Final Results

TOKYO--()--

Sumitomo Mitsui Financial Group, Inc. (SMFG)

Consolidated Financial Results for the Fiscal Year ended March 31, 2012

<Under Japanese GAAP>

Head Office: 1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan

Stock Exchange Listings: Tokyo Stock Exchange, Osaka Securities Exchange, Nagoya Stock Exchange, New York Stock Exchange

URL: http://www.smfg.co.jp

President: Koichi Miyata

Date of Ordinary General Meeting of Shareholders: June 28, 2012

Date of Payment of Year-End Dividends: June 28, 2012

(Note) Amounts less than one million yen have been omitted.

1. Consolidated Financial Results (for the fiscal year ended March 31, 2012)

(1) Operating Results (Millions of yen, except per share data and percentages)

    Ordinary Income   Ordinary Profit   Net Income
Fiscal Year ended March 31, 2012 ¥ 3,945,282   2.6 % ¥ 935,571   13.3 % ¥ 518,536   9.0 %
Fiscal Year ended March 31, 2011 3,845,861 21.5 825,428 47.7 475,895 75.2

Notes: 1. Comprehensive Income:

(a) for the fiscal year ended March 31, 2012: ¥ 665,232 million [60.9 %]

(b) for the fiscal year ended March 31, 2011: ¥ 413,375 million [(48.6) %]

2. Percentages shown in Ordinary Income, Ordinary Profit and Net Income are the increase (decrease) from the previous fiscal year.

    Net Income

per Share

  Net Income

Per Share (Diluted)

  Return on

Net Assets

  Ordinary Profit

on Total Assets

  Ordinary Profit on

Ordinary Income

Fiscal Year ended March 31, 2012 ¥ 374.26 ¥ 373.99 10.3 % 0.7 % 23.7 %
Fiscal Year ended March 31, 2011 336.85 336.78 9.8 0.6 21.5

Note: Equity in earnings (losses) of affiliates:

(a) for the fiscal year ended March 31, 2012: ¥ (31,122) million (b) for the fiscal year ended March 31, 2011: ¥ (13,319) million

(2) Financial Position (Millions of yen, except per share data and percentages)

    Total Assets   Net Assets   Net Assets

Ratio

  Net Assets

per Share

  Capital Ratio
March 31, 2012 ¥ 143,040,672 ¥ 7,254,976 3.6 % ¥ 3,856.37 (Preliminary) 16.94 %
March 31, 2011 137,803,098 7,132,073 3.7 3,533.47 16.63

Notes: 1. Stockholders’ equity:

(a) as of March 31, 2012: ¥ 5,210,400 million (b) as of March 31, 2011: ¥ 5,094,493 million

2. Net Assets Ratio = {(Net assets – Stock acquisition rights – Minority interests) / Total assets} X 100

3. Capital Ratio is calculated using the method stipulated in “Criteria for a Bank Holding Company to decide whether or not the adequacy of equity capital of the Bank Holding Company and its Subsidiary Companies is appropriate in light of the circumstances such as the assets, etc. it owns, pursuant to Article 52-25 of the Banking Act” (Financial Services Agency Notification 20, issued in 2006).

(3) Cash Flows (Millions of yen)

    Cash Flows from

Operating Activities

  Cash Flows from

Investing Activities

  Cash Flows from

Financing Activities

  Cash and Cash Equivalents at year-end
Fiscal Year ended March 31, 2012 ¥ 1,838,185 ¥ (2,589,543) ¥ (300,119) ¥ 4,588,858
Fiscal Year ended March 31, 2011 13,793,737 (11,148,211) (364,438) 5,645,094

2. Dividends on Common Stock (Millions of yen, except per share data and percentages)

  Cash Dividends per Share   Total Dividends

(Annual)

  Dividend Payout Ratio   Ratio of Dividends to Net Assets
  1st

Quarter

  2nd

Quarter

  3rd

Quarter

  4th

Quarter

  Annual
Fiscal Year
ended March 31, 2011 ¥ – ¥ 50 ¥ – ¥ 50 ¥ 100 ¥ 141,030 30.0 % 2.9 %
ended March 31, 2012 50 50 100 138,745 26.8 2.7
ending March 31, 2013 (Forecast) 50 50 100   29.4  

Note: Dividends on unlisted preferred stocks are reported on page 3.

3. Earnings Forecast on a Consolidated Basis (for the fiscal year ending March 31, 2013)

(Millions of yen, except per share data and percentages)

    Ordinary Profit   Net Income   Net Income

per Share

Six Months ending September 30, 2012 ¥ 460,000   (15.8) % ¥ 250,000   (20.3) % ¥ 184.64
Fiscal Year ending March 31, 2013 910,000 (2.7) 480,000 (7.4) 354.52

Note: Percentages shown in Ordi nary Profit and Net Income are the increase (decrease) from the results of the previous fiscal year.

[Notes]

(1) There were no changes in material consolidated subsidiaries in the fiscal year.

(2) There were changes in accounting principles when preparing consolidated financial statements due to revisions in accounting standards.

(3) Number of common stocks issued (common stock)

  As of March 31, 2012     As of March 31, 2011
(a) Number of shares issued (including treasury stocks) 1,414,055,625 shares 1,414,055,625 shares
(b) Number of treasury stocks 62,939,559 shares 32,581,914 shares
 
Fiscal year ended

March 31, 2012

Fiscal year ended

March 31, 2011

(c) Average number of shares issued in the period 1,385,505,385 shares 1,394,390,769 shares

(Note) Number of shares used in calculating “Net Income per Share” (on a consolidated basis) is reported on page 43.

[Reference] Parent Company Financial Information on a Non-consolidated Basis

Non-consolidated Financial Results (for the fiscal year ended March 31, 2012)

(1) Operating Results (Millions of yen, except per share data and percentages)

    Operating Income   Operating Profit   Ordinary Profit   Net Income
Fiscal Year        
ended March 31, 2012 ¥ 181,372 (18.4)% ¥ 156,470 (20.9) % ¥ 149,922 (21.7) % ¥ 149,919 (21.7) %
ended March 31, 2011 222,217 66.6 197,750 69.4 191,543 102.6 191,539 189.4
    Net Income

per Share

  Net Income

per Share (Diluted)

Fiscal Year
ended March 31, 2012 ¥ 107.06 ¥ 107.04
ended March 31, 2011 131.42 131.42

Note: Percentages shown in Operating Income, Operating Profit, Ordinary Profit and Net Income are the increase (decrease) from the previous fiscal year.

(2) Financial Position (Millions of yen, except per share data and percentages)

    Total Assets   Net Assets   Net Assets Ratio   Net Assets per Share
March 31, 2012 ¥ 6,153,461 ¥ 4,527,629 73.6 % ¥ 3,317.44
March 31, 2011 6,237,655 4,842,914 77.6 3,282.75

Note: Stockholders ’ equity

(a) as of March 31, 2012: ¥ 4,527,031 million (b) as of March 31, 2011: ¥ 4,842,743 million

[Note on Audit Process]

This earnings report is out of the scope of the audit procedure which is required by “Financial Instruments and Exchange Act.” Therefore, the audit process of consolidated financial statement and financial statement has not been completed as of the disclosure of this earnings report.

[Dividends Information]

Dividends on Preferred Stock

(Millions of yen, except per share data)

Type       Cash Dividends per Share   Total Dividends

(Annual)

1st Quarter   2nd Quarter   3rd Quarter   4th Quarter   Annual
Preferred stock

(Type 6)

Fiscal Year ended March 31, 2011 ¥ – ¥ 44,250 ¥ – ¥ 44,250 ¥ 88,500 ¥ 6,195

<Reference> Calculation for Indices

- Return on Net Assets (consolidated basis):

Net income   X 100
{(Stockholders’ equity at beginning of year – Number of preferred stocks issued at beginning of year X Issue price) + Stockholders’ equity at year-end} / 2
 

- Dividend Payout Ratio (consolidated basis):

Total dividends on common stock   X 100
Net income

- Ratio of Dividends to Net Assets (consolidated basis):

Total dividends on common stock   X 100
{(Stockholders’ equity at beginning of year – Number of preferred stocks issued at beginning of year X Issue price) + Stockholders’ equity at year-end} / 2
 

- Forecasted Net Income per Share (consolidated basis):

Forecasted net income
Forecasted average number of common stocks during the period (excluding treasury stock) (*)

* The forecasted average number of common stocks (excluding treasury stock) during the six months ending September 30, 2012 and fiscal year ending March 31, 2013, used for the above calculations, was assumed to be 1,353,956,142 shares, taking into account that SMFG’s holdings of common shares as treasury stock decreased in April 2012, after the share exchange transaction to make Promise Co., Ltd. its wholly owned subsidiary.

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 Sumitomo Mitsui Financial Group, Inc. and its management with respect to Sumitomo Mitsui Financial Group, Inc.’s future financial condition and results of operations. In many cases but not all, these statements contain words such as “anticipate”, “estimate”, “expect”, “intend”, “may”, “plan”, “probability”, “risk”, “project”, “should”, “seek”, “target” and similar expressions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those expressed in or implied by such forward-looking statements contained or deemed to be contained herein. The risks and uncertainties which may affect future performance include the fragility of any economic recovery, both globally and in Japan; Sumitomo Mitsui Financial Group, Inc.’s ability to successfully implement its business and capital strategy; the success of our business alliances including those in the consumer finance industry; exposure to new risks as we expand the scope of our business; significant credit-related costs; declines in the value of Sumitomo Mitsui Financial Group, Inc.’s securities portfolio. Given these and other risks and uncertainties, you should not place undue reliance on forward-looking statements, which speak only as of the date of this document. Sumitomo Mitsui Financial Group, Inc. undertakes no obligation to update or revise any forward-looking statements. Please refer to our most recent disclosure documents such as our annual report or the registration statement on Form 20-F and other documents submitted to the U.S. Securities and Exchange Commission, as well as our earnings press releases for a more detailed description of the risks and uncertainties that may affect our financial conditions, our operating results, and investors’ decisions.

Table of Contents

I. Operating and Financial Review

1. Consolidated Operating Results for the Fiscal Year Ended March 31, 2012 (Fiscal 2011)

2. Consolidated Financial Position as of March 31, 2012

3. Dividend Policy and Dividends for Fiscal 2011 and 2012

4. Risk Factors

II. Overview of SMFG Group

III. Management Policy

1. Our Basic Policy

2. Targeted Management Indices

3. Medium- to Long-term Management Strategy

4. Issues to be Addressed

IV. Consolidated Financial Statements

1. Consolidated Balance Sheets

2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

3. Consolidated Statements of Changes in Net Assets

4. Consolidated Statements of Cash Flows

5. Note on the Assumption as a Going Concern

6. Notes on Significant Accounting Policies for Preparing Consolidated Financial Statements

7. Unapplied Accounting Standards, etc.

8. Change in presentation

9. Additional Information

10. Notes to Consolidated Financial Statements

Notes to Consolidated Balance Sheets

Notes to Consolidated Statements of Income

Notes to Consolidated Statements of Changes in Net Assets

Notes to Consolidated Statements of Cash Flows

Fair Value of Financial Instruments

Fair Value of Securities and Money Held in Trust

Employee Retirement Benefits

Stock Options

Segment Information

Business Combination

Per Share Data

Significant Subsequent Events

V. Non-Consolidated Financial Statements

1. Non-consolidated Balance Sheets

2. Non-consolidated Statements of Income

3. Non-consolidated Statements of Changes in Net Assets

4. Note on the Assumption as a Going Concern

* (Appendix) Financial Results for the fiscal year ended March 31, 2012 Supplementary Information

I. Operating and Financial Review

1. Consolidated Operating Results for the Fiscal Year Ended March 31, 2012 (Fiscal 2011)

(1) Operating Results

During fiscal year 2011, the first year of the medium-term management plan for the three years from fiscal 2011 to 2013, Sumitomo Mitsui Financial Group, Inc. (“SMFG”) actively executed two strategies of “strengthening initiatives in strategic business areas” and “establishing a solid financial base and corporate infrastructure,” aiming to achieve the management objectives.

In fiscal 2011, net fees and commissions increased mainly as Sumitomo Mitsui Banking Corporation (“SMBC”) increased fees related to overseas loans as well as fees related to domestic loan syndication. Newly consolidated subsidiaries also contributed to the increase. As a result, ordinary income increased ¥99.4 billion year-on-year to ¥3,945.2 billion.

Ordinary expenses decreased ¥10.7 billion year-on-year to ¥3,009.7 billion. Meanwhile, general and administrative expenses increased due to the aggressive allocation of resources into focused business areas, such as our international business, and an increase of consolidated subsidiaries. On the other hand, other expenses decreased thanks to factors such as lower credit costs mainly due to SMBC’s tailored efforts to assist certain debtors to improve their businesses and financial conditions, and also similar efforts made by other consolidated subsidiaries to steadily reduce credit costs.

As a result, SMFG’s ordinary profit increased ¥110.1 billion year-on-year to ¥935.5 and net income increased ¥42.6 billion year-on-year to ¥518.5 billion.

(2) Earnings Forecast for the fiscal year ending March 31, 2013 (Fiscal 2012)

Our basic policy for fiscal 2012 is as follows: “Move forward steadily towards the targets of the medium-term management plan, capturing opportunities with proactive ideas and actions.” We will also continue to implement initiatives for the two strategies – strengthening initiatives in strategic business areas and establishing a solid financial base and corporate infrastructure – of the medium-term management plan.

As for earnings forecast on a consolidated basis, ordinary income and net income are expected to amount to ¥910 billion and ¥480 billion, respectively.

2. Consolidated Financial Position as of March 31, 2012

(1) Assets and Liabilities

Deposits were ¥84,128.5 billion, a year-on-year increase of ¥2,129.6 billion and negotiable certificates of deposit were ¥8,593.6 billion, an increase of ¥227.3 billion increase year over year.

Loans and bills discounted increased ¥1,372.2 billion to ¥62,720.5 billion year-on-year. This was mainly attributable to an increase, notably in Asia and the U. S., despite a decrease in domestic lending.

Total assets were ¥143,040.6 billion, a year-on-year increase of ¥5,237.5 billion.

(2) Net Assets

Net assets were ¥7,254.9 billion, a year-on-year increase of ¥122.9 billion. Stockholders’ equity within net assets was ¥5,014.3 billion, a year-on-year increase of ¥92.8 billion due mainly to the contribution of net income, the acquisition and cancellation of Preferred stock (Type 6), and the payment of cash dividends.

(3) Cash Flows

SMFG generated ¥1,838.1 billion of “Cash flows from operating activities,” a year-on-year decrease of ¥11,955.5 billion, used ¥2,589.5 billion of “Cash flows from investing activities,” a year-on-year increase of ¥8,558.6 billion, and used ¥300.1 billion of “Cash flows from financing activities,” a year-on-year increase of ¥64.3 billion.

Consequently, Cash and cash equivalents amounted to ¥4,588.8 billion, a decrease of ¥1,056.2 billion.

(4) Capital Ratio (preliminary)

Capital ratio was 16.94% on a consolidated basis.

3. Dividend Policy and Dividends for Fiscal 2011 and 2012

SMFG has a basic policy of steadily increasing returns to shareholders through the sustainable growth of its enterprise value, while enhancing its capital to maintain financial soundness in light of the public nature of its business as a bank holding company, and aims to realize a payout ratio of over 20% on a consolidated net income basis.

In line with this policy, SMFG decided to pay the following year-end dividends on common stocks, in view of the fiscal 2011 operating results.

Common stock:    
Year-end dividends ¥ 50 per share
Annual (including interim dividend) ¥ 100 (the same as fiscal 2011)

SMFG intends to pay the following dividends for fiscal 2012, based on the earnings forecast, level of dividend payout ratio and policy of maintaining stable dividend payment.

Common stock   ¥ 100 per share   (the same as fiscal 2011)
[interim dividends] [50]

4. Risk Factors

Principal risk factors that could materially affect SMFG’s operating results and financial position are as follows. SMFG takes necessary measures to prevent/mitigate the risk of such events from occurring, and responds quickly and appropriately when such events do occur.

  • Risk of economic and financial environment deteriorating
  • Risk of SMFG’s strategy failing
  • Risk of joint venture, alliance, investment, merger and acquisition failing
  • Risk of overseas expansion failing
  • Risk of non-performing loans and credit costs increasing
  • Risks associated with equity portfolio
  • Risks associated with trading business and investment activities
  • Risks associated with foreign exchange trading
  • Risk of capital ratio declining
  • Risks resulting from natural disasters
  • Risks associated with transactions with counterparties in Iran and other countries designated by the U.S. Department of State as state sponsors of terrorism
  • Risks related to changes in laws, regulations, regimes, and other regulatory matters

(Note) The above risk factors are as of May 15, 2012.

II. Overview of SMFG Group

SMFG group conducts primary banking business through the following financial services: securities services, leasing, credit card services, consumer finance, investment banking, loans and venture capital. SMFG has 337 consolidated subsidiaries and 43 companies accounted for by the equity method.

* Consolidated subsidiary ** Equity method affiliate

(Graphic omitted)

III. Management Policy

1. Our Basic Policy

We aim to be a globally competitive and trusted financial services group by maximizing our strength of Spirit of Innovation, Speed and Solution & Execution. Our mission is as follows:

- 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 rewarding work environment for our dedicated employees.

2. Targeted Management Indices

The SMFG group launched a medium-term management plan in May 2011 for the three years from fiscal 2011 to 2013 with two management objectives as follows:

- Aim for top quality in strategic business areas;

- Establish a solid financial base and corporate infrastructure to meet the challenges of financial regulations and highly competitive environment.

The following four financial objectives and targets were set with the aim of improving and seeking a balance between financial soundness, profitability, and growth.

- Achieve sufficient Core Tier I ratio as required for a global player (“financial soundness”);

- Enhance risk-return profile by improving asset quality (“profitability”);

- Aim for top-level cost efficiency among global players (“profitability”);

- Expand international business especially in Asia by capturing business opportunities in growth markets (“growth”).

Financial targets

Fiscal

2013

Targets

  Financial soundness   Core Tier I ratio *1,2   8%
Profitability Consolidated net income RORA *2 0.8%
Consolidated overhead ratio *2 50%-55%
Overhead ratio *3 45%-50%
Growth Overseas banking profit ratio *4 30%

*1 Calculated based on the definition as at the full implementation of Basel III in 2019

*2 SMFG consolidated basis *3 SMBC non-consolidated basis

*4 Managerial accounting basis. Proportion of Banking profit generated by International Banking Unit

within Marketing units

3. Medium- to Long-term Management Strategy

The business environment surrounding the SMFG group, including economic and market outlook, remains unpredictable, uncertain and unstable. However, we, as a financial services group with Japan as our home market, will implement initiatives for achieving our management objectives in order to fully accommodate the financial needs of our clients in a timely and effective manner.

We, the SMFG group, will make every effort to increase shareholder value by establishing a globally competitive business, corporate and financial base, and to be a top-tier global financial services group.

4. Issues to be Addressed

Our basic policy for fiscal 2012 is as follows: “Move forward steadily towards the targets of the medium-term management plan, capturing opportunities with proactive ideas and actions.” We will also continue to implement initiatives for the two strategies – strengthening initiatives in strategic business areas and establishing a solid financial base and corporate infrastructure – of the medium-term management plan.

(1) Strengthen initiatives in strategic business areas

(a) Financial consulting for retail customers

We will continue to make every effort to improve our financial consulting capabilities for retail customers, whose needs are diversifying, through initiatives including an expansion of product line-up in securities intermediary business and a reinforcement of insurance business at SMBC. At the same time, we will strengthen our client base by promoting a) collaboration between Middle Market Banking Unit and Consumer Banking Unit of SMBC, and b) cross-selling on a group-wide basis. In addition, we will offer products and services addressing individuals’ 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 companies engaged in these businesses into Consumer Finance & Transaction Business Department.

(b) Tailor-made solutions for corporate clients

We will strengthen responsiveness to customers by reorganizing marketing framework and optimizing staff allocation. Specifically, we will reinforce our lending business and our solution providing capabilities in order to more effectively accommodate diversified and sophisticated financing needs of clients from the planning stage.

