503
9,854
39,385
4,299,577
113,327,806

1,770,996
2,481,273
1,255,108
(210,003)
5,297,375
281,109
105,391
25,786
412,288
5,709,663
¥119,037,469

¥ 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

Millions of
U.S. dollars
2012

$ 51,049
29,539
6,663
2,481
8,848
7,624
45,998
88
516,756
686,856
12,469
24,129
8,900
1,886
2,258
52,351
(8,392)
(124)
$1,449,379

$1,027,552
22,865
6,853
55,274
14,529
42,653
63,086
4,157
244
51,329
5,403
32,795
131
7
30
120
480
52,351
1,379,859

21,563
30,212
15,282
(2,557)
64,500
3,423
1,283
314
5,020
69,520
$1,449,379

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 ¥82.13 to US$1, the exchange rate prevailing at March 31, 2012.

SMFG 2012 141

SMBC

Supplemental Information

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:

Millions of yen

2012

2011

Millions of
U.S. dollars
2012

¥1,239,535
943,216
226,631
3,726
1,330
18,625
46,006
1,736
453,877
84,051
193,341
48,500
2,021,042

282,668
99,235
93,389
2,050
5,318
70,530
12,144
134,989
22,384
752,436
16,175
120,394
1,329,050
691,992

¥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

$15,092
11,485
2,759
45
16
227
560
21
5,526
1,024
2,354
591
24,608

3,442
1,208
1,137
25
65
859
148
1,644
272
9,161
197
1,466
16,182
8,426

544
2,062
$ 5,820

44,703
169,315
¥ 477,973

42,386
125,273
¥ 421,180

Per share data:

¥4,498.64
—

¥3,905.80
—

$54.77
—

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 ¥82.13 to US$1, the exchange rate prevailing at March 31, 2012.

Yen

U.S. dollars

142

SMFG 2012

Income Analysis (Consolidated)

Sumitomo Mitsui Financial Group, Inc. and Subsidiaries

Operating Income, Classified by Domestic and Overseas Operations

Millions of yen

SMFG

Year ended March 31

Domestic
operations
Interest income ..................................................... ¥1,314,718
Interest expenses ..................................................
268,775
Net interest income ................................................... 1,045,943
Trust fees ...................................................................
1,770
Fees and commissions .........................................
827,374
Fees and commissions payments ........................
119,947
Net fees and commissions ........................................
707,426
Trading income......................................................
223,100
Trading losses .......................................................
9,273
Net trading income ....................................................
213,827
Other operating income ........................................ 1,029,399
Other operating expenses.....................................
836,155
Net other operating income (expenses) ....................
193,243

2012

Overseas
operations Elimination

Total

¥432,440
135,995
296,444
—
130,911
12,943
117,968
19,768
35,403
(15,634)
81,633
45,118
36,515

(114,559)
(1,006)
—
(2,606)
(791)
(1,814)
(44,676)
(44,676)

¥(115,566) ¥1,631,592
290,211
1,341,380
1,770
955,680
132,099
823,580
198,192
—
— 198,192
1,110,566
880,998
229,568

(466)
(275)
(190)

2011

Domestic
operations
¥1,345,979
281,315
1,064,663
2,335
806,591
120,594
685,997
251,626
6,732
244,894
961,912
821,014
140,898

Overseas
operations Elimination
¥356,800
103,355
253,444
—
92,975
11,046
81,929
2,787
10,589
(7,801)
77,934
37,504
40,429

¥(90,179)
(89,739)
(439)
—
(2,105)
(410)
(1,695)
(17,321)
(17,321)
—
(183)
(274)
91

Total
¥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

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 (2012, ¥11 million; 2011, ¥16 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 .............................................. ¥ 96,305,891
52,955,134
35,985,772
340,099
33,409

Loans and bills discounted ...................................
Securities ..............................................................
Call loans and bills bought ....................................
Receivables under resale agreements ..................

Average balance

Receivables under securities
borrowing transactions .......................................
Deposits with banks ..............................................
Lease receivables and investment assets ............

