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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE13a-16 OR15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of July 2018
Commission file number001-34919
SUMITOMO MITSUI FINANCIAL GROUP, INC.
(Translation of registrant’s name into English)
1-2, Marunouchi1-chome, Chiyoda-ku, Tokyo100-0005, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover ofForm 20-F orForm 40-F: | Form 20-F ☒ | or | Form 40-F ☐ | |||
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1): | ☐ | |||||
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-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 Rule12g3-2(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 withRule 12g3-2(b): | 82- |
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The information, documents and exhibits set forth in this Form6-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 FormF-3 (FileNo. 333-209069) and to be a part of such prospectus from the date of the filing thereof, to the extent not superseded by documents or reports subsequently filed or furnished.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. |
2. |
EXHIBIT INDEX
Exhibit No. | Description | |
15.1 | Consent of KPMG AZSA LLC |
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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/ Jun Ohta | |||
Name: | Jun Ohta | |||
Title: | Deputy President and Executive Officer Group Chief Financial Officer |
Date: July 5, 2018
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AUDITED CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED MARCH 31, 2017 AND 2018
On June 28, 2018, we published our consolidated financial statements as of and for the years ended March 31, 2017 and 2018 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, 2018 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 Form20-F filed with the SEC.
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CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Millions of yen | Millions of U.S. dollars | |||||||||
March 31 | 2017 | 2018 | 2018 | |||||||
Assets: | ||||||||||
Cash and due from banks | *8 | ¥ 46,865,538 | *8 | ¥�� 53,732,582 | $ 505,718 | |||||
Call loans and bills bought | 1,872,144 | 1,881,879 | 17,712 | |||||||
Receivables under resale agreements | 899,897 | 827,892 | 7,792 | |||||||
Receivables under securities borrowing transactions | 8,760,390 | 8,337,700 | 78,472 | |||||||
Monetary claims bought | *8 | 4,420,377 | *8 | 4,730,770 | 44,525 | |||||
Trading assets | *8 | 6,755,428 | *8 | 5,585,591 | 52,570 | |||||
Money held in trust | 3,439 | 1,482 | 14 | |||||||
Securities | *1, *2, *8, *15 | 24,631,792 | *1, *2, *8, *15 | 25,712,709 | 242,002 | |||||
Loans and bills discounted | *3, *4, *5, *6, *7, *8, *9 | 80,237,322 | *3, *4, *5, *6, *7, *8, *9 | 72,945,934 | 686,550 | |||||
Foreign exchanges | *7 | 1,723,867 | *7 | 2,166,190 | 20,388 | |||||
Lease receivables and investment assets | *8 | 2,395,597 | *8 | 2,329,431 | 21,924 | |||||
Other assets | *8 | 7,355,845 | *8 | 8,005,807 | 75,349 | |||||
Tangible fixed assets | *8, *10, *11, *12 | 3,101,642 | *8, *10, *11, *12 | 3,475,131 | 32,707 | |||||
Assets for rent | 2,086,391 | 2,553,213 | 24,030 | |||||||
Buildings | 381,378 | 341,949 | 3,218 | |||||||
Land | 489,167 | 424,277 | 3,993 | |||||||
Lease assets | 7,186 | 6,332 | 60 | |||||||
Construction in progress | 20,575 | 33,971 | 320 | |||||||
Other tangible fixed assets | 116,942 | 115,387 | 1,086 | |||||||
Intangible fixed assets | 946,506 | 865,584 | 8,147 | |||||||
Software | 431,833 | 428,756 | 4,035 | |||||||
Goodwill | 318,578 | 272,203 | 2,562 | |||||||
Lease assets | 185 | 163 | 2 | |||||||
Other intangible fixed assets | 195,909 | 164,460 | 1,548 | |||||||
Net defined benefit asset | 314,922 | 383,418 | 3,609 | |||||||
Deferred tax assets | 63,001 | 27,609 | 260 | |||||||
Customers’ liabilities for acceptances and guarantees | 8,090,111 | 8,575,499 | 80,711 | |||||||
Reserve for possible loan losses | (646,215) | (536,088) | (5,046) | |||||||
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Total assets | ¥ 197,791,611 | ¥ 199,049,128 | $ 1,873,404 | |||||||
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(Continued)
Millions of yen | Millions of U.S. dollars | |||||||||
March 31 | 2017 | 2018 | 2018 | |||||||
Liabilities and net assets: | ||||||||||
Liabilities: | ||||||||||
Deposits | *8 | ¥ 117,830,210 | *8 | ¥ 116,477,534 | $ 1,096,259 | |||||
Negotiable certificates of deposit | 11,880,937 | 11,220,284 | 105,603 | |||||||
Call money and bills sold | 2,088,019 | 1,190,928 | 11,209 | |||||||
Payables under repurchase agreements | *8 | 2,715,752 | *8 | 5,509,721 | 51,856 | |||||
Payables under securities lending transactions | *8 | 7,444,655 | *8 | 7,186,861 | 67,641 | |||||
Commercial paper | 2,311,542 | 2,384,787 | 22,445 | |||||||
Trading liabilities | 4,704,931 | 4,402,110 | 41,432 | |||||||
Borrowed money | *8, *13 | 10,786,713 | *8, *13 | 10,829,248 | 101,922 | |||||
Foreign exchanges | 683,252 | 865,640 | 8,147 | |||||||
Short-term bonds | 1,125,600 | 1,256,600 | 11,827 | |||||||
Bonds | *14 | 8,129,232 | *8, *14 | 9,057,683 | 85,249 | |||||
Due to trust account | 1,180,976 | 1,328,271 | 12,501 | |||||||
Other liabilities | *8 | 6,880,273 | *8 | 6,348,202 | 59,748 | |||||
Reserve for employee bonuses | 77,375 | 84,046 | 791 | |||||||
Reserve for executive bonuses | 3,045 | 3,861 | 36 | |||||||
Net defined benefit liability | 59,110 | 39,982 | 376 | |||||||
Reserve for executive retirement benefits | 2,347 | 2,026 | 19 | |||||||
Reserve for point service program | 21,744 | 22,244 | 209 | |||||||
Reserve for reimbursement of deposits | 15,464 | 17,765 | 167 | |||||||
Reserve for losses on interest repayment | 156,775 | 144,763 | 1,362 | |||||||
Reserves under the special laws | 1,745 | 2,397 | 23 | |||||||
Deferred tax liabilities | 335,908 | 455,234 | 4,285 | |||||||
Deferred tax liabilities for land revaluation | *10 | 31,596 | *10 | 30,539 | 287 | |||||
Acceptances and guarantees | *8 | 8,090,111 | *8 | 8,575,499 | 80,711 | |||||
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Total liabilities | 186,557,325 | 187,436,236 | 1,764,106 | |||||||
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Net assets: | ||||||||||
Capital stock | 2,337,895 | 2,338,743 | 22,012 | |||||||
Capital surplus | 757,346 | 758,215 | 7,136 | |||||||
Retained earnings | 5,036,756 | 5,552,573 | 52,260 | |||||||
Treasury stock | (12,913) | (12,493) | (118) | |||||||
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Total stockholders’ equity | 8,119,085 | 8,637,039 | 81,290 | |||||||
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Net unrealized gains (losses) on other securities | 1,542,308 | 1,688,842 | 15,895 | |||||||
Net deferred gains (losses) on hedges | (42,077) | (68,543) | (645) | |||||||
Land revaluation excess | *10 | 38,109 | *10 | 37,097 | 349 | |||||
Foreign currency translation adjustments | 65,078 | 36,906 | 347 | |||||||
Accumulated remeasurements of defined benefit plans | 9,034 | 59,121 | 556 | |||||||
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Total accumulated other comprehensive income | 1,612,453 | 1,753,424 | 16,503 | |||||||
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Stock acquisition rights | 3,482 | 2,823 | 27 | |||||||
Non-controlling interests | 1,499,264 | 1,219,604 | 11,479 | |||||||
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Total net assets | 11,234,286 | 11,612,892 | 109,298 | |||||||
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Total liabilities and net assets | ¥ 197,791,611 | ¥ 199,049,128 | $ 1,873,404 | |||||||
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CONSOLIDATED STATEMENTS OF INCOME
Millions of yen | Millions of U.S. dollars | |||||||||||||||
Year ended March 31 | 2017 | 2018 | 2018 | |||||||||||||
Ordinary income | ¥ | 5,133,245 | ¥ | 5,764,172 | $ | 54,251 | ||||||||||
Interest income | 1,912,027 | 2,165,788 | 20,384 | |||||||||||||
Interest on loans and discounts | 1,384,119 | 1,469,232 | 13,828 | |||||||||||||
Interest and dividends on securities | 259,840 | 342,013 | 3,219 | |||||||||||||
Interest on call loans and bills bought | 12,205 | 19,462 | 183 | |||||||||||||
Interest on receivables under resale agreements | 18,886 | 24,566 | 231 | |||||||||||||
Interest on receivables under securities borrowing transactions | 12,172 | 14,619 | 138 | |||||||||||||
Interest on deposits with banks | 48,040 | 75,619 | 712 | |||||||||||||
Interest on lease transactions | 70,227 | 70,941 | 668 | |||||||||||||
Other interest income | 106,534 | 149,333 | 1,405 | |||||||||||||
Trust fees | 3,797 | 3,884 | 37 | |||||||||||||
Fees and commissions | 1,195,452 | 1,244,063 | 11,709 | |||||||||||||
Trading income | 237,394 | 246,338 | 2,318 | |||||||||||||
Other operating income | 1,583,316 | 1,863,345 | 17,537 | |||||||||||||
Lease-related income | 257,847 | 271,703 | 2,557 | |||||||||||||
Installment-related income | 883,657 | 1,041,351 | 9,801 | |||||||||||||
Other | 441,811 | 550,290 | 5,179 | |||||||||||||
Other income | 201,257 | 240,751 | 2,266 | |||||||||||||
Gains on reversal of reserve for possible loan losses | — | 11,562 | 109 | |||||||||||||
Recoveries ofwritten-off claims | 14,089 | 10,231 | 96 | |||||||||||||
Other | *1 | 187,167 | *1 | 218,957 | 2,061 | |||||||||||
Ordinary expenses | 4,127,389 | 4,600,059 | 43,295 | |||||||||||||
Interest expenses | 553,394 | 775,560 | 7,299 | |||||||||||||
Interest on deposits | 189,204 | 283,229 | 2,666 | |||||||||||||
Interest on negotiable certificates of deposit | 67,232 | 86,810 | 817 | |||||||||||||
Interest on call money and bills sold | 5,491 | 8,471 | 80 | |||||||||||||
Interest on payables under repurchase agreements | 16,281 | 48,597 | 457 | |||||||||||||
Interest on payables under securities lending transactions | 4,631 | 11,316 | 107 | |||||||||||||
Interest on commercial paper | 15,510 | 18,393 | 173 | |||||||||||||
Interest on borrowed money | 39,528 | 54,654 | 514 | |||||||||||||
Interest on short-term bonds | 118 | 54 | 1 | |||||||||||||
Interest on bonds | 144,755 | 186,095 | 1,751 | |||||||||||||
Other interest expenses | 70,641 | 77,936 | 734 | |||||||||||||
Fees and commissions payments | 182,104 | 177,418�� | 1,670 | |||||||||||||
Trading losses | — | 36 | 0 | |||||||||||||
Other operating expenses | 1,275,747 | 1,589,355 | 14,959 | |||||||||||||
Lease-related expenses | 128,468 | 142,894 | 1,345 | |||||||||||||
Installment-related expenses | 832,749 | 987,154 | 9,291 | |||||||||||||
Other | 314,529 | 459,305 | 4,323 | |||||||||||||
General and administrative expenses | *2 | 1,812,433 | *2 | 1,816,197 | 17,094 | |||||||||||
Other expenses | 303,710 | 241,491 | 2,273 | |||||||||||||
Provision for reserve for possible loan losses | 75,915 | — | — | |||||||||||||
Other | *3 | 227,795 | *3 | 241,491 | 2,273 | |||||||||||
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Ordinary profit | 1,005,855 | 1,164,113 | 10,956 | |||||||||||||
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(Continued)
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Millions of yen | Millions of U.S. dollars | |||||||||||||||
Year ended March 31 | 2017 | 2018 | 2018 | |||||||||||||
Extraordinary gains | ¥ | 30,960 | ¥ | 866 | $ | 8 | ||||||||||
Gains on disposal of fixed assets | 1,552 | 852 | 8 | |||||||||||||
Reversal of reserve for eventual future operating losses from financial instruments transactions | 82 | 13 | 0 | |||||||||||||
Other extraordinary gains | *4 | 29,325 | — | — | ||||||||||||
Extraordinary losses | 57,511 | 56,129 | 528 | |||||||||||||
Losses on disposal of fixed assets | 7,720 | 5,563 | 52 | |||||||||||||
Losses on impairment of fixed assets | *5 | 49,460 | *5 | 49,900 | 470 | |||||||||||
Provision for reserve for eventual future operating losses from financial instruments transactions | 329 | 665 | 6 | |||||||||||||
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Income before income taxes | 979,305 | 1,108,850 | 10,436 | |||||||||||||
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Income taxes-current | 265,045 | 225,617 | 2,123 | |||||||||||||
Income taxes-deferred | (94,093) | 44,907 | 423 | |||||||||||||
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Income taxes | 170,951 | 270,524 | 2,546 | |||||||||||||
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Profit | 808,353 | 838,326 | 7,890 | |||||||||||||
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Profit attributable tonon-controlling interests | 101,834 | 103,957 | 978 | |||||||||||||
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Profit attributable to owners of parent | ¥ | 706,519 | ¥ | 734,368 | $ | 6,912 | ||||||||||
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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Millions of yen | Millions of U.S. dollars | |||||||||||||||
Year ended March 31 | 2017 | 2018 | 2018 | |||||||||||||
Profit | ¥ | 808,353 | ¥ | 838,326 | $ | 7,890 | ||||||||||
Other comprehensive income (losses) | *1 | 157,703 | *1 | 145,807 | 1,372 | |||||||||||
Net unrealized gains (losses) on other securities | 201,653 | 162,673 | 1,531 | |||||||||||||
Net deferred gains (losses) on hedges | (93,989) | (28,659) | (270) | |||||||||||||
Land revaluation excess | (6) | 1 | 0 | |||||||||||||
Foreign currency translation adjustments | (12,699) | (50,387) | (474) | |||||||||||||
Remeasurements of defined benefit plans | 81,193 | 49,221 | 463 | |||||||||||||
Share of other comprehensive income of affiliates | (18,448) | 12,957 | 122 | |||||||||||||
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Total comprehensive income | 966,057 | 984,133 | 9,262 | |||||||||||||
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Comprehensive income attributable to owners of parent | 860,806 | 876,353 | 8,248 | |||||||||||||
Comprehensive income attributable tonon-controlling interests | 105,250 | 107,780 | 1,014 |
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CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Millions of yen | ||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||
Year ended March 31, 2017 | Capital stock | Capital surplus | Retained earnings | Treasury stock | Total | |||||||||||||||||||
Balance at the beginning of the fiscal year | ¥ | 2,337,895 | ¥ | 757,306 | ¥ | 4,534,472 | ¥ | (175,381) | ¥ | 7,454,294 | ||||||||||||||
Changes in the fiscal year | ||||||||||||||||||||||||
Cash dividends | (205,083) | (205,083) | ||||||||||||||||||||||
Profit attributable to owners of parent | 706,519 | 706,519 | ||||||||||||||||||||||
Purchase of treasury stock | (100) | (100) | ||||||||||||||||||||||
Disposal of treasury stock | (2) | 162,567 | 162,564 | |||||||||||||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | 42 | 42 | ||||||||||||||||||||||
Increase due to increase in subsidiaries | 25 | 25 | ||||||||||||||||||||||
Increase due to decrease in subsidiaries | 13 | 13 | ||||||||||||||||||||||
Decrease due to increase in subsidiaries | (288) | (288) | ||||||||||||||||||||||
Decrease due to decrease in subsidiaries | (4) | (4) | ||||||||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (200) | (200) | ||||||||||||||||||||||
Reversal of land revaluation excess | 1,300 | 1,300 | ||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | ||||||||||||||||||||||||
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Net changes in the fiscal year | — | 40 | 502,283 | 162,467 | 664,791 | |||||||||||||||||||
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Balance at the end of the fiscal year | ¥ | 2,337,895 | ¥ | 757,346 | ¥ | 5,036,756 | ¥ | (12,913) | ¥ | 8,119,085 | ||||||||||||||
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Millions of yen | ||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||
Year ended March 31, 2017 | 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 | ¥ | 1,347,689 | ¥ | 55,130 | ¥ | 39,416 | ¥ | 87,042 | ¥ | (69,811) | ¥ | 1,459,467 | ||||||||||||
Changes in the fiscal year | ||||||||||||||||||||||||
Cash dividends | ||||||||||||||||||||||||
Profit attributable to owners of parent | ||||||||||||||||||||||||
Purchase of treasury stock | ||||||||||||||||||||||||
Disposal of treasury stock | ||||||||||||||||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | ||||||||||||||||||||||||
Increase due to increase in subsidiaries | ||||||||||||||||||||||||
Increase due to decrease in subsidiaries | ||||||||||||||||||||||||
Decrease due to increase in subsidiaries | ||||||||||||||||||||||||
Decrease due to decrease in subsidiaries | ||||||||||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | ||||||||||||||||||||||||
Reversal of land revaluation excess | ||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | 194,619 | (97,208) | (1,306) | (21,964) | 78,845 | 152,985 | ||||||||||||||||||
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Net changes in the fiscal year | 194,619 | (97,208) | (1,306) | (21,964) | 78,845 | 152,985 | ||||||||||||||||||
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Balance at the end of the fiscal year | ¥ | 1,542,308 | ¥ | (42,077) | ¥ | 38,109 | ¥ | 65,078 | ¥ | 9,034 | ¥ | 1,612,453 | ||||||||||||
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Millions of yen | ||||||||||||
Year ended March 31, 2017 | Stock acquisition rights | Non-controlling interests | Total net assets | |||||||||
Balance at the beginning of the fiscal year | ¥ | 2,884 | ¥ | 1,531,022 | ¥ | 10,447,669 | ||||||
Changes in the fiscal year | ||||||||||||
Cash dividends | (205,083) | |||||||||||
Profit attributable to owners of parent | 706,519 | |||||||||||
Purchase of treasury stock | (100) | |||||||||||
Disposal of treasury stock | 162,564 | |||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | 42 | |||||||||||
Increase due to increase in subsidiaries | 25 | |||||||||||
Increase due to decrease in subsidiaries | 13 | |||||||||||
Decrease due to increase in subsidiaries | (288) | |||||||||||
Decrease due to decrease in subsidiaries | (4) | |||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (200) | |||||||||||
Reversal of land revaluation excess | 1,300 | |||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | 598 | (31,758) | 121,825 | |||||||||
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Net changes in the fiscal year | 598 | (31,758) | 786,616 | |||||||||
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Balance at the end of the fiscal year | ¥ | 3,482 | ¥ | 1,499,264 | ¥ | 11,234,286 | ||||||
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(Continued)
Millions of yen | ||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||
Year ended March 31, 2018 | Capital stock | Capital surplus | Retained earnings | Treasury stock | Total | |||||||||||||||||||
Balance at the beginning of the fiscal year | ¥ | 2,337,895 | ¥ | 757,346 | ¥ | 5,036,756 | ¥ | (12,913) | ¥ | 8,119,085 | ||||||||||||||
Changes in the fiscal year | ||||||||||||||||||||||||
Issuance of new stock | 847 | 847 | 1,695 | |||||||||||||||||||||
Cash dividends | (218,596) | (218,596) | ||||||||||||||||||||||
Profit attributable to owners of parent | 734,368 | 734,368 | ||||||||||||||||||||||
Purchase of treasury stock | (142) | (142) | ||||||||||||||||||||||
Disposal of treasury stock | (41) | 562 | 521 | |||||||||||||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | 62 | 62 | ||||||||||||||||||||||
Increase due to increase in subsidiaries | 34 | 34 | ||||||||||||||||||||||
Increase due to decrease in subsidiaries | 5 | 5 | ||||||||||||||||||||||
Decrease due to increase in subsidiaries | (599) | (599) | ||||||||||||||||||||||
Decrease due to decrease in subsidiaries | (2) | (2) | ||||||||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (314) | (314) | ||||||||||||||||||||||
Reversal of land revaluation excess | 923 | 923 | ||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | ||||||||||||||||||||||||
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Net changes in the fiscal year | 847 | 868 | 515,817 | 420 | 517,954 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at the end of the fiscal year | ¥ | 2,338,743 | ¥ | 758,215 | ¥ | 5,552,573 | ¥ | (12,493) | ¥ | 8,637,039 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Millions of yen | ||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||
Year ended March 31, 2018 | 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 | ¥ | 1,542,308 | ¥ | (42,077) | ¥ | 38,109 | ¥ | 65,078 | ¥ | 9,034 | ¥ | 1,612,453 | ||||||||||||
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 withnon-controlling interests | ||||||||||||||||||||||||
Increase due to increase in subsidiaries | ||||||||||||||||||||||||
Increase due to decrease in subsidiaries | ||||||||||||||||||||||||
Decrease due to increase in subsidiaries | ||||||||||||||||||||||||
Decrease due to decrease in subsidiaries | ||||||||||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | ||||||||||||||||||||||||
Reversal of land revaluation excess | ||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | 146,533 | (26,466) | (1,012) | (28,171) | 50,087 | 140,971 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net changes in the fiscal year | 146,533 | (26,466) | (1,012) | (28,171) | 50,087 | 140,971 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at the end of the fiscal year | ¥ | 1,688,842 | ¥ | (68,543) | ¥ | 37,097 | ¥ | 36,906 | ¥ | 59,121 | ¥ | 1,753,424 | ||||||||||||
|
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|
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8
Table of Contents
Millions of yen | ||||||||||||
Year ended March 31, 2018 | Stock acquisition rights | Non-controlling interests | Total net assets | |||||||||
Balance at the beginning of the fiscal year | ¥ | 3,482 | ¥ | 1,499,264 | ¥ | 11,234,286 | ||||||
Changes in the fiscal year | ||||||||||||
Issuance of new stock | 1,695 | |||||||||||
Cash dividends | (218,596) | |||||||||||
Profit attributable to owners of parent | 734,368 | |||||||||||
Purchase of treasury stock | (142) | |||||||||||
Disposal of treasury stock | 521 | |||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | 62 | |||||||||||
Increase due to increase in subsidiaries | 34 | |||||||||||
Increase due to decrease in subsidiaries | 5 | |||||||||||
Decrease due to increase in subsidiaries | (599) | |||||||||||
Decrease due to decrease in subsidiaries | (2) | |||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (314) | |||||||||||
Reversal of land revaluation excess | 923 | |||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | (659) | (279,659) | (139,348) | |||||||||
|
|
|
|
|
| |||||||
Net changes in the fiscal year | (659) | (279,659) | 378,606 | |||||||||
|
|
|
|
|
| |||||||
Balance at the end of the fiscal year | ¥ | 2,823 | ¥ | 1,219,604 | ¥ | 11,612,892 | ||||||
|
|
|
|
|
|
9
Table of Contents
(Continued)
Millions of U.S. dollars | ||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||
Year ended March 31, 2018 | Capital stock | Capital surplus | Retained earnings | Treasury stock | Total | |||||||||||||||||||
Balance at the beginning of the fiscal year | $ | 22,004 | $ | 7,128 | $ | 47,405 | $ | (122) | $ | 76,415 | ||||||||||||||
Changes in the fiscal year | ||||||||||||||||||||||||
Issuance of new stock | 8 | 8 | 16 | |||||||||||||||||||||
Cash dividends | (2,057) | (2,057) | ||||||||||||||||||||||
Profit attributable to owners of parent | 6,912 | 6,912 | ||||||||||||||||||||||
Purchase of treasury stock | (1) | (1) | ||||||||||||||||||||||
Disposal of treasury stock | (0) | 5 | 5 | |||||||||||||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | 1 | 1 | ||||||||||||||||||||||
Increase due to increase in subsidiaries | 0 | 0 | ||||||||||||||||||||||
Increase due to decrease in subsidiaries | 0 | 0 | ||||||||||||||||||||||
Decrease due to increase in subsidiaries | (6) | (6) | ||||||||||||||||||||||
