Sumitomo Mitsui Financial Group Stock

Sumitomo Mitsui Financial Group, Inc. (SMFG) offers various financial services, including commercial banking, leasing, securities, consumer finance and other services.

The SMBC Group (the company and its subsidiaries and affiliates taken as a whole) includes Sumitomo Mitsui Banking Corporation (SMBC); SMBC Trust Bank Ltd. (SMBC Trust Bank); Sumitomo Mitsui Finance and Leasing Company, Limited (SMFL); SMBC Nikko Securities; Sumitomo Mitsui Card Company, Limited (Sumitomo Mitsui Card); SMBC Finance Service Co., Ltd. (SMBC Finance Service); SMBC Consumer Finance Co., Ltd. (SMBC Consumer Finance); The Japan Research Institute, Limited (The Japan Research Institute); Sumitomo Mitsui DS Asset Management Company, Limited (SMDAM); and other subsidiaries and affiliates.

Segments

The company operates through four segments: Wholesale Business Unit, Retail Business Unit, Global Business Unit, and Global Markets Business Unit.

Wholesale Business Unit segment

The Wholesale Business Unit segment provides comprehensive solutions primarily for corporate clients in Japan that respond to wide-ranging client needs in relation to financing, investment management, risk hedging, settlement, M&A and other advisory services, digital services and leasing services. This business unit mainly consists of the wholesale businesses of SMBC; SMBC Trust Bank Ltd. (SMBC Trust Bank); SMFL; SMBC Nikko Securities; Sumitomo Mitsui Card; and SMBC Finance Service, which changed its corporate name from Cedyna Financial Corporation upon merger with former SMBC Finance Service Co., Ltd. in July 2020.

Financing and Investment Management

The Wholesale Business Unit provides financing services that include bilateral loans, syndicated loans, commitment lines, structured finance, project finance, nonrecourse loans to and investments in corporate customers directly or through private equity funds, securitization, debt and equity underwriting and corporate bond trustee and registrar services.

The Wholesale Business Unit also provides investment management services, such as deposits and investment trusts. In addition, this business unit offers a wide range of securities products, including structured bonds and subordinated bonds to corporate clients through SMBC and SMBC Nikko Securities Inc. (SMBC Nikko Securities).

Risk Hedging

The Wholesale Business Unit provides various risk hedging services, including forward exchange contracts and derivatives to meet the company’s customers’ demand for hedging risks, such as interest rate risk or foreign exchange rate risk in their transactions. This business unit also provides guarantee services, including stand-by credit, performance bond and credit guarantee services.

Settlement

The Wholesale Business Unit offers a variety of products and services, including remittance, cash management, trade finance for export and import activities and supply chain finance to optimize customers’ cash flows and business flows.

In addition, this business unit provides comprehensive settlement services, including credit card issuing, merchant acquiring, collection outsourcing and factoring services for corporate customers through Sumitomo Mitsui Card and its wholly owned subsidiary, SMBC Finance Service.

M&A and Other Advisory Services

The Wholesale Business Unit responds to customers’ diversifying business strategies and management issues by providing solutions custom-tailored to their business characteristics and growth stage.

The Wholesale Business Unit caters to large corporate clients in their global business activities by leveraging the collective strength of SMBC Group companies. For example, SMBC and SMBC Nikko Securities support the entire deal process of cross-border M&A projects on a collaborative basis.

For mid-sized companies and small and medium-sized enterprises, the Wholesale Business Unit provides a wide range of financial services, including direct investment, LBO financing, debt restructuring, support for initial public offering and M&A advisory to enhance the company’s customers’ corporate value, working in conjunction with private equity funds as necessary. In real estate and related businesses, this business unit provides a full lineup of services, including brokerage and asset management by SMBC Trust Bank and funding support mainly by SMBC.

For start-up companies, the Wholesale Business Unit offers support in accordance with clients’ stage of growth, such as management consulting, venture investment, financing, and support for initial public offerings.

For clients considering business overseas, the Wholesale Business Unit provides tailored information on local laws and regulations and on Japanese companies already present in target countries. For clients who already have business overseas, each SMBC Group company collaborates to provide high quality solutions in areas, such as business expansion and reorganization.

Digital Services

The Wholesale Business Unit supports customers’ digitalization and new business creation efforts. For example, this business unit provides convenient digital services by enhancing collaboration between digital-related services by the SMBC Group companies, such as robotic process automation and electronic contract services. In addition, this business unit launched a corporate digital platform, which delivers a diverse range of financial and non-financial services, including those of external partners.

