Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 (6-k)

October 31

December 31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of June 2022

Commission file number 001-34919

SUMITOMO MITSUI FINANCIAL GROUP, INC.

(Translation of registrant’s name into English)

1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan

(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:	Form 20-F ☒	or	Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):	☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):	☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.	Yes ☐		No ☒

* If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):	82-

The information, documents and exhibits set forth in this Form 6-K shall be deemed to be incorporated by reference into the prospectus forming a part of Sumitomo Mitsui Financial Group, Inc.’s Registration Statement on Form F-3 (File No. 333-261754) and to be a part of such prospectus from the date of the filing thereof, to the extent not superseded by documents or reports subsequently filed or furnished.

TABLE OF DOCUMENT(S) SUBMITTED

1.	Consolidated Financial Statements of Sumitomo Mitsui Financial Group, Inc. as of and for the years ended March 31, 2021 and 2022

2.	Independent Auditor’s Report on the Consolidated Financial Statements of Sumitomo Mitsui Financial Group, Inc. as of and for the years ended March 31, 2021 and 2022

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Sumitomo Mitsui Financial Group, Inc.

By:	/s/ Toru Nakashima
	Name:	Toru Nakashima
	Title:	Senior Managing Executive Officer Group Chief Financial Officer

Date: June 28, 2022

AUDITED CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED MARCH 31, 2021 AND 2022

On June 22, 2022, we published our consolidated financial statements as of and for the years ended March 31, 2021 and 2022 prepared in accordance with accounting principles generally accepted in Japan, or Japanese GAAP, as part of our annual securities report (yukashoken hokokusho) for the year ended March 31, 2022 filed by us with the relevant Japanese authorities. This document includes such audited consolidated financial statements and the notes thereto. Japanese GAAP differs in certain respects from International Financial Reporting Standards as issued by the International Accounting Standards Board, or IFRS, and generally accepted accounting principles in the United States. For a description of certain differences between IFRS and Japanese GAAP, see “Item 5.A Operating Results—Reconciliation with Japanese GAAP” in our most recent annual report on Form 20-F filed with the SEC.

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS


March 31	Millions of yen						Millions of U.S. dollars
March 31	2021			2022			2022
Assets:
Cash and due from banks	*5	¥	72,568,875	*5	¥	74,792,123	$	610,997
Call loans and bills bought			2,553,463			1,965,134		16,054
Receivables under resale agreements			5,565,119			6,035,507		49,306
Receivables under securities borrowing transactions			5,827,448			5,649,632		46,153
Monetary claims bought			4,665,244			5,370,377		43,872
Trading assets	2, 5		6,609,195	2, 5		7,351,878		60,059
Money held in trust			309			310		3
Securities	1, 2, 3, 5, *13		36,549,043	1, 2, 3, 5, *13		38,538,724		314,833
Loans and bills discounted	3, 4, 5, 6		85,132,738	3, 4, 5, 6		90,834,056		742,048
Foreign exchanges	3, 4		2,173,189	3, 4		2,812,104		22,973
Lease receivables and investment assets			236,392			228,608		1,868
Other assets	3, 5		8,590,785	3, 5		10,175,873		83,129
Tangible fixed assets	7, 8, *9		1,458,991	7, 8, *9		1,457,254		11,905
Assets for rent			465,147			456,108		3,726
Buildings			370,531			357,930		2,924
Land			457,920			449,380		3,671
Lease assets			23,589			24,018		196
Construction in progress			17,394			26,991		221
Other tangible fixed assets			124,408			142,824		1,167
Intangible fixed assets			738,759			898,817		7,343
Software			475,360			460,468		3,762
Goodwill			147,508			320,640		2,619
Lease assets			769			584		5
Other intangible fixed assets			115,120			117,123		957
Net defined benefit asset			565,534			623,045		5,090
Deferred tax assets			29,840			66,720		545
Customers’ liabilities for acceptances and guarantees	*3		9,978,396	*3		11,722,239		95,762
Reserve for possible loan losses			(659,017)			(817,784)		(6,681)

Total assets		¥	242,584,308		¥	257,704,625	$	2,105,258

(Continued)


March 31	Millions of yen						Millions of U.S. dollars
March 31	2021			2022			2022
Liabilities and net assets:
Liabilities:
Deposits	*5	¥	142,026,156	*5	¥	148,585,460	$	1,213,834
Negotiable certificates of deposit			12,570,617			13,069,796		106,771
Call money and bills sold			1,368,515			1,129,999		9,231
Payables under repurchase agreements	*5		15,921,103	*5		19,359,965		158,157
Payables under securities lending transactions	*5		2,421,353	*5		1,580,580		12,912
Commercial paper			1,686,404			1,866,366		15,247
Trading liabilities			5,357,649			6,377,968		52,103
Borrowed money	5, 10		17,679,690	5, 10		18,877,990		154,219
Foreign exchanges			1,113,037			1,216,893		9,941
Short-term bonds			585,000			442,000		3,611
Bonds	*11		9,043,031	*11		9,808,107		80,125
Due to trust account	5, 12		2,321,223	5, 12		2,443,873		19,965
Other liabilities			7,741,638			8,415,621		68,749
Reserve for employee bonuses			89,522			89,894		734
Reserve for executive bonuses			4,408			4,064		33
Net defined benefit liability			35,334			40,864		334
Reserve for executive retirement benefits			1,081			1,087		9
Reserve for point service program			24,655			25,000		204
Reserve for reimbursement of deposits			9,982			5,767		47
Reserve for losses on interest repayment			140,758			135,084		1,104
Reserves under the special laws			3,902			3,902		32
Deferred tax liabilities			532,193			275,570		2,251
Deferred tax liabilities for land revaluation	*7		29,603	*7		29,193		238
Acceptances and guarantees	*5		9,978,396			11,722,239		95,762

Total liabilities			230,685,262			245,507,293		2,005,615

Net assets:
Capital stock			2,341,274			2,341,878		19,131
Capital surplus			693,205			693,664		5,667
Retained earnings			6,492,586			6,916,468		56,502
Treasury stock			(13,698)			(13,402)		(109)

Total stockholders’ equity			9,513,367			9,938,608		81,191

Net unrealized gains (losses) on other securities			2,094,605			1,632,080		13,333
Net deferred gains (losses) on hedges			14,723			(80,061)		(654)
Land revaluation excess	*7		36,251	*7		36,320		297
Foreign currency translation adjustments			40,390			450,143		3,677
Accumulated remeasurements of defined benefit plans			127,080			121,123		989

Total accumulated other comprehensive income			2,313,051			2,159,606		17,642

Stock acquisition rights			1,791			1,475		12
Non-controlling interests			70,836			97,641		798

Total net assets			11,899,046			12,197,331		99,643

Total liabilities and net assets		¥	242,584,308		¥	257,704,625	$	2,105,258

CONSOLIDATED STATEMENTS OF INCOME


	Millions of yen								Millions of U.S. dollars
Year ended March 31	2021				2022				2022
Ordinary income			¥	3,902,307			¥	4,111,127	$	33,585
Interest income				1,853,039				1,907,991		15,587
Interest on loans and discounts				1,367,726				1,367,464		11,171
Interest and dividends on securities				283,786				347,883		2,842
Interest on call loans and bills bought				11,896				15,563		127
Interest on receivables under resale agreements				10,056				6,166		50
Interest on receivables under securities borrowing transactions				4,407				1,068		9
Interest on deposits with banks				17,891				21,334		174
Interest on lease transactions				6,540				6,932		57
Interest on deferred payment				24,712				23,259		190
Other interest income				126,021				118,317		967
Trust fees				4,895				5,940		49
Fees and commissions				1,298,373				1,414,867		11,558
Trading income				199,647				101,293		827
Other operating income				365,761				369,898		3,022
Lease-related income				32,155				33,647		275
Other				333,606				336,250		2,747
Other income				180,589				311,136		2,542
Recoveries of written-off claims				12,850				13,552		111
Other		*1		167,739		*1		297,583		2,431
Ordinary expenses				3,191,288				3,070,505		25,084
Interest expenses				517,822				380,007		3,104
Interest on deposits				152,094				90,110		736
Interest on negotiable certificates of deposit				35,876				21,467		175
Interest on call money and bills sold				1,786				1,412		12
Interest on payables under repurchase agreements				7,097				5,872		48
Interest on payables under securities lending transactions				203				357		3
Interest on commercial paper				6,029				2,359		19
Interest on borrowed money				37,667				25,667		210
Interest on short-term bonds				63				10		0
Interest on bonds				204,509				212,920		1,739
Other interest expenses				72,492				19,829		162
Fees and commissions payments				204,352				215,332		1,759
Trading losses				—				130		1
Other operating expenses				193,354				259,015		2,116
Lease-related expenses				23,419				24,989		204
Other				169,935				234,026		1,912
General and administrative expenses		*2		1,747,144		*2		1,821,125		14,877
Other expenses				528,613				394,893		3,226
Provision for reserve for possible loan losses				233,875				180,004		1,471
Other		*3		294,737		*3		214,889		1,755

Ordinary profit				711,018				1,040,621		8,501


(Continued)
	Millions of yen								Millions of U.S. dollars
Year ended March 31	2021				2022				2022
Extraordinary gains			¥	9,440			¥	1,707	$	14
Gains on disposal of fixed assets				9,035				1,707		14
Reversal of reserve for eventual future operating losses from financial instruments transactions				—				0		0
Other extraordinary gains				404				—		—
Extraordinary losses				48,222				112,740		921
Losses on disposal of fixed assets				4,939				3,820		31
Losses on impairment of fixed assets		*4		42,525		*4		108,920		890
Provision for reserve for eventual future operating losses from financial instruments transactions				757				—		—

Income before income taxes				672,237				929,588		7,594

Income taxes-current				225,523				241,259		1,971
Income taxes-deferred				(69,177)				(26,724)		(218)

Income taxes				156,346				214,535		1,753

Profit				515,890				715,052		5,841

Profit attributable to non-controlling interests				3,077				8,421		69

Profit attributable to owners of parent			¥	512,812			¥	706,631	$	5,773

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Millions of yen								Millions of U.S. dollars
Year ended March 31	2021				2022				2022
Profit			¥	515,890			¥	715,052	$	5,841
Other comprehensive income (losses)		*1		949,124		*1		(153,165)		(1,251)
Net unrealized gains (losses) on other securities				718,428				(460,361)		(3,761)
Net deferred gains (losses) on hedges				(82,494)				(112,631)		(920)
Foreign currency translation adjustments				80,177				381,076		3,113
Remeasurements of defined benefit plans				217,424				(6,865)		(56)
Share of other comprehensive income of affiliates				15,587				45,617		373

Total comprehensive income				1,465,014				561,887		4,590

Comprehensive income attributable to owners of parent				1,460,228				553,117		4,519
Comprehensive income attributable to non-controlling interests				4,785				8,770		72

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS


Year ended March 31, 2021	Millions of yen
	Stockholders’ equity
	Capital stock		Capital surplus		Retained earnings		Treasury stock		Total
Balance at the beginning of the fiscal year	¥	2,339,964	¥	692,003	¥	6,336,311	¥	(13,983)	¥	9,354,296
Cumulative effects of changes in accounting policies						(41,849)				(41,849)
Restated balance		2,339,964		692,003		6,294,462		(13,983)		9,312,447
Changes in the fiscal year
Issuance of new stock		1,309		1,308						2,618
Cash dividends						(267,143)				(267,143)
Profit attributable to owners of parent						512,812				512,812
Purchase of treasury stock								(61)		(61)
Disposal of treasury stock				(65)				347		281
Changes in shareholders’ interest due to transaction with non-controlling interests				(106)						(106)
Decrease due to decrease in affiliates accounted for by the equity method						(48,054)				(48,054)
Reversal of land revaluation excess						574				574
Transfer from retained earnings to capital surplus				65		(65)				—
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		1,309		1,202		198,123		285		200,920

Balance at the end of the fiscal year	¥	2,341,274	¥	693,205	¥	6,492,586	¥	(13,698)	¥	9,513,367

Year ended March 31, 2021	Millions of yen
	Accumulated other comprehensive income
	Net unrealized gains (losses) on other securities		Net deferred gains (losses) on hedges		Land revaluation excess		Foreign currency translation adjustments		Accumulated remeasurements of defined benefit plans		Total
Balance at the beginning of the fiscal year	¥	1,371,407	¥	82,257	¥	36,878	¥	(32,839)	¥	(92,030)	¥	1,365,673
Cumulative effects of changes in accounting policies
Restated balance		1,371,407		82,257		36,878		(32,839)		(92,030)		1,365,673
Changes in the fiscal year
Issuance of new stock
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shareholders’ interest due to transaction with non-controlling interests
Decrease due to decrease in affiliates accounted for by the equity method
Reversal of land revaluation excess
Transfer from retained earnings to capital surplus
Net changes in items other than stockholders’ equity in the fiscal year		723,198		(67,533)		(627)		73,229		219,110		947,377

Net changes in the fiscal year		723,198		(67,533)		(627)		73,229		219,110		947,377

Balance at the end of the fiscal year	¥	2,094,605	¥	14,723	¥	36,251	¥	40,390	¥	127,080	¥	2,313,051


Year ended March 31, 2021	Millions of yen
Year ended March 31, 2021	Stock acquisition rights		Non- controlling interests		Total net assets
Balance at the beginning of the fiscal year	¥	2,064	¥	62,869	¥ 10,784,903
Cumulative effects of changes in accounting policies					(41,849)
Restated balance		2,064		62,869	10,743,054
Changes in the fiscal year
Issuance of new stock					2,618
Cash dividends					(267,143)
Profit attributable to owners of parent					512,812
Purchase of treasury stock					(61)
Disposal of treasury stock					281
Changes in shareholders’ interest due to transaction with non-controlling interests					(106)
Decrease due to decrease in affiliates accounted for by the equity method					(48,054)
Reversal of land revaluation excess					574
Transfer from retained earnings to capital surplus					—
Net changes in items other than stockholders’ equity in the fiscal year		(272)		7,967	955,071

Net changes in the fiscal year		(272)		7,967	1,155,992

Balance at the end of the fiscal year	¥	1,791	¥	70,836	¥ 11,899,046

(Continued)


Year ended March 31, 2022	Millions of yen
	Stockholders’ equity
	Capital stock		Capital surplus		Retained earnings		Treasury stock		Total
Balance at the beginning of the fiscal year	¥	2,341,274	¥	693,205	¥	6,492,586	¥	(13,698)	¥	9,513,367
Cumulative effects of changes in accounting policies						(8,502)				(8,502)
Restated balance		2,341,274		693,205		6,484,083		(13,698)		9,504,865
Changes in the fiscal year
Issuance of new stock		603		603						1,207
Cash dividends						(274,127)				(274,127)
Profit attributable to owners of parent						706,631				706,631
Purchase of treasury stock								(74)		(74)
Disposal of treasury stock				(50)				370		320
Changes in shareholders’ interest due to transaction with non-controlling interests				(144)						(144)
Reversal of land revaluation excess						(68)				(68)
Transfer from retained earnings to capital surplus				50		(50)				—
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		603		459		432,384		296		433,743

Balance at the end of the fiscal year	¥	2,341,878	¥	693,664	¥	6,916,468	¥	(13,402)	¥	9,938,608

Year ended March 31, 2022	Millions of yen
	Accumulated other comprehensive income
	Net unrealized gains (losses) on other securities		Net deferred gains (losses) on hedges		Land revaluation excess		Foreign currency translation adjustments		Accumulated remeasurements of defined benefit plans		Total
Balance at the beginning of the fiscal year	¥	2,094,605	¥	14,723	¥	36,251	¥	40,390	¥	127,080	¥	2,313,051
Cumulative effects of changes in accounting policies
Restated balance		2,094,605		14,723		36,251		40,390		127,080		2,313,051
Changes in the fiscal year
Issuance of new stock
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shareholders’ interest due to transaction with non-controlling interests
Reversal of land revaluation excess
Transfer from retained earnings to capital surplus
Net changes in items other than stockholders’ equity in the fiscal year		(462,524)		(94,785)		68		409,753		(5,957)		(153,444)

Net changes in the fiscal year		(462,524)		(94,785)		68		409,753		(5,957)		(153,444)

Balance at the end of the fiscal year	¥	1,632,080	¥	(80,061)	¥	36,320	¥	450,143	¥	121,123	¥	2,159,606


Year ended March 31, 2022	Millions of yen
Year ended March 31, 2022	Stock acquisition rights		Non- controlling interests		Total net assets
Balance at the beginning of the fiscal year	¥	1,791	¥	70,836	¥ 11,899,046
Cumulative effects of changes in accounting policies					(8,502)
Restated balance		1,791		70,836	11,890,544
Changes in the fiscal year
Issuance of new stock					1,207
Cash dividends					(274,127)
Profit attributable to owners of parent					706,631
Purchase of treasury stock					(74)
Disposal of treasury stock					320
Changes in shareholders’ interest due to transaction with non-controlling interests					(144)
Reversal of land revaluation excess					(68)
Transfer from retained earnings to capital surplus					—
Net changes in items other than stockholders’ equity in the fiscal year		(316)		26,805	(126,955)

Net changes in the fiscal year		(316)		26,805	306,787

Balance at the end of the fiscal year	¥	1,475	¥	97,641	¥ 12,197,331

(Continued)


Year ended March 31, 2022	Millions of U.S. dollars
	Stockholders’ equity
	Capital stock		Capital surplus		Retained earnings		Treasury stock		Total
Balance at the beginning of the fiscal year	$	19,126	$	5,663	$	53,040	$	(112)	$	77,717
Cumulative effects of changes in accounting policies						(69)				(69)
Restated balance		19,126		5,663		52,970		(112)		77,648
Changes in the fiscal year
Issuance of new stock		5		5						10
Cash dividends						(2,239)				(2,239)
Profit attributable to owners of parent						5,773				5,773
Purchase of treasury stock								(1)		(1)
Disposal of treasury stock				(0)				3		3
Changes in shareholders’ interest due to transaction with non-controlling interests				(1)						(1)
Reversal of land revaluation excess						(1)				(1)
Transfer from retained earnings to capital surplus				0		(0)				—
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		5		4		3,532		2		3,543

Balance at the end of the fiscal year	$	19,131	$	5,667	$	56,502	$	(109)	$	81,191

Year ended March 31, 2022	Millions of U.S. dollars
	Accumulated other comprehensive income
	Net unrealized gains (losses) on other securities		Net deferred gains (losses) on hedges		Land revaluation excess		Foreign currency translation adjustments		Accumulated remeasurements of defined benefit plans		Total
Balance at the beginning of the fiscal year	$	17,111	$	120	$	296	$	330	$	1,038	$	18,896
Cumulative effects of changes in accounting policies
Restated balance		17,111		120		296		330		1,038		18,896
Changes in the fiscal year
Issuance of new stock
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shareholders’ interest due to transaction with non-controlling interests
Reversal of land revaluation excess
Transfer from retained earnings to capital surplus
Net changes in items other than stockholders’ equity in the fiscal year		(3,778)		(774)		1		3,347		(49)		(1,254)

Net changes in the fiscal year		(3,778)		(774)		1		3,347		(49)		(1,254)

Balance at the end of the fiscal year	$	13,333	$	(654)	$	297	$	3,677	$	989	$	17,642


Year ended March 31, 2022	Millions of U.S. dollars
Year ended March 31, 2022	Stock acquisition rights		Non- controlling interests		Total net assets
Balance at the beginning of the fiscal year	$	15	$	579	$ 97,206
Cumulative effects of changes in accounting policies					(69)
Restated balance		15		579	97,137
Changes in the fiscal year
Issuance of new stock					10
Cash dividends					(2,239)
Profit attributable to owners of parent					5,773
Purchase of treasury stock					(1)
Disposal of treasury stock					3
Changes in shareholders’ interest due to transaction with non-controlling interests					(1)
Reversal of land revaluation excess					(1)
Transfer from retained earnings to capital surplus					—
Net changes in items other than stockholders’ equity in the fiscal year		(3)		219	(1,037)

Net changes in the fiscal year		(3)		219	2,506

Balance at the end of the fiscal year	$	12	$	798	$ 99,643

CONSOLIDATED STATEMENTS OF CASH FLOWS


Year ended March 31	Millions of yen						Millions of U.S. dollars
Year ended March 31	2021			2022			2022
Cash flows from operating activities:
Income before income taxes		¥	672,237		¥	929,588	$	7,594
Depreciation			207,815			222,298		1,816
Losses on impairment of fixed assets			42,525			108,920		890
Amortization of goodwill			19,365			19,618		160
Net (gains) losses on step acquisitions			(404)			—		—
Equity in net (gains) losses of affiliates			(24,972)			(28,511)		(233)
Net change in reserve for possible loan losses			177,227			120,415		984
Net change in reserve for employee bonuses			15,158			(2,422)		(20)
Net change in reserve for executive bonuses			1,061			(344)		(3)
Net change in net defined benefit asset and liability			(335,174)			(51,782)		(423)
Net change in reserve for executive retirement benefits			(235)			6		0
Net change in reserve for point service program			(1,920)			344		3
Net change in reserve for reimbursement of deposits			5,294			(4,214)		(34)
Net change in reserve for losses on interest repayment			(2,132)			(5,673)		(46)
Interest income			(1,853,039)			(1,907,991)		(15,587)
Interest expenses			517,822			380,007		3,104
Net (gains) losses on securities			(174,302)			(167,239)		(1,366)
Net (gains) losses from money held in trust			(0)			(0)		(0)
Net exchange (gains) losses			(398,722)			(645,090)		(5,270)
Net (gains) losses from disposal of fixed assets			(4,096)			2,113		17
Net change in trading assets			578,416			(350,069)		(2,860)
Net change in trading liabilities			(223,323)			454,445		3,712
Net change in loans and bills discounted			(2,316,636)			(4,730,989)		(38,649)
Net change in deposits			14,626,281			5,587,551		45,646
Net change in negotiable certificates of deposit			2,388,038			463,396		3,786
Net change in borrowed money (excluding subordinated borrowings)			2,454,998			906,048		7,402
Net change in deposits with banks			(10,577)			(2,667,375)		(21,791)
Net change in call loans and bills bought and others			1,377,379			(128,064)		(1,046)
Net change in receivables under securities borrowing transactions			(822,344)			177,815		1,453
Net change in call money and bills sold and others			364,533			2,956,428		24,152
Net change in commercial paper			307,253			99,900		816
Net change in payables under securities lending transactions			35,745			(840,773)		(6,869)
Net change in foreign exchanges (assets)			(110,014)			(626,264)		(5,116)
Net change in foreign exchanges (liabilities)			(353,210)			99,792		815
Net change in lease receivables and investment assets			(3,878)			26,248		214
Net change in short-term bonds (liabilities)			206,000			(143,000)		(1,168)
Issuance and redemption of bonds (excluding subordinated bonds)			(97,531)			210,858		1,723
Net change in due to trust account			509,868			122,649		1,002
Interest received			1,909,880			1,917,652		15,666
Interest paid			(559,951)			(383,080)		(3,129)
Other, net			(189,032)			(303,148)		(2,477)

Subtotal			18,935,404			1,820,065		14,869

Income taxes paid			(139,452)			(274,642)		(2,244)

Net cash provided by (used in) operating activities			18,795,951			1,545,423		12,625

(Continued)


Year ended March 31	Millions of yen						Millions of U.S. dollars
Year ended March 31	2021			2022			2022
Cash flows from investing activities:
Purchases of securities		¥	(41,807,504)		¥	(36,938,512)	$	(301,761)
Proceeds from sale of securities			17,221,557			18,619,631		152,109
Proceeds from redemption of securities			17,208,608			16,426,401		134,192
Purchases of money held in trust			(0)			(1)		(0)
Proceeds from sale of money held in trust			44			0		0
Purchases of tangible fixed assets			(145,946)			(92,592)		(756)
Proceeds from sale of tangible fixed assets			26,434			1,180		10
Purchases of intangible fixed assets			(178,765)			(195,596)		(1,598)
Purchases of stocks of subsidiaries resulting in change in scope of consolidation			(4,305)	*2		(227,321)		(1,857)

Net cash provided by (used in) investing activities			(7,679,878)			(2,406,810)		(19,662)

Cash flows from financing activities:
Repayment of subordinated borrowings			—			(15,000)		(123)
Proceeds from issuance of subordinated bonds and bonds with stock acquisition rights			194,103			184,048		1,504
Redemption of subordinated bonds and bonds with stock acquisition rights			(488,640)			(380,065)		(3,105)
Dividends paid			(267,119)			(274,058)		(2,239)
Proceeds from issuance of common stock to non-controlling stockholders			100			68		1
Dividends paid to non-controlling stockholders			(1,244)			(628)		(5)
Purchases of treasury stock			(61)			(74)		(1)
Proceeds from disposal of treasury stock			281			320		3
Purchase of stocks of subsidiaries not resulting in change in scope of consolidation			0			—		—
Proceeds from sale of stocks of subsidiaries not resulting in change in scope of consolidation			—			51		0

Net cash provided by (used in) financing activities			(562,580)			(485,338)		(3,965)

Effect of exchange rate changes on cash and cash equivalents			159,912			367,584		3,003

Net change in cash and cash equivalents			10,713,405			(979,140)		(7,999)

Cash and cash equivalents at the beginning of the fiscal year			56,097,807			66,811,212		545,799

Cash and cash equivalents at the end of the fiscal year	*1	¥	66,811,212	*1	¥	65,832,072	$	537,800

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Basis of presentation)

Sumitomo Mitsui Financial Group, Inc. (“the Company”) was established on December 2, 2002 as a holding company for the SMBC Group (“the Group”) through a statutory share transfer (kabushiki iten) of all of the outstanding equity securities of Sumitomo Mitsui Banking Corporation (“SMBC”) in exchange for the Company’s newly issued securities. The Company is a joint stock corporation with limited liability (Kabushiki Kaisha) incorporated under the Companies Act of Japan. Upon formation of the Company and completion of the statutory share transfer, SMBC became a direct wholly owned subsidiary of the Company.