Decrease due to decrease in subsidiaries | (0) | (0) | ||||||||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (3) | (3) | ||||||||||||||||||||||
Reversal of land revaluation excess | 9 | 9 | ||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net changes in the fiscal year | 8 | 8 | 4,855 | 4 | 4,875 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at the end of the fiscal year | $ | 22,012 | $ | 7,136 | $ | 52,260 | $ | (118) | $ | 81,290 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Millions of U.S. dollars | ||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||
Year ended March 31, 2018 | 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 | $ | 14,516 | $ | (396) | $ | 359 | $ | 613 | $ | 85 | $ | 15,176 | ||||||||||||
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 withnon-controlling interests | ||||||||||||||||||||||||
Increase due to increase in subsidiaries | ||||||||||||||||||||||||
Increase due to decrease in subsidiaries | ||||||||||||||||||||||||
Decrease due to increase in subsidiaries | ||||||||||||||||||||||||
Decrease due to decrease in subsidiaries | ||||||||||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | ||||||||||||||||||||||||
Reversal of land revaluation excess | ||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | 1,379 | (249) | (10) | (265) | 471 | 1,327 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net changes in the fiscal year | 1,379 | (249) | (10) | (265) | 471 | 1,327 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at the end of the fiscal year | $ | 15,895 | $ | (645) | $ | 349 | $ | 347 | $ | 556 | $ | 16,503 | ||||||||||||
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10
Table of Contents
Millions of U.S. dollars | ||||||||||||
Year ended March 31, 2018 | Stock acquisition rights | Non-controlling interests | Total net assets | |||||||||
Balance at the beginning of the fiscal year | $ | 33 | $ | 14,111 | $ | 105,734 | ||||||
Changes in the fiscal year | ||||||||||||
Issuance of new stock | 16 | |||||||||||
Cash dividends | (2,057) | |||||||||||
Profit attributable to owners of parent | 6,912 | |||||||||||
Purchase of treasury stock | (1) | |||||||||||
Disposal of treasury stock | 5 | |||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | 1 | |||||||||||
Increase due to increase in subsidiaries | 0 | |||||||||||
Increase due to decrease in subsidiaries | 0 | |||||||||||
Decrease due to increase in subsidiaries | (6) | |||||||||||
Decrease due to decrease in subsidiaries | (0) | |||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (3) | |||||||||||
Reversal of land revaluation excess | 9 | |||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | (6) | (2,632) | (1,312) | |||||||||
|
|
|
|
|
| |||||||
Net changes in the fiscal year | (6) | (2,632) | 3,563 | |||||||||
|
|
|
|
|
| |||||||
Balance at the end of the fiscal year | $ | 27 | $ | 11,479 | $ | 109,298 | ||||||
|
|
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|
|
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11
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions of yen | Millions of U.S. dollars | |||||||||||||||
Year ended March 31 | 2017 | 2018 | 2018 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Income before income taxes | ¥ | 979,305 | ¥ | 1,108,850 | $ | 10,436 | ||||||||||
Depreciation | 274,988 | 281,535 | 2,650 | |||||||||||||
Losses on impairment of fixed assets | 49,460 | 49,900 | 470 | |||||||||||||
Amortization of goodwill | 29,272 | 25,225 | 237 | |||||||||||||
Gains on step acquisitions | (29,325) | — | — | |||||||||||||
Equity in (gains) losses of affiliates | (24,552) | (38,992) | (367) | |||||||||||||
Net change in reserve for possible loan losses | 21,620 | (67,041) | (631) | |||||||||||||
Net change in reserve for employee bonuses | 7,765 | 10,570 | 99 | |||||||||||||
Net change in reserve for executive bonuses | 584 | 821 | 8 | |||||||||||||
Net change in net defined benefit asset and liability | (47,173) | (36,499) | (344) | |||||||||||||
Net change in reserve for executive retirement benefits | 145 | (244) | (2) | |||||||||||||
Net change in reserve for point service program | 2,076 | 637 | 6 | |||||||||||||
Net change in reserve for reimbursement of deposits | (1,514) | 3,704 | 35 | |||||||||||||
Net change in reserve for losses on interest repayment | (71,789) | (11,939) | (112) | |||||||||||||
Interest income | (1,912,027) | (2,165,788) | (20,384) | |||||||||||||
Interest expenses | 553,394 | 775,560 | 7,299 | |||||||||||||
Net (gains) losses on securities | (98,190) | (142,228) | (1,339) | |||||||||||||
Net (gains) losses from money held in trust | (0) | (0) | (0) | |||||||||||||
Net exchange (gains) losses | 16,280 | 323,045 | 3,040 | |||||||||||||
Net (gains) losses from disposal of fixed assets | 6,167 | 4,710 | 44 | |||||||||||||
Net change in trading assets | 1,260,408 | 1,475,948 | 13,891 | |||||||||||||
Net change in trading liabilities | (1,364,902) | (796,943) | (7,501) | |||||||||||||
Net change in loans and bills discounted | (5,197,594) | 761,992 | 7,172 | |||||||||||||
Net change in deposits | 7,287,109 | 6,079,437 | 57,218 | |||||||||||||
Net change in negotiable certificates of deposit | (2,367,722) | (472,574) | (4,448) | |||||||||||||
Net change in borrowed money (excluding subordinated borrowings) | 1,800,886 | 59,482 | 560 | |||||||||||||
Net change in deposits with banks | 837,507 | (1,359,236) | (12,793) | |||||||||||||
Net change in call loans and bills bought and others | (1,198,782) | (338,019) | (3,181) | |||||||||||||
Net change in receivables under securities borrowing transactions | (787,472) | 422,690 | 3,978 | |||||||||||||
Net change in call money and bills sold and others | 1,895,762 | 2,059,841 | 19,387 | |||||||||||||
Net change in commercial paper | (654,552) | 108,893 | 1,025 | |||||||||||||
Net change in payables under securities lending transactions | 2,135,651 | (168,890) | (1,590) | |||||||||||||
Net change in foreign exchanges (assets) | (144,713) | (453,061) | (4,264) | |||||||||||||
Net change in foreign exchanges (liabilities) | (400,001) | 183,504 | 1,727 | |||||||||||||
Net change in lease receivables and investment assets | (53,854) | 26,591 | 250 | |||||||||||||
Net change in short-term bonds (liabilities) | (145,700) | 131,000 | 1,233 | |||||||||||||
Issuance and redemption of bonds (excluding subordinated bonds) | 1,109,521 | 860,316 | 8,097 | |||||||||||||
Net change in due to trust account | 236,434 | 147,294 | 1,386 | |||||||||||||
Interest received | 1,911,477 | 2,121,086 | 19,963 | |||||||||||||
Interest paid | (536,129) | (756,202) | (7,117) | |||||||||||||
Other, net | (523,175) | (768,910) | (7,237) | |||||||||||||
|
|
|
| |||||||||||||
Subtotal | 4,856,646 | 9,446,071 | 88,904 | |||||||||||||
|
|
|
| |||||||||||||
Income taxes paid | (342,268) | (103,276) | (972) | |||||||||||||
|
|
|
| |||||||||||||
Net cash provided by (used in) operating activities | 4,514,377 | 9,342,794 | 87,932 | |||||||||||||
|
|
|
|
12
Table of Contents
(Continued)
Millions of yen | Millions of U.S. dollars | |||||||||||||||
Year ended March 31 | 2017 | 2018 | 2018 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of securities | ¥ | (21,215,546) | ¥ | (23,726,100) | $ | (223,304) | ||||||||||
Proceeds from sale of securities | 13,611,842 | 13,528,011 | 127,322 | |||||||||||||
Proceeds from redemption of securities | 8,852,923 | 8,357,784 | 78,662 | |||||||||||||
Purchases of money held in trust | (1) | (1) | (0) | |||||||||||||
Proceeds from sale of money held in trust | 1,744 | 1,957 | 18 | |||||||||||||
Purchases of tangible fixed assets | (495,823) | (712,563) | (6,706) | |||||||||||||
Proceeds from sale of tangible fixed assets | 169,423 | 302,362 | 2,846 | |||||||||||||
Purchases of intangible fixed assets | (145,290) | (136,079) | (1,281) | |||||||||||||
Proceeds from sale of intangible fixed assets | 636 | 3 | 0 | |||||||||||||
Purchases of stocks of subsidiaries resulting in change in scope of consolidation | *2 | (199,755) | *2 | (161,851) | (1,523) | |||||||||||
Proceeds from sale of stocks of subsidiaries resulting in change in scope of consolidation | 1,193 | *3 | (848,822) | 7,989 | ||||||||||||
|
|
|
|
|
| |||||||||||
Net cash provided by (used in) investing activities | 581,347 | (3,395,299) | (31,956) | |||||||||||||
|
|
|
|
|
| |||||||||||
Cash flows from financing activities: | ||||||||||||||||
Repayment of subordinated borrowings | (11,000) | (10,000) | (94) | |||||||||||||
Proceeds from issuance of subordinated bonds and bonds with stock acquisition rights | 394,495 | 254,747 | 2,398 | |||||||||||||
Redemption of subordinated bonds and bonds with stock acquisition rights | (371,640) | (180,033) | (1,694) | |||||||||||||
Dividends paid | (205,078) | (218,569) | (2,057) | |||||||||||||
Repayments tonon-controlling stockholders | (86,886) | (135,000) | (1,271) | |||||||||||||
Dividends paid tonon-controlling stockholders | (66,458) | (61,986) | (583) | |||||||||||||
Purchases of treasury stock | (100) | (142) | (1) | |||||||||||||
Proceeds from disposal of treasury stock | 179,757 | 521 | 5 | |||||||||||||
Purchases of stocks of subsidiaries not resulting in change in scope of consolidation | (4) | (6) | (0) | |||||||||||||
Proceeds from sale of stocks of subsidiaries not resulting in change in scope of consolidation | 390 | 0 | 0 | |||||||||||||
|
|
|
|
|
| |||||||||||
Net cash provided by (used in) financing activities | (166,524) | (350,468) | (3,299) | |||||||||||||
|
|
|
|
|
| |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (10,555) | (93,874) | (884) | |||||||||||||
|
|
|
|
|
| |||||||||||
Net change in cash and cash equivalents | 4,918,645 | 5,503,152 | 51,794 | |||||||||||||
|
|
|
|
|
| |||||||||||
Cash and cash equivalents at the beginning of the fiscal year | 37,556,806 | 42,478,393 | 399,797 | |||||||||||||
Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation | 2,943 | 1,568 | 15 | |||||||||||||
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation | (1) | — | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Cash and cash equivalents at the end of the fiscal year | *1 | ¥ | 42,478,393 | *1 | ¥ | 47,983,114 | $ | 451,606 | ||||||||
|
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13
Table of Contents
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 thenon-consolidated financial statements and US dollar figures.
Amounts less than 1 million yen 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, 2018 which was ¥106.25 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.
14
Table of Contents
(Significant accounting policies for preparing consolidated financial statements)
1. Scope of consolidation
(1) | Consolidated subsidiaries |
The number of consolidated subsidiaries at March 31, 2018 is 347.
Principal companies: | Sumitomo Mitsui Banking Corporation (“SMBC”) | |
SMBC Trust Bank Ltd. | ||
Sumitomo Mitsui Finance and Leasing Company, Limited (“SMFL”) | ||
SMBC Nikko Securities Inc. (“SMBC Nikko”) | ||
Sumitomo Mitsui Card Company, Limited (“SMCC”) | ||
Cedyna Financial Corporation | ||
SMBC Consumer Finance Co., Ltd. | ||
The Japan Research Institute, Limited | ||
Sumitomo Mitsui Asset Management Company, Limited (“SMAM”) | ||
Sumitomo Mitsui Banking Corporation Europe Limited | ||
Sumitomo Mitsui Banking Corporation (China) Limited | ||
SMBC Guarantee Co., Ltd. | ||
SMBC Capital Markets, Inc. |
Changes in the consolidated subsidiaries in the fiscal year ended March 31, 2018 are as follows:
American Railcar Leasing LLC and 80 other companies were newly included in the scope of consolidation as a result of acquisition of equity and for other reasons.
THE MINATO BANK, LTD., Kansai Urban Banking Corporation and 21 other companies were excluded from the scope of consolidation, as a result of becoming equity method affiliates due to the partial sale of their stock and for other reasons; and SMBC Friend Securities Co., Ltd. and 64 other companies were excluded from the scope of consolidation, as they ceased to be subsidiaries due to merger and for other reasons.
(2) | Unconsolidated subsidiaries |
Principal company: SBCS Co., Ltd.
148 unconsolidated subsidiaries are operators of silent partnerships for lease transactions and their assets and profits/losses do not belong to them substantially. Therefore, they have been excluded from the scope of consolidation pursuant to Article 5 Paragraph 1 Item 2 of Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements.
Unconsolidated subsidiaries are also 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, 2018 is 5.
Principal company: SBCS Co., Ltd.
(2) | Equity method affiliates |
The number of affiliates accounted for by the equity method at March 31, 2018 is 70.
Principal companies: | THE MINATO BANK, LTD. | |
Kansai Urban Banking Corporation | ||
PT Bank Tabungan Pensiunan Nasional Tbk | ||
Sumitomo Mitsui Auto Service Company, Limited | ||
Daiwa SB Investments Ltd. |
Changes in the equity method affiliates in the fiscal year ended March 31, 2018 are as follows:
THE MINATO BANK, LTD., Kansai Urban Banking Corporation and 21 other companies became equity method affiliates due to the partial sale of their stock and for other reasons; and 3 other companies became equity method affiliates due to the acquisition of stock and for other reasons.
5 companies were excluded from the scope of equity method affiliates due to liquidation and for other reasons.
15
Table of Contents
(3) | Unconsolidated subsidiaries that are not accounted for by the equity method |
148 unconsolidated subsidiaries that are not accounted for by the equity method are operators of silent partnerships for lease transactions and their assets and profits/losses do not belong to them substantially. Therefore, they have not been accounted for by the equity method pursuant to Article 10 Paragraph 1 Item 2 of Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements.
(4) | Affiliates that are not accounted for by the equity method |
Principal company: Daiwa SB Investments (USA) Ltd.
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 Company’s financial position and results of operations 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, 2018 are as follows: |
May 31 | 1 | |||||
June 30 | 14 | |||||
August 31 | 2 | |||||
September 30 | 11 | |||||
October 31 | 3 | |||||
December 31 | 150 | |||||
January 31 | 11 | |||||
February 28 | 6 | |||||
March 31 | 149 |
(2) | The subsidiaries with balance sheets dated May 31, June 30, August 31 and September 30 are consolidated using the financial statements as of March 31. Certain subsidiaries with balance sheets dated October 31 are consolidated using the financial statements as of March 31 and other subsidiaries with balance sheets dated October 31 are consolidated using the financial statements as of January 31. Certain subsidiaries with balance sheets dated December 31 and January 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 fiscalyear-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. Theyear-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, theyear-on-year valuation differences are also recorded in the above-mentioned accounts.
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(2) | Standards for recognition and measurement of securities |
1) | Debt securities that consolidated subsidiaries have the positive intent and ability to hold to maturity are classified asheld-to-maturity securities and are carried at amortized cost (based on straight-line method) using the moving-average method. Investments in unconsolidated subsidiaries and 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 unconsolidated subsidiaries and affiliates are classified as “other securities”(available-for-sale securities). Stocks (including foreign stocks) in other securities are carried at their average market prices during the final month of the fiscal year, and bonds and others are carried at their fiscalyear-end market prices (cost of securities sold is calculated using primarily the moving-average method). Other securities which are extremely difficult to determine fair value 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.
2) | 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 |
1) | Tangible fixed assets (excluding assets for rent and lease assets) |
Buildings owned by the Company and SMBC 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.
2) | 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 to 10 years).
3) | Assets for rent |
Assets for rent are depreciated using the straight-line method, assuming that lease terms are, in principle, their depreciation period and the salvage is estimated disposal value when the lease period expires.
4) | Lease assets |
Lease assets with respect tonon-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 thewrite-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.
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Discounted Cash Flows (“DCF”) method is used for claims on borrowers whose cash flows from collection of principals and interest can be rationally estimated, and SMBC applies it to claims on large potentially bankrupt borrowers and claims on large borrowers requiring close monitoring that have been classified as “Past due loans (3 months or more)” or “Restructured loans,” whose total loans from SMBC exceed a certain amount. 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, a reserve is provided based on the historical loan-loss ratio. 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 ofwrite-off for the years ended March 31, 2017 and 2018 were ¥288,145 million and ¥190,945 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 directors, corporate auditors and other corporate executive officers, in the amount deemed accrued at the fiscalyear-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 experience.
(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 Article46-5 of the Financial Instruments and Exchange Act.
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(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 fiscal year.
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) | Translation of foreign currency assets and liabilities |
Assets and liabilities of the Company and SMBC 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.
(15) | Lease transactions |
1) | Recognition of income on finance leases |
Interest income is allocated to each period.
2) | 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.
3) | Recognition of income and expenses on installment sales |
Primarily, installment-sales-related income and installment-sales-related expenses are recognized on adue-date basis over the full period of the installment sales.
(16) | Hedge accounting |
1) | 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 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 Audit Committee Report No. 24, February 13, 2002) 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.
2) | Hedging against currency fluctuations |
SMBC applies deferred hedge accounting stipulated in “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry” (JICPA Industry Audit Committee Report No. 25, July 29, 2002) to currency swap and foreign exchange swap transactions executed for the purpose of lending or borrowing funds in different currencies.
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Pursuant to JICPA Industry Audit Committee Report 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 sufficienton-balance (actual) oroff-balance (forward) liability exposure exists to cover the cost of the hedged securities denominated in the same foreign currencies.
3) | Hedging against share price fluctuations |
SMBC 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.
4) | 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 thenon-arbitrary and strict criteria for external transactions stipulated in JICPA Industry Audit Committee Report 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.
(17) | 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.
(18) | Scope of “Cash and cash equivalents” on consolidated statements of cash flows |
For the purposes 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.
(19) | Consumption taxes |
National and local consumption taxes of the Company and its consolidated domestic subsidiaries are accounted for using thetax-excluded method.
(20) | Adoption of the consolidatedcorporate-tax system |
The Company and certain consolidated domestic subsidiaries apply the consolidatedcorporate-tax system from fiscal 2017.
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(Unapplied Accounting Standards and Others)
“Accounting Standard for Revenue Recognition” (ASBJ Statement No.29) etc. (issued March 30, 2018)
(1) | Outline |
The accounting standard etc. provide comprehensive principles for revenue recognition by taking into account of international trends. The principles of revenue recognition in the standard etc. are promised transfer of goods or services to customers is recognized in an amount of the consideration expected to be earned in exchange for those goods or services.
(2) | Date of Application |
The date of application is undetermined.
(3) | Effects of Application of the Accounting Standard etc. |
The effects of the application of the accounting standard etc. are currently being examined.
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(Notes to consolidated balance sheets)
*1 | Japanese stocks and investments in unconsolidated subsidiaries and affiliates |
Japanese stocks and investments in unconsolidated subsidiaries and affiliates at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Japanese stocks | ¥ | 603,177 | ¥ | 677,723 | ||||
Investments | 1,371 | 5,428 |
Japanese stocks of jointly controlled entities were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Japanese stocks of jointly controlled entities | ¥ | 93,717 | ¥ | 101,782 |
*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, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Japanese government bonds in “Securities” | ¥ | 905 | ¥ | 901 |
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 and those securities held without being disposed at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Securities pledged | ¥ | 5,977,541 | ¥ | 6,659,456 | ||||
Securities held without being disposed | 3,112,106 | 1,307,487 |
*3 | Bankrupt loans andnon-accrual loans |
Bankrupt loans andnon-accrual loans at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Bankrupt loans | ¥ | 34,441 | ¥ | 27,709 | ||||
Non-accrual loans | 558,855 | 406,066 |
“Bankrupt loans” are loans, afterwrite-off, to legally bankrupt borrowers as defined in Article96-1-3 and96-1-4 of “Order for Enforcement of the Corporation Tax Act” (Cabinet Order No. 97 of 1965) and on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons.
“Non-accrual loans” are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.
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*4 | Past due loans (3 months or more) |
Past due loans (3 months or more) at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Past due loans (3 months or more) | ¥ | 22,434 | ¥ | 12,822 |
“Past due loans (3 months or more)” are loans on which the principal or interest payment is past due for 3 months or more, excluding “Bankrupt loans” and“Non-accrual loans.”
*5 | Restructured loans |
Restructured loans at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Restructured loans | ¥ | 252,790 | ¥ | 210,616 |
“Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g. reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “Bankrupt loans,”“Non-accrual loans” and “Past due loans (3 months or more).”
*6 | Risk-monitored loans |
The total amount of bankrupt loans,non-accrual loans, past due loans (3 months or more) and restructured loans at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Risk-monitored loans | ¥ | 868,521 | ¥ | 657,215 |
The amounts of loans presented in Notes *3 to *6 above are the amounts before deduction of reserve for possible loan losses.
