Sumitomo Mitsui Financial : Earnings Document

Investor Meeting FY3/2024

May 17, 2024

Copyright © 2024 Sumitomo Mitsui Financial Group. All Rights Reserved.

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," "believe," "estimate," "expect," "intend," "may," "plan," "probability," "risk," "project," "should," "seek," "target," "will" and similar expressions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those expressed in or implied by such forward-looking statements contained or deemed to be contained herein. The risks and uncertainties which may affect future performance include: deterioration of Japanese and global economic conditions and financial markets; declines in the value of our securities portfolio; incurrence of significant credit-related costs; our ability to successfully implement our business strategy through our subsidiaries, affiliates and alliance partners; and exposure to new risks as we expand the scope of our business. 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 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 and our operating results, and investors' decisions.

Exchange rates (TTM)

	Mar. 23	Mar. 24
USD	133.54	151.33
EUR	145.75	163.24

Definitions

SMFG	Sumitomo Mitsui Financial Group, Inc.
SMBC	Sumitomo Mitsui Banking Corporation
SMBC Trust	SMBC Trust Bank
SMFL	Sumitomo Mitsui Finance and Leasing
SMBC Nikko	SMBC Nikko Securities
SMCC	Sumitomo Mitsui Card Company
SMBCCF	SMBC Consumer Finance
SMDAM	Sumitomo Mitsui DS Asset Management
SMBCAC	SMBC Aviation Capital
SMICC	SMFG India Credit Company
(Former Fullerton India)
Major local subsidiaries	SMBC Bank International, SMBC Bank EU,
SMBC (China)
Expenses	Excl. non-recurring losses
(non-consolidated)
Net business profit	Before provision for general reserve for possible
loan losses
Retail Business Unit (RT)	Domestic retail business
Wholesale Business Unit (WS)	Domestic wholesale business
Global Business Unit (GB)	International business
Global Markets Business Unit	Market / Treasury related businesses
(GM)

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Agenda

Ⅰ

Ⅱ

Ⅲ

Our Journey	///////////////////////////////////////////	4

Enhance Corporate Value	////////////////////////////	11
⚫Improve ROE	///////////////////////////////////////////////////////////// 13

• Control cost of capital

and increase expected growth rate	///////////////////////////	24
Capital Policy	///////////////////////////////////////////////////////////	33

ⅣFinancial Results of FY3/2024///////////////////////////////////////////////////// 40

Appendix	///////////////////////////////////////////////////////////	55

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Our Journey

Our Vision

Vision

A trusted global solution provider

committed to the growth of our customers and advancement of society

Integrity

Passion

Solidarity

Engage with stakeholders fairly and sincerely

Challenge for future growth with courage

Unite the power of individuals as One Team

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Business environment

Pursue opportunities for further growth as the environment has become more positive than our initial assumptions, while remaining aware of the potential for significant market and economic volatility.

Economy

and

Market

Corporate

governance

Domestic economy is improving /

Overseas economy remains stornger than expected

			FY3/25	FY3/26			Strategies
			NIRP continues
	Policy	Japan			remains unchanged
	0.1%	0.1%
	Rate
		3.5%	2.5%
	(Maximum)	U.S.
					Challenge for
	5.0%	4.5%
	FX rate	USD	JPY 120	JPY 120	Upper: Original	higher goals
			Bottom: Revised
	JPY 140	JPY 140
	Accelerate reduction of	Benefit from
	equity holdings	gains on stocks		⚫Sale of U.S. freight car leasing
	due to the high stock price		business
					FY3/24		⚫
							Impairment of goodwill on FE Credit

⚫Forward looking provision

Top risks

Volatile financial and	Change of globalism
economic environment
Decline in the vitality of	Increasing external threats
Japanese society

Address risks

proactively

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Simulation of rise on JPY interest rates

B/S JPY 145 tn (Mar. 24)	Impact on net interest income*1
(JPY tn)	(JPY bn)	Lift of NIRP	per +10bps

						JPY + 40 bn	JPY + 40 bn
					200
	Floating rate	Saving
	30			150
Loans		85
Prime rate
				100
	10	o/w
	Fixed rate	Interest-	Deposits	50
	20	bearing
	JGB etc.	80
				0
	10
		Time			(50)
	BoJ's	20
	Current			(100)
	current
	account	15
	60				(150)	Mar. 24	Assumptions
		Other deposits
		Capital funding	Floating rate loans	+10bps
		Market funding	Prime rate loans	-
	Yen swap etc.
			Fixed rate loans	-	+10bps increase
	Investment	Funding		BoJ's current account	+10bps	in both short-term
					JGB	+10bps	and long-term rate
				Saving deposits	+2bps
				Time deposits	+3bps

Initiatives for

rising interest rates

Loan

• Secure appropriate spread and improve profitability

JGB etc.