3,916,819
320,621
1,502,065

Interest-bearing liabilities .......................................... ¥103,590,027
74,462,781
6,553,470
1,434,362
1,034,848
3,873,427
—
10,594,792
1,016,300
4,403,844

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

2012
Interest
¥1,314,718
971,576
218,377
2,080
38

6,823
2,853
56,844

¥ 268,775
54,738
10,059
1,564
1,048
6,852
—
104,790
1,540
86,133

Earnings yield

1.37%
1.83
0.61
0.61
0.11

0.17
0.89
3.78

0.26%
0.07
0.15
0.11
0.10
0.18
—
0.99
0.15
1.96

Average balance
¥93,247,748
54,156,879
31,216,834
355,148
26,178

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

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 (2012, ¥1,950,185 million; 2011, ¥1,188,255

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 (2012, ¥24,556 million; 2011, ¥21,928 million). “Interest-bearing liabilities” are shown
after deduction of amounts equivalent to the average balance of money held in trust (2012, ¥24,556 million; 2011, ¥21,928 million) and corresponding
interest (2012, ¥11 million; 2011, ¥16 million).

SMFG 2012 143

SMFG

Income Analysis (Consolidated)

Overseas Operations

Year ended March 31
Interest-earning assets ..............................................
Loans and bills discounted ...................................
Securities ..............................................................
Call loans and bills bought ....................................
Receivables under resale agreements ..................

Average balance
¥19,015,055
11,282,653
1,794,991
830,607
193,189

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

—
3,739,091
230,789

¥12,388,251
7,419,147
2,981,411
376,447
647,974
—
511,690
325,402
—
102,081

2012
Interest
¥432,440
312,938
40,659
12,671
5,852

—
27,497
12,099

¥135,995
48,104
22,399
2,032
2,646
—
1,986
13,098
—
6,610

Millions of yen

Earnings yield
2.27%
2.77
2.27
1.53
3.03

Average balance
¥15,642,630
9,620,423
1,978,236
771,389
69,728

—
0.74
5.24

1.10%
0.65
0.75
0.54
0.41
—
0.39
4.03
—
6.48

—
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

Earnings yield
2.28%
2.76
2.01
0.91
3.33

—
0.77
4.65

0.98%
0.55
0.96
0.50
0.36
—
0.35
2.36
—
6.42

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 (2012, ¥71,630 million; 2011, ¥103,935

million).

Total of Domestic and Overseas Operations

Year ended March 31
Interest-earning assets .............................................. ¥113,479,948
62,913,741
37,433,545
1,170,707
226,579

Average balance

3,916,819
3,904,411
1,732,854

Interest-bearing liabilities .......................................... ¥114,072,487
81,683,045
9,534,881
1,810,794
1,682,804
3,873,427
511,690
9,616,933
1,016,300
4,113,026

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

2012
Interest
¥1,631,592
1,211,794
242,086
14,752
5,890

6,823
29,742
68,943

¥290,211
102,018
32,458
3,596
3,694
6,852
1,986
45,939
1,540
76,276

Millions of yen

Earnings yield

1.44%
1.93
0.65
1.26
2.60

0.17
0.76
3.98

0.25%
0.12
0.34
0.20
0.22
0.18
0.39
0.48
0.15
1.85

Average balance
¥107,061,829
62,448,896
32,845,940
1,126,538
95,907

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

¥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

¥ 294,931
107,758
31,665
3,788
2,753
8,847
1,164
44,298
2,006
66,940

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

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 (2012, ¥2,024,133 million; 2011, ¥1,288,655

million).

4. Income and expenses resulting from money held in trust are included in “Other income” and “Other expenses.” Therefore, “Interest-earning assets” are

144

SMFG 2012

Income Analysis (Consolidated)

SMFG

Fees and Commissions

Millions of yen

2012

Domestic
Year ended March 31
operations
Fees and commissions .............................................. ¥827,374
21,619
117,283
65,090
18,896
6,322
59,283
208,853
141,372

Deposits and loans ...............................................
Remittances and transfers ....................................
Securities-related business ...................................
Agency ..................................................................
Safe deposits ........................................................
Guarantees ............................................................
Credit card business .............................................
Investment trusts ..................................................

