Increasing Shareholder Value

Transcription

1 Bank of America Merrill Lynch Japan Conference 212 Increasing Shareholder Value Koichi Miyata, President Sumitomo Mitsui Financial Group, Inc. September 5, 212

2 Today s Agenda 1. Risk factors for managing financial institutions 2. Our strengths and challenges 3. Growth strategies (1) Development of international business (2) Synergies between SMBC and SMBC Nikko (3) Consumer finance business In closing 1

3 1. Risk factors for managing financial institutions Overseas Domestic (Japan) European sovereign debt crisis Requirement for European banks to enhance capital base Slowdown of European economies Sluggish US economy Slowdown in emerging markets Shift in political climate JPY appreciation USD & EUR depreciation Decline in stock markets Increased volatility in commodity markets Tighter financial regulations LIBOR-fixing problems Sluggish economy Aging society Fiscal deficit issues March 211 earthquake and tsunami, nuclear accident Electricity supply concerns Increased concerns about corporate governance 2

4 2. Our strengths and challenges Strong customer base: SMBC s share among Japanese City banks * Domestic deposits Domestic loans All banks JPY 458 tn 23.9% 26.2% City banks JPY 232 tn All banks JPY 426 tn City banks 23.5% 25.7% JPY 18 tn All banks JPY 473 tn City banks JPY 27 tn All banks JPY 597 tn City banks JPY 274 tn * Source: Japanese Bankers Association Deposits and Loans of all banks. City banks represents sum of SMBC, The Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, Mizuho Corporate Bank, Resona Bank * and Saitama Resona Bank 3

5 2. Our strengths and challenges Strong customer base: Group structure *1 Sumitomo Mitsui Financial Group 6% Sumitomo Mitsui Finance and Leasing 4% (Leasing) Sumitomo Corporation Consolidated total assets JPY 143 tn Consolidated Tier I ratio 12.28% 3% 6% SMBC Aviation Capital 1% Became a subsidiary (Jun. 212) 1% 1% Japan Research Institute (System engineering and management consulting) Sumitomo Mitsui Banking Corporation Assets JPY 119 tn 1% 1% SMBC Nikko Securities Became a wholly-owned subsidiary (Oct. 29) [No. of total accounts: 2.5mn] (Securities) SMBC Friend Securities Deposits Loans No. of retail accounts No. of corporate loan clients JPY 76 tn JPY 56 tn 27 mn 11, 1% SMFG Card & Credit 66% 1% Sumitomo Mitsui 34% Card (Credit card) [No. of cardholders: 22mn] Cedyna [No. of cardholders: 21mn] NTT DOCOMO Became a wholly-owned subsidiary (May 211) 1% SMBC Consumer Finance Became a wholly-owned subsidiary (Apr. 212) (Consumer finance) [No. of unsecured loan accounts: 1.5mn] *1 As of June 3, 212 for percentage of voting rights and as of March 31, 212 for other figures *2 Renamed to SMBC Consumer Finance from Promise on July 1, 212 4

6 2. Our strengths and challenges Sound loan portfolio, resilient capital base, stable liquidity base Non-performing loan balance and ratio Loan-to-deposit ratio (consolidated basis) *2 (JPY tn) (SMBC non-consolidated) (%) % 12% 1% % Substandard loans Doubtful assets Bankrupt / quasi-bankrupt assets NPL ratio % Tier I ratio *1 12.3% 1% 8% 6% 4% 2% % (SMFG consolidated) % 6% 5.5% 2 4% 2% % *1 SMBC consolidated for 22 *2 Based on each company s financial statements, as of 31, 212 for SMFG, MUFG, Mizuho FG, and as of Dec. 31, 211 for others SMFG MUFG JPM DB Mizuho FG Citi HSBC BAC RBS Barclays BNP 5

7 2. Our strengths and challenges Highest profitability among Japanese peers Banking profit per employee *1,2 Domestic loan-to-deposit spread *1 Overhead ratio *1 (JPY mn) % 6% 1.52% 54.1% % 5% 49.6% 1.33% 46.9% % 1.17% 4% 15 SMFG MUFG Mizuho FG 1.% SMFG MUFG Mizuho FG 3% SMFG MUFG Mizuho FG *1 Based on each company s disclosure. The figures shown in the graph are: non-consolidated figures of SMBC for SMFG, non-consolidated figures of The Bank of Tokyo-Mitsubishi UFJ for MUFG, * and sum of non-consolidated figures of Mizuho Bank and Mizuho Corporate Bank for Mizuho FG *2 Before provision for general reserve for possible loan losses, excluding gains (losses) on bonds 6

8 2. Our strengths and challenges Credit ratings of G-SIFIs by Moody s * Apr. 21 Jul. 27 Jul. 212 Aaa Aa1 Aa2 Lloyds TSB Bank Bank of America Crédit Agricole Bank of New York Mellon Barclays Bank Citibank HSBC Bank Wells Fargo Bank UBS ING Bank JPMorgan Chase Bank Royal Bank of Scotland State Street Bank & Trust Bank of America Lloyds TSB Bank Bank of New York Mellon Royal Bank of Scotland Citibank UBS JPMorgan Chase Bank Wells Fargo Bank Banco Santander HSBC Bank Barclays Bank ING Bank BNP Paribas Nordea Bank Crédit Agricole Société Générale Credit Suisse State Street Bank & Trust Deutsche Bank SMBC Mizuho CB/BK BPCE(Banque Populaire) UniCredit BTMU Bank of New York Mellon State Street Bank & Trust Aa3 Banco Santander BNP Paribas BPCE(Banque Populaire) Commerzbank Deutsche Bank Société Générale UniCredit Commerzbank AG Goldman Sachs Bank Morgan Stanley Bank SMBC BTMU HSBC Bank JPMorgan Chase Bank Nordea Bank Wells Fargo Bank A1 Credit Suisse Bank of China A2 BTMU A3 SMBC Baa1 Bank of China Baa2 *2 Mizuho CB/BK * Long-term issuer ratings (if not available, long-term deposit ratings) of their operating banks *2 Bank of China Credit Suisse Mizuho CB/BK Barclays Bank BNP Paribas BPCE(Banque Populaire) Crédit Agricole Deutsche Bank Bank of America Citibank Commerzbank Banco Santander UniCredit Goldman Sachs Bank ING Bank Lloyds TSB Bank Société Générale UBS Morgan Stanley Bank Royal Bank of Scotland 7