(c) Commercial banking in emerging markets, especially Asia

We will a) accommodate Japanese clients’ needs, including supporting their international business development, more effectively and in a more integrated manner, and b) reinforce growing businesses including infrastructure finance and trade finance, by expanding our global network, promoting collaboration between domestic and overseas offices and between business units, and strengthening marketing functions associated with investment banking business in Asia. In addition, we will secure stable foreign-currency funding sources to accommodate an increase of overseas assets.

(d) Broker-dealer / Investment banking

We will reinforce SMBC Nikko Securities, the principal driver of our securities business, by further promoting collaboration with SMBC and enhancing wholesale securities business capabilities for cross-border M&A and other advisory services.

(e) Non-asset businesses (payment & settlement services and asset management)

We will accommodate the transaction services needs and accompanying financing needs of corporate clients the world over by flexibly and quickly offering products and services in a more integrated manner. To this end, we will leverage the functions of newly established Transaction Business Planning Department, which devises long-term, integrated transaction services business strategies for our group and manages settlement risk, and Transaction Business Division, which promote transaction services businesses for corporate clients. Regarding our asset management business, we will reinforce collaboration within our group and with overseas asset management companies.

(2) Establish a solid financial base and corporate infrastructure

In order to strengthen our corporate infrastructure to support 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 a) diversifying and enhancing business portfolio through rebalancing while reinforcing strategic business areas, and b) pursuing operational efficiency through business process re-engineering. Regarding compliance, we will further reinforce our compliance system to address the changing regulatory environment and to more effectively meet local laws and regulations in view of the group-wide development of our international business.

Through these initiatives, we aim to achieve steady results, and further increase the value for our clients and shareholders, financial markets, and society.

IV. Consolidated Financial Statements

1. Consolidated Balance Sheets

(Millions of yen)

March 31,   2012     2011
Assets:
Cash and due from banks ¥ 7,716,291 ¥ 9,233,906
Call loans and bills bought 1,291,818 851,636
Receivables under resale agreements 227,749 131,104
Receivables under securities borrowing transactions 4,539,555 4,740,410
Monetary claims bought 1,361,289 1,122,307
Trading assets 8,196,944 6,632,898
Money held in trust 23,878 24,011
Securities 42,529,950 39,952,123
Loans and bills discounted 62,720,599 61,348,355
Foreign exchanges 1,280,636 1,077,024
Lease receivables and investment assets 1,699,759 1,734,169
Other assets 4,622,756 4,604,732
Tangible fixed assets 1,180,522 1,168,908
Buildings 361,205 350,494
Land 555,179 551,839
Lease assets 9,063 10,527
Construction in progress 12,585 4,464
Other tangible fixed assets 242,488 251,583
Intangible fixed assets 799,773 674,216
Software 282,797 262,068
Goodwill 397,537 352,790
Lease assets 200 361
Other intangible fixed assets 119,237 58,995
Deferred tax assets 404,034 644,736
Customers’ liabilities for acceptances and guarantees 5,424,045 4,921,500
Reserve for possible loan losses (978,933) (1,058,945)
Total assets ¥ 143,040,672 ¥ 137,803,098

2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

(Consolidated Statements of Income)

(Millions of yen)

Year ended March 31, 2012   2011
Ordinary income ¥ 3,945,282 ¥ 3,845,861
Interest income 1,631,592 1,612,599
Interest on loans and discounts 1,211,794 1,199,083
Interest and dividends on securities 242,086 251,311
Interest on call loans and bills bought 14,752 9,305
Interest on receivables under resale agreements 5,890 2,351
Interest on receivables under securities borrowing transactions 6,823 8,464
Interest on deposits with banks 29,742 18,592
Interest on lease transactions 68,943 71,589
Other interest income 51,560 51,900
Trust fees 1,770 2,335
Fees and commissions 955,680 897,461
Trading income 198,192 237,093
Other operating income 1,110,566 1,039,662
Lease-related income 72,525 62,810
Installment-related income 692,007 623,907
Other 346,034 352,944
Other income 47,479 56,709
Recoveries of written-off claims 4,800
Other 42,678
Ordinary expenses 3,009,711 3,020,432
Interest expenses 290,223 294,947
Interest on deposits 102,018 107,758
Interest on negotiable certificates of deposit 32,458 31,665
Interest on call money and bills sold 3,596 3,788
Interest on payables under repurchase agreements 3,694 2,753
Interest on payables under securities lending transactions 6,852 8,847
Interest on commercial paper 1,986 1,164
Interest on borrowed money 45,939 44,298
Interest on short-term bonds 1,540 2,006
Interest on bonds 76,276 66,940
Other interest expenses 15,860 25,723
Fees and commissions payments 132,099 131,230
Other operating expenses 880,998 858,243
Lease-related expenses 47,571 37,352
Installment-related expenses 649,855 587,427
Other 183,571 233,463
General and administrative expenses 1,421,363 1,355,322
Other expenses 285,027 380,688
Provision for reserve for possible loan losses 4,244 48,720
Other 280,782 331,967
Ordinary profit 935,571 825,428

(Millions of yen)

Year ended March 31,   2012     2011
Extraordinary gains ¥ 27,793 ¥ 16,798
Gains on disposal of fixed assets 2,741 884
Gains on negative goodwill 409
Recoveries of written-off claims 2,813
Transfer from reserve for eventual future operating losses from financial instruments transactions

0

35

Other extraordinary gains 25,050 12,655
Extraordinary losses 10,397 14,913
Losses on disposal of fixed assets 6,507 5,914
Losses on impairment of fixed assets 3,861 5,411
Provision for reserve for eventual future operating losses from financial instruments transactions

29

34

Other extraordinary losses 3,552
Income before income taxes and minority interests 952,966 827,313
Income taxes 311,339 240,771
current 103,478 97,446
deferred 207,860 143,325
Income before minority interests 641,627 586,542
Minority interests in net income 123,090 110,646
Net income ¥ 518,536 ¥ 475,895

(Consolidated Statements of Comprehensive Income)

(Millions of yen)

Year ended March 31,   2012     2011
Income before minority interests ¥ 641,627 ¥ 586,542
Other comprehensive income 23,605 (173,166)
Net unrealized gains (losses) on other securities 69,103 (150,002)
Net deferred gains (losses) on hedges (22,964) 29,587
Land revaluation excess 5,613
Foreign currency translation adjustments (23,496) (60,928)
Share of other comprehensive income of affiliates (4,651) 8,176
Total comprehensive income 665,232 413,375
Comprehensive income attributable to shareholders of the parent 541,270 343,920
Comprehensive income attributable to minority interests 123,961 69,455

3. Consolidated Statements of Changes in Net Assets

(Millions of yen)

Year ended March 31,   2012   2011
Stockholders’ equity:
Capital stock
Balance at the beginning of the fiscal year ¥ 2,337,895 ¥ 2,337,895
Changes in the fiscal year
Net changes in the fiscal year
Balance at the end of the fiscal year 2,337,895 2,337,895
Capital surplus
Balance at the beginning of the fiscal year 978,851 978,897
Changes in the fiscal year
Disposal of treasury stock (9,047) (46)
Cancellation of treasury stock (210,003)
Net changes in the fiscal year (219,050) (46)
Balance at the end of the fiscal year 759,800 978,851
Retained earnings
Balance at the beginning of the fiscal year 1,776,433 1,451,945
Changes in the fiscal year
Cash dividends (142,010) (152,878)
Net income 518,536 475,895
Increase due to increase in subsidiaries 15 13
Increase due to decrease in subsidiaries 1 3
Decrease due to increase in subsidiaries (7) (13)
Decrease due to decrease in subsidiaries (16) (10)
Decrease due to decrease in affiliates (90) (126)
Reversal of land revaluation excess (208) 1,604
Net changes in the fiscal year 376,220 324,488
Balance at the end of the fiscal year 2,152,654 1,776,433
Treasury stock
Balance at the beginning of the fiscal year (171,760) (124,061)
Changes in the fiscal year
Purchase of treasury stock (321,521) (47,759)
Disposal of treasury stock 47,242 60
Cancellation of treasury stock 210,003
Net changes in the fiscal year (64,276) (47,699)
Balance at the end of the fiscal year (236,037) (171,760)
Total stockholders’ equity
Balance at the beginning of the fiscal year 4,921,419 4,644,677
Changes in the fiscal year
Cash dividends (142,010) (152,878)
Net income 518,536 475,895
Purchase of treasury stock (321,521) (47,759)
Disposal of treasury stock 38,194 13
Cancellation of treasury stock
Increase due to increase in subsidiaries 15 13
Increase due to decrease in subsidiaries 1 3
Decrease due to increase in subsidiaries (7) (13)
Decrease due to decrease in subsidiaries (16) (10)
Decrease due to decrease in affiliates (90) (126)
Reversal of land revaluation excess (208) 1,604
Net changes in the fiscal year 92,893 276,742
Balance at the end of the fiscal year 5,014,313 4,921,419

(continued)

(Millions of yen)

Year ended March 31,   2012     2011
Accumulated other comprehensive income:
Net unrealized gains (losses) on other securities
Balance at the beginning of the fiscal year 272,306 412,708
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year 58,127 (140,402)
Net changes in the fiscal year 58,127 (140,402)
Balance at the end of the fiscal year 330,433 272,306
Net deferred gains (losses) on hedges
Balance at the beginning of the fiscal year (9,701) (39,367)
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year (22,420) 29,666
Net changes in the fiscal year (22,420) 29,666
Balance at the end of the fiscal year (32,122) (9,701)
Land revaluation excess
Balance at the beginning of the fiscal year 33,357 34,955
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year 5,800 (1,597)
Net changes in the fiscal year 5,800 (1,597)
Balance at the end of the fiscal year 39,158 33,357
Foreign currency translation adjustments
Balance at the beginning of the fiscal year (122,889) (101,650)
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year (18,493) (21,238)
Net changes in the fiscal year (18,493) (21,238)
Balance at the end of the fiscal year (141,382) (122,889)
Total accumulated other comprehensive income
Balance at the beginning of the fiscal year 173,073 306,646
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year 23,013 (133,573)
Net changes in the fiscal year 23,013 (133,573)
Balance at the end of the fiscal year 196,087 173,073
Stock acquisition rights:
Balance at the beginning of the fiscal year 262 81
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year 429 180
Net changes in the fiscal year 429 180
Balance at the end of the fiscal year 692 262
Minority interests:
Balance at the beginning of the fiscal year 2,037,318 2,049,400
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year 6,564 (12,081)
Net changes in the fiscal year 6,564 (12,081)
Balance at the end of the fiscal year 2,043,883 2,037,318
Total net assets:
Balance at the beginning of the fiscal year 7,132,073 7,000,805
Changes in the fiscal year
Cash dividends (142,010) (152,878)
Net income 518,536 475,895
Purchase of treasury stock (321,521) (47,759)
Disposal of treasury stock 38,194 13
Cancellation of treasury stock
Increase due to increase in subsidiaries 15 13
Increase due to decrease in subsidiaries 1 3
Decrease due to increase in subsidiaries (7) (13)
Decrease due to decrease in subsidiaries (16) (10)
Decrease due to decrease in affiliates (90) (126)
Reversal of land revaluation excess (208) 1,604
Net changes in items other than stockholders’ equity in the fiscal year 30,008 (145,474)
Net changes in the fiscal year 122,902 131,268
Balance at the end of the fiscal year ¥ 7,254,976 ¥ 7,132,073

4. Consolidated Statements of Cash Flows

(Millions of yen)

Year ended March 31, 2012   2011
Cash flows from operating activities:
Income before income taxes and minority interests ¥ 952,966 ¥ 827,313
Depreciation 165,113 154,267
Losses on impairment of fixed assets 3,861 5,411
Amortization of goodwill 21,681 22,938
Gains on negative goodwill (409)
Gains on step acquisitions (25,050) (12,655)
Equity in losses of affiliates 31,122 13,319
Net change in reserve for possible loan losses (90,007) (13,433)
Net change in reserve for employee bonuses 2,816 1,057
Net change in reserve for executive bonuses 378 163
Net change in reserve for employee retirement benefits (5,083) (2,987)
Net change in reserve for executive retirement benefits (194) (5,642)
Net change in reserve for point service program 422 (1,420)
Net change in reserve for reimbursement of deposits 1,056 (1,810)
Net change in reserve for losses on interest repayment (25,756) (17,566)
Interest income (1,631,592) (1,612,599)
Interest expenses 290,223 294,947
Net gains on securities (130,612) (61,648)
Net losses from money held in trust 1,464 148
Net exchange losses 16,145 280,834
Net losses from disposal of fixed assets 3,765 5,029
Net change in trading assets (1,588,903) 7,813
Net change in trading liabilities 1,029,341 256,101
Net change in loans and bills discounted (828,051) 1,401,384
Net change in deposits 2,299,767 3,628,657
Net change in negotiable certificates of deposit 228,846 1,380,003
Net change in borrowed money (excluding subordinated borrowings) (1,994,204) 4,569,942
Net change in deposits with banks 462,914 (1,196,723)
Net change in call loans and bills bought and others (793,288) (18,924)
Net change in receivables under securities borrowing transactions 200,855 700,211
Net change in call money and bills sold and others 472,525 165,025
Net change in commercial paper 856,129 26,333
Net change in payables under securities lending transactions 97,497 1,397,458
Net change in foreign exchanges (assets) (205,926) (7,663)
Net change in foreign exchanges (liabilities) 46,712 64,083
Net change in lease receivables and investment assets 30,875 152,703
Net change in short-term bonds (liabilities) (233,809) (101,780)
Issuance and redemption of bonds (excluding subordinated bonds) 352,424 515,688
Net change in due to trust account 227,552 56,617
Interest received 1,663,901 1,635,444
Interest paid (295,539) (309,401)
Other, net 327,828 (279,956)
Subtotal 1,940,166 13,918,277
Income taxes paid (101,981)   (124,540)
Net cash provided by operating activities 1,838,185 13,793,737

(continued)

(Millions of yen)

Year ended March 31,   2012     2011
Cash flows from investing activities:
Purchases of securities (50,614,876) (67,169,471)
Proceeds from sale of securities 32,372,433 36,624,700
Proceeds from maturity of securities 15,925,697 19,626,268
Purchases of money held in trust (3,011) (6,942)
Proceeds from sale of money held in trust 1,540 5,236
Purchases of tangible fixed assets (131,154) (182,839)
Proceeds from sale of tangible fixed assets 30,343 6,966
Purchases of intangible fixed assets (101,447) (101,624)
Proceeds from sale of intangible fixed assets 24 528
Proceeds from sale of stocks of subsidiaries 314
Purchases of treasury stocks of subsidiaries (1,773)
Proceeds from purchase of stocks of subsidiaries resulting in changes in scope of consolidation

59,408

Purchases of stocks of subsidiaries resulting in changes in scope of consolidation

(67,369)

(10,756)

Proceeds from sale of stocks of subsidiaries resulting in changes in scope of consolidation

50

Net cash used in investing activities (2,589,543) (11,148,211)
Cash flows from financing activities:
Proceeds from issuance of subordinated borrowings 106,000 80,000
Repayment of subordinated borrowings (103,000) (87,500)
Proceeds from issuance of subordinated bonds and bonds with stock acquisition rights

557,360

256,751

Repayment of subordinated bonds and bonds with stock acquisition rights

(306,471)

(314,900)

Dividends paid (141,921) (152,612)
Proceeds from contributions paid by minority stockholders 471
Repayment to minority stockholders (309)
Dividends paid to minority stockholders (93,125) (97,609)
Purchases of treasury stock (321,521) (47,759)
Proceeds from disposal of treasury stock 2,390 13
Purchases of treasury stock of subsidiaries (14) (1,001)
Proceeds from sale of treasury stock of subsidiaries 183 17
Net cash used in financing activities (300,119) (364,438)
Effect of exchange rate changes on cash and cash equivalents (4,757) (7,185)
Net change in cash and cash equivalents (1,056,236) 2,273,901
Cash and cash equivalents at the beginning of the period 5,645,094 3,371,193
Cash and cash equivalents at the end of the period ¥ 4,588,858 ¥ 5,645,094

5. Note on the Assumption as a Going Concern

Not applicable.

6. Notes on Significant Accounting Policies for Preparing Consolidated Financial Statements

(1) Scope of consolidation  
(a) Consolidated subsidiaries 337 companies
Principal companies: Sumitomo Mitsui Banking Corporation (“SMBC”)
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.

(b) Unconsolidated subsidiaries

Principal company: SBCS Co., Ltd.

193 subsidiaries including SMLC MAHOGANY CO., LTD. are operators of silent partnerships for lease transactions 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.

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 judgment of SMFG’s financial position and results of operations when excluded from the scope of consolidation.

(2) Application of the equity method

(a) Unconsolidated subsidiaries accounted for by the equity method 4 companies

Principal company: SBCS Co., Ltd.

(b) Affiliates accounted for by the equity method 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:

6 companies including Hitachi Capital Auto Lease Corporation became equity method affiliates due mainly to acquisitions of stocks.

6 companies including Promise Co., Ltd. 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.

(c) 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 transactions 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.

(d) Affiliates that are not accounted for by the equity method

Principal company: Daiwa SB Investments (USA) Ltd.

Affiliates that are not accounted for by the equity method are 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.

(3) The balance sheet dates of consolidated subsidiaries

(a) The balance sheet dates of the consolidated subsidiaries are as follows:

May 31   1   company
June 30 5 companies
July 31 2 companies
September 30 3 companies
October 31 1 company
November 30 8 companies
December 31 122 companies
January 31 19 companies
February 29 9 companies
March 31 167 companies

(b) The subsidiaries with balance sheets dated May 31, June 30, July 31, September 30 and 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 transactions during the periods between their respective balance sheet dates and the consolidated closing date.

(4) Special purpose entities

(a) 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 were ¥2,175,773 million and ¥2,175,548 million, respectively. SMBC has no voting rights in the SPEs and sends no directors or employees.

(b) Principal transactions with the SPEs as of and for the fiscal year ended March 31, 2012

Millions of yen
 
Balances of principal transactions

as of March 31, 2012

  Principal profit or loss

for the fiscal year ended March 31, 2012

 
Item   Amount Item   Amount
 
Loans and bills discounted ¥ 1,486,284 Interest on loans and discounts ¥ 13,388
Credit lines 723,383 Fees and commissions 1,842
Liquidity lines 352,547

(5) Accounting policies

(a) Standards for recognition and measurement of trading assets/liabilities and trading profits/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 sheets on a trade date basis. Profits 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.

(b) Standards for recognition and measurement of securities

(i) 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 securities 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.

(ii) Securities included in money held in trust are carried in the same method as in (a) and (b) (i) above.

(c) Standards for recognition and measurement of derivative transactions

Derivative transactions, excluding those classified as trading derivatives, are carried at fair value.

(d) Depreciation

(i) 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 tangible fixed assets primarily using the straight-line method over the estimated useful lives of the respective assets.

(ii) 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 five years).

(iii) Lease assets

Lease assets with respect to non-transfer ownership finance leases, which are recorded in “Tangible fixed assets,” are depreciated using the straight-line method, assuming that lease terms are their expected lifetime and salvage values are zero.

(e) 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 assessment 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.

For other claims, a reserve is provided based on the historical 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 uncollectible based on assessment of each claim.

For collateralized or guaranteed claims on bankrupt borrowers 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.

(f) 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 fiscal year.

(g) 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 fiscal year.

(h) 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 (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.

(i) 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 our internal regulations.

(j) 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.

(k) 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.

(l) 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.

(m) 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, pursuant to Article 46-5 of the Financial Instruments and Exchange Act.

(n) 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 rate 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 rate prevailing at their respective balance sheet dates.

(o) Lease transactions

(i) Recognition of income on finance leases

Interest income is allocated to each period.

(ii) 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.

(iii) Recognition of income and expenses on installment sales

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.

(p) Hedge accounting

(i) Hedging against interest rate changes

As for the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets and liabilities, SMBC applies deferred hedge accounting.