The Company has prepared the accompanying consolidated financial statements in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards (“IFRS”).

The accounts of overseas subsidiaries and affiliated companies are, in principle, integrated with those of the Company’s accounting policies for purposes of consolidation unless they apply different accounting principles and standards as required under U.S. GAAP or IFRS, in which case a certain limited number of items are adjusted based on their materiality.

These consolidated financial statements are translated from the consolidated financial statements contained in the annual securities report filed under the Financial Instrument and Exchange Act of Japan (“FIEA based financial statements”) except for the addition of the non-consolidated financial statements and U.S. dollar figures.

Amounts less than ¥1 million have been rounded down. As a result, the totals in Japanese yen shown in the financial statements do not necessarily agree with the sum of the individual amounts.

The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2022 which was ¥122.41 to US$1. These translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at that rate.

(Significant Accounting Policies for Preparing Consolidated Financial Statements)

1. Scope of consolidation

(1)	Consolidated subsidiaries

The number of consolidated subsidiaries at March 31, 2022 is 181.


Principal companies:		Sumitomo Mitsui Banking Corporation (“SMBC”)
		SMBC Trust Bank Ltd.
		SMBC Nikko Securities Inc.
		Sumitomo Mitsui Card Company, Limited
		SMBC Finance Service Co., Ltd.
		SMBC Consumer Finance Co., Ltd.
		The Japan Research Institute, Limited
		Sumitomo Mitsui DS Asset Management Company, Limited
		SMBC Bank International plc
		Sumitomo Mitsui Banking Corporation (China) Limited
		PT Bank BTPN Tbk
		SMBC Americas Holdings, Inc.
		SMBC Guarantee Co., Ltd.
		SMBC Bank EU AG

Changes in the consolidated subsidiaries in the fiscal year ended March 31, 2022 are as follows:

Fullerton India Credit Company Limited was newly included in the scope of consolidation as a result of acquisition of stock, and 7 other companies were newly included in the scope of consolidation as a result of new establishment and for other reasons.

4 companies were excluded from the scope of consolidation because of liquidation and for other reasons.

(2)	Unconsolidated subsidiaries


Principal company:		SBCS Co., Ltd.

5 of the unconsolidated subsidiaries are investment partnerships, and neither their assets nor profit/loss are substantially attributable to subsidiaries, and thus are excluded from the scope of consolidation pursuant to Article 5, Paragraph 1, Item 2 of the Ordinance on the Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

Other unconsolidated subsidiaries are 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 the financial position and results of operations of the Company and its consolidated subsidiaries when excluded from the scope of consolidation.

2. Application of the equity method

(1)	Unconsolidated subsidiaries accounted for by the equity method

The number of unconsolidated subsidiaries accounted for by the equity method at March 31, 2022 is 5.


Principal company:		SBCS Co., Ltd.

(2)	Equity method affiliates

The number of affiliates accounted for by the equity method at March 31, 2022 is 107.


Principal companies:		Sumitomo Mitsui Finance and Leasing Company, Limited
		Sumitomo Mitsui Auto Service Company, Limited

Changes in the equity method affiliates in the fiscal year ended March 31, 2022 are as follows:

VPBank Finance Company Limited became equity method affiliates due to acquisition of stock, and 14 other companies became equity method affiliates due to new establishment and for other reasons.

1 company was excluded from the scope of equity method affiliates due to sale of stocks.

VPBank Finance Company Limited changed its name to VPBank SMBC Finance Company Limited.

(3)	Unconsolidated subsidiaries that are not accounted for by the equity method

5 unconsolidated subsidiaries that are not accounted for by the equity method are investment partnerships, and neither their assets nor profit/loss are substantially attributable to subsidiaries, and thus are excluded from the scope of equity method pursuant to Article 10, Paragraph 1, Item 2 of the Ordinance on the Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

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


Principal company:		Park Square Capital / SMBC Loan Programme S. à r. l.

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 the financial position and results of operations of the Company and its consolidated subsidiaries when excluded from the scope of equity method.

3. The balance sheet dates of consolidated subsidiaries

(1)	The balance sheet dates of the consolidated subsidiaries at March 31, 2022 are as follows:

(2)

The subsidiaries with balance sheets dated October 31 are consolidated using the financial statements as of January 31 and certain subsidiaries with balance sheets dated December 31 are consolidated using the financial statements as of March 31. Other subsidiaries are consolidated using the financial statements as of their respective balance sheet dates.

Appropriate adjustments were made to material transactions during the periods between their respective balance sheet dates and the consolidated closing date.

4. Accounting policies

(1)	Standards for recognition and measurement of trading assets/liabilities and trading income/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.

In terms of the evaluation of specific market risks and credit risks for derivative transactions, those fair values are calculated by group basis of the financial assets and liabilities based on net asset or liability after offsetting.

(2)	Standards for recognition and measurement of securities

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 (based on straight-line method) using the moving-average method. Investments in 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 affiliates are classified as “other securities” (available-for-sale securities). Other securities are carried at their period-end market prices (cost of securities sold is calculated using primarily the moving-average method). Stocks with no 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” except for the amount reflected on the gains or losses by applying fair value hedge accounting.

Securities included in money held in trust are carried in the same method as in (1) and (2), 1) above.

(3)	Standards for recognition and measurement of derivative transactions

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

(4)	Depreciation

Tangible fixed assets (excluding assets for rent and lease assets)

Buildings owned by the Company and SMBC, which is a consolidated subsidiary of the Company, 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.

Intangible fixed assets

Intangible fixed assets are depreciated using the straight-line method. Capitalized software for internal use owned by the Company and its consolidated domestic subsidiaries is depreciated over its estimated useful life (5-10 years).

Assets for rent

Assets for rent are depreciated using the straight-line method, assuming that lease terms or useful lives of such assets are, in principle, their depreciation period and the salvage values are estimated disposal values when the lease period expires.

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.

(5)	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.

SMBC, which is a consolidated subsidiary of the Company, applies Discounted Cash Flows (“DCF”) method for claims of large borrowers exceeding a certain amount, of which borrowers categories are bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers and whole or part of loans are classified as “Past due loans (3 months or more)” or “Restructured loans” requiring close monitoring, and whose cash flows from collection of principals and interest can be rationally estimated. 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, they are recorded by estimating the amount of expected loss in the next one year or three years. The estimated amount of expected loss is calculated by using average ratio of loan-loss ratio or probability of bankruptcies for certain periods in the past based on actual loan losses or bankruptcies in the past one year or three years, and by making necessary adjustments including future estimations.

In addition, in light of the latest economic situation and risk factors, for potential losses for specific portfolios that are based on the future prospects with high probability, but cannot be reflected in actual loan losses in the past and in any individual borrower’s classification, a reserve is provided in the amount deemed necessary based on an overall assessment.

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 for possible loan losses of the Company 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 for the fiscal years ended March 31, 2021 and 2022 were ¥163,185 million and ¥163,664 million, respectively.

(6)	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.

(7)	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.

(8)	Reserve for executive retirement benefits

The reserve for executive retirement benefits is provided for payment of retirement benefits to executives, in the amount of deemed accrued at the period-end based on our internal regulations.

(9)	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.

(10)	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.

(11)	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 results.

(12)	Reserves under the special laws

The reserves under the special laws are reserves 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.

(13)	Employee retirement benefits

In calculating the projected benefit obligation, mainly the benefit formula basis is used to attribute the expected benefit attributable to the respective period.

Unrecognized prior service cost is amortized on a straight-line basis, primarily over 9 years within the employees’ average remaining service period at incurrence.

Unrecognized net actuarial gain (loss) is amortized on a straight-line basis, primarily over 9 years within the employees’ average remaining service period, commencing from the next fiscal year of incurrence.

(14)	Revenue recognition

Revenue recognition

Revenue from contracts with customers is recognized by identifying the satisfaction of performance obligation of each of the transactions based on the actual transaction of the contractual coverage.

Revenue recognition of major transactions

Regarding revenue from contracts with customers, the contractual coverage and timing of identifying the satisfaction of performance obligation of each item of fees and commissions are determined as follows.

Revenue for deposits and loans, mainly including the commission fees, etc. for account transfer and commissions for office management during the loan period of syndicated loans, is recognized when the transaction started with the customer or over the period of the transaction of the related services.

Revenue for remittances and transfers, mainly including the fees for domestic and oversea remittances, is recognized when the related services are provided.

Revenue for securities-related business, mainly including trading commissions such as sales commissions of stocks and bonds, is recognized when the transaction started with the customer.

Revenue for agency business, mainly including the accepted commissions between banks due to online alliances commission fees, etc. for proxy office management, is recognized when the transaction started with the customer or over the period of the transaction of the related service.

Revenue for safe deposits, mainly including storage fees for safekeeping deposit and usage fees of safes and protective boxes, is recognized over the period of the transaction of the related service.

Revenue for credit card business, mainly including merchant fees, is recognized when the credit sales data arrives.

Revenue for investment trusts, mainly including the commissions for processing sales and records management of investment trusts, etc., is recognized when the transaction started with the customer or over the period of the transaction of the related service.

(15)	Translation of foreign currency assets and liabilities

Assets and liabilities of the Company and SMBC, which is a consolidated subsidiary of the Company, 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.

(16)	Lease transactions

Recognition of income on finance leases

Interest income is allocated to each period.

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.

(17)	Hedge accounting

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, which is a consolidated subsidiary of the Company, 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 Committee Practical Guideline No. 24, March 17, 2022) 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.

Hedging against currency fluctuations

SMBC, which is a consolidated subsidiary of the Company, applies deferred hedge accounting stipulated in “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry” (JICPA Industry Committee Practical Guideline No. 25, October 8, 2020) to currency swap and foreign exchange swap transactions executed for the purpose of lending or borrowing funds in different currencies.

Pursuant to JICPA Industry Committee Practical Guideline 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.

Hedging against share price fluctuations

SMBC, which is a consolidated subsidiary, applies fair value hedge accounting to individual hedges offsetting the price fluctuation of the shares that are classified under other securities, and accordingly evaluates the effectiveness of such individual hedges.

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 non-arbitrary and strict criteria for external transactions stipulated in JICPA Industry Committee Practical Guidelines 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, fair value hedge accounting or the special treatment for interest rate swaps.

(18)	Amortization of goodwill

Goodwill is amortized using the straight-line method over a period in which its benefit is expected to be realized, not to exceed 20 years. Immaterial goodwill is charged or credited to income directly when incurred.

(19)	Scope of “Cash and cash equivalents” on consolidated statements of cash flows

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

(20)	Adoption of the consolidated corporate-tax system

The Company and certain consolidated domestic subsidiaries apply the consolidated corporate-tax system.

(Significant Accounting Estimates)

1. Reserve for possible loan losses

(1)	The amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021 and 2022


	Millions of yen
Year ended March 31	2021		2022
Reserve for possible loan losses	¥	659,017	¥	817,784

(2)	Information on details of the significant accounting estimates for the identified item

Based on the assessment of all claims including loans and bills discounted conducted in accordance with the self-assessment procedures, and borrower category determined depending on their credit risk status, the following amounts are recorded as a reserve for possible loan losses.

- The estimated amount of expected loss calculated for each borrower category based on the average value of historical loan-loss ratio or probability of default over a certain past period is recorded as a reserve for loan losses

- As for claims classified as substandard or lower level classifications whose cash flows from collection of principals and interest can rationally be estimated, the Discounted Cash Flows (“DCF”) method is applied for ones with large borrowers of those claims and the amount calculated by the DCF method is recorded as a reserve for loan losses

- As for expected loss based on the future prospects with high probability, but cannot be reflected in historical loan-losses and in any individual borrower category, the amount deemed necessary based on an overall assessment is recorded as a reserve for loan losses

Reserve for possible loan losses recorded by the method above involves the following uncertainties in the process of estimation, hence requiring high-level managerial judgment.

- Consideration for qualitative factors including forward-looking information in determining borrower category

- Reasonable estimation of future individual cash flows in the DCF method

- Determination of a method for estimating expected loss based on future prospect in consideration of the latest economic environment and risk factors, and of the targeted portfolio

These may be affected by changes in economic environment, which have a potentially significant impact on the amount of reserve for possible loan losses for the next fiscal year.

(Note) For the estimation of the reserve for possible loan losses specifically related to the current international situation involving Ukraine and COVID-19, refer to (Additional Information).

2.	Impairment loss for fixed assets

(1)	The amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021 and 2022


	Millions of yen
Year ended March 31	2021		2022
Tangible fixed assets	¥	1,458,991	¥	1,457,254
Intangible fixed assets		738,759		898,817
Losses on impairment of fixed assets		42,525		108,920

(2)	Information on details of the significant accounting estimates for the identified item

(Grouping of assets)

As for land and buildings, etc., at SMBC, a consolidated subsidiary of the Company, a branch is the smallest unit of asset group, and intangible fixed assets and assets of Head Office, etc. which do not produce independent cash flows are treated as corporate assets. Corporate assets that are reasonably deemed to be used solely by each business unit are identified as each business unit’s corporate assets, and conducted impairment assessments on a business unit basis together with other related fixed assets. As for other corporate assets, impairment is recognized on a company level.

(Identifying indication of impairment, and testing and calculating recognition of impairment loss)

Fixed assets that have an indication of impairment are tested for recognition of impairment loss, and if recognition is required, their book values are reduced to the recoverable amount and the reduced amount is recorded as impairment loss. Recoverable amount is either net realizable value, which is deducting expected disposal cost from fair value of the fixed asset, or value in use which is the present value of cash flows expected to derive from the continuous use and disposal of the fixed asset after use.

Future cash flows and the growth rate used for testing the recognition of impairment loss as well as for calculating value in use are determined based on the factors including the estimation or judgment by management and the market growth rate, etc. Discount rate used for calculating value in use is determined based on the market interest rate and other market conditions, and these may be affected by changes in economic and financial environment. Therefore, if modification is required, it may have a potentially significant impact on the amount of impairment loss for fixed assets for the next fiscal year.

As for the fiscal year ended March 31, 2022, impairment loss of ¥37,795 million (tangible fixed assets ¥5,118 million, intangible fixed assets ¥32,677 million) related to the business assets attributable to the Retail Business Unit at SMBC is recorded. The future cash flows used to test recognition of impairment loss and calculate value in use is estimated based on the business plan of the business unit, which takes into account the balance of housing loans, as one of the major assumptions, and includes profit of the business unit adjusted on management accounting such as the collaboration profit with Group Companies, etc. The recoverable amount of calculating impairment loss is measured by using net realizable value. For the impairment loss for the fiscal year ended March 31, 2022, refer to (Notes to Consolidated statement of income).

3. Fair value of financial instruments

(1)	The amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2022

This is stated in (Notes to financial instruments).

(2)	Information on details of the significant accounting estimates for the identified item

This is stated in (Notes to financial instruments).

4. Reserve for losses on interest repayment

(1)	The amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021 and 2022


	Millions of yen
Year ended March 31	2021		2022
Reserve for losses on interest repayment	¥	140,758	¥	135,084

(2)	Information on details of the significant accounting estimates for the identified item

Reserve for losses on interest repayment is recorded based on estimated amount of claim of repayment in preparing for future claims of interest repayment from the customers whose loans are offered at interest rates in excess of the ceiling prescribed under the Interest Rate Restriction Act.

Estimated amount of claim for such repayment is calculated based on certain assumptions using the historical data regarding the number and amount of claims from customers. The trend in future claims of repayment from customers has a potentially significant impact on the amount of reserve for losses on interest repayment for the next fiscal year.

5. Retirement benefits expenses and retirement benefit obligations

(1)	The amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021 and 2022


	Millions of yen
Year ended March 31	2021		2022
Net defined benefit asset	¥	565,534	¥	623,045
Net defined benefit liability		35,334		40,864
Retirement benefit expenses included in general and administrative expenses		18,237		(12,317	)

(2)	Information on details of the significant accounting estimates for the identified item

Retirement benefit expenses and retirement benefit obligations for the defined benefit plans for employees are recorded based on various assumptions including discount rate, employee turnover and future salary increase rate.

Discount rate is determined based on Japanese government bond yields, while the indicators such as employee turnover and future salary increase rate are determined based on historical data as well as the latest information on future outlook. Determining these key factors and metrics requires high-level managerial judgment, and if modifications are required, it may have significant impact on the amounts of retirement benefit expenses and retirement benefit obligations for the next fiscal year.

6. Deferred tax assets

(1)	The amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021 and 2022


	Millions of yen
Year ended March 31	2021		2022
Deferred tax assets	¥	29,840	¥	66,720
Deferred tax liabilities		532,193		275,570

(2)	Information on details of the significant accounting estimates for the identified item

The amount of tax associated with temporary differences is recorded as deferred tax assets or deferred tax liabilities excluding the amount of tax that is not expected to be collected or paid in the future accounting periods. Deferred tax assets and deferred tax liabilities of the same taxable entity are offset and presented on a net basis.

While the recoverability of deferred tax assets is determined by reasonably estimating the scheduling of temporary differences and taxable income, in the event of changes to the scheduling of temporary differences, taxable income which is lower than initial estimation, or tax reform such as reduction of corporate income tax rate, there is a potentially significant impact on the amount of deferred tax assets for the next fiscal year.

(Changes in Accounting Policies)

Application of Accounting Standard for Revenue Recognition etc.

The Company applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020) etc. from the beginning of the fiscal year ended March 31, 2022, and has recognized revenue in an amount expected to be earned in exchange for goods or services at the time when controls of the promised goods or services are transferred to customers.

As for the application of Accounting standards for Revenue Recognition etc., in accordance with transitional treatment stipulated in the proviso of Paragraph 84 of “Accounting Standard for Revenue Recognition”, the cumulative effects by the retroactive application of the new accounting policy previous to the beginning of the fiscal year ended March 31, 2022 are adjusted to “Retained earnings” of the beginning of the fiscal year ended March 31, 2022.

As a result, “Retained earnings” decreased by ¥8,502 million at the beginning of the fiscal year ended March 31, 2022.

In accordance with the transitional measures set forth in Paragraph 89-3 of “Accounting Standards for Revenue Recognition,” information on breakdowns of revenues from contracts with customers for the fiscal year ended March 31, 2021 is not disclosed in (Revenue Recognition).

(Unapplied Accounting Standards and Others)

1. “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Revised Implementation Guidance No.31, June 17, 2021)

(1)

Outline

The implementation guidance defines the treatment of the measurement and notes of the fair value of investment trusts, and the treatment of notes concerning the fair value of investment in partnerships, etc., whose share of net unrealized gains is stated on the balance sheet on net basis.

(2)	Date of Application

The Company will apply the Implementation Guidance from the beginning of the fiscal year commencing on April 1, 2022.

(3)	Effects of Application of the Accounting Standard etc.

The effects of the application of the Implementation Guidance are currently being assessed.

2. “Practical Solution on the Treatment of Accounting and Disclosure when applying Group tax sharing system” (ASBJ Practical Issue Task Force No. 42, August 12, 2021)

(1)

Outline

The Practical Issue Task Force defines the treatment of accounting and disclosure of corporate tax, local tax and tax effect accounting when applying Group tax sharing system.

(2)	Date of Application

The Company will apply the Practical Issue Task Force from the beginning of the fiscal year commencing on April 1, 2022.

(3)	Effects of Application of the Accounting Standard etc.

The effects of the application of the Practical Issue Task Force are currently being assessed.

(Additional information)

1. The estimates of reserve for possible loan losses related to the impact of the current international situation involving Ukraine.

Considering the uncertain business environment caused by the current international situation involving Ukraine, estimation of the reserve for possible loan losses associated with the Russia-related credits is reflected in the consolidated financial statements by the following method. The Russia-related credits are mainly related to corporate customers in Russia.

For losses expected to be incurred in connection with individual borrowers based on the impact of economic sanctions imposed by governments of each country and the countermeasures taken by the Russian government, etc., a reserve for possible loan losses is provided by reviewing, as necessary, borrower categories based on the most recent available information. In addition, a reserve for possible loan losses is recorded as a reserve for claims originated in specific overseas countries at an amount deemed necessary in consideration of the political and economic situation in Russia.

Furthermore, in light of the probability of delays in principal or interest payments and the easing of payment terms, etc. due to the prolonged impact of such economic sanctions and countermeasures, a reserve for possible loan losses is recorded at an amount deemed necessary based on an overall assessment.

As a result, a reserve for possible loan losses at a total of ¥75,398 million is recorded for the Russia-related credits.

2. The estimates of reserve for possible loan losses related to the impact of the spread of the novel coronavirus disease (COVID-19).

Considering the continuing uncertainty of the spread of COVID-19, estimation of the reserve for possible loan losses associated with COVID-19 is reflected in the consolidated financial statements by the following method.

For potential losses expected to be incurred related to individual borrowers due to deterioration in business performance and funding, a reserve for possible loan losses is provided by reviewing, as necessary, borrower category based on the most recent available information.

In addition, for potential losses which cannot be reflected in any of individual borrower category, a reserve for possible loan losses is recorded at an amount deemed necessary based on an overall assessment. The assessment is conducted by specifying the portfolio significantly affected by COVID-19 and estimating the impact of changes in the economic trend and market condition due to the voluntary restraint on the economic activities caused by COVID-19, after consideration of the effect of the government’s financial support on bankruptcy trends.

3. Transition from the consolidated corporate-tax system to the group tax sharing system

Companies are required to shift from the consolidated corporate-tax system to the group tax sharing system from the fiscal year beginning on or after April 1, 2022, in accordance with the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 8, 2020) enacted on March 31, 2020. However, the Company and certain consolidated domestic subsidiaries, currently adopting the consolidated corporate-tax system, applied the accounting treatment based on the provisions of the Income Tax Act before the revision for the fiscal year ended March 31, 2022, in accordance with the “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ Practical Issue Task Force No. 39, March 31, 2020).

4. Repurchase and cancellation of own shares

On November 12, 2021, the Board of Directors of the Company resolved to repurchase its own shares under Article 8 of its Articles of Incorporation pursuant to Paragraph 1 of Article 459 of the Companies Act and cancel the repurchased shares pursuant to Article 178 of the Companies Act.

(1) Reason for the Repurchase of Own Shares

The Company will proceed with a flexible repurchase of its own shares in order to enhance shareholder return and improve capital efficiency.

(2) Outline of the Repurchase

(a) Type of shares to be repurchased: Common stock

(b) Aggregate number of shares to be repurchased:

Up to 33,000,000 shares (Equivalent to 2.4% of the number of shares issued (excluding treasury stock))

(d) Repurchase period: From November 15, 2021 to November 11, 2022

(e) Repurchase method:

Market purchases based on a discretionary dealing contract regarding repurchase of its own shares

(3) Outline of the Cancellation

(a) Type of shares to be cancelled: Common stock

(b) Number of shares to be cancelled: All of shares repurchased as stated in 2) above.

The Company had not conducted the repurchase and cancellation pursuant to the resolution of the Board of Directors as of the fiscal year ended March 31, 2022.