Overseas
operations Elimination
¥130,911
70,789
9,704
25,625
—
2
11,892
—
1,567

¥(2,606)
(11)
(3)
(366)
—
—
(109)
—
—

Total
¥955,680
92,397
126,984
90,350
18,896
6,325
71,066
208,853
142,940

Domestic
operations
¥806,591
21,264
119,605
70,803
18,054
6,505
52,403
185,970
161,632

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

Fees and commissions payments ............................. ¥119,947
27,256

Remittances and transfers ....................................

¥ 12,943
6,156

¥ (791)
(111)

¥132,099
33,301

¥120,594
27,927

¥11,046
6,149

¥ (410)
(118)

¥131,230
33,958

Notes: 1. Domestic operations comprise the operations of SMFG, its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic

consolidated subsidiaries. Overseas operations comprise the operations of the overseas branches of domestic consolidated banking subsidiaries and
overseas consolidated subsidiaries.

2. Intersegment transactions are reported in the “Elimination” column.

Trading Income

2012

2011

Millions of yen

Domestic
Year ended March 31
operations
Trading income .......................................................... ¥223,100
132,055

Gains on trading securities ...................................

Overseas
operations Elimination

¥19,768
—

¥(44,676)
(17,077)

Total
¥198,192
114,978

Domestic
operations
¥251,626
92,932

Overseas
operations Elimination

¥ 2,787
1,301

¥(17,321)
—

Total
¥237,093
94,234

Gains on securities related to
trading transactions ............................................
Gains on trading-related financial derivatives .......
Others ...................................................................

7,313
83,188
542

320
18,739
708

—
(27,599)
—

7,634
74,328
1,251

1,019
156,512
1,162

519
966
—

—
(17,321)
—

1,538
140,157
1,162

Trading losses............................................................ ¥ 9,273

¥35,403
— 17,077

¥(44,676)
(17,077)

¥ — ¥ 6,732
—

—

¥10,589
—

¥(17,321)
—

¥ —
—

Losses on trading securities .................................

Losses on securities related to
trading transactions ............................................
Losses on trading-related financial derivatives .....
Others ...................................................................

—
9,273
—

—
18,326
—

—
(27,599)
—

—
—
—

—
6,732
—

—
10,589
—

—
(17,321)
—

—
—
—

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 2012 145

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

2012

2011

¥48,497,851
25,121,271
3,792,990
77,412,113
5,327,489
¥82,739,603

¥ 4,849,970
1,745,146
121,331
6,716,447
3,266,149
¥ 9,982,596
¥92,722,199

¥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

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

2012

2011

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

¥ 6,076,691
137,269
897,228
4,237,663
4,117,083
3,448,010
7,443,777
3,612,303
1,054,492
20,907,113
¥51,931,633

¥ 73,593
510,896
9,165,963
1,038,512
¥10,788,965
¥62,720,599

11.70%
0.26
1.73
8.16
7.93
6.64
14.33
6.96
2.03
40.26
100.00%

0.68%
4.73
84.96
9.63
100.00%
—

¥ 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%
—

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.

146

SMFG 2012

Assets and Liabilities (Consolidated)

SMFG

Reserve for Possible Loan Losses

March 31
General reserve ...............................................................................................
Specific reserve ...............................................................................................
Loan loss reserve for specific overseas countries ..........................................
Reserve for possible loan losses .....................................................................
Amount of direct reduction ..............................................................................

2012
¥593,338
385,416
178
¥978,933
¥685,871

Risk-Monitored Loans

March 31
Bankrupt loans ................................................................................................
Non-accrual loans ...........................................................................................
Past due loans (3 months or more) .................................................................
Restructured loans ..........................................................................................
Total .................................................................................................................
Amount of direct reduction ..............................................................................

