Sumitomo Mitsui Financial : SMBC Group Annual Report 2022

MISSION &

VISION &

FIVE VALUES

"Our Group Mission," which serves as the foundation

for all of our corporate activities, portrays our mission toward stakeholders. "Vision" is our medium- to long-term aim for the Group.

"Five Values" represent the core values we share with all SMBC Group employees.

MISSION

VISION

FIVE VALUES

MISSION

We grow and prosper together with our customers, by providing services of greater value to them.

We aim to maximize our shareholders' value through the continuous

growth of our business.

We create a work environment that encourages and rewards diligent and highly-motivated employees.

We contribute to a sustainable society by addressing environmental and social issues.

VISION

A trusted global solution provider committed to the growth of our customers

and advancement of society

FIVE VALUES

Integrity

As a professional, always act with sincerity and a high ethical standard.

Customer First

Always look at it from the customer's point of view, and provide value based on their individual needs.

Proactive & Innovative

Embrace new ideas and perspectives, don't be deterred by failure.

Speed & Quality

Differentiate ourselves through the speed and quality of our decision-making and service delivery.

Team "SMBC Group"

Respect and leverage the knowledge and diverse talent of our global organization, as a team.

SMBC GROUP ANNUAL REPORT 2022 001

Executives of SMBC Nikko Securities Inc (SMBC Nikko Securities) were recently arrested and indicted on charges of violating the Financial Instruments and Exchange Act. SMBC Nikko Securities was also indicted on the same charges. On behalf of SMBC Group, I extend my deepest apologies to our customers and all other impacted parties for causing great concern and inconvenience.

We take these developments very seriously and will fully devote our resources to restoring the trust of customers and other stakeholders by supporting SMBC Nikko Securities in developing and implementing preventive measures that reflect the findings of investigations undertaken by the investigation committee established by SMBC Nikko Securities.

Jun Ohta

Director President and Group CEO

Contents

Value creation at SMBC Group

004 History of SMBC Group

1. SMBC Group's Value Creation Process

1. Message from Group CEO

1. Core Policy of the Medium-Term Management Plan (FY2020-FY2022)

1. Financial Highlights
2. ESG Highlights
3. Message from the Group CFO

1. Special Contents:
   Our Inorganic Strategy to Realize Sustainable Growth

1. Round-TableDiscussion with Outside Directors

1. Communication with Stakeholders

Business Strategies for Creating Value

1. Group Structure

1. Retail Business Unit

1. Wholesale Business Unit

1. Global Business Unit

1. Global Markets Business Unit

1. Opening up the Future of Finance through Digital

1. Creating Value through Sustainability Initiatives

1. Human Resource Strategies Supporting Value Creation

Corporate Infrastructure Supporting Value Creation

1. Corporate Governance

1. Risk Management

1. Compliance

1. Customer-OrientedInitiatives

1. Internal Audit
2. IT Governance

1. Financial Review

1. ESG Information

002 SMBC GROUP ANNUAL REPORT 2022

SMBC GROUP ANNUAL REPORT 2022 003

Value Creation at SMBC Group

History of SMBC Group

The roots of SMBC Group trace back more than four hundred years.

Value Creation at SMBC Group		Business Strategies for Creating Value		Corporate Infrastructure Supporting Value Creation

Drawing from the business spirit inherited from the pioneers at Mitsui and Sumitomo, SMBC Group has adapted to the changing needs of the times and shifted its businesses while enhancing the quality of its corporate infrastructure through sustainability initiatives.

Pursuit of Sustainable Growth through Utilization of Group Strength and Structural Reforms

2018

Group business reorganization

• THE MINATO BANK and Kansai Urban Banking Corporation deconsolidated
• Sumitomo Mitsui Finance and Leasing deconsolidated and converted into an equity-method aliate

Creating economic and social value by achieving growth with quality and sustainability

2021

Investment for growth in Asia in 2021

• Fullerton India became a consolidated subsidiary
• FE Credit became an equity method aliate
• Investment in RCBC

Strengthening the foundations of business

• Investment in Je‰eries
• Investment in ARA Asset Management

2022

Investment in SBI Holdings

Birth and Growth of Comprehensive Financial Group

2001

Sumitomo Mitsui Banking Corporation formed

2002

Sumitomo Mitsui Financial Group established

2004

SMBC Consumer Finance became an equity-method aliate

2009

SMBC Nikko Securities became a subsidiary

2002

Endorsement of United Nations Environment Programme Finance Initiative

2005

Establishment of voluntary Audit Committee

2007

Signing of United Nations Global Compact

2010

Listed on New York Stock Exchange

Expansion of the Scope of Operations and Target Markets

2012

SMBC Aviation Capital became a subsidiary

2012

SMBC Consumer Finance became a subsidiary

2013

SMBC Trust Bank became a subsidiary

2013

Bank BTPN became an equity-method aliate

2015

The Bank of East Asia became an equity-method aliate

2016

Sumitomo Mitsui Asset Management became a subsidiary

2015

First issuance of green bond

2015

Establishment of SMFG Corporate Governance Guideline

2016

Endorsement of Women's Empowerment Principles

2019

Sumitomo Mitsui DS Asset Management established through merger of Sumitomo Mitsui Asset Management and Daiwa SB Investments