5. Suspected illegal stabilization transactions

On March 24 and April 13, 2022, the Tokyo District Public Prosecutors Office filed charges with the Tokyo District Court to prosecute SMBC Nikko Securities Inc. (hereinafter, “SMBC Nikko Securities”), a consolidated subsidiary of the Company, and its former executive officers and employees, on suspicion of illegal stabilization transactions. There is a possibility that SMBC Nikko Securities will incur a monetary obligation in the form of a fine, etc. as stipulated in the Financial Instruments and Exchange Act, but it is difficult to reasonably estimate the amount at this time, and it is not clear whether this will affect SMBC Nikko Securities’ business performance and financial position.

(Notes to consolidated balance sheets)

*1	Stocks and investments in unconsolidated subsidiaries and affiliates

Stocks and investments in unconsolidated subsidiaries and affiliates at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Stocks	¥	960,834	¥	1,186,236
Investments		847		735

Stocks of jointly controlled entities were as follows:


	Millions of yen
March 31	2021		2022
Stocks of jointly controlled entities	¥	394,160	¥	426,492

*2	Unsecured loaned securities for which borrowers have the right to sell or pledge

The amount of unsecured loaned securities for which borrowers have the right to sell or pledge at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Japanese government bonds and local government bonds in “Securities”	¥	50,045	¥	133,331
Trading securities in “Trading assets”		2,190		238

As for the unsecured borrowed securities, securities under resale agreements and securities borrowed with cash collateral with rights to sell or pledge without restrictions, those securities pledged, those securities lent and those securities held without being disposed at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Securities pledged	¥	8,061,819	¥	8,648,160
Securities lent		394,493		392,554
Securities held without being disposed		4,090,071		3,612,737

Claims under the Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions are as follows. The claims are items that are recorded under the following items on the consolidated balance sheet: bonds included in “Securities” (limited to bonds for which the redemption of principal and the payment of interest in whole or in part are guaranteed, and that are issued through private placements (under Article 2, Paragraph 3 of the Financial Instruments and Exchange Act)), loans and bills discounted, foreign exchanges, accrued interest and suspense payments included in “Other assets,” and customers’ liabilities for acceptances and guarantees. If security lending listed in the notes is conducted, such securities (limited to those based on loan for a use agreement or lease agreement) are also included in the claims.


	Millions of yen
March 31	2021		2022
Bankrupt and quasi-bankrupt loans	¥	128,112	¥	99,256
Doubtful loans		392,161		643,881
Substandard loans		446,246		414,422
Past due loans (3 months or more)		16,165		13,553
Restructured loans		430,080		400,868
Subtotal		966,520		1,157,560
Normal loans		98,159,165		106,019,459
Total		99,125,686		107,177,019

Bankrupt and quasi-bankrupt loans are claims to borrowers who have fallen into bankruptcy due to reasons such as commencement of bankruptcy proceedings, commencement of rehabilitation proceedings, or petition for commencement of rehabilitation proceedings, and other similar claims.

Doubtful loans are claims to borrowers who have not yet become bankrupt but whose financial condition and business performance have deteriorated and it is highly probable that the loan principal cannot be collected and interest cannot be received in accordance with the contract, excluding bankrupt and quasi-bankrupt loans.

Past due loans (3 months or more) are loans for which the payment of principal or interest has been delayed for three months or more from the day after the agreed-upon payment date, excluding bankrupt and quasi-bankrupt loans and doubtful loans.

Restructured loans are loans on which terms and conditions have been amended in favor of the borrower with the objective of assisting the borrower’s financial recovery, such as by reducing or exempting interest, postponing interest payment and principal repayment, and forgiving debts, excluding bankrupt and quasi-bankrupt loans, doubtful loans, and past due loans (3 months or more).

Normal loans are loans that do not fall under the classification of bankrupt and quasi-bankrupt loans, doubtful loans, past due loans (3 months or more), and restructured loans, and where the borrower has no financial or business performance problems.

The amounts of loans presented above are the amounts before deduction of reserve for possible loan losses.

(Presentation change)

Category of “Risk-monitored loans” of the Banking Act is indicated in accordance with the loan category based on the Act on Emergency Measures for the Revitalization of Financial Function, due to the enforcement of “Cabinet Office Order to Partially Amend the Ordinance for Enforcement of the Banking Act” (Cabinet Office Order No.3, January 24, 2020) as of March 31, 2022.

*4	Bills discounted

Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Committee Practical Guidelines No. 24. SMBC and its banking subsidiaries have rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and foreign exchanges bought without restrictions, etc. The total face value at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Bills discounted	¥	1,142,755	¥	1,120,625

*5	Assets pledged as collateral

Assets pledged as collateral at March 31, 2021 and 2022 were as follows:


March 31, 2021	Millions of yen		March 31, 2022	Millions of yen
Assets pledged as collateral:			Assets pledged as collateral:
Cash and due from banks	¥	15,483	Cash and due from banks	¥	22,976
Trading assets		713,410	Trading assets		788,912
Securities		14,933,325	Securities		17,807,664
Loans and bills discounted		10,152,979	Loans and bills discounted		11,205,047
Liabilities corresponding to assets pledged as collateral:			Liabilities corresponding to assets pledged as collateral:
Deposits		13,972	Deposits		2,300
Payables under repurchase agreements		7,516,287	Payables under repurchase agreements		10,332,743
Payables under securities lending transactions		1,060,066	Payables under securities lending transactions		576,050
Borrowed money		14,950,162	Borrowed money		16,452,177
Due to trust account		588,785	Due to trust account		629,091
Acceptances and guarantees		105,700

In addition to the assets presented above, the following assets were pledged as collateral for cash settlements, and substitution for margins of futures transactions and certain other purposes at March 31, 2021 and 2022:


March 31, 2021	Millions of yen		March 31, 2022	Millions of yen
Cash and due from banks	¥	21	Cash and due from banks	¥	178,882
Trading assets		1,245,065	Trading assets		1,540,078
Securities		5,786,331	Securities		5,120,441
Loans and bills discounted		9,664	Loans and bills discounted		18,823

Other assets include collateral money deposited for financial instruments, surety deposits, margin of futures markets and other margins. The amounts for such assets were as follows:


March 31, 2021	Millions of yen		March 31, 2022	Millions of yen
Collateral money deposited for financial instruments	¥	2,111,770	Collateral money deposited for financial instruments	¥	2,696,495
Surety deposits		86,727	Surety deposits		82,525
Margins of futures markets		118,372	Margins of futures markets		144,815
Other margins		98,958	Other margins		111,115

*6	Commitment line contracts on overdrafts and loans

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 amounts of unused commitments at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
The amounts of unused commitments	¥	71,255,100	¥	72,708,112
The amounts of unused commitments whose original contract terms are within 1 year or unconditionally cancelable at any time		49,932,323		47,990,310

Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily affect actual future cash flow. Many of these commitments include clauses under which an application from customers can be rejected or contract amounts can be reduced in the event that economic conditions change, necessity for securing claims, or other events occur. In addition, at the time of contract, collateral such as premises and securities are requested to be pledged. Also after concluding the contracts, customer’s financial positions are monitored regularly based on internal procedures, and necessary measures such as revising contracts and securing claims are taken when such needs arise.

*7	Land revaluation excess

SMBC, a consolidated subsidiary of the Company, revaluated its 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 Company’s share of the net unrealized gains, net of deferred taxes, are reported as “Land revaluation excess” in “Net assets.”

Date of the revaluation

March 31, 1998 and March 31, 2002

Method of revaluation (stipulated in Article 3, paragraph 3 of the Act)

Fair values were determined by applying appropriate adjustments for land shape and timing of appraisal to the values stipulated in Article 2, item 3, 4 or 5 of “Order for Enforcement of Act on Revaluation of Land” (Cabinet Order No. 119 effective March 31, 1998).

*8	Accumulated depreciation on tangible fixed assets

Accumulated depreciation on tangible fixed assets at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Accumulated depreciation	¥	834,990	¥	894,962

*9	Deferred gain on tangible fixed assets deductible for tax purposes

Deferred gain on tangible fixed assets deductible for tax purposes at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Deferred gain on tangible fixed assets deductible for tax purposes	¥	55,626	¥	55,269
[The consolidated fiscal year concerned]		[—]		[—]

*10	Subordinated borrowings

The balance of subordinated borrowings included in “Borrowed money” at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Subordinated borrowings	¥	249,000	¥	234,000

*11	Subordinated bonds

The balance of subordinated bonds included in “Bonds” at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Subordinated bonds	¥	1,922,165	¥	1,769,175

*12	Borrowings from trust account in relation to covered bonds issued by trust account

The balance of borrowings from trust account in relation to covered bonds issued by trust account included in “Due to trust account” at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
The amount of borrowings from trust account in relation to covered bonds issued by trust account	¥	588,785	¥	629,091

*13	Guaranteed amount to privately-placed bonds

The amount guaranteed by banking subsidiaries to privately-placed bonds (stipulated by Article 2, paragraph 3 of Financial Instruments and Exchange Act) in “Securities” at March 31, 2021 and 2022 were as follows:


	Millions of yen
March 31	2021		2022
Guaranteed amount to privately-placed bonds	¥	1,431,071	¥	1,342,460

(Notes to consolidated statements of income)

*1	Other income

“Other” in “Other income” for the fiscal years ended March 31, 2021 and 2022 included the following:


Year ended March 31, 2021	Millions of yen		Year ended March 31, 2022	Millions of yen
Gains on sales of stocks	¥	124,730	Gains on sales of stocks	¥	248,845

*2	General and administrative expenses

“General and administrative expenses” for the fiscal years ended March 31, 2021 and 2022 included the following:


Year ended March 31, 2021	Millions of yen		Year ended March 31, 2022	Millions of yen
Salaries and related expenses	¥	646,959	Salaries and related expenses	¥	680,177
Depreciation		182,240	Depreciation		194,484
Research and development costs		60	Research and development costs		35

*3	Other expenses

“Other expenses” for the fiscal years ended March 31, 2021 and 2022 included the following:


Year ended March 31, 2021	Millions of yen		Year ended March 31, 2022	Millions of yen
Write-off of loans	¥	117,415	Write-off of loans	¥	79,578
Expenses related to equity derivatives		45,968	Losses on sale of delinquent loans		27,551
Write-off of stocks and others		24,073	Write-off of stocks and others		22,944
Losses on sale of delinquent loans		20,762

*4	Losses on impairment of fixed assets

The differences between the recoverable amounts and the book value of the following assets are recognized as “Losses on impairment of fixed assets,” and included in “Extraordinary losses” for the fiscal years ended March 31, 2021 and 2022.


Year ended March 31, 2021			Millions of yen
Area	Purpose of use	Type	Impairment loss
Tokyo metropolitan area	Branches (6 items)	Land and buildings, etc.	¥	873
	Idle assets (164 items)			7,786
Kinki area	Branches (1 item)	Land and buildings, etc.		16
	Idle assets (56 items)			2,415
Other	Branches (6 items)	Land and buildings, etc.		128
	Idle assets (20 items)			390
—	—	Goodwill		30,914

Year ended March 31, 2022			Millions of yen
Area	Purpose of use	Type	Impairment loss
Tokyo metropolitan area	Branches (44 items)	Land and buildings, etc.	¥	4,415
	Idle assets (89 items)			4,830
Kinki area	Branches (14 items)	Land and buildings, etc.		1,417
	Idle assets (61 items)			2,086
Other area in Japan	Branches (10 items)	Land and buildings, etc.		548
	Idle assets (42 items)			1,212
Asia/Oceania	Idle assets (2 items)	Buildings		1,611
Americas/ Europe/Middle East	Freight car lease assets, etc. (5,026 items)	Assets for rent		36,980
—	—	Software		55,815

As for land and buildings, etc., each 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. Intangible fixed assets and assets such as corporate headquarters facilities, training facilities, data and system centers, and health and recreational facilities which do not produce independent cash flows are treated as corporate assets.

In the fiscal year ended March 31, 2022, at the Retail Banking Unit at SMBC, a consolidated subsidiary of the Company, indications of impairment were identified due to continuous losses from operating activities caused by COVID-19. Therefore, in order to refine the treatment of some corporate assets, SMBC utilized management accounting to identify corporate assets that are reasonably deemed to be used solely by each business unit as that business unit’s corporate assets, and conducted impairment assessments on a business unit basis together with other related fixed assets. As a result, the carrying amounts of business assets (branches, software) that includes corporate assets attributable to the business unit are reduced to their recoverable amounts, and the decreased amounts are included in “Extraordinary losses” as “Losses on impairment of fixed assets.” The recoverable amount of the relevant business unit is calculated based on its net realizable value. When measuring the net realizable value, the net realizable value for land and buildings is calculated by subtracting the expected disposal cost from the real estate appraisal value estimated by an outside real estate appraiser.

At SMBC Trust Bank Ltd., a consolidated subsidiary of the Company, in order to refine the treatment of corporate assets, SMBC Trust Bank Ltd. utilized management accounting to identify corporate assets that are reasonably deemed to be used solely by each business unit as that business unit’s corporate assets, and conducted impairment assessments on a business unit basis together with other related fixed assets. As a result, the carrying amounts of business assets (branches, software) that includes corporate assets attributable to the personal loans unit are reduced to their recoverable amounts, and the decreased amounts are included in “Extraordinary losses” as “Losses on impairment of fixed assets.” The recoverable amount of the Unit is measured by value in use, which is calculated by discounting future cash flows by 7%.

As for idle assets, each individual property is treated as an asset group for recognition and measurement of impairment. The carrying amounts of idle assets are reduced to their recoverable amounts, and the decreased amounts are included in “Extraordinary losses” as “Losses on impairment of fixed assets,” if there are indicators that the invested amounts may not be recoverable. The recoverable amount is calculated using net realizable value, which is basically determined by subtracting the expected disposal cost from the real estate appraisal value.

As for lease assets, asset group for recognition and measurement of impairment is based on types of freight car. For the fiscal year ended March 31, 2022, it was found that the invested amounts for some freight car assets may not be recoverable, and as a result, the carrying amounts for those freight cars are reduced to their recoverable amounts, and the decreased amounts are included in “Extraordinary losses” as “Losses on impairment of fixed assets.” The recoverable amount is measured by value in use, which is calculated by discounting future cash flows by 5%.

(Notes to consolidated statements of comprehensive income)

*1	Reclassification adjustment and tax effect of other comprehensive income


Year ended March 31	Millions of yen
Year ended March 31	2021			2022
Net unrealized gains (losses) on other securities:
Amount arising during the fiscal year	¥	1,230,652		¥	(458,030	)
Reclassification adjustments		(217,948	)		(196,175	)

Before adjustments to tax effect		1,012,704			(654,205	)
Tax effect		(294,275	)		193,843

Net unrealized gains (losses) on other securities		718,428			(460,361	)

Net deferred gains (losses) on hedges:
Amount arising during the fiscal year		(159,221	)		(154,290	)
Reclassification adjustments		40,448			(9,914	)
Adjustments of acquisition cost of assets		—			80

Before adjustments to tax effect		(118,772	)		(164,125	)
Tax effect		36,277			51,494

Net deferred gains (losses) on hedges		(82,494	)		(112,631	)

Foreign currency translation adjustments:
Amount arising during the fiscal year		82,669			381,076
Reclassification adjustments		(2,492	)		—

Before adjustments to tax effect		80,177			381,076
Tax effect		—			—

Foreign currency translation adjustments		80,177			381,076

Remeasurements of defined benefit plans:
Amount arising during the fiscal year		307,353			16,815
Reclassification adjustments		5,758			(27,362	)

Before adjustments to tax effect		313,111			(10,546	)
Tax effect		(95,686	)		3,680

Remeasurements of defined benefit plans		217,424			(6,865	)

Share of other comprehensive income of equity method affiliates:
Amount arising during the fiscal year		16,387			41,207
Reclassification adjustments		(799	)		4,410

Before adjustments to tax effect		15,587			45,617
Tax effect		—			—

Share of other comprehensive income of equity method affiliates		15,587			45,617

Total other comprehensive income	¥	949,124		¥	(153,165	)

(Notes to consolidated statements of changes in net assets)

Fiscal year ended March 31, 2021

1. Type and number of shares issued and treasury stock


Year ended March 31, 2021	Number of shares
Year ended March 31, 2021	At the beginning of the fiscal year		Increase		Decrease		At the end of the fiscal year		Notes
Shares issued
Common stock		1,373,171,556		868,505		—		1,374,040,061	1

Total		1,373,171,556		868,505		—		1,374,040,061

Treasury stock
Common stock		3,645,043		57,918		90,659		3,612,302	2,3

Total		3,645,043		57,918		90,659		3,612,302


Notes:	1.	The increase of 868,505 shares in the total number of shares issued was due to issuance of new stocks as stock-based compensation.
	2.	The increase of 57,918 shares in the number of treasury common stock was due to purchases of fractional shares and acquisition of restricted stocks without compensation under the Stock Compensation Plans.
	3.	The decrease of 90,659 shares in the number of treasury common stock was due to sales of fractional shares as well as exercise of stock options.

2. Information on stock acquisition rights

Year ended March 31, 2021

Number of shares

Millions of yen

Details of stock
acquisition rights

Type of shares

At the beginning of
the fiscal year

Increase

Decrease

At the end of
the fiscal year

Notes

The Company

Stock acquisition rights
as stock options

—

1,791

Total

1,791

3. Information on dividends

(1) Dividends paid in the fiscal year

Date of resolution

Type of shares

Millions of yen, except per share amount

Cash
dividends

Cash dividends
per share

Record date

Effective date

Ordinary General Meeting of Shareholders held on June 26, 2020

Common stock

136,952

100

March 31, 2020

June 29, 2020

Meeting of the Board of Directors held on November 13, 2020

Common stock

130,190

September 30, 2020

December 3, 2020

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

Date of resolution

Type of shares

Millions of yen, except per share amount

Cash
dividends

Source of
dividends

Cash dividends
per share

Record date

Effective date

Ordinary General Meeting of Shareholders held on June 29, 2021

Common stock

130,190

Retained
earnings

March 31, 2021

June 30, 2021

Fiscal year ended March 31, 2022

1. Type and number of shares issued and treasury stock


Year ended March 31, 2022	Number of shares
Year ended March 31, 2022	At the beginning of the fiscal year		Increase		Decrease		At the end of the fiscal year		Notes
Shares issued
Common stock		1,374,040,061		322,041		—		1,374,362,102	1

Total		1,374,040,061		322,041		—		1,374,362,102

Treasury stock
Common stock		3,612,302		27,782		97,763		3,542,321	2,3

Total		3,612,302		27,782		97,763		3,542,321


Notes:	1.	The increase of 322,041 shares in the total number of shares issued was due to issuance of new stocks as stock-based compensation.
	2.	The increase of 27,782 shares in the number of treasury common stock was due to purchases of fractional shares and acquisition of restricted stocks without compensation under the Stock Compensation Plans.
	3.	The decrease of 97,763 shares in the number of treasury common stock was due to sales of fractional shares as well as exercise of stock options.

2. Information on stock acquisition rights

Year ended March 31, 2022

Number of shares

Millions of yen

Details of stock
acquisition rights

Type of shares

At the beginning of
the fiscal year

Increase

Decrease

At the end of
the fiscal year

Notes

The Company

Stock acquisition rights
as stock options

—

1,475

Total

1,475

3. Information on dividends

(1) Dividends paid in the fiscal year

Date of resolution

Type of shares

Millions of yen, except per share amount

Cash
dividends

Cash dividends
per share

Record date

Effective date

Ordinary General Meeting of Shareholders held on June 29, 2021

Common stock

130,190

March 31, 2021

June 30, 2021

Meeting of the Board of Directors held on November 12, 2021

Common stock

143,936

105

September 30, 2021

December 3, 2021

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

Date of resolution

Type of shares

Millions of yen, except per share amount

Cash
dividends

Source of
dividends

Cash dividends
per share

Record date

Effective date

Ordinary General Meeting of Shareholders held on June 29, 2022 (scheduled to be resolved)

Common stock

143,936

Retained
earnings

105

March 31, 2022

June 30, 2022

(Notes to consolidated statements of cash flows)

*1	The reconciliation of balance of “Cash and cash equivalents” at the end of the fiscal year and the amounts of items stated in the consolidated balance sheet


	Millions of yen
Year ended March 31	2021		2022
Cash and due from banks	¥	72,568,875	¥	74,792,123

Interest earning deposits with banks (excluding the deposit with the Bank of Japan)		(5,757,662)		(8,960,050)

Cash and cash equivalents	¥	66,811,212	¥	65,832,072

*2	The major components of assets and liabilities for entities newly consolidated by stock acquisition

The major components of assets and liabilities at the commencement of consolidation due to consolidating Fullerton India Credit Company Limited (“FICC”) and 1 other company by the Company’s stock acquisition and the relation between the acquisition cost of shares and expenditure to acquire were as follows:


Year ended March 31, 2022	Millions of yen
Assets	¥	402,519
Loans and bills discounted		306,412
Liabilities		(334,271)
Borrowed money		(173,032)
Non-controlling interests		(17,130)
Goodwill		179,196

Acquisition cost of 2 companies		230,314
Cash and cash equivalents included in acquired assets of 2 companies		(2,993)

Expenditure for acquisition of 2 companies	¥	227,321

(Notes to lease transactions)

1. Finance leases

(1)	Lessee side

Lease assets

(a)

Tangible fixed assets

Tangible fixed assets mainly consisted of branches and equipment.

(b)

Intangible fixed assets

Intangible fixed assets are software.

Depreciation method of lease assets

Depreciation method of lease assets is reported in “(Significant accounting policies for preparing consolidated financial statements) 4. Accounting policies (4) Depreciation.”

(2)	Lessor side

Breakdown of lease investment assets


March 31	Millions of yen
March 31	2021		2022
Lease receivables	¥	288,189	¥	287,443
Residual value		46,328		39,057
Unearned interest income		(98,125)		(97,892)

Total	¥	236,392	¥	228,608

The scheduled collections of lease payments receivable related to lease investment assets are as follows:


March 31	Millions of yen
March 31	2021		2022
Within 1 year	¥	29,790	¥	34,531
More than 1 year to 2 years		28,124		22,448
More than 2 years to 3 years		19,846		19,539
More than 3 years to 4 years		15,304		17,347
More than 4 years to 5 years		16,973		12,851
More than 5 years		178,149		180,724

Total	¥	288,189	¥	287,443

2. Operating leases

(1)	Lessee side

Future minimum lease payments on operating leases which were not cancelable were as follows:


March 31	Millions of yen
March 31	2021		2022
Due within 1 year	¥	39,033	¥	37,084
Due after 1 year		223,555		212,928

Total	¥	262,589	¥	250,013

(2)	Lessor side

Future minimum lease payments on operating leases which were not cancelable were as follows:


March 31	Millions of yen
March 31	2021		2022
Due within 1 year	¥	26,601	¥	27,906
Due after 1 year		58,759		60,247

Total	¥	85,361	¥	88,153

(Notes to financial instruments)

1. Status of financial instruments

(1)	Policies on financial instruments

The Group conducts banking and other financial services such as leasing, securities, consumer finance, system development and information processing. Its banking business includes deposit taking, lending, securities trading and investment, remittance and transfer, foreign exchange, bond subscription agent, trust business, and over-the-counter sales of securities investment trusts and insurance products.

These services entail holding of financial assets such as loans and bills discounted, bonds, and stocks. Meanwhile, the Group raises funds through deposit taking, borrowing, bond offering, etc. Furthermore, it undertakes derivative transactions to meet customers’ hedging needs to control market risk associated with deposit taking and lending (“ALM purposes”), and to make profit on short-term fluctuations in interest rates, foreign exchange rates, etc. (“trading purposes”). At SMBC, the Company’s major consolidated subsidiary, derivative transactions for ALM purposes are undertaken by the Treasury Dept., the Global Investment Dept., and Portfolio Investment Dept. of the Treasury Unit, while derivative transactions for trading purposes are undertaken by the Trading Dept. of the Treasury Unit (derivative transactions for both ALM and trading purposes are undertaken by the Treasury Dept., Asia Pacific Division in Asia Pacific region, and the Treasury Dept., East Asia Division in East Asia region).

(2)	Details of financial instruments and associated risks

Financial assets

The main financial assets held by the Group include loans to foreign and domestic companies and domestic individuals, and securities such as bonds (government and corporate bonds) and stocks (foreign and domestic stocks), etc. Bonds such as government bonds are held for both trading and ALM purposes, and certain bonds are held as held-to-maturity securities. Stocks are held mainly for strategic purposes. These assets expose the Group to credit risk, market risk and liquidity risk. Credit risk is the risk of loss arising from nonperformance of obligations by the borrower or issuer due to factors such as deterioration in the borrower’s/issuer’s financial conditions. Market risk is the risk stemming from fluctuations in interest rates, exchange rates, or share prices. Liquidity risk is the risk arising from difficulty executing transactions in desired quantities at appropriate prices due to low market liquidity. These risks are properly monitored and managed based on “(3) Risk management framework for financial instruments” below.