SMBC applies deferred hedge accounting stipulated in “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24) to portfolio hedges on groups of large-volume, small-value monetary claims and debts.

As for the portfolio hedges to offset market fluctuation, SMBC assesses the effectiveness of such hedges by classifying 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. At the fiscal year-end, gross amounts of deferred hedge losses and gains on “macro hedge” (before deducting tax effect) were ¥309 million and ¥188 million, respectively.

(ii) 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 transactions executed for the purpose of lending or borrowing funds in different currencies.

Pursuant to JICPA Industry Audit Committee Report No. 25, SMBC assesses the effectiveness of currency swap and foreign exchange swap transactions executed for the purpose of offsetting the risk of changes in currency exchange rates by verifying that there are foreign-currency monetary claims and debts corresponding to the foreign-currency positions.

In order to hedge risk arising from volatility of exchange rates for stocks of subsidiaries and affiliates and other securities (excluding bonds) denominated in foreign currencies, SMBC applies deferred hedge accounting or fair value hedge accounting, on the conditions that the hedged securities are designated in advance and that sufficient on-balance (actual) or off-balance (forward) liability exposure exists to cover the cost of the hedged securities denominated in the same foreign currencies.

(iii) Hedging against share price fluctuations

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.

(iv) 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.

(q) 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.

(r) Scope of “Cash and cash equivalents” on Consolidated Statement of Cash Flows

For the purposes of presenting the consolidated statement of cash flows, “Cash and cash equivalents” are cash on hand, non-interest earning deposits with banks and deposits paid to Bank of Japan.

(s) Consumption taxes

National and local consumption taxes of SMFG and its consolidated domestic subsidiaries are accounted for using the tax-excluded method.

7. 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 commencing 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 consolidation, 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.

8. Change in Presentation

(Consolidated statements of income)

SMFG had previously presented “Gains on reversal of reserve for possible loan losses” and “Recoveries of written-off claims” as part of “Extraordinary gains” until the fiscal year ended March 31, 2011. Based on “Practical Guidelines for Accounting Standard for Financial Instruments” (JICPA Accounting System Committee Report No. 14, revised March 29, 2011), SMFG presents them as items of “Other income” after April 1, 2011. However, the figures for the fiscal year ended March 31, 2011, are stated in the previous method in accordance with the Practical Guidelines.

9. Additional Information

(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 on and after the beginning of the fiscal year ended March 31, 2012.

(Effects of 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. Additionally, beginning from fiscal years starting 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.

10. Notes to Consolidated Financial Statements

(Notes to Consolidated Balance Sheets)

(1) Securities included stocks of unconsolidated subsidiaries and affiliates of ¥229,868 million and investments of ¥1,332 million.

(2) Japanese government bonds and stocks as a sub-account of Securities and trading securities as a sub-account of Trading assets include ¥51,022 million of unsecured loan securities for which borrowers have the right to sell or pledge.

As for the unsecured borrowed securities for which consolidated subsidiaries have the right to sell or pledge and the securities which consolidated subsidiaries purchased under resale agreements and borrowed with cash collateral, that are permitted to be sold or pledged without restrictions, ¥1,961,135 million of securities are pledged, and ¥378,167 million of securities are held in hand as of the consolidated balance sheet date.

(3) Bankrupt loans and Non-accrual loans were ¥74,218 million and ¥1,145,347 million, respectively.

“Bankrupt loans” are loans, after write-off, to legally bankrupt borrowers as defined in Article 96-1-3 and 96-1-4 of “Order for Enforcement of the Corporation Tax Act” (Cabinet Order No. 97 of 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.

“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.

(4) Past due loans (3 months or more) totaled ¥22,502 million.

“Past due loans (3 months or more)” are loans on which the principal or interest is past due for three months or more, excluding “Bankrupt loans” and “Non-accrual loans.”

(5) Restructured loans totaled ¥562,882 million.

“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).”

(6) The total amount of Bankrupt loans, Non-accrual loans, Past due loans (3 months or more) and Restructured loans was ¥1,804,951 million.

The amounts of loans presented in Notes (3) to (6) above are the amounts before deduction of reserve for possible loan losses.

(7) 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 was ¥754,204 million.

(8) Assets pledged as collateral were as follows:

March 31, 2012   Millions of yen
 
Assets pledged as collateral:
Cash and due from banks ¥ 294,382
Call loans and bills bought 490,255
Monetary claims bought 7,096
Trading assets 3,715,510
Securities 7,281,341
Loans and bills discounted 2,572,382
Lease receivables and investment assets 7,740
Tangible fixed assets 14,336
Other assets (installment account receivables, etc.) 4,412
 
March 31, 2012 Millions of yen
 
Liabilities corresponding to assets pledged as collateral:
Deposits ¥ 19,144
Call money and bills sold 825,000
Payables under repurchase agreements 1,676,902
Payables under securities lending transactions 5,180,034
Trading liabilities 513,941
Borrowed money 4,312,097
Other liabilities 10,149
Acceptances and guarantees 109,212

In addition, Cash and due from banks of ¥23,993 million, Trading assets of ¥86,879 million and Securities of ¥24,367,992 million were pledged as collateral for cash settlements, variation margins of futures markets and certain other purposes.

Other assets include surety deposits and intangible of ¥124,516 million, variation margins of futures markets of ¥17,906 million, and other variation margins of ¥66,197 million.

(9) 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 amount of unused commitments was ¥47,220,313 million and the amount of unused commitments whose original contract terms are within one year or unconditionally cancelable at any time was ¥39,753,611 million. 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.

(10) 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 also revaluated its own land for business activities in accordance with the Law. The net unrealized gains, net of deferred taxes, are reported as “Land revaluation excess” in “Net assets.”

Date of the revaluation

SMBC:

March 31, 1998 and March 31, 2002

Another consolidated subsidiary and an affiliate:

March 31, 1999 and March 31, 2002

Method of revaluation (stipulated in Article 3-3 of the 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 Article 2-3 and 2-5 of “Order for Enforcement of Act on Revaluation of Land” (Cabinet Order No. 119 of March 31, 1998).

(11) Accumulated depreciation on tangible fixed assets amounted to ¥750,082 million.

(12) Deferred gain on tangible fixed assets deductible for tax purposes amounted to ¥67,055 million.

(13) The balance of subordinated debt included in “Borrowed money” was ¥374,250 million.

(14) The balance of subordinated bonds included in “Bonds” was ¥2,402,075 million.

(15) The amount guaranteed by banking subsidiaries to privately-placed bonds (stipulated by Article 2-3 of Financial Instruments and Exchange Act) in “Securities” was ¥1,851,841 million.

(Notes to Consolidated Statements of Income)

(1) “Other income” included gains on sales of stocks and other securities of ¥15,654 million.

(2) “Other expenses” included write-off of loans of ¥90,305 million, losses on sale of stocks of ¥11,659 million, losses on devaluation of stocks and other securities of ¥31,875 million, provision for reserve for losses on interest repayment of ¥40,364 million, equity in losses of affiliates of ¥31,122 million and losses on sale of non-accrual loans of ¥25,364 million.

(3) “Other extraordinary gains” represented gains on step acquisitions of ¥25,050 million.

(4) The difference between the recoverable amount and the book value of the following assets is recognized as “Losses on impairment of fixed assets” and included in “Extraordinary losses” in the fiscal year.

Year ended March 31, 2012     Millions of yen
 
Area   Purpose of use Type Impairment loss
 
Tokyo metropolitan area Branches 11 branches Land and buildings, etc. ¥ 198
Idle assets 38 items 1,168
Others 4 items 58
Kinki area Branches 31 branches Land and buildings, etc. 393
Idle assets 41 items 1,630
Others 1 items 2
Others Branches 1 branches Land and buildings, etc. 27
Idle assets 16 items 381

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 smallest 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 “Extraordinary losses.” SMBC reduced the carrying amounts of idle assets, and other consolidated subsidiaries reduced the carrying amounts of their branches and idle assets.

The recoverable amount is calculated using net realizable value which is basically determined by subtracting the expected disposal cost from the appraisal value based on the Real Estate Appraisal Standard.

(Notes to Consolidated Statements of Changes in Net Assets)

(1) Type and number of shares issued and treasury stock

  Number of shares
 
Year ended March 31, 2012 As of beginning of the fiscal year   Increased in the fiscal year   Decreased in the fiscal year   As of the fiscal year-end
 
Shares issued
Common stock 1,414,055,625 1,414,055,625
Preferred stock (1st series type 6) (*1) 70,001 70,001
 
Total 1,414,125,626 70,001 1,414,055,625
       
Treasury stock
Common stock (*2) 32,581,914 45,686,368 15,328,723 62,939,559
Preferred stock (1st series type 6) (*1) 70,001 70,001
 
Total 32,581,914 45,756,369 15,398,724 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 the 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 sale of fractional shares, reduction of 7,363 shares through exercise of stock options and reduction of 15,321,360 shares through the allocation of SMFG shares held by SMFG Card & Credit, Inc., a consolidated subsidiary of SMFG for the purpose of wholly-owning Cedyna Financial Corporation, to the shareholders of Cedyna Financial Corporation on May 1, 2011, and sale of SMFG shares by consolidated subsidiaries.

(2) Information on stock acquisition rights

      Number of shares   Millions of yen
 
March 31, 2012 Detail of stock acquisition rights Type of shares Beginning of fiscal year   Increase in the fiscal year   Decrease in the fiscal year   Fiscal year-end Balance as of the fiscal year-end
 
SMFG Stock acquisition rights as stock options ¥ 598
Consolidated subsidiaries 94
 
Total ¥ 692

(3) Information on dividends

(a) Dividends paid in the fiscal year

    Millions of yen, except per share data
 
Date of resolution Type of shares Cash dividends   Cash dividends

per share

  Record date   Effective date
 
Ordinary General Meeting of Shareholders held on June 29, 2011 Common stock ¥ 70,514 ¥ 50 March 31, 2011 June 29, 2011
Preferred stock

(1st series type 6)

3,097 44,250 March 31, 2011 June 29, 2011
Meeting of the Board
of Directors held on November 14, 2011
Common stock ¥ 70,514 ¥ 50 September 30, 2011 December 2, 2011

(b) Dividends to be paid in the next fiscal year

    Millions of yen, except per share data
 
Date of resolution Type of shares Cash dividends   Source of dividends   Cash dividends per share   Record date   Effective date
 
Ordinary General Meeting of
Shareholders held on June 28, 2012
Common stock ¥ 68,230 Retained earnings ¥ 50 March 31, 2012 June 28, 2012

(Notes to Consolidated Statements of Cash Flows)

(1) Reconciliation of “Cash and due from banks” of the consolidated balance sheet to “Cash and cash equivalents” at the fiscal year-end is as follows:

March 31, 2012   (Millions of yen)
Cash and due from banks ¥ 7,716,291
Interest-earning deposits, excluding deposits to Bank of Japan (3,127,432)
Cash and cash equivalents ¥ 4,588,858

(2) 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 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:

March 31, 2012   (Millions of yen)
Assets ¥ 1,671,681
[Loans] 795,148
[Customers’ liabilities for acceptances and guarantees] 564,528
Liabilities (1,511,980)
[Borrowings] (300,884)
[Reserve for losses on interest repayment] (367,220)
[Acceptances and guarantees] (564,528)
Stock acquisition rights (56)
Minority interests (3,576)
Goodwill 57,300
Stock acquisition cost of the 7 companies 213,369
Cash and cash equivalents of the 7 companies (4,300)
Fair value of common stock of Promise owned before business combination (21,699)
Fair value of common stock of Promise additionally acquired through subscription for shares issued by way of third-party allotment (119,999)
Difference: Expenses required for acquisition of the 7 companies ¥ (67,369)

(Fair Value of Financial Instruments)

(1) “Consolidated balance sheet amount,” “Fair value” and “Net unrealized gains (losses)” of financial instruments as of March 31, 2012 are as follows. The amounts shown in the following table do not include financial instruments (see the next page) whose fair values are extremely difficult to determine, such as unlisted stocks classified as other securities, and stocks of subsidiaries and affiliates.

  Millions of yen
 
March 31, 2012 Consolidated balance sheet amount   Fair value   Net unrealized gains (losses)
 
1) Cash and due from banks (*1) ¥ 7,711,078 ¥ 7,715,673 ¥ 4,594
2) Call loans and bills bought (*1) 1,290,685 1,291,614 928
3) Receivables under resale agreements 227,749 228,471 722
4) Receivables under securities borrowing transactions 4,539,555 4,539,555
5) Monetary claims bought (*1) 1,354,400 1,360,792 6,391
6) Trading assets
Securities classified as trading purposes 4,285,328 4,285,328
7) Money held in trust 23,878 23,878
8) Securities
Bonds classified as held-to-maturity 5,277,668 5,346,853 69,184
Other securities 36,403,944 36,403,944
9) Loans and bills discounted 62,720,599
Reserve for possible loan losses (*1) (757,820)
 
61,962,778 63,076,899 1,114,120
 
10) Foreign exchanges (*1) 1,276,510 1,281,154 4,643
11) Lease receivables and investment assets (*1) 1,690,977 1,771,120 80,143
 
Total assets ¥ 126,044,556 ¥ 127,325,285 ¥ 1,280,729
     
1) Deposits 84,128,561 84,136,544 7,982
2) Negotiable certificates of deposit 8,593,638 8,593,118 (519)
3) Call money and bills sold 2,144,599 2,144,599 (0)
4) Payables under repurchase agreements 1,676,902 1,676,902
5) Payables under securities lending transactions 5,810,730 5,810,730
6) Commercial paper 1,193,249 1,193,249
7) Trading liabilities
Trading securities sold for short sales 2,172,857 2,172,857
8) Borrowed money 8,839,648 8,856,720 17,072
9) Foreign exchanges 302,580 302,580
10) Short-term bonds 949,388 949,385 (3)
11) Bonds 4,641,927 4,771,814 129,886
12) Due to trust account 443,723 443,723
 
Total liabilities ¥ 120,897,808 ¥ 121,052,227 ¥ 154,418
     
Derivative transactions (*2)
Hedge accounting not applied [102,744] [102,744]
Hedge accounting applied 308,082 308,082
 
Total ¥ 205,338 ¥ 205,338 ¥ –

(*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,” “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.

(2) Consolidated balance sheet amount of financial instruments whose fair values are extremely difficult to determine are as follows.

March 31, 2012   Millions of yen
 
Monetary claims bought
Monetary claims bought without market prices (*1) ¥ 6,062
Securities
Unlisted stocks, etc. (*2,4) 271,149
Investments in partnerships, etc. (*3,4) 345,987
 
Total ¥ 623,198

(*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 their 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 SMFG records net changes in their balance sheets and statements of income.

(*4) Unlisted stocks and investments in partnership totaling ¥9,292 million was written-off in the fiscal year ended March 31, 2012.

(Fair Value of Securities and Money Held in Trust)

(1) Securities

The amounts shown in the following tables include trading securities and short-term bonds classified as “Trading assets,” negotiable certificates of deposit bought classified as “Cash and due from banks” and beneficiary claims on loan trusts classified as “Monetary claims bought,” in addition to “Securities” stated in the consolidated balance sheet.

(a) Securities classified as trading purposes

As of March 31, 2012   Millions of yen
 
Valuations gains (losses) included in the earnings for the fiscal year ¥ 16,879

(b) Bonds classified as held-to-maturity

  Millions of yen
 
As of March 31, 2012 Consolidated balance sheet amount   Fair

value

  Net unrealized gains (losses)

 

Bonds with unrealized gains Japanese government bonds ¥ 4,787,498 ¥ 4,849,443 ¥ 61,944
Japanese local government bonds 175,423 178,243 2,819
Japanese corporate bonds 237,210 241,726 4,515
Other 2,695 2,703 8
 
Subtotal ¥ 5,202,828 ¥ 5,272,117 ¥ 69,288
 
Bonds with unrealized losses Japanese government bonds ¥ 70,020 ¥ 69,930 ¥ (90)
Japanese local government bonds 2,302 2,298 (3)
Japanese corporate bonds 713 710 (3)
Other 10,402 10,396 (6)
 
Subtotal 83,438 83,335 (103)
 
Total ¥ 5,286,267 ¥ 5,355,452 ¥ 69,184

(c) Other securities

  Millions of yen
 
As of March 31, 2012 Consolidated balance sheet amount   Acquisition cost   Net unrealized gains (losses)
 
Other securities with unrealized gains Stocks ¥ 1,193,663 ¥ 703,589 ¥ 490,074
Bonds 24,475,020 24,356,856 118,164
Japanese government bonds 21,717,683 21,654,331 63,351
Japanese local government bonds 289,456 287,307 2,149
Japanese corporate bonds 2,467,880 2,415,217 52,663
Other 4,649,021 4,510,332 138,689
 
Subtotal ¥ 30,317,706 ¥ 29,570,777 ¥ 746,928
 
Other securities with unrealized losses Stocks ¥ 946,993 ¥ 1,165,606 ¥ (218,613)
Bonds 3,209,463 3,215,812 (6,348)
  Japanese government bonds 2,751,854 2,752,509 (654)
Japanese local government bonds 7,702 7,717 (15)
Japanese corporate bonds 449,906 455,585 (5,678)
Other 2,461,368 2,508,349 (46,981)
 
Subtotal 6,617,825 6,889,769 (271,943)
 
Total ¥ 36,935,531 ¥ 36,460,546 ¥ 474,984

(Notes)

1. Net unrealized gains (losses) on other securities shown above include gains of ¥196 million 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
 
As of March 31, 2012 Consolidated balance sheet amount
 
Stocks ¥ 265,512
Other 357,686
Total ¥ 623,198

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

There are no corresponding transactions.

(e) Other securities sold during the fiscal year

  Millions of yen
 
Year ended March 31, 2012 Sales

amount

  Gains

on sales

  Losses

on sales

 
Stocks ¥ 33,752 ¥ 8,921 ¥ (3,221)
Bonds 16,676,636 39,724 (2,586)
  Japanese government bonds 16,261,807 38,204 (2,115)
Japanese local government bonds 178,423 553 (256)
Japanese corporate bonds 236,405 966 (214)
Other 15,598,701 143,163 (16,788)
 
Total ¥ 32,309,090 ¥ 191,809 ¥ (22,596)

(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 loss for the fiscal year was ¥27,988 million. 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     : Fair value is lower than acquisition cost.
Issuers requiring caution : Fair value is 30% or more lower than acquisition cost.
Normal issuers : Fair value is 50% or more lower than acquisition cost.

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 four categories of issuers.

(2) Money Held in Trust

(a) Money held in trust classified as trading purposes

As of March 31, 2012   Millions of yen
 
Valuations gains (losses) included in the earnings for the fiscal year ¥ (2)

(b) Money held in trust classified as held-to-maturity

There are no corresponding transactions.

(c) Other money held in trust

  Millions of yen
 
As of March 31, 2012 Consolidated balance sheet amount   Acquisition cost   Net unrealized gains (losses)   Unrealized gains   Unrealized losses
 
Other money held in trust ¥ 22,430 ¥ 22,477 ¥ (46) ¥ – ¥ (46)

(Note) Consolidated balance sheet amount is calculated using market prices at the fiscal year-end.

(3) Net Unrealized Gains (Losses) on Other Securities and Other Money Held in Trust

Net unrealized gains (losses) on other securities that is reported on the consolidated balance sheet is shown as follows:

As of March 31, 2012   Millions of yen
 
Net unrealized gains (losses) ¥ 474,803
Other securities 474,849
Other money held in trust (46)
(–) Deferred tax liabilities 138,439
 
Net unrealized gains (losses) on other securities (before following adjustment) 336,363
 
(–) Minority interests 13,124
(+) SMFG’s interest in net unrealized gains (losses) on valuation of other securities held by affiliates accounted for by the equity method

7,194

 
Net unrealized gains (losses) on other securities ¥ 330,433

(Notes)

1. Net unrealized gains (losses) on other securities shown above include gains of ¥196 million that is recognized in the fiscal year’s earnings by applying fair value hedge accounting.