• Grasp market trends and flexibly control balances

Deposit

• Acquire sticky liquid deposits with Olive

*1 Based on assumption of no change in balance sheet	Copyright © 2024 Sumitomo Mitsui Financial Group.	7
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Results of FY3/24

Both consolidated net business profit and bottom-line profit saw a strong increase due to a favorable environment and the growth of every Business Unit, alongside proactive preparation for potential risks.

Breakdown of consolidated net business profit

(JPY bn)

	GM	1,560.2
GB	+49.8
+121.2
WS
+74.8
RT
+37.7
		Full-year
		target
		1,400
1,276.4
+283.8
o/w environment factors +140
(FX +80, FF rate +60)
FY3/23		FY3/24

Breakdown of bottom-line profit

(JPY bn)	Growth strategy	Gains of stocks*1
	+84	+66	962.9

		One-off
		items	Full-year
		(78)
		target
	Environment
805.8	• FX +45		920
• FF rate +40
FY3/23			FY3/24

(Major items)

• Impairment of FE Credit in Vietnam: (46)
• Additional impairment of Aircraft leasing*2: (11) Prepare for

⚫	Forward-looking provisions: (25)	potential risks

• Loss from sales of U.S. freight car leasing business: (82)
• Receipt of insurance claims on aircraft leasing*3: +48
• Absence ofone-off items in FY3/23*4: +38

*1	Incl. an impairment of JPY 39 bn for overseas investment
*2	Impaired the entire remainig book value *3 Received for 19 of the 34 aircraft previously leased to Russian airlines	Copyright © 2024 Sumitomo Mitsui Financial Group.	8
*4	Gains on change in equity (Bank of East Asia), impairment of aircraft leasing, impairment of branches, etc.	All Rights Reserved.

Target of FY3/25

Aim to achieve a bottom-line profit exceeding JPY 1 tn for the first time

by further strengthening core earnings on top of capturing a favorable business environment.

				Result		Target
	(JPY bn)		FY3/24		FY3/25	YoY
Consolidated net	1,560.2		1,620	+59.8)
business profit
Credit cost		274.0		260	(14.0)
Ordinary profit		1,466.1		1,560	+93.9)
Profit attributable to	962.9		1,060	+97.1)
owner of parent
[Assumption]			（Mar. 24）	(FY3/25)
Policy rate		Japan		0.1%			0.1％
(Max)		U.S.		5.5%			5.0%
FX		USD		JPY 151.33		JPY 140

Breakdown of bottom-line profit

(JPY bn)	1,060

Growth

strategy

＋70

Others

962.9

Environment
•	FX	(30)
•	Policy rate (Japan)	+30)
•	Policy rate (U.S.)	(7)

FY3/24	FY3/25
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Financial goal in five years

ROCET1 10.5％

12%

11%

10%

9.4％

ROE*18.3％excl. unrealized gains

7.5％

9%

8%

9%

Final year of the next Medium-Term Management Plan

ROE of 9%

Bottom-line profits

6.5％	7.0％
ROE

1,060 bn

962.9 bn

JPY 805.8 bn

JPY ↓

Interest rate ↑

Stock price ↑

Mid-1,100bn

JPY ↑

Interest rate ↓

Stock price ↓

far exceeding JPY 1tn

[Assumption]	FY3/26	FY3/29
Policy	Japan	0.1%	0.1-0.5%
rate
U.S.	4.5%	2.0-3.0%
(max)
FX	USD	140	120-140

Bottom-line profit

FY3/23FY3/24FY3/25

FY3/26 FY3/29

*1	Profits attributable to owners of parent	× 100

{(Total shareholders equity at the beginning of period + Foreign currency adjustments at the beginning of the period) + (Total shareholders equity at the end of the period + Foreign currency adjustments at the end of the period)} /2

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