Financial liabilities

Financial liabilities of the Group include borrowed money and bonds, etc. in addition to deposits. Deposits mainly comprise deposits of domestic and foreign companies and domestic individuals. Borrowed money and bonds include subordinated borrowings and subordinated bonds with special clause specifying that the repayment order of borrowing or bond subordinates to other borrowings or bonds. Also, financial liabilities, like financial assets, expose the Group to not only market risk but also funding liquidity risk: the risk of the Group not being able to raise funds due to market turmoil, deterioration in the Group’s creditworthiness or other factors. These risks are properly monitored and managed based on “(3) Risk management framework for financial instruments” below.

Derivative transactions

Derivatives handled by the Group include foreign exchange futures; futures, forwards, swaps and options related to interest rates, currencies, equities, bonds and commodities; and credit and weather derivatives.

Major risks associated with derivatives include market risk, liquidity risk, and credit risk arising from nonperformance of contractual obligations due to deterioration in the counterparty’s financial conditions. These risks are properly monitored and managed based on “(3) Risk management framework for financial instruments” below.

Hedge accounting is applied to derivative transactions executed for ALM purposes, as necessary. Hedging instruments, hedged items, hedging policy and hedging method to assess the effectiveness of the hedge are described in “(Notes to significant accounting policies for preparing consolidated financial statements), 4. Accounting policies, (17) Hedge accounting.”

(3)	Risk management framework for financial instruments

The fundamental matters on risk management for the entire Group are set forth in “Policies on Comprehensive Risk Management.” The Company’s Management Committee establishes the basic risk management policy for the entire Group, based on the regulations, which is then approved by the Board of Directors. Each Group company has a risk management system based on the characteristics of its particular businesses and in accordance with the basic policy. Furthermore, the Group CRO is established to assess risk management across the Group unitarily and implement appropriate risk management. The Company is sharing information on group-wide risk management and strengthening related systems through the Group CRO Committee, which consists of the Group CRO and risk management representatives from strategically important Group companies.

Management of credit risk

The Company has established fundamental principles on credit risk management to thoroughly manage the credit risk of the entire Group. Each group company conducts integrated management of credit risk according to its operational characteristics, and the credit risk inherent in the entire portfolio as well as the risk in individual credits are managed quantitatively and continuously.

(a)

Credit risk management system

The Group CRO formulates credit risk management policies each year based on the basic risk management policy for the entire Group. Meanwhile, the Credit & Investment Planning Dept. is responsible for the comprehensive management of credit risk. This department drafts and administers credit risk regulations, including the Group’s credit policies, and performs credit portfolio management including non-performing loans. The Company has also established the Credit Risk Committee to serve as a body for deliberating on matters related to group-wide credit portfolios.

At SMBC, the Company’s major consolidated subsidiary, the Credit & Investment Planning Dept. of the Risk Management Unit is responsible for the comprehensive management of credit risk. This department establishes, revises or abolishes credit policies, the internal rating system, credit authority regulations, credit application regulations, and manages non-performing loans and other aspects of credit portfolio management. The department also controls SMBC’s total credit risk by quantifying credit risk (i.e. calculating risk capital and risk-weighted assets) in cooperation with the Corporate Risk Management Dept. Moreover, the Credit Portfolio Management Dept. within the Credit & Investment Planning Dept. works to stabilize SMBC’s overall credit portfolio through selling credit derivatives and loan claims.

The credit departments of each business unit together with branches conduct credit risk management for loans handled by their units and manage their units’ portfolios. Credit approval authority is generally determined based on the credit amounts and internal grades, and the credit departments focus on analysis and management of customers and transactions with relatively high credit risk. The Credit Administration Dept. is mainly responsible for formulating and implementing measures to reduce the exposure of non-performing loans. Through industrial and sector-specific surveys and studies of individual companies, the Corporate Research Dept. works to form an accurate idea of the circumstances of borrower companies and identify those with potentially troubled credit positions at early stage.

Moreover, the Credit Risk Committee, a cross-departmental consultative body, rounds out SMBC’s oversight systems for undertaking flexible and efficient control of credit risk and ensuring the overall soundness of SMBC’s loan operations.

In addition to these, the Internal Audit Unit, operating independently of the business units, audits asset quality, grading accuracy, self-assessment, and appropriateness of the credit risk management system, and reports the audit results to the Management Committee and the Audit Committee.

(b)

Method of credit risk management

The Company properly manages the credit risk inherent in individual loans and the entire portfolio by assessing and quantifying the credit risk of each borrower/loan using the internal rating system. In addition to management of individual loans through credit screening and monitoring, it manages the credit portfolio as described below in order to secure and improve the credit portfolio’s soundness and medium-term profitability.

•

Appropriate risk-taking within capital

To keep credit risk exposure to a permissible level relative to capital, the Company sets the upper limit of the permissible risk of overall risk capital, which represents the soundness of the risk appetite index, based on each business unit’s risk appetite and portfolio plan, and monitors the credit risk capital as part of permissible risk.

•

Controlling concentration of risk

Because concentration of credit risk in an industry or corporate group has the potential to impair the Company’s capital significantly, the Company implements measures to prevent excessive concentration of loan in a single industry and to control large exposure to individual borrowers by setting maximum loan amounts and conducting loan reviews thoroughly. To manage country risk, the Company also has credit limit guidelines based on each country’s creditworthiness.

•

Greater understanding of actual corporate conditions and balancing returns and risks

The Company runs credit operations on the basic principle of thoroughly understanding actual corporate conditions and gaining profit commensurate with the level of credit risk entailed, and makes every effort to improve profit at after-cost (credit cost, capital cost and overhead cost) level.

•

Reduction and prevention of non-performing loans

For non-performing loans and potential non-performing loans, the Company carries out loan reviews to clarify credit policies and action plans, enabling it to swiftly implement measures to prevent deterioration of borrowers’ business situations, support business recoveries, collect on loans, and enhance loan security.

In regard to financial instruments such as investments in certain funds, securitized products and credit derivatives that indirectly retain risks related to assets such as corporate bonds and loan claims (underlying assets), such instruments entail market and liquidity risks in addition to credit risk, since such instruments are traded on the market. Credit risk management for these instruments involving detailed analysis and evaluation of characteristics of underlying assets is performed while market risk is comprehensively managed within the framework for managing market and liquidity risks. Moreover, guidelines have been established based on the characteristics of each type of risk to appropriately manage risks of incurring losses.

In regard to credit risk of derivative transactions, the potential exposure based on the market price is regularly calculated and properly managed. When the counterparty is a financial institution with which the Company frequently conducts derivative transactions, measures such as a close-out netting provision, which provide offsetting credit exposures between two parties in a single net payment from one party to the other in case of bankruptcy or other default event, are implemented to reduce credit risk.

Management of market and liquidity risks

The Company manages market and liquidity risks across the entire Group by setting allowable risk limits; ensuring the transparency of the risk management process; and clearly separating front-office, middle-office, and back-office operations for a highly efficient system of mutual checks and balances.

(a)

Market and liquidity risk management systems

In accordance with the basic risk management policy for the entire Group decided upon by the Management Committee, the Company determines important matters relating to the management of market and liquidity risks, such as basic policies and risk limits, in order to manage these risks. The ALM Committee meets four times a year, in principle, to report on the state of market and liquidity risk management and to discuss ALM operation policies. The Corporate Risk Management Dept., which is independent from the business units that directly handle market transactions, manages market and liquidity risks in an integrated manner. This department not only monitors the current risk situations but also reports regularly to the Management Committee and the Audit Committee. Furthermore, the ALM Committee at SMBC, the core bank of the Company, meets on a monthly basis to examine reports on the state of observance of limits on market and liquidity risks and to discuss ALM operation policies.

In addition, the Internal Audit Dept., which is independent of other departments, periodically performs comprehensive internal audits to verify that the risk management framework is properly functioning and reports the audit results to the Management Committee and the Audit Committee.

(b)

Market and liquidity risk management methodology

•

Market risk management

The Company manages market risk by setting maximum loss and VaR (value at risk: maximum potential loss that may be incurred to a specific financial instrument for a given probability) within the market risk capital limit, which is set taking into account stockholders’ equity and other factors in accordance with the market transaction policies.

The Company uses the historical simulation method (a method for estimating the maximum loss by running simulations of changes in profit and loss on market fluctuations scenarios based on historical data) to measure VaR. Regarding banking activities (activities for generating profit through management of interest rates, terms, and other aspects such as loans and bonds in assets, deposits in liabilities) and trading activities (activities for generating profit by taking advantage of short-term fluctuations in market values and differences in value among markets), the Company calculates the maximum loss that may occur as a result of market fluctuations in 1 day with a probability of 1% based on 4 years of historical observation. With regard to the holding of shares (such as listed shares) for the purpose of strategic investment, the Company calculates the maximum loss that may occur as a result of market fluctuations in 1 year with a probability of 1% based on 10 years of historical observation.

Regarding risks associated with foreign exchange rates, interest rates, equity risk, option prices and other market risk factors, the Company manages such risks by setting a maximum limit on the indicator suited for each market risk factor such as BPV (basis point value: denotes the change in value of a financial instrument resulting from a 0.01 percentage-point change in the yield).

•

Quantitative information on market risks

As of March 31, 2022, total VaR of SMBC and its major consolidated subsidiaries was ¥62.6 billion for the banking activities, ¥25.9 billion for the trading activities and ¥1,226.4 billion for the holding of shares (such as listed shares) for the purpose of strategic investment.

However, it should be noted that these figures are statistical figures that change according to changes in assumptions and calculation methods, and may not cover the risk of future market conditions fluctuating drastically compared to market fluctuations of the past.

•

Liquidity risk management

The Company manages liquidity risk based on the framework of “setting management levels of risk appetite indicators” and “developing contingency plans.” Risk appetite indicators are quantitative benchmarks that select the types and indicate the levels of risk that the Company is willing to take on or tolerate. As an example, the Company sets a lower limit on the number of days over which cash flows could be maintained under the stress conditions such as deposit outflow, so as to secure funding sources that do not fall below the benchmark to avoid excessive reliance on short term funding. In addition, the Company develops contingency plans consisting of instructions, reporting lines and action plans in case of emergency.

Moreover, to manage the liquidity risk of marketable instruments, derivative transactions, etc., the Company has trading limits for each business office classified by currency, instrument, transaction period, etc. As for financial futures, etc., risks are managed by restricting positions to within a certain percentage of open interest in the entire market.

(4)	Supplementary explanations about matters concerning fair value of financial instruments

Fair values of financial instruments have been calculated using certain assumptions, and may differ if calculated based on different assumptions.

2. Matters concerning fair value of financial instruments and breakdown by input level

The amounts on the consolidated balance sheet, the fair value of financial instruments as well as the difference between them, and fair value by input level are as follows.

The amounts shown in the following tables do not include stocks with no market price, etc., and investments in partnerships (refer to Note 3).

The fair values of financial instruments are classified into the following three levels depending on the observability and significance of the input used in the fair value measurement.

Level 1: Fair value determined based on the (unadjusted) quoted price in an active market for the same asset or liability

Level 2: Fair value determined based on directly or indirectly observable inputs other than Level 1 inputs

Level 3: Fair value determined based on significant unobservable inputs

If multiple inputs with a significant impact are used for the fair value measurement of a financial instrument, the financial instrument is classified to the lowest priority level of fair value measurement in which each input belongs.

(1) Financial assets and liabilities at fair value on the consolidated balance sheets


		Millions of yen
		Consolidated balance sheet amount
March 31, 2021		Level 1		Level 2		Level 3		Total
	Monetary claims bought	¥	—	¥	276,989	¥	454,827	¥	731,817
	Trading assets
	Securities classified as trading purposes ^*1		2,473,813		591,976		270		3,066,060
	Money held in trust		—		309		—		309
	Securities
	Other securities ^*1		25,055,919		8,840,677		52,193		33,948,790
	Stocks		3,548,848		1,398		—		3,550,247
	Japanese government bonds		14,293,610		—		—		14,293,610
	Japanese local government bonds		686,861		45,760		—		732,622
	Short-term bonds		—		—		—		—
	Bonds		520		2,582,578		45,906		2,629,005
	Foreign stocks		613,230		4,029		—		617,260
	Foreign bonds		5,908,560		6,195,244		6,287		12,110,092
	Other		4,286		11,665		—		15,952

	Total assets	¥	27,529,732	¥	9,709,953	¥	507,291	¥	37,746,977

	Trading liabilities
	Trading securities sold for short sales ^*1	¥	1,997,985	¥	77,072	¥	—	¥	2,075,058

	Total liabilities	¥	1,997,985	¥	77,072	¥	—	¥	2,075,058

	Derivative transactions ^{*2, 3}
	Interest rate derivatives	¥	24,638	¥	416,233	¥	1,013	¥	441,886
	Currency derivatives		(560)		91,268		4,807		95,514
	Equity derivatives		(29,846)		106		21,696		(8,043)
	Bond derivatives		484		19		—		503
	Commodity derivatives		532		1,486		—		2,019
	Credit derivative transactions		—		(6,512)		796		(5,716)

	Total derivative transactions	¥	(4,751)	¥	502,601	¥	28,314	¥	526,164

The amount of investment trusts for which transitional measures are applied in accordance with Paragraph 26 of the “Guidance for Application of Fair Value Measurement” are not included in the table above. The amount of such investment trusts on the consolidated balance sheet includes financial assets of ¥1,200,314 million and financial liabilities of ¥1,510 million.

*2	The amounts collectively represent the derivative transactions which are recorded in “Trading assets,” “Trading liabilities,” “Other assets” and “Other liabilities.” Debts and credits arising from derivative transactions are presented on a net basis, with a net debt presented in round brackets.

*3	As for derivative transactions applying hedge accounting, ¥207,017 million is recorded on the consolidated balance sheet.

These are interest rate swap and other derivative transactions designated as hedging instruments for stabilizing cash flows of loans and bills discounted, etc., that are hedged items. The Company has mainly applied deferred hedge accounting for those derivative transactions. For these hedging relationships, the Company has applied “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (PITF No.40, September 29, 2020).


		Millions of yen
		Consolidated balance sheet amount
March 31, 2022		Level 1		Level 2		Level 3		Total
	Monetary claims bought	¥	—	¥	139,783	¥	453,676	¥	593,459
	Trading assets
	Securities classified as trading purposes ^*1		3,026,478		612,347		2,953		3,641,779
	Money held in trust		—		310		—		310
	Securities
	Other securities ^*1		26,967,783		8,748,760		38,988		35,755,532
	Stocks		3,236,224		789		—		3,237,013
	Japanese government bonds		15,774,197		—		—		15,774,197
	Japanese local government bonds		1,101,913		43,583		—		1,145,496
	Short-term bonds		—		101,998		—		101,998
	Bonds		120		2,500,547		37,949		2,538,617
	Foreign stocks		881,009		10,450		—		891,459
	Foreign bonds		5,971,115		6,069,966		1,038		12,042,120
	Other		3,204		21,425		—		24,629

	Total assets	¥	29,994,261	¥	9,501,201	¥	495,618	¥	39,991,081

	Trading liabilities
	Trading securities sold for short sales ^*1	¥	3,048,624	¥	129,081	¥	—	¥	3,177,706

	Total liabilities	¥	3,048,624	¥	129,081	¥	—	¥	3,177,706

	Derivative transactions ^{*2, 3}
	Interest rate derivatives	¥	397,345	¥	(573,584)	¥	1,505	¥	(174,733)
	Currency derivatives		(951)		(292,364)		14,851		(278,465)
	Equity derivatives		(69,982)		(842)		70,501		(323)
	Bond derivatives		(3,293)		1,406		—		(1,886)
	Commodity derivatives		1,210		(193)		—		1,016
	Credit derivative transactions		—		(4,494)		3,141		(1,352)

	Total derivative transactions	¥	324,327	¥	(870,072)	¥	89,999	¥	(455,745)

*2	The amounts collectively represent the derivative transactions which are recorded in “Trading assets,” “Trading liabilities,” “Other assets” and “Other liabilities.” Debts and credits arising from derivative transactions are presented on a net basis, with a net debt presented in round brackets.

*3	As for derivative transactions applying hedge accounting, ¥(682,849) million is recorded on the consolidated balance sheet.

(2) Financial assets and liabilities which are not stated at fair value on the consolidated balance sheet

Cash and due from banks, Call loans and bills bought, Receivables under resale agreements, Receivables under securities borrowing transactions, Foreign exchanges, Call money and bills sold, Payable under repurchase agreements, Payable under securities lending transactions, Commercial papers, and Short-term bonds payable are not included in the following tables since they are mostly short-term, and their fair values approximate their carrying amounts.


		Millions of yen
		Fair Value								Consolidated balance sheet amount		Net unrealized gains (losses)
March 31, 2021		Level 1		Level 2		Level 3		Total		Consolidated balance sheet amount		Net unrealized gains (losses)
	Monetary claims bought ^*	¥	—	¥	—	¥	3,971,664	¥	3,971,664	¥	3,930,431	¥	41,233
	Securities
	Bonds classified as held-to-maturity		22,239		—		—		22,239		22,300		(60)
	Loans and bills discounted										85,132,738
	Reserve for possible loan losses ^*										(456,861)

			—		—		86,450,361		86,450,361		84,675,876		1,774,484

	Lease receivables and investment assets ^*		—		—		239,867		239,867		235,723		4,144

	Total assets	¥	22,239	¥	—	¥	90,661,893	¥	90,684,133	¥	88,864,331	¥	1,819,802

	Deposits	¥	—	¥	142,023,649	¥	—	¥	142,023,649	¥	142,026,156	¥	(2,507)
	Negotiable certificates of deposit		—		12,579,851		—		12,579,851		12,570,617		9,233
	Borrowed money		—		17,773,586		—		17,773,586		17,679,690		93,895
	Bonds		—		8,621,373		702,346		9,323,720		9,043,031		280,688
	Due to trust account		—		2,335,221		—		2,335,221		2,321,223		13,998

	Total liabilities	¥	—	¥	183,333,682	¥	702,346	¥	184,036,029	¥	183,640,720	¥	395,308

*	General reserves and special reserves corresponding to loans are deducted. The reserve for possible loan losses on “Monetary claims bought” and “Lease receivables and investment assets” are deducted directly from consolidated balance sheet amount since they are immaterial.


		Millions of yen
		Fair Value								Consolidated balance sheet amount		Net unrealized gains (losses)
March 31, 2022		Level 1		Level 2		Level 3		Total		Consolidated balance sheet amount		Net unrealized gains (losses)
	Monetary claims bought ^*	¥	—	¥	—	¥	4,811,550	¥	4,811,550	¥	4,774,841	¥	36,709
	Securities
	Bonds classified as held-to-maturity		25,522		—		—		25,522		25,741		(218)
	Loans and bills discounted										90,834,056
	Reserve for possible loan losses ^*										(590,744)

			—		—		91,961,573		91,961,573		90,243,312		1,718,260

	Lease receivables and investment assets ^*		—		—		230,308		230,308		228,254		2,053

	Total assets	¥	25,522	¥	—	¥	97,003,432	¥	97,028,954	¥	95,272,149	¥	1,756,805

	Deposits	¥	—	¥	148,573,241	¥	—	¥	148,573,241	¥	148,585,460	¥	(12,218)
	Negotiable certificates of deposit		—		13,074,760		—		13,074,760		13,069,796		4,963
	Borrowed money		—		18,860,623		—		18,860,623		18,877,990		(17,366)
	Bonds		—		8,805,035		775,403		9,580,439		9,808,107		(227,668)
	Due to trust account		—		2,429,001		—		2,429,001		2,443,873		(14,871)

	Total liabilities	¥	—	¥	191,742,662	¥	775,403	¥	192,518,066	¥	192,785,228	¥	(267,161)

*	General reserves and special reserves corresponding to loans are deducted. The reserve for possible loan losses on “Monetary claims bought” and “Lease receivables and investment assets” are deducted directly from consolidated balance sheet amount since they are immaterial.

(Note 1) Description of the valuation techniques and inputs used to measure fair value

Assets

Monetary claims bought

The fair values of subordinated trust beneficiary interests related to securitized housing loans among monetary claims bought are determined by estimating future cash flows using the probability of default, loss given default and prepayment rate, and assessing the value by deducting the value of senior beneficial interests, etc. from the value of underlying housing loans.

The fair values of other transactions are, in principle, based on methods similar to the methods applied to Loans and bills discounted.

These transactions are mainly classified into Level 3.

Trading assets

The fair values of bonds and other securities held for trading purposes are, in principle, based on their market prices at the end of the fiscal year ended March 31, 2022.

The fair values of such bonds and other securities are mainly classified into Level 1 depending on the level of market activity. When fair value is determined based on either the prices quoted by the financial institutions, or future cash flows discounted using observable inputs such as interests, spreads, and others, they are classified into Level 2.

Money held in trust

The fair values of money held in trust are, in principle, fair values of securities in trust property calculated by the same method as securities that the Company owns. They are classified into Level 2.

Securities

In principle, the fair values of stocks (including foreign stocks) are based on the market price as of the end of the fiscal year ended March 31, 2022. They are mainly classified into Level 1 depending on the level of market activity. The fair values of securities with market prices other than stocks are based on the market price as of the end of the fiscal year ended March 31, 2022. Japanese Government bonds, etc. are mainly classified into Level 1 and other bonds are classified into Level 2.

The fair values of privately-placed bonds with no market prices are based on the present value of estimated future cash flows, taking into account the borrower’s probability of default, loss given default, etc. Those present values are discounted by a rate comprising a risk-free interest rate with certain adjustment. However, the fair values of bonds, such as privately-placed bonds issued by bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers are based on the bond’s book value after the deduction of the expected amount of a loss on the bond computed by using the same method applied to the estimation of a loan loss.

These transactions are mainly classified into Level 2.

Loans and bills discounted, and Lease receivables and investment assets

Of these transactions, considering the characteristics of these transaction, the fair values of overdrafts with no specified repayment dates are their book values as they are considered to approximate their fair values.

For short-term transactions, the fair values are also their book values as they are considered to approximate their fair values.

The fair values of long-term transactions are, in principle, based on the present value of estimated future cash flows taking into account the borrower’s probability of default, loss given default, etc. Those present values are discounted by a rate comprising a risk-free interest rate with certain adjustment. At certain consolidated subsidiaries of the Company, the fair values are calculated based on the present values of estimated future cash flows, which are computed based on the contractual interest rate. Those present values are discounted by a rate comprising a risk-free rate and a credit risk premium.

Regarding claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers, expected losses on such claims are calculated based on either the expected recoverable amount from disposal of collateral or guarantees, or the present value of expected future cash flows. Since the claims’ consolidated balance sheet amounts minus the expected amount of loan losses approximate their fair values, such amounts are considered to be their fair values.

These transactions are classified into Level 3.

Liabilities

Trading liabilities

The fair values of bonds sold for short sales and other securities for trading purposes are, in principle, based on their market prices as of the end of the fiscal year ended March 31, 2022. They are mainly classified into Level 1.

Deposits, Negotiable certificates of deposit, and Due to trust account

Out of these transactions, the fair values of demand deposits and deposits without maturity are their book values. The fair values of transactions with a short-term remaining maturity are also their book values, as their book values are regarded to approximate their fair values. The fair values of transactions with a long-term remaining maturity are, in principle, based on the present value of estimated future cash flows discounted by the interest rate assuming that the same type of deposit is newly accepted until the end of the remaining maturity.

The fair values of borrowings from the trust account related to covered bond issued by the trust account are based on the amount calculated in accordance with the price quoted by industry associations, etc.

These transactions are classified into Level 2.

Borrowed money and Bonds

The fair values of short-term transactions are their book values, as their book values are considered to approximate their fair values. For long-term transactions, their fair values are based on the present value of estimated future cash flows discounted using the refinancing rate applied to the same type of instruments for the remaining maturity.

For transactions with the price quoted by industry associations, etc., fair value is based on the amount calculated by using the published price data, yield data, etc.

These transactions are classified into Level 2.

Derivative transactions

The fair values of listed derivatives are based on their closing prices. The fair values of over-the-counter derivative transactions are based on the present value of the future cash flows, option valuation models, etc., using inputs such as interest rate, foreign exchange rate, stock price, commodity price, etc.