Notes: Definition of risk-monitored loan categories

2012
¥ 74,218
1,145,347
22,502
562,882
¥1,804,951
¥ 596,075

Millions of yen

2011
¥ 696,154
362,137
653
¥1,058,945
¥ 867,866

2011
¥ 90,777
1,031,828
25,438
498,323
¥1,646,369
¥ 735,638

1. Bankrupt loans: Credits for which accrued interest is not accounted in revenue; credits extended to borrowers that are undergoing bankruptcy,

corporate reorganization and rehabilitation proceedings or debtors receiving orders of disposition by suspension of business at bill clearinghouses

2. Non-accrual loans: Credits for which accrued interest is not accounted in revenue; credits, excluding loans to bankrupt borrowers and loans with grace for

interest payment to assist in corporate reorganization or to support business

3. Past due loans (3 months or more): Loans with payment of principal or interest in arrears for more than 3 months, calculated from the day following the

contractual due date, excluding borrowers in categories 1. and 2.

4. Restructured loans: Loans to borrowers in severe financial condition given certain favorable terms and conditions to assist in corporate rehabilitation or to

support business, excluding borrowers in categories 1. through 3.

Problem Assets Based on the Financial Reconstruction Law

March 31
Bankrupt and quasi-bankrupt assets ..............................................................
Doubtful assets ...............................................................................................
Substandard loans ..........................................................................................
Total of problem assets ...................................................................................
Normal assets .................................................................................................
Total .................................................................................................................
Amount of direct reduction ..............................................................................

Notes: Definition of problem asset categories

2012
¥ 259,670
1,017,631
580,351
1,857,653
69,826,134
¥71,683,787
¥ 685,871

Millions of yen

2011
¥ 281,611
875,837
532,873
1,690,321
67,868,754
¥69,559,075
¥ 867,866

1. Bankrupt and quasi-bankrupt assets: Credits to borrowers undergoing bankruptcy, corporate reorganization, and rehabilitation proceedings, as well as

claims of a similar nature

2. Doubtful assets: Credits for which final collection of principal and interest in line with original agreements is highly improbable due to deterioration of

financial position and business performance, but not insolvency of the borrower

3. Substandard loans: Past due loans (3 months or more) and restructured loans, excluding 1. and 2.
4. Normal assets: Credits to borrowers with good business performance and in financial standing without identified problems and not classified into the 3

categories above

SMFG 2012 147

SMFG

Assets and Liabilities (Consolidated)

Securities
Year-End Balance

March 31
Domestic operations:

Millions of yen

2012

2011

Overseas operations:

Unallocated corporate assets:

¥29,327,057
474,884
3,155,712
2,567,288
5,015,264
¥40,540,207

¥ —
—
—
997
1,941,863
¥ 1,942,861

¥ —
—
—
46,881
—
¥ 46,881
¥42,529,950

¥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

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 ........................................................... ¥7,546,567
Trading securities .................................................. 4,008,205
Derivatives of trading securities ............................
3,419
Securities related to trading transactions .............
—

Derivatives of securities related to
trading transactions ............................................
19,498
Trading-related financial derivatives ..................... 3,262,485
Other trading assets..............................................
252,958

2012

2011

Millions of yen

Overseas
operations Elimination

¥(48,408)

¥698,785
19,403
—
—

Total
¥8,196,944
— 4,027,609
3,419
—
—
—

Domestic
operations
¥6,149,138
2,778,917
3,857
—

¥518,595
38,619
—
—

Overseas
operations Elimination

¥(34,836)

Total
¥6,632,898
— 2,817,536
3,857
—
—
—

5
674,615
4,759

—
(48,408)
—

19,503
3,888,692
257,718

5,338
3,070,072
290,952

—
479,623
353

—
(34,836)
—

5,338
3,514,859
291,305

Trading liabilities ........................................................ ¥5,505,475
Trading securities sold for short sales .................. 2,169,852
Derivatives of trading securities ............................
7,409

¥790,993
3,005
43

¥(48,408)

¥6,248,061
— 2,172,857
7,453
—

¥4,670,219
1,622,216
1,803

¥612,920
830
—

¥(34,836)

¥5,248,302
— 1,623,046
1,803
—

Securities related to trading transactions
sold for short sales ..............................................