9 2. Our strengths and challenges Our historical financial performance SMFG consolidated Net income (2) (4) (6) 2 FY SMBC non-consolidated Total credit cost / Gains (losses) on stocks about JPY 5 bn 3/2* 3/3 3/4 3/5 3/6 3/7 3/8 3/9 3/1 3/11 3/12 3/13E 3/14E (2) (6) FY 3/2 3/3 3/4 3/5 3/6 3/7 3/8 3/9 3/1 3/11 3/12 3/13E (1,) (1,4) Gains (losses) on stocks Total credit cost (1,8) * SMBC consolidated 8

10 2. Our strengths and challenges Equity holdings Balance of equity holdings* 1 (JPY tn) % Equity holdings (acquisition cost on SMBC non-consolidated) *2 Percentage of equity holdings to SMFG consolidated Tier I Changes in the environment Tightening of capital regulations % Break-even level of Nikkei Stock Average: Around JPY 8,5 Need to minimize the impact of stock price fluctuation on our capital base % 29% 29% Reduce un-hedged equity to 25% of Tier I capital Apr Amount sold in FY3/212: Approx. JPY19 bn *1 Balance of domestic stocks classified as other securities with fair value *2 Until 2, percentage to SMBC consolidated Tier I 9

11 2. Our strengths and challenges Progress of the medium-term management plan Core Tier I ratio (pro-forma) Target Basel III fully loaded basis above 6% nearly 7.5% 8% Based on the definition as at the initial implementation of Basel III above 8% above 9% FY3/211 FY3/212 FY3/214 Target Net income RORA (SMFG consolidated).8%.9%.8% Overhead ratio (SMFG consolidated) 52.5% 53.5% 5% - 55% Overhead ratio (SMBC non-consolidated ) 45.6% 46.9% 45% - 5% Overseas banking profit ratio * 23.3% 26.% 3% * Based on the medium-term management plan assumed exchange rate of 1USD=JPY85 for FY3/212 to FY3/214 1

12 2. Our strengths and challenges 1Q, FY3/213 financial performance P/L Contribution of subsidiaries to SMFG s Net income Gross banking Profit of which Gains (losses) on bonds Apr.-Jun. 212 results YOY change FY3/213 forecasts 1H Full year 73 1,47 SMBC Consumer Finance (former Promise) *3 Sumitomo Mitsui Finance and Leasing Apr.-Jun. 212 results 21 6 YOY change +2 + SMBC <non-consolidated> Expenses *1 <OHR> Banking profit *2 Total credit cost Gains (losses) on stocks Ordinary profit % (69.3) (.4)% (37.6) (61.6) % % Cedyna SMBC Nikko Securities Sumitomo Mitsui Card () () [Swing factors compared with FY3/212 results] Marketing Units: maintain FY3/212 level due to an increase in International Banking Unit Treasury Unit: JPY (5) bn decrease SMFG <consolidated> Net income Ordinary profit Variance with SMBC non-consolidated Net income Variance with SMBC non-consolidated (96.4) (63.5) (1.9) (88.8) +7.6 *1 Excluding non-recurring losses *2 Before provision for general reserve for possible loan losses *3 Became subsidiary of SMFG in Dec Therefore, figures for 1Q, FY3/212 were included as a 22% owned affiliated company and figures for 1Q, FY3/213 were included as a subsidiary YOY increase due to a decrease in reversal of provisions and possible increase of costs in 2H under the unstable and uncertain environment SMBC Consumer Finance and Cedyna, which recorded huge losses in FY3/212 due to an increase of provisions, expected to turn into black 11

13 3. Growth strategies Profit drivers of the medium-term management plan 7 SMFG consolidated net income growth 6 Consolidated net income: about JPY 5 bn 5 Increase in profit of SMBC Nikko Increase in profit of Cedyna and Promise Revenue normalization Resource allocation overseas, etc. 4 Development of international business Synergies between SMBC and SMBC Nikko 3 FY3/11 Net income Gross banking profit in Marketing Units SMBC Contribution of subsidiaries/ affiliates Group companies etc. Gross banking profit of Treasury Unit Expenses SMBC Other (including increase in income tax) FY3/14E Net income : Change of FY3/213 forecast from FY3/211 results, including change in interest and exchange rates 12