Over-the-counter derivative transactions takes into account the counterparty’s and the Company’s credit risks, and the liquidity risks of the unsecured lending funds. Listed derivative transactions are mainly classified into Level 1. Over-the-counter derivative transactions are classified into Level 2 if observable inputs are available or impact of unobservable inputs to the fair values is not significant. If impact of unobservable inputs to the fair values is significant, they are classified into Level 3.

(Note 2) Quantitative information about financial assets and liabilities measured and stated on the consolidated balance sheet at fair value and classified in Level 3

Quantitative information on significant unobservable inputs


March 31, 2021	Valuation technique	Significant unobservable inputs	Range
Monetary claims bought	Discounted cash flow	Probability of default	0.1% — 100.0%
		Loss given default	0.0% — 51.4%
		Prepayment rate	2.0% — 7.5%
Trading assets:
Securities classified as trading purposes	Option valuation model	Equity volatility	24.6% — 57.6%
Securities:
Corporate Bonds	Discounted cash flow	Probability of default	7.9% — 100.0%
		Loss given default	0.0% — 80.2%
Foreign bonds	Discounted cash flow	Probability of default	11.9% — 100.0%
		Loss given default	34.1% — 78.5%
Derivative transactions:
Interest rate derivatives	Option valuation model	Correlation between interest rates	14.9% — 98.0%
Currency derivatives	Option valuation model	Correlation between interest rates	26.7% — 98.0%
		Correlation between interest rate and foreign exchange rate	13.9% — 47.6%
		Foreign exchange rate volatility	8.9% — 14.8%
Equity derivatives	Option valuation model	Correlation between equities	47.1% — 93.1%
		Correlation between foreign exchange rate and equity	(26.0)% — (2.6)%
		Equity volatility	16.6% — 55.9%
Credit derivatives	Credit default model	Correlation between foreign exchange rate and CDS* spread	15.0% — 90.0%

Credit Default Swap


March 31, 2022	Valuation technique	Significant unobservable inputs	Range
Monetary claims bought	Discounted cash flow	Probability of default	0.1% — 100.0%
		Loss given default	0.0% — 52.8%
		Prepayment rate	2.0% — 7.0%
Trading assets:
Securities classified as trading purposes	Option valuation model	Equity volatility	31.1% — 57.8%
Securities:
Corporate Bonds	Discounted cash flow	Probability of default	7.9% — 100.0%
		Loss given default	0.0% — 55.0%
Foreign bonds	Discounted cash flow	Probability of default	100.0%
		Loss given default	33.6% — 79.5%
Derivative transactions:
Interest rate derivatives	Option valuation model	Correlation between interest rates	16.0% — 58.1%
		Correlation between interest rate and foreign exchange rate	6.9% — 30.4%
Currency derivatives	Option valuation model	Correlation between interest rates	28.5% — 98.8%
		Correlation between interest rate and foreign exchange rate	10.5% — 48.7%
		Foreign exchange rate volatility	12.2% — 15.2%
	Discounted cash flow	Prepayment rate	22.0%
Equity derivatives	Option valuation model	Correlation between equities	42.6% — 93.1%
		Correlation between foreign exchange rate and equity	(14.2)% — 19.7%
		Equity volatility	12.8% — 79.1%
Credit derivatives	Credit default model	Correlation between foreign exchange rate and CDS* spread	15.0% — 90.0%

Credit Default Swap

Reconciliation between the beginning and ending balance, and net unrealized gains (losses) recognized in the earnings of the period


	Millions of yen
March 31, 2021	Beginning balance		Earnings of the period^*1		Other comprehensive income^*2		Net amount of purchase, sale, issuance and settlement		Transfer to Level 3^*3		Transfer from Level 3^*4		Ending balance		Net unrealized gains (losses) on financial assets and liabilities held at consolidated balance sheet date among the amount recognized in the earnings of the period
Monetary claims bought	¥	451,033	¥	—	¥	4,789	¥	(994)	¥	—	¥	—	¥	454,827	¥	—
Trading assets		152		3,499		—		(3,383)		1		—		270		184
Securities
Other securities		33,251		539		(1,515)		(28,217)		48,305		(170)		52,193		(4,585)
Corporate bonds		26,784		(50)		(1,510)		(27,452)		48,305		(170)		45,906		(4,545)
Foreign bonds		6,467		589		(4)		(765)		—		—		6,287		(40)
Derivative transactions
Interest rate		4,280		(3,316)		—		50		—		—		1,013		366
Currency		1,721		3,038		—		—		—		47		4,807		3,297
Equity		32,865		(13,462)		—		2,293		—		—		21,696		10,855
Bond		—		—		—		—		—		—		—		—
Credit derivative		2,240		(1,444)		—		—		—		—		796		(709)

Total	¥	525,544	¥	(11,145)	¥	3,274	¥	(30,251)	¥	48,306	¥	(122)	¥	535,605	¥	9,408

The amounts shown in the table above are included in consolidated statements of income.

The amounts shown in the table above are included in “Net unrealized gains (losses) on other securities” under “Other comprehensive income (losses).”

Transfer from Level 2 to Level 3 due to an increase in the impact on the fair value of unobservable inputs for privately-placed bonds etc. The transfer was made at the beginning of the fiscal year ended March 31, 2021.

Transfer from Level 3 to Level 2 due to a decrease in the impact on the fair value of unobservable inputs for privately-placed bonds etc. The transfer was made at the beginning of the fiscal year ended March 31, 2021.


	Millions of yen
March 31, 2022	Beginning balance		Earnings of the period^*1		Other comprehensive income^*2		Net amount of purchase, sale, issuance and settlement		Transfer to Level 3^*3		Transfer from Level 3^*4		Ending balance		Net unrealized gains (losses) on financial assets and liabilities held at consolidated balance sheet date among the amount recognized in the earnings of the period
Monetary claims bought	¥	454,827	¥	—	¥	(3,748)	¥	2,597	¥	—	¥	—	¥	453,676	¥	—
Trading assets		270		1,430		—		958		295		—		2,953		145
Securities
Other securities		52,193		3,716		(390)		(19,369)		9,757		(6,919)		38,988		(652)
Corporate bonds		45,906		3,638		(390)		(19,294)		9,757		(1,667)		37,949		(441)
Foreign bonds		6,287		77		0		(74)		—		(5,252)		1,038		(211)
Derivative transactions
Interest rate		1,013		699		—		743		—		(951)		1,505		709
Currency		4,807		10,043		—		—		—		—		14,851		10,042
Equity		21,696		48,398		—		407		—		—		70,501		65,804
Bond		—		(315)		—		315		—		—		—		—
Credit derivative		796		2,344		—		—		—		—		3,141		2,300

Total	¥	535,605	¥	66,317		¥ (4,138)	¥	(14,347)	¥	10,052	¥	(7,871)	¥	585,618	¥	78,350

The amounts shown in the table above are included in consolidated statements of income.

The amounts shown in the table above are included in “Net unrealized gains (losses) on other securities” under “Other comprehensive income (losses).”

Description of the fair value valuation process

At the Group, the middle division establishes policies and procedures for the calculation of fair value, and the front division develops valuation models in accordance with such policies and procedures. The middle division verifies the reasonableness of the fair value valuation models, the inputs used, and the appropriateness of the classified fair value level of the calculated fair value.

Observable data is utilized as much as possible for the valuation model. If quoted prices obtained from third parties are used, those values are verified by comparison with results recalculated by the Company using the inputs for the valuation.

Description of the sensitivity of the fair value to changes in significant unobservable inputs

Probability of default

Probability of default represents the likelihood that the default will occur, and is calculated based on actual defaults in the past. A significant increase (decrease) in the default rate would result in a significant decrease (increase) in a fair value.

Loss given default

Loss given default is the proportion of estimated losses in the event that default occurs to the total balance of bonds or loans and bills discounted, and is calculated based on actual defaults in the past. A significant increase (decrease) in loss given default would result in a significant decrease (increase) in a fair value.

Prepayment rate

Prepayment rate is the proportion of estimated principals assuming that prepayment is made in each period. In general, a significant change in prepayment rate would result in a significant increase or decrease in a fair value according to the contractual terms and conditions of the financial instruments.

Volatility

Volatility is an indicator that represents the estimation of severity of change over a certain period in values of inputs and market values. Volatility is estimated based on actual results in the past, information derived from third parties and other analysis approach. Volatility is mainly used in valuation of derivatives that refer to potential changes of interest rate, foreign exchange rate, stock price, etc. A significant increase (decrease) in volatility would generally result in a significant increase (decrease) in a fair value.

Correlation

Correlation is an indicator of the relation of variables such as interest rate, foreign exchange rate, Credit Default Swap (CDS) spread and stock price. Correlation is estimated based on actual results in the past, and is mainly used in valuation technique of complex derivatives, etc. A significant change in correlation would generally result in a significant increase or decrease in a fair value according to the contractual terms and conditions of the financial instrument.

(Note 3) Consolidated balance sheet amounts of stocks with no market prices, etc. and investments in partnership, etc. are as follows. In accordance with Paragraph 5 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19, March 31, 2020) and Paragraph 27 of “Guidance for Application of Fair Value Measurement,” these amounts are not included in “Trading assets” and “Securities” stated on the tables disclosed in “Matters concerning fair value of financial instruments and breakdown by input level:


	Millions of yen
	March 31, 2021		March 31, 2022
Stocks with no market prices, etc.^{*1, 2}	¥	187,204	¥	226,213
Investments in partnership, etc.^*2		278,072		324,512

Total	¥	465,276	¥	550,725

Unlisted stocks are included in stocks with no market prices, etc.

Unlisted stocks and investments in partnership totaling ¥20,644 million and ¥19,749 million were written-off in the fiscal year ended March 31, 2021 and 2022, respectively.

(Note 4) Redemption schedule of monetary claims and securities with maturities


	Millions of yen
March 31, 2021	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years
Monetary claims bought^*1	¥	3,315,168	¥	813,388	¥	255,255	¥	221,553
Securities		8,992,297		13,437,597		4,576,528		3,251,964
Bonds classified as held-to-maturity		—		—		22,300		—
Japanese government bonds		—		—		—		—
Japanese local government bonds		—		—		22,300		—
Japanese corporate bonds		—		—		—		—
Other		—		—		—		—
Other securities with maturity		8,992,297		13,437,597		4,554,228		3,251,964
Japanese government bonds		5,899,020		6,642,300		1,406,600		283,900
Japanese local government bonds		7,170		205,548		506,788		12,232
Japanese corporate bonds		273,382		1,222,810		639,373		466,520
Other		2,812,724		5,366,938		2,001,466		2,489,310
Loans and bills discounted^1,2		22,105,264		36,046,216		13,079,391		6,402,231
Lease receivables and investment assets		18,821		57,940		42,590		70,712

Total	¥	34,431,552	¥	50,355,142	¥	17,953,766	¥	9,946,460

The amounts shown in the table above do not include amounts for claims, such as claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers for which redemption is unlikely. The amounts for such claims are Monetary claims bought: ¥317 million, Loans and bills discounted: ¥422,940 million.

Loans and bills discounted without the maturity dates are not included. Such amount is totaled to ¥7,073,876 million at March 31, 2021.


	Millions of yen
March 31, 2022	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years
Monetary claims bought^*1	¥	3,974,845	¥	815,745	¥	311,015	¥	219,015
Securities		11,491,448		11,580,697		6,916,911		2,534,711
Bonds classified as held-to-maturity		—		3,448		22,300		—
Japanese government bonds		—		—		—		—
Japanese local government bonds		—		3,448		22,300		—
Japanese corporate bonds		—		—		—		—
Other		—		—		—		—
Other securities with maturity		11,491,448		11,577,249		6,894,611		2,534,711
Japanese government bonds		7,757,060		6,196,100		1,451,300		355,800
Japanese local government bonds		100		282,749		858,988		11,584
Japanese corporate bonds		193,861		1,329,315		554,483		448,883
Other		3,540,426		3,769,084		4,029,839		1,718,443
Loans and bills discounted^1,2		22,664,721		39,577,284		13,538,895		6,749,118
Lease receivables and investment assets		24,097		57,516		36,056		71,880

Total	¥	38,155,113	¥	52,031,243	¥	20,802,880	¥	9,574,725

The amounts shown in the table above do not include amounts for claims, such as claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers for which redemption is unlikely. The amounts for such claims are Monetary claims bought: ¥313 million, Loans and bills discounted: ¥601,929 million.

Loans and bills discounted without the maturity dates are not included. Such amount is totaled to ¥7,725,704 million at March 31, 2022.

(Note 5) Repayment schedule of bonds, borrowed money and other interest-bearing debts


	Millions of yen
March 31, 2021	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years
Deposits*	¥	138,365,168	¥	3,108,605	¥	160,363	¥	392,019
Negotiable certificates of deposit		12,105,583		465,034		—		—
Borrowed money		7,638,210		9,154,938		634,982		251,559
Bonds		1,294,715		3,677,761		2,970,463		1,100,289
Due to trust account		1,732,438		426,597		162,187		—

Total	¥	161,136,116	¥	16,832,937	¥	3,927,997	¥	1,743,867

Demand deposits are included in “Within 1 year.” Deposits include current deposits.


	Millions of yen
March 31, 2022	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years
Deposits*	¥	145,231,046	¥	2,762,344	¥	192,498	¥	399,570
Negotiable certificates of deposit		12,784,102		285,694		—		—
Borrowed money		8,765,083		9,128,064		691,834		293,007
Bonds		1,378,622		4,521,901		2,397,014		1,510,161
Due to trust account		1,876,830		464,435		102,607		—

Total	¥	170,035,684	¥	17,162,440	¥	3,383,955	¥	2,202,739

Demand deposits are included in “Within 1 year.” Deposits include current deposits.

(Notes to securities)

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

1.	Securities classified as trading purposes

2.	Bonds classified as held-to-maturity


		Millions of yen
March 31, 2021		Consolidated balance sheet amount		Fair value		Net unrealized gains (losses)
Bonds with unrealized gains:	Japanese government bonds	¥	—	¥	—	¥	—
	Japanese local government bonds		3,700		3,701		1
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		3,700		3,701		1

Bonds with unrealized losses:	Japanese government bonds		—		—		—
	Japanese local government bonds		18,600		18,538		(61)
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		18,600		18,538		(61)

Total		¥	22,300	¥	22,239	¥	(60)


		Millions of yen
March 31, 2022		Consolidated balance sheet amount		Fair value		Net unrealized gains (losses)
Bonds with unrealized gains:	Japanese government bonds	¥	—	¥	—	¥	—
	Japanese local government bonds		—		—		—
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		—		—		—

Bonds with unrealized losses:	Japanese government bonds		—		—		—
	Japanese local government bonds		25,741		25,522		(218)
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		25,741		25,522		(218)

Total		¥	25,741	¥	25,522	¥	(218)

3.	Other securities


		Millions of yen
March 31, 2021		Consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other securities with unrealized gains:	Stocks	¥	3,443,816	¥	1,161,142	¥	2,282,673
Other securities with unrealized gains:	Bonds		6,148,728		6,119,071		29,657
	Japanese government bonds		3,980,113		3,977,980		2,132
	Japanese local government bonds		215,060		214,647		413
	Japanese corporate bonds		1,953,555		1,926,443		27,111
	Other		8,133,879		7,336,137		797,741

	Subtotal		17,726,424		14,616,350		3,110,073

Other securities with unrealized losses:	Stocks		106,431		133,466		(27,035)
Other securities with unrealized losses:	Bonds		11,506,509		11,528,134		(21,624)
	Japanese government bonds		10,313,497		10,329,703		(16,206)
	Japanese local government bonds		517,561		518,629		(1,067)
	Japanese corporate bonds		675,450		679,800		(4,350)
	Other		6,613,717		6,743,300		(129,582)

	Subtotal		18,226,657		18,404,900		(178,243)

Total		¥	35,953,082	¥	33,021,251	¥	2,931,830


Note:		Net unrealized gains (losses) on other securities shown above include gains of ¥399 million for the fiscal year ended March 31, 2021 that are recognized in the earnings by applying fair value hedge accounting.


		Millions of yen
March 31, 2022		Consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other securities with unrealized gains:	Stocks	¥	3,102,908	¥	1,043,950	¥	2,058,958
Other securities with unrealized gains:	Bonds		3,669,443		3,652,567		16,875
	Japanese government bonds		2,139,495		2,139,166		329
	Japanese local government bonds		29,318		29,251		66
	Japanese corporate bonds		1,500,629		1,484,149		16,479
	Other		4,867,519		4,062,708		804,811

	Subtotal		11,639,871		8,759,226		2,880,645

Other securities with unrealized losses:	Stocks		134,105		159,405		(25,300)
Other securities with unrealized losses:	Bonds		15,890,865		15,957,815		(66,949)
	Japanese government bonds		13,634,701		13,682,130		(47,428)
	Japanese local government bonds		1,116,178		1,125,300		(9,121)
	Japanese corporate bonds		1,139,986		1,150,385		(10,399)
	Other		9,899,355		10,410,541		(511,185)

	Subtotal		25,924,326		26,527,762		(603,435)

Total		¥	37,564,198	¥	35,286,988	¥	2,277,209


Note:		Net unrealized gains (losses) on other securities shown above include gains of ¥2,122 million for the fiscal year ended March 31, 2022 that are recognized in the earnings by applying fair value hedge accounting.

4.	Held-to-maturity bonds sold during the fiscal year

Fiscal year ended March 31, 2021

There are no corresponding transactions.

Fiscal year ended March 31, 2022

There are no corresponding transactions.

5.	Other securities sold during the fiscal year


	Millions of yen
Year ended March 31, 2021	Sales amount		Gains on sales		Losses on sales
Stocks	¥	139,203	¥	83,297	¥	(4,992)
Bonds		7,402,988		7,378		(3,812)
Japanese government bonds		7,318,109		6,970		(3,812)
Japanese local government bonds		—		—		—
Japanese corporate bonds		84,879		408		—
Other		9,545,072		164,069		(47,591)

Total	¥	17,087,264	¥	254,745	¥	(56,397)


	Millions of yen
Year ended March 31, 2022	Sales amount		Gains on sales		Losses on sales
Stocks	¥	287,839	¥	191,361	¥	(7,223)
Bonds		7,581,576		8,918		(707)
Japanese government bonds		7,489,440		8,653		(707)
Japanese local government bonds		—		—		—
Japanese corporate bonds		92,135		264		—
Other		11,037,870		96,020		(88,699)

Total	¥	18,907,285	¥	296,300	¥	(96,630)

6.	Change of classification of securities

Fiscal year ended March 31, 2021

There are no significant corresponding transactions to be disclosed.

Fiscal year ended March 31, 2022

There are no significant corresponding transactions to be disclosed.

7.	Write-down of securities

Bonds classified as held-to-maturity and other securities (excluding other securities whose consolidated balance sheet amounts are not measured at 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 losses for the fiscal years ended March 31, 2021 and 2022 were ¥8,480 million and ¥4,688 million, respectively. 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 lower than acquisition cost.
Normal issuers:		Fair value is 50% or 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 4 categories of issuers.

(Notes to money held in trust)

1.	Money held in trust classified as trading purposes

Fiscal year ended March 31, 2021

There are no corresponding transactions.

Fiscal year ended March 31, 2022

There are no corresponding transactions.

2.	Money held in trust classified as held-to-maturity

Fiscal year ended March 31, 2021

There are no corresponding transactions.

Fiscal year ended March 31, 2022

There are no corresponding transactions.

3.	Other money held in trust (other than trading purpose and held-to-maturity)


March 31, 2021	Millions of yen
March 31, 2021	Consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other money held in trust	¥	309	¥	309		—

March 31, 2022	Millions of yen
March 31, 2022	Consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other money held in trust	¥	310	¥	310		—

(Notes to net unrealized gains (losses) on other securities)

The breakdown of “Net unrealized gains (losses) on other securities” reported on the consolidated balance sheets is as shown below:


March 31, 2021	Millions of yen
Net unrealized gains (losses)	¥	2,931,364
Other securities		2,931,364
Other money held in trust		—
(-) Deferred tax liabilities		747,355

Net unrealized gains (losses) on other securities (before following adjustments)		2,184,009

(-) Non-controlling interests		105,206
(+) The Company’s interest in net unrealized gains (losses) on valuation of other securities held by equity method affiliates		15,802

Net unrealized gains (losses) on other securities	¥	2,094,605


March 31, 2022	Millions of yen
Net unrealized gains (losses)	¥	2,277,165
Other securities		2,277,165
Other money held in trust		—
(-) Deferred tax liabilities		553,512

Net unrealized gains (losses) on other securities (before following adjustments)		1,723,652

(-) Non-controlling interests		105,291
(+) The Company’s interest in net unrealized gains (losses) on valuation of other securities held by equity method affiliates		13,719

Net unrealized gains (losses) on other securities	¥	1,632,080

(Notes to derivative transactions)

1.	Derivative transactions to which the hedge accounting method is not applied

The following tables set forth the contract amount or the amount equivalent to the notional amount, fair value and valuation gains (losses) by type of derivative with respect to derivative transactions to which the hedge accounting method is not applied at the end of the fiscal year. Contract amount does not indicate the market risk relating to derivative transactions.