—

Derivatives of securities related to
trading transactions ............................................
17,442
Trading-related financial derivatives ..................... 3,310,771
Other trading liabilities ..........................................
—

13
787,931
—

—
(48,408)
—

17,455
4,050,294
—

5,638
3,040,560
—

1
612,088
—

—
(34,836)
—

5,639
3,617,812
—

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 2012

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
157,151
(16,700)

April 30, 2008*1 ........................................
May 16, 2008*2 ........................................
January 4, 2009*3 .................................... 781,189,672.23
June 22, 2009*4 ....................................... 219,700,000
July 27, 2009*5 ........................................
8,931,300
January 27, 2010*6 .................................. 340,000,000
January 28, 2010*7 ..................................
36,343,848
February 8, 2010*8 ...................................
(33,400)
February 10, 2010*9 .................................
20,000,000
April 1, 2011*10 ........................................
(70,001)

Balances
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
1,414,055,625

Changes
¥ —
—
—
413,695
16,817
459,477
—
—
27,028
—

Balances
¥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
2,337,895

Changes
¥ —
—
—
413,695
16,817
459,477
—
—
27,028
—

Balances
¥ 642,355
642,355
642,355
1,056,050
1,072,868
1,532,345
1,532,345
1,532,345
1,559,374
1,559,374

Remarks:
*1 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)
*2 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)
*3 Increase in shares of common stock of 781,189,672.23 as a result of 100-for-1 stock split
*4 Public offering: Common stock: 219,700,000 shares

Issue price: ¥3,766 Capitalization: ¥1,883
*5 Allotment to third parties: Common stock: 8,931,300 shares

*6 Public offering: Common stock: 340,000,000 shares

Issue price: ¥2,702.81 Capitalization: ¥1,351.405

Issue price: ¥3,766 Capitalization: ¥1,883

*7 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)

*8 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)
*9 Allotment to third parties: Common stock: 20,000,000 shares

Issue price: ¥2,702.81 Capitalization: ¥1,351.405

*10 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, 2012
Common stock ...............................................................................................................................................................
Total ................................................................................................................................................................................

Number of shares issued
1,414,055,625
1,414,055,625

SMFG 2012 149

SMFG

Capital (Nonconsolidated)

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 ADRs on the New York Stock Exchange.

Number of Common Shares, Classified by Type of Shareholders

March 31, 2012
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
387
95
8,753
882
142
337,962
348,228
—

Number of
units

4,774
4,156,217
636,758
1,509,896
5,275,303
790
2,531,698
14,115,436
2,512,025

Percentage of
total
0.03%

29.44
4.51
10.70
37.37
0.01
17.94
100.00%
—

Notes: 1. Of 49,441,519 shares in treasury stock, 494,415 units are included in “Individuals and others” and the remaining 19 shares are included in “Fractional

shares.”

2. “Other institutions” and “Fractional shares” includes 28 units and 51 shares, held at Japan Securities Depository Center, Incorporated.
3. The number of shares constituting 1 unit is 100.

Principal Shareholders
Common Stock

March 31, 2012
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) ...................................................................................
State Street Bank and Trust Company 505225** .........................................................................................
Mellon Bank, N.A. as Agent for its Client Mellon Omnibus US Pension** ...................................................
The Bank of New York, Treaty JASDEC Account*** .....................................................................................
Nippon Life Insurance Company ..................................................................................................................
NATSCUMCO**** ..........................................................................................................................................
Sumitomo Mitsui Banking Corporation ........................................................................................................
Total ..............................................................................................................................................................