14 3. Growth strategies Development of international business (1) Progress of strategic initiatives 15 Overseas banking profit and ratio* 1 (before provisioning) Overseas banking profit (left axis) Overseas banking profit ratio (right axis) % % 3% 3% (USD bn) EMEA Americas Asia Overseas loan balance (USD)* 2, Change from 31, 11: +JPY 6 tn (+USD 71bn) Change from 31, 11: +JPY 3.5 tn (+USD 41bn) 2% 1 2% % 7% % FY 3/5 3/6 3/7 3/8 3/9 3/1 3/11 3/12 3/14 E Jun E Overseas loan balance, classified by region (JPY) *2 Total of which to Japanese corporations Asia to Japanese corporations Americas EMEA (JPY tn, at period-end) to Japanese corporations to Japanese corporations YOY change After adjustment of exchange rate fluctuation *1 Managerial accounting basis. Sum of SMBC and major overseas subsidiary banks. Based on the medium-term management plan assumed exchange rate of USD1=JPY85 *2 Managerial accounting basis. Sum of SMBC, SMBC Europe and SMBC (China). Geographic classification based on booking office *3 Exchanged at respective period-end exchange rates 13

15 3. Growth strategies Development of international business (2) Our footprint in Asia Strategic partners* 1 Loan balance in major countries* 2 Bank of China China Korea Taiwan Industrial and Commercial Bank of China Agricultural Bank of China Kookmin Bank First Commercial Bank China Korea Hong Kong Philippine Vietnam Bank of East Asia Metrobank Eximbank India Thailand Hong Kong Taiwan Malaysia RHB Bank Singapore 6 Indonesia Indonesia Cambodia India Bank Central Asia ACLEDA Bank Kotak Mahindra Bank *1 Boldfaced banks: SMBC has equity stake *2 Bar charts represent loan balance based on domicile of borrowers (not by channel). Figures of China includes those of SMBC (China). * Loan balances as of 31, 211 is exchanged to JPY from each country s local currency at the exchange rate of 31, Australia

16 3. Growth strategies Development of international business (3) GDP forecast Nominal GDP of world s economies *1 (USD tn) 6 Advanced economies Emerging and developing economies forecast Japan United States European Union China Developing Asia (excl. China) 4 Breakdown of world nominal GDP *1 GDP per capita *2 Emerging and developing economies 36% (Developing Asia 16%) 211 USD 7 tn Advanced economies 64% (Japan 8%) (United States = 1) Russia Russia Brazil China Thailand Brazil 2 Emerging and developing economies 42% (Developing Asia 21%) 217 forecast USD 94 tn 2 1 Thailand China Indonesia Indonesia India Advanced economies 58% (Japan 7%) *1 Source: IMF World Economic Outlook (Apr. 212 and Jul. 212). World: 184 counties, Advanced economies: 34 countries, Emerging and developing economies: 15 countries, European Union: 27 countries, Developing Asia (excl. China): 26 countries *2 Source: The Economist India

17 3. Growth strategies Development of international business (4)-1 Products with a competitive advantage Project finance / Loan syndication Example Approaches for energy related business League tables (Jan. Jun. 212) *1 Global Project Finance Loan Syndication #3 #7 Asia* 2 #5 #6 Overseas Initial investment / off-taking needs Related infrastructure development Exploration for mines/ FS / development Production / operation Transportation infrastructure M&A Project finance Business matching Trade finance Project finance ECA finance Ship finance New energy sources Water Growth Industry Cluster Dept. Renewable energy Water supply and sewerage, recycled water, desalination, etc. Domestic (Japan) Power generation Port / terminal infrastructure End use (e.g. power generation) Project finance Corporate finance Project finance Corporate finance Environment Natural resources Eco-city development, transportation system, rechargeable battery, etc. Value chain of coal, natural gas, etc. Relationship management, financing Consulting Carbon credit Global warming related business Frontier Newly growing businesses / markets *1 Source: Thomson Reuters (Mandated Arrangers) *2 Project finance: Asia Pacific, Loan syndication: Asia (excl. Japan) M&A advisory, equity / bond underwriting Finance lease, operating lease 16

18 3. Growth strategies Development of international business (4)-2 Products with a competitive advantage Trade finance Trade finance related profit Example Supplier Finance End-user (USD mn) Provide funding by longer usance Sales proceeds EMEA Americas Asia Exporter Purchase of export bills with L/C Importer [Needs] Extend due of usance Lower borrowing rate Working capital loans Reduction of high interest bearing debt 1 Local bank FY 3/11 3/12 3/14E Balance of trade finance as of 12:USD 17.5 bn FY3/12 ROA (managerial accounting basis):1.6% No. of channels : 22 ( 12) plan 3 ( 14) EMEA 8, Americas 2, Asia (incl. Tokyo) 12 Global Trade Finance Dept. provides trade finance for financial institutions, commodity finance, etc. Cash management service (CMS) as voted by corporations Cash management service Cash management providers ranking (in Asia Pacific) * Large corporations Medium corporations Small corporations 4th 4th 4th #1 among Japanese banks for seven consecutive years CMS in Asia: Aim to be one of the top three global banks JPY CMS as voted by financial institutions 1st #1 for seven consecutive years * Source: ASIAMONEY : Cash Management Poll 212 issued in Aug