2. Net unrealized gains (losses) included foreign currency translation adjustments on non-marketable securities denominated in foreign currencies.

(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 defined-contribution pension plan and have general type of employee pension plans. They may grant additional benefits in case where certain requirements are met when employees retire.

Some overseas consolidated subsidiaries adopt defined-benefit pension plans and defined-contribution pension plans. SMBC and some consolidated subsidiaries in Japan contributed some of their marketable equity securities to employee retirement benefit trusts.

(2) Projected benefit obligation

As of March 31, 2012     Millions of yen
 
Projected benefit obligation (A) ¥ (990,449)
Plan assets (B) 902,254
 
Unfunded projected benefit obligation (C) = (A)+(B) (88,194)
Unrecognized net actuarial gain or loss (D) 261,128
Unrecognized prior service cost (E) (6,624)
 
Net amount recorded on the consolidated balance sheet (F) = (C)+(D)+(E) 166,309
Prepaid pension cost (G) 212,221
 
Reserve for employee retirement benefits (F)-(G) ¥ (45,911)

(Note)

Some consolidated subsidiaries adopt simple method in calculating projected benefit obligation.

(3) Pension expenses

Year ended March 31, 2012   Millions of yen
 
Service cost ¥ 24,646
Interest cost on projected benefit obligation 24,013
Expected return on plan assets (27,169)
Amortization of unrecognized net actuarial gain or loss 38,736
Amortization of unrecognized prior service cost (6,542)
Other (nonrecurring additional retirement allowance paid and other) 5,136
 
Pension expenses ¥ 58,820

(Notes)

1. Pension expenses of consolidated subsidiaries which adopt simple method are included in “Service cost.”

2. Premium paid to defined-contribution pension is included in “Other.”

(4) Assumptions

Year ended March 31, 2012    
(a) Discount rate Domestic consolidated subsidiaries 1.15% - 2.5%
Overseas consolidated subsidiaries 4.7% - 7.0%
(b) Expected rate of return on plan assets Domestic consolidated subsidiaries 0% - 4.1%
Overseas consolidated subsidiaries 3.8% - 5.5%
(c) Allocation of estimated amount of retirement benefits Allocated to each period by the straight-line method
(d) Term to amortize unrecognized prior service cost Mainly 9 years (amortized using the straight-line method, within the employees’ average remaining service period at incurrence)
(e) Term to amortize unrecognized net actuarial gain or loss Mainly 9 years (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)

(Stock Options)

(1) Amount of stock options to be expensed in the fiscal year

General and administrative expenses ¥431 million

(2) Outline of stock options and changes

(a) SMFG

(i) Outline of stock options

Date of resolution   June 27, 2002   July 28, 2010   July 29, 2011
 
Title and number of grantees Directors and employees of SMFG and SMBC 677 Directors of SMFG: 8
Corporate auditors of SMFG: 3
Executive officers of SMFG: 2
Directors, corporate auditors, executive officers of SMBC: 69
Directors of SMFG: 9
Corporate auditors of SMFG: 3
Executive officers of SMFG: 2
Directors, corporate auditors, executive officers of SMBC: 71
Number of stock options (*1) Common shares 162,000

(*2)

Common shares: 102,600 Common shares: 268,200
Grant date August 30, 2002 August 13, 2010 August 16, 2011
Condition for vesting N.A. 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. 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.
Requisite service period N.A. June 29, 2010 to the closing of the ordinary general meeting of shareholders of SMFG for the fiscal year ended March 31, 2011. June 29, 2011 to the closing of the ordinary general meeting of shareholders of SMFG for the fiscal year ended March 31, 2012.
Exercise period June 28, 2004 to June 27, 2012 August 13, 2010 to August 12, 2040 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.

(ii) Stock options granted and changes

  Number of stock options
 
Date of resolution June 27, 2002   July 28, 2010   July 29, 2011
 
Before vested
Previous fiscal year-end 102,600
Granted 268,200
Forfeited 1,900 2,000
Vested 26,300 5,900
Outstanding 74,400 260,300
After vested
Previous fiscal year-end 108,100
Vested 26,300 5,900
Exercised 500
Forfeited
Exercisable 108,100 25,800 5,900

Price information

  Yen
 
Date of resolution June 27, 2002   July 28, 2010   July 29, 2011
 
Exercise price ¥ 6,649 ¥ 1 ¥ 1
Average exercise price 2,336
Fair value at the grant date 2,215 1,872

(iii) Valuation technique used for valuating fair value of stock options

Stock options granted in the fiscal year were valuated using the following valuation technique.

- Valuation technique: Black-Scholes option-pricing model

- Principal parameters used in the option-pricing model

Date of resolution   July 29, 2011
 
Expected volatility (*1) 51.64%
Average expected life (*2) 4 years
Expected dividends (*3) ¥100 per share
Risk-free interest rate (*4) 0.30%

(*) 1. Calculated based on the actual stock prices during 4 years from August 17, 2007 to August 16, 2011.

2. The average expected life could not be estimated rationally due to insufficient amount of data.

Therefore, it was estimated based on average assumption periods of officers of SMFG and consolidated subsidiaries.

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.

(iv) 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.

(b) A consolidated subsidiary, Kansai Urban Banking Corporation

(i) Outline of stock options

Date of resolution   June 28, 2001   June 27, 2002   June 27, 2003   June 29, 2004
 
Title and number of grantees Directors and employees 45 Directors and employees 44 Directors and

employees 65

Directors and employees 174
Number of stock options Common shares
238,000
Common shares
234,000
Common shares
306,000
Common shares
399,000
Grant date July 31, 2001 July 31, 2002 July 31, 2003 July 30, 2004
Condition for vesting N.A. N.A. N.A. N.A.
Requisite service period N.A. N.A. N.A. N.A.
Exercise period June 29, 2003

to June 28, 2011

June 28, 2004
to June 27, 2012
June 28, 2005
to June 27, 2013
June 30, 2006
to June 29, 2014
 
Date of resolution June 29, 2005 June 29, 2006 June 29, 2006 June 28, 2007
 
Title and number of grantees Directors and employees 183 Directors
9
Officers not doubling as directors 14,
Employees 46
Directors
10
Number of stock options Common shares
464,000
Common shares
162,000
Common shares
115,000
Common shares
174,000
Grant date July 29, 2005 July 31, 2006 July 31, 2006 July 31, 2007
Condition for vesting N.A. N.A. N.A. N.A.
Requisite service period N.A. N.A. N.A. N.A.
Exercise period June 30, 2007

to June 29, 2015

June 30, 2008

to June 29, 2016

June 30, 2008

to June 29, 2016

June 29, 2009

to June 28, 2017

 
Date of resolution June 28, 2007 June 27, 2008 June 26, 2009
 
Title and number of grantees Officers not doubling as directors 14,
Employees 48
Directors 9,
Officers not doubling as directors 16,
Employees 45
Directors 11,
Officers not doubling as directors 14,
Employees 57
Number of stock options Common shares
112,000
Common shares
289,000
Common shares
350,000
Grant date July 31, 2007 July 31, 2008 July 31, 2009
Condition for vesting N.A. N.A. N.A.
Requisite service period N.A. N.A. N.A.
Exercise period June 29, 2009
to June 28, 2017
June 28, 2010
to June 27, 2018
June 27, 2011
to June 26, 2019

(ii) Stock options granted and changes

Number of stock options

Date of resolution   June 28, 2001   June 27, 2002   June 27, 2003   June 29, 2004
 
Before vested;
Previous fiscal year-end
Granted
Forfeited
Vested
Outstanding
After vested;
Previous fiscal year-end 94,000 126,000 210,000 302,000
Vested
Exercised 10,000 14,000
Forfeited 84,000 6,000 18,000 17,000
Exercisable 106,000 192,000 285,000
 
Date of resolution June 29, 2005 June 29, 2006 June 29, 2006 June 28, 2007
 
Before vested;
Previous fiscal year-end
Granted
Forfeited
Vested
Outstanding
After vested;
Previous fiscal year-end 431,000 162,000 115,000 174,000
Vested
Exercised
Forfeited 39,000
Exercisable 392,000 162,000 115,000 174,000
 
Date of resolution June 28, 2007 June 27, 2008 June 26, 2009
 
Before vested;
Previous fiscal year-end 350,000
Granted
Forfeited
Vested 350,000
Outstanding
After vested;
Previous fiscal year-end 112,000 289,000
Vested 350,000
Exercised
Forfeited
Exercisable 112,000 289,000 350,000

Price information

Date of resolution   June 28, 2001   June 27, 2002   June 27, 2003   June 29, 2004
 
Exercise price ¥ 155 ¥ 131 ¥ 179 ¥ 202
Average exercise price 143 145
Fair value at the grant date
 
Date of resolution June 29, 2005 June 29, 2006 June 29, 2006 June 28, 2007
 
Exercise price ¥ 313 ¥ 490 ¥ 490 ¥ 461
Average exercise price
Fair value at the grant date 138 138 96
 
Date of resolution June 28, 2007 June 27, 2008 June 26, 2009
 
Exercise price ¥ 461 ¥ 302 ¥ 193
Average exercise price
Fair value at the grant date 96 37 51

(iii) 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.

(Segment Information)

(1) Information on profit and loss amount by reportable segment

  Millions of yen
 
Banking Business
 
SMBC    
 
Fiscal year ended March 31, 2012 Consumer Banking Unit   Middle Market Banking Unit   Corporate Banking Unit   International Banking Unit   Treasury Unit   Head office account   Sub-total Others Total
 
Gross profit ¥ 383,666 ¥ 422,825 ¥ 212,650 ¥ 197,436 ¥ 319,333 ¥ (3,398) ¥ 1,532,511 ¥ 231,326 ¥ 1,763,837
Interest income 326,923 256,800 136,592 111,625 123,120 1,818 956,878 156,627 1,113,505
Non-interest income 56,743 166,025 76,058 85,811 196,213 (5,217) 575,632 74,698 650,331
 
Expenses (289,506) (222,756) (38,214) (64,941) (19,206) (84,872) (719,495) (131,761) (851,257)
 
Other profit or loss (20,529) (20,529)
 
Consolidated net business profit ¥ 94,160 ¥ 200,069 ¥ 174,436 ¥ 132,495 ¥ 300,127 ¥ (88,271) ¥ 813,015 ¥ 79,035 ¥ 892,050
  Millions of yen
 
Securities Services   Leasing
 
Fiscal year ended March 31, 2012 SMBC Friend Securities Co., Ltd.   SMBC Nikko Securities Inc.   Others   Total Sumitomo Mitsui Finance and Leasing Company, Limited   Others   Total
 
Gross profit ¥ 47,395 ¥ 221,254 ¥ 9,219 ¥ 277,869 ¥ 88,546 ¥ 5,215 ¥ 93,761
Interest income 503 (2,536) 1,285 (747) 55,791 (1,062) 54,728
Non-interest income 46,891 223,790 7,934 278,617 32,755 6,277 39,032
 
Expenses (39,083) (180,076) (5,356) (224,516) (28,100) (11,429) (39,529)
 
Other profit or loss (7) (1,206) (1,327) (2,541) (1,027) 9,212 8,185
 
Consolidated net business profit ¥ 8,305 ¥ 39,970 ¥ 2,535 ¥ 50,811 ¥ 59,419 ¥ 2,998 ¥ 62,417
  Millions of yen
 
Credit Card Services    
 
Fiscal year ended March 31, 2012 Sumitomo Mitsui Card Company, Limited   Cedyna Financial Corporation   Others   Total Other Business Grand Total
 
Gross profit ¥ 179,322 ¥ 160,083 ¥ 6,527 ¥ 345,933 ¥ 128,680 ¥ 2,610,082
Interest income 18,544 36,379 1,939 56,863 125,160 1,349,510
Non-interest income 160,777 123,704 4,588 289,070 3,520 1,260,572
 
Expenses (126,589) (120,545) (5,096) (252,232) (6,992) (1,374,526)
 
Other profit or loss (9,587) (67,201) 2,889 (73,899) (132,824) (221,609)
 
Consolidated net business profit ¥ 43,144 ¥ (27,662) ¥ 4,320 ¥ 19,802 ¥ (11,136) ¥ 1,013,946

(Notes)

1. Consolidated net business profit = SMBC’s non-consolidated banking profit + SMFG’s non-consolidated ordinary profit + Other subsidiaries’ ordinary profit (excluding nonrecurring factors) + Equity method affiliates’ ordinary profit X Ownership ratio – Internal transactions (dividends, etc.)

2. Other profit or loss = Non-operating profit or loss of consolidated subsidiaries except SMBC + Equity method affiliates’ ordinary profit X Ownership ratio, etc.

3. Consolidated net business profit = Operating profit of each company for 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, and their non-operating profits or losses are classified as “Others” in each segment.

4. “Other business” includes profits/losses to be offset as internal transactions between segments.

(2) Difference between total amount of consolidated net business profit by reportable segment and ordinary profit on consolidated statements of income (adjustment of difference)

Fiscal year ended March 31, 2012   Millions of yen
 
Consolidated net business profit ¥ 1,013,946
Credit costs of SMBC (58,647)
Losses on stocks of SMBC (15,153)
Amortization of unrecognized retirement benefit obligation of SMBC (31,632)
Ordinary profit of consolidated subsidiaries other than reportable segment 81,398
Amortization of goodwill other than reportable segment (14,996)
Adjustment of profit or loss of equity method affiliates (5,553)
Others (33,790)
 
Ordinary profit on consolidated statements of income ¥ 935,571

(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. 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 X Ownership ratio – Equity method affiliates’ ordinary profit X Ownership ratio

(Business Combination)

<Business combination through acquisition>

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 acquisition 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 an equity method affiliates of SMFG. The outline of the business combination through acquisition is as follows:

(1) Outline of the business combination

(a) Name of the acquired company and its business

Promise (Consumer finance)

(b) 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.

(c) Date of business combination

December 7, 2011

(d) 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

(e) Name of the controlling entity after the business combination

Sumitomo Mitsui Financial Group, Inc.

(f) Percentage share of voting rights SMFG has acquired

Percentage share of voting rights owned before

business combination

  22%
Percentage share of voting rights additionally acquired

through tender offer

72%
Percentage share of voting rights additionally acquired

through subscription for shares issued by way of third-party allotment

4%
Percentage share of voting rights after acquisition 98%

(g) 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 statements of income.

(3) Acquisition cost of the acquired company

    Millions of yen
Fair value of common stock of Promise owned before business combination ¥ 21,699
Fair value of common stock of Promise additionally acquired through tender offer 70,995
Fair value of common stock of Promise additionally acquired through subscription for shares issued by way of third-party allotment 119,999
Expenses directly required for acquisition 674
Acquisition cost of the acquired company ¥ 213,369

(4) Difference between acquisition cost of the acquired company and total acquisition cost of individual transactions leading to acquisition

    Millions of yen
Acquisition cost of the acquired company ¥ 213,369
Total acquisition cost of individual transactions leading to acquisition 188,318
Difference (gains on step acquisitions) ¥ 25,050

(5) Goodwill, reason for recognizing goodwill, amortization method and amortization period

(a) Amount of goodwill

¥ 57,300 million

(b) 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.

(c) 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

(a) Assets

    Millions of yen
Total assets ¥ 1,671,681
Loans and bills discounted 795,148
Customers’ liabilities for acceptances and guarantees 564,528

(b) Liabilities

    Millions of yen
Total liabilities ¥ 1,511,980
Borrowed money 300,884
Reserve for losses on interest repayment 367,220
Acceptances and guarantees 564,528

(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

(a) 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:

    Millions of yen
Ordinary income ¥ 143,349
Ordinary profit (152,690)
Net income (186,332)

Note: Ordinary income is presented as a counterpart of sales of companies in other industries.

(b) 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 commencement date of the fiscal year.

The information mentioned above has not been audited by KPMG AZSA LLC.

<Transactions under common control>

Making Cedyna Financial Corporation a wholly-owned subsidiary

SMFG Card & Credit, Inc. (“FGCC”) made Cedyna Financial Corporation (“Cedyna”) a wholly-owned subsidiary by a share exchange with an effective date of May 1, 2011 (the “Share Exchange”). The outline of transactions under common control is as follows:

(1) Outline of the transactions

(a) Name and business of combined entities

Acquisition company: FGCC (Management of subsidiaries and affiliates)

Acquired company: Cedyna (Credit card services)

(b) Date of business combination

May 1, 2011

(c) Form of reorganization

Exchange of shares

(d) Name of the entity after the reorganization

Sumitomo Mitsui Financial Group, Inc.

(e) Outline and purpose of the transaction

SMFG and FGCC decided that they needed to establish a system 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).

(3) Acquisition cost of the additionally acquired stocks of subsidiaries

Millions of yen
Fair value of common stock of Cedyna additionally acquired   ¥ 37,535
Expenses directly required for acquisition 80
Acquisition cost of the additionally acquired stocks of subsidiaries ¥ 37,616

(4) Share exchange ratio, its basis for determination, number of shares delivered

(a) Type of shares and share exchange ratio

Common shares

SMFG 1 : Cedyna 0.06

Note: 0.06 shares of SMFG common stock was allotted and delivered per share of Cedyna common stock.

(b) Basis for determination of share exchange ratio

Nikko Cordial Securities Inc. (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 negotiations and discussions with reference to the share exchange ratio analysis provided by the above third party valuation institutions and with consideration for SMFG’s and Cedyna’s financial conditions, performance trends and stock price movements. As a result, FGCC and Cedyna each determined that the share exchange ratio set forth in (a) above was beneficial to the shareholders of both SMFG and Cedyna, and SMFG, FGCC and Cedyna agreed and decided.

(c) Number of shares delivered

14,702 thousand common shares of SMFG

(5) Goodwill, reason for recognizing goodwill, amortization method and amortization period

(a) Amount of goodwill

¥9,087 million

(b) 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.

(c) Method and term to amortize goodwill

Straight-line method over 20 years

(Per Share Data)

As of and year ended March 31, 2012   Yen
 
Net assets per share ¥ 3,856.37
Net income per share 374.26
Net income per share (diluted) 373.99

(Notes)

1. Net income per share and Net income per share (diluted) are calculated based on the followings:

Year ended March 31, 2012   Millions of yen, except number of shares
 
Net income per share
Net income ¥ 518,536
Amount not to attributable to common stockholders
Net income attributable to common stock 518,536
Average number of common stock during the period (in thousands) 1,385,505
 
Net income per share (diluted)
Adjustment for net income (278)
Adjustment of dilutive shares issued by subsidiaries and affiliates (278)
Increase in number of common stock (in thousands) 243
Stock acquisition rights (in thousands) 243
 
Outline of dilutive shares which were not included in the calculation of “Net income per share (diluted)” for the fiscal year ended March 31, 2012 because they do not have dilutive effect: Stock acquisition rights: 1 type

(Number of stock acquisition rights issued by resolution at the general shareholder’s 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.

2. Net assets per share is calculated based on the followings:

Year ended March 31, 2012   Millions of yen, except number of shares
 
Net assets ¥ 7,254,976
Amount excluded from Net assets 2,044,575
Stock acquisition rights 692
Minority interests 2,043,883
Net assets attributable to common stock at the fiscal year-end 5,210,400
Number of common stock at the fiscal year-end used for the calculation of Net assets per share (in thousands) 1,351,116

(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.

(Significant Subsequent Events)

<Transactions under common control>

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

(a) Name and business of combined entities

- Acquisition company: Sumitomo Mitsui Financial Group, Inc. (Bank holding company)

- Acquired company: Promise (Consumer finance)

(b) Date of business combination

April 1, 2012

(c) Form of reorganization

Exchange of shares

(d) Name of the entity after the reorganization

Sumitomo Mitsui Financial Group, Inc.

(e) 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

(a) 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.

(b) 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 (a) above was reasonable and beneficial to the shareholders of the two companies, subsequently agreeing and accepting it for the transaction.

(c) Number of shares delivered

45,660 thousand common shares of SMFG

Sumitomo Mitsui Financial Group, Inc.