*7 | Bills discounted |
Bills discounted are accounted for as financial transactions in accordance with the “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24, February 13, 2002). 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, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Bills discounted | ¥ | 802,664 | ¥ | 780,542 |
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*8 | Assets pledged as collateral |
Assets pledged as collateral at March 31, 2017 and 2018 consisted of the following:
March 31, 2017 | Millions of yen | March 31, 2018 | Millions of yen | |||||||
Assets pledged as collateral: | Assets pledged as collateral: | |||||||||
Cash and due from banks | ¥ 72,981 | Cash and due from banks | ¥ 19,998 | |||||||
Monetary claims bought | 29,021 | Monetary claims bought | 19,600 | |||||||
Trading assets | 2,315,475 | Trading assets | 2,223,355 | |||||||
Securities | 3,544,026 | Securities | 5,277,492 | |||||||
Loans and bills discounted | 8,239,227 | Loans and bills discounted | 8,014,149 | |||||||
Lease receivables and investment assets | 4,303 | Lease receivables and investment assets | 13,241 | |||||||
Tangible fixed assets | 9,112 | Tangible fixed assets | 51,630 | |||||||
Other assets (installment account receivable, etc.) | 564 | Other assets | 223 | |||||||
Liabilities corresponding to assets pledged as collateral: | Liabilities corresponding to assets pledged as collateral: | |||||||||
Deposits | 37,944 | Deposits | 26,555 | |||||||
Payables under repurchase agreements | 1,436,571 | Payables under repurchase agreements | 3,374,283 | |||||||
Payables under securities lending transactions | 6,072,016 | Payables under securities lending transactions | 6,167,353 | |||||||
Borrowed money | 6,922,810 | Borrowed money | 6,807,957 | |||||||
Other liabilities | 24,752 | Bonds | 27,901 | |||||||
Acceptances and guarantees | 193,294 | Other liabilities | 12,477 | |||||||
Acceptance and guarantees | 170,036 |
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, 2017 and 2018:
March 31, 2017 | Millions of yen | March 31, 2018 | Millions of yen | |||||||
Cash and due from banks | ¥ 12,688 | Cash and due from banks | ¥ 12,012 | |||||||
Trading assets | 111,189 | Trading assets | 196,313 | |||||||
Securities | 7,617,741 | Securities | 7,893,437 | |||||||
Loans and bills discounted | 1,593,035 | Loans and bills discounted | 2,812,382 |
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, 2017 | Millions of yen | March 31, 2018 | Millions of yen | |||||||
Collateral money deposited for financial instruments | ¥ 1,264,271 | Collateral money deposited for financial instruments | ¥ 1,745,149 | |||||||
Surety deposits | 114,293 | Surety deposits | 108,513 | |||||||
Margins of futures markets | 61,086 | Margins of futures markets | 65,172 | |||||||
Other margins | 32,119 | Other margins | 38,003 |
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*9 | 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, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
The amounts of unused commitments | ¥ | 62,035,638 | ¥ | 59,795,908 | ||||
The amounts of unused commitments whose original contract terms are within 1 year or unconditionally cancelable at any time | 46,185,404 | 42,963,575 |
Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily represent actual future cash flow requirements. Many of these commitments include clauses under which SMBC and other consolidated subsidiaries can reject an application from customers or reduce the contract amounts in the event that economic conditions change, SMBC and other consolidated subsidiaries need to secure claims, or other events occur. In addition, SMBC and other consolidated subsidiaries may request the customers to pledge collateral such as premises and securities at the time of the contracts, and take necessary measures such as monitoring customers’ financial positions, revising contracts when such need arises and securing claims after the contracts are made.
*10 | Land revaluation excess |
SMBC, a consolidated subsidiary of the Company, revalued 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 excess,” and the Company’s share of the net unrealized gains, net of deferred taxes, are reported as “Land revaluation excess” in “Net assets.”
Certain equity method affiliates also revalued its own land for business activities in accordance with the Act. The Company’s share of the net unrealized gains and net of deferred taxes are reported as “Land revaluation excess” in “Net assets.”
Date of the revaluation
SMBC: March 31, 1998 and March 31, 2002
Certain equity method affiliates: March 31, 1999 and March 31, 2002
Method of revaluation (stipulated in Article3-3 of the Act)
SMBC: Fair values were determined by applying appropriate adjustments for land shape and timing of appraisal to the values stipulated in Article2-3,2-4 or2-5 of “Order for Enforcement of Act on Revaluation of Land” (Cabinet Order No. 119 effective March 31, 1998).
Certain equity method affiliates: Fair values were determined based on the values stipulated in Article2-3 and2-5 of “Order for Enforcement of Act on Revaluation of Land” (Cabinet Order No. 119 effective March 31, 1998).
*11 | Accumulated depreciation on tangible fixed assets |
Accumulated depreciation on tangible fixed assets at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Accumulated depreciation | ¥ | 1,129,612 | ¥ | 1,089,903 |
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*12 | Deferred gain on tangible fixed assets deductible for tax purposes |
Deferred gain on tangible fixed assets deductible for tax purposes at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Deferred gain on tangible fixed assets deductible for tax purposes | ¥ | 63,213 | ¥ | 62,550 | ||||
[The consolidated fiscal year concerned] | [1,813] | [661] �� |
*13 | Subordinated borrowings |
The balance of subordinated borrowings with the special clause specifying that the repayment order of the borrowing subordinate to other borrowings included in “Borrowed money” at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Subordinated borrowings | ¥ | 284,200 | ¥ | 265,000 |
*14 | Subordinated bonds |
The balance of subordinated bonds included in “Bonds” at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Subordinated bonds | ¥ | 2,158,167 | ¥ | 2,211,841 |
*15 | Guaranteed amount to privately-placed bonds |
The amount guaranteed by SMBC and its banking subsidiaries to privately-placed bonds (stipulated by Article2-3 of the Financial Instruments and Exchange Act) in “Securities” at March 31, 2017 and 2018 were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Guaranteed amount to privately-placed bonds | ¥ | 1,974,118 | ¥ | 1,796,308 |
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(Notes to consolidated statements of income)
*1 | Other income |
“Other” in “Other income” for the fiscal years ended March 31, 2017 and 2018 included the following:
Year ended March 31, 2017 | Millions of yen | Year ended March 31, 2018 | Millions of yen | |||
Gains on sales of stocks | ¥ 80,307 | Gains on sales of stocks | ¥ 140,695 |
*2 | General and administrative expenses |
“General and administrative expenses” for the fiscal years ended March 31, 2017 and 2018 included the following:
Year ended March 31, 2017 | Millions of yen | Year ended March 31, 2018 | Millions of yen | |||
Salaries and related expenses | ¥ 669,496 | Salaries and related expenses | ¥ 689,192 | |||
Research and development costs | 89 | Research and development costs | 84 |
*3 | Other expenses |
“Other expenses” for the fiscal years ended March 31, 2017 and 2018 included the following:
Year ended March 31, 2017 | Millions of yen | Year ended March 31, 2018 | Millions of yen | |||
Write-off of loans | ¥ 87,792 | Write-off of loans | ¥ 105,228 | |||
Write-off of stocks and others | 14,859 | |||||
Loss on sales ofnon-accrual loans | 13,204 |
*4 | Other extraordinary gains |
“Other extraordinary gains” for the fiscal year ended March 31, 2017 was 29,325 million yen due to gains on step acquisitions.
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*5 | Losses on impairment of fixed assets |
The differences between the recoverable amounts and the book value of the following asset is recognized as “Losses on impairment of fixed assets,” and included in “Extraordinary losses” for the fiscal year ended March 31, 2017 and 2018.
Year ended March 31, 2017 | Millions of yen | |||||||
Area | Purpose of use | Type | Impairment loss | |||||
Tokyo metropolitan area | Branches (11 items) | Land and buildings, etc. | ¥ | 518 | ||||
Corporate assets (10 items) | 371 | |||||||
Idle assets (57 items) | 3,650 | |||||||
Others (6 items) | 58 | |||||||
Kinki area | Branches (16 items) | Land and buildings, etc. | 285 | |||||
Corporate asset (1 item) | 32 | |||||||
Idle assets (36 items) | 893 | |||||||
Others (2 items) | 1 | |||||||
Other | Branches (7 items) | Land and buildings, etc. | 274 | |||||
Idle assets (15items) | 292 | |||||||
Others (10 items) | 86 | |||||||
— | — | Goodwill | 42,995 | |||||
Year ended March 31, 2018 | Millions of yen | |||||||
Area | Purpose of use | Type | Impairment loss | |||||
Tokyo metropolitan area | Idle assets (121 items) | Land and buildings, etc. | ¥ | 15,424 | ||||
Kinki area | Idle assets (73 items) | Land and buildings, etc. | 9,538 | |||||
Other | Idle assets (32 items) | Land and buildings, etc. | 3,627 | |||||
— | — | Goodwill and intangible fixed assets | 21,310 |
At SMBC, a 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. Assets such as corporate headquarters facilities, training facilities, data and system centers, and health and recreational facilities which do not produce cash flows that can be attributed to individual assets are treated as corporate assets. As for idle assets, impairment loss is measured individually. At the Company and other consolidated subsidiaries, a branch or other group is the smallest asset grouping unit as well.
The carrying amounts of idle assets at SMBC 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. And the carrying amounts of branches, corporate assets and idle assets at other consolidated subsidiaries are reduced in the same method as at SMBC.
The recoverable amount is calculated using net realizable value which is basically determined by subtracting the expected disposal cost from the appraisal value based on the Real Estate Appraisal Standard.
The unit for goodwill and intangible assets is mainly based on each consolidated subsidiary. All unamortized balance of goodwill for the fiscal year ended March 31, 2017 was included in “Extraordinary losses” as “Losses on impairment of fixed assets” since there are indicators that amount of goodwill relating to SMBC Friend Securities Co., Ltd. may not be recoverable. The recoverable amount is calculated using net realizable value which is determined based on revalued corporate value. For the fiscal year ended March 31, 2018, the book value of goodwill and intangible assets of the PB, Real Estate and Trust Services of SMBC Trust Bank Ltd. was not expected to be recovered. Therefore, all unamortized balance of goodwill and intangible assets at the end of the fiscal year ended March 31, 2018 were 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 10%. In addition, the book value of goodwill and intangible assets of the auto lease business of SMFL Capital Company, Limited was not expected to be recovered. Therefore, all unamortized balance of goodwill and a portion of intangible assets at the end of the fiscal year ended March 31, 2018 were included in “Extraordinary losses” as “Losses on impairment of fixed assets.” The recoverable value is net realizable value, which is calculated based on the revalued corporate value.
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(Notes to consolidated statements of comprehensive income)
*1 | Reclassification adjustment and tax effect of other comprehensive income |
Millions of yen | ||||||||||||||||
Year ended March 31 | 2017 | 2018 | ||||||||||||||
Net unrealized gains (losses) on other securities: | ||||||||||||||||
Amount arising during the fiscal year | ¥ | 426,339 | ¥ | 462,091 | ||||||||||||
Reclassification adjustments | (144,428 | ) | (217,083 | ) | ||||||||||||
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Before adjustments to tax effect | 281,910 | 245,008 | ||||||||||||||
Tax effect | (80,256 | ) | (82,335 | ) | ||||||||||||
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Net unrealized gains (losses) on other securities | 201,653 | 162,673 | ||||||||||||||
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|
|
| |||||||||||||
Net deferred gains (losses) on hedges: | ||||||||||||||||
Amount arising during the fiscal year | (175,291 | ) | (93,976 | ) | ||||||||||||
Reclassification adjustments | 39,212 | 53,058 | ||||||||||||||
|
|
|
| |||||||||||||
Before adjustments to tax effect | (136,079 | ) | (40,918 | ) | ||||||||||||
Tax effect | 42,089 | 12,259 | ||||||||||||||
|
|
|
| |||||||||||||
Net deferred gains (losses) on hedges | (93,989 | ) | (28,659 | ) | ||||||||||||
|
|
|
| |||||||||||||
Land revaluation excess: | ||||||||||||||||
Amount arising during the fiscal year | — | — | ||||||||||||||
Reclassification adjustments | — | — | ||||||||||||||
|
|
|
| |||||||||||||
Before adjustments to tax effect | — | — | ||||||||||||||
Tax effect | (6 | ) | 1 | |||||||||||||
|
|
|
| |||||||||||||
Land revaluation excess | (6 | ) | 1 | |||||||||||||
|
|
|
| |||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||
Amount arising during the fiscal year | (12,699 | ) | (57,881 | ) | ||||||||||||
Reclassification adjustments | — | 7,494 | ||||||||||||||
|
|
|
| |||||||||||||
Before adjustments to tax effect | (12,699 | ) | (50,387 | ) | ||||||||||||
Tax effect | — | — | ||||||||||||||
|
|
|
| |||||||||||||
Foreign currency translation adjustments | (12,699 | ) | (50,387 | ) | ||||||||||||
|
|
|
| |||||||||||||
Remeasurements of defined benefit plans: | ||||||||||||||||
Amount arising during the fiscal year | 61,564 | 50,592 | ||||||||||||||
Reclassification adjustments | 54,960 | 19,696 | ||||||||||||||
|
|
|
| |||||||||||||
Before adjustments to tax effect | 116,525 | 70,289 | ||||||||||||||
Tax effect | (35,332 | ) | (21,067 | ) | ||||||||||||
|
|
|
| |||||||||||||
Remeasurements of defined benefit plans | 81,193 | 49,221 | ||||||||||||||
|
|
|
| |||||||||||||
Share of other comprehensive income of affiliates: | ||||||||||||||||
Amount arising during the fiscal year | (17,517 | ) | 13,971 | |||||||||||||
Reclassification adjustments | (930 | ) | (1,013 | ) | ||||||||||||
|
|
|
| |||||||||||||
Before adjustments to tax effect | (18,448 | ) | 12,957 | |||||||||||||
Tax effect | — | — | ||||||||||||||
|
|
|
| |||||||||||||
Share of other comprehensive income of affiliates | (18,448 | ) | 12,957 | |||||||||||||
|
|
|
| |||||||||||||
Total other comprehensive income | ¥ | 157,703 | ¥ | 145,807 | ||||||||||||
|
|
|
|
29
Table of Contents
(Notes to consolidated statements of changes in net assets)
Fiscal year ended March 31, 2017
1. Type and number of shares issued and treasury stock
Number of shares | ||||||||||||||||||||
Year ended March 31, 2017 | At the beginning of the fiscal year | Increase | Decrease | At the end of the fiscal year | Notes | |||||||||||||||
Shares issued | ||||||||||||||||||||
Common stock | 1,414,055,625 | — | — | 1,414,055,625 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 1,414,055,625 | — | — | 1,414,055,625 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Treasury stock | ||||||||||||||||||||
Common stock | 46,830,882 | 24,993 | 42,826,992 | 4,028,883 | 1,2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 46,830,882 | 24,993 | 42,826,992 | 4,028,883 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Notes: | 1. | Increase of 24,993 shares in the number of treasury common stock was due to purchases of fractional shares. | ||||
2. | Decrease of 42,826,992 shares in the number of treasury common stock includes decrease of 6,128 shares due to sales of fractional shares and exercise of stock options and decrease of 42,820,864 shares due to sale of stocks of the Company held by SMBC and its banking subsidiaries. |
2. Information on stock acquisition rights
Number of shares | Millions of yen | |||||||||||||||||||||||||||||
Year ended March 31, 2017 | Details of stock | Type of shares | At the beginning of the fiscal year | Increase | Decrease | At the end of the fiscal year | At the end of the fiscal year | Notes | ||||||||||||||||||||||
The Company | Stock acquisition rights as stock options | — | — | — | — | — | ¥ | 3,206 | ||||||||||||||||||||||
Consolidated subsidiaries | — | — | 276 | |||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | ¥ | 3,482 | ||||||||||||||||||||||||||||
|
|
3. Information on dividends
(1) Dividends paid in the fiscal year | ||||||||||||||||||
Type of shares | Millions of yen, except per share amount | |||||||||||||||||
Date of resolution | Cash dividends | Cash dividends per share | Record date | Effective date | ||||||||||||||
Ordinary General Meeting of Shareholders held on June 29, 2016 | Common stock | ¥ | 105,753 | ¥ | 75 | March 31, 2016 | June 29, 2016 | |||||||||||
Meeting of the Board of Directors held on November 11, 2016 | Common stock | 105,752 | 75 | September 30, 2016 | December 2, 2016 | |||||||||||||
(2) Dividends to be paid in the next fiscal year
| ||||||||||||||||||
Millions of yen, except per share amount | ||||||||||||||||||
Date of resolution | Type of shares | Cash dividends | Source of dividends | Cash dividends per share | Record date | Effective date | ||||||||||||
Ordinary General Meeting of Shareholders held on June 29, 2017 | Common stock | ¥ | 105,752 | | Retained earnings | ¥ | 75 | March 31, 2017 | June 30, 2017 |
30
Table of Contents
Fiscal year ended March 31, 2018
1. Type and number of shares issued and treasury stock
Number of shares | ||||||||||||||||||||
Year ended March 31, 2018 | At the beginning of the fiscal year | Increase | Decrease | At the end of the fiscal year | Notes | |||||||||||||||
Shares issued | ||||||||||||||||||||
Common stock | 1,414,055,625 | 387,765 | — | 1,414,443,390 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 1,414,055,625 | 387,765 | — | 1,414,443,390 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Treasury stock | ||||||||||||||||||||
Common stock | 4,028,883 | 31,554 | 175,469 | 3,884,968 | 2,3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 4,028,883 | 31,554 | 175,469 | 3,884,968 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Notes: | 1. | Increase of 387,765 shares in the total number of shares issued was due to issuance of new stocks as stock-based compensation. | ||||
2. | Increase of 31,554 shares in the number of treasury common stock was due to purchases of fractional shares. | |||||
3. | Decrease of 175,469 shares in the number of treasury common stock was due to sales of fractional shares and exercise of stock options. |
2. Information on stock acquisition rights
Number of shares | Millions of yen | |||||||||||||||||||||||||||||
Year ended March 31, 2018 | Details of stock | Type of shares | At the beginning of the fiscal year | Increase | Decrease | At the end of the fiscal year | At the end of the fiscal year | Notes | ||||||||||||||||||||||
The Company | Stock acquisition rights as stock options | — | — | — | — | — | ¥ | 2,823 | ||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | ¥ | 2,823 | ||||||||||||||||||||||||||||
|
|
3. Information on dividends
(1) Dividends paid in the fiscal year
| ||||||||||||||||||
Type of shares | Millions of yen, except per share amount | |||||||||||||||||
Date of resolution | Cash dividends | Cash dividends per share | Record date | Effective date | ||||||||||||||
Ordinary General Meeting of Shareholders held on June 29, 2017 | Common stock | ¥ | 105,752 | ¥ | 75 | March 31, 2017 | June 30, 2017 | |||||||||||
Meeting of the Board of Directors held on November 14, 2017 | Common stock | 112,844 | 80 | September 30, 2017 | December 1, 2017 | |||||||||||||
(2) Dividends to be paid in the next fiscal year
| ||||||||||||||||||
Millions of yen, except per share amount | ||||||||||||||||||
Date of resolution | Type of shares | Cash dividends | Source of dividends | Cash dividends per share | Record date | Effective date | ||||||||||||
Ordinary General Meeting of Shareholders held on June 28, 2018 | Common stock | ¥ | 126,950 | | Retained earnings | ¥ | 90 | March 31, 2018 | June 29, 2018 |
31
Table of Contents
(Notes to consolidated statements of cash flows)
*1 The relation between the amounts of accounts listed on the consolidated financial statements and “Cash and cash equivalents”
|
| |||||||
Millions of yen | ||||||||
Year ended March 31 | 2017 | 2018 | ||||||
Cash and due from banks | ¥ | 46,865,538 | ¥ | 53,732,582 | ||||
Interest earning deposits with banks (excluding the deposit with the Bank of Japan) | (4,387,144) | (5,749,468) | ||||||
|
|
|
| |||||
Cash and cash equivalents | ¥ | 42,478,393 | ¥ | 47,983,114 | ||||
|
|
|
| |||||
*2 The major components of assets and liabilities for entities newly consolidated by stock acquisition and for other reasons
The major components of assets and liabilities at the commencement of consolidation due to stock acquisition of SMFL Capital Company, Limited (former name: GE Japan LLC) and 5 other companies by SMFL’s stock acquisition and the relation between the acquisition cost of shares and expenditure to acquire were as follows;
|
| |||||||
Year ended March 31, 2017 | Millions of yen | |||||||
Assets | ¥ | 669,763 | ||||||
Lease receivables and investment assets | 394,459 | |||||||
Liabilities | (502,042) | |||||||
Borrowed money | (436,526) | |||||||
Non-controlling interests | (393) | |||||||
Goodwill | 13,632 | |||||||
|
| |||||||
Acquisition cost of 6 companies | 180,959 | |||||||
Cash and cash equivalents included in acquired assets of 6 companies | (1,015) | |||||||
|
| |||||||
Expenditure for acquisition of 6 companies | ¥ | 179,944 | ||||||
|
|
32
Table of Contents
The major components of assets and liabilities at the commencement of consolidation due to consolidating SMAM and 7 other companies by SMBC’s stock acquisition and the relation between the acquisition cost of shares and expenditure to acquire were as follows; |
Year ended March 31, 2017 | Millions of yen | |||||||
Assets | ¥ | 50,524 | ||||||
Securities | 13,466 | |||||||
Liabilities | (12,516) | |||||||
Non-controlling interests | (15,203) | |||||||
Goodwill | 38,053 | |||||||
|
| |||||||
Acquisition cost of 8 companies | 60,858 | |||||||
Cash and cash equivalents included in acquired assets of 8 companies | (474) | |||||||
Fair value of SMAM’s common stocks immediately prior to the business combination | (40,572) | |||||||
|
| |||||||
Expenditure for acquisition of 8 companies | ¥ | 19,811 | ||||||
|
|
The major components of assets and liabilities at the commencement of consolidation due to stock acquisition of American Railcar Leasing LLC and 19 other companies by SMBC Rail Services LLC’s stock acquisition and the relation between the acquisition cost of shares and expenditure to acquire were as follows; |
Year ended March 31, 2018 | Millions of yen | |||||||
Assets | ¥ | 319,975 | ||||||
Tangible fixed assets | 304,256 | |||||||
Liabilities | (149,469) | |||||||
Borrowed money | (147,523) | |||||||
|
| |||||||
Acquisition cost of 20 companies | 170,506 | |||||||
Cash and cash equivalents included in acquired assets of 20 companies | (8,654) | |||||||
|
| |||||||
Expenditure for acquisition of 20 companies | ¥ | 161,851 | ||||||
|
|
*3 The major components of assets and liabilities for entities which became equity method affiliates by sale of the shares
SMBC, a consolidated subsidiary of the Company, sold a portion of shares of THE MINATO BANK, LTD. (“Minato Bank”) and Kansai Urban Banking Corporation (“Kansai Urban”) through tender offers subject to the shares of common stocks of each bank by Resona Holdings, Inc.. The major components of assets and liabilities of Minato Bank and 15 other companies, and Kansai Urban and 6 other companies and the relation between the acquisition cost of the shares and expenditure to acquire were as follows;
Minato Bank (consolidated)
|
Year ended March 31, 2018 | Millions of yen | |||||||
Assets | ¥ | 3,528,896 | ||||||
Loans and bills discounted | 2,513,381 | |||||||
Liabilities | (3,384,488) | |||||||
Deposits | (3,233,642) | |||||||
Stock acquisition rights | (318) | |||||||
Non-controlling interests | (138,098) | |||||||
Investment account after sales of stocks | (3,969) | |||||||
Gains (losses) on sales of stocks | (634) | |||||||
|
| |||||||
Selling price of 16 companies | 1,389 | |||||||
Cash and cash equivalents included in disposed assets of 16 companies | (550,292) | |||||||
|
| |||||||
Expenditure for sales of 16 companies | ¥ | (548,903) | ||||||
|
|
33
Table of Contents
Kansai Urban (consolidated)
Year ended March 31, 2018 | Millions of yen | |||||||
Assets | ¥ | 4,709,055 | ||||||
Loans and bills discounted | 3,939,196 | |||||||
Liabilities | (4,498,339) | |||||||
Deposits | (4,063,161) | |||||||
Non-controlling interests | (63,804) | |||||||
Investment account after sales of stocks | (58,581) | |||||||
Gains (losses) on sales of stocks | (1,332) | |||||||
|
| |||||||
Selling price of 7 companies | 86,999 | |||||||
Cash and cash equivalents included in disposed assets of 7 companies | (386,917) | |||||||
|
| |||||||
Expenditure for sales of 7 companies | ¥ | (299,918) | ||||||
|
|
34
Table of Contents
(Notes to lease transactions)
1. Finance leases
(1) | Lessee side |
1) | Lease assets |
(a) | Tangible fixed assets |
Tangible fixed assets mainly consisted of branches and equipment.