2019

Bank BTPN became a subsidiary

2017

Release of Statement on Human Rights

2017

Release of Diversity and Inclusion Statement

2017

Endorsement of recommendations of Task Force on Climate-related Financial Disclosures

2017

Transition to Company with Three Committees Introduction of group-wide business units and CxO system

2018

Announcement of sector-specific financing policies

2019

Signing of Principles for Responsible Banking

2020

Revision of Our Mission

Establishment of SMBC Group Statement on Sustainability

2021

Appointment of Group CSuO and establishment of Sustainability Committee

2021

Commitment to achieving net zero emissions across investment and loan portfolio by 2050

2021

Participation in NZBA, TSVCM and PCAF

2022

Participation in the TNFD Forum

2022

Establishment of SMBC Group Environmental and Social Framework

004 SMBC GROUP ANNUAL REPORT 2022

SMBC GROUP ANNUAL REPORT 2022 005

Value Creation at SMBC Group

SMBC Group's

Value Creation

Process

Value Creation at SMBC Group		Business Strategies for Creating Value		Corporate Infrastructure Supporting Value Creation

SMBC Group defines sustainability as "creating a society in which today's generation can enjoy economic prosperity and well-being, and pass it on to future generations."

SMBC Group has identified "Environment," "Community" and "Next Generation" as priority issues (Materiality). In carrying out our Medium-Term Management Plan and achieving our KPIs in line with these priority issues, SMBC Group will generate social and economic value, and give back to all our stakeholders.

• Value Cycle

Value is returned to stakeholders by growing SMBC Group's corporate value.

It also further enhances intangible assets that are a source of this value, creating a virtuous cycle.

Dialog with stakeholders	Investment for growth	Capital policy
P042	P025	P028

Our businesses not only produce economic value, but also work to bring about the society SMBC Group seeks to create, and influence the way our customers and other stakeholders think and act.

Definition of Sustainability

Creating a society in which today's generation can enjoy

economic prosperity and well-being, and pass it on to future generations

Creation of a society in which

everyone can live with peace of mind

• Impact

• Outcome

Creating economic value

FY2022 Financial Targets

ROCET1	CET1 ratio
≧8.5%	c.10%
Base expenses	Bottom-line profit

<2019results ¥730billion

P022

Creating social value

Preservation of a healthy environment

• Meeting the target of 1.5℃ scenario and achieving a carbon-neutral society
• Reducing the risk of natural disasters

Creation of a society in which everyone can live with peace of mind

• Providing financial infrastructure that can be accessed with peace of mind
• Bringing about a prosperous society through credit creation

Fostering of people and industries that will shape the future

● Driving technology and innovation

P072

Preservation of				Fostering of people
a healthy				and industries that
environment				will shape the future

OUTCOME

Employees

OUTPUT

SMBC Group's Business Activities

Creation and intermediation of value

Society / Customers

Sustainability and Digital

IMPACT

Business Unit

Shareholders

Retail

Wholesale

Global

Global Market

Three Priority Issues

Environment

Community

Next Generation

Financial Capital

Human Capital

Intellectual Capital

Social and Relationship Capital

INPUT

Compliance

Risk

006 SMBC GROUP ANNUAL REPORT 2022

Corporate

management

governance

• Output

• BusinessModels Activities /

• Input

Four Business Units draw up and put in place business strategies for

each customer segment consistent with these three priority issues: "Environment," "Community" and "Next Generation." Sustainability & Digital is integrated into our business

activities as an issue to be addressed cross-functionally by all Business Units.

Implementation of the Medium-Term Management Plan

	Retail		Wholesale		Global		Global Market
	Balance of		Amount of		Revenue from multi-franchise		Green bonds
	fee-based AUM		Sustainable Finance		strategy target countries
			Total				Issue at least		Sustainability
	¥18trillion		¥1.4trillion		+15%		Once
	(+¥3 trillion)						per year
	Credit card sales handled		Number of companies		Retail deposits in Asia				Digital
			providing digital solutions
	¥31trillion		for corporate clients		x 3
		10,000
	(+¥10 trillion)		companies
									P018

We conduct our business activities by drawing on SMBC Group's intangible assets, including its brand and customer base cultivated over the course of the company's more than 400-year history, together with its robust financial capital.

Robust financials	Group history	Human Resources	IT
P118	P004	P084	P116

SMBC GROUP ANNUAL REPORT 2022 007