Number of
shares
90,536,318
73,312,500
39,033,944
29,113,800
19,858,287
17,891,918
15,999,996
15,466,682
14,319,917
13,340,000
328,873,362

Percentage of
shares outstanding
6.40%
5.18
2.76
2.05
1.40
1.26
1.13
1.09
1.01
0.94
23.25%

* Standing agent: The HongKong and Shanghai Banking Corporation Limited’s Tokyo Branch
** Standing agent: Mizuho Corporate Bank, Ltd.
*** Standing agent: The Bank of Tokyo-Mitsubishi UFJ, Ltd.
**** Standing agent: Sumitomo Mitsui Banking Corporation
Notes: 1. 49,441,519 shares of treasury stock owned by SMFG are not included in the above table.

2. Pursuant to Article 67 of the Enforcement Ordinance of the Companies Act, the exercise of voting rights of common shares held by Sumitomo Mitsui

Banking Corporation is restricted.

3. Sumitomo Mitsui Trust Holdings, Inc. has submitted a Report of Possession of Large Volume regarding its shareholding as of April 21, 2011. It stated that
The Sumitomo Trust and Banking Company, Limited and three other shareholders hold common shares in SMFG as of April 15, 2011. But these four are
not included in the above Principal Shareholders because SMFG was unable to confirm the number of shares owned by them at the end of the fiscal year
under review.
The Report of Possession of Large Volume is detailed as follows.

Principal Shareholder: The Sumitomo Trust and Banking Company, Limited (and three other joint shareholders)
Number of shares held: 78,378,800 (including joint ownership)
Shareholding ratio:

5.54%

150

SMFG 2012

Capital (Nonconsolidated)

SMFG

Stock Options

March 31
Number of shares granted........................................................................................................
Type of stock ............................................................................................................................
Issue price ................................................................................................................................
Amount capitalized when shares are issued ............................................................................
Exercise period of stock options ..............................................................................................

2012

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

2012

100,200 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

2012

266,200 shares
Common stock
¥1,873 per share
¥937 per share
From August 16, 2011 to August 15, 2041

Date of resolution: Meeting of the Board of Directors held on July 29, 2011
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 ........................................................................................

2012
¥2,933
2,003

2011
¥3,355
2,235

Notes: 1. Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

Yen
2010
¥4,520
2,591

2009
¥9,640
2,585

2008
¥1,210,000
633,000

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.

Six-Month Performance

Yen

High ..............................................................
Low ...............................................................

October 2011
¥2,312
2,060

November 2011
¥2,241
2,003

December 2011
¥2,282
2,110

January 2012
¥2,451
2,161

February 2012
¥2,806
2,409

March 2012
¥2,933
2,632

Note: Stock prices of common shares as quoted on the Tokyo Stock Exchange (First Section).

SMFG 2012 151

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 ..................................................... ¥1,200,347
Interest expenses ..................................................
234,598
Net interest income ...................................................
965,749
Trust fees ...................................................................
1,736
Fees and commissions .........................................
561,482
Fees and commissions payments ........................
126,179
Net fees and commissions ........................................
435,302
Trading income......................................................
203,699
Trading losses .......................................................
9,273
Net trading income ....................................................
194,426
Other operating income ........................................
234,609
Other operating expenses.....................................
57,071
Net other operating income (expenses) ....................
177,537

Millions of yen

2012

Overseas
operations Elimination
¥(100,773)
¥403,868
(100,890)
130,621
116
273,246
—
—
(2,550)
130,857
(785)
12,943
117,914
(1,764)
(44,676)
19,768
(44,676)
35,403
—
(15,634)
(427)
40,258
7,197
—
(427)
33,061

Total
¥1,503,442
264,329
1,239,113
1,736
689,790
138,337
551,452
178,791
—
178,791
274,440
64,269
210,171

Domestic
operations
¥1,227,312
241,960
985,352
2,299
574,092
127,305
446,786
227,454
6,732
220,722
249,252
135,821
113,430

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

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 (2012, ¥11 million; 2011, ¥16 million) related to the management of money held in trust.

