Sumitomo Mitsui Financial : Presentation Material with script

SMBC Group

IR Day

June 23, 2021

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All Rights Reserved.

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Agenda
Opening	Group CEO	Jun Ohta
P3	Retail	Senior Managing Executive Officer	Takashi Yamashita
P12	Wholesale	Senior Managing Executive Officer	Muneo Kanamaru
P20	Global Business	Senior Managing Executive Officer	Ryuji Nishisaki
P26	Global Markets	Senior Managing Executive Officer	Masamichi Koike
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2

Retail

Takashi Yamashita,

Senior Managing Executive Officer

Copyright © 2021 Sumitomo Mitsui Financial Group.

All Rights Reserved.

3

Progress of Medium-Term Management Plan

Financial Target

Net business	ROCET1	RWA
		profit
		FY3/23	FY3/23	In 3 years
JPY 305 bn	12%	+ JPY 0.4 tn
		Vs. FY3/20		Previous plan
	+ JPY 35 bn		JPY (0.3) tn
	KPI
			FY3/21	YoY	FY3/23
Balance of	JPY 16.7 tn	+ JPY 3.1 tn	JPY 18 tn
fee-based AUM
Credit card sales handled	JPY 20.8 tn	+ JPY 0.4 tn	JPY 31 tn
Balance of card loans	JPY 1.7 tn	JPY (0.1) tn	JPY 1.9 tn
# of digital channel users	7.3 mn	-	8 mn
		Utilization rate	42%	-	45%
Cost reduction from retail	JPY (7) bn	-	JPY (25) bn
branch reorganization

FY3/21 result

			(JPY bn)	FY3/21	YoY
		Gross profit	1,127.4	(48.7)
		Expenses	910.4	(24.1)
		(Overhead ratio)	80.8%	+1.3%
Net business profit	219.2	(24.4)
ROCET1		9.4%	+1.6%
RWA (JPY tn)		12.3	+0.1
			Key initiatives
Wealth	◼ Increase sales by capturing market growth

management ◼	Reform business model to enhance HNWI approach
	◼ Expand business with new products / services
Payment
		(e.g. numberless credit card)
Consumer	◼ Continue new initiatives including digital investment
finance
New	◼ Launched SMBC Elder Program (Apr.21)
business
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Financial targets of the Medium-Term Management Plan remain unchanged, although there are still negative impacts from COVID-19.

We are aiming to achieve net business profit of JPY 305 bn and ROCET1 of 12%.

Last fiscal year, gross profit declined by nearly JPY 50 bn due to the negative impact of COVID-19 in payment and consumer finance business.

In terms of expenses, we reduced base expenses through the utilization of remote/digital technology, etc., as well as the natural decrease of revenue- linked expenses.

Credit cost also decreased significantly in the consumer finance business because 1) domestic consumption declined sharply, 2) credit loss remained smaller than expected due to high liquidity of individuals.

Consequently, we were able to increase our bottom-line profit YoY. Furthermore, as RWA remained flat, ROCET1 has improved to 9.4%.

From here on, I would like to explain how we intend to generate stable earnings going forward.

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Roadmap to 2022

Outline

		Business environment		Growth beyond market average
Severe market environment
●NIRP / capital surplus ●thin margin ●severe competition	Group base cost reduction
Growth opportunities in low-growth domestic market	Competitive products / services
●Savings to asset building ●100-Year life era ●Digital & cashless
Enhance digitalization
	KPI

Balance of fee-based AUM

(JPY tn) ストック収益資産残高

In 3 years

20

+ JPY 4 tn

15

0

FY3/20

FY3/21

FY3/22

FY3/23

Credit card sales handled

買物取扱高

(JPY tn)

In 3 years

40

+ JPY 10 tn

20

0

FY3/20

FY3/21

FY3/22

FY3/23

	Card loan balance
(JPY tn)	カードローン残高	In 3years
	COVID-19	+ JPY 100 bn
2.0	impact

1.5	YoY
JPY (120) bn
0
FY3/20	FY3/21	FY3/22	FY3/23

Cost reduction of	FY3/23
retail branch reorganization
JPY (25) bn

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We assume that severe business environment will continue, such as the negative interest rate policy, thinner margins on fees, and intensifying competition resulting from the entry of IT companies.

Retail business is one of the few precious growing markets in Japan, where we could see the trend from savings to asset-building/wealth management, the expansion of needs in the 100-Year life era, and the advancement of digital/cashless services.

Our goal is that we will hold the number one position by making the most of our strong group companies : a) realizing growth beyond the market, b) pursuing a strong organization by reforming the group cost-structure, and c) enhancing digitalization and promoting products and services of the customers' benefit.

On the other hand, fine tuning is required in some areas to achieve the target of the Medium-Term Management Plan, given the impact of COVID-19.

In the wealth management business, which performed strongly in FY3/21, we aim to exceed the target of the Medium-Term Management Plan.

As to the credit card business, we were able to maintain our credit card sales handled even under COVID-19 by capturing the trend of the growing e- commerce market and the daily use of cashless payment. We aim to catch up with the Medium-Term Management Plan by capturing the recovery in consumption.

I assume it will take time until the balance of consumer finance recovers to its pre-COVID-19 level even if the consumption recovers, as it declined significantly in FY3/21.

We will aim to achieve our ROCET1 target by controlling credit cost and RWA, while offsetting the disadvantage of consumer finance business with wealth management business, retail branch reorganization, and other cost control initiatives.

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