Leasing

The Wholesale Business Unit provides a wide range of leasing services, including equipment, operating and leveraged leasing mainly through SMFL, one of the major leasing companies in Japan. The company has a 50% equity interest in SMFL while the remaining 50% is held by Sumitomo Corporation (Sumitomo Corp), a non-affiliate, which makes SMFL its joint venture with Sumitomo Corp.

Retail Business Unit segment

The Retail Business Unit provides financial services to consumers residing in Japan and mainly consists of the retail businesses of SMBC; SMBC Trust Bank; SMBC Nikko Securities; Sumitomo Mitsui Card; SMBC Finance Service; and SMBC Consumer Finance. This business unit offers a wide range of products and services for consumers, including wealth management services, settlement services, consumer finance and housing loans, in order to address the financial needs of all individual customers.

Wealth Management

The Retail Business Unit offers a variety of wealth management services to high-net-worth customers as well as customers with needs for asset building in the mass affluent and mass segments. The financial products and services that this business unit offers include deposit products, such as time deposits and foreign currency deposits, investment trusts, equities, bonds, insurance products and trust services.

In order to meet high-net-worth customers’ diverse needs for asset management, including asset succession, SMBC, SMBC Trust Bank and SMBC Nikko Securities are promoting greater collaboration by leveraging SMBC’s broad client base and high advisory capabilities of SMBC Trust Bank and SMBC Nikko Securities. In addition, the company is appointing dedicated staff to high-net-worth customers to give them access to outstanding advice and service.

Settlement

The Retail Business Unit conducts credit card, installment and transaction businesses and provides customers with secure and convenient payment methods.

In the credit card business, Sumitomo Mitsui Card Company, Limited (Sumitomo Mitsui Card) and SMBC Finance Service conduct a comprehensive credit card business with a strong brand, and offer a variety of settlement and finance services to meet diverse customer needs.

Sumitomo Mitsui Card is a leading company in Japan’s credit card industry, having introduced the Visa brand into the Japanese market, and issues a variety of affiliated credit cards in cooperation with partners, including but not limited to, railway companies, airline companies, department stores and online retailers to satisfy both these partners’ and cardholders’ needs.

SMBC Finance Service conducts credit card businesses, installment businesses such as shopping credit and automobile loans, and transaction businesses, such as collection outsourcing and factoring.

The company, Sumitomo Mitsui Card, SMBC and NTT DoCoMo, Inc. (NTT DoCoMo) formed a strategic business and capital alliance in credit payment services in 2005. In September 2018, the company entered into an agreement for new business cooperation with NTT DoCoMo to further expand credit payment services and explore new ways of collaboration in areas, such as FinTech. Based on this agreement, the company acquired an additional 34% of the outstanding shares of Sumitomo Mitsui Card from NTT DoCoMo, and as a result, its equity interest in Sumitomo Mitsui Card increased from 66% to 100% in April 2019. Simultaneously, the company made SMBC Finance Service, a subsidiary of Sumitomo Mitsui Card, in order to provide comprehensive solutions that benefit both the business operators and end-users. SMBC, Sumitomo Mitsui Card and SMBC Finance Service are leveraging their strengths to address cashless payment needs and integrate marketing and business operations.

Sumitomo Mitsui Card, together with GMO Payment Gateway, Inc. and Visa Worldwide Japan, Co., Ltd., has built a next-generation payment platform for business operators, and commenced full operations in October 2019. It provides an one-stop solution combining payment systems of real and online stores, and also integrates the payment center that processes the payment data and the network that delivers the processed payment data to each business operator.

Consumer Finance

The Retail Business Unit offers a variety of consumer loan products, including unsecured card loan products mainly through SMBC and SMBC Consumer Finance to meet the wide range of individual customers’ demand for funds. Also, SMBC Consumer Finance guarantees certain consumer loans made by SMBC and other financial institutions.

In addition, SMBC and SMBC Mobit Co., LTD., (SMBC Mobit) which is a wholly owned subsidiary of SMBC Consumer Finance engaged in the card loan business, are strengthening their partnership. For example, a loan card from SMBC Mobit can be applied for or received through automated contract machines in SMBC branch offices.

Housing Loans

The Retail Business Unit provides housing loans with a variety of terms and interest rates, including fixed-rate loans with 2- to 35-year terms, to meet diversified customer needs. As an example of a product addressing a specific customer need, this business unit offers a housing loan combined with an insurance policy that covers the repayment of the outstanding loan balance in the event the borrower is diagnosed with certain diseases. Housing loans are principally secured by collateral or supported by guarantees.