(1) Interest rate derivatives


	Millions of yen
	Contract amount						Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Interest rate futures:
Sold	¥	17,270,061	¥	6,611,011	¥	(1,126)	¥	(1,126)
Bought		8,617,990		5,912,395		726		726
Interest rate options:
Sold		5,924,592		3,182,912		(6,862)		(6,862)
Bought		180,429,787		69,190,643		30,995		30,995
Over-the-counter
Forward rate agreements:
Sold		55,761,372		5,980		12,420		12,420
Bought		54,471,354		1,560		(12,423)		(12,423)
Interest rate swaps:		468,245,252		356,060,418		236,177		236,177
Receivable fixed rate/payable floating rate		208,413,122		158,339,724		4,627,453		4,627,453
Receivable floating rate/payable fixed rate		204,100,529		153,091,311		(4,402,436)		(4,402,436)
Receivable floating rate/payable floating rate		55,641,657		44,546,438		(1,218)		(1,218)
Interest rate swaptions:
Sold		6,757,427		4,764,343		(84,446)		(84,446)
Bought		6,166,275		4,403,008		78,877		78,877
Caps:
Sold		64,606,743		36,017,193		(41,891)		(41,891)
Bought		13,510,015		11,219,847		11,642		11,642
Floors:
Sold		4,130,223		3,590,129		(19,012)		(19,012)
Bought		2,257,383		2,034,274		20,450		20,450
Other:
Sold		1,855,047		1,322,008		(6,649)		(6,649)
Bought		6,082,064		4,112,358		56,462		56,462

Total		/		/	¥	275,340	¥	275,340


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


	Millions of yen
	Contract amount						Valuation gains (losses)
March 31, 2022	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Interest rate futures:
Sold	¥	54,427,438	¥	19,738,845	¥	22,143	¥	22,143
Bought		88,326,052		47,391,708		(19,479)		(19,479)
Interest rate options:
Sold		63,833,754		15,699,082		(99,057)		(99,057)
Bought		386,745,214		128,653,154		493,419		493,419
Over-the-counter
Forward rate agreements:
Sold		6,333,817		—		(4,895)		(4,895)
Bought		6,241,393		—		4,867		4,867
Interest rate swaps:		661,604,364		431,818,786		(121,168)		(121,168)
Receivable fixed rate/payable floating rate		262,006,812		177,356,314		(4,693,040)		(4,693,040)
Receivable floating rate/payable fixed rate		270,394,735		183,824,473		4,557,661		4,557,661
Receivable floating rate/payable floating rate		129,083,786		70,522,569		4,364		4,364
Interest rate swaptions:
Sold		13,166,812		7,857,909		(205,991)		(205,991)
Bought		13,520,720		8,447,484		195,485		195,485
Caps:
Sold		90,834,343		57,007,182		(652,545)		(652,545)
Bought		17,003,839		13,666,308		146,807		146,807
Floors:
Sold		4,669,520		2,890,693		(10,389)		(10,389)
Bought		2,907,184		2,460,367		14,650		14,650
Other:
Sold		3,943,644		1,882,178		(27,824)		(27,824)
Bought		10,094,024		8,051,028		85,940		85,940

Total		/		/	¥	(178,039)	¥	(178,039)


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

(2) Currency derivatives


March 31, 2021	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Currency futures:
Sold	¥	1,812	¥	—	¥	93	¥	93
Bought		6,256		—		0		0
Over-the-counter
Currency swaps		76,626,201		59,390,711		(78,194)		161,586
Currency swaptions:
Sold		70,002		70,002		117		117
Bought		520,389		501,768		(493)		(493)
Forward foreign exchange		77,285,120		13,081,964		134,477		134,477
Currency options:
Sold		2,842,651		1,350,141		(85,577)		(85,577)
Bought		2,507,220		1,123,003		82,620		82,620

Total		/		/	¥	53,043	¥	292,824


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


March 31, 2022	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Currency futures:
Sold	¥	744	¥	—	¥	(103)	¥	(103)
Bought		10,013		—		0		0
Over-the-counter
Currency swaps		86,400,103		69,758,870		615,163		242,608
Currency swaptions:
Sold		47,455		47,455		54		54
Bought		645,572		612,935		36		36
Forward foreign exchange		86,861,074		13,390,507		(184,625)		(184,625)
Currency options:
Sold		3,272,220		1,324,819		(141,879)		(141,879)
Bought		6,639,072		1,053,206		117,012		117,012

Total		/		/	¥	405,658	¥	33,103


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

(3) Equity derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Equity price index futures:
Sold	¥	1,080,737	¥	23,420	¥	(9,528)	¥	(9,528)
Bought		528,050		42,460		13,942		13,942
Equity price index options:
Sold		589,781		184,932		(69,039)		(69,039)
Bought		360,975		118,530		34,014		34,014
Over-the-counter
Equity options:
Sold		50,915		4,266		(5,977)		(5,977)
Bought		107,824		25,680		18,974		18,974
Equity index forward contracts:
Sold		—		—		—		—
Bought		3,574		—		98		98
Equity price index swaps:
Receivable equity index/payable short-term floating rate		7,520		1,550		(1,153)		(1,153)
Receivable short-term floating rate/payable equity index		272,916		136,390		12,625		12,625

Total		/		/	¥	(6,043)	¥	(6,043)


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2022	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Equity price index futures:
Sold	¥	798,131	¥	36,776	¥	(61,375)	¥	(61,375)
Bought		430,563		10,703		39,332		39,332
Equity price index options:
Sold		757,642		214,565		(82,971)		(82,971)
Bought		494,972		141,251		35,030		35,030
Over-the-counter
Equity options:
Sold		73,807		10,524		(6,479)		(6,479)
Bought		176,088		53,670		29,472		29,472
Equity price index swaps:
Receivable equity index/payable short-term floating rate		5,535		1,500		(839)		(839)
Receivable short-term floating rate/payable equity index		325,383		158,924		49,536		49,536

Total		/		/	¥	1,707	¥	1,707


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

(4) Bond derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Bond futures:
Sold	¥	1,340,302	¥	—	¥	12,083	¥	12,083
Bought		1,604,432		—		(11,546)		(11,546)
Bond futures options:
Sold		58,891		—		(44)		(44)
Bought		12,000		—		(7)		(7)
Over-the-counter
Bond forward contract:
Sold		103		—		3		3
Bought		—		—		—		—
Bond options:
Sold		78,088		—		(745)		(745)
Bought		148,258		10,521		760		760

Total		/		/	¥	503	¥	503


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2022	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Bond futures:
Sold	¥	3,777,511	¥	—	¥	90,483	¥	90,483
Bought		4,250,422		—		(93,789)		(93,789)
Bond futures options:
Sold		9,792		—		(1)		(1)
Bought		20,482		—		13		13
Over-the-counter
Bond forward contract:
Sold		59,827		—		1,438		1,438
Bought		—		—		—		—
Bond options:
Sold		44,599		—		(586)		(586)
Bought		51,917		—		555		555

Total		/		/	¥	(1,886)	¥	(1,886)


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

(5) Commodity derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Commodity futures:
Sold	¥	14,624	¥	—	¥	405	¥	405
Bought		16,291		—		127		127
Over-the-counter
Commodity swaps:
Receivable fixed price/payable floating price		39,320		27,601		(3,463)		(3,463)
Receivable floating price/payable fixed price		36,039		25,820		5,466		5,466
Receivable floating price/payable floating price		904		882		(30)		(30)
Commodity options:
Sold		2,048		1,645		(546)		(546)
Bought		436		63		60		60

Total		/		/	¥	2,019	¥	2,019


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
	2.	Underlying assets of commodity derivatives are fuels and metals.


March 31, 2022	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Commodity futures:
Sold	¥	3,059	¥	—	¥	(192)	¥	(192)
Bought		8,125		—		1,402		1,402
Over-the-counter
Commodity swaps:
Receivable fixed price/payable floating price		72,156		19,691		(67,209)		(67,209)
Receivable floating price/payable fixed price		65,653		15,445		67,595		67,595
Receivable floating price/payable floating price		459		245		(88)		(88)
Commodity options:
Sold		2,677		1,766		(589)		(589)
Bought		1,113		202		98		98

Total		/		/	¥	1,016	¥	1,016


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
	2.	Underlying assets of commodity derivatives are fuels and metals.

(6) Credit derivative transactions


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Over-the-counter
Credit default options:
Sold	¥	1,213,365	¥	1,093,942	¥	21,929	¥	21,929
Bought		1,561,193		1,414,334		(27,645)		(27,645)

Total		/		/	¥	(5,716)	¥	(5,716)


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
	2.	“Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2022	Total		Over 1 year		Fair value		Valuation gains (losses)
Over-the-counter
Credit default options:
Sold	¥	1,289,784	¥	1,125,797	¥	15,206	¥	15,206
Bought		1,691,397		1,498,916		(16,558)		(16,558)

Total		/		/	¥	(1,352)	¥	(1,352)


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
	2.	“Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred.

2.	Derivative transactions to which the hedge accounting method is applied

The following tables set forth the contract amount or the amount equivalent to the notional amount and fair value by type of derivative and hedge accounting method with respect to derivative transactions to which the hedge accounting method is applied at the end of the fiscal year. Contract amount does not indicate the market risk relating to derivative transactions.

(1) Interest rate derivatives


March 31, 2021			Millions of yen
Hedge accounting method	Type of derivative	Principal items hedged	Contract amount
Hedge accounting method	Type of derivative	Principal items hedged	Total		Over 1 year		Fair value
Deferral hedge method	Interest rate futures:	Interest-earning/bearing financial assets/liabilities such as loans and bills discounted, other securities, deposits and negotiable certificates of deposit
	Sold		¥	7,580,404	¥	4,439,058	¥	1,403
	Bought			4,048,886		4,048,886		(498)
	Interest rate swaps:
	Receivable fixed rate/payable floating rate			31,981,533		25,876,121		298,464
	Receivable floating rate/payable fixed rate			11,869,419		10,877,836		(132,770)
	Interest rate swaptions:
	Sold			153,886		153,886		11,270
	Bought			—		—		—

Recognition of gain or loss on the hedged items	Interest rate swaps:	Loans and bills discounted
Recognition of gain or loss on the hedged items	Receivable floating rate/payable fixed rate	Loans and bills discounted		567,041		511,375		(11,324)

Special treatment for interest rate swaps	Interest rate swaps:	Borrowed money
Special treatment for interest rate swaps	Receivable floating rate/payable fixed rate	Borrowed money		62,100		51,380		(Note 2)

	Total			/		/	¥	166,545


Notes:	1.	The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 24.
	2.	Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money that is subject to the hedge. Therefore such fair value is included in the fair value of the relevant transaction subject to the hedge in the (Notes to financial instruments).


March 31, 2022			Millions of yen
Hedge accounting method	Type of derivative	Principal items hedged	Contract amount
Hedge accounting method	Type of derivative	Principal items hedged	Total		Over 1 year		Fair value
Deferral hedge method	Interest rate futures:	Interest-earning/bearing financial assets/liabilities such as loans and bills discounted, other securities, deposits and negotiable certificates of deposit
	Sold		¥	774,856	¥	25,541	¥	319
	Bought			—		—		—
	Interest rate swaps:
	Receivable fixed rate/payable floating rate			33,156,979		27,311,289		(470,643)
	Receivable floating rate/payable fixed rate			20,063,241		18,890,568		470,733
	Receivable floating rate/payable floating rate			2,060,000		—		(20)
	Interest rate swaptions:
	Sold			170,149		170,149		(3,214)
	Bought			—		—		—

Recognition of gain or loss on the hedged items	Interest rate swaps:	Loans and bills discounted
Recognition of gain or loss on the hedged items	Receivable floating rate/payable fixed rate	Loans and bills discounted		525,018		447,551		6,131

Special treatment for interest rate swaps	Interest rate swaps:	Borrowed money
Special treatment for interest rate swaps	Receivable floating rate/payable fixed rate			66,010		59,570		(Note 2)

	Total			/		/	¥	3,305


Notes:	1.	The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 24.
	2.	Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money that is subject to the hedge. Therefore such fair value is included in the fair value of the relevant transaction subject to the hedge in the (Notes to financial instruments).

(2) Currency derivatives

March 31, 2021

Type of derivative

Principal items hedged

Millions of yen

Hedge accounting
method

Contract amount

Total

Over 1 year

Fair value

Deferral hedge method

Currency swaps

Foreign currency denominated loans and bills discounted, other securities, deposits, foreign currency exchange, etc.

10,896,132

6,051,444

39,920

Forward foreign exchange

39,074

3,859

334

Recognition of gain or loss on the hedged items

Currency swaps

Loans and bills discounted, other securities

219,977

205,644

2,214

Forward foreign exchange

304

—

Total

42,471

Note: The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 25.

March 31, 2022

Type of derivative

Principal items hedged

Millions of yen

Hedge accounting
method

Contract amount

Total

Over 1 year

Fair value

Deferral hedge method

Currency swaps

Foreign currency denominated loans and bills discounted, other securities, deposits, foreign currency exchange, etc.

10,819,281

7,285,574

(685,686)

Forward foreign exchange

53,067

17,578

(1,224)

Recognition of gain or loss on the hedged items

Currency swaps

Forward foreign exchange

Loans and bills discounted, other securities

343,890

523

317,306

—

2,786

Total

(684,124)

Note: The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 25.

(3) Equity derivatives

March 31, 2021

Type of derivative

Principal items hedged

Millions of yen

Hedge accounting
method

Contract amount

Total

Over 1 year

Fair value

Deferral hedge method

Equity price index swaps:

Other securities

Receivable floating rate/payable equity index

21,077

—

690

Recognition of gain or loss on the hedged items

Equity price index swaps:

Other securities

Receivable floating rate/payable equity index

33,674

(2,689)

Total

(1,999)

March 31, 2022

Type of derivative

Principal items hedged

Millions of yen

Hedge accounting

method

Contact amount

Total

Over 1 year

Fair value

Recognition of gain or loss on the hedged items

Equity price index swaps:

Other securities

Receivable floating rate/payable equity index

19,719

(2,031)

Total

(2,031)

(Notes to employee retirement benefits)

1. Outline of employee retirement benefits

The Company’s consolidated subsidiaries have funded and unfunded contributory defined benefit pension plans and defined-contribution pension plans for benefit payments to their employees.

Funded contributory defined benefit pension plans mainly consist of contributory funded defined benefit pension plans and lump-sum severance indemnity plans which set up employee retirement benefit trusts.

Unfunded contributory defined benefit pension plans are lump-sum severance indemnity plans which do not use such trust scheme.

Some consolidated subsidiaries adopt the simplified method in calculating the projected benefit obligation. Additional benefits may also be granted when employees retire.

2. Contributory defined benefit pension plan

(1)	Reconciliation of beginning and ending balances of projected benefit obligation


	Millions of yen
Year ended March 31	2021		2022
Beginning balance of projected benefit obligation	¥	1,123,979	¥	1,097,541
Service cost		32,047		30,745
Interest cost on projected benefit obligation		3,970		5,180
Unrecognized net actuarial gain or loss incurred		10,691		(24,203)
Payments of retirement benefits		(53,586)		(56,858)
Unrecognized prior service cost		(23,842)		7,175
Other		4,281		1,448

Ending balance of projected benefit obligation	¥	1,097,541	¥	1,061,029

(2)	Reconciliation of beginning and ending balances of plan assets


	Millions of yen
Year ended March 31	2021		2022
Beginning balance of plan assets	¥	1,318,775	¥	1,627,741
Expected return on plan assets		39,287		40,654
Unrecognized net actuarial gain or loss incurred		293,981		34
Contributions by the employer		11,680		12,744
Payments of retirement benefits		(41,932)		(42,271)
Other		5,949		4,308

Ending balance of plan assets	¥	1,627,741	¥	1,643,211

(3) Reconciliation of the projected benefit obligation and plan assets to net defined benefit asset and net defined benefit liability reported on the consolidated balance sheets


	Millions of yen
March 31	2021		2022
Funded projected benefit obligation	¥	(1,069,315)	¥	(1,032,246)
Plan assets		1,627,741		1,643,211

		558,426		610,964
Unfunded projected benefit obligation		(28,226)		(28,783)

Net amount of asset and liability reported on the consolidated balance sheet	¥	530,200	¥	582,181


	Millions of yen
March 31	2021		2022
Net defined benefit asset	¥	565,534	¥	623,045
Net defined benefit liability		(35,334)		(40,864)

Net amount of asset and liability reported on the consolidated balance sheet	¥	530,200	¥	582,181

(4)	Pension expenses


Year ended March 31	Millions of yen
	2021		2022
Service cost	¥	32,047	¥	30,745
Interest cost on projected benefit obligation		3,970		5,180
Expected return on plan assets		(39,287)		(40,654)
Amortization of unrecognized net actuarial gain or loss		8,107		(25,280)
Amortization of unrecognized prior service cost		(2,349)		(2,082)
Other (nonrecurring additional retirement allowance paid and other)		4,659		7,370

Pension expenses	¥	7,148	¥	(24,719)

Note:

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

(5)	Remeasurements of defined benefit plans

The breakdown of “Remeasurements of defined benefit plans” (before deducting tax effect) is as shown below:


	Millions of yen
Year ended March 31	2021		2022
Prior service cost	¥	(21,493)	¥	9,257
Net actuarial gain or loss		(291,618)		1,289

Total	¥	(313,111)	¥	10,546

(6)	Accumulated remeasurements of defined benefit plans

The breakdown of “Accumulated remeasurements of defined benefit plans” (before deducting tax effect) is as shown below:


	Millions of yen
March 31	2021		2022
Unrecognized prior service cost	¥	(21,653)	¥	(12,395)
Unrecognized net actuarial gain or loss		(163,372)		(162,083)

Total	¥	(185,025)	¥	(174,479)

(7)	Plan assets

Major asset classes of plan assets

The proportion of major asset classes to the total plan assets is as follows:


March 31	2021		2022
Stocks		57.6%		51.7%
Bonds		14.6%		13.8%
General account of life insurance		2.5%		2.5%
Other		25.3%		32.0%

Total		100.0%		100.0%


Note:		The retirement benefit trusts set up for employee pension plans and lump-sum severance indemnity plans account for 37.1% and 35.2% of the total plan assets at March 31, 2021 and 2022, respectively.

Method for setting the long-term expected rate of return on plan assets

The long-term expected rate of return on plan assets is determined based on the current and expected allocation of plan assets and the current and expected long-term rates of return on various asset classes of plan assets.

(8)	Actuarial assumptions

The principal assumptions used in determining benefit obligation and pension expenses are as follows:

Discount rate


Year ended March 31, 2021	Percentages	Year ended March 31, 2022	Percentages
Domestic consolidated subsidiaries	0.0% to 0.8%	Domestic consolidated subsidiaries		0.1% to 0.8%
Overseas consolidated subsidiaries	2.0% to 6.5%	Overseas consolidated subsidiaries		1.4% to 6.6%

Long-term expected rate of return on plan assets


Year ended March 31, 2021	Percentages	Year ended March 31, 2022	Percentages
Domestic consolidated subsidiaries	0.0% to 3.7%	Domestic consolidated subsidiaries		0.0% to 3.6%
Overseas consolidated subsidiaries	2.0% to 6.5%	Overseas consolidated subsidiaries		2.7% to 6.6%

3. Defined contribution plan

Fiscal year ended March 31, 2021

The amount required to be contributed by the consolidated subsidiaries is ¥11,088 million.

Fiscal year ended March 31, 2022

The amount required to be contributed by the consolidated subsidiaries is ¥12,401 million.

(Notes to stock options)

Outline of stock options and changes

The Company

(1) Outline of stock options


Date of resolution	July 28, 2010	July 29, 2011	July 30, 2012	July 29, 2013

Title and number of grantees	Directors of the Company 8 Corporate auditors of the Company 3 Executive officers of the Company 2 Directors, corporate auditors and executive officers of SMBC 69	Directors of the Company 9 Corporate auditors of the Company 3 Executive officers of the Company 2 Directors, corporate auditors and executive officers of SMBC 71	Directors of the Company 9 Corporate auditors of the Company 3 Executive officers of the Company 2 Directors, corporate auditors and executive officers of SMBC 71	Directors of the Company 9 Corporate auditors of the Company 3 Executive officers of the Company 3 Directors, corporate auditors and executive officers of SMBC 67

Number of stock options*	Common shares 102,600	Common shares 268,200	Common shares 280,500	Common shares 115,700

Grant date	August 13, 2010	August 16, 2011	August 15, 2012	August 14, 2013

Condition for vesting	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 the Company 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 the Company 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 the Company 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 the Company and SMBC.

Requisite service period	From June 29, 2010 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2011	From June 29, 2011 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2012	From June 28, 2012 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2013	From June 27, 2013 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2014

Exercise period	August 13, 2010 to August 12, 2040	August 16, 2011 to August 15, 2041	August 15, 2012 to August 14, 2042	August 14, 2013 to August 13, 2043
Date of resolution	July 30, 2014	July 31, 2015	July 26, 2016
Title and number of grantees	Directors of the Company 10 Corporate auditors of the Company 3 Executive officers of the Company 2 Directors, corporate auditors and executive officers of SMBC 67	Directors of the Company 8 Corporate auditors of the Company 3 Executive officers of the Company 4 Directors, corporate auditors and executive officers of SMBC 68	Directors of the Company 8 Corporate auditors of the Company 3 Executive officers of the Company 5 Directors, corporate auditors and executive officers of SMBC 73

Number of stock options*	Common shares 121,900	Common shares 132,400	Common shares 201,200

Grant date	August 15, 2014	August 18, 2015	August 15, 2016

Condition for vesting	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 the Company 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 the Company 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 the Company and SMBC.

Requisite service period	From June 27, 2014 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2015	From June 26, 2015 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2016	From June 29, 2016 to the closing of the ordinary general meeting of shareholders of the Company for the fiscal year ended March 31, 2017

Exercise period	August 15, 2014 to August 14, 2044	August 18, 2015 to August 17, 2045	August 15, 2016 to August 14, 2046

*	Number of stock options is converted and stated as number of shares.

(2) Stock options granted and changes

1) Number of stock options*


	Number of stock options
Date of resolution	July 28, 2010		July 29, 2011		July 30, 2012		July 29, 2013		July 30, 2014		July 31, 2015		July 26, 2016
Before vested
Previous fiscal year-end		4,600		5,800		56,900		27,400		34,400		63,200		95,700
Granted		—		—		—		—		—		—		—
Forfeited		—		—		—		—		—		—		—
Vested		1,400		800		21,500		12,000		2,100		27,000		17,500
Outstanding		3,200		5,000		35,400		15,400		32,300		36,200		78,200
After vested
Previous fiscal year-end		39,700		120,300		108,200		25,400		25,700		11,700		15,700
Vested		1,400		800		21,500		12,000		2,100		27,000		17,500
Exercised		3,300		9,000		26,300		12,400		2,000		27,000		16,800
Forfeited		—		—		—		—		—		—		—
Exercisable		37,800		112,100		103,400		25,000		25,800		11,700		16,400

* Number of stock options has been converted and stated as number of shares.

2) Price information


	Yen
Date of resolution	July 28, 2010		July 29, 2011		July 30, 2012		July 29, 2013		July 30, 2014		July 31, 2015		July 26, 2016
Exercise price	¥	1	¥	1	¥	1	¥	1	¥	1	¥	1	¥	1
Average exercise price		4,000		3,912		3,925		3,903		3,919		3,846		3,837
Fair value at the grant date		2,215		1,872		2,042		4,159		3,661		4,904		2,811

(3) 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.

(Notes to deferred tax assets and liabilities)

1. Significant components of deferred tax assets and liabilities


March 31, 2021	Millions of yen			March 31, 2022	Millions of yen
Deferred tax assets:				Deferred tax assets:
Reserve for possible loan losses and write-off of loans	¥	270,071		Reserve for possible loan losses and write-off of loans	¥	311,128
Securities		142,716		Securities		142,140
Net operating loss carryforwards^*		113,089		Net operating loss carryforwards^*		113,008
Reserve for losses on interest repayment		43,100		Reserve for losses on interest repayment		41,362
Net deferred gains (losses) on hedge		2,071		Net deferred gains (losses) on hedge		32,584
Other		166,372		Other		216,895

Subtotal		737,421		Subtotal		857,120
Valuation allowance for net operating loss carryforwards^*		(49,547	)	Valuation allowance for net operating loss carryforwards^*		(37,144	)
Valuation allowance for total amount of deductible temporary differences etc.		(172,713	)	Valuation allowance for total amount of deductible temporary differences etc.		(173,496	)

Valuation allowance subtotal		(222,261	)	Valuation allowance subtotal		(210,641	)

Total deferred tax assets		515,160		Total deferred tax assets		646,479
Deferred tax liabilities:				Deferred tax liabilities:
Net unrealized gains on other securities		(742,247	)	Net unrealized gains on other securities		(569,133	)
Depreciation		(62,442	)	Depreciation		(70,862	)
Accumulated remeasurements of defined benefit plans		(58,556	)	Accumulated remeasurements of defined benefit plans		(56,355	)
Other		(154,267	)	Other		(158,978	)

Total deferred tax liabilities		(1,017,514	)	Total deferred tax liabilities		(855,329	)

Net deferred tax assets (liabilities)	¥	(502,353	)	Net deferred tax assets (liabilities)	¥	(208,850	)

*Net operating loss carryforwards and the amount of its deferred tax assets by expiry date.


	Millions of yen
March 31, 2021	Within 1 year			More than 1 year to 5 years			More than 5 years to 10 years			More than 10 years			Total
Net operating loss carryforwards*	¥	15,460		¥	24,348		¥	22,467		¥	50,813		¥	113,089
Valuation allowance		(8,407	)		(20,122	)		(19,719	)		(1,298	)		(49,547	)
Deferred tax assets		7,052			4,226			2,748			49,515			63,542

*Net operating loss carryforwards is multiplied by statutory tax rate.


	Millions of yen
March 31, 2022	Within 1 year			More than 1 year to 5 years			More than 5 years to 10 years			More than 10 years			Total
Net operating loss carryforwards*	¥	10,008		¥	22,553		¥	16,573		¥	63,873		¥	113,008
Valuation allowance		(2,364	)		(17,516	)		(15,654	)		(1,609	)		(37,144	)
Deferred tax assets		7,644			5,036			918			62,264			75,863

*Net operating loss carryforwards is multiplied by statutory tax rate.

2.	Significant components of difference between the statutory tax rate used by the Company and the effective income tax rate


March 31, 2021	Percentages		March 31, 2022	Percentages
Statutory tax rate (Adjustments)		30.62%	Statutory tax rate (Adjustments)		30.62%
Valuation allowance		(12.04)	Valuation allowance		(1.85)
Retained earnings of subsidiaries		(1.91)	Difference of the scope of taxable income between corporate income tax and enterprise income tax		(1.08)
Difference between the Company and overseas consolidated subsidiaries		(1.37)	Equity in gains of affiliates		(0.95)
Equity in gains of affiliates		(1.14)	Dividends exempted for income tax purposes		(0.91)
Expired loss carryforwards		9.28	Difference between the Company and overseas consolidated subsidiaries		(0.60)
Other		(0.18)	Other		(2.15)
Effective income tax rate		23.26%	Effective income tax rate		23.08%

(Notes to asset retirement obligations)

Fiscal year ended March 31, 2021

There is no significant information to be disclosed.

Fiscal year ended March 31, 2022

There is no significant information to be disclosed.

(Notes to real estate for rent)

Fiscal year ended March 31, 2021

There is no significant information to be disclosed.

Fiscal year ended March 31, 2022

There is no significant information to be disclosed.

(Revenue Recognition)

Information on breakdown of revenues from contracts with customers.