19 3. Growth strategies Development of international business (5) Alliance & acquisition strategy Investment criteria 1 Fits our Group strategy and associated risks are controllable 2 Delivers sufficient investment returns; achieves.8% Net income RORA 3 Contributes to strengthen our client service 4 Foreign currency funding is secured to accommodate the deal Example Acquisition of aircraft leasing business from The RBS group Overview of the acquired company Ranking after acquisition *2 Completed the acquisition on June 1, 212. Commenced its operation as SMBC Aviation Capital Acquisition price: approx. USD 7.3 billion *1 Shareholders: SMFL 6%, SMBC 3%, Sumitomo Corporation 1% SMBC Aviation Capital refinanced USD 3. billion of its existing borrowings through The Japan Bank for International Cooperation Five management members of former RBS Aviation Capital continue to manage the business. The board of directors consists of 11 directors, of which six from shareholders Leasing Company GECAS ILFC U.S. 1,31 former RBS AC + SMFG/SC Group* 3 BBAM AerCap CIT Aerospace former RBS AC SMFG/SC Group* 3 Nationality U.S. U.S. Netherlands U.S. Ireland Netherlands *1 The figure will be adjusted based on the assets and liabilities of the acquired business as of May 31, 212 *2 As of Dec 31, 211 (Source: Ascend) *3 Aggregate of 1) SMFL Aircraft Capital Corporation B.V., a subsidiary of Sumitomo Mitsui Finance and Leasing, and 2) Sumisho Aircraft Asset Management B.V., a subsidiary of Sumitomo Corporation No. of Aircrafts 1,

20 3. Growth strategies Development of international business (6) Foreign currency funding Overseas deposit balance* 1 Diversification of foreign-currency funding (USD bn) CDs & CP Deposits (incl. deposits from central banks) Overseas loan balance Jun. 12 Issued foreign-currency denominated senior bonds to: overseas institutional investors in Jul. 212 domestic retail investors in Jun. 212 Issue amount of foreign-currency denominated bonds (mn) Subordinated bonds to institutional investors Senior bonds to institutional investors Senior bonds to retail investors US$2, US$1,5 US$2, US$1,5 A$54 A$43 A$42 Oct.9-1 Apr. 1 - Sep. 1 *1 Managerial accounting basis, exchanged at respective period-end exchange rates. Sum of SMBC, SMBC Europe and SMBC (China) *2 Credit ratings at time of issuance Oct Apr Sep. 11 US$1,5 Oct Examples of USD senior bonds issuances by financial institutions US$3, Apr Sep. 12 Maturity Pricing date Issuer Issue amount Coupon Spread Credit ratings *2 (USD mn) (%) (bp) Moody's S&P 212/6/19 National Bank of Canada 1, 1.5 T+12 Aa2 A 212/6/2 Wells Fargo & Co 2, 1.5 T+115 A2 A+ 3 years 212/7/1 Sumitomo Mitsui Banking Corp 1, 1.35 T+1 Aa3 A+ 212/7/26 National Australia Bank Ltd (NY) 1, T+133 Aa2 AA- 212/7/26 ANZ National International Ltd (LDN) T+158 Aa3 AA- 212/7/31 Citigroup Inc 1, T+25 Baa2 A- 212/7/1 Sumitomo Mitsui Banking Corp 1, T+12 Aa3 A+ 5 years 212/8/6 Westpac Banking Corp 1,25 2. T+138 Aa2 AA- 212/8/13 JPMorgan Chase & Co 2,5 2. T+135 A2 A 212/6/29 Citigroup Inc T+25 Baa2 A- 1 years 212/7/1 Sumitomo Mitsui Banking Corp T+17 Aa3 A+ 212/7/31 Citigroup Inc T+235 Baa2 A- 19

21 3. Growth strategies Synergies between SMBC and SMBC Nikko (1) Progress of collaboration Number of referrals from SMBC to SMBC Nikko Profit synergies* 2 (No. of referrals) 1,5 Investment banking business Fixed income business 8 Full year of which 1Q Double compared with FY3/211 1, Apr.-Jun.11 Jul.-Sep.11 Oct.-Dec.11 Jan.-12 Apr.-Jun.12 FY 3/11 3/12 3/13 3/14E Assets under management (for individuals, group basis) * 1 League tables (Apr.-Jun. 212, ranks of SMBC Nikko) (JPY tn) 7 1% increase compared with 11 Global equity & equity-related (book runner, underwriting amount) *3 Rank #5 Mkt share 5.7% 6 JPY denominated bonds (lead manager, underwriting amount) *4 Financial advisor (M&A, transaction volume) *5 #5 #5 6.4% 33.% Jun E Financial advisor (M&A, No. of deals) *5 #5 2.% *1 Managerial accounting basis. Sum of SMBC, SMBC Nikko and SMBC Friend Securities *2 Managerial accounting basis *3 Source: SMBC Nikko, based on data from Thomson Reuters. Relating to Japanese corporations activities only *4 Source: SMBC Nikko. Consisting of corporate bonds, FILP agency bonds, municipality bonds, and samurai bonds *5 Source: Thomson Reuters. Relating to Japanese corporations activities only. Excluding real estate deals 2

22 3. Growth strategies Synergies between SMBC and SMBC Nikko (2) SMBC Nikko s financial performance SMBC Nikko s financial performance on a consolidated basis Peer comparison *2 Net operating revenue SG&A expenses Ordinary profit Net income *1 FY3/ Apr.-Jun YOY change (.3) +.1 (.3) (.1) Net income of FY3/12 and 1Q, FY3/ Rear bar: FY3/12 Front bar: 1Q, FY3/13 (39.4) (95.7) SMBC Nikko Nomura Daiwa Mizuho Mitsubishi UFJ Topics in 1Q, FY3/13 SMBC Nikko sold 35% of the total issued amount of JGB Reconstruction Bonds / Reconstruction Supporters' Bonds to retail investors in the Jul. 212 issue (amount sold in June: JPY 18.7 bn) Nikko JF Asia Discovery Fund became the largest domestic investment trust launched since Sep. 28 measured by launch amount (JPY bn) Quarterly net income after acquisition SMBC Nikko Sum of five companies (1.6) 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY3/1 FY3/11 FY3/12 FY3/13 *1 of which JPY(4.8) bn resulted from changes in the corporate tax rate in FY3/212 *2 Based on each companies financial statements. The figures shown in the charts above are: consolidated figures of Nomura Holdings (US GAAP, Net income attributable to Nomura Holdings shareholders) for Nomura, consolidated figures of Daiwa Securities Group for Daiwa, consolidated figures of Mizuho Securities for Mizuho, and consolidated figures of Mitsubishi UFJ Securities Holdings for Mitsubishi UFJ 21