V. Non-Consolidated Financial Statements

1. Non-consolidated Balance Sheets

(Millions of yen)

March 31,   2012     2011
Assets:
Current assets
Cash and due from banks ¥ 67,323 ¥ 54,154
Prepaid expenses 29 29
Accrued income 17 32
Accrued income tax refunds 33,266 41,382
Other current assets 1,216 798
Total current assets 101,852 96,397
Fixed assets
Tangible fixed assets
Buildings 0 0
Equipment 0 0
Total tangible fixed assets 0 0
Intangible fixed assets
Software 16 8
Total intangible fixed assets 16 8
Investments and other assets
Investments in subsidiaries and affiliates 6,051,591 6,141,248
Total investments and other assets 6,051,591 6,141,248
Total fixed assets 6,051,608 6,141,258
Total assets ¥ 6,153,461 ¥ 6,237,655
Liabilities:
Current liabilities
Short-term borrowings ¥ 1,228,030 ¥ 997,030
Accounts payable 990 940
Accrued expenses 3,082 3,054
Income taxes payable 16 25
Business office taxes payable 6 5
Reserve for employee bonuses 127 107
Reserve for executive bonuses 83 91
Other current liabilities 594 586
Total current liabilities 1,232,931 1,001,841
Fixed liabilities
Bonds 392,900 392,900
Total fixed liabilities 392,900 392,900
Total liabilities 1,625,831 1,394,741
Net assets:
Stockholders’ equity
Capital stock 2,337,895 2,337,895
Capital surplus
Capital reserve 1,559,374 1,559,374
Other capital surplus 63,592 273,652
Total capital surplus 1,622,966 1,833,027
Retained earnings
Other retained earnings
Voluntary reserve 30,420 30,420
Retained earnings brought forward 690,676 684,883
Total retained earnings 721,096 715,303
Treasury stock (154,926) (43,482)
Total stockholders’ equity 4,527,031 4,842,743
Stock acquisition rights 598 170
Total net assets 4,527,629 4,842,914
Total liabilities and net assets ¥ 6,153,461 ¥ 6,237,655

2. Non-consolidated Statements of Income

(Millions of yen)

Year ended March 31,   2012     2011
 
Operating income:
Dividends on investments in subsidiaries and affiliates ¥ 166,272 ¥ 206,865
Fees and commissions received from subsidiaries 15,100 15,352
Total operating income 181,372 222,217
Operating expenses:
General and administrative expenses 8,434 7,999
Interest on bonds 16,468 16,468
Total operating expenses 24,902 24,467
Operating profit 156,470 197,750
Non-operating income:
Interest income on deposits 88 68
Fees and commissions income 0 1
Other non-operating income 19 40
Total non-operating income 109 110
Non-operating expenses:
Interest on borrowings 6,485 6,290
Fees and commissions payments 163 26
Other non-operating expenses 8 0
Total non-operating expenses 6,657 6,317
Ordinary profit 149,922 191,543
Income before income taxes 149,922 191,543
Income taxes, current 3 3
Income taxes 3 3
Net income ¥ 149,919 ¥ 191,539

3. Non-consolidated Statements of Changes in Net Assets

(Millions of yen)

Year ended March 31,   2012     2011
Stockholders’ equity:
Capital stock
Balance at the beginning of the fiscal year ¥ 2,337,895 ¥ 2,337,895
Changes in the fiscal year
Net changes in the fiscal year
Balance at the end of the fiscal year 2,337,895 2,337,895
Capital surplus
Capital reserve
Balance at the beginning of the fiscal year 1,559,374 1,559,374
Changes in the fiscal year
Net changes in the fiscal year
Balance at the end of the fiscal year 1,559,374 1,559,374
Other capital surplus
Balance at the beginning of the fiscal year 273,652 273,699
Changes in the fiscal year
Disposal of treasury stock (57) (46)
Cancellation of treasury stock (210,003)
Net changes in the fiscal year (210,060) (46)
Balance at the end of the fiscal year 63,592 273,652
Total capital surplus
Balance at the beginning of the fiscal year 1,833,027 1,833,073
Changes in the fiscal year
Disposal of treasury stock (57) (46)
Cancellation of treasury stock (210,003)
Net changes in the fiscal year (210,060) (46)
Balance at the end of the fiscal year 1,622,966 1,833,027
Retained earnings
Other retained earnings
Voluntary reserve
Balance at the beginning of the fiscal year 30,420 30,420
Changes in the fiscal year
Net changes in the fiscal year
Balance at the end of the fiscal year 30,420 30,420
Retained earnings brought forward
Balance at the beginning of the fiscal year 684,883 647,622
Changes in the fiscal year
Cash dividends (144,126) (154,278)
Net income 149,919 191,539
Net changes in the fiscal year 5,792 37,260
Balance at the end of the fiscal year 690,676 684,883
Total retained earnings
Balance at the beginning of the fiscal year 715,303 678,042
Changes in the fiscal year
Cash dividends (144,126) (154,278)
Net income 149,919 191,539
Net changes in the fiscal year 5,792 37,260
Balance at the end of the fiscal year 721,096 715,303

(continued)

(Millions of yen)

Year ended March 31,   2012   2011
Treasury stock
Balance at the beginning of the fiscal year (43,482) (43,437)
Changes in the fiscal year
Purchase of treasury stock (321,521) (105)
Disposal of treasury stock 74 60
Cancellation of treasury stock 210,003
Net changes in the fiscal year (111,444) (45)
Balance at the end of the fiscal year (154,926) (43,482)
Total stockholders’ equity
Balance at the beginning of the fiscal year 4,842,743 4,805,574
Changes in the fiscal year
Cash dividends (144,126) (154,278)
Net income 149,919 191,539
Purchase of treasury stock (321,521) (105)
Disposal of treasury stock 17 13
Cancellation of treasury stock
Net changes in the fiscal year (315,711) 37,169
Balance at the end of the fiscal year 4,527,031 4,842,743
Stock acquisition rights:
Balance at the beginning of the fiscal year 170
Changes in the fiscal year
Net changes in items other than stockholders’ equity in the fiscal year 427 170
Net changes in the fiscal year 427 170
Balance at the end of the fiscal year 598 170
Total net assets:
Balance at the beginning of the fiscal year 4,842,914 4,805,574
Changes in the fiscal year
Cash dividends (144,126) (154,278)
Net income 149,919 191,539
Purchase of treasury stock (321,521) (105)
Disposal of treasury stock 17 13
Cancellation of treasury stock
Net changes in items other than stockholders’ equity in the fiscal year 427 170
Net changes in the fiscal year (315,284) 37,340
Balance at the end of the fiscal year ¥ 4,527,629 ¥ 4,842,914

4. Note on the Assumption as a Going Concern

Not applicable.

Financial Results

Fiscal Year 3/2012
-Supplementary Information-

Table of Contents

 
 
 
1. Income Analysis Consolidated Non-consolidated
2. Banking Profit per Employee / Overhead Ratio Non-consolidated
3. Interest Spread (Domestic) Non-consolidated
4. Gains (Losses) on Securities Non-consolidated
5. Unrealized Gains (Losses) on Securities Consolidated Non-consolidated
6. Balance of Securities, Classified by Maturity Non-consolidated
7. Overview of Derivative Transactions

(on Deferred Hedge Accounting Basis)

Non-consolidated
8. Employee Retirement Benefits Consolidated Non-consolidated
9. BIS Capital Ratio Consolidated Non-consolidated
10. ROE Consolidated
11. Balance of Problem Assets, Classified by

Financial Reconstruction Law and Self-Assessment,

and Write-Offs / Reserves

Non-consolidated
12. Risk-Monitored Loans Consolidated Non-consolidated
13. Reserve for Possible Loan Losses and Reserve Ratio Consolidated Non-consolidated
14. Problem Assets Based on the Financial

Reconstruction Law and the Coverage

Consolidated Non-consolidated
15. Results of Off-Balancing of Problem Assets Non-consolidated
16. Loan Portfolio, Classified by Industry Non-consolidated
17. Loan Portfolio, Classified by Country Non-consolidated
18. Balance of Deposits and Loans Non-consolidated
19. Number of Directors and Employees Non-consolidated
20. Number of Offices Non-consolidated
21. Deferred Tax Assets Consolidated Non-consolidated
22. Earnings Forecast for FY3/2013 Consolidated Non-consolidated
(Reference 1) FY3/2012 Performance and FY3/2013 Management Policy
(Reference 2) Exposure to Securitized Products
(Reference 3) Financial Statements of SMBC
 
Notes 1. Consolidated: Consolidated figures of Sumitomo Mitsui Financial Group, Inc. ("SMFG")
2. Non-consolidated: Non-consolidated figures of Sumitomo Mitsui Banking Corporation ("SMBC")

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 the fragility of any economic recovery, both globally and in Japan; our ability to successfully implement its business and capital strategy; the success of our business alliances including those in the consumer finance industry; exposure to new risks as we expand the scope of our business; significant credit-related costs; declines in the value of our securities portfolio. Given these and other risks and uncertainties, you should not place undue reliance on forward-looking statements, which speak only as of the date of this 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 the registration statement on Form 20-F and other documents submitted to the U.S. Securities and Exchange Commission, as well as our earnings press releases for a more detailed description of the risks and uncertainties that may affect our financial conditions, our operating results, and investors’ decisions.

Financial Highlights for FY3/2012    
1. Income Analysis
  SMBC non-consolidated  

(Millions of yen)

 

  FY3/2012     FY3/2011
              Change      
Gross banking profit 1 1,532,511 752 1,531,759
Excluding gains (losses) on bonds   2 1,379,974   (4,664)   1,384,638  
Gross domestic profit 3 1,097,760 (16,569) 1,114,329
Excluding gains (losses) on bonds   4 1,074,567   (11,374)   1,085,941  
Net interest income   5 849,250   (18,334)   867,584  
Trust fees   6 1,716   (583)   2,299  
Net fees and commissions   7 215,129   6,321   208,808  
Net trading income   8 5,112   4,172   940  
Net other operating income 9 26,550 (8,146) 34,696
  Gains (losses) on bonds   10 23,192   (5,196)

 

28,388  
Gross international profit 11 434,750 17,321 417,429
Excluding gains (losses) on bonds   12 305,406   6,709

 

298,697  
Net interest income   13 107,627   7,387   100,240  
Net fees and commissions   14 103,778   9,920   93,858  
Net trading income   15 78,938   (71,191)   150,129  
Net other operating income 16 144,406 71,206 73,200
    Gains (losses) on bonds   17 129,343   10,611

 

118,732  
Expenses (excluding non-recurring losses)   18 (719,495)   (20,298)   (699,197)  
Personnel expenses   19 (259,782)   (9,940)   (249,842)  
Non-personnel expenses   20 (422,854)   (11,383)   (411,471)  
  Taxes   21 (36,858)   1,025   (37,883)  
Banking profit (before provision for

general reserve for possible loan losses)

22 813,015 (19,547) 832,562
Excluding gains (losses) on bonds   23 660,478   (24,963)

 

685,441  
Provision for general reserve for possible loan losses   24 43,780   31,445   12,335  
Banking profit   25 856,796   11,899   844,897  
  Gains (losses) on bonds   26 152,536   5,416   147,120  
Non-recurring gains (losses)   27 (161,453)   87,740   (249,193)  
Credit costs   28 (103,662)   3,998   (107,660)  
Recoveries of written-off claims   29 1,234   1,234   -  
Gains (losses) on stocks   30 (15,153)   72,132   (87,285)  
Gains on sale of stocks and other securities 31 20,562 (1,109) 21,671
Losses on sale of stocks and other securities 32 (7,074) (5,470) (1,604)
  Losses on devaluation of stocks and other securities   33 (28,642)   78,711   (107,353)  
  Other non-recurring gains (losses)   34 (43,871)   10,376   (54,247)  
Ordinary profit   35 695,342   99,638   595,704  
Extraordinary gains (losses)   36 (3,349)   3,515   (6,864)  
Gains (losses) on disposal of fixed assets   37 (717)   1,619   (2,336)  
Losses on impairment of fixed assets   38 (2,632)   1,656   (4,288)  
  Recoveries of written-off claims   39 -   (1,055)   1,055  
Income before income taxes   40 691,992   103,153   588,839  
Income taxes - current   41 (44,703)   (2,317)   (42,386)  
Income taxes - deferred   42 (169,315)   (44,042)   (125,273)  
Net income   43 477,973   56,793   421,180  
                     
Total credit cost (24+28+29+39)   44 (58,647)   35,622   (94,269)  
Provision for general reserve for possible loan losses   45 43,780   31,445   12,335  
Write-off of loans   46 (15,797)   54,978   (70,775)  
Provision for specific reserve for possible loan losses   47 (59,196)   (32,092)   (27,104)  
Losses on sales of delinquent loans   48 (28,767)   (19,074)   (9,693)  
Provision for loan loss reserve for specific overseas countries 49 98   185   (87)  
  Recoveries of written-off claims   50 1,234   179   1,055  
 
Notes 1. Amounts less than 1 million yen are rounded down. Figures in parenthesis indicate the amount of loss or decrease.

2. "Recoveries of written-off claims" which were included in "Extraordinary gains (losses)" are included in "Non-recurring gains (losses)" since the fiscal year beginning on or after April 1, 2011.

 

Consolidated       (Millions of yen)
      FY3/2012       FY3/2011
                Change    
Consolidated gross profit   1   2,594,482   89,752   2,504,730
Net interest income   2   1,341,369   23,718   1,317,651
Trust fees   3   1,770   (565)   2,335
Net fees and commissions   4   823,580   57,350   766,230
Net trading income   5   198,192   (38,901)   237,093
  Net other operating income   6   229,568   48,149   181,419
General and administrative expenses   7   (1,421,363)   (66,041)   (1,355,322)
Credit costs   8   (126,055)   94,107   (220,162)
Write-off of loans   9   (90,305)   66,266   (156,571)
Provision for specific reserve for possible loan losses   10   (111,227)   (47,653)   (63,574)
Provision for general reserve for possible loan losses   11   106,512   91,593   14,919
  Other credit costs   12   (31,035)   (16,100)   (14,935)
Recoveries of written-off claims   13   4,800   4,800   -
Gains (losses) on stocks   14   (27,880)   64,069   (91,949)
Equity in earnings (losses) of affiliates   15   (31,122)   (17,803)   (13,319)
Other income (expenses)   16   (57,289)   (58,741)   1,452
Ordinary profit   17   935,571   110,143   825,428
Extraordinary gains (losses)   18   17,395   15,511   1,884
Gains on step acquisitions   19   25,050   12,395   12,655
Losses on impairment of fixed assets   20   (3,861)   1,550   (5,411)
  Recoveries of written-off claims   21   -   (2,813)   2,813
Income before income taxes and minority interests   22   952,966   125,653   827,313
Income taxes - current   23   (103,478)   (6,032)   (97,446)
Income taxes - deferred   24   (207,860)   (64,535)   (143,325)
Income before minority interests   25   641,627   55,085   586,542
Minority interests in net income   26   (123,090)   (12,444)   (110,646)
Net income   27   518,536   42,641   475,895
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
2. beginning on or after April 1, 2011.
                         
Total credit cost (8+13+21)   28   (121,255)   96,093   (217,348)
 
 
(Reference)       (Billions of yen)
Consolidated net business profit   29   1,013.9   11.9   1,002.0
Note Consolidated net business profit = (SMBC's non-consolidated banking profit (before provision for general reserve for possible loan losses))
+ (Other consolidated subsidiaries' ordinary profit (excluding non-recurring items)) + (Affiliates' ordinary profit) X (Ownership ratio)
- (Internal transactions (dividends, etc.))
 
(Number of consolidated subsidiaries and affiliates)        
 
        Mar. 31, 2012   Change   Mar. 31, 2011
Consolidated subsidiaries   30   337   10   327
Equity method affiliates   31   43   (4)   47
2. Banking Profit per Employee / Overhead Ratio      
  SMBC non-consolidated   (Millions of yen, %)
    FY3/2012   FY3/2011
                Change    
(1)Banking profit (before provision for general reserve for possible loan losses)   813,015   (19,547)   832,562
  Per employee (thousands of yen)       35,140   (1,129)   36,269
(2)Banking profit     856,796   11,899   844,897
  Per employee (thousands of yen)     37,033   227   36,806
(3)Banking profit (before provision for general reserve for possible loan

losses, excluding gains (losses) on bonds)

  660,478   (24,963)   685,441
  Per employee (thousands of yen)       28,547   (1,313)   29,860
                     
Overhead ratio       46.9   1.3   45.6
Notes 1. Employees include executive officers (other than board members) and overseas local staff, and exclude temporary staff,
employees temporarily transferred from other companies, and transferred staff to other companies.
2. Banking profit per employee is calculated on the basis of the average number of employees during the period.
3. Overhead ratio = Expenses (excluding non-recurring losses) / Gross banking profit

3. Interest Spread (Domestic)

(Table omitted)

4. Gains (Losses) on Securities        
  SMBC non-consolidated (Millions of yen)
    FY3/2012   FY3/2011
              Change    
Gains (losses) on bonds     152,536   5,416   147,120
Gains on sales     169,117   (31,361)   200,478
Losses on sales     (10,888)   35,276   (46,164)
Gains on redemption     0   -   0
Losses on redemption     (5,692)   1,502   (7,194)
  Losses on devaluation     -   -   -
                   
Gains (losses) on stocks     (15,153)   72,132   (87,285)
Gains on sales     20,562   (1,109)   21,671
Losses on sales     (7,074)   (5,470)   (1,604)
  Losses on devaluation     (28,642)   78,711   (107,353)

5. Unrealized Gains (Losses) on Securities

SMBC non-consolidated                               (Millions of yen)
      Mar. 31, 2012   Mar. 31, 2011
Balance sheet amount   Net unrealized gains (losses)   Balance sheet amount   Net unrealized gains (losses)
         
              (a)   (a) - (b)   Gains   Losses       (b)   Gains   Losses
Held-to-maturity purpose   5,163,764   67,902   8,972   67,993   90   4,071,733   58,930   60,394   1,463
Stocks of subsidiaries

and affiliates

  2,324,041   (21,499)   6,449   622   22,122   2,228,437   (27,948)   521   28,470
Other securities     35,440,979   388,982   83,361   672,572   283,590   33,980,684   305,621   662,003   356,382
Stocks     2,250,672   228,453   (47,015)   466,871   238,418   2,338,455   275,468   468,639   193,170
Bonds     26,306,672   104,356   32,425   109,504   5,148   24,303,221   71,931   99,888   27,956
  Others     6,883,634   56,172   97,950   96,196   40,024   7,339,007   (41,778)   93,476   135,254
Other money held in trust   5,805   (46)   (88)   -   46   8,875   42   42   -
Total     42,934,589   435,338   98,692   741,188   305,850   40,289,730   336,646   722,962   386,315
Stocks     3,472,964   217,149   (44,140)   467,494   250,345   3,494,297   261,289   469,161   207,871
Bonds     31,470,436   172,259   41,398   177,497   5,238   28,374,954   130,861   160,282   29,420
    Others     7,991,189   45,930   101,435   96,196   50,266   8,420,478   (55,505)   93,518   149,023
 

(Reference) Outstanding balance and amount sold of stocks in Other securities

(Table Omitted)

Consolidated                                     (Millions of yen)
    Mar. 31, 2012   Mar. 31, 2011
Balance sheet amount   Net unrealized gains (losses)   Balance sheet amount   Net unrealized gains (losses)
         
              (a)   (a) - (b)   Gains   Losses       (b)   Gains   Losses
Held-to-maturity purpose   5,286,267   69,184   9,327   69,288   103   4,189,272   59,857   61,389   1,531
Other securities     37,558,730   474,984   104,085   746,928   271,943   35,972,442   370,899   720,864   349,965
Stocks     2,406,170   271,461   (40,495)   490,074   218,613   2,486,258   311,956   487,773   175,817
Bonds     27,684,484   111,815   35,045   118,164   6,348   25,560,012   76,770   108,640   31,870
  Others     7,468,076   91,708   109,535   138,689   46,981   7,926,170   (17,827)   124,449   142,277
Other money held in trust   22,430   (46)   (88)   -   46   22,569   42   42   -
Total     42,867,429   544,122   113,323   816,216   272,093   40,184,285   430,799   782,295   351,496
Stocks     2,406,170   271,461   (40,495)   490,074   218,613   2,486,258   311,956   487,773   175,817
Bonds     32,957,653   180,998   44,359   187,444   6,445   29,734,790   136,639   170,021   33,382
    Others     7,503,605   91,662   109,458   138,697   47,034   7,963,235   (17,796)   124,500   142,297
Notes 1. The figures above include negotiable certificates of deposit in "Cash and due from banks" and beneficiary claims on loan trust in "Monetary claims bought."
 