Year ended March 31	Millions of yen
	2022
Ordinary income	¥	4,111,127
Fees and commissions		1,414,867
Deposits and loans		203,004
Remittances and transfers		141,312
Securities-related business		173,799
Agency		9,043
Safe deposits		4,025
Guarantees		80,330
Credit card business		332,054
Investment trusts		183,656
Others		287,641

Note:

Fees and commissions obtained through Deposits and loans principally arise in the Wholesale Business Unit and the Global Business Unit, Remittances and transfers principally arise in the Wholesale Business Unit, the Retail Business Unit, and the Global Business Unit, Securities-related business principally arise in the Wholesale Business Unit, the Retail Business Unit, and the Global Business Unit, Credit card business principally arise in the Retail Business Unit, and Investment trusts principally arise in the Retail Business Unit and Head office account and others. Income based on “Accounting Standard for Financial Instrument” (ASBJ Statement No. 10, July 4, 2019) is also included in the table above.

(Notes to segment and other related information)

[Segment information]

1. Summary of reportable segment

The Group’s reportable segment is defined as an operating segment for which discrete financial information is available and reviewed by the Board of Directors and the Company’s Management Committee regularly in order to make decisions about resources to be allocated to the segment and assess its performance.

The businesses operated by each business unit are as follows:


Wholesale Business Unit:		Business to deal with domestic medium-to-large-sized and small-to-medium-sized corporate customers
Retail Business Unit:		Business to deal with mainly domestic individual customers
Global Business Unit:		Business to deal with international (including Japanese) corporate customers in overseas
Global Markets Business Unit:		Business to deal with financial market
Head office account:		Business other than businesses above

2. Method of calculating profit and loss amount by reportable segment

Accounting methods applied to the reported business segment are the same as those described in “(Significant accounting policies for preparing consolidated financial statements).” In case several business units cooperate for transactions, profit and loss, and expenses related to the transactions are recognized in the business units cooperating for the transactions and those amounts are calculated in accordance with internal managerial accounting policy.

The Company does not assess assets by business segments.

3. Information on profit and loss amount by reportable segment


	Millions of yen
Year ended March 31, 2021	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Consolidated gross profit	¥	634,900	¥	1,127,400	¥	723,700	¥	460,700	¥	(140,513)	¥	2,806,187
General and administrative expenses		(299,900)		(910,400)		(383,300)		(82,900)		(70,644)		(1,747,144)
Others		53,500		2,200		26,300		35,700		(92,728)		24,972

Consolidated net business profit	¥	388,500	¥	219,200	¥	366,700	¥	413,500	¥	(303,885)	¥	1,084,015


Notes:	1.	Figures shown in the parenthesis represent the loss.
	2.	“Others” includes equity in profit and loss of affiliates and cooperated profit and loss based on internal managerial accounting.
	3.	“Head office account and others” includes profit or loss to be eliminated as inter-segment transactions.


	Millions of yen
Year ended March 31, 2022	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Consolidated gross profit	¥	707,500	¥	1,146,900	¥	872,000	¥	390,600	¥	(171,495)	¥	2,945,505
General and administrative expenses		(303,600)		(935,500)		(461,300)		(92,300)		(28,425)		(1,821,125)
Others		65,800		3,500		20,500		39,800		(101,089)		28,511

Consolidated net business profit	¥	469,700	¥	214,900	¥	431,200	¥	338,100	¥	(301,010)	¥	1,152,890


Notes:	1.	Figures shown in the parenthesis represent the loss.
	2.	“Others” includes equity in profit and loss of affiliates and cooperated profit and loss based on internal managerial accounting.
	3.	“Head office account and others” includes profit or loss to be eliminated as inter-segment transactions.

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


Year ended March 31, 2021	Millions of yen
Consolidated net business profit	¥	1,084,015
Other ordinary income (excluding equity in gains of affiliates)		155,617
Other ordinary expenses		(528,613)

Ordinary profit on consolidated statements of income	¥	711,018

Note:

Figures shown in the parenthesis represent the loss.


Year ended March 31, 2022	Millions of yen
Consolidated net business profit	¥	1,152,890
Other ordinary income (excluding equity in gains of affiliates)		282,625
Other ordinary expenses		(394,893)

Ordinary profit on consolidated statements of income	¥	1,040,621

Note:

Figures shown in the parenthesis represent the loss.

[Related information]

Fiscal year ended March 31, 2021

1. Information on each service

There is no information to be disclosed since information on each service is similar to the segment information.

2. Geographic information

(1) Ordinary income


Millions of yen
Japan	The Americas	Europe and Middle East	Asia and Oceania	Total
¥ 2,548,661	¥ 538,055	¥ 292,491	¥ 523,099	¥ 3,902,307

(2) Tangible fixed assets


Millions of yen
Japan	The Americas	Europe and Middle East	Asia and Oceania	Total
¥ 906,663	¥ 474,507	¥ 40,821	¥ 36,997	¥ 1,458,991

3. Information on major customers

There are no major customers individually accounting for 10% or more of ordinary income reported on the consolidated statements of income.

Fiscal year ended March 31, 2022

1. Information on each service

There is no information to be disclosed since information on each service is similar to the segment information.

2. Geographic information

(1) Ordinary income


Millions of yen
Japan	The Americas	Europe and Middle East	Asia and Oceania	Total
¥ 2,622,484	¥ 606,120	¥ 289,018	¥ 593,504	¥ 4,111,127

(2) Tangible fixed assets


Millions of yen
Japan	The Americas	Europe and Middle East	Asia and Oceania	Total
¥ 889,007	¥ 487,105	¥ 36,838	¥ 44,301	¥ 1,457,254

3. Information on major customers

There are no major customers individually accounting for 10% or more of ordinary income reported on the consolidated statements of income.

[Information on impairment loss for fixed assets by reportable segment]

The Company does not allocate impairment loss for fixed assets to the reportable segment.

Impairment loss for the fiscal year ended March 31, 2021 is ¥42,525 million.

Impairment loss for the fiscal year ended March 31, 2022 is ¥108,920 million.

[Information on amortization of goodwill and unamortized balance by reportable segment]


	Millions of yen
Year ended March 31, 2021	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Amortization of goodwill	¥	633	¥	4,019	¥	—	¥	—	¥	14,711	¥	19,365
Unamortized balance		5,387		42,060		—		—		100,060		147,508

	Millions of yen
Year ended March 31, 2022	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Amortization of goodwill	¥	633	¥	4,019	¥	—	¥	—	¥	14,964	¥	19,618
Unamortized balance		4,753		38,040		—		—		277,846		320,640

[Information on gains on negative goodwill by reportable segment]

Fiscal year ended March 31, 2021

There are no corresponding transactions.

Fiscal year ended March 31, 2022

There are no corresponding transactions.

[Information on related parties]

Fiscal year ended March 31, 2021

There is no significant corresponding information to be disclosed.

Fiscal year ended March 31, 2022

There is no significant corresponding information to be disclosed.

(Business Combination)

Fiscal year ended March 31, 2022

Fullerton India Credit Company Limited became a consolidated subsidiary of the Company

On November 30, 2021, the Company acquired partial shares of Fullerton India Credit Company Limited (“FICC”) based on the agreement concluded on July 6, 2021 among the Company, Fullerton Financial Holdings Pte. Ltd. and Angelica Investments Pte. Ltd. As a result, FICC and its 1 subsidiary became consolidated subsidiaries of the Company.

1. Outline of the business combination

(1) Name of the acquired company and its business


Name:		Fullerton India Credit Company Limited
Business:		Finance-related business

(2) Main reasons for the business combination

By investing in FICC, which has a strong pan-India distribution network with more than 650 branches and offers unsecured loans and loans against property to mainly SMEs, the self-employed, and mass market customers, the Company will gain a retail finance platform in India, which is essential for the expansion of its Asia franchise.

(3) Date of the business combination

November 30, 2021

(4) Legal form of the business combination

Acquisition of stock

(5) Name of the entity after the business combination

Sumitomo Mitsui Financial Group, Inc.

(6) The ratio of acquired voting rights

74.90%

(7) Grounds for deciding on the acquiring company

The Company owns a majority of the voting rights of FICC

2. Period of the acquired company’s financial results included in the consolidated statements of income of the Company

From January 1, 2022 to March 31, 2022

3. Acquisition cost and consideration of the acquired company


Consideration for the acquisition (cash)	¥	230,314	million
Acquisition cost of the acquired company	¥	230,314	million

4. Major acquisition-related cost


Advisory fees, etc.		¥	2,093				million

5. Amount of goodwill, reason for recognizing goodwill, amortization method and the period

(1) Amount of goodwill

¥179,196 million

(2) Reason for recognizing goodwill

The Company accounted for the difference between the acquisition cost and the fair value of the Company’s share of the net assets on the date of the business combination as goodwill.

(3) Amortization method and the period

Goodwill is amortized using the straight-line method over 15 years.

6. Amounts of assets acquired and liabilities assumed on the date of the business combination

(1) Assets


Total assets	¥	402,519	million
Loan and bills discounted	¥	306,412	million

(2) Liabilities


Total liabilities	¥	334,271	million
Borrowed money	¥	173,032	million

7. The details of contingent consideration specified in the business combination contract and the accounting policy from the fiscal year ended March 31, 2022

(1) The details of contingent consideration

The Company pays additional contingent consideration in proportion to the achievement level of the acquired company’s performance in the future.

(2) The future accounting policy

If the payment of additional contingent consideration is required, acquisition cost of the acquired company is modified assuming contingent consideration was paid when acquired, and the amount of goodwill and the amount of amortization of goodwill are modified.

8. Amounts allocated to intangible fixed assets other than goodwill, breakdown by component and the weighted average amortization period by component


Intangible fixed assets other than goodwill	¥	5,504 million	(7 years	)
Assets related to customers	¥	5,504 million	(7 years	)

9. Approximate amount and its calculation method of impact on the consolidated statements of income for the fiscal year ended March 31, 2022, assuming that the business combination had been completed at the beginning of the fiscal year

The estimated amount of such impact is immaterial and disclosure of the information is therefore omitted.

(Per Share Data)


		Yen
As of and year ended March 31		2021		2022
Net assets per share		¥	8,629.73	¥	8,825.53
Earnings per share			374.26		515.51
Earnings per share (diluted)			374.08		515.30

Note: Earnings per share and earnings per share (diluted) are calculated based on the following.

		Millions of yen except number of shares
	Year ended March 31	2021		2022
	Earnings per share:
	Profit attributable to owners of parent	¥	512,812	¥	706,631
	Amount not attributable to common stockholders		—		—

	Profit attributable to owners of parent attributable to common stock	¥	512,812	¥	706,631

	Average number of common stock during the fiscal year (in thousand)		1,370,213		1,370,737
	Earnings per share (diluted):
	Adjustment for profit attributable to owners of parent	¥	(0)	¥	—
	Adjustment of dilutive shares issued by consolidated subsidiaries and equity method affiliates		(0)		—

	Increase in number of common stock (in thousand)		658		561
	Stock acquisition rights		658		561
	Outline of dilutive shares which were not included in the calculation of “Earnings per share (diluted)” because they do not have dilutive effect:		—		—

2. Net assets per share are calculated based on the following:

		Millions of yen except number of shares
	March 31	2021		2022
	Net assets	¥	11,899,046	¥	12,197,331
	Amounts excluded from Net assets		72,627		99,116
	Stock acquisition rights		1,791		1,475
	Non-controlling interests		70,836		97,641

	Net assets attributable to common stock at the fiscal year-end	¥	11,826,418	¥	12,098,215

	Number of common stock at the fiscal year-end used for the calculation of Net assets per share (in thousands)		1,370,427		1,370,819

(Significant Subsequent Events)

There is no significant corresponding information to be disclosed.

[Consolidated supplementary financial schedules]

[Schedule of bonds]

Millions of yen

Percentages

Company

Type of bonds

Date of
issuance

At the beginning of
the fiscal year

At the end of
the fiscal year

Interest
rate (Note 1)

Collat-
eral

Date of
maturity

The Company

Straight bonds, payable in U.S.
dollars (Notes 3 and 4)

Mar. 2016 ~
Jan. 2022

4,703,467

($42,484,578 thousand)

[581,227]

5,515,326

($45,050,200 thousand)

[766,085]

0.074 ~

4.306

None

Jul. 2022 ~
Jan. 2052

Straight bonds, payable in Euro
(Notes 3 and 4)

Jun. 2016 ~
Oct. 2020

883,710

(€6,810,872 thousand)

[64,875]

863,948

(€6,314,951 thousand)

[102,607]

0 ~

1.716

None

Jun. 2022 ~
Feb. 2033

Straight bonds, payable in
Australian dollars
(Notes 3 and 4)

Sep. 2016 ~
Oct. 2019

249,178

(A$2,955,156 thousand)

[84,254]

179,780

(A$1,956,051 thousand)

[68,846]

1.315 ~

4.13

None

Mar. 2023 ~
Jul. 2028

Straight bonds, payable in Hong
Kong dollars (Note 3)

Apr. 26, 2018

4,272

(HK$300,000 thousand)

4,692

(HK$300,000 thousand)

3.54

None

Apr. 26, 2028

Subordinated bonds, payable in
Yen

Sep. 2014 ~
Sep. 2016

371,946

371,932

0.469 ~

1.328

None

Sep. 2024 ~
May. 2030

Subordinated bonds, payable in
Yen

Mar. 16, 2018

233,754

99,982

0.585

None

Mar. 16, 2028

Perpetual subordinated bonds,
payable in Yen

Jul. 2015 ~
Jan. 2022

648,878

733,998

0.848 ~

2.88

None

Perpetual

Subordinated bonds, payable in
U.S. dollars (Note 3)

Apr. 2014 ~

Sep. 2021

341,689

($3,086,344 thousand)

483,265

($3,947,924 thousand)

2.142 ~

4.436

None

Apr. 2024 ~

Sep. 2041

SMBC

Straight bonds, payable in U.S.
dollars (Notes 3 and 4)

Jul. 2012 ~
Dec. 2018

486,088

($4,390,645 thousand)

[61,997]

469,015

($3,831,516 thousand)

[153,012]

3 ~

4.13

None

Jul. 2022 ~
Mar. 2030

Straight bonds, payable in U.S.
dollars (Note 3)

May. 28, 2015

72,515

($655,000 thousand)

80,178

($655,000 thousand)

4.3

None

May. 30, 2045

Straight bonds, payable in Euro
(Notes 3 and 4)

Jul. 24, 2013

162,034

(€1,248,821 thousand)

[97,312]

68,346

(€499,570 thousand)

[—]

2.75

None

Jul. 24, 2023

Straight bonds, payable in
Australian dollars
(Note 3)

Mar. 2015 ~
Dec. 2018

11,231

(A$133,195 thousand)

12,242

(A$133,197 thousand)

2.9 ~

3.67

None

Jun. 2023 ~
Mar. 2025

Straight bonds, payable in Hong
Kong dollars (Notes 3 and 4)

Apr. 30, 2015

23,054

(HK$1,619,000 thousand)

[12,303]

11,808

(HK$755,000 thousand)

[—]

2.92

None

Apr. 30, 2025

Straight bonds, payable in
Thai baht
(Notes 3 and 4)

Nov. 8, 2018

7,080

(THB2,000,000 thousand)
[7,080]

—

Straight bonds, payable in
Chinese Yuan
(Note 3)

Jun. 8, 2020

16,860

(CNY1,000,000 thousand)

19,260

(CNY1,000,000 thousand)

3.2

None

Jun. 8, 2023

Subordinated bonds, payable in Yen
(Note 4)

Jun. 2011 ~
Dec. 2011

139,935

[79,940]

59,996

[—]

2.17 ~

2.21

None

Jun. 2026 ~
Dec. 2026

Perpetual subordinated
bonds, payable in U.S.
dollars (Notes 3 and 4)

Mar. 1, 2012

165,962

($1,499,074 thousand)

[165,976]

—

(*1)

Consolidated subsidiaries, straight bonds, payable in Yen (Notes 2 and 4)

Feb. 2012 ~
Mar. 2022

444,891

[128,911]

572,920

[168,376]

0.01 ~

None

Apr. 2022 ~
Feb. 2052

(*2)

Consolidated subsidiaries, straight bonds, payable in U.S. dollars (Notes 2,3 and 4)

Oct. 2016 ~
Mar. 2022

42,198

($381,166 thousand)

[6,272]

42,153

($344,360 thousand)

[4,636]

0.01 ~

3.2

None

Apr. 2022 ~
Nov. 2037

(*3)

Consolidated subsidiaries, straight bonds, payable in Euro (Notes 2 and 3)

Dec. 18, 2018

(€600 thousand)

(€400 thousand)

0.1

None

Dec. 18, 2023

(*4)

Consolidated subsidiaries, straight bonds, payable in Australian dollars
(Notes 2,3 and 4)

Mar. 2017 ~
Dec. 2018

1,178

(A$13,978 thousand)

[548]

532

(A$5,790 thousand)

[39]

0.01 ~

0.75

None

Jul. 2022 ~
Dec. 2028

(*5)

Consolidated subsidiaries, straight bonds, payable in Turkish lira (Notes 2,3 and 4)

Jul. 2017 ~
Oct. 2018

2,443

(TRY183,200 thousand)

[982]

821

(TRY98,290 thousand)

[581]

0.01 ~

None

Apr. 2022 ~
Oct. 2023

Millions of yen

Percentages

Company

Type of bonds

Date of
issuance

At the beginning of
the fiscal year

At the end of
the fiscal year

Interest
rate (Note 1)

Collat-
eral

Date of
maturity

(*6)

Consolidated subsidiaries, straight bonds, payable in Indonesia rupiah
(Notes 2,3 and 4)

Nov. 27, 2019

7,552
(IDR993,783,810 thousand)
[—]

8,473

(IDR996,888,908 thousand)

[6,791]

7.55 ~

7.75

None

Nov. 2022 ~
Nov. 2024

(*7)

Consolidated subsidiaries, straight bonds, payable in Chinese Yuan
(Notes 2,3 and 4)

Jan. 2022 ~
Mar. 2022

3,030

(CNY179,752 thousand)

[3,034]

62,982

(CNY3,270,100 thousand)

[63,172]

None

Apr. 2022 ~
Jun. 2022

(*8)

Consolidated subsidiaries, straight bonds, payable in Indian rupee
(Notes 2,3 and 4)

Apr. 2013 ~
Mar. 2022

—

103,786

(INR,64,065,950 thousand)

[40,759]

5.5 ~

10.6

None

Apr. 2022 ~
Jan. 2028

(*9)

Consolidated subsidiaries,
subordinated bonds,
payable in Indian rupee
(Notes 2,3 and 4)

Sep. 2012 ~
Oct. 2021

—

22,608

(INR13,955,850 thousand)

[3,713]

7.6 ~

11.4

Existing

Jun. 2022 ~
Oct. 2031

(*10)

Consolidated subsidiaries,
subordinated bonds,
payable in Yen (Note 2)

Dec. 1997 ~
Feb. 1998

20,000

4 ~

4.15

None

Jan. 28, 2028

(*11)

Consolidated subsidiaries, short-term bonds, payable in
Yen (Notes 2 and 4)

Jun. 2021 ~
Mar. 2022

585,000

[585,000]

442,000

[442,000]

(0.01) ~

0.01

None

Apr. 2022 ~
Dec. 2022

Total

—

¥9,628,031

¥10,250,107

—


Notes:	1.	“Interest rate” indicates a nominal interest rate which is applied at respective consolidated balance sheet dates. Therefore, this rate may differ from an actual interest rate.
	2.	(1) This represents straight bonds issued in Yen by SMBC Nikko, a domestic consolidated subsidiary. (2) This represents straight bonds issued in U.S. dollar by SMBC Nikko, a domestic consolidated subsidiary. (3) This represents straight bonds issued in Euro by SMBC Nikko, a domestic consolidated subsidiary. (4) This represents straight bonds issued in Australian dollar by SMBC Nikko, a domestic consolidated subsidiary. (5) This represents straight bonds issued in Turkish lira by SMBC Nikko, a domestic consolidated subsidiary. (6) This represents straight bonds issued in Indonesia rupiah by PT Bank BTPN Tbk, an overseas consolidated subsidiary. (7) This represents straight bonds issued in Chinese Yuan by Sumitomo Mitsui Banking Corporation (China) Limited, an overseas consolidated subsidiary. (8) This represents straight bonds issued in Indian rupee by Fullerton India Credit Company Limited which became an overseas consolidated subsidiary of the Company from the fiscal year ended March 31, 2022. (9) This represents subordinate term bonds issued in Indian rupee by Fullerton India Credit Company Limited which became an overseas consolidated subsidiary of the Company from the fiscal year ended March 31, 2022. (10) This represents subordinate term bonds issued in Yen by SMBC International Finance N.V., an overseas consolidated subsidiary. (*11) This represents an aggregate of short-term bonds issued in Yen by SMBC Nikko and SMCC, domestic consolidated subsidiaries.
	3.	Figures showed in ( ) in “At the beginning of the fiscal year” and “At the end of the fiscal year” are in foreign currency.
	4.	Figures showed in [ ] in “At the beginning of the fiscal year” and “At the end of the fiscal year” are the amounts to be redeemed within one year.
	5.	The redemption schedule over the next 5 years after respective balance sheet dates of the consolidated subsidiaries was as follows:


Millions of yen
Within 1 year	More than 1 year to 2 years	More than 2 years to 3 years	More than 3 years to 4 years	More than 4 years to 5 years
¥ 1,820,622	¥ 898,257	¥ 1,179,897	¥ 873,245	¥ 1,570,499

[Schedule of borrowings]


	Millions of yen				Percentages
Classification	At the beginning of the fiscal year		At the end of the fiscal year		Average interest rate	Repayment Term
Borrowed money	¥	17,679,690	¥	18,877,990	0.21		—
Other borrowings		17,679,690		18,877,990	0.21		Apr. 2022 ~ Perpetual
Lease obligations		28,835		29,030	2.64		Apr. 2022 ~ Jul. 2032


Notes:	1.	“Average interest rate” represents the weighted average interest rate based on the interest rates and “At the end of the fiscal year” at respective balance sheet dates of consolidated subsidiaries.
	2.	The redemption schedule over the next 5 years on Borrowings and Lease obligations after respective balance sheet dates of the consolidated subsidiaries was as follows:


	Millions of yen
	Within 1 year		More than 1 year to 2 years		More than 2 years to 3 years		More than 3 years to 4 years		More than 4 years to 5 years
Other borrowings	¥	8,765,083	¥	2,728,697	¥	4,541,966	¥	1,748,860	¥	108,539
Lease obligations		7,951		6,998		5,630		4,616		1,829

Since the commercial banking business accepts deposits and raises and manages funds through the call loan and commercial paper markets as a normal course of business, the schedule of borrowings shows a breakdown of Borrowed money included in the “Liabilities” and Lease obligations included in “Other liabilities” in the consolidated balance sheet.

Reference: Commercial paper issued for funding purpose as a normal course of business is as follows:

Millions of yen

Percentage

At the beginning of
the fiscal year

At the end of
the fiscal year

Average
interest rate

Repayment Term

Commercial paper

1,686,404

1,866,366

0.34

Apr. 2022 ~
Sep. 2022

[Schedule of asset retirement obligations]

Since the amount of asset retirement obligations accounts for 1% or less than the total of liabilities and net assets, the schedule of asset retirement obligation is not disclosed.