3. Intersegment transactions are reported in the “Elimination” column.

Average Balance, Interest and Earnings Yield of Interest-Earning Assets and Interest-Bearing Liabilities
Domestic Operations

Millions of yen

Year ended March 31
Average balance
Interest-earning assets ................................... ¥ 95,201,464
53,624,379
35,812,965
329,845
33,409

Loans and bills discounted .........................
Securities ....................................................
Call loans and bills bought .........................
Receivables under resale agreements ........
Receivables under securities
borrowing transactions .............................
Deposits with banks ...................................

2012

Interest
¥1,200,347
914,742
214,736
2,069
38

Earnings yield
1.26%
1.71
0.60
0.63
0.11

Average balance
¥91,909,190
54,710,171
31,053,391
352,721
26,178

2011

Interest
¥1,227,312
953,365
225,723
2,248
32

Earnings yield
1.34%
1.74
0.73
0.64
0.12

3,873,332
289,927

6,788
2,741

0.18
0.95

4,202,003
292,234

8,429
1,419

0.20
0.49

Interest-bearing liabilities ............................... ¥100,596,463
74,584,401
6,690,572
1,434,354
1,034,285

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

3,849,958
—
8,585,479
278,485
3,917,314

¥ 234,598
54,758
10,128
1,563
1,047

6,828
—
89,062
417
68,933

0.23%
0.07
0.15
0.11
0.10

0.18
—
1.04
0.15
1.76

¥95,026,491
71,099,847
7,197,270
1,613,567
443,352

¥ 241,960
71,691
12,453
2,166
571

4,545,844
—
6,205,133
359,916
3,347,596

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

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 (2012, ¥1,909,038 million; 2011, ¥1,143,287

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 (2012, ¥19,144 million; 2011, ¥18,676 million). “Interest-bearing liabilities” are shown
after deduction of amounts equivalent to the average balance of money held in trust (2012, ¥19,144 million; 2011, ¥18,676 million) and corresponding
interest (2012, ¥11 million; 2011, ¥16 million).

152

SMFG 2012

Income Analysis (Consolidated)

SMBC

Millions of yen

2012

Interest
¥403,868
310,883
23,707
12,671
5,852

Earnings yield
2.20%
2.78
1.69
1.53
3.03

Average balance
¥15,061,087
9,530,458
1,585,317
771,389
69,728

2011

Interest
¥331,747
263,531
23,265
7,055
2,319

Earnings yield
2.20%
2.77
1.47
0.91
3.33

Overseas Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥18,397,039
11,192,798
1,402,073
830,607
193,189

—
3,726,846

—
27,382

—
0.73

1.06%
0.65
0.75
0.54
0.41

—
2,282,712

—
17,572

¥10,438,017
6,702,044
2,013,996
326,104
597,909

¥100,023
36,716
19,268
1,621
2,180

¥130,621
48,104
22,399
2,032
2,646

Interest-bearing liabilities ............................... ¥12,284,079
7,419,165
2,981,411
376,447
647,974

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

—
511,690
221,212
—
102,081
Notes: 1. Overseas operations comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

—
328,969
349,022
—
105,117

—
1,986
7,895
—
6,610

—
0.39
3.57
—
6.48

—
1,164
6,751
—
6,745

—
0.77

0.96%
0.55
0.96
0.50
0.36

—
0.35
1.93
—
6.42

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 (2012, ¥71,493 million; 2011, ¥103,430

million).

Total of Domestic and Overseas Operations

Year ended March 31
Average balance
Interest-earning assets ................................... ¥112,123,576
63,510,882
37,215,039
1,160,453
226,579

Millions of yen

2012

Interest
¥1,503,442
1,153,439
238,443
14,741
5,890

Earnings yield
1.34%
1.82
0.64
1.27
2.60

Average balance
¥105,509,373
62,929,036
32,638,709
1,124,111
95,907

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

3,873,332
3,862,569

6,788
29,512

0.18
0.76

4,202,003
2,432,539

8,429
18,439

0.20
0.76

Interest-bearing liabilities ............................... ¥111,374,120
81,813,864
9,671,984
1,810,786
1,682,240