2. Stocks within Other securities and foreign stocks within Others of Other securities are valuated with the average market price during the final month of the fiscal year.
2. Rest of the securities are valuated at market prices 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. Unrealized gains (losses) indicate the difference between
the acquisition costs (or amortized costs) and the balance sheet amounts.
Net unrealized gains (losses) on Other securities include gains which are recognized in the statements of income by applying fair value hedge accounting and
not recorded directly to Net assets, accordingly. The amounts as of March 31, 2012 and March 31, 2011, are 196 million yen and 1,153 million yen, respectively,
in the statements of income.
 
4. Floating-rate Japanese government bonds which SMBC held as Other securities are carried on the balance sheet at their reasonably estimated amounts in
accordance with the "Practical Solution on Measurement of Fair Value of Financial Assets" (Accounting Standard Board of Japan Practical Issues Task Force No. 25)

6. Balance of Securities, Classified by Maturity

Balance of other securities with maturities and bonds of held-to-maturity

(Table Omitted)

7. Overview of Derivative Transactions (on Deferred Hedge Accounting Basis)

SMBC non-consolidated               (Billions of yen)
  Mar. 31, 2012           Mar. 31, 2011          
        Net   Net           Net   Net
Assets   Liabilities assets deferred Assets   Liabilities assets deferred
      (a)   (b)   (a) - (b)   gains (losses)   (c)   (d)   (c) - (d)   gains (losses)
Interest rate swaps   103.6   66.2   37.4   (36.4)   57.6   30.9   26.7   (17.6)
Currency swaps   288.7   10.1   278.6   (7.2)   352.3   13.9   338.4   6.0
Others   3.1   0.6   2.5   132.0   2.1   1.6   0.5   126.7
Total     395.4   76.9   318.5   88.4   412.0   46.4   365.6   115.1
 
Notes 1. Derivative transactions are valuated at fair value on the balance sheet.
Notes 2. SMBC applied deferred hedge or fair value hedge accounting based on Practical Guidelines for Accounting Standard for Financial Instruments
Notes 2. as well as deferred hedge accounting for banking industry based on JICPA Industry Audit Committee Report No.24 and No.25.
Notes 3. Figures for Net deferred gains (losses) are those before application of tax effect accounting.
(Appendix) Contract amount of interest rate swaps (on deferred hedge accounting basis), classified by maturity  
                                    (Billions of yen)
    Mar. 31, 2012   Mar. 31, 2011
                       
        1 year

or less

  More than

1 year to

5 years

  More than

5 years

  Total   1 year

or less

  More than

1 year to

5 years

  More than

5 years

  Total
Receivable fixed rate

/ payable floating rate

  5,351.6   12,797.4   5,922.6   24,071.6   4,960.9   14,496.3   4,676.4   24,133.6
Receivable floating rate

/ payable fixed rate

  1,368.6   4,693.8   5,533.2   11,595.6   613.2   5,360.0   6,047.3   12,020.5
Receivable floating rate

/ payable floating rate

  20.0   9.3   -   29.3   0.5   29.4   -   29.9
Total       6,740.2   17,500.5   11,455.8   35,696.5   5,574.6   19,885.7   10,723.7   36,184.0
8. Employee Retirement Benefits        
       
(1) Projected benefit obligation
 
SMBC non-consolidated       (Millions of yen)
Mar. 31, 2012   Mar. 31, 2011
            Change  
Projected benefit obligation (A) 843,362 (2,837) 846,199
    <Discount rate>   <2.5%> < - > <2.5%>
Fair value of plan assets (B) 802,733 5,594 797,139
Reserve for employee retirement benefits (C) - - -
Prepaid pension cost (D) 204,033 5,712 198,321
Unrecognized prior service cost (deductible from the obligation) (E) (4,538) 4,951 (9,489)
  Unrecognized net actuarial gain (loss) (A-B-C+D-E) 249,200 (7,671) 256,871
 
 
(Reference) Consolidated       (Millions of yen)
Mar. 31, 2012   Mar. 31, 2011
            Change  
Projected benefit obligation (A) 990,449 14,178 976,271
Fair value of plan assets (B) 902,254 18,999 883,255
Reserve for employee retirement benefits (C) 45,911 1,307 44,604
Prepaid pension cost (D) 212,221 4,224 207,997
Unrecognized prior service cost (deductible from the obligation) (E) (6,624) 3,741 (10,365)
  Unrecognized net actuarial gain (loss) (A-B-C+D-E) 261,128 (5,647) 266,775
 
 
(2) Pension expenses
 
SMBC non-consolidated       (Millions of yen)
FY3/2012   FY3/2011
            Change  
Pension expenses   46,025 (5,233) 51,258
Service cost   17,725 513 17,212
Interest cost on projected benefit obligation   21,154 207 20,947
Expected returns on plan assets   (25,057) 490 (25,547)
Amortization of unrecognized prior service cost   (4,950) 223 (5,173)
Amortization of unrecognized net actuarial gain (loss) 36,583 (6,610) 43,193
  Others     569 (58) 627
 
(Reference) Consolidated       (Millions of yen)
FY3/2012   FY3/2011
            Change  
Pension expenses   58,820 (5,168) 63,988
9. BIS Capital Ratio      
 
Consolidated     (Billions of yen, %)
Mar. 31, 2012 (a) Mar. 31, 2011
    [Preliminary] (a) - (b) (b)
(1) Capital ratio 16.94 0.31 16.63
Tier I ratio 12.29 (0.18) 12.47
(2) Tier I 6,274.4 (49.6) 6,324.0
(3) Tier II 2,771.1 234.1 2,537.0
(4) Subtraction items 397.5 (30.6) 428.1
(5) Total capital (2) + (3) - (4) 8,648.0 215.1 8,432.9
(6) Risk-adjusted assets 51,043.2 349.5 50,693.7
(7) Required capital (6) X 8% 4,083.5 28.0 4,055.5
 
SMBC consolidated      
Capital ratio (BIS Guidelines) 19.64 0.48 19.16
 
SMBC non-consolidated      
Capital ratio (BIS Guidelines) 21.92 0.47 21.45
 
 
 
 
10. ROE
 
Consolidated     (%)
FY3/2012   FY3/2011
    (a) (a) - (b) (b)
ROE (denominator: Total stockholders' equity) 10.4 0.5 9.9
Note

ROE

(denominator: Total =
stockholders' equity)

 

Net income

X100

{(Total stockholders' equity at the beginning of the term) + (Total stockholders' equity at the end of the term)} / 2
11. Balance of Problem Assets, Classified by Financial Reconstruction Law and Self-Assessment,
  and Write-Offs / Reserves
                     
SMBC non-consolidated, as of Mar. 31, 2012 (Billions of yen)
Category of Borrowers under Self-Assessment Problem Assets based on the Financial Reconstruction Law Classification under Self-Assessment   Reserve for possible loan losses Reserve Ratio
                 

Classification I

Classification II

Classification III

Classification IV

                     
Bankrupt Borrowers Bankrupt and Quasi-Bankrupt Assets Portion of claims secured by collateral or guarantees, etc.

Fully
reserved

Specific Reserve

  20.1 100%
Effectively Bankrupt Borrowers 134.4 (i) 119.4 (a) 15.0

Direct Write-Offs (*1)

(*2) (*3)
  (Change from Mar. 31, 2011: (4.1) )                                  
Doubtful Assets Portion of claims secured by collateral or guarantees, etc.

Necessary
amount reserved

Potentially Bankrupt Borrowers 229.4 75.84%
779.6 (ii) 477.1 (b)

302.5

(*2) (*3)

 

  (Change from Mar. 31, 2011: +94.8 )                                            
Substandard Loans

Portion of Substandard
Loans secured by
collateral or guarantees,
etc.

General Reserve
for Substandard Loans

268.8 (iii) 62.48%
Borrowers Requiring Caution (Change from Mar. 31, 2011: (34.2) ) 132.0 (c) 85.7 (*3)
(Claims to Substandard Borrowers)                       19.69%

Claims to Borrowers
Requiring Caution,
excluding claims to
Substandard Borrowers

6.69% (*3)
Normal Assets [14.12% ]
                   

General Reserve

(*4)

     
Normal Borrowers 62,493.6

Claims to
Normal
Borrowers

439.5 0.21%
                                                         

(*4)

 

                     
Loan loss Reserve for Specific Overseas Countries 0.2  
                                                                           
                                                                 
Total Problem asset ratio Total Reserve for

possible loan losses

689.2   Reserve Ratio (*5)
63,676.4 (iv) ((v)/(iv)) (Change from Mar. 31, 2011) D: Specific Reserve + General Reserve for Substandard Loans 335.2 (D/C)
      1.86%       +0.05%                                 73.79%  
                                                     
A=(i)+(ii)+(iii) B: Portion secured by collateral or guarantees, etc. C: Unsecured portion ( A - B ) Coverage Ratio

 

 

1,182.8 (v) (a)+(b)+(c) 728.5 454.3 ((B+D)/A)
  (Change from Mar. 31, 2011: +56.5 )                                               89.93%  
  *1 Includes amount of direct reduction totaling 334.9 billion yen.
*2 Includes reserve for assets that are not subject to disclosure based on the Financial Reconstruction Law standards.
(Bankrupt/Effectively Bankrupt Borrowers: 5.1 billion yen, Potentially Bankrupt Borrowers: 30.6 billion yen)
*3 Reserve ratios for claims on Bankrupt Borrowers, Effectively Bankrupt Borrowers, Potentially Bankrupt Borrowers, Substandard
*3 Borrowers and Borrowers Requiring Caution including Substandard Borrowers are the proportion of reserve for the possible loan
*3 losses to each category's total claims, excluding the portion secured by collateral or guarantees, etc.
*4 Reserve ratios for claims on Normal Borrowers and Borrowers Requiring Caution (excluding claims to Substandard Borrowers) are
*4 the proportion of the reserve for possible loan losses to the respective claims of each category.
*4 The reserve ratio for unsecured claims on Borrowers Requiring Caution (excluding claims to Substandard Borrowers) is shown in [ ].
*5 The proportion of the reserve to the claims, excluding the portion secured by collateral or guarantees, etc.
12. Risk-Monitored Loans
                   
SMBC non-consolidated   (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011
     
Ratio Ratio
      (a) (b) (a) - (c) (b) - (d) (c) (d)
Risk-monitored loans Bankrupt loans 57,503 0.1 (8,299) 0.0 65,802 0.1
Non-accrual loans 816,705 1.4 94,913 0.1 721,792 1.3
Past due loans (3 months or more) 10,531 0.0 (1,796) 0.0 12,327 0.0
Restructured loans 258,312 0.5 (32,370) 0.0 290,682 0.5
  Total 1,143,053 2.0 52,448 0.0 1,090,605 2.0
               
Total loans (term-end balance) 56,411,492 100.0 1,173,879 55,237,613 100.0
 
Amount of direct reduction 295,908 (130,295) 426,203
 
Consolidated (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011
     
Ratio Ratio
      (a) (b) (a) - (c) (b) - (d) (c) (d)
Risk-monitored loans Bankrupt loans 74,218 0.1 (16,559) 0.0 90,777 0.1
Non-accrual loans 1,145,347 1.8 113,519 0.1 1,031,828 1.7
Past due loans (3 months or more) 22,502 0.0 (2,936) 0.0 25,438 0.0
Restructured loans 562,882 0.9 64,559 0.1 498,323 0.8
  Total 1,804,951 2.9 158,582 0.2 1,646,369 2.7
               
Total loans (term-end balance) 62,720,599 100.0 1,372,244 61,348,355 100.0
 
Amount of direct reduction 596,075 (139,563) 735,638
 
 
13. Reserve for Possible Loan Losses and Reserve Ratio
 
SMBC non-consolidated (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011
     
Reserve ratio Reserve ratio
      (a) (b) (a) - (c) (b) - (d) (c) (d)
Reserve for possible loan losses 689,215 60.30 (22,307) (4.94) 711,522 65.24
General reserve 439,534 (43,781)   483,315  
Specific reserve 249,507 21,572   227,935  
  Loan loss reserve for specific overseas countries 173   (99)   272  
 
Amount of direct reduction 334,900 (161,305) 496,205
 
Consolidated (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011
     
Reserve ratio Reserve ratio
      (a) (b) (a) - (c) (b) - (d) (c) (d)
Reserve for possible loan losses 978,933 54.24 (80,012) (10.08) 1,058,945 64.32
General reserve 593,338 (102,816)   696,154  
Specific reserve 385,416 23,279   362,137  
  Loan loss reserve for specific overseas countries 178   (475)   653  
 
Amount of direct reduction 685,871 (181,995) 867,866
 
Note Reserve ratio: Reserve for possible loan losses / Risk-monitored loans. After direct reduction.
14. Problem Assets Based on the Financial Reconstruction Law and the Coverage
             
SMBC non-consolidated (Millions of yen, %)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Bankrupt and quasi-bankrupt assets 134,361 (4,072) 138,433
Doubtful assets 779,641 94,815 684,826
Substandard loans 268,844 (34,166) 303,010
Total (A) 1,182,847 56,578 1,126,269
 
  Normal assets 62,493,590 1,467,753 61,025,837
  Total (B) 63,676,437 1,524,331 62,152,106
Problem asset ratio (A/B) 1.86 0.05 1.81
 
Amount of direct reduction 334,900 (161,305) 496,205
 
Note Problem assets based on the Financial Reconstruction Law include loans, acceptances and guarantees,
suspense payments, and other credit-type assets.
 
      (Millions of yen)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Total coverage (C) 1,063,775 77,261 986,514
Reserve for possible loan losses* (D) 335,213 4,687 330,526
  Amount recoverable by guarantees, collateral and others (E) 728,561 72,573 655,988
* Sum of general reserve for substandard loans and specific reserve
 
          (%)
Coverage ratio (C) / (A) 89.93 2.34 87.59
Coverage ratio calculated with total reserve for possible loan losses

included in the numerator

119.86 (1.56) 121.42
 
          (%)
Reserve ratio to unsecured assets (D) / (A - E) 73.79 3.51 70.28
Reserve ratio calculated with total reserve for possible loan losses

included in the numerator

151.71 0.41 151.30
 
 
Consolidated (Millions of yen, %)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Bankrupt and quasi-bankrupt assets 259,670 (21,941) 281,611
Doubtful assets 1,017,631 141,794 875,837
Substandard loans 580,351 47,478 532,873
Total (A) 1,857,653 167,332 1,690,321
  Normal assets 69,826,134 1,957,380 67,868,754
  Total (B) 71,683,787 2,124,712 69,559,075
Problem asset ratio (A/B) 2.59 0.16 2.43
 
      (Millions of yen)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Total coverage (C) 1,519,780 89,197 1,430,583
Reserve for possible loan losses (D) 446,818 11,161 435,657
  Amount recoverable due to guarantees, collateral and others (E) 1,072,962 78,036 994,926
 
          (%)
Coverage ratio (C) / (A) 81.81 (2.82) 84.63
Coverage ratio calculated with total reserve for possible loan losses

included in the numerator

110.46 (11.05) 121.51
 
          (%)
Reserve ratio to unsecured assets (D) / (A - E) 56.94 (5.71) 62.65
Reserve ratio calculated with total reserve for possible loan losses

included in the numerator

124.75 (27.53) 152.28
15. Results of Off-Balancing of Problem Assets  
  SMBC non-consolidated
       
Results of the first half-year         (Billions of yen)
Mar. 31, 2011 Change in

the six months ended Sep. 30, 2011

Sep. 30, 2011
    Problem assets

newly classified

during the six months ended

Sep. 30, 2011

Amount of

off-balancing

 
             
Bankrupt and quasi-bankrupt assets 138.5 (12.2) 28.7 (40.9) 126.3
Doubtful assets 684.8 33.6 159.5 (125.9) 718.4
             
Total 823.3 21.4 (*1) 188.2 (166.8) 844.7
       
Result of measures connected to off-balancing (*2) 120.1 104.9
         

Breakdown of off-balancing by factor (*3)

Disposition by borrowers' liquidation (13.3)
Reconstructive disposition (9.1)
Improvement in debtors' performance due to reconstructive disposition -
Loan sales to market   (108.7)
Direct write-offs   91.3
Others       (127.0)
Collection/repayment, etc. (99.8)
Improvement in debtors' performance (27.2)
Total       (166.8)
 
 
Results of the second half-year         (Billions of yen)

 

 

 

Sep. 30, 2011

Change in

the six months ended Mar. 31, 2012

Problem assets

newly classified

during the six months ended

Mar. 31, 2012

Amount of

off-balancing

Mar. 31, 2012

             
Bankrupt and quasi-bankrupt assets 126.3 8.1 42.5 (34.4) 134.4
Doubtful assets 718.4 61.2 179.7 (118.5) 779.6
             
Total 844.7 69.3 222.2 (*1) (152.9) 914.0
       
Result of measures connected to off-balancing(*2) 104.9 63.6
         

Breakdown of off-balancing by factor (*3)

Disposition by borrowers' liquidation (29.2)
Reconstructive disposition (16.7)
Improvement in debtors' performance due to reconstructive disposition (0.2)
Loan sales to market   (81.1)
Direct write-offs   88.1
Others       (113.8)
Collection/repayment, etc. (93.4)
Improvement in debtors' performance (20.4)
Total       (152.9)
 
*1 The amount of Problem assets newly classified during the six months ended Sep. 30, 2011 and off-balanced in the six months ended Mar. 31, 2012 was 62.9 billion yen.
*2 The measures connected to off-balancing are legal reorganizations and other similar measures, corporate splits to good companies and bad companies, partial direct write-offs of
retail exposure to individuals and small- and medium-sized enterprises, and trusts to RCC for the purpose of revitalization which is scheduled to be off-balanced before the maturity.
*3 1. "Disposition by borrowers' liquidation" refers to abandonment or write-off of loans involved in bankruptcy liquidation proceedings (bankruptcy or special liquidations).
2. "Reconstructive disposition" refers to abandonment of loans involved in reconstructive bankruptcy proceedings (corporate reorganization and civil rehabilitation),
debt forgiveness involved in special mediation or other types of civil mediation, or debt forgiveness for restructuring involved in private reorganization.
16. Loan Portfolio, Classified by Industry          
     
(1) Loans and bills discounted, classified by industry
 
SMBC non-consolidated (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011  
      (a) Ratio (a) - (b) (b) Ratio
Domestic offices

(excluding Japan offshore banking account)

47,217,955 100.0 (633,111) 47,851,066 100.0
Manufacturing 5,701,247 12.1 68,556 5,632,691 11.8
Agriculture, forestry, fisheries, and mining 133,829 0.3 (11,348) 145,177 0.3
Construction 714,741 1.5 (56,244) 770,985 1.6
Transportation, communications and public enterprises 3,988,144 8.5 375,748 3,612,396 7.5
Wholesale and retail 3,691,342 7.8 (122,938) 3,814,280 8.0
Finance and insurance 5,828,625 12.3 (106,094) 5,934,719 12.4
Real estate and goods rental and leasing 6,185,671 13.1 (197,692) 6,383,363 13.3
Various services 3,197,121 6.8 (239,318) 3,436,439 7.2
Municipalities 949,628 2.0 (156,123) 1,105,751 2.3
  Others 16,827,603 35.6 (187,658) 17,015,261 35.6
Overseas offices and Japan offshore banking accounts 9,193,536 100.0 1,806,989 7,386,547 100.0
Public sector 47,641 0.5 28,154 19,487 0.3
Financial institutions 624,804 6.8 69,042 555,762 7.5
Commerce and industry 7,828,495 85.2 1,581,799 6,246,696 84.6
  Others 692,595 7.5 127,996 564,599 7.6
Total   56,411,492 - 1,173,879 55,237,613 -
 