The Retail Business Unit operations are mainly conducted through a large and well developed branch network. The company has a domestic network of SMBC branch offices, SMBC Trust Bank branch offices, SMBC Nikko Securities branch offices, and SMBC Consumer Finance staffed and unstaffed branch offices. Some SMBC branches provide financial consultation services for asset management and housing loans during extended hours, including weekday evenings, weekends, and national holidays, for the convenience of individual customers.

The Retail Business Unit also operates an extensive network of ATMs in Japan. SMBC offers its customers’ access to ATMs, some of which are SMBC’s ATMs and the majority of which are ATMs made available through arrangements with other ATM providers, such as convenience store chains. SMBC Consumer Finance offers its customers’ access to automatic contract machines and ATMs.

This business unit also offers internet banking services for consumers. As of March 31, 2022, SMBC’s internet banking services had approximately 19 million registered users. The users are able to transfer funds, perform balance inquiries, make time deposits and foreign currency deposits, and buy and sell investment trusts over the internet with smartphones and computers.

Moreover, in credit card business, there are approximately 52 million card holders of Sumitomo Mitsui Card and SMBC Finance Service as of March 31, 2022.

The Retail Business Unit is implementing an initiative to further enhance its simple and efficient administrative operations by digitalization of administrative processes and transfer of administrative functions of branches to administration centers, and over-the-counter consultation functions through the combination of full-service branches and branches specialized in individual consultation. With this initiative, the company aims to reduce costs while providing customers with convenient and high quality services.

The Retail Business Unit promotes digitalization in a variety of areas, including promotion of use of debit cards and credit cards that address cashless payment needs, a smartphone application that allows the company’s customers to easily and seamlessly view information on transactions with SMBC and Sumitomo Mitsui Card, and an automated chat service utilizing artificial intelligence.

Global Business Unit segment

The Global Business Unit, which was renamed from the International Business Unit in April 2020, supports the global businesses of a diverse range of clients, such as Japanese companies operating overseas, non-Japanese companies, financial institutions and government agencies and public corporations of various countries. This business unit mainly consists of the international businesses of SMBC, SMBC Trust Bank, SMFL, SMBC Nikko Securities and their foreign subsidiaries. The company has a global network of overseas offices.

Banking Business

The Global Business Unit provides a variety of tailored products and services to meet customer and market requirements, including loans, deposits, clearing services, trade finance, project finance, loan syndication, derivatives, and global cash management services.

In April 2019, the company commenced full operations of SMBC Bank EU AG, a banking subsidiary established in Germany, to retain its ability to respond flexibly to changes in the political and economic environment in Europe, including the United Kingdom’s exit from the European Union. Through SMBC Bank EU AG and the company’s other existing networks, it continues to provide clients with sustained and stable financial services while expanding the range of its services. In April 2022, SMBC Bank EU AG merged with the company’s securities business subsidiary in Germany, SMBC Nikko Capital Markets Europe GmbH. The merger enables the company to offer banking and securities products to its customers through a single entity providing a full range of financial services.

SMBC seeks to meet customers’ needs globally, together with the network of SMBC’s foreign banking subsidiaries, such as SMBC Bank International plc, which changed its corporate name from Sumitomo Mitsui Banking Corporation Europe Limited in October 2020, SMBC Bank EU AG, Sumitomo Mitsui Banking Corporation (China) Limited, PT Bank BTPN Tbk and foreign banking associates, including The Bank of East Asia, Limited and ACLEDA Bank Plc.

Securities Business

In overseas markets, the Global Business Unit provides services, such as underwriting activities, Japanese stock brokerage and M&A advisory through SMBC Nikko Capital Markets Limited and SMBC Nikko Securities America, Inc., which are subsidiaries of SMBC in the United Kingdom and the United States respectively. In addition, this business unit provides services, such as underwriting activities and Japanese stock brokerage through SMBC Bank EU AG, Japanese stock brokerage and M&A advisory services through SMBC Nikko Securities (Hong Kong) Limited and SMBC Nikko Securities (Singapore) Pte. Ltd., and M&A advisory related services through SMBC Nikko Investment Consulting (Shanghai) Limited. Together with other SMBC Nikko Securities’ subsidiaries and affiliates, this business unit offers high quality financial services to clients on a global basis.