(b) | Intangible fixed assets |
Intangible fixed assets are software.
2) | Depreciation method of lease assets |
Depreciation method of lease assets is reported in 4. Accounting policies (4) Depreciation.
(2) | Lessor side |
1) | Breakdown of lease investment assets |
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Lease receivables | ¥ | 1,575,535 | ¥ | 1,537,348 | ||||
Residual value | 141,815 | 136,677 | ||||||
Unearned interest income | (219,854) | (211,532) | ||||||
|
|
|
| |||||
Total | ¥ | 1,497,496 | ¥ | 1,462,494 | ||||
|
|
|
|
2) | The scheduled collections of lease payments receivable related to lease receivables and investment assets are as follows: |
Millions of yen | ||||||||||||||||
2017 | 2018 | |||||||||||||||
March 31 | Lease payments receivable related to lease receivables | Lease payments receivable related to investment assets | Lease payments receivable related to lease receivables | Lease payments receivable related to investment assets | ||||||||||||
Within 1 year | ¥ | 307,509 | ¥ | 423,147 | ¥ | 298,334 | ¥ | 432,502 | ||||||||
More than 1 year to 2 years | 218,544 | 342,384 | 213,802 | 347,790 | ||||||||||||
More than 2 years to 3 years | 153,983 | 272,786 | 162,091 | 265,262 | ||||||||||||
More than 3 years to 4 years | 111,720 | 190,488 | 92,799 | 176,630 | ||||||||||||
More than 4 years to 5 years | 55,302 | 116,975 | 55,429 | 109,159 | ||||||||||||
More than 5 years | 186,669 | 229,752 | 177,736 | 206,002 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ¥ | 1,033,730 | ¥ | 1,575,535 | ¥ | 1,000,194 | ¥ | 1,537,348 | ||||||||
|
|
|
|
|
|
|
|
3) | Non-transfer ownership finance leases, which commenced in fiscal years beginning before April 1, 2008, are valued at their appropriate book value, net of accumulated depreciation, as of March 31, 2008, and recorded as the beginning balance of “Lease receivables and investment assets.” |
Moreover, interest on suchnon-transfer ownership finance leases during the remaining term of the leases is allocated over the lease term using the straight-line method.
As a result of this accounting treatment, “Income before income taxes” for the fiscal years ended March 31, 2017 and 2018 were ¥1,688 million and ¥1,927 million, respectively, more than it would have been if such transactions had been treated in a similar way to sales of the underlying assets.
35
Table of Contents
2. Operating leases
(1) | Lessee side |
Future minimum lease payments on operating leases which were not cancelable were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Due within 1 year | ¥ | 44,745 | ¥ | 45,672 | ||||
Due after 1 year | 254,258 | 258,746 | ||||||
|
|
|
| |||||
Total | ¥ | 299,004 | ¥ | 304,419 | ||||
|
|
|
|
(2) | Lessor side |
Future minimum lease payments on operating leases which were not cancelable were as follows:
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Due within 1 year | ¥ | 215,329 | ¥ | 242,466 | ||||
Due after 1 year | 1,275,289 | 1,390,427 | ||||||
|
|
|
| |||||
Total | ¥ | 1,490,618 | ¥ | 1,632,894 | ||||
|
|
|
|
Future lease payments receivable on operating leases which were not cancelable at March 31, 2017 amounting to ¥0 million on the lessor side were pledged as collateral for borrowings.
36
Table of Contents
(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, andover-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. and the International Treasury Dept. of the Treasury Unit, while derivative transactions for trading purposes are undertaken by the Trading Dept. of the Treasury Unit (in Asia and Oceania regions, the Asia and Oceania Treasury Dept. is responsible for derivative transactions for both ALM and trading purposes).
(2) | Details of financial instruments and associated risks |
1) | 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 asheld-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.
2) | 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. 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.
3) | 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, (16) Hedge accounting.”
37
Table of Contents
(3) | Risk management framework for financial instruments |
The fundamental matters on risk management for the entire Group are set forth in “Regulations on 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.
1) | 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 group-wide basic policies for risk management. 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 includingnon-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 managesnon-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 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 ofnon-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 results directly to the Board of Directors and the Management 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.
38
Table of Contents
• | Appropriate risk-taking within capital |
To keep credit risk exposure to a permissible level relative to capital, the Company sets credit risk capital limit for internal control purposes. Under these limits, separate guidelines are issued for each business unit and marketing unit. The Company regularly monitors compliance with these guidelines.
• | 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 ofnon-performing loans |
Fornon-performing loans and potentialnon-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 aclose-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.
2) | 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 group-wide basic policies for risk management 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 Board of Directors. 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, the Board of Directors and other concerned committees and departments.
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(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, 2018, total VaR of SMBC and its major consolidated subsidiaries was ¥48.2 billion for the banking activities, ¥21.5 billion for the trading activities and ¥1,603.6 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 of the types and levels of risk that the Company is willing to take on or tolerate. As an example, the Company sets a lower limit on the period over which cash flows could be maintained through sales ofpre-determined marketable assets in the event of extreme market turmoil. By setting such a threshold, the Company aims to avoid excessive reliance on short term funding and secure funding sources in the event of extreme market turmoil. 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 are based on their market prices and, in cases where market prices are not available, on reasonably calculated prices. These prices have been calculated using certain assumptions, and may differ if calculated based on different assumptions.
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2. Fair value of financial instruments
(1) | “Consolidated balance sheet amount,” “Fair value” and “Net unrealized gains (losses)” of financial instruments as of March 31, 2017 and 2018 are as follows: |
The amounts shown in the following tables do not include financial instruments (see (3) below) whose fair values are extremely difficult to determine, such as unlisted stocks classified as other securities, and stocks of subsidiaries and affiliates.
Millions of yen | ||||||||||||||||
March 31, 2017 | Consolidated balance sheet amount | Fair value | Net unrealized gains (losses) | |||||||||||||
1) | Cash and due from banks *1 | ¥ | 46,856,755 | ¥ | 46,863,245 | ¥ | 6,490 | |||||||||
2) | Call loans and bills bought *1 | 1,870,376 | 1,872,041 | 1,665 | ||||||||||||
3) | Receivables under resale agreements | 899,897 | 901,214 | 1,316 | ||||||||||||
4) | Receivables under securities borrowing transactions *1 | 8,759,837 | 8,761,000 | 1,163 | ||||||||||||
5) | Monetary claims bought *1 | 4,415,287 | 4,428,894 | 13,606 | ||||||||||||
6) | Trading assets | |||||||||||||||
Securities classified as trading purposes | 3,778,798 | 3,778,798 | — | |||||||||||||
7) | Money held in trust | 3,439 | 3,439 | — | ||||||||||||
8) | Securities | |||||||||||||||
Bonds classified asheld-to-maturity | 1,173,423 | 1,180,318 | 6,895 | |||||||||||||
Other securities | 22,412,795 | 22,412,795 | — | |||||||||||||
9) | Loans and bills discounted | 80,237,322 | ||||||||||||||
Reserve for possible loan losses *1 | (360,465) | |||||||||||||||
|
|
|
|
|
| |||||||||||
79,876,857 | 81,964,043 | 2,087,186 | ||||||||||||||
|
|
|
|
|
| |||||||||||
10) | Foreign exchanges *1 | 1,716,259 | 1,717,458 | 1,198 | ||||||||||||
11) | Lease receivables and investment assets *1 | 2,387,292 | 2,483,992 | 96,699 | ||||||||||||
|
|
|
|
|
| |||||||||||
Total assets | ¥ | 174,151,021 | ¥ | 176,367,243 | ¥ | 2,216,221 | ||||||||||
|
|
|
|
|
| |||||||||||
1) | Deposits | ¥ | 117,830,210 | ¥ | 117,826,321 | ¥ | (3,888) | |||||||||
2) | Negotiable certificates of deposit | 11,880,937 | 11,886,844 | 5,906 | ||||||||||||
3) | Call money and bills sold | 2,088,019 | 2,088,066 | 47 | ||||||||||||
4) | Payables under repurchase agreements | 2,715,752 | 2,715,752 | — | ||||||||||||
5) | Payables under securities lending transactions | 7,444,655 | 7,444,655 | — | ||||||||||||
6) | Commercial paper | 2,311,542 | 2,311,536 | (6) | ||||||||||||
7) | Trading liabilities | |||||||||||||||
Trading securities sold for short sales | 2,071,583 | 2,071,583 | — | |||||||||||||
8) | Borrowed money | 10,786,713 | 10,794,049 | 7,335 | ||||||||||||
9) | Foreign exchanges | 683,252 | 683,252 | — | ||||||||||||
10) | Short-term bonds | 1,125,600 | 1,125,590 | (9) | ||||||||||||
11) | Bonds | 8,129,232 | 8,333,946 | 204,713 | ||||||||||||
12) | Due to trust account | 1,180,976 | 1,180,976 | — | ||||||||||||
|
|
|
|
|
| |||||||||||
Total liabilities | ¥ | 168,248,478 | ¥ | 168,462,576 | ¥ | 214,097 | ||||||||||
|
|
|
|
|
| |||||||||||
Derivative transactions *2 | ||||||||||||||||
Hedge accounting not applied | ¥ | 272,439 | ¥ | 272,439 | ¥ | — | ||||||||||
Hedge accounting applied | [162,498] | [162,498] | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | ¥ | 109,940 | ¥ | 109,940 | ¥ | — | ||||||||||
|
|
|
|
|
|
*1 | The amounts do not include general reserve for possible loan losses and specific reserve for possible loan losses. The reserves for possible losses on “Cash and due from banks,” “Call loans and bills bought,” “Receivables under securities borrowing transactions,” “Monetary claims bought,” “Foreign exchanges” and “Lease receivables and investment assets” are deducted directly from consolidated balance sheet amount since they are immaterial. |
*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 square brackets. |
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Millions of yen | ||||||||||||||||
March 31, 2018 | Consolidated balance sheet amount | Fair value | Net unrealized gains (losses) | |||||||||||||
1) | Cash and due from banks *1 | ¥ | 53,719,075 | ¥ | 53,727,901 | ¥ | 8,825 | |||||||||
2) | Call loans and bills bought *1 | 1,880,248 | 1,882,226 | 1,977 | ||||||||||||
3) | Receivables under resale agreements | 827,892 | 828,019 | 127 | ||||||||||||
4) | Receivables under securities borrowing transactions *1 | 8,337,151 | 8,337,727 | 575 | ||||||||||||
5) | Monetary claims bought *1 | 4,727,884 | 4,740,759 | 12,875 | ||||||||||||
6) | Trading assets | |||||||||||||||
Securities classified as trading purposes | 3,166,912 | 3,166,912 | — | |||||||||||||
7) | Money held in trust | 1,482 | 1,482 | — | ||||||||||||
8) | Securities | |||||||||||||||
Bonds classified asheld-to-maturity | 372,463 | 374,596 | 2,132 �� | |||||||||||||
Other securities | 24,231,212 | 24,231,212 | — | |||||||||||||
9) | Loans and bills discounted | 72,945,934 | ||||||||||||||
Reserve for possible loan losses *1 | (318,294) | |||||||||||||||
|
|
|
|
|
| |||||||||||
72,627,639 | 74,501,561 | 1,873,921 | ||||||||||||||
|
|
|
|
|
| |||||||||||
10) | Foreign exchanges *1 | 2,163,382 | 2,166,382 | 2,999 | ||||||||||||
11) | Lease receivables and investment assets *1 | 2,321,355 | 2,410,967 | 89,611 | ||||||||||||
|
|
|
|
|
| |||||||||||
Total assets | ¥ | 174,376,701 | ¥ | 176,369,750 | ¥ | 1,993,048 | ||||||||||
|
|
|
|
|
| |||||||||||
1) | Deposits | ¥ | 116,477,534 | ¥ | 116,473,422 | ¥ | (4,111) | |||||||||
2) | Negotiable certificates of deposit | 11,220,284 | 11,223,576 | 3,291 | ||||||||||||
3) | Call money and bills sold | 1,190,928 | 1,190,936 | 7 | ||||||||||||
4) | Payables under repurchase agreements | 5,509,721 | 5,509,721 | — | ||||||||||||
5) | Payables under securities lending transactions | 7,186,861 | 7,186,861 | — | ||||||||||||
6) | Commercial paper | 2,384,787 | 2,384,771 | (15) | ||||||||||||
7) | Trading liabilities | |||||||||||||||
Trading securities sold for short sales | 2,139,980 | 2,139,980 | — | |||||||||||||
8) | Borrowed money | 10,829,248 | 10,889,743 | 60,494 | ||||||||||||
9) | Foreign exchanges | 865,640 | 865,640 | — | ||||||||||||
10) | Short-term bonds | 1,256,600 | 1,256,600 | — | ||||||||||||
11) | Bonds | 9,057,683 | 9,300,891 | 243,208 | ||||||||||||
12) | Due to trust account | 1,328,271 | 1,328,271 | — | ||||||||||||
|
|
|
|
|
| |||||||||||
Total liabilities | ¥ | 169,447,542 | ¥ | 169,750,416 | ¥ | 302,874 | ||||||||||
|
|
|
|
|
| |||||||||||
Derivative transactions *2 | ||||||||||||||||
Hedge accounting not applied | ¥ | 185,561 | ¥ | 185,561 | ¥ | — | ||||||||||
Hedge accounting applied | [126,340] | [126,340] | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | ¥ | 311,902 | ¥ | 311,902 | ¥ | — | ||||||||||
|
|
|
|
|
|
*1 | The amounts do not include general reserve for possible loan losses and specific reserve for possible loan losses. The reserves for possible losses on “Cash and due from banks,” “Call loans and bills bought,” “Receivables under securities borrowing transactions,” “Monetary claims bought,” “Foreign exchanges” and ��Lease receivables and investment assets” are deducted directly from consolidated balance sheet amount since they are immaterial. |
*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 square brackets. |
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Table of Contents
(2) | Fair value calculation methodology for financial instruments |
Assets
1) Cash and due from banks, 2) Call loans and bills bought, 3) Receivables under resale agreements, 4) Receivables under securities borrowing transactions, 9) Loans and bills discounted, 10) Foreign exchanges and 11) Lease receivables and investment assets:
Of these transactions, for dues from banks without maturity and overdrafts with no specified repayment dates, the book values are used as fair value as they are considered to approximate their fair value.
For short-term transactions with remaining maturity not exceeding 6 months, in principle, the book values are used as fair value as they are considered to approximate their fair value.
The fair value of those with a remaining maturity of more than 6 months is, in principle, the present value of future cash flows (calculated by discounting estimated future cash flows, taking into account factors such as the borrower’s internal rating and pledged collateral, using a rate comprising of a risk-free interest rate and an adjustment). Certain consolidated subsidiaries of the Company calculate the present value by discounting the estimated future cash flows computed based on the contractual interest rate, using 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’ balance sheet amounts minus the expected amount of loan losses approximate their fair values, such amounts are considered to be their fair values.
5) Monetary claims bought:
The fair values of monetary claims bought, such as subordinated trust beneficiary interests related to securitized housing loans, are based on the assessed value of underlying housing loans securitized through the trust scheme minus the assessed value of senior beneficial interests, etc. The fair values of other transactions are, in principle, based on prices calculated using methods similar to the methods applied to 9) Loans and bills discounted.
6) Trading assets:
The fair values of bonds and other securities held for trading purposes are, in principle, based on their market price at the end of the fiscal year.
7) Money held in trust:
The fair values of money held in trust are, in principle, based on the market prices of securities held in trust calculated using methods similar to the methods applied to 8) Securities.
8) Securities:
In principle, the fair values of stocks (including foreign stocks) are based on the average market price during 1 month before the end of the fiscal year. The fair values of bonds and securities with market prices other than stocks are prices calculated based on their market prices as of the end of the fiscal year.
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Table of Contents
In light of the “Practical Solution on Measurement of Fair Value for Financial Assets” (ASBJ Practical Issue Task Force No. 25), the fair values of floating rate government bonds are based on the present value of future cash flows (the government bond yield is used to discount and estimate future cash flows). Bond yield and yield volatility are the main price parameters. The fair values of those without market prices, such as private placement bonds, are based on the present value of future cash flows calculated by discounting estimated future cash flows taking into account the borrower’s internal rating and pledged collateral by a rate comprising a risk-free interest rate and an adjustment.
However, the fair values of bonds, such as private placement 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. Meanwhile, the fair values of publicly offered investment trusts are calculated based on the published net asset value (NAV) per share, while those of private placement investment trusts are calculated based on the NAV published by securities firms and other financial institutions.
Liabilities
1) Deposits, 2) Negotiable certificates of deposit and 12) Due to trust account:
The fair values of demand deposits and deposits without maturity are based on their book values. The fair values of short-term transactions with remaining maturity not exceeding 6 months are also based on their book values, as their book values are regarded to approximate their market values.
The fair values of transactions with a remaining maturity of more than 6 months are, in principle, based on the present value of estimated future cash flows calculated using the rate applied to the same type of deposits that are newly accepted until the end of the remaining maturity.
3) Call money and bills sold, 4) Payables under repurchase agreements, 5) Payables under securities lending transactions, 6) Commercial paper, 8) Borrowed money, 10) Short-term bonds and 11) Bonds:
The fair values of short-term transactions with remaining maturity not exceeding 6 months are based on their book values, as their book values are considered to approximate their fair values. For transactions with a remaining maturity of more than 6 months, their fair values are, in principle, based on the present value of estimated future cash flows calculated using the refinancing rate applied to the same type of instruments for the remaining maturity. The fair values of bonds are based on the present value of future cash flows calculated using the rate derived from the data on the yields published by securities firms.
7) 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.
9) Foreign exchanges:
The fair values of foreign currency-denominated deposits without maturity received from other banks are based on their book values.
The fair values of foreign exchange related short-term borrowings are based on their book values, as their book values are regarded to approximate their fair values.
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Table of Contents
Derivatives transactions
The fair values of exchange-traded derivatives are based on their closing prices. With regard to OTC transactions, the fair values of interest rate, currency, stock, bond and credit derivatives are based on their prices calculated based on the present value of the future cash flows, option valuation models, etc. The fair values of commodity derivatives transactions are based on their prices calculated based on the derivative instrument’s components, including price and contract term.