23 3. Growth strategies Consumer finance business (1) SMFG s business Reorganization of SMFG s consumer finance business SMFG made Promise a wholly owned subsidiary in Apr.212. Former Promise was renamed SMBC Consumer Finance in Jul. 212 We aim to increase managerial flexibility and strengthen cooperation among group companies SMBC sold its share in ORIX Credit to ORIX in Jun. 212 We aim to concentrate resources into SMBC and SMBC Consumer Finance (JPY tn) Outstanding card loan balance of major Group companies SMBC Consumer Finance SMBC (guaranteed by companies other than SMBC Consumer Finance) SMBC (guaranteed by SMBC Consumer Finance) Overview of SMFG s consumer finance business.8 (Clients borrowing limit, JPY mn) % 2% (interest rate) Jun

24 3. Growth strategies Consumer finance business (2) Business conditions of SMBC Consumer Finance SMBC Consumer Finance s financial performance on a consolidated basis Operating income Interest on consumer loans Loan guarantee revenues FY3/ Apr.-Jun YOY change (3.5) (4.6) +6.2 Consumer loans outstanding / Actual average yield (JPY bn / %) Consumer loans outstanding: consolidated non-consolidated Actual average yield: consolidated non-consoidated , , , , Operating expenses Expenses for loan losses* Expenses for interest repayments* Expenses for debt guarantees Operating profit (156.6) (22.) (12.7) (9.6) (thousands) Jun. 12 Loan applications and new customers Loan applications (left axis) New customers (left axis) YoY change (loan applications, right axis) YoY change (new customers, right axis) (%) 1 5 Ordinary profit (155.5) (5) Net income (169.6) * Recorded JPY 24 bn of additional provisions in FY3/212 to cover all expected interest repayment claims 2 Jul. 1 Jan. 11 Jul. 11 Jan. 12 (1) (15) 23

25 3. Growth strategies Consumer finance business (3) Business conditions of SMBC Consumer Finance Overseas business Loan guarantee business Consumer loans outstanding (JPY bn, as of Jun. 12) *1 Hong Kong Thailand Consumer loans outstanding (HKD mn) 1,932 1,866 1,87 1,725 1,682 (Guaranteed loans outstanding; JPY bn) Number of guarantee agreements:183 To local banks, etc. To SMBC Shenzhen 1.66 Shenyang Jun Promise (Hong Kong) s financial performance *2 Operating income FY3/ FY3/12 (15-mos. period) 8.9 Apr.-Jun Ordinary profit Net income Jun. 12 *1 Local currencies converted into JPY *2 Figures before consolidation adjustments. Local currencies converted into JPY. FY3/12 was an irregular 15-months period due to a change in fiscal year-end 24

26 3. Growth strategies Consumer finance business (4) Business conditions of SMBC Consumer Finance No. of transaction-record disclosure requests * No. of interest refund claims * (thousand) (thousand) 4 FY3/11 2 FY3/11 FY3/12 FY3/12 FY3/13 FY3/ Apr. 月 May 5 月 Jun. 6 月 7 Jul. 月 Aug. 8 月 Sep 9 月 1 Oct. 月 11 Nov. 月 12 Dec. 月 Jan. 1 月 Feb. 2 月 3 月 4 Apr. 月 May 5 月 Jun. 6 月 7 Jul. 月 Aug. 8 月 Sep 9 月 1 Oct. 月 11 Nov. 月 12 Dec. 月 Jan. 1 月 Feb. 2 月 3 月 FY3/ FY3/ FY3/ FY3/ FY3/ FY3/ * Numbers of SMBC Consumer Finance on a non-consolidated basis. The aggregate of former Promise and former SANYO Shinpan until Sep

27 In closing (%) 2 G-SIFIs ROE *1 SMFG average of G-SIFIs (29 banks) average of US banks (8 banks) average of European banks (17 banks) Return to shareholders Dividend per share (JPY) Consolidated payout ratio *2,3 *2 FY3/ % 1 FY3/9 9 - FY FY3/1 FY3/ % 29.1% (1) FY3/ % (2) FY3/13 (forecast) % *1 Source: Bloomberg *2 Common stock only *3 SMFG implemented a 1 for 1 stock split of common stock on January 4, 29. Figures shown above reflect the stock split, assuming that it had been implemented at the beginning of FY3/8 26

28 Appendices

29 Overview of 1Q, FY3/213 results Key financial figures Banking profit *1 SMBC non-consolidated Total credit cost SMBC non-consolidated 29% of full-year forecast FY3/213 forecast JPY 75 bn JPY bn 1% of full-year forecast FY3/213 forecast JPY 1 bn (1H, FY3/213 forecast: 3 bn) JPY.5 bn Overhead ratio SMBC non-consolidated/ SMFG consolidated Net income SMFG consolidated Controlled within targets SMBC non-consolidated FY3/214 target 45%-5% SMFG consolidated FY3/214 target 5%-55% 46.5% 52.2% 25% of full-year forecast FY3/213 forecast JPY 48 bn JPY bn Per share information (SMFG consolidated) Apr. Jun. 212 results YOY change FY3/213 forecast Jun. 3, 212 Change from 31, 212 Net income per share JPY 87.4 JPY (61.43) JPY Net assets per share JPY 3, JPY (8.1) *1 Before provision for general reserve for possible loan losse 28