Leasing Business

The Global Business Unit provides a variety of leasing services related to the construction machinery, transportation equipment, industrial machinery, medical equipment and other categories mainly through SMFL’s offices overseas. This business unit also offers aircraft leasing services through SMBC Aviation Capital Limited, a subsidiary of SMFL, and railcar leasing services through SMBC Rail Services LLC, which is a railcar operating leasing company and a subsidiary of SMBC Leasing and Finance, Inc.

Global Markets Business Unit segment

The Global Markets Business Unit offers solutions through foreign exchange products, derivatives, bonds, stocks and other marketable financial products and also undertakes asset liability management operations, which help comprehensively control balance sheet liquidity risks and interest rate risks. This business unit consists of the Treasury Unit of SMBC and the global markets businesses of SMBC Nikko Securities.

Asset Liability Management and Portfolio Management

The Global Markets Business Unit maintains stability by establishing a portfolio with highly liquid products and focusing on products for which investment appetite is high, and by carrying out portfolio rebalancing in a nimble and dynamic manner in response to changes in market conditions.

Foreign Currency Funding

To support its overseas businesses, this business unit strives to improve the stability of the company’s foreign currency funding by diversifying funding methods and expanding the scope of investors it targets. At the same time, this business unit keeps appropriate control of the balance sheet in response to international financial regulations.

Sales and Trading

The Global Markets Business Unit provides detailed information on market conditions and economic trends to address customers’ hedging and asset management needs, expands its product lineup in foreign exchange, derivative, bond, stock and other products and supplies timely solutions to increase customer satisfaction and SMBC Group earnings.

In addition, this business unit encourages the use of electronic transactions, such as its electronic foreign exchange execution platform available via the internet to respond to the needs of a wider range of customers.

Other Major Business

System Development, Data Processing, Management Consulting and Economic Research

The company provides financial consultation services relating to management reforms, IT, the planning and development of strategic information systems and outsourcing. The company also conducts diverse activities including domestic and international economic research and analysis, policy recommendations, and business incubation. The company offers these services mainly through The Japan Research Institute.

Asset Management

The company engages in the investment advisory and investment trust management businesses.

In April 2019, Sumitomo Mitsui Asset Management (SMAM), the company’s subsidiary, merged with Daiwa SB Investments Ltd. (DSBI), previously its associate, to form SMDAM. The company’s equity interest in SMDAM resulting from the merger is 50.1%, and as such, SMDAM is its subsidiary. This merger was made for the purpose of establishing an asset management company that combines the strengths and expertise of SMAM and DSBI, and offers high quality investment management performance and services in order to properly address client needs.

Others

Kansai Mirai Financial Group, Inc. (Kansai Mirai Financial Group), which became the company’s associate in April 2018, engages in commercial banking business in Kansai area. However, in December 2020, the company sold a part of its shares of Kansai Mirai Financial Group and as a result, Kansai Mirai Financial Group is no longer its associate.

On October 28, 2021, SMBC Consumer Finance, the company’s wholly owned subsidiary, acquired a 49.0% equity interest in VPBank Finance Company Limited, a consumer finance company in Vietnam, from Vietnam Prosperity Joint Stock Commercial Bank. As a result, VPBank Finance Company Limited became the ocmpany’s associate and changed its corporate name to VPBank SMBC Finance Company Limited.

On November 30, 2021, the company acquired a 74.9% equity interest in Fullerton India Credit Company Limited (Fullerton India), which became its subsidiary. Fullerton India has a pan-India distribution network and offers unsecured loans and loans against property to mainly small and medium-sized enterprises and individual customers. This acquisition was made in order to gain a retail finance platform in India and further expand its business franchise in Asia.

Research and Development

The amounts of research and development expenditure recognized as expenses for the year ended March 31, 2022, were ¥35 million.

Regulations

Under the Foreign Exchange and Foreign Trade Act, SMBC is required to confirm that necessary permission from the relevant authorities is obtained by the customer or obtain necessary permission itself, for certain transaction involving targets who are designated under the law and the relevant orders thereunder, including North Korea or Iran.