(3) | Consolidated balance sheet amount of financial instruments whose fair values are extremely difficult to determine are as follows: |
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Monetary claims bought: | ||||||||
Monetary claims bought without market prices *1 | ¥ | 2,460 | ¥ | — | ||||
Securities: | ||||||||
Unlisted stocks, etc. *2*4 | 176,818 | 176,491 | ||||||
Investments in partnership, etc. *3*4 | 264,205 | 249,390 | ||||||
|
|
|
| |||||
Total | ¥ | 443,485 | ¥ | 425,881 | ||||
|
|
|
|
*1 | They are beneficiary claims on loan trusts (a) that behave more like equity than debt, (b) that do not have market prices, and (c) for which it is difficult to rationally estimate their fair values. |
*2 | They are not included in the scope of fair value disclosure since there are no market prices and it is extremely difficult to determine their fair values. |
*3 | They are capital contributions with no market prices. The above-stated amount includes the book value amount of investments in the partnership of which the Company records net changes in their balance sheets and statements of income. |
*4 | Unlisted stocks and investments in partnership totaling ¥9,869 million and ¥9,142 million werewritten-off in the fiscal year ended March 31, 2017 and 2018, respectively. |
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Table of Contents
(4) | Redemption schedule of monetary claims and securities with maturities |
Millions of yen | ||||||||||||||||
March 31, 2017 | Within 1 year | After 1 year through 5 years | After 5 years through 10 years | After 10 years | ||||||||||||
Deposits with banks | ¥ | 45,684,741 | ¥ | 34,913 | ¥ | 21,577 | ¥ | 1,136 | ||||||||
Call loans and bills bought | 1,824,664 | 46,118 | 1,360 | — | ||||||||||||
Receivables under resale agreements | 832,583 | 67,314 | — | — | ||||||||||||
Receivables under securities borrowing transactions | 8,754,840 | 5,550 | — | — | ||||||||||||
Monetary claims bought*1 | 3,456,614 | 599,502 | 59,428 | 266,599 | ||||||||||||
Securities*1 | 3,530,979 | 11,390,925 | 2,658,678 | 1,353,291 | ||||||||||||
Bonds classified asheld-to-maturity | 791,800 | 380,836 | — | — | ||||||||||||
Japanese government bonds | 790,000 | 370,000 | — | — | ||||||||||||
Japanese local government bonds | 1,800 | 5,626 | — | — | ||||||||||||
Japanese corporate bonds | — | 5,210 | — | — | ||||||||||||
Other | — | — | — | — | ||||||||||||
Other securities with maturity | 2,739,178 | 11,010,089 | 2,658,678 | 1,353,291 | ||||||||||||
Japanese government bonds | 79,000 | 6,789,300 | 220,400 | 147,000 | ||||||||||||
Japanese local government bonds | 4,822 | 28,545 | 49,538 | 26 | ||||||||||||
Japanese corporate bonds | 515,524 | 1,493,515 | 609,414 | 145,798 | ||||||||||||
Other | 2,139,831 | 2,698,728 | 1,779,326 | 1,060,466 | ||||||||||||
Loans and bills discounted*1*2 | 18,502,646 | 33,099,462 | 12,842,320 | 8,943,328 | ||||||||||||
Foreign exchanges*1 | 1,704,057 | 12,397 | — | — | ||||||||||||
Lease receivables and investment assets*1 | 660,683 | 1,272,477 | 171,960 | 117,548 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ¥ | 84,951,811 | ¥ | 46,528,660 | ¥ | 15,755,326 | ¥ | 10,681,905 | ||||||||
|
|
|
|
|
|
|
|
*1 The amounts shown in the table above do not include amounts for claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers and other claims for which redemption is unlikely. The amounts for such claims are Monetary claims bought: ¥2 million, Securities: ¥7,340 million, Loans and bills discounted: ¥542,240 million, Foreign exchanges: ¥7,413 million, Lease receivables and investment assets: ¥31,113 million. *2 “Loans and bills discounted” without the maturity dates are not included. Such amount is totaled to ¥6,306,217 million at March 31, 2017. |
Millions of yen | ||||||||||||||||
March 31, 2018 | Within 1 year | After 1 year through 5 years | After 5 years through 10 years | After 10 years | ||||||||||||
Deposits with banks | ¥ | 52,990,470 | ¥ | 23,915 | ¥ | 15,210 | ¥ | 1,130 | ||||||||
Call loans and bills bought | 1,802,316 | 79,563 | — | — | ||||||||||||
Receivables under resale agreements | 758,829 | 69,062 | — | — | ||||||||||||
Receivables under securities borrowing transactions | 8,333,400 | 4,300 | — | — | ||||||||||||
Monetary claims bought*1 | 3,748,669 | 569,546 | 67,347 | 301,601 | ||||||||||||
Securities*1 | 5,982,341 | 9,064,475 | 3,276,795 | 1,661,510 | ||||||||||||
Bonds classified asheld-to-maturity | 92,000 | 280,000 | — | — | ||||||||||||
Japanese government bonds | 92,000 | 280,000 | — | — | ||||||||||||
Japanese local government bonds | — | — | — | — | ||||||||||||
Japanese corporate bonds | — | — | — | — | ||||||||||||
Other | — | — | — | — | ||||||||||||
Other securities with maturity | 5,890,341 | 8,784,475 | 3,276,795 | 1,661,510 | ||||||||||||
Japanese government bonds | 3,280,000 | 5,226,000 | 344,500 | 300,200 | ||||||||||||
Japanese local government bonds | 17 | 21,748 | 25,148 | 16 | ||||||||||||
Japanese corporate bonds | 313,490 | 1,253,754 | 736,678 | 242,819 | ||||||||||||
Other | 2,296,833 | 2,282,972 | 2,170,468 | 1,118,474 | ||||||||||||
Loans and bills discounted*1*2 | 16,794,489 | 30,930,098 | 12,002,922 | 7,270,166 | ||||||||||||
Foreign exchanges*1 | 2,161,454 | 3,776 | — | — | ||||||||||||
Lease receivables and investment assets*1 | 655,790 | 1,247,385 | 166,152 | 93,880 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ¥ | 93,227,762 | ¥ | 41,992,123 | ¥ | 15,528,429 | ¥ | 9,328,290 | ||||||||
|
|
|
|
|
|
|
|
*1 The amounts shown in the table above do not include amounts for claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers and other claims for which redemption is unlikely. The amounts for such claims are Monetary claims bought: ¥0 million, Securities: ¥9,451 million, Loans and bills discounted: ¥423,081 million, Foreign exchanges: ¥960 million, Lease receivables and investment assets: ¥29,545 million. *2 “Loans and bills discounted” without the maturity dates are not included. Such amount is totaled to ¥5,526,153 million at March 31, 2018. |
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Table of Contents
(5) Redemption schedule of bonds, borrowed money and other interest-bearing debts
Millions of yen | ||||||||||||||||
March 31, 2017 | Within 1 year | After 1 year through 5 years | After 5 years through 10 years | After 10 years | ||||||||||||
Deposits * | ¥ | 113,529,261 | ¥ | 3,562,082 | ¥ | 252,345 | ¥ | 486,521 | ||||||||
Negotiable certificates of deposit | 11,514,609 | 363,542 | 2,785 | 0 | ||||||||||||
Call money and bills sold | 2,088,019 | — | — | — | ||||||||||||
Payables under repurchase agreements | 2,715,752 | — | — | — | ||||||||||||
Payables under securities lending transactions | 7,444,655 | — | — | — | ||||||||||||
Commercial paper | 2,311,542 | — | — | — | ||||||||||||
Borrowed money | 7,802,225 | 1,475,260 | 1,095,556 | 413,670 | ||||||||||||
Foreign exchanges | 683,252 | — | — | — | ||||||||||||
Short-term bonds | 1,125,600 | — | — | — | ||||||||||||
Bonds | 1,113,373 | 3,756,532 | 2,436,522 | 825,462 | ||||||||||||
Due to trust account | 1,180,976 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ¥ | 151,509,270 | ¥ | 9,157,417 | ¥ | 3,787,208 | ¥ | 1,725,655 | ||||||||
|
|
|
|
|
|
|
|
* | Demand deposits are included in “Within 1 year.” Deposits include current deposits. |
Millions of yen | ||||||||||||||||
March 31, 2018 | Within 1 year | After 1 year through 5 years | After 5 years through 10 years | After 10 years | ||||||||||||
Deposits * | ¥ | 112,396,477 | ¥ | 3,426,343 | ¥ | 179,801 | ¥ | 474,912 | ||||||||
Negotiable certificates of deposit | 10,760,778 | 459,505 | — | — | ||||||||||||
Call money and bills sold | 1,190,928 | — | — | — | ||||||||||||
Payables under repurchase agreements | 5,509,721 | — | — | — | ||||||||||||
Payables under securities lending transactions | 7,186,861 | — | — | — | ||||||||||||
Commercial paper | 2,384,787 | — | — | — | ||||||||||||
Borrowed money | 7,875,146 | 1,569,039 | 981,380 | 403,682 | ||||||||||||
Foreign exchanges | 865,640 | — | — | — | ||||||||||||
Short-term bonds | 1,256,600 | — | — | — | ||||||||||||
Bonds | 972,227 | 4,199,206 | 2,834,687 | 1,053,459 | ||||||||||||
Due to trust account | 1,328,271 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ¥ | 151,727,440 | ¥ | 9,654,095 | ¥ | 3,995,869 | ¥ | 1,932,054 | ||||||||
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
* | Demand deposits are included in “Within 1 year.” Deposits include current deposits. |
47
Table of Contents
(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
Millions of yen | ||||
March 31 | 2017 | 2018 | ||
Valuation gains (losses) included in the earnings for the fiscal year | ¥ (56,814) | ¥ (5,538) |
2. Bonds classified asheld-to-maturity
Millions of yen | ||||||||||||||
March 31, 2017 | Consolidated balance sheet amount | Fair value | Net unrealized gains (losses) | |||||||||||
Bonds with unrealized gains: | Japanese government bonds | ¥ | 1,160,754 | ¥ | 1,167,616 | ¥ | 6,861 | |||||||
Japanese local government bonds | 7,463 | 7,474 | 11 | |||||||||||
Japanese corporate bonds | 5,205 | 5,227 | 22 | |||||||||||
Other | — | — | — | |||||||||||
|
|
|
| �� |
|
| ||||||||
Subtotal | 1,173,423 | 1,180,318 | 6,895 | |||||||||||
|
|
|
|
|
| |||||||||
Bonds with unrealized losses: | Japanese government bonds | — | — | — | ||||||||||
Japanese local government bonds | — | — | — | |||||||||||
Japanese corporate bonds | — | — | — | |||||||||||
Other | — | — | — | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | — | — | — | |||||||||||
|
|
|
|
|
| |||||||||
Total | ¥ | 1,173,423 | ¥ | 1,180,318 | ¥ | 6,895 | ||||||||
|
|
|
|
|
| |||||||||
Millions of yen | ||||||||||||||
March 31, 2018 | Consolidated balance sheet amount | Fair value | Net unrealized gains (losses) | |||||||||||
Bonds with unrealized gains: | Japanese government bonds | ¥ | 370,463 | ¥ | 372,596 | ¥ | 2,132 | |||||||
Japanese local government bonds | — | — | — | |||||||||||
Japanese corporate bonds | — | — | — | |||||||||||
Other | — | — | — | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | 370,463 | 372,596 | 2,132 | |||||||||||
|
|
|
|
|
| |||||||||
Bonds with unrealized losses: | Japanese government bonds | 2,000 | 2,000 | — | ||||||||||
Japanese local government bonds | — | — | — | |||||||||||
Japanese corporate bonds | — | — | — | |||||||||||
Other | — | — | — | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | 2,000 | 2,000 | — | |||||||||||
|
|
|
|
|
| |||||||||
Total | ¥ | 372,463 | ¥ | 374,596 | ¥ | 2,132 | ||||||||
|
|
|
|
|
|
48
Table of Contents
3. Other securities
Millions of yen | ||||||||||||||
March 31, 2017 | Consolidated balance sheet amount | Acquisition cost | Net unrealized gains (losses) | |||||||||||
Other securities with unrealized gains: | Stocks | ¥ | 3,468,261 | ¥ | 1,531,248 | ¥ | 1,937,012 | |||||||
Bonds | 8,052,272 | 7,981,171 | 71,100 | |||||||||||
Japanese government bonds | 5,660,891 | 5,629,640 | 31,251 | |||||||||||
Japanese local government bonds | 12,242 | 12,165 | 76 | |||||||||||
Japanese corporate bonds | 2,379,138 | 2,339,365 | 39,772 | |||||||||||
Other | 4,233,661 | 3,879,509 | 354,152 | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | 15,754,194 | 13,391,929 | 2,362,265 | |||||||||||
|
|
|
|
|
| |||||||||
Other securities with unrealized losses: | Stocks | 142,601 | 157,742 | (15,140) | ||||||||||
Bonds | 2,129,124 | 2,139,848 | (10,724) | |||||||||||
Japanese government bonds | 1,633,041 | 1,639,835 | (6,793) | |||||||||||
Japanese local government bonds | 70,537 | 71,086 | (548) | |||||||||||
Japanese corporate bonds | 425,545 | 428,927 | (3,381) | |||||||||||
Other | 5,147,417 | 5,295,109 | (147,691) | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | 7,419,143 | 7,592,700 | (173,556) | |||||||||||
|
|
|
|
|
| |||||||||
Total | ¥ | 23,173,338 | ¥ | 20,984,630 | ¥ | 2,188,708 | ||||||||
|
|
|
|
|
|
Notes: | 1. | There is no net unrealized gains (losses) on other securities shown above for the fiscal year ended March 31, 2017 recognized in the earnings by applying fair value hedge accounting. | ||
2. | Consolidated balance sheet amounts of other securities whose fair values are extremely difficult to determine are as follows: |
March 31, 2017 | Millions of yen | |||
Stocks | ¥ | 146,906 | ||
Other | 296,578 | |||
|
| |||
Total | ¥ | 443,485 | ||
|
|
These amounts are not included in “3. Other securities” since there are no market prices and it is extremely difficult to determine their fair values.
Millions of yen | ||||||||||||||
March 31, 2018 | Consolidated balance sheet amount | Acquisition cost | Net unrealized gains (losses) | |||||||||||
Other securities with unrealized gains: | Stocks | ¥ | 3,633,885 | ¥ | 1,442,756 | ¥ | 2,191,129 | |||||||
Bonds | 6,998,992 | 6,946,588 | 52,404 | |||||||||||
Japanese government bonds | 4,797,431 | 4,779,687 | 17,743 | |||||||||||
Japanese local government bonds | 14,051 | 14,004 | 47 | |||||||||||
Japanese corporate bonds | 2,187,509 | 2,152,896 | 34,613 | |||||||||||
Other | 3,498,836 | 3,107,132 | 391,704 | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | 14,131,714 | 11,496,477 | 2,635,237 | |||||||||||
|
|
|
|
|
| |||||||||
Other securities with unrealized losses: | Stocks | 113,878 | 131,341 | (17,463) | ||||||||||
Bonds | 4,835,189 | 4,843,215 | (8,026) | |||||||||||
Japanese government bonds | 4,405,604 | 4,410,865 | (5,260) | |||||||||||
Japanese local government bonds | 32,980 | 33,076 | (95) | |||||||||||
Japanese corporate bonds | 396,604 | 399,274 | (2,670) | |||||||||||
Other | 5,933,514 | 6,135,100 | (201,585) | |||||||||||
|
|
|
|
|
| |||||||||
Subtotal | 10,882,582 | 11,109,658 | (227,075) | |||||||||||
|
|
|
|
|
| |||||||||
Total | ¥ | 25,014,297 | ¥ | 22,606,135 | ¥ | 2,408,161 | ||||||||
|
|
|
|
|
|
Notes: | 1. | Net unrealized gains (losses) on other securities shown above include gains of ¥15 million for the fiscal year ended March 31, 2018 that are recognized in the earnings by applying fair value hedge accounting. | ||
2. | Consolidated balance sheet amounts of other securities whose fair values are extremely difficult to determine are as follows: |
March 31, 2018 | Millions of yen | |||
Stocks | ¥ | 141,578 | ||
Other | 284,303 | |||
|
| |||
Total | ¥ | 425,881 | ||
|
|
These amounts are not included in “3. Other securities” since there are no market prices and it is extremely difficult to determine their fair values.
49
Table of Contents
4. | Held-to-maturity bonds sold during the fiscal year |
Fiscal year ended March 31, 2017
There are no corresponding transactions.
Fiscal year ended March 31, 2018
There are no corresponding transactions.
5. | Other securities sold during the fiscal year |
Millions of yen | ||||||||||||
Year ended March 31, 2017 | Sales amount | Gains on sales | Losses on sales | |||||||||
Stocks | ¥ | 179,108 | ¥ | 70,660 | ¥ | (8,676) | ||||||
Bonds | 7,331,730 | 27,719 | (6,727) | |||||||||
Japanese government bonds | 7,171,992 | 27,202 | (6,330) | |||||||||
Japanese local government bonds | 24,678 | 19 | (57) | |||||||||
Japanese corporate bonds | 135,059 | 496 | (339) | |||||||||
Other | 6,384,241 | 55,618 | (20,032) | |||||||||
|
|
|
|
|
| |||||||
Total | ¥ | 13,895,079 | ¥ | 153,998 | ¥ | (35,436) | ||||||
|
|
|
|
|
|
Millions of yen | ||||||||||||
Year ended March 31, 2018 | Sales amount | Gains on sales | Losses on sales | |||||||||
Stocks | ¥ | 202,808 | ¥ | 106,361 | ¥ | (89) | ||||||
Bonds | 6,477,102 | 9,798 | (2,024) | |||||||||
Japanese government bonds | 6,088,215 | 9,534 | (86) | |||||||||
Japanese local government bonds | 89,854 | 9 | (342) | |||||||||
Japanese corporate bonds | 299,031 | 254 | (1,595) | |||||||||
Other | 6,867,924 | 51,414 | (22,359) | |||||||||
|
|
|
|
|
| |||||||
Total | ¥ | 13,547,835 | ¥ | 167,573 | ¥ | (24,473) | ||||||
|
|
|
|
|
|
6. Change of classification of securities
Fiscal year ended March 31, 2017
There are no significant corresponding transactions to be disclosed.
Fiscal year ended March 31, 2018
There are no significant corresponding transactions to be disclosed.
50
Table of Contents
7. Write-down of securities
Bonds classified asheld-to-maturity and other securities (excluding securities whose fair values are extremely difficult to determine) 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, 2017 and 2018 were ¥8,592 million and ¥3,331 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. |
51
Table of Contents
(Notes to money held in trust)
1. Money held in trust classified as trading purposes
Fiscal year ended March 31, 2017
There are no corresponding transactions.
Fiscal year ended March 31, 2018
There are no corresponding transactions.
2. Money held in trust classified asheld-to-maturity
Fiscal year ended March 31, 2017
There are no corresponding transactions.
Fiscal year ended March 31, 2018
There are no corresponding transactions.
3. Other money held in trust
Millions of yen | ||||||||||||
March 31, 2017 | Consolidated balance sheet amount | Acquisition cost | Net unrealized gains (losses) | |||||||||
Other money held in trust | ¥ | 3,439 | ¥ | 3,439 | — | |||||||
Millions of yen | ||||||||||||
March 31, 2018 | Consolidated balance sheet amount | Acquisition cost | Net unrealized gains (losses) | |||||||||
Other money held in trust | ¥ | 1,482 | ¥ | 1,482 | — |
52
Table of Contents
(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, 2017 | Millions of yen | |||
Net unrealized gains (losses) | ¥ | 2,189,003 | ||
Other securities | 2,189,003 | |||
Other money held in trust | — | |||
(-) Deferred tax liabilities | 584,401 | |||
|
| |||
Net unrealized gains (losses) on other securities (before following adjustments) | 1,604,602 | |||
|
| |||
(-)Non-controlling interests | 62,511 | |||
(+) The Company’s interest in net unrealized gains (losses) on valuation of other securities held by equity method affiliates | 218 | |||
|
| |||
Net unrealized gains (losses) on other securities | ¥ | 1,542,308 | ||
|
|
Notes: | 1. | There is no net unrealized gains (losses) on other securities shown above for the fiscal year ended March 31, 2017 recognized in the earnings by applying fair value hedge accounting. | ||
2. | Net unrealized gains (losses) on other securities include foreign currency translation adjustments on foreign currency denominated securities whose fair value is extremely difficult to determine. |
March 31, 2018 | Millions of yen | |||
Net unrealized gains (losses) | ¥ | 2,408,313 | ||
Other securities | 2,408,313 | |||
Other money held in trust | — | |||
(-) Deferred tax liabilities | 659,098 | |||
|
| |||
Net unrealized gains (losses) on other securities (before following adjustments) | 1,749,215 | |||
|
| |||
(-)Non-controlling interests | 65,950 | |||
(+) The Company’s interest in net unrealized gains (losses) on valuation of other securities held by equity method affiliates | 5,577 | |||
|
| |||
Net unrealized gains (losses) on other securities | ¥ | 1,688,842 | ||
|
|
Notes: | 1. | Net unrealized gains of ¥15 million for the fiscal year ended March 31, 2018 recognized in the fiscal year’s earnings by applying fair value hedge accounting are deducted from net unrealized gains on other securities. | ||
2. | Net unrealized gains (losses) on other securities include foreign currency translation adjustments on foreign currency denominated securities whose fair value is extremely difficult to determine. |
53
Table of Contents
(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, valuation gains (losses) and fair value calculation methodologies 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, 2017 | Total | Over 1 year | Fair value | |||||||||||||
Listed | ||||||||||||||||
Interest rate futures: | ||||||||||||||||
Sold | ¥ | 39,837,289 | ¥ | 3,213,205 | ¥ | 3,982 | ¥ | 3,982 | ||||||||
Bought | 34,841,230 | 3,262,040 | (1,580) | (1,580) | ||||||||||||
Interest rate options: | ||||||||||||||||
Sold | 718,513 | 204,206 | (240) | (240) | ||||||||||||
Bought | 33,980,612 | 15,937,968 | 6,504 | 6,504 | ||||||||||||
Over-the-counter | ||||||||||||||||
Forward rate agreements: | ||||||||||||||||
Sold | 11,433,074 | 19,570 | (2,018) | (2,018) | ||||||||||||
Bought | 11,301,863 | 5,009 | 1,953 | 1,953 | ||||||||||||
Interest rate swaps: | 394,190,398 | 322,989,184 | 118,372 | 118,372 | ||||||||||||
Receivable fixed rate/payable floating rate | 182,815,914 | 149,614,851 | 3,440,828 | 3,440,828 | ||||||||||||
Receivable floating rate/payable fixed rate | 176,422,223 | 147,558,435 | (3,338,573) | (3,338,573) | ||||||||||||
Receivable floating rate/payable floating rate | 34,784,385 | 25,704,222 | 9,465 | 9,465 | ||||||||||||
Interest rate swaptions: | ||||||||||||||||
Sold | 5,239,445 | 3,217,041 | (4,722) | (4,722) | ||||||||||||
Bought | 4,247,277 | 2,688,847 | (733) | (733) | ||||||||||||
Caps: | ||||||||||||||||
Sold | 34,315,074 | 21,689,220 | (30,630) | (30,630) | ||||||||||||
Bought | 9,224,573 | 6,854,953 | 5,479 | 5,479 | ||||||||||||
Floors: | ||||||||||||||||
Sold | 623,227 | 323,811 | (705) | (705) | ||||||||||||
Bought | 967,498 | 943,700 | 1,685 | 1,685 | ||||||||||||
Other: | ||||||||||||||||
Sold | 1,173,711 | 759,423 | 2,081 | 2,081 | ||||||||||||
Bought | 7,182,812 | 5,947,819 | 13,001 | 13,001 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 112,429 | ¥ | 112,429 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on an exchange is calculated using the closing price on the Tokyo Financial Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value and option pricing models. |
54
Table of Contents
Millions of yen | ||||||||||||||||
Contract amount | Valuation gains (losses) | |||||||||||||||
March 31, 2018 | Total | Over 1 year | Fair value | |||||||||||||
Listed | ||||||||||||||||
Interest rate futures: | ||||||||||||||||
Sold | ¥ | 37,301,443 | ¥ | 6,925,140 | ¥ | 16,067 | ¥ | 16,067 | ||||||||
Bought | 37,215,533 | 6,842,217 | (14,654) | (14,654) | ||||||||||||
Interest rate options: | ||||||||||||||||
Sold | 1,391,595 | 45,200 | (300) | (300) | ||||||||||||
Bought | 65,110,433 | 29,958,221 | 4,520 | 4,520 | ||||||||||||
Over-the-counter | ||||||||||||||||
Forward rate agreements: | ||||||||||||||||
Sold | 12,680,558 | 521,495 | (4,656) | (4,656) | ||||||||||||
Bought | 12,344,032 | 435,954 | 4,594 | 4,594 | ||||||||||||
Interest rate swaps: | 429,909,020 | 341,129,716 | 93,567 | 93,567 | ||||||||||||
Receivable fixed rate/payable floating rate | 196,148,823 | 156,251,285 | 1,762,226 | 1,762,226 | ||||||||||||
Receivable floating rate/payable fixed rate | 193,099,356 | 154,329,705 | (1,689,126) | (1,689,126) | ||||||||||||
Receivable floating rate/payable floating rate | 40,571,800 | 30,474,185 | 9,649 | 9,649 | ||||||||||||
Interest rate swaptions: | ||||||||||||||||
Sold | 5,790,268 | 3,542,146 | (7,850) | (7,850) | ||||||||||||
Bought | 4,911,806 | 3,086,445 | 8,068 | 8,068 | ||||||||||||
Caps: | ||||||||||||||||
Sold | 39,511,432 | 25,413,931 | (27,760) | (27,760) | ||||||||||||
Bought | 8,998,567 | 7,222,545 | 1,176 | 1,176 | ||||||||||||
Floors: | ||||||||||||||||
Sold | 666,212 | 608,582 | (728) | (728) | ||||||||||||
Bought | 1,123,673 | 957,378 | 895 | 895 | ||||||||||||
Other: | ||||||||||||||||
Sold | 1,449,762 | 701,009 | (2,589) | (2,589) | ||||||||||||
Bought | 15,456,836 | 13,055,363 | 15,918 | 15,918 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 86,268 | ¥ | 86,268 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on an exchange is calculated using the closing price on the Tokyo Financial Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value and option pricing models. |
55
Table of Contents
(2) | Currency derivatives |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2017 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Currency futures: | ||||||||||||||||
Sold | ¥ | 1,559 | ¥ | — | ¥ | (18) | ¥ | (18) | ||||||||
Bought | 701 | — | 0 | 0 | ||||||||||||
Over-the-counter | ||||||||||||||||
Currency swaps | 36,267,949 | 27,100,479 | 246,213 | 32,616 | ||||||||||||
Currency swaptions: | ||||||||||||||||
Sold | 669,791 | 636,245 | (3,328) | (3,328) | ||||||||||||
Bought | 793,518 | 751,472 | 3,594 | 3,594 | ||||||||||||
Forward foreign exchange | 74,917,450 | 7,537,097 | (77,907) | (77,907) | ||||||||||||
Currency options: | ||||||||||||||||
Sold | 2,478,270 | 1,404,036 | (87,132) | (86,625) | ||||||||||||