3,849,958
511,690
7,500,718
278,485
4,019,396

¥ 264,329
102,133
32,528
3,596
3,694

6,828
1,986
24,773
417
75,544

0.24%
0.12
0.34
0.20
0.22

0.18
0.39
0.33
0.15
1.88

¥103,967,089
77,622,970
9,211,266
1,939,672
1,041,262

¥ 268,610
107,821
31,721
3,787
2,751

4,545,844
328,969
5,242,563
359,916
3,452,714

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

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 (2012, ¥1,980,197 million; 2011, ¥1,239,571

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 2012 153

SMBC

Income Analysis (Consolidated)

Fees and Commissions

Millions of yen

2012

Domestic
Year ended March 31
operations
Fees and commissions .............................................. ¥561,482
22,408
118,183
56,610
16,805
6,323
42,030
6,298
122,610

Overseas
operations Elimination
¥130,857
70,789
9,704
25,625
—
2
11,892
—
1,567

¥(2,550)
(10)
(1)
(361)
—
—
(106)
—
—

Total
¥689,790
93,187
127,886
81,874
16,805
6,325
53,816
6,298
124,177

Domestic
operations
¥574,092
22,057
120,616
58,728
16,274
6,505
39,403
6,208
145,850

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

Fees and commissions payments ............................. ¥126,179
27,256

Remittances and transfers ....................................

¥ 12,943
6,156

¥ (785)
(111)

¥138,337
33,301

¥127,305
27,927

¥11,046
6,149

¥ (407)
(118)

¥137,944
33,958

Notes: 1. Domestic operations comprise the operations of SMBC (excluding overseas branches) and its domestic consolidated subsidiaries. Overseas operations

comprise the operations of SMBC’s overseas branches and its overseas consolidated subsidiaries.

2. Intersegment transactions are reported in the “Elimination” column.

Trading Income

2012

2011

Millions of yen

Domestic
Year ended March 31
operations
Trading income .......................................................... ¥203,699
112,654

Gains on trading securities ...................................

Overseas
operations Elimination
¥(44,676)
— (17,077)

¥19,768

Total
¥178,791
95,577

Domestic
operations
¥227,454
68,760

Overseas
operations Elimination
¥(17,321)
—

¥ 2,787
1,301

Total
¥212,920
70,062

7,313
83,188
542

320
18,739
708

—
(27,599)
—

7,634
74,328
1,251

1,019
156,512
1,162

519
966
—

—
(17,321)
—

1,538
140,157
1,162

Trading losses............................................................ ¥ 9,273

¥35,403
— 17,077

¥(44,676)
(17,077)

¥ — ¥ 6,732
—

—

¥10,589
—

¥(17,321)
—

¥ —
—

Losses on trading securities .................................

—
9,273
—

—
18,326
—

—
(27,599)
—

—
—
—

—
6,732
—

—
10,589
—

—
(17,321)
—

—
—
—

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.

154

SMFG 2012

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

2012

2011

¥48,688,932
25,121,952
3,796,048
77,606,933
5,518,289
¥83,125,222

¥ 4,855,580
1,745,146
121,331
6,722,058
3,266,149
¥ 9,988,207
¥93,113,430

¥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

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

2012

2011

¥ 6,071,389
137,101
896,269
4,221,483
4,095,171
4,904,325
7,377,705
3,684,426
1,054,492
20,433,201
¥52,875,567

11.48%
0.26
1.70
7.98
7.75
9.28
13.95
6.97
1.99
38.64
100.00%

¥ 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%

Overseas operations:

¥ 35,733
621,657
7,385,370
822,832
¥ 8,865,594
¥61,959,049

¥ 73,593
510,896
9,086,200
1,038,510
¥10,709,200
¥63,584,767

0.69%
4.77
84.84
9.70
100.00%
—

0.40%
7.01
83.31
9.28
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.

SMFG 2012 155

SMBC

Assets and Liabilities (Consolidated)

Risk-Monitored Loans

2012
¥ 73,378
1,060,320
18,178
507,428
¥1,659,306
¥ 558,926

Millions of yen

2011
¥ 90,171
958,729
14,226
466,459
¥1,529,587
¥ 716,192