30 FY3/212 financial performance P/L Contribution of subsidiaries/affiliates to SMFG s Net income FY3/212 YOY change FY3/213 forecast FY3/212 YOY change Gross banking Profit 1, ,47. Cedyna *5 (38) (38) Expenses * Promise *6 (28) (7) <OHR> 46.9% +1.3% 49.% Sumitomo Mitsui Card SMBC non-consolidated Banking profit *2 Total credit cost *3 Gains (losses) on stocks (15.2) (19.6) (35.7) Sumitomo Mitsui Finance and Leasing SMBC Nikko Securities SMBC Guarantee (6) +18 Ordinary profit Net income * SMFG consolidated Ordinary profit Net income * *1 Excluding non-recurring losses *2 Before provision for general reserve for possible loan losses *3 Including portion recorded in Extraordinary gains (losses) in the results of FY3/211 *4 of which JPY (22.6) bn on SMBC non-consolidated basis and JPY (39.6) bn on SMFG consolidated basis resulted from the change in the corporate tax rate in FY3/212 *5 Excluding gains related to step acquisition of JPY 11.7 bn associated with procedures for making Cedyna a subsidiary in FY3/211 *6 Excluding gains related to step acquisition of JPY 25.1 bn associated with procedures for making Promise a subsidiary in FY3/212 29

31 Performance by business unit *1 SMBC non-consolidated Consumer Banking Unit Middle Market Banking Unit Corporate Banking Unit International Banking Unit (IBU) Marketing Units Treasury Unit Headquarters Total (Business Units) FY3/211 FY3/212 YOY change* 2 Gross banking profit (5.5) Expenses (.9) Banking profit (4.6) Gross banking profit (18.2) Expenses Banking profit (18.4) Gross banking profit Expenses Banking profit Gross banking profit Expenses Banking profit Gross banking profit 1, , Expenses Banking profit Gross banking profit (11.4) Expenses Banking profit (12.7) Gross banking profit (18.4) (3.4) +.4 Expenses Banking profit (93.8) (88.3) + 8. Gross banking profit 1, , Expenses Banking profit (19.6) Gross banking profit by product YOY change* 2 of which: Income on domestic loans Income on domestic yen deposits IBU s Interest related income* (26.) Total interest income (12.) of which: Investment trust Single premium type permanent life insurance Level premium insurance (5.1) Total income related to Financial consulting for retail customers of which: Loan syndication Structured finance* 4 Real estate finance* (4.1) (4.) Total income related to Investment Banking business* (1.1) of which: Sales of derivatives Money remittance, Electronic banking Foreign exchange IBU s Non-interest income* (.7) (1.1) Total non-interest income Gross banking profit of Marketing Units 1, Adjustment of interest rates and exchange rates, etc.: (14.6) Nominal YOY change: (2.9) Average loan balance and spread by business unit (JPY tn, %) IBU s interest earning assets *5 (USD bn, %) FY3/212 Balance YOY change* FY3/212 Spread 1.1 YOY change* 2 Domestic loans 47.6 (1.1) 1.5 (.3) of which: Consumer Banking Unit 15.3 (.1) 1.46 (.3) Middle Market Banking Unit 16.6 (.9) 1.13 (.5) Corporate Banking Unit (.3) (.4) *1 Managerial accounting basis *2 After adjustment of interest rates and exchange rates, etc. *3 Including profit from Japanese corporations in Hong Kong Branch and Taipei Branch *4 Including interest income *5 Sum of loans, trade bills, and securities 3

32 Gains (losses) on bonds Gross banking profit of Treasury Unit FY3/ FY3/ Q, FY3/ YOY change Gains (losses) on bonds Domestic operations International operations FY 3/ FY3/ Q, FY3/ YOY change (SMBC non-consolidated) Market interest rates in Japan and the U.S. JPY (%) 5 1Y JGB yields USD (%) 5 1Y US Treasury yields 4 3M JPY TIBOR 4 3M USD LIBOR /4/1 21/1/1 FY3/11 211/4/1 211/1/1 FY3/12 212/4/1 FY3/13 21/4/1 21/1/1 FY3/11 211/4/1 211/1/1 FY3/12 212/4/1 FY3/13 31

33 Expenses Expenses *1 OHR on group consolidated basis * 3 SMBC non-consolidated 8 Non-personnel expenses Personnel expenses OHR % 9 8 (%) % 46.9% 49.% 6% 4% % 3 2 FY3/7 3/8 3/9 3/1 3/11 3/12 3/13E SMFG consolidated FY3/11 FY3/12 YOY change Consolidated expenses* 2 1, , OHR 52.5% 53.5% +1.% % *1 Excluding non-recurring losses *2 Consolidated G&A expenses net of SMBC s non-recurring losses *3Based on each companies disclosure. G&A expenses (for Japanese banks, excluding non-recurring losses) divided by top-line profit (net of insurance claims). FY3/212 results for SMFG, MUFG and Mizuho FG, and FY12/211 results for others 1 SMFG MUFG HSBC Mizuho FG BNP RBS Barclays JPM Citi DB BAC 32