Bought | 2,289,036 | 1,280,452 | 79,065 | 78,559 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 160,485 | ¥ | (53,110) | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the Tokyo Financial Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value, option pricing models and other methodologies. |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2018 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Currency futures: | ||||||||||||||||
Sold | ¥ | 513 | ¥ | — | ¥ | (18) | ¥ | (18) | ||||||||
Bought | 175 | — | 0 | 0 | ||||||||||||
Over-the-counter | ||||||||||||||||
Currency swaps | 39,984,899 | 27,675,508 | 90,337 | 113,215 | ||||||||||||
Currency swaptions: | ||||||||||||||||
Sold | 431,065 | 375,092 | (3,156) | (3,156) | ||||||||||||
Bought | 874,253 | 772,102 | 5,364 | 5,364 | ||||||||||||
Forward foreign exchange | 76,246,360 | 8,727,532 | 21,951 | 21,951 | ||||||||||||
Currency options: | ||||||||||||||||
Sold | 2,606,941 | 1,357,801 | (75,760) | (75,760) | ||||||||||||
Bought | 2,424,055 | 1,177,161 | 79,404 | 79,404 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 118,123 | ¥ | 141,000 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the Tokyo Financial Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value, option pricing models and other methodologies. |
56
Table of Contents
(3) | Equity derivatives |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2017 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Equity price index futures: | ||||||||||||||||
Sold | ¥ | 738,963 | ¥ | — | ¥ | 10,580 | ¥ | 10,580 | ||||||||
Bought | 333,271 | 17,149 | (39) | (39) | ||||||||||||
Equity price index options: | ||||||||||||||||
Sold | 516,415 | 271,916 | (41,434) | (41,434) | ||||||||||||
Bought | 495,812 | 211,696 | 21,651 | 21,651 | ||||||||||||
Over-the-counter | ||||||||||||||||
Equity options: | ||||||||||||||||
Sold | 264,806 | 215,549 | (23,648) | (23,648) | ||||||||||||
Bought | 265,834 | 215,026 | 24,398 | 24,398 | ||||||||||||
Equity index forward contracts: | ||||||||||||||||
Sold | — | — | — | — | ||||||||||||
Bought | 15,677 | 303 | 156 | 156 | ||||||||||||
Equity price index swaps: | ||||||||||||||||
Receivable equity index/payable short-term floating rate | 101,785 | 91,030 | (8,670) | (8,670) | ||||||||||||
Receivable short-term floating rate/payable equity index | 204,793 | 183,842 | 15,460 | 15,460 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | (1,544) | ¥ | (1,544) | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the Osaka Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value and option pricing models. |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2018 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Equity price index futures: | ||||||||||||||||
Sold | ¥ | 481,952 | ¥ | 9,744 | ¥ | (5,450) | ¥ | (5,450) | ||||||||
Bought | 345,111 | 3,140 | 1,693 | 1,693 | ||||||||||||
Equity price index options: | ||||||||||||||||
Sold | 842,858 | 374,414 | (68,340) | (68,340) | ||||||||||||
Bought | 936,687 | 327,012 | 42,208 | 42,208 | ||||||||||||
Over-the-counter | ||||||||||||||||
Equity options: | ||||||||||||||||
Sold | 322,508 | 252,083 | (18,727) | (18,727) | ||||||||||||
Bought | 334,710 | 237,738 | 22,178 | 22,178 | ||||||||||||
Equity index forward contracts: | ||||||||||||||||
Sold | — | — | — | — | ||||||||||||
Bought | 7,564 | 207 | 537 | 537 | ||||||||||||
Equity price index swaps: | ||||||||||||||||
Receivable equity index/payable short-term floating rate | 73,385 | 58,755 | (8,013) | (8,013) | ||||||||||||
Receivable short-term floating rate/payable equity index | 167,867 | 140,115 | 14,971 | 14,971 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | (18,943) | ¥ | (18,943) | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the Osaka Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value and option pricing models. |
57
Table of Contents
(4) | Bond derivatives |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2017 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Bond futures: | ||||||||||||||||
Sold | ¥ | 2,201,646 | ¥ | — | ¥ | (5,334) | ¥ | (5,334) | ||||||||
Bought | 1,665,948 | — | 6,633 | 6,633 | ||||||||||||
Bond futures options: | ||||||||||||||||
Sold | 283,595 | — | (124) | (124) | ||||||||||||
Bought | 29,100 | — | 24 | 24 | ||||||||||||
Over-the-counter | ||||||||||||||||
Bond forward contract: | ||||||||||||||||
Sold | 2,051 | — | 25 | 25 | ||||||||||||
Bought | — | — | — | — | ||||||||||||
Bond options: | ||||||||||||||||
Sold | 212,475 | — | (341) | (341) | ||||||||||||
Bought | 320,867 | 104,888 | 774 | 774 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 1,657 | ¥ | 1,657 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the Osaka Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using option pricing models. |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2018 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Bond futures: | ||||||||||||||||
Sold | ¥ | 2,098,517 | ¥ | — | ¥ | (11,317) | ¥ | (11,317) | ||||||||
Bought | 1,677,824 | — | 9,729 | 9,729 | ||||||||||||
Bond futures options: | ||||||||||||||||
Sold | 427,121 | — | (421) | (421) | ||||||||||||
Bought | 60,157 | — | 17 | 17 | ||||||||||||
Over-the-counter | ||||||||||||||||
Bond forward contract: | ||||||||||||||||
Sold | 900 | — | 2 | 2 | ||||||||||||
Bought | 5,359 | — | 40 | 40 | ||||||||||||
Bond options: | ||||||||||||||||
Sold | 93,576 | — | (223) | (223) | ||||||||||||
Bought | 193,642 | 100,066 | 644 | 644 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | (1,529) | ¥ | (1,529) | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the Osaka Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using option pricing models. |
58
Table of Contents
(5) | Commodity derivatives |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2017 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Commodity futures: | ||||||||||||||||
Sold | ¥ | 13,929 | ¥ | — | ¥ | 75 | ¥ | 75 | ||||||||
Bought | 14,638 | — | (100) | (100) | ||||||||||||
Over-the-counter | ||||||||||||||||
Commodity swaps: | ||||||||||||||||
Receivable fixed price/payable floating price | 57,683 | 27,606 | 8,191 | 8,191 | ||||||||||||
Receivable floating price/payable fixed price | 56,396 | 25,795 | (6,551) | (6,551) | ||||||||||||
Receivable floating price/payable floating price | 2,444 | 2,116 | (40) | (40) | ||||||||||||
Commodity options: | ||||||||||||||||
Sold | 15,401 | 14,168 | (726) | (726) | ||||||||||||
Bought | 12,477 | 12,039 | 70 | 70 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 920 | ¥ | 920 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the New York Mercantile Exchange or other relevant exchanges. Fair value of OTC transactions is calculated based on factors such as price of the relevant commodity and contract term. | |||
3. | Underlying assets of commodity derivatives are fuels and metals. |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2018 | Total | Over 1 year | ||||||||||||||
Listed | ||||||||||||||||
Commodity futures: | ||||||||||||||||
Sold | ¥ | 10,401 | ¥ | — | ¥ | (191) | ¥ | (191) | ||||||||
Bought | 10,500 | — | 129 | 129 | ||||||||||||
Over-the-counter | ||||||||||||||||
Commodity swaps: | ||||||||||||||||
Receivable fixed price/payable floating price | 63,231 | 51,460 | 2,549 | 2,549 | ||||||||||||
Receivable floating price/payable fixed price | 62,061 | 50,443 | (503) | (503) | ||||||||||||
Receivable floating price/payable floating price | 3,173 | 1,922 | 164 | 164 | ||||||||||||
Commodity options: | ||||||||||||||||
Sold | 7,190 | 6,384 | (533) | (533) | ||||||||||||
Bought | 4,978 | 4,189 | (8) | (8) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 1,606 | ¥ | 1,606 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value of transactions listed on exchange is calculated using the closing price on the New York Mercantile Exchange or other relevant exchanges. Fair value of OTC transactions is calculated based on factors such as price of the relevant commodity and contract term. | |||
3. | Underlying assets of commodity derivatives are fuels and metals. |
59
Table of Contents
(6) | Credit derivative transactions |
Millions of yen | ||||||||||||||||
Contract amount | Fair value | Valuation gains (losses) | ||||||||||||||
March 31, 2017 | Total | Over 1 year | ||||||||||||||
Over-the-counter | ||||||||||||||||
Credit default options: | ||||||||||||||||
Sold | ¥ | 555,356 | ¥ | 412,834 | ¥ | 7,277 | ¥ | 7,277 | ||||||||
Bought | 732,991 | 522,137 | (8,786) | (8,786) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | (1,509) | ¥ | (1,509) | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value is calculated using discounted present value and option pricing models. | |||
3. | “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, 2018 | Total | Over 1 year | ||||||||||||||
Over-the-counter | ||||||||||||||||
Credit default options: | ||||||||||||||||
Sold | ¥ | 549,981 | ¥ | 465,481 | ¥ | 7,755 | ¥ | 7,755 | ||||||||
Bought | 691,315 | 567,065 | (7,719) | (7,719) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 36 | ¥ | 36 | ||||||||||
|
|
|
|
|
|
|
|
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. | Fair value is calculated using discounted present value and option pricing models. | |||
3. | “Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred. |
60
Table of Contents
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, fair value and fair value calculation methodologies 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, 2017 | Millions of yen | |||||||||||||||
Hedge accounting | Type of derivative | Principal items hedged | Contract amount | |||||||||||||
Total | Over 1 year | Fair value | ||||||||||||||
Deferral hedge | Interest futures: | Interest-earning/bearing financial assets/liabilities such as loans and bills discounted, other securities, deposits and negotiable certificates of deposit | ||||||||||||||
Sold | ¥ | 5,853,880 | ¥ | 4,263,220 | ¥ | (643) | ||||||||||
Bought | — | — | — | |||||||||||||
Interest rate swaps: | ||||||||||||||||
Receivable fixed rate/payable floating rate | 34,269,289 | 30,639,419 | 119,862 | |||||||||||||
Receivable floating rate/payable fixed rate | 19,875,014 | 17,418,379 | (97,711) | |||||||||||||
Interest rate swaptions: | ||||||||||||||||
Sold | 129,018 | 129,018 | (1,623) | |||||||||||||
Bought | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Recognition of gain or loss on the hedged items | Interest rate swaps: | Loans and bills discounted, corporate bonds | ||||||||||||||
Receivable fixed rate/payable floating rate | 56,095 | 56,095 | (2,046) | |||||||||||||
Receivable floating rate/payable fixed rate | 135,303 | 125,572 | (2,743) | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Special treatment for interest rate swaps | Interest rate swaps: | Loans and bills discounted, borrowed money, corporate bonds | ||||||||||||||
Receivable floating rate/payable fixed rate | 38,192 | 34,442 | (Note 3) | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 15,094 | ||||||||||||
|
|
|
|
|
|
Notes: | 1. | The Company applies deferred hedge accounting stipulated in “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24, February 13, 2002). | ||
2. | Fair value of transactions listed on exchange is calculated using the closing price on the Tokyo Financial Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value and option pricing models. | |||
3. | Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money or other transactions that are 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. Fair value of financial instruments.” |
March 31, 2018 | Millions of yen | |||||||||||||||
Hedge accounting | Type of derivative | Principal items hedged | Contract amount | Fair value | ||||||||||||
Total | Over 1 year | |||||||||||||||
Deferral hedge method | Interest futures: | Interest-earning/bearing financial assets/liabilities such as loans and bills discounted, other securities, deposits and negotiable certificates of deposit | ||||||||||||||
Sold | ¥ | 16,675,512 | ¥ | 11,044,262 | ¥ | 4,287 | ||||||||||
Bought | 1,593,750 | — | 79 | |||||||||||||
Interest rate swaps: | ||||||||||||||||
Receivable fixed rate/payable floating rate | 35,415,915 | 27,945,628 | (59,991) | |||||||||||||
Receivable floating rate/payable fixed rate | 16,132,939 | 14,569,986 | 39,356 | |||||||||||||
Interest rate swaptions: | ||||||||||||||||
Sold | 150,343 | 150,343 | (2,569) | |||||||||||||
Bought | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Recognition of gain or loss on the hedged items | Interest rate swaps: | Loans and bills discounted, corporate bonds |
| 62,830 |
|
| 53,125 |
|
| (2,536) |
| |||||
Receivable fixed rate/payable floating rate | ||||||||||||||||
Receivable floating rate/payable fixed rate | 201,714 | 187,519 | (1,245) | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Special treatment for interest rate swaps | Interest rate swaps: | Borrowed money, corporate bonds | ||||||||||||||
Receivable floating rate/payable fixed rate | 12,840 | 4,921 | (Note 3) | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | (22,620) | ||||||||||||
|
|
|
|
|
|
Notes: | 1. | The Company applies deferred hedge accounting stipulated in “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24, February 13, 2002). | ||
2. | Fair value of transactions listed on exchange is calculated using the closing price on the Tokyo Financial Exchange or other relevant exchanges. Fair value of OTC transactions is calculated using discounted present value and option pricing models. | |||
3. | Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money or other transactions that are 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. Fair value of financial instruments”. |
61
Table of Contents
(2) | Currency derivatives |
March 31, 2017 | Type of derivative | Principal items hedged | Millions of yen | |||||||||||||
Hedge accounting | Contract amount | |||||||||||||||
Total | Over 1 year | Fair value | ||||||||||||||
Deferral hedge method | Currency swaps | Foreign currency denominated loans and bills discounted, other securities, deposits, foreign exchange, etc. | ¥ | 6,226,217 | ¥ | 3,431,683 | ¥ | (181,138) | ||||||||
Forward foreign exchange | 5,363 | — | 106 | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Recognition of gain or loss on the hedged items | Currency swaps | Loans and bills discounted, foreign exchange | 117,797 | 80,427 | 3,439 | |||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Allocation method | Currency swaps | Borrowed money | 47,081 | 42,493 | (Note 3) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | (177,593) | ||||||||||||
|
|
|
|
|
|
Notes: | 1. The Company applies deferred hedge accounting stipulated in “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry” (JICPA Industry Audit Committee Report No. 25, July 29, 2002). | |||
2. Fair value is calculated using discounted present value. | ||||
3. Forward foreign exchange amounts treated by the allocation method are treated with the borrowed money that are subject to the hedge. Therefore, such fair value is included in the fair value of the relevant hedged items such as borrowed money disclosed in “(Notes to financial instruments) 2. Fair value of financial instruments”. |
March 31, 2018 | 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 exchange, etc. | ¥ | 5,995,052 | ¥ | 3,158,350 | ¥ | 165,826 | ||||||||
Forward foreign exchange | 51,850 | — | 379 | |||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Recognition of gain or loss on the hedged items | Currency swaps | Loans and bills discounted, foreign exchange | 146,889 | 127,037 | (17,089) | |||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Allocation method | Currency swaps | Borrowed money | 53,215 | 37,921 | (Note 3) | |||||||||||
Forward foreign exchange | 1,381 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | / | / | ¥ | 149,116 | ||||||||||||
|
|
|
|
|
|
Notes: | 1. The Company applies deferred hedge accounting stipulated in “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry” (JICPA Industry Audit Committee Report No. 25, July 29, 2002). | |||
2. Fair value is calculated using discounted present value. | ||||
3. Forward foreign exchange amounts treated by the allocation method are treated with the borrowed money that are subject to the hedge. Therefore, such fair value is included in the fair value of the relevant hedged items such as borrowed money disclosed in “(Notes to financial instruments) 2. Fair value of financial instruments”. |
(3) | Equity derivatives |
Fiscal year ended March 31, 2017
There are no corresponding transactions.
March 31, 2018 | Millions of yen | |||||||||||||||
Hedge accounting method | Type of derivative | Principal items hedged | Contract 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 | ¥ | 2,218 | 2,218 | (155) | ||||||||||||
|
|
|
|
|
|
| ||||||||||
Total | / | / | ¥ | (155) | ||||||||||||
|
|
|
|
|
|
Note: | Fair value is calculated using discounted present value. |
62
Table of Contents
(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 andlump-sum severance indemnity plans which set up employee retirement benefit trusts.
Unfunded contributory defined benefit pension plans arelump-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 | 2017 | 2018 | ||||||
Beginning balance of projected benefit obligation | ¥ | 1,202,471 | ¥ | 1,179,737 | ||||
Service cost | 41,098 | 39,579 | ||||||
Interest cost on projected benefit obligation | 4,984 | 6,905 | ||||||
Unrecognized net actuarial gain or loss incurred | (21,509) | 15,451 | ||||||
Payments of retirement benefits | (52,901) | (67,287) | ||||||
Unrecognized prior service cost | (3) | (43) | ||||||
Net change as a result of business combinations | 7,125 | (49,333) | ||||||
Other | (1,528) | 738 | ||||||
|
|
|
| |||||
Ending balance of projected benefit obligation | ¥ | 1,179,737 | ¥ | 1,125,746 | ||||
|
|
|
|
(2) | Reconciliation of beginning and ending balances of plan assets |
Millions of yen | ||||||||
Year ended March 31 | 2017 | 2018 | ||||||
Beginning balance of plan assets | ¥ | 1,357,175 | ¥ | 1,435,548 | ||||
Expected return on plan assets | 39,975 | 41,635 | ||||||
Unrecognized net actuarial gain or loss incurred | 40,016 | 65,860 | ||||||
Contributions by the employer | 44,574 | 18,130 | ||||||
Payments of retirement benefits | (42,387) | (44,429) | ||||||
Net change as a result of business combinations | — | (49,287) | ||||||
Other | (3,805) | 1,724 | ||||||
|
|
|
| |||||
Ending balance of plan assets | ¥ | 1,435,548 | ¥ | 1,469,182 | ||||
|
|
|
|
63
Table of Contents
(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 | 2017 | 2018 | ||||||
Funded projected benefit obligation | ¥ | (1,134,322) | ¥ | (1,096,677) | ||||
Plan assets | 1,435,548 | 1,469,182 | ||||||
|
|
|
| |||||
301,226 | 372,505 | |||||||
Unfunded projected benefit obligation | (45,414) | (29,069) | ||||||
|
|
|
| |||||
Net amount of asset and liability reported on the consolidated balance sheet | ¥ | 255,811 | ¥ | 343,435 | ||||
|
|
|
| |||||
Millions of yen | ||||||||
March 31 | 2017 | 2018 | ||||||
Net defined benefit asset | ¥ | 314,922 | ¥ | 383,418 | ||||
Net defined benefit liability | (59,110) | (39,982) | ||||||
|
|
|
| |||||
Net amount of asset and liability reported on the consolidated balance sheet | ¥ | 255,811 | ¥ | 343,435 | ||||
|
|
|
|
(4) | Pension expenses |
Millions of yen | ||||||||
Year ended March 31 | 2017 | 2018 | ||||||
Service cost | ¥ | 41,098 | ¥ | 39,579 | ||||
Interest cost on projected benefit obligation | 4,984 | 6,905 | ||||||
Expected return on plan assets | (39,975) | (41,635) | ||||||
Amortization of unrecognized net actuarial gain or loss | 55,123 | 20,870 | ||||||
Amortization of unrecognized prior service cost | (162) | (126) | ||||||
Other (nonrecurring additional retirement allowance paid and other) | 6,536 | 6,730 | ||||||
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Pension expenses | ¥ | 67,605 | ¥ | 32,323 | ||||
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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 | 2017 | 2018 | ||||||
Prior service cost | ¥ | 159 | ¥ | 120 | ||||
Net actuarial gain or loss | (116,685) | (74,335) | ||||||
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| |||||
Total | ¥ | (116,525) | ¥ | (74,215) | ||||
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(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 | 2017 | 2018 | ||||||
Unrecognized prior service cost | ¥ | (648) | ¥ | (528) | ||||
Unrecognized net actuarial gain or loss | (12,052) | (86,388) | ||||||
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| |||||
Total | ¥ | (12,700) | ¥ | (86,916) | ||||
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(7) | Plan assets |
1) | Major asset classes of plan assets |
The proportion of major asset classes to the total plan assets is as follows:
March 31 | 2017 | 2018 | ||
Stocks | 60.4% | 62.7% | ||
Bonds | 23.2% | 16.4% | ||
General account of life insurance | 4.4% | 3.0% | ||
Other | 12.0% | 17.9% | ||
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| |||
Total | 100.0% | 100.0% | ||
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Note: | The retirement benefit trusts set up for employee pension plans andlump-sum severance indemnity plans account for 34.8% and 35.2% of the total plan assets at March 31, 2017 and 2018, respectively. |
2) | 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:
1) | Discount rate |
Year ended March 31, 2017 | Percentages | Year ended March 31, 2018 | Percentages | |||||
Domestic consolidated subsidiaries | (0.1)% to 0.8% | Domestic consolidated subsidiaries | (0.1)% to 0.8% | |||||
Overseas consolidated subsidiaries | 2.5% to 11.3% | Overseas consolidated subsidiaries | 2.4% to 10.3% |
2) | Long-term expected rate of return on plan assets |
Year ended March 31, 2017 | Percentages | Year ended March 31, 2018 | Percentages | |||||
Domestic consolidated subsidiaries | 0% to 4.0% | Domestic consolidated subsidiaries | 0% to 4.0% | |||||
Overseas consolidated subsidiaries | 2.5% to 11.3% | Overseas consolidated subsidiaries | 2.6% to 10.3% |
3. Defined contribution plan
Fiscal year ended March 31, 2017
The amount required to be contributed by the consolidated subsidiaries is ¥9,787 million.
Fiscal year ended March 31, 2018
The amount required to be contributed by the consolidated subsidiaries is ¥10,702 million.
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Table of Contents
(Notes to stock options)
1. Amount of stock options expenses
Stock options expenses which were accounted for as general and administrative expenses for the fiscal years ended March 31, 2017 and 2018 are as follows:
Millions of yen | ||||||||
Year ended March 31 | 2017 | 2018 | ||||||
General and administrative expenses | ¥ | 638 | ¥ | 195 |
2. Amount of profit bynon-exercise of stock acquisition rights
Profit bynon-exercise of stock acquisition rights which were accounted for as other income for the fiscal years ended March 31, 2017 and 2018 are as follows:
Millions of yen | ||||||||
Year ended March 31 | 2017 | 2018 | ||||||
Other income | ¥ | 19 | ¥ | 29 |
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Table of Contents
3. 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 | ||||
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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 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 has been converted and stated as number of shares. |
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(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 | 26,800 | 90,100 | 131,500 | 86,700 | 99,200 | 122,600 | 201,200 | |||||||||||||||||||||
Granted | — | — | — | — | — | — | — | |||||||||||||||||||||
Forfeited | — | — | — | — | — | — | 2,300 | |||||||||||||||||||||
Vested | 18,400 | 31,700 | 51,100 | 29,800 | 34,900 | 19,900 | 30,100 | |||||||||||||||||||||
Outstanding | 8,400 | 58,400 | 80,400 | 56,900 | 64,300 | 102,700 | 168,800 | |||||||||||||||||||||
After vested | ||||||||||||||||||||||||||||
Previous fiscal year-end | 60,100 | 167,800 | 136,600 | 27,700 | 21,100 | 8,600 | — | |||||||||||||||||||||
Vested | 18,400 | 31,700 | 51,100 | 29,800 | 34,900 | 19,900 | 30,100 | |||||||||||||||||||||
Exercised | 14,300 | 31,000 | 36,000 | 25,200 | 26,100 | 17,200 | 24,900 | |||||||||||||||||||||
Forfeited | — | — | — | — | — | — | — | |||||||||||||||||||||
Exercisable | 64,200 | 168,500 | 151,700 | 32,300 | 29,900 | 11,300 | 5,200 | |||||||||||||||||||||
* 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 | 4,236 | 4,172 | 4,186 | 4,238 | 4,406 | 4,233 | 4,271 | |||||||||||||||||||||
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.