Risk-Monitored Loans (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011  
    (a) Ratio (a) - (b) (b) Ratio
Domestic offices

(excluding Japan offshore banking account)

1,064,161 100.0 87,993 976,168 100.0
Manufacturing 121,668 11.4 15,345 106,323 10.9
Agriculture, forestry, fisheries, and mining 3,108 0.3 (685) 3,793 0.4
Construction 76,350 7.2 6,057 70,293 7.2
Transportation, communications and public enterprises 148,702 14.0 61,355 87,347 9.0
Wholesale and retail 153,463 14.4 35,114 118,349 12.1
Finance and insurance 13,589 1.3 3,645 9,944 1.0
Real estate and goods rental and leasing 307,679 28.9 (9,636) 317,315 32.5
Various services 152,035 14.3 (22,875) 174,910 17.9
Municipalities - - - - -
  Others 87,562 8.2 (329) 87,891 9.0
Overseas offices and Japan offshore banking accounts 78,892 100.0 (35,544) 114,436 100.0
Public sector - - - - -
Financial institutions 3,181 4.0 (2,244) 5,425 4.7
Commerce and industry 75,710 96.0 (33,300) 109,010 95.3
  Others - - - - -
Total 1,143,053 - 52,448 1,090,605 -

(2) Problem assets based on the Financial Reconstruction Law classified by industry, and reserve ratio

           
SMBC non-consolidated       (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011
      (a) Reserve ratio (a) - (b) (b)
Domestic offices

(excluding Japan offshore banking account)

1,094,392 74.3 94,681 999,711
Manufacturing 127,033 82.7 15,619 111,414
Agriculture, forestry, fisheries, and mining 3,117 56.7 (911) 4,028
Construction 78,924 77.1 4,574 74,350
Transportation, communications and public enterprises 148,851 69.7 60,979 87,872
Wholesale and retail 160,356 70.6 38,838 121,518
Finance and insurance 14,428 53.5 3,624 10,804
Real estate and goods rental and leasing 317,476 85.0 (3,412) 320,888
Various services 154,678 58.7 (23,999) 178,677
Municipalities - - - -
  Others 89,523 100.0 (633) 90,156
Overseas offices and Japan offshore banking accounts 88,454 70.4 (38,104) 126,558
Public sector - - - -
Financial institutions 3,640 98.9 (2,243) 5,883
Commerce and industry 84,813 69.3 (35,861) 120,674
  Others - - - -
Total     1,182,847 73.8 56,578 1,126,269
Notes 1. Problem assets based on the Financial Reconstruction Law include loans, acceptances and guarantees, suspense payments,
and other credit-type assets.
2. Reserve ratio = (Reserve for possible loan losses) / (Assets excluding amounts recoverable due to guarantees, collateral and others) X 100
Reserve for possible loan losses is sum of general reserve for substandard loans and specific reserve.
 
 
 
SMBC non-consolidated (Millions of yen)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Consumer loans 15,206,143 (163,141) 15,369,284
Housing loans 14,336,810 (153,958) 14,490,768
  Residential purpose 11,196,588 54,930 11,141,658
  Other consumer loans 869,332 (9,184) 878,516
 
 
 
SMBC non-consolidated     (Millions of yen, %)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Outstanding balance 33,230,726 (582,692) 33,813,418
Ratio to total loans 70.4 (0.3) 70.7
Note Outstanding balance does not include loans at overseas offices and Japan offshore banking accounts.
17. Loan Portfolio, Classified by Country      
       
SMBC non-consolidated
 
(1) Loans to specific overseas countries
 

(Table Omitted)

 
(2) Loans outstanding, classified by major domicile
          (Millions of yen, %)
Mar. 31, 2012     Mar. 31, 2011  
    (a) Ratio (a) - (b) (b) Ratio
Asia 3,103,175 31.3 786,725 2,316,450 28.1
Indonesia 121,478 1.2 34,063 87,415 1.0
Thailand 322,327 3.2 11,414 310,913 3.8
Korea 264,840 2.7 70,152 194,688 2.4
Hong Kong 839,154 8.5 214,644 624,510 7.6
China 200,487 2.0 109,349 91,138 1.1
Singapore 745,226 7.5 194,390 550,836 6.7
India 257,247 2.6 68,779 188,468 2.3
  Others 352,412 3.6 83,934 268,478 3.2
Oceania 680,168 6.9 68,952 611,216 7.4
North America 2,915,121 29.4 509,392 2,405,729 29.2
Central and South America 981,138 9.9 83,656 897,482 10.9
Brazil 163,050 1.7 34,974 128,076 1.6
Panama 595,748 6.0 27,115 568,633 6.9
  Others 222,339 2.2 21,567 200,772 2.4
Western Europe 1,318,001 13.3 138,930 1,179,071 14.3
Eastern Europe 352,850 3.5 84,182 268,668 3.3
Russia 315,079 3.1 91,961 223,118 2.7
  Others 37,770 0.4 (7,780) 45,550 0.6
Others 563,640 5.7 8,236 555,404 6.8
Total 9,914,094 100.0 1,680,071 8,234,023 100.0
Note Classified by domicile of debtors.
 
(3) Problem assets based on the Financial Reconstruction Law, classified by domicile
 

Table Omitted

 
 
18. Balance of Deposits and Loans      
           
SMBC non-consolidated
 
(1) Balance of deposits and loans
 
        (Millions of yen, %)
FY3/2012   FY3/2011
      (a) (a) - (b) (b)
Deposits (period-end balance) 75,804,088 1,767,619 74,036,469
Deposits (average balance) 73,565,472 4,102,505 69,462,967
  Domestic units 64,890,957 3,212,144 61,678,813
Loans (period-end balance) 56,411,492 1,173,879 55,237,613
Loans (average balance) 56,658,263 423,216 56,235,047
  Domestic units 46,332,489 (1,204,512) 47,537,001
Note Deposits do not include "negotiable certificates of deposit."
 
(2) Balance of deposits, classified by type of depositor
        (Millions of yen)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Domestic deposits 74,721,212 1,672,215 73,048,997
Individual 37,696,735 1,043,058 36,653,677
  Corporate 37,024,477 629,157 36,395,320
Note Figures are before adjustment on interoffice accounts in transit.
Note Excludes "negotiable certificates of deposit" and Japan offshore banking accounts.
 
(Reference)   (Billions of yen)
Mar. 31, 2012   Mar. 31, 2011
      (a) (a) - (b) (b)
Balance of investment trusts 2,735.8 (303.6) 3,039.4
  Balance to individuals 2,421.5 (303.5) 2,725.0
Note Balance of investment trusts is recognized on a contract basis and measured according to each
Note fund's net asset balance at term-end.
 
        (Billions of yen)
FY3/2012   FY3/2011
      (a) (a) - (b) (b)
Sales of investment trusts to individuals 971.8 (156.3) 1,128.1
           
Sales of Pension-type insurance 176.6 (15.5) 192.1

19. Number of Directors and Employees

SMBC non-consolidated            
Mar. 31, 2012   Mar. 31, 2011
    (a) (a) - (b) (b)
Directors and auditors*1 24 (1) 25
Executive officers*2 59 (1) 60
Employees*3 22,686 162 22,524
*1 Include those of SMFG.
*2 Exclude board members.
*3 Include overseas local staff but exclude executive officers, contract employees, and temporary staff.
Number of employees is reported on the basis of full-time workers.

20. Number of Offices

SMBC non-consolidated            
Mar. 31, 2012   Mar. 31, 2011
    (a) (a) - (b) (b)
Domestic branches*1 437 2 435
Domestic sub-branches and agents*2 160 (6) 166
Overseas branches 15 - 15
Overseas sub-branches 10 3 7
Overseas representative offices 10 (1) 11
*1 Branches specialized in receiving money transfers, controlling ATMs in convenience stores, and international
business operations are excluded.
*2 Number of SMBC's bank agents.
 
(Reference)      
Sumitomo Mitsui Banking Corporation Europe Limited 5 1 4
Sumitomo Mitsui Banking Corporation (China) Limited 12 1 11
21. Deferred Tax Assets              
    (Reference)
(1) Deferred Tax Assets on the Balance Sheet     (Billions of yen) Temporary differences
   
SMBC Non-consolidated     Mar. 31, 2012 Change from Mar. 31, 2011 Mar. 31, 2011 Mar. 31, 2012
(a) Total deferred tax assets (b-c) 1 368.2 (161.7) 529.9  
(b) Subtotal of deferred tax assets   2 985.7 (330.4) 1,316.1 2,661.3
Reserve for possible loan losses 3 219.4 (32.6) 252.0 605.9
Write-off of loans 4 91.4 (55.6) 147.0 245.1
Taxable write-off of securities 5 436.5 (118.3) 554.8 1,218.1
Reserve for employee retirement benefits 6 50.7 (6.5) 57.2 139.7
Depreciation 7 5.0 (3.1) 8.1 13.6
Reserve for possible losses on investments 8 3.6 (2.0) 5.6 10.2
Net unrealized losses on other securities 9 50.8 5.5 45.3 139.4
Net deferred losses on hedges 10 16.9 11.0 5.9 47.7
Net operating loss carryforwards 11 36.5 (123.5) 160.0 38.0
  Others   12 74.9 (5.3) 80.2 203.6
  (c) Valuation allowance   13 617.5 (168.7) 786.2  
(d) Total deferred tax liabilities   14 182.8 29.8 153.0 512.3
Gain on securities contributed to employee retirement benefits trust 15 36.2 (5.2) 41.4 101.8
Net unrealized gains on other securities 16 128.6 39.6 89.0 361.6
Net deferred gains on hedges 17 - - - -
  Others   18 18.0 (4.6) 22.6 48.9
Net deferred tax assets

(Balance sheet amount)

(a-d) 19 185.4 (191.5) 376.9  
Amount corresponding to the deferred tax assets shown in line 10 (*1) 20 16.9 11.0 5.9 47.7
Amount corresponding to the deferred tax liabilities shown in line 16 (*2) 21 (107.6) (33.0) (74.6) (388.7)
  Net deferred tax assets excluding the amount shown in line 20 and 21 22 276.1 (169.5) 445.6 715.4
 
Consolidated          
(e) Net deferred tax assets   23 350.2 (274.0) 624.2
(f) Tier I capital   24 6,274.4 (49.6) 6,324.0
  Net deferred tax assets / Tier I capital (e/f) 25 5.6% (4.3)% 9.9%
 
*1 Companies may consider net deferred losses on hedges to be collectable, in case they assess the collectability of deferred tax assets on the basis of their future taxable income as stipulated in examples (4) proviso of the practical guidelines on assessing the collectability of deferred tax assets issued by the JICPA.

(ASBJ Guidance No.8 "Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet")

*2 Deferred tax assets are recognized on the balance sheet on a net basis after offsetting against deferred tax liabilities arising from net unrealized gains on other securities. But the collectability is assessed for the gross deferred tax assets, before offsetting against deferred tax liabilities.

(JICPA Auditing Committee Report No.70 "Auditing Treatment Regarding Application of Tax Effect Accounting to Valuation Differences on Other Securities and Losses on Impairment of Fixed Assets")

*3 The corporate income tax rate will be lowered and a special restoration surtax will be imposed from the fiscal year beginning on or after April 1, 2012. As a result, the effective income tax rate for calculation of SMBC's deferred tax assets and deferred tax liabilities, previously 40.63%, is now 37.94% for the temporary differences that are considered to be reversible during FY3/2013 to FY3/2015, and 35.57% for the temporary differences that are considered to be reversible after April 1, 2015 and thereafter.
 

(2) Reason for Recognition of Deferred Tax Assets

                           
(a) Recognition Criteria Practical Guideline, examples (4) proviso
                         
(1)

SMBC has significant tax loss carryforwards resulting from taking the measures described below in order to quickly strengthen its financial base, and are accordingly judged to be attributable to extraordinary factors. As a result, with regard to temporary differences which are considered to be reversible, SMBC recognized deferred tax assets within the limits of the estimated future taxable income for the period (approximately 5 years) pursuant to the practical guidelines on assessing the collectability of deferred tax assets issued by the JICPA

("Practical Guidelines") (*1).

(a) Disposal of Non-performing Loans
SMBC established internal standards for write-offs and provisions based on self-assessment in accordance with the "Prompt Corrective Action" adopted in FY3/1999 pursuant to the law concerning the maintenance of sound management of financial institutions (June 1996). SMBC has been aggressively disposing of non-performing loans and bolstering provisions against the risk of asset deterioration under the severe business environment of a prolonged sluggish economy.
In addition, pursuant to the government's "Program for Financial Revival" of October 2002, SMBC accelerated the disposal of non-performing loans in order to reduce the problem asset ratio to half by the end of FY3/2005. As a result, SMBC achieved this target 6 months ahead of schedule, in the first half of FY3/2005.
In these processes, the amount of taxable disposals of non-performing loans (*2) increased and accumulated. Afterwards, despite of the increased amount of the taxable disposal due to the credit cost, the realized amount of taxable disposals also increased steadily.
(b) Disposal of Unrealized Losses on Stocks
SMBC has been accelerating its effort to reduce stockholdings in order to lower the risk of stock price fluctuations, and to comply, at an early date, with the regulation limiting stockholdings that was adopted in FY3/2002.
During FY3/2003, SMBC sold stocks and reduced the balance by approximately 1.1 trillion yen, and also disposed in lump sum unrealized losses on stocks of approximately 1.2 trillion yen by writing off impaired stocks and using the gains on the March 2003 merger. Consequently, SMBC complied with the regulation limiting stockholdings at the end of FY3/2003, before the deadline.
As a result, the outstanding balance of taxable write-offs of securities (*2) increased temporarily from approximately 0.1 trillion yen as of March 31, 1999 to approximately 1.5 trillion yen as of March 31, 2003. Afterwards, despite of the increased amount of the taxable disposal resulting from the reducing the balance of the stocks and securities, taxable write-offs of securities carried out in the past were realized through the sales of the securities stocks.
(2) Consequently, tax loss carryforwards (*2) amounted to approximately 40 billion yen as of March 31, 2012. No tax loss carryforwards related to corporate taxes have expired in the past.
*1 JICPA Auditing Committee Report No.66 "Auditing Treatment Regarding Judgment of Realizability of Deferred Tax Assets"
*2 Corresponds to "Temporary differences" in the table on the previous page.
   
(b) Period for Future Taxable Income to be estimated 5 years
 
(c) Accumulated Amount of Estimated Future Taxable Income before Adjustments for the Next 5 Years
          (Billions of yen)            
          Estimates of next 5 years [Basic Policy]
Banking profit (before provision for 1 3,650.0 (1) Estimate when the temporary differences will be reversed
general reserve for possible loan losses)     (2) Conservatively estimate the taxable income before adjustments for
A Income before income taxes 2 1,972.4 the next 5 years
            (a) Rationally make earnings projection for the next five years, based on internal management plans.
B Adjustments to taxable income 3 189.0
(excluding reversal of temporary (b) Reduce the earnings projection by reasonable amount, reflecting the uncertainty of the projection.
  differences as of Mar. 31, 2012)    
C Taxable income before adjustments 4 2,161.4 (c) Add the necessary adjustments if any.
  (A+B)       (3) Calculate and record the amount of "deferred tax assets" by multiplying
          effective tax rate and the taxable income before adjustments estimated
Deferred tax assets corresponding to 5 802.2 above.
taxable income before adjustments                
 
 
(Reference) Income of final return before deducting operating loss carryforwards for the last 5 years
                        (Billions of yen)
            FY3/2008 FY3/2009 FY3/2010 FY3/2011 FY3/2012
Income of final return

before deducting operating loss carryforwards

746.7     350.4 615.7 637.8 308.8
Notes 1. (Income of final return before deduction of operating loss carryforwards)
= (Taxable income before adjustments for each fiscal year) - (Temporary differences to be reversed for each fiscal year)
2. Since the final declaration for the corporate income tax is done by the end of June, the figures for FY3/2012 are estimated.
 
22. Earnings Forecast for FY3/2013
       
(1) Earnings
 
Consolidated     (Billions of yen)
FY3/2013 Forecast FY3/2012
    1H FY3/2013   Result
Ordinary profit 460.0 910.0 935.6
Net income 250.0 480.0 518.5
 
(Reference)
SMBC non-consolidated     (Billions of yen)
FY3/2013 Forecast FY3/2012
    1H FY3/2013   Result
Gross banking profit 730.0 1,470.0 1,532.5
Expenses (360.0) (720.0) (719.5)
Banking profit (before provision for

general reserve for possible loan losses)

370.0 750.0 813.0
Ordinary profit 310.0 600.0 695.3
Net income 200.0 380.0 478.0
         
Total credit cost (*) (30.0) (100.0) (58.6)
*

(Provision for general reserve for possible loan losses) + (Credit costs) +
(Gains on reversal of reserve for possible loan losses)

+ (Recoveries of written-off claims)
 
(2) Dividends
 
        (Yen)
FY3/2013 Forecast FY3/2012
    Interim Annual Annual

Result

Dividend per share for common stock 50 100 100
 
(Reference)     (Billions of yen)
Total dividend 70.5 141.0 138.7
 

(Reference 1) FY3/2012 performance and FY3/2013 management policy

Management and financial objectives of medium-term management plan (FY3/2012-2014, announced May 2011)

Management objectives

  • Aim for top quality in strategic business areas
  • Establish a solid financial base and corporate infrastructure to meet the challenges of financial regulations and highly competitive environment

Financial objectives

  • To improve and seek a balance between financial soundness, profitability and growth

FY3/2012 summary: A good start for the first year of the medium-term management plan

Overview of FY3/2012 financial performance

SMBC non-consolidated

Gross banking profit - Increased overall in the Marketing Units led by International Banking Unit; high level of profit maintained in the Treasury Unit

Total credit cost - Decreased due to an improvement in asset quality and reversal of provisions

SMFG consolidated

Net income - Increased due to good performance of SMBC, despite negative impact of additional provisions for refund claims in Promise and Cedyna

[Table omitted ]

Progress of strategic initiatives

  • Development of international business

- Established 4 marketing offices in emerging markets, mainly in Asia, and increased overseas headcount

- Enhanced business promotion platform for Japanese corporations in Greater China Area

- Promoted transaction services business for Japanese corporations

- Agreed to acquire aircraft leasing business from RBS Group

- Diversified and enhanced foreign-currency funding sources

  • Synergies between SMBC and SMBC Nikko

- Established capability within SMBC Nikko for handling global offerings by Japanese corporations

- Developed the business and capital alliance with Moelis & Company for cross-border M&A and other advisory services

- Strengthened cooperation between SMBC and SMBC Nikko in securities intermediary business

  • Credit card / consumer finance business

- Fully prepared for refund claims and increased SMFG's stakes in Promise and Cedyna to 100% to strengthen group's earnings base

"3Cs" Management principles

Team SMFG, Team SMBC

  • Cross Selling
  • Credit Control
  • Cost Control

Progress towards financial targets in the medium-term management plan

[Table omitted ]

Basic policy for FY3/2013: Move forward steadily towards the targets of the medium-term management plan, capturing opportunities with proactive ideas and actions

  • "Development of international business" and "synergies between SMBC and SMBC Nikko" continue to be our growth drivers, while focusing on the "3Cs"

Strengthen initiatives in strategic business areas

Financial consulting for retail customers

  • Expand product line-up in securities intermediary business, reinforce insurance business at SMBC
  • Grow marketing function for business owners by leveraging financial consultants assigned to corporate business offices
  • Promote collaboration between SMBC and Promise

Tailor-made solutions for corporate clients

  • Strengthen responsiveness to customers by reorganizing marketing framework and optimizing staff allocation
  • Effectively accommodate diversified and sophisticated financing needs of clients from the planning stage

Commercial banking in emerging markets, especially Asia

  • Promote collaboration between domestic and overseas offices and between business units to further support clients
  • Reinforce growing businesses including infrastructure finance and trade finance
  • Secure stable foreign-currency funding sources to accommodate an increase of overseas assets

Broker-dealer/ Investment banking

  • Promote collaboration between SMBC and SMBC Nikko in areas including investment banking and sales of investment products
  • Strengthen cross-border M&A and other advisory services by leveraging alliance with Moelis & Company

Non-asset businesses (payment & settlement services and asset management)

  • Strengthen planning and marketing functions of transaction services business by establishing
  • Transaction Business Planning Department and Transaction Business Division
  • Promote collaboration between overseas alliance partners and our group companies in asset management business

Establish a solid financial base and corporate infrastructure

Extend best practice in management throughout the SMFG group

  • Diversify and enhance business portfolio, promote collaboration among group companies, and reinforce internal management system

Develop corporate infrastructure to support growing international network

  • Reinforce corporate infrastructure for sustainable growth including profitability management, risk management, and human resource development

Maximize operational efficiency

  • Pursue operational efficiency by, for example, reinforcing front-line sections and streamlining headquarters
(Reference 2) Exposure to Securitized Products
                   
1. Securitized Products
 
Consolidated   (Billions of yen)
      March 31, 2012 March 31, 2011
     

Balances (after provisions and

write-offs)

Change

from

Mar. 2011

Overseas

Change

from

Mar. 2011

Net unrealized gains/losses (after write-offs)

Change

from

Mar. 2011

Balances (after provisions and

write-offs)

Overseas

Net unrealized gains/losses (after

write-offs)

  Cards   49.4 46.8 49.4 46.8 0.2 0.3 2.6 2.6 (0.1)
  CLO   0.7 (0.8) 0.7 (0.8) 1.5 0.3 1.5 1.5 1.2
  CMBS 19.4 6.7 7.4 7.4 0.6 0.5 12.7 - 0.1
  RMBS, etc. 0.1 (0.0) 0.1 (0.0) 0.1 (0.2) 0.1 0.1 0.3
  Total 69.6 52.7 57.6 53.4 2.4 0.9 16.9 4.2 1.5
 
Notes 1. Balance of sub-prime related products is approx. 0.1 billion yen.
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, etc.