As a result of its operations in the United States, the company and SMBC are subject to extensive federal and state banking and securities supervision and regulation. SMBC engages in the U.S. banking activities directly through its branches in Los Angeles, San Francisco and New York and through its representative offices in Houston, Dallas, Silicon Valley, Chicago and White Plains, New York. SMBC also controls the U.S. banking subsidiary, Manufacturers Bank, and the U.S. broker-dealer subsidiary, SMBC Nikko Securities America, Inc. Through a reorganization of the company’s existing U.S. operations, the company and SMBC established the U.S. bank holding company, SMBC Americas Holdings, Inc. (SMBCAH), a wholly-owned direct subsidiary of SMBC at January 1, 2019. SMBCAH is the holding company for Manufacturers Bank, SMBC Nikko Securities America, Inc. and certain other the U.S. subsidiaries. The establishment of SMBCAH enhanced the company and SMBC’s the U.S. corporate governance capabilities by centralizing the supervision and management of its the U.S. operations and bring together its primary the U.S.-based banking, securities, capital markets and other subsidiaries under the new holding company.

SMBC’s New York branch is supervised by the Federal Reserve Bank of New York and the New York State Department of Financial Services, but its deposits are not insured (or eligible to be insured) by the Federal Deposit Insurance Corporation (FDIC). SMBC’s Los Angeles and San Francisco branches are supervised by the Federal Reserve Bank of San Francisco and the California Department of Financial Protection and Innovation (DFPI), but their deposits are not insured (or eligible to be insured) by the FDIC. SMBC’s representative offices in Houston and in Dallas are subject to regulation and examination by the Federal Reserve Bank of Dallas and the Texas Department of Banking. SMBC’s representative office in Silicon Valley is subject to regulation and examination by the Federal Reserve Bank of San Francisco and the California DFPI. SMBC’s representative office in Chicago is subject to regulation and examination by the Federal Reserve Bank of Chicago and the Illinois Department of Financial and Professional Regulation. SMBC’s representative office in White Plains, New York is subject to regulation and examination by the Federal Reserve Bank of New York and the New York State Department of Financial Services.

Manufacturers Bank is a California state-chartered bank with FDIC-insured deposits that is not a member of the Federal Reserve System. As such, Manufacturers Bank is subject to regulation, supervision and examination by the FDIC and the California DFPI.

The company, SMBC and SMBCAH are bank holding companies by virtue of their ownership of Manufacturers Bank, and as such are subject to the U.S. Bank Holding Company Act of 1956, as amended (Bank Holding Company Act), and are subject to regulation, supervision and examination by the Federal Reserve Board as their the U.S. umbrella supervisor. The company, SMBC and SMBCAH are required to serve as sources of financial strength to Manufacturers Bank.

The Bank Holding Company Act imposes restrictions on the company and SMBC’s the U.S. non-banking operations. Bank holding companies that elect to be treated as financial holding companies, such as the company, SMBC and SMBCAH are, however, permitted to engage in a broader range of activities in the United States. Unless otherwise limited by the Federal Reserve Board, financial holding companies generally can engage, directly or indirectly in the U.S. and abroad, in financial activities, either de novo or by acquisition, by providing after-the-fact notice to the Federal Reserve Board.

Under the Bank Holding Company Act, the company, SMBC and SMBCAH are also required to obtain the prior approval of the Federal Reserve Board before directly or indirectly acquiring the ownership or control of more than 5% of any class of voting shares of the U.S. banks, certain other depository institutions and bank or depository institution holding companies. In addition, SMBC’s the U.S. banking operations (including Manufacturers Bank and SMBC’s the U.S. branches) are also restricted from engaging in certain tying arrangements involving products and services.

SMBC’s the U.S. branches and Manufacturers Bank are subject to requirements and restrictions under the U.S. federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be made and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of Manufacturers Bank, and to a limited extent, SMBC’s New York and California branches.

The company is subject to the Volcker Rule, which restricts the ability of banking entities, such as it and SMBC, to engage as principal in proprietary trading activities, or sponsor, invest in, or retain investments in certain private equity, hedge or similar funds, but a number of exclusions and exemptions limit the Volcker Rule’s extraterritorial reach.

In the United States, SMBC’s the U.S.-registered broker-dealer subsidiary, SMBC Nikko Securities America, Inc. is regulated by the SEC.

In addition, SMBC Nikko Securities America, Inc. is a member of and regulated by the Financial Industry Regulatory Authority and is regulated by the individual state securities authorities in the states in which it operates. The U.S. government agencies and self-regulatory organizations, as well as state securities authorities in the United States having jurisdiction over SMBC’s the U.S. broker-dealer affiliates, are empowered to conduct administrative proceedings that can result in, among other things, censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer or its directors, officers or employees.

History

Sumitomo Mitsui Financial Group, Inc. was founded in 2002. The company was incorporated in 2002.