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(Notes to deferred tax assets and liabilities)
1. Significant components of deferred tax assets and liabilities
March 31, 2017 | Millions of yen | March 31, 2018 | Millions of yen | |||||||
Deferred tax assets: | Deferred tax assets: | |||||||||
Net operating loss carryforwards | ¥ | 450,959 | Net operating loss carryforwards | ¥ | 372,250 | |||||
Reserve for possible loan losses andwrite-off of loans | 249,877 | Reserve for possible loan losses andwrite-off of loans | 212,541 | |||||||
Write-off of securities | 59,304 | Write-off of securities | 46,007 | |||||||
Reserve for losses on interest repayment | 48,170 | Reserve for losses on interest repayment | 44,328 | |||||||
Net defined benefit liability | 39,755 | Net defined benefit liability | 32,615 | |||||||
Other | 208,634 | Other | 243,455 | |||||||
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Subtotal | 1,056,702 | Subtotal | 951,199 | |||||||
Valuation allowance | (493,247) | Valuation allowance | (454,329) | |||||||
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Total deferred tax assets | 563,454 | Total deferred tax assets | 496,870 | |||||||
Deferred tax liabilities: | Deferred tax liabilities: | |||||||||
Net unrealized gains on other securities | (586,254) | Net unrealized gains on other securities | (658,469) | |||||||
Gains on securities contributed to employee retirement benefits trust | (33,130) | Gains on securities contributed to employee retirement benefits trust | (31,890) | |||||||
Accumulated remeasurements of defined benefit plans | (8,531) | Accumulated remeasurements of defined benefit plans | (29,330) | |||||||
Other | (208,444) | Other | (204,804) | |||||||
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| |||||||
Total deferred tax liabilities | (836,361) | Total deferred tax liabilities | (924,494) | |||||||
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| |||||||
Net deferred tax assets (liabilities) | ¥ | (272,906) | Net deferred tax assets (liabilities) | ¥ | (427,624) |
2. Significant components of difference between the statutory tax rate used by the Company and the effective income tax rate
March 31, 2017 | Percentages | March 31, 2018 | Percentages | |||||||
Statutory tax rate | ¥ | 30.86% | Statutory tax rate | ¥ | 30.86% | |||||
Valuation allowance | (12.80) | Valuation allowance | (2.51) | |||||||
Difference between the Company and overseas consolidated subsidiaries | (2.29) | Difference between the Company and overseas consolidated subsidiaries | (1.89) | |||||||
Difference of gains on step acquisition | (0.92) | Foreign tax | (1.27) | |||||||
Dividends exempted for income tax purposes | (0.87) | Equity in gains of affiliates | (1.09) | |||||||
Impairment losses of goodwill | 1.35 | Dividends exempted for income tax purposes | (0.85) | |||||||
Foreign tax | 1.15 | Amortization of goodwill | 0.70 | |||||||
Other | 0.98 | Other | 0.45 | |||||||
Effective income tax rate | 17.46% | Effective income tax rate | 24.40% |
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(Notes to asset retirement obligations)
Fiscal year ended March 31, 2017
There is no significant information to be disclosed.
Fiscal year ended March 31, 2018
There is no significant information to be disclosed.
(Notes to real estate for rent)
Fiscal year ended March 31, 2017
There is no significant information to be disclosed.
Fiscal year ended March 31, 2018
There is no significant information to be disclosed.
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(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 Group introduced group-wide business units from April 1, 2017 which determine strategies for each customer segment across the Group companies, to further enhance the capability to meet the customers’ diversified needs. Therefore, the reportable segment was changed from “Commercial banking,” “Leasing,” “Securities,” “Consumer Finance” and “Other business” to “Wholesale Business Unit,” “Retail Business Unit,” “International Business Unit,” “Global Markets Business Unit” and “Head office account” from fiscal 2017.
The businesses operated by each business unit are as follows:
Wholesale Business Unit:
| Business to deal with domestic medium-to-large-sized enterprise | |
Retail Business Unit:
| Business to deal with domestic individual and small-to-medium-sized enterprise | |
International Business Unit:
| Business to deal with international (including Japanese) corporate customers | |
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 “(Notes to 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.
Information on profit and loss amount by reportable segment is provided based on changes above for the fiscal year ended March 31, 2017.
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, 2017 | Wholesale Business Unit | Retail Business Unit | International Business Unit | Global Markets Business Unit | Head office account and others | Total | ||||||||||||||||||
Consolidated gross profit | ¥ | 776,358 | ¥ | 1,313,920 | ¥ | 566,109 | ¥ | 346,779 | ¥ | (82,424) | ¥ | 2,920,742 | ||||||||||||
Expenses | (344,840) | (1,041,120) | (241,153) | (50,153) | (135,167) | (1,812,433) | ||||||||||||||||||
Others | 45,689 | 12,080 | 38,447 | 8,129 | (79,792) | 24,552 | ||||||||||||||||||
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Consolidated net business profit | ¥ | 477,207 | ¥ | 284,880 | ¥ | 363,403 | ¥ | 304,754 | ¥ | (297,384) | ¥ | 1,132,860 | ||||||||||||
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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, 2018 | Wholesale Business Unit | Retail Business Unit | International Business Unit | Global Markets Business Unit | Head office account and others | Total | ||||||||||||||||||
Consolidated gross profit | ¥ | 772,949 | ¥ | 1,311,727 | ¥ | 631,950 | ¥ | 356,150 | ¥ | (91,725) | ¥ | 2,981,050 | ||||||||||||
Expenses | (347,864) | (1,027,674) | (280,658) | (53,936) | (106,065) | (1,816,197) | ||||||||||||||||||
Others | 53,576 | 15,516 | 46,933 | 17,575 | (94,607) | 38,992 | ||||||||||||||||||
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Consolidated net business profit | ¥ | 478,661 | ¥ | 299,569 | ¥ | 398,225 | ¥ | 319,789 | ¥ | (292,398) | ¥ | 1,203,845 | ||||||||||||
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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. |
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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, 2017 | Millions of yen | |||
Consolidated net business profit | ¥ | 1,132,860 | ||
Other ordinary income (excluding equity in gains of affiliates) | 176,704 | |||
Other ordinary expenses | (303,710) | |||
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Ordinary profit on consolidated statements of income | ¥ | 1,005,855 | ||
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Note: | Figures shown in the parenthesis represent the loss. |
Year ended March 31, 2018 | Millions of yen | |||
Consolidated net business profit | ¥ | 1,203,845 | ||
Other ordinary income (excluding equity in gains of affiliates) | 201,759 | |||
Other ordinary expenses | (241,491) | |||
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Ordinary profit on consolidated statements of income | ¥ | 1,164,113 | ||
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Note: | Figures shown in the parenthesis represent the loss. |
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[Related information]
Fiscal year ended March 31, 2017
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 | ||||
¥ 3,747,786 | ¥ 493,079 | ¥ 461,876 | ¥ 430,502 | ¥ 5,133,245 |
Notes: | 1. | Consolidated ordinary income is presented as a counterpart of sales of companies in other industries. | ||
2. | Ordinary income from transactions of the Company and its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated subsidiaries is classified as “Japan.” Ordinary income from transactions of overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries is classified as “The Americas,” “Europe and Middle East” and “Asia and Oceania,” based on their locations and in consideration of their geographic proximity and other factors. | |||
3. | The Americas includes the United States, Brazil, Canada and others; Europe and Middle East includes the United Kingdom, Germany, France and others; Asia and Oceania includes China, Singapore, Australia and others except Japan. |
(2) | Tangible fixed assets |
Millions of yen | ||||||||
Japan | The Americas | Europe and Middle East | Asia and Oceania | Total | ||||
¥ 1,621,388 | ¥ 245,816 | ¥ 1,223,456 | ¥ 10,981 | ¥ 3,101,642 |
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.
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Table of Contents
Fiscal year ended March 31, 2018
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 | ||||
¥ 4,168,743 | ¥ 553,871 | ¥ 564,813 | ¥ 476,744 | ¥ 5,764,172 |
Notes: | 1. | Consolidated ordinary income is presented as a counterpart of sales of companies in other industries. | ||
2. | Ordinary income from transactions of the Company and its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated subsidiaries is classified as “Japan.” Ordinary income from transactions of overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries is classified as “The Americas,” “Europe and Middle East” and “Asia and Oceania,” based on their locations and in consideration of their geographic proximity and other factors. | |||
3. | The Americas includes the United States, Brazil, Canada and others; Europe and Middle East includes the United Kingdom, Germany, France and others; Asia and Oceania includes China, Singapore, Australia and others except Japan. |
(2) | Tangible fixed assets |
Millions of yen | ||||||||
Japan | The Americas | Europe and Middle East | Asia and Oceania | Total | ||||
¥ 1,645,637 | ¥ 626,147 | ¥ 1,192,015 | ¥ 11,330 | ¥ 3,475,131 |
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, 2017 is ¥49,460 million.
Impairment loss for the fiscal year ended March 31, 2018 is ¥49,900 million.
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Table of Contents
[Information on amortization of goodwill and unamortized balance by reportable segment]
Millions of yen | ||||||||||||||||||||||||
Year ended March 31, 2017 | Wholesale Business Unit | Retail Business Unit | International Business Unit | Global Markets Business Unit | Head office account and others | Total | ||||||||||||||||||
Amortization of goodwill | ¥ | 681 | ¥ | 4,019 | ¥ | 1,063 | ¥ | — | ¥ | 23,507 | ¥ | 29,272 | ||||||||||||
Unamortized balance | 12,950 | 58,140 | 5,495 | — | 241,991 | 318,578 | ||||||||||||||||||
Millions of yen | ||||||||||||||||||||||||
Year ended March 31, 2018 | Wholesale Business Unit | Retail Business Unit | International Business Unit | Global Markets Business Unit | Head office account and others | Total | ||||||||||||||||||
Amortization of goodwill | ¥ | 681 | ¥ | 4,019 | ¥ | 1,006 | ¥ | — | ¥ | 19,517 | ¥ | 25,225 | ||||||||||||
Unamortized balance | 7,416 | 54,120 | 4,197 | — | 206,469 | 272,203 |
[Information on gains on negative goodwill by reportable segment]
Fiscal year ended March 31, 2017
There are no corresponding transactions.
Fiscal year ended March 31, 2018
There are no corresponding transactions.
[Information on related parties]
Fiscal year ended March 31, 2017
There is no significant corresponding information to be disclosed.
Fiscal year ended March 31, 2018
There is no significant corresponding information to be disclosed.
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Table of Contents
(Business Combination)
<Partial sale of the shares of subsidiaries>
Partial sale of the shares of THE MINATO BANK, LTD. (“Minato Bank”) and Kansai Urban Banking Corporation (“Kansai Urban”)
SMBC, a consolidated subsidiary of the Company, sold a portion of shares of Minato Bank and Kansai Urban through tender offers subject to the shares of common stocks of each bank by Resona Holdings, Inc. (the “Sale of the Shares”). As a result, the Company’s voting rights were declined to 34.19% in Minato Bank and to 48.12% in Kansai Urban, and accordingly, the Company excluded 15 companies including Minato Bank and its subsidiaries, and 6 companies including Kansai Urban and its subsidiaries from the scope of consolidation and included them in the scope of equity method affiliates.
1. | Objectives of the Sale of the Shares |
The company conducted the Sale of the Shares as a part of the business integration between Minato Bank, Kansai Urban and The Kinki Osaka Bank, Ltd. (“the Business Integration”), to establish a leading regional financial group as well as the largest financial group in the Kansai region, aiming to deepen relationships with customers and local communities fostered for many years, as well as realizing the “New Retail Financial Services Model that is in Step with the Future of the Kansai Region.”
2. | Commencement date of settlement of the tender offers |
February 20, 2018
3. | Outline of the accounting treatment implemented |
The Company applied the accounting treatment stipulated in “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22) and “Practical Guidelines on Accounting Standards for Capital Consolidation Procedures in Preparing Consolidated Financial Statements” (JICPA Accounting Practice Committee Statement No. 7). The profit or loss resulting from the Sale of the Shares is immaterial.
4. | Period of financial results of Minato Bank and Kansai Urban included in the consolidated financial statements of the company |
From April 1, 2017 to March 31, 2018
5. | Outline of the subsidiaries to be excluded from the scope of consolidation (as of March 31, 2018) |
Minato Bank (Consolidated)
Total assets | ¥3,528,896 million | |
Total liabilities | ¥3,384,488 million | |
Ordinary income | ¥61,590 million | |
Ordinary profit | ¥10,317 million |
Kansai Urban (Consolidated)
Total assets | ¥4,709,055 million | |
Total liabilities | ¥4,498,339 million | |
Ordinary income | ¥90,268 million | |
Ordinary profit | ¥17,799 million |
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<Business combination through acquisition>
American Railcar Leasing LLC became a consolidated subsidiary of SMBC Rail Services LLC
On June 1, 2017, SMBC Rail Services LLC (“SMBC Rail”), a consolidated subsidiary of the Company, acquired all shares of American Railcar Leasing LLC (“ARL”) under the contract agreed with an affiliate of Icahn Enterprises L.P. in the United States on December 16, 2016. As a result, ARL and its 19 leasing affiliates became consolidated subsidiaries of the Company.
Seven out of the acquired consolidated subsidiaries were liquidated on the acquisition date. The outline of the business combination through acquisition is as follows.
1. Outline of the business combination
(1) Name of the acquired company and its business
American Railcar Leasing LLC (Railcar leasing business)
(2) Main reasons for the business combination
SMBC Rail acquired all shares of ARL because the U.S. Railcar leasing business is expected to continue to steadily grow and achieve higher profitability along with the U.S. economy, with stable demand for rail freight transportation as a major mode of a domestic logistic infrastructure.
(3) Date of the business combination
June 1, 2017
(4) Legal form of the business combination
Acquisition of stocks
(5) Name of the entity after the business combination
Sumitomo Mitsui Financial Group, Inc.
(6) The ratio of acquired voting rights
100%
(7) Grounds for deciding on the acquirer
SMBC Rail acquired all shares of ARL by cash.
2. Period of the acquired company’s financial result included in the consolidated financial statements of income of the Company
From June 1, 2017 to December 31, 2017
3. Acquisition cost and consideration of the acquired company
Consideration Cash and due from banks | ¥ | 170,506 million | ||||
Acquisition cost | ¥ | 170,506 million |
4. Major acquisition-related costs
Advisory fees, etc., ¥1,264 million
5. Amount of goodwill, reason for recognizing goodwill, amortization method and the period
There is no goodwill and negative goodwill to be recognized.
6. Amounts of assets acquired and liabilities assumed on the date of the business combination
1) Assets
Total assets: | ¥319,975 million ¥304,256 million | |||||||
Tangible fixed assets: |
2) Liabilities
Total liabilities: | ¥149,469 million ¥147,523 million | |||||||
Borrowed money: |
7. Approximate amounts and their calculation method of impact on the consolidated statements of income for the fiscal year
The approximate amounts have not been disclosed since they are immaterial. |
77
Table of Contents
(Per Share Data)
Yen | ||||||||||
As of and year ended March 31 | 2017 | 2018 | ||||||||
Net assets per share | ¥ | 6,901.67 | ¥ | 7,366.21 | ||||||
Earnings per share | 516.00 | 520.67 | ||||||||
Earnings per share (diluted) | 515.58 | 520.27 | ||||||||
| ||||||||||
Notes: 1. | 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 | 2017 | 2018 | ||||||||
Earnings per share: | ||||||||||
Profit attributable to owners of parent | ¥ | 706,519 | ¥ | 734,368 | ||||||
Amount not attributable to common stockholders | — | — | ||||||||
|
|
|
| |||||||
Profit attributable to owners of parent attributable to common stock | ¥ | 706,519 | ¥ | 734,368 | ||||||
|
|
|
| |||||||
Average number of common stock during the fiscal year (in thousand) | 1,369,231 | 1,410,442 | ||||||||
Earnings per share (diluted): | ||||||||||
Adjustment for profit attributable to owners of parent | ¥ | (9) | ¥ | (10) | ||||||
Adjustment of dilutive shares issued by consolidated subsidiaries and equity method affiliates | (9) | (10) | ||||||||
|
|
|
| |||||||
Increase in number of common stock (in thousand) | 1,092 | 1,052 | ||||||||
Stock acquisition rights | 1,092 | 1,052 | ||||||||
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 | 2017 | 2018 | ||||||||
Net assets | ¥ | 11,234,286 | ¥ | 11,612,892 | ||||||
Amounts excluded from Net assets | 1,502,747 | 1,222,427 | ||||||||
Stock acquisition rights | 3,482 | 2,823 | ||||||||
Non-controlling interests | 1,499,264 | 1,219,604 | ||||||||
|
|
|
| |||||||
Net assets attributable to common stock at the fiscal year-end | ¥ | 9,731,538 | ¥ | 10,390,464 | ||||||
|
|
|
| |||||||
Number of common stock at the fiscalyear-end used for the calculation of Net assets per share (in thousands) | 1,410,026 | 1,410,558 |
78
Table of Contents
(Significant Subsequent Events)
Fiscal year ended March 31, 2018
Repurchase and cancellation of own shares
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 returns and improve capital efficiency.
(2) | Outline of the Repurchase |
1) | Type of shares to be repurchased: Common stock |
2) | Aggregate number of shares to be repurchased: |
Up to 20,000,000 shares (Equivalent to 1.4% of the number of shares issued (excluding treasury stock))
3) | Aggregate amount to be repurchased: Up to JPY 70,000,000,000 |
4) | Repurchase period: From May 15, 2018 to July 31, 2018 |
5) | Repurchase method: |
Market purchases based on a discretionary dealing contract regarding repurchase of its own shares
(3) | Result of the Repurchase |
1) | Type of shares repurchased: Common stock |
2) | Aggregate number of shares repurchased: 15,368,300 shares |
3) | Aggregate amount repurchased: JPY 69,999,886,200 |
4) | Repurchase period: From May 15, 2018 to June 19, 2018 (on a contract basis) |
5) | Repurchase method: |
Market purchases based on a discretionary dealing contract regarding repurchase of its own shares
(4) | Outline of the Cancellation |
1) | Type of shares to be cancelled: Common stock |
2) | Number of shares to be cancelled: 15,368,300 shares |
3) | Scheduled cancellation date: August 20, 2018 |
79
Table of Contents
[Consolidated Supplementary Financial Schedules]
[Schedule of bonds]
Millions of yen | Percentages | |||||||||||||
Company | Type of bonds | Date of issuance | At the beginning of | At the end of | Interest rate (Note 1) | Collat- eral | Date of maturity | |||||||
The Company | Straight bonds, payable in U.S. dollars (Note 3) | Mar.2016 ~ Feb.2018 | 1,651,436 ($14,720,000 thousand) | 2,601,531 ($24,485,000 thousand) | 2.058 ~ 4.3 | None | Mar. 2021 ~ Feb. 2048 | |||||||
Straight bonds, payable in Euro (Note 3) | Jun. 2016 ~ Feb. 2018 | 239,680 (€2,000,000 thousand) | 511,154 (€3,910,000 thousand) | 0.123 ~ 1.716 | None | Jan. 2022 ~ Feb. 2033 | ||||||||
Straight bonds, payable in Austlian dollars (Note 3) | Sep. 2016 ~ Mar. 2018 | 93,961 (A$1,095,000 thousand) | 179,956 (A$2,204,000 thousand) | 3.065 ~ 4.13 | None | Mar. 2022 ~ Mar. 2028 | ||||||||
Subordinated bonds, | Sep. 2014 ~ Sep. 2016 | 366,335 | 370,809 | 0.469 ~ 1.328 | None | Sep. 2024 ~ May. 2030 | ||||||||
Subordinated bonds, | Sep. 2014 ~ Mar. 2018 | 287,878 | 387,654 | 0.3~ 0.61 | None | Sep. 2024~ Mar. 2028 | ||||||||
Perpetual subordinated | Jul. 2015~ Dec. 2017 | 449,897 | 599,794 | 1.29~ 2.88 | None | Perpetual | ||||||||
Subordinated bonds, payable in U.S. dollars (Note 3) | Apr.2, 2014 | 195,697 ($1,744,337 thousand) | 185,903 ($1,749,682 thousand) | 4.436 | None | Apr. 2, 2024 | ||||||||
|
|
|
|
|
|
|
| |||||||
SMBC | Straight bonds, payable in Yen (Note 4) | Oct. 2012 ~ Apr. 2014 | 159,998 [60,000] | 100,000 [50,000] | 0.254 ~ 0.33 | None | Apr. 2018 ~ Apr. 2019 | |||||||
Straight bonds, payable in U.S.dollars | Jan. 2012~ Jan. 2018 | 2,344,158 ($20,894,544 thousand) [608,069] | 2,016,383 ($18,977,726 thousand) [708,687] | 1.67~ 4.13 | None | Jul. 2018~ Mar. 2030 | ||||||||
Subordinated bonds, payable in U.S. dollars (Note 3) | May. 28, 2015 | 73,484 ($655,000 thousand) | 69,593 ($655,000 thousand) | 4.3 | None | May. 30, 2045 | ||||||||
Straight bonds, payable in Euro (Notes 3 and 4) | Jul. 2013 ~ Nov. 2015 | 418,561 (€3,492,666 thousand) [179,760] | 260,709 (€1,994,259 thousand) [—] | 1~ 2.75 | None | Dec. 2020 ~ Jul. 2023 | ||||||||
Straight bonds, payable in Australian dollars (Notes 3 and 4) | Jun. 2013 ~ Aug. 2015 | 78,063 (A$909,720 thousand) [11,155] | 63,673 (A$779,834 thousand) [27,761] | 2.97 ~ 4.13 | None | Dec. 2018 ~ Mar. 2025 | ||||||||
Straight bonds, payable in Hong Kong dollars (Note 3) | Mar. 2015 ~ Apr. 2015 | 34,136 (HK$2,364,000 thousand) | 32,008 (HK$2,364,000 thousand) | 2.09 ~ 2.92 | None | Apr. 2020 ~ Apr. 2025 | ||||||||
Straight bonds, payable in Thai Baht (Note 3) | Nov. 2016 ~ Aug. 2017 | 11,410 (THB3,500,000 thousand) | 25,642 (THB7,500,000 thousand) | 2 ~ 2.09 | None | Nov. 2019 ~ Aug. 2020 | ||||||||
Subordinated bonds, payable in Yen (Note 4) | Dec. 2007 ~ Dec. 2011 | 463,982 [79,900] | 383,567 [21,500] | 1.43 ~ 2.8 | None | Feb. 2019 ~ Dec.2026 | ||||||||
Subordinated bonds, | Jan. 29, 2013 | 99,724 | — | — | None | — | ||||||||
Subordinated bonds, payable in Euroyen | Jun. 16, 2008 | 2,000 | 2,000 | 2.564 | None | Jun. 16, 2023 | ||||||||
Perpetual subordinated | Mar.1, 2012 | 168,221 ($1,499,434 thousand) | 159,296 ($1,499,272 thousand) | 4.85 | None | Mar. 1, 2022 | ||||||||
Subordinated bonds, payable in Euro (Note 3) | Nov. 9, 2010 | 89,429 (€746,242 thousand) | 97,815 (€748,230thousand) | 4 | None | Nov. 9, 2020 | ||||||||
|
|
|
|
|
|
|
| |||||||
(*1) | Consolidated subsidiaries, straight bonds, payable in Yen (Notes 2 and 4) | Feb. 2011 ~ Mar. 2018 | 786,802 [160,804] | 804,339 [141,273] | 0.01 ~ 21 | None | Apr. 2018 ~ Mar. 2048 | |||||||
|
|
|
|
|
|
|
| |||||||
(*2) | Consolidated subsidiaries, specified bonds, payable in Yen (Notes 2) | Mar. 24, 2017 | — | 27,901 | 0.75 | Provided | Sep.30, 2025 | |||||||
|
|
|
|
|
|
|
| |||||||
(*3) | Consolidated subsidiaries, straight bonds, payable in U.S. dollars (Notes 2,3 and 4) | Apr. 2014 ~ Mar. 2018 | 15,028 ($135,510 thousand) [4,996] | 24,742 ($230,387 thousand) [3,757] | 0.01 ~ 3.8395 | None | Apr. 2018 ~ Nov. 2037 | |||||||
|
|
|
|
|
|
|
| |||||||
(*4) | Consolidated subsidiaries, straight bonds, payable in Australian dollars | Mar. 2016~ Jan. 2018 | 1,654 (A$19,280 thousand) | 1,895 (A$23,220 thousand) [166] | 0.01~ 3 | None | Jan. 2019~ Aug. 2031 | |||||||
|
|
|
|
|
|
|
| |||||||
(*5) | Consolidated subsidiaries, straight bonds, payable in Turkish lira (Notes 2 and 3) | Jul. 2017~ Mar. 2018 | — | 3,567 (TRY 132,290 thousand) | 0.01~ 9 | None | Aug. 2019~ Feb. 2023 | |||||||
|
|
|
|
|
|
|
| |||||||
(*6) | Consolidated subsidiaries, straight bonds, payable in U.S. dollars (Notes 2 and 3) | Jul. 2016 ~ Jul. 2017 | 54,000 ($481,333 thousand) | 103,660 ($975,629 thousand) | 2.65~ 3 | None | Jul. 2021~ Jul. 2022 | |||||||
|
|
|
|
|
|
|
| |||||||
(*7) | Consolidated subsidiaries, straight bonds, payable in Indonesia rupiah (Notes 2,3 and 4) | Feb. 2015~ Jun. 2017 | 8,688 (IDR998,631,966 thousand) [8,688] | 19,080 (IDR 2,298,899,588 thousand) [19,080] | 8.25~ 9.85 | None | Feb. 2018~ Jun. 2018 | |||||||
|
|
|
|
|
|
|
| |||||||
(*8) | Consolidated subsidiaries, subordinated bonds, payable in Yen (Notes 2) | Dec. 1997~ Dec. 2012 | 35,000 | 25,000 | 4 ~ 4.15 | None | Aug. 2019 ~ Jan. 2028 | |||||||
|
|
|
|
|
|
|
| |||||||
(*9) | Consolidated subsidiaries, short-term bonds, payable in Yen (Notes 2 and 4) | Apr. 2015 ~ Mar. 2018 | 1,125,600 [1,125,600] | 1,256,600 [1,256,600] | -0.0002 ~ 0.064 | None | Apr. 2018 ~ Sep. 2018 | |||||||
|
|
|
|
|
|
|
| |||||||
Total | — | ¥9,254,832 | ¥10,314,283 | — | — | — | ||||||||
|
|
80
Table of Contents
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 an aggregate of straight bonds issued in yen by SMFL and SMBC Nikko, domestic consolidated subsidiaries. (*2) This represents specified bond issued in yen by Otemachi 142 specified purpose enterprise, a domestic consolidated subsidiary. (*3) This represents straight bonds issued in U.S. dollar 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 U.S. dollar by SMBC Aviation Capital Limited, an overseas consolidated subsidiary. (*7) This represents straight bonds issued in Indonesia rupiah by PT Bank Sumitomo Mitsui Indonesia, an overseas consolidated subsidiary. (*8) This represents subordinated term bonds issued in yen by SMBC International Finance N.V., an overseas consolidated subsidiary. Subordinated term bond issued in yen by Kansai Urban which became an equity method affiliate in the fiscal 2017 is included in the balance at the beginning of the year. (*9) This represents an aggregate of short-term bonds issued in yen by SMFL and SMBC Nikko, domestic consolidated subsidiaries. Short-term bonds issued in yen by SMCC is included in the balance at the beginning of the fiscal year. | |||
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 | More than 2 years | More than 3 years | More than 4 years | ||||
¥ 2,228,827 | ¥ 947,209 | ¥ 937,637 | ¥ 1,219,962 | ¥ 1,094,397 |
81
Table of Contents
[Schedule of borrowings]
Millions of yen | Percentages | |||||||||||||
Classification | At the beginning of the fiscal year | At the end of the fiscal year | Average | Repayment Term | ||||||||||
Borrowed money | ¥ | 10,786,713 | ¥ | 10,829,248 | 0.57 | — | ||||||||
Other borrowings | 10,786,713 | 10,829,248 | 0.57 | | Jan. 2018 ~ Perpetual | |||||||||
Lease obligations | 106,924 | 89,940 | 4.66 | | Apr. 2018 ~ 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 | ¥ | 7,875,146 | ¥ | 403,576 | ¥ | 377,414 | ¥ | 350,067 | ¥ | 437,981 | ||||||||||
Lease obligations | 24,948 | 22,550 | 20,228 | 11,305 | 4,935 |
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 | Percentages | |||||||||||||
At the beginning of the fiscal year | At the end of the fiscal year | Average | Repayment Term | |||||||||||
Commercial paper | ¥ | 2,311,542 | ¥ | 2,384,787 | 1.29 | Apr. 2018 ~ Feb. 2019 |
[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 liability obligation is not disclosed.