4. No loss was recorded on securitized products in FY3/2012.
 
2. Transactions with Monoline Insurance Companies
                     
(1) Credit derivatives (Credit Default Swap ["CDS"]) transactions with monoline insurance companies
 
Consolidated  

(Billions of yen)

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

March 31, 2011

 

Net exposure

Change

from

Mar. 2011

Reserve for possible loan losses Net exposure Reserve for possible loan losses Amount of reference assets

Change

from

Mar. 2011

Amount of reference assets
Exposure to CDS transactions with monoline insurance companies 3.0 0.1 1.0 2.9 0.8 236.1 (85.2) 321.3
 
Notes 1. Reference assets do not include subprime-related assets.
2. SMFG recorded loss on those transactions of approx. 0.2 billion yen in FY3/2012.

(2) Loans and investments guaranteed by monoline insurance companies etc.

             
Consolidated   (Billions of yen)
March 31, 2012 March 31, 2011
Exposure

Change

from

Mar. 2011

Reserve for possible loan losses Exposure Reserve for possible loan losses
       

 

     
Loans and investments guaranteed or insured by monoline insurance companies 7.6 (1.8) 0.0 9.4 0.0
 
Note Underlying assets do not include subprime-related assets.
 
3. Leveraged Loans
                     
Consolidated   (Billions of yen)
March 31, 2012 March 31, 2011
Loans

Change from Mar. 2011

Undrawn commitments

Change from Mar. 2011

Reserve for possible loan losses Loans Undrawn commitments Reserve for possible loan losses
Europe 151.2 (45.7) 20.7 (2.7) 4.7 196.9 23.4 7.5
Japan 131.0 (52.5) 22.3 6.8 1.3 183.5 15.5 12.7
United States 75.6 (1.6) 51.1 (15.0) 5.0 77.2 66.1 11.0
Asia

(excluding Japan)

62.0 (3.4) 5.7 (2.0) - 65.4 7.7 1.0
Total 419.8 (103.2) 99.8 (12.9) 11.0 523.0 112.7 32.2
 
Notes 1. Above figures include the amount to be sold of approx. 8 billion yen.

In FY3/2012, we sold leveraged loans of approx. 34 billion yen, and loss on the sale amounted to approx. 13 billion yen.

2. Above figures do not include leveraged loans which are included in underlying assets of "1. Securitized Products" shown on page 21.
3. Reserves for possible loan losses do not include general reserve for possible loan losses against normal borrowers.
 
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' financing needs. Most of the reference assets are high-grade claims of corporate clients and do not include sub-prime loan related assets.
 
 
 
Consolidated   (Billions of yen)
March 31, 2012 March 31, 2011
Notional amount

Change from

Mar. 2011

Overseas

Change from

Mar. 2011

Notional amount

Overseas

Reference assets related to

Asset Backed Commercial

Paper (ABCP) Programs

as Sponsor

599.9 126.7 230.9 36.2 473.2 194.7
 
(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 approx. 46 billion yen.

 
5. Others
We have no securities issued by Structured Investment Vehicles.
(Reference 3) Financial Statements of SMBC
  1. Condensed Balance Sheet
  SMBC non-consolidated  

(Millions of yen)

 

        March 31, 2012 (A)   March 31, 2011 (B)  

Change (A-B)

                       
Assets
Cash and due from banks 6,618,725 8,102,186 (1,483,461)
Call loans 526,068 261,540 264,528
Receivables under resale agreements 203,768 96,665 107,103
Receivables under securities borrowing transactions 726,677 402,928 323,749
Bills bought 21,171 26,580 (5,409)
Monetary claims bought 626,146 509,773 116,373
Trading assets 3,777,835 3,623,461 154,374
Money held in trust 7,253 10,316 (3,063)
Securities 42,441,134 39,853,432 2,587,702
Loans and bills discounted 56,411,492 55,237,613 1,173,879
Foreign exchanges 1,024,074 1,000,964 23,110
Other assets 1,981,695 1,994,996 (13,301)
Tangible fixed assets 730,939 717,568 13,371
Intangible fixed assets 154,892 142,321 12,571
Deferred tax assets 185,428 376,899 (191,471)
Customers' liabilities for acceptances and guarantees 4,299,577 3,852,949 446,628
Reserve for possible loan losses (689,215) (711,522) 22,307
  Reserve for possible losses on investments   (10,195)   (13,769)   3,574  
  Total assets   119,037,469   115,484,907   3,552,562  
Liabilities
Deposits 75,804,088 74,036,469 1,767,619
Negotiable certificates of deposit 8,588,746 8,406,816 181,930
Call money 1,877,900 2,272,758 (394,858)
Payables under repurchase agreements 562,867 503,315 59,552
Payables under securities lending transactions 4,539,644 4,760,920 (221,276)
Commercial paper 1,193,249 337,120 856,129
Trading liabilities 3,503,085 3,015,835 487,250
Borrowed money 5,181,294 5,952,326 (771,032)
Foreign exchanges 341,400 272,253 69,147
Short-term bonds 19,999 40,999 (21,000)
Bonds 4,215,610 3,670,355 545,255
Due to trust account 443,723 216,171 227,552
Other liabilities 2,693,465 2,521,061 172,404
Reserve for employee bonuses 10,798 10,019 779
Reserve for executive bonuses 609 692 (83)
Reserve for point service program 2,503 1,586 917
Reserve for reimbursement of deposits 9,854 8,872 982
Deferred tax liabilities for land revaluation 39,385 45,091 (5,706)
  Acceptances and guarantees   4,299,577   3,852,949   446,628  
  Total liabilities   113,327,806   109,925,614   3,402,192  
Net assets
Capital stock 1,770,996 1,770,996 -
Capital surplus 2,481,273 2,481,273 -
Capital reserve 1,771,043 1,771,043 -
Other capital surplus 710,229 710,229 -
Retained earnings 1,255,108 935,992 319,116
Other retained earnings 1,255,108 935,992 319,116
Voluntary reserve for retirement allowances 1,656 1,656 -
Voluntary reserve 219,845 219,845 -
Retained earnings brought forward 1,033,606 714,490 319,116
Treasury stock (210,003) - (210,003)
Total stockholders' equity 5,297,375 5,188,262 109,113
 
Net unrealized gains (losses) on other securities 281,109 229,885 51,224
Net deferred gains (losses) on hedges 105,391 121,109 (15,718)
Land revaluation excess 25,786 20,035 5,751
  Total valuation and translation adjustments   412,288   371,030   41,258  
  Total net assets   5,709,663   5,559,293   150,370  
  Total liabilities and net assets   119,037,469   115,484,907   3,552,562  
Note Amounts less than 1 million yen are rounded down. Figures in parenthesis indicate the amount of loss or decrease.
 
2. Condensed Income Statement
             
SMBC non-consolidated  

(Millions of yen)

 

 

FY3/2012 (A)

 

FY3/2011 (B)

Change (A-B)

                       
  Ordinary income   2,018,585   2,108,724   (90,139)  
Interest income 1,239,535 1,259,403 (19,868)
Interest on loans and discounts 937,403 957,181 (19,778)
Interest and dividends on securities 226,631 240,380 (13,749)
Trust fees 1,736 2,299 (563)
Fees and commissions 453,877 439,770 14,107
Trading income 84,051 151,070 (67,019)
Other operating income 193,341 218,075 (24,734)
    Other income   46,043   38,105   7,938  
  Ordinary expenses   1,323,243   1,513,020   (189,777)  
Interest expenses 282,668 291,595 (8,927)
Interest on deposits 68,335 78,517 (10,182)
Fees and commissions payments 134,989 137,103 (2,114)
Trading losses - - -
Other operating expenses 22,384 110,177 (87,793)
General and administrative expenses 752,436 738,447 13,989
    Other expenses   130,763   235,696   (104,933)  
  Ordinary profit   695,342   595,704   99,638  
Extraordinary gains 2,456 1,863 593
  Extraordinary losses   5,806   8,728   (2,922)  
  Income before income taxes   691,992   588,839   103,153  
Income taxes - current 44,703 42,386 2,317
  Income taxes - deferred   169,315   125,273   44,042  
  Total income taxes   214,018   167,659   46,359  
  Net income   477,973   421,180   56,793  
Note Amounts less than 1 million yen are rounded down. Figures in parenthesis indicate the amount of loss or decrease.
 
3. Statement of Changes in Net Assets
                     
SMBC non-consolidated
 
Year ended March 31, 2012(Millions of yen)

 

Capital
surplus

Retained
earnings

 

 

Capital stock

Capital
reserve

Other capital
surplus

Other retained
earnings

Treasury
stock

Total stockholders'
equity

     

 

    Voluntary reserve for retirement allowances Voluntary reserve Retained earnings brought forward  
  Balance

at the beginning of the period

1,770,996 1,771,043 710,229 1,656 219,845 714,490 - 5,188,262
  Changes in the period                
    Cash dividends           (158,645)   (158,645)
    Net income           477,973   477,973
    Purchase of treasury stock             (210,003) (210,003)
    Transfer from land revaluation excess           (212)   (212)
    Net changes in the items other than stockholders' equity in the period                
  Net changes in the period - - - - - 319,115 (210,003) 109,112
  Balance

at the end of the period

1,770,996 1,771,043 710,229 1,656 219,845 1,033,606 (210,003) 5,297,375
 
(Millions of yen)
      Valuation and translation adjustments  

 

     

Net unrealized gains on other securities

  Net deferred gains (losses) on hedges   Land revaluation excess   Total valuation and translation adjustments

Total net assets

  Balance

at the beginning of the period

229,885 121,109 20,035 371,030 5,559,293
  Changes in the period          
    Cash dividends         (158,645)
    Net income         477,973
    Purchase of treasury stock         (210,003)
    Transfer from land revaluation excess           (212)
    Net changes in the items other than stockholders' equity in the period 51,223 (15,717) 5,751 41,257 41,257
  Net changes in the period 51,223 (15,717) 5,751 41,257 150,370
  Balance

at the end of the period

281,109 105,391 25,786 412,288 5,709,663
Note Amounts less than 1 million yen are rounded down. Figures in parenthesis indicate the amount of loss or decrease.
 
SMBC non-consolidated
                   
Year ended March 31, 2011
    (Millions of yen)

 

Capital
surplus

Retained
earnings

 

Capital
stock

Capital
reserve

Other capital
surplus

Other retained
earnings

Total stockholders'
equity

            Reserve for losses on overseas investments Voluntary reserve for retirement allowances Voluntary reserve Retained earnings brought forward  
  Balance

at the beginning of the period

1,770,996 1,771,043 702,514 0 1,656 219,845 482,983 4,949,040
  Changes in the period                
    Increase due to share exchange     7,715         7,715
    Transfer from reserve for losses on overseas investments       (0)     0 -
    Cash dividends             (191,173) (191,173)
    Net income             421,180 421,180
    Transfer from land revaluation excess             1,500 1,500
    Net changes in the items other than stockholders' equity in the period                
  Net changes in the period - - 7,715 (0) - - 231,506 239,222
  Balance

at the end of the period

1,770,996 1,771,043 710,229 - 1,656 219,845 714,490 5,188,262
 
  (Millions of yen)
    Valuation and translation adjustments  

 

    Net unrealized gains on other securities   Net deferred gains (losses) on hedges   Land revaluation excess   Total valuation and translation adjustments

Total net assets

Balance

at the beginning of the period

379,353 48,020 21,535 448,909 5,397,949
Changes in the period          
  Increase due to share exchange         7,715
  Transfer from reserve for losses on overseas investments         -
  Cash dividends         (191,173)
  Net income         421,180
  Transfer from land revaluation excess         1,500
  Net changes in the items other than stockholders' equity in the period (149,467) 73,088 (1,500) (77,878) (77,878)
Net changes in the period (149,467) 73,088 (1,500) (77,878) 161,343
Balance

at the end of the period

229,885 121,109 20,035 371,030 5,559,293
Note Amounts less than 1 million yen are rounded down. Figures in parenthesis indicate the amount of loss or decrease.
 
4. Market Value Information on Securities      
           
SMBC Non-consolidated
 
[1] Securities
In addition to "Securities" stated in the non-consolidated balance sheet, negotiable certificates of deposit classified as "Cash and due from banks" and beneficiary claims on loan trust classified as "Monetary claims bought" are included in the amounts below.
 
(1) Bonds classified as held-to-maturity
(Millions of yen)

Type

Mar. 31, 2012
              Balance sheet amount Fair value Net unrealized gains (losses)
Bonds whose fair value

is above the

balance sheet amount

Japanese government bonds 4,787,498 4,849,443 61,944
Japanese local government bonds 90,616 92,719 2,102
Japanese corporate bonds 215,627 219,573 3,945
        Subtotal   5,093,743 5,161,736 67,993
Bonds whose fair value

is below the

balance sheet amount

Japanese government bonds 70,020 69,930 (90)
Japanese local government bonds - - -
Japanese corporate bonds - - -
        Subtotal   70,020 69,930 (90)
Total 5,163,764 5,231,666 67,902
 
(2)Investments in subsidiaries and affiliates
(Millions of yen)
Mar. 31, 2012
              Balance sheet amount Fair value Net unrealized gains (losses)
Stocks of subsidiaries       61,661 50,402 (11,258)
Stocks of affiliates       32,819 22,578 (10,240)
Total 94,480 72,980 (21,499)
Note Stocks of subsidiaries and affiliates whose fair value is extremely difficult to determine.
 
                (Millions of yen)
        Balance sheet amount
Stocks of subsidiaries   2,099,169
Stocks of affiliates     101,297
Others       29,093
Total       2,229,560
These amounts are not included in "Investments of subsidiaries and affiliates" shown above since there are
no market prices and it is extremely difficult to determine their fair values.
 
(3) Other securities
  (Millions of yen)
      Type   Mar. 31, 2012
                Balance sheet amount   Acquisition cost   Net unrealized gains (losses)
Securities whose

balance sheet amount

is above the

acquisition cost

Stocks 1,123,341 656,469 466,871
Bonds 23,311,642 23,202,137 109,504
  Japanese government bonds 20,984,459 20,925,435 59,023
Japanese local government bonds 136,885 136,001 883
Japanese corporate bonds 2,190,297 2,140,700 49,597
Others     4,501,070 4,404,873 96,196
        Subtotal     28,936,053 28,263,480 672,572
Securities whose

balance sheet amount

is below the

acquisition cost

Stocks 922,246 1,160,665 (238,418)
Bonds 2,995,029 3,000,178 (5,148)
Japanese government bonds 2,630,960 2,631,507 (546)
Japanese local government bonds 1,672 1,679 (7)
Japanese corporate bonds 362,396 366,991 (4,594)
Others 2,060,646 2,100,671 (40,024)
        Subtotal     5,977,923 6,261,514 (283,590)
Total             34,913,977 34,524,995 388,982
 
  Note   1. Net unrealized gains (losses) on Other securities shown above include gains of 196 million yen that are

recognized in the statement of income by applying fair value hedge accounting.

2. Securities whose fair value is extremely difficult to determine.
      (Millions of yen)
    Balance sheet amount
Stocks   205,083
Others   321,917
Total   527,001
These amounts are not included in "Other securities" shown above since there are no market prices and it is
extremely difficult to determine their fair values.
 
(4) 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 recoverable. The fair value is recognized as the balance sheet amount and the amount of write-down is accounted for as valuation loss for this period. Valuation loss for this period is 23,468 million yen. 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 Fair value is lower than acquisition cost.
Issuers requiring caution Fair value is 30% or more lower than acquisition cost.
Normal issuers Fair value is 50% or more lower than acquisition cost.
 
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 currently bankrupt but 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 four categories of issuers
 
[2] Money held in trust
                 
Other money held in trust (Other than classified as trading or held-to-maturity purpose)
    (Millions of yen)
March 31, 2012        
   
        Balance sheet amount Acquisition cost Net unrealized gains (losses) of which

whose balance

sheet amount

is above the

acquisition cost

of which

whose balance

sheet amount

is below the

acquisition cost

Other money held in trust 5,805 5,852 (46) - (46)
 

5. Statements of Trust Assets and Liabilities

SMBC non-consolidated           (Millions of yen)
  March 31,   March 31,   Change
    2012 (A)   2012 (B)   (A-B)
Loans and bills discounted 235,829 237,383 (1,554)
Securities 424,478 444,664 (20,186)
Beneficiary claims 9,991 - 9,991
Securities held in custody accounts - 3,046 (3,046)
Monetary claims 621,656 548,973 72,683
Tangible fixed assets 7 22 (15)
Intangible fixed assets - 7 (7)
Other claims 1,529 2,474 (945)
Call loans 100,732 79,427 21,305
Due from banking account 443,723 216,171 227,552
Cash and due from banks 53,904 43,638 10,266
Others   0   284   (284)
Total Assets   1,891,853   1,576,094   315,759
Designated money trusts 821,292 615,685 205,607
Specified money trusts 228,033 176,511 51,522
Money in trusts other than money trusts 220,605 220,007 598
Security trusts - 3,221 (3,221)

Monetary claims trusts

617,858 554,703 63,155
Equipment trusts 24 45 (21)
Composite trusts   4,039   5,919   (1,880)
Total liabilities   1,891,853   1,576,094   315,759
 
Notes   1. Amounts less than 1 million yen are rounded down.
    2. SMBC has no co-operative trusts under other trust bank's administration.
3. SMBC does not handle any trusts with principal indemnification.

4. Balance of self-declaration of trust, which is not included in the table above,
was 85,721 million yen on March 31, 2012 and 57,547 million yen on March 31, 2011.

 

Some of the graphs/images may not be properly viewed. In that case, please visit the following website:

http://www.smfg.co.jp/english/investor/financial/latest_statement.html

Category Code: FR
Sequence Number: 326810
Time of Receipt (offset from UTC): 20120515T104916+0100

Contacts

Sumitomo Mitsui Bnkg

Contacts

Sumitomo Mitsui Bnkg