[Others]

Quarterly consolidated financial information in the fiscal year ended March 31, 2022 is as follows:


	Millions of yen (except Earnings per share)
	First quarter consolidated total period		Second quarter consolidated total period		Third quarter consolidated total period		Fiscal year ended March 31, 2022
Ordinary income	¥	951,725	¥	1,965,482	¥	2,995,751	¥	4,111,127
Income before income taxes		284,812		626,759		862,152		929,588
Profit attributable to owners of parent		203,243		456,068		624,795		706,631
Earnings per share		148.30		332.74		455.82		515.51

	Yen
	First quarter consolidated accounting period		Second quarter consolidated accounting period		Third quarter consolidated accounting period		Fourth quarter consolidated accounting period
Earnings per share	¥	148.30	¥	184.43	¥	123.08	¥	59.70

(Non-consolidated financial statements)

1.	Non-consolidated balance sheets


	Millions of yen				Millions of U.S. dollars
March 31	2021		2022		2022
Assets:
Current assets
Cash and due from banks	¥	221,992	¥	319,147	$	2,607
Prepaid expenses		401		713		6
Accrued income		45,877		47,870		391
Accrued income tax refunds		4,380		28,074		229
Current portion of long-term loans receivables from subsidiaries and affiliates		741,493		936,602		7,651
Other current assets		88,583		84,127		687

Total current assets		1,102,729		1,416,534		11,572

Fixed assets
Tangible fixed assets
Buildings		38,262		38,824		317
Land		31,454		31,454		257
Equipment		326		964		8
Construction in progress		772		100		1

Total tangible fixed assets		70,815		71,344		583

Intangible fixed assets
Software		474		3,703		30

Total intangible fixed assets		474		3,703		30

Investments and other assets
Investment securities		2,200		43		0
Investments in subsidiaries and affiliates		6,393,634		6,625,337		54,124
Long-term loans receivable from subsidiaries and affiliates		7,454,394		8,132,822		66,439
Long-term prepaid expenses		438		273		2
Deferred tax assets		472		540		4
Other investments and other assets		220		2,487		20

Total investments and other assets		13,851,362		14,761,505		120,591

Total fixed assets		13,922,653		14,836,553		121,204

Total assets	¥	15,025,382	¥	16,253,088	$	132,776

Liabilities:
Current liabilities
Short-term borrowings	¥	1,278,030	¥	1,508,030	$	12,320
Accounts payable		17,913		14,903		122
Accrued expenses		45,025		47,993		392
Income taxes payable		12		13		0
Business office taxes payable		65		48		0
Reserve for employee bonuses		747		744		6
Reserve for executive bonuses		569		529		4
Current portion of bonds		730,422		936,602		7,651
Current portion of long-term borrowings		11,071		—		—
Other current liabilities		1,699		4,055		33

Total current liabilities		2,085,555		2,512,921		20,529

Fixed liabilities
Bonds		6,718,181		7,325,358		59,843
Long-term borrowings		237,989		308,975		2,524

Total fixed liabilities		6,956,170		7,634,334		62,367

Total liabilities		9,041,726		10,147,255		82,896

Net assets:
Stockholders’ equity
Capital stock		2,341,274		2,341,878		19,131
Capital surplus
Capital reserve		1,562,751		1,563,355		12,771

Total capital surplus		1,562,751		1,563,355		12,771

Retained earnings
Other retained earnings
Voluntary reserve		30,420		30,420		249
Retained earnings brought forward		2,061,118		2,182,107		17,826

Total retained earnings		2,091,538		2,212,527		18,075

Treasury stock		(13,698)		(13,402)		(109)

Total stockholders’ equity		5,981,865		6,104,357		49,868

Stock acquisition rights		1,791		1,475		12

Total net assets		5,983,656		6,105,832		49,880

Total liabilities and net assets	¥	15,025,382	¥	16,253,088	$	132,776

2.	Non-consolidated statements of income


Year ended March 31	Millions of yen						Millions of U.S. dollars
Year ended March 31	2021			2022			2022

Operating income:
Dividends on investments in subsidiaries and affiliates	¥	304,866		¥	422,366		$	3,450
Fees and commissions received from subsidiaries		7,817			9,481			77
Interests on loans receivable from subsidiaries and affiliates		170,775			184,204			1,505

Total operating income		483,459			616,052			5,033

Operating expenses:
General and administrative expenses		30,791			34,499			282
Interest on bonds		160,013			172,901			1,412
Interest on long-term borrowings		4,516			5,252			43

Total operating expenses		195,322			212,653			1,737

Operating profit		288,137			403,398			3,295

Non-operating income:
Interest income on deposits		17			9			0
Fees and commissions income		0			0			0
Other non-operating income		446			136			1

Total non-operating income		465			146			1

Non-operating expenses:
Interest on short-term borrowings		4,298			4,735			39
Fees and commissions payments		32			130			1
Amortization of bond issuance cost		4,695			5,088			42
Other non-operating expenses		174			585			5

Total non-operating expenses		9,200			10,539			86

Ordinary profit		279,402			393,006			3,211

Extraordinary loss:

Losses on valuation of investment securities		—			2,798			23

Losses on valuation of stocks of subsidiaries and affiliates		2,943			2,692			22

Total extraordinary loss		2,943			5,490			45

Income before income taxes		276,458			387,515			3,166

Income taxes-current		(5,511	)		(7,584	)		(62	)
Income taxes-deferred		3			(67	)		(1	)

Income taxes		(5,508	)		(7,651	)		(63	)

Net income	¥	281,966		¥	395,167		$	3,228


	Yen						U.S. dollars
	2021			2022			2022
Per share data:
Earnings per share	¥	205.78		¥	288.29		$	2.36
Earnings per share (diluted)		205.68			288.17			2.35

3.	Non-consolidated statements of changes in net assets


	Millions of yen
	Stockholders’ equity
			Capital surplus
Year ended March 31, 2021	Capital stock		Capital reserve		Other capital surplus		Total capital surplus
Balance at the beginning of the fiscal year	¥	2,339,964	¥	1,561,442	¥	—	¥	1,561,442
Changes in the fiscal year:
Issuance of new stock		1,309		1,308				1,308
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock						(65)		(65)
Transfer from retained earnings to capital surplus						65		65
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		1,309		1,308		—		1,308

Balance at the end of the fiscal year	¥	2,341,274	¥	1,562,751	¥	—	¥	1,562,751


	Millions of yen
	Stockholders’ equity
	Retained earnings
	Other retained earnings
Year ended March 31, 2021	Voluntary reserve		Retained earnings brought forward		Total retained earnings
Balance at the beginning of the fiscal year	¥	30,420	¥	2,046,360	¥	2,076,780
Changes in the fiscal year:
Issuance of new stock
Cash dividends				(267,143)		(267,143)
Net income				281,966		281,966
Purchase of treasury stock
Disposal of treasury stock
Transfer from retained earnings to capital surplus				(65)		(65)
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		—		14,757		14,757

Balance at the end of the fiscal year	¥	30,420	¥	2,061,118	¥	2,091,538


	Millions of yen
	Stockholders’ equity				Stock acquisition rights
Year ended March 31, 2021	Treasury stock		Total		Stock acquisition rights		Total net assets
Balance at the beginning of the fiscal year	¥	(13,983)	¥	5,964,203	¥	2,064	¥	5,966,267
Changes in the fiscal year:
Issuance of new stock				2,618				2,618
Cash dividends				(267,143)				(267,143)
Net income				281,966				281,966
Purchase of treasury stock		(61)		(61)				(61)
Disposal of treasury stock		347		281				281
Transfer from retained earnings to capital surplus				—				—
Net changes in items other than stockholders’ equity in the fiscal year						(272)		(272)

Net changes in the fiscal year		285		17,661		(272)		17,388

Balance at the end of the fiscal year	¥	(13,698)	¥	5,981,865	¥	1,791	¥	5,983,656


	Millions of yen
	Stockholders’ equity
			Capital surplus
Year ended March 31, 2022	Capital stock		Capital reserve		Other capital surplus		Total capital surplus
Balance at the beginning of the fiscal year	¥	2,341,274	¥	1,562,751	¥	—	¥	1,562,751
Changes in the fiscal year:
Issuance of new stock		603		603				603
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock						(50)		(50)
Transfer from retained earnings to capital surplus						50		50
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		603		603		—		603

Balance at the end of the fiscal year	¥	2,341,878	¥	1,563,355	¥	—	¥	1,563,355


	Millions of yen
	Stockholders’ equity
	Retained earnings
	Other retained earnings
Year ended March 31, 2022	Voluntary reserve		Retained earnings brought forward		Total retained earnings
Balance at the beginning of the fiscal year	¥	30,420	¥	2,061,118	¥	2,091,538
Changes in the fiscal year:
Issuance of new stock
Cash dividends				(274,127)		(274,127)
Net income				395,167		395,167
Purchase of treasury stock
Disposal of treasury stock
Transfer from retained earnings to capital surplus				(50)		(50)
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		—		120,989		120,989

Balance at the end of the fiscal year	¥	30,420	¥	2,182,107	¥	2,212,527


	Millions of yen
	Stockholders’ equity				Stock acquisition rights
Year ended March 31, 2022	Treasury stock		Total		Stock acquisition rights		Total net assets
Balance at the beginning of the fiscal year	¥	(13,698)	¥	5,981,865	¥	1,791	¥	5,983,656
Changes in the fiscal year:
Issuance of new stock				1,207				1,207
Cash dividends				(274,127)				(274,127)
Net income				395,167				395,167
Purchase of treasury stock		(74)		(74)				(74)
Disposal of treasury stock		370		320				320
Transfer from retained earnings to capital surplus				—				—
Net changes in items other than stockholders’ equity in the fiscal year						(316)		(316)

Net changes in the fiscal year		296		122,492		(316)		122,176

Balance at the end of the fiscal year	¥	(13,402)	¥	6,104,357	¥	1,475	¥	6,105,832


	Millions of U. S. dollars
	Stockholders’ equity
			Capital surplus
Year ended March 31, 2022	Capital stock		Capital reserve		Other capital surplus		Total capital surplus
Balance at the beginning of the fiscal year	$	19,126	$	12,767	$	—	$	12,767
Changes in the fiscal year:
Issuance of new stock		5		5				5
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock						(0)		(0)
Transfer from retained earnings to capital surplus						0		0
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		5		5		—		5

Balance at the end of the fiscal year	$	19,131	$	12,771	$	—	$	12,771


	Millions of U. S. dollars
	Stockholders’ equity
	Retained earnings
	Other retained earnings
Year ended March 31, 2022	Voluntary reserve		Retained earnings brought forward		Total retained earnings
Balance at the beginning of the fiscal year	$	249	$	16,838	$	17,086
Changes in the fiscal year:
Issuance of new stock
Cash dividends				(2,239)		(2,239)
Net income				3,228		3,228
Purchase of treasury stock
Disposal of treasury stock
Transfer from retained earnings to capital surplus				(0)		(0)
Net changes in items other than stockholders’ equity in the fiscal year

Net changes in the fiscal year		—		988		988

Balance at the end of the fiscal year	$	249	$	17,826	$	18,075


	Millions of U. S. dollars
	Stockholders’ equity				Stock acquisition rights
Year ended March 31, 2022	Treasury stock		Total		Stock acquisition rights		Total net assets
Balance at the beginning of the fiscal year	$	(112)	$	48,867	$	15	$	48,882
Changes in the fiscal year:
Issuance of new stock				10				10
Cash dividends				(2,239)				(2,239)
Net income				3,228				3,228
Purchase of treasury stock		(1)		(1)				(1)
Disposal of treasury stock		3		3				3
Transfer from retained earnings to capital surplus				—				—
Net changes in items other than stockholders’ equity in the fiscal year						(3)		(3)

Net changes in the fiscal year		2		1,001		(3)		998

Balance at the end of the fiscal year	$	(109)	$	49,868	$	12	$	49,880

100

Independent Auditor’s Report

To the Board of Directors of

Sumitomo Mitsui Financial Group, Inc.:

Opinion

We have audited the accompanying consolidated financial statements of Sumitomo Mitsui Financial Group, Inc. (“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at March 31, 2022 and 2021, the consolidated statements of income, comprehensive income, changes in net assets and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with accounting principles generally accepted in Japan.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1.	The reasonableness of management’s assessment of the reserve for possible loan losses for SMBC’s corporate loans

The key audit matter

In the consolidated balance sheet of Sumitomo Mitsui Financial Group, Inc. and its consolidated subsidiaries (collectively referred to as the “Group”) as of March 31, 2022, the reserve for possible loan losses (the “Reserve”) was ¥590,744 million on loans and bills discounted (the “Loans”) of ¥90,834,056 million (or approximately 35.3% of total assets). Included in such balances were mainly corporate loans and the related reserve of Sumitomo Mitsui Banking Corporation (“SMBC”), a commercial banking subsidiary. As discussed in the “Notes (Additional information)” to the consolidated financial statements, a reserve of ¥75,398 million was recorded for possible loan losses for Russia-related credits.

As discussed in the “Notes (Significant Accounting Policies for Preparing Consolidated Financial Statements), 4. Accounting policies, (5) Reserve for possible loan losses” to the consolidated financial statements, SMBC assesses all claims including the Loans in accordance with the internal criteria for self-assessment of asset quality, and classifies borrowers into credit categories through examining individual credit risk profiles. On the basis of each borrower category, reserves and/or write-offs are recorded based on the methods including one that uses the historical loan-loss ratios or the probability of default to estimate possible loan losses and a discounted cash flow (DCF) method, in accordance with its internal policy for write-offs and provisions. For claims originated in specific overseas countries, an additional specific overseas reserve is recorded in the amount deemed necessary based on the assessment of political and economic conditions. Additionally, considering the recent economic environment and risk factors, a potential loss amount that was deemed to have incurred in specific portfolios, among others, was recorded in the Reserve at the end of the current fiscal year based on an overall assessment of a probable future outlook for those portfolios that has not been fully captured in the historical data or individual borrower classification.

As discussed in the “Notes (Significant Accounting Estimates)” and the “Notes (Additional information)” to the consolidated financial statements, the assessment of the Reserve for SMBC’s corporate loans involved significant estimation uncertainty, and required significant management judgment primarily in the following aspects:

•

classifying borrowers into appropriate credit categories through performing a qualitative assessment, including the use of forward-looking information;

•

determining whether additional reserves for specific portfolios are deemed necessary, and selecting appropriate methodologies to estimate such additional reserves based on the future outlook in light of the recent economic environment and risk factors; and

•

projecting future cash flow scenarios as an input to the DCF method for borrowers with large claims classified mainly as substandard or lower-level classifications.

In the judgment and estimation of these elements during the current fiscal year, the uncertain business environment arising from the current international situation involving Ukraine and the continuing uncertainty of the COVID-19 situation, in particular, required consideration, which included the assessment, for the purpose of measuring potential losses, of (i) the impact of economic sanctions imposed by governments of each country and the countermeasures taken by the Russian government under the current international situation involving Ukraine, and (ii) the impact of changes in the economic environment and market conditions caused by voluntary restraints and other restrictions on social and economic activities due to COVID-19 considering the effects of government support programs on the trends of bankruptcy cases and other attributes.

We, therefore, determined that management’s assessment of the Reserve for SMBC’s corporate loans, specifically, classifying borrowers into credit categories through a qualitative assessment including the use of forward-looking information, determining whether additional reserves for specific portfolios are deemed necessary based on the future outlook in light of the recent economic environment and risk factors as well as determining appropriate methodologies to estimate such additional reserves, and projecting cash flow scenarios used in the DCF method, was one of the most significant matters in our audit of the consolidated financial statements for this fiscal year, and accordingly, a key audit matter.

How the matter was addressed in our audit

The primary procedures we performed to assess the reasonableness of management’s assessment of the Reserve for SMBC’s corporate loans included the following:

(1)

Internal control testing

We evaluated the design and tested the operating effectiveness of certain of SMBC’s internal controls over its process to assess the Reserve for SMBC’s corporate loans. In this assessment, we focused on the controls that related to the:

•

approval of the internal rules for accounting for the Reserve, including the criteria for self-assessment and the policy for write-offs and provisions;

•

validation of the obligor grading models;

•

classification of individual borrowers into credit categories through a qualitative assessment;

•

determination of additional reserves for specific portfolios based on the future outlook in light of the recent economic environment and risk factors; and

•

projection of future cash flow scenarios used in the DCF method.

(2)

Evaluation of the policy for the Reserve and the obligor grading models

We evaluated the policy for the Reserve for SMBC’s corporate loans for compliance with the accounting principles generally accepted in Japan. Additionally, we involved credit risk specialists with industry-specific knowledge and expertise who assisted us in evaluating the appropriateness of the obligor grading models, which provided the basis for borrower classification, through analyzing the consistency of obligor grades with external ratings, and also through a retrospective review of the models’ performance.

(3)

Evaluation of borrower classification taking into account qualitative factors

For SMBC’s corporate borrowers that we selected based on certain criteria, we evaluated the appropriateness of borrower classification taking into account qualitative factors through:

•

analyzing the borrowers’ current business performance including the sufficiency of liquidity;

•

assessing the appropriateness of the borrowers’ business plans used as a basis for management’s borrower classification, by comparing the plans with the industry outlook and the recent performance, and also by analyzing the impact of stressed scenarios considered by management;

•

analyzing the impact of economic sanctions imposed by governments of each country and the countermeasures taken by the Russian government on the borrowers’ business performance and liquidity positions, including the assessment of the consistency of the obligor grades with external ratings and the analysis of the current repayment situation; and

•

analyzing the forecasts of liquidity position incorporating financial support programs by governments and financial institutions in each country in response to COVID-19 and the borrowers’ business plans.

(4)

Evaluation of the reasonableness of additional reserves for specific portfolios based on the future outlook in light of the recent economic environment and risk factors

Given the uncertain business environment arising from the current international situation involving Ukraine and the continuing uncertainty of the COVID-19 situation impacting the economic environment, we evaluated the reasonableness of additional reserves for specific portfolios through:

•

analyzing the respective industry environment by referencing the relevant indices and other information published by external agencies;

•

assessing the appropriateness of the selection of portfolios subject to additional reserves, through the analysis of the impact of the economic sanctions imposed by governments of each country and the countermeasures taken by the Russian government assuming they are prolonged;

•

assessing assumptions used in estimating additional reserves, especially the risks of delinquency and loan modifications related to credit exposure in Russia, through the analysis of the impact of the economic sanctions imposed by governments of each country and the countermeasures taken by the Russian government assuming they are prolonged, including the analysis of the observed trend in the repayment of Russian government and corporates;

•

assessing the appropriateness of the selection of portfolios subject to additional reserves in relation to COVID-19, by analyzing the effects of financial support programs by governments and financial institutions in each country on the trends of bankruptcy cases and other attributes, and also by analyzing the observed trends in recent revisions of obligor grades by portfolios;

•

assessing the consistency of assumptions used in estimating additional reserves, especially the assumption about the extent of the impact changes in economic environment and market conditions caused by voluntary restraints and other restrictions on social and economic activities have had on each portfolio with the respective industry environment; and

•

evaluating the appropriateness of the methodologies used to estimate additional reserves considering the nature of and risk factors identified in each portfolio as well as the result of a retrospective review.

(5)

Evaluation of future cash flow scenarios used in the DCF method

For borrowers that we selected based on certain criteria among those for which the reserves were calculated using the DCF method, we evaluated the appropriateness of the borrowers’ future cash flow scenarios through:

•

assessing the feasibility of the restructuring plans considering the recent economic environment and the prospect of future economic conditions;

•

assessing the borrowers’ current progress against the restructuring plans; and

•

assessing the borrower’s ability to repay considering the schedule and underlying sources of repayments based on the restructuring plans.

2.	Application of impairment accounting for fixed assets in the SMBC Retail Business Unit

The key audit matter

In the consolidated statement of income of the Group for the fiscal year ended March 31, 2022, losses on impairment of fixed assets of ¥ 108,920 million were recorded. As discussed in the “Notes (Significant Accounting Estimates)” to the consolidated financial statements, ¥ 37,795 million of this amount (tangible fixed assets ¥ 5,118 million, intangible fixed assets ¥ 32,677 million) was related to the business assets attributable to the Retail Business Unit at SMBC (the “SMBC Retail Business Unit”).

In applying impairment accounting for fixed assets, whenever there is an indication of impairment for an asset group, the Group needs to determine whether an impairment loss should be recognized by comparing the undiscounted future cash flows that are expected to be generated from the respective asset group with its carrying amount. If it is determined that the recognition of an impairment loss is deemed necessary, the carrying amount is reduced to the recoverable amount and the resulting decrease in the carrying amount is recorded as an impairment loss. The recoverable amount is estimated as the higher of either the net realizable value which is calculated by deducting expected disposal costs from the fair value of the fixed assets or the value in use which is the present value of future cash flows expected to be derived from the continuous use and ultimate disposal of the fixed assets.

(1)

Identification of assets attributable to the SMBC Retail Business Unit

Since there was an indication of impairment for the SMBC Retail Business Unit in the current fiscal year, it was necessary to determine whether an impairment loss should be recognized for its business assets that includes corporate assets attributable to the SMBC Retail Business Unit. A management accounting framework was used to identify assets attributable to the SMBC Retail Business Unit.

If the identification of assets attributable to the SMBC Retail Business Unit was not performed reasonably, there may have been a significant impact on the consolidated financial statements.

(2)

Estimation of future cash flows

The SMBC Retail Business Unit has incurred continuing losses from operating activities due to the effect of COVID-19 and other factors, and there was an indication of impairment for corporate assets related to the SMBC Retail Business Unit. Therefore, in the current fiscal year, the Group considered whether an impairment loss shall be recognized for the business assets that includes corporate assets related to the SMBC Retail Business Unit, and determined that the recognition of an impairment loss was deemed necessary since the total amount of estimated undiscounted future cash flows was less than the carrying amounts of the assets. In measuring the impairment loss, the net realizable value was used after comparing the value in use calculated as the present value of future cash flows with the net realizable value.

The future cash flows used to determine whether an impairment loss should be recognized and to calculate the recoverable amount for the purpose of measuring the impairment loss were estimated based on the business plan of the SMBC Retail Banking Unit prepared by management, which takes into account the balance of housing loans, as one of the major assumptions. There was a high degree of uncertainty in these estimates, involving subjective management judgment. If the future cash flows were not properly estimated, the determination on whether an impairment loss should be recognized and the measurement of the impairment loss may have been inappropriate, which may have resulted in a significant impact on the consolidated financial statements.

We, therefore, determined that the application of impairment accounting for fixed assets in the SMBC Retail Business Unit, specifically, the identification of assets attributable to the SMBC Retail Business Unit and the estimation of future cash flows, was one of the most significant matters in our audit of the consolidated financial statements for this fiscal year, and accordingly, a key audit matter.

How the matter was addressed in our audit

The primary procedures we performed to assess the appropriateness of the application of impairment accounting for fixed assets in the SMBC Retail Business Unit included the following:

(1)

Internal control testing

We evaluated the design and tested the operating effectiveness of certain of SMBC’s internal controls related to the application of impairment accounting for fixed assets in the SMBC Retail Business Unit. In this assessment, we focused on the controls that related to the:

•

approval of the identification of assets attributable to the SMBC Retail Business Unit; and

•

approval of the determination on whether an impairment loss shall be recognized and the measurement of the impairment loss for fixed assets in the SMBC Retail Business Unit, including the estimation of future cash flows.

(2)

Evaluation of the reasonableness of the identification of assets attributable to the SMBC Retail Business Unit

We evaluated the reasonableness of the identification of assets attributable to the SMBC Retail Business Unit through:

•

assessing the reasonableness of the Group’s policy to determine the scope of assets attributable to the SMBC Retail Business Unit based on the extent of their relevance to the operations and the specific identification method used, by inquiring of the department in charge and reviewing the related approved documents, taking into consideration the method of managing fixed assets at SMBC and the profit and loss management related to the SMBC Retail Business Unit for management reporting purpose; and

•

confirming that the identification of assets attributable to the SMBC Retail Business Unit was appropriately performed based on the Group’s policy and the specific identification method referred to above, by inquiring of the department in charge and reviewing the results of the identification of assets and the supporting documents, taking into consideration the nature and usage of the identified assets.

(3)

Evaluation of the reasonableness of the estimation of future cash flows

We evaluated the reasonableness of future cash flows used to determine whether an impairment loss should be recognized and to measure the impairment loss in the SMBC Retail Business Unit through:

•

assessing the appropriateness of the scope of profit and loss items attributable to the SMBC Retail Business Unit based on their relevance to the operations, by inquiring of the department in charge about the business plan which was the basis for estimating future cash flows, and reviewing the relevant approved documents, with an understanding of the contents and nature of major profit and loss items included in the business plan;

•

assessing the reasonableness of the estimation underlying the business plan, by inquiring of the department in charge about the business plan, reviewing the related approved documents, and comparing major profit and loss items included in the business plan with actual results, taking into consideration the impact of the business environment surrounding the SMBC Retail Business Unit on the future cash flows; and

•

confirming that the market and competitive environment behind key assumptions including the projected balance of housing loans was consistent with our understanding based on external industry reports.

Other Information

The other information comprises the information included in the disclosure documents that contain or accompany the audited financial statements, but does not include the financial statements and our auditor’s report thereon.

We do not perform any work on the other information as we determine such information does not exist.

Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.

The Audit Committee is responsible for overseeing the directors and the corporate executive officers’ performance of their duties with regard to the design, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

•

Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2022 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in basis of presentation in the notes to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan

We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

/S/ Toshihiro Otsuka

Designated Engagement Partner

Certified Public Accountant

/S/ Noriaki Habuto

Designated Engagement Partner

Certified Public Accountant

/S/ Kazuhide Niki

Designated Engagement Partner

Certified Public Accountant

KPMG AZSA LLC

Tokyo Office, Japan

June 21, 2022