34 Total credit cost SMBC non-consolidated 1, ,2 1,5 232bp Total credit cost (left axis) Total credit cost / Total claims (right axis) (bp) 25 Major subsidiaries FY3/12 YOY change 1, 2 Cedyna * Kansai Urban Banking Corporation Sumitomo Mitsui Card Promise * (7) (9) bp bp 9bp 16bp 15bp FY3/2 3/3 3/4 3/5 3/6 3/7 3/8 3/9 3/1 3/11 3/12 3/13E 5 SMBC Guarantee Sumitomo Mitsui Finance and Leasing (2) (6) (11) (21) SMFG consolidated YOY change Total credit cost 1,73.4 1, , (96.) Excluding SMBC non-consolidated (6.3) *1 Became a subsidiary in May 21 *2 Became a subsidiary in Dec Renamed to SMBC Consumer Finance from Promise on July 1,

35 Loan balance SMBC non-consolidated Loan balance *1 Loan balance by domestic Marketing Units, managerial accounting basis (JPY tn, at period-end) 8 7 Breakdown of change from 211 to 212 (JPY tn) Domestic loans, excl. risk-monitored loans (.7) Overseas loans, excl. risk-monitored loans Risk-monitored loans +.1 (JPY tn, at period-end) Consumer Banking Unit Middle Market Banking *3 Unit YOY change (.1) (.5) * Total Corporate Banking Unit 11.7 (.2) Overseas loans, classified by region,* 4 managerial accounting basis 5 Total (JPY tn, at period-end) YOY change After adjustment of exchange rate fluctuation of which to Japanese corporations Asia Americas EMEA *1 The aggregate of former Sakura bank and Sumitomo Bank for 1 *2 After add-back adjustment of portion of housing loans securitized in FY3/12 of approx. JPY 8 bn *3 Excluding loans to the Special Account for Allotment of Local allocation Tax and Local Transfer Tax, etc. and Deposit Insurance Corporation of Japan *4 Sum of SMBC, SMBC Europe and SMBC (China). Based on location of the channels. 34

36 Loan spread *1 Overseas *2 Domestic *3 1.4% 1.4% Large corporations (Corporate Banking Unit) Medium-sized enterprises and SME's (Middle Market Banking Unit) 1.2% 1.2% 1.% 1.%.8%.8%.6%.6%.4%.4%.2%.2%.%.% Sep Sep Sep Sep Sep Sep Sep Sep *1 Managerial accounting basis. Average loan spread of existing loans *2 Sum of SMBC, SMBC Europe and SMBC (China) *3 SMBC non-consolidated 35

37 Exposure to GIIPS countries Exposure to GIIPS countries: approx. USD 7.2 billion *1 as of June 212 Gov t bonds issued by GIIPS countries *2 Spain Italy approx. USD 4.3 mn USD 4.1 mn USD.2 mn Ireland approx. USD 1.4 bn *1 Aircraft leasing Portugal approx. USD.5 bn Spain approx. USD 2.6 bn *1 To large corporations and project finance Italy approx. USD 2.9 bn To large corporations and project finance Greece approx. USD.24 bn *1 Aircraft leasing *1 Aircraft leasing by newly consolidated SMBC Aviation Capital is approx. USD 1.48 bn; approx. USD 1 bn in Ireland, approx. USD.3 bn in Spain and approx..18 bn in Greece *2 Secondary holdings of government bonds in SMBC Nikko (SMFG consolidated) 36

38 Overseas loan balance classified by borrower type * 15 Total By region as of 12 (%) (USD bn) (%) Non-Japanese corporations and others (product type lending) Japanese corporations Japanese corporations Non-Japanese corporations and others Total Asia Americas EMEA Major countries in Asia as of 12 (%) Japanese corporations Non-Japanese corporations and others * Managerial accounting basis. Sum of SMBC, SMBC Europe and SMBC (China). Geographic classification based on booking office Singapore Hong Kong China Sydney Bangkok Seoul 37

39 Bond portfolio Yen bond portfolio SMBC non-consolidated (Total balance of bonds with maturities classified as Other securities and bonds of held-to-maturity; total of JGBs, Japanese local government bonds and Japanese corporate bonds) of which 15-year floating-rate JGBs: approx. JPY 1.9 tn Balance (JPY tn) More than 1 years More than 5 years to 1 years More than 1 year to 5 years 1 year or less Jun. 12 of which 2 years or less: JPY 6. tn (change from 12: JPY (2.5) tn) Average duration (years)* Unrealized gains (losses) * (11.9) 7.7 (282.2) (151.4) (129.5) (1.2) *1 Excluding bonds of held-to-maturity, bonds for which hedge-accounting is applied, and private placement bonds. Duration of 15-year floating rate JGBs is regarded as zero (duration of JGBs portfolio for 2) *2 15-year floating-rate JGBs have been carried at their reasonably estimated amounts from 9 38