[Others]
Quarterly consolidated financial information in the fiscal year ended March 31, 2018 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, 2018 | |||||||||||||
Ordinary income | ¥ | 1,361,027 | ¥ | 2,746,944 | ¥ | 4,263,194 | ¥ | 5,764,172 | ||||||||
Income before income taxes | 315,647 | 612,020 | 949,115 | 1,108,850 | ||||||||||||
Profit attributable to owners of parent | 241,521 | 420,195 | 648,125 | 734,368 | ||||||||||||
Earnings per share | 171.28 | 297.94 | 459.53 | 520.67 | ||||||||||||
Yen | ||||||||||||||||
First quarter consolidated accounting period | Second quarter consolidated accounting period | Third quarter consolidated accounting period | Fourth quarter consolidated accounting period | |||||||||||||
Earnings per share | ¥ | 171.28 | ¥ | 126.67 | ¥ | 161.59 | ¥ | 61.14 |
82
Table of Contents
(Non-consolidated financial statements)
1. | Non-consolidated balance sheets |
Millions of yen | Millions of U.S. dollars | |||||||||||
March 31 | 2017 | 2018 | 2018 | |||||||||
Assets: | ||||||||||||
Current assets | ||||||||||||
Cash and due from banks | ¥ | 728,445 | ¥ | 251,680 | $ | 2,369 | ||||||
Prepaid expenses | 140 | 340 | 3 | |||||||||
Accrued income | 21,240 | 31,638 | 298 | |||||||||
Accrued income tax refunds | 87,571 | 67,414 | 634 | |||||||||
Deferred tax assets | 36,266 | 313 | 3 | |||||||||
Other current assets | 3,312 | 45,169 | 425 | |||||||||
|
|
|
|
|
| |||||||
Total current assets | 876,975 | 396,556 | 3,732 | |||||||||
|
|
|
|
|
| |||||||
Fixed assets | ||||||||||||
Tangible fixed assets | ||||||||||||
Buildings | 39 | 89 | 1 | |||||||||
Equipment | 0 | 7 | 0 | |||||||||
Construction in progress | — | 13,718 | 129 | |||||||||
|
|
|
|
|
| |||||||
Total tangible fixed assets | 39 | 13,815 | 130 | |||||||||
|
|
|
|
|
| |||||||
Intangible fixed assets | ||||||||||||
Software | 316 | 296 | 3 | |||||||||
|
|
|
|
|
| |||||||
Total intangible fixed assets | 316 | 296 | 3 | |||||||||
|
|
|
|
|
| |||||||
Investments and other assets | ||||||||||||
Investments in subsidiaries and affiliates | 6,155,487 | 6,156,181 | 57,941 | |||||||||
Long-term loans receivable from subsidiaries and affiliates | 3,424,217 | 5,537,800 | 52,120 | |||||||||
Long-term prepaid expenses | — | 315 | 3 | |||||||||
Deferred tax assets | 102 | — | — | |||||||||
Other investments and other assets | 0 | 0 | 0 | |||||||||
|
|
|
|
|
| |||||||
Total investments and other assets | 9,579,808 | 11,694,298 | 110,064 | |||||||||
|
|
|
|
|
| |||||||
Total fixed assets | 9,580,164 | 11,708,409 | 110,197 | |||||||||
|
|
|
|
|
| |||||||
Total assets | ¥ | 10,457,139 | ¥ | 12,104,965 | $ | 113,929 | ||||||
|
|
|
|
|
| |||||||
Liabilities: | ||||||||||||
Current liabilities | ||||||||||||
Short-term borrowings | ¥ | 1,228,030 | ¥ | 1,228,030 | $ | 11,558 | ||||||
Accounts payable | 844 | 11,440 | 108 | |||||||||
Accrued expenses | 23,156 | 34,081 | 321 | |||||||||
Income taxes payable | 80 | 6 | 0 | |||||||||
Business office taxes payable | 9 | 75 | 1 | |||||||||
Reserve for employee bonuses | 234 | 693 | 7 | |||||||||
Reserve for executive bonuses | 95 | 400 | 4 | |||||||||
Other current liabilities | 1,090 | 626 | 6 | |||||||||
|
|
|
|
|
| |||||||
Total current liabilities | 1,253,541 | 1,275,354 | 12,003 | |||||||||
|
|
|
|
|
| |||||||
Fixed liabilities | ||||||||||||
Bonds | 3,558,111 | 5,105,279 | 48,050 | |||||||||
Long-term borrowings | 132,805 | 199,221 | 1,875 | |||||||||
Deferred tax liabilities | — | 34 | 0 | |||||||||
|
|
|
|
|
| |||||||
Total fixed liabilities | 3,690,917 | 5,304,535 | 49,925 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities | 4,944,459 | 6,579,890 | 61,928 | |||||||||
|
|
|
|
|
| |||||||
Net assets: | ||||||||||||
Stockholders’ equity | ||||||||||||
Capital stock | 2,337,895 | 2,338,743 | 22,012 | |||||||||
Capital surplus | ||||||||||||
Capital reserve | 1,559,374 | 1,560,221 | 14,684 | |||||||||
Other capital surplus | 24,327 | 24,286 | 229 | |||||||||
|
|
|
|
|
| |||||||
Total capital surplus | 1,583,701 | 1,584,508 | 14,913 | |||||||||
|
|
|
|
|
| |||||||
Retained earnings | ||||||||||||
Other retained earnings | ||||||||||||
Voluntary reserve | 30,420 | 30,420 | 286 | |||||||||
Retained earnings brought forward | 1,570,369 | 1,581,073 | 14,881 | |||||||||
|
|
|
|
|
| |||||||
Total retained earnings | 1,600,789 | 1,611,493 | 15,167 | |||||||||
|
|
|
|
|
| |||||||
Treasury stock | (12,913) | (12,493) | (118) | |||||||||
|
|
|
|
|
| |||||||
Total stockholders’ equity | 5,509,473 | 5,522,252 | 51,974 | |||||||||
|
|
|
|
|
| |||||||
Stock acquisition rights | 3,206 | 2,823 | 27 | |||||||||
|
|
|
|
|
| |||||||
Total net assets | 5,512,680 | 5,525,075 | 52,001 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities and net assets | ¥ | 10,457,139 | ¥ | 12,104,965 | $ | 113,929 | ||||||
|
|
|
|
|
|
83
Table of Contents
2.Non-consolidated statements of income
Year ended March 31 | Millions of yen | Millions of U.S. dollars | ||||||||||
2017 | 2018 | 2018 | ||||||||||
Operating income: | ||||||||||||
Dividends on investments in subsidiaries and affiliates | ¥ | 428,846 | ¥ | 257,001 | $ | 2,419 | ||||||
Fees and commissions received from subsidiaries | 20,705 | 10,226 | 96 | |||||||||
Interests on loans receivable from subsidiaries and affiliates | 52,931 | 99,093 | 933 | |||||||||
|
|
|
|
|
| |||||||
Total operating income | 502,484 | 366,321 | 3,448 | |||||||||
|
|
|
|
|
| |||||||
Operating expenses: | ||||||||||||
General and administrative expenses | 10,830 | 23,195 | 218 | |||||||||
Interest on bonds | 63,347 | 106,052 | 998 | |||||||||
Interest on long-term borrowings | 1,110 | 4,285 | 40 | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 75,288 | 133,533 | 1,257 | |||||||||
|
|
|
|
|
| |||||||
Operating profit | 427,196 | 232,787 | 2,191 | |||||||||
|
|
|
|
|
| |||||||
Non-operating income: | ||||||||||||
Interest income on deposits | 44 | 35 | 0 | |||||||||
Fees and commissions income | 1 | 1 | 0 | |||||||||
Othernon-operating income | 194 | 186 | 2 | |||||||||
|
|
|
|
|
| |||||||
Totalnon-operating income | 240 | 223 | 2 | |||||||||
|
|
|
|
|
| |||||||
Non-operating expenses: | ||||||||||||
Interest on borrowings | 4,451 | 4,298 | 40 | |||||||||
Fees and commissions payments | 155 | 313 | 3 | |||||||||
Amortization of bond issuance cost | 8,417 | 7,193 | 68 | |||||||||
Othernon-operating expenses | 2 | 197 | 2 | |||||||||
|
|
|
|
|
| |||||||
Totalnon-operating expenses | 13,026 | 12,002 | 113 | |||||||||
|
|
|
|
|
| |||||||
Ordinary profit | 414,410 | 221,008 | 2,080 | |||||||||
|
|
|
|
|
| |||||||
Extraordinary losses: | ||||||||||||
Losses on sales of stocks of subsidiaries and affiliates | — | 10 | 0 | |||||||||
|
|
|
|
|
| |||||||
Total extraordinary losses | — | 10 | 0 | |||||||||
|
|
|
|
|
| |||||||
Income before income taxes | 414,410 | 220,998 | 2,080 | |||||||||
|
|
|
|
|
| |||||||
Income taxes-current | 3 | (44,393) | (418) | |||||||||
Income taxes-deferred | (36,368) | 36,090 | 340 | |||||||||
|
|
|
|
|
| |||||||
Income taxes | (36,365) | (8,302) | (78) | |||||||||
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|
|
|
|
| |||||||
Net income | ¥ | 450,775 | ¥ | 229,300 | $ | 2,158 | ||||||
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|
|
|
|
| |||||||
Yen | U.S. dollars | |||||||||||
2017 | 2018 | 2018 | ||||||||||
Per share data: | ||||||||||||
Earnings per share | ¥ | 319.69 | ¥ | 162.57 | $ | 1.53 | ||||||
Earnings per share (diluted) | 319.44 | 162.45 | 1.53 |
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3. | Non-consolidated statements of changes in net assets |
Millions of yen | ||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||
Capital surplus | Retained earnings | |||||||||||||||||||||||||||
Other retained earnings | ||||||||||||||||||||||||||||
Year ended March 31, 2017 | Capital stock | Capital reserve | Other capital surplus | Total capital surplus | Voluntary reserve | Retained earnings brought forward | Total retained earnings | |||||||||||||||||||||
Balance at the beginning of the fiscal year | ¥ | 2,337,895 | ¥ | 1,559,374 | ¥ | 24,332 | ¥ | 1,583,706 | ¥ | 30,420 | ¥ | 1,331,100 | ¥ | 1,361,520 | ||||||||||||||
Changes in the fiscal year: | ||||||||||||||||||||||||||||
Cash dividends | (211,506) | (211,506) | ||||||||||||||||||||||||||
Net income | 450,775 | 450,775 | ||||||||||||||||||||||||||
Purchase of treasury stock | ||||||||||||||||||||||||||||
Disposal of treasury stock | (4) | (4) | ||||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | ||||||||||||||||||||||||||||
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|
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| |||||||||||||||
Net changes in the fiscal year | — | — | (4) | (4) | — | 239,268 | 239,268 | |||||||||||||||||||||
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|
| |||||||||||||||
Balance at the end of the fiscal year | ¥ | 2,337,895 | ¥ | 1,559,374 | ¥ | 24,327 | ¥ | 1,583,701 | ¥ | 30,420 | ¥ | 1,570,369 | ¥ | 1,600,789 | ||||||||||||||
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| |||||||||||||||
Millions of yen | ||||||||||||||||||||||||||||
Stockholders’ equity | Stock acquisition rights | |||||||||||||||||||||||||||
Year ended March 31, 2017 | Treasury stock | Total | Total net assets | |||||||||||||||||||||||||
Balance at the beginning of the fiscal year | ¥ | (12,833) | ¥ | 5,270,289 | ¥ | 2,635 | ¥ | 5,272,925 | ||||||||||||||||||||
Changes in the fiscal year: | ||||||||||||||||||||||||||||
Cash dividends | (211,506) | (211,506) | ||||||||||||||||||||||||||
Net income | 450,775 | 450,775 | ||||||||||||||||||||||||||
Purchase of treasury stock | (100) | (100) | (100) | |||||||||||||||||||||||||
Disposal of treasury stock | 19 | 15 | 15 | |||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | 571 | 571 | ||||||||||||||||||||||||||
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| |||||||||||||||||||||
Net changes in the fiscal year | (80) | 239,183 | 571 | 239,755 | ||||||||||||||||||||||||
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|
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|
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| |||||||||||||||||||||
Balance at the end of the fiscal year | ¥ | (12,913) | ¥ | 5,509,473 | ¥ | 3,206 | ¥ | 5,512,680 | ||||||||||||||||||||
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Millions of yen | ||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||
Capital surplus | Retained earnings | |||||||||||||||||||||||||||
Other retained earnings | Total retained earnings | |||||||||||||||||||||||||||
Year ended March 31, 2018 | Capital stock | Capital reserve | Other capital surplus | Total capital surplus | Voluntary reserve | Retained earnings brought forward | ||||||||||||||||||||||
Balance at the beginning of the fiscal year | ¥ | 2,337,895 | ¥ | 1,559,374 | ¥ | 24,327 | ¥ | 1,583,701 | ¥ | 30,420 | ¥ | 1,570,369 | ¥ | 1,600,789 | ||||||||||||||
Changes in the fiscal year: | ||||||||||||||||||||||||||||
Issuance of new stock | 847 | 847 | 847 | |||||||||||||||||||||||||
Cash dividends | (218,596) | (218,596) | ||||||||||||||||||||||||||
Net income | 229,300 | 229,300 | ||||||||||||||||||||||||||
Purchase of treasury stock | ||||||||||||||||||||||||||||
Disposal of treasury stock | (41) | (41) | ||||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | ||||||||||||||||||||||||||||
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| |||||||||||||||
Net changes in the fiscal year | 847 | 847 | (41) | 806 | — | 10,704 | 10,704 | |||||||||||||||||||||
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|
| |||||||||||||||
Balance at the end of the fiscal year | ¥ | 2,338,743 | ¥ | 1,560,221 | ¥ | 24,286 | ¥ | 1,584,508 | ¥ | 30,420 | ¥ | 1,581,073 | ¥ | 1,611,493 | ||||||||||||||
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| |||||||||||||||
Millions of yen | ||||||||||||||||||||||||||||
Stockholders’ equity | Stock acquisition rights | Total net assets | ||||||||||||||||||||||||||
Year ended March 31, 2018 | Treasury stock | Total | ||||||||||||||||||||||||||
Balance at the beginning of the fiscal year | ¥ | (12,913) | ¥ | 5,509,473 | ¥ | 3,206 | ¥ | 5,512,680 | ||||||||||||||||||||
Changes in the fiscal year: | ||||||||||||||||||||||||||||
Issuance of new stock | 1,695 | 1,695 | ||||||||||||||||||||||||||
Cash dividends | (218,596) | (218,596) | ||||||||||||||||||||||||||
Net income | 229,300 | 229,300 | ||||||||||||||||||||||||||
Purchase of treasury stock | (142) | (142) | (142) | |||||||||||||||||||||||||
Disposal of treasury stock | 562 | 521 | 521 | |||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | (382) | (382) | ||||||||||||||||||||||||||
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| |||||||||||||||||||||
Net changes in the fiscal year | 420 | 12,778 | (382) | 12,395 | ||||||||||||||||||||||||
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|
|
|
|
| |||||||||||||||||||||
Balance at the end of the fiscal year | ¥ | (12,493) | ¥ | 5,522,252 | ¥ | 2,823 | ¥ | 5,525,075 | ||||||||||||||||||||
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Millions of U. S. dollars | ||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||
Capital surplus | Retained earnings | |||||||||||||||||||||||||||
Other retained earnings | Total retained earnings | |||||||||||||||||||||||||||
Year ended March 31, 2018 | Capital stock | Capital reserve | Other capital surplus | Total capital surplus | Voluntary reserve | Retained earnings brought forward | ||||||||||||||||||||||
Balance at the beginning of the fiscal year | $ | 22,004 | $ | 14,676 | $ | 229 | $ | 14,905 | $ | 286 | $ | 14,780 | $ | 15,066 | ||||||||||||||
Changes in the fiscal year: | ||||||||||||||||||||||||||||
Issuance of new stock | 8 | 8 | 8 | |||||||||||||||||||||||||
Cash dividends | (2,057) | (2,057) | ||||||||||||||||||||||||||
Net income | 2,158 | 2,158 | ||||||||||||||||||||||||||
Purchase of treasury stock | ||||||||||||||||||||||||||||
Disposal of treasury stock | (0) | (0) | ||||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | ||||||||||||||||||||||||||||
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| |||||||||||||||
Net changes in the fiscal year | 8 | 8 | (0) | 8 | — | 101 | 101 | |||||||||||||||||||||
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|
|
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|
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| |||||||||||||||
Balance at the end of the fiscal year | $ | 22,012 | $ | 14,684 | $ | 229 | $ | 14,913 | $ | 286 | $ | 14,881 | $ | 15,167 | ||||||||||||||
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| |||||||||||||||
Millions of U. S. dollars | ||||||||||||||||||||||||||||
Stockholders’ equity | Stock acquisition rights | Total net assets | �� | |||||||||||||||||||||||||
Year ended March 31, 2018 | Treasury stock | Total | ||||||||||||||||||||||||||
Balance at the beginning of the fiscal year | $ | (122) | $ | 51,854 | $ | 30 | $ | 51,884 | ||||||||||||||||||||
Changes in the fiscal year: | ||||||||||||||||||||||||||||
Issuance of new stock | 16 | 16 | ||||||||||||||||||||||||||
Cash dividends | (2,057) | (2,057) | ||||||||||||||||||||||||||
Net income | 2,158 | 2,158 | ||||||||||||||||||||||||||
Purchase of treasury stock | (1) | (1) | (1) | |||||||||||||||||||||||||
Disposal of treasury stock | 5 | 5 | 5 | |||||||||||||||||||||||||
Net changes in items other than stockholders’ equity in the fiscal year | (4) | (4) | ||||||||||||||||||||||||||
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| |||||||||||||||||||||
Net changes in the fiscal year | 4 | 120 | (4) | 117 | ||||||||||||||||||||||||
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| |||||||||||||||||||||
Balance at the end of the fiscal year | $ | (118) | $ | 51,974 | $ | 27 | $ | 52,001 | ||||||||||||||||||||
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Table of Contents
To the Board of Directors of
Sumitomo Mitsui Financial Group, Inc.:
We have audited the accompanying consolidated financial statements of Sumitomo Mitsui Financial Group, Inc. (“the Company”) and subsidiaries, which comprise the consolidated balance sheets as at March 31, 2018 and 2017, and the consolidated statements of income, comprehensive income, changes in net assets and cash flows for the years then ended, and basis of presentation, significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these 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 misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries as at March 31, 2018 and 2017, and their financial performance and cash flows for the years then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2018 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.
/s/ KPMG AZSA LLC
June 27, 2018
Tokyo, Japan
88