40 Capital and risk-weighted assets SMFG consolidated Tier I of which: Capital stock & Capital surplus Preferred Stock Retained earnings Preferred securities issued by overseas SPCs Foreign currency translation adjustment Increase in equity capital resulting from a securitization exposure Tier II of which: Unrealized gains on other securities after 55% discount General reserve for loan losses Perpetual subordinated debt Dated subordinated debt Deduction Total capital Risk-weighted assets Capital ratio Tier I ratio Core Tier I ratio (pro forma) Based on the definition as at the full implementation of Basel III Based on the definition as at the initial implementation of Basel III 31, 11 (a) 6,324. 3, ,72.8 1,593.6 (122.9) (36.3) 2, ,967.2 (428.1) 8, , % 12.47% above 6% above 8% 31, 12 (b) 6, ,97.7-2,84.4 1,588.9 (141.4) (38.3) 2, ,34.9 (399.6) 8, , % 12.28% nearly 7.5% above 9% (b) - (a) (51.7) (219.) (21.) (4.7) (18.5) (2.) (33.3) (93.8) % (.19%) + over 1% +over1% (1) (2) (3) (4) (5) [Notes] (5) Credit risk-weighted assets Market risk equivalent (Ref.) Outlier ratio * 2 Operational risk equivalent Total Risk-weighted assets Tier I (1)Redemption of all Type 6 preferred stock on Apr. 1, 211 JPY (21.) bn (2) Consolidated Net income + JPY bn Dividends JPY (138.7) bn Net deferred tax assets / SMFG consolidated Tier I capital: 5.6% as of 212, decreased by 4.3% compared with 211 Tier II (3) Redemption of perpetual subordinated debt JPY (93.8) bn (4) Public offering in domestic market by SMBC + JPY 396. bn 31, 11 46, % 3, , , 12 45, , % 3, ,43.2 YOY change (442.) (5.2%) Decreased mainly as a result of a decline in domestic exposure, despite an increase in overseas loan balances and an increase through consolidation of Promise of JPY 9 bn Net deferred tax assets (274.) Basel 2.5 impact of introduction of stressed VaR: approx. JPY 4 bn *1 Calculation for Core Tier I ratio based on Basel III standards. Other calculations based on Basel II standards (Credit risk: AIRB, Operational risk: AMA) *2 SMBC consolidated basis 39

41 Capital policy and return to shareholders Capital policy Return to shareholders Common equity Tier 1 capital (Core Tier I capital *1 ) Additional Tier 1 capital Aim for Core Tier I ratio of 8% at March 214 by accumulating earnings Estimates increase of risk-weighted assets by 1% from Basel III implementation Sufficient amount of preferred securities to be grandfathered beyond introduction of Basel III No need for issuance of "newstyle" Tier I securities for a while Dividends per share planned at JPY 1 in FY3/213 Above 2% consolidated payout ratio (FY3/212: 26.8%, FY3/213 estimate: 29.4%) Dividend per share (JPY)* 4,5 Consolidated payout ratio *4 FY3/ % FY3/ % 29.1% 26.8% BPS (JPY, period-end) *5 4, , , , , ROE *6 12.3% - 7.5% 9.9% 1.4% - FY3/1 1 FY3/11 1 FY3/12 1 FY3/13 forecast % Tier 2 capital Sufficient amount of sub debt to be grandfathered Also able to issue old-style sub debt *2 until FY3/213 Treasury stock (SMFG shares) Held by SMFG: 3.8 million shares *3 Held by SMBC: 56.2 million shares *3 (Due to share exchange for acquiring Promise) Preferred securities which become callable in FY3/14 SMFG Preferred Capital USD 2 Limited SMFG Preferred Capital JPY 2 Limited Series D Series G Issue date Aggregate issue amount May 28 USD 1,8 mn Dividend First call rate *7 date *8 8.75% Jul. 213 Dec. 28 JPY bn 4.76% Jan. 214 Jan. 29 JPY bn 4.65% Jan. 214 Type Non step-up Non step-up Non step-up *1 Common Equity Tier 1 Capital under Basel III *2 Subordinated debt issued based on Basel II to be grandfathered beyond introduction of Basel III, such as those in bullet format, and in callable format without step-up clause and redeemable 5 years after issuance *3 Reflecting impact of 1% acquisition of Promise on April 1, 212 *4 Common stock only *5 SMFG implemented a 1 for 1 stock split of common stock on January 4, 29. Figures shown above reflect the stock split, assuming that it had been implemented at the beginning of FY3/8 *6 On a stockholders equity basis *7 For SMFG Preferred Capital JPY 2 Limited only, floating rate after the first call date *8 Callable at any dividend payment date on and after the first call date, subject to the prior approval of the FSA 4

42 Summary of regulatory capital framework In March 212, the Japanese FSA amended requirements regarding bank capital *1 Basically consistent with Basel III text Effective from the end of March 213 to conform with the fiscal year end of Japanese banks Additional loss absorbency requirement for G-SIFIs 14% 12% 1% 8% 6% 4% Basel II Tier II Additional Tier I Capital conservation buffer Minimum common equity Tier I ratio 8.% 8.% 8.% 8.% 3.5% 1.% 2.5% 2.% 1.5% Transition period 1.5% 8.625% 2.% 1.5%.625% 9.25% 2.% 1.5% 1.25% 9.875% 2.% 1.5% 1.875% Fully implemented Bucket 4 (2.5%) * 2 Bucket 1 (1.%) 1.5% 1.5% 1.5% 1.5% 2.% 2.% 2.% 2.% 1.5% 1.5% 1.5% 1.5% 2.5% 2.5% 2.5% 2.5% 2% 3.5% 4.% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% % Phase-in of deductions *3 Grandfathering of capital instruments - 2% 4% 6% 8% 1% 1% 1% 1% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% - *1 Drafts of other rules that are to be implemented after 214, such as rules on capital buffers and liquidity standards, will be published at a later stage *2 With an empty bucket of 3.5% to discourage further systemicness *3 Including amounts exceeding the limit for deferred tax assets, mortgage servicing rights and investment in capital instruments of unconsolidated financial institutions 41

43 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 2-F and other documents 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.